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Last updated on April 17, 2014 at 8:20 EDT

Endo Reports Second Quarter Financial Results

August 6, 2013

MALVERN, Pa., Aug. 6, 2013 /PRNewswire/ —

  • Total quarterly revenues of $767 million, decreased by 2 percent versus prior year.
  • Second quarter reported diluted (GAAP) EPS of $0.30; Second quarter adjusted diluted EPS of $1.42 increased by 12 percent versus prior year.
  • Company now expects 2013 revenues in the range of $2.70 billion to $2.80 billion.
  • Company now expects reported diluted (GAAP) EPS in the range of $1.47 to $1.77; Company now expects 2013 adjusted diluted EPS in the range of $4.25 to $4.55.
  • Company on-track to meet expense reductions as announced on June 5, 2013.

Endo Health Solutions (Nasdaq: ENDP) today reported second quarter 2013 total revenues of $767 million, compared to $785 million for the same quarter of 2012. Endo reported second quarter 2013 net income of $35 million, compared to reported net income of $9 million for the comparable 2012 period. Reported net income for the period includes a charge of approximately $60 million for the period, primarily to reflect the impact of an accrual for certain product liability claims.

As detailed in the supplemental financial information below, adjusted net income for the three months ended June 30, 2013 was $166 million, compared to $154 million for the same period in 2012. Reported diluted EPS for the second quarter 2013 was $0.30, compared to $0.08 for the second quarter of 2012. Adjusted diluted EPS was $1.42 for the second quarter 2013 compared to $1.27 for the same period in 2012.

On June 5, Endo Health Solutions announced a new strategic direction and related actions to streamline the company’s operations and expand its platform for sustainable cash flow and earnings growth. Those actions were the result of a comprehensive assessment of Endo’s strategy, businesses and operating model.

The company has made progress in implementing the actions announced on June 5. In particular, cost reduction efforts to reduce operating expenses by $325 million on an annual run rate basis versus 2012 expenses are on track. In addition, the company has launched a process to explore strategic alternatives for its HealthTronics business and branded pharmaceutical discovery platform. R&D operations have been restructured to improve efficiency and effectiveness, with a focus on development capabilities and near-term revenue generating assets. Efforts to drive organic growth across business lines through more effective execution are beginning to show impact, and the company has made progress in enhancing its senior talent base. The company also continues to be committed to its strategy of pursuing accretive, value creating acquisitions.

“I’m pleased with the progress that the company has made in implementing our new strategic vision,” said Rajiv De Silva, president and CEO of Endo. “We’re making good progress on all of the actions we announced on June 5. Our expense reduction efforts are on track to meet our objectives, we have made progress in the exploration of strategic alternatives for HealthTronics and our branded pharmaceutical discovery platform, and we have positive organic growth momentum within each of our core businesses. I believe that with a continued sharp focus on our strategic priorities, the right cost structure and disciplined execution, Endo will meet and strive to exceed the expectations of our customers, employees, shareholders and patients.”


FINANCIAL PERFORMANCE AT A GLANCE


    ($ in thousands, except

     per share amounts)

                                     2nd Quarter

                                                                             Six Months Ended June 30,
                                                                             -------------------------

                                2013             2012          Change 2013  2012                Change
                                ----             ----          ------ ----  ----                ------

    Total Revenues          $766,509                  $785,188         (2)%       $1,475,028           $1,475,821     -  %

    Reported Net Income      $34,999                    $9,465         270%          $50,348             $(77,880) NM

    Reported Diluted EPS       $0.30                     $0.08         275%            $0.44               $(0.67) NM

    Adjusted Net Income     $166,348                  $154,153           8%         $289,586             $260,453    11%

    Adjusted Diluted EPS       $1.42                     $1.27          12%            $2.51                $2.14    17%

ENDO PHARMACEUTICALS

Second quarter 2013 branded pharmaceutical revenues were $416 million, a 6 percent decrease compared to second quarter 2012 branded pharmaceutical revenues. This decrease was primarily attributable to the decrease in net sales of OPANA(®) ER. Second quarter 2013 net sales of OPANA ER decreased 38 percent compared to second quarter 2012. This decrease is related to higher shipments during second quarter of 2012 to rebuild wholesale inventories that were largely depleted as a result of a first quarter 2012 supply disruption. In addition, the brand is now subject to competition from a non-AB rated generic that launched in January 2013.

