DUBLIN, May 5, 2022
/CNW/ -- Endo International plc (NASDAQ: ENDP) today reported
financial results for the first-quarter ended March 31, 2022
and provided second-quarter 2022 financial guidance.
"Despite challenging market dynamics for VASOSTRICT®,
our first-quarter financial performance was in-line with our
expectations with growth in our Branded Specialty Products
portfolio driven by XIAFLEX® and our Generics segment
driven by varenicline, the only FDA approved generic for
Chantix®," said Blaise
Coleman, Endo's President and Chief Executive Officer. "As
we manage through the VASOSTRICT® loss of exclusivity
over the near term, we remain focused on investing to advance our
product portfolio for the long term. This includes executing on our
XIAFLEX® maximization initiative, furthering our
commitment to making QWO® the cornerstone treatment for
cellulite through the expected launch of a new clinical study later
this quarter, and bolstering our sterile injectables product
pipeline with our recently announced acquisition."
FIRST-QUARTER
FINANCIAL PERFORMANCE
|
(in thousands,
except per share amounts)
|
|
|
Three Months Ended March 31,
|
|
|
|
2022
|
|
2021
|
|
Change
|
Total Revenues,
Net
|
$
652,259
|
|
$
717,919
|
|
(9) %
|
Reported (Loss) Income
from Continuing Operations
|
$
(65,300)
|
|
$
47,059
|
|
NM
|
Reported Diluted
Weighted Average Shares
|
233,879
|
|
238,671
|
|
(2) %
|
Reported Diluted Net
(Loss) Income per Share from Continuing Operations
|
$
(0.28)
|
|
$
0.20
|
|
NM
|
Reported Net (Loss)
Income
|
$
(71,974)
|
|
$
41,524
|
|
NM
|
Adjusted Income from
Continuing Operations (2)(3)
|
$
155,939
|
|
$
174,917
|
|
(11) %
|
Adjusted Diluted
Weighted Average Shares (1)(2)
|
236,716
|
|
238,671
|
|
(1) %
|
Adjusted Diluted Net
Income per Share from Continuing Operations (2)(3)
|
$
0.66
|
|
$
0.73
|
|
(10) %
|
Adjusted EBITDA
(2)(3)
|
$
310,926
|
|
$
364,715
|
|
(15) %
|
__________
|
(1)
|
Reported Diluted Net
(Loss) Income 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.
|
(2)
|
The information
presented in the table above includes non-GAAP financial measures
such as Adjusted Income from Continuing Operations, Adjusted
Diluted Weighted Average Shares, Adjusted Diluted Net Income per
Share from Continuing Operations and Adjusted EBITDA. Refer to the
"Supplemental Financial Information" section below for
reconciliations of certain non-GAAP financial measures to the most
directly comparable GAAP financial measures.
|
(3)
|
Effective January 1,
2022, these non-GAAP financial measures now include acquired
in-process research and development charges which were previously
excluded under our legacy non-GAAP policy. This change has been
applied retrospectively to all periods presented. Refer to note
(14) in the "Notes to the Reconciliations of GAAP and Non-GAAP
Financial Measures" section below for additional
discussion.
|
CONSOLIDATED RESULTS
Total revenues were $652 million
in first-quarter 2022, a decrease of 9% compared to $718 million during the same period in 2021. This
decrease was primarily attributable to decreased revenues from our
Sterile Injectables segment, partially offset by increased revenues
from our Generic Pharmaceuticals segment and the Specialty Products
portfolio of our Branded Pharmaceuticals segment.
Reported loss from continuing operations in first-quarter 2022
was $65 million compared to reported
income from continuing operations of $47
million during the same period in 2021. This decrease was
primarily due to decreased revenues and increased operating
expenses related to our investment in consumer marketing efforts
supporting XIAFLEX® as well as higher
litigation-related costs and asset impairment charges. Reported
diluted net loss per share from continuing operations in
first-quarter 2022 was $0.28 compared
to reported diluted net income per share from continuing operations
in first-quarter 2021 of $0.20.
Adjusted income from continuing operations in first-quarter 2022
was $156 million compared to
$175 million in first-quarter 2021.
This result was primarily attributable to decreased revenues.
Adjusted diluted net income per share from continuing operations in
first-quarter 2022 was $0.66 compared
to $0.73 in first-quarter 2021.
BRANDED PHARMACEUTICALS SEGMENT
First-quarter 2022 Branded Pharmaceuticals segment revenues were
$205 million, a decrease of 1%
compared to $207 million during
first-quarter 2021.
Specialty Products revenues increased 4% to $149 million in first-quarter 2022 compared to
$143 million in first-quarter 2021, with sales of
XIAFLEX® increasing 4% to $99
million compared to sales of $95 million in
first-quarter 2021. Established Products revenues decreased 12% to
$56 million in first-quarter 2022
compared to $63 million in
first-quarter 2021, driven primarily by ongoing generic
competition.
