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Endo Reports Fourth-Quarter And Full-Year 2019 Financial Results

February 26, 2020
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— Strong Operational Performance Led by Year-over-Year Double-Digit-Percentage Revenue Growth in Sterile Injectables Segment and in Specialty Products Portfolio of Branded Pharmaceuticals Segment —

— Full-Year 2020 Financial Guidance Provided for Revenue, Adjusted Diluted Net Income per Share from Continuing Operations and Adjusted EBITDA —

DUBLIN, Feb. 26, 2020 /PRNewswire/ -- Endo International plc (NASDAQ: ENDP) today reported financial results for the fourth quarter and full year ended December 31, 2019.

  • Total revenues during the fourth quarter of 2019 were $765 million, a decrease of 3% compared to fourth-quarter 2018 revenues of $786 million.
  • Revenues of the Specialty Products portfolio of Branded Pharmaceuticals segment increased 15% in the fourth quarter of 2019 to $149 million compared to fourth-quarter 2018 revenues of $130 million.
  • Revenues of the Sterile Injectables segment increased 10% in the fourth quarter of 2019 to $285 million compared to fourth-quarter 2018 revenues of $259 million.

FINANCIAL PERFORMANCE
(in thousands, except per share amounts)


Three months ended December 31,




Year ended December 31,




2019


2018


Change


2019


2018


Change

Total Revenues, Net

$

764,800



$

786,389



(3)

%


$

2,914,364



$

2,947,078



(1)

%

Reported Loss from Continuing Operations

$

(208,489)



$

(265,479)



(21)

%


$

(360,584)



$

(961,767)



(63)

%

Reported Diluted Weighted Average Shares

226,787



224,353



1

%


226,050



223,960



1

%

Reported Diluted Net Loss per Share from Continuing Operations

$

(0.92)



$

(1.18)



(22)

%


$

(1.60)



$

(4.29)



(63)

%

Reported Net Loss

$

(218,643)



$

(291,908)



(25)

%


$

(422,636)



$

(1,031,469)



(59)

%

Adjusted Income from Continuing Operations

$

170,907



$

175,383



(3)

%


$

551,524



$

663,206



(17)

%

Adjusted Diluted Weighted Average Shares (1)

231,571



232,958



(1)

%


231,706



229,386



1

%

Adjusted Diluted Net Income per Share from Continuing Operations

$

0.74



$

0.75



(1)

%


$

2.38



$

2.89



(18)

%

Adjusted EBITDA

$

346,283



$

344,185



1

%


$

1,308,890



$

1,357,061



(4)

%

__________

(1)

Reported Diluted Net Loss 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.

"In 2019, Endo delivered stronger than expected performance during the fourth quarter and for the full year, driven by continued double-digit percentage revenue growth in our Sterile Injectables segment and in the Specialty Products Portfolio of our Branded Pharmaceuticals segment, and as a result of our dedication to operational execution," said Paul Campanelli, Chairman, President and Chief Executive Officer at Endo. "For the full year, our Sterile Injectables segment exceeded $1 billion in revenue and our Specialty Products Portfolio exceeded $500 million in revenue, demonstrating progress on our strategic priority of expanding and investing in these businesses. Additionally, during the fourth quarter, the U.S. FDA accepted our original Biologics License Application for our CCH for Cellulite product and we launched five products."

"Looking ahead to 2020, Endo intends to build upon the success of the past year. We are focused on continuing to invest in our core areas of growth as part of our multi-year strategic plan, while being responsive to the current external environment under the leadership of Blaise Coleman, Endo's new President and Chief Executive Officer."

CONSOLIDATED RESULTS

Total revenues were $765 million in fourth-quarter 2019 compared to $786 million during the same period in 2018. This decrease was primarily attributable to competitive pressures in the Generic Pharmaceuticals segment and the Established Products portfolio of the Branded Pharmaceuticals segment, partially offset by continued strong growth in the Sterile Injectables segment and the Specialty Products portfolio of the Branded Pharmaceuticals segment.

Reported loss from continuing operations in fourth-quarter 2019 was $208 million compared to reported loss from continuing operations of $265 million during the same period in 2018. This result was primarily attributable to a decrease in asset impairment charges. Reported diluted net loss per share from continuing operations in fourth-quarter 2019 was $0.92 compared to reported diluted net loss per share from continuing operations of $1.18 in fourth-quarter 2018.

