Endo Reports Second-Quarter 2020 Financial Results

August 5, 2020

— Revenues decreased 2% to $688 million compared to prior year —

— On July 6, 2020, U.S. FDA approved Qwo™ (collagenase clostridium histolyticum-aaes), the first injectable treatment for cellulite —

DUBLIN, Aug. 5, 2020 /PRNewswire/ -- Endo International plc (NASDAQ: ENDP) today reported financial results for the second quarter ended June 30, 2020.

"I'm proud of what our team delivered in the second quarter. Our Branded Pharmaceuticals segment performed better than previously guided as COVID-19 related restrictions and physician office closures began easing throughout the quarter. Additionally, our Sterile Injectables segment delivered strong revenue growth versus prior year as customers built significant inventory levels of products used to treat certain COVID-19 patients," said Blaise Coleman, President and Chief Executive Officer at Endo. "I want to thank our team members for their tireless work and dedication to meeting our customers' needs in a challenging environment."

Mr. Coleman continued, "With the recent FDA approval of QWO and Endo's impending entry into the US medical aesthetics market, we are ready to embark on the next phase of our transformation. We have evolved our strategic priorities to focus on expanding and enhancing our portfolio of life-enhancing products while accelerating new ways to better serve our customers and to improve productivity. We look forward to executing against these priorities as we seek to realize Endo's full potential."

SECOND-QUARTER FINANCIAL PERFORMANCE (in thousands, except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019 (1)		Change		2020		2019 (1)		Change
Total Revenues, Net	$	687,588	$	699,727	(2)	%	$	1,507,993	$	1,420,138	6	%
Reported Income (Loss) from Continuing Operations	$	17,610	$	(98,052)	NM		$	175,191	$	(110,664)	NM
Reported Diluted Weighted Average Shares	233,681		226,221		3	%	233,348		225,408		4	%
Reported Diluted Net Income (Loss) per Share from Continuing Operations	$	0.08	$	(0.43)	NM		$	0.75	$	(0.49)	NM
Reported Net Income (Loss)	$	10,558	$	(106,005)	NM		$	140,488	$	(124,578)	NM
Adjusted Income from Continuing Operations	$	151,700	$	139,388	9	%	$	372,100	$	278,161	34	%
Adjusted Diluted Weighted Average Shares (2)	233,681		232,713		—	%	233,348		232,174		1	%
Adjusted Diluted Net Income per Share from Continuing Operations	$	0.65	$	0.60	8	%	$	1.59	$	1.20	33	%
Adjusted EBITDA	$	336,481	$	326,084	3	%	$	757,607	$	677,180	12	%

(1)

Certain prior period adjusted amounts have been revised as a result of a change in the Company's definition of its adjusted financial metrics. Refer to the "Supplemental Financial Information" section below for additional discussion.

(2)

Reported Diluted Net Income (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.

CONSOLIDATED RESULTS
Total revenues were $688 million in second-quarter 2020, a decrease of 2% compared to $700 million during the same period in 2019. This result was primarily attributable to decreased Branded Pharmaceuticals segment revenues due to reduced physician office activity and patient office visits compared to prior year because of the COVID-19 pandemic. This decrease was largely offset by an increase in Sterile Injectables segment revenues due to significant channel inventory stocking of products used to treat certain patients infected with COVID-19.

Reported income from continuing operations in second-quarter 2020 was $18 million compared to reported loss from continuing operations of $98 million during the same period in 2019. This result was primarily attributable to lower asset impairment charges. Reported diluted net income per share from continuing operations in second-quarter 2020 was $0.08 compared to reported diluted net loss per share from continuing operations of $0.43 in second-quarter 2019.

Adjusted income from continuing operations in second-quarter 2020 was $152 million compared to $139 million in second-quarter 2019. This increase was primarily attributable to lower second-quarter 2020 operating expenses. Adjusted diluted net income per share from continuing operations in second-quarter 2020 was $0.65 compared to $0.60 in second-quarter 2019.

BRANDED PHARMACEUTICALS SEGMENT
Second-quarter 2020 Branded Pharmaceuticals segment revenues were $130 million, a decrease of 38% compared to $209 million during second-quarter 2019. This decrease was primarily attributable to reduced volumes caused by the COVID-19 pandemic.

