endp-20200805
0001593034false00015930342020-08-052020-08-05

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________
FORM 8-K
_______________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 5, 2020
_______________________________
Endo International plc
(Exact Name of Registrant as Specified in Its Charter)
_______________________________
Ireland
001-36326
68-0683755
(State or other jurisdiction
of incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
First Floor, Minerva House, Simmonscourt Road
Ballsbridge, Dublin 4,
Ireland
Not Applicable
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code 011-353-1-268-2000
Not Applicable
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Ordinary shares, nominal value $0.0001 per shareENDPThe Nasdaq Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 2.02. Results of Operations and Financial Condition.
On August 5, 2020, Endo International plc (the “Company,” “Endo,” or “we”) issued an earnings release announcing its financial results for the three and six months ended June 30, 2020 (the “Earnings Release”). A copy of the Earnings Release is attached as Exhibit 99.1 hereto and is incorporated herein by reference.
The Company utilizes certain financial measures that are not prescribed by or prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). The Company utilizes these financial measures, commonly referred to as “non-GAAP,” because (i) they are used by the Company, along with financial measures in accordance with GAAP, to evaluate the Company’s operating performance; (ii) the Company believes that they will be used by certain investors to measure the Company’s operating results; (iii) the Compensation Committee of the Company's Board of Directors uses Adjusted diluted net income per share from continuing operations and Adjusted EBITDA, or measures derived from such, in assessing the performance and compensation of substantially all of the Company's employees, including executive officers; and (iv) the Company’s leverage ratio, as defined by the Company’s credit agreement, is calculated based on non-GAAP financial measures. The Company believes that presenting these non-GAAP financial measures provides useful information about the Company’s performance across reporting periods on a consistent basis by excluding certain items, which may be favorable or unfavorable, pursuant to the procedure described in the succeeding paragraph.
The initial identification and review of the non-GAAP adjustments necessary to arrive at these non-GAAP financial measures are performed by a team of finance professionals that include the Chief Accounting Officer and segment finance leaders in accordance with the Company’s Adjusted Income Statement Policy, which is reviewed and approved by the Audit Committee of the Company’s Board of Directors. Company tax professionals review and determine the tax effect of adjusted pre-tax income at applicable tax rates and other tax adjustments as described below. Proposed adjustments, along with any items considered but excluded, are presented to the Chief Accounting Officer, Chief Executive Officer and/or the Chief Financial Officer for their consideration. In turn, the non-GAAP adjustments are presented to the Audit Committee on a quarterly basis as part of the Company’s standard procedures for preparation and review of the earnings release and other quarterly materials.
These non-GAAP financial measures should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. The Company's definition of these non-GAAP financial measures may differ from similarly titled measures used by others. The definitions of the most commonly used non-GAAP financial measures are presented below.
Adjusted income from continuing operations
Adjusted income from continuing operations represents Income (loss) from continuing operations prepared in accordance with GAAP and adjusted for certain items. Adjustments to GAAP amounts may include, but are not limited to, certain upfront and milestone payments to partners; acquisition-related and integration items, including transaction costs and changes in the fair value of contingent consideration; cost reduction and integration-related initiatives such as separation benefits, continuity payments, other exit costs and certain costs associated with integrating an acquired company's operations; asset impairment charges; amortization of intangible assets; inventory step-up recorded as part of our acquisitions; litigation-related and other contingent matters; certain legal costs; gains or losses from early termination of debt; debt modification costs; gains or losses from the sales of businesses and other assets; foreign currency gains or losses on intercompany financing arrangements; the tax effect of adjusted pre-tax income at applicable tax rates and other tax adjustments; and certain other items.
Adjusted diluted net income per share from continuing operations and Adjusted diluted weighted average shares
Adjusted diluted net income per share from continuing operations represents Adjusted income from continuing operations divided by the number of Adjusted diluted weighted average shares.
Both GAAP and non-GAAP diluted Net income (loss) per share data is computed based on weighted average shares outstanding and, if there is net income from continuing operations (rather than net loss) during the period, the dilutive impact of share equivalents outstanding during the period. Diluted weighted average shares outstanding and Adjusted diluted weighted average shares outstanding are calculated on the same basis except for the net income or loss figure used in determining whether to include such dilutive impact.
