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Endo Reports Third Quarter 2015 Financial Results

November 5, 2015

DUBLIN, Nov. 5, 2015 /PRNewswire/ --

  • Third quarter revenues of $746 million, a 14 percent increase from third quarter of 2014
  • Third quarter reported $3.84 diluted (GAAP) loss per share from continuing operations and $1.02 adjusted diluted EPS from continuing operations
  • U.S. Branded Pharmaceuticals third quarter revenue increase of 27 percent primarily attributable to the acquisition of Auxilium Pharmaceuticals
  • U.S. Generic Pharmaceuticals continues strong growth in third quarter with 15 percent revenue increase over third quarter 2014
  • International Pharmaceuticals third quarter results on-track and aligned with Company expectations
  • Affirms revenue and adjusted diluted EPS guidance from continuing operations for full year 2015 and EPS guidance for 2016
  • Company conducting portfolio optimization process to realign U.S. Branded resources toward long-term growth drivers
  • Third quarter GAAP results include pre-tax non-cash intangible and goodwill impairment charges

Endo International plc (NASDAQ: ENDP) (TSX: ENL) today reported third quarter 2015 financial results, including:

  • Revenues of $746 million, a 14 percent increase compared to third quarter 2014 revenues of $654 million, including new product revenue from 2014 and 2015 strategic M&A transactions.
  • Reported loss from continuing operations of $804 million compared to third quarter 2014 reported income from continuing operations of $49 million.
  • Reported diluted loss per share from continuing operations of $3.84 compared to third quarter 2014 reported diluted earnings per share from continuing operations of $0.31.
  • Adjusted income from continuing operations of $214 million, a 31 percent increase compared to third quarter 2014 adjusted income from continuing operations of $163 million.
  • Adjusted diluted earnings per share from continuing operations of $1.02 compared to third quarter 2014 adjusted diluted earnings per share from continuing operations of $1.03.

"Our diversified business delivered solid financial results this quarter and was further strengthened by our completed acquisition of Par Pharmaceutical Holdings, Inc. As we continue to execute on our strategy of organic growth, de-risked pipeline development and creating shareholder value through accretive, strategic M&A, we believe Endo is positioned for overall double-digit revenue expansion over the mid- to long-term," said Rajiv De Silva, President and CEO of Endo. "Fundamentally, our business is more diversified and well positioned financially and strategically. Following the recent FDA approval of BELBUCA™, we are conducting a strategic portfolio optimization process to expand our pain sales force and reallocate resources across key growth products in our U.S. Branded Pharmaceuticals business. Moving forward, we remain focused on execution and value creation activities: the integration of Par, driving growth for our priority branded products, growing our international presence and strategic M&A."

FINANCIAL PERFORMANCE
($ in thousands, except per share amounts)

 

 

3rd Quarter

     

Nine Months Ended
September 30,

   
 

2015

 

2014

 

Change

 

2015

 

2014

 

Change

Total Revenues

$

745,727

   

$

654,116

   

14

%

 

$

2,195,021

   

$

1,717,806

   

28

%

Reported (Loss) Income from Continuing Operations

$

(803,706)

   

$

48,953

   

NM

 

$

(744,108)

   

$

42,127

   

NM

Reported Diluted (Loss) Income per Share from Continuing Operations

$

(3.84)

   

$

0.31

   

NM

 

$

(3.96)

   

$

0.27

   

NM

Adjusted Income from Continuing Operations

$

214,110

   

$

163,095

   

31

%

 

$

625,805

   

$

418,858

   

49

%

Adjusted Diluted Weighted Average Shares

210,787

   

158,975

   

33

%

 

192,144

   

155,902

   

23

%

Adjusted Diluted EPS from Continuing Operations

$

1.02

   

$

1.03

   

(1)%

   

$

3.26

   

$

2.68

   

22

%

U.S. BRANDED PHARMACEUTICALS

During the third quarter of 2015, the U.S. Branded Pharmaceuticals business unit focused on growth for recently launched products XIAFLEX® for Peyronie's disease and AVEED®.

Third quarter 2015 U.S. Branded Pharmaceuticals results include:

  • Revenues of $305 million, a 27 percent increase compared to third quarter 2014; this increase was primarily attributable to the strategic addition of Auxilium Pharmaceuticals.
  • Net sales of Lidoderm® decreased 29 percent compared to third quarter 2014; this decrease was attributable to lower brand demand due to generic competition and a new generic entrant in August 2015.
  • Net sales of Voltaren® Gel increased 5 percent compared to third quarter 2014; this increase was primarily attributable to increased volumes resulting from an increased sales and marketing emphasis on the product.

