Amneal Pharmaceuticals, Inc. · NASDAQ:AMRX

Amneal Pharmaceuticals — Q3 2019 Earnings Presentation

35 slides from Amneal Pharmaceuticals's earnings presentation, Nov 6, 2019

1. Slide 1: Q3 2019 Earnings Call: Strategic Priorities and Financial Results

   “ We make healthy possible” Q3 2019 Earnings Call Strategic Priorities and Financial Results 1 November 6, 2019

2. Slide 2: Safe Harbor Statement

   Safe Harbor Statement Safe Harbor Statement Certain statements contained herein, regarding matters that are not historical facts, may be forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). Such forward- looking statements include statements regarding mana

3. Slide 3: Non-GAAP Financial Measures

   Non-GAAP Financial Measures This presentation includes certain Non-GAAP financial measures, including adjusted EBITDA, adjusted net income, adjusted net income per diluted share, adjusted gross profit, adjusted gross margin, and adjusted operating income, which are intended as supplemental measures

4. Slide 4: Agenda

   Agenda 1 Strategic Priorities Chirag and Chintu Patel, Co-CEOs 2 Q3 Financial Results & Guidance Todd Branning, SVP & CFO 3 Closing Remarks Chirag Patel, Co-CEO 4 Q&A 4

5. Slide 5: Strategic Priorities

   Strategic Priorities Chirag and Chintu Patel Co-CEOs 5

6. Slide 6: Where We Are Today

   Where We Are Today • Delivered on promise to thoroughly evaluate business o Made progress in three months; majority of review complete o Strong conviction & enthusiasm for the future • 2019 is a transition year o Amneal’s strengths far outweigh weaknesses o Strategically adapting business to get ahe

7. Slide 7: Path to Growth: 2020 & Beyond

   Path to Growth: 2020 & Beyond • Maximizing base business portfolio of 225+ products & track record • Improving gross margin o Increasing plant utilization o Streamlining inventory & supply chain management o Improving gross-to-net sales conversion o Right-sizing OpEx • Refocusing R&D efforts to bett

8. Slide 8: Revitalizing the Base Business

   Revitalizing the Base Business • Utilizing customer relationships to add incremental base business o Identified ~25% of ~225 marketed commercial products in which we can win new business & drive volumes o Won new awards for 20 base business products that will be incremental in 2020 o 30+ other produ

9. Slide 9: Improving Gross Margins

   Improving Gross Margins • Driving higher plant utilization o Winning more base business to fill manufacturing footprint o Launching new, high-value products • Working to streamline inventory & supply chain management o Driving precision in inventory management to reduce inventory obsolescence charge

10. Slide 10: R&D Pipeline: Shifting to Complex & Differentiated Dosage Forms

    R&D Pipeline: Shifting to Complex & Differentiated Dosage Forms ANDAs Submitted (Pending +TA): 95 Development Pipeline: 80 projects Nasal Spray 1% Otic 1% Transmucosal 2% Nasal Spray 3% Transdermal 3% Transdermal 3% Ophthalmic 5% Inhalation 8% Topical 7% Topicals 10% Capsule/Soft Gel 9% MR Tablets 1

11. Slide 11: Refocusing R&D Efforts

    Refocusing R&D Efforts • Optimizing R&D spend to drive growth o Targeting ~15-17 ANDA filings in 2019; 25-30 in 2020 o Leveraging infrastructure & asset base o Shifting product selection & channel focus away from commodity generics o Expect meaningful volume growth in transdermal, oral liquids and i

12. Slide 12: Overhauling Product Launch Strategy

    Overhauling Product Launch Strategy • Focusing on complex & Specialty to drive top-line growth & operating cash flow o R&D and tech ops teams implemented enhancements to improve speed-to-market o Delivered 10 successful new product launches since early August, o Continuing to focus on injectables Ex

13. Slide 13: Growing the Specialty Business

    Growing the Specialty Business • Strategically building branded business with disciplined & cost- effective approach • Executing on IPX203 development program & focusing on world-class CNS and endocrinology platforms • New licensing agreement with Kashiv BioSciences for Exclusive U.S. rights for dev

