0001023024-21-000007 | 10-K | XBRL Viewer

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2020	Mar. 02, 2021	Jun. 30, 2020
Document Information [Line Items]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2020
Document Transition Report	false
Entity File Number	001-31812
Entity Registrant Name	ANI PHARMACEUTICALS, INC
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	58-2301143
Entity Address, Address Line One	210 Main Street West
Entity Address, City or Town	Baudette
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	56623
City Area Code	218
Local Phone Number	634-3500
Title of 12(b) Security	Common Stock
Trading Symbol	ANIP
Security Exchange Name	NASDAQ
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	true
Entity Shell Company	false
Entity Public Float			$ 316.1
Entity Central Index Key	0001023024
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Amendment Flag	false
Common Stock [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		12,354,398
Class C Special Stock [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		10,864

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Current Assets
Cash and cash equivalents	$ 7,864	$ 62,332
Accounts receivable, net of $100,328 and $59,946 of adjustments for chargebacks and other allowances at December 31, 2020 and 2019, respectively	95,793	72,129
Inventories, net	60,803	48,163
Prepaid income taxes	0	1,076
Prepaid expenses and other current assets	5,861	3,995
Total Current Assets	170,321	187,695
Property and equipment, net	41,269	40,551
Restricted cash	5,003	5,029
Deferred tax assets, net of deferred tax liabilities and valuation allowance	51,704	38,326
Intangible assets, net	188,511	180,388
Goodwill	3,580	3,580
Other non-current assets	802	1,220
Total Assets	461,190	456,789
Current Liabilities
Current debt, net of deferred financing costs	13,243	9,941
Accounts payable	11,261	14,606
Accrued expenses and other	2,456	2,362
Accrued royalties	6,407	5,084
Accrued compensation and related expenses	6,231	3,736
Current income taxes payable, net	3,906	0
Accrued government rebates	7,826	8,901
Returned goods reserve	27,155	16,595
Deferred revenue	80	451
Total Current Liabilities	78,565	61,676
Non-current Liabilities
Non-current debt, net of deferred financing costs and current component	172,443	175,808
Derivatives and other non-current liabilities	14,482	6,514
Total Liabilities	265,490	243,998
Commitments and Contingencies (Note 12)
Stockholders' Equity
Common Stock, $0.0001 par value, 33,333,334 shares authorized; 12,429,916 shares issued and 12,354,398 outstanding at December 31, 2020; 12,104,875 shares issued and 12,089,565 shares outstanding at December 31, 2019	1	1
Class C Special Stock, $0.0001 par value, 781,281 shares authorized; 10,864 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively
Preferred Stock, $0.0001 par value, 1,666,667 shares authorized; 0 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively
Treasury stock, 75,518 shares of common stock, at cost, at December 31, 2020 and 15,310 shares of common stock, at cost, at December 31, 2019	(2,246)	(723)
Additional paid-in capital	214,354	200,800
(Accumulated deficit)/retained earnings	(4,972)	17,584
Accumulated other comprehensive loss, net of tax	(11,437)	(4,871)
Total Stockholders' Equity	195,700	212,791
Total Liabilities and Stockholders' Equity	$ 461,190	$ 456,789

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Adjustments for chargebacks and other allowances	$ 100,328	$ 59,946
Preferred Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.0001	$ 0.0001
Preferred Stock, Shares Authorized	1,666,667	1,666,667
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Treasury Stock, Common, Shares	75,518	15,310
Common Stock [Member]
Common Stock, Par Value (in dollars per share)	$ 0.0001	$ 0.0001
Common Stock, Authorized Shares	33,333,334	33,333,334
Common Stock, Issued Shares	12,429,916	12,104,875
Common Stock, Outstanding Shares	12,354,398	12,089,565
Class C Special Stock [Member]
Common Stock, Par Value (in dollars per share)	$ 0.0001	$ 0.0001
Common Stock, Authorized Shares	781,281	781,281
Common Stock, Issued Shares	10,864	10,864
Common Stock, Outstanding Shares	10,864	10,864

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Consolidated Statements of Operations
Net Revenues	$ 208,475	$ 206,547	$ 201,576
Operating Expenses
Cost of sales (excluding depreciation and amortization)	87,157	63,154	73,024
Research and development	16,001	19,806	15,388
Selling, general, and administrative	64,986	55,843	44,063
Depreciation and amortization	44,638	44,612	33,742
Cortrophin pre-launch charges	11,263	6,706
Intangible asset impairment charge	446	75	0
Total Operating Expenses	224,491	190,196	166,217
Operating (Loss)/Income	(16,016)	16,351	35,359
Other Expense, net
Interest expense, net	(9,452)	(12,966)	(14,758)
Other expense, net	(494)	(228)	(550)
(Loss)/Income Before Benefit/(Provision) for Income Taxes	(25,962)	3,157	20,051
Benefit/(provision) for income taxes	3,414	2,937	(4,557)
Net (Loss)/Income	$ (22,548)	$ 6,094	$ 15,494
Basic and Diluted (Loss)/Earnings Per Share:
Basic (Loss)/Earnings Per Share	$ (1.88)	$ 0.51	$ 1.31
Diluted (Loss)/Earnings Per Share	$ (1.88)	$ 0.50	$ 1.30
Basic Weighted-Average Shares Outstanding	11,964	11,841	11,677
Diluted Weighted-Average Shares Outstanding	11,964	12,040	11,772

Consolidated Statements of Comprehensive (Loss)/Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Consolidated Statements of Comprehensive (Loss)/Income
Net (loss)/income	$ (22,548)	$ 6,094	$ 15,494
Other comprehensive (loss)/income, net of tax:
(Losses)/gains on interest rate swap	(6,566)	(4,492)	(379)
Total other comprehensive (loss)/income, net of tax	(6,566)	(4,492)	(379)
Total comprehensive (loss)/income, net of tax	$ (29,114)	$ 1,602	$ 15,115

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

- Definition

Amount after tax and reclassification adjustments of other comprehensive income (loss).

+ References

+ Details

Consolidated Statements of Changes in Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Loss, Net of Tax [Member]	(Accumulated Deficit)/Retained Earnings [Member] Cumulative Effect, Period of Adoption, Adjustment [Member]	(Accumulated Deficit)/Retained Earnings [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member]	Total
Balance at Dec. 31, 2017	$ 1	$ 179,020	$ (259)			$ (4,006)		$ 174,756
Balance (in shares) at Dec. 31, 2017	11,656		5
Stock-based Compensation Expense		6,782						6,782
Treasury stock purchases for restricted stock vests			$ (659)					(659)
Treasury stock purchases for restricted stock vests (in shares)			11
Issuance of Common Shares upon Stock Option and ESPP Exercise		2,719	$ 259					2,978
Issuance of Common Shares upon Stock Option and ESPP Exercise (in shares)	142		(5)
Issuance of Restricted Stock Awards (in shares)	65
Repurchase of Convertible Notes and Unwind of Call Option Overlay		(1,709)						(1,709)
(Losses)/Gains on Interest Rate Swap				$ (379)				(379)
Net (loss)/income						15,494		15,494
Balance at Dec. 31, 2018	$ 1	186,812	$ (659)	(379)	$ 2	11,488	$ 2	197,263
Balance (in shares) at Dec. 31, 2018	11,863		11
Stock-based Compensation Expense		9,217						9,217
Treasury stock purchases for restricted stock vests			$ (1,031)					(1,031)
Treasury stock purchases for restricted stock vests (in shares)			20
Issuance of Common Shares upon Stock Option and ESPP Exercise		5,738						5,738
Issuance of Common Shares upon Stock Option and ESPP Exercise (in shares)	136
Issuance of Restricted Stock Awards		(967)	$ 967
Issuance of Restricted Stock Awards (in shares)	106		(16)
(Losses)/Gains on Interest Rate Swap				(4,492)				(4,492)
Net (loss)/income						6,094		6,094
Balance at Dec. 31, 2019	$ 1	200,800	$ (723)	(4,871)	$ (8)	17,584	$ (8)	212,791
Balance (in shares) at Dec. 31, 2019	12,105		15
Stock-based Compensation Expense		12,936						12,936
Treasury stock purchases for restricted stock vests			$ (1,523)					(1,523)
Treasury stock purchases for restricted stock vests (in shares)			61
Issuance of Common Shares upon Stock Option and ESPP Exercise		618						618
Issuance of Common Shares upon Stock Option and ESPP Exercise (in shares)	21
Issuance of Restricted Stock Awards (in shares)	304
(Losses)/Gains on Interest Rate Swap				(6,566)				(6,566)
Net (loss)/income						(22,548)		(22,548)
Balance at Dec. 31, 2020	$ 1	$ 214,354	$ (2,246)	$ (11,437)		$ (4,972)		$ 195,700
Balance (in shares) at Dec. 31, 2020	12,430		76

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash Flows From Operating Activities
Net (loss)/income	$ (22,548)	$ 6,094	$ 15,494
Adjustments to reconcile net income/(loss) to net cash and cash equivalents provided by operating activities:
Stock-based compensation	12,936	9,217	6,782
Deferred taxes	(13,205)	(9,134)	(5,180)
Depreciation and amortization	44,638	44,612	33,742
Acquired in-process research and development ("IPR&D")	3,753	2,324	1,335
Non-cash interest	1,876	7,024	8,465
Loss on repurchase of Convertible notes	0	0	468
Asset impairment charge	445	75	0
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net	(23,664)	(7,287)	(4,743)
Inventories, net	(2,759)	(7,660)	(379)
Prepaid expenses and other current assets	(1,866)	403	(1,142)
Accounts payable	(2,294)	5,039	3,466
Accrued royalties	1,323	(3,372)	(3,708)
Current income taxes, net	4,982	(6,098)	6,184
Accrued government rebates	(1,075)	(73)	1,044
Returned goods reserve	10,369	4,043	4,278
Accrued expenses, accrued compensation, and other	2,356	424	968
Net Cash and Cash Equivalents Provided by Operating Activities	15,267	45,631	67,074
Cash Flows From Investing Activities
Acquisition of WellSpring Pharma Services Inc., net of cash acquired	0	0	(16,467)
Acquisition of product rights, IPR&D, and other related assets	(62,187)	(20,914)	(5,169)
Acquisition of property and equipment, net	(6,135)	(6,635)	(5,743)
Net Cash and Cash Equivalents Used in Investing Activities	(68,322)	(27,549)	(27,379)
Cash Flows From Financing Activities
Payment of debt issuance and convertible debt repurchase costs	0	0	(1,572)
Payments on Term Loan and Delayed Draw Term Loan agreements	(8,034)	(2,707)	(2,813)
Borrowings under Revolver agreement	15,000	0	0
Payments on Revolver agreement	(7,500)	0	0
Borrowings under Delayed Draw Term Loan agreement	0	118,000	0
Proceeds from stock option exercises and ESPP purchases	618	5,738	2,978
Repayment of Convertible Notes	0	(118,750)	(26,125)
Unwinding of portion of call option overlay, net	0	0	375
Treasury stock purchases for restricted stock vests	(1,523)	(1,031)	(659)
Net Cash and Cash Equivalents (Used in)/Provided by Financing Activities	(1,439)	1,250	(27,816)
Net Change in Cash and Cash Equivalents	(54,494)	19,332	11,879
Cash and cash equivalents, beginning of period	67,361	48,029	36,150
Cash and cash equivalents, end of period	12,867	67,361	48,029
Reconciliation of cash, cash equivalents, and restricted cash, beginning of period
Cash and cash equivalents	62,332	43,008	31,144
Restricted cash	5,029	5,021	5,006
Cash and cash equivalents, beginning of period	67,361	48,029	36,150
Reconciliation of cash, cash equivalents, and restricted cash, end of period
Cash and cash equivalents	7,864	62,332	43,008
Restricted cash	5,003	5,029	5,021
Cash and cash equivalents, end of period	12,867	67,361	48,029
Supplemental disclosure for cash flow information:
Cash paid for interest, net of amounts capitalized	6,931	6,092	6,285
Cash paid for income taxes	4,984	10,033	6,397
Supplemental non-cash investing and financing activities:
Acquisition of product rights, IPR&D, and other related assets included in returned goods reserve and derivatives and other non-current liabilities	391	500	0
Property and equipment purchased and included in accounts payable	$ 172	$ 723	$ 521

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2020

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Business

ANI Pharmaceuticals, Inc. and its consolidated subsidiaries, ANIP Acquisition Company and ANI Pharmaceuticals Canada Inc. (together, “ANI,” the “Company,” “we,” “us,” or “our”) is an integrated specialty pharmaceutical company focused on delivering value to our customers by developing, manufacturing, and marketing high quality branded and generic prescription pharmaceuticals. ANI was organized as a Delaware corporation in April 2001. At our three facilities, of which two are located in Baudette, Minnesota and one in Oakville, Ontario, we manufacture oral solid dose products, as well as semi-solids, liquids and topicals, controlled substances, and potent products that must be manufactured in a fully-contained environment. We also perform contract manufacturing for other pharmaceutical companies.

On August 6, 2018, our subsidiary, ANI Pharmaceuticals Canada Inc. (“ANI Canada”), acquired all the issued and outstanding equity interests of WellSpring Pharma Services Inc. (“WellSpring”), a Canadian company that performs contract development and manufacturing of pharmaceutical products. In conjunction with the transaction, we acquired WellSpring’s pharmaceutical manufacturing facility, laboratory, and offices, its current book of commercial business, as well as an organized workforce.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain prior period information has been reclassified to conform to the current period presentation.

Principles of Consolidation

The consolidated financial statements include the accounts of ANI Pharmaceuticals, Inc. and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation.

Foreign Currency

We have a subsidiary located in Canada. The subsidiary conducts its transactions in U.S. dollars and Canadian dollars, but its functional currency is the U.S. dollar. The results of any non-U.S. dollar transactions are remeasured in U.S. dollars at the applicable exchange rates during the period and resulting foreign currency transaction gains and losses are included in the determination of net income. Our gain or loss on transactions denominated in foreign currencies was immaterial for the years ended December 31, 2020, 2019, and 2018. Unless otherwise noted, all references to “$” or “dollar” refer to the U.S. dollar.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In the accompanying consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, revenue recognition, allowance for credit losses, variable consideration determined based on accruals for chargebacks, administrative fees and rebates, government rebates, returns and other allowances, allowance for inventory obsolescence, valuation of financial instruments and intangible assets, accruals for contingent liabilities, fair value of long-lived assets, income tax provision or benefit, deferred taxes and valuation allowance, determination of right-of-use assets and lease liabilities, purchase price allocations, and the depreciable lives of long-lived assets. Because of the uncertainties inherent in such estimates, actual results may differ from those estimates. Management periodically evaluates estimates used in the preparation of the financial statements for reasonableness.

We are subject to risks and uncertainties as a result of the novel coronavirus (“COVID-19”) pandemic. We are unable to predict the impact that the COVID-19 pandemic will have on our future business, financial condition, and

results of operations due to numerous uncertainties. These uncertainties include the occurrence of recurring outbreaks and their severity and the duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others. While we experienced a negative impact to our net revenues during the year ended December 31, 2020 in part due to the COVID-19 pandemic, we remain unable to predict the future impact on our estimates and assumptions. There was not a material impact to these estimates or assumptions in our consolidated financial statements as of and for the year ended December 31, 2020. Actual results could differ from those estimates, which may change our estimates in future periods. We continue to closely monitor the impact of the COVID-19 pandemic on our business.

Leases

At the inception of a contract we determine if the arrangement is, or contains, a lease. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Rent expense is recognized on a straight-line basis over the lease term.

We have made certain accounting policy elections whereby we (i) do not recognize ROU assets or lease liabilities for short-term leases (those with original terms of 12-months or less) and (ii) combine lease and non-lease elements of our operating leases. Operating lease ROU assets are included in other non-current assets and operating lease liabilities are included in accrued expenses and other and derivatives and other non-current liabilities in our consolidated balance sheets. As of December 31, 2020, we did not have any finance leases.

Comprehensive Income/(Loss)

Comprehensive (loss)/income, which is reported in the statement of comprehensive (loss)/income, consists of net (loss)/income, changes in fair value of our interest rate swap, and other comprehensive (loss)/income, net of tax.

Credit Concentration

Our customers are primarily wholesale distributors, chain drug stores, group purchasing organizations, and other pharmaceutical companies.

During the years ended December 31, 2020 and 2019 we had three customers that accounted for 10% or more of net revenues. As of December 31, 2020, accounts receivable from these customers totaled 81% of accounts receivable, net.

The three customers represent the total percentage of net revenues as follows:



	Years Ended December 31,
	2020		2019		2018
Customer 1	31	%	32	%	33	%
Customer 2	24	%	25	%	23	%
Customer 3	19	%	23	%	21	%

Vendor Concentration

We source the raw materials for products, including active pharmaceutical ingredients (“API”), from both domestic and international suppliers. Generally, only a single source of API is qualified for use in each product due to the costs and time required to validate a second source of supply. As a result, we are dependent upon our current vendors to supply reliably the API required for ongoing product manufacturing. During the year ended December 31, 2020, we purchased approximately 10% of our inventory from one supplier. As of December 31, 2020, amounts payable to this supplier was $0.9 million. During the year ended December 31, 2019, we purchased approximately 13% of our inventory from one supplier. During the year ended December 31, 2018, we purchased approximately 13% of our inventory from one supplier.

Revenue Recognition

We recognize revenue using the following steps:

●

Identification of the contract, or contracts, with a customer;

●

Identification of the performance obligations in the contract;

●

Determination of the transaction price, including the identification and estimation of variable consideration;

●

Allocation of the transaction price to the performance obligations in the contract; and

●

Recognition of revenue when we satisfy a performance obligation.

We derive our revenues primarily from sales of generic and branded pharmaceutical products. Revenue is recognized when our obligations under the terms of our contracts with customers are satisfied, which generally occurs when control of the products we sell is transferred to the customer. We estimate variable consideration after considering applicable information that is reasonably available. We generally do not have incremental costs to obtain contracts that would otherwise not have been incurred. We do not adjust revenue for the promised amount of consideration for the effects of a significant financing component because our customers generally pay us within 100 days.

All revenue recognized in our consolidated statements of operations is considered to be revenue from contracts with customers. The following table depicts the disaggregation of revenue:



Products and Services	Years Ended December 31,
(in thousands)	2020		2019		2018
Sales of generic pharmaceutical products	$	147,257	$	128,729	$	117,451
Sales of branded pharmaceutical products		47,960		63,767		60,554
Sales of contract manufactured products		9,221		11,139		9,119
Royalties from licensing agreements		1,396		807		12,504
Product development services		1,858		1,125		1,019
Other⁽¹⁾		783		980		929
Total net revenues	$	208,475	$	206,547	$	201,576

(1)	Primarily includes laboratory services and royalties on sales of contract manufactured products



Timing of Revenue Recognition	Years Ended December 31,
(in thousands)	2020		2019		2018
Performance obligations transferred at a point in time	$	206,617	$	205,422	$	200,557
Performance obligations transferred over time		1,858		1,125		1,019
Total	$	208,475	$	206,547	$	201,576

During the year ended December 31, 2020, we did not incur, and therefore did not defer, any material incremental costs to obtain contracts or costs to fulfill contracts. We recognized a decrease of $9.9 million of net revenue from performance obligations satisfied in prior periods during the year ended December 31, 2020, consisting primarily of revised estimates for variable consideration, including chargebacks, rebates, returns, and other allowances, related to prior period sales. We provide technical transfer services to customers, for which services are transferred over time. As a result, we had $0.1 million of contract assets related to revenue recognized based on percentage of completion but not yet billed at December 31, 2019. At December 31, 2020, we did not have any contract assets related to revenue recognized based on percentage of completion but not yet billed. We also had $0.1 million and $0.5 million of deferred revenue at December 31, 2020 and 2019, respectively. For the year ended December 31, 2020, we recognized $0.3 million of revenue that was included in deferred revenue as of December 31, 2019. For the year ended December 31, 2019, we recognized $0.1 million of revenue that was included in deferred revenue as of December 31, 2018.

Revenue from Sales of Generic and Branded Pharmaceutical Products

Product sales consists of sales of our generic and brand pharmaceutical products. Our sole performance obligation in our contracts is to provide pharmaceutical products to customers. Our products are sold at pre-determined standalone selling prices and our performance obligation is considered to be satisfied when control of the product is transferred to the customer. Control is generally transferred to the customer upon delivery of the product to the customer, as our pharmaceutical products are generally sold on an FOB destination basis and because inventory risk and risk of ownership passes to the customer upon delivery. Payment terms for these sales are generally fewer than 100 days.

Revenue from Distribution Agreements

From time to time, we enter into marketing and distribution agreements with third parties in which we sell products under Abbreviated New Drug Applications (“ANDAs”) or New Drug Applications (“NDAs”) owned or licensed by these third parties. These products are sold under our own label. We have assessed and determined that we control the products sold under these marketing and distribution agreements and therefore are the principal for sales under each of these marketing and distribution agreements. As a result, we recognize revenue on a gross basis when control has passed to the customer and we have satisfied our performance obligation. Under these agreements, we pay these third parties a specified percentage of the gross profit earned on sales of the products. These profit-sharing percentages are recognized in cost of sales in our consolidated statements of operations and are accrued in accrued royalties in our consolidated balance sheets until payment has occurred.

Sales of our pharmaceutical products are subject to variable consideration due to chargebacks, government rebates, returns, administrative and other rebates, and cash discounts. Estimates for these elements of variable consideration require significant judgment.

Chargebacks

Chargebacks, primarily from wholesalers, result from arrangements we have with indirect customers establishing prices for products which the indirect customer purchases through a wholesaler. Alternatively, we may pre-authorize wholesalers to offer specified contract pricing to other indirect customers. Under either arrangement, we provide a chargeback credit to the wholesaler for any difference between the contracted price with the indirect customer and the wholesaler’s invoice price, typically Wholesale Acquisition Cost ("WAC").

