Exhibit 99.2
AMAG PHARMACEUTICALS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On August 6, 2018, AMAG Pharmaceuticals, Inc., a Delaware corporation (the “Company” or “AMAG”) completed its previously announced sale (the “Transaction”) of its wholly-owned subsidiary, CBR Acquisition Holdings Corp., a Delaware corporation (“CBR Holdings”), and its Cord Blood Registry® (CBR®) business to GI Chill Acquisition LLC, a Delaware limited liability company and affiliate of GI Partners, a private equity investment firm (together, “GI”). The Transaction was completed pursuant to the Stock Purchase Agreement (the “Purchase Agreement”) between the Company and GI dated June 14, 2018, pursuant to which the Company agreed to sell CBR Holdings and the CBR business to GI on a cash-free, debt-free basis for $530.0 million in cash, subject to ordinary purchase price adjustments. The Company intends to use a majority of the net proceeds from the CBR sale to redeem the remaining $475.0 million aggregate principal amount of its 7.875% senior notes due 2023 (the “Notes”). The redemption date for the Notes is scheduled for September 5, 2018, at which time, the Company expects to pay an aggregate redemption price, including premium and accrued interest, of approximately $503.5 million.
The accompanying unaudited pro forma condensed consolidated balance sheet of AMAG as of June 30, 2018 is presented as if the disposition of CBR occurred as of June 30, 2018 and gives effect to the elimination of the historical CBR net assets due to the CBR sale, as well as other pro forma adjustments as described in the accompanying notes.
The accompanying unaudited pro forma condensed consolidated statements of operations of AMAG for the six months ended June 30, 2018 and for the fiscal year ended December 31, 2017 are presented as if the disposition of CBR occurred as of January 1, 2017 and give effect to the elimination of the historical CBR financial results due to the CBR sale, as well as other pro forma adjustments, as described in the accompanying notes. The accompanying unaudited pro forma condensed consolidated statements of operations of AMAG for the fiscal years ended December 31, 2016 and 2015 only give effect to the elimination of the historical CBR financial results as if the CBR sale had occurred as of January 1, 2015. AMAG acquired CBR on August 17, 2015. The 2015 results of operations attributable to CBR are eliminated from this date forward only.
The accompanying pro forma financial statements are based on information currently available and have been prepared using certain assumptions and estimates. These unaudited pro forma financial statements are intended for informational purposes only and the unaudited pro forma financial information is not necessarily indicative of the results of operations or financial position that might have been achieved for the dates or periods indicated, nor is it necessarily indicative of the results of operations or financial position that may occur in the future.
These unaudited pro forma condensed consolidated financial statements have been derived from AMAG’s historical consolidated financial statements as of and for the fiscal years ended December 31, 2017, 2016 and 2015, and the interim unaudited period ended June 30, 2018. The unaudited pro forma condensed consolidated financial statements and the accompanying notes should be read in conjunction with AMAG’s historical consolidated financial statements and related notes for the periods presented.
The following is a brief description of the amounts recorded under each of the column headings in the unaudited pro forma consolidated statements of operations and balance sheet:
Historical
This column was derived from AMAG’s historical consolidated financial statements for the periods, and as of the date presented and does not reflect any adjustments related to the CBR sale or related events.
CBR Sale
This column was derived from AMAG’s historical consolidated financial statements and the related accounting records for the fiscal years ended December 31, 2017, 2016, and 2015 and the unaudited consolidated financial statements and accounting records as of and for the six months ended June 30, 2018 and reflects the elimination of the historical operating results of CBR. These amounts do not include allocations of corporate overhead expenses. The CBR Sale column of the unaudited pro forma condensed consolidated balance sheet as of June 30, 2018 reflects the value of CBR assets and liabilities as of that date and also reflects the cash that would have been received if the closing of the CBR sale had occurred on that date.
Pro Forma Adjustments
This column reflects additional pro forma adjustments that are (1) directly attributable to the CBR sale, (2) factually supportable, and (3) with respect to the unaudited pro forma condensed consolidated statements of operations, expected to have a continuing impact on AMAG’s financial results. These adjustments are further described in the accompanying notes and relate to the Company’s intention to use a majority of the net proceeds from the CBR sale to redeem the remaining $475.0 million aggregate principal amount of the Notes assuming the redemption occurred as of June 30, 2018 for balance sheet purposes and on January 1, 2017 for statement of operations purposes.