Specialty Products revenues decreased 45% to $69 million in second-quarter 2020 compared to $124 million in second-quarter 2019, with sales of XIAFLEX^® decreasing 55% to $34 million compared to $75 million in second-quarter 2019. This decrease was primarily a result of physician office closures and a decline in patients electing to be treated because of the COVID-19 pandemic. Established Products revenues decreased 28% to $61 million in second-quarter 2020 compared to $85 million in second-quarter 2019 due to competitive pressures and a temporary product supply disruption, which has been resolved.

On July 6, 2020, the U.S. Food and Drug Administration (FDA) approved QWO (collagenase clostridium histolyticum-aaes) for the treatment of moderate to severe cellulite in the buttocks of adult women. QWO is the first FDA-approved injectable treatment for cellulite and is expected to be available throughout the United States beginning in spring 2021.

STERILE INJECTABLES SEGMENT
Second-quarter 2020 Sterile Injectables segment revenues were $319 million, an increase of 31% compared to $244 million during second-quarter 2019. This increase was primarily driven by significant channel inventory stocking of VASOSTRICT^® in anticipation of treating vasodilatory shock in patients infected with COVID-19.

GENERIC PHARMACEUTICALS SEGMENT
Second-quarter 2020 Generic Pharmaceuticals segment revenues were $216 million, a decrease of 1% compared to $218 million during second-quarter 2019. This decrease was primarily attributable to continued competitive pressures on certain key products, which were partially offset by recent product launches.

INTERNATIONAL PHARMACEUTICALS SEGMENT
Second-quarter 2020 International Pharmaceuticals segment revenues decreased 20% to $23 million compared to $29 million during second-quarter 2019.

THIRD-QUARTER AND FULL YEAR 2020 GUIDANCE
Endo is providing financial guidance for third-quarter and full year 2020. The third-quarter financial guidance reflects the anticipated unfavorable impact of new competitive events in Endo's Generic Pharmaceuticals segment and significant VASOSTRICT channel destocking. The outlook ranges below also reflect a number of other assumptions that are subject to change including, among other things, uncertainties related to the COVID-19 pandemic and the Company's expectation of a return to more normalized customer purchasing patterns during the fourth-quarter 2020. The Company estimates:

	Third-Quarter 2020	Full Year 2020
Total Revenues, Net	$515M to $550M	$2.60B to $2.70B
Adjusted EBITDA	$175M to $200M	$1.19B to $1.23B
Adjusted Diluted Net Income per Share from Continuing Operations	$0.08 to $0.13	$2.00 to $2.15
Adjusted Gross Margin	~64.0% to ~65.0%	~66.5% to ~67.0%
Adjusted Operating Expenses as a Percentage of Total Revenues, Net	~34.0%	~25.0% to ~25.5%
Adjusted Interest Expense	~$140M	~$530M to ~$535M
Adjusted Effective Tax Rate	~7.5% to ~8.5%	~14.0% to ~15.0%
Adjusted Diluted Weighted Average Shares	~234M	~234M

BALANCE SHEET, LIQUIDITY AND OTHER UPDATES
As of June 30, 2020, the Company had approximately $1.8 billion in unrestricted cash; $8.3 billion of debt; and a net debt to adjusted EBITDA ratio of 4.5.

Second-quarter 2020 cash provided by operating activities was $304 million, compared to $177 million of net cash provided by operating activities during second-quarter 2019.

CONFERENCE CALL INFORMATION
Endo will conduct a conference call with financial analysts to discuss this press release tomorrow at 7:00 a.m. EDT. The dial-in number to access the call is U.S./Canada (866) 497-0462, International (678) 509-7598, and the passcode is 2058864. Please dial in 10 minutes prior to the scheduled start time.

A replay of the call will be available from August 6, 2020 at 10:00 a.m. ET until 10:00 a.m. ET on August 13, 2020 by dialing U.S./Canada (855) 859-2056, International (404) 537-3406, and entering the passcode 2058864.

A simultaneous webcast of the call can be accessed by visiting http://investor.endo.com/events-and-presentations. In addition, a replay of the webcast will be available on the Company website for one year following the event.

