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ENDO REPORTS SECOND-QUARTER 2023 FINANCIAL RESULTS

August 8, 2023
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DUBLIN, Aug. 8, 2023 /PRNewswire/ -- Endo International plc (OTC: ENDPQ) today reported financial results for the second-quarter ended June 30, 2023.

SECOND-QUARTER FINANCIAL PERFORMANCE

(in thousands, except per share amounts)


Three Months Ended June 30,




Six Months Ended June 30,




2023


2022


Change


2023


2022


Change

Total Revenues, Net

$          546,852


$          569,114


(4) %


$      1,062,119


$      1,221,373


(13) %

Reported Income (Loss) from
Continuing Operations

$            24,011


$      (1,880,883)


NM


$           21,188


$     (1,946,183)


NM

Reported Diluted Weighted Average
Shares

235,220


235,117


— %


235,662


234,498


— %

Reported Diluted Net Income (Loss)
per Share from Continuing Operations

$                0.10


$               (8.00)


NM


$               0.09


$              (8.30)


NM

Reported Net Income (Loss)

$            23,438


$      (1,885,427)


NM


$           20,159


$     (1,957,401)


NM

Adjusted Income from Continuing
Operations (2)(3)

$          230,705


$              6,532


NM


$         424,033


$         162,471


NM

Adjusted Diluted Weighted Average
Shares (1)(2)

235,220


236,217


— %


235,662


236,466


— %

Adjusted Diluted Net Income per
Share from Continuing Operations
(2)(3)

$                0.98


$                0.03


NM


$               1.80


$               0.69


NM

Adjusted EBITDA (2)(3)

$          243,417


$          160,206


52 %


$         452,447


$         471,132


(4) %

__________

(1)

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.

(2)

The information presented in the table above includes non-GAAP financial measures such as Adjusted Income from Continuing Operations, Adjusted Diluted Weighted Average Shares, Adjusted Diluted Net Income per Share from Continuing Operations and Adjusted EBITDA. Refer to the "Supplemental Financial Information" section below for reconciliations of certain non-GAAP financial measures to the most directly comparable GAAP financial measures.

(3)

Effective January 1, 2022, these non-GAAP financial measures now include acquired in-process research and development charges which were previously excluded under Endo's legacy non-GAAP policy. Refer to note (13) in the "Notes to the Reconciliations of GAAP and Non-GAAP Financial Measures" section below for additional discussion.

CONSOLIDATED FINANCIAL RESULTS

Total revenues were $547 million in second-quarter 2023, a decrease of 4% compared to $569 million in second-quarter 2022. This decrease was primarily attributable to decreased revenues from the Generic Pharmaceuticals segment.

Reported income from continuing operations in second-quarter 2023 was $24 million compared to reported loss from continuing operations of $1,881 million in second-quarter 2022. This change was primarily due to lower asset impairment charges and lower interest expense as a result of the August 2022 Chapter 11 filing.

Adjusted income from continuing operations in second-quarter 2023 was $231 million compared to $7 million in second-quarter 2022. This change was primarily driven by lower interest and adjusted operating expenses, including acquired in-process research and development charges.

BRANDED PHARMACEUTICALS SEGMENT

Second-quarter 2023 Branded Pharmaceuticals segment revenues were $212 million, a decrease of 3% compared to $219 million during second-quarter 2022.

Specialty Products revenues increased 1% to $165 million in second-quarter 2023 compared to $164 million in second-quarter 2022. This change was primarily due to an increase in SUPPRELIN® LA revenues mainly driven by increased average net selling price as a result of business mix. Second-quarter 2023 XIAFLEX® revenues were $117 million, a 3% decrease compared to second-quarter 2022 driven by decreased net selling price partially offset by increased volumes. XIAFLEX® second-quarter 2023 revenues increased 21% compared to first-quarter 2023 primarily driven by strong Peyronie's Disease volume growth.

