Indivior Pharmaceuticals, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. 121 Indivior PLC Consolidated Statements of Operations (Amounts in millions, except per share data) Year Ended December 31, 2024 2023 2022 Net revenue $ 1,188 $ 1,093 $ 901 Cost of sales 231 174 151 Gross profit 957 919 749 Operating expenses: Selling, general and administrative 618 569 469 Research and development 107 116 74 Acquired in-process research and development 1 162 — Litigation settlement 195 239 296 Other operating expense (income), net 4 ( 9 ) ( 8 ) Total operating expenses, net 925 1,076 831 Operating income (loss) 32 ( 156 ) ( 81 ) Other income and expenses: Interest income 23 43 19 Interest expense ( 41 ) ( 35 ) ( 27 ) Income (loss) before income taxes 14 ( 149 ) ( 89 ) Income tax (expense) benefit ( 11 ) 20 44 Net income (loss) $ 2 $ ( 129 ) $ ( 44 ) Earnings (loss) per share Basic $ 0.02 $ ( 0.94 ) $ ( 0.32 ) Diluted $ 0.02 $ ( 0.94 ) $ ( 0.32 ) Shares used in computing earnings (loss) per share Basic 132 137 139 Diluted 133 137 139 See Notes to Consolidated Financial Statements. 122 Indivior PLC Consolidated Statements of Comprehensive Loss (Amounts in millions) Year Ended December 31, 2024 2023 2022 Net income (loss) $ 2 $( 129 ) $( 44 ) Other comprehensive (loss) income, net of tax Foreign currency translation ( 6 ) 2 ( 6 ) Other comprehensive (loss) income ( 6 ) 2 ( 6 ) Total comprehensive loss $( 4 ) $( 127 ) $( 50 ) See Notes to Consolidated Financial Statements. 123 Indivior PLC Consolidated Balance Sheets (Amounts in millions, except per share data) Year Ended December 31, 2024 2023 Assets Current assets Cash and cash equivalents $ 319 $ 316 Short-term investments 1 94 Accounts receivable, net of allowances of $ 3 (2024) and $ 2 (2023) 254 254 Inventories 178 135 Prepaid expenses and other current assets 53 52 Escrow settlement asset — 415 Current tax receivable 34 — Total current assets 839 1,266 Long-term investments 27 41 Property, plant and equipment, net 100 84 Operating lease right of use assets, net 39 40 Goodwill and other intangible assets, net 6 13 Deferred tax assets 280 288 Other non-current assets 29 28 Total assets $ 1,319 $ 1,760 Liabilities and shareholders' deficit Current liabilities Accrued rebates and product returns $ 562 $ 535 Accounts payable and accrued expenses 232 204 Accrued litigation settlement expenses, current 99 492 Current portion of long-term debt 18 3 Operating lease liabilities, current 10 9 Income taxes payable 7 8 Other current liabilities 11 40 Total current liabilities 939 1,290 Long-term debt, less current portion 315 237 Accrued litigation settlement expenses, non-current 365 359 Operating lease liabilities, non-current 32 34 Other non-current liabilities 18 31 Total liabilities 1,668 1,951 Commitments and contingencies (Note 15) Shareholders' deficit Common stock, par value $ 0.50 per share Issued shares: 125 (2024) and 137 (2023) 62 68 Additional paid-in capital 90 88 Share repurchase commitment ( 10 ) ( 23 ) Accumulated other comprehensive loss ( 36 ) ( 30 ) Accumulated deficit ( 454 ) ( 295 ) Total shareholders' deficit ( 348 ) ( 191 ) Total liabilities and shareholders' deficit $ 1,319 $ 1,760 See Notes to Consolidated Financial Statements. 124 Indivior PLC Consolidated Statements of Shareholders’ Deficit (Amounts in millions) Common Stock Shares Amount Additional paid-in capital Share Repurchase Commitment Accumulated other comprehensive loss Accumulated deficit Total shareholders’ equity (deficit) Balance, December 31, 2021 702 $ 70 $ 80 $ — $ ( 26 ) $ ( 3 ) $ 121 Net loss — — — — — ( 44 ) ( 44 ) Other comprehensive loss — — — — ( 6 ) — ( 6 ) Common stock issued 4 1 1 — — — 2 Common stock repurchased and canceled ( 570 ) ( 3 ) — — — ( 87 ) ( 90 ) Share-based compensation — — 16 — — — 16 Settlement of tax on equity awards — — ( 10 ) — — — ( 10 ) Share repurchase liability movement, net — — — ( 9 ) — — ( 9 ) Balance, December 31, 2022 136 $ 68 $ 87 $ ( 9 ) $ ( 32 ) $ ( 134 ) $ ( 20 ) Net loss — $ — $ — $ — $ — $ ( 129 ) $ ( 129 ) Other comprehensive income — — — — 2 — 2 Common stock issued 2 1 2 — — — 3 Common stock repurchased and canceled ( 2 ) ( 1 ) — — — ( 32 ) ( 33 ) Share-based compensation — — 21 — — — 21 Settlement of tax on equity awards — — ( 22 ) — — — ( 22 ) Share repurchase liability movement, net — — — ( 14 ) — — ( 14 ) Balance, December 31, 2023 137 $ 68 $ 88 $ ( 23 ) $ ( 30 ) $ ( 295 ) $ ( 191 ) Net income — $ — $ — $ — $ — $ 2 $ 2 Other comprehensive loss — — — — ( 6 ) — ( 6 ) Common stock issued 1 1 2 — — — 3 Common stock repurchased and canceled ( 13 ) ( 7 ) — — — ( 161 ) ( 168 ) Share-based compensation — — 24 — — — 24 Settlement of tax on equity awards — — ( 22 ) — — — ( 22 ) Share repurchase liability movement, net — — — 13 — — 13 Other — — ( 2 ) — — — ( 2 ) Balance, December 31, 2024 125 $ 62 $ 90 $ ( 10 ) $ ( 36 ) $ ( 454 ) $ ( 348 ) See Notes to Consolidated Financial Statements. 125 Indivior PLC Consolidated Statements of Cash Flows (Amounts in millions) Year Ended December 31, 2024 2023 2022 Cash flows from operating activities: Net income (loss) $ 2 $ ( 129 ) $ ( 44 ) Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation and amortization 29 15 16 Share-based compensation expense 24 21 16 Impairment of tangible and intangible assets 8 — — Unrealized loss on equity investments 9 — — Deferred income taxes 6 ( 65 ) ( 105 ) Acquired in-process research and development 1 162 — Impact from foreign exchange movements ( 2 ) ( 10 ) ( 4 ) Other adjustments, net — ( 1 ) Change in operating assets and liabilities: Accounts receivable ( 1 ) ( 33 ) ( 21 ) Inventories ( 45 ) ( 15 ) ( 30 ) Other current and non-current assets 378 ( 410 ) 69 Accounts payable Accrued legal and settlement expenses ( 387 ) 50 197 Other current and non-current liabilities 14 114 ( 97 ) Net cash provided by (used in) operating activities 36 ( 300 ) ( 4 ) Cash flows from investing activities: Purchases of property and equipment ( 29 ) ( 8 ) ( 5 ) Purchases of in-process research and development and intangible assets ( 2 ) ( 45 ) — Acquisitions, net of cash acquired — ( 129 ) — Purchases of investments in debt securities ( 17 ) ( 45 ) ( 245 ) Sales and maturities of debt securities 117 129 27 Other proceeds from investing activities — 3 1 Net cash provided by (used in) investing activities 69 ( 95 ) ( 222 ) Cash flows from financing activities: Proceeds from the issuance of common stock 3 3 2 Cash paid for repurchases of common stock ( 173 ) ( 33 ) ( 90 ) Proceeds from debt, net 332 — — Repayments of debt ( 240 ) ( 12 ) ( 3 ) Other ( 2 ) — — Settlement of tax on equity awards ( 22 ) ( 22 ) ( 10 ) Net cash used in financing activities ( 102 ) ( 64 ) ( 101 ) Net increase (decrease) in cash and cash equivalents 3 ( 459 ) ( 327 ) Exchange differences — 1 ( 1 ) Cash and cash equivalents at beginning of period 316 774 1,102 Cash and cash equivalents at end of period $ 319 $ 316 $ 774 See Notes to Consolidated Financial Statements. 126 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) 1. Business Overview Indivior PLC and its subsidiaries (together, “Indivior” or the “Company”) is a global pharmaceutical company working to help change patients’ lives by pioneering life-transforming treatment for addiction, including SUBLOCADE (buprenorphine extended-release) injection for subcutaneous use, a long-acting injectable (LAI) for opioid use disorder and OPVEE (Nalmefene) nasal spray for opioid overdose recovery. The principal accounting policies adopted in the preparation of these financial statements are set out below. Unless otherwise stated, these policies have been consistently applied to all the years presented. 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The consolidated financial statements include the accounts of all the Company’s subsidiaries and are prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). All intercompany balances and transactions have been eliminated in consolidation. Columns and rows within tables may not add due to rounding. Percentages and per share data have been calculated using actual, non-rounded figures. The Company previously prepared its consolidated financial statements in accordance with International Financial Reporting Standards. As part of the Company’s efforts to align with industry peers and prepare for the expected loss of foreign private issuer status, the Company elected to file its 2024 annual report on Form 10-K, including presentation of its consolidated financial statements in accordance with U.S. GAAP. The transition to U.S. GAAP is reflected retrospectively for all periods from the Company’s inception. Fair Value Measurements Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. See Note 13. Financial Instruments and Fair Value Measurements for additional information on the fair value hierarchy used by the Company. Foreign Currency Translation The financial statements of each of the Company’s subsidiaries are measured using the currency of the primary economic environment in which the entity operates (the functional currency), which is generally the local currency with the exception of manufacturing, treasury and holding companies where the functional currency is the U.S. dollar. The Company’s presentation currency is the U.S. dollar. The financial statements of subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars using period-end exchange rates for assets and liabilities, historical exchange rates for shareholders’ equity and weighted average exchange rates for operating results. Translation gains and losses are recognized in Consolidated Statements of Comprehensive Loss. Use of Estimates and Judgments The preparation of Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported. Significant estimates are used in determining items such as accruals for returns, incentives and rebates, impairment of intangible assets, acquisitions, and ongoing litigation. Actual results may differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents comprise cash in hand, current balances with banks and similar institutions, and short-term highly liquid investments with original maturities of less than three months and are recognized at cost, which approximates fair value. 127 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) Accounts Receivable, Net Accounts receivables are initially recognized at their invoiced amounts less any adjustments for estimated deductions such as cash discounts. Provisions for expected credit losses are established using an expected credit loss model (“ECL”) taking into account individual customer’s credit risk based on financial position, past experience, and other relevant factors. Charges for ECL are recognized in the Consolidated Statements of Operations within selling, general and administrative expense. The provision for ECL was approximately $ 3 million and $ 2 million at December 31, 2024, and 2023, respectively. Concentration of Credit Risk Financial instruments that potentially expose the Company to concentrations of credit risk are limited to cash and cash equivalents deposited with banks and other financial institutions, investment in debt securities, accounts receivable and other assets. The Company maintains its cash and cash equivalents with high credit quality financial institutions. Financial institution counterparties are subject to approval under the Company’s counterparty risk policy and such approval is limited to financial institutions with a BBB rating or above. All the Company’s investments in debt securities are of low credit risk based on investment-grade credit ratings from Standard and Poor’s or Moody’s (BBB-/Baa3 or higher). As of December 31, 2024, 2023 and 2022 the Company had four separate customers representing greater than 10% of the net accounts receivable balance. Year Ended December 31, Percent of accounts receivable 2024 2023 2022 Customer A 25 % 21 % 25 % Customer B 18 % 23 % 23 % Customer C 17 % 17 % 15 % Customer D 10 % 8 % 8 % Investments The Company’s investments comprise holdings in equity and debt securities. Investments in equity securities which have readily available fair values are initially recorded and subsequently remeasured at fair value through earnings. Investments in debt securities are initially recorded at fair value and remeasured based on the intended holding period. Investments classified as held to maturity investments are reported at amortized cost and realized gains or losses are reported in earnings. Held to maturity investments are classified as long-term investments, except for those with maturities less than 12 months from the end of the reporting period, which are classified as short-term investments. Declines in fair value below amortized cost related to credit losses (i.e., impairment due to credit losses) are included in the