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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024
oTRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                   to                   .
Commission File Number 001-31812
ANI PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware58-2301143
(State or other jurisdiction of
incorporation or organization) 		(IRS Employer
Identification Number)
210 Main Street West
Baudette, Minnesota 56623
(Address of principal executive offices)
(218) 634-3500
(Registrant’s telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:Trading Symbol(s)Name of each exchange on which registered:
Common StockANIPNasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
x
Accelerated filero
Non-accelerated filer
o
Smaller reporting company
o
Emerging growth company
o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of July 30, 2024 there were 21,030,069 shares of common stock and 10,864 shares of class C special stock of the registrant outstanding.

ANI PHARMACEUTICALS, INC.
FORM 10-Q — Quarterly Report
For the Quarterly Period Ended June 30, 2024
TABLE OF CONTENTS
Page
2
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q and certain information incorporated herein by reference contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements include, but are not limited to, statements about future operations, strategies and growth potential, the revenue potential (licensing, royalty and sales) of products we sell, development timelines, expected timeframe for submission of new drug applications, abbreviated new drug applications, or supplemental new drug applications to the U.S. Food and Drug Administration (the “FDA”), pipeline or potential markets for our products, selling and marketing strategies and associated costs to support the sales of Purified Cortrophin® Gel (Repository Corticotropin Injection USP) (“Cortrophin Gel”), the announcement and pendency of the acquisition of Alimera Sciences, Inc. (“Alimera”), impact of accounting principles, litigation expenses, liquidity and capital resources, the impact of global pandemics on our business, and other statements that are not historical in nature, particularly those that utilize terminology such as “anticipates,” “will,” “expects,” “plans,” “potential,” “future,” “believes,” “intends,” “continue,” other words of similar meaning, derivations of such words, and the use of future dates. Such forward-looking statements are based on the reasonable beliefs of our management as well as assumptions made by and information currently available to our management. Readers should not put undue reliance on these forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified; therefore, our actual results may differ materially from those described in any forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in our periodic reports filed with the U.S. Securities and Exchange Commission (the “SEC”), including those discussed in the “Risk Factors” section in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and the following factors:
•our ability to continue to achieve commercial success with Cortrophin Gel, our first rare disease pharmaceutical product, including expanding the market and gaining market share, our business, financial condition, and results of operations will be negatively impacted;
•the ability of our approved products, including Cortrophin Gel, to achieve commercialization at levels of market acceptance that will continue to allow us to achieve profitability;
•our ability to complete or achieve any, or all of the intended benefits of acquisitions and investments, including the pending acquisition of Alimera, in a timely manner or at all;
•the risks that our acquisitions and investments, including the pending acquisition of Alimera, could disrupt our business and harm our financial position and operating results;
•delays in production, increased costs and potential loss of revenues if we need to change suppliers due to the limited number of suppliers for our raw materials, active pharmaceutical ingredients (“API”), expedients, and other materials;
•our reliance on single source third party contract manufacturing supply for certain of our key products, including Cortrophin Gel, and post consummation of the acquisition, for Alimera's products;
•delays or failure in obtaining and maintaining approvals by the FDA of the products we sell;
•changes in policy or actions that may be taken by the FDA, United States Drug Enforcement Administration, and other regulatory agencies, including among other things, drug recalls, regulatory approvals, facility inspections and potential enforcement actions;
•our ability to develop, license or acquire, and commercialize new products;
•the level of competition we face and the legal, regulatory and/or legislative strategies employed by our competitors to prevent or delay competition from generic alternatives to branded products;
•our ability to protect our intellectual property rights;
•the impact of legislative or regulatory reform on the pricing for pharmaceutical products;
•the impact of any litigation to which we are, or may become, a party;
•our ability, and that of our suppliers, development partners, and manufacturing partners, to comply with laws, regulations and standards that govern or affect the pharmaceutical and biotechnology industries;
•our ability to maintain the services of our key executives and other personnel; and
•general business and economic conditions, such as inflationary pressures, geopolitical conditions including, but not limited to, the conflict between Russia and the Ukraine, the conflict between Israel and Gaza, conflicts related to the attacks on cargo ships in the Red Sea, and the effects and duration of outbreaks of public health emergencies.
3
These factors should not be construed as exhaustive and should be read in conjunction with our other disclosures, including but not limited to our Annual Report on Form 10-K for the year ended December 31, 2023, including the factors described in “Item 1A. Risk Factors.” Other risks may be described from time to time in our filings made under the securities laws, including our quarterly reports on Form 10-Q and our current reports on Form 8-K. New risks emerge from time to time. It is not possible for our management to predict all risks. The forward-looking statements contained in this document are made only as of the date of this document. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
The Company may use its investor relations website as a distribution channel of material company information. Financial and other important information regarding the Company is routinely posted on and accessible through the Company’s investor relations website. We encourage investors and others interested in our Company to review the information we post on our investor relations website in addition to filings with the SEC, press releases, public conference calls and webcasts. Information contained on the Company’s website is not included as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

