Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 11, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Entity Registrant Name | Osmotica Pharmaceuticals plc | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 58,898,708 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001739426 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 125,830 | $ 95,865 |
Trade accounts receivable, net | 32,644 | 43,914 |
Inventories, net | 20,536 | 21,305 |
Prepaid expenses and other current assets | 10,654 | 11,546 |
Total current assets | 189,664 | 172,630 |
Property, plant and equipment, net | 29,987 | 30,238 |
Operating lease assets | 4,471 | 4,983 |
Intangibles, net | 149,624 | 153,986 |
Goodwill | 100,855 | 100,855 |
Other non‑current assets | 533 | 563 |
Total assets | 475,134 | 463,255 |
Current liabilities: | ||
Trade accounts payable | 8,784 | 8,495 |
Accrued liabilities | 47,256 | 65,253 |
Current portion of obligation under finance leases, ASC842 | 110 | 127 |
Current portion of lease liability | 2,004 | 2,062 |
Total current liabilities | 58,154 | 75,937 |
Long‑term debt, net of non‑current deferred financing costs | 268,236 | 267,950 |
Long-term portion of obligation under finance lease, ASC842 | 29 | 44 |
Long-term portion of lease liability | 2,646 | 3,116 |
Deferred taxes | 2,329 | 1,500 |
Total liabilities | 331,394 | 348,547 |
Commitments and contingencies (See Note 11) | ||
Shareholders' Equity | ||
Ordinary shares ($0.01 nominal value 400,000,000 shares authorized, 58,898,708 and 51,845,742 share issued and outstanding at March 31, 2020 and December 31, 2019, respectively | 589 | 518 |
Additional paid in capital | 521,484 | 489,440 |
Accumulated deficit | (376,104) | (373,021) |
Accumulated other comprehensive loss | (2,229) | (2,229) |
Total shareholders' equity | 143,740 | 114,708 |
Total liabilities and shareholders' equity | $ 475,134 | $ 463,255 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) | Mar. 31, 2020$ / sharesshares | Mar. 31, 2020€ / sharesshares | Dec. 31, 2019$ / sharesshares | Dec. 31, 2019€ / sharesshares |
CONSOLIDATED BALANCE SHEETS | ||||
Ordinary shares, nominal value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | ||
Ordinary shares, number of shares authorized | 400,000,000 | 400,000,000 | 400,000,000 | 400,000,000 |
Ordinary shares, number of shares issued | 58,898,708 | 58,898,708 | 51,845,742 | 51,845,742 |
Ordinary shares, number of shares outstanding | 58,898,708 | 58,898,708 | 51,845,742 | 51,845,742 |
Preferred shares, nominal value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | ||
Preferred shares, number of shares authorized | 40,000,000 | 40,000,000 | 40,000,000 | 40,000,000 |
Preferred shares, number of shares issued | 0 | 0 | 0 | 0 |
Preferred shares, number of shares outstanding | 0 | 0 | 0 | 0 |
Euro deferred shares, nominal value (in euros per share) | € / shares | € 1 | € 1 | ||
Euro deferred shares, number of shares authorized | 25,000 | 25,000 | 25,000 | 25,000 |
Euro deferred shares, number of shares issued | 0 | 0 | 0 | 0 |
Euro deferred shares, number of shares outstanding | 0 | 0 | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues | $ 48,649 | $ 57,126 |
Cost of goods sold (inclusive of amortization of intangibles) | 20,590 | 29,203 |
Gross profit | 28,059 | 27,923 |
Selling, general and administrative expenses | 21,176 | 21,656 |
Research and development expenses | 5,688 | 9,764 |
Total operating expenses | 26,864 | 31,420 |
Operating loss | 1,195 | (3,497) |
Interest expense and amortization of debt discount | 4,064 | 4,501 |
Other non-operating expense | (746) | (557) |
Total other non-operating expense (gain) | (3,318) | (3,944) |
Loss before income taxes | (2,123) | (7,441) |
Income tax benefit | (960) | 754 |
Net loss | $ (3,083) | (6,687) |
Other comprehensive loss, net | ||
Comprehensive loss | $ (6,687) | |
Income (loss) per share attributable to shareholders | ||
Loss per share attributable to shareholders, basic and diluted | $ (0.05) | $ (0.13) |
Partnership income (loss) per unit | $ (0.13) | |
Weighted average shares basic and diluted | ||
Weighted average shares, basic and diluted | 58,257,191 | 52,518,924 |
Product Revenue | ||
Revenues | $ 47,308 | $ 56,400 |
Royalty Revenue | ||
Revenues | 869 | 721 |
Licensing and Contract Revenue | ||
Revenues | $ 472 | $ 5 |
STATEMENTS OF CHANGES IN SHAREH
STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY - USD ($) $ in Thousands | Ordinary shares | Additional Paid-in Capital [Member] | Accumulated deficit | Accumulated other comprehensive loss | Total |
Stockholders' equity, beginning balance at Dec. 31, 2018 | $ 525 | $ 487,288 | $ (102,120) | $ (1,846) | $ 383,847 |
Shares, Outstanding, Beginning Balance at Dec. 31, 2018 | 52,518,924 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (6,687) | (6,687) | |||
Share compensation | 1,169 | 1,169 | |||
Stockholders' equity, ending balance at Mar. 31, 2019 | $ 525 | 488,457 | (108,807) | (1,846) | 378,329 |
Shares, Outstanding, Ending Balance at Mar. 31, 2019 | 52,518,924 | ||||
Stockholders' equity, beginning balance at Dec. 31, 2019 | $ 518 | 489,440 | (373,021) | (2,229) | 114,708 |
Shares, Outstanding, Beginning Balance at Dec. 31, 2019 | 51,845,742 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (3,083) | (3,083) | |||
Share compensation, value | $ 2 | 1,107 | 1,109 | ||
Share compensation, shares | 181,966 | ||||
Payments for taxes related to the net share settlement of equity awards | (616) | (616) | |||
Issuance of ordinary shares in initial public offering and private placement, net of offering costs | $ 69 | 31,720 | 31,789 | ||
Issuance of ordinary shares in initial public offering and private placement, shares | 6,900,000 | ||||
Repurchase of ordinary shares, value | (167) | $ (167) | |||
Repurchase of ordinary shares, shares | (29,000) | (29,000) | |||
Stockholders' equity, ending balance at Mar. 31, 2020 | $ 589 | $ 521,484 | $ (376,104) | $ (2,229) | $ 143,740 |
Shares, Outstanding, Ending Balance at Mar. 31, 2020 | 58,898,708 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (3,083) | $ (6,687) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 5,562 | 17,993 |
Share compensation | 1,107 | 1,169 |
Deferred income tax benefit | 829 | (1,060) |
Loss on sale of fixed and leased assets | (3) | 53 |
Bad debt provision | 29 | (84) |
Amortization of deferred financing and loan origination fees | 333 | 323 |
Change in operating assets and liabilities: | ||
Trade accounts receivable, net | 11,242 | (378) |
Inventories, net | 769 | (3,432) |
Prepaid expenses and other current assets | 891 | 4,691 |
Other non‑current assets | (18) | |
Trade accounts payable | 289 | (4,279) |
Accrued and other current liabilities | (18,011) | (14,436) |
Net cash used in operating activities | (64) | (6,127) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Proceeds from sale of fixed and leased assets | 4 | |
Payments on disposal of leased assets | (1) | |
Purchase of property, plant and equipment | (949) | (635) |
Net cash used in investing activities | (946) | (635) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payments on finance lease obligations, ASC842 | (33) | (31) |
Proceeds from public offering, net of issuance costs | 31,791 | |
Repurchases of ordinary shares | (167) | |
Payments for taxes related to net share settlement of equity awards | (616) | |
Repayment of insurance financing loan | (979) | |
Net cash provided by (used in) financing activities | 30,975 | (1,010) |
Net change in cash and cash equivalents | 29,965 | (7,772) |
Cash and cash equivalents, beginning of period | 95,865 | 70,834 |
Cash and cash equivalents, end of period | 125,830 | 63,062 |
Supplemental disclosure of cash and non‑cash transactions: | ||
Cash paid for interest | 5,375 | 4,069 |
Cash paid for taxes | $ 474 | $ 215 |
Organization and Nature of Oper
Organization and Nature of Operations | 3 Months Ended |
Mar. 31, 2020 | |
Organization and Nature of Operations | |
Organization and Nature of Operations | Note 1. Organization and Nature of Operations Osmotica Pharmaceuticals plc, together with its subsidiaries, is a fully integrated biopharmaceutical company focused on the development and commercialization of specialty products that target markets with underserved patient populations. The Company generates revenues across an existing portfolio of promoted specialty neurology and women’s health products, as well as non-promoted products, many of which are primarily complex formulations of generic drugs. Osmotica Pharmaceuticals plc (formerly known as Lilydale Limited and Osmotica Pharmaceuticals Limited) is an Irish public limited company. Osmotica Holdings S.C.Sp. acquired Osmotica Pharmaceuticals plc on April 30, 2018 for the purpose of facilitating an offering of ordinary shares in an initial public offering (“IPO”). On October 22, 2018, Osmotica Pharmaceuticals plc completed its IPO, in which it issued and allotted 7,647,500 ordinary shares at a public offering price of $7.00 per share. The number of shares issued in the IPO reflected the exercise in full of the underwriters’ option to purchase 997,500 additional ordinary shares. In addition, the Company issued and allotted 2,014,285 ordinary shares at the public offering price in a private placement to investment funds affiliated with Avista Capital Partners, Altchem Limited and an entity controlled by the Company’s Chief Financial Officer. The aggregate net proceeds from the IPO and the private placement were approximately $58.1 million after deducting underwriting discounts and commissions and estimated offering expenses. Immediately prior to the IPO and prior to the commencement of trading of Osmotica Pharmaceuticals plc’s ordinary shares on the Nasdaq Global Select Market, Osmotica Holdings S.C.Sp. undertook a series of restructuring transactions that resulted in Osmotica Pharmaceuticals plc being the direct parent of Osmotica Holdings S.C.Sp with each holder of common units of Osmotica Holdings S.C.Sp. receiving approximately 42.84 ordinary shares of Osmotica Pharmaceuticals plc in exchange for each such common unit. In addition, each holder of an option to purchase common units of Osmotica Holdings S.C.Sp. received an option to purchase the number of ordinary shares of Osmotica Pharmaceuticals plc determined by multiplying the number of units underlying such option by approximately 42.84 (rounded down to the nearest whole share) and dividing the exercise price per unit for such option by approximately 42.84 (rounded up to the nearest whole cent). These transactions are referred to as the “Reorganization”. Accordingly, all share and share amounts for all periods presented in the accompanying financial statements have been adjusted retroactively, where applicable, to reflect the Reorganization. Until the Reorganization, Osmotica Pharmaceuticals plc did not conduct any operations (other than activities incidental to its formation, the Reorganization and the pursuit of an IPO). Upon the completion of the Reorganization, the historical consolidated financial statements of Osmotica Holdings S.C.Sp. became the historical financial statements of Osmotica Pharmaceuticals plc. Accordingly, the accompanying unaudited condensed consolidated financial information as of and for the three months ended March 31, 2020 included herein reflect the financial information of Osmotica Holdings S.C.Sp. Osmotica Holdings S.C.Sp.is a Luxembourg special limited partnership, formed on December 3, 2015 in connection with a business combination (the “Merger”), effective February 3, 2016, pursuant to a definitive agreement among Osmotica Holdings S.C.Sp., Vertical/Trigen Holdings, LLC (“Vertical/Trigen”) and its members, and Osmotica Holdings Corp Limited and its shareholders, among others. Osmotica Holdings S.C.Sp. and several other holding companies and partnerships were formed as a result of the Merger. Pursuant to the Merger, Vertical/Trigen was deemed to be the accounting acquirer. Unless otherwise indicated or required by the context, references throughout to “Osmotica,” or the “Company”, refer to (i) prior to the completion of the Reorganization, Osmotica Holdings S.C.Sp. and its consolidated subsidiaries, including, from and after April 30, 2018, Osmotica Pharmaceuticals plc, and (ii) following the completion of the Reorganization, Osmotica Pharmaceuticals plc and its consolidated subsidiaries, including Osmotica Holdings S.C.Sp. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Basis of Presentation and Summary of Significant Accounting Policies | Note 2. Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation —The accompanying unaudited condensed consolidated financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and under the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim reporting. In management’s opinion, the interim financial data presented includes all adjustments (consisting solely of normal recurring items) necessary for fair presentation. All intercompany accounts and transactions have been eliminated. Certain information required by GAAP has been condensed or omitted in accordance with rules and regulations of the SEC. Operating results for the three months ended March 31, 2020, are not necessarily indicative of the results that may be expected for any future period or for the year ending December 31, 2020 or any period thereafter. The accompanying Condensed Consolidated Balance Sheet data as of December 31, 2019 was derived from the audited consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2019. Basic and Diluted Loss per Share —Basic and diluted net loss per share is determined by dividing net loss by the weighted average ordinary shares outstanding during the period. For all periods presented with a net loss, the shares underlying the ordinary share options and restricted stock units have been excluded from the calculation because their effect would be anti‑dilutive. Therefore, the weighted-average shares outstanding used to calculate both basic and diluted loss per share are the same for periods with a net loss. The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding as they would be anti‑dilutive as of March 31, 2020 and 2019: Three Months Ended March 31, 2020 2019 Restricted stock units 1,165,364 1,374,335 Options to purchase ordinary shares 3,046,086 3,187,872 Fair Value of Financial Instrument s—The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and short and long‑term debt. The fair values of cash and cash equivalents, accounts receivable, accounts payable and debt approximate book value because of the short maturity of these financial instruments. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. Segment Reporting —The Company operates in one business segment which focuses on developing and commercializing pharmaceutical products that target markets with underserved patient populations. The Company’s business offerings have similar economic and other characteristics, including the nature of products, manufacturing and acquiring processes, types of customers, distribution methods and regulatory environment. The chief operating decision maker (“CODM”) reviews profit and loss information on a consolidated basis to assess performance and make overall operating decisions. The condensed consolidated financial statements reflect the financial results of the Company’s one reportable operating segment. The Company has no significant revenues or tangible assets outside of the United States. Correction of Immaterial Errors In connection with the preparation of the Company’s unaudited condensed consolidated financial statements as of and for the period ended September 30, 2019 and 2018 for inclusion in the Company’s Quarterly Report on Form 10-Q, the Company determined that a revision was required to correct misstatement associated with the tax treatment of certain intercompany transactions at the time of the business combination between Osmotica Holdings Limited and subsidiaries and Vertical/Trigen Holdings LLC which occurred on February 3, 2016. Additionally, revisions were necessary to correct misstatements related to uncertain tax provisions and prepaid taxes and certain other previously identified immaterial misstatements. These adjustments and the evaluation of these adjustmens has been previously disclosed in the Company’s Quarterly report on Form 10-Q for the period ended September 30, 2019 and the Company has reflected the corrections in the results for the prior period as detailed below (dollars in thousands). Three months ended March 31, 2019 As Net As Prepaid expenses and other current assets $ 16,199 $ (270) $ 15,929 Total assets 776,147 (270) 775,877 Income taxes payable- current portion 496 (496) - Deferred taxes 24,837 2,397 27,234 Income taxes payable- long term portion 1,804 737 2,541 Total liabilities 394,909 2,638 397,547 Shareholders' equity 381,237 (2,908) 378,329 Total liabilities and shareholders' equity 776,147 (270) 775,877 Income tax benefit (expense) 1,240 (486) 754 Net loss (6,201) (486) (6,687) Comprehensive loss (6,201) (486) (6,687) Loss per share (0.12) (0.01) (0.13) Weighted average share - basic and diluted 52,518,924 - 52,518,924 Recently Adopted Accounting Standards In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduces a new methodology for accounting for credit losses on financial instruments, including available-for-sale debt securities. The guidance establishes a new “expected loss model ” that requires entities to estimate current expected credit losses on financial instruments by using all practical and relevant information. The estimate of credit losses must be based on all relevant information including historical information, current conditions, and reasonable and supportable forecasts that affect the collectability of the amounts. The Company adopted this standard on January 1, 2020, and there was no material impact to the Company’s consolidated financial statements. The Company has provided additional disclosure as required by the standard upon adoption. Refer to Note 4 for additional details. . |
Revenues
Revenues | 3 Months Ended |
Mar. 31, 2020 | |
Revenues Abstract | |
Revenues | Note 3. Revenues The Company’s performance obligations are to provide its pharmaceutical products based upon purchase orders from distributors. The performance obligation is satisfied at a point in time, typically upon delivery, when the customer obtains control of the pharmaceutical product. The Company invoices its customers after the products have been delivered and invoice payments are generally due within 30 to 60 days of invoice date. The following table disaggregates revenue from contracts with customers by pharmaceutical products (dollars in thousands): Three Months Ended March 31, Pharmaceutical Product 2020 2019 Venlafaxine ER $ 14,118 $ 21,607 Methylphenidate ER 8,396 20,789 Divigel 7,581 5,497 Nitrofurantoin 4,608 — Lorzone 2,428 4,269 OB Complete 1,877 1,931 Other 8,300 2,307 Net product sales 47,308 56,400 Royalty revenue 869 721 License and contract revenue 472 5 Total revenues $ 48,649 $ 57,126 When the Company receives consideration from a customer, or such consideration is unconditionally due from a customer prior to the transfer of products to the customer under the terms of a contract, the Company records a contract liability. The Company classifies contract liabilities as deferred revenue. The Company had no deferred revenue as of March 31, 2020. Upon adoption of ASC Topic 606, the Company did not have any contract assets or liabilities. The Company has elected to apply the exemption under paragraph 606‑10‑50‑14(a) related to remaining performance obligations as all open purchase orders are expected to be satisfied with a period of one year from the date of the purchase order. Contract assets primarily relate to rights to consideration for goods or services transferred to the customer when the right is conditional on something other than the passage of time. Contract assets are transferred to accounts receivable when the rights become unconditional. The Company had no contract assets as of March 31, 2020. The Company has no costs to obtain or fulfill contracts meeting the capitalization criteria under ASC Topic 340, Other Assets and Deferred Costs. |
Accounts Receivable, Sales and
Accounts Receivable, Sales and Allowances | 3 Months Ended |
Mar. 31, 2020 | |
Accounts Receivable, Sales and Allowances | |