U.S. GENERIC PHARMACEUTICALS

During the third quarter of 2015, the U.S. Generic Pharmaceuticals business unit continued to advance key manufacturing, quality, commercial and R&D initiatives to support its organic growth objectives and began the full-scale integration of Par following the closing of the acquisition at the end of September 2015. The U.S. Generics business is now named Par Pharmaceutical, an Endo International Company and is led by Paul Campanelli, Group President and a member of the Executive Leadership Team. 

Third quarter 2015 U.S. Generic Pharmaceuticals results include:

  • Net sales of $368 million, a 15 percent increase compared to third quarter 2014; this increase was attributable to underlying organic growth of the business, including new product launches, as well as growth from the addition of sales from our September 2015 acquisition of Par and our August 2014 acquisition of DAVA Pharmaceuticals.

INTERNATIONAL PHARMACEUTICALS

As part of Endo's planned expansion of its International Pharmaceuticals business unit and to further diversify the Company's financial profile, it recently announced multiple strategic transactions designed to increase focus on the core pharmaceuticals business line within its Litha Group. This included the acquisition of a broad product and R&D portfolio from the Aspen Group, which closed in October 2015, and the strategic divestiture of a portfolio of non-core products, which is expected to close by early 2016.

Third quarter 2015 International Pharmaceuticals results include:

  • Net sales of $73 million, primarily attributable to Paladin Labs and the Litha Group, which were acquired in February 2014, as well as sales from Grupo Farmaceutico Somar, acquired in July 2014.

2015 Financial Guidance

For the full twelve months ended December 31, 2015, at current exchange rates, Endo affirms revenue and adjusted diluted EPS guidance from continuing operations. The Company estimates:

  • Total revenue to be between $3.22 billion and $3.27 billion;
  • Reported (GAAP) diluted earnings per share (loss per share) from continuing operations to be between $(3.70) and $(3.60); and
  • Adjusted diluted EPS from continuing operations to be between $4.50 and $4.60.

The Company's 2015 financial guidance is based on the following assumptions:

  • Adjusted gross margin of approximately 64 percent;
  • Adjusted operating expenses as a percentage of revenues to be approximately 21.5 percent;
  • Adjusted interest expense of approximately $375 million;
  • Adjusted effective tax rate of between 9 percent and 10 percent; and
  • Adjusted diluted earnings per share from continuing operations assume full year adjusted diluted shares outstanding of approximately 201 million.

Asset Impairments
During the third quarter of 2015, the Company recorded $240 million of pre-tax, non-cash impairment charges related to intangible assets. This included a $150 million charge that was triggered by underperformance of STENDRA®, NATESTO, and Testim® and the expectation of lower future cash flows for these products as Endo prioritizes future investments across other products. In addition, the Company identified impairment indicators on certain other indefinite and finite-lived intangible assets based on third quarter decisions to reprioritize certain product portfolios and in-process research and development programs primarily across the Company's legacy Qualitest business assets. This assessment resulted in a combined additional pre-tax non-cash impairment charge of approximately $90 million.

As a result of the sustained downturn in the TRT market and the underperformance of STENDRA®, the Company initiated an interim goodwill impairment analysis of our Urology, Endocrinology and Oncology (UEO) reporting unit as of September 30, 2015 and recorded an estimated pre-tax, non-cash impairment charge of $680 million representing the difference between the estimated implied fair value of the UEO reporting unit's goodwill and its respective net book value.

The pre-tax, non-cash impairment charges are partially offset by $80.3 million of income recognized during the third quarter related to a reduction in the fair value of contingent cash consideration liabilities.

Conference Call Information

Endo will conduct a conference call with financial analysts to discuss this press release today at 8:30 a.m. ET. The dial-in number to access the call is U.S. / Canada (866) 497-0462, International (678) 509-7598, and the conference number is 65950717. Please dial in 10 minutes prior to the scheduled start time.

A replay of the call will be available from November 5, 2015 at 11:30 a.m. ET until 11:59 p.m. ET on November 19, 2015 by dialing (855) 859-2056 (U.S. / Canada) or (404) 537-3406 (International) and entering the conference number 65950717.

A simultaneous webcast of the call can be accessed by visiting www.endo.com. In addition, a replay of the webcast will be available until 11:59 p.m. ET on November 19, 2015. A replay can be accessed by clicking on "Events" in the Investor Relations section of the website.

