-- First quarter revenues increased 14% to $820 million versus prior year, augmented by
approximately $75 million due to
impact of coronavirus (COVID-19) pandemic --
-- Full-year 2020 financial guidance withdrawn due to
uncertainty regarding the continued impact of the COVID-19 pandemic
--
DUBLIN, May 7, 2020 /CNW/
-- Endo International plc (NASDAQ: ENDP) today reported financial
results for the first quarter ended March
31, 2020 and provided an update relating to the impact of
the COVID-19 pandemic.
"I am proud of the way Endo is responding to the challenges
associated with the COVID-19 pandemic. We have taken appropriate
steps to protect the health and safety of our nearly 3,200 team
members and their families around the globe, to support our
communities through monetary and product donations, and to rapidly
increase the production and distribution of Endo's critical care
products which are administered to patients suffering from
COVID-19," said Blaise Coleman,
President and Chief Executive Officer at Endo.
Mr. Coleman continued, "Our first-quarter 2020 results reflect
continued strong underlying performance from our Sterile
Injectables segment and the Specialty Products Portfolio of our
Branded Pharmaceuticals segment. Our results were significantly
augmented by higher patient demand and increased customer inventory
purchasing due to the COVID-19 pandemic. Although the future impact
on our business from COVID-19 is uncertain, we will continue our
commitments to keeping our team members safe, reliably supplying
critical medicines to patients in need and investing for long term
success."
COMPREHENSIVE RESPONSE TO
COVID-19
- Endo implemented alternative working practices and
mandatory work from home requirements for appropriate team
members and transitioned its sales force to a "virtual" engagement
model to continue supporting healthcare professionals, patient care
and access to medicines.
- Endo maintained and prioritized operations at all manufacturing
sites with a modified schedule to safely focus on demand for
critical care and medically necessary products.
- Endo implemented shift rotations, increased social distancing,
provided additional compensation to certain on-site operations
employees and enhanced the already rigorous cleaning protocols
throughout all of the Company's facilities.
- Endo pledged over $5 million in
product and monetary support to help address COVID-19 related
needs.
FIRST-QUARTER 2020 REVENUES AUGMENTED BY IMPACT OF
COVID-19
- Endo's Sterile Injectables segment revenue growth was favorably
impacted by approximately $45 million
due to higher utilization and increased channel inventory stocking
of VASOSTRICT®, ADRENALIN® and other products
used primarily to treat patients infected with COVID-19.
- Endo's Branded Pharmaceuticals segment revenue was not
materially impacted by COVID-19 as inventory stocking of
XIAFLEX® by some customers at the end of the
first-quarter resulting from future access concerns was partially
offset by a decrease in demand for XIAFLEX® during the
last two weeks of the quarter due to a reduction in physician
activity and a slowing of patient office visits because of shelter
in place orders.
- Endo's Generic Pharmaceuticals segment revenue growth was
driven by approximately $30 million
from accelerated prescription fulfillment due to consumer access
concerns and the utilization of certain generic medications used to
treat patients suffering from COVID-19.
EXPECTED ONGOING COVID-19 BUSINESS IMPACT
- Sterile Injectables Segment: Endo anticipates
segment revenues to increase in the second-quarter of 2020 versus
the first-quarter of 2020 primarily due to higher utilization and
channel inventory stocking. During the second half of 2020, Endo
anticipates a period of destocking with a subsequent return towards
pre-COVID-19 purchasing levels. The Company expects full-year 2020
revenues to increase compared to full-year 2019 revenues.
- Branded Pharmaceuticals Segment: Endo anticipates
segment revenues to decline in the second-quarter of 2020 compared
to the first-quarter of 2020 due to decreased demand for physician
administered products, including XIAFLEX® and
SUPPRELIN® LA, which began during the last two weeks of
the first-quarter because of office closures and a decline in
patients electing to be treated. The Company expects to see a
gradual increase in demand beginning in the second half of 2020 as
physician and patient activities return towards pre-COVID-19
levels. The Company expects full-year 2020 revenues to decline
compared to full-year 2019 revenues.
- Generic Pharmaceuticals Segment: Endo anticipates a
decline in segment revenues in the second-quarter of 2020 compared
to the first-quarter of 2020 driven by lower prescription trends
following accelerated first-quarter prescription fulfillment. As a
result of Endo's modified production schedules to safely maintain
operations in response to COVID-19, the Company also expects
potential temporary supply decreases of lower margin products and
potential launch delays for certain medications in this segment.
The Company expects full-year 2020 revenues to decline compared to
full-year 2019 revenues.
- Anticipated product launch of Collagenase Clostridium
Histolyticum (CCH) for the treatment of cellulite in the buttocks
moved to first-quarter 2021: As a result of the
anticipated impact of COVID-19 on medical aesthetics physician
office closures and consumer spending, the Company is moving its
anticipated product launch to the first-quarter 2021, pending FDA
approval. This tactical shift in launch timing is intended to allow
medical aesthetics physicians and their patients, as well as the
broader market, to return towards a pre-COVID-19 environment. Given
the change in Endo's CCH launch timing, the Company has modified
its recruiting plans and the phasing of certain commercial launch
plan activities. These decisions are resulting in an expected
reduction to estimated 2020 full-year adjusted operating expenses.
