Amneal Pharmaceuticals Inc (AMRX) 2019 Q1 法說會逐字稿

Good morning, and welcome to the Amneal Pharmaceuticals First Quarter 2019 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

At this time, I'd like to turn the conference over to Mark Donohue, Vice President of Investor Relations and Communications. Please go ahead.

Thank you, Allison. Good morning, everyone. Welcome to Amneal's First Quarter 2019 Earnings Call.

Earlier this morning, we issued a press release reporting our results. The press release as well as the slides that we present on this call are available on our website at www.amneal.com. We're conducting a live webcast of this call, a replay of which will also be available on our website after its conclusion.

Please note that today's call is copyrighted material of Amneal and cannot be rebroadcast without the company's expressed written consent. I'd also like to remind you that during the course of this call, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company.

It's important to note that such statements about estimated or anticipated Amneal results, prospects or other non-historical facts are forward-looking statements and reflect our current perspective of existing trends and information as of today's date.

Amneal disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Actual results may differ materially from current expectations and projections depending on a number of factors affecting the Amneal business.

These factors are detailed in our periodic public filings with the Securities and Exchange Commission, including, but not limited to, Amneal Pharmaceuticals, Inc. Form 10-K of the period ending December 31, 2018.

Our discussion today includes certain non-GAAP measures as defined by the SEC. Management uses both GAAP financial measures and disclosed non-GAAP financial measures internally to evaluate and manage the company's operations and to better understand its business. Further, management believes the inclusion of non-GAAP financial measures provides meaningful supplementary information to facilitate analysis by investors in evaluating the company's financial performance, results of operations and trends. A reconciliation of GAAP to non-GAAP measures is available in this morning's press release and in the appendix of today's presentation.

On the call this morning are Rob Stewart, our President and Chief Executive Officer; Todd Branning, our Chief Financial Officer. Following prepared remarks, we will hold a Q&A session. Also on the call and available for Q&A is Paul Bisaro, our Executive Chairman; Andy Boyer, our Executive Vice President of Commercial Operations; Joe Todisco, Senior Vice President of Specialty Commercial; and David Buchen, Chief Legal Officer and Corporate Secretary.

So for our agenda, Rob will begin with some review of our first quarter highlights. Following that, Todd will review our financial results, after which Rob will conclude and reaffirm our guidance for 2019 and also review our strategic priorities going forward.

And with that, I'm going to turn the call over to Rob.

Thank you, Mark. Good morning, everyone, and thank you for joining us today to review Amneal's first quarter results. Please turn to Slide 6 to begin with a few highlights from the quarter.

We began 2019 with a good first quarter as we grew revenue and EBITDA over the same period last year, executed on priorities across our business and continued to follow through on the key strategic objectives outlined as integral to drive our long-term growth.

First, we continued to keep our industry-leading generic launch engine intact, delivering 11 approvals, 2 tentative approvals during the quarter and launching 6 new generic products. This included the approval and launch of rivastigmine patch, our first generic transdermal product and another important milestone in the diversification of our portfolio into more valuable, complex dosage forms, a key stated goal for our company. We remain positioned to launch up to 50 new products in 2019, approximately 20% more launches than we had in 2018. The successful transition of levothyroxine also paid immediate dividends and helped us achieve year-over-year growth amid a challenging time for our sector.

Second, we maintained momentum in our specialty franchise with our key promoted products Rytary and Unithroid both delivering year-over-year growth and solid prescription growth sequentially. We are investing in additional sales and marketing efforts to build on and accelerate the continued growth we expect from both of these franchises.

Third, we continued to simplify our operational footprint and optimize our business to focus on our core areas of strength. We took strategic action to divest our commercial business in the U.K. during the quarter and in Germany earlier this month, allowing us to concentrate our focus and resources on strengthening our growing position in the U.S. market.

Additionally, with all the major tasks of the Amneal and Impax integration now complete, we are continuing to realize synergy capture across the organization. We have now captured more than $100 million in cost synergies since the close and remain on track to achieve more than $200 million in cost savings at a faster pace than we had originally planned.

