Endo Reports Second Quarter 2015 Financial Results

DUBLIN, Aug. 10, 2015 /CNW/ --

  • Second quarter revenues of $735 million
  • Second quarter reported $0.49 diluted (GAAP) loss per share from continuing operations and $1.08 adjusted diluted EPS from continuing operations
  • U.S. Branded Pharmaceuticals second quarter revenue increase of 27 percent primarily attributable to the acquisition of Auxilium Pharmaceuticals
  • U.S. Generic Pharmaceuticals continues strong growth in second quarter with 24 percent revenue increase over second quarter 2014
  • International Pharmaceuticals second quarter results on-track and aligned with Company expectations
  • Affirms revenue and adjusted diluted EPS guidance from continuing operations for full year 2015

Endo International plc (NASDAQ: ENDP) (TSX: ENL) today reported second quarter 2015 financial results, including:

  • Revenues of $735 million, a 24 percent increase compared to second quarter 2014 revenues of $593 million, including new product revenue from 2014 and 2015 strategic M&A transactions.
  • Reported loss from continuing operations of $91 million compared to second quarter 2014 reported income from continuing operations of $41 million.
  • Adjusted income from continuing operations of $204 million, a 39 percent increase compared to second quarter 2014 adjusted income from continuing operations of $147 million.
  • Reported diluted loss per share from continuing operations of $0.49 compared to second quarter 2014 reported diluted earnings per share from continuing operations of $0.25.
  • Adjusted diluted earnings per share from continuing operations of $1.08 compared to second quarter 2014 adjusted diluted earnings per share from continuing operations of $0.89.
  • Adjusted diluted shares for the second quarter 2015 include the weighted average of approximately 28 million shares issued in June 2015 as part of the financing to fund the pending acquisition of Par Pharmaceutical. Adjusted diluted earnings per share for the second quarter 2015 excluding the effect of these additional shares would have been $1.12.

"Our diversified business delivered strong financial results for the quarter and demonstrated the value that we expect to create through the continued execution of our strategy," said Rajiv De Silva, President and CEO of Endo. "We are close to completing the integration planning for our acquisition of Par and we remain excited by the strategic expansion of our product portfolio, R&D pipeline and long-term growth profile that the Par assets and Par talent joining Endo are expected to help provide. Looking ahead to the second half of 2015 and beyond, we are focused on accelerating growth in our current U.S. Branded Pharmaceuticals portfolio and continue to expect that our strategic M&A and pipeline development efforts will yield future growth drivers."

FINANCIAL PERFORMANCE



($ in thousands, except per share amounts)



2nd Quarter




Six Months Ended June 30,




2015


2014


Change


2015


2014


Change

Total Revenues

$

735,166



$

592,848



24

%


$

1,449,294



$

1,063,690



36

%

Reported Income (Loss) from Continuing Operations

$

(90,894)



$

40,575



NM



$

59,598



$

(6,826)



NM


Reported Diluted Income (Loss) per Share from Continuing Operations

$

(0.49)



$

0.25



NM



$

0.33



$

(0.04)



NM


Adjusted Income from Continuing Operations

$

204,335



$

147,286



39

%


$

411,695



$

255,763



61

%

Adjusted Diluted Weighted

Average Shares

188,819



163,369



16

%


182,822



154,365



18

%

Adjusted Diluted EPS from

Continuing Operations

$

1.08



$

0.89



21

%


$

2.25



$

1.65



36

%

 

U.S. BRANDED PHARMACEUTICALS

During second quarter 2015 the U.S. Branded Pharmaceuticals business unit completed its integration of the Auxilium portfolio of products and subsequent restructuring of its field sales force.

Second quarter 2015 U.S. Branded Pharmaceuticals results include:

  • Revenues of $316 million, a 27 percent increase compared to second quarter 2014; this increase was primarily attributable to the strategic addition of Auxilium Pharmaceuticals.
  • Net sales of OPANA® ER decreased 20 percent compared to second quarter 2014; this decrease was attributable to lower brand demand due to generic competition and lower average pricing.
  • Net sales of Voltaren® Gel increased 11 percent compared to second quarter 2014; this increase was primarily attributable to demand growth.

U.S. GENERIC PHARMACEUTICALS

During the second quarter 2015, the U.S. Generic Pharmaceuticals business unit continued to advance key manufacturing, quality, commercial and R&D initiatives to support its organic growth objectives, while also planning for the integration of Par Pharmaceutical following the expected closing of the acquisition by the Company's reporting of third quarter 2015 results.

