DUBLIN, May 8, 2023 /PRNewswire/ -- Endo International
plc (OTC: ENDPQ) today reported financial results for the
first-quarter ended March 31, 2023.
FIRST-QUARTER FINANCIAL PERFORMANCE
(in thousands, except per share amounts)
|
Three Months Ended
March 31,
|
|
|
|
2023
|
|
2022
|
|
Change
|
|
Total Revenues,
Net
|
$
515,267
|
|
$
652,259
|
|
(21) %
|
|
Reported Loss from
Continuing Operations
|
$
(2,823)
|
|
$
(65,300)
|
|
(96) %
|
|
Reported Diluted
Weighted Average Shares
|
235,216
|
|
233,879
|
|
1 %
|
|
Reported Diluted Net
Loss per Share from Continuing Operations
|
$
(0.01)
|
|
$
(0.28)
|
|
(96) %
|
|
Reported Net
Loss
|
$
(3,279)
|
|
$
(71,974)
|
|
(95) %
|
|
Adjusted Income from
Continuing Operations (2)(3)
|
$
193,328
|
|
$
155,939
|
|
24 %
|
|
Adjusted Diluted
Weighted Average Shares (1)(2)
|
236,105
|
|
236,716
|
|
— %
|
|
Adjusted Diluted Net
Income per Share from Continuing Operations (2)(3)
|
$
0.82
|
|
$
0.66
|
|
24 %
|
|
Adjusted EBITDA
(2)(3)
|
$
209,030
|
|
$
310,926
|
|
(33) %
|
|
__________
|
|
(1)
|
Reported Diluted Net
Loss per Share from Continuing Operations is computed based on
weighted average shares outstanding and, if there is income from
continuing operations during the period, the dilutive impact of
ordinary share equivalents outstanding during the period. In the
case of Adjusted Diluted Weighted Average Shares, Adjusted Income
from Continuing Operations is used in determining whether to
include such dilutive impact.
|
|
(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 Endo's legacy non-GAAP policy. Refer to note (13) in
the "Notes to the Reconciliations of GAAP and Non-GAAP Financial
Measures" section below for additional discussion.
|
CONSOLIDATED FINANCIAL RESULTS
Total revenues were $515 million
in first-quarter 2023, a decrease of 21% compared to $652 million in first-quarter 2022. This decrease
was primarily attributable to decreased revenues from the Sterile
Injectables segment, partially offset by increased revenues from
the Generic Pharmaceuticals segment.
Reported loss from continuing operations in first-quarter 2023
was $3 million compared to
$65 million in first-quarter 2022.
Reported diluted net loss per share from continuing operations in
first-quarter 2023 was $0.01 compared
to $0.28 in first-quarter 2022. These
results were primarily due to lower interest expenses as a result
of the Chapter 11 filing as well as lower operating expenses, asset
impairment and litigation-related charges, partially offset by
decreased revenues and increased expenses related to the Chapter 11
reorganization process.
Adjusted income from continuing operations in first-quarter 2023
was $193 million compared to
$156 million in first-quarter 2022.
Adjusted diluted net income per share from continuing operations in
first-quarter 2023 was $0.82 compared
to $0.66 in first-quarter 2022. These
results were primarily driven by lower interest and adjusted
operating expenses, which were partially offset by decreased
revenues.
BRANDED PHARMACEUTICALS SEGMENT
First-quarter 2023 Branded Pharmaceuticals segment revenues were
$198 million, a decrease of 4%
compared to $205 million during
first-quarter 2022.
Specialty Products revenues decreased 5% to $142 million in first-quarter 2023 compared to
$149 million in first-quarter 2022. This change was
primarily due to a decrease in Supprelin® LA mainly
driven by lower average net selling price as a result of business
mix. First-quarter 2023 XIAFLEX® revenues were
$97 million, a 3% decrease compared
to first-quarter 2022 driven by channel inventory destocking.
