Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Impax Laboratories, LLC | ipxl-08x09x2016x8k.htm |
| EX-99.1 - EXHIBIT 99.1 - Impax Laboratories, LLC | ipxl-08x09x2016x8kxex991.htm |
1
Second Quarter 2016
Earnings Conference Call
August 9, 2016
2
Impax Cautionary Statement Regarding
Forward Looking Statements
"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995:
To the extent any statements made in this presentation contain information that is not historical; these statements are forward-looking in nature
and express the beliefs and expectations of management. Such statements are based on current expectations and involve a number of known
and unknown risks and uncertainties that could cause the Company’s future results, performance, or achievements to differ significantly from
the results, performance, or achievements expressed or implied by such forward-looking statements. Such risks and uncertainties include, but
are not limited to: fluctuations in revenues and operating income; the Company’s ability to successfully develop and commercialize
pharmaceutical products in a timely manner; reductions or loss of business with any significant customer; the substantial portion of the
Company’s total revenues derived from sales of a limited number of products; the impact of consolidation of the Company’s customer base; the
impact of competition; the Company’s ability to sustain profitability and positive cash flows; any delays or unanticipated expenses in connection
with the operation of the Company’s manufacturing facilities; the effect of foreign economic, political, legal, and other risks on the Company’s
operations abroad; the uncertainty of patent litigation and other legal proceedings; the increased government scrutiny on the Company’s
agreements with brand pharmaceutical companies; product development risks and the difficulty of predicting FDA filings and approvals;
consumer acceptance and demand for new pharmaceutical products; the impact of market perceptions of the Company and the safety and
quality of the Company’s products; the Company’s determinations to discontinue the manufacture and distribution of certain products; the
Company’s ability to achieve returns on its investments in research and development activities; changes to FDA approval requirements ; the
Company’s ability to successfully conduct clinical trials; the Company’s reliance on third parties to conduct clinical trials and testing; the
Company’s lack of a license partner for commercialization of NUMIENT™ (IPX066) outside of the United States; impact of illegal distribution
and sale by third parties of counterfeits or stolen products; the availability of raw materials and impact of interruptions in the Company’s supply
chain; the Company’s policies regarding returns, allowances and chargebacks; the use of controlled substances in the Company’s products; the
effect of current economic conditions on the Company’s industry, business, results of operations and financial condition; disruptions or failures
in the Company’s information technology systems and network infrastructure caused by third party breaches or other events; the Company’s
reliance on alliance and collaboration agreements; the Company’s reliance on licenses to proprietary technologies; the Company’s dependence
on certain employees; the Company’s ability to comply with legal and regulatory requirements governing the healthcare industry; the regulatory
environment; the effect of certain provisions in the Company’s government contracts; the Company’s ability to protect its intellectual property;
exposure to product liability claims; risks relating to goodwill and intangibles; changes in tax regulations; the Company’s ability to manage
growth, including through potential acquisitions and investments; risks related to the Company’s acquisitions of or investments in technologies,
products or businesses; the restrictions imposed by the Company’s credit facility and indenture; the Company’s level of indebtedness and
liabilities and the potential impact on cash flow available for operations; uncertainties involved in the preparation of the Company’s financial
statements; the Company’s ability to maintain an effective system of internal control over financial reporting; the effect of terrorist attacks on the
Company’s business; the location of the Company’s manufacturing and research and development facilities near earthquake fault lines;
expansion of social media platforms and other risks described in the Company’s periodic reports filed with the Securities and Exchange
Commission. Forward-looking statements speak only as to the date on which they are made, and the Company undertakes no obligation to
update publicly or revise any forward-looking statement, regardless of whether new information becomes available, future developments occur
or otherwise.
Trademarks referenced herein are the property of their respective owners.
©2016 Impax Laboratories, Inc. All Rights Reserved.
