Amneal Pharmaceuticals, Inc.

Previous wording

The following discussion and analysis for the three months ended March 31, 2025 should also be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements for the year ended December 31, 2024 included in our 2024 Annual Report on Form 10-K.

Current wording

The following discussion and analysis for the three and six months ended June 30, 2025 should also be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements for the year ended December 31, 2024 included in our 2024 Annual Report on Form 10-K.

Previous wording

Over the past few months, President Trump has announced a number of tariff actions, and while there are currently no reciprocal tariffs on pharmaceutical products imported into the U.S., this can change at any moment. In addition, on April 14, 2025, the Department of Commerce Bureau of Industry and Security announced that it had initiated, as of April 1, 2025, a broad investigation under section 232 of the Trade Expansion Act to determine the effects on national security of imports of pharmaceuticals (i.e. FDF, API, key starting materials, derivatives, and medical countermeasures). This is currently an investigation into whether trade remedies such as tariffs should be imposed and covers both generic and brand products.

Current wording

During 2025, President Trump has announced a number of tariff actions, and while there are currently no reciprocal tariffs on pharmaceutical products imported into the U.S., this can change at any moment. In addition, on April 14, 2025, the Department of Commerce Bureau of Industry and Security announced that it had initiated, as of April 1, 2025, a broad investigation under section 232 of the Trade Expansion Act to determine the effects on national security of imports of pharmaceuticals (i.e. FDF, API, key starting materials, derivatives, and medical countermeasures). This is currently an investigation into whether trade remedies such as tariffs should be imposed and covers both generic and brand products.

Previous wording

•Growth in our Affordable Medicines segment net revenue of $23.4 million, primarily due to new products launched in 2025 and 2024, which contributed $40.8 million of year-over-year growth, and strong volume growth, partially offset by price erosion.

Current wording

•Growth in our Affordable Medicines segment net revenue of $6.1 million, primarily due to new products launched in 2025 and 2024, which contributed $33.0 million of year-over-year growth, and strong volume growth, partially offset by price erosion.

Previous wording

Cost of goods sold increased 4.4% for the three months ended March 31, 2025 as compared to the prior year period. The increase in cost of goods sold was primarily due to increased Affordable Medicines and AvKARE volume, increased amortization related to CREXONT® andincreased plant and freight costs, partially offset by manufacturing efficiencies.

Current wording

Cost of goods sold decreased 3.0% for thethree months ended June 30, 2025 as compared to the prior year period. The decrease in cost of goods sold was primarily due to manufacturing efficiencies, partially offset by increased amortization related to CREXONT®.

Previous wording

For the three months ended March 31, 2025, our provision for income taxes and effective tax rate were$12.9 million and 34.3%, respectively, as compared to$6.2 million and(8.2)%, respectively, for the three months ended March 31, 2024. The period-over-period changes in the provision for income taxes and effective tax rate primarily related to differences in jurisdictional mix of income, the utilization of net operating losses in the prior period and discrete items related to share-based compensation in the current period.

Current wording

For the three months ended June 30, 2025, our provision for income taxes and effective tax rate were $16.1 million and 31.1%, respectively, as compared to $3.6 million and 17.7%, respectively, for the three months ended June 30, 2024. The period-over-period changes in the provision for income taxes and effective tax rate primarily related to differences in jurisdictional mix of income, the utilization of net operating losses in the prior period and discrete items related to share-based compensation in the current period.

Previous wording

Affordable Medicines net revenue for the three months ended March 31, 2025 increased 6.0% as compared to the prior year period, primarily due to new products launched in 2025 and 2024, which contributed $40.8 million of year-over-year growth, and strong volume growth, partially offset by price erosion.

Current wording

Affordable Medicines net revenue for the three months ended June 30, 2025 increased 1.4% as compared to the prior year period, primarily due to new products launched in 2025 and 2024, which contributed $33.0 million of year-over-year growth, and strong volume growth, partially offset by price erosion.

Previous wording

Affordable Medicines gross profit as a percentage of net revenue increased to 41.5% for the three months ended March 31, 2025 from 38.7% in the prior year period, primarily as a result of the factors noted above.

Current wording

Affordable Medicines gross profit as a percentage of net revenue increased to 41.7% for the three months ended June 30, 2025 from 38.9% in the prior year period primarily as a result of the factors noted above.

