EXHIBIT 99.1

Akorn Provides First Quarter 2020 Results

LAKE FOREST, Ill., May 11, 2020 (GLOBE NEWSWIRE) -- Akorn, Inc. (Nasdaq: AKRX), a leading specialty pharmaceutical company, today announced its financial results for the first quarter of 2020.

First Quarter 2020 Results and Recent Developments

  • Net revenue was $205 million, up $39 million, 23% from the prior year quarter
  • Net loss was $257 million, compared to $82 million loss in the prior year quarter
  • Adjusted EBITDA was $59 million, compared to $23 million in the prior year quarter
  • Discussions with lenders regarding the sale process and Chapter 11 filing are on-going
  • Received Establishment Inspection Report (EIR) and Voluntary Action Indicated (VAI) status for February 2020 inspection of Akorn’s Hettlingen, Switzerland manufacturing facility

Summary Financial Results for the Quarter Ended March 31, 2020

Akorn's reported net revenue was $204.7 million for the three month period ended March 31, 2020, representing an increase of $38.8 million, or 23.4%, as compared to net revenue of $165.9 million for the three month period ended March 31, 2019.  The increase in net revenue in the period was primarily due to increases of $23.0 million, $9.0 million, and $6.8 million in discontinued products revenue, organic revenue and new products, respectively.  The $23.0 million increase in discontinued products revenue was primarily driven by an unapproved product that has since been discontinued.  The $9.0 million increase in organic revenue was due to approximately $21.6 million, or 14.2% of favorable price variance primarily due to 2019 price increases on certain exclusive products partially offset by $12.5 million, or 8.2% in volume decline principally due to lower sales of Myorisan®.

Consolidated gross profit for the quarter ended March 31, 2020, was $94.5 million, or 46.2% of net revenue, compared to $53.5 million, or 32.3% of net revenue, in the corresponding prior year quarter.  The increase in the gross profit percentage was principally due to decreased costs associated with FDA compliance related improvement activities, favorable price and product mix, including the sale of an unapproved product that has since been discontinued.

GAAP net (loss) for the first quarter of 2020, was $(256.7) million, or $(2.01) per diluted share, compared to GAAP net (loss) of $(82.2) million, or $(0.65) per diluted share, for the same quarter of 2019.  After a net adjustment of $302 million to net income for non-GAAP items, adjusted diluted earnings per share for the first quarter of 2020 was $0.36, compared to $0.01 in the same quarter of 2019, after a net adjustment of $84 million to net income for non-GAAP items.  See "Non-GAAP Financial Measures" below.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was $(241.9) million for the first quarter of 2020, compared to $(47.7) million for the first quarter of 2019.  Adjusted EBITDA, which is a non-GAAP measure used by management to evaluate the performance of the Akorn business, was $58.6 million for the first quarter of 2020, compared to $23.4 million for the first quarter of 2019.  See "Non-GAAP Financial Measures" below.

About Akorn:

Akorn, Inc. is a specialty pharmaceutical company engaged in the development, manufacture and marketing of multisource and branded pharmaceuticals.  Akorn has manufacturing facilities located in Decatur, Illinois; Somerset, New Jersey; Amityville, New York; Hettlingen, Switzerland and Paonta Sahib, India that manufacture ophthalmic, injectable and specialty sterile and non-sterile pharmaceuticals.  Additional information is available on Akorn’s website at www.akorn.com.

Non-GAAP Financial Measures:

To supplement Akorn’s financial results presented in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP (also referred to as “adjusted” or “non-GAAP adjusted”) financial measures in this press release and the accompanying tables, including (1) EBITDA, (2) adjusted EBITDA, (3) adjusted net income, (4) adjusted diluted earnings per share, (5) net debt, and (6) net debt to adjusted EBITDA ratio.  These non-GAAP measures adjust for certain specified items that are described in this release.  The Company believes that each of these non-GAAP financial measures is helpful in understanding its past financial performance and potential future results.  The non-GAAP financial measures are not meant to be considered in isolation or as a substitute for or superior to comparable GAAP measures.

