Skip to Content

Endo Reports Second-Quarter 2019 Financial Results

August 5, 2019

- Operating Performance Led by Year-over-Year Double-Digit-Percentage Growth in Revenues of Sterile Injectables Segment and Specialty Products Portfolio of Branded Pharmaceuticals Segment -

- Endo Reaffirms Full-Year 2019 Financial Guidance -

DUBLIN, Aug. 5, 2019 /PRNewswire/ -- Endo International plc (NASDAQ: ENDP) today reported second-quarter 2019 financial results, including:

  • Revenues of $700 million, a decrease of 2 percent compared to second-quarter 2018 revenues of $715 million.
  • Branded Pharmaceuticals - Specialty Products revenues increased 17 percent to $124 million compared to second-quarter 2018 revenues of $106 million.
  • Sterile Injectables revenues increased 12 percent to $244 million compared to second-quarter 2018 revenues of $218 million.
  • Reported net loss from continuing operations of $98 million compared to second-quarter 2018 reported net loss from continuing operations of $52 million.
  • Reported diluted loss per share from continuing operations of $0.43 compared to second-quarter 2018 reported diluted loss per share from continuing operations of $0.23.
  • Adjusted income from continuing operations of $120 million compared to second-quarter 2018 adjusted income from continuing operations of $172 million.
  • Adjusted diluted earnings per share from continuing operations of $0.52 compared to second-quarter 2018 adjusted diluted earnings per share from continuing operations of $0.76.
  • Adjusted EBITDA of $307 million compared to second-quarter 2018 adjusted EBITDA of $351 million.

"I am pleased with our second-quarter 2019 operating performance, led by continued year-over-year double-digit percentage growth in revenues of our Sterile Injectables segment and in the Specialty Products portfolio of our Branded Pharmaceuticals segment. XIAFLEX® grew 18 percent in the quarter, reflecting continued demand growth as a result of successful commercial execution and promotional investment," said Paul Campanelli, President and Chief Executive Officer of Endo. "We are on target to meet our previously provided full-year financial guidance and remain highly focused on the continued execution of our multiyear turnaround plan in a challenging external environment."


FINANCIAL PERFORMANCE


(in thousands, except per share amounts)



Three Months Ended June 30,




Six Months Ended June 30,




2019


2018


Change


2019


2018


Change

Total Revenues, Net

$

699,727



$

714,696



(2)

%


$

1,420,138



$

1,415,223



%

Reported Loss from Continuing
Operations

$

(98,052)



$

(52,479)



87

%


$

(110,664)



$

(550,217)



(80)

%

Reported Diluted Weighted Average
Shares

226,221



223,834



1

%


225,408



223,677



1

%

Reported Diluted Loss per Share
from Continuing Operations

$

(0.43)



$

(0.23)



87

%


$

(0.49)



$

(2.46)



(80)

%

Adjusted Income from Continuing

Operations

$

120,405



$

172,195



(30)

%


$

242,488



$

322,978



(25)

%

Adjusted Diluted Weighted Average
Shares1

232,713



227,273



2

%


232,174



226,114



3

%

Adjusted Diluted Income per Share
from Continuing Operations

$

0.52



$

0.76



(32)

%


$

1.04



$

1.43



(27)

%

__________

(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 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.


CONSOLIDATED RESULTS

Total revenues were $700 million in second-quarter 2019 compared to $715 million during the same period in 2018. This decrease was primarily attributable to competitive pressures in the Generic Pharmaceuticals segment, the Established Products portfolio of the Branded Pharmaceuticals segment, and the International segment, partially offset by continued strong growth in the Sterile Injectables segment and the Specialty Products portfolio of the Branded Pharmaceuticals segment.

GAAP net loss from continuing operations in second-quarter 2019 was $98 million compared to GAAP net loss from continuing operations of $52 million during the same period in 2018. This result was primarily attributable to an increase in asset impairment charges and a decrease in gains on the sale of certain assets, partially offset by a decrease in research and development spending. GAAP diluted net loss per share from continuing operations in second-quarter 2019 was $0.43 compared to GAAP diluted net loss per share from continuing operations of $0.23 in second-quarter 2018.