Established Products revenues decreased 15% to $47 million in second-quarter 2023 compared to $55 million in second-quarter 2022 due primarily to generic competition.

STERILE INJECTABLES SEGMENT

Second-quarter 2023 Sterile Injectables segment revenues were $137 million, an increase of 11% compared to $123 million during second-quarter 2022. This change was primarily attributable to consideration received in connection with a settlement agreement with Novavax, Inc. to resolve a dispute under a previous manufacturing and services agreement.  This was partially offset by decreased VASOSTRICT® revenues due to lower price and market share resulting from generic competition and lower overall market volumes.

GENERIC PHARMACEUTICALS SEGMENT

Second-quarter 2023 Generic Pharmaceuticals segment revenues were $179 million, a decrease of 12% compared to $203 million during second-quarter 2022. This decrease was primarily attributable to competitive pressure on lubiprostone capsules, the authorized generic of Mallinckrodt's Amitiza®, and varenicline tablets, the generic version of Chantix®, partially offset by revenues from dexlansoprazole delayed release capsules, the generic version of Dexilant® which launched during fourth-quarter 2022.

During second-quarter 2023, another generic varenicline competitor entered the market with additional competitors anticipated in 2023.

INTERNATIONAL PHARMACEUTICALS SEGMENT

Second-quarter 2023 International Pharmaceuticals segment revenues were $19 million, a decrease of 20% compared to $24 million during second-quarter 2022. This decrease was primarily attributable to a 2022 product discontinuation.

FINANCIAL EXPECTATIONS

Endo's second-quarter 2023 adjusted financial results exceeded the expectations assumed in the low end of the prior outlook for the full-year ending December 31, 2023, primarily driven by higher revenue from varenicline and dexlansoprazole delayed release capsules due to fewer than expected competitors and the recognition of the Novavax settlement.

The current outlook for the full-year ending December 31, 2023 contemplates a range of potential outcomes reflecting uncertainties in key assumptions primarily related to the timing of varenicline and dexlansoprazole competitive entrants. Endo does not currently anticipate a material impact to its long-term financial outlook, previously provided on February 14, 2023, beyond 2023.

The financial expectations reflect adjusted results.  All financial expectations provided by Endo are forward-looking, and actual results may differ materially from such expectations, as further discussed below under the heading "Cautionary Note Regarding Forward-Looking Statements."


Full-Year 2023 Adjusted Results

($ in millions)

Prior Outlook


Current Outlook

Total Revenues, Net

$1,890 - $2,075


$1,975 - $2,035

EBITDA

$690 - $820


$750 - $790

Assumptions:




Segment Revenues:




Branded Pharmaceuticals

~$870


~$870

Sterile Injectables

$400 - $430


~$430

Generic Pharmaceuticals

$555 - $710


$610 - $670

International Pharmaceuticals

~$65


~$65

Gross Margin as a Percentage of Total Revenues, Net

~67%


~67%

Operating Expenses

~$635


~$635

CASH, CASH FLOW AND OTHER UPDATES

As of June 30, 2023, the Company had approximately $0.9 billion in unrestricted cash and cash equivalents. Second-quarter 2023 net cash provided by operating activities was approximately $127 million compared to approximately $133 million net cash used in operating activities during second-quarter 2022. This increase was primarily attributable to an increase in adjusted EBITDA, coupled with decreases in net working capital, cash interest payments and litigation related payments.

Amitiza® is a registered trademark of a Mallinckrodt company.
Dexilant® is a registered trademark of Takeda Pharmaceutical U.S.A., Inc.
Chantix® is a registered trademark of Pfizer Inc.

