Endo Reports Third-Quarter 2017 Financial Results

November 9, 2017

DUBLIN, Nov. 9, 2017 /PRNewswire/ --

Third-quarter 2017 revenues of $787 million and reported $0.45 diluted (GAAP) loss per share from continuing operations
Third-quarter 2017 adjusted diluted earnings per share (EPS) from continuing operations of $0.91
Third-quarter 2017 Sterile Injectables revenues increased 28 percent to $175 million
Third-quarter 2017 Branded Specialty Products revenues increased 11 percent to $114 million
Third-quarter 2017 reported (GAAP) consolidated net loss of $97 million
Third-quarter 2017 adjusted EBITDA of $375 million
Company reaffirms full year 2017 revenues, adjusted diluted EPS and adjusted EBITDA financial guidance provided in August 2017

Endo International plc (NASDAQ: ENDP) today reported third-quarter 2017 financial results, including:

Revenues of $787 million, an 11 percent decrease compared to third-quarter 2016 revenues of $884 million.
Reported net loss from continuing operations of $100 million compared to third-quarter 2016 reported net loss from continuing operations of $191 million.
Reported diluted loss per share from continuing operations of $0.45 compared to third-quarter 2016 reported diluted loss per share from continuing operations of $0.86.
Adjusted income from continuing operations of $204 million compared to third-quarter 2016 adjusted income from continuing operations of $226 million.
Adjusted diluted EPS from continuing operations of $0.91 compared to third-quarter 2016 adjusted diluted EPS from continuing operations of $1.01.
Adjusted EBITDA of $375 million compared to third-quarter 2016 adjusted EBITDA of $367 million.

"We continue to execute against our key priorities and deliver solid operating results," said Paul Campanelli, President and CEO of Endo. "Our core areas of focus, Sterile Injectables and Branded Specialty Products, are achieving impressive growth while we continue to drive margin expansion. We look forward to a strong finish to 2017 and we reaffirm the revenue and adjusted financial guidance we provided in August 2017."

FINANCIAL PERFORMANCE

(in thousands, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017		2016		Change		2017		2016		Change
Total Revenues	$	786,887	$	884,335	(11)	%	$	2,700,218	$	2,768,761	(2)	%
Reported (Loss) Income from Continuing Operations	$	(99,687)	$	(191,496)	(48)	%	$	(961,130)	$	109,553	NM
Reported Diluted Weighted Average Shares	223,299		222,767		—	%	223,157		223,060		—	%
Reported Diluted (Loss) Income per Share from Continuing Operations	$	(0.45)	$	(0.86)	(48)	%	$	(4.31)	$	0.49	NM
Adjusted Income from Continuing Operations	$	204,052	$	225,519	(10)	%	$	686,498	$	658,591	4	%
Adjusted Diluted Weighted Average Shares¹	224,216		223,139		—	%	223,779		223,060		—	%
Adjusted Diluted EPS from Continuing Operations	$	0.91	$	1.01	(10)	%	$	3.07	$	2.95	4	%

(1) Diluted per share data is computed based on weighted average shares outstanding and, if there is income from continuing operations during the period, the dilutive impact of share equivalents outstanding during the period. In the case of Adjusted Diluted Weighted Average Shares, Adjusted Income from Continuing Operations is used in determining whether to include such dilutive impact.

CONSOLIDATED RESULTS

Total revenues decreased by 11 percent to $787 million in third-quarter 2017 compared to the same period in 2016. The decline was primarily due to previously announced U.S. Generic Pharmaceuticals product discontinuances, pricing pressure from increased competition primarily impacting the U.S. Generics Base business, generic competition adversely impacting the Branded Established Products portfolio and the ceasing of shipments of OPANA^® ER to customers by September 1, 2017.

GAAP net loss from continuing operations in third-quarter 2017 was $100 million compared to GAAP net loss from continuing operations of $191 million during the same period in 2016. This decrease included the impact of lower amortization of intangible assets in third-quarter 2017 and higher third-quarter 2016 tax expense primarily due to the amortization of a deferred charge. GAAP net loss per share from continuing operations for third-quarter 2017 was $0.45, compared to diluted GAAP loss per share from continuing operations of $0.86 in third-quarter 2016.

