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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under Item 1A. Risk Factors and under the heading Forward-Looking Statements in this Annual Report on Form 10-K. The following discussion and analysis, as well as other sections in this report, should be read in conjunction with the consolidated financial statements and related notes to consolidated financial statements included elsewhere herein.

For a discussion of our financial condition and results of operations for the year ended December 31, 2019 compared to the year ended December 31, 2018, see “Results of Operations” and “Liquidity and Capital Resources” under Part II.,Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2019 Annual Report on Form 10-K, which discussion is incorporated herein by reference.

Overview

The Company

Amneal Pharmaceuticals, Inc. (the "Company," "we," "us," or "our") is a pharmaceutical company specializing in developing, manufacturing, marketing and distributing high-value generic pharmaceutical products across a broad array of dosage forms and therapeutic areas, as well as branded products. We were formed on October 4, 2017 under the name Atlas Holdings, Inc. for the purpose of facilitating the combination (the "Combination") of Impax Laboratories, Inc. ("Impax") and Amneal Pharmaceuticals LLC ("Amneal"), which closed on May 4, 2018. Refer to Note 1. Nature of Operations and Basis of Presentation for further information related to the Combination. Prior to the consummation of the Combination, Amneal and Impax operated separately as independent companies. The historical financial results of the Company for the periods prior to the May 4, 2018 closing of the Combination are the historical financial results of Amneal, and thus the current period results, and balances, may not be comparable to prior years.

On January 31, 2020, we acquired a 65.1% controlling interest in both AvKARE Inc., a Tennessee corporation now a limited liability company (“AvKARE, LLC”), and Dixon-Shane, LLC d/b/a R&S Northeast LLC, a Kentucky limited liability company (“R&S”). As a result of the AvKARE, LLC and R&S acquisitions (the “Acquisitions”), we now have three reportable segments: Generics, Specialty, and AvKARE.

Generics

Our Generics segment includes approximately 250 product families covering an extensive range of dosage forms and delivery systems, including both immediate and extended release oral solids, powders, liquids, sterile injectables, nasal sprays, inhalation and respiratory products, ophthalmics (which are sterile pharmaceutical preparations administered for ocular conditions), films, transdermal patches and topicals (which are creams or gels designed to administer pharmaceuticals locally through the skin). We focus on developing products with substantial barriers-to-entry resulting from complex drug formulations or manufacturing, or legal or regulatory challenges. Generic products, particularly in the U.S., generally contribute most significantly to revenues and gross margins at the time of their launch, and even more so in periods of market exclusivity, or in periods of limited generic competition. As such, the timing of new product introductions can have a significant impact on the Company’s financial results. The entrance into the market of additional competition generally has a negative impact on the volume and / or pricing of the affected products. Additionally, pricing is often affected by factors outside of the Company’s control.

We focus on developing products with substantial barriers-to-entry as a result of complex drug formulations or manufacturing, legal and/or regulatory challenges. We believe that focusing on these opportunities allows us to offer first-to-file ("FTF"), first-to-market ("FTM") and other "high-value" products, which we define as products with zero to three generic competitors at time of launch. These products tend to be more profitable and often have longer life cycles than other generic pharmaceuticals. As of December 31, 2020, our Generics segment had 111 products either approved but not yet launched or pending FDA approval and another 90 products in various stages of development. Over 60% of our total generic pipeline consists of what we believe to be potential FTF, FTM and high-value products.

Specialty

Specialty is comprised of the Impax specialty business acquired in the Combination and the Gemini Laboratories LLC ("Gemini") business acquired on May 7, 2018. Refer to Note 3. Acquisitions and Divestitures for further information related to the Combination and the Gemini acquisition. Prior to these two transactions, we did not have a Specialty segment.

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Our Specialty segment is engaged in the development, promotion, sale and distribution of proprietary branded pharmaceutical products, with a focus on products addressing central nervous system ("CNS") disorders, including migraine and Parkinson’s disease. Our portfolio of products includes Rytary®, an extended release oral capsule formulation of carbidopa-levodopa for the treatment of Parkinson’s disease, post-encephalitic parkinsonism, and parkinsonism that may follow carbon monoxide intoxication or manganese intoxication. In addition to Rytary®, our promoted Specialty portfolio includes Unithroid® (levothyroxine sodium), for the treatment of hypothyroidism, which is sold under a license and distribution agreement with Jerome Stevens Pharmaceuticals, Inc., Emverm® (mebendazole) 100 mg chewable tablets, for the treatment of pinworm, whipworm, common roundworm, common hookworm and American hookworm in single or mixed infections, and Zomig® (zolmitriptan) products, for the treatment of migraine headaches, which is sold under a license agreement with AstraZeneca U.K. Limited. We believe that we have the research, development and formulation expertise to develop branded products that will deliver significant improvements over existing therapies. Effective during the three months ended September 2019, the operating results for oxymorphone were reclassified from Generics to Specialty, where it is sold as a non-promoted product.

For Specialty products, the majority of the product’s commercial value is usually realized during the period in which the product has market exclusivity. In the U.S. when market exclusivity expires and generic versions of a product are approved and marketed, there can often be very substantial and rapid declines in the branded product’s sales.

AvKARE

AvKARE provides pharmaceuticals, medical and surgical products and services primarily to governmental agencies, primarily focused on serving the Department of Defense and the Department of Veterans Affairs. AvKARE is a wholesale distributor of bottle and unit dose pharmaceuticals under the registered names of AvKARE and AvPAK, as well as medical and surgical products. AvKARE is also a packager and wholesale distributor of pharmaceuticals and vitamins to its retail and institutional customers who are located throughout the United States of America focused primarily on offering 340b-qualified entities products to provide consistency in care and pricing.

The Industry

The pharmaceutical industry is highly competitive and highly regulated. As a result, we face a number of industry-specific factors and challenges, which can significantly impact our results. For a more detailed explanation of our business and its risks, refer to Item 1. Business and Item 1A. Risk Factors in this Form 10-K.

COVID-19 Pandemic

On March 11, 2020, the World Health Organization designated the outbreak of a novel strain of coronavirus (“COVID-19”) as a global pandemic. Governments and businesses around the world have taken unprecedented actions to mitigate the spread of COVID-19, including imposing restrictions on movement and travel such as quarantines and shelter-in-place requirements, and restricting or prohibiting outright some or all commercial and business activity, including the manufacture and distribution of certain goods and the provision of non-essential services. These measures, though currently temporary in nature, may become more severe and continue indefinitely depending on the evolution of the outbreak.

We observed lost sales and some supply interruptions during the year ended December 31, 2020 in our New York, New Jersey and India manufacturing plants. While manufacturing has resumed to levels around pre-COVID-19, we may again experience supply chain constraints at our New York, New Jersey, India or other facilities during subsequent waves of COVID-19 infections. These potential supply chain disruptions may significantly impact our 2021 results of operations and cash flows. As noted in Item 2. Properties, several of our key domestic manufacturing, packaging, and facilities are located in New York and New Jersey, two states with a high number of confirmed cases of COVID-19.

To the extent that the COVID-19 pandemic continues or worsens, national, state, and local governments may impose additional restrictions or extend the restrictions already in place. The worsening of the pandemic and the related safety and business operating restrictions could result in a number of adverse impacts to our business, including, but not limited to, additional disruption to the economy and our customers, additional work restrictions, and supply chains being interrupted or slowed. Also, governments may impose other laws, regulations, or taxes that could adversely impact our business, financial condition, or results of operations. Further, depending on the extent to which our customers are affected, they could delay or reduce purchases of products we provide. The potential effects of the COVID-19 pandemic also could impact us in a number of other ways including, but not limited to, reductions to our profitability, fluctuations in foreign currency markets, the availability of future borrowings, the cost of borrowings, credit risks of our customers and counterparties, and potential impairment of the carrying amount of goodwill or other definite-lived assets.

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We will continue to actively monitor the situation and may take further precautionary and preemptive actions as may be required by national, state, or local authorities or that we determine are in the best interests of our employees, customers, partners, suppliers, and shareholders. Until the ultimate extent and duration of the pandemic is known, we cannot predict the ultimate effects the pandemic may have on our business, in particular with respect to demand for our products, our strategy, and our prospects, the effects on our customers, or the impact on our financial results.

Results of Operations

Consolidated Results

The following table sets forth our summarized, consolidated results of operations for the years ended December 31, 2020 and 2019 (in thousands):

Years Ended December 31,

In-process research and development impairment charges 2,680 46,619

Acquisition, transaction-related and integration expenses 8,988 16,388

Charges related to legal matters, net 5,860 12,442

Intellectual property legal development expenses 10,655 14,238

Gain from reduction of tax receivable agreement liability — 192,884

Net Revenue

Net revenue for the year ended December 31, 2020 increased by 23%, or $366 million, to $2.0 billion compared to $1.6 billion for the year ended December 31, 2019. The increase over the prior year was primarily attributable to $294 million in incremental revenue from our newly acquired AvKARE segment, $214 million from 2019 and 2020 new product launches in our Generics segment and $10 million primarily from volume increases in our Specialty segment, partially offset by erosion in our Generics segment from competition primarily related to Levothyroxine Sodium Tabs and Diclofenac Gel 1% and a $16 million decline from the divestitures of our international businesses, primarily in the U.K. and Germany.

Cost of Goods Sold and Gross Profit

Cost of goods sold, including impairment charges, increased 7%, or $91 million, to $1.4 billion for the year ended December 31, 2020 as compared to $1.3 billion for the year ended December 31, 2019. The increase in cost of goods sold was primarily attributable to $242 million in incremental cost of goods sold from our newly acquired AvKARE segment and cost of goods sold related to new product launches of $74 million. These amounts were partially offset by a $92 million decrease in cost of goods sold impairment charges mainly in our Generics segment, a $36 million decrease in expenses related to the Levothyroxine transition agreement with Lannett Company ("Lannett"), a $19 million decline in inventory obsolescence, a $12 million decline associated with the divestitures of our international businesses primarily in the U.K. and Germany, a $9 million reduction in site closure and integration costs and better plant utilization and operating efficiencies in 2020.

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Accordingly, gross profit for the year ended December 31, 2020 was $628 million or 32% of total revenues as compared to gross profit of $353 million or 22% of total revenues for the year ended December 31, 2019. Our gross profit as a percentage of net revenue increased compared to the prior year primarily as a result of the factors described above.

Selling, General and Administrative

Selling, general and administrative expenses ("SG&A") for the year ended December 31, 2020 were $327 million, as compared to $290 million for the year ended December 31, 2019. The $37 million increase was primarily due to $59 million in incremental expenses related to our newly acquired AvKARE segment, partially offset by cost savings associated with our restructuring and integration programs, as well as efficient cost management efforts.

Research and Development

Research and development expenses for the year ended December 31, 2020 were $180 million, as compared to $188 million for the year ended December 31, 2019. The $8 million decrease was primarily attributable to cost savings in our Generics segment associated with the Company’s restructuring programs and the timing of expenses in 2020 due to delayed spending as a result of COVID-19, partially offset by a $6 million increase in milestone achievements and upfront license payments with our development partners and increased spend within our Specialty segment ongoing projects.