Supplemental Financial Information

The following tables provide a reconciliation of our reported (GAAP) statements of operations to our adjusted statements of operations (Non-GAAP) for each of the three months ended September 30, 2015 and 2014 (in thousands, except per share data):

Three Months Ended September 30, 2015 (unaudited)

 Actual Reported
 (GAAP)

 

Adjustments

   

Non-GAAP Adjusted

 REVENUES

$

745,727

   

$

     

$

745,727

 
             

 COSTS AND EXPENSES:

           

Cost of revenues

442,459

   

(169,967)

 

(1)

 

272,492

 

Selling, general and administrative

163,221

   

(21,771)

 

(2)

 

141,450

 

Research and development

21,327

   

(4,614)

 

(3)

 

16,713

 

Litigation-related and other contingencies, net

   

     

 

Asset impairment charges

923,607

   

(923,607)

 

(4)

 

 

Acquisition-related and integration items

(27,688)

   

27,688

 

(5)

 

 

 OPERATING (LOSS) INCOME FROM CONTINUING OPERATIONS

$

(777,199)

   

$

1,092,271

     

$

315,072

 

 INTEREST EXPENSE, NET

96,446

   

(1,924)

 

(6)

 

94,522

 

 LOSS ON EXTINGUISHMENT OF DEBT

40,909

   

(40,909)

 

(7)

 

 

 OTHER EXPENSE, NET

50,091

   

(46,180)

 

(8)

 

3,911

 

 (LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX

$

(964,645)

   

$

1,181,284

     

$

216,639

 

 INCOME TAX (BENEFIT) EXPENSE

(160,939)

   

163,468

 

(9)

 

2,529

 

 (LOSS) INCOME FROM CONTINUING OPERATIONS

$

(803,706)

   

$

1,017,816

     

$

214,110

 

 DISCONTINUED OPERATIONS, NET OF TAX

(246,782)

   

247,362

 

(10)

 

580

 

 CONSOLIDATED NET (LOSS) INCOME

$

(1,050,488)

   

$

1,265,178

     

$

214,690

 

 Less: Net loss attributable to noncontrolling interests

(46)

   

     

(46)

 

 NET (LOSS) INCOME ATTRIBUTABLE TO ENDO INTERNATIONAL PLC

$

(1,050,442)

   

$

1,265,178

     

$

214,736

 

 DILUTED EARNINGS PER SHARE DATA ATTRIBUTABLE TO ENDO INTERNATIONAL PLC ORDINARY SHAREHOLDERS:

           

 Continuing operations

$

(3.84)

         

$

1.02

 

 Discontinued operations

(1.18)

         

 

 DILUTED (LOSS) EARNINGS PER SHARE

$

(5.02)

         

$

1.02

 

 DILUTED WEIGHTED AVERAGE SHARES

209,274

         

210,787

 

Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:

(1)     To exclude amortization of commercial intangible assets related to developed technology of $121,503, a fair value step-up in inventory of $38,461, certain excess manufacturing costs that will be eliminated pursuant to integration plans of $4,458, certain separation benefits and other costs incurred in connection with continued efforts to enhance the Company's operations of $906 and accruals for milestone payments to partners of $4,639.

(2)     To exclude certain separation benefits and other costs incurred in connection with continued efforts to enhance the Company's operations.

(3)     Primarily to exclude milestone payments to partners of $4,622.

(4)     To exclude asset impairment charges.

(5)     To exclude acquisition and integration costs of $52,585, primarily associated with the Par acquisition, offset by a decrease in the fair value of contingent consideration of $(80,273).

(6)     To exclude debt abandonment costs.

(7)     To exclude a net loss on extinguishment of debt in connection with debt refinancing activity.

(8)     To exclude unused financing commitments of $64,281, foreign currency impact related to the re-measurement of intercompany debt instruments of $(5,693), amounts associated with the settlement of certain pre-acquisition items associated with our Auxilium subsidiary of $(12,500) and other miscellaneous expense of $92.

(9)     Primarily to reflect the tax savings from acquired tax attributes and the effect of the pre-tax adjustments above at applicable rates. Additionally, included within this amount is an adjustment to exclude approximately $2,600 of tax benefit that was realized as part of the sale of the men's health component of our AMS business, which was listed as held for sale during the first quarter of 2015.

(10)  Primarily to exclude certain items related to the AMS businesses reported as Discontinued operations, net of tax.

