Amneal Pharmaceuticals, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 was an exceptional year with double-digit revenue and adjusted EBITDA growth, and net leverage reduced below 4 times. All segments saw double-digit growth.
• Launched Crexent for Parkinson's disease, with early traction exceeding expectations; market share at ~1% in 4 months, on track to exit 2024 at >3%; confident of US peak sales $300-$500 million.
• Entered GLP-1 space via collaboration with Medcera, building two peptide manufacturing facilities; global weight loss market projected to exceed $150 billion by 2030.
• Affordable medicine segment had $1.7 billion in revenue in 2024, 15% growth; injectables expanding with over 40 products, first three 505(b)(2) injectables launched in 2024.
• Biosimilars generated $126 million in 2024, first three products; pipeline has five additional biosimilars filed, with launches planned in 2026-2027.
• RevCare segment has long-term contracts and recurring revenue, grew 25% in 2024, expected to continue double-digit growth.

Segment Performance

• Affordable Medicine: Generated $1.7 billion in 2024, with 15% growth. Q4 2024 revenue was $439 million, up 21%. Biosimilars in Q4 2024 generated $39 million, a 49% year-over-year increase. New product launches added $54 million to Q4 revenue.
• Specialty: Grew 14% in 2024. Q4 2024 revenue was $121 million, up 16%. The Parkinson's franchise (Crexent, Rytary, Ongentys) generated $64 million in Q4 2024, including $3 million from Crexent. Goal is to grow specialty to over $500 million by 2027.
• RevCare: Revenue grew 25% in 2024. Q4 2024 revenue was $170 million, up 14%. Expected to continue double-digit growth, reaching over $900 million in revenue by 2027.

Guidance

• 2025 Total Revenue: Expected $3.0-$3.1 billion (7%-11% growth).
• Affordable Medicine: Continued double-digit growth with new launches, biosimilars, and injectables.
• Specialty: ~$400 million revenue in 2025, including ~$50 million Crexent sales and $120-$140 million Rytary sales.
• RevCare: Continued double-digit growth.
• Adjusted Gross Margins: 41%-42% in 2025.
• Adjusted EBITDA: $650-$675 million (4%-8% growth).
• Adjusted EPS: $0.65-$0.70.
• Operating Cash Flow: Excluding legal costs, $280-$310 million in 2025.
• Capital Expenditures: ~$100 million net of reimbursement for Medcera facilities.

Risks

• State-level processes for naloxone contracts are frustrating and slow-moving.
• Potential legal settlement costs could impact cash flow.
• Dependence on successful launch and market uptake of new products like Crexent and biosimilars.

Question and Answer

Q: Elaborate on Crexent's first few months of launch, patient sources, physician integration, and formulary access.

A: Crexent's launch has exceeded expectations, with broad market reach. Formulary access is at ~30% and expected to rise to ~50% by year-end, aiming to surpass Rytary's 70% coverage. Physicians are reporting positive patient responses, and the team is working to expand coverage.

Q: Thoughts on organic investments vs external BD, CapEx growth, and M&A for biosimilars.

A: Organic pipeline is strong; CapEx is manageable with government incentives and incremental investments. M&A is considered for biosimilars but not a major focus, with an emphasis on leveraging existing infrastructure.

Q: Commentary on naloxone contracts, Unithroid, and deleveraging targets.

A: Naloxone contracts are slow-moving at the state level; Unithroid has consistent growth. Target is to reduce net debt to EBITDA to 3.6-3.7 in 2025.

Q: Guidance EBITDA margins, Rytary LOE impact, leverage targets, and lenalidomide launch.

A: EBITDA margin affected by business mix and Rytary loss of exclusivity; continued deleveraging is targeted. Lenalidomide launch is subject to settlement dynamics, with no specific details due to ongoing legal matters.