{"url_path":"/sec/anip/10-k/2026/item-8","section_key":"item-8","section_title":"Item 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-02-27","source_url":"https://www.sec.gov/Archives/edgar/data/1023024/0001023024-26-000014-index.html","accession_number":"0001023024-26-000014","cik":"0001023024","ticker":"ANIP","issuer_name":"ANI PHARMACEUTICALS INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/1023024/0001023024-26-000014-index.html","primary_entity_key":"0001023024","primary_entity_name":"ANI PHARMACEUTICALS INC"},"word_count":30789,"has_tables":true,"body_markdown":"Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA\n\nREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n\nTo the Board of Directors and Stockholders of\n\nANI Pharmaceuticals, Inc.\n\nOpinion on the Financial Statements\n\nWe have audited the accompanying consolidated balance sheets of ANI Pharmaceuticals, Inc. and Subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, comprehensive income (loss), mezzanine equity and stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the consolidated results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.\n\nWe also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 27, 2026 expressed an unqualified opinion.\n\nBasis for Opinion\n\nThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.\n\nCritical Audit Matters\n\nThe critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.\n\nEvaluation of the Chargeback Accrual\n\nAs described in Note 2 to the consolidated financial statements, the Company records variable consideration estimated at the time of sale, for chargebacks. The amount accrued for chargebacks as of December 31, 2025, is approximately $143 million. Management's estimate of the chargeback accrual is based on inventory levels in the distribution channel of wholesalers, impacted by the actual average selling price for each product and the wholesaler acquisition cost, which are utilized to estimate the expected chargeback accrual.\n\nWe identified the chargeback accrual as a critical audit matter as there is especially challenging auditor judgment required with respect to the calculation of the chargeback accrual given certain assumptions used including purchasing trends of distributors and historical product sales used to predict future sales.\n\n82\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nAddressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included assessing the design and testing the effectiveness of controls relating to the chargeback accrual, including management's control over the assumptions used to estimate the accrual. We evaluated the inventory levels in the distribution channel of wholesalers and considered the underlying contracts for the actual average selling price. We also validated the wholesaler acquisition costs for a selection of products. We evaluated the accrual for chargebacks by comparing historically recorded accruals to the actual amount that was ultimately claimed by the wholesalers. We analyzed year over year trends in the accrual in comparison with revenue trends to further evaluate reasonableness of the estimate and consistency with expectations.\n\n/s/ EisnerAmper LLP\n\nWe have served as the Company’s auditor since 2013.\n\nEISNERAMPER LLP\n\nIselin, New Jersey\n\nFebruary 27, 2026\n\n83\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n\nTo the Board of Directors and Stockholders of\n\nANI Pharmaceuticals, Inc.\n\nOpinion on Internal Control over Financial Reporting\n\nWe have audited ANI Pharmaceuticals, Inc. and Subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2025, based on criteria established in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in the Internal Control - Integrated Framework (2013) issued by COSO.\n\nWe also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of ANI Pharmaceuticals, Inc. and Subsidiaries as of December 31, 2025 and 2024, and the related consolidated statements of operations, comprehensive income (loss), mezzanine equity and stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes and our report dated February 27, 2026 expressed an unqualified opinion.\n\nBasis for Opinion\n\nThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.\n\nDefinition and Limitations of Internal Control over Financial Reporting\n\nAn entity’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. An entity’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the entity; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the entity are being made only in accordance with authorizations of management and directors of the entity; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the entity’s assets that could have a material effect on the financial statements.\n\nBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.\n\n/s/ EisnerAmper LLP\n\nEISNERAMPER LLP\n\nIselin, New Jersey\n\nFebruary 27, 2026\n\n84\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI PHARMACEUTICALS, INC. AND SUBSIDIARIES\n\nConsolidated Balance Sheets\n\n(in thousands, except share and per share amounts)\n\nDecember 31,\n2025December 31,\n2024\n\nAssets\n\nCurrent Assets  \n\nCash and cash equivalents$285,585 $144,861 \n\nRestricted cash36 33 \n\nAccounts receivable, net of $171,803 and $127,824 of adjustments for chargebacks and other allowances at December 31, 2025 and 2024, respectively\n281,082 221,726 \n\nInventories143,067 136,782 \n\nPrepaid income taxes11,027 772 \n\nPrepaid expenses and other current assets23,189 17,975 \n\nInvestment in equity securities9,131 6,307 \n\nTotal Current Assets753,117 528,456 \n\nNon-current Assets\n\nProperty and equipment, net62,476 56,863 \n\nDeferred tax assets, net of deferred tax liabilities and valuation allowance69,072 85,106 \n\nIntangible assets, net479,526 541,834 \n\nGoodwill62,480 59,990 \n\nDerivatives and other non-current assets13,706 12,220 \n\nTotal Assets$1,440,377 $1,284,469 \n\nLiabilities, Mezzanine Equity, and Stockholders’ Equity  \n\nCurrent Liabilities  \n\nCurrent debt, net of deferred financing costs$17,268 $9,172 \n\nAccounts payable62,583 45,656 \n\nAccrued royalties48,497 22,626 \n\nAccrued compensation and related expenses37,897 37,725 \n\nAccrued government rebates43,154 18,714 \n\nIncome taxes payable 1,291 5,622 \n\nIncome taxes payable - foreign948 1,899 \n\nReturned goods reserve49,504 39,274 \n\nCurrent contingent consideration167 29 \n\nAccrued expenses and other16,803 13,735 \n\nTotal Current Liabilities278,112 194,452 \n\nNon-current Liabilities  \n\nNon-current debt, net of deferred financing costs and current component291,840 309,108 \n\nNon-current convertible notes, net of deferred financing costs 307,927 305,812 \n\nAccrued licensor payments due— 20,961 \n\nNon-current contingent consideration, net of current 9,610 19,825 \n\nOther non-current liabilities12,164 5,781 \n\nTotal Liabilities$899,653 $855,939 \n\nCommitments and Contingencies (Note 17) \n\nMezzanine Equity  \n\nConvertible Preferred Stock, Series A, $0.0001 par value, 1,666,667 shares authorized; 0 shares issued and outstanding at December 31, 2025 and 25,000 shares issued and outstanding at December 31, 2024\n— 24,850 \n\nStockholders’ Equity  \n\nCommon Stock, $0.0001 par value, 66,000,000 shares authorized; 23,112,577 shares issued and 22,491,281 outstanding at December 31, 2025; $0.0001 par value, 33,333,334 shares authorized 21,537,707 shares issued and 21,108,152 shares outstanding at December 31, 2024\n3 2 \n\nClass C Special Stock, $0.0001 par value, 781,281 shares authorized; 10,864 shares issued and outstanding at December 31, 2025 and 2024 respectively\n— — \n\nPreferred Stock, $0.0001 par value, 1,666,667 shares authorized; 0 shares issued and outstanding at December 31, 2025 and 2024, respectively\n— — \n\nTreasury stock, 621,296 shares of common stock, at cost, at December 31, 2025 and 429,555 shares of common stock, at cost, at December 31, 2024\n(33,249)(21,040)\n\nAdditional paid-in capital596,036 519,653 \n\nAccumulated deficit(23,099)(100,279)\n\nAccumulated other comprehensive income, net of tax1,033 5,344 \n\nTotal Stockholders’ Equity540,724 403,680 \n\nTotal Liabilities, Mezzanine Equity, and Stockholders’ Equity$1,440,377 $1,284,469 \n\n    The accompanying notes are an integral part of these consolidated financial statements.\n\n85\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI PHARMACEUTICALS, INC. AND SUBSIDIARIES\n\nConsolidated Statements of Operations\n\n(in thousands, except per share amounts)\n\nYears Ended December 31,\n\n202520242023\n\nNet Revenues$883,366 $614,376 $486,816 \n\nOperating Expenses   \n\nCost of sales (excluding depreciation and amortization)341,310 250,210 181,513 \n\nResearch and development51,664 44,581 34,286 \n\nSelling, general, and administrative317,745 249,636 161,697 \n\nDepreciation and amortization91,417 67,731 59,791 \n\nContingent consideration fair value adjustment(31,012)(619)1,426 \n\nLoss (gain) on disposal of assets382 (5,347)— \n\nRestructuring activities— — 1,132 \n\nIntangible asset impairment charge767 7,600 — \n\nTotal Operating Expenses, net772,273 613,792 439,845 \n\nOperating Income111,093 584 46,971 \n\nOther Expense, net\n\nUnrealized gain on investment in equity securities2,824 6,307 — \n\nInterest expense, net(20,060)(17,602)(26,940)\n\nOther income (expense), net1,934 (4,033)(159)\n\nLoss on extinguishment of debt— (7,468)— \n\nIncome (Loss) Before Expense (Benefit) for Income Taxes95,791 (22,212)19,872 \n\nIncome tax expense (benefit) 17,454 (3,690)1,093 \n\nNet Income (Loss) $78,337 $(18,522)$18,779 \n\nDividends on Series A Convertible Preferred Stock(1,157)(1,625)(1,625)\n\nNet Income (Loss) Available to Common Shareholders$77,180 $(20,147)$17,154 \n\nBasic and Diluted Income (Loss) Per Share:\n\nBasic Income (Loss) Per Share$3.50 $(1.04)$0.86 \n\nDiluted Income (Loss) Per Share$3.32 $(1.04)$0.85 \n\nBasic Weighted-Average Shares Outstanding20,05319,31818,001\n\nDiluted Weighted-Average Shares Outstanding21,22819,31818,194\n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n86\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI PHARMACEUTICALS, INC. AND SUBSIDIARIES\n\nConsolidated Statements of Comprehensive Income (Loss)\n\n(in thousands)\n\nYears Ended December 31,\n\n202520242023\n\nNet Income (Loss) $78,337 $(18,522)$18,779 \n\nOther comprehensive income (loss), net of tax:   \n\nForeign currency translation adjustment116 (644)44 \n\nLoss on interest rate swap(4,427)(2,869)(3,355)\n\nTotal other comprehensive loss, net of tax(4,311)(3,513)(3,311)\n\nTotal comprehensive income (loss), net of tax$74,026 $(22,035)$15,468 \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n87\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI PHARMACEUTICALS, INC. AND SUBSIDIARIES\n\nConsolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity\n\nFor the Years Ended December 31, 2025, 2024, and 2023\n\n(in thousands)\n\nMezzanine Equity\nSeries A Convertible\nPreferred\nStockMezzanine Equity\nSeries A Convertible\nPreferred Stock\nSharesCommon\nStock\nPar ValueCommon\nStock\nSharesClass C\nSpecial\nStockAdditional\nPaid-in\nCapitalTreasury\nStock\nSharesTreasury\nStockAccumulated Other\nComprehensive\n(Loss) Gain\nNet of TaxAccumulated\nDeficitTotal\nMezzanine Equity\nand Stockholders'\nEquity\n\nBalance, December 31, 2022$24,850 25$1 17,644$— $403,901 149$(5,094)$12,168 $(97,286)$338,540 \n\nStock-based Compensation Expense— —— —— 20,652 —— — — 20,652 \n\nTreasury Stock Purchases for Restricted Stock Vests— —— —— — 115(4,987)— — (4,987)\n\nIssuance of Common Shares upon Stock Option and ESPP Exercise— —— 227— 8,996 —— — — 8,996 \n\nIssuance of Restricted Stock Awards— —— 674— — —— — — — \n\nIssuance of Performance Stock Units— —— 85— — —— — — — \n\nRestricted Stock Awards and Performance Stock Unit Forfeitures— —— (83)— (1)—— — — (1)\n\nIssuance of Common Stock in Public Offering, net of offering costs— —1 2,184— 80,555 —— — — 80,556 \n\nDividends on Convertible Preferred Stock— —— —— — —— — (1,625)(1,625)\n\nOther comprehensive loss— —— —— — —— (3,311)— (3,311)\n\nNet Income— —— —— — —— — 18,779 18,779 \n\nBalance, December 31, 2023$24,850 25$2 20,731$— $514,103 264$(10,081)$8,857 $(80,132)$457,599 \n\nStock-based Compensation Expense— —— —— 29,344 —— — — 29,344 \n\nCapped Call Transaction, net of tax— —— —— (30,281)—— — — (30,281)\n\nTreasury Stock Purchases for Restricted Stock Vests— —— — — — 166(10,959)— — (10,959)\n\nIssuance of Common Shares upon Stock Option and ESPP Exercise— —— 152— 6,488 —— — — 6,488 \n\nIssuance of Restricted Stock Awards— —— 708— — —— — — — \n\nIssuance of Performance Stock Units— —— 74— — —— — — — \n\nRestricted Stock Awards and Performance Stock Units Forfeitures— —— (127)— (1)—— — — (1)\n\nDividends on Series A Convertible Preferred Stock— —— —— — —— — (1,625)(1,625)\n\nOther comprehensive loss— —— —— — —— (3,513)— (3,513)\n\nNet Loss— —— —— — —— — (18,522)(18,522)\n\nBalance, December 31, 2024$24,850 25$2 21,538$— $519,653 430$(21,040)$5,344 $(100,279)$428,530 \n\nStock-based Compensation Expense— —— —— 37,929 —— — — 37,929 \n\nConversion of Series A Convertible Preferred Stock(24,850)(25)1 603— 24,850 —— — — 1 \n\nTreasury Stock Purchases for Restricted Stock Vests— —— —— — 191(12,209)— — (12,209)\n\n88\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nMezzanine Equity\nSeries A Convertible\nPreferred\nStockMezzanine Equity\nSeries A Convertible\nPreferred Stock\nSharesCommon\nStock\nPar ValueCommon\nStock\nSharesClass C\nSpecial\nStockAdditional\nPaid-in\nCapitalTreasury\nStock\nSharesTreasury\nStockAccumulated Other\nComprehensive\n(Loss) Gain\nNet of TaxAccumulated\nDeficitTotal\nMezzanine Equity\nand Stockholders'\nEquity\n\nIssuance of Common Shares upon Stock Option and ESPP Exercise— —— 258 — 13,604 —— — — 13,604 \n\nIssuance of Restricted Stock Awards— —— 729 — — —— — — — \n\nIssuance of Performance Stock Units— —— 80 — — —— — — — \n\nRestricted Stock Awards Forfeitures— —— (95)— — —— — — — \n\nDividends on Series A Convertible Preferred Stock— —— —— — —— — (1,157)(1,157)\n\nOther comprehensive loss— —— —— — —— (4,311)— (4,311)\n\nNet Income— —— —— — —— — 78,337 78,337 \n\nBalance, December 31, 2025$— —$3 23,113$— $596,036 621$(33,249)$1,033 $(23,099)$540,724 \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n89\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI PHARMACEUTICALS, INC. AND SUBSIDIARIES\n\nConsolidated Statements of Cash Flows    \n\n(in thousands)\n\nYear Ended December 31,\n\n202520242023\n\nCash Flows From Operating Activities   \n\nNet income (loss) $78,337 $(18,522)$18,779 \n\nAdjustments to reconcile net income (loss) to net cash and cash equivalents provided by operating activities:   \n\nStock-based compensation37,929 29,344 20,652 \n\nDeferred taxes14,237 (21,913)(11,740)\n\nDepreciation and amortization91,417 67,731 59,791 \n\nUnrealized gain on investment in equity securities(2,824)(6,307)— \n\nNon-cash operating lease expense1,759 1,526 1,269 \n\nNon-cash interest 1,356 642 3,922 \n\nContingent consideration fair value adjustment(31,012)(619)1,426 \n\nLoss (gain) on disposal of assets382 (5,347)— \n\nLoss on extinguishment of debt— 7,468 — \n\nAmortization of inventory step up— 13,599 — \n\nAsset impairment charges767 7,600 — \n\nChanges in operating assets and liabilities, net of acquisitions:   \n\nAccounts receivable, net(58,530)(21,087)3,359 \n\nInventories(5,961)(21,287)(5,841)\n\nPrepaid expenses and other assets(5,024)2,129 (9,015)\n\nAccounts payable15,156 479 7,552 \n\nAccrued royalties25,871 6,350 6,969 \n\nIncome taxes(15,531)(1,415)11,991 \n\nAccrued government rebates24,441 6,160 1,296 \n\nReturned goods reserve10,229 9,102 (3,722)\n\nAccrued expenses, accrued compensation, and other2,226 8,384 12,271 \n\nNet Cash and Cash Equivalents Provided by Operating Activities185,225 64,017 118,959 \n\nCash Flows From Investing Activities   \n\nAcquisition of Alimera, net of cash acquired— (401,280)— \n\nAcquisition of product rights, intangible assets, and other related assets(20,486)(717)(9,643)\n\nAcquisition of property and equipment, net(13,835)(16,236)(8,868)\n\nProceeds from the sale of building— 13,514 — \n\nNet Cash and Cash Equivalents Used in Investing Activities(34,321)(404,719)(18,511)\n\nCash Flows From Financing Activities   \n\nProceeds from convertible notes— 316,250 — \n\nProceeds from term loan — 325,000 — \n\nPurchase of capped call transaction— (40,575)— \n\nProceeds from public offering— — 80,555 \n\nPayments on contingent consideration(26)(12,500)(12,500)\n\nPrincipal payments on borrowings (10,156)(3,531)(3,000)\n\nDebt issuance costs— (17,353)— \n\nRepayment on borrowings under credit agreement— (292,500)— \n\nPayment of accrued licensor payment— (3,750)— \n\nSeries A convertible preferred stock dividends paid(1,157)(1,625)(1,625)\n\nProceeds from stock option exercises and ESPP purchases13,604 6,488 8,996 \n\nTreasury stock purchases for restricted stock vests(12,209)(10,959)(4,987)\n\nNet Cash and Cash Equivalents (Used in) Provided by Financing Activities(9,944)264,945 67,439 \n\nEffect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash(233)(470)— \n\nNet Change in Cash, Cash Equivalents, and Restricted Cash 140,727 (76,227)167,887 \n\nCash and cash equivalents, beginning of year144,894 221,121 53,234 \n\nCash, cash equivalents and restricted cash, end of year$285,621 $144,894 $221,121 \n\n90\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nYear Ended December 31,\n\n202520242023\n\nReconciliation of cash, cash equivalents, and restricted cash, beginning of year\n\nCash and cash equivalents$144,861 $221,121 $48,228 \n\nRestricted cash33 — 5,006 \n\nCash, cash equivalents, and restricted cash, beginning of year$144,894 $221,121 $53,234 \n\nReconciliation of cash, cash equivalents, and restricted cash, end of year\n\nCash and cash equivalents$285,585 $144,861 $221,121 \n\nRestricted cash36 33 — \n\nCash, cash equivalents, and restricted cash, end of year$285,621 $144,894 $221,121 \n\nSupplemental disclosure for cash flow information:   \n\nCash paid for interest, net of amounts capitalized$26,929 $24,379 $31,431 \n\nCash paid for income taxes, net of refunds received $17,674 $19,061 $1,228 \n\nRight-of-use assets obtained in exchange for lease obligations$6,641 $— $4,715 \n\nSupplemental non-cash investing and financing activities:   \n\nPurchase consideration for acquisition of Alimera $— $(8,322)$— \n\nConversion of convertible preferred stock into common stock$24,850 $— $— \n\nProperty and equipment purchased and included in accounts payable$1,050 $529 $328 \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n91\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\n1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES\n\nOrganization and Business\n\nANI Pharmaceuticals, Inc. and its consolidated subsidiaries (collectively, “ANI,” the “Company,” “we,” “us,” or “our”) is a diversified bio-pharmaceutical company. The Company's mission is “Serving Patients, Improving Lives” by developing, manufacturing, and commercializing therapeutics through its Rare Disease, Generics, and Brands businesses.\n\nOn September 16, 2024, the Company acquired Alimera Sciences, Inc. (\"Alimera\"). In connection with the acquisition, the Company added two new products, ILUVIEN® and YUTIQ®, both of which are indicated for the treatment of chronic retinal diseases. See Note 3 \"Business Combination\" in the notes to the consolidated financial statements for further information on the acquisition.\n\nDuring March 2025, the U.S. Food and Drug Administration (the “FDA”) approved an expanded label for ILUVIEN to include an indication for the treatment of chronic non-infectious uveitis affecting the posterior segment of the eye (\"NIU-PS\") in addition to the then-current indication of Diabetic Macular Edema (\"DME\"). The Company is currently marketing ILUVIEN for both indications in the U.S. ILUVIEN was already approved for both DME and NIU-PS outside the U.S., including in seventeen European countries. During the second quarter of 2025, the Company transitioned promotional efforts in the U.S. from YUTIQ to ILUVIEN with its combined label of DME and NIU-PS.\n\nThe Company owns and operates three pharmaceutical manufacturing facilities, including two facilities in Baudette, Minnesota and one in East Windsor, New Jersey, which collectively are capable of producing oral solid dose products, as well as semi-solids, liquids and topicals, controlled substances, and potent products that must be manufactured in a fully-contained environment. The Company ceased operations at another manufacturing facility in Oakville, Ontario as of March 31, 2023. In February 2024, the Company entered into an agreement for the sale of the Oakville site, for a price of $19.2 million Canadian Dollars, or approximately $14.2 million, based on the then-current exchange rate at closing of such transaction. The sale closed on March 28, 2024. See Note 4 \"Restructuring Canada Operations\" in the notes to the consolidated financial statements for further information.\n\nThe Company held its 2025 Annual Meeting of Stockholders (the \"2025 Annual Meeting\") on May 22, 2025. At the 2025 Annual Meeting, the stockholders of the Company approved an amendment to the Company's Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 33.3 million shares to 66.0 million shares.\n\nBasis of Presentation\n\nThe consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).\n\nCertain prior year amounts, such as prepaid income taxes, income taxes payable, and income taxes payable-foreign, have been reclassified for consistency to conform with current year presentation in the consolidated balance sheets. Such reclassifications had no effect on previously reported net income (loss), stockholders' equity, or cash flows.\n\nPrinciples of Consolidation\n\nThe consolidated financial statements include the accounts of ANI Pharmaceuticals, Inc. and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation.\n\n92\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nForeign Currency\n\nThe Company currently has subsidiaries located in Canada, India, Ireland, Germany, and the United Kingdom. The India-based subsidiary generally conducts its transactions in Indian Rupees, which is also its functional currency. The Ireland and Germany subsidiaries generally conduct their transactions in Euros, which is also their functional currency. The United Kingdom subsidiary conducts its transactions in Euros and British Pounds, and its functional currency is Euros. The Canada-based subsidiary conducts its transactions in U.S. dollars and Canadian dollars, but its functional currency is the U.S. dollar.\n\nThe results of any non-U.S. dollar transactions and balances are remeasured in U.S. dollars at the applicable exchange rates during the period and resulting foreign currency transaction gains and losses are included in the determination of net income (loss). Unless otherwise noted, all references to “$” or “dollar” refer to the U.S. dollar. The Company’s asset and liability accounts are translated using the current exchange rate as of the balance sheet date, except for shareholders’ equity accounts, which are translated using historical rates. Net revenues and expense accounts are translated using an average exchange rate over the year ended on the balance sheet date. Adjustments resulting from the translation of the financial statements of the Company’s foreign subsidiaries into U.S. dollars are accumulated as a separate component of shareholders’ equity within accumulated other comprehensive income (loss), net of tax. Foreign currency transaction gains and losses include fluctuations related to long-term intercompany loans. Translation gains and losses on intercompany balances of a long-term investment nature are included in foreign currency translation adjustments in accumulated other comprehensive income (loss).