Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 31, 2021 | Jan. 31, 2022 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Dec. 31, 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 Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 42,950,149 | |
Entity Central Index Key | 0000057725 | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS (UN
CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Dec. 31, 2021 | Jun. 30, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 98,635 | $ 93,286 |
Accounts receivable, net | 66,275 | 98,834 |
Inventories | 105,779 | 109,545 |
Income taxes receivable | 35,847 | 35,050 |
Assets held for sale | 12,733 | 2,678 |
Other current assets | 15,345 | 14,170 |
Total current assets | 334,614 | 353,563 |
Property, plant and equipment, net | 143,104 | 166,674 |
Intangible assets, net | 90,972 | 137,835 |
Operating lease right-of-use assets | 10,227 | 10,559 |
Other assets | 16,020 | 15,106 |
TOTAL ASSETS | 594,937 | 683,737 |
Current liabilities: | ||
Accounts payable | 25,988 | 29,585 |
Accrued expenses | 11,206 | 13,077 |
Accrued payroll and payroll-related expenses | 9,606 | 10,680 |
Rebates payable | 25,205 | 19,025 |
Royalties payable | 10,687 | 13,779 |
Restructuring liability | 620 | 8 |
Current operating lease liabilities | 2,054 | 2,045 |
Other current liabilities | 3,885 | 2,270 |
Total current liabilities | 89,251 | 90,469 |
Long-term debt, net | 603,484 | 590,683 |
Long-term operating lease liabilities | 10,554 | 11,047 |
Other liabilities | 17,808 | 19,009 |
TOTAL LIABILITIES | 721,097 | 711,208 |
Commitments and contingencies (Notes 11 and 12) | ||
STOCKHOLDERS' DEFICIT | ||
Common stock ($0.001 par value, 100,000,000 shares authorized; 42,053,623 and 40,913,148 shares issued; 40,500,320 and 39,576,606 shares outstanding at December 31, 2021 and June 30, 2021, respectively) | 42 | 41 |
Additional paid-in capital | 360,765 | 355,239 |
Accumulated deficit | (468,193) | (364,766) |
Accumulated other comprehensive loss | (519) | (548) |
Treasury stock (1,553,303 and 1,336,542 shares at December 31, 2021 and June 30, 2021, respectively) | (18,255) | (17,437) |
Total stockholders' deficit | (126,160) | (27,471) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 594,937 | $ 683,737 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares | Dec. 31, 2021 | Jun. 30, 2021 |
CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 42,053,623 | 40,913,148 |
Common stock, shares outstanding | 40,500,320 | 39,576,606 |
Treasury stock, shares | 1,553,303 | 1,336,542 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||
Net sales | $ 86,508 | $ 133,920 | $ 188,033 | $ 260,399 |
Cost of sales | 76,990 | 124,488 | 157,998 | 216,675 |
Amortization of intangibles | 3,808 | 8,657 | 7,804 | 17,246 |
Gross profit | 5,710 | 775 | 22,231 | 26,478 |
Operating expenses: | ||||
Research and development expenses | 4,747 | 5,644 | 10,511 | 12,183 |
Selling, general and administrative expenses | 18,791 | 13,730 | 37,696 | 28,866 |
Restructuring expenses | 891 | 891 | 4,043 | |
Asset impairment charges | 49,361 | 198,000 | 49,361 | 198,000 |
Total operating expenses | 73,790 | 217,374 | 98,459 | 243,092 |
Operating loss | (68,080) | (216,599) | (76,228) | (216,614) |
Other income (expense): | ||||
Investment income | 46 | 43 | 80 | 88 |
Interest expense | (14,430) | (13,496) | (28,654) | (27,982) |
Other | 11 | 28 | (51) | 5 |
Total other expense | (14,373) | (13,425) | (28,625) | (27,889) |
Loss before income tax | (82,453) | (230,024) | (104,853) | (244,503) |
Income tax benefit | (1,368) | (58,076) | (1,426) | (66,056) |
Net loss | $ (81,085) | $ (171,948) | $ (103,427) | $ (178,447) |
Loss per common share: | ||||
Basic (in dollars per share) | $ (2.01) | $ (4.36) | $ (2.58) | $ (4.55) |
Diluted (in dollars per share) | $ (2.01) | $ (4.36) | $ (2.58) | $ (4.55) |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 40,358,127 | 39,443,441 | 40,142,974 | 39,257,211 |
Diluted (in shares) | 40,358,127 | 39,443,441 | 40,142,974 | 39,257,211 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) | ||||
Net loss | $ (81,085) | $ (171,948) | $ (103,427) | $ (178,447) |
Other comprehensive income (loss): | ||||
Foreign currency translation gain (loss) | 5 | (47) | 29 | 32 |
Total other comprehensive income (loss) | 5 | (47) | 29 | 32 |
Comprehensive loss | $ (81,080) | $ (171,995) | $ (103,398) | $ (178,415) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Treasury Stock | Total |
Balance, beginning at Jun. 30, 2020 | $ 40 | $ 321,164 | $ (1,291) | $ (627) | $ (16,390) | $ 302,896 |
Balance, beginning (in shares) at Jun. 30, 2020 | 39,963 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Shares issued in connection with share-based compensation plans | $ 1 | 442 | 443 | |||
Shares issued in connection with share-based compensation plans (in shares) | 869 | |||||
Share-based compensation | 5,333 | 5,333 | ||||
Purchase of treasury stock | (999) | (999) | ||||
Other comprehensive income (Loss) | 32 | 32 | ||||
Net loss | (178,447) | (178,447) | ||||
Balance, ending at Dec. 31, 2020 | $ 41 | 326,939 | (179,738) | (595) | (17,389) | 129,258 |
Balance, ending (in shares) at Dec. 31, 2020 | 40,832 | |||||
Balance, beginning at Sep. 30, 2020 | $ 41 | 324,788 | (7,790) | (548) | (17,176) | 299,315 |
Balance, beginning (in shares) at Sep. 30, 2020 | 40,687 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Shares issued in connection with share-based compensation plans | 160 | 160 | ||||
Shares issued in connection with share-based compensation plans (in shares) | 145 | |||||
Share-based compensation | 1,991 | 1,991 | ||||
Purchase of treasury stock | (213) | (213) | ||||
Other comprehensive income (Loss) | (47) | (47) | ||||
Net loss | (171,948) | (171,948) | ||||
Balance, ending at Dec. 31, 2020 | $ 41 | 326,939 | (179,738) | (595) | (17,389) | 129,258 |
Balance, ending (in shares) at Dec. 31, 2020 | 40,832 | |||||
Balance, beginning at Jun. 30, 2021 | $ 41 | 355,239 | (364,766) | (548) | (17,437) | (27,471) |
Balance, beginning (in shares) at Jun. 30, 2021 | 40,913 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Shares issued in connection with share-based compensation plans | $ 1 | 199 | 200 | |||
Shares issued in connection with share-based compensation plans (in shares) | 1,140 | |||||
Share-based compensation | 5,327 | 5,327 | ||||
Purchase of treasury stock | (818) | (818) | ||||
Other comprehensive income (Loss) | 29 | 29 | ||||
Net loss | (103,427) | (103,427) | ||||
Balance, ending at Dec. 31, 2021 | $ 42 | 360,765 | (468,193) | (519) | (18,255) | (126,160) |
Balance, ending (in shares) at Dec. 31, 2021 | 42,053 | |||||
Balance, beginning at Sep. 30, 2021 | $ 42 | 358,361 | (387,108) | (524) | (18,124) | (47,353) |
Balance, beginning (in shares) at Sep. 30, 2021 | 41,787 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Shares issued in connection with share-based compensation plans | 95 | 95 | ||||
Shares issued in connection with share-based compensation plans (in shares) | 266 | |||||
Share-based compensation | 2,309 | 2,309 | ||||
Purchase of treasury stock | (131) | (131) | ||||
Other comprehensive income (Loss) | 5 | 5 | ||||
Net loss | (81,085) | (81,085) | ||||
Balance, ending at Dec. 31, 2021 | $ 42 | $ 360,765 | $ (468,193) | $ (519) | $ (18,255) | $ (126,160) |
Balance, ending (in shares) at Dec. 31, 2021 | 42,053 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
OPERATING ACTIVITIES: | ||
Net loss | $ (103,427) | $ (178,447) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 18,871 | 28,717 |
Deferred income tax benefit | (14,519) | |
Share-based compensation | 5,327 | 5,333 |
Asset impairment charges | 49,361 | 198,000 |
Loss (gain) on sale/disposal of assets | 51 | (24) |
Accrual of payment-in-kind interest on Second Lien Credit Facility | 10,024 | |
Amortization of debt discount and other debt issuance costs | 2,959 | 6,239 |
Provision for inventory write-downs | 4,054 | 23,214 |
Other noncash expenses | 393 | 635 |
Changes in assets and liabilities which provided (used) cash: | ||
Accounts receivable, net | 32,559 | (34,443) |
Inventories | (288) | (2,551) |
Income taxes receivable/payable | (833) | (50,065) |
Other assets | (2,255) | (7,248) |
Rebates payable | 6,180 | 5,616 |
Royalties payable | (3,092) | (81) |
Restructuring liability | 612 | 134 |
Operating lease assets/liabilities | (561) | 407 |
Accounts payable | (3,597) | 10,135 |
Accrued expenses | (1,871) | (10,870) |
Accrued payroll and payroll-related expenses | (1,074) | (7,358) |
Other liabilities | 450 | 2,586 |
Net cash provided by (used in) operating activities | 13,843 | (24,590) |
INVESTING ACTIVITIES: | ||
Purchases of property, plant and equipment | (6,758) | (5,129) |
Proceeds from sale of property, plant and equipment | 353 | 44 |
Purchases of intangible assets | (1,500) | (4,000) |
Net cash used in investing activities | (7,905) | (9,085) |
FINANCING ACTIVITIES: | ||
Repayments of long-term debt | (68,516) | |
Proceeds from issuance of stock | 200 | 443 |
Payment of debt issuance costs | (2,390) | |
Purchase of treasury stock | (818) | (999) |
Net cash used in financing activities | (618) | (71,462) |
Effect on cash and cash equivalents of changes in foreign exchange rates | 29 | 32 |
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 5,349 | (105,105) |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD | 98,286 | 144,329 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD | 103,635 | 39,224 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Interest paid | 15,131 | 21,844 |
Income taxes refunded | (592) | (1,473) |
Purchases of property, plant and equipment included in accounts payable | $ 999 | $ 994 |
Interim Financial Information
Interim Financial Information | 6 Months Ended |
Dec. 31, 2021 | |
Interim Financial Information | |
Interim Financial Information | Note 1. Interim Financial Information The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for the presentation of interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited financial statements do not include all the information and footnotes necessary for a comprehensive presentation of the financial position, results of operations and cash flows for the periods presented. In the opinion of management, the unaudited financial statements include all the normal recurring adjustments that are necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. Operating results for the three and six months ended December 31, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2022. These unaudited financial statements should be read in combination with the other Notes in this section; “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing in Item 2; and the Consolidated Financial Statements, including the Notes to the Consolidated Financial Statements, included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021. The Consolidated Balance Sheet as of June 30, 2021 was derived from audited financial statements. |
The Business and Nature of Oper
The Business and Nature of Operations | 6 Months Ended |
Dec. 31, 2021 | |
The Business and Nature of Operations | |
