DUBLIN, Nov. 8, 2018 /PRNewswire/ --
- Third-quarter 2018 revenues of $745 million compared to third-quarter 2017
revenues of $787 million
- Third-quarter 2018 XIAFLEX® franchise revenues
increased 22 percent versus third-quarter 2017 to $64 million
- Third-quarter 2018 Sterile Injectables revenues increased
17 percent versus third-quarter 2017 to $237
million
- Company raises 2018 financial guidance
Endo International plc (NASDAQ: ENDP) today reported
third-quarter 2018 financial results, including:
- Revenues of $745 million, a
decrease of 5 percent compared to third-quarter 2017 revenues of
$787 million; revenues increased 4
percent compared to second-quarter 2018.
- Reported net loss from continuing operations of $146 million compared to third-quarter 2017
reported net loss from continuing operations of $100 million.
- Reported diluted loss per share from continuing operations of
$0.65 compared to third-quarter 2017
reported diluted loss per share from continuing operations of
$0.45.
- Adjusted income from continuing operations of $165 million compared to third-quarter 2017
adjusted income from continuing operations of $204 million.
- Adjusted diluted EPS from continuing operations of $0.71 compared to third-quarter 2017 adjusted
diluted EPS from continuing operations of $0.91.
- Adjusted EBITDA of $328 million
compared to third-quarter 2017 adjusted EBITDA of $375 million.
"We had strong operational performance in the quarter,
delivering double-digit growth in our U.S. Branded Sterile
Injectables business and in the Specialty Products portfolio of our
U.S. Branded - Specialty & Established Pharmaceuticals
business," said Paul Campanelli,
President and Chief Executive Officer of Endo. "We are focused on
enhancing our capabilities in these businesses through the
Somerset/Wintac acquisition, which we anticipate will close during
the first quarter of 2019, and on our planned expansion into the
medical aesthetics market. On that front, I am extremely pleased
with the previously reported positive results from the Phase 3 CCH
for cellulite clinical trials and I look forward to taking the next
steps to bring this treatment to patients."
|
FINANCIAL
PERFORMANCE
|
|
|
(in thousands,
except per share amounts)
|
|
|
Three Months Ended
September 30,
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
Total
Revenues
|
$
|
745,466
|
|
|
$
|
786,887
|
|
|
(5)
|
%
|
|
$
|
2,160,689
|
|
|
$
|
2,700,218
|
|
|
(20)
|
%
|
|
Reported Loss from
Continuing Operations
|
$
|
(146,071)
|
|
|
$
|
(99,687)
|
|
|
47
|
%
|
|
$
|
(696,288)
|
|
|
$
|
(961,130)
|
|
|
(28)
|
%
|
|
Reported Diluted
Weighted Average Shares
|
224,132
|
|
|
223,299
|
|
|
—
|
%
|
|
223,829
|
|
|
223,157
|
|
|
—
|
%
|
|
Reported Diluted
Loss per Share from Continuing Operations
|
$
|
(0.65)
|
|
|
$
|
(0.45)
|
|
|
44
|
%
|
|
$
|
(3.11)
|
|
|
$
|
(4.31)
|
|
|
(28)
|
%
|
|
Adjusted Income
from Continuing Operations
|
$
|
164,845
|
|
|
$
|
204,052
|
|
|
(19)
|
%
|
|
$
|
487,823
|
|
|
$
|
686,498
|
|
|
(29)
|
%
|
|
Adjusted Diluted
Weighted Average Shares1
|
232,358
|
|
|
224,216
|
|
|
4
|
%
|
|
228,195
|
|
|
223,779
|
|
|
2
|
%
|
|
Adjusted Diluted
EPS from Continuing Operations
|
$
|
0.71
|
|
|
$
|
0.91
|
|
|
(22)
|
%
|
|
$
|
2.14
|
|
|
$
|
3.07
|
|
|
(30)
|
%
|
|
__________
|
|
(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 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 $745 million
in third-quarter 2018 compared to $787
million in the same period in 2017. This performance was
primarily attributable to competitive pressures and product
discontinuations in the U.S. Generic Pharmaceutical segment, the
divestiture of the Company's Mexican business, Somar, and the
voluntary market withdrawal of OPANA® ER. These factors
were partially offset by the launch of ertapenem for injection, the
authorized generic of INVANZ®, and continued strong
growth in the U.S. Branded - Sterile Injectables segment.
GAAP net loss from continuing operations in third-quarter 2018
was $146 million compared to GAAP net
loss from continuing operations of $100
million during the same period in 2017. This result was
primarily attributable to the gross margin impact of the quarter's
revenue reduction and increased asset impairment charges. GAAP
diluted net loss per share from continuing operations for
third-quarter 2018 was $0.65 compared
to GAAP diluted net loss per share from continuing operations of
$0.45 in third-quarter 2017.
Adjusted income from continuing operations in third-quarter 2018
was $165 million compared to
$204 million in third-quarter 2017.
This performance was primarily attributable to the divestiture of
Somar and the voluntary market withdrawal of OPANA® ER.
Adjusted diluted EPS from continuing operations in third-quarter
2018 was $0.71 compared to
$0.91 in third-quarter 2017.
U.S. BRANDED - SPECIALTY & ESTABLISHED
PHARMACEUTICALS
In November 2018, the Company
reported positive results from two Phase 3 clinical trials of
collagenase clostridium histolyticum (or "CCH") for the treatment
of cellulite in the buttocks. Trial subjects receiving CCH showed
highly statistically significant levels of improvement in the
appearance of cellulite with treatment, as measured by the trial's
primary endpoint.
Third-quarter 2018 U.S. Branded - Specialty & Established
Pharmaceuticals results include:
- Revenues of $220 million compared
to $234 million in third-quarter
2017; this performance was primarily attributable to the voluntary
cessation of OPANA® ER shipments in third-quarter 2017.
Excluding the impact of OPANA® ER, revenues were
consistent with third-quarter 2017.
- Specialty Products revenues increased 13 percent in
third-quarter 2018 compared to third-quarter 2017, primarily driven
by the continued strong performance from XIAFLEX®. Sales
of XIAFLEX® increased 22 percent compared to
third-quarter 2017; this increase was primarily attributable to
volume growth in both Peyronie's Disease and Dupuytren's
Contracture indications.
U.S. BRANDED - STERILE INJECTABLES
During third-quarter 2018, the U.S. Branded Sterile Injectables
segment launched ertapenem for injection, the authorized generic of
INVANZ®.
Third-quarter 2018 U.S. Branded - Sterile Injectables results
include:
- Revenues of $237 million, an
increase of 17 percent compared to third-quarter 2017. This
increase was primarily attributable to the launch of ertapenem for
injection and the continued strong growth of ADRENALIN®
and VASOSTRICT®.
