ANI PHARMACEUTICALS INC
For the period ended Jun 30, 2024. Filed Aug 6, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 6, 2024
ANIP$67.41-3.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-10.
0001023024-24-000057
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001023024-24-000085
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 81 previous paragraphs and 112 current paragraphs.
41 unchanged; 33 reworded; 27 added; 5 removed; 2 previous and 11 current paragraphs rearranged.
Tables are not compared: 8 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (27)
Current report
On June 24 2024, we announced that we entered into a definitive agreement pursuant to which we will acquire Alimera Sciences, Inc. (“Alimera”), which is currently expected to close late during the third quarter of 2024, subject to customary closing conditions, including receipt of required regulatory approvals and approval by Alimera’s shareholders. The acquisition of Alimera is anticipated to strengthen our Rare Disease business and expand our footprint beyond the U.S. with the addition of Alimera’s direct marketing operations located in Germany, the United Kingdom, Portugal, and Ireland, as well as its partnerships in Europe, Asia, and the Middle East.
Current report
Pending merger agreement
Current report
On June 21, 2024, the Company entered into an Agreement and Plan of Merger with Alimera and ANIP Merger Sub INC. (“Merger Sub”), providing for the merger of Merger Sub with and into Alimera (the “Merger”), with Alimera surviving the Merger as a wholly owned indirect subsidiary of the Company. Capitalized terms used herein, but not otherwise defined, have the meanings set forth in the Merger Agreement.
Current report
At the effective time of the Merger (the “Effective Time”), each outstanding share of common stock, par value $0.01 per share, of Alimera, outstanding immediately prior to the Effective Time will automatically be converted into the right to receive (i) $5.50 in cash, without interest and (ii) one contingent value right (a “CVR”), which shall represent the right to receive the Milestone Payments (as defined below) subject to the terms and conditions set forth in the CVR Agreement (as defined below) (the consideration contemplated by (i) and (ii), together, the “Merger Consideration”).
Current report
At or immediately prior to the Effective Time, the Company will enter into a contingent value rights agreement (the “CVR Agreement”), pursuant to which each holder of Alimera Common Stock, as well as holders of Alimera Warrants, Alimera Options, Alimera PSUs, Alimera RSAs and Alimera RSUs, may become entitled to contingent cash payments per CVR (each, a “Milestone Payment”), such payment(s) being contingent upon, and subject to, satisfaction of the Milestones (as defined below).
Current report
When issued, each CVR will entitle the holder (the “Holder”) to receive Milestone Payments for 2026 and 2027, upon satisfaction of the applicable Milestones. The Milestone Payments for each CVR will equal the product (rounded to the nearest 1/100 of $0.01) of $0.25 multiplied by a fraction (which is no case will exceed one), and (i) for 2026, equals the amount, if any, by which the 2026 Net Revenue exceeds $140.0 million, divided by $10.0 million (subject to adjustment for the exercise price of Eligible Options), and (ii) for 2027, equals the amount, if any, by which the 2027 Net Revenue exceeds $160.0 million, divided by $15.0 million (subject to adjustment for the exercise price of Eligible Options) (the occurrence of the events in clauses (i) and (ii), each, a “Milestone”).
Current report
The Merger Agreement requires Alimera, as promptly as reasonably practicable, and in any event within 25 business days following the date of the Merger Agreement, to prepare and file with the SEC a proxy statement for the purpose of seeking stockholder approval to the Merger Agreement.
Current report
Consummation of the Merger is subject to certain conditions, including approval by Alimera’s stockholders, the absence of any legal restraints restraining, enjoining, preventing, prohibiting or otherwise making illegal the consummation of the Merger, expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and any other specified required regulatory approvals that may be required will have been obtained, and each party’s performance of its obligations in all material respects under the Merger Agreement.
Current report
In connection with the Merger, JPMorgan Chase Bank, N.A. and Blackstone Credit & Insurance (the “Lenders”) have committed to provide debt financing for the transaction in an aggregate principal amount equal to $280.0 million, on the terms and subject to the conditions set forth in a commitment letter, dated June 21, 2024 (the “Debt Commitment Letter”). The obligations of the Lenders to provide debt financing under the Debt Commitment Letter are subject to customary conditions, including, without limitation, execution and delivery of definitive documentation consistent with the Debt Commitment Letter.
Current report
During the three and six months ended June 30, 2024, the Company incurred approximately $3.5 million, respectively, in transaction costs related to this pending Merger Agreement, all of which were expensed.
Current report
RESULTS OF OPERATIONS
Current report
•Research and develo pment expenses decreased from $7.4 million to $7.3 million, a nominal decrease of approximately $0.1 million or 1.1% when comparing the three months ended June 30, 2024 to the same period in 2023.
