- Operating Performance Led by Year-over-Year
Double-Digit-Percentage Growth in Revenues of Sterile Injectables
Segment and Specialty Products Portfolio of Branded Pharmaceuticals
Segment -
- Endo Reaffirms Full-Year 2019 Financial Guidance -
DUBLIN, Aug. 5, 2019 /CNW/ -- Endo International plc
(NASDAQ: ENDP) today reported second-quarter 2019 financial
results, including:
- Revenues of $700 million, a
decrease of 2 percent compared to second-quarter 2018 revenues of
$715 million.
- Branded Pharmaceuticals - Specialty Products revenues increased
17 percent to $124 million compared
to second-quarter 2018 revenues of $106
million.
- Sterile Injectables revenues increased 12 percent to
$244 million compared to
second-quarter 2018 revenues of $218
million.
- Reported net loss from continuing operations of $98 million compared to second-quarter 2018
reported net loss from continuing operations of $52 million.
- Reported diluted loss per share from continuing operations of
$0.43 compared to second-quarter 2018
reported diluted loss per share from continuing operations of
$0.23.
- Adjusted income from continuing operations of $120 million compared to second-quarter 2018
adjusted income from continuing operations of $172 million.
- Adjusted diluted earnings per share from continuing operations
of $0.52 compared to second-quarter
2018 adjusted diluted earnings per share from continuing operations
of $0.76.
- Adjusted EBITDA of $307 million
compared to second-quarter 2018 adjusted EBITDA of $351 million.
"I am pleased with our second-quarter 2019 operating
performance, led by continued year-over-year double-digit
percentage growth in revenues of our Sterile Injectables segment
and in the Specialty Products portfolio of our Branded
Pharmaceuticals segment. XIAFLEX® grew 18 percent in the
quarter, reflecting continued demand growth as a result of
successful commercial execution and promotional investment," said
Paul Campanelli, President and Chief
Executive Officer of Endo. "We are on target to meet our previously
provided full-year financial guidance and remain highly focused on
the continued execution of our multiyear turnaround plan in a
challenging external environment."
FINANCIAL
PERFORMANCE
|
|
(in thousands,
except per share amounts)
|
|
|
Three Months Ended
June 30,
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
Total Revenues,
Net
|
$
|
699,727
|
|
|
$
|
714,696
|
|
|
(2)
|
%
|
|
$
|
1,420,138
|
|
|
$
|
1,415,223
|
|
|
—
|
%
|
Reported Loss from
Continuing
Operations
|
$
|
(98,052)
|
|
|
$
|
(52,479)
|
|
|
87
|
%
|
|
$
|
(110,664)
|
|
|
$
|
(550,217)
|
|
|
(80)
|
%
|
Reported Diluted
Weighted Average
Shares
|
226,221
|
|
|
223,834
|
|
|
1
|
%
|
|
225,408
|
|
|
223,677
|
|
|
1
|
%
|
Reported Diluted
Loss per Share
from Continuing Operations
|
$
|
(0.43)
|
|
|
$
|
(0.23)
|
|
|
87
|
%
|
|
$
|
(0.49)
|
|
|
$
|
(2.46)
|
|
|
(80)
|
%
|
Adjusted Income
from Continuing
Operations
|
$
|
120,405
|
|
|
$
|
172,195
|
|
|
(30)
|
%
|
|
$
|
242,488
|
|
|
$
|
322,978
|
|
|
(25)
|
%
|
Adjusted Diluted
Weighted Average
Shares1
|
232,713
|
|
|
227,273
|
|
|
2
|
%
|
|
232,174
|
|
|
226,114
|
|
|
3
|
%
|
Adjusted Diluted
Income per Share
from Continuing Operations
|
$
|
0.52
|
|
|
$
|
0.76
|
|
|
(32)
|
%
|
|
$
|
1.04
|
|
|
$
|
1.43
|
|
|
(27)
|
%
|
__________
|
(1)
|
Diluted per share
data is computed based on weighted average shares outstanding and,
if there is income from continuing operations during the period,
the dilutive impact of ordinary share equivalents outstanding
during the period. In the case of Adjusted Diluted Weighted Average
Shares, Adjusted Income from Continuing Operations is used in
determining whether to include such dilutive impact.
|
CONSOLIDATED RESULTS
Total revenues were $700 million
in second-quarter 2019 compared to $715
million during the same period in 2018. This decrease was
primarily attributable to competitive pressures in the Generic
Pharmaceuticals segment, the Established Products portfolio of the
Branded Pharmaceuticals segment, and the International segment,
partially offset by continued strong growth in the Sterile
Injectables segment and the Specialty Products portfolio of the
Branded Pharmaceuticals segment.
GAAP net loss from continuing operations in second-quarter 2019
was $98 million compared to GAAP net
loss from continuing operations of $52
million during the same period in 2018. This result was
primarily attributable to an increase in asset impairment charges
and a decrease in gains on the sale of certain assets, partially
offset by a decrease in research and development spending. GAAP
diluted net loss per share from continuing operations in
second-quarter 2019 was $0.43
compared to GAAP diluted net loss per share from continuing
operations of $0.23 in second-quarter
2018.
Adjusted income from continuing operations in second-quarter
2019 was $120 million compared to
$172 million in second-quarter 2018.
This decrease was primarily attributable to lower adjusted gross
margin in our Generic Pharmaceuticals segment due to a decline in
revenue and an unfavorable change in product mix. Adjusted diluted
income per share from continuing operations in second-quarter 2019
was $0.52 compared to $0.76 in second-quarter 2018.
BRANDED PHARMACEUTICALS
Second-quarter 2019 Branded Pharmaceuticals revenues were
$209 million compared to $213 million in second-quarter 2018. This
decrease was primarily attributable to ongoing generic competition
in our Established Products portfolio, offset by continued strong
growth of our Specialty Products portfolio.
Specialty Products revenues increased 17 percent to $124 million in second-quarter 2019 compared to
second-quarter 2018, primarily driven by the continued strong
performance of XIAFLEX®. Sales of XIAFLEX®
increased 18 percent to $75 million
compared to second-quarter 2018, primarily attributable to demand
growth in both the Peyronie's Disease and Dupuytren's Contracture
indications driven by continued commercial execution and investment
in promotional activities.
With regards to Collagenase Clostridium Histolyticum (CCH) for
the treatment of cellulite, Phase 3 data was presented in May at
the American Society for Aesthetic Plastic Surgery Hot Topics
session by clinical investigator Dr. Lawrence Bass. Additionally, Phase 2 and Phase 3
data was presented by multiple physicians, including clinical
investigator Dr. Michael Gold,
throughout the Vegas Cosmetic Surgery meeting held in June.
STERILE INJECTABLES
Second-quarter 2019 Sterile Injectables revenues were
$244 million, an increase of 12
percent compared to second-quarter 2018. This increase reflects the
third-quarter 2018 launch of ertapenem for injection, the
authorized generic of INVANZ®, as well as the continued
strong growth of VASOSTRICT® and ADRENALIN®.
As anticipated, second-quarter 2019 Sterile Injectables revenue
declined versus first-quarter 2019 primarily as a result of the
non-recurrence of the first-quarter stocking benefit and the
expected destocking in the second quarter.
GENERIC PHARMACEUTICALS
Second-quarter 2019 Generic Pharmaceuticals revenues were
$218 million compared to $241 million in second-quarter 2018. This
performance was primarily attributable to increased competitive
pressure on certain generic products. Partially offsetting the
decrease was the impact of certain 2018 product launches including,
among others, colchicine tablets, the authorized generic of
Colcrys®. During second-quarter 2019, the Generic
Pharmaceuticals segment launched three products.