Previous wording

Affordable Medicines SG&A expense for the three months ended March 31, 2025 increased 1.9% as compared to the prior year period, primarily due to increases in employee compensation and shipping costs.

Current wording

Affordable Medicines SG&A expense for the three months ended June 30, 2025 increased 8.2% as compared to the prior year period, primarily due to increases in employee compensation and shipping costs.

Previous wording

Affordable Medicines R&D expenses for the three months ended March 31, 2025 decreased 9.9% as compared to the prior year period, primarily due to a decrease in in-licensing and upfront milestone payments of $3.3 million and reduced project spend, partially offset by increases in employee compensation.

Current wording

Affordable Medicines R&D expenses for the three months ended June 30, 2025 increased 32.2% as compared to the prior year period, primarily due to increases in employee compensation, increase in project spend and increase in in-licensing and upfront milestone payments.

Previous wording

Specialty cost of goods sold for the three months ended March 31, 2025 increased 18.5% as compared to the prior year period, primarily due to increases in amortization related to CREXONT® and sales volume.

Current wording

Specialty cost of goods sold for the three months ended June 30, 2025 increased 20.9% compared to the prior year period, primarily due to increases in amortization related to CREXONT® and sales volume.

Previous wording

Specialty gross profit as a percentage of net revenue decreased to 51.0% for the three months ended March 31, 2025 as compared to 57.4% in the prior year period due to the impact of increased amortization related to CREXONT®.

Current wording

Specialty gross profit as a percentage of net revenue increased to 56.4% for the three months ended June 30, 2025 as compared to 55.7% in the prior year period due to the impact of increased amortization related to CREXONT®.

Previous wording

Specialty SG&A expense for the three months ended March 31, 2025 increased 22.9% as compared to the prior year period, primarily due to launch costs associated with CREXONT® and increases in employee compensation.

Current wording

Specialty SG&A expense for the three months ended June 30, 2025 increased 13.9% as compared to the prior year period, primarily due to launch costs associated with CREXONT® and increases in employee compensation.

Previous wording

•Growth in our Specialty segment net revenue of $3.1 million, primarily driven by increases of $9.1 million and $4.0 million in sales of CREXONT® and UNITHROID®, respectively, partially offset by a $5.1 million decline in sales of RYTARY®. In addition, the prior year period included $4.5 million of out-licensing revenue associated with IPX203.

Current wording

•Growth in our Specialty segment net revenue of$27.1 million, primarily driven by increases of $20.3 million, $3.9 million and $7.7 million in sales of CREXONT®, RYTARY® and UNITHROID®, respectively, partially offset by a decline in our non-promoted products. In addition, the prior year period included $4.5 million of out-licensing revenue associated with IPX203.

Previous wording

•Growth in our AvKARE segment net revenue of $9.8 million, primarily driven bygrowth in our government label channel resulting from new product introductions, partially offset by a decline in our lower margin distribution channel.

Current wording

•Growth in our AvKARE segment net revenue of$2.4 million, primarily driven bygrowth in our government label channel resulting from new product introductions, partially offset by a decline in our lower margin distribution channel.

Previous wording

SG&A expenses for the three months ended March 31, 2025 increased 5.1% as compared to the prior year period, primarily due to increases in employee compensation and launch costs associated with CREXONT®, partially offset by a reduction in legal expenses primarily resulting from insurance coverage for certain legal fees.

Current wording

SG&A expenses for the six months ended June 30, 2025 increased 5.9% as compared to the prior year period, primarily due to increases in employee compensation and launch costs associated with CREXONT®, partially offset by a reduction in legal expenses primarily resulting from insurance coverage for certain legal fees.

Previous wording

Charges Related to Legal Matters, Net

Current wording

(Credit) charges Related to Legal Matters, Net

Previous wording

For the three months ended March 31, 2024, charges related to legal matters, net of$94.4 million were primarily associated with a settlement in principle on the primary financial terms for a nationwide resolution to the opioids cases that have been filed and that might have been filed against us by political subdivisions and Native American tribes across the U.S. Refer to Note 16. Commitments and Contingencies for additional information.

Current wording

For the six months ended June 30, 2024, charges related to legal matters, net of$95.1 million were primarily associated with a settlement in principle on the primary financial terms for a nationwide resolution to the opioids cases that have been filed and that might have been filed against us by political subdivisions and Native American tribes across the U.S. Refer to Note 16. Commitments and Contingencies for additional information.