Adjusted gross margin
Adjusted gross margin represents total revenues less cost of revenues prepared in accordance with GAAP and adjusted for the items enumerated above under the heading “Adjusted income from continuing operations,” to the extent such items relate to cost of revenues. Such items may include, but are not limited to, certain upfront and milestone payments to partners; cost reduction and integration-related initiatives such as separation benefits, continuity payments, other exit costs and certain costs associated with integrating an acquired company's operations; amortization of intangible assets; inventory step-up recorded as part of our acquisitions; and certain other items.



Adjusted operating expenses
Adjusted operating expenses represent operating expenses prepared in accordance with GAAP and adjusted for the items enumerated above under the heading “Adjusted income from continuing operations,” to the extent such items relate to operating expenses. Such items may include, but are not limited to, certain upfront and milestone payments to partners; acquisition-related and integration items, including transaction costs and changes in the fair value of contingent consideration; cost reduction and integration-related initiatives such as separation benefits, continuity payments, other exit costs and certain costs associated with integrating an acquired company's operations; asset impairment charges; amortization of intangible assets; inventory step-up recorded as part of our acquisitions; litigation-related and other contingent matters; certain legal costs; debt modification costs; and certain other items.
Adjusted interest expense
Adjusted interest expense represents interest expense, net, prepared in accordance with GAAP, adjusted for certain non-cash interest expense.
Adjusted income taxes and Adjusted effective tax rate
Adjusted income taxes are calculated by tax effecting adjusted pre-tax income and permanent book-tax differences at the applicable effective tax rate that will be determined by reference to statutory tax rates in the relevant jurisdictions in which the Company operates. Adjusted income taxes include current and deferred income tax expense commensurate with the non-GAAP measure of profitability. Adjustments are then made for certain items relating to prior years and for tax planning actions that are expected to be distortive to the underlying effective tax rate and trend in the effective tax rate. The most directly comparable GAAP financial measure for Adjusted income taxes is Income tax (benefit) expense, prepared in accordance with GAAP. The Adjusted effective tax rate represents the rate generated when dividing Adjusted income taxes by the amount of adjusted pre-tax income.
EBITDA and Adjusted EBITDA
EBITDA represents Net income (loss) before Interest expense, net; Income tax (benefit) expense; Depreciation; and Amortization, each prepared in accordance with GAAP. Adjusted EBITDA further adjusts EBITDA by excluding other (income) expense, net; share-based compensation; certain upfront and milestone payments to partners; acquisition-related and integration items, including transaction costs and changes in the fair value of contingent consideration; cost reduction and integration-related initiatives such as separation benefits, continuity payments, other exit costs and certain costs associated with integrating an acquired company's operations; asset impairment charges; inventory step-up recorded as part of our acquisitions; litigation-related and other contingent matters; certain legal costs; debt modification costs; discontinued operations, net of tax; and certain other items.
Net Debt and Net Debt Leverage Ratio
Net debt is calculated as the aggregate carrying amount of debt outstanding less unrestricted cash and cash equivalents.
The net debt leverage ratio is calculated as net debt divided by Adjusted EBITDA for the trailing twelve-month period.
Effective January 1, 2020, the Company revised its definition of its adjusted financial metrics to exclude certain legal costs. The Company believes that such costs are not indicative of business performance and that excluding them more accurately reflects the Company’s results and better enables management to compare financial results between periods. As a result of this change, the Company’s Adjusted income from continuing operations, Adjusted diluted net income per share from continuing operations, Adjusted operating expenses and Adjusted EBITDA now exclude opioid-related legal expenses. The amounts of such costs for the three months ended March 31, 2019, June 30, 2019, September 30, 2019 and December 31, 2019 were $16.7 million, $19.0 million, $14.6 million and $15.1 million, respectively. The amount for the year ended December 31, 2018 was $43.8 million.