In-Process Research and Development Impairment Charges

We recognized in-process research and development ("IPR&D") impairment charges of $3 million for the year ended December 31, 2020, as compared to $47 million for the year ended December 31, 2019. The charges in 2020 were associated with four products in our Generics segment, three of which experienced significant price erosion, resulting in significantly lower than expected future cash flows, and the other of which was canceled due to the withdrawal of our development partner.

For the year ended December 31, 2019, the impairment charges were primarily associated with seven products in our Generics segment that were acquired as part of the Combination. For one IPR&D product, the impairment charge was the result of increased competition at launch resulting in significantly lower than expected future cash flows. For one IPR&D product, the impairment charge was the result of a strategic decision to no longer pursue approval of the product. For the other five IPR&D products, the impairment charges were the result of significant price erosion for the products resulting in significantly lower than expected future cash flows.

Acquisition, Transaction-Related and Integration Expenses

Acquisition, transaction-related and integration expenses were $9 million for the year ended December 31, 2020, as compared to $16 million for the year ended December 31, 2019. During the year ended December 31, 2020, acquisition, transaction-related and integration expenses were primarily related to professional services fees (e.g., legal, investment banking and consulting) associated with the pending acquisition of a 98% interest in Kashiv Specialty Pharmaceuticals, LLC (see Note 28. Subsequent Events), systems integrations associated with the Combination and integration activities associated with the Acquisitions. In comparison, acquisition, transaction-related and integration expenses for the prior year primarily related to the substantial completion of business integration activities related to the Combination during 2019.

Restructuring and Other Charges

On July 10, 2019, we announced a plan to restructure our operations that is intended to reduce costs and optimize our organizational and manufacturing infrastructure. Pursuant to the restructuring plan as revised, we expect to reduce our headcount by approximately 300 to 350 by December 31, 2021, primarily by ceasing manufacturing at our Hauppauge, NY facility.

We recorded $2 million of restructuring and other charges for the year ended December 31, 2020, which primarily consisted of charges associated with cash severance and other benefits provided pursuant to our severance programs for former employees. For the year ended December 31, 2019, we recorded $34 million in restructuring and other charges, which consisted of $12 million of property plant and equipment and right of use asset impairment charges primarily in connection with the planned closure of the Company’s Hauppauge, NY facility, employee restructuring separation charges of $11 million in connection with our severance programs for employees at our Hauppauge, NY, Hayward, CA and other facilities, and $11 million of other employee severance charges.

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Charges Related to Legal Matters, Net

For the year ended December 31, 2020, we recorded a net charge of $6 million for commercial legal proceedings and claims, primarily related to our Generics segment. For the year ended December 31, 2019, we recorded a net charge of $12 million primarily associated with a settlement agreement with Teva Pharmaceuticals related to our Generics segment. For further details, see Note 21. Commitments and Contingencies.

Intellectual Property Legal Development Expense

Intellectual property legal development expenses include, but are not limited to, costs associated with formulation assessments, patent challenge opinions and strategy, and litigation expenses to defend our intellectual property. For the year ended December 31, 2020, these expenses were $11 million as compared to $14 million for the year ended December 31, 2019. The $3 million decrease was primarily associated with legal proceedings that were completed in the year ended December 31, 2019. For further details, see Note 21. Commitments and Contingencies.

Gain From Reduction of Tax Receivable Agreement Liability

In connection with the Combination, the Company entered into a tax receivable agreement (“TRA”) for which it is generally required to pay the other holders of Amneal Common Units 85% of the applicable tax savings, if any, in U.S. federal and state income tax that it is deemed to realize as a result of certain tax attributes of their Amneal Common Units sold to the Company (or exchanged in a taxable sale) and that are created as a result of (i) the sales of their Amneal Common Units for shares of Class A Common Stock and (ii) tax benefits attributable to payments made under the TRA.

During the year ended December 31, 2019, we recorded a $429 million valuation allowance to reduce our deferred tax assets (“DTAs”) to zero. In conjunction with the valuation allowance of our DTAs, we reversed the accrued TRA liability, which resulted in a $193 million gain to our statement of operations. For a further discussion, see Note 8. Income Taxes.

Other Expense, Net

Other expense, net was $127 million for the year ended December 31, 2020, as compared to $164 million for the year ended December 31, 2019. The decrease of $38 million was primarily attributable to a $22 million decline in interest expense as reductions in interest rates offset increased borrowings and a $21 million favorable foreign currency impact primarily associated with the strengthening of the euro and the Swiss franc relative to the U.S. dollar, partially offset by a $7 million unfavorable impact from divestitures.

(Benefit From) Provision For Income Taxes

The benefit from income taxes for the year ended December 31, 2020 was $104 million primarily resulting from a $110 million carryback of U.S. Federal net operating losses and $4 million of related interest under the CARES Act, of which we collected $110 million of cash during 2020. The CARES Act is an emergency economic stimulus package in response to the COVID-19 pandemic which, among other things, includes provisions relating to income and non-income-based tax laws. These DTAs had a 100% valuation allowance as of December 31, 2019.

The provision for income taxes for the year ended December 31, 2019 was $383 million, primarily resulting from a $425 million valuation allowance recorded on our DTAs. We recorded valuation allowances on our various DTAs on a jurisdictional basis after it was determined that it is more likely than not that our DTAs will not be realized.

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Generics

The following table sets forth results of operations for our Generics segment for the years ended December 31, 2020 and 2019 (in thousands):

Years Ended December 31,

In-process research and development impairment charges 2,680 46,619

Charges related to legal matters, net 5,610 12,442

Intellectual property legal development expenses 10,647 13,193

Other operating (income) expense, net (286) 24,734

Net Revenue

Generics net revenue was $1.3 billion for the year ended December 31, 2020, an increase of $34 million or 3% when compared with the same period in 2019. The year-over-year increase was primarily driven by 2019 and 2020 new product launches of $214 million, which included EluRyng and Sucralfate Oral Suspension, partially offset by a decline of $16 million due to the divestiture of our international businesses primarily in the U.K. and Germany in 2019, a $28 million decline related to the reclassification of Oxymorphone to Specialty mid-2019, and erosion in our existing business primarily from Levothyroxine Sodium Tabs and Diclofenac Gel 1% generic competition. Excluding the effect of the divestitures and reclassification of Oxymorphone, Generics revenues increased 6% year over year.

Cost of Goods Sold and Gross Profit

Generics cost of goods sold, including impairment charges, for the year ended December 31, 2020 was $929 million, a decrease of $175 million or 16% as compared to the year ended December 31, 2019. The year-over-year decrease was primarily associated with an $85 million decline in intangible asset impairment charges. Cost of goods sold was also favorably impacted by a $36 million decline of expenses related to the Levothyroxine transition agreement with Lannett, a $19 million decline in inventory related charges, a $17 million decline from the reclassification of Oxymorphone to our Specialty segment, a $12 million decline associated with the divestitures of our international businesses, primarily in the U.K and Germany, a $9 million decline in site closure expenses, a $10 million decline in amortization expense, and operating efficiencies and better plant utilization, partially offset by $74 million of incremental cost of goods sold from new product launches.

Generics gross profit for the year ended December 31, 2020 was $414 million or 31% as compared to gross profit of $205 million or 16% of total revenue for the year ended December 31, 2019. Generics gross profit as a percentage of sales increased compared to the prior year primarily as a result of the factors described above.

Selling, General, and Administrative

Generics SG&A expenses for the year ended December 31, 2020 were $56 million, as compared to $69 million for the year ended December 31, 2019. The $13 million decrease year-over-year was primarily associated with cost savings initiatives associated with our restructuring and integration programs, efficient expense management and the timing of expenses in 2020 due to delayed spending as a result of COVID-19 as well as a reduction in international expenditures from the divested business.

Research and Development

Generics research and development expenses for the year ended December 31, 2020 were $150 million as compared to $172 million for the year ended December 31, 2019. The $22 million year-over-year decrease was primarily associated with a $16 million reduction in project spend due to a shift in portfolio to Specialty, cost savings associated with our restructuring programs, and delays from COVID-19 and transitioning some third-party costs in-house.

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In-Process Research and Development Impairment Charges

For the year ended December 31, 2020, we recognized IPR&D impairment charges of $3 million, associated with four products, three of which experienced significant price erosion, resulting in significantly lower than expected future cash flows, and the other of which was canceled due to the withdrawal of our development partner.

For the year ended December 31, 2019, we recognized IPR&D impairment charges of $47 million associated with six intangible assets that were partially impaired and one intangible asset that was fully impaired. For one IPR&D product, the impairment charge was the result of increased competition at launch resulting in significantly lower than expected future cash flows. For one IPR&D product, the impairment charge was the result of a strategic decision to no longer pursue approval of the product. For the other five IPR&D products, the impairment charges were the result of significant price erosion for the products resulting in significantly lower than expected future cash flows.

Charges Related to Legal Matters, Net

For the year ended December 31, 2020, we recorded a net charge of $6 million for Generics commercial legal proceedings and claims. For the year ended December 31, 2019, we recorded a net charge of $12 million primarily associated with a Generics settlement agreement with Teva Pharmaceuticals. For further details, see Note 21. Commitments and Contingencies.

Intellectual Property Legal Development Expenses

Generics intellectual property legal development expenses for the year ended December 31, 2020 were $11 million as compared to $13 million for the prior year period. These costs include, but are not limited to, formulation assessments, patent challenge opinions and strategy, and litigation expenses to defend our intellectual property.

Other Operating (Income) Expense, Net

Generics other operating income, net for the year ended December 31, 2020 was less than $1 million, as compared to $25 million of other operating expense, net for the year ended December 31, 2019. The $26 million year-over-year decrease was primarily related to integration expenses associated with the Combination in 2019, during which substantially all of the business integration activities related to that transaction were completed.

Specialty

The following table sets forth results of operations for our Specialty segment for the years ended December 31, 2020 and 2019 (in thousands):

Years Ended December 31,

Cost of goods sold impairment charges — 7,017

Intellectual property legal development expenses 8 1,045

Charges related to legal matters, net 250 —

Other operating expense, net 85 8,737

Net Revenue

Specialty net revenue for the year ended December 31, 2020 was $356 million, an increase of 12% or $38 million compared to the year ended December 31, 2019. The increase from the prior year was primarily due to $28 million in sales related to Oxymorphone which was reclassified from our Generics segment to our Specialty segment mid 2019. Excluding this reclassification, Specialty grew $10 million, or 3%, due to volume growth in Rytary and Unithroid, partially offset by the adverse impact of COVID-19 on Emverm sales and declines in non-promoted products.

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Cost of Goods Sold and Gross Profit

Specialty cost of goods sold, including impairment charges, for the year ended December 31, 2020 was $193 million, an increase of $23 million or 14% compared to the year ended December 31, 2019. The increase from the prior year was primarily due to $17 million of incremental expenses associated with the reclassification of Oxymorphone and $9 million of incremental amortization expense, as well as a volume increase in our existing business, partially offset by a $7 million decline in intangible asset impairment charges.