Accounts Receivable, Sales and Allowances | Note 4. Accounts Receivable, Sales and Allowances The nature of the Company’s business inherently involves, in the ordinary course, significant amounts and substantial volumes of transactions and estimates relating to allowances for product returns, chargebacks, rebates, allowance for credit losses under the new standard and discounts given to customers. This is typical of the pharmaceutical industry and not necessarily specific to the Company. Depending on the product, the end‑user customer, the specific terms of national supply contracts and the particular arrangements with the Company’s wholesale customers, certain rebates, chargebacks and other credits are deducted from the Company’s accounts receivable. The process of claiming these deductions depends on wholesalers reporting to the Company the amount of deductions that were earned under the terms of the respective agreement with the end‑user customer (which in turn depends on the specific end‑user customer, each having its own pricing arrangement, which entitles it to a particular deduction). This process can lead to partial payments against outstanding invoices as the wholesalers take the claimed deductions at the time of payment. Accounts receivable result primarily from sales of pharmaceutical products, amounts due under revenue sharing, license and royalty arrangements, which inherently involves, in the ordinary course of business, estimates relating to allowances for product returns, chargebacks, rebates, credit losses and discounts given to customers. Credit is extended based on the customer’s financial condition, and, generally, collateral is not required. The Company ages its accounts receivable using the corresponding sale date of the transaction and considers accounts past due based on terms agreed upon in the transaction, which is generally 30 to 60 days for branded and generic sales, depending on the customer and the products purchased. The Company is exposed to credit losses primarily through sales of its products. Prior to January 1, 2020, accounts receivable were recorded at cost less an allowance for doubtful accounts. Subsequent to January 1, 2020, accounts receivable are recorded at amortized cost less an allowance for expected credit losses that are not expected to be recovered. The Company’s expected loss methodology for accounts receivable is developed using historical collection experience, a review of the current status of customer’s trade receivables, and current and future market conditions. Due to the short-term nature of such receivables, the estimate of accounts receivable that may not be collected is based on the aging of accounts receivable balances and the financial condition of customers. The Company’s monitoring activities include timely account reconciliations, dispute resolution, payment confirmation, consideration of customers’ financial condition and macroeconomic conditions. Balances are written-off when determined to be uncollectible. The Company considered the current and expected future economic and market conditions surrounding a novel strain of the coronavirus, referred to as 2019-ncov, COVID-19 coronavirus epidemic, or COVID-19, and determined that the estimate of credit losses was not significantly impacted. With the exception of the allowance for credit losses, which is reflected as part of selling, general and administrative expense, the provisions for the following customer reserves are reflected as a reduction of revenues in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss. Trade accounts receivable, net consisted of the following (dollars in thousands): March 31, December 31, 2020 2019 Gross trade accounts receivable Trade accounts receivable $ 55,876 $ 70,958 Royalty accounts receivable 686 702 Other receivable 2,141 2,186 Less reserves for: Chargebacks (16,288) (14,624) Commercial rebates (7,917) (13,579) Discounts and allowances (1,687) (1,591) Allowance for credit losses (167) (138) Total trade accounts receivable, net $ 32,644 $ 43,914 The Company recorded the following adjustments to gross product sales (dollars in thousands): Three Months Ended March 31, 2020 2019 Gross product sales $ 109,030 $ 231,548 Less provisions for: Chargebacks (50,173) (101,234) Government and managed care rebates (4,846) (2,523) Commercial rebates (3,220) (64,598) Product returns (309) (1,026) Discounts and allowances (2,380) (4,701) Advertising and promotions (794) (1,066) Net product sales $ 47,308 $ 56,400 The activity in the Company’s allowance for customer deductions against trade accounts receivable was as follows (dollars in thousands): Discounts Commercial and Credit Chargebacks Rebates Allowances Losses Total Balance at December 31, 2018 $ 38,861 $ 49,232 $ 3,510 $ 194 $ 91,797 Provision 345,366 147,173 15,719 (190) 508,068 Charges processed (369,603) (182,826) (17,638) 134 (569,933) Balance at December 31, 2019 $ 14,624 $ 13,579 $ 1,591 $ 138 $ 29,932 Provision 50,173 3,220 2,380 29 55,802 Charges processed (48,509) (8,882) (2,284) — (59,675) Balance at March 31, 2020 $ 16,288 $ 7,917 $ 1,687 $ 167 $ 26,059 The activity in the Company’s accrued liabilities for customer deductions by account was as follows (dollars in thousands): Government and Product Managed Care Returns Rebates Total Balance at December 31, 2018 $ 48,464 $ 9,981 $ 58,445 Provision (3,932) 20,092 16,160 Charges processed (11,075) (25,206) (36,281) Balance at December 31, 2019 $ 33,457 $ 4,867 $ 38,324 Provision 309 4,846 5,155 Charges processed (4,566) (6,131) (10,697) Balance at March 31, 2020 $ 29,200 $ 3,582 $ 32,782 Provisions and utilizations of provisions activity in the current period which relate to the prior period revenues are not provided because to do so would be impracticable. The current systems and processes of the Company do not capture the chargeback and rebate settlements by the period in which the original sales transaction was recorded. The Company uses a combination of factors and applications to estimate the dollar amount of reserves for chargebacks and rebates at each month end. Variable consideration is included in the transaction price only to the extent a significant reversal in the amount of cumulative revenue recognized is not probable of occurring when the uncertainty associated with the variable consideration is subsequently resolved. The Company regularly monitors the reserves based on an analysis of the Company’s product sales and most recent claims, wholesaler inventory, current pricing, and anticipated future pricing changes. If amounts are different from the estimate due to changes from estimated rates, accrual rate adjustments are considered prospectively when determining provisions in accordance with authoritative GAAP. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2020 | |
Inventories | |
Inventories | Note 5. Inventories The components of inventories, net of allowances, were as follows (dollars in thousands): March 31, December 31, 2020 2019 Finished goods $ 14,085 $ 15,319 Work in process 1,128 778 Raw materials and supplies 5,323 5,208 $ 20,536 $ 21,305 The Company maintains an allowance for excess and obsolete inventory, as well as inventory where its cost is in excess of its net realizable value. The activity in the allowance for excess, obsolete, and net realizable value inventory account was as follows (dollars in thousands): March 31, December 31, 2020 2019 Balance at beginning of period $ 1,069 $ 1,561 Provision 314 2,322 Charges processed (29) (2,814) Balance at end of period $ 1,354 $ 1,069 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | Note 6. Goodwill and Other Intangible Assets The Company tests goodwill, definite-lived and indefinite‑lived intangible assets for impairment annually as of October 1 st , or more frequently whenever events or changes in circumstances indicate that the asset might be impaired. There were no events or circumstances since December 31, 2019 requiring the Company to test for impairment of goodwill. The carrying value of goodwill was $100.9 million as of March 31, 2020 and December 31, 2019. The following table sets forth the major categories of the Company’s intangible assets and the weighted‑average remaining amortization period for those assets that were not already fully amortized (dollars in thousands): March 31, 2020 Weighted Average Remaining Gross Net Amortization Carrying Accumulated Carrying Period Amount Amortization Impairment Amount (Years) Distribution Rights $ 33,714 $ (22,691) $ — $ 11,023 9.8 Product Rights 202,567 (155,615) — 46,952 2.8 Tradenames 13,485 (3,212) — 10,273 14.7 Developed Technology 52,466 (35,090) — 17,376 10.7 IPR&D 64,000 — — 64,000 Indefinite Lived $ 366,232 $ (216,608) $ — $ 149,624 The gross carrying amounts and accumulated amortization in the table above is inclusive of $10.4 million and have been fully impaired in the table above and inclusive as of March 31, 2020. December 31, 2019 Weighted Average Gross Net Remaining Carrying Accumulated Carrying Amortization Amount Amortization Impairment Amount Period (Years) Distribution Rights $ 98,433 $ (22,291) $ (64,719) $ 11,423 10.1 Product Rights 348,600 (152,348) (146,033) 50,219 3.1 Tradenames 13,485 (3,035) — 10,450 15.0 Developed Technology 125,461 (34,572) (72,995) 17,894 10.9 IPR&D 64,000 — — 64,000 Indefinite Lived $ 649,979 $ (212,246) $ (283,747) $ 153,986 The gross carrying amounts and accumulated amortization in the table above is inclusive of $10.4 million and have been fully impaired in the table above and inclusive as of December 31, 2019. Changes in the net carrying amount of intangible assets were as follows (dollars in thousands): Distribution Product Developed Rights Rights Tradenames Technology IPR&D Total December 31, 2018 $ 81,204 $ 217,473 $ 11,156 $ 96,857 $ 83,700 $ 490,390 Amortization (5,062) (40,921) (706) (5,968) — (52,657) Impairments (64,719) (146,033) — (72,995) — (283,747) Reclassifications(A) — 19,700 — — (19,700) — December 31, 2019 $ 11,423 $ 50,219 $ 10,450 $ 17,894 $ 64,000 $ 153,986 Amortization (400) (3,267) (177) (518) — (4,362) March 31, 2020 $ 11,023 $ 46,952 $ 10,273 $ 17,376 $ 64,000 $ 149,624 (A) IPR&D in the amount of $19.7 million related to Osmolex ER was reclassified to Product Rights in the first quarter of 2019 when the product was launched. Osmolex ER was fully impaired during the second quarter of 2019. As part of the Company’s goodwill and intangible asset impairment assessments, the Company estimates the fair values of the reporting unit and intangible assets using an income approach that utilizes a discounted cash flow model, or, where appropriate, a market approach. The discounted cash flow models are dependent upon the Company’s estimates of future cash flows and other factors. These estimates of future cash flows involve assumptions concerning (i) future operating performance, including future sales, long‑term growth rates, operating margins, variations in the amounts, allocation and timing of cash flows and the probability of achieving the estimated cash flows and (ii) future economic conditions. These assumptions are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy. The discount rates applied to estimated cash flows for the Company’s October 1, 2019 annual goodwill and indefinite-lived asset impairment test was 16.5% . The Company believes the discount rates and other inputs and assumptions are consistent with those that a market participant would use. Any impairment charges resulting from annual or interim goodwill and intangible asset impairment assessments are recorded to Impairment of intangible assets in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Amortization expense of $4.4 million and $16.9 million for the three months ended March 31, 2020 and 2019, respectively, was recorded as cost of goods sold. The amortization expense of acquired intangible assets for each of the following periods are expected to be as follows (dollars in thousands): Amortization Years ending December 31 Expense Remainder of 2020 $ 13,088 2021 17,161 2022 12,685 2023 11,805 2024 10,682 Thereafter 20,203 Total $ 85,624 |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Accrued Liabilities Abstract | |