FINANCIAL SCHEDULES

The following table presents Endo's unaudited Total revenues, net for the three and six months ended June 30, 2023 and 2022 (dollars in thousands):


Three Months Ended June 30,


Percent
Growth


Six Months Ended June 30,


Percent
Growth


2023


2022



2023


2022


Branded Pharmaceuticals:












Specialty Products:












XIAFLEX®

$         117,291


$         120,878


(3) %


$         214,201


$         220,362


(3) %

SUPPRELIN® LA

28,223


24,739


14 %


51,800


53,569


(3) %

Other Specialty (1)

19,839


18,246


9 %


41,533


38,990


7 %

Total Specialty Products

$         165,353


$         163,863


1 %


$         307,534


$         312,921


(2) %

Established Products:












PERCOCET®

$           26,445


$           26,256


1 %


$           52,501


$           52,431


— %

TESTOPEL®

11,600


10,021


16 %


22,589


18,901


20 %

Other Established (2)

8,979


18,812


(52) %


27,326


39,560


(31) %

Total Established Products

$           47,024


$           55,089


(15) %


$         102,416


$         110,892


(8) %

Total Branded Pharmaceuticals (3)

$         212,377


$         218,952


(3) %


$         409,950


$         423,813


(3) %

Sterile Injectables:












ADRENALIN®

$           27,133


$           26,774


1 %


$           52,708


$           60,597


(13) %

VASOSTRICT®

24,419


35,630


(31) %


50,370


191,520


(74) %

Other Sterile Injectables (4)

85,476


60,767


41 %


135,205


111,082


22 %

Total Sterile Injectables (3)

$         137,028


$         123,171


11 %


$         238,283


$         363,199


(34) %

Total Generic Pharmaceuticals (5)

$         178,579


$         203,377


(12) %


$         376,759


$         389,321


(3) %

Total International Pharmaceuticals
(6)

$           18,868


$           23,614


(20) %


$           37,127


$           45,040


(18) %

Total revenues, net

$         546,852


$         569,114


(4) %


$      1,062,119


$      1,221,373


(13) %

__________

(1)

Products included within Other Specialty include AVEED®, NASCOBAL® Nasal Spray and QWO®.

(2)

Products included within Other Established include, but are not limited to, EDEX®.

(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, 2023 and/or any product having revenues in excess of $25 million during any completed quarterly period in 2023 or 2022.

(4)

Products included within Other Sterile Injectables include, but are not limited to, APLISOL®. During the second quarter of 2023, the Company executed a Settlement Agreement and Release of Claims with Novavax, Inc. (the Novavax Settlement Agreement) to resolve a dispute under a previous manufacturing and services agreement. For the three months ended June 30, 2023, the cash and non-cash consideration received in connection with the Novavax Settlement Agreement made up 6% of consolidated total revenues. No other individual product within Other Sterile Injectables has exceeded 5% of consolidated total revenues for the periods presented.

(5)

The Generic Pharmaceuticals segment is comprised of a portfolio of products that are generic versions of branded products, are distributed primarily through the same wholesalers, generally have limited or no intellectual property protection and are sold within the U.S. Varenicline tablets (Endo's generic version of Pfizer Inc.'s Chantix®), which launched in September 2021, made up 10% and 13%, for the three and six months ended June 30, 2023, respectively, and 13% and 12% for the three and six months ended June 30, 2022, respectively, of consolidated total revenues. During the six months ended June 30, 2023, dexlansoprazole delayed release capsules (Endo's generic version of Takeda Pharmaceuticals USA, Inc.'s Dexilant®), which launched in November 2022, made up 5% of consolidated total revenues. No other individual product within this segment has exceeded 5% of consolidated total revenues for the periods presented.

(6)

The International Pharmaceuticals segment, which accounted for less than 5% of consolidated total revenues for each of the periods presented, includes a variety of specialty pharmaceutical products sold outside the U.S., primarily in Canada through Endo's operating company Paladin Labs Inc.