Because adjusted financial measures exclude the effect of items that will increase or decrease the Company's reported results of operations, the Company strongly encourages investors to review the Company's consolidated financial statements and publicly filed reports in their entirety. Investors are also encouraged to review the reconciliation of the non-GAAP financial measures used in the Earnings Release to their most directly comparable GAAP financial measures as included in the Earnings Release. However, the Company does not provide reconciliations of projected non-GAAP financial measures to GAAP financial measures, nor does it provide comparable projected GAAP financial measures for such projected non-GAAP financial measures. The Company is unable to provide such reconciliations without unreasonable efforts due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including adjustments that could be made for asset impairments, contingent consideration adjustments, legal settlements, gains or losses on extinguishment of debt, adjustments to inventory and other charges reflected in the reconciliation of historic numbers, the amount of which could be significant.



The information in this Item 2.02 and in Exhibit 99.1 attached hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information contained in this Item 2.02 and in Exhibit 99.1 attached hereto shall not be incorporated into any registration statement or other document filed by the Registrant with the U.S. Securities and Exchange Commission under the Securities Act of 1933, whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
NumberDescription
99.1
104Cover Page Interactive Date File (embedded within the Inline XBRL document)



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
ENDO INTERNATIONAL PLC
By:/s/ Matthew J. Maletta
Name:Matthew J. Maletta
Title:Executive Vice President,
Chief Legal Officer and Company Secretary
Dated: August 5, 2020

Document

Exhibit 99.1
https://cdn.kscope.io/2538dff00ee675f06995a23eb98489b3-endoelogo11.jpg
ENDO REPORTS SECOND-QUARTER 2020 FINANCIAL RESULTS
— Revenues decreased 2% to $688 million compared to prior year —
— On July 6, 2020, U.S. FDA approved Qwo™ (collagenase clostridium histolyticum-aaes), the first injectable treatment for cellulite —
DUBLIN, August 5, 2020 -- Endo International plc (NASDAQ: ENDP) today reported financial results for the second quarter ended June 30, 2020.
“I’m proud of what our team delivered in the second quarter. Our Branded Pharmaceuticals segment performed better than previously guided as COVID-19 related restrictions and physician office closures began easing throughout the quarter. Additionally, our Sterile Injectables segment delivered strong revenue growth versus prior year as customers built significant inventory levels of products used to treat certain COVID-19 patients,” said Blaise Coleman, President and Chief Executive Officer at Endo. “I want to thank our team members for their tireless work and dedication to meeting our customers’ needs in a challenging environment.”
Mr. Coleman continued, “With the recent FDA approval of QWO and Endo’s impending entry into the US medical aesthetics market, we are ready to embark on the next phase of our transformation. We have evolved our strategic priorities to focus on expanding and enhancing our portfolio of life-enhancing products while accelerating new ways to better serve our customers and to improve productivity. We look forward to executing against these priorities as we seek to realize Endo’s full potential.”
SECOND-QUARTER FINANCIAL PERFORMANCE
(in thousands, except per share amounts)
Three Months Ended June 30,Six Months Ended June 30,
20202019 (1)Change20202019 (1)Change
Total Revenues, Net$687,588  $699,727  (2)%$1,507,993  $1,420,138  %
Reported Income (Loss) from Continuing Operations$17,610  $(98,052) NM$175,191  $(110,664) NM
Reported Diluted Weighted Average Shares233,681  226,221  %233,348  225,408  %
Reported Diluted Net Income (Loss) per Share from Continuing Operations$0.08  $(0.43) NM$0.75  $(0.49) NM
Reported Net Income (Loss)$10,558  $(106,005) NM$140,488  $(124,578) NM
Adjusted Income from Continuing Operations$151,700  $139,388  %$372,100  $278,161  34 %
Adjusted Diluted Weighted Average Shares (2)233,681  232,713  — %233,348  232,174  %
Adjusted Diluted Net Income per Share from Continuing Operations$0.65  $0.60  %$1.59  $1.20  33 %
Adjusted EBITDA$336,481  $326,084  %$757,607  $677,180  12 %
__________
(1)Certain prior period adjusted amounts have been revised as a result of a change in the Company’s definition of its adjusted financial metrics. Refer to the “Supplemental Financial Information” section below for additional discussion.
