PR Newswire | Feb 25, 2021 04:31PM EST

2021 Financial Guidance

02/25 15:30 CST

Endo Reports Fourth-Quarter And Full-Year 2020 Financial Results And Introduces 2021 Financial Guidance DUBLIN, Feb. 25, 2021

DUBLIN, Feb. 25, 2021 /PRNewswire/ -- Endo International plc (NASDAQ: ENDP) today reported financial results for the fourth-quarter and full-year ended December 31, 2020 and introduced 2021 financial guidance.

"I am proud of all that the Endo team achieved in a very challenging year. We made significant progress in advancing our strategic priorities, delivered solid financial performance, rapidly responded to the COVID-19 pandemic and advanced our ESG-related actions," said Blaise Coleman, President and Chief Executive Officer at Endo.

"Looking ahead, we remain committed to expanding and enhancing our portfolio through focused investments, including the anticipated spring 2021 launch of QWO(r), the first and only FDA approved injectable treatment for cellulite. Together with our previously announced business transformation initiatives, we are confident that continuing to execute on our strategic priorities will enable us to deliver sustainable value over the long-term."

FINANCIAL PERFORMANCE (in thousands, except per share amounts)



Three Months Ended December 31, Year Ended December 31,

2020 2019 (1) Change2020 2019 (1) Change

Total Revenues, Net $760,221 $764,800 (1)% $2,903,074$2,914,364- %

Reported Income (Loss) from $141,247 $(208,489) NM $247,464 $(360,584)NM Continuing Operations

Reported Diluted Weighted 234,474 226,787 3 % 233,653 226,050 3 %Average Shares

Reported Diluted Net Income (Loss) per Share from $0.60 $(0.92) NM $1.06 $(1.60) NM Continuing Operations

Reported Net Income (Loss) $119,343 $(218,643) NM $183,944 $(422,636)NM

Adjusted Income from $175,995 $185,231 (5)% $670,370 $616,078 9 %Continuing Operations (3)

Adjusted Diluted Weighted 234,474 231,571 1 % 233,653 231,706 1 %Average Shares (2)(3)

Adjusted Diluted Net Income per Share from Continuing $0.75 $0.80 (6)% $2.87 $2.66 8 %Operations (3)

Adjusted EBITDA (3) $351,635 $361,336 (3)% $1,395,942$1,374,1722 %

__________

Certain prior period adjusted amounts have been revised as a result of a (1)change in the Company's definition of its adjusted financial metrics. Refer to the "Supplemental Financial Information" section below for additional discussion.

Reported Diluted Net Income (Loss) per Share from Continuing Operations is computed based on weighted average shares outstanding and, if there is income from continuing operations during the period, the dilutive impact (2)of ordinary share equivalents outstanding during the period. In the case of Adjusted Diluted Weighted Average Shares, Adjusted Income from Continuing Operations is used in determining whether to include such dilutive impact.

The information presented in the table above includes non-GAAP financial measures such as "Adjusted Income from Continuing Operations," "Adjusted Diluted Weighted Average Shares," "Adjusted Diluted Net Income per Share (3)from Continuing Operations" and "Adjusted EBITDA." Refer to the "Supplemental Financial Information" section below for reconciliations of certain non-GAAP financial measures to the most directly comparable GAAP financial measures.

CONSOLIDATED RESULTS

Total revenues were $760 million in fourth-quarter 2020, a decrease of 1% compared to $765 million during the same period in 2019. This result was primarily attributable to decreased Generic Pharmaceuticals segment revenues which were largely offset by increased Sterile Injectables segment revenues.

Reported income from continuing operations in fourth-quarter 2020 was $141 million compared to a reported loss from continuing operations of $208 million during the same period in 2019. This result was primarily attributable to decreased asset impairment charges and a non-cash income tax benefit resulting from a change in deferred tax liabilities following the BioSpecifics Technologies Corp. (BioSpecifics) acquisition in fourth-quarter 2020. Reported diluted net income per share from continuing operations in fourth-quarter 2020 was $0.60 compared to reported diluted net loss per share from continuing operations in fourth-quarter 2019 of $0.92.

Adjusted income from continuing operations in fourth-quarter 2020 was $176 million compared to $185 million in fourth-quarter 2019. Adjusted diluted net income per share from continuing operations in fourth-quarter 2020 was $0.75 compared to $0.80 in fourth-quarter 2019. These decreases were primarily attributable to higher adjusted operating expenses.

BRANDED PHARMACEUTICALS SEGMENT

Fourth-quarter 2020 Branded Pharmaceuticals segment revenues were $225 million and were comparable to revenues of $226 million during fourth-quarter 2019.