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AMAG Pharmaceuticals, Inc.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2018
(in thousands, except share and per share data)
| | Historical | | CBR Sale | | Pro Forma
Adjustments | | AMAG
Pro Forma | |
Current assets: | | | | | | | | | |
Cash and cash equivalents | | $ | 212,499 | | $ | 571,900 | (a) | $ | (515,558 | )(d) | $ | 268,841 | |
Marketable securities | | 138,672 | | — | | — | | 138,672 | |
Accounts receivable, net | | 103,353 | | — | | — | | 103,353 | |
Inventories | | 30,674 | | — | | — | | 30,674 | |
Prepaid and other current assets | | 12,465 | | — | | — | | 12,465 | |
Assets held for sale | | 77,161 | | (77,161 | )(b) | — | | — | |
Total current assets | | 574,824 | | 494,739 | | (515,558 | ) | 554,005 | |
Property, plant and equipment, net | | 7,340 | | — | | — | | 7,340 | |
Goodwill | | 422,513 | | — | | — | | 422,513 | |
Intangible assets, net | | 261,692 | | — | | — | | 261,692 | |
Deferred tax asset | | 1,151 | | — | | — | | 1,151 | |
Restricted cash | | 495 | | — | | — | | 495 | |
Other long-term assets | | 103 | | — | | — | | 103 | |
Assets held for sale, net of current position | | 559,300 | | (559,300 | )(b) | — | | — | |
Total Assets | | $ | 1,827,418 | | $ | (64,561 | ) | $ | (515,558 | ) | $ | 1,247,299 | |
| | | | | | | | | |
Current liabilities: | | | | | | | | | |
Accounts payable | | $ | 10,738 | | $ | — | | $ | — | | $ | 10,738 | |
Accrued expenses | | 194,053 | | — | | (12,458 | )(e) | 181,595 | |
Current portion of long-term debt | | 20,727 | | — | | — | | 20,727 | |
Current portion of acquisition-related contingent consideration | | 210 | | — | | — | | 210 | |
Deferred revenues | | 182 | | — | | — | | 182 | |
Liabilities held for sale | | 52,962 | | (52,962 | )(b) | | | — | |
Total current liabilities | | 278,872 | | (52,962 | ) | (12,458 | ) | 213,452 | |
Long-term liabilities: | | | | | | | | | |
Long-term debt, net | | 466,906 | | — | | (466,906 | )(f) | — | |
Convertible notes, net | | 254,902 | | — | | — | | 254,902 | |
Acquisition-related contingent consideration | | 631 | | — | | — | | 631 | |
Other long-term liabilities | | 918 | | — | | — | | 918 | |
Non-current liabilities held for sale | | 98,285 | | (98,285 | )(b) | — | | — | |
Total Liabilities | | 1,100,514 | | (151,247 | ) | (479,364 | ) | 469,903 | |
| | | | | | | | | |
Stockholders’ Equity | | | | | | | | | |
Preferred stock, par value $0.01 per share, 2,000,000 shares authorized; none issued | | — | | — | | — | | — | |
Common stock, par value $0.01 per share, 117,500,000 shares authorized; 34,390,068 shares issued and outstanding at June 30, 2018 | | 344 | | — | | — | | 344 | |
Additional paid-in capital | | 1,281,858 | | — | | — | | 1,281,858 | |
Accumulated other comprehensive loss | | (4,295 | ) | — | | — | | (4,295 | ) |
Accumulated deficit | | (551,003 | ) | 86,686 | (c) | (36,194 | )(g) | (500,511 | ) |
Total Equity | | 726,904 | | 86,686 | | (36,194 | ) | 777,396 | |
Total Liabilities and Equity | | $ | 1,827,418 | | $ | (64,561 | ) | $ | (515,558 | ) | $ | 1,247,299 | |
| | | | | | | | | | | | | | |
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AMAG Pharmaceuticals, Inc.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE 6 MONTHS ENDED JUNE 30, 2018
(in thousands, except per share data)
| | Historical | | Pro Forma
Adjustments | | AMAG
Pro Forma | |
Revenues: | | | | | | | |
Product sales, net | | $ | 263,567 | | $ | | — | | $ | 263,567 | |
Other revenues | | 75 | | — | | 75 | |
Total revenues | | 263,642 | | — | | 263,642 | |
Costs and expenses: | | | | | | | |
Cost of product sales | | 140,688 | | — | | 140,688 | |
Research and development expenses | | 22,502 | | — | | 22,502 | |
Acquired in-process research and development | | 20,000 | | — | | 20,000 | |
Selling, general and administrative expenses | | 89,329 | | — | | 89,329 | |
Total costs and expenses | | 272,519 | | — | | 272,519 | |
Operating loss | | (8,877 | ) | — | | (8,877 | ) |