Specialty gross profit for the year ended December 31, 2020 was $163 million or 46% as compared to gross profit of $148 million or 47% for the year ended December 31, 2019.

Selling, General, and Administrative

Specialty SG&A expense for the year ended December 31, 2020 was $76 million, as compared to $80 million for the year ended December 31, 2019. The $4 million decrease was primarily due to a reduction in in-person expenditures due to COVID-19.

Research and Development

Specialty research and development expenses for the year ended December 31, 2020 were $30 million, as compared to $16 million for the year ended December 31, 2019. The $14 million increase was primarily due to a $9 million in ongoing project costs associated with IPX203 as well as $7 million in milestone payments. IPX203 is our investigational extended-release formulation of Carbidopa-Levodopa in advanced Parkinson's Disease patients.

Other Operating Expense, Net

For the year ended December 31, 2020, we recognized other operating expense, net of less than $1 million in the Specialty segment compared to $9 million for the year ended December 31, 2019. The $9 million decrease was primarily attributable to integration expenses associated with the Combination incurred in 2019, during which substantially all of the business integration activities related to that transaction were completed.

AvKARE

The following table sets forth results of operations for our AvKARE segment for the year ended December 31, 2020 (in thousands):

Selling, general and administrative 58,544

Acquisition, transaction-related and integration expenses 641

Operating loss $ (7,658)

Our AvKARE segment consists of the businesses we acquired in the Acquisitions on January 31, 2020. Prior to the Acquisitions, we did not have an AvKARE segment. Refer to Note 3. Acquisitions and Divestitures. Operating results for the sale of Amneal products by AvKARE are included in Generics.

Liquidity and Capital Resources

Our primary source of liquidity is cash generated from operations, available cash and borrowings under debt financing arrangements, including $495 million of available capacity on our revolving credit facility as of December 31, 2020, as defined in Note 17. Debt. We believe these sources are sufficient to fund our planned operations, meet our interest and contractual obligations and provide sufficient liquidity over the next 12 months. However, our ability to satisfy our working capital requirements and debt obligations will depend upon economic conditions, the impact of the COVID-19 pandemic, and demand for our products, which are factors that may be out of our control.

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Our primary uses of capital resources are to fund operating activities, including research and development expenses associated with new product filings, and pharmaceutical product manufacturing expenses, license payments, and spending on production facility expansions and capital equipment items. As the impact of the COVID-19 pandemic on the economy and our operations evolves, we will continue to assess our liquidity needs. A continued worldwide disruption could materially affect our future access to sources of liquidity, particularly our cash flows from operations, and financial condition. In the event of a sustained market deterioration, we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate actions.

On March 27, 2020, President Trump signed into law the CARES Act, is an emergency economic stimulus package in response to the COVID-19 pandemic which, among other things, includes provisions relating to income and non-income-based tax laws. During 2020, we received $110 million in cash from U.S. federal tax refunds associated with the CARES Act, which includes interest of approximately $4 million. See Note 8. Income Taxes for more information on the effect of the CARES Act on the Company.

We estimate that we will invest approximately $60 million to $70 million during 2021 for capital expenditures to support and grow our existing operations, primarily related to investments in manufacturing equipment, information technology and facilities. In addition, we expect to close on our pending acquisition of 98% of Kashiv Specialty Pharmaceuticals, LLC during the first half of 2021. Under the terms of the acquisition, we will pay an upfront purchase price comprised of: (i) a cash payment of $70 million at the closing, which is subject to certain customary purchase price adjustments and (ii) a cash payment of $30 million at the one-year anniversary of the execution of the purchase agreement. We expect to fund the transaction with cash on hand. See Note 28.Subsequent Events for more information.

We will also make substantial payments for monthly interest and quarterly principal amounts due on our Term Loan and Rondo Term Loan. Related to our Term Loan, the Company was required to calculate the amount of excess cash flows based on its results for the year ended December 31, 2020. As a result, the Company expects to make a payment of $14 million in March 2021 to satisfy the excess cash flow requirements, in addition to our normal principal payments. Accordingly, we expect to make $41 million in principal payments and make interest payment payments totaling $112 million during 2021 related to our Term Loan. Related to our Rondo Term Loan, we expect to make $9 million in principal payments and make interest payments totaling $6 million during 2021. Additionally, we fully repaid the Short-Term Sellers Note during February 2021. See Note 17. Debt for more information.

We are party to a tax receivable agreement that requires us to make cash payments to APHC Holdings LLC (formerly known as Amneal Holdings LLC) ("Holdings") in respect of certain tax benefits that we may realize or may be deemed to realize as a result of sales or exchanges of Amneal common units by Holdings. The timing and amount of any payments under the tax receivable agreement will also vary, depending upon a number of factors including the timing and number of Amneal common units sold or exchanged for our Class A Common Stock, the price of our Class A Common Stock on the date of sale or exchange, the timing and amount of our taxable income, and the tax rate in effect at the time of realization of our taxable income. The tax receivable agreement also requires that we make an accelerated payment to Holdings equal to the present value of all future payments due under the agreement upon certain change of control and similar transactions. Further sales or exchanges occurring subsequent to December 31, 2020 could result in future Amneal tax deductions and obligations to pay 85% of such benefits to the holders of Amneal common units. These obligations could be incremental to and substantially larger than the approximate $206 million contingent liability as of December 31, 2020. As a result of the foregoing, our obligations under the tax receivable agreement could have a substantial negative impact on our liquidity. See Item 1A. Risk Factors and Note 8. Income Taxes for more information.

In addition, pursuant to the limited liability operating agreement of Amneal, in connection with any tax period, Amneal will be required to make distributions to its members, on a pro rata basis in proportion to the number of Amneal Common Units held by each member, of cash until each member (other than the Company) has received an amount at least equal to its assumed tax liability and the Company has received an amount sufficient to enable it to timely satisfy all of its U.S. federal, state and local and non-U.S. tax liabilities, and meet its obligations pursuant to the tax receivable agreement. For the years ended December 31, 2020, 2019, and 2018, Amneal made an aggregate of $3 million, $13 million, and $36 million, respectively, in tax distributions to Holdings. There was no amount due to Holdings as of December 31, 2020.

At December 31, 2020, our cash and cash equivalents consist of cash on deposit and highly liquid investments. A portion of our cash flows are derived outside the United States. As a result, we are subject to market risk associated with changes in foreign exchange rates. We maintain cash balances at both U.S. based and foreign country based commercial banks. At various times during the year, our cash balances held in the United States may exceed amounts that are insured by the Federal Deposit Insurance Corporation ("FDIC"). We make our investments in accordance with our investment policy. The primary objectives of our investment policy are liquidity and safety of principal.

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Cash Flows

For a discussion comparing of our cash flows for the fiscal years 2019 to 2018, see Cash Flows under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2019 Annual Report on Form 10-K.

The following table sets forth our summarized, consolidated cash flows for the years ended December 31, 2020 and 2019 (in thousands):

Years Ended December 31,

Cash provided by (used in):

Effect of exchange rate changes on cash 1,037 (2,249)

Cash Flows from Operating Activities

Net cash provided by operating activities was $379 million for the year ended December 31, 2020 compared to $2 million for the year ended December 31, 2019. The year over year improvement was primarily due to $110 million of cash received from a U.S. Federal net operating loss carryback related to the CARES Act, improved operating performance and sales collections, and a decrease in payments of employee separation benefits and interest, which were partially offset by an unfavorable impact from inventory.

Cash Flows from Investing Activities

Net cash used in investing activities was $318 million for the year ended December 31, 2020 compared to $20 million for the year ended December 31, 2019. The change was primarily related to cash paid for the Acquisitions, a decrease in proceeds from the surrender of corporate owned life insurance, and a decrease related to proceeds from the sale of our international businesses in the U.K. and Germany in 2019, partially offset by a decrease in the acquisition of intangible assets and a decrease in purchases of property, plant and equipment.

Cash Flows from Financing Activities

Net cash provided by financing activities was $132 million for the year ended December 31, 2020 compared to net cash used in financing activities of $46 million for the year ended December 31, 2019. The change was primarily attributable to the net proceeds from a $180 million term loan associated with the Acquisitions and a decrease in tax distributions to non-controlling interests, partially offset by an increase in payments of principal on debt and capital leases.

Commitments and Contractual Obligations

Our contractual obligations as of December 31, 2020 were as follows (in thousands):

Payments Due by Period

Contractual Obligations Total LessThan 1Year 1-3Years 3-5Years MoreThan 5Years

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(1)A description of our Term Loan, and related debt service and interest requirements is contained in Note 17. Debt. Interest on our Term Loan was calculated based on applicable rates at December 31, 2020, including any impact from our interest rate swap.

(2)Amounts represent future minimum rental payments under non-cancelable leases for certain facilities. A discussion of our operating lease obligations is contained in Note 12. Leases.

(3)Amounts represent future minimum rental payments under non-cancelable financing lease obligation for a production facility in New York. A discussion of our financing lease obligations is contained in Note 12. Leases.

(4)Rondo Term Loan relates to the Acquisitions. Interest on the Rondo Term Loan was calculated based on the applicable rate at December 31, 2020. A discussion of the Rondo Term Loan, and related debt service and interest requirements is contained in Note 17. Debt.

The foregoing table does not include milestone payments potentially payable by the Company under its collaboration agreements and licenses. Such milestone payments are dependent upon the occurrence of specific and contingent events, and not the passage of time. A discussion of our significant contingent milestones is contained in Note 5. Alliance and Collaboration and Note 24. Related Party Transactions. Additionally, the foregoing table does not include $45 million of aggregate principal and the related interest due on the long-term promissory notes and the short-term promissory note issued in connection with the Acquisition. The short-term promissory note of $1 million was fully repaid in February 2021. Refer to the section Acquisition Financing – Notes Payable-Related Party in Note 17. Debt for a discussion of this indebtedness.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of December 31, 2020.

Critical Accounting Policies

Our significant accounting policies are described in Note 2. Summary of Significant Accounting Policies.

Included within these policies are certain policies which contain critical accounting estimates and, therefore, have been deemed to be “critical accounting policies.” Critical accounting estimates are those which require management to make assumptions about matters that were uncertain at the time the estimate was made and for which the use of different estimates, which reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur from period to period could have a material impact on our financial condition or results of operations. We have identified the following to be our critical accounting policies: sales-related deductions, impairment of goodwill and intangible assets, income taxes and contingencies.

Sales-Related Deductions

Our gross product revenue is subject to a variety of deductions, which are estimated and recorded in the same period that the revenue is recognized, and primarily represent chargebacks, rebates, group purchasing organization fees, prompt payment (cash) discounts, consideration payable to the customer, billbacks, Medicaid and other government pricing programs, price protection and shelf stock adjustments, and sales returns. Those deductions represent estimates of rebates and discounts related to gross sales for the reporting period and, as such, knowledge and judgment of market conditions and practice are required when estimating the impact of these revenue deductions on gross sales for a reporting period.