INTERNATIONAL PHARMACEUTICALS
Second-quarter 2019 International Pharmaceuticals revenues were
$29 million, compared to $43 million in the same period in 2018.
2019 FINANCIAL GUIDANCE
For the twelve months ending December 31, 2019, at current
exchange rates, Endo is reaffirming its previously provided
guidance on revenue, adjusted diluted earnings per share from
continuing operations and adjusted EBITDA from continuing
operations. The Company estimates:
- Total revenues to be between $2.76
billion and $2.96
billion;
- Adjusted diluted earnings per share from continuing operations
to be between $2.00 and $2.25; and
- Adjusted EBITDA from continuing operations to be between
$1.24 billion and $1.34 billion.
The Company's 2019 non-GAAP financial guidance is based on the
following assumptions:
- Adjusted gross margin of approximately 65.0% to 66.0%;
- Adjusted operating expenses as a percentage of revenues of
approximately 24.5% to 25.0%;
- Adjusted interest expense of approximately $550 million to $560
million;
- Adjusted effective tax rate of approximately 17.5% to 18.5%;
and
- Adjusted diluted weighted average shares outstanding of
approximately 234 million.
BALANCE SHEET, LIQUIDITY AND OTHER UPDATES
In June 2019, the Company borrowed
$300.0 million under its existing
$1,000.0 million revolving credit
facility. The Company expects to use the proceeds from this
borrowing for purposes consistent with the Company's previously
stated capital allocation priorities, including for general
corporate purposes.
As of June 30, 2019, the Company had approximately
$1.4 billion in unrestricted cash;
debt of $8.4 billion; net debt of
approximately $7.0 billion and a net
debt to adjusted EBITDA ratio of 5.3.
Second-quarter 2019 cash provided by operating activities was
$177 million, compared to
$170 million of net cash provided by
operating activities during second-quarter 2018.
CONFERENCE CALL INFORMATION
Endo will conduct a conference call with financial analysts to
discuss this press release tomorrow at 7:30
a.m. ET. The dial-in number to access the call is
U.S./Canada (866) 497-0462,
International (678) 509-7598, and the passcode is 4344119. Please
dial in 10 minutes prior to the scheduled start time.
A replay of the call will be available from August 6, 2019
at 10:30 a.m. ET until 10:30 a.m. ET
on August 13, 2019 by dialing U.S./Canada (855) 859-2056, International (404)
537-3406, and entering the passcode 4344119.
A simultaneous webcast of the call can be accessed by visiting
http://investor.endo.com/events-and-presentations. In addition, a
replay of the webcast will be available on the Company website for
one year following the event.
FINANCIAL SCHEDULES
The following table presents Endo's unaudited Total revenues,
net for the three and six months ended June
30, 2019 and 2018 (dollars in thousands):
|
Three Months Ended
June 30,
|
|
Percent
Growth
|
|
Six Months Ended
June 30,
|
|
Percent
Growth
|
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
|
Branded
Pharmaceuticals:
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
Products:
|
|
|
|
|
|
|
|
|
|
|
|
XIAFLEX®
|
$
|
74,855
|
|
|
$
|
63,500
|
|
|
18
|
%
|
|
$
|
143,362
|
|
|
$
|
120,641
|
|
|
19
|
%
|
SUPPRELIN®
LA
|
23,714
|
|
|
19,963
|
|
|
19
|
%
|
|
45,770
|
|
|
40,540
|
|
|
13
|
%
|
Other
Specialty (1)
|
25,524
|
|
|
22,585
|
|
|
13
|
%
|
|
49,927
|
|
|
41,612
|
|
|
20
|
%
|
Total
Specialty Products
|
$
|
124,093
|
|
|
$
|
106,048
|
|
|
17
|
%
|
|
$
|
239,059
|
|
|
$
|
202,793
|
|
|
18
|
%
|
Established
Products:
|
|
|
|
|
|
|
|
|
|
|
|
PERCOCET®
|
$
|
28,878
|
|
|
$
|
30,833
|
|
|
(6)
|
%
|
|
$
|
59,638
|
|
|
$
|
62,809
|
|
|
(5)
|
%
|
TESTOPEL®
|
11,780
|
|
|
13,844
|
|
|
(15)
|
%
|
|
27,594
|
|
|
29,014
|
|
|
(5)
|
%
|
Other
Established (2)
|
44,262
|
|
|
61,912
|
|
|
(29)
|
%
|
|
86,247
|
|
|
118,256
|
|
|
(27)
|
%
|
Total
Established Products
|
$
|
84,920
|
|
|
$
|
106,589
|
|
|
(20)
|
%
|
|
$
|
173,479
|
|
|
$
|
210,079
|
|
|
(17)
|
%
|
Total Branded
Pharmaceuticals (3)
|
$
|
209,013
|
|
|
$
|
212,637
|
|
|
(2)
|
%
|
|
$
|
412,538
|
|
|
$
|
412,872
|
|
|
—
|
%
|
Sterile
Injectables:
|
|
|
|
|
|
|
|
|
|
|
|
VASOSTRICT®
|
$
|
116,026
|
|
|
$
|
106,329
|
|
|
9
|
%
|
|
$
|
255,163
|
|
|
$
|
220,054
|
|
|
16
|
%
|
ADRENALIN®
|
45,835
|
|
|
36,658
|
|
|
25
|
%
|
|
93,157
|
|
|
66,398
|
|
|
40
|
%
|
Ertapenem for injection
|
25,547
|
|
|
—
|
|
|
NM
|
|
57,766
|
|
|
—
|
|
|
NM
|
Other
Sterile Injectables (4)
|
56,872
|
|
|
74,856
|
|
|
(24)
|
%
|
|
108,242
|
|
|
147,245
|
|
|
(26)
|
%
|
Total Sterile
Injectables (3)
|
$
|
244,280
|
|
|
$
|
217,843
|
|
|
12
|
%
|
|
$
|
514,328
|
|
|
$
|
433,697
|
|
|
19
|
%
|
Total Generic
Pharmaceuticals
|
$
|
217,784
|
|
|
$
|
241,236
|
|
|
(10)
|
%
|
|
$
|
436,310
|
|
|
$
|
490,476
|
|
|
(11)
|
%
|
Total International
Pharmaceuticals
|
$
|
28,650
|
|
|
$
|
42,980
|
|
|
(33)
|
%
|
|
$
|
56,962
|
|
|
$
|
78,178
|
|
|
(27)
|
%
|
Total revenues,
net
|
$
|
699,727
|
|
|
$
|
714,696
|
|
|
(2)
|
%
|
|
$
|
1,420,138
|
|
|
$
|
1,415,223
|
|
|
—
|
%
|
__________
|
(1)
|
Products included
within Other Specialty are NASCOBAL® Nasal Spray and
AVEED®. Beginning with our first-quarter 2019 reporting,
TESTOPEL®, which was previously included in Other
Specialty, has been reclassified and is now included in the
Established Products portfolio for all periods
presented.
|
(2)
|
Products included
within Other Established include, but are not limited to,
LIDODERM®, VOLTAREN® Gel, EDEX®,
FORTESTA® Gel, and TESTIM®, including the
authorized generics of TESTIM® and FORTESTA®
Gel.
|
(3)
|
Individual products
presented above represent the top two performing products in each
product category for either the three or six months ended June 30,
2019 and/or any product having revenues in excess of $25 million
during any quarterly period in 2019 or 2018.
|
(4)
|
Products included
within Other Sterile Injectables include, but are not limited to,
APLISOL® and ephedrine sulfate injection.
