Endo Reports Second-Quarter 2017 Financial Results
- Second-quarter 2017 revenues of
$876 million and reported$3.12 diluted (GAAP) loss per share from continuing operations - Second-quarter 2017 Branded Specialty Products revenues increased 16 percent to
$110 million - Second-quarter 2017 Sterile Injectables revenues increased 27 percent to
$161 million - Second-quarter 2017 adjusted diluted earnings per share (EPS) from continuing operations increased 8 percent to
$0.93 - Second-quarter 2017 reported (GAAP) consolidated net loss of
$1,397 million , including$775 million to increase the mesh product liability accrual primarily related to the resolution of virtually all known U.S. mesh product liability claims - Second-quarter 2017 adjusted income from continuing operations increased 8 percent to
$207 million - Second-quarter 2017 adjusted EBITDA increased 11 percent to
$388 million - Company updates 2017 financial guidance to reflect the previously announced
Somar divestiture, OPANA® ER withdrawal and manufacturing network restructuring - Company reports
$725 million of impairment charges relating primarily to market and competitive factors impacting certain products, its manufacturing network restructuring,Somar divestiture and the market withdrawal of OPANA® ER
- Revenues of
$876 million , a 5 percent decrease compared to second-quarter 2016 revenues of$921 million . - Reported net loss from continuing operations of
$696 million compared to second-quarter 2016 reported net income from continuing operations of$390 million . - Reported diluted loss per share from continuing operations of
$3.12 compared to second-quarter 2016 reported diluted earnings per share from continuing operations of$1.75 . - Adjusted income from continuing operations of
$207 million , an 8 percent increase compared to second-quarter 2016 adjusted income from continuing operations of$192 million . - Adjusted diluted EPS from continuing operations of
$0.93 , an 8 percent increase compared to second-quarter 2016 adjusted diluted EPS from continuing operations of$0.86 . - Adjusted EBITDA of
$388 million , an 11 percent increase compared to second-quarter 2016 adjusted EBITDA of$350 million .
"We are very pleased to report another solid quarter of operating performance, with impressive contributions from our core growth areas. Sterile Injectables and Branded Specialty Products continue to perform well, as each unit again achieved strong double-digit growth," said
"In addition to solid quarterly execution, we continue to make significant progress across an array of strategic initiatives, including settling mesh litigation, divesting Litha, signing a definitive agreement to divest
FINANCIAL PERFORMANCE |
|||||||||||||||||||||
(in thousands, except per share amounts) |
|||||||||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||||||
2017 |
2016 |
Change |
2017 |
2016 |
Change |
||||||||||||||||
Total Revenues |
$ |
875,731 |
$ |
920,887 |
(5) |
% |
$ |
1,913,331 |
$ |
1,884,426 |
2 |
% |
|||||||||
Reported (Loss) Income from Continuing Operations |
$ |
(696,020) |
$ |
389,812 |
NM |
$ |
(861,443) |
$ |
301,049 |
NM |
|||||||||||
Reported Diluted Weighted Average Shares |
223,158 |
222,863 |
— |
% |
223,086 |
223,021 |
— |
% |
|||||||||||||
Reported Diluted (Loss) Income per Share from Continuing Operations |
$ |
(3.12) |
$ |
1.75 |
NM |
$ |
(3.86) |
$ |
1.35 |
NM |
|||||||||||
Adjusted Income from Continuing Operations |
$ |
207,201 |
$ |
192,341 |
8 |
% |
$ |
482,446 |
$ |
433,072 |
11 |
% |
|||||||||
Adjusted Diluted Weighted Average Shares1 |
223,785 |
222,863 |
— |
% |
223,560 |
223,021 |
— |
% |
|||||||||||||
Adjusted Diluted EPS from Continuing Operations |
$ |
0.93 |
$ |
0.86 |
8 |
% |
$ |
2.16 |
$ |
1.94 |
11 |
% |
(1) |
Diluted per share data is computed based on weighted average shares outstanding and, if there is income from continuing operations during the period, the dilutive impact of share equivalents outstanding during the period. In the case of Adjusted Diluted Weighted Average Shares, Adjusted Income from Continuing Operations is used in determining whether to include such dilutive impact. |
CONSOLIDATED RESULTS
Total revenues decreased by 5 percent to
Adjusted income from continuing operations in second-quarter 2017 increased by 8 percent to
U.S. GENERIC PHARMACEUTICALS
During second-quarter 2017, the
Second-quarter 2017
- Revenues of
$563 million , virtually unchanged from second-quarter 2016, as decline in the Generics Base business was substantially offset by strong growth in Sterile Injectables and New Launches and Alternative Dosages. - Sterile Injectables increased 27 percent compared to second-quarter 2016; this increase was driven primarily by VASOSTRICT® and ADRENALIN®.
- The Generics Base business decreased 34 percent compared to second-quarter 2016; this decrease primarily resulted from the impact on second-quarter 2017 related to 2016 competitive events and previously announced product discontinuances.
