Endo Reports First Quarter 2015 Financial Results

DUBLIN, May 11, 2015 /PRNewswire/ --

• First quarter revenues of $714 million
• First quarter reported $0.85 diluted (GAAP) EPS from continuing operations and $1.17 adjusted diluted EPS from continuing operations
• U.S. Branded Pharmaceuticals first quarter revenues increase of 21 percent primarily attributable to the acquisition of Auxilium Pharmaceuticals
• U.S. Generic Pharmaceuticals continues strong growth in first quarter with 68 percent revenue increase over first quarter 2014
• International Pharmaceuticals first quarter results on-track and aligned with Company expectations
• Affirms revenue guidance from continuing operations and raises adjusted diluted EPS from continuing operations guidance for full year 2015

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

• Revenues of $714 million, a 52 percent increase compared to first quarter 2014 revenues of $471 million, including new product revenue from 2014 and 2015 strategic M&A transactions.
• Reported income from continuing operations of $150 million compared to a first quarter 2014 reported loss from continuing operations of $47 million.
• Adjusted income from continuing operations of $207 million, a 91 percent increase compared to first quarter 2014 adjusted income from continuing operations of $108 million.
• Reported diluted EPS from continuing operations of $0.85 compared to first quarter 2014 reported loss per share from continuing operations of $0.37.
• Adjusted diluted earnings per share from continuing operations of $1.17 compared to first quarter 2014 adjusted diluted earnings per share from continuing operations of $0.75.

"We continued to make progress during the first quarter towards achieving a number of our strategic priorities for the year," said Rajiv De Silva, President and CEO of Endo. "Our diversified business helped us deliver strong financial results for the quarter and helps provide the flexibility to re-invest and re-deploy capital to drive growth. We are excited about our new commercial opportunities in U.S. Branded Pharmaceuticals with the recent addition of the Auxilium portfolio and the launch of Natesto™ Testosterone Nasal Gel. We also believe that we have attractive development opportunities to support further organic growth across each of our business units."

FINANCIAL PERFORMANCE

U.S. BRANDED PHARMACEUTICALS

During first quarter 2015 the U.S. Branded Pharmaceuticals business unit largely completed the integration of Auxilium Pharmaceuticals. The Company believes that the addition of Auxilium's approved products and substantial research and development (R&D) portfolio will support the segment's near-term organic growth objectives.

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

• Revenues of $285 million, a 21 percent increase compared to first quarter 2014, primarily attributable to the strategic addition of Auxilium Pharmaceuticals.
• Net sales of OPANA® ER decreased less than 1 percent compared to first quarter 2014, attributable to lower brand demand due to generic competition that was largely offset by improved pricing.
• Net sales of Voltaren® Gel increased 21 percent compared to first quarter 2014, primarily attributable to demand growth.

U.S. GENERIC PHARMACEUTICALS

The U.S. Generic Pharmaceuticals business unit remains focused on manufacturing, quality and R&D to support its organic growth objectives. For full-year 2015 Endo continues to expect strong double-digit revenue growth for this segment compared to 2014 results.

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

• Product net sales of $357 million, a 68 percent increase compared to first quarter 2014, primarily attributable to underlying growth of 39 percent in the existing business. Underlying growth excludes revenues from acquisitions for the first twelve months after closing, as well as sales of the Authorized Generic (AG) version of LIDODERM®. Total growth benefited from the addition of sales from Boca Pharmacal and DAVA Pharmaceuticals following the close of those acquisitions in February 2014 and August 2014, respectively, as well as sales of the AG version of LIDODERM®, which launched in May 2014.

INTERNATIONAL PHARMACEUTICALS

Endo is focused on expanding its International Pharmaceuticals business unit and further diversifying the Company's financial profile.

First quarter 2015 International Pharmaceuticals results include:

• Sales of $73 million, attributable to Paladin Labs, inclusive of Litha Group, acquired February 2014 and product sales by Grupo Farmaceutico Somar, acquired July 2014.

2015 Financial Guidance

For the full twelve months ended December 31, 2015, at current exchange rates, Endo estimates:

• Total revenue to be between $2.90 billion and $3.00 billion;
• Reported (GAAP) diluted earnings per share (EPS) from continuing operations now expected to be between $1.70 and $1.90 compared to $2.73 and $2.93 previously; and
• Adjusted diluted EPS from continuing operations now expected to be between $4.40 and $4.60 compared to $4.35 and $4.55 previously.

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

• Adjusted gross margin of between 64 percent and 65 percent;
• Adjusted operating expenses as a percentage of revenues to be between 23 percent and 24 percent;
• Adjusted interest expense of approximately $310 million;
• Adjusted effective tax rate of between 13 percent and 14 percent; and
• Adjusted diluted earnings per share from continuing operations assume full year adjusted diluted shares outstanding of approximately 180 million.

Conference Call Information

Endo will conduct a conference call with financial analysts to discuss this press release today at 9:00 a.m. ET. The dial-in number to access the call is U.S./Canada (866) 497-0462, International (678) 509-7598, and the conference number is 34236444. Please dial in 10 minutes prior to the scheduled start time.

A replay of the call will be available from May 11, 2015 at 12:00 p.m. ET until 11:59 p.m. ET on May 25, 2015 by dialing (855) 859-2056 (U.S./Canada) or (404) 537-3406 (International) and entering the conference number is 34236444.

A simultaneous webcast of the call may be accessed by visiting www.endo.com. In addition, a replay of the webcast will be available until 11:59 p.m. ET on May 25, 2015. The replay may be accessed by clicking on "Events" in the Investor Relations section of the website.

Supplemental Financial Information

The following tables provide a reconciliation of our reported (GAAP) statements of operations to our adjusted statements of operations (Non-GAAP) for each of the three months ended March 31, 2015 and 2014 (in thousands, except per share data):

 

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

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

(Tables Attached)

 

The following tables present Endo's unaudited Net Revenues for the three months ended March 31, 2015 and 2014:

 

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

 

The following table presents unaudited condensed consolidated Statement of Cash Flow data for the three months ended March 31, 2015 and 2014:

 

Our Net cash used in operating activities includes the impact of certain payments for legal settlements, primarily related to mesh and the Department of Justice settlement related to the sale, marketing and promotion of Lidoderm. The following schedule presents the unaudited impact of these payments on our Net cash used in operating activities for the three months ended March 31, 2015 and 2014:

 

Safe Harbor Statement

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

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

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

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SOURCE Endo International plc