3
Agenda
• 2Q16 Financial Results
• Business Update
Fred Wilkinson
President & CEO
• 2Q16 Financial Review
• 2016 Financial Guidance Update
Bryan Reasons
SVP & CFO
• Q&A Executive Team
4
2Q16 Results and
Business Update
Fred Wilkinson
President & Chief Executive Officer
5
2Q16 Financial Results
$175
$122
2Q15 2Q16
Generic Revenues
$ millions
$40
$51
2Q15 2Q16
• $53MM decline in sales of generics Solaraze®, Skelaxin® and
Adderall XR®
• Significant decline in price and volume on gSolaraze and
gSkelaxin due to new competition led to a $15 million shelf-stock
adjustment which reduced 2Q net revenue
• gAdderall XR share declined to ~6% compared to 10% last year
› Delayed in re-acquiring a major customer
• Epinephrine auto-injector and oxymorphone revenue grew 112%
• Launched Emverm® in March/April
• Expanded sales force to 116 reps – completed in June
• Strong revenue growth across the portfolio
› 48% growth in anthelmintic franchise
‒ Albenza® and Emverm
› 27% growth in Rytary®
› 15% growth in Zomig®
• Adjusted operating income up 40% (1)
$303 $292
June-15 June-16
$54
$106
June-15 June-16
Specialty Pharma Revenues
$ millions
2Q16 Commentary
2Q16 Commentary
Six Months Ended
Six Months Ended
(1) Specialty Pharma reported operating income increased 247%
gSolaraze® (Diclofenac sodium gel 3%); gSkelaxin® (Metaxalone); gAdderall XR® (Mixed amphetamine salts)
6
Revised 2016 Financial Guidance
• What has changed since mid-June?
› Further deterioration in generic Solaraze® market as a result of aggressive
competition
› Delayed close of the generic product acquisition from Teva/Allergan
› Delay in supply of an authorized generic product and deferred timing of targeted
2016 launches
› Initiatives to recapture generic Adderall XR® share delayed
› Slower shift of Albenza to Emverm
• Our plan of action to continue to achieve double-digit earnings
growth in 2016
› Maximize generic opportunities:
‒ Efficient commercial integration of recently acquired products from Teva and its affiliates
‒ 12 to 14 targeted product launches (3 launched first-half 2016)
• Currently projecting 4 in 3Q16; 5 to 7 in 4Q16
‒ Expand epinephrine and oxymorphone sales
‒ Focus on expanding share of high-value generics
› Re-focus expanded sales force on Rytary and Zomig
‒ Accelerate targeted non-personal promotion for Emverm
› Continued focus on companywide operational efficiencies and expenses
7
Rapid Market Change in Generic Solaraze®
(Diclofenac Sodium Gel 3%)
Impax Net Sales ($ in millions)
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16
Impax Net Sales $11 $17 $33 $88 $50 $5
Sequential $ Change +$3 +$6 +$16 +$55 ($38) ($45)
Change in Sales Due to a Change in Volume and / or Price
Volume 100% 100% 100% 100% (76%) (60%)
Price 0% 0% 0% 0% (24%) (40%)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Market Share
Impax Sandoz AG Taro PNA Actavis
Jan
‘15
Feb
‘15
Mar
‘15
Apr
‘15
May
‘15
Jun
‘15
Jul
‘15
Aug
‘15
Sep
‘15
Oct
‘15
Nov
‘15
Dec
‘15
Jan
‘16
Feb
‘16
Mar
‘16
Apr
‘16
May
‘16
Jun
‘16
Source: IMS NPA Weekly
PNA = Pharmaceutica North America, Inc.