The Business and Nature of Operations | Note 2. 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 The COVID-19 pandemic continues to have an impact on the global economy and the way companies operate. In light of the economic impacts of COVID-19, the Company reviewed the assets on our Consolidated Balance Sheet as of December 31, 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 the first six months of Fiscal 2022 and during Fiscal 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, the total volume of drug prescriptions written in the country decreased at the start of the pandemic causing less demand for our products. Recently, prescription volumes have begun to increase back to pre-pandemic levels. However, 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 | 6 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 3. 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 (deficit) 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”), 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 December 31, 2021, the Company classified this balance as restricted cash, which is included in other assets. 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 December 31, 2021 and 2020. December 31, 2021 December 31, 2020 Cash and cash equivalents $ 98,635 $ 34,224 Restricted cash, included in other assets 5,000 5,000 Cash, cash equivalents and restricted cash as presented on the Consolidated Statements of Cash Flows $ 103,635 $ 39,224 Allowance for doubtful accounts The Company complies with ASU 2016-13, Measurement of Credit Losses on Financial Instruments 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. The Company continually evaluates the reasonableness of the useful lives of these assets. Indefinite-lived intangible assets are not amortized, but instead are tested at least annually for impairment. Costs to renew or extend the term of a recognized intangible asset are expensed as incurred. 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 table below identifies the Company’s net sales by medical indication for the three and six months ended December 31, 2021 and 2020. Three Months Ended Six Months Ended (In thousands) December 31, December 31, Medical Indication 2021 2020 2021 2020 Analgesic $ 3,919 $ 3,572 $ 9,233 $ 6,692 Anti-Psychosis 2,095 13,317 5,810 26,345 Cardiovascular 9,753 16,336 23,853 36,050 Central Nervous System 22,340 24,614 45,125 47,139 Endocrinology 8,297 9,496 16,142 12,729 Gastrointestinal 14,023 18,575 29,263 35,675 Infectious Disease 6,520 23,044 19,035 44,976 Migraine 4,446 6,083 9,131 15,773 Respiratory/Allergy/Cough/Cold 1,868 2,267 4,982 3,693 Urinary 1,164 1,361 2,340 2,819 Other 9,111 8,410 18,287 16,044 Contract manufacturing revenue 2,972 6,845 4,832 12,464 Total net sales $ 86,508 $ 133,920 $ 188,033 $ 260,399 Customer, Supplier and Product Concentration The following table presents the percentage of total net sales, for the three and six months ended December 31, 2021 and 2020, 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 net sales in any of those periods: Three Months Ended Six Months Ended December 31, December 31, 2021 2020 2021 2020 Product 1 5 % 15 % 8 % 15 % The following table presents the percentage of total net sales, for the three and six months ended December 31, 2021 and 2020, for certain of the Company’s customers which accounted for at least 10% of net sales in any of those periods: Three Months Ended Six Months Ended December 31, December 31, 2021 2020 2021 2020 Customer A 26 % 26 % 28 % 26 % Customer B 15 % 21 % 17 % 22 % Customer C 14 % 12 % 14 % 11 % Revenue Recognition The Company complies with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers 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 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. Variable lease costs not initially included in the lease liability and ROU asset impairment charges are expensed as incurred. The Company has elected, as an accounting policy, not to apply the recognition requirements in ASC 842 to short-term leases. Short-term leases are leases that have a term of 12 months or less and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. The Company recognizes the lease payments for short-term leases on a straight-line basis over the lease term and the lease cost is not recorded on the Consolidated Balance Sheets. 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 stock price on the grant date to value restricted stock and performance-based shares with vesting based on the satisfaction of a performance condition. The Company uses the Black-Scholes valuation model to determine the fair value of stock options and the Monte-Carlo simulation model to determine the fair value of performance-based shares with a market condition. 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 $1.8 million and $0.8 million as of December 31, 2021 and June 30, 2021, respectively, and is recorded in the accrued payroll and payroll-related expenses caption in the Consolidated Balance Sheets. 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. 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 as if it were vested, includes performance-based shares that would be issued if the performance criteria were met as of the end of the reporting period, 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) reflects all changes in equity during a period except those that resulted from investments by or distributions to the Company’s stockholders. This includes, but is not limited to, foreign currency translation gain (loss). 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 | 6 Months Ended |
Dec. 31, 2021 | |
Restructuring Charges | |
Restructuring Charges | Note 4. Restructuring Charges 2021 Restructuring Plan On November 1, 2021, the Board of Directors authorized a restructuring and cost savings plan (the “2021 Restructuring Plan”) to further optimize its operations, improve efficiencies and reduce costs. Under the 2021 Restructuring Plan, the Company will consolidate its manufacturing footprint by transferring certain liquid drug production from its Silarx Pharmaceuticals, Inc. (“Silarx”) facility in Carmel, New York to the Company’s main plant in Seymour, Indiana. Following the transition, which is expected to take 12 to 18 months, the Company intends to shut down operations at Silarx. The Company is also currently pursuing the sale of the facility, which is anticipated within one year and may result in accelerated timing for the shutdown of operations at Silarx. Several products manufactured by Silarx and Kremers Urban Pharmaceuticals, Inc. will be scaled back or discontinued over time. Particularly, the Company will scale back or phase out some small low-margin over-the-counter medicines from Carmel and two low-margin prescription products as part of the restructuring program. During the transition of products from Carmel, New York to the Seymour, Indiana facility, the Company will continue to assess its portfolio and may introduce or discontinue additional products. As part of the 2021 Restructuring Plan, the Company will also scale back its research and development operations and eliminate certain administrative positions that primarily support the Silarx and research and development operations. The total reduction in headcount, and the basis of the estimated severance costs, for the 2021 Restructuring Plan is expected to be approximately 165 positions, which includes additional positions identified at the Seymour, Indiana facility in January 2022. The Company initiated the plan on November 3, 2021 and expects that the actions contemplated under the 2021 Restructuring Plan will be substantially complete by June 30, 2023. The plan is expected to generate cost savings of $20 million, annually. The Company estimates that it will incur approximately $6.0 million to $7.0 million of total costs to implement the 2021 Restructuring Plan, comprised primarily of approximately $5.0 million of severance and employee-related costs and approximately $1.0 million to $2.0 million of tech transfer costs. The Company also expects to incur approximately $2.0 million to $3.0 million in capital expenditures to build out the liquid manufacturing business at the Kremers Urban Pharmaceuticals, Inc. facility. The Company incurred $0.9 million in severance-related costs during the second quarter of Fiscal 2022 in connection with the 2021 Restructuring Plan. A reconciliation of the charges in restructuring liabilities associated with the 2021 Restructuring Plan from June 30, 2021 through December 31, 2021 is set forth in the following table: Employee Tech Transfer (In thousands) Separation Costs Costs Total Balance at June 30, 2021 $ — $ — $ — Restructuring charges 864 27 891 Payments (244) (27) (271) Balance at December 31, 2021 $ 620 — $ 620 The Company has incurred $48.9 million in non-cash impairment charges in connection with the 2021 Restructuring Plan related to certain long-lived intangible assets as well as certain facility, equipment and other plant-related assets currently utilized by the Company. Refer to Note 7 “Property, Plant and Equipment,” Note 9 “Intangible Assets” and Note 20 “Assets Held for Sale” for further details on the impairment charges incurred as of December 31, 2021 in connection with the 2021 Restructuring Plan. |
Accounts Receivable, net
Accounts Receivable, net | 6 Months Ended |
Dec. 31, 2021 | |
Accounts Receivable, net | |
Accounts Receivable, net | Note 5. Accounts Receivable, net Accounts receivable, net consisted of the following components at December 31, 2021 and June 30, 2021: December 31, June 30, (In thousands) 2021 2021 Gross accounts receivable $ 204,746 $ 239,271 Less: Chargebacks reserve (66,833) (69,564) Less: Rebates reserve (18,497) (16,272) Less: Returns reserve (36,770) (38,395) Less: Other deductions (15,298) (15,505) Less: Allowance for doubtful accounts (1,073) (701) Accounts receivable, net $ 66,275 $ 98,834 For the three months ended December 31, 2021, the Company recorded a provision for chargebacks, rebates (including rebates presented as rebates payable), returns and other deductions of $114.7 million, $26.5 million, $7.4 million and $7.8 million, respectively. For the three months ended December 31, 2020, the Company recorded a provision for chargebacks, rebates (including rebates presented as rebates payable), returns and other deductions of $191.5 million, $43.4 million, $5.2 million and $20.8 million, respectively. For the six months ended December 31, 2021, the Company recorded a provision for chargebacks, rebates (including rebates presented as rebates payable), returns and other deductions of $245.9 million, $55.3 million, $13.3 million and $26.8 million, respectively. For the six months ended December 31, 2020, the Company recorded a provision for chargebacks, rebates (including rebates presented as rebates payable), returns and other deductions of $379.8 million, $77.7 million, $10.7 million and $36.6 million, respectively. The following table identifies the activity and ending balances of each major category of revenue-related reserve for the six months ended December 31, 2021 and 2020: Reserve Category (In thousands) Chargebacks Rebates Returns Other Total Balance at June 30, 2021 $ 69,564 $ 35,297 $ 38,395 $ 15,505 $ 158,761 Current period provision 245,900 55,262 13,305 26,761 341,228 Credits issued during the period (248,631) (46,857) (14,930) (26,968) (337,386) Balance at December 31, 2021 $ 66,833 $ 43,702 $ 36,770 $ 15,298 $ 162,603 Reserve Category (In thousands) Chargebacks Rebates Returns Other Total Balance at June 30, 2020 $ 61,877 $ 62,711 $ 40,796 $ 17,557 $ 182,941 Current period provision 379,821 77,657 10,652 36,624 504,754 Credits issued during the period (360,242) (77,536) (12,181) (34,833) (484,792) Balance at December 31, 2020 $ 81,456 $ 62,832 $ 39,267 $ 19,348 $ 202,903 For the three months ended December 31, 2021 and 2020, as a percentage of gross sales the provision for chargebacks was 47.8% and 49.3%, the provision for rebates was 11.1% and 11.2%, the provision for returns was 3.1% and 1.3% and the provision for other adjustments was 3.2% and 5.4%, respectively. For the six months ended December 31, 2021 and 2020, as a percentage of gross sales the provision for chargebacks was 46.9% and 50.5%, the provision for rebates was 10.5% and 10.3%, the provision for returns was 2.5% and 1.4% and the provision for other adjustments was 5.1% and 4.9%, respectively. The decreases in the reserves for chargebacks, rebates and returns from June 30, 2021 to December 31, 2021 was primarily attributable to lower net sales in the three months ended December 31, 2021 as compared to the three months ended June 30, 2021. The rebates reserve was also impacted by the lower net sales in the three months ended December 31, 2021; however, the reserve increased due to the timing of payments in Fiscal 2022. We have not recorded any material amounts in the current period related to reversals or additions of prior period reserves. |