Adjusted income from continuing operations in fourth-quarter 2019 was $171 million compared to $175 million in fourth-quarter 2018. This decrease was primarily attributable to lower adjusted gross margin due to lower sales. Adjusted diluted net income per share from continuing operations in fourth-quarter 2019 was $0.74 compared to $0.75 in fourth-quarter 2018.

BRANDED PHARMACEUTICALS

Fourth-quarter 2019 Branded Pharmaceuticals revenues were $226 million compared to $230 million in fourth-quarter 2018. This decrease was primarily attributable to ongoing generic competition in the Established Products portfolio, offset by continued strong growth in the Specialty Products portfolio.

Specialty Products revenues increased 15% to $149 million in fourth-quarter 2019 compared to $130 million in fourth-quarter 2018, primarily driven by the continued strong performance of XIAFLEX®. Sales of XIAFLEX® increased 27% to $102 million compared to $80 million in fourth-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.

In November 2019, the U.S. Food and Drug Administration accepted the Company's original Biologics License Application (BLA) for its Collagenase Clostridium Histolyticum (CCH) product for the treatment of cellulite in the buttocks. The Prescription Drug User Fee Act (PDUFA), or target action date for the BLA, has been set for July 6, 2020.

STERILE INJECTABLES

Fourth-quarter 2019 Sterile Injectables revenues were $285 million, an increase of 10% compared to $259 million in fourth-quarter 2018. This increase reflects the continued strong growth of VASOSTRICT® and ADRENALIN®.

GENERIC PHARMACEUTICALS

Fourth-quarter 2019 Generic Pharmaceuticals revenues were $226 million, a decrease of 14% compared to $264 million in fourth-quarter 2018. This performance was primarily attributable to continued competitive pressure on commoditized generic products. Partially offsetting the decrease were the impacts of certain recent product launches. During fourth-quarter 2019, the Generic Pharmaceuticals segment launched five products.

INTERNATIONAL PHARMACEUTICALS

Fourth-quarter 2019 International Pharmaceuticals revenues were $29 million, a decrease of 16% compared to fourth-quarter 2018. This decrease was primarily due to ongoing generic competition.

2020 FINANCIAL GUIDANCE

Endo is providing guidance for the 12 months ending December 31, 2020, at current exchange rates, for revenue, adjusted diluted net income per share from continuing operations and adjusted EBITDA. The Company estimates:

  • Total revenues to be between $2.72 billion and $2.92 billion;
  • Adjusted diluted net income per share from continuing operations to be between $2.15 and $2.40; and
  • Adjusted EBITDA to be between $1.22 billion and $1.32 billion.

The Company's 2020 non-GAAP financial guidance is based on the following assumptions:

  • Adjusted gross margin of approximately 66.0% to 67.0%;
  • Adjusted operating expenses as a percentage of revenue to be approximately 25.0% to 25.5%;
  • Adjusted interest expense of approximately $535 to $545 million;
  • Adjusted effective tax rate of approximately 13.5% to 14.5%; and
  • Adjusted diluted weighted average shares outstanding of approximately 236 million.

Guidance for Adjusted diluted net income per share from continuing operations, Adjusted EBITDA and Adjusted operating expenses exclude opioid-related legal expenses.

BALANCE SHEET, LIQUIDITY AND OTHER UPDATES

As of December 31, 2019, the Company had approximately $1.5 billion in unrestricted cash; debt of $8.4 billion; net debt of approximately $6.9 billion and a net debt to adjusted EBITDA ratio of 5.3.

Fourth-quarter 2019 cash used in operating activities was $21 million, compared to $70 million of net cash provided by operating activities during fourth-quarter 2018.

CONFERENCE CALL INFORMATION

Endo will conduct a conference call with financial analysts to discuss this press release today at 8:00 a.m. ET. The dial-in number to access the call is U.S./Canada (866) 497-0462, International (678) 509-7598, and the passcode is 4777677. Please dial in 10 minutes prior to the scheduled start time.

A replay of the call will be available from February 26, 2020 at 11:00 a.m. ET until 11:00 a.m. ET on March 4, 2020 by dialing U.S./Canada (800) 585-8367, International (404) 537-3406, and entering the passcode 4777677.