Other income (expense): | | | | | | | |
Interest expense | | (32,034 | ) | (19,318 | )(i) | (12,716 | ) |
Interest and dividend income | | 1,595 | | — | | 1,595 | |
Other expense | | (44 | ) | — | | (44 | ) |
Total other expense, net | | (30,483 | ) | (19,318 | ) | (11,165 | ) |
| | | | | | | |
Loss from continuing operations before income taxes | | (39,360 | ) | (19,318 | ) | (20,042 | ) |
Income tax expense (benefit) | | 44,556 | | (748 | )(j) | 45,304 | |
Net loss from continuing operations | | $ | (83,916 | )(h) | $ | (18,570 | ) | $ | (65,346 | ) |
| | | | | | | |
Net loss per share: | | | | | | | |
Basic and diluted net loss per share | | $ | (2.45 | ) | | | $ | (1.91 | ) |
| | | | | | | |
Weighted average shares outstanding used to compute net loss per share: | | | | | | | |
Basic and diluted | | 34,261 | | | | 34,261 | |
| | | | | | | | | | | | | |
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AMAG Pharmaceuticals, Inc.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE 12 MONTHS ENDED DECEMBER 31, 2017
(in thousands, except per share data)
| | Historical | | CBR Sale | | Pro Forma
Adjustments | | AMAG
Pro Forma | |
Revenues: | | | | | | | | | |
Product sales, net | | $ | 495,645 | | $ | — | | $ | — | | $ | 495,645 | |
Service revenues, net | | 114,177 | | 114,177 | (k) | | | — | |
License fee, collaboration and other revenues | | 124 | | — | | — | | 124 | |
Total revenues | | 609,946 | | 114,177 | | — | | 495,769 | |
Costs and expenses: | | | | | | | | | |
Cost of product sales (excluding impairment) | | 161,349 | | — | | — | | 161,349 | |
Cost of services | | 21,817 | | 21,817 | (k) | | | — | |
Research and development expenses | | 75,017 | | — | | — | | 75,017 | |
Acquired in-process research and development | | 65,845 | | — | | — | | 65,845 | |
Selling, general and administrative expenses | | 259,933 | | 81,782 | (k) | — | | 178,151 | |
Impairment of intangible assets | | 319,246 | | — | | — | | 319,246 | |
Total costs and expenses | | 903,207 | | 103,599 | | — | | 799,608 | |
Operating (loss) income | | (293,261 | ) | 10,578 | | — | | (303,839 | ) |
Other income (expense): | | | | | | | | | |
Interest expense | | (68,382 | ) | — | | (40,180 | )(i) | (28,202 | ) |
Loss on debt extinguishment | | (10,926 | ) | — | | — | | (10,926 | ) |
Interest and dividend income | | 2,810 | | — | | — | | 2,810 | |
Other expense | | (335 | ) | (265 | )(k) | — | | (70 | ) |
Total other expense, net | | (76,833 | ) | (265 | ) | (40,180 | ) | (36,388 | ) |
| | | | | | | | | |
(Loss) income before income taxes | | (370,094 | ) | 10,313 | | (40,180 | ) | (340,227 | ) |
Income tax (benefit) expense | | (170,866 | ) | 4,388 | (k) | (15,344 | )(j) | (159,910 | ) |
Net (loss) income | | $ | (199,228 | ) | $ | 5,925 | | $ | (24,836 | ) | $ | (180,317 | ) |
| | | | | | | | | |
Net loss per share: | | | | | | | | | |
Basic and diluted net loss per share | | $ | (5.71 | ) | | | | | | | $ | (5.17 | ) |
| | | | | | | | | |
Weighted average shares outstanding used to compute net loss per share: | | | | | | | | | |
Basic and diluted | | 34,907 | | | | | | 34,907 | |
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AMAG Pharmaceuticals, Inc.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE 12 MONTHS ENDED DECEMBER 31, 2016
(in thousands, except per share data)
| | Historical | | CBR Sale | | AMAG
Pro Forma | |
| | | | | | | |
Revenues: | | | | | | | |
Product sales, net | | $ | 432,170 | | $ | — | | $ | 432,170 | |
Service revenues, net | | 99,604 | | 99,604 | (k) | — | |
License fee, collaboration and other revenues | | 317 | | — | | 317 | |
Total revenues | | 532,091 | | 99,604 | | 432,487 | |
Costs and expenses: | | | | | | | |
Cost of product sales (excluding impairment) | | 96,314 | | — | | 96,314 | |
Cost of services | | 20,575 | | 20,575 | (k) | — | |
Research and development expenses | | 66,084 | | 523 | (k) | 65,561 | |
Selling, general and administrative expenses | | 249,870 | | 80,402 | (k) | 169,468 | |
Impairment of intangible assets | | 19,663 | | 3,700 | (k) | 15,963 | |