Sandoz AG
& Brand
Exit Market
Sandoz
Returns
Taro, Actavis
& PNA Launch
Price decline results in
$14.5MM shelf-stock
adjustment in 2Q
8
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015/07/24 2015/08/21 2015/09/18 2015/10/16 2015/11/13 2015/12/11 2016/01/08 2016/02/05 2016/03/04 2016/04/01 2016/04/29 2016/05/27 2016/06/24
Amphetamine Salts XR (A) Amphetamine Salts IR (B) Diclofenac Sodium Gel (C)
Digoxin (D) Epinephrine Auto-injector (E) Fenofibrate Capsules (F)
Fenofibrate Tablets (G) Metaxalone (H) Oxymorphone (I)
Largest Generic Products – LTM Share
C
F
I
E
G
D
H
A
B
F
C
E
A
B I
D
H
G
Source: IMS NPA Weekly; LTM = Last Twelve Months
Jul ‘15 Aug ‘15 Sep ‘15 Oct ‘15 Nov ‘15 Dec ‘15 Jan ‘16 Feb ‘16 Mar ‘16 Apr ‘16 May ‘16 Jun ‘16
Fairly Stable Share for Majority of Products
9
Impax Year Over Year Change in Generic
Volume and Price
Total Generics
3Q15 4Q15 1Q16 2Q16
Volume 27% 106% 53% (11%)
Price (3%) (13%) (21%) (19%)
gSolaraze® (Diclofenac sodium gel 3%); gSkelaxin® (Metaxalone)
Excluding generic Solaraze® and generic Skelaxin®
3Q15 4Q15 1Q16 2Q16
Volume (4%) 12% 4% (11%)
Price (4%) (3%) (6%) (4%)
10
Expanded Generic Portfolio Through Product Acquisition
Acquired 15 Marketed Products
Product Brand Strength Divested File
Acitretin capsules Soriatane® 10 mg,17.5 mg, 22.5 mg, 25 mg Allergan
Alendronate Sodium tablets Fosamax® 5mg, 10mg, 35 mg, 40 mg, 70 mg Teva
Budesonide inhalation suspension Pulmicort Respules® 0.25/2 mg/ml, 0.5/2 mg/ml Allergan
Buspirone HCl tablets Buspar® 5 mg, 10 mg, 15 mg Allergan
Desmopressin Acetate tablets DDAVP® 0.1 mg, 0.2 mg Teva
Dexmethylphenidate HCI extended release capsules Focalin XR® 5 mg, 10 mg, 15 mg, 20 mg, 30 mg Allergan
Epirubicin injection vial Ellence® 50 mg/25 ml, 200 mg/100 ml Teva
Glyburide/Metformin HCI tablets Glucovance® 1.25/250 mg, 2.5/500 mg, 5/500 mg Teva
Hydroxyzine Pamoate capsules Vistaril® 25mg, 50mg Allergan
Levalbuterol HCI inhalation solution Xopenex® 0.0103%, 0.0210%, 0.0420% Allergan
Metoclopramide HCI tablets Reglan® 5 mg, 10 mg Allergan
Mirtazapine ODT Remeron SolTab® 15 mg, 30 mg, 45 mg Teva
Nabumetone tablets Relafen® 500 mg, 750 mg Teva
Nitrofurantoin capsules (macrocrystals) Macrodantin® 50 mg, 100 mg Teva
Propranolol HCl tablets Inderal® 10 mg, 20 mg, 40 mg, 60 mg, 80 mg Teva
Pipeline Products
Aspirin/Dipyridamole capsules Aggrenox® 25/200 mg Allergan
Budesonide inhalation suspension Pulmicort Respules® 1 mg/2 ml Allergan
Dexmethylphenidate HCl extended release capsules Focalin XR® 25 mg, 35 mg Allergan
Fluocinonide cream (emulsified base) Lidex‐E® 0.05% Allergan
Methylphenidate HCl extended release tablets (1) Concerta® 18 mg, 27 mg,36 mg, 54 mg
One Undisclosed Under Development
(1) Reacquired full commercial rights to Impax’s pending ANDA, a product previously partnered with Teva
11
Targeting 12 to 14 Generic Product Launches in 2016
Source of sales data: IMS NPA June 2016;
Launch/Approval data as of Aug 3, 2016;
TA = Tentative Approval
(1) Assuming receipt of final FDA approval launch following patent expiration in April 2017
(2) Launched Hayward ANDA
U.S. Brand/Generic market sales of $4.7B
Progress of Targeted Launches Products Launched 1H 2016
Products Approved Launched
Oxycodone TR ER tablets
(OxyContin®)
Authorized
Generic March
Amphetamine Salts ER capsules
(Adderall XR®) – Impax ANDA February April
