Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Jul. 31, 2021 | Dec. 31, 2020 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Jun. 30, 2021 | ||
Document Transition Report | false | ||
Entity File Number | 001-31298 | ||
Entity Registrant Name | LANNETT COMPANY, INC | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 23-0787699 | ||
Entity Address, Address Line One | 1150 Northbrook Drive, Suite 155 | ||
Entity Address, City or Town | Trevose | ||
Entity Address, State or Province | PA | ||
Entity Address, Postal Zip Code | 19053 | ||
City Area Code | 215 | ||
Local Phone Number | 333-9000 | ||
Title of 12(b) Security | Common Stock | ||
Trading Symbol | LCI | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 214,124,709 | ||
Entity Common Stock, Shares Outstanding | 42,276,052 | ||
Entity Central Index Key | 0000057725 | ||
Current Fiscal Year End Date | --06-30 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2021 | Jun. 30, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 93,286 | $ 144,329 |
Accounts receivable, net | 98,834 | 125,688 |
Inventories | 109,545 | 142,867 |
Income taxes receivable | 35,050 | 14,419 |
Assets held for sale | 2,678 | 2,678 |
Other current assets | 14,170 | 13,227 |
Total current assets | 353,563 | 443,208 |
Property, plant and equipment, net | 166,674 | 179,518 |
Intangible assets, net | 137,835 | 374,735 |
Operating lease right-of-use assets | 10,559 | 9,343 |
Deferred tax assets | 117,890 | |
Other assets | 15,106 | 11,861 |
TOTAL ASSETS | 683,737 | 1,136,555 |
Current liabilities: | ||
Accounts payable | 29,585 | 32,535 |
Accrued expenses | 13,077 | 14,962 |
Accrued payroll and payroll-related expenses | 10,680 | 16,304 |
Rebates payable | 19,025 | 38,175 |
Royalties payable | 13,779 | 20,863 |
Restructuring liability | 8 | 27 |
Current operating lease liabilities | 2,045 | 1,097 |
Short-term borrowings and current portion of long-term debt | 88,189 | |
Other current liabilities | 2,270 | 2,713 |
Total current liabilities | 90,469 | 214,865 |
Long-term debt, net | 590,683 | 592,940 |
Long-term operating lease liabilities | 11,047 | 9,844 |
Other liabilities | 19,009 | 16,010 |
TOTAL LIABILITIES | 711,208 | 833,659 |
Commitments and contingencies (Notes 10 and 11) | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Common stock ($0.001 par value, 100,000,000 shares authorized; 40,913,148 and 39,963,127 shares issued; 39,576,606 and 38,798,787 shares outstanding at June 30, 2021 and June 30, 2020, respectively) | 41 | 40 |
Additional paid-in capital | 355,239 | 321,164 |
Accumulated deficit | (364,766) | (1,291) |
Accumulated other comprehensive loss | (548) | (627) |
Treasury stock (1,336,542 and 1,164,340 shares at June 30, 2021 and June 30, 2020, respectively) | (17,437) | (16,390) |
Total stockholders' equity (deficit) | (27,471) | 302,896 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 683,737 | $ 1,136,555 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2021 | Jun. 30, 2020 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized shares | 100,000,000 | 100,000,000 |
Common stock, issued shares | 40,913,148 | 39,963,127 |
Common stock, outstanding shares | 39,576,606 | 38,798,787 |
Treasury stock, shares | 1,336,542 | 1,164,340 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Net sales | $ 478,778 | $ 545,744 | $ 655,407 |
Cost of sales | 378,335 | 348,508 | 379,601 |
Amortization of intangibles | 24,850 | 32,016 | 32,196 |
Gross profit | 75,593 | 165,220 | 243,610 |
Operating expenses: | |||
Research and development expenses | 24,173 | 29,978 | 38,807 |
Selling, general and administrative expenses | 68,078 | 79,467 | 87,648 |
Restructuring expenses | 4,043 | 1,771 | 4,095 |
Asset impairment charges | 216,550 | 34,448 | 375,381 |
Total operating expenses | 312,844 | 145,664 | 505,931 |
Operating income (loss) | (237,251) | 19,556 | (262,321) |
Other income (loss): | |||
Loss on extinguishment of debt | (10,341) | (2,145) | (448) |
Investment income | 236 | 1,646 | 3,166 |
Interest expense | (53,830) | (66,845) | (84,624) |
Other | (1,664) | (840) | (2,018) |
Total other loss | (65,599) | (68,184) | (83,924) |
Loss before income tax | (302,850) | (48,628) | (346,245) |
Income tax expense (benefit) | 60,625 | (15,262) | (74,138) |
Net loss | $ (363,475) | $ (33,366) | $ (272,107) |
Loss per common share: | |||
Basic (in dollars per share) | $ (9.23) | $ (0.86) | $ (7.20) |
Diluted (in dollars per share) | $ (9.23) | $ (0.86) | $ (7.20) |
Weighted average common shares outstanding: | |||
Basic (in shares) | 39,391,589 | 38,592,618 | 37,779,812 |
Diluted (in shares) | 39,391,589 | 38,592,618 | 37,779,812 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | |||
Net loss | $ (363,475) | $ (33,366) | $ (272,107) |
Other comprehensive income (loss): | |||
Foreign currency translation gain (loss) | 79 | (12) | (100) |
Total other comprehensive income (loss) | 79 | (12) | (100) |
Comprehensive loss | $ (363,396) | $ (33,378) | $ (272,207) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated DeficitPeriod of adoption, adjustment | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Period of adoption, adjustment | Total |
Balance, beginning at Jun. 30, 2018 | $ 38 | $ 306,817 | $ (2,282) | $ 306,464 | $ (515) | $ (13,889) | $ (2,282) | $ 598,915 |
Balance, beginning (in shares) at Jun. 30, 2018 | 38,257 | |||||||
Increase (Decrease) in Shareholders' Equity | ||||||||
Shares issued in connection with share-based compensation plans | $ 1 | 1,179 | 1,180 | |||||
Shares issued in connection with share-based compensation plans (in shares) | 713 | |||||||
Share-based compensation | 9,027 | 9,027 | ||||||
Purchase of treasury stock | (592) | (592) | ||||||
Other comprehensive income (Loss) | (100) | (100) | ||||||
Net loss | (272,107) | (272,107) | ||||||
Balance, ending at Jun. 30, 2019 | $ 39 | 317,023 | 32,075 | (615) | (14,481) | 334,041 | ||
Balance, ending (in shares) at Jun. 30, 2019 | 38,970 | |||||||
Increase (Decrease) in Shareholders' Equity | ||||||||
Shares issued in connection with share-based compensation plans | $ 1 | 997 | 998 | |||||
Shares issued in connection with share-based compensation plans (in shares) | 993 | |||||||
Share-based compensation | 10,216 | 10,216 | ||||||
Purchase of treasury stock | (1,909) | (1,909) | ||||||
Other comprehensive income (Loss) | (12) | (12) | ||||||
Capped call transaction | (7,072) | (7,072) | ||||||
Net loss | (33,366) | (33,366) | ||||||
Balance, ending at Jun. 30, 2020 | $ 40 | 321,164 | (1,291) | (627) | (16,390) | 302,896 | ||
Balance, ending (in shares) at Jun. 30, 2020 | 39,963 | |||||||
Increase (Decrease) in Shareholders' Equity | ||||||||
Accumulated deficit | (1,291) | |||||||
Shares issued in connection with share-based compensation plans | $ 1 | 663 | 664 | |||||
Shares issued in connection with share-based compensation plans (in shares) | 950 | |||||||
Share-based compensation | 9,037 | 9,037 | ||||||
Purchase of treasury stock | (1,047) | (1,047) | ||||||
Other comprehensive income (Loss) | 79 | 79 | ||||||
Issuance of warrant | 24,375 | 24,375 | ||||||
Net loss | (363,475) | (363,475) | ||||||
Balance, ending at Jun. 30, 2021 | $ 41 | $ 355,239 | $ (364,766) | $ (548) | $ (17,437) | (27,471) | ||
Balance, ending (in shares) at Jun. 30, 2021 | 40,913 | |||||||
Increase (Decrease) in Shareholders' Equity | ||||||||
Accumulated deficit | $ (364,766) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
OPERATING ACTIVITIES: | |||
Net loss | $ (363,475) | $ (33,366) | $ (272,107) |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation and amortization | 47,824 | 56,309 | 55,594 |
Deferred income tax expense (benefit) | 117,890 | (8,585) | (87,242) |
Share-based compensation | 9,037 | 10,216 | 9,027 |
Asset impairment charges | 216,550 | 34,448 | 375,381 |
Loss (gain) on sale/disposal of assets | 171 | (159) | 1,559 |
Loss on extinguishment of debt | 10,341 | 2,145 | 448 |
Accrual of payment-in-kind interest | 3,642 | ||
Amortization of debt discount and other debt issuance costs | 10,146 | 14,336 | 17,641 |
Provision for inventory write-downs | 24,328 | 10,341 | 21,765 |
Other noncash expenses | 1,021 | 1,969 | 2,579 |
Changes in assets and liabilities which provided (used) cash: | |||
Accounts receivable, net | 26,854 | 39,064 | 84,949 |
Inventories | 8,994 | (9,237) | (24,101) |
Income taxes receivable/payable | (20,437) | (14,465) | 18,319 |
Other assets | 2,509 | 4,095 | 2,643 |
Rebates payable | (19,150) | (8,000) | (3,225) |
Royalties payable | (7,084) | 4,648 | 10,260 |
Restructuring liability | (19) | (2,288) | (4,391) |
Operating lease liability | (194) | (1,464) | |
Accounts payable | (2,950) | 19,042 | (43,274) |
Accrued expenses | (1,885) | 2,213 | (1,620) |
Accrued payroll and payroll-related expenses | (5,624) | (3,620) | 12,105 |
Other liabilities | 2,362 | (1,628) | |
Net cash provided by operating activities | 60,851 | 116,014 | 176,310 |
INVESTING ACTIVITIES: | |||
Purchases of property, plant and equipment | (10,415) | (18,330) | (24,340) |
Proceeds from sale of property, plant and equipment | 114 | 7,380 | 14,450 |
Proceeds from sale of outstanding loan to Variable Interest Entity ("VIE") | 5,600 | ||
Advance to VIE | (250) | ||
Purchases of intangible assets | (4,500) | (28,800) | (3,000) |
Net cash used in investing activities | (14,801) | (40,000) | (7,290) |
FINANCING ACTIVITIES: | |||
Proceeds from issuance of long-term debt | 356,225 | 86,250 | |
Purchase of capped call | (7,072) | ||
Repayments of long-term debt | (437,926) | (146,700) | (126,743) |
Proceeds from issuance of stock | 664 | 998 | 1,180 |
Payment of debt issuance costs | (10,088) | (3,489) | (1,102) |
Purchase of treasury stock | (1,047) | (1,909) | (592) |
Net cash used in financing activities | (92,172) | (71,922) | (127,257) |
Effect on cash and cash equivalents of changes in foreign exchange rates | 79 | (12) | (100) |
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (46,043) | 4,080 | 41,663 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD | 144,329 | 140,249 | 98,586 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD | 98,286 | 144,329 | 140,249 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||
Interest paid | 34,859 | 51,928 | 66,750 |
Income taxes paid (refunded) | (36,830) | 7,787 | (4,641) |
Andor Pharmaceuticals, LLC ("Andor") License Agreement acquisition | 16,000 | ||
Accrued purchases of property, plant and equipment | 1,809 | $ 2,295 | $ 765 |
Issuance of warrant in connection with Second Lien Credit Facility | $ 24,375 |
The Business and Nature of Oper
The Business and Nature of Operations | 12 Months Ended |
Jun. 30, 2021 | |
The Business and Nature of Operations | |
The Business and Nature of Operations | Note 1. The Business and Nature of Operations Lannett Company, Inc. (a Delaware corporation) and its subsidiaries (collectively, the “Company” or “Lannett”) primarily develop, manufacture, package, market and distribute solid oral and extended release (tablets and capsules), topical, nasal and oral solution finished dosage forms of drugs that address a wide range of therapeutic areas. Certain of these products are manufactured by others and distributed by the Company. The Company operates pharmaceutical manufacturing plants in Carmel, New York and Seymour, Indiana. The Company’s customers include generic pharmaceutical distributors, drug wholesalers, chain drug stores, private label distributors, mail-order pharmacies, other pharmaceutical manufacturers, managed care organizations, hospital buying groups, governmental entities and health maintenance organizations. COVID-19 Update In December 2019, the COVID-19 virus emerged in Wuhan, China and spread to other parts of the world. In March 2020, the World Health Organization (“WHO”) designated COVID-19 a global pandemic. Governments on the national, state and local level in the United States, and around the world, implemented lockdown and shelter-in-place orders, requiring many non-essential businesses to shut down operations. The Company’s business, however, is deemed “essential” and it has continued to operate, manufacture, and distribute its medicines to customers. In light of the economic impacts of COVID-19, the Company reviewed the assets on our Consolidated Balance Sheet as of June 30, 2021, including intangible and other long-lived assets. Based on our review, the Company determined that no impairments or other write-downs specifically related to COVID-19 were necessary during Fiscal Year 2021. Our assessment is based on information currently available and is highly reliant on various assumptions. Changes in market conditions could impact the Company’s future outlook and may lead to impairments in the future. While COVID-19 has thus far not had a material impact on the Company’s operations, subsequent to an initial stocking up of supplies by our customers at the start of the pandemic, the total volume of drug prescriptions being written in the country has decreased causing less demand for our products. We cannot reasonably predict the ultimate impact of COVID-19 on our future results of operations and cash flows due to the continued uncertainty around the duration and severity of the pandemic. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Presentation The Consolidated Financial Statements have been prepared in conformity with U.S. GAAP. Principles of consolidation The Consolidated Financial Statements include the accounts of Lannett Company, Inc. and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. Reclassifications Certain prior year amounts have been reclassified to conform to the current year financial statement presentation. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are required in the determination of revenue recognition and sales deductions for estimated chargebacks, rebates, returns and other adjustments including a provision for the Company’s liability under the Medicare Part D program. Additionally, significant estimates and assumptions are required when determining the value of inventories and long-lived assets, including intangible assets, income taxes, and contingencies. Because of the inherent subjectivity and complexity involved in these estimates and assumptions, actual results could differ from those estimates. Foreign currency translation The Consolidated Financial Statements are presented in U.S. dollars, the reporting currency of the Company. The financial statements of the Company’s foreign subsidiary are maintained in local currency and translated into U.S. dollars at the end of each reporting period. Assets and liabilities are translated at period-end exchange rates, while revenues and expenses are translated at average exchange rates during the period. The adjustments resulting from the use of differing exchange rates are recorded as part of stockholders’ equity in accumulated other comprehensive income (loss). Gains and losses resulting from transactions denominated in foreign currencies are recognized in the Consolidated Statements of Operations under other income (loss). Amounts recorded due to foreign currency fluctuations are immaterial to the Consolidated Financial Statements. Cash, cash equivalents and restricted cash The Company considers all highly liquid investments with original maturities less than or equal to three months at the date of purchase to be cash and cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair value, and consist of bank deposits and money market funds. The Company maintains its cash deposits and cash equivalents at well-known, stable financial institutions. Such amounts frequently exceed insured limits. In connection with the Second Lien Secured Loan Facility (“Second Lien Facility”), which is discussed in further detail in Note 9 “Long-Term Debt,” the Company is required to maintain at least $5 million in a deposit account at all times, subject to control by the Second Lien Collateral Agent. At June 30, 2021, the Company classified this balance as restricted cash, which is included in other assets on the Consolidated Balance Sheets. Presented in the table below is a reconciliation of the cash, cash equivalents and restricted cash amounts presented on the Consolidated Balance Sheets to the sum of such amounts presented on the Consolidated Statements of Cash Flows for the periods ended June 30, 2021, 2020 and 2019. June 30, 2021 June 30, 2020 June 30, 2019 Cash and cash equivalents $ 93,286 $ 144,329 $ 140,249 Restricted cash, included in other assets 5,000 — — Cash, cash equivalents and restricted cash as presented on the Consolidated Statements of Cash Flows $ 98,286 $ 144,329 $ 140,249 Allowance for doubtful accounts On July 1, 2020, the Company adopted guidance issued by the FASB in ASU 2016-13, Measurement of Credit Losses on Financial Instruments , which requires the Company to recognize an allowance that reflects a current estimate of credit losses expected to be incurred over the life of the financial asset, including trade receivables. The adoption of ASU 2016-13 did not have a material impact on the Company’s Consolidated Financial Statements for the fiscal year ended June 30, 2021. The Company continuously monitors collections and payments from its customers and maintains a provision for estimated credit losses. The Company determines its allowance for doubtful accounts by considering a number of factors, including the length of time balances are past due, the Company’s previous loss history, the customer’s current ability to pay its obligations to the Company and the expected condition of the general economy and the industry as a whole. The Company writes off accounts receivable when they are determined to be uncollectible. Inventories Inventories are stated at the lower of cost or net realizable value by the first-in, first-out method. Inventories are regularly reviewed and write-downs for excess and obsolete inventory are recorded based primarily on current inventory levels, expiration date and estimated sales forecasts. Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the assets’ estimated useful lives. Repairs and maintenance costs that do not extend the useful life of the asset are expensed as incurred. Intangible Assets Definite-lived intangible assets are stated at cost less accumulated amortization. Amortization of definite-lived intangible assets is computed on a straight-line basis over the assets’ estimated useful lives which commences upon shipment of the product, generally for periods ranging from 5 Valuation of Long-Lived Assets, including Intangible Assets The Company’s long-lived assets primarily consist of property, plant and equipment and definite and indefinite-lived intangible assets. Property, plant and equipment and definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances (“triggering events”) indicate that the carrying amount of the asset may not be recoverable. If a triggering event is determined to have occurred, the asset’s carrying value is compared to the future undiscounted cash flows expected to be generated by the asset. If the carrying value exceeds the undiscounted cash flows of the asset, then impairment exists. Indefinite-lived intangible assets are tested for impairment at least annually during the fourth quarter of each fiscal year or more frequently if events or triggering events indicate that the asset might be impaired. An impairment loss is measured as the excess of the asset’s carrying value over its fair value, which in most cases is calculated using a discounted cash flow model. Discounted cash flow models are highly reliant on various assumptions which are considered Level 3 inputs, including estimates of future cash flows (including long-term growth rates), discount rates and the probability of achieving the estimated cash flows. Segment Information The Company operates in one reportable segment, generic pharmaceuticals. As such, the Company aggregates its financial information for all products. The following table identifies the Company’s net sales by medical indication for fiscal years ended June 30, 2021, 2020 and 2019. The medical indication categories for the fiscal year ended June 30, 2019 were reclassified to better align with industry standards and the Company’s peers. (In thousands) Fiscal Year Ended June 30, Medical Indication 2021 2020 2019 Analgesic $ 14,684 $ 8,680 $ 8,251 Anti-Psychosis 43,720 104,934 73,453 Cardiovascular 65,987 88,576 101,467 Central Nervous System 95,115 77,256 59,019 Endocrinology 27,070 — 197,522 Gastrointestinal 67,540 73,477 63,043 Infectious Disease 67,761 73,237 16,950 Migraine 25,554 44,266 41,592 Respiratory/Allergy/Cough/Cold 9,258 11,576 12,479 Urinary 5,786 4,225 6,755 Other 35,312 35,013 51,517 Contract manufacturing revenue 20,991 24,504 23,359 Total net sales $ 478,778 $ 545,744 $ 655,407 Customer, Supplier and Product Concentration The following table presents the percentage of total net sales, for the fiscal years ended June 30, 2021, 2020 and 2019, for certain of the Company’s products, defined as products containing the same active ingredient or combination of ingredients, which accounted for at least 10% of total net sales in any of those periods: June 30, June 30, June 30, 2021 2020 2019 Product 1 12 % 10 % — % Product 2 7 % 18 % 10 % Product 3 3 % — % 30 % The following table presents the percentage of total net sales, for the fiscal years ended June 30, 2021, 2020 and 2019, for certain of the Company’s customers which accounted for at least 10% of total net sales in any of those periods: June 30, June 30, June 30, 2021 2020 2019 Customer A 27 % 25 % 21 % Customer B 21 % 23 % 18 % Customer C 12 % 11 % 10 % Customer D — % — % 12 % Revenue Recognition The Company complies with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers Revenue Recognition When revenue is recognized, a simultaneous adjustment to gross sales is made for estimated chargebacks, rebates, returns, promotional adjustments and other potential adjustments. These provisions are primarily estimated based on historical experience, future expectations, contractual arrangements with wholesalers and indirect customers and other factors known to management at the time of accrual. Accruals for provisions are presented in the Consolidated Financial Statements as a reduction to gross sales with the corresponding reserve presented as a reduction of accounts receivable or included as rebates payable, depending on the nature of the reserve. Provisions for chargebacks, rebates, returns and other adjustments require varying degrees of subjectivity. While rebates generally are based on contractual terms and require minimal estimation, chargebacks and returns require management to make more subjective assumptions. Each major category is discussed in detail below: Chargebacks The provision for chargebacks is the most significant and complex estimate used in the recognition of revenue. The Company sells its products directly to wholesale distributors, generic distributors, retail pharmacy chains and mail-order pharmacies. The Company also sells its products indirectly to independent pharmacies, managed care organizations, hospitals, nursing homes and group purchasing organizations, collectively referred to as “indirect customers.” The Company enters into agreements with its indirect customers to establish pricing for certain products. The indirect customers then independently select a wholesaler from which to purchase the products. If the price paid by the indirect customers is lower than the price paid by the wholesaler, the Company will provide a credit, called a chargeback, to the wholesaler for the difference between the contractual price with the indirect customers and the wholesaler purchase price. The provision for chargebacks is based on expected sell-through levels by the Company’s wholesale customers to the indirect customers and estimated