Historically, our changes of estimates reflecting actual results or updated expectations have not been material to our overall business. Product-specific rebates, however, may have a significant impact on year-over-year individual product growth trends. If any of our ratios, factors, assessments, experiences or judgments are not indicative or accurate predictors of our future experience, our results could be materially affected. The sensitivity of our estimates can vary by program, type of customer and geographic location. However, estimates associated with governmental allowances, Medicaid and other performance-based contract rebates are most at risk for material adjustment because of the extensive time delay between the recording of the accrual and its ultimate settlement, an interval that can generally range up to one year. Because of this time lag, in any given quarter, our adjustments to actual can incorporate revisions of several prior quarters.

Business Combinations

We account for acquired businesses using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values. The consolidated financial statements and results of operations reflect an acquired business after the completion of the acquisition. The fair value of the consideration

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paid is assigned to the underlying net assets of the acquired business based on their respective fair values as determined using a market participant concept. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill.

Intangible assets are amortized over the estimated useful life of the asset. Significant judgments are used in determining the estimated fair values assigned to the assets acquired and liabilities assumed and in determining estimates of useful lives of long-lived assets. Fair value determinations and useful life estimates are based on, among other factors, estimates of expected future net cash flows, estimates of appropriate discount rates used to present value expected future net cash flow streams, the assessment of each asset’s life cycle, competitive trends impacting the asset and each cash flow stream, as well as other factors. These judgments can materially impact the estimates used to allocate acquisition date fair values to assets acquired and liabilities assumed and the future useful lives. For these and other reasons, actual results may vary significantly from estimated results.

Impairment of Goodwill and Intangible Assets

Goodwill

Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value based test. We test goodwill for possible impairment annually during the fourth quarter, or whenever events or circumstances indicate that the carrying amount may not be recoverable.

In order to test goodwill for impairment, an entity is permitted to first assess qualitative factors to determine whether a quantitative assessment of goodwill is necessary. The qualitative factors considered by the Company may include, but are not limited to, general economic conditions, the Company’s outlook, market performance of the Company’s industry and recent and forecasted financial performance. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that a reporting unit’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. If a quantitative assessment is required, the Company determines the fair value of its reporting unit using a combination of the income and market approaches. If the net book value of the reporting unit exceeds its fair value, the Company recognizes a goodwill impairment charge for the reporting unit equal to the lesser of (i) the total goodwill allocated to that reporting unit and (ii) the amount by which that reporting unit’s carrying amount exceeds its fair value.

Goodwill is allocated and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. As a result of the Acquisitions, we added a third reportable segment, AvKARE, to our existing reportable segments, Generics and Specialty. Our reportable segments are the same as the respective operating segments and reporting units. As of December 31, 2020, $361 million, $92 million, and $70 million of goodwill was allocated to the Specialty, Generics, and AvKARE segments, respectively. During the fourth quarter of 2020, we tested each of the reporting units for impairment using a quantitative assessment. The determination of fair value in the quantitative assessment required us to make significant estimates and assumptions. These estimates and assumptions primarily included, but were not limited to: the selection of appropriate peer group companies, the discount rate, terminal growth rates, and forecasts of revenue, operating income, depreciation and amortization, restructuring charges and capital expenditures. For more information see Note 15. Goodwill and Intangible Assets. There was no impairment of goodwill in any reporting unit for the year ended December 31, 2020.

Significant judgment is employed in determining the assumptions utilized in our quantitative assessment. Accordingly, any changes in assumptions described above could have a material impact on our consolidated results of operations. Additionally, for each of our reporting units, there are a number of future events and factors that may impact future results and the outcome of subsequent goodwill impairment testing. For a list of these factors, see Item 1A. Risk Factors.

Intangible Assets

We review our long-lived assets, including intangible assets with finite lives, for recoverability whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. We evaluate assets for potential impairment by comparing estimated future undiscounted net cash flows to the carrying amount of the asset. If the carrying amount of the assets exceeds the estimated future undiscounted cash flows, impairment is measured based on the difference between the carrying amount of the assets and fair value which is generally an expected present value cash flow technique. Our policy in determining whether an impairment indicator exists comprises measurable operating performance criteria as well as other qualitative measures. Events giving rise to impairment are an inherent risk in the pharmaceutical industry and cannot be predicted. Factors that we consider in deciding when to perform an impairment review include significant under-performance of

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a product in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in our use of the assets. If our assumptions are not correct, there could be an impairment loss in subsequent periods or, in the case of a change in the estimated useful life of the asset, a change in amortization expense.

Intangible assets with indefinite lives, including in-process research and development (“IPR&D”), are tested for impairment if impairment indicators arise and, at a minimum, annually. However, an entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that an indefinite-lived intangible asset’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. The indefinite-lived intangible asset impairment test consists of a one-step analysis that compares the fair value of the intangible asset with its carrying amount. If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. We consider many factors in evaluating whether the value of its intangible assets with indefinite lives may not be recoverable, including, but not limited to the discount rate, terminal growth rates, general economic conditions, our outlook and market performance of our industry and recent and forecasted financial performance.

For the year ended December 31, 2020, the Company recognized a total of $37 million of intangible asset impairment charges, of which $34 million was recognized in cost of goods sold and $3 million was recognized in in-process research and development. The impairment charges for the year ended December 31, 2020 are primarily related to ten products, six of which are currently marketed products and four of which are IPR&D products, all acquired as part of the Combination. For more information regarding these impairment charges, see Note 15. Goodwill and Intangible Assets.

Income Taxes

We record valuation allowances against our DTAs when it is more likely than not that all or a portion of a DTA will not be realized. We routinely evaluate the realizability of our DTAs by assessing the likelihood that our DTAs will be recovered based on all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, estimates of future taxable income, tax planning strategies and results of operations. Estimating future taxable income is inherently uncertain and requires judgment. In projecting future taxable income, we consider our historical results and incorporate certain assumptions, including projected new product launches, revenue growth, and operating margins, among others.

A valuation allowance, if needed, reduces DTAs to the amount expected to be realized. When determining the amount of net DTAs that are more likely than not to be realized, we assess all available positive and negative evidence. This evidence includes, but is not limited to, prior earnings history, projected future earnings, carryback and carry-forward periods and the feasibility of ongoing tax strategies that could potentially enhance the likelihood of the realization of a DTA. The weight given to the positive and negative evidence is commensurate with the extent the evidence may be objectively verified. As such, it is generally difficult for positive evidence regarding projected future taxable income to outweigh objective negative evidence of recent financial reporting losses.

As of December 31, 2020, based upon all available objective and verifiable evidence both positive and negative, including historical levels of pre-tax income (loss) both on a consolidated basis and tax reporting entity basis, legislative developments, expectations and risks associated with estimates of future pre-tax income, and prudent and feasible tax planning strategies, we determined that it is more likely than not that we will not realize the benefits of our gross DTAs. Accordingly, as of December 31, 2020, this valuation allowance was $423 million and reduced the carrying value of these gross DTAs, net of the impact of the reversal of taxable temporary differences, to zero.

As described in Note 8. Income Taxes, we are a party to a TRA under which we are generally required to pay to the other holders of Amneal Common Units 85% of the applicable tax savings, if any, in U.S. federal and state income tax that we are deemed to realize as a result of certain tax attributes of their Amneal Common Units sold to us (or exchanged in a taxable sale) and that are created as a result of (i) the sales of their Amneal Common Units for shares of Class A common stock and (ii) tax benefits attributable to payments made under the TRA.

The timing and amount of any payments under the TRA may vary, depending upon a number of factors including the timing and number of Amneal common units sold or exchanged for our Class A Common Stock, the price of our Class A Common Stock on the date of sale or exchange, the timing and amount of our taxable income, and the tax rate in effect at the time of realization of the our taxable income (the TRA liability is determined based on a percentage of the corporate tax savings from the use of the TRA's attributes).Further sales or exchanges occurring subsequent to December 31, 2020 could result in future Amneal tax deductions and obligations to pay 85% of such benefits to the holders of Amneal common units.

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The projection of future taxable income involves significant judgment. Actual taxable income may differ materially from our estimates, which could significantly impact our liabilities under the TRA. As noted above, we have determined it is more-likely-than-not we will be unable to utilize all of our DTAs subject to the TRA; therefore, as of December 31, 2020, we had not recognized the contingent liability under the TRA related to the tax savings we may realize from common units sold or exchanged. If utilization of these DTAs becomes more-likely-than-not in the future, at such time, these TRA liabilities (which amount to approximately $206 million as of December 31, 2020, as a result of basis adjustments under Internal Revenue Code Section 754) will be recorded through charges to our statements of operations.However, if the tax attributes are not utilized in future years, it is reasonably possible no amounts would be paid under the TRA.Should we determine that a DTA with a valuation allowance is realizable in a subsequent period, the related valuation allowance will be released and if a resulting TRA payment is determined to be probable, a corresponding TRA liability will be recorded.

Contingencies

We are involved in various litigation, government investigations and other legal proceedings that arise from time to time in the ordinary course of business. Our legal proceedings are complex, constantly evolving and subject to uncertainty. As such, we cannot predict the outcome or impact of our legal proceedings.

While we believe we have valid claims and/or defenses for the matters described in Note 21. Commitments and Contingencies, the nature of litigation is unpredictable and the outcome of the following proceedings could include damages, fines, penalties and injunctive or administrative remedies. For any proceedings where losses are probable and reasonably capable of estimation, we accrue for a potential loss. When we have a probable loss for which a reasonable estimate of the liability is a range of losses and no amount within that range is a better estimate than any other amount, we record the loss at the low end of the range. While these accruals have been deemed reasonable by our management, the assessment process relies heavily on estimates and assumptions that may ultimately prove inaccurate or incomplete. Additionally, unforeseen circumstances or events may lead us to subsequently change our estimates and assumptions. The process of analyzing, assessing and establishing reserve estimates relative to legal proceedings involves a high degree of judgment.

Although the outcome and costs of the asserted and unasserted claims is difficult to predict, based on the information presently known to management, we do not currently expect the ultimate liability, if any, for such matters to have a material adverse effect on our business, financial condition, results of operations, or cash flows.

For further details, see Note 21. Commitments and Contingencies.

Recently Issued Accounting Standards

Recently issued accounting standards are discussed in Note 2. Summary of Significant Accounting Policies.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Our cash is held on deposit in demand accounts at large financial institutions in amounts in excess of the FDIC insurance coverage limit of $250,000 per depositor, per FDIC-insured bank, per ownership category. Our cash equivalents are comprised of highly rated money market funds. We had no short-term investments as of December 31, 2020 or December 31, 2019.

Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash equivalents and accounts receivable. We limit our credit risk associated with cash equivalents by placing investments with high credit quality securities, including U.S. government securities, treasury bills, corporate debt, short-term commercial paper and highly rated money market funds. As discussed in Note 17. Debt, we are party to a term loan with a principal amount of $2.7 billion and an asset backed revolving credit facility under which loans and letters of credit up to a principal amount of $495 million are available as of December 31, 2020 (principal amount of up to $25 million is available for letters of credit). The proceeds for any loans made under our asset backed revolving credit facility are available for capital expenditures, acquisitions, working capital needs and other general corporate purposes.