4
Part I — FINANCIAL INFORMATION
Item 1.    Condensed Consolidated Financial Statements (unaudited)
ANI PHARMACEUTICALS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)
Assets
June 30,
2024		December 31,
2023
Current Assets
Cash and cash equivalents$240,110 $221,121 
Accounts receivable, net of $102,784 and $97,262 of adjustments for chargebacks and other allowances at June 30, 2024 and December 31, 2023, respectively
166,091 162,079 
Inventories125,448 111,196 
Prepaid income taxes2,867 — 
Assets held for sale— 8,020 
Prepaid expenses and other current assets14,001 17,400 
Investment in equity securities6,943 — 
Total Current Assets555,460 519,816 
Non-current Assets
Property and equipment, net51,640 44,593 
Deferred tax assets, net of deferred tax liabilities and valuation allowance89,506 90,711 
Intangible assets, net183,078 209,009 
Goodwill28,221 28,221 
Derivatives and other non-current assets12,848 12,072 
Total Assets$920,753 $904,422 
Liabilities, Mezzanine Equity, and Stockholders’ Equity
Current Liabilities
Current debt, net of deferred financing costs$850 $850 
Accounts payable48,681 36,683 
Accrued royalties20,357 16,276 
Accrued compensation and related expenses16,111 23,786 
Accrued government rebates12,324 12,168 
Income taxes payable— 8,164 
Returned goods reserve33,897 29,678 
Current contingent consideration841 12,266 
Accrued expenses and other6,917 5,606 
Total Current Liabilities139,978 145,477 
Non-current Liabilities
Non-current debt, net of deferred financing costs and current component284,394 284,819 
Non-current contingent consideration11,092 11,718 
Other non-current liabilities4,679 4,809 
Total Liabilities$440,143 $446,823 
Commitments and Contingencies (Note 13)
Mezzanine Equity
Convertible Preferred Stock, Series A, $0.0001 par value, 1,666,667 shares authorized; 25,000 shares issued and outstanding at June 30, 2024 and December 31, 2023
24,850 24,850 
Stockholders’ Equity
Common Stock, $0.0001 par value, 33,333,334 shares authorized; 21,476,115 shares issued and 21,063,528 outstanding at June 30, 2024; 20,730,896 shares issued and 20,466,953 shares outstanding at December 31, 2023
2 2 
Class C Special Stock, $0.0001 par value, 781,281 shares authorized; 10,864 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively
— — 
Preferred Stock, $0.0001 par value, 1,666,667 shares authorized; 0 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively
— — 
Treasury stock, 412,587 shares of common stock, at cost, at June 30, 2024 and 263,943 shares of common stock, at cost, at December 31, 2023
(20,042)(10,081)
Additional paid-in capital532,497 514,103 
Accumulated deficit(65,025)(80,132)
Accumulated other comprehensive income, net of tax8,328 8,857 
Total Stockholders’ Equity455,760 432,749 
Total Liabilities, Mezzanine Equity, and Stockholders’ Equity$920,753 $904,422 
The accompanying notes are an integral part of these condensed consolidated financial statements.
5

ANI PHARMACEUTICALS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Net Revenues$138,040 $116,547 $275,470 $223,333 
Operating Expenses
Cost of sales (excluding depreciation and amortization)57,698 42,284 106,855 79,992 
Research and development7,296 7,374 17,807 13,298 
Selling, general, and administrative52,821 38,760 100,842 75,228 
Depreciation and amortization14,697 14,690 29,383 29,390 
Contingent consideration fair value adjustment359 1,035 449 1,996 
Restructuring activities— 2 — 1,132 
Gain on sale of building — — (5,347)— 
Total Operating Expenses, net132,871 104,145 249,989 201,036 
Operating Income 5,169 12,402 25,481 22,297 
Other Income (Expense), net  
Unrealized (loss) gain on investment in equity securities (2,712)— 6,943 — 
Interest expense, net(4,656)(7,100)(9,256)(14,796)
Other expense, net(88)(53)(120)(87)
(Loss) Income Before Income Tax Expense (Benefit)(2,287)5,249 23,048 7,414 
Income tax expense (benefit)— (996)7,128 (270)
Net (Loss) Income $(2,287)$6,245 $15,920 $7,684 
Dividends on Series A Convertible Preferred Stock(407)(407)(813)(813)
Net (Loss) Income Available to Common Shareholders$(2,694)$5,838 $15,107 $6,871 
Basic and Diluted (Loss) Income Per Share:
Basic (Loss) Income Per Share$(0.14)$0.30 $0.71 $0.36 
Diluted (Loss) Income Per Share$(0.14)$0.29 $0.70 $0.36 
Basic Weighted-Average Shares Outstanding19,32117,68819,21017,044
Diluted Weighted-Average Shares Outstanding19,32117,85519,56117,177
The accompanying notes are an integral part of these condensed consolidated financial statements.
6

ANI PHARMACEUTICALS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive (Loss) Income
(in thousands)
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Net (Loss) Income $(2,287)$6,245 $15,920 $7,684 
Other comprehensive (loss) income, net of tax:  
Foreign currency translation adjustment(12)(17)(109)90 
(Loss) Gain on interest rate swap(1,066)2,612 (420)1,469 
Total other comprehensive (loss) income, net of tax(1,078)2,595 (529)1,559 
Total comprehensive (loss) income, net of tax$(3,365)$8,840 $15,391 $9,243 
The accompanying notes are an integral part of these condensed consolidated financial statements.
7

ANI PHARMACEUTICALS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity
For the Three Months Ended June 30, 2024 and 2023
(in thousands)
(unaudited)
Mezzanine Equity
Series A Convertible
Preferred
Stock		Mezzanine Equity
Series A Convertible
Preferred Stock
Shares		Common
Stock
Par Value		Common
Stock
Shares		Class C
Special
Stock		Additional
Paid-in
Capital		Treasury
Stock
Shares		Treasury
Stock		Accumulated Other
Comprehensive Income,
Net of Tax		Accumulated
Deficit		Total Mezzanine
Equity and
Stockholders’
Equity
Balance, March 31, 2023$24,850 25$1 18,226$— $408,395 234$(8,643)$11,131 $(96,252)339,482 
Stock-based Compensation Expense— —— —— 5,249 —— — — 5,249 
Treasury Stock Purchases for Restricted Stock Vests— —— —— — 14(537)— — (537)
Issuance of Common Shares upon Stock Option and ESPP Exercise— —— 40— 1,289 —— — — 1,289 
Issuance of Restricted Stock Awards— —— 104— — —— — — — 
Restricted Stock Awards Forfeitures— —— (18)— — —— — — — 
Issuance of Common Stock in Public Offering— —1 2,184— 80,555 —— — — 80,556 
Dividends on Series A Convertible Preferred Stock— —— —— — —— — (407)(407)
Other Comprehensive Income— —— —— — —— 2,595 — 2,595 
Net Income— —— —— — —— — 6,245 6,245 
Balance, June 30, 2023$24,850 25$2 20,536$— $495,488 248$(9,180)$13,726 $(90,414)$434,472 
Balance, March 31, 2024$24,850 25$2 21,373$— $523,628 393$(18,742)$9,406 $(62,331)$476,813 
Stock-based Compensation Expense— —— —— 7,864 —— — — 7,864 
Treasury Stock Purchases for Restricted Stock Vests— —— —— — 20(1,300)— — (1,300)
Issuance of Common Shares upon Stock Option and ESPP Exercise— —— 46— 1,005 —— — — 1,005 
Issuance of Restricted Stock Awards— —— 65— — —— — — — 
Restricted Stock Awards Forfeitures— —— (8)— — —— — — — 
Dividends on Series A Convertible Preferred Stock— —— —— — —— — (407)(407)
Other Comprehensive Loss— —— —— — —— (1,078)— (1,078)
Net Loss— —— —— — —— — (2,287)(2,287)
Balance, June 30, 2024$24,850 25$2 21,476$— $532,497 413$(20,042)$8,328 $(65,025)$480,610 
The accompanying notes are an integral part of these condensed consolidated financial statements.