XIAFLEX® first-quarter 2023 demand growth was in-line
with internal expectations and reflected steady progress in
adapting to continuing market dynamics and the ongoing third-party
specialty pharmacy provider transition.
Established Products revenues decreased 1% to $55 million
in first-quarter 2023 compared to $56 million in first-quarter
2022 due primarily to generic competition.
STERILE INJECTABLES SEGMENT
First-quarter 2023 Sterile Injectables segment revenues were
$101 million, a decrease of 58% compared to $240 million
during first-quarter 2022. This change was primarily attributable
to decreased VASOSTRICT® revenues due to lower price and
market share resulting from generic competition and lower overall
market volumes.
GENERIC PHARMACEUTICALS SEGMENT
First-quarter 2023 Generic Pharmaceuticals segment revenues were
$198 million, an increase of 7% compared to $186 million
during first-quarter 2022. This increase was primarily attributable
to revenues from dexlansoprazole delayed release capsules, the
generic version of Dexilant® which launched during
fourth-quarter 2022, and from varenicline tablets, the first
generic version of Chantix® which launched during
third-quarter 2021, partially offset by competitive pressure on
certain generic products. During first-quarter 2023, a generic
varenicline competitor entered the market and additional
competitors are anticipated in 2023.
INTERNATIONAL PHARMACEUTICALS SEGMENT
First-quarter 2023 International Pharmaceuticals segment
revenues were $18 million, a decrease of 15% compared to
$21 million during first-quarter 2022. This decrease was
primarily attributable to a 2022 product discontinuation.
FINANCIAL EXPECTATIONS
On February 14, 2023, Endo
disclosed that its Board of Directors reviewed the Company's
long-term plan, including a presentation prepared by the Company's
management. Endo's first-quarter 2023 results exceeded the
expectations assumed in the February long-term plan primarily
driven by higher varenicline and dexlansoprazole delayed release
capsules revenues due to fewer than expected competitors. The below
updated financial expectations for the full-year ending
December 31, 2023 contemplate a range
of potential outcomes reflecting uncertainties in key assumptions
for the timing of varenicline and dexlansoprazole competitive
entrants and recognition of the Novavax settlement. Endo does not
currently anticipate a material impact to its previously provided
long-term financial outlook beyond 2023. All financial expectations
provided by Endo are forward-looking, and actual results may differ
materially from such expectations, as further discussed below under
the heading "Cautionary Note Regarding Forward-Looking
Statements."
|
($ in
millions)
|
2023
|
|
Total Revenues,
Net
|
$1,890 -
$2,075
|
|
Adjusted
EBITDA
|
$690 - $820
|
|
Assumptions:
|
|
|
Segment
Revenues:
|
|
|
Branded
Pharmaceuticals
|
~$870
|
|
Sterile
Injectables
|
$400 - $430
|
|
Generic
Pharmaceuticals
|
$555 - $710
|
|
International
Pharmaceuticals
|
~$65
|
|
Adjusted Gross Margin
as a Percentage of Total Revenues, Net
|
~67%
|
|
Adjusted Operating
Expenses
|
~$635
|
CASH, CASH FLOW AND OTHER UPDATES
As of March 31, 2023, the Company had approximately
$0.9 billion in unrestricted cash.
First-quarter 2023 net cash provided by operating activities was
approximately $62 million compared to
approximately $201 million provided
by operating activities during first-quarter 2022. This decrease
was primarily attributable to a decrease in adjusted EBITDA,
coupled with increases in net working capital and
restructuring-related payments, which were partially offset by
reductions in cash interest and litigation related payments.
Dexilant® is a registered trademark of Takeda
Pharmaceutical U.S.A., Inc.
