8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): February 28, 2014 (February 28, 2014)

ENDO HEALTH SOLUTIONS INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	001-15989	13-4022871
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1400 Atwater Drive, Malvern, Pennsylvania	19355
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (484) 216-0000

Not Applicable

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operation and Financial Condition.

On February 28, 2014, the Registrant issued an earnings release announcing its financial results for the three and twelve months ended December 31, 2013. A copy of the earnings release is furnished as Exhibit 99.1.

This earnings release includes financial measures that are not in conformity with accounting principles generally accepted in the United States. We refer to these as non-GAAP financial measures. Specifically, the release refers to statements of operations amounts, including adjusted diluted earnings per share, adjusted gross margin, adjusted operating expenses and adjusted effective tax rate.

We define adjusted diluted earnings per share (“EPS”) as diluted earnings per share, adjusted for certain upfront and milestone payments to partners; acquisition-related and integration items, net; cost reduction and integration-related initiatives; asset impairment charges; amortization of intangible assets related to marketed products and customer relationships; inventory step-up recorded as part of our acquisitions; non-cash interest expense; litigation-related and other contingent matters; certain other items that the we believe do not reflect our core operating performance; the cash tax savings resulting from our recent acquisitions; and the tax effect of the pre-tax adjustments above at applicable tax rates.

We define adjusted gross margin as total revenues, less cost of revenues, adjusted for amortization of intangible assets related to marketed products; certain upfront and milestone payments to partners; cost reduction and integration-related initiatives; inventory step-up recorded as part of our acquisitions; and certain other items that we believe do not reflect our core operating performance.

We define adjusted operating expense as operating expenses, adjusted for amortization of intangible assets related to marketed products and customer relationships; certain upfront and milestone payments to partners; acquisition-related and integration items, net; cost reduction and integration-related initiatives; asset impairment charges; inventory step-up recorded as part of our acquisitions; litigation-related and other contingent matters; and certain other items that we believe do not reflect our core operating performance.

We define adjusted effective tax rate as the effective tax rate, adjusted for certain upfront and milestone payments to partners; acquisition-related and integration items, net; cost reduction and integration-related initiatives; asset impairment charges; amortization of intangible assets related to marketed products and customer relationships; inventory step-up recorded as part of our acquisitions; non-cash interest expense; litigation-related and other contingent matters; certain other items that the we believe do not reflect our core operating performance; the cash tax savings resulting from our recent acquisitions; and the tax effect of the pre-tax adjustments above at applicable tax rates.

These non-GAAP financial measures are not prepared in accordance with accounting principles generally accepted in the United States and may be different from non-GAAP financial measures used by other companies. We refer to these non-GAAP financial measures in making operating decisions because we believe they provide meaningful supplemental information regarding our operational performance. For instance, we believe that these measures facilitate internal comparisons to our historical operating results and comparisons to competitors’ results. We believe these measures are useful to investors in allowing for greater transparency related to supplemental information used in our financial and operational decision-making. In addition, we have historically reported similar financial measures to our investors and believe that the inclusion of comparative numbers provides consistency in our financial reporting at this time. Further, we believe that these measures may be useful to investors as we are aware that certain of our significant stockholders utilize these measures to evaluate our financial performance. Finally, adjusted diluted earnings per share is used by the Compensation Committee of our Board of Directors in assessing the performance and compensation of substantially all of our employees, including executive officers.

Investors are encouraged to review the reconciliation of the non-GAAP financial measures used in this earnings announcement to their most directly comparable GAAP financial measures as provided with the financial statements included in this earnings release.

However, with the exception of projected adjusted diluted earnings per share, we have not provided a quantitative reconciliation of projected non-GAAP measures including adjusted gross margin, adjusted operating expenses and adjusted effective tax rate. Not all of the information necessary for quantitative reconciliation is available to us at this time without unreasonable efforts. This is due primarily to variability and difficulty in making accurate detailed forecasts and projections. Accordingly, we do not believe that reconciling information for such projected figures would be meaningful.

The information in this Item 2.02 and in Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information contained in this Item 2.02 and in Exhibit 99.1 shall not be incorporated into any registration statement or other document filed with the Securities and Exchange Commission by the company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

Not applicable.

(b) Pro Forma Financial Information.

Not applicable.

(c) Shell Company Transactions.

Not applicable.

(d) Exhibits.