U.S. GENERIC PHARMACEUTICALS
During third-quarter 2018, the U.S. Generic Pharmaceuticals
segment launched 3 products, including colchicine tablets, the
authorized generic of COLCRYS®, which was the result of
a first-to-file paragraph four settlement agreement.
Third-quarter 2018 U.S. Generic Pharmaceuticals results
include:
- Revenues of $258 million compared
to $295 million in third-quarter
2017; this performance was primarily attributable to competitive
pressures in the generic business and previously announced product
discontinuations, partially offset by the launch of colchicine
tablets.
INTERNATIONAL PHARMACEUTICALS
Third-quarter 2018 International Pharmaceuticals revenues were
$30 million, compared to $56 million in the same period in 2017. This
performance is primarily attributable to the Somar divestiture in
the fourth-quarter of 2017.
2018 FINANCIAL GUIDANCE
For the full twelve months ending December 31, 2018, at
current exchange rates, Endo is raising its financial guidance. The
Company now estimates:
- Total revenues to be between $2.87
billion and $2.92
billion;
- Adjusted diluted EPS from continuing operations to be between
$2.65 and $2.75; and
- Adjusted EBITDA from continuing operations to be between
$1.32 billion and $1.34 billion.
The Company's 2018 non-GAAP financial guidance is based on the
following assumptions:
- Adjusted gross margin of approximately 68.5%;
- Adjusted operating expenses as a percentage of revenues of
approximately 27.0%;
- Adjusted interest expense of approximately $525 million;
- Adjusted effective tax rate of approximately 8.5% to 9.5%;
and
- Adjusted diluted weighted average shares outstanding of
approximately 230 million.
BALANCE SHEET, LIQUIDITY AND OTHER UPDATES
As of September 30, 2018, the Company had $1.1 billion in unrestricted cash; debt of
$8.3 billion; net debt of
approximately $7.1 billion and a net
debt to adjusted EBITDA ratio of 5.3.
Third-quarter 2018 cash used in operating activities was
$22 million, compared to $83 million of net cash provided by operating
activities in the comparable 2017 period.
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 6154109. Please
dial in 10 minutes prior to the scheduled start time.
A replay of the call will be available from November 8,
2018 at 11:00 a.m. ET until 11:00 a.m.
ET on November 11, 2018 by
dialing U.S./Canada (855)
859-2056, International (404) 537-3406, and entering the passcode
6154109.
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.
VOLTAREN is a registered trademark of Novartis Corporation
COLCRYS is a registered trademark of Takeda Pharmaceuticals
U.S.A., Inc.
INVANZ is a registered trademark of Merck Sharp & Dohme
Corp.
|
FINANCIAL
SCHEDULES
|
|
|
The following table
presents Endo's unaudited Total Revenues for the three and nine
months ended September 30, 2018 and 2017 (dollars in
thousands):
|
|
|
Three Months Ended
September 30,
|
|
Percent
Growth
|
|
Nine Months Ended
September 30,
|
|
Percent
Growth
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
U.S. Branded -
Specialty &
Established Pharmaceuticals:
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
Products:
|
|
|
|
|
|
|
|
|
|
|
|
|
XIAFLEX®
|
$
|
64,214
|
|
|
$
|
52,511
|
|
|
22
|
%
|
|
$
|
184,855
|
|
|
$
|
152,113
|
|
|
22
|
%
|
|
SUPPRELIN®
LA
|
20,408
|
|
|
20,638
|
|
|
(1)
|
%
|
|
60,948
|
|
|
63,468
|
|
|
(4)
|
%
|
|
Other Specialty
(1)
|
43,576
|
|
|
40,634
|
|
|
7
|
%
|
|
114,202
|
|
|
113,407
|
|
|
1
|
%
|
|
Total Specialty
Products
|
$
|
128,198
|
|
|
$
|
113,783
|
|
|
13
|
%
|
|
$
|
360,005
|
|
|
$
|
328,988
|
|
|
9
|
%
|
|
Established
Products:
|
|
|
|
|
|
|
|
|
|
|
|
|
PERCOCET®
|
$
|
30,730
|
|
|
$
|
31,349
|
|
|
(2)
|
%
|
|
$
|
93,539
|
|
|
$
|
93,183
|
|
|
—
|
%
|
|
VOLTAREN®
Gel
|
15,057
|
|
|
19,102
|
|
|
(21)
|
%
|
|
44,185
|
|
|
53,646
|
|
|
(18)
|
%
|
|
OPANA® ER
|
—
|
|
|
14,756
|
|
|
(100)
|
%
|
|
—
|
|
|
82,056
|
|
|
(100)
|
%
|
|
Other Established
(2)
|
46,115
|
|
|
54,813
|
|
|
(16)
|
%
|
|
135,243
|
|
|
171,277
|
|
|
(21)
|
%
|
|
Total Established
Products
|
$
|
91,902
|
|
|
$
|
120,020
|
|
|
(23)
|
%
|
|
$
|
272,967
|
|
|
$
|
400,162
|
|
|
(32)
|
%
|
|
Total U.S. Branded -
Specialty &
Established Pharmaceuticals (3)
|
$
|
220,100
|
|
|
$
|
233,803
|
|
|
(6)
|
%
|
|
$
|
632,972
|
|
|
$
|
729,150
|
|
|
(13)
|
%
|
|
U.S. Branded -
Sterile Injectables:
|
|
|
|
|
|
|
|
|
|
|
|
|
VASOSTRICT®
|
$
|
112,333
|
|
|
$
|
105,741
|
|
|
6
|
%
|
|
$
|
332,387
|
|
|
$
|
300,649
|
|
|
11
|
%
|
|
ADRENALIN®
|
35,460
|
|
|
25,335
|
|
|
40
|
%
|
|
101,858
|
|
|
50,464
|
|
|
NM
|
|
Ertapenem for
injection
|
25,798
|
|
|
—
|
|
|
NM
|
|
25,798
|
|
|
—
|
|
|
NM
|
|
Other Sterile
Injectables (4)
|
63,559
|
|
|
70,829
|
|
|
(10)
|
%
|
|
210,804
|
|
|
203,252
|
|
|
4
|
%
|
|
Total U.S. Branded -
Sterile Injectables (3)
|
$
|
237,150
|
|
|
$
|
201,905
|
|
|
17
|
%
|
|
$
|
670,847
|
|
|
$
|
554,365
|
|
|
21
|
%
|
|
Total U.S. Generic
Pharmaceuticals
|
$
|
257,969
|
|
|
$
|
294,749
|
|
|
(12)
|
%
|
|
$
|
748,445
|
|
|
$
|
1,227,584
|
|
|
(39)
|
%
|
|
Total International
Pharmaceuticals
|
$
|
30,247
|
|
|
$
|
56,430
|
|
|
(46)
|
%
|
|
$
|
108,425
|
|
|
$
|
189,119
|
|
|
(43)
|
%
|
|
Total
Revenues
|
$
|
745,466
|
|
|
$
|
786,887
|
|
|
(5)
|
%
|
|
$
|
2,160,689
|
|
|
$
|
2,700,218
|
|
|
(20)
|
%
|
|
__________
|
|
(1)
|
Products included
within Other Specialty include TESTOPEL®,
NASCOBAL® Nasal Spray and AVEED®.
