Amneal (AMRX)

Pharmaceutical company Amneal Pharmaceuticals (NASDAQ:AMRX) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 11.7% year on year to $784.5 million. The company’s full-year revenue guidance of $3.05 billion at the midpoint came in 1.3% above analysts’ estimates. Its non-GAAP profit of $0.17 per share was 22.9% above analysts’ consensus estimates.

Company Overview

Founded in 2002 and growing into one of America's largest generic drug producers, Amneal Pharmaceuticals (NASDAQ:AMRX) develops, manufactures, and distributes generic medicines, specialty branded drugs, biosimilars, and injectable products for the U.S. healthcare market.

The generic pharmaceutical industry operates on a volume-driven, low-cost business model, producing bioequivalent versions of branded drugs once their patents expire. These companies benefit from consistent demand for affordable medications, as they are critical to reducing healthcare costs. Generics typically face lower R&D expenses and shorter regulatory approval timelines compared to branded drug makers, enabling cost efficiencies. However, the industry is highly competitive, with intense pricing pressures, thin margins, and frequent legal challenges from branded pharmaceutical companies over patent disputes. Looking ahead, the industry is supported by tailwinds such as the role of AI in streamlining drug development (reverse engineering complex formulations) and manufacturing efficiency (optimize processes and remove inefficiencies). Governments and insurers' focus on reducing drug costs can also boost generics' adoption. However, headwinds include escalating pricing pressure from large buyers like pharmacy chains and healthcare distributors as well as evolving regulatory hurdles.

Amneal's primary competitors in the generic pharmaceutical market include Teva Pharmaceutical Industries, Viatris (formerly Mylan), Sandoz Group, and Sun Pharmaceutical Industries. In the specialty pharmaceutical segment, Amneal competes with companies like Supernus Pharmaceuticals and Alkermes, while its AvKARE division faces competition from major pharmaceutical wholesalers such as Cardinal Health, McKesson, and Cencora (formerly AmerisourceBergen).

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With $2.93 billion in revenue over the past 12 months, Amneal has decent scale. This is important as it gives the company more leverage in a heavily regulated, competitive environment that is complex and resource-intensive.

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Amneal grew its sales at a decent 9.3% compounded annual growth rate. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Amneal’s annualized revenue growth of 10.9% over the last two years is above its five-year trend, suggesting some bright spots.

This quarter, Amneal reported year-on-year revenue growth of 11.7%, and its $784.5 million of revenue exceeded Wall Street’s estimates by 2.1%.

Looking ahead, sell-side analysts expect revenue to grow 6.3% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is above the sector average and indicates the market sees some success for its newer products and services.

Amneal was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.7% was weak for a healthcare business.

On the plus side, Amneal’s operating margin rose by 4.4 percentage points over the last five years, as its sales growth gave it operating leverage. Zooming in on its more recent performance, we can see the company’s trajectory is intact as its margin has also increased by 2.7 percentage points on a two-year basis.

In Q3, Amneal generated an operating margin profit margin of 9%, down 3.7 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Amneal’s EPS grew at a decent 5.6% compounded annual growth rate over the last five years. Despite its operating margin improvement during that time, this performance was lower than its 9.3% annualized revenue growth, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.

Diving into the nuances of Amneal’s earnings can give us a better understanding of its performance. A five-year view shows Amneal has diluted its shareholders, growing its share count by 120%. This dilution overshadowed its increased operational efficiency and has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, Amneal reported adjusted EPS of $0.17, up from $0.16 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Amneal’s full-year EPS of $0.75 to grow 9.1%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Amneal has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 8.2% over the last five years, slightly better than the broader healthcare sector.

Taking a step back, we can see that Amneal’s margin dropped by 1.9 percentage points during that time. If its declines continue, it could signal increasing investment needs and capital intensity.

Amneal’s free cash flow clocked in at $106.2 million in Q3, equivalent to a 13.5% margin. The company’s cash profitability regressed as it was 4.2 percentage points lower than in the same quarter last year, but it’s still above its five-year average. We wouldn’t read too much into this quarter’s decline because investment needs can be seasonal, causing short-term swings. Long-term trends are more important.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Amneal historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 4.5%, lower than the typical cost of capital (how much it costs to raise money) for healthcare companies.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Amneal’s ROIC has increased significantly over the last few years. This is a good sign, and if its returns keep rising, there’s a chance it could evolve into an investable business.

Amneal reported $201.2 million of cash and $2.72 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $668.5 million of EBITDA over the last 12 months, we view Amneal’s 3.8× net-debt-to-EBITDA ratio as safe. We also see its $120.9 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Amneal beat analysts’ EPS expectations this quarter. We were also glad its full-year revenue guidance slightly exceeded Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 6.7% to $11.13 immediately after reporting.

Updated: December 4, 2025 at 11:03 PM EST

Are you wondering whether to buy Amneal or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

Amneal isn’t a terrible business, but it doesn’t pass our bar. Although its revenue growth was decent over the last five years, it’s expected to deteriorate over the next 12 months and its mediocre ROIC lags the market and is a headwind for its stock price.

Amneal’s P/E ratio based on the next 12 months is 14.4x. While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $13.50 on the company (compared to the current share price of $11.90).