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Endo Reports Second-Quarter 2021 Financial Results And Updates 2021 Financial Guidance

August 5, 2021
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DUBLIN, Aug. 5, 2021 /PRNewswire/ -- Endo International plc (NASDAQ: ENDP) today reported financial results for the second-quarter ended June 30, 2021.

"Our second-quarter 2021 results reflect strong sequential growth in our Branded Pharmaceuticals segment driven by XIAFLEX®, and better than expected performance of our Sterile Injectables and Generic Pharmaceuticals segments," said Blaise Coleman, President and Chief Executive Officer at Endo. "Moving forward, we remain committed to further advancing our strategic priorities by delivering on our business transformation initiatives and investing in the on-going launch of QWO®, the growth of XIAFLEX® and the progression of our product pipeline."

SECOND-QUARTER FINANCIAL PERFORMANCE

(in thousands, except per share amounts)

 

Three Months Ended June 30,

      

Six Months Ended June 30,

    
 

2021

  

2020

  

Change

  

2021

  

2020

  

Change

Total Revenues, Net

$

713,830

    

$

687,588

    

4

%

  

$

1,431,749

    

$

1,507,993

    

(5)

%

Reported (Loss) Income from Continuing Operations

$

(10,184)

    

$

17,610

    

NM

  

$

36,875

    

$

175,191

    

(79)

%

Reported Diluted Weighted Average Shares

233,331

    

233,681

    

—

%

  

237,043

    

233,348

    

2

%

Reported Diluted Net (Loss) Income per Share from Continuing Operations

$

(0.04)

    

$

0.08

    

NM

  

$

0.16

    

$

0.75

    

(79)

%

Reported Net (Loss) Income

$

(15,500)

    

$

10,558

    

NM

  

$

26,024

    

$

140,488

    

(81)

%

Adjusted Income from Continuing Operations (2)

$

152,121

    

$

151,700

    

—

%

  

$

327,038

    

$

372,100

    

(12)

%

Adjusted Diluted Weighted Average Shares (1)(2)

235,416

    

233,681

    

1

%

  

237,043

    

233,348

    

2

%

Adjusted Diluted Net Income per Share from Continuing Operations (2)

$

0.65

    

$

0.65

    

—

%

  

$

1.38

    

$

1.59

    

(13)

%

Adjusted EBITDA (2)

$

342,700

    

$

336,481

    

2

%

  

$

707,415

    

$

757,607

    

(7)

%

 

__________

(1)

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

(2)

The information presented in the table above includes non-GAAP financial measures such as "Adjusted Income from Continuing Operations," "Adjusted Diluted Weighted Average Shares," "Adjusted Diluted Net Income per Share from Continuing Operations" and "Adjusted EBITDA." Refer to the "Supplemental Financial Information" section below for reconciliations of certain non-GAAP financial measures to the most directly comparable GAAP financial measures.

CONSOLIDATED RESULTS

Total revenues were $714 million in second-quarter 2021, an increase of 4% compared to $688 million during the same period in 2020. This result was primarily attributable to increased revenues from the Specialty Products portfolio of our Branded Pharmaceuticals segment, partially offset by decreased revenues from our Generic Pharmaceuticals and Sterile Injectables segments.

Reported loss from continuing operations in second-quarter 2021 was $10 million compared to reported income from continuing operations of $18 million during the same period in 2020. This result was attributable to higher litigation-related costs which were partially offset by increased revenues and favorable product mix changes. Reported diluted net loss per share from continuing operations in second-quarter 2021 was $0.04 compared to reported diluted net income per share from continuing operations in second-quarter 2020 of $0.08.

Adjusted income from continuing operations in second-quarter 2021 was $152 million equal to second-quarter 2020. Adjusted diluted net income per share from continuing operations in second-quarter 2021 was $0.65 equal to second-quarter 2020.

BRANDED PHARMACEUTICALS SEGMENT

Second-quarter 2021 Branded Pharmaceuticals segment revenues were $228 million, an increase of 76% compared to $130 million during second-quarter 2020.

Specialty Products revenues increased to $167 million in second-quarter 2021 compared to $69 million in second-quarter 2020. XIAFLEX® revenues increased to $111 million compared to $34 million in second-quarter 2020 primarily driven by demand growth due to increased physician office activity and patient office visits coupled with commercial execution. Established Products revenues were essentially flat at $61 million in the second-quarter 2021 and the second-quarter 2020.

STERILE INJECTABLES SEGMENT

Second-quarter 2021 Sterile Injectables segment revenues were $295 million, a decrease of 8% compared to $319 million during second-quarter 2020. This was primarily driven by a decrease in VASOSTRICT® revenues due to anticipated lower volumes as COVID-19 related hospitalizations decreased.

GENERIC PHARMACEUTICALS SEGMENT

Second-quarter 2021 Generic Pharmaceuticals segment revenues were $167 million, a decrease of 23% compared to $216 million during second-quarter 2020. This decrease was primarily attributable to continued competitive pressures on certain products, partially offset by the January 2021 launch of lubiprostone capsules, the first authorized generic of Mallinckrodt's Amitiza®.

INTERNATIONAL PHARMACEUTICALS SEGMENT

Second-quarter 2021 International Pharmaceuticals segment revenues increased 4% to $24 million compared to $23 million during second-quarter 2020.

2021 FINANCIAL GUIDANCE

Endo is updating its financial guidance for the full-year ending December 31, 2021 by narrowing the expected ranges regarding revenues, adjusted diluted net income per share from continuing operations and adjusted EBITDA. The guidance below contemplates a range of potential outcomes that reflect uncertainties in certain key assumptions including, among other things, uncertainties related to the COVID-19 pandemic. These statements are forward-looking, and actual results may differ materially from Endo's expectations, as further discussed below under the heading "Cautionary Note Regarding Forward-Looking Statements."

