AMRX

Amneal Pharmaceuticals, Inc. (the “Company”, “we,” “us,” or “our”) is a diversified, global biopharmaceutical company that develops, manufactures, markets, and distributes a diverse portfolio of essential medicines. Our Affordable Medicines segment includes retail generics, injectables, and biosimilars. In our Specialty segment, we offer a portfolio of branded pharmaceuticals focused primarily on central nervous system and endocrine disorders. Through our AvKARE segment, we are a distributor of pharmaceuticals and other products for the U.S. federal government, retail, and institutional markets. We operate principally in the U.S., India, and Ireland. The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under Item 1A. Risk Factors in our 2025 Annual Report on Form 10-K, in Item 1A. Risk Factors of Part II of this Quarterly Report on Form 10-Q and under the heading Cautionary Note Regarding Forward-Looking Statements included elsewhere in this Quarterly Report on Form 10-Q. The following discussion and analysis for the three and six months ended June 30, 2026 should also be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements for the year ended December 31, 2025 included in our 2025 Annual Report on Form 10-K. Overview We have three reportable segments: Affordable Medicines, Specialty, and AvKARE. Refer to Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Annual Report on Form 10-K for a description of our segments. Agreement to Acquire Kashiv Biosciences, LLC On April 21, 2026, we entered into a definitive agreement to acquire 100% of the outstanding membership interests in Kashiv BioSciences, LLC (a related party, as described in Note 18. Related Party Transactions in this Quarterly Report on Form 10-Q and Note 22. Related Party Transactions in our 2025 Annual Report on Form 10-K) (“Kashiv”) in a transaction (the “Transaction”) with consideration that includes $375 million of cash and 28,942,108 shares of Class A common stock of the Company at closing, subject to certain purchase price adjustments for cash, and the funding of operations between signing and closing, among others. Consideration also includes up to $350 million in potential contingent payments based on the achievement of certain regulatory milestones in the United States and potential contingent royalties equal to 25% of the amount by which annual aggregate gross profits for certain products exceed specified gross profit hurdle amounts for the corresponding annual royalty periods during the twelve-year period following the closing of the transaction. The transaction was approved by a vote of the holders of the Company’s common stock not party to the transaction, and the issuance of Class A common stock as consideration was approved by a vote of the Company’s common shareholders on July 31, 2026. Closing of the transaction, which is expected in the third quarter of 2026, remains subject to the satisfaction of customary closing conditions. Upon closing of the transaction, we will issue 28,942,108 shares of our Class A common stock. As a result, our stockholders will own a smaller percentage of the Company after the acquisition and will thereafter have a reduced voting and economic interest in the Company. Kashiv is a vertically integrated biopharmaceutical company with numerous commercial and advanced clinical-stage assets and is among the few U.S.-based companies to both manufacture and receive marketing authorization for multiple biosimilars. Water Damage to India Facility During the third week of July 2026, severe rain caused water damage to one of our facilities in India. We are currently undertaking remediation efforts and completing repairs. As of the date of this Quarterly Report, we estimate that inventory losses, property damage, remediation costs, and other incremental expenses could range from approximately $10 million to $15 million before any potential insurance recoveries, with most of the impact expected during the second half of 2026. We maintain property and business interruption insurance. The amount and timing of any potential insurance recoveries have not yet been determined. These estimates are preliminary and may change as the assessment and remediation activities continue. 35 Since the severe rain and resulting water damage occurred subsequent to June 30, 2026, no amounts related to this event have been recognized in our consolidated financial statements as of and for the three and six months ended June 30, 2026. We expect production volumes and operating results to be adversely affected during the second half of 2026. In addition, separate from the estimated direct losses and costs described above, we currently estimate that this event could result in approximately $20 million of lost pre-tax profit during the same period. The magnitude of the impact will depend on the timing of repairs and the availability of alternative manufacturing capacity. Certain Market, Industry, and Geopolitical Factors The Pharmaceutical Industry The pharmaceutical industry is highly competitive and highly regulated. As a result, we face a number of industry-specific factors and challenges, which can significantly impact our results. For a more detailed explanation of our business and its risks, refer to our 2025 Annual Report on Form 10-K, as supplemented by Part II, Item 1A “Risk Factors” of our subsequent Quarterly Reports on Form 10-Q. Inflation While it is difficult to accurately measure the impact of inflation, we do not currently expect a material impact related to inflation for the year ending December 31, 2026. Notwithstanding our