Net Cash Provided by Operations
Net cash provided by operating activities was $21.0 million for the nine months ended September 30, 2020, compared to $40.8 million provided by operating activities during the same period in 2019, a decrease of $19.9 million. The decrease was due to changes in working capital and the net loss during the nine months ended September 30, 2020, including payments made for Cortrophin pre-launch materials and increases to trade accounts receivable.
Net Cash Used in Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2020 was $66.2 million, principally due to the January 2020 acquisition of 23 generic products and inventory and materials from Amerigen Pharmaceuticals, Ltd. for $57.4 million, cash payments for the July 2020 acquisition of an ANDA and certain inventories of $4.0 million, and $4.0 million of capital expenditures during the period. Net cash used in investing activities for the nine months ended September 30, 2019 was $26.2 million, principally due to the June 2019 acquisition of in-process research and development related to seven development-stage products for $2.3 million, the March 2019 asset acquisition of ANDAs for $2.5 million, the January 2019 Asset Purchase Agreement Amendment for $16.0 million, a July 2019 contractual license payment for $0.3 million, and $4.9 million of capital expenditures during the period.
Net Cash Provided by Financing Activities
Net cash provided by financing activities was $0.8 million for the nine months ended September 30, 2020, principally due to net borrowings of $7.5 million on the Revolver and $0.5 million of proceeds from stock option exercises, partially offset by $5.7 million of maturity payments on the Term Loan and DDTL and $1.5 million of treasury stock purchased in relation to restricted stock vests. Net cash provided by financing activities was $2.0 million for the nine months ended September 30, 2019, principally due to $4.9 million of proceeds from stock option exercises, partially offset by $1.8 million of payments on the Term Loan and $1.0 million of treasury stock purchased in relation to restricted stock vests.
CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES
This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our unaudited interim condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In our consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, allowance for doubtful accounts, accruals for chargebacks, government rebates, returns, and other allowances, allowance for inventory obsolescence, valuation of financial instruments and intangible assets, accruals for contingent liabilities, fair value of long-lived assets, deferred taxes and valuation allowance, and the depreciable lives of long-lived assets.
A summary of our significant accounting policies is included in Item 8. Consolidated Financial Statements, Note 1, Description of Business and Summary of Significant Accounting Policies, in our Annual Report on Form 10-K for the year ended December 31, 2019. Certain of our accounting policies are considered critical, as these policies require significant, difficult or complex judgments by management, often requiring the use of estimates about the effects of matters that are inherently uncertain. Such policies are summarized in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2019.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
A discussion of the recently issued accounting pronouncements is described in Note 1, Business, Presentation, and Recent Accounting Pronouncements, in the unaudited interim condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q quarterly report and is incorporated herein by reference.