Amneal Pharmaceuticals Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
February 28, 2025

There are 11 speakers on the call.

Operator

Good morning, and welcome to the Amneal Pharmaceuticals Fourth Quarter twenty twenty four Earnings Conference Call.

Speaker 1

I would now like to turn

Operator

the call over to Amneal's Head of Investor Relations, Tony DiMeo. Please go ahead.

Speaker 2

Good morning, and thank you for joining Amneal Pharmaceuticals' fourth quarter twenty twenty four earnings call. Today, we issued a press release reporting Q4 results. The earnings press release and presentation are available at amnule.com. Certain statements made on this call regarding matters that are not historical facts, including but not limited to management's outlook or predictions, are forward looking statements that are based solely on information that is now available to us. Please see the section entitled cautionary statements on forward looking statements for factors that may impact future performance.

Speaker 2

We also discussed non GAAP measures. Information on use of these measures and reconciliations to GAAP are in the earnings release and freeze and take. On the call today are Shiroag and Shinto Patel, cofounders and co CEOs Tasos Kony Dares, CFO our commercial leaders, Andy Boyer for Affordable Medicines Joe Renda for Specialty and Jason Daley, Chief Legal Officer. I will now hand the call over to Shirogg.

Speaker 3

Thank you, Tony. Good morning, everyone. At Amneal, we are much more than another generics company. We are an American biopharmaceutical company with a track record of excellence in delivering high quality, complex pharmaceuticals at speed and scale. We are a leader in an essential industry providing millions of patients with access to affordable and innovative medicines.

Speaker 3

2024 was an exceptional year where Amneal delivered stellar financial performance with double digit revenue and adjusted EBITDA growth and reducing net leverage below four times. All segments grew revenues double digits. This broad based performance reflects the strength of our diversified business, strong execution and continued investment in growth areas. Beyond financial results, we took major strategic steps in 2024 to enhance our long term growth profile and expand our future potential including launching Krexant, establishing our GLP-one collaboration and adding to our biosimilars pipeline. The first important milestone we achieved in 2024 was the successful launch of Krexant.

Speaker 3

We are so excited by the strong response from prescribers and inspiring patient testimonials. Early traction has exceeded expectations with market share reaching about 1% in just four months and on track to exit the year at 3% plus. As a point of reference, Rytray has 6% market share currently ten years since its launch. We are very confident in achieving U. S.

Speaker 3

Peak sales of $300,000,000 to $500,000,000 for Trexant. Our specialty business grew 14% in 2024 and our goal is to grow specialty to over $500,000,000 by 2027. This growth will be driven by Krexant, Unithroid, Onyentis and upcoming launch of DHE and other branded products. We aim to add more branded opportunities to our portfolio over time. Second, in 2024 we entered the high growth weight loss and obesity space, a new category for Amneal.

Speaker 3

Through a strategic collaboration with MedCera, a clinical stage biotech company developing next generation therapies. This unique collaboration represents a new integrated business model to drive innovation at scale between two organizations. It is a logical extension of Amneal's strategy that leverages our existing, our expertise in complex manufacturing and track record of delivering high quality innovation at scale. Amneal is MEC Sera's preferred global supplier for The U. S, Europe and other markets.

Speaker 3

In addition, we look to commercialize MEC Sera products in 20 emerging markets including India. To support this effort we will leverage our existing peptide capabilities and building two new high volume peptide manufacturing facilities. With the global weight loss market projected to exceed $150,000,000,000 by 02/1930, this initiative is a powerful new long term growth driver for MEO. Over time we see this as a very large opportunity for MEO with three avenues for value creation. One, the MedStar collaboration which is our top priority.

Speaker 3

Two, providing CMO offerings to other large companies. Three, providing scale to deliver on generics weight loss therapies. Third, our affordable medicine segment historically referred to as generics includes retail products and our rapidly growing injectable and biosimilar products. The affordable medicine segment generated revenues of $1,700,000,000 in 2024 as growth accelerated to 15% fueled by new launches and a diversified complex portfolio over three components of the segment. This is a massive business that remains the foundation of MNO and we expect it will continue to grow tremendously going forward.

Speaker 3

Within this segment our injectables business is expanding quickly. We have a growing portfolio of over 40 injectable products and launch our first three thousand five hundred and fifty two injectables in 2024. These differentiated ready to use solutions improve hospital efficiency by eliminating medication preparation steps and errors. In addition, we see biosimilars as the next major wave of affordable medicines. For patients biosimilars improve the affordability of and access to key therapies.