STERILE INJECTABLES SEGMENT
First-quarter 2022 Sterile Injectables segment revenues were
$240 million, a decrease of 22%
compared to $309 million during first-quarter 2021. This was
primarily attributable to decreased VASOSTRICT® revenues
due to generic competition as well as lower overall demand as
COVID-19 related hospitalizations decline.
GENERIC PHARMACEUTICALS SEGMENT
First-quarter 2022 Generic Pharmaceuticals segment revenues were
$186 million, an increase of 3% compared to $181 million
during first-quarter 2021. This increase was primarily attributable
to revenues from varenicline tablets, the only FDA-approved generic
version of Chantix®, which launched during third-quarter
2021, partially offset by competitive pressure on certain other
generic products.
INTERNATIONAL PHARMACEUTICALS SEGMENT
First-quarter 2022 International Pharmaceuticals segment
revenues were $21 million compared to $22 million during
first-quarter 2021.
SECOND-QUARTER 2022 FINANCIAL GUIDANCE
Due to uncertainties in certain key assumptions, Endo is only
providing financial guidance for the second quarter ending
June 30, 2022 at this time. These
statements are forward-looking, and actual results may differ
materially from Endo's expectations, as further discussed below
under the heading "Cautionary Note Regarding Forward-Looking
Statements."
As previously communicated, beginning with the financial
guidance provided in connection with its first-quarter 2022
financial reporting, Endo now includes in its forward-looking
financial guidance the impact of acquired in-process research and
development charges already incurred in the relevant period, or
expected to be incurred for transactions signed through a certain
date, but will not include any impact for costs which may be
incurred in connection with potential business development
activities entered after such date. The guidance provided below
includes estimated in-process research and development charges for
transactions signed through May 5,
2022, inclusive of the recently announced $35 million sterile injectable product
acquisition from Nevakar Injectables, Inc.
|
Second-Quarter 2022
|
Total Revenues,
Net
|
$500 -
$525M
|
Adjusted
EBITDA
|
$110 -
$125M
|
Adjusted Diluted Net
Income (Loss) per Share from Continuing Operations
|
($0.17) -
($0.15)
|
Assumptions:
|
|
Adjusted Gross
Margin
|
~67.0%
|
Adjusted Operating
Expenses as a Percentage of Total Revenues, Net
|
~46.5%
|
Adjusted Interest
Expense
|
~$143M
|
Adjusted Effective Tax
Rate
|
~1.0%
|
Adjusted Diluted
Weighted Average Shares
|
~235M
|
BALANCE SHEET, LIQUIDITY AND OTHER UPDATES
As of March 31, 2022, the Company had approximately
$1.4 billion in unrestricted cash;
$8.1 billion of debt; and a net debt
to adjusted EBITDA ratio of 4.7. These amounts reflect the
Company's repayment of approximately $180 million of senior
notes during the first quarter of 2022.
First-quarter 2022 net cash provided by operating activities was
$201 million compared to $244 million provided by operating activities
during the first-quarter 2021. This decrease was primarily
attributable to decreased revenues.
CONFERENCE CALL INFORMATION
Endo will conduct a conference call with financial analysts to
discuss this press release tomorrow, May 6,
2022, at 7:30 a.m. ET. The
dial-in number to access the call is U.S./Canada (866) 497-0462, International (678)
509-7598, and the passcode is 8947159.
Please dial in 10 minutes prior to the scheduled start time. A
replay of the call will be available from May 6, 2022 at
10:30 a.m. ET until 9:30 a.m. ET on
May 13, 2022 by dialing U.S./Canada (855) 859-2056 International (404)
537-3406, and entering the passcode 8947159.
A simultaneous webcast of the call can be accessed by visiting
https://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.
Chantix® is a registered trademark of Pfizer Inc.
FINANCIAL SCHEDULES
The following table presents Endo's unaudited Total revenues,
net for the three months ended March 31,
2022 and 2021 (dollars in thousands):
|
Three Months Ended March 31,
|
|
Percent
Growth
|
|
2022
|
|
2021
|
|
Branded Pharmaceuticals:
|
|
|
|
|
|
Specialty Products:
|
|
|
|
|
|
XIAFLEX®
|
$
99,484
|
|
$
95,270
|
|
4 %
|
SUPPRELIN® LA
|
28,830
|
|
28,028
|
|
3 %
|
Other Specialty (1)
|
20,744
|
|
20,032
|
|
4 %
|
Total Specialty
Products
|
$
149,058
|
|
$
143,330
|
|
4 %
|
Established Products:
|
|
|
|
|
|
PERCOCET®
|
$
26,175
|
|
$
25,625
|
|
2 %
|
TESTOPEL®
|
8,880
|
|
11,189
|
|
(21) %
|
Other Established (2)
|
20,748
|
|
26,491
|
|
(22) %
|
Total
Established Products
|
$
55,803
|
|
$
63,305
|
|
(12) %
|
Total Branded
Pharmaceuticals (3)
|
$
204,861
|
|
$
206,635
|
|
(1) %
|
Sterile Injectables:
|
|
|
|
|
|
VASOSTRICT®
|
$
155,890
|
|
$
223,946
|
|
(30) %
|
ADRENALIN®
|
33,823
|
|
29,437
|
|
15 %
|
Other Sterile Injectables (4)
|
50,315
|
|
55,362
|
|
(9) %
|
Total Sterile
Injectables (3)
|
$
240,028
|
|
$
308,745
|
|
(22) %
|
Total Generic
Pharmaceuticals (5)
|
$
185,944
|
|
$
180,873
|
|
3 %
|
Total International
Pharmaceuticals (6)
|
$
21,426
|
|
$
21,666
|
|
(1) %
|
Total revenues,
net
|
$
652,259
|
|
$
717,919
|
|
(9) %
|
__________
|
(1)
|
Products included
within Other Specialty include NASCOBAL® Nasal Spray,
AVEED® and QWO®.