\n\nUse of Estimates\n\nThe preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In the consolidated financial statements, estimates are used for, but not limited to, variable consideration determined based on accruals for chargebacks, administrative fees and rebates, government rebates, returns and other allowances, income tax provision or benefit, deferred taxes and valuation allowance, stock-based compensation, revenue recognition, allowance for inventory obsolescence, valuation of financial instruments and intangible assets, accruals for contingent liabilities, including contingent consideration and contingent value rights in acquisitions, fair value of long-lived assets, determination of right-of-use assets and lease liabilities, allowance for credit losses, and the depreciable lives of long-lived assets. Because of the uncertainties inherent in such estimates, actual results may differ from those estimates. Management periodically evaluates estimates used in the preparation of the financial statements for reasonableness.\n\nBusiness Combination and Goodwill\n\nThe Company accounted for its acquisition of Alimera using the acquisition method of accounting prescribed by ASC 805, Business Combinations, whereby the results of operations, including the revenues and earnings of Alimera, are included in the financial statements from the date of acquisition. Assets acquired and liabilities assumed as of the date of acquisition are recognized at their fair values based on widely accepted valuation techniques in accordance with ASC 820, Fair Value Measurements. Goodwill is recognized for the excess of the consideration transferred over the net fair values of assets acquired and liabilities assumed. Management’s assessment of qualitative factors affecting goodwill for each acquisition includes estimates of market share at the date of purchase, ability to grow in the market, synergy with existing Company operations and the payor profile in the markets. The fair value assigned to the intangible assets was determined using the income approach, specifically the multi-period excess earnings methodology. The process for estimating fair values requires the use of significant estimates, assumptions and judgments, including determining the timing and estimates of future cash flows and developing appropriate discount rates. The estimates of fair value are based upon assumptions believed to be reasonable using the best information available. These assumptions are inherently uncertain and unpredictable and, as a result, actual results may differ materially from estimates.\n\n93\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nASC 805, Business Combinations, establishes a measurement period to provide the Company with a reasonable amount of time to obtain the information necessary to identify and measure various items in a business combination and cannot extend beyond one year from the acquisition date. Measurement period adjustments are recognized in the reporting period in which the adjustments are determined and calculated as if the accounting had been completed as of acquisition date. The Company has completed the final fair value determination of the assets acquired and liabilities assumed from Alimera, within the measurement period, which did not exceed one year from the acquisition date.\n\nInvestment in Equity Securities\n\nThe Company accounts for its investment in equity securities with a readily determinable fair value in accordance with the guidance in ASC 321, Investments – Equity Securities. The Company presents unrealized gains and losses related to the equity securities, within Unrealized gain on investment in equity securities in its consolidated statements of operations. Fair values are obtained from quoted prices on the NASDAQ Stock Market, Inc. (“NASDAQ”).\n\nRestructuring Activities\n\nThe Company defines restructuring activities to include costs directly associated with exit or disposal activities. Such costs include cash employee contractual severance and other termination benefits, one-time employee termination severance and benefits, contract termination charges, impairment and acceleration of depreciation associated with long-lived assets, and other exit or disposal costs. In general, the Company records involuntary employee-related exit and disposal costs when there is a substantive plan for employee severance and related payments are probable and estimable. For one-time termination benefits, including those with a service requirement, expense is recorded when the employees are entitled to receive such benefits and the amount can be reasonably estimated. Expense related to one-time termination benefits with a service requirement is recorded over time, as the service is completed. Contract termination fees and penalties, and other exit and disposal costs are generally recorded as incurred. Restructuring activities are recognized as an operating expense in the consolidated statements of operations.\n\nRevenue Recognition\n\nThe Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized using the following steps:\n\n•Identification of the contract, or contracts, with a customer;\n\n•Identification of the performance obligations in the contract;\n\n•Determination of the transaction price, including the identification and estimation of variable consideration;\n\n•Allocation of the transaction price to the performance obligations in the contract; and\n\n•Recognition of revenue when the Company satisfies a performance obligation.\n\nThe Company derives its revenues primarily from sales of generic, rare disease, and brands portfolio 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 is transferred to the customer. Generally, the Company does not incur incremental costs to obtain contracts that would otherwise not have been incurred. The Company has not identified any agreements or arrangement that would qualify as a significant financing component.\n\nSales 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.\n\n94\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nRevenue from Distribution Agreements\n\nFrom time to time, the Company may enter into marketing and distribution agreements with third parties in which products are sold under Abbreviated New Drug Applications (“ANDAs”) or New Drug Applications (“NDAs”) owned or licensed by third parties. These products are sold under the ANI label. The Company controls the products sold under these marketing and distribution agreements and therefore is the principal for sales under each of these marketing and distribution agreements. As a result, revenue is recognized on a gross basis when control has passed to the customer and the performance obligation has been satisfied. Under these agreements, the Company pays third parties a specified percentage of the gross profit earned on sales of the products. These profit-sharing percentages are recognized in cost of sales in the consolidated statements of operations and are accrued in accrued royalties in the consolidated balance sheets until payment has occurred.\n\nContract Manufacturing Product Sales Revenue\n\nContract manufacturing arrangements consist of agreements in which pharmaceutical products are manufactured by the Company on behalf of a third party. The performance obligation is to manufacture and provide pharmaceutical products to customers, typically pharmaceutical companies. The products are sold at predetermined standalone selling prices and the performance obligation is considered to be satisfied when control of the product is transferred to the customer. Control is transferred to the customer when the product leaves the shipping dock to be shipped to the customer, as contract manufactured pharmaceutical products are sold on an FOB shipping point basis and the inventory risk and risk of ownership passes to the customer at that time. Payment terms for these sales are generally fewer than two months. Typically, there are no material returns for contract manufactured products.\n\nRoyalties from Licensing Agreements\n\nFrom time to time, the Company enters into licensing agreements, under which the Company licenses to the seller the right to sell the acquired products. Because these royalties are sales-based, the Company recognizes the revenue when the underlying sales occur, based on sales and gross profit information received from the sellers. The Company may enter into agreements which include profit-sharing percentages on gross profits. The profit-sharing percentages are recorded in cost of sales in the consolidated statements of operations when the associated revenue is recognized and are recorded in accrued royalties in the consolidated balance sheets when the associated revenue is recognized and until payment has occurred.\n\nCash, Cash Equivalents, and Restricted Cash\n\nAll highly liquid investments with original maturities of three months or less from the date of purchase are classified as cash equivalents. Cash and cash equivalents consist of cash deposited in checking accounts, time deposits with original maturities of less than three months, and money market accounts with original maturities of three months or less at the date of purchase. Cash and cash equivalents include cash on-hand and money market funds which invest exclusively in high-quality, short-term securities that are issued or guaranteed by the U.S. government. Due to the short-term maturity of the funds invested in the money market accounts, the carrying amounts are a reasonable estimate of fair value. The majority of the Company's cash balances are held in interest bearing and non-interest bearing accounts in U.S.-based financial institutions which are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $250 thousand. The majority of the Company's cash balances are in excess of FDIC coverage, which the Company considers to be a normal business risk. In addition, the Company has cash and cash equivalents held in international bank accounts that are denominated in various foreign currencies, specifically in Canada, the United Kingdom, Germany, Ireland, Portugal, and India.\n\nAccounts Receivable\n\nThe Company extends credit to customers on an unsecured basis. Expected credit losses are measured at amortized cost, including trade and unbilled receivables, on a collective basis, based on their similar risk characteristics. Expected credit losses are based on historical credit loss experience, review of the current aging or status of accounts receivable and current and forward-looking views from an economic and industry perspective. Receivables are written off when it is determined that amounts are uncollectible. The allowance for credit losses was not material as of December 31, 2025 and 2024.\n\n95\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nInventories\n\nInventories consist of raw materials, packaging materials, work-in-progress, and finished goods. Inventories are stated at the lower of standard cost or net realizable value. The Company periodically reviews and adjusts standard costs, which generally approximate weighted average cost.\n\nProperty and Equipment\n\nProperty and equipment are recorded at cost. Expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is recorded on a straight-line basis over estimated useful lives as follows:\n\nClassificationYears\n\nBuildings and improvements20-40years\n\nLeasehold improvements Shorter of asset's useful life or remaining life of lease\n\nMachinery, furniture, and equipment3-10years\n\nConstruction in progress consists of multiple projects, primarily related to new equipment and expansion of laboratory and manufacturing facilities to expand manufacturing capability as product lines grow. Construction in progress includes the cost of construction and other direct costs attributable to the construction, along with capitalized interest. Depreciation is not recorded on construction in progress until such time as the assets are placed in service.\n\nThe Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. No impairment loss related to property and equipment was recognized during the years ended December 31, 2025, 2024, and 2023.\n\nLeases\n\nOperating lease right-of-use (\"ROU\") assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Rent expense is recognized on a straight-line basis over the lease term. Leases with an initial term of twelve months or less are not recorded on the consolidated balance sheet, and the Company does not separate lease and non-lease components of contracts. There are no material residual guarantees associated with any of the Company’s leases, and there are no significant restrictions or covenants included in the Company’s lease agreements. Operating lease ROU assets are included in other non-current assets and operating lease liabilities are included in accrued expenses and other and other non-current liabilities in the consolidated balance sheets. As of December 31, 2025, the Company had finance leases that consist of leases for automobiles. Finance leases are included in property and equipment, net, accrued expenses and other current liabilities, and other liabilities on the consolidated balance sheets. Finance lease assets are amortized on a straight-line basis over the shorter of the estimated useful lives of the assets or the lease terms.\n\nIntangible Assets\n\nIntangible assets with definite lives are amortized based on their pattern of economic benefit over their estimated useful lives, or the straight-line amortization method if not materially different, and reviewed periodically for impairment. The definite-lived ANDAs, NDAs and product rights, marketing and distribution rights, customer relationships, and non-compete agreement are stated at cost, net of amortization, and generally amortized over their remaining estimated useful lives, ranging from seven to twelve years, based on the straight-line amortization method. In the case of certain NDA and product rights, an accelerated amortization method is used to better match the anticipated economic benefits expected to be provided. Management reviews definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, in a manner similar to that for property and equipment. During the year ended December 31, 2025, $0.8 million of impairment charges were recognized on intangible assets. During the year ended December 31, 2024, $3.6 million of impairment charges were recognized on intangible assets. During the year ended December 31, 2023, no impairment charges were recognized on intangible assets.\n\n96\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nIndefinite-lived intangible assets other than goodwill include in-process research and development (“IPR&D”) projects. IPR&D intangible assets represent the fair value of technology acquired in a business combination for which the technology projects are incomplete but have substance. When an IPR&D project is completed (generally upon receipt of regulatory approval), the asset is then accounted for as a definite-lived intangible asset. Indefinite-lived intangibles are tested for impairment at least annually, as of October 31, and whenever events or changes in circumstances indicate that the carrying amount of the asset might not be recoverable. Judgment is used in determining when these events and circumstances arise. At December 31, 2025, there was no IPR&D recorded on the balance sheet, and as such no impairment testing was performed, and no impairment charges were recognized on IPR&D. During the year ended December 31, 2024, $4.0 million of impairment charges were recognized on IPR&D. During the year ended December 31, 2023, no impairment charges were recognized on IPR&D.\n\nGoodwill\n\nGoodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost, using the purchase method of accounting, and is related to past business combinations with BioSante Pharmaceuticals, Inc., WellSpring Pharma Services Inc., Novitium, and Alimera. The Company is organized in three reporting units, Generics and Other, Brands, and Rare Disease. Goodwill is not amortized, but is subject to periodic review for impairment. All of the Company's goodwill is recorded in the Generics and Other reporting unit, except for goodwill recorded as a result of the Alimera acquisition, which is recorded in the Rare Disease reporting unit.\n\nThe Company reviews goodwill for impairment on a reporting unit basis annually, on October 31, and whenever events or changes in circumstances indicate the carrying value of goodwill might not be recoverable. Under the authoritative guidance issued by the FASB, the Company has the option to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the goodwill impairment test is performed. The goodwill impairment test requires the Company to estimate the fair value of the reporting unit and to compare the fair value of the reporting unit with its carrying amount. If the fair value exceeds the carrying amount, then no impairment is recognized. If the carrying amount recorded exceeds the fair value calculated, then an impairment charge is recognized for the difference. The judgments made in determining the projected cash flows used to estimate the fair value can materially impact the Company’s financial condition and results of operations.\n\nThe Company assessed the assets qualitatively, and concluded it was more likely than not that the fair value of the reporting units are greater than their carrying value as of October 31, 2025 and 2024, and therefore no quantitative testing for impairment was required. No impairment loss related to goodwill was recognized in the years ended December 31, 2025, 2024, and 2023.\n\nCollaborative Arrangements\n\nThe Company may enter into collaborative arrangements with various commercial partners to further business opportunities. In collaborative arrangements revenues and costs generated by collaborative arrangements may be presented on a gross or net basis depending on the specific facts of the collaborative arrangement.\n\nResearch and Development Expenses\n\nResearch and development (\"R&D\") activities are expensed as incurred. R&D expenses primarily consist of direct and allocated expenses incurred with the process of formulation, clinical research, and validation associated with new product development.\n\n97\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nStock-Based Compensation\n\nThe Company issues stock options, restricted stock awards (\"RSAs\") and restricted stock units (\"RSUs\"), which are awarded in exchange for employee and non-employee director services. From time to time, the Company may grant awards through an inducement grant outside of the incentive plan to induce prospective employees to accept employment with the Company. These grants are made pursuant to inducement grants outside of the shareholder approved equity plan as permitted under the Nasdaq Stock Market listing rules. Stock-based compensation cost for stock options is determined at the grant date using an option pricing model and stock-based compensation cost for restricted stock awards is based on the closing market price of the stock at the grant date. The value of the award is recognized as expense on a straight-line basis over the employee’s requisite service period and classified where the underlying salaries are classified. Forfeitures are accounted for as they occur. Excess tax benefits or tax deficiencies are recognized as a component of the current period provision for income taxes.\n\nAwards may also be issued in the form of Performance Stock Units (“PSUs”) to certain employees of the Company. PSUs represent the right to receive a number of shares of Company common stock, contingent upon the achievement of specified performance objectives during a specified performance period. PSUs granted vest over a three-year performance period. Currently, the vesting of PSUs is contingent upon the Company meeting both certain total shareholder return (“TSR”) levels as compared to a select peer group over the over three years and certain adjusted non-GAAP year-on-year earnings before interest, income taxes, depreciation, and amortization (“EBITDA”) growth rates over the vesting term. The related share-based compensation expense is determined based on the estimated fair value of the underlying shares on the date of grant and is recognized straight-line over the vesting term.\n\nThe Company also administers an Employee Stock Purchase Plan (“ESPP”). The estimated fair value of stock-based compensation awards are recognized and classified in the expense where the underlying salaries are classified.\n\nValuation of stock awards requires us to make assumptions and to apply judgment to determine the fair value of the awards. These assumptions and judgments include estimating the future volatility of the Company's stock price and dividend yields. Changes in these assumptions can affect the fair value estimate.\n\nIncome Taxes\n\nThe Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.\n\nThe Company is subject to taxation in various U.S. jurisdictions, Canada, Europe, and India, and all of its income tax returns remain subject to examination by tax authorities due to the availability of net operating loss carryforwards.\n\nThe Company uses a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company has not identified any uncertain income tax positions that could have a material impact on the consolidated financial statements. The Company recognizes interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense.\n\n98\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nDerivative Instruments and Hedge Accounting\n\nThe Company uses interest rate swaps to hedge exposure to interest rate risk, as well as benefit from favorable conditions. The Company recognizes all derivative instruments as either assets or liabilities at fair value. For all of the Company’s derivative positions that are designated and qualify as part of a cash flow hedging relationship, the effective portion of the gain or loss on the derivatives is reported as a component of other comprehensive income (loss)and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. Gains and losses on derivatives representing any ineffective component of the hedge are recognized in current earnings. All of the Company’s cash flow hedges have been deemed effective as of December 31, 2025 and 2024 for both accounting and tax purposes. The Company has elected hedge accounting for both U.S. GAAP and tax purposes. The Company maintains formal documentation through a periodic memo and accounting analysis that cover what is being hedged, how it is being hedged, hedge effectiveness, the nature of the risk being hedged, among other required analyses. Company policy further includes a quarterly probability analysis covering hedge effectiveness.\n\nContingent Consideration\n\nThe terms of the acquisition agreement between ANI and Novitium Pharma LLC include the potential payment of future consideration that is contingent upon the achievement of certain regulatory and financial performance milestones. At the acquisition date, contingent consideration is recorded at fair value based on the additional consideration expected to be transferred, which is based on the estimate of probability-weighted future cash flows as discounted to present value. Significant inputs used in the measurement of the fair value include discount rates, probabilities of achievement of regulatory-based milestones and payments, and projected revenues and gross profits. The discount rates are derived using accepted valuation methodologies. The probability of achievement of regulatory milestones is based on historical and projected success rates. The projected revenues and gross profits are based on internal forecasts and long-term plans. The contingent consideration is remeasured each reporting period using Level 3 inputs. Changes in fair value, which incorporate changes in assumptions and the passage of time, are recognized as an operating expense in the consolidated statements of operations. Any future payment of contingent consideration will be reported as a financing cash flow for amounts paid up to the acquisition-date fair value of the consideration, and as an operating cash outflow for any amounts in excess of the acquisition-date fair value in the consolidated statement of cash flows.