1


(2)Reported Diluted Net Income (Loss) per Share from continuing operations is computed based on weighted average shares outstanding and, if there is income from continuing operations during the period, the dilutive impact of ordinary share equivalents outstanding during the period. In the case of Adjusted Diluted Weighted Average Shares, Adjusted Income from Continuing Operations is used in determining whether to include such dilutive impact.
CONSOLIDATED RESULTS
Total revenues were $688 million in second-quarter 2020, a decrease of 2% compared to $700 million during the same period in 2019. This result was primarily attributable to decreased Branded Pharmaceuticals segment revenues due to reduced physician office activity and patient office visits compared to prior year because of the COVID-19 pandemic. This decrease was largely offset by an increase in Sterile Injectables segment revenues due to significant channel inventory stocking of products used to treat certain patients infected with COVID-19.
Reported income from continuing operations in second-quarter 2020 was $18 million compared to reported loss from continuing operations of $98 million during the same period in 2019. This result was primarily attributable to lower asset impairment charges. Reported diluted net income per share from continuing operations in second-quarter 2020 was $0.08 compared to reported diluted net loss per share from continuing operations of $0.43 in second-quarter 2019.
Adjusted income from continuing operations in second-quarter 2020 was $152 million compared to $139 million in second-quarter 2019. This increase was primarily attributable to lower second-quarter 2020 operating expenses. Adjusted diluted net income per share from continuing operations in second-quarter 2020 was $0.65 compared to $0.60 in second-quarter 2019.
BRANDED PHARMACEUTICALS SEGMENT
Second-quarter 2020 Branded Pharmaceuticals segment revenues were $130 million, a decrease of 38% compared to $209 million during second-quarter 2019. This decrease was primarily attributable to reduced volumes caused by the COVID-19 pandemic.
Specialty Products revenues decreased 45% to $69 million in second-quarter 2020 compared to $124 million in second-quarter 2019, with sales of XIAFLEX® decreasing 55% to $34 million compared to $75 million in second-quarter 2019. This decrease was primarily a result of physician office closures and a decline in patients electing to be treated because of the COVID-19 pandemic. Established Products revenues decreased 28% to $61 million in second-quarter 2020 compared to $85 million in second-quarter 2019 due to competitive pressures and a temporary product supply disruption, which has been resolved.
On July 6, 2020, the U.S. Food and Drug Administration (FDA) approved QWO (collagenase clostridium histolyticum-aaes) for the treatment of moderate to severe cellulite in the buttocks of adult women. QWO is the first FDA-approved injectable treatment for cellulite and is expected to be available throughout the United States beginning in spring 2021.
STERILE INJECTABLES SEGMENT
Second-quarter 2020 Sterile Injectables segment revenues were $319 million, an increase of 31% compared to $244 million during second-quarter 2019. This increase was primarily driven by significant channel inventory stocking of VASOSTRICT® in anticipation of treating vasodilatory shock in patients infected with COVID-19.
GENERIC PHARMACEUTICALS SEGMENT
Second-quarter 2020 Generic Pharmaceuticals segment revenues were $216 million, a decrease of 1% compared to $218 million during second-quarter 2019. This decrease was primarily attributable to continued competitive pressures on certain key products, which were partially offset by recent product launches.
2


INTERNATIONAL PHARMACEUTICALS SEGMENT
Second-quarter 2020 International Pharmaceuticals segment revenues decreased 20% to $23 million compared to $29 million during second-quarter 2019.