Second quarter 2013 net sales of LIDODERM(®) increased 1 percent compared to second quarter 2012. This increase is attributable to the combination of increased price and prescription volume growth. The effect of those growth factors were largely offset by the company’s previously announced Supply Agreement with Actavis. As part of that agreement, Endo and its partner Teikoku are providing, at no cost to Actavis, $12 million per month of branded LIDODERM (valued at equivalent wholesale acquisition cost) to the wholesale affiliate of Actavis for its distribution.

Second quarter 2013 net sales of Voltaren(®) Gel decreased 2 percent compared to second quarter 2012. This decrease is attributable to higher shipments during second quarter of 2012 to rebuild wholesale inventories that were largely depleted as a result of a first quarter 2012 supply disruption. According to IMS Health, total prescriptions for Voltaren Gel established a new high for the product during second quarter 2013.

Second quarter 2013 net sales of FORTESTA(®) Gel increased 154 percent compared to second quarter 2012. This increase was primarily attributable to improved formulary access that facilitated a significant year-over-year increase in total prescription volumes for the product.


QUALITEST

Second quarter 2013 generic product net sales of $171 million represent an increase of 7 percent compared to second quarter 2012. This increase was primarily attributable to strong demand for Qualitest’s diversified product portfolio. Net sales of $349 million during the first six months of 2013 represent an increase of 14 percent compared to the first six months of 2012. Qualitest continues to concentrate on additional process improvements and increased efficiencies in order to enhance profitability in addition to focusing on sales growth.

In July 2013, Qualitest received FDA approval of Oxycodone and Acetaminophen Tablets, 2.5mg/325mg, 7.5mg/325mg and 10mg/325mg. According to IMS Health, total combined branded and generic industry sales for these products in the U.S. for the 12 months ended Dec. 31, 2012 were approximately $400 million.


AMS

Second quarter 2013 sales were $126 million, a decrease of 2 percent, at current exchange rates, compared to second quarter 2012. This decrease is primarily attributable to a decrease in U.S.-based sales. Second quarter 2013 International-based sales of AMS products increased approximately 6 percent compared to second quarter 2012.

The decrease in U.S.-based sales is primarily attributable to a continued decrease in Women’s Health sales. Worldwide sales of Women’s Health products decreased 15 percent in the second quarter 2013, compared to the same period last year. The decrease in Women’s Health sales is attributable to year-over-year declines in U.S.-based procedural volumes reflecting on-going industry shifts following the FDA’s September 2011 advisory committee meeting regarding the use of surgical mesh in pelvic organ prolapse. AMS remains focused on educational activities as part of an overall effort to continue to encourage patients and physicians to discuss the risks and benefits of AMS’s surgical mesh devices as an important treatment option for patients who suffer from stress urinary incontinence and/or pelvic organ prolapse.

Second quarter 2013 sales of AMS’s benign prostatic hyperplasia (BPH) business increased 5 percent compared to second quarter 2012. This increase is primarily attributable to higher sales of GreenLight(TM) consoles and fiber sales. Second quarter 2013 Men’s Health sales increased slightly compared to second quarter 2012.


2013 Financial Guidance

Endo’s estimates are based on estimated results for the twelve months ended Dec. 31, 2013 and management’s current belief about prescription trends, pricing levels, inventory levels and the anticipated timing of future product launches and events. The company’s guidance for reported (GAAP) earnings per share does not include any estimates for potential new corporate development transactions. For the full twelve months ended Dec. 31, 2013, at current exchange rates, Endo estimates:

  • Total revenue to be between $2.70 billion and $2.80 billion
  • Reported (GAAP) diluted earnings per share to be between $1.47 and $1.77
  • Adjusted diluted earnings per share to be between $4.25 and $4.55

The company’s 2013 guidance is based on certain assumptions including:

  • Adjusted gross margin of between 64 percent and 66 percent
  • Adjusted effective tax rate of between 28.5 percent and 29.5 percent
  • The company continues to expect a single generic competitor for LIDODERM in September 2013 as a result of a previously announced settlement agreement with Actavis (formerly Watson Pharmaceuticals).

