Q1 2024 Earnings Call
May 3, 2024
Cautionary Statement on Forward Looking Statements
Certain statements contained herein, regarding matters that are not historical facts, may be forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995). Such forward-looking statements include statements regarding management's intentions, plans, beliefs, expectations, financial results, or forecasts for the future, including among other things: discussions of future operations; expected or estimated operating results and financial performance; and statements regarding our positioning, including our ability to drive sustainable long-term growth, and other non-historical statements. Words such as "plans," "expects," "will," "anticipates," "estimates," and similar words, or the negatives thereof, are intended to identify estimates and forward-looking statements. The reader is cautioned not to rely on these forward-looking statements. These forward-looking statements are based on current expectations of future events, including with respect to future market conditions, company performance and financial results, operational investments, business prospects, new strategies and growth initiatives, the competitive environment, and other events. If the underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of the Company. Such risks and uncertainties include, but are not limited to: our ability to successfully develop, license, acquire and commercialize new products on a timely basis; the competition we face in the pharmaceutical industry from brand and generic drug product companies, and the impact of that competition on our ability to set prices; our ability to obtain exclusive marketing rights for our products; our revenues are derived from the sales of a limited number of products, a substantial portion of which are through a limited number of customers; the impact of a prolonged business interruption within our supply chain; the continuing trend of consolidation of certain customer groups; our dependence on third-party suppliers and distributors for raw materials for our products and certain finished goods; our dependence on third-party agreements for a portion of our product offerings; legal, regulatory and legislative efforts by our brand competitors to deter competition from our generic alternatives; our dependence on information technology systems and infrastructure and the potential for cybersecurity incidents; our ability to attract, hire and retain highly skilled personnel; risks related to federal regulation of arrangements between manufacturers of branded and generic products; our reliance on certain licenses to proprietary technologies from time to time; the significant amount of resources we expend on research and development; the risk of claims brought against us by third parties; risks related to changes in the regulatory environment, including U.S. federal and state laws related to healthcare fraud abuse and health information privacy and security and changes in such laws; changes to Food and Drug Administration product approval requirements; the impact of healthcare reform and changes in coverage and reimbursement levels by governmental authorities and other third-party payers; our dependence on third- party agreements for a portion of our product offerings; our substantial amount of indebtedness and our ability to generate sufficient cash to service our indebtedness in the future, and the impact of interest rate fluctuations on such indebtedness; our potential expansion into additional international markets subjecting us to increased regulatory, economic, social and political uncertainties, including recent events affecting the financial services industry; our ability to identify, make and integrate acquisitions or investments in complementary businesses and products on advantageous terms; the impact of global economic, political or other catastrophic events; our obligations under a tax receivable agreement may be significant; and the high concentration of ownership of our Class A common stock and the fact that we are controlled by the Amneal Group. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company's filings with the Securities and Exchange Commission, including under Item 1A, "Risk Factors" in the Company's most recent Annual Report on Form 10-K and in its subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. Forward-looking statements included herein speak only as of the date hereof and we undertake no obligation to revise or update such statements to reflect the occurrence of events or circumstances after the date hereof.
Non-GAAP Financial Measures