Specialty Products revenues increased 4% to $154 million in fourth-quarter 2020 compared to $149 million in fourth-quarter 2019, with sales of XIAFLEX(r) increasing 4% to $105 million compared to sales of $102 million in fourth-quarter 2019. Established Products revenues decreased 8% to $71 million in fourth-quarter 2020 compared to $77 million in fourth-quarter 2019, driven primarily by TESTOPEL(r) supply normalization.

STERILE INJECTABLES SEGMENT

Fourth-quarter 2020 Sterile Injectables segment revenues were $332 million, an increase of 16% compared to $285 million during fourth-quarter 2019. This increase was primarily driven by higher VASOSTRICT(r) revenues.

GENERIC PHARMACEUTICALS SEGMENT

Fourth-quarter 2020 Generic Pharmaceuticals segment revenues were $180 million, a decrease of 20% compared to $226 million during fourth-quarter 2019. This decrease was primarily attributable to continued competitive pressures on certain key products.

INTERNATIONAL PHARMACEUTICALS SEGMENT

Fourth-quarter 2020 International Pharmaceuticals segment revenues decreased 18% to $23 million compared to $29 million during fourth-quarter 2019. This decrease was primarily attributable to continued competitive pressures on certain key products.

2021 FINANCIAL GUIDANCE

Endo is providing financial guidance for the first-quarter and full-year ending December 31, 2021. The guidance below contemplates a range of potential outcomes that reflect uncertainties in certain key assumptions including, among other things, uncertainties related to the COVID-19 pandemic. These statements are forward-looking, and actual results may differ materially from Endo's expectations, as further discussed below under the heading "Cautionary Note Regarding Forward-Looking Statements."

First-Quarter 2021 Full-Year 2021



Total Revenues, Net $620M - $680M $2.55B - $2.79B

Adjusted EBITDA $270M - $300M $1.12B - $1.28B

Adjusted Diluted Net Income per Share from Continuing Operations $0.40 - $0.50 $1.80 - $2.30



Assumptions:

Adjusted Gross Margin ~70.5% ~70.0% - 71.0%

Adjusted Operating Expenses as a Percentage of Total Revenues, Net~30.5% ~28.5% - 29.5%

Adjusted Interest Expense ~$135M ~$540M

Adjusted Effective Tax Rate ~16.5% ~13.0% - 14.0%

Adjusted Diluted Weighted Average Shares ~237M ~239M

BALANCE SHEET, LIQUIDITY AND OTHER UPDATES

As of December 31, 2020, the Company had approximately $1.2 billion in unrestricted cash; $8.3 billion of debt; and a net debt to adjusted EBITDA ratio of 5.1.

Fourth-quarter 2020 net cash provided by operating activities was $108 million, compared to $21 million of net cash used in operating activities during fourth-quarter 2019.

On December 2, 2020, the Company completed the previously announced acquisition of BioSpecifics, a commercial-stage biopharmaceutical company, for $88.50 per share in an all-cash transaction. We paid approximately $560 million in cash, net of cash, cash equivalents and investments acquired, to acquire BioSpecifics.

CONFERENCE CALL INFORMATION

Endo will conduct a conference call with financial analysts to discuss this press release tomorrow, February 26, 2021, 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 8387347. Please dial in 10 minutes prior to the scheduled start time.

A replay of the call will be available from February 26, 2021 at 10:30 a.m. ET until 10:30 a.m. ET on March 5, 2021 by dialing U.S./Canada (855) 859-2056; International (404) 537-3406, and entering the passcode 8387347.

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.

FINANCIAL SCHEDULES

The following table presents Endo's unaudited Total revenues, net for the three months and years ended December 31, 2020 and 2019 (dollars in thousands):

Three Months Ended December 31, PercentYear Ended December 31, PercentGrowth Growth 2020 2019 2020 2019

Branded Pharmaceuticals:

Specialty Products:

XIAFLEX(r) $ 105,212 $ 101,520 4 % $316,234 $327,638 (3) %

SUPPRELIN(r) LA 24,838 20,255 23 % 88,182 86,797 2 %

Other Specialty (1) 23,867 26,844 (11)% 92,662 105,241 (12)%

Total Specialty Products $ 153,917 $ 148,619 4 % $497,078 $519,676 (4) %

Established Products:

PERCOCET(r) $ 27,323 $ 27,813 (2) % $110,112 $116,012 (5) %

TESTOPEL(r) 8,357 14,414 (42)% 35,234 55,244 (36)%

Other Established (2) 34,907 34,705 1 % 139,356 164,470 (15)%

Total Established Products $ 70,587 $ 76,932 (8) % $284,702 $335,726 (15)%

Total Branded Pharmaceuticals (3) $ 224,504 $ 225,551 - % $781,780 $855,402 (9) %