Balance Sheet Update

During the second quarter of 2013, Endo made payments of approximately $17 million to reduce the outstanding principal of term loan debt associated with the acquisition of AMS. This brings the total repayments on this debt to approximately $769 million, inclusive of approximately $638 million in cumulative voluntary prepayments, through second quarter of 2013.


Conference Call Information

Endo will conduct a conference call with financial analysts to discuss this news release today at 8:30 a.m. ET. Investors and other interested parties may call 877-546-5019 (domestic) or +1 857-244-7551 (international) and enter passcode 83553344. Please dial in 10 minutes prior to the scheduled start time.

A replay of the call will be available from August 6, 2013 at 10:30 a.m. ET until 11:59 p.m. ET on August 20, 2013 by dialing 888-286-8010 (domestic) or +1 617-801-6888 (international) and entering passcode 16875843.

A simultaneous webcast of the call can 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 20, 2013. The replay can 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, 2013 and 2012 (in thousands, except per share data):

    Three Months Ended June 30, 2013 (unaudited)                Actual                   Adjustments            Non-GAAP

                                                              Reported                                           Adjusted
                                                                (GAAP)
                                                                -----

    REVENUES                                                                    $766,509                      $                -                        $766,509

    COSTS AND EXPENSES:

    Cost of revenues                                                   309,167                       (56,414)                 (1)         252,753

    Selling, general and administrative                                253,335                       (65,533)                 (2)         187,802

    Research and development                                            34,091                        (3,367)                 (3)          30,724

    Litigation-related and other contingencies                          59,971                       (59,971)                 (4)               -

    Asset impairment charges                                             7,087                        (7,087)                 (5)               -

    Acquisition-related and integration items, net                       2,640                        (2,640)                 (6)               -
                                                                         -----

    OPERATING INCOME                                                            $100,218                                $195,012                        $295,230
                                                                                --------                                --------                        --------

    INTEREST EXPENSE, NET                                               42,486                        (5,662)                 (7)          36,824

    OTHER (INCOME) EXPENSE, NET                                        (16,413)                       17,593                  (8)           1,180

    INCOME BEFORE INCOME TAX                                                     $74,145                                $183,081                        $257,226
                                                                                                                        --------

    INCOME TAX                                                          26,034                        51,732                  (9)          77,766
                                                                                                      ------

    CONSOLIDATED NET INCOME                                                      $48,111                                $131,349                        $179,460
                                                                                 -------                                --------                        --------

    Less: Net income attributable to noncontrolling interests           13,112                             -                               13,112
                                                                        ------

    NET INCOME ATTRIBUTABLE TO ENDO HEALTH                                       $34,999                                $131,349                        $166,348

    SOLUTIONS INC.

    DILUTED EARNINGS PER SHARE                                                     $0.30                                                          $1.42

    DILUTED WEIGHTED AVERAGE SHARES                                    117,221                                                    117,221
    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 marketed products of
                   $50,061, certain separation
                   benefits and other costs
                   incurred in connection with
                   continued efforts to enhance
                   the company's operations of
                   $2,353 and accruals for
                   milestone payments to partners
                   of $4,000.

    (2)            To exclude certain separation
                   benefits and other costs
                   incurred in connection with
                   continued efforts to enhance
                   the company's operations of
                   $49,921, amortization of
                   customer relationships of
                   $2,746 and mesh litigation-
                   related defense costs of
                   $12,866.

    (3)            To exclude milestone payments to
                   partners of $1,398 and certain
                   separation benefits and other
                   costs incurred in connection
                   with continued efforts to
                   enhance the company's
                   operations of $1,969.

    (4)            To exclude the net impact of
                   accruals primarily for mesh-
                   related product liability.

    (5)            To exclude asset impairment
                   charges.

    (6)            To exclude integration costs of
                   $2,580 and a loss of $60
                   recorded to reflect the change
                   in fair value of the contingent
                   consideration associated with
                   the Qualitest acquisition.

    (7)            To exclude additional interest
                   expense as a result of the
                   prior adoption of ASC 470-20.

    (8)            To exclude $(16,545) related to
                   patent litigation settlement
                   income and other income of
                   $(1,048).