|
The following table presents unaudited Condensed Consolidated
Statement of Operations data for the three and six months ended
June 30, 2019 and 2018 (in thousands,
except per share data):
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
TOTAL REVENUES,
NET
|
$
|
699,727
|
|
|
$
|
714,696
|
|
|
$
|
1,420,138
|
|
|
$
|
1,415,223
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
Cost of
revenues
|
388,208
|
|
|
381,905
|
|
|
780,117
|
|
|
785,503
|
|
Selling, general and
administrative
|
152,297
|
|
|
148,157
|
|
|
303,420
|
|
|
314,824
|
|
Research and
development
|
26,348
|
|
|
82,102
|
|
|
59,834
|
|
|
120,748
|
|
Litigation-related
and other contingencies, net
|
10,315
|
|
|
19,620
|
|
|
10,321
|
|
|
17,120
|
|
Asset impairment
charges
|
88,438
|
|
|
22,767
|
|
|
253,886
|
|
|
471,183
|
|
Acquisition-related
and integration items
|
(5,507)
|
|
|
5,161
|
|
|
(43,008)
|
|
|
11,996
|
|
Interest expense,
net
|
134,809
|
|
|
130,059
|
|
|
267,484
|
|
|
254,049
|
|
Gain on
extinguishment of debt
|
—
|
|
|
—
|
|
|
(119,828)
|
|
|
—
|
|
Other (income)
expense, net
|
(597)
|
|
|
(28,831)
|
|
|
4,205
|
|
|
(31,709)
|
|
LOSS FROM CONTINUING
OPERATIONS BEFORE INCOME TAX
|
$
|
(94,584)
|
|
|
$
|
(46,244)
|
|
|
$
|
(96,293)
|
|
|
$
|
(528,491)
|
|
INCOME TAX
EXPENSE
|
3,468
|
|
|
6,235
|
|
|
14,371
|
|
|
21,726
|
|
LOSS FROM CONTINUING
OPERATIONS
|
$
|
(98,052)
|
|
|
$
|
(52,479)
|
|
|
$
|
(110,664)
|
|
|
$
|
(550,217)
|
|
DISCONTINUED
OPERATIONS, NET OF TAX
|
(7,953)
|
|
|
(8,388)
|
|
|
(13,914)
|
|
|
(16,139)
|
|
NET LOSS
|
$
|
(106,005)
|
|
|
$
|
(60,867)
|
|
|
$
|
(124,578)
|
|
|
$
|
(566,356)
|
|
NET LOSS PER
SHARE—BASIC:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
(0.43)
|
|
|
$
|
(0.23)
|
|
|
$
|
(0.49)
|
|
|
$
|
(2.46)
|
|
Discontinued
operations
|
(0.04)
|
|
|
(0.04)
|
|
|
(0.06)
|
|
|
(0.07)
|
|
Basic
|
$
|
(0.47)
|
|
|
$
|
(0.27)
|
|
|
$
|
(0.55)
|
|
|
$
|
(2.53)
|
|
NET LOSS PER
SHARE—DILUTED:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
(0.43)
|
|
|
$
|
(0.23)
|
|
|
$
|
(0.49)
|
|
|
$
|
(2.46)
|
|
Discontinued
operations
|
(0.04)
|
|
|
(0.04)
|
|
|
(0.06)
|
|
|
(0.07)
|
|
Diluted
|
$
|
(0.47)
|
|
|
$
|
(0.27)
|
|
|
$
|
(0.55)
|
|
|
$
|
(2.53)
|
|
WEIGHTED AVERAGE
SHARES:
|
|
|
|
|
|
|
|
Basic
|
226,221
|
|
|
223,834
|
|
|
225,408
|
|
|
223,677
|
|
Diluted
|
226,221
|
|
|
223,834
|
|
|
225,408
|
|
|
223,677
|
|
The following table presents unaudited Condensed Consolidated
Balance Sheet data at June 30, 2019 and December 31, 2018
(in thousands):
|
June 30,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
1,446,949
|
|
|
$
|
1,149,113
|
|
Restricted cash and
cash equivalents
|
307,587
|
|
|
305,368
|
|
Accounts
receivable
|
442,078
|
|
|
470,570
|
|
Inventories,
net
|
335,890
|
|
|
322,179
|
|
Other current
assets
|
222,548
|
|
|
95,920
|
|
Total current
assets
|
$
|
2,755,052
|
|
|
$
|
2,343,150
|
|
TOTAL NON-CURRENT
ASSETS
|
7,319,237
|
|
|
7,789,243
|
|
TOTAL
ASSETS
|
$
|
10,074,289
|
|
|
$
|
10,132,393
|
|
LIABILITIES AND
SHAREHOLDERS' DEFICIT
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts payable and
accrued expenses, including legal settlement accruals
|
$
|
1,786,054
|
|
|
$
|
1,914,285
|
|
Other current
liabilities
|
49,766
|
|
|
35,811
|
|
Total current
liabilities
|
$
|
1,835,820
|
|
|
$
|
1,950,096
|
|
LONG-TERM DEBT, LESS
CURRENT PORTION, NET
|
8,369,972
|
|
|
8,224,269
|
|
OTHER
LIABILITIES
|
458,969
|
|
|
456,311
|
|
SHAREHOLDERS'
DEFICIT
|
(590,472)
|
|
|
(498,283)
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIT
|
$
|
10,074,289
|
|
|
$
|
10,132,393
|
|
The following table presents unaudited Condensed Consolidated
Statement of Cash Flow data for the six months ended June 30, 2019 and 2018 (in thousands):
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
OPERATING
ACTIVITIES:
|
|
|
|
Net loss
|
$
|
(124,578)
|
|
|
$
|
(566,356)
|
|
Adjustments to
reconcile Net loss to Net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
320,788
|
|
|
379,646
|
|
Asset impairment
charges
|
253,886
|
|
|
471,183
|
|
Other, including cash
payments to claimants from Qualified Settlement Funds
|
(363,494)
|
|
|
(65,341)
|
|
Net cash provided by
operating activities
|
$
|
86,602
|
|
|
$
|
219,132
|
|
INVESTING
ACTIVITIES:
|
|
|
|
Purchases of
property, plant and equipment, excluding capitalized
interest
|
$
|
(23,632)
|
|
|
$
|
(41,960)
|
|
Proceeds from sale of
business and other assets, net
|
2,594
|
|
|
37,971
|
|
Other
|
(1,278)
|
|
|
(4,999)
|
|
Net cash used in
investing activities
|
$
|
(22,316)
|
|
|
$
|
(8,988)
|
|
FINANCING
ACTIVITIES:
|
|
|
|
Proceeds from
(payments on) borrowings, net
|
$
|
257,605
|
|
|
$
|
(19,650)
|
|
Other
|
(22,676)
|
|
|
(21,143)
|
|
Net cash provided by
(used in) financing activities
|
$
|
234,929
|
|
|
$
|
(40,793)
|
|
Effect of foreign
exchange rate
|
841
|
|
|
(1,010)
|
|
NET INCREASE IN CASH,
CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH
EQUIVALENTS
|
$
|
300,056
|
|
|
$
|
168,341
|
|
CASH, CASH
EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS,
BEGINNING OF PERIOD
|
1,476,837
|
|
|
1,311,014
|
|
CASH, CASH
EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, END
OF PERIOD
|
$
|
1,776,893
|
|
|
$
|
1,479,355
|
|
SUPPLEMENTAL FINANCIAL INFORMATION
To supplement the financial measures prepared in accordance with
U.S. generally accepted accounting principles (GAAP), the Company
uses certain non-GAAP financial measures. For additional
information on the Company's use of such non-GAAP financial
measures, refer to Endo's Current Report on Form 8-K furnished
today to the U.S. Securities and Exchange Commission, which
includes an explanation of the Company's reasons for using non-GAAP
measures.
