Earnings Call Transcript - AMRX Q1 2026

Operator, Operator

Good morning, and welcome to today's Amneal Pharmaceuticals Investor Call. I will now turn the call over to Amneal's Head of Investor Relations, Tony DiMeo.

Anthony DiMeo, Head of Investor Relations

Good morning, and thank you for joining Amneal Pharmaceuticals investor call. This morning, we issued a press release announcing Amneal agrees to acquire Kashiv BioSciences and reporting preliminary Q1 results. The 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 press release and presentation. On the call today are Chirag and Chintu Patel, Co-Founders and Co-CEOs; Tasos Konidaris, CFO; and Jason Daly, Chief Legal Officer. I will now hand the call over to Chirag.

Chirag Patel, Co-Founder and Co-CEO

Thank you, Tony. Today is a defining moment for Amneal. This morning, we announced that Amneal agrees to acquire Kashiv BioSciences, creating a fully integrated global biosimilars leader and positioning Amneal to become the #1 affordable medicines company in the United States. We have long said this was our goal. And today, we're showing exactly how to get there. Turning to Slide 3. I'll begin the call by discussing the strategic fit of the acquisition and the remarkable biosimilar opportunity ahead. Chintu will share more about Kashiv, our combined capabilities and the robust biosimilar portfolio we will have. Tasos will discuss the transaction, our financial outlook and Amneal's very strong first quarter results, which we preannounced this morning. At a high level, Q1 marked another consecutive quarter of strong top and bottom line growth with revenue up 4%, adjusted EBITDA up 19% and EPS up 29%. Our strong start of the year, combined with growth of existing and new products, gives us confidence to raise our stand-alone guidance for 2026. This consistent performance is something investors have come to expect from Amneal and something we take great pride in. On Slide 4, we provide an executive summary of this combination. First, this is a highly strategic transaction that creates fully integrated global biosimilars leader. This unlocks direct access to more than $300 million of worldwide biologic loss of exclusivity over the next decade by bringing together Kashiv's deep R&D and manufacturing capabilities with our proven commercial scale. This combination builds on a longstanding partnership that significantly reduces execution risk. Second, this combination creates immediate scale in biosimilars. We expect multiple launches each year going forward, supported by a robust pipeline of more than 20 biosimilars programs. Third, this adds biosimilars as a key growth pillar within affordable medicines. The transaction further diversifies our business and extends our growth profile well into 2030s, while also creating a footprint to expand internationally over time. And fourth, the deal is structured to create value from day one. With a balanced mix of upfront consideration and performance-based milestones, we expect significant financial synergies and we maintain a disciplined financial profile with a clear path to deleverage to below 3x by 2028. Let me turn it over to Chintu to share more about Kashiv.

Chintu Patel, Co-Founder and Co-CEO

Thank you, Chirag. Good morning, everyone. Going to Slide 5. Today's acquisition announcement reflects our long-stated goal to be vertically integrated in biosimilars. I want to acknowledge the Amneal and Kashiv teams whose hard work made this possible. Kashiv is a biologics platform built over 12 years with more than $900 million invested, 600-plus employees and four R&D and manufacturing sites. It brings proven capabilities, a differentiated portfolio and a global operational footprint in the U.S. and India, which provides reliable supply chain and cost efficiencies. Turning to Slide 6. Kashiv adds deep biosimilar development expertise and scaled U.S. and India manufacturing, enabling multiple programs to run in parallel with speed and cost efficiency. The platform can support three to five biosimilars developments annually and offers end-to-end biologics capabilities from clone development and protein characterization through clinical and regulatory execution. These expertise spans key modalities and the vast majority of biologics, including microbials, monoclonal antibodies, fusion proteins, bispecifics and cytokines. From a manufacturing perspective, drug substance capacity is expected to scale from 26,000 liters in 2026 to 75,000 liters by 2028. Combined with Amneal, this creates a fully integrated global biosimilar platform. I will hand it over to Tasos to share more on the transaction.