\n\nAccrued Licensor Payments\n\nThe terms of the Product Rights Agreement, dated May 17, 2023, between the Company and EyePoint Pharmaceuticals, Inc. (“EyePoint”) include the potential payment of future consideration that is contingent upon the achievement of annual U.S. net sales of certain products (including YUTIQ and ILUVIEN) in excess of certain thresholds, beginning at $70.0 million in 2025 and increasing annually thereafter. Significant inputs used in the measurement of the fair value include discount rates and probabilities of achievement of net revenue. The discount rates are derived using accepted valuation methodologies. The projected net sales are based on internal forecasts and long-term plans. The contingent payments are remeasured each reporting period using Level 3 inputs. Changes in fair value, which incorporate changes in assumptions and the passage of time, are recognized as an operating expense in the consolidated statements of operations. There were no amounts due and payable during the year ended December 31, 2025.\n\nContingent Value Rights\n\nIn connection with the acquisition of Alimera, the Company issued Contingent Value Rights (\"CVRs\"), which provided for the holders to receive future contingent milestone cash payments based on certain net revenue thresholds established for 2026 and 2027. See Note 12 \"Fair Value\" in the notes to the consolidated financial statements for more information relating to the CVR obligations. The contingent value rights are remeasured each reporting period using Level 3 inputs. Changes in fair value, which incorporate changes in assumptions and the passage of time, are recognized as an operating expense in the consolidated statements of operations. There were no amounts due and payable during the year ended December 31, 2025 or 2024.\n\n99\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nFair Value Measurements\n\nFair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value. These tiers include:\n\n•Level 1—Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.\n\n•Level 2—Observable market-based inputs other than quoted prices in active markets for identical assets or liabilities.\n\n•Level 3—Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.\n\nThe consolidated balance sheets include certain financial instruments (primarily cash and cash equivalents, prepaid expenses, accounts receivable, accounts payable, accrued expenses, and other current liabilities) that are carried at cost and that approximate fair values as of December 31, 2025 and 2024 due to their short term nature. See Note 12 \"Fair Value\" in the notes to the consolidated financial statements for additional information.\n\nRecent Accounting Pronouncements\n\nRecently Issued Accounting Pronouncements Not Yet Adopted\n\nFrom time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.\n\nIn November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE), which specifies additional disclosure requirements. The new guidance requires additional disclosures, including the composition of certain income expense line items (such as purchases of inventory, employee compensation, and \"other expenses\") and a separate disclosure for selling expenses. This change is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, however, early adoption is permitted. The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on the consolidated financial statements and disclosures and anticipates disclosing any impact of the adoption in the annual report on Form 10-K for the fiscal year ended December 31, 2027.\n\nRecently Adopted Accounting Pronouncements\n\nIn December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. The Company adopted ASU 2023-09 in the fourth quarter of 2025, with prospective application. The adoption of ASU 2023-09 has not had a material effect on the Company’s statements and disclosures. See Note 16 \"Income Taxes\" in the notes to the consolidated financial statements.\n\nIn November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures related to significant segment expenses. The Company has adopted the provisions of ASU 2023-07 for the year ended December 31, 2024, and has applied this guidance to the disclosures for the year ended December 31, 2024, and retroactively for all previous periods presented. See Note 19 “Segment Reporting” in the notes to the consolidated financial statements.\n\n100\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\n2. REVENUE RECOGNITION AND RELATED ALLOWANCES\n\nRevenue Recognition\n\nRevenues are primarily derived from sales of generic, rare disease, and brands portfolio 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 is 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 its customers generally pay within 100 days.\n\nAll revenue recognized in the accompanying consolidated statements of operations is considered to be revenue from contracts with customers. The following table depicts the disaggregation of revenue:\n\nYears Ended December 31,\n\nProducts and Services (in thousands)202520242023\n\nRare Disease and Brands\n\nCortrophin Gel$347,778 $198,085 $112,117 \n\nILUVIEN and YUTIQ74,868 31,514 — \n\nRare Disease total net revenues $422,646 $229,599 $112,117 \n\nBrands61,308 64,743 85,384 \n\nRare Disease and Brands total net revenues $483,954 $294,342 $197,501 \n\nGenerics and Other\n\nGeneric pharmaceutical products $384,110 $301,004 $269,449 \n\nRoyalties and other pharmaceutical services15,302 19,030 19,866 \n\nGenerics and Other total net revenues $399,412 $320,034 $289,315 \n\nTotal net revenue $883,366 $614,376 $486,816 \n\nYears Ended December 31,\n\nTiming of Revenue Recognition (in thousands)2025 20242023\n\nPerformance obligations transferred at a point in time$883,366 $614,376 $486,441 \n\nPerformance obligations transferred over time— — 375 \n\nTotal$883,366 $614,376 $486,816 \n\nIn the years ended December 31, 2025 or 2024, the Company did not incur, and therefore did not defer, any material incremental costs to obtain or fulfill contracts. As of December 31, 2025, there were no contract assets recorded which were related to revenue recognized based on percentage of completion but not yet billed.\n\nThe Company recognized a decrease of $2.1 million of net revenue from performance obligations satisfied in prior periods during the year ended December 31, 2025, consisting primarily of revised estimates for variable consideration, including chargebacks, rebates, returns, and other allowances, related to prior period sales.\n\nAs of December 31, 2025, the aggregate amount of the transaction price allocated to the remaining performance obligations for all open contract manufacturing customer contracts was $2.4 million, which consists of firm orders for contract manufactured products. ANI will recognize revenue for these performance obligations as they are satisfied, which is anticipated within six months.\n\n101\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nVariable Consideration\n\nSales 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.\n\nChargebacks\n\nChargebacks, primarily from wholesalers, result from arrangements with indirect customers establishing prices for products which the indirect customer purchases through a wholesaler. Alternatively, the Company may pre-authorize wholesalers to offer specified contract pricing to other indirect customers. Under either arrangement, the Company provides a chargeback credit to the wholesaler for any difference between the contracted price with the indirect customer and the wholesaler’s invoice price, typically Wholesale Acquisition Cost (“WAC”).\n\nPrior period chargebacks claimed by wholesalers are analyzed to determine the actual average selling price (“ASP”) for each product. This calculation is performed by product by wholesaler. ASPs can be affected by several factors such as:\n\n•A change in customer mix,\n\n•A change in negotiated terms with customers,\n\n•A change in the volume of off-contract purchases, and\n\n•Changes in WAC.\n\nAs necessary, ASPs are adjusted based on anticipated changes in the factors above.\n\nThe difference between ASP and WAC is recorded as a reduction in both gross revenues in the consolidated statements of operations and accounts receivable in the consolidated balance sheets, at the time revenue is recognized from the product sale. The Company continually monitors chargeback activity and adjusts ASPs when the Company believes that actual selling prices will differ from current ASPs.\n\nGovernment Rebates\n\nGovernment rebates reserve consists of estimated payments due to governmental agencies for utilization of the Company's products by beneficiaries under such governmental programs. The two largest government programs are Medicaid and Medicare.\n\nThe Company participates in the Medicaid Drug Rebate Program and pays rebates to the states related on Medicaid beneficiary utilization of the Company's products. Medicaid rebates are billed within 60-90 days of the end of the quarter in which the product was dispensed to a Medicaid beneficiary. Medicaid rebate amounts per product unit are established by law, based on the Average Manufacturer Price (“AMP”), which is reported on a monthly and quarterly basis, and, in the case of branded products, best price, which is reported on a quarterly basis.\n\nMedicaid reserves are based on expected utilization from state Medicaid programs. Estimates for expected claims are driven by patient usage, sales mix, calculated AMP or best price, as well as inventory in the distribution channel that will be subject to a Medicaid rebate. As a result of the delay between selling the products, dispensing the products and rebate billing, the Medicaid rebate reserve includes both an estimate of outstanding claims for end-customer sales that have occurred but for which the related invoice has not been received, as well as an estimate for future claims that will be made when inventory in the distribution channel is sold through to Medicaid beneficiaries.\n\n102\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nMany of the Company's products are also covered under Medicare. Through 2024, the Company participated in the Coverage Gap Discount Program (“CGDP”), under which it provided discounts on covered Part D drugs approved under NDAs that were dispensed to Medicare Part D beneficiaries in the coverage gap phase of the benefit. Beginning in 2025, the Company participates in the Medicare Part D Manufacturer Discount Program (“MDP”), which replaces the CGDP under the Inflation Reduction Act of 2022. Under the MDP, the Company is required to provide discounts on covered Part D drugs approved under NDAs or BLAs that are dispensed to Medicare Part D beneficiaries during the initial coverage and catastrophic phases of the benefit. This requirement applies to all covered Part D drugs approved under NDAs or BLAs, including products marketed as authorized generics.\n\nEstimates for these discounts are based on historical experience with Medicare Part D utilization and discount invoicing patterns for applicable products. Medicare Part D discounts are billed quarterly for drugs dispensed to Medicare Part D in the prior quarter, which is typically 120 days after the product is shipped. As a result of the delay between selling the products, dispensing the products and discount invoicing, Medicare Part D discount reserve includes both an estimate of outstanding claims for end-customer sales that have occurred but for which the related claim has not been billed, as well as an estimate for future claims that will be made when inventory in the distribution channel is sold through to Medicare Part D beneficiaries.\n\nTo evaluate the adequacy of government rebate and discount reserves, the Company reviews these reserves on a quarterly basis against actual claims and invoicing data to ensure the liability is reasonably stated. The Company continually monitors the government rebate and discount reserve and adjusts estimates when it expects that actual obligations may differ from established accruals. Accruals for government rebates and discounts are recorded as a reduction to gross revenues in the consolidated statements of operations and as an increase to accrued government rebates in the consolidated balance sheets\n\nReturns\n\nA returns policy is in place that allows customers to return product within a specified period prior to and subsequent to the expiration date. Generally, product may be returned for a period beginning six months prior to its expiration date to up to one year after its expiration date. Product returns are settled through the issuance of a credit to the customer. The estimate for returns is based upon historical experience with actual returns. While such experience has allowed for reasonable estimation in the past, history may not always be an accurate indicator of future returns. The Company continually monitors estimates for returns and make adjustments when it is expected that actual product returns may differ from the established accruals. Accruals for returns are recorded as a reduction to gross revenues in the consolidated statements of operations and as an increase to the return goods reserve in the consolidated balance sheets. Generally, the Company does not accept product returns in international markets, however, there is a limited history of returns in such areas.\n\nAdministrative Fees and Other Rebates\n\nAdministrative fees or rebates are offered to wholesalers, group purchasing organizations, and indirect customers. Fees and rebates are accrued, by product by wholesaler, at the time of sale based on contracted rates and ASPs.\n\nTo evaluate the adequacy of the administrative fee accruals, on-hand inventory counts are obtained from the wholesalers. The Company continually monitors administrative fee activity and adjust accruals when it is expected that actual administrative fees may differ from the accruals. Accruals for administrative fees and other rebates are recorded as a reduction in both gross revenues in the consolidated statements of operations and accounts receivable or accrued expenses in the consolidated balance sheets.\n\nPrompt Payment Discounts\n\nSales discounts may be granted to customers for prompt payment. The reserve for prompt payment discounts is based on invoices outstanding. Based on past experience, it is assumed that all available discounts will be taken. Accruals for prompt payment discounts are recorded as a reduction in both gross revenues in the consolidated statements of operations and accounts receivable in the consolidated balance sheets.\n\n103\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nThe following table summarizes activity in the consolidated balance sheets for accruals and allowances for the years ended December 31, 2025, 2024, and 2023:\n\nAccruals for Chargebacks, Returns, and Other Allowances\n\n(in thousands)Chargebacks Government\nRebates Returns Administrative\nFees and Other\nRebates Prompt\nPayment\nDiscounts\n\nBalance at December 31, 2023 (1)$84,208 $12,168 $29,678 $11,412 $4,865 \n\nAccruals/Adjustments576,461 32,008 38,587 65,661 25,760 \n\nCredits Taken Against Reserve(555,039)(25,462)(28,991)(57,485)(24,367)\n\nBalance at December 31, 2024 (1)$105,630 $18,714 $39,274 $19,588 $6,258 \n\nAccruals/Adjustments677,311 78,276 37,333 86,620 35,993 \n\nCredits Taken Against Reserve(639,489)(53,836)(27,103)(77,295)(33,618)\n\nBalance at December 31, 2025 (1)$143,452 $43,154 $49,504 $28,913 $8,633 \n\n____________________\n\n(1)Chargebacks are included as an offset to accounts receivable, net of chargebacks and other allowances in the consolidated balance sheets. Administrative Fees and Other Rebates and Prompt Payment Discounts are included as a reduction to accounts receivable, net of chargebacks and other allowances or accrued expenses and other in the consolidated balance sheets. Returns are included in returned goods reserve in the consolidated balance sheets. Government Rebates are included in accrued government rebates in the consolidated balance sheets.\n\nCredit Concentration\n\nANI’s customers are primarily national wholesalers, specialty pharmacies, retail pharmacy chains, other U.S. and international distributors, group purchasing organizations, and hospitals and healthcare providers.\n\nDuring the year ended December 31, 2025, there were three customers that accounted for 10% or more of net revenues, made up of wholesale distributors. As of December 31, 2025, accounts receivable from these customers totaled 64% of accounts receivable, net. During the years ended December 31, 2024, and 2023, there were four customers that accounted for 10% or more of net revenues.\n\nThe four customers represent the total percentage of net revenues as follows:\n\nYears Ended December 31,\n\n202520242023\n\nCustomer 117 %25 %31 %\n\nCustomer 29 %11 %13 %\n\nCustomer 314 %12 %13 %\n\nCustomer 422 %16 %12 %\n\n3. BUSINESS COMBINATION\n\nOn September 16, 2024, the Company completed its acquisition of Alimera pursuant to the terms of the Agreement and Plan of Merger, dated as of June 21, 2024 (the “Merger Agreement”), by and among the Company, Alimera and ANIP Merger Sub INC., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”). Pursuant to the Merger Agreement, Merger Sub merged with and into Alimera (the \"Merger\"), with Alimera surviving the Merger as a wholly owned subsidiary of the Company.\n\n104\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nAt the effective time of the Merger, each share of outstanding Alimera common stock (the “Alimera Common Stock”), including each Alimera RSA, Alimera PSU, Alimera RSU, and Alimera Warrant (each as defined below), but excluding any treasury shares or shares owned by the Company, Merger Sub or any other subsidiary of the Company or Alimera, was canceled and ceased to exist and was converted into the right to receive (i) $5.50 in cash (“Closing Cash Consideration”), and (ii) one contingent value right (a “CVR”), which represents the right to receive certain milestone payments subject to the terms and conditions set forth in the CVR Agreement entered into on September 16, 2024 (collectively, the “Merger Consideration”). The CVRs have been remeasured to fair value as of December 31, 2025. See Note 12 “Fair Value” in the notes to the consolidated financial statements.\n\nIn addition to the amounts payable to the holders thereof in connection with the Merger, all of the outstanding awards of restricted shares of Alimera Common Stock (each, an “Alimera RSA”), each Alimera Performance Stock Unit (“Alimera PSU”), each Alimera Restricted Stock Unit (“Alimera RSU”) and each Alimera warrant (\"Alimera Warrant\") that were outstanding immediately prior to the Effective Time were automatically canceled and converted into the right to receive one (1) CVR per share of Alimera Common Stock then underlying the applicable instrument.\n\nEach stock option previously granted by Alimera to purchase Alimera Common Stock (each, an “Alimera Option”) that was outstanding and unexercised as of the Effective Time and which had a per share exercise price that was less than the Closing Cash Consideration was, in addition to the cash amounts payable to the holders thereof in connection with the Closing, automatically canceled and converted into the right to receive one (1) CVR per share of Alimera Common Stock then underlying such Alimera Option. No other Alimera Options were cancelled and converted into the right to receive a CVR, provided that each Alimera Option with a per share exercise price greater than or equal to the Closing Cash Consideration but less than the Consideration (as defined in the Merger Agreement) may receive a payment in connection with the payout of the CVRs (if any).\n\nThis acquisition was accounted for as a business combination. Purchase consideration consisted of the following:\n\n(In thousands, except share price and exchange ratio)Purchase Consideration\n\nAlimera Common Stock outstanding$53,971 \n\nAlimera Warrants outstanding after exercise989 \n\nAlimera Common Stock and Alimera Warrants outstanding54,960 \n\nCash consideration per share$5.50 \n\nCash consideration for Alimera Common Stock$302,280 \n\nRepayment of Alimera Debt$78,540 \n\nPayment of Alimera transaction costs20,172 \n\nCash settlement for pre-acquisition equity awards9,535 \n\nFair value of CVRs8,322 \n\nTotal Merger Consideration$418,849 \n\nThe cash payment was funded through the 2024 Credit Facility (see Note 6 “2024 Credit Agreement” in the notes to the consolidated financial statements), and also cash on-hand from the Company's balance sheet.\n\nAs part of the purchase consideration the Company paid approximately $78.5 million for the repayment of the outstanding term loan Alimera had with SLR Investment Corp., including interest payable, prepayment and end of term fees. Furthermore, the Company repaid $20.2 million of transaction costs incurred by Alimera.\n\nIn accordance with the terms of the Merger Agreement, the Company settled all outstanding equity awards held by Alimera employees, for a total cash amount of $19.3 million, of which, $1.3 million was paid in cash at the close of the Merger. Of the $19.3 million, $9.5 million was determined to be related to the pre-Merger services provided and as a result was allocated to the purchase consideration transferred. The remaining amounts were attributed to the post-Merger period and deemed to be for the benefit of the Company. As a result, $8.8 million was recognized as selling, general, and administrative and $1.0 million as research and development expense, respectively, for the year ended December 31, 2024.\n\n105\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nThe CVRs represent a form of contingent consideration and are included as part of the purchase consideration transferred. The CVRs represent the right to future cash payments for the former Alimera shareholders based on certain 2026 and 2027 revenue targets. Management determined the contingent consideration to be liability classified and will measure the liability at fair value each reporting period. The fair value of the CVRs have been estimated using a Monte Carlo simulation under an option pricing framework, $8.3 million of the total $8.7 million was related to the pre-combination period and recognized as consideration transferred. The remaining $0.4 million of the fair value of the CVR was allocated to post-merger period and recognized as selling, general, and administrative for the year ended December 31, 2024. The CVRs have been remeasured to fair value as of December 31, 2025, see Note 12 “Fair Value” in the notes to the consolidated financial statements.\n\nThe preliminary purchase price allocation, measurement period adjustments, and final purchase price allocation of the fair value of the Alimera acquisition is shown in the table below.