U.S. BRANDED PHARMACEUTICALS
During second-quarter 2017, the
Second-quarter 2017
- Revenues of
$245 million , a 15 percent decrease compared to second-quarter 2016; this decrease was primarily attributable to generic competition adversely impacting the Company's established products portfolio, including VOLTAREN® Gel, LIDODERM® and OPANA® ER , along with the divestiture of STENDRA®. - Specialty Products increased 16 percent in second-quarter 2017 versus the same period in 2016, driven by strong performance from XIAFLEX®, SUPPRELIN® LA and AVEED®. Sales of XIAFLEX®, our flagship Branded product, increased 18 percent compared to second-quarter 2016; this increase was primarily attributable to strong volume growth.
INTERNATIONAL PHARMACEUTICALS
Endo's previously announced sale of its South African business,
Second-quarter 2017
2017 FINANCIAL GUIDANCE
For the full twelve months ended December 31, 2017, at current exchange rates, Endo is providing updated guidance on revenue, GAAP and adjusted diluted income (loss) per share from continuing operations and adjusted EBITDA from continuing operations, along with certain assumptions used in determining these measures, to reflect the planned divestiture of
- Total revenues to be between
$3.38 billion to $3.53 billion ; - Reported diluted GAAP loss per share from continuing operations to be between
$4.76 and $4.46 ; - Adjusted diluted EPS from continuing operations to be between
$3.35 to $3.65 ; and - Adjusted EBITDA from continuing operations to be between
$1.48 billion to $1.56 billion .
The Company's 2017 non-GAAP financial guidance is based on the following assumptions:
- Adjusted gross margin of approximately 62.5% to 63.5%;
- Adjusted operating expenses as a percentage of revenues of approximately 22.5%;
- Adjusted interest expense of approximately
$490 million to $500 million ; - Adjusted effective tax rate of approximately 14.0%; and
- Adjusted diluted EPS from continuing operations assumes full-year adjusted diluted shares outstanding of approximately 224 million shares.
BALANCE SHEET, LIQUIDITY AND OTHER UPDATES
As of June 30, 2017, the Company had
Second-quarter 2017 cash provided by operating activities was
The Company recently announced that it has reached agreements to resolve virtually all known U.S. mesh product liability claims. Endo agreed to make installment payments beginning in the fourth-quarter of 2017 and continuing through the fourth-quarter of 2019. The Company increased its mesh product liability accrual by
During second-quarter 2017, the Company recorded total combined pre-tax, non-cash asset impairment charges of
$501 million of non-restructuring goodwill and intangible asset impairments related to itsU.S. Generic and Branded Pharmaceuticals segments, which included the market withdrawal of OPANA® ER and$115 million of goodwill and other intangible assets related to the Company's plannedSomar sale.- As part of its recently announced manufacturing network restructuring initiative, the Company will be ceasing operations and closing its manufacturing and distribution facilities in
Huntsville, Alabama . The Company recorded an impairment charge of$90 million related to intangible assets and property, plant and equipment associated with the planned closure.
As previously announced, the Company expects to pay approximately
CONFERENCE CALL INFORMATION
Endo will conduct a conference call with financial analysts to discuss this press release today at
A replay of the call will be available from August 8, 2017 at 11:30 a.m. ET until 11:59 p.m. ET on August 22, 2017 by dialing U.S./Canada (855) 859-2056, International (404) 537-3406, and entering the passcode 45397076.
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
FINANCIAL SCHEDULES
The following table presents Endo's unaudited Total Revenues for the three and six months ended
Three Months Ended June 30, |
Percent Growth |
Six Months Ended June 30, |
Percent Growth |