The Prescription Drug User Fee Act (PDUFA) date for CCH for
cellulite is July 6, 2020.
- Development Activities: Endo currently anticipates
modest delays in patient recruitment and site selection for new
clinical trials and ongoing studies. Additionally, the Company
anticipates potential delays in some of its new product regulatory
filings planned for 2020 in its Sterile Injectables and Generic
Pharmaceuticals segments.
- 2020 Full-year Guidance Withdrawn: Due to the
uncertainty surrounding the duration and severity of the COVID-19
pandemic and its impact on the Company's business and operations,
the Company is not able to reliably estimate its results for the
remainder of 2020. As a result, Endo is withdrawing its previously
provided 2020 financial guidance. In addition, as a result of this
uncertainty, Endo's consolidated and business segment financial
results for the three months ended March 31,
2020 and for any other period(s) during the COVID-19
pandemic and any recovery period(s) may not be directly comparable
to any historical period(s) and may not be indicative of future
results.
Endo is providing the following limited second-quarter 2020 outlook
considerations, at current exchange rates, for revenue, adjusted
gross margin and adjusted operating margin. The company
estimates:
-
- Total revenues to decline in the low 20's percentage range
compared to the first-quarter of 2020;
- Adjusted gross margin to be approximately 60 percent of
revenues; and
- Adjusted operating expenses to be approximately 25 percent of
revenues.
FIRST-QUARTER
FINANCIAL PERFORMANCE
(in thousands, except per share amounts)
|
|
|
Three Months Ended
March 31,
|
|
|
|
2020
|
|
2019
(1)
|
|
Change
|
Total Revenues,
Net
|
$
|
820,405
|
|
|
$
|
720,411
|
|
|
14
|
%
|
Reported Income
(Loss) from Continuing Operations
|
$
|
157,581
|
|
|
$
|
(12,612)
|
|
|
NM
|
Reported Diluted
Weighted Average Shares
|
233,014
|
|
|
224,594
|
|
|
4
|
%
|
Reported Diluted
Net Income (Loss) per Share from Continuing
Operations
|
$
|
0.68
|
|
|
$
|
(0.06)
|
|
|
NM
|
Reported Net
Income (Loss)
|
$
|
129,930
|
|
|
$
|
(18,573)
|
|
|
NM
|
Adjusted Income
from Continuing Operations
|
$
|
220,400
|
|
|
$
|
138,773
|
|
|
59
|
%
|
Adjusted Diluted
Weighted Average Shares (2)
|
233,014
|
|
|
231,634
|
|
|
1
|
%
|
Adjusted Diluted
Net Income per Share from Continuing Operations
|
$
|
0.95
|
|
|
$
|
0.60
|
|
|
58
|
%
|
Adjusted
EBITDA
|
$
|
421,126
|
|
|
$
|
351,096
|
|
|
20
|
%
|
__________
(1)
|
Certain prior period
adjusted amounts have been revised as a result of a change in the
Company's definition of its adjusted financial metrics. Refer to
the "Supplemental Financial Information" section below for
additional discussion.
|
(2)
|
Reported Diluted Net
Income (Loss) per Share from continuing operations 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 $820 million in first-quarter 2020 compared to
$720 million during the same period
in 2019. This increase was attributable to strong growth in the
Sterile Injectables segment and the Specialty Products portfolio of
the Branded Pharmaceuticals segment, together with recent product
launches in the Generic Pharmaceuticals segment. It was also
attributable to higher patient demand and increased customer
inventory purchasing due to the COVID-19 pandemic. This increase
was partially offset by continued competitive pressures in the
Established Products portfolio of the Branded Pharmaceuticals
segment.
Reported income from continuing operations in first-quarter 2020
was $158 million compared to reported
loss from continuing operations of $13
million during the same period in 2019. This result was
primarily attributable to a discrete tax benefit arising from the
Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and
strong operating performance. Reported diluted net income per share
from continuing operations in first-quarter 2020 was $0.68 compared to reported diluted net loss per
share from continuing operations of $0.06 in first-quarter 2019.
Adjusted income from continuing operations in first-quarter 2020
was $220 million compared to
$139 million in first-quarter 2019.
This increase was primarily attributable to higher first-quarter
2020 revenues. Adjusted diluted net income per share from
continuing operations in first-quarter 2020 was $0.95 compared to $0.60 in first-quarter 2019.
BRANDED PHARMACEUTICALS SEGMENT
First-quarter 2020
Branded Pharmaceuticals segment revenues of $204 million were comparable to the same period
in the prior year. Continued strong growth in the segment's
Specialty Products portfolio was offset by ongoing generic
competition in the segment's Established Products portfolio.
Specialty Products revenues increased 17% to $134 million in first-quarter 2020 compared to
$115 million in first-quarter 2019,
primarily driven by the strong performance of XIAFLEX®.
