Amneal reports second quarter 2019 financial results
Bridgewater, n.j.--(business wire)--amneal pharmaceuticals, inc. (nyse: amrx) (the “company”) announced its results today for the second quarter ended june 30, 2019. summary of gaap and non-gaap combined and adjusted results (unaudited; in thousands, except per share amounts) three months ended june 30, 2019 june 30, 2018 year/ year variance gaap results(2) net revenue $ 404,642 $ 413,787 (2.2)% net loss attributable to amneal pharmaceuticals, inc. $ (16,902 ) $ (19,104 ) 11.5% diluted loss per share attributable to amneal pharmaceuticals, inc. $ (0.13 ) $ (0.15 ) 13.3% non-gaap results(1)(3) combined net revenue $ 404,642 $ 462,328 (12.5)% combined adjusted net income $ 26,669 $ 69,895 (61.8)% combined adjusted ebitda $ 92,081 $ 138,622 (33.6)% combined adjusted diluted eps $ 0.09 $ 0.23 (60.9)% (1) see “non-gaap financial measures” below. (2) prior year financials reflect the results of amneal pharmaceuticals llc consolidating the results of impax laboratories, llc from the transaction closing date on may 4, 2018. (3) for the three months ended june 30, 2018, assumes the combination between amneal pharmaceuticals llc and impax laboratories, llc, and the acquisition of gemini laboratories, llc, excluding the impact of financing and acquisition accounting adjustments, occurred on january 1, 2018. second quarter 2019 performance net revenue in the second quarter of 2019 was $405 million, a decrease of 2.2% compared to the second quarter of 2018, due to lower generics segment revenue partially offset by an increase in specialty segment revenue. net loss attributable to amneal pharmaceuticals, inc. was $17 million in the second quarter of 2019 compared to a net loss of $19 million in the prior year period. diluted eps in the second quarter of 2019 was a loss of $0.13 compared to a loss of $0.15 in the prior year period. combined net revenue(1) in the second quarter of 2019 was $405 million, a decrease of 12.5% compared to the second quarter of 2018, due to a decline in revenue from both the generics and specialty segments. combined adjusted net income(1) in the second quarter of 2019 was $27 million, a decrease of 61.8% compared to the prior year period. combined adjusted ebitda(1) in the second quarter of 2019 was $92 million, a decrease of 33.6% compared to the prior year period, due to lower revenue and lower gross margins, partially offset by lower operating expenses as a result of cost synergies from the business combination with impax. combined adjusted diluted eps in the second quarter of 2019 was $0.09, compared to $0.23 for the prior year period. (1) see “non-gaap financial measures” below. amneal pharmaceuticals, inc. reconciliation of generics operating income (loss) to generics combined operating income (loss) (unaudited; in thousands) generics three months ended june 30, 2019 three months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined net revenue - generics $ 335,064 $ — $ 335,064 $ 361,770 $ 20,995 $ 382,765 cost of goods sold 263,423 — 263,423 211,534 29,624 241,158 cost of goods sold impairment charges 3,012 — 3,012 — — — gross profit 68,629 — 68,629 150,236 (8,629 ) 141,607 selling, general, and administrative 14,379 — 14,379 19,621 4,340 23,961 research and development 45,448 — 45,448 47,206 3,984 51,190 restructuring and other charges 418 — 418 24,797 — 24,797 legal settlement gains — — — (3,000 ) — (3,000 ) intellectual property legal development expenses 2,511 — 2,511 4,004 — 4,004 acquisition, integration and transaction related expenses 987 — 987 114,622 — 114,622 operating income (loss) $ 4,886 $ — $ 4,886 $ (57,014 ) $ (16,953 ) $ (73,967 ) gross margin 20.5 % — % 20.5 % 41.5 % (41.1 %) 37.0 % adjusted gross profit (non-gaap)(4) $ 115,434 $ — $ 115,434 $ 186,848 $ (1,690 ) $ 185,158 adjusted gross margin (non-gaap)(5) 34.5 % — % 34.5 % 51.6 % (8.0 %) 48.4 % adjusted operating income (non-gaap) $ 64,748 $ — $ 64,748 $ 120,662 $ (11,339 ) $ 109,323 (4) adjusted gross profit is calculated as combined net revenue less adjusted cost of goods sold. see non-gaap reconciliations below for calculation of adjusted cost of goods sold. (5) adjusted gross margin is calculated as adjusted gross profit divided by combined net revenue. amneal pharmaceuticals, inc. reconciliation of generics operating (loss) income to generics combined operating loss (unaudited; in thousands) generics six months ended june 30, 2019 six months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined net revenue - generics $ 717,541 $ — $ 717,541 $ 636,959 $ 102,237 $ 739,196 cost of goods sold 542,301 — 542,301 342,128 122,761 464,889 cost of goods sold impairment charges 56,309 — 56,309 — — — gross profit 118,931 — 118,931 294,831 (20,524 ) 274,307 selling, general, and administrative 38,527 — 38,527 30,824 7,334 38,158 research and development 95,599 — 95,599 91,415 13,623 105,038 in-process research and development impairment charges 22,787 — 22,787 — — — restructuring and other charges 2,499 — 2,499 24,797 — 24,797 litigation, settlements and related charges — — — — 89,159 89,159 legal settlement gains — — — (3,000 ) — (3,000 ) intellectual property legal development expenses 5,632 — 5,632 8,580 23 8,603 acquisition, integration and transaction related expenses 3,584 — 3,584 114,622 — 114,622 operating (loss) income $ (49,697 ) $ — $ (49,697 ) $ 27,593 $ (130,663 ) $ (103,070 ) gross margin 16.6 % — % 16.6 % 46.3 % (20.1 %) 37.1 % adjusted gross profit (non-gaap)(4) $ 277,711 $ — $ 277,711 $ 333,203 $ 3,246 $ 336,449 adjusted gross margin (non-gaap)(5) 38.7 % — % 38.7 % 52.3 % 3.2 % 45.5 % adjusted operating income (non-gaap) $ 161,567 $ — $ 161,567 $ 208,125 $ (16,752 ) $ 191,373 (4) adjusted gross profit is calculated as combined net revenue less adjusted cost of goods sold. see non-gaap reconciliations below for calculation of adjusted cost of goods sold. (5) adjusted gross margin is calculated as adjusted gross profit divided by combined net revenue. generics net