Inventories
Inventories | 6 Months Ended |
Dec. 31, 2021 | |
Inventories | |
Inventories | Note 6. Inventories Inventories at December 31, 2021 and June 30, 2021 consisted of the following: December 31, June 30, (In thousands) 2021 2021 Raw Materials $ 49,042 $ 45,370 Work-in-process 4,927 12,685 Finished Goods 51,810 51,490 Total $ 105,779 $ 109,545 During the three months ended December 31, 2021 and 2020, the Company recorded write-downs to net realizable value for excess and obsolete inventory of $1.2 million and $20.6 million, respectively. During the six months ended December 31, 2021 and 2020, the Company recorded write-downs to net realizable value for excess and obsolete inventory of $4.1 million and $23.2 million. The decrease 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 resulted in a significant write-down in the prior-year period. |
Property, Plant and Equipment,
Property, Plant and Equipment, net | 6 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment, net | |
Property, Plant and Equipment, net | Note 7. Property, Plant and Equipment, net Property, plant and equipment, net at December 31, 2021 and June 30, 2021 consisted of the following: December 31, June 30, (In thousands) Useful Lives 2021 2021 Land — $ 533 $ 1,783 Building and improvements 10 - 39 years 93,401 103,082 Machinery and equipment 5 - 10 years 163,352 166,617 Furniture and fixtures 5 - 7 years 3,367 3,399 Less accumulated depreciation (129,529) (123,294) 131,124 151,587 Construction in progress 11,980 15,087 Property, plant and equipment, net $ 143,104 $ 166,674 As a result of the 2021 Restructuring Plan, the Company performed a fair value analysis of the Silarx facility and certain equipment at the facility, which resulted in an $8.4 million impairment charge in the second quarter of Fiscal 2022. The land, facility and equipment identified for sale, totaling $10.5 million, was reclassified to the assets held for sale caption in the Consolidated Balance Sheet as of December 31, 2021. Depreciation expense for the three months ended December 31, 2021 and 2020 was $5.5 million and $5.7 million, respectively. Depreciation expense for the six months ended December 31, 2021 and 2020 was $11.1 million and $11.5 million, respectively. Property, plant and equipment, net included amounts held in foreign countries in the amount of $0.6 million at December 31, 2021 and June 30, 2021. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Dec. 31, 2021 | |
Fair Value Measurements | |
Fair Value Measurements | Note 8. 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. 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 We estimate the fair value of 7.750% Senior Secured Notes due 2026 (the “Notes”) and the 4.50% Convertible Senior Notes (“Convertible Senior Notes”) using market quotations for debt that have quoted prices in active markets (Level 1). Since our Second Lien Secured Loan Facility (“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). The estimated fair value of the Notes as of December 31, 2021 and June 30, 2021 was approximately $266 million and $347 million, respectively. The estimated fair value of the Second Lien Facility as of December 31, 2021 and June 30, 2021 was approximately $144 million and $189 million, respectively. The estimated fair value of the Convertible Senior Notes was approximately $27 million and $53 million as of December 31, 2021 and June 30, 2021, respectively. The fair value of the Convertible Senior Notes as of December 31, 2021 was lower than the carrying value primarily due to the Company’s stock price at December 31, 2021 as compared to the $15.29 conversion price. |
Intangible Assets
Intangible Assets | 6 Months Ended |
Dec. 31, 2021 | |
Intangible Assets | |
Intangible Assets | Note 9. Intangible Assets Intangible assets, net as of December 31, 2021 and June 30, 2021 consisted of the following: Weighted Gross Carrying Amount Accumulated Amortization Intangible Assets, Net Avg. Life December 31, June 30, December 31, June 30, December 31, June 30, (In thousands) (Yrs.) 2021 2021 2021 2021 2021 2021 Definite-lived: KUPI product rights 15 $ 35,000 $ 83,955 $ — $ (4,198) $ 35,000 $ 79,757 KUPI trade name 2 2,920 2,920 (2,920) (2,920) — — KUPI other intangible assets 15 19,000 19,000 (7,728) (7,095) 11,272 11,905 Silarx product rights 15 20,000 20,000 (5,556) (4,889) 14,444 15,111 Other product rights 10 37,417 35,918 (11,161) (8,856) 26,256 27,062 Total definite-lived $ 114,337 $ 161,793 $ (27,365) $ (27,958) $ 86,972 $ 133,835 Indefinite-lived: KUPI in-process research and development — $ 4,000 $ 4,000 $ — $ — $ 4,000 $ 4,000 Total indefinite-lived 4,000 4,000 — — 4,000 4,000 Total intangible assets, net $ 118,337 $ 165,793 $ (27,365) $ (27,958) $ 90,972 $ 137,835 For the three months ended December 31, 2021 and 2020, the Company recorded amortization expense of $3.8 million and $8.7 million, respectively. For the six months ended December 31, 2021 and 2020, the Company recorded amortization expense of $7.8 million and $17.2 million, respectively. In November 2021, the Company announced the 2021 Restructuring Plan, which includes the phase out of two low-margin prescription products at Kremers Urban Pharmaceuticals, Inc. The Company determined that the decision to discontinue these products along with continued competitive pressures in the market represent a “triggering event” and, therefore, performed an analysis to determine the potential impairment of certain long-lived assets, including its intangible assets. Based on the analysis, the Company recorded an impairment charge of $40.6 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. Future annual amortization expense consisted of the following as of December 31, 2021: (In thousands) Amortization Fiscal Year Ending June 30, Expense 2022 $ 5,127 2023 10,295 2024 10,021 2025 9,827 2026 9,173 Thereafter 42,529 $ 86,972 |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Dec. 31, 2021 | |
Long-Term Debt | |
Long-Term Debt | Note 10. Long-Term Debt Long-term debt, net consisted of the following: December 31, June 30, (In thousands) 2021 2021 7.75% Senior Secured Notes due 2026 $ 350,000 $ 350,000 Unamortized discount and other debt issuance costs (5,106) (5,594) 7.75% Senior Secured Notes due 2026, net 344,894 344,406 Second Lien Secured Loan Facility due 2026 ($190.0M Principal, $5.7M Exit Fee, and $13.7M and $3.6M accrued PIK interest at December 31, 2021 and June 30, 2021 respectively) 209,366 199,342 Unamortized discount and other debt issuance costs (34,663) (36,701) Second Lien Secured Loan Facility due 2026, net 174,703 162,641 4.50% Convertible Senior Notes due 2026 86,250 86,250 Unamortized discount and other debt issuance costs (2,363) (2,614) 4.50% Convertible Senior Notes, net 83,887 83,636 $45 million Amended ABL Credit Facility — — Total debt, net 603,484 590,683 Less short-term borrowings and current portion of long-term debt — — Total long-term debt, net $ 603,484 $ 590,683 The weighted average interest rate for the three months ended December 31, 2021 and 2020 was 8.9% and 7.8%, respectively. The weighted average interest rate for the six months ended December 31, 2021 and 2020 was 8.9% and 7.9%, respectively. Long-term debt amounts due, for the twelve-month periods ending December 31 are as follows: Amounts Payable (In thousands) to Institutions 2022 $ — 2023 — 2024 — 2025 — 2026 645,616 Total $ 645,616 The long-term debt amounts due above include accrued PIK interest on the Second Lien Facility as of December 31, 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 | 6 Months Ended |
Dec. 31, 2021 | |
Legal, Regulatory Matters and Contingencies | |
Legal, Regulatory Matters and Contingencies | Note 11. 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 On May 22, 2019, following an audit conducted by the Company, 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 (“VA”) as a result of certain commercial customer prices that were not properly disclosed to the VA for the period of January 1, 2012 through June 30, 2016. In August 2019, the Company remitted payment to the VA and was indemnified from UCB for the portion of that related to the period prior to the acquisition of Kremers Urban Pharmaceuticals (January 1, 2012 to November 24, 2015) totaling $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. On September 9, 2021, the state Attorneys General amended their bellwether 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. In October 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. In August 2021, the court granted the motion to certify the proposed class, to appoint class representatives, and to appoint class counsel. In August 2021, the Company filed a petition for permission to appeal the court’s class certification order. In September 2021, counsel for the class filed a response in opposition to the Company’s position. In November 2021, the United States Court of Appeals for the Third Circuit granted the Company’s petition for permission to appeal the class certification order. In January 2022, the Third Circuit granted the Company’s motion to stay the case pending a decision on the interlocutory appeal. 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. 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 memorialized the settlement in a series of settlement documents which were signed on October 15, 2021. The terms of the settlement are confidential and include, among other things, a non-exclusive patent license granted by Genus, which allows the Company to continue marketing its approved cocaine hydrochloride product, a payment of $1.5 million by the Company and transfer by the Company of certain ANDAs and an NDA to Genus, and the stipulation that all cases shall be dismissed with prejudice. All cases against the Company have been dismissed with prejudice. 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, which began on January 31, 2022. The Company denies that it tortiously interfered with Sandoz’s contract or that it converted any of Sandoz’s alleged confidential information. The Company cannot reasonably predict the outcome of this suit at this time. Ranitidine Oral Solution, USP On June 1, 2020, a class action complaint was served upon the Company and approximately forty-five (45) other companies asserting claims for personal injury arising from the presence of NDMA in Ranitidine products. The complaint is consolidated in a multidistrict litigation (“MDL”) pending in the United States District Court for the Southern District of Florida. Similar complaints were filed in state court in New Mexico and state court in Maryland and served upon the Company. Subsequently, a number of similar complaints were served on the Company. The Company filed a motion to dismiss the complaint filed in the MDL which was granted with leave to amend on December 31, 2020. The plaintiffs filed a First Amended complaint on February 9, 2021, to which the generic manufacturer defendants, including the Company, filed a renewed motion to dismiss all claims. On July 8, 2021, the Court issued an Order granting the motion and dismissing all claims with prejudice based on federal preemption. The Plaintiffs filed an appeal to the Eleventh Circuit Court of Appeals. Separately, the New Mexico case was conditionally transferred to the MDL, but ultimately remanded back to the state court. The Company, along with other defendants filed a motion to dismiss on preemption ground. The motion was denied on August 17, 2021; however, the Company is currently evaluating options for interlocutory appeal. Since the Company, based upon the information received to date, did not sell Ranitidine in New Mexico, it is pursuing its options for dismissal. It is in the process of negotiating a voluntary dismissal with attorneys for the State and simultaneously moving for dismissal on jurisdiction grounds. Separately, the Company filed a notice to remove and transfer the Maryland case to the MDL which the plaintiff has opposed. On April 1, 2021, the case was remanded back to the state court. Recently, two separate complaints were filed against the Company and others in Philadelphia Court of Common Pleas by parents on behalf of minor children alleging personal injury as a result of using the Company’s Ranitidine products. The Company has filed its preliminary objections to both of the complaints, seeking dismissal on the basis of preemption, legal insufficiency, learned intermediary defense and lack of specificity. The Company has placed its insurance carrier on notice of the claim and the carrier has appointed counsel to defend the Company. 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 | 6 Months Ended |
