Amneal Pharmaceuticals - Earnings Call - Q2 2025

Executive Summary

• Q2 2025 delivered solid execution but a mixed print versus consensus: net revenue was $724.5M (+3% YoY) with adjusted diluted EPS at $0.25; revenue missed Street while EPS beat on margin strength and FX. Consensus for Q2 was revenue $744.6M*, EPS $0.1749*.
• Adjusted EBITDA was $184.0M, outpacing Street ($175.0M*) on favorable mix and efficiency initiatives.
• Management raised 2025 guidance for adjusted EBITDA ($665–$685M from $650–$675M), adjusted diluted EPS ($0.70–$0.75 from $0.65–$0.70) and operating cash flow (raised by $20M), with revenue held at $3.0–$3.1B.
• A comprehensive refinancing (oversubscribed) reduces annual interest expense by >$33M and extends maturities to 2032, de-risking the balance sheet and supporting cash flow; near-term catalysts include CREXONT® uptake, Brekiya® FDA approval and government-channel wins.

What Went Well and What Went Wrong

What Went Well

• Specialty momentum: Specialty net revenue rose 23% YoY on CREXONT®, RYTARY® and UNITHROID®; CREXONT® uptake exceeded expectations, with management confident on its peak sales trajectory (“highly confident that Trexon [CREXONT®] will achieve U.S. peak sales of $300–$500M”).
• Margin strength and EPS beat: Adjusted EPS grew 56% YoY to $0.25, supported by top-line, higher gross margins and favorable FX (“adjusted EPS growth of 56%... driven by higher adjusted EBITDA, favorable foreign exchange and lower interest expense”).
• Balance sheet optimization: Completed refinancing ($2.1B Term Loan B + $600M senior secured notes) and reduced net leverage to 3.7x; refinancing was “oversubscribed many times over” and cuts interest costs by >$33M annually.

What Went Wrong

• Revenue miss vs Street: Q2 net revenue of $724.5M came in below consensus ($744.6M*), with Affordable Medicines growth tempered by supply timing and facility upgrades; AvKARE revenue declined 4% YoY.
• AvKARE mix headwind: AvKARE revenues decreased YoY (−4%), though margins improved; distribution channel softness weighed, offset by government label growth.
• Tariff uncertainty: Management highlighted potential industry disruption from extreme tariff proposals; while pharma is currently exempt, visibility remains limited (“it’s still unknown… as of now, pharma is exempted from all tariffs”).

Transcript

Speaker 7

Good morning and welcome to the Amneal Pharmaceuticals second quarter 2025 earnings call. I will now turn the call over to Amneal's Head of Investor Relations, Anthony DiMeo.

Speaker 2

Good morning and thank you for joining Amneal Pharmaceuticals second quarter 2025 earnings call. Today, we issue the press release reporting Q2 results. The earnings press release and presentation are available at amneal.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. We also discuss non-GAAP measures. Information on use of these measures and reconciliations to GAAP are in the earnings release and presentation. On the call today are Chirag and Chintu Patel, co-founders and co-CEOs, Tasos Konidaris, CFO, our commercial leaders: Amy Boyer for Affordable Medicines, Joe Renda for Specialties, and Jason Daly, Chief Legal Officer.

I will now hand the call over to Chirag.

Speaker 0

Thank you, Tony. Good morning, everyone. The second quarter was another consecutive quarter of strong performance and growth, with revenues of $720 million and an adjusted EBITDA of $184 million. At the halfway point of the year, and with confidence in our outlook, we are pleased to raise 2025 guidance. I'm so excited to walk you through the multiple growth drivers that are shaping the future of Amneal. At Amneal, we focus each day on delivering innovative and affordable medicines that are essential for patients. Since our founding in 2002, we have methodically diversified beyond generics to build a broad and differentiated portfolio of branded and complex products. Amneal has stood out from the pack by generating consistent growth in each of the last six years, and we expect growth will continue in the years ahead.

