Endo Reports Fourth-Quarter 2023 Financial Results

Endo International plc reported financial results for the fourth-quarter ended December 31, 2023.

DUBLIN, March 6, 2024 /PRNewswire/ -- Endo International plc (OTC: ENDPQ) today reported financial results for the fourth-quarter ended December 31, 2023.

FOURTH-QUARTER FINANCIAL PERFORMANCE

(in thousands, except per share amounts)

Three Months Ended December 31,

Year Ended December 31,

2023

2022

Change

2023

2022

Change

Total Revenues, Net

$ 497,734

$ 555,812

(10) %

$ 2,011,518

$ 2,318,875

(13) %

Reported Loss from Continuing Operations

$ (2,441,038)

$ (245,163)

NM

$ (2,447,786)

$ (2,909,618)

(16) %

Reported Diluted Weighted Average Shares

235,220

235,205

— %

235,219

234,840

— %

Reported Diluted Net Loss per Share from Continuing Operations (1)

$ (10.38)

$ (1.04)

NM

$ (10.41)

$ (12.39)

(16) %

Reported Net Loss

$ (2,441,483)

$ (243,535)

NM

$ (2,449,807)

$ (2,923,105)

(16) %

Adjusted Income from Continuing Operations (2)(3)

$ 151,060

$ 189,529

(20) %

$ 706,534

$ 463,858

52 %

Adjusted Diluted Weighted Average Shares (1)(2)

235,220

236,500

(1) %

235,441

236,404

— %

Adjusted Diluted Net Income per Share from Continuing Operations (2)(3)

$ 0.64

$ 0.80

(20) %

$ 3.00

$ 1.96

53 %

Adjusted EBITDA (2)(3)

$ 166,341

$ 210,102

(21) %

$ 761,838

$ 892,050

(15) %

__________

(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 $498 million in fourth-quarter 2023, a decrease of 10% compared to $556 million in fourth-quarter 2022. This decrease was primarily attributable to decreased revenues from the Generic Pharmaceuticals and Sterile Injectables segments, partially offset by increased revenues from the Branded Pharmaceuticals segment.

Reported loss from continuing operations in fourth-quarter 2023 was $2,441 million compared to reported loss from continuing operations of $245 million in fourth-quarter 2022. This change was driven by adjustments to our estimated allowed claims, including with respect to certain litigation matters and debt obligations. The allowed claims will be reduced to reflect actual payments upon Chapter 11 emergence, which is expected to occur in second-quarter 2024.

Adjusted income from continuing operations in fourth-quarter 2023 was $151 million compared to $190 million in fourth-quarter 2022. This change was primarily driven by decreased revenues.

BRANDED PHARMACEUTICALS SEGMENT

Fourth-quarter 2023 Branded Pharmaceuticals segment revenues were $246 million compared to $224 million during fourth-quarter 2022.

Specialty Products revenues increased 16% to $188 million in fourth-quarter 2023 compared to $162 million in fourth-quarter 2022. This change was primarily due to an increase in XIAFLEX® revenues, partially offset by a decrease in SUPPRELIN® LA revenues mainly driven by lower volumes. Fourth-quarter 2023 XIAFLEX® revenues were $148 million, a 29% increase compared to fourth-quarter 2022 driven by increased net selling price and increased volumes. The increase in net selling price was primarily attributable to reversing approximately $14 million of reserves recorded during the first three quarters of 2023 following application of the final Inflation Reduction Act vial-wastage rebate determination.

STERILE INJECTABLES SEGMENT

Fourth-quarter 2023 Sterile Injectables segment revenues were $96 million, a decrease of 11% compared to $108 million during fourth-quarter 2022. This decrease was primarily attributable to competitive pressure on VASOSTRICT® and ADRENALIN®.

GENERIC PHARMACEUTICALS SEGMENT

Fourth-quarter 2023 Generic Pharmaceuticals segment revenues were $139 million, a decrease of 32% compared to $205 million during fourth-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.