Consolidated Statements of Operations, with a corresponding allowance established. If the estimate of expected credit losses decreases in subsequent periods, the Company will reverse the credit losses through current period earnings and adjust the allowance accordingly. Inventories Raw materials and consumables, work in progress and finished goods are stated at the lower of cost or net realizable value determined by the first in, first out method. Cost comprises materials, direct labor, and an appropriate allocation of overhead expenses (based on normal operating capacity) required to get the inventory to its present location and condition. Net realizable value is the estimated selling price less applicable selling expenses. Write-down of inventory occurs in the general course of business and is recognized in cost of sales. Property, Plant and Equipment 128 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) Property, plant, and equipment are carried at cost less accumulated depreciation and impairment, with the exception of land, which is stated at cost less impairment. Depreciation is provided over the estimated useful lives of the assets using the straight-line method. For this purpose, useful lives are determined within the following limits: Assets Expected useful life Buildings Not more than 20 years Plant and Equipment Not more than 10 years Motor Vehicles and Computer Equipment Not more than 4 years Leasehold Improvements Up to the expected lease term The estimated useful lives and residual value of property, plant and equipment are assessed periodically and adjusted as required. Current facts and circumstances are periodically evaluated to determine if the carrying value of property, plant and equipment may not be recoverable and an impairment loss it to be recorded, see “ Impairment of Long-Lived Assets ” for more information. Intangible Assets Intangible assets are carried at cost less accumulated amortization and accumulated impairment. Intangible assets with finite useful lives are amortized over their useful lives. Acquired computer software licenses and related implementation costs are capitalized at cost. These costs are amortized on a straight-line basis, generally over a period of up to five years . Acquired computer software primarily relates to SAP, the Company’s ERP system. Amortization expense is included in selling, general and administrative expenses. Marketed products include acquired distribution rights and post-approval milestone payments. These costs are amortized on a straight-line basis generally over the expected patent life of not more than 15 years. Amortization expense is recorded in cost of sales. Gains and losses on the disposal of intangible assets are determined by comparing the asset’s carrying value with any sale proceeds and are included in the Consolidated Statements of Operations. Leases The Company leases various buildings and equipment (including vehicles). Lease contracts are typically made for fixed periods of three to 10 years but may have termination or extension options. All leased buildings and equipment are classified as operating leases and the expense is recognized on a straight-line basis over the lease term. Options to extend or terminate the lease are included in the lease term when it is reasonably certain that the Company will exercise that option. The Company recognizes a right-of-use asset (“ROU asset”) and a corresponding liability (“lease liability”) at the lease commencement date, measured on a present value basis. Leases with a term of 12 months or less (short-term leases) are not recognized on the balance sheet. For short-term leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease. The Company has made a policy election to separately account for lease and non-lease components. Lease liabilities are measured at the present value of the remaining minimum lease payments over the lease term using the discount rate at lease commencement. Where the interest rate implicit in the lease can be determined, it is used to measure the liability. Where the interest rate implicit in the lease cannot be determined, the incremental borrowing rate at the lease commencement date is used. The incremental borrowing rate is the rate of interest the lessee would have to pay to borrow on a collateralized basis, over a similar term, an amount equal to the lease payments in a similar economic environment. Generally, the Company uses its incremental borrowing rate as the starting point for determining the discount rate, resulting in a range of rates from 4 % to 12 % depending upon type of lease and country of origin. 129 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) ROU assets are initially measured at cost, which comprises the initial amount of the lease liability, plus any initial direct costs incurred, less any lease incentives received. Subsequent to initial measurement, operating lease expense is recognized on a straight-line basis over the term of the lease with the ROU asset remeasured at the amount of the remeasured lease liability. ROU assets are assessed periodically for impairment whenever there is an indication the carrying amount may not be recoverable (see “ Impairment of Long-Lived Assets” for more information). Impairment of Long-Lived Assets The Company periodically assesses potential impairments of its long-lived assets, namely, intangible assets, property, plant, and equipment and ROU assets. The carrying value of long-lived assets (both intangible and tangible) is reviewed for potential impairment whenever events or changes in circumstances indicate the carrying value of an asset (or asset group) may not be recoverable. We identify impairment by comparing the projected undiscounted cash flows to be generated by the asset (or asset group) to its carrying value. If an impairment is identified, a loss is recorded equal to the excess of the asset's net book value over its fair value, and the cost basis is adjusted. Goodwill and indefinite-lived intangible assets are reviewed for impairment at least annually during the fourth quarter, or more frequently if impairment indicators are present, by first assessing qualitative factors to determine whether it is more likely than not the fair value of the asset is less than its carrying amount. If we conclude it is more likely than not the fair value is less than the carrying amount, a quantitative test that compares the fair value of the intangible asset to its carrying value is performed to determine the amount of any impairment. Employee and Retirement Benefits Liabilities for wages and salaries, including non-monetary benefits, vacation and accumulating sick leave are recognized at the time of employees’ services and are measured at the amounts expected to be paid when the liabilities are settled. These employee benefits are expected to be settled in the next twelve months and are included within accrued expenses. Some of the Company’s subsidiaries operate defined contribution plans, defined benefit pension plans, and/or provide post-retirement medical care to their retirees. The cost of providing pensions to employees who are members of defined contribution plans is charged to the income statement as services relating to those contributions are received. The Company has no further payment obligations in respect of such plans once the contributions have been paid. Other post-retirement benefits are not material. Debt Debt is initially recognized at fair value less attributable transaction costs, including legal and advisory and original issue discount costs. Transaction costs related to the debt placement are deferred against the loan balance and amortized over the term of the debt using the effective interest method. Transaction costs related to the undrawn revolving credit facility are deferred as a prepaid asset and amortized on a straight-line basis over the period the credit facility will be available. Subsequent to initial recognition, debt is stated at amortized cost, with any difference between cost and redemption value being recognized within interest expense in the Consolidated Statements of Operations over the term of the loan on an effective interest basis. Debt is classified as current or noncurrent based on timing of payments and expected maturity. Contingencies In the normal course of business, the Company is subject to loss contingencies such as legal proceedings and claims that arise out of our business that cover a wide range of matters, including, among others, government investigations, product liability and tax matters. Accruals are recognized when it is probable that a liability will be incurred, and the amount of loss can be reasonably estimated. Gain contingencies are not recognized until realized. Legal fees are expensed as incurred. Revenue Recognition Net revenue is generated from sales of pharmaceutical products, net of discounts and accruals for returns, incentives and rebates ("gross-to-net revenue deductions"). Direct customers are often 130 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) wholesalers, specialty pharmacies and specialty distributors of pharmaceutical products; indirect customers are often government-sponsored programs or commercial insurers with whom the Company has separate pricing and formulary agreements. Net revenue is recognized when a contractual promise to a customer (performance obligation) has been fulfilled by transferring control over pharmaceutical products to the direct customer, substantially all of which is upon receipt of the products by the customer, and therefore all revenue is recognized at a “point in time.” The amount of net revenue recognized is based on the consideration expected in exchange for pharmaceutical products, including reductions in revenue for rebates expected to be paid to indirect customers. The consideration Indivior receives may be fixed or variable. Variable consideration is only recognized when it is probable that a significant reversal will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company has no material contracts with more than one performance obligation. During 2023, U.S. Biomedical Advanced Research and Development Authority (BARDA) awarded the Company a contract which included initial purchase and options for purchases and delivery of OPVEE over another 9 years at guaranteed pricing through 2033. Shipping and handling activities are not considered to be a separate performance obligation. All taxes assessed by a governmental authority that are imposed on our sales of product and collected from a customer are excluded from the measurement of the transaction price. Management is required to determine the net transaction price in respect of each of its contracts with direct and indirect customers. In making such judgment, management assesses the impact of any variable consideration in the contract due to gross-to-net revenue deductions . These are estimated and recognized in the period in which the underlying performance obligation is fulfilled as a reduction of net revenue. The following are the Company’s significant categories of gross-to-net revenue deductions: • Government and commercial rebates The Company records accruals for rebates for governmental programs as a reduction of sales when the product is sold into the distribution channel. The Company pays rebates to individual U.S. states for all eligible units purchased under the Medicaid Drug Rebate Program in the U.S. ("Medicaid") based on a “per unit rebate” calculation, which is based on the Company’s average manufacturer prices and applicable supplemental agreements. Management estimates expected unit sales under Medicaid and adjusts its rebate accrual based on actual unit, per unit rebate amounts and changes in trends in Medicaid utilization. Commercial rebates include amounts payable to payers and healthcare providers under contractual arrangements and may vary by product. Government and commercial rebates are estimated using contracted rates, historical and estimated payer mix, historical utilization trends and payment processing time lag. Additionally, in developing estimates, management considers statutory rebate requirements, estimated patient mix, known market events or trends, channel inventory data obtained from third parties and other pertinent internal or external information. Management assesses and updates estimates each reporting period to reflect billing trends and other current information. • Chargebacks Chargebacks relate to discounts that occur when contracted indirect customers purchase directly from wholesalers and specialty distributors at a contracted price. The wholesaler or specialty distributor, in turn, then generally charges back to the Company the difference between the wholesale acquisition cost and the contracted price paid to the wholesaler or specialty distributor by the customer. 