Akorn’s management uses these measures in analyzing its business and financial condition.  Akorn’s management believes that the presentation of these and other non-GAAP financial measures provide investors greater transparency into Akorn’s ongoing results of operations allowing investors to better compare the Company’s results from period to period.

Investors should note that these non-GAAP financial measures used to present financial guidance are not prepared under any comprehensive set of accounting rules or principles and do not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP.  Investors should also note that these non-GAAP financial measures have no standardized meaning prescribed by GAAP and; therefore, have limits in their usefulness to investors.  In addition, from time-to-time in the future there may be other items that the Company may exclude for purposes of its non-GAAP financial measures; likewise, the Company may in the future cease to exclude items that it has historically excluded for purposes of its non-GAAP financial measures.  Because of the non-standardized definitions, the non-GAAP financial measures as used by Akorn in this press release and the accompanying tables may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by the Company’s competitors and other companies.

Set forth below is the definition of each non-GAAP financial measure as used by the Company in this press release and a full reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measures.

EBITDA, as defined by the Company, represents net loss before net interest expense, (benefit) provision for income taxes and depreciation and amortization.

Adjusted EBITDA, as defined by the Company, is calculated as follows:

Net (loss), (minus) plus:

Interest (expense), net
(Benefit) provision for income taxes
Depreciation and amortization
Non-cash expenses, such as impairment of goodwill, impairment of intangible assets, impairment of fixed assets and other, gain on disposal of fixed assets, share-based compensation expense, and amortization of deferred financing costs
Other adjustments, such as legal settlements and various merger and acquisition-related expenses, employee retention and other compensation, legal and financial advisory fees, data integrity investigations & assessment, India costs (excluding depreciation and interest), FDA compliance related expenses, other settlements and fees and Fresenius transaction & Securities Class Action Litigation.

Adjusted EBITDA is deemed by the Company to be a useful performance indicator because it includes an add back of non-cash or non-recurring operating expenses that have no impact on continuing cash flows as well as other items that are not expected to recur and therefore are not reflective of continuing operating performance.

Adjusted net income, as defined by the Company, is calculated as follows:

Net (loss), (minus) plus:

Amortization expense
Non-cash expenses, such as impairment of goodwill, impairment of intangible assets, impairment of fixed assets and other, gain on disposal of fixed assets, share-based compensation expense, and amortization of deferred financing costs
Other adjustments, such as merger and acquisition-related expenses, employee retention and other compensation, legal and financial advisory fees, data integrity investigations & assessment, India costs (excluding depreciation and interest), FDA compliance related expenses, other settlements and fees and Fresenius transaction & Securities Class Action Litigation
Less an estimated tax (benefit) provision, net of the benefit from utilizing net operating loss carry-forwards effected for the adjustments noted above.

Adjusted diluted earnings per share, as defined by the Company, is equal to adjusted net income (loss) divided by the actual or anticipated diluted share count for the applicable period.  The Company believes that adjusted net income and adjusted diluted earnings per share are meaningful financial indicators, to both Company management and investors, in that they exclude non-cash income and expense items that have no impact on current or future cash flows, as well as other income and expense items that are not expected to recur and therefore are not reflective of continuing operating performance.

Net debt, as defined by the Company, is gross debt including Akorn’s term loan less cash and cash equivalents.

Net debt to adjusted EBITDA ratio, as defined by the Company, is net debt divided by the trailing twelve months adjusted EBITDA.

The shortcomings of non-GAAP financial measures as guidance or performance measures are that they provide a view of the Company’s results of operations without including all events during a period.  For example, adjusted EBITDA does not take into account the impact of capital expenditures on either the liquidity or the financial performance of the Company and likewise omits share-based compensation expenses, which may vary over time and may represent a material portion of overall compensation expense.  Adjusted net income (loss) does not take into account non-cash expenses that reflect the amortization of past expenditures, or include share-based compensation, which is an important and material element of the Company's compensation package for its directors, officers and other key employees.  Due to the inherent limitations of non-GAAP financial measures, investors should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP.  Investors and other readers are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP measures to their most directly comparable GAAP measures as presented in this press release.

