Raises 2024 Financial Expectations Provides 2025 Financial Expectations
MALVERN, Pa., Aug. 27, 2024 /PRNewswire/ -- Endo, Inc. ("Endo" or the "Company") (OTCQX:NDOI), a diversified specialty pharmaceutical company transforming insights into life-enhancing therapies, today reported financial results for the second-quarter ended June 30, 2024[1]. Endo acquired substantially all of the assets of Endo International plc ("EIP") on April 23, 2024, as contemplated by EIP's plan of reorganization (the "Plan").
The Company continues executing its strategy of becoming a vibrant growth company. With second-quarter results which exceeded internal expectations, the Company is raising 2024 full-year financial expectations and is also providing 2025 financial expectations, which represent a return to growth.
ENDO SECOND-QUARTER FINANCIAL PERFORMANCE
(in thousands)
Successor
Predecessor
Non-GAAP
Predecessor
Non-GAAP
Three Months Ended June 30, 2024
Period From April 1, 2024 through April 23, 2024
Combined Three Months Ended June 30, 2024
Three Months Ended June 30, 2023
% Change2024 vs. 2023
Branded Pharmaceuticals
$ 146,151
$ 78,918
$ 225,069
$ 212,377
6 %
Sterile Injectables
$ 56,474
$ 34,297
$ 90,771
$ 137,028
(34) %
Generic Pharmaceuticals
$ 69,722
$ 40,360
$ 110,082
$ 178,579
(38) %
International Pharmaceuticals
$ 11,816
$ 8,892
$ 20,708
$ 18,868
10 %
Total Revenues, Net
$ 284,163
$ 162,467
$ 446,630
$ 546,852
(18) %
Reported Net (Loss) Income
$ (148,776)
$ 6,527,549
$ 6,378,773
$ 23,438
NM
Adjusted Net Income (a)
$ 28,122
$ 76,571
$ 104,693
$ 230,705
(55) %
Adjusted EBITDA (a)
$ 89,691
$ 86,090
$ 175,781
$ 243,417
(28) %
__________
(a)
The information presented in the table above includes non-GAAP financial measures such as Adjusted Net Income and Adjusted EBITDA. Please refer to the "Supplemental Financial Information" section below for reconciliations of certain non-GAAP financial measures to the most directly comparable GAAP financial measures.
1
As required by GAAP, due to the application of Fresh Start Accounting, results for the quarter must be presented separately for the predecessor period from April 1, 2024 through April 23, 2024 (the "Predecessor" period) and the successor three months ended June 30, 2024 (the "Successor" period). However, to facilitate comparison of our operating results against the relevant prior periods the Company has combined the results of the Predecessor and Successor periods as non-GAAP measures ("combined" results).
ENDO CONSOLIDATED FINANCIAL RESULTS
Total revenues in the combined second-quarter 2024 (as defined below under "Supplemental Financial Information – Non-GAAP Financial Measures") were $447 million, a decrease of 18% compared to $547 million in second-quarter 2023. This decrease was primarily attributable to decreased revenues from the Generic Pharmaceuticals and Sterile Injectables segments, partially offset by increased revenues from the Branded Pharmaceuticals segment.
Net Income in the combined second-quarter 2024 was $6,379 million compared to $23 million in second-quarter 2023. This change was primarily due to gains arising from the Plan's implementation and the application of fresh start accounting.
Adjusted Net Income in the combined second-quarter 2024 was $105 million compared to $231 million in second-quarter 2023. This change was primarily due to decreased revenues.
BRANDED PHARMACEUTICALS SEGMENT
Branded Pharmaceuticals segment revenues were $225 million in the combined second-quarter 2024, representing a 6% increase compared to $212 million in second-quarter 2023.
Specialty Products revenues were $162 million in the combined second-quarter 2024, representing a 2% decrease compared to $165 million in second-quarter 2023. This change was primarily due to a decrease in SUPPRELIN® LA revenues due to lower volumes and a decrease in NASCOBAL® Nasal Spray revenues due to generic competition, partially offset by an increase in XIAFLEX® revenues.
XIAFLEX® revenues were $127 million in the combined second-quarter 2024, representing an 8% increase compared to $117 million in second-quarter 2023. This increase was driven by increased net selling price and underlying demand growth that was in-line with internal expectations. XIAFLEX® volume increased 8% compared to first quarter 2024 and decreased slightly compared to second-quarter 2023 due to changes in channel inventory.
Established Products revenues were $63 million in the combined second-quarter 2024, representing a 33% increase compared to $47 million in second-quarter 2023. This increase was primarily due to an approximately $10 million favorable change in non-recurring, non-cash adjustments between the second-quarter 2024 and second-quarter 2023 related to previously discontinued products as well as increased revenues related to products that experienced temporary supply disruptions in 2023.