Restructuring expenses | | 715 | | 374 | (k) | 341 | |
Total costs and expenses | | 453,221 | | 105,574 | | 347,647 | |
Operating income (loss) | | 78,870 | | (5,970 | ) | 84,840 | |
Other income (expense): | | | | | | | |
Interest expense | | (73,153 | ) | — | | (73,153 | ) |
Interest and dividend income | | 3,149 | | — | | 3,149 | |
Other income | | 189 | | — | | 189 | |
Total other expense, net | | (69,815 | ) | — | | (69,815 | ) |
| | | | | | | |
Income (loss) before income taxes | | 9,055 | | (5,970 | ) | 15,025 | |
Income tax expense (benefit) | | 11,538 | | (1,633 | )(k) | 13,171 | |
Net (loss) income | | $ | (2,483 | ) | $ | (4,337 | ) | $ | 1,854 | |
| | | | | | | |
Net (loss) income per share: | | | | | | | |
Basic net (loss) income per share | | $ | (0.07 | ) | | | | $ | 0.05 | |
Diluted net (loss) income per share | | $ | (0.07 | ) | | | | $ | 0.05 | |
| | | | | | | |
Weighted average shares outstanding used to compute net (loss) income per share: | | | | | | | |
Basic | | 34,346 | | | | 34,346 | |
Diluted | | 34,346 | | | | 34,833 | |
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AMAG Pharmaceuticals, Inc.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE 12 MONTHS ENDED DECEMBER 31, 2015
(in thousands, except per share data)
| | Historical | | CBR Sale | | AMAG
Pro Forma | |
| | | | | | | |
Revenues: | | | | | | | |
Product sales, net | | $ | 341,816 | | $ | — | | $ | 341,816 | |
Service revenues, net | | 24,132 | | 24,132 | (k) | — | |
License fee, collaboration and other revenues | | 52,328 | | — | | 52,328 | |
Total revenues | | 418,276 | | 24,132 | | 394,144 | |
Costs and expenses: | | | | | | | |
Cost of product sales | | 78,509 | | — | | 78,509 | |
Cost of services | | 9,992 | | 9,992 | (k) | — | |
Research and development expenses | | 42,878 | | 168 | (k) | 42,710 | |
Selling, general and administrative expenses | | 160,309 | | 29,182 | (k) | 131,127 | |
Acquisition-related costs | | 11,232 | | — | | 11,232 | |
Restructuring expenses | | 4,136 | | 1,862 | (k) | 2,274 | |
Total costs and expenses | | 307,056 | | 41,204 | | 265,852 | |
Operating income (loss) | | 111,220 | | (17,072 | ) | 128,292 | |
Other income (expense): | | | | | | | |
Interest expense | | (53,251 | ) | — | | (53,251 | ) |
Loss on debt extinguishment | | (10,449 | ) | — | | (10,449 | ) |
Interest and dividend income | | 1,512 | | 11 | (k) | 1,501 | |
Other expense | | (9,188 | ) | (15 | )(k) | (9,173 | ) |
Total other expense, net | | (71,376 | ) | (4 | ) | (71,372 | ) |
| | | | | | | |
Income (loss) before income taxes | | 39,844 | | (17,076 | ) | 56,920 | |
Income tax expense (benefit) | | 7,065 | | (5,699 | )(k) | 12,764 | |
Net income (loss) | | $ | 32,779 | | $ | (11,377 | ) | $ | 44,156 | |
| | | | | | | |
Net income per share: | | | | | | | |
Basic net income per share | | $ | 1.04 | | | | | $ | 1.40 | |
Diluted net income per share | | $ | 0.93 | | | | | $ | 1.25 | |
| | | | | | | |
Weighted average shares outstanding used to compute net income per share: | | | | | | | |
Basic | | 31,471 | | | | 31,471 | |
Diluted | | 35,308 | | | | 35,308 | |
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Note 1. Description of Sale
On August 6, 2018, the Company completed its previously announced sale of CBR Holdings and its CBR business to GI. The Transaction was completed pursuant to the Purchase Agreement between the Company and GI dated June 14, 2018, pursuant to which the Company agreed to sell CBR Holdings and the CBR business to GI on a cash-free, debt-free basis for $530.0 million in cash, subject to ordinary purchase price adjustments. The Company intends to use a majority of the net proceeds from the CBR sale to redeem the remaining $475.0 million aggregate principal amount of its Notes. The redemption date for the Notes is scheduled for September 5, 2018, at which time, the Company expects to pay an aggregate redemption price, including premium and accrued interest, of approximately $503.5 million.