Second quarter 2015 U.S. Generic Pharmaceuticals results include:

  • Net sales of $338 million, a 24 percent increase compared to second quarter 2014; this increase was attributable to underlying organic growth of the business, growth from the addition of sales from our August 2014 acquisition of DAVA Pharmaceuticals and increased sales of the authorized generic version of LIDODERM®, which launched in May 2014.

INTERNATIONAL PHARMACEUTICALS

As part of Endo's planned expansion of its International Pharmaceuticals business unit and to further diversify the Company's financial profile, it recently announced multiple strategic transactions designed to increase focus on the core pharmaceuticals business line within its Litha Group. This included the acquisition of a broad product and R&D portfolio and the strategic divestiture of a portfolio of non-core products. These transactions are expected to close in the third and fourth quarter 2015, respectively.

Second quarter 2015 International Pharmaceuticals results include:

  • Net sales of $81 million, primarily attributable to Paladin Labs and the Litha Group, which were acquired in February 2014, as well as sales by Grupo Farmaceutico Somar, acquired in July 2014.

2015 Financial Guidance

For the full twelve months ended December 31, 2015, at current exchange rates, Endo affirms revenue and adjusted diluted EPS guidance from continuing operations, prior to the impact of the pending close of the acquisition of Par Pharmaceutical and related financing activities. The Company estimates:

  • Total revenue to be between $2.90 billion and $3.00 billion;
  • Reported (GAAP) diluted earnings per share (EPS) from continuing operations now expected to be between $1.42 and $1.62 compared to $1.70 and $1.90 previously; and
  • Adjusted diluted EPS from continuing operations to be between $4.40 and $4.60.

The Company's 2015 financial guidance is based on the following assumptions:

  • Adjusted gross margin of between 64 percent and 65 percent;
  • Adjusted operating expenses as a percentage of revenues to be between 23 percent and 24 percent;
  • Adjusted interest expense of approximately $310 million;
  • Adjusted effective tax rate of between 13 percent and 14 percent;
  • Adjusted diluted earnings per share from continuing operations assume full year adjusted diluted shares outstanding of approximately 180 million; and
  • Full-year 2015 financial guidance excludes the impact of the pre-close financing activities related to the acquisition of Par.

Balance Sheet Update

Cash and Cash Equivalents increased by approximately $2.1 billion in the six month period ended June 30, 2015. The increase is primarily attributable to the proceeds from the Company's June 2015 registered offering of ordinary shares. Endo issued 27,627,628 ordinary shares at a price of $83.25 per share, for aggregate gross proceeds of approximately $2.3 billion. Endo expects to use the net proceeds of the offering to fund the previously announced acquisition of Par Pharmaceutical Holdings, Inc.

In addition to the registered offering of ordinary shares, Endo has recently completed certain other pre-close financing activities related to the acquisition of Par. In July 2015, the company issued $1.635 billion of 6.00% senior notes due July 2023. In addition, Endo secured commitments for $3.8 billion of new senior secured credit facilities. The company intends to use the net proceeds from the equity and debt financing and cash on hand to fund the acquisition of Par and to refinance existing debt.

As part of refinancing existing debt, in July 2015, Endo redeemed all $499,875,000 aggregate principal amount outstanding of its 7.00% Senior Notes due 2019. In April 2015, Endo also settled approximately $98.7 million aggregate principal amount of Convertible Notes for approximately $316.4 million in cash and ordinary shares.

Accounts payable and accrued expenses increased to approximately $3.30 billion as of June 30, 2015. The increase is primarily attributable to an increase of approximately $269 million to the Company's product liability reserve in the three month period ended June 30, 2015 for claims related to vaginal mesh cases, raising the reserve for vaginal mesh cases to approximately $1.53 billion. The change in the reserve for product liability claims is attributable to Endo recently becoming aware of previously unknown U.S. mesh claims and a decrease in the applicable reduction factor from approximately 20 percent to 18 percent. Endo believes these claims are due, in large part, to certain trial verdicts affecting other mesh manufacturers and the resulting increase in advertising by plaintiffs' counsel seeking additional claimants. The Company believes that the current product liability accrual includes all known claims for which liability is probable and estimable.