Finally, we also strengthened our experienced management team during the quarter with the appointment of several key senior leaders who will play important roles in optimizing our business to position Amneal for sustainable long-term growth. In addition to Todd joining our team as CFO, we have brought on David Buchen as Chief Legal Officer and Corporate Secretary and Pradeep Bhadauria as Chief Scientific Officer.

Turning now to Slide 7. From a financial perspective, we had a good quarter with combined net revenue growth of 5% and adjusted EBITDA growth of 17% as Generic segment performance, the growth of Rytary and Unithroid and synergy capture more than offset generic base business erosion and the loss of exclusivity of Albenza.

Combined adjusted diluted EPS of $0.14 was flat with prior year quarter primarily due to the incremental interest expense of $12 million net of tax or approximately $0.04 per diluted share. As a reminder, the first quarter of 2018 does not include the impact of the higher interest expense used to finance the combination with Impax that closed in May of 2018.

Before Todd covers the details of our financial results, I'd like to review highlights from our segments. Starting with our Generic segment on Slide 8, we have continued to build momentum with pipeline execution and advancing our strategy to diversify our portfolio through a focus on higher-value, higher-return opportunities.

In Q1, generics combined net revenue grew 7% as we benefited from the 2018 new product launches, including levothyroxine, which more than offset the impact of additional competition on our base generics business.

We launched 6 new generic products in Q1. As I noted earlier, this included the approval and launch of rivastigmine, our first generic transdermal product, which marks an important milestone in the expansion of our portfolio into transdermal products which you'll see additional success throughout the year.

During the quarter, we played to our strength as a reliable and consistent supplier and capitalized on supply chain disruptions and shortages. We will continue to explore opportunity to leverage our position as a partner of choice to fulfill customer product needs as they arise.

A core component of our generics business strategy is drive sustainable growth by building a diversified, high-value generic business that includes more complex products. As you'll see on the next 2 slides, both our FDA submitted and R&D developed pipelines support and align with this strategy.

Turning to Slide 9. As shown here of Amneal's 105 products submitted at the FDA, almost 50% of them are from non-oral solid dosage products. Our pipeline has delivered 14 ANDA approvals so far this year, including the transdermal patch approved and launched in Q1. In addition, we have 3 tentative approvals so far this year. The diverse and strong pipeline positions Amneal to launch up to 50 products for the balance of the year.

Turning to Slide 10 for an update on our generic R&D development pipeline. As shown here, approximately 70% of the 77 products in our R&D pipeline are focused on non-oral solid dosage products that have the potential to be more durable and have higher and more sustainable value.

Within our Specialty segment on Slide 11, we are continuing to see strong performance from our key promoted products Rytary and Unithroid, both of which saw double-digit gains in prescription. This played a significant role in helping to offset the impact of the entry of generic competition to Albenza.

Within the Rytary franchise, effective February 1, we added approximately 12 million additional covered Med D lives under new agreements with Humana and United Healthcare. Our team's marketing efforts to more effectively establish the importance of the Rytary value proposition is clearly resonating with both prescribers and patients. And as Rytary patients move through the Med D coverage gap, we expect to see progressive growth in prescriptions over the remainder of the year.

With Unithroid, we grew new prescriptions by 37% year-over-year and we'll continue to execute on our successful sales and marketing strategy to maintain our historical growth trend.

With that, I'll turn the call over to Todd.

Thanks, Rob. Good morning, everyone.

Turning to Slide 13 and a review of the Generic segment results for the first quarter. As Rob noted, our first quarter year-over-year results were positive. Compared to last year's first quarter, net revenue increased 7% to $382 million. We benefited from the more than 40 products launched in 2018, including levothyroxine, which more than offset a decline in sales of oseltamivir and aspirin dipyridamole due to new competition.

On a sequential basis compared to the fourth quarter of 2018, results were lower as is typically the case between the fourth and first quarters and were also impacted by added competition on base business products, including aspirin dipyridamole and Yuvafem. Partially offsetting the decrease was a full quarter of levothyroxine and higher sales of a number of base business products including oseltamivir as flu season picked up and guanfacine. We also added revenue contribution, though minimal, from 6 new generic product launches in the first quarter.

