PR Newswire
DUBLIN, Aug. 8, 2023
DUBLIN, Aug. 8, 2023 /PRNewswire/ -- Endo International plc (OTC: ENDPQ) today reported financial results for the second-quarter ended June 30, 2023.
SECOND-QUARTER FINANCIAL PERFORMANCE
(in thousands, except per share amounts)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2023 | 2022 | Change | 2023 | 2022 | Change | ||||||
Total Revenues, Net | $ 546,852 | $ 569,114 | (4) % | $ 1,062,119 | $ 1,221,373 | (13) % | |||||
Reported Income (Loss) from | $ 24,011 | $ (1,880,883) | NM | $ 21,188 | $ (1,946,183) | NM | |||||
Reported Diluted Weighted Average | 235,220 | 235,117 | — % | 235,662 | 234,498 | — % | |||||
Reported Diluted Net Income (Loss) | $ 0.10 | $ (8.00) | NM | $ 0.09 | $ (8.30) | NM | |||||
Reported Net Income (Loss) | $ 23,438 | $ (1,885,427) | NM | $ 20,159 | $ (1,957,401) | NM | |||||
Adjusted Income from Continuing | $ 230,705 | $ 6,532 | NM | $ 424,033 | $ 162,471 | NM | |||||
Adjusted Diluted Weighted Average | 235,220 | 236,217 | — % | 235,662 | 236,466 | — % | |||||
Adjusted Diluted Net Income per | $ 0.98 | $ 0.03 | NM | $ 1.80 | $ 0.69 | NM | |||||
Adjusted EBITDA (2)(3) | $ 243,417 | $ 160,206 | 52 % | $ 452,447 | $ 471,132 | (4) % | |||||
__________ | |
(1) | 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. |
(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 $547 million in second-quarter 2023, a decrease of 4% compared to $569 million in second-quarter 2022. This decrease was primarily attributable to decreased revenues from the Generic Pharmaceuticals segment.
Reported income from continuing operations in second-quarter 2023 was $24 million compared to reported loss from continuing operations of $1,881 million in second-quarter 2022. This change was primarily due to lower asset impairment charges and lower interest expense as a result of the August 2022 Chapter 11 filing.
Adjusted income from continuing operations in second-quarter 2023 was $231 million compared to $7 million in second-quarter 2022. This change was primarily driven by lower interest and adjusted operating expenses, including acquired in-process research and development charges.
BRANDED PHARMACEUTICALS SEGMENT
Second-quarter 2023 Branded Pharmaceuticals segment revenues were $212 million, a decrease of 3% compared to $219 million during second-quarter 2022.
Specialty Products revenues increased 1% to $165 million in second-quarter 2023 compared to $164 million in second-quarter 2022. This change was primarily due to an increase in SUPPRELIN® LA revenues mainly driven by increased average net selling price as a result of business mix. Second-quarter 2023 XIAFLEX® revenues were $117 million, a 3% decrease compared to second-quarter 2022 driven by decreased net selling price partially offset by increased volumes. XIAFLEX® second-quarter 2023 revenues increased 21% compared to first-quarter 2023 primarily driven by strong Peyronie's Disease volume growth.
Established Products revenues decreased 15% to $47 million in second-quarter 2023 compared to $55 million in second-quarter 2022 due primarily to generic competition.
STERILE INJECTABLES SEGMENT
Second-quarter 2023 Sterile Injectables segment revenues were $137 million, an increase of 11% compared to $123 million during second-quarter 2022. This change was primarily attributable to consideration received in connection with a settlement agreement with Novavax, Inc. to resolve a dispute under a previous manufacturing and services agreement. This was partially offset by decreased VASOSTRICT® revenues due to lower price and market share resulting from generic competition and lower overall market volumes.
GENERIC PHARMACEUTICALS SEGMENT
Second-quarter 2023 Generic Pharmaceuticals segment revenues were $179 million, a decrease of 12% compared to $203 million during second-quarter 2022. This decrease was primarily attributable to competitive pressure on lubiprostone capsules, the authorized generic of Mallinckrodt's Amitiza®, and varenicline tablets, the generic version of Chantix®, partially offset by revenues from dexlansoprazole delayed release capsules, the generic version of Dexilant® which launched during fourth-quarter 2022.
During second-quarter 2023, another generic varenicline competitor entered the market with additional competitors anticipated in 2023.
INTERNATIONAL PHARMACEUTICALS SEGMENT
Second-quarter 2023 International Pharmaceuticals segment revenues were $19 million, a decrease of 20% compared to $24 million during second-quarter 2022. This decrease was primarily attributable to a 2022 product discontinuation.