Speaker 3

For Amneal we see biosimilars as a long term growth factor where we are well positioned to lead. Our first three biosimilars generated 126,000,000 revenue in 2024 just their second year on the market. We have built our pipeline with five additional biosimilars expected to be filed this year and commercial launch is planned for 2026 and 2027. In 2024 we added our largest opportunity omalizumab a biosimilar for Xolair targeting $2,800,000,000 U. S.

Speaker 3

Market. By 2027 we expect to have six commercial biosimilars in The United States market. Looking forward, the global biosimilar is projected to grow from about $33,000,000,000 today to $75,000,000,000 by 02/1930. Given the cost, complexity and development timelines, we see a relatively limited number of market participants. A recent IQV report highlighted the significant white space opportunity in biosimilars.

Speaker 3

There are over 100 biologic products with patents expiring over the next ten years and only 10% currently have biosimilars in development. The report estimates that biosimilars for the other 90% would save American patient about $100,000,000,000 per year. We believe success in biosimilars will be driven by product selection, speed to market, R and D, manufacturing and customer service. Similar to complex generics where Avanil is a leader, we are well positioned to be a major biosimilar player. Our strategic focus has been in licensing and initial portfolio and building a commercial platform to start.

Speaker 3

Next, our goal is to be vertically integrated and leverage our proven ability to develop, manufacture and commercialize complex pharmaceuticals at scale. Finally, our rev care segment is a highly durable business with long term contacts and recurring revenue streams across three channels distribution, government and unit dose. In 2024, healthcare revenue grew 25% and we expect continued double digit growth reaching over $900,000,000 in revenue by 2027. This business adds stability and diversification to Amneal's portfolio. Overall, Amneal is an essential player in an essential industry.

Speaker 3

Over 90% of prescriptions in The United States are for affordable medicines yet account for only 10% of commercial value. Amneal fulfills over 162,000,000 scripts for American patients each year. We are the largest U. S. Manufacturer of affordable medicines.

Speaker 3

Currently, Amneal is number four in The U. S. Retail market based on value. And our goal is to become top five in The U. S.

Speaker 3

Injectables and U. S. Biosimilars market in coming years. Over our company's history we have built a successful track record of innovation, execution and growth. Amel is uniquely positioned in the pharmaceutical industry with a broad and differentiated portfolio across affordable medicines, specialty and distribution to drive sustainable growth.

Speaker 3

I'll now pass it to Chintu.

Speaker 4

Thank you, Shirag. And good morning, everyone. And special thanks to our dedicated employees for making Amneal a purpose driven company focused on execution and delivering value to our stakeholders. Today, I will provide an update on our strategic priorities across operations, innovations and our portfolio. First, our world class global operations remain a key competitive advantage.

Speaker 4

Amneal has a stellar quality track record and a world class operational infrastructure with an extensive manufacturing footprint in The United States, Ireland and India. Over our history, the FDA has conducted over 105 successful inspections with either no or only minor observations. Further, we continue to invest in digitization, automation and operational efficiencies to drive innovation and growth across different voltage forms. We are committed to enhancing our operational excellence and cost efficiencies across our global infrastructure. Amid chronic drug shortages and supply chain challenges in The U.

Speaker 4

S, Amneal stands out with its industry leading quality, resilient supply chain and high customer fulfillment rates. A key highlight is our collaboration with Matera in the GLP-one space, where our partners portfolio is moving swiftly through the drug development phase. Amneal already has the infrastructure and capabilities for peptide development and injectable manufacturing. As part of this collaboration, we will build two state of the art manufacturing facilities, one for peptide drug substance production and another for advanced sterile fill finish manufacturing. These investments will enable large scale production positioning Amni as Masera's preferred global supplier, while leveraging our R and D expertise and quality leadership in this fast growing category.

Speaker 4

Next in innovation, we launched Kraxont, which is a remarkable new treatment for Parkinson's disease designed for rapid onset and extended efficacy. Krexone delivers more good on time with fewer doses. Our open label Phase four study is underway to generate additional real world evidence. We are pleased with early adoption and wonderful testimonials from patients positioning Kratxon to become the leading branded Parkinson's therapy. Next in our specialty pipeline is the DHE auto injector for migraine and cluster headache.