INTERNATIONAL PHARMACEUTICALS SEGMENT

Fourth-quarter 2023 International Pharmaceuticals segment revenues were $17 million, a decrease of 14% compared to $20 million during fourth-quarter 2022. This decrease was primarily attributable to competitive pressure on several products.

2024 FINANCIAL EXPECTATIONS

Endo is providing financial guidance for the full-year ending December 31, 2024, which contemplates key uncertainties, including competitive assumptions related to VASOSTRICT® ready-to-use, ADRENALIN ® and generic Dexilant ® products. 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 2024
Adjusted Results

($ in millions)

Total Revenues, Net

$1,685 - $1,770

EBITDA

$615 - $645

Assumptions:

Segment Revenues:

Branded Pharmaceuticals

$860 - $905

Sterile Injectables

$370 - $390

Generic Pharmaceuticals

$395 - $415

International Pharmaceuticals

$60

Gross Margin as a Percentage of Total Revenues, Net

~67%

Operating Expenses

$585 - $605

CASH, CASH FLOW AND OTHER UPDATES

As of December 31, 2023, the Company had approximately $778 million in unrestricted cash and cash equivalents. Fourth-quarter 2023 net cash provided by operating activities was approximately $115 million compared to approximately $110 million net cash provided by operating activities during fourth-quarter 2022.

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 months and years ended December 31, 2023 and 2022 (dollars in thousands):

Three Months Ended December 31,

Percent
Growth

Year Ended December 31,

Percent
Growth

2023

2022

2023

2022

Branded Pharmaceuticals:

Specialty Products:

XIAFLEX®

$ 147,760

$ 114,304

29 %

$ 475,014

$ 438,680

8 %

SUPPRELIN® LA

23,459

28,159

(17) %

96,849

113,011

(14) %

Other Specialty (1)

16,515

19,986

(17) %

73,797

70,009

5 %

Total Specialty Products

$ 187,734

$ 162,449

16 %

$ 645,660

$ 621,700

4 %

Established Products:

PERCOCET®

$ 27,584

$ 26,460

4 %

$ 106,375

$ 103,943

2 %

TESTOPEL®

10,265

10,396

(1) %

42,464

38,727

10 %

Other Established (2)

20,186

24,523

(18) %

64,588

86,772

(26) %

Total Established Products

$ 58,035

$ 61,379

(5) %

$ 213,427

$ 229,442

(7) %

Total Branded Pharmaceuticals (3)

$ 245,769

$ 223,828

10 %

$ 859,087

$ 851,142

1 %

Sterile Injectables:

ADRENALIN®

$ 24,329

$ 28,790

(15) %

$ 99,910

$ 114,304

(13) %

VASOSTRICT®

21,983

28,479

(23) %

93,180

253,696

(63) %

Other Sterile Injectables (4)

49,587

50,472

(2) %

236,473

221,633

7 %

Total Sterile Injectables (3)

$ 95,899

$ 107,741

(11) %

$ 429,563

$ 589,633

(27) %

Total Generic Pharmaceuticals (5)

$ 139,211

$ 204,701

(32) %

$ 650,352

$ 795,457

(18) %

Total International Pharmaceuticals (6)

$ 16,855

$ 19,542

(14) %

$ 72,516

$ 82,643

(12) %

Total revenues, net

$ 497,734

$ 555,812

(10) %

$ 2,011,518

$ 2,318,875

(13) %

__________

(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 the year ended December 31, 2023 and/or any product having revenues in excess of and/or any product having revenues in excess of $25 million during any completed quarterly period in 2023 or 2022.

