RESTRUCTURING

3 Months Ended

Mar. 31, 2023

Restructuring and Related Activities [Abstract]

NOTE 5. RESTRUCTURING

2020 Restructuring Initiative

There have been no material charges or cash payments associated with the 2020 Restructuring Initiative in 2023.

The following pre-tax net amounts related to the 2020 Restructuring Initiative are included in the Company’s Condensed Consolidated Statements of Operations during the three months ended March 31, 2022 (in thousands):


	Three Months Ended March 31,
		2022
Net restructuring charges related to:
Accelerated depreciation		$	3,677

Inventory adjustments		766
Employee separation, continuity and other benefit-related costs		2,378
Certain other restructuring costs		574
Total		$	7,395

These pre-tax net amounts were primarily attributable to our Generic Pharmaceuticals segment, which incurred $5.0 million of pre-tax net charges during the three months ended March 31, 2022. The remaining amounts related to our other segments and certain corporate unallocated costs.

As of December 31, 2022, cumulative amounts incurred to date included charges related to accelerated depreciation of $51.0 million, asset impairments related to certain identifiable intangible assets, operating lease assets and disposal groups totaling $49.5 million, inventory adjustments of $11.6 million, employee separation, continuity and other benefit-related costs, net of $53.9 million and certain other restructuring costs of $3.5 million. Of these amounts, $134.3 million was attributable to the Generic Pharmaceuticals segment, with the remaining amounts relating to our other segments and certain corporate unallocated costs.


	Three Months Ended March 31,
		2022
Net restructuring charges included in:
Cost of revenues		$	3,259
Selling, general and administrative		1,156
Research and development		2,980


Total		$	7,395

2022 Restructuring Initiative

In April 2022, the Company communicated the initiation of actions to streamline and simplify certain functions, including its commercial organization, to increase its overall organizational effectiveness and better align with current and future needs. In December 2022, the Company announced it would be taking certain additional actions to cease the production and sale of QWO® in light of market concerns about the extent and variability of bruising following initial treatment as well as the potential for prolonged skin discoloration. These actions, which are collectively referred to herein as the 2022 Restructuring Initiative, were initiated with the expectation of, among other things, generating cost savings, with a portion to be reinvested to support the Company’s key strategic priority to expand and enhance its product portfolio. In December 2022, the Bankruptcy Court approved an order authorizing the Company to cease the production and commercialization of QWO® and granting related relief.

As a result of the 2022 Restructuring Initiative, the Company’s global workforce is ultimately expected to be reduced by up to approximately 190 net full-time positions. The Company expects to realize annualized pre-tax cash savings (without giving effect to the costs described below) of approximately $105 million to $125 million by the end of 2023, primarily related to reductions in Selling, general and administrative expenses and Cost of revenues. Future costs associated with the 2022 Restructuring Initiative are not expected to be material.

There have been no material charges associated with the 2022 Restructuring Initiative in 2023.

The following pre-tax net amounts related to the 2022 Restructuring Initiative are included in the Company’s Condensed Consolidated Statements of Operations during the three months ended March 31, 2022 (in thousands):


	Three Months Ended March 31,
		2022
Net restructuring charges related to:


Inventory adjustments		$	1,557
Employee separation, continuity and other benefit-related costs		20,320
Certain other restructuring costs		7,555
Total		$	29,432

These pre-tax net amounts were primarily attributable to our Branded Pharmaceuticals segment, which incurred $16.3 million of pre-tax net charges during the three months ended March 31, 2022. The remaining amounts related to our Generic Pharmaceuticals segment and certain corporate unallocated costs.

As of December 31, 2022, cumulative amounts incurred to date included charges related to asset impairments related to certain identifiable intangible assets of $180.2 million, inventory adjustments of $34.9 million, employee separation, continuity and other benefit-related costs, net of $28.3 million and certain other restructuring costs of $8.7 million. Of these amounts, $238.6 million was attributable to the Branded Pharmaceuticals segment, with the remaining amounts related to our Generic Pharmaceuticals segment and certain corporate unallocated costs.


	Three Months Ended March 31,
		2022
Net restructuring charges included in:
Cost of revenues		$	12,115
Selling, general and administrative		13,626
Research and development		3,691


Total		$	29,432

Changes to the liability for the 2022 Restructuring Initiative during the three months ended March 31, 2023 were as follows (in thousands):


	Employee Separation, Continuity and Other Benefit-Related Costs



Liability balance as of December 31, 2022	$	14,997

Cash payments	(9,687)
Liability balance as of March 31, 2023	$	5,310

The liability at March 31, 2023 is classified as current and is included in Accounts payable and accrued expenses in the Condensed Consolidated Balance Sheets.