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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

  

2022
 

Cost of revenues

  

Operating

expenses