revenue of $335 million decreased 7.4% for the second quarter of 2019 compared to $362 million for the second quarter of 2018. generics combined net revenue(1) in the second quarter of 2019 was $335 million, a decrease of 12.5% compared to $383 million in the prior year period. the decrease is primarily attributable to additional competition on the base generic portfolio including key products aspirin dipyridamole er capsules, yuvafem and diclofenac gel 1% and the sale of two of the company's international businesses, partially offset by sales of levothyroxine and guanfacine hcl. generics gross margin for the second quarter of 2019 was 20.5% compared to 41.5% for the second quarter of 2018. generics combined adjusted gross margin(1) for the second quarter of 2019 was 34.5% compared to 48.4% for the prior year period. the decrease is primarily related to unfavorable generics revenue mix including the impact of price erosion, and inventory obsolescence charges. generics operating income for the second quarter of 2019 was $5 million compared to an operating loss of $57 million for the second quarter of 2018, primarily due to acquisition, integration and restructuring charges related to the business combination with impax in may 2018. generics combined adjusted operating income(1) for the second quarter of 2019 was $65 million, a decrease of 40.8% compared to $109 million in the prior year period, primarily due to lower revenues and gross margin as noted above. (1) see “non-gaap financial measures” below. amneal pharmaceuticals, inc. reconciliation of specialty operating income to specialty combined operating income (unaudited; in thousands) specialty three months ended june 30, 2019 three months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined net revenue - specialty: rytary® $ 33,000 $ — $ 33,000 $ 20,520 $ 8,578 $ 29,098 unithroid® 8,904 — 8,904 4,424 3,207 7,631 zomig® 14,427 — 14,427 9,695 3,933 13,628 all other specialty products 13,247 — 13,247 17,378 11,828 29,206 total net revenue - specialty 69,578 — 69,578 52,017 27,546 79,563 cost of goods sold 32,958 — 32,958 23,958 6,711 30,669 gross profit 36,620 — 36,620 28,059 20,835 48,894 selling, general, and administrative 16,150 — 16,150 13,549 7,707 21,256 research and development 2,568 — 2,568 3,129 1,007 4,136 intellectual property legal development expenses — — — 43 — 43 restructuring and other charges — — — 2,421 — 2,421 acquisition, integration and transaction related expenses 1,366 — 1,366 — — — operating income $ 16,536 $ — $ 16,536 $ 8,917 $ 12,121 $ 21,038 gross margin 52.6 % — % 52.6 % 53.9 % 75.6 % 61.5 % adjusted gross profit (non-gaap)(4) $ 56,780 $ — $ 56,780 $ 40,660 $ 22,363 $ 63,023 adjusted gross margin (non-gaap)(5) 81.6 % — % 81.6 % 78.2 % 81.2 % 79.2 % adjusted operating income (non-gaap) $ 39,313 $ — $ 39,313 $ 23,939 $ 13,649 $ 37,588 (4) adjusted gross profit is calculated as combined net revenue less adjusted cost of goods sold. see non-gaap reconciliations below for calculation of adjusted cost of goods sold. (5) adjusted gross margin is calculated as adjusted gross profit divided by combined net revenue. amneal pharmaceuticals, inc. reconciliation of specialty operating income to specialty combined operating income (unaudited; in thousands) specialty six months ended june 30, 2019 six months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined net revenue - specialty: rytary® $ 61,828 $ — $ 61,828 $ 20,520 $ 35,086 $ 55,606 unithroid® 18,625 — 18,625 4,424 9,716 14,140 zomig® 25,551 — 25,551 9,695 14,411 24,106 all other specialty products 27,217 — 27,217 17,378 37,032 54,410 total net revenue - specialty 133,221 — 133,221 52,017 96,245 148,262 cost of goods sold 63,823 — 63,823 23,958 26,731 50,689 gross profit 69,398 — 69,398 28,059 69,514 97,573 selling, general, and administrative 37,477 — 37,477 13,549 27,942 41,491 research and development 6,275 — 6,275 3,129 3,664 6,793 intellectual property legal development expenses 1,045 — 1,045 43 — 43 restructuring and other charges 178 — 178 2,421 — 2,421 litigation, settlements and related charges — — — — 940 940 acquisition, integration and transaction related expenses 3,250 — 3,250 — — — operating income $ 21,173 $ — $ 21,173 $ 8,917 $ 36,968 $ 45,885 gross margin 52.1 % — % 52.1 % 53.9 % 72.2 % 65.8 % adjusted gross profit (non-gaap)(4) $ 109,769 $ — $ 109,769 $ 40,660 $ 75,626 $ 116,286 adjusted gross margin (non-gaap)(5) 82.4 % — % 82.4 % 78.2 % 78.6 % 78.4 % adjusted operating income (non-gaap) $ 68,038 $ — $ 68,038 $ 23,939 $ 45,144 $ 69,083 (4) adjusted gross profit is calculated as combined net revenue less adjusted cost of goods sold. see non-gaap reconciliations below for calculation of adjusted cost of goods sold. (5) adjusted gross margin is calculated as adjusted gross profit divided by combined net revenue. the specialty segment is comprised of the impax specialty business acquired on may 4, 2018 and the gemini laboratories, llc business acquired on may 7, 2018. prior to these two transactions, amneal did not have a specialty segment. specialty net revenue in the second quarter of 2019 increased to $70 million compared to $52 million for the second quarter of 2018, primarily due to the timing of the combination with impax and the gemini acquisition. specialty combined net revenue(1) in the second quarter of 2019 was $70 million, a decrease of 12.5% compared to the prior year period, driven primarily by lower revenue from albenza® as a result of the loss of exclusivity in september of 2018, partially offset by higher revenue from rytary® and unithroid®. specialty gross margin for the second quarter of 2019 was 52.6% compared to 53.9% for the second quarter of 2018. specialty combined adjusted gross margin(5) was 81.6% for the second quarter of 2019 compared to 79.2% in the prior year period, primarily due to product sales mix. specialty operating income for the second quarter of 2019 was $17 million compared to $9 million for the second quarter of 2018, primarily due