We limit our credit risk with respect to accounts receivable by performing credit evaluations when deemed necessary. We do not require collateral to secure amounts owed to us by our customers.

By the nature of our global operations, we are exposed to cash flow and earnings fluctuations resulting from foreign exchange rate variation. These exposures are transactional and translational in nature. Since we manufacture and sell our products throughout the world, we believe our foreign currency risk is diversified. Principal drivers of this diversified foreign exchange exposure include the European Euro, Indian Rupee, and the Swiss Franc. Our transactional exposure arises from the purchase

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and sale of goods and services in currencies other than the functional currency of our operational units. We also have exposure related to the translation of financial statements of our foreign divisions into U.S. dollars, our functional currency. The financial statements of our operations outside the U.S. are measured using the local currency as the functional currency. Adjustments to translate the assets and liabilities of these foreign operations into U.S. dollars are accumulated as a component of other comprehensive income/(loss). Transaction gains and losses are included in the determination of our net income in our statements of operations. Such foreign currency transaction gains and losses include fluctuations related to long term intercompany loans that are payable in the foreseeable future.

Inflation has not had a significant impact on our revenues or operations to date and we do not believe that inflation will have a significant impact on our revenues or operations for 2021.

In the normal course of operations, we are exposed to market risks relating to our long-term debt arising from adverse changes in interest rates. Market risk is defined for these purposes as the potential change in the fair value of a financial asset or liability resulting from an adverse movement in interest rates. Changes in interest rates impact fixed and variable rate debt differently. For fixed rate debt, a change in interest rates will impact only the fair value of the debt, whereas for variable rate debt, a change in the interest rates will impact interest expense and cash flows.

At December 31, 2020 and 2019, we had $2.8 billion and $2.7 billion, respectively, of variable rate debt (no fixed rate debt). Our debt as of December 31, 2020 comprised of our Term Loan, with principal outstanding of $2.6 billion, and our Rondo Term Loan, with principal outstanding of $173 million. We estimated the fair values of the Term Loan and Rondo Term loan using quoted prices in active markets and yields for the same or similar types of borrowings, taking into account the underlying terms of the debt instruments. At December 31, 2020 and 2019, we estimated the fair values of the Term Loan to be $2.6 billion and $2.4 billion, respectively, and the estimated fair value of the Rondo Term loan to be $172 million at December 31, 2020. A hypothetical 1% increase in market interest rates would potentially reduce the estimated fair value of our Term Loan by approximately $90 million and the Rondo Term Loan by approximately $5 million as of December 31, 2020.

In October 2019, we entered into an interest rate lock agreement for a total notional amount of $1.3 billion whereby we exchanged floating for fixed rate interest payments for our LIBOR based borrowing under our Term Loan. At inception and at year end, we assessed hedge effectiveness and determined it to continue to be highly effective. We also reviewed the credit standing of the counterparty at year end and deemed the counterparties to have the ability to honor their obligations. The fair value of the variable-to-fixed interest rate swap was $54 million, in a liability position, as of December 31, 2020. We estimate that a hypothetical 100 basis point increase in the forward one-month LIBOR curve would potentially increase the fair value of our derivative liability by $18 million as of December 31, 2020.

Increases or decreases in interest rates would affect our annual interest expense. Based on the principal amount of the Term Loan debt outstanding at December 31, 2020, a hypothetical 1% increase or decrease in interest rates would have affected our annual interest expense by approximately $26 million (before the impact of the interest rate lock agreement discussed above). Based on the principal amount of the Rondo Term Loan debt outstanding at December 31, 2020, a hypothetical 1% increase or decrease in interest rates would have affected our annual interest expense by approximately $2 million.

Item 8. Financial Statements and Supplementary Data

The consolidated financial statements listed in Item 15. Exhibits, Financial Statement Schedules are filed as part of this Annual Report on Form 10-K and incorporated by reference herein.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to ensure information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Co-Chief Executive Officers and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

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Our management, with the participation of our Co-Chief Executive Officers and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Consistent with guidance issued by the Securities and Exchange Commission that an assessment of internal controls over financial reporting of a recently acquired business may be omitted from management’s evaluation of disclosure controls and procedures, management is excluding an assessment of such internal controls of AvKARE, LLC and R&S Northeast LLC, which was acquired on January 31, 2020, from its evaluation of the effectiveness of our disclosure controls and procedures. Based upon that evaluation, our Co-Chief Executive Officers and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2020.

Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Consistent with guidance issued by the Securities and Exchange Commission that an assessment of a recently acquired business may be omitted from management's report on internal control over financial reporting in the year of acquisition, management excluded an assessment of the effectiveness of the Company’s internal control over financial reporting related to AvKARE, LLC and R&S Northeast LLC as described above. AvKARE, LLC and R&S Northeast LLC represented, excluding intangible assets and goodwill arising from the acquisition (which were included in the scope of management's assessment), approximately 9% of our consolidated total assets and 15% of our consolidated net revenue as of and for the year ended December 31, 2020. Based on the assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2020. Ernst & Young has independently assessed the effectiveness of our internal control over financial reporting and its report is included below.

Changes in Internal Control over Financial Reporting

As previously disclosed, as of June 30 and September 30, 2020, our Co-Chief Executive Officers and Chief Financial Officer concluded that, due to a material weakness, our disclosure controls and procedures were not effective as of those dates. The material weakness in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act), which we initially identified during the three months ended June 30, 2020, resulted from ineffective controls over cash disbursements. Specifically, we did not have adequate controls to prevent improper changes to banking information in our vendor master file, which allowed cash disbursements to be redirected from a vendor bank account to an unrelated bank account.

In light of the material weakness, we performed additional analysis, including validating changes to vendor bank account information made during 2020, to ensure that our financial statements covered by this Annual Report on Form 10-K are prepared in accordance with generally accepted accounting principles in the United States of America. This control deficiency did not result in any financial loss or any material impact to the financial statements for the periods covered by this Annual Report on Form 10-K or for any prior periods.

To remediate the material weakness described above, we enhanced the design and execution of our existing controls and procedures to prevent improper changes to the banking information in our vendor master file. During the three months ended December 31, 2020, we completed the control enhancements and testing necessary to conclude that the material weakness was remediated.

Except as noted above, during the year ended December 31, 2020, there were no changes in our internal control over financial reporting which materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitation on Effective Controls

Management, including our Co-Chief Executive Officers and Chief Financial Officer, does not expect that our disclosure controls and procedures or its system of internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed or operated, can provide only reasonable, but not absolute, assurance that the objectives of the system of internal control are met. The design of our control system reflects the fact that there are resource constraints, and that the benefits of such control system must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control failures and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the intentional acts of individuals, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part on certain assumptions about the likelihood

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of future events, and there can be no assurance that the design of any particular control will always succeed in achieving its objective under all potential future conditions.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Amneal Pharmaceuticals, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Amneal Pharmaceuticals Inc.’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Amneal Pharmaceuticals, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of AvKARE, LLC (AvKARE) and R&S Northeast LLC (R&S), which is included in the 2020 consolidated financial statements of the Company and, excluding intangible assets and goodwill arising from the acquisition (which were included in the scope of management's assessment), constituted 9% of consolidated total assets as of December 31, 2020 and 15% of revenues for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of AvKARE and R&S.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity / members’ deficit, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and our report dated March 1, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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/s/ Ernst & Young LLP

Iselin, New Jersey

March 1, 2021

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Item 9B. Other Information

None.

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PART III.

Item 10. Directors, Executive Officers and Corporate Governance

The information required in this Item 10 will be included in the following sections in the 2021 Proxy Statement, which sections are incorporated in this Item 10 by reference: “Proposal No. 1-Election of Directors,” “Our Management,” “Delinquent Section 16(a) Reports,” “Committees of the Board of Directors” and “Audit Committee.”

Code of Business Conduct for Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer. We have adopted a Code of Business Conduct that applies to all of our employees, officers and directors. The full text of our Code of Business Conduct is available at the investors section of our website, http://investors.amneal.com. We intend to disclose any amendment to, or waiver from, a provision of the Code of Business Conduct that applies to our principal executive officer, principal financial officer or principal accounting officer in the investors section of our website.

Item 11. Executive Compensation

The information required in this Item 11 will be included in the following sections in the 2021 Proxy Statement, which sections are incorporated in this Item 11 by reference: “Compensation Discussion and Analysis,” “Executive Compensation,” “Director Compensation,” “The Board’s Role in Risk Oversight,” “Compensation Committee Interlocks and Insider Participation” and “Report of the Compensation Committee.” Notwithstanding the foregoing, the information in the section entitled “Report of the Compensation Committee” is only “furnished” herein and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Except as set forth below, the information required in this Item 12 will be included in the section entitled “Beneficial Ownership” in the 2021 Proxy Statement, which section is incorporated in this Item 12 by reference.

Securities Authorized for Issuance Under Equity Compensation Plans. The following table summarizes information, as of December 31, 2020, relating to the Amneal Pharmaceuticals, Inc. 2018 Incentive Award Plan, which was approved by the Company’s stockholders and which authorizes the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, other stock or cash based awards and dividend equivalent awards to employees, non-employee directors and consultants.

Equity Compensation Plan Information

Equity compensation plans not approved by security holders — — —

(1)Equity compensation plans approved by security holders which are included in column (a) of the table are the 2018 Incentive Award Plan (including 3,710,903 shares of Class A Common Stock to be issued upon exercise of outstanding options and 9,132,552 shares of Class A Common Stock to be issued upon vesting and settlement of outstanding RSUs subject to continued employment) and 100,326 of options remaining from the Impax option conversion associated with the Combination on May 4, 2018. RSUs included in column (a) of the table represent the full number of RSUs awarded and outstanding whereas the number of shares of Class A Common Stock to be issued

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upon vesting will be lower than what is reflected on the table because the value of shares required to meet employee tax withholding requirements are not issued.

(2)Column (b) relates to stock options and does not include any exercise price for RSUs because an RSU’s value is dependent upon attainment of continued employment or service and they are settled for shares of Common Stock on a one-for-one basis.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required in this Item 13 will be included in the following sections in the 2021 Proxy Statement, which sections are incorporated in this Item 13 by reference: “Certain Related Parties and Related Party Transactions,” “Controlled Company Status” and “Committees of the Board of Directors.”

Item 14. Principal Accounting Fees and Services

The information required in this Item 14 will be included in the section entitled “Independent Registered Public Accounting Firm Fees” in the 2021 Proxy Statement, which section is incorporated in this Item 14 by reference.

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PART IV.

Item 15. Exhibits, Financial Statement Schedules

(a)(1) Consolidated Financial Statements

Index to financial statements and supplementary data filed as part of this Report.