Current report
Other Expense, net
Current report
Income Tax Expense (Benefit)
Current report
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023
Current report
Net Revenues
Current report
Net revenues for thesix months ended June 30, 2024 were$275.5 million compared to$223.3 million for the same period in 2023, an increase of 23.3%, primarily as a result of the following factors:
Current report
•Net revenues for branded pharmaceutical products, royalties, and other pharmaceutical services were $45.2 million during the six months ended June 30, 2024, a decrease of 18.9% compared to $55.7 million for the same period in 2023, driven by a net decrease in volume. During the first quarter of 2024, we were successful in supplying incremental volume in markets that were experiencing supply chain disruptions for competing products, which did not continue into the second quarter of 2024.
Current report
For the six months ended June 30, 2024, cost of sales increased to $106.9 million from $80.0 million for the same period in 2023, an increase of $26.9 million, or 33.6%. The increase is primarily due to significant net growth in sales volumes of pharmaceutical products and significant growth of royalty bearing products, including Cortrophin Gel.
Current report
Cost of sales, as a percentage of net revenues, increased to 38.8% from 35.8% for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to a shift in product mix year over year, increase in sales volume, and increase in sales of products that bear a royalty payable.
Current report
Other Operating Expenses, net
Current report
For the six months ended June 30, 2024, other operating expenses, net increased to$143.1 million from$121.0 million for the same period in 2023, an increase of$22.1 million, or 18.2%, primarily as a result of the following factors:
Current report
•Depreciation and amortization expense was $29.4 million for the six months ended June 30, 2024, compared to $29.4 million for the same period in 2023.
Current report
Other Expense, net
Current report
For thesix months ended June 30, 2024, we recognized total other expense, net of $2.4 million as compared to total other expense of $14.9 million for the same period in 2023, a decrease of $12.5 million.
Current report
Income Tax Expense (Benefit)
Current report
On June 21, 2024, in connection with the pending business combination with Alimera, JPMorgan Chase Bank, N.A. and Blackstone Credit & Insurance as Lenders committed to provide debt financing for the Merger in an aggregate principal amount equal to $280.0 million, on the terms and subject to the conditions set forth in the Debt Commitment Letter. Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report on Form 10-Q for further information regarding the Merger.
Removed paragraphs (5)
Previous report
Product Launches
Previous report
Refer to our website at www.anipharmaceuticals.com for information on the products, including indications/treatments.
Previous report
In addition to the above, within our Generics, Established Brand, and Other segment, from time to time we have been successful in supplying incremental volume in markets that were experiencing supply chain disruptions for competing products. This factor favorably impacted the established brand portion of the segment in the current year period as compared to favorably impacting both the generic and established brand portion of the segment in the prior year period. Generally, when opportunities for volume and revenue upside related to our products arise in the marketplace, there is no assurance as to how long these favorable market conditions may persist.
Previous report
Other Income (Expense), net
Previous report
Income Tax Expense
Reworded paragraphs (33)
Previous wording
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the unaudited interim condensed consolidated financial statements and the accompanying notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, the audited consolidated financial statements and the accompanying notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Annual Report”), as well as the information contained under Management’s Discussion and Analysis of Financial Condition and Results of Operations and “Risk Factors” contained in the 2023 Annual Report, and Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q , and other information provided from time to time in our other filings with the SEC. This discussion contains forward-looking statements, based on current expectations and related to future events and our future financial performance, that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many important factors, including those set forth under “Risk Factors” in our 2023 Annual Report and this Quarterly Report on Form 10-Q.
Current wording
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the unaudited interim condensed consolidated financial statements and the accompanying notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, the audited consolidated financial statements and the accompanying notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Form 10-K”), as well as the information contained under Management’s Discussion and Analysis of Financial Condition and Results of Operations and “Risk Factors” contained in the 2023 Form 10-K, and Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q , and other information provided from time to time in our other filings with the SEC. This discussion contains forward-looking statements, based on current expectations and related to future events and our future financial performance, that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many important factors, including those set forth under “Risk Factors” in our 2023 Form 10-K and this Quarterly Report on Form 10-Q.
Previous wording
ANI Pharmaceuticals, Inc. and its consolidated subsidiaries (together, “ANI,” the “Company,” “we,” “us,” or “our”) is a diversified bio-pharmaceutical company serving patients in need by developing, manufacturing, and marketing high quality branded and generic prescription pharmaceuticals, including for diseases with high unmet medical need. Our team is focused on delivering sustainable growth by scaling up our Rare Disease business through the launch of our lead asset, Cortrophin Gel, strengthening our generics business with enhanced development capability, innovation in established brands and leveraging our U.S.-based manufacturing capabilities. Our three pharmaceutical manufacturing facilities, of which two are located in Baudette, Minnesota, and one is located in East Windsor, New Jersey, are together capable of producing oral solid dose products, as well as semi-solids, liquids and topicals, controlled substances, and potent products that must be manufactured in a fully-contained environment. We ceased operations at our subsidiary in Oakville, Ontario, Canada as of March 31, 2023. This action was part of ongoing initiatives to capture operational synergies following our acquisition of Novitium Pharma LLC (“Novitium”) in November 2021. We have fully completed the transition of the products manufactured or packaged in Oakville to one of our three U.S. based manufacturing sites. In February 2024, our Canadian subsidiary entered into an agreement for the purchase and sale of the Oakville site, for a purchase price of $19.2 million Canadian Dollars, or approximately $14.2 million, based on the current exchange rate. The sale closed on March 28, 2024 (see Note 3).