 

Full-Year 2021
 

Prior

  

Current

Total Revenues, Net

$2.65B - $2.79B

  

$2.73B - $2.79B

Adjusted EBITDA

$1.18B - $1.28B

  

$1.23B - $1.28B

Adjusted Diluted Net Income per Share from Continuing Operations

$1.95 - $2.30

  

$2.15 - $2.30

Assumptions:

      

Adjusted Gross Margin

~70.0% - 71.0%

  

~70.0% - 71.0%

Adjusted Operating Expenses as a Percentage of Total Revenues, Net

~28.5% - 29.0%

  

~28.5%

Adjusted Interest Expense

~$560M

  

~$560M

Adjusted Effective Tax Rate

~11.0% - 12.0%

  

~11.0% - 12.0%

Adjusted Diluted Weighted Average Shares

~239M

  

~239M

BALANCE SHEET, LIQUIDITY AND OTHER UPDATES

As of June 30, 2021, the Company had approximately $1.5 billion in unrestricted cash; $8.3 billion of debt; and a net debt to adjusted EBITDA ratio of 5.0.

Second-quarter 2021 net cash provided by operating activities was $155 million compared to $304 million during the second-quarter 2020. This decrease was primarily due to a decrease in cash flow from the change in net working capital.

Additionally, the Company recently entered into definitive agreements to sell the Company's manufacturing site in Chestnut Ridge, New York, as well as an undisclosed number of U.S. product regulatory approvals and related product inventory to subsidiaries of Strides Pharma Science Limited for approximately $24 million in cash, as well as certain other non-cash considerations. The exit of this site was included in a series of business transformation initiatives that the Company announced in late 2020, including further optimizing of the Company's generic retail business cost structure. The sale is expected to close in the second-half of 2021.

CONFERENCE CALL INFORMATION

Endo will conduct a conference call with financial analysts to discuss this press release tomorrow, August 6, 2021, at 7:30 a.m. ET. The dial-in number to access the call is U.S./Canada (866) 497-0462, International (678) 509-7598, and the passcode is 9749734. Please dial in 10 minutes prior to the scheduled start time.

A replay of the call will be available from August 6, 2021 at 10:30 a.m. ET until 10:30 a.m. ET on August 16, 2021 by dialing U.S./Canada (855) 859-2056 International (404) 537-3406, and entering the passcode 9749734.

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.

FINANCIAL SCHEDULES

The following table presents Endo's unaudited Total revenues, net for the three and six months ended June 30, 2021 and 2020 (dollars in thousands):

 

Three Months Ended June 30,

  

Percent
Growth

  

Six Months Ended June 30,

  

Percent
Growth
 

2021

  

2020

    

2021

  

2020

  

Branded Pharmaceuticals:

                      

Specialty Products:

                      

XIAFLEX®

$

111,487

    

$

33,783

    

NM

  

$

206,757

    

$

122,855

    

68

%

SUPPRELIN® LA

27,568

    

15,395

    

79

%

  

55,596

    

35,115

    

58

%

Other Specialty (1)

28,036

    

19,566

    

43

%

  

48,068

    

45,071

    

7

%

Total Specialty Products

$

167,091

    

$

68,744

    

NM

  

$

310,421

    

$

203,041

    

53

%

Established Products:

                      

PERCOCET®

$

26,156

    

$

27,578

    

(5)

%

  

$

51,781

    

$

55,281

    

(6)

%

TESTOPEL®

9,439

    

617

    

NM

  

20,628

    

8,809

    

NM

Other Established (2)

25,354

    

32,582

    

(22)

%

  

51,845

    

66,463

    

(22)

%

Total Established Products

$

60,949

    

$

60,777

    

—

%

  

$

124,254

    

$

130,553

    

(5)

%

Total Branded Pharmaceuticals (3)

$

228,040

    

$

129,521

    

76

%

  

$

434,675

    

$

333,594

    

30

%

Sterile Injectables:

                      

VASOSTRICT®

$

197,121

    

$

214,214

    

(8)

%

  

$

421,067

    

$

417,118

    

1

%

ADRENALIN®

29,977

    

33,161

    

(10)

%

  

59,414

    

89,673

    

(34)

%

Other Sterile Injectables (4)

67,502

    

71,839

    

(6)

%

  

122,864

    

148,813

    

(17)

%

Total Sterile Injectables (3)

$

294,600

    

$

319,214

    

(8)

%

  

$

603,345

    

$

655,604

    

(8)

%

Total Generic Pharmaceuticals

$

167,272

    

$

215,879

    

(23)

%

  

$

348,145

    

$

467,162

    

(25)

%

Total International Pharmaceuticals

$

23,918

    

$

22,974

    

4

%

  

$

45,584

    

$

51,633

    

(12)

%

Total revenues, net

$

713,830

    

$

687,588

    

4

%

  

$

1,431,749

    

$

1,507,993

    

(5)

%

__________

(1)

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

(2)

Products included within Other Established include, but are not limited to, EDEX® and LIDODERM®.

(3)

Individual products presented above represent the top two performing products in each product category for either the three or six months ended June 30, 2021 and/or any product having revenues in excess of $25 million during any quarterly period in 2021 or 2020.

(4)

Products included within Other Sterile Injectables include ertapenem for injection, APLISOL® and others.