In the process, we have transformed Amneal and have entered the most exciting chapter yet. In this new chapter, there are a number of new growth drivers, including Trexon for Parkinson's disease, brachial autoinjector for severe migraine, new biosimilars such as biosimilar Xolair, our continued cadence of 20-30 new generics launches each year, particularly complex products including unique 5-5B2 injectables for hospitals, and our GLP-1 opportunity with Metsera. These new medicines and new opportunities are designed to create substantial value by, one, advancing the standard of care and increasing access to medicines for patients, two, further expanding and differentiating our portfolio for providers, and three, adding to our growth story for investors. Over time, Amneal has strategically evolved from generics to innovative and complex medicines, and we are entering our new next phase of growth with strong momentum and clear confidence in growth ahead.

First, in our specialty segment, the launch of Trexon for Parkinson's disease continues to exceed our expectations in the first year of the launch. Uptake has been very strong, with the U.S. market share about at 2% and on track for over 3% by the end of the year. Notably, about 80% of Trexon's scripts are coming from IR patients, which is a strong indicator of our successful strategy to pursue the broader Parkinson's market. The patient testimonials have been inspiring, and we have highlighted a few in our earnings presentations. We are highly confident that Trexon will achieve U.S. peak sales of $300 million to $500 million. Let me now turn to our newest specialty branded product, brachial autoinjector, which received U.S. FDA approval in May.

Brachial is the first and only autoinjector form of DHE, a therapy that has been trusted for over 70 years for the acute treatment of migraine and cluster headaches in adults. In the migraine treatment landscape, there is a significant unmet need for patients who do not respond to existing therapies. This new product gives patients sustained headache relief when they need it the most and eliminates the need for time-consuming hospital visits. We are excited to launch brachial with a commercial rollout in October. We continue to see this as a $50 to $100 million peak sales opportunity. Second, in GLP-1s, we are advancing our partnership with Metsera to help deliver innovative therapies at scale. Amneal is Metsera's preferred global supplier for developed markets, including the U.S. and Europe. We will also commercialize their products in 20 emerging markets, including India.

We see GLP-1s as a long-term opportunity, and we look forward to sharing more on this key catalyst over time. Third, in our Affordable Medicines segment, growth continues to be fueled by our diversified portfolio of complex products and the addition of new differentiated offerings. Broadly, we continue to see favorable macro trends across all three pillars: retail generics, injectables, and biosimilars, and remain confident in our ability to execute advanced new innovations and drive sustainable growth long term. Within biosimilars specifically, we see a favorable long-term outlook for the U.S. market. Over the next decade, the number of biologic patent expirations is expected to double compared to the past 10 years, creating a significant opportunity as approximately 90% of these products do not have biosimilars in development.

At the same time, development timelines and costs are trending lower, with fewer phase three study requirements and generally less competition per molecule, excluding some of the largest biologics such as Humira and Stelara. Against this backdrop, our biosimilars in-licensing strategy has enabled us to build an initial portfolio. With three biosimilars already commercialized and five more in development, we anticipate having six marketed biosimilars across eight presentations by 2027. Specifically, biosimilar Xolair represents our largest biosimilar opportunity today. As we have said in the past, our strategic intention is to be vertically integrated in biosimilars over time. Finally, performance in the healthcare segment continues to be driven by a broad portfolio of products and new launches delivered across three distinct channels: government, distribution, and unit dose. This business, which adds stability and diversification to Amneal's portfolio, is expected to drive revenue of over $900 million by 2027.

In summary, Amneal has a diverse array of growth drivers that build upon our distinct market position, drive sustainable value creation, and improve access and care for patients. Our strategic goal is to be America's number one affordable medicines company, and we are well on our way. I'll now turn it over to Chintu. Thank you, Chirag, and good morning, everyone. Let me begin by expressing my deep appreciation to our Amneal team. Your passion, resiliency, and unwavering commitment continue to drive Amneal forward as a deeply purpose-driven company. This morning, I will provide an update on our strategic priorities across operations, innovation, and expanding portfolio, and how these are translating into strong execution and sustained performance in 2025. First, in operations, our global high-quality manufacturing infrastructure remains a key competitive advantage. Amneal continues to be recognized for its quality track record and industry-leading reliability.