    (9)            To reflect the cash tax savings
                   results from our recent
                   acquisitions and the tax effect
                   of the pre-tax adjustments
                   above at applicable tax rates.

    Three Months Ended June 30, 2012 (unaudited)               Actual                  Adjustments             Non-GAAP

                                                              Reported                                          Adjusted
                                                               (GAAP)
                                                               -----

    REVENUES                                                                  $785,188                       $                -                         $785,188

    COSTS AND EXPENSES:

    Cost of revenues                                                  294,570                       (58,857)                 (1)         235,713

    Selling, general and administrative                               233,622                        (5,697)                 (2)         227,925

    Research and development                                           45,427                        (2,808)                 (3)          42,619

    Patent litigation settlement, net                                 131,361                      (131,361)                 (4)               -

    Asset impairment charges                                            3,000                        (3,000)                 (5)               -

    Acquisition-related and integration items, net                      7,055                        (7,055)                 (6)               -
                                                                        -----

    OPERATING INCOME                                                           $70,153                                 $208,778                         $278,931
                                                                               -------                                 --------                         --------

    INTEREST EXPENSE, NET                                              45,985                        (5,169)                 (7)          40,816

    OTHER EXPENSE (INCOME), NET                                           297                          (300)                 (8)              (3)

    INCOME BEFORE INCOME TAX                                                   $23,871                                 $214,247                         $238,118
                                                                                                                       --------

    INCOME TAX                                                          1,776                        69,559                  (9)          71,335
                                                                                                     ------

    CONSOLIDATED NET INCOME                                                    $22,095                                 $144,688                         $166,783
                                                                               -------                                 --------                         --------

    Less: Net income attributable to noncontrolling interests          12,630                             -                               12,630

    NET INCOME ATTRIBUTABLE TO ENDO HEALTH                                      $9,465                                 $144,688                         $154,153

    SOLUTIONS INC.

    DILUTED EARNINGS PER SHARE                                                   $0.08                                                            $1.27

    DILUTED WEIGHTED AVERAGE SHARES                                   121,080                                                    121,080
    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 marketed
                   products of $55,812, the impact of
                   inventory step-up recorded as part
                   of acquisition accounting and net
                   milestone payments and receipts of
                   $2,236 and certain separation
                   benefits and other costs incurred in
                   connection with continued efforts to
                   enhance the company's operations of
                   $809.

    (2)            To exclude certain separation benefits
                   and other costs incurred in
                   connection with continued efforts to
                   enhance the company's operations of
                   $2,945 and amortization of customer
                   relationships of $2,752.

    (3)            To exclude milestone and upfront
                   payments to partners.

    (4)            To exclude the net impact of the
                   Actavis (Watson) litigation
                   settlement.

    (5)           To exclude asset impairment charges.

    (6)            To exclude acquisition-related and
                   integration costs of $6,996 and a
                   loss of $59 recorded to reflect the
                   change in fair value of the
                   contingent consideration associated
                   with the Qualitest Pharmaceuticals
                   acquisition.

    (7)            To exclude additional interest expense
                   as a result of the prior adoption of
                   ASC 470-20.

    (8)            To exclude milestone and upfront
                   payments to partners.

    (9)            To reflect the cash tax savings
                   results from our recent acquisitions
                   and the tax effect of the pre-tax
                   adjustments above at applicable tax
                   rates.

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, 2013 and 2012 (in thousands, except per share data):

    Six Months Ended June 30, 2013 (unaudited)                 Actual                      Adjustments             Non-GAAP

                                                              Reported                                             Adjusted
                                                               (GAAP)
                                                               -----

    REVENUES                                                                    $1,475,028                       $                -                        $1,475,028

    COSTS AND EXPENSES:

    Cost of revenues                                                   595,093                         (102,940)                 (1)         492,153

    Selling, general and administrative                                489,717                          (87,416)                 (2)         402,301

    Research and development                                            75,660                           (9,182)                 (3)          66,478

    Litigation-related and other contingencies                         128,203                         (128,203)                 (4)               -

    Asset impairment charges                                             8,187                           (8,187)                 (5)               -

    Acquisition-related and integration items, net                       3,958                           (3,958)                 (6)               -
                                                                         -----