14. Slide 14: Evaluating External Opportunities

    Evaluating External Opportunities • Potential for accelerating growth in Generics & Specialty o Transformative M&A o New distribution channels & key international markets o Smaller transactions o 505(b)(2) opportunities & sterile manufacturing opportunities in U.S. to capture compelling ROI Discipli

15. Slide 15: Financial Review

    Financial Review Todd Branning SVP & CFO 15

16. Slide 16: Q3 2019 Results

    Q3 2019 Results Adjusted Results(1) Variance Revenue and Gross Margin decline due to:  New competition on key generic products and supply constraints on Q3 Q3 Q2 a few products including Epinephrine Auto-Injector YOY Sequential $ millions 2019 2018 2019  Sale of international businesses  Loss of

17. Slide 17: Generics Segment

    Generics Segment Adjusted Results(1) $ millions Net Revenue Gross Margin Operating Income $391 $131 $335 $291 50% 34% $65 30% $40 Q3 18 Q2 19 Q3 19 Q3 18 Q2 19 Q3 19 Q3 18 Q2 19 Q3 19  YOY decrease: new competition on key products  YOY and sequential decreases: impact of  Year-over-year and seque

18. Slide 18: Specialty Segment

    Specialty Segment Adjusted Results(1) $ millions Net Revenue Gross Margin Operating Income $85 $87 $44 79% 82% $39 $41 $70 74% Q3 18 Q2 19 Q3 19 Q3 18 Q2 19 Q3 19 Q3 18 Q2 19 Q3 19  Year-over-year increase: higher sales of Unithroid®  Year-over-year and sequential decrease: primarily  Year-over-y

19. Slide 19: Cash Flow and Balance Sheet Information

    Cash Flow and Balance Sheet Information $ millions $ millions Q3 2019 Q2 2019 Change $301 Cash and cash equivalents(5) $217 $57 $160 $495 Accounts receivable $518 $635 ($117) $41 $23 Current portion and long-term debt(1) $2,636 $2,641 ($5) $43 $13 $217 Cash flow from operations $140 $21 Gross Debt t

20. Slide 20: Revised 2019 Financial Guidance

    Revised 2019 Financial Guidance(1) Prior Updated Adjusted Gross Margin 47% - 50% Approximately 43% Adjusted R&D as a % of net revenues 9.5% - 10.5% No change Adjusted SG&A as a % of net revenues 14% - 15% No change Adjusted EBITDA $425 million - $475 million Approximately $345 million Adjusted Dilut

21. Slide 21: Q&A

    Q&A

22. Slide 22: Appendix: Non-GAAP Reconciliations

    Appendix: Non-GAAP Reconciliations 22

23. Slide 23: Reconciliation of Non-GAAP Combined Revenue

    Reconciliation of Non-GAAP Combined Revenue (Unaudited: In thousands) Three months ended September 30, Three months ended June 30, 2019 2018 2019 Net revenue: Generics $ 291,021 $ 391,175 $ 335,064 Specialty 87,262 85,312 69,578 Total net revenue $ 378,283 476,487 $ 404,642 23

24. Slide 24: Reconciliation of Net (Loss) Income to EBITDA and Combined Adjusted EBITDA

    Reconciliation of Net (Loss) Income to EBITDA and Combined Adjusted EBITDA (Unaudited: In thousands) Three months ended June 30, Three months ended September 30, 2019 2019 2018 Net loss $ (50,526) Net (loss) income $ (363,392) $ 17,465 Adjusted to add (deduct): Adjusted to add (deduct): Interest exp

25. Slide 25: Reconciliation of Net (Loss) Income to EBITDA and Combined Adjusted EBITDA

    Reconciliation of Net (Loss) Income to EBITDA and Combined Adjusted EBITDA (Unaudited: In thousands) Three months ended Three months December 31, ended March 31, 2018 2019 Net (loss) $ (20,330) Net (loss) income $ (124,752) Adjusted to add (deduct): Adjusted to add (deduct): Interest expense, net 42