Cautionary Note Regarding Forward-Looking Statements

This press release includes statements that may constitute “forward-looking statements,” including statements regarding the Company’s business plan, financial performance and the path and milestones for executing a sale of Akorn’s business, through the filing of Chapter 11 cases under the U.S. Bankruptcy Code, the Company’s continued engagement in discussions with certain of its lenders regarding the process for such potential sale of the Company’s business.  You can identify forward-looking statements by terminology such as “may,” “should,” “will,” “expect,” “continue,” “believe,” “seek,” “anticipate,” “estimate,” “intend,” “could,” “would,” “potential,” or the negative of such terms or other similar expressions.  These statements are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  A number of important factors could cause actual results of the Company and its subsidiaries to differ materially from those indicated by such forward-looking statements.  These factors include, but are not limited to: (i) the effect of the Delaware Court of Chancery’s October 1, 2018 decision against the Company and the Delaware Supreme Court’s December 7, 2018 order affirming the Chancery Court’s decision on the Company’s ability to retain and hire key personnel, its ability to maintain relationships with its customers, suppliers and others with whom it does business, or its operating results and business generally, (ii) the risk that ongoing or future litigation against the defendants or related to the Chancery Court’s decision and Delaware Supreme Court’s affirmation may result in significant costs of defense, indemnification and/or liability, (iii) the outcome of the investigation conducted by the Company with the assistance of outside consultants, into alleged breaches of FDA data integrity requirements relating to product development at the Company and any actions taken by the Company, third parties or the FDA as a result of such investigations, (iv) the difficulty of predicting the timing or outcome of product development efforts, including FDA and other regulatory agency approvals and actions, if any, (v) the timing and success of product launches, (vi) difficulties or delays in manufacturing, (vii) the Company’s increased indebtedness and compliance with certain covenants and other obligations under the Second Amendment to Standstill Agreement and Third Amendment to Credit Agreement (the “Second Amended Standstill Agreement”), which create material uncertainties and risks to its growth and business outlook, (viii) the Company’s obligation under the Second Amended Standstill Agreement to pay certain fees and expenses and increased interest margin, and achieve milestones for executing a sale of Akorn’s business, through the filing of Chapter 11 cases under the U.S. Bankruptcy Code,  (x) potential adverse impacts on the Company’s business and any cases commenced under Chapter 11 due to the effects of COVID-19; and (xi) such other risks and uncertainties outlined in the risk factors detailed in Part I, Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (as filed with the Securities and Exchange Commission (“SEC”) on February 26, 2020), Part II, Item 1A, “Risk Factors,” of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2020 (as filed with the SEC on May 11, 2020) and other risk factors identified from time to time in the Company’s filings with the SEC.  Readers should carefully review these risk factors, and should not place undue reliance on the Company’s forward-looking statements.  These forward-looking statements are based on information, plans and estimates at the date of this report.  The Company undertakes no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.



AKORN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)
(In Thousands, Except Per Share Data)
(Unaudited) 

 Three Months Ended
March 31,
 2020 2019
Revenues, net$204,693   $165,871  
Cost of sales (exclusive of amortization of intangibles, included within operating expenses below)110,149   112,358  
GROSS PROFIT94,544   53,513  
    
Selling, general and administrative expenses65,056   72,498  
Research and development expenses9,811   8,714  
Amortization of intangibles6,142   11,065  
Impairment of goodwill267,923   15,955  
Impairment of intangible assets   10,354  
Litigation rulings, settlements and contingencies(7,470)  410  
TOTAL OPERATING EXPENSES341,462   118,996  
OPERATING (LOSS)(246,918)  (65,483) 
Amortization of deferred financing costs(8,629)  (1,304) 
Interest expense, net(24,364)  (14,327) 
Other non-operating (expense) income, net(261)  353  
    