||||||||||||||||||
2017 |
2016 |
2017 |
2016 |
||||||||||||||||||
U.S. Generic Pharmaceuticals: |
|||||||||||||||||||||
U.S. Generics Base |
$ |
218,935 |
$ |
331,095 |
(34) |
% |
$ |
455,082 |
$ |
678,524 |
(33) |
% |
|||||||||
Sterile Injectables |
160,597 |
126,245 |
27 |
% |
311,946 |
249,934 |
25 |
% |
|||||||||||||
New Launches and Alternative Dosages |
183,780 |
108,018 |
70 |
% |
518,267 |
220,290 |
135 |
% |
|||||||||||||
Total U.S. Generic Pharmaceuticals |
$ |
563,312 |
$ |
565,358 |
— |
% |
$ |
1,285,295 |
$ |
1,148,748 |
12 |
% |
|||||||||
U.S. Branded Pharmaceuticals: |
|||||||||||||||||||||
Specialty Products: |
|||||||||||||||||||||
XIAFLEX® |
$ |
50,077 |
$ |
42,419 |
18 |
% |
$ |
99,602 |
$ |
86,464 |
15 |
% |
|||||||||
SUPPRELIN® LA |
23,649 |
21,211 |
11 |
% |
42,830 |
38,463 |
11 |
% |
|||||||||||||
Other Specialty (1) |
36,745 |
31,973 |
15 |
% |
72,773 |
64,942 |
12 |
% |
|||||||||||||
Total Specialty Products |
$ |
110,471 |
$ |
95,603 |
16 |
% |
$ |
215,205 |
$ |
189,869 |
13 |
% |
|||||||||
Established Products: |
|||||||||||||||||||||
OPANA® ER |
$ |
31,582 |
$ |
38,554 |
(18) |
% |
$ |
67,300 |
$ |
83,224 |
(19) |
% |
|||||||||
PERCOCET® |
30,889 |
35,708 |
(13) |
% |
61,834 |
69,301 |
(11) |
% |
|||||||||||||
VOLTAREN® Gel |
20,270 |
27,290 |
(26) |
% |
34,544 |
63,037 |
(45) |
% |
|||||||||||||
LIDODERM® |
11,678 |
27,039 |
(57) |
% |
24,854 |
46,751 |
(47) |
% |
|||||||||||||
Other Established (2) |
40,298 |
64,148 |
(37) |
% |
91,610 |
144,973 |
(37) |
% |
|||||||||||||
Total Established Products |
$ |
134,717 |
$ |
192,739 |
(30) |
% |
$ |
280,142 |
$ |
407,286 |
(31) |
% |
|||||||||
Total U.S. Branded Pharmaceuticals (3) |
$ |
245,188 |
$ |
288,342 |
(15) |
% |
$ |
495,347 |
$ |
597,155 |
(17) |
% |
|||||||||
Total International Pharmaceuticals |
$ |
67,231 |
$ |
67,187 |
— |
% |
$ |
132,689 |
$ |
138,523 |
(4) |
% |
|||||||||
Total Revenues |
$ |
875,731 |
$ |
920,887 |
(5) |
% |
$ |
1,913,331 |
$ |
1,884,426 |
2 |
% |
__________ |
|
(1) |
Products included within Other Specialty include TESTOPEL®, NASCOBAL® Nasal Spray, and AVEED®. |
(2) |
Products included within Other Established include, but are not limited to, TESTIM® and FORTESTA® Gel, including the authorized generic. |
(3) |
Individual products presented above represent the top two performing products in each product category and/or any product having revenues in excess of $25 million during any quarterly period in 2017 or 2016. LIDODERM® is separately presented as its revenues exceeded $25 million in certain quarterly periods in 2016. |
The following table presents unaudited Condensed Consolidated Statement of Operations data for the three and six months ended
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2017 |
2016 |
2017 |
2016 |
||||||||||||
TOTAL REVENUES |
$ |
875,731 |
$ |
920,887 |
$ |
1,913,331 |
$ |
1,884,426 |
|||||||
COSTS AND EXPENSES: |
|||||||||||||||
Cost of revenues |
539,401 |
632,218 |
1,208,363 |
1,320,923 |
|||||||||||
Selling, general and administrative |
155,555 |
193,070 |
332,795 |
371,425 |
|||||||||||
Research and development |
40,869 |
50,589 |
83,878 |
92,281 |
|||||||||||
Litigation-related and other contingencies, net |
(2,600) |
5,259 |
(1,664) |
10,459 |
|||||||||||
Asset impairment charges |
725,044 |
39,951 |
929,006 |
169,576 |
|||||||||||
Acquisition-related and integration items |
4,190 |
48,171 |
15,070 |
60,725 |
|||||||||||
OPERATING LOSS FROM CONTINUING OPERATIONS |
$ |
(586,728) |
$ |
(48,371) |
$ |
(654,117) |
$ |
(140,963) |
|||||||
INTEREST EXPENSE, NET |
121,747 |
111,919 |
233,746 |
228,712 |
|||||||||||
LOSS ON EXTINGUISHMENT OF DEBT |
51,734 |
— |
51,734 |
— |
|||||||||||
OTHER (INCOME) EXPENSE, NET |
(6,709) |
5,175 |
(8,746) |
3,268 |
|||||||||||
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX |
$ |
(753,500) |
$ |
(165,465) |
$ |
(930,851) |
$ |
(372,943) |
|||||||
INCOME TAX BENEFIT |
(57,480) |
(555,277) |
(69,408) |
(673,992) |
|||||||||||