Three Months Ended September 30, 2014 (unaudited)

 Actual Reported
 (GAAP)

 

Adjustments

   

Non-GAAP Adjusted

 REVENUES

$

654,116

   

$

     

$

654,116

 
             

 COSTS AND EXPENSES:

           

Cost of revenues

341,193

   

(81,825)

 

(1)

 

259,368

 

Selling, general and administrative

148,901

   

(31,531)

 

(2)

 

117,370

 

Research and development

20,813

   

(4,300)

 

(3)

 

16,513

 

Litigation-related and other contingencies

3,131

   

(3,131)

 

(4)

 

 

Acquisition-related and integration items

2,732

   

(2,732)

 

(5)

 

 

 OPERATING INCOME FROM CONTINUING OPERATIONS

$

137,346

   

$

123,519

     

$

260,865

 

 INTEREST EXPENSE, NET

61,950

   

(1,992)

 

(6)

 

59,958

 

LOSS ON EXTINGUISHMENT OF DEBT

2,027

   

(2,027)

 

(7)

 

 

 OTHER (INCOME) EXPENSE, NET

(5,724)

   

5,729

 

(8)

 

5

 

 INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX

$

79,093

   

$

121,809

     

$

200,902

 

 INCOME TAX EXPENSE

30,140

   

7,667

 

(9)

 

37,807

 

 INCOME FROM CONTINUING OPERATIONS

$

48,953

   

$

114,142

     

$

163,095

 

 DISCONTINUED OPERATIONS, NET OF TAX

(301,002)

   

319,840

 

(10)

 

18,838

 

 CONSOLIDATED NET (LOSS) INCOME

$

(252,049)

   

$

433,982

     

$

181,933

 

 Less: Net income (loss) attributable to noncontrolling interests

35

   

(369)

 

(11)

 

(334)

 

 NET (LOSS) INCOME ATTRIBUTABLE TO ENDO INTERNATIONAL PLC

$

(252,084)

   

$

434,351

     

$

182,267

 

 DILUTED EARNINGS PER SHARE DATA ATTRIBUTABLE TO ENDO INTERNATIONAL PLC ORDINARY SHAREHOLDERS:

           

 Continuing operations

$

0.31

         

$

1.03

 

 Discontinued operations

(1.90)

         

0.12

 

 DILUTED (LOSS) EARNINGS PER SHARE

$

(1.59)

         

$

1.15

 

 DILUTED WEIGHTED AVERAGE SHARES

158,975

         

158,975

 

Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:

(1)     To exclude amortization of commercial intangible assets related to developed technology of $55,367 and a fair value step-up in inventory of $17,364 and accruals for milestone payments to partners of $9,094.

(2)     To exclude certain separation benefits and other costs incurred in connection with continued efforts to enhance the company's operations of $7,559, a charge for an additional year of the branded prescription drug fee in accordance with IRS regulations issued in the third quarter of 2014 of $24,972 and an adjustment to the accrual for excise tax payments of $(1,000).

(3)     To exclude milestone payments to partners of $4,354 and adjustments to accruals for other costs incurred in connection with continued efforts to enhance the Company's operations of $(54).

(4)     To exclude the impact of certain net litigation charges.

(5)     To exclude acquisition and integration costs associated with the Somar, DAVA and other acquisitions.

(6)     To exclude additional non-cash interest expense.

(7)     To exclude the unamortized debt issuance costs written off and recorded as a net loss on extinguishment of debt in connection with various debt refinancing activity.

(8)     To exclude adjustments to the gain on sale of certain early-stage drug discovery and development assets of $(150), foreign currency impact related to the remeasurement of intercompany debt instruments of $(5,740) and other miscellaneous expense of $161.

(9)     Primarily to reflect the cash tax savings from acquired tax attributes and the tax effect of the pre-tax adjustments above at applicable tax rates.

(10)  To exclude certain items related to the AMS business, including litigation charges related to vaginal mesh cases, reported as Discontinued operations, net of tax.

(11)  To exclude the impact of the portion of certain of the above adjustments attributable to noncontrolling interests.

The following tables provide a reconciliation of our reported (GAAP) statements of operations to our adjusted statements of operations (Non-GAAP) for each of the nine months ended September 30, 2015 and 2014 (in thousands, except per share data):

Nine Months Ended September 30, 2015 (unaudited)

 Actual
Reported
 (GAAP)

 

Adjustments

   

Non-GAAP Adjusted

 REVENUES

$

2,195,021

   

$

     

$

2,195,021

 
             

 COSTS AND EXPENSES:

           

Cost of revenues

1,265,583

   

(472,314)

 

(1)

 

793,269

 

Selling, general and administrative

529,290

   

(107,766)

 

(2)

 

421,524

 

Research and development

58,208

   

(8,184)

 

(3)

 

50,024

 

Litigation-related and other contingencies, net

19,875

   

(19,875)

 

(4)

 

 