The following table presents unaudited Condensed Consolidated Statement of Operations data for the three and six months ended June 30, 2021 and 2020 (in thousands, except per share data):

 

Three Months Ended June 30,

  

Six Months Ended June 30,
 

2021

  

2020

  

2021

  

2020

TOTAL REVENUES, NET

$

713,830

    

$

687,588

    

$

1,431,749

    

$

1,507,993

  

COSTS AND EXPENSES:

              

Cost of revenues

318,480

    

336,096

    

623,773

    

724,895

  

Selling, general and administrative

177,619

    

173,258

    

364,793

    

340,026

  

Research and development

34,669

    

30,495

    

64,408

    

62,110

  

Litigation-related and other contingencies, net

35,195

    

(8,572)

    

35,832

    

(25,748)

  

Asset impairment charges

4,929

    

—

    

8,238

    

97,785

  

Acquisition-related and integration items, net

97

    

6,045

    

(4,925)

    

18,507

  

Interest expense, net

141,553

    

129,164

    

275,894

    

262,041

  

Loss on extinguishment of debt

—

    

—

    

13,753

    

—

  

Other expense (income), net

372

    

(4,150)

    

1,284

    

(18,124)

  

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX

$

916

    

$

25,252

    

$

48,699

    

$

46,501

  

INCOME TAX EXPENSE (BENEFIT)

11,100

    

7,642

    

11,824

    

(128,690)

  

(LOSS) INCOME FROM CONTINUING OPERATIONS

$

(10,184)

    

$

17,610

    

$

36,875

    

$

175,191

  

DISCONTINUED OPERATIONS, NET OF TAX

(5,316)

    

(7,052)

    

(10,851)

    

(34,703)

  

NET (LOSS) INCOME

$

(15,500)

    

$

10,558

    

$

26,024

    

$

140,488

  

NET (LOSS) INCOME PER SHARE—BASIC:

              

Continuing operations

$

(0.04)

    

$

0.08

    

$

0.16

    

$

0.77

  

Discontinued operations

(0.03)

    

(0.03)

    

(0.05)

    

(0.16)

  

Basic

$

(0.07)

    

$

0.05

    

$

0.11

    

$

0.61

  

NET (LOSS) INCOME PER SHARE—DILUTED:

              

Continuing operations

$

(0.04)

    

$

0.08

    

$

0.16

    

$

0.75

  

Discontinued operations

(0.03)

    

(0.03)

    

(0.05)

    

(0.15)

  

Diluted

$

(0.07)

    

$

0.05

    

$

0.11

    

$

0.60

  

WEIGHTED AVERAGE SHARES:

              

Basic

233,331

    

229,716

    

231,941

    

228,457

  

Diluted

233,331

    

233,681

    

237,043

    

233,348

  

The following table presents unaudited Condensed Consolidated Balance Sheet data at June 30, 2021 and December 31, 2020 (in thousands):

 

June 30, 2021

  

December 31,
2020

ASSETS

      

CURRENT ASSETS:

      

Cash and cash equivalents

$

1,545,172

    

$

1,213,437

  

Restricted cash and cash equivalents

128,558

    

171,563

  

Accounts receivable

458,138

    

511,262

  

Inventories, net

338,456

    

352,260

  

Other current assets

99,005

    

164,736

  

Total current assets

$

2,569,329

    

$

2,413,258

  

TOTAL NON-CURRENT ASSETS

6,636,928

    

6,851,379

  

TOTAL ASSETS

$

9,206,257

    

$

9,264,637

  

LIABILITIES AND SHAREHOLDERS' DEFICIT

      

CURRENT LIABILITIES:

      

Accounts payable and accrued expenses, including legal settlement accruals

$

1,174,178

    

$

1,208,061

  

Other current liabilities

235,034

    

45,763

  

Total current liabilities

$

1,409,212

    

$

1,253,824

  

LONG-TERM DEBT, LESS CURRENT PORTION, NET

8,052,815

    

8,280,578

  

OTHER LIABILITIES

361,272

    

378,174

  

SHAREHOLDERS' DEFICIT

(617,042)

    

(647,939)

  

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT

$

9,206,257

    

$

9,264,637

  

The following table presents unaudited Condensed Consolidated Statement of Cash Flow data for the six months ended June 30, 2021 and 2020 (in thousands):

 

Six Months Ended June 30,
 

2021

  

2020

OPERATING ACTIVITIES:

      

Net income

$

26,024

    

$

140,488

  

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

      

Depreciation and amortization

237,703

    

264,198

  

Asset impairment charges

8,238

    

97,785

  

Other, including cash payments to claimants from Qualified Settlement Funds

126,851

    

(135,583)

  

Net cash provided by operating activities

$

398,816

    

$

366,888

  

INVESTING ACTIVITIES:

      

Capital expenditures, excluding capitalized interest

$

(41,345)

    

$

(36,305)

  

Proceeds from sale of business and other assets, net

1,343

    

6,017

  

Other

(5,048)

    

(1,125)

  

Net cash used in investing activities

$

(45,050)

    

$

(31,413)

  

FINANCING ACTIVITIES:

      

Payments on borrowings, net

$

(43,166)

    

$

(66,685)

  

Other

(22,581)

    

(9,046)

  

Net cash used in financing activities

$

(65,747)

    

$

(75,731)

  

Effect of foreign exchange rate

711

    

(915)

  

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

$

288,730

    

$

258,829

  

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

1,385,000

    

1,720,388

  

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

$

1,673,730

    

$

1,979,217

  

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) income (GAAP) to Adjusted EBITDA (non-GAAP) for the three and six months ended June 30, 2021 and 2020 (in thousands):

 

Three Months Ended June 30,

  

Six Months Ended June 30,
 

2021

  

2020

  

2021

  

2020

Net (loss) income (GAAP)

$

(15,500)

    

$

10,558

    

$

26,024

    

$

140,488

  

Income tax expense (benefit)

