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Endo Reports Second-Quarter 2018 Financial Results

August 8, 2018

DUBLIN, Aug. 8, 2018/PRNewswire/ --

  • Second-quarter 2018 revenues of $715 million compared to second-quarter 2017 revenues of $876 million
  • Second-quarter 2018 XIAFLEX® franchise revenues increased 27 percent versus second-quarter 2017 to $64 million
  • Second-quarter 2018 Sterile Injectables revenues increased 21 percent versus second-quarter 2017 to $218 million
  • Entered exclusive licensing agreement with Nevakar for the development of five 505(b)(2) injectable products
  • Company raises 2018 financial guidance
  • Phase 3 trials for collagenase clostridium histolyticum (CCH) for the treatment of cellulite now expected to have top-line results in fourth-quarter 2018

Endo International plc (NASDAQ: ENDP) today reported second-quarter 2018 financial results, including:

  • Revenues of $715 million, an 18 percent decrease compared to second-quarter 2017 revenues of $876 million; revenues increased two percent compared to first-quarter 2018.
  • Reported net loss from continuing operations of $52 million compared to second-quarter 2017 reported net loss from continuing operations of $696 million.
  • Reported diluted loss per share from continuing operations of $0.23 compared to second-quarter 2017 reported diluted loss per share from continuing operations of $3.12.
  • Adjusted income from continuing operations of $172 million compared to second-quarter 2017 adjusted income from continuing operations of $207 million.
  • Adjusted diluted EPS from continuing operations of $0.76 compared to second-quarter 2017 adjusted diluted EPS from continuing operations of $0.93.
  • Adjusted EBITDA of $351 million compared to second-quarter 2017 adjusted EBITDA of $388 million.

"Throughout 2018, we successfully executed on our strategic initiatives. We continued to reinvest into our Specialty segment, which delivered record Xiaflex sales in the second-quarter. The recent growth of our U.S. Branded Sterile Injectables business has focused our efforts on completing the Somerset/Wintac acquisition, which remains on track to close in the fourth quarter. Additionally, we are proud to announce a new collaboration with Nevakar, Inc. We believe this collaboration will bring several critical care products to our sterile portfolio," said Paul Campanelli, President and CEO of Endo. "Lastly, while our U.S. Generic Pharmaceuticals segment has faced a challenging market environment, we are cautiously optimistic that the portfolio decisions we made over the past 18 months position us well for the future."

 

FINANCIAL PERFORMANCE
(in thousands, except per share amounts)

 
 

Three Months Ended June 30,

     

Six Months Ended June 30,

   
 

2018

 

2017

 

Change

 

2018

 

2017

 

Change

Total Revenues

$

714,696

   

$

875,731

   

(18)

%

 

$

1,415,223

   

$

1,913,331

   

(26)

%

Reported Loss from Continuing
Operations

$

(52,479)

   

$

(696,020)

   

(92)

%

 

$

(550,217)

   

$

(861,443)

   

(36)

%

Reported Diluted Weighted Average
hares

223,834

   

223,158

   

%

 

223,677

   

223,086

   

%

Reported Diluted Loss per Share
from Continuing Operations

$

(0.23)

   

$

(3.12)

   

(93)

%

 

$

(2.46)

   

$

(3.86)

   

(36)

%

Adjusted Income from Continuing
Operations

$

172,195

   

$

207,201

   

(17)

%

 

$

322,978

   

$

482,446

   

(33)

%

Adjusted Diluted Weighted Average
Shares1

227,273

   

223,785

   

2

%

 

226,114

   

223,560

   

1

%

Adjusted Diluted EPS from
Continuing Operations

$

0.76

   

$

0.93

   

(18)

%

 

$

1.43

   

$

2.16

   

(34)

%

__________

(1)

Diluted per share data is computed based on weighted average shares outstanding and, if there is income from continuing operations during the period, the dilutive impact of share equivalents outstanding during the period. In the case of Adjusted Diluted Weighted Average Shares, Adjusted Income from Continuing Operations is used in determining whether to include such dilutive impact.

 

CONSOLIDATED RESULTS

Total revenues were $715 million in second-quarter 2018 compared to $876 million in the same period in 2017. This performance was primarily attributable to the loss of marketing exclusivity in the first half of 2017 for the first-to-file U.S. Generic Pharmaceuticals product ezetimibe tablets, the generic version of ZETIA®. Also contributing to the quarter's revenue performance versus prior year were the annualization of the impact from 2017 competitive entries and product discontinuances in the U.S. Generic Pharmaceuticals segment, the divestitures of the Company's South African and Mexican businesses, Litha and Somar, and the voluntary market withdrawal of OPANA® ER.