estimates, rising inflationary pressures due to higher input costs (including higher material, transportation, supply, labor and other costs whether as a result of supply chain disruption, tariffs or otherwise) could exceed our expectations, which would further adversely impact our operating results in future periods. Trade Policy and Tariffs We are subject to certain trade and tariff requirements imposed by the U.S. and various foreign governments. The great majority of our net sales rely on finished dosage forms (“FDF”) or active pharmaceutical ingredients (“API”) produced in the U.S. or India. We have limited reliance on imports from Europe and China, and no reliance on imports from Mexico or Canada. Since 2025, the U.S. government has taken a number of actions affecting trade policy for pharmaceuticals, including initiating investigations into pharmaceutical imports and announcing various tariff measures, as discussed in Part II., Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our 2025 Annual Report on Form 10-K. These actions have included the imposition and subsequent invalidation of certain tariffs under the International Emergency Economic Powers Act by the U.S. Supreme Court, as well as the establishment of additional tariffs pursuant to several other authorities that include product‑specific exemptions. On May 13, 2026, the President announced the findings of a Section 232 investigation into pharmaceutical imports and the imposition of tariffs on certain FDF and API, under which certain branded pharmaceutical products and their APIs are subject to tariffs of up to 100%, with the potential for tariff reductions and various product-, company-, and country-specific exceptions. We are currently evaluating the potential impact of these measures, the ultimate effect of which will depend on the availability and terms of any applicable exceptions, and any additional guidance or actions taken by the Administration. Generic and biosimilar products, as well as their associated APIs, were exempted from this action. On July 21, 2026, the President announced a preliminary proposal that generic drugs imported into the U.S. would remain subject to no tariffs through July 31, 2028, after which tariffs would increase to 100% for one year and 200% thereafter. As of the date of this Quarterly Report on Form 10-Q, the announced policy has not been formally implemented and significant uncertainties remain regarding its scope, including the treatment of APIs, biosimilars, global supply chains and potential exemptions. Based on the announced timing, we do not expect a material direct impact on our 2026 results; however, if implemented as announced, the tariffs could materially increase the cost of products manufactured by us or third parties outside the U.S., adversely affecting gross margins, product availability and our competitive position. We are evaluating our product-level exposure and potential mitigation actions, including expanding U.S. manufacturing, alternative sourcing, supplier arrangements, pricing actions and portfolio changes, but we cannot currently estimate the impact on our future financial condition, results of operations or cash flows. 36 Results of Operations Comparison of Three Months Ended June 30, 2026 to Three Months Ended June 30, 2025 Consolidated Results The following table sets forth our summarized, consolidated results of operations for the three months ended June 30, 2026 and 2025 (in thousands): Three Months Ended June 30, Change 2026 2025 $ % Net revenue $ 796,197 $ 724,508 $ 71,689 9.9 % Cost of goods sold 461,689 438,255 23,434 5.3 % Gross profit 334,508 286,253 48,255 16.9 % Selling, general and administrative 148,722 124,266 24,456 19.7 % Research and development 39,017 47,964 (8,947) (18.7) % Intellectual property legal development expenses 2,087 2,017 70 3.5 % Acquisition costs 7,600 — 7,600 nm Restructuring and other charges 554 1,024 (470) (45.9) % Charges (credit) related to legal matters, net 8,057 (390) 8,447 nm Other operating income (1,298) — (1,298) nm Operating income 129,769 111,372 18,397 16.5 % Total other expense, net (58,779) (59,661) 882 (1.5) % Income before income taxes 70,990 51,711 19,279 37.3 % Provision for income taxes 1,376 16,101 (14,725) (91.5) % Net income $ 69,614 $ 35,610 $ 34,004 95.5 % nm - not meaningful Net Revenue Net revenue for the three months ended June 30, 2026 increased 9.9% from the prior year period, primarily due to: •Growth in our Affordable Medicines segment net revenue of $56.5 million, primarily due to new products launched in 2026 and 2025, which contributed $44.8 million of year-over-year growth, as well as an increase in sales of women’s health medicines due to market conditions, partially offset by price erosion. •Growth in our Specialty segment net revenue of $21.3 million, primarily driven by increases in sales of CREXONT® ($17.6 million), BREKIYA® autoinjector ($5.5 million), and UNITHROID® ($5.9 million), partially offset by the expected decline in sales of RYTARY®. •A decline in our AvKARE segment net revenue of $6.1 million, primarily driven by a reduction in our low margin distribution sales, partially offset by expansion in our government label channel from new product introductions. Cost of Goods Sold and Gross Profit Cost of goods sold increased 5.3% for the three months ended June 30, 2026 as compared to the prior year period. The increase in cost of goods sold was primarily due to increases in sales volume, plant and freight costs, and inventory obsolescence, partially offset by a reduction in amortization expense. Gross profit as a percentage of net revenue increased to 42.0% for the three months ended June 30, 2026 from 39.5% in the prior year period primarily due to lower amortization expense and operating leverage from higher sales volume. 