131 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) Management estimates the accrual for these chargebacks based on historical and expected utilization of these programs. Accruals for chargebacks are recorded within Accrued Rebates and Product Returns as they are settled by payment and not net-settled. • Sales returns Returns are generally made if the product is damaged, defective or otherwise cannot be used by the customer. In the U.S., the Company typically permit returns six months prior to and up to twelve months after the product expiration date. Outside the U.S., returns are only allowed in certain countries on a limited basis. Accruals for product returns are estimated based primarily on analysis of the Company’s historical product return patterns, expected future returns, and contractual agreement terms. Estimated returns are accrued in the period the related revenue is recognized. • Sales discounts Wholesalers, specialty pharmacies and specialty distributors of the Company’s products are generally offered various forms of consideration, including discounts, allowances, service fees and prompt payment discounts, for distributing the products. Wholesaler and specialty distributor allowances and service fees arise from contractual agreements and are estimated as a percentage of the price at which the Company sells product to them. Accruals for wholesaler allowances and services fees are recorded within Accrued Rebates and Product Returns as they are settled by rebate payment and not net-settled. In addition, customers are offered a prompt pay discount for payment within a specified contractual period. Prompt pay discounts are classified as reductions of accounts receivable. Management also takes account of factors such as levels of inventory in its various distribution channels, product expiry dates and information about potential entry of competing products into the market. In each case, the accruals made for allowances noted above are subject to continuous review and adjustment as appropriate, based on the most recent information available to management. Adjustments to the accruals may be necessary based on actual utilization information submitted to the Company (in the case of accruals for rebates related to sales targets or contractual rebates), claims/invoices received (in the case of regulatory rebates and chargebacks) and actual return rates. Government and commercial rebates, chargebacks, sales returns and sales discounts to customers are recorded as a reduction in sales. As on December 31, 2024, and December 31, 2023, liabilities in respect of sales returns and rebates totaled $ 562 million and $ 535 million of which 83 % and 80 % originated in the US in relation to Managed Care, Federal and Medicaid. Cost of Sales The cost of goods sold primarily consists of raw materials, third party manufacturing costs, freight and distribution costs, direct labor, cost of write-down of inventory to net realizable value and manufacturing overhead costs. Abnormal idle capacity is expensed as incurred within cost of sales. Advertising Expense Advertising expense includes the cost of promotional materials and activities, such as printed materials and digital marketing, marketing programs and speaker programs. Advertising expenses are expensed as incurred and are included in selling, general and administrative expenses. Advertising expenses were $ 68 million in 2024, $ 53 million in 2023 and $ 52 million in 2022. Share-based Payments Incentives in the form of shares are provided to employees under restricted share award plans. Restricted share awards are subject to either service conditions only or service and market conditions, specifically total shareholder return or relative to selected indices. Share-based compensation expense is 132 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) recorded ratably over the vesting period, regardless of whether the market condition has been satisfied, as an expense in selling, general and administrative expense in the Consolidated Statements of Operations with a corresponding increase in additional paid-in-capital. Forfeitures are estimated based on historical experience at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates. See Note 15. Share-Based Payments for more information. Research and Development Expenses Research and development costs are expensed as incurred. Research and development expenses are comprised of costs incurred in performing research and development activities including payroll and benefits, pre-clinical, clinical trial and related clinical manufacturing costs, manufacturing development and scale-up costs, product development and regulatory costs, contract services and other outside contractor costs, research license fees, depreciation and amortization of lab facilities and lab supplies costs incurred for the acquisition of assets for which there is no alternative future use beyond the development of unapproved pharmaceutical products. For compounds acquired or licensed before regulatory approval, the Company records acquisition costs, upfront and milestone payments as IPR&D expense in the Consolidated Statements of Operations. Acquisition costs and upfront payments are recorded when incurred. The cost of milestones is recorded when probable, which for milestones with regulatory approval requirements is generally when the specific milestone has been achieved. Once a compound receives regulatory approval, any further milestone payments are recorded as acquired distribution rights within intangible assets, less accumulated amortization on a straight-line basis over the remaining agreement term or the expected product life cycle, whichever is shorter. The Company accrues costs for clinical trial activities based upon estimates of the services received and related expenses incurred that have yet to be invoiced by the contract research organizations, clinical study sites, laboratories, consultants, or other clinical trial vendors that perform the activities. Restructuring Costs Restructuring charges are recognized as a result of significant changes in market conditions and actions taken to streamline operations and realize operational synergies. One-time employee termination costs are recognized at the time of communication to employees, unless future service is required, in which case the costs are recognized ratably over the future service period. Ongoing employee termination benefits are recognized as a liability when it is probable that a liability exists and the amount is reasonably estimable. The Company periodically evaluates and, if necessary, adjusts its estimates based on currently available information. Interest Expense Interest expense includes stated interest and amortization of deferred financing costs and debt discount incurred by the Company in connection with the refinancing of its term loan as discussed within Note 12. Debt . The Company amortizes the deferred financing costs and debt discount over the term of the debt, using the effective interest method. Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets (“DTAs”) and deferred tax liabilities (“DTLs”) for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines DTAs and DTLs on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on DTAs and DTLs is recognized in income in the period that includes the enactment date. The Company recognizes DTAs to the extent that it believes these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative 133 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. If the Company determines that it would be able to realize our DTAs in the future in excess of their net recorded amount, the DTA valuation allowance would be appropriately adjusted, which would reduce the provision for income taxes. The Company records uncertain tax positions on the basis of a two-step process in which (1) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. Accrued interest and penalties payable for unrecognized tax benefits are included in either current or non-current income taxes payable. Interest and penalties related to unrecognized tax benefits are included in interest expense and SG&A expense, respectively. Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing earnings available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed using the weighted-average number of outstanding shares of ordinary shares and, when dilutive, the weighted-average number of potential common shares outstanding during the period which consist primarily of contingently issuable shares, assuming the vesting of restricted stock and current expected vesting of performance shares, which are added net of applying the treasury stock method. Recently Adopted Accounting Standards ASU 2023-07: Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures This update improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and is required to be effective for the Company for fiscal periods beginning after December 15, 2023. As this accounting standard only impacts disclosures, it did not impact the Company’s Consolidated Statements of Operations or Consolidated Balance Sheets. ASU 2023-09: Income Taxes (Topic 740)—Improvements to Income Tax Disclosures This update standardizes categories for the effective tax rate reconciliation, requires disaggregation of income taxes paid and additional income tax-related disclosures and is required to be effective for the Company for fiscal periods beginning after December 15, 2024. The Company has elected to adopt ASU 2023-09 for the 2024 fiscal year retrospectively. As this accounting standard only impacts disclosures, the adoption did not impact the Company’s Consolidated Statements of Operations or Consolidated Balance Sheets. Recently Issued Accounting Standards Not Yet Adopted ASU 2024-03: Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)—Disaggregation of Income Statement Expenses This update requires disclosure in the notes to the financial statements of specified information about certain costs and expenses and is required to be effective for the Company for fiscal periods beginning after December 15, 2026. As this accounting standard only impacts disclosures, it will not impact the Company’s Consolidated Statements of Operations or Consolidated Balance Sheets. 3. Segment, Geographic and Other Revenue Information The Company derives revenues from customers through the development, manufacture and sale of buprenorphine-based prescription drugs for treatment of opioid dependence and related disorders. The Company offers a range of four different product lines, with the financial results reported on a consolidated basis and reviewed as a single component. The CEO is responsible for assessing performance of the 134 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) business, establishing and approving budgets, setting and evaluating performance goals, and making all key decisions aligned with strategic objectives of the Company. Accordingly, the CEO has been identified as the chief operating decision maker (“CODM”). The CEO reviews the Company's financial information on a consolidated basis for purposes of allocating resources and evaluating performance. Accordingly, the Company has concluded that it operates in a single operating and reportable segment for all periods presented. Please refer to Note 1. Business Overview for more information on the products and services of the Company. The CODM uses income from operations to measure the profitability of the segment. This amount is determined in accordance with the accounting policies of the consolidated entity as described in Note 2. Summary of Significant Accounting Policies . These amounts are reported on the Consolidated Statements of Operations. The measure of segment assets is reported on the Consolidated Balance Sheets as total consolidated assets. The CODM reviews net revenue and income from operations on a consolidated basis and compares to forecasted totals to evaluate financial performance. In addition, the CODM reviews the total disaggregated US net revenue by product line. No additional financial information is provided by product line. The financial data provided to the CODM is as follows: 135 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) Year Ended December 31, 2024 2023 2022 US: SUBLOCADE* $ 704 $ 588 $ 381 Sublingual & other 1 250 282 323 OPVEE 2 15 — — PERSERIS 3 40 42 28 Total US 1,008 912 732 Most of World 179 181 169 Net revenue 1,188 1,093 901 Cost of sales 231 174 151 Gross profit 957 919 749 Operating expenses: Selling and marketing 255 236 218 Administrative and general 363 333 251 Total selling, general and administrative 618 569 469 Research and development 107 116 74 Acquired in-process research and development 1 162 — Litigation settlement 195 239 296 Other operating expense (income), net 4 ( 9 ) ( 8 ) Total operating expenses, net 925 1,076 831 Operating income (loss) 32 ( 156 ) ( 81 ) Other income and expenses: Interest income 23 43 19 Interest expense ( 41 ) ( 35 ) ( 27 ) Income (loss) before income taxes 14 ( 149 ) ( 89 ) Income tax (expense) benefit ( 11 ) 20 44 Net income (loss) $ 2 $ ( 129 ) $ ( 44 ) *Total SUBLOCADE net revenue $ 756 630 408 1 Includes $ 3 million of revenue generated from onerous contracts at the Raleigh manufacturing facility in FY 2024. Refer note 18. 