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,
2023 and 2022 (dollars in thousands):
|
Three Months Ended
March 31,
|
|
Percent
Growth
|
|
2023
|
|
2022
|
|
|
Branded
Pharmaceuticals:
|
|
|
|
|
|
|
Specialty
Products:
|
|
|
|
|
|
|
XIAFLEX®
|
$
96,910
|
|
$
99,484
|
|
(3) %
|
|
SUPPRELIN®
LA
|
23,577
|
|
28,830
|
|
(18) %
|
|
Other Specialty
(1)
|
21,694
|
|
20,744
|
|
5 %
|
|
Total Specialty
Products
|
$
142,181
|
|
$
149,058
|
|
(5) %
|
|
Established
Products:
|
|
|
|
|
|
|
PERCOCET®
|
$
26,056
|
|
$
26,175
|
|
— %
|
|
TESTOPEL®
|
10,989
|
|
8,880
|
|
24 %
|
|
Other Established
(2)
|
18,347
|
|
20,748
|
|
(12) %
|
|
Total Established
Products
|
$
55,392
|
|
$
55,803
|
|
(1) %
|
|
Total Branded
Pharmaceuticals (3)
|
$
197,573
|
|
$
204,861
|
|
(4) %
|
|
Sterile
Injectables:
|
|
|
|
|
|
|
VASOSTRICT®
|
$
25,951
|
|
$
155,890
|
|
(83) %
|
|
ADRENALIN®
|
25,575
|
|
33,823
|
|
(24) %
|
|
Other Sterile
Injectables (4)
|
49,729
|
|
50,315
|
|
(1) %
|
|
Total Sterile
Injectables (3)
|
$
101,255
|
|
$
240,028
|
|
(58) %
|
|
Total Generic
Pharmaceuticals (5)
|
$
198,180
|
|
$
185,944
|
|
7 %
|
|
Total International
Pharmaceuticals (6)
|
$
18,259
|
|
$
21,426
|
|
(15) %
|
|
Total revenues,
net
|
$
515,267
|
|
$
652,259
|
|
(21) %
|
|
__________
|
|
(1)
|
Products included
within Other Specialty include AVEED®,
NASCOBAL® Nasal Spray and QWO®.
|
|
(2)
|
Products included
within Other Established include, but are not limited to,
EDEX®.
|
|
(3)
|
Individual products
presented above represent the top two performing products in each
product category for the three months ended March 31, 2023 and/or
any product having revenues in excess of $25 million during any
completed quarterly period in 2023 or 2022.
|
|
(4)
|
Products included
within Other Sterile Injectables include APLISOL®,
ertapenem for injection 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 limited or
no intellectual property protection and are sold within the U.S.
During the three months ended March 31, 2023 and 2022, varenicline
tablets (Endo's generic version of Pfizer Inc.'s
Chantix®), which launched in September 2021, made up 15%
and 10%, respectively, of consolidated total revenues. During
the three months ended March 31, 2023, dexlansoprazole delayed
release capsules (Endo's generic version of Takeda Pharmaceuticals
USA, Inc.'s Dexilant®), which launched in November 2022,
made up 6% 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 Endo's operating
company Paladin Labs Inc.