Anastasios Konidaris, Chief Financial Officer

Good morning, and thank you, Chintu. Turning to the transaction overview on Slide 7. As you can see, we have purposely structured this deal to balance upfront value and success-based consideration to ensure alignment of interest. The upfront value of $750 million is a 50-50 mix of cash and equity. The equity portion translates to approximately $29 million of Amneal shares, representing 8% equity dilution. In addition to the upfront value, the deal terms include potential milestones of up to $350 million, contingent upon attaining certain regulatory approval milestones as well as potential royalties over 12 years contingent on achieving certain gross profit levels. Finally, Amneal will fund operations between signing and closing of the deal. We spent a lot of time structuring this transaction to ensure it aligns incentives with the large commercial opportunities ahead of us and doing it in the most balance-sheet-friendly way. The transaction will be funded by cash on hand as well as some additional debt, and we expect the combined company's net debt leverage ratio at the end of 2026 to be 3.7x adjusted EBITDA, only a slight increase to the 3.5x adjusted EBITDA at the end of 2025. It is important to note that we expect to resume our deleveraging in 2027 and expect our net leverage ratio to be below 3x net debt to adjusted EBITDA by 2028. Finally, we expect this highly strategic transaction to close in a few months as we work through annual shareholder approval, customary closing conditions and regulatory approvals. Let me now share our expected combined financial growth profile on Slide 8. First, we're embarking on this acquisition from a position of strength. As you may have seen from our press release this morning, we announced record first quarter preliminary financial results, and we also raised our full-year stand-alone guidance. Amneal's ability to deliver solid top-line growth and double-digit adjusted EPS growth in a tumultuous macroeconomic environment is a testament to our strategic choices, strong execution and relevancy of our products. Consequently, on a combined basis, including Kashiv, our 2026 view remains largely unchanged aside from a small impact to cash flow related to near-term transaction and integration costs. Importantly, we're maintaining the higher adjusted EBITDA and EPS outlook, which we believe is a clear signal of the underlying momentum and confidence in the trajectory of our business. For 2027 and beyond, we expect the combined company to continue to grow both in terms of top and bottom line performance. And by 2030, we expect revenues to have grown by approximately $1.2 billion or 40% over 2026 and EPS up by approximately $0.70 or 70% over 2026. Finally, we expect substantial operating cash flow growth, which supports our continued deleveraging. While increased financial performance is important, I cannot emphasize enough the impact this acquisition is having in enhancing our diversification, providing us with access to large markets into 2030 and beyond, similar to our GLP-1 collaboration with Pfizer. Let me now hand it back to Chirag.

Chirag Patel, Co-Founder and Co-CEO

Thank you, Tasos. On Slide 9, this transaction fits squarely in our long-term strategy. It adds biosimilars as a key growth pillar and positions us higher on the value curve with greater scale and higher growth. So why now? In looking at Slide 10, it's because we are entering the golden era for biosimilars. The global market is expected to grow from about $40 billion today towards $200 billion by 2035, driven by the largest biologic loss of exclusivity in history over the next decade. Advancing to Slide 11. Biosimilars represent the next major wave of affordable medicines, and we are at an inflection point. Physician adoption is accelerating, patient access is expanding and the U.S. regulatory advancements are lowering development time and cost. Today, about half of U.S. drug spend is concentrated in high-cost biologics. Furthermore, biopharma pipelines continue to shift towards biologics with most therapies in development being large molecules. Each biologic is a future biosimilar opportunity. With biosimilars, access expands and cost lowers, delivering meaningful value for patients and the health care system. In 2024, biosimilars were estimated to have saved the U.S. health care system $20 billion. There's a powerful opportunity to improve affordability and expand access because what is the point of innovation if it is not accessible. Turning to Slide 12. Despite this opportunity, there are only a handful of integrated global players. And today, there is no clear U.S. biosimilar leader. Most players have relied on partnerships to date. With Kashiv, we bring together development, manufacturing and commercialization, enabling faster execution, smarter and bigger portfolio choices and the ability to capture full economics. We believe this level of vertical integration is a true competitive advantage. I'll pass it back to Chintu to share more on the combined capabilities and portfolio.