2 2024 OPVEE net revenue includes $ 15 million for two BARDA orders. 3 Marketing and promotion activities for PERSERIS were discontinued in 2024. Significant customers that amount to 10% or more of the Company’s net revenues are as follows (in percentages of total net revenue for each year): Year Ended December 31, 2024 2023 2022 Customer A 19 % 19 % 17 % Customer B 18 % 19 % 22 % Customer C 18 % 16 % 16 % Customer D 11 % 9 % 7 % 136 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) The following table summarizes the Company's long-lived assets, which include property, plant and equipment and right of use assets, by geographic area: Year Ended December 31, 2024 2023 United States $ 74 $ 63 Most of World 65 62 Total long-lived tangible assets $ 139 $ 125 Total capital expenditures were $ 29 million, $ 8 million and $ 5 million for year ended December 31, 2024, 2023 and 2022 respectively. 4. Income Tax Income (loss) before income tax expense (benefit) by geographical area consisted of the following: (in millions) Year Ended December 31, 2024 2023 2022 Domestic $ 28 $ 2 $ ( 171 ) Foreign United States ( 31 ) ( 158 ) 77 Most of World excluding United Kingdom 17 7 5 Total income (loss) before tax $ 14 $ ( 149 ) $ ( 89 ) Income tax expense (benefit) consisted of the following: Year Ended December 31, (in millions) 2024 2023 2022 Current Domestic $ ( 6 ) $ 48 $ 15 Foreign United States 8 ( 4 ) 47 Most of World excluding United Kingdom 3 1 ( 1 ) Total current income tax expense (benefit) 5 45 61 Deferred Domestic 25 ( 65 ) ( 79 ) Foreign United States ( 18 ) — ( 27 ) Most of World excluding United Kingdom ( 1 ) — 1 Total deferred income tax expense (benefit) 6 ( 65 ) ( 105 ) Total income tax expense (benefit) $ 11 $ ( 20 ) $ ( 44 ) In 2023, Finance (No. 2) Act 2023 (Pillar Two) was enacted in the U.K., introducing a global minimum effective tax rate of 15%. The legislation was also enacted or substantively enacted in other jurisdictions in which the Company operates. The Pillar Two legislation is effective for the Company’s financial year beginning January 1, 2024. The Company performed an assessment exposure to Pillar Two income taxes and has determined it qualifies for one of the transitional safe harbors provided in territories with material pretax income in which it operates. 137 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) The following is a reconciliation of income tax expense with income taxes at the U.K. statutory rate: Year Ended December 31, (in millions) 2024 2023 2022 Amount Percent Amount Percent Amount Percent U.K. Federal Statutory Tax Rate 1 $ 4 25.0 % $ ( 35 ) 23.5 % $ ( 17 ) 19.0 % Nontaxable or Nondeductible Items Imputed Expense ( 13 ) ( 90.9 ) % ( 12 ) 7.9 % ( 7 ) 7.8 % Other Permanent Differences 2 11.6 % ( 5 ) 3.3 % — — % Effect of Changes in Tax Laws or Rates Enacted in the Current Period — — % ( 3 ) 2.2 % ( 25 ) 27.4 % Effect of Cross-Border Tax Laws 3 22.7 % 3 ( 2.0 ) % 2 ( 1.9 ) % Changes in Valuation Allowances 15 103.4 % 1 ( 0.7 ) % 3 ( 3.7 ) % Other Adjustments Statutory Adjustments 2 16.2 % ( 2 ) 1.3 % ( 5 ) 6.2 % Changes in Unrecognized Tax Benefits ( 2 ) ( 11.4 ) % 1 ( 0.9 ) % ( 2 ) 1.7 % Foreign Tax Effects United States Statutory Tax Rate Difference Between United States and United Kingdom 1 8.8 % 4 ( 2.7 ) % 2 ( 2.1 ) % State & Local (Net of Federal) — — % — — % 6 ( 6.9 ) % Nontaxable or Nondeductible Items Imputed Income 12 79.5 % 12 ( 7.8 ) % 8 ( 9.0 ) % Non-deductible Intangible Amortization — — % 26 ( 17.4 ) % — — % Other Permanent Differences — — % 4 ( 2.7 ) % ( 1 ) 1.7 % Tax Credits Research and Development Tax Credit ( 2 ) ( 15.5 ) % ( 2 ) 1.5 % — — % Foreign Tax Credits ( 16 ) ( 109.9 ) % ( 16 ) 10.1 % ( 10 ) 11.6 % Changes in Valuation Allowance 4 30.5 % 4 ( 2.4 ) % 2 ( 2.5 ) % Other Foreign Jurisdictions 1 6.0 % — — % — — % Total Effective Tax Rate $ 11 76.0 % $ ( 20 ) 13.2 % $ ( 44 ) 49.3 % 1 The enacted U.K. Statutory Corporation Tax rate increased to 25 % as of April 1, 2023, providing a blended rate of 23.5 % for the year ended December 31, 2023. 138 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) Deferred Taxes Significant components of the Company’s deferred tax assets and liabilities are as follows: Year Ended December 31, (in millions) 2024 2023 Deferred tax assets: Intangibles $ 15 $ 27 Share-based compensation 7 6 Lease liabilities 5 4 Accruals and general expenses 22 20 Capitalized research and development 7 7 Inventory reserves 70 53 Litigation 24 23 Foreign tax credit carryforwards 10 6 Interest expense carryforwards 14 13 Outside basis in Investments 3 — Tax loss carryforwards 156 162 Total deferred tax assets 333 321 Valuation allowance ( 47 ) ( 28 ) Total deferred tax assets, net of valuation allowance 286 293 Deferred tax liabilities: Property, plant and equipment ( 1 ) ( 2 ) Right of use assets ( 5 ) ( 3 ) Total deferred tax liabilities ( 6 ) ( 5 ) Total net deferred tax assets (liabilities) $ 280 $ 288 Recognized as: Deferred tax assets—noncurrent $ 286 $ 293 Deferred tax liabilities—noncurrent $ ( 6 ) $ ( 5 ) As of December 31, 2024, the Company had foreign tax credit carryforwards of $ 10 million, if not used, will expire in 2031 through 2034, and R&D Credit carryforward of $ 1 million, if not used, will expire in 2042. Valuation Allowances As of December 31, 2024, 2023 and 2022, the Company had valuation allowances of $ 47 million, $ 28 million and $ 23 million, respectively. A reconciliation of the beginning and ending valuation allowance was as follows: Year Ended December 31, (in millions) 2024 2023 2022 Balance at beginning of year $ 28 $ 23 $ 17 Additions to valuation allowance charged to income tax expense 19 5 6 Balance at end of year $ 47 $ 28 $ 23 Additions to valuation allowances of $ 19 million, $ 5 million, and $ 6 million for 2024, 2023 and 2022, respectively, were due to deferred tax assets recorded in connection with corporate interest expense restriction, net operating and capital losses in the U.K. and foreign tax credits in the U.S. 139 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) Unrecognized Tax Benefit We are subject to income taxation in many jurisdictions. Unrecognized tax benefits reflect the differences between tax positions we have taken or expect to take on income tax returns and the amounts recognized in our financial statements. Resolution of the related tax positions with the relevant tax authorities may take many years to complete, and such timing is not entirely within our control. The following table reconciles the beginning and ending amount of our gross unrecognized tax benefits: Year Ended December 31, (in millions) 2024 2023 2022 Balance at beginning of year $ 9 $ 7 $ 9 Additions for tax positions of prior years — 5 — Reductions for tax positions due to lapse of statutes of limitations ( 2 ) — ( 2 ) Tax settlements ( 3 ) ( 3 ) — Balance at end of year $ 4 $ 9 $ 7 As of December 31, 2024, 2023 and 2022, the unrecognized tax benefits that, if recognized, would impact the effective tax rate were $ 4 million, $ 9 million, and $ 7 million, respectively. As of December 31, 2024, the Company had accrued interest of $ 1 million, $ 2 million and $ 2 million for 2024, 2023 and 2022, respectively. For the years ended December 31, 2024, 2023 and 2022, interest expense was nil , $ 1 million, and nil , respectively. As of December 31, 2024, the Company had accrued penalties of $ 1 million, $ 1 million and nil for 2024, 2023 and 2022, respectively. For the years ended December 31, 2024, 2023 and 2022, the penalty expense was nil , $ 1 million, and nil , respectively. The total amount of unrecognized tax benefits relating to the Company’s tax positions is subject to change based on future events including, but not limited to, the settlement of ongoing tax audits and assessments and the expiration of applicable statutes of limitations. 140 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) Income Taxes Paid Income taxes paid, net of (refunds) received, consisted of the following: Year Ended December 31, (in millions) 2024 2023 2022 Domestic $ 40 $ 33 $ 10 Foreign United States US Federal 2 ( 9 ) 37 US State and Local 2 5 9 New York state * 3 * Most of World 2 — 1 Total Taxes Paid $ 46 $ 32 $ 57 * The amount of income taxes paid during the year does not meet the 5% disaggregation threshold. Reinvestment of Unremitted Earnings We consider foreign earnings of specific subsidiaries to be indefinitely reinvested. There is no deferred tax liability, recorded, if any on such amounts. If at some future date, the Company ceases to be permanently reinvested in these specific foreign subsidiaries, the Company may be subject to foreign withholding and other taxes on these undistributed earnings and may need to record a deferred tax liability for any outside basis difference on these specific foreign subsidiaries. At December 31, 2024, 2023 and 2022, we estimate the unrecorded, deferred tax liability to be, $ 2 million for each of the respective years. Tax Return Examination Status The Company files income tax returns in the U.K., U.S. and in various foreign, state and local jurisdictions. We are subject to tax audits in the various jurisdictions until the respective statutes of limitation expire. The Company is no longer subject to U.K. examinations by tax authorities for fiscal years before 2019 and U.S. federal income tax examinations by tax authorities for fiscal years before 2021. There are ongoing U.K. and U.S. state and local audits covering 2018-2022. An estimate of reasonably possible additional tax liabilities and interest that could arise on resolution of these examinations, including the impact from later periods is in the range of nil to $ 61 million. 5. Inventories Inventories are comprised of: Year Ended December 31, 2024 2023 Raw materials and consumables $ 33 $ 38 Work in progress 51 34 Finished goods 94 63 Total Inventories, net $ 178 $ 135 Cost of sales included inventory write-downs of $ 36 million, $ 14 million and $ 6 million for the years ended December 31, 2024, 2023 and 2022 respectively. Inventory write-downs reflected in the carrying amounts above at December 31, 2024, 2023 and 2022 were $ 26 million, $ 13 million, and $ 10 million, respectively. The 2024 write-down included $ 21 million related to the discontinuation of marketing and promotion for PERSERIS. 141 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) 6. Property, Plant and Equipment, Net A summary of property, plant and equipment is as follows: Year Ended December 31, 2024 2023 Land and buildings $ 76 $ 65 Plant and equipment 76 77 Construction in progress 38 23 Gross property, plant and equipment 190 165 Less: Accumulated depreciation ( 90 ) ( 81 ) Total property, plant and equipment, net $ 100 $ 84 The Company capitalizes interest expense, if material, as part of the cost of construction of property, plant and equipment. Interest expense capitalized in 2024 was $ 3 million. No interest was capitalized in 2023 or 2022. Depreciation expense was $ 12 million, $ 7 million, and $ 7 million for the years ended December 31, 2024, 2023 and 2022, respectively. Depreciation expense is included in cost of sales, research and development, and selling, general and administrative expenses within the Consolidated Statements of Operations. Property, plant and equipment impairment charges (related to the discontinuation of marketing and promotion for PERSERIS) of $ 8 million were recognized in cost of sales within the Consolidated Statements of Operations in the year ended December 31, 2024. No impairment charges were recognized on property, plant and equipment for the years ended December 31, 2023 or 2022. 7. Goodwill and Intangible Assets Year Ended December 31, 2024 2023 Goodwill $ 2 $ 5 Marketed products 213 213 Software 38 39 Gross intangible assets 253 257 Less: Accumulated amortization ( 246 ) ( 244 ) Total intangible assets, net $ 6 $ 13 Acquired distribution rights for marketed products were fully amortized before 2022. Amortization expense of software is included in selling, general and administrative expenses within the Consolidated Statements of Operations and wa s $ 3 million, $ 3 million , and $ 3 million in 2024, 2023 and 2022, respectively. No impairment has been recorded. The estimated annual amortization expense for intangible assets, before tax, for the next five years is not material. 