The following table presents unaudited Condensed Consolidated Statement of Operations data for the three and six months ended June 30, 2023 and 2022 (in thousands, except per share data):


Three Months Ended June 30,


Six Months Ended June 30,


2023


2022


2023


2022

TOTAL REVENUES, NET

$         546,852


$         569,114


$      1,062,119


$      1,221,373

COSTS AND EXPENSES:








Cost of revenues

233,852


263,786


466,594


537,001

Selling, general and administrative

137,729


180,830


288,522


407,991

Research and development

28,037


29,788


55,740


65,918

Acquired in-process research and development


65,000



67,900

Litigation-related and other contingencies, net

28,013


208


43,213


25,362

Asset impairment charges


1,781,063


146


1,801,016

Acquisition-related and integration items, net

365


1,825


762


448

Interest expense, net

120


139,784


229


274,733

Reorganization items, net

84,267



169,619


Other expense (income), net

179


(19,438)


54


(18,149)

INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAX

$           34,290


$    (1,873,732)


$           37,240


$    (1,940,847)

INCOME TAX EXPENSE

10,279


7,151


16,052


5,336

INCOME (LOSS) FROM CONTINUING OPERATIONS

$           24,011


$    (1,880,883)


$           21,188


$    (1,946,183)

DISCONTINUED OPERATIONS, NET OF TAX

(573)


(4,544)


(1,029)


(11,218)

NET INCOME (LOSS)

$           23,438


$    (1,885,427)


$           20,159


$    (1,957,401)

NET INCOME (LOSS) PER SHARE—BASIC:








Continuing operations

$                0.10


$              (8.00)


$                0.09


$              (8.30)

Discontinued operations


(0.02)



(0.05)

Basic

$                0.10


$              (8.02)


$                0.09


$              (8.35)

NET INCOME (LOSS) PER SHARE—DILUTED:








Continuing operations

$                0.10


$              (8.00)


$                0.09


$              (8.30)

Discontinued operations


(0.02)



(0.05)

Diluted

$                0.10


$              (8.02)


$                0.09


$              (8.35)

WEIGHTED AVERAGE SHARES:








Basic

235,220


235,117


235,218


234,498

Diluted

235,220


235,117


235,662


234,498

The following table presents unaudited Condensed Consolidated Balance Sheet data at June 30, 2023 and December 31, 2022 (in thousands):


June 30, 2023


December 31,
2022

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$         865,918


$      1,018,883

Restricted cash and cash equivalents

159,707


145,358

Accounts receivable

447,885


493,988

Inventories, net

274,535


274,499

Other current assets

114,867


144,040

  Total current assets

$      1,862,912


$      2,076,768

TOTAL NON-CURRENT ASSETS

3,556,199


3,681,169

TOTAL ASSETS

$      5,419,111


$      5,757,937

LIABILITIES AND SHAREHOLDERS' DEFICIT




CURRENT LIABILITIES:




Accounts payable and accrued expenses, including legal settlement accruals

$         563,425


$         687,183

Other current liabilities

1,457


2,444

  Total current liabilities

$         564,882


$         689,627

OTHER LIABILITIES

56,634


61,700

LIABILITIES SUBJECT TO COMPROMISE

8,924,870


9,168,782

SHAREHOLDERS' DEFICIT

(4,127,275)


(4,162,172)

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT

$      5,419,111


$      5,757,937

The following table presents unaudited Condensed Consolidated Statement of Cash Flow data for the six months ended June 30, 2023 and 2022 (in thousands):


Six Months Ended June 30,


2023


2022

OPERATING ACTIVITIES:




Net income (loss)

$           20,159


$    (1,957,401)

Adjustments to reconcile Net income (loss) to Net cash provided by operating activities:




  Depreciation and amortization

155,003


206,224

  Asset impairment charges

146


1,801,016

  Other, including cash payments to claimants from Qualified Settlement Funds

14,106


18,064

Net cash provided by operating activities

$         189,414


$           67,903

INVESTING ACTIVITIES:




Capital expenditures, excluding capitalized interest

$          (53,516)


$          (47,559)

Acquisitions, including in-process research and development, net of cash and restricted
cash acquired


(89,520)

Proceeds from sale of business and other assets

2,259


21,133

Other

19,354


4,200

Net cash used in investing activities

$          (31,903)