The tables below provide reconciliations of certain of our
non-GAAP financial measures to their most directly comparable GAAP
amounts. Refer to the "Notes to the Reconciliations of GAAP and
Non-GAAP Financial Measures" section below for additional details
regarding the adjustments to the non-GAAP financial measures
detailed throughout this Supplemental Financial Information
section.
Reconciliation of EBITDA and Adjusted EBITDA
(non-GAAP)
The following table provides a reconciliation of Net loss (GAAP)
to Adjusted EBITDA (non-GAAP) for the three and six months ended
June 30, 2019 and 2018 (in
thousands):
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net loss
(GAAP)
|
$
|
(106,005)
|
|
|
$
|
(60,867)
|
|
|
$
|
(124,578)
|
|
|
$
|
(566,356)
|
|
Income tax
expense
|
3,468
|
|
|
6,235
|
|
|
14,371
|
|
|
21,726
|
|
Interest expense,
net
|
134,809
|
|
|
130,059
|
|
|
267,484
|
|
|
254,049
|
|
Depreciation and
amortization (15)
|
158,055
|
|
|
170,011
|
|
|
320,788
|
|
|
344,469
|
|
EBITDA
(non-GAAP)
|
$
|
190,327
|
|
|
$
|
245,438
|
|
|
$
|
478,065
|
|
|
$
|
53,888
|
|
|
|
|
|
|
|
|
|
Inventory step-up and
other cost savings (2)
|
$
|
—
|
|
|
$
|
124
|
|
|
$
|
—
|
|
|
$
|
190
|
|
Upfront and
milestone-related payments (3)
|
1,444
|
|
|
36,964
|
|
|
2,383
|
|
|
38,296
|
|
Inventory reserve
increase from restructuring (4)
|
—
|
|
|
202
|
|
|
—
|
|
|
2,590
|
|
Separation benefits
and other restructuring (5)
|
2,124
|
|
|
28,951
|
|
|
4,149
|
|
|
75,550
|
|
Certain
litigation-related and other contingencies, net (6)
|
10,315
|
|
|
19,620
|
|
|
10,321
|
|
|
17,120
|
|
Asset impairment
charges (7)
|
88,438
|
|
|
22,767
|
|
|
253,886
|
|
|
471,183
|
|
Acquisition-related
and integration costs (8)
|
—
|
|
|
1,034
|
|
|
—
|
|
|
1,034
|
|
Fair value of
contingent consideration (9)
|
(5,507)
|
|
|
4,127
|
|
|
(43,008)
|
|
|
10,962
|
|
Gain on
extinguishment of debt (10)
|
—
|
|
|
—
|
|
|
(119,828)
|
|
|
—
|
|
Share-based
compensation
|
12,600
|
|
|
12,096
|
|
|
37,333
|
|
|
29,986
|
|
Other (income)
expense, net (16)
|
(597)
|
|
|
(28,831)
|
|
|
4,205
|
|
|
(31,709)
|
|
Other
adjustments
|
3
|
|
|
(10)
|
|
|
87
|
|
|
(708)
|
|
Discontinued
operations, net of tax (13)
|
7,953
|
|
|
8,388
|
|
|
13,914
|
|
|
16,139
|
|
Adjusted EBITDA
(non-GAAP)
|
$
|
307,100
|
|
|
$
|
350,870
|
|
|
$
|
641,507
|
|
|
$
|
684,521
|
|
Reconciliation of Adjusted Income from Continuing Operations
(non-GAAP)
The following table provides a reconciliation of our Loss from
continuing operations (GAAP) to our Adjusted income from continuing
operations (non-GAAP) for the three and six months ended
June 30, 2019 and 2018 (in
thousands):
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Loss from continuing
operations (GAAP)
|
$
|
(98,052)
|
|
|
$
|
(52,479)
|
|
|
$
|
(110,664)
|
|
|
$
|
(550,217)
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
Amortization of
intangible assets (1)
|
140,418
|
|
|
153,215
|
|
|
286,017
|
|
|
310,387
|
|
Inventory step-up and
other cost savings (2)
|
—
|
|
|
124
|
|
|
—
|
|
|
190
|
|
Upfront and
milestone-related payments (3)
|
1,444
|
|
|
36,964
|
|
|
2,383
|
|
|
38,296
|
|
Inventory reserve
increase from restructuring (4)
|
—
|
|
|
202
|
|
|
—
|
|
|
2,590
|
|
Separation benefits
and other restructuring (5)
|
2,124
|
|
|
28,951
|
|
|
4,149
|
|
|
75,550
|
|
Certain
litigation-related and other contingencies, net (6)
|
10,315
|
|
|
19,620
|
|
|
10,321
|
|
|
17,120
|
|
Asset impairment
charges (7)
|
88,438
|
|
|
22,767
|
|
|
253,886
|
|
|
471,183
|
|
Acquisition-related
and integration costs (8)
|
—
|
|
|
1,034
|
|
|
—
|
|
|
1,034
|
|
Fair value of
contingent consideration (9)
|
(5,507)
|
|
|
4,127
|
|
|
(43,008)
|
|
|
10,962
|
|
Gain on
extinguishment of debt (10)
|
—
|
|
|
—
|
|
|
(119,828)
|
|
|
—
|
|
Other (11)
|
86
|
|
|
(28,007)
|
|
|
1,620
|
|
|
(31,261)
|
|
Tax adjustments
(12)
|
(18,861)
|
|
|
(14,323)
|
|
|
(42,388)
|
|
|
(22,856)
|
|
Adjusted income from
continuing operations (non-GAAP)
|
$
|
120,405
|
|
|
$
|
172,195
|
|
|
$
|
242,488
|
|
|
$
|
322,978
|
|
Reconciliation of Other Adjusted Income Statement Data
(non-GAAP)
The following tables provide detailed reconciliations of various
other income statement data between the GAAP and non-GAAP amounts
for the three and six months ended June 30,
2019 and 2018 (in thousands, except per share data):
Three Months Ended
June 30, 2019
|
|
Total
revenues,
net
|
|
Cost of
revenues
|
|
Gross
margin
|
|
Gross
margin
%
|
|
Total
operating
expenses
|
|
Operating
expense to
revenue %
|
|
Operating
income
from
continuing
operations
|
|
Operating
margin %
|
|
Other
non-
operating
expense,
net
|
|
(Loss)
income
from
continuing
operations
before
income tax
|
|
Income
tax
expense
|
|
Effective
tax rate
|
|
(Loss)
income
from
continuing
operations
|
|
Discontinued
operations,
net of tax
|
|
Net (loss)
income
|
|
Diluted
(loss)
income
per share
from
continuing
operations (14)
|
Reported
(GAAP)
|
$
699,727
|
|
$ 388,208
|
|
$ 311,519
|
|
44.5 %
|
|
$ 271,891
|
|
38.9 %
|
|
$
39,628
|
|
5.7 %
|
|
$ 134,212
|
|
$
(94,584)
|
|
$
3,468
|
|
(3.7)%
|
|
$
(98,052)
|
|
$
(7,953)
|
|
$
(106,005)
|
|
$
(0.43)
|
Items impacting
comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets (1)
|
—
|
|
(140,418)
|
|
140,418
|
|
|
|
—
|
|
|
|
140,418
|
|
|
|
—
|
|
140,418
|
|
—
|
|
|
|
140,418
|