(4)

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 less than 5% and 16% for the three months ended December 31, 2023 and 2022, respectively, and 8% and 13% for the years ended December 31, 2023 and 2022, respectively, of consolidated total revenues. Dexlansoprazole delayed release capsules (Endo’s generic version of Takeda Pharmaceuticals USA, Inc.'s Dexilant®), which launched in November 2022, made up 6% for the quarter and full-year ended December 31, 2023 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 months and years ended December 31, 2023 and 2022 (in thousands, except per share data):

Three Months Ended December 31,

Year Ended December 31,

2023

2022

2023

2022

TOTAL REVENUES, NET

$ 497,734

$ 555,812

$ 2,011,518

$ 2,318,875

COSTS AND EXPENSES:

Cost of revenues

249,535

294,266

946,415

1,092,499

Selling, general and administrative

140,433

176,957

567,727

777,169

Research and development

28,140

30,230

115,462

128,033

Acquired in-process research and development

68,700

Litigation-related and other contingencies, net

1,556,773

33,984

1,611,090

478,722

Asset impairment charges

357

191,530

503

2,142,746

Acquisition-related and integration items, net

148

1,359

1,972

408

Interest (income) expense, net

(239)

290

349,776

Reorganization items, net

942,382

78,766

1,169,961

202,978

Other income, net

(7,525)

(11,907)

(9,688)

(34,054)

LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX

$ (2,412,270)

$ (239,663)

$ (2,391,924)

$ (2,888,102)

INCOME TAX EXPENSE

28,768

5,500

55,862

21,516

LOSS FROM CONTINUING OPERATIONS

$ (2,441,038)

$ (245,163)

$ (2,447,786)

$ (2,909,618)

DISCONTINUED OPERATIONS, NET OF TAX

(445)

1,628

(2,021)

(13,487)

NET LOSS

$ (2,441,483)

$ (243,535)

$ (2,449,807)

$ (2,923,105)

NET LOSS PER SHARE—BASIC:

Continuing operations

$ (10.38)

$ (1.04)

$ (10.41)

$ (12.39)

Discontinued operations

(0.01)

(0.06)

Basic

$ (10.38)

$ (1.04)

$ (10.42)

$ (12.45)

NET LOSS PER SHARE—DILUTED:

Continuing operations

$ (10.38)

$ (1.04)

$ (10.41)

$ (12.39)

Discontinued operations

(0.01)

(0.06)

Diluted

$ (10.38)

$ (1.04)

$ (10.42)

$ (12.45)

WEIGHTED AVERAGE SHARES:

Basic

235,220

235,205

235,219

234,840

Diluted

235,220

235,205

235,219

234,840

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

December 31,
2023

December 31,
2022

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$ 777,919

$ 1,018,883

Restricted cash and cash equivalents

167,702

145,358

Accounts receivable

386,919

493,988

Inventories, net

246,017

274,499

Other current assets

89,944

144,040

Total current assets

$ 1,668,501

$ 2,076,768

TOTAL NON-CURRENT ASSETS

3,468,793

3,681,169

TOTAL ASSETS

$ 5,137,294

$ 5,757,937

LIABILITIES AND SHAREHOLDERS’ DEFICIT

CURRENT LIABILITIES:

Accounts payable and accrued expenses, including legal settlement accruals

$ 537,736

$ 687,183

Other current liabilities

1,058

2,444

Total current liabilities

$ 538,794

$ 689,627

OTHER LIABILITIES

100,192

61,700

LIABILITIES SUBJECT TO COMPROMISE

11,095,868

9,168,782

SHAREHOLDERS’ DEFICIT

(6,597,560)

(4,162,172)

TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT

$ 5,137,294

$ 5,757,937

The following table presents unaudited Condensed Consolidated Statement of Cash Flow data for the years ended December 31, 2023 and 2022 (in thousands):

Year Ended December 31,

2023

2022

OPERATING ACTIVITIES:

Net loss

$ (2,449,807)

$ (2,923,105)

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

Depreciation and amortization

306,448

391,629

Asset impairment charges

503

2,142,746

Non-cash reorganization items, net

905,868

89,197

Other, including cash payments to claimants from Qualified Settlement Funds

1,672,086

568,726

Net cash provided by operating activities

$ 435,098

$ 269,193

INVESTING ACTIVITIES:

Capital expenditures, excluding capitalized interest

$ (94,325)

$ (99,722)

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

(90,320)

Proceeds from sale of business and other assets

5,134

41,400

Other

39,397

15,495

Net cash used in investing activities

$ (49,794)

$ (133,147)

FINANCING ACTIVITIES:

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

$ (599,492)

$ (509,513)

Other

(5,136)

(4,360)

Net cash used in financing activities

$ (604,628)

$ (513,873)

Effect of foreign exchange rate

704

(4,242)

NET DECREASE IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS

$ (218,620)

$ (382,069)

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

$ 1,030,621

$ 1,249,241

__________

(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 months and years ended December 31, 2023 and 2022 (in thousands):

Three Months Ended December 31,

Year Ended December 31,

2023

2022

2023

2022

Net loss (GAAP)

$ (2,441,483)

$ (243,535)

$ (2,449,807)

$ (2,923,105)

Income tax expense

28,768

5,500

55,862

21,516

Interest (income) expense, net

(239)

290

349,776

Depreciation and amortization (1)

74,358

89,342

306,448

387,856

EBITDA (non-GAAP)

$ (2,338,596)

$ (148,403)

$ (2,087,497)

$ (2,163,957)

Amounts related to continuity and separation benefits, cost reductions and strategic review initiatives (2)

7,380

59,356

44,098

198,381

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

1,556,773

33,984

1,611,090

478,722

Certain legal costs (4)

2,069

434

7,256

31,756

Asset impairment charges (5)

357

191,530

503

2,142,746

Fair value of contingent consideration (6)

148

1,359

1,972

408

Share-based compensation (1)

4,124

2,091

17,145

Other income, net (7)

(7,525)

(11,907)

(9,688)

(34,054)

Reorganization items, net (8)

942,382

78,766

1,169,961

202,978

Other (9)

2,908

2,487

20,031

4,438

Discontinued operations, net of tax (10)

445

(1,628)

2,021

13,487

Adjusted EBITDA (non-GAAP) (13)

$ 166,341

$ 210,102

$ 761,838

$ 892,050

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 months and years ended December 31, 2023 and 2022 (in thousands):

Three Months Ended December 31,

Year Ended December 31,

2023

2022

2023

2022

Loss from continuing operations (GAAP)

$ (2,441,038)

$ (245,163)

$ (2,447,786)

$ (2,909,618)

Non-GAAP adjustments:

Amortization of intangible assets (11)

61,823

75,467

255,933

337,311

Amounts related to continuity and separation benefits, cost reductions and strategic review initiatives (2)

7,380

59,356

44,098

198,381

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

1,556,773

33,984

1,611,090

478,722

Certain legal costs (4)

2,069

434

7,256

31,756

Asset impairment charges (5)

357

191,530

503

2,142,746

Fair value of contingent consideration (6)

148

1,359

1,972

408

Reorganization items, net (8)

942,382

78,766

1,169,961

202,978

Other (9)

(3,641)

(10,022)

13,485

(32,980)

Tax adjustments (12)

24,807

3,818

50,022

14,154

Adjusted income from continuing operations (non-GAAP) (13)

$ 151,060

$ 189,529

$ 706,534

$ 463,858

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 months and years ended December 31, 2023 and 2022 (in thousands, except per share data):

Three Months Ended December 31, 2023

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
(income),
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)

$ 497,734

$ 249,535

$ 248,199

49.9 %

$1,725,851

346.7 %

$ (1,477,652)

(296.9) %

$ 934,618

$ (2,412,270)

$ 28,768

(1.2) %

$ (2,441,038)

$ (445)

$ (2,441,483)

$ (10.38)

Items impacting
comparability:

Amortization of
intangible assets (11)

(61,823)

61,823

61,823

61,823

61,823

61,823

Amounts related to
continuity and
separation benefits,
cost reductions and
strategic review
initiatives (2)

(702)

702

(6,678)

7,380

7,380

7,380

7,380

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

(1,556,773)