11,100

    

7,642

    

11,824

    

(128,690)

  

Interest expense, net

141,553

    

129,164

    

275,894

    

262,041

  

Depreciation and amortization (14)

110,145

    

120,855

    

221,724

    

255,813

  

EBITDA (non-GAAP)

$

247,298

    

$

268,219

    

$

535,466

    

$

529,652

  
               

Upfront and milestone-related payments (2)

5,125

    

444

    

5,681

    

2,194

  

Continuity and separation benefits and other cost reductions (3)

15,083

    

9,444

    

38,803

    

32,664

  

Certain litigation-related and other contingencies, net (4)

35,195

    

(8,572)

    

35,832

    

(25,748)

  

Certain legal costs (5)

24,843

    

18,005

    

44,119

    

33,541

  

Asset impairment charges (6)

4,929

    

—

    

8,238

    

97,785

  

Acquisition-related and integration costs (7)

(20)

    

—

    

411

    

—

  

Fair value of contingent consideration (8)

117

    

6,045

    

(5,336)

    

18,507

  

Loss on extinguishment of debt (9)

—

    

—

    

13,753

    

—

  

Share-based compensation (14)

4,444

    

9,222

    

14,437

    

21,677

  

Other expense (income), net (15)

372

    

(4,150)

    

1,284

    

(18,124)

  

Other (10)

(2)

    

30,772

    

3,876

    

30,756

  

Discontinued operations, net of tax (12)

5,316

    

7,052

    

10,851

    

34,703

  

Adjusted EBITDA (non-GAAP)

$

342,700

    

$

336,481

    

$

707,415

    

$

757,607

  

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

The following table provides a reconciliation of the Company's (Loss) income from continuing operations (GAAP) to Adjusted income from continuing operations (non-GAAP) for the three and six months ended June 30, 2021 and 2020 (in thousands):

 

Three Months Ended June 30,

  

Six Months Ended June 30,
 

2021

  

2020

  

2021

  

2020

(Loss) income from continuing operations (GAAP)

$

(10,184)

    

$

17,610

    

$

36,875

    

$

175,191

  

Non-GAAP adjustments:

              

Amortization of intangible assets (1)

94,070

    

104,498

    

189,200

    

221,735

  

Upfront and milestone-related payments (2)

5,125

    

444

    

5,681

    

2,194

  

Continuity and separation benefits and other cost reductions (3)

15,083

    

9,444

    

38,803

    

32,664

  

Certain litigation-related and other contingencies, net (4)

35,195

    

(8,572)

    

35,832

    

(25,748)

  

Certain legal costs (5)

24,843

    

18,005

    

44,119

    

33,541

  

Asset impairment charges (6)

4,929

    

—

    

8,238

    

97,785

  

Acquisition-related and integration costs (7)

(20)

    

—

    

411

    

—

  

Fair value of contingent consideration (8)

117

    

6,045

    

(5,336)

    

18,507

  

Loss on extinguishment of debt (9)

—

    

—

    

13,753

    

—

  

Other (10)

1,355

    

29,755

    

6,381

    

15,335

  

Tax adjustments (11)

(18,392)

    

(25,529)

    

(46,919)

    

(199,104)

  

Adjusted income from continuing operations (non-GAAP)

$

152,121

    

$

151,700

    

$

327,038

    

$

372,100

  

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, 2021 and 2020 (in thousands, except per share data):

 

Three Months Ended June 30, 2021
 

Total
revenues,
net

  

Cost of
revenues

  

Gross
margin

  

Gross
margin
%

  

Total
operating
expenses

  

Operating
expense to
revenue %

  

Operating
income
from
continuing
operations

  

Operating
margin %

  

Other non-
operating
expense,
net

  

Income from
continuing
operations
before
income
tax

  

Income
tax
expense

  

Effective
tax rate

  

(Loss)
income
from
continuing
operations

  

Discontinued
operations,
net of tax

  

Net (loss)
income

  

Diluted net
(loss) income
per share
from
continuing
operations
(13)

Reported (GAAP)

$   713,830

  

$     318,480

  

$   395,350

  

55.4 %

  

$     252,509

  

35.4 %

  

$   142,841

  

20.0 %

  

$ 141,925

  

$            916

  

$   11,100

  

1,211.8 %

  

$   (10,184)

  

$         (5,316)

  

$     (15,500)

  

$          (0.04)

Items impacting comparability:

                                                              

Amortization of intangible assets (1)

-

  

(94,070)

  

94,070

      

-

      

94,070

      

-

  

94,070

  

-

      

94,070

  

-

  

94,070

    

Upfront and milestone-related payments (2)

-

  

(125)

  

125

      

(5,000)

      

5,125

      

-

  

5,125

  

-

      

5,125

  

-

  

5,125

    

Continuity and separation benefits and other cost reductions (3)

-

  

(4,970)

  

4,970

      

(10,113)

      

15,083

      

-

  

15,083

  

-

      

15,083

  

-

  

15,083

    

Certain litigation-related and other contingencies, net (4)

-

  

-

  

-

      

(35,195)

      

35,195

      

-

  

35,195

  

-

      

35,195

  

-

  

35,195

    

Certain legal costs (5)

-

  

-

  

-

      

(24,843)

      

24,843

      

-

  

24,843

  

-

      

24,843

  

-

  

24,843

    

Asset impairment charges (6)

-

  

-

  

-

      

(4,929)

      

4,929

      

-

  

4,929

  

-

      

4,929

  

-

  

4,929

    

Acquisition-related and integration costs (7)

-

  

-

  

-

      

20

      

(20)

      

-

  

(20)

  

-

      

(20)

  

-

  

(20)

    

Fair value of contingent consideration (8)

