Endo Reports First Quarter Financial Results
- Total quarterly revenues of
$709 million , increased by 3 percent versus prior year. - First quarter reported diluted (GAAP) EPS of
$0.14 . - First quarter adjusted diluted EPS of
$1.09 increased by 25 percent versus prior year. - Company continues to expect 2013 revenues in the range of
$2.80 billion to $2.95 billion . - Company now expects reported diluted (GAAP) EPS in the range of
$2.10 to $2.40 . - Company continues to expect 2013 adjusted diluted EPS in the range of
$4.40 to $4.70 .
As detailed in the supplemental financial information below, adjusted net income for the three months ended
"2013 is a year of transition for Endo as we begin to manage the entry of generic competition for LIDODERM® and navigate through the headwinds that we have faced recently, including those with OPANA® ER. I continue to be very optimistic about the future of Endo," said
FINANCIAL PERFORMANCE AT A GLANCE |
||||||||||
($ in thousands, except per share amounts) |
||||||||||
1st Quarter |
||||||||||
2013 |
2012 |
Change |
||||||||
Total Revenues |
$ |
708,519 |
$ |
690,633 |
3% |
|||||
Reported Net Income |
$ |
15,349 |
$ |
(87,345) |
NM |
|||||
Reported Diluted EPS |
$ |
0.14 |
$ |
(0.75) |
NM |
|||||
Adjusted Net Income |
$ |
123,238 |
$ |
106,300 |
16% |
|||||
Adjusted Diluted EPS |
$ |
1.09 |
$ |
0.87 |
25% |
ENDO PHARMACEUTICALS
First quarter 2013 branded pharmaceutical revenues were
First quarter 2013 net sales of OPANA ER decreased 31 percent compared to first quarter 2012. This decrease is primarily attributable to a supply disruption at the end of first quarter 2012 that led some patients to switch to other pain relief products. In addition, the brand is now subject to the headwinds of a non-AB rated generic that launched in
In
First quarter 2013 net sales of Voltaren® Gel were
First quarter 2013 net sales of FORTESTA® Gel increased 152 percent compared to first quarter 2012. This increase was primarily attributable to improved formulary access that facilitated a significant year-over-year increase in total prescription volumes for the product.
QUALITEST
First quarter 2013 generic product net sales of
In
AMS
First quarter 2013 sales of Devices were
The decrease in U.S.-based sales is primarily attributable to a continued decline in Women's Health sales, which decreased 16 percent in the first quarter 2013, compared to the same period last year. The decrease in Women's Health sales is attributable to year-over-year declines in U.S.-based procedural volumes reflecting recent industry shifts following the
First quarter 2013 sales of AMS's benign prostatic hyperplasia (BPH) business decreased 8 percent compared to first quarter 2012. This decrease is primarily attributable to lower sales of GreenLight™ consoles and was partially offset by an increase in GreenLight fiber sales. First quarter 2013 Men's Health sales increased slightly compared to first quarter 2012.
HEALTHTRONICS
First quarter 2013 Services sales of
2013 Financial Guidance
Endo's estimates are based on estimated results for the twelve months ended
- Total revenue to be between
$2.80 billion and $2.95 billion - Reported (GAAP) diluted earnings per share to be between
$2.10 and $2.40 - Adjusted diluted earnings per share to be between
$4.40 and $4.70
The company's 2013 guidance is based on certain assumptions including:
- Adjusted gross margin of between 64 percent and 66 percent
- Adjusted effective tax rate of between 28.5 percent and 29.5 percent
- The company assumes the availability of a non-AB rated, full-line generic extended-release oxymorphone for the first six months of 2013. The company further assumes no generic competition thereafter due to the anticipated outcome of an
FDA decision inMay 2013 that could remove generic formulations of non-tamper-resistant extended-release oxymorphone from the market. Consistent with its Citizen's Petition, the company continues to believe that sufficient evidence exists to support a determination byFDA that the old formulation of OPANA ER was discontinued for reasons of safety, which serves the public health. The company's expected revenues for 2013 reflect a reduction in 2013 OPANA ER net sales of 20% versus 2012 net sales, due to the effect of potential erosion in market share from the single, non-AB-rated generic competitor that launched inJan. 2013 combined with the impact of recent prescription trends reflecting flat market share. - The company continues to expect a single generic competitor for LIDODERM in
September 2013 as a result of a previously announced settlement agreement withActavis (formerlyWatson Pharmaceuticals ).