to higher revenue. specialty combined adjusted operating income(1) for the second quarter of 2019 was $39 million, an increase of $1 million compared to the prior year period, primarily due to lower expenses and favorable product sales mix. (1) see “non-gaap financial measures” below. corporate and other information (unaudited; in thousands) three months ended june 30, 2019 three months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined general and administrative expense $ 36,752 $ — $ 36,752 $ 22,833 $ 8,000 $ 30,833 acquisition, transaction-related and integration expenses 1,166 — 1,166 92,885 4,381 97,266 restructuring and other charges 2,417 — 2,417 17,247 223 17,470 total general, administrative and other operating expenses $ 40,335 $ — $ 40,335 $ 132,965 $ 12,604 $ 145,569 six months ended june 30, 2019 six months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined general and administrative expense $ 75,713 $ — $ 75,713 $ 36,751 $ 28,737 $ 65,488 acquisition, transaction-related and integration expenses 2,717 — 2,717 100,020 10,925 110,945 restructuring and other charges 6,319 — 6,319 17,247 5,123 22,370 total general, administrative and other operating expenses $ 84,749 $ — $ 84,749 $ 154,018 $ 44,785 $ 198,803 general and administrative and other operating expenses in the second quarter of 2019 decreased to $40 million compared to $133 million in the prior year period. general and administrative and other operating expenses on a combined basis(1) in the second quarter of 2019 decreased to $40 million compared to $146 million in the prior year period. the decrease is primarily due to costs associated with the combination with impax and gemini acquisition including lower acquisition, transaction-related and integration expenses, and lower restructuring and other charges. 2019 financial outlook amneal’s full year 2019 estimates are based on management's current expectations, including with respect to prescription trends, pricing levels, inventory levels, and the anticipated timing of future product launches and events. the company cannot provide a reconciliation between non-gaap projections and the most directly comparable gaap measures without unreasonable efforts because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items required for the reconciliation. the items include, but are not limited to, acquisition-related expenses, restructuring expenses, asset impairments and other gains and losses. these items are uncertain, depend on various factors, and could have a material impact on u.s. gaap reported results for 2019. amneal is updating certain of its previously provided 2019 guidance as follows: full year 2019 financial guidance prior updated adjusted gross margin 47% - 50% 47% - 50% adjusted r&d as a % of net revenue 9% - 10% 9.5% - 10.5% adjusted sg&a as a % of net revenue 11% - 12% 14% - 15% adjusted ebitda $600 million - $650 million(6) $425 million - $475 million adjusted diluted eps $0.94 - $1.04 $0.52 - $0.62 adjusted effective tax rate 19% - 21% 19% - 21% capital expenditures approximately $100 million $65 million - $85 million weighted average diluted shares outstanding approximately 300 million approximately 300 million (6) the company issued revised adjusted ebitda guidance on july 10, 2019. prior to the july 10 update, the company’s original guidance with respect to 2019 adjusted ebitda was $600 million - $650 million. conference call information amneal will hold a conference call on august 5, 2019 at 8:30 a.m. eastern time to discuss its results. the call and presentation can also be accessed via a live webcast through the investor relations section of amneal’s web site at https://investors.amneal.com/investor-relations, or directly at https://event.on24.com/wcc/r/2021447/323a22aa88a202dfc94fa94090002247. the number to call from within the united states is (844) 746-0741 and (412) 317-5273 internationally. a replay of the conference call will be available shortly after the call for a period of seven days. to access the replay, dial (877) 344-7529 (in the u.s.) and (412) 317-0088 (international callers). the access code for the replay is 10133264. about amneal amneal pharmaceuticals, inc. (nyse: amrx), headquartered in bridgewater, nj, is an integrated pharmaceutical company focused on developing, manufacturing and distributing generic, brand and biosimilar products. the company has operations in north america, asia, and europe, working together to bring high-quality medicines to patients primarily within the united states. amneal has an extensive portfolio of more than 300 generic medicines, and is expanding its portfolio to include complex dosage forms in a broad range of therapeutic areas. the company also markets a portfolio of branded pharmaceutical products through its specialty segment focused principally on central nervous system disorders and parasitic infections. for more information, visit www.amneal.com. non-gaap financial measures this release 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 of the company’s performance that are not required by or presented in accordance with gaap. in addition, this release includes these non-gaap measures and our reported results on a non-gaap combined basis to include the historical results of impax and gemini, not adjusted for financing and acquisition accounting impacts of the combination, as if the transaction closing dates had occurred on the first day of all periods presented herein. all combined business results presented in this release are not prepared in accordance with article 11 of regulation s-x. the calculation of non-gaap adjusted diluted earnings per share assumes the conversion of all outstanding shares of class b common stock to shares of class a common stock. management uses these non-gaap historical and combined 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, and doing so on a combined basis 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 operation 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, the combined results may not represent what our combined results of operations and financial position would have been had the transactions occurred on the dates indicated, nor are they intended to project our combined 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 net income, diluted earnings per share or any other measure determined in accordance with gaap. readers should review the reconciliations included below, and should not rely on any single financial measure to evaluate the company’s business. a reconciliation of each non-gaap measure to the most directly comparable gaap measure is set forth below. 