    OPERATING INCOME                                                              $174,210                                 $339,886                          $514,096
                                                                                  --------                                 --------                          --------

    INTEREST EXPENSE, NET                                               86,789                          (11,112)                 (7)          75,677

    LOSS ON EXTINGUISHMENT OF DEBT                                      11,312                          (11,312)                 (8)               -

    OTHER (INCOME) EXPENSE, NET                                        (34,581)                          36,820                  (9)           2,239

    INCOME BEFORE INCOME TAX                                                      $110,690                                 $325,490                          $436,180
                                                                                                                           --------

    INCOME TAX                                                          35,976                           86,252                 (10)         122,228
                                                                                                         ------

    CONSOLIDATED NET INCOME                                                        $74,714                                 $239,238                          $313,952
                                                                                   -------                                 --------                          --------

    Less: Net income attributable to noncontrolling interests           24,366                                -                               24,366

    NET INCOME ATTRIBUTABLE TO ENDO HEALTH                                         $50,348                                 $239,238                          $289,586

    SOLUTIONS INC.

    DILUTED EARNINGS PER SHARE                                                       $0.44                                                           $2.51

    DILUTED WEIGHTED AVERAGE SHARES                                    115,205                                                       115,205
    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 marketed products of
                     $96,250, certain separation
                     benefits and other costs incurred
                     in connection with continued
                     efforts to enhance the company's
                     operations of $2,690 and accruals
                     for milestone payments to partners
                     of $4,000.

    (2)              To exclude certain separation
                     benefits and other costs incurred
                     in connection with continued
                     efforts to enhance the company's
                     operations of $60,747,
                     amortization of customer
                     relationships of $5,503 and mesh
                     litigation-related defense costs
                     of $21,166.

    (3)              To exclude milestone payments to
                     partners of $3,972 and certain
                     separation benefits and other
                     costs incurred in connection with
                     continued efforts to enhance the
                     company's operations of $5,210.

    (4)              To exclude the net impact of
                     accruals primarily for mesh-
                     related product liability.

    (5)              To exclude asset impairment
                     charges.

    (6)              To exclude integration costs of
                     $3,858 and a loss of $100 recorded
                     to reflect the change in fair
                     value of the contingent
                     consideration associated with the
                     Qualitest acquisition.

    (7)              To exclude additional interest
                     expense as a result of the prior
                     adoption of ASC 470-20.

    (8)              To exclude the unamortized debt
                     issuance costs written off and
                     recorded as a loss on
                     extinguishment of debt upon our
                     March 2013 prepayment on our Term
                     Loan indebtedness as well as upon
                     the amendment and restatement of
                     our existing credit facility.

    (9)              To exclude $(35,772) related to
                     patent litigation settlement
                     income and other income of
                     $(1,048).

    (10)             To reflect the cash tax savings
                     results from our recent
                     acquisitions and the tax effect of
                     the pre-tax adjustments above at
                     applicable tax rates.


    Six Months Ended June 30, 2012 (unaudited)                 Actual                       Adjustments             Non-GAAP

                                                              Reported                                              Adjusted
                                                               (GAAP)
                                                               -----

    REVENUES                                                                    $1,475,821                        $                -                        $1,475,821

    COSTS AND EXPENSES:

    Cost of revenues                                                   659,390                          (220,095)                 (1)         439,295

    Selling, general and administrative                                488,076                           (19,564)                 (2)         468,512

    Research and development                                           134,115                           (49,780)                 (3)          84,335

    Patent litigation settlement, net                                  131,361                          (131,361)                 (4)               -

    Asset impairment charges                                            43,000                           (43,000)                 (5)               -

    Acquisition-related and integration items, net                      10,804                           (10,804)                 (6)               -
                                                                        ------

    OPERATING INCOME                                                                $9,075                                  $474,604                          $483,679
                                                                                    ------                                  --------                          --------

    INTEREST EXPENSE, NET                                               92,881                           (10,145)                 (7)          82,736

    LOSS ON EXTINGUISHMENT OF DEBT                                       5,426                            (5,426)                 (8)               -

    OTHER EXPENSE, NET                                                     748                              (300)                 (9)             448