|
|
(2)
|
Products included
within Other Established include, but are not limited to,
LIDODERM®, EDEX®, TESTIM® and
FORTESTA® Gel, including the authorized
generics.
|
|
(3)
|
Individual products
presented above represent the top two performing products in each
product category and/or any product having revenues in excess of
$25 million during any quarterly period in 2018 or 2017.
|
|
(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 nine months ended September 30, 2018 and
2017 (in thousands, except per share data):
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
TOTAL
REVENUES
|
$
|
745,466
|
|
|
$
|
786,887
|
|
|
$
|
2,160,689
|
|
|
$
|
2,700,218
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
412,965
|
|
|
514,522
|
|
|
1,198,468
|
|
|
1,722,885
|
|
|
Selling, general and
administrative
|
163,791
|
|
|
135,880
|
|
|
478,615
|
|
|
468,675
|
|
|
Research and
development
|
39,683
|
|
|
39,644
|
|
|
160,431
|
|
|
123,522
|
|
|
Litigation-related
and other contingencies, net
|
(1,750)
|
|
|
(12,352)
|
|
|
15,370
|
|
|
(14,016)
|
|
|
Asset impairment
charges
|
142,217
|
|
|
94,924
|
|
|
613,400
|
|
|
1,023,930
|
|
|
Acquisition-related
and integration items
|
1,288
|
|
|
16,641
|
|
|
13,284
|
|
|
31,711
|
|
|
OPERATING LOSS FROM
CONTINUING OPERATIONS
|
$
|
(12,728)
|
|
|
$
|
(2,372)
|
|
|
$
|
(318,879)
|
|
|
$
|
(656,489)
|
|
|
INTEREST EXPENSE,
NET
|
131,847
|
|
|
127,521
|
|
|
385,896
|
|
|
361,267
|
|
|
LOSS ON
EXTINGUISHMENT OF DEBT
|
—
|
|
|
—
|
|
|
—
|
|
|
51,734
|
|
|
OTHER INCOME,
NET
|
(1,507)
|
|
|
(2,097)
|
|
|
(33,216)
|
|
|
(10,843)
|
|
|
LOSS FROM CONTINUING
OPERATIONS BEFORE
INCOME TAX
|
$
|
(143,068)
|
|
|
$
|
(127,796)
|
|
|
$
|
(671,559)
|
|
|
$
|
(1,058,647)
|
|
|
INCOME TAX EXPENSE
(BENEFIT)
|
3,003
|
|
|
(28,109)
|
|
|
24,729
|
|
|
(97,517)
|
|
|
LOSS FROM CONTINUING
OPERATIONS
|
$
|
(146,071)
|
|
|
$
|
(99,687)
|
|
|
$
|
(696,288)
|
|
|
$
|
(961,130)
|
|
|
DISCONTINUED
OPERATIONS, NET OF TAX
|
(27,134)
|
|
|
3,017
|
|
|
(43,273)
|
|
|
(705,886)
|
|
|
NET LOSS
|
$
|
(173,205)
|
|
|
$
|
(96,670)
|
|
|
$
|
(739,561)
|
|
|
$
|
(1,667,016)
|
|
|
NET (LOSS) INCOME PER
SHARE—BASIC:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
(0.65)
|
|
|
$
|
(0.45)
|
|
|
$
|
(3.11)
|
|
|
$
|
(4.31)
|
|
|
Discontinued
operations
|
(0.12)
|
|
|
0.02
|
|
|
(0.19)
|
|
|
(3.16)
|
|
|
Basic
|
$
|
(0.77)
|
|
|
$
|
(0.43)
|
|
|
$
|
(3.30)
|
|
|
$
|
(7.47)
|
|
|
NET (LOSS) INCOME PER
SHARE—DILUTED:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
(0.65)
|
|
|
$
|
(0.45)
|
|
|
$
|
(3.11)
|
|
|
$
|
(4.31)
|
|
|
Discontinued
operations
|
(0.12)
|
|
|
0.02
|
|
|
(0.19)
|
|
|
(3.16)
|
|
|
Diluted
|
$
|
(0.77)
|
|
|
$
|
(0.43)
|
|
|
$
|
(3.30)
|
|
|
$
|
(7.47)
|
|
|
WEIGHTED AVERAGE
SHARES:
|
|
|
|
|
|
|
|
|
Basic
|
224,132
|
|
|
223,299
|
|
|
223,829
|
|
|
223,157
|
|
|
Diluted
|
224,132
|
|
|
223,299
|
|
|
223,829
|
|
|
223,157
|
|
|
The following table
presents unaudited Condensed Consolidated Balance Sheet data at
September 30, 2018 and December 31, 2017 (in
thousands):
|
|
|
September 30,
2018
|
|
December 31,
2017
|
|
ASSETS
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,118,885
|
|
|
$
|
986,605
|
|
|
Restricted cash and
cash equivalents
|
289,667
|
|
|
320,453
|
|
|
Accounts
receivable
|
467,156
|
|
|
517,436
|
|
|
Inventories,
net
|
332,787
|
|
|
391,437
|
|
|
Other current
assets
|
67,104
|
|
|
55,146
|
|
|
Total current
assets
|
$
|
2,275,599
|
|
|
$
|
2,271,077
|
|
|
TOTAL NON-CURRENT
ASSETS
|
8,246,063
|
|
|
9,364,503
|
|
|
TOTAL
ASSETS
|
$
|
10,521,662
|
|
|
$
|
11,635,580
|
|
|
LIABILITIES AND
SHAREHOLDERS' (DEFICIT) EQUITY
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
Accounts payable and
accrued expenses, including legal settlement accruals
|
$
|
1,985,637
|
|
|
$
|
2,184,618
|
|
|
Other current
liabilities
|
35,831
|
|
|
36,291
|
|
|
Total current
liabilities
|
$
|
2,021,468
|
|
|
$
|
2,220,909
|
|
|
LONG-TERM DEBT, LESS
CURRENT PORTION, NET
|
8,228,612
|
|
|
8,242,032
|
|
|
OTHER
LIABILITIES
|
491,041
|
|
|
687,759
|
|
|
SHAREHOLDERS'
(DEFICIT) EQUITY
|
(219,459)
|
|
|
484,880
|
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS' (DEFICIT) EQUITY
|
$
|
10,521,662
|
|
|
$
|
11,635,580
|
|
|
The following table
presents unaudited Condensed Consolidated Statement of Cash Flow
data for the nine months ended September 30, 2018 and 2017 (in
thousands):
|
|
|
Nine Months Ended
September 30,
|
|
2018
|
|
2017
|
|
OPERATING