Adjusted income from continuing operations in third-quarter 2017 was $204 million compared to $226 million in third-quarter 2016. This decrease included the impact of an increase to interest expense, mainly due to the refinancing of the Company's secured debt in April 2017, and adjusted tax expense. Adjusted EPS from continuing operations in third-quarter 2017 was $0.91 compared to $1.01 in third-quarter 2016.

U.S. GENERIC PHARMACEUTICALS

During third-quarter 2017, the U.S. Generic Pharmaceuticals segment launched vigabatrin for oral solution USP, the first generic version of Sabril^®, and sodium phenylbutyrate tablets, the first generic equivalent of Buphenyl^®. Year-to-date in 2017, Par has launched 14 new generic products and has made nine submissions to regulatory authorities.

Third-quarter 2017 U.S. Generic Pharmaceuticals results include:

Revenues of $497 million, a 7 percent decrease compared to third-quarter 2016, as the decline in the U.S. Generics Base business was partially offset by strong growth in Sterile Injectables.
Sterile Injectables revenue increased 28 percent compared to third-quarter 2016; this increase was driven primarily by ADRENALIN^®and VASOSTRICT^®.
The U.S. Generics Base business revenues decreased 27 percent compared to third-quarter 2016; this decrease primarily resulted from the impact on third-quarter 2017 related to 2016 and 2017 competitive events, previously announced product discontinuances and the continued impact on pricing due to consolidation among our trade accounts.

U.S. BRANDED PHARMACEUTICALS

During third-quarter 2017, Endo, in partnership with Tim Herron, a four-time PGA Tour winner, and Damon Adamany, MD, of the CORE Institute, launched Facts on Hand, an unbranded campaign to raise awareness of Dupuytren's Contracture, a progressive, potentially disfiguring hand condition. Endo also recently launched several direct-to-consumer initiatives intended to increase patient awareness of XIAFLEX^® as a possible treatment option for Dupuytren's Contracture and Peyronie's Disease.

Third-quarter 2017 U.S. Branded Pharmaceuticals results include:

Revenues of $234 million, a 16 percent decrease compared to third-quarter 2016; this decrease was primarily attributable to generic competition adversely impacting the Company's established products portfolio, the divestitures of STENDRA^® and BELBUCA^® and the decline in revenues of OPANA^® ER resulting from the cessation of product shipments by September 1, 2017.
Specialty Products revenues increased 11 percent in third-quarter 2017 versus the same period in 2016, driven by strong performance from XIAFLEX^®and other products within our Specialty Products portfolio. Sales of XIAFLEX^®, our flagship Branded product, increased 10 percent compared to third-quarter 2016; this increase was primarily attributable to volume growth.

INTERNATIONAL PHARMACEUTICALS

During third-quarter 2017, Endo announced it had entered into a definitive agreement to sell its Mexican subsidiary, Somar, to Advent International. The transaction closed on October 25, 2017.

Third-quarter 2017 International Pharmaceuticals revenues were $56 million, compared to $71 million in the same period in 2016. The decline is primarily attributable to the sale of the Company's South African business, Litha Healthcare Group, to Acino Pharma AG, which closed on July 3, 2017.

2017 FINANCIAL GUIDANCE

For the full twelve months ended December 31, 2017, at current exchange rates, Endo is reaffirming its full-year guidance on revenue, adjusted diluted EPS from continuing operations and adjusted EBITDA from continuing operations provided in August 2017. The Company estimates:

Total revenues to be between $3.38 billion to $3.53 billion;
Reported diluted GAAP loss per share from continuing operations to be between $4.94 and $4.64;
Adjusted diluted EPS from continuing operations to be between $3.35 to $3.65; and
Adjusted EBITDA from continuing operations to be between $1.48 billion to $1.56 billion.

The Company's 2017 non-GAAP financial guidance is based on the following assumptions:

Adjusted gross margin of approximately 62.5% to 63.5%;
Adjusted operating expenses as a percentage of revenues of approximately 22.0%;
Adjusted interest expense of approximately $490 million to $500 million;
Adjusted effective tax rate of approximately 12.0% to 13.0%; and
Adjusted diluted EPS from continuing operations assumes full-year adjusted diluted shares outstanding of approximately 224 million shares.

