Amneal Pharmaceuticals, Inc. (NASDAQ:AMRX) Q4 2024 Earnings Conference Call February 28, 2025 8:30 AM ET

Company Participants

Tony DiMeo - Head of Investor Relations
Chirag Patel - President and Co-Chief Executive Officer
Chintu Patel - Co-Chief Executive Officer
Tasos Konidaris - Executive Vice President and Chief Financial Officer
Joe Renda - Senior Vice President and Chief Commercial Officer, Specialty
Jason Daly - Chief Legal Officer

Conference Call Participants

Chris Schott - J.P. Morgan
David Amsellem - Piper Sandler
Leszek Sulewski - Truist Securities
Balaji Prasad - Barclays

Operator

Good morning, and welcome to the Amneal Pharmaceuticals, Inc. fourth quarter 2024 Earnings Conference Call. I would now like to turn the call over to Amneal's Head of Investor Relations, Tony DiMeo. Please go ahead.

Tony DiMeo

Thank you for joining the Amneal Pharmaceuticals, Inc. fourth quarter 2024 earnings call. Today, we issued a press release reporting Q4 results. The earnings press release and presentation are available at amneal.

com. Certain statements made on this call regarding matters that are not historical facts, including but not limited to management's outlook, are forward-looking statements that are based solely on information that is now available to us. Please see the section entitled cautionary statements on forward-looking statements for factors that may impact future performance.

We also discussed non-GAAP measures. Information on the use of these measures and reconciliations to GAAP are in the earnings release and presentation. On the call today are Chirag Patel and Chintu Patel, Co-founders and Co-CEOs, Tasos Konidaris, CFO, our commercial leaders, Joe Renda for Specialty, and Jason Daley, Chief Legal Officer.

I will now hand the call over to Chirag Patel.

Chirag Patel

Thank you, Tony. Good morning, everyone. Amneal Pharmaceuticals, Inc. is much more than another generics company.

We are an American biopharmaceutical company with a track record of excellence in delivering high-quality, complex pharmaceuticals at speed and scale. We are a leader in an essential industry providing millions of patients with access to affordable and innovative medicines. 2024 was an exceptional year where Amneal Pharmaceuticals, Inc. delivered stellar financial performance with double-digit revenue and adjusted EBITDA growth, and reducing net leverage below four times.

All segments grew revenues double digits. This broad-based performance reflects the strength of our diversified business, strong execution, and continued investment in growth areas. Beyond financial results, we took major strategic steps in 2024 to enhance our long-term growth profile and expand our future potential, including launching Crexent, establishing our GLP-1 collaboration, and adding to our biosimilars pipeline.

The first important milestone we achieved in 2024 was the successful launch of Crexent. We are so excited by the strong response from prescribers and inspiring patient testimonials. Early traction has exceeded expectations, with market share reaching about 1% in just four months and on track to exit the year at 3% plus.

As a point of reference, Rytary has 6% market share currently, ten years since its launch. We are very confident in achieving US peak sales of $300 to $500 million for Crexent. Our specialty business grew 14% in 2024, and our goal is to grow specialty to over $500 million by 2027.

This growth will be driven by Crexent, Unithroid, Ongentys, and the upcoming launch of DHE and other branded products. We aim to add more branded opportunities to our portfolio over time. Second, in 2024, we entered the high-growth weight loss and obesity space, a new category for Amneal Pharmaceuticals, Inc. through a strategic collaboration with Medcera, a clinical-stage biotech company developing next-generation therapies.

This unique collaboration represents a new integrated business model to drive innovation at scale between two organizations. It is a logical extension of Amneal Pharmaceuticals, Inc.'s strategy that leverages our existing expertise in complex manufacturing and track record of delivering high-quality innovation at scale. Amneal Pharmaceuticals, Inc. is Medcera's preferred global supplier for the US and other markets.