Report of Independent Registered Public Accounting Firm F-1

Consolidated Statements of Operations F-6

Consolidated Statements of Comprehensive Income (Loss) F-7

Consolidated Balance Sheets F-8

Consolidated Statements of Cash Flows F-12

Notes to Consolidated Financial Statements F-13

(a)(2) Financial Statement Schedules

All schedules are omitted because they are not required or because the required information is included in the Consolidated Financial Statements or notes thereto.

(a)(3) Exhibits

See the "Exhibit Index" prior to the signature page of this Annual Report on Form 10-K.

Item 16. Form 10-K Summary

None.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Amneal Pharmaceuticals, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Amneal Pharmaceuticals, Inc. (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders' equity / members' deficit and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2021 expressed an unqualified opinion thereon.

Adoption of New Accounting Standard

As discussed in Note 2 to the consolidated financial statements, the Company changed its method for accounting for leases in 2019.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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Medicaid Rebates

Sales Returns

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Impairment of Intangible Assets with Finite Lives

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Impairment of Goodwill and Other Indefinite-lived Intangible Asset

AvKARE and R&S Acquisitions

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/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2008.

Iselin, New Jersey

March 1, 2021

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Amneal Pharmaceuticals, Inc.

Consolidated Statements of Operations

(in thousands, except per share amounts)

Years Ended December 31,

In-process research and development impairment charges 2,680 46,619 39,259

Acquisition, transaction-related and integration expenses 8,988 16,388 221,818

Other (expense) income:

Loss on extinguishment of debt — — (19,667)

Gain (loss) on sale of international businesses 123 7,258 (2,958)

Gain from reduction of tax receivable agreement liability — 192,884 1,665

Accretion of redeemable non-controlling interest — — (1,176)

Class A and Class B-1 basic $ 0.62 $ (2.74) $ (0.16)

Class A and Class B-1 diluted $ 0.61 $ (2.74) $ (0.16)

Weighted-average common shares outstanding:

The accompanying notes are an integral part of these consolidated financial statements.

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Amneal Pharmaceuticals, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

Years Ended December 31,

Accretion of redeemable non-controlling interest — — (1,176)

Other comprehensive (loss) income:

Foreign currency translation adjustments

Foreign currency translation adjustments, net (13,500) 2,180 (3,952)

Unrealized (loss) gain on cash flow hedge, net of tax (70,276) 16,373 —

The accompanying notes are an integral part of these consolidated financial statements.

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Amneal Pharmaceuticals, Inc.

Consolidated Balance Sheets

(in thousands)

Assets

Current assets:

Prepaid expenses and other current assets 73,467 70,164

Operating lease right-of-use assets - related party 24,792 16,528

Financing lease right-of-use assets - related party 58,676 61,284

Liabilities and Stockholders' Equity

Current liabilities:

Current portion of long-term debt, net 44,228 21,479

Current portion of operating lease liabilities 6,474 11,874

Current portion of note payable - related party 1,000 —

Related party payables - short term 7,561 5,969

Note payable - related party 36,440 —

Operating lease liabilities - related party 23,049 15,469

Financing lease liabilities - related party 60,193 61,463

Related party payable - long term 1,584 —

Commitments and contingencies (Notes 5 & 21)

Redeemable non-controlling interest 11,804 —

Stockholders' equity:

Accumulated other comprehensive loss (41,318) (68)

Total Amneal Pharmaceuticals, Inc. stockholders' equity 303,271 232,010

The accompanying notes are an integral part of these consolidated financial statements.

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Amneal Pharmaceuticals, Inc.

Consolidated Statement of Changes in Stockholders' Equity / Members' Deficit

(in thousands)

Shares Amount Shares Amount

Foreign currency translation adjustment — — — — — — (6,643) (6,857) (13,500) —

Stock-based compensation — — — — 20,750 — — — 20,750 —

Non-controlling interests from Rondo transaction — — — — — — — — — 11,475

The accompanying notes are an integral part of these consolidated financial statements.

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Amneal Pharmaceuticals, Inc.

Consolidated Statement of Changes in Stockholders' Equity / Members' Deficit

(in thousands)

Shares Amount Shares Amount Shares Amount

Foreign currency translation adjustment — — — — — — — — (729) (504) (1,233)

Stock-based compensation — — — — — — 21,679 — — — 21,679

Tax distribution — — — — — — — — — (82) (82)

The accompanying notes are an integral part of these consolidated financial statements.

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Amneal Pharmaceuticals, Inc.

Consolidated Statement of Changes in Stockholders' Equity / Members' Deficit

(in thousands)

Shares Amount Shares Amount Shares Amount

Period Prior to the Combination

Foreign currency translation adjustment — — — — — — — — — — 1,721 — 1,721 —

Period Subsequent to the Combination

Stock-based compensation — — — — — — — — 8,840 — — — 8,840 —

Tax distribution — — — — — — — — — — — (48,955) (48,955) —

The accompanying notes are an integral part of these consolidated financial statements.

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Amneal Pharmaceuticals, Inc.

Consolidated Statements of Cash Flows

(in thousands)

Years Ended December 31,

Cash flows from operating activities:

Gain from reduction of tax receivable agreement liability — (192,884) (1,665)

Amortization of Levothyroxine Transition Agreement asset — 36,393 10,423

Loss on extinguishment of debt — — 19,667

(Gain) loss on sale of international businesses, net (123) (7,258) 2,958

Non-cash restructuring and asset-related charges (536) 12,459 11,295

Changes in assets and liabilities:

Prepaid expenses, other current assets and other assets 33,312 38,870 8,775

Accounts payable, accrued expenses and other liabilities 307 (10,257) (53,547)

Cash flows from investing activities:

Acquisition of product rights and licenses — (50,250) (14,000)

Deposits for future acquisition of property, plant, and equipment (5,391) — —

Acquisition of intangible assets (4,350) — —

Proceeds from surrender of corporate owned life insurance — 43,017 —

Proceeds from sales of property, plant and equipment — — 25,344

Proceeds from sale of international businesses, net of cash sold — 34,834 —

Cash flows from financing activities:

Net payments on revolving credit line — — (75,000)

Payments of principal on financing obligation - related party — — (243)

Employee payroll tax withholding on restricted stock unit vesting (863) (926) —

Equity contributions — — 27,742

Capital contribution from non-controlling interest — — 360

Acquisition of redeemable non-controlling interest — — (11,775)

Distributions to members — — (182,998)

Payments of principal on financing lease - related party (1,079) (2,270) —

Repayment of related party notes — — (92,042)

Effect of foreign exchange rate on cash 1,037 (2,249) (670)

Supplemental disclosure of cash flow information:

Supplemental disclosure of non-cash investing and financing activity:

Notes payable for acquisitions - related party $ 36,033 $ — $ —

Acquisition of non-controlling interest $ — $ — $ 3,485

Tax distribution to non-controlling interest $ — $ — $ 13,412

Distribution to members $ — $ — $ 8,562

The accompanying notes are an integral part of these consolidated financial statements.

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Amneal Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements

1. Nature of Operations and Basis of Presentation

Amneal Pharmaceuticals, Inc., formerly known as Atlas Holdings, Inc. (the "Company"), was formed along with its wholly owned subsidiary, K2Merger Sub Corporation, a Delaware corporation ("Merger Sub"), on October 4, 2017, for the purpose of facilitating the combination of Impax Laboratories, Inc. (now Impax Laboratories, LLC), a Delaware corporation then listed on the Nasdaq Stock Market ("Impax") and Amneal Pharmaceuticals LLC, a Delaware limited liability company ("Amneal").

Amneal was formed in 2002 and operates through various subsidiaries. Amneal is a vertically integrated developer, manufacturer, and seller of generic pharmaceutical products. Amneal’s pharmaceutical research includes analytical and formulation development and stability. Amneal has operations in the United States, India, and Ireland. Amneal sells to wholesalers, distributors, hospitals, chain pharmacies and individual pharmacies, either directly or indirectly.

On October 17, 2017, Amneal, Impax, the Company and Merger Sub entered into the Business Combination Agreement, as amended on November 21, 2017 and December 16, 2017 (the "BCA").

On May 4, 2018, pursuant to the BCA, Impax and Amneal combined the generics and specialty pharmaceutical business of Impax with the generic drug development and manufacturing business of Amneal to create the Company as a new generics and specialty pharmaceutical company listed on the New York Stock Exchange, through the following transactions (together, the "Combination," and the closing of the Combination, the "Closing"): (i) Merger Sub merged with and into Impax, with Impax surviving as a direct wholly owned subsidiary of the Company, (ii) each share of Impax’s common stock, par value $0.01 per share ("Impax Common Stock"), issued and outstanding immediately prior to the Closing, other than Impax Common Stock held by Impax in treasury, by the Company or by any of their respective subsidiaries, was converted into the right to receive one fully paid and non-assessable share of Class A common stock of the Company, par value $0.01 per share ("Class A Common Stock"), (iii) Impax converted to a Delaware limited liability company, (iv) the Company contributed to Amneal all of the Company’s equity interests in Impax, in exchange for Amneal common units ("Amneal Common Units"), (v) the Company issued an aggregate number of shares of Class B common stock of the Company, par value $0.01 per share ("Class B Common Stock," and collectively, with the Class A Common Stock and Class B-1 common stock of the Company, par value $0.01 , ("Class B-1 Common Stock"), the "Company Common Stock" to APHC Holdings, LLC, (formerly Amneal Holdings, LLC), the parent entity of Amneal as of the Closing ("Holdings"), and (vi) the Company became the managing member of Amneal.

Immediately upon the Closing, holders of Impax Common Stock prior to the Closing collectively held approximately 25% of the Company and Holdings held a majority interest in the Company with an effective voting interest of approximately 75% on a fully diluted and as converted basis through its ownership of Class B Common Stock. Holdings also held a corresponding number of Amneal Common Units, which entitled it to approximately 75% of the economic interests in the combined businesses of Impax and Amneal. The Company held an interest in Amneal of approximately 25% and became its managing member.

In connection with the Combination, on May 4, 2018, Holdings entered into definitive purchase agreements which provided for a private placement of certain shares of Class A Common Stock and Class B-1 Common Stock (the "PIPE Investment") with select institutional investors (the "PIPE Investors"). Pursuant to the terms of the purchase agreements, upon the Closing, Holdings exercised its right to cause the Company to redeem approximately 15% of its ownership interests in the Company in exchange for 34.5 million shares of Class A Common Stock and 12.3 million unregistered shares of Class B-1 Common Stock (the "Redemption"). The shares of Class A Common Stock and Class B-1 Common Stock received in the Redemption were sold immediately following the Closing by Holdings to the PIPE Investors at a per share purchase price of $18.25 for gross proceeds of $855 million. Following the PIPE Investment, the PIPE Investors owned collectively approximately 15% of the Company Common Stock on a fully diluted and as converted basis. On May 4, 2018, Holdings also caused Amneal to redeem (the "Closing Date Redemption") 6.9 million of Amneal Common Units held by Holdings for a like number of shares of Class A Common Stock, for future distribution to certain direct and indirect members of Holdings who were or are employees of the Company and to whom were previously issued (prior to the Closing) profit participation units ("PPUs") in Amneal. As a result of the PIPE Investment and Closing Date Redemption, the voting and economic interest of approximately 75% held by Holdings immediately upon Closing was reduced by approximately 18%. The overall interest percentage of the non-controlling interest holders upon the consummation of the Combination, PIPE Investment and Closing Date Redemption was approximately 57%. As of December 31, 2020, the overall interest percentage of the non-controlling interest holders was approximately 51%.