-

  

-

  

-

      

(117)

      

117

      

-

  

117

  

-

      

117

  

-

  

117

    

Other (10)

-

  

-

  

-

      

-

      

-

      

(1,355)

  

1,355

  

-

      

1,355

  

-

  

1,355

    

Tax adjustments (11)

-

  

-

  

-

      

-

      

-

      

-

  

-

  

18,392

      

(18,392)

  

-

  

(18,392)

    

Exclude discontinued operations, net of tax (12)

-

  

-

  

-

      

-

      

-

      

-

  

-

  

-

      

-

  

5,316

  

5,316

    

After considering items (non-GAAP)

$   713,830

  

$     219,315

  

$   494,515

  

69.3 %

  

$     172,332

  

24.1 %

  

$   322,183

  

45.1 %

  

$ 140,570

  

$     181,613

  

$   29,492

  

16.2 %

  

$   152,121

  

$                  -

  

$     152,121

  

$            0.65

 

 

 

Three Months Ended June 30, 2020
 

Total
revenues,
net

  

Cost of
revenues

  

Gross
margin

  

Gross
margin
%

  

Total
operating
expenses

  

Operating
expense to
revenue %

  

Operating
income from
continuing
operations

  

Operating
margin %

  

Other non-
operating
expense,
net

  

Income from
continuing
operations
before
income tax

  

Income
tax
expense

  

Effective
tax rate

  

Income
from
continuing
operations

  

Discontinued
operations,
net of tax

  

Net
income

  

Diluted net
income per
share from
continuing
operations
(13)

Reported (GAAP)

$   687,588

  

$     336,096

  

$   351,492

  

51.1 %

  

$     201,226

  

29.3 %

  

$   150,266

  

21.9 %

  

$ 125,014

  

$       25,252

  

$     7,642

  

30.3 %

  

$     17,610

  

$         (7,052)

  

$       10,558

  

$            0.08

Items impacting comparability:

                                                              

Amortization of intangible assets (1)

-

  

(104,498)

  

104,498

      

-

      

104,498

      

-

  

104,498

  

-

      

104,498

  

-

  

104,498

    

Upfront and milestone-related payments (2)

-

  

(125)

  

125

      

(319)

      

444

      

-

  

444

  

-

      

444

  

-

  

444

    

Continuity and separation benefits and other cost reductions (3)

-

  

(904)

  

904

      

(8,540)

      

9,444

      

-

  

9,444

  

-

      

9,444

  

-

  

9,444

    

Certain litigation-related and other contingencies, net (4)

-

  

-

  

-

      

8,572

      

(8,572)

      

-

  

(8,572)

  

-

      

(8,572)

  

-

  

(8,572)

    

Certain legal costs (5)

-

  

-

  

-

      

(18,005)

      

18,005

      

-

  

18,005

  

-

      

18,005

  

-

  

18,005

    

Fair value of contingent consideration (8)

-

  

-

  

-

      

(6,045)

      

6,045

      

-

  

6,045

  

-

      

6,045

  

-

  

6,045

    

Other (10)

-

  

-

  

-

      

(30,749)

      

30,749

      

994

  

29,755

  

-

      

29,755

  

-

  

29,755

    

Tax adjustments (11)

-

  

-

  

-

      

-

      

-

      

-

  

-

  

25,529

      

(25,529)

  

-

  

(25,529)

    

Exclude discontinued operations, net of tax (12)

-

  

-

  

-

      

-

      

-

      

-

  

-

  

-

      

-

  

7,052

  

7,052

    

After considering items (non-GAAP)

$   687,588

  

$     230,569

  

$   457,019

  

66.5 %

  

$     146,140

  

21.3 %

  

$   310,879

  

45.2 %

  

$ 126,008

  

$     184,871

  

$   33,171

  

17.9 %

  

$   151,700

  

$                  -

  

$     151,700

  

$            0.65

 

 

 

Six Months Ended June 30, 2021
 

Total
revenues,
net

  

Cost of
revenues

  

Gross
margin

  

Gross
margin
%

  

Total
operating
expenses

  

Operating
expense to
revenue %

  

Operating
income
from
continuing
operations

  

Operating
margin %

  

Other non-
operating
expense,
net

  

Income from
continuing
operations
before
income tax

  

Income
tax
expense

  

Effective
tax rate

  

Income
from
continuing
operations

  

Discontinued
operations,
net of tax

  

Net
income

  

Diluted net
income per
share from
continuing
operations
(13)

Reported (GAAP)

$1,431,749

  

$     623,773

  

$   807,976

  

56.4 %

  

$     468,346

  

32.7 %

  

$   339,630

  

23.7 %

  

$ 290,931

  

$       48,699

  

$   11,824

  

24.3 %

  

$     36,875

  

$       (10,851)

  

$       26,024

  

$            0.16

Items impacting comparability:

                                                              

Amortization of intangible assets (1)

-

  

(189,200)

  

189,200

      

-

      

189,200

      

-

  

189,200

  

-

      

189,200

  

-

  

189,200

    

Upfront and milestone-related payments (2)

-

  

(651)

  

651

      

(5,030)

      

5,681

      

-

  

5,681

  

-

      

5,681

  

-

  

5,681

    

Continuity and separation benefits and other cost reductions (3)

-

  

(20,266)

  

20,266

      

(18,537)

      

38,803

      

-

  

38,803

  

-

      

38,803

  

-

  

38,803

    

Certain litigation-related and other contingencies, net (4)

-

  

-

  

-

      

(35,832)

      

35,832

      

-

  

35,832

  

-

      

35,832

  

-

  

35,832

    

Certain legal costs (5)

-

  

-

  

-

      

(44,119)

