Endo Reports First-Quarter 2019 Financial Results

DUBLIN, May 9, 2019 /PRNewswire/ --

• First-quarter 2019 revenues increased 3 percent to $720 million compared to first-quarter 2018 revenues of $701 million
• First-quarter 2019 Sterile Injectables revenues increased 25 percent to $270 million compared to first-quarter 2018 revenues of $216 million
• First-quarter 2019 Branded Pharmaceuticals - Specialty Products revenues increased 19 percent to $115 million compared to first-quarter 2018 revenues of $97 million
• Company affirms 2019 financial guidance

Endo International plc (NASDAQ: ENDP) today reported first-quarter 2019 financial results, including:

• Revenues of $720 million, an increase of 3 percent compared to first-quarter 2018 revenues of $701 million.
• Reported net loss from continuing operations of $13 million compared to first-quarter 2018 reported net loss from continuing operations of $498 million.
• Reported diluted loss per share from continuing operations of $0.06 compared to first-quarter 2018 reported diluted loss per share from continuing operations of $2.23.
• Adjusted income from continuing operations of $122 million compared to first-quarter 2018 adjusted income from continuing operations of $151 million.
• Adjusted diluted earnings per share from continuing operations of $0.53 compared to first-quarter 2018 adjusted diluted earnings per share from continuing operations of $0.67.
• Adjusted EBITDA of $334 million compared to first-quarter 2018 adjusted EBITDA of $334 million.

"We are extremely pleased with Endo's continued strong operational performance during the first quarter, led by double-digit revenue growth in our Sterile Injectables segment and in the Specialty Products portfolio of our Branded Pharmaceuticals segment. Additionally, during the quarter we completed a debt refinancing which increases our operational flexibility," said Paul Campanelli, President and Chief Executive Officer of Endo. "We are on target to meet our previously provided full-year financial guidance and we remain focused on executing our multi-year turnaround plan, which includes continuing our regulatory and pre-commercialization activities to successfully bring CCH for cellulite to market."

CONSOLIDATED RESULTS

During the first quarter of 2019, Endo changed the names of its reportable segments. This change, which was intended to simplify the segments' names, had no impact on Endo's consolidated or segment results.

Total revenues were $720 million in first-quarter 2019 compared to $701 million during the same period in 2018. This increase was primarily attributable to continued strong growth in the Sterile Injectables segment and the Specialty Products portfolio of the Branded Pharmaceuticals segment, partially offset by competitive pressures in the Generic Pharmaceuticals segment, the Established Products portfolio of the Branded Pharmaceuticals segment, and the International segment.

GAAP net loss from continuing operations in first-quarter 2019 was $13 million compared to GAAP net loss from continuing operations of $498 million during the same period in 2018. This result was primarily attributable to a first-quarter gain related to the current year debt refinancing transactions and a reduction in asset impairment charges. GAAP diluted net loss per share from continuing operations in first-quarter 2019 was $0.06 compared to GAAP diluted net loss per share from continuing operations of $2.23 in first-quarter 2018.

Adjusted income from continuing operations in first-quarter 2019 was $122 million compared to $151 million in first-quarter 2018. Adjusted diluted income per share from continuing operations in first-quarter 2019 was $0.53 compared to $0.67 in first-quarter 2018.

BRANDED PHARMACEUTICALS

First-quarter 2019 Branded Pharmaceuticals revenues were $204 million compared to $200 million in first-quarter 2018. This increase was primarily attributable to continued strong growth of our Specialty Products portfolio, offset by ongoing generic competition in our Established Products portfolio.

Specialty Products revenues increased 19 percent to $115 million in first-quarter 2019 compared to first-quarter 2018, primarily driven by the continued strong performance from XIAFLEX^®. Sales of XIAFLEX^® increased 20 percent to $69 million compared to first-quarter 2018; this increase was primarily attributable to underlying volume growth in both the Peyronie's Disease and Dupuytren's Contracture indications.

Additionally, the Company presented new Phase 3 data from the Collagenase Clostridium Histolyticum (CCH) for cellulite clinical trials at the American Academy of Dermatology conference.

STERILE INJECTABLES

First-quarter 2019 Sterile Injectables revenues were $270 million, an increase of 25 percent compared to first-quarter 2018. This increase was primarily attributable to the third-quarter 2018 launch of ertapenem for injection, the authorized generic of INVANZ^®, as well as the continued strong growth of ADRENALIN^® and VASOSTRICT^®. The increase in volume for VASOSTRICT^® during the quarter included a benefit from the timing of shipments.