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On July 5, 2018, Holdings distributed to its members (collectively, the "Amneal Group") all Amneal Common Units and shares of Class B Common Stock held by Holdings. As a result, as of December 31, 2020 and 2019, Holdings did not hold any equity interest in Amneal or the Company.

The Company is a holding company, whose principal assets are Amneal Common Units.

During the year ended December 31, 2019, pursuant to the Company's certificate of incorporation, the Company converted all (12.3 million) of its issued and outstanding shares of Class B-1 Common Stock to Class A Common Stock and such shares of Class B-1 Common Stock have been retired and may not be reissued by the Company. The rights of Class A Common Stock and Class B-1 Common Stock are identical, except that the Class B-1 Common Stock had certain director appointment rights and the Class B-1 Common Stock had no voting rights (other than with respect to its director appointment right and as otherwise required by law).

2. Summary of Significant Accounting Policies

Accounting Principles

The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). All intercompany accounts and transactions have been eliminated.

Principles of Consolidation

Although the Company has a minority economic interest in Amneal, it is Amneal’s sole managing member, having the sole voting power to make all of Amneal’s business decisions and control its management. Therefore, the Company consolidates the financial statements of Amneal and its subsidiaries. The Company’s consolidated financial statements are a continuation of Amneal’s financial statements, with adjustments to equity to reflect the Combination, the PIPE Investment and non-controlling interests for the portion of Amneal’s economic interests that is not held by the Company. Prior to the closing of the Combination and PIPE Investment, the Company did not conduct any activities other than those incidental to the formation of it and Merger Sub and the matters contemplated by the BCA and had no operations and no material assets or liabilities. Results for the year ended December 31, 2018 include the impact of the Combination from May 4, 2018 to December 31, 2018.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires the Company's management to make estimates and assumptions that affect the reported financial position at the date of the financial statements and the reported results of operations during the reporting period. Such estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities in the consolidated financial statements and accompanying notes. The following are some, but not all, of such estimates: the determination of chargebacks, sales returns, rebates, billbacks, valuation of intangible and other assets acquired in business combinations, allowances for accounts receivable, accrued liabilities, stock-based compensation, valuation of inventory balances, the determination of useful lives for product rights and the assessment of expected cash flows used in evaluating goodwill and other long-lived assets for impairment. Actual results could differ from those estimates.

Revenue Recognition

On January 1, 2018, the Company adopted Accounting Standards Update ("ASU") 2014-9, Revenue from Contracts with Customers and associated ASUs (collectively "Topic 606"), which sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific sections of revenue recognition guidance that have historically existed.

When assessing its revenue recognition, the Company performs the following five steps in accordance with Topic 606: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies the performance obligation. The Company recognizes revenue when it transfers control of its products to customers, in an amount that reflects the consideration to which the Company expects to be entitled to receive in exchange for those products. For further details on the Company’s revenue recognition policies under Topic 606, refer to Note 4. Revenue Recognition.

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Stock-Based Compensation

The Company’s stock-based compensation consists of stock options, restricted stock units ("RSUs") and market performance-based restricted stock units (“MPRSUs”) awarded to employees and non-employee directors. Stock options are measured at their fair value on the grant date or date of modification, as applicable. RSUs, including MPRSUs, are measured at the stock price on the grant date or date of modification, as applicable. The Company recognizes compensation expense on a straight-line basis over the requisite service and/or performance period, as applicable. Forfeitures of awards are accounted for as a reduction in stock-based compensation expense in the period such awards are forfeited. The Company's policy is to issue new shares upon option exercises and the vesting of RSUs and MPRSUs.

Foreign Currencies

The Company has operations in the U.S., India, Ireland, and other international jurisdictions. The results of its non-U.S. dollar based operations are translated to U.S. Dollars at the average exchange rates during the period. Assets and liabilities are translated at the rate of exchange prevailing on the balance sheet date. Investment accounts are translated at historical exchange rates. Translation adjustments are accumulated in a separate component of stockholders’/members’ deficit in the consolidated balance sheet and are included in the determination of comprehensive income. Transaction gains and losses are included in the determination of net income (loss) in the Company consolidated statements of operations as a component of foreign exchange gains and losses. Such foreign currency transaction gains and losses include fluctuations related to long term intercompany loans that are payable in the foreseeable future.

Business Combinations

Business combinations are accounted for using the acquisition method of accounting. Under the acquisition method, the acquiring entity in a business combination records the assets acquired and liabilities assumed at the date of acquisition at their fair values. Any excess of the purchase price over the fair value of net assets and other identifiable intangible assets acquired is recorded as goodwill. Acquisition-related costs, primarily professional fees, are expensed as incurred.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on deposit and highly liquid investments with original maturities of three months or less. A portion of the Company’s cash flows are derived outside the U.S. As a result, the Company is subject to market risk associated with changes in foreign exchange rates. The Company maintains cash balances at both U.S.-based and foreign-based commercial banks. At various times during the year, cash balances in the U.S. may exceed amounts that are insured by the Federal Deposit Insurance Corporation.

Restricted Cash

At December 31, 2020 and 2019, respectively, the Company had restricted cash balances of $6 million and $2 million in its bank accounts primarily related to the purchase of certain land and equipment.

Accounts Receivable and Allowance for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company limits its credit risk with respect to accounts receivable by performing credit evaluations when deemed necessary. The Company does not require collateral to secure amounts owed to it by its customers.

Trade accounts receivable are stated at their net realizable value. The allowance for doubtful accounts reflects the best estimate of expected credit losses of the accounts receivable portfolio determined on the basis of historical experience, current information, and forecasts of future economic conditions. The Company determines its allowance methodology by pooling receivable balances at the customer level. We consider various factors, including the Company’s previous loss history, individual credit risk associated to each customer, and the current and future condition of the general economy. These credit risk factors are monitored on a quarterly basis and updated as necessary. To the extent that any individual debtor is identified whose credit quality has deteriorated, the Company establishes allowances based on the individual risk characteristics of such customer. The Company makes concerted efforts to collect all outstanding balances due from customers; however, account balances are charged off against the allowance when management believes it is probable the receivable will not be recovered. The Company does not have any off-balance-sheet credit exposure related to customers.

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Chargebacks Received from Manufacturers

When a sale occurs on a contracted item, the difference between the cost the Company pays to the manufacturer of that item and the contract price that the end customer has with the manufacturer is rebated to the Company by the manufacturer as a chargeback. Chargebacks are recorded as a reduction to cost of sales and either a reduction in the amount due to the manufacturer (if there is a right of offset) or as a receivable from the manufacturer.

Inventories

Inventories consist of finished goods held for sale, raw materials, and work in process. Inventories are stated at net realizable value, with cost determined using the first-in, first-out method. Adjustments for excess and obsolete inventories are established based upon historical experience and management’s assessment of current product demand. These assessments include inventory obsolescence based on its expiration date, damaged or rejected product, and slow-moving products.

Property, Plant, and Equipment

Property, plant, and equipment are stated at historical cost less accumulated depreciation. Depreciation expense is computed primarily using the straight-line method over the estimated useful lives of the assets, which are as follows:

Asset Classification Estimated Useful Life

Buildings 30 years

Computer equipment 5 years

Furniture and fixtures 7 years

Leasehold improvements Shorter of asset's useful life or remaining life of lease

Machinery and equipment 5 - 10 years

Vehicles 5 years

Upon retirement or disposal, the cost of the asset disposed and the accumulated depreciation are removed from the accounts, and any gain or loss is reflected as part of operating income (loss) in the period of disposal. Expenditures that significantly increase value or extend useful lives of property, plant, and equipment are capitalized, whereas those for normal maintenance and repairs are expensed. The Company capitalizes interest on borrowings during the construction period of major capital projects as part of the related asset and amortizes the capitalized interest into earnings over the related asset’s remaining useful life.

Leases

All significant lease arrangements are recognized as right-of-use (ROU) assets and lease liabilities at lease commencement. ROU assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the present value of the future lease payments using the Company's incremental borrowing rate, which is assessed quarterly.

Operating lease expense is recognized on a straight-line basis over the lease term. At each balance sheet date, operating and financing lease liabilities continue to represent the present value of the future payments. Financing lease ROU assets are expensed using the straight-line method, unless another basis is more representative of the pattern of economic benefit, to lease expense. Interest on financing lease liabilities is recognized in interest expense.

Leases with an initial term of 12 months or less (short-term leases) are not recognized in the balance sheet and the related lease payments are recognized as incurred over the lease term. The Company separates lease and non-lease components. A portion of the Company's real estate leases are subject to periodic changes in the Consumer Price Index ("CPI"). The changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred.

For further details regarding the Company's leases, refer to Note 12. Leases.

In-Process Research and Development

The fair value of in-process research and development ("IPR&D") acquired in a business combination is determined based on the present value of each research project’s projected cash flows using an income approach. Revenues are estimated based on

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relevant market size and growth factors, expected industry trends, individual project life cycles and the life of each research project’s underlying marketability. In determining the fair value of each research project, expected cash flows are adjusted for certain risks of completion, including technical and regulatory risk.

The value attributable to IPR&D projects at the time of acquisition is capitalized as an indefinite-lived intangible asset and tested for impairment until the project is completed or abandoned. Upon completion of the project, the indefinite-lived intangible asset is then accounted for as a finite-lived intangible asset and amortized over the estimated useful life of the asset based on the pattern in which the economic benefits are expected to be consumed or otherwise used up or, if that pattern is not readily determinable, on a straight-line basis. If the project is abandoned, the indefinite-lived intangible asset is charged to expense.

Intangible assets with indefinite lives, including IPR&D, are tested for impairment if impairment indicators arise and, at a minimum, annually. However, an entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that an indefinite-lived intangible asset’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. The indefinite-lived intangible asset impairment test consists of a one-step analysis that compares the fair value of the intangible asset with its carrying amount. If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The Company considers many factors in evaluating whether the value of its intangible assets with indefinite lives may not be recoverable, including, but not limited to, expected growth rates, the cost of equity and debt capital, general economic conditions, the Company's outlook and market performance of the Company's industry and recent and forecasted financial performance.

Goodwill

Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value based test. The Company reviews goodwill for possible impairment annually during the fourth quarter, or whenever events or circumstances indicate that the carrying amount may not be recoverable.