Asset impairment charges

1,000,850

   

(1,000,850)

 

(5)

 

 

Acquisition-related and integration items

51,177

   

(51,177)

 

(6)

 

 

 OPERATING (LOSS) INCOME FROM CONTINUING OPERATIONS

$

(729,962)

   

$

1,660,166

     

$

930,204

 

 INTEREST EXPENSE, NET

250,196

   

(6,302)

 

(7)

 

243,894

 

 LOSS ON EXTINGUISHMENT OF DEBT

41,889

   

(41,889)

 

(8)

 

 

 OTHER EXPENSE, NET

62,589

   

(59,975)

 

(9)

 

2,614

 

 (LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX

$

(1,084,636)

   

$

1,768,332

     

$

683,696

 

 INCOME TAX (BENEFIT) EXPENSE

(340,528)

   

398,419

 

(10)

 

57,891

 

 (LOSS) INCOME FROM CONTINUING OPERATIONS

$

(744,108)

   

$

1,369,913

     

$

625,805

 

 DISCONTINUED OPERATIONS, NET OF TAX

(632,624)

   

675,998

 

(11)

 

43,374

 

 CONSOLIDATED NET (LOSS) INCOME

$

(1,376,732)

   

$

2,045,911

     

$

669,179

 

 Less: Net loss attributable to noncontrolling interests

(153)

   

     

(153)

 

 NET (LOSS) INCOME ATTRIBUTABLE TO ENDO INTERNATIONAL PLC

$

(1,376,579)

   

$

2,045,911

     

$

669,332

 

 DILUTED EARNINGS PER SHARE DATA ATTRIBUTABLE TO ENDO INTERNATIONAL PLC ORDINARY SHAREHOLDERS:

           

 Continuing operations

$

(3.96)

         

$

3.26

 

 Discontinued operations

(3.36)

         

0.22

 

 DILUTED (LOSS) EARNINGS PER SHARE

$

(7.32)

         

$

3.48

 

 DILUTED WEIGHTED AVERAGE SHARES

188,085

         

192,144

 

Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:

(1)     To exclude amortization of commercial intangible assets related to developed technology of $333,759, a fair value step-up in inventory of $122,714, certain excess manufacturing costs that will be eliminated pursuant to integration plans of $9,069, accruals for milestone payments to partners of $5,866 and other miscellaneous costs of $906.

(2)     To exclude certain separation benefits and other costs incurred in connection with continued efforts to enhance the Company's operations of $69,363 and a charge of $37,603 related to the acceleration of Auxilium employee equity awards at closing and costs associated with unused financing commitments of $800.

(3)     Primarily to exclude milestone payments to partners of $8,197.

(4)     To exclude the net impact of certain litigation charges.

(5)     To exclude asset impairment charges.

(6)     To exclude acquisition and integration costs of $134,778, primarily associated with the Auxilium and Par acquisitions, partially offset by a decrease in the fair value of contingent consideration of $(83,601).

(7)     To exclude non-cash interest expense of $1,632 and debt abandonment costs of $4,670.

(8)     To exclude a net loss on extinguishment of debt in connection with debt refinancing activity.

(9)     To exclude other than temporary impairment of equity investment of $18,869, the foreign currency impact related to the re-measurement of intercompany debt instruments of $(23,991), amounts associated with the settlement of certain pre-acquisition items associated with our Auxilium subsidiary of $(12,500), unused financing commitments of $78,352, and other miscellaneous income of $(755).

(10)  Primarily to reflect the tax savings from acquired tax attributes and the effect of the pre-tax adjustments above at applicable rates. Additionally, included within this amount is an adjustment to exclude approximately $161,800 of tax benefit that was realized as part of the sale of the men's health component of our AMS business, which was listed as held for sale during the first quarter of 2015.

(11)  Primarily to exclude certain items related to the AMS businesses, reported as Discontinued operations, net of tax, including impairment charges of $224,953 based on the estimated fair values of the underlying businesses being sold, less the costs to sell and litigation charges related to vaginal mesh cases.