Speaker 4

These innovative presentations of a well known molecule is intended to help patients avoid emergency room visits during these painful episodes. We project peak sales of 50,000,000 to 100,000,000 and look forward to launch later this year pending FDA approval. Next, I will touch on our complex generics portfolio. We expect to launch 20 to 30 new products each year. This year, so far, we have launched key complex products such as mesalamine, avirolimus and momentine Donazepil, which has one hundred and eighty day exclusivity.

Speaker 4

Last week, we received approval for lenalidomide, which will launch in early twenty twenty six. This cadence of approvals and new launches reflects the breadth and depth of our R and D pipeline. Currently, we have 76 products pending approval of which 61% are non oral solids and 56% in development, of which 93% are non oral solids. We continue to optimize our R and D portfolio, allocating more resources towards biosimilars and specialty over time. In 2024, we launched 12 new injectable products, including our FOS335B2 products, PEM ready, Fosinuas for oncology and potassium phosphate are ready to use IV bag.

Speaker 4

Our fourth five thousand five hundred and fifty two injectable Boruzo for multiple myeloma is approved and set to launch in Q2 with 10 to 12 additional 5,552 injectables in development. We will meaningfully expand our injectable portfolio. Other complex injectable programs, microsphere, liposomal and drug device combinations are progressing as well With our R and D capabilities and infrastructure of 21 manufacturing lines in injectables, Amneal is well positioned to be a leader in the injectable space in the coming year. In biosimilar, we are strategically focused on expanding our portfolio. We are very excited about the biosimilar market given the upcoming wave of biologics LOEs, clarity on the regulatory pathway and continued adoption by clinicians.

Speaker 4

Building on the success of our first three commercial products, we have in licensed five additional biosimilar pipeline candidates. The BLA filings for two denazumab biosimilars were submitted. Next, the supplemental BLA filing for Pacfield Grastim OBI and auto injector is expected in Q2. After that, the BLA filing for omalizumab, a biosimilar for Xolair is expected by the end of the year. We look to further expand our portfolio and be vertically integrated over time to be a leader in the biosimilar industry.

Speaker 4

In summary, we are focused on driving execution across development, manufacturing and commercialization throughout our diversified and growing business. With that, I will hand it over to Tasos.

Speaker 5

Thank you, Cintu, and good morning, everyone. 2024 was a very strong year of execution across all our business units with excellent financial performance well ahead of our original guidance metrics. In addition, net leverage declined to 3.9 times compared to 4.8 times at the end of twenty twenty three as we grew EBITDA and we paid down debt. Strategically, as Chirag and Chintu highlighted, we are driving the ongoing diversification of the business through new launches and pipeline expansion in biosimilars and GLP 1s, which provides a strong foundation for long term growth. In 2025, we expect continued top and bottom line growth reflecting our ability to offset territory loss of exclusivity due to the breadth and depth of our commercial portfolio and strong pipeline.

Speaker 5

I'll review our strong performance in Q4, touch on our full year results and discuss guidance for 2025. In the fourth quarter, revenues of $731,000,000 grew 18% with double digit growth across all three segments. Our Affordable Medicine segment grew 21% to $439,000,000 New product launches added $54,000,000 to Q4 revenue driven by recent complex launches Biosimilars generated 39,000,000 in Q4 revenues and grew 49% versus the prior year. As Sidhu mentioned, Emil's continued success in R and D superb quality track record and supply consistency are competitive advantages driving sustainable growth, portfolio diversification and value to customers, providers and patients. Q4 specialty revenues grew 16% to $121,000,000 driven by our branded products.

Speaker 5

Our Parkinson's franchise which includes Krexan, Rythery and Oncenitis generated $64,000,000 in Q4 revenues including $3,000,000 for Krexan. As we said, we're very pleased with the initial launch success of Krexan and its early trajectory well ahead of Rite Aid's launch. In Q4, our AvCare segment grew 14% to $170,000,000 reflecting continued growth across the distribution and government channels. New product launches and continued strong execution are key drivers of Aptcare's strong performance. Moving down the P and L, Q4 adjusted EBITDA of $155,000,000 reflects robust revenue growth, consistent gross margins and some targeted R and D sales and marketing investments in high growth areas.