Conference Call Information

Endo will conduct a conference call with financial analysts to discuss this press release today at 8:00 a.m. ET. The dial-in number to access the call is U.S./Canada (866) 497-0462, International (678) 509-7598, and the conference number is 93183256. Please dial in 10 minutes prior to the scheduled start time.

A replay of the call will be available from August 10, 2015 at 11:00 a.m. ET until 11:59 p.m. ET on August 24, 2015 by dialing (855) 859-2056 (U.S./Canada) or (404) 537-3406 (International) and entering the conference number is 93183256.

A simultaneous webcast of the call may be accessed by visiting www.endo.com. In addition, a replay of the webcast will be available until 11:59 p.m. ET on August 24, 2015. The replay may be accessed by clicking on "Events" in the Investor Relations section of the website.

Supplemental Financial Information

The following tables provide a reconciliation of our reported (GAAP) statements of operations to our adjusted statements of operations (Non-GAAP) for each of the three months ended June 30, 2015 and 2014 (in thousands, except per share data):

 

Three Months Ended June 30, 2015 (unaudited)

 Actual
Reported
 (GAAP)


Adjustments



Non-GAAP Adjusted

 REVENUES

$

735,166



$




$

735,166









 COSTS AND EXPENSES:







Cost of revenues

438,858



(166,558)


(1)


272,300


Selling, general and administrative

154,491



(6,585)


(2)


147,906


Research and development

18,984



(1,507)


(3)


17,477


Litigation-related and other contingencies, net

6,875



(6,875)


(4)



Asset impairment charges

70,243



(70,243)


(5)



Acquisition-related and integration items

44,225



(44,225)


(6)



 OPERATING INCOME

$

1,490



$

295,993




$

297,483


 INTEREST EXPENSE, NET

80,611



(2,999)


(7)


77,612


 OTHER EXPENSE, NET

24,493



(23,929)


(8)


564


 (LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX

$

(103,614)



$

322,921




$

219,307


 INCOME TAX (BENEFIT) EXPENSE

(12,720)



27,692


(9)


14,972


 (LOSS) INCOME FROM CONTINUING OPERATIONS

$

(90,894)



$

295,229




$

204,335


 DISCONTINUED OPERATIONS, NET OF TAX

(159,632)



181,771


(10)


22,139


 CONSOLIDATED NET (LOSS) INCOME

$

(250,526)



$

477,000




$

226,474


 Less: Net loss attributable to noncontrolling interests

(107)






(107)


 NET (LOSS) INCOME ATTRIBUTABLE TO ENDO INTERNATIONAL PLC

$

(250,419)



$

477,000




$

226,581


 DILUTED EARNINGS PER SHARE DATA ATTRIBUTABLE TO ENDO

INTERNATIONAL PLC ORDINARY SHAREHOLDERS:







 Continuing operations

$

(0.49)






$

1.08


 Discontinued operations

(0.86)






0.12


 DILUTED (LOSS) EARNINGS PER SHARE

$

(1.35)






$

1.20


 DILUTED WEIGHTED AVERAGE SHARES

185,328






188,819



Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:

(1)

To exclude amortization of commercial intangible assets related to developed technology of $116,987, a fair value step-up in inventory of $46,699, certain excess manufacturing costs that will be eliminated pursuant to integration plans of $2,249 and accruals for milestone payments to partners of $623.

(2)

To exclude certain separation benefits and other costs incurred in connection with continued efforts to enhance the Company's operations of $5,785 and costs associated with unused financing commitments of $800.

(3)

To exclude milestone payments to partners of $1,512 offset by separation costs of $(5).

(4)

To exclude the impact of net litigation charges.

(5)

To exclude asset impairment charges.

(6)

To exclude acquisition and integration costs, primarily associated with the Auxilium and Par acquisitions and the AMS divestiture.

(7)

To exclude debt abandonment costs of $2,746 and additional non-cash interest expense related to our 1.75% Convertible Senior Subordinated Notes of $253.

(8)

To exclude other than temporary impairment of equity investment of $18,869, foreign currency impact related to the re-measurement of intercompany debt instruments of $2,792, costs associated with unused financing commitments of $2,261 and other miscellaneous expenses of $7.

(9)

Primarily to reflect the tax savings from acquired tax attributes and the effect of the pre-tax adjustments above at applicable rates. Additionally, included within this amount is an adjustment to exclude approximately $500 of tax benefit resulting from the expected realization of deferred tax assets in the foreseeable future related to certain components of our AMS business, which was listed as held for sale during the first quarter of 2015.