Sterile Injectables:

VASOSTRICT(r) $ 213,116 $ 146,883 45 % $785,646 $531,737 48 %

ADRENALIN(r) 31,739 45,827 (31)% 152,074 179,295 (15)%

Ertapenem for injection 18,959 25,060 (24)% 65,607 104,679 (37)%

APLISOL(r) 10,399 5,830 78 % 36,220 61,826 (41)%

Other Sterile Injectables (4) 57,637 61,568 (6) % 199,300 185,594 7 %

Total Sterile Injectables (3) $ 331,850 $ 285,168 16 % $1,238,847$1,063,13117 %

Total Generic Pharmaceuticals $ 180,440 $ 225,560 (20)% $783,110 $879,882 (11)%

Total International Pharmaceuticals$ 23,427 $ 28,521 (18)% $99,337 $115,949 (14)%

Total revenues, net $ 760,221 $ 764,800 (1) % $2,903,074$2,914,364- %

__________

(1)Products included within Other Specialty are NASCOBAL^(r) Nasal Spray and AVEED^(r).

(2)Products included within Other Established include, but are not limited to, EDEX^(r) and LIDODERM^(r).

Individual products presented above represent the top two performing products in each product category for the year ended December 31, 2020 (3)and/or any product having revenues in excess of $100 million during any of the years ended December 31, 2020, 2019 or 2018 or $25 million during any quarterly period in 2020 or 2019.

(4)Products included within Other Sterile Injectables include ephedrine sulfate injection and others.

The following table presents unaudited Condensed Consolidated Statement of Operations data for the three months and years ended December 31, 2020 and 2019 (in thousands, except per share data):

Three Months Ended December 31,Year Ended December 31,

2020 2019 2020 2019

TOTAL REVENUES, NET $ 760,221 $764,800 $2,903,074$2,914,364

COSTS AND EXPENSES:

Cost of revenues 369,539 400,056 1,442,511 1,569,338

Selling, general and administrative 176,221 160,671 698,506 632,420

Research and development 64,737 34,379 158,902 130,732

Litigation-related and other contingencies, net4,889 15,304 (19,049) 11,211

Asset impairment charges 14,147 267,430 120,344 526,082

Acquisition-related and integration items, net (551) (19,115) 16,549 (46,098)

Interest expense, net 135,250 134,347 532,939 538,734

Gain on extinguishment of debt - - - (119,828)

Other expense (income), net 4,208 (3,731) (21,110) 16,677

LOSS FROM CONTINUING OPERATIONS BEFORE $ (8,219) $(224,541) $(26,518) $(344,904)INCOME TAX

INCOME TAX (BENEFIT) EXPENSE (149,466) (16,052) (273,982) 15,680

INCOME (LOSS) FROM CONTINUING OPERATIONS $ 141,247 $(208,489) $247,464 $(360,584)

DISCONTINUED OPERATIONS, NET OF TAX (21,904) (10,154) (63,520) (62,052)

NET INCOME (LOSS) $ 119,343 $(218,643) $183,944 $(422,636)

NET INCOME (LOSS) PER SHARE-BASIC:

Continuing operations $ 0.61 $(0.92) $1.08 $(1.60)

Discontinued operations (0.09) (0.04) (0.28) (0.27)

Basic $ 0.52 $(0.96) $0.80 $(1.87)

NET INCOME (LOSS) PER SHARE-DILUTED:

Continuing operations $ 0.60 $(0.92) $1.06 $(1.60)

Discontinued operations (0.09) (0.04) (0.27) (0.27)

Diluted $ 0.51 $(0.96) $0.79 $(1.87)

WEIGHTED AVERAGE SHARES:

Basic 230,301 226,787 229,314 226,050

Diluted 234,474 226,787 233,653 226,050

The following table presents unaudited Condensed Consolidated Balance Sheet data at December 31, 2020 and December 31, 2019 (in thousands):

December 31,December 31, 2020 2019

ASSETS

CURRENT ASSETS:

Cash and cash equivalents $1,213,437$1,454,531

Restricted cash and cash equivalents 171,563 247,457

Accounts receivable 511,262 467,953

Inventories, net 352,260 327,865

Other current assets 164,736 88,412

Total current assets $2,413,258$2,586,218

TOTAL NON-CURRENT ASSETS 6,851,379 6,803,309

TOTAL ASSETS $9,264,637$9,389,527

LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES:

Accounts payable and accrued expenses, including legal settlement accruals$1,208,061$1,412,954