1,556,773

1,556,773

1,556,773

1,556,773

Certain legal costs (4)

(2,069)

2,069

2,069

2,069

2,069

Asset impairment
charges (5)

(357)

357

357

357

357

Fair value of
contingent
consideration (6)

(148)

148

148

148

148

Reorganization items,
net (8)

(942,382)

942,382

942,382

942,382

Other (9)

(375)

375

(2,533)

2,908

6,549

(3,641)

(3,641)

(3,641)

Tax adjustments (12)

(24,807)

24,807

24,807

Discontinued
operations, net of tax
(10)

445

445

After considering items
(non-GAAP) (13)

$ 497,734

$ 186,635

$ 311,099

62.5 %

$ 157,293

31.6 %

$ 153,806

30.9 %

$ (1,215)

$ 155,021

$ 3,961

2.6 %

$ 151,060

$ —

$ 151,060

$ 0.64

Three Months Ended December 31, 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)

$ 555,812

$ 294,266

$ 261,546

47.1 %

$ 434,060

78.1 %

$ (172,514)

(31.0) %

$ 67,149

$ (239,663)

$ 5,500

(2.3) %

$ (245,163)

$ 1,628

$ (243,535)

$ (1.04)

Items impacting
comparability:

Amortization of
intangible assets (11)

(75,467)

75,467

75,467

75,467

75,467

75,467

Amounts related to
continuity and
separation benefits,
cost reductions and
strategic review
initiatives (2)

(38,153)

38,153

(21,203)

59,356

59,356

59,356

59,356

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

(33,984)

33,984

33,984

33,984

33,984

Certain legal costs (4)

(434)

434

434

434

434

Asset impairment
charges (5)

(191,530)

191,530

191,530

191,530

191,530

Fair value of
contingent
consideration (6)

(1,359)

1,359

1,359

1,359

1,359

Reorganization items,
net (8)

(78,766)

78,766

78,766

78,766

Other (9)

(125)

125

(2,355)

2,480

12,502

(10,022)

(10,022)

(10,022)

Tax adjustments (12)

(3,818)

3,818

3,818

Discontinued
operations, net of tax
(10)

(1,628)

(1,628)

After considering items
(non-GAAP) (13)

$ 555,812

$ 180,521

$ 375,291

67.5 %

$ 183,195

33.0 %

$ 192,096

34.6 %

$ 885

$ 191,211

$ 1,682

0.9 %

$ 189,529

$ —

$ 189,529

$ 0.80

Year Ended December 31, 2023

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
(income),
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)

$ 2,011,518

$ 946,415

$ 1,065,103

53.0 %

$2,296,754

114.2 %

$ (1,231,651)

(61.2) %

$1,160,273

$ (2,391,924)

$ 55,862

(2.3) %

$ (2,447,786)

$ (2,021)

$ (2,449,807)

$ (10.41)

Items impacting
comparability:

Amortization of
intangible assets (11)

(255,933)

255,933

255,933

255,933

255,933

255,933

Amounts related to
continuity and
separation benefits,
cost reductions and
strategic review
initiatives (2)

(4,514)

4,514

(39,584)

44,098

44,098

44,098

44,098

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

(1,611,090)

1,611,090

1,611,090

1,611,090

1,611,090

Certain legal costs (4)

(7,256)

7,256

7,256

7,256

7,256

Asset impairment
charges (5)

(503)

503

503

503

503

Fair value of
contingent
consideration (6)

(1,972)

1,972

1,972

1,972

1,972

Reorganization items,
net (8)

(1,169,961)

1,169,961

1,169,961

1,169,961

Other (9)

(1,278)

1,278

(18,753)

20,031

6,546

13,485

13,485

13,485

Tax adjustments (12)

(50,022)

50,022

50,022

Discontinued
operations, net of tax
(10)

2,021

2,021

After considering items
(non-GAAP) (13)