In order to test goodwill for impairment, an entity is permitted to first assess qualitative factors to determine whether a quantitative assessment of goodwill is necessary. The qualitative factors considered by the Company may include, but are not limited to, general economic conditions, the Company’s outlook, market performance of the Company’s industry and recent and forecasted financial performance. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that a reporting unit’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. If a quantitative assessment is required, the Company determines the fair value of its reporting unit using a combination of the income and market approaches. If the net book value of the reporting unit exceeds its fair value, the Company recognizes a goodwill impairment charge for the reporting unit equal to the lesser of (i) the total goodwill allocated to that reporting unit and (ii) the amount by which that reporting unit’s carrying amount exceeds its fair value. See Note 15. Goodwill and Other Intangible Assets, for further discussion of the Company's quantitative assessment of goodwill.

Assumptions and estimates used in the evaluation of impairment may affect the carrying value of long-lived assets, which could result in impairment charges in future periods. Such assumptions include projections of future cash flows and the current fair value of the asset.

Amortization of Intangible Assets with Finite Lives

Intangible assets, other than indefinite-lived intangible assets, are amortized over the estimated useful life of the asset based on the pattern in which the economic benefits are expected to be consumed or otherwise used up or, if that pattern is not readily determinable, on a straight-line basis. The useful life is the period over which the assets are expected to contribute directly or indirectly to future cash flows. Intangible assets are not written-off in the period of acquisition unless they become impaired during that period.

The Company regularly evaluates the remaining useful life of each intangible asset that is being amortized to determine whether events and circumstances warrant a revision to the remaining period of amortization. If the estimate of the intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over that revised remaining useful life. See Note 15. Goodwill and Other Intangible Assets, for further discussion of the Company's intangible assets.

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Impairment of Long-Lived Assets (Including Intangible Assets with Finite Lives)

The Company reviews its long-lived assets, including intangible assets with finite lives, for recoverability whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company evaluates assets for potential impairment by comparing estimated future undiscounted net cash flows to the carrying amount of the asset. If the carrying amount of the assets exceeds the estimated future undiscounted cash flows, impairment is measured based on the difference between the carrying amount of the assets and fair value which is generally an expected present value cash flow technique. Management’s policy in determining whether an impairment indicator exists comprises measurable operating performance criteria as well as other qualitative measures. See Note 15. Goodwill and Other Intangible Assets, for further discussion of the Company's assessment of intangible asset impairment.

Financial Instruments

The Company minimizes its risks from interest fluctuations through its normal operating and financing activities and, when deemed appropriate through the use of derivative financial instruments. Derivative financial instruments are used to manage risk and are not used for trading or other speculative purposes. The Company does not use leveraged derivative financial instruments. Derivative financial instruments that qualify for hedge accounting must be designated and effective as a hedge of the identified risk exposure at the inception of the contract. Accordingly, changes in fair value of the derivative contract must be highly correlated with changes in fair value of the underlying hedged item at inception of the hedge and over the life of the hedge contract.

All derivatives are recorded on the balance sheet as assets or liabilities and measured at fair value. For derivatives designated as cash flow hedges, the effective portion of the changes in fair value of the derivatives are recorded in accumulated other comprehensive income (loss), net of income taxes and subsequently amortized as an adjustment to interest expense over the period during which the hedged forecasted transaction affects earnings, which is when the Company recognizes interest expense on the hedged cash flows. Cash flows of such derivative financial instruments are classified consistent with the underlying hedged item.

Highly effective hedging relationships that use interest rate swaps as the hedging instrument and that meet criteria under ASC 815, Derivatives and Hedging, may qualify for the “short-cut method” of assessing effectiveness. The short-cut method allows the Company to make the assumption of no ineffectiveness, which means that the change in fair value of the hedged item can be assumed to be equal to the change in fair value of the derivative. Unless critical terms change, no further evaluation of effectiveness is performed for these hedging relationships unless a critical term is changed.

For a hedging relationship that does not qualify for the short-cut method, the Company measures its effectiveness using the “hypothetical derivative method”, in which the change in fair value of the hedged item must be measured separately from the change in fair value of the derivative. At inception and quarterly thereafter, the Company formally assesses whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the fair value or cash flows of the hedged item. The Company compares the change in the fair value of the actual interest rate derivative to the change in the fair value of a hypothetical interest rate derivative with critical terms that match the hedged interest rate payments. After the initial quantitative assessment, this analysis is performed on a qualitative basis and, if it is determined that the hedging relationship was and continues to be highly effective, no further analysis is required.

All components of each derivative financial instrument's gain or loss are included in the assessment of hedge effectiveness. If it is determined that a derivative ceases to be a highly effective hedge, the Company discontinues hedge accounting and any deferred gains or losses related to a discontinued cash flow hedge shall continue to be reported in accumulated other comprehensive income (loss) net of income taxes, unless it is probable that the forecasted transaction will not occur. If it is probable that the forecasted transaction will not occur by the originally specified time period, the Company discontinues hedge accounting, and any deferred gains or losses reported in accumulated other comprehensive income (loss) are classified into earnings immediately.

The Company is subject to credit risk as a result of nonperformance by counterparties to the derivative agreements. Upon inception and quarterly thereafter, the Company makes judgments on each counterparty’s creditworthiness for nonperformance by counterparties.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes, which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax bases of its assets and

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liabilities by applying the enacted tax rates in effect for the year in which the differences are expected to reverse. Such net tax effects on temporary differences are reflected on the Company’s consolidated balance sheets as deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when the Company believes that it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.

ASC 740-10 prescribes a two-step approach for the recognition and measurement of tax benefits associated with the positions taken or expected to be taken in a tax return that affect amounts reported in the financial statements. The Company has reviewed and will continue to review the conclusions reached regarding uncertain tax positions, which may be subject to review and adjustment at a later date based on ongoing analyses of tax laws, regulations and interpretations thereof. To the extent that the Company’s assessment of the conclusions reached regarding uncertain tax positions changes as a result of the evaluation of new information, such change in estimate will be recorded in the period in which such determination is made. The Company reports income tax-related interest and penalties relating to uncertain tax positions, if applicable, as a component of income tax expense.

Comprehensive Income (Loss)

Comprehensive income (loss) includes net income (loss) and all changes in stockholders’ equity (except those arising from transactions with stockholders) including foreign currency translation adjustments resulting from the consolidation of foreign subsidiaries’ financial statements and unrealized gains on cash flows hedges, net of income taxes.

Research and Development

Research and development ("R&D") activities are expensed as incurred. R&D expenses primarily consist of direct and allocated expenses incurred with the process of formulation, clinical research, and validation associated with new product development. Upfront and milestone payments made to third parties in connection with R&D collaborations are expensed as incurred up to the point of regulatory approval or when there is no alternative future use.

Intellectual Property Legal Development Expenses

The Company expenses external intellectual property legal development expenses as incurred. These costs relate to legal challenges of innovator’s patents for invalidity or non-infringement, which are customary in the generic pharmaceutical industry, and are incurred predominately during development of a product and prior to regulatory approval. Associated costs include, but are not limited to, formulation assessments, patent challenge opinions and strategy, and litigation expenses to defend the intellectual property supporting the Company's regulatory filings.

Shipping Costs

The Company records the costs of shipping product to its customers as a component of selling, general, and administrative expenses as incurred. Shipping costs were $17 million, $15 million and $21 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Recently Adopted Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modified the disclosure requirements on fair value measurement. The Company adopted ASU 2018-13 effective January 1, 2020, and it did not have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, guidance that changes the impairment model for most financial assets including trade receivables and certain other instruments that are not measured at fair value through net income. The standard replaced today’s "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost and requires entities to record allowances for available-for-sale debt securities rather than reduce the carrying amount, as they did under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. Entities apply the standard’s provisions as a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company adopted ASU 2016-13 effective January 1, 2020, and it did not have a material impact on the Company’s consolidated financial statements.

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Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform, which provided elective amendments for entities that have contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments may be applied to impacted contracts and hedges prospectively through December 31, 2022. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements.

3. Acquisitions and Divestitures

Acquisitions

AvKARE and R&S Purchase Agreement

On December 10, 2019, the Company, through its investment in Rondo Partners, LLC (“Rondo”), entered into equity purchase and operating agreements to acquire approximately a 65.1% controlling financing interest in both AvKARE Inc., a Tennessee corporation, and Dixon-Shane, LLC d/b/a R&S Northeast LLC, a Kentucky limited liability company (“R&S”) (collectively the “Acquisitions”). Prior to closing, AvKARE, Inc. converted to a limited liability company, AvKARE, LLC. AvKARE, LLC is one of the largest private label providers of generic pharmaceuticals in the U.S. federal agency sector, primarily focused on serving the Department of Defense and the Department of Veterans Affairs. R&S is a national pharmaceutical wholesaler focused primarily on offering 340b-qualified entities products to provide consistency in care and pricing.

On January 31, 2020, the Company completed the Acquisitions. The purchase price of $294 million included cash of $254 million, the issuance of long-term promissory notes to the sellers with an aggregate principal amount of $44 million (estimated fair value of $35 million) (the “Sellers Notes”) and a short-term promissory note (the “Short-Term Seller Note”) with a principal amount of $1 million to the sellers. The cash purchase price was funded by $76 million of cash on hand and debt of $178 million of proceeds from a $180 million term loan. The remaining $2 million consisted of working capital costs. The Company is not party to or a guarantor of the term loan, the Sellers Notes or the Short-Term Sellers Note. (refer to Note 17.Debt). For further detail of the purchase price, refer to the table below.

For the year ended December 31, 2020, there were $1 million of transaction costs associated with the Acquisitions recorded in acquisition, transaction-related and integration expenses (none in 2019 and 2018).

The Acquisitions were accounted for under the acquisition method of accounting, with Amneal as the accounting acquirer of AvKARE, LLC and R&S.

The purchase price was calculated as follows (in thousands):

Settlement of Amneal trade accounts receivable from R&S (2) 6,855

Short-Term Seller Note (3) 1,000

Working capital adjustment (4) (2,640)

Fair value consideration transferred $ 294,248

(1)In accordance with ASC 805, Business Combinations, all consideration transferred was measured at its acquisition-date fair value. The Sellers Notes were stated at the fair value estimate of $35 million, which is the $44 million aggregate principal amount less a $9 million discount. The fair value of the Sellers Notes was estimated using the Monte-Carlo simulation approach under the option pricing framework.

(2)Represents trade accounts receivable from R&S that was effectively settled upon closing of the Acquisitions.

(3)Represents the principal amount due on the Short-Term Seller Note, which approximates fair value.

(4)Represents a working capital adjustment pursuant to the terms of the purchase agreement. The entire amount was received in cash by the Company in September 2020.

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The following is a summary of the purchase price allocation for the Acquisitions (in thousands):

Preliminary Fair Values as of January 31, 2020

Trade accounts receivable, net $ 46,702

Prepaid expenses and other current assets 11,316

Related party receivables 61

Property, plant and equipment 5,278

Operating lease right-of-use assets - related party 5,544

Accounts payable and accrued expenses 62,489

Related party payables 1,532

Operating lease liabilities - related party 5,544

Total liabilities assumed 69,565

Redeemable non-controlling interests 11,475

Fair value of consideration transferred $ 294,248

The acquired intangible assets are being amortized over their estimated useful lives as follows (in thousands):