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 management’s intentions, plans, beliefs, expectations or forecasts for the future, including, among other things, future operating results and financial performance, product development and launches, integration strategies and resulting cost reduction, market position and business strategy. words such as “may,” “will,” “could,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “assume,” “continue,” and similar words 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. 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 amneal pharmaceuticals, inc. (the “company”). such risks and uncertainties include, but are not limited to: our ability to integrate the operations of amneal pharmaceuticals llc and impax laboratories, llc pursuant to the business combination completed on may 4, 2018, and our ability to realize the anticipated synergies and other benefits of the combination; our ability to successfully develop and commercialize new products; our ability to obtain exclusive marketing rights for our products and to introduce 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 manage our growth; our dependence on the sales of a limited number of products for a substantial portion of our total revenues; the risk of product liability and other claims against us by consumers and other third parties; risks related to changes in the regulatory environment, including united states federal and state laws related to healthcare fraud abuse and health information privacy and security and changes in such laws; changes to fda product approval requirements; risks related to federal regulation of arrangements between manufacturers of branded and generic products; the impact of healthcare reform and changes in coverage and reimbursement levels by governmental authorities and other third-party payers; the continuing trend of consolidation of certain customer groups; our reliance on certain licenses to proprietary technologies from time to time; our dependence on third party suppliers and distributors for raw materials for our products and certain finished goods; the impact of global economic conditions; our dependence on third party agreements for a portion of our product offerings; our ability to make acquisitions of or investments in complementary businesses and products on advantageous terms; legal, regulatory and legislative efforts by our brand competitors to deter competition from our generic alternatives; the significant amount of resources we expend on research and development; 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; the high concentration of ownership of our class a common stock and the fact that we are controlled by a group of stockholders. a further list and descriptions of these risks, uncertainties and other factors can be found in the company’s most recently filed annual report on form 10-k for the fiscal year ended december 31, 2018, as supplemented by any subsequently filed quarterly reports on form 10-q. copies of these filings are available online at www.sec.gov, www.amneal.com or on request from the company. 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. trademarks referenced herein are the property of their respective owner. amneal pharmaceuticals, inc. consolidated statements of operations (unaudited; in thousands, except per share amounts) three months ended june 30, six months ended june 30, 2019 2018 2019 2018 net revenue $ 404,642 $ 413,787 $ 850,762 $ 688,976 cost of goods sold 296,381 235,492 606,124 366,086 cost of goods sold impairment charges 3,012 — 56,309 — gross profit 105,249 178,295 188,329 322,890 selling, general and administrative 67,281 56,003 151,717 81,124 research and development 48,016 50,335 101,874 94,544 in-process research and development impairment charges — — 22,787 — acquisition, transaction-related and integration expenses 3,519 207,507 9,551 214,642 restructuring and other charges 2,835 44,465 8,996 44,465 legal settlement gains — (3,000 ) — (3,000 ) intellectual property legal development expenses 2,511 4,047 6,677 8,623 operating loss (18,913 ) (181,062 ) (113,273 ) (117,508 ) other (expense) income: interest expense, net (43,886 ) (36,622 ) (87,167 ) (57,673 ) foreign exchange gain (loss), net 8,311 (25,946 ) 2,847 (17,381 ) loss on extinguishment of debt — (19,667 ) — (19,667 ) (loss) gain on sale of international businesses, net (1,888 ) — 6,930 — other income, net 149 791 1,256 1,739 total other expense, net (37,314 ) (81,444 ) (76,134 ) (92,982 ) loss before income taxes (56,227 ) (262,506 ) (189,407 ) (210,490 ) benefit from income taxes (5,701 ) (12,416 ) (14,129 ) (12,052 ) net loss (50,526 ) (250,090 ) (175,278 ) (198,438 ) less: net loss attributable to amneal pharmaceuticals llc pre-combination — 200,341 — 148,806 less: net loss attributable to non-controlling interests 33,624 31,885 110,495 31,768 net loss attributable to amneal pharmaceuticals, inc. before accretion of redeemable non-controlling interest (16,902 ) (17,864 ) (64,783 ) (17,864 ) accretion of redeemable non-controlling interest — (1,240 ) — (1,240 ) net loss attributable to amneal pharmaceuticals, inc. $ (16,902 ) $ (19,104 ) $ (64,783 ) $ (19,104 ) net loss per share attributable to amneal pharmaceuticals, inc.'s common stockholders: class a and class b-1 basic and diluted $ (0.13 ) $ (0.15 ) $ (0.51 ) $ (0.15 ) weighted-average common shares outstanding: class a and class b-1 basic and diluted 128,016 127,112 127,852 127,112 amneal pharmaceuticals, inc. condensed consolidated balance sheets (unaudited; in thousands) june 30, 2019 december 31, 2018 assets current assets: cash and cash equivalents $ 54,893 $ 213,394 restricted cash 2,129 5,385 trade accounts receivable, net 634,666 481,495 inventories 414,627 457,219 prepaid expenses and other current assets 77,062 128,321 related party receivables 2,470 830 total current assets 1,185,847 1,286,644 property, plant and equipment, net 508,086 544,146 goodwill 420,017 426,226 intangible assets, net 1,553,330 1,654,969 deferred tax asset, net 391,881 373,159 operating lease right-of-use assets 59,900 — operating lease right-of-use assets - related party 17,031 — financing lease right-of-use assets - related party 62,588 — other assets 63,459 67,592 total assets $ 4,262,139 $ 4,352,736 liabilities and stockholders' equity current liabilities: accounts payable and accrued expenses $ 505,143 $ 514,440 current portion of long-term debt, net 21,445 21,449 current portion of operating lease liabilities 13,313 — current portion of operating and financing lease liabilities - related party 3,293 — related party payables 2,965 17,695 current portion of financing obligation - related party — 266 total current liabilities 546,159 553,850 long-term debt, net 2,619,788 2,630,598 deferred income taxes — 1,178 liabilities under tax receivable agreement 193,499 192,884 operating lease liabilities 47,836 — operating lease liabilities - related party 14,862 — financing lease liabilities - related party 61,990 — financing obligation - related party — 39,083 other liabilities 28,653 38,780 total long-term liabilities 2,966,628 2,902,523 total stockholders' equity 749,352 896,363 total liabilities and stockholders' equity $ 4,262,139 $ 4,352,736 amneal pharmaceuticals, inc. consolidated statements of cash flows (unaudited; in thousands) six months ended june 30, 2019 2018 cash flows from operating activities: net loss $ (175,278 ) $ (198,438 ) adjustments to reconcile net loss to net cash used in operating activities: depreciation and amortization 99,574 46,897 amortization of levothyroxine transition agreement asset 36,393 — unrealized foreign currency (gain) loss (3,695 ) 17,032 amortization of debt issuance costs 3,218 2,577 loss on extinguishment of debt — 19,667 gain on sale of international businesses, net (6,930 ) — gain on termination of lease — (3,524 ) intangible asset impairment charges 79,096 — non-cash restructuring and asset-related charges 1,314 — deferred tax benefit (18,209 ) (14,993 ) stock-based compensation and ppu expense 10,571 160,401 inventory provision 50,410 17,426 other operating charges and credits, net 3,155 927 changes in assets and liabilities: trade accounts receivable, net (162,954 ) (60,051 ) inventories (19,658 ) (71,655 ) prepaid expenses, other current assets and other assets 28,614 (5,107 ) related party receivables (1,624 ) 11,017 accounts payable, accrued expenses and other liabilities (13,538 ) 19,630 related party payables 2,225 (13,356 ) net cash used in operating activities (87,316 ) (71,550 ) cash flows from investing activities: purchases of property, plant and equipment (29,629 ) (36,600 ) acquisition of product rights and licenses (50,000 ) (3,000 ) acquisitions, net of cash acquired — (321,324 ) proceeds from sale of international businesses, net of cash sold 34,834 — net cash used in investing activities (44,795 ) (360,924 ) cash flows from financing activities: payments of deferred financing costs and debt extinguishment costs — (54,955 ) proceeds from issuance of debt — 1,325,383 payments of principal on debt and capital leases (13,500 ) (603,551 ) payments on revolving credit line — (75,000 ) payments of principal on financing lease - related party (866 ) — payments of financing obligation - related party — (121 ) proceeds from exercise of stock options 1,385 1,977 employee payroll tax withholding on restricted stock unit vesting (921 ) — equity contributions — 27,742 capital contribution from non-controlling interest — 360 acquisition of non-controlling interest (3,543 ) — tax distribution to non-controlling interest (13,494 ) — distributions to members — (182,998 ) repayment of related party note — (14,842 ) net cash (used in) provided by financing activities (30,939 ) 423,995 effect of foreign exchange rate on cash 1,293 (853 ) net decrease in cash, cash equivalents, and restricted cash (161,757 ) (9,332 ) cash, cash equivalents, and restricted cash - beginning of period 218,779 77,922 cash, cash equivalents, and restricted cash - end of period $ 57,022 $ 68,590 cash and cash equivalents - end of period $ 54,893 $ 61,521 restricted cash - end of period 2,129 7,069 cash, cash equivalents, and restricted cash - end of period $ 57,022 $ 68,590 amneal pharmaceuticals, inc. reconciliation of non-gaap combined results of operations (unaudited; in thousands) three months ended june 30, 2019 three months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined net revenue: generics $ 335,064 $ — $ 335,064 $ 361,770 $ 20,995 $ 382,765 specialty 69,578 — 69,578 52,017 27,546 79,563 total net revenue 404,642 — 404,642 413,787 48,541 462,328 cost of goods sold 296,381 — 296,381 235,492 36,335 271,827 cost of goods sold impairment charges 3,012 — 3,012 — — — gross profit 105,249 — 105,249 178,295 12,206 190,501 selling, general and administrative 67,281 — 67,281 56,003 20,047 76,050 research and development 48,016 — 48,016 50,335 4,991 55,326 acquisition, transaction-related and integration expenses 3,519 — 3,519 207,507 4,381 211,888 restructuring and other charges 2,835 — 2,835 44,465 223 44,688 legal settlement gains — — — (3,000 ) — (3,000 ) intellectual property legal development expenses 2,511 — 2,511 4,047 — 4,047 operating loss (18,913 ) — (18,913 ) (181,062 ) (17,436 ) (198,498 ) other (expense) income: interest expense, net (43,886 ) — (43,886 ) (36,622 ) (4,539 ) (41,161 ) foreign exchange gain (loss), net 8,311 — 8,311 (25,946 ) — (25,946 ) loss on extinguishment of debt — — — (19,667 ) — (19,667 ) loss on sale of international businesses (1,888 ) — (1,888 ) — — — other income (expense), net 149 — 149 791 (14 ) 777 total other expense, net (37,314 ) — (37,314 ) (81,444 ) (4,553 ) (85,997 ) loss before income taxes (56,227 ) — (56,227 ) (262,506 ) (21,989 ) (284,495 ) (benefit from) provision for income taxes (5,701 ) — (5,701 ) (12,416 ) 1,017 (11,399 ) net loss (50,526 ) — (50,526 ) (250,090 ) (23,006 ) (273,096 ) less: net loss attributable to amneal pharmaceuticals llc pre-combination — — — 200,341 less: net loss attributable to non-controlling interests 33,624 — 33,624 31,885 accretion of redeemable non-controlling interest — — — (1,240 ) net loss attributable to amneal pharmaceuticals, inc. $ (16,902 ) $ — $ (16,902 ) $ (19,104 ) amneal pharmaceuticals, inc. reconciliation of non-gaap combined results of operations (unaudited; in thousands) six months ended june 30, 2019 six months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined net revenue: generics $ 717,541 $ — $ 717,541 $ 636,959 $ 102,237 $ 739,196 specialty 133,221 — 133,221 52,017 96,245 148,262 total net revenue 850,762 — 850,762 688,976 198,482 887,458 cost of goods sold 606,124 — 606,124 366,086 149,492 515,578 cost of goods sold impairment charges 56,309 — 56,309 — — — gross profit 188,329 — 188,329 322,890 48,990 371,880 selling, general and administrative 151,717 — 151,717 81,124 64,013 145,137 research and development 101,874 — 101,874 94,544 17,287 111,831 in-process research and development impairment charges 22,787 — 22,787 — — — acquisition, transaction-related and integration expenses 9,551 — 9,551 214,642 10,925 225,567 restructuring and other charges 8,996 — 8,996 44,465 5,123 49,588 legal settlement gains — — — (3,000 ) — (3,000 ) intellectual property legal development expenses 6,677 — 6,677 8,623 23 8,646 litigation, settlements and related charges — — — — 90,099 90,099 operating loss (113,273 ) — (113,273 ) (117,508 ) (138,480 ) (255,988 ) other (expense) income: interest expense, net (87,167 ) — (87,167 ) (57,673 ) (18,231 ) (75,904 ) foreign exchange gain (loss) 2,847 — 2,847 (17,381 ) 921 (16,460 ) loss on extinguishment of debt — — — (19,667 ) — (19,667 ) gain on sale of international businesses 6,930 — 6,930 — — — other income (expense) 1,256 — 1,256 1,739 (638 ) 1,101 total other expense, net (76,134 ) — (76,134 ) (92,982 ) (17,948 ) (110,930 ) loss before income taxes (189,407 ) — (189,407 ) (210,490 ) (156,428 ) (366,918 ) benefit from income taxes (14,129 ) — (14,129 ) (12,052 ) (6,273 ) (18,325 ) net loss (175,278 ) — (175,278 ) (198,438 ) (150,155 ) (348,593 ) less: net loss attributable to amneal pharmaceuticals llc pre-combination — — — 148,806 less: net loss attributable to non-controlling interests 110,495 — 110,495 31,768 accretion of redeemable non-controlling interest — — — (1,240 ) net loss attributable to amneal pharmaceuticals, inc. $ (64,783 ) $ — $ (64,783 ) $ (19,104 ) amneal pharmaceuticals, inc. non-gaap reconciliations (unaudited; in thousands) reconciliations of generics cost of goods sold to combined adjusted cost of goods sold generics three months ended june 30, 2019 three months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined cost of goods sold $ 263,423 $ — $ 263,423 $ 211,534 $ 29,624 $ 241,158 cost of goods sold impairment charges 3,012 — 3,012 — — — adjusted to deduct (add): amortization 14,636 — 14,636 6,043 3,934 9,977 inventory related charges(7) 21,443 — 21,443 30,569 3,005 33,574 acquisition and site closure expenses(8) 6,969 — 6,969 — — — asset impairment charges(9) 3,012 — 3,012 — — — stock-based compensation expense 813 — 813 — — — other (68 ) — (68 ) — — — adjusted cost of goods sold (non-gaap) $ 219,630 $ — $ 219,630 $ 174,922 $ 22,685 $ 197,607 generics six months ended june 30, 2019 six months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined cost of goods sold $ 542,301 $ — $ 542,301 $ 342,128 $ 122,761 $ 464,889 cost of goods sold impairment charges 56,309 — 56,309 — — — adjusted to deduct (add): amortization 25,388 — 25,388 7,803 13,823 21,626 inventory related charges(7) 21,777 — 21,777 30,569 9,894 40,463 acquisition and site closure expenses(8) 16,480 — 16,480 — — — asset impairment charges(9) 56,309 — 56,309 — 53 53 stock-based compensation expense 1,409 — 1,409 — — — amortization of upfront payment(11) 36,393 — 36,393 — — — other 1,024 — 1,024 — — — adjusted cost of goods sold (non-gaap) $ 439,830 $ — $ 439,830 $ 303,756 $ 98,991 $ 402,747 amneal pharmaceuticals, inc. non-gaap reconciliations (unaudited; in thousands) reconciliations of specialty cost of goods sold to combined adjusted cost of goods sold specialty three months ended june 30, 2019 three months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined cost of goods sold $ 32,958 $ — $ 32,958 $ 23,958 $ 6,711 $ 30,669 adjusted to deduct: amortization 20,160 — 20,160 10,651 1,528 12,179 inventory related charges(7) — — — 1,950 — 1,950 adjusted cost of goods sold (non-gaap) $ 12,798 $ — $ 12,798 $ 11,357 $ 5,183 $ 16,540 specialty six months ended june 30, 2019 six months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined cost of goods sold $ 63,823 $ — $ 63,823 $ 23,958 $ 26,731 $ 50,689 adjusted to deduct: amortization 40,371 — 40,371 10,651 6,112 16,763 inventory related charges(7) — — — 1,950 — 1,950 adjusted cost of goods sold (non-gaap) $ 23,452 $ — $ 23,452 $ 11,357 $ 20,619 $ 31,976 amneal pharmaceuticals, inc. non-gaap reconciliations (unaudited; in thousands) reconciliations of generics operating income (loss) to combined adjusted operating income generics three months ended june 30, 2019 three months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined operating income (loss) $ 4,886 $ — $ 4,886 $ (57,014 ) $ (16,953 ) $ (73,967 ) adjusted to add (deduct): acquisition and site closure expenses(8) 10,885 — 10,885 114,622 — 114,622 