    (LOSS) INCOME BEFORE INCOME TAX                                               $(89,980)                                 $490,475                          $400,495
                                                                                                                            --------

    INCOME TAX                                                         (37,550)                          152,142                 (10)         114,592
                                                                                                         -------

    CONSOLIDATED NET (LOSS) INCOME                                                $(52,430)                                 $338,333                          $285,903
                                                                                  --------                                  --------                          --------

    Less: Net income attributable to noncontrolling interests           25,450                                 -                               25,450
                                                                                                             ---

    NET (LOSS) INCOME ATTRIBUTABLE TO ENDO HEALTH                                 $(77,880)                                 $338,333                          $260,453

    SOLUTIONS INC.

    DILUTED (LOSS) EARNINGS PER SHARE                                               $(0.67)                                                           $2.14

    DILUTED WEIGHTED AVERAGE SHARES                                    117,022                                                        121,836
    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 marketed
                     products of $106,415, the impact of
                     inventory step-up recorded as part
                     of acquisition accounting of $880,
                     the accrual for the payment to Impax
                     related to sales of OPANA ER of
                     $110,000, net milestone payments to
                     partners of $1,487 and certain
                     separation benefits and other costs
                     incurred in connection with continued
                     efforts to enhance the company's
                     operations of $1,313.

    (2)              To exclude certain separation benefits
                     and other costs incurred in
                     connection with continued efforts to
                     enhance the company's operations of
                     $14,055 and amortization of customer
                     relationships of $5,509.

    (3)              To exclude milestone and upfront
                     payments to partners.

    (4)              To exclude the net impact of the
                     Actavis (Watson) litigation
                     settlement.

    (5)             To exclude asset impairment charges.

    (6)              To exclude acquisition-related and
                     integration costs of $10,872 and a
                     gain of $(68) recorded to reflect the
                     change in fair value of the
                     contingent consideration associated
                     with the Qualitest Pharmaceuticals
                     acquisition.

    (7)              To exclude additional interest expense
                     as a result of the prior adoption of
                     ASC 470-20.

    (8)              To exclude the unamortized debt
                     issuance costs written off and
                     recorded as a loss on extinguishment
                     of debt upon our 2012 prepayments on
                     our Term Loan indebtedness.

    (9)              To exclude milestone and upfront
                     payments to partners.

    (10)             To reflect the cash tax savings
                     results from our recent acquisitions
                     and the tax effect of the pre-tax
                     adjustments above at applicable tax
                     rates.

Non-GAAP Adjusted net income and its components and Non-GAAP Adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. 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 filed today with 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 2013

                                                                                                                                                                               Year Ending

                                                                                                                                                                            December 31, 2013
                                                                                                                                                                            -----------------

                                                                                                                                                                                                        $1.77
    Projected GAAP diluted income per common share                                                                                                                                  $1.47     To

    Upfront and milestone-related payments to partners                                                                                                                  0.22                      0.22

    Amortization of commercial intangible assets and inventory step-up                                                                                                  1.65                      1.65

    Integration and restructuring charges                                                                                                                               0.95                      0.95

    Charges for litigation and other legal matters                                                                                                                      1.38                      1.38

    Actavis (Watson) litigation settlement                                                                                                                             (0.41)                    (0.41)

    Interest expense adjustment for ASC 470-20 and other treasury related items                                                                                         0.29                      0.29

    Tax effect of pre-tax adjustments at the applicable tax rates and certain other expected                                                                           (1.30)                    (1.30)

    cash tax savings as a result of recent acquisitions

    Diluted adjusted income per common share guidance                                                                                                                  $4.25           To        $4.55

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 Aug 6, 2013.

About Endo

Endo Health Solutions Inc. (Endo) is a U.S.-based specialty healthcare company with four distinct business segments that are focused on branded and generic pharmaceuticals, devices and services and provide quality products to our customers while improving the lives of patients. Through our operating companies – AMS, Endo Pharmaceuticals, HealthTronics and Qualitest – Endo is dedicated to finding solutions for the unmet needs of patients. 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, 2013 and 2012:

                                                                                                                                Endo Health Solutions Inc.