(LOSS) INCOME FROM CONTINUING OPERATIONS |
$ |
(696,020) |
$ |
389,812 |
$ |
(861,443) |
$ |
301,049 |
|||||||
DISCONTINUED OPERATIONS, NET OF TAX |
(700,498) |
(46,216) |
(708,903) |
(91,324) |
|||||||||||
CONSOLIDATED NET (LOSS) INCOME |
$ |
(1,396,518) |
$ |
343,596 |
$ |
(1,570,346) |
$ |
209,725 |
|||||||
Less: Net income attributable to noncontrolling interests |
— |
18 |
— |
16 |
|||||||||||
NET (LOSS) INCOME ATTRIBUTABLE TO ENDO INTERNATIONAL PLC |
$ |
(1,396,518) |
$ |
343,578 |
$ |
(1,570,346) |
$ |
209,709 |
|||||||
NET (LOSS) INCOME PER SHARE ATTRIBUTABLE TO ENDO INTERNATIONAL PLC ORDINARY SHAREHOLDERS—BASIC: |
|||||||||||||||
Continuing operations |
$ |
(3.12) |
$ |
1.75 |
$ |
(3.86) |
$ |
1.35 |
|||||||
Discontinued operations |
(3.14) |
(0.21) |
(3.18) |
(0.41) |
|||||||||||
Basic |
$ |
(6.26) |
$ |
1.54 |
$ |
(7.04) |
$ |
0.94 |
|||||||
NET (LOSS) INCOME PER SHARE ATTRIBUTABLE TO ENDO INTERNATIONAL PLC ORDINARY SHAREHOLDERS—DILUTED: |
|||||||||||||||
Continuing operations |
$ |
(3.12) |
$ |
1.75 |
$ |
(3.86) |
$ |
1.35 |
|||||||
Discontinued operations |
(3.14) |
(0.21) |
(3.18) |
(0.41) |
|||||||||||
Diluted |
$ |
(6.26) |
$ |
1.54 |
$ |
(7.04) |
$ |
0.94 |
|||||||
WEIGHTED AVERAGE SHARES: |
|||||||||||||||
Basic |
223,158 |
222,667 |
223,086 |
222,485 |
|||||||||||
Diluted |
223,158 |
222,863 |
223,086 |
223,021 |
The following table presents unaudited Condensed Consolidated Balance Sheet data at June 30, 2017 and December 31, 2016 (in thousands):
June 30, 2017 |
December 31, 2016 |
||||||
ASSETS |
|||||||
CURRENT ASSETS: |
|||||||
Cash and cash equivalents |
$ |
616,534 |
$ |
517,250 |
|||
Restricted cash and cash equivalents |
364,796 |
282,074 |
|||||
Accounts receivable |
580,123 |
992,153 |
|||||
Inventories, net |
489,752 |
555,671 |
|||||
Assets held for sale |
166,190 |
116,985 |
|||||
Other current assets |
57,620 |
125,326 |
|||||
Total current assets |
$ |
2,275,015 |
$ |
2,589,459 |
|||
TOTAL NON-CURRENT ASSETS |
10,003,075 |
11,685,650 |
|||||
TOTAL ASSETS |
$ |
12,278,090 |
$ |
14,275,109 |
|||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||
CURRENT LIABILITIES: |
|||||||
Accounts payable and accrued expenses, including legal settlement accruals |
$ |
2,143,167 |
$ |
2,470,016 |
|||
Liabilities held for sale |
44,367 |
24,338 |
|||||
Other current liabilities |
39,413 |
140,391 |
|||||
Total current liabilities |
$ |
2,226,947 |
$ |
2,634,745 |
|||
LONG-TERM DEBT, LESS CURRENT PORTION, NET |
8,251,289 |
8,141,378 |
|||||
OTHER LIABILITIES |
990,748 |
797,397 |
|||||
TOTAL SHAREHOLDERS' EQUITY |
809,106 |
2,701,589 |
|||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
12,278,090 |
$ |
14,275,109 |
The following table presents unaudited Condensed Consolidated Statement of Cash Flow data for the six months ended
Six Months Ended June 30, |
|||||||
2017 |
2016 |
||||||
OPERATING ACTIVITIES: |
|||||||
Consolidated net (loss) income |
$ |
(1,570,346) |
$ |
209,725 |
|||
Adjustments to reconcile consolidated net (loss) income to Net cash provided by operating activities: |
|||||||
Depreciation and amortization |
499,656 |
476,911 |
|||||
Asset impairment charges |
929,006 |
190,904 |
|||||
Other, including cash payments to claimants from Qualified Settlement Funds (1) |
482,670 |
(318,929) |
|||||
Net cash provided by operating activities |
$ |
340,986 |
$ |
558,611 |
|||
INVESTING ACTIVITIES: |
|||||||
Purchases of property, plant and equipment |
$ |
(59,729) |
$ |
(53,705) |
|||
Proceeds from sale of business and other assets, net |
18,531 |
6,631 |
|||||
Increase in restricted cash and cash equivalents (1) |
(522,772) |
(327,359) |
|||||
Decrease in restricted cash and cash equivalents (1) |
440,190 |
524,438 |
|||||
Other |
— |
(13,000) |
|||||
Net cash (used in) provided by investing activities |
$ |
(123,780) |
$ |
137,005 |
|||
FINANCING ACTIVITIES: |
|||||||
(Payments on) proceeds from borrowings, net |
$ |
(2,550) |
$ |
(276,740) |
|||
Other |