$ 2,011,518

$ 684,690

$ 1,326,828

66.0 %

$ 617,596

30.7 %

$ 709,232

35.3 %

$ (3,142)

$ 712,374

$ 5,840

0.8 %

$ 706,534

$ —

$ 706,534

$ 3.00

Year Ended December 31, 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)

$ 2,318,875

$ 1,092,499

$ 1,226,376

52.9 %

$ 3,595,778

155.1 %

$ (2,369,402)

(102.2) %

$ 518,700

$ (2,888,102)

$ 21,516

(0.7) %

$ (2,909,618)

$ (13,487)

$ (2,923,105)

$ (12.39)

Items impacting
comparability:

Amortization of
intangible assets (11)

(337,311)

337,311

337,311

337,311

337,311

337,311

Amounts related to
continuity and
separation benefits,
cost reductions and
strategic review
initiatives (2)

(61,806)

61,806

(136,575)

198,381

198,381

198,381

198,381

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

(478,722)

478,722

478,722

478,722

478,722

Certain legal costs (4)

(31,756)

31,756

31,756

31,756

31,756

Asset impairment
charges (5)

(2,142,746)

2,142,746

2,142,746

2,142,746

2,142,746

Fair value of
contingent
consideration (6)

(408)

408

408

408

408

Reorganization items,
net (8)

(202,978)

202,978

202,978

202,978

Other (9)

(500)

500

(3,925)

4,425

37,405

(32,980)

(32,980)

(32,980)

Tax adjustments (12)

(14,154)

14,154

14,154

Discontinued
operations, net of tax
(10)

13,487

13,487

After considering items
(non-GAAP) (13)

$ 2,318,875

$ 692,882

$ 1,625,993

70.1 %

$ 801,646

34.6 %

$ 824,347

35.5 %

$ 353,127

$ 471,220

$ 7,362

1.6 %

$ 463,858

$ —

$ 463,858

$ 1.96

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 months and years ended December 31, 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 December 31,

2023

2022

Cost of revenues

Operating
expenses

Cost of revenues

Operating
expenses

Continuity and separation benefits

$ 693

$ 6,677

$ 5,802

$ 21,642

Inventory adjustments

9

1

32,351

116

Other, including strategic review initiatives

(555)

Total

$ 702

$ 6,678

$ 38,153

$ 21,203

Year Ended December 31,

2023

2022

Cost of revenues

Operating
expenses

Cost of revenues

Operating
expenses

Continuity and separation benefits

$ 3,833

$ 39,866

$ 18,301

$ 67,277

Accelerated depreciation

2,164

1,660

Inventory adjustments

90

(323)

33,785

2,577

Other, including strategic review initiatives

591

41

7,556

65,061

Total

$ 4,514

$ 39,584

$ 61,806

$ 136,575

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

(3)

To exclude adjustments to accruals for litigation-related settlement charges.

(4)

To exclude amounts related to opioid-related legal expenses.

(5)

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

Three Months Ended December 31,

Year Ended December 31,

2023

2022

2023

2022

Goodwill impairment charges

$ —

$ —

$ —

$ 1,845,000

Other intangible asset impairment charges

185,548

288,701

Property, plant and equipment impairmentcharges

357

5,982

503

9,045

Total

$ 357

$ 191,530

$ 503

$ 2,142,746

(6)

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

(7)

To exclude Other income, net per the Consolidated Statements of Operations.

(8)

Amounts relate to the net expense or income recognized during Endo’s bankruptcy proceedings required to be presented as Reorganization items, net under Accounting Standards Codification Topic 852, Reorganizations.