|
(2)
|
Products included
within Other Established include, but are not limited to,
EDEX® and LIDODERM®.
|
(3)
|
Individual products
presented above represent the top two performing products in each
product category for the three months ended March 31, 2022 and/or
any product having revenues in excess of $25 million during any
quarterly period in 2022 or 2021.
|
(4)
|
Products included
within Other Sterile Injectables include ertapenem for injection,
APLISOL® and others.
|
(5)
|
The Generic
Pharmaceuticals segment is comprised of a portfolio of products
that are generic versions of branded products, are distributed
primarily through the same wholesalers, generally have no
intellectual property protection and are sold within the U.S.
During the three months ended March 31, 2022, varenicline tablets
(our generic version of Pfizer Inc.'s Chantix®), which
launched in September 2021, made up 10% of consolidated total
revenues. No other individual product within this segment has
exceeded 5% of consolidated total revenues for the periods
presented.
|
(6)
|
The International
Pharmaceuticals segment, which accounted for less than 5% of
consolidated total revenues for each of the periods presented,
includes a variety of specialty pharmaceutical products sold
outside the U.S., primarily in Canada through our operating company
Paladin Labs Inc.
|
The following table presents unaudited Condensed Consolidated
Statement of Operations data for the three months ended
March 31, 2022 and 2021 (in
thousands, except per share data):
|
Three Months Ended March 31,
|
|
2022
|
|
2021
|
TOTAL REVENUES,
NET
|
$
652,259
|
|
$
717,919
|
COSTS AND
EXPENSES:
|
|
|
|
Cost of revenues
|
273,215
|
|
305,293
|
Selling, general and administrative
|
227,161
|
|
187,174
|
Research and development
|
36,130
|
|
29,739
|
Acquired in-process research and development
|
2,900
|
|
—
|
Litigation-related and other contingencies, net
|
25,154
|
|
637
|
Asset impairment charges
|
19,953
|
|
3,309
|
Acquisition-related and integration items, net
|
(1,377)
|
|
(5,022)
|
Interest expense, net
|
134,949
|
|
134,341
|
Loss on extinguishment of debt
|
—
|
|
13,753
|
Other expense, net
|
1,289
|
|
912
|
(LOSS) INCOME FROM
CONTINUING OPERATIONS BEFORE INCOME TAX
|
$
(67,115)
|
|
$
47,783
|
INCOME TAX (BENEFIT)
EXPENSE
|
(1,815)
|
|
724
|
(LOSS) INCOME FROM
CONTINUING OPERATIONS
|
$
(65,300)
|
|
$
47,059
|
DISCONTINUED
OPERATIONS, NET OF TAX
|
(6,674)
|
|
(5,535)
|
NET (LOSS)
INCOME
|
$
(71,974)
|
|
$
41,524
|
NET (LOSS) INCOME PER
SHARE—BASIC:
|
|
|
|
Continuing operations
|
$
(0.28)
|
|
$
0.20
|
Discontinued operations
|
(0.03)
|
|
(0.02)
|
Basic
|
$
(0.31)
|
|
$
0.18
|
NET (LOSS) INCOME PER
SHARE—DILUTED:
|
|
|
|
Continuing operations
|
$
(0.28)
|
|
$
0.20
|
Discontinued operations
|
(0.03)
|
|
(0.03)
|
Diluted
|
$
(0.31)
|
|
$
0.17
|
WEIGHTED AVERAGE
SHARES:
|
|
|
|
Basic
|
233,879
|
|
230,551
|
Diluted
|
233,879
|
|
238,671
|
The following table presents unaudited Condensed
Consolidated Balance Sheet data at March 31, 2022 and
December 31, 2021 (in thousands):
|
March 31, 2022
|
|
December 31, 2021
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash equivalents
|
$ 1,413,150
|
|
$ 1,507,196
|
Restricted cash and cash equivalents
|
181,768
|
|
124,114
|
Accounts receivable
|
473,295
|
|
592,019
|
Inventories, net
|
283,826
|
|
283,552
|
Other current assets
|
140,753
|
|
207,705
|
Total current assets
|
$ 2,492,792
|
|
$ 2,714,586
|
TOTAL NON-CURRENT
ASSETS
|