This release includes certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted net income, and adjusted diluted EPS, which are intended as supplemental measures of the Company's performance that are not required by or presented in accordance with GAAP. Adjusted diluted EPS reflects diluted earnings per share based on adjusted net income, which is net loss adjusted to (A) exclude (i) non-cash interest, (ii) GAAP provision for income taxes, (iii) amortization, (iv) stock-based compensation, (v) acquisition, site closure expenses, and idle facility expenses, (vi) restructuring and other charges, (vii) charges related to certain legal matters, including interest, net, (viii) asset impairment charges, (ix) change in fair value of contingent consideration, (x) increase in tax receivable agreement liability, (xi) system implementation expense, (xii) other and (xiii) net income attributable to non-controlling interests not associated with Class B common stock, and (B) include non-GAAP provision for income taxes. Non-GAAP adjusted diluted EPS for the three months ended March 31, 2024 was calculated assuming the weighted average diluted shares outstanding of Class A common stock. Non-GAAP adjusted diluted EPS for the three months ended March 31, 2023 was calculated assuming (i) the weighted average diluted shares outstanding of Class A common stock and (ii) as if all shares of Class B common stock were converted to shares of Class A common stock as of January 1, 2023. Management uses these non-GAAP measures internally to evaluate and manage the Company's operations and to better understand its business because they facilitate a comparative assessment of the Company's operating performance relative to its performance based on results calculated under GAAP. These non-GAAP measures also isolate the effects of some items that vary from period to period without any correlation to core operating performance and eliminate certain charges that management believes do not reflect the Company's operations and underlying operational performance. The compensation committee of the Company's board of directors also uses certain of these measures to evaluate management's performance and set its compensation. The Company believes that these non-GAAP measures also provide useful information to investors regarding certain financial and business trends relating to the Company's financial condition and operating results facilitates an evaluation of the financial performance of the Company and its operations on a consistent basis. Providing this information therefore allows investors to make independent assessments of the Company's financial performance, results of operations and trends while viewing the information through the eyes of management. These non-GAAP measures are subject to limitations. The non-GAAP measures presented in this release may not be comparable to similarly titled measures used by other companies because other companies may not calculate one or more in the same manner. Additionally, the non-GAAP performance measures exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements; do not reflect changes in, or cash requirements for, working capital needs; and do not reflect interest expense, or the requirements necessary to service interest or principal payments on debt. Further, our historical adjusted results are not intended to project our adjusted results of operations or financial position for any future period. To compensate for these limitations, management presents and considers these non-GAAP measures in conjunction with the Company's GAAP results; no non-GAAP measure should be considered in isolation from or as alternatives to any measure determined in accordance with GAAP.
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Q1 2024 Earnings Call
Agenda | |
1 | Strategy & Business Update |
Chirag and Chintu Patel, | |
Co-founders and Co-CEOs | |
2 | Financial Results |
Tasos Konidaris, EVP & CFO | |
3 | Q&A |
Chirag Patel, | Chintu Patel, | Tasos Konidaris, |
Co-CEO and President | Co-CEO | EVP & CFO |
Andy Boyer, | Joe Renda, | Jason Daly, SVP |
EVP - Generics | SVP - Specialty | & Chief Legal Officer |
3
Q1 2024 key highlights
Strong start
to 2024
- Q1 net revenue of $659M, up +18%, and adjusted EBITDA of $152M, up +31%, reflects double-digit top-linegrowth in all 3 segments, combined with strong gross margins driven by the complexity of the portfolio
Affirming full year
2024 outlook
- Continue to expect 2024 net revenue of $2.55-$2.65B,reflecting +7%-11%growth, and adjusted EBITDA of $580-$620M,reflecting high-singledigit growth
Continued | • Reduced net leverage to 4.6x in Q1, down from 4.8x at 2023 year-end; higher |