wholesaler inventory levels. As sales to the large wholesale customers, such as Cardinal Health, AmerisourceBergen and McKesson increase (decrease), the reserve for chargebacks will also generally increase (decrease). However, the size of the increase (decrease) depends on product mix and the amount of sales made to indirect customers with which the Company has specific chargeback agreements. The Company continually monitors the reserve for chargebacks and makes adjustments when management believes that expected chargebacks may differ from the actual chargeback reserve. Rebates Rebates are offered to the Company’s key chain drug store, distributor and wholesaler customers to promote customer loyalty and increase product sales. These rebate programs provide customers with credits upon attainment of pre-established volumes or attainment of net sales milestones for a specified period. Other promotional programs are incentive programs offered to the customers. Additionally, as a result of the Patient Protection and Affordable Care Act (“PPACA”) enacted in the U.S. in March 2010, the Company participates in a cost-sharing program for certain Medicare Part D beneficiaries designed primarily for the sale of brand drugs and certain generic drugs if their Food and Drug Administration (“FDA”) approval was granted under a New Drug Application (“NDA”) or 505(b) NDA versus an Abbreviated New Drug application ("ANDA’). Drugs purchased within the Medicare Part D coverage gap (commonly referred to as the “donut hole”) result in additional rebates. The Company estimates the reserve for rebates and other promotional credit programs based on the specific terms in each agreement when revenue is recognized. The reserve for rebates increases (decreases) as sales to certain wholesale and retail customers increase (decrease). However, since these rebate programs are not identical for all customers, the size of the reserve will depend on the mix of sales to customers that are eligible to receive rebates. Returns Consistent with industry practice, the Company has a product returns policy that allows customers to return product within a specified time period prior to and subsequent to the product’s expiration date in exchange for a credit to be applied to future purchases. The Company’s policy requires that the customer obtain pre-approval from the Company for any qualifying return. The Company estimates its provision for returns based on historical experience, changes to business practices, credit terms and any extenuating circumstances known to management. While historical experience has allowed for reasonable estimations in the past, future returns may or may not follow historical trends. The Company continually monitors the reserve for returns and makes adjustments when management believes that actual product returns may differ from the established reserve. Generally, the reserve for returns increases as net sales increase. Other Adjustments Other adjustments consist primarily of “price adjustments”, also known as “shelf-stock adjustments” and “price protections,” which are both credits issued to reflect increases or decreases in the invoice or contract prices of the Company’s products. In the case of a price decrease, a credit is given for product remaining in customer’s inventories at the time of the price reduction. Contractual price protection results in a similar credit when the invoice or contract prices of the Company’s products increase, effectively allowing customers to purchase products at previous prices for a specified period of time. Amounts recorded for estimated shelf-stock adjustments and price protections are based upon specified terms with direct customers, estimated changes in market prices and estimates of inventory held by customers. The Company regularly monitors these and other factors and evaluates the reserve as additional information becomes available. Other adjustments also include prompt payment discounts and “failure-to-supply” adjustments. If the Company is unable to fulfill certain customer orders, the customer can purchase products from our competitors at their prices and charge the Company for any difference in our contractually agreed upon prices. Leases The Company complies with ASC Topic 842, Leases , which superseded ASC Topic 840, Leases . Under ASC 842, when the Company enters into a new arrangement, it must determine, at the inception date, whether the arrangement is or contains a lease. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. Once a lease has been identified, the Company must determine the lease term, the present value of lease payments and the classification of the lease as either operating or financing. The lease term is determined to be the non-cancelable period including any lessee renewal options which are considered to be reasonably certain of exercise. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The present value of lease payments includes fixed and certain variable payments, less lease incentives, together with amounts probable of being owed by the Company under residual value guarantees and, if reasonably certain of being paid, the cost of certain renewal options and early termination penalties set forth in the lease arrangement. To calculate the present value of lease payments, we use our incremental borrowing rate based on the information available at commencement date, as the rate implicit in the lease is generally not readily available. In making the determination of whether a lease is an operating lease or a finance lease, the Company considers the lease term in relation to the economic life of the leased asset, the present value of lease payments in relation to the fair value of the leased asset and certain other factors. Upon the commencement of the lease, the Company will record a lease liability and right-of-use (“ROU”) asset based on the present value of the future minimum lease payments over the lease term at commencement date. The ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. For operating leases, a single lease cost is generally recognized in the Consolidated Statements of Operations on a straight-line basis over the lease term unless an impairment has been recorded with respect to a leased asset. For finance leases, amortization expense and interest expense are recognized separately in the Consolidated Statements of Operations, with amortization expense generally recorded on a straight-line basis and interest expense recorded using the effective interest method. Variable lease costs not initially included in the lease liability and ROU asset impairment charges are expensed as incurred. Cost of Sales, including Amortization of Intangibles Cost of sales includes all costs related to bringing products to their final selling destination, which includes direct and indirect costs, such as direct material, labor and overhead expenses. Additionally, cost of sales includes product royalties, depreciation, amortization and costs to renew or extend recognized intangible assets, freight charges and other shipping and handling expenses. Research and Development Research and development costs are expensed as incurred, including all production costs until a drug candidate is approved by the FDA. Research and development expenses include costs associated with internal projects as well as costs associated with third-party research and development contracts. Contingencies Loss contingencies, including litigation-related contingencies, are included in the Consolidated Statements of Operations when the Company concludes that a loss is both probable and reasonably estimable. Legal fees for litigation-related matters are expensed as incurred and included in the Consolidated Statements of Operations under the Selling, general and administrative expenses line item. Restructuring Costs The Company records charges associated with approved restructuring plans to remove duplicative headcount and infrastructure associated with business acquisitions or to simplify business processes. Restructuring charges can include severance costs to eliminate a specified number of employees, infrastructure charges to vacate facilities and consolidate operations and contract cancellation costs. The Company records restructuring charges based on estimated employee terminations, site closure and consolidation plans. The Company accrues severance and other employee separation costs under these actions when it is probable that a liability exists, and the amount is reasonably estimable. Share-Based Compensation Share-based compensation costs are recognized over the vesting period, using a straight-line method, based on the fair value of the instrument on the date of grant less an estimate for expected forfeitures. The Company uses the Black-Scholes valuation model to determine the fair value of stock options, the stock price on the grant date to value restricted stock and the Monte-Carlo simulation model to determine the fair value of performance-based shares. The Black-Scholes valuation and Monte-Carlo simulation models include various assumptions, including the expected volatility, the expected life of the award, dividend yield and the risk-free interest rate as well as performance assumptions of peer companies. These assumptions involve inherent uncertainties based on market conditions which are generally outside the Company’s control. Changes in these assumptions could have a material impact on share-based compensation costs recognized in the Consolidated Financial Statements. Self-Insurance The Company self-insures for certain employee medical and prescription benefits. The Company also maintains stop loss coverage with third party insurers to limit its total liability exposure. The liability for self-insured risks is primarily calculated using independent third-party actuarial valuations which take into account actual claims, claims growth and claims incurred but not yet reported. Actual experience, including claim frequency and severity as well as health-care inflation, could result in different liabilities than the amounts currently recorded. The liability for self-insured risks under this plan was not material to the consolidated financial position of the Company as of June 30, 2021 and June 30, 2020. Income Taxes The Company uses the liability method to account for income taxes as prescribed by ASC 740, Income Taxes Income Taxes The Company may recognize the tax benefit from an uncertain tax position claimed on a tax return only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The authoritative accounting standards also provide guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. On March 27, 2020, in response to COVID-19 and its detrimental impact to the global economy, former President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) into law, which provides a stimulus to the U.S. economy in the form of various individual and business assistance programs as well as temporary changes to existing tax law. Among the changes to the provision in business tax laws include a five-year net operating loss carryback for the Fiscal 2019 - 2021 tax years, a deferral of the employer’s portion of certain payroll tax, and an increase in the interest expense deductibility limitation for the Fiscal 2020 and 2021 tax years. ASC 740 requires the tax effects of changes in tax laws or rates to be recorded in the period of enactment. As a result of the CARES Act, the Company carried back its Fiscal 2020 taxable loss into the Fiscal 2015 tax year. Earnings (Loss) Per Common Share The presentation of basic and diluted earnings (loss) per common share is required on the face of the Company's Consolidated Statements of Operations as well as a reconciliation of the computation of basic earnings (loss) per common share to diluted earnings (loss) per common share. In accordance with ASC 260, Earnings per share For purposes of determining diluted earnings per share, the Company further adjusts the basic earnings per share to include the effect of potentially dilutive shares outstanding, including options and restricted stock awards, the 4.50% Convertible Senior Notes (the “Convertible Notes”), and the Warrants. In this calculation, the Company reallocates net income based on the rights of each potentially dilutive share and will report the most dilutive earnings (loss) per share. The weighted average number of diluted shares is adjusted for the potential dilutive effect of the exercise of stock options, treats unvested restricted stock and performance-based shares as if it were vested, and assumes the conversion of the 4.50% Convertible Senior Notes. The Company uses the “if-converted" method to compute earnings (loss) per share when assuming the conversion of the Convertible Notes, which is calculated by dividing the adjusted "if-converted" net income by the adjusted weighted average number of shares of common stock outstanding during the period. The adjusted "if-converted" net income is adjusted for interest expense and amortization of debt issuance costs, both net of tax, associated with the Convertible Notes. Because the Warrants do not participate in losses, the Company will allocate undistributed earnings when calculating basic and diluted earnings per share in periods of net income only. Anti-dilutive securities are excluded from the calculation. Dilutive shares are also excluded in the calculation in periods of net loss because the effect of including such securities would be anti-dilutive. Comprehensive Income (Loss) Comprehensive income (loss) includes all changes in equity during a period except those that resulted from investments by or distributions to the Company’s stockholders. Other comprehensive income (loss) refers to gains and losses that are included in comprehensive income (loss) but excluded from income (loss) for all amounts are recorded directly as an adjustment to stockholders’ equity. Recent Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options and Derivatives and Hedging - Contracts in Entity’s Own Equity |
Restructuring Charges
Restructuring Charges | 12 Months Ended |
Jun. 30, 2021 | |
Restructuring Charges | |
Restructuring Charges | Note 3. Restructuring Charges 2020 Restructuring Plan On July 10, 2020, the Board of Directors authorized a restructuring and cost savings plan (the “2020 Restructuring Plan”) to enhance manufacturing efficiencies, streamline operations and reduce the Company’s cost structure. The 2020 Restructuring Plan was implemented, in part, as a result of previously anticipated near-term competition and pricing pressure with respect to certain key products. The 2020 Restructuring Plan included lowering operating costs and reducing the workforce by approximately 80 positions. The 2020 Restructuring Plan was initiated on July 13, 2020 and completed as of December 31, 2020. The Company incurred $4.0 million in severance-related costs in Fiscal 2021 in connection with the 2020 Restructuring Plan. The Company expects the 2020 Restructuring Plan to result in annual cost savings in excess of $15.0 million. A reconciliation of the changes in restructuring liabilities associated with the 2020 Restructuring Plan from June 30, 2020 through June 30, 2021 is set forth in the following table: Employee (In thousands) Separation Costs Balance at June 30, 2020 $ — Restructuring charges 4,043 Payments (4,035) Balance at June 30, 2021 $ 8 |
Accounts Receivable, net
Accounts Receivable, net | 12 Months Ended |
Jun. 30, 2021 | |
Accounts Receivable, net | |
Accounts Receivable, net | Note 4. Accounts Receivable Accounts receivable consisted of the following components at June 30, 2021 and 2020: June 30, June 30, (In thousands) 2021 2020 Gross accounts receivable $ 239,271 $ 271,557 Less: Chargebacks reserve (69,564) (61,877) Less: Rebates reserve (16,272) (24,536) Less: Returns reserve (38,395) (40,796) Less: Other deductions (15,505) (17,557) Less: Allowance for doubtful accounts (701) (1,103) Accounts receivable, net $ 98,834 $ 125,688 For the fiscal year ended June 30, 2021, the Company recorded a provision for chargebacks, rebates, returns and other deductions of $650.3 million, $133.9 million, $20.3 million and $68.2 million, respectively. For the fiscal year ended June 30, 2020, the Company recorded a provision for chargebacks, rebates, returns and other deductions of $761.8 million, $223.9 million, $16.9 million and $88.5 million, respectively. For the fiscal year ended June 30, 2019, the Company recorded a provision for chargebacks, rebates, returns and other deductions of $1.0 billion, $250.6 million, $42.0 million and $67.3 million, respectively. The following table identifies the activity and ending balances of each major category of revenue-related reserve for fiscal years 2021, 2020 and 2019: Reserve Category (In thousands) Chargebacks Rebates Returns Other Total Balance at June 30, 2018 $ 153,034 82,502 43,059 20,021 298,616 Adjustment related to adoption of ASC 606 — — — 3,536 3,536 Current period provision 1,047,192 250,555 41,982 67,344 1,407,073 Credits issued during the period (1,110,659) (254,783) (29,487) (72,773) (1,467,702) Balance at June 30, 2019 89,567 78,274 55,554 18,128 241,523 Current period provision 761,787 223,932 16,863 88,468 1,091,050 Credits issued during the period (789,477) (239,495) (31,621) (89,039) (1,149,632) Balance at June 30, 2020 61,877 62,711 40,796 17,557 182,941 Current period provision 650,317 133,898 20,280 68,177 872,672 Credits issued during the period (642,630) (161,312) (22,681) (70,229) (896,852) Balance at June 30, 2021 $ 69,564 $ 35,297 $ 38,395 $ 15,505 $ 158,761 For the fiscal years ended June 30, 2021, 2020 and 2019, as a percentage of gross sales the provision for chargebacks was 48.9%, 47.2% and 51.4%, respectively, the provision for rebates was 10.1%, 13.9% and 12.3%, respectively, the provision for returns was 1.5%, 1.0% and 2.1%, respectively and the provision for other adjustments was 5.1%, 5.5% and 3.3%, respectively. The increase in the chargebacks reserve was primarily due to timing of sales and product mix partially offset by lower sales. The rebates reserve decreased primarily due to lower sales of Fluphenazine in Fiscal 2021, which had higher than average government-related rebates. Historically, we have not recorded any material amounts in the current period related to reversals or additions of prior period reserves. |
Inventories
Inventories | 12 Months Ended |
Jun. 30, 2021 | |
Inventories | |
Inventories | Note 5. Inventories Inventories at June 30, 2021 and 2020 consisted of the following: June 30, June 30, (In thousands) 2021 2020 Raw Materials $ 45,370 $ 59,703 Work-in-process 12,685 12,235 Finished Goods 51,490 70,929 Total $ 109,545 $ 142,867 During the fiscal years ended June 30, 2021, 2020 and 2019, the Company recorded write-downs to net realizable value for excess and obsolete inventory of $24.3 million, $10.3 million and $21.8 million, respectively. The increase in write-downs for excess and obsolete inventory was primarily related to the discontinuation of certain product lines during the second quarter of Fiscal 2021, which is discussed further in Note 8 “Intangible Assets.” |
Property, Plant and Equipment,
Property, Plant and Equipment, net | 12 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment, net | |
Property, Plant and Equipment, net | Note 6. Property, Plant and Equipment Property, plant and equipment at June 30, 2021 and 2020 consisted of the following: June 30, June 30, (In thousands) Useful Lives 2021 2020 Land — $ 1,783 $ 1,783 Building and improvements 10 103,082 100,285 Machinery and equipment 5 166,617 164,704 Furniture and fixtures 5 3,399 3,116 Less accumulated depreciation (123,294) (102,983) 151,587 166,905 Construction in progress 15,087 12,613 Property, plant and equipment, net $ 166,674 $ 179,518 Depreciation expense for the fiscal years ended June 30, 2021, 2020 and 2019 was $22.9 million, $24.3 million and $23.4 million, respectively. Property, plant and equipment, net included amounts held in foreign countries in the amount of $0.6 million at June 30, 2021 and June 30, 2020. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Jun. 30, 2021 | |
Fair Value Measurements | |
Fair Value Measurements | Note 7. Fair Value Measurements The Company’s financial instruments recorded in the Consolidated Balance Sheets include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and debt obligations. The Company’s cash and cash equivalents include bank deposits and money market funds. The carrying value of certain financial instruments, primarily cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, approximate their estimated fair values based upon the short-term nature of their maturity dates. The Company follows the authoritative guidance of ASC Topic 820 “Fair Value Measurements and Disclosures.” Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The authoritative guidance also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company’s financial assets and liabilities measured at fair value are entirely within Level 1 of the hierarchy as defined below: Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. Level 2 — Directly or indirectly observable inputs, other than quoted prices, such as quoted prices for similar assets or liabilities; quoted prices for identical or similar instruments in markets that are not active; or model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 — Unobservable inputs that are supported by little or no market activity and that are material to the fair value of the asset or liability. Financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation are examples of Level 3 assets and liabilities. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. Financial Instruments Disclosed, But Not Reported, at Fair Value In April 2021, the Company refinanced its Term Loan B Facility by issuing 7.750% senior secured notes due 2026 (the “Notes”) and entering into a Second Lien Secured Loan Facility (“Second Lien Facility”), which is discussed further in Note 9 “Long Term Debt”. The Company also has 4.50% Convertible Senior Notes (“Convertible Senior Notes”) outstanding as of June 30, 2021. We estimate the fair value of the Notes, the Convertible Senior Notes and, previously, the Term Loan B Facility using market quotations for debt that have quoted prices in active markets (Level 1). Since our Second Lien Facility does not trade on a daily basis in an active market, the fair value estimate is based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities (Level 2). As of June 30, 2021, the estimated fair value of the Notes and the Second Lien Facility were approximately $347 million and $189 million, respectively. The estimated fair value of Term Loan B Facility was approximately $608 million as of June 30, 2020. The estimated fair value of our 4.50% Convertible Senior Notes was approximately $53 million and $58 million as of June 30, 2021 and June 30, 2020, respectively. The fair value as of June 30, 2021 was lower than the carrying value primarily due to the Company’s stock price at June 30, 2021 as compared to the $15.29 conversion price. Non-recurring Fair Value Measurements The Company has certain assets that are measured at fair value on a non-recurring basis and are adjusted to fair value only when the carrying values are greater than the fair values. These assets are subject to fair value adjustments when there is evidence of impairment. The Company’s estimation of the fair value of intangible assets for impairment represents a Level 3 fair value measurement, due to the use of internal and external projections and unobservable measurement inputs. Based on an impairment analysis performed during the second quarter of Fiscal 2021, the Company adjusted the KUPI product rights assets and the KUPI in-process research and development asset to fair value, $84.0 million and $4.0 million respectively, as of December 31, 2020. In addition, the Company adjusted certain intangible assets included within the other product rights category of definite-lived intangible to fair value, $3.7 million, as of June 30, 2021 based on an impairment analysis performed during the fourth quarter of Fiscal 2021. Refer to Note 8 “Intangible Assets” for further information. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Jun. 30, 2021 | |