Current wording
ANI Pharmaceuticals, Inc. and its consolidated subsidiaries (together, “ANI,” the “Company,” “we,” “us,” or “our”) is a diversified bio-pharmaceutical company serving patients in need by developing, manufacturing, and marketing high quality branded and generic prescription pharmaceuticals, including for diseases with high unmet medical need. Our team is focused on delivering sustainable growth by scaling up our Rare Disease business through the launch of our lead asset, Cortrophin Gel, strengthening our generics business with enhanced development capability, innovation in established brands and leveraging our U.S.-based manufacturing capabilities. Our three pharmaceutical manufacturing facilities, of which two are located in Baudette, Minnesota, and one is located in East Windsor, New Jersey, are together capable of producing oral solid dose products, as well as semi-solids, liquids and topicals, controlled substances, and potent products that must be manufactured in a fully-contained environment. We ceased operations at our subsidiary in Oakville, Ontario, Canada as of March 31, 2023. This action was part of ongoing initiatives to capture operational synergies following our acquisition of Novitium Pharma LLC (“Novitium”) in November 2021. We have fully completed the transition of the products manufactured or packaged in Oakville to one of our three U.S. based manufacturing sites. In February 2024, our Canadian subsidiary entered into an agreement for the purchase and sale of the Oakville site, for a purchase price of $19.2 million Canadian Dollars, or approximately $14.2 million, based on the exchange rate at closing. The sale closed on March 28, 2024 (see Note 4).
Previous wording
Our objective is to build a sustainable and growing biopharmaceutical company serving patients in need and creating long-term value for our investors. Our overall strategy is enabled by an empowered, collaborative, and purposeful team with high performance-orientation, Serving Patients, Improving Lives.
Current wording
Our objective is to build a sustainable and growing biopharmaceutical company serving patients in need and creating long-term value for our investors. Our overall strategy is enabled by an empowered, collaborative, and purposeful team with high performance-orienta tion that seeks to deliver on our purpose of “Serving Patients, Improving Lives.”
Previous wording
Throughout 2023 and the first quarter of 2024, we continued to build and invest in our infrastructure to support growth in new areas of opportunity, such as pulmonology, ophthalmology, and gout in the ACTH market. On October 2, 2023, we announced FDA approval and commercial availability of a 1-mLvial of Cortrophin Gel, appropriate for adjunctive treatment of certain patients with acute gouty arthritis flares. As a result of the continued investment in our Rare Disease Platform, our expenditures were significantly higher during the first quarter of 2024 as compared to the prior year.
Current wording
Throughout 2023 and the first half of 2024, we continued to build and invest in our infrastructure to support growth in new areas of opportunity, such as pulmonology, ophthalmology, and gout in the ACTH market. On October 2, 2023, we announced FDA approval and commercial availability of a 1-mLvial of Cortrophin Gel, appropriate for adjunctive treatment of certain patients with acute gouty arthritis flares. As a result of the continued investment in our Rare Disease platform, our expenditures were significantly higher during the first half of 2024 as compared to the prior year.
Previous wording
We plan to continue to expand our Rare Disease business, through a combination of organic growth, as described above, and acquisition. While we continue to execute against our strategic initiatives that we believe will result in the long-term, sustainable growth and value to our stockholders, we continue to evaluate potential acquisitions and other strategic transactions of businesses that we believe complement our existing portfolio, infrastructure and capabilities or provide us with the opportunity to expand our existing capabilities.
Current wording
We plan to continue to expand our Rare Disease business, through a combination of organic growth, as described above, and acquisition. See below for expanded discussion on our pending business combination with Alimera. While we continue to execute against our strategic initiatives that we believe will result in the long-term, sustainable growth and value to our stockholders, we continue to evaluate potential acquisitions and other strategic transactions of businesses that we believe complement our existing portfolio, infrastructure and capabilities or provide us with the opportunity to expand our existing capabilities.
Previous wording
We have grown our generics business through a combination of market share gains on existing products and new product launches. We have also successfully acquired numerous ANDAs through business and asset acquisitions. Our most recent business acquisition was Novitium, including its portfolio of commercial and pipeline generic products, manufacturing and development facilities and expert workforce. The Novitium acquisition significantly increased our generic pharmaceutical research and development and manufacturing capabilities. We have begun to increase our focus on niche lower competition opportunities such as injectables, Paragraph IV, and competitive generic therapy ("CGT") designation filings. Additionally, we will continue to seek opportunities to enhance our capab ilities through strategic partnerships and acquisitions of assets and businesses. During 2022, we completed an asset acquisition of four ANDAs from Oakrum Pharma, including two that were commercial at the time of acquisition. During 2023, we acquired two ANDAs and one pipeline product from the Chapter 7 Trustee for the estates of Akorn Holding Company and certain of its affiliates, acquired an ANDA and registered patents and pending patent applications from Slayback Pharma Limited Liability Company, and acquired additional ANDAs and product rights for two products in the second half of 2023.
