Unlike Many of Its Peers, Allergan Beats Forecast and Is on the Hunt for More M&A Deals
Published: Feb 09, 2017
DUBLIN, Feb. 8, 2017 /PRNewswire/ -- Allergan plc (NYSE: AGN) today reported its fourth quarter and full year 2016 continuing operations performance.
Fourth Quarter and Full-Year 2016 Continuing Operations
(unaudited; $ in millions, except per share amounts)
Q4 '16 v Q4 '15
Q4 '16 v Q3 '16
Total net revenues**
Diluted EPS - Continuing Operations
Continuing Operations Tax Rate
Non-GAAP Adjusted Operating Income
Non-GAAP Performance Net Income Per Share *
Non-GAAP Adjusted EBITDA
Non-GAAP SG&A Expense
Non-GAAP R&D Expense
Non-GAAP Continuing Operations Tax Rate
* New nomenclature for non-GAAP earnings per share. Metrics and calculations for this measure have not changed. Refer to table 3 for additional definition of non-GAAP performance net income per share.
** Excludes the reclassification of revenues of ($43.6) million in Q4 2015 and ($23.7) million in Q3 2016 related to the portion of Allergan product revenues sold by our former Anda Distribution Business into discontinued operations. Excludes the reclassification of revenues of ($80.0) million in the twelve months ended December 31, 2016 and ($157.4) million in the twelve months ended December 31, 2015 related to the portion of Allergan product revenues sold by our former Anda Distribution Business into discontinued operations.
Total net revenues of $3.9 billion, a seven percent increase versus the prior year quarter, were driven by strong performance from higher revenues in Facial Aesthetics, BOTOX® Therapeutic, Eye Care, LINZESS® and new product launches across therapeutic areas, partially offset by lower revenues from Namenda XR® and loss of exclusivity of ASACOL® HD. For the full year 2016, Allergan reported total net revenues of $14.57 billion, a 15 percent increase versus the prior year, driven by continued strong growth across key therapeutic areas and products, and a full year impact of acquired Allergan brands.
"2016 was a year of transformation for Allergan. We are now a branded biopharmaceutical leader, focused on delivering sustainable revenue growth, advancing our pipeline, maintaining industry leading margins and allocating capital to maximize shareholder return. In the fourth quarter of 2016, we delivered against these priorities. Our top global products and new launches powered revenue growth, including, but not limited to, BOTOX®, RESTASIS®, OZURDEX®, Fillers, LINZESS®, VRAYLAR, VIBERZI®, KYBELLA® and Lo LOESTRIN®. Our R&D team continued to advance key programs and deliver FDA approvals for new products that change lives. And we made fast progress in our capital deployment program, enhancing short- and long-term value for our shareholders," said Brent Saunders, Chairman and CEO of Allergan.
"2017 is a pivotal year for Allergan and we are well-positioned to deliver growth through excellent execution. We have growing products and franchises, with nine product launches planned in 2017. Our Open Science pipeline is advancing innovative, high-value treatments for patients, including our six 'stars' entering or currently in phase 3 development. And our operational excellence and capital deployment initiatives will support our continued growth and enhance shareholder value," added Saunders.
"I thank our 16,000 global colleagues who continue to Be Bold. They are delivering new ideas that allow us to build strong bridges with customers, act fast, and drive results for Allergan. And they are focused on advancing innovative new treatments across our therapeutic areas that can make a profound impact on global health and patient care," added Saunders.
Fourth-Quarter 2016 Performance
GAAP operating loss from continuing operations in the fourth quarter 2016 was $900 million an increase in losses of 58.0 percent versus prior year primarily due to research and development (R&D)-related charges and impairments. Non-GAAP adjusted operating income from continuing operations in the fourth quarter of 2016 was $1.87 billion. Non-GAAP adjusted operating income was impacted by higher operating expenses.
Full Year 2016 Performance
GAAP operating loss from continuing operations for the full year 2016 was $1.8 billion, a decrease in losses of 41.7 percent versus prior year primarily due to the fact that 2015 included the impact of selling through acquired inventory, higher acquisition related stock compensation expense and higher restructuring costs all in connection with the Allergan acquisition. Non-GAAP adjusted operating income from continuing operations for the full year 2016 was $7.25 billion, an increase of 7 percent versus prior year. Cash flow from operations of approximately $1.4 billion for the full year, a decrease of 68.5 percent versus prior year, was due primarily to reduced revenues from the Global Generics business, tax payments related to the Global Generics and Anda Distribution divestitures to Teva and increased R&D investment.
Total GAAP Selling, General and Administrative (SG&A) Expense was $1.28 billion for the fourth quarter 2016 unchanged from $1.28 billion in the prior year period. Total non-GAAP SG&A Expense increased to $1.07 billion for the fourth quarter 2016 from $997 million in the prior year quarter, primarily due to additional selling and promotional expenses for key products and new product launches. GAAP R&D investment for the fourth quarter 2016 was $913 million, compared to $431 million in the fourth quarter of 2015. Non-GAAP R&D investment for the fourth quarter 2016 was $426 million, an increase of 26 percent over prior year, due to increased costs associated with clinical programs which were weighted toward the back-half of 2016.
Amortization, Tax and Capitalization
Amortization expense from continuing operations for the fourth quarter 2016 was $1.64 billion, compared to $1.58 billion in the fourth quarter of 2015. The Company's GAAP continuing operations tax rate was 96.4 percent in the fourth quarter 2016. The Company's non-GAAP adjusted continuing operations tax rate was 10.4 percent in the fourth quarter 2016. As of December 31, 2016, Allergan had cash and marketable securities of $13.2 billion and outstanding indebtedness of $32.8 billion.
Discontinued Operations and Continuing Operations
As a result of the divestiture of the Company's Anda Distribution business to Teva on October 3, 2016, financial results of this business are being reported as discontinued operations in the condensed consolidated statements of operations up through the date of divestiture. Included in segment revenues are product sales that were sold by the Anda Distribution business once the Anda Distribution business had sold the product to a third-party customer.
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