Intangible Assets | |
Intangible Assets | Note 8. Intangible Assets Intangible assets, net as of June 30, 2021 and June 30, 2020, consisted of the following: Weighted Gross Carrying Amount Accumulated Amortization Intangible Assets, Net Avg. Life June 30, June 30, June 30, June 30, June 30, June 30, (In thousands) (Yrs.) 2021 2020 2021 2020 2021 2020 Definite-lived: KUPI product rights 15 83,955 416,154 (4,198) (125,327) 79,757 290,827 KUPI trade name 2 2,920 2,920 (2,920) (2,920) — — KUPI other intangible assets 15 19,000 19,000 (7,095) (5,828) 11,905 13,172 Silarx product rights 15 20,000 20,000 (4,889) (3,556) 15,111 16,444 Other product rights 10 35,918 50,718 (8,856) (5,426) 27,062 45,292 Total definite-lived $ 161,793 $ 508,792 $ (27,958) $ (143,057) $ 133,835 $ 365,735 Indefinite-lived: KUPI in-process research and development — $ 4,000 $ 9,000 $ — $ — $ 4,000 $ 9,000 Total indefinite-lived 4,000 9,000 — — 4,000 9,000 Total intangible assets, net $ 165,793 $ 517,792 $ (27,958) $ (143,057) $ 137,835 $ 374,735 For the fiscal years ended June 30, 2021, 2020 and 2019, the Company recorded amortization expense of $24.9 million, $32.0 million and $32.2 million, respectively. In December 2020, the Company reviewed its product portfolio and decided to discontinue 23 lower gross margin product lines, including product lines that were acquired through various past business and product acquisitions. As a result of the discontinuance and the reduction in net sales and gross margin of certain other product lines, the Company determined that such decision represents a “triggering event” and, therefore, commenced an analysis to determine the potential for impairment of certain long-lived assets, primarily its intangible assets. Based on that analysis, the Company recorded an impairment charge of $193.0 million related to the KUPI product rights intangible assets. The impairment charge is primarily a result of the decline in net sales and gross margin of certain product lines acquired in connection with the KUPI acquisition, including those product lines being discontinued. In connection with a review of the Company’s product portfolio in the fourth quarter of fiscal year 2021, the Company identified lower projected cash flows as a result of increased competition for the Levothyroxine tablets product, which is sold under an agreement with Cediprof, Inc. As a result, the Company recorded a $17.0 million impairment charge to its intangible asset for the distribution and supply agreement with Cediprof, Inc., which is included within the other product rights category of definite-lived intangible assets. The Company also recorded a $5.0 million impairment charge in the second quarter of fiscal year 2021 to its KUPI in-process research and development intangible asset due to delays in the expected launch of a product within the portfolio, which resulted in reduced projected cash flows. In November 2020, the Company entered into Amendment No. 2 to License and Supply Agreement (the “2020 Amendment”) with Recro Gainesville LLC (“Recro”), which amended the Company’s agreement with Recro to exclusively distribute Verelan PM ®, Verelan SR ®, and Verapamil PM. In accordance with the Company’s policy to expense costs to renew or extend the term of a recognized intangible asset as incurred, the Company recorded $5.0 million in consideration to renew the Company’s distribution agreement during Fiscal Year 2021, which is included within cost of sales on the Consolidated Statements of Operations. Future annual amortization expense consists of the following: (In thousands) Amortization Fiscal Year Ending June 30, Expense 2022 $ 14,780 2023 14,587 2024 14,312 2025 14,119 2026 13,465 Thereafter 62,572 $ 133,835 |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Jun. 30, 2021 | |
Long-Term Debt | |
Long-Term Debt | Note 9. Long-Term Debt Long-term debt, net consisted of the following: June 30, June 30, (In thousands) 2021 2020 Term Loan A $ — $ 48,844 Unamortized discount and other debt issuance costs — (433) Term Loan A, net — 48,411 Term Loan B — 572,857 Unamortized discount and other debt issuance costs — (23,278) Term Loan B, net — 549,579 7.75% senior secured notes due 2026 350,000 — Unamortized discount and other debt issuance costs (5,594) — 7.75% senior secured notes due 2026, net 344,406 — Second Lien Secured Loan Facility due 2026 ($190.0M Principal, $5.7M Exit Fee, and $3.6M accrued PIK interest) 199,342 — Unamortized discount and other debt issuance costs (36,701) — Second Lien Secured Loan Facility due 2026, net 162,641 — 4.50% Convertible Senior Notes due 2026 86,250 86,250 Unamortized discount and other debt issuance costs (2,614) (3,111) 4.50% Convertible Senior Notes, net 83,636 83,139 $45 million Amended ABL Credit Facility — — Total debt, net 590,683 681,129 Less short-term borrowings and current portion of long-term debt — (88,189) Total long-term debt, net $ 590,683 $ 592,940 The weighted average interest rate for Fiscal 2021, which includes the impact of paid-in-kind (“PIK”) interest expense incurred during the period, was 8.0%. The weighted average interest rate for Fiscal 2020 was 8.8%. The Company paid off the outstanding balance of the Term Loan A of $42.0 million on November 25, 2020 with cash on hand. The Company’s undrawn $125.0 million Revolving Credit Facility also expired on November 25, 2020. On April 22, 2021, the Company issued $350.0 million aggregate principal amount of 7.750% senior secured notes due 2026 (the “Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and outside the United States to persons other than U.S. persons in reliance upon Regulation S under the Securities Act. The Notes bear interest semi-annually in arrears on April 15 and October 15 of each year, beginning on October 15, 2021, at a rate of 7.750% per annum in cash. The Notes will mature on April 15, 2026, unless earlier redeemed or repurchased in accordance with their terms. On April 5, 2021, the Company entered into an Exchange Agreement with certain participating lenders to exchange a portion of their existing Term B Loans for Second Lien Loans pursuant to a new $190.0 million Second Lien Secured Loan Facility (“Second Lien Facility”). On April 22, 2021, in connection with the issuance of the Notes and the entrance into the Amended ABL Credit Facility, which is discussed further below, the exchange between the Company and the participating lenders was consummated. From the Closing Date until the one-year anniversary of the Closing Date, the Second Lien Loans will bear 10.0% PIK interest. Thereafter, the Second Lien notes will bear 5.0% cash interest and 5.0% PIK interest until maturity, except to the extent the Company elects to pay all or a portion of the PIK interest in cash. The Second Lien Loans will mature on July 21, 2026. When a portion or all of the Second Lien Facility is repaid, the Company is required to pay a non-refundable exit fee (“Exit Fee”) equal to 3.0% of the principal amount of the loan repaid up to a maximum of $5.7 million. In connection with the Second Lien Facility, the Company issued to the Participating Lenders warrants to purchase up to 8,280,000 shares of common stock of the Company (the “Warrants”) at an exercise price of $6.88 per share. Refer to Note 13 “Warrants” for further information on the Warrants issued. In addition to the Notes Offering and the Second Lien Facility, on April 22, 2021, the Company entered into an amendment to that certain Credit and Guaranty Agreement, dated as of December 7, 2020 (such agreement as so amended, the “Amended ABL Credit Agreement”), among the Company, certain of its wholly-owned domestic subsidiaries party thereto, as borrowers or as guarantors, Wells Fargo Bank, National Association, as administrative agent and as collateral agent and the other lenders party thereto, for the purpose of, among other things, increasing the aggregate amount of the revolving credit facility from $30.0 million to $45.0 million and extending the maturity thereof to the fifth anniversary of the closing date of Notes Offering (subject to a springing maturity as set forth therein). The Amended ABL Credit Agreement provides for a revolving credit facility (the “Amended ABL Credit Facility”) that includes letter of credit and swing line sub-facilities. Borrowing availability under the Amended ABL Credit Facility is determined by a monthly borrowing base collateral calculation that is based on specified percentages of eligible accounts receivable less certain reserves and subject to certain other adjustments as set forth in the Amended ABL Credit Agreement. Availability is reduced by issuance of letters of credit as well as any borrowings. Loans outstanding under the Amended ABL Credit Agreement bear interest at a floating rate measured by reference to, at the Company’s option, either an adjusted London Inter-Bank Offered Rate (“LIBOR”) (subject to a floor of 0.75%) plus an applicable margin of 2.50% per annum, or an alternate base rate plus an applicable margin of 1.50% per annum. Unused commitments under the Amended ABL Credit Facility are subject to a per annum fee of 0.50% per annum, which fee increases to 0.75% per annum for any quarter during which the company's average usage under the Amended ABL Credit Facility is less than $5.0 million. The Amended ABL Credit Agreement includes a covenant to maintain a minimum fixed charge coverage ratio of no less than 1.10 to 1.00, which is tested only when Excess Availability is less than 15.0% of the lesser of (A) the borrowing base and (B) the then effective commitments under the Amended ABL Credit Facility for three consecutive business days and continuing until the first day immediately succeeding the last day of 30 consecutive days on which Excess Availability is in excess of such threshold. The Amended ABL Credit Agreement provides for events of default, which, if any of them occur, would permit or require the principal, premium, if any, and interest on all of the then outstanding obligations under the Amended ABL Credit Facility to be due and payable immediately and the commitments under the Amended ABL Credit Facility to be terminated. In connection with the Second Lien Facility, the Company is required to maintain at least $5.0 million in a deposit account at all times, subject to control by the Second Lien Collateral Agent and a minimum cash balance of $15.0 million as of the last day of each month. At June 30, 2021, the Company classified the $5.0 million required deposit account balance as restricted cash, which is included in other assets caption on the Consolidated Balance Sheets. The Company used the net proceeds of the Notes Offering and Second Lien Facility, in addition to cash on hand, to pay off the existing Term Loan B Facility in full and pay certain fees and expenses related to the transactions. In accordance with ASC 470, Debt Long-term debt amounts due, for the twelve-month periods ending June 30 were as follows: Amounts Payable (In thousands) to Institutions 2022 $ — 2023 — 2024 — 2025 — 2026 350,000 Thereafter 285,592 Total $ 635,592 The long-term debt amounts due above include accrued PIK interest on the Second Lien Facility as of June 30, 2021. Following the one-year anniversary of the closing date of the Second Lien Facility, the Company may elect to pay in cash any interest required to be paid in the form of PIK interest. The outstanding Notes, Second Lien Facility, and Amended ABL Credit Facility amounts above are guaranteed by all of Lannett’s significant wholly-owned domestic subsidiaries and are collateralized by substantially all present and future assets of the Company. |
Legal, Regulatory Matters and C
Legal, Regulatory Matters and Contingencies | 12 Months Ended |
Jun. 30, 2021 | |
Legal, Regulatory Matters and Contingencies | |
Legal, Regulatory Matters and Contingencies | Note 10. Legal, Regulatory Matters and Contingencies State Attorneys General Inquiry into the Generic Pharmaceutical Industry In July 2014, the Company received interrogatories and a subpoena from the State of Connecticut Office of the Attorney General concerning its investigation into the pricing of digoxin. According to the subpoena, the Connecticut Attorney General is investigating whether anyone engaged in any activities that resulted in (a) fixing, maintaining or controlling prices of digoxin or (b) allocating and dividing customers or territories relating to the sale of digoxin in violation of Connecticut antitrust law. In June 2016, the Connecticut Attorney General issued interrogatories and a subpoena to an employee of the Company in order to gain access to documents and responses previously supplied to the Department of Justice pursuant to the federal investigation described below. Beginning in December 2016, the Connecticut Attorney General and numerous other State Attorneys General have filed civil complaints against the Company and numerous other companies and individuals relating to alleged anti-competitive behavior as more fully described below. Based on internal investigations performed to date, the Company currently believes that it has acted in compliance with all applicable laws and regulations. Federal Investigation into the Generic Pharmaceutical Industry In November and December 2014, the Company and certain affiliated individuals and customers were served with grand jury subpoenas relating to a federal investigation of the generic pharmaceutical industry into possible violations of the Sherman Act. The subpoenas requested corporate documents of the Company relating to corporate, financial and employee information, communications or correspondence with competitors regarding the sale of generic prescription medications and the marketing, sale, or pricing of certain products, generally for the period of 2005 through the dates of the subpoenas. The Company received a Civil Investigative Demand (“CID”) from the Department of Justice on May 14, 2018. The CID requested information from 2009-present regarding allegations that the generic pharmaceutical industry engaged in market allocation, price fixing, payment of illegal remuneration and submission of false claims. The Company has responded to the CID. Based on internal investigations performed to date, the Company believes that it has acted in compliance with all applicable laws and regulations. Government Pricing During the quarter ended December 31, 2016, the Company completed a contract compliance review, for the period January 1, 2012 through June 30, 2016, for one of KUPI’s government-entity customers. As a result of the review, the Company identified certain commercial customer prices and other terms that were not properly disclosed to the government-entity resulting in potential overcharges. For the period January 1, 2012 through November 24, 2015 (“the pre-acquisition period”), the Company is fully indemnified per the Stock Purchase Agreement. On May 22, 2019, the Department of Veterans Affairs issued a Contracting Officer’s Final Decision and Demand for Payment, assessing the sum of $9.4 million for overpayments by the Veteran’s Administration for the period of January 1, 2012 through June 30, 2016. In August 2019, the Company remitted payment to the VA and received reimbursement from UCB for the indemnified portion of the payment in the amount of $8.1 million. The VA requested additional information for the period of July 1, 2016 through March 2018. The Company is in the process of responding to the information request. State Attorneys General and Private Plaintiffs Antitrust and Consumer Protection Litigation In December 2016, the Connecticut Attorney General and various other State Attorneys General filed a civil complaint alleging that six pharmaceutical companies engaged in anti-competitive behavior. The Company was not named in the action and does not compete on the products that formed the basis of the complaint. The complaint was later transferred for pretrial purposes to the United States District Court for the Eastern District of Pennsylvania as part of a multidistrict litigation captioned In re: Generic Pharmaceuticals Pricing Antitrust Litigation (the “MDL”). On October 31, 2017, the State Attorneys General filed a motion for leave to amend their complaint to add numerous additional defendants, including the Company, and claims relating to 13 additional drugs. The District Court granted that motion on June 5, 2018. The State Attorneys General filed their amended complaint on June 18, 2018. The claim relating to Lannett involves alleged price-fixing for one drug, doxycycline monohydrate, but does not involve the pricing for digoxin. The State Attorneys General also allege that all defendants were part of an overarching, industry-wide conspiracy to allocate markets and fix prices generally. On August 15, 2019, the Court denied the defendants' joint motion to dismiss the overarching conspiracy claims but has yet to decide an individual motion filed by the Company to dismiss the overarching conspiracy claims as to it. On May 10, 2019, the State Attorneys General filed a new lawsuit naming the Company and one of its employees as defendants, along with 33 other companies and individuals. The complaint again alleges an overarching conspiracy and contains claims for price-fixing and market allocation under the Sherman Act and related state laws. The complaint focuses on the conduct of another generic pharmaceutical company, and the relationships that company had with other generic companies and their employees. The specific allegations in this complaint against Lannett relate to the Company’s sales of baclofen and levothyroxine. The complaint also names another current employee as a defendant, but the allegations pertain to conduct that occurred prior to their employment by Lannett. In June 2020, the State Attorneys General filed a third overarching conspiracy complaint involving scores of different drugs used primarily to treat dermatological conditions, including alleged price-fixing by the Company for acetazolamide. Both complaints have been added to the MDL. In 2016 and 2017, the Company and certain competitors were named as defendants in a number of lawsuits filed by private plaintiffs alleging that the Company and certain generic pharmaceutical manufacturers have conspired to fix prices of generic digoxin, levothyroxine, ursodiol and baclofen. These cases are part of a larger group of more than 100 lawsuits generally alleging that over 30 generic pharmaceutical manufacturers and distributors conspired to fix prices for multiple different generic drugs in violation of the federal Sherman Act, various state antitrust laws, and various state consumer protection statutes. The United States also has been granted leave to intervene in the cases. On April 6, 2017, these cases were added to the MDL. The various plaintiffs are grouped into three categories - Direct Purchaser Plaintiffs, End Payer Plaintiffs, and Indirect Reseller Purchasers - and filed Consolidated Amended Complaints (“CACs”) against the Company and the other defendants in August 2017. The CACs naming the Company as a defendant involve generic digoxin, levothyroxine, ursodiol and baclofen. Pursuant to a court-ordered schedule grouping the 18 different drug cases into three separate tranches, the Company and other generic pharmaceutical manufacturer defendants in October 2017 filed joint and individual motions to dismiss the CACs involving the six drugs in the first tranche, including digoxin. In October 2018, the Court (with one exception) denied defendants’ motions to dismiss plaintiffs’ Sherman Act claims with respect to the drugs in the first tranche. In March 2019, the Company and other defendants filed answers to the Sherman Act claims. In addition, in February 2019, the Court dismissed certain of the plaintiffs’ state law claims but denied the remainder of defendants’ motions to dismiss and set a deadline of April 1, 2019 for certain plaintiffs to amend their existing complaints. Those plaintiffs amended their complaints, but further motions to dismiss the state-law claims remain pending. Following the lead of the state Attorneys General, the Direct Purchaser Plaintiffs, End Payer Plaintiffs and Indirect Reseller Plaintiffs filed their own complaints in June 2018 alleging an overarching conspiracy relating to 14 generic drugs in the End Payer complaint and 15 generic drugs in the Indirect Reseller complaint. Although the complaints allege an overarching conspiracy with respect to all of the drugs identified, the specific allegations related to drugs the Company manufactures involve acetazolamide and doxycycline monohydrate. In addition, between December 2019 and February 2020, the End Payer Plaintiffs, Indirect Reseller Purchasers, and Direct Purchaser Plaintiffs filed separate complaints alleging overarching, industry-wide price-fixing conspiracies modeled on the second one filed by the state Attorneys General. The new complaint involves 135 new drugs in addition to those named in previous complaints. As to the Company, the new drugs involved are pilocarpine HCL, triamterene HCTZ capsules, amantadine HCL, and oxycodone HCL. None of the defendants, including the Company, has responded yet to these new complaints. Between January 2018 and December 2020, a number of opt-out parties filed individual complaints or otherwise commenced actions against the Company and dozens of other companies and individuals alleging an overarching conspiracy and individual conspiracies to fix the prices and allocate markets on scores of different drug products, including digoxin, doxycycline, levothyroxine, ursodiol and baclofen. The opt-out parties include various retailers, insurers and county governments, which have filed federal suits in Pennsylvania, New York, California, Minnesota and Texas. All of those complaints have been added to the MDL but none of the defendants, including the Company, has responded to any of the complaints. Other groups of insurers have commenced actions in Pennsylvania state court against the Company and other drug companies by filing writs of summons, which are not complaints but can serve to toll the running of statutes of limitations. Those state-court cases have not been added to the MDL, although the parties have agreed to stay those cases pending further developments in the MDL. In June 2020, the Company and a number of other generic pharmaceutical manufacturers were named as defendants in a Statement of Claim in a proposed class proceeding in federal court in Toronto, Ontario, Canada. The case alleges a violation of Canada’s Competition Act. The allegations are similar to those in the MDL alleging an overarching, industry-wide conspiracy to allocate markets and fix the price of generic drugs. That alleged conspiracy reached Canada because these same manufacturers also allegedly sell the majority of generic drugs in Canada. The Statement of Claim alleges that the conspiracy extends to the entire generic pharmaceutical market. The specific drugs identified with respect to the Company are: acetazolamide, baclofen, digoxin, doxycycline monohydrate, levothyroxine, and ursodiol. The Company has not yet responded to the Statement of Claim. On July 13, 2020, the District Court overseeing the MDL selected as “bellwether” cases the second overarching conspiracy case filed by the state Attorneys General in May 