GAAP net loss from continuing operations in second-quarter 2018 was $52 million compared to GAAP net loss from continuing operations of $696 million during the same period in 2017. This was primarily attributable to lower pre-tax, non-cash asset impairment charges. GAAP diluted net loss per share from continuing operations for second-quarter 2018 was $0.23, compared to GAAP diluted net loss per share from continuing operations of $3.12 in second-quarter 2017.

Adjusted income from continuing operations in second-quarter 2018 was $172 million compared to $207 million in second-quarter 2017. This performance was primarily attributable to lower revenues of ezetimibe tablets, the divestitures of Litha and Somar and the voluntary withdrawal of OPANA® ER. Adjusted diluted EPS from continuing operations in second-quarter 2018 was $0.76 compared to $0.93 in second-quarter 2017.

U.S. BRANDED - SPECIALTY & ESTABLISHED PHARMACEUTICALS

During second-quarter 2018, Endo accelerated the recruitment for two Phase 3 clinical trials of collagenase clostridium histolyticum (or "CCH") for the treatment of cellulite and now expects topline results in fourth-quarter 2018.

Second-quarter 2018 U.S. Branded - Specialty & Established Pharmaceuticals results include:

  • Revenues of $213 million compared to $245 million in second-quarter 2017; this performance was primarily attributable to the voluntary cessation of OPANA® ER shipments in third-quarter 2017. Excluding OPANA® ER and SUMAVEL™ DosePro™, which was discontinued in first-quarter 2018, revenues increased two percent compared to second-quarter 2017.
  • Specialty Products revenues increased 9 percent in second-quarter 2018 compared to second-quarter 2017, primarily driven by strong performance from XIAFLEX®. Sales of XIAFLEX® increased 27 percent compared to second-quarter 2017; this increase was primarily attributable to volume growth in both Dupuytren's Contracture and Peyronie's Disease.

U.S. BRANDED - STERILE INJECTABLES

During second-quarter 2018, the U.S. Branded Sterile Injectables segment launched glycopyrrolate injection, the generic version of ROBINUL®, as Somerset Therapeutics' exclusive distributor.

Also in second-quarter 2018, Endo entered into an exclusive licensing agreement with Nevakar, a specialty pharmaceutical company developing multiple assets in the ophthalmic and injectable areas, for the development of five differentiated, sterile injectable products in the U.S. and Canada. Nevakar will develop and seek U.S. Food and Drug Administration (FDA) approval for these products and Endo's Par Pharmaceuticals Sterile Products division will launch and distribute them upon approval. In July, the segment launched ertapenem for injection, the authorized generic of INVANZ®.

Second-quarter 2018 U.S. Branded - Sterile Injectables results include:

  • Revenues of $218 million, a 21 percent increase compared to second-quarter 2017; this increase was primarily attributable to strong growth of ADRENALIN® and VASOSTRICT®.

U.S. GENERIC PHARMACEUTICALS

During second-quarter 2018, the U.S. Generic Pharmaceuticals segment launched praziquantel tablets, the first-to-market generic version of BILTRICIDE®. In July, the segment launched colchicine tablets, the authorized generic of COLCRYS®.

Second-quarter 2018 U.S. Generic Pharmaceuticals results include:

  • Revenues of $241 million compared to $383 million in second-quarter 2017; this performance was primarily attributable to the loss of marketing exclusivity in the first half of 2017 for the first-to-file product ezetimibe tablets. Also contributing were the annualization of the impact from 2017 competitive entries and previously announced product discontinuances, including the authorized generic of metoprolol.

INTERNATIONAL PHARMACEUTICALS

Second-quarter 2018 International Pharmaceuticals revenues were $43 million, compared to $67 million in the same period in 2017. This performance is primarily attributable to the sale of Litha and Somar in the second-half of 2017. Excluding Litha and Somar, which were divested in 2017, International Pharmaceuticals second-quarter 2018 revenues increased 25 percent compared to second-quarter 2017.

2018 FINANCIAL GUIDANCE

For the full twelve months ending December 31, 2018, at current exchange rates, Endo is raising its financial guidance. The Company now estimates:

  • Total revenues to be between $2.75 billion and $2.85 billion;
  • Adjusted diluted EPS from continuing operations to be between $2.50 and $2.60; and
  • Adjusted EBITDA from continuing operations to be between $1.27 billion and $1.33 billion.

The Company's 2018 non-GAAP financial guidance is based on the following assumptions:

  • Adjusted gross margin of approximately 68.5% to 69.5%;
  • Adjusted operating expenses as a percentage of revenues of approximately 26.0% to 27.0%;
  • Adjusted interest expense of approximately $530 million to $540 million;
  • Adjusted effective tax rate of approximately 11.0% to 12.0%; and
  • Adjusted diluted weighted average shares outstanding of approximately 229 million.