Nine Months Ended September 30, 2014 (unaudited)

 Actual
Reported
 (GAAP)

 

Adjustments

   

Non-GAAP Adjusted

 REVENUES

$

1,717,806

   

$

     

$

1,717,806

 
             

 COSTS AND EXPENSES:

           

Cost of revenues

857,317

   

(197,136)

 

(1)

 

660,181

 

Selling, general and administrative

433,333

   

(106,975)

 

(2)

 

326,358

 

Research and development

82,165

   

(25,022)

 

(3)

 

57,143

 

Litigation-related and other contingencies, net

7,085

   

(7,085)

 

(4)

 

 

Acquisition-related and integration items

67,619

   

(67,619)

 

(5)

 

 

 OPERATING INCOME FROM CONTINUING OPERATIONS

$

270,287

   

$

403,837

     

$

674,124

 

 INTEREST EXPENSE, NET

167,525

   

(11,307)

 

(6)

 

156,218

 

 LOSS ON EXTINGUISHMENT OF DEBT

31,712

   

(31,712)

 

(7)

 

 

 OTHER INCOME, NET

(18,728)

   

9,579

 

(8)

 

(9,149)

 

 INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX

$

89,778

   

$

437,277

     

$

527,055

 

 INCOME TAX EXPENSE

47,651

   

60,546

 

(9)

 

108,197

 

 INCOME FROM CONTINUING OPERATIONS

$

42,127

   

$

376,731

     

$

418,858

 

 DISCONTINUED OPERATIONS, NET OF TAX

(707,068)

   

782,694

 

(10)

 

75,626

 

 CONSOLIDATED NET (LOSS) INCOME

$

(664,941)

   

$

1,159,425

     

$

494,484

 

 Less: Net income attributable to noncontrolling interests

2,895

   

1,575

 

(11)

 

4,470

 

 NET (LOSS) INCOME ATTRIBUTABLE TO ENDO INTERNATIONAL PLC

$

(667,836)

   

$

1,157,850

     

$

490,014

 

 DILUTED EARNINGS PER SHARE DATA ATTRIBUTABLE TO ENDO INTERNATIONAL PLC ORDINARY SHAREHOLDERS:

           

 Continuing operations

$

0.27

         

$

2.68

 

 Discontinued operations

(4.55)

         

0.46

 

 DILUTED (LOSS) EARNINGS PER SHARE

$

(4.28)

         

$

3.14

 

 DILUTED WEIGHTED AVERAGE SHARES

155,902

         

155,902

 

Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:

(1)     To exclude amortization of commercial intangible assets related to developed technology of $147,798, a fair value step-up in inventory of $40,089 and accruals for milestone payments to partners of $9,249.

(2)     To exclude certain separation benefits and other costs incurred in connection with continued efforts to enhance the Company's operations of $17,703, a charge for an additional year of the branded prescription drug fee in accordance with IRS regulations issued in the third quarter of 2014 of $24,972, accruals for excise tax payments of $54,300 and a charge of $10,000 related to the non-recoverability of certain non-trade receivables that did not relate to our core operating activities.

(3)     To exclude milestone payments to partners of $25,704 and adjustments to accruals for other costs incurred in connection with continued efforts to enhance the Company's operations of $(682).

(4)     To exclude the impact of certain net litigation charges.

(5)     To exclude acquisition and integration costs of associated with the Paladin, Boca, Somar, DAVA and other acquisitions.

(6)     To exclude additional non-cash interest expense.

(7)     To exclude the unamortized debt issuance costs written off and recorded as a net loss on extinguishment of debt in connection with various debt refinancing activity.

(8)     To exclude the net gain on sale of certain early-stage drug discovery and development assets of $(4,000), foreign currency impact related to the remeasurement of intercompany debt instruments of $(5,740) and other miscellaneous expense of $161.

(9)     Primarily to reflect the cash tax savings from acquired tax attributes and the tax effect of the pre-tax adjustments above at applicable tax rates.

(10)  To exclude certain items related to the AMS and Healthtronics businesses, including litigation charges related to vaginal mesh cases, reported as Discontinued operations, net of tax.

(11)  To exclude the impact of the portion of certain of the above adjustments attributable to noncontrolling interests.

Non-GAAP adjusted net income and its components and Non-GAAP adjusted diluted earnings per share amounts are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted earnings per share amounts. Despite the importance of these measures to management in goal setting and performance measurement, we stress that these are Non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, Non-GAAP adjusted net income and its components (unlike U.S. GAAP net income and its components) may not be comparable to the calculation of similar measures of other companies. These Non-GAAP financial measures are presented solely to permit investors to more fully understand how management assesses performance. See Endo's Current Report on Form 8-K furnished today to the Securities and Exchange Commission for an explanation of Endo's reasons for using non-GAAP measures.