(9)

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

Three Months Ended December 31,

2023

2022

Cost of revenues

Operating
expenses

Other non-
operating
expenses

Cost of revenues

Operating
expenses

Other non-
operating
expenses

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

$ —

$ —

$ 2,156

$ —

$ —

$ 1,786

Gain on sale of business and other assets

(8,705)

(14,288)

Other miscellaneous

375

2,533

125

2,355

Total

$ 375

$ 2,533

$ (6,549)

$ 125

$ 2,355

$ (12,502)

Year Ended December 31,

2023

2022

Cost of revenues

Operating
expenses

Other non-
operating
expenses

Cost of revenues

Operating
expenses

Other non-
operating
expenses

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

$ —

$ —

$ 2,159

$ —

$ —

$ (5,328)

Gain on sale of business and other assets

(8,705)

(26,508)

Other miscellaneous

1,278

18,753

500

3,925

(5,569)

Total

$ 1,278

$ 18,753

$ (6,546)

$ 500

$ 3,925

$ (37,405)

The “Other” row included in the reconciliations of Net loss (GAAP) to Adjusted EBITDA (non-GAAP) primarily relates to the items enumerated in the foregoing “Cost of revenues” and “Operating expenses” columns.

(10)

To exclude the results of the businesses reported as discontinued operations, net of tax.

(11)

To exclude amortization expense related to intangible assets.

(12)

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.

(13)

Amounts of Acquired in-process research and development charges included within these non-GAAP financial measures are set forth in the table below (in thousands):

Three Months Ended December 31,

Year Ended December 31,

2023

2022

2023

2022

Acquired in-process research and development charges

$ —

$ —

$ —

$ 68,700

(14)

Calculated as income or loss from continuing operations divided by the applicable weighted average share number. The applicable weighted average share numbers are as follows (in thousands):

Three Months Ended December 31,

Year Ended December 31,

2023

2022

2023

2022

GAAP

235,220

235,205

235,219

234,840

Non-GAAP Adjusted

235,220

236,500

235,441

236,404

Non-GAAP Financial Measures

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). These non-GAAP financial measures are not, and should not be viewed as, substitutes for GAAP net income and its components and diluted net income per share amounts. Despite the importance of these measures to management in goal setting and performance measurement, the Company stresses that these are non-GAAP financial measures that have no standardized meaning prescribed by GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, non-GAAP adjusted EBITDA and non-GAAP adjusted net income from continuing operations and its components (unlike GAAP net income from continuing operations and its components) may not be comparable to the calculation of similar measures of other companies. These non-GAAP financial measures are presented solely to permit investors to more fully understand how management assesses performance.

Investors are encouraged to review the reconciliations of the non-GAAP financial measures used in this press release to their most directly comparable GAAP financial measures. 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, gain / loss on extinguishment of debt, adjustments to inventory and other charges reflected in the reconciliation of historic numbers, the amounts of which could be significant.

See Endo’s Current Report on Form 8-K furnished today to the U.S. Securities and Exchange Commission for an explanation of Endo’s non-GAAP financial measures.

About Endo

Endo (OTC: ENDPQ) is a specialty pharmaceutical company committed to helping everyone we serve live their best life through the delivery of quality, life-enhancing therapies. Our decades of proven success come from passionate team members around the globe collaborating to bring treatments forward. Together, we boldly transform insights into treatments benefiting those who need them, when they need them. Learn more at www.endo.com or connect with us on LinkedIn.