8

ANI PHARMACEUTICALS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity
For the Six Months Ended June 30, 2024 and 2023
(in thousands)
(unaudited)
Mezzanine Equity
Series A Convertible
Preferred
Stock		Mezzanine Equity
Series A Convertible
Preferred Stock
Shares		Common
Stock
Par Value		Common
Stock
Shares		Class C
Special
Stock		Additional
Paid-in
Capital		Treasury
Stock
Shares		Treasury
Stock		Accumulated Other
Comprehensive Income,
Net of Tax		Accumulated
Deficit		Total Mezzanine
Equity and
Stockholders’
Equity
Balance, December 31, 2022$24,850 25$1 17,644$— $403,900 149$(5,094)$12,167 $(97,285)$338,539 
Stock-based Compensation Expense— —— —— 9,587 —— — — 9,587 
Treasury Stock Purchases for Restricted Stock Vests— —— —— — 99(4,086)— — (4,086)
Issuance of Common Shares upon Stock Option and ESPP Exercise— —— 45— 1,446 —— — — 1,446 
Issuance of Restricted Stock Awards— —— 624— — —— — — — 
Issuance of Performance Stock Units— —— 67— — —— — — — 
Restricted Stock Awards Forfeitures— —— (28)— — —— — — — 
Issuance of Common Stock in Public Offering— —1 2,184— 80,555 —— — — 80,556 
Dividends on Series A Convertible Preferred Stock— —— —— — —— — (813)(813)
Other Comprehensive Income— —— —— — —— 1,559 — 1,559 
Net Income— —— —— — —— — 7,684 7,684 
Balance, June 30, 2023$24,850 25$2 20,536$— $495,488 248$(9,180)$13,726 $(90,414)$434,472 
Balance, December 31, 2023$24,850 25$2 20,731$— $514,103 264$(10,081)$8,857 $(80,132)$457,599 
Stock-based Compensation Expense— —— —— 14,798 —— — — 14,798 
Treasury Stock Purchases for Restricted Stock Vests— —— —— — 149(9,961)— — (9,961)
Issuance of Common Shares upon Stock Option and ESPP Exercise— —— 77— 3,596 —— — — 3,596 
Issuance of Restricted Stock Awards— —— 606— — —— — — — 
Issuance of Performance Stock Units— —— 74— — —— — — — 
Restricted Stock Awards Forfeitures— —— (12)— — —— — — — 
Dividends on Series A Convertible Preferred Stock— —— —— — —— — (813)(813)
Other Comprehensive Loss— —— —— — —— (529)— (529)
Net Income— —— —— — —— — 15,920 15,920 
Balance, June 30, 2024$24,850 25$2 21,476$— $532,497 413$(20,042)$8,328 $(65,025)$480,610 
The accompanying notes are an integral part of these condensed consolidated financial statements.
9

ANI PHARMACEUTICALS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended June 30,
20242023
Cash Flows From Operating Activities
Net income $15,920 $7,684 
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Stock-based compensation14,798 9,587 
Deferred taxes1,205 (137)
Depreciation and amortization29,383 29,390 
Unrealized gain on investment in equity securities
(6,943)— 
Non-cash operating lease expense750 61 
Non-cash interest 198 1,973 
Contingent consideration fair value adjustment449 1,996 
Gain on sale of building (5,347)— 
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable, net(4,012)(7,486)
Inventories(14,252)1,032 
Prepaid expenses and other assets1,777 1,449 
Accounts payable10,379 (800)
Accrued royalties4,081 (577)
Prepaid income taxes(11,031)(261)
Accrued government rebates156 (1,099)
Returned goods reserve4,219 (3,601)
Accrued expenses, accrued compensation, and other(6,047)2,839 
Net Cash and Cash Equivalents Provided by Operating Activities35,683 42,050 
Cash Flows From Investing Activities
Acquisition of product rights, intangible assets, and other related assets— (4,329)
Acquisition of property and equipment, net(9,030)(4,850)
Proceeds from the sale of building 13,514 — 
Net Cash and Cash Equivalents Provided by (Used in) Investing Activities4,484 (9,179)
Cash Flows From Financing Activities
Payments on borrowings under credit agreements(1,500)(1,500)
Series A convertible preferred stock dividends paid(813)(813)
Proceeds from stock option exercises and ESPP purchases3,596 1,446 
Proceeds from public offering— 80,555 
Treasury stock purchases for restricted stock vests(9,961)(4,086)
Payments on contingent consideration(12,500)— 
Net Cash and Cash Equivalents (Used in) Provided by Financing Activities(21,178)75,602 
Net Change in Cash, Cash Equivalents, and Restricted Cash18,989 108,473 
Cash, cash equivalents, and restricted cash, beginning of period221,121 53,234 
Cash and cash equivalents, end of period$240,110 $161,707 
Reconciliation of cash, cash equivalents, and restricted cash, beginning of period
Cash and cash equivalents$221,121 $48,228 
Restricted cash— 5,006 
Cash, cash equivalents, and restricted cash, beginning of period$221,121 $53,234 
Supplemental disclosure for cash flow information:
Cash paid for interest, net of amounts capitalized$16,155 $15,456 
Cash paid for income taxes$17,204 $141 
Right-of-use assets obtained in exchange for lease obligations$— $4,499 
Supplemental non-cash investing and financing activities:
Property and equipment purchased and included in accounts payable$1,618 $539 
The accompanying notes are an integral part of these condensed consolidated financial statements.
10