Each year, we make targeted investments in digitization and automation across our network to improve efficiency and scalability. We also stay focused on our cost structure through various operational excellence programs. These capabilities enable us to launch new complex products, help address drug shortages, and meet the needs of our customers and the patients we serve. Amneal has built one of the largest and most advanced U.S. pharmaceutical manufacturing footprints anchored in Newark and New Jersey, with broad capabilities across oral solids, liquids, topicals, transdermals, and complex formulations, making Made in America a core strategic advantage. In the second quarter, we announced our collaboration with Epiged to start U.S. injectable manufacturing, leveraging their low-field technology capabilities. This partnership strengthens our ability to serve both commercial and government markets with large production capacity while supporting U.S. emergency preparedness and national health security. This expansion extends our leading U.S.

pharmaceutical manufacturing footprint and expands our domestic capabilities for future complex products in sterile dosage forms. Turning to innovation, we are very pleased with the continued strong performance of Trexon in the first year of launch. Trexon is uniquely designed to deliver rapid onset and sustained efficacy, giving Parkinson's patients more good on time with fewer daily doses. Our phase four study remains on track, and we expect these real-world data to further reinforce Trexon's clinical value and differentiation. Next, in our specialty business is brachial, the now approved DHE autoinjector for migraine and cluster headache. This is the first and only autoinjector formulation of this well-established therapy. This paves the way for us to develop other drug-device combination products that are clinically relevant for providers and can help patients in other branded therapeutic areas. In GLP-1s, our strategic partnership with Metsera is advancing.

We are building two state-of-the-art manufacturing facilities, one for high-value hepatitis drug substance production and the other for advanced sterile fill finish capabilities. Metsera's lead programs are progressing well through development, with impressive efficacy and strong product profiles and timelines that are not too far out, positioning us to participate meaningfully in this high-growth market. This collaboration draws on our core strengths in complex pharmaceutical R&D and manufacturing. Through our differentiated integrated business model, we believe we can drive innovation at scale and deliver new impactful obesity therapies for patients. In our affordable medicine portfolio, we expect to launch 20 to 30 new products each year. We have launched 15 new products so far in 2025. In Q2, we were pleased to receive approval for our generic version of Pred Forte, a complex ophthalmic product.

Among upcoming key launches this year, there is Restriodon injection for schizophrenia, a generic version of Restasis for dry eye, and many more. Overall, our affordable medicine pipeline remains steep and robust, capable of producing new products for years. We are very pleased with our continued progress in developing complex products across key categories such as microspheres, liposomals, and 5-5B2 injectables. We are also making strong, strong progress in inhalation, which will become a new vector of growth beginning next year, with two commercial inhalation product launches expected in 2026. As of Q2, there are 76 ANDAs pending approval, out of which 67% are non-oral solids and 47 products in development, out of which 96% are non-oral solids. We continue to prioritize our R&D portfolio and allocate investment towards higher growth areas like specialty brands, injectables, and biosimilars.

In biosimilars, we see an opportunity for Amneal Pharmaceuticals to establish a leadership position in the space. This year, we are filing five biosimilar pipeline candidates with launches targeted for 2026 and 2027. The BLA filings for two denosumab biosimilars were submitted with goal dates in Q4. Next, we look to submit the supplemental BLA for our PEG-free grafting OBI and autoinjector in Q4, followed by the BLA filing for biosimilar Xolair in Q4. We are pleased that our PEG-free grafting OBI and autoinjector product, as well as our biosimilar to Xolair, will be made in the United States, underscoring our commitment to high-quality U.S.-based manufacturing and supply chain reliability. Recently, we shared positive phase 3 data for biosimilar Xolair, positioning us to be among the first entrants in the $3 billion market. We are focused on advancing these programs and continuously adding new programs to expand our biosimilar portfolio.