Note 2. Basis of Presentation
The historical condensed consolidated financial statements have been adjusted in the accompanying unaudited pro forma condensed consolidated financial statements to give effect to pro forma events that are (1) directly attributable to the CBR sale, (2) factually supportable, and, (3) with respect to the unaudited pro forma condensed consolidated statements of operations, expected to have a continuing impact on AMAG’s results.
The unaudited pro forma condensed consolidated financial statements do not necessarily reflect what the consolidated Company’s financial condition or results of operations would have been had the transaction occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the Company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein.
Note 3. Unaudited Pro Forma Condensed Consolidated Balance Sheet Adjustments
(a) Represents estimated cash proceeds, net of unpaid transaction costs, as if the CBR sale was completed on June 30, 2018.
Pro forma adjustments to Cash and cash equivalents (in millions):
Cash to be received, net | | $ | 582.3 | |
Less: Unpaid transaction costs (1) | | (10.4 | ) |
Net cash proceeds | | $ | 571.9 | |
(b) Represents the elimination of the assets and liabilities associated with the CBR business, which were reported as held for sale in the Company’s Form 10-Q filed with the U.S. Securities and Exchange Commission (the “Commission”) on August 3, 2018.
(c) Represents the estimated net gain on the sale of CBR. This amount does not reflect the final amount to be realized upon completion of the CBR sale, primarily as a result of the actual closing date being August 6, 2018 as opposed to June 30, 2018. The gain on the sale is not included in the unaudited pro forma condensed consolidated statements of operations, as this gain represents a material nonrecurring credit which results directly from the transaction.
Pro forma adjustments to Accumulated deficit (in millions):
Cash to be received, net | | $ | 582.3 | |
Less: Net assets of CBR | | (485.2 | ) |
Unpaid transaction costs(1) | | (10.4 | ) |
Estimated gain before taxes | | 86.7 | |
Estimated taxes | | — | |
Estimated gain on sale, net of taxes | | $ | 86.7 | |
(1) Net assets of CBR as of June 30, 2018 included $3.8 million of prepaid transaction costs. Total estimated transaction costs are $14.2 million.
(d) Represents cash to be used to repay the outstanding principal, accrued but unpaid interest, and related repayment premium on the Notes. The $28.1 million premium is based on a redemption price of 105.906%, which reflects the premium to be paid at the repayment date. The premium associated with the repayment of the Notes is not reflected in the unaudited pro forma condensed consolidated statements of operations as the premium represents a material nonrecurring charge which results directly from the transaction.
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Pro forma adjustments to Cash and cash equivalents (in millions):
Principal on the Notes | | $ | 475.0 | |
Premium on repayment of the Notes | | 28.1 | |
Accrued, unpaid interest | | 12.5 | |
Total cash to be used for repayment | | $ | 515.6 | |
(e) Represents accrued, unpaid interest related to the Notes.
(f) Represents the Notes, net of debt discount, issuance costs and other lender fees and expenses of $8.1 million, which the Company will repay on September 5, 2018 with the net proceeds from the CBR sale.
(g) Represents the estimated loss on redemption of the Notes.
Pro forma adjustments to Accumulated deficit (in millions):
Premium on repayment of the Notes | | $ | 28.1 | |
Write-off of unamortized debt issuance costs and debt discount | | 8.1 | |
Loss on redemption | | $ | 36.2 | |
Note 4. Unaudited Pro Forma Condensed Consolidated Statements of Operations Adjustments
(h) Represents the operating results of the continuing business for the six months ended June 30, 2018 as the results of the CBR business were reported as discontinued operations in the Form 10-Q filed with the Commission on August 3, 2018.
(i) Represents the elimination of interest expense on the Notes as described in footnote (d) above, which the Company will repay on September 5, 2018 with the net proceeds from the CBR sale.
(j) Represents the tax effect of pro forma adjustments using the applicable statutory income tax rates in effect during the periods presented.
(k) Represents the elimination of the revenues and expenses associated with the CBR business. Historical annual periods will be presented as discontinued operations beginning with the Company’s Form 10-K for the year ended December 31, 2018.
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