5,954,419
|
|
6,052,829
|
TOTAL ASSETS
|
$ 8,447,211
|
|
$ 8,767,415
|
LIABILITIES AND SHAREHOLDERS'
DEFICIT
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts payable and accrued expenses, including legal
settlement accruals
|
$ 1,336,819
|
|
$ 1,417,892
|
Other current liabilities
|
39,323
|
|
212,070
|
Total current liabilities
|
$ 1,376,142
|
|
$ 1,629,962
|
LONG-TERM DEBT, LESS
CURRENT PORTION, NET
|
8,040,992
|
|
8,048,980
|
OTHER
LIABILITIES
|
341,075
|
|
332,459
|
SHAREHOLDERS'
DEFICIT
|
(1,310,998)
|
|
(1,243,986)
|
TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIT
|
$ 8,447,211
|
|
$ 8,767,415
|
The following table presents unaudited Condensed
Consolidated Statement of Cash Flow data for the three months ended
March 31, 2022 and 2021 (in
thousands):
|
Three Months Ended March 31,
|
|
2022
|
|
2021
|
OPERATING
ACTIVITIES:
|
|
|
|
Net (loss)
income
|
$
(71,974)
|
|
$
41,524
|
Adjustments to
reconcile Net (loss) income to Net cash provided by operating
activities:
|
|
|
|
Depreciation and amortization
|
106,315
|
|
118,485
|
Asset impairment charges
|
19,953
|
|
3,309
|
Other, including cash payments to claimants from Qualified
Settlement Funds
|
147,025
|
|
80,522
|
Net cash provided by operating
activities
|
$
201,319
|
|
$
243,840
|
INVESTING
ACTIVITIES:
|
|
|
|
Capital expenditures, excluding capitalized
interest
|
$
(23,025)
|
|
$
(16,733)
|
Acquisitions, including in-process research and development,
net of cash and restricted
cash acquired
|
(24,520)
|
|
—
|
Proceeds from sale of business and other assets,
net
|
541
|
|
818
|
Other
|
(1,840)
|
|
(1,133)
|
Net cash used in investing
activities
|
$
(48,844)
|
|
$
(17,048)
|
FINANCING
ACTIVITIES:
|
|
|
|
Payments on borrowings, net
|
$
(186,812)
|
|
$
(36,818)
|
Other
|
(2,386)
|
|
(10,532)
|
Net cash used in financing
activities
|
$
(189,198)
|
|
$
(47,350)
|
Effect of foreign
exchange rate
|
331
|
|
399
|
NET (DECREASE) INCREASE
IN CASH, CASH EQUIVALENTS, RESTRICTED CASH
AND RESTRICTED CASH EQUIVALENTS
|
$
(36,392)
|
|
$
179,841
|
CASH, CASH EQUIVALENTS,
RESTRICTED CASH AND RESTRICTED CASH
EQUIVALENTS, BEGINNING OF PERIOD
|
1,631,310
|
|
1,385,000
|
CASH, CASH EQUIVALENTS,
RESTRICTED CASH AND RESTRICTED CASH
EQUIVALENTS, END OF PERIOD
|
$ 1,594,918
|
|
$ 1,564,841
|
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 the
Company's 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.
As previously communicated, in response to views expressed by
the U.S. Securities and Exchange Commission, the Company has,
effective January 1, 2022, revised
its definition of its adjusted financial measures to no longer
exclude Acquired in-process research and development charges
(representing the research and development costs it had previously
labeled as "Upfront and milestone payments to partners"). As a
result of this change, the Company's adjusted financial measures
now reflect the impact of those transactions. The inclusion of the
impact of these transactions, which may occur from time to time,
could result in significant, but temporary, fluctuations in both
our GAAP and Non-GAAP financial measures in the period(s) in which
they are incurred. These charges also are not indicative of the
underlying performance of our operations during the period. This
change was applied retrospectively to all periods presented herein.
Refer to footnote (14) in the "Notes to the Reconciliations of GAAP
and Non-GAAP Financial Measures" section below for additional
discussion.