FINANCIAL EXPECTATIONS
Endo's second-quarter 2023 adjusted financial results exceeded the expectations assumed in the low end of the prior outlook for the full-year ending December 31, 2023, primarily driven by higher revenue from varenicline and dexlansoprazole delayed release capsules due to fewer than expected competitors and the recognition of the Novavax settlement.
The current outlook for the full-year ending December 31, 2023 contemplates a range of potential outcomes reflecting uncertainties in key assumptions primarily related to the timing of varenicline and dexlansoprazole competitive entrants. Endo does not currently anticipate a material impact to its long-term financial outlook, previously provided on February 14, 2023, beyond 2023.
The financial expectations reflect adjusted results. All financial expectations provided by Endo are forward-looking, and actual results may differ materially from such expectations, as further discussed below under the heading "Cautionary Note Regarding Forward-Looking Statements."
Full-Year 2023 Adjusted Results | |||
($ in millions) | Prior Outlook | Current Outlook | |
Total Revenues, Net | $1,890 - $2,075 | $1,975 - $2,035 | |
EBITDA | $690 - $820 | $750 - $790 | |
Assumptions: | |||
Segment Revenues: | |||
Branded Pharmaceuticals | ~$870 | ~$870 | |
Sterile Injectables | $400 - $430 | ~$430 | |
Generic Pharmaceuticals | $555 - $710 | $610 - $670 | |
International Pharmaceuticals | ~$65 | ~$65 | |
Gross Margin as a Percentage of Total Revenues, Net | ~67% | ~67% | |
Operating Expenses | ~$635 | ~$635 | |
CASH, CASH FLOW AND OTHER UPDATES
As of June 30, 2023, the Company had approximately $0.9 billion in unrestricted cash and cash equivalents. Second-quarter 2023 net cash provided by operating activities was approximately $127 million compared to approximately $133 million net cash used in operating activities during second-quarter 2022. This increase was primarily attributable to an increase in adjusted EBITDA, coupled with decreases in net working capital, cash interest payments and litigation related payments.
Amitiza® is a registered trademark of a Mallinckrodt company.
Dexilant® is a registered trademark of Takeda Pharmaceutical U.S.A., Inc.
Chantix® is a registered trademark of Pfizer Inc.
FINANCIAL SCHEDULES
The following table presents Endo's unaudited Total revenues, net for the three and six months ended June 30, 2023 and 2022 (dollars in thousands):
Three Months Ended June 30, | Percent | Six Months Ended June 30, | Percent | ||||||||
2023 | 2022 | 2023 | 2022 | ||||||||
Branded Pharmaceuticals: | |||||||||||
Specialty Products: | |||||||||||
XIAFLEX® | $ 117,291 | $ 120,878 | (3) % | $ 214,201 | $ 220,362 | (3) % | |||||
SUPPRELIN® LA | 28,223 | 24,739 | 14 % | 51,800 | 53,569 | (3) % | |||||
Other Specialty (1) | 19,839 | 18,246 | 9 % | 41,533 | 38,990 | 7 % | |||||
Total Specialty Products | $ 165,353 | $ 163,863 | 1 % | $ 307,534 | $ 312,921 | (2) % | |||||
Established Products: | |||||||||||
PERCOCET® | $ 26,445 | $ 26,256 | 1 % | $ 52,501 | $ 52,431 | — % | |||||
TESTOPEL® | 11,600 | 10,021 | 16 % | 22,589 | 18,901 | 20 % | |||||
Other Established (2) | 8,979 | 18,812 | (52) % | 27,326 | 39,560 | (31) % | |||||
Total Established Products | $ 47,024 | $ 55,089 | (15) % | $ 102,416 | $ 110,892 | (8) % | |||||
Total Branded Pharmaceuticals (3) | $ 212,377 | $ 218,952 | (3) % | $ 409,950 | $ 423,813 | (3) % | |||||
Sterile Injectables: | |||||||||||
ADRENALIN® | $ 27,133 | $ 26,774 | 1 % | $ 52,708 | $ 60,597 | (13) % | |||||
VASOSTRICT® | 24,419 | 35,630 | (31) % | 50,370 | 191,520 | (74) % | |||||
Other Sterile Injectables (4) | 85,476 | 60,767 | 41 % | 135,205 | 111,082 | 22 % | |||||
Total Sterile Injectables (3) | $ 137,028 | $ 123,171 | 11 % | $ 238,283 | $ 363,199 | (34) % | |||||
Total Generic Pharmaceuticals (5) | $ 178,579 | $ 203,377 | (12) % | $ 376,759 | $ 389,321 | (3) % | |||||
Total International Pharmaceuticals | $ 18,868 | $ 23,614 | (20) % | $ 37,127 | $ 45,040 | (18) % | |||||