|
The following table presents unaudited Condensed Consolidated
Statement of Operations data for the three months ended
March 31, 2023 and 2022 (in
thousands, except per share data):
|
Three Months Ended
March 31,
|
|
2023
|
|
2022
|
|
TOTAL REVENUES,
NET
|
$
515,267
|
|
$
652,259
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
Cost of
revenues
|
232,742
|
|
273,215
|
|
Selling, general and
administrative
|
150,793
|
|
227,161
|
|
Research and
development
|
27,703
|
|
36,130
|
|
Acquired in-process
research and development
|
—
|
|
2,900
|
|
Litigation-related and
other contingencies, net
|
15,200
|
|
25,154
|
|
Asset impairment
charges
|
146
|
|
19,953
|
|
Acquisition-related
and integration items, net
|
397
|
|
(1,377)
|
|
Interest expense,
net
|
109
|
|
134,949
|
|
Reorganization items,
net
|
85,352
|
|
—
|
|
Other (income)
expense, net
|
(125)
|
|
1,289
|
|
INCOME (LOSS) FROM
CONTINUING OPERATIONS BEFORE INCOME TAX
|
$
2,950
|
|
$
(67,115)
|
|
INCOME TAX EXPENSE
(BENEFIT)
|
5,773
|
|
(1,815)
|
|
LOSS FROM CONTINUING
OPERATIONS
|
$
(2,823)
|
|
$
(65,300)
|
|
DISCONTINUED
OPERATIONS, NET OF TAX
|
(456)
|
|
(6,674)
|
|
NET LOSS
|
$
(3,279)
|
|
$
(71,974)
|
|
NET (LOSS) INCOME PER
SHARE—BASIC:
|
|
|
|
|
Continuing
operations
|
$
(0.01)
|
|
$
(0.28)
|
|
Discontinued
operations
|
—
|
|
(0.03)
|
|
Basic
|
$
(0.01)
|
|
$
(0.31)
|
|
NET (LOSS) INCOME PER
SHARE—DILUTED:
|
|
|
|
|
Continuing
operations
|
$
(0.01)
|
|
$
(0.28)
|
|
Discontinued
operations
|
—
|
|
(0.03)
|
|
Diluted
|
$
(0.01)
|
|
$
(0.31)
|
|
WEIGHTED AVERAGE
SHARES:
|
|
|
|
|
Basic
|
235,216
|
|
233,879
|
|
Diluted
|
235,216
|
|
233,879
|
The following table presents unaudited Condensed Consolidated
Balance Sheet data at March 31, 2023 and December 31,
2022 (in thousands):
|
March 31,
2023
|
|
December 31,
2022
|
|
ASSETS
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
Cash and cash
equivalents
|
$
903,613
|
|
$ 1,018,883
|
|
Restricted cash and
cash equivalents
|
157,039
|
|
145,358
|
|
Accounts
receivable
|
459,355
|
|
493,988
|
|
Inventories,
net
|
285,284
|
|
274,499
|
|
Other current
assets
|
126,465
|
|
144,040
|
|
Total current
assets
|
$ 1,931,756
|
|
$ 2,076,768
|
|
TOTAL NON-CURRENT
ASSETS
|
3,634,349
|
|
3,681,169
|
|
TOTAL ASSETS
|
$ 5,566,105
|
|
$ 5,757,937
|
|
LIABILITIES AND
SHAREHOLDERS' DEFICIT
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
Accounts payable and
accrued expenses, including legal settlement accruals
|
$
603,933
|
|
$
687,183
|
|
Other current
liabilities
|
2,710
|
|
2,444
|
|
Total current
liabilities
|
$
606,643
|
|
$
689,627
|
|
OTHER
LIABILITIES
|
72,321
|
|
61,700
|
|
LIABILITIES SUBJECT TO
COMPROMISE
|
9,040,746
|
|
9,168,782
|
|
SHAREHOLDERS'
DEFICIT
|
(4,153,605)
|
|
(4,162,172)
|
|
TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIT
|
$ 5,566,105
|
|
$ 5,757,937
|
The following table presents unaudited Condensed Consolidated
Statement of Cash Flow data for the three months ended March 31, 2023 and 2022 (in thousands):
|
Three Months Ended
March 31,
|
|
2023
|
|
2022
|
|
OPERATING
ACTIVITIES:
|
|
|
|
|
Net loss
|
$
(3,279)
|
|
$
(71,974)
|
|
Adjustments to
reconcile Net loss to Net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