Adjusted income from continuing operations in second-quarter 2019 was $120 million compared to $172 million in second-quarter 2018. This decrease was primarily attributable to lower adjusted gross margin in our Generic Pharmaceuticals segment due to a decline in revenue and an unfavorable change in product mix. Adjusted diluted income per share from continuing operations in second-quarter 2019 was $0.52 compared to $0.76 in second-quarter 2018.

BRANDED PHARMACEUTICALS

Second-quarter 2019 Branded Pharmaceuticals revenues were $209 million compared to $213 million in second-quarter 2018. This decrease was primarily attributable to ongoing generic competition in our Established Products portfolio, offset by continued strong growth of our Specialty Products portfolio.

Specialty Products revenues increased 17 percent to $124 million in second-quarter 2019 compared to second-quarter 2018, primarily driven by the continued strong performance of XIAFLEX®. Sales of XIAFLEX® increased 18 percent to $75 million compared to second-quarter 2018, primarily attributable to demand growth in both the Peyronie's Disease and Dupuytren's Contracture indications driven by continued commercial execution and investment in promotional activities.

With regards to Collagenase Clostridium Histolyticum (CCH) for the treatment of cellulite, Phase 3 data was presented in May at the American Society for Aesthetic Plastic Surgery Hot Topics session by clinical investigator Dr. Lawrence Bass. Additionally, Phase 2 and Phase 3 data was presented by multiple physicians, including clinical investigator Dr. Michael Gold, throughout the Vegas Cosmetic Surgery meeting held in June.

STERILE INJECTABLES

Second-quarter 2019 Sterile Injectables revenues were $244 million, an increase of 12 percent compared to second-quarter 2018. This increase reflects the third-quarter 2018 launch of ertapenem for injection, the authorized generic of INVANZ®, as well as the continued strong growth of VASOSTRICT® and ADRENALIN®. As anticipated, second-quarter 2019 Sterile Injectables revenue declined versus first-quarter 2019 primarily as a result of the non-recurrence of the first-quarter stocking benefit and the expected destocking in the second quarter.

GENERIC PHARMACEUTICALS

Second-quarter 2019 Generic Pharmaceuticals revenues were $218 million compared to $241 million in second-quarter 2018. This performance was primarily attributable to increased competitive pressure on certain generic products. Partially offsetting the decrease was the impact of certain 2018 product launches including, among others, colchicine tablets, the authorized generic of Colcrys®. During second-quarter 2019, the Generic Pharmaceuticals segment launched three products.

INTERNATIONAL PHARMACEUTICALS

Second-quarter 2019 International Pharmaceuticals revenues were $29 million, compared to $43 million in the same period in 2018.

2019 FINANCIAL GUIDANCE

For the twelve months ending December 31, 2019, at current exchange rates, Endo is reaffirming its previously provided guidance on revenue, adjusted diluted earnings per share from continuing operations and adjusted EBITDA from continuing operations. The Company estimates:

  • Total revenues to be between $2.76 billion and $2.96 billion;
  • Adjusted diluted earnings per share from continuing operations to be between $2.00 and $2.25; and
  • Adjusted EBITDA from continuing operations to be between $1.24 billion and $1.34 billion.

The Company's 2019 non-GAAP financial guidance is based on the following assumptions:

  • Adjusted gross margin of approximately 65.0% to 66.0%;
  • Adjusted operating expenses as a percentage of revenues of approximately 24.5% to 25.0%;
  • Adjusted interest expense of approximately $550 million to $560 million;
  • Adjusted effective tax rate of approximately 17.5% to 18.5%; and
  • Adjusted diluted weighted average shares outstanding of approximately 234 million.

BALANCE SHEET, LIQUIDITY AND OTHER UPDATES

In June 2019, the Company borrowed $300.0 million under its existing $1,000.0 million revolving credit facility. The Company expects to use the proceeds from this borrowing for purposes consistent with the Company's previously stated capital allocation priorities, including for general corporate purposes.

As of June 30, 2019, the Company had approximately $1.4 billion in unrestricted cash; debt of $8.4 billion; net debt of approximately $7.0 billion and a net debt to adjusted EBITDA ratio of 5.3.