BALANCE SHEET, LIQUIDITY AND OTHER UPDATES

As of September 30, 2017, the Company had $738 million in unrestricted cash; debt of $8.3 billion; net debt of approximately $7.5 billion and a net debt to adjusted EBITDA ratio of 4.2.

Third-quarter 2017 cash provided by operating activities was $83 million, compared to $115 million of net cash used in operating activities in the comparable 2016 period. The 2016 period was impacted by higher funding of payments related to settled U.S. mesh product liability claims.

During third-quarter 2017, the Company recorded pre-tax, non-cash asset impairment charges of $95 million, $78 million of which related to in-process research and development intangible assets in its U.S. Generic Pharmaceuticals segment and certain finite-lived intangible assets in its U.S. Branded Pharmaceuticals segment.

CONFERENCE CALL INFORMATION

Endo will conduct a conference call with financial analysts to discuss this press release today at 4:30 p.m. ET. The dial-in number to access the call is U.S./Canada (866) 497-0462, International (678) 509-7598, and the passcode is 92375212. Please dial in 10 minutes prior to the scheduled start time.

A replay of the call will be available from November 9, 2017 at 7:30 p.m. ET until 7:30 p.m. ET on November 12, 2017 by dialing U.S./Canada (855) 859-2056, International (404) 537-3406, and entering the passcode 92375212.

A simultaneous webcast of the call can be accessed by visiting www.endo.com. In addition, a replay of the webcast will be available on the Company website for one year following the event. The replay can be accessed by clicking on the Investor Relations section of the Endo website.

FINANCIAL SCHEDULES

The following table presents Endo's unaudited Total Revenues for the three and nine months ended September 30, 2017 and 2016 (in thousands):

	Three Months Ended September 30,				Percent Growth		Nine Months Ended September 30,				Percent Growth
	2017		2016		Percent Growth		2017		2016		Percent Growth
U.S. Generic Pharmaceuticals:
U.S. Generics Base	$	192,333	$	263,431	(27)	%	$	647,415	$	941,955	(31)	%
Sterile Injectables	174,982		136,966		28	%	486,928		386,900		26	%
New Launches and Alternative Dosages	129,339		133,294		(3)	%	647,606		353,584		83	%
Total U.S. Generic Pharmaceuticals	$	496,654	$	533,691	(7)	%	$	1,781,949	$	1,682,439	6	%
U.S. Branded Pharmaceuticals:
Specialty Products:
XIAFLEX®	$	52,511	$	47,695	10	%	$	152,113	$	134,159	13	%
SUPPRELIN® LA	20,638		19,392		6	%	63,468		57,855		10	%
Other Specialty (1)	40,634		35,298		15	%	113,407		100,240		13	%
Total Specialty Products	$	113,783	$	102,385	11	%	$	328,988	$	292,254	13	%
Established Products:
OPANA® ER	$	14,756	$	36,834	(60)	%	$	82,056	$	120,058	(32)	%
PERCOCET®	31,349		33,881		(7)	%	93,183		103,182		(10)	%
VOLTAREN® Gel	19,102		18,993		1	%	53,646		82,030		(35)	%
LIDODERM®	12,851		19,704		(35)	%	37,705		66,455		(43)	%
Other Established (2)	41,962		68,046		(38)	%	133,572		213,019		(37)	%
Total Established Products	$	120,020	$	177,458	(32)	%	$	400,162	$	584,744	(32)	%
Total U.S. Branded Pharmaceuticals (3)	$	233,803	$	279,843	(16)	%	$	729,150	$	876,998	(17)	%
Total International Pharmaceuticals	$	56,430	$	70,801	(20)	%	$	189,119	$	209,324	(10)	%
Total Revenues	$	786,887	$	884,335	(11)	%	$	2,700,218	$	2,768,761	(2)	%


(1) Products included within Other Specialty include TESTOPEL^®, NASCOBAL^®Nasal Spray, and AVEED^®.
(2) Products included within Other Established include, but are not limited to, TESTIM^® and FORTESTA^® Gel, including the authorized generic.
(3) Individual products presented above represent the top two performing products in each product category and/or any product having revenues in excess of $25 million during any quarterly period in 2017 or 2016. LIDODERM^® is separately presented as its revenues exceeded $25 million in certain quarterly periods in 2016.