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular Dollars in Thousands, Except Share and per Share Data)
(Unaudited)
1.    BUSINESS, PRESENTATION, AND RECENT ACCOUNTING PRONOUNCEMENTS
Overview
ANI Pharmaceuticals, Inc. and its consolidated subsidiaries (together, “ANI,” the “Company,” “we,” “us,” or “our”) is a diversified bio-pharmaceutical company serving patients in need by developing, manufacturing, and marketing branded and generic prescription pharmaceuticals, including for diseases with high unmet medical need. The Company is focused on delivering growth by scaling up the Rare Disease business through the launch of Cortrophin Gel, strengthening its generics business with enhanced development capability, innovation in established brands and leveraging its U.S. based manufacturing capabilities. The Company’s three pharmaceutical manufacturing facilities, of which two are located in Baudette, Minnesota, and one is located in East Windsor, New Jersey, are together capable of producing oral solid dose products, as well as semi-solids, liquids and topicals, controlled substances, and potent products that must be manufactured in a fully-contained environment. The Company has ceased operations at our subsidiary in Oakville, Ontario, Canada as of March 31, 2023. This action was part of ongoing initiatives to capture operational synergies following our acquisition of Novitium Pharma LLC (“Novitium”) in November 2021. The Company has fully completed the transition of the products manufactured or packaged in Oakville to one of the three U.S. based manufacturing sites. In February 2024, the Company entered into an agreement for the sale of the Oakville site, for a price of $19.2 million Canadian Dollars, or approximately $14.2 million, based on the exchange rate at closing. The sale closed on March 28, 2024 (see Note 4).
The Company’s operations are subject to certain risks and uncertainties including, among others, current and potential competitors with greater resources, dependence on significant customers, and possible fluctuations in financial results.
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly the Company’s financial position, results of operations, comprehensive (loss) income, and cash flows. The consolidated balance sheet at December 31, 2023 has been derived from audited financial statements as of that date. The unaudited interim condensed consolidated statements of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the U.S. Securities and Exchange Commission (the “SEC”). Therefore, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto previously distributed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”), as filed with the SEC.
Principles of Consolidation
The unaudited interim condensed consolidated financial statements include the accounts of ANI Pharmaceuticals, Inc. and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation.
11

Foreign Currency
The Company has ceased operations at our subsidiary in Oakville, Ontario, Canada as of March 31, 2023. The Company currently has a subsidiary located in India. The Canada-based subsidiary conducted its transactions in U.S. dollars and Canadian dollars, but its functional currency was the U.S. dollar. The India-based subsidiary generally conducts its transactions in Indian rupees, which is also its functional currency. The results of any non-U.S. dollar transactions and balances are remeasured in U.S. dollars at the applicable exchange rates during the period and resulting foreign currency transaction gains and losses are included in the determination of net income. The gain or loss on transactions denominated in foreign currencies and the translation impact of local currencies to U.S. dollars was immaterial for the three and six months ended June 30, 2024 and 2023. Unless otherwise noted, all references to “$” or “dollar” refer to the U.S. dollar. The Company’s asset and liability accounts are translated using the current exchange rate as of the balance sheet date, except for shareholders’ equity accounts, which are translated using historical rates. Net revenues and expense accounts are translated using an average exchange rate over the period ended on the balance sheet date. Adjustments resulting from the translation of the financial statements of the Company’s foreign subsidiaries into U.S. dollars are accumulated as a separate component of shareholders’ equity within accumulated other comprehensive (loss) income, net of tax.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In the condensed consolidated financial statements, estimates are used for, but not limited to, variable consideration determined based on accruals for chargebacks, administrative fees and rebates, government rebates, returns and other allowances, income tax provision or benefit, deferred taxes and valuation allowance, stock-based compensation, revenue recognition, allowance for inventory obsolescence, valuation of financial instruments and intangible assets, accruals for contingent liabilities, including contingent consideration in acquisitions, fair value of long-lived assets, determination of right-of-use assets and lease liabilities, allowance for credit losses, and the depreciable lives of long-lived assets. Because of the uncertainties inherent in such estimates, actual results may differ from those estimates. Management periodically evaluates estimates used in the preparation of the financial statements for reasonableness.
Restructuring Activities
The Company defines restructuring activities to include costs directly associated with exit or disposal activities. Such costs include cash employee contractual severance and other termination benefits, one-time employee termination severance and benefits, contract termination charges, impairment and acceleration of depreciation associated with long-lived assets, and other exit or disposal costs. In general, the Company records involuntary employee-related exit and disposal costs when there is a substantive plan for employee severance and related payments are probable and estimable. For one-time termination benefits, including those with a service requirement, expense is recorded when the employees are entitled to receive such benefits and the amount can be reasonably estimated. Expense related to one-time termination benefits with a service requirement is recorded over time, as the service is completed. Contract termination fees and penalties, and other exit and disposal costs are generally recorded as incurred. Restructuring activities are recognized as an operating expense in the condensed consolidated statements of operations.
Investment in Equity Securities
The Company accounts for its investment in equity securities with a readily determinable fair value in accordance with the guidance in ASC 321, Investments – Equity Securities. The Company presents unrealized gains and losses related to the equity securities, within Unrealized gain on investment in equity securities in its unaudited condensed consolidated statements of operations. Fair values are obtained from quoted prices on the NASDAQ Stock Market, Inc. (“NASDAQ”).
12

Assets Held-for-Sale
The Company classifies assets held-for-sale if all held-for-sale criteria is met pursuant to ASC 360-10, Property, Plant and Equipment. Criteria include management commitment to sell the disposal group in its present condition and the sale being deemed probable of being completed within one year. Assets classified as held-for-sale are not depreciated and are measured at the lower of their carrying amount or fair value less cost to sell. The Company assesses the fair value of a disposal group, less any costs to sell, each reporting period it remains classified as held-for-sale and reports any subsequent changes as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the initial carrying value of the disposal group. The Company determined that the Oakville, Ontario, Canada property met the held-for-sale criteria. As of December 31, 2023, approximately $8.0 million of assets held for sale were recorded on the consolidated balance sheets. The Oakville, Ontario property was sold on March 28, 2024 (see Note 4).
Recent Accounting Pronouncements
Recent Accounting Pronouncements Not Yet Adopted
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies and are adopted by the Company as of the specified effective date. The Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.
In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures related to significant segment expenses. The guidance in this ASU is effective for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The guidance is applied retrospectively to all periods presented in the financial statements, unless it is impracticable. The Company is currently evaluating the effect the adoption of this ASU may have on its disclosures in the notes to the consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes guidance to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. These amendments are effective for all public entities for fiscal periods beginning after December 15, 2024, with early adoption permitted. These amendments apply on a prospective basis, but entities have an option to apply it retrospectively for all periods presented. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.
Recent Securities and Exchange Commission Final Rules Issued but Not Yet Effective
On March 6, 2024, the SEC adopted new rules that will require registrants to disclose certain climate-related information in their annual reports. The final rule requires disclosure of, among other things: material climate-related risks and their material impacts; activities to mitigate or adapt to such risks; information about a registrant’s board of directors’ oversight of climate-related risks and management’s role in managing material climate-related risks; and information on any climate-related targets or goals that are material to the registrant’s business, results of operations, or financial condition. In addition, certain disclosures related to severe weather events and other natural conditions will be required in a registrant’s audited financial statements. The required information about climate-related risks will also include disclosure of a registrant’s greenhouse gas emissions. The Company will be subject to the applicable requirements of the final rule in our annual reports for fiscal years beginning on January 1, 2025. In April 2024, the SEC voluntarily stayed the rules pending judicial review. The Company is currently evaluating the potential impact of these rules on its consolidated financial statements and related disclosures.
13

