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Endo Reports Third-Quarter 2021 Financial Results And Raises 2021 Financial Guidance

November 4, 2021
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DUBLIN, Nov. 4, 2021 /PRNewswire/ -- Endo International plc (NASDAQ: ENDP) today reported financial results for the third-quarter ended September 30, 2021.

"We delivered strong third-quarter results driven by outstanding execution across all of our businesses. As a result of our year-to-date performance and our expectations for the remainder of 2021, we are raising our full-year 2021 financial guidance," said Blaise Coleman, President and Chief Executive Officer at Endo. "Additionally, we are pleased with our progress against our strategic priorities including our efforts to expand and enhance our portfolio with the recent launch of varenicline tablets, the only available FDA approved generic version of Chantix®, and the continued positive market response to QWO®."  

THIRD-QUARTER FINANCIAL PERFORMANCE

(in thousands, except per share amounts)

 
 

Three Months Ended September 30,

     

Nine Months Ended September 30,

   
 

2021

 

2020

 

Change

 

2021

 

2020

 

Change

Total Revenues, Net

$

772,028

   

$

634,860

   

22

%

 

$

2,203,777

   

$

2,142,853

   

3

%

Reported (Loss) Income from Continuing Operations

$

(49,289)

   

$

(68,974)

   

(29)

%

 

$

(12,414)

   

$

106,217

   

NM

Reported Diluted Weighted Average Shares

233,578

   

230,040

   

2

%

 

232,487

   

233,379

   

%

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

$

(0.21)

   

$

(0.30)

   

(30)

%

 

$

(0.05)

   

$

0.46

   

NM

Reported Net (Loss) Income

$

(77,207)

   

$

(75,887)

   

2

%

 

$

(51,183)

   

$

64,601

   

NM

Adjusted Income from Continuing Operations (2)

$

189,277

   

$

122,275

   

55

%

 

$

516,315

   

$

494,375

   

4

%

Adjusted Diluted Weighted Average Shares (1)(2)

235,527

   

233,442

   

1

%

 

236,538

   

233,379

   

1

%

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

$

0.80

   

$

0.52

   

54

%

 

$

2.18

   

$

2.12

   

3

%

Adjusted EBITDA (2)

$

386,883

   

$

286,700

   

35

%

 

$

1,094,298

   

$

1,044,307

   

5

%

__________

(1)

Reported Diluted Net (Loss) Income 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.

CONSOLIDATED RESULTS

Total revenues were $772 million in third-quarter 2021, an increase of 22% compared to $635 million during the same period in 2020. This result was primarily attributable to increased revenues from our Sterile Injectables, Generic Pharmaceuticals, and Branded Pharmaceuticals segments.

Reported loss from continuing operations in third-quarter 2021 was $49 million compared to reported loss from continuing operations of $69 million during the same period in 2020. This result was attributable to increased revenue and favorable changes in product mix, which were partially offset by higher litigation-related costs, asset impairment charges and other operating expenses, including as a result of our investment and promotional efforts behind XIAFLEX® and QWO®. Reported diluted net loss per share from continuing operations in third-quarter 2021 was $0.21 compared to reported diluted net loss per share from continuing operations in third-quarter 2020 of $0.30.

Adjusted income from continuing operations in third-quarter 2021 was $189 million compared to $122 million in third-quarter 2020. The result was attributable to increased revenues and favorable changes in product mix. Adjusted diluted net income per share from continuing operations in third-quarter 2021 was $0.80 compared to $0.52 in third-quarter 2020.

BRANDED PHARMACEUTICALS SEGMENT

Third-quarter 2021 Branded Pharmaceuticals segment revenues were $231 million, an increase of 3% compared to $224 million during third-quarter 2020.

Specialty Products revenues increased 16% to $162 million in third-quarter 2021 compared to $140 million in third-quarter 2020. XIAFLEX® revenues increased 20% to $106 million compared to $88 million in third-quarter 2020 primarily driven by demand growth due to additional physician office activity coupled with commercial execution. Established Products revenues decreased 17% to $69 million in third-quarter 2021 compared to $84 million in third-quarter 2020 partly driven by a non-recurring stocking benefit for TESTOPEL® in prior year.

STERILE INJECTABLES SEGMENT

Third-quarter 2021 Sterile Injectables segment revenues were $344 million, an increase of 37% compared to $251 million during third-quarter 2020. This increase was attributable to additional VASOSTRICT® revenues primarily due to hospitalizations associated with the COVID-19 delta variant.