In summary, we have continued our strong operational momentum and execution in 2025. Our strategic focus on innovation, quality, and manufacturing excellence sets the way for sustainable growth and category leadership across our business over time. Thank you, and with that, I will hand it over to Tasos.

Speaker 8

Thank you, Chintu. Good morning, everyone. We're very pleased with our second quarter financial performance as the resiliency of our diversified business model, strong growth in our specialty business, and focus on efficiency delivered revenue growth of 3%, adjusted EBITDA growth of 13%, and adjusted EPS growth of 56%. Furthermore, we reduced net leverage to 3.7 times versus 3.9 times adjusted EBITDA in December 2024 and fully refinanced our debt, which will reduce interest costs substantially and extend maturities to 2032. From a top-line perspective, Q2 was another quarter of growth, with total net revenues up 3%. Our Affordable Medicines revenue of $433 million grew 1% on top of last year's exceptional growth of 14%. Our current quarter growth was driven by new products, where 2024 and 2025 launches added $33 million.

It is important to note that during the second quarter, our commercial teams built a strong foundation with our clients across a number of new 505(b)(2) products, while our global supply teams completed a few production facility upgrades. The combination of multiple highly innovative products and enhanced manufacturing supply to meet market demand gives us confidence for even higher revenues in subsequent quarters. Q2 specialty revenue was also very strong at $128 million, as it grew 23% year over year. This growth was driven by our three main branded products, with Trexon adding $11 million, Rytary adding $9 million, up 19%, and Unithroid adding $4 million, up 12%. We continue to be very pleased by the market acceptance of Trexon and expect full-year 2025 revenue in excess of our initial estimate of $15 million.

In the second quarter, other revenues of $163 million declined 4%, while gross margin increased by 540 basis points and operating income increased by 44%. As we discussed in the first quarter, we're very pleased by the financial performance of Abbcare and the team's focus on higher profitability by maximizing the unique value we provide to the VA and DOD compared to the lower margin distribution channel. Let me now move down the P&L, where Q2 adjusted gross margins were very strong at 45.6%, up 470 basis points year over year. These higher gross margins were driven by favorable product mix in each of the three segments and ongoing operating efficiencies. Notably, Q2 adjusted gross margins of Affordable Medicines grew 270 basis points to 44.3%.

Our second quarter adjusted EBITDA of $184 million grew 13%, driven by top-line growth, higher gross margins, and higher investments in R&D and sales and marketing to ensure future growth. Finally, we were extremely pleased by the 56% growth in adjusted EPS, driven by the higher adjusted EBITDA, favorable foreign exchange, and lower interest expense. Looking at our first half financial performance, our total company revenues grew 4%, our adjusted EBITDA of $354 million grew 12%, and our adjusted EPS of $0.45 is up 50%. We're also very pleased by the increased level of profitability, as adjusted gross margin of 44.3% grew 290 basis points, and adjusted EBITDA of 25% grew 180 basis points. Before I conclude with our updated 2025 financial guidance, I'll just touch on four important topics. First, we're excited about our multiple growth drivers ensuring robust top-line growth.

These include over 20 new product launches annually, strong uptake of Trexon, the upcoming launch of brachial autoinjector for migraine and cluster headaches, multiple new biosimilar launches next year, and large new product opportunities available to the VA and DOD. Second, from a target perspective, and while we don't have full clarity, we have multiple levers to mitigate any potential negative impact. As we have discussed, we have one of the largest U.S. manufacturing footprints in our industry. We have extensive experience with tech transfers. We have no meaningful exposure to Mexico, Canada, China, or Europe, and finally, no exposure to any most favored nation pricing action. Third, from a balancing perspective, we're extremely pleased by the full refinancing we opportunistically completed last week.