2.    REVENUE RECOGNITION AND RELATED ALLOWANCES
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized using the following steps:
•Identification of the contract, or contracts, with a customer;
•Identification of the performance obligations in the contract;
•Determination of the transaction price, including the identification and estimation of variable consideration;
•Allocation of the transaction price to the performance obligations in the contract; and
•Recognition of revenue when we satisfy a performance obligation.
Revenues are primarily derived from sales of generic, rare disease, and established brand pharmaceutical products, royalties, and other pharmaceutical services. Revenue is recognized when obligations under the terms of contracts with customers are satisfied, which generally occurs when control of the products sold are transferred to the customer. Variable consideration is estimated after the consideration of applicable information that is reasonably available. The Company generally does not have incremental costs to obtain contracts that would otherwise not have been incurred. The Company does not adjust revenue for the promised amount of consideration for the effects of a significant financing component because our customers generally pay us within 100 days.
All revenue recognized in the accompanying unaudited interim condensed consolidated statements of operations is considered to be revenue from contracts with customers. The following table depicts the disaggregation of revenue:
Three Months Ended June 30,Six Months Ended June 30,
Products and Services (in thousands)2024202320242023
Sales of generic pharmaceutical products$73,964 $63,317 $144,181 $127,030 
Sales of established brand pharmaceutical products, royalties, and other pharmaceutical services14,883 28,926 45,159 55,669 
Sales of rare disease pharmaceutical products49,193 24,304 86,130 40,634 
Total net revenues$138,040 $116,547 $275,470 $223,333 
Three Months Ended June 30,Six Months Ended June 30,
Timing of Revenue Recognition (in thousands)2024202320242023
Performance obligations transferred at a point in time$138,040 $116,547 $275,470 $222,958 
Performance obligations transferred over time— — — 375 
Total$138,040 $116,547 $275,470 $223,333 
In the three and six months ended June 30, 2024 and 2023, the Company did not incur, and therefore did not defer, any material incremental costs to obtain or fulfill contracts. The Company recognized a decrease of $1.5 million to net revenue from performance obligations satisfied in prior periods during the six months ended June 30, 2024, consisting primarily of revised estimates for variable consideration, including chargebacks, rebates, returns, and other allowances, related to prior period sales. The Company recognized an increase of $5.0 million to net revenue from performance obligations satisfied in prior periods during the six months ended June 30, 2023, consisting primarily of revised estimates for variable consideration, including chargebacks, rebates, returns, and other allowances, related to prior period sales. Additionally, as of June 30, 2024, and December 31, 2023, there was no deferred revenue recorded on the condensed consolidated balance sheets.
As of June 30, 2024, the aggregate amount of the transaction price allocated to the remaining performance obligations for all open contract manufacturing customer contracts was $3.0 million, which consists of firm orders for contract manufactured products. The Company recognizes revenue for these performance obligations as they are satisfied, which is anticipated within six months.
14

Variable consideration
Sales of pharmaceutical products are subject to variable consideration due to chargebacks, government rebates, returns, administrative and other rebates, and cash discounts. Estimates for these elements of variable consideration require significant judgment.
The following table summarizes activity in the condensed consolidated balance sheets for accruals and allowances for the six months ended June 30, 2024 and 2023, respectively:
Accruals for Chargebacks, Returns, and Other Allowances
(in thousands)ChargebacksGovernment
Rebates		ReturnsAdministrative
Fees and Other
Rebates		Prompt
Payment
Discounts
Balance at December 31, 2022$148,562 $10,872 $33,399 $9,442 $6,488 
Accruals/Adjustments290,826 11,100 5,995 25,606 11,028 
Credits Taken Against Reserve(362,253)(10,001)(9,596)(25,177)(12,653)
Balance at June 30, 2023 (1)$77,135 $11,971 $29,798 $9,871 $4,863 
Balance at December 31, 2023$84,208 $12,168 $29,678 $11,412 $4,865 
Accruals/Adjustments267,779 13,324 21,895 29,970 11,422 
Credits Taken Against Reserve(262,541)(13,168)(17,676)(29,656)(11,243)
Balance at June 30, 2024 (1)$89,446 $12,324 $33,897 $11,726 $5,044 
______________________________________________
(1)Chargebacks and Prompt Payment Discounts are included as an offset to accounts receivable in the unaudited interim condensed consolidated balance sheets. Administrative Fees and Other Rebates are included as an offset to accounts receivable or as accrued expenses and other in the unaudited interim condensed consolidated balance sheets. Returns are included in returned goods reserve in the unaudited interim condensed consolidated balance sheets. Government Rebates are included in accrued government rebates in the unaudited interim condensed consolidated balance sheets.
Credit Concentration
ANI’s customers are primarily wholesale distributors, chain drug stores, group purchasing organizations, and pharmaceutical companies.
During the three and six months ended June 30, 2024, there were four customers that accounted for 10% or more of net revenues. During the three months ended June 30, 2023, there were four customers that accounted for 10% or more of net revenues. During the six months ended June 30, 2023, there were three customers that accounted for 10% or more of net revenues. As of June 30, 2024, accounts receivable from these customers totaled 79% of Accounts receivable, net.
The four customers represent the total percentage of net revenues as follows:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Customer 124 %32 %29 %32 %
Customer 212 %14 %12 %14 %
Customer 313 %13 %11 %13 %
Customer 417 %10 %15 %9 %