Current wording
We have grown our generics business through a combination of market share gains on existing products and new product launches. We have also successfully acquired numerous ANDAs through business and asset acquisitions. Our most recent business acquisition in the Generics, Established Brands, and Other segment was the acquisition of Novitium in 2021, which included its portfolio of commercial and pipeline generic products, manufacturing and development facilities and expert workforce. The Novitium acquisition significantly increased our generic pharmaceutical research and development and manufacturing capabilities. We have begun to increase our focus on niche lower competition opportunities such as injectables, Paragraph IV, and competitive generic therapy (“CGT”) designation filings. Additionally, we will continue to seek opportunities to enhance our capab ilities through strategic partnerships and acquisitions of assets and businesses.During 2023, we acquired two ANDAs and one pipeline product from the Chapter 7 Trustee for the estates of Akorn Holding Company and certain of its affiliates, acquired an ANDA and registered patents and pending patent applications from Slayback Pharma Limited Liability Company, and acquired additional ANDAs and product rights for two products in the second half of 2023. During 2022, we completed an asset acquisition of four ANDAs from Oakrum Pharma, including two that were commercial at the time of acquisition. .
Previous wording
On February 15, 2024, ANI Pharmaceuticals, Canada, Inc., a wholly owned subsidiary of the Company, entered into an agreement (the "Agreement") with 1540700 Ontario Limited ("Buyer") for the sale of ANI's Oakville, Ontario former manufacturing site (the "Property") for a total purchase price of $19.2 million Canadian Dollars, or approximately $14.2 million, based on the current exchange rate, subject to certain market adjustments. During February 2024, and in accordance with the Agreement, the Buyer deposited a total of approximately $1.9 million Canadian Dollars, or approximately $1.4 million in refundable deposits in escrow as part of the total purchase price.
Current wording
On February 15, 2024, ANI Pharmaceuticals Canada, Inc., a wholly owned subsidiary of the Company, entered into an agreement (the “Agreement”) with 1540700 Ontario Limited (“Buyer”) for the sale of ANI’s Oakville, Ontario former manufacturing site (the “Property”) for a total purchase price of $19.2 million Canadian Dollars, or approximately $14.2 million, based on the exchange rate at closing. During February 2024, and in accordance with the Agreement, the Buyer deposited a total of approximately $1.9 million Canadian Dollars, or approximately $1.4 million in refundable deposits in escrow as part of the total purchase price.
Previous wording
Impacts to our first quarter 2024 and 2023 results of operations, including to net revenues, operating expenses, interest and other expense, net, and income taxes are described below.
Current wording
Impacts to our second quarter 2024 and 2023 results of operations, including to net revenues, operating expenses, interest and other expense, net, and income taxes are described below.
Previous wording
Net revenues for the three months ended March 31, 2024 were $137.4 million compared to $106.8 million for the same period in 2023, an increase of 28.7%, primarily as a result of the following factors:
Current wording
Net revenues for the three months ended June 30, 2024 were $138.0 million compared to $116.5 million for the same period in 2023, an increase of 18.4%, primarily as a result of the following factors:
Previous wording
•Net revenues for branded pharmaceutical products, royalties, and other pharmaceutical services were $30.3 million during the three months ended March 31, 2024, an increase of 13.2% compared to $26.7 million for the same period in 2023, driven by a net increase in volume.
Current wording
•Net revenues for branded pharmaceutical products, royalties, and other pharmaceutical services were $14.9 million during the three months ended June 30, 2024, a decrease of 48.5% compared to $28.9 million for the same period in 2023, driven by a net decrease in volume. During the three months ended June 30, 2023, we benefited from supplying incremental volume in markets that were experiencing supply chain disruptions for competing products.
Previous wording
•Net revenues of rare disease pharmaceutical products, which consists entirely of sales of Cortrophin Gel, were $36.9 million during the three months ended March 31, 2024, an increase of $20.6 million from $16.3 million for the same period in 2023. This increase was driven by increased volume in this third year of launch (product was launched in late January 2022).
Current wording
•Net revenues of rare disease pharmaceutical products, which consists entirely of sales of Cortrophin Gel, were $49.2 million during the three months ended June 30, 2024, an increase of $24.9 million from $24.3 million for the same period in 2023. This increase was driven by increased volume in this third year of launch (product was launched in late January 2022).
Previous wording
For the three months ended March 31, 2024, cost of sales increased to $49.2 million from $37.7 million for the same period in 2023, an increase of $11.4 million, or 30.4%. The increase is primarily due to a net increase in sales volumes of pharmaceutical products across all segments and a significant net increase in sales of products that bear a royalty payable, including Cortrophin Gel.