The following table presents unaudited Condensed Consolidated Statement of Operations data for the three and nine months ended September 30, 2017 and 2016 (in thousands, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
TOTAL REVENUES	$	786,887	$	884,335	$	2,700,218	$	2,768,761
COSTS AND EXPENSES:
Cost of revenues	514,522		557,472		1,722,885		1,878,395
Selling, general and administrative	135,880		186,735		468,675		558,160
Research and development	39,644		44,885		123,522		137,166
Litigation-related and other contingencies, net	(12,352)		18,256		(14,016)		28,715
Asset impairment charges	94,924		93,504		1,023,930		263,080
Acquisition-related and integration items	16,641		19,476		31,711		80,201
OPERATING LOSS FROM CONTINUING OPERATIONS	$	(2,372)	$	(35,993)	$	(656,489)	$	(176,956)
INTEREST EXPENSE, NET	127,521		112,184		361,267		340,896
LOSS ON EXTINGUISHMENT OF DEBT	—		—		51,734		—
OTHER (INCOME) EXPENSE, NET	(2,097)		(2,866)		(10,843)		402
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX	$	(127,796)	$	(145,311)	$	(1,058,647)	$	(518,254)
INCOME TAX (BENEFIT) EXPENSE	(28,109)		46,185		(97,517)		(627,807)
(LOSS) INCOME FROM CONTINUING OPERATIONS	$	(99,687)	$	(191,496)	$	(961,130)	$	109,553
DISCONTINUED OPERATIONS, NET OF TAX	3,017		(27,423)		(705,886)		(118,747)
CONSOLIDATED NET LOSS	$	(96,670)	$	(218,919)	$	(1,667,016)	$	(9,194)
Less: Net income attributable to noncontrolling interests	—		—		—		16
NET LOSS ATTRIBUTABLE TO ENDO INTERNATIONAL PLC	$	(96,670)	$	(218,919)	$	(1,667,016)	$	(9,210)
NET (LOSS) INCOME PER SHARE ATTRIBUTABLE TO ENDO INTERNATIONAL PLC ORDINARY SHAREHOLDERS—BASIC:
Continuing operations	$	(0.45)	$	(0.86)	$	(4.31)	$	0.49
Discontinued operations	0.02		(0.12)		(3.16)		(0.53)
Basic	$	(0.43)	$	(0.98)	$	(7.47)	$	(0.04)
NET (LOSS) INCOME PER SHARE ATTRIBUTABLE TO ENDO INTERNATIONAL PLC ORDINARY SHAREHOLDERS—DILUTED:
Continuing operations	$	(0.45)	$	(0.86)	$	(4.31)	$	0.49
Discontinued operations	0.02		(0.12)		(3.16)		(0.53)
Diluted	$	(0.43)	$	(0.98)	$	(7.47)	$	(0.04)
WEIGHTED AVERAGE SHARES:
Basic	223,299		222,767		223,157		222,579
Diluted	223,299		222,767		223,157		223,060

The following table presents unaudited Condensed Consolidated Balance Sheet data at September 30, 2017 and December 31, 2016 (in thousands):

	September 30, 2017		December 31, 2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	738,393	$	517,250
Restricted cash and cash equivalents	361,137		282,074
Accounts receivable	531,488		992,153
Inventories, net	443,270		555,671
Assets held for sale	65,565		116,985
Other current assets	56,626		125,326
Total current assets	$	2,196,479	$	2,589,459
TOTAL NON-CURRENT ASSETS	9,698,992		11,685,650
TOTAL ASSETS	$	11,895,471	$	14,275,109
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses, including legal settlement accruals	$	1,986,405	$	2,470,016
Liabilities held for sale	13,456		24,338
Other current liabilities	42,260		140,391
Total current liabilities	$	2,042,121	$	2,634,745
LONG-TERM DEBT, LESS CURRENT PORTION, NET	8,246,605		8,141,378
OTHER LIABILITIES	841,761		797,397
TOTAL SHAREHOLDERS' EQUITY	764,984		2,701,589
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	11,895,471	$	14,275,109