|
—
|
|
140,418
|
|
|
Upfront and
milestone-related
payments (3)
|
—
|
|
(739)
|
|
739
|
|
|
|
(705)
|
|
|
|
1,444
|
|
|
|
—
|
|
1,444
|
|
—
|
|
|
|
1,444
|
|
—
|
|
1,444
|
|
|
Separation benefits
and other
restructuring (5)
|
—
|
|
—
|
|
—
|
|
|
|
(2,124)
|
|
|
|
2,124
|
|
|
|
—
|
|
2,124
|
|
—
|
|
|
|
2,124
|
|
—
|
|
2,124
|
|
|
Certain litigation-
related and other
contingencies, net (6)
|
—
|
|
—
|
|
—
|
|
|
|
(10,315)
|
|
|
|
10,315
|
|
|
|
—
|
|
10,315
|
|
—
|
|
|
|
10,315
|
|
—
|
|
10,315
|
|
|
Asset impairment
charges (7)
|
—
|
|
—
|
|
—
|
|
|
|
(88,438)
|
|
|
|
88,438
|
|
|
|
—
|
|
88,438
|
|
—
|
|
|
|
88,438
|
|
—
|
|
88,438
|
|
|
Fair value of
contingent
consideration (9)
|
—
|
|
—
|
|
—
|
|
|
|
5,507
|
|
|
|
(5,507)
|
|
|
|
—
|
|
(5,507)
|
|
—
|
|
|
|
(5,507)
|
|
—
|
|
(5,507)
|
|
|
Other (11)
|
—
|
|
—
|
|
—
|
|
|
|
175
|
|
|
|
(175)
|
|
|
|
(261)
|
|
86
|
|
—
|
|
|
|
86
|
|
—
|
|
86
|
|
|
Tax adjustments
(12)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
18,861
|
|
|
|
(18,861)
|
|
—
|
|
(18,861)
|
|
|
Exclude
discontinued
operations, net of tax (13)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
7,953
|
|
7,953
|
|
|
After considering
items
(non-GAAP)
|
$
699,727
|
|
$ 247,051
|
|
$ 452,676
|
|
64.7 %
|
|
$ 175,991
|
|
25.2 %
|
|
$
276,685
|
|
39.5 %
|
|
$ 133,951
|
|
$
142,734
|
|
$ 22,329
|
|
15.6 %
|
|
$
120,405
|
|
$
—
|
|
$
120,405
|
|
$
0.52
|
Three Months Ended
June 30, 2018
|
|
Total
revenues,
net
|
|
Cost of
revenues
|
|
Gross
margin
|
|
Gross
margin
%
|
|
Total
operating
expenses
|
|
Operating
expense to
revenue %
|
|
Operating
income
from
continuing
operations
|
|
Operating
margin %
|
|
Other non-
operating
expense,
net
|
|
(Loss)
income
from
continuing
operations
before
income tax
|
|
Income
tax
expense
|
|
Effective
tax rate
|
|
(Loss)
income
from
continuing
operations
|
|
Discontinued
operations,
net of tax
|
|
Net (loss)
income
|
|
Diluted
(loss)
income
per share
from
continuing
operations (14)
|
Reported
(GAAP)
|
$
714,696
|
|
$ 381,905
|
|
$ 332,791
|
|
46.6 %
|
|
$ 277,807
|
|
38.9 %
|
|
$
54,984
|
|
7.7 %
|
|
$ 101,228
|
|
$
(46,244)
|
|
$
6,235
|
|
(13.5)%
|
|
$
(52,479)
|
|
$
(8,388)
|
|
$
(60,867)
|
|
$
(0.23)
|
Items impacting
comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets (1)
|
—
|
|
(153,215)
|
|
153,215
|
|
|
|
—
|
|
|
|
153,215
|
|
|
|
—
|
|
153,215
|
|
—
|
|
|
|
153,215
|
|
—
|
|
153,215
|
|
|
Inventory step-up
and
other cost savings (2)
|
—
|
|
(124)
|
|
124
|
|
|
|
—
|
|
|
|
124
|
|
|
|
—
|
|
124
|
|
—
|
|
|
|
124
|
|
—
|
|
124
|
|
|
Upfront and
milestone-related
payments (3)
|
—
|
|
(694)
|
|
694
|
|
|
|
(36,270)
|
|
|
|
36,964
|
|
|
|
—
|
|
36,964
|
|
—
|
|
|
|
36,964
|
|
—
|
|
36,964
|
|
|
Inventory reserve
increase from
restructuring (4)
|
—
|
|
(202)
|
|
202
|
|
|
|
—
|
|
|
|
202
|
|
|
|
—
|
|
202
|
|
—
|
|
|
|
202
|
|
—
|
|
202
|
|
|
Separation benefits
and other
restructuring (5)
|
—
|
|
(26,613)
|
|
26,613
|
|
|
|
(2,338)
|
|
|
|
28,951
|
|
|
|
—
|
|
28,951
|
|
—
|
|
|
|
28,951
|
|
—
|
|
28,951
|
|
|
Certain litigation-
related and other
contingencies, net (6)
|
—
|
|
—
|
|
—
|
|
|
|
(19,620)
|
|
|
|
19,620
|
|
|
|
—
|
|
19,620
|
|
—
|
|
|
|
19,620
|
|
—
|
|
19,620
|
|
|
Asset impairment
charges (7)
|
—
|
|
—
|
|
—
|
|
|
|
(22,767)
|
|
|
|
22,767
|
|
|
|
—
|
|
22,767
|
|
—
|
|
|
|
22,767
|
|
—
|
|
22,767
|
|
|
Acquisition-related
and integration costs
(8)
|
—
|
|
—
|
|
—
|
|
|
|
(1,034)
|
|
|
|
1,034
|
|
|
|
—
|
|
1,034
|
|
—
|
|
|
|
1,034
|
|
—
|
|
1,034
|
|
|
Fair value of
contingent
consideration (9)
|
—
|
|
—
|
|
—
|
|
|
|
(4,127)
|
|
|
|
4,127
|
|
|
|
—
|
|
4,127
|
|
—
|
|
|
|
4,127
|
|
—
|
|
4,127
|
|
|
Other (11)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
28,007
|
|
(28,007)
|
|
—
|
|
|
|
(28,007)
|
|
—
|
|
(28,007)
|
|
|
Tax adjustments
(12)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
14,323
|
|
|
|
(14,323)
|
|
—
|
|
(14,323)
|
|
|
Exclude
discontinued
operations, net of tax
(13)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
8,388
|
|
8,388
|
|
|
After considering
items
(non-GAAP)
|
$
714,696
|
|
$ 201,057
|
|
$ 513,639
|
|
71.9 %
|
|
$ 191,651
|
|
26.8 %
|
|
$
321,988
|
|
45.1 %
|
|
$ 129,235
|
|
$
192,753
|
|
$ 20,558
|
|
10.7 %
|
|
$
172,195
|
|
$
—
|
|
$
172,195
|
|
$
0.76
|
Six Months Ended
June 30, 2019
|
|
Total
revenues,
net
|
|
Cost of
revenues
|
|
Gross
margin
|
|
Gross
margin
%
|
|
Total
operating
expenses
|
|
Operating
expense to revenue
%
|
|
Operating
income
from
continuing
operations
|
|
Operating
margin %
|
|
Other
non-
operating
expense,
net
|
|
(Loss)
income
from
continuing
operations
before
income tax
|
|
Income
tax
expense
|
|
Effective
tax rate
|
|
(Loss)
income
from
continuing
operations
|
|
Discontinued
operations,
net of tax
|
|
Net (loss)
income
|
|
Diluted
(loss)
income
per share
from
continuing
operations (14)
|
Reported
(GAAP)
|
$
1,420,138
|
|
$ 780,117
|
|
$ 640,021
|
|
45.1 %
|
|
$ 584,453
|
|
41.2 %
|
|
$
55,568
|
|
3.9 %
|
|
$ 151,861
|
|
$
(96,293)
|
|
$ 14,371
|
|
(14.9)%
|
|
$
(110,664)
|
|
$
(13,914)
|
|
$
(124,578)
|
|
$
(0.49)
|
Items impacting
comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets (1)
|
—
|
|
(286,017)
|
|
286,017
|
|
|
|
—
|
|
|
|
286,017
|
|
|
|
—
|
|
286,017
|
|
—
|
|
|
|
286,017
|
|
—
|
|
286,017
|
|
|
Upfront and
milestone-related
payments (3)