Chintu Patel, Co-Founder and Co-CEO

Thank you. Chirag shared with you the strategy on why biosimilars. Let me share with you the clear reason why Amneal. Looking at Slide 13, since our founding, we have built a leading affordable medicine business. We are now #3 in U.S. retail generics with over 280 products across dosage forms with one of the most complex portfolios in the industry. This is a natural extension of our strategy, and we will execute with the same rigor and discipline in biosimilars. On Slide 14, we show how this combination brings together end-to-end biosimilar capabilities. Kashiv adds scientific expertise and in-house development from cell line through approval, along with scaled biologics manufacturing across a global footprint. Amneal brings a proven commercial engine, leveraging our leading affordable medicines business, long-standing customer relationships and the specialty branded infrastructure to drive market access and uptake. Built on a 10-year plus partnership with Kashiv, our capabilities are highly complementary and position us to execute well. Next, let's look at Slide 15 and the combined portfolio. Together, we have a combined portfolio of 20-plus biosimilars that targets over $100 billion in U.S. opportunity and more globally. First, we expect to have six commercial biosimilars by 2027, including biosimilars for Avastin and denosumab and a biosimilar for XOLAIR, which is pending approval. Second, we expect six or more additional approvals from our advanced pipeline by 2030. And third, in 2030 and beyond, we have a deep pipeline of future programs that extend our growth well into the next decade. Strategically, this is a balanced and durable portfolio mix. Many opportunities are biologics with fewer than one or two competitors expected and others are widely used products with large markets, creating a durable and scalable growth engine. On Slide 16, we have a clear line of sight to a steady cadence of near-term catalysts from Kashiv. First, lanreotide is a high-value partner asset expected to be approved in quarter 3. Second, biosimilar XOLAIR follows with anticipated approval at year-end, which is another Kashiv partnered asset that we now capture full value for. After that, we see a pipeline of additional approvals in 2028 and 2029, including biosimilars for ORENCIA and CIMZIA, each representing meaningful future growth drivers. Let me now pass it back to Tasos.