37 Selling, General, and Administrative Selling, general, and administrative (“SG&A”) expenses for the three months ended June 30, 2026 increased 19.7% as compared to the prior year period, primarily due to increases in employee compensation and launch costs associated with CREXONT® and BREKIYA® autoinjector. Research and Development Research and development (“R&D”) expenses for the three months ended June 30, 2026 decreased 18.7% as compared to the prior year period, primarily driven by a $2.9 million decrease in in-licensing and upfront milestone payments and lower employee compensation costs as a result of operational efficiencies. Acquisition Costs Acquisition costs for the three months ended June 30, 2026 were primarily related to professional services fees (e.g., legal, financial advisory, accounting, and consulting) associated with the previously announced agreement to acquire Kashiv (see Note 18. Related Party Transactions). Charges (Credit) Related to Legal Matters, Net For the three months ended June 30, 2026, charges related to legal matters, net were $8.1 million, primarily consisting of charges related to antitrust class action litigation. For additional information regarding the antitrust class action litigation, refer to Note 16. Commitments and Contingencies. Other Operating Income Other operating income for the three months ended June 30, 2026 was primarily comprised of income earned from the India Production Linked Incentive Scheme for the Pharmaceutical Sector (the “PLI Scheme”). Total Other Expense, Net Total other expense, net for the three months ended June 30, 2026 decreased 1.5% as compared to the prior year period. The decrease was primarily driven by a $10.1 million period-over-period decrease in interest expense due to lower interest rates on our variable-rate debt and a $2.0 million period-over-period decrease in the tax receivable agreement charge (refer to Note 4. Income Taxes), partially offset by unfavorable foreign currency movements. Provision for Income Taxes For the three months ended June 30, 2026, our provision for income taxes and effective tax rate were $1.4 million and 1.9%, respectively, as compared to $16.1 million and 31.1%, respectively, for the three months ended June 30, 2025. The period-over-period change in the provision for income taxes was primarily due to the tax impacts from changes in the level and jurisdictional mix of income, the impact of the One Big Beautiful Bill Act (enacted in July 2025), and discrete items related to share-based compensation in the current period. 38 Affordable Medicines The following table sets forth results of operations for our Affordable Medicines segment for the three months ended June 30, 2026 and 2025 (in thousands): Three Months Ended June 30, Change 2026 2025 $ % Net revenue $ 489,913 $ 433,425 $ 56,488 13.0 % Cost of goods sold 282,684 252,646 30,038 11.9 % Gross profit 207,229 180,779 26,450 14.6 % Selling, general and administrative 42,367 34,226 8,141 23.8 % Research and development 33,023 41,899 (8,876) (21.2) % Intellectual property legal development expenses 2,002 1,978 24 1.2 % Restructuring and other charges — 683 (683) nm Charges (credit) related to legal matters, net 8,057 (390) 8,447 nm Other operating income (1,298) — (1,298) nm Operating income $ 123,078 $ 102,383 $ 20,695 20.2 % nm - not meaningful Net Revenue Affordable Medicines net revenue for the three months ended June 30, 2026 increased 13.0% as compared to the prior year period, primarily due to new products launched in 2026 and 2025, which contributed $44.8 million of year-over-year growth, as well as an increase in sales of women’s health medicines due to market conditions, partially offset by price erosion. Cost of Goods Sold and Gross Profit Affordable Medicines cost of goods sold for the three months ended June 30, 2026 increased 11.9% as compared to the prior year period, primarily due to increases in sales volume, plant and freight costs, and inventory obsolescence. Affordable Medicines gross profit as a percentage of net revenue increased to 42.3% for the three months ended June 30, 2026 from 41.7% in the prior year period, primarily due to favorable product mix from recently launched products and higher sales volumes, partially offset by increased plant and freight costs and inventory obsolescence. Selling, General, and Administrative Affordable Medicines SG&A expense for the three months ended June 30, 2026 increased 23.8% as compared to the prior year period, primarily due to increases in employee compensation, regulatory fees, and freight costs. Research and Development Affordable Medicines R&D expenses for the three months ended June 30, 2026 decreased 21.2% as compared to the prior year period, primarily driven by a $2.9 million decrease in in-licensing and upfront milestone payments and lower employee compensation costs as a result of operational efficiencies. Charges (Credit) Related to Legal Matters, Net For the three months ended June 30, 2026, charges related to legal matters, net were $8.1 million, primarily consisting of charges related to antitrust class action litigation. For additional information regarding the antitrust class action litigation, refer to Note 16. Commitments and Contingencies. Other Operating Income Other operating income for the three months ended June 30, 2026 was primarily comprised of income earned from the PLI Scheme. 