BALANCE SHEET, LIQUIDITY AND OTHER UPDATES

As of June 30, 2018, the Company had $1,099 million in unrestricted cash; debt of $8.3 billion; net debt of approximately $7.2 billion and a net debt to adjusted EBITDA ratio of 5.2.

Second-quarter 2018 cash provided by operating activities was $170 million, compared to $171 million of net cash provided by operating activities in the comparable 2017 period.

CONFERENCE CALL INFORMATION

Endo will conduct a conference call with financial analysts to discuss this press release today at 9:00 a.m. ET. The dial-in number to access the call is U.S./Canada (866) 497-0462, International (678) 509-7598, and the passcode is 1586569. Please dial in 10 minutes prior to the scheduled start time.

A replay of the call will be available from August 8, 2018 at 12:00 p.m. ET until 12:00 p.m. ET on August 11, 2018 by dialing U.S./Canada (855) 859-2056, International (404) 537-3406, and entering the passcode 1586569.

A simultaneous webcast of the call can be accessed by visiting http://investor.endo.com/events-and-presentations. In addition, a replay of the webcast will be available on the Company website for one year following the event.

ZETIA is a U.S. registered trademark of MSD International GMBH LLC
DOSEPRO is a U.S. registered trademark of Zogenix, Inc.
ROBINUL is a U.S. registered trademark of Wyeth LLC.
VOLTAREN is a registered trademark of Novartis Corporation
COLCRYS is a registered trademark of Takeda Pharmaceuticals U.S.A., Inc.
BILTRICIDE is a registered trademark of Bayer Intellectual Property GmbH
INVANZ is a registered trademark of Merck Sharp & Dohme Corp.

 

 

FINANCIAL SCHEDULES

The following table presents Endo's unaudited Total Revenues for the three and six months ended June 30, 2018 and 2017
(dollars in thousands):

 
 

Three Months Ended June 30,

 

Percent
Growth

 

Six Months Ended June 30,

 

Percent
Growth

 

2018

 

2017

   

2018

 

2017

 

U.S. Branded - Specialty &
Established Pharmaceuticals:

                     

Specialty Products:

                     

   XIAFLEX®

$

63,500

   

$

50,077

   

27

%

 

$

120,641

   

$

99,602

   

21

%

   SUPPRELIN® LA

19,963

   

23,649

   

(16)

%

 

40,540

   

42,830

   

(5)

%

   Other Specialty (1)

36,429

   

36,745

   

(1)

%

 

70,626

   

72,773

   

(3)

%

Total Specialty Products

$

119,892

   

$

110,471

   

9

%

 

$

231,807

   

$

215,205

   

8

%

Established Products:

                     

   PERCOCET®

$

30,833

   

$

30,889

   

%

 

$

62,809

   

$

61,834

   

2

%

   VOLTAREN® Gel

17,811

   

20,270

   

(12)

%

 

29,128

   

34,544

   

(16)

%

   OPANA® ER

   

31,582

   

(100)

%

 

   

67,300

   

(100)

%

   Other Established (2)

44,101

   

51,976

   

(15)

%

 

89,128

   

116,464

   

(23)

%

Total Established Products

$

92,745

   

$

134,717

   

(31)

%

 

$

181,065

   

$

280,142

   

(35)

%

Total U.S. Branded - Specialty &
Established Pharmaceuticals (3)

$

212,637

   

$

245,188

   

(13)

%

 

$

412,872

   

$

495,347

   

(17)

%

U.S. Branded - Sterile Injectables:

                     

   VASOSTRICT®

$

106,329

   

$

95,750

   

11

%

 

$

220,054

   

$

194,908

   

13

%

   ADRENALIN®

36,658

   

19,032

   

93

%

 

66,398

   

25,129

   

NM

   Other Sterile Injectables (4)

74,856

   

65,510

   

14

%

 

147,245

   

132,423

   

11

%

Total U.S. Branded - Sterile Injectables (3)

$

217,843

   

$

180,292

   

21

%

 

$

433,697

   

$

352,460

   

23

%

Total U.S. Generic Pharmaceuticals

$

241,236

   

$

383,020

   

(37)

%

 

$

490,476

   

$

932,835

   

(47)

%

Total International Pharmaceuticals

$

42,980

   

$

67,231

   

(36)

%

 

$

78,178

   

$

132,689

   

(41)

%

Total Revenues

$

714,696

   

$

875,731

   

(18)

%

 

$

1,415,223

   

$

1,913,331

   

(26)

%

__________

(1)

Products included within Other Specialty include TESTOPEL®, NASCOBAL® Nasal Spray and AVEED®.

(2)

Products included within Other Established include, but are not limited to, LIDODERM®, EDEX®, TESTIM® and FORTESTA® Gel, including the authorized generics.

(3)

Individual products presented above represent the top two performing products in each product category and/or any product having revenues in excess of $25 million during any quarterly period in 2018 or 2017.