Speaker 5

Q4 adjusted EPS of $0.12 declined 0.02 as higher adjusted EBITDA was offset by interest expense. In summary, Q4 reflected strong year over year revenue growth of 18% and adjusted EBITDA growth of 9%. Moving on to the full year of 2024, total revenues were $2,800,000,000 up $400,000,000 or 17% year over year and was ahead of our original and revised guidance of about $2,600,000,000 Each segment grew double digits with affordable medicines of 15%, specialty up 14% and AvCare up 25%. Twenty twenty four adjusted gross margins were strong at 42.4% with affordable medicines gross margins expanding by 110 basis points reflecting in product launches and operating efficiencies. Full year 2024 adjusted EBITDA of CAD327 million was ahead of original guidance of CAD580 million to CAD620 million and grew 12%, which includes a substantial increase in R and D and sales and marketing to enhance our already strong pipeline and support new launches.

Speaker 5

From a cash flow perspective, 2024 operating cash flow was CAD348 million dollars excluding one time legal costs well ahead of original guidance of $260,000,000 to $300,000,000 The strong performance was driven by higher adjusted EBITDA and good work by our teams to drive substantial working capital improvements and some timing benefits. Also glad to report that as part of our efforts to reduce leverage, we paid down $182,000,000 of gross debt in 2024 and reduced net leverage to 3.9 times as compared to 4.8 times at the end of twenty twenty three and going further back 7.4 times net leverage at the end of twenty nineteen. We achieved net leverage below four times one year ahead of our publicly stated target. In summary, very strong full year 2024 results with revenue growth of 18%, adjusted EBITDA of 12% and substantial debt reduction while continuing to invest for long term growth. Let me now move on and discuss our full year guidance for 2025.

Speaker 5

On the top line, we expect 2025 total company net revenue of $3,000,000,000 to $3,100,000,000 reflecting strong growth of 7% to 11%. First, in the Affordable Medicines segment, we expect continued double digit growth in 2025 due to the uptake of products launched throughout 2024, some new launches expected in 2025 continued biosimilar growth and injectables expansion with a number of new five zero five B2 products. Second, in the Specialty segment, we expect 2025 revenue of approximately $400,000,000 which includes expected correction sales of approximately $50,000,000 and expected retiree sales between $120,000,000 to $140,000,000 given the loss of exclusivity in the third quarter of twenty twenty five. Third, in the AvCare segment, we expect continued double digit growth in 2025 driven by ongoing new launches from Emneal and other suppliers across its channels. Moving down the P and L, we expect 2025 adjusted gross margins between 4142% similar to 2024%.

Speaker 5

We expect adjusted EBITDA between $650,000,000 and AUD $675,000,000 reflecting growth between 4% to 8% due to top line growth, the right to lose of exclusivity as well as incremental sales and marketing investments to maximize the substantial commercial opportunities ahead of us. That is, cracks and biosimilars, five zero five B2s and injectables. From an EPS perspective, we expect 2025 adjusted EPS between $0.65 and 0.7 which reflects adjusted EBITDA growth and lower interest expense as debt levels have been reduced and interest rates are beginning to come down. Moving to cash flow, we expect another strong year of cash generation 2025, which allows us to continue reducing gross debt and net leverage. For 2025, we expect operating cash flow excluding potential legal settlement costs between $280,000,000 and $310,000,000 Depending on timing of settlements, we may incur approximately $25,000,000 of costs, which are substantially lower than prior years.

Speaker 5

From a capital allocation perspective, we continue to prioritize investments to further diversify our business and drive sustainable growth, particularly high growth areas such as specialty, biosimilars and GLP ones. In 2025, we expect capital expenditures of approximately $100,000,000 net of reimbursement related to the facilities we're building as part of our Matera collaboration. In addition, we continue to be laser focused and continue to reduce our debt levels.

Speaker 4

Looking to

Speaker 5

the balance sheet, our strong financial performance and disciplined capital allocation is driven higher cash generation and continued delivering. Recognizing our delivering progress and improved financial profile, we're pleased to receive One Nas credit upgrades from S and P and Moody's a few months ago. Now that net leverage is below four times, our focus is on driving net leverage to below three times in the next few years. Let me now turn the call back to Cirag.

Speaker 3

Thank you, Tasos. In summary, 2024 was a remarkable year for Nneal. We delivered broad based double digit growth and took key strategic actions to further position our company for sustainable long term growth. Amneal enters a new chapter of growth in 2025 with tremendous momentum across our business. And we are so excited for what's ahead.

Speaker 3

Let's now open the call for Q and A

Speaker 1

The first question is from Chris Schott from JPMorgan. Your line is now open.

