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Endo Reports Second-Quarter 2020 Financial Results

August 5, 2020
Share:

— 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



2020


2019


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



$



$

1,400



$


Development-based



1,527





983


Total

$

667



$

1,527



$

1,400



$

983


 

(3)

   Adjustments for continuity and separation benefits and other cost reductions included the following (in thousands):




Three Months Ended June 30,


2020


2019


Cost of revenues


Operating expenses


Cost of revenues


Operating expenses

Continuity and separation benefits

$

515



$

3,606



$



$

410