(4)

Products included within Other Sterile Injectables include, but are not limited to, APLISOL®, ephedrine sulfate injection and neostigmine methylsulfate injection.

 

 

The following table presents unaudited Condensed Consolidated Statement of Operations data for the three and six months ended
June 30, 2018 and 2017 (in thousands, except per share data):

 
 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2018

 

2017

 

2018

 

2017

TOTAL REVENUES

$

714,696

   

$

875,731

   

$

1,415,223

   

$

1,913,331

 

COSTS AND EXPENSES:

             

Cost of revenues

381,905

   

539,401

   

785,503

   

1,208,363

 

Selling, general and administrative

148,157

   

155,555

   

314,824

   

332,795

 

Research and development

82,102

   

40,869

   

120,748

   

83,878

 

Litigation-related and other contingencies, net

19,620

   

(2,600)

   

17,120

   

(1,664)

 

Asset impairment charges

22,767

   

725,044

   

471,183

   

929,006

 

Acquisition-related and integration items

5,161

   

4,190

   

11,996

   

15,070

 

OPERATING INCOME (LOSS) FROM CONTINUING
OPERATIONS

$

54,984

   

$

(586,728)

   

$

(306,151)

   

$

(654,117)

 

INTEREST EXPENSE, NET

130,059

   

121,747

   

254,049

   

233,746

 

LOSS ON EXTINGUISHMENT OF DEBT

   

51,734

   

   

51,734

 

OTHER INCOME, NET

(28,831)

   

(6,709)

   

(31,709)

   

(8,746)

 

LOSS FROM CONTINUING OPERATIONS BEFORE
INCOME TAX

$

(46,244)

   

$

(753,500)

   

$

(528,491)

   

$

(930,851)

 

INCOME TAX EXPENSE (BENEFIT)

6,235

   

(57,480)

   

21,726

   

(69,408)

 

LOSS FROM CONTINUING OPERATIONS

$

(52,479)

   

$

(696,020)

   

$

(550,217)

   

$

(861,443)

 

DISCONTINUED OPERATIONS, NET OF TAX

(8,388)

   

(700,498)

   

(16,139)

   

(708,903)

 

NET LOSS

$

(60,867)

   

$

(1,396,518)

   

$

(566,356)

   

$

(1,570,346)

 

NET LOSS PER SHARE—BASIC:

             

Continuing operations

$

(0.23)

   

$

(3.12)

   

$

(2.46)

   

$

(3.86)

 

Discontinued operations

(0.04)

   

(3.14)

   

(0.07)

   

(3.18)

 

Basic

$

(0.27)

   

$

(6.26)

   

$

(2.53)

   

$

(7.04)

 

NET LOSS PER SHARE—DILUTED:

             

Continuing operations

$

(0.23)

   

$

(3.12)

   

$

(2.46)

   

$

(3.86)

 

Discontinued operations

(0.04)

   

(3.14)

   

(0.07)

   

(3.18)

 

Diluted

$

(0.27)

   

$

(6.26)

   

$

(2.53)

   

$

(7.04)

 

WEIGHTED AVERAGE SHARES:

             

Basic

223,834

   

223,158

   

223,677

   

223,086

 

Diluted

223,834

   

223,158

   

223,677

   

223,086

 

 

 

The following table presents unaudited Condensed Consolidated Balance Sheet data at June 30, 2018 and
December 31, 2017 (in thousands):

 
 

June 30, 2018

 

December 31,
2017

ASSETS

     

CURRENT ASSETS:

     

Cash and cash equivalents

$

1,098,788

   

$

986,605

 

Restricted cash and cash equivalents

358,211

   

320,453

 

Accounts receivable

451,240

   

517,436

 

Inventories, net

343,318

   

391,437

 

Other current assets

57,341

   

55,146

 

   Total current assets

$

2,308,898

   

$

2,271,077

 

TOTAL NON-CURRENT ASSETS

8,549,137

   

9,364,503

 

TOTAL ASSETS

$

10,858,035

   

$

11,635,580

 

LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY

     

CURRENT LIABILITIES:

     

Accounts payable and accrued expenses, including legal settlement accruals

$

2,117,079

   

$

2,184,618

 

Other current liabilities

35,987

   

36,291

 

   Total current liabilities

$

2,153,066

   

$

2,220,909

 

LONG-TERM DEBT, LESS CURRENT PORTION, NET

8,233,005

   

8,242,032

 

OTHER LIABILITIES

534,041

   

687,759

 

SHAREHOLDERS' (DEFICIT) EQUITY

(62,077)

   

484,880

 

TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY

$

10,858,035

   

$

11,635,580

 

 

 

 

The following table presents unaudited Condensed Consolidated Statement of Cash Flow data for the six months ended
June 30, 2018 and 2017 (in thousands):