\n\n(in thousands)\nPreliminary Purchase Price AllocationMeasurement Period AdjustmentFinal Purchase Price Allocation\n\nCash and cash equivalents$9,247 $— $9,247 \n\nAccounts receivable38,605 175 38,780 \n\nPrepaid expenses and other assets2,618 — 2,618 \n\nInventories19,457 (1,559)17,898 \n\nProperty and equipment3,086 — 3,086 \n\nIntangible assets400,000 — 400,000 \n\nDeferred tax asset, net of deferred tax liabilities and valuation allowance198 (84)114 \n\nDerivative and other non-current assets1,224 — 1,224 \n\nTotal assets$474,435 $(1,468)$472,967 \n\nAccounts payable$8,001 $— $8,001 \n\nAccrued expenses and other11,396 976 12,372 \n\nAccrued government rebates— 385 385 \n\nReturned goods reserve3,095 (2,600)495 \n\nCurrent accrued licensor payment3,684 — 3,684 \n\nDeferred tax liability37,932 1,828 39,760 \n\nAccrued licensor payment, net of current21,316 — 21,316 \n\nOther non-current liabilities2,364 — 2,364 \n\nTotal liabilities$87,788 $589 $88,377 \n\nTotal fair value of consideration transferred$418,849 $— $418,849 \n\nLess: fair value of net acquired identifiable assets and liabilities386,647 (2,057)384,590 \n\nGoodwill$32,202 $2,057 $34,259 \n\nThe net assets were recorded at their estimated fair value. In valuing acquired assets and liabilities, fair value estimates were based primarily on future expected cash flows, market rate assumptions for contractual obligations, and appropriate discount rates.\n\n106\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nSubsequent to the acquisition date, the Company has updated certain amounts above based upon information that was not known to the Company as of the acquisition date. The Company determined that the adjustments are considered measurement period adjustments under the accounting guidance. The Company recorded a net increase to goodwill of approximately $2.1 million as a result of the adjustments based on matters that existed at acquisition date but were not known to the Company at that time. Measurement period adjustments were recorded, from the acquisition date through the end of the measurement period. The purchase price allocation was finalized during the quarter ended September 30, 2025.\n\nThe fair value of finished goods inventory utilizes a sales comparison approach which estimates the selling price of the inventory in completed condition less costs of disposal and a reasonable profit allowance for the selling effort. The identifiable intangible assets acquired are amortized on a straight-line basis over their estimated useful lives. The following table summarizes the estimated fair value of identifiable intangible assets acquired and their amortization period (in years):\n\nFair Value (in thousands)Amortization Period\n\nILUVIEN$230,000 12\n\nYUTIQ$170,000 12\n\nAs part of the Merger, the Company acquired the product rights to ILUVIEN and YUTIQ. The fair value of the acquired intangible assets was determined using an income approach, and more specifically, the multi-period excess earnings methodology.\n\nDuring the second quarter of 2025, the Company transitioned promotional efforts in the U.S. from YUTIQ to ILUVIEN with its combined label of DME and NIU-PS, and as a result the Company combined the ILUVIEN and YUTIQ intangible assets. The Company concluded that there were no changes to expected future cash flows for the combined ILUVIEN definite-lived intangible asset. The fair value of the definite-lived intangible asset was not below its carrying value as of December 31, 2025.\n\nThe estimated deferred tax liability, recognized based on the estimated tax impact of the differences between the financial reporting and tax bases of the assets and liabilities acquired, is included in Deferred tax assets, net of deferred tax liabilities and valuation allowance in the consolidated balance sheet as of December 31, 2024.\n\nGoodwill is calculated as the difference between the fair value of the preliminary aggregate purchase consideration and the values assigned to the identifiable tangible and intangible assets acquired and liabilities assumed. Goodwill represents the workforce acquired, as well as future operating efficiencies and cost savings. The actual amount of goodwill will depend upon the final determination of the fair value of the assets acquired and liabilities assumed and may differ materially from this preliminary determination. Goodwill established as a result of the acquisition is tax deductible in the U.S.\n\nAlimera operations generated approximately $31.5 million of net revenue and recorded a net loss of approximately $14.4 million from the date of acquisition through December 31, 2024.\n\nTransaction Costs\n\nIn conjunction with the acquisition, the Company incurred approximately $2.1 million and $18.1 million in transaction and integration costs during the year ended December 31, 2025 and 2024, respectively, all of which were recognized as selling, general, and administrative expense in the consolidated statement of operations.\n\nPro Forma Consolidated Financial Information (unaudited)\n\nThe following unaudited pro forma financial information summarizes the results of operations for the periods indicated as if the acquisition had been completed as of January 1, 2023.\n\n107\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nYear Ended December 31,\n\n(in thousands)20242023\n\nNet revenues$680,911$567,570\n\nNet loss$(24,338)$(71,552)\n\nThe unaudited pro forma financial information includes, where applicable, adjustments for (i) the amortization of the inventory step-up, (ii) additional amortization expense related to acquired intangible assets, (iii) transaction costs and other one-time non-recurring costs, (iv) additional interest expense for borrowings related to the acquisition, and (v) associated tax-related impacts of adjustments. These pro forma adjustments are based on the available information as of the date hereof and upon assumptions that the Company believes are reasonable to reflect the impact of the acquisition with the Company's historical financial information on a pro forma basis. Adjustments do not include costs related to integration activities, cost savings or synergies that have been or may be achieved by the combined business.\n\n4. RESTRUCTURING CANADA OPERATIONS\n\nOn March 31, 2023 the Company ceased operations at the Oakville, Ontario, Canada manufacturing plant (the \"Property\").\n\nFor the year ended December 31, 2025 and 2024, there were no restructuring activities recorded in the consolidated statements of operations or the consolidated balance sheets.\n\nFor the year ended December 31, 2023, restructuring activities resulted in expenses of $1.1 million. This included $0.2 million of severance and other employee benefit costs and $0.7 million of asset-related impairment and accelerated depreciation costs, and $0.2 million for other miscellaneous costs.\n\nThese costs were recorded as restructuring activities, an operating item, in the accompanying consolidated statements of operations. Certain of the severance and other employee benefit costs contain a service requirement, and as such, were accrued over time as they were earned.\n\nOn February 15, 2024, ANI Pharmaceuticals Canada Inc., a wholly owned subsidiary of the Company, entered into an agreement with 1540700 Ontario Limited for the sale of the Property for a total purchase price of $19.2 million Canadian Dollars, or approximately $14.2 million, based on the then-current exchange rate at closing. On March 28, 2024, the Company completed the sale of the Property. After payment of commissions, real estate taxes, and other related costs of approximately $0.7 million, the Company received net proceeds of approximately $13.5 million at closing. The gain on the sale of the Property was approximately $5.3 million, recorded in the consolidated statements of operations for the year ended December 31, 2024. The land and building had a net carrying value of approximately $8.0 million, which was previously presented as assets held for sale on the consolidated balance sheets as of December 31, 2023.\n\n5. 2021 CREDIT FACILITY\n\nIn connection with the acquisition of Novitium on November 19, 2021, the Company, as borrower, entered into a credit agreement (the “2021 Credit Agreement”) with Truist Bank and other lenders, which provided for credit facilities consisting of (i) a senior secured term loan facility in an aggregate principal amount of $300.0 million (the “2021 Term Facility”) and (ii) a senior secured revolving credit facility in an aggregate commitment amount of $40.0 million, which provided for revolving credit loans, swingline loans and letters of credit (the \"2021 Revolving Facility,\" and together with the 2021 Term Facility, the \"2021 Credit Facility\").\n\nThe Company incurred $14.0 million in deferred debt issuance costs associated with the 2021 Credit Facility. Costs allocated to the 2021 Term Facility were classified as a direct reduction to the current and non-current portion of the borrowings, depending on their nature. Costs allocated to the 2021 Revolving Facility were classified as other current and other non-current assets, depending on their nature. A commitment fee of 0.5% per annum on any unused portion of the 2021 Revolving Facility.\n\n108\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nExtinguishment of the 2021 Credit Facility\n\nOn August 13, 2024, the Company entered into an indenture with U.S. Bank Trust Company, National Association, as trustee, for the issuance of the 2.25% Convertible Senior Notes due 2029 (as described in Note 7 “2.25% Convertible Senior Notes” to the notes to the consolidated financial statements). The proceeds of the Convertible Senior Notes and cash on-hand were used to repay the 2021 Credit Facility in its entirety, or approximately $294.0 million, comprised of $292.5 million of unpaid principal, $1.2 million in accrued and unpaid interest, and $0.3 million of legal fees. In connection with the issuance of the Convertible Senior Notes, the Company recorded a loss on debt extinguishment in the consolidated statement of operations for the year ended December 31, 2024, amounting to approximately $7.5 million, comprised of the write-off unamortized deferred financing fees related to the 2021 Credit Facility as of August 13, 2024.\n\nThe following table sets forth the components of total interest expense related to the 2021 Credit Facility recognized in the accompanying consolidated statements of operations for the years ended December 31:\n\n(in thousands)20242023\n\nContractual coupon$16,644$30,692\n\nAmortization of deferred financing costs 1,4772,363\n\nCapitalized interest(492)(588)\n\n$17,629$32,467\n\n6.    2024 CREDIT AGREEMENT\n\nOn August 13, 2024, the Company, as lead borrower, and ANIP Acquisition Company, as initial subsidiary borrower (“ANIP”) entered into a credit agreement (the “2024 Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and the financial institutions party thereto as lenders (together, the “Lenders”), which provides for aggregate principal commitments consisting of (i) a senior secured delayed-draw term loan facility in an aggregate principal amount of $325.0 million (the “Term Loan A” or “TLA”), and (ii) a senior secured revolving credit facility in an aggregate commitment amount of $75.0 million, which may be used for revolving credit loans, swingline loans and letters of credit (the “TLA Revolver” and together with the TLA, the “2024 Credit Facility”).\n\nOn September 16, 2024 (the “Closing Date”), ANIP drew the full $325.0 million of Term Loan A principal, with proceeds used to finance the acquisition of Alimera, including fees, costs and expenses incurred in connection with the acquisition. As of December 31, 2025, $74.9 million is available for borrowing under the TLA Revolver. The TLA and the TLA Revolver mature on September 16, 2029. The 2024 Credit Facility contains certain contingent acceleration clauses that could result in an earlier maturity date, none of which have been triggered as of December 31, 2025.\n\nThe cash interest rate and effective rate under the Term Loan A was approximately 6.33% and 6.69% per annum at December 31, 2025, respectively.\n\nThe 2024 Credit Facility is secured by a lien on substantially all of the Company’s and its principal domestic subsidiary’s assets and any future domestic subsidiary guarantors’ assets. The 2024 Credit Facility is subject to customary financial and nonfinancial covenants. As of December 31, 2025, the Company was in compliance with all covenants associated with the 2024 Credit Facility.\n\nThe Company is required to make quarterly principal payments, beginning on December 31, 2024, in the amount of (i) 0.625% of the original principal amount of the Term Loan A on each quarterly payment date on or prior to the one year anniversary of the Closing Date, (ii) 1.25% of the original principal amount of the Term Loan A on each quarterly payment date following the one year anniversary of the Closing Date and 1.875% of the original principal amount of the Term Loan A on each quarterly payment date following the three year anniversary of the Closing Date and with the remaining unpaid principal amount due on the maturity date of the Term Loan A. A commitment fee accrues on the unutilized commitments under the TLA Revolver and, from and after the date that is two months after the closing date of the 2024 Credit Agreement, the TLA at a per annum rate equal between 0.25% and 0.40% depending on the Company’s first lien net leverage ratio.\n\n109\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nThe Company incurred $5.0 million in deferred debt issuance costs associated with the TLA, which costs are classified as a direct reduction to the current and non-current portion of debt. The Company incurred $1.1 million in deferred debt issuance costs associated with the TLA Revolver. Of the $0.8 million of unamortized deferred debt issuance costs allocated to the TLA Revolver, $0.6 million is included in other non-current assets in the consolidated balance sheets, and $0.2 million is included in prepaid expenses and other current assets in the consolidated balance sheets.\n\nThe carrying value of the current and non-current components of the Term Loan A as of the years ended December 31:\n\nCurrent\n\n(in thousands)20252024\n\nCurrent borrowing on debt$18,281 $10,156 \n\nDeferred financing costs(1,013)(984)\n\nCurrent debt, net of deferred financing costs$17,268 $9,172 \n\nNon-Current\n\n(in thousands)20252024\n\nNon-current borrowing on debt$294,531 $312,813 \n\nDeferred financing costs(2,691)(3,705)\n\nNon-current debt, net of deferred financing costs and current component$291,840 $309,108 \n\nThe contractual maturity of the Term Loan A is as follows for the years ended December 31:\n\n(in thousands)2024 Term Loan A\n\n2026$18,281 \n\n202724,375 \n\n202824,375 \n\n2029245,781 \n\nTotal$312,812 \n\nThe following table sets forth the components of total interest expense, net recognized in the accompanying consolidated statements of operations for the years ended December 31:\n\n(in thousands)202520242023\n\nContractual coupon interest expense, 2021 Credit Agreement$—$(20,993)$(33,270)\n\nContractual coupon interest expense, 2024 Credit Agreement(22,137)(7,264)—\n\nContractual coupon interest expense, Convertible Notes(7,096)(2,747)—\n\nAmortization of deferred financing costs (3,329)(2,624)(2,364)\n\nInterest expense (32,562)(33,628)(35,634)\n\nCapitalized interest related to Construction in Progress 381492 588 \n\nInterest and dividend income on bank balances 7,2479,2685,528\n\nInterest income on interest rate swap4,8746,2662,578\n\nInterest income12,50216,0268,694\n\nInterest expense, net$(20,060)$(17,602)$(26,940)\n\n110\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\n7.    2.25% CONVERTIBLE SENIOR NOTES\n\nOffering of Convertible Senior Notes\n\nOn August 7, 2024, the Company entered into a purchase agreement (the “Purchase Agreement”) with the initial purchasers (the “Initial Purchasers”) relating to the issuance of the $275.0 million aggregate principal amount of the Company's Convertible Senior Notes due 2029 (the “Notes”). Pursuant to the terms of the Purchase Agreement, the Company granted the Initial Purchasers an option to purchase up to an additional $41.25 million aggregate principal amount of Notes (the “Option”) for settlement at any time during the thirteen days beginning on, and including, August 7, 2024, which Option was exercised in full on August 8, 2024.\n\nOn August 13, 2024 (the “Closing Date” or “Issue Date”), the Company completed an offering of $316.25 million aggregate principal amount of Notes. The Notes were issued pursuant to an indenture (the “Indenture”) dated as of August 13, 2024 between the Company and U.S. Bank Trust Company, National Association (“Trustee”). The Notes are due September 1, 2029, unless earlier repurchased, redeemed, or converted. The Notes will accrue interest at a rate of 2.25% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2025. After deducting the initial purchasers’ discounts and commissions of approximately $9.5 million, but before deducting the Company’s offering expenses, the net proceeds to the Company from the offering of the Notes were approximately $306.8 million. After payment of the cost of entering into the Capped Call transactions (as defined below), the Company used the remainder of the net proceeds from the Notes offering, together with cash on hand, to repay the 2021 Credit Facility in its entirety. Refer to Note 5 “2021 Credit Facility” to the notes to the consolidated financial statements for the details of the extinguishment of the 2021 Credit Agreement.\n\nThe Notes are the Company’s senior, unsecured obligations and are (i) equal in right of payment with the Company’s existing and future senior, unsecured indebtedness; (ii) senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the Notes; (iii) effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries.\n\nConversion Options\n\nPrior to the close of business on the business day immediately preceding June 1, 2029, holders of the Notes will have the right to convert their Notes only upon the occurrence of certain events as set forth in the Indenture. All or any portion of the Notes may be converted prior to June 1, 2029 at the holders’ option upon the occurrence of any of the following: (i) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on September 30, 2024, if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price of the Notes for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (ii) during the five consecutive business days immediately after any ten consecutive trading day period (such ten consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate of the Notes on such trading day; (iii) upon the occurrence of certain corporate events or distributions on the Company's common stock, as described in the Indenture; or (iv) if the Company calls such Notes for redemption.\n\nOn or after June 1, 2029 until the close of business on the second scheduled trading day immediately before the maturity date of the Notes, holders may convert all or any portion of their Notes at any time at their election. The initial conversion rate for the Notes is 13.4929 shares of the Company’s common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $74.11 per share of the Company’s common stock. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for holders that convert their Notes in connection with such Make-Whole Fundamental Change, as described in the Indenture.\n\n111\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nUpon conversion of the Notes, the Company will pay cash up to the aggregate principal amount of the Notes to be converted and pay or deliver, as the case may be, cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company’s election, in respect of the remainder, if any, of the Company's conversion obligation.\n\nThe Notes will be redeemable, in whole or in part (subject to certain limitations described below), at the Company’s option at any time, and from time to time, on or after September 1, 2027 and on or before the 61st scheduled trading day immediately before the maturity date, but only if (i) the notes are “Freely Tradable” (as defined in the Indenture) as of the date the Company sends the related redemption notice and all accrued and unpaid additional interest, if any, has been paid in full as of the first interest payment date occurring on or before the date the Company sends the related redemption notice; and (ii) the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends such redemption notice; and (2) the trading day immediately before the date the Company sends such redemption notice. However, the Company may not redeem less than all of the outstanding Notes unless at least $75.0 million aggregate principal amount of Notes are outstanding and not called for redemption as of the time the Company sends the related redemption notice. The redemption price will be a cash amount equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, calling any Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted with a conversion date that is on or after the date the Company sends the related redemption notice and on or before the second business day immediately before the related redemption date.\n\nIf certain corporate events that constitute a “Fundamental Change” (as defined in the Indenture) occur, then, subject to a limited exception for certain cash mergers, holders of the Notes may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s common stock.\n\nEvents of Default\n\nThe Notes include customary provisions relating to the occurrence of “Events of Default” (as defined in the Indenture), including breaches of covenants, breaches of warranty, change of control, nonpayment, bankruptcy, assignment, foreclosure, cessation of business, and defaults under ancillary documents. Certain of the Events of Default are subject to notice and cure periods. As of December 31, 2025, the Company was in compliance with all covenants associated with the Notes.\n\nDebt issuance costs related to the Notes totaled $11.2 million at inception and were comprised of discounts and commissions payable to the initial purchasers and third-party offering costs and will be amortized to interest expense using the effective interest method over the contractual term. As of December 31, 2025 and 2024, the unamortized debt discount and debt issuance cost of the Notes was approximately $8.3 and $10.4 million, respectively, on the consolidated balance sheets. The effective interest rate during the year ended December 31, 2025 was 3.01%.\n\nDuring the year ended December 31, 2025, the Notes did not meet any of the circumstances that would allow for a conversion. The Notes were therefore not convertible as of December 31, 2025, and were classified as long-term debt on the Company’s consolidated balance sheet as of December 31, 2025.\n\nAs of December 31, 2025, the total estimated fair value (which represents a Level 2 valuation) of the Notes is approximately $413.0 million.\n\nThe Company recognized $7.1 million and $2.7 million of contractual coupon interest expense and $2.1 million and $0.8 million of interest expense related to the amortization of deferred financing costs for the years ended December 31, 2025 and 2024, respectively.\n\n112\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nCapped Call Transactions\n\nIn connection with the offering of Notes, on August 7, 2024 and August 8, 2024, the Company entered into capped call transactions with certain financial institutions (“Capped Calls”). The Capped Calls each have an initial cap price of $114.02, which represents a premium of 100% over the last reported sale price of the Company’s common stock on August 7, 2024. The Company used approximately $40.6 million of the net proceeds from the offering of the Notes to pay premiums on the Capped Calls.\n\nThe Capped Calls are expected to generally reduce potential dilution to the Company’s common stock upon any conversion of the Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes. The Capped Calls cover, subject to anti-dilution adjustments, approximately 4.3 million shares of the Company's common stock.