In March, the U.S. Food and Drug Administration (FDA) removed vasopressin from the 503B Bulks List. As a result, it is now unlawful for outsourcing facilities to sell compounded vasopressin products unless they compound those products using an FDA-approved vasopressin. VASOSTRICT^® is the only vasopressin product approved by the FDA.

GENERIC PHARMACEUTICALS

First-quarter 2019 Generic Pharmaceuticals revenues were $219 million compared to $249 million in first-quarter 2018. This performance was primarily attributable to increased competitive pressure on certain generic products that had limited competition in the first quarter of 2018. Partially offsetting the decrease was the impact of certain 2018 product launches including, among others, colchicine tablets, the authorized generic of Colcrys^®. During first-quarter 2019, the Generic Pharmaceuticals segment launched aliskiren hemifumarate tablets.

INTERNATIONAL PHARMACEUTICALS

First-quarter 2019 International Pharmaceuticals revenues were $28 million, compared to $35 million in the same period in 2018.

2019 FINANCIAL GUIDANCE

For the twelve months ending December 31, 2019, at current exchange rates, Endo is affirming its previously provided guidance on revenue, adjusted diluted earnings per share from continuing operations and adjusted EBITDA from continuing operations. The Company estimates:

• Total revenues to be between $2.76 billion and $2.96 billion;
• Adjusted diluted earnings per share from continuing operations to be between $2.00 and $2.25; and
• Adjusted EBITDA from continuing operations to be between $1.24 billion and $1.34 billion.

The Company's 2019 non-GAAP financial guidance is based on the following assumptions:

• Adjusted gross margin of approximately 65.0% to 66.0%;
• Adjusted operating expenses as a percentage of revenues of approximately 24.5% to 25.0%;
• Adjusted interest expense of approximately $550 million to $560 million;
• Adjusted effective tax rate of approximately 17.5% to 18.5%;
• Adjusted diluted weighted average shares outstanding of approximately 234 million; and
• Revenue, adjusted EBITDA, and adjusted diluted earnings per share weighted slightly more towards the second half of 2019.

BALANCE SHEET, LIQUIDITY AND OTHER UPDATES

In March 2019, the Company executed a debt refinancing which increases operational flexibility and significantly reduced the amount outstanding on most of the Company's near-term debt maturities. Additionally, the Company extended the maturity date for substantially its entire revolving credit facility from April 2022 to March 2024.

As of March 31, 2019, the Company had approximately $1.0 billion in unrestricted cash; debt of $8.1 billion; net debt of approximately $7.1 billion and a net debt to adjusted EBITDA ratio of 5.3.

First-quarter 2019 cash used in operating activities was $91 million, compared to $49 million of net cash provided by operating activities during first quarter 2018.

CONFERENCE CALL INFORMATION

Endo will conduct a conference call with financial analysts to discuss this press release today at 7:30 a.m. ET. The dial-in number to access the call is U.S./Canada (866) 497-0462, International (678) 509-7598, and the passcode is 5669074. Please dial in 10 minutes prior to the scheduled start time.

A replay of the call will be available from May 9, 2019 at 10:30 a.m. ET until 10:30 a.m. ET on May 12, 2019 by dialing U.S./Canada (855) 859-2056, International (404) 537-3406, and entering the passcode 5669074.

A simultaneous webcast of the call can be accessed by visiting http://investor.endo.com/events-and-presentations. In addition, a replay of the webcast will be available on the Company website for one year following the event.

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 our 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.

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 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 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 amount 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 International plc

Endo International plc (NASDAQ: ENDP) is a highly focused generics and specialty branded pharmaceutical company delivering quality medicines to patients in need through excellence in development, manufacturing and commercialization. Endo has global headquarters in Dublin, Ireland, and U.S. headquarters in Malvern, PA. Learn more at www.endo.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements, including but not limited to the statements by Mr. Campanelli, as well as other statements regarding product development, market potential, corporate strategy, optimization efforts and restructurings, timing, closing and expected benefits and value from any acquisition, expected growth and regulatory approvals, together with Endo's earnings per share from continuing operations 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; changes in legislation; 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, 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 effectiveness of advertising and other promotional campaigns; the timely and successful implementation of strategic initiatives; the timing or results of any pending or future litigation, investigations or claims or actual or contingent liabilities, settlement discussions, negotiations or other adverse proceedings; unfavorable publicity regarding the misuse of opioids; timing and uncertainty of any acquisition, including the possibility that various closing conditions may not be satisfied or waived, uncertainty surrounding the successful integration of any acquired business and failure to achieve the expected financial and commercial results from such acquisition; 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 most recent 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 845-364-4833.

Related Links

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