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3.    PENDING MERGER AGREEMENT
On June 21, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Alimera Sciences, Inc., a Delaware corporation (“Alimera”) and ANIP Merger Sub INC., a Delaware corporation and a wholly owned indirect subsidiary of the Company (“Merger Sub”), providing for the merger of Merger Sub with and into Alimera (the “Merger”), with Alimera surviving the Merger as a wholly owned indirect subsidiary of the Company. Capitalized terms used herein, but not otherwise defined, have the meanings set forth in the Merger Agreement.
At the effective time of the Merger (the “Effective Time”), each outstanding share of common stock, par value $0.01 per share, of Alimera, outstanding immediately prior to the Effective Time will automatically be converted into the right to receive (i) $5.50 in cash, without interest and (ii) one contingent value right (a “CVR”), which shall represent the right to receive the Milestone Payments (as defined below) subject to the terms and conditions set forth in the CVR Agreement (as defined below) (the consideration contemplated by (i) and (ii), together, the “Merger Consideration”).
At or immediately prior to the Effective Time, the Company will enter into a contingent value rights agreement (the “CVR Agreement”), pursuant to which each holder of Alimera Common Stock, as well as holders of Alimera Warrants, Alimera Options, Alimera PSUs, Alimera RSAs and Alimera RSUs, may become entitled to contingent cash payments per CVR (each, a “Milestone Payment”), such payment(s) being contingent upon, and subject to, satisfaction of the Milestones (as defined below).

When issued, each CVR will entitle the holder (the “Holder”) to receive Milestone Payments for 2026 and 2027, upon satisfaction of the applicable Milestones. The Milestone Payments for each CVR will equal the product (rounded to the nearest 1/100 of $0.01) of $0.25 multiplied by a fraction (which in no case will exceed one), and (i) for 2026, equals the amount, if any, by which the 2026 Net Revenue exceeds $140.0 million, divided by $10.0 million (subject to adjustment for the exercise price of Eligible Options), and (ii) for 2027, equals the amount, if any, by which the 2027 Net Revenue exceeds $160.0 million, divided by $15.0 million (subject to adjustment for the exercise price of Eligible Options) (the occurrence of the events in clauses (i) and (ii), each, a “Milestone”).
The Merger Agreement requires Alimera, as promptly as reasonably practicable, and in any event within 25 business days following the date of the Merger Agreement, to prepare and file with the SEC a proxy statement for the purpose of seeking stockholder approval to the Merger Agreement. Alimera filed their preliminary proxy statement on July 24, 2024 with the SEC.
Consummation of the Merger is subject to certain conditions, including approval by Alimera’s stockholders, the absence of any legal restraints restraining, enjoining, preventing, prohibiting or otherwise making illegal the consummation of the Merger, expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and any other specified required regulatory approvals that may be required will have been obtained, and each party’s performance of its obligations in all material respects under the Merger Agreement.
In connection with the Merger, JPMorgan Chase Bank, N.A. and Blackstone Credit & Insurance (the “Lenders”) have committed to provide debt financing for the transaction in an aggregate principal amount equal to $280.0 million, on the terms and subject to the conditions set forth in a commitment letter, dated June 21, 2024 (the “Debt Commitment Letter”). The obligations of the Lenders to provide debt financing under the Debt Commitment Letter are subject to customary conditions, including, without limitation, execution and delivery of definitive documentation consistent with the Debt Commitment Letter.
During the three and six months ended June 30, 2024, the Company incurred approximately $3.5 million in transaction costs related to this pending Merger Agreement, all of which were expensed, and are included in Selling, general, and administrative on the condensed consolidated statements of operations.