(LOSS) BEFORE INCOME TAXES(280,172)  (80,761) 
Income tax (benefit)/provision(23,445)  1,420  
NET (LOSS)$(256,727)  $(82,181) 
NET (LOSS) PER COMMON SHARE:   
Net (Loss) per Common Share, basic and diluted$(2.01)  $(0.65) 
SHARES USED IN COMPUTING NET (LOSS) PER COMMON SHARE:   
WEIGHTED AVERAGE BASIC AND DILUTED127,648   125,566  
COMPREHENSIVE (LOSS):   
Net (loss)$(256,727)  $(82,181) 
Unrealized holding (loss) on available-for-sale securities, net of tax of $0 and $0 for the three month periods ended March 31, 2020 and 2019, respectively.(1)    
Foreign currency translation (loss)(524)  (424) 
Pension liability adjustment gain/(loss), net of tax of ($29) and $30 for the three month periods ended March 31, 2020 and 2019, respectively.114   (116) 
COMPREHENSIVE (LOSS)$(257,138)  $(82,721) 
 



AKORN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)

 March 31, 2020
(Unaudited)
 December 31,
2019
ASSETS   
CURRENT ASSETS   
Cash and cash equivalents$72,181   $144,804  
Trade accounts receivable, net187,218   134,173  
Inventories, net172,597   170,047  
Prepaid expenses and other current assets58,868   31,023  
TOTAL CURRENT ASSETS490,864   480,047  
PROPERTY, PLANT AND EQUIPMENT, NET294,499   295,533  
OTHER LONG-TERM ASSETS   
Goodwill   267,923  
Intangible assets, net209,659   215,801  
Right-of-use assets, net - Operating leases21,982   22,445  
Other non-current assets15,271   6,890  
TOTAL OTHER LONG-TERM ASSETS246,912   513,059  
TOTAL ASSETS$1,032,275   $1,288,639  
LIABILITIES AND SHAREHOLDERS’ EQUITY   
CURRENT LIABILITIES   
Trade accounts payable$31,118   $44,958  
Income taxes payable181     
Accrued royalties8,953   5,956  
Accrued compensation24,563   13,005  
Current portion of long-term debt (net of deferred financing costs)853,627   843,328  
Accrued administrative fees30,537   31,725  
Current portion of accrued legal fees and contingencies14,873   23,673  
Current portion of lease liability - Operating leases2,401   2,290  
Accrued expenses and other liabilities19,350   20,652  
TOTAL CURRENT LIABILITIES985,603   985,587  
LONG-TERM LIABILITIES   
Deferred tax liability   225  
Uncertain tax liabilities2,684   2,633  
Long-term lease liability - Operating leases21,427   22,021  
Long-term portion of accrued legal fees and contingencies31,160   33,000  
Pension obligations and other liabilities10,895   10,881  
TOTAL LONG-TERM LIABILITIES66,166   68,760  
TOTAL LIABILITIES1,051,769   1,054,347  
SHAREHOLDERS’ EQUITY   
Preferred stock, $1 par value - 5,000,000 shares authorized; no shares issued or outstanding at March 31, 2020 and December 31, 2019.     
Common stock, no par value – 150,000,000 shares authorized; 126,276,438 and 126,145,832 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively.598,873   595,521  
Accumulated deficit(590,665)  (333,938) 
Accumulated other comprehensive (loss)(27,702)  (27,291) 
TOTAL SHAREHOLDERS’ EQUITY(19,494)  234,292  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,032,275   $1,288,639  
    



AKORN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)