(10)

Primarily to exclude certain items related to the AMS businesses, including litigation charges related to vaginal mesh cases, reported as Discontinued operations, net of tax.

 

 


Three Months Ended June 30, 2014 (unaudited)

 Actual
Reported
 (GAAP)


Adjustments



Non-GAAP Adjusted

 REVENUES

$

592,848



$




$

592,848









 COSTS AND EXPENSES:







Cost of revenues

303,445



(71,905)


(1)


231,540


Selling, general and administrative

124,366



(16,450)


(2)


107,916


Research and development

30,406



(10,646)


(3)


19,760


Litigation-related and other contingencies

3,954



(3,954)


(4)



Acquisition-related and integration items

19,618



(19,618)


(5)



 OPERATING INCOME

$

111,059



$

122,573




$

233,632


 INTEREST EXPENSE, NET

52,183



(3,346)


(6)


48,837


LOSS ON EXTINGUISHMENT OF DEBT

20,089



(20,089)


(7)



 OTHER INCOME, NET

(6,596)



3,850


(8)


(2,746)


 INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX

$

45,383



$

142,158




$

187,541


 INCOME TAX EXPENSE

4,808



35,447


(9)


40,255


 INCOME FROM CONTINUING OPERATIONS

$

40,575



$

106,711




$

147,286


 DISCONTINUED OPERATIONS, NET OF TAX

(20,189)



47,755


(10)


27,566


 CONSOLIDATED NET INCOME

$

20,386



$

154,466




$

174,852


 Less: Net (loss) income attributable to noncontrolling interests

(774)



1,944


(11)


1,170


 NET INCOME ATTRIBUTABLE TO ENDO INTERNATIONAL PLC

$

21,160



$

152,522




$

173,682


 DILUTED EARNINGS PER SHARE DATA ATTRIBUTABLE TO ENDO

INTERNATIONAL PLC ORDINARY SHAREHOLDERS:







 Continuing operations

$

0.25






$

0.89


 Discontinued operations

(0.12)






0.17


 DILUTED EARNINGS PER SHARE

$

0.13






$

1.06


 DILUTED WEIGHTED AVERAGE SHARES

163,369






163,369



Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:

(1)

To exclude amortization of commercial intangible assets related to developed technology of $52,761 and a fair value step-up in inventory of $19,144.

(2)

To exclude certain separation benefits and other costs incurred in connection with continued efforts to enhance the Company's operations of $11,150, an adjustment to the accrual for excise tax payments of $(4,700) and a charge of $10,000 related to the non-recoverability of certain non-trade receivables that did not relate to our core operating activities.

(3)

To exclude milestone payments to partners of $10,350 and adjustments to accruals for other costs incurred in connection with continued efforts to enhance the Company's operations of $296.

(4)

To exclude the impact of charges primarily for mesh-related product liability.

(5)

To exclude acquisition and integration costs associated with the Paladin, Boca and other acquisitions.

(6)

To exclude additional non-cash interest expense related to our 1.75% Convertible Senior Subordinated Notes.

(7)

To exclude the unamortized debt issuance costs written off and recorded as a net loss on extinguishment of debt in connection with various refinancing and note repurchase activity.

(8)

To exclude the net gain on sale of certain early-stage drug discovery and development assets.

(9)

Primarily to reflect the cash tax savings from acquired tax attributes and the tax effect of the pre-tax adjustments above at applicable tax rates.

(10)

To exclude certain items related to the AMS and Healthtronics businesses, including litigation charges related to vaginal mesh cases, reported as Discontinued operations, net of tax.

(11)

To exclude the impact of the portion of certain of the above adjustments attributable to noncontrolling interests.

 

The following tables provide a reconciliation of our reported (GAAP) statements of operations to our adjusted statements of operations (Non-GAAP) for each of the six months ended June 30, 2015 and 2014 (in thousands, except per share data):

 

Six Months Ended June 30, 2015 (unaudited)

 Actual

Reported
 (GAAP)


Adjustments



Non-GAAP Adjusted

 REVENUES

$

1,449,294



$




$

1,449,294









 COSTS AND EXPENSES:







Cost of revenues

823,124



(302,347)


(1)


520,777


Selling, general and administrative

366,069



(85,995)


(2)


280,074


Research and development

36,881



(3,570)


(3)


33,311


Litigation-related and other contingencies, net

19,875



(19,875)


