Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

The changes in goodwill were as follows (in thousands):


	Years Ended December 31,
	2023		2022
Balance, beginning of period	$	598,853	$	593,017
Goodwill acquired during the period	—		7,553
Adjustment during the period for the Puniska Acquisition	—		3,075
Currency translation	(224)		(4,792)
Balance, end of period	$	598,629	$	598,853

As of December 31, 2023, $366.3 million, $162.8 million, and $69.5 million of goodwill was allocated to the Specialty, Generics, and AvKARE segments, respectively. As of December 31, 2022, $366.3 million, $163.1 million, and $69.5 million of goodwill was allocated to the Specialty, Generics, and AvKARE segments, respectively. For the year ended December 31, 2022, goodwill acquired during the period was associated with the Saol Acquisition. Refer to Note 3. Acquisitions for additional information about the Saol Acquisition and Puniska Acquisition.

Interim Goodwill and In-Process Research and Development Intangible Asset Impairment Tests

On June 30, 2023, the Company received a complete response letter (“CRL”) from the FDA regarding its new drug application (“NDA”) for IPX203 for the treatment of Parkinson’s disease. The CRL indicated that although an adequate scientific bridge was established for the safety of one ingredient, levodopa, based on pharmacokinetic studies, it was not adequately established for the other ingredient, carbidopa, and the FDA requested additional information. The CRL did not identify any issues with respect to the efficacy or manufacturing of IPX203. As of June 30, 2023, the Company identified the receipt of this CRL as an indicator of impairment, performed the necessary fair value test, and concluded that the IPX203 IPR&D intangible asset was not impaired.

During October 2023, the Company met with the FDA to align on the path to approval for IPX203. During the meeting, the FDA asked the Company to perform a QT study, a routine cardiac safety study that is required for new drugs. The Company considered the FDA’s requirement for a QT study in its June 30, 2023 fair value test. On February 7, 2024, the Company provided a complete response resubmission to the FDA for IPX203.

Additionally, in light of the significance of IPX203 to the Specialty reporting unit, the Company performed an interim goodwill impairment test for its Specialty reporting unit, which is the same as the Company’s Specialty reportable segment, as of June 30, 2023. Based on the results of this test, the Company determined that the estimated fair value of the Specialty reporting unit exceeded its carrying value and there was no impairment of goodwill as of June 30, 2023. Refer to the section Annual Goodwill Impairment Test below for additional information.

Annual Goodwill Impairment Test

The Company performed a quantitative annual goodwill impairment test for the Generics and Specialty reporting units and a qualitative annual goodwill impairment test for the AvKARE reporting unit on October 1, 2023, the measurement date. The quantitative analysis performed included estimating the fair value of each reporting unit using both the income and market approaches. Based on the results of the annual impairment tests, the Company determined that the estimated fair values of the Generics and Specialty reporting units exceeded their respective carrying amounts as of the measurement date. Additionally, the Company concluded, as of the measurement date, that it was more likely than not that the fair value of the AvKARE reporting unit exceeded its carrying value and its goodwill was not impaired. Therefore, the Company did not record an impairment charge for the year ended December 31, 2023. Except for the receipt of the IPX203 CRL, there were no indicators of goodwill impairment during the year ended December 31, 2023, including the period subsequent to the measurement date.

In performing the quantitative annual goodwill impairment test, the Company utilized long-term growth rates for its Generics and Specialty reporting units ranging from no growth to 1.0% and a discount rate of 13.0% in its estimation of fair value. As of October 1, 2023, the estimated fair value of the Generics reporting unit was in excess of its carrying value by approximately 46%, and the estimated fair value of the Specialty reporting unit was in excess of its carrying value by approximately 88%. A 500-basis point increase in the assumed discount rates utilized in each test would not have resulted in a goodwill impairment charge in the Company's Generics or Specialty reporting units.

While management believes the assumptions used were reasonable and commensurate with the views of a market participant, changes in key assumptions for these reporting units, including increasing the discount rate, lowering forecasts for revenue and operating margin or lowering the long-term growth rate, could result in a future goodwill impairment.

Intangible assets were comprised of the following (in thousands):


	December 31, 2023							December 31, 2022
	Weighted- Average Amortization Period (in years)	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Amortizing intangible assets:
Product rights	6.3	$	1,198,971	$	(703,297)	$	495,674	$	1,222,762	$	(573,281)	$	649,481

Other intangible assets	3.3	111,800		(72,896)		38,904		133,800		(77,943)		55,857
Total		1,310,771		(776,193)		534,578		1,356,562		(651,224)		705,338
In-process research and development		355,845		—		355,845		390,755		—		390,755
Total intangible assets		$	1,666,616	$	(776,193)	$	890,423	$	1,747,317	$	(651,224)	$	1,096,093

For the year ended December 31, 2023, the Company recognized a total of $66.9 million of intangible asset impairment charges, of which $36.1 million was recognized in cost of goods sold and $30.8 million was recognized in in-process research and development impairment charges. Cost of sales impairment charges for the year ended December 31, 2023 of $36.1 million primarily related to a reduction in promotional focus on LYVISPAH™, resulting in significantly lower than forecasted future cash flows. IPR&D impairment charges for the year ended December 31, 2023 of $30.8 million were related to one Generics asset and one Specialty asset, both of which experienced adverse clinical trials results in the fourth quarter of 2023 and resulted in significantly lower than expected future cash flows.

For the year ended December 31, 2022, the Company recognized a total of $24.1 million of intangible asset impairment charges, of which $11.1 million was recognized in cost of goods sold and $13.0 million was recognized in in-process research and development impairment charges. Cost of sales impairment charges for the year ended December 31, 2022 of $11.1 million related to currently marketed products of which (i) one product experienced significant price erosion during 2022, resulting in significantly lower than expected future cash flows and negative margins, (ii) the supply agreement of one product was terminated during 2022 and therefore the asset was not recoverable and (iii) one product was no longer expected to be sold to a key customer, and therefore the asset was not recoverable. IPR&D impairment charges for the year ended December 31, 2022 of $13.0 million related to (i) one asset that experienced a delay in its expected launch date and (ii) one asset that experienced significant expected price erosion, both of which resulted in significantly lower than expected future cash flows.

For the year ended December 31, 2021, the Company recognized a total of $23.4 million of intangible asset impairment charges, of which $22.7 million was recognized in cost of goods sold and $0.7 million was recognized in in-process research and development impairment charges. For the currently marketed products, five products experienced significant price erosion during 2021, resulting in significantly lower than expected future cash flows and negative margins. Of the five currently marketed products that experienced significant price erosion during 2021, Levothyroxine contributed $17.7 million of the $22.7 million in impairment charges included within cost of goods sold (refer to Note 5. Alliance and Collaboration for additional information about the Company’s Levothyroxine license with JSP). Additionally, the supply agreements for two currently marketed products were terminated early due to market conditions. The IPR&D impairment charge of $0.7 million was related to one product that experienced a delay in its expected launch date, resulting in significantly lower than expected future cash flows.

Amortization expense related to intangible assets for the years ended December 31, 2023, 2022 and 2021 was $163.2 million, $172.1 million and $172.7 million, respectively.

The following table presents future amortization expense for the next five years and thereafter, excluding $355.8 million of IPR&D intangible assets (in thousands):


	Future Amortization
2024	$	159,059
2025	119,404
2026	70,708
2027	50,380
2028	31,656
Thereafter	103,371
Total	$	534,578