Our adjusted gross margin declined in the first quarter by approximately 300 basis points on a sequential basis due primarily to the impact of shelf stock adjustments, product returns, inventory reserves and unfavorable product mix.

Adjusted operating income in the first quarter compared to last year's first quarter increased $15 million to $97 million driven by higher revenues and lower R&D and SG&A expenses as we realize the benefit of cost synergies.

On a sequential basis, adjusted operating income was down compared to the fourth quarter of 2018 as a result of lower revenue, margin compression and increased expenses on legal fees, REMS program costs and freight shipping charges. Additionally, last year's fourth quarter included the favorable impact of $19 million of legal product settlements for which there were none in this year's first quarter.

Moving to Slide 14 and our Specialty segment results. On a year-over-year basis, net revenue decreased 7% to $64 million as higher sales of Rytary and Unithroid were more than offset by an 80% or $11 million decline in sales of Albenza as a result of generic competition.

On a sequential basis, net revenue in the first quarter decreased 27% due to lower volumes across the portfolio, primarily the result of seasonal customer ordering patterns in December versus January and higher gross-to-net adjustments on Rytary from new managed care rebate agreements as well as higher Med D coverage gap liability.

Adjusted gross margin for the first quarter was 83%, up when compared to both the fourth and first quarter of 2018 driven by favorable product sales mix.

On a year-over-year basis, adjusted operating income for the Specialty segment declined $2 million to $29 million due primarily to the loss of exclusivity of Albenza.

And on a sequential basis, adjusted operating income decreased due to lower revenues and higher SG&A expenses as a result of the timing of spend associated with new marketing programs and our annual sales meeting.

Moving to Slide 15. We ended the first quarter with $64 million in cash and cash equivalents, down compared to the fourth quarter of 2018. The decrease in cash and in operating cash flow was the result of a number of factors which we expect to improve over the course of this year.

The first quarter was impacted by lower revenues and operating income as previously noted compared to the fourth quarter of 2018. As part of the Impax integration, we completed the order-to-cash conversion in last year's fourth quarter which accelerated AR collections last year but led to lower collections of receivables during the first quarter.

Cash flow from operations was also impacted by an increase in inventory levels driven by our decision to make strategic investments to position ourselves to take advantage of potential generic market opportunities.

Additionally, we incurred approximately $40 million of payments related to transaction, integration and restructuring costs, including severance payments. As Rob noted earlier, we are continuing our focused efforts to streamline our operations, accelerate savings and generate resources to drive organic growth.

For the remainder of the year, we expect to see decreased spending within SG&A, COGS and R&D, including lower cash payments for severance, integration-related and restructuring expenses and lower employee-related costs as 2018 bonuses were paid in Q1 2019. These actions, combined with an increase in revenues as new product launches accelerate into the back half of the year, are expected to fuel an improvement in our cash flow from operations throughout 2019.

I will now turn the call back to Rob for closing remarks.

Thanks, Todd. On Slide 18, we are reconfirming our 2019 guidance. We are doing so even with the divestiture of our European commercial businesses which reflects our ongoing focus on streamlining our operations and accelerating savings as we drive organic growth and pursue external growth opportunities.

We continue to expect revenues to increase in the remainder of 2019 driven by the full year impact of 2018 product launches and up to 50 new generic products this year, accelerating into the back half of the year. This includes generic NuvaRing, which we currently project as a second half opportunity assuming FDA approval. This will be partially offset by declines from additional competition on key products.

We expect to generate positive cash flow this year, which we anticipate utilizing for the optionality of either delevering or investing in other M&A transactions.

We expect improved profitability through decreased spending within COGS, SG&A and R&D as a result of reduced project spend and the benefits of full year cost synergies.

We continue to expect adjusted EBITDA in the range of $600 million to $650 million and adjusted diluted EPS in the range of $0.94 to $1.04. Based on the expected timing of 2019 approvals and launches, we expect our results to be back half weighted.