(4)



Asset impairment charges

77,243



(77,243)


(5)



Acquisition-related and integration items

78,865



(78,865)


(6)



 OPERATING INCOME

$

47,237



$

567,895




$

615,132


 INTEREST EXPENSE, NET

153,750



(4,378)


(7)


149,372


 LOSS ON EXTINGUISHMENT OF DEBT

980



(980)


(8)



 OTHER EXPENSE (INCOME), NET

12,498



(13,795)


(9)


(1,297)


 (LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX

$

(119,991)



$

587,048




$

467,057


 INCOME TAX (BENEFIT) EXPENSE

(179,589)



234,951


(10)


55,362


 INCOME FROM CONTINUING OPERATIONS

$

59,598



$

352,097




$

411,695


 DISCONTINUED OPERATIONS, NET OF TAX

(385,842)



428,636


(11)


42,794


 CONSOLIDATED NET (LOSS) INCOME

$

(326,244)



$

780,733




$

454,489


 Less: Net loss attributable to noncontrolling interests

(107)






(107)


 NET (LOSS) INCOME ATTRIBUTABLE TO ENDO INTERNATIONAL PLC

$

(326,137)



$

780,733




$

454,596


 DILUTED EARNINGS PER SHARE DATA ATTRIBUTABLE TO ENDO

INTERNATIONAL PLC ORDINARY SHAREHOLDERS:







 Continuing operations

$

0.33






$

2.25


 Discontinued operations

(2.11)






0.24


 DILUTED (LOSS) EARNINGS PER SHARE

$

(1.78)






$

2.49


 DILUTED WEIGHTED AVERAGE SHARES

182,822






182,822



Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:

(1)

To exclude amortization of commercial intangible assets related to developed technology of $212,256, a fair value step-up in inventory of $84,253, certain excess manufacturing costs that will be eliminated pursuant to integration plans of $4,611 and accruals for milestone payments to partners of $1,227.

(2)

To exclude certain separation benefits and other costs incurred in connection with continued efforts to enhance the Company's operations of $47,592 and a charge of $37,603 related to the acceleration of Auxilium employee equity awards at closing and costs associated with unused financing commitments of $800.

(3)

To exclude milestone payments to partners of $3,575 offset by separation costs of $(5).

(4)

To exclude the impact of certain net litigation charges.

(5)

To exclude asset impairment charges.

(6)

To exclude acquisition and integration costs, primarily associated with the Auxilium and Par acquisitions and the AMS divestiture.

(7)

To exclude debt abandonment costs of $2,746 and additional non-cash interest expense related to our 1.75% Convertible Senior Subordinated Notes of $1,632.

(8)

To exclude a net loss on extinguishment of debt in connection with note repurchase activity.

(9)

To exclude other than temporary impairment of equity investment of $18,869, the foreign currency impact related to the re-measurement of intercompany debt instruments of $(18,298), costs associated with unused financing commitments of $14,071 and other miscellaneous income of $(847).

(10)

Primarily to reflect the tax savings from acquired tax attributes and the effect of the pre-tax adjustments above at applicable rates. Additionally, included within this amount is an adjustment to exclude approximately $159,200 of tax benefit resulting from the expected realization of deferred tax assets in the foreseeable future related to certain components of our AMS business, which was listed as held for sale during the first quarter of 2015.

(11)

Primarily to exclude certain items related to the AMS businesses, reported as Discontinued operations, net of tax, including an impairment charge of $222,753 based on the estimated fair values of the underlying businesses being sold, less the costs to sell and litigation charges related to vaginal mesh cases.

 

 


Six Months Ended June 30, 2014 (unaudited)

 Actual

Reported
 (GAAP)


Adjustments



Non-GAAP Adjusted

 REVENUES

$

1,063,690



$




$

1,063,690









 COSTS AND EXPENSES:







Cost of revenues

516,124



(115,311)


(1)


400,813


Selling, general and administrative

284,432



(75,444)


(2)


208,988


Research and development

61,352



(20,722)


(3)


40,630


Litigation-related and other contingencies

3,954



(3,954)


(4)



Acquisition-related and integration items

64,887



(64,887)


(5)



 OPERATING INCOME

$

132,941



$

280,318




$

413,259


 INTEREST EXPENSE, NET

105,575



(9,315)


(6)


96,260


 LOSS ON EXTINGUISHMENT OF DEBT

29,685



(29,685)