39 Specialty The following table sets forth results of operations for our Specialty segment for the three months ended June 30, 2026 and 2025 (in thousands): Three Months Ended June 30, Change 2026 2025 $ % Net revenue $ 149,295 $ 128,043 $ 21,252 16.6 % Cost of goods sold 48,265 55,795 (7,530) (13.5) % Gross profit 101,030 72,248 28,782 39.8 % Selling, general and administrative 40,095 30,314 9,781 32.3 % Research and development 5,994 6,065 (71) (1.2) % Intellectual property legal development expenses 85 39 46 117.9 % Restructuring and other charges — 341 (341) (100.0) % Operating income $ 54,856 $ 35,489 $ 19,367 54.6 % Net Revenue Specialty net revenue for the three months ended June 30, 2026 increased 16.6% compared to the prior year period, primarily driven by increases in sales of CREXONT® ($17.6 million), BREKIYA® autoinjector ($5.5 million), and UNITHROID® ($5.9 million), partially offset by the expected decline in sales of RYTARY®. Cost of Goods Sold and Gross Profit Specialty cost of goods sold for the three months ended June 30, 2026 decreased 13.5% compared to the prior year period, primarily due to a reduction in amortization expense of $14.1 million and revenue mix, partially offset by increased sales volume. Specialty gross profit as a percentage of net revenue increased to 67.7% for the three months ended June 30, 2026 as compared to 56.4%, primarily as a result of the factors noted above. Selling, General, and Administrative Specialty SG&A expense for the three months ended June 30, 2026 increased 32.3% as compared to the prior year period, primarily due to increased launch costs associated with CREXONT® and BREKIYA® autoinjector, as well as increased employee compensation. Research and Development Specialty R&D expense for the three months ended June 30, 2026 decreased 1.2% as compared to the prior year period, primarily due to increased operational efficiencies. 40 AvKARE The following table sets forth results of operations for our AvKARE segment for the three months ended June 30, 2026 and 2025 (in thousands): Three Months Ended June 30, Change 2026 2025 $ % Net revenue $ 156,989 $ 163,040 $ (6,051) (3.7) % Cost of goods sold 130,740 129,814 926 0.7 % Gross profit 26,249 33,226 (6,977) (21.0) % Selling, general and administrative 16,913 15,079 1,834 12.2 % Operating income $ 9,336 $ 18,147 $ (8,811) (48.6) % Net Revenue AvKARE net revenue for the three months ended June 30, 2026 decreased 3.7% as compared to the prior year period, primarily driven by a reduction in our low margin distribution sales, partially offset by expansion in our government label channel from new product introductions. Cost of Goods Sold and Gross Profit AvKARE cost of goods sold for the three months ended June 30, 2026 increased 0.7% as compared to the prior year period, primarily due to an increase in inventory obsolescence of $5.6 million and higher sales in our government label channel, partially offset by reduced sales in our low margin distribution channel. Gross profit as a percentage of net revenue decreased to 16.7% for the three months ended June 30, 2026 from 20.4% in the prior year period, primarily as a result of the factors noted above. Selling, General and Administrative AvKARE SG&A expense for the three months ended June 30, 2026 increased 12.2% as compared to the prior year period, primarily due to increased employee compensation. 41 Comparison of Six Months Ended June 30, 2026 to Six Months Ended June 30, 2025 Consolidated Results The following table sets forth our summarized, consolidated results of operations for the six months ended June 30, 2026 and 2025 (in thousands): Six Months Ended June 30, Change 2026 2025 $ % Net revenue $ 1,518,716 $ 1,419,928 $ 98,788 7.0 % Cost of goods sold 864,095 877,784 (13,689) (1.6) % Gross profit 654,621 542,144 112,477 20.7 % Selling, general and administrative 287,582 242,554 45,028 18.6 % Research and development 77,400 88,004 (10,604) (12.0) % Intellectual property legal development expenses 3,629 3,784 (155) (4.1) % Acquisition costs 12,753 — 12,753 nm Restructuring and other charges 1,204 1,595 (391) (24.5) % Charges (credit) related to legal matters, net 8,751 (390) 9,141 nm Other operating income (8,239) (5,122) (3,117) 60.9 % Operating income 271,541 211,719 59,822 28.3 % Total other expense, net (120,375) (122,522) 2,147 (1.8) % Income before income taxes 151,166 89,197 61,969 69.5 % Provision for income taxes 3,552 28,969 (25,417) (87.7) % Net income $ 147,614 $ 60,228 $ 87,386 145.1 % nm - not meaningful Net Revenue Net revenue for the six months ended June 30, 2026 increased 7.0% from the prior year period primarily due to: •Growth in our Affordable Medicines segment net revenue of $65.0 million, primarily due to new products launched in 2026 and 2025, which contributed $45.2 million of year-over-year growth, as well as increases in sales of women’s health and attention deficit hyperactivity disorder medicines due to market conditions, partially offset by price erosion. •Growth in our Specialty segment net revenue of $46.2 million, primarily driven by increases in sales of CREXONT® ($29.8 million), BREKIYA® autoinjector ($10.1 million), and UNITHROID® ($8.5 million), partially offset by the expected decline in sales of RYTARY®. •Decline in our AvKARE segment net revenue of $12.4 million, primarily driven by a reduction in our low margin distribution sales, partially offset by expansion in our government label channel from new product introductions. Cost of Goods Sold and Gross Profit Cost of goods sold for the six months ended June 30, 2026 decreased 1.6% compared to the prior year period. The decrease in cost of goods sold was primarily due to the mix of revenues, including a reduction in low margin distribution sales, increased manufacturing efficiencies, and a reduction in amortization expense of $26.0 million, partially offset by increases in sales volume, plant and freight costs, and inventory obsolescence. Gross profit as a percentage of net revenue increased to 43.1% for the six months ended June 30, 2026 from 38.2% in the prior year period, primarily as a result of the factors noted above. 