Total revenues, net | $ 546,852 | $ 569,114 | (4) % | $ 1,062,119 | $ 1,221,373 | (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 either the three or six months ended June 30, 2023 and/or any product having revenues in excess of $25 million during any completed quarterly period in 2023 or 2022. |
(4) | Products included within Other Sterile Injectables include, but are not limited to, APLISOL®. During the second quarter of 2023, the Company executed a Settlement Agreement and Release of Claims with Novavax, Inc. (the Novavax Settlement Agreement) to resolve a dispute under a previous manufacturing and services agreement. For the three months ended June 30, 2023, the cash and non-cash consideration received in connection with the Novavax Settlement Agreement made up 6% of consolidated total revenues. No other individual product within Other Sterile Injectables has exceeded 5% of consolidated total revenues for the periods presented. |
(5) | The Generic Pharmaceuticals segment is comprised of a portfolio of products that are generic versions of branded products, are distributed primarily through the same wholesalers, generally have limited or no intellectual property protection and are sold within the U.S. Varenicline tablets (Endo's generic version of Pfizer Inc.'s Chantix®), which launched in September 2021, made up 10% and 13%, for the three and six months ended June 30, 2023, respectively, and 13% and 12% for the three and six months ended June 30, 2022, respectively, of consolidated total revenues. During the six months ended June 30, 2023, dexlansoprazole delayed release capsules (Endo's generic version of Takeda Pharmaceuticals USA, Inc.'s Dexilant®), which launched in November 2022, made up 5% of consolidated total revenues. No other individual product within this segment has exceeded 5% of consolidated total revenues for the periods presented. |
(6) | The International Pharmaceuticals segment, which accounted for less than 5% of consolidated total revenues for each of the periods presented, includes a variety of specialty pharmaceutical products sold outside the U.S., primarily in Canada through Endo's operating company Paladin Labs Inc. |
The following table presents unaudited Condensed Consolidated Statement of Operations data for the three and six months ended June 30, 2023 and 2022 (in thousands, except per share data):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
TOTAL REVENUES, NET | $ 546,852 | $ 569,114 | $ 1,062,119 | $ 1,221,373 | |||
COSTS AND EXPENSES: | |||||||
Cost of revenues | 233,852 | 263,786 | 466,594 | 537,001 | |||
Selling, general and administrative | 137,729 | 180,830 | 288,522 | 407,991 | |||
Research and development | 28,037 | 29,788 | 55,740 | 65,918 | |||
Acquired in-process research and development | — | 65,000 | — | 67,900 | |||
Litigation-related and other contingencies, net | 28,013 | 208 | 43,213 | 25,362 | |||
Asset impairment charges | — | 1,781,063 | 146 | 1,801,016 | |||
Acquisition-related and integration items, net | 365 | 1,825 | 762 | 448 | |||
Interest expense, net | 120 | 139,784 | 229 | 274,733 | |||
Reorganization items, net | 84,267 | — | 169,619 | — | |||
Other expense (income), net | 179 | (19,438) | 54 | (18,149) | |||
INCOME (LOSS) FROM CONTINUING OPERATIONS | $ 34,290 | $ (1,873,732) | $ 37,240 | $ (1,940,847) | |||
INCOME TAX EXPENSE | 10,279 | 7,151 | 16,052 | 5,336 | |||
INCOME (LOSS) FROM CONTINUING OPERATIONS | $ 24,011 | $ (1,880,883) | $ 21,188 | $ (1,946,183) | |||
DISCONTINUED OPERATIONS, NET OF TAX | (573) | (4,544) | (1,029) | (11,218) | |||
NET INCOME (LOSS) | $ 23,438 | $ (1,885,427) | $ 20,159 | $ (1,957,401) | |||
NET INCOME (LOSS) PER SHARE—BASIC: | |||||||
Continuing operations | $ 0.10 | $ (8.00) | $ 0.09 | $ (8.30) | |||
Discontinued operations | — | (0.02) | — | (0.05) | |||
Basic | $ 0.10 | $ (8.02) | $ 0.09 | $ (8.35) | |||
NET INCOME (LOSS) PER SHARE—DILUTED: | |||||||
Continuing operations | $ 0.10 | $ (8.00) | $ 0.09 | $ (8.30) | |||
Discontinued operations | — | (0.02) | — | (0.05) | |||
Diluted | $ 0.10 | $ (8.02) | $ 0.09 | $ (8.35) | |||
WEIGHTED AVERAGE SHARES: | |||||||
Basic | 235,220 | 235,117 | |||||