Anastasios Konidaris, Chief Financial Officer

Thank you, Chintu. I'm very pleased to share with you our exceptional first quarter preliminary results, our confidence in the strength of our business, which translates to increasing our full-year guidance on a stand-alone basis. And finally, our proposed acquisition of Kashiv BioSciences, which positions Amneal as a leader in the large global biosimilars market. Let me first start with our first quarter preliminary financial results, which were characterized by robust top-line growth, exceptional bottom-line growth and continuing deleveraging. Moving to Slide 22 in the appendix. Total net revenues in the first quarter of $723 million grew 4%. Q1 Affordable Medicines revenue of $423 million grew 2%, driven by strong performance of key women's health and ADHD products due to high market demand and increased Amneal supply. These high-margin products drove Q1 segment gross margin to 47.3%, up 320 basis points versus Q1 of 2025. We continue to expect Affordable Medicines revenue growth of 7% to 8% this year, driven by the strength of new product launches and strong execution by our teams. Q1 Specialty revenue of $133 million grew 23%. First quarter CREXONT revenue of $21 million reflects continued strong market uptake. Earlier this week, we shared with you our additional Phase IV data, which showed CREXONT as having more than three hours good downtime versus RYTARY, reflecting CREXONT's compelling clinical profile. In addition, we're also delighted with the strong launch trajectory of Brekiya for cluster headaches. Revenue in Q1 2026 was $4.6 million compared to $1.6 million in Q4 2025. This rapid adoption as well as feedback from patients and prescribers confirms the substantial market need and long-term revenue potential for Brekiya. Turning over to AvKARE, where Q1 revenues of $166 million declined by $6 million or 4% as strong growth in our government channel was offset by expected decline in the low-margin distribution channel. As you recall, this is part of our strategy to enhance profitability, and we're happy to report that AvKARE's gross margin in the quarter grew by 690 basis points versus first quarter last year. Moving to Slide 21. From a bottom-line perspective, the strong growth of adjusted gross margins by approximately 500 basis points and thoughtful expense management translated to Q1 2026 adjusted EBITDA of $202 million, up 19% and Q1 adjusted EPS of $0.27, up 29%. Finally, our strong financial performance and discipline continue to reduce leverage and our net leverage ratio in March of 2026 declined to 3.5x adjusted EBITDA compared to 3.9x adjusted EBITDA in March of 2025. So in summary, and before I turn to our acquisition of Kashiv BioSciences, our business fundamentals, financial outlook and balance sheet have never been stronger, which positions us well to consider such a strategic deal. Turning back to the acquisition for a moment, as we outlined on Slide 17, this is a highly synergistic transaction, adding significant value to our commercial and operating business model and providing substantial financial benefits over the course of time. From an integration perspective, we're combining Kashiv's R&D and manufacturing expertise with Amneal's commercial engine. We're strengthening market access, expanding in hospitals and accelerating international growth. With our shared global platform, we accelerate time to market at lower cost. From a financial standpoint, we expect $400 million to $500 million in cumulative financial synergies over time. There are two key elements to this. First, we're now capturing full economics from partnered assets by eliminating milestones and profit-sharing obligations that existed as part of prior licensing deals. Second, we also expect to realize substantial tax benefits as well as incentives from the local Indian authorities. Importantly, this deal goes beyond traditional cost synergies. It creates strategic scale and durable value while also avoiding the significant time and capital needed to build a biosimilars platform organically. Let me now hand it back over to Chirag.

Chirag Patel, Co-Founder and Co-CEO

Thank you, Tasos. On Slide 18, since 2019, we have built a stronger and more diversified Amneal, and delivered consistent top and bottom line growth each year. We have done this by executing well across our business. We launched 20 to 30 products annually, expanded especially with CREXONT and Brekiya, entered biosimilars with our first products, established a novel GLP-1 collaboration with Pfizer, expanded internationally and acquired and more than doubled the AvKARE business. That said, the opportunity ahead remains significantly greater than what we have achieved to date. We envision Amneal 2030 as a much larger, more diversified biopharmaceutical company with more than 400 retail and injectable medicines, mostly complex and differentiated, a large pipeline of 20-plus biosimilars and multiple specialty branded products advancing the standard of care, while Amneal fills hundreds of millions of U.S. prescriptions each year. In summary, the key takeaway from today's call are on Slide 19. Today marks a pivotal moment for Amneal, establishing a fully integrated global biosimilars leader, strengthening our diversified portfolio and extending our durable growth profile into 2030s. Our strategy remains clear to become America's #1 affordable medicines company and a leading global provider of essential medicines because innovation only matters when it reaches the patients. With that, thank you, and we will open the line for questions.

Operator, Operator

Your first question comes from the line of Matt Dellatorre with Goldman Sachs.

Matthew Dellatorre, Analyst, Goldman Sachs

Congrats on the deal. I know this was a long time coming, so very exciting. Maybe two questions, if I may. First, just on the commercial strategy for the new expanded portfolio. I see you have both the mega blockbusters like OPDIVO and KEYTRUDA and also many sub-$5 billion assets in there. And then also, it's a healthy mix of pharmacy benefit and medical benefit drugs. So could you maybe speak a bit on how you approach portfolio construction and what type of assets we should expect over time as you all disclose more and the pipeline expands? And then I realize you're primarily focused on the U.S. market, but can you just remind us how you are thinking about the international biosimilars business as well? And then maybe stepping back, a question for Chirag. When you look at this new kind of combined company you all have now, what would you highlight as maybe the two to three specific things that you're most excited about and which you think could drive upside to this long-term guidance that you're giving today?