Other current liabilities 45,763 47,335

Total current liabilities $1,253,824$1,460,289

LONG-TERM DEBT, LESS CURRENT PORTION, NET 8,280,578 8,359,899

OTHER LIABILITIES 378,174 435,883

SHAREHOLDERS' DEFICIT (647,939) (866,544)

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $9,264,637$9,389,527

The following table presents unaudited Condensed Consolidated Statement of Cash Flow data for the years ended December 31, 2020 and 2019 (in thousands):

Year Ended December 31,

2020 2019

OPERATING ACTIVITIES:

Net income (loss) $183,944 $(422,636)

Adjustments to reconcile Net income (loss) to Net cash provided by operating activities:

Depreciation and amortization 518,807 612,862

Asset impairment charges 120,344 526,082

Other, including cash payments to claimants from Qualified Settlement Funds (425,703) (618,256)

Net cash provided by operating activities $397,392 $98,052

INVESTING ACTIVITIES:

Capital expenditures, excluding capitalized interest $(69,971) $(63,854)

Acquisitions, including in-process research and development, net of cash and (649,504) - restricted cash acquired

Proceeds from sales and maturities of investments 92,763 -

Proceeds from sale of business and other assets, net 6,737 6,577

Other (4,892) (2,921)

Net cash used in investing activities $(624,867)$(60,198)

FINANCING ACTIVITIES:

(Payments on) proceeds from borrowings, net $(96,683) $237,989

Other (11,884) (33,388)

Net cash (used in) provided by financing activities $(108,567)$204,601

Effect of foreign exchange rate 654 1,096

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND $(335,388)$243,551 RESTRICTED CASH EQUIVALENTS

CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, 1,720,388 1,476,837 BEGINNING OF PERIOD

CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, END OF $1,385,000$1,720,388PERIOD

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 the Company's 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.

Effective January 1, 2020, the Company revised its definition of its adjusted financial metrics to exclude certain legal costs. The Company believes that such costs are not indicative of business performance and that excluding them more accurately reflects the Company's results and better enables management to compare financial results between periods. As a result of this change, the Company's adjusted financial metrics now exclude opioid-related legal expenses. Prior period adjusted results throughout this document have also been adjusted to reflect this change. The impact of excluding these costs during the three months and years ended December 31, 2020 and 2019 is reflected in the Certain legal costs lines of each of the following reconciliation tables.

Reconciliation of EBITDA and Adjusted EBITDA (non-GAAP)

The following table provides a reconciliation of Net income (loss) (GAAP) to Adjusted EBITDA (non-GAAP) for the three months and years ended December 31, 2020 and 2019 (in thousands):

Three Months Ended December 31,Year Ended December 31,

2020 2019 2020 2019

Net income (loss) (GAAP) $ 119,343 $(218,643) $183,944 $(422,636)

Income tax (benefit) expense (149,466) (16,052) (273,982) 15,680

Interest expense, net 135,250 134,347 532,939 538,734

Depreciation and amortization (14) 119,562 144,453 496,349 612,862

EBITDA (non-GAAP) $ 224,689 $44,105 $939,250 $744,640



Upfront and milestone-related payments (2) 32,606 2,568 35,075 6,623

Continuity and separation benefits and other cost reductions (3)25,926 19,426 126,282 34,598

Certain litigation-related and other contingencies, net (4) 4,889 15,304 (19,049) 11,211

Certain legal costs (5) 15,935 15,053 67,819 65,282

Asset impairment charges (6) 14,147 267,430 120,344 526,082

Acquisition-related and integration costs (7) 196 - 196 -

Fair value of contingent consideration (8) (747) (19,115) 16,353 (46,098)

Gain on extinguishment of debt (9) - - - (119,828)

Share-based compensation (14) 7,905 10,233 36,167 59,142

Other expense (income), net (15) 4,208 (3,731) (21,110) 16,677

Other (10) (23) (91) 31,095 13,791

Discontinued operations, net of tax (12) 21,904 10,154 63,520 62,052

Adjusted EBITDA (non-GAAP) $ 351,635 $361,336 $1,395,942$1,374,172

Reconciliation of Adjusted Income from Continuing Operations (non-GAAP)

The following table provides a reconciliation of the Company's Income (loss) from continuing operations (GAAP) to Adjusted income from continuing operations (non-GAAP) for the three months and years ended December 31, 2020 and 2019 (in thousands):

Three Months Ended December 31,Year Ended December 31,

2020 2019 2020 2019

Income (loss) from continuing operations (GAAP) $ 141,247 $(208,489) $247,464$(360,584)

Non-GAAP adjustments:

Amortization of intangible assets (1) 101,742 125,913 427,543 543,862

Upfront and milestone-related payments (2) 32,606 2,568 35,075 6,623

Continuity and separation benefits and other cost reductions (3)25,926 19,426 126,282 34,598