Turning now to Slide 18. Our strategic priorities for 2019 are to build Amneal from our position of strength in order to achieve strong operational cash flows. We'll do this by leveraging the Amneal and Impax combination to capture synergies and capitalize on organic growth opportunities, driving operational excellence while remaining committed to being a high-quality, reliable supplier with exceptional customer service and compliance and diversifying our business through internal R&D and external business development opportunities.

From a long-term perspective on Slide 19, we are exceptionally optimistic about Amneal's long-term growth potential. Now 1 year removed from the completion of our combination with Impax, we've achieved a tremendous amount, successfully integrating our businesses, working creatively and quickly to capture new opportunities, advancing and diversifying our pipeline and maintaining our unwavering commitment to safety and quality, all while remaining laser-focused on execution and delivering an industry-leading rate of product approvals and launches.

I want to thank all of our employees around the world for the remarkable contributions they have made to get Amneal to where we stand today. We are building this organization from a position of strength. For the remainder of 2019, we're going to focus on continuing to drive organic growth within both our Generic and Specialty businesses, exploring additional opportunities to diversify our commercial footprint and utilizing excess cash flow to pursue creative business development to further accelerate our growth.

Amneal is solidly positioned to execute against our near-term priorities to deliver on our 2019 targets while also implementing our long-term strategy to deliver sustainable growth for our shareholders in years to come.

With that, I'll turn the call back to Mark to start our Q&A.

Thanks, Rob. Allison, would you please give the instructions to prompt callers for the Q&A and open the lines up for questions. Thank you.

(Operator Instructions) Our first question today will come from Louise Chen of Cantor Fitzgerald.

This is Jennifer Kim on for Louise. I have a few questions here. My first question is just thinking about the 6 product launches from this quarter. You said they had pretty minimal contribution. And I'm just wondering if you could update us on how you think that level of contribution for new products will change over the course of the year and sequentially. My second question is, when you talk about diversifying your portfolio away from specialties and generics, is it fair to say that you're talking about biosimilars? And is biosimilar insulin something that you'd be interested in just because of the noise around insulin recently? And then my last question is just maybe for Todd. As the CFO, what are your short and long-term goals and what are your priorities?

Okay. So I'll obviously handle the first 2 and hand the third off to Todd. In terms of the product launches, because of the timing of when those launched within the quarter, they had somewhat of a muted contribution in the first quarter. But those products that we did launch will continue to gradually improve in terms of market share, volume as well as contribution throughout the course of the year.

Again, only 6 products launched out of the 50 in the first quarter. And so you will see not only the gradual ramp in contribution from the products already launched, but as we continue to launch products and some of our more highly valuable product launches are in the back half of the year, so that kind of gives you kind of the, I guess, the perspective on how to think about launch contribution as we kind of progress through the year. It will be a gradual build, but with a greater contribution in the second half of the year versus the first half of the year. But all of these launches provide incremental value as they do launch and as you do begin to see uptake in terms of share.

In terms of diversifying the business, we continue to look at other adjacencies in and around our specialty franchises as well as in our institutional platform. So when you think about Amneal today, we've got a very good retail component with our generics business. We also have a growing institutional footprint that allows us to be very relevant to hospitals. And if we could add additional products into that infrastructure, that's an area of focus for us as we diversify and try to find ways to accelerate that segment within our business. And that could include biosimilars and will include biosimilars in the future. But I wouldn't necessarily say that our near-term priority is to build a biosimilar portfolio. I still think that, that segment is going to be a slow uptake. And so our focus is probably more on generic injectables and branded injectables that we think that could fit that institutional platform that we have and continue to build both organically. If we have ways to accelerate that through M&A, that would be my kind of area of focus.

And in terms of insulin, we continue to look at the space. We continue to evaluate it. I don't have anything specific to announce on this call today, but it's an area of interest that we continue to explore and I'll kind of leave it at that. And then I'll turn it over to Todd for his short and long-term priorities.