ACTIVITIES:
|
|
|
|
|
Net loss
|
$
|
(739,561)
|
|
|
$
|
(1,667,016)
|
|
|
Adjustments to
reconcile Net loss to Net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
556,503
|
|
|
742,936
|
|
|
Asset impairment
charges
|
613,400
|
|
|
1,023,930
|
|
|
Other, including cash
payments to claimants from Qualified Settlement Funds
|
(233,350)
|
|
|
322,312
|
|
|
Net cash provided by
operating activities
|
$
|
196,992
|
|
|
$
|
422,162
|
|
|
INVESTING
ACTIVITIES:
|
|
|
|
|
Purchases of
property, plant and equipment, excluding capitalized
interest
|
$
|
(56,544)
|
|
|
$
|
(94,102)
|
|
|
Proceeds from sale of
business and other assets, net
|
43,753
|
|
|
96,066
|
|
|
Other
|
(891)
|
|
|
7,000
|
|
|
Net cash (used in)
provided by investing activities
|
$
|
(13,682)
|
|
|
$
|
8,964
|
|
|
FINANCING
ACTIVITIES:
|
|
|
|
|
Payments on
borrowings, net
|
$
|
(29,535)
|
|
|
$
|
(12,325)
|
|
|
Other
|
(33,273)
|
|
|
(123,028)
|
|
|
Net cash used in
financing activities
|
$
|
(62,808)
|
|
|
$
|
(135,353)
|
|
|
Effect of foreign
exchange rate
|
(608)
|
|
|
3,983
|
|
|
Movement in cash held
for sale
|
—
|
|
|
(1,450)
|
|
|
NET INCREASE IN CASH,
CASH EQUIVALENTS, RESTRICTED CASH AND
RESTRICTED CASH EQUIVALENTS
|
$
|
119,894
|
|
|
$
|
298,306
|
|
|
CASH, CASH
EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH
EQUIVALENTS, BEGINNING OF PERIOD
|
1,311,014
|
|
|
805,180
|
|
|
CASH, CASH
EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH
EQUIVALENTS, END OF PERIOD
|
$
|
1,430,908
|
|
|
$
|
1,103,486
|
|
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 nine months ended September 30, 2018
and 2017 (in thousands):
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Net loss
(GAAP)
|
$
|
(173,205)
|
|
|
$
|
(96,670)
|
|
|
$
|
(739,561)
|
|
|
$
|
(1,667,016)
|
|
|
Income tax expense
(benefit)
|
3,003
|
|
|
(28,109)
|
|
|
24,729
|
|
|
(97,517)
|
|
|
Interest expense,
net
|
131,847
|
|
|
127,521
|
|
|
385,896
|
|
|
361,267
|
|
|
Depreciation and
amortization (15)
|
176,856
|
|
|
183,475
|
|
|
521,325
|
|
|
680,385
|
|
|
EBITDA
(non-GAAP)
|
$
|
138,501
|
|
|
$
|
186,217
|
|
|
$
|
192,389
|
|
|
$
|
(722,881)
|
|
|
|
|
|
|
|
|
|
|
Inventory step-up and
other cost savings (2)
|
$
|
71
|
|
|
$
|
66
|
|
|
$
|
261
|
|
|
$
|
281
|
|
|
Upfront and
milestone-related payments (3)
|
4,731
|
|
|
775
|
|
|
43,027
|
|
|
6,952
|
|
|
Inventory reserve
increase from restructuring (4)
|
207
|
|
|
—
|
|
|
2,797
|
|
|
7,899
|
|
|
Separation benefits
and other restructuring (5)
|
3,794
|
|
|
80,693
|
|
|
79,344
|
|
|
120,078
|
|
|
Certain
litigation-related and other contingencies, net (6)
|
(1,750)
|
|
|
(12,352)
|
|
|
15,370
|
|
|
(14,016)
|
|
|
Asset impairment
charges (7)
|
142,217
|
|
|
94,924
|
|
|
613,400
|
|
|
1,023,930
|
|
|
Acquisition-related
and integration costs (8)
|
519
|
|
|
1,201
|
|
|
1,553
|
|
|
8,137
|
|
|
Fair value of
contingent consideration (9)
|
769
|
|
|
15,440
|
|
|
11,731
|
|
|
23,574
|
|
|
Loss on
extinguishment of debt (10)
|
—
|
|
|
—
|
|
|
—
|
|
|
51,734
|
|
|
Share-based
compensation
|
13,736
|
|
|
13,247
|
|
|
43,722
|
|
|
40,252
|
|
|
Other income, net
(16)
|
(1,507)
|
|
|
(2,097)
|
|
|
(33,216)
|
|
|
(10,843)
|
|
|
Other
adjustments
|
(67)
|
|
|
(58)
|
|
|
(775)
|
|
|
(75)
|
|
|
Discontinued
operations, net of tax (13)
|
27,134
|
|
|
(3,017)
|
|
|
43,273
|
|
|
705,886
|
|
|
Adjusted EBITDA
(non-GAAP)
|
$
|
328,355
|
|
|
$
|
375,039
|
|
|
$
|
1,012,876
|
|
|
$
|
1,240,908
|
|
|
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 nine months ended September 30, 2018 and 2017 (in
thousands):
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Loss from continuing
operations (GAAP)
|
$
|
(146,071)
|
|
|
$
|
(99,687)
|
|
|
$
|
(696,288)
|
|
|
$
|
(961,130)
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets (1)
|
161,275
|
|
|
161,413
|
|
|
471,662
|
|
|
615,490
|
|
|
Inventory step-up and
other cost savings (2)
|
71
|
|
|
66
|
|
|
261
|
|
|
281
|
|
|
Upfront and
milestone-related payments (3)
|
4,731
|
|
|
775
|
|
|
43,027
|
|
|
6,952
|
|
|
Inventory reserve
increase from restructuring (4)
|
207
|
|
|
—
|
|
|
2,797
|
|
|
7,899
|
|
|
Separation benefits
and other restructuring (5)
|
3,794
|
|
|
80,693
|
|
|
79,344
|
|
|
120,078
|
|
|
Certain
litigation-related and other contingencies, net (6)
|
(1,750)
|
|
|
(12,352)
|
|
|
15,370
|
|
|
(14,016)
|
|
|
Asset impairment
charges (7)
|
142,217
|
|
|
94,924
|
|
|
613,400
|
|
|
1,023,930
|
|
|
Acquisition-related
and integration costs (8)