Sales of XIAFLEX® increased 30% to $89 million compared to $69 million in first-quarter 2019, which was
primarily attributable to demand growth driven by continued
commercial execution and investment in promotional activities as
well as inventory stocking in the specialty pharmacy and specialty
distributor channels.
STERILE INJECTABLES SEGMENT
First-quarter 2020 Sterile
Injectables segment revenues were $336 million, an increase of 25% compared to
$270 million in first-quarter 2019.
This increase reflects the strong growth of VASOSTRICT®
and ADRENALIN® resulting primarily from significantly
increased sales volume towards the end of the quarter due to higher
utilization primarily to treat patients infected with COVID-19,
increased channel inventory stocking and price.
GENERIC PHARMACEUTICALS SEGMENT
First-quarter 2020
Generic Pharmaceuticals segment revenues were $251 million, an increase of 15% compared to
$219 million in first-quarter 2019.
This increase was primarily attributable to recent product launches
and accelerated prescription fulfillment resulting from consumer
access concerns related to the COVID-19 pandemic and was partially
offset by continued competitive pressure on commoditized generic
products. During first-quarter 2020, the Generic Pharmaceuticals
segment launched four products.
INTERNATIONAL PHARMACEUTICALS SEGMENT
First-quarter
2020 International Pharmaceuticals segment revenues of $29 million were comparable to the same period in
the prior year.
BALANCE SHEET, LIQUIDITY AND OTHER UPDATES
As of
March 31, 2020, the Company had approximately $1.5 billion in unrestricted cash; $8.4 billion of debt; and a net debt to adjusted
EBITDA ratio of 4.7.
First-quarter 2020 cash provided by operating activities was
$63 million, compared to $91 million of net cash used in operating
activities during first-quarter 2019.
CONFERENCE CALL INFORMATION
Endo will conduct a
conference call with financial analysts to discuss this press
release today at 8:00 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 4777677. Please dial in 10 minutes
prior to the scheduled start time.
A replay of the call will be available from May 7, 2020 at
11:00 a.m. ET until 11:00 a.m. ET on
May 14, 2020 by dialing U.S./Canada (800) 585-8367, International (404)
537-3406, and entering the passcode 9795496.
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 months ended March 31,
2020 and 2019 (dollars in thousands):
|
Three Months Ended
March 31,
|
|
Percent
Growth
|
|
2020
|
|
2019
|
|
Branded
Pharmaceuticals:
|
|
|
|
|
|
Specialty
Products:
|
|
|
|
|
|
XIAFLEX®
|
$
|
89,072
|
|
|
$
|
68,507
|
|
|
30
|
%
|
SUPPRELIN®
LA
|
19,720
|
|
|
22,056
|
|
|
(11)
|
%
|
Other Specialty
(1)
|
25,505
|
|
|
24,403
|
|
|
5
|
%
|
Total Specialty
Products
|
$
|
134,297
|
|
|
$
|
114,966
|
|
|
17
|
%
|
Established
Products:
|
|
|
|
|
|
PERCOCET®
|
$
|
27,703
|
|
|
$
|
30,760
|
|
|
(10)
|
%
|
EDEX®
|
8,568
|
|
|
5,971
|
|
|
43
|
%
|
Other Established
(2)
|
33,505
|
|
|
51,828
|
|
|
(35)
|
%
|
Total Established
Products
|
$
|
69,776
|
|
|
$
|
88,559
|
|
|
(21)
|
%
|
Total Branded
Pharmaceuticals (3)
|
$
|
204,073
|
|
|
$
|
203,525
|
|
|
—
|
%
|
Sterile
Injectables:
|
|
|
|
|
|
VASOSTRICT®
|
$
|
202,904
|
|
|
$
|
139,137
|
|
|
46
|
%
|
ADRENALIN®
|
56,512
|
|
|
47,322
|
|
|
19
|
%
|
Ertapenem for
injection
|
17,874
|
|
|
32,219
|
|
|
(45)
|
%
|
APLISOL®
|
9,867
|
|
|
12,381
|
|
|
(20)
|
%
|
Other Sterile
Injectables (4)
|
49,233
|
|
|
38,989
|
|
|
26
|
%
|
Total Sterile
Injectables (3)
|
$
|
336,390
|
|
|
$
|
270,048
|
|
|
25
|
%
|
Total Generic
Pharmaceuticals
|
$
|
251,283
|
|
|
$
|
218,526
|
|
|
15
|
%
|
Total International
Pharmaceuticals
|
$
|
28,659
|
|
|
$
|
28,312
|
|
|
1
|
%
|
Total revenues,
net
|
$
|
820,405
|
|
|
$
|
720,411
|
|
|
14
|
%
|
__________
(1)
|
Products included
within Other Specialty are NASCOBAL® Nasal Spray and
AVEED®.
|
(2)
|
Products included
within Other Established include, but are not limited to,
LIDODERM® and TESTOPEL®.
|
(3)
|
Individual products
presented above represent the top two performing products in each
product category for the three months ended March 31, 2020 and/or
any product having revenues in excess of $25 million during any
quarterly period in 2020 or 2019.