FINANCIAL SCHEDULES
The following table presents Endo's unaudited Total revenues, net for the three and six months ended June 30, 2020 and 2019 (dollars in thousands):

	Three Months Ended June 30,				Percent Growth		Six Months Ended June 30,				Percent Growth
	2020		2019		Percent Growth		2020		2019		Percent Growth
Branded Pharmaceuticals:
Specialty Products:
XIAFLEX®	$	33,783	$	74,855	(55)	%	$	122,855	$	143,362	(14)	%
SUPPRELIN® LA	15,395		23,714		(35)	%	35,115		45,770		(23)	%
Other Specialty (1)	19,566		25,524		(23)	%	45,071		49,927		(10)	%
Total Specialty Products	$	68,744	$	124,093	(45)	%	$	203,041	$	239,059	(15)	%
Established Products:
PERCOCET®	$	27,578	$	28,878	(5)	%	$	55,281	$	59,638	(7)	%
LIDODERM®	7,056		9,051		(22)	%	14,279		17,120		(17)	%
EDEX®	6,604		7,662		(14)	%	15,172		13,633		11	%
Other Established (2)	19,539		39,329		(50)	%	45,821		83,088		(45)	%
Total Established Products	$	60,777	$	84,920	(28)	%	$	130,553	$	173,479	(25)	%
Total Branded Pharmaceuticals (3)	$	129,521	$	209,013	(38)	%	$	333,594	$	412,538	(19)	%
Sterile Injectables:
VASOSTRICT®	$	214,214	$	116,026	85	%	$	417,118	$	255,163	63	%
ADRENALIN®	33,161		45,835		(28)	%	89,673		93,157		(4)	%
Ertapenem for injection	11,990		25,547		(53)	%	29,864		57,766		(48)	%
APLISOL®	6,511		15,530		(58)	%	16,378		27,911		(41)	%
Other Sterile Injectables (4)	53,338		41,342		29	%	102,571		80,331		28	%
Total Sterile Injectables (3)	$	319,214	$	244,280	31	%	$	655,604	$	514,328	27	%
Total Generic Pharmaceuticals	$	215,879	$	217,784	(1)	%	$	467,162	$	436,310	7	%
Total International Pharmaceuticals	$	22,974	$	28,650	(20)	%	$	51,633	$	56,962	(9)	%
Total revenues, net	$	687,588	$	699,727	(2)	%	$	1,507,993	$	1,420,138	6	%

__________
(1)	Products included within Other Specialty are NASCOBAL^®Nasal Spray and AVEED^®.
(2)	Products included within Other Established include, but are not limited to, TESTOPEL^®.
(3)	Individual products presented above represent the top two performing products in each product category for either the three or six months ended June 30, 2020 and/or any product having revenues in excess of $25 million during any quarterly period in 2020 or 2019.
(4)	Products included within Other Sterile Injectables include ephedrine sulfate injection and others.

The following table presents unaudited Condensed Consolidated Statement of Operations data for the three and six months ended June 30, 2020 and 2019 (in thousands, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
TOTAL REVENUES, NET	$	687,588	$	699,727	$	1,507,993	$	1,420,138
COSTS AND EXPENSES:
Cost of revenues	336,096		388,208		724,895		780,117
Selling, general and administrative	173,258		152,297		340,026		303,420
Research and development	30,495		26,348		62,110		59,834
Litigation-related and other contingencies, net	(8,572)		10,315		(25,748)		10,321
Asset impairment charges	—		88,438		97,785		253,886
Acquisition-related and integration items, net	6,045		(5,507)		18,507		(43,008)
Interest expense, net	129,164		134,809		262,041		267,484
Gain on extinguishment of debt	—		—		—		(119,828)
Other (income) expense, net	(4,150)		(597)		(18,124)		4,205
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAX	$	25,252	$	(94,584)	$	46,501	$	(96,293)
INCOME TAX EXPENSE (BENEFIT)	7,642		3,468		(128,690)		14,371
INCOME (LOSS) FROM CONTINUING OPERATIONS	$	17,610	$	(98,052)	$	175,191	$	(110,664)
DISCONTINUED OPERATIONS, NET OF TAX	(7,052)		(7,953)		(34,703)		(13,914)
NET INCOME (LOSS)	$	10,558	$	(106,005)	$	140,488	$	(124,578)
NET INCOME (LOSS) PER SHARE—BASIC:
Continuing operations	$	0.08	$	(0.43)	$	0.77	$	(0.49)
Discontinued operations	(0.03)		(0.04)		(0.16)		(0.06)
Basic	$	0.05	$	(0.47)	$	0.61	$	(0.55)
NET INCOME (LOSS) PER SHARE—DILUTED:
Continuing operations	$	0.08	$	(0.43)	$	0.75	$	(0.49)
Discontinued operations	(0.03)		(0.04)		(0.15)		(0.06)
Diluted	$	0.05	$	(0.47)	$	0.60	$	(0.55)
WEIGHTED AVERAGE SHARES:
Basic	229,716		226,221		228,457		225,408
Diluted	233,681		226,221		233,348		225,408