Second-quarter 2019 cash provided by operating activities was $177 million, compared to $170 million of net cash provided by operating activities during second-quarter 2018.

CONFERENCE CALL INFORMATION

Endo will conduct a conference call with financial analysts to discuss this press release tomorrow 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 4344119. Please dial in 10 minutes prior to the scheduled start time.

A replay of the call will be available from August 6, 2019 at 10:30 a.m. ET until 10:30 a.m. ET on August 13, 2019 by dialing U.S./Canada (855) 859-2056, International (404) 537-3406, and entering the passcode 4344119.

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, 2019 and 2018 (dollars in thousands):


Three Months Ended June 30,


Percent
Growth


Six Months Ended June 30,


Percent
Growth


2019


2018



2019


2018


Branded Pharmaceuticals:












  Specialty Products:












  XIAFLEX®

$

74,855



$

63,500



18

%


$

143,362



$

120,641



19

%

  SUPPRELIN® LA

23,714



19,963



19

%


45,770



40,540



13

%

  Other Specialty (1)

25,524



22,585



13

%


49,927



41,612



20

%

  Total Specialty Products

$

124,093



$

106,048



17

%


$

239,059



$

202,793



18

%

  Established Products:












   PERCOCET®

$

28,878



$

30,833



(6)

%


$

59,638



$

62,809



(5)

%

   TESTOPEL®

11,780



13,844



(15)

%


27,594



29,014



(5)

%

   Other Established (2)

44,262



61,912



(29)

%


86,247



118,256



(27)

%

  Total Established Products

$

84,920



$

106,589



(20)

%


$

173,479



$

210,079



(17)

%

Total Branded Pharmaceuticals (3)

$

209,013



$

212,637



(2)

%


$

412,538



$

412,872



%

Sterile Injectables:












   VASOSTRICT®

$

116,026



$

106,329



9

%


$

255,163



$

220,054



16

%

   ADRENALIN®

45,835



36,658



25

%


93,157



66,398



40

%

   Ertapenem for injection

25,547





NM


57,766





NM

   Other Sterile Injectables (4)

56,872



74,856



(24)

%


108,242



147,245



(26)

%

Total Sterile Injectables (3)

$

244,280



$

217,843



12

%


$

514,328



$

433,697



19

%

Total Generic Pharmaceuticals

$

217,784



$

241,236



(10)

%


$

436,310



$

490,476



(11)

%

Total International Pharmaceuticals

$

28,650



$

42,980



(33)

%


$

56,962



$

78,178



(27)

%

Total revenues, net

$

699,727



$

714,696



(2)

%


$

1,420,138



$

1,415,223



%

__________

(1)

Products included within Other Specialty are NASCOBAL® Nasal Spray and AVEED®. Beginning with our first-quarter 2019 reporting, TESTOPEL®, which was previously included in Other Specialty, has been reclassified and is now included in the Established Products portfolio for all periods presented.

(2)

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

(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, 2019 and/or any product having revenues in excess of $25 million during any quarterly period in 2019 or 2018.

(4)

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


The following table presents unaudited Condensed Consolidated Statement of Operations data for the three and six months ended June 30, 2019 and 2018 (in thousands, except per share data):


Three Months Ended June 30,


Six Months Ended June 30,


2019


2018


2019


2018

TOTAL REVENUES, NET

$

699,727



$

714,696



$

1,420,138



$

1,415,223


COSTS AND EXPENSES:








Cost of revenues

388,208



381,905



780,117



785,503


Selling, general and administrative

152,297



148,157



303,420



314,824


Research and development

26,348



82,102



59,834



120,748


Litigation-related and other contingencies, net

10,315



19,620



10,321



17,120


Asset impairment charges

88,438



22,767



253,886



471,183


Acquisition-related and integration items

(5,507)



5,161



(43,008)



11,996


Interest expense, net

134,809



130,059



267,484



254,049


Gain on extinguishment of debt





(119,828)




Other (income) expense, net

(597)



(28,831)



4,205



(31,709)


LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX

$

(94,584)



$

(46,244)



$

(96,293)



$

(528,491)


INCOME TAX EXPENSE

3,468



6,235



14,371



21,726


LOSS FROM CONTINUING OPERATIONS

$

(98,052)