Reconciliation of Projected GAAP Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share Guidance for 2015

 

Year Ending

 

December 31, 2015

Projected GAAP diluted income per ordinary share

$

(3.70)

 

To

$

(3.60)

 

Upfront and milestone-related payments to partners

0.08

   

0.08

 

Amortization of commercial intangible assets, fair value inventory step-up and certain excess manufacturing costs that will be eliminated pursuant to integration plans

3.87

   

3.87

 

Acquisition related, integration and restructuring charges and certain excess costs that will be eliminated pursuant to integration plans

1.32

   

1.32

 

Asset impairment charges

4.98

   

4.98

 

Charges for litigation and other legal matters

0.04

   

0.04

 

Interest expense adjustment for non-cash interest, loss on extinguishment of debt and other treasury related items

0.27

   

0.27

 

Exclusion of dilutive securities due to net loss

(0.08)

   

(0.08)

 

Tax effect of pre-tax adjustments at the applicable tax rates and certain other expected cash tax savings as a result of acquisitions

(2.28)

   

(2.28)

 

Diluted adjusted income per ordinary share guidance

$

4.50

 

To

$

4.60

 

The Company's guidance is being issued based on certain assumptions including:

  • Certain of the above amounts are based on estimates and there can be no assurance that Endo will achieve these results.
  • Includes all completed business development transactions as of November 5, 2015.

About Endo International plc

Endo International plc (NASDAQ: ENDP) (TSX: ENL) is a global specialty pharmaceutical company focused on improving patients' lives while creating shareholder value. Endo develops, manufactures, markets and distributes quality branded and generic pharmaceutical products as well as over-the-counter medications through its operating companies. Endo has global headquarters in Dublin, Ireland, and U.S. headquarters in Malvern, PA. Learn more at www.endo.com.

(Tables Attached)

The following tables present Endo's unaudited Net Revenues for the three and nine months ended September 30, 2015 and 2014:

 

 

Endo International plc

Net Revenues (unaudited)

(in thousands)

 

 

Three Months Ended
September 30,

 

Percent Growth

 

Nine Months Ended
September 30,

 

Percent Growth

 

2015

 

2014

   

2015

 

2014

 

U.S. Branded Pharmaceuticals:

                     

Pain:

                     

LIDODERM®

$

29,689

   

$

41,602

   

(29)%

   

$

85,035

   

$

117,684

   

(28)%

 

OPANA® ER

42,206

   

49,800

   

(15)%

   

132,162

   

150,862

   

(12)%

 

PERCOCET®

31,898

   

30,709

   

4

%

 

100,641

   

91,232

   

10

%

Voltaren® Gel

48,515

   

46,302

   

5

%

 

144,992

   

129,658

   

12

%

 

$

152,308

   

$

168,413

   

(10)%

   

$

462,830

   

$

489,436

   

(5)%

 

Urology Retail:

                     

FORTESTA® GEL, including Authorized Generic

$

11,074

   

$

17,573

   

(37)%

   

$

40,102

   

$

40,720

   

(2)%

 

TESTIM®, including Authorized Generic

10,513

   

   

NM

 

31,358

   

   

NM

 

$

21,587

   

$

17,573

   

23

%

 

$

71,460

   

$

40,720

   

75

%

Specialty:

                     

SUPPRELIN® LA

$

19,095

   

$

17,762

   

8

%

 

$

53,173

   

$

48,568

   

9

%

XIAFLEX®

40,000

   

   

NM

 

107,918

   

   

NM

 

$

59,095

   

$

17,762

   

233

%

 

$

161,091

   

$

48,568

   

232

%

Branded Other Revenues

71,788

   

37,183

   

93

%

 

209,817

   

93,591

   

124

%

Actavis Royalty

   

   

NM

 

   

51,328

   

(100)%

 

Total U.S. Branded Pharmaceuticals

$

304,778

   

$

240,931

   

27

%

 

$

905,198

   

$

723,643

   

25

%

Total U.S. Generic Pharmaceuticals

367,933

   

319,399

   

15

%

 

1,063,221

   

803,467

   

32

%

Total International Pharmaceuticals

73,016

   

93,786

   

(22)%

   

226,602

   

190,696

   

19

%

Total Revenue

$

745,727

   

$

654,116

   

14

%

 

$

2,195,021

   

$

1,717,806

   

28

%

The following table presents unaudited condensed consolidated Balance Sheet data at September 30, 2015 and December 31, 2014:

 

 

September 30,
 2015

 

December 31,
 2014

ASSETS

     

CURRENT ASSETS:

     

Cash and cash equivalents

$

836,111

   

$

408,753

 

Restricted cash and cash equivalents

511,562

   

530,930

 

Accounts receivable

1,837,558

   

1,126,078

 

Inventories, net

946,650

   

423,321

 

Assets held for sale

52,574

   

1,937,864

 

Other assets

615,021

   

653,315

 

Total current assets

$

4,799,476

   