amortization 14,636 — 14,636 6,043 3,934 9,977 inventory related charges(7) 21,443 — 21,443 30,569 3,005 33,574 stock-based compensation expense 3,875 — 3,875 221 — 221 asset impairment charges(9) 3,059 — 3,059 — — — restructuring and other charges(10) 418 — 418 24,797 — 24,797 r&d milestone payment 5,614 — 5,614 1,424 — 1,424 other (68 ) — (68 ) — (1,325 ) (1,325 ) adjusted operating income (non-gaap) $ 64,748 $ — $ 64,748 $ 120,662 $ (11,339 ) $ 109,323 generics six months ended june 30, 2019 six months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined operating (loss) income $ (49,697 ) $ — $ (49,697 ) $ 27,593 $ (130,663 ) $ (103,070 ) adjusted to add (deduct): acquisition and site closure expenses(8) 29,670 — 29,670 114,622 — 114,622 amortization 25,388 — 25,388 7,803 13,823 21,626 inventory related charges(7) 21,777 — 21,777 30,569 9,894 40,463 stock-based compensation expense 5,373 — 5,373 221 982 1,203 asset impairment charges(9) 79,211 79,211 53 53 restructuring and other charges(10) 2,499 — 2,499 24,797 — 24,797 litigation, settlements and related charges(12) — — — — 89,159 89,159 amortization of upfront payment(11) 36,393 — 36,393 — — — r&d milestone payment 9,929 — 9,929 2,700 — 2,700 other 1,024 — 1,024 (180 ) — (180 ) adjusted operating income (non-gaap) $ 161,567 $ — $ 161,567 $ 208,125 $ (16,752 ) $ 191,373 amneal pharmaceuticals, inc. non-gaap reconciliations (unaudited; in thousands) reconciliations of specialty operating income to combined adjusted operating income specialty three months ended june 30, 2019 three months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined operating income $ 16,536 $ — $ 16,536 $ 8,917 $ 12,121 $ 21,038 adjusted to add: amortization 20,160 — 20,160 10,651 1,528 12,179 inventory related charges(7) — — — 1,950 — 1,950 acquisition and site closure expenses(8) 2,251 — 2,251 — — — stock-based compensation expense 366 — 366 — — — restructuring and other charges(10) — — — 2,421 — 2,421 adjusted operating income (non-gaap) $ 39,313 $ — $ 39,313 $ 23,939 $ 13,649 $ 37,588 specialty six months ended june 30, 2019 six months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined operating income $ 21,173 $ — $ 21,173 $ 8,917 $ 36,968 $ 45,885 adjusted to add: amortization 40,371 — 40,371 10,651 6,112 16,763 inventory related charges(7) — — — 1,950 — 1,950 acquisition and site closure expenses(8) 5,806 — 5,806 — — — stock-based compensation expense 510 — 510 — 1,124 1,124 restructuring and other charges(10) 178 — 178 2,421 — 2,421 litigation, settlements and related charges — — — — 940 940 adjusted operating income (non-gaap) $ 68,038 $ — $ 68,038 $ 23,939 $ 45,144 $ 69,083 amneal pharmaceuticals, inc. non-gaap reconciliations (unaudited; in thousands, except per share amounts) reconciliation of net loss to combined adjusted net income and calculation of adjusted diluted eps three months ended june 30, 2019 three months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined net loss $ (50,526 ) $ — $ (50,526 ) $ (250,090 ) $ (23,006 ) $ (273,096 ) adjusted to add (deduct): non-cash interest 1,617 — 1,617 4,407 2,549 6,956 gaap income tax (benefit) expense (5,701 ) — (5,701 ) (12,416 ) 1,017 (11,399 ) amortization 34,796 — 34,796 16,694 5,462 22,156 stock-based compensation expense 6,224 — 6,224 1,644 — 1,644 acquisition and site closure expenses(8) 19,056 — 19,056 207,507 4,381 211,888 restructuring and other charges(10) 2,835 — 2,835 44,465 223 44,688 loss on extinguishment of debt — — — 19,667 — 19,667 inventory related charges(7) 21,443 — 21,443 32,519 3,005 35,524 loss on sale of assets — — — 878 — 878 asset impairment charges(9) 4,408 — 4,408 — — — foreign exchange (gain) loss (8,311 ) — (8,311 ) 25,946 — 25,946 loss on sale of international business(13) 1,888 — 1,888 — — — r&d milestone payments 5,614 — 5,614 1,424 — 1,424 other 491 — 491 1,225 1,300 2,525 income tax at 21% (7,104 ) — (7,104 ) (19,943 ) 1,064 (18,879 ) net income attributable to nci not associated with our class b shares (61 ) — (61 ) (27 ) — (27 ) adjusted net income (non-gaap) $ 26,669 $ — $ 26,669 $ 73,900 $ (4,005 ) $ 69,895 adjusted diluted eps (non-gaap)(14) $ 0.09 $ 0.23 (14) under the if-converted method, for the three months ended june 30, 2019, utilizes weighted average diluted shares outstanding of 299,139, which consists of class a & class b shares. under the if-converted method, for the three months ended june 30, 2018, utilizes weighted average diluted shares outstanding of 299,029, which consists of class a, class b & class b-1 shares. amneal pharmaceuticals, inc. non-gaap reconciliations (unaudited; in thousands, except per share amounts) reconciliation of net loss to combined adjusted net income and calculation of adjusted diluted eps six months ended june 30, 2019 six months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined net loss $ (175,278 ) $ — $ (175,278 ) $ (198,438 ) $ (150,155 ) $ (348,593 ) adjusted to add (deduct): non-cash interest 3,218 — 3,218 5,577 9,413 14,990 gaap income tax benefit (14,129 ) — (14,129 ) (12,052 ) (6,273 ) (18,325 ) amortization 65,759 — 65,759 18,454 19,935 38,389 stock-based compensation expense 10,571 — 10,571 1,644 4,816 6,460 acquisition and site closure expenses(8) 47,258 — 47,258 214,642 10,925 225,567 restructuring and other charges(10) 8,996 — 8,996 44,465 5,123 49,588 loss on extinguishment of debt — — — 19,667 — 19,667 inventory related charges(7) 21,777 — 21,777 32,519 9,894 42,413 litigation, settlements and related charges(12) — — — — 90,099 90,099 loss on sale of assets — — — 878 — 878 asset impairment charges(9) 81,008 — 81,008 — 53 53 amortization of upfront payment 36,393 — 36,393 — — — foreign exchange (gain) loss (2,847 ) — (2,847 ) 17,381 (921 ) 16,460 gain on sale of international businesses, net (13) (6,930 ) — (6,930 ) — — — r&d milestone payments 9,929 — 9,929 2,700 — 2,700 other 1,583 — 1,583 (820 ) 1,953 1,133 income tax at 21% (18,334 ) — (18,334 ) (31,020 ) 1,309 (29,711 ) net income attributable to nci not