Accrued Liabilities | Note 7. Accrued Liabilities Accrued liabilities consist of the following (dollars in thousands): March 31, December 31, 2020 2019 Accrued product returns $ 29,200 $ 33,457 Accrued royalties 3,434 3,649 Accrued compensation 3,292 10,998 Accrued government and managed care rebates 3,582 4,867 Accrued research and development 1,432 3,028 Accrued expenses and other liabilities 5,841 8,477 Customer coupons 475 777 Total $ 47,256 $ 65,253 In the ordinary course of business, the Company enters into contractual agreements with wholesalers pursuant to which the wholesalers distribute sales of Company products to customers and provide sales data to the Company. In return the wholesalers charge the Company a fee for services and other customary rebates and chargebacks based on distribution sales of Company products through the wholesalers and downstream customers. |
Financing Arrangements
Financing Arrangements | 3 Months Ended |
Mar. 31, 2020 | |
Financing Arrangements | |
Financing Arrangements | Note 8. Financing Arrangements The composition of the Company’s debt and financing obligations is as follows (dollars in thousands): March 31, December 31, 2020 2019 CIT Bank, N.A. Term Loan, net of deferred financing costs of $3.2 million and $3.4 million as of March 31, 2020 and December 31, 2019, respectively $ 268,236 $ 267,950 Total debt 268,236 267,950 Less: current portion — — Long-term debt $ 268,236 $ 267,950 Term Loan As of March 31, 2020, the interest rate was 4.82% for the Company’s Term A Loan and 5.32% for the Term B Loan. As of December 31, 2019, the interest rate was 5.79% for the Term A Loan and 6.29% for the Term B Loan. The Company was in compliance with all covenants of the Term Loan Agreement as of March 31, 2020. Revolving Facility As of March 31, 2020 there were no amounts drawn under the $50 million Revolving Facility with CIT Bank, N.A. |
Concentrations and Credit Risk
Concentrations and Credit Risk | 3 Months Ended |
Mar. 31, 2020 | |
Concentrations and Credit Risk | |
Concentrations and Credit Risk | Note 9. Concentrations and Credit Risk In the three months ended March 31, 2020 and 2019, a significant portion of the Company’s gross product sales reported were through three customers, and a significant portion of the Company’s accounts receivable as of March 31, 2020 and December 31, 2019 were due from these customers as well. The following table sets forth the percentage of the Company’s gross sales and accounts receivable attributable to these customers for the periods indicated: Gross Product Three Months Ended March 31, 2020 2019 Amerisource Bergen 31 % 7 % Cardinal Health 22 % 55 % McKesson 43 % 36 % Combined Total 96 % 98 % Gross Account Receivables March 31, December 31, 2020 2019 Amerisource Bergen 30 % 21 % Cardinal Health 24 % 22 % McKesson 39 % 51 % Combined Total 93 % 94 % Purchasing For the three months ended March 31, 2020 and 2019, one supplier accounted for approximately 65% and 76%, respectively, of the Company’s purchases of raw materials for products that are manufactured by the Company. The Company purchases various Active Pharmaceutical Ingredient, (“API”) of finished products at contractual minimum levels through agreements with third parties. Individually, none of these agreements are material to the Company, therefore, the Company does not believe that any of the purchase obligations represent levels above the normal course of business as of March 31, 2020. |
Incentive Plans
Incentive Plans | 3 Months Ended |
Mar. 31, 2020 | |
Incentive Plans | |
Incentive Plans | Note 10. Incentive Plans The Company recognized share-based compensation expense of $1.0 million and $1.2 million during the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, the total remaining unrecognized compensation cost related to non-vested share-based compensation awards amounted to $8.9 million. During the three months ended on March 31, 2020 and 2019, the Company granted 0 and 1,374,335, respectively, of restricted stock units. During the three months ended March 31, 2020 and 2019, shares vested were 237,163 and 0, respectively. As of March 31, 2020 there were 1,165,364 restricted stock units outstanding and the weighted-average remaining requisite service period of the non-vested stock options was 1.57 years and for non-vested restricted stock units was 2.96 years. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 11. Commitments and Contingencies Contingent Milestone Payments The Company has entered into strategic business agreements for the development and marketing of finished dosage form pharmaceutical products with various pharmaceutical development companies. Each strategic business agreement includes a future payment schedule for contingent milestone payments and in certain strategic business agreements, minimum royalty payments. The Company will be responsible for contingent milestone payments and minimum royalty payments to these strategic business partners based upon the occurrence of future events. Each strategic business agreement defines the triggering event of its future payment schedule, such as meeting product development progress timelines, successful product testing and validation, successful clinical studies, and various U.S. Food and Drug Administration and other regulatory approvals. Supply Agreement Obligations The Company is engaged in various supply agreements with third parties which obligate the Company to purchase various API or finished products at contractual minimum levels. None of these agreements are individually or in the aggregate material to the Company. Further, the Company does not believe that any of the purchase obligations represent levels above that of normal business demands as of March 31, 2020. Legal Proceedings The Company is a party in legal proceedings and potential claims arising from time to time in the ordinary course of its business. The amount, if any, of ultimate liability with respect to such matters cannot be determined. Despite the inherent uncertainties of litigation, management of the Company believes that the ultimate disposition of such proceedings and exposures will not have a material adverse impact on the financial condition, results of operations, or cash flows of the Company. On February 16, 2018, the Company received FDA approval for its amantadine extended release tablets under the trade name OSMOLEX ER. On that same date the Company filed in the Federal District Court for the District of Delaware a Complaint for Declaratory Judgment of Noninfringement of certain patents owned by Adamas Pharmaceuticals, Inc. (Osmotica Pharmaceutical US LLC and Vertical Pharmaceuticals, LLC vs. Adamas Pharmaceuticals, Inc. and Adamas Pharma, LLC). Adamas was served with the Complaint on February 21, 2018. Adamas filed an answer on April 13, 2018 denying the allegations in the Complaint and reserving the ability to raise counterclaims as the litigation progresses. On September 20, 2018, Adamas filed an amended answer to the Company’s Complaint for Declaratory Judgment of Noninfringement, with counterclaims alleging infringement of certain patents included in the Company’s Complaint and requesting that the court grant Adamas damages, injunctive relief and attorneys’ fees. The action is ongoing, but was stayed on May 23, 2019 at the parties’ joint request. On April 30, 2019, Osmotica Pharmaceuticals plc was served with a complaint in an action entitled Leo Shumacher, et al., v. Osmotica Pharmaceuticals plc, et al ., Superior Court of New Jersey, Somerset County No. SOM-L-000540-19. On May 10, 2019, a Complaint entitled Jeffrey Tello, et al., v. Osmotica Pharmaceuticals plc, et al., Superior Court of New Jersey, Somerset County No. SOM-L-000617-19 was filed in the same court as the Shumacher action. The complaints name Osmotica Pharmaceuticals plc, certain of its directors and officers and the underwriters of its initial public offering as defendants in putative class actions alleging violations of Sections 11 and 15 of the Securities Act of 1933 related to the disclosures contained in the registration statement and prospectus used for the Company’s initial public offering of ordinary shares. On July 22, 2019, Plaintiffs filed an Amended Complaint consolidating the two actions, reiterating the previously pled allegations and adding an additional individual defendant. The Company disputes the allegations in the complaint and intends to vigorously defend against the action. However, this litigation matter is still in an early stage and there is no assurance that the Company will be successful in its defense or that insurance will be available or adequate to fund any settlement or judgment or the litigation costs of the action, which could adversely affect the Company’s results of operations and financial condition. There is no loss that is probable or reasonably estimatable as of March 31, 2020. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Taxes | |
Income Taxes | Note 12. Income Taxes During the three months ended March 31, 2020, the Company recognized an income tax expense of $1.0 million on $2.1 million of loss before income tax, compared to $0.8 million of income tax benefit on $7.4 million of loss before income tax during the comparable 2019 period. The tax expense resulted from the Company’s foreign entities generating a projected tax liability. Income taxes for the interim periods have been based on an estimated annual worldwide effective tax rate. Income tax (expense) benefit differs from the statutory income tax rate primarily due to the occurrence of orphan drug and research development credits, recording of a valuation allowance and the addition of state and foreign taxes. The Coronavirus Aid Relief, and Economic Security Act (CARES Act) was enacted on March 27, 2020 in the United States. The CARES Act and related notices include several significant provisions, including delaying certain payroll tax payments, mandatory transition tax payments under the Tax Cuts and Jobs Act, and estimated income tax payments that we expect to defer to future periods. We do not currently expect the CARES Act to have a material impact on our financial results, including on our annual estimated effective tax rate, or on our liquidity. We will continue to monitor and assess the impact the CARES Act and similar legislation in other countries may have on our business and financial results. The Company provides reserves for potential payments of income tax to various tax authorities or does not recognize income tax benefits related to uncertain tax positions and other issues. Tax benefits for uncertain tax positions are based on a determination of whether a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized, assuming that the matter in question will be decided based on its technical merits. The Company’s policy is to record interest and penalties in the provision for income taxes. Two of the Company’s subsidiaries, Osmotica Pharmaceutical Corp. and Valkyrie Group Holding Inc., are under audit by the Internal Revenue Service for tax years 2016 and 2017. Currently, there are no significant issues to report. Valuation Allowance Net deferred tax assets arise due to the recognition of income and expense items for tax purposes, which differ from those used for financial statement purposes. ASC 740, Income Taxes, provides for the recognition of deferred tax assets if the realization of such assets is more likely than not. In assessing the need for a valuation allowance in the first quarter of year ending 2020, the Company considered all available objective and verifiable evidence both positive and negative, including historical levels of pre-tax income (loss) both on a consolidated basis and tax reporting entity basis, legislative developments, expectations and risks associated with estimates of future pre-tax income, and prudent and feasible tax planning strategies. The Company assesses the realizability of the deferred tax assets at each balance sheet date based on actuals and forecasted operating results in order to determine the proper amount, if any, of a valuation allowance. As a result of this analysis, the Company determined that it is more likely than not that it will not realize the benefits of its net deferred tax assets and therefore has recorded a valuation allowance to reduce the carrying value of its net deferred tax assets. The Company continues to maintain valuation allowances on deferred tax assets applicable to entities in foreign jurisdictions for which separate income tax returns are filed, where realization of the related deferred tax assets from future profitable operations is not reasonably assured. |