Cautionary Note Regarding Forward-Looking Statements

Certain information in this press release may be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation, including, but not limited to, statements with respect to financial guidance, expectations or outlook, bankruptcy court hearings or approvals, Chapter 11 emergence, and any other statements that refer to expected, estimated or anticipated future results or that do not relate solely to historical facts. Statements including words or phrases such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “plan,” “will,” “may,” “look forward,” “outlook,” “guidance,” “future,” “potential” or similar expressions are forward-looking statements. All forward-looking statements in this communication reflect the Company’s current views as of the date of this communication about its plans, intentions, expectations, strategies and prospects, which are based on the information currently available to it and on assumptions it has made. Actual results may differ materially and adversely from current expectations based on a number of factors, including, among other things, the following: the Company’s restructuring activities; the timing, impact or results of any pending or future litigation, investigations, proceedings or claims, including opioid, tax and antitrust related matters; actual or contingent liabilities; settlement discussions or negotiations; the Company’s liquidity, financial performance, cash position and operations; the Company’s strategy; risks and uncertainties associated with Chapter 11 proceedings; the negative impacts on the Company’s businesses as a result of filing for and operating under Chapter 11 protection; the time, terms and ability to obtain approval and consummate the proposed Plan or Reorganization or a sale under Section 363 of the U.S. Bankruptcy Code; the adequacy of the capital resources of the Company’s businesses and the difficulty in forecasting the liquidity requirements of the operations of the Company’s businesses; the unpredictability of the Company’s financial results while in Chapter 11 proceedings; the Company’s ability to discharge claims in Chapter 11 proceedings; negotiations with the holders of the Company’s indebtedness and its trade creditors and other significant creditors; risks and uncertainties with performing under the terms of the restructuring support agreement and any other arrangement with lenders or creditors while in Chapter 11 proceedings; the Company’s ability to conduct business as usual; the Company’s ability to continue to serve customers, suppliers and other business partners at the high level of service and performance they have come to expect from the Company; the Company’s ability to continue to pay employees, suppliers and vendors; the ability to control costs during Chapter 11 proceedings; adverse litigation; the risk that the Company’s Chapter 11 Cases may be converted to cases under Chapter 7 of the Bankruptcy Code; the Company’s ability to secure operating capital; the Company’s ability to take advantage of opportunities to acquire assets with upside potential; the impact of competition and the timing of competitive entrants; the Company’s ability to satisfy judgments or settlements or pursue appeals including bonding requirements; the Company’s ability to adjust to changing market conditions; the Company’s ability to attract and retain key personnel; supply chain interruptions or difficulties; changes in competitive or market conditions; changes in legislation or regulatory developments; the Company’s ability to obtain and maintain adequate protection for intellectual property rights; the timing and uncertainty of the results of both the research and development and regulatory processes, including regulatory decisions, product recalls, withdrawals and other unusual items; domestic and foreign health care and cost containment reforms, including government pricing, tax and reimbursement policies; technological advances and patents obtained by competitors; the performance, including the approval, introduction, and consumer and physician acceptance of new products and the continuing acceptance of currently marketed products; the Company’s ability to integrate any newly acquired products into its portfolio and achieve any financial or commercial expectations; the impact that known and unknown side effects may have on market perception and consumer preference for the Company’s products; the effectiveness of advertising and other promotional campaigns; the timely and successful implementation of any strategic initiatives; unfavorable publicity regarding the misuse of opioids; the uncertainty associated with the identification of and successful consummation and execution of external corporate development initiatives and strategic partnering transactions; the Company’s ability to advance its strategic priorities, develop its product pipeline and continue to develop the market for XIAFLEX® and other branded and unbranded products; and the Company’s ability to obtain and successfully manufacture, maintain and distribute a sufficient supply of products to meet market demand in a timely manner. In addition, U.S. and international economic conditions, including consumer confidence and debt levels, inflation, taxation, changes in interest and currency exchange rates, international relations, capital and credit availability, the status of financial markets and institutions and the impact of continued economic volatility, can materially affect the Company’s results. Therefore, the reader is cautioned not to rely on these forward-looking statements. The Company expressly disclaims any intent or obligation to update these forward-looking statements, except as required to do so by law.

Additional information concerning risk factors, including those referenced above, can be found in press releases issued by the Company, as well as public periodic filings with the U.S. Securities and Exchange Commission (the “SEC”) and with securities regulators in Canada, including the discussion under the heading “Risk Factors” in the Company’s most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q or other filings with the SEC. Copies of the Company’s press releases and additional information about the Company are available at www.endo.com or you can contact the Endo Investor Relations Department at relations.investor@endo.com.

SOURCE Endo International plc

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/endo-reports-fourth-quarter-2023-financial-results-302081855.html

SOURCE Endo International plc

Company Codes: OtherOTC:ENDPQ, OTC-PINK:ENDPQ

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