\n\nThe Capped Calls will expire upon the maturity of the Notes. The Capped Calls are separate transactions entered into by the Company with the financial institution counterparties thereto, the Capped Calls are not part of the terms of the Notes and the Capped Calls do not change the holders’ rights under the Notes. The Capped Calls do not meet the criteria for separate accounting as a derivative as they meet the criteria for equity classification, and the capped call transaction premiums are recorded as a reduction to Additional Paid-In Capital within Shareholders’ Equity, net of deferred income taxes.\n\n8. DERIVATIVE FINANCIAL INSTRUMENT AND HEDGING ACTIVITY\n\nIn April 2020, the Company entered into an interest rate swap with Citizens Bank, N.A. to manage its exposure to changes in the London Interbank Offered Rate (“LIBOR”)-based interest rates underlying total borrowings under term facilities related to the 2021 Credit Agreement. The interest rate swap matures in December 2026. The Company amended its 2021 Credit Agreement to transition from LIBOR to the Secured Overnight Financing Rate (“SOFR”) due to the cessation of LIBOR in the third quarter of 2023, and accordingly, the interest rate swap transitioned from LIBOR to SOFR. The interest rate swap is used to manage changes in SOFR-based interest rates underlying a portion of the borrowing under the Term Loan A. Concurrent with the termination of the 2021 Credit Agreement and entry into the 2024 Credit Agreement with Truist Bank, the interest rate swap with a notional value of $168.6 million at origin on November 21, 2021 was novated and Truist Bank became the new counterparty.\n\nOn August 30, 2024, in connection with the entry into the 2024 Credit Facility, the interest rate swap with a notional value of $139.4 million was transferred from Truist Bank to JPMorgan Chase Bank, N.A., as the new counterparty. The interest rate swap is used to manage changes in SOFR-based interest rates underlying a portion of the borrowing under the Term Loan A. The interest rate swap provides an effective fixed interest rate of 2.313% and is designated as an effective cash flow hedge and therefore qualifies for hedge accounting. As of December 31, 2025, the notional amount of the interest rate swap was $139.4 million, and will remain static until maturity in December 2026. As of December 31, 2025, the fair value of the interest rate swap asset recorded in other non-current assets in the consolidated balance sheets is $1.6 million. As of December 31, 2025, $1.6 million was recorded in accumulated other comprehensive income (loss), net of tax in the consolidated balance sheets.\n\nDuring the year ended December 31, 2025, the loss on fair value of the interest rate swaps, net of tax recorded in accumulated other comprehensive income (loss)in the consolidated statements of comprehensive income was approximately $4.4 million. Differences between the hedged SOFR rate and the fixed rate are recorded as interest expense in the same period that the related interest is recorded for the Term Facility based on the SOFR rate. In the years ended December 31, 2025 and 2024, the Company recorded a reduction in interest expense of $4.9 million and $6.3 million in relation to the interest rate swaps, respectively. Included in these amounts for the years ended December 31, 2025 and 2024 are reclassifications out of accumulated other comprehensive income (loss)of $3.4 million of interest income and $0.8 million of interest expense, respectively, related to terminated and de-designated cash flow hedges.\n\n113\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\n9. INVENTORIES\n\nThe following table shows the Company's inventory by asset class as of the years ended December 31:\n\n(in thousands)20252024\n\nRaw materials$74,363 $67,174 \n\nPackaging materials9,743 9,977 \n\nWork-in-progress2,973 1,665 \n\nFinished goods55,988 57,966 \n\nInventories$143,067 $136,782 \n\nVendor Concentration\n\nRaw materials are sourced for products, including API, from both domestic and international suppliers. Generally, only a single source of API is qualified for use in each product due to the costs and time required to validate a second source of supply. As a result, the Company is dependent upon current vendors to reliably supply the API required for on-going product manufacturing. During the year ended December 31, 2025, approximately 17% of the Company's raw material inventory purchases were from one domestic supplier. During the year ended December 31, 2024, approximately 12% of the Company's raw material inventory purchases were from one domestic supplier. During the year ended December 31, 2023, no single vendor represented more than 10% of the Company's raw material inventory purchases.\n\n10. PROPERTY AND EQUIPMENT, NET\n\nThe following tables show the Company’s gross property and equipment by major asset class and accumulated depreciation as of the years ended December 31:\n\n(in thousands)20252024\n\nLand$2,410 $1,582 \n\nBuildings25,833 24,438 \n\nMachinery, furniture, and equipment76,043 68,697 \n\nLeasehold improvements1,405 1,297 \n\nFinance leases650 1,161 \n\nConstruction in progress8,825 4,568 \n\n115,166 101,743 \n\nLess: accumulated depreciation(52,690)(44,880)\n\nProperty and equipment, net$62,476 $56,863 \n\nDepreciation expense for the years ended December 31, 2025, 2024, and 2023 totaled $8.9 million, $7.4 million, and $7.5 million, respectively. During the years ended December 31, 2025, 2024, and 2023 there was $0.4 million, $0.5 million, and $0.6 million, respectively, of interest capitalized into construction in progress, respectively.\n\n114\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\n11. GOODWILL AND INTANGIBLE ASSETS\n\nGoodwill\n\nAs of December 31, 2025, the Company has assigned its goodwill in three reporting units, Generics and Other, Brands, and Rare Disease reporting units. As a result of the 2013 merger with BioSante Pharmaceuticals, Inc., the Company recorded goodwill of $1.8 million. As a result of the acquisition of WellSpring Pharma Services Inc. in 2018, the Company recorded goodwill of $1.7 million. From the acquisition of Novitium in 2021, the Company recorded goodwill of $24.6 million. The goodwill from the transactions with BioSante Pharmaceuticals, Inc., WellSpring Pharma Services Inc., and Novitium is recorded in the Generics and Other reporting unit. As a result of the acquisition of Alimera, on September 16, 2024, the Company recorded goodwill of $34.3 million in the Rare Disease reporting unit. Refer to Note 3 “Business Combination” to the notes to the consolidated financial statements for further information related to the acquisition.\n\nThere have been no events or changes in circumstances that would have reduced the fair value of the reporting units below their carrying value during the years ended December 31, 2025 and 2024, and as a result, no impairment charges have been recognized. In addition to the qualitative impairment analysis performed at October 31, 2025, there were no events or changes in circumstances that would have reduced the fair value of the reporting unit below its carrying value from October 31, 2025 to December 31, 2025. No goodwill impairment losses were recognized during the years ended December 31, 2025, 2024, and 2023.\n\nIntangible Assets\n\nThe components of net definite-lived intangible assets and net indefinite-lived intangible assets other than goodwill are as follows:\n\nDecember 31, 2025December 31, 2024Remaining Weighted Average\nAmortization\nPeriod(1)\n\n(in thousands)\nGross Carrying Amount\nAccumulated\nAmortizationNet Carrying AmountGross Carrying\nAmountAccumulated\nAmortizationNet Carrying Amount\n\nDefinite-Lived Intangible Assets:\n\nAcquired ANDA intangible assets$214,260 $(147,511)$66,749 $210,497 $(124,874)$85,623 3.7 years\n\nNDAs and product rights673,554 (271,818)401,736 641,271 (216,420)424,851 10.3 years\n\nMarketing and distribution rights17,157 (16,195)962 17,157 (15,233)1,924 1.0 years\n\nCustomer relationships24,900 (14,821)10,079 24,900 (11,264)13,636 2.8 years\n\nTotal Definite-Lived Intangible Assets929,871 (450,345)479,526 893,825 (367,791)526,034 9.2 years\n\nIndefinite-Lived Intangible Assets:\n\nIn process research and development— — — 15,800 — 15,800 Indefinite\n\nTotal Intangible Assets, net$929,871 $(450,345)$479,526 $909,625 $(367,791)$541,834 \n\n(1) Weighted average amortization period as of December 31, 2025.\n\nDefinite-lived intangible assets arising from business combinations and other asset acquisitions include intangibles such as Abbreviated New Drug Applications (“ANDAs”), New Drug Applications (“NDAs”) and product rights, marketing and distribution rights, customer relationships, and non-compete agreements. Definite-lived intangible assets are tested for impairment when events or changes in circumstances indicate that these assets might be impaired.\n\n115\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nPursuant to a Royalty Purchase Agreement dated as of December 17, 2020, EyePoint Pharmaceuticals US, Inc. (f/k/a pSivida US, Inc. or “EyePoint”) sold to SWK Funding LLC (\"SWK\") its right to receive royalty payments on future sales of ILUVIEN under an existing collaboration agreement entered into in July 2017 between EyePoint and the Company (the “RPA Transaction”). In connection with the RPA Transaction, the Company agreed to pay such royalty payments directly to SWK. On June 19, 2024, Alimera entered into a letter agreement with SWK, pursuant to which the parties agreed to a lower fixed royalty payment of 3.125% (the “Alternative Royalty”) on combined sales of ILUVIEN and YUTIQ. The letter agreement included a buy-out of the Alternative Royalty at Alimera’s option at any time during the period within six (6) months after a change of control of Alimera, after which SWK would have no further right to receive any payments under the letter agreement or the RPA (the “Buy-Out Option”). On March 17, 2025, the Company exercised the Buy-Out Option and paid SWK $17.3 million with cash on hand, and as such, no further royalty is due to SWK on net revenues beginning January 1, 2025, forward. The purchase of the Buy-Out Option was recorded as a definite-lived intangible asset, which will be amortized over a period of approximately twelve years, consistent with the useful lives of YUTIQ and ILUVIEN. The SWK definite-lived intangible asset is included in the \"NDAs and product rights\" in the table above.\n\nDuring the year ended December 31, 2025, $15.8 million was reclassified from indefinite-lived IPR&D to definite-lived NDAs and Product Rights related to the commercialization of Tezruly and Inzirqo, and will be amortized over ten years. As of December 31, 2025 there was no IPR&D on the consolidated balance sheet, and there were no impairment losses recognized on IPR&D.\n\nAdditionally, approximately $3.8 million of acquired ANDA intangible assets were capitalized related to asset acquisitions during the year ended December 31, 2025, which will be amortized over their useful lives.\n\nDuring the year ended December 31, 2024, the Company acquired Alimera, and as a result, acquired two intangible assets for ILUVIEN and YUTIQ, in the amount of $170.0 million and $230.0 million, respectively, which will be amortized over twelve years. During the second quarter of 2025, the Company transitioned promotional efforts in the U.S. from YUTIQ to ILUVIEN with its combined label of DME and NIU-PS, and as result the Company combined the ILUVIEN and YUTIQ intangible assets. The Company concluded that there were no changes to expected future cash flows for the combined ILUVIEN definite-lived intangible asset.\n\nThe Company recognized approximately $0.8 million of impairment charges during the year ended December 31, 2025, related to one product for which the Company has ceased commercialization, and recognized approximately $3.6 million of impairment losses during the year ended December 31, 2024, related to certain definite-lived intangibles. There were no impairment losses recorded during the year ended December 31, 2023.\n\nAmortization expense for definite-lived intangible assets was $82.5 million, $60.3 million, and $52.3 million for the years ended December 31, 2025, 2024, and 2023, respectively. See Note 12 \"Fair Value\" in the notes to the consolidated financial statements for more details on acquired definite-lived and indefinite-lived intangible assets.\n\nIndefinite-lived intangible assets other than goodwill, as described above, include IPR&D. Indefinite-lived intangible assets are not amortized, and the Company tests for impairment of indefinite-lived intangible assets annually as of October 31, 2025, as well as with definite-lived intangibles when events or circumstances indicate that the carrying value of the assets may not be recoverable. The Company 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, the Company evaluated events and circumstances that would affect the significant inputs used to determine the fair value of the assets.\n\nNo amounts were reclassified from indefinite-lived IPR&D to intangible assets during the year ended December 31, 2024. The Company recorded $4.0 million of impairment losses on IPR&D during the year ended December 31, 2024. There were no comparable reclassifications or impairment charges for the year ended December 31, 2023.\n\n116\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nExpected future amortization expense is as follows for the years ending December 31:\n\n(in thousands)\n\n2026$69,640 \n\n202760,573 \n\n202854,582 \n\n202948,343 \n\n203037,727 \n\n2031 and thereafter208,661 \n\nTotal$479,526 \n\nExpected amortization expense is an estimate. Actual amounts of amortization expense may differ due to additional intangible assets acquired, impairment of intangible assets, and other events.\n\n12. FAIR VALUE\n\nFair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework that prioritizes and ranks the level of observability of inputs used in measuring fair value.\n\nThe inputs used in measuring the fair value of cash and cash equivalents are considered to be Level 1 in accordance with the three-tier fair value hierarchy. The fair market values are based on period-end statements supplied by the various banks and brokers that held the majority of the Company's funds. The fair value of short-term financial instruments (primarily accounts receivable, prepaid expenses, accounts payable, accrued expenses, and other current liabilities) approximate their carrying values because of their short-term nature. The 2024 Credit Facility bears an interest rate that fluctuates with the changes in SOFR and because the variable interest rate approximates market borrowing rates available to the Company, the carrying value of the 2024 Credit Facility approximated its fair values at December 31, 2025 and 2024.\n\nFinancial Assets and Liabilities Measured at Fair Value on a Recurring Basis\n\nAlimera Contingent Value Rights Agreement\n\nOn September 16, 2024, prior to consummation of the Alimera acquisition, the Company entered into a CVR agreement, pursuant to which holders of Alimera Common Stock, as well as holders of Alimera Warrants, Alimera Options, Alimera PSUs, Alimera RSAs and Alimera RSUs, may become entitled to contingent cash payments per CVR (each, a “Milestone Payment”), such payments being contingent upon, and subject to, the achievement of: (i) $140.0 million in net revenue (the “2026 Milestone”) on third party sales of ILUVIEN and YUTIQ for the Company’s 2026 fiscal year (the “2026 Net Revenue”) and/or (ii) $160.0 million in net revenue (the “2027 Milestone” and together with the 2026 Milestone, the “Milestones”) on third party sales of ILUVIEN and YUTIQ for the Company’s 2027 fiscal year (the “2027 Net Revenue”). Each CVR entitles the holder to receive a Milestone Payment upon satisfaction of the applicable Milestones. The Milestone Payment for each CVR will equal the product (rounded to the nearest 1/100 of $0.01) of (i) $0.25 multiplied by a fraction (not exceeding one), the numerator of which is the amount, if any, by which the 2026 Net Revenue exceeds $140.0 million and the denominator of which is $10.0 million (subject to adjustment for the exercise price of applicable Alimera Options) and/or (ii) $0.25 multiplied by a fraction (not exceeding one), the numerator of which is the amount, if any, by which the 2027 Net Revenue exceeds $160.0 million and the denominator of which is $15.0 million (subject to adjustment for the exercise price of applicable Alimera Options).\n\nIf the Milestones are met, the distributions in respect of the CVRs will be made on or prior to the date that is fifteen (15) business days following the filing by the Company of its audited financial statements with the Securities and Exchange Commission in its annual report on Form 10-K in respect of the applicable year in which such Milestones have been achieved, and will be subject to a number of deductions, exceptions and limitations, including, but not limited to, certain taxes.\n\n117\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nThe fair value of the CVR liability is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy. The Company utilized a Monte Carlo simulation model to estimate the fair value of the CVR liability. For each simulated path of future revenue, the payments to the CVR holders were calculated based on the contractual terms of the rights. The average payments from all simulated paths were then discounted to present value at an estimated cost of debt. As a result of the decrease in forecast future revenue for 2026 and 2027, a corresponding decrease in the CVR liability was recorded. The fair value of the CVR liability was approximately $1.4 million as of December 31, 2025, a decrease of approximately $7.6 million from $9.0 million as of December 31, 2024, and is classified as non-current contingent consideration in the Company's consolidated balance sheet.\n\nThe following table presents the changes in the CVR liability classified as Level 3 for the years ended December 31, 2025 and 2024:\n\nYear Ended December 31,\n\n(in thousands)20252024\n\nBeginning balance$9,000 $— \n\nCVR Agreement— 8,700 \n\nChange in fair value (7,572)300 \n\nEnding balance$1,428 $9,000 \n\nMoney Market Funds\n\nMoney market funds are readily convertible into cash and the net asset value of each fund on the last day of the reporting period is used to determine its fair value. Money market funds are included in Cash and cash equivalents within the consolidated balance sheets, and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The Company does not adjust the quoted market price for such financial instruments. The fair value of the money market funds was approximately $209.9 million and $84.3 million as of December 31, 2025 and 2024, respectively.\n\nInterest Rate Swap\n\nThe fair value of the interest rate swap is estimated based on the present value of projected future cash flows using the SOFR forward rate curve. The fair value of the interest rate swap is estimated based on the present value of projected future cash flows using the SOFR forward rate curve (see Note 6 \"2024 Credit Agreement\" in the notes to the consolidated financial statements). The model used to value the interest rate swap includes inputs of readily observable market data, a Level 2 input. As described in further detail in Note 8 “Derivative Financial Instrument and Hedging Activity” to the notes to the consolidated financial statements. As described in Note 8, the fair value of the interest rate swap was $1.6 million and $4.9 million at December 31, 2025 and 2024, respectively, and was classified as a non-current assets in the consolidated balance sheets.\n\nCG Oncology Equity Securities\n\nThe Company currently holds 219,925 shares of common stock in CG Oncology, Inc. (Nasdaq: CGON) (\"CG Oncology\"). The Company accounts for its investment in CG Oncology equity securities as an equity investment with a readily determinable fair value, as the securities are publicly traded on the Nasdaq Global Select Market. The fair value of the equity securities is based on its closing price on the Nasdaq and is classified within Level 1 of the fair value hierarchy because the equity securities are valued using quoted market prices. The Company does not adjust the quoted market price for such financial instruments. The fair value of the CG Oncology equity securities was approximately $9.1 million and $6.3 million as of December 31, 2025 and 2024, based on a closing market price of $41.52 and $28.68 on December 31, 2025 and 2024, respectively. The change in fair value of the equity securities is classified on the consolidated statements of operations as unrealized gain on investment in equity securities, in the amounts of approximately $2.8 million and $6.3 million for the years ended December 31, 2025 and 2024, respectively. Between 2013 and 2023, CG Oncology securities held by the Company were valued at zero under U.S. GAAP.\n\n118\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nNovitium Contingent Consideration\n\nIn connection with the acquisition of Novitium, the Company may pay up to $46.5 million in additional consideration related to the achievement of certain milestones, including milestones on gross profit of Novitium portfolio products over a 24-month period (which period ran from December 1, 2021 through November 30, 2023), , regulatory filings completed during this 24-month period, and a percentage of net profits on certain products that are launched in the future.\n\nThe discounted cash flow method used to value this contingent consideration includes inputs of not readily observable market data, which are Level 3 inputs, as the inputs are not based on readily available market data. As of the November 19, 2021 acquisition date, the contingent consideration had a fair value of $30.8 million.\n\nPursuant to the terms of the Agreement and Plan of Merger related to the Novitium acquisition, dated as of March 8, 2021 (the \"Novitium Merger Agreement\"), on December 12, 2023, the Company paid $12.5 million of cash consideration to the holders of Novitium ownership interests (\"Company Members\"), for the achievement of the ANDA Filing Earn-Out, (as defined in the Novitium Merger Agreement). On February 22, 2024, the Company paid $12.5 million to Company Members of Novitium upon the achievement of the milestone. See Note 18 \"Related Party Transactions\" in the notes to the consolidated financial statements).\n\nPursuant to the terms of the Novitium Merger Agreement, the Company owes 20% of net profit generated by the sales of certain 505(b)(2) products (as defined in the Novitium Merger Agreement) to the Company Members through the earlier to occur of (i) the sum of all such payments being equal to $21.5 million in the aggregate and (ii) the tenth anniversary of the FDA approval of the applicable 505(b)(2) product (the \"505(b)(2) Earn-Out\"). The payments are due on a quarterly basis, within 45 calendar days of each quarter end. During the years ended December 31, 2025 and 2024, the Company has paid less than $0.1 million and zero, respectively, for payments of the 505(b)(2) Earn-Out to the Company Members, respectively.\n\nThe total fair value of the contingent consideration was approximately $8.3 million and $10.9 million as of December 31, 2025 and 2024, respectively, and is reflected as a current and non-current accrued contingent consideration liability in the consolidated balance sheets.