$       (111,746)

FINANCING ACTIVITIES:




Payments on borrowings, including certain adequate protection payments, net (a)

$       (294,988)


$       (193,312)

Other

(2,083)


(3,638)

Net cash used in financing activities

$       (297,071)


$       (196,950)

Effect of foreign exchange rate

944


(452)

NET DECREASE IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND
RESTRICTED CASH EQUIVALENTS

$       (138,616)


$       (241,245)

CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH
EQUIVALENTS, BEGINNING OF PERIOD

1,249,241


1,631,310

CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH
EQUIVALENTS, END OF PERIOD

$      1,110,625


$      1,390,065

__________

(a)

Beginning during the third quarter of 2022, Endo became obligated to make certain adequate protection payments as a result of the Chapter 11 proceedings, which are currently being accounted for as a reduction of the carrying amount of the related debt instruments and presented as financing cash outflows. Some or all of the adequate protection payments may later be recharacterized as interest expense and/or as operating cash outflows depending upon certain developments in the Chapter 11 proceedings, which could result in increases in interest expense and/or decreases in operating cash flows in future periods that may be material.

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.

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, 2023 and 2022 (in thousands):


Three Months Ended June 30,


Six Months Ended June 30,


2023


2022


2023


2022

Net income (loss) (GAAP)

$           23,438


$    (1,885,427)


$           20,159


$    (1,957,401)

Income tax expense

10,279


7,151


16,052


5,336

Interest expense, net

120


139,784


229


274,733

Depreciation and amortization (1)

77,130


99,762


155,003


202,400

EBITDA (non-GAAP)

$         110,967


$    (1,638,730)


$         191,443


$    (1,474,932)

Amounts related to continuity and separation benefits,
cost reductions and strategic review initiatives (2)

14,281


37,347


25,954


94,996

Certain litigation-related and other contingencies, net (3)

28,013


208


43,213


25,362

Certain legal costs (4)

2,113


(9,462)


3,673


23,270

Asset impairment charges (5)


1,781,063


146


1,801,016

Fair value of contingent consideration (6)

365


1,825


762


448

Share-based compensation (1)


2,721


2,091


7,650

Other expense (income), net (7)

179


(19,438)


54


(18,149)

Reorganization items, net (8)

84,267



169,619


Other (9)

2,659


128


14,463


253

Discontinued operations, net of tax (10)

573


4,544


1,029


11,218

Adjusted EBITDA (non-GAAP) (13)

$         243,417


$         160,206


$         452,447


$         471,132

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, 2023 and 2022 (in thousands):


Three Months Ended June 30,


Six Months Ended June 30,


2023


2022


2023


2022

Income (loss) from continuing operations (GAAP)

$           24,011


$    (1,880,883)


$           21,188


$    (1,946,183)

Non-GAAP adjustments:








  Amortization of intangible assets (11)

64,425


87,568


129,681


177,802

  Amounts related to continuity and separation benefits,
  cost reductions and strategic review initiatives (2)

14,281


37,347


25,954


94,996

  Certain litigation-related and other contingencies, net (3)

28,013


208


43,213


25,362

  Certain legal costs (4)

2,113


(9,462)


3,673


23,270

  Asset impairment charges (5)


1,781,063


146


1,801,016

  Fair value of contingent consideration (6)

365


1,825


762


448

  Reorganization items, net (8)

84,267



169,619


  Other (9)

4,581


(19,170)


16,670


(17,847)

  Tax adjustments (12)

8,649


8,036


13,127


3,607

Adjusted income from continuing operations (non-GAAP)
(13)

$         230,705


$              6,532


$         424,033


$         162,471

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, 2023 and 2022 (in thousands, except per share data):

Three Months Ended June 30, 2023


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
(income),
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
(14)

Reported (GAAP)

$  546,852


$  233,852


$  313,000


57.2 %


$  194,144


35.5 %


$     118,856


21.7 %


$    84,566


$      34,290


$    10,279


30.0 %


$      24,011


$          (573)


