Item 2.05 Costs Associated with Exit or Disposal Activities
On December 15, 2022, Lannett Company, Inc. (the "Company") authorized a
restructuring and cost savings plan (the "2022 Restructuring Plan") to
streamline and realign our operations to ensure the continued progression of our
existing pipeline and future growth. The 2022 Restructuring Plan includes
operational improvements and cost efficiencies as well as engagement with more
external partners and technology providers, globally, to execute on our R&D
plans and operations. These actions will result in the reduction to our
workforce by 64 positions, equal to approximately 11% of the Company's total
number of employees, to align with our product development approach. The
workforce reduction will be implemented in several phases throughout the
remainder of the Company's current fiscal year. In connection with the shift in
our R&D operations, the Company also anticipates exiting our State Road and
Torresdale facilities in Philadelphia, Pennsylvania by the end of our current
fiscal year.
The Company estimates that it will incur approximately $3.0 million in
severance-related costs in connection with the 2022 Restructuring Plan, of which
$0.4 million is expected to be incurred in the second quarter of Fiscal 2023.
These expenses were factored into the operational improvements and cost
efficiency initiatives that were discussed by management during the Fiscal 2023
first quarter earnings call held on November 2, 2022. The Company expects to
provide an update on these efforts and related financial impact by our February
2023 earnings call.
This Item 2.05 contains forward-looking statements, including information
regarding the 2022 Restructuring Plan. These forward-looking statements are
based on the Company's current expectations and' inherently involve significant
risks and uncertainties. The Company's actual results and the timing of events
arising from or out of the 2022 Restructuring Plan could differ materially from
those anticipated in such forward-looking statements as a result of these risks
and uncertainties. A further description of the risks and uncertainties relating
to the business of the Company is contained in the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 2022, filed with Securities and
Exchange Commission ("Commission") on August 25, 2022, and the Company's
subsequent current and periodic reports filed with the Commission. The Company
undertakes no duty or obligation to update any forward-looking statements
contained in this Item 2.05 as a result of new information, future events or
changes in expectations.
Item 2.06 Material Impairments
As a result of the 2022 Restructuring Plan as further described in Item 2.05
above, the Company expects to record a non-cash impairment charge of its
Torresdale facility in the estimated range of $6 million to $8 million in the
second quarter of Fiscal 2023. Any non-cash impairment charges would be in
addition to the restructuring costs referenced in Item 2.05 above.
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