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 twelve months ended December 31, 2019 and 2018 (dollars in thousands):


Three months ended December 31,


Percent
Growth


Year ended December 31,


Percent
Growth


2019


2018



2019


2018


Branded Pharmaceuticals:












Specialty Products:












XIAFLEX®

$

101,520



$

79,783



27

%


$

327,638



$

264,638



24

%

SUPPRELIN® LA

20,255



20,759



(2)

%


86,797



81,707



6

%

Other Specialty (1)

26,844



29,004



(7)

%


105,241



98,230



7

%

Total Specialty Products

$

148,619



$

129,546



15

%


$

519,676



$

444,575



17

%

Established Products:












PERCOCET®

$

27,813



$

29,362



(5)

%


$

116,012



$

122,901



(6)

%

TESTOPEL®

14,414



13,401



8

%


55,244



58,377



(5)

%

Other Established (2)

34,705



57,551



(40)

%


164,470



236,979



(31)

%

Total Established Products

$

76,932



$

100,314



(23)

%


$

335,726



$

418,257



(20)

%

Total Branded Pharmaceuticals (3)

$

225,551



$

229,860



(2)

%


$

855,402



$

862,832



(1)

%

Sterile Injectables:












VASOSTRICT®

$

146,883



$

121,380



21

%


$

531,737



$

453,767



17

%

ADRENALIN®

45,827



41,631



10

%


179,295



143,489



25

%

Ertapenem for injection

25,060



31,870



(21)

%


104,679



57,668



82

%

APLISOL®

5,830



15,849



(63)

%


61,826



64,913



(5)

%

Other Sterile Injectables (4)

61,568



47,989



28

%


185,594



209,729



(12)

%

Total Sterile Injectables (3)

$

285,168



$

258,719



10

%


$

1,063,131



$

929,566



14

%

Total Generic Pharmaceuticals

$

225,560



$

263,770



(14)

%


$

879,882



$

1,012,215



(13)

%

Total International Pharmaceuticals

$

28,521



$

34,040



(16)

%


$

115,949



$

142,465



(19)

%

Total revenues, net

$

764,800



$

786,389



(3)

%


$

2,914,364



$

2,947,078



(1)

%

__________

(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®, EDEX® and VOLTAREN® Gel.

(3)

Individual products presented above represent the top two performing products in each product category for the year ended December 31, 2019 and/or any product having revenues in excess of $100 million during any of the years ended December 31, 2019, 2018 or 2017 or $25 million during any quarterly period in 2019 or 2018.

(4)

Products included within Other Sterile Injectables include ephedrine sulfate injection, treprostinil for injection and others.

The following table presents unaudited Condensed Consolidated Statement of Operations data for the three and twelve months ended December 31, 2019 and 2018 (in thousands, except per share data):


Three months ended December 31,


Year ended December 31,


2019


2018


2019


2018

TOTAL REVENUES, NET

$

764,800



$

786,389



$

2,914,364



$

2,947,078


COSTS AND EXPENSES:








Cost of revenues

400,056



433,214



1,569,338



1,631,682


Selling, general and administrative

160,671



167,422



632,420



646,037


Research and development

34,379



25,395



130,732



185,826


Litigation-related and other contingencies, net

15,304



(1,561)



11,211



13,809


Asset impairment charges

267,430



303,539



526,082



916,939


Acquisition-related and integration items, net

(19,115)



8,630



(46,098)



21,914


Interest expense, net

134,347



135,760



538,734



521,656


Gain on extinguishment of debt





(119,828)




Other (income) expense, net

(3,731)



(18,737)



16,677



(51,953)


LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX

$

(224,541)



$

(267,273)



$

(344,904)



$

(938,832)


INCOME TAX (BENEFIT) EXPENSE

(16,052)



(1,794)



15,680



22,935


LOSS FROM CONTINUING OPERATIONS

$

(208,489)



$

(265,479)



$

(360,584)



$

(961,767)


DISCONTINUED OPERATIONS, NET OF TAX

(10,154)



(26,429)



(62,052)



(69,702)


NET LOSS

$

(218,643)



$

(291,908)



$

(422,636)



$

(1,031,469)


NET LOSS PER SHARE—BASIC:








Continuing operations

$

(0.92)



$

(1.18)



$

(1.60)



$

(4.29)


Discontinued operations

(0.04)



(0.12)



(0.27)



(0.32)


Basic

$

(0.96)



$

(1.30)



$

(1.87)



$

(4.61)


NET LOSS PER SHARE—DILUTED:








Continuing operations

$

(0.92)



$

(1.18)



$

(1.60)



$

(4.29)


Discontinued operations

(0.04)



(0.12)



(0.27)



(0.32)


Diluted

$

(0.96)



$

(1.30)