|
(4)
|
Products included
within Other Sterile Injectables include ephedrine sulfate
injection and others.
|
The following table presents unaudited Condensed Consolidated
Statement of Operations data for the three months ended
March 31, 2020 and 2019 (in
thousands, except per share data):
|
Three Months Ended
March 31,
|
|
2020
|
|
2019
|
TOTAL REVENUES,
NET
|
$
|
820,405
|
|
|
$
|
720,411
|
|
COSTS AND
EXPENSES:
|
|
|
|
Cost of
revenues
|
388,799
|
|
|
391,909
|
|
Selling, general and
administrative
|
166,768
|
|
|
151,123
|
|
Research and
development
|
31,615
|
|
|
33,486
|
|
Litigation-related
and other contingencies, net
|
(17,176)
|
|
|
6
|
|
Asset impairment
charges
|
97,785
|
|
|
165,448
|
|
Acquisition-related
and integration items, net
|
12,462
|
|
|
(37,501)
|
|
Interest expense,
net
|
132,877
|
|
|
132,675
|
|
Gain on
extinguishment of debt
|
—
|
|
|
(119,828)
|
|
Other (income)
expense, net
|
(13,974)
|
|
|
4,802
|
|
INCOME (LOSS) FROM
CONTINUING OPERATIONS BEFORE INCOME TAX
|
$
|
21,249
|
|
|
$
|
(1,709)
|
|
INCOME TAX (BENEFIT)
EXPENSE
|
(136,332)
|
|
|
10,903
|
|
INCOME (LOSS) FROM
CONTINUING OPERATIONS
|
$
|
157,581
|
|
|
$
|
(12,612)
|
|
DISCONTINUED
OPERATIONS, NET OF TAX
|
(27,651)
|
|
|
(5,961)
|
|
NET INCOME
(LOSS)
|
$
|
129,930
|
|
|
$
|
(18,573)
|
|
NET INCOME (LOSS) PER
SHARE—BASIC:
|
|
|
|
Continuing
operations
|
$
|
0.69
|
|
|
$
|
(0.06)
|
|
Discontinued
operations
|
(0.12)
|
|
|
(0.02)
|
|
Basic
|
$
|
0.57
|
|
|
$
|
(0.08)
|
|
NET INCOME (LOSS) PER
SHARE—DILUTED:
|
|
|
|
Continuing
operations
|
$
|
0.68
|
|
|
$
|
(0.06)
|
|
Discontinued
operations
|
(0.12)
|
|
|
(0.02)
|
|
Diluted
|
$
|
0.56
|
|
|
$
|
(0.08)
|
|
WEIGHTED AVERAGE
SHARES:
|
|
|
|
Basic
|
227,198
|
|
|
224,594
|
|
Diluted
|
233,014
|
|
|
224,594
|
|
The following table presents unaudited Condensed Consolidated
Balance Sheet data at March 31, 2020 and December 31,
2019 (in thousands):
|
March 31,
2020
|
|
December 31,
2019
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
1,531,538
|
|
|
$
|
1,454,531
|
|
Restricted cash and
cash equivalents
|
200,666
|
|
|
247,457
|
|
Accounts
receivable
|
536,903
|
|
|
467,953
|
|
Inventories,
net
|
324,962
|
|
|
327,865
|
|
Other current
assets
|
141,266
|
|
|
88,412
|
|
Total current
assets
|
$
|
2,735,335
|
|
|
$
|
2,586,218
|
|
TOTAL NON-CURRENT
ASSETS
|
6,570,545
|
|
|
6,803,309
|
|
TOTAL
ASSETS
|
$
|
9,305,880
|
|
|
$
|
9,389,527
|
|
LIABILITIES AND
SHAREHOLDERS' DEFICIT
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts payable and
accrued expenses, including legal settlement accruals
|
$
|
1,297,191
|
|
|
$
|
1,412,954
|
|
Other current
liabilities
|
49,800
|
|
|
47,335
|
|
Total current
liabilities
|
$
|
1,346,991
|
|
|
$
|
1,460,289
|
|
LONG-TERM DEBT, LESS
CURRENT PORTION, NET
|
8,354,920
|
|
|
8,359,899
|
|
OTHER
LIABILITIES
|
341,786
|
|
|
435,883
|
|
SHAREHOLDERS'
DEFICIT
|
(737,817)
|
|
|
(866,544)
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIT
|
$
|
9,305,880
|
|
|
$
|
9,389,527
|
|
The following table presents unaudited Condensed Consolidated
Statement of Cash Flow data for the three months ended March 31, 2020 and 2019 (in thousands):
|
Three Months Ended
March 31,
|
|
2020
|
|
2019
|
OPERATING
ACTIVITIES:
|
|
|
|
Net income
(loss)
|
$
|
129,930
|
|
|
$
|
(18,573)
|
|
Adjustments to
reconcile Net income (loss) to Net cash provided by (used in)
operating activities:
|
|
|
|
Depreciation and
amortization
|
141,588
|
|
|
162,733
|
|
Asset impairment
charges
|
97,785
|
|
|
165,448
|
|
Other, including cash
payments to claimants from Qualified Settlement Funds
|
(306,747)
|
|
|
(400,191)
|
|
Net cash provided by
(used in) operating activities