Speaker 6

Great. Thanks so much for the questions. Maybe just to start off with, I just had a couple on Crook Science. Maybe just kicking off a little bit, can you just elaborate on these first few months of the launch? And it seems like the ramp is going really nicely, but I was wondering if there's any surprises from your perspective in terms either where the patients are coming from or just any dynamics of how physicians are integrating this into into their practices?

Speaker 6

And maybe just a second one on Curacao while we're at it. Can you just give us the latest in terms of where formulary access stands and how you're seeing that trending?

Speaker 3

Thank you, Chris. We're so excited, beyond our expectations. And the testimonials, patient testimonials are amazing. This is where you feel so good that the patient that wasn't able to walk now walks. They're taking fewer capsules a day, lasting longer.

Speaker 3

So it's arguably right now it's early four months, it's performing as the best CDLD formulation and absorption ever seen in this category. And this is straight from the most well known KOL

Speaker 7

saying

Speaker 3

it's the best absorption he has seen and it's a he called it a miracle drug. And we keep hearing that from all across the MDS, even started from general neuro. We're going after the long term care. So we're covering all corners of the market now, all 100%. We're right.

Speaker 3

We covered only 20%, which is the fluctuators market in, with MDS. So this is we have broadened our market reach. The teams are doing great. We're so excited. There's already 1,000 plus prescriptions per week just in four months.

Speaker 3

And the writer would have taken two years to get there. This amazing feedback, formulary access is awesome as well. And for to discuss that further, I'll pass it on to Joe Randa, our Head

Speaker 8

of Specialty Business. Thanks, Shrugg. Thanks, Chris,

Speaker 7

for the question. And, yes, to Shrugg's point, we're very pleased with the performance we've seen thus far. The team has really executed well. The plan, the response from the market has been remarkable. We continue to hear from physicians literally every day the patient responses that they're getting.

Speaker 7

You asked about formulary access and so far we've been very pleased with the response from the payers. Right now, we're somewhere in the neighborhood of about 30% coverage rate. We anticipate that to go up this year, in the neighborhood at 50%. Our goal has always been to catch or surpass Rytary coverage, which is around 70%. We anticipate bringing on at least one, two, maybe even three major commercial payers this year.

Speaker 7

So, the coverage conversations have been very good. The payers are also seeing the demand generation that's happening in the market. So, that's further exciting them about bringing Crexon on formulary. And we're also getting great response from the advocacy organizations. So, we're partnering very closely with the advocacy organizations across the country.

Speaker 7

They're also, helping spread the word of how favorable Crexant has been. So, just to give you a point of illustration, when you look at the way Crexant has performed in LAUNCH versus Rytary, We're three to five times where Rytary was at this point in launch. So very good uptake in the market, very pleased and we look for more to come.

Speaker 3

Yes. And Chris, last thing I would add is this is we're making Rytary on the global product, so creating global access. So we have a partner in Canada, South America, Mexico. We have a partner in Europe. We are Amneal will market in India.

Speaker 3

And we're looking for a partner in China and Japan. So this is would be

Speaker 5

a

Speaker 3

truly global product. As you know, Rytheri was never available outside of The United States. Millions of Parkinson's patients across the globe And this will be the best therapy that they will get for their day to day living with Parkinson's.

Speaker 6

Excellent. And maybe just one last question for me was just kind of bigger picture with the strong top line. I just been interested, are you thinking about either organic investment into the business or external DD any differently than the past? I'm just trying to get a sense of how you're thinking about balancing kind of longer term investment and top line growth versus kind of maybe the drop through of that growth in terms of the near term margins? Thank you.

Speaker 3

Thanks, Chris. So we're so fortunate to have a solid organic pipeline in affordable medicines. So within affordable medicines and retail GX, we have a leading portfolio in inhalations, ophthalmics, a microsphere. We're just drug device combination products. So one of the best portfolio we have.

Speaker 3

Then comes to the injectable which we have 12 or so more five, five, two injectables to come ready to use peptide, microspheres, very excited. Biosimilars, we have in licensed the product as we've been very upfront about it that this is a and very long term focus that this is over 10 business. It is and we've been investing for a long time. We need to become vertically integrated. So have manufacturing with us, R and D with us, full pipeline, global market.

Speaker 3

And we are just like in complex GX, we were here to stay. Our mission is to become America's number one affordable medicines company. So biosimilar expansion is must. So we will allocate capital towards biosimilar. And then always looking for specialty portfolio addition.