Glyburide IR tablet (Diabeta®) September 2015 June
Additional FDA Approvals in 2016
Ezetimibe and simvastatin tablets
(Vytorin®) TA –Jan. April 2017
(1)
Amphetamine Salts ER capsules
(Adderall XR®) – CorePharma ANDA TA - April NA
(2)
Morphine Sulfate ER capsules
(Kadian®) April TBD
Morphine Sulfate ER tablets
(MS-Contin®) July TBD
Methylphenidate ER capsules
(Metadate CD®) July TBD
2 2 2
1
2
3 to 5
1H16A 3Q16E 4Q16E
Pending FDA Approval
2016 Approval
Pre 2016 Approval Not Yet Launched or Re-introduction
3 products
launched
Targeting
4 product
launches
Targeting
5 to 7
product
launches
12
Multiple Generic Opportunities to Drive Future Growth
Solid Oral Dosage
Alternative Dosage Form
Current U.S. Brand/Generic Market - $9B
30% Potential/Confirmed FTF or FTM
Source of sales data: IMS NPA June 2016; Pipeline data as of Aug 3, 2016; TA = Tentative Approval
Current U.S. Brand/Generic Market - $11B
61% Potential FTF or FTM
14
6
20 Products Pending at FDA
15
8
23 Products Under Development
Disclosed Pending ANDAs at FDA
Product IMS Sales Product IMS Sales
Oxycodone ER tablet (new formulation) (OxyContin®) $2.5B Aspirin Dipyridamole ER capsule (Aggrenox®) $281M
Sevelamer Carbonate IR tablet (Renvela®) $1.8B Fentanyl Buccal IR tablet (Fentora®) $162M
Methylphenidate HCI ER tablet (Concerta®) $1.8B Fenofibric Acid DR capsule (Trilipix®) $127M
Ezetimibe Simvastatin IR tablet (Vytorin®) - TA $698M Dutasteride/Tamsulosin IR capsule (Jalyn®) $70M
Colesevelam IR tablet (Welchol®) $644M Risedronate Sodium DR tablet (Atelvia®) $57M
Oxymorphone ER tablet (new formulation) (Opana ER®) $336M
First-to-market opportunity
13
Focused on Growing CNS Franchise
0.0%
1.0%
2.0%
3.0%
0
2,000
4,000
6,000
8,000
10,000
12,000
F
eb
-1
5
M
ar
-1
5
A
pr
-1
5
M
ay
-1
5
Ju
n-
15
Ju
l-1
5
A
ug
-1
5
S
ep
-1
5
O
ct
-1
5
N
ov
-1
5
D
ec
-1
5
Ja
n-
16
F
eb
-1
6
M
ar
-1
6
A
pr
-1
6
M
ay
-1
6
Ju
n-
16
C
D
LD
S
ha
re
T
R
x
Monthly TRx and Share of National CD-LD TRx Since Launch
Rytary TRx CD-LD Share
0%
25%
50%
2,000
4,000
6,000
8,000
10,000
12,000
14,000
N
as
al
T
rip
ta
n
S
ha
re
T
R
x
Monthly TRx and Share of Nasal Triptan TRx
TRx Nasal Triptan Share
• Expanded sales force to 116 completed in June
• Simplified dosing message
• 88% of commercial Rx and 88% of Medicare Part
D Rx being approved
• Increased reimbursement support
• Consistent performance as second position detail
• Strong growth from general neurologists
• 20% year over year growth in share of Nasal
Triptan segment
• Share now over 40%
Source: IMS NPA Monthly June 2016
14
Accelerating Non-Personal Promotion
0%
20%
40%
0
1,000
2,000
3,000
4,000
A
nt
he
lm
in
ti
c
S
ha
re
T
R
x
Weekly TRx and Combined Share of Anthelmintic TRx Since Launch
Albenza TRx Emverm TRx Combined EM and AL Sh
(albendazole) tablets
&
• Launched Emverm (mebendazole)
• Building awareness that mebendazole is back; only
FDA approved prescription therapy for pinworm
• Has expanded overall anthelmintic business
• Accelerating non-personal promotion
Consumer Print Advertising
Digital Advertising
eBlast: National
Association of
Pediatric Nurse
Practitioners
Non-Personal Professional
Promotion
Source: IMS NPA Monthly June 2016
15
IPX203: Positive Outcome of Phase 2a Study
• Phase 2a study
› Randomized, crossover, single-dose, rater-blinded
pharmacodynamics study in advanced Parkinson's Patients.