 Three Months Ended
March 31,
 2020 2019
OPERATING ACTIVITIES:   
Net (loss)$(256,727)  $(82,181) 
Adjustments to reconcile consolidated net (loss)  to net cash (used in) operating activities:   
Depreciation and amortization13,874    18,750   
Amortization of debt financing costs8,629    1,304   
Impairment of intangible assets—    10,354   
Goodwill impairment267,923    15,955   
Fixed asset impairment and other—    10,089   
Non-cash stock compensation expense3,431    4,720   
Non-cash interest expense1,670    —   
Deferred income taxes, net(225)  (28) 
Other(83)  (31) 
Changes in operating assets and liabilities:   
Other non-current assets(8,565)  584   
Trade accounts receivable(53,009)  (21,283) 
Inventories, net(2,486)  10,819   
Prepaid expenses and other current assets(27,895)  1,079   
Trade accounts payable(10,057)  722   
Accrued legal fees and contingencies(10,640)  (2,703) 
Uncertain tax liabilities51    1,420   
Accrued expenses and other liabilities12,680    (33) 
NET CASH (USED IN) OPERATING ACTIVITIES$(61,429)  $(30,463) 
INVESTING ACTIVITIES:   
Proceeds from disposal of assets386    —   
Purchases of property, plant and equipment(11,531)  (10,059) 
NET CASH (USED IN) INVESTING ACTIVITIES$(11,145)  $(10,059) 
FINANCING ACTIVITIES:   
Stock compensation plan withholdings for employee taxes(79)  —   
Payment of contingent acquisition liabilities—    (116) 
Lease payments(6)  (335) 
NET CASH (USED IN) FINANCING ACTIVITIES$(85)  $(451) 
Effect of exchange rate changes on cash and cash equivalents(37)  54   
(DECREASE) IN CASH AND CASH EQUIVALENTS$(72,696)  $(40,919) 
Cash, cash equivalents, and restricted cash at beginning of period145,607    225,794   
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD$72,911    $184,875   
SUPPLEMENTAL DISCLOSURES:   
Amount paid for interest$23,803    $16,314   
Amount (received) for income taxes, net$(56)  $(14,526) 
Additional capital expenditures included in accounts payable$2,514    $4,641   
Standstill Agreement related non-cash interest$1,670    $—   
          



Reconciliation of GAAP Net (Loss) to Non-GAAP EBITDA and Adjusted EBITDA
(In Thousands)
(Unaudited)

 Three Months Ended
  March 31,
  2020 2019
NET (LOSS)$(256,727)  $(82,181) 
     
ADJUSTMENTS TO ARRIVE AT EBITDA:   
 Interest expense, net24,364   14,327  
 Depreciation expense7,727   7,639  
 Amortization expense6,147   11,111  
 Income tax (benefit)/provision(23,445)  1,420  
EBITDA(241,934)  (47,684) 
     
NON-CASH AND OTHER NON-RECURRING INCOME AND EXPENSES   
 Impairment of goodwill267,923   15,955  
 Amortization of deferred financing costs8,629   1,304  
 Non-cash stock compensation expense3,431   4,720  
 Impairment of fixed assets and other   10,089  
 Impairment of intangible assets   10,354  
 (Gain) on disposal of fixed assets(83)  (32) 
 Employee retention and other compensation(A)9,972   2,893  
 Legal and financial advisory fees9,656   5,748  
 FDA compliance related expenses(A)4,669   10,991  
 Other settlements and fees1,142     
 Fresenius transaction & Securities Class Action Litigation1,275   1,706  
 India costs (excluding depreciation and interest)(A)1,047   2,267  
 Data integrity investigations & assessment354   4,640  
 Merger and acquisition-related expenses32   (3) 
 Litigation rulings, settlements and contingencies(7,470)  410  
ADJUSTED EBITDA$58,643   $23,358  

(A)  Certain 2019 information has been recast to conform with 2020 presentation.  See the related tables below.



Reconciliation of GAAP Net (Loss) to non-GAAP Adjusted Net Income and Adjusted Diluted Earnings Per Share
(In Thousands, Except Per Share Data)
(Unaudited) 

 Three Months Ended
 March 31,
 2020 2019
Net (Loss)$(256,727)  $(82,181) 
    
Income tax (benefit)/provision(23,445)  1,420  
    
(LOSS) BEFORE INCOME TAXES$(280,172)  $(80,761) 
    