$

(1.87)



$

(4.61)


WEIGHTED AVERAGE SHARES:








Basic

226,787



224,353



226,050



223,960


Diluted

226,787



224,353



226,050



223,960


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


December 31, 2019


December 31, 2018

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$

1,454,531



$

1,149,113


Restricted cash and cash equivalents

247,457



305,368


Accounts receivable

467,953



470,570


Inventories, net

327,865



322,179


Other current assets

88,412



95,920


Total current assets

$

2,586,218



$

2,343,150


TOTAL NON-CURRENT ASSETS

6,803,309



7,789,243


TOTAL ASSETS

$

9,389,527



$

10,132,393


LIABILITIES AND SHAREHOLDERS' DEFICIT




CURRENT LIABILITIES:




Accounts payable and accrued expenses, including legal settlement accruals

$

1,412,954



$

1,914,285


Other current liabilities

47,335



35,811


Total current liabilities

$

1,460,289



$

1,950,096


LONG-TERM DEBT, LESS CURRENT PORTION, NET

8,359,899



8,224,269


OTHER LIABILITIES

435,883



456,311


SHAREHOLDERS' DEFICIT

(866,544)



(498,283)


TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT

$

9,389,527



$

10,132,393


The following table presents unaudited Condensed Consolidated Statement of Cash Flow data for the years ended December 31, 2019 and 2018 (in thousands):


Year ended December 31,


2019


2018

OPERATING ACTIVITIES:




Net loss

$

(422,636)



$

(1,031,469)


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




Depreciation and amortization

612,862



723,707


Asset impairment charges

526,082



916,939


Other, including cash payments to claimants from Qualified Settlement Funds

(618,256)



(341,907)


Net cash provided by operating activities

$

98,052



$

267,270


INVESTING ACTIVITIES:




Purchases of property, plant and equipment, excluding capitalized interest

$

(63,854)



$

(83,398)


Proceeds from sale of business and other assets, net

6,577



70,369


Other

(2,921)



(4,871)


Net cash used in investing activities

$

(60,198)



$

(17,900)


FINANCING ACTIVITIES:




Proceeds from (payments on) borrowings, net

$

237,989



$

(39,372)


Other

(33,388)



(42,200)


Net cash provided by (used in) financing activities

$

204,601



$

(81,572)


Effect of foreign exchange rate

1,096



(1,975)


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

$

243,551



$

165,823


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

$

1,720,388



$

1,476,837


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 twelve months ended December 31, 2019 and 2018 (in thousands):


Three months ended December 31,


Year ended December 31,


2019


2018


2019


2018

Net loss (GAAP)

$

(218,643)



$

(291,908)



$

(422,636)



$

(1,031,469)


Income tax (benefit) expense

(16,052)



(1,794)



15,680



22,935


Interest expense, net

134,347



135,760



538,734



521,656


Depreciation and amortization (15)

144,453



167,205



612,862



688,530


EBITDA (non-GAAP)

$

44,105



$

9,263



$

744,640



$

201,652










Inventory step-up and other cost savings (2)

$



$



$



$

261


Upfront and milestone-related payments (3)

2,568



2,081



6,623



45,108


Inventory reserve increase from restructuring (4)



150





2,947


Retention and separation benefits and other restructuring (5)

19,426



4,004



34,598



83,348


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

15,304



(1,561)



11,211



13,809


Asset impairment charges (7)

267,430



303,539



526,082



916,939


Acquisition-related and integration costs (8)



451





2,004


Fair value of contingent consideration (9)

(19,115)



8,179



(46,098)



19,910


Gain on extinguishment of debt (10)





(119,828)




Share-based compensation

10,233



10,349



59,142



54,071


Other (income) expense, net (16)

(3,731)



(18,737)



16,677



(51,953)


Other adjustments

(91)



38



13,791



(737)


Discontinued operations, net of tax (13)

10,154



26,429



62,052



69,702


Adjusted EBITDA (non-GAAP)

$

346,283



$

344,185



$

1,308,890



$

1,357,061


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 twelve months ended December 31, 2019 and 2018 (in thousands):


Three months ended December 31,


Year ended December 31,


2019


2018


2019


2018

Loss from continuing operations (GAAP)

$

(208,489)



$

(265,479)



$

(360,584)



$

(961,767)


Non-GAAP adjustments:








Amortization of intangible assets (1)

125,913



150,677



543,862



622,339


Inventory step-up and other cost savings (2)