In addition, we look to commercialize Medcera products in 20 emerging markets, including India. To support this effort, we will leverage our existing peptide capabilities and build two new high-volume peptide manufacturing facilities. With the global weight loss market projected to exceed $150 billion by 2030, this initiative is a powerful new long-term growth driver for Amneal Pharmaceuticals, Inc. Over time, we see this as a very large opportunity for Amneal Pharmaceuticals, Inc. with three avenues for value creation: one, the Medcera collaboration, which is our top priority; two, providing CMO offerings to other large companies; three, providing scale to deliver on generics weight loss therapies.

Third, our affordable medicine segment, historically referred to as generics, includes retail products and our rapidly growing injectable and biosimilar products. The affordable medicine segment generated revenues of $1.7% billion in 2024 as growth accelerated to 15%, fueled by new launches and a diversified complex portfolio over three components of the segment. This is a massive business that remains the foundation of Amneal Pharmaceuticals, Inc., and we expect it will continue to grow tremendously going forward.

Within this segment, our injectables business is expanding quickly. We have a growing portfolio of over 40 injectable products and launched our first three 505(b)(2) injectables in 2024. These differentiated ready-to-use solutions improve hospital efficiency by eliminating medication preparation steps and errors.

In addition, we see biosimilars as the next major wave of affordable medicines. For patients, biosimilars improve the affordability of and access to key therapies. For Amneal Pharmaceuticals, Inc., we see biosimilars as a long-term growth factor where we are well-positioned to lead.

Our first three biosimilars generated $126 million in revenue in 2024, just their second year on the market. We have built our pipeline with five additional biosimilars expected to be filed this year and commercial launches planned for 2026 and 2027. In 2024, we added our largest opportunity, omalizumab, a biosimilar for Xolair, targeting a $2.8% billion US market.

By 2027, we expect to have six commercial biosimilars in the United States market. Looking forward, the global biosimilar market is projected to grow from about $33 billion today to $75 billion by 2030. Given the cost, complexity, and development timelines, we see a relatively limited number of market participants.

A recent IQVIA report highlighted the significant white space opportunity in biosimilars. There are over 100 biologic products with patents expiring over the next ten years, and only 10% currently have biosimilars in development. The report estimates that biosimilars for the other 90% would save patients about $100 billion per year.

We believe success in biosimilars will be driven by product selection, speed to market, R&D, manufacturing, and customer service. Similar to complex generics where Amneal Pharmaceuticals, Inc. is a leader, we are well-positioned to be a major biosimilar player. Our strategic focus has been in licensing an initial portfolio and building a commercial platform to start.

Next, our goal is to be vertically integrated and leverage our proven ability to develop, manufacture, and commercialize complex pharmaceuticals at scale. Finally, our RevCare segment is a highly durable business with long-term contracts and recurring revenue streams across three channels: distribution, government, and unit dose. In 2024, RevCare revenue grew 25%, and we expect continued double-digit growth, reaching over $900 million in revenue by 2027.

This business adds stability and diversification to Amneal Pharmaceuticals, Inc.'s portfolio. Overall, Amneal Pharmaceuticals, Inc. is an essential player in an essential industry. Over 90% of prescriptions in the United States are for affordable medicines, yet account for only 10% of commercial value.

Amneal Pharmaceuticals, Inc. fulfills over 162 million scripts for American patients each year. We are the largest US manufacturer of affordable medicines. Currently, Amneal Pharmaceuticals, Inc. is number four in the US retail market based on value, and our goal is to become top five in the US injectables and US biosimilars market in the coming years.

Over our company's history, we have built a successful track record of innovation, execution, and growth. Amneal Pharmaceuticals, Inc. is uniquely positioned in the pharmaceutical industry with a broad and differentiated portfolio across affordable medicines, specialty, and distribution to drive sustainable growth. I'll now pass it to Chintu Patel.

Chintu Patel

Thank you, Chirag. And good morning, everyone. And special thanks to our dedicated employees for making Amneal Pharmaceuticals, Inc. a purpose-driven company focused on execution and delivering value to our stakeholders.