|
519
|
|
|
1,201
|
|
|
1,553
|
|
|
8,137
|
|
|
Fair value of
contingent consideration (9)
|
769
|
|
|
15,440
|
|
|
11,731
|
|
|
23,574
|
|
|
Loss on
extinguishment of debt (10)
|
—
|
|
|
—
|
|
|
—
|
|
|
51,734
|
|
|
Other (11)
|
1,353
|
|
|
3,035
|
|
|
(29,908)
|
|
|
(1,133)
|
|
|
Tax adjustments
(12)
|
(2,270)
|
|
|
(41,456)
|
|
|
(25,126)
|
|
|
(195,298)
|
|
|
Adjusted income from
continuing operations (non-GAAP)
|
$
|
164,845
|
|
|
$
|
204,052
|
|
|
$
|
487,823
|
|
|
$
|
686,498
|
|
|
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 nine
months ended September 30, 2018 and 2017 (in thousands, except per
share data):
|
|
|
|
Three Months Ended
September 30, 2018
|
|
|
Total
revenues
|
|
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)
|
|
$
745,466
|
|
$
412,965
|
|
$
332,501
|
|
44.6
%
|
|
$
345,229
|
|
46.3
%
|
|
$
(12,728)
|
|
(1.7)%
|
|
$
130,340
|
|
$
(143,068)
|
|
$
3,003
|
|
(2.1)%
|
|
$
(146,071)
|
|
$
(27,134)
|
|
$
(173,205)
|
|
$
(0.65)
|
|
Items impacting
comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets (1)
|
|
—
|
|
(161,275)
|
|
161,275
|
|
|
|
—
|
|
|
|
161,275
|
|
|
|
—
|
|
161,275
|
|
—
|
|
|
|
161,275
|
|
—
|
|
161,275
|
|
0.71
|
|
Inventory step-up
and
other cost savings (2)
|
|
—
|
|
(71)
|
|
71
|
|
|
|
—
|
|
|
|
71
|
|
|
|
—
|
|
71
|
|
—
|
|
|
|
71
|
|
—
|
|
71
|
|
—
|
|
Upfront
and
milestone-related
payments (3)
|
|
—
|
|
(745)
|
|
745
|
|
|
|
(3,986)
|
|
|
|
4,731
|
|
|
|
—
|
|
4,731
|
|
—
|
|
|
|
4,731
|
|
—
|
|
4,731
|
|
0.02
|
|
Inventory reserve
increase from
restructuring (4)
|
|
—
|
|
(207)
|
|
207
|
|
|
|
—
|
|
|
|
207
|
|
|
|
—
|
|
207
|
|
—
|
|
|
|
207
|
|
—
|
|
207
|
|
—
|
|
Separation
benefits
and other
restructuring (5)
|
|
—
|
|
(3,626)
|
|
3,626
|
|
|
|
(168)
|
|
|
|
3,794
|
|
|
|
—
|
|
3,794
|
|
—
|
|
|
|
3,794
|
|
—
|
|
3,794
|
|
0.02
|
|
Certain
litigation-
related and other
contingencies, net (6)
|
|
—
|
|
—
|
|
—
|
|
|
|
1,750
|
|
|
|
(1,750)
|
|
|
|
—
|
|
(1,750)
|
|
—
|
|
|
|
(1,750)
|
|
—
|
|
(1,750)
|
|
(0.01)
|
|
Asset impairment
charges (7)
|
|
—
|
|
—
|
|
—
|
|
|
|
(142,217)
|
|
|
|
142,217
|
|
|
|
—
|
|
142,217
|
|
—
|
|
|
|
142,217
|
|
—
|
|
142,217
|
|
0.62
|
|
Acquisition-related
and integration costs (8)
|
|
—
|
|
—
|
|
—
|
|
|
|
(519)
|
|
|
|
519
|
|
|
|
—
|
|
519
|
|
—
|
|
|
|
519
|
|
—
|
|
519
|
|
—
|
|
Fair value of
contingent
consideration (9)
|
|
—
|
|
—
|
|
—
|
|
|
|
(769)
|
|
|
|
769
|
|
|
|
—
|
|
769
|
|
—
|
|
|
|
769
|
|
—
|
|
769
|
|
—
|
|
Other (11)
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,353)
|
|
1,353
|
|
—
|
|
|
|
1,353
|
|
—
|
|
1,353
|
|
0.01
|
|
Tax adjustments
(12)
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
2,270
|
|
|
|
(2,270)
|
|
—
|
|
(2,270)
|
|
(0.01)
|
|
Exclude
discontinued
operations, net of tax (13)
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
27,134
|
|
27,134
|
|
—
|
|
After considering
items
(non-GAAP)
|
|
$
745,466
|
|
$
247,041
|
|
$
498,425
|
|
66.9 %
|
|
$
199,320
|
|
26.7 %
|
|
$
299,105
|
|
40.1 %
|
|
$ 128,987
|
|
$
170,118
|
|
$
5,273
|
|
3.1 %
|
|
$
164,845
|
|
$
—
|
|
$
164,845
|
|
$
0.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, 2017
|
|
|
Total
revenues
|
|
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 (benefit)
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)
|
|
$
786,887
|
|
$
514,522
|
|
$
272,365
|
|
34.6
%
|
|
$
274,737
|
|
34.9
%
|
|
$
(2,372)
|
|
(0.3)%
|
|
$
125,424
|
|
$
(127,796)
|
|
$
(28,109)
|
|
22.0
%
|
|
$
(99,687)
|
|
$
3,017
|
|
$
(96,670)
|
|
$
(0.45)
|
|
Items impacting
comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets (1)
|
|
—
|
|
(161,413)
|
|
161,413
|
|
|
|
—
|
|
|
|
161,413
|
|
|
|
—
|
|
161,413
|
|
—
|
|
|
|
161,413
|
|
—
|
|
161,413
|
|
0.73
|
|
Inventory step-up
and
other cost savings (2)
|
|
—
|
|
(66)
|
|
66
|
|
|
|
—
|
|
|
|
66
|
|
|
|
—
|
|
66
|
|
—
|
|
|
|
66
|
|
—
|
|
66
|
|
—
|
|
Upfront and
milestone-related
payments (3)
|
|
—
|
|
(688)
|
|
688
|
|
|
|
(87)
|
|
|
|
775
|
|
|
|
—
|
|
775
|
|
—
|
|
|
|
775
|
|
—
|
|
775
|
|
—
|
|
Separation
benefits
and other
restructuring (5)
|
|
—
|
|
(78,680)
|
|
78,680
|
|
|
|
(2,013)
|
|
|
|
80,693
|
|
|
|
—
|
|
80,693
|
|
—
|
|
|
|
80,693
|
|
—
|
|
80,693
|
|
0.36
|
|
Certain
litigation-
related and other
contingencies, net (6)
|
|
—
|
|
—
|
|
—
|
|
|
|
12,352
|
|
|
|
(12,352)
|
|
|
|
—
|
|
(12,352)
|
|
—
|
|
|
|
(12,352)
|
|
—
|
|
(12,352)
|
|
(0.06)
|
|
Asset impairment
charges (7)
|
|
—
|
|
—
|