Reconciliation of EBITDA and Adjusted EBITDA
(non-GAAP)
The following table provides a reconciliation of Net (loss)
income (GAAP) to Adjusted EBITDA (non-GAAP) for the three months
ended March 31, 2022 and 2021 (in
thousands):
|
Three Months Ended March 31,
|
|
2022
|
|
2021
|
Net (loss) income
(GAAP)
|
$
(71,974)
|
|
$
41,524
|
Income tax (benefit) expense
|
(1,815)
|
|
724
|
Interest expense, net
|
134,949
|
|
134,341
|
Depreciation and amortization (1)
|
102,638
|
|
111,579
|
EBITDA
(non-GAAP)
|
$
163,798
|
|
$
288,168
|
Amounts related to continuity and separation benefits, cost
reductions and strategic review
initiatives (2)
|
57,649
|
|
23,720
|
Certain litigation-related and other contingencies, net
(3)
|
25,154
|
|
637
|
Certain legal costs (4)
|
32,732
|
|
19,276
|
Asset impairment charges (5)
|
19,953
|
|
3,309
|
Acquisition-related and integration costs (6)
|
—
|
|
431
|
Fair value of contingent consideration (7)
|
(1,377)
|
|
(5,453)
|
Loss on extinguishment of debt (8)
|
—
|
|
13,753
|
Share-based compensation (1)
|
4,929
|
|
9,993
|
Other expense, net (9)
|
1,289
|
|
912
|
Other (10)
|
125
|
|
4,434
|
Discontinued operations, net of tax (11)
|
6,674
|
|
5,535
|
Adjusted EBITDA
(non-GAAP) (14)
|
$
310,926
|
|
$
364,715
|
Reconciliation of Adjusted Income from Continuing Operations
(non-GAAP)
The following table provides a reconciliation of the Company's
(Loss) income from continuing operations (GAAP) to Adjusted income
from continuing operations (non-GAAP) for the three months ended
March 31, 2022 and 2021 (in
thousands):
|
Three Months Ended March 31,
|
|
2022
|
|
2021
|
(Loss) income from
continuing operations (GAAP)
|
$
(65,300)
|
|
$
47,059
|
Non-GAAP
adjustments:
|
|
|
|
Amortization of intangible assets (12)
|
90,234
|
|
95,130
|
Amounts related to continuity and separation benefits, cost
reductions and strategic review initiatives (2)
|
57,649
|
|
23,720
|
Certain litigation-related and other contingencies, net
(3)
|
25,154
|
|
637
|
Certain legal costs (4)
|
32,732
|
|
19,276
|
Asset impairment charges (5)
|
19,953
|
|
3,309
|
Acquisition-related and integration costs (6)
|
—
|
|
431
|
Fair value of contingent consideration (7)
|
(1,377)
|
|
(5,453)
|
Loss on extinguishment of debt (8)
|
—
|
|
13,753
|
Other (10)
|
1,323
|
|
5,582
|
Tax
adjustments (13)
|
(4,429)
|
|
(28,527)
|
Adjusted income from
continuing operations (non-GAAP) (14)
|
$
155,939
|
|
$
174,917
|
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,
2022 and 2021 (in thousands, except per share data):
Three Months Ended March 31,
2022
|
|
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
(benefit)
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 (15)
|
Reported
(GAAP)
|
$
652,259
|
|
$
273,215
|
|
$
379,044
|
|
58.1 %
|
|
$
309,921
|
|
47.5 %
|
|
$
69,123
|
|
10.6 %
|
|
$
136,238
|
|
$
(67,115)
|
|
$
(1,815)
|
|
2.7 %
|
|
$
(65,300)
|
|
$
(6,674)
|
|
$
(71,974)
|
|
$ (0.28)
|
Items impacting
comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets (12)
|
—
|
|
(90,234)
|
|
90,234
|
|
|
|
—
|
|
|
|
90,234
|
|
|
|
—
|
|
90,234
|
|
—
|
|
|
|
90,234
|
|
—
|
|
90,234
|
|
|
Amounts related to continuity and separation benefits, cost
reductions and strategic review initiatives (2)
|
—
|
|
(15,737)
|
|
15,737
|
|
|
|
(41,912)
|
|
|
|
57,649
|
|
|
|
—
|
|
57,649
|
|
—
|
|
|
|
57,649
|
|
—
|
|
57,649
|
|
|
Certain litigation-related and other contingencies, net
(3)
|
—
|
|
—
|
|
—
|
|
|
|
(25,154)
|
|
|
|
25,154
|
|
|
|
—
|
|
25,154
|
|
—
|
|
|
|
25,154
|
|
—
|
|
25,154
|
|
|
Certain legal costs (4)
|
—
|
|
—
|
|
—
|
|
|
|
(32,732)
|
|
|
|
32,732
|
|
|
|
—
|
|
32,732
|
|
—
|
|
|
|
32,732
|
|
—
|
|
32,732
|
|
|
Asset impairment charges (5)
|
—
|
|
—
|
|
—
|
|
|
|
(19,953)
|
|
|
|
19,953
|
|
|
|
—
|
|
19,953
|
|
—
|
|
|
|
19,953
|
|
—
|
|
19,953
|
|
|
Fair value of contingent consideration (7)
|
—
|
|
—
|
|
—
|
|
|
|
1,377
|
|
|
|
(1,377)
|
|
|
|
—
|
|
(1,377)
|
|
—
|
|
|
|
(1,377)
|
|
—
|
|
(1,377)
|
|
|
Other (10)
|
—
|
|
(125)
|
|
125
|
|
|
|
—
|
|
|
|
125
|
|
|
|
(1,198)
|
|
1,323
|
|
—
|
|
|
|
1,323
|
|
—
|
|
1,323
|
|
|
Tax