2019 as well as individual-conspiracy cases filed by the Direct Purchaser Plaintiffs, End Payer Plaintiffs, and Indirect Reseller Purchasers involving the drugs clobetasol, clomipramine and pravastatin. The Company is a defendant only in the overarching conspiracy case. On February 9, 2021, the District Court vacated the order selecting the bellwether cases. Thereafter, the District Court re-designated the clobetasol and clomipramine cases as individual-conspiracy bellwethers, and on May 7, 2021, selected the third complaint filed by the state Attorneys General in June 2020 as the new overarching conspiracy bellwether case. The state Attorneys General have since indicated that they intend to amend their complaint in the overarching conspiracy bellwether case but have not yet filed a new amended complaint. To date, none of the bellwether cases have been scheduled for trial. The Company believes that it acted in compliance with all applicable laws and regulations. Accordingly, the Company disputes the allegations set forth in these class actions and plans to vigorously defend itself against these claims. Shareholder Litigation In November 2016, a putative class action lawsuit was filed against the Company and two of its former officers in the federal district court for the Eastern District of Pennsylvania, alleging that the Company and two of its former officers damaged the purported class by making false and misleading statements regarding the Company’s drug pricing methodologies and internal controls. In December 2017, counsel for the putative class filed a second amended complaint. The Company filed a motion to dismiss the second amended complaint in February 2018. In July 2018, the court granted the Company’s motion to dismiss the second amended complaint. In September 2018, counsel for the putative class filed a third amended complaint alleging that the Company and two of its former officers made false and misleading statements regarding the impact of competition on prices and sales of certain of the Company’s products, regarding the potential effects on the Company of regulatory investigations and antitrust litigation, and regarding the defendants’ investigation of purported anticompetitive conduct. The Company filed a motion to dismiss the third amended complaint in November 2018. In May 2019, the court denied the Company’s motion to dismiss the third amended complaint. In July 2019, the Company filed an answer to the third amended complaint. On October 1, 2020, counsel for the putative class filed a motion for class certification. In March 2021, the Company filed a brief in opposition to the motion to certify the putative class. On August 12, 2021, the Court entered an Order granting the motion and certifying the class. In August 2021, the court granted the motion to certify the proposed class, to appoint class representatives, and to appoint class counsel. The Company believes it acted in compliance with all applicable laws and continues to vigorously defend itself from these claims. The Company cannot reasonably predict the outcome of the suit at this time. In May 2019, a shareholder derivative lawsuit was filed against certain of the Company’s current and former officers and certain of the current and former members of the Company’s Board of Directors in the federal court for the District of Delaware. The Company was also named as a nominal defendant in the suit. The suit alleges that the defendants breached their fiduciary duties as directors and/or officers of the Company, that certain of the defendants caused the Company to issue false and misleading proxy statements in violation of Section 14(a) of the Securities Exchange Act of 1934, that the defendants were unjustly enriched at the expense of the Company, and that the defendants wasted corporate assets belonging to the Company. On December 4, 2019 the Court entered a stipulation consolidating the suit with a separate shareholder derivative suit filed in July 2019, as described below. On December 6, 2019, the Company filed a motion to dismiss the consolidated cases. On January 14, 2020, the parties reached an agreement in principle to resolve the consolidated cases, subject to the execution of a mutually acceptable settlement document and Court approval. In July 2019, a shareholder derivative lawsuit was filed against certain of the Company’s current and former officers and directors in the federal court for the Eastern District of Pennsylvania. The Company was also named as a nominal defendant in the suit. The suit alleges that the defendants breached their fiduciary duties as directors and/or officers of the Company and that certain of the defendants caused the Company to violate Sections 10(b), 14(a), and 29(b) of the Securities Exchange Act of 1934. In October 2019, this suit was transferred to the federal court for the District of Delaware and was pending before the same judge presiding over the shareholder derivative suit that was filed in May 2019. On December 4, 2019, the Court entered a stipulation consolidating the suit with a separate shareholder derivative suit filed in May 2019, as described above. On December 6, 2019, the Company filed a motion to dismiss the consolidated cases. On January 14, 2020, the parties reached an agreement in principle to resolve the consolidated cases, subject to the execution of a mutually agreeable settlement document and Court approval. The settlement of the two consolidated cases, which was preliminarily approved by the Court on August 7, 2020, requires the Company to implement certain new corporate policies and pay the plaintiffs’ counsel in the consolidated cases, collectively, the sum of $600,000 in exchange for a release of all liability with respect to both of the consolidated cases. A settlement hearing was held on October 7, 2020. At the settlement hearing, the Magistrate Judge issued an oral Report and Recommendation approving the settlement and denying the objecting parties’ motion to intervene. The time period to object to the Report and Recommendation has expired. On October 22, 2020, the Court adopted the Report and Recommendation, granted the motion for final approval of the settlement, denied the objecting parties’ motion to intervene, and issued a final judgement dismissing the consolidated cases with prejudice. The Company considers these matters closed. In September 2019, a shareholder derivative lawsuit was filed against certain of the Company’s current and former officers, directors, and employees in the federal court for the District of Delaware. The Company was also named as a nominal defendant in the suit. The suit alleges that the defendants breached their fiduciary duties as directors and/or officers of the Company, alleges waste of corporate assets and gross mismanagement, and alleges that certain of the defendants caused the Company to violate Section 14(a) of the Securities and Exchange Act of 1934. On November 22, 2019, the Company filed a motion to dismiss the complaint. On January 16, 2020, the Court entered the parties’ stipulation to stay the case pending the resolution of the defendants’ motion to dismiss the two earlier filed consolidated shareholder derivative cases referenced above. On February 18, 2020, the Court entered the parties’ stipulation to withdraw the Company’s motion to dismiss without prejudice to the Company’s ability to refile a renewed motion to dismiss after the stay is lifted. On March 11, 2020, following notice that Plaintiffs no longer consented to the stay, the Court lifted the stay. On April 6, 2020, certain of the defendants, including the Company, filed a renewed motion to dismiss or, in the alternative, to stay the account. On April 29, 2020, the Court entered the parties’ stipulation to stay the action, pending a decision from the Court regarding the settlement in the consolidated derivative actions discussed above. In light of the Final Order and Judgment entered in the two earlier filed consolidated shareholder derivative cases referenced above, the parties filed a stipulation and proposed order dismissing this action, with prejudice. On October 29, 2020, the District Court Judge entered an Order approving the parties’ Stipulation of Dismissal, with prejudice. The Company considers this matter closed. In February 2020, a shareholder derivative lawsuit was filed against certain of the Company’s current and former officers, directors, and employees in the Court of Chancery of the State of Delaware. The Company was also named as a nominal defendant in the suit. The suit alleges that the defendants breached their fiduciary duties as directors and/or officers of the Company and were unjustly enriched. On March 16, 2020, the Company filed a motion to dismiss the complaint, and a motion to stay the proceedings. On March 27, 2020, the Company filed its opening brief in support of its motion to stay the proceedings. On April 6, 2020, the parties entered into a stipulation and proposed order to stay the action. The Court granted the stipulation and proposed order that same day. In light of the Final Order and Judgment entered in the two earlier filed consolidated shareholder derivative cases referenced above, the parties agreed to dismiss this action, with prejudice. The Court granted Stipulation of Dismissal with Prejudice on November 4, 2020. The Company considers this matter closed. Genus Life Sciences In December 2018, Genus Lifesciences, Inc. (“Genus”) sued the Company, Cody Labs, and others in California federal court, alleging violations of the Lanham Act, Sherman Act, and California false advertising law. Genus received FDA approval for a cocaine hydrochloride product in December 2018, and its claims are premised in part on allegations that the Company falsely advertises its unapproved cocaine hydrochloride solution product. The Company denied that it is falsely advertising its cocaine hydrochloride solution product and continued to market its unapproved product relying on the Guidance for FDA Staff and Industry, Marketed Unapproved Drugs — Compliance Policy Guide, pending approval of its Section 505(b)(2) application (until August 15, 2019, when it agreed to a request by the FDA to cease marketing its unapproved product as a result of the approval of a competitor’s product). In January 2019, the Company filed a motion to dismiss the complaint. On May 3, 2019, the Court issued a written decision granting in part and denying in part the motion to dismiss. On June 6, 2019, Genus filed an Amended Complaint. On June 27, 2019, the Company filed a motion to dismiss the amended complaint. By Order dated September 3, 2019, the Court granted in part and denied in part the Company's motion to dismiss. On November 20, 2019, Genus filed a second amended complaint. On December 17, 2019, the Company filed an answer to the second amended complaint. The Company believes it acted in compliance with all applicable laws and regulations and plans to vigorously defend itself from these claims. On August 16, 2021, the Company and Genus reached an agreement in principle to amicably resolve this case, along with three other cases involving the Company’s approved cocaine hydrochloride product. The parties are in the process of negotiating and finalizing various agreements memorializing the settlement and have a motion to stay the case for 60 days. Sandoz, Inc. On July 20, 2020, Sandoz, Inc. (“Sandoz”) filed a complaint in federal court in Philadelphia, alleging claims for tortious interference with contract, unfair competition and conversion of confidential information, arising out of Cediprof, Inc.’s (“Cediprof”) termination of Sandoz’s contract to distribute levothyroxine tablets in the United States and certain territories. Along with the complaint, Sandoz filed a motion for a temporary restraining order and preliminary injunction, seeking to enjoin the Company from commencing the distribution of levothyroxine tablets on August 3, 2020. On the same day, Sandoz filed a separate complaint and application for a temporary restraining order and preliminary injunction against Cediprof in federal court in New York, seeking to prevent Cediprof from selling its levothyroxine tablets in the United States and certain of its territories to anyone other than Sandoz. On July 27, 2020, the New York court held a hearing and denied Sandoz’s application for a temporary restraining order, ruling Sandoz had failed to establish irreparable harm. Sandoz subsequently dismissed the complaint and is proceeding against Cediprof in an Arbitration in New York, where the Company has agreed to indemnify Cediprof. On July 28, 2020, the Philadelphia court held a hearing and denied Sandoz’s application for a temporary restraining order, ruling that Sandoz had failed to establish irreparable harm and failed to establish that it is likely to succeed on the merits of its claim against Lannett. On October 5, 2020, the Company filed a motion to dismiss the complaint. On December 28, 2020, the Court granted in part and denied in part the motion, dismissing certain of the claims. The Company has filed a motion to stay the case pending the Arbitration of the Sandoz/Cediprof dispute. On January 11, 2021, the Company filed an answer and counterclaim to the complaint. Upon the conclusion of fact discovery, the Court entered an order on July 16, 2021 staying the remaining deadlines in the case pending the outcome of the Arbitration between Sandoz and Cediprof. The Company denies that it tortiously interfered with Sandoz’s contract or that it converted any of Sandoz’s alleged confidential information. Discovery is ongoing and the Company cannot reasonably predict the outcome of this suit at this time. Other Litigation Matters The Company is also subject to various legal proceedings arising out of the normal course of its business including, but not limited to, product liability, intellectual property, patent infringement claims and antitrust matters. It is not possible to predict the outcome of these various proceedings. An adverse determination in any of these proceedings or in any of the proceedings described above in the future could have a significant impact on the financial position, results of operations and cash flows of the Company. |
Commitments
Commitments | 12 Months Ended |
Jun. 30, 2021 | |
Commitments | |
Commitments | Note 11. Commitments Leases At June 30, 2021 and 2020, the Company has a ROU lease asset of $10.6 million and $9.3 million, respectively, and a ROU liability of $13.1 million and $10.9 million, respectively. The current balance of the ROU liability at June 30, 2021 and 2020 was $2.0 million and $1.1 million, respectively. In February 2021, the Company extended our existing lease for the warehouse in Seymour, Indiana. The lease term is now set to expire in March 2031. Accordingly, the Company recorded a ROU lease asset and liability totaling $2.3 million, respectively, in the third quarter of Fiscal 2021. Components of lease costs are as follows: Fiscal Year Ended June 30, (In thousands) 2021 2020 Operating lease cost $ 1,754 $ 2,246 Variable lease cost 133 153 Short-term lease cost (a) 448 579 Total $ 2,335 $ 2,978 ______________________ (a) Not recorded on the Consolidated Balance Sheet Supplemental cash flow information and non-cash activity related to our operating leases are as follows: Fiscal Year Ended June 30, (In thousands) 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 1,916 $ 2,086 Non-cash activity: ROU assets obtained in exchange for new operating lease liabilities $ 2,275 $ 4,317 Weighted average remaining lease term and discount rate for our operating leases are as follows: Fiscal Year Ended June 30, 2021 2020 Weighted-average remaining lease term 10 years 9 years Weighted-average discount rate 8.5 % 7.9 % Maturities of lease liabilities by fiscal year for our operating leases are as follows: (In thousands) Amounts Due 2022 $ 2,051 2023 2,064 2024 2,083 2025 2,104 2026 2,124 Thereafter 8,513 Total lease payments 18,939 Less: Imputed interest 5,847 Present value of lease liabilities $ 13,092 Other Commitments During Fiscal 2017, the Company signed an agreement with a company operating in the pharmaceutical business, under which the Company agreed to provide up to $15.0 million in revolving loans, which expires in seven years and bears interest at 2.0%, for the purpose of expansion and other business needs. In Fiscal 2019, the Company sold 50% of the outstanding loan to a third party for $5.6 million, in addition to assigning 50% of all rights, title and interest in the loan and loan documents. As of June 30, 2021, $6.6 million was outstanding under the revolving loan and is included in other assets. Based on the guidance set forth in ASC 810-10 Consolidation In Fiscal 2020, the Company executed a License and Collaboration Agreement with North South Brother Pharmacy Investment Co., Ltd. and HEC Group PTY, Ltd. (collectively, “HEC”) to develop an insulin glargine product that would be biosimilar to Lantus Solostar. Under the terms of the deal, among other things, the Company shall fund up to the initial $32 million of the development costs and split 50 /50 any development costs in excess thereof. As of June 30, 2021, the Company has incurred approximately $4 million of development costs towards the $32 million commitment made by the Company. Lannett shall receive an exclusive license to distribute and market the product in the United States upon FDA approval under the 50 /50 profit split for the first ten years following commercialization, followed by a 60 /40 split in favor of HEC for the following five years . To date, the COVID-19 pandemic has not had a material impact on the development of the insulin glargine product. However, the timing of the product development and approval could be delayed as the COVID-19 pandemic continues. On February 8, 2021, the Company executed a License and Collaboration Agreement and a Supply Agreement with Sunshine Lake Pharma Co., Ltd. an HEC Group company (“Sunshine”) with respect to the development of a biosimilar insulin aspart product. Under the terms of the deal, among other things, the Company shall fund up to the initial $32 million of the development costs, provided that if total development and other costs paid by Lannett are less than $32 million then the difference will be paid to Sunshine over the first year of commercialization. As of June 30, 2021, the Company has not yet incurred material costs towards the $32 million commitment made by the Company. The parties shall negotiate the sharing of any development costs in excess of $32 million. Lannett shall receive an exclusive license to distribute and market the product in the United States upon FDA approval under the 50 /50 profit split for the first ten years following commercialization, followed by a 60 /40 split in favor of Sunshine for the following five years . |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 12 Months Ended |
Jun. 30, 2021 | |
Accumulated Other Comprehensive Loss. | |
Accumulated Other Comprehensive Loss | Note 12. Accumulated Other Comprehensive Loss The Company’s Accumulated Other Comprehensive Loss was comprised of the following components as of June 30, 2021 and 2020: June 30, (In thousands) 2021 2020 Foreign Currency Translation Beginning Balance, June 30 $ (627) $ (615) Net income (loss) on foreign currency translation (net of tax of $0 and $0) 79 (12) Other comprehensive income (loss), net of tax 79 (12) Total Accumulated Other Comprehensive Loss $ (548) $ (627) |
Warrants
Warrants | 12 Months Ended |
Jun. 30, 2021 | |
Warrants | |
Warrants | Note 13. Warrants In connection with the Second Lien Facility, which is discussed further in Note 9 “Long-Term Debt” above, the Company issued to the Participating Lenders warrants to purchase up to 8,280,000 shares of common stock of the Company (the “Warrants”) at an exercise price of $6.88 per share. The Warrants were issued on April 22, 2021 with an eight-year term. The Participating Lenders received registration rights with respect to the shares of common stock of the Company to be received upon exercise of the Warrants. The Company concluded that the Warrants were indexed to its own stock and, therefore, are classified as an equity instrument. In accordance with ASC 470, Debt , the Company allocated the proceeds of the Second Lien Facility issuance based on the relative fair value of the debt instrument and the Warrants separately at the time of issuance, which was determined using the Black-Scholes valuation model. Various assumptions were used in the valuation model, including the expected volatility of 74.2% , the expected life of the Warrants of 8 years, and the risk-free rate of 1.3% . The relative fair value allocated to the Warrants was $24.4 million at the issuance date. The holders of the Warrants are entitled to receive dividends or distributions of any kind made to the common stockholders to the same extent as if the holder had exercised the Warrant into common stock. Although the Company did not issue or declare dividends during the period, the Warrants are considered participating securities under ASC 260, Earnings per share , for purposes of calculating earnings (loss) per share under the two-class method. Refer to Note 14 “Loss Per Common Share” for further details of the two-class method and the Company’s calculation of earnings (loss) per share. |
Loss Per Common Share
Loss Per Common Share | 12 Months Ended |
Jun. 30, 2021 | |
Loss Per Common Share | |
Loss Per Common Share | Note 14. Loss Per Common Share A reconciliation of the Company’s basic and diluted earnings (loss) per common share was as follows: For Fiscal Year Ended June 30, (In thousands, except share and per share data) 2021 2020 2019 Numerator: Net loss $ (363,475) $ (33,366) $ (272,107) Net income allocated to participating securities for the Warrants — — — Interest expenses applicable to the Convertible Notes, net of tax — — — Amortization of debt issuance costs applicable to the Convertible Notes, net of tax — — — Adjusted "if-converted" net loss $ (363,475) $ (33,366) $ (272,107) Denominator: Basic weighted average common shares outstanding 39,391,589 38,592,618 37,779,812 Effect of potentially dilutive options and restricted stock awards — — — Effect of conversion of the Convertible Notes — — — Effect of participating securities for the Warrants — — — Diluted weighted average common shares outstanding 39,391,589 38,592,618 37,779,812 Loss per common share: Basic $ (9.23) $ (0.86) $ (7.20) Diluted $ (9.23) $ (0.86) $ (7.20) In accordance with ASC 260, Earnings per share The number of anti-dilutive shares that have been excluded in the computation of diluted earnings per share for the fiscal years ended June 30, 2021, 2020 and 2019 were 8.0 million, 6.6 million and 1.9 million, respectively. The effect of potentially dilutive shares was excluded from the calculation of diluted loss per share in the fiscal years ended June 30, 2021, 2020 and 2019 because the effect of including such securities would be anti-dilutive. |
Share-based Compensation
Share-based Compensation | 12 Months Ended |
Jun. 30, 2021 | |
Share-based Compensation | |