Previous wording

Other operating income for the three months ended March 31, 2025 was comprised of income earned from the India Production Linked Incentive Scheme for the Pharmaceutical Sector (the “PLI Scheme”).

Current wording

Other operating income for the six months ended June 30, 2025 was comprised of income earned from the India Production Linked Incentive Scheme for the Pharmaceutical Sector (the “PLI Scheme”).

Previous wording

Total other expense, net for the three months ended March 31, 2025 decreased 3.0% as compared to the prior year period. The decrease was primarily driven by an $8.8 million decrease in interest expense as a result of lower rates and lower amounts outstanding on our variable-rate debt and the favorable impact of foreign exchange, partially offset by an $8.7 million period-over-period increase in our tax receivable agreement liability.

Current wording

Total other expense, net for the six months ended June 30, 2025 decreased 12.4% as compared to the prior year period. The decrease was primarily driven by a $9.4 million decrease in interest expense as a result of lower rates and lower amounts outstanding on our variable-rate debt and the favorable impact of foreign exchange, primarily from the Euro.

Previous wording

Affordable Medicines cost of goods sold for the three months ended March 31, 2025 increased 1.1% as compared to the prior year period, primarily due to costs associated with increased sales volume and increased plant and freight costs, partially offset by manufacturing efficiencies.

Current wording

Affordable Medicines cost of goods sold for the six months ended June 30, 2025 decreased 1.1% as compared to the prior year period, primarily due tomanufacturing efficiencies and favorable product mix, partially offset by increased plant and freight costs.

Previous wording

For the three months ended March 31, 2024, charges related to legal matters, net of $94.4 million were primarily associated with a settlement in principle on the primary financial terms for a nationwide resolution to the opioids cases that have been filed and that might have been filed against us by political subdivisions and Native American tribes across the U.S. Refer to Note 16. Commitments and Contingencies for additional information.

Current wording

For the six months ended June 30, 2024, charges related to legal matters, net of $95.1 million were primarily associated with a settlement in principle on the primary financial terms for a nationwide resolution to the opioids cases that have been filed and that might have been filed against us by political subdivisions and Native American tribes across the U.S. Refer to Note 16. Commitments and Contingencies for additional information.

Previous wording

Other operating income for the three months ended March 31, 2025 was comprised of income earned from the PLI Scheme.

Current wording

Other operating income for the six months ended June 30, 2025 was comprised of income earned from the PLI Scheme.

Previous wording

Specialty net revenue for the three months ended March 31, 2025 increased 2.9% as compared to the prior year period, primarily driven by increases of $9.1 million and $4.0 million in sales of CREXONT® and UNITHROID®, respectively, partially offset by a $5.1 million decline in sales of RYTARY®. In addition, the prior year period included $4.5 million of out-licensing revenue associated with IPX203.

Current wording

Specialty net revenue for the six months ended June 30, 2025 increased 12.9% as compared to the prior year period, primarily driven by increases of $20.3 million, $3.9 million and $7.7 million in sales of CREXONT®, RYTARY® and UNITHROID®, respectively, partially offset by a decline in our non-promoted products. In addition, the prior year period included $4.5 million of out-licensing revenue associated with IPX203.

Previous wording

Specialty R&D expenses for the three months ended March 31, 2025 increased 83.9% as compared to the prior year period, primarily due to increased in-licensing and upfront milestone payments of $3.0 million and higher project spend.

Current wording

Specialty R&D expenses for the six months ended June 30, 2025 increased 63.0% as compared to the prior year period, primarily due to increased in-licensing and upfront milestone payments of $3.0 million and higher project spend.

Previous wording

AvKARE net revenue for the three months ended March 31, 2025 increased 6.0% as compared to the prior year period primarily driven bygrowth in our government label channel resulting from new product introductions, partially offset by a decline in our lower margin distribution channel.

Current wording

AvKARE net revenue for the six months ended June 30, 2025 increased 0.7% as compared to the prior year period primarily driven bygrowth in our government label channel resulting from new product introductions, partially offset by a decline in our lower margin distribution channel.

Previous wording

AvKARE cost of goods sold for the three months ended March 31, 2025 increased 5.4% as compared to the prior year period primarily due to an increased inventory provision and higher sales in our government label channel, partially offset by decreased sales in our lower margin distribution channel.