Today, I will provide an update on our strategic priorities across operations, innovation, and our portfolio. First, our world-class global operations remain a key competitive advantage. Amneal Pharmaceuticals, Inc. has a stellar quality track record and a world-class operational infrastructure with an extensive manufacturing footprint in the United States, Ireland, and India.

Over our history, the FDA has conducted over 105 successful inspections with either no or only minor observations. Further, we continue to invest in digitization, automation, and operational efficiencies to drive innovation and growth across different business forms. We are committed to enhancing our operational excellence and cost efficiencies across our global infrastructure.

Amid chronic drug shortages and supply chain challenges in the US, Amneal Pharmaceuticals, Inc. stands out with its industry-leading quality, resilient supply chain, and high customer fulfillment rates. A key highlight is our collaboration with Medcera in the GLP-1 space. Our partner's portfolio is moving swiftly to the drug development phase.

Amneal Pharmaceuticals, Inc. already has the infrastructure and capabilities for peptide development and injectable manufacturing. As part of this collaboration, we will build two state-of-the-art manufacturing facilities, one for peptide drug substance production and another for advanced sterile finish manufacturing. These investments will enable large-scale production, positioning Amneal Pharmaceuticals, Inc. as Medcera's preferred global supplier while leveraging our R&D expertise and quality leadership in this fast-growing category.

Next in innovation, we launched Crexent, which is a remarkable new treatment for Parkinson's disease designed for rapid onset and extended efficacy. Crexent delivers more good on time with fewer doses. Our open-label phase four study is underway to generate additional real-world evidence.

We are pleased with early adoption and wonderful testimonials from patients, positioning Crexent to become the leading branded Parkinson's therapy. Next in our specialty pipeline is the DHE auto-injector for migraine and cluster headache. This innovative presentation of a well-known molecule is intended to help patients avoid emergency room visits during these painful episodes.

We project peak sales of $50 to $100 million and look forward to launch later this year pending FDA approval. Next, I will touch on our complex generics portfolio. We expect to launch 20 to 30 new products each year.

This year, so far, we have launched key complex products such as mesalamine and memantine donepezil, which has 180-day exclusivity. Last week, we received approval for lenalidomide, which we will launch in early 2026. This cadence of approvals and new launches reflects the breadth and depth of our R&D pipeline.

Currently, we have 76 products pending approval, of which 61% are non-oral solids, and 56 in development, of which 93% are non-oral solids. We continue to optimize our R&D portfolio, allocating more resources towards biosimilars and specialty over time. In 2024, we launched 12 new injectable products, including our first three 505(b)(2) products, pamidronate, fortum, and potassium phosphate ready-to-use IV bag. Our 505(b)(2) injectable bortezomib for multiple myeloma is approved and set to launch in Q2.

We have 12 additional 505(b)(2) injectables in development. We will meaningfully expand our injectable portfolio. Other complex injectable programs, microsphere, liposomal, and drug-device combinations are progressing as well.

With our R&D capabilities and infrastructure of 21 manufacturing lines in injectables, Amneal Pharmaceuticals, Inc. is well-positioned to be a leader in the injectable space in the coming years. In biosimilars, we are strategically focused on expanding our portfolio. We are very excited about the biosimilar market given the upcoming wave of biologics LOEs, clarity on the regulatory pathway, and continued adoption by clinicians.

Building on the success of our first three commercial products, we have in-licensed five additional biosimilar pipeline candidates. The BLA filings for two denosumab biosimilars were submitted. Next, the supplemental BLA filing for bevacizumab, an ophthalmic biosimilar, is expected in Q2. After that, the BLA filing for omalizumab, a biosimilar for Xolair, is expected by the end of the year.

We look to further expand our portfolio and be vertically integrated over time to be a leader in the biosimilar industry. In summary, we are focused on driving execution across development, manufacturing, and commercialization throughout our diversified and growing business. With that, I will hand it over to Tasos Konidaris.