In summary, we refinanced $2.7 billion of debt by issuing $2.1 billion in a new seven-year term loan deal and a brand new $600 million seven-year senior secure note. The refinancing was extremely well received and oversubscribed many times over and achieved long-term interest cost reductions of more than $33 million annually and extended maturity to 2032 versus 2028. Fourth point worth mentioning is that because of the new federal tax legislation, we expect about $46 million in cash tax savings, most of which will occur in 2026, improving our cash flow. This benefit is primarily driven by the immediate expensing of R&D and upfront depreciation of assets. With the strength of our first half performance and the multiple levers of growth drivers and solid execution, we're pleased to update our 2025 financial guidance. For revenues, we continue to expect $3 to $3.1 billion.

We're increasing adjusted EBITDA by about $15 million in the range of $665 to $695 million. We're increasing our adjusted EPS by about $0.05 between $0.70 and $0.75, and we're also raising our operating cash flow guidance, excluding discrete items, by about $20 million in the range of $300 to $330 million. With that, I'll turn the call back to Chirag.

Speaker 0

Thank you, Tasos. Q2 results and increased 2025 guidance reflect the continued strength of our diverse business. We are confident in our ability to continue advancing in this new chapter of growth towards our goal of being America's number one affordable medicines company. Let's now open the call for questions and answers.

Speaker 7

Thank you. We will now begin our Q&A session. When preparing to ask a question, please ensure the voice is unmuted locally. Our first question comes from David Amsellem from Piper Sandler. Your line is now open. Please go ahead.

Speaker 6

Thanks. Just a couple from me. First on Trexon and Rytary in the overall Parkinson's franchise. As we move through 2025 and into 2026, with the LOE of Rytary, how should we think about when the Parkinson's franchise reaches a trough and when you think you'll be in a position to return that business to growth once you've absorbed the full impact of the LOE? Just help us understand that, particularly as we move into next year. That's number one. Number two, on the Metsera collaboration, noted that you've talked about commercial manufacturing for at cost plus a margin. Just wondering how profitable that is going to be and the extent to which those economics ultimately will expand your overall profitability. Thanks.

Speaker 0

Hey, David. Good morning. This is Tasos. Let me take the first one. To directly answer your question in terms of the trough of the business, just from a context perspective, last year, Rytary did about $210 million worth of revenue, and obviously, we had no Trexon. My gut feel is this year, as you know, even though the LOE of Rytary was on July 31, there has been no approval for a generic Rytary. That's going to help us this year, and I think it's going to help us in the short term next year whenever generics become available. Our gut feel is this year with probably Trexon doing, let's say, $55 million or so, maybe Rytary does about $150 million. Essentially, the combined portfolio is kind of flat to last year from a revenue perspective.

EBITDA is a bit of a drag this year, which we're able to overcome because of the growth of the rest of the business and just reflects the investments we need to make to grow Trexon. The trough we believe comes next year, right from a revenue perspective, because next year, Rytary probably will have more of a generic competition than this year. At the same time, Trexon is growing very, very rapidly. I think the trough comes next year from a revenue perspective, okay? I believe from an EBITDA perspective, trough is probably I don't expect much of dilution than this year from an EBITDA perspective because this year we already absorbed a substantial headwind to EBITDA because of the investments of Trexon.

Nevertheless, even if there is a bit of a headwind next year from an EBITDA perspective as well, we feel confident we will be able to overcome this as the rest of the business will more than offset that. At the end of the day, trough comes next year, highly confident we will be overcoming it because we're trying to drive the total business to continue to grow top line and bottom line. Hopefully, that works for you. Let me turn to Chirag on Metsera.

Speaker 6

Yeah. David, good morning. Metsera collaboration is moving forward, very awesome. We have so many scientists, engineers that I've worked, my brother, everybody's there, and we work with Clive and with the team over there. Great progress, and we could not be even more happier than this about our partnership. It is very properly structured as we have taken a lot of risk upfront building the sites. We would expect more margins than typical CMO or CDMO because we have taken upfront risk. We are not sizing up the margins at this point, but they are higher than, obviously, the generics margins, much higher. The second point is international markets, which we control the marketing. We do not know yet exactly what price it would be sold at, but to give you the reference, Lilly launched Manzaro in India at $160 a month.