 
 

Six Months Ended June 30,

 

2018

 

2017

OPERATING ACTIVITIES:

     

Net loss

$

(566,356)

   

$

(1,570,346)

 

Adjustments to reconcile Net loss to Net cash provided by operating activities:

     

  Depreciation and amortization

379,646

   

499,656

 

  Asset impairment charges

471,183

   

929,006

 

  Other, including cash payments to claimants from Qualified Settlement Funds

(65,341)

   

480,770

 

  Net cash provided by operating activities

$

219,132

   

$

339,086

 

INVESTING ACTIVITIES:

     

Purchases of property, plant and equipment, excluding capitalized interest

$

(41,960)

   

$

(59,729)

 

Proceeds from sale of business and other assets, net

37,971

   

18,531

 

Other

(4,999)

   

 

  Net cash used in investing activities

$

(8,988)

   

$

(41,198)

 

FINANCING ACTIVITIES:

     

Payments on borrowings, net

$

(19,650)

   

$

(2,550)

 

Other

(21,143)

   

(97,033)

 

  Net cash used in financing activities

$

(40,793)

   

$

(99,583)

 

Effect of foreign exchange rate

(1,010)

   

2,926

 

Movement in cash held for sale

   

(21,125)

 

NET INCREASE IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND
RESTRICTED CASH EQUIVALENTS

$

168,341

   

$

180,106

 

CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH
EQUIVALENTS, BEGINNING OF PERIOD

1,311,014

   

805,180

 

CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH
EQUIVALENTS, END OF PERIOD

$

1,479,355

   

$

985,286

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP financial measures. For additional information on the Company's use of such non-GAAP financial measures, refer to Endo's Current Report on Form 8-K furnished today to the U.S. Securities and Exchange Commission, which includes an explanation of the Company's reasons for using non-GAAP measures.

The tables below provide reconciliations of certain of our non-GAAP financial measures to their most directly comparable GAAP amounts. Refer to the "Notes to the Reconciliations of GAAP and Non-GAAP Financial Measures" section below for additional details regarding the adjustments to the non-GAAP financial measures detailed throughout this Supplemental Financial Information section.

 

Reconciliation of EBITDA and Adjusted EBITDA (non-GAAP)

The following table provides a reconciliation of Net loss (GAAP) to Adjusted EBITDA (non-GAAP) for the three and six
months ended June 30, 2018 and 2017 (in thousands):

 
 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2018

 

2017

 

2018

 

2017

Net loss (GAAP)

$

(60,867)

   

$

(1,396,518)

   

$

(566,356)

   

$

(1,570,346)

 

Income tax expense (benefit)

6,235

   

(57,480)

   

21,726

   

(69,408)

 

Interest expense, net

130,059

   

121,747

   

254,049

   

233,746

 

Depreciation and amortization (15)

170,011

   

212,801

   

344,469

   

496,910

 

EBITDA (non-GAAP)

$

245,438

   

$

(1,119,450)

   

$

53,888

   

$

(909,098)

 
               

Inventory step-up and other cost savings (2)

$

124

   

$

100

   

$

190

   

$

215

 

Upfront and milestone-related payments (3)

36,964

   

3,082

   

38,296

   

6,177

 

Inventory reserve increase from restructuring (4)

202

   

7,899

   

2,590

   

7,899

 

Separation benefits and other restructuring (5)

28,951

   

16,715

   

75,550

   

39,385

 

Certain litigation-related and other contingencies, net (6)

19,620

   

(2,600)

   

17,120

   

(1,664)

 

Asset impairment charges (7)

22,767

   

725,044

   

471,183

   

929,006

 

Acquisition-related and integration costs (8)

1,034

   

2,240

   

1,034

   

6,936

 

Fair value of contingent consideration (9)

4,127

   

1,950

   

10,962

   

8,134

 

Loss on extinguishment of debt (10)

   

51,734

   

   

51,734

 

Share-based compensation

12,096

   

7,512

   

29,986

   

27,005

 

Other income, net (16)

(28,831)

   

(6,709)

   

(31,709)

   

(8,746)

 

Other adjustments

(10)

   

(114)

   

(708)

   

(17)

 

Discontinued operations, net of tax (13)

8,388

   

700,498

   

16,139

   

708,903

 

Adjusted EBITDA (non-GAAP)

$

350,870

   

$

387,901

   

$

684,521

   

$

865,869

 

 

 

Reconciliation of Adjusted Income from Continuing Operations (non-GAAP)

The following table provides a reconciliation of our Loss from continuing operations (GAAP) to our Adjusted income from
continuing operations (non-GAAP) for the three and six months ended June 30, 2018 and 2017 (in thousands):

 
 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2018

 

2017

 

2018

 

2017

Loss from continuing operations (GAAP)

$

(52,479)