Tasos Konidaris

Thank you, Chintu, and good morning, everyone. 2024 was a very strong year of execution across all our business units with excellent financial performance well ahead of our original guidance metrics. In addition, net leverage declined to 3.9% times compared to 4.8% times at the end of 2023.

As we grew EBITDA, we paid down debt. Strategically, as Chirag and Chintu highlighted, we are driving the ongoing diversification of the business through new launches and pipeline expansion, biosimilars, and GLP-1, which provides a strong foundation for long-term growth. In 2025, we expect continued top and bottom-line growth reflecting our ability to offset the Rytary loss of exclusivity due to the breadth and depth of our commercial portfolio and strong pipeline.

I'll review our strong performance in Q4, touching on our full-year results and discuss guidance for 2025. The fourth quarter, revenues of $731 million grew 18% with double-digit growth across all three segments. Our affordable medicine segment grew 21% to $439 million.

New product launches added $54 million to Q4 revenue driven by recent complex launches. Biosimilars generated $39 million in Q4 revenues and grew 49% versus the prior year. As Chintu mentioned, Amneal Pharmaceuticals, Inc.'s continued investment in R&D, superb quality track record, and supply consistency are competitive advantages driving sustainable growth, portfolio diversification, and value to customers, providers, and patients.

Q4 specialty revenues grew 16% to $121 million driven by our branded products. Our Parkinson's franchise, which includes Crexent, Rytary, and Ongentys, generated $64 million in Q4 revenues, including $3 million from Crexent. As we said, we are very pleased with the initial launch success of Crexent and its early trajectory well ahead of Rytary's launch.

In Q4, our RevCare segment grew 14% to $170 million reflecting continued growth across the distribution and government channels. New product launches and continued strong execution are key drivers of RevCare's strong performance. Moving down the P&L, Q4 adjusted EBITDA was $155 million, reflecting robust revenue growth, consistent gross margins, and some targeted R&D sales and marketing investments in high-growth areas.

Q4 adjusted EPS of $0.12% declined $0.02% as higher adjusted EBITDA was offset by interest expense. In summary, Q4 reflected strong year-over-year revenue growth of 18% and adjusted EBITDA growth of 9%. Moving on to the full year of 2024.

Total revenues were $2.8% billion, $400 million or 17% year-over-year, and was ahead of our original and revised guidance of about $2.6% billion. Each segment grew double digits with affordable medicines up 15%, specialty up 14%, and RevCare up 25%. 2024 adjusted gross margins were strong at 42.4% with affordable medicines gross margins expanding by 110 basis points, reflecting product launches and operating efficiencies.

Full-year 2024 adjusted EBITDA of $627 million was ahead of original guidance of $580 to $620 million and grew 12%, which includes a substantial increase in R&D, sales, and marketing to enhance our already strong pipeline and support new launches. From a cash flow perspective, 2024 operating cash flow was $348 million, excluding one-time legal costs, well ahead of original guidance of $260 to $300 million. Strong performance was driven by higher adjusted EBITDA and good work by our teams to drive substantial working capital improvements and some timing benefits.

Also glad to report that as part of our efforts to reduce leverage, we paid down $182 million of gross debt in 2024 and reduced net leverage to 3.9% times as compared to 4.8% times at the end of 2023, and going further back, 7.4% times net leverage at the end of 2019. We achieved net leverage below four times one year ahead of our publicly stated target. In summary, very strong full-year 2024 results with revenue growth of 18%, adjusted EBITDA of 12%, and substantial debt reduction while continuing to invest for long-term growth.

Let me now move on and discuss our full-year guidance for 2025. On the top line, we expect 2025 total company net revenue of $3.0% to $3.1% billion, reflecting strong growth of 7% to 11%. First, in the affordable medicine segment, we expect continued double-digit growth in 2025 due to the uptake of products launched throughout 2024, some new launches expected in 2025, continued biosimilar growth, and injectables expansion with a number of new 505(b)(2) products.