› IPX203 was compared to both immediate-release carbidopa-
levodopa (IR CD-LD) and Rytary®
› Endpoints: Investigator Assessment of Motor State, MDS-
UPDRS Part III (motor skills) and Pharmacokinetics of both
LD and CD
› IPX203 showed statistically significant improvement in the
reduction of “off” time and improvement in “on” time with
non-troublesome dyskinesia
› IPX203 was generally well tolerated and no serious or
severe adverse events were reported
Investigator Assessment of Motor State
Off Time (h) On Time (h)
Immediate-release CD-LD 7.3 2.7
Rytary 5.5* 4.4*
IPX203 4.6 * + 5.4 * +
* p ≤ 0.0002 compared to IR CD-LD + p < 0.05 compared with Rytary
Improvement from Baseline in
MDS-UPDRS Part III
Next steps
Currently transitioning from Phase 2a to
Phase 2b multiple dose study in patients
with advanced Parkinson’s disease
16
2016 Priorities
• Maintain quality and compliance across all facilities / departments
• Sharpen focus on supply chain and cost efficiencies
• Improve conversion costs across global manufacturing network
Focus on Quality and Operations
• Optimize existing generic opportunities
• Launch up to 12 to 14 generic products
• Effectively utilize expanded Specialty Pharma sales force to drive growth
Maximize Dual Platform
• Successfully develop and bring to market new products
• Invest in sustainable generic and specialty pharma markets
Optimize R&D
• Execute on value enhancing business development and M&A
• Pursue generic and specialty pharma value creating opportunities
Business Development Acceleration
17
Financial Review and
2016 Financial Guidance
Bryan Reasons
Senior Vice President & Chief Financial Officer
18
2Q 2016 Financial Results
2Q
2016
2Q
2015 Change
GENERIC DIVISION
Total Revenues $121.7 $174.7 (30.3%)
Gross Margin 30.7% 36.6% (5.9)ppts
Adjusted Gross Margin 40.2% 43.1% (2.9)ppts
Operating Income $18.5 $42.4 (56.4%)
Adjusted Operating Income $31.1 $53.7 (42.1%)
SPECIALTY PHARMA DIVISION
Total Revenues $50.9 $39.5 28.9%
Gross Margin 70.0% 53.0% 17.0ppts
Adjusted Gross Margin 84.6% 80.6% 4.0ppts
Operating Income $13.1 $3.8 244.7%
Adjusted Operating Income $20.5 $14.7 39.5%
2Q
2016
2Q
2015 Change
TOTAL COMPANY
Total Revenues $172.6 $214.2 (19.4%)
Gross Margin 42.3% 39.6% 2.7ppts
Adjusted Gross Margin 53.3% 50.0% 3.3ppts
SG&A Expense $44.9 $48.3 (7.0%)
R&D Expense $21.7 $17.0 27.6%
Diluted EPS ($0.04) ($0.03) (33.3%)
Adjusted Diluted EPS $0.21 $0.34 (38.2%)
Refer to the GAAP to non-GAAP reconciliation tables in the appendix for a reconciliation of non-GAAP results
SG&A = Selling, general and administrative
R&D = Research & development
EPS = Earnings Per Share
19
2016 Updated Guidance
Item 2015A Issued February 22
Revised
June 21 – Generic
Product Acquisition
Updated
August 9
Revenue $860M At least 15% over 2015 (~$990M) No Change $900M to $940M
Adjusted Gross Margin 49% Approximately 50% Low 50% range No change
Adjusted R&D Expense $74M $100M-$105M No change No change
Adjusted SG&A Expense $180M $200M-$210M No change $190M-$200M
Tax Rate 34% 34%-36% No change No change
Adjusted Interest Expense $14M $12M $20M $18M
Adjusted EPS $1.45 At least 10% over 2015 (~$1.60)
At least 20% over
2015 (~$1.74) $1.57 to $1.70
SG&A = Selling, general and administrative
R&D = Research & development
EPS = Earnings per share
The Company does not provide forward-looking diluted earnings per share and related guidance metrics as outlined above on
a GAAP basis as certain financial information, such as the amortization of recently acquired intangible assets, restructuring
and impairment charges and other items used to determine such measures are not available and cannot be reasonably
estimated.
20
Well-Positioned Capital Structure Post-Acquisition
Generic Product Acquisition Financing
$400 Million Term Loan A; Interest Rate of L+300*; Tenor 5 years
Capitalization
($ millions)
Cash and Cash Equivalents – June 30, 2016 $ 367
Less Cash Used for Acquisition $ 196
Revolver ($200) $ 0
2022 Convertible Senior Notes $ 600
Term Loan $ 400
Total Debt $ 1,000
Net Debt $ 829
Leverage
Net Debt $ 829
Net Debt / LTM Pro-forma Adjusted EBITDA 2.4x**
• Based on <3x net debt/pro-forma adjusted EBITDA (earnings before, interest, taxes, depreciation and amortization.