\n\nThe recurring Level 3 fair value measurements of contingent consideration for which a liability is recorded include the following significant unobservable inputs as of December 31, 2025:\n\nPayment TypeValuation TechniqueUnobservable InputAssumptions\n\nProfit-based milestone paymentsProbability-weighted discounted cash flowDiscount rate11.5%\n\nProjected fiscal year of payment2026-2034\n\nThe following table presents the changes in contingent consideration balances classified as Level 3 balances for the years ended December 31, 2025 and 2024:\n\nYear Ended December 31,\n\n(in thousands)20252024\n\nBeginning balance$10,854 $23,984 \n\nPayment of Gross-Profit earn-out(26)(12,500)\n\nAccrual of Gross-Profit earn-out108 — \n\nChange in fair value(2,588)(630)\n\nEnding balance$8,348 $10,854 \n\n119\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nAccrued Licensor Payments\n\nOn May 17, 2023, Alimera entered into the Product Rights Agreement with EyePoint, which granted Alimera an exclusive and sublicensable right and license under EyePoint’s and its affiliates’ interest in certain of EyePoint’s and its affiliates’ intellectual property to develop, manufacture, sell, commercialize and otherwise exploit certain products, including YUTIQ, for the treatment and prevention of uveitis in the entire world, except Europe, the Middle East and Africa, where the Company already had such rights pursuant to the A&R Collaboration Agreement, and except for China, Hong Kong, Macau, Taiwan, Brunei, Burma (Myanmar), Cambodia, Timor-Leste, Indonesia, Laos, Malaysia, the Philippines, Singapore, South Korea, Thailand and Vietnam, for which Ocumension holds a license from EyePoint. Pursuant to the agreement, Alimera paid EyePoint an upfront payment of $75.0 million and also made four quarterly guaranteed payments to EyePoint totaling $7.5 million during the year ended December 31, 2024. Upon making the quarterly payments in the aggregate amount of $7.5 million in 2024, the licenses and rights granted to the Company became automatically perpetual and irrevocable. There are no quarterly guaranteed payments in 2025 and beyond.\n\nRoyalties are payable to EyePoint from 2025 to 2028 at 30% of annual U.S. net sales of certain products (including YUTIQ and ILUVIEN) in excess of certain thresholds, beginning at $70.0 million in 2025, and increasing annually thereafter. The Company did not make any royalty payments during 2025, as the minimum threshold of net sales that would trigger the requirement to make royalty payments was not met.\n\nDuring the quarter ended December 31, 2024, the Company paid the final quarterly payment of $1.9 million. The present value of the remaining payments to EyePoint for years 2025 to 2028 will continue to be revalued at an appropriate discount rate for the Company at each reporting date until they are settled. Significant inputs used in the measurement of the fair value include discount rates and probabilities of achievement of net revenue. Changes in fair value, which incorporate changes in assumptions and the passage of time, are recognized as an operating expense in the consolidated statements of operations. These changes resulted in a decrease of the fair value of the liability of approximately $21.0 million as no further payments are anticipated to be made in fiscal 2026 to 2028.\n\nThe following table presents the changes in accrued licensor payments classified as Level 3 balances for the years ended December 31, 2025 and 2024:\n\nYear Ended December 31,\n\n(in thousands)20252024\n\nBeginning balance$20,961 $— \n\nAccrued licensor payments— 25,000 \n\nPayments— (3,750)\n\nChange in fair value (20,961)(289)\n\nEnding balance$— $20,961 \n\nThe following table presents financial assets and liabilities accounted for at fair value on a recurring basis as of December 31, 2025 and December 31, 2024, by level within the fair value hierarchy:\n\n(in thousands)\nDescriptionFair Value at\nDecember 31, 2025Level 1Level 2Level 3\n\nAssets    \n\nMoney Market Fund$209,891 $209,891 $— $— \n\nInterest rate swap$1,646 $— $1,646 $— \n\nCG Oncology - Investment in equity securities$9,131 $9,131 $— $— \n\nLiabilities    \n\nContingent consideration, Novitium$8,348 $— $— $8,348 \n\nContingent Value Rights, Alimera$1,428 $— $— $1,428 \n\nAccrued licensor payment$— $— $— $— \n\n120\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\n(in thousands)\nDescriptionFair Value at\nDecember 31, 2024Level 1Level 2Level 3\n\nAssets\n\nMoney Market Fund$84,277 $84,277 $— $— \n\nInterest rate swaps$4,897 $— $4,897 $— \n\n CG Oncology - Investment in equity securities$6,307 $6,307 $— $— \n\nLiabilities    \n\nContingent consideration, Novitium$10,854 $— $— $10,854 \n\nContingent Value Rights, Alimera$9,000 $— $— $9,000 \n\n  Accrued licensor payment$20,961 $— $— $20,961 \n\nFinancial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis\n\nThere are no financial assets and liabilities that are measured at fair value on a non-recurring basis.\n\nNon-Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis\n\nThere are no non-financial assets and liabilities that are measured at fair value on a recurring basis.\n\nNon-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis\n\nLong-lived assets, including property and equipment, ROU assets, intangible assets, and goodwill, are measured at fair value on a non-recurring basis. During the years ended December 31, 2025 and 2024 there were $0.8 million and $7.6 million of impairment charges recognized related to non-financial assets and liabilities measured at fair value on a non-recurring basis, respectively. During the year ended December 31, 2023, there were no impairment losses recognized in relation to any non-financial assets or liabilities measured at fair value.\n\nAcquired Non-Financial Assets Measured at Fair Value\n\nAcquired non-financial assets measured at fair value consists of certain assets, such as ANDAs or NDAs, acquired by the Company during the year ended December 31, 2025 and 2024, as discussed above, and assets and liabilities acquired from Alimera during the year ended December 31, 2024 (see Note 3 \"Business Combination\" in the notes to the consolidated financial statements).\n\n13. MEZZANINE AND STOCKHOLDERS’ EQUITY\n\nAuthorized shares\n\nAt the 2025 Annual Meeting, the stockholders of the Company approved an amendment to the Company's Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 33.3 million shares to 66.0 million shares.\n\nThe Company is authorized to issue up to 66.0 million shares of common stock with a par value of $0.0001 per share, 0.8 million shares of class C special stock with a par value of $0.0001 per share, and 1.7 million shares of undesignated preferred stock with a par value of $0.0001 per share at December 31, 2025.\n\nThere were 23.1 million and 22.5 million shares of common stock issued and outstanding as of December 31, 2025, respectively, and 21.5 million and 21.1 million shares of common stock issued and outstanding as of December 31, 2024, respectively.\n\n121\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nPublic Offering\n\nIn May 2023, through a public offering, the Company completed the issuance and sale of 2,183,545 shares of ANI common stock, resulting in net proceeds after issuance costs of $80.6 million.\n\nClass C Special Stock\n\nThere were 11 thousand shares of class C special stock issued and outstanding as of December 31, 2025 and 2024. Each share of class C special stock entitles its holder to one vote per share. Each share of class C special stock is exchangeable, at the option of the holder, for one share of the Company's common stock, at an exchange price of $90.00 per share, subject to adjustment upon certain capitalization events. Holders of class C special stock are not entitled to receive dividends or to participate in the distribution of the Company's assets upon liquidation, dissolution, or winding-up the Company. The holders of class C special stock have no cumulative voting, preemptive, subscription, redemption, or sinking fund rights.\n\nMezzanine Equity\n\nPIPE Shares\n\nOn March 8, 2021, concurrently with the acquisition of Novitium, and as financing for a portion of the acquisition, the Company entered into an Equity Commitment and Investment Agreement with Ampersand 2020 Limited Partnership (the “PIPE Investor”), pursuant to which the PIPE Investor agreed to purchase, 25,000 shares of the Company's Series A Convertible Preferred Stock (the “PIPE Shares”) for a purchase price of $1,000 per share and an aggregate purchase price of $25.0 million on November 19, 2021. The PIPE Shares were classified as mezzanine equity because the shares were mandatorily redeemable for cash upon a change in control, an event that would not have been solely in the Company's control. The Company incurred $0.2 million in issuance costs associated with the transaction.\n\nThe PIPE Shares accrued dividends at 6.50% per year on a cumulative basis, payable in cash or in-kind, and participated, on a pro-rata basis, in any dividends that would have been declared with respect to the Company's common stock. The PIPE Shares were convertible into shares of the Company's common stock at the conversion price of $41.4662 (i) beginning two years after their issuance date, at the election of ANI (in which case the PIPE Investor must convert all of the PIPE Shares), if the volume-weighted average price of the Company's common stock for any 20 trading days out of 30 consecutive trading days exceeded 170% of the conversion price, and (ii) at any time after issuance, at the election of the PIPE Investor.\n\nOn August 14, 2025, the PIPE Investor converted 5,000 PIPE Shares into 120,580 shares of common stock based on the conversion price of $41.4662 per share. On September 26, 2025, the Company mandatorily converted the remaining 20,000 outstanding PIPE Shares into 482,320 shares of common stock based on the conversion price of $41.4662 per share, as the conditions for conversion had been satisfied.\n\nThere were no shares of Series A convertible preferred stock outstanding at December 31, 2025. There were 25,000 shares of Series A convertible preferred stock outstanding as of December 31, 2024.\n\n14. EARNINGS (LOSS) PER SHARE\n\nBasic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted-average number of shares of common stock outstanding during the period.\n\nFor periods of net income, and when the effects are not anti-dilutive, the Company calculates diluted earnings (loss) per share by dividing net income available to common stockholders by the weighted-average number of shares outstanding plus the impact of all potential dilutive shares of common stock, consisting of shares issuable upon conversion of the Company's senior convertible notes, common stock options, shares to be purchased under the ESPP, and performance stock units, using the more dilutive of the treasury stock or the two-class method. For periods of net loss, diluted loss per share is calculated similarly to basic loss per share.\n\n122\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nUnvested restricted shares and Series A convertible preferred stock shares contain non-forfeitable rights to dividends, and therefore are considered to be participating securities; in periods of net income, the calculation of basic and diluted earnings (loss) per share excludes from the numerator net income (but not net loss) attributable to the unvested restricted shares and the shares of common stock assumed converted from the preferred shares and excludes the impact of those shares from the denominator. The Company’s participating securities do not have a contractual obligation to share in the Company’s losses. As such, the net loss is attributed entirely to common stockholders.\n\nAs the Company reported a net loss for the year ended December 31, 2024, diluted net loss per share attributable to common shareholders was the same as basic net loss per share attributable to common shareholders for this period.\n\nEarnings (loss) per share for the years ended December 31, 2025, 2024, and 2023 are calculated for basic and diluted earnings (loss) per share as follows:\n\nBasicDiluted\n\n(in thousands, except per share amounts)Years Ended December 31,Years Ended December 31,\n\n202520242023202520242023\n\nNet income (loss) available to common shareholders $77,180 $(20,147)$17,154 $77,180 $(20,147)$17,154 \n\nEarnings allocated to participating securities(6,963)— (1,679)(6,611)— (1,663)\n\nNet income (loss) available to common shareholders$70,217 $(20,147)$15,475 $70,569 $(20,147)$15,491 \n\nBasic Weighted-Average Shares Outstanding20,05319,31818,00120,05319,31818,001\n\nDilutive effect of convertible senior notes, common stock options, ESPP, and performance stock units1,175—193\n\nDiluted Weighted-Average Shares Outstanding21,22819,31818,194\n\nEarnings (loss) per share$3.50 $(1.04)$0.86 $3.32 $(1.04)$0.85 \n\nThe number of anti-dilutive shares, which have been excluded from the computation of diluted earnings (loss) per share, was 2.0 million, 2.3 million, and 2.4 million for the years ended December 31, 2025, 2024, and 2023, respectively. For the year ended December 31, 2024, all potentially dilutive shares were anti-dilutive and excluded from the calculation of diluted loss per share because the Company reported a net loss.\n\n15. STOCK-BASED COMPENSATION\n\nEmployee Stock Purchase Plan\n\nIn July 2016, the Company commenced administration of the ANI Pharmaceuticals, Inc. 2016 ESPP. Under the ESPP, participants can purchase shares of common stock at a 15% discount on the lowest share price on the first day of the purchase period or the last day of the purchase period.\n\nDuring the 2025 Annual Meeting, the stockholders of the Company approved an amendment to the ESPP. Subject to adjustment, the Amended and Restated ANI Pharmaceuticals, Inc. 2016 Employee Stock Purchase Plan, or Amended and Restated ESPP, authorized the issuance of an additional 500,000 shares.\n\nAs of December 31, 2025, there are approximately 0.5 million shares of common stock available for issuance under the Amended and Restated ESPP.\n\n123\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nStock Incentive Plan\n\nDuring the 2024 Annual Meeting of Stockholders held on May 21, 2024, the stockholders of the Company approved an amendment to the Amended and Restated Stock Incentive Plan (the “2022 Plan”) (such amendment, the “2024 Stock Plan Amendment” and the 2022 Plan, after giving effect to the 2024 Stock Plan Amendment, the “Amended 2022 Stock Plan”). Subject to adjustment, the 2024 Stock Plan Amendment authorizes the issuance of an additional 1,610,000 shares pursuant to the Amended 2022 Stock Plan. During the 2025 Annual Meeting, the stockholders of the Company approved a further amendment to the Amended 2022 Stock Plan (such amendment, the “2025 Stock Plan Amendment”; and the Amended 2022 Stock Plan, after giving effect to the 2025 Stock Plan Amendment, the “Second Amended 2022 Stock Plan”). The 2025 Stock Plan Amendment authorized the issuance of an additional 750,000 shares pursuant to the Second Amended 2022 Stock Plan..\n\nAs of December 31, 2025, approximately 1.9 million shares of common stock were available for issuance under the Second Amended 2022 Stock Plan.\n\nEquity-based service awards are granted under the 2022 Plan, which was approved by the Company's stockholders at the 2022 Annual Meeting of Stockholders (the “Annual Meeting”) held on April 27, 2022. Prior to this approval, the Company granted equity-based incentive awards under the Sixth Amended and Restated 2008 Stock Incentive Plan (the “2008 Plan”), which was renamed, amended and restated to the 2022 Plan. The 2022 Plan, among other things, increased the number of shares reserved for issuance under the 2008 Plan by 1,150,000 shares. On May 23, 2023, the Company’s stockholders approved an amendment to the 2022 Plan (such amendment, the “2023 Stock Plan Amendment”). Subject to adjustment, the 2023 Stock Plan Amendment increased the number of shares reserved for issuance under the 2022 Plan by 750,000 shares.\n\nFrom time to time, the Company may grant stock options to employees through an inducement grant outside of the Second Amended 2022 Stock Plan to induce prospective employees to accept employment (the “Inducement Grants”). The options are granted at an exercise price equal to the fair market value of a share of the common stock on the respective grant date and are generally exercisable in four equal annual installments beginning on the first anniversary of the respective grant date. The grants are made pursuant to inducement grants outside of the stockholder approved equity plan as permitted under the Nasdaq Stock Market listing rules. No Inducement Grants were issued to employees in 2023, 2024, or 2025.\n\nThe cost of equity-based service awards are measured based on the grant-date fair value of the award. The cost is recognized ratably over the period during which an employee is required to provide service in exchange for the award or the requisite service period. Stock-based compensation expense is recognized ratably over the vesting periods of the awards.\n\nThe following table summarizes stock-based compensation expense incurred for ESPP expense, stock options, restricted stock awards, restricted stock units, performance-based restricted stock units, and Inducement Grants and included in the consolidated statements of operations:\n\n(in thousands)Years Ended December 31,\n\n202520242023\n\nSelling, general, and administrative$33,982$26,534$19,036\n\nResearch and development2,1441,533910\n\nCost of sales1,8031,277706\n\nTotal$37,929$29,344$20,652\n\nIncome tax benefits of approximately $1.4 million, $2.8 million, and $3.3 million were recognized for stock-based compensation-related tax deductions in the 2025, 2024, and 2023 consolidated statements of operations, respectively.\n\n124\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nStock Options\n\nOutstanding stock options granted to employees and consultants generally vest over a period of four years and have 10-year contractual terms. Outstanding stock options granted to non-employee directors generally vest over a period of one to four years and have 10-year contractual terms.\n\nThere were no grants of stock options during 2025 or 2024. For 2023, the fair value of each option grant was estimated using the Black-Scholes option-pricing model, using the following assumptions:\n\nYear Ended December 31,\n\n2023\n\nExpected option life (years)6.25\n\nRisk-free interest rate4.1%\n\nExpected stock price volatility49.0%\n\nDividend yield—\n\nThe Company uses the simplified method to estimate the expected option life of options. The risk-free interest rate used is the yield on a U.S. Treasury note as of the grant date with a maturity equal to the estimated life of the option. The calculated estimated volatility rate is based on ANI's historical stock price. The Company has not issued a cash dividend on its shares of common stock in the past nor does the Company have any current plans to do so in the future; therefore, an expected dividend yield of zero was used.\n\nA summary of stock option activity under the Second Amended 2022 Stock Plan and Inducement Grants during the years ended December 31, 2025, 2024, and 2023 is presented below:\n\n(in thousands, except per share and\nremaining term data)Option\nSharesWeighted\nAverage\nExercise PriceFair ValueWeighted\nAverage\nRemaining\nTerm\n(years)Aggregate\nIntrinsic Value\n\nOutstanding at December 31, 2022907 $45.47 5.6$3,868 \n\nGranted3 41.84 $22.12 \n\nExercised(189)44.09 $2,894 \n\nForfeited(21)33.45 \n\nExpired(11)55.15 \n\nOutstanding at December 31, 2023689 $46.05 4.9$8,370 \n\nExercised(102)43.80 $2,001 \n\nExpired(3)50.88 \n\nOutstanding at December 31, 2024584 $46.42 3.9$7,190 \n\nExercised(197)55.22 $5,125 \n\nForfeited(3)34.24 \n\nExpired(33)68.71 \n\nOutstanding at December 31, 2025351 $39.53 4.0$13,852 \n\nExercisable at December 31, 2025349 $39.53 3.9$13,765 \n\n125\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nAs of December 31, 2025, there was less than $0.1 million of total unrecognized compensation cost related to non-vested stock options granted under the Second Amended 2022 Stock Plan and Inducement Grant. The cost is expected to be recognized over a weighted-average period of 0.83 years. During the year ended December 31, 2025, the Company received $10.9 million in cash from the exercise of stock options and recorded approximately $0.2 million tax provision related to these exercises. During the year ended December 31, 2024, the Company received $4.5 million in cash from the exercise of stock options and recorded a $0.2 million tax provision related to these exercises. During the year ended December 31, 2023, the Company received $8.3 million in cash from the exercise of stock options and recorded a $0.2 million tax provision related to these exercises.\n\nRestricted Stock Awards\n\nRestricted stock awards (“RSAs”) granted to employees generally vest over a period of four years. RSAs granted to non-officer directors generally vest over a period of one year. During the vesting period, the recipient of the restricted stock has full voting rights as a stockholder and would receive dividends, if declared, even though the restricted stock remains subject to transfer restrictions and will generally be forfeited upon termination of the officer prior to vesting. The fair value of each RSA is based on the market value of the Company's stock on the date of grant. Upon vesting, unrestricted shares of common stock are delivered to employees and directors.\n\nA summary of RSA activity under the Second Amended 2022 Stock Plan during the years ended December 31, 2025, 2024, and 2023 is presented below:\n\n(in thousands, except per share and\nremaining term data)SharesWeighted\nAverage Grant\nDate Fair\nValueWeighted Average\nRemaining Term\n(years)\n\nUnvested at December 31, 20221,141 $33.86 2.6\n\nGranted674 43.30 \n\nVested(383)34.59 \n\nForfeited(81)38.10 \n\nUnvested at December 31, 20231,351 $38.11 2.4\n\nGranted708 57.22 \n\nVested(485)37.99 \n\nForfeited(119)45.05 \n\nUnvested at December 31, 20241,455 $46.89 2.3\n\nGranted729 61.59 \n\nVested(552)43.44 \n\nForfeited(95)55.04 \n\nUnvested at December 31, 20251,537 $54.59 2.3\n\nAs of December 31, 2025, there was $66.5 million of total unrecognized compensation cost related to non-vested RSAs granted under the Second Amended 2022 Stock Plan, which is expected to be recognized over a weighted-average period of 2.26 years.\n\nRestricted Stock Units\n\nRestricted stock units (“RSUs”) are typically granted to international employees of the Company under the Amended 2022 Stock Plan, and generally vest over a period of four years. Each RSU will entitle the recipient to receive one unrestricted share of common stock upon vesting. The fair value of each RSU is based on the market value of the Company's stock on the date of grant. The Company began granting RSUs to certain employees during the year ended 2025, and there were no grants to employees during 2024 or 2023.\n\n126\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nA summary of RSU activity under the Second Amended 2022 Stock Plan during the year ended December 31, 2025 is presented below:\n\n(in thousands, except per share and\nremaining term data)SharesWeighted\nAverage Grant\nDate Fair\nValueWeighted Average\nRemaining Term\n(years)\n\nUnvested at December 31, 2024— $— — \n\nGranted23 70.09 \n\nForfeited(1)69.64 \n\nUnvested at December 31, 202522 $70.12 3.4\n\nAs of December 31, 2025, there was $1.4 million of total unrecognized compensation cost related to non-vested RSUs granted under the Second Amended 2022 Stock Plan, which is expected to be recognized over a weighted-average period of 3.4 years.\n\nPerformance-Based Restricted Stock Units\n\nAwards may also be issued in the form of PSUs. PSUs represent the right to receive a number of shares of Company common stock, contingent upon the achievement of specified performance objectives during a specified performance period. PSUs granted to date vest over a three-year performance period.