THIRD-QUARTER AND FULL YEAR 2020 GUIDANCE
Endo is providing financial guidance for third-quarter and full year 2020. The third-quarter financial guidance reflects the anticipated unfavorable impact of new competitive events in Endo’s Generic Pharmaceuticals segment and significant VASOSTRICT channel destocking. The outlook ranges below also reflect a number of other assumptions that are subject to change including, among other things, uncertainties related to the COVID-19 pandemic and the Company’s expectation of a return to more normalized customer purchasing patterns during the fourth quarter 2020. The Company estimates:
Third-Quarter 2020Full Year 2020
Total Revenues, Net$515M to $550M$2.60B to $2.70B
Adjusted EBITDA$175M to $200M$1.19B to $1.23B
Adjusted Diluted Net Income per Share from Continuing Operations$0.08 to $0.13$2.00 to $2.15
Adjusted Gross Margin~64.0% to ~65.0%~66.5% to ~67.0%
Adjusted Operating Expenses as a Percentage of Total Revenues, Net~34.0%~25.0% to ~25.5%
Adjusted Interest Expense~$140M~$530M to ~$535M
Adjusted Effective Tax Rate~7.5% to ~8.5%~14.0% to ~15.0%
Adjusted Diluted Weighted Average Shares~234M~234M
BALANCE SHEET, LIQUIDITY AND OTHER UPDATES
As of June 30, 2020, the Company had approximately $1.8 billion in unrestricted cash; $8.3 billion of debt; and a net debt to adjusted EBITDA ratio of 4.5.
Second-quarter 2020 cash provided by operating activities was $304 million, compared to $177 million of net cash provided by operating activities during second-quarter 2019.
CONFERENCE CALL INFORMATION
Endo will conduct a conference call with financial analysts to discuss this press release tomorrow at 7:00 a.m. EDT. The dial-in number to access the call is U.S./Canada (866) 497-0462, International (678) 509-7598, and the passcode is 2058864. Please dial in 10 minutes prior to the scheduled start time.
A replay of the call will be available from August 6, 2020 at 10:00 a.m. ET until 10:00 a.m. ET on August 13, 2020 by dialing U.S./Canada (855) 859-2056, International (404) 537-3406, and entering the passcode 2058864.
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.
3


FINANCIAL SCHEDULES
The following table presents Endo's unaudited Total revenues, net for the three and six months ended June 30, 2020 and 2019 (dollars in thousands):
Three Months Ended June 30,Percent GrowthSix Months Ended June 30,Percent Growth
2020201920202019
Branded Pharmaceuticals:
Specialty Products:
XIAFLEX®$33,783  $74,855  (55)%$122,855  $143,362  (14)%
SUPPRELIN® LA15,395  23,714  (35)%35,115  45,770  (23)%
Other Specialty (1)19,566  25,524  (23)%45,071  49,927  (10)%
Total Specialty Products$68,744  $124,093  (45)%$203,041  $239,059  (15)%
Established Products:
PERCOCET®$27,578  $28,878  (5)%$55,281  $59,638  (7)%
LIDODERM®7,056  9,051  (22)%14,279  17,120  (17)%
EDEX®6,604  7,662  (14)%15,172  13,633  11 %
Other Established (2)19,539  39,329  (50)%45,821  83,088  (45)%
Total Established Products$60,777  $84,920  (28)%$130,553  $173,479  (25)%
Total Branded Pharmaceuticals (3)$129,521  $209,013  (38)%$333,594  $412,538  (19)%
Sterile Injectables:
VASOSTRICT®$214,214  $116,026  85 %$417,118  $255,163  63 %
ADRENALIN®33,161  45,835  (28)%89,673  93,157  (4)%
Ertapenem for injection11,990  25,547  (53)%29,864  57,766  (48)%
APLISOL®6,511  15,530  (58)%16,378  27,911  (41)%
Other Sterile Injectables (4)53,338  41,342  29 %102,571  80,331  28 %
Total Sterile Injectables (3)$319,214  $244,280  31 %$655,604  $514,328  27 %
Total Generic Pharmaceuticals$215,879  $217,784  (1)%$467,162  $436,310  %
Total International Pharmaceuticals$22,974  $28,650  (20)%$51,633  $56,962  (9)%
Total revenues, net$687,588  $699,727  (2)%$1,507,993  $1,420,138  %
__________
(1)Products included within Other Specialty are NASCOBAL® Nasal Spray and AVEED®.
(2)Products included within Other Established include, but are not limited to, TESTOPEL®.
(3)Individual products presented above represent the top two performing products in each product category for either the three or six months ended June 30, 2020 and/or any product having revenues in excess of $25 million during any quarterly period in 2020 or 2019.