      

44,119

      

-

  

44,119

  

-

      

44,119

  

-

  

44,119

    

Asset impairment charges (6)

-

  

-

  

-

      

(8,238)

      

8,238

      

-

  

8,238

  

-

      

8,238

  

-

  

8,238

    

Acquisition-related and integration costs (7)

-

  

-

  

-

      

(411)

      

411

      

-

  

411

  

-

      

411

  

-

  

411

    

Fair value of contingent consideration (8)

-

  

-

  

-

      

5,336

      

(5,336)

      

-

  

(5,336)

  

-

      

(5,336)

  

-

  

(5,336)

    

Loss on extinguishment of debt (9)

-

  

-

  

-

      

-

      

-

      

(13,753)

  

13,753

  

-

      

13,753

  

-

  

13,753

    

Other (10)

-

  

-

  

-

      

(3,879)

      

3,879

      

(2,502)

  

6,381

  

-

      

6,381

  

-

  

6,381

    

Tax adjustments (11)

-

  

-

  

-

      

-

      

-

      

-

  

-

  

46,919

      

(46,919)

  

-

  

(46,919)

    

Exclude discontinued operations, net of tax (12)

-

  

-

  

-

      

-

      

-

      

-

  

-

  

-

      

-

  

10,851

  

10,851

    

After considering items (non-GAAP)

$1,431,749

  

$     413,656

  

$1,018,093

  

71.1 %

  

$     357,636

  

25.0 %

  

$   660,457

  

46.1 %

  

$ 274,676

  

$     385,781

  

$   58,743

  

15.2 %

  

$   327,038

  

$                  -

  

$     327,038

  

$            1.38

 

 

 

Six Months Ended June 30, 2020
 

Total
revenues,
net

  

Cost of
revenues

  

Gross
margin

  

Gross
margin
%

  

Total
operating
expenses

  

Operating
expense to
revenue %

  

Operating
income
from
continuing
operations

  

Operating
margin %

  

Other non-
operating
expense,
net

  

Income from
continuing
operations
before
income tax

  

Income
tax
(benefit)
expense

  

Effective
tax rate

  

Income
from
continuing
operations

  

Discontinued
operations,
net of tax

  

Net
income

  

Diluted net
income per
share from
continuing
operations
(13)

Reported (GAAP)

$1,507,993

  

$     724,895

  

$   783,098

  

51.9 %

  

$     492,680

  

32.7 %

  

$   290,418

  

19.3 %

  

$ 243,917

  

$       46,501

  

$(128,690)

  

(276.7)%

  

$   175,191

  

$       (34,703)

  

$     140,488

  

$            0.75

Items impacting comparability:

                                                              

Amortization of intangible assets (1)

-

  

(221,735)

  

221,735

      

-

      

221,735

      

-

  

221,735

  

-

      

221,735

  

-

  

221,735

    

Upfront and milestone-related payments (2)

-

  

(667)

  

667

      

(1,527)

      

2,194

      

-

  

2,194

  

-

      

2,194

  

-

  

2,194

    

Continuity and separation benefits and other cost reductions (3)

-

  

(7,142)

  

7,142

      

(25,522)

      

32,664

      

-

  

32,664

  

-

      

32,664

  

-

  

32,664

    

Certain litigation-related and other contingencies, net (4)

-

  

-

  

-

      

25,748

      

(25,748)

      

-

  

(25,748)

  

-

      

(25,748)

  

-

  

(25,748)

    

Certain legal costs (5)

-

  

-

  

-

      

(33,541)

      

33,541

      

-

  

33,541

  

-

      

33,541

  

-

  

33,541

    

Asset impairment charges (6)

-

  

-

  

-

      

(97,785)

      

97,785

      

-

  

97,785

  

-

      

97,785

  

-

  

97,785

    

Fair value of contingent consideration (8)

-

  

-

  

-

      

(18,507)

      

18,507

      

-

  

18,507

  

-

      

18,507

  

-

  

18,507

    

Other (10)

-

  

-

  

-

      

(30,749)

      

30,749

      

15,414

  

15,335

  

-

      

15,335

  

-

  

15,335

    

Tax adjustments (11)

-

  

-

  

-

      

-

      

-

      

-

  

-

  

199,104

      

(199,104)

  

-

  

(199,104)

    

Exclude discontinued operations, net of tax (12)

-

  

-

  

-

      

-

      

-

      

-

  

-

  

-

      

-

  

34,703

  

34,703

    

After considering items (non-GAAP)

$1,507,993

  

$     495,351

  

$1,012,642

  

67.2 %

  

$     310,797

  

20.6 %

  

$   701,845

  

46.5 %

  

$ 259,331

  

$     442,514

  

$   70,414

  

15.9 %

  

$   372,100

  

$                  -

  

$     372,100

  

$            1.59

 

Notes to the Reconciliations of GAAP and Non-GAAP Financial Measures

Notes to certain line items included in the reconciliations of the GAAP financial measures to the non-GAAP financial measures for the three and six months ended June 30, 2021 and 2020 are as follows:

(1)

To exclude amortization expense related to intangible assets.
   