Exhibit Number	Description
99.1	Press Release of Endo Health Solutions Inc. dated February 28, 2014, reporting the Registrant’s financial results for the three and twelve month periods ended December 31, 2013

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

ENDO HEALTH SOLUTIONS INC.
(Registrant)
By:	/s/ CAROLINE B. MANOGUE
Name:	Caroline B. Manogue
Title:	Executive Vice President, Chief Legal Officer & Secretary

Dated: February 28, 2014

INDEX TO EXHIBITS

Exhibit Number	Description
99.1	Press Release of Endo Health Solutions Inc. dated February 28, 2014, reporting the Registrant’s financial results for the three and twelve month periods ended December 31, 2013

EX-99.1

Exhibit 99.1

CONTACT:

Investors/Media	Investors
Blaine Davis	Jonathan Neely
(484) 216-7158	(484) 216-6645

ENDO REPORTS FOURTH QUARTER AND FULL YEAR 2013 FINANCIAL RESULTS

• Company expects to close Paladin Labs transaction on February 28, 2014.

• Full year 2013 adjusted diluted EPS exceeds previously issued guidance by $0.04.

• Total quarterly revenues of $585 million, reported diluted (GAAP) loss per share of $6.74 and adjusted diluted EPS of $0.96.

• Company expects 2014 revenues to be in the range from $2.50 billion to $2.62 billion.

• Company expects 2014 reported diluted (GAAP) EPS to be in the range from$1.36 to $1.81 and 2014 adjusted diluted EPS to be in the range from $3.40 to $3.65.

MALVERN, Pa., Feb 28, 2014—Endo Health Solutions (Nasdaq: ENDP) today reported fourth quarter 2013 revenues of $585 million, compared to $750 million for the same quarter of 2012. As previously announced, on February 3, 2014, Endo completed the sale of its former HealthTronics business. Financial results related to HealthTronics are presented as income (loss) from discontinued operations, net of tax and non-controlling interest expense on the consolidated statements of income, and are excluded from all other results and 2014 financial guidance.

Endo reported a net loss of $776 million in fourth quarter 2013 compared to a net loss of $716 million in fourth quarter 2012. As detailed in the supplemental financial information below, adjusted net income for the three months ended December 31, 2013 decreased by 34 percent to $124 million, compared to $187 million for the same period in 2012.

The net loss reported for the period is primarily attributable to two charges that were previously disclosed. A pre-tax, non-cash asset impairment charge of approximately $495 million, primarily related to goodwill attributable to the company’s acquisition of American Medical Systems. And, a pre-tax, non-cash charge of $316 million, to increase the company’s product liability reserve for all known, pending and estimated future claims primarily related to vaginal mesh cases. The change in the accrual for product liability claims is primarily associated with the company’s ongoing evaluation of the vaginal mesh litigation, including the inherent uncertainty of this litigation and potential settlement costs.

1

Reported diluted loss per share for the fourth quarter 2013 was $6.74, compared to $6.35 for the fourth quarter of 2012. Adjusted diluted EPS decreased by 41 percent to $0.96 for the fourth quarter of 2013 compared to $1.62 for the same period in 2012.

“We made significant progress in 2013 towards our objective of transforming Endo into a leading specialty healthcare company. We re-oriented the company in a new strategic direction, completed a significant restructuring, implemented a new more efficient operating model and completed a series of transactions that have transformed the company while improving our focus,” said Rajiv De Silva, President and CEO of Endo. “And today we have announced the expected close of the acquisition of Paladin Labs. As a result of this acquisition Endo now has a platform for creating further shareholder value that will help accelerate our plans for long term strategic growth.”

FINANCIAL PERFORMANCE

($ in thousands, except per share amounts)
	4rd Quarter									Twelve Months Ended December 31,
	2013			2012			Change			2013			2012			Change
Total Revenues	$	584,946		$	749,820			(22	)%	$	2,616,907		$	2,815,736			(7	)%
Reported Net Income	$	(775,910	)	$	(716,266	)		(8	)%	$	(685,339	)	$	(740,337	)		7	%
Reported Diluted EPS	$	(6.74	)	$	(6.35	)		(6	)%	$	(6.05	)	$	(6.40	)		5	%
Adjusted Net Income	$	123,697		$	186,588			(34	)%	$	573,996		$	600,134			(4	)%
Adjusted Diluted EPS	$	0.96		$	1.62			(41	)%	$	4.79		$	5.02			(5	)%

ENDO PHARMACEUTICALS

Fourth quarter 2013 branded pharmaceutical revenues were $255 million, a 44 percent decrease compared to fourth quarter 2012 branded pharmaceutical revenues. This decrease was primarily attributable to the decrease in net sales of LIDODERM^®. Fourth quarter 2013 net sales of LIDODERM decreased 87 percent compared to the fourth quarter 2012. This decrease is attributable to the effects of the loss of market exclusivity for the product in September 2013. The decrease of LIDODERM sales in the fourth quarter was partially offset by $30 million of royalty revenues that Endo recognized per the terms of its previously announced Watson (now doing business as Actavis, Inc.) Settlement Agreement.

Fourth quarter 2013 net sales of Voltaren^® Gel increased 22 percent compared to fourth quarter 2012. This increase is attributable to strong growth in demand. According to IMS Health, total prescriptions for Voltaren Gel increased by 29 percent compared to fourth quarter 2012.