Certain litigation-related and other contingencies, net (4) 4,889 15,304 (19,049) 11,211

Certain legal costs (5) 15,935 15,053 67,819 65,282

Asset impairment charges (6) 14,147 267,430 120,344 526,082

Acquisition-related and integration costs (7) 196 - 196 -

Fair value of contingent consideration (8) (747) (19,115) 16,353 (46,098)

Gain on extinguishment of debt (9) - - - (119,828)

Other (10) 3,727 (2,002) 17,164 28,252

Tax adjustments (11) (163,673) (30,857) (368,821)(73,322)

Adjusted income from continuing operations (non-GAAP) $ 175,995 $185,231 $670,370$616,078

Reconciliation of Other Adjusted Income Statement Data (non-GAAP)

The following tables provide detailed reconciliations of various other income statement data between the GAAP and non-GAAP amounts for the three months and years ended December 31, 2020 and 2019 (in thousands, except per share data):

Three Months Ended December 31, 2020

Operating Operating (Loss) income Diluted net Total Cost of Gross Gross Total expense income from Operating Other from continuing Income tax Effective Income from Discontinued income per share revenues, revenues margin margin operating to continuing margin % non-operating operations (benefit) tax rate continuing operations, net Net income from continuing net % expenses revenue % operations expense, net before income expense operations of tax operations (13) tax

Reported (GAAP) $ 760,221 $ 369,539 $ 390,682 51.4 % $ 259,443 34.1 % $ 131,239 17.3 % $ 139,458 $ (8,219) $(149,466) 1,818.5 % $ 141,247 $ (21,904) $ 119,343 $ 0.60

Items impactingcomparability:

Amortization of - (101,742) 101,742 - 101,742 - 101,742 - 101,742 - 101,742intangible assets (1)

Upfront andmilestone-related - (925) 925 (31,681) 32,606 - 32,606 - 32,606 - 32,606payments (2)

Continuity and separationbenefits and other cost - (11,721) 11,721 (14,205) 25,926 - 25,926 - 25,926 - 25,926reductions (3)

Certainlitigation-related and - - - (4,889) 4,889 - 4,889 - 4,889 - 4,889other contingencies, net(4)

Certain legal costs (5) - - - (15,935) 15,935 - 15,935 - 15,935 - 15,935

Asset impairment charges - - - (14,147) 14,147 - 14,147 - 14,147 - 14,147(6)

Acquisition-related and - - - (196) 196 - 196 - 196 - 196integration costs (7)

Fair value of contingent - - - 747 (747) - (747) - (747) - (747)consideration (8)

Other (10) - - - - - (3,727) 3,727 - 3,727 - 3,727

Tax adjustments (11) - - - - - - - 163,673 (163,673) - (163,673)

Exclude discontinuedoperations, net of tax - - - - - - - - - 21,904 21,904(12)

After considering items $ 760,221 $ 255,151 $ 505,070 66.4 % $ 179,137 23.6 % $ 325,933 42.9 % $ 135,731 $ 190,202 $ 14,207 7.5 % $ 175,995 $ $ 175,995 $ 0.75(non-GAAP) -

Three Months Ended December 31, 2019

Operating (Loss) income Diluted net Total Gross Total Operating (loss) income Other from Income tax (Loss) Discontinued (loss) income per revenues, Cost of Gross margin operating expense from Operating non-operating continuing (benefit) Effective income from operations, net of Net (loss) share from net revenues margin % expenses to continuing margin % expense, net operations expense tax rate continuing tax income continuing revenue % operations before income operations operations (13) tax

Reported (GAAP) $ 764,800 $ 400,056 $ 364,744 47.7 % $ 458,669 60.0 % $ (93,925) (12.3)% $ 130,616 $ (224,541) $ (16,052) 7.1 % $ (208,489) $ (10,154) $ (218,643) $ (0.92)

Items impactingcomparability:

Amortization of - (125,913) 125,913 - 125,913 - 125,913 - 125,913 - 125,913intangible assets (1)

Upfront andmilestone-related - (542) 542 (2,026) 2,568 - 2,568 - 2,568 - 2,568payments (2)

Continuity andseparation benefits and - (4,689) 4,689 (14,737) 19,426 - 19,426 - 19,426 - 19,426other cost reductions(3)

Certainlitigation-related and - - - (15,304) 15,304 - 15,304 - 15,304 - 15,304other contingencies, net(4)

Certain legal costs (5) - - - (15,053) 15,053 - 15,053 - 15,053 - 15,053

Asset impairment charges - - - (267,430) 267,430 - 267,430 - 267,430 - 267,430(6)