77,873
|
|
106,315
|
|
Asset impairment
charges
|
146
|
|
19,953
|
|
Other, including cash
payments to claimants from Qualified Settlement Funds
|
(12,644)
|
|
147,025
|
|
Net cash provided by
operating activities
|
$
62,096
|
|
$
201,319
|
|
INVESTING
ACTIVITIES:
|
|
|
|
|
Capital expenditures,
excluding capitalized interest
|
$
(31,280)
|
|
$
(23,025)
|
|
Acquisitions,
including in-process research and development, net of cash and
restricted
cash acquired
|
—
|
|
(24,520)
|
|
Proceeds from sale of
business and other assets
|
978
|
|
541
|
|
Other
|
8,938
|
|
(1,840)
|
|
Net cash used in
investing activities
|
$
(21,364)
|
|
$
(48,844)
|
|
FINANCING
ACTIVITIES:
|
|
|
|
|
Payments on
borrowings, including certain adequate protection payments, net
(a)
|
$
(144,508)
|
|
$
(186,812)
|
|
Other
|
(207)
|
|
(2,386)
|
|
Net cash used in
financing activities
|
$
(144,715)
|
|
$
(189,198)
|
|
Effect of foreign
exchange rate
|
394
|
|
331
|
|
NET DECREASE IN CASH,
CASH EQUIVALENTS, RESTRICTED CASH AND
RESTRICTED CASH EQUIVALENTS
|
$
(103,589)
|
|
$
(36,392)
|
|
CASH, CASH EQUIVALENTS,
RESTRICTED CASH AND RESTRICTED CASH
EQUIVALENTS, BEGINNING OF PERIOD
|
1,249,241
|
|
1,631,310
|
|
CASH, CASH EQUIVALENTS,
RESTRICTED CASH AND RESTRICTED CASH
EQUIVALENTS, END OF PERIOD
|
$
1,145,652
|
|
$ 1,594,918
|
|
__________
|
|
(a)
|
Beginning during the
third quarter of 2022, Endo became obligated to make certain
adequate protection payments as a result of the Chapter 11
proceedings, which are currently being accounted for as a reduction
of the carrying amount of the related debt instruments and
presented as financing cash outflows. Some or all of the adequate
protection payments may later be recharacterized as interest
expense and/or as operating cash outflows depending upon certain
developments in the Chapter 11 proceedings, which could result in
increases in interest expense and/or decreases in operating cash
flows in future periods that may be material.
|
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.
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 months ended
March 31, 2023 and 2022 (in
thousands):
|
Three Months Ended
March 31,
|
|
2023
|
|
2022
|
|
Net loss
(GAAP)
|
$
(3,279)
|
|
$
(71,974)
|
|
Income tax expense
(benefit)
|
5,773
|
|
(1,815)
|
|
Interest expense,
net
|
109
|
|
134,949
|
|
Depreciation and
amortization (1)
|
77,873
|
|
102,638
|
|
EBITDA
(non-GAAP)
|
$
80,476
|
|
$
163,798
|
|
Amounts related to
continuity and separation benefits, cost reductions and
strategic
review initiatives (2)
|
11,673
|
|
57,649
|
|
Certain
litigation-related and other contingencies, net (3)
|
15,200
|
|
25,154
|
|
Certain legal costs
(4)
|
1,560
|
|
32,732
|
|
Asset impairment
charges (5)
|
146
|
|
19,953
|
|
Fair value of
contingent consideration (6)
|
397
|
|
(1,377)
|
|
Share-based
compensation (1)
|
2,091
|
|
4,929
|
|
Other (income) expense,
net (7)
|
(125)
|
|
1,289
|
|
Reorganization items,
net (8)
|
85,352
|
|
—
|
|
Other (9)
|
11,804
|
|
125
|
|
Discontinued
operations, net of tax (10)
|
456
|
|
6,674
|
|
Adjusted EBITDA
(non-GAAP) (13)
|
$
209,030
|
|
$
310,926
|
Reconciliation of Adjusted Income from Continuing Operations
