Endo Reports Third-Quarter 2024 Financial Results and Reaffirms 2024 Financial Expectations
MALVERN, Pa., Nov. 5, 2024 /PRNewswire/ -- Endo, Inc. ("Endo" or the "Company") (OTCQX:NDOI), today reported financial results for the third quarter ended September 30, 2024. Endo acquired substantially all of the assets of Endo International plc ("EIP"), on April 23, 2024, as contemplated by EIP's plan of reorganization1.
"During the quarter, Endo's XIAFLEX® franchise grew 13%, with strong performance from both the Peyronie's disease and Dupuytren's contracture indications," said Scott Hirsch, Interim Chief Executive Officer at Endo. "We continue to achieve our 2024 financial objectives, underscoring both our dedication to patients and our focus on delivering value to our stakeholders."
ENDO THIRD-QUARTER FINANCIAL PERFORMANCE(in thousands)
Successor
Predecessor
Three Months Ended September 30, 2024
Three Months Ended September 30, 2023
% Change
2024 vs. 2023
Branded Pharmaceuticals
$ 217,180
$ 203,368
7 %
Sterile Injectables
$ 80,128
$ 95,381
(16) %
Generic Pharmaceuticals
$ 110,830
$ 134,382
(18) %
International Pharmaceuticals
$ 18,368
$ 18,534
(1) %
Total Revenues, Net
$ 426,506
$ 451,665
(6) %
Net Loss
$ (232,776)
$ (28,483)
NM
Adjusted Net Income (a)
$ 61,963
$ 131,441
(53) %
Adjusted EBITDA (a)
$ 151,299
$ 143,050
6 %
(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 period must be presented separately for the predecessor period from January 1, 2024 through April 23, 2024 (the "Predecessor" period) and the successor nine months ended September 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).
CONSOLIDATED RESULTS
Total revenues in third-quarter 2024 were $427 million, a decrease of 6% compared to $452 million in third-quarter 2023. This decrease was primarily attributable to competitive pressure across the Generic Pharmaceuticals and Sterile Injectables segments which was partially offset by Branded Pharmaceuticals segment revenue growth.
Net Loss in third-quarter 2024 was $233 million compared to $28 million in third-quarter 2023. This change was primarily due to the application of fresh start accounting.
Adjusted Net Income in third-quarter 2024 was $62 million compared to $131 million in third-quarter 2023. This change was primarily due to increased interest and income tax expense in third-quarter 2024.
Adjusted EBITDA was $151 million compared to $143 million in third-quarter 2023. This increase was primarily driven by reduced operating costs and improved adjusted gross margin, partially offset by decreased revenues.
SEGMENT RESULTS
Branded Pharmaceuticals segment revenues were $217 million in third-quarter 2024, a 7% increase compared to $203 million in third-quarter 2023.
Specialty Products revenues were $159 million in third-quarter 2024, representing a 6% increase compared to $150 million in third-quarter 2023. This increase was primarily attributable to a 13% increase in XIAFLEX® revenues to $128 million, driven by strong underlying demand and increased average net selling price. This increase was partially offset by decreased SUPPRELIN® LA revenues resulting from lower volumes and decreased NASCOBAL® Nasal Spray revenues due to discontinuation of the product.
Established Products revenues were $58 million in third-quarter 2024, representing a 9% increase compared to $53 million in third-quarter 2023. This increase was primarily driven by royalties and certain non-recurring milestone payments related to a prior development agreement.
Sterile Injectables segment revenues were $80 million in third-quarter 2024, a 16% decrease compared to $95 million in third-quarter 2023. This change was primarily attributable to competitive product pressures, driven by a decline in VASOSTRICT®, and temporary supply disruptions on several products that are expected to be substantially resolved by the end of 2024.
Generic Pharmaceuticals segment revenues were $111 million in third-quarter 2024, an 18% decrease compared to $134 million in third-quarter 2023. This change was primarily attributable to competitive pressure across a number of products, driven by a decline in 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 revenues were $18 million in third-quarter 2024 compared to $19 million in third-quarter 2023.
BALANCE SHEET AND LIQUIDITY
As of September 30, 2024, Endo had approximately $368 million in unrestricted cash and cash equivalents.
Third-quarter 2024 net cash provided by operating activities was approximately $12 million compared to approximately $131 million net cash provided by operating activities during third-quarter 2023. This change was primarily driven by the final payment of certain escrowed professional fees incurred in connection with Endo International plc's plan of reorganization, which are also reflected in the $79 million decrease in restricted cash, and increased interest and tax payments.
In October, Endo successfully completed the repricing of its $1.5 billion senior secured term loan (the "Term Loan") due 2031. The Term Loan repricing reduces the applicable interest rate by 50 basis points to Term Secured Overnight Financing Rate plus 4.0%. There are no changes to the Term Loan maturity and all other terms and conditions remain substantially unchanged. Endo estimates that the Term Loan repricing will reduce cash interest expense by approximately $8 million annually.
FINANCIAL EXPECTATIONS
Based on third-quarter results and fourth-quarter expectations, Endo is affirming its Total Revenues and Adjusted EBITDA financial expectations for the full-year ending December 31, 2024. Financial expectations are inclusive of predecessor and successor periods.