Balance Sheet Update
During the first quarter of 2013, Endo made payments of approximately
Conference Call Information
Endo will conduct a conference call with financial analysts to discuss this news release today at
A replay of the call will be available from
A simultaneous webcast of the call can be accessed by visiting www.endo.com. In addition, a replay of the webcast will be available until
Supplemental Financial Information
The following tables provide a reconciliation of our reported (GAAP) statements of operations to our adjusted statements of operations (Non-GAAP) for each of the three months ended
Three Months Ended March 31, 2013 (unaudited) |
Actual Reported |
Adjustments |
Non-GAAP Adjusted |
|||||||||
REVENUES |
$ |
708,519 |
$ |
— |
$ |
708,519 |
||||||
COSTS AND EXPENSES: |
||||||||||||
Cost of revenues |
285,926 |
(46,526) |
(1) |
239,400 |
||||||||
Selling, general and administrative |
236,382 |
(21,883) |
(2) |
214,499 |
||||||||
Research and development |
41,569 |
(5,815) |
(3) |
35,754 |
||||||||
Litigation-related and other contingencies |
68,232 |
(68,232) |
(4) |
— |
||||||||
Asset impairment charges |
1,100 |
(1,100) |
(5) |
— |
||||||||
Acquisition-related and integration items, net |
1,318 |
(1,318) |
(6) |
— |
||||||||
OPERATING INCOME |
$ |
73,992 |
$ |
144,874 |
$ |
218,866 |
||||||
INTEREST EXPENSE, NET |
44,303 |
(5,450) |
(7) |
38,853 |
||||||||
NET LOSS ON EXTINGUISHMENT OF DEBT |
11,312 |
(11,312) |
(8) |
— |
||||||||
OTHER (INCOME) EXPENSE, NET |
(18,168) |
19,227 |
(9) |
1,059 |
||||||||
INCOME BEFORE INCOME TAX |
$ |
36,545 |
$ |
142,409 |
$ |
178,954 |
||||||
INCOME TAX |
9,942 |
34,520 |
(10) |
44,462 |
||||||||
CONSOLIDATED NET INCOME |
$ |
26,603 |
$ |
107,889 |
$ |
134,492 |
||||||
Less: Net income attributable to noncontrolling interests |
11,254 |
— |
11,254 |
|||||||||
NET INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC. |
$ |
15,349 |
$ |
107,889 |
$ |
123,238 |
||||||
DILUTED EARNINGS PER SHARE |
$ |
0.14 |
$ |
1.09 |
||||||||
DILUTED WEIGHTED AVERAGE SHARES |
113,189 |
113,189 |
Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations: |
||
(1) |
To exclude amortization of commercial intangible assets related to marketed products of $46,189 and certain separation benefits and other costs incurred in connection with continued efforts to enhance the company's operations. |
|
(2) |
To exclude certain separation benefits and other costs incurred in connection with continued efforts to enhance the company's operations, amortization of customer relationships and mesh litigation-related defense costs. |
|
(3) |
To exclude milestone payments to partners and certain separation benefits and other costs incurred in connection with continued efforts to enhance the company's operations. |
|
(4) |
To exclude the net impact of accruals primarily for mesh-related product liability. |
|
(5) |
To exclude asset impairment charges. |
|
(6) |
To exclude acquisition-related and integration costs and a small loss recorded to reflect the change in fair value of the contingent consideration associated with the Qualitest acquisition. |
|
(7) |
To exclude additional interest expense as a result of the prior adoption of ASC 470-20. |
|
(8) |
To exclude the unamortized debt issuance costs written off and recorded as a net loss on extinguishment of debt upon our March 2013 prepayment on our Term Loan indebtedness as well as upon the amendment and restatement of our existing credit facility. |
|
(9) |
To exclude patent litigation settlement income. |
|
(10) |