The following table presents unaudited Condensed Consolidated Statement of Cash Flow data for the nine months ended September 30, 2017 and 2016 (in thousands):

	Nine Months Ended September 30,
	2017		2016
OPERATING ACTIVITIES:
Consolidated net loss	$	(1,667,016)	$	(9,194)
Adjustments to reconcile consolidated net loss to Net cash provided by operating activities:
Depreciation and amortization	742,936		716,332
Asset impairment charges	1,023,930		284,409
Other, including cash payments to claimants from Qualified Settlement Funds (1)	324,212		(548,170)
Net cash provided by operating activities	$	424,062	$	443,377
INVESTING ACTIVITIES:
Purchases of property, plant and equipment	$	(94,102)	$	(88,087)
Acquisitions, net of cash acquired	—		(30,394)
Proceeds from sale of business and other assets, net	96,066		6,686
Increase in restricted cash and cash equivalents (1)	(624,145)		(588,455)
Decrease in restricted cash and cash equivalents (1)	545,379		898,288
Other	7,000		(19,172)
Net cash (used in) provided by investing activities	$	(69,802)	$	178,866
FINANCING ACTIVITIES:
Payments on borrowings, net	$	(12,325)	$	(305,634)
Other	(123,028)		(28,877)
Net cash used in financing activities	$	(135,353)	$	(334,511)
Effect of foreign exchange rate	$	3,686	$	1,497
Movement in cash held for sale	(1,450)		—
NET INCREASE IN CASH AND CASH EQUIVALENTS	$	221,143	$	289,229
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	517,250		272,348
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	738,393	$	561,577

(1) Included within the above Condensed Consolidated Statements of Cash Flows is the impact of payments into and out of QSFs for mesh-related product liability. Cash payments into QSFs result in a cash outflow for investing activities (CFI). Cash releases from QSFs result in a cash inflow for investing activities and a corresponding outflow for operating activities (CFO). The following table reflects the mesh-related payment activities for the nine months ended September 30, 2017 and 2016 by cash flow component:

	Nine Months Ended September 30,
	2017				2016
	Impact on CFO (a)		Impact on CFI		Impact on CFO (a)		Impact on CFI
Cash contributions to Qualified Settlement Funds	$	—	$	(623,128)	$	—	$	(587,782)
Cash payments to claimants from Qualified Settlement Funds	(545,379)		545,379		(898,288)		898,288
Cash payments made directly to claimants	(3,625)		—		(5,561)		—
Total	$	(549,004)	$	(77,749)	$	(903,849)	$	310,506

(a) These amounts are included in "Other, including cash payments to claimants from Qualified Settlement Funds (1)" in the Condensed Consolidated Statements of Cash Flows above.

SUPPLEMENTAL FINANCIAL INFORMATION

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

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

Reconciliation of EBITDA and Adjusted EBITDA (non-GAAP)

The following table provides a reconciliation of Net loss attributable to Endo International plc (GAAP) to Adjusted EBITDA (non-GAAP) for the three and nine months ended September 30, 2017 and 2016 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Net loss attributable to Endo International plc (GAAP)	$	(96,670)	$	(218,919)	$	(1,667,016)	$	(9,210)
Income tax (benefit) expense	(28,109)		46,185		(97,517)		(627,807)
Interest expense, net	127,521		112,184		361,267		340,896
Depreciation and amortization (18)	183,475		230,520		680,385		695,432
EBITDA (non-GAAP)	$	186,217	$	169,970	$	(722,881)	$	399,311