(non-GAAP)
The following table provides a reconciliation of the Company's
Loss from continuing operations (GAAP) to Adjusted income from
continuing operations (non-GAAP) for the three months ended
March 31, 2023 and 2022 (in
thousands):
|
Three Months Ended
March 31,
|
|
2023
|
|
2022
|
|
Loss from continuing
operations (GAAP)
|
$
(2,823)
|
|
$
(65,300)
|
|
Non-GAAP
adjustments:
|
|
|
|
|
Amortization of
intangible assets (11)
|
65,256
|
|
90,234
|
|
Amounts related to
continuity and separation benefits, cost reductions and
strategic
review initiatives (2)
|
11,673
|
|
57,649
|
|
Certain
litigation-related and other contingencies, net (3)
|
15,200
|
|
25,154
|
|
Certain legal costs
(4)
|
1,560
|
|
32,732
|
|
Asset impairment
charges (5)
|
146
|
|
19,953
|
|
Fair value of
contingent consideration (6)
|
397
|
|
(1,377)
|
|
Reorganization items,
net (8)
|
85,352
|
|
—
|
|
Other (9)
|
12,089
|
|
1,323
|
|
Tax adjustments
(12)
|
4,478
|
|
(4,429)
|
|
Adjusted income from
continuing operations (non-GAAP) (13)
|
$
193,328
|
|
$
155,939
|
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,
2023 and 2022 (in thousands, except per share data):
|
Three Months Ended
March 31, 2023
|
|
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
(income),
net
|
|
Income from
continuing
operations
before
income tax
|
|
Income tax
expense
|
|
Effective
tax rate
|
|
(Loss)
income from
continuing
operations
|
|
Discontinued
operations,
net of tax
|
|
Net (loss)
income
|
|
Diluted net
(loss)
income per
share from
continuing
operations (14)
|
|
Reported
(GAAP)
|
$
515,267
|
|
$
232,742
|
|
$
282,525
|
|
54.8 %
|
|
$
194,239
|
|
37.7 %
|
|
$ 88,286
|
|
17.1 %
|
|
$
85,336
|
|
$
2,950
|
|
$ 5,773
|
|
195.7 %
|
|
$ (2,823)
|
|
$
(456)
|
|
$ (3,279)
|
|
$ (0.01)
|
|
Items impacting
comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets (11)
|
—
|
|
(65,256)
|
|
65,256
|
|
|
|
—
|
|
|
|
65,256
|
|
|
|
—
|
|
65,256
|
|
—
|
|
|
|
65,256
|
|
—
|
|
65,256
|
|
|
|
Amounts related to
continuity and separation benefits, cost reductions and strategic
review initiatives (2)
|
—
|
|
(1,982)
|
|
1,982
|
|
|
|
(9,691)
|
|
|
|
11,673
|
|
|
|
—
|
|
11,673
|
|
—
|
|
|
|
11,673
|
|
—
|
|
11,673
|
|
|
|
Certain
litigation-related and other contingencies, net (3)
|
—
|
|
—
|
|
—
|
|
|
|
(15,200)
|
|
|
|
15,200
|
|
|
|
—
|
|
15,200
|
|
—
|
|
|
|
15,200
|
|
—
|
|
15,200
|
|
|
|
Certain legal costs
(4)
|
—
|
|
—
|
|
—
|
|
|
|
(1,560)
|
|
|
|
1,560
|
|
|
|
—
|
|
1,560
|
|
—
|
|
|
|
1,560
|
|
—
|
|
1,560
|
|
|
|
Asset impairment
charges (5)
|
—
|
|
—
|
|
—
|
|
|
|
(146)
|
|
|
|
146
|
|
|
|
—
|
|
146
|
|
—
|
|
|
|
146
|
|
—
|
|
146
|
|
|
|
Fair value of
contingent consideration (6)
|
—
|
|
—
|
|
—
|
|
|
|
(397)
|
|
|
|
397
|
|
|
|
—
|
|
397
|
|
—
|
|
|
|
397
|
|
—
|
|
397
|
|
|
|
Reorganization items,
net (8)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(85,352)
|
|
85,352
|
|
—
|
|
|
|
85,352
|
|
—
|
|
85,352
|
|
|
|
Other (9)
|
—
|
|
(653)
|
|
653
|
|
|
|
(11,152)
|
|
|
|
11,805
|
|
|
|
(284)
|
|
12,089
|
|
—
|
|
|
|
12,089
|
|
—
|
|
12,089
|
|
|
|
Tax adjustments
(12)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
(4,478)
|
|
|
|
4,478
|
|
—
|
|
4,478
|