Share-based Compensation | Note 15. Share-based Compensation At June 30, 2021, the Company had two share-based employee compensation plans (the 2014 Long-Term Incentive Plan (“LTIP”) and the 2021 LTIP). The 2021 LTIP, which authorized 3.0 million new shares of common stock for future issuances, was approved by the stockholders of the Company in January 2021. Together these plans authorized an aggregate total of 8.0 million shares to be issued. As of June 30, 2021, the plans have a total of 3.1 million shares available for future issuances. No awards have been granted from the 2021 LTIP as of June 30, 2021. Historically, the Company has issued share-based compensation awards with a vesting period ranging up to 3 years and a maximum contractual term of 10 years. The Company issues new shares of stock when stock options are exercised. As of June 30, 2021, there was $9.5 million of total unrecognized compensation cost related to non-vested share-based compensation awards. That cost is expected to be recognized over a weighted average period of 2.0 years. Stock Options The Company measures share-based compensation costs for options using the Black-Scholes option pricing model. The following table presents the weighted average assumptions used to estimate fair values of the stock options granted, the estimated annual forfeiture rates used to recognize the associated compensation expense and the weighted average fair value of the options granted during the fiscal years ended June 30: 2021 2020 2019 Risk-free interest rate 0.2 % 1.9 % 2.9 % Expected volatility 82.5 % 73.7 % 58.4 % Expected dividend yield — % — % — % Forfeiture rate — % — % 6.5 % Expected term 5.0 years 5.1 years 5.3 years Weighted average fair value $ 3.86 $ 4.00 $ 6.52 Expected volatility is based on the historical volatility of the price of our common shares during the historical period equal to the expected term of the option. The Company uses historical information to estimate the expected term, which represents the period of time that options granted are expected to be outstanding. The risk-free rate for the period equal to the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The forfeiture rate assumption is the estimated annual rate at which unvested awards are expected to be forfeited during the vesting period. This assumption is based on our actual forfeiture rate on historical awards. Periodically, management will assess whether it is necessary to adjust the estimated rate to reflect changes in actual forfeitures or changes in expectations. Additionally, the expected dividend yield is equal to zero, as the Company has not historically issued and has no immediate plans to issue a dividend. A stock option summary as of June 30, 2021, 2020 and 2019 and changes during the years then ended, is presented below: Weighted Weighted- Average Average Aggregate Remaining Exercise Intrinsic Contractual (In thousands, except for weighted average price and life data) Awards Price Value Life (yrs.) Outstanding at June 30, 2018 1,057 $ 22.46 $ 2,584 5.4 Granted 73 $ 12.20 Exercised (94) $ 4.06 $ 311 Forfeited, expired or repurchased (464) $ 30.61 Outstanding at June 30, 2019 572 $ 17.56 $ 273 5.0 Granted 522 $ 6.57 Exercised (56) $ 5.42 $ 237 Forfeited, expired or repurchased (47) $ 24.73 Outstanding at June 30, 2020 991 $ 12.11 $ 678 5.6 Granted 309 $ 5.95 Exercised (37) $ 4.12 $ 61 Forfeited, expired or repurchased (217) $ 17.17 Outstanding at June 30, 2021 1,046 $ 9.51 $ 25 7.2 Vested and expected to vest at June 30, 2021 1,045 $ 9.51 $ 25 7.2 Exercisable at June 30, 2021 383 $ 14.82 $ 25 4.9 Restricted Stock The Company measures restricted stock compensation costs based on the stock price at the grant date less an estimate for expected forfeitures. The annual forfeiture rate used to calculate compensation expense was 6.5% for fiscal years ended June 30, 2021, 2020 and 2019. A summary of restricted stock awards as of June 30, 2021, 2020 and 2019 and changes during the fiscal years then ended, is presented below: Weighted Average Grant - Aggregate (In thousands, except for weighted average price data) Awards date Fair Value Intrinsic Value Non-vested at June 30, 2018 704 $ 20.06 Granted 1,176 9.90 Vested (434) 19.75 $ 4,107 Forfeited (158) 14.00 Non-vested at June 30, 2019 1,288 $ 11.63 Granted 941 6.45 Vested (773) 10.54 $ 6,401 Forfeited (112) 10.75 Non-vested at June 30, 2020 1,344 $ 8.70 Granted 901 5.74 Vested (805) 8.60 $ 4,668 Forfeited (90) 9.18 Non-vested at June 30, 2021 1,350 $ 6.75 Performance-Based Shares In September 2017, the Company approved a plan to begin granting performance-based awards to certain key executives. The stock-settled awards will cliff vest based on relative Total Shareholder Return (“TSR”) over a three-year performance period. The Company measures share-based compensation cost for TSR awards using a Monte-Carlo simulation model. A summary of performance-based share awards as of June 30, 2021, 2020 and 2019 and changes during the current fiscal years then ended, is presented below: Weighted Average Grant - (In thousands, except for weighted average price and life data) Awards date Fair Value Non-vested at June 30, 2018 20 $ 25.58 Granted 52 17.69 Vested — — Forfeited — — Non-vested at June 30, 2019 72 $ 19.92 Granted 178 10.71 Vested (46) 15.08 Forfeited — — Non-vested at June 30, 2020 204 $ 12.99 Granted 339 $ 9.22 Performance adjustment (1) (12) $ 25.58 Non-vested at June 30, 2021 531 $ 10.29 ________________________________________ (1) Represents the adjustment based on the performance of the September 2017 awards, which was below the Threshold goal level at the end of the three-year performance period. Employee Stock Purchase Plan In February 2003, the Company’s stockholders approved an Employee Stock Purchase Plan (“ESPP”). Employees eligible to participate in the ESPP may purchase shares of the Company’s stock at 85% of the lower of the fair market value of the common stock on the first day of the calendar quarter, or the last day of the calendar quarter. Under the ESPP, employees can authorize the Company to withhold up to 10% of their compensation during any quarterly offering period, subject to certain limitations. The ESPP was implemented on April 1, 2003 and is qualified under Section 423 of the Internal Revenue Code. The Board of Directors authorized an aggregate total of 1.1 million shares of the Company’s common stock for issuance under the ESPP. During the fiscal years ended June 30, 2021, 2020 and 2019, 109 thousand shares, 118 thousand shares and 185 thousand shares were issued under the ESPP, respectively. As of June 30, 2021, 1.0 million total cumulative shares have been issued under the ESPP. The following table presents the allocation of share-based compensation costs recognized in the Consolidated Statements of Operations by financial statement line item: For Fiscal Year Ended June 30, (In thousands) 2021 2020 2019 Selling, general and administrative expenses $ 7,016 $ 7,087 $ 5,715 Research and development expenses 538 801 750 Cost of sales 1,483 2,328 2,562 Total $ 9,037 $ 10,216 $ 9,027 Tax benefit at statutory rate $ 2,033 $ 2,299 $ 2,031 |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Jun. 30, 2021 | |
Employee Benefit Plan | |
Employee Benefit Plan | Note 16. Employee Benefit Plan The Company has a 401(k) defined contribution plan (the “Plan”) covering substantially all employees. Pursuant to the Plan provisions, the Company is required to make matching contributions equal to 50% of each employee’s contribution, not to exceed 4% of the employee’s compensation for the Plan year. Beginning January 1, 2021, the Company reduced the matching contribution to 50% of each employee’s contribution, not to exceed 2% of the employee’s compensation for the Plan year. Contributions to the Plan during the fiscal years ended June 30, 2021, 2020, and 2019 were $1.6 million, $2.2 million and $2.3 million, respectively. In Fiscal 2020, the Company implemented a non-qualified deferred compensation plan for certain senior-level management and executives. The non-qualified deferred compensation plan allows certain eligible employees to defer additional pre-tax earnings for retirement, beyond the IRS limits in place under the Plan. Contributions to the non-qualified deferred compensation plan during Fiscal 2020 were not material. |
Income Taxes
Income Taxes | 12 Months Ended |
Jun. 30, 2021 | |
Income Taxes | |
Income Taxes | Note 17. Income Taxes On March 27, 2020, in response to COVID-19 and its detrimental impact to the global economy, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law, which provided a stimulus to the U.S. economy in the form of various individual and business assistance programs as well as temporary changes to existing tax law. Among the changes to the provision in business tax laws include a five-year net operating loss carryback for the Fiscal 2019 - 2021 tax years, a deferral of the employer’s portion of certain payroll tax, and an increase in the interest expense deductibility limitation for the Fiscal 2020 and 2021 tax years. ASC 740 requires the tax effects of changes in tax laws or rates to be recorded in the period of enactment. As a result of the CARES Act, the Company will carry back its Fiscal 2021 taxable loss into the Fiscal 2016 tax year, which resulted in an approximately $10.3 million tax rate benefit in the current year. In Fiscal 2020, the Company carried back its taxable loss into the Fiscal 2015 tax year, which resulted in a an approximately $2.8 million tax rate benefit in the fiscal year ended June 30, 2020. The following table summarizes the components of the provision for income taxes for the fiscal years ended June 30: (In thousands) 2021 2020 2019 Current Income Tax Expense (Benefit) Federal $ (57,335) $ (7,082) $ 13,185 State and Local 70 405 (81) Total Current Income Tax Expense (Benefit) (57,265) (6,677) 13,104 Deferred Income Tax Expense (Benefit) Federal 112,414 (6,525) (85,022) State and Local 5,476 (2,060) (2,220) Total Deferred Income Tax Expense (Benefit) 117,890 (8,585) (87,242) Total Income Tax Expense (Benefit) $ 60,625 $ (15,262) $ (74,138) A reconciliation of the differences between the effective rates and federal statutory rates was as follows: June 30, June 30, June 30, 2021 2020 2019 Federal income tax at statutory rate 21.0 % 21.0 % 21.0 % State and local income tax, net (1.4) % 2.7 % 0.5 % Nondeductible expenses (0.1) % (1.1) % (0.1) % Nondeductible drug fee (0.1) % (1.6) % — % Foreign rate differential — % (0.1) % (0.4) % Income tax credits 0.2 % 2.5 % 0.5 % Unrecognized tax benefits — % (5.0) % 0.1 % Change in tax laws 5.1 % 15.4 % — % Excess tax benefits on share-based compensation (0.3) % (0.8) % (0.3) % Valuation allowance (44.3) % — % — % Other (0.1) % (1.6) % 0.1 % Effective income tax rate (20.0) % 31.4 % 21.4 % The principal types of differences between assets and liabilities for financial statement and tax return purposes are accruals, reserves, impairment of intangibles, accumulated amortization, accumulated depreciation and share-based compensation expense. A deferred tax asset is recorded for the future benefits created by the timing of accruals and reserves and the application of different amortization lives for financial statement and tax return purposes. The Company’s deferred tax liability is mainly attributable to different depreciation methods for financial statement and tax return purposes. A deferred tax asset valuation allowance is established if it is more likely than not that the Company will be unable to realize certain of the deferred tax assets. As of June 30, 2021 and 2020, temporary differences which give rise to deferred tax assets and liabilities were as follows: June 30, June 30, (In thousands) 2021 2020 Deferred tax assets: Share-based compensation expense $ 1,779 $ 2,661 Reserve for returns 8,213 11,022 Inventory 6,047 4,920 Federal net operating loss 273 273 State net operating loss 9,415 8,387 Impairment on Cody note receivable 1,157 1,171 Accumulated amortization on intangible assets 112,548 79,939 Foreign net operating loss 1,792 1,822 Interest carryforward 21,111 25,392 Operating lease 2,890 3,439 R&D carryforward 1,334 491 Other 849 2,862 Total deferred tax asset 167,408 142,379 Valuation allowance (153,383) (14,622) Total deferred tax asset less valuation allowance 14,025 127,757 Deferred tax liabilities: Prepaid expenses 239 681 Property, plant and equipment 11,525 5,383 Operating lease 2,261 3,803 Total deferred tax liability 14,025 9,867 Net deferred tax asset $ — $ 117,890 The federal and state and local tax deferred tax assets begin to expire in fiscal years 2026 and 2036, respectively. The General Business Credit generated in fiscal year 2021 will expire in fiscal year 2041. The interest carryforward has an indefinite life. In the fourth quarter of Fiscal 2021, the Company recorded a full valuation allowance of its net deferred tax assets totaling $153.4 million. In determining whether a valuation allowance was necessary, the Company reviewed all available positive and negative evidence including forecasts of future taxable income, historical results of operations, statutory expirations and available tax planning strategies, among other considerations. In accordance with ASC 740 Income Taxes, the weight given to the evidence reviewed was commensurate with the extent each can be objectively verified. Based on our review, the Company determined that the positive evidence related to longer-term projected profitability, when taking into consideration the inherent uncertainty around the available data, was insufficient to overcome the significant negative evidence attributed to recent historical losses incurred as well as the revised forecasts indicating continued competitive pressures on our near-term outlook. The Company may recognize the tax benefit from an uncertain tax position claimed on a tax return only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (exclusive of interest and penalties) was as follows: (In thousands) Balance Balance at June 30, 2019 $ 2,199 Additions for tax positions of the current year 2,467 Additions for tax positions of prior years (51) Lapse of statute of limitations (24) Balance at June 30, 2020 $ 4,591 Additions for tax positions of the current year 91 Additions for tax positions of prior years 104 Settlements (240) Balance at June 30, 2021 $ 4,546 The amount of unrecognized tax benefits at June 30, 2021, 2020 and 2019 was $4.5 million, $4.6 million and $2.2 million, respectively, of which $4.4 million, $4.5 million and $2.1 million would impact the Company’s effective tax rate, respectively, if recognized. The Company has not recorded any interest and penalties for the periods ended June 30, 2021, 2020 and 2019 in the statement of operations and no cumulative interest and penalties have been recorded either in the Company’s Consolidated Balance Sheet as of June 30, 2021 and 2020. The Company will recognize interest accrued on unrecognized tax benefits in interest expense and any related penalties in operating expenses. The Company files income tax returns in the United States federal jurisdiction and various states. The Company’s federal tax returns for Fiscal Year 2014 and prior generally are no longer subject to review as such years are closed. The Company’s Fiscal Year 2015 through 2017 federal returns are currently under examination by the Internal Revenue Service (“IRS”). In March 2021, the Company was notified that its Fiscal Year 2020 federal return was also selected for examination. The Company has received preliminary assessments from the IRS, which are not considered material to the Company’s Consolidated Statements of Operations; however, we cannot reasonably predict the final outcome of the examinations at this time. In October 2018, the Company was notified that the Commonwealth of Pennsylvania will conduct a routine field audit of the Company’s Fiscal 2016 and Fiscal 2017 corporate tax returns. In March 2021, the Company received a preliminary assessment from the Commonwealth of Pennsylvania, which is not considered material to the Company’s Consolidated Statement of Operations. In December 2019, the Company was notified that the Florida Department of Revenue will conduct a routine field audit of the Company’s Fiscal 2016, 2017 and 2018 corporate tax returns. In December 2020, the Company settled the audit with the Florida Department of Revenue for an immaterial amount. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions | |
Related Party Transactions | Note 18. Related Party Transactions The Company had sales of $2.6 million, $3.0 million and $3.8 million during the fiscal years ended June 30, 2021, 2020 and 2019, respectively, to a generic distributor, Auburn Pharmaceutical Company (“Auburn”), which is a member of the Premier Buying Group. Jeffrey Farber, a current board member, is the owner of Auburn. Accounts receivable includes amounts due from Auburn of $0.4 million and $0.7 million at June 30, 2021 and 2020, respectively. |
Assets Held for Sale
Assets Held for Sale | 12 Months Ended |
Jun. 30, 2021 | |
Assets Held for Sale | |
Assets held for Sale | Note 19. Assets Held for Sale In the first quarter of Fiscal 2019, the Company approved a plan to sell the Cody API business, which includes the manufacturing and distribution of active pharmaceutical ingredients for use in finished goods production. As a result of the plan, the Company recorded the assets of the Cody API business at fair value less costs to sell. The Company performed a fair value analysis which resulted in a $29.9 million impairment of the Cody Labs long-lived assets in Fiscal 2019. The Company was unable to sell the Cody API business as an ongoing operation and intended to sell the equipment utilized by the Cody API business as well as the real estate upon receiving approval of the Company’s cocaine hydrochloride solution Section 505(b)(2) NDA application and to have Cody Labs cease all operations. During Fiscal 2020, the Company completed the sale of the equipment associated with the Cody API business for approximately $3.0 million. In the second quarter of Fiscal 2020, the Company signed a two-year agreement to lease a portion of the real estate to a third party. In October 2020, the Company entered into an agreement for the sale of real estate associated with the Cody API business for $3.8 million before fees and selling costs, subject to certain closing conditions. However, prior to closing, the buyer terminated the transaction in December 2020. The Company continues to actively market the real estate. As of June 30, 2021, the remaining real estate associated with the Cody API business, totaling $2.7 million, is recorded in the assets held for sale caption on the Consolidated Balance Sheets. The following table summarizes the financial results of the Cody API business for the fiscal years ended June 30, 2021, 2020 and 2019: Fiscal Year Ended June 30, (In thousands) 2021 2020 2019 Net sales $ — $ 1,067 $ 3,139 Pretax loss attributable to Cody API business (761) (6,549) (51,509) The pretax loss attributable to the Cody API business during the fiscal year ended June 30, 2020 includes a full impairment of a $1.2 million ROU lease asset that was recorded upon adoption of ASU No. 2016-02 on July 1, 2019. The pretax loss attributable to the Cody API business during the fiscal year ended June 30, 2019 includes impairment charges totaling $32.8 million to adjust the long-lived assets to their fair value less costs to sell. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Jun. 30, 2021 | |
Schedule II - Valuation and Qualifying Accounts | |
Schedule II - Valuation and Qualifying Accounts | Lannett Company, Inc. Schedule II - For the years ended June 30: Balance at Charged to Balance at Description Beginning of (Reduction of) End of Fiscal (In thousands) Fiscal Year Expense Deductions Year Allowance for Doubtful Accounts 2021 $ 1,103 $ 374 $ (776) $ 701 2020 1,223 $ 386 $ (506) $ 1,103 2019 1,308 870 (955) 1,223 Deferred Tax Asset Valuation Allowance 2021 $ 14,622 $ 138,761 $ — $ 153,383 2020 13,549 1,073 — 14,622 2019 8,120 5,429 — 13,549 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The Consolidated Financial Statements have been prepared in conformity with U.S. GAAP. |
Principles of consolidation | Principles of consolidation The Consolidated Financial Statements include the accounts of Lannett Company, Inc. and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current year financial statement presentation. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are required in the determination of revenue recognition and sales deductions for estimated chargebacks, rebates, returns and other adjustments including a provision for the Company’s liability under the Medicare Part D program. Additionally, significant estimates and assumptions are required when determining the value of inventories and long-lived assets, including intangible assets, income taxes, and contingencies. Because of the inherent subjectivity and complexity involved in these estimates and assumptions, actual results could differ from those estimates. |
Foreign currency translation | Foreign currency translation The Consolidated Financial Statements are presented in U.S. dollars, the reporting currency of the Company. The financial statements of the Company’s foreign subsidiary are maintained in local currency and translated into U.S. dollars at the end of each reporting period. Assets and liabilities are translated at period-end exchange rates, while revenues and expenses are translated at average exchange rates during the period. The adjustments resulting from the use of differing exchange rates are recorded as part of stockholders’ equity in accumulated other comprehensive income (loss). Gains and losses resulting from transactions denominated in foreign currencies are recognized in the Consolidated Statements of Operations under other income (loss). Amounts recorded due to foreign currency fluctuations are immaterial to the Consolidated Financial Statements. |
Cash, cash equivalents and restricted cash | Cash, cash equivalents and restricted cash The Company considers all highly liquid investments with original maturities less than or equal to three months at the date of purchase to be cash and cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair value, and consist of bank deposits and money market funds. The Company maintains its cash deposits and cash equivalents at well-known, stable financial institutions. Such amounts frequently exceed insured limits. In connection with the Second Lien Secured Loan Facility (“Second Lien Facility”), which is discussed in further detail in Note 9 “Long-Term Debt,” the Company is required to maintain at least $5 million in a deposit account at all times, subject to control by the Second Lien Collateral Agent. At June 30, 2021, the Company classified this balance as restricted cash, which is included in other assets on the Consolidated Balance Sheets. Presented in the table below is a reconciliation of the cash, cash equivalents and restricted cash amounts presented on the Consolidated Balance Sheets to the sum of such amounts presented on the Consolidated Statements of Cash Flows for the periods ended June 30, 2021, 2020 and 2019. June 30, 2021 June 30, 2020 June 30, 2019 Cash and cash equivalents $ 93,286 $ 144,329 $ 140,249 Restricted cash, included in other assets 5,000 — — Cash, cash equivalents and restricted cash as presented on the Consolidated Statements of Cash Flows $ 98,286 $ 144,329 $ 140,249 |
Allowance for doubtful accounts | Allowance for doubtful accounts On July 1, 2020, the Company adopted guidance issued by the FASB in ASU 2016-13, Measurement of Credit Losses on Financial Instruments , which requires the Company to recognize an allowance that reflects a current estimate of credit losses expected to be incurred over the life of the financial asset, including trade receivables. The adoption of ASU 2016-13 did not have a material impact on the Company’s Consolidated Financial Statements for the fiscal year ended June 30, 2021. The Company continuously monitors collections and payments from its customers and maintains a provision for estimated credit losses. The Company determines its allowance for doubtful accounts by considering a number of factors, including the length of time balances are past due, the Company’s previous loss history, the customer’s current ability to pay its obligations to the Company and the expected condition of the general economy and the industry as a whole. The Company writes off accounts receivable when they are determined to be uncollectible. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value by the first-in, first-out method. Inventories are regularly reviewed and write-downs for excess and obsolete inventory are recorded based primarily on current inventory levels, expiration date and estimated sales forecasts. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the assets’ estimated useful lives. Repairs and maintenance costs that do not extend the useful life of the asset are expensed as incurred. |