** Pro-forma to include last twelve months contribution of acquired generic products from Teva and its affiliates. Net Debt / LTM Pro-forma Reported EDBITA is3.5x.
21
$512M
$596M
$860M
$0.82
$1.32
$1.45
54%
59%
49%
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$1.80
$2.00
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
2013 2014 2015 2016
Focused on Creating Long-Term Growth
2011 – 2015 FDA Warning Letter at Hayward Facility
$900M to $940M
$1.57 to $1.70
Low 50% range
Revenue
Adjusted
EPS
Adjusted
Gross Margin
CAGR*
‘13A – ‘16E
Refer to the GAAP to non-GAAP reconciliation tables in the appendix for a reconciliation of non-GAAP results
*CAGR = Compound Annual Growth Rate; calculated using 2013 adjusted results to 2016 guidance (low end of estimated range); EPS = Earnings Per Share
The Company does not provide forward-looking diluted earnings per share and gross margin guidance on a GAAP basis as certain financial information, such as the amortization of
recently acquired intangible assets, restructuring and impairment charges and other items used to determine such measures are not available and cannot be reasonably estimated.
Revenue 22%
EPS 24%
2016
Guidance
Item 2013 2014 2015
Reported EPS $1.47 $0.81 $0.54
Reported
Gross Margin 39% 52.5% 41%
22
Q&A
23
Appendix
24
22 Pending ANDAs at FDA
* Assuming final FDA approval, earliest potential launch date/timing based on settlement or patent expiration date.
Source of sales data: IMS NPA Monthly June 2016; Pipeline data as of June 21, 2016; TA = tentative approval
1 Launched authorized generic in April 2016
2 Launched authorized generic in July 2013
First-to-market opportunity
Disclosed ANDAs
Greneric Product Name Strengths Brand IMS Sales Potential Launch Timing*
Oxycodone ER tablet (new formulation) 1 10, 15, 20, 30, 40, 60, 80 mg OxyContin® $2.5B Settled, not disclosed
Sevelamer Carbonate IR tablet 800 mg Renvela® $1.8B Approval
Methylphenidate HCI ER tablet 18, 27, 36, 54 mg Concerta® $1.8B Approval
Ezetimibe Simvastatin IR tablet – TA 10 mg/10 mg, 10 mg/20 mg, 10 mg/40 mg, 10 mg/80 mg Vytorin
® $698M April 2017
Colesevelam IR tablet 625 mg Welchol® $644M Approval
Oxymorphone ER tablet (new formulation) 5, 7.5, 10, 15, 20, 30, 40 mg Opana ER® $336M Pending litigation
Aspirin Dipyridamole ER capsule 25/200mg Aggrenox® $281M Approval
Fentanyl Buccal IR tablet 100, 200, 400, 600, 800 mcg Fentora® $165M Settled, not disclosed
Fenofibric Acid DR capsule 2 45, 135 mg Trilipix® $143M Approval
Dutasteride/Tamsulosin IR capsule 0.5 mg/0.4 mg Jalyn® $78M Approval
Risedronate Sodium DR tablet 35 mg Atelvia® $54M Approval
25
GAAP to Adjusted Net Income Reconciliation
The following table reconciles reported net loss to adjusted net income.
(Unaudited, amounts in thousands, except per share and per share data)
Three months ended
June 30,
2016 2015
Net loss $ (2,701) $ (1,852)
Adjusted to add (deduct):
Amortization 12,469 12,622
Business development expenses 1,448 3,901
Hayward facility remediation costs - 2,697
Tower acquisition severance - -
Philadelphia packaging and distribution restructuring (191) 2,643
Middlesex manufacturing restructuring 5,213 -
Payments for licensing agreements - -
Fair value of inventory step-up - 4,239
Ticking Fees - -
Non-cash interest expense 5,409 -
Reserve for Turing receivable - -
Intangible asset impairment charge 2,491 -
Loss on debt extinguishment - 16,903
Deferred financing costs - 749
Income tax effect (9,130) (17,456)
Adjusted net income $ 15,008 $ 24,446
Adjusted net income per diluted share $ 0.21 $ 0.34
Net loss per diluted share $ (0.04) $ (0.03)
Diluted weighted-average common shares outstanding 71,909 72,551
26
GAAP to Adjusted Results Reconciliation
The following table reconciles total Company reported cost of revenues to adjusted cost of revenues.