Yes. Jennifer, thanks for your question. So I would highlight, I guess, 3 things in relation to short-term and long-term priorities. The first is to continue to work closely with our generics and specialty businesses to drive growth and identify opportunities in those segments of our business. In conjunction with that, to maintain good discipline around our cost base and to find ways to optimize opportunities to drive our spend base to a lower level as we progress throughout 2019. The second would be to focus on our cash flow generation, the cash flow from operations and to drive that and progress that throughout 2019 so that we have the capability to pursue both internal and external growth opportunities. And the third would be to just maintain our balance sheet in a good position so that we've got flexibility and optionality as we move forward.

Our next question will come from Gary Nachman of BMO Capital Markets.

First, the competitive pressures with some of your key generic products like aspirin dip and Yuvafem, have you been able to do anything with your customers to try and maintain share for those products? Just explain how the situations have been playing out. And then just how do you weigh the need to spend sufficiently behind your pipeline while also scaling back your spending which is what you said? Just where you're focusing mostly in R&D in terms of prioritization and making sure you continue to fund the pipeline that you've always been talking about?

Yes. So thanks, Gary. Regarding the competitive pressures on our products, look, when you're a good, high-quality, reliable supplier that doesn't have the type of kind of intermittent supplies or backorders or poor customer service, that gives you the ability to have constructive conversation with your customers and also provides you opportunities to hold on to market share positions. And I think that's a key component of kind of our focus and the way that we operate our supply chain and the way we invest in our facilities and invest in our supply chain.

I also think it also matters when you're in that #1, 2 or 3 position once a product does go generic. And so on dipyridamole aspirin or either generic Aggrenox, that's a good example where we've been able to hold on to market share despite the fact that there's been many competitive launches that have now come into the market over the last 12 months. When you're in that incumbent seat, we then control the decision in terms of whether or not we want to give up the volume or at what price point do we want to try and drive down to. And we make those decisions on a one-off basis on each particular product depending on how important that product is to our portfolio, how it fits our overall supply chain strategies and manufacturing capacity analysis.

And so you think about, we've got over 350 product families that we make those kind of decisions day in and day out. And the positive element about Amneal and Amneal's supply chain is that generally customers don't want to move the product away from us provided that they feel that they're getting a fair price. And again, we're always looking at ways where we can maximize the value for our companies and our shareholders.

As we think about R&D, a lot of companies over time have really focused on the number of ANDA applications and not necessarily really focusing on what the ANDA opportunities are. And so with the addition of Pradeep as well as the way that we are kind of reconfiguring and the way that we've integrated Impax and Amneal together and as we've kind of looked at our R&D spend, we've kind of challenged ourselves to go back and say, okay, in this new market reality, where are the right opportunities to make the best investments that we think are going to generate the greatest returns and not necessarily just feeding investment into the number of ANDAs?

We're now at a point where we've got a good enough portfolio and a large enough portfolio that we think that it's not anymore about targeting a certain number of ANDAs, but it's really targeting the opportunities. We're very disciplined in that approach. We've introduced new processes around looking at return on investment of each of our R&D dollars. And we're making sure that we're channeling the dollars to those right opportunities.

And those opportunities are going to generally have higher returns because we think that we have the internal expertise and capability and manufacturing infrastructure to be able to have the confidence that our technical probability of success is high. And we also think that they may be the type of assets that will have fewer number of competitors and more durable contribution for us over the long term.

And that's the process that we've been going through for this last year. And really that's kind of the focus on us going forward is challenging every investment dollar to make absolutely sure it's being invested in the right area that we think is going to generate a return. So hopefully that kind of gives you a flavor on how we've been thinking about aligning our infrastructure to the new reality of the market.

The next question will come from David Amsellem of Piper Jaffray.

So just on the previously limited competition products that are now facing competition, so Voltaren and Vagifem and Aggrenox. Can you talk maybe qualitatively about how resilient or not resilient those products have been in the face of that competition? And then specifically on Voltaren, what's your view on potential deterioration in that market given that Akorn is planning to enter the market later this year?