Dec. 31, 2021 | |
Commitments | |
Commitments | Note 12. Commitments Leases At December 31, 2021 and June 30, 2021, the Company had a ROU lease asset of $10.2 million and $10.6 million, respectively, and an operating lease liability of $12.6 million and $13.1 million, respectively. The current balance of the operating lease liability at December 31, 2021 and June 30, 2021was $2.1 million and $2.0 million, respectively. Components of lease cost are as follows: Three Months Ended Six Months Ended December 31, December 31, (In thousands) 2021 2020 2021 2020 Operating lease cost $ 444 $ 477 $ 905 $ 879 Variable lease cost 16 43 57 82 Short-term lease cost 83 108 152 226 Total $ 543 $ 628 $ 1,114 $ 1,187 Supplemental cash flow information related to our operating leases is as follows: Six Months Ended December 31, (In thousands) 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 1,084 $ 809 Weighted-average remaining lease term and discount rate for our operating leases are as follows: Six Months Ended December 31, 2021 2020 Weighted-average remaining lease term 9 years 8 years Weighted-average discount rate 8.5 % 8.0 % Maturities of lease liabilities by fiscal year for our operating leases are as follows: (In thousands) Amounts Due 2022 $ 1,045 2023 2,064 2024 2,083 2025 2,103 2026 2,124 Thereafter 8,513 Total lease payments 17,932 Less: Imputed interest 5,324 Present value of lease liabilities $ 12,608 Other Commitments 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 50/50 60/40 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 December 31, 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 60/40 . |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 6 Months Ended |
Dec. 31, 2021 | |
Accumulated Other Comprehensive Loss. | |
Accumulated Other Comprehensive Loss | Note 13. Accumulated Other Comprehensive Loss The Company’s Accumulated Other Comprehensive Loss was comprised of the following components as of December 31, 2021 and 2020: December 31, (In thousands) 2021 2020 Foreign Currency Translation Beginning Balance, June 30 $ (548) $ (627) Net income on foreign currency translation (net of tax of $0 and $0) 29 32 Other comprehensive income, net of tax 29 32 Total Accumulated Other Comprehensive Loss $ (519) $ (595) |
Warrants
Warrants | 6 Months Ended |
Dec. 31, 2021 | |
Warrants | |
Warrants | Note 14. Warrants 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. 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 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 |
Loss Per Common Share
Loss Per Common Share | 6 Months Ended |
Dec. 31, 2021 | |
Loss Per Common Share | |
Loss Per Common Share | Note 15. Loss Per Common Share A reconciliation of the Company’s basic and diluted loss per common share was as follows: Three Months Ended December 31, (In thousands, except share and per share data) 2021 2020 Numerator: Net loss $ (81,085) $ (171,948) Interest expense 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 $ (81,085) $ (171,948) Denominator: Basic weighted average common shares outstanding 40,358,127 39,443,441 Effect of potentially dilutive options, restricted stock awards and performance-based shares — — Effect of conversion of the Convertible Notes — — Diluted weighted average common shares outstanding 40,358,127 39,443,441 Loss per common share: Basic $ (2.01) $ (4.36) Diluted $ (2.01) $ (4.36) Six Months Ended December 31, (In thousands, except share and per share data) 2021 2020 Numerator: Net loss $ (103,427) $ (178,447) 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 $ (103,427) $ (178,447) Denominator: Basic weighted average common shares outstanding 40,142,974 39,257,211 Effect of potentially dilutive options, restricted stock awards and performance-based shares — — Effect of conversion of the Convertible Notes — — Effect of participating securities for the Warrants — — Diluted weighted average common shares outstanding 40,142,974 39,257,211 Loss per common share: Basic $ (2.58) $ (4.55) Diluted $ (2.58) $ (4.55) 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 was 8.1 million for each of the three and six months ended December 31, 2021 and 2020. The effect of potentially dilutive shares was excluded from the calculation of diluted loss per share in the three and six months ended December 31, 2021 and 2020 because the effect of including such securities would be anti-dilutive. |
Share-based Compensation
Share-based Compensation | 6 Months Ended |
Dec. 31, 2021 | |
Share-based Compensation | |
Share-based Compensation | Note 16. Share-based Compensation At December 31, 2021, the Company had two share-based employee compensation plans (the 2014 Long-Term Incentive Plan (“LTIP”) and the 2021 LTIP). Together these plans authorized an aggregate total of 8.0 million shares to be issued. As of December 31, 2021, the plans have a total of 1.4 million shares available for future issuances. 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 December 31, 2021, there was $12.0 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 cost for options using the Black-Scholes option pricing model. There were no stock options granted during the six months ended December 31, 2021. 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 six months ended December 31, 2020: Six Months Ended December 31, 2020 Risk-free interest rate 0.2 % Expected volatility 82.5 % Expected dividend yield — % Forfeiture rate — % Expected term 5.0 years Weighted average fair value $ 3.86 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 December 31, 2021 and changes during the six months 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, 2021 1,046 $ 9.51 $ 25 7.2 Exercised (3) $ 3.55 $ 2 Forfeited, expired or repurchased (11) $ 7.62 Outstanding at December 31, 2021 1,032 $ 9.55 $ — 6.8 Vested and expected to vest at December 31, 2021 1,032 $ 9.55 $ — 6.8 Exercisable at December 31, 2021 626 $ 11.67 $ — 5.9 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 the six months ended December 31, 2021 and 2020. A summary of restricted stock awards as of December 31, 2021 and changes during the six months 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, 2021 1,350 $ 6.75 Granted 1,110 4.14 Vested (973) 5.98 $ 3,765 Forfeited (83) 5.72 Non-vested at December 31, 2021 1,404 $ 5.28 Performance-Based Shares The Company grants performance-based awards to certain key executives. The stock-settled awards will cliff vest based on a three-year performance measurement period. Awards issued prior to July 2021 are based on relative Total Shareholder Return (“TSR”) over a three-year period. Half of the performance shares granted in July 2021 will be tied to our relative TSR, consistent with awards granted in prior years, with the other half tied to a variety of strategic portfolio goals. The Company measures share-based compensation cost for TSR awards using a Monte-Carlo simulation model. Compensation cost for awards tied to strategic portfolio goals is measured using the stock price at the grant date and is recognized based on performance at target award levels. However, in accordance with ASC 718, Compensation – Stock Compensation A summary of performance-based share awards as of December 31, 2021 and changes during the current fiscal year, 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, 2021 531 $ 10.29 Granted 617 $ 6.04 Performance adjustment (1) (40) $ 17.69 Vested (58) $ 7.72 Non-vested at December 31, 2021 1,050 $ 7.65 (1) Represents the adjustment based on the performance of the July 2018 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 (“2003 ESPP”). The 2003 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 2003 ESPP. During the six months ended December 31, 2021 and 2020, 107 thousand shares and 56 thousand shares were issued under the 2003 ESPP, respectively. As of December 31, 2021, 1.1 million total cumulative shares have been issued under the 2003 ESPP. In January 2022, the stockholders of the Company approved a new ESPP (“2022 ESPP” and, together with the 2003 ESPP, “ESPPs”). The Company is authorized an additional 1.5 million shares of the Company’s common stock for issuance under the 2022 ESPP, which is qualified under Section 423 of the Internal Revenue Code. 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 following table presents the allocation of share-based compensation costs recognized in the Consolidated Statements of Operations by financial statement line item: Three Months Ended Six Months Ended December 31, December 31, (In thousands) 2021 2020 2021 2020 Selling, general and administrative expenses $ 2,115 $ 1,507 $ 4,812 $ 4,221 Research and development expenses 27 132 122 287 Cost of sales 167 352 393 825 Total $ 2,309 $ 1,991 $ 5,327 $ 5,333 Tax benefit at statutory rate $ 519 $ 448 $ 1,199 $ 1,200 |
Employee Benefit Plan
Employee Benefit Plan | 6 Months Ended |
Dec. 31, 2021 | |
Employee Benefit Plan | |
Employee Benefit Plan | Note 17. Employee Benefit Plan The Company has a 401k defined contribution plan (the “Plan”) covering substantially all employees. Pursuant to the Plan provisions, the Company was 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 were $0.2 million and $0.5 million during the three months ended December 31, 2021 and 2020, respectively. Contributions to the Plan were $0.5 million and $1.1 million during the six months ended December 31, 2021 and 2020, 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 the three and six months ended December 31, 2021 were not material. |
Income Taxes
Income Taxes | 6 Months Ended |
Dec. 31, 2021 | |
Income Taxes | |
Income Taxes | Note 18. Income Taxes The federal, state and local income tax benefit for the three months ended December 31, 2021 was $1.4 million compared to $58.1 million for the three months ended December 31, 2020. The effective tax rates for the three months ended December 30, 2021 and 2020 were 1.7% and 25.2%, respectively. The effective tax rate for the three months ended December 31, 2021 was lower compared to the three months ended December 31, 2020 primarily due to the valuation allowance recorded in Fiscal 2021. The federal, state and local income tax benefit for the six months ended December 31, 2021 was $1.4 million compared to $66.1 million for the six months ended December 31, 2020. The effective tax rates for the six months ended December 31, 2021 and 2020 were 1.4% and 27.0%, respectively. The effective tax rate for the six months ended December 31, 2021 was lower compared to the six months ended December 31, 2020 primarily due to the valuation allowance recorded in Fiscal 2021. 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. As of December 31, 2021 and June 30, 2021, the Company has total unrecognized tax benefits of $4.5 million, of which $4.4 million would impact the Company’s effective tax rate for each period, if recognized. As a result of the positions taken during the period, the Company has not recorded any material interest and penalties for the period ended December 31, 2021 in the statement of operations and no cumulative interest and penalties have been recorded either in the Company’s statement of financial position as of December 31, 2021 and June 30, 2021. 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 2014 and prior generally are no longer subject to review as such years are closed. The Company’s Fiscal 2015 through 2017 and 2020 federal returns are currently under examination by the Internal Revenue Service (“IRS”). The Company has received preliminary assessments from the IRS, which are not considered material to 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 November 2021, the Company was notified that the State of Florida will conduct an audit of the Company’s Fiscal 2019 and 2020 corporate tax returns. The Company cannot currently predict the outcome of the audit. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions | |
Related Party Transactions | Note 19. Related Party Transactions The Company had sales of $0.4 million and $0.8 million during the three months ended December 31, 2021 and 2020, respectively, to a generic distributor, Auburn Pharmaceutical Company (“Auburn”), which is a member of the Premier Buying Group. Sales to Auburn for the six months ended December 31, 2021 and 2020 were $0.6 million and $1.5 million, respectively. Jeffrey Farber, a current board member, is the owner of Auburn. Accounts receivable includes amounts due from Auburn of $0.3 million and $0.4 million at December 31, 2021 and June 30, 2021, respectively. |
Assets Held for Sale
Assets Held for Sale | 6 Months Ended |
Dec. 31, 2021 | |
Assets Held for Sale | |
Assets held for Sale | Note 20. Assets Held for Sale Cody API Real Estate In Fiscal 2020, the Company ceased operations at Cody Labs, leased a portion of the real estate to a third party and intends to sell the remaining real estate. In November 2021, the Company entered into an agreement for the sale of real estate associated with the Cody API business. The Company adjusted the carrying value to fair value based on the signed agreement and estimated proceeds of the sale, which resulted in a $0.5 million impairment charge. As of December 31, 2021, the remaining real estate associated with the Cody API business, totaling $2.2 million, was recorded in the assets held for sale caption in the Consolidated Balance Sheets. The financial results of the Cody API business for the three and six months ended December 31, 2021 and 2020 were not material to the Company’s Consolidated Statements of Operations. Silarx Pharmaceuticals, Inc. Facility in Carmel, New York In November 2021, the Company announced the 2021 Restructuring Plan, which includes consolidating its manufacturing footprint by transferring certain liquid drug production from its Silarx Pharmaceuticals, Inc. (“Silarx”) facility in Carmel, New York to the Company’s main plant in Seymour, Indiana. Following the transition, which is expected to take 12 to 18 months, the Company intends to shut down operations at the Silarx facility. The Company is also currently pursuing the sale of the facility, which is anticipated to occur within one year and may result in accelerated timing for the shutdown of operations at Silarx. As such, the facility and certain equipment identified for sale are considered held for sale as of December 31, 2021. The Company subsequently performed a fair value analysis which resulted in an $8.4 million impairment charge of the Silarx facility and certain equipment at the facility in the second quarter of Fiscal 2022. As of December 31, 2021, the facility and equipment identified for sale, totaling $10.5 million, was recorded in the assets held for sale caption in the Consolidated Balance Sheet. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Dec. 31, 2021 | |
Subsequent Events. | |
Subsequent Events | Note 21. Subsequent Events On January 31, 2022, the Company completed the sale of certain real estate associated with the former Cody API business for total consideration of $2.2 million, after fees and selling costs. The carrying value of the real estate was included within the assets held for sale caption in the Consolidated Balance Sheets as of December 31, 2021. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Dec. 31, 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 (deficit) 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”), 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 December 31, 2021, the Company classified this balance as restricted cash, which is included in other assets. 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 December 31, 2021 and 2020. December 31, 2021 December 31, 2020 Cash and cash equivalents $ 98,635 $ 34,224 Restricted cash, included in other assets 5,000 5,000 Cash, cash equivalents and restricted cash as presented on the Consolidated Statements of Cash Flows $ 103,635 $ 39,224 |
Allowance for doubtful accounts | Allowance for doubtful accounts The Company complies with ASU 2016-13, Measurement of Credit Losses on Financial Instruments |
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. The Company continually evaluates the reasonableness of the useful lives of these assets. Indefinite-lived intangible assets are not amortized, but instead are tested at least annually for impairment. Costs to renew or extend the term of a recognized intangible asset are expensed as incurred. |
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 table below identifies the Company’s net sales by medical indication for the three and six months ended December 31, 2021 and 2020. Three Months Ended Six Months Ended (In thousands) December 31, December 31, Medical Indication 2021 2020 2021 2020 Analgesic $ 3,919 $ 3,572 $ 9,233 $ 6,692 Anti-Psychosis 2,095 13,317 5,810 26,345 Cardiovascular 9,753 16,336 23,853 36,050 Central Nervous System 22,340 24,614 45,125 47,139 Endocrinology 8,297 9,496 16,142 12,729 Gastrointestinal 14,023 18,575 29,263 35,675 Infectious Disease 6,520 23,044 19,035 44,976 Migraine 4,446 6,083 9,131 15,773 Respiratory/Allergy/Cough/Cold 1,868 2,267 4,982 3,693 Urinary 1,164 1,361 2,340 2,819 Other 9,111 8,410 18,287 16,044 Contract manufacturing revenue 2,972 6,845 4,832 12,464 Total net sales $ 86,508 $ 133,920 $ 188,033 $ 260,399 |
Customer, Supplier and Product Concentration | Customer, Supplier and Product Concentration The following table presents the percentage of total net sales, for the three and six months ended December 31, 2021 and 2020, 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 net sales in any of those periods: Three Months Ended Six Months Ended December 31, December 31, 2021 2020 2021 2020 Product 1 5 % 15 % 8 % 15 % The following table presents the percentage of total net sales, for the three and six months ended December 31, 2021 and 2020, for certain of the Company’s customers which accounted for at least 10% of net sales in any of those periods: Three Months Ended Six Months Ended December 31, December 31, 2021 2020 2021 2020 Customer A 26 % 26 % 28 % 26 % Customer B 15 % 21 % 17 % 22 % Customer C 14 % 12 % 14 % 11 % |
Revenue Recognition | Revenue Recognition The Company complies with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers 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 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. Variable lease costs not initially included in the lease liability and ROU asset impairment charges are expensed as incurred. The Company has elected, as an accounting policy, not to apply the recognition requirements in ASC 842 to short-term leases. Short-term leases are leases that have a term of 12 months or less and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. The Company recognizes the lease payments for short-term leases on a straight-line basis over the lease term and the lease cost is not recorded on the Consolidated Balance Sheets. |
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 stock price on the grant date to value restricted stock and performance-based shares with vesting based on the satisfaction of a performance condition. The Company uses the Black-Scholes valuation model to determine the fair value of stock options and the Monte-Carlo simulation model to determine the fair value of performance-based shares with a market condition. 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 $1.8 million and $0.8 million as of December 31, 2021 and June 30, 2021, respectively, and is recorded in the accrued payroll and payroll-related expenses caption in the Consolidated Balance Sheets. |
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. |
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 as if it were vested, includes performance-based shares that would be issued if the performance criteria were met as of the end of the reporting period, 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) reflects all changes in equity during a period except those that resulted from investments by or distributions to the Company’s stockholders. This includes, but is not limited to, foreign currency translation gain (loss). 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) | 6 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Schedule of reconciliation of the cash, cash equivalents and restricted cash amounts | December 31, 2021 December 31, 2020 Cash and cash equivalents $ 98,635 $ 34,224 Restricted cash, included in other assets 5,000 5,000 Cash, cash equivalents and restricted cash as presented on the Consolidated Statements of Cash Flows $ 103,635 $ 39,224 |
Schedule of the Company's net sales by medical indication | Three Months Ended Six Months Ended (In thousands) December 31, December 31, Medical Indication 2021 2020 2021 2020 Analgesic $ 3,919 $ 3,572 $ 9,233 $ 6,692 Anti-Psychosis 2,095 13,317 5,810 26,345 Cardiovascular 9,753 16,336 23,853 36,050 Central Nervous System 22,340 24,614 45,125 47,139 Endocrinology 8,297 9,496 16,142 12,729 Gastrointestinal 14,023 18,575 29,263 35,675 Infectious Disease 6,520 23,044 19,035 44,976 Migraine 4,446 6,083 9,131 15,773 Respiratory/Allergy/Cough/Cold 1,868 2,267 4,982 3,693 Urinary 1,164 1,361 2,340 2,819 Other 9,111 8,410 18,287 16,044 Contract manufacturing revenue 2,972 6,845 4,832 12,464 Total net sales $ 86,508 $ 133,920 $ 188,033 $ 260,399 |
Summary of products which accounted for at least 10% of total net sales | Three Months Ended Six Months Ended December 31, December 31, 2021 2020 2021 2020 Product 1 5 % 15 % 8 % 15 % |
Summary of customers which accounted for at least 10% of total net sales | Three Months Ended Six Months Ended December 31, December 31, 2021 2020 2021 2020 Customer A 26 % 26 % 28 % 26 % Customer B 15 % 21 % 17 % 22 % Customer C 14 % 12 % 14 % 11 % |
Restructuring Charges (Tables)
Restructuring Charges (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Restructuring Charges | |
Schedule of reconciliation of changes in restructuring liabilities | Employee Tech Transfer (In thousands) Separation Costs Costs Total Balance at June 30, 2021 $ — $ — $ — Restructuring charges 864 27 891 Payments (244) (27) (271) Balance at December 31, 2021 $ 620 — $ 620 |
Accounts Receivable, net (Table
Accounts Receivable, net (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Accounts Receivable, net | |
Schedule of accounts receivable | December 31, June 30, (In thousands) 2021 2021 Gross accounts receivable $ 204,746 $ 239,271 Less: Chargebacks reserve (66,833) (69,564) Less: Rebates reserve (18,497) (16,272) Less: Returns reserve (36,770) (38,395) Less: Other deductions (15,298) (15,505) Less: Allowance for doubtful accounts (1,073) (701) Accounts receivable, net $ 66,275 $ 98,834 |
Schedule of major category of revenue-related reserves | Reserve Category (In thousands) Chargebacks Rebates Returns Other Total Balance at June 30, 2021 $ 69,564 $ 35,297 $ 38,395 $ 15,505 $ 158,761 Current period provision 245,900 55,262 13,305 26,761 341,228 Credits issued during the period (248,631) (46,857) (14,930) (26,968) (337,386) Balance at December 31, 2021 $ 66,833 $ 43,702 $ 36,770 $ 15,298 $ 162,603 Reserve Category (In thousands) Chargebacks Rebates Returns Other Total Balance at June 30, 2020 $ 61,877 $ 62,711 $ 40,796 $ 17,557 $ 182,941 Current period provision 379,821 77,657 10,652 36,624 504,754 Credits issued during the period (360,242) (77,536) (12,181) (34,833) (484,792) Balance at December 31, 2020 $ 81,456 $ 62,832 $ 39,267 $ 19,348 $ 202,903 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Inventories | |