Current wording
For the three months ended June 30, 2024, cost of sales increased to $57.7 million from $42.3 million for the same period in 2023, an increase of $15.4 million, or 36.5%. The increase is primarily due to significant net growth in sales volumes of pharmaceutical products and significant growth of royalty bearing products, including Cortrophin Gel.
Previous wording
Cost of sales, as a percentage of net revenues, increased slightly from 35.3% to 35.8% for the three months ended March 31, 2024, compared to the same period in 2023, primarily due to a shift in product mix year over year.
Current wording
Cost of sales, as a percentage of net revenues, increased to 41.8% from 36.3% for the three months ended June 30, 2024, compared to the same period in 2023, primarily due to a shift in product mix year over year, increase in sales volume, and increase in sales of products that bear a royalty payable.
Previous wording
During the three months ended March 31, 2024, we purchased approximately 25% of our raw material inventory from one supplier. During the three months ended March 31, 2023, no single vendor represented more than 10% of our raw material inventory purchases.
Current wording
During the three months ended June 30, 2024, approximately 27% of our raw material purchases were from one supplier. During the three months ended June 30, 2023, no single vendor represented more than 10% of our raw material inventory purchases.
Previous wording
For the three months ended March 31, 2024, other operating expenses, net increased to $68.0 million from $59.2 million for the same period in 2023, an increase of $8.8 million, or 14.8%, primarily as a result of the following factors:
Current wording
For the three months ended June 30, 2024, other operating expenses, net increased to $75.2 million from $61.9 million for the same period in 2023, an increase of $13.3 million, or 21.5%, primarily as a result of the following factors:
Previous wording
•Selling, general, and administrative expenses increased from $36.5 million to $48.0 million, an increase of $11.6 million, or 31.7%, due to increased employment related costs, continued investment in our Rare Disease segment sales and marketing activities, legal expenses, as well as an overall increase in activities required to support the growth of our business.
Current wording
•Selling, general, and administrative expenses increased from $38.8 million to $52.8 million, an increase of $14.1 million, or 36.3%, due to increased employment related costs, continued investment in our Rare Disease segment sales and marketing activities, legal expenses, expenses related to the pending acquisition of Alimera, as well as an overall increase in activities required to support the growth of our business.
Previous wording
•Depreciation and amortization expense was $14.7 million for thethree months ended March 31, 2024, compared to $14.7 million for the same period in 2023, a nominal decrease of approximately $14.0 thousand year-over-year.
Current wording
•Depreciation and amortization expense was $14.7 million for the three months ended June 30, 2024, compared to $14.7 million for the same period in 2023.
Previous wording
For thethree months ended March 31, 2024, we recognized total other income of $5.0 million as compared to total other expense of $7.7 million for the same period in 2023, an increase of $12.8 million.
Current wording
For the three months ended June 30, 2024, we recognized total other expense of $7.5 million as compared to total other expense of $7.2 million for the same period in 2023, an increase of $0.3 million.
Previous wording
Interest expense, net for the three months ended March 31, 2024 consists primarily of interest expense on borrowings under our Term Facility of approximately $8.5 million and amortization of deferred debt issuance costs of approximately $0.6 million, offset by dividend income earned on our money market funds and interest earned on our cash balances of approximately $2.8 million, the effects of the interest rate swap of approximately $1.6 million, and interest capitalized into construction in progress. The decrease in interest expense is primarily related to the increase in the dividend income and interest income earned on our larger cash balances during the current period, as interest expense on borrowing under our Term Facility and amortization of deferred debt issuance costs are consistent with the three months ended March 31, 2023.
Current wording
•Interest expense, net for the three months ended June 30, 2024 consists primarily of interest expense on borrowings under our Term Facility of approximately $8.5 million and amortization of deferred debt issuance costs of approximately $0.6 million, offset by dividend income earned on our money market funds and interest earned on our cash balances of approximately $2.6 million, the effects of the interest rate swap of approximately $1.6 million, and interest capitalized into construction in progress. The decrease in interest expense is primarily related to the increase in the dividend income and interest income earned on our larger cash balances during the current period, as interest expense on borrowing under our Term Facility and amortization of deferred debt issuance costs are consistent with the three months ended June 30, 2023.
Previous wording
Income tax expense consists of current and deferred components, which include changes in our deferred tax assets, our deferred tax liabilities, and our valuation allowance.
Current wording
Income tax expense (benefit) consists of current and deferred components, which include changes in our deferred tax assets, our deferred tax liabilities, and our valuation allowance.
Previous wording
For the three months ended March 31,2023, we recognized an income tax expense of $0.7 million. The income tax expense resulted from applying an estimated annual worldwide effective tax rate of 34.9% to pre-tax consolidated income of $2.2 million reported during the period. There were no material discrete items occurring during the three months ended March 31,2023.