2

Fourth quarter 2013 net sales of OPANA^® ER decreased 14 percent compared to fourth quarter 2012. This decrease is primarily attributable to a year-over-year decrease in demand. According to IMS Health, total prescriptions for OPANA ER decreased by 11 percent compared to fourth quarter 2012.

QUALITEST

Fourth quarter 2013 generic product net sales of $198 million represent an increase of 22 percent compared to fourth quarter 2012 generic product net sales. This increase was primarily attributable to strong demand for Qualitest’s diversified product portfolio. Generic product net sales of $731 million for full-year 2013 represent an increase of 15 percent compared to the first twelve months of 2012. Qualitest continues to focus on sales growth and improving processes to enhance profitability.

On February 3, 2014, Qualitest announced the close of its acquisition of Boca Pharmacal, a privately owned specialty generics company, for $225 million. The company expects the transaction to be immediately accretive to Endo’s adjusted diluted earnings per share.

AMS

In the fourth quarter 2013, AMS sales were $132 million, a decrease of less than 1 percent, at current exchange rates, compared to the fourth quarter of 2012. This decrease is primarily attributable to a decrease in Women’s Health sales which decreased by 12 percent in the fourth quarter 2013, compared to the same period last year. The decrease in Women’s Health sales is attributable to year-over-year declines in U.S.-based procedural volumes.

In the fourth quarter 2013, Men’s Health sales increased 9 percent compared to fourth quarter 2012. This increase is primarily attributable to growth in sales of male continence products including the AMS 800^TM Urinary Control System and the AdVance^TM Male Sling System.

Fourth quarter 2013 sales of AMS’s benign prostatic hyperplasia (BPH) business decreased 8 percent compared to fourth quarter 2012. This decrease is primarily attributable to lower sales of GreenLight™ consoles and was partially offset by an increase in GreenLight fiber sales.

3

2014 Financial Guidance

Endo’s estimates are based on projected results for the twelve months ended Dec. 31, 2014 and management’s current belief about prescription trends, pricing levels, inventory levels and the anticipated timing of future product launches and events. The company’s guidance for reported (GAAP) earnings per share does not include any estimates for potential new corporate development transactions. For the full twelve months ended Dec. 31, 2014, at current exchange rates, Endo estimates:

• Total revenue to be between $2.50 billion and $2.62 billion

• Reported (GAAP) diluted earnings per share to be between $1.36 and $1.81

• Adjusted diluted earnings per share to be between $3.40 and $3.65

• Adjusted diluted earnings per share assume full year adjusted diluted shares outstanding of 164 million

The company’s 2014 guidance is based on certain assumptions including:

• Adjusted gross margin of between 63 percent and 65 percent

• Year-over-year low-double digit percentage decrease of Adjusted Operating Expenses

• Adjusted interest expense of approximately $210 million

• Adjusted effective tax rate of between 23 percent and 25 percent

Balance Sheet Update

On December 19, 2013, Endo issued $700 million in aggregate principal amount of 5.75% Senior Notes due 2022 at an issue price of par. Endo intends to use the net proceeds from the offering, together with borrowings under the term loan portion of a new senior secured credit facility, to refinance Endo’s existing senior secured credit facility, to pay related fees and expenses and for general corporate purposes, which may include strategic acquisitions.

Conference Call Information

Endo will conduct a conference call with financial analysts to discuss this news release today at 8:30 a.m. ET. Investors and other interested parties may call 866-515-2910 (domestic) or +1 617-399-5124 (international) and enter passcode 79916686. Please dial in 10 minutes prior to the scheduled start time.

A replay of the call will be available from February 28, 2014 at 12:30 p.m. ET until 11:59 p.m. ET on March 15, 2014 by dialing 888-286-8010 (domestic) or +1 617-801-6888 (international) and entering passcode 13770519.

A simultaneous webcast of the call can be accessed by visiting www.endo.com. In addition, a replay of the webcast will be available until 11:59 p.m. ET on March 15, 2014. The replay can be accessed by clicking on “Events” in the Investor Relations section of the website.