GENERIC PHARMACEUTICALS SEGMENT

Third-quarter 2021 Generic Pharmaceuticals segment revenues were $174 million, an increase of 29% compared to $136 million during third-quarter 2020. This increase was primarily attributable to additional revenues from 2021 product launches.

INTERNATIONAL PHARMACEUTICALS SEGMENT

Third-quarter 2021 International Pharmaceuticals segment revenues were $23 million compared to $24 million during third-quarter 2020.  

2021 FINANCIAL GUIDANCE

Endo is updating its financial guidance for the full-year ending December 31, 2021 by raising the expected ranges regarding revenues, adjusted diluted net income per share from continuing operations and adjusted EBITDA. The guidance below contemplates a range of potential outcomes that reflect uncertainties in certain key assumptions including, among other things, uncertainties related to the COVID-19 pandemic. These statements are forward-looking, and actual results may differ materially from Endo's expectations, as further discussed below under the heading "Cautionary Note Regarding Forward-Looking Statements."

 

Full-Year 2021  

Prior

 

Current

Total Revenues, Net

$2.73B - $2.79B

 

$2.90B - $2.94B

Adjusted EBITDA

$1.23B - $1.28B

 

$1.40B - $1.42B

Adjusted Diluted Net Income per Share from Continuing Operations

$2.15 - $2.30

 

$2.80 - $2.85

Assumptions:

     

Adjusted Gross Margin

~70.0% - 71.0%

 

~71.5%

Adjusted Operating Expenses as a Percentage of Total Revenues, Net

~28.5%

 

~26.5%

Adjusted Interest Expense

~$560M

 

~$560M

Adjusted Effective Tax Rate

~11.0% - 12.0%

 

~13.0%

Adjusted Diluted Weighted Average Shares

~239M

 

~236M

BALANCE SHEET, LIQUIDITY AND OTHER UPDATES

As of September 30, 2021, the Company had approximately $1.6 billion in unrestricted cash; $8.3 billion of debt; and a net debt to adjusted EBITDA ratio of 4.6.

Third-quarter 2021 net cash provided by operating activities was $62 million compared to $77 million used in operating activities during the third-quarter 2020. This change was primarily due to an increase in adjusted income from continuing operations and changes in working capital, offset by payments to settle certain opioid matters.

Additionally, in October 2021, the Company completed the previously announced sale of its manufacturing site in Chestnut Ridge, NY, which included, among other assets, U.S. generic retail products and related product inventory to subsidiaries of Strides Pharma Science Limited for approximately $24 million in cash, as well as certain other non-cash considerations. The exit of this site was included in a series of business transformation initiatives that the Company announced in late 2020, including further optimization of its generic retail business cost structure.

CONFERENCE CALL INFORMATION

Endo will conduct a conference call with financial analysts to discuss this press release tomorrow, November 5, 2021, at 7:30 a.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 6052178. Please dial in 10 minutes prior to the scheduled start time.

A replay of the call will be available from November 5, 2021 at 10:30 a.m. ET until 9:30 a.m. ET on November 12, 2021 by dialing U.S./Canada (855) 859-2056 International (404) 537-3406, and entering the passcode 6052178.

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.

Chantix® is a registered trademark of Pfizer Inc.

FINANCIAL SCHEDULES

The following table presents Endo's unaudited Total revenues, net for the three and nine months ended September 30, 2021 and 2020 (dollars in thousands):

 

Three Months Ended September 30,

 

Percent
Growth

 

Nine Months Ended September 30,

 

Percent
Growth

 

2021

 

2020

   

2021

 

2020

 

Branded Pharmaceuticals:

                     

Specialty Products:

                     

XIAFLEX®

$

105,509

   

$

88,167

   

20

%

 

$

312,266

   

$

211,022

   

48

%

SUPPRELIN® LA

30,069

   

28,229

   

7

%

 

85,665

   

63,344

   

35

%

Other Specialty (1)

26,339

   

23,724

   

11

%

 

74,407

   

68,795

   

8

%

Total Specialty Products

$

161,917

   

$

140,120

   

16

%

 

$

472,338

   

$

343,161

   

38

%

Established Products:

                     

PERCOCET®

$

26,914

   

$

27,508

   

(2)

%

 

$

78,695

   

$

82,789

   

(5)

%

TESTOPEL®

11,686

   

18,068

   

(35)

%

 

32,314

   

26,877

   

20

%

Other Established (2)

30,460

   

37,986

   

(20)

%

 

82,305

   

104,449

   

(21)