There will be some Ozempic generics competition, and we hear they could be launching at $60, $80 a month for monthly treatment. You can see it's a substantial opportunity for us, and we have rights to 20 countries. India would be setting the prices for most of the countries, and I don't think we would be lower than India's prices in any of those countries. A significant number of patients could be on this therapy, it's the India number at this price, somewhere between $60 to $160. The product is in shortage already. It's some 50 million patients, five zero. These are large numbers of patients. Volume will drive margins and higher penetration. We could do what we're driving, significant revenue.

When we're deciding all this, starting from the beginning of 2026, I would say these are very significant opportunities for us, for supplying Metsera as well as for our own international marketing. That's for Metsera.

Speaker 0

Helpful. Thank you.

Speaker 7

Thank you. Our next question comes from Les Sulewski from Truist Securities. Your line is now open. Please go ahead.

Good morning. Thank you for taking our questions. First, on the Parkinson's franchise, maybe just provide a latest status of the Rytary generic launches. Also, can you maybe provide some additional commentary on where you stand with the reimbursement? Separately, what's the update on the regulatory approval process across some of the other partners internationally that you've disclosed before? Maybe provide any additional timelines that you'd expect on your international or your launch in India on the product. How do you think about the size of that opportunity? Separately, maybe just kind of a longer view, as you're capturing some of the uptake from these partnerships, including Metsera and others, and lean more into innovative products, how are you thinking about the overall gross margin profile for the enterprise kind of moving into 2027 and beyond? Thank you.

Speaker 0

Yeah. Let me take the Rytary generic question, then I'll pass it over to Joe, who heads up Commercial Operations, Commercial Business for Specialty. I'll turn it over to Chirag and Chintu for some of the partnerships. I'll tackle the margin profile. In terms of generics, so far, Deva has a 180-day exclusivity on the generic Rytary. They currently have not been approved. Frankly, I know as much as you do on when that may happen, right? That's as much as I can tell you. Our view is it's a sizable opportunity. We expected in our planning that generics were going to become available August 1. Obviously, this kind of what I will call short-term delay helps us from a financial perspective. It allows us to reinvest in the business. It allows us to increase our guidance.

At some point in time, there will be generics maybe later on this year, sometime next year. We'll be in a great position to overcome any headwind that may come out of that. I think that's the answer to your first question. Let me turn it over to Joe, give you an update on the reimbursement on our Trexon.

Speaker 4

Yeah, thanks, Tasos. Thanks for the question. We've been really pleased with coverage so far with Trexon in the market. Actually, it's above our expectations. We were anticipating around 50% coverage or so far this year. We've garnered now over 60% commercial coverage, which includes some of the biggest payers in the market: United, CVS, VA, DOD. Really pleased with coverage, and we anticipate that to continue because we're in good dialogue with the payers related to some of the Part D plans. We're looking to land those. Our goal was always around 70% coverage. We're well on our way there, and the feedback from the market continues to be really strong from our key prescribers. We're anticipating that the growth we're seeing is going to continue, and it's partly because of that great access that we've created so far.

Speaker 0

Let me take a crack also at some of the questions more about regulatory progress on some of the ex-U.S. business or kind of the margin profile with those partners. What we have said, right, is that over the course of time, 99.9% of our revenue is U.S.-based, right? That leaves a lot of white space, call it ex-U.S. We have made the strategic choice that the best way for us from a capital allocation perspective is instead of trying to build the infrastructures in those markets, which has a very long-term payback period, to develop the partnership model for all markets except India. Obviously, there is a lot of our own heritage in India. We have 6,000 employees already over there. More importantly, if you think about India, the standard of living is growing substantially. The size of the pharmaceutical market there is expected to grow dramatically.