42 Selling, General, and Administrative SG&A expenses for the six months ended June 30, 2026 increased 18.6% as compared to the prior year period, primarily due to increases in employee compensation and launch costs associated with CREXONT® and BREKIYA® autoinjector. Research and Development R&D expenses for the six months ended June 30, 2026 decreased 12.0% as compared to the prior year period, primarily driven by a $5.6 million reduction in in-licensing and upfront milestone payments, lower employee compensation costs and other overhead reductions due to operational efficiencies, partially offset by increased project spend. Acquisition Costs Acquisition costs for the six months ended June 30, 2026 were primarily related to professional services fees (e.g., legal, due diligence, financial advisory, accounting, and consulting) associated with the previously announced agreement to acquire Kashiv (see Note 18. Related Party Transactions). Charges (Credit) Related to Legal Matters, Net For the six months ended June 30, 2026, charges related to legal matters, net were $8.8 million, primarily consisting of (i) a $21.2 million charge associated with certain states electing a 25% cash conversion in lieu of product under the Nationwide Opioids Settlement Agreement, partially offset by a $20.8 million discount recorded on the expected settlement payments as of the agreement’s effective date and (ii) charges associated with antitrust class action litigation. For additional information regarding the Nationwide Opioids Settlement Agreement and antitrust class action litigation, refer to Note 16. Commitments and Contingencies. Other Operating Income Other operating income for the six months ended June 30, 2026 was primarily comprised of a $6.9 million gain recognized during the first quarter of 2026 from the derecognition of the financing obligation associated with a contract with Pfizer and income earned from the PLI Scheme. Refer to Note 3. Alliance and Collaboration for additional information about our contract with Pfizer. Other operating income for the six months ended 2025 was comprised of income earned from the PLI Scheme. Total Other Expense, Net Total other expense, net for the six months ended June 30, 2026 decreased 1.8% as compared to the prior year period. The decrease was driven by a period-over-period decrease in the tax receivable agreement charge of $15.0 million (refer to Note 4. Income Taxes) and a $13.6 million period-over-period decrease in interest expense due to lower rates on our variable-rate debt, partially offset by a $3.5 million loss on refinancing in the first quarter of 2026 and unfavorable foreign currency movements. Provision for Income Taxes For the six months ended June 30, 2026, our provision for income taxes and effective tax rate were $3.6 million and 2.3%, respectively, as compared to $29.0 million and 32.5%, respectively, for the six months ended June 30, 2025. The period-over-period change in the provision for income taxes was primarily due to the tax impacts from changes in the level and jurisdictional mix of income, the impact of the One Big Beautiful Bill Act, and discrete items related to share-based compensation in the current period. 43 Affordable Medicines The following table sets forth results of operations for our Affordable Medicines segment for the six months ended June 30, 2026 and 2025 (in thousands): Six Months Ended June 30, Change 2026 2025 $ % Net revenue $ 913,150 $ 848,133 $ 65,017 7.7 % Cost of goods sold 515,128 495,279 19,849 4.0 % Gross profit 398,022 352,854 45,168 12.8 % Selling, general and administrative 83,685 67,941 15,744 23.2 % Research and development 66,309 72,879 (6,570) (9.0) % Intellectual property legal development expenses 3,495 3,691 (196) (5.3) % Restructuring and other charges — 683 (683) nm Charges (credit) related to legal matters, net 8,751 (390) 9,141 nm Other operating income (8,239) (5,122) (3,117) 60.9 % Operating income $ 244,021 $ 213,172 $ 30,849 14.5 % nm - not meaningful Net Revenue Affordable Medicines net revenue for the six months ended June 30, 2026 increased 7.7% as compared to the prior year period, primarily due to new products launched in 2026 and 2025, which contributed $45.2 million of year-over-year growth, as well as increases in sales of women’s health and attention deficit hyperactivity disorder medicines due to market conditions, partially offset by price erosion. Cost of Goods Sold and Gross Profit Affordable Medicines cost of goods sold for the six months ended June 30, 2026 increased 4.0% as compared to the prior year period, primarily due to increases in sales volume, plant and freight costs, and inventory obsolescence, partially offset by favorable product mix and manufacturing efficiencies. Affordable Medicines gross profit as a percentage of net revenue increased to 43.6% for the six months ended June 30, 2026 from 41.6% in the prior year period, primarily as a result of the factors noted above. Selling, General, and Administrative Affordable Medicines SG&A expense for the six months ended June 30, 2026 increased 23.2% as compared to the prior year period, primarily due to increases in employee compensation, regulatory fees, freight costs, and costs related to our international expansion. Research and Development Affordable Medicines R&D expenses for the six months ended June 30, 2026 decreased 9.0% as compared to the prior year period, primarily driven by a $2.6 million reduction in in-licensing and upfront milestone payments, lower employee compensation costs and other overhead reductions due to operational efficiencies, partially offset by increased project spend. 