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4.    RESTRUCTURING
On March 31, 2023 the Company ceased operations at the Oakville, Ontario, Canada manufacturing plant. This action was part of ongoing initiatives to capture operational synergies following the acquisition of Novitium in November 2021. ANI has fully completed the transition of the products manufactured or packaged in Oakville to one of the Company’s three U.S. based manufacturing sites.
There were no restructuring activities recorded in the three or six months ended June 30, 2024 and as of June 30, 2024, there was no severance or other employee benefits accrued on the unaudited interim condensed consolidated balance sheet.
For the three months ended June 30, 2023, restructuring activities resulted in an immaterial amount of expenses, and for the six months ended June 30, 2023, restructuring activities resulted in expenses of $1.1 million. This included $0.2 million of severance and other employee benefit costs and $0.7 million of accelerated depreciation costs and $0.2 million for other miscellaneous costs.
In conjunction with the exit of the Canadian facility, the Company determined that the land and building at the Oakville, Ontario, Canada plant (the “Property”) will be sold together and met the criteria to be classified as held for sale as of June 30, 2023. The land and building had a net carrying value of approximately $8.0 million, which was presented as assets held for sale on the accompanying condensed consolidated balance sheet at December 31, 2023. These assets were part of the Generics, Established Brands, and Other segment. As of June 30, 2024 these assets were sold.
On February 15, 2024, ANI Pharmaceuticals Canada Inc., a wholly owned subsidiary of the Company, entered into an agreement (the “Agreement”) with 1540700 Ontario Limited (“Buyer”) for the sale of the Property for a total purchase price of $19.2 million Canadian Dollars, or approximately $14.2 million, based on the exchange rate at closing. On March 28, 2024 the Company completed the sale of the Property. After payment of commissions, real estate taxes, and other related costs of approximately $0.7 million, the Company received a net proceeds of approximately $13.5 million at closing. The gain on the sale of the Property was approximately $5.3 million, recorded in the unaudited interim condensed consolidated statements of operations for the six months ended June 30, 2024.
5.    INDEBTEDNESS
Credit Facility
On November 19, 2021, the Company completed its acquisition of Novitium pursuant to the terms of the Agreement and Plan of Merger, dated as of March 8, 2021 (the “Novitium Merger Agreement”), by and among the Company, Novitium, Nile Merger Sub LLC, a Delaware limited liability company, and certain other parties, with Novitium becoming a wholly owned subsidiary of the Company.
On November 19, 2021, the Company, as borrower, entered into a credit agreement (the “Credit Agreement”) with Truist Bank and other lenders, which provides for credit facilities consisting of (i) a senior secured term loan facility in an aggregate principal amount of $300.0 million (the “Term Facility”) and (ii) a senior secured revolving credit facility in an aggregate commitment amount of $40.0 million, which may be used for revolving credit loans, swingline loans and letters of credit (the “Revolving Facility,” and together with the Term Facility, the “Credit Facility”). The Term Facility proceeds were used to finance the cash portion of the consideration under the Novitium Merger Agreement, repay the existing credit facility, and pay fees, costs and expenses incurred in connection with the merger. The Term Facility matures in November 2027 and the Revolving Facility in November 2026. The Credit Facility has a subjective acceleration clause in case of a material adverse effect.
In July 2023, the Company amended its Credit Agreement to transition from London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Finaning Rate (“SOFR”) due to the cessation of LIBOR pursuant to the terms of Amendment No.1 to the Credit Agreement (“Amendment No. 1”). SOFR was applied to the Credit Facility for the interest period (as defined in the Credit Agreement) beginning on August 1, 2023 and replaced all LIBOR terms.
The Credit Facility permits both base rate borrowings (“ABR Loans”) and Eurodollar rate borrowings (“Eurodollar Loans”), plus a spread as defined in the Credit Facility. As of June 30, 2024, we had not drawn on the Revolving Facility and $40.0 million remained available for borrowing subject to certain conditions.
The interest rate under the Term Facility was 11.44% at June 30, 2024.
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The Company incurred $14.0 million in deferred debt issuance costs associated with the Credit Facility. Costs allocated to the Term Facility are classified as a direct reduction to the current and non-current portion of the borrowings, depending on their nature. Costs allocated to the Revolving Facility are classified as other current and other non-current assets, depending on their nature. A commitment fee of 0.5% per annum is assessed on any unused portion of the Revolving Facility.
The Credit Facility is secured by a lien on substantially all of ANI Pharmaceuticals, Inc.’s and its principal domestic subsidiary’s assets and any future domestic subsidiary guarantors’ assets. The Credit Facility is subject to customary financial and nonfinancial covenants.
The carrying value of the current and non-current components of the Term Facility as of June 30, 2024 and December 31, 2023 are:
Current
(in thousands)June 30,
2024		December 31,
2023
Current borrowing on debt$3,000 $3,000 
Deferred financing costs(2,150)(2,150)
Current debt, net of deferred financing costs $850 $850 
Non-Current
(in thousands)June 30,
2024		December 31,
2023
Non-current borrowing on debt$289,500 $291,000 
Deferred financing costs(5,106)(6,181)
Non-current debt, net of deferred financing costs and current component$284,394 $284,819 
As of June 30, 2024, outstanding principal was $292.5 million on the Term Facility. Of the $0.6 million of unamortized deferred debt issuance costs allocated to the Revolving Facility, $0.3 million is included in other non-current assets in the unaudited interim condensed consolidated balance sheets, and $0.3 million is included in prepaid expenses and other current assets in the unaudited interim condensed consolidated balance sheets.
The contractual maturity of the Term Facility is as follows for the period ending:
(in thousands)Term Facility
2024 (remainder of the year)$1,500 
20253,000 
20263,000 
2027285,000 
Total$292,500 
The following table sets forth the components of total interest expense related to the Term Facility during the three and six months ended June 30, 2024 and 2023, as recognized in the accompanying unaudited interim condensed consolidated statements of operations for the three and six months ended June 30, 2024 and 2023:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2024202320242023
Contractual coupon$6,848 $7,620 $13,761 $14,970 
Amortization of finance fees591 591 1,182 1,182 
Capitalized interest(151)(277)(263)(298)
$7,288 $7,934 $14,680 $15,854 
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6.    DERIVATIVE FINANCIAL INSTRUMENT AND HEDGING ACTIVITY
In April 2020, the Company entered into an interest rate swap with Citizens Bank, N.A. to manage its exposure to changes in LIBOR-based interest rates underlying total borrowings under term facilities related to the prior credit agreement, and the interest rate swap matures in December 2026. Concurrent with the termination of the prior credit agreement and entry into the Credit Agreement with Truist Bank, the interest rate swap with a notional value of $168.6 million at origin on November 21, 2021 was novated and Truist Bank is the new counterparty.
As described further below, the Company amended its Credit Agreement to transition from LIBOR to SOFR due to the cessation of LIBOR, and accordingly, the interest rate swap transitioned from LIBOR to SOFR. The swap is used to manage changes in SOFR-based interest rates underlying a portion of the borrowing under the Term Facility.
The interest rate swap provides an effective fixed interest rate of 2.26% and has been designated as an effective cash flow hedge and therefore qualifies for hedge accounting. As of June 30, 2024, the notional amount of the interest rate swap was $139.4 million and decreased quarterly by approximately $4.0 million until December 2023, after which it remains static until maturity in December 2026. As of June 30, 2024, the fair value of the interest rate swap asset recorded in other non-current assets in the unaudited interim condensed consolidated balance sheets was $7.4 million. As of June 30, 2024, $8.5 million was recorded in accumulated other comprehensive (loss) income, net of tax in the unaudited interim condensed consolidated balance sheets.
During the three and six months ended June 30, 2024, the loss on the fair value of the interest rate swaps, net of tax recorded in accumulated other comprehensive (loss) income in the unaudited interim condensed consolidated statements of comprehensive income was approximately $1.1 million and $0.5 million, respectively. Differences between the hedged SOFR rate and the fixed rate are recorded as interest expense in the same period that the related interest is recorded for the Term Facility based on the SOFR rate. In the three and six months ended June 30, 2024, the Company recorded a reduction in interest expense of $1.6 million and $3.2 million in relation to the interest rate swaps, respectively. In the three and six months ended June 30, 2023, the Company recorded a reduction in interest expense of $0.6 million and $1.1 million in relation to the interest rate swaps, respectively. Included in this amount for the three and six months ended June 30, 2024 are reclassifications out of accumulated other comprehensive (loss) income of $0.2 million of interest income and $0.4 million, respectively, related to terminated and de-designated cash flow hedges. Included in this amount for the three and six months ended June 30, 2023 are reclassifications out of accumulated other comprehensive (loss) income of $0.7 million of interest income and $0.7 million, respectively, related to terminated and de-designated cash flow hedges.
In conjunction with the amendment of the Credit Agreement (see Note 5), the Company’s derivative positions automatically transitioned to SOFR, the designated fallback terms, as determined by the International Swaps and Derivatives Association on August 1, 2023. Concurrently, the Company updated its hedge documentation to reflect the change of the benchmark index, which changed solely as a result of reference rate reform. Under ASC 848, Reference Rate Reform, hedge accounting may continue without de-designation if certain criteria are met. For cash flow hedges in which the designated hedged risk is LIBOR (or another rate that is expected to be discontinued), the guidance allows an entity to assert that it remains probable that the hedged forecasted transaction will occur. The Company applied the optional expedient within ASC 848 to conclude the updates to the hedge relationship due to reference rate reform did not have a material impact on the Company’s consolidated financial statements.
7.    EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding during the period.
For periods of net income, and when the effects are not anti-dilutive, diluted earnings per share is calculated by dividing net income available to common stockholders by the weighted-average number of shares outstanding plus the impact of all potential dilutive common shares, consisting primarily of common stock options, shares to be purchased under the 2016 Employee Stock Purchase Plan (“ESPP”), and performance stock units, using the more dilutive of the treasury stock or the two-class method. For periods of net loss, diluted loss per share is calculated similarly to basic loss per share.