adjustments (13)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
4,429
|
|
|
|
(4,429)
|
|
—
|
|
(4,429)
|
|
|
Discontinued operations, net of tax (11)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
6,674
|
|
6,674
|
|
|
After considering items
(non-GAAP) (14)
|
$
652,259
|
|
$
167,119
|
|
$
485,140
|
|
74.4 %
|
|
$
191,547
|
|
29.4 %
|
|
$
293,593
|
|
45.0 %
|
|
$
135,040
|
|
$
158,553
|
|
$ 2,614
|
|
1.6 %
|
|
$
155,939
|
|
$
—
|
|
$
155,939
|
|
$ 0.66
|
Three Months Ended March 31,
2021
|
|
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
expense
|
|
Effective
tax rate
|
|
Income
from
continuing
operations
|
|
Discontinued
operations,
net of tax
|
|
Net
income
|
|
Diluted net
income per
share from
continuing
operations (15)
|
Reported
(GAAP)
|
$
717,919
|
|
$
305,293
|
|
$
412,626
|
|
57.5 %
|
|
$
215,837
|
|
30.1 %
|
|
$
196,789
|
|
27.4 %
|
|
$
149,006
|
|
$
47,783
|
|
$
724
|
|
1.5 %
|
|
$
47,059
|
|
$
(5,535)
|
|
$
41,524
|
|
$ 0.20
|
Items impacting
comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets (12)
|
—
|
|
(95,130)
|
|
95,130
|
|
|
|
—
|
|
|
|
95,130
|
|
|
|
—
|
|
95,130
|
|
—
|
|
|
|
95,130
|
|
—
|
|
95,130
|
|
|
Amounts related to continuity and separation benefits, cost
reductions and strategic review initiatives (2)
|
—
|
|
(15,296)
|
|
15,296
|
|
|
|
(8,424)
|
|
|
|
23,720
|
|
|
|
—
|
|
23,720
|
|
—
|
|
|
|
23,720
|
|
—
|
|
23,720
|
|
|
Certain litigation-related and other contingencies, net
(3)
|
—
|
|
—
|
|
—
|
|
|
|
(637)
|
|
|
|
637
|
|
|
|
—
|
|
637
|
|
—
|
|
|
|
637
|
|
—
|
|
637
|
|
|
Certain legal costs (4)
|
—
|
|
—
|
|
—
|
|
|
|
(19,276)
|
|
|
|
19,276
|
|
|
|
—
|
|
19,276
|
|
—
|
|
|
|
19,276
|
|
—
|
|
19,276
|
|
|
Asset impairment charges (5)
|
—
|
|
—
|
|
—
|
|
|
|
(3,309)
|
|
|
|
3,309
|
|
|
|
—
|
|
3,309
|
|
—
|
|
|
|
3,309
|
|
—
|
|
3,309
|
|
|
Acquisition-related and integration costs (6)
|
—
|
|
—
|
|
—
|
|
|
|
(431)
|
|
|
|
431
|
|
|
|
—
|
|
431
|
|
—
|
|
|
|
431
|
|
—
|
|
431
|
|
|
Fair value of contingent consideration (7)
|
—
|
|
—
|
|
—
|
|
|
|
5,453
|
|
|
|
(5,453)
|
|
|
|
—
|
|
(5,453)
|
|
—
|
|
|
|
(5,453)
|
|
—
|
|
(5,453)
|
|
|
Loss on extinguishment of debt (8)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(13,753)
|
|
13,753
|
|
—
|
|
|
|
13,753
|
|
—
|
|
13,753
|
|
|
Other (10)
|
—
|
|
(526)
|
|
526
|
|
|
|
(3,909)
|
|
|
|
4,435
|
|
|
|
(1,147)
|
|
5,582
|
|
—
|
|
|
|
5,582
|
|
—
|
|
5,582
|
|
|
Tax
adjustments (13)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
28,527
|
|
|
|
(28,527)
|
|
—
|
|
(28,527)
|
|
|
Discontinued operations, net of tax (11)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
5,535
|
|
5,535
|
|
|
After considering items
(non-GAAP) (14)
|
$
717,919
|
|
$
194,341
|
|
$
523,578
|
|
72.9 %
|
|
$
185,304
|
|
25.8 %
|
|
$
338,274
|
|
47.1 %
|
|
$
134,106
|
|
$
204,168
|
|
$
29,251
|
|
14.3 %
|
|
$
174,917
|
|
$
—
|
|
$
174,917
|
|
$ 0.73
|
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, 2022
and 2021 are as follows:
(1)
|
Depreciation and
amortization and Share-based compensation amounts per the Adjusted
EBITDA reconciliations do not include amounts reflected in other
lines of the reconciliations, including Amounts related to
continuity and separation benefits, cost reductions and strategic
review initiatives.
|
(2)
|
Adjustments for amounts
related to continuity and separation benefits, cost reductions and
strategic review initiatives included the following (in
thousands):
|
|
Three Months Ended March 31,
|
|
2022
|
|
2021
|
|
Cost of revenues
|
|
Operating
expenses
|
|
Cost of revenues
|
|
Operating
expenses
|
Continuity and
separation benefits
|
$
5,252
|
|
$
27,075
|
|
$
5,192
|
|
$
3,352
|
Accelerated
depreciation
|
2,164
|
|
1,513
|
|
5,054
|
|
1,853
|
Other, including
strategic review initiatives
|
8,321
|
|
13,324
|
|
5,050
|
|
3,219
|
Total
|
$
15,737
|
|
$
41,912
|
|
$
15,296
|
|
$
8,424
|
|
|
|
The amounts in the
tables above include adjustments related to previously announced
restructuring activities, certain continuity and transitional
compensation arrangements, certain other cost reduction initiatives
and certain strategic review initiatives.