26. Slide 26: Gross Debt and Net Debt to Combined Adjusted EBITDA

    Gross Debt and Net Debt to Combined Adjusted EBITDA ($ in thousands) Last Twelve Months Last Twelve Months September 30, 2019 June 30, 2019 Current portion of long-term debt, net $ 21,468 $ 21,445 Long-term Debt , net 2,614,412 2,619,788 Cash and cash equivalents and restricted cash 217,058 57,022 N

27. Slide 27: Reconciliation of Net (Loss) Income to Combined Adjusted Net Income and Adjusted Diluted EPS

    Reconciliation of Net (Loss) Income to Combined Adjusted Net Income and Calculation of Adjusted Diluted EPS (Unaudited; In thousands, except per share amounts) Three months ended June 30, Three months ended September 30, 2019 2019 2018 Net loss $ (50,526) Net (loss) income $ (363,392) $ 17,465 Adjus

28. Slide 28: Reconciliation of Generics Operating Income to Generics Combined Operating Income

    Reconciliation of Generics Operating Income to Generics Combined Operating Income (Unaudited; In thousands) Three months ended June 30, Three months ended September 30, 2019 2019 2018 Net revenue - Generics $ 335,064 Net revenue - Generics $ 291,021 $ 391,175 Cost of goods sold 263,423 Cost of goods

29. Slide 29: Reconciliation of Generics Cost of Goods Sold to Combined Adjusted Cost of Goods Sold

    Reconciliation of Generics Cost of Goods Sold to Generics Combined Adjusted Cost of Goods Sold (Unaudited; In thousands) Three months ended September 30, Three months ended June 30, 2019 2018 2019 Cost of goods sold Cost of goods sold $ 263,423 $ 217,773 $ 230,051 Cost of goods sold impairment charg

30. Slide 30: Reconciliation of Generics Operating (Loss) Income to Combined Adjusted Operating Income

    Reconciliation of Generics Operating (Loss) Income to Generics Combined Adjusted Operating Income (Unaudited; In thousands) Three months ended June 30, 2019 Three months ended September 30, Operating income (loss) $ 4,886 2019 2018 Operating (loss) income Adjusted to add (deduct): $ (80,361) $ 92,23

31. Slide 31: Reconciliation of Specialty Operating Income to Specialty Combined Operating Income

    Reconciliation of Specialty Operating Income to Specialty Combined Operating Income (Unaudited; In thousands) Three months ended June 30, Three months ended September 30, 2019 2019 2018 Net revenue - Specialty: Net revenue - Specialty: Rytary® $ 33,000 Rytary® $ 33,710 $ 33,073 Unithroid® 8,904 Unit

32. Slide 32: Reconciliation of Specialty Cost of Goods Sold to Combined Adjusted Cost of Goods Sold

    Reconciliation of Specialty Cost of Goods Sold to Specialty Combined Adjusted Cost of Goods Sold (Unaudited; In thousands) Three months ended September 30, 2019 2018 Cost of goods sold $ 49,944 $ 38,516 Cost of goods sold impairment charges 7,017 — Adjusted to deduct: Amortization 27,103 19,548 Asse

33. Slide 33: Reconciliation of Specialty Operating (Loss) Income to Combined Adjusted Operating Income

    Reconciliation of Specialty Operating (Loss) Income to Specialty Combined Adjusted Operating Income (Unaudited; In thousands) Three months ended September 30, 2019 2018 Operating income $ 3,596 $ 22,633 Adjusted to add: Amortization 27,103 19,548 Inventory related charges — 960 Acquisition and site

34. Slide 34: Reconciliation of SG&A to Combined Adjusted SG&A

    Reconciliation of SG&A to Combined Adjusted SG&A (Unaudited; In thousands) Three months ended Three months ended Three months ended September 30, 2019 September 30, 2018 June 30, 2019 Selling, general and administrative $ 63,797 $ 75,486 $ 67,281 Adjusted to deduct: Stock-based compensation expense

35. Slide 35: Reconciliation of Research and Development to Combined Adjusted Research and Development

    Reconciliation of Research and Development to Combined Adjusted Research and Development (Unaudited; In thousands) Three months ended Three months ended Three months ended September 30, 2019 September 30, 2018 June 30, 2019 Research and development $ 38,125 $ 42,349 $ 48,016 IPR&D impairment charges

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