19

Unvested restricted shares and Series A convertible preferred stock shares contain non-forfeitable rights to dividends, and therefore are considered to be participating securities; in periods of net income, the calculation of basic and diluted earnings (loss) per share excludes from the numerator net income (but not net loss) attributable to the unvested restricted shares and the common shares assumed converted from the preferred shares and excludes the impact of those shares from the denominator. The Company’s participating securities do not have a contractual obligation to share in the Company’s losses. As such, the net loss was attributed entirely to common stockholders. As the Company has reported a net loss for the three months ended June 30, 2024, diluted net loss per share attributable to common shareholders is the same as basic net loss per share attributable to common shareholders for this period.
Earnings per share for the three and six months ended June 30, 2024 and 2023 are calculated for basic and diluted earnings per share as follows:
BasicDilutedBasicDiluted
(in thousands, except per share amounts)Three Months Ended June 30,Three Months Ended June 30,Six Months Ended June 30,Six Months Ended June 30,
20242023202420232024202320242023
Net (loss) income available to common shareholders$(2,694)$5,838 $(2,694)$5,838 $15,107 $6,871 $15,107 $6,871 
Earnings allocated to participating securities— (589)— (589)(1,499)(716)(1,474)(716)
Net (loss) income available to common shareholders$(2,694)$5,249 $(2,694)$5,249 $13,608 $6,155 $13,633 $6,155 
Basic Weighted-Average Shares Outstanding19,32117,68819,32117,68819,210 17,04419,210 17,044
Dilutive effect of common stock options, ESPP, and performance stock units— 167351 133
Diluted Weighted-Average Shares Outstanding19,32117,85519,561 17,177
(Loss) earnings per share$(0.14)$0.30 $(0.14)$0.29 $0.71 $0.36 $0.70 $0.36 
The number of shares of potentially dilutive securities excluded from the computation of diluted net loss per share attributable to common stockholders was 2.8 million for the three months ended June 30, 2024 because including them would have been anti-dilutive.
The number of anti-dilutive shares, which have been excluded from the computation of diluted earnings per share, was 2.3 million for the six months ended June 30, 2024.
The number of anti-dilutive shares, which have been excluded from the computation of diluted earnings per share, was 2.5 million for the three and six months ended June 30, 2023.
8.    INVENTORIES
Inventories consist of the following as of:
(in thousands)June 30, 2024December 31, 2023
Raw materials$62,584 $62,237 
Packaging materials10,434 9,617 
Work-in-progress4,775 3,144 
Finished goods47,655 36,198 
Inventories$125,448 $111,196 
20

Vendor Concentration
Raw materials are sourced for products, including active pharmaceutical ingredients (“API”), from both domestic and international suppliers. Generally, only a single source of API is qualified for use in each product due to the cost and time required to validate a second source of supply. As a result, the Company is dependent upon our current vendors to reliably supply the API required for on-going product manufacturing. During the three and six months ended June 30, 2024, approximately 27% and 24%, respectively, of our raw material purchases were from one supplier. During the three and six months ended June 30, 2023, no single vendor represented more than 10% of our raw material inventory purchases.
9.    GOODWILL AND INTANGIBLE ASSETS
Goodwill
As a result of the 2013 merger with BioSante Pharmaceuticals, Inc., the Company recorded goodwill of $1.8 million. As a result of the acquisition of WellSpring Pharma Services Inc. in 2018, the Company recorded goodwill of $1.7 million. From the acquisition of Novitium in 2021, the Company recorded goodwill of $24.6 million. As of June 30, 2024, the Company has two operating segments, which were also deemed the Company’s two reporting units, Generics, Established Brands, and Other reporting unit and the Rare Disease reporting unit. All of the goodwill is recorded in the Generics, Established Brands, and Other reporting unit.
Goodwill is reviewed for impairment at least annually, at October 31, or more frequently if a triggering event occurs between impairment testing dates. The Company’s impairment assessment begins with a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. Qualitative factors may include, macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity and Company specific events. If, based on the qualitative test, the Company determines that it is “more likely than not” that the fair value of a reporting unit is less than its carrying value, then we evaluate goodwill for impairment by comparing the fair value of our reporting unit to its respective carrying value, including its goodwill. If it is determined that it is “not likely” that the fair value of the reporting unit is less than its carrying value, then no further testing is required. There have been no events or changes in circumstances that would have reduced the fair value of the Generics, Established Brands, and Other reporting unit below its carrying value during the three and six months ended June 30, 2024 and 2023, no impairment charges have been recognized.
Intangible Assets
The components of definite-lived intangible assets and indefinite-lived intangible assets, other than goodwill, are as follows:
June 30, 2024December 31, 2023Remaining Weighted Average
Amortization
Period(1)
(in thousands)Gross Carrying
Amount		Accumulated
Amortization		Net Carrying Amount Gross Carrying
Amount		Accumulated
Amortization		Net Carrying Amount
Definite-Lived Intangible Assets:
Acquired ANDAs intangible assets$209,780 $(112,742)$97,038 $209,780 $(100,660)$109,120 4.8 years
NDAs and product rights244,871 (196,451)48,420 244,871