(2)

Adjustments for upfront and milestone-related payments to partners included the following (in thousands):
   
 

Three Months Ended June 30,
 

2021

  

2020
 

Cost of revenues

  

Operating
expenses

  

Cost of revenues

  

Operating
expenses

Sales-based

$

125

    

$

—

    

$

125

    

$

—

  

Development-based

—

    

5,000

    

—

    

319

  

Total

$

125

    

$

5,000

    

$

125

    

$

319

  
               
 

Six Months Ended June 30,
 

2021

  

2020
 

Cost of revenues

  

Operating
expenses

  

Cost of revenues

  

Operating
expenses

Sales-based

$

651

    

$

—

    

$

667

    

$

—

  

Development-based

—

    

5,030

    

—

    

1,527

  

Total

$

651

    

$

5,030

    

$

667

    

$

1,527

  
   

(3)

Adjustments for continuity and separation benefits and other cost reductions included the following (in thousands):
   
 

Three Months Ended June 30,
 

2021

  

2020
 

Cost of revenues

  

Operating
expenses

  

Cost of revenues

  

Operating
expenses

Continuity and separation benefits

$

(2,913)

    

$

4,485

    

$

515

    

$

3,606

  

Accelerated depreciation charges

7,140

    

1,932

    

1,347

    

408

  

Other

743

    

3,696

    

(958)

    

4,526

  

Total

$

4,970

    

$

10,113

    

$

904

    

$

8,540

  
               
 

Six Months Ended June 30,
 

2021

  

2020
 

Cost of revenues

  

Operating
expenses

  

Cost of revenues

  

Operating
expenses

Continuity and separation benefits

$

2,279

    

$

7,837

    

$

1,142

    

$

16,775

  

Accelerated depreciation charges

12,194

    

3,785

    

6,026

    

2,359

  

Other

5,793

    

6,915

    

(26)

    

6,388

  

Total

$

20,266

    

$

18,537

    

$

7,142

    

$

25,522

  
 

Included within the Continuity and separation benefits line are costs associated with certain continuity and transitional compensation arrangements for certain senior management of the Company. Additionally, amounts include adjustments related to previously announced restructurings and other strategic initiatives to further optimize Endo's operations.
 

(4)

To exclude adjustments to accruals for litigation-related settlement charges and certain settlement proceeds related to suits filed by subsidiaries.
   

(5)

To exclude opioid-related legal expenses.
   

(6)

Adjustments for asset impairment charges included the following (in thousands):
   
 

Three Months Ended June 30,

  

Six Months Ended June 30,
 

2021

  

2020

  

2021

  

2020

Goodwill impairment charges

$

—

    

$

—

    

$

—

    

$

32,786

  

Other intangible asset impairment charges

4,929

    

—

    

7,811

    

63,751

  

Property, plant and equipment impairment charges

—

    

—

    

427

    

1,248

  

Total

$

4,929

    

$

—

    

$

8,238

    

$

97,785

  
   

(7)

To exclude integration costs.
   

(8)

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.
   

(9)

To exclude the loss on the extinguishment of debt associated with the Company's March 2021 refinancing transactions.
   

(10)

The Other rows included in each of the above reconciliations of GAAP financial measures to non-GAAP financial measures (except for the reconciliations of Net (loss) income (GAAP) to Adjusted EBITDA (non-GAAP)) include the following (in thousands):
   
 

Three Months Ended June 30,
 

2021

  

2020
 

Operating
expenses

  

Other non-
operating
expenses

  

Operating
expenses

  

Other non-
operating
expenses

Foreign currency impact related to the re-measurement of intercompany debt instruments

$

—

    

$

1,355

    

$

—

    

$

3,005

  

(Gain) loss on sale of business and other assets

—

    

—

    

—

    

(3,999)

  

Debt modification costs

—

    

—

    

30,749

    

—

  

Total

$

—

    

$

1,355

    

$

30,749

    

$

(994)

  
               
 

Six Months Ended June 30,
 

2021

  

2020
 

Operating
expenses

  

Other non-
operating
expenses

  

Operating
expenses

  

Other non-
operating
expenses

Foreign currency impact related to the re-measurement of intercompany debt instruments

$

—

    

$

2,502

    

$

—

    

$

(4,089)

  

Gain on sale of business and other assets

—

    

—

    

—

    

(11,325)

  

Debt modification costs

3,879

    

—

    

30,749

    

—

  

Total

$

3,879

    

$

2,502

    

$

30,749

    

$

(15,414)

  
 

The Other row included in the reconciliations of Net (loss) income (GAAP) to Adjusted EBITDA (non-GAAP) primarily relates to the items enumerated in the foregoing "Operating expenses" columns.
 

(11)

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.
   

(12)

To exclude the results of the businesses reported as discontinued operations, net of tax.
   

(13)

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 June 30,

  

Six Months Ended June 30,
 

2021

  

2020

  

2021

  

2020

GAAP

233,331

    

233,681

    

237,043

    

233,348

  

Non-GAAP Adjusted

235,416

    

233,681

    

237,043

    

233,348

  
   

(14)

Depreciation and amortization and Share-based compensation per the Adjusted EBITDA reconciliations do not include amounts reflected in other lines of the reconciliations, including Continuity and separation benefits and other cost reductions.
   

(15)

To exclude Other expense (income), net per the Condensed Consolidated Statements of Operations.

Reconciliation of Net Debt Leverage Ratio (non-GAAP)

The following table provides a reconciliation of the Company's Net income (GAAP) to Adjusted EBITDA (non-GAAP) for the twelve months ended June 30, 2021 (in thousands) and the calculation of the Company's Net Debt Leverage Ratio (non-GAAP):

 

Twelve Months

Ended June 30,

2021

Net income (GAAP)

$

69,480

  

Income tax benefit

(133,468)

  

Interest expense, net

546,792

  

Depreciation and amortization (14)

462,260

  

EBITDA (non-GAAP)

$

945,064

  
   

Upfront and milestone-related payments

$

38,562

  

Continuity and separation benefits and other cost reductions

132,421

  

Certain litigation-related and other contingencies, net

42,531

  

Certain legal costs

78,397

  

Asset impairment charges

30,797

  

Acquisition-related and integration costs

607

  

Fair value of contingent consideration

(7,490)