Current wording

AvKARE cost of goods sold for the six months ended June 30, 2025 decreased 2.7% as compared to the prior year period primarily due to a reduction of sales in our low margin distribution channel partially offset by higher sales in our government label channel and an increase in the inventory provision.

Previous wording

Our primary source of liquidity is cash generated from operations, available cash on hand, and borrowings under debt financing arrangements (as defined and discussed in Note 15. Debt in our 2024 Annual Report on Form 10-K). As of March 31, 2025, we had access to$305.2 million of available capacity under the Amended New Revolving Credit Facility and$28.0 million of available capacity under the Amended Rondo Revolving Credit Facility. On April 9, 2025, the Company executed an amendment to the Amended Rondo Revolving Credit Facility to increase (i) the borrowing capacity from $70 million to $125.0 million and (ii) the letter of credit commitment from $60 million to $90 million, and extend the maturity to April 9, 2030. We believe these sources are sufficient to fund our planned operations, meet our interest and contractual obligations, including acquisitions, and provide sufficient liquidity over the next 12 months from the date of filing of this Quarterly Report on Form 10-Q. However, our ability to satisfy our working capital requirements and debt obligations will depend upon economic conditions, the impact of international trade policy, including tariffs, our ability to negotiate and maintain satisfactory terms under our borrowing and debt facilities in the future, and demand for our products, which are factors that may be out of our control. Our primary uses of capital resources are to fund operating activities, including R&D expenses associated with new product filings, and pharmaceutical product manufacturing expenses, license payments, spending on production facility expansions, capital equipment, acquisitions, and legal settlements.

Current wording

Our primary source of liquidity is cash generated from operations, available cash on hand, and borrowings under debt financing arrangements (as defined and discussed in Note 15. Debt in our 2024 Annual Report on Form 10-K). On April 9, 2025, the Company executed an amendment to the Amended Rondo Revolving Credit Facility that, among other things, (i) increased the aggregate revolving commitment from $70 million to $125 million, (ii) increased the letter of credit commitment from $60 million to $90 million, and (iii) extended the maturity to April 9, 2030. As of June 30, 2025, we had access to$304.7 million of available capacity under the Amended New Revolving Credit Facility and$83.0 million of available capacity under the Amended Rondo Revolving Credit Facility. We believe these sources are sufficient to fund our planned operations, meet our interest and contractual obligations, including acquisitions, and provide sufficient liquidity over the next 12 months from the date of filing of this Quarterly Report on Form 10-Q. However, our ability to satisfy our working capital requirements and debt obligations will depend upon economic conditions, the impact of international trade policy, including tariffs, our ability to negotiate and maintain satisfactory terms under our borrowing and debt facilities in the future, and demand for our products, which are factors that may be out of our control. Our primary uses of capital resources are to fund operating activities, including R&D expenses associated with new product filings, and pharmaceutical product manufacturing expenses, license payments, spending on production facility expansions, capital equipment, acquisitions, and legal settlements.

Previous wording

In late April 2024, we reached a nationwide settlement in principle on the primary financial terms, with no admission of wrongdoing, for a nationwide resolution to the opioids cases that have been filed and that might have been filed by Attorneys General, political subdivisions and Native American tribes. Refer to Note 16. Commitments and Contingencies for additional information.

Current wording

In late April 2024, we reached a nationwide settlement in principle on the primary financial terms, with no admission of wrongdoing, for a nationwide resolution to the opioids cases that have been filed and that might have been filed by Attorneys General, political subdivisions and Native American tribes. Refer to Note 16. Commitments and Contingencies and Note 21. Subsequent Eventsfor additional information.

Previous wording

As part of the Reorganization (as defined in Note 1. Nature of Operations in our 2024 Annual Report on Form 10-K), the tax receivable agreement (“TRA”) was amended to reduce our future obligation to pay 85% of the realized tax benefits subject to the TRA to 75% of such realized benefits. As of March 31, 2025, the contingent TRA liability, including the impact of the amendment, was approximately $123.1 million. During the three months ended March 31, 2025, the Company made payments of $3.0 million associated with the TRA.