Yes. Look, anything that has margin in generics these days are always going to be targeted with other competitive launches. Over the course of, let's call it, the last 6 months, we've seen a significant number of competitive launches against the top 20 products that we have in our portfolio. And we saw the impact of that a bit in the fourth quarter. We saw the continued impact of that in the first quarter, which is why it's so important to have launch productivity to be able to offset that.

That said, even with the competition that we've seen on many of these products, because of the fact that we were there at market formation, because of the fact that we're in a position where we can reliably supply these products, we've been able to hold on to market share and we've been able to -- still, I think pricing in many of these have remained a little bit more resilient, again, because of the fact that we can get maybe a bit more premium for our supply chain and our reliability.

So even though that all of our top 20 had seen in some respects additional competition and started in, again, late third quarter and continued through fourth quarter and even into the first quarter, these assets are still durable. They're still making good contributions to our margins today and to our bottom line today. And I expect that they will continue to be good products for us going forward because they've all now kind of suffered the shock of competition.

We will still see more competitors. You mentioned Akorn coming in on Voltaren. We'll deal with those issues as they come up. But we do, within our guidance, we do assume additional competitors in on many of these products, which again speaks to the fact that we're committed to our guidance because of the fact that we've got launch productivity, we've got other growth opportunities, we've got synergy capture that will all mute the impact of those competition assumptions that we expect throughout the course of the year.

Our next question will come from Ami Fadia of SVB Leerink.

This is Eason Lee on for Ami. I have 2 product questions, please. On levothyroxine, we saw the entry of a generic Synthroid. And sort of understanding that it's not the same as your generic, maybe how do you sort of see this market shaping up in 2019 both on a volume and price level? And then secondly on epinephrine, can you talk about how you're doing with regards to supply as we sort of come into the busy season? And how do you sort of see your share shaping up going forward given that we've sort of seen AUVI-Q and Teva's EpiPen generic sort of gaining share pretty rapidly in the recent weeks?

Yes. Thanks, Eason. With respect to levothyroxine, we think this is going to be still a great franchise for us, both branded as well as generic. Again, back to good, reliable supply, we've got a great partnership with Jerome Stevens. They've got a long history of being a very good supplier with this particular product. And even with competition that has entered into the market, unless you're AB-rated to all 4, let's call it, branded levothyroxine products out there, it's a challenge for you to be able to really create the opportunity for substitution.

You got to also remember too that this is a product that it's considered a narrow therapeutic index product. When patients switch from one generic to another or from one brand to another, the FDA guidance suggests that patients be retitrated. That creates somewhat of a stickiness or an adhesion to your particular product. And so I believe that levothyroxine is going to be a great product for us for a very, very long period of time and is in a position to even withstand competition. And also our deal structure with Jerome Stevens contemplates protecting our contribution even in the face of any kind of pricing kind of challenges. I also would say that with this, from a volume standpoint, we continue to see great demand for this product despite the fact that there's been a competitive entry. And you can see that the market shares have remained relatively stable.

With regarding of Adrenaclick, we are seeing improvements in the supply chain around this product. The efforts that Pfizer has made throughout the course of 2018 are now starting to bear fruit where we're seeing better reliability and better delivery performance of the product. We're building inventory in advance of the season, the anticipated season in second and third quarter. Right now, touch wood, I like what I'm seeing. And I think that we will have additional inventory this year compared to what we were struggling with throughout the course of last year.

Adrenaclick is not AB-rated to the other epinephrine like EpiPen or the Teva product so our product is not interchangeable with EpiPen. It has its own prescription. And we see that Teva is essentially taking market share from EpiPen, which you would expect. But Adrenaclick is still, I think, positioned well in the marketplace. And I think we expect this to be actually a growth driver in 2019 versus 2018.

The next question will come from Greg Fraser of SunTrust.

It's Greg Fraser on for Gregg Gilbert. I just want to follow up on cash flow. Was the swing in receivables something that you had expected to happen in the first quarter? And are receivables back to a more normalized level now? And we know that you expect cash flow to improve throughout the year. I was wondering if you could comment on whether you expect year-over-year growth in operating cash flow for 2019.