Current wording
For the three months ended June 30, 2023, we recognized an income tax benefit of $1.0 million. The income tax expense resulted from applying an estimated annual worldwide effective tax rate of (19.0)% to pre-tax consolidated income of $5.2 million reported during the period. There were no material discrete items occurring during the three months ended June 30, 2023.
Previous wording
•Net revenues for generic pharmaceutical products were $70.2 million during the three months ended March 31, 2024, an increase of 10.2% compared to $63.7 million for the same period in 2023, driven by increased volumes on the base business and the inclusion of 2023 launches and new product launches in 2024. From aproduct perspective, the increase was principally driven by revenues from year over year increases in products such as Colestipol, Nitrofurantoin, Lacosamide, and various other products tempered by a decrease in revenues of Meloxicam, Nebivolol, and Famotidine, among others.
Current wording
•Net revenues for generic pharmaceutical products were $144.2 million duringthesix months ended June 30, 2024, an increase of 13.5% compared to$127.0 million for the same period in 2023, driven by increased volumes and the inclusion of 2023 launches and new product launches in 2024. From a product perspective, the increase was principally driven by revenues from year over year increases in products such as Colestipol, Estradiol,Lacosamide, Nitrofurantoin, Pentoxifylline, Pirfenidone, Prednisone, Tranexamic Acid, and various other products tempered by a decrease in revenues of Famotidine, Meloxicam, Nebivolol, Paliperidone, and Prochlorperazine among others.
Previous wording
•Research and develo pment expenses increased from $5.9 million to $10.5 million, an increase of $4.6 million or 77.4%, primarily due to expenses related to a FDA filing fee for a 505(b)(2) for one product of approximately $2.0 million, and a higher level of activity associated with ongoing and new projects in the three months ended March 31, 2024.
Current wording
•Research and development expenses increased from $13.3 million to $17.8 million, an increase of $4.5 million or 33.9%, primarily due to a higher level of activity associated with ongoing and new projects in the six months ended June 30, 2024.
Previous wording
•We recognized losses of $0.1 million and $1.0 million in thethree months ended March 31, 2024 and 2023, respectively, for the contingent consideration fair value adjustment. The change in the fair value adjustment during the three months ended March 31, 2024 is primarily related to changes in the anticipated timing of cash flows (i.e., moving closer to the anticipated payment dates of the consideration for the third milestone) and fluctuations in the discount rates, offset by adjustments recorded upon payment of the Gross Profit Earn-Out during the first quarter. Additionally, the fair value measurement adjustment in the three months ended March 31, 2024 is related to only the third milestone, whereas the fair value adjustment at March 31, 2023 related to all three milestones.
Current wording
•We recognized losses of $0.4 million and $2.0 million in the six months ended June 30, 2024 and 2023, respectively, for the contingent consideration fair value adjustment. The change in the fair value adjustment during the six months ended June 30, 2024 is primarily related to changes in the anticipated timing of cash flows (i.e., moving closer to the anticipated payment dates of the consideration for the third milestone in connection with the acquisition of Novitium) and fluctuations in the discount rates, offset by adjustments recorded upon payment of the Gross Profit Earn-Out during the first quarter. Additionally, the fair value measurement adjustment in the six months ended June 30, 2024 is related to only the third milestone, whereas the fair value adjustment at June 30, 2023 related to all three milestones.
Previous wording
•We recognized restructuring activities expenses of $1.1 million in thethree months ended March 31,2023. In 2023 costs included severance and other employee benefits costs of $0.2 million, $0.7 million of accelerated depreciation costs and $0.2 million for other miscellaneous costs accrued in 2022. There were no restructuring expenses recognized in the three months ended March 31, 2024.
Current wording
•We recognized restructuring activities expenses of $1.1 million in the six months ended June 30, 2023. In 2023 costs included severance and other employee benefits costs of $0.2 million, $0.7 million of accelerated depreciation costs and $0.2 million for other miscellaneous costs accrued in 2022. There were no restructuring expenses recognized in the six months ended June 30, 2024.
Previous wording
•We recognized a gain related to the sale of the former Oakville, Ontario manufa cturing site of approximately$5.3 million during the three months ended March 31, 2024. There was no comparable sale in the three months ended March 31, 2023.
Current wording
•We recognized a gain related to the sale of the former Oakville, Ontario manufacturing site of approximately $5.3 million during the six months ended June 30, 2024. There was no comparable sale in the six months ended June 30, 2023.
Previous wording
The increase in Unrealized gain on investment in equity securities of approximately $9.7 million is due to the recognition of our investment of CG Oncology upon their January 2024 IPO and the subsequent mark to market to fair value of equity securities held in CG Oncology as of the balance sheet date. There was no comparable gain on investment in the three months ended March 31, 2023.
Current wording
•The unrealized gain on investment in equity securities of approximately $6.9 million is due to the mark to market to fair value of equity securities held in CG Oncology as of the balance sheet date. There was nocomparable gain on investment in the six months ended June 30, 2023.