                                                                                                                                 Net Revenues (unaudited)

                                                                                                                                      (in thousands)

                                                                                   Three Months Ended June 30,                                                     Six Months Ended June 30,
                                                                                   ---------------------------                                                     -------------------------

                                                                                        2013                        2012             Percent               2013                                   2012    Percent
                                                                                                                                      Growth                                                               Growth
                                                                                       ----                       ----              -------              ----                                 ----     -------

    Endo Pharmaceuticals:

    LIDODERM(R)                                                                     $229,656                              $228,006                            1%                              $416,680             $438,020  (5)%

    OPANA(R) ER                                                                       57,951                                93,413                         (38)%                               114,278              174,499 (35)%

    Voltaren(R) Gel                                                                   42,783                                43,690                          (2)%                                78,893               43,690   81%

    PERCOCET(R)                                                                       25,950                                25,824                            -  %                              52,568               49,204    7%

    FROVA(R)                                                                          14,312                                14,002                            2%                                28,089               29,646  (5)%

    FORTESTA(R) Gel                                                                   17,477                                 6,881                          154%                                32,131               12,703  153%

    SUPPRELIN(R) LA                                                                   16,597                                14,797                           12%                                30,023               28,243    6%

    VANTAS(R)                                                                          3,107                                 4,346                         (29)%                                 6,974                8,238 (15)%

    VALSTAR(R)                                                                         4,888                                 6,087                         (20)%                                10,303               12,323 (16)%

    Other Branded Products                                                             1,052                                 1,120                          (6)%                                 1,325                  855   55%

    Royalty and Other Revenue                                                          1,874                                 4,620                         (59)%                                 1,972                8,939 (78)%
                                                                                       -----                                                                                                    -----

    Total Endo Pharmaceuticals                                                      $415,647                              $442,786                          (6)%                              $773,236             $806,360  (4)%

    Total Qualitest                                                                 $170,530                              $159,895                            7%                              $348,783             $305,240   14%

    American Medical Systems:

    Men's Health                                                                      68,081                                66,972                            2%                               135,649              134,412    1%

    Women's Health                                                                    27,666                                32,466                         (15)%                                56,270               66,364 (15)%

    BPH Therapy                                                                       30,224                                28,693                            5%                                56,704               57,521  (1)%
                                                                                      ------                                ------                                                              ------               ------

    Total AMS                                                                        125,971                               128,131                          (2)%                               248,623              258,297  (4)%

    HealthTronics                                                                     54,361                                54,376                            -  %                             104,386              105,924  (1)%
                                                                                      ------                                ------                                                             -------              -------

    Total Revenue                                                                    766,509                               785,188                          (2)%                             1,475,028            1,475,821    -  %
                                                                                     =======                               =======                                                           =========            =========


    The following table presents unaudited condensed consolidated Balance Sheet data at June 30, 2013 and December 31, 2012:

                                                                                                                                                                                                                                          June 30,               December 31,
                                                                                                                                                                                                                                               2013                      2012
                                                                                                                                                                                                                                               ----                      ----

    ASSETS

    CURRENT ASSETS:

    Cash and cash equivalents                                                                                                                                                                                                                          $505,608                                $547,916

    Accounts receivable                                                                                                                                                                                                                     709,404                              690,850

    Inventories, net                                                                                                                                                                                                                        429,942                              357,638

    Other assets                                                                                                                                                                                                                            312,313                              372,830
                                                                                                                                                                                                                                            -------                              -------

          Total current assets                                                                                                                                                                                                                       $1,957,267                              $1,969,234

    PROPERTY, PLANT AND EQUIPMENT, NET                                                                                                                                                                                                      375,079                              385,668

    GOODWILL                                                                                                                                                                                                                              2,017,313                            2,014,351

    OTHER INTANGIBLES, NET                                                                                                                                                                                                                2,010,258                            2,098,973

    OTHER ASSETS                                                                                                                                                                                                                             93,721                              100,333

    TOTAL ASSETS                                                                                                                                                                                                                                     $6,453,638                              $6,568,559
                                                                                                                                                                                                                                                     ==========                              ==========

    LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES:

    Accounts payable and accrued expenses                                                                                                                                                                                                            $1,351,809                              $1,587,827

    Other current liabilities                                                                                                                                                                                                                73,396                              140,193
                                                                                                                                                                                                                                             ------                              -------