%

Total Established Products

$

69,060

   

$

83,562

   

(17)

%

 

$

193,314

   

$

214,115

   

(10)

%

Total Branded Pharmaceuticals (3)

$

230,977

   

$

223,682

   

3

%

 

$

665,652

   

$

557,276

   

19

%

Sterile Injectables:

                     

VASOSTRICT®

$

255,697

   

$

155,412

   

65

%

 

$

676,764

   

$

572,530

   

18

%

ADRENALIN®

28,722

   

30,662

   

(6)

%

 

88,136

   

120,335

   

(27)

%

Other Sterile Injectables (4)

59,234

   

65,319

   

(9)

%

 

182,098

   

214,132

   

(15)

%

Total Sterile Injectables (3)

$

343,653

   

$

251,393

   

37

%

 

$

946,998

   

$

906,997

   

4

%

Total Generic Pharmaceuticals

$

174,306

   

$

135,508

   

29

%

 

$

522,451

   

$

602,670

   

(13)

%

Total International Pharmaceuticals

$

23,092

   

$

24,277

   

(5)

%

 

$

68,676

   

$

75,910

   

(10)

%

Total revenues, net

$

772,028

   

$

634,860

   

22

%

 

$

2,203,777

   

$

2,142,853

   

3

%

__________

(1)

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

(2)

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

(3)

Individual products presented above represent the top two performing products in each product category for either the three or nine months ended September 30, 2021 and/or any product having revenues in excess of $25 million during any quarterly period in 2021 or 2020.

(4)

Products included within Other Sterile Injectables include ertapenem for injection, APLISOL® and others.

The following table presents unaudited Condensed Consolidated Statement of Operations data for the three and nine months ended September 30, 2021 and 2020 (in thousands, except per share data):

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

2020

 

2021

 

2020

TOTAL REVENUES, NET

$

772,028

   

$

634,860

   

$

2,203,777

   

$

2,142,853

 

COSTS AND EXPENSES:

             

Cost of revenues

286,068

   

348,077

   

909,841

   

1,072,972

 

Selling, general and administrative

246,864

   

182,259

   

611,657

   

522,285

 

Research and development

25,616

   

32,055

   

90,024

   

94,165

 

Litigation-related and other contingencies, net

83,495

   

1,810

   

119,327

   

(23,938)

 

Asset impairment charges

42,155

   

8,412

   

50,393

   

106,197

 

Acquisition-related and integration items, net

(1,432)

   

(1,407)

   

(6,357)

   

17,100

 

Interest expense, net

142,958

   

135,648

   

418,852

   

397,689

 

Loss on extinguishment of debt

   

   

13,753

   

 

Other income, net

(5,955)

   

(7,194)

   

(4,671)

   

(25,318)

 

(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX

$

(47,741)

   

$

(64,800)

   

$

958

   

$

(18,299)

 

INCOME TAX EXPENSE (BENEFIT)

1,548

   

4,174

   

13,372

   

(124,516)

 

(LOSS) INCOME FROM CONTINUING OPERATIONS

$

(49,289)

   

$

(68,974)

   

$

(12,414)

   

$

106,217

 

DISCONTINUED OPERATIONS, NET OF TAX

(27,918)

   

(6,913)

   

(38,769)

   

(41,616)

 

NET (LOSS) INCOME

$

(77,207)

   

$

(75,887)

   

$

(51,183)

   

$

64,601

 

NET (LOSS) INCOME PER SHARE—BASIC:

             

Continuing operations

$

(0.21)

   

$

(0.30)

   

$

(0.05)

   

$

0.46

 

Discontinued operations

(0.12)

   

(0.03)

   

(0.17)

   

(0.18)

 

Basic

$

(0.33)

   

$

(0.33)

   

$

(0.22)

   

$

0.28

 

NET (LOSS) INCOME PER SHARE—DILUTED:

             

Continuing operations

$

(0.21)

   

$

(0.30)

   

$

(0.05)

   

$

0.46

 

Discontinued operations

(0.12)

   

(0.03)

   

(0.17)

   

(0.18)

 

Diluted

$

(0.33)

   

$

(0.33)

   

$

(0.22)

   

$

0.28

 

WEIGHTED AVERAGE SHARES:

             

Basic

233,578

   

230,040

   

232,487

   

228,985

 

Diluted

233,578

   

230,040

   

232,487

   

233,379

 

The following table presents unaudited Condensed Consolidated Balance Sheet data at September 30, 2021 and December 31, 2020 (in thousands):

 

September 30,
2021

 

December 31,
2020

ASSETS

     

CURRENT ASSETS:

     

Cash and cash equivalents

$

1,568,665

   

$

1,213,437

 

Restricted cash and cash equivalents

131,605

   

171,563

 

Accounts receivable

533,827

   

511,262

 

Inventories, net

297,302

   

352,260

 

Assets held for sale

39,952

   

 

Other current assets

177,595

   

164,736

 

Total current assets

$

2,748,946

   

$

2,413,258

 

TOTAL NON-CURRENT ASSETS

6,497,606

   

6,851,379

 

TOTAL ASSETS

$

9,246,552

   

$

9,264,637

 

LIABILITIES AND SHAREHOLDERS' DEFICIT

     

CURRENT LIABILITIES:

     

Accounts payable and accrued expenses, including legal settlement accruals

$

1,316,842

   

$

1,208,061

 

Liabilities held for sale

3,055

   

 

Other current liabilities

234,372

   

45,763

 

Total current liabilities

$

1,554,269

   

$

1,253,824

 

LONG-TERM DEBT, LESS CURRENT PORTION, NET

8,050,874

   

8,280,578

 

OTHER LIABILITIES

331,726

   

378,174

 

SHAREHOLDERS' DEFICIT

(690,317)

   

(647,939)

 

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT

$

9,246,552

   

$

9,264,637

 

The following table presents unaudited Condensed Consolidated Statement of Cash Flow data for the nine months ended September 30, 2021 and 2020 (in thousands):

 

Nine Months Ended September 30,

 

2021

 

2020

OPERATING ACTIVITIES:

     

Net (loss) income

$

(51,183)

   

$

64,601

 

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

     

 Depreciation and amortization

350,455

   

391,463

 

 Asset impairment charges

50,393

   

106,197

 

 Other, including cash payments to claimants from Qualified Settlement Funds

111,249

   

(272,818)

 

Net cash provided by operating activities

$

460,914

   

$

289,443

 

INVESTING ACTIVITIES:

     

Capital expenditures, excluding capitalized interest

$

(61,496)

   

$

(52,692)

 

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

(5,000)

   

 

Proceeds from sale of business and other assets, net

1,357

   

6,377

 

Other

(5,207)

   

(3,915)

 

Net cash used in investing activities

$

(70,346)

   

$

(50,230)

 

FINANCING ACTIVITIES:

     

Payments on borrowings, net

$

(49,541)

   

$

(86,887)

 

Other

(25,995)

   

(11,470)

 

Net cash used in financing activities

$

(75,536)

   

$

(98,357)

 

Effect of foreign exchange rate

238

   

(458)

 

NET INCREASE IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS

$

315,270

   

$

140,398

 

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

1,385,000

   

1,720,388

 

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

$

1,700,270

   

$

1,860,786

 

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 (loss) income (GAAP) to Adjusted EBITDA (non-GAAP) for the three and nine months ended September 30, 2021 and 2020 (in thousands):

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

2020

 

2021

 

2020

Net (loss) income (GAAP)

$

(77,207)

   

$

(75,887)

   

$

(51,183)

   

$

64,601

 

Income tax expense (benefit)

1,548

   

4,174

   

13,372

   

(124,516)

 

Interest expense, net

142,958

   

135,648

   

418,852

   

397,689

 

Depreciation and amortization (14)

106,402

   

120,974

   

328,126

   

376,787

 

EBITDA (non-GAAP)

$

173,701

   

$

184,909

   

$

709,167

   

$

714,561

 
               

Upfront and milestone-related payments (2)

$

525

   

$

275

   

$

6,206

   

$

2,469

 

Amounts related to continuity and separation benefits, cost reductions and strategic review initiatives (3)

19,829

   

67,692

   

58,632

   

100,356

 

Certain litigation-related and other contingencies, net (4)

83,495

   

1,810

   

119,327

   

(23,938)

 

Certain legal costs (5)

38,842

   

18,343

   

82,961

   

51,884

 

Asset impairment charges (6)

42,155

   

8,412

   

50,393

   

106,197

 

Acquisition-related and integration costs (7)

3

   

   

414

   

 

Fair value of contingent consideration (8)

(1,435)

   

(1,407)

   

(6,771)

   

17,100

 

Loss on extinguishment of debt (9)

   

   

13,753

   

 

Share-based compensation (14)

7,800

   

6,585

   

22,237

   

28,262

 

Other income, net (15)

(5,955)

   

(7,194)

   

(4,671)

   

(25,318)

 

Other (10)

5

   

362

   

3,881

   

31,118

 

Discontinued operations, net of tax (12)

27,918

   

6,913

   

38,769

   

41,616

 

Adjusted EBITDA (non-GAAP)

$

386,883

   

$

286,700

   

$

1,094,298

   

$

1,044,307

 

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

The following table provides a reconciliation of the Company's (Loss) income from continuing operations (GAAP) to Adjusted income from continuing operations (non-GAAP) for the three and nine months ended September 30, 2021 and 2020 (in thousands):

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

2020

 

2021

 

2020

(Loss) income from continuing operations (GAAP)

$

(49,289)

   

$

(68,974)

   

$

(12,414)

   

$

106,217

 

Non-GAAP adjustments:

             

Amortization of intangible assets (1)

91,901

   

104,066

   

281,101

   

325,801

 

Upfront and milestone-related payments (2)

525

   

275

   

6,206

   

2,469

 

Amounts related to continuity and separation benefits, cost reductions and strategic review initiatives (3)

19,829

   

67,692

   

58,632

   

100,356

 

Certain litigation-related and other contingencies, net (4)

83,495

   

1,810

   

119,327

   

(23,938)

 

Certain legal costs (5)

38,842

   

18,343

   

82,961

   

51,884

 

Asset impairment charges (6)

42,155

   

8,412

   

50,393

   

106,197

 

Acquisition-related and integration costs (7)

3

   

   

414

   

 

Fair value of contingent consideration (8)

(1,435)

   

(1,407)

   

(6,771)

   

17,100

 

Loss on extinguishment of debt (9)

   

   

13,753

   

 

Other (10)

(6,926)

   

(1,898)

   

(545)

   

13,437

 

Tax adjustments (11)

(29,823)

   

(6,044)

   

(76,742)

   

(205,148)

 

Adjusted income from continuing operations (non-GAAP)

$

189,277

   

$

122,275

   

$

516,315

   

$

494,375

 

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, 2021 and 2020 (in thousands, except per share data):

 

Three Months Ended September 30, 2021

 

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
(13)

Reported (GAAP)

$ 772,028

 

$286,068

 

$485,960

 

62.9 %

 

$ 396,698

 

51.4 %

 

$     89,262

 

11.6 %

 

$ 137,003

 

$    (47,741)

 

$  1,548

 

(3.2)%

 

$   (49,289)

 

$      (27,918)

 

$ (77,207)

 

$        (0.21)

Items impacting comparability:

                                                             

Amortization of intangible assets (1)

-

 

(91,901)

 

91,901

     

-

     

91,901

     

-

 

91,901

 

-

     

91,901

 

-

 

91,901

   

Upfront and milestone-related payments (2)

-

 

(525)

 

525

     

-

     

525

     

-

 

525

 

-

     

525

 

-

 

525

   

Amounts related to continuity and separation benefits, cost reductions and strategic review initiatives (3)

-

 

10,259

 

(10,259)

     

(30,088)

     

19,829

     

-

 

19,829

 

-

     

19,829

 

-

 

19,829

   

Certain litigation-related and other contingencies, net (4)

-

 

-

 

-

     

(83,495)

     

83,495

     

-

 

83,495

 

-

     

83,495

 

-

 

83,495

   

Certain legal costs (5)

-

 

-

 

-

     

(38,842)

     

38,842

     

-

 

38,842

 

-

     

38,842

 

-

 

38,842

   

Asset impairment charges (6)

-

 

-

 

-

     

(42,155)

     

42,155

     

-

 

42,155

 

-

     

42,155

 

-

 

42,155

   

Acquisition-related and integration costs (7)

-

 

-

 

-

     

(3)

     

3

     

-

 

3

 

-

     

3

 

-

 

3

   

Fair value of contingent consideration (8)

-

 

-

 

-

     

1,435

     

(1,435)

     

-

 

(1,435)

 

-

     

(1,435)

 

-

 

(1,435)

   

Other (10)

-

 

-

 

-

     

-

     

-

     

6,926

 

(6,926)

 

-

     

(6,926)

 

-

 

(6,926)

   

Tax adjustments (11)

-

 

-

 

-

     

-

     

-

     

-

 

-

 

29,823

     

(29,823)

 

-

 

(29,823)

   

Exclude discontinued operations, net of tax (12)

-

 

-

 

-

     

-

     

-

     

-

 

-

 

-

     

-

 

27,918

 

27,918

   

After considering items (non-GAAP)

$ 772,028

 

$203,901

 

$568,127

 

73.6 %

 

$ 203,550

 

26.4 %

 

$   364,577

 

47.2 %

 

$ 143,929

 

$   220,648

 

$31,371

 

14.2 %

 

$   189,277

 

$                 -

 

$ 189,277

 

$          0.80

 

 

Three Months Ended September 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

 

(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
(13)

Reported (GAAP)

$ 634,860

 

$348,077

 

$286,783

 

45.2 %

 

$ 223,129

 

35.1 %

 

$     63,654

 

10.0 %

 

$ 128,454

 

$    (64,800)

 

$  4,174

 

(6.4)%

 

$   (68,974)

 

$        (6,913)

 

$ (75,887)

 

$        (0.30)

Items impacting comparability:

                                                             

Amortization of intangible assets (1)

-

 

(104,066)

 

104,066

     

-

     

104,066

     

-

 

104,066

 

-

     

104,066

 

-

 

104,066

   

Upfront and milestone-related payments (2)

-

 

(125)

 

125

     

(150)

     

275

     

-

 

275

 

-

     

275

 

-

 

275

   

Amounts related to continuity and separation benefits, cost reductions and strategic review initiatives (3)

-

 

(36,550)

 

36,550

     

(31,142)

     

67,692

     

-

 

67,692

 

-

     

67,692

 

-

 

67,692

   

Certain litigation-related and other contingencies, net (4)

-

 

-

 

-

     

(1,810)

     

1,810

     

-

 

1,810

 

-

     

1,810

 

-

 

1,810

   

Certain legal costs (5)

-

 

-

 

-

     

(18,343)

     

18,343

     

-

 

18,343

 

-

     

18,343

 

-

 

18,343

   

Asset impairment charges (6)

-

 

-

 

-

     

(8,412)

     

8,412

     

-

 

8,412

 

-

     

8,412

 

-

 

8,412

   

Fair value of contingent consideration (8)

-

 

-

 

-

     

1,407

     

(1,407)

     

-

 

(1,407)

 

-

     

(1,407)

 

-

 

(1,407)

   

Other (10)

-

 

-

 

-

     

(369)

     

369

     

2,267

 

(1,898)

 

-

     

(1,898)

 

-

 

(1,898)

   

Tax adjustments (11)

-

 

-

 

-

     

-

     

-

     

-

 

-

 

6,044

     

(6,044)

 

-

 

(6,044)

   

Exclude discontinued operations, net of tax (12)

-

 

-

 

-

     

-

     

-

     

-

 

-

 

-

     

-

 

6,913

 

6,913

   

After considering items (non-GAAP)

$ 634,860

 

$207,336

 

$427,524

 

67.3 %

 

$ 164,310

 

25.9 %

 

$   263,214

 

41.5 %

 

$ 130,721

 

$   132,493

 

$10,218

 

7.7 %

 

$   122,275

 

$                 -

 

$ 122,275

 

$          0.52

 

 

Nine Months Ended September 30, 2021

 

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

 

(Loss)
income
from
continuing
operations

 

Discontinued
operations,
net of tax

 

Net (loss)
income

 

Diluted net
(loss)
income per
share from
continuing
operations
(13)

Reported (GAAP)

$2,203,777

 

$909,841

 

$1,293,936

 

58.7 %

 

$ 865,044

 

39.3 %

 

$   428,892

 

19.5 %

 

$ 427,934

 

$          958

 

$13,372

 

1,395.8 %

 

$   (12,414)

 

$      (38,769)

 

$ (51,183)

 

$        (0.05)

Items impacting comparability:

                                                             

Amortization of intangible assets (1)

-

 

(281,101)

 

281,101

     

-

     

281,101

     

-

 

281,101

 

-

     

281,101

 

-

 

281,101

   

Upfront and milestone-related payments (2)

-

 

(1,176)

 

1,176

     

(5,030)

     

6,206

     

-

 

6,206

 

-

     

6,206

 

-

 

6,206

   

Amounts related to continuity and separation benefits, cost reductions and strategic review initiatives (3)

-

 

(10,007)

 

10,007

     

(48,625)

     

58,632

     

-

 

58,632

 

-

     

58,632

 

-

 

58,632

   

Certain litigation-related and other contingencies, net (4)

-

 

-

 

-

     

(119,327)

     

119,327

     

-

 

119,327

 

-

     

119,327

 

-

 

119,327

   

Certain legal costs (5)

-

 

-

 

-

     

(82,961)

     

82,961

     

-

 

82,961

 

-

     

82,961

 

-

 

82,961

   

Asset impairment charges (6)

-

 

-

 

-

     

(50,393)

     

50,393

     

-

 

50,393

 

-

     

50,393

 

-

 

50,393

   

Acquisition-related and integration costs (7)

-

 

-

 

-

     

(414)

     

414

     

-

 

414

 

-

     

414

 

-

 

414

   

Fair value of contingent consideration (8)

-

 

-

 

-

     

6,771

     

(6,771)

     

-

 

(6,771)

 

-

     

(6,771)

 

-

 

(6,771)

   

Loss on extinguishment of debt (9)

-

 

-

 

-

     

-

     

-

     

(13,753)

 

13,753

 

-

     

13,753

 

-

 

13,753

   

Other (10)

-

 

-

 

-

     

(3,879)

     

3,879

     

4,424

 

(545)

 

-

     

(545)

 

-

 

(545)

   

Tax adjustments (11)

-

 

-

 

-

     

-

     

-

     

-

 

-

 

76,742

     

(76,742)

 

-

 

(76,742)

   

Exclude discontinued operations, net of tax (12)

-

 

-

 

-

     

-

     

-

     

-

 

-

 

-

     

-

 

38,769

 

38,769

   

After considering items (non-GAAP)

$2,203,777

 

$617,557

 

$1,586,220

 

72.0 %

 

$ 561,186

 

25.5 %

 

$1,025,034

 

46.5 %

 

$ 418,605

 

$   606,429

 

$90,114

 

14.9 %

 

$   516,315

 

$                 -

 

$ 516,315

 

$          2.18

 

 

Nine Months Ended September 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

 

(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 income

 

Diluted net
income per
share from
continuing
operations
(13)

Reported (GAAP)

$2,142,853

 

$1,072,972

 

$1,069,881

 

49.9 %

 

$ 715,809

 

33.4 %

 

$   354,072

 

16.5 %

 

$ 372,371

 

$    (18,299)

 

$(124,516)

 

680.5 %

 

$   106,217

 

$      (41,616)

 

$      64,601

 

$          0.46

Items impacting comparability:

                                                             

Amortization of intangible assets (1)

-

 

(325,801)

 

325,801

     

-

     

325,801

     

-

 

325,801

 

-

     

325,801

 

-

 

325,801

   

Upfront and milestone-related payments (2)

-

 

(792)

 

792

     

(1,677)

     

2,469

     

-

 

2,469

 

-

     

2,469

 

-

 

2,469

   

Amounts related to continuity and separation benefits, cost reductions and strategic review initiatives (3)

-

 

(43,692)

 

43,692

     

(56,664)

     

100,356

     

-

 

100,356

 

-

     

100,356

 

-

 

100,356

   

Certain litigation-related and other contingencies, net (4)

-

 

-

 

-

     

23,938

     

(23,938)

     

-

 

(23,938)

 

-

     

(23,938)

 

-

 

(23,938)

   

Certain legal costs (5)

-

 

-

 

-

     

(51,884)

     

51,884

     

-

 

51,884

 

-

     

51,884

 

-

 

51,884

   

Asset impairment charges (6)

-

 

-

 

-

     

(106,197)

     

106,197

     

-

 

106,197

 

-

     

106,197

 

-

 

106,197

   

Fair value of contingent consideration (8)

-

 

-

 

-

     

(17,100)

     

17,100

     

-

 

17,100

 

-

     

17,100

 

-

 

17,100

   

Other (10)

-

 

-

 

-

     

(31,118)

     

31,118

     

17,681

 

13,437

 

-

     

13,437

 

-

 

13,437

   

Tax adjustments (11)

-

 

-

 

-

     

-

     

-

     

-

 

-

 

205,148

     

(205,148)

 

-

 

(205,148)

   

Exclude discontinued operations, net of tax (12)

-

 

-

 

-

     

-

     

-

     

-

 

-

 

-

     

-

 

41,616

 

41,616

   

After considering items (non-GAAP)

$2,142,853

 

$   702,687

 

$1,440,166

 

67.2 %

 

$ 475,107

 

22.2 %

 

$   965,059

 

45.0 %

 

$ 390,052

 

$   575,007

 

$    80,632

 

14.0 %

 

$   494,375

 

$                 -

 

$    494,375

 

$          2.12

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 nine months ended September 30, 2021 and 2020 are as follows:

(1)

To exclude amortization expense related to intangible assets.