|
(3)
|
To exclude adjustments
to accruals for litigation-related settlement charges and certain
settlement proceeds related to suits filed by
subsidiaries.
|
(4)
|
To exclude
opioid-related legal expenses.
|
(5)
|
Adjustments for asset
impairment charges included the following (in
thousands):
|
|
Three Months Ended March 31,
|
|
2022
|
|
2021
|
Other intangible asset
impairment charges
|
$
19,953
|
|
$
2,882
|
Property, plant and
equipment impairment charges
|
—
|
|
427
|
Total
|
$
19,953
|
|
$
3,309
|
|
|
(6)
|
To exclude integration
costs.
|
(7)
|
To exclude the impact
of changes in the fair value of contingent consideration
liabilities resulting from changes to 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 the Company could incur, related
contingent obligations.
|
(8)
|
To exclude the loss on
the extinguishment of debt associated with the Company's March 2021
refinancing transactions.
|
(9)
|
To exclude Other
expense, net per the Condensed Consolidated Statements of
Operations.
|
(10)
|
The "Other" rows
included in each of the above reconciliations of GAAP financial
measures to non-GAAP financial measures (except for the
reconciliations of Net (loss) income (GAAP) to Adjusted EBITDA
(non-GAAP)) include the following (in thousands):
|
|
Three Months Ended March 31,
|
|
2022
|
|
2021
|
|
Cost of revenues
|
|
Operating
expenses
|
|
Other non-
operating
expenses
|
|
Cost of revenues
|
|
Operating
expenses
|
|
Other non-
operating
expenses
|
Foreign currency
impact
related to the re-
measurement of
intercompany debt
instruments
|
$
—
|
|
$
—
|
|
$
1,198
|
|
$
—
|
|
$
—
|
|
$
1,147
|
Debt modification
costs
|
—
|
|
—
|
|
—
|
|
—
|
|
3,879
|
|
—
|
Other
miscellaneous
|
125
|
|
—
|
|
—
|
|
526
|
|
30
|
|
—
|
Total
|
$
125
|
|
$
—
|
|
$
1,198
|
|
$
526
|
|
$
3,909
|
|
$
1,147
|
|
|
|
The "Other" row
included in the reconciliations of Net (loss) income (GAAP) to
Adjusted EBITDA (non-GAAP) primarily relates to the items
enumerated in the foregoing "Cost of revenues" and "Operating
expenses" columns.
|
(11)
|
To exclude the results
of the businesses reported as discontinued operations, net of
tax.
|
(12)
|
To exclude amortization
expense related to intangible assets.
|
(13)
|
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.
|
(14)
|
Effective January 1,
2022, these non-GAAP financial measures now include acquired
in-process research and development charges which were previously
excluded under our legacy non-GAAP policy. This change has been
applied retrospectively to all periods presented. Amounts of
Acquired in-process research and development charges included
within these non-GAAP financial measures are set forth in the table
below (in thousands):
|
|
Three Months Ended March 31,
|
|
Twelve Months
Ended March 31,
|
|
2022
|
|
2021
|
|
2022
|
Acquired in-process
research and development charges
|
$
2,900
|
|
$
—
|
|
$
28,020
|
|
|
(15)
|
Calculated as income or
loss 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,
|
|
2022
|
|
2021
|
GAAP
|
233,879
|
|
238,671
|
Non-GAAP
Adjusted
|
236,716
|
|
238,671
|
Reconciliation of Net Debt Leverage Ratio
(non-GAAP)
The following table provides a reconciliation of Net loss (GAAP)
to Adjusted EBITDA (non-GAAP) for the twelve months ended
March 31, 2022 (in thousands) and the calculation of the
Company's Net Debt Leverage Ratio (non-GAAP):
|
Twelve Months
Ended March 31,
2022
|
Net loss
(GAAP)
|
$
(726,743)
|
Income tax expense
|
19,939
|
Interest expense, net
|
562,961
|
Depreciation and amortization (1)
|
423,439
|
EBITDA
(non-GAAP)
|
$
279,596
|
Amounts related to continuity and separation benefits, cost
reductions and strategic review initiatives
|
124,841
|
Certain litigation-related and other contingencies,
net
|
370,012
|
Certain legal costs
|
149,604
|
Asset impairment charges
|
431,621
|
Acquisition-related and integration costs
|
(17)
|
Fair value of contingent consideration
|
(4,717)
|
Share-based compensation (1)
|
24,163
|
Other income, net
|
(19,397)
|
Other
|
904
|
Discontinued operations, net of tax
|
45,303
|
Adjusted EBITDA
(non-GAAP) (14)
|
$ 1,401,913
|
|
|
Calculation of Net Debt:
|
|
Debt
|
$ 8,067,108
|
Cash (excluding
Restricted Cash)
|
1,413,150
|
Net
Debt (non-GAAP)
|
$ 6,653,958
|
|
|
Calculation of Net Debt
Leverage:
|
|
Net Debt Leverage Ratio
(non-GAAP) (a)
|
4.7
|
__________
|
(a)
|
As further discussed in
footnote (14) in the "Notes to the Reconciliations of GAAP and
Non-GAAP Financial Measures" section, effective January 1, 2022,
Adjusted EBITDA now includes acquired in-process research and
development charges which were previously excluded under our legacy
non-GAAP policy. The inclusion of these amounts did not
significantly impact the calculated Net Debt Leverage Ratio for the
twelve-month period ended March 31, 2022. However, to the extent we
incur additional acquired in-process research and development
charges in the future, it could result in increases to this
ratio.