Chargeback credits are calculated as follows:

Prior period chargebacks claimed by wholesalers are analyzed to determine the actual average selling price ("ASP") for each product. This calculation is performed by product by wholesaler. ASPs can be affected by several factors such as:

●

A change in customer mix

●

A change in negotiated terms with customers

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A change in the volume of off-contract purchases

●

Changes in WAC

As necessary, we adjust ASPs based on anticipated changes in the factors above.

The difference between ASP and WAC is recorded as a reduction in both gross revenues in the consolidated statements of operations and accounts receivable in the consolidated balance sheets, at the time we recognize revenue from the product sale.

To evaluate the adequacy of our chargeback accruals, we obtain on-hand inventory counts from the wholesalers. This inventory is multiplied by the chargeback amount, the difference between ASP and WAC, to arrive at total expected future chargebacks, which is then compared to the chargeback accruals. We continually monitor chargeback activity and adjust ASPs when we believe that actual selling prices will differ from current ASPs.

Government Rebates

Our government rebates reserve consists of estimated payments due to governmental agencies for purchases made by third parties under various governmental programs. The two largest government programs that impact our net revenue and our government rebates reserve are federal and state Medicaid rebate programs and Medicare.

We participate in certain qualifying federal and state Medicaid rebate programs whereby discounts and rebates are provided to participating programs after the final dispensing of the product by a pharmacy to a Medicaid plan participant. Medicaid rebates are typically billed up to 120 days after the product is shipped. Medicaid rebate amounts per product unit are established by law, based on the Average Manufacturer Price (“AMP”), which is reported on a monthly and quarterly basis, and, in the case of branded products, best price, which is reported on a quarterly basis. Our Medicaid reserves are based on expected claims from state Medicaid programs. Estimates for expected claims are driven by patient usage, sales mix, calculated AMP or best price, as well as inventory in the distribution channel that will be subject to a Medicaid rebate. As a result of the delay between selling the products and rebate billing, our Medicaid rebate reserve includes both an estimate of outstanding claims for end-customer sales that have occurred but for which the related claim has not been billed, as well as an estimate for future claims that will be made when inventory in the distribution channel is sold through to plan participants.

Many of our products are also covered under Medicare. We, like all pharmaceutical companies, must provide a discount for any products sold under NDAs to Medicare Part D participants. This applies to all products sold under NDAs, regardless of whether the products are marketed as branded or generic. Our estimates for these discounts are based on historical experience with Medicare rebates for our products. While such experience has allowed for reasonable estimations in the past, history may not always be an accurate indicator of future rebates. Medicare rebates are typically billed up to 120 days after the product is shipped. As a result of the delay between selling the products and rebate billing, our Medicare rebate reserve includes both an estimate of outstanding claims for end-customer sales that have occurred but for which the related claim has not been billed, as well as an estimate for future claims that will be made when inventory in the distribution channel is sold through to Medicare Part D participants.

To evaluate the adequacy of our government rebate reserves, we review the reserves on a quarterly basis against actual claims data to ensure the liability is fairly stated. We continually monitor our government rebate reserve and adjust our estimates if we believe that actual government rebates may differ from our established accruals. Accruals for government rebates are recorded as a reduction to gross revenues in the consolidated statements of operations and as an increase to accrued government rebates in the consolidated balance sheets.

Returns

We maintain a return policy that allows customers to return product within a specified period prior to and subsequent to the expiration date. Generally, product may be returned for a period beginning six months prior to its expiration date to up to one year after its expiration date. Our product returns are settled through the issuance of a credit to the customer. Our estimate for returns is based upon historical experience with actual returns. While such experience has allowed for reasonable estimation in the past, history may not always be an accurate indicator of future returns. We continually monitor our estimates for returns and make adjustments when we believe that actual product returns may differ from the established accruals. Accruals for returns are recorded as a reduction to gross revenues in the consolidated statements of operations and as an increase to the return goods reserve in the consolidated balance sheets.

Administrative Fees and Other Rebates

Administrative fees or rebates are offered to wholesalers, group purchasing organizations, and indirect customers. We accrue for fees and rebates, by product by wholesaler, at the time of sale based on contracted rates and ASPs.

To evaluate the adequacy of our administrative fee accruals, we obtain on-hand inventory counts from the wholesalers. This inventory is multiplied by the ASPs to arrive at total expected future sales, which is then multiplied by contracted rates. The result is then compared to the administrative fee accruals. We continually

monitor administrative fee activity and adjust our accruals when we believe that actual administrative fees will differ from the accruals. Accruals for administrative fees and other rebates are recorded as a reduction in both gross revenues in the consolidated statements of operations and accounts receivable in the consolidated balance sheets.

Prompt Payment Discounts

We often grant sales discounts for prompt payment. The reserve for prompt payment discounts is based on invoices outstanding. We assume, based on past experience, that all available discounts will be taken. Accruals for prompt payment discounts are recorded as a reduction in both gross revenues in the consolidated statements of operations and accounts receivable in the consolidated balance sheets.

The following table summarizes activity in the consolidated balance sheets for accruals and allowances for the years ended December 31, 2020, 2019, and 2018:


	Accruals for Chargebacks, Returns, and Other Allowances
							Administrative		Prompt
			Government				Fees and Other		Payment
(in thousands)	Chargebacks		Rebates		Returns		Rebates		Discounts
Balance at December 31, 2018 (1)	$	39,007	$	8,974	$	12,552	$	7,353	$	2,009
Accruals/Adjustments		260,771		17,549		19,105		36,874		10,789
Credits Taken Against Reserve		(249,896)		(17,622)		(15,062)		(35,946)		(10,249)
Balance at December 31, 2019 (1)	$	49,882	$	8,901	$	16,595	$	8,281	$	2,549
Accruals/Adjustments		408,265		14,240		30,333		37,588		14,347
Credits Taken Against Reserve		(369,401)		(15,315)		(19,773)		(36,963)		(13,057)
Balance at December 31, 2020 (1)	$	88,746	$	7,826	$	27,155	$	8,906	$	3,839

(1)Chargebacks are included as a reduction to accounts receivable, net of chargebacks and other allowances in the consolidated balance sheets. Administrative Fees and Other Rebates and Prompt Payment Discounts are included as a reduction to accounts receivable, net of chargebacks and other allowances or accrued expenses and other in the consolidated balance sheets. Returns are included in returned goods reserve in the consolidated balance sheets. Government Rebates are included in accrued government rebates in the consolidated balance sheets.

Contract Manufacturing Product Sales Revenue

Contract manufacturing arrangements consists of agreements in which we manufacture a pharmaceutical product on behalf of third party. Our performance obligation is to manufacture and provide pharmaceutical products to customers, typically pharmaceutical companies. The contract manufactured products are sold at pre-determined standalone selling prices and our performance obligations are considered to be satisfied when control of the product is transferred to the customer. Control is transferred to the customer when the product leaves our dock to be shipped to the customer, as our pharmaceutical products are sold on an FOB shipping point basis and the inventory risk and risk of ownership passes to the customer at that time. Payment terms for these sales are generally fewer than two months. We estimate returns based on historical experience. Historically, we have not had material returns for contract manufactured products.

As of December 31, 2020, the aggregate amount of the transaction price allocated to the remaining performance obligations for all open contract manufacturing customer contracts was $6.8 million, which consists of firm orders for contract manufactured products. We will recognize revenue for these performance obligations as they are satisfied, which is anticipated within twelve months.

Royalties from Licensing Agreements

From time to time, we enter into transition agreements with the sellers of products we acquire, under which we license to the seller the right to sell the acquired products. Therefore, we recognize the revenue associated with sales of the underlying products as royalties. Because these royalties are sales-based, we recognize the revenue when the

underlying sales occur, based on sales and gross profit information received from the sellers. Upon full transition of the products and upon launching the products under our own labels, we recognize revenue for the products as sales of generic or branded pharmaceutical products, as described above.

Pursuant to a 2012 Tripartite Agreement (the “Tripartite Agreement”) between the Company, The Regents of the University of California (“The Regents”), and Cabaret Biotech Ltd., an Israeli corporation (“Cabaret”) (as assignee of Dr. Zelig Eshhar’s rights under the Tripartite Agreement), and subsequent amendments thereto and assignments thereof, we are entitled to receive a percentage of the milestone and sales royalty payments paid to Cabaret by Kite Pharma, Inc. (“Kite”), a subsidiary of Gilead Sciences, Inc., under a license agreement. Under such license agreement, Kite licensed from Dr. Eshhar and Cabaret the patent rights covered by the Tripartite Agreement and agreed to make certain payments to Cabaret based on, among other things, Kite’s sales of Yescarta®. Under the Tripartite Agreement, portions of these payments are to be distributed to The Regents and to us.

We record royalty income related to Yescarta® on an accrual basis utilizing our best estimate of royalties earned based upon information available in the public domain, our understanding of the various agreements governing the royalty, and other information received from time to time from the relevant parties. Generally, cash is received directly from Cabaret once a year. The agreements governing this royalty are subject to multiple litigations in multiple jurisdictions, including litigation between Cabaret and Kite, and separately, the Company and Cabaret. We recently became aware that the litigation between Cabaret and Kite was dismissed and are working with our counsel to determine the potential impact the resolution of that matter may have on our rights under the agreements. In addition, the Israeli Tax Authority has taken the position that any payments from Cabaret to us are subject to mandatory withholding tax. The Company and its tax counsel have disputed this position and are actively seeking to resolve the issue. The ultimate outcome of these matters, either individually or in the aggregate, may impact the amount of cash due to us, and may result in the termination of future payments or further claims that royalties received by us in the past be repaid.

Product Development Services Revenue

We provide product development services to customers, which are performed over time. These services primarily relate to the technical transfer of product development to our facility in Oakville, Ontario. The duration of these technical transfer projects can be up to three years. Deposits received from these customers are recorded as deferred revenue until revenue is recognized. For contracts with no deposits and for the remainder of contracts with deposits, we invoice customers as our performance obligations are satisfied. We recognize revenue on a percentage of completion basis, which results in contract assets on our balance sheet. As of December 31, 2020, the aggregate amount of the transaction price allocated to the remaining performance obligations for all product development services contracts was $0.6 million. We expect to satisfy these performance obligations within the next 18 months.

Cash, Cash Equivalents, and Restricted Cash

We consider all highly liquid instruments with maturities of three months or less when purchased to be cash equivalents. All interest bearing and non-interest bearing accounts are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $250 thousand. The majority of our cash balances are in excess of FDIC coverage. We consider this to be a normal business risk.

In April 2016, we purchased the rights, title, and interest in the NDA for Inderal LA, as well as certain documentation, trademark rights, and finished goods from Cranford Pharmaceuticals, LLC for $60.0 million in cash and milestone payments based on future gross profits from sales of products under the NDA. Additionally, we transferred $5.0 million to an escrow account as security for future milestone payments. This escrow account balance is included in restricted cash in our accompanying consolidated balance sheet as of December 31, 2020.

Accounts Receivable

We extend credit to customers on an unsecured basis. We measure expected credit losses on our financial assets at amortized cost, including trade and unbilled receivables, on a collective basis, based on their similar risk characteristics. Expected credits losses are based on historical credit loss experience, review of the current aging or

status of accounts receivable and current and forward-looking views from an economic and industry perspective. We determine trade receivables to be delinquent when greater than 30 days past due. Receivables are written off when it is determined that amounts are uncollectible. Our allowance for credit losses was immaterial as of December 31, 2020. Our allowance for doubtful accounts as of December 31, 2019, as accounted for and reported under previously applicable U.S. GAAP, was also immaterial.

Inventories

Inventories consist of raw materials, packaging materials, work-in-progress, and finished goods. Inventories are stated at the lower of standard cost or net realizable value. We periodically review and adjust standard costs, which generally approximate weighted average cost.

Property and Equipment

Property and equipment are recorded at cost. Expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is recorded on a straight-line basis over estimated useful lives as follows:


Buildings and improvements	20	-	40	years
Machinery, furniture, and equipment	1		10	years

Construction in progress consists of multiple projects, primarily related to new equipment to expand our manufacturing capability as our product lines grow. Construction in progress includes the cost of construction and other direct costs attributable to the construction, along with capitalized interest. Depreciation is not recorded on construction in progress until such time as the assets are placed in service.

We review property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. No impairment loss related to property and equipment was recognized during the years ended December 31, 2020, 2019, and 2018. Assets held for disposal are reportable at the lower of the carrying amount or fair value, less costs to sell. No assets were held for disposal as of December 31, 2020 and 2019.

Intangible Assets

Intangible assets other than goodwill consist of acquired ANDAs for previously commercialized and marketed drug products, acquired approved ANDAs for generic products yet to be commercialized, an acquired development package for a generic drug product, a license, supply and distribution agreement for a generic drug product, acquired product rights for generic products, acquired NDAs and product rights for branded products, acquired marketing and distribution rights, and a non-compete agreement.

The ANDAs, NDAs and product rights, marketing and distribution rights, and non-compete agreement are amortized over their remaining estimated useful lives, ranging from seven to 10 years, generally based on the straight-line method. Management reviews definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, in a manner similar to that for property and equipment. During the year ended December 31, 2020, we recognized an impairment charge of $0.4 million relating to a marketing and distribution right asset (Note 7). During the year ended December 31, 2019, we recognized an impairment charge of $75 thousand relating to our Ranitidine product right asset (Note 7). No impairment losses related to intangible assets were recognized in the year ended December 31, 2018.

Goodwill

Goodwill relates to the 2013 merger with BioSante Pharmaceuticals, Inc. and the acquisition of WellSpring and represents the excess of the total purchase consideration over the fair value of acquired assets and assumed liabilities, using the purchase method of accounting. Goodwill is not amortized, but is subject to periodic review for

impairment. Goodwill is reviewed for impairment annually, as of October 31, and whenever events or changes in circumstances indicate that the carrying amount of the goodwill might not be recoverable. We perform our review of goodwill on our one reporting unit.

Before employing detailed impairment testing methodologies, we first evaluate the likelihood of impairment by considering qualitative factors relevant to our reporting unit. When performing the qualitative assessment, we evaluate events and circumstances that would affect the significant inputs used to determine the fair value of the goodwill. Events and circumstances evaluated include: macroeconomic conditions that could affect us, industry and market considerations for the generic pharmaceutical industry that could affect us, cost factors that could affect our performance, our financial performance (including share price), and consideration of any company-specific events that could negatively affect us, our business, or the fair value of our business. If we determine that it is more likely than not that goodwill is impaired, we will then apply detailed testing methodologies. Otherwise, we will conclude that no impairment has occurred.

Detailed impairment testing involves comparing the fair value of our one reporting unit to its carrying value, including goodwill. Fair value reflects the price a market participant would be willing to pay in a potential sale of ANI. If the fair value exceeds carrying value, then it is concluded that no goodwill impairment has occurred. If the carrying value of the reporting unit were to exceed its fair value, we would recognize an impairment charge for the amount by which the carrying amount exceeded the reporting unit’s fair value. The loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. No impairment loss related to goodwill was recognized in the years ended December 31, 2020, 2019, and 2018.

Collaborative Arrangements

At times, we have entered into arrangements with various commercial partners to further business opportunities. In collaborative arrangements such as these, when we are actively involved and exposed to the risks and rewards of the activities and are determined to be the principal participant in the collaboration, we classify third party costs incurred and revenues in the consolidated statements of operations on a gross basis. Otherwise, third party revenues and costs generated by collaborative arrangements are presented on a net basis. Payments between us and the other participants are recorded and classified based on the nature of the payments.

Royalties

We have entered profit-sharing arrangements with third parties in which we sell products under ANDAs or NDAs owned or licensed by these third parties. Under these agreements, we pay these third parties a specified percentage of the gross profit earned on sales of the products. These profit-sharing percentages are recorded in cost of sales in our consolidated statements of operations when the associated revenue is recognized and are recorded in accrued royalties in our consolidated balance sheets when the associated revenue is recognized and until payment has occurred.

Research and Development Expenses

Research and development costs are expensed as incurred and primarily consist of expenses relating to product development. Research and development costs totaled $16.0 million, $19.8 million, and $15.4 million for the years ended December 31, 2020, 2019, and 2018, respectively.

Stock-Based Compensation

We have a stock-based compensation plan that includes stock options and restricted stock, which are awarded in exchange for employee and non-employee director services. From time to time, we may make awards through an inducement grant outside of our plan to induce prospective employees to accept employment with us. These grants are made pursuant to inducement grants outside of our shareholder approved equity plan as permitted under the Nasdaq Stock Market listing rules. Stock-based compensation cost for stock options is determined at the grant date using an option pricing model and stock-based compensation cost for restricted stock is based on the closing market price of the stock at the grant date. The value of the award is recognized as expense on a straight-line basis over the employee’s requisite service period and classified where the underlying salaries are classified. We also account for

forfeitures as they occur rather than using an estimated forfeiture rate. We recognize excess tax benefits or tax deficiencies as a component of our current period provision for income taxes.

In addition, in July 2016, we commenced administration of our Employee Stock Purchase Plan (“ESPP”). We recognize the estimated fair value of stock-based compensation awards and classify the expense where the underlying salaries are classified.

We incurred $12.8 million, $9.1 million, and $6.7 million of non-cash, stock-based compensation cost for the years ended December 31, 2020, 2019, and 2018, respectively, and $180 thousand, $147 thousand, and $102 thousand of the 2020, 2019, and 2018 expense related to the ESPP, respectively. In 2020, we recognized $3.4 million of stock compensation expense related to the modification of awards of our former President and Chief Executive Officer, pursuant to his termination without good cause (Note 9).

Valuation of stock awards requires us to make assumptions and to apply judgment to determine the fair value of the awards. These assumptions and judgments include estimating the future volatility of our stock price and dividend yields. Changes in these assumptions can affect the fair value estimate.

Income Taxes

We use the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted.

The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. We have provided a valuation allowance against certain of our state net operating loss (“NOL”) carryforwards that are not expected to be used during the carryforward periods. As of December 31, 2018, we had also provided a valuation allowance against ANI Canada’s net deferred tax assets of $1.9 million and against certain of our state NOL carryforwards that were not expected to be used during the carryforward periods. As a result of a newly adopted transfer pricing policy in 2019, our assessment of the amount of ANI Canada’s deferred tax assets that were more likely than not to be realized changed. During 2019, we released ANI Canada’s valuation allowance and, as a result, our valuation allowance at December 31, 2020 of $0.3 million relates solely to our state NOL carryforwards.

We have not provided for deferred taxes related to any difference between the tax basis in the shares of ANI Canada and the financial reporting basis in those shares since it has the intent and ability to indefinitely reinvest ANI Canada’s earnings and not repatriate those earnings.

We use a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. We have not identified any uncertain income tax positions that could have a material impact on the consolidated financial statements.

We recognize interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense; we did not have any material amounts accrued as of December 31, 2020, 2019, and 2018. We are subject to taxation in various U.S. jurisdictions and Canada and all of our income tax returns remain subject to examination by tax authorities due to the availability of NOL carryforwards.

We consider potential tax effects resulting from discontinued operations and for gains and losses in other comprehensive income and record intra-period tax allocations, when those effects are deemed material. In 2020, we entered in an interest rate swap agreement (Note 4) that we designated as cash flow hedges designed to manage exposure to changes in LIBOR-based interest rate underlying our secured term loan (the “Term Loan”) and delayed draw term loan (the “DDTL”) with Citizen’s Bank., N.A. Due to the effective nature of the hedge, the initial fair value of the hedge and subsequent changes in the fair value of the hedge are recognized in accumulated other

comprehensive loss, net of tax in the accompanying consolidated balance sheets. Income taxes are allocated to the hedge component of accumulated other comprehensive income based on appropriate intra-period tax allocations when those effects are deemed material.

Earnings (Loss) per Share

Basic earnings (loss) per share is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period.

For periods of net income, and when the effects are not anti-dilutive, we calculate diluted earnings (loss) per share by dividing net income available to common shareholders by the weighted-average number of shares outstanding plus the impact of all potential dilutive common shares, consisting primarily of common stock options, shares to be purchased under our ESPP, and unvested restricted stock awards, using the treasury stock method. For periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all dilutive potential common shares is anti-dilutive.

Our unvested restricted shares and certain of our outstanding warrants contain non-forfeitable rights to dividends, and therefore are considered to be participating securities; in periods of net income, the calculation of basic and diluted earnings (loss) per share excludes from the numerator net income (but not net loss) attributable to the unvested restricted shares and excludes the impact of those shares from the denominator.

For purposes of determining diluted earnings (loss) per share in 2019, we elected a policy to settle the principal portion of our 3% Convertible Senior Notes (the “Notes”), which matured and were settled in December 2019, in cash. As such, the principal portion of the Notes had no effect on either the numerator or denominator when determining diluted earnings (loss) per share. Any conversion gain was assumed to be settled in shares and was incorporated in diluted earnings per share using the treasury method. The warrants issued in conjunction with the issuance of the Notes were considered to be dilutive if they were in-the-money relative to our average stock price during the period; the bond hedge purchased in conjunction with the issuance of the Notes was always considered to be anti-dilutive.