A combination of our heritage, a combination of our existing infrastructure in India, a relevant product portfolio, and a very large market, it only made sense for us to launch our own Amneal brand in that market. The uptake is growing very nicely. We have a few hundred people. We have established a commercial team based in Mumbai. We have a few hundred commercial teams who are building it out. Early days of the product portfolio launching there, and that's going to build over the course of time. You shouldn't expect anything drastic over the next couple of years, but that's going to build over the course of time. In the rest of the markets, we out-license Trexon in Europe. That regulatory process is in process. That's going to come over the next couple of years with product approval and slowly building that revenue portfolio.

Those are the two main drivers of growth of our international business over the next few years. Once again, not from a margin perspective, listen, we are not in the business of diluting margins. What you should expect from us is to continue to drive gross margin increases steadily over the course of time. Our adjusted EBITDA to revenue has been hovering at about 22.5%. You should expect this over the course of time to increase. We're not doing anything to do anything dramatic because we want to continue to invest in the business because we see a tremendous amount of growth, whether or not it's in the injectables, biosimilars, international, I just mentioned it. We're not in the business of diluting margins or diluting our cash flow. With that, let me turn it over to Chintu or Chirag to see if they have anything else to add.

Thank you, Tasos. I just wanted to add on an international partnership. First of all, we are very happy and pleased with Trexon and how all the testimony and information and our partners in Europe and Latin America are very pleased, and we are very excited. We hope to launch these products in Europe by late 2026 and in India late 2026 to early 2027. Our regulatory applications are moving well, and we are excited. Plus, we have a diversified manufacturing footprint and a cost advantage. We are also qualifying our India site for Trexon to improve our margins. Just wanted to add that.

Very helpful. Thank you.

Speaker 7

Thank you. Our next question comes from Chris Schott from JPMorgan. Your line is now open. Please go ahead.

Speaker 1

Thank you so much. This is Ekaterina on for Chris. First question is just around guidance. I think the revenue range does imply a bit of a step up as we kind of think about revenues in the second half versus the first half of the year. Can you maybe elaborate what are the main drivers of this? I'm assuming some of this is the timing of new launches and perhaps the delay in Rytary, but just anything else to kind of keep in mind. Second question is just around tariffs. Latest thoughts on what these could mean for the industry and Amneal, and I think specifically what are you hearing out of Washington on how generic products and API could be treated as we think about the 150% or 250% tariffs that are kind of being thrown around? Thank you.

Speaker 0

Hey, Ekaterina. I can take the first one. Yeah, we expect a stronger second half from a revenue perspective than the first half. As you said, there is nothing fundamentally different other than the typical, what I would call, cadence of new product introductions. Products that we launch late in 2024, early 2025, they keep building momentum over the course of time. That's number one. Number two is even though the vast majority of the products we were expecting to launch in 2025 have already launched, there are just a few more that are supposed to be coming in Q3 and Q4. Those will add to the revenue growth. The third point is really we're looking at, as I mentioned in my script, in Q1 and Q2, we completed a number of facility upgrades that kind of prevented us from meeting market demand primarily on our injectable portfolio.

Now with those essentially behind us, it just frees up capacity and improves our global supply ability to meet market demand. All of those things will play into the second half of the year to have kind of stronger revenue performance than the first half. Obviously, we're looking for growth from a top-line perspective going into 2026 and 2027 with a strong tailwind behind us. I'll turn it over to Chirag and see if they maybe tell us a little bit about all their adventures coming out of Washington, D.C. Great. That's the hardest job to do. We've been meeting and giving our perspective to the administration, which is rightfully focused on two things: what is driving these pharma investigations. One is national security. Heavily over-reliance on antibiotics. It would be like 95% of key starting material coming from China. We hardly make anything in the United States.

Even British goods, it's less than 2%. If you take each of these critical categories, we have virtually no manufacturing in the United States. Second thing is socioeconomics, obviously, that it creates American jobs and more factories, more plants in the United States. With that, we've been not negotiating, but we've been putting new solutions because if you put a 150% ship set or 200% tariffs, it's going to be chaotic because nobody knows how long the tariffs would stay. If there are such large tariffs, obviously, the pricing would have to go up to our customers because we have to keep supplying the products and we have to keep making money. This is not us alone. Of all the companies, we are least impacted because almost two-thirds of our manufacturing value is in the United States. That could create shortages as well. It may not be the solution.