Schedule of Inventories | December 31, June 30, (In thousands) 2021 2021 Raw Materials $ 49,042 $ 45,370 Work-in-process 4,927 12,685 Finished Goods 51,810 51,490 Total $ 105,779 $ 109,545 |
Property, Plant and Equipment_2
Property, Plant and Equipment, net (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment, net | |
Schedule of property, plant and equipment, net | December 31, June 30, (In thousands) Useful Lives 2021 2021 Land — $ 533 $ 1,783 Building and improvements 10 - 39 years 93,401 103,082 Machinery and equipment 5 - 10 years 163,352 166,617 Furniture and fixtures 5 - 7 years 3,367 3,399 Less accumulated depreciation (129,529) (123,294) 131,124 151,587 Construction in progress 11,980 15,087 Property, plant and equipment, net $ 143,104 $ 166,674 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Intangible Assets | |
Summary of intangible assets, net | Weighted Gross Carrying Amount Accumulated Amortization Intangible Assets, Net Avg. Life December 31, June 30, December 31, June 30, December 31, June 30, (In thousands) (Yrs.) 2021 2021 2021 2021 2021 2021 Definite-lived: KUPI product rights 15 $ 35,000 $ 83,955 $ — $ (4,198) $ 35,000 $ 79,757 KUPI trade name 2 2,920 2,920 (2,920) (2,920) — — KUPI other intangible assets 15 19,000 19,000 (7,728) (7,095) 11,272 11,905 Silarx product rights 15 20,000 20,000 (5,556) (4,889) 14,444 15,111 Other product rights 10 37,417 35,918 (11,161) (8,856) 26,256 27,062 Total definite-lived $ 114,337 $ 161,793 $ (27,365) $ (27,958) $ 86,972 $ 133,835 Indefinite-lived: KUPI in-process research and development — $ 4,000 $ 4,000 $ — $ — $ 4,000 $ 4,000 Total indefinite-lived 4,000 4,000 — — 4,000 4,000 Total intangible assets, net $ 118,337 $ 165,793 $ (27,365) $ (27,958) $ 90,972 $ 137,835 |
Summary of future annual amortization expense | (In thousands) Amortization Fiscal Year Ending June 30, Expense 2022 $ 5,127 2023 10,295 2024 10,021 2025 9,827 2026 9,173 Thereafter 42,529 $ 86,972 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Long-Term Debt | |
Summary of long-term debt, net | December 31, June 30, (In thousands) 2021 2021 7.75% Senior Secured Notes due 2026 $ 350,000 $ 350,000 Unamortized discount and other debt issuance costs (5,106) (5,594) 7.75% Senior Secured Notes due 2026, net 344,894 344,406 Second Lien Secured Loan Facility due 2026 ($190.0M Principal, $5.7M Exit Fee, and $13.7M and $3.6M accrued PIK interest at December 31, 2021 and June 30, 2021 respectively) 209,366 199,342 Unamortized discount and other debt issuance costs (34,663) (36,701) Second Lien Secured Loan Facility due 2026, net 174,703 162,641 4.50% Convertible Senior Notes due 2026 86,250 86,250 Unamortized discount and other debt issuance costs (2,363) (2,614) 4.50% Convertible Senior Notes, net 83,887 83,636 $45 million Amended ABL Credit Facility — — Total debt, net 603,484 590,683 Less short-term borrowings and current portion of long-term debt — — Total long-term debt, net $ 603,484 $ 590,683 |
Summary of long-term debt amounts due | Amounts Payable (In thousands) to Institutions 2022 $ — 2023 — 2024 — 2025 — 2026 645,616 Total $ 645,616 |
Commitments (Tables)
Commitments (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Commitments | |
Schedule of components of lease cost and supplemental cash flow information | Three Months Ended Six Months Ended December 31, December 31, (In thousands) 2021 2020 2021 2020 Operating lease cost $ 444 $ 477 $ 905 $ 879 Variable lease cost 16 43 57 82 Short-term lease cost 83 108 152 226 Total $ 543 $ 628 $ 1,114 $ 1,187 |
Schedule of supplemental cash flow information and non-cash activity | Six Months Ended December 31, (In thousands) 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 1,084 $ 809 |
Schedule of weighted-average remaining lease term | Six Months Ended December 31, 2021 2020 Weighted-average remaining lease term 9 years 8 years Weighted-average discount rate 8.5 % 8.0 % |
Schedule of maturities of lease liabilities | (In thousands) Amounts Due 2022 $ 1,045 2023 2,064 2024 2,083 2025 2,103 2026 2,124 Thereafter 8,513 Total lease payments 17,932 Less: Imputed interest 5,324 Present value of lease liabilities $ 12,608 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Accumulated Other Comprehensive Loss. | |
Schedule of Accumulated Other Comprehensive Loss | December 31, (In thousands) 2021 2020 Foreign Currency Translation Beginning Balance, June 30 $ (548) $ (627) Net income on foreign currency translation (net of tax of $0 and $0) 29 32 Other comprehensive income, net of tax 29 32 Total Accumulated Other Comprehensive Loss $ (519) $ (595) |
Loss Per Common Share (Tables)
Loss Per Common Share (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Loss Per Common Share | |
Summary of reconciliation of the Company's basic and diluted (loss) per common share | Three Months Ended December 31, (In thousands, except share and per share data) 2021 2020 Numerator: Net loss $ (81,085) $ (171,948) Interest expense 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 $ (81,085) $ (171,948) Denominator: Basic weighted average common shares outstanding 40,358,127 39,443,441 Effect of potentially dilutive options, restricted stock awards and performance-based shares — — Effect of conversion of the Convertible Notes — — Diluted weighted average common shares outstanding 40,358,127 39,443,441 Loss per common share: Basic $ (2.01) $ (4.36) Diluted $ (2.01) $ (4.36) Six Months Ended December 31, (In thousands, except share and per share data) 2021 2020 Numerator: Net loss $ (103,427) $ (178,447) 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 $ (103,427) $ (178,447) Denominator: Basic weighted average common shares outstanding 40,142,974 39,257,211 Effect of potentially dilutive options, restricted stock awards and performance-based shares — — Effect of conversion of the Convertible Notes — — Effect of participating securities for the Warrants — — Diluted weighted average common shares outstanding 40,142,974 39,257,211 Loss per common share: Basic $ (2.58) $ (4.55) Diluted $ (2.58) $ (4.55) |
Share-based Compensation (Table
Share-based Compensation (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Share-based Compensation | |
Schedule of weighted average assumptions | Six Months Ended December 31, 2020 Risk-free interest rate 0.2 % Expected volatility 82.5 % Expected dividend yield — % Forfeiture rate — % Expected term 5.0 years Weighted average fair value $ 3.86 |
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, 2021 1,046 $ 9.51 $ 25 7.2 Exercised (3) $ 3.55 $ 2 Forfeited, expired or repurchased (11) $ 7.62 Outstanding at December 31, 2021 1,032 $ 9.55 $ — 6.8 Vested and expected to vest at December 31, 2021 1,032 $ 9.55 $ — 6.8 Exercisable at December 31, 2021 626 $ 11.67 $ — 5.9 |
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, 2021 1,350 $ 6.75 Granted 1,110 4.14 Vested (973) 5.98 $ 3,765 Forfeited (83) 5.72 Non-vested at December 31, 2021 1,404 $ 5.28 |
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, 2021 531 $ 10.29 Granted 617 $ 6.04 Performance adjustment (1) (40) $ 17.69 Vested (58) $ 7.72 Non-vested at December 31, 2021 1,050 $ 7.65 (1) Represents the adjustment based on the performance of the July 2018 awards, which was below the Threshold goal level at the end of the three-year performance period. |
Schedule of allocation of share-based compensation | Three Months Ended Six Months Ended December 31, December 31, (In thousands) 2021 2020 2021 2020 Selling, general and administrative expenses $ 2,115 $ 1,507 $ 4,812 $ 4,221 Research and development expenses 27 132 122 287 Cost of sales 167 352 393 825 Total $ 2,309 $ 1,991 $ 5,327 $ 5,333 Tax benefit at statutory rate $ 519 $ 448 $ 1,199 $ 1,200 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Cash (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Jun. 30, 2020 |
Summary of Significant Accounting Policies | ||||
Deposit account as restricted cash in other assets | $ 5,000 | |||
Cash and cash equivalents | 98,635 | $ 93,286 | $ 34,224 | |
Restricted cash, included in other assets | 5,000 | 5,000 | ||
Cash, cash equivalents and restricted cash as presented on the Consolidated Statements of Cash Flows | $ 103,635 | $ 98,286 | $ 39,224 | $ 144,329 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Segments (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2021USD ($)segment | Dec. 31, 2020USD ($) | |
Medical Indication Information | ||||
Number of reportable segments | segment | 1 | |||
Total net sales | $ 86,508 | $ 133,920 | $ 188,033 | $ 260,399 |
Analgesic | ||||
Medical Indication Information | ||||
Total net sales | 3,919 | 3,572 | 9,233 | 6,692 |
Anti-Psychosis | ||||
Medical Indication Information | ||||
Total net sales | 2,095 | 13,317 | 5,810 | 26,345 |
Cardiovascular | ||||
Medical Indication Information | ||||
Total net sales | 9,753 | 16,336 | 23,853 | 36,050 |
Central Nervous System | ||||
Medical Indication Information | ||||
Total net sales | 22,340 | 24,614 | 45,125 | 47,139 |
Endocrinology | ||||
Medical Indication Information | ||||
Total net sales | 8,297 | 9,496 | 16,142 | 12,729 |
Gastrointestinal | ||||
Medical Indication Information | ||||
Total net sales | 14,023 | 18,575 | 29,263 | 35,675 |
Infectious Disease | ||||
Medical Indication Information | ||||
Total net sales | 6,520 | 23,044 | 19,035 | 44,976 |
Migraine | ||||
Medical Indication Information | ||||
Total net sales | 4,446 | 6,083 | 9,131 | 15,773 |
Respiratory/Allergy/Cough/Cold | ||||
Medical Indication Information | ||||
Total net sales | 1,868 | 2,267 | 4,982 | 3,693 |
Urinary | ||||
Medical Indication Information | ||||
Total net sales | 1,164 | 1,361 | 2,340 | 2,819 |
Other | ||||
Medical Indication Information | ||||
Total net sales | 9,111 | 8,410 | 18,287 | 16,044 |
Contract manufacturing revenue | ||||
Medical Indication Information | ||||
Total net sales | $ 2,972 | $ 6,845 | $ 4,832 | $ 12,464 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Concentrations (Details) - Net sales | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Products | Product 1 | ||||
Concentration risk | ||||
Concentration risk (as a percent) | 5.00% | 15.00% | 8.00% | 15.00% |
Customers | Customer A | ||||
Concentration risk | ||||
Concentration risk (as a percent) | 26.00% | 26.00% | 28.00% | 26.00% |
Customers | Customer B | ||||
Concentration risk | ||||
Concentration risk (as a percent) | 15.00% | 21.00% | 17.00% | 22.00% |
Customers | Customer C | ||||
Concentration risk | ||||
Concentration risk (as a percent) | 14.00% | 12.00% | 14.00% | 11.00% |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Self Insurance (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Jun. 30, 2021 |
Summary of Significant Accounting Policies | ||
Self-insured risks | $ 1.8 | $ 0.8 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Loss per Share (Details) | Dec. 31, 2021 | Jun. 30, 2021 |
4.50% Convertible Senior Notes due 2026 | ||
Interest rate (as a percent) | 4.50% | 4.50% |
Restructuring Charges (Details)
Restructuring Charges (Details) $ in Thousands | Nov. 01, 2021USD ($)employee | Dec. 31, 2021USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) |
Restructuring Charges | ||||
Restructuring expenses | $ 891 | $ 891 | $ 4,043 | |
2021 Restructuring Plan | ||||
Restructuring Charges | ||||
Restructuring expenses | 891 | |||
Positions eliminated estimate | employee | 165 | |||
Expected cost savings | $ 20,000 | |||
Severance costs | $ 900 | |||
2021 Restructuring Plan | Minimum | ||||
Restructuring Charges | ||||
Aggregate expected restructuring charges | 6,000 | |||
Commitment estimate | 2,000 | |||
2021 Restructuring Plan | Maximum | ||||
Restructuring Charges | ||||
Aggregate expected restructuring charges | 7,000 | |||
Commitment estimate | 3,000 | |||
2021 Restructuring Plan | Employee Separation Costs | ||||
Restructuring Charges | ||||
Restructuring expenses | 864 | |||
Aggregate expected restructuring charges | 5,000 | |||
2021 Restructuring Plan | Tech Transfer Costs | ||||
Restructuring Charges | ||||
Restructuring expenses | $ 27 | |||