ADJUSTMENTS TO ARRIVE AT ADJUSTED NET INCOME:   
Impairment of goodwill (5)267,923   15,955  
Amortization of deferred financing costs (6)8,629   1,304  
Amortization expense (4)6,147   11,111  
Non-cash stock compensation expense (1, 2, 3)3,431   4,720  
Impairment of fixed assets (7)   10,089  
Impairment of intangible assets (5)   10,354  
(Gain) on disposal of fixed assets (1)(83)  (32) 
Employee retention and other compensation(A) (1, 2, 3)9,972   2,893  
Legal and financial advisory fees (1)9,656   5,748  
FDA compliance related expenses(A) (2,3)4,669   10,991  
Other settlements and fees (1,3)1,142     
Fresenius transaction & Securities Class Action Litigation (1)1,275   1,706  
India costs (excluding depreciation and interest)(A) (1,3)1,047   2,267  
Data integrity investigations & assessment (1)354   4,640  
Merger & acquisition-related expenses (1)32   (3) 
Litigation rulings, settlements and contingencies (8)(7,470)  410  
ADJUSTED INCOME BEFORE INCOME TAX$26,552   $1,392  
ADJUSTMENTS TO INCOME TAX PROVISION (BENEFIT)(18,925)    
TOTAL ADJUSTED INCOME TAX PROVISION (BENEFIT)$(18,925)  $  
    
ADJUSTED NET INCOME$45,477   $1,392  
    
ADJUSTED DILUTED EARNINGS PER SHARE$0.36   $0.01  
    
(A)  Certain 2019 information has been recast to conform with 2020 presentation.   
    
(1) - Excluded from SG&A expenses   
(2) - Excluded from R&D expenses   
(3) - Excluded from Cost of sales   
(4) - Excluded from Amortization of intangibles   
(5) - Excluded from Impairment of goodwill, intangible assets   
(6) - Excluded from Amortization of deferred financing costs   
(7) - Excluded from Impairment of fixed assets   
(8) - Excluded from Litigation rulings, settlements and contingencies   
    



AKORN, INC.
Reconciliation of GAAP Debt to Non-GAAP Net Debt and Net Debt to Adjusted EBITDA Ratio
(In Thousands, Except Net Debt to Adjusted EBITDA Ratio)

 March 31, 2020
GAAP Debt$853,627 
Cash and cash equivalents72,181 
Net debt$781,446 
  
Adjusted EBITDA, trailing twelve months ended$158,973 
  
Net debt to adjusted EBITDA ratio4.9 
 



Reconciliation 2019 of GAAP Net (Loss) Income to Non-GAAP EBITDA and Recast Adjusted EBITDA
(In Thousands)
(Unaudited)

 Three Months Ended Year Ended
  March 31,
2019
 June 30,
2019
 September 30,
2019
 December 31,
2019
 2019
NET (LOSS)$(82,181)  $(111,599)  $47,670   $(80,660)  $(226,770) 
           
ADJUSTMENTS TO ARRIVE AT EBITDA:         
 Interest expense, net14,327   17,341   18,982   18,703   69,353  
 Depreciation expense7,639   7,419   7,734   7,683   30,475  
 Amortization expense11,111   9,954   9,380   9,380   39,825  
 Income tax (benefit)/provision1,420   1,482   (66,257)  2,347   (61,008) 
EBITDA(47,684)  (75,403)  17,509   (42,547)  (148,125) 
           
NON-CASH AND OTHER NON-RECURRING INCOME AND EXPENSES         
 Impairment of goodwill15,955            15,955  
 Amortization of deferred financing costs1,304   5,654   8,581   16,014   31,554  
 Non-cash stock compensation expense4,720   5,589   5,726   5,246   21,281  
 Impairment of fixed assets and other10,089   138   158   29,509   39,894  
 Impairment of intangible assets10,354   393      18,750   29,498  
 (Gain) on disposal of fixed assets(32)  2      (2)  (32) 
 Employee retention and other compensation2,893   2,545   3,411   2,665   11,515  
 Legal and financial advisory fees5,748   4,290   1,511   4,877   16,425  
 FDA compliance related expenses10,991   11,851   4,566   7,738   35,145  
 Fresenius transaction & Securities Class Action Litigation1,706   1,740   2,689   1,817   7,952  
 India costs (excluding depreciation and interest)2,267   1,446   1,431   1,264   6,408  
 Data integrity investigations & assessment4,640   3,380   2,660   1,327   12,006  
 Merger and acquisition-related expenses(3)  9   21   6   33  
 Litigation rulings, settlements and contingencies410   74,469   (11,625)  (19,075)  44,179  
ADJUSTED EBITDA$23,358   $36,103   $36,638   $27,589   $123,688  