44 Charges (Credit) Related to Legal Matters, Net For the six months ended June 30, 2026, charges related to legal matters, net were $8.8 million, primarily consisting of (i) a $21.2 million charge associated with certain states electing a 25% cash conversion in lieu of product under the Nationwide Opioids Settlement Agreement, partially offset by a $20.8 million discount recorded on the expected settlement payments as of the agreement’s effective date and (ii) charges associated with antitrust class action litigation. For additional information regarding the Nationwide Opioids Settlement Agreement and antitrust class action litigation, refer to Note 16. Commitments and Contingencies. Other Operating Income Other operating income for the six months ended June 30, 2026 was primarily comprised of a $6.9 million gain recognized during the first quarter of 2026 from the derecognition of the financing obligation associated with a contract with Pfizer, and income earned from the PLI Scheme. Refer to Note 3. Alliance and Collaboration for additional information about our contract with Pfizer. Other operating income for the six months ended 2025 was comprised of income earned from the PLI Scheme. Specialty The following table sets forth results of operations for our Specialty segment for the six months ended June 30, 2026 and 2025 (in thousands): Six Months Ended June 30, Change 2026 2025 $ % Net revenue $ 282,560 $ 236,340 $ 46,220 19.6 % Cost of goods sold 91,285 108,878 (17,593) (16.2) % Gross profit 191,275 127,462 63,813 50.1 % Selling, general and administrative 74,786 61,292 13,494 22.0 % Research and development 11,091 15,125 (4,034) (26.7) % Intellectual property legal development expenses 134 93 41 44.1 % Restructuring and other charges 347 471 (124) (26.3) % Operating income $ 104,917 $ 50,481 $ 54,436 107.8 % Net Revenue Specialty net revenue for the six months ended June 30, 2026 increased 19.6% as compared to the prior year period, primarily driven by increases in sales of CREXONT® ($29.8 million), BREKIYA® autoinjector ($10.1 million), and UNITHROID® ($8.5 million), partially offset by the expected decline in sales of RYTARY®. Cost of Goods Sold and Gross Profit Specialty cost of goods sold for the six months ended June 30, 2026 decreased 16.2% as compared to the prior year period, primarily due to a reduction in amortization expense of $28.0 million and revenue mix, partially offset by increased sales volume. Specialty gross profit as a percentage of net revenue increased to 67.7% for the six months ended June 30, 2026 as compared to 53.9%, primarily as a result of the factors noted above. Selling, General, and Administrative Specialty SG&A expense for the six months ended June 30, 2026 increased 22.0% as compared to the prior year period, primarily due to increased launch costs associated with CREXONT® and BREKIYA® autoinjector, as well as increased employee compensation. 45 Research and Development Specialty R&D expenses for the six months ended June 30, 2026 decreased 26.7% as compared to the prior year period, primarily due to decreased in-licensing and upfront milestone payments of $3.0 million. AvKARE The following table sets forth results of operations for our AvKARE segment for the six months ended June 30, 2026 and 2025 (in thousands): Six Months Ended June 30, Change 2026 2025 $ % Net revenue $ 323,006 $ 335,455 $ (12,449) (3.7) % Cost of goods sold 257,682 273,627 (15,945) (5.8) % Gross profit 65,324 61,828 3,496 5.7 % Selling, general and administrative 33,593 30,773 2,820 9.2 % Operating income $ 31,731 $ 31,055 $ 676 2.2 % Net Revenue AvKARE net revenue for the six months ended June 30, 2026 decreased 3.7% as compared to the prior year period primarily driven by a reduction in our low margin distribution sales, partially offset by expansion in our government label channel from new product introductions. Cost of Goods Sold and Gross Profit AvKARE cost of goods sold for the six months ended June 30, 2026 decreased 5.8% as compared to the prior year period primarily due to reduced sales in our low margin distribution channel, partially offset by higher sales in our government label channel. Gross profit as a percentage of net revenue increased to 20.2% for the six months ended June 30, 2026 from 18.4% in the prior year period, primarily as a result of the factors noted above. Selling, General and Administrative AvKARE SG&A expense for the six months ended June 30, 2026 increased 9.2% as compared to the prior year period, primarily due to increased employee compensation. Liquidity and Capital Resources Our primary source of liquidity is cash generated from operations, available cash on hand, and borrowings under debt financing arrangements as discussed and defined in Note 12. Debt in this Quarterly Report on Form 10-Q and in Note 14. Debt in our 2025 Annual Report on Form 10-K. As of June 30, 2026, we had access to $495.2 million of available capacity under our 2025 Revolving Credit Facility