Prior Outlook
Current Outlook
($ in millions)
Total Revenues, Net
$1,720- $1,780
$1,720- $1,780
Adjusted EBITDA
$635 - $655
$635 - $655
Assumptions:
Segment Revenues:
Branded Pharmaceuticals
$875 - $905
$875 - $905
Sterile Injectables
$370 - $390
$350- $370
Generic Pharmaceuticals
$410 - $420
$430 - $440
International Pharmaceuticals
~$65
~$65
Adjusted Gross Margin as a Percentage of Total Revenues, Net
~67%
~67%
Adjusted Operating Expenses
$595 - $615
$595 - $615
The foregoing information includes financial guidance, expectations and other forward-looking statements based on Endo's current views, beliefs, estimates and assumptions. 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."
PHASE 2 PLANTAR FASCIITIS STUDY UPDATE
On October 30, 2024, Endo received results from its Phase 2 dose-ranging clinical study of collagenase clostridium histolyticum (CCH) in participants with plantar fasciitis. While study participants receiving one treatment of CCH 0.6 mg showed numerical improvement from baseline on the Pain Intensity Numeric Rating Scale (NRS) average daily pain score compared to placebo, the difference was not statistically significant.
Though the Phase 2 study did not achieve its primary endpoint, the results were informative and, based on a post-hoc analysis, clinically meaningful for a subpopulation of patients—those with moderate to severe plantar fasciitis pain as determined by Foot Function Index subscales. Endo is continuing to evaluate the Phase 2 study data to determine next steps.
The safety profile of CCH in the Phase 2 study was consistent with the known safety profile from other CCH clinical studies. Most adverse events were local to injection and rated as mild to moderate with no treatment-related serious adverse events.
CONFERENCE CALL INFORMATION
Endo will host a conference call to discuss this press release later today, November 5, 2024, at 8:30 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
Three Months Ended September 30, 2024
Three Months Ended September 30, 2023
% Change
2024 vs. 2023
Specialty Products:
XIAFLEX®
$ 127,992
$ 113,053
13 %
SUPPRELIN® LA
19,130
21,590
(11) %
Other Specialty (1)
12,311
15,749
(22) %
Total Specialty Products
$ 159,433
$ 150,392
6 %
Established Products:
PERCOCET®
$ 24,144
$ 26,290
(8) %
TESTOPEL®
8,604
9,610
(10) %
Other Established (2)
24,999
17,076
46 %
Total Established Products
$ 57,747
$ 52,976
9 %
Total Branded Pharmaceuticals (3)
$ 217,180
$ 203,368
7 %
Sterile Injectables:
ADRENALIN®
$ 21,463
$ 22,873
(6) %
VASOSTRICT®
15,412
20,827
(26) %
Other Sterile Injectables (4)
43,253
51,681
(16) %
Total Sterile Injectables (3)
$ 80,128
$ 95,381
(16) %
Total Generic Pharmaceuticals (5)
$ 110,830
$ 134,382
(18) %
Total International Pharmaceuticals (6)
$ 18,368
$ 18,534
(1) %
Total Revenues, Net
$ 426,506
$ 451,665
(6) %
(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 Successor three or nine months ended September 30, 2024, the Predecessor period from January 1, 2024 through April 23, 2024 and/or any product having revenues in excess of $25 million during any quarter presented for 2024 or 2023.
(4)
Products included within Other Sterile Injectables include, but are not limited to, APLISOL®. 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 three months ended September 30, 2024, of consolidated revenues. During the three months ended September 30, 2023, Dexlansoprazole delayed release capsules (Endo's generic version of Takeda Pharmaceuticals USA, Inc.'s Dexilant®), which launched in November 2022, made up 7% of Predecessor 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 September 30, 2024
Three Months Ended September 30, 2023
TOTAL REVENUES, NET
$ 426,506
$ 451,665
COSTS AND EXPENSES:
Cost of revenues
448,324
230,286
Selling, general and administrative
148,322
138,772
Research and development
20,190
31,582
Acquired in-process research and development
1,750
—
Litigation-related and other contingencies, net
200
11,104
Acquisition-related and integration items, net
1,773
1,062
Interest expense, net
62,727
10
Reorganization items, net
—
57,960
Other income, net
(1,193)
(2,217)
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX
$ (255,587)
$ (16,894)
INCOME TAX (BENEFIT) EXPENSE
(22,811)
11,042
LOSS FROM CONTINUING OPERATIONS
$ (232,776)
$ (27,936)
DISCONTINUED OPERATIONS, NET OF TAX
—
(547)
NET LOSS
$ (232,776)
$ (28,483)
NET LOSS PER SHARE—BASIC:
Continuing operations
$ (3.06)
$ (0.12)
Discontinued operations
—
—
Basic
$ (3.06)
$ (0.12)
NET LOSS PER SHARE—DILUTED:
Continuing operations
$ (3.06)
$ (0.12)
Discontinued operations
—
—
Diluted
$ (3.06)
$ (0.12)
WEIGHTED AVERAGE SHARES:
Basic
76,156
235,220
Diluted
76,156
235,220
The following table presents unaudited Total revenues, net (dollars in thousands):
Successor
Predecessor
Non-GAAP
Predecessor
Non-GAAP
Nine Months Ended September 30, 2024
Period From January 1, 2024 through April 23, 2024
Combined Nine Months Ended September 30, 2024
Nine Months Ended September 30, 2023
% Change
2024 vs. 2023
Specialty Products:
