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ENDO REPORTS THIRD-QUARTER 2023 FINANCIAL RESULTS

November 6, 2023
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DUBLIN, Nov. 6, 2023 /PRNewswire/ -- Endo International plc (OTC: ENDPQ) today reported financial results for the third-quarter ended September 30, 2023.

THIRD-QUARTER FINANCIAL PERFORMANCE

(in thousands, except per share amounts)

 

Three Months Ended September 30,

     

Nine Months Ended September 30,

   
 

2023

 

2022

 

Change

 

2023

 

2022

 

Change

Total Revenues, Net

$        451,665

 

$        541,690

 

(17) %

 

$     1,513,784

 

$     1,763,063

 

(14) %

Reported Loss from Continuing

Operations

$         (27,936)

 

$       (718,272)

 

(96) %

 

$           (6,748)

 

$    (2,664,455)

 

NM

Reported Diluted Weighted Average

Shares

235,220

 

235,160

 

— %

 

235,219

 

234,719

 

— %

Reported Diluted Net Loss per Share

from Continuing Operations

$             (0.12)

 

$             (3.05)

 

(96) %

 

$             (0.03)

 

$           (11.35)

 

NM

Reported Net Loss

$         (28,483)

 

$       (722,169)

 

(96) %

 

$           (8,324)

 

$    (2,679,570)

 

NM

Adjusted Income from Continuing

Operations (2)(3)

$        131,441

 

$        111,858

 

18 %

 

$        555,474

 

$        274,329

 

NM

Adjusted Diluted Weighted Average

Shares (1)(2)

235,220

 

236,183

 

— %

 

235,515

 

236,372

 

— %

Adjusted Diluted Net Income per

Share from Continuing Operations (2)(3)

$              0.56

 

$              0.47

 

19 %

 

$              2.36

 

$              1.16

 

NM

Adjusted EBITDA (2)(3)

$        143,050

 

$        210,816

 

(32) %

 

$        595,497

 

$        681,948

 

(13) %

__________

(1)

Reported Diluted Net 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 $452 million in third-quarter 2023, a decrease of 17% compared to $542 million in third-quarter 2022. This decrease was primarily attributable to decreased revenues from the Generic Pharmaceuticals and Sterile Injectables segments.

Reported loss from continuing operations in third-quarter 2023 was $28 million compared to reported loss from continuing operations of $718 million in third-quarter 2022. This change was primarily due to lower litigation-related and asset impairment charges and lower interest expense as a result of the August 2022 Chapter 11 filing.

Adjusted income from continuing operations in third-quarter 2023 was $131 million compared to $112 million in third-quarter 2022. This change was primarily driven by lower interest and adjusted operating expenses which were partially offset by decreased revenues.

BRANDED PHARMACEUTICALS SEGMENT

Third-quarter 2023 Branded Pharmaceuticals segment revenues were $203 million compared to $204 million during third-quarter 2022.

Specialty Products revenues increased 3% to $150 million in third-quarter 2023 compared to $146 million in third-quarter 2022. This change was primarily due to an increase in XIAFLEX® and Other Specialty revenues, partially offset by a decrease in SUPPRELIN® LA revenues mainly driven by lower average net selling price as a result of business mix and lower overall market volumes. Third-quarter 2023 XIAFLEX® revenues were $113 million, a 9% increase compared to third-quarter 2022 driven by increased net selling price and increased volumes. 

Established Products revenues decreased 7% to $53 million in third-quarter 2023 compared to $57 million in third-quarter 2022 due primarily to product discontinuations.

STERILE INJECTABLES SEGMENT

Third-quarter 2023 Sterile Injectables segment revenues were $95 million, a decrease of 20% compared to $119 million during third-quarter 2022. This change was primarily attributable to decreased VASOSTRICT® revenues due to lower price resulting from generic competition.

GENERIC PHARMACEUTICALS SEGMENT

Third-quarter 2023 Generic Pharmaceuticals segment revenues were $134 million, a decrease of 33% compared to $201 million during third-quarter 2022. This decrease was primarily attributable to competitive pressure on varenicline tablets, the generic version of Chantix®, and lubiprostone capsules, the authorized generic of Mallinckrodt's Amitiza®, partially offset by revenue from dexlansoprazole delayed release capsules, the generic version of Dexilant®, which launched during fourth-quarter 2022.

During third-quarter 2023, two additional generic varenicline competitors entered the market, and an additional competitor entered in early fourth-quarter 2023.

INTERNATIONAL PHARMACEUTICALS SEGMENT

Third-quarter 2023 International Pharmaceuticals segment revenues were $19 million, essentially unchanged compared to $18 million during third-quarter 2022.

FINANCIAL EXPECTATIONS

Endo's third-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 dexlansoprazole delayed release capsules due to fewer than expected competitors, partially offset by lower varenicline revenues due to increased competition. Additionally, expected full-year 2023 adjusted financial results reflect lower-than-expected XIAFLEX® demand and SUPPRELIN® LA net selling price as well as better than expected Sterile Injectables performance.

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

$1,975 - $2,035

 

~$1,990

EBITDA

$750 - $790

 

~$750

Assumptions:

     

Segment Revenues:

     

Branded Pharmaceuticals

~$870

 

~$845

Sterile Injectables

~$430

 

~$440

Generic Pharmaceuticals

$610 - $670

 

~$635

International Pharmaceuticals

~$65

 

~$70

Gross Margin as a Percentage of Total Revenues, Net

~67%

 

~66%

Operating Expenses

~$635

 

~$625

 

CASH, CASH FLOW AND OTHER UPDATES

As of September 30, 2023, the Company had approximately $823 million in unrestricted cash and cash equivalents. Third-quarter 2023 net cash provided by operating activities was approximately $131 million compared to approximately $92 million net cash provided by operating activities during third-quarter 2022. This increase was primarily attributable to a decrease in cash interest payments and certain one-time payments made in third-quarter 2022 but not in third-quarter 2023, partially offset by a decrease in adjusted EBITDA.

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 nine months ended September 30, 2023 and 2022 (dollars in thousands):

 

Three Months Ended September 30,

 

Percent

Growth

 

Nine Months Ended September 30,

 

Percent

Growth

 

2023

 

2022

   

2023

 

2022

 

Branded Pharmaceuticals:

                     

Specialty Products:

                     

  XIAFLEX®

$         113,053

 

$         104,014

 

9 %

 

$         327,254

 

$         324,376

 

1 %

  SUPPRELIN® LA

21,590

 

31,283

 

(31) %

 

73,390

 

84,852

 

(14) %

  Other Specialty (1)

15,749

 

11,033

 

43 %

 

57,282

 

50,023

 

15 %

Total Specialty Products

$         150,392

 

$         146,330

 

3 %

 

$         457,926

 

$         459,251

 

— %

Established Products:

                     

  PERCOCET®

$           26,290

 

$           25,052

 

5 %

 

$           78,791

 

$           77,483

 

2 %

  TESTOPEL®

9,610

 

9,430

 

2 %

 

32,199

 

28,331

 

14 %

  Other Established (2)

17,076

 

22,689

 

(25) %

 

44,402

 

62,249

 

(29) %

Total Established Products

$           52,976

 

$           57,171

 

(7) %

 

$         155,392

 

$         168,063

 

(8) %

Total Branded Pharmaceuticals (3)

$         203,368

 

$         203,501

 

— %

 

$         613,318

 

$         627,314

 

(2) %

Sterile Injectables:

                     

  ADRENALIN®

$           22,873

 

$           24,917

 

(8) %

 

$           75,581

 

$           85,514

 

(12) %

  VASOSTRICT®

20,827

 

33,697

 

(38) %

 

71,197

 

225,217

 

(68) %

  Other Sterile Injectables (4)

51,681

 

60,079

 

(14) %

 

186,886

 

171,161

 

9 %

Total Sterile Injectables (3)

$           95,381

 

$         118,693

 

(20) %

 

$         333,664

 

$         481,892

 

(31) %

Total Generic Pharmaceuticals (5)

$         134,382

 

$         201,435

 

(33) %

 

$         511,141

 

$         590,756

 

(13) %

Total International Pharmaceuticals (6)

$           18,534

 

$           18,061

 

3 %

 

$           55,661

 

$           63,101

 

(12) %

Total revenues, net

$         451,665

 

$         541,690

 

(17) %

 

$      1,513,784

 

$      1,763,063

 

(14) %

__________

(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 nine months ended September 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®. No 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% for the nine months ended September 30, 2023, and 15% and 13% for the three and nine months ended September 30, 2022, respectively, of consolidated total revenues. During the three and nine months ended September 30, 2023, Dexlansoprazole delayed release capsules (Endo's generic version of Takeda Pharmaceuticals USA, Inc.'s Dexilant®), which launched in November 2022, made up 7% and 6%, respectively, of consolidated total revenues. During the three months ended September 30, 2022, lubiprostone capsules (the authorized generic of Mallinckrodt plc's Amitiza®), which launched in January 2021, 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 nine months ended September 30, 2023 and 2022 (in thousands, except per share data):

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2023

 

2022

 

2023

 

2022

TOTAL REVENUES, NET

$         451,665

 

$         541,690

 

$      1,513,784

 

$      1,763,063

COSTS AND EXPENSES:

             

Cost of revenues

230,286

 

261,232

 

696,880

 

798,233

Selling, general and administrative

138,772

 

192,221

 

427,294

 

600,212

Research and development

31,582

 

31,885

 

87,322

 

97,803

Acquired in-process research and development

 

800

 

 

68,700

Litigation-related and other contingencies, net

11,104

 

419,376

 

54,317

 

444,738

Asset impairment charges

 

150,200

 

146

 

1,951,216

Acquisition-related and integration items, net

1,062

 

(1,399)

 

1,824

 

(951)

Interest expense, net

10

 

74,753

 

239

 

349,486

Reorganization items, net

57,960

 

124,212

 

227,579

 

124,212

Other income, net

(2,217)

 

(3,998)

 

(2,163)

 

(22,147)

(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX

$          (16,894)

 

$       (707,592)

 

$          20,346

 

$    (2,648,439)

INCOME TAX EXPENSE

11,042

 

10,680

 

27,094

 

16,016

LOSS FROM CONTINUING OPERATIONS

$          (27,936)

 

$       (718,272)

 

$           (6,748)

 

$    (2,664,455)

DISCONTINUED OPERATIONS, NET OF TAX

(547)

 

(3,897)

 

(1,576)

 

(15,115)

NET LOSS

$          (28,483)

 

$       (722,169)

 

$           (8,324)

 

$    (2,679,570)

NET (LOSS) INCOME PER SHARE—BASIC:

             

Continuing operations

$              (0.12)

 

$             (3.05)

 

$             (0.03)

 

$           (11.35)

Discontinued operations

 

(0.02)

 

(0.01)

 

(0.07)

Basic

$              (0.12)

 

$(3.07)

 

$             (0.04)

 

$           (11.42)

NET (LOSS) INCOME PER SHARE—DILUTED:

             

Continuing operations

$              (0.12)

 

$             (3.05)

 

$             (0.03)

 

$           (11.35)

Discontinued operations

 

(0.02)

 

(0.01)

 

(0.07)

Diluted

$              (0.12)

 

$             (3.07)

 

$             (0.04)

 

$           (11.42)

WEIGHTED AVERAGE SHARES:

             

Basic

235,220

 

235,160

 

235,219

 

234,719

Diluted

235,220

 

235,160

 

235,219

 

234,719

 

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

 

September 30,

2023

 

December 31,

2022

ASSETS

     

CURRENT ASSETS:

     

Cash and cash equivalents

$         823,305

 

$      1,018,883

Restricted cash and cash equivalents

167,939

 

145,358

Accounts receivable

387,485

 

493,988

Inventories, net

273,831

 

274,499

Other current assets

100,716

 

144,040

  Total current assets

$      1,753,276

 

$      2,076,768

TOTAL NON-CURRENT ASSETS

3,502,519

 

3,681,169

TOTAL ASSETS

$      5,255,795

 

$      5,757,937

LIABILITIES AND SHAREHOLDERS' DEFICIT

     

CURRENT LIABILITIES:

     

Accounts payable and accrued expenses, including legal settlement accruals

$         562,628

 

$         687,183

Other current liabilities

2,004

 

2,444

  Total current liabilities

$         564,632

 

$         689,627

OTHER LIABILITIES

63,786

 

61,700

LIABILITIES SUBJECT TO COMPROMISE

8,786,571

 

9,168,782

SHAREHOLDERS' DEFICIT

(4,159,194)

 

(4,162,172)

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT

$      5,255,795

 

$      5,757,937

 

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

 

Nine Months Ended September 30,

 

2023

 

2022

OPERATING ACTIVITIES:

     

Net loss

$           (8,324)

 

$      (2,679,570)

Adjustments to reconcile Net loss to Net cash provided by operating activities:

     

  Depreciation and amortization

232,090

 

302,338

  Asset impairment charges

146

 

1,951,216

  Non-cash reorganization items, net

 

89,197

  Other, including cash payments to claimants from Qualified Settlement Funds

96,129

 

496,430

  Net cash provided by operating activities

$         320,041

 

$          159,611

INVESTING ACTIVITIES:

     

Capital expenditures, excluding capitalized interest

$          (74,245)

 

$          (77,865)

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

cash acquired

 

(89,520)

Proceeds from sale of business and other assets

3,538

 

22,378

Other

32,560

 

10,461

  Net cash used in investing activities

$          (38,147)

 

$        (134,546)

FINANCING ACTIVITIES:

     

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

$        (450,518)

 

$        (363,486)

Other

(4,353)

 

(3,837)

  Net cash used in financing activities

$        (454,871)

 

$        (367,323)

Effect of foreign exchange rate

(20)

 

(4,674)

NET DECREASE IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND

RESTRICTED CASH EQUIVALENTS

$        (172,997)

 

$        (346,932)

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

$       1,076,244

 

$       1,284,378

__________

(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 loss (GAAP) to Adjusted EBITDA (non-GAAP) for the three and nine months ended September 30, 2023 and 2022 (in thousands):

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2023

 

2022

 

2023

 

2022

Net loss (GAAP)

$          (28,483)

 

$       (722,169)

 

$           (8,324)

 

$    (2,679,570)

Income tax expense

11,042

 

10,680

 

27,094

 

16,016

Interest expense, net

10

 

74,753

 

239

 

349,486

Depreciation and amortization (1)

77,087

 

96,114

 

232,090

 

298,514

EBITDA (non-GAAP)

$           59,656

 

$       (540,622)

 

$         251,099

 

$    (2,015,554)

Amounts related to continuity and separation benefits,

cost reductions and strategic review initiatives (2)

10,764

 

44,029

 

36,718

 

139,025

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

11,104

 

419,376

 

54,317

 

444,738

Certain legal costs (4)

1,514

 

8,052

 

5,187

 

31,322

Asset impairment charges (5)

 

150,200

 

146

 

1,951,216

Fair value of contingent consideration (6)

1,062

 

(1,399)

 

1,824

 

(951)

Share-based compensation (1)

 

5,371

 

2,091

 

13,021

Other income, net (7)

(2,217)

 

(3,998)

 

(2,163)

 

(22,147)

Reorganization items, net (8)

57,960

 

124,212

 

227,579

 

124,212

Other (9)

2,660

 

1,698

 

17,123

 

1,951

Discontinued operations, net of tax (10)

547

 

3,897

 

1,576

 

15,115

Adjusted EBITDA (non-GAAP) (13)

$         143,050

 

$         210,816

 

$         595,497

 

$         681,948

 

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

The following table provides a reconciliation of the Company's Loss from continuing operations (GAAP) to Adjusted income from continuing operations (non-GAAP) for the three and nine months ended September 30, 2023 and 2022 (in thousands):

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2023

 

2022

 

2023

 

2022

Loss from continuing operations (GAAP)

$             (27,936)

 

$       (718,272)

 

$           (6,748)

 

$      (2,664,455)

Non-GAAP adjustments:

             

  Amortization of intangible assets (11)

64,429

 

84,042

 

194,110

 

261,844

  Amounts related to continuity and separation benefits,

  cost reductions and strategic review initiatives (2)

10,764

 

44,029

 

36,718

 

139,025

  Certain litigation-related and other contingencies, net

   (3)

11,104

 

419,376

 

54,317

 

444,738

  Certain legal costs (4)

1,514

 

8,052

 

5,187

 

31,322

  Asset impairment charges (5)

 

150,200

 

146

 

1,951,216

  Fair value of contingent consideration (6)

1,062

 

(1,399)

 

1,824

 

(951)

  Reorganization items, net (8)

57,960

 

124,212

 

227,579

 

124,212

  Other (9)

456

 

(5,111)

 

17,126

 

(22,958)

  Tax adjustments (12)

12,088

 

6,729

 

25,215

 

10,336

Adjusted income from continuing operations (non-GAAP)

(13)

$         131,441

 

$         111,858

 

$         555,474

 

$         274,329

 

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

Three Months Ended September 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

 

(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)

$  451,665

 

$  230,286

 

$  221,379

 

49.0 %

 

$  182,520

 

40.4 %

 

$      38,859

 

8.6 %

 

$    55,753

 

$     (16,894)

 

$  11,042

 

(65.4) %

 

$      (27,936)

 

$          (547)

 

$     (28,483)

 

$       (0.12)

Items impacting

comparability:

                                                             

Amortization of

intangible assets (11)

 

(64,429)

 

64,429

     

     

64,429

     

 

64,429

 

     

64,429

 

 

64,429

   

Amounts related to

continuity and

separation benefits,

cost reductions and

strategic review

initiatives (2)

 

(1,342)

 

1,342

     

(9,422)

     

10,764

     

 

10,764

 

     

10,764

 

 

10,764

   

Certain litigation-

related and other

contingencies, net (3)

 

 

     

(11,104)

     

11,104

     

 

11,104

 

     

11,104

 

 

11,104

   

Certain legal costs (4)

 

 

     

(1,514)

     

1,514

     

 

1,514

 

     

1,514

 

 

1,514

   

Fair value of

contingent

consideration (6)

 

 

     

(1,062)

     

1,062

     

 

1,062

 

     

1,062

 

 

1,062

   

Reorganization items,

net (8)

 

 

     

     

     

(57,960)

 

57,960

 

     

57,960

 

 

57,960

   

Other (9)

 

(125)

 

125

     

(2,534)

     

2,659

     

2,203

 

456

 

     

456

 

 

456

   

Tax adjustments (12)

 

 

     

     

     

 

 

(12,088)

     

12,088

 

 

12,088

   

Discontinued

operations, net of tax

(10)

 

 

     

     

     

 

 

     

 

547

 

547

   

After considering items

(non-GAAP) (13)

$  451,665

 

$  164,390

 

$  287,275

 

63.6 %

 

$  156,884

 

34.7 %

 

$     130,391

 

28.9 %

 

$          (4)

 

$     130,395

 

$    (1,046)

 

(0.8) %

 

$     131,441

 

$             —

 

$    131,441

 

$       0.56

 

Three Months Ended September 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)

$  541,690

 

$  261,232

 

$  280,458

 

51.8 %

 

$  793,083

 

146.4 %

 

$   (512,625)

 

(94.6) %

 

$  194,967

 

$   (707,592)

 

$    10,680

 

(1.5) %

 

$   (718,272)

 

$       (3,897)

 

$   (722,169)

 

$      (3.05)

Items impacting

comparability:

                                                             

Amortization of

intangible assets (11)

 

(84,042)

 

84,042

     

     

84,042

     

 

84,042

 

     

84,042

 

 

84,042

   

Amounts related to

continuity and

separation benefits,

cost reductions and

strategic review

initiatives (2)

 

(2,809)

 

2,809

     

(41,220)

     

44,029

     

 

44,029

 

     

44,029

 

 

44,029

   

Certain litigation-

related and other

contingencies, net (3)

 

 

     

(419,376)

     

419,376

     

 

419,376

 

     

419,376

 

 

419,376

   

Certain legal costs (4)

 

 

     

(8,052)

     

8,052

     

 

8,052

 

     

8,052

 

 

8,052

   

Asset impairment

charges (5)

 

 

     

(150,200)

     

150,200

     

 

150,200

 

     

150,200

 

 

150,200

   

Fair value of

contingent

consideration (6)

 

 

     

1,399

     

(1,399)

     

 

(1,399)

 

     

(1,399)

 

 

(1,399)

   

Reorganization items,

net (8)

 

 

     

     

     

(124,212)

 

124,212

 

     

124,212

 

 

124,212

   

Other (9)

 

(125)

 

125

     

(1,570)

     

1,695

     

6,806

 

(5,111)

 

     

(5,111)

 

 

(5,111)

   

Tax adjustments (12)

 

 

     

     

     

 

 

(6,729)

     

6,729

 

 

6,729

   

Discontinued

operations, net of tax

(10)

 

 

     

     

     

 

 

     

 

3,897

 

3,897

   

After considering items

(non-GAAP) (13)

$  541,690

 

$  174,256

 

$  367,434

 

67.8 %

 

$  174,064

 

32.1 %

 

$     193,370

 

35.7 %

 

$    77,561

 

$     115,809

 

$      3,951

 

3.4 %

 

$     111,858

 

$             —

 

$    111,858

 

$       0.47

 

Nine Months Ended September 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

 

(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)

$  1,513,784

 

$  696,880

 

$  816,904

 

54.0 %

 

$  570,903

 

37.7 %

 

$     246,001

 

16.3 %

 

$  225,655

 

$      20,346

 

$    27,094

 

133.2 %

 

$      (6,748)

 

$       (1,576)

 

$      (8,324)

 

$       (0.03)

Items impacting

comparability:

                                                             

Amortization of

intangible assets (11)

 

(194,110)

 

194,110

     

     

194,110

     

 

194,110

 

     

194,110

 

 

194,110

   

Amounts related to

continuity and

separation benefits,

cost reductions and

strategic review

initiatives (2)

 

(3,812)

 

3,812

     

(32,906)

     

36,718

     

 

36,718

 

     

36,718

 

 

36,718

   

Certain litigation-

related and other

contingencies, net (3)

 

 

     

(54,317)

     

54,317

     

 

54,317

 

     

54,317

 

 

54,317

   

Certain legal costs (4)

 

 

     

(5,187)

     

5,187

     

 

5,187

 

     

5,187

 

 

5,187

   

Asset impairment

charges (5)

 

 

     

(146)

     

146

     

 

146

 

     

146

 

 

146

   

Fair value of

contingent

consideration (6)

 

 

     

(1,824)

     

1,824

     

 

1,824

 

     

1,824

 

 

1,824

   

Reorganization items,

net (8)

 

 

     

     

     

(227,579)

 

227,579

 

     

227,579

 

 

227,579

   

Other (9)

 

(903)

 

903

     

(16,220)

     

17,123

     

(3)

 

17,126

 

     

17,126

 

 

17,126

   

Tax adjustments (12)

 

 

     

     

     

 

 

(25,215)

     

25,215

 

 

25,215

   

Discontinued

operations, net of tax

(10)

 

 

     

     

     

 

 

     

 

1,576

 

1,576

   

After considering items

(non-GAAP) (13)

$  1,513,784

 

$  498,055

 

$  1,015,729

 

67.1 %

 

$  460,303

 

30.4 %

 

$     555,426

 

36.7 %

 

$    (1,927)

 

$     557,353

 

$      1,879

 

0.3 %

 

$     555,474

 

$             —

 

$     555,474

 

$       2.36

 

Nine Months Ended September 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)

$  1,763,063

 

$  798,233

 

$  964,830

 

54.7 %

 

$  3,161,718

 

179.3 %

 

$ (2,196,888)

 

(124.6) %

 

$  451,551

 

$ (2,648,439)

 

$    16,016

 

(0.6) %

 

$ (2,664,455)

 

$     (15,115)

 

$ (2,679,570)

 

$    (11.35)

Items impacting

comparability:

                                                             

Amortization of

intangible assets (11)

 

(261,844)

 

261,844

     

     

261,844

     

 

261,844

 

     

261,844

 

 

261,844

   

Amounts related to

continuity and

separation benefits,

cost reductions and

strategic review

initiatives (2)

 

(23,653)

 

23,653

     

(115,372)

     

139,025

     

 

139,025

 

     

139,025

 

 

139,025

   

Certain litigation-

related and other

contingencies, net (3)

 

 

     

(444,738)

     

444,738

     

 

444,738

 

     

444,738

 

 

444,738

   

Certain legal costs (4)

 

 

     

(31,322)

     

31,322

     

 

31,322

 

     

31,322

 

 

31,322

   

Asset impairment

charges (5)

 

 

     

(1,951,216)

     

1,951,216

     

 

1,951,216

 

     

1,951,216

 

 

1,951,216

   

Fair value of

contingent

consideration (6)

 

 

     

951

     

(951)

     

 

(951)

 

     

(951)

 

 

(951)

   

Reorganization items,

net (8)

 

 

     

     

     

(124,212)

 

124,212

 

     

124,212

 

 

124,212

   

Other (9)

 

(375)

 

375

     

(1,570)

     

1,945

     

24,903

 

(22,958)

 

     

(22,958)

 

 

(22,958)

   

Tax adjustments (12)

 

 

     

     

     

 

 

(10,336)

     

10,336

 

 

10,336

   

Discontinued

operations,

net of tax (10)

 

 

     

     

     

 

 

     

 

15,115

 

15,115

   

After considering items

(non-GAAP) (13)

$  1,763,063

 

$  512,361

 

$  1,250,702

 

70.9 %

 

$  618,451

 

35.1 %

 

$     632,251

 

35.9 %

 

$  352,242

 

$     280,009

 

$      5,680

 

2.0 %

 

$     274,329

 

$             —

 

$     274,329

 

$       1.16

 

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, 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 September 30,

 

2023