deleveraging | profitability and cash generation allow for gross debt reduction over time |
4
Executing on Amneal's four pillars of value creation
Key Pillar | Metric | 2019 | 2023 | LTM(2) Q1 2024 | |
#1 | Increased | OSD(1) Gx % of | 53% | 25% | 25% |
diversification | revenue | ||||
#2 | Strong financial | Revenues | $1.6B | $2.4B | $2.5B |
performance | Adjusted EBITDA | $339M | $558M | $594M | |
#3 | Cash generation | Operating Cash Flow | $2M | $346M | $201M |
#4 | Deleveraging | Net Leverage | 7.4x | 4.8x | 4.6x |
at 12/31/19 | at 12/31/23 | at 3/31/24 | |||
Growth projection(3)
<20% of revenue by 2027
High single-digit growth Meaningful acceleration
Sustained higher levels of cash flow generation
- 4x in 2025, < 3x thereafter
- OSD = Oral Solid. AvKARE sales of Amneal label products, royalty income and international revenues are included within Generics Non-OSD consistent with how the Company manages its portfolio. Projection excludes select high-
value OSD products that are highly complex with limited competition. | 5 | |
(2) | LTM = Last Twelve Months | |
(3) | Growth projection reflects the potential outcomes of delivering our long-term strategy and is based on the current macro environment and expected product pipeline launches, among other assumptions. |
Global diversified pharmaceutical company with a clear strategy for sustainable growth
Business area | Net Revenue |
LTM Q1 2024 | |
Retail | |
Generics | |
Injectables | |
$1.519B | |
Biosimilars | |
International |
Strategy for growth | Growth projection(1) | |
Grow #4 U.S. Generics portfolio of ~240 products with new | Low-single digit growth | |
launches and shift to complex dosage forms | ||
Expand portfolio of 30+ institutional products through new launches | $300M+ revenue by 2025 | |
and leverage new capacity to be Top 5 in U.S. and a global player | High-single | |
Drive initial portfolio and add more biosimilars to the pipeline to be | $200M+ peak U.S. sales by | digit growth |
Top 5 in U.S. and a global player | 2025 from 1st 3 biosimilars(2) |
Market expansion in India, Europe, China and rest of the world - | Add $50-100M revenue by 2027 |
either direct or through licensing | |
Specialty | $404M | Grow branded portfolio with focus on Neurology and Endocrinology | $500M+ revenue by 2027 reflecting |
high-single digit growth | |||
AvKARE | $572M | Grow across government, institutional and distribution channels | $650M+ by 2025 reflecting |
double-digit growth | |||
(1) | Growth projection reflects the potential outcomes of delivering our long-term strategy and is based on the current macro environment and expected product pipeline launches, among other assumptions. | 6 |
(2) | Represents the total peak U.S. sales for our first three oncology biosimilars (filgrastim, pegfilgrastim and bevacizumab). |
Recent and upcoming growth catalysts across portfolio
Retail | Injectables | Biosimilars | Specialty | International | |||
Achieved | ✓ Launched: Naloxone nasal spray, | ✓ Launched: Ropivacaine (IV bag), | ✓ Driving uptake of: | Launched: | Launched: | ||
in 2024 | Fluorometholone acetate, Carvedilol ER, | PEMRYDI RTUTM(1) 505(b)(2), | ALYMSYS® (bevacizumab), | ✓ | ONGENTYS® | ✓ | India: Ophthalmics, Oncology |
Darunavir, Ciprofloxacin and | Atropine Sulfate (PFS(2)) | RELUEKO® (filgrastim), & | |||||
Dexamethasone Otic Suspension | FYLNETRA® (peg-filgrastim) | (Parkinson's Disease | and Diagnostics | ||||
✓ Approved: Methylprednisolone | adjunctive therapy) | Partnerships established: | |||||
✓ Approved: Lacosamide oral solution, | acetate, Foscarnet sodium | ||||||
✓ Finalized partnerships in ~40 | |||||||
Fosfomycin Tromethamine granules for oral | |||||||
solution, Ofloxacin ophthalmic solution, | countries in Middle East, | ||||||
Pitavastain | Africa, Latin America, and | ||||||
Southeast Asia | |||||||
Expected | 2024: Mesalamine, Gx ProAir®, Gx QVAR®, | 2024: 2 505(b)(2) RTU products: | Added Q1:2 peg-filgrastim | 8/7/24 goal date: IPX203 | • Register products with our | ||
2024/2025 | Estradiol Gel, Bromfenac opthalmic solution, | FOCINVEZTM (vial) and Potassium | programs (On-Body injector & | (Parkinson's Disease) | European and other | ||
launches | Bupropion, Clindamycin phosphate topical, | phosphate (IV bag), Exenatide pen | Prefilled autoinjector); BLA(5) | 1H 2025: DHE | distribution partners | ||
and key | Everolimus, Isotretinoin, Loteprednol etabonate | injector, Propofol emulsion, | filing expected in Q1 2025 | autoinjector (migraine | • Execute additional global | ||
ophthalmic, Timolol maleate opthalmic, | Edaravone, Sodium phosphate, | ||||||
activities | BLA filing of:2 denosumab | and cluster headache) | partnership agreements | ||||