Chirag Patel, Co-Founder and Co-CEO

Thank you, Matt. So let me address the portfolio mix first, the Kashiv pipeline. Markets are shifting more towards PBMs. We predict roughly 70% to 75% of the market to be driven by private label, PBMs, specialty pharmacies and about 25% or so will be driven by buy and bill. So it's a well-thought-out portfolio. If you look at the disclosed products, there are certain undisclosed products that, just like what we did with small molecule, we want to be the big, relevant player and mostly focused on niche products. So how do we achieve that? That is why we have some of the big products like KEYTRUDA, OPDIVO, DUPIXENT, but each has its own reason why we have selected them. Just to give you an example, DUPIXENT requires such a large biologics capacity, we're building it, and at the right time, it will be ready to deliver. Then we have niche products, which we expect two to three competitors for. So if you look at overall in the next 10 years, our portfolio would probably be about 70% niche and about 30% large molecules that we must have to offer a complete package to the customers. So that is how the portfolio is constructed and obviously a lot of IP-driven strategy work goes behind it for the last 10 years, which Kashiv has done, and we like the portfolio. Execution is going to be the key, which Kashiv has demonstrated over the last years. We will bring the same rigor to execute this big platform on biologics. Your second question on how we think about U.S. commercialization: we will be marketing Amneal products directly. We already have long-standing relationships with big buyers such as CVS, Express Scripts, Cigna, Optum and UnitedHealth. These customers represent a large share of the market. We also enjoy great relationships with smaller customers. So we're well set to commercialize products in the United States with a broad portfolio. Don't forget our small-molecule business plays a role as well. It's the same people, same relationships, the same trust that we have established. If you ask customers like Red Oak or Walgreens, they would rank Amneal as a strategic, reliable partner with the capability to deliver complex products and create massive patient access at affordable prices. We intend to do the same with biosimilars. Internationally, our strategy has been clear. In India, we have started marketing on our own, mostly to address unmet needs on the branded side and biosimilars. For the rest of the world, we enjoy great partnerships; Kashiv has also built strong partnerships which will be disclosed in the near future. I'm a big believer in a partnership model. There is a large biosimilar opportunity globally; partnership makes great sense, and we don't intend to have large direct commercial footprints in Europe, South America or Canada. We're focused on delivering biosimilars at scale, staying in the molecule for a long time, and being a champion in America. Our stated goal is America's #1 affordable medicines company and we are on our way to get there over a multi-decade strategy. Regarding what excites me most about the combined company: first, our core business is performing strongly—women's health, hormonal patches, inhalation and ophthalmic products are at high demand. Small-molecule LOEs are going to increase over the next five years compared to the prior five years, so there's tremendous growth opportunity in the core business. Second, our specialty brands are very exciting. You saw the CREXONT data—impressive. Feedback from partners internationally suggests this could become a preferred therapy because it addresses limitations of older therapies. CREXONT is very promising for maintaining daily life for Parkinson's patients. We're also encouraged by Brekiya's launch for cluster headaches. Third, the GLP-1 partnership with Pfizer presents a major opportunity. The GLP-1 market will continue to grow and will require significant manufacturing capacity and capability. We have rights in 18 countries for certain markets and a unique strategy with Pfizer. And finally, biosimilars represent a huge growth opportunity. Providers are more accepting, coverage is improving, and regulatory requirements have been reduced, making this the right time to integrate Kashiv's platform and deliver three to five biosimilars development programs per year. It also opens opportunities in bispecifics, fusion proteins and ADCs in the future. This is why it's important for Amneal to now have a complete platform covering both small and large molecules. Long answer, but I hope it was helpful, Matt.

Operator, Operator

Your next question comes from the line of Les Sulewski with Truist Securities.