\n\nFebruary 12, 2025 Performance-Based Restricted Stock Units\n\nOn February 12, 2025, as part of the Company's equity compensation program, PSUs were granted to certain executives. Of these PSUs, 50% were market performance-based restricted stock units (“MPRSUs”), vesting of which is contingent upon the Company meeting certain total shareholder return (“TSR”) levels as compared to a select peer group over the over three years starting January 1, 2025, and 50% of the PSUs were performance based restricted stock units (“PRSUs”), vesting of which is contingent upon the Company meeting certain adjusted non-GAAP year-on-year EBITDA growth rates over the over three years starting January 1, 2025. The MPRSUs and PRSUs are also subject to the recipient’s continued employment or service through December 31, 2027. The related share-based compensation expense is determined based on the estimated fair value of the underlying shares on the date of grant and is recognized straight-line over the vesting term.\n\nOn February 12, 2025, the Company granted 79,859 PSUs to employees and officers of the Company under the Second Amended 2022 Stock Plan (including 74,421 PSUs to officers of the Company). As described above, PSU performance will be measured over three-year performance period from January 1, 2025 through December 31, 2027 and will cliff-vest contingent upon the achievement of specified performance objectives. Both the MPRSUs and the PRSUs have a maximum potential to vest at 200%. At each reporting period, the Company analyzes progress on the performance goals to assess the likelihood of achievement.\n\nThe estimated grant date fair value per share of the MPRSUs was $97.48 and was calculated using a Monte Carlo simulation model. These MPRSUs are included at 100% of the estimate number of shares at the end of the three-year performance period and are reflected under “Granted” in the table below.\n\nThe estimated grant date fair value per share of the PRSUs was $59.68 based on the closing price of the stock on the date of grant. These PRSUs are included at 100% of the estimated number of shares at the end of the three-year performance period and are reflected under “Granted” in the table below.\n\n127\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nFebruary 14, 2024 Performance-Based Restricted Stock Units Grant\n\nOn February 14, 2024, the Company granted 73,588 PSUs to officers and employees of the Company under the Second Amended 2022 Stock Plan (including 66,433 PSUs to officers of the Company). PSU performance will be measured over a three-year performance period from January 1, 2024 through December 31, 2026 and will cliff-vest contingent upon the achievement of specified performance objectives. Of these PSUs, 50% were MPRSUs, vesting of which is contingent upon the Company meeting certain TSR levels as compared to a select peer group over the over three years starting January 1, 2024, and 50% of the PSUs were PRSUs, vesting of which is contingent upon the Company meeting certain adjusted non-GAAP year-on-year EBITDA growth rates over the over three years starting January 1, 2024. Both the MPRSUs and the PRSUs have a maximum potential to vest at 200%. At each reporting period, the Company analyzes progress on the performance goals to assess the likelihood of achievement.\n\nThe estimated grant date fair value per share of the MPRSUs was $85.65 and was calculated using a Monte Carlo simulation model. Based on the Company's analysis, the MPRSUs are included at 100% of the estimate number of shares at the end of the three-year performance period and are reflected under “Granted” in the table below.\n\nThe estimated grant date fair value per share of the PRSUs was $56.10 based on the closing price of the stock on the date of grant. Based on the Company's analysis, the PRSUs are included at 100% of the estimated number of shares at the end of the three-year performance period and are reflected under “Granted” in the table below.\n\nFebruary 28, 2023 Performance-Based Restricted Stock Units Grant\n\nOn February 28, 2023, as part of the Company's equity compensation program, PSUs were granted to certain executives. Of these PSUs, 50% were MPRSUs, vesting of which is contingent upon the Company meeting certain TSR levels as compared to a select peer group over the over three years starting January 1, 2023. The MPRSUs are also subject to the recipient’s continued employment or service through December 31, 2025. The MPRSUs cliff vest at the end of the three-year period and have a maximum potential to vest at 200% (85,099 shares) based on TSR performance. The related share-based compensation expense is determined based on the estimated fair value of the underlying shares on the date of grant and is recognized straight-line over the vesting term. The estimated grant date fair value per share of the MPRSUs was $68.65 and was calculated using a Monte Carlo simulation model. The MPRSUs are included at 100% of the estimate number of shares at the end of the three-year performance period and are reflected under “Granted” in the table below.\n\nThe other 50% of the PSUs were PRSUs, vesting of which is contingent upon the Company meeting certain adjusted non-GAAP year-on-year EBITDA growth rates over the over three years starting January 1, 2023. The PRSUs are also subject to the recipient’s continued employment or service through December 31, 2025. The PRSUs cliff vest at the end of the three-year period and have a maximum potential to vest at 200% (85,099 shares) based on adjusted non-GAAP year-on-year EBITDA growth rates. The related share-based compensation expense is determined based on the estimated fair value of the underlying shares on the date of grant and is recognized straight-line over the vesting term. At each reporting period, the Company analyzes progress on the performance goals to assess the likelihood of achievement. The estimated grant date fair value per share of the PRSUs was $41.84 based on the closing price of the stock on the date of grant. The PRSUs are included at 100% of the estimated number of shares at the end of the three-year performance period and are reflected under “Granted” in the table below.\n\n128\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nA summary of PSU activity under the Second Amended 2022 Stock Plan during the years ended December 31, 2025, 2024, and 2023 is presented below:\n\n(in thousands, except per share and\nremaining term data)SharesWeighted\nAverage Grant\nDate Fair\nValueWeighted Average\nRemaining Term\n(years)\n\nUnvested at December 31, 2022— $— 0\n\nGranted85 41.84 \n\nForfeited(1)41.84 \n\nUnvested at December 31, 202384 $41.84 2.0\n\nGranted74 56.10 \n\nForfeited(8)48.06 \n\nUnvested at December 31, 2024150 $48.52 1.6\n\nGranted80 59.68 \n\nUnvested at December 31, 2025230 $52.40 1.5\n\nAs of December 31, 2025, there was $8.5 million of total unrecognized compensation cost related to non-vested PSUs granted under the Second Amended 2022 Stock Plan, which is expected to be recognized over a weighted-average period of 1.5 years.\n\n16. INCOME TAXES\n\nThe foreign current and foreign deferred (benefit) expense below represent the Company's tax (benefit) expense from Canada, India, United Kingdom, Ireland, Portugal, and Germany.\n\nThe Company is required to establish a valuation allowance for deferred tax assets if, based on the weight of all available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the projected future taxable income and tax planning strategies in making this assessment.\n\nAs of December 31, 2025 and 2024, the consolidated valuation allowance was $12.4 million and $9.5 million, respectively, primarily related to deferred tax assets for net operating losses in the UK and certain U.S. state jurisdictions.\n\nIn July 2025, the One Big Beautiful Bill Act (\"OBBBA\") was enacted into law. For fiscal year 2025, the primary impact of the OBBBA to the tax provision was the accelerated expensing of domestic research and development activities which reduced the Company's deferred tax assets and reduced its current income tax liability. The OBBBA restored an EBITDA-based calculation permanently and it resulted in the reduction of deferred tax assets and additional tax-deductible interest expense.\n\nIncome (loss) before expense (benefit) for income taxes consisted of the following:\n\nYears Ended December 31,\n\n(in thousands) 202520242023\n\nUnited States$103,588 $(24,618)$19,124 \n\nForeign(7,797)2,406 748 \n\nIncome (loss) before expense (benefit) for income taxes\n$95,791 $(22,212)$19,872 \n\n129\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nTotal income tax expense (benefit) for income taxes consists of the following for the years ended December 31:\n\n(in thousands)202520242023\n\nCurrent income tax expense (benefit)   \n\nFederal$(3,011)$13,714 $9,117 \n\nState5,533 2,231 3,534 \n\nForeign171 1,876 26 \n\nTotal current tax expense2,693 17,821 12,677 \n\nDeferred income tax expense (benefit)   \n\nFederal15,979 (17,876)(7,601)\n\nState(1,250)(3,906)(3,946)\n\nForeign(2,942)(1,217)(29)\n\nTotal deferred tax expense (benefit)11,787 (22,999)(11,576)\n\nChange in valuation allowance2,974 1,488 (8)\n\nTotal expense (benefit) for income taxes$17,454 $(3,690)$1,093 \n\nThe following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the year ended December 31, 2025, updated for the new disclosure guidance within ASU 2023-09, which the Company has adopted prospectively.\n\nYear Ended December 31, 2025\n\n(in thousands)\nAmountPercentage\n\nTax expense at federal statutory rate$20,116 21.0 %\n\nState and local income tax, net of federal (national) income tax effect2,902 3.0 %\n\nForeign tax effects:\n\nForeign Tax Effects - United Kingdom - Valuation Allowance2,974 3.1 %\n\nForeign Tax Effects - United Kingdom - Other(468)(0.5)%\n\nForeign Tax Effects - Other foreign jurisdictions(662)(0.7)%\n\nTax Credits - Research and Experimentation(3,771)(3.9)%\n\nNontaxable or nondeductible items:\n\nNontaxable or Nondeductible Items - Executive compensation 2,668 2.8 %\n\nNontaxable or Nondeductible Items - Equity compensation(1,281)(1.3)%\n\nNontaxable or Nondeductible Items - Contingent consideration(5,992)(6.3)%\n\nNontaxable or Nondeductible Items - Other989 1.0 %\n\nOther adjustments(21)— %\n\nTax expense at effective rate$17,454 18.2 %\n\n130\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nThe following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the years ended December 31, 2024 and 2023, prior to the application of ASU 2023-09:\n\nAs of December 31,\n\n20242023\n\nUS federal statutory rate21.0 %21.0 %\n\nState taxes, net of federal benefit2.5 %4.8 %\n\nForeign taxes(3.0)%0.0%\n\nChange in valuation allowance(6.7)%0.0%\n\nStock-based compensation(6.5)%10.8 %\n\nNon-deductible costs(8.8)%2.1 %\n\nChange in state apportionment factors, state and foreign rates4.0 %(11.8)%\n\nResearch and experimentation and charitable credits14.1 %(19.0)%\n\nTransfer pricing and other— %(2.4)%\n\nEffective income tax rate16.6 %5.5 %\n\nThe components of deferred tax assets and liabilities as of December 31, 2025 and 2024, are as follows (in thousands): \n\nAs of December 31,\n\n(in thousands)20252024\n\nDeferred tax assets:\n\nAccruals and advances$18,944 $16,318 \n\nStock-based compensation8,430 7,373 \n\nAccruals for chargebacks and returns19,447 23,427 \n\nInventories6,614 5,234 \n\nNet operating loss carryforwards28,148 27,254 \n\nCapitalized research expenditures— 19,836 \n\nInterest expense carryforwards — 6,400 \n\nDebt instruments7,728 9,590 \n\nCharitable contribution carryforward7,003 — \n\nOther assets7,718 5,305 \n\nTotal deferred tax assets$104,032 $120,737 \n\nLess valuation allowance(12,423)(9,450)\n\nTotal net deferred tax assets$91,609 $111,287 \n\nDeferred tax liabilities:  \n\nDepreciation$(6,336)$(6,710)\n\nIntangible assets(7,358)(12,537)\n\nOther liabilities (8,843)(6,934)\n\nTotal deferred tax liabilities$(22,537)$(26,181)\n\nDeferred tax assets, net of deferred tax liabilities and valuation allowance$69,072 $85,106 \n\n131\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nAs of December 31, 2025, the Company had U.S. federal net operating loss carryforwards of approximately $48.3 million and UK net operating loss carryforwards of approximately $61.9 million as a result of the acquisition of Alimera. Net operating loss carryforwards related to the Alimera acquisition are indefinite lived. State net operating loss carryforwards related to the 2013 merger with BioSante Pharmaceuticals, Inc., if not used, expire in annual increments through 2033. All of the net operating loss carryforwards are limited on an annual basis as prescribed by Section 382 of the U.S. Internal Revenue Code; the current annual limitation is approximately $7.2 million per year. Additionally, as of December 31, 2025, the Company had tax effected total net operating losses in various states of $2.2 million which begin to expire through 2030.\n\nThe amounts of income tax paid by the Company, net of refunds, for the year ended December 31, 2025 were as follows:\n\n(in thousands)\n\nAmount\n\nUnited States - federal$13,699 \n\nUnited States - state and local - other2,343 \n\nUnited States - state and local - Pennsylvania 976 \n\nForeign656 \n\nTotal\n$17,674 \n\nThe Company is subject to income taxes in numerous jurisdictions in the U.S. and certain foreign jurisdictions. Significant judgment is required in evaluating tax positions and determining the expense for income taxes. The Company established liabilities for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These liabilities are established when the Company believe that certain positions might be challenged despite its belief that its tax return positions are fully supportable. The Company adjusts these liabilities in light of changing facts and circumstances, such as the outcome of a tax audit. The expense for income taxes includes the impact of changes to the liability that is considered appropriate. The Company has not identified any material uncertain income tax positions as of December 31, 2025 and 2024.\n\nWhile the general IRS assessment statute of limitations is three years, the IRS can examine an original loss year return to verify a net operating loss deduction, even if it is beyond the three-year statute. This exception applies because a net operating loss deduction may affect the taxable income in other years, and the IRS retains the right to audit the original year to ensure the net operating loss was properly calculated.\n\n17. COMMITMENTS AND CONTINGENCIES\n\nOperating Leases\n\nThe majority of the Company's leases as of December 31, 2025 are classified as operating leases. Leases with an initial term of twelve months or less are not recorded on the balance sheet, and the Company does not separate lease and non-lease components of contracts. The Company’s lease agreements do not provide for determination of the interest rate implicit in the lease. Therefore, the Company used a benchmark approach to derive an appropriate incremental borrowing rate. The Company’s incremental borrowing rate is the rate of interest that the lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The Company benchmarked itself against other companies of similar credit ratings and comparable quality and derived an incremental borrowing rate, which was used to discount its lease liabilities. Rent expense is recognized on a straight-line basis over the lease term. Operating lease ROU assets are included in other non-current assets and operating lease liabilities are included in accrued expenses and other and other non-current liabilities in the consolidated balance sheets. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.\n\n132\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nThe Company entered into a new lease agreement for office space located in Princeton, New Jersey, for a term of approximately 10 years, following the lease commencement date of August 18, 2025. The office space serves as the Company's commercial headquarters, which includes certain employees in the Company's corporate, legal, human resources, business functions, and commercial operations. The Company recognized a right-of-use asset and a corresponding lease liability at the lease commencement date of approximately $5.2 million. The lease liability is initially measured at the present value of the lease payments, discounted using the lessee's incremental borrowing rate of approximately 7.4%. The lease agreement includes a rent-free period of three months, and is classified as an operating lease in the consolidated balance sheets.\n\nIn connection with the acquisition of Alimera, the Company acquired an operating lease for office space in Alpharetta, Georgia The lease for this space expires in December 2032 with an early termination option in December 2029 and an option to extend five years beyond December 2032. During 2025, the Company entered into an agreement to sublease the entire space to a subtenant, which agreement will expire in December 2032.\n\nAs of December 31, 2025, the Company has operating leases for facilities and office equipment with remaining terms expiring from 2026 through 2035 and a weighted average remaining lease terms of 6.5 years and 3.8 years, as of December 31, 2025 and 2024, respectively. Many of the operating leases have fair value renewal options, none of which are considered certain of being exercised or included in the minimum lease term. The weighted average incremental borrowing rates for the Company's lease obligations as of December 31, 2025 and 2024 are 7.74% and 8.10%, respectively.\n\nLease expense consisted of the following for the years ended December 31:\n\n(in thousands)202520242023\n\nOperating lease costs$3,299$2,122$2,031\n\nFinance lease costs12343—\n\nVariable lease costs190261221\n\nSublease income(64)——\n\nTotal lease costs$3,548$2,426$2,252\n\nThe table below reconciles the fixed component of the undiscounted cash flows for each of the next five years and the total remaining years to the operating lease liabilities recorded on the consolidated balance sheet as of December 31:\n\n(in thousands)\n\n2026$2,597\n\n20272,835\n\n20282,147\n\n20291,679\n\n2030920\n\nThereafter 4,094\n\nTotal minimum lease payments $14,272\n\nLess: effects of discounting (3,176)\n\nPresent value of future minimum lease payments 11,096\n\nLess: current lease liability, included in accrued expenses and other(1,923)\n\nNon-current lease liability, included in other non-current liabilities$9,173\n\n133\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nFinance Leases\n\nIn connection with the acquisition of Alimera, the Company acquired finance leases primarily consisting of automobiles. The automobiles are capitalized at the lesser of fair market value or the present value of the minimum lease payments at the inception of the leases using the Company’s incremental borrowing rate. The Company’s finance lease agreements do not contain any material residual value guarantees or material restrictive covenants. Finance lease ROU assets are included in other non-current assets, specifically in Property and equipment, net, and finance lease liabilities are included in accrued expenses and other and other non-current liabilities in the consolidated balance sheets.\n\nAs of December 31, 2025, a schedule of maturity of finance lease liabilities, together with the present value of minimum lease payments, is as follows:\n\n(in thousands)\n\n2026$150\n\n20278\n\nTotal minimum lease payments$158\n\nLess: effects of discounting(6)\n\nPresent value of future minimum lease payments152\n\nLess: current lease liability, included in accrued expenses and other(104)\n\nNon-current lease liability, included in other non-current liabilities$48\n\nAs of December 31, 2025, the weighted average remaining lease terms of the Company's finance leases was 0.6 years. As of December 31, 2025 the weighted average discount rate used to determine the finance lease liabilities was 10.7%.\n\nGovernment Regulation\n\nThe Company's products and facilities are subject to regulation by a number of federal and state governmental agencies, such as the Drug Enforcement Administration (“DEA”), the FDA, the Centers for Medicare and Medicaid Services, the Central Drugs Standard Control Organization, the Narcotics Control Bureau (“NCB”), and India’s Ministry of Health and Family Welfare. The FDA, in particular, maintains oversight of the formulation, manufacture, distribution, packaging, and labeling of all of ANI's products. The DEA and NCB maintain oversight over products that are considered controlled substances.\n\nUnapproved Products\n\nFour products, Esterified Estrogen with Methyltestosterone (“EEMT”), Opium Tincture, Thyroid Tablets, and Hyoscyamine, are marketed without approved NDAs or ANDAs. On December 27, 2023, the Company acquired from Alvogen, Inc. the rights to Hyoscyamine for total cash consideration of $2.0 million, which product was launched commercially in February 2024. During the years ended December 31, 2025, 2024, and 2023, net revenues from the commercial sales of these products totaled $24.1 million, $22.4 million, and $22.4 million, respectively. Before the acquisition of Hyoscyamine, contract manufacturing revenues for Hyoscyamine, for the years ended December 31, 2024 and 2023 were $0.1 million and $1.9 million, respectively.\n\n134\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nLegal proceedings\n\nThe Company is involved, and from time to time may become involved, in various disputes, governmental and/or regulatory inquiries, investigations, government reimbursement related actions and litigation. These matters are complex and subject to significant uncertainties. While the Company believes that it has valid claims and/or defenses in the litigation and other matters described below, litigation is inherently unpredictable, particularly where the damages sought are substantial or indeterminate or when the proceedings, investigations or inquiries are in the early stages, and the outcome of the proceedings could result in losses, including substantial damages, fines, civil or criminal penalties and injunctive or administrative remedies. The Company intends to vigorously prosecute and/or defend these matters, as appropriate; however, from time to time, the Company may settle or otherwise resolve these matters on terms and conditions that it believes are in the Company's best interests. Resolution of any or all claims, investigations, and legal proceedings, individually or in the aggregate, could have a material adverse effect on the results of operations and/or cash flows in any given accounting period or on the Company's overall financial condition.\n\nUnless otherwise disclosed, the Company is unable to predict the outcome of the matter or to provide an estimate of the range of reasonably possible material losses. The Company records accruals for loss contingencies to the extent it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.\n\nFrom time to time, the Company may also be involved in other pending proceedings for which, in the opinion of management and based upon facts and circumstances known at the time, either the likelihood of loss is remote or any reasonably possible loss associated with the resolution of such proceedings is not expected to be material to our results, and therefore remain undisclosed. If and when any reasonably possible losses associated with the resolution of such other pending proceedings, in the opinion of management, become material, the Company will disclose such matters.