associated with our class b shares (140 ) — (140 ) (144 ) — (144 ) adjusted net income (non-gaap) $ 68,834 $ — $ 68,834 $ 115,453 $ (3,829 ) $ 111,624 adjusted diluted eps (non-gaap)(15) $ 0.23 $ 0.37 (15) under the if-converted method, for the six months ended june 30, 2019, utilizes weighted average diluted shares outstanding of 299,117, which consists of class a & class b shares. under the if-converted method, for the six months ended june 30, 2018, utilizes weighted average diluted shares outstanding of 299,029, which consists of class a, class b & class b-1 shares. amneal pharmaceuticals, inc. non-gaap reconciliations (unaudited, in thousands) reconciliation of net loss to ebitda and combined adjusted ebitda three months ended june 30, 2019 three months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined net loss $ (50,526 ) $ — $ (50,526 ) $ (250,090 ) $ (23,006 ) $ (273,096 ) adjusted to add (deduct): interest expense, net 43,886 — 43,886 36,622 4,539 41,161 income tax (benefit) expense (5,701 ) — (5,701 ) (12,416 ) 1,017 (11,399 ) depreciation and amortization 50,706 — 50,706 32,147 6,925 39,072 ebitda (non-gaap) $ 38,365 $ — $ 38,365 $ (193,737 ) $ (10,525 ) $ (204,262 ) adjusted to add (deduct): stock-based compensation expense $ 6,224 $ — $ 6,224 $ 1,644 $ — $ 1,644 acquisition and site closure expenses(8) 19,056 — 19,056 207,507 4,381 211,888 restructuring and other charges(10) 2,835 — 2,835 44,465 223 44,688 loss on extinguishment of debt — — — 19,667 — 19,667 inventory related charges(7) 21,443 — 21,443 32,519 3,005 35,524 loss on sale of assets — — — 878 — 878 asset impairment charges(9) 4,408 — 4,408 — — — foreign exchange (gain) loss (8,311 ) — (8,311 ) 25,946 — 25,946 loss on sale of international businesses(13) 1,888 — 1,888 — — — r&d milestone payments 5,614 — 5,614 1,424 — 1,424 other 559 — 559 1,225 — 1,225 adjusted ebitda (non-gaap) $ 92,081 $ — $ 92,081 $ 141,538 $ (2,916 ) $ 138,622 amneal pharmaceuticals, inc. non-gaap reconciliations (unaudited; in thousands) reconciliation of net loss to ebitda and combined adjusted ebitda six months ended june 30, 2019 six months ended june 30, 2018 add: (non-gaap) add: (non-gaap) actual impax/ gemini combined actual impax/ gemini combined net loss $ (175,278 ) $ — $ (175,278 ) $ (198,438 ) $ (150,155 ) $ (348,593 ) adjusted to add (deduct): interest expense, net 87,167 — 87,167 57,673 18,231 75,904 income tax benefit (14,129 ) — (14,129 ) (12,052 ) (6,273 ) (18,325 ) depreciation and amortization 99,574 — 99,574 46,898 24,900 71,798 ebitda (non-gaap) $ (2,666 ) $ — $ (2,666 ) $ (105,919 ) $ (113,297 ) $ (219,216 ) adjusted to add (deduct): stock-based compensation expense $ 10,571 $ — $ 10,571 $ 1,644 $ 4,816 $ 6,460 acquisition and site closure expenses(8) 47,258 — 47,258 214,642 10,925 225,567 restructuring and other charges(10) 8,996 — 8,996 44,465 5,123 49,588 loss on extinguishment of debt — — — 19,667 — 19,667 inventory related charges(7) 21,777 — 21,777 32,519 9,894 42,413 litigation, settlements and related charges(12) — — — — 90,099 90,099 loss on sale of assets — — — 878 — 878 asset impairment charges(9) 81,008 — 81,008 — 53 53 amortization of upfront payment(11) 36,393 — 36,393 — — — foreign exchange (gain) loss (2,847 ) — (2,847 ) 17,381 (921 ) 16,460 gain on sale of international businesses, net (13) (6,930 ) — (6,930 ) — — — r&d milestone payments 9,929 — 9,929 2,700 — 2,700 other 559 — 559 (820 ) 653 (167 ) adjusted ebitda (non-gaap) $ 204,048 $ — $ 204,048 $ 227,157 $ 7,345 $ 234,502 (7) for the three and six months ended june 30, 2019, inventory related charges primarily represent inventory obsolescence resulting from new initiatives and policies adopted with our restructuring effort. for the three and six months ended june 30, 2018, inventory related charges represents a reserve for an unfavorable supply arrangement and the amortization of the impax inventory step-up to fair value in purchase accounting. (8) acquisition and site closure expenses for the three and six months ended june 30, 2019 includes costs related to (i) plant closure and redundant employee costs and (ii) third party costs associated with the combination of impax and related integration including legal, investment banking, accounting and information technology. for the three and six months ended june 30, 2018, acquisition and site closure expenses also includes costs associated with the impax sale of its middlesex, nj and taiwan facilities. (9) asset impairment charges for the three and six months ended june 30, 2019 are primarily associated with the write-off of in process research and development product rights and intangible asset impairment charges primarily related to products acquired in the impax combination. (10) restructuring and other charges includes employee separation costs associated with the consolidation of sites, as well as the write-off of property, plant, and equipment at those sites. (11) amortization of upfront payment represents the amortization of the upfront payment made to lannett in connection with our transition agreement with levothyroxine. (12) litigation, settlements and related charges represents an impax litigation settlement charge for the three and six months ended june 30, 2018 related to a settlement of claims with the plaintiffs in the class action antitrust suits related to solodyn®. (13) for the three months ended june 30, 2019, loss on the sale of international business represents the loss from the sale of our amneal deutschland gmbh subsidiary, which comprised substantially all of the company's operations in germany. for the six months ended june 30, 2019, gain on the sale of international businesses, net represents the gain from the sale of our creo pharma holding limited subsidiary, which comprised substantially all of the company's operations in the united kingdom partially offset by the loss from the sale of our amneal deutschland gmbh subsidiary, which comprised substantially all of the company's operations in germany.