|
—
|
|
(1,400)
|
|
1,400
|
|
|
|
(983)
|
|
|
|
2,383
|
|
|
|
—
|
|
2,383
|
|
—
|
|
|
|
2,383
|
|
—
|
|
2,383
|
|
|
Separation benefits
and other
restructuring (5)
|
—
|
|
—
|
|
—
|
|
|
|
(4,149)
|
|
|
|
4,149
|
|
|
|
—
|
|
4,149
|
|
—
|
|
|
|
4,149
|
|
—
|
|
4,149
|
|
|
Certain litigation-
related and other
contingencies, net (6)
|
—
|
|
—
|
|
—
|
|
|
|
(10,321)
|
|
|
|
10,321
|
|
|
|
—
|
|
10,321
|
|
—
|
|
|
|
10,321
|
|
—
|
|
10,321
|
|
|
Asset impairment
charges (7)
|
—
|
|
—
|
|
—
|
|
|
|
(253,886)
|
|
|
|
253,886
|
|
|
|
—
|
|
253,886
|
|
—
|
|
|
|
253,886
|
|
—
|
|
253,886
|
|
|
Fair value of
contingent
consideration (9)
|
—
|
|
—
|
|
—
|
|
|
|
43,008
|
|
|
|
(43,008)
|
|
|
|
—
|
|
(43,008)
|
|
—
|
|
|
|
(43,008)
|
|
—
|
|
(43,008)
|
|
|
Gain on
extinguishment of
debt (10)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
119,828
|
|
(119,828)
|
|
—
|
|
|
|
(119,828)
|
|
—
|
|
(119,828)
|
|
|
Other (11)
|
—
|
|
—
|
|
—
|
|
|
|
175
|
|
|
|
(175)
|
|
|
|
(1,795)
|
|
1,620
|
|
—
|
|
|
|
1,620
|
|
—
|
|
1,620
|
|
|
Tax adjustments
(12)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
42,388
|
|
|
|
(42,388)
|
|
—
|
|
(42,388)
|
|
|
Exclude
discontinued
operations, net of tax
(13)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
13,914
|
|
13,914
|
|
|
After considering
items
(non-GAAP)
|
$
1,420,138
|
|
$ 492,700
|
|
$ 927,438
|
|
65.3 %
|
|
$ 358,297
|
|
25.2 %
|
|
$
569,141
|
|
40.1 %
|
|
$ 269,894
|
|
$
299,247
|
|
$ 56,759
|
|
19.0 %
|
|
$
242,488
|
|
$
—
|
|
$
242,488
|
|
$
1.04
|
Six Months Ended
June 30, 2018
|
|
Total
revenues,
net
|
|
Cost of
revenues
|
|
Gross
margin
|
|
Gross
margin %
|
|
Total
operating
expenses
|
|
Operating
expense to
revenue %
|
|
Operating
(loss)
income
from
continuing
operations
|
|
Operating
margin %
|
|
Other
non-
operating
expense,
net
|
|
(Loss)
income
from
continuing
operations
before
income tax
|
|
Income
tax
expense
|
|
Effective
tax rate
|
|
(Loss)
income
from
continuing
operations
|
|
Discontinued
operations,
net of tax
|
|
Net (loss)
income
|
|
Diluted
(loss)
income
per share
from
continuing
operations (14)
|
Reported
(GAAP)
|
$
1,415,223
|
|
$ 785,503
|
|
$ 629,720
|
|
44.5 %
|
|
$ 935,871
|
|
66.1 %
|
|
$
(306,151)
|
|
(21.6)%
|
|
$ 222,340
|
|
$
(528,491)
|
|
$ 21,726
|
|
(4.1)%
|
|
$
(550,217)
|
|
$
(16,139)
|
|
$
(566,356)
|
|
$
(2.46)
|
Items impacting
comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets (1)
|
—
|
|
(310,387)
|
|
310,387
|
|
|
|
—
|
|
|
|
310,387
|
|
|
|
—
|
|
310,387
|
|
—
|
|
|
|
310,387
|
|
—
|
|
310,387
|
|
|
Inventory step-up
and
other cost savings (2)
|
—
|
|
(190)
|
|
190
|
|
|
|
—
|
|
|
|
190
|
|
|
|
—
|
|
190
|
|
—
|
|
|
|
190
|
|
—
|
|
190
|
|
|
Upfront and
milestone-related
payments (3)
|
—
|
|
(1,350)
|
|
1,350
|
|
|
|
(36,946)
|
|
|
|
38,296
|
|
|
|
—
|
|
38,296
|
|
—
|
|
|
|
38,296
|
|
—
|
|
38,296
|
|
|
Inventory reserve
increase from
restructuring (4)
|
—
|
|
(2,590)
|
|
2,590
|
|
|
|
—
|
|
|
|
2,590
|
|
|
|
—
|
|
2,590
|
|
—
|
|
|
|
2,590
|
|
—
|
|
2,590
|
|
|
Separation benefits
and other
restructuring (5)
|
—
|
|
(53,831)
|
|
53,831
|
|
|
|
(21,719)
|
|
|
|
75,550
|
|
|
|
—
|
|
75,550
|
|
—
|
|
|
|
75,550
|
|
—
|
|
75,550
|
|
|
Certain litigation-
related and other
contingencies, net (6)
|
—
|
|
—
|
|
—
|
|
|
|
(17,120)
|
|
|
|
17,120
|
|
|
|
—
|
|
17,120
|
|
—
|
|
|
|
17,120
|
|
—
|
|
17,120
|
|
|
Asset impairment
charges (7)
|
—
|
|
—
|
|
—
|
|
|
|
(471,183)
|
|
|
|
471,183
|
|
|
|
—
|
|
471,183
|
|
—
|
|
|
|
471,183
|
|
—
|
|
471,183
|
|
|
Acquisition-related
and integration costs
(8)
|
—
|
|
—
|
|
—
|
|
|
|
(1,034)
|
|
|
|
1,034
|
|
|
|
—
|
|
1,034
|
|
—
|
|
|
|
1,034
|
|
—
|
|
1,034
|
|
|
Fair value of
contingent
consideration (9)
|
—
|
|
—
|
|
—
|
|
|
|
(10,962)
|
|
|
|
10,962
|
|
|
|
—
|
|
10,962
|
|
—
|
|
|
|
10,962
|
|
—
|
|
10,962
|
|
|
Other (11)
|
—
|
|
—
|
|
—
|
|
|
|
630
|
|
|
|
(630)
|
|
|
|
30,631
|
|
(31,261)
|
|
—
|
|
|
|
(31,261)
|
|
—
|
|
(31,261)
|
|
|
Tax adjustments
(12)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
22,856
|
|
|
|
(22,856)
|
|
—
|
|
(22,856)
|
|
|
Exclude
discontinued
operations, net of tax
(13)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
16,139
|
|
16,139
|
|
|
After considering
items
(non-GAAP)
|
$
1,415,223
|
|
$ 417,155
|
|
$ 998,068
|
|
70.5 %
|
|
$ 377,537
|
|
26.7 %
|
|
$
620,531
|
|
43.8 %
|
|
$ 252,971
|
|
$
367,560
|
|
$ 44,582
|
|
12.1 %
|
|
$
322,978
|
|
$
—
|
|
$
322,978
|
|
$
1.43
|
Notes to the Reconciliations of GAAP and Non-GAAP Financial
Measures
Notes to certain line items included in the reconciliations of
the GAAP financial measures to the Non-GAAP financial measures for
the three and six months ended June 30,
2019 and 2018 are as follows:
(1)
|
Adjustments for
amortization of commercial intangible assets included the following
(in thousands):
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Amortization of
intangible assets excluding fair value
step-up from contingent consideration
|
$
|
134,473
|
|
|
$
|
146,906
|
|
|
$
|
271,338
|
|
|
$
|
296,766
|
|
Amortization of
intangible assets related to fair value step-up from contingent consideration
|
5,945
|
|
|
6,309
|
|
|
14,679
|
|
|
13,621
|
|
Total
|
$
|
140,418
|
|
|
$
|
153,215
|
|
|
$
|
286,017
|
|
|
$
|
310,387
|
|
|
|
(2)
|
To exclude
adjustments for inventory step-up.