Related Parties
Related Parties | 3 Months Ended |
Mar. 31, 2020 | |
Related Parties | |
Related Parties | Note 13. Related Parties Prior to the Company’s initial public offering, it paid quarterly advisory, monitoring fees and any other related expenses to certain shareholders. The Company had accrued less than $0.1 million and $0.1 million as liabilities, as of March 31, 2020 and December 31, 2019, respectively, and had recognized $0.8 million and less than $0.1 million of related expense for the three months ended March 31, 2020 and 2019, respectively. Further, the Company leases its Argentina office and warehouse space facilities through a related party lease. The term of the operating lease is through December 31, 2020. For the three months ended March 31, 2020 and 2019, the Company incurred rent expense under this lease of less than $0.1 million and $0.1 million, respectively. On August 22, 2018, the Company entered into a Master Service Agreement with United Biosource, LLC or (“UBC”), an Avista Capital Partners portfolio company, for prescription processing and patient access services. In November 2018, the Company and UBC entered into a Statement of Work for services valued at approximately $2.4 million. The Company had accrued $0.3 million of liabilities related to this agreement as of March 31, 2020 and had recognized $0.4 million of related expense for the three months ended March 31, 2020. |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Note 14. Shareholders’ Equity Ordinary Share Repurchase Program In September 2019, the Company’s Board of Directors authorized the repurchase of up to 5,251,892 ordinary shares pursuant to a share repurchase program. Purchases under the ordinary share repurchase program can be made on the open market or in privately negotiated transactions, with the size and timing of these purchases based on a number of factors, including the price and business and market conditions. The Company expects to retire ordinary shares acquired under the repurchase program. In the three months ended March 31, 2020, the Company repurchased 29,000 ordinary shares for an aggregate of $0.2 million. 2019 Employee Share Purchase Plan In September 2019, the Company’s board of directors adopted and approved, the Employee Share Purchase Plan (the “ESPP”). The ESPP allows each eligible employee who is participating in the plan to purchase shares by authorizing payroll deductions of up to $2,000 per payroll period. Unless the participating employee has previously withdrawn from the offering, accumulated payroll deductions will be used to purchase shares on the last business day of the offering period at a price equal to 85 percent of the fair market value of the shares on the first business day or the last business day of the offering period, whichever is lower. Under applicable tax rules, an employee may purchase no more than $25,000 worth of ordinary shares, valued at the start of the purchase period, under the ESPP in any calendar year. There is no minimum holding period associated with shares purchased pursuant to this plan. An employee’s purchase rights terminate immediately upon termination of employment. The Company accounts for employee stock purchases made under its ESPP using the estimate grant date fair value of accounting in accordance with ASC 718, Stock Compensation. The purchase price discount and the look-back feature cause the ESPP to be compensatory and the Company to recognize compensation expense. The compensation cost is recognized on a straight-line basis over the requisite service period. The Company recognized less than $0.1 million of compensation expense for the three months ended March 31, 2020. The Company values ESPP shares using the Black-Scholes model. As of March 31, 2020, there was less than $0.1 million of unrecognized ordinary share compensation expense related to the ESPP, which is expected to be recognized over a weighted-average period of 0.50 years. On January 2, 2020, the Company issued 29,351 ordinary shares to the employees who participated in the ESPP during the offering period ended December 31, 2019. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation —The accompanying unaudited condensed consolidated financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and under the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim reporting. In management’s opinion, the interim financial data presented includes all adjustments (consisting solely of normal recurring items) necessary for fair presentation. All intercompany accounts and transactions have been eliminated. Certain information required by GAAP has been condensed or omitted in accordance with rules and regulations of the SEC. Operating results for the three months ended March 31, 2020, are not necessarily indicative of the results that may be expected for any future period or for the year ending December 31, 2020 or any period thereafter. The accompanying Condensed Consolidated Balance Sheet data as of December 31, 2019 was derived from the audited consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2019. |
Fair Value of Financial Instruments | Fair Value of Financial Instrument s—The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and short and long‑term debt. The fair values of cash and cash equivalents, accounts receivable, accounts payable and debt approximate book value because of the short maturity of these financial instruments. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. |
Basic and Diluted Loss per Share | Basic and Diluted Loss per Share —Basic and diluted net loss per share is determined by dividing net loss by the weighted average ordinary shares outstanding during the period. For all periods presented with a net loss, the shares underlying the ordinary share options and restricted stock units have been excluded from the calculation because their effect would be anti‑dilutive. Therefore, the weighted-average shares outstanding used to calculate both basic and diluted loss per share are the same for periods with a net loss. The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding as they would be anti‑dilutive as of March 31, 2020 and 2019: Three Months Ended March 31, 2020 2019 Restricted stock units 1,165,364 1,374,335 Options to purchase ordinary shares 3,046,086 3,187,872 |
Segment Reporting | Segment Reporting —The Company operates in one business segment which focuses on developing and commercializing pharmaceutical products that target markets with underserved patient populations. The Company’s business offerings have similar economic and other characteristics, including the nature of products, manufacturing and acquiring processes, types of customers, distribution methods and regulatory environment. The chief operating decision maker (“CODM”) reviews profit and loss information on a consolidated basis to assess performance and make overall operating decisions. The condensed consolidated financial statements reflect the financial results of the Company’s one reportable operating segment. The Company has no significant revenues or tangible assets outside of the United States. |
Correction of Immaterial Errors | Correction of Immaterial Errors In connection with the preparation of the Company’s unaudited condensed consolidated financial statements as of and for the period ended September 30, 2019 and 2018 for inclusion in the Company’s Quarterly Report on Form 10-Q, the Company determined that a revision was required to correct misstatement associated with the tax treatment of certain intercompany transactions at the time of the business combination between Osmotica Holdings Limited and subsidiaries and Vertical/Trigen Holdings LLC which occurred on February 3, 2016. Additionally, revisions were necessary to correct misstatements related to uncertain tax provisions and prepaid taxes and certain other previously identified immaterial misstatements. These adjustments and the evaluation of these adjustmens has been previously disclosed in the Company’s Quarterly report on Form 10-Q for the period ended September 30, 2019 and the Company has reflected the corrections in the results for the prior period as detailed below (dollars in thousands). Three months ended March 31, 2019 As Net As Prepaid expenses and other current assets $ 16,199 $ (270) $ 15,929 Total assets 776,147 (270) 775,877 Income taxes payable- current portion 496 (496) - Deferred taxes 24,837 2,397 27,234 Income taxes payable- long term portion 1,804 737 2,541 Total liabilities 394,909 2,638 397,547 Shareholders' equity 381,237 (2,908) 378,329 Total liabilities and shareholders' equity 776,147 (270) 775,877 Income tax benefit (expense) 1,240 (486) 754 Net loss (6,201) (486) (6,687) Comprehensive loss (6,201) (486) (6,687) Loss per share (0.12) (0.01) (0.13) Weighted average share - basic and diluted 52,518,924 - 52,518,924 |