Intangible Assets | Intangible Assets Definite-lived intangible assets are stated at cost less accumulated amortization. Amortization of definite-lived intangible assets is computed on a straight-line basis over the assets’ estimated useful lives which commences upon shipment of the product, generally for periods ranging from 5 |
Valuation of Long-Lived Assets, including Intangible Assets | Valuation of Long-Lived Assets, including Intangible Assets The Company’s long-lived assets primarily consist of property, plant and equipment and definite and indefinite-lived intangible assets. Property, plant and equipment and definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances (“triggering events”) indicate that the carrying amount of the asset may not be recoverable. If a triggering event is determined to have occurred, the asset’s carrying value is compared to the future undiscounted cash flows expected to be generated by the asset. If the carrying value exceeds the undiscounted cash flows of the asset, then impairment exists. Indefinite-lived intangible assets are tested for impairment at least annually during the fourth quarter of each fiscal year or more frequently if events or triggering events indicate that the asset might be impaired. An impairment loss is measured as the excess of the asset’s carrying value over its fair value, which in most cases is calculated using a discounted cash flow model. Discounted cash flow models are highly reliant on various assumptions which are considered Level 3 inputs, including estimates of future cash flows (including long-term growth rates), discount rates and the probability of achieving the estimated cash flows. |
Segment Information | Segment Information The Company operates in one reportable segment, generic pharmaceuticals. As such, the Company aggregates its financial information for all products. The following table identifies the Company’s net sales by medical indication for fiscal years ended June 30, 2021, 2020 and 2019. The medical indication categories for the fiscal year ended June 30, 2019 were reclassified to better align with industry standards and the Company’s peers. (In thousands) Fiscal Year Ended June 30, Medical Indication 2021 2020 2019 Analgesic $ 14,684 $ 8,680 $ 8,251 Anti-Psychosis 43,720 104,934 73,453 Cardiovascular 65,987 88,576 101,467 Central Nervous System 95,115 77,256 59,019 Endocrinology 27,070 — 197,522 Gastrointestinal 67,540 73,477 63,043 Infectious Disease 67,761 73,237 16,950 Migraine 25,554 44,266 41,592 Respiratory/Allergy/Cough/Cold 9,258 11,576 12,479 Urinary 5,786 4,225 6,755 Other 35,312 35,013 51,517 Contract manufacturing revenue 20,991 24,504 23,359 Total net sales $ 478,778 $ 545,744 $ 655,407 |
Customer, Supplier and Product Concentration | Customer, Supplier and Product Concentration The following table presents the percentage of total net sales, for the fiscal years ended June 30, 2021, 2020 and 2019, for certain of the Company’s products, defined as products containing the same active ingredient or combination of ingredients, which accounted for at least 10% of total net sales in any of those periods: June 30, June 30, June 30, 2021 2020 2019 Product 1 12 % 10 % — % Product 2 7 % 18 % 10 % Product 3 3 % — % 30 % The following table presents the percentage of total net sales, for the fiscal years ended June 30, 2021, 2020 and 2019, for certain of the Company’s customers which accounted for at least 10% of total net sales in any of those periods: June 30, June 30, June 30, 2021 2020 2019 Customer A 27 % 25 % 21 % Customer B 21 % 23 % 18 % Customer C 12 % 11 % 10 % Customer D — % — % 12 % |
Revenue Recognition | Revenue Recognition The Company complies with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers Revenue Recognition When revenue is recognized, a simultaneous adjustment to gross sales is made for estimated chargebacks, rebates, returns, promotional adjustments and other potential adjustments. These provisions are primarily estimated based on historical experience, future expectations, contractual arrangements with wholesalers and indirect customers and other factors known to management at the time of accrual. Accruals for provisions are presented in the Consolidated Financial Statements as a reduction to gross sales with the corresponding reserve presented as a reduction of accounts receivable or included as rebates payable, depending on the nature of the reserve. Provisions for chargebacks, rebates, returns and other adjustments require varying degrees of subjectivity. While rebates generally are based on contractual terms and require minimal estimation, chargebacks and returns require management to make more subjective assumptions. Each major category is discussed in detail below: Chargebacks The provision for chargebacks is the most significant and complex estimate used in the recognition of revenue. The Company sells its products directly to wholesale distributors, generic distributors, retail pharmacy chains and mail-order pharmacies. The Company also sells its products indirectly to independent pharmacies, managed care organizations, hospitals, nursing homes and group purchasing organizations, collectively referred to as “indirect customers.” The Company enters into agreements with its indirect customers to establish pricing for certain products. The indirect customers then independently select a wholesaler from which to purchase the products. If the price paid by the indirect customers is lower than the price paid by the wholesaler, the Company will provide a credit, called a chargeback, to the wholesaler for the difference between the contractual price with the indirect customers and the wholesaler purchase price. The provision for chargebacks is based on expected sell-through levels by the Company’s wholesale customers to the indirect customers and estimated wholesaler inventory levels. As sales to the large wholesale customers, such as Cardinal Health, AmerisourceBergen and McKesson increase (decrease), the reserve for chargebacks will also generally increase (decrease). However, the size of the increase (decrease) depends on product mix and the amount of sales made to indirect customers with which the Company has specific chargeback agreements. The Company continually monitors the reserve for chargebacks and makes adjustments when management believes that expected chargebacks may differ from the actual chargeback reserve. Rebates Rebates are offered to the Company’s key chain drug store, distributor and wholesaler customers to promote customer loyalty and increase product sales. These rebate programs provide customers with credits upon attainment of pre-established volumes or attainment of net sales milestones for a specified period. Other promotional programs are incentive programs offered to the customers. Additionally, as a result of the Patient Protection and Affordable Care Act (“PPACA”) enacted in the U.S. in March 2010, the Company participates in a cost-sharing program for certain Medicare Part D beneficiaries designed primarily for the sale of brand drugs and certain generic drugs if their Food and Drug Administration (“FDA”) approval was granted under a New Drug Application (“NDA”) or 505(b) NDA versus an Abbreviated New Drug application ("ANDA’). Drugs purchased within the Medicare Part D coverage gap (commonly referred to as the “donut hole”) result in additional rebates. The Company estimates the reserve for rebates and other promotional credit programs based on the specific terms in each agreement when revenue is recognized. The reserve for rebates increases (decreases) as sales to certain wholesale and retail customers increase (decrease). However, since these rebate programs are not identical for all customers, the size of the reserve will depend on the mix of sales to customers that are eligible to receive rebates. Returns Consistent with industry practice, the Company has a product returns policy that allows customers to return product within a specified time period prior to and subsequent to the product’s expiration date in exchange for a credit to be applied to future purchases. The Company’s policy requires that the customer obtain pre-approval from the Company for any qualifying return. The Company estimates its provision for returns based on historical experience, changes to business practices, credit terms and any extenuating circumstances known to management. While historical experience has allowed for reasonable estimations in the past, future returns may or may not follow historical trends. The Company continually monitors the reserve for returns and makes adjustments when management believes that actual product returns may differ from the established reserve. Generally, the reserve for returns increases as net sales increase. Other Adjustments Other adjustments consist primarily of “price adjustments”, also known as “shelf-stock adjustments” and “price protections,” which are both credits issued to reflect increases or decreases in the invoice or contract prices of the Company’s products. In the case of a price decrease, a credit is given for product remaining in customer’s inventories at the time of the price reduction. Contractual price protection results in a similar credit when the invoice or contract prices of the Company’s products increase, effectively allowing customers to purchase products at previous prices for a specified period of time. Amounts recorded for estimated shelf-stock adjustments and price protections are based upon specified terms with direct customers, estimated changes in market prices and estimates of inventory held by customers. The Company regularly monitors these and other factors and evaluates the reserve as additional information becomes available. Other adjustments also include prompt payment discounts and “failure-to-supply” adjustments. If the Company is unable to fulfill certain customer orders, the customer can purchase products from our competitors at their prices and charge the Company for any difference in our contractually agreed upon prices. |
Leases | Leases The Company complies with ASC Topic 842, Leases , which superseded ASC Topic 840, Leases . Under ASC 842, when the Company enters into a new arrangement, it must determine, at the inception date, whether the arrangement is or contains a lease. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. Once a lease has been identified, the Company must determine the lease term, the present value of lease payments and the classification of the lease as either operating or financing. The lease term is determined to be the non-cancelable period including any lessee renewal options which are considered to be reasonably certain of exercise. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The present value of lease payments includes fixed and certain variable payments, less lease incentives, together with amounts probable of being owed by the Company under residual value guarantees and, if reasonably certain of being paid, the cost of certain renewal options and early termination penalties set forth in the lease arrangement. To calculate the present value of lease payments, we use our incremental borrowing rate based on the information available at commencement date, as the rate implicit in the lease is generally not readily available. In making the determination of whether a lease is an operating lease or a finance lease, the Company considers the lease term in relation to the economic life of the leased asset, the present value of lease payments in relation to the fair value of the leased asset and certain other factors. Upon the commencement of the lease, the Company will record a lease liability and right-of-use (“ROU”) asset based on the present value of the future minimum lease payments over the lease term at commencement date. The ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. For operating leases, a single lease cost is generally recognized in the Consolidated Statements of Operations on a straight-line basis over the lease term unless an impairment has been recorded with respect to a leased asset. For finance leases, amortization expense and interest expense are recognized separately in the Consolidated Statements of Operations, with amortization expense generally recorded on a straight-line basis and interest expense recorded using the effective interest method. Variable lease costs not initially included in the lease liability and ROU asset impairment charges are expensed as incurred. |
Cost of Sales, including Amortization of Intangibles | Cost of Sales, including Amortization of Intangibles Cost of sales includes all costs related to bringing products to their final selling destination, which includes direct and indirect costs, such as direct material, labor and overhead expenses. Additionally, cost of sales includes product royalties, depreciation, amortization and costs to renew or extend recognized intangible assets, freight charges and other shipping and handling expenses. |
Research and Development | Research and Development Research and development costs are expensed as incurred, including all production costs until a drug candidate is approved by the FDA. Research and development expenses include costs associated with internal projects as well as costs associated with third-party research and development contracts. |
Contingencies | Contingencies Loss contingencies, including litigation-related contingencies, are included in the Consolidated Statements of Operations when the Company concludes that a loss is both probable and reasonably estimable. Legal fees for litigation-related matters are expensed as incurred and included in the Consolidated Statements of Operations under the Selling, general and administrative expenses line item. |
Restructuring Costs | Restructuring Costs The Company records charges associated with approved restructuring plans to remove duplicative headcount and infrastructure associated with business acquisitions or to simplify business processes. Restructuring charges can include severance costs to eliminate a specified number of employees, infrastructure charges to vacate facilities and consolidate operations and contract cancellation costs. The Company records restructuring charges based on estimated employee terminations, site closure and consolidation plans. The Company accrues severance and other employee separation costs under these actions when it is probable that a liability exists, and the amount is reasonably estimable. |
Share-based Compensation | Share-Based Compensation Share-based compensation costs are recognized over the vesting period, using a straight-line method, based on the fair value of the instrument on the date of grant less an estimate for expected forfeitures. The Company uses the Black-Scholes valuation model to determine the fair value of stock options, the stock price on the grant date to value restricted stock and the Monte-Carlo simulation model to determine the fair value of performance-based shares. The Black-Scholes valuation and Monte-Carlo simulation models include various assumptions, including the expected volatility, the expected life of the award, dividend yield and the risk-free interest rate as well as performance assumptions of peer companies. These assumptions involve inherent uncertainties based on market conditions which are generally outside the Company’s control. Changes in these assumptions could have a material impact on share-based compensation costs recognized in the Consolidated Financial Statements. |
Self-Insurance | Self-Insurance The Company self-insures for certain employee medical and prescription benefits. The Company also maintains stop loss coverage with third party insurers to limit its total liability exposure. The liability for self-insured risks is primarily calculated using independent third-party actuarial valuations which take into account actual claims, claims growth and claims incurred but not yet reported. Actual experience, including claim frequency and severity as well as health-care inflation, could result in different liabilities than the amounts currently recorded. The liability for self-insured risks under this plan was not material to the consolidated financial position of the Company as of June 30, 2021 and June 30, 2020. |
Income Taxes | Income Taxes The Company uses the liability method to account for income taxes as prescribed by ASC 740, Income Taxes Income Taxes The Company may recognize the tax benefit from an uncertain tax position claimed on a tax return only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The authoritative accounting standards also provide guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. On March 27, 2020, in response to COVID-19 and its detrimental impact to the global economy, former President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) into law, which provides a stimulus to the U.S. economy in the form of various individual and business assistance programs as well as temporary changes to existing tax law. Among the changes to the provision in business tax laws include a five-year net operating loss carryback for the Fiscal 2019 - 2021 tax years, a deferral of the employer’s portion of certain payroll tax, and an increase in the interest expense deductibility limitation for the Fiscal 2020 and 2021 tax years. ASC 740 requires the tax effects of changes in tax laws or rates to be recorded in the period of enactment. As a result of the CARES Act, the Company carried back its Fiscal 2020 taxable loss into the Fiscal 2015 tax year. |
Earnings (Loss) Per Common Share | Earnings (Loss) Per Common Share The presentation of basic and diluted earnings (loss) per common share is required on the face of the Company's Consolidated Statements of Operations as well as a reconciliation of the computation of basic earnings (loss) per common share to diluted earnings (loss) per common share. In accordance with ASC 260, Earnings per share For purposes of determining diluted earnings per share, the Company further adjusts the basic earnings per share to include the effect of potentially dilutive shares outstanding, including options and restricted stock awards, the 4.50% Convertible Senior Notes (the “Convertible Notes”), and the Warrants. In this calculation, the Company reallocates net income based on the rights of each potentially dilutive share and will report the most dilutive earnings (loss) per share. The weighted average number of diluted shares is adjusted for the potential dilutive effect of the exercise of stock options, treats unvested restricted stock and performance-based shares as if it were vested, and assumes the conversion of the 4.50% Convertible Senior Notes. The Company uses the “if-converted" method to compute earnings (loss) per share when assuming the conversion of the Convertible Notes, which is calculated by dividing the adjusted "if-converted" net income by the adjusted weighted average number of shares of common stock outstanding during the period. The adjusted "if-converted" net income is adjusted for interest expense and amortization of debt issuance costs, both net of tax, associated with the Convertible Notes. Because the Warrants do not participate in losses, the Company will allocate undistributed earnings when calculating basic and diluted earnings per share in periods of net income only. Anti-dilutive securities are excluded from the calculation. Dilutive shares are also excluded in the calculation in periods of net loss because the effect of including such securities would be anti-dilutive. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) includes all changes in equity during a period except those that resulted from investments by or distributions to the Company’s stockholders. Other comprehensive income (loss) refers to gains and losses that are included in comprehensive income (loss) but excluded from income (loss) for all amounts are recorded directly as an adjustment to stockholders’ equity. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options and Derivatives and Hedging - Contracts in Entity’s Own Equity |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Summary of Significant Accounting Policies | |
Schedule of reconciliation of the cash, cash equivalents and restricted cash amounts | June 30, 2021 June 30, 2020 June 30, 2019 Cash and cash equivalents $ 93,286 $ 144,329 $ 140,249 Restricted cash, included in other assets 5,000 — — Cash, cash equivalents and restricted cash as presented on the Consolidated Statements of Cash Flows $ 98,286 $ 144,329 $ 140,249 |
Schedule of the Company's net sales by medical indication | (In thousands) Fiscal Year Ended June 30, Medical Indication 2021 2020 2019 Analgesic $ 14,684 $ 8,680 $ 8,251 Anti-Psychosis 43,720 104,934 73,453 Cardiovascular 65,987 88,576 101,467 Central Nervous System 95,115 77,256 59,019 Endocrinology 27,070 — 197,522 Gastrointestinal 67,540 73,477 63,043 Infectious Disease 67,761 73,237 16,950 Migraine 25,554 44,266 41,592 Respiratory/Allergy/Cough/Cold 9,258 11,576 12,479 Urinary 5,786 4,225 6,755 Other 35,312 35,013 51,517 Contract manufacturing revenue 20,991 24,504 23,359 Total net sales $ 478,778 $ 545,744 $ 655,407 |
Summary of products which accounted for at least 10% of total net sales | June 30, June 30, June 30, 2021 2020 2019 Product 1 12 % 10 % — % Product 2 7 % 18 % 10 % Product 3 3 % — % 30 % |
Summary of customers which accounted for at least 10% of total net sales | June 30, June 30, June 30, 2021 2020 2019 Customer A 27 % 25 % 21 % Customer B 21 % 23 % 18 % Customer C 12 % 11 % 10 % Customer D — % — % 12 % |
Restructuring Charges (Tables)
Restructuring Charges (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Restructuring Charges | |
Schedule of reconciliation of changes in restructuring liabilities associated with restructuring program | Employee (In thousands) Separation Costs Balance at June 30, 2020 $ — Restructuring charges 4,043 Payments (4,035) Balance at June 30, 2021 $ 8 |
Accounts Receivable, net (Table
Accounts Receivable, net (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Accounts Receivable, net | |
Schedule of accounts receivable | June 30, June 30, (In thousands) 2021 2020 Gross accounts receivable $ 239,271 $ 271,557 Less: Chargebacks reserve (69,564) (61,877) Less: Rebates reserve (16,272) (24,536) Less: Returns reserve (38,395) (40,796) Less: Other deductions (15,505) (17,557) Less: Allowance for doubtful accounts (701) (1,103) Accounts receivable, net $ 98,834 $ 125,688 |
Schedule of major category of revenue-related reserves | Reserve Category (In thousands) Chargebacks Rebates Returns Other Total Balance at June 30, 2018 $ 153,034 82,502 43,059 20,021 298,616 Adjustment related to adoption of ASC 606 — — — 3,536 3,536 Current period provision 1,047,192 250,555 41,982 67,344 1,407,073 Credits issued during the period (1,110,659) (254,783) (29,487) (72,773) (1,467,702) Balance at June 30, 2019 89,567 78,274 55,554 18,128 241,523 Current period provision 761,787 223,932 16,863 88,468 1,091,050 Credits issued during the period (789,477) (239,495) (31,621) (89,039) (1,149,632) Balance at June 30, 2020 61,877 62,711 40,796 17,557 182,941 Current period provision 650,317 133,898 20,280 68,177 872,672 Credits issued during the period (642,630) (161,312) (22,681) (70,229) (896,852) Balance at June 30, 2021 $ 69,564 $ 35,297 $ 38,395 $ 15,505 $ 158,761 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Inventories | |