   

(2)

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

   
   

Three Months Ended September 30,

   

2021

 

2020

   

Cost of revenues

 

Operating
expenses

 

Cost of revenues

 

Operating
expenses

 

Sales-based

$

525

   

$

   

$

125

   

$

 
 

Development-based

   

   

   

150

 
 

Total

$

525

   

$

   

$

125

   

$

150

 
                 
   

Nine Months Ended September 30,

   

2021

 

2020

   

Cost of revenues

 

Operating
expenses

 

Cost of revenues

 

Operating
expenses

 

Sales-based

$

1,176

   

$

   

$

792

   

$

 
 

Development-based

   

5,030

   

   

1,677

 
 

Total

$

1,176

   

$

5,030

   

$

792

   

$

1,677

 
   

(3)

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

   
   

Three Months Ended September 30,

   

2021

 

2020

   

Cost of revenues

 

Operating
expenses

 

Cost of revenues

 

Operating
expenses

 

Continuity and separation benefits

$

(16,106)

   

$

4,823

   

$

32,048

   

$

25,906

 
 

Accelerated depreciation

5,128

   

1,223

   

4,502

   

1,789

 
 

Other, including strategic review initiatives

719

   

24,042

   

   

3,447

 
 

Total

$

(10,259)

   

$

30,088

   

$

36,550

   

$

31,142

 
                 
   

Nine Months Ended September 30,

   

2021

 

2020

   

Cost of revenues

 

Operating
expenses

 

Cost of revenues

 

Operating
expenses

 

Continuity and separation benefits

$

(13,827)

   

$

12,660

   

$

33,190

   

$

42,681

 
 

Accelerated depreciation

17,322

   

5,008

   

10,528

   

4,148

 
 

Other, including strategic review initiatives

6,512

   

30,957

   

(26)

   

9,835

 
 

Total

$

10,007

   

$

48,625

   

$

43,692

   

$

56,664

 
   
 

The amounts in the tables above include adjustments related to previously announced restructuring activities, certain continuity and transitional compensation arrangements, certain other cost reduction initiatives and certain strategic review initiatives.

   

(4)

To exclude adjustments to accruals for litigation-related settlement charges and certain settlement proceeds related to suits filed by subsidiaries.

   

(5)

To exclude opioid-related legal expenses.

   

(6)

Adjustments for asset impairment charges included the following (in thousands):

   
   

Three Months Ended September 30,

 

Nine Months Ended September 30,

   

2021

 

2020

 

2021

 

2020

 

Goodwill impairment charges

$

   

$

   

$

   

$

32,786

 
 

Other intangible asset impairment charges

   

2,020

   

7,811

   

65,771

 
 

Property, plant and equipment impairment charges

   

   

427

   

1,248

 
 

Operating lease right-of-use asset impairment charges

   

6,392

   

   

6,392

 
 

Disposal group impairment charges

42,155

   

   

42,155

   

 
 

Total

$

42,155

   

$

8,412

   

$

50,393

   

$

106,197

 
   

(7)

To exclude integration costs.

   

(8)

To exclude the impact of changes in the fair value of contingent consideration liabilities resulting from changes to estimates regarding the timing and amount of the future revenues of the underlying products and changes in other assumptions impacting the probability of incurring, and extent to which the Company could incur, related contingent obligations.

   

(9)

To exclude the loss on the extinguishment of debt associated with the Company's March 2021 refinancing transactions.

   

(10)

The Other rows included in each of the above reconciliations of GAAP financial measures to non-GAAP financial measures (except for the reconciliations of Net (loss) income (GAAP) to Adjusted EBITDA (non-GAAP)) include the following (in thousands):

   
   

Three Months Ended September 30,

   

2021

 

2020

   

Operating
expenses

 

Other non-
operating
expenses

 

Operating
expenses

 

Other non-
operating
expenses

 

Foreign currency impact related to the re-measurement of intercompany debt instruments

$

   

$

(2,036)

   

$

   

$

1,663

 
 

Debt modification costs

   

   

369

   

 
 

Other miscellaneous

   

(4,890)

   

   

(3,930)

 
 

Total

$

   

$

(6,926)

   

$

369

   

$

(2,267)

 
                 
   

Nine Months Ended September 30,

   

2021

 

2020

   

Operating
expenses

 

Other non-
operating
expenses

 

Operating
expenses

 

Other non-
operating
expenses

 

Foreign currency impact related to the re-measurement of intercompany debt instruments

$

   

$

466

   

$

   

$

(2,426)

 
 

Gain on sale of business and other assets