REVENUE RECOGNITION AND RELATED ALLOWANCES

3 Months Ended

Mar. 31, 2024

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION AND RELATED ALLOWANCES

REVENUE RECOGNITION AND RELATED ALLOWANCES

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized 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.

Revenues are primarily derived from sales of generic, rare disease, and established brand pharmaceutical products, royalties, and other pharmaceutical services. Revenue is recognized when obligations under the terms of contracts with customers are satisfied, which generally occurs when control of the products sold are transferred to the customer. Variable consideration is estimated after the consideration of applicable information that is reasonably available. The Company generally does not have incremental costs to obtain contracts that would otherwise not have been incurred. The Company does 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 the accompanying unaudited interim condensed consolidated statements of operations is considered to be revenue from contracts with customers. The following table depicts the disaggregation of revenue:

	Three Months Ended
Products and Services	March 31, 2024		March 31, 2023
(in thousands)
Sales of generic pharmaceutical products	$	70,217	$	63,713
Sales of established brand pharmaceutical products, royalties, and other pharmaceutical services	30,276		26,743
Sales of rare disease pharmaceutical products	36,937		16,330
Total net revenues	$	137,430	$	106,786

	Three Months Ended
Timing of Revenue Recognition	March 31, 2024		March 31, 2023
(in thousands)
Performance obligations transferred at a point in time	$	137,430	$	106,411
Performance obligations transferred over time	—		375
Total	$	137,430	$	106,786

In the three months ended March 31, 2024 and 2023, the Company did not incur, and therefore did not defer, any material incremental costs to obtain or fulfill contracts. The Company recognized a decrease of $0.1 million to net revenue from performance obligations satisfied in prior periods during the three months ended March 31, 2024, consisting primarily of revised estimates for variable consideration, including chargebacks, rebates, returns, and other allowances, related to prior period sales. We recognized an increase of $5.1 million to net revenue from performance obligations satisfied in prior periods during the three months ended March 31, 2023, consisting primarily of revised estimates for variable consideration, including chargebacks, rebates, returns, and other allowances, related to prior period sales. Additionally, as of March 31, 2024, and December 31, 2023, there was no deferred revenue recorded on the condensed consolidated balance sheet.

As of March 31, 2024, the aggregate amount of the transaction price allocated to the remaining performance obligations for all open contract manufacturing customer contracts was $3.0 million, which consists of firm orders for contract manufactured products. The Company recognizes revenue for these performance obligations as they are satisfied, which is anticipated within six months.

Variable consideration

Sales of 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.

The following table summarizes activity in the condensed consolidated balance sheets for accruals and allowances for the three months ended March 31, 2024 and 2023, respectively:

	Accruals for Chargebacks, Returns, and Other Allowances
(in thousands)	Chargebacks		Government Rebates		Returns		Administrative Fees and Other Rebates		Prompt Payment Discounts
Balance at December 31, 2022	$	148,562	$	10,872	$	33,399	$	9,442	$	6,488
Accruals/Adjustments	146,113		4,461		4,640		12,026		5,483
Credits Taken Against Reserve	(193,859)		(6,726)		(3,931)		(12,018)		(6,538)
Balance at March 31, 2023 (1)	$	100,816	$	8,607	$	34,108	$	9,450	$	5,433
Balance at December 31, 2023	$	84,208	$	12,168	$	29,678	$	11,412	$	4,865
Accruals/Adjustments	131,097		5,952		12,521		14,811		5,635
Credits Taken Against Reserve	(137,779)		(8,611)		(9,346)		(13,085)		(5,641)
Balance at March 31, 2024 (1)	$	77,526	$	9,509	$	32,853	$	13,138	$	4,859

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(1)Chargebacks and Prompt Payment Discounts are included as an offset to accounts receivable in the unaudited interim condensed consolidated balance sheets. Administrative Fees and Other Rebates are included as an offset to accounts receivable or as accrued expenses and other in the unaudited interim condensed consolidated balance sheets. Returns are included in returned goods reserve in the unaudited interim condensed consolidated balance sheets. Government Rebates are included in accrued government rebates in the unaudited interim condensed consolidated balance sheets.

Credit Concentration

ANI's customers are primarily wholesale distributors, chain drug stores, group purchasing organizations, and pharmaceutical companies.

During the three months ended March 31, 2024, there were four customers that accounted for 10% or more of net revenues. During the three months ended March 31, 2023, there were three customers that accounted for 10% or more of net revenues. As of March 31, 2024, accounts receivable from these customers totaled 81% of Accounts receivable, net.

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

	Three Months Ended
	March 31, 2024		March 31, 2023
Customer 1	34	%	33	%
Customer 2	13	%	15	%
Customer 3	10	%	14	%
Customer 4	13	%	7	%