$

5,080,261

 

TOTAL NON-CURRENT ASSETS

16,681,383

   

5,829,355

 

TOTAL ASSETS

$

21,480,859

   

$

10,909,616

 

LIABILITIES AND STOCKHOLDERS' EQUITY

     

CURRENT LIABILITIES:

     

Accounts payable and accrued expenses

$

3,798,498

   

$

2,890,143

 

Liabilities held for sale

11,744

   

103,338

 

Other current liabilities

150,013

   

155,959

 

Total current liabilities

$

3,960,255

   

$

3,149,440

 

LONG-TERM DEBT, LESS CURRENT PORTION, NET

8,889,494

   

4,202,356

 

OTHER LIABILITIES

2,235,056

   

1,149,607

 

STOCKHOLDERS' EQUITY:

     

Total Endo International plc shareholders' equity

$

6,396,064

   

$

2,374,757

 

Noncontrolling interests

(10)

   

33,456

 

Total shareholders' equity

$

6,396,054

   

$

2,408,213

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

21,480,859

   

$

10,909,616

 

The following table presents unaudited condensed consolidated Statement of Cash Flow data for the nine months ended September 30, 2015 and 2014:

 

Nine Months Ended September 30,

 

2015

 

2014

OPERATING ACTIVITIES:

     

Consolidated net loss

$

(1,376,732)

   

$

(664,941)

 

Adjustments to reconcile consolidated Net loss to Net cash (used in) provided by operating activities

     

Depreciation and amortization

381,952

   

233,012

 

Other

1,028,185

   

(225,258)

 

Changes in assets and liabilities which (used) provided cash

(210,837)

   

889,391

 

Net cash (used in) provided by operating activities

(177,432)

   

232,204

 

INVESTING ACTIVITIES:

     

Purchases of property, plant and equipment, net

(50,944)

   

(57,126)

 

Acquisitions, net of cash acquired

(7,514,425)

   

(1,052,599)

 

Proceeds from sale of business, net

1,588,779

   

54,521

 

Proceeds from settlement escrow

   

11,518

 

Increase in restricted cash and cash equivalents

(533,441)

   

(215,267)

 

Decrease in restricted cash and cash equivalents

549,171

   

770,000

 

Other

364

   

110,110

 

Net cash used in investing activities

(5,960,496)

   

(378,843)

 

FINANCING ACTIVITIES:

     

Borrowings on indebtedness, net

4,418,808

   

337,832

 

Issuance of ordinary shares

2,300,000

   

 

Other

(148,262)

   

(25,127)

 

Net cash provided by financing activities

6,570,546

   

312,705

 

Effect of foreign exchange rate

(5,260)

   

(1,547)

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

427,358

   

164,519

 

LESS: NET DECREASE IN CASH AND CASH EQUIVALENTS OF DISCONTINUED OPERATIONS

   

(17,413)

 

NET INCREASE IN CASH AND CASH EQUIVALENTS OF CONTINUING OPERATIONS

427,358

   

181,932

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

408,753

   

526,597

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

$

836,111

   

$

708,529

 

Our Net cash (used in) provided by operating activities includes the impact of certain payments for legal settlements, primarily related to mesh product liability and the Department of Justice settlement related to the sale, marketing and promotion of Lidoderm. The following schedule presents the unaudited impact of these payments on our Net cash (used in) provided by operating activities for the nine months ended September 30, 2015 and 2014:

 

 

Nine Months Ended September 30,

 

2015

 

2014

Net cash (used in) provided by operating activities, as reported

$

(177,432)

   

$

232,204

 

Payments for certain legal settlements

525,875

   

214,216

 

Net cash provided by operating activities, excluding the impact of certain legal settlements

348,443

   

446,420

 

Safe Harbor Statement

This press release contains forward-looking statements, including but not limited to the statements by Mr. De Silva and other statements regarding product development, market potential, expected growth and regulatory approvals, as well as Endo's earnings per share amounts, product net sales, revenue forecasts and any other statements that refer to Endo's expected, estimated or anticipated future results. 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 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; 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; 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 strategic initiatives; the results of any pending or future litigation, investigations or claims; the uncertainty associated with the identification of and successful consummation and execution of external corporate development initiatives and strategic partnering transactions; and Endo's ability to obtain and successfully maintain 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, as well as the general 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 2014 Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. 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 484-216-0000.

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/endo-reports-third-quarter-2015-financial-results-300173061.html

SOURCE Endo International plc

Investors/Media: Keri P. Mattox, (484) 216-7912; Media: Heather Zoumas-Lubeski, (484) 216-6829