Scopolamine | Labetalol, Nicardipine, Phytonadione | ||||||
biosimilar pipeline candidates | |||||||
2025: Gx Restasis®, Gx Pred-Forte®, | 2025: Gx Copaxone®, Gx Risperdal | (for Prolia® and XGEVA®) | |||||
Eltrombopag, Memantine/Donepezil ER; | Consta®, Epinephrine (MDV(3) & SDV(4) | Look to in-license1-2 biosimilar | |||||
Additional pipeline opportunities not disclosed | vials and PFS(2)), Hydrocortisone | ||||||
sodium succinate (vial), Sodium | opportunities per year | ||||||
bicarbonate (vial) and 2-3505(b)(2) | |||||||
RTU products including | |||||||
Phenylephrine (IV bag) |
Potential high-value opportunities
(1) RTU = Ready-to-use; (2) PFS = Prefilled Syringe; (3) MDV = Multiple-dose vial; (4) SDV = Single-dose vial; (5) BLA = Biologics License Application | 7 |
Note: All trademarks are the property of their respective owners. |
Key near-term growth drivers
Retail & Injectables | Naloxone HCl | ALYMSYS® | IPX203 | DHE Autoinjector | |
New Launches | Nasal Spray | ||||
Product type | Generics portfolio | Complex generics | Biosimilar | Specialty | Specialty |
Therapeutic area | All areas | Anti-overdose | Oncology | Parkinson's Disease | Migraine and Cluster |
Headache | |||||
Expected Launch | 30+ each year | ✓ Q2 2024 | ✓ Q4 2022 | Q3 2024(3) | 1H 2025 |
Expands and diversifies | Increases access to OTC(2) | Potential to achieve 1.55 | Prefilled and ready-to-use | ||
Importance | portfolio with complex | and affordable treatment as | Key oncology therapy | ||
more hours of "Good On" | autoinjector for an easy-to- | ||||
products and drives | opioid crisis remains a U.S. | with growing market share | |||
time per dose | use treatment option | ||||
continued growth | Public Health Emergency | ||||
Market | Expect $100M+ in new | Expect $30M+ sales in 2024; | Expect $100M+ | Estimated ~$300M - $500M | Estimated ~$50M - $100M |
opportunity | product revenue in 2024(1) | < 10M unit capacity in 2025 | sales by 2025 | U.S. sales opportunity | U.S. sales opportunity |
- Reflects expected 2024 new launches and the impact of 2023 new launches annualizing. Note: This does not include naloxone, which is listed separately above.
(2) OTC = Over-the-Counter | 8 |
(3) Pending successful CRL resolution and FDA approval. | |
Our portfolio continues to diversify - making growth sustainable
Purposeful mix shift towards a more complex portfolio
Generics net revenues mix ($'s) | Pipeline mix | |
(# of products) | ||
6% | |||||
56% | 52% | 43% | 41% | 37% | |
65% | |||||
94% | |||||
44% | 48% | 57% | 59% | 63% | |
35% | |||||
2019 | 2020 | 2021 | 2022 | 2023 | Pending | Pipeline | ||
Actuals | Actuals | Actuals | Actuals | Actuals | ANDAs | |||
Non-Oral Solid(1) | Oral Solid | |||||||
Diversified revenues driving sustainable growth
Total company net revenues mix ($'s)
Specialty | Oral Solid | AvKARE | |
Generics | 23% | ||
20% | |||
25% | |||
Oral Solid | |||
Generics | Non-Oral Solid | ||
53% | Specialty | ||
Generics | Non-Oral Solid | ||
16% | |||
28% | Generics | ||
36% |
2019 | LTM Q1 2024 |
Note: Total may not add due to rounding. LTM = Last Twelve Months | 9 |
(1) AvKARE sales of Amneal label products, royalty income and international revenues are included within Generics Non-OSD consistent with how the Company manages its portfolio. |
Deep pipeline as our wheel of innovation keeps turning
~67 pipeline
Developing pipeline across increasingly complex dosage forms with 94% non-oralsolids
programs with
~$27B TAM
~86 pending
ANDA's with
~$50B TAM
270+
commercial
Retail &
Injectable
products
Pending
ANDA's
across
dosage forms
with 63% non-oralsolids
Oral Solids: 32
$27,362 | |||
$12,325 | |||
$1,334 | $362 | ||
LOA | PIV/Day 181 | Day 1 | Single |
Source |
Topicals/Transdermal: 8
$455
$155 | $97 | |
LOA | PIV/Day 1 | S. Source |
Injectables: 27
$1,596 | ||||
$797 | $395 | |||
$200 | $107 | |||
NDA | LOA | Day | PIV S. Source | |
1/FTM |
Oral Liquids: 3
$613
$31
LOAPIV
Ophthalmics: 12 | |||
$2,653 | |||
$904 | |||
$6 | 57 | ||
eFTF | LOA PIV/D181 S.Source | ||
Inh/Nasal: 4
$793
$254
eFTF/PIVLOA
Refreshing pipeline by filing 25-30ANDAs and launching 30+ new products each year
Note: Total Addressable market (TAM) are approximate IQVIA (brand + active generics) MAT February 2024 sales ($ in millions).
For ANDA charts, Single Source: One active player other than RLD / RS. FTM: First to market (No IP/ No Generic). PIV: Paragraph IV certification. LOA: Launch upon approval. eFTF: exclusive first to file. High Value: large size opportunity for Amneal. 10
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Amneal Pharmaceuticals Inc. published this content on 03 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 May 2024 10:24:09 UTC.