(4)Products included within Other Sterile Injectables include ephedrine sulfate injection and others.
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The following table presents unaudited Condensed Consolidated Statement of Operations data for the three and six months ended June 30, 2020 and 2019 (in thousands, except per share data):
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
TOTAL REVENUES, NET$687,588  $699,727  $1,507,993  $1,420,138  
COSTS AND EXPENSES:
Cost of revenues336,096  388,208  724,895  780,117  
Selling, general and administrative173,258  152,297  340,026  303,420  
Research and development30,495  26,348  62,110  59,834  
Litigation-related and other contingencies, net(8,572) 10,315  (25,748) 10,321  
Asset impairment charges—  88,438  97,785  253,886  
Acquisition-related and integration items, net6,045  (5,507) 18,507  (43,008) 
Interest expense, net129,164  134,809  262,041  267,484  
Gain on extinguishment of debt—  —  —  (119,828) 
Other (income) expense, net(4,150) (597) (18,124) 4,205  
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAX$25,252  $(94,584) $46,501  $(96,293) 
INCOME TAX EXPENSE (BENEFIT)7,642  3,468  (128,690) 14,371  
INCOME (LOSS) FROM CONTINUING OPERATIONS$17,610  $(98,052) $175,191  $(110,664) 
DISCONTINUED OPERATIONS, NET OF TAX(7,052) (7,953) (34,703) (13,914) 
NET INCOME (LOSS)$10,558  $(106,005) $140,488  $(124,578) 
NET INCOME (LOSS) PER SHARE—BASIC:
Continuing operations$0.08  $(0.43) $0.77  $(0.49) 
Discontinued operations(0.03) (0.04) (0.16) (0.06) 
Basic$0.05  $(0.47) $0.61  $(0.55) 
NET INCOME (LOSS) PER SHARE—DILUTED:
Continuing operations$0.08  $(0.43) $0.75  $(0.49) 
Discontinued operations(0.03) (0.04) (0.15) (0.06) 
Diluted$0.05  $(0.47) $0.60  $(0.55) 
WEIGHTED AVERAGE SHARES:
Basic229,716  226,221  228,457  225,408  
Diluted233,681  226,221  233,348  225,408  
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The following table presents unaudited Condensed Consolidated Balance Sheet data at June 30, 2020 and December 31, 2019 (in thousands):
June 30, 2020December 31, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$1,780,087  $1,454,531  
Restricted cash and cash equivalents180,730  247,457  
Accounts receivable271,893  467,953  
Inventories, net330,540  327,865  
Other current assets122,894  88,412  
Total current assets$2,686,144  $2,586,218  
TOTAL NON-CURRENT ASSETS6,478,990  6,803,309  
TOTAL ASSETS$9,165,134  $9,389,527  
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses, including legal settlement accruals$1,175,241  $1,412,954  
Other current liabilities47,170  47,335  
Total current liabilities$1,222,411  $1,460,289  
LONG-TERM DEBT, LESS CURRENT PORTION, NET8,302,595  8,359,899  
OTHER LIABILITIES354,995  435,883  
SHAREHOLDERS' DEFICIT(714,867) (866,544) 
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT$9,165,134  $9,389,527  
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The following table presents unaudited Condensed Consolidated Statement of Cash Flow data for the six months ended June 30, 2020 and 2019 (in thousands):
Six Months Ended June 30,
20202019
OPERATING ACTIVITIES:
Net income (loss)$140,488  $(124,578) 
Adjustments to reconcile Net income (loss) to Net cash provided by operating activities:
Depreciation and amortization264,198  320,788  
Asset impairment charges97,785  253,886  
Other, including cash payments to claimants from Qualified Settlement Funds(135,583) (363,494) 
Net cash provided by operating activities$366,888  $86,602  
INVESTING ACTIVITIES:
Purchases of property, plant and equipment, excluding capitalized interest$(36,305) $(23,632) 
Proceeds from sale of business and other assets, net6,017  2,594  
Other(1,125) (1,278) 
Net cash used in investing activities$(31,413) $(22,316) 
FINANCING ACTIVITIES:
(Payments on) proceeds from borrowings, net$(66,685) $257,605  
Other(9,046) (22,676) 
Net cash (used in) provided by financing activities$(75,731) $234,929  
Effect of foreign exchange rate(915) 841  
NET INCREASE IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS$258,829  $300,056  
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, BEGINNING OF PERIOD1,720,388  1,476,837  
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, END OF PERIOD$1,979,217  $1,776,893  
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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.