Earnings per share for the years ended December 31, 2020, 2019, and 2018 are calculated for basic and diluted earnings (loss) per share as follows:


	Basic						Diluted
(in thousands, except per share amounts)	Years Ended December 31,						Years Ended December 31,
	2020		2019		2018		2020		2019		2018
Net (loss)/income	$	(22,548)	$	6,094	$	15,494	$	(22,548)	$	6,094	$	15,494
Net income allocated to restricted stock		—		(97)		(154)		—		(97)		(154)
Net (loss)/income allocated to common shares	$	(22,548)	$	5,997	$	15,340	$	(22,548)	$	5,997	$	15,340
Basic Weighted-Average Shares Outstanding		11,964		11,841		11,677		11,964		11,841		11,677
Dilutive effect of stock options and ESPP								—		103		95
Dilutive effect of Notes								—		96		—
Diluted Weighted-Average Shares Outstanding								11,964		12,040		11,772

(Loss)/Earnings per share	$	(1.88)	$	0.51	$	1.31	$	(1.88)	$	0.50	$	1.30

The number of anti-dilutive shares, which have been excluded from the computation of diluted earnings (loss) per share, including the shares underlying the Notes, were 1.3 million, 3.0 million, and 4.4 million for the years ended December 31, 2020, 2019, and 2018, respectively. Due to the net loss in the year ended December 31, 2020, all dilutive potential common shares were also excluded from the diluted loss per share calculation, as the impact of those potential common shares is anti-dilutive in the case of a net loss. Anti-dilutive shares consist of out-of-the-

money Class C Special stock, out-of-the-money common stock options, common stock options that are anti-dilutive when calculating the impact of the potential dilutive common shares using the treasury stock method, underlying shares related to out-of-the-money bonds issued as convertible debt (for 2019 only) and out-of-the-money warrants exercisable for common stock.

Hedge Accounting

At times we use derivative financial instruments to hedge our exposure to interest rate risks. All derivative financial instruments are recognized as either assets or liabilities at fair value on the consolidated balance sheet and are classified as current or non-current based on the scheduled maturity of the instrument.

When we enter into a hedge arrangement and intend to apply hedge accounting, we formally document the hedge relationship and designate the instrument for financial reporting purposes as a fair value hedge, a cash flow hedge, or a net investment hedge. When we determine that a derivative financial instrument qualifies as a cash flow hedge and is effective, the changes in fair value of the instrument are recorded in accumulated other comprehensive (loss)/income, net of tax in our consolidated balance sheets and will be reclassified to earnings when the hedged item affects earnings.

Fair Value of Financial Instruments

Our consolidated balance sheets include various financial instruments (primarily cash and cash equivalents, prepaid expenses, accounts receivable, accounts payable, accrued expenses, and other current liabilities) that are carried at cost and that approximate fair value. Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value. These tiers include:

●

Level 1—Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

●

Level 2—Observable market-based inputs other than quoted prices in active markets for identical assets or liabilities.

●

Level 3—Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

See Note 8 for additional information regarding fair value.

Geographic Information

Based on the distinct nature of our operations, our internal management structure, and the financial information that is evaluated regularly by our Chief Operating Decision Maker, we determined that we operate in one reportable segment. Our operations are located in the United States and Canada. The majority of the assets of the Company are located in the United States.

The following table depicts the Company’s revenue by geographic operations during the following periods:


(in thousands)	Years Ended December 31,
Location of Operations	2020		2019		2018
United States	$	202,881	$	199,663	$	196,886
Canada		5,594		6,884		4,690
Total Revenue	$	208,475	$	206,547	$	201,576

The following table depicts the Company’s property and equipment, net according to geographic location as of:


(in thousands)	December 31, 2020		December 31, 2019
United States	$	26,960	$	26,708
Canada		14,309		13,843
Total property and equipment, net	$	41,269	$	40,551

Recent Accounting Pronouncements

Recent Accounting Pronouncements Not Yet Adopted

In November 2019, the Financial Accounting Standards Board (“FASB”) issued guidance simplifying the accounting for income taxes by removing the following exceptions: 1) exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items, 2) exception requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment, 3) exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary, and 4) exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The amendments also simplify accounting for income taxes by doing the following: 1) requiring that an entity recognize a franchise tax or similar tax that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, 2) requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction, 3) specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements, 4) requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date, and 5) making minor Codification improvements for income taxes related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method. The guidance is effective for reporting periods beginning after December 15, 2020, including interim periods within that fiscal year. Early adoption was permitted, including adoption in an interim period. We will adopt this guidance as of January 1, 2021. We expect that the adoption of this guidance will not have a material impact on our consolidated financial statements.

We have evaluated all other issued and unadopted Accounting Standards Updates and believe the adoption of these standards will not have a material impact on our consolidated statements of operations, comprehensive income, balance sheets, or cash flows.

Recently Adopted Accounting Pronouncements

In November 2018, the FASB issued guidance clarifying that certain transactions between collaborative arrangement participants should be accounted for as revenue under Accounting Standards Codification Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account. The guidance was effective for reporting periods beginning after December 15, 2019, including interim periods within that fiscal year. We adopted this guidance as of January 1, 2020. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued guidance amending the disclosure requirements on fair value measurements. The amendments add, modify, and eliminate certain disclosure requirements on fair value measurements. The guidance was effective for reporting periods beginning after December 15, 2019, including interim periods within that fiscal year. We adopted this guidance as of January 1, 2020. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In June 2016, the FASB issued guidance with respect to measuring credit losses on financial instruments, including trade receivables. The guidance eliminates the probable initial recognition threshold that was previously required prior to recognizing a credit loss on financial instruments. The credit loss estimate now reflects an entity's current estimate of all future expected credit losses. Under the previous guidance, an entity only considered past events and current conditions. In April 2019, the FASB further clarified the scope of the credit losses standard and addressed issues related to accrued interest receivable balances, recoveries, variable interest rates, and prepayment. In May 2019, the FASB issued further guidance to provide entities with an option to irrevocably elect the fair value option applied on an instrument-by-instrument basis for eligible financial instruments. We adopted this guidance as of January 1, 2020 using the modified retrospective method for all financial assets measured at amortized cost. Results for reporting periods beginning after January 1, 2020 are presented under the new guidance while prior period amounts continue to be reported in accordance with previously applicable GAAP. We recognized an $8 thousand decrease to retained earnings as of January 1, 2020 for the cumulative effect of adopting the new guidance.

BUSINESS COMBINATION

12 Months Ended

Dec. 31, 2020

BUSINESS COMBINATION

BUSINESS COMBINATION

2. BUSINESS COMBINATION

Summary

On August 6, 2018, our subsidiary, ANI Canada, acquired all the issued and outstanding equity interests of WellSpring, a Canadian company that performs contract development and manufacturing of pharmaceutical products for a purchase price of $18.0 million, subject to certain customary adjustments. Pursuant to these customary adjustments, the total purchase consideration was $16.7 million. The consideration was paid entirely from cash on hand. We incurred approximately $1.1 million in transaction costs related to the acquisition, all of which were expensed in 2018. In conjunction with the transaction, we acquired WellSpring’s pharmaceutical manufacturing facility, laboratory, and offices, its current book of commercial business, as well as an organized workforce. Following the consummation of the transaction, WellSpring was merged into ANI Canada with the resulting entity’s name being ANI Pharmaceuticals Canada Inc.

We acquired WellSpring to provide an additional tech transfer site in order to accelerate the re-commercialization of the previously-approved ANDAs in our pipeline, to expand our contract manufacturing revenue base, and to broaden our manufacturing capabilities to three manufacturing facilities.

Pro Forma Condensed Combined Financial Information (unaudited)

The following unaudited pro forma condensed combined financial information summarizes the results of operations for the periods indicated as if the WellSpring acquisition had been completed as of January 1, 2017.


	Years Ended December 31,
(in thousands)	2018		2017⁽¹⁾
Net revenues	$	208,213	$	188,758
Net income/(loss)	$	13,287	$	(3,102)

⁽¹⁾ Net loss for the year ended December 31, 2017 includes the impact to WellSpring of $4.4 million of related party debt forgiveness.

INDEBTEDNESS

12 Months Ended

Dec. 31, 2020

INDEBTEDNESS

INDEBTEDNESS

3. INDEBTEDNESS

Credit Facility

Our five-year Senior Secured Credit Facility (the “Credit Facility”) is comprised of a $72.2 million Term Loan, a $118.0 million DDTL, and a $75.0 million revolving credit facility (the “Revolver”), all of which mature in December 2023. The Credit Facility has a subjective acceleration clause in case of a material adverse event. The Term Loan includes a repayment schedule, pursuant to which $6.3 million of the loan will be paid in quarterly installments during the 12 months ended December 31, 2021. As of December 31, 2020, $6.3 million of the loan is recorded as current borrowings in the consolidated balance sheets. The DDTL includes a repayment schedule,

pursuant to which $7.4 million will be paid in quarterly installments during the 12 months ended December 31, 2021. As of December 31, 2020, $7.4 million of the loan is recorded as current borrowings in the consolidated balance sheets. In March 2020, we drew $15.0 million under the Revolver, of which $7.5 million has been repaid as of December 31, 2020. As of December 31, 2020, $67.5 million remained available for borrowing under the Revolver. Amounts drawn on the Term Loan, DDTL, and Revolver bear an interest rate equal to, at our option, either a LIBOR rate plus 1.50% to 2.75% per annum, depending on our total leverage ratio or an alternative base rate plus an applicable base rate margin, which varies within a range of 0.50% to 1.75%, depending on our total leverage ratio. On the Revolver, we incur a commitment fee at a rate per annum that varies within a range of 0.25% to 0.50%, depending on our leverage ratio. As of December 31, 2020, our interest rate on outstanding borrowings is LIBOR plus 2.25% and our commitment fee rate is 0.4%.

The Credit Facility is secured by a lien on substantially all of ANI Pharmaceuticals, Inc.’s and its principal domestic subsidiary’s assets and any future domestic subsidiary guarantors’ assets. The Credit Facility imposes financial covenants consisting of a maximum total leverage ratio, which was, as of December 31, 2020, no greater than 3.25 to 1.00 and a minimum fixed charge coverage ratio, which shall be greater than or equal to 1.25 to 1.00. The primary non-financial covenants under the Credit Facility limit, subject to various exceptions, our ability to incur future indebtedness, to place liens on assets, to pay dividends or make other distributions on our capital stock, to repurchase our capital stock, to conduct acquisitions, to alter our capital structure, and to dispose of assets. As of December 31, 2020, we are compliant with our financial covenants.

The carrying value of the current and non-current components of the Term Loan and DDTL as of December 31, 2020 and 2019 are:


	Current
	December 31,		December 31,
(in thousands)	2020		2019
Current borrowing on debt	$	13,691	$	10,412
Deferred financing costs		(448)		(471)
Current debt, net of deferred financing costs	$	13,243	$	9,941


	Non-Current
	December 31,		December 31,
(in thousands)	2020		2019
Non-current borrowing on debt	$	165,755	$	177,069
Deferred financing costs		(812)		(1,261)
Non-current debt, net of deferred financing costs and current component	$	164,943	$	175,808

As of December 31, 2020, we had a $65.9 million balance on the Term Loan, $113.6 million balance on the DDTL, and $7.5 million balance on the Revolver. Of the $0.8 million of deferred debt issuance costs allocated to the Revolver, $0.5 million is included in other non-current assets in the accompanying consolidated balance sheets and $0.3 million is included in prepaid expenses and other current assets in the accompanying consolidated balance sheets. Of the $0.3 million of deferred debt issuance costs allocated to the DDTL, $0.1 million is classified as a direct deduction to the current portion of the DDTL in the accompanying consolidated balance sheets and $0.2 million is classified as a direct reduction to the non-current portion of the DDTL in the accompanying consolidated balance sheets. Of the $0.9 million of deferred debt issuance costs allocated to the Term Loan, $0.3 million is classified as a direct deduction to the current portion of the Term Loan in the accompanying consolidated balance sheets and $0.6 million is classified as a direct deduction to the non-current portion of the Term Loan in the accompanying consolidated balance sheets.

The contractual maturity of our Term Loan, DDTL, and Revolver is as follows for the years ending December 31:


(in thousands)	Term Loan		DDTL		Revolver
2021	$	6,316	$	7,375	$	—
2022		5,414		8,850		—
2023		54,141		97,350		7,500
Total	$	65,871	$	113,575	$	7,500

The following table sets forth the components of total interest expense related to the Term Loan, DDTL, and Revolver recognized in our consolidated statements of operations for the year ended December 31:



		Years Ended December 31,
(in thousands)	2020		2019		2018
Contractual coupon	$	8,847	$	6,635	$	7,170
Amortization of debt discount		—		5,647		7,002
Amortization of finance fees		720		1,377		1,463
Capitalized interest		(88)		(191)		(724)
	$	9,479	$	13,468	$	14,911

DERIVATIVE FINANCIAL INSTRUMENT AND HEDGING ACTIVITY

12 Months Ended

Dec. 31, 2020

DERIVATIVE FINANCIAL INSTRUMENT AND HEDGING ACTIVITY

DERIVATIVE FINANCIAL INSTRUMENT AND HEDGING ACTIVITY

4. DERIVATIVE FINANCIAL INSTRUMENT AND HEDGING ACTIVITY

In December 2018, we refinanced our previous Credit Agreement and, at the same time, entered into an interest rate swap, which was considered a derivative financial instrument, with Citizens Bank, N.A. to manage our exposure to changes in LIBOR-based interest rates underlying our Term Loan. In February 2019, we entered into an interest rate swap, which was considered a derivative financial instrument, with Citizens Bank, N.A. to manage our exposure to changes in LIBOR-based interest rates underlying our DDTL. The hedges had been designated as effective cash flow hedges and qualified for hedge accounting. The interest rate swaps related to the Term Loan and DDTL had a weighted average fixed rate of 2.60% and 2.47%, respectively, with a maturity in December 2023. In April 2020, we terminated the remaining $184.2 million notional value of these interest rate swaps. We discontinued hedge accounting for these instruments and are recognizing the net loss in accumulated other comprehensive loss of $13.2 million to interest expense over the remaining terms through December 2023.

At the same time in April 2020, we entered into an interest rate swap with Citizens Bank, N.A. to manage our exposure to changes in LIBOR-based interest rates underlying total borrowings under our Term Loan and DDTL. The interest rate swap matures in December 2026. As of December 31, 2020, the notional amount of the interest rate swap was $179.4 million and decreases in line with maturities of our Term Loan and DDTL until December 2023, after which it remains static until maturity in 2026. The interest rate swap provides an effective fixed interest rate of 1.99% throughout the term of our Term Loan and DDTL and has been designated as an effective cash flow hedge and therefore qualifies for hedge accounting. As of December 31, 2020, the fair value of the interest rate swap liability recorded in derivatives and other non-current liabilities in the accompanying consolidated balance sheets was $14.1 million. As of December 31, 2020, $11.4 million was recorded in accumulated other comprehensive loss, net of tax in the accompanying consolidated balance sheets.

During the year ended December 31, 2020, the change in fair value of the interest rate swaps was $9.2 million. During the year ended December 31, 2020, losses on the interest rate swap of $6.6 million were recorded in accumulated other comprehensive loss, net of tax in our consolidated statements of comprehensive (loss)/income. Differences between the hedged LIBOR rate and the fixed rate are recorded as interest expense in the same period that the related interest is recorded for the Term Loan and DDTL based on the LIBOR rate. In the year ended December 31, 2020, $3.9 million of interest expense was recognized in relation to the interest rate swaps.

INVENTORIES

12 Months Ended

Dec. 31, 2020

INVENTORIES

INVENTORIES

5. INVENTORIES

Inventories consist of the following as of December 31:


	December 31,		December 31,
(in thousands)	2020		2019
Raw materials	$	41,591	$	34,881
Packaging materials		3,194		2,902
Work-in-progress		886		361
Finished goods		20,363		16,750
		66,034		54,894
Reserve for excess/obsolete inventories		(5,231)		(6,731)
Inventories, net	$	60,803	$	48,163

During the fourth quarter 2019, we recognized a $4.6 million inventory reserve charge, primarily related to our exit from the market of Methylphenidate Extended Release.

PROPERTY, PLANT, AND EQUIPMENT

12 Months Ended

Dec. 31, 2020

PROPERTY, PLANT, AND EQUIPMENT

PROPERTY, PLANT, AND EQUIPMENT

6. PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment consist of the following as of December 31:


	December 31,		December 31,
(in thousands)	2020		2019
Land	$	4,667	$	4,566
Buildings		11,633		10,275
Machinery, furniture, and equipment		39,111		34,984
Construction in progress		3,385		3,496
		58,796		53,321
Less: accumulated depreciation		(17,527)		(12,770)
Property and equipment, net	$	41,269	$	40,551

Depreciation expense for the years ended December 31, 2020, 2019, and 2018 totaled $4.8 million, $4.4 million, and $2.1 million, respectively. During the years ended December 31, 2020, 2019, and 2018 there was $0.1 million, $0.2 million, and $0.7 million of interest capitalized into construction in progress, respectively.

INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2020

INTANGIBLE ASSETS

INTANGIBLE ASSETS

7. INTANGIBLE ASSETS

Goodwill

As a result of our 2013 merger with BioSante Pharmaceuticals, Inc., we recorded goodwill of $1.8 million. As a result of our acquisition of WellSpring, we recorded additional goodwill of $1.7 million in 2018. We assess the recoverability of the carrying value of goodwill on an annual basis as of October 31 of each year, and whenever events occur or circumstances changes that would, more likely than not, reduce the fair value of our reporting unit below its carrying value.

For the goodwill impairment analyses performed at October 31, 2020 and 2019, we performed qualitative assessments to determine whether it was more likely than not that our goodwill asset was impaired in order to determine the necessity of performing a quantitative impairment test, under which management would calculate the asset’s fair value. When performing the qualitative assessments, we evaluated events and circumstances that would affect the significant inputs used to determine the fair value of the goodwill. Events and circumstances evaluated include: macroeconomic conditions that could affect us, industry and market considerations for the pharmaceutical industry that could affect us, cost factors that could affect our performance, our financial performance (including share price), and consideration of any company-specific events that could negatively affect us, our business, or our fair value. Based on our assessments of the aforementioned factors, it was determined that it was more likely than

not that the fair value of our one reporting unit is greater than its carrying amount as of October 31, 2020 and 2019, and therefore no quantitative testing for impairment was required.

In addition to the qualitative impairment analysis performed at October 31, 2020, there were no events or changes in circumstances that could have reduced the fair value of our reporting unit below its carrying value from October 31, 2020 to December 31, 2020. No impairment loss was recognized during the years ended December 31, 2020, 2019, and 2018, and the balance of goodwill was $3.6 million as of December 31, 2020 and 2019.

Definite-lived Intangible Assets

The components of net definite-lived intangible assets are as follows:


	December 31, 2020				December 31, 2019				Weighted Average
	Gross Carrying		Accumulated		Gross Carrying		Accumulated		Amortization
(in thousands)	Amount		Amortization		Amount		Amortization		Period
Acquired ANDA intangible assets	$	106,415	$	(42,367)	$	64,704	$	(30,169)	8.8	years
NDAs and product rights		230,974		(112,483)		230,974		(87,352)	10.0	years
Marketing and distribution rights		17,157		(11,386)		10,923		(8,982)	5.7	years
Non-compete agreement		624		(423)		624		(334)	7.0	years
	$	355,170	$	(166,659)	$	307,225	$	(126,837)	9.4	years

Definite-lived intangible assets are stated at cost, net of amortization, generally using the straight-line method over the expected useful lives of the intangible assets. In the case of certain NDA, we use an accelerated amortization method to better match the anticipated economic benefits expected to be provided. Amortization expense was $39.9 million, $40.2 million, and $31.7 million for the years ended December 31, 2020, 2019, and 2018, respectively. Refer to Note 8 for more details on acquired definite-lived intangible assets.

We test for impairment of definite-lived intangible assets when events or circumstances indicate that the carrying value of the assets may not be recoverable. We recognized an impairment of $0.4 million in the year ended December 31, 2020, in relation to a marketing and distribution right asset. We recognized an impairment of $75 thousand in the year ended December 31, 2019, in relation to a product right asset. No impairment losses related to intangible assets were recognized in the year ended December 31, 2018. No events or circumstances arose in 2020, 2019, or 2018 that indicated that the carrying value of any of our other definite-lived intangible assets may not be recoverable.

Expected future amortization expense is as follows for the years ending December 31:


(in thousands)
2021	$	38,605
2022		35,199
2023		34,451
2024		31,474
2025		28,127
2026 and thereafter		20,655
Total	$	188,511

FAIR VALUE DISCLOSURES

12 Months Ended

Dec. 31, 2020

FAIR VALUE DISCLOSURES

FAIR VALUE DISCLOSURES

8. FAIR VALUE DISCLOSURES

Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value.

The inputs used in measuring the fair value of cash and cash equivalents are considered to be Level 1 in accordance with the three-tier fair value hierarchy. The fair market values are based on period-end statements supplied by the various banks and brokers that held the majority of our funds. The fair value of short-term financial instruments (primarily accounts receivable, prepaid expenses, accounts payable, accrued expenses, and other current

liabilities) approximate their carrying values because of their short-term nature. The Term Loan, DDTL, and Revolver bear an interest rate that fluctuates with the changes in LIBOR and, because the variable interest rates approximate market borrowing rates available to us, we believe the carrying values of these borrowings approximated their fair values at December 31, 2020 and 2019.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

Our contingent value rights (“CVRs”), which were granted coincident with our merger with BioSante Pharmaceuticals, Inc. and expire in June 2023, are considered to be contingent consideration and are classified as liabilities. As such, the CVRs were recorded as purchase consideration at their estimated fair value, using Level 3 inputs, and are marked to market each reporting period until settlement. The fair value of CVRs is estimated using the present value of management’s projection of the expected payments pursuant to the terms of the CVR agreement, which is the primary unobservable input. If our projection or expected payments were to increase substantially, the value of the CVRs could increase as a result. The present value of the liability was calculated using a discount rate of 15%. We determined that the fair value of the CVRs was immaterial as of December 31, 2020 and 2019. We also determined that the changes in such fair value were immaterial for the years ended December 31, 2020, 2019, and 2018.

In April 2020, we terminated two interest rate swaps used to manage interest rate exposure on underlying interest payments for our Term Loan and DDTL and entered into one new interest rate swap agreement to manage our total exposure under these borrowings (Note 4). The fair value of our interest rate swap is estimated based on the present value of projected future cash flows using the LIBOR forward rate curve. The model used to value the interest rate swap includes inputs of readily observable market data, a Level 2 input. As described in detail in Note 4, the fair value of the interest rate swap was a $14.1 million liability at December 31, 2020.