Fair value of contingent - - - 19,115 (19,115) - (19,115) - (19,115) - (19,115)consideration (8)

Other (10) - - - - - 2,002 (2,002) - (2,002) - (2,002)

Tax adjustments (11) - - - - - - - 30,857 (30,857) - (30,857)

Exclude discontinuedoperations, net of tax - - - - - - - - - 10,154 10,154(12)

After considering items $ 764,800 $ 268,912 $ 495,888 64.8 % $ 163,234 21.3 % $ 332,654 43.5 % $ 132,618 $ 200,036 $ 14,805 7.4 % $ 185,231 $ - $ 185,231 $ 0.80(non-GAAP)

Year Ended December 31, 2020

(Loss) income Total Gross Total Operating Operating Other from Income tax Income from Discontinued Diluted net revenues, Cost of Gross margin operating expense income from Operating non-operating continuing (benefit) Effective continuing operations, net of Net income income per share net revenues margin % expenses to continuing margin % expense, net operations expense tax rate operations tax from continuing revenue % operations before income operations (13) tax

Reported (GAAP) $2,903,074 $ 1,442,511 $1,460,563 50.3 % $ 975,252 33.6 % $ 485,311 16.7 % $ 511,829 $ (26,518) $(273,982) 1,033.2 % $ 247,464 $ (63,520) $ 183,944 $ 1.06

Items impactingcomparability:

Amortization of - (427,543) 427,543 - 427,543 - 427,543 - 427,543 - 427,543intangible assets (1)

Upfront andmilestone-related - (1,717) 1,717 (33,358) 35,075 - 35,075 - 35,075 - 35,075payments (2)

Continuity and separationbenefits and other cost - (55,413) 55,413 (70,869) 126,282 - 126,282 - 126,282 - 126,282reductions (3)

Certainlitigation-related and - - - 19,049 (19,049) - (19,049) - (19,049) - (19,049)other contingencies, net(4)

Certain legal costs (5) - - - (67,819) 67,819 - 67,819 - 67,819 - 67,819

Asset impairment charges - - - (120,344) 120,344 - 120,344 - 120,344 - 120,344(6)

Acquisition-related and - - - (196) 196 - 196 - 196 - 196integration costs (7)

Fair value of contingent - - - (16,353) 16,353 - 16,353 - 16,353 - 16,353consideration (8)

Other (10) - - - (31,118) 31,118 13,954 17,164 - 17,164 - 17,164

Tax adjustments (11) - - - - - - - 368,821 (368,821) - (368,821)

Exclude discontinuedoperations, net of tax - - - - - - - - - 63,520 63,520(12)

After considering items $2,903,074 $ 957,838 $1,945,236 67.0 % $ 654,244 22.5 % $1,290,992 44.5 % $ 525,783 $ 765,209 $ 94,839 12.4 % $ 670,370 $ - $ 670,370 $ 2.87(non-GAAP)

Year Ended December 31, 2019

(Loss) income Diluted net Total Gross Total Operating Operating Other from (Loss) Discontinued (loss) income per revenues, Cost of Gross margin operating expense income from Operating non-operating continuing Income tax Effective income from operations, net of Net (loss) share from net revenues margin % expenses to continuing margin % expense, net operations expense tax rate continuing tax income continuing revenue % operations before income operations operations (13) tax

Reported (GAAP) $2,914,364 $ 1,569,338 $1,345,026 46.2 % $ 1,254,347 43.0 % $ 90,679 3.1 % $ 435,583 $ (344,904) $ 15,680 (4.5)% $ (360,584) $ (62,052) $ (422,636) $ (1.60)

Items impactingcomparability:

Amortization of - (543,862) 543,862 - 543,862 - 543,862 - 543,862 - 543,862intangible assets (1)

Upfront andmilestone-related - (2,484) 2,484 (4,139) 6,623 - 6,623 - 6,623 - 6,623payments (2)

Continuity and separationbenefits and other cost - (5,693) 5,693 (28,905) 34,598 - 34,598 - 34,598 - 34,598reductions (3)

Certainlitigation-related and - - - (11,211) 11,211 - 11,211 - 11,211 - 11,211other contingencies, net(4)

Certain legal costs (5) - - - (65,282) 65,282 - 65,282 - 65,282 - 65,282

Asset impairment charges - - - (526,082) 526,082 - 526,082 - 526,082 - 526,082(6)

Fair value of contingent - - - 46,098 (46,098) - (46,098) - (46,098) - (46,098)consideration (8)

Gain on extinguishment of - - - - - 119,828 (119,828) - (119,828) - (119,828)debt (9)