Speaker 3

Beyond DHE, we're looking at either a couple of programs internally which we are not ready to discuss yet and working with few outside potential that we can either bring it in license or buy those products.

Speaker 6

Great. Thanks so much.

Operator

The next question is from David Apsleyn from Piper Sandler. Your line is now open.

Speaker 9

Thanks. So I've got a couple. So you cited GLP-one's peptides in 2028. Are those launches in ex USemerging markets? Is it Trulicity?

Speaker 9

Is it comp in The United States? Is it a combination of those things? I'm just trying to get a sense of what you're thinking regarding that 2028 number that's on Slide six. And then secondly, with the Matera collaboration, you're constructing the new facilities, but you've also talked about Beyond Peptides vertically integrating your biosimilars business. And so I guess my question here is, how should we think about growth in CapEx over the next several years and how that plays into your overall debt pay down strategy?

Speaker 9

Because it sounds like there's significant expansion of your infrastructure that's going to be happening. So just wanted to get your thoughts there. I'll leave it there. Thanks.

Speaker 3

Thank you, David. So first question on GLP-one by 2028, all of the above what you mentioned is ex U. S. Could have a product like Pulisity, could have other contract manufacturing business. So that is what how we see the GLP-one through our partnership with MedCera.

Speaker 3

The growth in CapEx as we had laid out that MedCera is contributing $100,000,000 We expect government incentives to be around $100,000,000 We're investing $100,000,000 1 hundred and 50 million dollars of our CapEx over three years. So it's manageable CapEx as you would have noticed we increased our CapEx projection for this year about $100,000,000 dollars We're not on a biosimilars, we're not going to start building from scratch. We're going to do certain M and A to bring the capacity already there and pipeline that is already there. And it will require incremental CapEx for those but we do not know exactly how much. But you can see in the ballpark will continue to be $70,000,000 1 hundred million dollars ongoing on CapEx.

Speaker 3

But our EBITDA is keep growing up, our cash flow is improving, our interest rates growing interest expense is coming down. So no problem. If I'll then invest here and keep making we have the awesome infrastructure already for many things and this will be additional great infrastructure to have.

Speaker 9

If I may just ask a quick follow-up regarding M and A, do you think that in terms of capacity, help us understand how large you can go or what you're thinking about aspirationally in terms of sizing?

Speaker 3

Well, David, we are focused as Tasos said, right, we're not going to be four times leverage under four times and over time we want to go to three times. So we would have to find a creative deal may include the cash on hand or limited cash equity. So there's multiple ways to do it.

Speaker 5

Yes. Hey David, this is Dars. Let's kind of be clear, right? Continued leverage continues to be an organic revenue growth continues to be our top two priorities, number one. Number two, we're not a big M and A shop.

Speaker 5

Sub. We're not a big M and A sub. The last deal we did, which was whatever $300 some million deal, that was the Apture deal five years ago. And I think universally that has paid for itself five times over. And it's the strength of our organic pipeline that puts us in a position I think to kind of do the right deal that makes sense financially, number one.

Speaker 5

Number two, it has to be strategic in nature such as biosimilars. And number three, we have a high degree of confidence of executing well. And I think the way the teams have executed in terms of growing our biosimilars essentially from nothing three years ago to something that probably in 2025 this year is probably going to be $150 some million business. I think that's remarkable. So that's how we think about it.

Speaker 5

And so hopefully that's helpful.

Speaker 1

It is. Thanks. The next question is from Les Lutsky from Truist Securities. Your line is now open. Good morning.

Speaker 1

Thank you for taking my questions. Can you provide any latest commentary around naloxone? Any additional contracts that you signed with other states? And then, second, I haven't really heard much commentary on Unithroid, maybe provide some puts and takes around long term opportunity there. And then lastly, you know, you did comment on the delevering, and you deleveraged faster than you anticipated.

Speaker 1

Is there a new target, for 2025? Thank you.

Speaker 3

So, let's good morning. Nalox zone, the states are slowing moving. So we haven't got to California, we're close to a few states, but haven't signed anything new beyond California, which was the largest state by far. You have to add another 20 states to get to California. And we're working through the distributors as well who already have the state contracts.

Speaker 3

So the auction is moving. It's a three player's market today. And Taiwan is not much in it. So we're Emergent is well positioned in all these states in longer term contracts and it is a frustrating process at state level. But we have a team that is key working on it and we expect to grow this business.