STERILE INJECTABLES SEGMENT
Sterile Injectables segment revenues were $91 million in the combined second-quarter of 2024, representing a 34% decrease compared to $137 million in second-quarter 2023. This decrease was primarily attributable to a non-recurring payment of $33 million received from Novavax, Inc. in second-quarter 2023 to settle a dispute related to a previous manufacturing and services agreement and competitive pressures, partially offset by revenues from 2023 new product launches.
GENERIC PHARMACEUTICALS SEGMENT
Generic Pharmaceuticals segment revenues were $110 million in the combined second-quarter 2024, representing a 38% decrease compared to $179 million in second-quarter 2023. This decrease was primarily attributable to competitive pressure across multiple products including varenicline tablets, the generic version of Chantix®, and dexlansoprazole delayed release capsules, the generic version of Dexilant®, partially offset by increased revenues from lidocaine patch 5%, the generic version of LIDODERM®.
INTERNATIONAL PHARMACEUTICALS SEGMENT
International Pharmaceuticals segment revenues were $21 million in the combined second-quarter 2024 compared to $19 million during second-quarter 2023.
BALANCE SHEET AND LIQUIDITY
As of June 30, 2024, Endo had approximately $294 million in unrestricted cash and cash equivalents.
Combined second-quarter 2024 net cash used in operating activities was approximately $698 million compared to approximately $127 million net cash provided by operating activities during second-quarter 2023. This change was primarily driven by the settlement of certain claims during the predecessor period in connection with the Plan.
During second-quarter 2024, the Company used the proceeds from the issuance of a $1.5 billion senior secured term loan facility and $1.0 billion senior secured notes due in 2031, along with the proceeds from a $500 million equity rights offering, to acquire substantially all of EIP's assets in connection with the Plan.
FINANCIAL EXPECTATIONS
Endo is updating its financial expectations for the full-year ending December 31, 2024, inclusive of the predecessor and successor periods.
Prior Outlook
Current Outlook
($ in millions)
Total Revenues, Net
$1,685 - $1,770
$1,720- $1,780
Adjusted EBITDA
$615 - $645
$635 - $655
Assumptions:
Segment Revenues:
Branded Pharmaceuticals
$860 - $905
$875 - $905
Sterile Injectables
$370 - $390
$370 - $390
Generic Pharmaceuticals
$395 - $415
$410 - $420
International Pharmaceuticals
~$60
~$65
Adjusted Gross Margin as a Percentage of Total Revenues, Net
~67%
~67%
Adjusted Operating Expenses
$585 - $605
$595 - $615
In light of recent developments related to the expected timing of certain new product launches included in long term projections disclosed by EIP in connection with its Chapter 11 process, Endo is providing financial expectations for the full-year ending December 31, 2025, compared to mid-point of full-year 2024 expectations.
Full-year 2025
($ in millions)
Total Revenues, Net
Low-single digit % growth
Adjusted EBITDA
Mid to high-single digit % growth
Assumptions:
Segment Revenues:
Branded Pharmaceuticals
Low to mid-single digit % growth
Sterile Injectables
Low to mid-single digit % growth
Generic Pharmaceuticals
Flat to mid-single digit % decline
International Pharmaceuticals
Flat
The foregoing information includes financial guidance, expectations and other forward-looking statements based on Endo's current views, beliefs, estimates and assumptions, and it updates and supersedes all guidance, projections, forecasts, plans, expectations and other forward-looking statements for any time period(s) previously provided by EIP or Endo. Endo expressly disclaims any intent or obligation to update such forward-looking statements whether as a result of new information, future developments or otherwise and will not do so except as required by law. Actual results may differ materially and adversely from these and any other forward-looking statements, as further discussed below under the heading "Cautionary Note Regarding Forward-Looking Statements."
CONFERENCE CALL INFORMATION
Endo will host a conference call to discuss this press release later today, August 27, 2024, at 8:00 a.m. ET.
To participate in the call, please dial 800-836-8184 (U.S. and Canada toll-free) or 646-357-8785 (outside the U.S.) or join the live webcast at this link. Please join 10 minutes prior to the scheduled start time.
A replay of the webcast will be available within 24 hours at investor.endo.com.
LIDODERM® is a U.S. registered trademark of Teikoku Pharma USA, Inc.
Dexilant® is a registered trademark of Takeda Pharmaceutical U.S.A., Inc.
Chantix® is a registered trademark of Pfizer Inc.