|
|
|
Discontinued
operations, net of tax (10)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
456
|
|
456
|
|
|
|
After considering items
(non-GAAP) (13)
|
$
515,267
|
|
$
164,851
|
|
$
350,416
|
|
68.0 %
|
|
$
156,093
|
|
30.3 %
|
|
$ 194,323
|
|
37.7 %
|
|
$
(300)
|
|
$ 194,623
|
|
$ 1,295
|
|
0.7 %
|
|
$ 193,328
|
|
$
—
|
|
$ 193,328
|
|
$ 0.82
|
|
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 (14)
|
|
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 (11)
|
—
|
|
(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 (6)
|
—
|
|
—
|
|
—
|
|
|
|
1,377
|
|
|
|
(1,377)
|
|
|
|
—
|
|
(1,377)
|
|
—
|
|
|
|
(1,377)
|
|
—
|
|
(1,377)
|
|
|
|
Other (9)
|
—
|
|
(125)
|
|
125
|
|
|
|
—
|
|
|
|
125
|
|
|
|
(1,198)
|
|
1,323
|
|
—
|
|
|
|
1,323
|
|
—
|
|
1,323
|
|
|
|
Tax adjustments
(12)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
4,429
|
|
|
|
(4,429)
|
|
—
|
|
(4,429)
|
|
|
|
Discontinued
operations, net of tax (10)
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
6,674
|
|
6,674
|
|
|
|
After considering items
(non-GAAP) (13)
|
$
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
|
|
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, 2023 and 2022 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,
|
|
2023
|
|
2022
|
|
Cost of
revenues
|
|
Operating
expenses
|
|
Cost of
revenues
|
|
Operating
expenses
|
|
Continuity and
separation benefits
|
$
1,124
|
|
$
9,673
|
|
$
5,252
|
|
$
27,075
|
|
Accelerated
depreciation
|
—
|
|
—
|
|
2,164
|
|
1,513
|
|
Inventory
adjustments
|
267
|
|
—
|
|
766
|
|
1,557
|
|
Other, including
strategic review initiatives
|
591
|
|
18
|
|
7,555
|
|
11,767
|
|
Total
|
$
1,982
|
|
$
9,691
|
|
$
15,737
|
|
$
41,912
|
|
|
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.
|
|
(4)
|
To exclude amounts
related to opioid-related legal expenses.
|
|
(5)
|
Adjustments for asset
impairment charges included in the following (in
thousands):
|
|
Three Months Ended
March 31,
|
|
2023
|
|
2022
|
|
Other intangible asset
impairment charges
|
$
—
|
|
$
19,953
|
|
Property, plant and
equipment impairment charges
|
146
|
|
—
|
|
Total
|
$
146
|
|
$
19,953
|
|
(6)
|
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.
|
|
(7)
|
To exclude Other
(income) expense, net per the Condensed Consolidated Statements of
Operations.
|
|
(8)
|
Amounts relate to the
net expense or income recognized during Endo's bankruptcy
proceedings required to be presented as Reorganization items, net
under Accounting Standards Codification Topic 852,
Reorganizations.
|
|
(9)
|
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 (GAAP) to Adjusted EBITDA (non-GAAP))
include the following (in thousands):
|
|
Three Months Ended
March 31,
|
|
2023
|
|
2022
|
|
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
|
$
—
|
|
$
—
|
|
$
284
|
|
$
—
|
|
$
—
|
|
$
1,198
|
|
Other
miscellaneous
|
653
|
|
11,152
|
|
—
|
|
125
|
|
—
|
|
—
|
|
Total
|
$
653
|
|
$
11,152
|
|
$
284
|
|
$
125
|
|
$
—
|
|
$
1,198
|
|
|
The "Other" row
included in the reconciliations of Net loss (GAAP) to Adjusted
EBITDA (non-GAAP) primarily relates to the items enumerated in the
foregoing "Cost of revenues" and "Operating expenses"
columns.