(97,033) |
(24,861) |
|||||
Net cash used in financing activities |
$ |
(99,583) |
$ |
(301,601) |
|||
Effect of foreign exchange rate |
$ |
2,786 |
$ |
1,459 |
|||
Movement in cash held for sale |
(21,125) |
— |
|||||
NET INCREASE IN CASH AND CASH EQUIVALENTS |
$ |
99,284 |
$ |
395,474 |
|||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
517,250 |
272,348 |
|||||
CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ |
616,534 |
$ |
667,822 |
(1) |
Included within the above Condensed Consolidated Statements of Cash Flows is the impact of payments into and out of QSFs for mesh-related product liability. Cash payments into QSFs result in a cash outflow for investing activities (CFI). Cash releases from QSFs result in a cash inflow for investing activities and a corresponding outflow for operating activities (CFO). The following table reflects the mesh-related payment activities for the six months ended June 30, 2017 and 2016 by cash flow component: |
Six Months Ended June 30, |
||||||||||||||||
2017 |
2016 |
|||||||||||||||
Impact on CFO (a) |
Impact on CFI |
Impact on CFO (a) |
Impact on CFI |
|||||||||||||
Cash contributions to Qualified Settlement Funds |
$ |
— |
$ |
(522,770) |
$ |
— |
$ |
(326,795) |
||||||||
Cash payments to claimants from Qualified Settlement Funds |
(440,190) |
440,190 |
(524,438) |
524,438 |
||||||||||||
Cash payments made directly to claimants |
(3,794) |
— |
(5,438) |
— |
||||||||||||
Total |
$ |
(443,984) |
$ |
(82,580) |
$ |
(529,876) |
$ |
197,643 |
(a) |
These amounts are included in "Other, including cash payments to claimants from Qualified Settlement Funds (1)" in the Condensed Consolidated Statements of Cash Flows above. |
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
The tables below provide reconciliations of certain of our non-GAAP financial measures, both historical and forward-looking, to their most directly comparable GAAP amounts. Refer to the "Notes to the Reconciliations of GAAP and Non-GAAP Financial Measures" section below for additional details regarding the adjustments to the non-GAAP financial measures detailed throughout this Supplemental Financial Information section.
Reconciliation of EBITDA and Adjusted EBITDA (non-GAAP)
The following table provides a reconciliation of Net (loss) income attributable to
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2017 |
2016 |
2017 |
2016 |
||||||||||||
Net (loss) income attributable to Endo International plc (GAAP) |
$ |
(1,396,518) |
$ |
343,578 |
$ |
(1,570,346) |
$ |
209,709 |
|||||||
Income tax benefit |
(57,480) |
(555,277) |
(69,408) |
(673,992) |
|||||||||||
Interest expense, net |
121,747 |
111,919 |
233,746 |
228,712 |
|||||||||||
Depreciation and amortization (18) |
212,801 |
231,478 |
496,910 |
464,912 |
|||||||||||
EBITDA (non-GAAP) |
$ |
(1,119,450) |
$ |
131,698 |
$ |
(909,098) |
$ |
229,341 |
|||||||
Inventory step-up and other cost savings (2) |
$ |
100 |
$ |
29,103 |
$ |
215 |
$ |
97,579 |
|||||||
Upfront and milestone-related payments (3) |
3,082 |
2,688 |
6,177 |
4,105 |
|||||||||||
Inventory reserve increase from restructuring (4) |
7,899 |
6,706 |
7,899 |
33,633 |
|||||||||||
Royalty obligations (5) |
— |
— |
— |
(7,750) |
|||||||||||
Separation benefits and other restructuring (6) |
16,715 |
15,468 |
39,385 |
26,997 |
|||||||||||
Certain litigation-related and other contingencies, net (7) |
(2,600) |
5,259 |
(1,664) |
10,459 |
|||||||||||
Asset impairment charges (8) |
725,044 |
39,951 |
929,006 |
169,576 |
|||||||||||
Acquisition-related and integration costs (9) |
2,240 |
24,287 |
6,936 |
47,515 |
|||||||||||
Fair value of contingent consideration (10) |
1,950 |
23,884 |
8,134 |
13,210 |
|||||||||||
Loss on extinguishment of debt (11) |
51,734 |
— |
51,734 |
— |
|||||||||||
Share-based compensation |
7,512 |
14,203 |
27,005 |
28,520 |
|||||||||||
Other (income) expense, net (19) |
(6,709) |
5,175 |
(8,746) |
3,268 |
|||||||||||
Other adjustments |
(114) |