|
$
|
62,556
|
|
|
$
|
(90,583)
|
|
INVESTING
ACTIVITIES:
|
|
|
|
Purchases of
property, plant and equipment, excluding capitalized
interest
|
$
|
(19,638)
|
|
|
$
|
(15,386)
|
|
Proceeds from sale of
business and other assets, net
|
4,167
|
|
|
103
|
|
Other
|
(492)
|
|
|
(1,094)
|
|
Net cash used in
investing activities
|
$
|
(15,963)
|
|
|
$
|
(16,377)
|
|
FINANCING
ACTIVITIES:
|
|
|
|
Payments on
borrowings, net
|
$
|
(9,721)
|
|
|
$
|
(26,585)
|
|
Other
|
(4,762)
|
|
|
(7,186)
|
|
Net cash used in
financing activities
|
$
|
(14,483)
|
|
|
$
|
(33,771)
|
|
Effect of foreign
exchange rate
|
(1,894)
|
|
|
537
|
|
NET INCREASE
(DECREASE) IN CASH, CASH EQUIVALENTS, RESTRICTED CASH
AND RESTRICTED CASH EQUIVALENTS
|
$
|
30,216
|
|
|
$
|
(140,194)
|
|
CASH, CASH
EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH
EQUIVALENTS, BEGINNING OF PERIOD
|
1,720,388
|
|
|
1,476,837
|
|
CASH, CASH
EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH
EQUIVALENTS, END OF PERIOD
|
$
|
1,750,604
|
|
|
$
|
1,336,643
|
|
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.
Effective January 1, 2020, the
Company revised its definition of its adjusted financial metrics to
exclude certain legal costs. The Company believes that such costs
are not indicative of business performance and that excluding them
more accurately reflects the Company's results and better enables
management to compare financial results between periods. As a
result of this change, our adjusted financial metrics now exclude
opioid-related legal expenses. Prior period adjusted results
throughout this document have also been adjusted to reflect this
change. The impact of excluding these costs during the three months
ended March 31, 2020 and 2019 is
reflected in the Certain legal costs lines of each of the following
reconciliation tables.
Reconciliation of EBITDA and Adjusted EBITDA
(non-GAAP)
The following table provides a reconciliation of Net income
(loss) (GAAP) to Adjusted EBITDA (non-GAAP) for the three months
ended March 31, 2020 and 2019 (in
thousands):
|
Three Months Ended
March 31,
|
|
2020
|
|
2019
|
Net income (loss)
(GAAP)
|
$
|
129,930
|
|
|
$
|
(18,573)
|
|
Income tax (benefit)
expense
|
(136,332)
|
|
|
10,903
|
|
Interest expense,
net
|
132,877
|
|
|
132,675
|
|
Depreciation and
amortization (13)
|
134,958
|
|
|
162,733
|
|
EBITDA
(non-GAAP)
|
$
|
261,433
|
|
|
$
|
287,738
|
|
|
|
|
|
Upfront and
milestone-related payments (2)
|
1,750
|
|
|
939
|
|
Continuity and
separation benefits and other cost reductions (3)
|
23,220
|
|
|
2,025
|
|
Certain
litigation-related and other contingencies, net (4)
|
(17,176)
|
|
|
6
|
|
Certain legal costs
(5)
|
15,536
|
|
|
16,689
|
|
Asset impairment
charges (6)
|
97,785
|
|
|
165,448
|
|
Fair value of
contingent consideration (7)
|
12,462
|
|
|
(37,501)
|
|
Gain on
extinguishment of debt (8)
|
—
|
|
|
(119,828)
|
|
Share-based
compensation (13)
|
12,455
|
|
|
24,733
|
|
Other (income)
expense, net (14)
|
(13,974)
|
|
|
4,802
|
|
Other
adjustments
|
(16)
|
|
|
84
|
|
Discontinued
operations, net of tax (11)
|
27,651
|
|
|
5,961
|
|
Adjusted EBITDA
(non-GAAP)
|
$
|
421,126
|
|
|
$
|
351,096
|
|
Reconciliation of Adjusted Income from Continuing Operations
(non-GAAP)
The following table provides a reconciliation of our Income
(loss) from continuing operations (GAAP) to our Adjusted income
from continuing operations (non-GAAP) for the three months ended
March 31, 2020 and 2019 (in
thousands):
|
Three Months Ended
March 31,
|
|
2020
|
|
2019
|
Income (loss) from
continuing operations (GAAP)
|
$
|
157,581
|
|
|
$
|
(12,612)
|
|
Non-GAAP
adjustments:
|
|
|
|
Amortization of
intangible assets (1)