Previous wording
For thethree months ended March 31, 2024, we recognized an income tax expenseof $7.1 million. The Company's effective tax rate was 28.1% after discrete items for thethree months ended March 31, 2024. The effective tax rate differed from the federal statutory rate of 21% primarily due to state taxes, stock based compensation, tax on the sale of the Oakville, Ontario manufacturing site, and recording of a withholding tax liability on the proceeds of the sale.
Current wording
For thesix months ended June 30, 2024, we recognized an income tax expense of $7.1 million. The Company’s effective tax rate was 30.9% after discrete items for thesix months ended June 30, 2024. The effective tax rate differed from the federal statutory rate of 21% primarily due to state taxes, stock based compensation, tax on the sale of the Oakville, Ontario manufacturing site, and recording of a withholding tax liability on the proceeds of the sale, and non-deductible expenses related to a planned acquisition.
Previous wording
We believe that our financial resources, consisting of current working capital, anticipated future operating revenue and corresponding collections from customers, and our Credit Facility, under which $40.0 million remains available for borrowing as of March 31, 2024, will be sufficient to enable us to meet our working capital requirements and debt obligations for at least the next 12 months.
Current wording
We believe that our financial resources, consisting of current working capital, anticipated future operating revenue and corresponding collections from customers, our Credit Facility, under which $40.0 million remains available for borrowing as of June 30, 2024, and the anticipated debt financing provided by the Lenders for the Merger in an aggregate principal amount equal to $280.0 million, will be sufficient to enable us to meet our working capital requirements and debt obligations for at least the next 12 months.
Previous wording
Net cash provided by operating activities was $18.3 million for the three months ended March 31, 2024, compared to net cash provided by operating activities of $21.4 million during the same period in 2023, a change of $3.2 million. The decrease in cash provided by operating activities was driven by net income in the current year period due to increased sales and gross profit offset by non-recurring transactions such as gain on the sale of the Oakville, Ontario manufacturing site, the gain on investment of equity securities as well as significant fluctuations in our assets and liabilities due to increased activities.
Current wording
Net cash provided by operating activities was $35.7 million for the six months ended June 30, 2024, compared to net cash provided by operating activities of $42.1 million during the same period in 2023, a decrease of $6.4 million. The decrease in cash provided by operating activities resulted from an increase in non-cash items such as stock-based compensation offset by non-recurring transactions such as gain on the sale of the Oakville, Ontario manufacturing site, and the gain on investment of equity securities as well as significant fluctuations in our assets and liabilities due to increased activities.
Previous wording
Net cash provided by investing activities for thethree months ended March 31, 2024 was $8.9 million, principally due to the proceeds received from the sale of the Oakville, Ontario manufacturing site in March 2024 of approximately $13.5 million offset by capital expenditures of approximately $4.6 million. Net cash used in investing activities for the three months ended March 31, 2023 was $2.4 million, principally due to $2.3 million of capital expenditures.
Current wording
Net cash provided by investing activities for the six months ended June 30, 2024 was $4.5 million, principally due to the proceeds received from the sale of the Oakville, Ontario manufacturing site in March 2024 of approximately $13.5 million offset by capital expenditures of approximately $9.0 million. Netcash used in investing activities for thesix months ended June 30, 2023 was $9.2 million, principally due to $4.9 million of capital expenditures and acquisitions of ANDAs from the estates of Akorn Holding Company for $4.3 million.
Previous wording
Net cash used in financing activities for the three months ended March 31, 2024 was $19.7 million, principally resulting from $12.5 million paid to the Company Members of Novitium, $8.7 million of treasury stock purchased related to restricted stock vests, $0.8 million maturity payments on the Term Facility, and $0.4 million convertible preferred stock dividends paid, offset by $2.6 million from proceeds from stock option exercises and ESPP purchases. Net cash used in financing activities for the three months ended March 31, 2023 was $4.5 million, primarily resulting from $3.5 million of treasury stock purchased in relation to restricted stock vests, $0.8 million maturity payments on the Term Facility, and $0.4 million convertible preferred stock dividends paid.
Current wording
Net cash used in financing activities for the six months ended June 30, 2024 was $21.2 million, principally resulting from $12.5 million paid to the Company Members of Novitium, $10.0 million of treasury stock purchased related to restricted stock vests, $1.5 million maturity payments on the Term Facility, and $0.8 million convertible preferred stock dividends paid, offset by $3.6 million from proceeds from stock option exercises and ESPP purchases. Net cash provided by financing activities for the six months ended June 30, 2023 was $75.6 million, principally due to $80.6 million in proceeds from the May 2023 public offering and $1.4 million from proceeds from stock option exercises and ESPP purchases. This is offset by cash used in financing activities related to $4.1 million of treasury stock purchased in relation to restricted stock vests, $1.5 million maturity payments on the Term Facility, and $0.8 million convertible preferred stock dividends paid.