Current wording

As part of the Reorganization (as defined in Note 1. Nature of Operations in our 2024 Annual Report on Form 10-K), the tax receivable agreement (“TRA”) was amended to reduce our future obligation to pay 85% of the realized tax benefits subject to the TRA to 75% of such realized benefits. As of June 30, 2025, the contingent TRA liability, including the impact of the amendment, was approximately $118.7 million. During the six months ended June 30, 2025, the Company made payments of $3.0 million, associated with the TRA.

Previous wording

In 2020, we acquired a 65.1% controlling interest in both AvKARE Inc., a Tennessee corporation, now a limited liability company (“AvKARE, LLC”), and Dixon-Shane, LLC d/b/a R&S Northeast LLC, a Kentucky limited liability company (“R&S”). The sellers of AvKARE, LLC and R&S (the “AvKARE Sellers”) hold the remaining 34.9% interest in the holding company that directly owns the acquired companies (“Rondo”). We attribute 34.9% of the net income or loss associated with Rondo to redeemable non-controlling interests. During the three months ended March 31, 2025 and 2024, we made cash tax distributions of $0.1 million and $0.6 million, respectively, to the AvKARE Sellers. During April 2025, we made cash tax distributions of $4.8 million to the AvKARE Sellers.

Current wording

In 2020, we acquired a 65.1% controlling interest in both AvKARE Inc., a Tennessee corporation, now a limited liability company (“AvKARE, LLC”), and Dixon-Shane, LLC d/b/a R&S Northeast LLC, a Kentucky limited liability company (“R&S”). The sellers of AvKARE, LLC and R&S (the “AvKARE Sellers”) hold the remaining 34.9% interest in the holding company that directly owns the acquired companies (“Rondo”). We attribute 34.9% of the net income or loss associated with Rondo to redeemable non-controlling interests. During the six months ended June 30, 2025 and 2024, we made cash distributions of $25.0 million and $8.9 million, respectively, to the AvKARE Sellers. During July 2025, we made cash tax distributions of $6.0 million to the AvKARE Sellers.

Previous wording

The following table sets forth our summarized, consolidated cash flows for the three months ended March 31, 2025 and 2024 (in thousands):

Current wording

The following table sets forth our summarized, consolidated cash flows for the six months ended June 30, 2025 and 2024 (in thousands):

Previous wording

Net cash provided by operating activities was $7.4 million for the three months ended March 31, 2025 as compared to net cash used in operating activities of $4.4 million in the prior year period. The period-over-period increase was primarily driven by (i) payment of $52.4 million associated with the Opana ER® antitrust litigation settlement during the three months ended March 31, 2024, (ii) higher period-over-period collections of outstanding receivables, and(iii)increased profitability adjusted for non-cash items, partially offset by a decrease in accounts payables due to timing.

Current wording

Net cash provided by operating activities was $91.2 million for the six months ended June 30, 2025 as compared to $35.2 million in the prior year period. The period-over-period increase was primarily driven by the payment of $52.4 million associated with the Opana ER® antitrust litigation settlement during the six months ended June 30, 2024. Excluding the Opana ER® antitrust litigation settlement payment, net cash provided by operating activities were relatively flat period-over-period.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2025 was $17.8 million as compared to $19.8 million in the prior year period. The period-over-period decrease in net cash used in investing activities was primarily due to a decrease in acquired intangible assets primarily driven by the payment of a sales-based milestone related to a licensing and supply agreement in the prior year period, partially offset by higher capital expenditures.

Current wording

Net cash used in investing activities for the six months ended June 30, 2025 was $44.3 million as compared to $26.2 million in the prior year period. The period-over-period increase in net cash used in investing activities was primarily due to an increase in higher capital expenditures, partially offset by a decrease in acquired intangible assets primarily driven by the payment of a sales-based milestone related to a licensing and supply agreement in the prior year period.

Previous wording

Net cash used in financing activities was $39.2 million for the three months ended March 31, 2025 as compared to $23.2 million in the prior year period. The period-over-period increase in net cash used in financing activities was primarily due to an increase in employee payroll tax withholding on restricted stock unit and performance stock unit vesting.

Current wording

Net cash used in financing activities was $80.9 million for the six months ended June 30, 2025 as compared to $58.2 million in the prior year period. The period-over-period increase in net cash used in financing activities was primarily due to increases in employee payroll tax withholding on restricted stock unit and performance stock unit vesting and tax and other distributions to non-controlling interests, partially offset by payments on the Sellers Notes in the prior year period.