Other (10) - - - (13,878) 13,878 (14,374) 28,252 - 28,252 - 28,252

Tax adjustments (11) - - - - - - - 73,322 (73,322) - (73,322)

Exclude discontinuedoperations, net of tax - - - - - - - - - 62,052 62,052(12)

After considering items $2,914,364 $ 1,017,299 $1,897,065 65.1 % $ 650,948 22.3 % $1,246,117 42.8 % $ 541,037 $ 705,080 $ 89,002 12.6 % $ 616,078 $ - $ 616,078 $ 2.66(non-GAAP)

Notes to the Reconciliations of GAAP and Non-GAAP Financial Measures

Notes to certain line items included in the reconciliations of the GAAP financial measures to the non-GAAP financial measures for the three months and years ended December 31, 2020 and 2019 are as follows:

(1) Adjustments for amortization of commercial intangible assets included the following (in thousands):



Three Months Ended December 31,Year Ended December 31,

2020 2019 2020 2019

Amortization of intangible assets excluding fair $ 100,926 $123,669 $ 424,276 $523,872 value step-up from contingent consideration

Amortization of intangible assets related to fair 816 2,244 3,267 19,990 value step-up from contingent consideration

Total $ 101,742 $125,913 $ 427,543 $543,862



(2) Adjustments for upfront and milestone-related payments to partners included the following (in thousands):



Three Months Ended December 31,

2020 2019

Cost of revenues Operating Cost of revenuesOperating expenses expenses

Sales-based $ 925 $- $ 542 $-

Development-based - 31,681 - 2,026

Total $ 925 $31,681 $ 542 $2,026



Year Ended December 31,

2020 2019

Cost of revenues Operating Cost of revenuesOperating expenses expenses

Sales-based $ 1,717 $- $ 2,484 $-

Development-based - 33,358 - 4,139

Total $ 1,717 $33,358 $ 2,484 $4,139



The amounts included in Development-based payments included a fourth-quarter 2020 charge of $28.6 million related to in-process research and development assets expensed in connection with the acquisition of BioSpecifics.



(3) Adjustments for continuity and separation benefits and other cost reductions included the following (in thousands):



Three Months Ended December 31,

2020 2019

Cost of revenues Operating Cost of revenuesOperating expenses expenses

Continuity and separation benefits $ 3,585 $7,451 $ 4,689 $9,997

Accelerated depreciation charges 5,039 2,744 - -

Other 3,097 4,010 - 4,740

Total $ 11,721 $14,205 $ 4,689 $14,737



Year Ended December 31,

2020 2019

Cost of revenues Operating Cost of revenuesOperating expenses expenses

Continuity and separation benefits $ 36,775 $50,132 $ 5,693 $17,881

Accelerated depreciation charges 15,567 6,892 - -

Other 3,071 13,845 - 11,024

Total $ 55,413 $70,869 $ 5,693 $28,905



Included within the Continuity and separation benefits line are costs associated with certain continuity and transitional compensation arrangements for certain senior management of the Company. Additionally, amounts during the three months and year ended December 31, 2020 include severance and other restructuring charges related to the previously announced strategic initiatives to further optimize Endo's operations.



(4) To exclude adjustments to accruals for litigation-related settlement charges and certain settlement proceeds related to suits filed by subsidiaries.



(5) To exclude opioid-related legal expenses.



(6) Adjustments for asset impairment charges included the following (in thousands):



Three Months Ended December 31,Year Ended December 31,

2020 2019 2020 2019

Goodwill impairment charges $ - $20,800 $ 32,786 $171,908

Other intangible asset impairment charges 14,146 243,046 79,917 347,706

Property, plant and equipment impairment charges 1 3,584 1,249 6,468

Operating lease right-of-use asset impairment charges- - 6,392 -

Total $ 14,147 $267,430 $ 120,344 $526,082



(7) To exclude integration costs.



To exclude the impact of changes in the fair value of contingent consideration liabilities resulting from changes to our estimates regarding the timing and (8) amount of the future revenues of the underlying products and changes in other assumptions impacting the probability of incurring, and extent to which the Company could incur, related contingent obligations.



(9) To exclude the gain on the extinguishment of debt associated with the Company's March 2019 refinancing.