Leszek Sulewski, Analyst, Truist Securities

Congrats on the transaction. So you noted the capacity scaling from 26,000 liters to 75,000 liters. How does this compare to some of your peers? And what's the magnitude of dollar spend to get there? Separately, would you say this is right-sized for that business moving forward? Do you see a further need for capacity expansion beyond the 75,000 liters? And then second, on the gross margin profile, maybe walk us through the puts and takes around Q1 and how does the remainder of this year look? And then over the long run, how should we think about the margin profile now that the biosimilars business will be integrated?

Chirag Patel, Co-Founder and Co-CEO

Great. Chintu and I will take the first one and pass it to Tasos for the second one. So Kashiv has built the platform manufacturing sites over the last several years, which coincides with the product approvals timing. So XOLAIR being first, we will be manufacturing in Piscataway, New Jersey and also have a backup site in India for global supply. So all key molecules will have two sites, U.S. and India, as we believe in U.S. manufacturing and maintaining redundant supply. We also have a site in Chicago for E. coli manufacturing. The current capacity is sufficient for the first few launches. Then over 2027, 2028 and 2029, we're expanding to 75,000 liters, which matches the pipeline execution, approval and launch timing. That is how we see the capacity expansion. It will be a good problem to have for 2030 and beyond to continue expanding. Once we have the infrastructure at the same site, we can expand another 25,000 liters as needed. We will keep expanding smartly and will not have issues with capacity. I'll pass it to Chintu to give more color.

Chintu Patel, Co-Founder and Co-CEO

So we have perfectly sized the capacity, and it's not only about how many thousands of liters, it's also about how you design and the number of bioreactors because you need flexibility in your manufacturing and for the execution of the filing products. I think that's a key differentiator in how we have thought through it on a long-term basis to cater to our goals of filing a few biosimilars every year and at the same time ensure we have excess capacity commercially. We have diversified our supply chain across U.S. and India. So if a product is cost sensitive, we will have capacity in India as well as in the U.S. We are positioned well to cater to the 20 products we have and have considered this as global capacity, not only U.S. So we are comfortable that 75,000 liters supports those 20 products with good market share assumptions. Regarding spend, it's about $30 million to $50 million a year in CapEx for the next two to three years to get to the 75,000 liters.

Anastasios Konidaris, Chief Financial Officer

And Les, this is Tasos. Around gross margin. I'll speak in annual terms. Our full-year consolidated gross margin in 2025 was about 42.9%, so call it 43%. My view is we will finish 2026 at about 45%, so we're targeting roughly a 200 basis point expansion. That's going to be driven across business units. Our Affordable Medicines margins will continue to expand as we evolve the pipeline toward more complex products with higher price points. Second, our conscious decision to increase gross margins in our AvKARE business by focusing more on the government channel at the expense of the low-margin distribution channel continues to pay dividends. Finally, our Specialty business already has gross margins in the low 80s, and continued adoption there helps overall. So that's why we think 2026 will be closer to 45% versus about 43% last year. Looking further out, margins have room to grow beyond 45% over time. Over the next three to four years, we see the 45% gross margin getting closer to 47% as the portfolio continues to be driven by biosimilars, which generally have higher price points than the rest of the business.

Operator, Operator

Your next question comes from the line of David Amsellem with Piper Sandler.

David Amsellem, Analyst, Piper Sandler

So I have a few. First, can you comment and elaborate on the insider ownership of Kashiv? That's number one. Number two is why provide long-term revenue and EBITDA targets, not just 2027, but also out to 2030? What was the rationale there? And remind us, is the EBITDA margin expansion that you're factoring in between 2027 and 2030 largely a function of eliminating shared economics on biosimilars? And then the last question: how much of your revenue base by 2030 do you expect will be from biosimilars?

Anastasios Konidaris, Chief Financial Officer

David, I'll take question #2 and #3. If you can just—can you repeat question number one for a second, if you don't mind?

David Amsellem, Analyst, Piper Sandler

Yes, the insider ownership of Kashiv.