|
—
|
|
|
|
(94,924)
|
|
|
|
94,924
|
|
|
|
—
|
|
94,924
|
|
—
|
|
|
|
94,924
|
|
—
|
|
94,924
|
|
0.43
|
|
Acquisition-related
and integration
costs (8)
|
|
—
|
|
—
|
|
—
|
|
|
|
(1,201)
|
|
|
|
1,201
|
|
|
|
—
|
|
1,201
|
|
—
|
|
|
|
1,201
|
|
—
|
|
1,201
|
|
0.01
|
|
Fair value of
contingent
consideration (9)
|
|
—
|
|
—
|
|
—
|
|
|
|
(15,440)
|
|
|
|
15,440
|
|
|
|
—
|
|
15,440
|
|
—
|
|
|
|
15,440
|
|
—
|
|
15,440
|
|
0.07
|
|
Other (11)
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,035)
|
|
3,035
|
|
—
|
|
|
|
3,035
|
|
—
|
|
3,035
|
|
0.01
|
|
Tax adjustments
(12)
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
41,456
|
|
|
|
(41,456)
|
|
—
|
|
(41,456)
|
|
(0.19)
|
|
Exclude
discontinued
operations, net of tax (13)
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
(3,017)
|
|
(3,017)
|
|
—
|
|
After considering
items
(non-GAAP)
|
|
$
786,887
|
|
$
273,675
|
|
$
513,212
|
|
65.2 %
|
|
$
173,424
|
|
22.0 %
|
|
$
339,788
|
|
43.2 %
|
|
$ 122,389
|
|
$
217,399
|
|
$
13,347
|
|
6.1 %
|
|
$
204,052
|
|
$
—
|
|
$
204,052
|
|
$
0.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2018
|
|
|
Total
revenues
|
|
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)
|
|
$
2,160,689
|
|
$
1,198,468
|
|
$
962,221
|
|
44.5
%
|
|
$
1,281,100
|
|
59.3
%
|
|
$
(318,879)
|
|
(14.8)%
|
|
$
352,680
|
|
$
(671,559)
|
|
$
24,729
|
|
(3.7)%
|
|
$
(696,288)
|
|
$
(43,273)
|
|
$
(739,561)
|
|
$
(3.11)
|
|
Items impacting
comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets (1)
|
|
—
|
|
(471,662)
|
|
471,662
|
|
|
|
—
|
|
|
|
471,662
|
|
|
|
—
|
|
471,662
|
|
—
|
|
|
|
471,662
|
|
—
|
|
471,662
|
|
2.10
|
|
Inventory step-up
and
other cost savings (2)
|
|
—
|
|
(261)
|
|
261
|
|
|
|
—
|
|
|
|
261
|
|
|
|
—
|
|
261
|
|
—
|
|
|
|
261
|
|
—
|
|
261
|
|
—
|
|
Upfront and
milestone-related
payments (3)
|
|
—
|
|
(2,095)
|
|
2,095
|
|
|
|
(40,932)
|
|
|
|
43,027
|
|
|
|
—
|
|
43,027
|
|
—
|
|
|
|
43,027
|
|
—
|
|
43,027
|
|
0.19
|
|
Inventory reserve
increase from
restructuring (4)
|
|
—
|
|
(2,797)
|
|
2,797
|
|
|
|
—
|
|
|
|
2,797
|
|
|
|
—
|
|
2,797
|
|
—
|
|
|
|
2,797
|
|
—
|
|
2,797
|
|
0.01
|
|
Separation
benefits
and other
restructuring (5)
|
|
—
|
|
(57,457)
|
|
57,457
|
|
|
|
(21,887)
|
|
|
|
79,344
|
|
|
|
—
|
|
79,344
|
|
—
|
|
|
|
79,344
|
|
—
|
|
79,344
|
|
0.34
|
|
Certain
litigation-
related and other
contingencies, net (6)
|
|
—
|
|
—
|
|
—
|
|
|
|
(15,370)
|
|
|
|
15,370
|
|
|
|
—
|
|
15,370
|
|
—
|
|
|
|
15,370
|
|
—
|
|
15,370
|
|
0.07
|
|
Asset impairment
charges (7)
|
|
—
|
|
—
|
|
—
|
|
|
|
(613,400)
|
|
|
|
613,400
|
|
|
|
—
|
|
613,400
|
|
—
|
|
|
|
613,400
|
|
—
|
|
613,400
|
|
2.73
|
|
Acquisition-related
and integration costs (8)
|
|
—
|
|
—
|
|
—
|
|
|
|
(1,553)
|
|
|
|
1,553
|
|
|
|
—
|
|
1,553
|
|
—
|
|
|
|
1,553
|
|
—
|
|
1,553
|
|
0.01
|
|
Fair value of
contingent
consideration (9)
|
|
—
|
|
—
|
|
—
|
|
|
|
(11,731)
|
|
|
|
11,731
|
|
|
|
—
|
|
11,731
|
|
—
|
|
|
|
11,731
|
|
—
|
|
11,731
|
|
0.05
|
|
Other (11)
|
|
—
|
|
—
|
|
—
|
|
|
|
630
|
|
|
|
(630)
|
|
|
|
29,278
|
|
(29,908)
|
|
—
|
|
|
|
(29,908)
|
|
—
|
|
(29,908)
|
|
(0.13)
|
|
Tax adjustments
(12)
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
25,126
|
|
|
|
(25,126)
|
|
—
|
|
(25,126)
|
|
(0.12)
|
|
Exclude
discontinued
operations, net of tax (13)
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
43,273
|
|
43,273
|
|
—
|
|
After considering
items
(non-GAAP)
|
|
$
2,160,689
|
|
$
664,196
|
|
$
1,496,493
|
|
69.3 %
|
|
$
576,857
|
|
26.7 %
|
|
$
919,636
|
|
42.6 %
|
|
$ 381,958
|
|
$
537,678
|
|
$
49,855
|
|
9.3 %
|
|
$
487,823
|
|
$
—
|
|
$
487,823
|
|
$
2.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2017
|
|
|
Total
revenues
|
|
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 (benefit)
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)
|
|
$
2,700,218
|
|
$
1,722,885
|
|
$
977,333
|
|
36.2
%
|
|
$
1,633,822
|
|
60.5
%
|
|
$
(656,489)
|
|
(24.3)%
|
|
$
402,158
|
|
$
(1,058,647)
|
|
$
(97,517)
|
|
9.2
%
|
|
$
(961,130)
|
|
$
(705,886)
|
|
$
(1,667,016)
|
|
$
(4.31)
|
|
Items impacting
comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets (1)
|
|
—
|
|
(615,490)
|
|
615,490
|
|
|
|
—
|
|
|
|
615,490
|
|
|
|
—
|
|
615,490
|
|
—
|
|
|
|
615,490
|
|
—
|
|
615,490
|
|
2.75
|
|
Inventory step-up
and
other cost savings (2)
|
|
—
|
|
(281)
|
|
281
|
|
|
|
—
|
|
|
|
281
|
|
|
|
—
|
|
281
|
|
—
|
|
|
|
281
|
|
—
|
|
281
|
|
—
|
|
Upfront and