Schedule of Inventories | June 30, June 30, (In thousands) 2021 2020 Raw Materials $ 45,370 $ 59,703 Work-in-process 12,685 12,235 Finished Goods 51,490 70,929 Total $ 109,545 $ 142,867 |
Property, Plant and Equipment_2
Property, Plant and Equipment, net (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment, net | |
Schedule of property, plant and equipment, net | June 30, June 30, (In thousands) Useful Lives 2021 2020 Land — $ 1,783 $ 1,783 Building and improvements 10 103,082 100,285 Machinery and equipment 5 166,617 164,704 Furniture and fixtures 5 3,399 3,116 Less accumulated depreciation (123,294) (102,983) 151,587 166,905 Construction in progress 15,087 12,613 Property, plant and equipment, net $ 166,674 $ 179,518 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Intangible Assets | |
Summary of intangible assets, net | Weighted Gross Carrying Amount Accumulated Amortization Intangible Assets, Net Avg. Life June 30, June 30, June 30, June 30, June 30, June 30, (In thousands) (Yrs.) 2021 2020 2021 2020 2021 2020 Definite-lived: KUPI product rights 15 83,955 416,154 (4,198) (125,327) 79,757 290,827 KUPI trade name 2 2,920 2,920 (2,920) (2,920) — — KUPI other intangible assets 15 19,000 19,000 (7,095) (5,828) 11,905 13,172 Silarx product rights 15 20,000 20,000 (4,889) (3,556) 15,111 16,444 Other product rights 10 35,918 50,718 (8,856) (5,426) 27,062 45,292 Total definite-lived $ 161,793 $ 508,792 $ (27,958) $ (143,057) $ 133,835 $ 365,735 Indefinite-lived: KUPI in-process research and development — $ 4,000 $ 9,000 $ — $ — $ 4,000 $ 9,000 Total indefinite-lived 4,000 9,000 — — 4,000 9,000 Total intangible assets, net $ 165,793 $ 517,792 $ (27,958) $ (143,057) $ 137,835 $ 374,735 |
Summary of future annual amortization expense | (In thousands) Amortization Fiscal Year Ending June 30, Expense 2022 $ 14,780 2023 14,587 2024 14,312 2025 14,119 2026 13,465 Thereafter 62,572 $ 133,835 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Long-Term Debt | |
Summary of long-term debt, net | June 30, June 30, (In thousands) 2021 2020 Term Loan A $ — $ 48,844 Unamortized discount and other debt issuance costs — (433) Term Loan A, net — 48,411 Term Loan B — 572,857 Unamortized discount and other debt issuance costs — (23,278) Term Loan B, net — 549,579 7.75% senior secured notes due 2026 350,000 — Unamortized discount and other debt issuance costs (5,594) — 7.75% senior secured notes due 2026, net 344,406 — Second Lien Secured Loan Facility due 2026 ($190.0M Principal, $5.7M Exit Fee, and $3.6M accrued PIK interest) 199,342 — Unamortized discount and other debt issuance costs (36,701) — Second Lien Secured Loan Facility due 2026, net 162,641 — 4.50% Convertible Senior Notes due 2026 86,250 86,250 Unamortized discount and other debt issuance costs (2,614) (3,111) 4.50% Convertible Senior Notes, net 83,636 83,139 $45 million Amended ABL Credit Facility — — Total debt, net 590,683 681,129 Less short-term borrowings and current portion of long-term debt — (88,189) Total long-term debt, net $ 590,683 $ 592,940 |
Summary of long-term debt amounts due | Amounts Payable (In thousands) to Institutions 2022 $ — 2023 — 2024 — 2025 — 2026 350,000 Thereafter 285,592 Total $ 635,592 |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Commitments | |
Schedule of components of lease cost | Fiscal Year Ended June 30, (In thousands) 2021 2020 Operating lease cost $ 1,754 $ 2,246 Variable lease cost 133 153 Short-term lease cost (a) 448 579 Total $ 2,335 $ 2,978 ______________________ (a) Not recorded on the Consolidated Balance Sheet |
Schedule of supplemental cash flow information and non-cash activity | Fiscal Year Ended June 30, (In thousands) 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 1,916 $ 2,086 Non-cash activity: ROU assets obtained in exchange for new operating lease liabilities $ 2,275 $ 4,317 |
Schedule of weighted-average remaining lease term | Fiscal Year Ended June 30, 2021 2020 Weighted-average remaining lease term 10 years 9 years Weighted-average discount rate 8.5 % 7.9 % |
Schedule of maturities of lease liabilities | (In thousands) Amounts Due 2022 $ 2,051 2023 2,064 2024 2,083 2025 2,104 2026 2,124 Thereafter 8,513 Total lease payments 18,939 Less: Imputed interest 5,847 Present value of lease liabilities $ 13,092 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Accumulated Other Comprehensive Loss. | |
Schedule of Accumulated Other Comprehensive Loss | June 30, (In thousands) 2021 2020 Foreign Currency Translation Beginning Balance, June 30 $ (627) $ (615) Net income (loss) on foreign currency translation (net of tax of $0 and $0) 79 (12) Other comprehensive income (loss), net of tax 79 (12) Total Accumulated Other Comprehensive Loss $ (548) $ (627) |
Loss Per Common Share (Tables)
Loss Per Common Share (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Loss Per Common Share | |
Summary of reconciliation of the Company's basic and diluted (loss) per common share | For Fiscal Year Ended June 30, (In thousands, except share and per share data) 2021 2020 2019 Numerator: Net loss $ (363,475) $ (33,366) $ (272,107) Net income allocated to participating securities for the Warrants — — — Interest expenses applicable to the Convertible Notes, net of tax — — — Amortization of debt issuance costs applicable to the Convertible Notes, net of tax — — — Adjusted "if-converted" net loss $ (363,475) $ (33,366) $ (272,107) Denominator: Basic weighted average common shares outstanding 39,391,589 38,592,618 37,779,812 Effect of potentially dilutive options and restricted stock awards — — — Effect of conversion of the Convertible Notes — — — Effect of participating securities for the Warrants — — — Diluted weighted average common shares outstanding 39,391,589 38,592,618 37,779,812 Loss per common share: Basic $ (9.23) $ (0.86) $ (7.20) Diluted $ (9.23) $ (0.86) $ (7.20) |
Share-based Compensation (Table
Share-based Compensation (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Share-based Compensation | |
Schedule of weighted average assumptions | 2021 2020 2019 Risk-free interest rate 0.2 % 1.9 % 2.9 % Expected volatility 82.5 % 73.7 % 58.4 % Expected dividend yield — % — % — % Forfeiture rate — % — % 6.5 % Expected term 5.0 years 5.1 years 5.3 years Weighted average fair value $ 3.86 $ 4.00 $ 6.52 |
Summary of stock option award activity | Weighted Weighted- Average Average Aggregate Remaining Exercise Intrinsic Contractual (In thousands, except for weighted average price and life data) Awards Price Value Life (yrs.) Outstanding at June 30, 2018 1,057 $ 22.46 $ 2,584 5.4 Granted 73 $ 12.20 Exercised (94) $ 4.06 $ 311 Forfeited, expired or repurchased (464) $ 30.61 Outstanding at June 30, 2019 572 $ 17.56 $ 273 5.0 Granted 522 $ 6.57 Exercised (56) $ 5.42 $ 237 Forfeited, expired or repurchased (47) $ 24.73 Outstanding at June 30, 2020 991 $ 12.11 $ 678 5.6 Granted 309 $ 5.95 Exercised (37) $ 4.12 $ 61 Forfeited, expired or repurchased (217) $ 17.17 Outstanding at June 30, 2021 1,046 $ 9.51 $ 25 7.2 Vested and expected to vest at June 30, 2021 1,045 $ 9.51 $ 25 7.2 Exercisable at June 30, 2021 383 $ 14.82 $ 25 4.9 |
Summary of non-vested restricted stock awards | Weighted Average Grant - Aggregate (In thousands, except for weighted average price data) Awards date Fair Value Intrinsic Value Non-vested at June 30, 2018 704 $ 20.06 Granted 1,176 9.90 Vested (434) 19.75 $ 4,107 Forfeited (158) 14.00 Non-vested at June 30, 2019 1,288 $ 11.63 Granted 941 6.45 Vested (773) 10.54 $ 6,401 Forfeited (112) 10.75 Non-vested at June 30, 2020 1,344 $ 8.70 Granted 901 5.74 Vested (805) 8.60 $ 4,668 Forfeited (90) 9.18 Non-vested at June 30, 2021 1,350 $ 6.75 |
Schedule of non-vested performance-based shares | Weighted Average Grant - (In thousands, except for weighted average price and life data) Awards date Fair Value Non-vested at June 30, 2018 20 $ 25.58 Granted 52 17.69 Vested — — Forfeited — — Non-vested at June 30, 2019 72 $ 19.92 Granted 178 10.71 Vested (46) 15.08 Forfeited — — Non-vested at June 30, 2020 204 $ 12.99 Granted 339 $ 9.22 Performance adjustment (1) (12) $ 25.58 Non-vested at June 30, 2021 531 $ 10.29 ________________________________________ (1) Represents the adjustment based on the performance of the September 2017 awards, which was below the Threshold goal level at the end of the three-year performance period. |
Schedule of allocation of share-based compensation | For Fiscal Year Ended June 30, (In thousands) 2021 2020 2019 Selling, general and administrative expenses $ 7,016 $ 7,087 $ 5,715 Research and development expenses 538 801 750 Cost of sales 1,483 2,328 2,562 Total $ 9,037 $ 10,216 $ 9,027 Tax benefit at statutory rate $ 2,033 $ 2,299 $ 2,031 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Income Taxes | |
Schedule of provision for income taxes | (In thousands) 2021 2020 2019 Current Income Tax Expense (Benefit) Federal $ (57,335) $ (7,082) $ 13,185 State and Local 70 405 (81) Total Current Income Tax Expense (Benefit) (57,265) (6,677) 13,104 Deferred Income Tax Expense (Benefit) Federal 112,414 (6,525) (85,022) State and Local 5,476 (2,060) (2,220) Total Deferred Income Tax Expense (Benefit) 117,890 (8,585) (87,242) Total Income Tax Expense (Benefit) $ 60,625 $ (15,262) $ (74,138) |
Schedule of effective rate reconciliation | June 30, June 30, June 30, 2021 2020 2019 Federal income tax at statutory rate 21.0 % 21.0 % 21.0 % State and local income tax, net (1.4) % 2.7 % 0.5 % Nondeductible expenses (0.1) % (1.1) % (0.1) % Nondeductible drug fee (0.1) % (1.6) % — % Foreign rate differential — % (0.1) % (0.4) % Income tax credits 0.2 % 2.5 % 0.5 % Unrecognized tax benefits — % (5.0) % 0.1 % Change in tax laws 5.1 % 15.4 % — % Excess tax benefits on share-based compensation (0.3) % (0.8) % (0.3) % Valuation allowance (44.3) % — % — % Other (0.1) % (1.6) % 0.1 % Effective income tax rate (20.0) % 31.4 % 21.4 % |
Schedule of deferred taxes | June 30, June 30, (In thousands) 2021 2020 Deferred tax assets: Share-based compensation expense $ 1,779 $ 2,661 Reserve for returns 8,213 11,022 Inventory 6,047 4,920 Federal net operating loss 273 273 State net operating loss 9,415 8,387 Impairment on Cody note receivable 1,157 1,171 Accumulated amortization on intangible assets 112,548 79,939 Foreign net operating loss 1,792 1,822 Interest carryforward 21,111 25,392 Operating lease 2,890 3,439 R&D carryforward 1,334 491 Other 849 2,862 Total deferred tax asset 167,408 142,379 Valuation allowance (153,383) (14,622) Total deferred tax asset less valuation allowance 14,025 127,757 Deferred tax liabilities: Prepaid expenses 239 681 Property, plant and equipment 11,525 5,383 Operating lease 2,261 3,803 Total deferred tax liability 14,025 9,867 Net deferred tax asset $ — $ 117,890 |
Schedule of unrecognized tax benefits | (In thousands) Balance Balance at June 30, 2019 $ 2,199 Additions for tax positions of the current year 2,467 Additions for tax positions of prior years (51) Lapse of statute of limitations (24) Balance at June 30, 2020 $ 4,591 Additions for tax positions of the current year 91 Additions for tax positions of prior years 104 Settlements (240) Balance at June 30, 2021 $ 4,546 |
Assets Held for Sale (Tables)
Assets Held for Sale (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Assets Held for Sale | |
Schedule of financial results of the Cody API business | Fiscal Year Ended June 30, (In thousands) 2021 2020 2019 Net sales $ — $ 1,067 $ 3,139 Pretax loss attributable to Cody API business (761) (6,549) (51,509) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Cash (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 |
Summary of Significant Accounting Policies | ||||
Deposit account as restricted cash in other assets | $ 5,000 | |||
Cash and cash equivalents | 93,286 | $ 144,329 | $ 140,249 | |
Restricted cash, included in other assets | 5,000 | |||
Cash, cash equivalents and restricted cash as presented on the Consolidated Statements of Cash Flows | $ 98,286 | $ 144,329 | $ 140,249 | $ 98,586 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Intangible Assets (Details) | 12 Months Ended |
Jun. 30, 2021 | |
Minimum | |
Intangible Assets | |
Estimated useful lives | 5 years |
Maximum | |
Intangible Assets | |
Estimated useful lives | 15 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Segments (Details) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021USD ($)segment | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | |
Medical Indication Information | |||
Number of reportable segments | segment | 1 | ||
Total net sales | $ 478,778 | $ 545,744 | $ 655,407 |
Analgesic | |||
Medical Indication Information | |||
Total net sales | 14,684 | 8,680 | 8,251 |
Anti-Psychosis | |||
Medical Indication Information | |||
Total net sales | 43,720 | 104,934 | 73,453 |
Cardiovascular | |||
Medical Indication Information | |||
Total net sales | 65,987 | 88,576 | 101,467 |
Central Nervous System | |||
Medical Indication Information | |||
Total net sales | 95,115 | 77,256 | 59,019 |
Endocrinology | |||
Medical Indication Information | |||
Total net sales | 27,070 | 197,522 | |
Gastrointestinal | |||
Medical Indication Information | |||
Total net sales | 67,540 | 73,477 | 63,043 |
Infectious Disease | |||
Medical Indication Information | |||
Total net sales | 67,761 | 73,237 | 16,950 |
Migraine | |||
Medical Indication Information | |||
Total net sales | 25,554 | 44,266 | 41,592 |
Respiratory/Allergy/Cough/Cold | |||
Medical Indication Information | |||
Total net sales | 9,258 | 11,576 | 12,479 |
Urinary | |||
Medical Indication Information | |||
Total net sales | 5,786 | 4,225 | 6,755 |
Other | |||
Medical Indication Information | |||
Total net sales | 35,312 | 35,013 | 51,517 |
Contract manufacturing revenue | |||
Medical Indication Information | |||
Total net sales | $ 20,991 | $ 24,504 | $ 23,359 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Concentrations (Details) - Net sales | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Products | Product 1 | |||
Concentration risk | |||
Concentration risk (as a percent) | 12.00% | 10.00% | |
Products | Product 2 | |||
Concentration risk | |||
Concentration risk (as a percent) | 7.00% | 18.00% | 10.00% |
Products | Product 3 | |||
Concentration risk | |||
Concentration risk (as a percent) | 3.00% | 30.00% | |
Customers | Customer A | |||
Concentration risk | |||
Concentration risk (as a percent) | 27.00% | 25.00% | 21.00% |
Customers | Customer B | |||
Concentration risk | |||
Concentration risk (as a percent) | 21.00% | 23.00% | 18.00% |
Customers | Customer C | |||
Concentration risk | |||
Concentration risk (as a percent) | 12.00% | 11.00% | 10.00% |
Customers | Customer D | |||
Concentration risk | |||
Concentration risk (as a percent) | 12.00% |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Loss per Share (Details) | Jun. 30, 2021 |
4.50% Convertible Senior Notes due 2026 | |
Interest rate (as a percent) | 4.50% |
Restructuring Charges - Restruc
Restructuring Charges - Restructuring Program (Details) $ in Thousands | Jul. 10, 2020employee | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) |
Restructuring Charges | ||||
Restructuring expenses | $ 4,043 | $ 1,771 | $ 4,095 | |
2020 Restructuring Plan | ||||
Restructuring Charges | ||||
Positions eliminated estimate | employee | 80 | |||
Restructuring expenses | 4,000 | |||
Expected cost savings | $ 15,000 |
Restructuring Charges - Restr_2
Restructuring Charges - Restructuring Program Change (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Reconciliation of the changes in restructuring liabilities | |||
Restructuring charges | $ 4,043 | $ 1,771 | $ 4,095 |
2020 Restructuring Plan | |||
Reconciliation of the changes in restructuring liabilities | |||
Restructuring charges | 4,000 | ||
2020 Restructuring Plan | Employee Separation Costs | |||
Reconciliation of the changes in restructuring liabilities | |||
Restructuring charges | 4,043 | ||
Payments | (4,035) | ||
Ending balance for the period | $ 8 |
Accounts Receivable, net (Detai
Accounts Receivable, net (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Jun. 30, 2020 |
Accounts receivable, net | ||
Gross accounts receivable | $ 239,271 | $ 271,557 |
Less: Allowance for doubtful accounts | (701) | (1,103) |
Accounts receivable, net | 98,834 | 125,688 |
Chargebacks | ||
Accounts receivable, net | ||
Less: reserve | (69,564) | (61,877) |
Rebates | ||
Accounts receivable, net | ||
Less: reserve | (16,272) | (24,536) |
Returns | ||
Accounts receivable, net | ||
Less: reserve | (38,395) | (40,796) |
Other | ||
Accounts receivable, net | ||
Less: reserve | $ (15,505) | $ (17,557) |
Accounts Receivable, net - Reve
Accounts Receivable, net - Revenue reserve (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Accounts receivable, net | |||
Balance at the beginning of the period | $ 182,941 | $ 241,523 | $ 298,616 |
Current period provision | 872,672 | 1,091,050 | 1,407,073 |
Adjustment related to adoption of ASC 606 | 3,536 | ||
Credits issued during the period | (896,852) | (1,149,632) | (1,467,702) |
Balance at the end of the period | 158,761 | 182,941 | 241,523 |
Chargebacks | |||
Accounts receivable, net | |||
Balance at the beginning of the period | 61,877 | 89,567 | 153,034 |
Current period provision | 650,317 | 761,787 | 1,047,192 |
Credits issued during the period | (642,630) | (789,477) | (1,110,659) |
Balance at the end of the period | 69,564 | 61,877 | 89,567 |
Rebates | |||
Accounts receivable, net | |||
Balance at the beginning of the period | 62,711 | 78,274 | 82,502 |
Current period provision | 133,898 | 223,932 | 250,555 |
Credits issued during the period | (161,312) | (239,495) | (254,783) |
Balance at the end of the period | 35,297 | 62,711 | 78,274 |
Returns | |||
Accounts receivable, net | |||
Balance at the beginning of the period | 40,796 | 55,554 | 43,059 |
Current period provision | 20,280 | 16,863 | 41,982 |
Credits issued during the period | (22,681) | (31,621) | (29,487) |
Balance at the end of the period | 38,395 | 40,796 | 55,554 |
Other | |||
Accounts receivable, net | |||
Balance at the beginning of the period | 17,557 | 18,128 | 20,021 |
Current period provision | 68,177 | 88,468 | 67,344 |
Adjustment related to adoption of ASC 606 | 3,536 | ||
Credits issued during the period | (70,229) | (89,039) | (72,773) |
Balance at the end of the period | 15,505 | 17,557 | 18,128 |
Rebates | |||
Accounts receivable, net | |||
Current period provision | $ 133,900 | $ 223,900 | $ 250,600 |
Accounts Receivable, net - Re_2
Accounts Receivable, net - Revenue reserve information (Details) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Chargebacks | |||
Accounts receivable, net | |||
Percentage of provision for rebates, chargebacks, returns and other adjustments on gross sales | 48.90% | 47.20% | 51.40% |
Rebates | |||
Accounts receivable, net | |||
Percentage of provision for rebates, chargebacks, returns and other adjustments on gross sales | 10.10% | 13.90% | 12.30% |
Returns | |||
Accounts receivable, net | |||
Percentage of provision for rebates, chargebacks, returns and other adjustments on gross sales | 1.50% | 1.00% | 2.10% |
Other | |||
Accounts receivable, net | |||
Percentage of provision for rebates, chargebacks, returns and other adjustments on gross sales | 5.10% | 5.50% | 3.30% |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Jun. 30, 2020 |
Inventories: | ||
Raw Materials | $ 45,370 | $ 59,703 |
Work-in-process | 12,685 | 12,235 |
Finished Goods | 51,490 | 70,929 |
Net inventory | $ 109,545 | $ 142,867 |
Inventories - Additional inform
Inventories - Additional information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Inventories: | |||
Provision for inventory write-downs | $ 24,328 | $ 10,341 | $ 21,765 |
Excess and Obsolete | |||
Inventories: | |||
Provision for inventory write-downs | $ 24,300 | $ 10,300 | $ 21,800 |
Property, Plant and Equipment_3
Property, Plant and Equipment, net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Property, Plant and Equipment, net | |||
Less: accumulated depreciation | $ (123,294) | $ (102,983) | |
Property, plant and equipment, net before construction in progress | 151,587 | 166,905 | |
Property, plant and equipment, net | 166,674 | 179,518 | |
Depreciation expense | 22,900 | 24,300 | $ 23,400 |
Held in foreign countries | |||
Property, Plant and Equipment, net | |||
Property, plant and equipment, net | 600 | 600 | |
Land | |||
Property, Plant and Equipment, net | |||
Property, plant and equipment, net | 1,783 | 1,783 | |
Building and improvements | |||
Property, Plant and Equipment, net | |||
Property, plant and equipment, net | 103,082 | 100,285 | |
Machinery and equipment | |||
Property, Plant and Equipment, net | |||
Property, plant and equipment, net | 166,617 | 164,704 | |
Furniture and fixtures | |||
Property, Plant and Equipment, net | |||
Property, plant and equipment, net | 3,399 | 3,116 | |
Construction in progress | |||
Property, Plant and Equipment, net | |||
Property, plant and equipment, net | $ 15,087 | $ 12,613 |
Property, Plant and Equipment_4
Property, Plant and Equipment, net - Useful Lives (Details) | 12 Months Ended |
Jun. 30, 2021 | |
Building and improvements | Minimum | |
Property, Plant and Equipment, net | |
Useful Lives | 10 years |
Building and improvements | Maximum | |
Property, Plant and Equipment, net | |
Useful Lives | 39 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment, net | |
Useful Lives | 5 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment, net | |
Useful Lives | 10 years |
Furniture and fixtures | Minimum | |
Property, Plant and Equipment, net | |
Useful Lives | 5 years |
Furniture and fixtures | Maximum | |
Property, Plant and Equipment, net | |
Useful Lives | 7 years |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ / shares in Units, $ in Millions | Jun. 30, 2021 | Apr. 22, 2021 | Dec. 31, 2020 | Jun. 30, 2020 |
Other product rights | ||||
Debt Instrument [Line Items] | ||||
Definite-lived intangible assets fair value | $ 3.7 | |||
KUPI | In-process research and development | ||||
Debt Instrument [Line Items] | ||||
Indefinite-lived intangible assets fair value | $ 4 | |||
KUPI | Product rights | ||||
Debt Instrument [Line Items] | ||||
Definite-lived intangible assets fair value | $ 84 | |||
7.750% Senior secured notes due 2026 | ||||
Debt Instrument [Line Items] | ||||
Estimated fair value of loan | $ 347 | |||
Interest rate (as a percent) | 7.75% | 7.75% | ||
Second Lien Facility | ||||
Debt Instrument [Line Items] | ||||
Estimated fair value of loan | $ 189 | |||
Term Loan B due 2022 | ||||
Debt Instrument [Line Items] | ||||
Estimated fair value of loan | $ 608 | |||
4.50% Convertible Senior Notes due 2026 | ||||
Debt Instrument [Line Items] | ||||
Estimated fair value of loan | $ 53 | $ 58 | ||
Interest rate (as a percent) | 4.50% | |||
Initial conversion price | $ 15.29 |
Intangible Assets - Definite-li
Intangible Assets - Definite-lived (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Finite-Lived Intangible Assets | ||||
Gross Carrying Amount | $ 161,793 | $ 508,792 | ||
Accumulated Amortization | (27,958) | (143,057) | ||
Intangible Assets, Net | 133,835 | 365,735 | ||
Amortization expense | $ 24,900 | 32,000 | $ 32,200 | |
Product rights | KUPI | ||||
Finite-Lived Intangible Assets | ||||
Weighted Avg. Life | 15 years | |||
Gross Carrying Amount | $ 83,955 | 416,154 | ||
Accumulated Amortization | (4,198) | (125,327) | ||
Intangible Assets, Net | $ 79,757 | 290,827 | ||
Definite-lived intangible assets impairment | $ 193,000 | |||
Product rights | Silarx | ||||
Finite-Lived Intangible Assets | ||||