261


Upfront and milestone-related payments (3)

2,568



2,081



6,623



45,108


Inventory reserve increase from restructuring (4)



150





2,947


Retention and separation benefits and other restructuring (5)

19,426



4,004



34,598



83,348


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

15,304



(1,561)



11,211



13,809


Asset impairment charges (7)

267,430



303,539



526,082



916,939


Acquisition-related and integration costs (8)



451





2,004


Fair value of contingent consideration (9)

(19,115)



8,179



(46,098)



19,910


Gain on extinguishment of debt (10)





(119,828)




Other (11)

(2,002)



(19,034)



28,252



(48,942)


Tax adjustments (12)

(30,128)



(7,624)



(72,594)



(32,750)


Adjusted income from continuing operations (non-GAAP)

$

170,907



$

175,383



$

551,524



$

663,206


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 twelve months ended December 31, 2019 and 2018 (in thousands, except per share data):


Three months ended December 31, 2019


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 (benefit) 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 (14)

Reported (GAAP)

$   764,800


$     400,056


$   364,744


47.7 %


$     458,669


60.0 %


$    (93,925)


(12.3)%


$ 130,616


$   (224,541)


$ (16,052)


7.1 %


$ (208,489)


$       (10,154)


$   (218,643)


$          (0.92)

Items impacting comparability:
































Amortization of intangible assets (1)

-


(125,913)


125,913




-




125,913




-


125,913


-




125,913


-


125,913



Upfront and milestone-related payments (3)

-


(542)


542




(2,026)




2,568




-


2,568


-




2,568


-


2,568



Retention and separation benefits and other restructuring (5)

-


(4,689)


4,689




(14,737)




19,426




-


19,426


-




19,426


-


19,426



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

-


-


-




(15,304)




15,304




-


15,304


-




15,304


-


15,304



Asset impairment charges (7)

-


-


-




(267,430)




267,430




-


267,430


-




267,430


-


267,430



Fair value of contingent consideration (9)

-


-


-




19,115




(19,115)




-


(19,115)


-




(19,115)


-


(19,115)



Other (11)

-


-


-




-




-




2,002


(2,002)


-




(2,002)


-


(2,002)



Tax adjustments (12)

-


-


-




-




-




-


-


30,128




(30,128)


-


(30,128)



Exclude discontinued operations, net of tax (13)

-


-


-




-




-




-


-


-




-


10,154


10,154



After considering items (non-GAAP)

$   764,800


$     268,912


$   495,888


64.8 %


$     178,287


23.3 %


$   317,601


41.5 %


$ 132,618


$     184,983


$   14,076


7.6 %


$   170,907


$                  -


$     170,907


$            0.74

 


Three months ended December 31, 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 (benefit) 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 (14)

Reported (GAAP)

$   786,389


$     433,214


$   353,175


44.9 %


$     503,425


64.0 %


$  (150,250)


(19.1)%


$ 117,023


$   (267,273)


$   (1,794)


0.7 %


$ (265,479)


$       (26,429)


$   (291,908)


$          (1.18)

Items impacting comparability:
































Amortization of intangible assets (1)

-


(150,677)


150,677




-




150,677




-


150,677


-




150,677


-


150,677



Upfront and milestone-related payments (3)

-


(741)


741




(1,340)




2,081




-


2,081


-




2,081


-


2,081



Inventory reserve increase from restructuring (4)

-


(150)


150




-




150




-


150


-




150


-


150



Retention and separation benefits and other restructuring (5)

-


(30)


30




(3,974)




4,004




-


4,004


-




4,004


-


4,004



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

-


-


-




1,561




(1,561)




-


(1,561)


-




(1,561)


-


(1,561)



Asset impairment charges (7)

-


-


-




(303,539)




303,539




-


303,539


-




303,539


-


303,539



Acquisition-related and integration costs (8)

-


-


-




(451)




451




-


451


-




451


-


451



Fair value of contingent consideration (9)

-


-


-




(8,179)




8,179




-


8,179


-




8,179


-


8,179



Other (11)

-


-


-




-




-




19,034


(19,034)


-




(19,034)


-


(19,034)



Tax adjustments (12)

-


-


-




-




-




-


-


7,624




(7,624)


-


(7,624)



Exclude discontinued operations, net of tax (13)

-


-


-




-




-




-


-


-




-


26,429


26,429



After considering items (non-GAAP)