milestone-related
payments (3)
|
|
—
|
|
(2,039)
|
|
2,039
|
|
|
|
(4,913)
|
|
|
|
6,952
|
|
|
|
—
|
|
6,952
|
|
—
|
|
|
|
6,952
|
|
—
|
|
6,952
|
|
0.03
|
|
Inventory reserve
increase from
restructuring (4)
|
|
—
|
|
(7,899)
|
|
7,899
|
|
|
|
—
|
|
|
|
7,899
|
|
|
|
—
|
|
7,899
|
|
—
|
|
|
|
7,899
|
|
—
|
|
7,899
|
|
0.04
|
|
Separation
benefits
and other
restructuring (5)
|
|
—
|
|
(85,367)
|
|
85,367
|
|
|
|
(34,711)
|
|
|
|
120,078
|
|
|
|
—
|
|
120,078
|
|
—
|
|
|
|
120,078
|
|
—
|
|
120,078
|
|
0.54
|
|
Certain
litigation-
related and other
contingencies, net (6)
|
|
—
|
|
—
|
|
—
|
|
|
|
14,016
|
|
|
|
(14,016)
|
|
|
|
—
|
|
(14,016)
|
|
—
|
|
|
|
(14,016)
|
|
—
|
|
(14,016)
|
|
(0.06)
|
|
Asset impairment
charges (7)
|
|
—
|
|
—
|
|
—
|
|
|
|
(1,023,930)
|
|
|
|
1,023,930
|
|
|
|
—
|
|
1,023,930
|
|
—
|
|
|
|
1,023,930
|
|
—
|
|
1,023,930
|
|
4.59
|
|
Acquisition-related
and integration costs (8)
|
|
—
|
|
—
|
|
—
|
|
|
|
(8,137)
|
|
|
|
8,137
|
|
|
|
—
|
|
8,137
|
|
—
|
|
|
|
8,137
|
|
—
|
|
8,137
|
|
0.04
|
|
Fair value of
contingent
consideration (9)
|
|
—
|
|
—
|
|
—
|
|
|
|
(23,574)
|
|
|
|
23,574
|
|
|
|
—
|
|
23,574
|
|
—
|
|
|
|
23,574
|
|
—
|
|
23,574
|
|
0.11
|
|
Loss on
extinguishment
of debt (10)
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(51,734)
|
|
51,734
|
|
—
|
|
|
|
51,734
|
|
—
|
|
51,734
|
|
0.23
|
|
Other (11)
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,133
|
|
(1,133)
|
|
—
|
|
|
|
(1,133)
|
|
—
|
|
(1,133)
|
|
(0.01)
|
|
Tax adjustments
(12)
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
195,298
|
|
|
|
(195,298)
|
|
—
|
|
(195,298)
|
|
(0.88)
|
|
Exclude
discontinued
operations, net of tax (13)
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
705,886
|
|
705,886
|
|
—
|
|
After considering
items
(non-GAAP)
|
|
$
2,700,218
|
|
$
1,011,809
|
|
$
1,688,409
|
|
62.5 %
|
|
$
552,573
|
|
20.5 %
|
|
$
1,135,836
|
|
42.1 %
|
|
$ 351,557
|
|
$
784,279
|
|
$
97,781
|
|
12.5 %
|
|
$
686,498
|
|
$
—
|
|
$
686,498
|
|
$
3.07
|
|
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 nine
months ended September 30, 2018 and 2017 are as follows:
|
|
|
(1)
|
Adjustments for
amortization of commercial intangible assets included the following
(in thousands):
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Amortization of
intangible assets excluding fair value
step-up from contingent consideration
|
$
|
149,249
|
|
|
$
|
151,250
|
|
|
$
|
446,015
|
|
|
$
|
585,025
|
|
|
Amortization of
intangible assets related to fair value
step-up from contingent consideration
|
12,026
|
|
|
10,163
|
|
|
25,647
|
|
|
30,465
|
|
|
Total
|
$
|
161,275
|
|
|
$
|
161,413
|
|
|
$
|
471,662
|
|
|
$
|
615,490
|
|
|
|
|
(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
September 30,
|
|
|
2018
|
|
2017
|
|
|
Cost of
revenues
|
|
Operating
expenses
|
|
Cost of
revenues
|
|
Operating
expenses
|
|
Sales-based
|
$
|
745
|
|
|
$
|
—
|
|
|
$
|
688
|
|
|
$
|
—
|
|
|
Development-based
|
—
|
|
|
3,986
|
|
|
—
|
|
|
87
|
|
|
Total
|
$
|
745
|
|
|
$
|
3,986
|
|
|
$
|
688
|
|
|
$
|
87
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
|
Cost of
revenues
|
|
Operating
expenses
|
|
Cost of
revenues
|
|
Operating
expenses
|
|
Sales-based
|
$
|
2,095
|
|
|
$
|
—
|
|
|
$
|
2,039
|
|
|
$
|
—
|
|
|
Development-based
|
—
|
|
|
40,932
|
|
|
—
|
|
|
4,913
|
|
|
Total
|
$
|
2,095
|
|
|
$
|
40,932
|
|
|
$
|
2,039
|
|
|
$
|
4,913
|
|
|
|
|
(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
September 30,
|
|
|
2018
|
|
2017
|
|
|
Cost of
revenues
|
|
Operating
expenses
|
|
Cost of
revenues
|
|
Operating
expenses
|
|
Separation
benefits
|
$
|
1,711
|
|
|
$
|
379
|
|
|
$
|
19,535
|
|
|
$
|
284
|
|
|
Accelerated
depreciation and product discontinuation
charges
|
—
|
|
|
—
|
|
|
59,805
|
|
|
—
|
|
|
Other
|
1,915
|
|
|
(211)
|
|
|
(660)
|
|
|
1,729
|
|
|
Total
|
$
|
3,626
|
|
|
$
|
168
|
|
|
$
|
78,680
|
|
|
$
|
2,013
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
|
Cost of
revenues
|
|
Operating
expenses
|
|
Cost of
revenues
|
|
Operating
expenses
|
|
Separation
benefits
|
$
|
15,479
|
|
|
$
|
17,215
|
|
|
$
|
21,805
|
|
|
$
|
19,539
|
|
|
Accelerated
depreciation and product discontinuation
charges
|
35,177
|
|
|
—
|
|
|
59,805
|
|
|
398
|
|
|
Other
|
6,801
|
|
|
4,672
|
|
|
3,757
|
|
|
14,774
|
|
|
Total
|
$
|
57,457
|
|
|
$
|
21,887
|
|
|
$
|
85,367
|
|
|
$
|
34,711
|
|
|
|
|
(6)
|
To exclude
litigation-related settlement charges, reimbursements 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