|
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 (NASDAQ: ENDP) is a specialty pharmaceutical company
committed to helping everyone we serve live their best life through
the delivery of quality, life-enhancing therapies. Our decades of
proven success come from a global team of passionate employees
collaborating to bring the best treatments forward. Together, we
boldly transform insights into treatments benefiting those who need
them, when they need them. Learn more at www.endo.com or connect
with us on LinkedIn.
Cautionary Note Regarding Forward-Looking
Statements
Certain information in this press release may be considered
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and any applicable
Canadian securities legislation, including, but not limited to, the
statements by Mr. Coleman, as well as other statements regarding
product demand or revenue; plans for investments; generic
competition; the advancement of our product portfolio; financial
guidance or outlook for the second quarter of 2022, full-year 2022
or any other future periods; and any other statements that refer to
our expected, estimated or anticipated future results or that do
not relate solely to historical facts. Statements including words
or phrases such as "believe," "expect," "anticipate," "intend,"
"estimate," "plan," "will," "may," "look forward," "intend,"
"guidance," "future," "potential" or similar expressions are
forward-looking statements. 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 and adversely from
current expectations based on a number of factors affecting Endo's
businesses, including, among other things, the following: the
outcome of our strategic review, contingency planning and any
potential restructuring or bankruptcy filing; the timing, impact or
results of any pending or future litigation, investigations,
proceedings or claims, including opioid, tax and antitrust related
matters; actual or contingent liabilities; settlement discussions
or negotiations; the impact of competition, including the loss of
exclusivity and generic competition for VASOSTRICT®; our
ability to satisfy judgments or settlements or pursue appeals
including bonding requirements; our ability to adjust to changing
market conditions; our ability to attract and retain key personnel;
our inability to maintain compliance with financial covenants and
operating obligations which would expose us to potential events of
default under our outstanding indebtedness; our ability to incur
additional debt or equity financing for working capital, capital
expenditures, business development, debt service requirements,
acquisitions or general corporate or other purposes; our ability to
refinance our indebtedness; a significant reduction in our
short-term or long-term revenues which could cause us to be unable
to fund our operations and liquidity needs or repay indebtedness;
supply chain interruptions or difficulties; changes in competitive
or market conditions; changes in legislation or regulatory
developments; our ability to obtain and maintain adequate
protection for our 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; our ability to integrate any newly acquired products into
our portfolio and achieve any financial or commercial expectations;
the impact that known and unknown side effects may have on market
perception and consumer preference for our products; the
effectiveness of advertising and other promotional campaigns; the
timely and successful implementation of any strategic initiatives;
unfavorable publicity regarding the misuse of opioids; the
uncertainty associated with the identification of and successful
consummation and execution of external corporate development
initiatives and strategic partnering transactions; our ability to
advance our strategic priorities, develop our product pipeline and
continue to develop the market for QWO® and other
products; and our 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 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, the
impact of and response to the ongoing COVID-19 pandemic and the
impact of continued economic volatility, can materially affect our
results. The occurrence or possibility of any such result has
caused us to engage, and may result in further engagement in
strategic reviews that ultimately may result in our pursuing one or
more significant corporate transactions or other remedial measures,
including on a preventative or proactive basis. Those remedial
measures could include a potential bankruptcy filing (which, if it
occurred, would subject us to additional risks and uncertainties
that could adversely affect our business prospects and ability to
continue as a going concern), corporate reorganization or
restructuring activities involving all or a portion of our
business, asset sales or other divestitures, cost-saving
initiatives or other corporate realignments, seeking strategic
partnerships and exiting certain product or geographic markets.
Some of these measures could take significant time to implement and
others may require judicial or other third-party approval. Any such
actions may be complex, could entail significant costs and charges
or could otherwise negatively impact shareholder value, and there
can be no assurance that we will be able to accomplish any of these
alternatives on terms acceptable to us, or at all, or that they
will result in their intended benefits. 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 risk factors, including those
referenced above, 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 or other
filings with the U.S. Securities and Exchange Commission. 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