$

(52,479)



$

(110,664)



$

(550,217)


DISCONTINUED OPERATIONS, NET OF TAX

(7,953)



(8,388)



(13,914)



(16,139)


NET LOSS

$

(106,005)



$

(60,867)



$

(124,578)



$

(566,356)


NET LOSS PER SHARE—BASIC:








Continuing operations

$

(0.43)



$

(0.23)



$

(0.49)



$

(2.46)


Discontinued operations

(0.04)



(0.04)



(0.06)



(0.07)


Basic

$

(0.47)



$

(0.27)



$

(0.55)



$

(2.53)


NET LOSS PER SHARE—DILUTED:








Continuing operations

$

(0.43)



$

(0.23)



$

(0.49)



$

(2.46)


Discontinued operations

(0.04)



(0.04)



(0.06)



(0.07)


Diluted

$

(0.47)



$

(0.27)



$

(0.55)



$

(2.53)


WEIGHTED AVERAGE SHARES:








Basic

226,221



223,834



225,408



223,677


Diluted

226,221



223,834



225,408



223,677



The following table presents unaudited Condensed Consolidated Balance Sheet data at June 30, 2019 and December 31, 2018 (in thousands):


June 30, 2019


December 31, 2018

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$

1,446,949



$

1,149,113


Restricted cash and cash equivalents

307,587



305,368


Accounts receivable

442,078



470,570


Inventories, net

335,890



322,179


Other current assets

222,548



95,920


Total current assets

$

2,755,052



$

2,343,150


TOTAL NON-CURRENT ASSETS

7,319,237



7,789,243


TOTAL ASSETS

$

10,074,289



$

10,132,393


LIABILITIES AND SHAREHOLDERS' DEFICIT




CURRENT LIABILITIES:




Accounts payable and accrued expenses, including legal settlement accruals

$

1,786,054



$

1,914,285


Other current liabilities

49,766



35,811


Total current liabilities

$

1,835,820



$

1,950,096


LONG-TERM DEBT, LESS CURRENT PORTION, NET

8,369,972



8,224,269


OTHER LIABILITIES

458,969



456,311


SHAREHOLDERS' DEFICIT

(590,472)



(498,283)


TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT

$

10,074,289



$

10,132,393



The following table presents unaudited Condensed Consolidated Statement of Cash Flow data for the six months ended June 30, 2019 and 2018 (in thousands):


Six Months Ended June 30,


2019


2018

OPERATING ACTIVITIES:




Net loss

$

(124,578)



$

(566,356)


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




Depreciation and amortization

320,788



379,646


Asset impairment charges

253,886



471,183


Other, including cash payments to claimants from Qualified Settlement Funds

(363,494)



(65,341)


Net cash provided by operating activities

$

86,602



$

219,132


INVESTING ACTIVITIES:




Purchases of property, plant and equipment, excluding capitalized interest

$

(23,632)



$

(41,960)


Proceeds from sale of business and other assets, net

2,594



37,971


Other

(1,278)



(4,999)


Net cash used in investing activities

$

(22,316)



$

(8,988)


FINANCING ACTIVITIES:




Proceeds from (payments on) borrowings, net

$

257,605



$

(19,650)


Other

(22,676)



(21,143)


Net cash provided by (used in) financing activities

$

234,929



$

(40,793)


Effect of foreign exchange rate

841



(1,010)


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

$

300,056



$

168,341


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

1,476,837



1,311,014


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

$

1,776,893



$

1,479,355



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, 2019 and 2018 (in thousands):


Three Months Ended June 30,


Six Months Ended June 30,


2019


2018


2019


2018

Net loss (GAAP)

$

(106,005)



$

(60,867)



$

(124,578)



$

(566,356)


Income tax expense

3,468



6,235



14,371



21,726


Interest expense, net

134,809



130,059



267,484



254,049


Depreciation and amortization (15)

158,055



170,011



320,788



344,469


EBITDA (non-GAAP)

$

190,327



$

245,438



$

478,065



$

53,888










Inventory step-up and other cost savings (2)

$



$

124



$



$

190


Upfront and milestone-related payments (3)

1,444



36,964



2,383



38,296


Inventory reserve increase from restructuring (4)