Second, in the specialty segment, we expect 2025 revenue of approximately $400 million, which includes expected Crexent sales of approximately $50 million and expected Rytary sales between $120 and $140 million given the loss of exclusivity in the third quarter of 2025. Third, in the RevCare segment, we expect continued double-digit growth in 2025 driven by ongoing new launches from Amneal Pharmaceuticals, Inc. and other suppliers across its channels. Moving down the P&L, we expect 2025 adjusted gross margins between 41% to 42%, similar to 2024.

We expect adjusted EBITDA between $650 and $675 million, reflecting growth between 4% to 8% due to top-line growth, the Rytary loss of exclusivity, as well as incremental sales and marketing investments to maximize the substantial commercial opportunity ahead of us, such as Crexent, biosimilars, 505(b)(2)s, and injectables. From an EPS perspective, we expect 2025 adjusted EPS between $0.65% and $0.70%, which reflects adjusted EBITDA growth and lower interest expense as debt levels have been reduced and interest rates beginning to come down. Moving to cash flow, we expect another strong year of cash generation in 2025, which allows us to continue reducing gross debt and net leverage.

For 2025, we expect operating cash flow excluding potential legal settlement costs between $280 and $310 million. Depending on the timing of settlements, we may incur approximately $25 million of costs, which are substantially lower than prior years. From a capital allocation perspective, we continue to prioritize investments to further diversify our business and drive sustainable growth, particularly in high-growth areas such as specialty, biosimilars, and GLP-1s.

In 2025, we expect capital expenditures of approximately $100 million net of reimbursement related to the new facilities we are building as part of our Medcera collaboration. In addition, we continue to be laser-focused on continuing to reduce our debt levels. Looking to the balance sheet, our strong financial performance and disciplined capital allocation have driven higher cash generation and continued deleveraging.

Recognizing our deleveraging progress and improved financial profile, we are pleased to receive one-notch credit upgrades from S&P and Moody's a few months ago. Now that net leverage is below four times, our focus is on driving net leverage to below three times in the next few years. Let me now turn the call back to Chirag Patel.

Chirag Patel

Thank you, Tasos. In summary, 2024 was a remarkable year for Amneal Pharmaceuticals, Inc. We delivered broad-based double-digit growth and took key strategic actions to further position our company for sustainable long-term growth. Amneal Pharmaceuticals, Inc. enters a new chapter of growth in 2025 with tremendous momentum across our business, and we are so excited for what's ahead.

Let's now open the call for Q&A.

Operator

Thank you. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two.

When preparing to ask your question, please ensure your device is unmuted locally. The first question is from Chris Schott from JPMorgan. Your line is now open.

Chris Schott

Great. Thanks so much for the questions. Maybe just to start off with, I just had a couple on Crexent.

Can you just elaborate on these first few months of the launch. It seems like the ramp is going really nicely, but I was just wondering if there are any surprises from your perspective in terms of either where the patients are coming from or just any dynamics of how physicians are integrating this into their practices. Maybe just a second one on Crexent while we're at it.

Can you just give us the latest in terms of where formulary access stands and how you're seeing that trending.

Chirag Patel

Thank you, Chris. We're so excited. Beyond our expectations.

And the patient testimonials are amazing. This is where you feel so good that the patient that wasn't able to walk now walks. They're taking fewer capsules a day, lasting longer.

So it's arguably right now, it's early four months, it's performing as the best CDLD formulation and absorption ever seen in this category. And this is straight from the most well-known KOL saying it's the best absorption he has seen, and it's called a medical drug. And we keep hearing that from all across the MDS, even started from General Neuro, we're going up to the long-term care.

So we're covering all corners of the market now, all 100%. We're right there. We covered only 20%, which is fluctuating as the market.