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Goodwill impairment
charges
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
391,000
|
|
|
$
|
288,745
|
|
|
Other intangible
asset impairment charges
|
140,609
|
|
|
78,300
|
|
|
217,576
|
|
|
674,177
|
|
|
Property, plant and
equipment impairment charges
|
1,608
|
|
|
16,624
|
|
|
4,824
|
|
|
61,008
|
|
|
Total
asset impairment charges
|
$
|
142,217
|
|
|
$
|
94,924
|
|
|
$
|
613,400
|
|
|
$
|
1,023,930
|
|
|
|
|
(8)
|
Adjustments for
acquisition and integration items primarily relate to various
acquisitions. Amounts included the following (in
thousands):
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Integration costs
(primarily third-party consulting fees)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,476
|
|
|
Acquisition
costs
|
519
|
|
|
—
|
|
|
1,553
|
|
|
—
|
|
|
Other
|
—
|
|
|
1,201
|
|
|
—
|
|
|
3,661
|
|
|
Total
|
$
|
519
|
|
|
$
|
1,201
|
|
|
$
|
1,553
|
|
|
$
|
8,137
|
|
|
|
|
(9)
|
To exclude the impact
of changes in the fair value of contingent consideration resulting
from changes in market conditions impacting the commercial
potential of the underlying products.
|
|
|
|
(10)
|
To exclude the loss
on the extinguishment of debt associated with our April 2017
refinancing.
|
|
|
|
(11)
|
Other adjustments
included the following (in thousands):
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
|
Operating
expenses
|
|
Other non-
operating
expenses
|
|
Operating
expenses
|
|
Other non-
operating
expenses
|
|
Foreign currency
impact related to the re-measurement
of intercompany debt instruments
|
$
|
—
|
|
|
$
|
1,528
|
|
|
$
|
—
|
|
|
$
|
3,005
|
|
|
(Gain) loss on sale
of business and other assets
|
—
|
|
|
(177)
|
|
|
—
|
|
|
—
|
|
|
Other
miscellaneous
|
—
|
|
|
2
|
|
|
—
|
|
|
30
|
|
|
Total
|
$
|
—
|
|
|
$
|
1,353
|
|
|
$
|
—
|
|
|
$
|
3,035
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
|
Operating
expenses
|
|
Other non-
operating
expenses
|
|
Operating
expenses
|
|
Other non-
operating
expenses
|
|
Foreign currency
impact related to the re-measurement
of intercompany debt instruments
|
$
|
—
|
|
|
$
|
(1,560)
|
|
|
$
|
—
|
|
|
$
|
(2,922)
|
|
|
(Gain) loss on sale
of business and other assets
|
—
|
|
|
(24,014)
|
|
|
—
|
|
|
—
|
|
|
Other
miscellaneous
|
(630)
|
|
|
(3,704)
|
|
|
—
|
|
|
1,789
|
|
|
Total
|
$
|
(630)
|
|
|
$
|
(29,278)
|
|
|
$
|
—
|
|
|
$
|
(1,133)
|
|
|
|
|
(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 in the Condensed Consolidated Statement of
Operations.
|
|
|
|
(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
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
GAAP EPS
|
|
224,132
|
|
|
223,299
|
|
|
223,829
|
|
223,157
|
|
Non-GAAP
EPS
|
|
232,358
|
|
|
224,216
|
|
|
228,195
|
|
223,779
|
|
|
|
(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, net per the Consolidated Statement 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 September 30,
2018 (in thousands) and the calculation of our Net Debt Leverage
Ratio (non-GAAP):
|
|
|
Twelve Months
Ended
September 30,
2018
|
|
|
Net loss
(GAAP)
|
$
|
(1,107,978)
|
|
|
Income tax
benefit
|
(128,047)
|
|
|
Interest expense,
net
|
512,857
|
|
|
Depreciation and
amortization (15)
|
698,646
|
|
|
EBITDA
(non-GAAP)
|
$
|
(24,522)
|
|
|
|
|
Inventory step-up and
other cost savings
|
$
|
370
|
|
|
Upfront and
milestone-related payments
|
45,558
|
|
|
Inventory reserve
increase from restructuring
|
8,576
|
|
|
Separation benefits
and other restructuring
|
158,036
|
|
|
Certain
litigation-related and other contingencies, net
|
215,376
|
|
|
Asset impairment
charges
|
743,846
|
|
|
Acquisition-related
and integration costs
|
1,553
|
|
|
Fair value of
contingent consideration
|
38,106
|
|
|
Loss on
extinguishment of debt
|
—
|
|
|
Share-based
compensation
|
53,619
|
|
|
Other income,
net
|
(39,396)
|
|
|
Other
adjustments
|
(926)
|
|
|
Discontinued
operations, net of tax
|
140,109
|
|
|
Adjusted
EBITDA (non-GAAP)
|
$
|
1,340,305
|
|
|
|
|
Calculation of Net
Debt:
|
|
|
Debt
|
$
|
8,262,762
|
|
|
Cash (excluding
Restricted Cash)
|
1,118,885
|
|
|
Net Debt
(non-GAAP)
|
$
|
7,143,877
|
|
|
|
|
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, loss on extinguishment of debt,
adjustments to inventory and other charges reflected in the
reconciliation of historic numbers, the amount 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
484-216-0000.