2021 Restructuring Plan | Tech Transfer Costs | Minimum | ||||
Restructuring Charges | ||||
Aggregate expected restructuring charges | 1,000 | |||
2021 Restructuring Plan | Tech Transfer Costs | Maximum | ||||
Restructuring Charges | ||||
Aggregate expected restructuring charges | $ 2,000 |
Restructuring Charges - Restruc
Restructuring Charges - Restructuring Program Change (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Reconciliation of the changes in restructuring liabilities | ||||
Restructuring charges | $ 891 | $ 891 | $ 4,043 | |
Asset impairment charges | 49,361 | $ 198,000 | 49,361 | $ 198,000 |
2021 Restructuring Plan | ||||
Reconciliation of the changes in restructuring liabilities | ||||
Restructuring charges | 891 | |||
Payments | (271) | |||
Ending balance for the period | 620 | 620 | ||
Asset impairment charges | 48,900 | |||
2021 Restructuring Plan | Employee Separation Costs | ||||
Reconciliation of the changes in restructuring liabilities | ||||
Restructuring charges | 864 | |||
Payments | (244) | |||
Ending balance for the period | $ 620 | 620 | ||
2021 Restructuring Plan | Tech Transfer Costs | ||||
Reconciliation of the changes in restructuring liabilities | ||||
Restructuring charges | 27 | |||
Payments | $ (27) |
Accounts Receivable, net (Detai
Accounts Receivable, net (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Jun. 30, 2021 |
Accounts receivable, net | ||
Gross accounts receivable | $ 204,746 | $ 239,271 |
Less: Allowance for doubtful accounts | (1,073) | (701) |
Accounts receivable, net | 66,275 | 98,834 |
Chargebacks | ||
Accounts receivable, net | ||
Less: reserve | (66,833) | (69,564) |
Rebates | ||
Accounts receivable, net | ||
Less: reserve | (18,497) | (16,272) |
Returns | ||
Accounts receivable, net | ||
Less: reserve | (36,770) | (38,395) |
Other | ||
Accounts receivable, net | ||
Less: reserve | $ (15,298) | $ (15,505) |
Accounts Receivable, net - Reve
Accounts Receivable, net - Revenue reserve (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Accounts receivable, net | ||||
Balance at the beginning of the period | $ 158,761 | $ 182,941 | ||
Current period provision | 341,228 | 504,754 | ||
Credits issued during the period | (337,386) | (484,792) | ||
Balance at the end of the period | $ 162,603 | $ 202,903 | 162,603 | 202,903 |
Chargebacks | ||||
Accounts receivable, net | ||||
Balance at the beginning of the period | 69,564 | 61,877 | ||
Current period provision | 114,700 | 191,500 | 245,900 | 379,821 |
Credits issued during the period | (248,631) | (360,242) | ||
Balance at the end of the period | 66,833 | 81,456 | 66,833 | 81,456 |
Rebates | ||||
Accounts receivable, net | ||||
Balance at the beginning of the period | 35,297 | 62,711 | ||
Current period provision | 26,500 | 43,400 | 55,262 | 77,657 |
Credits issued during the period | (46,857) | (77,536) | ||
Balance at the end of the period | 43,702 | 62,832 | 43,702 | 62,832 |
Returns | ||||
Accounts receivable, net | ||||
Balance at the beginning of the period | 38,395 | 40,796 | ||
Current period provision | 7,400 | 5,200 | 13,305 | 10,652 |
Credits issued during the period | (14,930) | (12,181) | ||
Balance at the end of the period | 36,770 | 39,267 | 36,770 | 39,267 |
Other | ||||
Accounts receivable, net | ||||
Balance at the beginning of the period | 15,505 | 17,557 | ||
Current period provision | 7,800 | 20,800 | 26,761 | 36,624 |
Credits issued during the period | (26,968) | (34,833) | ||
Balance at the end of the period | $ 15,298 | $ 19,348 | $ 15,298 | $ 19,348 |
Accounts Receivable, net - Re_2
Accounts Receivable, net - Revenue reserve information (Details) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Chargebacks | ||||
Accounts receivable, net | ||||
Percentage of provision for rebates, chargebacks, returns and other adjustments on gross sales | 47.80% | 49.30% | 46.90% | 50.50% |
Rebates | ||||
Accounts receivable, net | ||||
Percentage of provision for rebates, chargebacks, returns and other adjustments on gross sales | 11.10% | 11.20% | 10.50% | 10.30% |
Returns | ||||
Accounts receivable, net | ||||
Percentage of provision for rebates, chargebacks, returns and other adjustments on gross sales | 3.10% | 1.30% | 2.50% | 1.40% |
Other | ||||
Accounts receivable, net | ||||
Percentage of provision for rebates, chargebacks, returns and other adjustments on gross sales | 3.20% | 5.40% | 5.10% | 4.90% |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Jun. 30, 2021 |
Inventories: | ||
Raw Materials | $ 49,042 | $ 45,370 |
Work-in-process | 4,927 | 12,685 |
Finished Goods | 51,810 | 51,490 |
Net inventory | $ 105,779 | $ 109,545 |
Inventories - Additional inform
Inventories - Additional information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Inventories: | ||||
Provision for inventory write-downs | $ 1,200 | $ 20,600 | $ 4,054 | $ 23,214 |
Property, Plant and Equipment_3
Property, Plant and Equipment, net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2021 | |
Property, Plant and Equipment, net | |||||
Less: accumulated depreciation | $ (129,529) | $ (129,529) | $ (123,294) | ||
Property, plant and equipment, net before construction in progress | 131,124 | 131,124 | 151,587 | ||
Property, plant and equipment, net | 143,104 | 143,104 | 166,674 | ||
Depreciation expense | 5,500 | $ 5,700 | 11,100 | $ 11,500 | |
Assets held for sale | 12,733 | 12,733 | 2,678 | ||
Disposal group held for sale | 2021 Restructuring Plan | |||||
Property, Plant and Equipment, net | |||||
Impairment of long-lived assets | 8,400 | ||||
Assets held for sale | 10,500 | 10,500 | |||
Held in foreign countries | |||||
Property, Plant and Equipment, net | |||||
Property, plant and equipment, net | 600 | 600 | 600 | ||
Land | |||||
Property, Plant and Equipment, net | |||||
Property, plant and equipment, gross | 533 | 533 | 1,783 | ||
Building and improvements | |||||
Property, Plant and Equipment, net | |||||
Property, plant and equipment, gross | 93,401 | 93,401 | 103,082 | ||
Machinery and equipment | |||||
Property, Plant and Equipment, net | |||||
Property, plant and equipment, gross | 163,352 | 163,352 | 166,617 | ||
Furniture and fixtures | |||||
Property, Plant and Equipment, net | |||||
Property, plant and equipment, gross | 3,367 | 3,367 | 3,399 | ||
Construction in progress | |||||
Property, Plant and Equipment, net | |||||
Property, plant and equipment, net | $ 11,980 | $ 11,980 | $ 15,087 |
Property, Plant and Equipment_4
Property, Plant and Equipment, net - Useful Lives (Details) | 6 Months Ended |
Dec. 31, 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 | Dec. 31, 2021 | Jun. 30, 2021 |
7.750% Senior Secured Notes due 2026 | ||
Debt Instrument [Line Items] | ||
Interest rate (as a percent) | 7.75% | 7.75% |
Estimated fair value of loan | $ 266 | $ 347 |
4.50% Convertible Senior Notes due 2026 | ||
Debt Instrument [Line Items] | ||
Interest rate (as a percent) | 4.50% | 4.50% |
Estimated fair value of loan | $ 27 | $ 53 |
Initial conversion price | $ 15.29 | |
Second Lien Facility | ||
Debt Instrument [Line Items] | ||
Estimated fair value of loan | $ 144 | $ 189 |
Intangible Assets - Definite-li
Intangible Assets - Definite-lived (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Nov. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2021 | |
Finite-Lived Intangible Assets | ||||||
Gross Carrying Amount | $ 114,337 | $ 114,337 | $ 161,793 | |||
Accumulated Amortization | (27,365) | (27,365) | (27,958) | |||
Intangible Assets, Net | 86,972 | 86,972 | 133,835 | |||
Amortization expense | 3,800 | $ 8,700 | $ 7,800 | $ 17,200 | ||
KUPI | ||||||
Finite-Lived Intangible Assets | ||||||
Definite-lived intangible assets impairment | $ 40,600 | |||||
Product rights | KUPI | ||||||
Finite-Lived Intangible Assets | ||||||
Weighted Avg. Life | 15 years | |||||
Gross Carrying Amount | 35,000 | $ 35,000 | 83,955 | |||
Accumulated Amortization | (4,198) | |||||
Intangible Assets, Net | 35,000 | $ 35,000 | 79,757 | |||
Product rights | Silarx | ||||||
Finite-Lived Intangible Assets | ||||||
Weighted Avg. Life | 15 years | |||||
Gross Carrying Amount | 20,000 | $ 20,000 | 20,000 | |||
Accumulated Amortization | (5,556) | (5,556) | (4,889) | |||
Intangible Assets, Net | 14,444 | $ 14,444 | 15,111 | |||
Trade name | KUPI | ||||||
Finite-Lived Intangible Assets | ||||||
Weighted Avg. Life | 2 years | |||||
Gross Carrying Amount | 2,920 | $ 2,920 | 2,920 | |||
Accumulated Amortization | (2,920) | $ (2,920) | (2,920) | |||
Other intangible assets | KUPI | ||||||
Finite-Lived Intangible Assets | ||||||
Weighted Avg. Life | 15 years | |||||
Gross Carrying Amount | 19,000 | $ 19,000 | 19,000 | |||
Accumulated Amortization | (7,728) | (7,728) | (7,095) | |||
Intangible Assets, Net | 11,272 | $ 11,272 | 11,905 | |||
Other product rights | ||||||
Finite-Lived Intangible Assets | ||||||
Weighted Avg. Life | 10 years | |||||
Gross Carrying Amount | 37,417 | $ 37,417 | 35,918 | |||
Accumulated Amortization | (11,161) | (11,161) | (8,856) | |||
Intangible Assets, Net | $ 26,256 | $ 26,256 | $ 27,062 |
Intangible Assets - Indefinite
Intangible Assets - Indefinite lived (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Jun. 30, 2021 |
Indefinite-lived | ||
Indefinite-lived assets, net | $ 4,000 | $ 4,000 |
Total intangible assets - Gross Carrying Amount | 118,337 | 165,793 |
Accumulated Amortization | (27,365) | (27,958) |
Total intangible assets, Net | 90,972 | 137,835 |
In-process research and development | KUPI | ||
Indefinite-lived | ||
Indefinite-lived assets, net | $ 4,000 | $ 4,000 |
Intangible Assets - Future Amor
Intangible Assets - Future Amortization (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Jun. 30, 2021 |
Future annual amortization expense: | ||
2022 | $ 5,127 | |
2023 | 10,295 | |
2024 | 10,021 | |
2025 | 9,827 | |
2026 | 9,173 | |
Thereafter | 42,529 | |
Intangible Assets, Net | $ 86,972 | $ 133,835 |
Long-Term Debt - Summary (Detai
Long-Term Debt - Summary (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2021 | |
Long-term debt | |||||
Debt, gross | $ 645,616 | $ 645,616 | |||
Total debt, net | 603,484 | 603,484 | $ 590,683 | ||
Long-term debt, net | $ 603,484 | 603,484 | 590,683 | ||
Accrual of payment-in-kind interest on Second Lien Credit Facility | $ 10,024 | ||||
Weighted average interest rate (as a percent) | 8.90% | 7.80% | 8.90% | 7.90% | |
7.750% Senior Secured Notes due 2026 | |||||
Long-term debt | |||||
Debt, gross | $ 350,000 | $ 350,000 | 350,000 | ||
Unamortized discount and other debt issuance costs | (5,106) | (5,106) | (5,594) | ||
Total debt, net | $ 344,894 | $ 344,894 | $ 344,406 | ||
Interest rate (as a percent) | 7.75% | 7.75% | 7.75% | ||
Second Lien Facility | |||||
Long-term debt | |||||
Debt, gross | $ 209,366 | $ 209,366 | $ 199,342 | ||
Unamortized discount and other debt issuance costs | (34,663) | (34,663) | (36,701) | ||
Total debt, net | 174,703 | 174,703 | 162,641 | ||
Principal Amount | 190,000 | 190,000 | |||
Exit fee | 5,700 | 5,700 | |||
Accrual of payment-in-kind interest on Second Lien Credit Facility | 13,700 | 3,600 | |||
4.50% Convertible Senior Notes due 2026 | |||||
Long-term debt | |||||
Debt, gross | 86,250 | 86,250 | 86,250 | ||
Unamortized discount and other debt issuance costs | (2,363) | (2,363) | (2,614) | ||
Total debt, net | $ 83,887 | $ 83,887 | $ 83,636 | ||
Interest rate (as a percent) | 4.50% | 4.50% | 4.50% | ||
ABL Credit Facility | |||||
Long-term debt | |||||
Maximum borrowing capacity | $ 45,000 | $ 45,000 | $ 45,000 |
Long-Term Debt - Maturity (Deta
Long-Term Debt - Maturity (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Long-term Debt, Rolling Maturity | |
2026 | $ 645,616 |
Total | $ 645,616 |
Legal, Regulatory Matters and_2
Legal, Regulatory Matters and Contingencies (Details) $ in Millions | Oct. 15, 2021USD ($) | May 22, 2019USD ($) | Aug. 31, 2019USD ($)product | Nov. 30, 2016item | Dec. 31, 2021Distributorlawsuitproduct | Jun. 30, 2018product | Oct. 31, 2017product |
Genus Life Sciences | |||||||
Legal, Regulatory Matters and Contingencies | |||||||
Litigation settlement payable to other party | $ | $ 1.5 | ||||||