  

Loss on extinguishment of debt

13,753

  

Share-based compensation (14)

28,927

  

Other income, net

(1,702)

  

Other

4,215

  

Discontinued operations, net of tax

39,668

  

Adjusted EBITDA (non-GAAP)

$

1,345,750

  
   

Calculation of Net Debt:

  

Debt

$

8,275,957

  

Cash (excluding Restricted Cash)

1,545,172

  

Net Debt (non-GAAP)

$

6,730,785

  
   

Calculation of Net Debt Leverage:

  

Net Debt Leverage Ratio (non-GAAP)

5.0

  

Non-GAAP Financial Measures

The Company utilizes certain financial measures that are not prescribed by or prepared in accordance with accounting principles generally accepted in the U.S. (GAAP). These non-GAAP financial measures are not, and should not be viewed as, substitutes for GAAP net income and its components and diluted net income per share amounts. Despite the importance of these measures to management in goal setting and performance measurement, the company stresses that these are non-GAAP financial measures that have no standardized meaning prescribed by GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, non-GAAP adjusted EBITDA and non-GAAP adjusted net income from continuing operations and its components (unlike GAAP net income from continuing operations and its components) may not be comparable to the calculation of similar measures of other companies. These non-GAAP financial measures are presented solely to permit investors to more fully understand how management assesses performance.

Investors are encouraged to review the reconciliations of the non-GAAP financial measures used in this press release to their most directly comparable GAAP financial measures. However, the Company does not provide reconciliations of projected non-GAAP financial measures to GAAP financial measures, nor does it provide comparable projected GAAP financial measures for such projected non-GAAP financial measures. The Company is unable to provide such reconciliations without unreasonable efforts due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including adjustments that could be made for asset impairments, contingent consideration adjustments, legal settlements, gain / loss on extinguishment of debt, adjustments to inventory and other charges reflected in the reconciliation of historic numbers, the amounts of which could be significant.

See Endo's Current Report on Form 8-K furnished today to the U.S. Securities and Exchange Commission for an explanation of Endo's non-GAAP financial measures.

About Endo International plc

Endo (NASDAQ: ENDP) is a specialty pharmaceutical company committed to helping everyone we serve live their best life through the delivery of quality, life-enhancing therapies. Our decades of proven success come from a global team of passionate employees collaborating to bring the best treatments forward. Together, we boldly transform insights into treatments benefiting those who need them, when they need them. Learn more at www.endo.com or connect with us on LinkedIn.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements, including, but not limited to, the statements by Mr. Coleman, as well as other statements regarding product development, product launches, product investments, product pipeline, product demand, market potential, advancement of strategic priorities, transformation initiatives, corporate strategy and optimization efforts, together with Endo's net income per share from continuing operations amounts, product net sales, revenue forecasts and other financial guidance for full-year 2021 or any other future period, the impact of and response to the COVID-19 pandemic and any other statements that refer to Endo's expected, estimated or anticipated future results. 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 forecasts are inherently estimates that cannot be made with precision, Endo's performance at times differs materially from its estimates and targets, and Endo often does not know what the actual results will be until after the end of the applicable reporting period. Therefore, Endo will not report or comment on its progress during a current quarter except through public announcement. Any statement made by others with respect to progress during a current quarter cannot be attributed to Endo.

All forward-looking statements in this press release reflect Endo's current analysis of existing trends and information and represent Endo's judgment only as of the date of this press release. Actual results may differ materially and adversely from current expectations based on a number of factors affecting Endo's businesses, including, among other things, the following: changing competitive, market and regulatory conditions; changes in legislation and regulatory developments; Endo's ability to obtain and maintain adequate protection for its intellectual property rights; the timing and uncertainty of the results of both the research and development and regulatory processes, including regulatory decisions, product recalls, withdrawals and other unusual items; domestic and foreign health care and cost containment reforms, including government pricing, tax and reimbursement policies; technological advances and patents obtained by competitors; the performance, including the approval, introduction, and consumer and physician acceptance of new products and the continuing acceptance of currently marketed products; the effectiveness of advertising and other promotional campaigns; the timely and successful implementation of any strategic and/or optimization initiatives; the timing or results of any pending or future litigation, investigations or claims or actual or contingent liabilities, settlement discussions, negotiations or other adverse proceedings, including pending and future opioid-related matters, pending tax matters with the IRS and proceedings that involve or may involve key products such as VASOSTRICT®; the ability to satisfy judgments or settlements or pursue appeals including bonding requirements; the ability to maintain compliance with debt obligations; 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 and business transformation initiatives, develop its product pipeline and successfully launch QWO® and other 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 higher unemployment, political instability, financial hardship, consumer confidence and debt levels, taxation, changes in interest and currency exchange rates, international relations, capital and credit availability, the status of financial markets and institutions, fluctuations or devaluations in the value of sovereign government debt, the impact of and response to the ongoing COVID-19 pandemic 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 the above-referenced risk factors and other risk factors can be found in press releases issued by Endo, as well as Endo's public periodic filings with the U.S. Securities and Exchange Commission and with securities regulators in Canada, including the discussion under the heading "Risk Factors" in Endo's most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q or other filings with the U.S. Securities and Exchange Commission. Copies of Endo's press releases and additional information about Endo are available at www.endo.com or you can contact the Endo Investor Relations Department by calling 845-364-4833.

Cision View original content:https://www.prnewswire.com/news-releases/endo-reports-second-quarter-2021-financial-results-and-updates-2021-financial-guidance-301349815.html

SOURCE Endo International plc

Media: Heather Zoumas-Lubeski, (484) 216-6829; Investors: Pravesh Khandelwal, (845) 364-4833