Inventory step-up and other cost savings (2)	$	66	$	14,208	$	281	$	111,787
Upfront and milestone-related payments (3)	775		1,770		6,952		5,875
Inventory reserve (decrease) increase from restructuring (4)	—		(9,041)		7,899		24,592
Royalty obligations (5)	—		—		—		(7,750)
Separation benefits and other restructuring (6)	80,693		18,823		120,078		45,820
Certain litigation-related and other contingencies, net (7)	(12,352)		18,256		(14,016)		28,715
Asset impairment charges (8)	94,924		93,504		1,023,930		263,080
Acquisition-related and integration costs (9)	1,201		7,907		8,137		55,422
Fair value of contingent consideration (10)	15,440		11,569		23,574		24,779
Loss on extinguishment of debt (11)	—		—		51,734		—
Share-based compensation	13,247		14,953		40,252		43,473
Other (income) expense, net (19)	(2,097)		(2,866)		(10,843)		402
Other adjustments	(58)		614		(75)		(781)
Discontinued operations, net of tax (15)	(3,017)		27,423		705,886		118,747
Net income attributable to noncontrolling interests (16)	—		—		—		16
Adjusted EBITDA (non-GAAP)	$	375,039	$	367,090	$	1,240,908	$	1,113,488

Reconciliation of Adjusted Income from Continuing Operations (non-GAAP)

The following table provides a reconciliation of our (Loss) income from continuing operations (GAAP) to our Adjusted income from continuing operations (non-GAAP) for the three and nine months ended September 30, 2017 and 2016 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
(Loss) income from continuing operations (GAAP)	$	(99,687)	$	(191,496)	$	(961,130)	$	109,553
Non-GAAP adjustments:
Amortization of intangible assets (1)	161,413		211,548		615,490		636,061
Inventory step-up and other cost savings (2)	66		14,208		281		111,787
Upfront and milestone-related payments (3)	775		1,770		6,952		5,875
Inventory reserve (decrease) increase from restructuring (4)	—		(9,041)		7,899		24,592
Royalty obligations (5)	—		—		—		(7,750)
Separation benefits and other restructuring (6)	80,693		18,823		120,078		45,820
Certain litigation-related and other contingencies, net (7)	(12,352)		18,256		(14,016)		28,715
Asset impairment charges (8)	94,924		93,504		1,023,930		263,080
Acquisition-related and integration costs (9)	1,201		7,907		8,137		55,422
Fair value of contingent consideration (10)	15,440		11,569		23,574		24,779
Loss on extinguishment of debt (11)	—		—		51,734		—
Non-cash and penalty interest charges (12)	—		—		—		4,092
Other (13)	3,035		53		(1,133)		(5,437)
Tax adjustments (14)	(41,456)		48,418		(195,298)		(637,998)
Adjusted income from continuing operations (non-GAAP)	$	204,052	$	225,519	$	686,498	$	658,591

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 nine months ended September 30, 2017 and 2016 (in thousands, except per share data):

	Three Months Ended September 30, 2017
	Total revenues	Cost of revenues	Gross margin	Gross margin %	Total operating expenses	Operating expense to revenue %	Operating (loss) income from continuing operations	Operating margin %	Other non-operating expense, net	(Loss) income from continuing operations before income tax	Income tax (benefit) expense	Effective tax rate	(Loss) income from continuing operations	Discontinued operations, net of tax	Net (loss) income attributable to Endo International plc	Diluted (loss) income per share from continuing operations (17)
Reported (GAAP)	$ 786,887	$ 514,522	$ 272,365	35 %	$ 274,737	35 %	$ (2,372)	—%	$ 125,424	$ (127,796)	$ (28,109)	22 %	$ (99,687)	$ 3,017	$ (96,670)	$ (0.45)
Items impacting comparability:
Amortization of intangible assets (1)	—	(161,413)	161,413		—		161,413		—	161,413	—		161,413	—	161,413	0.73
Inventory step-up and other cost savings (2)	—	(66)	66		—		66		—	66	—		66	—	66	—
Upfront and milestone-related payments (3)	—	(688)	688		(87)		775		—	775	—		775	—	775	—
Separation benefits and other restructuring (6)	—	(78,680)	78,680		(2,013)		80,693		—	80,693	—		80,693	—	80,693	0.36
Certain litigation-related and other contingencies, net (7)	—	—	—		12,352		(12,352)		—	(12,352)	—		(12,352)	—	(12,352)	(0.06)
Asset impairment charges (8)	—	—	—		(94,924)		94,924		—	94,924	—		94,924	—	94,924	0.43
Acquisition-related and integration costs (9)	—	—	—		(1,201)		1,201		—	1,201	—		1,201	—	1,201	0.01
Fair value of contingent consideration (10)	—	—	—		(15,440)		15,440		—	15,440	—		15,440	—	15,440	0.07
Other (13)	—	—	—		—		—		(3,035)	3,035	—		3,035	—	3,035	0.01
Tax adjustments (14)	—	—	—		—		—		—	—	41,456		(41,456)	—	(41,456)	(0.19)
Exclude discontinued operations, net of tax (15)	—	—	—		—		—		—	—	—		—	(3,017)	(3,017)	—
After considering items (non-GAAP)	$ 786,887	$ 273,675	$ 513,212	65 %	$ 173,424	22 %	$ 339,788	43 %	$ 122,389	$ 217,399	$ 13,347	6 %	$ 204,052	$ —	$ 204,052	$ 0.91