FINANCIAL SCHEDULES
The following table presents unaudited Total revenues, net (dollars in thousands):
Successor
Predecessor
Non-GAAP
Predecessor
Non-GAAP
Three Months Ended June 30, 2024
Period From April 1, 2024 through April 23, 2024
Combined Three Months Ended June 30, 2024
Three Months Ended June 30, 2023
% Change
2024 vs. 2023
Specialty Products:
XIAFLEX®
$ 87,054
$ 39,588
$ 126,642
$ 117,291
8 %
SUPPRELIN® LA
14,518
6,078
20,596
28,223
(27) %
Other Specialty (1)
9,339
5,902
15,241
19,839
(23) %
Total Specialty Products
$ 110,911
$ 51,568
$ 162,479
$ 165,353
(2) %
Established Products:
PERCOCET®
$ 13,910
$ 9,348
$ 23,258
$ 26,445
(12) %
TESTOPEL®
8,382
2,734
11,116
11,600
(4) %
Other Established (2)
12,948
15,268
28,216
8,979
NM
Total Established Products
$ 35,240
$ 27,350
$ 62,590
$ 47,024
33 %
Total Branded Pharmaceuticals (3)
$ 146,151
$ 78,918
$ 225,069
$ 212,377
6 %
Sterile Injectables:
ADRENALIN®
$ 14,642
$ 11,233
$ 25,875
$ 27,133
(5) %
VASOSTRICT®
7,926
7,356
15,282
24,419
(37) %
Other Sterile Injectables (4)
33,906
15,708
49,614
85,476
(42) %
Total Sterile Injectables (3)
$ 56,474
$ 34,297
$ 90,771
$ 137,028
(34) %
Total Generic Pharmaceuticals (5)
$ 69,722
$ 40,360
$ 110,082
$ 178,579
(38) %
Total International Pharmaceuticals (6)
$ 11,816
$ 8,892
$ 20,708
$ 18,868
10 %
Total revenues, net
$ 284,163
$ 162,467
$ 446,630
$ 546,852
(18) %
__________
(1)
Products included within Other Specialty include AVEED® and NASCOBAL® Nasal Spray.
(2)
Products included within Other Established include, but are not limited to, EDEX®.
(3)
Individual products presented above represent the top two performing products in each product category for either the combined three months ended June 30, 2024 and/or any product having revenues in excess of $25 million during any period presented for 2024 or 2023.
(4)
Products included within Other Sterile Injectables include, but are not limited to, APLISOL®. During the second quarter of 2023, Endo International plc and/or certain of its subsidiaries executed a Settlement Agreement and Release of Claims with Novavax, Inc. (the Novavax Settlement Agreement) to resolve a dispute under a previous manufacturing services agreement. For the three months ended June 30, 2023, the cash and non-cash consideration received in connection with the Novavax Settlement Agreement made up approximately 7% of consolidated total revenue. No individual product within Other Sterile Injectables has exceeded 5% of consolidated total revenues for the periods presented.
(5)
The Generic Pharmaceuticals segment is comprised of a portfolio of products that are generic versions of branded products, are distributed primarily through the same wholesalers, generally have limited or no intellectual property protection and are sold within the U.S. Lidocaine patch 5% (the generic version of LIDODERM®), made up approximately 8%, for the combined three months ended June 2024, of consolidated revenues. Varenicline tablets (Endo's generic version of Pfizer Inc.'s Chantix®), which launched in September 2021, made up 10%, for the three months ended June 30, 2023, of consolidated total revenues.
(6)
No individual product within the International Pharmaceuticals segment accounted for more than 5% of consolidated total revenues for any of the periods presented.
The following table presents the unaudited Condensed Consolidated Statement of Operations (in thousands):
Successor
Predecessor
Three Months Ended June 30, 2024
Period From April 1, 2024 through April 23, 2024
Three Months Ended June 30, 2023
TOTAL REVENUES, NET
$ 284,163
$ 162,467
$ 546,852
COSTS AND EXPENSES:
Cost of revenues
333,695
60,539
233,852
Selling, general and administrative
95,992
28,323
137,729
Research and development
22,448
6,120
28,037
Acquired in-process research and development
—
—
—
Litigation-related and other contingencies, net
—
200
28,013
Asset impairment charges
—
1,799
—
Acquisition-related and integration items, net
(130)
(817)
365
Interest expense (income), net
44,669
(2)
120
Reorganization items, net
—
(6,328,145)
84,267
Other expense (income), net
246
(493)
179
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX
$ (212,757)
$ 6,394,943
$ 34,290
INCOME TAX (BENEFIT) EXPENSE
(63,981)
50,629
10,279
(LOSS) INCOME FROM CONTINUING OPERATIONS
$ (148,776)
$ 6,344,314
$ 24,011
DISCONTINUED OPERATIONS, NET OF TAX
—
183,234
(573)
NET (LOSS) INCOME
$ (148,776)
$ 6,527,548
$ 23,438
NET (LOSS) INCOME PER SHARE—BASIC:
Continuing operations
$ (1.95)
$ 26.97
$ 0.10
Discontinued operations
—
0.78
—
Basic
$ (1.95)
$ 27.75
$ 0.10
NET (LOSS) INCOME PER SHARE—DILUTED:
Continuing operations
$ (1.95)
$ 26.97
$ 0.10
Discontinued operations
—
0.78
—
Diluted
$ (1.95)
$ 27.75