Weighted Avg. Life | 15 years | |||
Gross Carrying Amount | $ 20,000 | 20,000 | ||
Accumulated Amortization | (4,889) | (3,556) | ||
Intangible Assets, Net | $ 15,111 | 16,444 | ||
Trade name | KUPI | ||||
Finite-Lived Intangible Assets | ||||
Weighted Avg. Life | 2 years | |||
Gross Carrying Amount | $ 2,920 | 2,920 | ||
Accumulated Amortization | $ (2,920) | (2,920) | ||
Other intangible assets | KUPI | ||||
Finite-Lived Intangible Assets | ||||
Weighted Avg. Life | 15 years | |||
Gross Carrying Amount | $ 19,000 | 19,000 | ||
Accumulated Amortization | (7,095) | (5,828) | ||
Intangible Assets, Net | $ 11,905 | 13,172 | ||
Other product rights | ||||
Finite-Lived Intangible Assets | ||||
Weighted Avg. Life | 10 years | |||
Gross Carrying Amount | $ 35,918 | 50,718 | ||
Accumulated Amortization | (8,856) | (5,426) | ||
Intangible Assets, Net | $ 27,062 | $ 45,292 | ||
Definite-lived intangible assets impairment | $ 17,000 |
Intangible Assets - Indefinite
Intangible Assets - Indefinite lived (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Indefinite-lived | ||
Indefinite-lived assets, net | $ 4,000 | $ 9,000 |
Total intangible assets - Gross Carrying Amount | 165,793 | 517,792 |
Accumulated Amortization | (27,958) | (143,057) |
Total intangible assets, Net | 137,835 | 374,735 |
In-process research and development | KUPI | ||
Indefinite-lived | ||
Indefinite-lived assets, net | 4,000 | $ 9,000 |
Indefinite-lived intangible assets impairment | $ 5,000 |
Intangible Assets - Future Amor
Intangible Assets - Future Amortization (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Finite-Lived Intangible Assets | ||||
Cost of sales | $ 378,335 | $ 348,508 | $ 379,601 | |
Future annual amortization expense: | ||||
2022 | 14,780 | |||
2023 | 14,587 | |||
2024 | 14,312 | |||
2025 | 14,119 | |||
2026 | 13,465 | |||
Thereafter | 62,572 | |||
Intangible Assets, Net | $ 133,835 | $ 365,735 | ||
Recro | ||||
Finite-Lived Intangible Assets | ||||
Cost of sales | $ 5,000 |
Long-Term Debt - Summary (Detai
Long-Term Debt - Summary (Details) - USD ($) $ in Thousands | Nov. 25, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | Apr. 22, 2021 | Dec. 07, 2020 |
Long-term debt | ||||||
Debt, gross | $ 635,592 | |||||
Total debt, net | 590,683 | $ 681,129 | ||||
Less short-term borrowings and current portion of long-term debt | (88,189) | |||||
Long-term debt, net | 590,683 | $ 592,940 | ||||
Accrual of payment-in-kind interest | $ 3,642 | |||||
Weighted average interest rate (as a percent) | 8.00% | 8.80% | ||||
Payment for extinguishment of debt | $ 437,926 | $ 146,700 | $ 126,743 | |||
Term Loan A due 2020 | ||||||
Long-term debt | ||||||
Debt, gross | 48,844 | |||||
Unamortized discount and other debt issuance costs | (433) | |||||
Total debt, net | 48,411 | |||||
Payment for extinguishment of debt | $ 42,000 | |||||
Term Loan B due 2022 | ||||||
Long-term debt | ||||||
Debt, gross | 572,857 | |||||
Unamortized discount and other debt issuance costs | (23,278) | |||||
Total debt, net | 549,579 | |||||
7.750% Senior secured notes due 2026 | ||||||
Long-term debt | ||||||
Debt, gross | 350,000 | |||||
Unamortized discount and other debt issuance costs | (5,594) | |||||
Total debt, net | $ 344,406 | |||||
Interest rate (as a percent) | 7.75% | 7.75% | ||||
Second Lien Facility | ||||||
Long-term debt | ||||||
Debt, gross | $ 199,342 | |||||
Unamortized discount and other debt issuance costs | (36,701) | |||||
Total debt, net | 162,641 | |||||
Exit fee | 5,700 | |||||
Accrual of payment-in-kind interest | 3,600 | |||||
4.50% Convertible Senior Notes due 2026 | ||||||
Long-term debt | ||||||
Debt, gross | 86,250 | 86,250 | ||||
Unamortized discount and other debt issuance costs | (2,614) | (3,111) | ||||
Total debt, net | $ 83,636 | $ 83,139 | ||||
Interest rate (as a percent) | 4.50% | |||||
ABL Credit Facility | ||||||
Long-term debt | ||||||
Maximum borrowing capacity | $ 45,000 | $ 45,000 | $ 30,000 | |||
Revolving Credit Facility due 2020 | ||||||
Long-term debt | ||||||
Debt terminated | $ 125,000 |
Long-Term Debt - Details (Detai
Long-Term Debt - Details (Details) $ / shares in Units, $ in Thousands | Apr. 22, 2021USD ($)D$ / sharesshares | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Apr. 05, 2021USD ($) | Dec. 07, 2020USD ($) |
Debt Instrument [Line Items] | ||||||
Deposit account as restricted cash in other assets | $ 5,000 | |||||
Loss on extinguishment of debt | $ (10,341) | $ (2,145) | $ (448) | |||
7.750% Senior secured notes due 2026 | ||||||
Debt Instrument [Line Items] | ||||||
Principal Amount | $ 350,000 | |||||
Interest rate (as a percent) | 7.75% | 7.75% | ||||
Second Lien Facility | ||||||
Debt Instrument [Line Items] | ||||||
Principal Amount | $ 190,000 | $ 190,000 | ||||
Exit fee (as a percent) | 3.00% | |||||
Common stock under the warrant (in shares) | shares | 8,280,000 | |||||
Warrants exercise price (in dollars per share) | $ / shares | $ 6.88 | |||||
Second Lien Facility | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Exit fee | $ 5,700 | |||||
Second Lien Facility | Interest rate, first year | ||||||
Debt Instrument [Line Items] | ||||||
Paid-in-kind interest rate (as a percent) | 10.00% | |||||
Second Lien Facility | Interest rate, after first year | ||||||
Debt Instrument [Line Items] | ||||||
Paid-in-kind interest rate (as a percent) | 5.00% | |||||
Cash interest rate (as a percent) | 5.00% | |||||
ABL Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 45,000 | 45,000 | $ 30,000 | |||
Unused capacity commitment fee (as a percent) | 0.50% | |||||
Unused capacity, threshold balance, commitment fee (as a percent) | 0.75% | |||||
Threshold outstanding principal amount | $ 5,000 | |||||
Fixed charge coverage ratio | 1.10 | |||||
Minimum fixed charge coverage ratio percentage | 15.00% | |||||
Consecutive business days | D | 3 | |||||
Designated action and Excess Availability | 30 days | |||||
Minimum amount to be maintained in deposit account | $ 5,000 | |||||
Minimum liquidity to be maintained | $ 15,000 | |||||
Deposit account as restricted cash in other assets | 5,000 | |||||
ABL Credit Facility | LIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Minimum applicable margin rate (as a percent) | 0.75% | |||||
Variable interest rate (as a percent) | 2.50% | |||||
ABL Credit Facility | Alternate base | ||||||
Debt Instrument [Line Items] | ||||||
Variable interest rate (as a percent) | 1.50% | |||||
Term Loan B due 2022 | ||||||
Debt Instrument [Line Items] | ||||||
Loss on extinguishment of debt | $ (10,300) |
Long-Term Debt - Maturity (Deta
Long-Term Debt - Maturity (Details) $ in Thousands | Jun. 30, 2021USD ($) |
Long-term Debt, Rolling Maturity | |
2026 | $ 350,000 |
Thereafter | 285,592 |
Total | $ 635,592 |
Legal, Regulatory Matters and_2
Legal, Regulatory Matters and Contingencies (Details) - USD ($) | Aug. 07, 2020 | May 22, 2019 | Aug. 31, 2019 |
Government Pricing | |||
Legal, Regulatory Matters and Contingencies | |||
Damages sought, value | $ 9,400,000 | ||
Litigation settlement payable to other party | $ 8,100,000 | ||
Shareholder Litigation | |||
Legal, Regulatory Matters and Contingencies | |||
Litigation settlement payable to other party | $ 600,000 |
Commitments - Leases (Details)
Commitments - Leases (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Feb. 28, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | |
Commitments | |||
Right-of-use asset | $ 10,559 | $ 9,343 | |
Present value of lease liabilities | 13,092 | 10,900 | |
ROU current liability | 2,045 | 1,097 | |
ROU assets obtained in exchange for new operating lease liabilities | $ 2,300 | $ 2,275 | $ 4,317 |
Commitments - Lease cost (Detai
Commitments - Lease cost (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Commitments | ||
Operating lease cost | $ 1,754 | $ 2,246 |
Variable lease cost | 133 | 153 |
Short-term lease cost | 448 | 579 |
Total lease cost | $ 2,335 | $ 2,978 |
Commitments - Cash flow (Detail
Commitments - Cash flow (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Feb. 28, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | |
Lease cash flow | |||
Operating cash flows from operating leases | $ 1,916 | $ 2,086 | |
ROU assets obtained in exchange for new operating lease liabilities | $ 2,300 | $ 2,275 | $ 4,317 |
Weighted-average | |||
Weighted-average remaining lease term | 10 years | 9 years | |
Weighted-average discount rate | 8.50% | 7.90% |
Commitments - Maturity (Details
Commitments - Maturity (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Jun. 30, 2020 |
Maturities of lease liabilities | ||
2022 | $ 2,051 | |
2023 | 2,064 | |
2024 | 2,083 | |
2025 | 2,104 | |
2026 | 2,124 | |
Thereafter | 8,513 | |
Total lease payments | 18,939 | |
Less: Imputed interest | 5,847 | |
Present value of lease liabilities | $ 13,092 | $ 10,900 |
Commitments - Other (Details)
Commitments - Other (Details) $ in Thousands | Feb. 08, 2021USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2017USD ($) |
Commitments | |||||
Proceeds from sale of loan | $ 5,600 | ||||
HEC Agreement | |||||
Commitments | |||||
Commitment amount | $ 32,000 | ||||
Development costs | $ 4,000 | ||||
Excess development cost split ratio | 1 | ||||
HEC Agreement | First ten years | |||||
Commitments | |||||
Profit split ratio | 1 | ||||
Profit split period | 10 years | ||||
HEC Agreement | Next five years | |||||
Commitments | |||||
Profit split ratio | 1.5 | ||||
Profit split period | 5 years | ||||
Sunshine Agreement | |||||
Commitments | |||||
Commitment amount | $ 32,000 | ||||
Sunshine Agreement | First ten years | |||||
Commitments | |||||
Profit split ratio | 1 | ||||
Profit split period | 10 years | ||||
Sunshine Agreement | Next five years | |||||
Commitments | |||||
Profit split ratio | 1.5 | ||||
Profit split period | 5 years | ||||
Variable interest entity | |||||
Commitments | |||||
Commitment amount | $ 15,000 | ||||
Expiration period | 7 years | ||||
Loans receivable fixed rate (as a percent) | 2.00% | ||||
Percentage of outstanding loan | 50.00% | ||||
Proceeds from sale of loan | $ 5,600 | ||||
Loan receivable | $ 6,600 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Accumulated Other Comprehensive Loss. | ||
Beginning Balance | $ (627) | $ (615) |
Net income (loss) on foreign currency translation (net of tax of $0 and $0) | 79 | (12) |
Other comprehensive income (loss), net of tax | 79 | (12) |
Total Accumulated Other Comprehensive Loss | (627) | |
Net income (loss) on foreign currency translation, tax | $ 0 | $ 0 |
Warrants (Details)
Warrants (Details) | Apr. 22, 2021USD ($)$ / sharesshares | Jun. 30, 2021USD ($) |
Class of Warrant or Right | ||
Issuance of warrant | $ 24,375,000 | |
Second Lien Facility | ||
Class of Warrant or Right | ||
Common stock under the warrant (in shares) | shares | 8,280,000 | |
Warrants exercise price (in dollars per share) | $ / shares | $ 6.88 | |
Warrants term | 8 years | |
Issuance of warrant | $ 24,400,000 | |
Second Lien Facility | Expected volatility | ||
Class of Warrant or Right | ||
Warrant measurement input | 74.2 | |
Second Lien Facility | Expected term | ||
Class of Warrant or Right | ||
Warrant measurement input | 8 | |
Second Lien Facility | Risk-free rate | ||
Class of Warrant or Right | ||
Warrant measurement input | 1.3 |
Loss Per Common Share (Details)
Loss Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Numerator: | |||
Net loss | $ (363,475) | $ (33,366) | $ (272,107) |
Adjusted "if-converted" net loss | $ (363,475) | $ (33,366) | $ (272,107) |
Denominator: | |||
Basic weighted average common shares outstanding | 39,391,589 | 38,592,618 | 37,779,812 |
Diluted weighted average common shares outstanding | 39,391,589 | 38,592,618 | 37,779,812 |
Loss per common share: | |||
Basic (in dollars per share) | $ (9.23) | $ (0.86) | $ (7.20) |
Diluted (in dollars per share) | $ (9.23) | $ (0.86) | $ (7.20) |
Anti-dilutive shares excluded in the computation of diluted earnings per share | 8,000,000 | 6,600,000 | 1,900,000 |
Share-based Compensation - Comp
Share-based Compensation - Compensation Plans (Details) shares in Millions, $ in Millions | 12 Months Ended |
Jun. 30, 2021USD ($)shares | |
Stock-based Compensation | |
Additional shares for future issuances | 3 |
Aggregate number of shares authorized for issuance | 8 |
Shares for future issuances | 3.1 |
Number of awards granted | 0 |
Total unrecognized compensation cost related to non-vested share-based compensation awards granted under the Plans | $ | $ 9.5 |
Weighted average period during which the cost is expected to be recognized | 2 years |
Maximum | |
Stock-based Compensation | |
Share-based compensation awards vesting period | 3 years |
Share-based compensation awards maximum contractual term | 10 years |
Share-based Compensation - Opti
Share-based Compensation - Options Valuation (Details) - Stock options - $ / shares | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Assumptions used to estimate fair values | |||
Risk-free interest rate (as a percent) | 0.20% | 1.90% | 2.90% |
Expected volatility (as a percent) | 82.50% | 73.70% | 58.40% |
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Forfeiture rate (as a percent) | 6.50% | ||
Expected term (in years) | 5 years | 5 years 1 month 6 days | 5 years 3 months 18 days |
Weighted average fair value (in dollars per share) | $ 3.86 | $ 4 | $ 6.52 |
Share-based Compensation - Op_2
Share-based Compensation - Options Rollforward (Details) - Stock options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
Awards | ||||
Outstanding at the beginning of the period (in shares) | 991 | 572 | 1,057 | |
Granted (in shares) | 309 | 522 | 73 | |
Exercised (in shares) | (37) | (56) | (94) | |
Forfeited, expired or repurchased (in shares) | (217) | (47) | (464) | |
Outstanding at the end of the period (in shares) | 1,046 | 991 | 572 | 1,057 |
Vested and expected to vest, Awards (in shares) | 1,045 | |||
Exercisable at the end of the period (in shares) | 383 | |||
Weighted-Average Exercise Price | ||||
Outstanding at the beginning of the period (in dollars per share) | $ 12.11 | $ 17.56 | $ 22.46 | |
Granted (in dollars per share) | 5.95 | 6.57 | 12.20 | |
Exercised (in dollars per share) | 4.12 | 5.42 | 4.06 | |
Forfeited, expired or repurchased (in dollars per share) | 17.17 | 24.73 | 30.61 | |
Outstanding at the end of the period (in dollars per share) | 9.51 | $ 12.11 | $ 17.56 | $ 22.46 |
Vested and expected to vest, Weighted-Average Exercise Price (in dollars per share) | 9.51 | |||
Exercisable at the end of the period (in dollars per share) | $ 14.82 | |||
Aggregate Intrinsic Value | ||||
Outstanding at the beginning of the period (in dollars) | $ 678 | $ 273 | $ 2,584 | |
Exercised (in dollars) | 61 | 237 | 311 | |
Outstanding at the end of the period (in dollars) | 25 | $ 678 | $ 273 | $ 2,584 |
Vested and expected to vest, Aggregate Intrinsic Value | 25 | |||
Exercisable at the end of the period (in dollars) | $ 25 | |||
Weighted Average Remaining Contractual Life | ||||
Outstanding at the end of the period | 7 years 2 months 12 days | 5 years 7 months 6 days | 5 years | 5 years 4 months 24 days |
Vested and expected to vest | 7 years 2 months 12 days | |||
Exercisable at the end of the period | 4 years 10 months 24 days |
Share-based Compensation - Rest
Share-based Compensation - Restricted Stock (Details) - Restricted stock - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Stock-based Compensation | |||
Annual forfeiture rate used to calculate compensation expense (as a percent) | 6.50% | 6.50% | 6.50% |
Awards | |||
Non-vested at the beginning of the period (in shares) | 1,344 | 1,288 | 704 |
Granted (in shares) | 901 | 941 | 1,176 |
Vested (in shares) | (805) | (773) | (434) |
Forfeited (in shares) | (90) | (112) | (158) |
Non-vested at the end of the period (in shares) | 1,350 | 1,344 | 1,288 |
Weighted Average Grant-date Fair Value | |||
Non-vested at the beginning of the period (in dollars per share) | $ 8.70 | $ 11.63 | $ 20.06 |
Granted (in dollars per share) | 5.74 | 6.45 | 9.90 |
Vested (in dollars per share) | 8.60 | 10.54 | 19.75 |
Forfeited (in dollars per share) | 9.18 | 10.75 | 14 |
Non-vested at the end of the period (in dollars per share) | $ 6.75 | $ 8.70 | $ 11.63 |
Aggregate Intrinsic Value | |||
Vested | $ 4,668 | $ 6,401 | $ 4,107 |
Share-based Compensation - Perf
Share-based Compensation - Performance-Based (Details) - Performance-Based Shares - $ / shares shares in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Stock-based Compensation | |||
Share-based compensation awards vesting period | 3 years | ||
Awards | |||
Non-vested at the beginning of the period (in shares) | 204 | 72 | 20 |
Granted (in shares) | 339 | 178 | 52 |
Performance adjustment (in shares) | (12) | ||
Vested (in shares) | (46) | ||
Non-vested at the end of the period (in shares) | 531 | 204 | 72 |
Weighted Average Grant-date Fair Value | |||
Non-vested at the beginning of the period (in dollars per share) | $ 12.99 | $ 19.92 | $ 25.58 |
Granted (in dollars per share) | 9.22 | 10.71 | 17.69 |
Performance adjustment (in dollars per share) | 25.58 | ||
Vested (in dollars per share) | 15.08 | ||
Non-vested at the end of the period (in dollars per share) | $ 10.29 | $ 12.99 | $ 19.92 |
Share-based Compensation - Stoc
Share-based Compensation - Stock Purchase Plan (Details) - shares shares in Thousands | 12 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | Apr. 01, 2003 | |
Stock-based Compensation | ||||
Shares authorized for issuance (in shares) | 8,000 | |||
Employee Stock Purchase Plan | ||||
Stock-based Compensation | ||||
Purchase price of stock as percent of market fair value (in percent) | 85.00% | |||
Compensation authorized by the employee to be withheld for stock purchase (in percent) | 10.00% | |||
Shares authorized for issuance (in shares) | 1,100 | |||
Shares issued (in shares) | 109 | 118 | 185 | |
Cumulative shares issued (in shares) | 1,000 |
Share-based Compensation - Cost
Share-based Compensation - Cost (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Share-based compensation costs | |||
Share based compensation | $ 9,037 | $ 10,216 | $ 9,027 |
Tax benefit at statutory rate | 2,033 | 2,299 | 2,031 |
Selling, general and administrative | |||
Share-based compensation costs | |||
Share based compensation | 7,016 | 7,087 | 5,715 |
Research and development | |||
Share-based compensation costs | |||
Share based compensation | 538 | 801 | 750 |
Cost of sales | |||
Share-based compensation costs | |||
Share based compensation | $ 1,483 | $ 2,328 | $ 2,562 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) $ in Millions | Jan. 01, 2021 | Dec. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 |
Employee Benefit Plan | |||||
Company matching contributions (as a percent) | 50.00% | 50.00% | |||
Maximum company contribution (as a percent) | 2.00% | 4.00% | |||
Contributions to the plan | $ 1.6 | $ 2.2 | $ 2.3 |
Income Taxes - Expense (Details
Income Taxes - Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Current Income Tax Expense (Benefit) | |||
Federal | $ (57,335) | $ (7,082) | $ 13,185 |
State and Local | 70 | 405 | (81) |
Total Current Income Tax Expense (Benefit) | (57,265) | (6,677) | 13,104 |
Deferred Income Tax Expense (Benefit) | |||
Federal | 112,414 | (6,525) | (85,022) |
State and Local | 5,476 | (2,060) | (2,220) |
Total Deferred Income Tax Expense (Benefit) | 117,890 | (8,585) | (87,242) |
Total Income Tax Expense (Benefit) | $ 60,625 | $ (15,262) | $ (74,138) |
Reconciliation of federal statutory rate to effective rate | |||
Federal income tax at statutory rate (as a percent) | 21.00% | 21.00% | 21.00% |
State and local income tax, net (as a percent) | (1.40%) | 2.70% | 0.50% |
Nondeductible expenses (as a percent) | (0.10%) | (1.10%) | (0.10%) |
Nondeductible drug fee | (0.10%) | (1.60%) | |
Foreign rate differential (as a percent) | (0.10%) | (0.40%) | |
Income tax credits (as a percent) | 0.20% | 2.50% | 0.50% |
Unrecognized tax benefits | (5.00%) | 0.10% | |
Change in tax laws (as a percent) | 5.10% | 15.40% | |
Excess tax benefits on share-based compensation (as a percent) | (0.30%) | (0.80%) | (0.30%) |
Valuation allowance (as a percent) | (44.30%) | ||
Other (as a percent) | (0.10%) | (1.60%) | 0.10% |
Effective income tax rate (as a percent) | (20.00%) | 31.40% | 21.40% |
COVID 19 | |||
Income tax | |||
Discrete tax benefit | $ (10,300) | $ (2,800) |
Income Taxes - Deferred (Detail
Income Taxes - Deferred (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Deferred tax assets: | ||
Share-based compensation expense | $ 1,779 | $ 2,661 |
Reserve for returns | 8,213 | 11,022 |
Inventory | 6,047 | 4,920 |
Federal net operating loss | 273 | 273 |
State net operating loss | 9,415 | 8,387 |
Impairment on Cody note receivable | 1,157 | 1,171 |
Accumulated amortization on intangible assets | 112,548 | 79,939 |
Foreign net operating loss | 1,792 | 1,822 |
Interest carryforward | 21,111 | 25,392 |
Operating lease | 2,890 | 3,439 |
R&D carryforward | 1,334 | 491 |
Other | 849 | 2,862 |
Total deferred tax asset | 167,408 | 142,379 |
Valuation allowance | (153,383) | (14,622) |
Total deferred tax asset less valuation allowance | 14,025 | 127,757 |
Deferred tax liabilities: | ||
Prepaid expenses | 239 | 681 |
Property, plant and equipment | 11,525 | 5,383 |
Operating lease | 2,261 | 3,803 |
Total deferred tax liability | 14,025 | 9,867 |
Net deferred tax asset | $ 117,890 | |
Valuation allowance increase (decrease) | $ 153,400 |
Income Taxes - Unrecognized Ben
Income Taxes - Unrecognized Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Taxes | |||
Balance at the beginning of the period | $ 4,591 | $ 2,199 | |
Additions for tax positions of the current year | 91 | 2,467 | |
Reduction for tax positions of prior years | (51) | ||
Additions for tax positions of prior years | 104 | ||
Settlements | (240) | ||
Lapse of statute of limitations | (24) | ||
Balance at the end of the period | 4,546 | 4,591 | |
Unrecognized tax benefits that would impact rate | 4,400 | 4,500 | $ 2,100 |
Unrecognized tax benefits interest and penalties | $ 0 | $ 0 | $ 0 |
Related Party Transactions (Det
Related Party Transactions (Details) - Auburn - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Related Party Transactions | |||
Sales to related party | $ 2.6 | $ 3 | $ 3.8 |
Accounts receivable related party | $ 0.4 | $ 0.7 |
Assets Held for Sale (Details)
Assets Held for Sale (Details) - USD ($) $ in Thousands | Jul. 01, 2019 | Sep. 30, 2018 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | Oct. 31, 2020 | Dec. 31, 2019 |
Assets Held for Sale | |||||||
Assets held for sale | $ 2,678 | $ 2,678 | |||||
Disposal group held for sale | Cody API Restructuring Plan | |||||||
Assets Held for Sale | |||||||
Impairment of long-lived assets | $ 29,900 | $ 32,800 | |||||
Proceeds from Divestiture of Businesses | 3,000 | ||||||
Operating lease term | 2 years | ||||||
Potential sales amount | $ 3,800 | ||||||
Assets held for sale | 2,700 | ||||||
Net sales | 1,067 | 3,139 | |||||
Pretax loss attributable to Cody API business | $ (761) | $ (6,549) | $ (51,509) | ||||
Impairment of the ROU lease asset | $ 1,200 |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Allowance for Doubtful Accounts | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Valuation Allowances and Reserves, Balance, Beginning Balance | $ 1,103 | $ 1,223 | $ 1,308 |
Charged to (Reduction of) Expense | 374 | 386 | 870 |
Deductions | (776) | (506) | (955) |
Valuation Allowances and Reserves, Balance, Ending Balance | 701 | 1,103 | 1,223 |
Valuation Allowance of Deferred Tax Assets | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Valuation Allowances and Reserves, Balance, Beginning Balance | 14,622 | 13,549 | 8,120 |
Charged to (Reduction of) Expense | 138,761 | 1,073 | 5,429 |
Valuation Allowances and Reserves, Balance, Ending Balance | $ 153,383 | $ 14,622 | $ 13,549 |