|
(3)
|
Adjustments for
upfront and milestone-related payments to partners included the
following (in thousands):
|
|
|
|
Three Months Ended
June 30,
|
|
2019
|
|
2018
|
|
Cost of
revenues
|
|
Operating
expenses
|
|
Cost of
revenues
|
|
Operating
expenses
|
Sales-based
|
$
|
739
|
|
|
$
|
—
|
|
|
$
|
694
|
|
|
$
|
—
|
|
Development-based
|
—
|
|
|
705
|
|
|
—
|
|
|
36,270
|
|
Total
|
$
|
739
|
|
|
$
|
705
|
|
|
$
|
694
|
|
|
$
|
36,270
|
|
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
|
Cost of
revenues
|
|
Operating
expenses
|
|
Cost of
revenues
|
|
Operating
expenses
|
Sales-based
|
$
|
1,400
|
|
|
$
|
—
|
|
|
$
|
1,350
|
|
|
$
|
—
|
|
Development-based
|
—
|
|
|
983
|
|
|
—
|
|
|
36,946
|
|
Total
|
$
|
1,400
|
|
|
$
|
983
|
|
|
$
|
1,350
|
|
|
$
|
36,946
|
|
|
|
(4)
|
To exclude charges
reflecting adjustments to excess inventory reserves related to our
various restructuring initiatives.
|
(5)
|
Adjustments for
separation benefits and other restructuring included the following
(in thousands):
|
|
|
|
Three Months Ended
June 30,
|
|
2019
|
|
2018
|
|
Cost of
revenues
|
|
Operating
expenses
|
|
Cost of
revenues
|
|
Operating
expenses
|
Separation
benefits
|
$
|
—
|
|
|
$
|
410
|
|
|
$
|
3,983
|
|
|
$
|
1,440
|
|
Accelerated
depreciation and product discontinuation
charges
|
—
|
|
|
—
|
|
|
18,045
|
|
|
—
|
|
Other
|
—
|
|
|
1,714
|
|
|
4,585
|
|
|
898
|
|
Total
|
$
|
—
|
|
|
$
|
2,124
|
|
|
$
|
26,613
|
|
|
$
|
2,338
|
|
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
|
Cost of
revenues
|
|
Operating
expenses
|
|
Cost of
revenues
|
|
Operating
expenses
|
Separation
benefits
|
$
|
—
|
|
|
$
|
2,212
|
|
|
$
|
13,768
|
|
|
$
|
16,836
|
|
Accelerated
depreciation and product discontinuation
charges
|
—
|
|
|
—
|
|
|
35,177
|
|
|
—
|
|
Other
|
—
|
|
|
1,937
|
|
|
4,886
|
|
|
4,883
|
|
Total
|
$
|
—
|
|
|
$
|
4,149
|
|
|
$
|
53,831
|
|
|
$
|
21,719
|
|
|
|
(6)
|
To exclude
litigation-related settlement charges and certain settlements
proceeds related to suits filed by our subsidiaries.
|
(7)
|
Adjustments for asset
impairment charges included the following (in
thousands):
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Goodwill impairment
charges
|
$
|
65,108
|
|
|
$
|
—
|
|
|
$
|
151,108
|
|
|
$
|
391,000
|
|
Other intangible
asset impairment charges
|
21,699
|
|
|
22,767
|
|
|
100,399
|
|
|
76,967
|
|
Property, plant and
equipment impairment charges
|
1,631
|
|
|
—
|
|
|
2,379
|
|
|
3,216
|
|
Total asset
impairment charges
|
$
|
88,438
|
|
|
$
|
22,767
|
|
|
$
|
253,886
|
|
|
$
|
471,183
|
|
|
|
(8)
|
Adjustments for
acquisition and integration items primarily relate to various
acquisitions.
|
(9)
|
To exclude the impact
of changes in the fair value of contingent consideration
liabilities resulting from changes to our estimates regarding the
timing and amount of the future revenues of the underlying products
and changes in other assumptions impacting the probability of, and
extent to which we will incur related contingent
obligations.
|
(10)
|
To exclude the gain
on the extinguishment of debt associated with our March 2019
refinancing.
|
(11)
|
Other adjustments
included the following (in thousands):
|
|
|
|
Three Months Ended
June 30,
|
|
2019
|
|
2018
|
|
Operating
expenses
|
|
Other non-
operating
expenses
|
|
Operating
expenses
|
|
Other non-
operating
expenses
|
Foreign currency
impact related to the re-measurement
of intercompany debt instruments
|
$
|
—
|
|
|
$
|
2,262
|
|
|
$
|
—
|
|
|
$
|
(574)
|
|
(Gain) loss on sale
of business and other assets
|
—
|
|
|
(2,001)
|
|
|
—
|
|
|
(23,837)
|
|
Other
miscellaneous
|
(175)
|
|
|
—
|
|
|
—
|
|
|
(3,596)
|
|
Total
|
$
|
(175)
|
|
|
$
|
261
|
|
|
$
|
—
|
|
|
$
|
(28,007)
|
|
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
|
Operating
expenses
|
|
Other non-
operating
expenses
|
|
Operating
expenses
|
|
Other non-
operating
expenses
|
Foreign currency
impact related to the re-measurement
of intercompany debt instruments
|
$
|
—
|
|
|
$
|
3,796
|
|
|
$
|
—
|
|
|
$
|
(3,088)
|
|
(Gain) loss on sale
of business and other assets
|
—
|
|
|
(2,001)
|
|
|
—
|
|
|
(23,837)
|
|
Other
miscellaneous
|
(175)
|
|
|
—
|
|
|
(630)
|
|
|
(3,706)
|
|
Total
|
$
|
(175)
|
|
|
$
|
1,795
|
|
|
$
|
(630)
|
|
|
$
|
(30,631)
|
|
|
|
(12)
|
Adjusted income taxes
are calculated by tax effecting adjusted pre-tax income and
permanent book-tax differences at the applicable effective tax rate
that will be determined by reference to statutory tax rates in the
relevant jurisdictions in which the Company operates. Adjusted
income taxes include current and deferred income tax expense
commensurate with the non-GAAP measure of profitability.
|
(13)
|
To exclude the
results of the businesses reported as discontinued operations, net
of tax.
|
(14)
|
Calculated as Net
(loss) income from continuing operations divided by the applicable
weighted average share number. The applicable weighted average
share numbers are as follows (in thousands):
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
GAAP
|
226,221
|
|
|
223,834
|
|
|
225,408
|
|
|
223,677
|
|
Non-GAAP
Adjusted
|
232,713
|
|
|
227,273
|
|
|
232,174
|
|
|
226,114
|
|
|
|
(15)
|
Depreciation and
amortization per the Adjusted EBITDA reconciliations do not include
certain depreciation amounts reflected in other lines of the
reconciliations, including Acquisition-related and integration
costs and Separation benefits and other restructuring.