The following table presents our financial assets and liabilities accounted for at fair value on a recurring basis as of December 31, 2020 and December 31, 2019, by level within the fair value hierarchy:


(in thousands)	Fair Value at
Description	December 31, 2020		Level 1		Level 2		Level 3
Liabilities
Interest rate swaps	$	14,109	$	—	$	14,109	$	—
CVRs	$	—	$	—	$	—	$	—


	Fair Value at
Description	December 31, 2019		Level 1		Level 2		Level 3
Liabilities
Interest rate swaps	$	6,215	$	—	$	6,215	$	—
CVRs	$	—	$	—	$	—	$	—

Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

We have no non-financial assets and liabilities that are measured at fair value on a non-recurring basis.

Non-Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

We have no non-financial assets and liabilities that are measured at fair value on a recurring basis.

Non-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

We measure our long-lived assets, including property, plant, and equipment, ROU assets, intangible assets, and goodwill, at fair value on a non-recurring basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. During the year ended December 31, 2020, we recognized a $0.4 million impairment charge related to marketing and distribution right asset (Note 7). There were no other fair value impairments recognized in the year ended December 31, 2020. During the year ended December 31, 2019, we

recognized a $75 thousand impairment charge related to our Ranitidine product right asset (Note 7). There were no other fair value impairments recognized in the year ended December 31, 2019.

Acquired Non-Financial Assets

In July 2020, we acquired an ANDA and certain related inventories from a private company for total consideration of $4.3 million. We also incurred and paid $0.1 million in transaction costs directly related to the acquisition. We accounted for this transaction as an asset acquisition and capitalized the transaction costs directly related to the acquisition. We recognized $3.0 million as an acquired ANDA intangible asset and $1.4 million in inventory at fair value. The fair value of the inventory was determined based on the estimated selling price to be generated from the finished goods, less costs to sell, including a reasonable margin, which are level 3 unobservable inputs. The ANDA will be amortized in full over its useful life of seven years and will be tested for impairment when events or circumstances indicate that the carrying value of the asset may not be recoverable. No such triggering events were identified during the period from the date of acquisition to December 31, 2020 and therefore no impairment loss was recognized for the year ended December 31, 2020.

In May 2020, we entered into an agreement with a private company to purchase an ANDA and API for one currently marketed generic drug product and certain API for $0.2 million using cash on hand. We accounted for this transaction as an asset acquisition. The API inventory was recognized at fair value. The ANDA will be amortized in full over its useful life of seven years and will be tested for impairment when events or circumstances indicate that the carrying value of the asset may not be recoverable. No such triggering events were identified during the period from the date of acquisition to December 31, 2020 and therefore no impairment loss was recognized for the year ended December 31, 2020.

In January 2020, we completed the acquisition of the U.S. portfolio of 23 generic products and API and finished goods related to certain of those products from Amerigen Pharmaceuticals, Ltd. ("Amerigen") for a purchase consideration of $56.8 million and up to $25.0 million in contingent payments over the subsequent four years from the acquisition. The product portfolio at the time of the acquisition included ten commercial products, three approved products with launches pending, four filed products and four in-development products as well as a license to commercialize two approved products. Payments were made using cash on hand and through borrowings of $15.0 million under our Revolver. We also incurred and paid $0.7 million in transaction costs directly related to the acquisition. We accounted for the transaction as an asset acquisition and capitalized the transaction costs directly related to the acquisition. We recognized $38.5 million as acquired ANDA intangible assets and $6.7 million as acquired marketing and distribution rights related to the licensed products, which are being amortized over their useful lives of seven years. We also recognized $3.8 million of the purchase price as research and development expense because certain of the generic products have significant remaining work required in order to be commercialized and the products do not have an alternative future use. The payment was allocated to the two asset categories and in-process research and development based on relative fair value, which was determined using Level 3 unobservable inputs. To determine the fair value of the acquired intangible assets and in-process research and development, we used the present value of the estimated cash flows related to the products, using a discount rate of 8%. We also recognized $8.4 million in inventory at fair value, including $1.7 million of API and $6.7 million of finished goods. The fair value of the inventory was determined based on the estimated selling price to be generated from the finished goods, less costs to sell, including a reasonable margin, which are level 3 unobservable inputs. Contingent liabilities will be accrued when they are both estimable and probable. The intangible assets will be tested for impairment when events or circumstances indicate that the carrying value of the asset may not be recoverable. No such triggering events were identified during the period from the date of acquisition to December 31, 2020 and therefore no impairment loss was recognized for the year ended December 31, 2020.

In June 2019, we acquired from Coeptis Pharmaceuticals, Inc. seven development stage generic products, as well as API and reference-listed drug inventory related to certain of the products for a payment of $2.3 million. The entire payment, and $24 thousand of transaction costs directly related to the acquisition, was recorded as research and development expense because the potential generic products have significant remaining work required in order to commercialize the products and do not have an alternative future use. In addition, we could make up to $12.0 million in payments for certain development and commercial milestones. These milestones were determined to be contingent liabilities and will be accrued when they are both estimable and probable.

In April 2019, we entered into an agreement with PII and BAS, under which a previously-commercialized product will be developed and marketed. Per the agreement, we paid PII a series of licensing fees in conjunction with the achievement of certain development and commercial milestones. In the fourth quarter of 2019, the product was launched, triggering a $0.5 million payment due to PII. The payment due as of December 31, 2019 was capitalized as an intangible asset and was being amortized over its 10-year useful life. During the fourth quarter of 2020, we recognized a full impairment of the remaining $0.4 million carrying value of the asset, as it was determined that the asset would not generate future cash flows.

In March 2019, we entered into an agreement with Teva Pharmaceutical Industries Ltd. to purchase a basket of ANDAs for 35 previously-marketed generic drug products for $2.5 million in cash (Note 7). We accounted for this transaction as an asset purchase. The $2.5 million of ANDAs were recorded at their relative fair value, determined using Level 3 unobservable inputs. In order to determine the fair value of the product rights intangible assets, we used the present value of the estimated cash flows related to the product rights, using a discount rate of 15%. The ANDAs are being amortized in full over their 10-year useful lives and will be tested for impairment when events or circumstances indicate that the carrying value of the asset may not be recoverable. No such triggering events were identified during the period from the date of acquisition to December 31, 2020 and therefore no impairment loss was recognized for the years ended 2019 and 2020.

In January 2019, we entered into an amendment to asset purchase agreements (the “Asset Purchase Agreement Amendment”) with Teva Pharmaceuticals USA, Inc. (“Teva”) related to three purchases of baskets of ANDAs. This transaction was unrelated to the March 2019 transaction with Teva discussed herein. Under the terms of the Asset Purchase Agreement Amendment, all royalty obligations of the Company owed to Teva with respect to products associated with ten ANDAs under the original asset purchase agreements ceased being effective as of December 31, 2018. As consideration for the termination of such future royalty obligations, we paid Teva a sum of $16.0 million in cash (Note 7). Upon payment of $16.0 million, the purchase price of each basket of ANDAs was increased to reflect the subsequent payment as if that payment had been made on the initial acquisition date. As a result, in addition to increasing the carrying value of the acquired ANDA intangible assets by $9.2 million, we recognized cumulative amortization expense of $6.8 million. The payment was allocated to the three ANDA baskets based on the relative fair value of the ANDA baskets, which were determined using Level 3 unobservable inputs. In order to determine the fair value of the acquired ANDA intangible assets, we used the present value of the estimated cash flows related to the ANDAs, using a discount rate of 12%. The additional carrying value is being amortized over the remaining useful lives of the three ANDA baskets and will be tested for impairment when events or circumstances indicate that the carrying value of the asset may not be recoverable. No such triggering events were identified during the period from the date of acquisition to December 31, 2020 and therefore no impairment loss was recognized for the years ended 2019 and 2020.

In April 2018, we entered into an agreement with Impax Laboratories, Inc. (now Amneal) to purchase the approved ANDAs for three previously-commercialized generic drug products, the approved ANDAs for two generic drug products that had not yet been commercialized at the time of the acquisition, the development package for one generic drug product, a license, supply, and distribution agreement for a generic drug product with an ANDA that was pending approval, and certain manufacturing equipment required to manufacture one of the products, for $2.3 million in cash. At the same time, we entered into a supply agreement with Amneal under which we may elect to purchase the finished goods for one of the products for up to 17 months beginning October 1, 2019, under certain conditions. If we elected to purchase the finished goods from Amneal for this period, we could have been required to pay a milestone payment of up to $10.0 million upon launch, depending on the number of competitors selling the product at the time of launch. The payment was not triggered. As a result, no payment was made, and this contingent liability has been resolved. The launch of one of the acquired products had the potential to trigger a milestone payment of $25.0 million to Teva, depending on the number of competitors selling the product at the time of launch. We launched this product in 2019 and the payment was not triggered. As a result, no payment was made, and this contingent liability has been resolved. Additionally, depending on the number of competitors selling the product one year after the launch date, we could have been required to pay a second milestone of $15.0 million to Teva. The one-year anniversary of the launch occurred during the year ended December 31, 2020 and the payment was not triggered. As a result, no payment was made, and this contingent liability has been resolved. We made the $2.3 million cash payment using cash on hand and capitalized $0.1 million of costs directly related to the asset purchase. We accounted for this transaction as an asset purchase. The $1.0 million acquired ANDA intangible assets were

recorded at their relative fair value, determined using Level 3 unobservable inputs. In order to determine the fair value of the acquired ANDA intangible assets, we used the present value of the estimated cash flows related to the approved ANDAs, using discount rates of 10% to 15%. The acquired ANDAs are being amortized in full over their 10 year useful lives and will be tested for impairment when events or circumstances indicate that the carrying value of the assets may not be recoverable. The $58 thousand of manufacturing equipment used to manufacture one of the products was recorded at its relative fair value, based on the estimated net book value of the equipment purchased. The equipment is being amortized in full over its five year useful life and will be tested for impairment when events or circumstances indicate that the carrying value of the asset may not be recoverable. No such triggering events were identified during the period from the date of acquisition to December 31, 2020 and therefore no impairment loss was recognized for the year ended December 31, 2020. The $1.3 million of in-process research and development related to products with significant further work required in order to commercialize the products, and for which there is no alternative future use. The in-process research and development was recorded at its relative fair value, determined using Level 3 unobservable inputs. In order to determine the fair value of the in-process research and development, we used the present value of the estimated cash flows related to the products, using a discount rate of 75%, reflective of the higher risk associated with these products. As the transaction was accounted for as an asset purchase, the $1.3 million of in-process research and development was immediately recognized as research and development expense.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2020

STOCKHOLDERS' EQUITY

STOCKHOLDER'S EQUITY

9. STOCKHOLDERS’ EQUITY

Authorized shares

We are authorized to issue up to 33.3 million shares of common stock with a par value of $0.0001 per share, 0.8 million shares of class C special stock with a par value of $0.0001 per share, and 1.7 million shares of undesignated preferred stock with a par value of $0.0001 per share at December 31, 2020.

There were 12.4 million and 12.3 million shares of common stock issued and outstanding as of December 31, 2020, respectively, and 12.1 million shares of common stock issued and outstanding as of December 31, 2019.

There were 11 thousand shares of class C special stock issued and outstanding as of December 31, 2020 and 2019. Each share of class C special stock entitles its holder to one vote per share. Each share of class C special stock is exchangeable, at the option of the holder, for one share of our common stock, at an exchange price of $90.00 per share, subject to adjustment upon certain capitalization events. Holders of class C special stock are not entitled to receive dividends or to participate in the distribution of our assets if we were to liquidate, dissolve, or wind-up the company. The holders of class C special stock have no cumulative voting, preemptive, subscription, redemption, or sinking fund rights.

There were no shares of undesignated preferred stock outstanding as of December 31, 2020 and 2019.

STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2020

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

10. STOCK-BASED COMPENSATION

Employee Stock Purchase Plan

In July 2016, we commenced administration of the ANI Pharmaceuticals, Inc. 2016 Employee Stock Purchase Plan. The Board of Directors and shareholders approved a maximum of 0.2 million shares of common stock, which were reserved and made available for issuance under the ESPP. Under the ESPP, participants can purchase shares of our stock at a 15% discount. We issued 13 thousand, six thousand, and five thousand shares in the years ended December 31, 2020, 2019, and 2018, respectively.

The following table summarizes ESPP expense incurred under the 2016 Employee Stock Purchase Plan and included in our accompanying consolidated statements of operations:


(in thousands)	Years Ended December 31,
	2020		2019		2018
Cost of sales	$	21	$	18	$	11
Research and development		36		29		16
Selling, general, and administrative		123		100		75
	$	180	$	147	$	102

Stock Incentive Plan

All equity-based service awards are granted under the ANI Pharmaceuticals, Inc. Amended and Restated 2008 Stock Incentive Plan (the “2008 Plan”). As of December 31, 2020, 1.1 million shares of our common stock remained available for issuance under the 2008 Plan.

On September 8, 2020, we granted 179,643 stock options to our President and Chief Executive Officer, through an inducement grant outside of our 2008 Plan to induce him to accept employment with us (the “Inducement Grant”). The options were granted at an exercise price equal to the fair market value of a share of our common stock on the respective grant date and will be exercisable in four equal annual installments beginning on the first anniversary of the respective grant date. The grant was made pursuant to inducement grants outside of our shareholder approved equity plan as permitted under the Nasdaq Stock Market listing rules.

We measure the cost of equity-based service awards based on the grant-date fair value of the award. The cost is recognized ratably over the period during which an employee is required to provide service in exchange for the award or the requisite service period. We recognize stock-based compensation expense ratably over the vesting periods of the awards.

The following table summarizes stock-based compensation expense incurred under the 2008 Plan and Inducement Grant and included in our consolidated statements of operations:


	Years Ended December 31,
(in thousands)	2020		2019		2018
Cost of sales	$	115	$	101	$	87
Research and development		561		756		771
Selling, general, and administrative		12,080		8,213		5,822
	$	12,756	$	9,070	$	6,680

We recognized income tax benefits of $1.6 million, $1.4 million, and $1.2 million for stock-based compensation-related tax deductions in our 2020, 2019, and 2018 consolidated statements of operations, respectively.

Stock Options

Outstanding stock options granted to employees and consultants generally vest over a period of four years and have 10-year contractual terms. Outstanding stock options granted to non-employee directors generally vest over a period of one to four years and have 10-year contractual terms. Upon exercise of an option, we issue new shares of our common stock or issue shares from treasury stock.

For 2020, 2019, and 2018, the fair value of each option grant was estimated using the Black-Scholes option-pricing model, using the following assumptions:


	Years Ended December 31,
	2020	2019	2018
Expected option life (years)	5.50 - 6.25	5.50 - 6.25	5.48 - 6.25
Risk-free interest rate	0.31% - 1.63%	1.91% - 2.58%	2.64% - 2.93%
Expected stock price volatility	49.2% - 51.2%	63.1% - 66.7%	55.1% - 60.6%
Dividend yield	—	—	—

We use the simplified method to estimate the expected option life of options. The risk-free interest rate used is the yield on a U.S. Treasury note as of the grant date with a maturity equal to the estimated life of the option. We calculated an estimated volatility rate based on our historical stock price. We have not issued a cash dividend in the past nor do we have any current plans to do so in the future; therefore, an expected dividend yield of zero was used.

A summary of stock option activity under the 2008 Plan and Inducement Grant during the years ended December 31, 2020, 2019, and 2018 is presented below:


				Weighted		Weighted
				Average		Average
		Weighted		Grant-		Remaining
(in thousands, except per share and	Option	Average		date		Term	Aggregate
remaining term data)	Shares	Exercise Price		Fair Value		(years)	Intrinsic Value
Outstanding December 31, 2017	767	$	42.93			7.8	$	16,785
Granted	156		57.60	$	31.76
Exercised	(142)		19.47					5,863
Forfeited	(18)		60.17
Expired	(4)		74.53
Outstanding December 31, 2018	759	$	49.74			7.6	$	2,221
Granted	160		65.97	$	40.14
Exercised	(130)		41.99					3,335
Forfeited	(31)		56.66
Expired	(1)		54.36
Outstanding at December 31, 2019	757	$	54.21			7.2	$	6,761
Granted	231		30.29	$	14.39
Exercised	(8)		36.81					216
Forfeited	(44)		54.54
Expired	—		—
Outstanding at December 31, 2020	936	$	48.44			7.1	$	372
Exercisable at December 31, 2020	571	$	53.06			5.9	$	347

As of December 31, 2020, there was $6.0 million of total unrecognized compensation cost related to non-vested stock options granted under the 2008 Plan and Inducement Grant. The cost is expected to be recognized over a weighted-average period of 2.6 years. During the year ended December 31, 2020, we received $0.3 million in cash from the exercise of stock options and recorded a $43 thousand tax provision related to these exercises. During the year ended December 31, 2019, we received $5.5 million in cash from the exercise of stock options and recorded a $0.7 million tax benefit related to these exercises. During the year ended December 31, 2018, we received $2.8 million in cash from the exercise of stock options and recorded a $0.6 million tax benefit related to these exercises.

Restricted Stock Awards

Restricted stock awards (“RSAs”) granted to employees generally vest over a period of four years. RSAs granted to non-officer directors generally vest over a period of one year.

Shares of our common stock delivered to employees and directors will be unrestricted upon vesting. During the vesting period, the recipient of the restricted stock has full voting rights as a stockholder and would receive dividends, if declared, even though the restricted stock remains subject to transfer restrictions and will generally be forfeited upon termination of the officer prior to vesting. The fair value of each RSA is based on the market value of our stock on the date of grant.

A summary of RSA activity under the Plan during the years ended December 31, 2020, 2019, and 2018 is presented below:


		Weighted
		Average Grant		Weighted Average
(in thousands, except per share and		Date Fair		Remaining Term
remaining term data)	Shares	Value		(years)
Unvested at December 31, 2017	85	$	48.34	2.6
Granted	65		58.11
Vested	(33)		47.34
Forfeited	—		—
Unvested at December 31, 2018	117	$	54.04	2.1
Granted	122		66.39
Vested	(42)		54.77
Forfeited	(5)		62.63
Unvested at December 31, 2019	192	$	61.46	2.6
Granted	305		44.42
Vested	(127)		58.88
Forfeited	(18)		51.53
Unvested at December 31, 2020	352	$	48.14	2.7

As of December 31, 2020, there was $12.6 million of total unrecognized compensation cost related to non-vested RSAs granted under the Plan, which is expected to be recognized over a weighted-average period of 2.7 years.

On January 17, 2020, we entered into employment agreements with our Named Executive Officers (“NEOs”) at that time. As part of the employment agreements, the NEOs’ Non-Statutory Stock Option, Incentive Option and Restricted Stock Grant agreements (“NEO Stock Agreements”) were modified to provide for accelerated vesting of unvested non-statutory stock options and restricted stock awards in the event of a termination for any reason other than "cause" as defined in the employment agreements or by the NEOs for “good reason” as defined in the employment agreements. Additionally, any vested incentive or non-statutory stock options and unvested non-statutory stock options subject to acceleration and held unexercised by the NEOs at the time of such termination at the time will retain their contractual term, which is generally 10 years from grant date. At this time, we did not recognize any incremental stock-based compensation expense associated with these modifications, as no assumptions regarding the assumed probability of these awards' future vests were changed on this modification date.

In May 2020, our former President and Chief Executive Officer departed the Company. The departure constituted a Termination Without Good Cause as defined in his employment agreement, and he received separation payments and benefits under his employment agreement in respect of a termination without good cause, including those related to his non-statutory stock options and restricted stock awards as discussed above. This action was accounted for as a modification of the underlying awards and the full expense related to the modified awards was recognized in the second quarter 2020. As part of the benefits, 48,448 previously unvested restricted stock awards and 63,305 previously unvested non-statutory stock options vested upon the termination. Additionally, these 63,305 previously unvested non-statutory stock options that vested upon termination and 101,376 previously

vested and unexercised non-statutory stock options retained their original contractual term. Upon the Termination Without Good Cause, we recognized $3.4 million of stock-based compensation expense associated with this termination and modification of awards.

INCOME TAXES

12 Months Ended

Dec. 31, 2020

INCOME TAXES

INCOME TAXES

11. INCOME TAXES

On August 6, 2018, ANI Canada acquired all the issued and outstanding equity interests of WellSpring in a non-taxable transaction (Note 2). Following the consummation of the transaction, WellSpring was merged into ANI Canada. For U.S. Federal and state income tax purposes, ANI Canada is not part of ANI’s consolidated group; rather, ANI Canada is subject to income taxes only in Canada and solely based on its stand-alone operations. The foreign current and foreign deferred provisions (benefits) below represent ANI Canada’s tax provision (benefit) from the Canadian taxing jurisdictions.

We are required to establish a valuation allowance for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the projected future taxable income and tax planning strategies in making this assessment.

As part of purchase accounting, the Company established net deferred tax assets relating to differences in the book bases (determined based on fair value purchase accounting) and tax bases (determined based on the carryover nature of the nontaxable transaction) of ANI Canada’s assets and liabilities of approximately $1.9 million, offset by a full valuation allowance due to our determination that it was more likely than not that all of the deferred tax assets would not be realized. During 2019, we adopted an intercompany transfer pricing policy that uses the “comparable profits method” for pricing intercompany services between ANI Pharmaceuticals, Inc. and ANI Canada. For U.S. and Canadian tax purposes, the policy was adopted in conjunction with the acquisition date of August 6, 2018. As a result of the newly adopted transfer pricing policy, our assessment of the amount of ANI Canada’s deferred tax assets that are more likely than not to be realized changed and, as a result, during 2019, we released the remaining net valuation allowance related to ANI Canada’s deferred tax assets.