Previous wording
A summary of our significant accounting policies is included in Part II, Item 8. Consolidated Financial Statements, Note 1, Description of Business and Summary of Significant Accounting Policies, in our Annual Report on Form 10-K for the year ended December 31, 2023. Certain of our accounting policies are considered critical, as these policies require significant, difficult or complex judgments by management, often requiring the use of estimates about the effects of matters that are inherently uncertain. There have been no material changes to our critical accounting estimates since the 2023 Form 10-K.
Current wording
A summary of our significant accounting policies is included in Part II, Item 8. Consolidated Financial Statements, Note 1, Description of Business and Summary of Significant Accounting Policies, in our 2023 Form 10-K. Certain of our accounting policies are considered critical, as these policies require significant, difficult or complex judgments by management, often requiring the use of estimates about the effects of matters that are inherently uncertain. There have been no material changes to our critical accounting estimates since the 2023 Form 10-K.
Rearranged current paragraphs (11)
Current report — wording carried from elsewhere
•Net revenues for generic pharmaceutical products were $74.0 million during the three months ended June 30, 2024, an increase of 16.8% compared to $63.3 million for the same period in 2023, driven by increased volumesand the inclusion of 2023 launches and new product launches in 2024. From a product perspective, the increase was principally driven by revenues from year over year increases in products such as Colestipol, Estradiol, Pentoxifylline, Pirfenidone, Thyroid, and various other products tempered by a decrease in revenues of Famotidine, Paliperidone, Misoprostol, and Nebivolol among others.
Current report — wording carried from elsewhere
•We recognized losses of $0.4 million and $1.0 million in the three months ended June 30, 2024 and 2023, respectively, for the contingent consideration fair value adjustment. The change in the fair value adjustment during the three months ended June 30, 2024 is primarily related to changes in the anticipated timing of cash flows (i.e., moving closer to the anticipated payment dates of the consideration for the third milestone in connection with the acquisition of Novitium). Additionally, the fair value measurement adjustment in the three months ended June 30, 2024 is related to only the third milestone, whereas the fair value adjustment at June 30, 2023 related to all three milestones.
Current report — wording carried from elsewhere
•We recorded an unrealized loss on our investment in equity securities held in CG Oncology of approximately $2.7 million is due to the mark to market to fair value of equity securities as of the balance sheet date. Therewas no comparable loss on investment in the three months ended June 30, 2023.
Current report — wording carried from elsewhere
For the three months ended June 30, 2024, we recognized an income tax expense of approximately $0.0 million. The Company’s effective tax rate was 0.0% after discrete items for the three months ended June 30, 2024. The effective tax rate differed from the federal statutory rate of 21% primarily due to state taxes, stock based compensation, and non-deductible expenses related to the pending business combination which were treated as a discrete item during the quarter which affects the estimated tax rate.
Current report — wording carried from elsewhere
•Net revenues of rare disease pharmaceutical products, which consists entirely of sales of Cortrophin Gel, were $86.1 million during the six months ended June 30, 2024, an increase of $45.5 million from $40.6 million for the same period in 2023. This increase was driven by increased volume in this third year of launch (product was launched in late January 2022).
Current report — wording carried from elsewhere
Cost of Sales (Excluding Depreciation and Amortization)
Current report — wording carried from elsewhere
During the six months ended June 30, 2024, approximately 24% of our raw material purchases were from one supplier. During the six months ended June 30, 2023, no single vendor represented more than 10% of our raw material inventory purchases.
Current report — wording carried from elsewhere
•Selling, general, and administrative expenses increased from $75.2 million to $100.8 million, an increase of $25.6 million, or 34.0%, due to increased employment related costs, continued investment in our Rare Disease segment sales and marketing activities, legal expenses, expenses related to the pending acquisition of Alimera, as well as an overall increase in activities required to support the growth of our business.
Current report — wording carried from elsewhere
•Interest expense, net for the six months ended June 30, 2024 consists primarily of interest expense on borrowings under our Term Facility of approximately $17.0 million and amortization of deferred debt issuance costs of approximately $1.2 million, offset by dividend income earned on our money market funds and interest earned on our cash balances of approximately $5.4 million, the effects of the interest rate swap of approximately $3.2 million, and interest capitalized into construction in progress. The decrease in interest expense is primarily related to the increase in the dividend income and interest income earned on our larger cash balances during the current period, as interest expense on borrowing under our Term Facility and amortization of deferred debt issuance costs are consistent with the six months ended June 30, 2023.
Current report — wording carried from elsewhere
For the six months ended June 30, 2023, we recognized an income tax benefit of$0.3 million. The income tax expense resulted from applying an estimated annual worldwide effective tax rate of(3.7)% to pre-tax consolidated income of$7.4 million reported during the period. There were no material discrete items occurring during the six months ended June 30, 2023.
Current report — wording carried from elsewhere
Net Cash (Used in) Provided by Financing Activities
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Our overall strategy is enabled by an empowered, collaborative, and purposeful team with a high performance-orientation.
Previous report — wording carried elsewhere
Net Cash Used in Financing Activities