Effective January 1, 2020, the Company revised its definition of its adjusted financial metrics to exclude certain legal costs. The Company believes that such costs are not indicative of business performance and that excluding them more accurately reflects the Company’s results and better enables management to compare financial results between periods. As a result of this change, the Company’s adjusted financial metrics now exclude opioid-related legal expenses. Prior period adjusted results throughout this document have also been adjusted to reflect this change. The impact of excluding these costs during the three and six months ended June 30, 2020 and 2019 is reflected in the Certain legal costs lines of each of the following reconciliation tables.
Reconciliation of EBITDA and Adjusted EBITDA (non-GAAP)
The following table provides a reconciliation of Net income (loss) (GAAP) to Adjusted EBITDA (non-GAAP) for the three and six months ended June 30, 2020 and 2019 (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Net income (loss) (GAAP)$10,558  $(106,005) $140,488  $(124,578) 
Income tax expense (benefit)7,642  3,468  (128,690) 14,371  
Interest expense, net129,164  134,809  262,041  267,484  
Depreciation and amortization (13)120,855  158,055  255,813  320,788  
EBITDA (non-GAAP)$268,219  $190,327  $529,652  $478,065  
Upfront and milestone-related payments (2)444  1,444  2,194  2,383  
Continuity and separation benefits and other cost reductions (3)9,444  2,124  32,664  4,149  
Certain litigation-related and other contingencies, net (4)(8,572) 10,315  (25,748) 10,321  
Certain legal costs (5)18,005  18,984  33,541  35,673  
Asset impairment charges (6)—  88,438  97,785  253,886  
Fair value of contingent consideration (7)6,045  (5,507) 18,507  (43,008) 
Gain on extinguishment of debt (8)—  —  —  (119,828) 
Share-based compensation (13)9,222  12,600  21,677  37,333  
Other (income) expense, net (14)(4,150) (597) (18,124) 4,205  
Other (9)30,772   30,756  87  
Discontinued operations, net of tax (11)7,052  7,953  34,703  13,914  
Adjusted EBITDA (non-GAAP)$336,481  $326,084  $757,607  $677,180  
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Reconciliation of Adjusted Income from Continuing Operations (non-GAAP)
The following table provides a reconciliation of the Company’s Income (loss) from continuing operations (GAAP) to Adjusted income from continuing operations (non-GAAP) for the three and six months ended June 30, 2020 and 2019 (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Income (loss) from continuing operations (GAAP)$17,610  $(98,052) $175,191  $(110,664) 
Non-GAAP adjustments:
Amortization of intangible assets (1)104,498  140,418  221,735  286,017  
Upfront and milestone-related payments (2)444  1,444  2,194  2,383  
Continuity and separation benefits and other cost reductions (3)9,444  2,124  32,664  4,149  
Certain litigation-related and other contingencies, net (4)(8,572) 10,315  (25,748) 10,321  
Certain legal costs (5)18,005  18,984  33,541  35,673  
Asset impairment charges (6)—  88,438  97,785  253,886  
Fair value of contingent consideration (7)6,045  (5,507) 18,507  (43,008) 
Gain on extinguishment of debt (8)—  —  —  (119,828) 
Other (9)29,755  86  15,335  1,620  
Tax adjustments (10)(25,529) (18,862) (199,104) (42,388) 
Adjusted income from continuing operations (non-GAAP)$151,700  $139,388  $372,100  $278,161  
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Reconciliation of Other Adjusted Income Statement Data (non-GAAP)