$      23,438


$       0.10

Items impacting
comparability:
































Amortization of
intangible assets (11)


(64,425)


64,425







64,425





64,425





64,425



64,425



Amounts related
to continuity and
separation benefits,
cost reductions and
strategic review
initiatives (2)


(488)


488




(13,793)




14,281





14,281





14,281



14,281



Certain litigation-
related and other
contingencies, net (3)






(28,013)




28,013





28,013





28,013



28,013



Certain legal costs (4)






(2,113)




2,113





2,113





2,113



2,113



Fair value of
contingent
consideration (6)






(365)




365





365





365



365



Reorganization items,
net (8)












(84,267)


84,267





84,267



84,267



Other (9)


(125)


125




(2,534)




2,659




(1,922)


4,581





4,581



4,581



Tax adjustments (12)














(8,649)




8,649



8,649



Discontinued
operations, net of tax
(10)


















573


573



After considering items
(non-GAAP) (13)

$  546,852


$  168,814


$  378,038


69.1 %


$  147,326


26.9 %


$     230,712


42.2 %


$    (1,623)


$     232,335


$      1,630


0.7 %


$     230,705


$             —


$    230,705


$       0.98

 

Three Months Ended June 30, 2022


Total
revenues,
net


Cost of
revenues


Gross
margin


Gross
margin %


Total
operating
expenses


Operating
expense
to
revenue %


Operating
(loss)
income from
continuing
operations


Operating
margin %


Other non-
operating
expense,
net


(Loss)
income from
continuing operations
before
income tax


Income tax
expense
(benefit)


Effective
tax rate


(Loss)
income from
continuing
operations


Discontinued
operations,
net of tax


Net (loss)
income


Diluted net
(loss)
income per
share from
continuing
operations
(14)

Reported (GAAP)

$  569,114


$  263,786


$  305,328


53.6 %


$  2,058,714


361.7 %


$ (1,753,386)


(308.1) %


$  120,346


$ (1,873,732)


$      7,151


(0.4) %


$ (1,880,883)


$       (4,544)


$ (1,885,427)


$      (8.00)

Items impacting
comparability:
































Amortization of
intangible assets (11)


(87,568)


87,568







87,568





87,568





87,568



87,568



Amounts related to
continuity and
separation benefits,
cost reductions and
strategic review
initiatives (2)


(5,107)


5,107




(32,240)




37,347





37,347





37,347



37,347



Certain litigation-
related and other
contingencies, net (3)






(208)




208





208





208



208



Certain legal costs (4)






9,462




(9,462)





(9,462)





(9,462)



(9,462)



Asset impairment
charges (5)






(1,781,063)




1,781,063





1,781,063





1,781,063



1,781,063



Fair value of
contingent
consideration (6)






(1,825)




1,825





1,825





1,825



1,825



Other (9)


(125)


125







125




19,295


(19,170)





(19,170)



(19,170)



Tax adjustments (12)














(8,036)




8,036



8,036



Discontinued
operations, net of tax
(10)


















4,544


4,544



After considering items
(non-GAAP) (13)

$  569,114


$  170,986


$  398,128


70.0 %


$  252,840


44.4 %


$     145,288


25.5 %


$  139,641


$        5,647


$       (885)


(15.7) %


$        6,532


$             —


$        6,532


$       0.03

 

Six Months Ended June 30, 2023


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
(income),
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
(14)

Reported (GAAP)

$  1,062,119


$  466,594


$  595,525


56.1 %


$  388,383


36.6 %


$     207,142


19.5 %


$  169,902


$      37,240


$       16,052


43.1 %


$      21,188


$       (1,029)


$      20,159


$       0.09

Items impacting
comparability:
































Amortization of
intangible assets (11)


(129,681)


129,681







129,681





129,681





129,681



129,681



Amounts related to
continuity and
separation benefits,
cost reductions and
strategic review
initiatives (2)


(2,470)