(7)



 OTHER INCOME, NET

(13,004)



3,850


(8)


(9,154)


 INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX

$

10,685



$

315,468




$

326,153


 INCOME TAX EXPENSE

17,511



52,879


(9)


70,390


 (LOSS) INCOME FROM CONTINUING OPERATIONS

$

(6,826)



$

262,589




$

255,763


 DISCONTINUED OPERATIONS, NET OF TAX

(406,066)



462,854


(10)


56,788


 CONSOLIDATED NET (LOSS) INCOME

$

(412,892)



$

725,443




$

312,551


 Less: Net income attributable to noncontrolling interests

2,860



1,944


(11)


4,804


 NET (LOSS) INCOME ATTRIBUTABLE TO ENDO INTERNATIONAL PLC

$

(415,752)



$

723,499




$

307,747


 DILUTED EARNINGS PER SHARE DATA ATTRIBUTABLE TO ENDO

INTERNATIONAL PLC ORDINARY SHAREHOLDERS:







 Continuing operations

$

(0.04)






$

1.65


 Discontinued operations

(2.92)






0.34


 DILUTED (LOSS) EARNINGS PER SHARE

$

(2.96)






$

1.99


 DILUTED WEIGHTED AVERAGE SHARES

140,252






154,365



Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:

(1)

To exclude amortization of commercial intangible assets related to developed technology of $92,431, a fair value step-up in inventory of $22,725 and accruals for milestone payments to partners of $155.

(2)

To exclude certain separation benefits and other costs incurred in connection with continued efforts to enhance the Company's operations of $10,144, accruals for excise tax payments of $55,300 and a charge of $10,000 related to the non-recoverability of certain non-trade receivables that did not relate to our core operating activities.

(3)

To exclude milestone payments to partners of $21,350 and adjustments to accruals for other costs incurred in connection with continued efforts to enhance the Company's operations of $(628).

(4)

To exclude the impact of net charges primarily for mesh-related product liability.

(5)

To exclude acquisition and integration costs of associated with the Paladin, Boca and other acquisitions.

(6)

To exclude additional non-cash interest expense related to our 1.75% Convertible Senior Subordinated Notes.

(7)

To exclude the unamortized debt issuance costs written off and recorded as a net loss on extinguishment of debt in connection with various refinancing and note repurchase activity.

(8)

To exclude the net gain on sale of certain early-stage drug discovery and development assets.

(9)

Primarily to reflect the cash tax savings from acquired tax attributes and the tax effect of the pre-tax adjustments above at applicable tax rates.

(10)

To exclude certain items related to the AMS and Healthtronics businesses, including litigation charges related to vaginal mesh cases, reported as Discontinued operations, net of tax.

(11)

To exclude the impact of the portion of certain of the above adjustments attributable to noncontrolling interests.

 

Non-GAAP adjusted net income and its components and Non-GAAP adjusted diluted earnings per share amounts are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted earnings per share amounts. Despite the importance of these measures to management in goal setting and performance measurement, we stress that these are Non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, Non-GAAP adjusted net income and its components (unlike U.S. GAAP net income 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. See Endo's Current Report on Form 8-K furnished today to the Securities and Exchange Commission for an explanation of Endo's reasons for using non-GAAP measures.

Reconciliation of Projected GAAP Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share Guidance for 2015

 


Year Ending


December 31, 2015

Projected GAAP diluted income per ordinary share

$

1.42


To

$

1.62


Upfront and milestone-related payments to partners

0.31



0.31


Amortization of commercial intangible assets, fair value inventory step-up and certain excess costs that will be eliminated pursuant to integration plans

3.34



3.34


Acquisition related, integration and restructuring charges and certain excess costs that will be eliminated pursuant to integration plans

1.00



1.00


Asset Impairment Charges

0.43



0.43


Charges for litigation and other legal matters

0.11



0.11


Interest expense adjustment for non-cash interest related to our 1.75% Convertible Senior Subordinated Notes and other treasury related items

0.01



0.01


Tax effect of pre-tax adjustments at the applicable tax rates and certain other expected cash tax savings as a result of acquisitions

(2.22)



(2.22)


Diluted adjusted income per ordinary share guidance

$

4.40


To

$

4.60


 

The Company's guidance is being issued based on certain assumptions including:

  • Certain of the above amounts are based on estimates and there can be no assurance that Endo will achieve these results.
  • Includes all completed business development transactions as of August 10, 2015.