To reflect the cash tax savings results from our recent acquisitions and the tax effect of the pre-tax adjustments above at applicable tax rates. |
Three Months Ended March 31, 2012 (unaudited) |
Actual Reported |
Adjustments |
Non-GAAP Adjusted |
|||||||||
REVENUES |
$ |
690,633 |
$ |
— |
$ |
690,633 |
||||||
COSTS AND EXPENSES: |
||||||||||||
Cost of revenues |
364,820 |
(161,238) |
(1) |
203,582 |
||||||||
Selling, general and administrative |
254,454 |
(13,867) |
(2) |
240,587 |
||||||||
Research and development |
88,688 |
(46,972) |
(3) |
41,716 |
||||||||
Asset impairment charges |
40,000 |
(40,000) |
(4) |
— |
||||||||
Acquisition-related and integration items, net |
3,749 |
(3,749) |
(5) |
— |
||||||||
OPERATING (LOSS) INCOME |
$ |
(61,078) |
$ |
265,826 |
$ |
204,748 |
||||||
INTEREST EXPENSE, NET |
46,896 |
(4,976) |
(6) |
41,920 |
||||||||
NET LOSS ON EXTINGUISHMENT OF DEBT |
5,426 |
(5,426) |
(7) |
— |
||||||||
OTHER EXPENSE, NET |
451 |
— |
451 |
|||||||||
(LOSS) INCOME BEFORE INCOME TAX |
$ |
(113,851) |
$ |
276,228 |
$ |
162,377 |
||||||
INCOME TAX |
(39,326) |
82,583 |
(8) |
43,257 |
||||||||
CONSOLIDATED NET (LOSS) INCOME |
$ |
(74,525) |
$ |
193,645 |
$ |
119,120 |
||||||
Less: Net income attributable to noncontrolling interests |
12,820 |
— |
12,820 |
|||||||||
NET (LOSS) INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC. |
$ |
(87,345) |
$ |
193,645 |
$ |
106,300 |
||||||
DILUTED (LOSS) EARNINGS PER SHARE |
$ |
(0.75) |
$ |
0.87 |
||||||||
DILUTED WEIGHTED AVERAGE SHARES |
117,052 |
122,591 |
Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations: |
|
(1) |
To exclude amortization of commercial intangible assets related to marketed products of $50,603, the impact of inventory step-up recorded as part of acquisition accounting and certain milestone payments and receipts, the accrual for the payment to Impax related to sales of OPANA ER of $110,000 and certain separation benefits and other costs incurred in connection with continued efforts to enhance the company's operations. |
(2) |
To exclude certain separation benefits and other costs incurred in connection with continued efforts to enhance the company's operations and amortization of customer relationships. |
(3) |
To exclude milestone and upfront payments to partners. |
(4) |
To exclude asset impairment charges. |
(5) |
To exclude acquisition-related and integration costs and a small gain recorded to reflect the change in fair value of the contingent consideration associated with the Qualitest Pharmaceuticals acquisition. |
(6) |
To exclude additional interest expense as a result of the prior adoption of ASC 470-20. |
(7) |
To exclude the unamortized debt issuance costs written off and recorded as a loss on extinguishment of debt upon our 2012 prepayments on our Term Loan indebtedness. |
(8) |
To reflect the cash tax savings results from our recent acquisitions and the tax effect of the pre-tax adjustments above at applicable tax rates. |
Non-GAAP Adjusted net income and its components and Non-GAAP Adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. Despite the importance of these measures to management in goal setting and performance measurement, we stress that Non-GAAP Adjusted income and its components are Non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, Non-GAAP Adjusted net income and its components (unlike U.S. GAAP net income and its components) may not be comparable to the calculation of similar measures of other companies. Non-GAAP Adjusted net income and its components are presented solely to permit investors to more fully understand how management assesses performance.