2,470




(23,484)




25,954





25,954





25,954



25,954



Certain litigation-
related and other
contingencies, net (3)






(43,213)




43,213





43,213





43,213



43,213



Certain legal costs (4)






(3,673)




3,673





3,673





3,673



3,673



Asset impairment
charges (5)






(146)




146





146





146



146



Fair value of
contingent
consideration (6)






(762)




762





762





762



762



Reorganization items,
net (8)












(169,619)


169,619





169,619



169,619



Other (9)


(778)


778




(13,686)




14,464




(2,206)


16,670





16,670



16,670



Tax adjustments (12)














(13,127)




13,127



13,127



Discontinued
operations, net of tax
(10)


















1,029


1,029



After considering items
(non-GAAP) (13)

$  1,062,119


$  333,665


$  728,454


68.6 %


$  303,419


28.6 %


$     425,035


40.0 %


$    (1,923)


$     426,958


$      2,925


0.7 %


$     424,033


$             —


$     424,033


$       1.80

 

Six Months Ended June 30, 2022


Total
revenues,
net


Cost of
revenues


Gross
margin


Gross
margin %


Total
operating
expenses


Operating
expense to
revenue %


Operating
(loss) income
from
continuing
operations


Operating
margin %


Other non-
operating expense,
net


(Loss)
income from
continuing
operations
before
income tax


Income tax
expense


Effective
tax rate


(Loss)
income from
continuing
operations


Discontinued
operations,
net of tax


Net (loss)
income


Diluted net
(loss)
income per
share from
continuing
operations
(14)

Reported (GAAP)

$  1,221,373


$  537,001


$  684,372


56.0 %


$  2,368,635


193.9 %


$ (1,684,263)


(137.9) %


$           256,584


$ (1,940,847)


$      5,336


(0.3) %


$ (1,946,183)


$     (11,218)


$ (1,957,401)


$      (8.30)

Items impacting
comparability:
































Amortization of
intangible assets (11)


(177,802)


177,802







177,802





177,802





177,802



177,802



Amounts related to
continuity and
separation benefits,
cost reductions and
strategic review
initiatives (2)


(20,844)


20,844




(74,152)




94,996





94,996





94,996



94,996



Certain litigation-
related and other
contingencies, net (3)






(25,362)




25,362





25,362





25,362



25,362



Certain legal costs (4)






(23,270)




23,270





23,270





23,270



23,270



Asset impairment
charges (5)






(1,801,016)




1,801,016





1,801,016





1,801,016



1,801,016



Fair value of
contingent
consideration (6)






(448)




448





448





448



448



Other (9)


(250)


250







250




18,097


(17,847)





(17,847)



(17,847)



Tax adjustments (12)














(3,607)




3,607



3,607



Discontinued
operations, net of tax
(10)


















11,218


11,218



After considering items
(non-GAAP) (13)

$  1,221,373


$  338,105


$  883,268


72.3 %


$  444,387


36.4 %


$     438,881


35.9 %


$           274,681


$     164,200


$      1,729


1.1 %


$     162,471


$             —


$     162,471


$       0.69

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, 2023 and 2022 are as follows:

(1)

Depreciation and amortization and Share-based compensation amounts per the Adjusted EBITDA reconciliations do not include amounts reflected in other lines of the reconciliations, including Amounts related to continuity and separation benefits, cost reductions and strategic review initiatives.



(2)

Adjustments for amounts related to continuity and separation benefits, cost reductions and strategic review initiatives included the following (in thousands):

 


Three Months Ended June 30,


2023


2022


Cost of revenues


Operating
expenses


Cost of revenues


Operating
expenses

Continuity and separation benefits

$               1,016


$             14,092


$               4,846


$               6,898

Accelerated depreciation




147

Inventory adjustments

(528)


(322)


261


904

Other, including strategic review initiatives


23



24,291

Total

$                  488


$             13,793


$               5,107


$             32,240

 


Six Months Ended June 30,