$   786,389


$     281,616


$   504,773


64.2 %


$     187,503


23.8 %


$   317,270


40.3 %


$ 136,057


$     181,213


$     5,830


3.2 %


$   175,383


$                  -


$     175,383


$            0.75

 


Year Ended December 31, 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 net (loss) income per share from continuing operations (14)

Reported (GAAP)

$2,914,364


$  1,569,338


$1,345,026


46.2 %


$  1,254,347


43.0 %


$     90,679


3.1 %


$ 435,583


$   (344,904)


$   15,680


(4.5)%


$ (360,584)


$       (62,052)


$   (422,636)


$          (1.60)

Items impacting comparability:
































Amortization of intangible assets (1)

-


(543,862)


543,862




-




543,862




-


543,862


-




543,862


-


543,862



Upfront and milestone-related payments (3)

-


(2,484)


2,484




(4,139)




6,623




-


6,623


-




6,623


-


6,623



Retention and separation benefits and other restructuring (5)

-


(5,693)


5,693




(28,905)




34,598




-


34,598


-




34,598


-


34,598



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

-


-


-




(11,211)




11,211




-


11,211


-




11,211


-


11,211



Asset impairment charges (7)

-


-


-




(526,082)




526,082




-


526,082


-




526,082


-


526,082



Fair value of contingent consideration (9)

-


-


-




46,098




(46,098)




-


(46,098)


-




(46,098)


-


(46,098)



Gain on extinguishment of debt (10)

-


-


-




-




-




119,828


(119,828)


-




(119,828)


-


(119,828)



Other (11)

-


-


-




(13,878)




13,878




(14,374)


28,252


-




28,252


-


28,252



Tax adjustments (12)

-


-


-




-




-




-


-


72,594




(72,594)


-


(72,594)



Exclude discontinued operations, net of tax (13)

-


-


-




-




-




-


-


-




-


62,052


62,052



After considering items (non-GAAP)

$2,914,364


$  1,017,299


$1,897,065


65.1 %


$     716,230


24.6 %


$1,180,835


40.5 %


$ 541,037


$     639,798


$   88,274


13.8 %


$   551,524


$                  -


$     551,524


$            2.38

 


Year Ended December 31, 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 net (loss) income per share from continuing operations (14)

Reported (GAAP)

$2,947,078


$  1,631,682


$1,315,396


44.6 %


$  1,784,525


60.6 %


$  (469,129)


(15.9)%


$ 469,703


$   (938,832)


$   22,935


(2.4)%


$ (961,767)


$       (69,702)


$(1,031,469)


$          (4.29)

Items impacting comparability:
































Amortization of intangible assets (1)

-


(622,339)


622,339




-




622,339




-


622,339


-




622,339


-


622,339



Inventory step-up and other cost savings (2)

-


(261)


261




-




261




-


261


-




261


-


261



Upfront and milestone-related payments (3)

-


(2,836)


2,836




(42,272)




45,108




-


45,108


-




45,108


-


45,108



Inventory reserve increase from restructuring (4)

-


(2,947)


2,947




-




2,947




-


2,947


-




2,947


-


2,947



Retention and separation benefits and other restructuring (5)

-


(57,487)


57,487




(25,861)




83,348




-


83,348


-




83,348


-


83,348



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

-


-


-




(13,809)




13,809




-


13,809


-




13,809


-


13,809



Asset impairment charges (7)

-


-


-




(916,939)




916,939




-


916,939


-




916,939


-


916,939



Acquisition-related and integration costs (8)

-


-


-




(2,004)




2,004




-


2,004


-




2,004


-


2,004



Fair value of contingent consideration (9)

-


-


-




(19,910)




19,910




-


19,910


-




19,910


-


19,910



Other (11)

-


-


-




630




(630)




48,312


(48,942)


-




(48,942)


-


(48,942)



Tax adjustments (12)

-


-


-




-




-




-


-


32,750




(32,750)


-


(32,750)



Exclude discontinued operations, net of tax (13)

-


-


-




-




-




-


-


-




-


69,702


69,702



After considering items (non-GAAP)

$2,947,078


$     945,812


$2,001,266


67.9 %


$     764,360


25.9 %


$1,236,906


42.0 %


$ 518,015


$     718,891


$   55,685


7.7 %


$   663,206


$                  -


$     663,206


$            2.89

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 twelve months ended December 31, 2019 and 2018 are as follows:

(1)

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





Three months ended December 31,


Year ended December 31,



2019


2018


2019


2018


Amortization of intangible assets excluding fair value