As of December 31, 2020 and 2019, our consolidated valuation allowance was $0.3 million, related solely to deferred tax assets for net operating loss carryforwards in certain U.S. state jurisdictions.

Our total provision for income taxes consists of the following for the years ended December 31, 2020, 2019, and 2018:


(in thousands)	2020		2019		2018
Current income tax provision:
Federal	$	9,232	$	4,985	$	7,985
State		559		1,212		1,751
Total		9,791		6,197		9,736
Deferred income tax (benefit)/provision:
Federal		(14,125)		(6,274)		(4,630)
State		744		(2,027)		(556)
Foreign		345		1,000		(214)
Total		(13,036)		(7,301)		(5,400)
Change in valuation allowance		(169)		(1,833)		221
Total (benefit)/provision for income taxes	$	(3,414)	$	(2,937)	$	4,557

The difference between our expected income tax provision from applying U.S. Federal statutory tax rates to the pre-tax income and actual income tax provision relates primarily to the effect of the following:


	As of December 31,
	2020		2019		2018
US Federal statutory rate	21.0	%	21.0	%	21.0	%
State taxes, net of Federal benefit	1.9	%	3.2	%	2.4	%
Foreign taxes	(0.1)	%	0.4	%	26.5	%
Change in valuation allowance	0.7	%	(58.1)	%	(26.5)	%
Stock-based compensation	(2.5)	%	(6.7)	%	(1.8)	%
Non-deductible costs	(3.5)	%	9.1	%	—	%
Change in state apportionment factors, state and foreign rates	(7.3)	%	(28.1)	%	—	%
Research and experimentation and charitable credits	0.9	%	(33.5)	%	—	%
Transfer pricing and other	2.0	%	(0.2)	%	1.1	%
Effective income tax rate	13.1	%	(93.0)	%	22.7	%

Deferred income taxes reflect the net tax effects of differences between the bases of assets and liabilities for financial reporting and income tax purposes. Our deferred income tax assets and liabilities consisted of the following:


	As of December 31,
(in thousands)	2020		2019
Deferred tax assets:
Accruals and advances	$	7,174	$	8,586
Stock-based compensation		4,277		3,750
Accruals for chargebacks and returns		13,831		7,603
Inventory		6,101		4,720
Intangible asset		21,911		14,923
Net operating loss carryforwards		4,090		4,767
Other		2,171		1,459
Total deferred tax assets	$	59,555	$	45,808
Deferred tax liabilities:
Depreciation	$	(5,913)	$	(6,029)
Intangible assets		(11)		(13)
Other		(1,664)		(1,008)
Total deferred tax liabilities	$	(7,588)	$	(7,050)
Valuation allowance		(263)		(432)
Deferred tax assets, net of deferred tax liabilities and valuation allowance	$	51,704	$	38,326

As of December 31, 2020, we had U.S. federal net operating loss carryforwards of approximately $10.5 million, all of which arose as a result of the 2013 merger with BioSante Pharmaceuticals, Inc. and, if not used, expire in annual increments through 2033. The utilization of the net operating loss carryforwards are limited in future years as prescribed by Section 382 of the U.S. Internal Revenue Code; our current annual limitation of the federal net operating loss is approximately $0.8 million per year. Additionally, as of December 31, 2020 we have total net operating losses in Canada of $6.5 million that begin expiring in 2035.

We are subject to income taxes in numerous jurisdictions in the U.S. and in Canada. Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. We establish liabilities for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These liabilities are established when we believe that certain positions might be challenged despite our belief that our tax return positions are fully supportable. We adjust these liabilities in light of changing facts and circumstances, such as the outcome of a tax audit. The provision for income taxes includes the impact of changes to the liability that is considered appropriate. We identified no material uncertain income tax positions as of December 31, 2020 and 2019.

We are subject to income tax audits in all jurisdictions for which we file tax returns. Tax audits by their nature are often complex and can require several years to complete. All of our income tax returns remain subject to examination by tax authorities due to the availability of net operating loss carryforwards.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2020

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

12. COMMITMENTS AND CONTINGENCIES

Operating Leases

All our existing leases as of December 31, 2020 are classified as operating leases. As of December 31, 2020, we have twelve material operating leases for facilities and office equipment with remaining terms expiring from 2021 through 2025 and a weighted average remaining lease term of 1.6 years. Many of our existing leases have fair value renewal options, none of which are considered certain of being exercised or included in the minimum lease term. Discount rates used in the calculation of our lease liability ranged between 3.99% and 8.95%.

Rent expense for the years ended December 31, 2020 and 2019 consisted of the following:


	Year Ended December 31,
(in thousands)	2020		2019
Operating lease costs	$	223	$	190
Variable lease costs		66		60
Total lease costs	$	289	$	250

A maturity analysis of our operating leases follows:


(in thousands)
Future payments:
2021	$	138
2022		97
2023		52
2024		26
2025 and thereafter		6
Total	$	319

Discount		(18)
Lease liability		301
Current lease liability		(129)
Non-current lease liability	$	172

Vendor Purchase Minimums

We have supply agreements with four vendors that include purchase minimums. Pursuant to these agreements, we will be required to purchase a total of $2.8 million of API from these four vendors during the year ended December 31, 2021.

Government Regulation

Our products and facilities are subject to regulation by a number of federal and state governmental agencies, such as the Drug Enforcement Administration (“DEA”), the Food and Drug Administration (“FDA”), the Centers for Medicare and Medicaid Services (“CMS”), and Health Canada. The FDA, in particular, maintains oversight of the formulation, manufacture, distribution, packaging, and labeling of all of our products. The DEA and Health Canada maintain oversight over our products that are considered controlled substances.

Unapproved Products

Two of our products, Esterified Estrogen with Methyltestosterone (“EEMT”) and Opium Tincture, are marketed without approved NDAs or ANDAs. During the years ended December 31, 2020, 2019, and 2018, net revenues for these products totaled $16.9 million, $20.7 million, and $24.9 million, respectively.

Previously, the FDA’s Unapproved Drug Initiative included publication of their policy with respect to the continued marketing of unapproved products in the September 2011 Compliance Policy Guide Sec. 440.100 titled “Marketed New Drugs without Approved NDAs or ANDAs.” Under this policy, the FDA had stated that it would follow a risk-based approach with regard to enforcement against marketing of unapproved products. The guideline allowed the FDA to evaluate whether to initiate enforcement action on a case-by-case basis, while giving higher priority to enforcement action against products in certain categories, such as those with potential safety risks or that lack evidence of effectiveness. In November 2020 (effective December 2020), the Department of Health and Human Services (“HHS”) published a notice in the Federal Register to terminate the FDA’s Unapproved Drug Initiative, which would include the withdrawal of this September 2011 Compliance Policy Guide. Neither the HHS nor the FDA has provided any additional guidance, notice or statement regarding how they intend to approach enforcement against marketing of unapproved products.

We continue to believe that, so long as we comply with applicable manufacturing standards, the FDA will continue to operate on a risk-based approach and will not take action against us. However, we can offer no assurance that the FDA will continue to follow this approach or that it will not take a contrary position with any individual product or group of products. If the FDA were to move away from the risk-based approach to enforcement against marketing of unapproved products, we may be required to seek FDA approval for these products or withdraw such products from the market. If we decide to withdraw the products from the market, our net revenues for generic pharmaceutical products would decline materially, and if we decide to seek FDA approval, we would face increased expenses and might need to suspend sales of the products until such approval was obtained, and there are no assurances that we would receive such approval.

In addition, one group of products that we manufacture on behalf of a contract customer is marketed by that customer without an approved NDA. If the FDA took enforcement action against such customer, the customer may be required to seek FDA approval for the group of products or withdraw them from the market. Our contract manufacturing revenues for the group of unapproved products for the years ended December 31, 2020, 2019, and 2018 were $2.8 million, $3.1 million, and $2.0 million, respectively.

Legal proceedings

We are involved, and from time to time may become involved, in various disputes, governmental and/or regulatory inquiries, investigations, government reimbursement related actions and litigation. These matters are complex and subject to significant uncertainties. As such, we cannot accurately predict the outcome, or the effects of the legal proceedings described below. While we believe that we have valid claims and/or defenses in the litigation and other matters described below, litigation is inherently unpredictable, and the outcome of the proceedings could result in losses, including substantial damages, fines, civil or criminal penalties and injunctive or administrative remedies. We intend to vigorously prosecute and/or defend these matters, as appropriate, however, from time to time, we may settle or otherwise resolve these matters on terms and conditions that we believe are in our best interests. Resolution of any or all claims, investigations, and legal proceedings, individually or in the aggregate, could have a material adverse effect on our results of operations and/or cash flows in any given accounting period or on our overall financial condition.

Some of these matters with which we are involved are described below, and unless otherwise disclosed, we are unable to predict the outcome of the matter or to provide an estimate of the range of reasonably possible material losses. We record accruals for loss contingencies to the extent we conclude it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

From time to time, we are also involved in other pending proceedings for which, in our opinion based upon facts and circumstances known at the time, either the likelihood of loss is remote or any reasonably possible loss

associated with the resolution of such proceedings is not expected to be material to our results, and therefore remain undisclosed. If and when any reasonably possible losses associated with the resolution of such other pending proceedings, in our opinion, become material, we will disclose such matters.

Furthermore, like all pharmaceutical manufacturers, we are periodically exposed to product liability claims. The prevalence of these claims could limit our coverage under future insurance policies or cause those policies to become more expensive, which could harm our business, financial condition, and operating results. Recent trends in the product liability and director and officer insurance markets is to exclude matters related to certain classes of drugs, such as opioids. Our policies have been subject to such exclusions which place further potential risk of financial loss on us.

Legal fees for litigation-related matters are expensed as incurred and included in the consolidated statements of operations under the selling, general, and administrative expense line item.

Commercial Litigation

In November of 2017, we were served with a complaint filed by Arbor Pharmaceuticals, LLC, in the United States District Court, District of Minnesota. The complaint alleges false advertising and unfair competition in violation of Section 43(a) of the Lanham Act, Section 1125(a) of Title 15 of the United States Code, and Minnesota State law, under the premise that we sold an unapproved Erythromycin Ethylsuccinate (“EES”) product during the period between September 27, 2016 and November 2, 2018. The complaint seeks a trial by jury and monetary damages (inclusive of actual and consequential damages, treble damages, disgorgement of ANI profit, and legal fees) of an unspecified amount. Discovery in this action closed on March 31, 2019. Trial is currently expected to be in August 2021. In light of the significant disagreement over the facts and legal theories in this case which will be determined at trial, we are unable to predict or reasonably estimate the potential loss or effect on our operations at this time. We have not established any reserves related to this action and it is not covered by insurance. We believe the action is without merit and continue to defend this lawsuit vigorously. Any adverse outcome in this case could have a material adverse impact on our financial condition, results of operations or cash flows.

On December 3, 2020, class action complaints were filed against the Company on behalf of putative classes of direct and indirect purchasers of the drug Bystolic. On December 23, 2020, six individual purchasers of Bystolic: CVS, Rite Aid, Walgreen, Kroger, Albertsons, and H-E-B, filed substantively identical complaints against the Company. The plaintiffs in these actions allege that Forest Laboratories, the manufacturer of Bystolic, entered into anticompetitive agreements when settling patent litigation related to Bystolic with seven potential manufacturers of a generic version of Bystolic: Hetero, Torrent, Alkem/Indchemie, Glenmark, Amerigen, Watson, and various of their corporate parents, successors, subsidiaries, and affiliates. ANI itself has not been a party to patent litigation with Forest concerning Bystolic and did not settle patent litigation with Forest. The plaintiffs named the Company as a defendant based on the Company’s January 8, 2020 Asset Purchase Agreement with Amerigen. The complaints allege that the 2013 patent litigation settlement agreement between Forest and Amerigen violates federal and state antitrust laws and state consumer protection laws by delaying the market entry of generic versions of Bystolic. Plaintiffs allege they paid higher prices as a result of delayed generic competition. Plaintiffs seek treble damages, injunctive relief, and attorneys’ fees. The complaints do not specify the amount of damages sought from the Company or other defendants and the Company at this early stage of the litigation cannot reasonably estimate the potential damages that the plaintiffs will seek. The cases have been consolidated in the United States District Court for the Southern District of New York. The Company has filed a motion to dismiss the complaints that is pending before the Court and disputes any liability.

Industry Related Litigation

In July 2020, we were served with a complaint brought by the Office of the Attorney General of the State of New Mexico against manufacturers and sellers of ranitidine products. The complaint asserts a public nuisance claim and a negligence claim against the generic ranitidine manufacturer defendants, including the Company. The public nuisance claim asserts that the widespread sale of ranitidine products in the state created a public nuisance that requires a state-wide medical monitoring program of New Mexico residents for the development of colorectal cancer, stomach cancer, gastrointestinal disorders and liver disease. As damages, New Mexico asks that the

defendants fund this medical monitoring program. The negligence claims assert that the defendants were negligent in selling the product, essentially alleging that it was unreasonable to have the product on the market. With respect to that claim, New Mexico asserts that it paid for ranitidine products through state-funded insurance and health-care programs. The case was removed to federal court and transferred to the In re Zantac multidistrict litigation (“MDL”) on December 15, 2020. New Mexico has moved for remand to state court. The MDL court granted the remand motion on February 25, 2021. In December 2020, the City of Baltimore served ANI with a complaint against manufacturers and sellers of ranitidine products. The City of Baltimore complaint tracks the allegations of the New Mexico complaint. The Baltimore action was removed to federal court and transferred to the In re Zantac MDL on February 1, 2021. We dispute any liability in these matters and intend to vigorously defend ourselves in the litigation.

Product Liability Related Litigation

All manufacturers of the drug Reglan and its generic equivalent metoclopramide, including ANI, have faced allegations from plaintiffs in various states claiming bodily injuries as a result of ingestion of metoclopramide or its brand name, Reglan, prior to the FDA’s February 2009 Black Box warning requirement (“legacy claims”). All these original legacy claims were settled or closed out, including a series of claims in California that were resolved by coordinated proceeding and settlement. Our insurance company assumed the defense of the legacy claims and paid all losses in settlement of the California legacy claims. In March 2019, we were served with a lawsuit in the Superior Court of California, County of Riverside, adding us as a defendant in a complaint filed in July 2017 that is alleged not to have been part of the original settled legacy claims. This new claim, as well as the impact of the prior settlements on this claim, is currently being evaluated by the Company, its insurers, and its legal counsel.

In June 2020, we were served with a personal injury complaint in the case of Koepsel v. Boehringer Ingelheim Pharmaceuticals, et al., MDL No. 20-MD-2924, Case No. 9:20-cv-80882-RLR, filed in the Southern District of Florida, in which the plaintiff alleges that he developed kidney cancer in 2018 as a result of taking over the counter medication containing ranitidine. The Koepsel action was filed within an existing multidistrict litigation concerning ranitidine-containing drugs pending in the Southern District of Florida before Judge Robin L. Rosenberg, In re Zantac MDL, 20 MDL 2924. A Master Personal Injury Complaint (“MPIC”) in that MDL that was filed on June 22, 2020 also named the Company as a defendant. The Company was dismissed from the Koepsel case on August 21, 2020 and was dismissed from the MPIC on September 8, 2020. On December 31, 2020, after ANI was dismissed, the district court dismissed the MPIC claims against generic manufacturer defendants partially with prejudice and partially with leave to replead. The failure to warn and design defect claims were dismissed with prejudice on preemption grounds. An Amended Master Personal Injury Complaint was filed on February 8, 2021, which does not name ANI. The Company has been named in other individual personal injury complaints filed in MDL 20 MD 2924 in which plaintiffs allege that they developed cancer after taking prescription and over the counter medication containing ranitidine. To date, the Company has been served with complaints in five of those additional cases: Cooper v. Boehringer Ingelheim Pharmaceuticals, et al., MDL No. 20-MD-2924, Case No. 9:20-cv-81130-RLR (served September 30, 2020), Lineberry v. Amneal Pharmaceuticals, LLC, et al., MDL No. 20-MD-2924, Case No. 9:20-cv-81079-RLR (served August 20, 2020), Lovette v. Amneal Pharmaceuticals, LLC, et al., MDL No. 20-MD-2924, Case No. 9:20-cv-81040-RLR (served August 26, 2020), Hightower v. Pfizer, et al, MDL No. 20-MD-2924, Case No. 9-20-cv-82214-RLR (served December 16, 2020) and Bird v. Boehringer Ingelheim Pharmaceuticals, et al., MDL No. 20-MD-2924, Case No. 9-20-cv-80837-RLR (served December 30, 2020). We have informed counsel for the plaintiffs that we did not sell an over the counter ranitidine product and sold a generic prescription ranitidine product for a limited two-month period of time, from July 2019 to September 2019. Our product was voluntarily recalled in January 2020. Each of the plaintiffs in the five pending cases alleges a cancer diagnosis prior to the time that ANI sold ranitidine, and we have informally sought dismissal from these cases on that basis. ANI was voluntarily dismissed from the Cooper, Lineberry and Lovette actions on November 20, 2020. ANI’s informal dismissal requests are pending for the Hightower and Bird actions. We dispute any liability in these MDL matters and intend to vigorously defend ourselves in the litigation.

Other Industry Related Matters

On or about September 20, 2017, the Company and certain of its employees were served with search warrants and/or grand jury subpoenas to produce documents and possibly testify relating to a federal investigation of the

generic pharmaceutical industry. We have been cooperating and intend to continue cooperating with the investigation. However, no assurance can be given as to the timing or outcome of the investigation.

CORTROPHIN PRE-LAUNCH CHARGES

12 Months Ended

Dec. 31, 2020

CORTROPHIN PRE-LAUNCH CHARGES

CORTROPHIN PRE-LAUNCH CHARGES

13. CORTROPHIN PRE-LAUNCH CHARGES

In January 2016, we acquired the right, title and interest in the NDAs for Cortrophin Gel and Cortrophin-Zinc. Subsequently, we assembled a Cortrophin re-commercialization team of scientists, executed a long-term supply agreement with a supplier of pig pituitary glands, our primary raw material for corticotrophin API, executed a long-term supply agreement with an API manufacturer, with whom we have advanced the manufacture of corticotropin API via manufacture of commercial-scale batches, and executed a long-term commercial supply agreement with a current good manufacturing practice (“cGMP”) aseptic fill contract manufacturer.

Prior to the third quarter 2019, all purchases of material, including pig pituitary glands and API, related to the re-commercialization efforts were consumed in research and development activities and recognized as research and development expense in the period in which they were incurred. In the third quarter of 2019, we began purchasing materials that are intended to be used commercially in anticipation of FDA approval of Cortrophin Gel and the resultant product launch. Under U.S. GAAP, we cannot capitalize these pre-launch purchases of materials as inventory prior to FDA approval, and accordingly, they are charged to expense in the period in which they are incurred. We expect these pre-launch purchases of material to increase significantly in the future as we build raw materials, API and finished goods for the expected launch of this product. During the years ended December 31, 2020 and 2019, we incurred related charges for the purchase of materials of $11.3 million and $6.7 million, respectively. Due to the inherent uncertainty of the timing of FDA approval for this product, we cannot reasonably predict whether these materials will ultimately be eligible for use in commercial finished goods inventory. In the future, we also expect to incur other charges directly related to the Cortrophin pre-launch commercialization efforts, including, but not limited to, sales and marketing and consulting expenses, which will vary in frequency and impact on our results of operations.

CEO DEPARTURE

12 Months Ended

Dec. 31, 2020

CEO DEPARTURE

CEO DEPARTURE

14. CEO DEPARTURE

In May 2020, our former President and Chief Executive Officer departed the Company. The departure constituted a Termination Without Good Cause as defined in his employment agreement, and he receives separation payments and benefits under his employment agreement in respect of a termination without good cause, including cash payments for salary continuation, bonus and fringe benefits for two years, and benefits related to his non-statutory stock options and restricted stock awards. During the year ended December 31, 2020, we recognized $6.5 million of expense associated with his termination, comprised of $3.1 million for salary continuation, bonus, and fringe benefits and $3.4 million of stock-based compensation expense (Note 10).

RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2020

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

15. RELATED PARTY TRANSACTIONS

In August 2020, we appointed Jeanne Thoma as a director of the Company. Ms. Thoma is the former Chief Executive Officer of SPI Pharmaceuticals, Inc. (“SPI”), who retired in October 2020. SPI supplies ingredients to the Company. We made payments totaling approximately $352,000 and $208,000 in the years ended 2020 and 2019, respectively, to SPI, related to the purchase of ingredients.

SUBSEQUENT EVENT

12 Months Ended

Dec. 31, 2020

SUBSEQUENT EVENT

SUBSEQUENT EVENT

16. SUBSEQUENT EVENT

On March 8, 2021, ANI Pharmaceuticals, Inc. (“Parent”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among Parent, Nile Merger Sub LLC, a Delaware limited liability company and a wholly-owned subsidiary of Parent (“Merger Sub”), Novitium Pharma LLC, a Delaware limited liability company (“Novitium”), Esjay LLC, a Delaware limited liability company (“Esjay”), Chali Properties, LLC, a New Jersey limited liability company (“Chali”), Chad Gassert, Muthusamy Shanmugam, and Thorappadi Vijayaraj (collectively, the “Key Persons”, and Muthusamy Shanmugam and Thorappadi Vijayaraj, together with Esjay and Chali, the “Principal Members”) and Shareholder Representative Services LLC, a Colorado limited liability company, as the representative of the equity holders of Novitium.

Upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Novitium, with Novitium surviving the merger as a wholly-owned subsidiary of Parent (the “Merger”). The closing of the Merger (the “Closing”) will occur (a) within five business days after all of the conditions to the Closing set forth in the Merger Agreement are satisfied or waived or (b) at such other time, date and place as may be agreed by Parent and Novitium, subject to the completion of a minimum period.