In, with MDS. This is we have broadened our market reach. The teams are doing great.

We're so excited. This already thousand plus week. Just in four months.

The Rytary would have taken two years to get this amazing feedback. Formulary access is awesome as well. And for to discuss that further, I'll pass it on to Joe Renda, our head of Specialty business.

Joe Renda

Yeah. Thanks, Chirag. Thanks, Chris, for the question.

And, yeah, to Chirag's point, we're very pleased with the performance we've seen thus far. The team has really executed well. The response from the market has been remarkable.

We continue to hear from physicians literally every day the patient responses that they're getting. You asked about formulary access and so far that we've been very pleased with the response from the payers. Right now, we're somewhere in the neighborhood of about 30% coverage rate.

We anticipate that to go up this year to the neighborhood of 50%. Our goal has always been to catch or surpass Rytary coverage, which is around 70%. We anticipate bringing on at least one, two, maybe even three major commercial payers this year.

So the coverage conversations have been very good. The payers are also seeing the demand generation that's happening in the market. So that's further exciting them about bringing Crexent on formulary.

And we're also getting great response from the advocacy organizations. So we're partnering very closely with the advocacy organizations across the country. They're also helping spread the word of how favorable Crexent has been.

So to give you a point of illustration, when you look at the way Crexent has performed in launch versus Rytary, we're three to five times where Rytary was at this point in launch. So very good uptake in the market. Very pleased and we look for more to come.

Chirag Patel

Yeah. And Chris, last thing I would add is this is we're making Crexent a global product. So creating global access.

We have a partner in Canada, South America, Mexico, our partner in Europe. Amneal Pharmaceuticals, Inc. will market in India. And we're looking for a partner in China and Japan.

So this will be a truly global product. As you know, Rytary was never available outside of the United States. Millions of Parkinson's patients across the globe and this will be the best therapy that they will get for their day-to-day living with Parkinson's.

Chris Schott

Excellent. And maybe just one last question for me was just kind of bigger picture with the strong top line. I just been interested.

Are you thinking about either organic investments into the business or external BD any differently than the past. I'm just trying to get a sense of how you're thinking about balancing kind of longer-term investments and top-line growth versus kind of maybe the drop through of that growth in terms of the near-term margins.

Chirag Patel

Thanks, Chris. So we're so fortunate to have a solid organic pipeline. In affordable medicines, within affordable medicines and retail GX, we have a leading portfolio in inhalations of Talmex, a microsphere.

We're just drug-device combination products. So one of the best portfolios we have. Then comes to injectables.

We have more 505(b)(2) injectables to come. Ready to use, peptide, microspheres, very excited. Biosimilars, we have in-licensed the product as we've been very apparent about it that this is a very long-term focus that this is over ten years business. It is and we've been investing for a long time.

We need to become vertically integrated. So have manufacturing with us, R&D with us, full pipeline, global market. And we are just like in complex generics, we are here to stay.

Our mission is to become America's number one affordable medicines company. So biosimilar expansion is a must. So we will allocate capital towards biosimilars.

And then always looking for specialty portfolio addition. Beyond DHE, we're looking at either a couple of programs internally, which we're not ready to discuss yet. And working with a few outside potentials that we can either bring in license or buy those products.

Chris Schott

Great. Thanks so much.

Operator

The next question is from David Amsellem from Piper Sandler. Your line is now open.

David Amsellem

Hi. Thanks. So got a couple.

So you cited GLP-1s peptides in 2028. Are those launches in ex-US/emerging markets. Is it Trulicity. Is it a combination of those things.

I'm just trying to get a sense of what you're thinking regarding that 2028 number that's on slide six. And then secondly, with the Medcera collaboration, you're constructing the new facilities, but you've also talked about beyond peptides vertically integrating your biosimilar business. And so I guess my question here is how should we think about growth in CapEx over the next several years and how that plays into your overall debt pay-down strategy because it sounds like there's significant expansion of your infrastructure that's going to be happening.