   

$

(696,020)

   

$

(550,217)

   

$

(861,443)

 

Non-GAAP adjustments:

             

  Amortization of intangible assets (1)

153,215

   

190,943

   

310,387

   

454,077

 

  Inventory step-up and other cost savings (2)

124

   

100

   

190

   

215

 

  Upfront and milestone-related payments (3)

36,964

   

3,082

   

38,296

   

6,177

 

  Inventory reserve increase from restructuring (4)

202

   

7,899

   

2,590

   

7,899

 

  Separation benefits and other restructuring (5)

28,951

   

16,715

   

75,550

   

39,385

 

  Certain litigation-related and other contingencies, net (6)

19,620

   

(2,600)

   

17,120

   

(1,664)

 

  Asset impairment charges (7)

22,767

   

725,044

   

471,183

   

929,006

 

  Acquisition-related and integration costs (8)

1,034

   

2,240

   

1,034

   

6,936

 

  Fair value of contingent consideration (9)

4,127

   

1,950

   

10,962

   

8,134

 

  Loss on extinguishment of debt (10)

   

51,734

   

   

51,734

 

  Other (11)

(28,007)

   

(3,233)

   

(31,261)

   

(4,168)

 

  Tax adjustments (12)

(14,323)

   

(90,653)

   

(22,856)

   

(153,842)

 

Adjusted income from continuing operations (non-GAAP)

$

172,195

   

$

207,201

   

$

322,978

   

$

482,446

 

 

 

Reconciliation of Other Adjusted Income Statement Data (non-GAAP)

The following tables provide detailed reconciliations of various other income statement data between the GAAP and non-GAAP amounts for the three and six months ended June 30, 2018
and 2017 (in thousands, except per share data):

 
 

Three Months Ended June 30, 2018

 

Total revenues

 

Cost of revenues

 

Gross margin

 

Gross margin %

 

Total operating expenses

 

Operating expense to revenue %

 

Operating income from continuing operations

 

Operating margin %

 

Other non-operating expense, net

 

(Loss) income from continuing operations before income tax

 

Income tax expense

 

Effective tax rate

 

(Loss) income from continuing operations

 

Discontinued operations, net of tax

 

Net (loss) income

 

Diluted (loss) income per share from continuing operations (14)

Reported (GAAP)

$    714,696

 

$    381,905

 

$    332,791

 

47 %

 

$    277,807

 

39 %

 

$     54,984

 

8 %

 

$ 101,228

 

$         (46,244)

 

$    6,235

 

(13)%

 

$   (52,479)

 

$      (8,388)

 

$      (60,867)

 

$          (0.23)

Items impacting comparability:

                                                             

Amortization of intangible assets (1)

 

(153,215)

 

153,215

     

     

153,215

     

 

153,215

 

     

153,215

 

 

153,215

 

0.67

Inventory step-up and other cost savings (2)

 

(124)

 

124

     

     

124

     

 

124

 

     

124

 

 

124

 

Upfront and milestone-related payments (3)

 

(694)

 

694

     

(36,270)

     

36,964

     

 

36,964

 

     

36,964

 

 

36,964

 

0.17

Inventory reserve increase from restructuring (4)

 

(202)

 

202

     

     

202

     

 

202

 

     

202

 

 

202

 

Separation benefits and other restructuring (5)

 

(26,613)

 

26,613

     

(2,338)

     

28,951

     

 

28,951

 

     

28,951

 

 

28,951

 

0.13

Certain litigation-related and
other contingencies, net (6)

 

 

     

(19,620)

     

19,620

     

 

19,620

 

     

19,620

 

 

19,620

 

0.09

Asset impairment charges (7)

 

 

     

(22,767)

     

22,767

     

 

22,767

 

     

22,767

 

 

22,767

 

0.10

Acquisition-related and integration costs (8)

 

 

     

(1,034)

     

1,034

     

 

1,034

 

     

1,034

 

 

1,034

 

Fair value of contingent consideration (9)

 

 

     

(4,127)

     

4,127

     

 

4,127

 

     

4,127

 

 

4,127

 

0.02

Other (11)

 

 

     

     

     

28,007

 

(28,007)

 

     

(28,007)

 

 

(28,007)

 

(0.13)

Tax adjustments (12)

 

 

     

     

     

 

 

14,323

     

(14,323)

 

 

(14,323)

 

(0.06)

Exclude discontinued operations, net of tax (13)

 

 

     

     

     

 

 

     

 

8,388

 

8,388

 

After considering items (non-GAAP)

$    714,696

 

$    201,057

 

$    513,639

 

72 %

 

$    191,651

 

27 %

 

$   321,988

 

45 %

 

$ 129,235

 

$         192,753

 

$  20,558

 

11 %

 

$  172,195

 

$             —

 

$     172,195

 