Well, first off, I want to say, I want to congratulate Gregg Gilbert for actually picking somebody with the same name filling in for him. So thanks, Greg. I'll turn those questions over to Todd. I think he can give some more clarity around that.

Yes. Greg, this is Todd. Thanks for your questions. Regarding the cash flow swing, we did anticipate that given our order-to-cash conversion that we completed in the fourth quarter of last year. So we knew once we did that conversion and how we work that with customers that we would accelerate cash collections into the fourth quarter and out of the first quarter of this year. So it wasn't something that was unexpected by us. If you look over really the 2 quarters, our cash collections have trended exactly where we think they should be. So it was just a function of accelerating some of the cash collection into the fourth quarter in conjunction with our order-to-cash conversion. And we've seen now that we've got just outside of the quarter, we're seeing some normalization of our cash collections with customers. And we expect that to continue in Q2 and for the balance of the year.

Regarding year-over-year operating cash flow growth, we do expect that our operating cash flow is going progress and continue to grow throughout 2019. That's what we signaled when we last spoke with you in February. And we still continue to see that for the balance of the year. Of course, that will be driven by our ability to accelerate launches in the generic side in the back half of the year and I think continue to maintain discipline around our costs and our investments. So we do see a picture where cash flow growth is progressing as we move through 2019. And again, that's consistent with what we had expected.

The next question will come from Dewey Steadman of Canaccord.

On the international businesses, obviously, we have seen some sales of, I guess, the U.K. business and now the German business. What else is out there from an international perspective in this newly combined business? And what are your thoughts on international? Obviously, you've dived into the space in the past, in prior life. And how attractive are ex U.S. opportunities to you going forward?

Yes. Thanks, Dewey. And as you noted, we did sell both our U.K. and our German businesses. And these were kind of, let's call it, cleanups of kind of prior acquisition strategies that were not fully integrated into the business, didn't necessarily fit the model that we're trying to create. They were good businesses but relatively small in size, not necessarily scalable, not to the degree as you had pointed out, that you know of my past history, that it wasn't at the size or scale that I thought was going to be a meaningful enough launchpad for us to really build. It would take too much time, too much distraction for the organization.

If we found the right acquisition target that came with it, a more significant and sizable international business, that would become somewhat more appealing to me. But trying to greenfield international businesses was a bit more of a distraction to our current strategy today and our current focus. And I looked at it as an opportunity where we could sell off those businesses, create value for us, refocus our organization on what I think are going to be important drivers for the short term. But that doesn't mean that I'm immune to getting back into the international markets. I don't necessarily see that you get as much synergy between playing internationally versus domestically in particular around the generic side. We would need to find the right acquisition target that came with it, something that had an infrastructure, that had a more significant, prominent market share for it to become more meaningful and more attractive for us. And that would become a priority for us in the more longer term.

The next question will come from Randall Stanicky of RBC Capital.

This is Dan Busby on for Randall. I'll stick to 2 questions. First, regarding new launch contribution for the remainder of the year, can you provide any color on how much of that pertains to products that have already been approved or tentatively approved and to what extent guidance relies on a few key approvals such as NuvaRing? And then second, you talked about the back half new launch weighting this year. Can you provide any directional guidance on what we should expect in the second quarter versus the first quarter regarding revenue and EBITDA cadence?

Yes. So for competitive reasons, I'm not going to get into all the big product launches because there are others that are obviously neck-and-neck with us and I don't want to disclose really too much on the call. We've provided some color around NuvaRing. Others are talking about NuvaRing as well in the same kind of time frame that we are. We've got some other more significant launches that we expect that would be in that late third quarter, fourth quarter type of time frame. But you'll see a steady build from kind of third quarter and fourth quarter kind of and then continuing into 2020.