What the administration is trying to do, which we fully support, is for national security to bring the production of critical products to the United States from the key starting material API to finished goods by creating a demand for American-made products because it will be obviously expensive products to make in America compared to coming out of China or China and India. With all that, it's still unknown. We'll see what happens. It's still under investigation. As of now, pharma is exempted from all tariffs. We'll stay tuned.

Speaker 1

Thank you so much. I appreciate all the color.

Thank you, Ekaterina. Next question.

Speaker 7

Our next question is from Matthew Dellatorre from Goldman Sachs. Your line is now open. Please go ahead.

Speaker 5

Hey, guys. Good morning, and thanks for the question, and congrats on the continued progress. Maybe first, just to follow up on the prior question on the revenue guide, should we expect the Generics and Distribution segments to inflect or catch up in the second half? Second question, post the recent debt refinancing, what are your latest thoughts on the potential vertical integration of your biosimilars business in terms of timing or likelihood? Maybe more broadly, how does this increased flexibility that you now have impact your broader capital allocation strategy? Thank you.

Speaker 0

Hey, Matt. This is Tasos. Good morning. First on that, we expect growth in the second half, substantial more growth in the second half. That is really driven by what I call stability on the distribution channel. At this point in time, point number one. Number two is we expect our government business to accelerate the growth that we have already seen this year because there is a number of large product launches. I don't want to talk specifics. There is at least one or two large product opportunities that will become available in Q3, and Abbcare will be in a position to capitalize on that opportunity. That's kind of number one. From a refinancing perspective, before I turn it over to Chirag to talk about, from a refinancing perspective, as I mentioned before, that was just incredibly successful. Substantially reduces our interest expense.

Depending on what month we use, it decreases our interest expense between 16% and 20% per year. That's a dramatic improvement. Number one, extends maturities by four years to 2032. We don't expect this to change our capital allocation policy. Over the course of time, what we have said is we want to make sure that we fund our business appropriately and kind of capitalize on the opportunities that we have, number one. Also, deleveraging over the course of time is really important to us. That doesn't need to be linear, right? Every single quarter, every single year. Over the course of time, I think we've done a really good job, essentially cutting leverage by half in the last four or five years. That's kind of our area of focus. Chirag, anything else?

Speaker 6

Thank you, Tasos. Your second question meant on how when do we look to integrate. First of all, biosimilars, the entire market, it's a race right now. How fast we can execute. FDA has been very cooperative along with MHRA, EMA, the entire world, obviously, for obvious reasons. Tremendous cost savings, but most importantly, it creates more access. More patients. We have seen 2.5 times more volume because of more access because of lower prices. How many new patients are getting this product? Total support from all of the regulatory agencies, government agencies. I know we had a bad start with Humira as a market, but now there are 100 biologists. Only 20 are being worked on. 80 are not being worked on. Our goal is we have done this so well with complex generics products, and we have invested so much in this. We could do this.

We could have a pipeline of 30 products, 35. We can keep going and make a lot of products in the United States and India and have this combination, which allows us a global supply and global cost position and much faster execution on a number of products. Since it's a race, we look to do it as soon as possible. We'll be very disciplined and obviously do the deal, which doesn't blow any of the... We have worked hard to get our debt to EBITDA ratio down. We would like to maintain or have some flexibility there and then set up a deal which we can afford and provides tremendous growth to Amneal going forward. We see this as a great business for the next 10 years.

Speaker 5

Great. Thank you both.

Speaker 7

Thank you.

Speaker 0

Thanks, Matt.

Speaker 7

This concludes our Q&A session. I'll hand back to Chirag for closing remarks.

Speaker 0

Oh, thank you very much, everybody. Have a great, great day today. Thank you.

Thanks, everyone.

Speaker 7

Thank you. This concludes today's call. Thank you for joining. You may now disconnect your lines.