	Three Months Ended September 30, 2016
	Total revenues	Cost of revenues	Gross margin	Gross margin %	Total operating expenses	Operating expense to revenue %	Operating (loss) income from continuing operations	Operating margin %	Other non-operating expense, net	(Loss) income from continuing operations before income tax	Income tax expense (benefit)	Effective tax rate	(Loss) income from continuing operations	Discontinued operations, net of tax	Net (loss) income attributable to Endo International plc (16)	Diluted (loss) income per share from continuing operations (17)
Reported (GAAP)	$ 884,335	$ 557,472	$ 326,863	37 %	$ 362,856	41 %	$ (35,993)	(4)%	$ 109,318	$ (145,311)	$ 46,185	(32)%	$ (191,496)	$ (27,423)	$ (218,919)	$ (0.86)
Items impacting comparability:
Amortization of intangible assets (1)	—	(211,548)	211,548		—		211,548		—	211,548	—		211,548	—	211,548	0.95
Inventory step-up and other cost savings (2)	—	(14,208)	14,208		—		14,208		—	14,208	—		14,208	—	14,208	0.06
Upfront and milestone-related payments (3)	—	(664)	664		(1,106)		1,770		—	1,770	—		1,770	—	1,770	0.01
Inventory reserve decrease from restructuring (4)	—	9,041	(9,041)		—		(9,041)		—	(9,041)	—		(9,041)	—	(9,041)	(0.04)
Separation benefits and other restructuring (6)	—	(12,989)	12,989		(5,834)		18,823		—	18,823	—		18,823	—	18,823	0.08
Certain litigation-related and other contingencies, net (7)	—	—	—		(18,256)		18,256		—	18,256	—		18,256	—	18,256	0.08
Asset impairment charges (8)	—	—	—		(93,504)		93,504		—	93,504	—		93,504	—	93,504	0.42
Acquisition-related and integration costs (9)	—	—	—		(7,907)		7,907		—	7,907	—		7,907	—	7,907	0.04
Fair value of contingent consideration (10)	—	—	—		(11,569)		11,569		—	11,569	—		11,569	—	11,569	0.05
Other (13)	—	—	—		—		—		(53)	53	—		53	—	53	—
Tax adjustments (14)	—	—	—		—		—		—	—	(48,418)		48,418	—	48,418	0.22
Exclude discontinued operations, net of tax (15)	—	—	—		—		—		—	—	—		—	27,423	27,423	—
After considering items (non-GAAP)	$ 884,335	$ 327,104	$ 557,231	63 %	$ 224,680	25 %	$ 332,551	38 %	$ 109,265	$ 223,286	$ (2,233)	(1)%	$ 225,519	$ —	$ 225,519	$ 1.01