Anastasios Konidaris, Chief Financial Officer

Insider ownership of Kashiv is disclosed in our proxy. Kashiv has been owned by the Amneal Group, which has been a large shareholder in Amneal since our founding. Ownership includes both of our CEOs, who have been transparent about that, as well as other investors in Kashiv who have been long-term contributors to both businesses. On why we provided long-term guidance: no CFO likes to provide long-term guidance because many things can change over time. Having said that, we take our long-term financial commitments very seriously. For us to provide these long-term numbers, we had to feel confident in our ability to deliver. We conducted extensive diligence—multiple teams across R&D, legal, business development, finance and commercial—before laying out these numbers. Providing long-term guidance gives focus to our 8,000 employees and our new colleagues at Kashiv, eliminating ambiguity and aligning everyone to a set of financial metrics. Also, we have been prudently conservative in our forecasts; management does not want to put out numbers we are at risk of missing. Regarding revenue and EBITDA expansion: it's a combination of both our base business growth and the acquisition. Our Affordable Medicines business is already growing—we expect it to grow 7% to 8% this year—and that will continue. Biosimilars will add to that growth. On an EBITDA basis, our Q1 EBITDA was up 19% and last year's EBITDA growth was 10%. The base business is growing at least 10% adjusted EBITDA, and we expect biosimilars to contribute on top of that. So the long-term forecast reflects growth of the existing business plus the acquisition and is conservative in nature.

David Amsellem, Analyst, Piper Sandler

Yes. How much of your business do you think will be biosimilars by 2030—for example, what portion of revenue?

Anastasios Konidaris, Chief Financial Officer

If you think about 2030, for example, our guidance is $4.3 billion to $4.5 billion in revenue, and approximately a little over $1 billion—roughly $1.0 billion to $1.3 billion—of that is expected to be biosimilars.

Operator, Operator

Your next question comes from the line of Chris Schott with JPMorgan.

Christopher Schott, Analyst, JPMorgan

Just two for me. First, a bigger picture question on biosimilars. Can you talk a bit more about how you see the competitive landscape evolving as we approach this very large cycle of biologic patent expirations? Do you anticipate more meaningful consolidation such that a handful of players dominate, or will this remain a more fragmented market? Second, on lanreotide (Somatuline Depot), can you talk about that opportunity as we think about 2026 in terms of market dynamics, competitive landscape and how meaningful that product could be for Amneal?

Chirag Patel, Co-Founder and Co-CEO

Thank you, Chris. On the competitive landscape, vertically integrated players tend to take more market share. Companies like Amgen have maintained biosimilar investments, and other brand companies have focused on innovation. That leaves a handful of integrated players like Sandoz, Celltrion, Samsung and Biocon, among others. The cycle of expirations and the regulatory and manufacturing requirements mean this is not like small molecules where many entrants flood the market. Building U.S.-oriented regulated manufacturing and development capabilities takes years and substantial investment. So we expect a smaller set of vertically integrated leaders to emerge, while other players may partner. For large molecules like KEYTRUDA or OPDIVO, you may see five to ten competitors; for many niche molecules, we expect two to three competitors. There are roughly 118 molecules to pursue, so the opportunity is broad even if only a few companies vertically integrate at scale. Chintu, do you want to add anything?

Chintu Patel, Co-Founder and Co-CEO

There are high barriers to entry: the science is more complicated than small molecules and development can cost in the range of $50 million to $75 million per product. It typically takes five to seven years for a new player to build the platform and expertise. At Kashiv, we have more than 600 people and deep experience, which supports our ability to run three to five biosimilars per year. Competition will include a few vertically integrated players, but the space remains open for a leader; we believe Amneal will be a leader by 2030.

Chirag Patel, Co-Founder and Co-CEO

On lanreotide, the market dynamics have changed. Cipla had manufacturing issues and is no longer in the market, leaving the brand. The product is in high demand; we're getting interest from many customers. We've requested the FDA to expedite the approval and they're working on it. We could be the first to market in the U.S. for a generic lanreotide, and we will supply and create additional access for hospitals and clinics as soon as possible.