$            0.76

                                                               
                                                               
 

Three Months Ended June 30, 2017

 

Total revenues

 

Cost of revenues

 

Gross margin

 

Gross margin %

 

Total operating expenses

 

Operating expense to revenue %

 

Operating (loss) income from continuing operations

 

Operating margin %

 

Other non-operating expense, net

 

(Loss) income from continuing operations before income tax

 

Income tax (benefit) expense

 

Effective tax rate

 

(Loss) income from continuing operations

 

Discontinued operations, net of tax

 

Net (loss) income

 

Diluted (loss) income per share from continuing operations (14)

Reported (GAAP)

$    875,731

 

$    539,401

 

$    336,330

 

38 %

 

$    923,058

 

105 %

 

$  (586,728)

 

(67)%

 

$ 166,772

 

$       (753,500)

 

$ (57,480)

 

8 %

 

$ (696,020)

 

$  (700,498)

 

$ (1,396,518)

 

$          (3.12)

Items impacting comparability:

                                                             

Amortization of intangible assets (1)

 

(190,943)

 

190,943

     

     

190,943

     

 

190,943

 

     

190,943

 

 

190,943

 

0.86

Inventory step-up and other cost savings (2)

 

(100)

 

100

     

     

100

     

 

100

 

     

100

 

 

100

 

Upfront and milestone-related payments (3)

 

(682)

 

682

     

(2,400)

     

3,082

     

 

3,082

 

     

3,082

 

 

3,082

 

0.01

Inventory reserve increase from restructuring (4)

 

(7,899)

 

7,899

     

     

7,899

     

 

7,899

 

     

7,899

 

 

7,899

 

0.04

Separation benefits and other restructuring (5)

 

(5,026)

 

5,026

     

(11,689)

     

16,715

     

 

16,715

 

     

16,715

 

 

16,715

 

0.07

Certain litigation-related and
other contingencies, net (6)

 

 

     

2,600

     

(2,600)

     

 

(2,600)

 

     

(2,600)

 

 

(2,600)

 

(0.01)

Asset impairment charges (7)

 

 

     

(725,044)

     

725,044

     

 

725,044

 

     

725,044

 

 

725,044

 

3.25

Acquisition-related and integration costs (8)

 

 

     

(2,240)

     

2,240

     

 

2,240

 

     

2,240

 

 

2,240

 

0.01

Fair value of contingent consideration (9)

 

 

     

(1,950)

     

1,950

     

 

1,950

 

     

1,950

 

 

1,950

 

0.01

Loss on extinguishment of debt (10)

 

 

     

     

     

(51,734)

 

51,734

 

     

51,734

 

 

51,734

 

0.23

Other (11)

 

 

     

     

     

3,233

 

(3,233)

 

     

(3,233)

 

 

(3,233)

 

(0.01)

Tax adjustments (12)

 

 

     

     

     

 

 

90,653

     

(90,653)

 

 

(90,653)

 

(0.41)

Exclude discontinued operations, net of tax (13)

 

 

     

     

     

 

 

     

 

700,498

 

700,498

 

After considering items (non-GAAP)

$    875,731

 

$    334,751

 

$    540,980

 

62 %

 

$    182,335

 

21 %

 

$   358,645

 

41 %

 

$ 118,271

 

$         240,374

 

$  33,173

 

14 %

 

$  207,201

 

$             —

 

$     207,201

 

$            0.93

                                                               
                                                               
 

Six Months Ended June 30, 2018

 

Total revenues

 

Cost of revenues

 

Gross margin

 

Gross margin %

 

Total operating expenses

 

Operating expense to revenue %

 

Operating (loss) income from continuing operations

 

Operating margin %

 

Other non-operating expense, net

 

(Loss) income from continuing operations before income tax

 

Income tax expense

 

Effective tax rate

 

(Loss) income from continuing operations

 

Discontinued operations, net of tax

 

Net (loss) income

 

Diluted (loss) income per share from continuing operations (14)

Reported (GAAP)

$ 1,415,223

 

$    785,503

 

$    629,720

 

44 %

 

$    935,871

 

66 %

 

$  (306,151)

 

(22)%

 

$ 222,340

 

$       (528,491)

 

$  21,726

 

(4)%

 

$ (550,217)

 

$    (16,139)

 

$    (566,356)

 

$          (2.46)

Items impacting comparability:

                                                             

Amortization of intangible assets (1)

 

(310,387)

 

310,387

     

     

310,387

     

 

310,387

 

     

310,387

 

 

310,387

 

1.38

Inventory step-up and other cost savings (2)

 

(190)

 

190

     

     

190

     

 

190

 

     

190

 

 

190

 

Upfront and milestone-related payments (3)

 

(1,350)

 

1,350

     

(36,946)

     

38,296

     

 

38,296

 