Speaker 3

But as it is what we have forecasted, we should be able to provide about 2,500,000 kits this year to the market and going up to 4,000,000 kits in the next in 2026. So that's what we're working towards. Unithroid is like sensoroid. They're a patient to which favors consistent therapy and that is what we provide. It has a consistent growth profile over time.

Speaker 3

We see it going the same way. Tasos? Hey Les, good morning.

Speaker 5

From a deleveraging perspective, you can expect us to continue to pay down debt and reduce net debt to EBITDA in 2025. Just depending on the number of scenarios around interest rates, refinancing etcetera, we're targeting about give or take between $80,000,000 to $100,000,000 overall reduction in gross debt, number one. This year in 2024, we finished net debt to EBITDA $3,900,000 percent. My gut feel is we're targeting 3.6% to 3.7% net debt to EBITDA. So another 0.3% or 0.2%, zero point three % reductions in net debt to EBITDA.

Speaker 5

So we kind of continuing going down in a reasonable manner reduction of leverage, gross and net debt to EBITDA.

Speaker 1

Great. Thank you for that color. The next question is from Balaji Paksa from Barclays. Your line is now open.

Speaker 10

Good morning, everyone. So it's great to see the consistent progress and the healthy outlook. I'll try to hit a couple of questions on topics not allowed. But Tassos, starting with you, firstly on the guidance and EBITDA margins, 2025 EBITDA range seems to be at around 20.9% to 22.5%. I'm surprised to see that even at the higher end there is limited OPM expansion.

Speaker 10

So how much of a drag has writer ELOE been on this? And are there any other factors at play, one? Two, I'm sure everyone will be happy to say that not a big M and A shop and the focus will be on continuing to deliver. So is this going to be more of a consistent deleverage year over year? Or are you comfortable with a bump up in net leverage on the back of any deals?

Speaker 10

Lastly, Chirag, I was just curious, combining your re approval of Leonard and White and the Beatrice's issues with Indore and that they can't supply, they evidently need a supplier. Do you see any scope for you to monetize your approval early either in the form of supply deal or an accelerated launch out of January 2026? Thank you.

Speaker 5

Let me take the first couple of them, Bilal, and good morning. So number one is, I mean, you're correct. If you look at EBITDA as a percentage of revenue and in 2024 we were at about 22.5%. We look at the guidance for more like 21%. So it looks a little bit of a deterioration.

Speaker 5

I wouldn't read anything into this. This is driven by a couple of things. Number one is just it's a mix of business. Healthcare continued to grow faster than the rest of the business. And the simple fact is that that EBITDA that business is slightly less profitable than the rest of the business.

Speaker 5

But frankly, we don't care. We're just looking at incremental dollars, right, and incremental costs that can help us fund our business and grow. So it's number one. And then obviously the combination of the Rythery LOE, right? Rythery is a 90% margin product, right?

Speaker 5

And they need to kind of invest in Kraksan and kind of maximize kind of the slope of growth for that product. So that's what I would say. My gut feel is, it's kind of we're barely into 2025. I think as we look at 2026 as we anniversary most of the right of the LOE, the incremental investments, full year investments of Krexan begin to kind of level off, I will expect to see EBITDA margin to begin increasing. So that's kind of on that.

Speaker 5

Number two, on deleveraging, the company is not on autopilot. So in five years, we reduced leverage from 7.4 to 3.9, probably in 2025 we'll get 3.6%. We'd like to see in a perfect world a gliding path of reduction. If at any given point in time there is a slight increase for a few months or for a year. I don't think our equity holders or our debt holders will be concerned because it will be the right decision that's going to begin kind of leading to further delevering over the course of time.

Speaker 5

So that's how we think about that. Suraj on the other question?

Speaker 3

I believe it's IP subject

Speaker 8

to a settlement, Chirag. And thanks for the question, Balaji. This is Jason Daley, the Chief Legal Officer. Given the settlement dynamics, I think we shouldn't be talking too much about lenalidomide. But obviously, we're excited for all of the products that are in our portfolio and looking forward to launching them all.

Speaker 1

We have no further questions. So I'd like to hand back to Shriraj for any closing remarks.

Speaker 3

Well, thank you very much. Have a nice weekend. Thanks. Thank you, everyone.

Operator

This concludes today's call. You may now disconnect from the call and enjoy the rest of your day.

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Earnings Conference Call
Amneal Pharmaceuticals Q4 2024
00:00 / 00:00