202





2,590


Separation benefits and other restructuring (5)

2,124



28,951



4,149



75,550


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

10,315



19,620



10,321



17,120


Asset impairment charges (7)

88,438



22,767



253,886



471,183


Acquisition-related and integration costs (8)



1,034





1,034


Fair value of contingent consideration (9)

(5,507)



4,127



(43,008)



10,962


Gain on extinguishment of debt (10)





(119,828)




Share-based compensation

12,600



12,096



37,333



29,986


Other (income) expense, net (16)

(597)



(28,831)



4,205



(31,709)


Other adjustments

3



(10)



87



(708)


Discontinued operations, net of tax (13)

7,953



8,388



13,914



16,139


Adjusted EBITDA (non-GAAP)

$

307,100



$

350,870



$

641,507



$

684,521



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, 2019 and 2018 (in thousands):


Three Months Ended June 30,


Six Months Ended June 30,


2019


2018


2019


2018

Loss from continuing operations (GAAP)

$

(98,052)



$

(52,479)



$

(110,664)



$

(550,217)


Non-GAAP adjustments:








Amortization of intangible assets (1)

140,418



153,215



286,017



310,387


Inventory step-up and other cost savings (2)



124





190


Upfront and milestone-related payments (3)

1,444



36,964



2,383



38,296


Inventory reserve increase from restructuring (4)



202





2,590


Separation benefits and other restructuring (5)

2,124



28,951



4,149



75,550


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

10,315



19,620



10,321



17,120


Asset impairment charges (7)

88,438



22,767



253,886



471,183


Acquisition-related and integration costs (8)



1,034





1,034


Fair value of contingent consideration (9)

(5,507)



4,127



(43,008)



10,962


Gain on extinguishment of debt (10)





(119,828)




Other (11)

86



(28,007)



1,620



(31,261)


Tax adjustments (12)

(18,861)



(14,323)



(42,388)



(22,856)


Adjusted income from continuing operations (non-GAAP)

$

120,405



$

172,195



$

242,488



$

322,978



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, 2019 and 2018 (in thousands, except per share data):

Three Months Ended June 30, 2019


Total
revenues,
net


Cost of
revenues


Gross
margin


Gross
margin
%


Total
operating
expenses


Operating
expense to
revenue %


Operating
income
from
continuing
operations


Operating
margin %


Other
non-
operating
expense,
net


(Loss)
income
from
continuing
operations
before
income tax


Income
tax
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)

$    699,727


$ 388,208


$ 311,519


44.5 %


$ 271,891


38.9 %


$    39,628


5.7 %


$ 134,212


$   (94,584)


$   3,468


(3.7)%


$   (98,052)


$      (7,953)


$ (106,005)


$    (0.43)

Items impacting
comparability:
































Amortization of
intangible assets (1)


(140,418)


140,418







140,418





140,418





140,418



140,418



Upfront and
milestone-related
payments (3)


(739)


739




(705)




1,444





1,444





1,444



1,444



Separation benefits
and other
restructuring (5)






(2,124)




2,124





2,124





2,124



2,124



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






(10,315)




10,315





10,315





10,315



10,315



Asset impairment
charges (7)






(88,438)




88,438





88,438





88,438



88,438



Fair value of
contingent
consideration (9)






5,507




(5,507)





(5,507)





(5,507)



(5,507)



Other (11)






175




(175)




(261)


86





86



86



Tax adjustments (12)














18,861




(18,861)



(18,861)



Exclude discontinued
operations, net of tax
(13)


















7,953


7,953



After considering items
(non-GAAP)

$    699,727


$ 247,051


$ 452,676


64.7 %


$ 175,991


25.2 %


$  276,685


39.5 %


$ 133,951


$  142,734


$ 22,329


15.6 %


$  120,405


$             —


$  120,405


$     0.52

 

Three Months Ended June 30, 2018


Total
revenues,
net


Cost of
revenues


Gross
margin


Gross
margin
%


Total
operating
expenses


Operating
expense to
revenue %


Operating
income
from
continuing
operations


Operating
margin %


Other non-
operating
expense,
net


(Loss)
income
from
continuing
operations
before
income tax


Income
tax
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


46.6 %


$ 277,807


38.9 %


$    54,984


7.7 %


$ 101,228


$   (46,244)