About Endo International plc

Endo International plc is a global specialty pharmaceutical company focused on improving patients' lives while creating shareholder value. Endo develops, manufactures, markets and distributes quality branded pharmaceutical and generic pharmaceutical products as well as over-the-counter medications though its operating companies. Endo has global headquarters in Dublin, Ireland, and U.S. headquarters in Malvern, PA. Learn more at www.endo.com.

(Tables Attached)

The following tables present Endo's unaudited Net Revenues for the three and six months ended June 30, 2015 and 2014:

 


Endo International plc

Net Revenues (unaudited)

(in thousands)




Three Months Ended June 30,


Percent Growth


Six Months Ended June 30,


Percent Growth


2015


2014



2015


2014


U.S. Branded Pharmaceuticals:












Pain:












LIDODERM®

$

30,186



$

43,002



(30)

%


$

55,346



$

76,082



(27)

%

OPANA® ER

43,097



54,109



(20)

%


89,956



101,062



(11)

%

PERCOCET®

32,444



31,543



3

%


68,743



60,523



14

%

Voltaren® Gel

51,006



45,797



11

%


96,477



83,356



16

%


$

156,733



$

174,451



(10)

%


$

310,522



$

321,023



(3)

%

Urology Retail:












FORTESTA® GEL, including Authorized Generic

$

14,538



$

12,004



21

%


$

29,028



$

23,147



25

%

TESTIM®, including Authorized Generic

11,416





NM



20,845





NM



$

25,954



$

12,004



116

%


$

49,873



$

23,147



115

%

Specialty:












SUPPRELIN® LA

$

17,796



$

17,049



4

%


$

34,078



$

30,806



11

%

XIAFLEX®

39,952





NM



67,918





NM



$

57,748



$

17,049



239

%


$

101,996



$

30,806



231

%

Branded Other Revenues

75,478



31,931



136

%


138,029



56,408



145

%

Actavis Royalty



13,112



(100)

%




51,328



(100)

%

Total U.S. Branded Pharmaceuticals

$

315,913



$

248,547



27

%


$

600,420



$

482,712



24

%

Total U.S. Generic Pharmaceuticals

338,326



272,213



24

%


695,288



484,068



44

%

Total International Pharmaceuticals

80,927



72,088



12

%


153,586



96,910



58

%

Total Revenue

$

735,166



$

592,848



24

%


$

1,449,294



$

1,063,690



36

%

 

The following table presents unaudited condensed consolidated Balance Sheet data at June 30, 2015 and December 31, 2014:

 



June 30,
 2015


December 31,
 2014

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$

2,529,735



$

408,753


Restricted cash and cash equivalents

484,788



530,930


Accounts receivable

1,318,286



1,126,078


Inventories, net

625,767



423,321


Assets held for sale

1,696,059



1,937,864


Other assets

882,318



653,315


Total current assets

$

7,536,953



$

5,080,261


TOTAL NON-CURRENT ASSETS

8,594,961



5,829,355


TOTAL ASSETS

$

16,131,914



$

10,909,616


LIABILITIES AND STOCKHOLDERS' EQUITY




CURRENT LIABILITIES:




Accounts payable and accrued expenses

$

3,302,663



$

2,890,143


Liabilities held for sale

104,994



103,338


Other current liabilities

79,785



155,959


Total current liabilities

$

3,487,442



$

3,149,440


LONG-TERM DEBT, LESS CURRENT PORTION, NET

5,361,230



4,202,356


OTHER LIABILITIES

1,131,304



1,149,607


STOCKHOLDERS' EQUITY:




Total Endo International plc shareholders' equity

$

6,151,870



$

2,374,757


Noncontrolling interests

68



33,456


Total shareholders' equity

$

6,151,938



$

2,408,213


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

16,131,914



$

10,909,616


 

The following table presents unaudited condensed consolidated Statement of Cash Flow data for the six months ended June 30, 2015 and 2014:

 


Six Months Ended June 30,


2015


2014

OPERATING ACTIVITIES:




Consolidated net loss

$

(326,244)



$

(412,892)


Adjustments to reconcile consolidated Net loss to Net cash used in operating activities




Depreciation and amortization

249,181



152,818


Other

196,288



(85,137)


Changes in assets and liabilities which (used) provided cash

(196,711)



292,580


Net cash used in operating activities

(77,486)



(52,631)