Recently Adopted and Recent Accounting Standards | Three months ended March 31, 2019 As Net As Prepaid expenses and other current assets $ 16,199 $ (270) $ 15,929 Total assets 776,147 (270) 775,877 Income taxes payable- current portion 496 (496) - Deferred taxes 24,837 2,397 27,234 Income taxes payable- long term portion 1,804 737 2,541 Total liabilities 394,909 2,638 397,547 Shareholders' equity 381,237 (2,908) 378,329 Total liabilities and shareholders' equity 776,147 (270) 775,877 Income tax benefit (expense) 1,240 (486) 754 Net loss (6,201) (486) (6,687) Comprehensive loss (6,201) (486) (6,687) Loss per share (0.12) (0.01) (0.13) Weighted average share - basic and diluted 52,518,924 - 52,518,924 Recently Adopted Accounting Standards In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduces a new methodology for accounting for credit losses on financial instruments, including available-for-sale debt securities. The guidance establishes a new “expected loss model ” that requires entities to estimate current expected credit losses on financial instruments by using all practical and relevant information. The estimate of credit losses must be based on all relevant information including historical information, current conditions, and reasonable and supportable forecasts that affect the collectability of the amounts. The Company adopted this standard on January 1, 2020, and there was no material impact to the Company’s consolidated financial statements. The Company has provided additional disclosure as required by the standard upon adoption. Refer to Note 4 for additional details. |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | Three Months Ended March 31, 2020 2019 Restricted stock units 1,165,364 1,374,335 Options to purchase ordinary shares 3,046,086 3,187,872 |
Schedule of amounts originally reported, net correction adjustments and corrected amounts for items affected by the restatement | Three months ended March 31, 2019 As Net As Prepaid expenses and other current assets $ 16,199 $ (270) $ 15,929 Total assets 776,147 (270) 775,877 Income taxes payable- current portion 496 (496) - Deferred taxes 24,837 2,397 27,234 Income taxes payable- long term portion 1,804 737 2,541 Total liabilities 394,909 2,638 397,547 Shareholders' equity 381,237 (2,908) 378,329 Total liabilities and shareholders' equity 776,147 (270) 775,877 Income tax benefit (expense) 1,240 (486) 754 Net loss (6,201) (486) (6,687) Comprehensive loss (6,201) (486) (6,687) Loss per share (0.12) (0.01) (0.13) Weighted average share - basic and diluted 52,518,924 - 52,518,924 |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenues Abstract | |
Schedule of disaggregation of revenue from contracts with customers | Three Months Ended March 31, Pharmaceutical Product 2020 2019 Venlafaxine ER $ 14,118 $ 21,607 Methylphenidate ER 8,396 20,789 Divigel 7,581 5,497 Nitrofurantoin 4,608 — Lorzone 2,428 4,269 OB Complete 1,877 1,931 Other 8,300 2,307 Net product sales 47,308 56,400 Royalty revenue 869 721 License and contract revenue 472 5 Total revenues $ 48,649 $ 57,126 |
Accounts Receivable, Sales an_2
Accounts Receivable, Sales and Allowances (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Schedule of components of accounts receivable | March 31, December 31, 2020 2019 Gross trade accounts receivable Trade accounts receivable $ 55,876 $ 70,958 Royalty accounts receivable 686 702 Other receivable 2,141 2,186 Less reserves for: Chargebacks (16,288) (14,624) Commercial rebates (7,917) (13,579) Discounts and allowances (1,687) (1,591) Allowance for credit losses (167) (138) Total trade accounts receivable, net $ 32,644 $ 43,914 |
Schedule of adjustments to gross product sales | Three Months Ended March 31, 2020 2019 Gross product sales $ 109,030 $ 231,548 Less provisions for: Chargebacks (50,173) (101,234) Government and managed care rebates (4,846) (2,523) Commercial rebates (3,220) (64,598) Product returns (309) (1,026) Discounts and allowances (2,380) (4,701) Advertising and promotions (794) (1,066) Net product sales $ 47,308 $ 56,400 |
Trade accounts receivable | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Schedule of activity in allowance/liability for customer deductions | Discounts Commercial and Credit Chargebacks Rebates Allowances Losses Total Balance at December 31, 2018 $ 38,861 $ 49,232 $ 3,510 $ 194 $ 91,797 Provision 345,366 147,173 15,719 (190) 508,068 Charges processed (369,603) (182,826) (17,638) 134 (569,933) Balance at December 31, 2019 $ 14,624 $ 13,579 $ 1,591 $ 138 $ 29,932 Provision 50,173 3,220 2,380 29 55,802 Charges processed (48,509) (8,882) (2,284) — (59,675) Balance at March 31, 2020 $ 16,288 $ 7,917 $ 1,687 $ 167 $ 26,059 |
Accrued liabilities | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Schedule of activity in allowance/liability for customer deductions | Government and Product Managed Care Returns Rebates Total Balance at December 31, 2018 $ 48,464 $ 9,981 $ 58,445 Provision (3,932) 20,092 16,160 Charges processed (11,075) (25,206) (36,281) Balance at December 31, 2019 $ 33,457 $ 4,867 $ 38,324 Provision 309 4,846 5,155 Charges processed (4,566) (6,131) (10,697) Balance at March 31, 2020 $ 29,200 $ 3,582 $ 32,782 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory [Line Items] | |
Summary of components of inventories, net of allowances | March 31, December 31, 2020 2019 Finished goods $ 14,085 $ 15,319 Work in process 1,128 778 Raw materials and supplies 5,323 5,208 $ 20,536 $ 21,305 |
Allowance for excess and obsolete inventory | |
Inventory [Line Items] | |
Schedule of activity in allowance for inventory valuation and obsolescence | March 31, December 31, 2020 2019 Balance at beginning of period $ 1,069 $ 1,561 Provision 314 2,322 Charges processed (29) (2,814) Balance at end of period $ 1,354 $ 1,069 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Other Intangible Assets | |
Schedule of major categories of the Company’s intangible assets and the weighted average remaining amortization period | March 31, 2020 Weighted Average Remaining Gross Net Amortization Carrying Accumulated Carrying Period Amount Amortization Impairment Amount (Years) Distribution Rights $ 33,714 $ (22,691) $ — $ 11,023 9.8 Product Rights 202,567 (155,615) — 46,952 2.8 Tradenames 13,485 (3,212) — 10,273 14.7 Developed Technology 52,466 (35,090) — 17,376 10.7 IPR&D 64,000 — — 64,000 Indefinite Lived $ 366,232 $ (216,608) $ — $ 149,624 December 31, 2019 Weighted Average Gross Net Remaining Carrying Accumulated Carrying Amortization Amount Amortization Impairment Amount Period (Years) Distribution Rights $ 98,433 $ (22,291) $ (64,719) $ 11,423 10.1 Product Rights 348,600 (152,348) (146,033) 50,219 3.1 Tradenames 13,485 (3,035) — 10,450 15.0 Developed Technology 125,461 (34,572) (72,995) 17,894 10.9 IPR&D 64,000 — — 64,000 Indefinite Lived $ 649,979 $ (212,246) $ (283,747) $ 153,986 |
Schedule of changes in the net carrying amount of intangible assets | Distribution Product Developed Rights Rights Tradenames Technology IPR&D Total December 31, 2018 $ 81,204 $ 217,473 $ 11,156 $ 96,857 $ 83,700 $ 490,390 Amortization (5,062) (40,921) (706) (5,968) — (52,657) Impairments (64,719) (146,033) — (72,995) — (283,747) Reclassifications(A) — 19,700 — — (19,700) — December 31, 2019 $ 11,423 $ 50,219 $ 10,450 $ 17,894 $ 64,000 $ 153,986 Amortization (400) (3,267) (177) (518) — (4,362) March 31, 2020 $ 11,023 $ 46,952 $ 10,273 $ 17,376 $ 64,000 $ 149,624 (A) IPR&D in the amount of $19.7 million related to Osmolex ER was reclassified to Product Rights in the first quarter of 2019 when the product was launched. Osmolex ER was fully impaired during the second quarter of 2019. |
Schedule of expected amortization expense | Amortization Years ending December 31 Expense Remainder of 2020 $ 13,088 2021 17,161 2022 12,685 2023 11,805 2024 10,682 Thereafter 20,203 Total $ 85,624 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accrued Liabilities Abstract | |
Schedule of accrued liabilities | March 31, December 31, 2020 2019 Accrued product returns $ 29,200 $ 33,457 Accrued royalties 3,434 3,649 Accrued compensation 3,292 10,998 Accrued government and managed care rebates 3,582 4,867 Accrued research and development 1,432 3,028 Accrued expenses and other liabilities 5,841 8,477 Customer coupons 475 777 Total $ 47,256 $ 65,253 |
Financing Arrangement (Tables)
Financing Arrangement (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Financing Arrangements | |
Schedule of Composition of Company’s Debt and Financing Obligations | March 31, December 31, 2020 2019 CIT Bank, N.A. Term Loan, net of deferred financing costs of $3.2 million and $3.4 million as of March 31, 2020 and December 31, 2019, respectively $ 268,236 $ 267,950 Total debt 268,236 267,950 Less: current portion — — Long-term debt $ 268,236 $ 267,950 |
Concentrations and Credit Risk
Concentrations and Credit Risk (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Gross Product Sales | Customer concentration risk | |
Concentrations and Credit Risk | |
Schedule of percentage of Company’s gross sales and accounts receivable attributable to customers | Gross Product Three Months Ended March 31, 2020 2019 Amerisource Bergen 31 % 7 % Cardinal Health 22 % 55 % McKesson 43 % 36 % Combined Total 96 % 98 % |
Gross Accounts Receivable | Credit concentration risk | |
Concentrations and Credit Risk | |
Schedule of percentage of Company’s gross sales and accounts receivable attributable to customers | Gross Account Receivables March 31, December 31, 2020 2019 Amerisource Bergen 30 % 21 % Cardinal Health 24 % 22 % McKesson 39 % 51 % Combined Total 93 % 94 % |
Organization and Nature of Op_2
Organization and Nature of Operations (Details) - USD ($) | Oct. 22, 2018 | Oct. 21, 2018 |
Stock transactions | ||
Aggregate net proceeds | $ 58,100,000 | |
Number of shares per unit | 42.84 | |
Option shares multiple | 42.84 | |
Option exercise price divisor | $ 42.84 | |
IPO [Member] | ||
Stock transactions | ||
Number of ordinary shares issued | 7,647,500 | |
Public offering price per share | $ 7 | |
Over-Allotment Option [Member] | ||
Stock transactions | ||
Number of ordinary shares issued | 997,500 | |
Private Placement [Member] | ||
Stock transactions | ||
Number of ordinary shares issued | 2,014,285 |
Basis of Presentation - Anti-di
Basis of Presentation - Anti-dilutive shares (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Restricted Stock Units (RSUs) [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities | 1,165,364 | 1,374,335 |
Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities | 3,046,086 | 3,187,872 |
Basis of Presentation - Segment
Basis of Presentation - Segments (Details) | 3 Months Ended |
Mar. 31, 2020segment | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Number of operating segments | 1 |
Number of reportable operating segments | 1 |
Basis of Presentation - Error c
Basis of Presentation - Error correction (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 21, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Balance sheet items | |||||
Prepaid expenses and other current assets | $ 10,654 | $ 15,929 | $ 11,546 | ||
Assets | 475,134 | 775,877 | 463,255 | ||
Deferred taxes | 2,329 | 27,234 | 1,500 | ||
Income taxes payable - long-term portion | 2,541 | ||||
Liabilities | 331,394 | 397,547 | 348,547 | ||
Additional paid in capital | 521,484 | 489,440 | |||
Accumulated deficit | (376,104) | (373,021) | |||
Shareholders' equity | 143,740 | 378,329 | 114,708 | $ 383,847 | |