The following tables provide detailed reconciliations of various other income statement data between the GAAP and non-GAAP amounts for the three and six months ended June 30, 2020 and 2019 (in thousands, except per share data):
Three Months Ended June 30, 2020
Total revenues, netCost of revenuesGross marginGross margin %Total operating expensesOperating expense to revenue %Operating income from continuing operationsOperating margin %Other non-operating expense, netIncome from continuing operations before income taxIncome tax expenseEffective tax rateIncome from continuing operationsDiscontinued operations, net of taxNet incomeDiluted net income per share from continuing operations (12)
Reported (GAAP)$687,588  $336,096  $351,492  51.1 %$201,226  29.3 %$150,266  21.9 %$125,014  $25,252  $7,642  30.3 %$17,610  $(7,052) $10,558  $0.08  
Items impacting comparability:
Amortization of intangible assets (1)—  (104,498) 104,498  —  104,498  —  104,498  —  104,498  —  104,498  
Upfront and milestone-related payments (2)—  (125) 125  (319) 444  —  444  —  444  —  444  
Continuity and separation benefits and other cost reductions (3)—  (904) 904  (8,540) 9,444  —  9,444  —  9,444  —  9,444  
Certain litigation-related and other contingencies, net (4)—  —  —  8,572  (8,572) —  (8,572) —  (8,572) —  (8,572) 
Certain legal costs (5)—  —  —  (18,005) 18,005  —  18,005  —  18,005  —  18,005  
Fair value of contingent consideration (7)—  —  —  (6,045) 6,045  —  6,045  —  6,045  —  6,045  
Other (9)—  —  —  (30,749) 30,749  994  29,755  —  29,755  —  29,755  
Tax adjustments (10)—  —  —  —  —  —  —  25,529  (25,529) —  (25,529) 
Exclude discontinued operations, net of tax (11)—  —  —  —  —  —  —  —  —  7,052  7,052  
After considering items (non-GAAP)$687,588  $230,569  $457,019  66.5 %$146,140  21.3 %$310,879  45.2 %$126,008  $184,871  $33,171  17.9 %$151,700  $—  $151,700  $0.65  
Three Months Ended June 30, 2019
Total revenues, netCost of revenuesGross marginGross margin %Total operating expensesOperating expense to revenue %Operating income from continuing operationsOperating margin %Other non-operating expense, net(Loss) income from continuing operations before income taxIncome tax expenseEffective tax rate(Loss) income from continuing operationsDiscontinued operations, net of taxNet (loss) incomeDiluted net (loss) income per share from continuing operations (12)
Reported (GAAP)$699,727  $388,208  $311,519  44.5 %$271,891  38.9 %$39,628  5.7 %$134,212  $(94,584) $3,468  (3.7)%$(98,052) $(7,953) $(106,005) $(0.43) 
Items impacting comparability:
Amortization of intangible assets (1)—  (140,418) 140,418  —  140,418  —  140,418  —  140,418  —  140,418  
Upfront and milestone-related payments (2)—  (739) 739  (705) 1,444  —  1,444  —  1,444  —  1,444  
Continuity and separation benefits and other cost reductions (3)—  —  —  (2,124) 2,124  —  2,124  —  2,124  —  2,124  
Certain litigation-related and other contingencies, net (4)—  —  —  (10,315) 10,315  —  10,315  —  10,315  —  10,315  
Certain legal costs (5)—  —  —  (18,984) 18,984  —  18,984  —  18,984  —  18,984  
Asset impairment charges (6)—  —  —  (88,438) 88,438  —  88,438  —  88,438  —  88,438  
Fair value of contingent consideration (7)—  —  —  5,507  (5,507) —  (5,507) —  (5,507) —  (5,507) 
Other (9)—  —  —  175  (175) (261) 86  —  86  —  86  
Tax adjustments (10)—  —  —  —  —  —  —  18,862  (18,862) —  (18,862) 
Exclude discontinued operations, net of tax (11)—  —  —  —  —  —  —  —  —  7,953  7,953  
After considering items (non-GAAP)$699,727  $247,051  $452,676  64.7 %$157,007  22.4 %$295,669  42.3 %$133,951  $161,718  $22,330  13.8 %$139,388  $—  $139,388  $0.60  
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