The following table presents unaudited Condensed Consolidated Balance Sheet data at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020		December 31, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,780,087	$	1,454,531
Restricted cash and cash equivalents	180,730		247,457
Accounts receivable	271,893		467,953
Inventories, net	330,540		327,865
Other current assets	122,894		88,412
Total current assets	$	2,686,144	$	2,586,218
TOTAL NON-CURRENT ASSETS	6,478,990		6,803,309
TOTAL ASSETS	$	9,165,134	$	9,389,527
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses, including legal settlement accruals	$	1,175,241	$	1,412,954
Other current liabilities	47,170		47,335
Total current liabilities	$	1,222,411	$	1,460,289
LONG-TERM DEBT, LESS CURRENT PORTION, NET	8,302,595		8,359,899
OTHER LIABILITIES	354,995		435,883
SHAREHOLDERS' DEFICIT	(714,867)		(866,544)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$	9,165,134	$	9,389,527

The following table presents unaudited Condensed Consolidated Statement of Cash Flow data for the six months ended June 30, 2020 and 2019 (in thousands):

	Six Months Ended June 30,
	2020		2019
OPERATING ACTIVITIES:
Net income (loss)	$	140,488	$	(124,578)
Adjustments to reconcile Net income (loss) to Net cash provided by operating activities:
Depreciation and amortization	264,198		320,788
Asset impairment charges	97,785		253,886
Other, including cash payments to claimants from Qualified Settlement Funds	(135,583)		(363,494)
Net cash provided by operating activities	$	366,888	$	86,602
INVESTING ACTIVITIES:
Purchases of property, plant and equipment, excluding capitalized interest	$	(36,305)	$	(23,632)
Proceeds from sale of business and other assets, net	6,017		2,594
Other	(1,125)		(1,278)
Net cash used in investing activities	$	(31,413)	$	(22,316)
FINANCING ACTIVITIES:
(Payments on) proceeds from borrowings, net	$	(66,685)	$	257,605
Other	(9,046)		(22,676)
Net cash (used in) provided by financing activities	$	(75,731)	$	234,929
Effect of foreign exchange rate	(915)		841
NET INCREASE IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS	$	258,829	$	300,056
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, BEGINNING OF PERIOD	1,720,388		1,476,837
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, END OF PERIOD	$	1,979,217	$	1,776,893

SUPPLEMENTAL FINANCIAL INFORMATION
To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP financial measures. For additional information on the Company's use of such non-GAAP financial measures, refer to Endo's Current Report on Form 8-K furnished today to the U.S. Securities and Exchange Commission, which includes an explanation of the Company's reasons for using non-GAAP measures.

The tables below provide reconciliations of certain of the Company's non-GAAP financial measures to their most directly comparable GAAP amounts. Refer to the "Notes to the Reconciliations of GAAP and Non-GAAP Financial Measures" section below for additional details regarding the adjustments to the non-GAAP financial measures detailed throughout this Supplemental Financial Information section.

Effective January 1, 2020, the Company revised its definition of its adjusted financial metrics to exclude certain legal costs. The Company believes that such costs are not indicative of business performance and that excluding them more accurately reflects the Company's results and better enables management to compare financial results between periods. As a result of this change, the Company's adjusted financial metrics now exclude opioid-related legal expenses. Prior period adjusted results throughout this document have also been adjusted to reflect this change. The impact of excluding these costs during the three and six months ended June 30, 2020 and 2019 is reflected in the Certain legal costs lines of each of the following reconciliation tables.