8. Investments The Company has investments in corporate debt securities which are initially recorded at fair value, plus or minus directly attributable transaction costs, and remeasured based on the intended holding period. Interest income on debt securities is included interest income within the Consolidated Statements of Operations using the effective interest method. The Company’s investments are classified as held to maturity investments and reported at amortized cost and realized gains or losses are reported in earnings. The following table summarizes the amortized cost of corporate debt securities, unrealized gains and losses, and the fair value for investments in held-to-maturity debt, disaggregated by class of instrument and underlying investment contractual maturity: 142 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) Amortized Cost Basis Fair Value December 31, 2024 Corporate Debt Securities Less than 1 year $ 17 $ 17 1 year to 2 years 10 10 December 31, 2023 Corporate Debt Securities Less than 1 year $ 99 $ 98 1 year to 2 years 27 27 Gross unrealized gains and gross unrealized losses were not material in 2023 or 2024. At December 31, 2024 and 2023, $ 27 million of debt securities were held by a separate cell of an insurance company as part of an agreement to fund insurance coverage. These debt securities are classified as non-current as access to the investments is subject to contractual restrictions through at least December 31, 2026, regardless of the underlying investment maturity. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations and as noted above for debt securities held by a separate cell of an insurance company. Held-to-maturity securities with a value of $ 27 million were sold in 2024 sufficiently close to their maturity such that changes in the market interest rate would not have significantly affected the securities' fair value; an insignificant gain was recognized. No impairment charges were incurred on any held-to-maturity securities in 2024, 2023 or 2022. The Company also holds investments in equity securities which are initially recorded and subsequently recorded at fair value through earnings. The fair value of the equity securities is based on quoted market prices on the measurement date. See Note 13. Financial Instruments and Fair Value Measurements for further discussion. 9. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses include: Year Ended December 31, 2024 2023 Accounts payable $ 63 $ 39 Accrued employee-related obligations 60 72 Accrued indirect tax and government fees 39 27 Accrued other expenses 71 66 Total accounts payable and accrued expenses $ 232 $ 204 Accrued other expenses includes various unbilled costs covering marketing, research and development, legal, consulting and other. 10. Leases The following tables summarizes the components of operating lease expense: Year Ended December 31, 2024 2023 2022 Operating lease cost $ 12 $ 11 $ 8 Total operating lease expenses $ 12 $ 11 $ 8 143 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) Cash paid for amounts included in the measurement of operating lease liabilities was $ 13 million in 2024, $ 11 million in 2023, and $ 9 million in 2022. Right-of-use assets recorded in exchange for executing new operating lease agreements were $ 10 million in 2024, $ 14 million in 2023, and $ 5 million in 2022. Supplemental information related to leases is as follows: Year Ended December 31, 2024 2023 Weighted average remaining lease term (years) 4.5 4.4 Weighted average discount rate 8 % 7 % Future lease payments for non-cancellable operating leases as of December 31, 2024, were as follows: 2025 $ 13 2026 12 2027 11 2028 7 2029 1 Thereafter 6 Total future lease payments 50 Less: Imputed interest ( 8 ) Total lease liability $ 42 At December 31, 2024, the Company had no additional operating leases entered into that had not yet commenced. 11. Accrued Litigation Settlement Expenses Year ended December 31, 2024 2023 Current Non current Total Current Non current Total Accrued litigation settlement expenses DOJ-related $ 52 $ 296 $ 348 $ 57 $ 344 $ 401 Antitrust claims 24 — 24 415 — 415 Opioid litigation 15 61 76 — — — Other 8 8 16 20 15 35 Total accrued litigation settlement expenses $ 99 $ 365 $ 464 $ 492 $ 359 $ 851 DOJ-Related DOJ Resolution Agreement In July 2020, the Company settled criminal and civil liability with the U.S. Department of Justice (DOJ), the U.S. Federal Trade Commission (FTC), and U.S. state attorneys general. Pursuant to the resolution agreement, aggregate payments of $ 263 million (including interest) have been made through December 31, 2024. An additional payment of $ 52 million was made in January 2025 and two annual installments of $ 50 million plus interest will be due in January 2026 and 2027, with the final installment of $ 200 million due in December 2027. The Company has the option to prepay. Interest accrues at 1.25 % on certain portions of the resolution and will be paid with the installment payments. For non-interest-bearing portions, the liability 144 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) has been recorded at the NPV based on timing of the estimated payments using a discount rate equal to the interest rate on the interest-bearing portions. Antitrust class and state claims Multi-district antitrust class and state claims Settlement agreements were entered into during 2023 with three plaintiff classes to fully resolve certain multi-district antitrust claims. The settlement amount payable to the direct purchaser class received final court approval in 2024. Indivior has no further obligations related to this matter. Other antitrust claims Certain antitrust cases filed in Virginia state court were settled and paid during 2024 by agreement of the parties for $ 85 million and mutual releases of claims and counterclaims. The accrual of $ 24 million at December 31, 2024 relates to a settlement of the last remaining antitrust litigation. An installment of $ 15 million was paid in December 2024 and the remaining liability of $ 24 million December 31, 2024 reflects the NPV at the risk-free rate of the amounts to be paid in 2025. This final settlement resolves all of the Company’s remaining legacy antitrust litigation. Opioid litigation The accrual of $ 76 million at December 31, 2024 reflects the present value of the agreed amount in a preliminary settlement between Indivior, the plaintiffs' executive committee and certain state attorneys general covering certain opioid litigation (including cases in the Opioid MDL) brought by municipalities and tribes. The outflow of resources is expected to occur over five years . The parties still must negotiate material terms and conditions of the final settlement agreement, including structure, and scope of releases. The provision is measured using a risk free rate and will be remeasured at a risk-adjusted rate upon reaching a final settlement agreement. Other Other at December 31, 2024 includes the remaining liability related to an indemnity settlement with Reckitt Benckiser. See Note 16. Commitments and Contingencies for additional information on legal matters. 12. Debt In 2024, the Company completed a refinancing of its term loan, repaying in full the previous term loan and replacing it with a new note purchase agreement with principal amount of $ 350 million and a committed, revolving credit facility of $ 50 million, both of which mature in November 2030. None of the $ 50 million revolving credit facility has been utilized. As a result of the debt refinancing, the Company incurred a charge of $ 3 million for the write-off of unamortized deferred financing costs due to early extinguishment of the previous term loan (recorded in interest expense) and legal and advisory fees of $ 4 million incurred in conjunction with the new note purchase agreement (recorded in SG&A). The Company capitalized $ 21 million of deferred financing and original issue discount costs related to the new agreement, of which $ 18 million is netted against the total amount borrowed and is being amortized over the maturity period using the effective interest method, the remainder of which relates to the undrawn revolving credit facility and is being amortized on a straight-line basis to the maturity date. The amount of the current and previous term loan of $ 333 million and $ 240 million in 2024 and 2023, respectively, is secured by the assets of certain subsidiaries of the Company, primarily in the form of guarantees issued by respective subsidiaries. In relation to these debts, interest paid was $ 32 million, $ 26 million, and $ 18 million in 2024, 2023, and 2022, respectively. Interest expense was $ 32 million, $ 27 million, and $ 19 million in 2024, 2023, and 2022, respectively. 145 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) The terms of the loan in effect at December 31, 2024, are as follows: Period Interest Payable Required Amortization Required Total Leverage Ratio Required Interest Coverage Ratio Note Purchase Agreement Through Sept. 30, 2026 SOFR + 5.5 % 5 % No more than 3 :1 At least 2.5 :1 From Dec. 31, 2026 and thereafter SOFR + 5.5 % 7.5 % No more than 2.5 :1 At least 2.5 :1 Revolving Credit Facility Through Sept. 30, 2026 SOFR + 5.5 %; 0.5 % undrawn fee N/A No more than 3 :1 At least 2.5 :1 From Dec. 31, 2026 and thereafter SOFR + 5.5 %; 0.5 % undrawn fee No more than 2.5 :1 At least 2.5 :1 The total leverage ratio is calculated as total debt less up to $ 50 million in cash, divided by Consolidated Adjusted EBITDA. The Note Purchase Agreement generally defines the interest coverage ratio to mean Consolidated Adjusted EBITDA divided by interest expense. For purposes of the Note Purchase Agreement and Revolving Credit Facility only, the Note Purchase Agreement generally defines "Consolidated Adjusted EBITDA" to mean Consolidated Net Income for such period plus, without duplication, amounts paid or expensed for: taxes; interest; depreciation or amortization; debt, equity, and similar capital issuance costs; letters of credit; capital leases; the acquisition or repayment of any debt securities; board of director fees and expenses; transaction costs and charges incurred in connection with transactions permitted under the Note Purchase Agreement; non-recurring litigation or claim settlement charges; non-cash compensation charges associated with any stock options, restricted stock or other equity instruments; any net after-tax extraordinary, nonrecurring or unusual gains or losses; expected cost savings reasonably anticipated to be realized within 18 months related to transactions, and related charges and costs; provided that each is counted only to the extent deducted in calculating Consolidated Net Income for such period, and minus certain items such as certain non-cash gains or income to the extent they increased Consolidated Net Income. The Company is in comp liance with these and all other covenants. Aggregate maturities of long-term debt obligations and interest are as follows: 2025 2026 2027 2028 2029 Thereafter $ 53 $ 51 $ 57 $ 55 $ 52 $ 256 13. Financial Instruments and Fair Value Measurements Financial instruments include cash and cash equivalents, accounts receivable, accounts payable, debt, investments in corporate debt securities and investments in equity securities. The carrying value of these financial instruments, excluding debt instruments and the Company’s investments in corporate debt and equity securities, approximates fair value because of the short-term nature of these instruments. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses a fair value hierarchy which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. There are three levels of inputs used to measure fair value with Level 1 having the highest priority and Level 3 having the lowest: • Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities. 146 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) • Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 — Unobservable inputs that are supported by little or no market activity. Level 3 assets or liabilities are those whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques with significant unobservable inputs, as well as assets or liabilities for which the determination of fair value requires significant judgment or estimation. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The Company’s only financial instruments which are measured at fair value on a recurring basis are equity securities. The fair value of the equity securities is based on quoted market prices on the measurement date. Financial instruments measured at fair value on a recurring basis at December 31 are summarized below: Year Ended December 31, 2024 2023 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Equity securities $ 1 $ — $ — $ 10 $ — $ — Total $ 1 $ — $ — $ 10 $ — $ — The Company recognized unrealized losses on the remeasurement of equity securities of $ 9 million and $ nil in 2024 and 2023, respectively, which was recorded in other operating expense (income), net. The fair value of long-term debt was $ 350 million as of December 31, 2024 and was valued using Level 2 inputs which are based upon the quoted market prices for the same or similar debt instruments. The fair value of short-term debt approximates the carrying value due to the short maturities of the debt instruments. The fair value of the Company’s corporate debt securities was $ 27 million and $ 126 million at December 31, 2024, and 2023. The fair value of the corporate debt securities held at amortized cost was calculated based on quoted market prices which would be classified as Level 1 in the fair value hierarchy above. Financial assets and liabilities are offset, and the net amount reported in the Consolidated Balance Sheets when there is a legally enforceable right to offset and net settlement is intended. 14. Earnings (Loss) Per Share The following table summarizes the calculation of basic and diluted loss per share for years ended December 31, 2024, 2023 and 2022: 147 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) Year Ended December 31, 2024 2023 2022 Net income (loss) $ 2 $ ( 129 ) $ ( 44 ) Basic weighted-average shares outstanding 132 137 139 Effect of potentially dilutive securities: Restricted stock awards 1 — — — Diluted weighted-average shares outstanding 133 137 139 Basic earnings (loss) per share 0.02 ( 0.94 ) ( 0.32 ) Diluted earnings (loss) per share 0.02 ( 0.94 ) ( 0.32 ) 1 The potential shares excluded from the diluted earnings (loss) per share computation because of the antidilutive impact were nil in 2024, 4 million in 2023, and 6 million in 2022. The weighted average number of shares is adjusted for the number of shares granted to the extent market conditions have been met at the balance sheet date and determined using the treasury stock method. Conditional awards of 2 million shares were granted under the Company’s Long-Term Incentive Plan in 2024 and 2023, respectively. For 2024 and 2023, 3 million and 1 million share awards were excluded from the computation of diluted weighted average shares, after application of the treasury method, because the market criteria were not met at the balance sheet date. 15. Share-Based Payments The Company operates three equity-settled executive and employee share plans. For share-based payment awards, the fair value at the grant date is calculated using appropriate pricing models. Total pretax share-based compensation cost recorded in 2024, 2023 and 2022 was $ 24 million, $ 21 million and $ 16 million, respectively. Income tax benefits for stock-based compensation expense recognized in 2024, 2023 and 2022 were $ 5 million, $ 3 million, and $ 3 million, respectively. Indivior Long-Term Incentive Plan (LTIP) In 2015, a share-based incentive plan was introduced for employees (including executive directors) of the Company. The awards are conditional upon the satisfaction of both market conditions and service period, generally of three years . Awards granted to executive directors are subject to a further post-vesting period of two-years . The LTIP award shares vest based on a comparison between the share performance of the Company and the share performance of other companies (“Comparators”) within two indices: (1) The FTSE 250 and (2) the S&P 1500 Pharmaceutical and Biotech Index. The conditions are based on calculation of the Total Shareholder Return (“TSR”) for the Company and the Comparators in the FTSE 250, and the TSR for the Comparators in the S&P 1500 Pharmaceutical and Biotech Index and into what percentile the Company falls as compared to the Comparators in each index. The vesting is as follows: a threshold ( 12.5 % payout) for 50 th percentile performance and maximum ( 100 % payout) for 75 th percentile performance; with interpolation in between. However, if the performance of the Company falls below the 50 th percentile of the index, none of the shares will vest. An equal weight is given to the performance compared to the FTSE 250 and S&P 1500 Pharmaceutical and Biotech Index. The fair values of awards granted under the LTIP are calculated using a Monte Carlo simulation method. As vesting of the LTIP award shares is based on relative market conditions, an open form model such as the Monte Carlo is required to take into consideration the parameters of the awards. The key assumptions in the simulation model are share price of the Company, expected volatilities of the Company considering a combination of historic and implied volatility, risk-free rate, and dividend yield. 148 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) A summary of the service-based restricted share awards and market-based share awards activity under the LTIP as of December 31, 2024, is presented below (values in thousands): Outstanding Service-based Restricted Share Awards Outstanding Market-based Share Awards Shares at December 31, 2022 1,555 5,950 Granted 352 1,409 Issued ( 410 ) ( 1,124 ) Canceled/forfeited/adjusted ( 330 ) ( 907 ) Shares at December 31, 2023 1,167 5,328 Granted 473 1,304 Issued ( 335 ) ( 973 ) Canceled/forfeited/adjusted ( 268 ) ( 941 ) Shares at December 31, 2024 1,036 4,717 In 2022, a 5:1 share consolidation was completed. Shareholders received 1 new ordinary share with a nominal value of $ 0.50 for every 5 previously existing ordinary shares with a nominal value of $ 0.10 each. The weighted average fair value per share of the service-based restricted share awards granted was $ 19.44 , $ 19.25 and $ 3.57 in fiscal years 2024, 2023 and 2022 (2022 value prior to share consolidation), respectively, based on the fair market value at the date of grant. The total fair value of restricted share awards issued was $ 12 million, $ 12 million and $ 9 million in 2024, 2023 and 2022, respectively. The weighted average fair value per share of the market-based share awards granted per share was $ 14.58 , $ 11.72 and $ 2.86 in fiscal years 2024, 2023 and 2022 (2022 value prior to share consolidation) respectively, calculated using the weighted average fair market value for each of the component goals at the date of grant. The total fair value of market-based share awards issued was $ 44 million, $ 44 million, and $ 21 million in fiscal years 2024, 2023 and 2022, respectively. Total compensation cost for unvested awards not yet recognized at December 31, 2024 was approximately $ 17 million for market-based share awards and $ 8 million for service-based restricted share awards, respectively. Compensation cost is expected to be recognized over the remaining weighted-average period of 1.7 years for market-based share awards and 1.8 years for service-based restricted share awards. Other Employee Plans The Company operates a Her Majesty's Revenue and Customs approved (“HMRC-approved”) save as you earn (“SAYE”) plan for U.K. employees and US Employee Share Purchase Plan (ESPP) for US employees. The amounts recognized for these plans are not material for disclosure. Share Options The Company did not grant any share options in 2024, 2023 or 2022. The total fair value of share options exercised was approximately $ 3 million in 2024. No share options were exercised in 2023 or 2022. 16. Commitments and Contingencies Legal Proceedings and Contingencies The Company is involved in various lawsuits, claims, and other legal proceedings that arise in the ordinary course of business. These proceedings may involve compliance and trade practices, antitrust, commercial claims, product liability claims, intellectual property rights and securities, among others. The Company records accruals for loss contingencies associated with legal matters when it is probable that a liability will be incurred, and the amount of the loss can be reasonably estimated. The Company has 149 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) accrued for these matters and will continue to monitor each related legal issue and adjust accruals as might be warranted based on new information and further developments. Developments in legal proceedings and other matters that could cause changes in the amounts previously accrued are evaluated each reporting period. Amounts accrued for legal contingencies often result from a complex series of judgments about future events and uncertainties that rely heavily on estimates and assumptions including timing of related payments. Where the amount and timing of the payment is fixed, the obligation is not interest-bearing, and the impact of discounting is significant, these obligations are recorded at their present value, generally using a discount rate appropriate to the obligation or approximating the risk-free rate at the time the Company incurred the obligation. The Company does not believe that any of the legal matters discussed below, except as otherwise specifically noted, will have a material adverse effect on its financial position or liquidity as the Company believes it has substantial defenses in the matters. However, the outcomes of the Company’s legal proceedings and other contingencies are inherently unpredictable and subject to significant uncertainties. There can be no assurance that there will not be an increase in the scope of one or more of these pending matters or that any other future legal matters will not be material to Company’s financial position, results of operations or cash flows for a particular period. Certain ongoing legal proceedings or threats of legal proceedings to which the Company is a party, but in which the Company believes the possibility of an adverse impact is remote, are not discussed in this Note. Antitrust Litigation and Consumer Protection On November 27, 2024, Indivior Inc. and Indivior Solutions Inc. entered into a settlement agreement with Humana Inc. and certain of its affiliates, and Centene Corp. and certain of its affiliates to resolve all remaining antitrust litigation against the Company, including Humana Inc. v. Indivior Inc. , No. 21-CI-004833 (Ky. Cir. Ct.) (Jefferson Cnty), Centene Corp. v. Indivior Inc. , No. CL23000054-00 (Va. Cir. Ct.) (Roanoke Cnty), and Carefirst of Maryland, Inc. et al. v. Reckitt Benckiser Inc., et al. , Case. No. 2875 (Phila. Ct. Common Pleas). Under the agreement, Indivior Inc. and Indivior Solutions Inc. will pay a total of $ 40 million to the Humana and Centene companies. $ 15 million was paid in December 2024, with the remaining installments of $ 5 million and $ 20 million due on or before March 15, 2025 and December 15, 2025, respectively. Civil Opioid Litigation The Company has been named as a defendant in more than 400 civil lawsuits alleging that manufacturers, distributors, and retailers of opioids engaged in a longstanding practice to market opioids as safe and effective for the treatment of long-term chronic pain to increase the market for opioids and their own market shares for opioids, or alleging individual personal injury claims. Most of these cases have been consolidated and are pending in a federal multi-district litigation in the U.S. District Court for the Northern District of Ohio. See In re National Prescription Opiate Litigation , MDL No. 2804 (N.D. Ohio) (the "Opioid MDL"). Nearly two-thirds of the cases in the Opioid MDL were filed by cities and counties, while nearly one-third of the cases were filed by private plaintiffs, most of whom assert claims relating to neonatal abstinence syndrome ("NAS"). Cases brought by cities and counties outside of the MDL include, for example, 35 actions pending in New York state court, 8 writs filed in Pennsylvania state court, and actions brought in federal district courts in Florida and Georgia. Litigation against the Company in the Opioid MDL and the other federal courts is stayed. The New York state court has not yet entered a case management order. The Company has not yet been served with a complaint in any of the Pennsylvania state court matters. Pursuant to mediation, the Company, the Plaintiffs' Executive Committee in the Opioid MDL, Tribal Leadership Committee, and certain state attorneys general reached agreement on the amount of a potential settlement. The Company has recorded a related provision of $ 76 million, reflecting the NPV of the agreed amount (See Note 11. Accrued Litigation Settlement Expenses ). The parties, however, still must negotiate material terms and conditions of the final settlement agreement, including the ultimate timing and structure 150 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) of