5,783 |
(17) |
(1,395) |
|||||||||||
Discontinued operations, net of tax (15) |
700,498 |
46,216 |
708,903 |
91,324 |
|||||||||||
Net income attributable to noncontrolling interests (16) |
— |
18 |
— |
16 |
|||||||||||
Adjusted EBITDA (non-GAAP) |
$ |
387,901 |
$ |
350,439 |
$ |
865,869 |
$ |
746,398 |
Reconciliation of Adjusted Income from Continuing Operations (non-GAAP)
The following table provides a reconciliation of our (Loss) income from continuing operations (GAAP) to our Adjusted income from continuing operations (non-GAAP) for the three and six months ended
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2017 |
2016 |
2017 |
2016 |
||||||||||||
(Loss) income from continuing operations (GAAP) |
$ |
(696,020) |
$ |
389,812 |
$ |
(861,443) |
$ |
301,049 |
|||||||
Non-GAAP adjustments: |
|||||||||||||||
Amortization of intangible assets (1) |
190,943 |
212,844 |
454,077 |
424,513 |
|||||||||||
Inventory step-up and other cost savings (2) |
100 |
29,103 |
215 |
97,579 |
|||||||||||
Upfront and milestone-related payments (3) |
3,082 |
2,688 |
6,177 |
4,105 |
|||||||||||
Inventory reserve increase from restructuring (4) |
7,899 |
6,706 |
7,899 |
33,633 |
|||||||||||
Royalty obligations (5) |
— |
— |
— |
(7,750) |
|||||||||||
Separation benefits and other restructuring (6) |
16,715 |
15,468 |
39,385 |
26,997 |
|||||||||||
Certain litigation-related and other contingencies, net (7) |
(2,600) |
5,259 |
(1,664) |
10,459 |
|||||||||||
Asset impairment charges (8) |
725,044 |
39,951 |
929,006 |
169,576 |
|||||||||||
Acquisition-related and integration costs (9) |
2,240 |
24,287 |
6,936 |
47,515 |
|||||||||||
Fair value of contingent consideration (10) |
1,950 |
23,884 |
8,134 |
13,210 |
|||||||||||
Loss on extinguishment of debt (11) |
51,734 |
— |
51,734 |
— |
|||||||||||
Non-cash and penalty interest charges (12) |
— |
— |
— |
4,092 |
|||||||||||
Other (13) |
(3,233) |
1,541 |
(4,168) |
(5,490) |
|||||||||||
Tax adjustments (14) |
(90,653) |
(559,202) |
(153,842) |
(686,416) |
|||||||||||
Adjusted income from continuing operations (non-GAAP) |
$ |
207,201 |
$ |
192,341 |
$ |
482,446 |
$ |
433,072 |
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
Three Months Ended June 30, 2017 |
|||||||||||||||||||||||||||||||
Total revenues |
Cost of revenues |
Gross margin |
Gross margin % |
Total operating expenses |
Operating expense to revenue % |
Operating (loss) income from continuing operations |
Operating margin % |
Other non-operating expense, net |
(Loss) income from continuing operations before income tax |
Income tax (benefit) expense |
Effective tax rate |
(Loss) income from continuing operations |
Discontinued operations, net of tax |
Net (loss) income attributable to Endo International plc |
Diluted (loss) income per share from continuing operations (17) |
||||||||||||||||
Reported (GAAP) |
$ 875,731 |
$ 539,401 |
$ 336,330 |
38 % |
$ 923,058 |
105 % |
$ (586,728) |
(67)% |
$ 166,772 |
$ (753,500) |
$ (57,480) |
8 % |
$ (696,020) |
$ (700,498) |
$ (1,396,518) |
$ (3.12) |
|||||||||||||||
Items impacting comparability: |
|||||||||||||||||||||||||||||||
Amortization of intangible assets (1) |
— |
(190,943) |
190,943 |
— |
190,943 |
— |
190,943 |
— |
190,943 |
— |
190,943 |
0.86 |
|||||||||||||||||||
Inventory step-up and other cost savings (2) |
— |
(100) |
100 |
— |
100 |
— |
100 |
— |
100 |
— |
100 |
— |
|||||||||||||||||||
Upfront and milestone-related payments (3) |
— |
(682) |
682 |
(2,400) |
3,082 |
— |
3,082 |
— |
3,082 |
— |
3,082 |
0.01 |
|||||||||||||||||||
Inventory reserve increase from restructuring (4) |
— |
(7,899) |
7,899 |
— |
7,899 |
— |
7,899 |
— |
7,899 |
— |
7,899 |
0.04 |
|||||||||||||||||||
Separation benefits and other restructuring (6) |
— |
(5,026) |
5,026 |
(11,689) |
16,715 |
— |
16,715 |
— |
16,715 |
— |
16,715 |
0.07 |
|||||||||||||||||||
Certain litigation-related and other contingencies, net (7) |
— |
— |
— |
2,600 |
(2,600) |
— |
(2,600) |
— |
(2,600) |