Government Pricing | |||||||
Legal, Regulatory Matters and Contingencies | |||||||
Damages sought, value | $ | $ 9.4 | ||||||
Government Pricing | KUPI | |||||||
Legal, Regulatory Matters and Contingencies | |||||||
Damages sought, value | $ | $ 8.1 | ||||||
Private Antitrust and Consumer Protection Litigation | |||||||
Legal, Regulatory Matters and Contingencies | |||||||
Number of manufacturers and distributors | Distributor | 30 | ||||||
Number of drugs | product | 135 | 18 | 6 | ||||
Private Antitrust and Consumer Protection Litigation | Minimum | |||||||
Legal, Regulatory Matters and Contingencies | |||||||
Number of lawsuits | lawsuit | 100 | ||||||
End Payer Plaintiffs | |||||||
Legal, Regulatory Matters and Contingencies | |||||||
Number of drugs | product | 14 | ||||||
Indirect Reseller Plaintiffs | |||||||
Legal, Regulatory Matters and Contingencies | |||||||
Number of drugs | product | 15 | ||||||
Shareholder Litigation | |||||||
Legal, Regulatory Matters and Contingencies | |||||||
Number of officers | item | 2 |
Commitments - Leases (Details)
Commitments - Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Jun. 30, 2021 |
Commitments | ||
Right-of-use asset | $ 10,227 | $ 10,559 |
Operating lease liability | 12,608 | 13,100 |
Operating lease liability, current | $ 2,054 | $ 2,045 |
Commitments - Lease cost (Detai
Commitments - Lease cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Commitments | ||||
Operating lease cost | $ 444 | $ 477 | $ 905 | $ 879 |
Variable lease cost | 16 | 43 | 57 | 82 |
Short-term lease cost | 83 | 108 | 152 | 226 |
Total lease cost | $ 543 | $ 628 | $ 1,114 | $ 1,187 |
Commitments - Cash flow (Detail
Commitments - Cash flow (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Lease cash flow | ||
Operating cash flows from operating leases | $ 1,084 | $ 809 |
Weighted-average | ||
Weighted-average remaining lease term | 9 years | 8 years |
Weighted-average discount rate | 8.50% | 8.00% |
Commitments - Maturity (Details
Commitments - Maturity (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Jun. 30, 2021 |
Maturities of lease liabilities | ||
2022 | $ 1,045 | |
2023 | 2,064 | |
2024 | 2,083 | |
2025 | 2,103 | |
2026 | 2,124 | |
Thereafter | 8,513 | |
Total lease payments | 17,932 | |
Less: Imputed interest | 5,324 | |
Present value of lease liabilities | $ 12,608 | $ 13,100 |
Commitments - Other (Details)
Commitments - Other (Details) $ in Millions | Feb. 08, 2021USD ($) | Dec. 31, 2021USD ($) | Jun. 30, 2020USD ($) |
HEC Agreement | |||
Commitments | |||
Commitment amount | $ 32 | ||
Development costs | $ 6 | ||
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 | 1.50 | ||
Profit split period | 5 years | ||
Sunshine Agreement | |||
Commitments | |||
Commitment amount | $ 32 | $ 32 | |
Sunshine Agreement | First ten years | |||
Commitments | |||
Profit split ratio | 1 | ||
Profit split period | 10 years | ||
Sunshine Agreement | Next five years | |||
Commitments | |||
Profit split ratio | 1.50 | ||
Profit split period | 5 years |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Accumulated Other Comprehensive Loss. | ||
Beginning Balance | $ (548) | $ (627) |
Net income on foreign currency translation (net of tax of $0 and $0) | 29 | 32 |
Other comprehensive income, net of tax | 29 | 32 |
Total Accumulated Other Comprehensive Loss | (519) | (595) |
Net income (loss) on foreign currency translation, tax | $ 0 | $ 0 |
Warrants (Details)
Warrants (Details) - Second Lien Facility $ / shares in Units, $ in Millions | Apr. 22, 2021USD ($)$ / sharesshares |
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 | $ | $ 24.4 |
Loss Per Common Share (Details)
Loss Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Numerator: | ||||
Net loss | $ (81,085) | $ (171,948) | $ (103,427) | $ (178,447) |
Adjusted "if-converted" net loss | $ (81,085) | $ (171,948) | $ (103,427) | $ (178,447) |
Denominator: | ||||
Basic weighted average common shares outstanding | 40,358,127 | 39,443,441 | 40,142,974 | 39,257,211 |
Diluted weighted average common shares outstanding | 40,358,127 | 39,443,441 | 40,142,974 | 39,257,211 |
Loss per common share: | ||||
Basic (in dollars per share) | $ (2.01) | $ (4.36) | $ (2.58) | $ (4.55) |
Diluted (in dollars per share) | $ (2.01) | $ (4.36) | $ (2.58) | $ (4.55) |
Anti-dilutive shares excluded in the computation of diluted earnings per share | 8,100,000 | 8,100,000 | 8,100,000 | 8,100,000 |
Share-based Compensation - Comp
Share-based Compensation - Compensation Plans (Details) shares in Millions, $ in Millions | 6 Months Ended |
Dec. 31, 2021USD ($)ShareBasedCompensationPlanshares | |
Stock-based Compensation | |
Number of share-based employee compensation plans | ShareBasedCompensationPlan | 2 |
Aggregate number of shares authorized for issuance | 8 |
Shares for future issuances | 1.4 |
Share-based compensation awards maximum contractual term | 10 years |
Total unrecognized compensation cost related to non-vested share-based compensation awards granted under the Plans | $ | $ 12 |
Maximum | |
Stock-based Compensation | |
Share-based compensation awards vesting period | 3 years |
Weighted average period during which the cost is expected to be recognized | 2 years |
Share-based Compensation - Opti
Share-based Compensation - Options Valuation (Details) - Stock options - $ / shares | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Assumptions used to estimate fair values | ||
Risk-free interest rate (as a percent) | 0.20% | |
Expected volatility (as a percent) | 82.50% | |
Expected dividend yield (as a percent) | 0.00% | 0.00% |
Expected term (in years) | 5 years | |
Weighted average fair value (in dollars per share) | $ 3.86 | |
Granted (in shares) | 0 |
Share-based Compensation - Op_2
Share-based Compensation - Options Rollforward (Details) - Stock options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Jun. 30, 2021 | |
Awards | ||
Outstanding at the beginning of the period (in shares) | 1,046 | |
Exercised (in shares) | (3) | |
Forfeited, expired or repurchased (in shares) | (11) | |
Outstanding at the end of the period (in shares) | 1,032 | 1,046 |
Vested and expected to vest, Awards (in shares) | 1,032 | |
Exercisable at the end of the period (in shares) | 626 | |
Weighted-Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 9.51 | |
Exercised (in dollars per share) | 3.55 | |
Forfeited, expired or repurchased (in dollars per share) | 7.62 | |
Outstanding at the end of the period (in dollars per share) | 9.55 | $ 9.51 |
Vested and expected to vest, Weighted-Average Exercise Price (in dollars per share) | 9.55 | |
Exercisable at the end of the period (in dollars per share) | $ 11.67 | |
Aggregate Intrinsic Value | ||
Outstanding at the beginning of the period (in dollars) | $ 25 | |
Exercised (in dollars) | $ 2 | |
Outstanding at the end of the period (in dollars) | $ 25 | |
Weighted Average Remaining Contractual Life | ||
Weighted Average Remaining Contractual Life (yrs.) | 6 years 9 months 18 days | 7 years 2 months 12 days |
Vested and expected to vest | 6 years 9 months 18 days | |
Exercisable at the end of the period | 5 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 | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Stock-based Compensation | ||
Annual forfeiture rate used to calculate compensation expense (as a percent) | 6.50% | 6.50% |
Awards | ||
Non-vested at the beginning of the period (in shares) | 1,350 | |
Granted (in shares) | 1,110 | |
Vested (in shares) | (973) | |
Forfeited (in shares) | (83) | |
Non-vested at the end of the period (in shares) | 1,404 | |
Weighted Average Grant-date Fair Value | ||
Non-vested at the beginning of the period (in dollars per share) | $ 6.75 | |
Granted (in dollars per share) | 4.14 | |
Vested (in dollars per share) | 5.98 | |
Forfeited (in dollars per share) | 5.72 | |
Non-vested at the end of the period (in dollars per share) | $ 5.28 | |
Aggregate Intrinsic Value | ||
Vested | $ 3,765 |
Share-based Compensation - Perf
Share-based Compensation - Performance-Based (Details) - Performance-Based Shares shares in Thousands | 6 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Stock-based Compensation | |
Share-based compensation awards vesting period | 3 years |
Awards | |
Non-vested at the beginning of the period (in shares) | shares | 531 |
Granted (in shares) | shares | 617 |
Vested (in shares) | shares | (58) |
Performance adjustment (in shares) | shares | (40) |
Non-vested at the end of the period (in shares) | shares | 1,050 |
Weighted Average Grant-date Fair Value | |
Non-vested at the beginning of the period (in dollars per share) | $ / shares | $ 10.29 |
Granted (in dollars per share) | $ / shares | 6.04 |
Performance adjustment (in dollars per share) | $ / shares | 17.69 |
Vested (in dollars per share) | $ / shares | 7.72 |
Non-vested at the end of the period (in dollars per share) | $ / shares | $ 7.65 |
Share-based Compensation - Stoc
Share-based Compensation - Stock Purchase Plan (Details) - shares shares in Thousands | 1 Months Ended | 6 Months Ended | ||
Jan. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Apr. 01, 2003 | |
Stock-based Compensation | ||||
Shares authorized for issuance (in shares) | 8,000 | |||
Employee Stock Purchase Plan | ||||
Stock-based Compensation | ||||
Shares authorized for issuance (in shares) | 1,100 | |||
Additional shares for future issuances | 1,500 | |||
Shares issued (in shares) | 107 | 56 | ||
Cumulative shares issued (in shares) | 1,100 | |||
Purchase price of stock based on market (as a percent) | 85.00% | |||
Maximum compensation withheld for stock purchase (as a percent) | 10.00% |
Share-based Compensation - Cost
Share-based Compensation - Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based compensation costs | ||||
Total | $ 2,309 | $ 1,991 | $ 5,327 | $ 5,333 |
Tax benefit at statutory rate | 519 | 448 | 1,199 | 1,200 |
Selling, general and administrative expenses | ||||
Share-based compensation costs | ||||
Total | 2,115 | 1,507 | 4,812 | 4,221 |
Research and development expenses | ||||
Share-based compensation costs | ||||
Total | 27 | 132 | 122 | 287 |
Cost of sales | ||||
Share-based compensation costs | ||||
Total | $ 167 | $ 352 | $ 393 | $ 825 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) $ in Millions | Jan. 01, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 |
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 | $ 0.2 | $ 0.5 | $ 0.5 | $ 1.1 |
Income Taxes - Quarter (Details
Income Taxes - Quarter (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2021 | |
Reconciliation of federal statutory rate to effective rate | |||||
Income tax benefit | $ (1,368) | $ (58,076) | $ (1,426) | $ (66,056) | |
Effective income tax rate (as a percent) | 1.70% | 25.20% | 1.40% | 27.00% | |
Unrecognized tax benefits | $ 4,500 | $ 4,500 | $ 4,500 | ||
Unrecognized tax benefits that would impact rate | 4,400 | 4,400 | 4,400 | ||
Unrecognized tax benefits interest and penalties | $ 0 | $ 0 | $ 0 |
Related Party Transactions (Det
Related Party Transactions (Details) - Auburn - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2021 | |
Related Party Transactions | |||||
Sales to related party | $ 0.4 | $ 0.8 | $ 0.6 | $ 1.5 | |
Accounts receivable related party | $ 0.3 | $ 0.3 | $ 0.4 |
Assets Held for Sale (Details)
Assets Held for Sale (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Nov. 30, 2021 | Dec. 31, 2021 | Jun. 30, 2021 | |
Assets Held for Sale | |||
Assets held for sale | $ 12,733 | $ 2,678 | |
Disposal group held for sale | Cody API Restructuring Plan | |||
Assets Held for Sale | |||
Impairment of long-lived assets | $ 500 | ||
Assets held for sale | 2,200 | ||
Disposal group held for sale | 2021 Restructuring Plan | |||
Assets Held for Sale | |||
Impairment of long-lived assets | 8,400 | ||
Assets held for sale | $ 10,500 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | Jan. 31, 2022USD ($) |
Subsequent Events | Cody API Restructuring Plan | Disposal by sale, not discontinued operations | |
Subsequent Events | |
Total consideration on sale | $ 2.2 |