\n\nFurthermore, like many pharmaceutical manufacturers, the Company is periodically exposed to product liability claims. The prevalence of these claims could limit the Company's coverage under future insurance policies or cause those policies to become more expensive, which could harm its business, financial condition, and operating results. Recent trends in the product liability and director and officer insurance markets is to exclude matters related to certain classes of drugs. The Company's policies have been subject to such exclusions which place further potential risk of financial loss on us.\n\nLegal fees for litigation-related matters are expensed as incurred and included in the consolidated statements of operations under the selling, general, and administrative expense line item.\n\n135\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nCommercial Litigation\n\nOn March 4, 2024, ANI commenced a civil action against CG Oncology, Inc. f/k/a Cold Genesys, Inc. (“CG Oncology”) in the Superior Court of the State of Delaware (“Delaware Action”). ANI’s complaint alleges that, under an Assignment and Technology Transfer Agreement dated as of November 15, 2010 (the “November 2010 Agreement”), CG Oncology is liable to pay ANI a running royalty of 5% of the worldwide net sales of cretostimogene made by CG Oncology or any affiliate or sublicensee thereof; and that in February 2024, CG Oncology wrongfully repudiated its royalty obligation to ANI. On April 2, 2024, CG Oncology filed an answer and counterclaim (the “CGON Answer and Counterclaim”) and concurrently moved for judgment on the pleadings or, in the alternative, for partial summary judgment (the “Motion for Summary Judgment”). CG Oncology’s Motion for Summary Judgment sought judgment declaring that the November 2010 Agreement does not “oblige CGON to pay royalties after expiration of the latest-running assigned patent.” On April 25, 2024, ANI filed a reply to CG Oncology’s counterclaims, denying any liability to CG Oncology and asserting additional counterclaims against CG Oncology (“Reply Counterclaims”) for alleged breach of the November 2010 Agreement and, in the alternative, for unjust enrichment. On May 15, 2024, CG Oncology filed a reply to ANI’s counterclaims, denying any liability to ANI and generally maintaining the positions taken in the CGON Answer and Counterclaim. On November 18, 2024, the court denied CG Oncology's Motion for Summary Judgment. On June 2, 2025, CG Oncology filed five motions for summary judgment seeking dismissal of all of ANI's claims and counterclaims, including breach of the royalty payment provision, breach of good faith performance, breach of the implied covenant of good faith, and in the alternative, unjust enrichment. Also on June 2, 2025, ANI filed a motion for partial summary judgment seeking dismissal of CG Oncology's counterclaims for unenforceability of the royalty payment provision under Brulotte, breach of good faith performance, breach of confidentiality and trade secret misappropriation. At a pretrial conference on July 16, 2025, the court granted CG Oncology's motion for partial summary judgment on its Brulotte counterclaim and affirmative defense, but allowed the case to proceed on ANI's counterclaim for unjust enrichment. The court also granted ANI's motion for partial summary judgment, dismissing CG Oncology's breach of confidentiality and trade secret misappropriation claims. The jury trial commenced in Delaware Superior Court on July 21, 2025. On July 29, 2025, a verdict was returned by the jury, finding that (1) the unenforceability of the royalty payment provision in the November 2010 Agreement did not affect the economic or legal substance of the transactions contemplated thereby in a manner that was materially adverse to ANI, and (2) awarding no damages to ANI on its unjust enrichment counterclaim. On August 12, 2025, ANI filed a motion for a new trial and for judgment as a matter of law. On September 10, 2025, CG Oncology filed its opposition to ANI's motion, and on October 8, 2025, ANI filed its reply to CG Oncology's opposition. A hearing date has been scheduled for April 10, 2026. ANI expects to continue to challenge this verdict through post-trial motions and/or an appeal.\n\nOn March 6, 2024, a complaint was filed against ANI by Acella Pharmaceuticals, LLC, in the United States District Court of Minnesota, asserting, among other things, false advertising under the Lanham Act, and unfair trade practices and false advertising under Minnesota law, relating to ANI’s natural desiccated thyroid tablets USP. The complaint seeks injunctive relief, actual and consequential damages, disgorgement of profits, and attorneys’ fees and costs. On April 16, 2024, ANI filed an answer to Acella’s complaint, denying all claims, and asserting certain affirmative defenses, and counterclaims against Acella for false advertising of its thyroid product marketed as NP Thyroid® Tablets, under the Lanham Act, common law unfair competition and unfair and deceptive trade practices and false advertising under Minnesota and Georgia law. ANI seeks injunctive relief, compensatory damages, punitive damages and attorneys’ fees and costs. On May 17, 2024, Acella filed a motion to dismiss ANI’s counterclaims. On June 7, 2024, ANI filed an amended answer to Acella’s complaint and counterclaims. Acella filed a motion to dismiss ANI’s amended counterclaims on July 31, 2024. A hearing was held on September 11, 2024 on Acella’s motion to dismiss. On December 19, 2024, the court issued an order denying Acella's motion. The parties have been unable to reach a settlement to date. Fact discovery is now closed and expert discovery is currently ongoing. The trial-ready date is currently set for no earlier than August 3, 2026. ANI disputes any liability in this matter and intends to defend this lawsuit vigorously.\n\n136\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nPatent Litigation\n\nOn November 21, 2023, a complaint was filed against Novitium and certain other defendants in the case of Harmony Biosciences, LLC, Bioprojet Societe Civile de Recherche and Bioprojet Pharma SAS (collectively, the \"Plaintiffs\") v. AET Pharma US, Inc., Annora Pharma Private Limited, Novitium Pharma LLC, Zenara Pharma Private Limited and Biophore India Pharmaceuticals Private Limited in the U.S. District Court for the District of Delaware, asserting, among other things, that Novitium’s proposed pitolisant hydrochloride drug product, which is subject to Novitium’s Abbreviated New Drug Application, infringes certain U.S. patents owned by the plaintiffs. The complaint seeks damages, injunctive relief, attorneys’ fees and costs. On January 29, 2024, Novitium filed its answer, denying all allegations and asserting counterclaims of non-infringement and invalidity. On February 16, 2024, plaintiffs filed their answer, denying Novitium’s counterclaims and asserting certain affirmative defenses against Novitium. On April 15, 2024, the court consolidated Novitium’s case and two other cases brought by plaintiffs against Lupin Limited et al, and MSN Pharms. Inc. et al., into one consolidated matter filed in C.A. No. 23-1286-JLH. On January 15, 2026, Plaintiffs and Novitium entered into a Settlement Agreement, and on January 16, 2026, Plaintiffs and Novitium filed a Stipulation and Joint Dismissal of all claims, counterclaims and defenses, which order was entered by the court on January 20, 2026, effectively terminating the case against Novitium.\n\nOn December 27, 2024, a complaint was filed against Novitium by Athena Bioscience, LLC (“Athena”) in the U.S. District Court for the District of Delaware, asserting, among other things, that Novitium’s proposed tramadol hydrochloride solution drug product, which is subject to Novitium’s Abbreviated New Drug Application, infringes certain U.S. patents owned by Athena. The complaint seeks damages, injunctive relief, attorneys’ fees and costs. On March 7, 2025, Novitium filed its answer, denying all allegations and asserting counterclaims of non-infringement and invalidity. On March 28, 2025, Athena filed its answer to Novitium's answer and counterclaims. On September 4, 2025, Athena and Novitium jointly filed a Stipulation and Order of Dismissal of all claims, counterclaims and defenses, which order was entered by the court on September 8, 2025, effectively terminating the case.\n\nRanitidine Related Litigation\n\nFederal Court Multi District Litigation\n\nANI and Novitium were named as defendants, along with numerous other brand and generic pharmaceutical manufacturers, wholesale distributors, retail pharmacy chains, and repackagers of ranitidine-containing products, in In re: Zantac/Ranitidine NDMA Litigation (MDL No, 2924), filed in the United States District Court for the Southern District of Florida (the “MDL Court”). Plaintiffs allege that defendants failed to disclose and/or concealed the alleged inherent presence of N-Nitrosodimethylamine (or “NDMA”) in brand-name Zantac or generic ranitidine and the alleged associated risk of cancer. While ANI was initially a defendant, the lead plaintiff attorneys voluntarily dismissed ANI as a defendant in the Master Complaint. On July 8, 2021, the MDL Court dismissed all claims by all plaintiffs against the generic drug manufacturers with prejudice, on preemption grounds. The MDL Court also dismissed all claims by all plaintiffs against the brand manufacturers on summary judgment. Plaintiffs appealed the MDL Court’s dismissals to the Eleventh Circuit Court of Appeals. On November 7, 2022, the Eleventh Circuit affirmed the MDL Court’s dismissal of cases brought by third-party payors. The Eleventh Circuit raised questions in the appeals of the other cases about the finality of the MDL Court’s judgments, which were resolved in September 2023. Plaintiffs filed opening briefs on April 10, 2024 and generics defendants filed their response on July 25, 2024. Plaintiffs filed reply briefs in September 2024. Oral arguments were heard on October 10, 2025, and a decision from the court is pending.\n\nANI and Novitium dispute any liability in this matter.\n\n137\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nState Court Personal Injury Litigation\n\nCalifornia. The pending cases in California state court naming generic ranitidine manufacturers were transferred to an existing civil case coordination docket for pretrial proceedings (JCCP) in Alameda County. On September 21, 2023, plaintiffs filed a master complaint in the JCCP alleging strict liability, negligent failure to warn and general negligence, but not naming any generic defendants. Plaintiffs filed an amended master complaint on April 29, 2024 and filed a second amended master complaint on July 2, 2024. Defendants filed omnibus demurrers to the complaint. Novitium is currently named in one bellwether case (Bautista), one wave 2 case (Austin), one wave 3 case (Rodarte), three wave 5 cases, six wave 6 cases, and four wave 7 cases. The court heard arguments for the demurrers on August 22, 2024 and issued its final ruling on August 28, 2024, allowing some counts to survive. The surviving counts as to generic defendants include strict liability (manufacturing defect) and general negligence (storage and transport, failure to warn and product containers). Novitium filed its answer to the second amended master complaint on September 6, 2024.\n\nIn December 2023, the Keller Postman firm filed a large number of short form complaints that name generic defendants. Novitium is named in 29 of the short form complaints which reference the claims for the master complaint, but Novitium has not been served. ANI is not named. On February 1, 2024, the generic defendants filed an omnibus demurrer challenging the sufficiency of the Keller Postman complaints, largely on the basis of preemption. On April 23, 2024, the California court sustained the demurrer in part, dismissing all design defect claims against the generic defendants with prejudice on preemption grounds, but the court otherwise granted plaintiffs an opportunity for leave to amend their other claims against the generic defendants. Plaintiffs filed amended short form complaints on September 20, 2024 and defendants filed responses on October 6, 2024. No case including Novitium is expected to go to trial before June 2026.\n\nNovitium disputes any liability in these matters.\n\n18. RELATED PARTY TRANSACTIONS\n\nPIPE Shares\n\nOn March 8, 2021, the Company entered into an Equity Commitment and Investment Agreement with the PIPE Investor, pursuant to which 25,000 shares were purchased for $1,000 per share and an aggregate purchase price of $25.0 million on November 19, 2021. The former Chairman of the Company's Board of Directors and current Director, Patrick D. Walsh, is an operating partner of Ampersand Capital Partners, an affiliate of the PIPE Investor.\n\nDuring the quarter ended September 30, 2025, all PIPE Shares were converted to shares of common stock, and as such there were no PIPE Shares outstanding as of December 31, 2025. Refer to Note 13 “Mezzanine and Stockholders' Equity” to the notes to the consolidated financial statements for further information related to the conversion of the PIPE Shares.\n\nNovitium\n\nIn connection with the acquisition of Novitium, the Company entered into employment agreements with the two executives and founders of Novitium, Muthusamy Shanmugam, Head of R&D and COO of NJ Operations of ANI, and Chad Gassert, Sr. Vice President, Corporate Development and Strategy of ANI. Both serve as executive officers of the Company and Mr. Shanmugam also serves on the Company’s Board of Directors. Mr. Shanmugam holds a minority interest in Scitus Pharma Services Private Limited (“Scitus”), which provides clinical research services to Novitium. Mr. Shanmugam holds interests in certain entities with which the Company conducts business, including a majority interest in SS Pharma LLC (“SS Pharma”), which acquires and supplies API to Novitium; a minority interest in Nuray Chemical Private Limited (“Nuray”), which manufactured and supplied API to Novitium in prior periods; a majority interest in each of Esjay Pharma Private Limited and Esjay LLC (together, “Esjay”), which provides research and development services, certain finished goods, and certain consulting services to the Company; and a minority interest in each of SThree Chemicals Pvt Ltd and SThree Chemicals LLC (together, “SThree”), which acquires and supplies API to Novitium.\n\n138\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nA summary of payments to related parties is presented below:\n\nYears Ended December 31,\n\n(in thousands) 202520242023\n\nScitus $4,066$2,759$3,646\n\nSS Pharma—1,2448,235\n\nEsjay 4,566115—\n\nSThree 8,26811,428—\n\nTotal Payments$16,900$15,546$11,881\n\nAs of December 31, 2025, the outstanding balances due to Scitus, Esjay, and SThree were $0.5 million, $0.9 million, and $1.3 million, respectively. There was no outstanding balance due to SS Pharma or Nuray at December 31, 2025.\n\nOn December 12, 2023, the Company paid $12.5 million of cash consideration to the Company Members of Novitium for the achievement of the \"ANDA Filing Earn-Out,\" as defined in the Novitium Merger Agreement, and as discussed in Note 2 “Revenue Recognition and Related Allowances” in the notes to the consolidated financial statements. The Company paid each of Mr. Shanmugam, Esjay, and Mr. Gassert, through his company Chali Properties LLC, approximately $0.1 million, $6.6 million, and $1.9 million, respectively, for their portion of the cash consideration due to them as part of the Novitium Merger Agreement.\n\nOn February 22, 2024, the Company paid $12.5 million of cash consideration to the Company Members of Novitium for the achievement of the \"Gross Profit Earn-Out,\" as defined in the Novitium Merger Agreement, and as discussed in Note 2 “Revenue Recognition and Related Allowances” in the notes to the consolidated financial statements. The Company paid each of Mr. Shanmugam, Esjay, and Mr. Gassert, through his company Chali Properties LLC, approximately $0.1 million, $6.6 million, and $1.9 million, respectively, for their portion of the cash consideration due to them as part of the Novitium acquisition.\n\n19. SEGMENT REPORTING\n\nAn operating segment is defined as a component of an entity that engages in business activities from which it may recognize revenues and incur expense, the operating results of which are regularly reviewed by the entity’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The CODM for the Company is the Chief Executive Officer. The Company does not aggregate its operating segments for reporting purposes, and therefore, the reportable segments are the same as its operating segments.\n\nFollowing the acquisition of Alimera and during the fourth quarter of 2024, the Company reorganized the segment information that is regularly provided to the CODM resulting in changes to the Company's identification of significant segment expenses. Therefore, the Company has recast prior period segment information to conform to the current-period presentation in accordance with the segment guidance at ASC 280-10-50-34.\n\nThe Company is now organized into two operating segments as follows:\n\n•Rare Disease and Brands – Consists of two reporting units, Rare Disease and Brands. The Rare Disease unit consists of operations related to the development, manufacture and marketing of proprietary branded pharmaceutical products, with a strategic focus on products used in the treatment of patients with rare disease conditions, and consists of operations related to Cortrophin Gel and ILUVIEN (there were no sales of YUTIQ during the third and fourth quarters of 2025). In addition, the Brands reporting unit includes a portfolio of approximately 20 branded products that are principally sold in highly genericized markets.\n\n•Generics and Other – Consists of operations related to the development, manufacture, and marketing of generic pharmaceutical products including those sold through traditional wholesale and retail sales channels, sales of contract manufactured products, royalties on contract manufactured products, product development\n\n139\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nservices, and other. As of December 31, 2025, this reporting segment was comprised of over 120 product families.\n\nThe CODM evaluates the performance of the Company as two operating segments based on revenues and operating income (loss), exclusive of corporate expenses and other expenses not directly allocated or attributable to an operating segment. These expenses include, but are not limited to; certain management, legal, accounting, human resources, insurance, and information technology expenses, as well as transaction and integration expenses related to the acquisition of Alimera and other acquisitions.\n\nThe Company does not manage assets of the Company by operating segment and the CODM does not review asset information by operating segment. Accordingly, the Company does not present total assets by operating segment.\n\nFinancial information by reportable segment is as follows:\n\nYear Ended December 31, 2025\n\n(in thousands)\nGenerics and OtherRare Disease and BrandsCorporate and Unallocated Total\n\nNet Revenues $399,433$483,933$— $883,366 \n\nCost of sales (excluding depreciation and amortization) (201,955)(139,355)— (341,310)\n\nResearch and Development expense(36,815)(14,849)— (51,664)\n\nSelling, general, and administrative expense(5,675)(188,489)(123,581)(317,745)\n\nDepreciation and amortization— — (91,417)(91,417)\n\nContingent consideration fair value adjustment— — 31,012 31,012 \n\nLoss on disposal of assets— — (382)(382)\n\nIntangible asset impairment charge — — (767)(767)\n\nOperating Income (Loss)$154,988$141,240$(185,135)$111,093 \n\nUnrealized gain on investment in equity securities $— $— $2,824 $2,824 \n\nInterest expense, net — — (20,060)(20,060)\n\nOther income, net — — 1,934 1,934 \n\nIncome (Loss) Before Income Tax Expense$154,988$141,240$(200,437)$95,791 \n\n140\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nYear Ended December 31, 2024\n\n(in thousands)\nGenerics and OtherRare Disease and BrandsCorporate and UnallocatedTotal\n\nNet Revenues$320,034$294,342$— $614,376 \n\nCost of sales (excluding depreciation and amortization)(168,371)(81,839)— (250,210)\n\nResearch and Development expense(30,519)(14,062)— (44,581)\n\nSelling, general, and administrative expense(5,120)(125,972)(118,544)(249,636)\n\nDepreciation and amortization— — (67,731)(67,731)\n\nContingent consideration fair value adjustment— — 619 619 \n\nGain on disposal of assets— — 5,347 5,347 \n\nIntangible asset impairment charge— — (7,600)(7,600)\n\nOperating Income (Loss)$116,024$72,469$(187,909)$584\n\nUnrealized gain on investment in equity securities$— $— $6,307 $6,307 \n\nInterest expense, net— — (17,602)(17,602)\n\nOther expense, net— — (4,033)(4,033)\n\nLoss on extinguishment of debt— — (7,468)(7,468)\n\nIncome (Loss) Before Income Tax Benefit$116,024$72,469$(210,705)$(22,212)\n\nYear Ended December 31, 2023\n\n(in thousands)\nGenerics and OtherRare Disease and BrandsCorporate and UnallocatedTotal\n\nNet Revenues$289,314$197,502$— $486,816 \n\nCost of sales (excluding depreciation and amortization)(152,739)(28,774)— (181,513)\n\nResearch and Development expense(28,197)(6,089)— (34,286)\n\nSelling, general, and administrative expense(2,451)(73,466)(85,780)(161,697)\n\nDepreciation and amortization— — (59,791)(59,791)\n\nContingent consideration fair value adjustment— — (1,426)(1,426)\n\nRestructuring activities— — (1,132)(1,132)\n\nOperating Income (Loss)$105,927$89,173$(148,129)$46,971\n\nInterest expense, net$— $— $(26,940)$(26,940)\n\nOther expense, net— — (159)(159)\n\nIncome (Loss) Before Income Tax Expense$105,927$89,173$(175,228)$19,872 \n\nGeographic Information\n\nThe following depicts the Company's total revenue according to geographic location. The Company ceased operations at the Oakville, Ontario, Canada location as of March 31, 2023. The revenue from the acquisition of Alimera is also included in the years ended December 31, 2025 and 2024 in the table below. The majority of the assets of the Company are located in the U.S. The Company also maintains operations in India, Ireland, Portugal, Germany, and the United Kingdom.\n\n141\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)\n\nANI Pharmaceuticals, Inc. and Subsidiaries\n\nNotes to the Consolidated Financial Statements\n\nFor the years ended December 31, 2025, 2024, and 2023\n\nThe following table depicts the Company’s revenue by geographic operations during the following periods:\n\n(in thousands)Years Ended December 31,\n\nLocation of Operations202520242023\n\nUnited States$852,443$604,989$486,251\n\nInternational30,9239,387565\n\nTotal Revenue$883,366$614,376$486,816\n\nThe following table depicts the Company’s property, plant and equipment, net according to geographic location during the year ended:\n\n(in thousands)December 31, 2025December 31, 2024\n\nUnited States$59,548$54,730\n\nInternational2,9282,133\n\nTotal property and equipment, net$62,476$56,863\n\n20. SUBSEQUENT EVENTS\n\nU.S. Tariff Update\n\nOn February 20, 2026, the United States Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (\"IEEPA\"). The ultimate availability, timing, and amount of any potential refunds of such tariffs remain highly uncertain and are subject to further legal, regulatory, and administrative developments. Following the Supreme Court’s decision, the U.S. presidential administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on the Company. The Company continues to monitor and evaluate these developments and assess their potential impact on its business, financial condition, and results of operations.\n\n142\n\n[Table of Contents](#id93db5ee702e4e9d8da25580f80f13e1_7)"}