— |
(2,600) |
(0.01) |
|||||||||||||||||||
Asset impairment charges (8) |
— |
— |
— |
(725,044) |
725,044 |
— |
725,044 |
— |
725,044 |
— |
725,044 |
3.25 |
|||||||||||||||||||
Acquisition-related and integration costs (9) |
— |
— |
— |
(2,240) |
2,240 |
— |
2,240 |
— |
2,240 |
— |
2,240 |
0.01 |
|||||||||||||||||||
Fair value of contingent consideration (10) |
— |
— |
— |
(1,950) |
1,950 |
— |
1,950 |
— |
1,950 |
— |
1,950 |
0.01 |
|||||||||||||||||||
Loss on extinguishment of debt (11) |
— |
— |
— |
— |
— |
(51,734) |
51,734 |
— |
51,734 |
— |
51,734 |
0.23 |
|||||||||||||||||||
Other (13) |
— |
— |
— |
— |
— |
3,233 |
(3,233) |
— |
(3,233) |
— |
(3,233) |
(0.01) |
|||||||||||||||||||
Tax adjustments (14) |
— |
— |
— |
— |
— |
— |
— |
90,653 |
(90,653) |
— |
(90,653) |
(0.41) |
|||||||||||||||||||
Exclude discontinued operations, net of tax (15) |
— |
— |
— |
— |
— |
— |
— |
— |
— |
700,498 |
700,498 |
— |
|||||||||||||||||||
After considering items (non-GAAP) |
$ 875,731 |
$ 334,751 |
$ 540,980 |
62 % |
$ 182,335 |
21 % |
$ 358,645 |
41 % |
$ 118,271 |
$ 240,374 |
$ 33,173 |
14 % |
$ 207,201 |
$ — |
$ 207,201 |
$ 0.93 |
|||||||||||||||
Three Months Ended June 30, 2016 |
|||||||||||||||||||||||||||||||
Total revenues |
Cost of revenues |
Gross margin |
Gross margin % |
Total operating expenses |
Operating expense to revenue % |
Operating (loss) income from continuing operations |
Operating margin % |
Other non-operating expense, net |
(Loss) income from continuing operations before income tax |
Income tax (benefit) expense |
Effective tax rate |
(Loss) income from continuing operations |
Discontinued operations, net of tax |
Net (loss) income attributable to Endo International plc (16) |
Diluted (loss) income per share from continuing operations (17) |
||||||||||||||||
Reported (GAAP) |
$ 920,887 |
$ 632,218 |
$ 288,669 |
31 % |
$ 337,040 |
37 % |
$ (48,371) |
(5)% |
$ 117,094 |
$ (165,465) |
$ (555,277) |
336 % |
$ 389,812 |
$ (46,216) |
$ 343,578 |
$ 1.75 |
|||||||||||||||
Items impacting comparability: |
|||||||||||||||||||||||||||||||
Amortization of intangible assets (1) |
— |
(212,844) |
212,844 |
— |
212,844 |
— |
212,844 |
— |
212,844 |
— |
212,844 |
0.95 |
|||||||||||||||||||
Inventory step-up and other cost savings (2) |
— |
(29,103) |
29,103 |
— |
29,103 |
— |
29,103 |
— |
29,103 |
— |
29,103 |
0.13 |
|||||||||||||||||||
Upfront and milestone-related payments (3) |
— |
(642) |
642 |
(2,046) |
2,688 |
— |
2,688 |
— |
2,688 |
— |
2,688 |
0.01 |
|||||||||||||||||||
Inventory reserve increase from restructuring (4) |
— |
(6,706) |
6,706 |
— |
6,706 |
— |
6,706 |
— |
6,706 |
— |
6,706 |
0.03 |
|||||||||||||||||||
Separation benefits and other restructuring (6) |
— |
(6,405) |
6,405 |
(9,063) |
15,468 |
— |
15,468 |
— |
15,468 |
— |
15,468 |
0.07 |
|||||||||||||||||||
Certain litigation-related and other contingencies, net (7) |
— |
— |
— |
(5,259) |
5,259 |
— |
5,259 |
— |
5,259 |
— |
5,259 |
0.02 |
|||||||||||||||||||
Asset impairment charges (8) |
— |
— |
— |
(39,951) |
39,951 |
— |
39,951 |
— |
39,951 |
— |
39,951 |
0.18 |
|||||||||||||||||||
Acquisition-related and integration costs (9) |
— |
— |
— |
(24,287) |
24,287 |
— |
24,287 |
— |
24,287 |
— |
24,287 |
0.11 |
|||||||||||||||||||
Fair value of contingent consideration (10) |
— |
— |
— |
(23,884) |
23,884 |
— |
23,884 |
— |
23,884 |
— |
23,884 |
0.11 |
|||||||||||||||||||
Other (13) |
— |
— |
— |
— |
— |
(1,541) |
1,541 |
— |
1,541 |
— |
1,541 |
0.01 |
|||||||||||||||||||
Tax adjustments (14) |
— |
— |
— |
— |
— |
— |
— |
559,202 |
(559,202) |
— |
(559,202) |
(2.51) |
|||||||||||||||||||
Exclude discontinued operations, net of tax (15) |
— |
— |
— |
— |
— |
— |
— |
— |
— |
46,216 |
46,216 |
— |
|||||||||||||||||||
After considering items (non-GAAP) |
$ 920,887 |
$ 376,518 |
$ 544,369 |
59 % |
$ 232,550 |
25 % |
$ 311,819 |
34 % |
$ 115,553 |
$ 196,266 |
$ 3,925 |
2 % |
$ 192,341 |
$ — |
$ 192,323 |
$ 0.86 |
|||||||||||||||