So just wanted to get your thoughts there. I'll leave it there. Thanks.

Chirag Patel

Thank you, David. So first question, on GLP-1 by 2028, all of the above, what you mentioned is ex-US could have a product like Trulicity. Could have other contract manufacturing business.

So that is how we see the GLP-1 our partnership with Medcera. The growth in CapEx as we have laid out that Medcera is contributing $100 million. We expect the government incentives to be around $100 million. We're investing $100 to $150 million of our CapEx over three years.

It's manageable CapEx as you would have noticed. We increased our CapEx projection for this year to about $100 million. We're not and about biosimilars, we're not going to start building from scratch.

We might do certain M&A to bring the capacity already there. And pipeline that is already there. And it will require incremental CapEx for those, but we do not know exactly how much.

But you can see in the ballpark, we'll continue to be $70 to $100 million ongoing on CapEx. But our EBITDA is keep growing up. Our cash flow is improving.

Our interest rate going interest expense is coming down. So no problem. I thought they invest here and keep making we have the awesome infrastructure already for many things, and this will be additional.

Great infrastructure to have.

David Amsellem

If I may just ask a quick follow-up regarding M&A. Do you think that in terms of capacity, you know, help us understand, you know, how large you can go or what you're thinking about aspirationally in terms of sizing.

Chirag Patel

Well, David, we are focused as Tasos said. Right. We're not going to be we'll be four times leverage under four times.

And over time, we want to go to three times. So we would have to find a creative deal may include the cash on hand or limited cash, equity. So there's multiple ways to do it.

Tasos Konidaris

Hey, David. This is Tasos. So just to be clear.

Right. Continue to leverage continues to be and organic revenue growth continues to be our top two priorities, number one. Number two, we're not a big M&A shop. We're not a big M&A shop.

The last deal we did was, what, $300 some million deal. That was the AvKARE deal five years ago. And I think universally has that has paid for itself, you know, five times over.

And it's the strength of our organic pipeline that puts us in a position, I think, to do the right deal that makes sense financially, number one. Number two, it has to be strategic in nature such as, you know, biosimilars. And number three, we have a high degree of confidence in executing well.

And I think, you know, the way the teams have executed in terms of growing our biosimilars, essentially, from nothing three years ago, to something that, you know, probably in 2025, this year is probably going to be a $150 some million business. I think that's remarkable. So that's how we think about it.

David Amsellem

And so hopefully, that's helpful.

Tasos Konidaris

It is. Thanks.

Operator

The next question is from Leszek Sulewski from Truist Securities. Your line is now open.

Leszek Sulewski

Good morning. Thank you for taking my questions. Can you provide any latest commentary on around naloxone any additional contracts that you signed with other states.

And then second, I haven't really heard much commentary on Unithroid. Maybe provide some puts and takes around long-term opportunity there. And then lastly, I you know, you did comment on the deleveraging and you deleveraged faster than you anticipated.

Is there a new target for 2025. Thank you.

Chirag Patel

So Leszek, good morning. Naloxone, the states are slowing moving. So we haven't talked to California.

We're very close to a few states, but haven't signed anything new beyond California, which was the largest state by far. You have to add another 20 states to get to California, and we're working through the distributors as well who already have the state contracts. So naloxone's moving.

It's three players market today. And Teva is not much in it. So we're emerging as well positioned in all these states in longer-term contracts.

And it is a frustrating process at the state level. But we have a team that is key working on it, and we expect to grow this business. But as it is what we have forecasted, we should be able to provide about 2.5% million kits this year to the market and going up to 4 million kits in the next in 2026.

So that's what we're working towards. Unithroid is, like, Synthroid. They're patient to which she favors.

Consistent therapy, and that is what we provide. Has a consistent growth profile over time. We see it going the same way.

Tasos Konidaris

Hey, Leszek. Good morning. From the leveraging perspective, we can expect us to continue to pay down debt and reduce net debt to EBITDA in 2025.