Liabilities and Equity | 475,134 | 775,877 | $ 463,255 | ||
Comprehensive income items | |||||
Income tax benefit | (960) | 754 | |||
Net income (loss) | $ (3,083) | (6,687) | |||
Comprehensive loss | $ (6,687) | ||||
Loss per share | $ (0.13) | ||||
Weighted Average Number of Shares Outstanding, Basic and Diluted | 58,257,191 | 52,518,924 | |||
Option shares multiple | 42.84 | ||||
Cost of goods sold (inclusive of amortization of intangibles) | $ 20,590 | $ 29,203 | |||
Research and development expenses | $ 5,688 | 9,764 | |||
Previously Reported [Member] | |||||
Balance sheet items | |||||
Prepaid expenses and other current assets | 16,199 | ||||
Assets | 776,147 | ||||
Income taxes payable - current portion | 496 | ||||
Deferred taxes | 24,837 | ||||
Income taxes payable - long-term portion | 1,804 | ||||
Liabilities | 394,909 | ||||
Shareholders' equity | 381,237 | ||||
Liabilities and Equity | 776,147 | ||||
Comprehensive income items | |||||
Income tax benefit | 1,240 | ||||
Net income (loss) | (6,201) | ||||
Comprehensive loss | $ (6,201) | ||||
Loss per share | $ (0.12) | ||||
Weighted Average Number of Shares Outstanding, Basic and Diluted | 52,518,924 | ||||
Restatement Adjustment [Member] | |||||
Balance sheet items | |||||
Prepaid expenses and other current assets | $ (270) | ||||
Assets | (270) | ||||
Income taxes payable - current portion | (496) | ||||
Deferred taxes | 2,397 | ||||
Income taxes payable - long-term portion | 737 | ||||
Liabilities | 2,638 | ||||
Shareholders' equity | (2,908) | ||||
Liabilities and Equity | (270) | ||||
Comprehensive income items | |||||
Income tax benefit | (486) | ||||
Net income (loss) | (486) | ||||
Comprehensive loss | $ (486) | ||||
Loss per share | $ (0.01) |
Revenues (Details)
Revenues (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 48,649,000 | $ 57,126,000 |
Contract with customer, asset and liability | ||
Deferred revenue | $ 0 | |
Remaining performance obligations | true | |
Contract assets | $ 0 | |
Cost to obtain or fulfill contracts | 0 | |
Product Revenue | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 47,308,000 | 56,400,000 |
Venlafaxine ER/VERT | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 14,118,000 | 21,607,000 |
Methylphenidate ER | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 8,396,000 | 20,789,000 |
Divigel | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 7,581,000 | 5,497,000 |
Nitrofurantoin Product [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 4,608,000 | |
Lorzone | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 2,428,000 | 4,269,000 |
OB Complete | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,877,000 | 1,931,000 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 8,300,000 | 2,307,000 |
Royalty Revenue | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 869,000 | 721,000 |
License and contract revenue | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 472,000 | $ 5,000 |
Minimum | ||
Disaggregation of Revenue [Line Items] | ||
Invoice payment due period | 30 days | |
Minimum | Product Revenue | ||
Disaggregation of Revenue [Line Items] | ||
Invoice payment due period | 30 days | |
Maximum | ||
Disaggregation of Revenue [Line Items] | ||
Invoice payment due period | 60 days | |
Maximum | Product Revenue | ||
Disaggregation of Revenue [Line Items] | ||
Invoice payment due period | 60 days |
Accounts Receivable, Sales an_3
Accounts Receivable, Sales and Allowances - Trade accounts receivable, net (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total trade accounts receivable, net | $ 32,644 | $ 43,914 |
Minimum | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Invoice payment due period | 30 days | |
Maximum | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Invoice payment due period | 60 days | |
Chargebacks | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Reserves | $ (16,288) | (14,624) |
Commercial rebates | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Reserves | (7,917) | (13,579) |
Discounts and allowances | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Reserves | (1,687) | (1,591) |
Doubtful accounts | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Reserves | (167) | (138) |
Trade accounts receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross trade accounts receivable | 55,876 | 70,958 |
Royalty accounts receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross trade accounts receivable | 686 | 702 |
Other receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross trade accounts receivable | $ 2,141 | $ 2,186 |
Accounts Receivable, Sales an_4
Accounts Receivable, Sales and Allowances - Adjustment to gross product sales (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Revenues | $ 48,649 | $ 57,126 |
Product Revenue | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Gross product sales | 109,030 | 231,548 |
Revenues | 47,308 | 56,400 |
Product Revenue | Chargebacks | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Adjustments to gross products sales | (50,173) | (101,234) |
Product Revenue | Government And Managed Care Rebates [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Adjustments to gross products sales | (4,846) | (2,523) |
Product Revenue | Commercial rebates | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Adjustments to gross products sales | (3,220) | (64,598) |
Product Revenue | Product returns | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Adjustments to gross products sales | (309) | (1,026) |
Product Revenue | Discounts and allowances | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Adjustments to gross products sales | (2,380) | (4,701) |
Product Revenue | Advertising and promotions | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Adjustments to gross products sales | $ (794) | $ (1,066) |
Accounts Receivable, Sales an_5
Accounts Receivable, Sales and Allowances - Allowance for customer deduction (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Trade accounts receivable | ||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at beginning of period | $ 29,932 | $ 91,797 |
Provision | 55,802 | 508,068 |
Charges processed | (59,675) | (569,933) |
Balance at end of period | 26,059 | 29,932 |
Chargebacks | ||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at beginning of period | 14,624 | |
Balance at end of period | 16,288 | 14,624 |
Chargebacks | Trade accounts receivable | ||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at beginning of period | 14,624 | 38,861 |
Provision | 50,173 | 345,366 |
Charges processed | (48,509) | (369,603) |
Balance at end of period | 16,288 | 14,624 |
Commercial rebates | ||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at beginning of period | 13,579 | |
Balance at end of period | 7,917 | 13,579 |
Commercial rebates | Trade accounts receivable | ||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at beginning of period | 13,579 | 49,232 |
Provision | 3,220 | 147,173 |
Charges processed | (8,882) | (182,826) |
Balance at end of period | 7,917 | 13,579 |
Discounts and allowances | ||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at beginning of period | 1,591 | |
Balance at end of period | 1,687 | 1,591 |
Discounts and allowances | Trade accounts receivable | ||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at beginning of period | 1,591 | 3,510 |
Provision | 2,380 | 15,719 |
Charges processed | (2,284) | (17,638) |
Balance at end of period | 1,687 | 1,591 |
Doubtful accounts | ||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at beginning of period | 138 | |
Balance at end of period | 167 | 138 |
Doubtful accounts | Trade accounts receivable | ||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at beginning of period | 138 | 194 |
Provision | 29 | (190) |
Charges processed | 134 | |
Balance at end of period | $ 167 | $ 138 |
Accounts Receivable, Sales an_6
Accounts Receivable, Sales and Allowances - Accrued liabilities for customer deductions (Details) - Accrued liabilities - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at beginning of period | $ 38,324,000 | $ 58,445,000 |
Provision | 5,155,000 | 16,160,000 |
Charges processed | (10,697,000) | (36,281,000) |
Balance at end of period | 32,782 | 38,324,000 |
Product returns | ||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at beginning of period | 33,457,000 | 48,464,000 |
Provision | 309,000 | (3,932,000) |
Charges processed | (4,566,000) | (11,075,000) |
Balance at end of period | 29,200 | 33,457,000 |
Government And Managed Care Rebates [Member] | ||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at beginning of period | 4,867,000 | 9,981,000 |
Provision | 4,846,000 | 20,092,000 |
Charges processed | (6,131,000) | (25,206,000) |
Balance at end of period | $ 3,582 | $ 4,867,000 |
Inventories - Components (Detai
Inventories - Components (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Inventories | ||
Finished goods | $ 14,085 | $ 15,319 |
Work in process | 1,128 | 778 |
Raw materials and supplies | 5,323 | 5,208 |
Total | $ 20,536 | $ 21,305 |
Inventories - Allowance for Exc
Inventories - Allowance for Excess and Obsolete Inventory (Details) - Allowance for excess and obsolete inventory - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Summary of activity in the allowance for excess, obsolete, and net realizable value inventory account | ||
Balance at beginning of period | $ 1,069 | $ 1,561 |
Provision | 314 | 2,322 |
Charges processed | (29) | (2,814) |
Balance at end of period | $ 1,354 | $ 1,069 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | $ 100,855 |
Goodwill, Ending Balance | $ 100,855 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Major Categories (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule of major categories of the Company’s intangible assets and the weighted average remaining amortization period | |||
Accumulated amortization | $ (216,608) | $ (212,246) | |
Impairment | (283,747) | ||
Net carrying amount, finite-lived | 85,624 | ||
Gross carrying amount | 366,232 | 649,979 | |
Net carrying amount | 149,624 | 153,986 | $ 490,390 |
Fully impaired intangible assets | 10,400 | 10,400 | |
IPR&D | |||
Schedule of major categories of the Company’s intangible assets and the weighted average remaining amortization period | |||
Gross carrying amount, Indefinite-lived | 64,000 | 64,000 | |
Indefinite-lived intangible assets | 64,000 | 64,000 | |
Net carrying amount | 64,000 | 64,000 | 83,700 |
Distribution Rights | |||
Schedule of major categories of the Company’s intangible assets and the weighted average remaining amortization period | |||
Gross carrying amount, finite-lived | 33,714 | 98,433 | |
Accumulated amortization | (22,691) | (22,291) | |
Impairment | (64,719) | ||
Net carrying amount, finite-lived | 11,023 | 11,423 | |
Net carrying amount | $ 11,023 | $ 11,423 | 81,204 |
Weighted average remaining amortization period (Years) | 9 years 9 months 18 days | 10 years 1 month 6 days | |