|
117,237
|
|
|
145,599
|
|
Upfront and
milestone-related payments (2)
|
1,750
|
|
|
939
|
|
Continuity and
separation benefits and other cost reductions (3)
|
23,220
|
|
|
2,025
|
|
Certain
litigation-related and other contingencies, net (4)
|
(17,176)
|
|
|
6
|
|
Certain legal costs
(5)
|
15,536
|
|
|
16,689
|
|
Asset impairment
charges (6)
|
97,785
|
|
|
165,448
|
|
Fair value of
contingent consideration (7)
|
12,462
|
|
|
(37,501)
|
|
Gain on
extinguishment of debt (8)
|
—
|
|
|
(119,828)
|
|
Other (9)
|
(14,420)
|
|
|
1,534
|
|
Tax adjustments
(10)
|
(173,575)
|
|
|
(23,526)
|
|
Adjusted income from
continuing operations (non-GAAP)
|
$
|
220,400
|
|
|
$
|
138,773
|
|
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 months ended March 31,
2020 and 2019 (in thousands, except per share data):
|
Three Months Ended
March 31, 2020
|
|
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
|
|
Income
from
continuing
operations before
income tax
|
|
Income
tax
(benefit)
expense
|
|
Effective
tax rate
|
|
Income
from
continuing
operations
|
|
Discontinued
operations,
net of tax
|
|
Net income
|
|
Diluted
net
income
per share
from continuing
operations (12)
|
Reported
(GAAP)
|
$
820,405
|
|
$
388,799
|
|
$
431,606
|
|
52.6 %
|
|
$
291,454
|
|
35.5 %
|
|
$
140,152
|
|
17.1 %
|
|
$
118,903
|
|
$
21,249
|
|
$
(136,332)
|
|
(641.6)%
|
|
$
157,581
|
|
$
(27,651)
|
|
$
129,930
|
|
$
0.68
|
Items impacting
comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets (1)
|
-
|
|
(117,237)
|
|
117,237
|
|
|
|
-
|
|
|
|
117,237
|
|
|
|
-
|
|
117,237
|
|
-
|
|
|
|
117,237
|
|
-
|
|
117,237
|
|
|
Upfront and
milestone-related
payments (2)
|
-
|
|
(542)
|
|
542
|
|
|
|
(1,208)
|
|
|
|
1,750
|
|
|
|
-
|
|
1,750
|
|
-
|
|
|
|
1,750
|
|
-
|
|
1,750
|
|
|
Continuity and
separation benefits
and other cost
reductions (3)
|
-
|
|
(6,238)
|
|
6,238
|
|
|
|
(16,982)
|
|
|
|
23,220
|
|
|
|
-
|
|
23,220
|
|
-
|
|
|
|
23,220
|
|
-
|
|
23,220
|
|
|
Certain
litigation-
related and other
contingencies, net (4)
|
-
|
|
-
|
|
-
|
|
|
|
17,176
|
|
|
|
(17,176)
|
|
|
|
-
|
|
(17,176)
|
|
-
|
|
|
|
(17,176)
|
|
-
|
|
(17,176)
|
|
|
Certain legal costs
(5)
|
-
|
|
-
|
|
-
|
|
|
|
(15,536)
|
|
|
|
15,536
|
|
|
|
-
|
|
15,536
|
|
|
|
|
|
15,536
|
|
-
|
|
15,536
|
|
|
Asset impairment
charges (6)
|
-
|
|
-
|
|
-
|
|
|
|
(97,785)
|
|
|
|
97,785
|
|
|
|
-
|
|
97,785
|
|
-
|
|
|
|
97,785
|
|
-
|
|
97,785
|
|
|
Fair value of
contingent
consideration (7)
|
-
|
|
-
|
|
-
|
|
|
|
(12,462)
|
|
|
|
12,462
|
|
|
|
-
|
|
12,462
|
|
-
|
|
|
|
12,462
|
|
-
|
|
12,462
|
|
|
Other (9)
|
-
|
|
-
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,420
|
|
(14,420)
|
|
-
|
|
|
|
(14,420)
|
|
-
|
|
(14,420)
|
|
|
Tax adjustments
(10)
|
-
|
|
-
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
-
|
|
173,575
|
|
|
|
(173,575)
|
|
-
|
|
(173,575)
|
|
|
Exclude
discontinued
operations, net of tax (11)
|
-
|
|
-
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
-
|
|
-
|
|
|
|
-
|
|
27,651
|
|
27,651
|
|
|
After considering
items
(non-GAAP)
|
$
820,405
|
|
$
264,782
|
|
$
555,623
|
|
67.7 %
|
|
$
164,657
|
|
20.1 %
|
|
$
390,966
|
|
47.7 %
|
|
$
133,323
|
|
$
257,643
|
|
$
37,243
|
|
14.5 %
|
|
$
220,400
|
|
$
-
|
|
$
220,400
|
|
$
0.95
|
|
Three Months Ended
March 31, 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
net (loss)
income
per share
from
continuing
operations (12)
|
Reported
(GAAP)
|
$
720,411
|
|
$
391,909
|
|
$
328,502
|
|
45.6 %
|
|
$
312,562
|
|
43.4 %
|
|
$
15,940
|
|
2.2 %
|
|
$
17,649
|
|
$
(1,709)
|
|
$
10,903
|
|
(638.0)%
|
|
$
(12,612)
|
|
$
(5,961)
|
|
$
(18,573)
|
|
$
(0.06)
|
Items impacting
comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets (1)
|
-
|
|
(145,599)
|
|
145,599
|
|
|
|
-
|
|
|
|
145,599
|
|
|
|
-
|
|
145,599
|
|
-
|
|
|
|
145,599
|
|
-
|
|
145,599
|
|
|
Upfront and
milestone-related
payments (2)
|
-
|
|
(661)
|
|
661
|
|
|
|
(278)
|
|
|
|
939
|
|
|
|
-
|
|
939
|
|
-
|
|
|
|
939
|
|
-
|
|
939
|
|
|
Continuity and
separation benefits
and other cost
reductions (3)
|
-
|
|
-
|
|
-
|
|
|
|
(2,025)
|
|
|
|
2,025
|
|
|
|
-
|
|
2,025
|
|
-
|
|
|
|
2,025
|
|
-
|
|
2,025
|
|
|
Certain
litigation-
related and other
contingencies, net (4)
|
-
|
|
-
|
|
-
|
|
|
|
(6)
|
|
|
|
6
|
|
|
|
-
|
|
6
|
|
-
|
|
|
|
6
|
|
-
|
|
6
|
|
|
Certain legal costs
(5)
|
-
|
|
-
|
|
-
|
|
|
|
(16,689)
|
|
|
|
16,689
|
|
|
|
-
|
|
16,689
|
|
-
|
|
|
|
16,689
|
|
-
|
|
16,689
|
|
|
Asset impairment
charges (6)
|
-
|
|
-
|
|
-
|
|
|
|
(165,448)
|
|
|
|
165,448
|
|
|
|
-
|
|
165,448
|
|
-
|
|
|
|
165,448
|
|
-
|
|
165,448
|
|
|
Fair value of
contingent
consideration (7)
|
-
|
|
-
|
|
-
|
|
|
|
37,501
|
|
|
|
(37,501)
|
|
|
|
-
|
|
(37,501)
|
|
-
|
|
|
|
(37,501)
|
|
-
|
|
(37,501)
|
|
|
Gain on
extinguishment of
debt (8)
|
-
|
|
-
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
119,828
|
|
(119,828)
|
|
-
|
|
|
|
(119,828)
|
|
-
|
|
(119,828)
|
|
|
Other (9)
|
-
|
|
-
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,534)
|
|
1,534
|
|
-
|
|
|
|
1,534
|
|
-
|
|
1,534
|
|
|
Tax adjustments
(10)
|
-
|
|
-
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
-
|
|
23,526
|
|
|
|
(23,526)
|
|
-
|
|
(23,526)
|
|
|
Exclude
discontinued
operations, net of tax (11)
|
-
|
|
-
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
-
|
|
-
|
|
|
|
-
|
|
5,961
|
|
5,961
|
|
|
After considering
items
(non-GAAP)
|
$
720,411
|
|
$
245,649
|
|
$
474,762
|
|
65.9 %
|
|
$
165,617
|
|
23.0 %
|
|
$
309,145
|
|
42.9 %
|
|
$
135,943
|
|
$
173,202
|
|
$
34,429
|
|
19.9 %
|
|
$
138,773
|
|
$
-
|
|
$
138,773
|
|
$
0.60
|
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 months ended March 31, 2020
and 2019 are as follows:
(1)
|
Adjustments for
amortization of commercial intangible assets included the following
(in thousands):
|
|
Three Months Ended
March 31,
|
|
2020
|
|
2019
|
Amortization of
intangible assets excluding fair value step-up from
contingent consideration
|
$
|
116,420
|
|
|
$
|
136,865
|
|
Amortization of
intangible assets related to fair value step-up from
contingent consideration
|
817
|
|
|
8,734
|
|
Total
|
$
|
117,237
|
|
|
$
|
145,599
|
|
(2)
|
Adjustments for
upfront and milestone-related payments to partners included the
following (in thousands):
|
|
Three Months Ended
March 31,
|
|
2020
|
|
2019
|
|
Cost of
revenues
|
|
Operating
expenses
|
|
Cost of
revenues
|
|
Operating
expenses
|
Sales-based
|
$
|
542
|
|
|
$
|
—
|
|
|
$
|
661
|
|
|
$
|
—
|
|
Development-based
|
—
|
|
|
1,208
|
|
|
—
|
|
|
278
|
|
Total
|
$
|
542
|
|
|
$
|
1,208
|
|
|
$
|
661
|
|
|
$
|
278
|
|
(3)
|
Adjustments for
continuity and separation benefits and other cost reductions
included the following (in thousands):
|
|
Three Months Ended
March 31,
|
|
2020
|
|
2019
|
|
Cost of
revenues
|
|
Operating
expenses
|
|
Cost of
revenues
|
|
Operating
expenses
|
Continuity and
separation benefits
|
$
|
627
|
|
|
$
|
13,169
|
|
|
$
|
—
|
|
|
$
|
1,802
|
|
Accelerated
depreciation charges
|
4,679
|
|
|
1,951
|
|
|
—
|
|
|
—
|
|
Other
|
932
|
|
|
1,862
|
|
|
—
|
|
|
223
|
|
Total
|
$
|
6,238
|
|
|
$
|
16,982
|
|
|
$
|
—
|
|
|
$
|
2,025
|
|
|
Included within the
Continuity and separation benefits line are costs associated with
certain continuity and transitional
compensation arrangements for certain senior management of the
Company.