and $125.0 million of available capacity under the Amended and Restated Rondo Revolving Credit Facility. On July 31, 2026, we borrowed $30.0 million under our 2025 Revolving Credit Facility for working capital needs and other general corporate purposes. On August 5, 2026, we borrowed an additional $150.0 million under our 2025 Revolving Credit Facility in anticipation of funding a portion of the cash consideration payable upon the closing of the Kashiv acquisition. The consummation of the acquisition remains subject to the satisfaction or waiver of customary closing conditions and is expected to occur during the third quarter of 2026. As of the date of filing of this Quarterly Report on Form 10-Q, after giving effect to these borrowings, approximately $315.2 million remained available under the 2025 Revolving Credit Facility. We believe these sources are sufficient to fund our planned operations, meet our interest and contractual obligations, including acquisitions, and provide sufficient liquidity over the next 12 months from the date of filing of this Quarterly Report on Form 10-Q. However, our ability to satisfy our working capital requirements and debt obligations will depend upon economic conditions, the impact of international trade policy, including tariffs, our ability to negotiate and maintain satisfactory terms under our borrowing and debt facilities in the future, and demand for our products, which are factors that may be out of our 46 control. Our primary uses of capital resources are to fund operating activities, including R&D expenses associated with new product filings, and pharmaceutical product manufacturing expenses, license payments, spending on production facility expansions, capital equipment, acquisitions, and legal settlements. We estimate that we will invest approximately $150.0 million during 2026 for capital expenditures and associated deposits to support and grow our existing operations, primarily related to investments in manufacturing equipment, information technology, and facilities. Agreement to Acquire Kashiv Biosciences, LLC As discussed in the section titled “Overview” in Item 2., Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report on Form 10-Q, on April 21, 2026, we entered into a definitive agreement to acquire Kashiv, which is expected to close in the third quarter of 2026. At closing, we expect to fund the cash portion of the purchase price of $375 million, subject to certain adjustments including for cash, the funding of operations between signing and closing (subject to a specified cap, calculated on the basis of the period from the date of the purchase agreement until the closing), indebtedness, transaction expenses and working capital fluctuations (relative to a target). In addition, we expect to incur post-closing integration costs. Although these amounts had not been incurred as of June 30, 2026, they represent known cash requirements that are reasonably likely to be incurred in connection with the closing of the acquisition and the integration of Kashiv. We currently expect to fund these requirements through a combination of cash on hand and long-term borrowings. Debt Instruments Over the next 12 months, we expect to make substantial payments, including monthly interest and quarterly principal amounts for our Term Loan Due 2032, semi-annual interest payments on our Senior Notes Due 2032, and contractual payments for leased premises. Refer to Note 12. Debt and Note 20. Subsequent Events in this Quarterly Report on Form 10-Q and Note 14. Debt, Note 16. Leases, and Commitments and Contractual Obligations under Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Annual Report on Form 10-K for additional information. In addition, to finance the planned acquisition of Kashiv, we have utilized a portion of our revolving credit facility and expect to borrow additional funds, which will increase our interest expense and interest payments. On August 3, 2026, we entered into a repricing amendment governing our Term Loan Due 2032, which reduced the applicable interest rate margins on the Term Loan Due 2032 by 50 basis points to 2.50% per annum for SOFR benchmark rate loans and 1.50% per annum for base rate loans. Nationwide Opioids Settlement Agreement The Nationwide Opioids Settlement Agreement became effective on January 29, 2026, and we made our first installment payment of $23.8 million to the settlement administrator on that date. We made an additional installment payment of $12.1 million on February 26, 2026. We expect to make future cash payments of $97.6 million through March 2034, including $12.7 million on March 1, 2027. Refer to Note 16. Commitments and Contingencies in this Quarterly Report on Form 10-Q for additional information. Tax Receivable Agreement As of June 30, 2026, the contingent tax receivable agreement (“TRA”) liability was approximately $129.0 million. During the six months ended June 30, 2026 and 2025, we made payments of $38.8 million and $3.0 million, respectively, associated with the TRA. The timing and amount of any payments under the TRA may vary, depending upon a number of factors including the timing and amount of our taxable income, and the corporate tax rate in effect at the time of realization of our taxable income. The timing and amount of payments may also be accelerated under certain conditions, such as a change of control or other early termination event, which could give rise to our obligation to make TRA payments in advance of tax benefits being realized. For further information, including our recognized current and long-term liabilities