Product Rights | |||
Schedule of major categories of the Company’s intangible assets and the weighted average remaining amortization period | |||
Gross carrying amount, finite-lived | $ 202,567 | $ 348,600 | |
Accumulated amortization | (155,615) | (152,348) | |
Impairment | (146,033) | ||
Net carrying amount, finite-lived | 46,952 | 50,219 | |
Net carrying amount | $ 46,952 | $ 50,219 | 217,473 |
Weighted average remaining amortization period (Years) | 2 years 9 months 18 days | 3 years 1 month 6 days | |
Tradenames | |||
Schedule of major categories of the Company’s intangible assets and the weighted average remaining amortization period | |||
Gross carrying amount, finite-lived | $ 13,485 | $ 13,485 | |
Accumulated amortization | (3,212) | (3,035) | |
Net carrying amount, finite-lived | 10,273 | 10,450 | |
Net carrying amount | $ 10,273 | $ 10,450 | 11,156 |
Weighted average remaining amortization period (Years) | 14 years 8 months 12 days | 15 years | |
Developed Technology | |||
Schedule of major categories of the Company’s intangible assets and the weighted average remaining amortization period | |||
Gross carrying amount, finite-lived | $ 52,466 | $ 125,461 | |
Accumulated amortization | (35,090) | (34,572) | |
Impairment | (72,995) | ||
Net carrying amount, finite-lived | 17,376 | 17,894 | |
Net carrying amount | $ 17,376 | $ 17,894 | $ 96,857 |
Weighted average remaining amortization period (Years) | 10 years 8 months 12 days | 10 years 10 months 24 days |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Changes in Net Carrying Amount of Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Schedule of major categories of the Company’s intangible assets and the weighted average remaining amortization period | |||
Balance at the beginning of the period | $ 153,986 | $ 490,390 | $ 490,390 |
Amortization | (4,362) | (16,900) | (52,657) |
Impairments | (283,747) | ||
Balance at the end of the period | 149,624 | 153,986 | |
IPR&D | |||
Schedule of major categories of the Company’s intangible assets and the weighted average remaining amortization period | |||
Balance at the beginning of the period | 64,000 | 83,700 | 83,700 |
Reclassifications | (19,700) | (19,700) | |
Balance at the end of the period | 64,000 | 64,000 | |
Distribution Rights | |||
Schedule of major categories of the Company’s intangible assets and the weighted average remaining amortization period | |||
Balance at the beginning of the period | 11,423 | 81,204 | 81,204 |
Amortization | (400) | (5,062) | |
Impairments | (64,719) | ||
Balance at the end of the period | 11,023 | 11,423 | |
Product Rights | |||
Schedule of major categories of the Company’s intangible assets and the weighted average remaining amortization period | |||
Balance at the beginning of the period | 50,219 | 217,473 | 217,473 |
Amortization | (3,267) | (40,921) | |
Impairments | (146,033) | ||
Reclassifications | 19,700 | ||
Balance at the end of the period | 46,952 | 50,219 | |
Tradenames | |||
Schedule of major categories of the Company’s intangible assets and the weighted average remaining amortization period | |||
Balance at the beginning of the period | 10,450 | 11,156 | 11,156 |
Amortization | (177) | (706) | |
Balance at the end of the period | 10,273 | 10,450 | |
Developed Technology | |||
Schedule of major categories of the Company’s intangible assets and the weighted average remaining amortization period | |||
Balance at the beginning of the period | 17,894 | $ 96,857 | 96,857 |
Amortization | (518) | (5,968) | |
Impairments | (72,995) | ||
Balance at the end of the period | $ 17,376 | $ 17,894 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Fair value (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($) | Sep. 30, 2019 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Impairment of intangibles | $ 283,747 | |
Measurement Input, Discount Rate [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Discount rate for goodwill and intangible assets | 0.165 | |
Product Rights | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Impairment of intangibles | 146,033 | |
Distribution Rights | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Impairment of intangibles | 64,719 | |
Developed Technology | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Impairment of intangibles | $ 72,995 |
Goodwill and Other Intangible_7
Goodwill and Other Intangible Assets - Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Goodwill and Other Intangible Assets | |||
Amortization expense | $ 4,362 | $ 16,900 | $ 52,657 |
Amortization expense of acquired intangible assets | |||
Remainder of 2020 | 13,088 | ||
2021 | 17,161 | ||
2022 | 12,685 | ||
2023 | 11,805 | ||
2024 | 10,682 | ||
Thereafter | 20,203 | ||
Net carrying amount, finite-lived | $ 85,624 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Accrued Liabilities Abstract | ||
Accrued product returns | $ 29,200 | $ 33,457 |
Accrued royalties | 3,434 | 3,649 |
Accrued compensation | 3,292 | 10,998 |
Accrued government and managed care rebates | 3,582 | 4,867 |
Accrued research and development | 1,432 | 3,028 |
Accrued expenses and other liabilities | 5,841 | 8,477 |
Customer coupons | 475 | 777 |
Accrued Liabilities | $ 47,256 | $ 65,253 |
Financing Arrangements (Details
Financing Arrangements (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Financing Arrangements | ||
Long-term debt | $ 268,236 | $ 267,950 |
Long‑term debt, net of non‑current deferred financing costs | 268,236 | 267,950 |
Deferred financing costs | 3,200 | 3,400 |
CIT Bank, N.A. Term Loan | ||
Financing Arrangements | ||
Long-term debt | $ 268,236 | $ 267,950 |
Financing Arrangements - Term l
Financing Arrangements - Term loan (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Financing Arrangements | ||
Deferred financing costs | $ 3.2 | $ 3.4 |
Term A Loan | ||
Financing Arrangements | ||
Effective interest rate (as percent) | 4.82% | 5.79% |
Term B Loan | ||
Financing Arrangements | ||
Effective interest rate (as percent) | 5.32% | 6.29% |
Financing Arrangements - Revolv
Financing Arrangements - Revolving credit facility (Details) | Mar. 31, 2020USD ($) |
Financing Arrangements | |
Amount outstanding | $ 0 |
Aggregate borrowing capacity | $ 50,000,000 |
Concentrations and Credit Risks
Concentrations and Credit Risks (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020customeritem | Mar. 31, 2019customeritem | Dec. 31, 2019 | |
Gross Sales | Customer concentration risk | |||
Concentrations and Credit Risk | |||
Number of customers | 3 | 3 | |
Concentration risk (as a percent) | 96.00% | 98.00% | |
Gross Sales | Customer concentration risk | Amerisource Bergen | |||
Concentrations and Credit Risk | |||
Concentration risk (as a percent) | 31.00% | 7.00% | |
Gross Sales | Customer concentration risk | Cardinal Health | |||
Concentrations and Credit Risk | |||
Concentration risk (as a percent) | 22.00% | 55.00% | |
Gross Sales | Customer concentration risk | McKesson | |||
Concentrations and Credit Risk | |||
Concentration risk (as a percent) | 43.00% | 36.00% | |
Gross Accounts Receivable | Credit concentration risk | |||
Concentrations and Credit Risk | |||
Number of customers | 3 | 3 | |
Concentration risk (as a percent) | 93.00% | 94.00% | |
Gross Accounts Receivable | Credit concentration risk | Amerisource Bergen | |||
Concentrations and Credit Risk | |||
Concentration risk (as a percent) | 30.00% | 21.00% | |
Gross Accounts Receivable | Credit concentration risk | Cardinal Health | |||
Concentrations and Credit Risk | |||
Concentration risk (as a percent) | 24.00% | 22.00% | |
Gross Accounts Receivable | Credit concentration risk | McKesson | |||
Concentrations and Credit Risk | |||
Concentration risk (as a percent) | 39.00% | 51.00% | |
Purchases | Supplier concentration risk | |||
Concentrations and Credit Risk | |||
Concentration risk (as a percent) | 65.00% | 76.00% | |
Number of suppliers | item | 1 | 1 |
Incentive Plans - Expense, Opti
Incentive Plans - Expense, Options (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Incentive plans | ||
Share-based compensation expense | $ 1 | $ 1.2 |
Unrecognized compensation cost related to nonvested options | $ 8.9 | |
Options | ||
Incentive plans | ||
Options outstanding, weighted average contractual term | 1 year 6 months 26 days |
Incentive Plans - Restricted st
Incentive Plans - Restricted stock units (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Granted | 0 | 1,374,335 |
Released | (237,163) | 0 |
Outstanding at end of period, shares | 1,165,364 | |
Number of shares that vested during the period | 237,163 | 0 |
Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Remaining contractual term | 2 years 11 months 16 days |
Commitments and Contingencies -
Commitments and Contingencies - Legal (Details) | Jul. 22, 2019item |
Commitments and Contingencies | |
Loss Contingency, Pending Claims, Number | 2 |
Income Taxes (Details)
Income Taxes (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)item | Mar. 31, 2019USD ($) | |
Income Taxes | ||
Income tax expense (benefit) | $ 960 | $ (754) |
Loss before income tax | $ 2,123 | $ 7,441 |
Number of subsidiaries under tax audit | item | 2 |
Related Parties (Details)
Related Parties (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | ||
Nov. 30, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | ||||
Amount per agreement | $ 0.1 | |||
Shareholder | ||||
Related Party Transaction [Line Items] | ||||
Accrued liability | $ 0.1 | |||
Related party expenses | $ 0.8 | |||
Avista | ||||
Related Party Transaction [Line Items] | ||||
Accrued liability | 0.3 | |||
Related party expenses | 0.4 | |||
Amount per agreement | $ 2.4 | |||
Maximum | ||||
Related Party Transaction [Line Items] | ||||
Amount per agreement | 0.1 | |||
Maximum | Shareholder | ||||
Related Party Transaction [Line Items] | ||||
Accrued liability | $ 0.1 | |||
Related party expenses | $ 0.1 |
Shareholders' Equity - Share re
Shareholders' Equity - Share repurchase program (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Sep. 30, 2019 | |
Equity, Class of Treasury Stock [Line Items] | ||
Repurchase authorization, number of shares | 5,251,892 | |
Shares repurchased, in shares | 29,000 | |
Shares repurchased, value | $ 167 | |
Additional Paid-in Capital [Member] | ||
Equity, Class of Treasury Stock [Line Items] | ||
Shares repurchased, value | $ 167 |
Shareholders' Equity - ESPP (De
Shareholders' Equity - ESPP (Details) - USD ($) | Jan. 02, 2020 | Mar. 31, 2020 |
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | ||
Maximum deduction per pay period | $ 2,000 | |
Share price, as percentage of fair market value | 85.00% | |
Unrecognized compensation cost, recognition period | 6 months | |
ESPP, shares issued during the period | 0 | |
Maximum | ||
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | ||
ESPP expense recognized | $ 100,000 | |
Unrecognized compensation cost | $ 100,000 |