INVESTING ACTIVITIES:




Purchases of property, plant and equipment, net

(38,621)



(40,379)


Acquisitions, net of cash acquired

(915,945)



(203,088)


Proceeds from sale of business, net

4,712



54,521


Proceeds from settlement escrow



3,148


Increase in restricted cash and cash equivalents

(381,223)




Decrease in restricted cash and cash equivalents

424,695



704,223


Other

41



69,916


Net cash (used in) provided by investing activities

(906,341)



588,341


FINANCING ACTIVITIES:




Borrowings (payments) on indebtedness, net

922,821



373,875


Issuance of ordinary shares

2,302,281



2,288


Other

(108,694)



(33,355)


Net cash provided by financing activities

3,116,408



342,808


Effect of foreign exchange rate

(11,599)



4,716


NET INCREASE IN CASH AND CASH EQUIVALENTS

2,120,982



883,234


LESS: NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS OF DISCONTINUED OPERATIONS



(17,413)


NET INCREASE IN CASH AND CASH EQUIVALENTS OF CONTINUING OPERATIONS

2,120,982



900,647


CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

408,753



526,597


CASH AND CASH EQUIVALENTS, END OF PERIOD

$

2,529,735



$

1,427,244


 

Our Net cash used in operating activities includes the impact of certain payments for legal settlements, primarily related to mesh product liability and the Department of Justice settlement related to the sale, marketing and promotion of Lidoderm. The following schedule presents the unaudited impact of these payments on our Net cash used in operating activities for the six months ended June 30, 2015 and 2014:

 



Six Months Ended June 30,


2015


2014

Net cash used in operating activities, as reported

$

(77,486)



$

(52,631)


Payments for certain legal settlements

395,916



202,265


Net cash provided by operating activities, excluding the impact of certain legal settlements

318,430



149,634


 

Safe Harbor Statement

This press release contains forward-looking statements, including but not limited to the statements by Mr. De Silva and other statements regarding product development, market potential, expected growth and regulatory approvals, as well as Endo's earnings per share amounts, product net sales, revenue forecasts and any other statements that refer to Endo's expected, estimated or anticipated future results. Because forecasts are inherently estimates that cannot be made with precision, Endo's performance at times differs materially from its estimates and targets, and Endo often does not know what the actual results will be until after the end of the applicable reporting period. Therefore, Endo will not report or comment on its progress during a current quarter except through public announcement. Any statement made by others with respect to progress during a current quarter cannot be attributed to Endo.

All forward-looking statements in this press release reflect Endo's current analysis of existing trends and information and represent Endo's judgment only as of the date of this press release. Actual results may differ materially from current expectations based on a number of factors affecting Endo's businesses, including, among other things, the following: changing competitive, market and regulatory conditions; Endo's ability to obtain and maintain adequate protection for its intellectual property rights; the timing and uncertainty of the results of both the research and development and regulatory processes; 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 effectiveness of advertising and other promotional campaigns; the timely and successful implementation of strategic initiatives; the results of any pending or future litigation, investigations or claims; the uncertainty associated with the identification of and successful consummation and execution of external corporate development initiatives and strategic partnering transactions; and Endo's ability to obtain and successfully maintain a sufficient supply of products to meet market demand in a timely manner. In addition, U.S. and international economic conditions, including higher unemployment, political instability, financial hardship, consumer confidence and debt levels, taxation, changes in interest and currency exchange rates, international relations, capital and credit availability, the status of financial markets and institutions, fluctuations or devaluations in the value of sovereign government debt, as well as the general impact of continued economic volatility, can materially affect Endo's results. Therefore, the reader is cautioned not to rely on these forward-looking statements. Endo expressly disclaims any intent or obligation to update these forward-looking statements except as required to do so by law.

Additional information concerning the above-referenced risk factors and other risk factors can be found in press releases issued by Endo, as well as Endo's public periodic filings with the U.S. Securities and Exchange Commission and with securities regulators in Canada, including the discussion under the heading "Risk Factors" in Endo's 2014 Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q. Copies of Endo's press releases and additional information about Endo are available at www.endo.com or you can contact the Endo Investor Relations Department by calling 484-216-0000.

 

SOURCE Endo International plc

For further information: Investors/Media: Keri P. Mattox, (484) 216-7912; Investors: Jonathan Neely, (484) 216-6645; Media: Heather Zoumas-Lubeski, (484) 216-6829, http://www.endo.com


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