The Merger consideration will consist of a combination of (i) an estimated cash amount of $89.5 million, subject to various adjustments and expected to be financed in part by a $25.0 million Private Investment in Public Equity (“PIPE Investment”) (as defined below) and in part by new debt financing, (ii) an aggregate of 2,466,667 shares of Parent common stock, and (iii) up to $46.5 million in contingent future earn-out payments.

We will finance the transaction with a new $340.0 million Senior Secured Credit Facility (the “Facility”), consisting of a $300.0 million term loan and a $40.0 million revolving credit facility, the issuance of approximately $74.0 million in equity to the sellers, and a $25.0 million PIPE Investment by Ampersand Capital Partners. The new debt financing will be secured by substantially all the assets of ANI and its subsidiaries and used for the cash portion of the acquisition and to refinance ANI’s existing senior credit facilities.

Concurrently with the execution of the Merger Agreement, on March 8, 2021, Parent entered into an Equity Commitment and Investment Agreement (the “Investment Agreement”) with Ampersand 2020 Limited Partnership (the “PIPE Investor”), an affiliate of Ampersand Capital Partners, pursuant to which we agreed to issue and sell to the PIPE Investor, and the PIPE Investor agreed to purchase, 25,000 shares of our Series A Convertible Preferred Stock (the “PIPE Shares”), for a purchase price of $1,000 per share and an aggregate purchase price of $25.0 million, in a private placement (the “PIPE Investment”).

The completion of the Merger transaction is subject to various closing conditions, including approval by ANI stockholders of the issuance of ANI common stock in connection with the Merger. For more information about the pending Merger transaction, please see the Form 8-K filed on March 9, 2021 by ANI Pharmaceuticals, Inc., which is incorporated by reference herein.

QUARTERLY FINANCIAL DATA (unaudited)

12 Months Ended

Dec. 31, 2020

QUARTERLY FINANCIAL DATA (unaudited)

QUARTERLY FINANCIAL DATA (unaudited)

17. QUARTERLY FINANCIAL DATA (unaudited)

The following table presents unaudited quarterly consolidated operating results for each of our last eight fiscal quarters. The information below has been prepared on a basis consistent with our audited consolidated financial statements.


	2020 Quarters (unaudited)
(in thousands, except per share data)	First		Second		Third		Fourth
Net revenues	$	49,774	$	48,470	$	52,979	$	57,252
Total operating expenses		57,616		59,777		50,177		56,921
Operating (loss)/income		(7,842)		(11,307)		2,802		331
Benefit/(provision) for income taxes		2,853		1,443		371		(1,253)
Net (loss)/income	$	(7,011)	$	(12,336)	$	434	$	(3,635)
Basic and diluted (loss)/earnings per share:
Basic (loss)/earnings per share	$	(0.59)	$	(1.03)	$	0.04	$	(0.30)
Diluted (loss)/earnings per share	$	(0.59)	$	(1.03)	$	0.04	$	(0.30)


	2019 Quarters (unaudited)
(in thousands, except per share data)	First		Second		Third		Fourth⁽¹⁾
Net revenues	$	52,887	$	54,357	$	51,337	$	47,966
Total operating expenses		48,485		45,065		44,009		52,637
Operating income/(loss)		4,402		9,292		7,328		(4,671)
(Provision)/benefit for income taxes		(469)		653		(64)		2,817
Net income/(loss)	$	449	$	6,585	$	3,895	$	(4,835)
Basic and diluted earnings/(loss) per share:
Basic earnings/(loss) per share	$	0.04	$	0.55	$	0.32	$	(0.41)
Diluted earnings/(loss) per share	$	0.04	$	0.53	$	0.32	$	(0.41)

(1)	During the fourth quarter 2019, we recognized a $4.6 million inventory reserve charge, primarily related to our exit from the market of Methylphenidate Extended Release. We also recognized Cortrophin pre-launch charges of $6.5 million.

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2020

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Business

Basis of Presentation

Principles of Consolidation

The consolidated financial statements include the accounts of ANI Pharmaceuticals, Inc. and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation.

Foreign Currency

Use of Estimates

Leases

Leases

Comprehensive Income/(Loss)

Concentration Risk

Credit Concentration

Our customers are primarily wholesale distributors, chain drug stores, group purchasing organizations, and other pharmaceutical companies.

The three customers represent the total percentage of net revenues as follows:



	Years Ended December 31,
	2020		2019		2018
Customer 1	31	%	32	%	33	%
Customer 2	24	%	25	%	23	%
Customer 3	19	%	23	%	21	%

Vendor Concentration

Revenue Recognition

We recognize revenue using the following steps:

●

Identification of the contract, or contracts, with a customer;

●

Identification of the performance obligations in the contract;

●

Determination of the transaction price, including the identification and estimation of variable consideration;

●

Allocation of the transaction price to the performance obligations in the contract; and

●

Recognition of revenue when we satisfy a performance obligation.

All revenue recognized in our consolidated statements of operations is considered to be revenue from contracts with customers. The following table depicts the disaggregation of revenue:



Products and Services	Years Ended December 31,
(in thousands)	2020		2019		2018
Sales of generic pharmaceutical products	$	147,257	$	128,729	$	117,451
Sales of branded pharmaceutical products		47,960		63,767		60,554
Sales of contract manufactured products		9,221		11,139		9,119
Royalties from licensing agreements		1,396		807		12,504
Product development services		1,858		1,125		1,019
Other⁽¹⁾		783		980		929
Total net revenues	$	208,475	$	206,547	$	201,576

(1)	Primarily includes laboratory services and royalties on sales of contract manufactured products



Timing of Revenue Recognition	Years Ended December 31,
(in thousands)	2020		2019		2018
Performance obligations transferred at a point in time	$	206,617	$	205,422	$	200,557
Performance obligations transferred over time		1,858		1,125		1,019
Total	$	208,475	$	206,547	$	201,576

Revenue from Sales of Generic and Branded Pharmaceutical Products

Revenue from Distribution Agreements

Chargebacks

Chargeback credits are calculated as follows:

●

A change in customer mix

●

A change in negotiated terms with customers

●

A change in the volume of off-contract purchases

●

Changes in WAC

As necessary, we adjust ASPs based on anticipated changes in the factors above.

Government Rebates

Returns

Administrative Fees and Other Rebates

Prompt Payment Discounts

The following table summarizes activity in the consolidated balance sheets for accruals and allowances for the years ended December 31, 2020, 2019, and 2018:


	Accruals for Chargebacks, Returns, and Other Allowances
							Administrative		Prompt
			Government				Fees and Other		Payment
(in thousands)	Chargebacks		Rebates		Returns		Rebates		Discounts
Balance at December 31, 2018 (1)	$	39,007	$	8,974	$	12,552	$	7,353	$	2,009
Accruals/Adjustments		260,771		17,549		19,105		36,874		10,789
Credits Taken Against Reserve		(249,896)		(17,622)		(15,062)		(35,946)		(10,249)
Balance at December 31, 2019 (1)	$	49,882	$	8,901	$	16,595	$	8,281	$	2,549
Accruals/Adjustments		408,265		14,240		30,333		37,588		14,347
Credits Taken Against Reserve		(369,401)		(15,315)		(19,773)		(36,963)		(13,057)
Balance at December 31, 2020 (1)	$	88,746	$	7,826	$	27,155	$	8,906	$	3,839

Contract Manufacturing Product Sales Revenue

Royalties from Licensing Agreements

Product Development Services Revenue

Cash, Cash Equivalents, and Restricted Cash

Accounts Receivable

Inventories

Property and Equipment


Buildings and improvements	20	-	40	years
Machinery, furniture, and equipment	1		10	years

Intangible Assets

Goodwill

Collaborative Arrangements

Royalties

Research and Development Expenses

Stock-Based Compensation

forfeitures as they occur rather than using an estimated forfeiture rate. We recognize excess tax benefits or tax deficiencies as a component of our current period provision for income taxes.

Income Taxes

Earnings (Loss) per Share

Basic earnings (loss) per share is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period.

Earnings per share for the years ended December 31, 2020, 2019, and 2018 are calculated for basic and diluted earnings (loss) per share as follows:


	Basic						Diluted
(in thousands, except per share amounts)	Years Ended December 31,						Years Ended December 31,
	2020		2019		2018		2020		2019		2018
Net (loss)/income	$	(22,548)	$	6,094	$	15,494	$	(22,548)	$	6,094	$	15,494
Net income allocated to restricted stock		—		(97)		(154)		—		(97)		(154)
Net (loss)/income allocated to common shares	$	(22,548)	$	5,997	$	15,340	$	(22,548)	$	5,997	$	15,340
Basic Weighted-Average Shares Outstanding		11,964		11,841		11,677		11,964		11,841		11,677
Dilutive effect of stock options and ESPP								—		103		95
Dilutive effect of Notes								—		96		—
Diluted Weighted-Average Shares Outstanding								11,964		12,040		11,772

(Loss)/Earnings per share	$	(1.88)	$	0.51	$	1.31	$	(1.88)	$	0.50	$	1.30

Hedge Accounting

Fair Value of Financial Instruments

●

Level 2—Observable market-based inputs other than quoted prices in active markets for identical assets or liabilities.

●

Level 3—Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

See Note 8 for additional information regarding fair value.

Geographic Information

The following table depicts the Company’s revenue by geographic operations during the following periods:


(in thousands)	Years Ended December 31,
Location of Operations	2020		2019		2018
United States	$	202,881	$	199,663	$	196,886
Canada		5,594		6,884		4,690
Total Revenue	$	208,475	$	206,547	$	201,576

The following table depicts the Company’s property and equipment, net according to geographic location as of:


(in thousands)	December 31, 2020		December 31, 2019
United States	$	26,960	$	26,708
Canada		14,309		13,843
Total property and equipment, net	$	41,269	$	40,551

Recent Accounting Pronouncements

Recent Accounting Pronouncements Not Yet Adopted

Recently Adopted Accounting Pronouncements

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2020

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of customer concentration



	Years Ended December 31,
	2020		2019		2018
Customer 1	31	%	32	%	33	%
Customer 2	24	%	25	%	23	%
Customer 3	19	%	23	%	21	%

Schedule of disaggregation of revenue and revenue recognized



Products and Services	Years Ended December 31,
(in thousands)	2020		2019		2018
Sales of generic pharmaceutical products	$	147,257	$	128,729	$	117,451
Sales of branded pharmaceutical products		47,960		63,767		60,554
Sales of contract manufactured products		9,221		11,139		9,119
Royalties from licensing agreements		1,396		807		12,504
Product development services		1,858		1,125		1,019
Other⁽¹⁾		783		980		929
Total net revenues	$	208,475	$	206,547	$	201,576

(1)	Primarily includes laboratory services and royalties on sales of contract manufactured products



Timing of Revenue Recognition	Years Ended December 31,
(in thousands)	2020		2019		2018
Performance obligations transferred at a point in time	$	206,617	$	205,422	$	200,557
Performance obligations transferred over time		1,858		1,125		1,019
Total	$	208,475	$	206,547	$	201,576

Schedule of accruals and allowances

The following table summarizes activity in the consolidated balance sheets for accruals and allowances for the years ended December 31, 2020, 2019, and 2018:


	Accruals for Chargebacks, Returns, and Other Allowances
							Administrative		Prompt
			Government				Fees and Other		Payment
(in thousands)	Chargebacks		Rebates		Returns		Rebates		Discounts
Balance at December 31, 2018 (1)	$	39,007	$	8,974	$	12,552	$	7,353	$	2,009
Accruals/Adjustments		260,771		17,549		19,105		36,874		10,789
Credits Taken Against Reserve		(249,896)		(17,622)		(15,062)		(35,946)		(10,249)
Balance at December 31, 2019 (1)	$	49,882	$	8,901	$	16,595	$	8,281	$	2,549
Accruals/Adjustments		408,265		14,240		30,333		37,588		14,347
Credits Taken Against Reserve		(369,401)		(15,315)		(19,773)		(36,963)		(13,057)
Balance at December 31, 2020 (1)	$	88,746	$	7,826	$	27,155	$	8,906	$	3,839

Schedule of property, plant and equipment, useful life


Buildings and improvements	20	-	40	years
Machinery, furniture, and equipment	1		10	years

Schedule of Earnings per share, basic and diluted

Earnings per share for the years ended December 31, 2020, 2019, and 2018 are calculated for basic and diluted earnings (loss) per share as follows:


	Basic						Diluted
(in thousands, except per share amounts)	Years Ended December 31,						Years Ended December 31,
	2020		2019		2018		2020		2019		2018
Net (loss)/income	$	(22,548)	$	6,094	$	15,494	$	(22,548)	$	6,094	$	15,494
Net income allocated to restricted stock		—		(97)		(154)		—		(97)		(154)
Net (loss)/income allocated to common shares	$	(22,548)	$	5,997	$	15,340	$	(22,548)	$	5,997	$	15,340
Basic Weighted-Average Shares Outstanding		11,964		11,841		11,677		11,964		11,841		11,677
Dilutive effect of stock options and ESPP								—		103		95
Dilutive effect of Notes								—		96		—
Diluted Weighted-Average Shares Outstanding								11,964		12,040		11,772

(Loss)/Earnings per share	$	(1.88)	$	0.51	$	1.31	$	(1.88)	$	0.50	$	1.30

Schedule of revenue from company's revenue by geographic operations

The following table depicts the Company’s revenue by geographic operations during the following periods:


(in thousands)	Years Ended December 31,
Location of Operations	2020		2019		2018
United States	$	202,881	$	199,663	$	196,886
Canada		5,594		6,884		4,690
Total Revenue	$	208,475	$	206,547	$	201,576

Schedule of company's property and equipment, net according to geographic location

The following table depicts the Company’s property and equipment, net according to geographic location as of:


(in thousands)	December 31, 2020		December 31, 2019
United States	$	26,960	$	26,708
Canada		14,309		13,843
Total property and equipment, net	$	41,269	$	40,551

BUSINESS COMBINATION (Tables)

12 Months Ended

Dec. 31, 2020

BUSINESS COMBINATION

Schedule of unaudited proforma condensed financial information for the results of operations


	Years Ended December 31,
(in thousands)	2018		2017⁽¹⁾
Net revenues	$	208,213	$	188,758
Net income/(loss)	$	13,287	$	(3,102)

⁽¹⁾ Net loss for the year ended December 31, 2017 includes the impact to WellSpring of $4.4 million of related party debt forgiveness.

INDEBTEDNESS (Tables)

12 Months Ended

Dec. 31, 2020

INDEBTEDNESS

Schedule of carrying value of the current and non-current components of the term loan

The carrying value of the current and non-current components of the Term Loan and DDTL as of December 31, 2020 and 2019 are:


	Current
	December 31,		December 31,
(in thousands)	2020		2019
Current borrowing on debt	$	13,691	$	10,412
Deferred financing costs		(448)		(471)
Current debt, net of deferred financing costs	$	13,243	$	9,941


	Non-Current
	December 31,		December 31,
(in thousands)	2020		2019
Non-current borrowing on debt	$	165,755	$	177,069
Deferred financing costs		(812)		(1,261)
Non-current debt, net of deferred financing costs and current component	$	164,943	$	175,808

Schedule of contractual maturity of term loan and DDTL

The contractual maturity of our Term Loan, DDTL, and Revolver is as follows for the years ending December 31:


(in thousands)	Term Loan		DDTL		Revolver
2021	$	6,316	$	7,375	$	—
2022		5,414		8,850		—
2023		54,141		97,350		7,500
Total	$	65,871	$	113,575	$	7,500

Schedule of components of total interest expense related to the notes and term loan



		Years Ended December 31,
(in thousands)	2020		2019		2018
Contractual coupon	$	8,847	$	6,635	$	7,170
Amortization of debt discount		—		5,647		7,002
Amortization of finance fees		720		1,377		1,463
Capitalized interest		(88)		(191)		(724)
	$	9,479	$	13,468	$	14,911

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

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+ Details

INVENTORIES (Tables)

12 Months Ended

Dec. 31, 2020

INVENTORIES

Schedule of Inventories

Inventories consist of the following as of December 31:


	December 31,		December 31,
(in thousands)	2020		2019
Raw materials	$	41,591	$	34,881
Packaging materials		3,194		2,902
Work-in-progress		886		361
Finished goods		20,363		16,750
		66,034		54,894
Reserve for excess/obsolete inventories		(5,231)		(6,731)
Inventories, net	$	60,803	$	48,163

PROPERTY, PLANT, AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2020

PROPERTY, PLANT, AND EQUIPMENT

Schedule of property, plant and equipment

Property, plant, and equipment consist of the following as of December 31:


	December 31,		December 31,
(in thousands)	2020		2019
Land	$	4,667	$	4,566
Buildings		11,633		10,275
Machinery, furniture, and equipment		39,111		34,984
Construction in progress		3,385		3,496
		58,796		53,321
Less: accumulated depreciation		(17,527)		(12,770)
Property and equipment, net	$	41,269	$	40,551

INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2020

INTANGIBLE ASSETS

Schedule of components of net definite-lived intangible assets

The components of net definite-lived intangible assets are as follows:


	December 31, 2020				December 31, 2019				Weighted Average
	Gross Carrying		Accumulated		Gross Carrying		Accumulated		Amortization
(in thousands)	Amount		Amortization		Amount		Amortization		Period
Acquired ANDA intangible assets	$	106,415	$	(42,367)	$	64,704	$	(30,169)	8.8	years
NDAs and product rights		230,974		(112,483)		230,974		(87,352)	10.0	years
Marketing and distribution rights		17,157		(11,386)		10,923		(8,982)	5.7	years
Non-compete agreement		624		(423)		624		(334)	7.0	years
	$	355,170	$	(166,659)	$	307,225	$	(126,837)	9.4	years

Schedule of expected future amortization expense

Expected future amortization expense is as follows for the years ending December 31:


(in thousands)
2021	$	38,605
2022		35,199
2023		34,451
2024		31,474
2025		28,127
2026 and thereafter		20,655
Total	$	188,511

FAIR VALUE DISCLOSURES (Tables)

12 Months Ended

Dec. 31, 2020

FAIR VALUE DISCLOSURES

Schedule of financial assets and liabilities accounted for at fair value on a recurring basis


(in thousands)	Fair Value at
Description	December 31, 2020		Level 1		Level 2		Level 3
Liabilities
Interest rate swaps	$	14,109	$	—	$	14,109	$	—
CVRs	$	—	$	—	$	—	$	—


	Fair Value at
Description	December 31, 2019		Level 1		Level 2		Level 3
Liabilities
Interest rate swaps	$	6,215	$	—	$	6,215	$	—
CVRs	$	—	$	—	$	—	$	—

STOCK-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2020

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

For 2020, 2019, and 2018, the fair value of each option grant was estimated using the Black-Scholes option-pricing model, using the following assumptions:


	Years Ended December 31,
	2020	2019	2018
Expected option life (years)	5.50 - 6.25	5.50 - 6.25	5.48 - 6.25
Risk-free interest rate	0.31% - 1.63%	1.91% - 2.58%	2.64% - 2.93%
Expected stock price volatility	49.2% - 51.2%	63.1% - 66.7%	55.1% - 60.6%
Dividend yield	—	—	—

Summary of Stock option and restricted stock activity

A summary of stock option activity under the 2008 Plan and Inducement Grant during the years ended December 31, 2020, 2019, and 2018 is presented below:


				Weighted		Weighted
				Average		Average
		Weighted		Grant-		Remaining
(in thousands, except per share and	Option	Average		date		Term	Aggregate
remaining term data)	Shares	Exercise Price		Fair Value		(years)	Intrinsic Value
Outstanding December 31, 2017	767	$	42.93			7.8	$	16,785
Granted	156		57.60	$	31.76
Exercised	(142)		19.47					5,863
Forfeited	(18)		60.17
Expired	(4)		74.53
Outstanding December 31, 2018	759	$	49.74			7.6	$	2,221
Granted	160		65.97	$	40.14
Exercised	(130)		41.99					3,335
Forfeited	(31)		56.66
Expired	(1)		54.36
Outstanding at December 31, 2019	757	$	54.21			7.2	$	6,761
Granted	231		30.29	$	14.39
Exercised	(8)		36.81					216
Forfeited	(44)		54.54
Expired	—		—
Outstanding at December 31, 2020	936	$	48.44			7.1	$	372
Exercisable at December 31, 2020	571	$	53.06			5.9	$	347

Non-vested Restricted Stock Shares Activity

A summary of RSA activity under the Plan during the years ended December 31, 2020, 2019, and 2018 is presented below:


		Weighted
		Average Grant		Weighted Average
(in thousands, except per share and		Date Fair		Remaining Term
remaining term data)	Shares	Value		(years)
Unvested at December 31, 2017	85	$	48.34	2.6
Granted	65		58.11
Vested	(33)		47.34
Forfeited	—		—
Unvested at December 31, 2018	117	$	54.04	2.1
Granted	122		66.39
Vested	(42)		54.77
Forfeited	(5)		62.63
Unvested at December 31, 2019	192	$	61.46	2.6
Granted	305		44.42
Vested	(127)		58.88
Forfeited	(18)		51.53
Unvested at December 31, 2020	352	$	48.14	2.7

Employee Stock Purchase Plan 2016 [Member]

Summary of allocated expense


(in thousands)	Years Ended December 31,
	2020		2019		2018
Cost of sales	$	21	$	18	$	11
Research and development		36		29		16
Selling, general, and administrative		123		100		75
	$	180	$	147	$	102

Stock Incentive Plan 2008 [Member]

Summary of allocated expense


	Years Ended December 31,
(in thousands)	2020		2019		2018
Cost of sales	$	115	$	101	$	87
Research and development		561		756		771
Selling, general, and administrative		12,080		8,213		5,822
	$	12,756	$	9,070	$	6,680

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2020

INCOME TAXES

Schedule of Components of Income Tax Expense (Benefit)

Our total provision for income taxes consists of the following for the years ended December 31, 2020, 2019, and 2018:


(in thousands)	2020		2019		2018
Current income tax provision:
Federal	$	9,232	$	4,985	$	7,985
State		559		1,212		1,751
Total		9,791		6,197		9,736
Deferred income tax (benefit)/provision:
Federal		(14,125)		(6,274)		(4,630)
State		744		(2,027)		(556)
Foreign		345		1,000		(214)
Total		(13,036)		(7,301)		(5,400)
Change in valuation allowance		(169)		(1,833)		221
Total (benefit)/provision for income taxes	$	(3,414)	$	(2,937)	$	4,557

Schedule of Effective Income Tax Rate Reconciliation


	As of December 31,
	2020		2019		2018
US Federal statutory rate	21.0	%	21.0	%	21.0	%
State taxes, net of Federal benefit	1.9	%	3.2	%	2.4	%
Foreign taxes	(0.1)	%	0.4	%	26.5	%
Change in valuation allowance	0.7	%	(58.1)	%	(26.5)	%
Stock-based compensation	(2.5)	%	(6.7)	%	(1.8)	%
Non-deductible costs	(3.5)	%	9.1	%	—	%
Change in state apportionment factors, state and foreign rates	(7.3)	%	(28.1)	%	—	%
Research and experimentation and charitable credits	0.9	%	(33.5)	%	—	%
Transfer pricing and other	2.0	%	(0.2)	%	1.1	%
Effective income tax rate	13.1	%	(93.0)	%	22.7	%

Schedule of Deferred Tax Assets and Liabilities


	As of December 31,
(in thousands)	2020		2019
Deferred tax assets:
Accruals and advances	$	7,174	$	8,586
Stock-based compensation		4,277		3,750
Accruals for chargebacks and returns		13,831		7,603
Inventory		6,101		4,720
Intangible asset		21,911		14,923
Net operating loss carryforwards		4,090		4,767
Other		2,171		1,459
Total deferred tax assets	$	59,555	$	45,808
Deferred tax liabilities:
Depreciation	$	(5,913)	$	(6,029)
Intangible assets		(11)		(13)
Other		(1,664)		(1,008)
Total deferred tax liabilities	$	(7,588)	$	(7,050)
Valuation allowance		(263)		(432)
Deferred tax assets, net of deferred tax liabilities and valuation allowance	$	51,704	$	38,326

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2020

COMMITMENTS AND CONTINGENCIES

Schedule of rent expense


	Year Ended December 31,
(in thousands)	2020		2019
Operating lease costs	$	223	$	190
Variable lease costs		66		60
Total lease costs	$	289	$	250

Schedule of maturity analysis of operating leases


(in thousands)
Future payments:
2021	$	138
2022		97
2023		52
2024		26
2025 and thereafter		6
Total	$	319

Discount		(18)
Lease liability		301
Current lease liability		(129)
Non-current lease liability	$	172

QUARTERLY FINANCIAL DATA (unaudited) (Tables)

12 Months Ended

Dec. 31, 2020

QUARTERLY FINANCIAL DATA (unaudited)

Schedule of quarterly financial information (unaudited)


	2020 Quarters (unaudited)
(in thousands, except per share data)	First		Second		Third		Fourth
Net revenues	$	49,774	$	48,470	$	52,979	$	57,252
Total operating expenses		57,616		59,777		50,177		56,921
Operating (loss)/income		(7,842)		(11,307)		2,802		331
Benefit/(provision) for income taxes		2,853		1,443		371		(1,253)
Net (loss)/income	$	(7,011)	$	(12,336)	$	434	$	(3,635)
Basic and diluted (loss)/earnings per share:
Basic (loss)/earnings per share	$	(0.59)	$	(1.03)	$	0.04	$	(0.30)
Diluted (loss)/earnings per share	$	(0.59)	$	(1.03)	$	0.04	$	(0.30)


	2019 Quarters (unaudited)
(in thousands, except per share data)	First		Second		Third		Fourth⁽¹⁾
Net revenues	$	52,887	$	54,357	$	51,337	$	47,966
Total operating expenses		48,485		45,065		44,009		52,637
Operating income/(loss)		4,402		9,292		7,328		(4,671)
(Provision)/benefit for income taxes		(469)		653		(64)		2,817
Net income/(loss)	$	449	$	6,585	$	3,895	$	(4,835)
Basic and diluted earnings/(loss) per share:
Basic earnings/(loss) per share	$	0.04	$	0.55	$	0.32	$	(0.41)
Diluted earnings/(loss) per share	$	0.04	$	0.53	$	0.32	$	(0.41)

(1)	During the fourth quarter 2019, we recognized a $4.6 million inventory reserve charge, primarily related to our exit from the market of Methylphenidate Extended Release. We also recognized Cortrophin pre-launch charges of $6.5 million.

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentrations (Details) $ in Millions	12 Months Ended
	Dec. 31, 2020 USD ($) customer item	Dec. 31, 2019 customer item	Dec. 31, 2018 item
Revenue \| Customer concentration
Number of major customers \| customer	3	3
Revenue \| Customer concentration \| Customer One [Member]
Concentration Risk, Percentage	31.00%	32.00%	33.00%
Revenue \| Customer concentration \| Customer Two [Member]
Concentration Risk, Percentage	24.00%	25.00%	23.00%
Revenue \| Customer concentration \| Customer Three [Member]
Concentration Risk, Percentage	19.00%	23.00%	21.00%
Accounts receivable \| Customer concentration
Concentration Risk, Percentage	81.00%
Cost of goods sold \| Supplier concentration \| One supplier
Concentration Risk, Percentage	10.00%	13.00%	13.00%
Number of major suppliers \| item	1	1	1
Amount payable to supplier \| $	$ 0.9

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue disaggregation (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Revenue recognition	$ 57,252	$ 52,979	$ 48,470	$ 49,774	$ 47,966	$ 51,337	$ 54,357	$ 52,887	$ 208,475	$ 206,547	$ 201,576
Sales of generic pharmaceutical products [Member]
Revenue recognition									147,257	128,729	117,451
Sales of branded pharmaceutical products [Member]
Revenue recognition									47,960	63,767	60,554
Sales of contract manufactured products [Member]
Revenue recognition									9,221	11,139	9,119
Royalties from licensing agreements [Member]
Revenue recognition									1,396	807	12,504
Product development services [Member]
Revenue recognition									1,858	1,125	1,019
Other [Member]
Revenue recognition									$ 783	$ 980	$ 929

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

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+ Details

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue timing (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Revenue recognition	$ 57,252	$ 52,979	$ 48,470	$ 49,774	$ 47,966	$ 51,337	$ 54,357	$ 52,887	$ 208,475	$ 206,547	$ 201,576
Performance obligations satisfied in prior periods									9,900
Contract with Customer, Asset, Net					100					100
Deferred revenue	$ 80				$ 451				80	451
Revenue recognized									300	100
Performance obligations transferred at a point in time [Member]
Revenue recognition									206,617	205,422	200,557
Performance obligations transferred over time [Member]
Revenue recognition									$ 1,858	$ 1,125	$ 1,019

- Definition

+ References

+ Details

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accruals and allowances (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Accruals and allowances
Beginning balance	$ 59,946
Ending balance	100,328	$ 59,946
Sales of contract manufactured products [Member]
Accruals and allowances
Revenue, Remaining Performance Obligation, Amount	$ 6,800
Revenue, Remaining Performance Obligation, Remaining Period	12 months
Product Development Services [Member]
Accruals and allowances
Revenue, Remaining Performance Obligation, Amount	$ 600
Product Development Services [Member] \| Maximum
Accruals and allowances
Revenue, Remaining Performance Obligation, Remaining Period	18 months
Chargebacks
Accruals and allowances
Beginning balance	$ 49,882	39,007
Accruals/Adjustments	408,265	260,771
Credits Taken Against Reserve	(369,401)	(249,896)
Ending balance	88,746	49,882
Government Rebates
Accruals and allowances
Beginning balance	8,901	8,974
Accruals/Adjustments	14,240	17,549
Credits Taken Against Reserve	(15,315)	(17,622)
Ending balance	7,826	8,901
Returns
Accruals and allowances
Beginning balance	16,595	12,552
Accruals/Adjustments	30,333	19,105
Credits Taken Against Reserve	(19,773)	(15,062)
Ending balance	27,155	16,595
Administrative Fees and Other Rebates
Accruals and allowances
Beginning balance	8,281	7,353
Accruals/Adjustments	37,588	36,874
Credits Taken Against Reserve	(36,963)	(35,946)
Ending balance	8,906	8,281
Prompt Payment Discounts
Accruals and allowances
Beginning balance	2,549	2,009
Accruals/Adjustments	14,347	10,789
Credits Taken Against Reserve	(13,057)	(10,249)
Ending balance	$ 3,839	$ 2,549

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - PPE and Intangibles (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Restricted cash		$ 5,029	$ 5,003	$ 5,029	$ 5,021	$ 5,006
Inventory reserve charge		4,600
Goodwill, Impairment Loss			0	0	0
Impairment of Intangible Assets, Finite-lived			446	75	0
Allocated Share-based Compensation Expense			12,800	9,100	6,700
Deferred Tax Assets, Valuation Allowance		432	263	432
Operating loss carryforwards			10,500
Impairment loss related to property and equipment recognized			0	0	0
Assets Held-for-sale, Not Part of Disposal Group		0	$ 0	0
Minimum \| Intangible Asset Impairments [Member]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life			7 years
Maximum \| Intangible Asset Impairments [Member]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life			10 years
ANI Canada [Member]
Deferred Tax Assets, Valuation Allowance		$ 300	$ 300	300	1,900
Operating loss carryforwards			6,500
Arthur Przybyl [Member]
Allocated Share-based Compensation Expense	$ 3,400		3,400
Employee Stock Purchase Plan 2016 [Member]
Allocated Share-based Compensation Expense			$ 180	$ 147	$ 102
Building and Building Improvements [Member] \| Minimum
Property, Plant and Equipment, Useful Life			20 years
Building and Building Improvements [Member] \| Maximum
Property, Plant and Equipment, Useful Life			40 years
Machinery, furniture and equipment [Member] \| Minimum
Property, Plant and Equipment, Useful Life			1 year
Machinery, furniture and equipment [Member] \| Maximum
Property, Plant and Equipment, Useful Life			10 years

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Net (loss)/income	$ (3,635)	$ 434	$ (12,336)	$ (7,011)	$ (4,835)	$ 3,895	$ 6,585	$ 449	$ (22,548)	$ 6,094	$ 15,494
Net income allocated to restricted stock, Basic										(97)	(154)
Net income allocated to restricted stock, Diluted										(97)	(154)
Net income/(loss) allocated to common shares, Basic									(22,548)	5,997	15,340
Net income/(loss) allocated to common shares, Diluted									$ (22,548)	$ 5,997	$ 15,340
Basic Weighted-Average Shares Outstanding									11,964	11,841	11,677
Dilutive effect of stock options and ESPP										103	95
Dilutive effect of Notes										96
Diluted Weighted-Average Shares Outstanding									11,964	12,040	11,772
Basic earnings/(loss) per share	$ (0.30)	$ 0.04	$ (1.03)	$ (0.59)	$ (0.41)	$ 0.32	$ 0.55	$ 0.04	$ (1.88)	$ 0.51	$ 1.31
Earnings/(Loss) Per Share, Diluted	$ (0.30)	$ 0.04	$ (1.03)	$ (0.59)	$ (0.41)	$ 0.32	$ 0.53	$ 0.04	$ (1.88)	$ 0.50	$ 1.30
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount									1,300	3,000	4,400
Convertible Senior Notes [Member]
Stated interest rate (as a percent)					3.00%					3.00%

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Geographical (Details) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2020 USD ($)	Sep. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2020 USD ($) segment	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Number of segments \| segment									1
Revenue recognition	$ 57,252	$ 52,979	$ 48,470	$ 49,774	$ 47,966	$ 51,337	$ 54,357	$ 52,887	$ 208,475	$ 206,547	$ 201,576
Property and equipment, net	41,269				40,551				41,269	40,551
United States [Member]
Revenue recognition									202,881	199,663	196,886
Property and equipment, net	26,960				26,708				26,960	26,708
Canada [Member]
Revenue recognition									5,594	6,884	$ 4,690
Property and equipment, net	$ 14,309				$ 13,843				$ 14,309	$ 13,843

- Definition

+ References

+ Details

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Information (Details) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Apr. 30, 2016	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Jan. 01, 2020
(Accumulated deficit)/retained earnings		$ (4,972)	$ 17,584
Fdic Guaranteed Amount		250
Payments to acquire intangible assets		62,187	20,914	$ 5,169
Research and Development Expense		$ 16,001	$ 19,806	$ 15,388
Cranford Pharmaceuticals [Member] \| New Drug Applications [Member]
Payments to acquire intangible assets	$ 60,000
Funds Held In Escrow In Relation To Asset Purchase	$ 5,000
ASU 2016-13 [Member] \| Cumulative Effect, Period of Adoption, Adjustment [Member]
(Accumulated deficit)/retained earnings					$ (8)

BUSINESS COMBINATION (Details) - USD ($) $ in Thousands		12 Months Ended
BUSINESS COMBINATION (Details) - USD ($) $ in Thousands	Aug. 06, 2018	Dec. 31, 2018	Dec. 31, 2020	Dec. 31, 2019
Goodwill			$ 3,580	$ 3,580
WellSpring Pharma Services [Member]
Transaction costs		$ 1,100
Purchase price	$ 18,000
Total consideration	$ 16,700

BUSINESS COMBINATION - Pro Forma (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Net revenues	$ 208,213	$ 188,758
Net income/(loss)	$ 13,287	(3,102)
WellSpring Pharma Services [Member]
Business Combination Related Party Debt Forgiveness		$ 4,400

INDEBTEDNESS - Credit facility (Details) $ in Thousands	1 Months Ended	12 Months Ended
INDEBTEDNESS - Credit facility (Details) $ in Thousands	Mar. 31, 2020 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Long-term Debt, Current Maturities		$ 13,243	$ 9,941
Borrowing repayment		$ 7,500	$ 0	$ 0
Convertible Senior Notes [Member]
Stated interest rate (as a percent)			3.00%
Senior Secured Credit Facility [Member]
Debt Instrument, Term		5 years
Line of Credit Facility, Commitment Fee Percentage		0.40%
Leverage Ratio		3.25
Fixed charge coverage ratio		1.25
Senior Secured Credit Facility [Member] \| LIBOR [Member]
Debt Instrument, Basis Spread on Variable Rate		2.25%
Senior Secured Credit Facility [Member] \| LIBOR [Member] \| Minimum
Debt Instrument, Basis Spread on Variable Rate		1.50%
Senior Secured Credit Facility [Member] \| LIBOR [Member] \| Maximum
Debt Instrument, Basis Spread on Variable Rate		2.75%
Senior Secured Credit Facility [Member] \| Alternative Base Rate [Member] \| Minimum
Debt Instrument, Basis Spread on Variable Rate		0.50%
Senior Secured Credit Facility [Member] \| Alternative Base Rate [Member] \| Maximum
Debt Instrument, Basis Spread on Variable Rate		1.75%
Senior Secured Credit Facility [Member] \| Term Loan [Member]
Line of Credit Facility, Maximum Borrowing Capacity		$ 72,200
Quarterly payment		6,300
Long-term Debt, Current Maturities		6,300
Senior Secured Credit Facility [Member] \| Delayed Draw Term Loan [Member]
Line of Credit Facility, Maximum Borrowing Capacity		118,000
Quarterly payment		7,400
Long-term Debt, Current Maturities		7,400
Senior Secured Credit Facility [Member] \| Revolver [Member]
Line of Credit Facility, Maximum Borrowing Capacity		75,000
Proceeds from borrowing	$ 15,000
Borrowing repayment		7,500
Line of Credit Facility, Remaining Borrowing Capacity		$ 67,500
Senior Secured Credit Facility [Member] \| Revolver [Member] \| Minimum
Line of Credit Facility, Commitment Fee Percentage		0.25%
Senior Secured Credit Facility [Member] \| Revolver [Member] \| Maximum
Line of Credit Facility, Commitment Fee Percentage		0.50%

INDEBTEDNESS - Facility components (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Current debt, net of deferred financing costs	$ 13,243	$ 9,941
Non-current debt, net of deferred financing costs and current component	172,443	175,808
Term Loan and DDTL [Member]
Current borrowing on debt	13,691	10,412
Deferred financing costs	(448)	(471)
Current debt, net of deferred financing costs	13,243	9,941
Non-current borrowing on debt	165,755	177,069
Deferred financing costs	(812)	(1,261)
Non-current debt, net of deferred financing costs and current component	$ 164,943	$ 175,808

INDEBTEDNESS - Outstanding (Details) - Senior Secured Credit Facility [Member] $ in Millions	12 Months Ended
	Dec. 31, 2020 USD ($)
Debt Instrument, Term	5 years
Delayed Draw Term Loan [Member]
Long-term debt, gross	$ 113.6
Total debt issuance costs, net	0.3
Debt issuance costs, current	0.1
Debt issuance costs, noncurrent	0.2
Term Loan [Member]
Long-term debt, gross	65.9
Total debt issuance costs, net	0.9
Debt issuance costs, current	0.3
Debt issuance costs, noncurrent	0.6
Revolver [Member]
Long-term debt, gross	7.5
Total debt issuance costs, net	0.8
Debt issuance costs, current	0.3
Debt issuance costs, noncurrent	$ 0.5

INDEBTEDNESS - Credit facility - Maturity (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Term Loan [Member]
2021	$ 6,316
2022	5,414
2023	54,141
Total	65,871
Delayed Draw Term Loan [Member]
2021	7,375
2022	8,850
2023	97,350
Total	113,575
Revolver [Member]
2023	7,500
Total	$ 7,500

INDEBTEDNESS - Interest (Details) - USD ($) $ in Thousands	12 Months Ended
INDEBTEDNESS - Interest (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
INDEBTEDNESS
Contractual coupon	$ 8,847	$ 6,635	$ 7,170
Amortization of debt discount		5,647	7,002
Amortization of finance fees	720	1,377	1,463
Capitalized interest	(88)	(191)	(724)
Interest Expense, Debt	$ 9,479	$ 13,468	$ 14,911

DERIVATIVE FINANCIAL INSTRUMENT AND HEDGING ACTIVITY (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Apr. 30, 2020	Feb. 28, 2019
Accumulated other comprehensive loss, net of tax	$ 11,437	$ 4,871
(Losses)/gains on interest rate swap	(6,566)	(4,492)	$ (379)
Interest rate swap [Member]
Derivative liability, notional amount				$ 184,200
Accumulated other comprehensive loss, net of tax	11,400			$ 13,200
Fair value interest rate derivative liabilities	14,109	$ 6,215
Unrealized gain (loss)	9,200
(Losses)/gains on interest rate swap	(6,600)
Interest expense	3,900
Interest rate swap [Member] \| Term Loan [Member]
Weighted average fixed rate (as a percent)					2.60%
Interest rate swap [Member] \| Delayed Draw Term Loan [Member]
Weighted average fixed rate (as a percent)					2.47%
Interest rate swap [Member] \| Senior Secured Credit Facility [Member]
Derivative liability, notional amount	$ 179,400
Debt effective interest rate (as a percent)	1.99%

INVENTORIES (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
INVENTORIES
Raw materials	$ 41,591	$ 34,881
Packaging materials	3,194	2,902
Work-in-progress	886	361
Finished goods	20,363	16,750
Inventory, Gross, Total	66,034	54,894
Reserve for excess/obsolete inventories	(5,231)	(6,731)
Inventories, net	$ 60,803	$ 48,163

INVENTORIES - Information (Details) $ in Millions	3 Months Ended
INVENTORIES - Information (Details) $ in Millions	Dec. 31, 2019 USD ($)
INVENTORIES
Inventory reserve charge	$ 4.6

PROPERTY, PLANT, AND EQUIPMENT (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Property, Plant and Equipment, Gross, Total	$ 58,796	$ 53,321
Less: accumulated depreciation	(17,527)	(12,770)
Property and equipment, net	41,269	40,551
Land [Member]
Property, Plant and Equipment, Gross, Total	4,667	4,566
Buildings [Member]
Property, Plant and Equipment, Gross, Total	11,633	10,275
Machinery, furniture and equipment [Member]
Property, Plant and Equipment, Gross, Total	39,111	34,984
Construction in progress [Member]
Property, Plant and Equipment, Gross, Total	$ 3,385	$ 3,496

PROPERTY, PLANT, AND EQUIPMENT - Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
PROPERTY, PLANT, AND EQUIPMENT
Depreciation	$ 4.8	$ 4.4	$ 2.1
Interest capitalized	$ 0.1	$ 0.2	$ 0.7

INTANGIBLE ASSETS - Goodwill (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2013
Goodwill	$ 3,580	$ 3,580
Goodwill, impairment loss	$ 0	$ 0	$ 0
BioSante Pharmaceuticals Inc [Member]
Goodwill				$ 1,800
WellSpring Pharma Services [Member]
Acquisition of WellSpring			$ 1,700

INTANGIBLE ASSETS - Components (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
INTANGIBLE ASSETS
Gross Carrying Amount	$ 355,170	$ 307,225
Accumulated Amortization	$ (166,659)	(126,837)
Weighted Average Amortization Period	9 years 4 months 24 days
Amortization of intangible assets	$ 39,900	40,200	$ 31,700
Intangible asset impairment charge	446	75	$ 0
Acquired ANDA intangible assets
INTANGIBLE ASSETS
Gross Carrying Amount	106,415	64,704
Accumulated Amortization	$ (42,367)	(30,169)
Weighted Average Amortization Period	8 years 9 months 18 days
NDAs and product rights
INTANGIBLE ASSETS
Gross Carrying Amount	$ 230,974	230,974
Accumulated Amortization	$ (112,483)	(87,352)
Weighted Average Amortization Period	10 years
Marketing and distribution rights
INTANGIBLE ASSETS
Gross Carrying Amount	$ 17,157	10,923
Accumulated Amortization	$ (11,386)	(8,982)
Weighted Average Amortization Period	5 years 8 months 12 days
Intangible asset impairment charge	$ 400
Non-compete agreement
INTANGIBLE ASSETS
Gross Carrying Amount	624	624
Accumulated Amortization	$ (423)	$ (334)
Weighted Average Amortization Period	7 years