(Unaudited, amounts in thousands)
Three months ended
June 30,
2016 2015
Cost of revenues $ 99,606 $ 129,331
Adjusted to deduct:
Amortization 12,469 12,622
Hayward facility remediation costs - 2,697
Philadelphia packaging and distribution
restructuring (222) 2,643
Middlesex manufacturing restructuring 5,213 -
Intangible asset impairment charge 1,545 -
Fair value of inventory step-up - 4,239
Adjusted cost of revenues $ 80,601 $ 107,130
Adjusted gross profit (a) $ 91,989 $ 107,052
Adjusted gross margin (a) 53.3% 50.0%
(a) Adjusted gross profit is calculated as total revenues less adjusted cost of revenues. Adjusted gross margin is calculated as adjusted
gross profit divided by total revenues.
27
Generic Division GAAP to Adjusted
Results Reconciliation
The following tables reconcile the Impax Generics Division reported cost of revenues to adjusted cost of revenues, adjusted gross
profit, adjusted gross margin and adjusted operating income.
(Unaudited, amounts in thousands)
(a) Adjusted gross profit is calculated as total revenues less adjusted cost of revenues. Adjusted gross margin is calculated as adjusted
gross profit divided by total revenues.
Three Months Ended
June 30,
2016 2015
Revenues:
Impax Generics Product sales, net $ 119,953 $ 171,273
Rx Partner 1,669 2,579
Other revenues 73 827
Total revenues 121,695 174,679
Cost of revenues 84,339 110,767
Gross profit 37,356 63,912
Operating expenses:
Selling, general and administrative 1,565 7,284
Research and development 17,089 12,891
Patent litigation expense 155 1,332
Total operating expenses 18,809 21,507
Income from operations $ 18,547 $ 42,405
Gross margin 30.7% 36.6%
Adjusted gross profit (a) $ 48,945 $ 75,215
Adjusted gross margin (a) 40.2% 43.1%
Three Months Ended
June 30, June 30,
2016 2015
GAAP Income from operations $ 18,547 $ 42,405
Adjusted to add (deduct):
Amortization 5,053 5,238
Hayward facility remediation costs - 2,697
Tower acquisition severance - 2,643
Hayward technical operations and R&D
restructuring - -
Philadelphia packaging and distribution
restructuring (222) -
Middlesex manufacturing restructuring 5,213 -
Intangible asset impairment charge 2,491 -
Fair value of inventory step-up - 725
Payments for licensing agreements - -
Adjusted Income from operations $ 31,082 $ 53,708
28
Specialty Pharma Division GAAP to
Adjusted Results Reconciliation
The following tables reconcile the Impax Specialty Pharma Divisions reported cost of revenues to adjusted cost of revenues,
adjusted gross profit, adjusted gross margin and adjusted operating income.
(Unaudited, amounts in thousands)
(a) Adjusted gross profit is calculated as total revenues less adjusted cost of revenues. Adjusted gross margin is calculated as adjusted
gross profit divided by total revenues.
Three Months Ended
June 30,
2016 2015
Revenues:
Impax Specialty Pharma Product sales, net $ 50,895 $ 39,275
Other revenues - 228
Total revenues 50,895 39,503
Cost of revenues 15,267 18,564
Gross profit 35,628 20,939
Operating expenses:
Selling, general and administrative 16,133 12,912
Research and development 4,657 4,104
Patent litigation expense 1,774 162
Total operating expenses 22,564 17,178
Income from operations $ 13,064 $ 3,761
Gross margin 70.0% 53.0%
Adjusted gross profit (a) $ 43,044 $ 31,837
Adjusted gross margin (a) 84.6% 80.6%
Three Months Ended
June 30, June 30,
2016 2015
GAAP Income from operations $ 13,064 $ 3,761
Adjusted to add:
Amortization 7,416 7,384
Fair value of inventory step-up -
3,514
Tower acquisition severance -
-
Adjusted Income from operations $ 20,480 $ 14,659