Reconciliation of EBITDA and Adjusted EBITDA (non-GAAP)
The following table provides a reconciliation of Net income (loss) (GAAP) to Adjusted EBITDA (non-GAAP) for the three and six months ended June 30, 2020 and 2019 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Net income (loss) (GAAP)	$	10,558	$	(106,005)	$	140,488	$	(124,578)
Income tax expense (benefit)	7,642		3,468		(128,690)		14,371
Interest expense, net	129,164		134,809		262,041		267,484
Depreciation and amortization (13)	120,855		158,055		255,813		320,788
EBITDA (non-GAAP)	$	268,219	$	190,327	$	529,652	$	478,065

Upfront and milestone-related payments (2)	444		1,444		2,194		2,383
Continuity and separation benefits and other cost reductions (3)	9,444		2,124		32,664		4,149
Certain litigation-related and other contingencies, net (4)	(8,572)		10,315		(25,748)		10,321
Certain legal costs (5)	18,005		18,984		33,541		35,673
Asset impairment charges (6)	—		88,438		97,785		253,886
Fair value of contingent consideration (7)	6,045		(5,507)		18,507		(43,008)
Gain on extinguishment of debt (8)	—		—		—		(119,828)
Share-based compensation (13)	9,222		12,600		21,677		37,333
Other (income) expense, net (14)	(4,150)		(597)		(18,124)		4,205
Other (9)	30,772		3		30,756		87
Discontinued operations, net of tax (11)	7,052		7,953		34,703		13,914
Adjusted EBITDA (non-GAAP)	$	336,481	$	326,084	$	757,607	$	677,180

Reconciliation of Adjusted Income from Continuing Operations (non-GAAP)
The following table provides a reconciliation of the Company's Income (loss) from continuing operations (GAAP) to Adjusted income from continuing operations (non-GAAP) for the three and six months ended June 30, 2020 and 2019 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Income (loss) from continuing operations (GAAP)	$	17,610	$	(98,052)	$	175,191	$	(110,664)
Non-GAAP adjustments:
Amortization of intangible assets (1)	104,498		140,418		221,735		286,017
Upfront and milestone-related payments (2)	444		1,444		2,194		2,383
Continuity and separation benefits and other cost reductions (3)	9,444		2,124		32,664		4,149
Certain litigation-related and other contingencies, net (4)	(8,572)		10,315		(25,748)		10,321
Certain legal costs (5)	18,005		18,984		33,541		35,673
Asset impairment charges (6)	—		88,438		97,785		253,886
Fair value of contingent consideration (7)	6,045		(5,507)		18,507		(43,008)
Gain on extinguishment of debt (8)	—		—		—		(119,828)
Other (9)	29,755		86		15,335		1,620
Tax adjustments (10)	(25,529)		(18,862)		(199,104)		(42,388)
Adjusted income from continuing operations (non-GAAP)	$	151,700	$	139,388	$	372,100	$	278,161

Reconciliation of Other Adjusted Income Statement Data (non-GAAP)
The following tables provide detailed reconciliations of various other income statement data between the GAAP and non-GAAP amounts for the three and six months ended June 30, 2020 and 2019 (in thousands, except per share data):

	Three Months Ended June 30, 2020
	Total revenues, net	Cost of revenues	Gross margin	Gross margin %	Total operating expenses	Operating expense to revenue %	Operating income from continuing operations	Operating margin %	Other non-operating expense, net	Income from continuing operations before income tax	Income tax expense	Effective tax rate	Income from continuing operations	Discontinued operations, net of tax	Net income	Diluted net income per share from continuing operations (12)
Reported (GAAP)	$ 687,588	$ 336,096	$ 351,492	51.1 %	$ 201,226	29.3 %	$ 150,266	21.9 %	$ 125,014	$ 25,252	$ 7,642	30.3 %	$ 17,610	$ (7,052)	$ 10,558	$ 0.08
Items impacting comparability:
Amortization of intangible assets (1)	-	(104,498)	104,498		-		104,498		-	104,498	-		104,498	-	104,498
Upfront and milestone-related payments (2)	-	(125)	125		(319)		444		-	444	-		444	-	444
Continuity and separation benefits and other cost reductions (3)	-	(904)	904		(8,540)		9,444		-	9,444	-		9,444	-	9,444
Certain litigation-related and other contingencies, net (4)	-	-	-		8,572		(8,572)		-	(8,572)	-		(8,572)	-	(8,572)
Certain legal costs (5)	-	-	-		(18,005)		18,005		-	18,005	-		18,005	-	18,005
Fair value of contingent consideration (7)	-	-	-		(6,045)		6,045		-	6,045	-		6,045	-	6,045
Other (9)	-	-	-		(30,749)		30,749		994	29,755	-		29,755	-	29,755
Tax adjustments (10)	-	-	-		-		-		-	-	25,529		(25,529)	-	(25,529)
Exclude discontinued operations, net of tax (11)	-	-	-		-		-		-	-	-		-	7,052	7,052
After considering items (non-GAAP)	$ 687,588	$ 230,569	$ 457,019	66.5 %	$ 146,140	21.3 %	$ 310,879	45.2 %	$ 126,008	$ 184,871	$ 33,171	17.9 %	$ 151,700	$ -	$ 151,700	$ 0.65