     

38,296

 

 

38,296

 

0.17

Inventory reserve increase from restructuring (4)

 

(2,590)

 

2,590

     

     

2,590

     

 

2,590

 

     

2,590

 

 

2,590

 

0.01

Separation benefits and other restructuring (5)

 

(53,831)

 

53,831

     

(21,719)

     

75,550

     

 

75,550

 

     

75,550

 

 

75,550

 

0.34

Certain litigation-related and
other contingencies, net (6)

 

 

     

(17,120)

     

17,120

     

 

17,120

 

     

17,120

 

 

17,120

 

0.08

Asset impairment charges (7)

 

 

     

(471,183)

     

471,183

     

 

471,183

 

     

471,183

 

 

471,183

 

2.10

Acquisition-related and integration costs (8)

 

 

     

(1,034)

     

1,034

     

 

1,034

 

     

1,034

 

 

1,034

 

Fair value of contingent consideration (9)

 

 

     

(10,962)

     

10,962

     

 

10,962

 

     

10,962

 

 

10,962

 

0.05

Other (11)

 

 

     

630

     

(630)

     

30,631

 

(31,261)

 

     

(31,261)

 

 

(31,261)

 

(0.14)

Tax adjustments (12)

 

 

     

     

     

 

 

22,856

     

(22,856)

 

 

(22,856)

 

(0.10)

Exclude discontinued operations, net of tax (13)

 

 

     

     

     

 

 

     

 

16,139

 

16,139

 

After considering items (non-GAAP)

$ 1,415,223

 

$    417,155

 

$    998,068

 

71 %

 

$    377,537

 

27 %

 

$   620,531

 

44 %

 

$ 252,971

 

$         367,560

 

$  44,582

 

12 %

 

$  322,978

 

$             —

 

$     322,978

 

$            1.43

                                                               
                                                               
 

Six Months Ended June 30, 2017

 

Total revenues

 

Cost of revenues

 

Gross margin

 

Gross margin %

 

Total operating expenses

 

Operating expense to revenue %

 

Operating (loss) income from continuing operations

 

Operating margin %

 

Other non-operating expense, net

 

(Loss) income from continuing operations before income tax

 

Income tax (benefit) expense

 

Effective tax rate

 

(Loss) income from continuing operations

 

Discontinued operations, net of tax

 

Net (loss) income

 

Diluted (loss) income per share from continuing operations (14)

Reported (GAAP)

$ 1,913,331

 

$ 1,208,363

 

$    704,968

 

37 %

 

$ 1,359,085

 

71 %

 

$  (654,117)

 

(34)%

 

$ 276,734

 

$       (930,851)

 

$ (69,408)

 

7 %

 

$ (861,443)

 

$  (708,903)

 

$ (1,570,346)

 

$          (3.86)

Items impacting comparability:

                                                             

Amortization of intangible assets (1)

 

(454,077)

 

454,077

     

     

454,077

     

 

454,077

 

     

454,077

 

 

454,077

 

2.03

Inventory step-up and other cost savings (2)

 

(215)

 

215

     

     

215

     

 

215

 

     

215

 

 

215

 

Upfront and milestone-related payments (3)

 

(1,351)

 

1,351

     

(4,826)

     

6,177

     

 

6,177

 

     

6,177

 

 

6,177

 

0.03

Inventory reserve increase from restructuring (4)

 

(7,899)

 

7,899

     

     

7,899

     

 

7,899

 

     

7,899

 

 

7,899

 

0.04

Separation benefits and other restructuring (5)

 

(6,687)

 

6,687

     

(32,698)

     

39,385

     

 

39,385

 

     

39,385

 

 

39,385

 

0.18

Certain litigation-related and
other contingencies, net (6)

 

 

     

1,664

     

(1,664)

     

 

(1,664)

 

     

(1,664)

 

 

(1,664)

 

(0.01)

Asset impairment charges (7)

 

 

     

(929,006)

     

929,006

     

 

929,006

 

     

929,006

 

 

929,006

 

4.16

Acquisition-related and integration costs (8)

 

 

     

(6,936)

     

6,936

     

 

6,936

 

     

6,936

 

 

6,936

 

0.03

Fair value of contingent consideration (9)

 

 

     

(8,134)

     

8,134

     

 

8,134

 

     

8,134

 

 

8,134

 

0.04

Loss on extinguishment of debt (10)

 

 

     

     

     

(51,734)

 

51,734

 

     

51,734

 

 

51,734

 

0.23

Other (11)

 

 

     

     

     

4,168

 

(4,168)

 

     

(4,168)

 

 

(4,168)

 

(0.02)

Tax adjustments (12)

 

 

     

     

     

 

 

153,842

     

(153,842)

 

 

(153,842)

 

(0.69)

Exclude discontinued operations, net of tax (13)