Second quarter, we're not providing specific guidance, but I would say that we would see a slight increase in second quarter and then ramping up with a greater contribution in third quarter. And our more significant quarter, we expect this year, will be in the fourth quarter. But as we get some of these products approved and launched, we will press release them so that we can give you the confidence that these things are coming through. But I think the way to maybe kind of think about our business this year is kind of almost looking at last year. The first quarter being our lowest, and granted this year we're starting from a 17% higher rate than we were last year at the same period of time. But you can kind of expect that kind of gradual build where you should see second quarter improve over first quarter, third quarter stepping up again and fourth quarter being our strongest quarter. So a very, very similar kind of trend line I would think you would expect in 2019 versus 2018.

The next question will come from Tim Chiang of BTIG.

Rob, can you talk a little bit just about the specialty business that you guys have today, how you plan on bolstering it? Obviously, you guys have highlighted that it'll probably decline this year. But are you guys looking at potentially bringing in some additional products to sort of complement what you already have in the CNS side? What can you do to sort of get that growth engine back in the specialty brand side?

Yes. Thanks, Tim. And I'll work Joe into this question as well and I'll open up with a couple of remarks. But first off, our specialty business is growing when you exclude the impact of Albenza. So Albenza went generic. We had the loss of exclusivity on that. But when you look at the core CNS portfolio as well as you look at Unithroid, those businesses are growing. If we can find the right assets where we can leverage our sales infrastructure, we would be certainly open to that. But we don't necessarily need that to keep that growth. I mean the real thing that's kind of masking the specialty overall performance number is purely the loss of Albenza.

But we're also looking at other adjacencies as well because of the fact that we're calling on neurologists in addition to movement disorder specialists. We have opportunities to potentially leverage our sales infrastructure in neurology. And then I would also say that because of the fact that we're in the institutional setting as well with our oncology platform, with our injectables as well as other assets that we have in our injectable portfolio that we think that, that may be an opportunity to add on other franchises, more specialty franchises that have potential selling strategies into the institutions and into the GPOs where we think that we can leverage our infrastructure there. But Joe, maybe a comment or 2 as well on that.

Yes. I mean, as Rob pointed out, absent Albenza, all 4 of our promoted brands are seeing growth year-over-year from a net sales standpoint. Specifically Rytary, which is heavily reimbursed through Med D, had a strong first quarter from a script standpoint, essentially even with Q4 despite all the typical Med D headwinds with copay resets and Med D coverage gap. And now we're starting to see a lot of claim-specific data showing growth on the trend that we want to see, indicating that our sales and marketing and promotion are taking effect. So we feel good about growth of Rytary and Unithroid as well year-over-year.

Maybe just one follow-up. I noticed that you guys are going to expand your sales force in the back half of the year for Unithroid. I mean how promotion-sensitive are branded levothyroxine products?

I can take that, sorry. The business model we have on Unithroid, it is a fairly promotion-sensitive situation. We are essentially a, what we're calling, a second-line therapy in that space. It's a very niche space, has a narrow therapeutic index as Rob mentioned before. A lot of the patients that are on Unithroid have been on other levothyroxine medications previously and for whatever reason were not stable. So we offer a high-quality, branded medication that gives patients stability. So to that extent, it is very promotion-sensitive where we're educating physicians on the unique proposition that Unithroid brings. So the more territories that we do add to help maintain our growth trajectory.

I think the way to think about it is, we're constantly evaluating our spend. And we see that the performance of these brands is certainly increasing our level of confidence that we could potentially open up some additional territories, put some additional promotion behind some of these products and hopefully accelerate the performance around these assets. And so the confidence now quarter-over-quarter, year-over-year is certainly improving. My confidence that this is an area that we should continue to put some effort behind. And that's why you see some of the kind of the choppiness of our SG&A budget a little bit in the first quarter as well as we've kind of relaunched some of the marketing efforts around these products and we'll see the fruits of that continue throughout the subsequent quarters of the year.

Thank you, Tim. So that includes all of our callers for today. We thank you all for joining us. If you have any follow-up questions, please reach out to Investor Relations. We're available the rest of the week. Thank you.

Thanks, everyone.

Thank you.

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