payments and product distribution, injunctive relief, and scope of the release. The proposed settlement would resolve claims by cities and counties, but would not resolve private plaintiff cases against the Company (whether in the MDL or proceeding separately). With respect to cases outside the MDL that were not filed by cities or counties: Indivior Inc. was named as a defendant in San Miguel Hospital Corp. d/b/a Alta Vista Regional Medical Center v. Johnson & Johnson, et al. , No. 1:23-cv-00903 (D.N.M.) on March 18, 2024. Indivior moved to dismiss the complaint in May 2024. Indivior's motion to dismiss remains pending. On October 28, 2024, Indivior Inc. was named as one of numerous defendants in five individual complaints filed in West Virginia state court that were transferred to West Virginia's Mass Litigation Panel. See In re Opioid Litigation , No. 22-C-9000 NAS (W.V. Kanawha Cnty. Cir. Ct.) ("WV MLP Action"). All five of Indivior Inc.'s cases in the WV MLP Action involve claims related to NAS. Indivior Inc. moved to dismiss all five complaints. The MLP granted Indivior's motion to dismiss on April 17, 2023. The plaintiffs appealed, and the Intermediate Court of Appeals of West Virginia affirmed dismissal of all claims against Indivior on December 27, 2024. The plaintiffs filed a notice of appeal in the West Virginia Supreme Court as to all defendants, including Indivior, on February 27, 2025. On October 28, 2024, Indivior Inc. was named along with dozens of other manufacturers and distributors in a putative class action brought by West Virginia school districts in federal district court. See Marshall County Board of Education and Wetzel County Board of Education v. Cephalon, et al. , No. 5:24-cv-00207 (N.D.W. Va.). Indivior Inc.'s response to the complaint is not yet due. Additionally, on May 23, 2024, the Consumer Protection Division of the Office of the Attorney General of Maryland served on Indivior Inc. an administrative subpoena related generally to opioid products marketed and sold in Maryland. Indivior Inc.’s response to the subpoena remains ongoing. The Company has begun its evaluation of all of the claims, believes it has meritorious defenses, and intends to vigorously defend itself in all actions that would not be resolved by the proposed settlement. Given the status and preliminary stage of litigation, no estimate of possible loss for those matters can be made at this time. False Claims Act Allegations In August 2018, the U.S. District Court for the Western District of Virginia unsealed a declined qui tam complaint alleging causes of action under the Federal and state False Claims Acts against certain entities within the Company predicated on best price issues and claims of retaliation. See United States ex rel. Miller v. Reckitt Benckiser Group PLC et al. , Case No. 1:15-cv-00017 (W.D. Va.). The suit also seeks reasonable attorneys’ fees and costs. The Company filed a Motion to Dismiss in June 2021, which was granted in part and denied in part on October 17, 2023. The relator filed a sixth amended complaint against only Indivior Inc. on December 7, 2023, which Indivior answered on March 18, 2024. Discovery has been stayed pending resolution of certain discovery disputes. The Company is evaluating the claims, believes it has meritorious defenses, and intends to vigorously defend itself. Given the status and preliminary stage of the litigation, no estimate of possible loss can be made at this time. U.K. Shareholder Claims On September 21, 2022, certain shareholders issued representative and multiparty claims against Indivior PLC in the High Court of Justice for the Business and Property Courts of England and Wales, King’s Bench Division. On January 16, 2023, the representative served its Particular of Claims setting forth in more detail the claims against the Group, while the same law firm that represents the representative also sent its draft Particular of Claims for the multiparty action. The claims made in both the representative and multiparty actions generally allege that Indivior PLC violated the U.K. Financial Services and Markets Act 2000 (“FSMA 2000”) by making false or misleading statements or material omissions in public disclosures, including the 2014 Demerger Prospectus, regarding an alleged product-hopping scheme regarding the switch from SUBOXONE Tablets to SUBOXONE Film. Indivior PLC filed an application to strike out the representative action. On December 5, 2023, the court handed down a judgment allowing the Company's 151 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) application to strike out the representative action. The court subsequently awarded certain costs to the Company. On January 23, 2024, the claimants requested permission to appeal the decision to the court of appeals. The appellate court affirmed the dismissal by order dated January 23, 2025. The claimants applied for permission to appeal to the Supreme Court on February 19, 2025. The Company opposed, and the court refused the application on February 27, 2025. The Company has begun its evaluation of the remaining claims, believes it has meritorious defenses, and intends to vigorously defend itself. Given the status and preliminary stage of the litigation, no estimate of possible loss can be made at this time. U.S. Shareholder Claims A class action lawsuit was filed against Indivior PLC, Mark Crossley (the CEO of the Company), and Ryan Preblick (the CFO of the Company) on August 2, 2024, alleging violations of certain U.S. federal securities laws. The putative class, as alleged, includes plaintiffs that purchased or otherwise acquired Indivior securities between February 22, 2024 and July 8, 2024. The court entered an order appointing a lead plaintiff on October 7, 2024, and the lead plaintiff filed an amended complaint on December 5, 2024, which additionally named Richard Simkin (the CCO of the Company) as a defendant. The defendants filed a motion to dismiss on January 10, 2025, which remains pending. The Group has begun its evaluation of the claims, believes it has meritorious defenses, and intends to vigorously defend itself. Given the status and preliminary stage of the litigation, no estimate of possible loss can be made at this time. Opiant Shareholder Claims On November 8, 2023, plaintiff James Litten filed a class action complaint in the Delaware Court of Chancery alleging that former officers and directors of Opiant Pharmaceuticals, Inc. ("Opiant") breached fiduciary duties of care, loyalty, and good faith in connection with Indivior PLC's 2022 acquisition of Opiant. The defendants moved to dismiss the complaint on January 26, 2024. On March 21, 2024, the plaintiff filed an amended complaint. The defendants moved to dismiss the amended complaint on June 21, 2024. The court heard argument on the motion to dismiss on January 17, 2025 and heard additional argument on February 19, 2025. The motion remains pending. The Company has begun its evaluation of the claims, believes it has meritorious defenses, and intends to vigorously defend itself. Given the status and preliminary stage of the litigation, no estimate of possible loss can be made at this time. Dental Allegations The Company has been named as a defendant in numerous lawsuits alleging that SUBOXONE Film was defectively designed and caused dental injury, and that the Company failed to properly warn of the risks of such injuries. The plaintiffs generally seek compensatory damages, as well as punitive damages and attorneys’ fees and costs. Plaintiffs and potential plaintiffs related to these lawsuits generally can be grouped as follows: Dental MDL Plaintiffs: Approximately 1,300 of these cases have been consolidated in multi-district litigation in the Northern District of Ohio. See In Re Suboxone (Buprenorphine/Naloxone) Film Products Liability Litigation , MDL No. 3092 (N.D. Oh.) (the "Dental MDL"). Dental MDL Schedule A Plaintiffs: One complaint filed in the Dental MDL on June 14, 2024 attached a schedule of nearly 10,000 plaintiffs (the “Schedule A Plaintiffs”). The parties negotiated a tolling agreement for the Schedule A Plaintiffs that would permit plaintiffs’ counsel additional time to investigate issues such as whether and when the Schedule A Plaintiffs used any Indivior product before determining whether to file individual complaints that ultimately would be coordinated with the Dental MDL. Plaintiffs indicated to the court they will dismiss more than 1,400 plaintiffs in the future, pursuant to a mechanism to be provided by the court. On February 7, 2025, the plaintiffs filed an amended Schedule A that reduced the number of Schedule A claimants to 8,623 . State Court Plaintiffs: One complaint has been filed in New Jersey state court, and the parties have agreed to toll the claims of more than 850 other individuals in Delaware, New Jersey, and Virginia. Complaints have not yet been filed on behalf of the tolled individuals. 152 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) Product liability cases such as these typically involve issues relating to medical causation, label warnings and reliance on those warnings, scientific evidence and findings, actual/provable injury and other matters. These cases are in their preliminary stages. These lawsuits and claims follow a June 2022 required revision to the Prescribing Information and Patient Medication Guide about dental problems reported in connection with buprenorphine medicines dissolved in the mouth to treat opioid use disorder. This revision was required by the FDA of all manufacturers of these products. The Company has been informed by its primary insurance carrier that defense costs for the Dental MDL should begin to be reimbursed now that the Company's self-insurance retention has been exhausted. Additionally, the Company's primary insurance carrier has issued a reservation of rights against payment of any liability costs. In the event of a liability finding, various factors could affect reimbursement or payment by insurers, if any, including (i) the scope of the insurers’ purported defenses and exclusions to avoid coverage, (ii) the outcome of negotiations with insurers, (iii) delays in or avoidance of payment by insurers and (iv) the extent to which insurers may become insolvent in the future. The Company has begun its evaluation of the claims, believes it has meritorious defenses, and intends to vigorously defend itself. Given the status and preliminary stage of the litigation, no estimate of possible loss can be made at this time. Applications to file class actions based on similar allegations as in the Dental MDL, but also relating to SUBOXONE Tablets, were filed in Quebec and British Columbia against various subsidiaries of the Company, among other defendants, in April 2024. The Company has begun its evaluation of the claims, believes it has meritorious defenses, and intends to vigorously defend itself. Given the status and preliminary stage of the litigation, no estimate of possible loss ca n be made at this time. 17. Shareholders' Equity Ordinary Shares A summary of ordinary shares outstanding is as follows: Year Ended December 31, 2024 2023 2022 Balance at beginning of year 137 136 702 Shares repurchased and canceled — — ( 18 ) Share consolidation — — ( 551 ) Allotments to satisfy vesting/exercises of share-based compensation awards 1 2 4 Shares repurchased and cancelled (post share consolidation) ( 13 ) ( 2 ) ( 1 ) Balance at end of year 125 137 136 The Company has one class of ordinary shares with par value of $ 0.50 per share which carries the right to one vote at general meetings of the Company. Incremental costs directly attributable to the issue of ordinary shares, net of any tax effects, are recognized as a deduction from equity. The Company does not hold any shares as treasury shares. The Company is authorized to issue an additional allotment as needed each year at the Annual General Meeting up to a maximum of an amount equivalent to two-thirds of the shares in issue (of which one-third must be offered by way of rights issue). On October 10, 2022, Indivior PLC completed a 5-for-1 share consolidation. Shareholders received 1 new share of ordinary shares with a nominal value of $ 0.50 each for every 5 previously existing shares of ordinary shares which had a nominal value of $ 0.10 each. The Company does not anticipate the payment of dividends for the foreseeable future. 153 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) Accumulated other comprehensive loss The accumulated other comprehensive loss includes the accumulated foreign exchange differences from the translation of the financial statements of the Company’s foreign operations arising when the Company’s entities are consolidated. Accumulated deficit At the inception of Indivior as an independent publicly-listed company, accumulated deficit of $ 1,295 million was recognized, representing the difference between the nominal value of the shares issued by the Company and the net investment in the Company by the former owner. 