Chintu Patel, Co-Founder and Co-CEO

This is also a global opportunity. We have pending approvals in Europe as well. Lanreotide is a complex drug-device combination peptide, so we are optimistic about its potential.

Operator, Operator

Your next question comes from the line of Glen Santangelo with Barclays.

Glen Santangelo, Analyst, Barclays

A couple for me. Chirag, strategically this makes sense, but I'm curious about the operational complexities involved. Many other players prefer partnerships versus vertical integration—maybe due to operational complexity. Do you worry about increasing the company's risk profile this way? Second, on the 2027 EBITDA guidance you provided today, it seems below some Street forecasts and implies a deceleration in growth in '27 versus '26. Given the $400 million to $500 million in synergies you referenced and some partnership deals on track, how should we reconcile the timing of synergies and when they might show up in 2027 and beyond?

Chirag Patel, Co-Founder and Co-CEO

Thank you, Glen. On partnering versus vertical integration: yes, vertical integration is complex—that's why it took Kashiv many years and significant investment to build this capability. It requires R&D, IP management and manufacturing scale. Vertical integration provides full economics, freedom to select products and control over execution. For large, long-term opportunities, we believe vertical integration is the right path to capture full value. Partnerships still make sense internationally and remain part of our approach outside the U.S. Ultimately, the companies that succeed in 2030–2035 will likely be vertically integrated. Now I'll pass it to Tasos to address the guidance and synergies.

Anastasios Konidaris, Chief Financial Officer

Glen, I enjoy financial modeling questions. Let's put things in perspective. Our guidance for 2027 adjusted EBITDA of $820 million is slightly below some Street estimates—maybe the Street is around $835 million. So the difference is not large. We don't run our business to satisfy external expectations; we run it for shareholders and long-term value. Regarding growth rates, our 2026 midpoint EBITDA is $755 million, about 10% growth versus prior year. Even using the low end of our 2027 guidance of $820 million, that's about 9% growth versus 10%, which isn't a significant deceleration. We feel great about a 9% to 10% adjusted EBITDA growth next year even while absorbing a strategic deal that will have some near-term dilution until it becomes accretive in 2028. We also need to fund incremental R&D to maximize the opportunity. So we provided a conservative view for 2027 that reflects our confidence in the underlying business and the acquisition integration timeline.

Operator, Operator

Your next question comes from the line of Ash Verma with UBS.

Analyst, Analyst, UBS (on behalf of Ash Verma)

This is an analyst from UBS calling on behalf of Ash Verma. I have two questions. First, on lanreotide: it seems like there's limited competition in this molecule. How confident are you about the approval timeline in Q3, and what will be the gating items for launch? Second, on gross margin: first quarter looked strong at around 48%—does that imply some normalization later in the year? Can you clarify the cadence and expectations for gross margin over the remainder of the year?

Chirag Patel, Co-Founder and Co-CEO

Thank you. On lanreotide, the gating item is FDA approval. We're ready to supply, and it's a strong opportunity for Amneal. I'll pass it to Tasos on gross margin guidance.

Anastasios Konidaris, Chief Financial Officer

Our Q1 gross margin was a record quarter, up about 510 basis points versus Q1 of last year. Sustaining that level of expansion quarter after quarter is difficult, so our full-year view is more conservative. We expect 2026 consolidated gross margin to be closer to about 45% compared to about 43% in 2025. The Q1 result was strong, but we anticipate some normalization over the remainder of the year while still delivering meaningful full-year margin expansion.

Operator, Operator

There are no further questions at this time. I will now turn the call back to Chirag Patel for closing remarks.

Chirag Patel, Co-Founder and Co-CEO

Well, thank you, everyone, and have a great day.

Operator, Operator

This concludes today's call. Thank you for attending. You may now disconnect.