	Three Months Ended June 30, 2019
	Total revenues, net	Cost of revenues	Gross margin	Gross margin %	Total operating expenses	Operating expense to revenue %	Operating income from continuing operations	Operating margin %	Other non-operating expense, net	(Loss) income from continuing operations before income tax	Income tax expense	Effective tax rate	(Loss) income from continuing operations	Discontinued operations, net of tax	Net (loss) income	Diluted net (loss) income per share from continuing operations (12)
Reported (GAAP)	$ 699,727	$ 388,208	$ 311,519	44.5 %	$ 271,891	38.9 %	$ 39,628	5.7 %	$ 134,212	$ (94,584)	$ 3,468	(3.7)%	$ (98,052)	$ (7,953)	$ (106,005)	$ (0.43)
Items impacting comparability:
Amortization of intangible assets (1)	-	(140,418)	140,418		-		140,418		-	140,418	-		140,418	-	140,418
Upfront and milestone-related payments (2)	-	(739)	739		(705)		1,444		-	1,444	-		1,444	-	1,444
Continuity and separation benefits and other cost reductions (3)	-	-	-		(2,124)		2,124		-	2,124	-		2,124	-	2,124
Certain litigation-related and other contingencies, net (4)	-	-	-		(10,315)		10,315		-	10,315	-		10,315	-	10,315
Certain legal costs (5)	-	-	-		(18,984)		18,984		-	18,984	-		18,984	-	18,984
Asset impairment charges (6)	-	-	-		(88,438)		88,438		-	88,438	-		88,438	-	88,438
Fair value of contingent consideration (7)	-	-	-		5,507		(5,507)		-	(5,507)	-		(5,507)	-	(5,507)
Other (9)	-	-	-		175		(175)		(261)	86	-		86	-	86
Tax adjustments (10)	-	-	-		-		-		-	-	18,862		(18,862)	-	(18,862)
Exclude discontinued operations, net of tax (11)	-	-	-		-		-		-	-	-		-	7,953	7,953
After considering items (non-GAAP)	$ 699,727	$ 247,051	$ 452,676	64.7 %	$ 157,007	22.4 %	$ 295,669	42.3 %	$ 133,951	$ 161,718	$ 22,330	13.8 %	$ 139,388	$ -	$ 139,388	$ 0.60

	Six Months Ended June 30, 2020
	Total revenues, net	Cost of revenues	Gross margin	Gross margin %	Total operating expenses	Operating expense to revenue %	Operating income from continuing operations	Operating margin %	Other non-operating expense, net	Income from continuing operations before income tax	Income tax (benefit) expense	Effective tax rate	Income from continuing operations	Discontinued operations, net of tax	Net income	Diluted net income per share from continuing operations (12)
Reported (GAAP)	$1,507,993	$ 724,895	$ 783,098	51.9 %	$ 492,680	32.7 %	$ 290,418	19.3 %	$ 243,917	$ 46,501	$(128,690)	(276.7)%	$ 175,191	$ (34,703)	$ 140,488	$ 0.75
Items impacting comparability:
Amortization of intangible assets (1)	-	(221,735)	221,735		-		221,735		-	221,735	-		221,735	-	221,735
Upfront and milestone-related payments (2)	-	(667)	667		(1,527)		2,194		-	2,194	-		2,194	-	2,194
Continuity and separation benefits and other cost reductions (3)	-	(7,142)	7,142		(25,522)		32,664		-	32,664	-		32,664	-	32,664
Certain litigation-related and other contingencies, net (4)	-	-	-		25,748		(25,748)		-	(25,748)	-		(25,748)	-	(25,748)
Certain legal costs (5)	-	-	-		(33,541)		33,541		-	33,541	-		33,541	-	33,541
Asset impairment charges (6)	-	-	-		(97,785)		97,785		-	97,785	-		97,785	-	97,785
Fair value of contingent consideration (7)	-	-	-		(18,507)		18,507		-	18,507	-		18,507	-	18,507
Other (9)	-	-	-		(30,749)		30,749		15,414	15,335	-		15,335	-	15,335
Tax adjustments (10)	-	-	-		-		-		-	-	199,104		(199,104)	-	(199,104)
Exclude discontinued operations, net of tax (11)	-	-	-		-		-		-	-	-		-	34,703	34,703
After considering items (non-GAAP)	$1,507,993	$ 495,351	$1,012,642	67.2 %	$ 310,797	20.6 %	$ 701,845	46.5 %	$ 259,331	$ 442,514	$ 70,414	15.9 %	$ 372,100	$ -	$ 372,100	$ 1.59