	Nine Months Ended September 30, 2017
	Total revenues	Cost of revenues	Gross margin	Gross margin %	Total operating expenses	Operating expense to revenue %	Operating (loss) income from continuing operations	Operating margin %	Other non-operating expense, net	(Loss) income from continuing operations before income tax	Income tax (benefit) expense	Effective tax rate	(Loss) income from continuing operations	Discontinued operations, net of tax	Net (loss) income attributable to Endo International plc	Dilute (loss) income per share from continuing operations (17)
Reported (GAAP)	$ 2,700,218	$ 1,722,885	$ 977,333	36 %	$ 1,633,822	61 %	$ (656,489)	(24)%	$ 402,158	$ (1,058,647)	$ (97,517)	9 %	$ (961,130)	$ (705,886)	$ (1,667,016)	$ (4.31)
Items impacting comparability:
Amortization of intangible assets (1)	—	(615,490)	615,490		—		615,490		—	615,490	—		615,490	—	615,490	2.75
Inventory step-up and other cost savings (2)	—	(281)	281		—		281		—	281	—		281	—	281	—
Upfront and milestone-related payments (3)	—	(2,039)	2,039		(4,913)		6,952		—	6,952	—		6,952	—	6,952	0.03
Inventory reserve increase from restructuring (4)	—	(7,899)	7,899		—		7,899		—	7,899	—		7,899	—	7,899	0.04
Separation benefits and other restructuring (6)	—	(85,367)	85,367		(34,711)		120,078		—	120,078	—		120,078	—	120,078	0.54
Certain litigation-related and other contingencies, net (7)	—	—	—		14,016		(14,016)		—	(14,016)	—		(14,016)	—	(14,016)	(0.06)
Asset impairment charges (8)	—	—	—		(1,023,930)		1,023,930		—	1,023,930	—		1,023,930	—	1,023,930	4.59
Acquisition-related and integration costs (9)	—	—	—		(8,137)		8,137		—	8,137	—		8,137	—	8,137	0.04
Fair value of contingent consideration (10)	—	—	—		(23,574)		23,574		—	23,574	—		23,574	—	23,574	0.11
Loss on extinguishment of debt (11)	—	—	—		—		—		(51,734)	51,734	—		51,734	—	51,734	0.23
Other (13)	—	—	—		—		—		1,133	(1,133)	—		(1,133)	—	(1,133)	(0.01)
Tax adjustments (14)	—	—	—		—		—		—	—	195,298		(195,298)	—	(195,298)	(0.88)
Exclude discontinued operations, net of tax (15)	—	—	—		—		—		—	—	—		—	705,886	705,886	—
After considering items (non-GAAP)	$ 2,700,218	$ 1,011,809	$ 1,688,409	63 %	$ 552,573	20 %	$ 1,135,836	42 %	$ 351,557	$ 784,279	$ 97,781	12 %	$ 686,498	$ —	$ 686,498	$ 3.07


	Nine Months Ended September 30, 2016
	Total revenues	Cost of revenues	Gross margin	Gross margin %	Total operating expenses	Operating expense to revenue %	Operating (loss) income from continuing operations	Operating margin %	Other non-operating expense, net	(Loss) income from continuing operations before income tax	Income tax (benefit) expense	Effective tax rate	Income from continuing operations	Discontinued operations, net of tax	Net (loss) income attributable to Endo International plc (16)	Diluted income (loss) per share from continuing operations (17)
Reported (GAAP)	$ 2,768,761	$ 1,878,395	$ 890,366	32 %	$ 1,067,322	39 %	$ (176,956)	(6)%	$ 341,298	$ (518,254)	$ (627,807)	121 %	$ 109,553	$ (118,747)	$ (9,210)	$ 0.49
Items impacting comparability:
Amortization of intangible assets (1)	—	(636,061)	636,061		—		636,061		—	636,061	—		636,061	—	636,061	2.84
Inventory step-up and other cost savings (2)	—	(110,437)	110,437		(1,350)		111,787		—	111,787	—		111,787	—	111,787	0.50
Upfront and milestone-related payments (3)	—	(1,973)	1,973		(3,902)		5,875		—	5,875	—		5,875	—	5,875	0.03
Inventory reserve increase from restructuring (4)	—	(24,592)	24,592		—		24,592		—	24,592	—		24,592	—	24,592	0.11
Royalty obligations (5)	—	7,750	(7,750)		—		(7,750)		—	(7,750)	—		(7,750)	—	(7,750)	(0.03)
Separation benefits and other restructuring (6)	—	(19,394)	19,394		(26,426)		45,820		—	45,820	—		45,820	—	45,820	0.21
Certain litigation-related and other contingencies, net (7)	—	—	—		(28,715)		28,715		—	28,715	—		28,715

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Endo Reports Third-Quarter 2017 Financial Results