Just depending on a number of scenarios, around interest rates, refinancing, etcetera. We're targeting about give or take, between $80 to $100 million overall reduction in gross debt, number one. You know, this year, 2024, we finished net debt to EBITDA 3.9%.

My gut feel is we're targeting 3.6% to 3.7%. Net debt to EBITDA. So another, you know, 0.3% or, you know, 0.2%, 0.3% reduction going down the in a reasonable manner reduction of leverage, gross, and then net EBITDA.

Leszek Sulewski

Great. Thank you for that color.

Operator

The next question is from Balaji Prasad from Barclays. Your line is now open.

Balaji Prasad

Hi. Good morning, everyone. So it's great to see the consistent progress and the healthy outlook.

I'll try to read a couple of questions on topics, Tasos. But Tasos, starting with you, firstly, on the guidance and EBITDA margins, 2025 EBITDA range seems to be at around 20.9% to 22.5%. I'm surprised to see that even at the higher end, there is limited PMX expansion.

So, like, how much of a drag has Rytary LOE been on this. And are there any other factors at play. One, two, I'm sure everyone will be happy to hear you say that you're not a big M&A shop in the focus will be on continuing to deliver.

So is this going to be more of a consistent leverage year over year, or are you comfortable with a bump up in net leverage on the back of any deals. Lastly, Chirag, I was just curious. Combining your recent approval of lenalidomide and we address those issues with Endo and that they can't supply, they evidently need a supplier.

Do you see any scope for you to monetize your approval early either in the form of supply deal or an accelerated launch ahead of January 2026. Thank you.

Tasos Konidaris

Let me take the first couple of them, and good morning. So number one is I mean, you're correct. You can look at the EBITDA as a percentage of revenue, and, you know, in 2024, we were at about 22.5%.

You look at the guidance for more like 21%. So it looks a little bit of a deterioration. I wouldn't read anything into this.

This is driven by a couple of things. Number one is just it's a mix of business. RevCare continued to grow faster than the rest of the business. And then just simple fact is that, you know, that EBITDA that business is slightly less profitable than the rest of the business.

Frankly, just look at incremental dollars. Right. And incremental cost that can help us fund our business and grow.

So it's number one, and then, obviously, the combination of the Rytary LOE. Right. Rytary is a 90% product.

Right. And they need to invest in Crexent and maximize the slope of growth for that product. So that's what I would say.

My gut feel is, you know, it's gonna you know, we're barely into 2025. I think as we look at 2026 as we anniversary most of the Rytary LOE, the incremental investments, full-year investments of Crexent begin to level off, I will expect to see EBITDA margin to begin increasing. So that's kind of on that.

Number two on the leverage, I mean, you know, the company is not on autopilot. So you know, in five years, we reduced leverage from 7.4% to, you know, 3.9%. Probably in 2025, we'll get 3.6%.

There you know, we'd like to see in a perfect world a gliding path of reduction. If at any given point in time, there is a slight increase for a few months or for a year, I don't think our equity holders or our debt holders will be concerned because it will be the right decision that's gonna begin leading to, you know, further deleveraging over the course of time. So that's how we think about that.

To add on the other question, I believe it's IP. Okay. To a settlement.

Jason Daley

Chirag, and thanks for the question, Balaji. This is Jason Daley, the Chief Legal Officer. Given the settlement dynamics, I think we shouldn't be talking too much about lenalidomide, but obviously, we're excited for all the products that are in our portfolio and looking forward to launching them.

Balaji Prasad

Alright, Jason. Thank you.

Operator

We have no further questions. So I'd like to hand back to Chirag Patel for any closing remarks.

Chirag Patel

Thank you very much. Have a nice weekend.

Tasos Konidaris

Thanks.

Tony DiMeo

Thank you, everyone.

Operator

This concludes today's call. You may now disconnect from the call, and enjoy the rest of your day.