|
|
|
(4)
|
To exclude
adjustments to our accruals for litigation-related settlement
charges and certain settlement proceeds related to suits filed
by our subsidiaries.
|
|
|
(5)
|
To exclude
opioid-related legal expenses.
|
|
|
(6)
|
Adjustments for asset
impairment charges included the following (in
thousands):
|
|
Three Months Ended
March 31,
|
|
2020
|
|
2019
|
Goodwill impairment
charges
|
$
|
32,786
|
|
|
$
|
86,000
|
|
Other intangible
asset impairment charges
|
63,751
|
|
|
78,700
|
|
Property, plant and
equipment impairment charges
|
1,248
|
|
|
748
|
|
Total asset
impairment charges
|
$
|
97,785
|
|
|
$
|
165,448
|
|
(7)
|
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
incurring, and extent to which we could incur, related contingent
obligations.
|
|
|
(8)
|
To exclude the gain
on the extinguishment of debt associated with our March 2019
refinancing.
|
|
|
(9)
|
Other adjustments
included the following (in thousands):
|
|
Three Months Ended
March 31,
|
|
2020
|
|
2019
|
|
Operating
expenses
|
|
Other non-
operating
expenses
|
|
Operating
expenses
|
|
Other non-
operating
expenses
|
Foreign currency
impact related to the re-measurement
of intercompany debt instruments
|
$
|
—
|
|
|
$
|
(7,094)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(Gain) loss on sale
of business and other assets
|
—
|
|
|
(7,326)
|
|
|
—
|
|
|
1,534
|
|
Total
|
$
|
—
|
|
|
$
|
(14,420)
|
|
|
$
|
—
|
|
|
$
|
1,534
|
|
(10)
|
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.
|
|
|
(11)
|
To exclude the
results of the businesses reported as discontinued operations, net
of tax.
|
|
|
(12)
|
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
March 31,
|
|
2020
|
|
2019
|
GAAP
|
233,014
|
|
|
224,594
|
|
Non-GAAP
Adjusted
|
233,014
|
|
|
231,634
|
|
(13)
|
Depreciation and
amortization and Share-based compensation per the Adjusted EBITDA
reconciliations do not include amounts reflected in other lines of
the reconciliations, including Continuity and separation benefits
and other cost reductions.
|
|
|
(14)
|
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 income
(loss) (GAAP) to our Adjusted EBITDA (non-GAAP) for the twelve
months ended March 31, 2020 (in thousands) and the calculation
of our Net Debt Leverage Ratio (non-GAAP):
|
Twelve Months
Ended
March 31, 2020
|
Net loss
(GAAP)
|
$
|
(274,133)
|
|
Income tax
benefit
|
(131,555)
|
|
Interest expense,
net
|
538,936
|
|
Depreciation and
amortization (13)
|
585,087
|
|
EBITDA
(non-GAAP)
|
$
|
718,335
|
|
|
|
Upfront and
milestone-related payments
|
$
|
7,434
|
|
Continuity and
separation benefits and other cost reductions
|
55,793
|
|
Certain
litigation-related and other contingencies, net
|
(5,971)
|
|
Certain legal
costs
|
64,129
|
|
Asset impairment
charges
|
458,419
|
|
Fair value of
contingent consideration
|
3,865
|
|
Share-based
compensation (13)
|
46,864
|
|
Other income,
net
|
(2,099)
|
|
Other
adjustments
|
13,691
|
|
Discontinued
operations, net of tax
|
83,742
|
|
Adjusted EBITDA
(non-GAAP)
|
$
|
1,444,202
|
|
|
|
Calculation of Net
Debt:
|
|
Debt
|
$
|
8,389,070
|
|
Cash (excluding
Restricted Cash)
|
1,531,538
|
|
Net Debt
(non-GAAP)
|
$
|
6,857,532
|
|
|
|
Calculation of Net
Debt Leverage:
|
|
Net Debt Leverage
Ratio (non-GAAP)
|
4.7
|
|
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 net income per share amounts. Despite the
importance of these measures to management in goal setting and
performance measurement, the company stresses 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
specialty branded and generics pharmaceutical company delivering
quality medicines to patients in need through excellence in
development, manufacturing and commercialization. Endo has global
headquarters in Dublin, Ireland.
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.
Coleman, as well as other statements regarding product development,
market potential, corporate strategy, optimization efforts,
expected growth and regulatory approvals, together with Endo's net
income per share from continuing operations amounts, product net
sales, revenue forecasts, the impact of and response to the
COVID-19 pandemic 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 manufacture, maintain and distribute 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, the impact of and response to the
COVID-19 pandemic and the 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 International plc