for the TRA, refer to Note 4. Income Taxes in this Quarterly Report on Form 10-Q and Item 1A. Risk Factors and Note 5. Income Taxes in our 2025 Annual Report on Form 10-K. 47 Tax-Related and Other Distributions In 2020, we acquired a 65.1% controlling interest in both AvKARE Inc., a Tennessee corporation, now a limited liability company (“AvKARE, LLC”), and Dixon-Shane, LLC d/b/a R&S Northeast LLC, a Kentucky limited liability company (“R&S”). The sellers of AvKARE, LLC and R&S (the “AvKARE Sellers”) hold the remaining 34.9% interest (the “Rondo Class B Units”) in the holding company that directly owns the acquired companies (“Rondo”). We attribute 34.9% of the net income or loss associated with Rondo to redeemable non-controlling interests. During the six months ended June 30, 2026 and 2025, we made cash tax and other distributions of $21.1 million and $25.0 million, respectively, to the AvKARE Sellers. Rondo Redeemable Non-Controlling Interests Beginning January 1, 2026, the holders of the Rondo Class B Units have a put right to require us to purchase their units for a purchase price that is based on a multiple of Rondo’s earnings before income taxes, depreciation, and amortization, subject to the satisfaction of certain financial targets and other conditions. As of June 30, 2026, no conditions have been met that would make redemption probable or otherwise certain. Cash Balances As of June 30, 2026, our cash and cash equivalents consist of cash on deposit and highly liquid investments. A portion of our cash flows are derived outside the U.S. As a result, we are subject to market risk associated with changes in foreign exchange rates. We maintain cash balances at both U.S. based and foreign country based commercial banks. At various times during the year, our cash balances held in the U.S. may exceed amounts that are insured by the Federal Deposit Insurance Corporation. We make our investments in accordance with our investment policy. The primary objectives of our investment policy are liquidity and safety of principal. Cash Flows The following table sets forth our summarized, consolidated cash flows for the six months ended June 30, 2026 and 2025 (in thousands): Six Months Ended June 30, Change 2026 2025 $ % Net cash (used in) provided by: Operating activities $ (47,987) $ 91,227 $ (139,214) (152.6) % Investing activities (144,452) (44,345) (100,107) nm Financing activities 20,306 (80,853) 101,159 (125.1) % Effect of exchange rate changes on cash (1,187) (777) (410) 52.8 % Net decrease in cash, cash equivalents, and restricted cash $ (173,320) $ (34,748) $ (138,572) nm nm - not meaningful Cash Flows from Operating Activities Net cash used in operating activities was $48.0 million for the six months ended June 30, 2026 as compared to net cash provided by operating activities of $91.2 million in the prior year period. The period-over-period decrease was primarily driven by working capital outflows in the current period, including (i) $35.9 million of litigation settlement payments related to the Nationwide Opioids Settlement Agreement (refer to Note 16. Commitments and Contingencies in this Quarterly Report on Form 10-Q for additional information), (ii) $38.8 million paid relating to our TRA liability, (iii) unfavorable collections of trade accounts receivable due to timing and (iv) increases in inventories to support key growth initiatives, partially offset by higher profitability adjusted for non-cash items. Cash Flows from Investing Activities Net cash used in investing activities for the six months ended June 30, 2026 was $144.5 million as compared to $44.3 million in the prior year period. The period-over-period increase was primarily driven by a $75.0 million upfront payment that was 48 capitalized as a product rights intangible asset (refer to Note 3. Alliance and Collaboration in this Quarterly Report on Form 10-Q for additional information) and increased deposits for the future acquisition of property, plant and equipment. Cash Flows from Financing Activities Net cash provided by financing activities was $20.3 million for the six months ended June 30, 2026 as compared to net cash used in financing activities of $80.9 million in the prior year period. The period-over-period increase in net cash provided by financing activities was primarily driven by a $120.5 million increase in net cash inflows from debt and financing activities, as well as a decrease in tax and other distributions to non-controlling interests of $3.9 million, partially offset by an increase in employee payroll tax withholdings on restricted stock unit vesting of $22.7 million. Commitments and Contractual Obligations Our contractual obligations are set forth in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our 2025 Annual Report on Form 10-K. As of June 30, 2026, there have been no material changes to the disclosure presented in our 2025 Annual Report on Form 10-K, except for items discussed above in the section titled “Liquidity and Capital Resources” in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report on Form 10-Q. Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements as of June 30, 2026. Critical Accounting Policies and Estimates For a discussion of our critical accounting policies and estimates, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Annual Report on Form 10-K. There have been no material changes to the disclosures presented in our 2025 Annual Report on Form 10-K. Recently Issued Accounting Standards Recently issued accounting standards are discussed in Note 1. Summary of Significant Accounting Policies.