$   6,235


(13.5)%


$   (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



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



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



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






(19,620)




19,620





19,620





19,620



19,620



Asset impairment
charges (7)






(22,767)




22,767





22,767





22,767



22,767



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



Other (11)












28,007


(28,007)





(28,007)



(28,007)



Tax adjustments (12)














14,323




(14,323)



(14,323)



Exclude discontinued
operations, net of tax
(13)


















8,388


8,388



After considering items
(non-GAAP)

$    714,696


$ 201,057


$ 513,639


71.9 %


$ 191,651


26.8 %


$  321,988


45.1 %


$ 129,235


$  192,753


$ 20,558


10.7 %


$  172,195


$             —


$  172,195


$     0.76

 

Six Months Ended June 30, 2019


Total
revenues,
net


Cost of
revenues


Gross
margin


Gross
margin
%


Total
operating
expenses


Operating
expense to
revenue %


Operating
income
from
continuing
operations


Operating
margin %


Other
non-
operating
expense,
net


(Loss)
income
from
continuing
operations
before
income tax


Income
tax
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)

$ 1,420,138


$ 780,117


$ 640,021


45.1 %


$ 584,453


41.2 %


$    55,568


3.9 %


$ 151,861


$   (96,293)


$ 14,371


(14.9)%


$ (110,664)


$    (13,914)


$ (124,578)


$    (0.49)

Items impacting
comparability:
































Amortization of
intangible assets (1)


(286,017)


286,017







286,017





286,017





286,017



286,017



Upfront and
milestone-related
payments (3)


(1,400)


1,400




(983)




2,383





2,383





2,383



2,383



Separation benefits
and other
restructuring (5)






(4,149)




4,149





4,149





4,149



4,149



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






(10,321)




10,321





10,321





10,321



10,321



Asset impairment
charges (7)






(253,886)




253,886





253,886





253,886



253,886



Fair value of
contingent
consideration (9)






43,008




(43,008)





(43,008)





(43,008)



(43,008)



Gain on
extinguishment of
debt (10)












119,828


(119,828)





(119,828)



(119,828)



Other (11)






175




(175)




(1,795)


1,620





1,620



1,620



Tax adjustments (12)














42,388




(42,388)



(42,388)



Exclude discontinued
operations, net of tax
(13)


















13,914


13,914



After considering items
(non-GAAP)

$ 1,420,138


$ 492,700


$ 927,438


65.3 %


$ 358,297


25.2 %


$  569,141


40.1 %


$ 269,894


$  299,247


$ 56,759


19.0 %


$  242,488


$             —


$  242,488


$     1.04

 

Six Months Ended June 30, 2018


Total
revenues,
net


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


44.5 %


$ 935,871


66.1 %


$ (306,151)


(21.6)%


$ 222,340


$ (528,491)


$ 21,726


(4.1)%


$ (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



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



Inventory reserve
increase from
restructuring (4)


(2,590)


2,590







2,590





2,590





2,590



2,590



Separation benefits
and other
restructuring (5)


(53,831)


53,831




(21,719)




75,550





75,550





75,550



75,550



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






(17,120)




17,120





17,120





17,120



17,120



Asset impairment
charges (7)






(471,183)




471,183





471,183





471,183



471,183



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



Other (11)






630




(630)




30,631


(31,261)





(31,261)



(31,261)



Tax adjustments (12)














22,856




(22,856)



(22,856)



Exclude discontinued
operations, net of tax
(13)


















16,139


16,139



After considering items
(non-GAAP)

$ 1,415,223


$ 417,155


$ 998,068


70.5 %


$ 377,537


26.7 %


$  620,531


43.8 %


$ 252,971


$  367,560


$ 44,582


12.1 %


$  322,978


$             —


$  322,978


$     1.43

 

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, 2019 and 2018 are as follows:

(1)

Adjustments for amortization of commercial intangible assets included the following (in thousands):




Three Months Ended June 30,


Six Months Ended June 30,


2019


2018


2019


2018

Amortization of intangible assets excluding fair value
step-up from contingent consideration

$

134,473

</