Endo International Reports Fourth Quarter And Full Year 2015 Financial Results

DUBLIN, Feb. 29, 2016 /PRNewswire/ --

• Full year 2015 adjusted diluted EPS of $4.66 exceeds top end of guidance
• Fourth quarter revenues of $1,074 million brings full year revenues to top end of guidance
• Fourth quarter reported $1.97 diluted (GAAP) EPS from continuing operations and $1.36 adjusted diluted EPS from continuing operations
• Company expects 2016 revenues to range from $4.32 billion to $4.52 billion
• Company expects 2016 reported diluted GAAP earnings per share to range from $2.25 to $2.60
• Company updates 2016 adjusted diluted earnings per share to range from $5.85 to $6.20
• Company increases mesh product liability pre-tax accrual by $834 million
• Company also announces it is winding down ASTORA Women's Health business

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

• Revenues of $1,074 million including new product revenues from 2014 and 2015 strategic transactions, a 62 percent increase compared to fourth quarter 2014 revenues of $663 million.
• Reported income from continuing operations of $444 million compared to fourth quarter 2014 reported income from continuing operations of $19 million.
• Reported diluted earnings per share (EPS) from continuing operations of $1.97 compared to fourth quarter 2014 reported diluted earnings per share from continuing operations of $0.12.
• Adjusted income from continuing operations of $307 million, a 101 percent increase compared to fourth quarter 2014 adjusted income from continuing operations of $153 million.
• Adjusted diluted EPS from continuing operations of $1.36 compared to fourth quarter 2014 adjusted diluted earnings per share from continuing operations of $0.96.

"Endo delivered solid financial results this quarter and was further strengthened by our first full quarter of revenues from the acquisition of Par Pharmaceutical Holdings, Inc. As we enter 2016, we believe our business is diversified and positioned for double-digit underlying growth over the mid- to long-term," said Rajiv De Silva, President and CEO of Endo. "Moving forward, we are focused on operational execution - especially on the integration of Par and on supporting growth for priority branded products such as XIAFLEX® and BELBUCA - and continuing to create value for Endo shareholders."

U.S. BRANDED PHARMACEUTICALS

During fourth quarter 2015, the U.S. Branded Pharmaceuticals business unit continued to support growth for prioritized products including XIAFLEX®, extended the exclusive licensing agreement for Voltaren^® Gel through 2023 and secured regulatory approval and prepared for the commercial launch of BELBUCA.

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

• Revenues of $379 million, a 54 percent increase compared to fourth quarter 2014; this increase was primarily attributable to the strategic addition of Auxilium Pharmaceuticals.
• Net sales of Voltaren^® Gel increased 24 percent compared to fourth quarter 2014; this increase was attributable to higher volumes resulting from increased sales and marketing efforts.
• Net sales of LIDODERM^® increased 1 percent compared to fourth quarter 2014; this increase was primarily attributable to net price gains in the quarter and lower return reserves.

U.S. GENERIC PHARMACEUTICALS

During the fourth quarter 2015, the U.S. Generic Pharmaceuticals business unit focused on the integration of Par Pharmaceutical Holdings, Inc. and continued to advance key manufacturing, quality, commercial and R&D initiatives to support its organic growth objectives.

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

• Revenues of $609 million, an 81 percent increase compared to fourth quarter 2014; this increase was primarily attributable to growth from the addition of sales from the Company's September 2015 acquisition of Par, as well as underlying growth of certain products.
• Compared to previous 2015 expectations, fourth quarter revenues in U.S. Generic Pharmaceuticals were unfavorably impacted by increased pricing pressure due to increased competition across pain and commoditized products within legacy Qualitest and certain non-recurring charges.

INTERNATIONAL PHARMACEUTICALS

As part of Endo's planned expansion of its International Pharmaceuticals business unit and to further diversify the Company's financial profile, the Company recently closed two strategic transactions designed to increase focus on core pharmaceuticals within its Litha Group. This included the acquisition of a broad product and R&D portfolio from the Aspen Group, which closed in October 2015, and the strategic divestiture of a portfolio of non-core products, which closed in February 2016.

Fourth quarter 2015 International Pharmaceuticals results include:

• Revenues of $85 million, a 7 percent increase over fourth quarter 2014 or a 24 percent increase excluding an unfavorable currency impact of $14 million; this increase was primarily attributable to sales growth in Mexico.

2016 Financial Guidance

For the full twelve months ended December 31, 2016, at current exchange rates, Endo is providing revenue guidance and updating its adjusted diluted EPS guidance from continuing operations. The Company estimates:

• Total revenues to be between $4.32 billion and $4.52 billion;
• Reported (GAAP) EPS from continuing operations to be between $2.25 and $2.60;
• Adjusted diluted EPS from continuing operations to be between $5.85 and $6.20; and
• Cash flow from operations is expected to support the Company's stated goal of de-levering to 3 to 4 times net debt to adjusted EBITDA in the second half of 2016.

The Company's 2016 financial guidance is based on the following assumptions:

• Adjusted gross margin of approximately 63% to 65%;
• Adjusted operating expenses as a percentage of revenues to be approximately 19.5% to 20.5%;
• Adjusted interest expense of approximately $455 million;
• Adjusted effective tax rate of approximately  9% to 11%; and
• Adjusted diluted EPS from continuing operations assume full year adjusted diluted shares outstanding of approximately 224 million shares.

Other Updates

As of December 31, 2015, the Company had $272.3 million in unrestricted cash; net debt of $8.3 billion and a net debt to pro forma adjusted EBITDA ratio of 4.37.

During the fourth quarter 2015, the Company recorded the following non-cash impairment charges:

• $85.8 million related to Paladin goodwill driven by the loss of exclusivity of certain products;
• $38.4 million related to legacy Qualitest products as part of the continued portfolio optimization process with the integration of Par Pharmaceutical; and
• $12.5 million, net primarily related to the abandonment of STENDRA®.

During the fourth quarter 2015, the Company recorded an $834.0 million aggregate pre-tax charge to increase its estimated product liability accrual for vaginal mesh cases. This product liability accrual increase includes $401 million attributable to removing the reduction factor assumption previously included in the Company's estimates based on the actual number of claims processed and the lack of any meaningful reduction factor observed to date.

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