INTANGIBLE ASSETS - Amortization (Details) $ in Thousands	Dec. 31, 2020 USD ($)
INTANGIBLE ASSETS
2021	$ 38,605
2022	35,199
2023	34,451
2024	31,474
2025	28,127
2026 and thereafter	20,655
Total	$ 188,511

FAIR VALUE DISCLOSURES (Details) $ in Thousands	12 Months Ended
FAIR VALUE DISCLOSURES (Details) $ in Thousands	Dec. 31, 2020 USD ($) derivative	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Apr. 30, 2020 USD ($)
Asset impairment charge	$ 445	$ 75	$ 0
Senior Secured Credit Facility [Member] \| Term Loan [Member]
Long-term debt, gross	65,900
Senior Secured Credit Facility [Member] \| Delayed Draw Term Loan [Member]
Long-term debt, gross	$ 113,600
Contingent Value Rights [Member] \| Discount rate
Fair values inputs discount rate	15.00%
Interest rate swap [Member]
Number of interest rate swaps terminated \| derivative	2
Number of derivative instruments held \| derivative	1
Fair value interest rate derivative liabilities	$ 14,109	6,215
Derivative liability, notional amount				$ 184,200
Interest rate swap [Member] \| Fair Value, Inputs, Level 2 [Member]
Fair value interest rate derivative liabilities	14,109	$ 6,215
Interest rate swap [Member] \| Senior Secured Credit Facility [Member]
Derivative liability, notional amount	$ 179,400

FAIR VALUE DISCLOSURES - Acquired (Details) $ in Thousands	1 Months Ended							3 Months Ended		12 Months Ended
FAIR VALUE DISCLOSURES - Acquired (Details) $ in Thousands	Jul. 31, 2020 USD ($)	May 31, 2020 USD ($) product	Jan. 31, 2020 USD ($) product	Jun. 30, 2019 USD ($) item	Mar. 31, 2019 USD ($) item	Jan. 31, 2019 USD ($)	Apr. 30, 2018 USD ($) product	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Payments to acquire intangible assets										$ 62,187	$ 20,914	$ 5,169
Gross carrying amount								$ 355,170	$ 307,225	$ 355,170	307,225
Useful life of intangible assets										9 years 4 months 24 days
Research and development										$ 16,001	19,806	15,388
Intangible asset impairment charge										446	75	0
Amortization of intangible assets										39,900	40,200	31,700
Inventories, net								60,803	48,163	60,803	48,163
Raw materials								41,591	34,881	41,591	34,881
Finished goods								20,363	16,750	20,363	16,750
Acquired in-process research and development ("IPR&D")										3,753	2,324	$ 1,335
Acquired ANDA intangible assets
Gross carrying amount								106,415	64,704	$ 106,415	64,704
Useful life of intangible assets										8 years 9 months 18 days
Marketing and distribution rights
Gross carrying amount								17,157	10,923	$ 17,157	10,923
Useful life of intangible assets										5 years 8 months 12 days
Intangible asset impairment charge										$ 400
Private Company [Member]
Number of generic products \| product		1
Total asset purchase	$ 4,300	$ 200
Transaction costs	100
Gross carrying amount	$ 3,000
Useful life of intangible assets	7 years	7 years
Intangible asset impairment charge										0
Inventories, net	$ 1,400
Amerigen Pharmaceuticals, Ltd.
Number of generic products \| product			23
Total asset purchase			$ 56,800
Transaction costs			700
Contingent liability not recognized			$ 25,000
Period of contingent payments			4 years
Number of commercial products under product portfolio			10
Number of approved products with launches pending under product portfolio			3
Number of filed products under product portfolio			4
Number of in-development products under product portfolio			4
Number of approved products under product portfolio			2
Useful life of intangible assets			7 years
Research and development			$ 3,800
Intangible asset impairment charge										0
Inventories, net			8,400
Raw materials			1,700
Finished goods			6,700
Amerigen Pharmaceuticals, Ltd. \| Revolver [Member]
Amount borrowed			$ 15,000
Amerigen Pharmaceuticals, Ltd. \| Discount rate
Fair values inputs discount rate			8.00%
Amerigen Pharmaceuticals, Ltd. \| Acquired ANDA intangible assets
Gross carrying amount			$ 38,500
Amerigen Pharmaceuticals, Ltd. \| Marketing and distribution rights
Gross carrying amount			$ 6,700
Coeptis Pharmaceuticals, Inc. [Member]
Number of generic products \| item				7
Total asset purchase				$ 2,300
Transaction costs				24
Contingent liability not recognized				$ 12,000
Pharmaceutics International, Inc and BAS ANDA LLC [Member]
Payments to acquire intangible assets									$ 500
Useful life of intangible assets									10 years
Intangible asset impairment charge								$ 400
Teva Pharmaceuticals [Member]
Number of generic products \| item					35
Payments to acquire intangible assets					$ 2,500	$ 16,000
Gross carrying amount					$ 2,500	9,200
Useful life of intangible assets					10 years
Intangible asset impairment charge										0	0
Cumulative amortization expense						$ 6,800
Teva Pharmaceuticals [Member] \| Discount rate
Fair values inputs discount rate					15.00%	12.00%
Impax Laboratories, Inc. [Member]
Number of generic products \| product							2
Transaction costs							$ 100
Payments to acquire intangible assets							2,300
Gross carrying amount							$ 1,000
Useful life of intangible assets							10 years
Intangible asset impairment charge										$ 0
Purchase commitment period							17 months
Equipment fair value							$ 58
Property useful life							5 years
Acquired in-process research and development ("IPR&D")							$ 1,300
Impax Laboratories, Inc. [Member] \| Discount rate
Fair values inputs discount rate							75.00%
Impax Laboratories, Inc. [Member] \| Discount rate \| Minimum
Fair values inputs discount rate							10.00%
Impax Laboratories, Inc. [Member] \| Discount rate \| Maximum
Fair values inputs discount rate							15.00%
Impax Laboratories, Inc. [Member] \| Milestone One [Member]
Contingent liability not recognized							$ 25,000
Impax Laboratories, Inc. [Member] \| Milestone Two [Member]
Contingent liability not recognized							15,000
Impax Laboratories, Inc. [Member] \| Milestone Three [Member]
Contingent liability not recognized							$ 10,000
Appco Pharma, LLC [Member]
Intangible asset impairment charge											$ 75

STOCKHOLDER'S EQUITY (Details) - $ / shares	Dec. 31, 2020	Dec. 31, 2019
Preferred Stock, Shares Authorized	1,666,667	1,666,667
Preferred Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.0001	$ 0.0001
Preferred Stock, Shares Outstanding	0	0
Common Stock [Member]
Common Stock, Authorized Shares	33,300,000
Common Stock, Par Value (in dollars per share)	$ 0.0001
Common Stock, Shares, Issued	12,400,000	12,100,000
Common Stock, Shares, Outstanding	12,300,000	12,100,000
Class C Special Stock [Member]
Common Stock, Authorized Shares	800,000
Common Stock, Par Value (in dollars per share)	$ 0.0001
Common Stock, Shares, Issued	11,000	11,000
Common Stock, Shares, Outstanding	11,000	11,000
Common Stock Conversion Price	$ 90.00	$ 90.00

STOCK-BASED COMPENSATION - Expense (Details) - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Allocated share-based compensation expense	$ 12,800	$ 9,100	$ 6,700
Employee service share-based compensation, tax benefit from compensation expense	$ 1,600	$ 1,400	$ 1,200
Employee Stock Purchase Plan 2016 [Member]
Discount from market price (as a percent)	15.00%
Employee share plan issued (in shares)	13	6	5
Allocated share-based compensation expense	$ 180	$ 147	$ 102
Stock-based compensation shares available	200
Stock Incentive Plan 2008 [Member]
Allocated share-based compensation expense	$ 12,756	9,070	6,680
Stock-based compensation shares available	1,100
Cost of sales [Member] \| Employee Stock Purchase Plan 2016 [Member]
Allocated share-based compensation expense	$ 21	18	11
Cost of sales [Member] \| Stock Incentive Plan 2008 [Member]
Allocated share-based compensation expense	115	101	87
Research and development Expense [Member] \| Employee Stock Purchase Plan 2016 [Member]
Allocated share-based compensation expense	36	29	16
Research and development Expense [Member] \| Stock Incentive Plan 2008 [Member]
Allocated share-based compensation expense	561	756	771
Selling, general and administrative Expenses [Member] \| Employee Stock Purchase Plan 2016 [Member]
Allocated share-based compensation expense	123	100	75
Selling, general and administrative Expenses [Member] \| Stock Incentive Plan 2008 [Member]
Allocated share-based compensation expense	$ 12,080	$ 8,213	$ 5,822

STOCK-BASED COMPENSATION - Fair value options (Details)		12 Months Ended
STOCK-BASED COMPENSATION - Fair value options (Details)	Jan. 17, 2020	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Award expiration period	10 years
Options [Member]
Dividend yield		0.00%	0.00%	0.00%
Options [Member] \| Minimum
Expected option life		5 years 6 months	5 years 6 months	5 years 5 months 23 days
Risk-free interest rate		0.31%	1.91%	2.64%
Expected stock price volatility		49.20%	63.10%	55.10%
Options [Member] \| Maximum
Expected option life		6 years 3 months	6 years 3 months	6 years 3 months
Risk-free interest rate		1.63%	2.58%	2.93%
Expected stock price volatility		51.20%	66.70%	60.60%
Options [Member] \| Employees and Consultants [Member]
Award expiration period		10 years
Vesting period		4 years
Options [Member] \| Non Employee Director [Member]
Award expiration period		10 years
Options [Member] \| Non Employee Director [Member] \| Minimum
Vesting period		1 year
Options [Member] \| Non Employee Director [Member] \| Maximum
Vesting period		4 years

STOCK-BASED COMPENSATION - Stock option activity (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Sep. 08, 2020	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Aggregate Intrinsic Value
Proceeds from stock option exercised		$ 618	$ 5,738	$ 2,978
Nikhil Lalwani [Member]
Option Shares
Granted (in shares)	179,643
Options [Member]
Option Shares
Outstanding at the beginning of the period (in shares)		757,000	759,000	767,000
Granted (in shares)		231,000	160,000	156,000
Exercised (in shares)		(8,000)	(130,000)	(142,000)
Forfeited (in shares)		(44,000)	(31,000)	(18,000)
Expired (in shares)			(1,000)	(4,000)
Outstanding at the end of the period (in shares)		936,000	757,000	759,000	767,000
Exercisable at the end of the period (in shares)		571,000
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)		$ 54.21	$ 49.74	$ 42.93
Granted (in dollars per share)		30.29	65.97	57.60
Exercised (in dollars per share)		36.81	41.99	19.47
Forfeited (in dollars per share)		54.54	56.66	60.17
Expired (in dollars per share)			54.36	74.53
Outstanding at the end of the period (in dollars per share)		48.44	54.21	49.74	$ 42.93
Exercisable at the end of the period (in dollars per share)		53.06
Weighted Average Grant-date Fair Value
Granted (in dollars per share)		$ 14.39	$ 40.14	$ 31.76
Weighted Average Remaining Term (years)
Outstanding at the end of the period weighted average remaining term		7 years 1 month 6 days	7 years 2 months 12 days	7 years 7 months 6 days	7 years 9 months 18 days
Exercisable at the end of the period weighted average remaining term		5 years 10 months 24 days
Aggregate Intrinsic Value
Outstanding at the beginning of the period intrinsic value (in dollars)		$ 6,761	$ 2,221	$ 16,785
Exercised at the end of the period intrinsic value (in dollars)		216	3,335	5,863
Outstanding at the end of the period intrinsic value (in dollars)		372	6,761	2,221	$ 16,785
Exercisable at the end of the period intrinsic value (in dollars)		347
Unrecognized option costs		$ 6,000
Period of cost recognition		2 years 7 months 6 days
Proceeds from stock option exercised		$ 300	5,500	2,800
Stock options exercise tax benefit		$ 43	$ 700	$ 600

STOCK-BASED COMPENSATION - RSA activity (Details) - USD ($) $ / shares in Units, $ in Millions		1 Months Ended	3 Months Ended	12 Months Ended
	Jan. 17, 2020	May 31, 2020	Jun. 30, 2020	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Award expiration period	10 years
Allocated share-based compensation expense				$ 12.8	$ 9.1	$ 6.7
Arthur Przybyl [Member]
Options, nonvested (in shares)		63,305
Options, vested (in shares)		101,376
Allocated share-based compensation expense			$ 3.4	$ 3.4
Restricted Stock [Member]
Unvested, Shares, Outstanding, Beginning of period				192,000	117,000	85,000
Unvested Shares, Granted				305,000	122,000	65,000
Unvested Shares, Vested				(127,000)	(42,000)	(33,000)
Unvested Shares, Forfeited				(18,000)	(5,000)
Unvested Shares, Outstanding, End of period				352,000	192,000	117,000	85,000
Weighted Average Grant Date Fair Value, Outstanding, Beginning of period				$ 61.46	$ 54.04	$ 48.34
Weighted Average Grant Date Fair Value, Granted				44.42	66.39	58.11
Weighted Average Grant Date Fair Value, Vested				58.88	54.77	47.34
Weighted Average Grant Date Fair Value, Forfeited				51.53	62.63
Weighted Average Grant Date Fair Value, Outstanding, End of period				$ 48.14	$ 61.46	$ 54.04	$ 48.34
Weighted Average Remaining Term (years)				2 years 8 months 12 days	2 years 7 months 6 days	2 years 1 month 6 days	2 years 7 months 6 days
Unrecognized non-option costs				$ 12.6
Period of cost recognition				2 years 8 months 12 days
Restricted Stock [Member] \| Employees and Consultants [Member]
Vesting period				4 years
Restricted Stock [Member] \| Non Employee Director [Member]
Vesting period				1 year
Restricted Stock [Member] \| Arthur Przybyl [Member]
Unvested Shares, Outstanding, End of period		48,448

INCOME TAXES - Provision (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
INCOME TAXES - Provision (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Current income tax provision:
Federal									$ 9,232	$ 4,985	$ 7,985
State									559	1,212	1,751
Total									9,791	6,197	9,736
Deferred income tax (benefit)/provision:
Federal									(14,125)	(6,274)	(4,630)
State									744	(2,027)	(556)
Foreign									345	1,000	(214)
Total									(13,036)	(7,301)	(5,400)
Change in valuation allowance									(169)	(1,833)	221
Total (benefit)/provision for income taxes	$ 1,253	$ (371)	$ (1,443)	$ (2,853)	$ (2,817)	$ 64	$ (653)	$ 469	$ (3,414)	$ (2,937)	$ 4,557

INCOME TAXES - Effective rate (Details)	12 Months Ended
INCOME TAXES - Effective rate (Details)	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
INCOME TAXES
US Federal statutory rate	21.00%	21.00%	21.00%
State taxes, net of Federal benefit	1.90%	3.20%	2.40%
Foreign taxes	(0.10%)	0.40%	26.50%
Change in valuation allowance	0.70%	(58.10%)	(26.50%)
Stock-based compensation	(2.50%)	(6.70%)	(1.80%)
Non-deductible costs	(3.50%)	9.10%
Change in state apportionment factors, state and foreign rates	(7.30%)	(28.10%)
Research and experimentation and charitable credits	0.90%	(33.50%)
Transfer pricing and other	2.00%	(0.20%)	1.10%
Effective income tax rate	13.10%	(93.00%)	22.70%

INCOME TAXES - Deferred tax (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Deferred tax assets:
Accruals and advances	$ 7,174	$ 8,586
Stock-based compensation	4,277	3,750
Accruals for chargebacks and returns	13,831	7,603
Inventory	6,101	4,720
Intangible asset	21,911	14,923
Net operating loss carryforwards	4,090	4,767
Other	2,171	1,459
Total deferred tax assets	59,555	45,808
Deferred tax liabilities:
Depreciation	(5,913)	(6,029)
Intangible assets	(11)	(13)
Other	(1,664)	(1,008)
Total deferred tax liabilities	(7,588)	(7,050)
Valuation allowance	(263)	(432)
Deferred tax assets, net of deferred tax liabilities and valuation allowance	$ 51,704	$ 38,326

INCOME TAXES - Information (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Aug. 06, 2018
Deferred tax assets and liabilities	$ 51,704	$ 38,326
Valuation allowance	263	432
Operating loss carryforwards	10,500
ANI Canada [Member]
Deferred tax assets and liabilities				$ 1,900
Valuation allowance	300	$ 300	$ 1,900
Operating loss carryforwards	6,500
Federal [Member]
Operating loss carryforwards	$ 800

COMMITMENTS AND CONTINGENCIES - Leases expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Operating lease, weighted average remaining lease term	1 year 7 months 6 days
Operating lease costs	$ 223	$ 190
Variable lease costs	66	60
Total lease costs	$ 289	$ 250
Minimum
Operating lease liability (in percent)	3.99%
Maximum
Operating lease liability (in percent)	8.95%

COMMITMENTS AND CONTINGENCIES - Lease maturity (Details) $ in Thousands	Dec. 31, 2020 USD ($)
COMMITMENTS AND CONTINGENCIES
2021	$ 138
2022	97
2023	52
2024	26
2025 and thereafter	6
Total	319
Discount	(18)
Lease liability	301
Current lease liability	$ (129)
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Accrued Liabilities, Current
Non-current lease liability	$ 172
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Other Liabilities, Noncurrent

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
COMMITMENTS AND CONTINGENCIES
Long-term purchase commitment, amount									$ 2,800
Revenue recognition	$ 57,252	$ 52,979	$ 48,470	$ 49,774	$ 47,966	$ 51,337	$ 54,357	$ 52,887	208,475	$ 206,547	$ 201,576
Unapproved Products [Member]
COMMITMENTS AND CONTINGENCIES
Revenue recognition									16,900	20,700	24,900
Unapproved Products [Member] \| Contract Customer [Member]
COMMITMENTS AND CONTINGENCIES
Revenue recognition									$ 2,800	$ 3,100	$ 2,000

- Definition

+ References

+ Details

CORTROPHIN PRE-LAUNCH CHARGES (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2020	Dec. 31, 2019
CORTROPHIN PRE-LAUNCH CHARGES
Cortrophin pre-launch charges	$ 6,500	$ 11,263	$ 6,706

CEO DEPARTURE (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended	12 Months Ended
CEO DEPARTURE (Details) - USD ($) $ in Millions	May 31, 2020	Jun. 30, 2020	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
CEO Departure
Allocated share-based compensation expense			$ 12.8	$ 9.1	$ 6.7
Arthur Przybyl [Member]
CEO Departure
Termination benefits period	2 years
Employee expense			6.5
Severance and bonus			3.1
Allocated share-based compensation expense		$ 3.4	$ 3.4

RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
SPI Pharmaceuticals, Inc. [Member]
Related Party Transaction [Line Items]
Payments to related party	$ 352,000	$ 208,000

SUBSEQUENT EVENTS (Details) - Subsequent Event [Member] $ / shares in Units, $ in Millions	Mar. 08, 2021 USD ($) $ / shares shares
PIPE Investment [Member]
SUBSEQUENT EVENTS
Stock issued, value	$ 25.0
Stock issued (in shares) \| shares	25,000
Share price (in dollars per share) \| $ / shares	$ 1,000
Senior Secured Credit Facility 2021 [Member]
SUBSEQUENT EVENTS
Maximum borrowing capacity	$ 340.0
Senior Secured Credit Facility 2021 [Member] \| Term Loan [Member]
SUBSEQUENT EVENTS
Maximum borrowing capacity	300.0
Senior Secured Credit Facility 2021 [Member] \| Revolver [Member]
SUBSEQUENT EVENTS
Maximum borrowing capacity	40.0
Novitium Pharma [Member]
SUBSEQUENT EVENTS
Cash outflow in merger	$ 89.5
Equity issued in merger (in shares) \| shares	2,466,667
Contingent consideration	$ 46.5
Equity issued in merger, value	$ 74.0

QUARTERLY FINANCIAL DATA (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
QUARTERLY FINANCIAL DATA
Net Revenues	$ 57,252	$ 52,979	$ 48,470	$ 49,774	$ 47,966	$ 51,337	$ 54,357	$ 52,887	$ 208,475	$ 206,547	$ 201,576
Total operating expenses	56,921	50,177	59,777	57,616	52,637	44,009	45,065	48,485	224,491	190,196	166,217
Operating (loss)/ income	331	2,802	(11,307)	(7,842)	(4,671)	7,328	9,292	4,402	(16,016)	16,351	35,359
Benefit/(provision) for income taxes	(1,253)	371	1,443	2,853	2,817	(64)	653	(469)	3,414	2,937	(4,557)
Net (loss)/income	$ (3,635)	$ 434	$ (12,336)	$ (7,011)	$ (4,835)	$ 3,895	$ 6,585	$ 449	$ (22,548)	$ 6,094	$ 15,494
Basic and diluted (loss)/earnings per share:
Basic earnings/(loss) per share	$ (0.30)	$ 0.04	$ (1.03)	$ (0.59)	$ (0.41)	$ 0.32	$ 0.55	$ 0.04	$ (1.88)	$ 0.51	$ 1.31
Diluted (Loss)/Earnings Per Share	$ (0.30)	$ 0.04	$ (1.03)	$ (0.59)	$ (0.41)	$ 0.32	$ 0.53	$ 0.04	$ (1.88)	$ 0.50	$ 1.30
Inventory reserve charges					$ 4,600
Cortrophin pre-launch charges					$ 6,500				$ 11,263	$ 6,706