          Total current liabilities                                                                                                                                                                                                                  $1,425,205                              $1,728,020

    DEFERRED INCOME TAXES                                                                                                                                                                                                                   476,384                              516,565

    LONG-TERM DEBT, LESS CURRENT PORTION, NET                                                                                                                                                                                             2,994,252                            3,037,947

    OTHER LIABILITIES                                                                                                                                                                                                                       306,252                              152,821

    STOCKHOLDERS' EQUITY:

    Total Endo Health Solutions Inc. stockholders' equity                                                                                                                                                                                            $1,192,940                              $1,072,856

    Noncontrolling interests                                                                                                                                                                                                                 58,605                               60,350
                                                                                                                                                                                                                                             ------                               ------

    Total stockholders' equity                                                                                                                                                                                                                       $1,251,545                              $1,133,206
                                                                                                                                                                                                                                                     ----------                              ----------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                       $6,453,638                              $6,568,559
                                                                                                                                                                                                                                                     ==========                              ==========


    The following table presents unaudited condensed consolidated Statement of Cash Flow data for the six months ended June 30, 2013 and 2012:

                                                                                                                                                  Six Months Ended June 30,
                                                                                                                                                  -------------------------

                                                                                                                                                   2013                     2012
                                                                                                                                                   ----                     ----

    OPERATING ACTIVITIES:

    Consolidated net income (loss)                                                                                                              $74,714                          $(52,430)

    Adjustments to reconcile consolidated net income to Consolidated net income (loss)

        Depreciation and amortization                                                                                                           135,051                           139,563

        Stock-based compensation                                                                                                                 22,753                            33,346

        Amortization of debt issuance costs and premium / discount                                                                               18,567                            17,521

        Other                                                                                                                                    29,473                           (26,591)

    Changes in assets and liabilities which (used) provided cash                                                                               (163,527)                           64,930

         Net cash provided by operating activities                                                                                              117,031                           176,339
                                                                                                                                                -------                           -------

    INVESTING ACTIVITIES:

    Purchases of property, plant and equipment, net                                                                                             (37,029)                          (46,414)

    Acquisitions, net of cash acquired                                                                                                           (3,645)                              443

    Other                                                                                                                                       (12,673)                           13,800
                                                                                                                                                                                  ------

       Net cash used in investing activities                                                                                                    (53,347)                          (32,171)
                                                                                                                                                -------                           -------

    FINANCING ACTIVITIES:

    Issuance of common stock from treasury, net of (purchases)                                                                                    2,803                           (53,101)

    Cash distributions to noncontrolling interests                                                                                              (24,349)                          (26,158)

    Principal (payments) borrowings on indebtedness, net                                                                                       (117,443)                         (233,445)

    Exercise of Endo Health Solutions Inc. stock options                                                                                         52,483                            10,819

    Other                                                                                                                                       (20,434)                            1,752

       Net cash used in financing activities                                                                                                   (106,940)                         (300,133)
                                                                                                                                               --------                          --------

    Effect of foreign exchange rate                                                                                                                 948                               291

    NET DECREASE IN CASH AND CASH EQUIVALENTS                                                                                                   (42,308)                         (155,674)
                                                                                                                                                -------                          --------

    CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                                                              547,916                           547,620

    CASH AND CASH EQUIVALENTS, END OF PERIOD                                                                                                   $505,608                          $391,946
                                                                                                                                               ========                          ========

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plan,” “will,” “may,” “look forward,” “intend,” “guidance,” “future” or similar expressions are forward-looking statements. Because these statements reflect our current views, expectations and beliefs concerning future events, these forward-looking statements involve risks and uncertainties. Investors should note that many factors, as more fully described under the caption “Risk Factors” in our Form 10-K, Form 10-Q and Form 8-K filings with the Securities and Exchange Commission and as otherwise enumerated herein or therein, could affect our future financial results and could cause our actual results to differ materially from those expressed in forward-looking statements contained in our Annual Report on Form 10-K. The forward-looking statements in this press release are qualified by these risk factors. These are factors that, individually or in the aggregate, could cause our actual results to differ materially from expected and historical results. We assume no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

SOURCE Endo Health Solutions


Source: PR Newswire