GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2022

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

8. GOODWILL AND INTANGIBLE ASSETS

Goodwill

As a result of our 2013 merger with BioSante Pharmaceuticals, Inc. (“BioSante”), we recorded goodwill of $1.8 million. As a result of our acquisition of WellSpring Pharma Services Inc., we recorded additional goodwill of $1.7 million in 2018. From our acquisition of Novitium in 2021, we recorded goodwill of $24.6 million. We have two operating segments, which are the same as our two reporting units, Generics, Established Brands, and Other reporting unit and the Rare Disease reporting unit. All of the goodwill is recorded in our Generics, Established Brands, and Other reporting unit.

For the goodwill impairment analyses performed at October 31, 2022 and 2021, 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. 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, 2022 and 2021, and therefore no quantitative testing for impairment was required.

In addition to the qualitative impairment analysis performed at October 31, 2022, there were no events or changes in circumstances that would have reduced the fair value of our reporting unit below its carrying value from October 31, 2022 to December 31, 2022. No impairment loss was recognized during the years ended December 31, 2022, 2021, and 2020, and the balance of goodwill was $28.2 million and $27.9 million as of December 31, 2022 and 2021, respectively.

Intangible Assets

The components of net definite-lived intangible assets and net indefinite-lived intangible assets other than goodwill are as follows:

	December 31, 2022				December 31, 2021				Weighted Average
	Gross Carrying		Accumulated		Gross Carrying		Accumulated		Amortization
(in thousands)	Amount		Amortization		Amount		Amortization		Period
Definite-Lived Intangible Assets:
Acquired ANDA intangible assets	$	195,862	$	(75,606)	$	168,536	$	(54,079)	8.3	years
NDAs and product rights		242,372		(162,188)		242,372		(138,835)	9.9	years
Marketing and distribution rights		17,157		(13,309)		17,157		(12,347)	5.5	years
Non-compete agreement		624		(602)		624		(513)	7.0	years
Customer relationships		24,900		(4,150)		24,900		(593)	7.0	years
Indefinite-Lived Intangible Assets:
In process research and development		26,575		—		46,900		—	Indefinite
Total Intangible Assets, net	$	507,490	$	(255,855)	$	500,489	$	(206,367)	8.9	years

During 2022, $20.3 million was reclassified from IPR&D to ANDA intangible assets upon completion of projects and launch of related products. We also added $7.2 million in ANDA intangible assets related to the July 21, 2022 transaction with Oakrum Pharma, LLC (Note 9). These assets will be amortized over a seven-year useful life.

Indefinite-Lived Intangible Assets impairment analysis was performed as of October 31, 2022. We performed qualitative assessments to determine whether it was more likely than not that the assets were 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 assets. Based on our assessments of the aforementioned factors, it was determined that it was more likely than not that the fair value of assets are greater than their carrying amount as of October 31, 2022, and therefore no quantitative testing for impairment was

required. In addition to the qualitative impairment analysis performed, there were no events or changes in circumstances that would have reduced the fair value of assets below their carrying value from October 31, 2022 to December 31, 2022. During the year ended December 31, 2022, we recognized a full impairment of a definite-lived ANDA asset with a remaining carrying value of $0.1 million.

Amortization expense was $49.5 million, $41.8 million, and $39.9 million for the years ended December 31, 2022, 2021, and 2020, respectively. Refer to Note 9 for more details on acquired definite-lived and indefinite-lived intangible assets.

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

(in thousands)
2023	$	51,792
2024		50,996
2025		48,893
2026		35,574
2027		26,663
2028 and thereafter		37,717
Total	$	251,635

Expected amortization expense is an estimate. Actual amounts of amortization expense may differ due to timing of regulatory approvals related to IPR&D assets, additional intangible assets acquired, impairment of intangible assets, and other events.