Reconciliation of Projected GAAP Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share Guidance for 2013 |
|||||||
Year Ending |
|||||||
December 31, 2013 |
|||||||
Projected GAAP diluted income per common share |
$ |
2.10 |
To |
$ |
2.40 |
||
Upfront and milestone-related payments to partners |
0.17 |
0.17 |
|||||
Amortization of commercial intangible assets and inventory step-up |
1.65 |
1.65 |
|||||
Integration and restructuring charges |
0.32 |
0.32 |
|||||
Charges for litigation and other legal matters |
0.75 |
0.75 |
|||||
Actavis (Watson) litigation settlement |
(0.38) |
(0.38) |
|||||
Interest expense adjustment for ASC 470-20 and other treasury related items |
0.30 |
0.30 |
|||||
Tax effect of pre-tax adjustments at the applicable tax rates and certain other expected cash tax savings as a result of recent acquisitions |
(0.51) |
(0.51) |
|||||
Diluted adjusted income per common share guidance |
$ |
4.40 |
To |
$ |
4.70 |
The company's guidance is being issued based on certain assumptions including:
- Certain of the above amounts are based on estimates and there can be no assurance that Endo will achieve these results.
- Includes all completed business development transactions as of May 7, 2013.
About Endo
(Tables Attached)
The following tables present Endo's unaudited Net Revenues for the three months ended
Endo Health Solutions Inc. Net Revenues (unaudited) (in thousands) |
|||||||||||
Three Months Ended March 31, |
Percent Growth |
||||||||||
2013 |
2012 |
||||||||||
Endo Pharmaceuticals: |
|||||||||||
LIDODERM® |
$ |
187,024 |
$ |
210,014 |
(11)% |
||||||
OPANA® ER |
56,327 |
81,086 |
(31)% |
||||||||
Voltaren® Gel |
36,110 |
— |
NM |
||||||||
PERCOCET® |
26,618 |
23,380 |
14% |
||||||||
FROVA® |
13,777 |
15,644 |
(12)% |
||||||||
SUPPRELIN® LA |
13,426 |
13,446 |
—% |
||||||||
VANTAS® |
3,867 |
3,892 |
(1)% |
||||||||
VALSTAR® |
5,415 |
6,236 |
(13)% |
||||||||
FORTESTA® Gel |
14,654 |
5,822 |
152% |
||||||||
Other Branded Products |
273 |
(265) |
NM |
||||||||
Royalty and Other Revenue |
98 |
4,319 |
(98)% |
||||||||
Total Endo Pharmaceuticals |
$ |
357,589 |
$ |
363,574 |
(2)% |
||||||
Total Qualitest |
$ |
178,253 |
$ |
145,345 |
23% |
||||||
American Medical Systems: |
|||||||||||
Men's Health |
67,568 |
67,440 |
—% |
||||||||
Women's Health |
28,604 |
33,898 |
(16)% |
||||||||
BPH Therapy |
26,480 |
28,828 |
(8)% |
||||||||
Total AMS |
122,652 |
130,166 |
(6)% |
||||||||
HealthTronics |
50,025 |
51,548 |
(3)% |
||||||||
Total Revenue |
708,519 |
690,633 |
3% |
The following table presents unaudited condensed consolidated Balance Sheet data at
March 31, |
December 31, |
||||||
ASSETS |
|||||||
CURRENT ASSETS: |
|||||||
Cash and cash equivalents |
$ |
340,517 |
$ |
547,916 |
|||
Accounts receivable |
711,193 |
690,850 |
|||||
Inventories, net |
384,757 |
357,638 |
|||||
Other assets |
362,552 |
372,830 |
|||||
Total current assets |
$ |
1,799,019 |
$ |
1,969,234 |
|||
PROPERTY, PLANT AND EQUIPMENT, NET |
382,245 |
385,668 |
|||||
GOODWILL |
2,017,363 |
2,014,351 |
|||||
OTHER INTANGIBLES, NET |
2,058,398 |
2,098,973 |
|||||
OTHER ASSETS |
95,477 |
100,333 |
|||||
TOTAL ASSETS |
$ |
6,352,502 |
$ |
6,568,559 |