|
(16)
|
To exclude Other
(income) expense, net per the Condensed Consolidated Statements of
Operations.
|
|
|
Reconciliation of Net Debt Leverage Ratio (non-GAAP)
The following table provides a reconciliation of our Net loss
(GAAP) to our Adjusted EBITDA (non-GAAP) for the twelve months
ended June 30, 2019 (in thousands) and the calculation of our
Net Debt Leverage Ratio (non-GAAP):
|
Twelve Months
Ended June 30,
2019
|
Net loss
(GAAP)
|
$
|
(589,691)
|
|
Income tax
expense
|
15,580
|
|
Interest expense,
net
|
535,091
|
|
Depreciation and
amortization (15)
|
664,849
|
|
EBITDA
(non-GAAP)
|
$
|
625,829
|
|
|
|
Inventory step-up and
other cost savings
|
$
|
71
|
|
Upfront and
milestone-related payments
|
9,195
|
|
Inventory reserve
increase from restructuring
|
357
|
|
Separation benefits
and other restructuring
|
11,947
|
|
Certain
litigation-related and other contingencies, net
|
7,010
|
|
Asset impairment
charges
|
699,642
|
|
Acquisition-related
and integration costs
|
970
|
|
Fair value of
contingent consideration
|
(34,060)
|
|
Gain on
extinguishment of debt
|
(119,828)
|
|
Share-based
compensation
|
61,418
|
|
Other income,
net
|
(16,039)
|
|
Other
adjustments
|
58
|
|
Discontinued
operations, net of tax
|
67,477
|
|
Adjusted EBITDA
(non-GAAP)
|
$
|
1,314,047
|
|
|
|
Calculation of Net
Debt:
|
|
Debt
|
$
|
8,404,122
|
|
Cash (excluding
Restricted Cash)
|
1,446,949
|
|
Net Debt
(non-GAAP)
|
$
|
6,957,173
|
|
|
|
Calculation of Net
Debt Leverage:
|
|
Net Debt Leverage
Ratio (non-GAAP)
|
5.3
|
|
Non-GAAP Financial Measures
The Company utilizes certain financial measures that are not
prescribed by or prepared in accordance with accounting principles
generally accepted in the U.S. (GAAP). These Non-GAAP financial
measures are not, and should not be viewed as, substitutes for GAAP
net income and its components and diluted earnings per share
amounts. Despite the importance of these measures to management in
goal setting and performance measurement, we stress that these are
Non-GAAP financial measures that have no standardized meaning
prescribed by GAAP and, therefore, have limits in their usefulness
to investors. Because of the non-standardized definitions, Non-GAAP
adjusted EBITDA and Non-GAAP adjusted net income from continuing
operations and its components (unlike GAAP net income from
continuing operations and its components) may not be comparable to
the calculation of similar measures of other companies. These
Non-GAAP financial measures are presented solely to permit
investors to more fully understand how management assesses
performance.
Investors are encouraged to review the reconciliations of the
non-GAAP financial measures used in this press release to their
most directly comparable GAAP financial measures. However, the
Company does not provide reconciliations of projected non-GAAP
financial measures to GAAP financial measures, nor does it provide
comparable projected GAAP financial measures for such projected
non-GAAP financial measures. The Company is unable to provide such
reconciliations without unreasonable efforts due to the inherent
difficulty in forecasting and quantifying certain amounts that are
necessary for such reconciliations, including adjustments that
could be made for asset impairments, contingent consideration
adjustments, legal settlements, gain / loss on extinguishment of
debt, adjustments to inventory and other charges reflected in the
reconciliation of historic numbers, the amounts of which could be
significant.
See Endo's Current Report on Form
8-K furnished today to the U.S. Securities and Exchange Commission
for an explanation of Endo's non-GAAP financial measures.
About Endo International plc
Endo International plc (NASDAQ: ENDP) is a highly focused
generics and specialty branded pharmaceutical company delivering
quality medicines to patients in need through excellence in
development, manufacturing and commercialization. Endo has global
headquarters in Dublin, Ireland,
and U.S. headquarters in Malvern,
PA. Learn more at www.endo.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements,
including but not limited to the statements by Mr. Campanelli, as
well as other statements regarding product development, market
potential, corporate strategy, optimization efforts and
restructurings, timing, closing and expected benefits and value
from any acquisition, expected growth and regulatory approvals,
together with Endo's earnings per share from continuing operations
amounts, product net sales, revenue forecasts and any other
statements that refer to Endo's expected, estimated or anticipated
future results. Because forecasts are inherently estimates that
cannot be made with precision, Endo's performance at times differs
materially from its estimates and targets, and Endo often does not
know what the actual results will be until after the end of the
applicable reporting period. Therefore, Endo will not report or
comment on its progress during a current quarter except through
public announcement. Any statement made by others with respect to
progress during a current quarter cannot be attributed to Endo.
All forward-looking statements in this press release reflect
Endo's current analysis of existing trends and information and
represent Endo's judgment only as of the date of this press
release. Actual results may differ materially from current
expectations based on a number of factors affecting Endo's
businesses, including, among other things, the following: changing
competitive, market and regulatory conditions; changes in
legislation; Endo's ability to obtain and maintain adequate
protection for its intellectual property rights; the timing and
uncertainty of the results of both the research and development and
regulatory processes, including regulatory decisions, product
recalls, withdrawals and other unusual items; domestic and foreign
health care and cost containment reforms, including government
pricing, tax and reimbursement policies; technological advances and
patents obtained by competitors; the performance, including the
approval, introduction, and consumer and physician acceptance of
new products and the continuing acceptance of currently marketed
products; the effectiveness of advertising and other promotional
campaigns; the timely and successful implementation of strategic
initiatives; the timing or results of any pending or future
litigation, investigations or claims or actual or contingent
liabilities, settlement discussions, negotiations or other adverse
proceedings; unfavorable publicity regarding the misuse of opioids;
timing and uncertainty of any acquisition, including the
possibility that various closing conditions may not be satisfied or
waived, uncertainty surrounding the successful integration of any
acquired business and failure to achieve the expected financial and
commercial results from such acquisition; the uncertainty
associated with the identification of and successful consummation
and execution of external corporate development initiatives and
strategic partnering transactions; and Endo's ability to obtain and
successfully maintain a sufficient supply of products to meet
market demand in a timely manner. In addition, U.S. and
international economic conditions, including higher unemployment,
political instability, financial hardship, consumer confidence and
debt levels, taxation, changes in interest and currency exchange
rates, international relations, capital and credit availability,
the status of financial markets and institutions, fluctuations or
devaluations in the value of sovereign government debt, as well as
the general impact of continued economic volatility, can materially
affect Endo's results. Therefore, the reader is cautioned not to
rely on these forward-looking statements. Endo expressly disclaims
any intent or obligation to update these forward-looking statements
except as required to do so by law.
Additional information concerning the above-referenced risk
factors and other risk factors can be found in press releases
issued by Endo, as well as Endo's public periodic filings with the
U.S. Securities and Exchange Commission and with securities
regulators in Canada, including
the discussion under the heading "Risk Factors" in Endo's most
recent Annual Report on Form 10-K and any subsequent Quarterly
Reports on Form 10-Q. Copies of Endo's press releases and
additional information about Endo are available at www.endo.com or
you can contact the Endo Investor Relations Department by calling
845-364-4833.
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SOURCE Endo Pharmaceuticals Inc.