|
|
(10)
|
To exclude the results
of the businesses reported as discontinued operations, net of
tax.
|
|
(11)
|
To exclude amortization
expense related to intangible assets.
|
|
(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)
|
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,
|
|
2023
|
|
2022
|
|
Acquired in-process
research and development charges
|
$
—
|
|
$
2,900
|
|
|
|
(14)
|
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,
|
|
2023
|
|
2022
|
|
GAAP
|
235,216
|
|
233,879
|
|
Non-GAAP
Adjusted
|
236,105
|
|
236,716
|
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
Endo (OTC: ENDPQ) 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 passionate team members around the globe
collaborating to bring 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,
statements with respect to financial guidance, expectations or
outlook, the restructuring support agreement and the sale
transaction, the Chapter 11 proceedings, and any other statements
that refer to Endo's 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," "guidance," "future," "potential" or similar expressions
are forward-looking statements. All forward-looking statements in
this communication reflect the Company's current views as of the
date of this communication about its plans, intentions,
expectations, strategies and prospects, which are based on the
information currently available to it and on assumptions it has
made. Actual results may differ materially and adversely from
current expectations based on a number of factors, including, among
other things, the following: 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 Company's liquidity, financial performance, cash position and
operations; the Company's strategy; risks and uncertainties
associated with Chapter 11 proceedings; the negative impacts on the
Company's businesses as a result of filing for and operating under
Chapter 11 protection; the time, terms and ability to confirm a
sale of the Company's businesses under Section 363 of the U.S.
Bankruptcy Code; the adequacy of the capital resources of the
Company's businesses and the difficulty in forecasting the
liquidity requirements of the operations of the Company's
businesses; the unpredictability of the Company's financial results
while in Chapter 11 proceedings; the Company's ability to discharge
claims in Chapter 11 proceedings; negotiations with the holders of
the Company's indebtedness and its trade creditors and other
significant creditors; risks and uncertainties with performing
under the terms of the restructuring support agreement and any
other arrangement with lenders or creditors while in Chapter 11
proceedings; the Company's ability to conduct business as usual;
the Company's ability to continue to serve customers, suppliers and
other business partners at the high level of service and
performance they have come to expect from the Company; the
Company's ability to continue to pay employees, suppliers and
vendors; the ability to control costs during Chapter 11
proceedings; adverse litigation; the risk that the Company's
Chapter 11 Cases may be converted to cases under Chapter 7 of the
Bankruptcy Code; the Company's ability to secure operating capital;
the Company's ability to take advantage of opportunities to acquire
assets with upside potential; the Company's ability to execute on
its strategic plan to pursue, evaluate and close an asset sale of
the Company's businesses pursuant to Section 363 of the U.S.
Bankruptcy Code; the impact of competition; Endo's ability to
satisfy judgments or settlements or pursue appeals including
bonding requirements; Endo's ability to adjust to changing market
conditions; Endo's ability to attract and retain key personnel;
supply chain interruptions or difficulties; changes in competitive
or market conditions; changes in legislation or regulatory
developments; Endo's ability to obtain and maintain adequate
protection for Endo's 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; Endo's ability to integrate any newly acquired products
into Endo's 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 Endo's
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;
Endo's ability to advance its strategic priorities, develop its
product pipeline and continue to develop the market for
XIAFLEX® and other branded and unbranded products; and
Endo's ability to obtain and successfully manufacture, maintain and
distribute a sufficient supply of products to meet market demand in
a timely manner. In addition, U.S. and international economic
conditions, including consumer confidence and debt levels,
inflation, taxation, changes in interest and currency exchange
rates, international relations, capital and credit availability,
the status of financial markets and institutions and the impact of
continued economic volatility, can materially affect Endo's
results. Therefore, the reader is cautioned not to rely on these
forward-looking statements. Endo expressly disclaims any intent or
obligation to update these forward-looking statements, except as
required to do so by law.
Additional information concerning 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 at relations.investor@endo.com.
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