|||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||
CURRENT LIABILITIES: |
|||||||
Accounts payable and accrued expenses |
$ |
1,349,021 |
$ |
1,587,827 |
|||
Other current liabilities |
73,162 |
140,193 |
|||||
Total current liabilities |
$ |
1,422,183 |
$ |
1,728,020 |
|||
DEFERRED INCOME TAXES |
493,152 |
516,565 |
|||||
LONG-TERM DEBT, LESS CURRENT PORTION, NET |
3,006,062 |
3,037,947 |
|||||
OTHER LIABILITIES |
259,368 |
152,821 |
|||||
STOCKHOLDERS' EQUITY: |
|||||||
Total Endo Health Solutions Inc. stockholders' equity |
$ |
1,114,371 |
$ |
1,072,856 |
|||
Noncontrolling interests |
57,366 |
60,350 |
|||||
Total stockholders' equity |
$ |
1,171,737 |
$ |
1,133,206 |
|||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
6,352,502 |
$ |
6,568,559 |
The following table presents unaudited condensed consolidated Statement of Cash Flow data for the three months ended
Three Months Ended March 31, |
|||||||
2013 |
2012 |
||||||
OPERATING ACTIVITIES: |
|||||||
Consolidated net income (loss) |
$ |
26,603 |
$ |
(74,525) |
|||
Adjustments to reconcile consolidated net income to Consolidated net income (loss) |
|||||||
Depreciation and amortization |
66,819 |
66,957 |
|||||
Stock-based compensation |
15,331 |
14,518 |
|||||
Amortization of debt issuance costs and premium / discount |
9,776 |
7,868 |
|||||
Other |
22,122 |
20,982 |
|||||
Changes in assets and liabilities which used cash |
(199,398) |
(48,862) |
|||||
Net cash used in operating activities |
(58,747) |
(13,062) |
|||||
INVESTING ACTIVITIES: |
|||||||
Purchases of property, plant and equipment, net |
(23,645) |
(28,921) |
|||||
Acquisitions, net of cash acquired |
(3,645) |
— |
|||||
Other |
(10,000) |
(5,000) |
|||||
Net cash used in investing activities |
(37,290) |
(33,921) |
|||||
FINANCING ACTIVITIES: |
|||||||
Issuance of common stock from treasury, net of (purchases) |
1,557 |
(31,588) |
|||||
Cash distributions to noncontrolling interests |
(12,832) |
(13,120) |
|||||
Principal (payments) borrowings on indebtedness, net |
(99,777) |
(219,502) |
|||||
Exercise of Endo Health Solutions Inc. stock options |
12,826 |
9,543 |
|||||
Other |
(12,724) |
2,545 |
|||||
Net cash used in financing activities |
(110,950) |
(252,122) |
|||||
Effect of foreign exchange rate |
(412) |
(212) |
|||||
NET DECREASE IN CASH AND CASH EQUIVALENTS |
(207,399) |
(299,317) |
|||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
547,916 |
547,620 |
|||||
CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ |
340,517 |
$ |
248,303 |
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as "believes," "expects," "anticipates," "intends," "estimates," "plan," "will," "may," "look forward," "intend," "guidance," "future" or similar expressions are forward-looking statements. Because these statements reflect our current views, expectations and beliefs concerning future events, these forward-looking statements involve risks and uncertainties. Investors should note that many factors, as more fully described under the caption "Risk Factors" in our Form 10-K, Form 10-Q and Form 8-K filings with the
SOURCE
Investors/Media: Blaine Davis, (484) 216-7158, or Investors: Jonathan Neely, (484) 216-6645