Six Months Ended June 30, 2017 |
|||||||||||||||||||||||||||||||
Total revenues |
Cost of revenues |
Gross margin |
Gross margin % |
Total operating expenses |
Operating expense to revenue % |
Operating (loss) income from continuing operations |
Operating margin % |
Other non-operating expense, net |
(Loss) income from continuing operations before income tax |
Income tax (benefit) expense |
Effective tax rate |
(Loss) income from continuing operations |
Discontinued operations, net of tax |
Net (loss) income attributable to Endo International plc |
Diluted (loss) income per share from continuing operations (17) |
||||||||||||||||
Reported (GAAP) |
$ 1,913,331 |
$ 1,208,363 |
$ 704,968 |
37 % |
$ 1,359,085 |
71 % |
$ (654,117) |
(34)% |
$ 276,734 |
$ (930,851) |
$ (69,408) |
7 % |
$ (861,443) |
$ (708,903) |
$ (1,570,346) |
$ (3.86) |
|||||||||||||||
Items impacting comparability: |
|||||||||||||||||||||||||||||||
Amortization of intangible assets (1) |
— |
(454,077) |
454,077 |
— |
454,077 |
— |
454,077 |
— |
454,077 |
— |
454,077 |
2.03 |
|||||||||||||||||||
Inventory step-up and other cost savings (2) |
— |
(215) |
215 |
— |
215 |
— |
215 |
— |
215 |
— |
215 |
— |
|||||||||||||||||||
Upfront and milestone-related payments (3) |
— |
(1,351) |
1,351 |
(4,826) |
6,177 |
— |
6,177 |
— |
6,177 |
— |
6,177 |
0.03 |
|||||||||||||||||||
Inventory reserve increase from restructuring (4) |
— |
(7,899) |
7,899 |
— |
7,899 |
— |
7,899 |
— |
7,899 |
— |
7,899 |
0.04 |
|||||||||||||||||||
Separation benefits and other restructuring (6) |
— |
(6,687) |
6,687 |
(32,698) |
39,385 |
— |
39,385 |
— |
39,385 |
— |
39,385 |
0.18 |
|||||||||||||||||||
Certain litigation-related and other contingencies, net (7) |
— |
— |
— |
1,664 |
(1,664) |
— |
(1,664) |
— |
(1,664) |
— |
(1,664) |
(0.01) |
|||||||||||||||||||
Asset impairment charges (8) |
— |
— |
— |
(929,006) |
929,006 |
— |
929,006 |
— |
929,006 |
— |
929,006 |
4.16 |
|||||||||||||||||||
Acquisition-related and integration costs (9) |
— |
— |
— |
(6,936) |
6,936 |
— |
6,936 |
— |
6,936 |
— |
6,936 |
0.03 |
|||||||||||||||||||
Fair value of contingent consideration (10) |
— |
— |
— |
(8,134) |
8,134 |
— |
8,134 |
— |
8,134 |
— |
8,134 |
0.04 |
|||||||||||||||||||
Loss on extinguishment of debt (11) |
— |
— |
— |
— |
— |
(51,734) |
51,734 |
— |
51,734 |
— |
51,734 |
0.23 |
|||||||||||||||||||
Other (13) |
— |
— |
— |
— |
— |
4,168 |
(4,168) |
— |
(4,168) |
— |
(4,168) |
(0.02) |
|||||||||||||||||||
Tax adjustments (14) |
— |
— |
— |
— |
— |
— |
— |
153,842 |
(153,842) |
— |
(153,842) |
(0.69) |
|||||||||||||||||||
Exclude discontinued operations, net of tax (15) |
— |
— |
— |
— |
— |
— |
— |
— |
— |
708,903 |
708,903 |
— |
|||||||||||||||||||
After considering items (non-GAAP) |
$ 1,913,331 |
$ 738,134 |
$ 1,175,197 |
61 % |
$ 379,149 |
20 % |
$ 796,048 |
42 % |
$ 229,168 |
$ 566,880 |
$ 84,434 |
15 % |
$ 482,446 |
$ — |
$ 482,446 |
$ 2.16 |
|||||||||||||||
Six Months Ended June 30, 2016 |
|||||||||||||||||||||||||||||||
Total revenues |
Cost of revenues |
Gross margin |
Gross margin % |
Total operating expenses |
Operating expense to revenue % |
Operating (loss) income from continuing operations |
Operating margin % |
Other non-operating expense, net |
(Loss) income from continuing operations before income tax |
Income tax (benefit) expense |
Effective tax rate |
(Loss) income from continuing operations |
Discontinued operations, net of tax |
Net (loss) income attributable to Endo International plc (16) |
Diluted (loss) income per share from continuing operations (17) |
||||||||||||||||
Reported (GAAP) |
$ 1,884,426 |
$ 1,320,923 |
$ 563,503 |
30 % |
$ 704,466 |
37 % |
$ (140,963) |
(7)% |
$ 231,980 |
$ (372,943) |
$ (673,992) |
181 % |
$ 301,049 |
$ (91,324) |
$ 209,709 |
$ 1.35 |
|||||||||||||||
Items impacting comparability: |
|||||||||||||||||||||||||||||||
Amortization of intangible assets (1) |
— |
(424,513) |
424,513 |
— |
424,513 |
— |
424,513 |
— |