18. Asset Acquisitions Opiant Acquisition On March 2, 2023, the Company acquired 100 % of the share capital of Opiant, which at the time was a publicly traded company in the U.S., for upfront cash consideration of $ 146 million and an additional amount to be potentially paid upon achievement of net sales milestones. Opiant was a specialty pharmaceutical company focusing on developing drugs for addictions and drug overdose. As a result of the acquisition, the Company added OPVEE, formerly the pipeline product OPNT003, an opioid overdose treatment well-suited to confront illicit synthetic opioids like fentanyl, to its addiction treatment and science portfolio. OPVEE was approved by the FDA in May 2023 and launched in October 2023. For the acquisition of Opiant, substantially all of the fair value of the gross assets acquired (excluding cash and cash equivalents, deferred tax assets, and goodwill resulting from the effects of deferred tax liabilities) was concentrated in the IPR&D associated with OPVEE. Accordingly, the Company accounted for the transaction as an asset acquisition. With the closing of this transaction, a relative fair value approach was taken for allocating the purchase consideration to the acquired assets and liabilities with no goodwill recognized. The Company used a multi-period excess earnings method, a form of the income approach, to determine the fair value of the IPR&D of $ 120 million, which was immediately expensed. As part of the acquisition of Opiant, the Company agreed to provide a maximum of $ 8.00 per share in Contingent Value Rights ("CVR") post-acquisition. The Company will pay $ 2.00 per CVR for each of the following net revenue thresholds achieved by OPVEE, during any period of four consecutive quarters prior to the seven th anniversary of the U.S. commercial launch: (i) $ 225 million, (ii) $ 300 million and (iii) $ 325 million. The remaining (iv) $ 2.00 per CVR would be paid if OPVEE achieves net revenue of $ 250 million during any period of four consecutive quarters prior to the third anniversary of the U.S. commercial launch. The potential undiscounted payout of contingent consideration ranges from zero to $ 68 million based on the achievement of the milestones. No liabilities were recognized as of December 31, 2023 or 2024 since the net revenue thresholds have not been reached. The cash outflow for the acquisition was $ 124 million, net of cash acquired. Direct transaction costs of $ 10 million are included in this cash outflow and expensed as a component of acquired IPR&D. Of the $ 146 million upfront consideration, $ 2 million represents acceleration of vesting of employee share compensation and has been recognized as a post-combination expense. As part of the acquisition, the Company assumed outstanding debt of $ 10 million which was settled and included as a cash outflow from financing activities. Additional acquisition-related costs of $ 16 million were incurred in 2023 and included in selling, general, and administrative expenses, primarily relating to severance, acceleration of vesting of Opiant employee share compensation, and short-term retention accruals. 154 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) The following table summarizes the net assets acquired: Net assets acquired Cash and cash equivalents $ 30 Inventories 3 Right-of-use assets 2 IPR&D 120 Deferred tax assets 15 Other assets 6 Trade and other payables ( 10 ) Lease liabilities ( 2 ) Debt ( 10 ) Total net assets acquired, inclusive of expensed IPR&D $ 154 19. Business Combinations On November 1, 2023, the Company acquired an aseptic manufacturing facility (the "Facility") in the U.S. for upfront consideration of $ 5 million in cash and assumption of certain contract manufacturing obligations. The Facility will be further developed to secure the long-term production and supply of SUBLOCADE. The acquisition was accounted for as a business combination using the acquisition method of accounting . The assets acquired and liabilities assumed were recorded at fair value, with the excess of the purchase price over the fair value of the identifiable assets and liabilities recognized as goodwill. A liability was recorded at fair value to reflect the present value of the expected losses from assumed contractual manufacturing obligations. Net operating losses attributable to these contractual obligations will be recorded against the liability from the date of acquisition through fulfillment of the contracts in early 2025. As of December 31, 2024, committed capital spend for the Facility is approximately $ 21 million. Identifiable assets acquired and liabilities assumed As the acquisition was completed in late 2023, the provisional fair value of assets acquired and liabilities assumed at the date of acquisition was disclosed in the Consolidated Financial Statements for the year ended December 31, 2023. In 2024, based on new information obtained about facts and circumstances that existed as of the acquisition date, the Company adjusted the provisional fair values for acquired property, plant and equipment and the assumed onerous contract provision, with a net reduction to goodwill of $ 3 million. The measurement period was closed on March 31, 2024. The following table provides the total consideration and acquisition date fair values of assets acquired and liabilities assumed and the adjusted values: Net assets acquired At Date of Acquisition Measurement Period Adjustment Adjusted Values Property, plant and equipment $ 28 $ ( 2 ) $ 26 Deferred tax assets 2 ( 1 ) 1 Trade and other payables ( 1 ) — ( 1 ) Contractual liabilities ( 29 ) 6 ( 23 ) Total net assets acquired $ — $ 3 $ 3 155 Indivior PLC Notes to the Consolidated Financial Statements (Dollars in millions) Goodwill arising from the acquisition has been recognized as follows, reflecting the Q1 2024 measurement period adjustments: At Date of Acquisition Measurement Period Adjustment Adjusted Values Consideration transferred $ 5 $ — $ 5 Less: Fair value of net assets acquired — ( 3 ) ( 3 ) Goodwill $ 5 $ ( 3 ) $ 2 The goodwill is primarily attributable to Indivior-specific synergies relating to accelerated in-sourcing of SUBLOCADE production and the skills and technical talent of the Facility's workforce. 20. Restructuring Discontinuation of PERSERIS Marketing and Promotion In July 2024, the Company announced the discontinuation of promotion and marketing support for PERSERIS, resulting in a headcount reduction of approximately 130 employees and termination of related contract manufacturing agreements. The decision was taken in consideration of regulatory changes announced during Q2 2024 which are expected to adversely intensify payor management of the treatment category in which PERSERIS competes and would make PERSERIS no longer financially viable. While the Company will continue to supply PERSERIS for the foreseeable future, the expected adverse impacts represented an impairment indicator for PERSERIS-related assets, resulting in year to date impairment charges and other expenses as detailed below. Charges of $ 53 million recorded in 2024 included inventory provisions and impairment of tangible assets, contract termination costs and severance. No additional costs are expected to be incurred. Impairment charges, provisions, write downs and other 2024 Charged to cost of sales: Plant and equipment $ 8 Inventory 21 Contract termination and related supplier charges 12 Sub-total: Cost of sales 41 Charged to SG&A: Severance 7 Other expenses 5 Sub-total: SG&A 12 Total charges $ 53 Contract termination fees of $ 5 million and severance of $ 6 million were paid in 2024. 21. Subsequent Events In February 2025, the Company announced that Mark Crossley will be stepping down as Chief Executive Officer and as a Board Director by mutual agreement. Mr. Crossley is expected to remain as CEO until at least the date of the Company's annual general meeting (AGM) in May 2025. The Separation Agreement includes a one-year severance, continuation of benefits, and allows for potential vesting of all share-based compensation awards to the extent the original grant date market conditions met. These costs will be expensed in 2025. The Company plans to appoint Joe Ciaffoni, currently an Independent Non-Executive Director of the Company, as the new Chief Executive Officer. The terms of his appointment are subject to, and effective upon, the approval by shareholders of a new remuneration policy at the Company's AGM in May 2025. 156 Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Indivior PLC Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the consolidated financial statements, including the related notes, as listed in the index appearing under Item 15 a) 1., and the schedule of condensed financial information of the registrant as of December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023 and 2022 appearing under Item 15, of Indivior PLC and its subsidiaries (the "Company") (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of 157 records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Medicaid Rebate Accruals As described in Note 2 to the consolidated financial statements, the Company records accruals for rebates for governmental programs as a reduction of sales when the product is sold into the distribution channel. The Company pays rebates to individual U.S. states for all eligible units purchased under the Medicaid Drug Rebate Program in the United States (Medicaid) based on a “per unit rebate” calculation, which is based on the Company’s average manufacturer prices and applicable supplemental agreements. Management estimates expected unit sales under Medicaid and adjusts the Company’s rebate accrual based on actual unit, per unit rebate amounts and changes in trends in Medicaid utilization. These rebates are estimated using historical and estimated payer mix, historical utilization trends and payment processing time lag. Additionally, in developing estimates, management considers statutory rebate requirements, estimated patient mix, known market events or trends, channel inventory data obtained from third parties and other pertinent internal or external information. As of December 31, 2024, the Company’s accrued rebates and product returns balance was $562 million, of which a majority relates to Medicaid. The principal considerations for our determination that performing procedures relating to the Medicaid rebate accruals is a critical audit matter are (i) the significant judgment by management when developing the estimate of the Medicaid rebate accruals and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to expected unit sales under Medicaid and the actual unit, per unit rebate amounts and changes in trends in Medicaid utilization. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to Medicaid rebate accruals. These procedures also included, among others (i) developing an independent estimate of the Medicaid rebate accruals by utilizing third-party data related to product demand and price changes, the terms of the specific rebate programs, the historical trend of actual rebate claims paid, and known market events; (ii) comparing the independent estimate to management’s estimate to evaluate the reasonableness of management’s estimate; and (iii) testing, on a sample basis, rebate claims paid by the Company. 158 /s/ PricewaterhouseCoopers LLP Richmond, Virginia March 3, 2025 We have served as the Company’s auditor since 2022. 159 Management's Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Indivior’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles; • provide reasonable assurance that receipts and expenditures are being made only in accordance with the authorizations of management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the Consolidated Financial Statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of Indivior’s internal control over financial reporting as of December 31, 2024. Management based this assessment on criteria for effective internal control over financial reporting described in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management determined that, as of December 31, 2024, the Company maintained effective internal control over financial reporting. PricewaterhouseCoopers LLP, an independent registered public accounting firm, who audited the Consolidated Financial Statements of the Company included in this report, has audited the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024, as stated in their report which appears herein. 160 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.