	Six Months Ended June 30, 2019
	Total revenues, net	Cost of revenues	Gross margin	Gross margin %	Total operating expenses	Operating expense to revenue %	Operating income from continuing operations	Operating margin %	Other non-operating expense, net	(Loss) income from continuing operations before income tax	Income tax expense	Effective tax rate	(Loss) income from continuing operations	Discontinued operations, net of tax	Net (loss) income	Diluted net (loss) income per share from continuing operations (12)
Reported (GAAP)	$1,420,138	$ 780,117	$ 640,021	45.1 %	$ 584,453	41.2 %	$ 55,568	3.9 %	$ 151,861	$ (96,293)	$ 14,371	(14.9)%	$ (110,664)	$ (13,914)	$ (124,578)	$ (0.49)
Items impacting comparability:
Amortization of intangible assets (1)	-	(286,017)	286,017		-		286,017		-	286,017	-		286,017	-	286,017
Upfront and milestone-related payments (2)	-	(1,400)	1,400		(983)		2,383		-	2,383	-		2,383	-	2,383
Continuity and separation benefits and other cost reductions (3)	-	-	-		(4,149)		4,149		-	4,149	-		4,149	-	4,149
Certain litigation-related and other contingencies, net (4)	-	-	-		(10,321)		10,321		-	10,321	-		10,321	-	10,321
Certain legal costs (5)	-	-	-		(35,673)		35,673		-	35,673	-		35,673	-	35,673
Asset impairment charges (6)	-	-	-		(253,886)		253,886		-	253,886	-		253,886	-	253,886
Fair value of contingent consideration (7)	-	-	-		43,008		(43,008)		-	(43,008)	-		(43,008)	-	(43,008)
Gain on extinguishment of debt (8)	-	-	-		-		-		119,828	(119,828)	-		(119,828)	-	(119,828)
Other (9)	-	-	-		175		(175)		(1,795)	1,620	-		1,620	-	1,620
Tax adjustments (10)	-	-	-		-		-		-	-	42,388		(42,388)	-	(42,388)
Exclude discontinued operations, net of tax (11)	-	-	-		-		-		-	-	-		-	13,914	13,914
After considering items (non-GAAP)	$1,420,138	$ 492,700	$ 927,438	65.3 %	$ 322,624	22.7 %	$ 604,814	42.6 %	$ 269,894	$ 334,920	$ 56,759	16.9 %	$ 278,161	$ -	$ 278,161	$ 1.20

Notes to the Reconciliations of GAAP and Non-GAAP Financial Measures
Notes to certain line items included in the reconciliations of the GAAP financial measures to the Non-GAAP financial measures for the three and six months ended June 30, 2020 and 2019 are as follows:

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Amortization of intangible assets excluding fair value step-up from contingent consideration	$	103,681	$	134,473	$	220,101	$	271,338
Amortization of intangible assets related to fair value step-up from contingent consideration	817		5,945		1,634		14,679
Total	$	104,498	$	140,418	$	221,735	$	286,017

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

	Three Months Ended June 30,
	2020				2019
	Cost of revenues		Operating expenses		Cost of revenues		Operating expenses
Sales-based	$	125	$	—	$	739	$	—
Development-based	—		319		—		705
Total	$	125	$	319	$	739	$	705

	Six Months Ended June 30,
	2020				2019
	Cost of revenues		Operating expenses		Cost of revenues		Operating expenses
Sales-based	$	667	$

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Endo Reports Second-Quarter 2020 Financial Results