Note:  FDA compliance related expenses and India costs (excluding depreciation and interest) are now included as adjustments to EBITDA to conform to current year presentation.  In addition, expense related to the 2019 Cash LTIP program has also been included as adjustments to EBITDA to conform to current year presentation and are included within Employee retention and other compensation.



Reconciliation of 2019 GAAP Net (Loss) Income to non-GAAP Recast Adjusted Net Income and Recast Adjusted Diluted Earnings Per Share
(In Thousands, Except Per Share Data)
(Unaudited) 

 Three Months Ended Year Ended
 March 31,
2019
 June 30,
2019
 September 30,
2019
 December 31,
2019
 2019
Net (Loss)$(82,181)  $(111,599)  $47,670   $(80,660)  $(226,770) 
          
Income tax (benefit)/provision1,420   1,482   (66,257)  2,347   (61,008) 
          
(LOSS) BEFORE INCOME TAXES$(80,761)  $(110,117)  $(18,587)  $(78,313)  $(287,778) 
          
ADJUSTMENTS TO ARRIVE AT ADJUSTED NET INCOME:         
Impairment of goodwill (5)15,955            15,955  
Amortization of deferred financing costs (6)1,304   5,654   8,581   16,014   31,554  
Amortization expense (4)11,111   9,954   9,380   9,380   39,825  
Non-cash stock compensation expense (1, 2, 3)4,720   5,589   5,726   5,246   21,281  
Impairment of fixed assets (7)10,089   138   158   29,509   39,894  
Impairment of intangible assets (5)10,354   393      18,750   29,498  
(Gain) on disposal of fixed assets (1)(32)  2      (2)  (32) 
Employee retention and other compensation (1, 2, 3)2,893   2,545   3,411   2,665   11,515  
Legal and financial advisory fees (1)5,748   4,290   1,511   4,877   16,425  
FDA compliance related expenses (2,3)10,991   11,851   4,566   7,738   35,145  
Fresenius transaction & Securities Class Action Litigation (1)1,706   1,740   2,689   1,817   7,952  
India costs (excluding depreciation and interest) (1,3)2,267   1,446   1,431   1,264   6,408  
Data integrity investigations & assessment (1)4,640   3,380   2,660   1,327   12,006  
Merger & acquisition-related expenses (1)(3)  9   21   6   33  
Litigation rulings and settlements (8)410   74,469   (11,625)  (19,075)  44,179  
ADJUSTED INCOME BEFORE INCOME TAX$1,392   $11,343   $9,922   $1,203   $23,860  
          
          
ADJUSTED NET INCOME$1,392   $11,343   $9,922   $1,203   $23,860  
          
ADJUSTED DILUTED EARNINGS PER SHARE$0.01   $0.09   $0.08   $0.01   $0.19  
          
Note:  FDA compliance related expenses and India costs (excluding depreciation and interest) are now included as adjustments to EBITDA to conform to current year presentation.  In addition, expense related to the 2019 Cash LTIP program has also been included as adjustments to EBITDA to conform to current year presentation and are included within Employee retention and other compensation.
          
(1) - Excluded from SG&A expenses         
(2) - Excluded from R&D expenses         
(3) - Excluded from Cost of sales         
(4) - Excluded from Amortization of intangibles         
(5) - Excluded from Impairment of goodwill, intangible assets         
(6) - Excluded from Amortization of deferred financing costs         
(7) - Excluded from Impairment of fixed assets         
(8) - Excluded from Litigation rulings, settlements and contingencies         



Investors/Media:
(847) 279-6162
Investor.relations@akorn.com

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