The Other row included in each of the above reconciliations of GAAP financial (10)measures to non-GAAP financial measures (except for the reconciliations of Net income (loss) (GAAP) to Adjusted EBITDA (non-GAAP)) includes the following (in thousands):



Three Months Ended December 31,

2020 2019

Operating Other non- Operating Other non- expenses operating expenses operating expenses expenses

Foreign currency impact related to the re-measurement$ - $4,345 $ - $1,488 of intercompany debt instruments

(Gain) loss on sale of business and other assets - - - (5,488)

Other miscellaneous - (618) - 1,998

Total $ - $3,727 $ - $(2,002)



Year Ended December 31,

2020 2019

Operating Other non- Operating Other non- expenses operating expenses operating expenses expenses

Foreign currency impact related to the re-measurement$ - $1,919 $ - $4,362 of intercompany debt instruments

(Gain) loss on sale of business and other assets - (11,325) - (7,488)

Debt modification costs 31,118 - - -

Other miscellaneous - (4,548) 13,878 17,500

Total $ 31,118 $(13,954) $ 13,878 $14,374



The Other row included in the reconciliations of Net income (loss) (GAAP) to Adjusted EBITDA (non-GAAP) primarily relates to the items enumerated in the foregoing "Operating expenses" columns.



Adjusted income taxes are calculated by tax effecting adjusted pre-tax income and permanent book-tax differences at the applicable effective tax rate that (11)will be determined by reference to statutory tax rates in the relevant jurisdictions in which the Company operates. Adjusted income taxes include current and deferred income tax expense commensurate with the non-GAAP measure of profitability.



(12)To exclude the results of the businesses reported as discontinued operations, net of tax.



Calculated as net income or loss from continuing operations divided by the (13)applicable weighted average share number. The applicable weighted average share numbers are as follows (in thousands):



Three Months Ended December 31,Year Ended December 31,

2020 2019 2020 2019

GAAP 234,474 226,787 233,653 226,050

Non-GAAP Adjusted 234,474 231,571 233,653 231,706



Depreciation and amortization and Share-based compensation per the Adjusted (14)EBITDA reconciliations do not include amounts reflected in other lines of the reconciliations, including Continuity and separation benefits and other cost reductions.



(15)To exclude Other expense (income), net per the Condensed Consolidated Statements of Operations.

Reconciliation of Net Debt Leverage Ratio (non-GAAP)

The following table provides a reconciliation of the Company's Net income (GAAP) to Adjusted EBITDA (non-GAAP) for the twelve months ended December 31, 2020 (in thousands) and the calculation of the Company's Net Debt Leverage Ratio (non-GAAP):

Twelve Months Ended December 31, 2020

Net income (GAAP) $183,944

Income tax benefit (273,982)

Interest expense, net 532,939

Depreciation and amortization (14) 496,349

EBITDA (non-GAAP) $939,250



Upfront and milestone-related payments $35,075

Continuity and separation benefits and other cost reductions126,282

Certain litigation-related and other contingencies, net (19,049)

Certain legal costs 67,819

Asset impairment charges 120,344

Acquisition-related and integration costs 196

Fair value of contingent consideration 16,353

Share-based compensation (14) 36,167

Other income, net (21,110)

Other 31,095

Discontinued operations, net of tax 63,520

Adjusted EBITDA (non-GAAP) $1,395,942



Calculation of Net Debt:

Debt $8,314,728

Cash (excluding Restricted Cash) 1,213,437

Net Debt (non-GAAP) $7,101,291



Calculation of Net Debt Leverage:

Net Debt Leverage Ratio (non-GAAP) 5.1

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 net income per share amounts. Despite the importance of these measures to management in goal setting and performance measurement, the company stresses 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 amounts 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 (NASDAQ: ENDP) is a specialty pharmaceutical company committed to helping everyone we serve live their best life through the delivery of quality, life-enhancing therapies. Our decades of proven success come from a global team of passionate employees collaborating to bring the best treatments forward. Together, we boldly transform insights into treatments benefiting those who need them, when they need them. Learn more at www.endo.com or connect with us on LinkedIn.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements, including, but not limited to, the statements by Mr. Coleman, as well as other statements regarding product development, market potential, corporate strategy and optimization efforts, together with Endo's net income per share from continuing operations amounts, product net sales, revenue forecasts and other financial guidance for the first-quarter and full-year 2021, the impact of and response to the COVID-19 pandemic and any other statements that refer to Endo's expected, estimated or anticipated future results. 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 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 and adversely 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 and regulatory developments; 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 any strategic and/or optimization 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, including pending and future opioid-related matters, pending tax matters with the IRS and proceedings that involve or may involve key products such as VASOSTRICT(r); unfavorable publicity regarding the misuse of opioids; the 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 (such as our recently completed acquisition of BioSpecifics) 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 manufacture, maintain and distribute 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, the impact of and response to the ongoing COVID-19 pandemic and the 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 or other filings with the U.S. Securities and Exchange Commission. 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.

View original content: http://www.prnewswire.com/news-releases/endo-reports-fourth-quarter-and-full-year-2020-financial-results-and-introduces-2021-financial-guidance-301236060.html

SOURCE Endo International plc