4

Supplemental Financial Information

The following tables provide a reconciliation of our reported (GAAP) statements of operations to our adjusted statements of operations (Non-GAAP) for each of the three months ended December 31, 2013 and 2012 (in thousands, except per share data):

Three Months Ended December 31, 2013 (unaudited)	Actual Reported (GAAP)			Adjustments			Non-GAAP Adjusted
REVENUES	$	584,946		$	—		$	584,946
COSTS AND EXPENSES:
Cost of revenues		253,886			(51,825	) (1)		202,061
Selling, general and administrative		186,443			(34,705	) (2)		151,738
Research and development		33,623			(7,029	) (3)		26,594
Litigation-related and other contingencies		325,144			(325,144	) (4)		—
Asset impairment charges		514,255			(514,255	) (5)		—
Acquisition-related and integration items		4,076			(4,076	) (6)		—
OPERATING (LOSS) INCOME	$	(732,481	)	$	937,034		$	204,553
INTEREST EXPENSE, NET		43,910			(5,926	) (7)		37,984
OTHER INCOME, NET		(1,330	)		—			(1,330	)
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX	$	(775,061	)	$	942,960		$	167,899
INCOME TAX		(106,984	)		148,994	(8)		42,010
(LOSS) INCOME FROM CONTINUING OPERATIONS	$	(668,077	)	$	793,966		$	125,889
DISCONTINUED OPERATIONS, NET OF TAX	$	(93,666	)	$	105,641	(9)	$	11,975
CONSOLIDATED NET (LOSS) INCOME	$	(761,743	)	$	899,607		$	137,864
Less: Net income attributable to noncontrolling interests		14,167			—			14,167
NET (LOSS) INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	(775,910	)	$	899,607		$	123,697
DILUTED EARNINGS PER SHARE DATA ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.:
Continuing operations	$	(5.80	)				$	0.98
Discontinued operations		(0.94	)					(0.02	)
DILUTED (LOSS) EARNINGS PER SHARE	$	(6.74	)				$	0.96
DILUTED WEIGHTED AVERAGE SHARES		115,105						128,644

Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:

(1) To exclude amortization of commercial intangible assets related to marketed products of $39,493 and accruals for milestone payments to partners of $12,332.

(2) To exclude certain separation benefits and other costs incurred in connection with continued efforts to enhance the company’s operations of $13,602, amortization of customer relationships of $2,515 and mesh litigation-related defense costs of $18,588.

(3) To exclude milestone payments to partners of $6,307 and certain separation benefits and other costs incurred in connection with continued efforts to enhance the company’s operations of $722.

(4) To exclude the net impact of accruals primarily for mesh-related product liability.

(5) To exclude asset impairment charges.

(6) To exclude integration costs of $3,416 and a loss of $660 recorded to reflect the change in fair value of the contingent consideration associated with the Qualitest acquisition.

(7) To exclude additional interest expense as a result of the prior adoption of ASC 470-20.

(8) To reflect the cash tax savings results from our acquisitions and dispositions and the tax effect of the pre-tax adjustments above at applicable tax rates.

(9) To exclude certain items related to the HealthTronics business, which is reported as Discontinued operations, net of tax, that the Company believes does not reflect its core operating performance.

5

Three Months Ended December 31, 2012 (unaudited)	Actual Reported (GAAP)			Adjustments			Non-GAAP Adjusted
REVENUES	$	749,820		$	—		$	749,820
COSTS AND EXPENSES:
Cost of revenues		277,835			(50,687	) (1)		227,148
Selling, general and administrative		192,387			(18,369	) (2)		174,018
Research and development		41,340			(7,554	) (3)		33,786
Litigation-related and other contingencies		233,825			(233,825	) (4)		—
Asset impairment charges		661,388			(661,388	) (5)		—
Acquisition-related and integration items		5,118			(5,118	) (6)		—
OPERATING (LOSS) INCOME	$	(662,073	)	$	976,941		$	314,868
INTEREST EXPENSE, NET		44,448			(5,408	) (7)		39,040
OTHER INCOME, NET		(655	)		300	(8)		(355	)
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX	$	(705,866	)	$	982,049		$	276,183
INCOME TAX		(21,185	)		112,989	(9)		91,804
(LOSS) INCOME FROM CONTINUING OPERATIONS	$	(684,681	)	$	869,060		$	184,379
DISCONTINUED OPERATIONS, NET OF TAX	$	(19,095	)	$	33,794	(10)	$	14,699
CONSOLIDATED NET (LOSS) INCOME	$	(703,776	)	$	902,854		$	199,078
Less: Net income attributable to noncontrolling interests		12,490			—			12,490
NET (LOSS) INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	(716,266	)	$	902,854		$	186,588
DILUTED EARNINGS PER SHARE DATA ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.:
Continuing operations	$	(6.07	)				$	1.60
Discontinued operations		(0.28	)					0.02
DILUTED (LOSS) EARNINGS PER SHARE	$	(6.35	)				$	1.62
DILUTED WEIGHTED AVERAGE SHARES		112,811						114,929

Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:

(1) To exclude amortization of commercial intangible assets related to marketed products of $52,536, an adjustment to the accrual for the payment to Impax related to sales of OPANA ER of $(2,000) and certain separation benefits and other costs incurred in connection with continued efforts to enhance the company’s operations of $151.

(2) To exclude certain separation benefits and other costs incurred in connection with continued efforts to enhance the company’s operations of $15,863 and amortization of customer relationships of $2,506.

(3) To exclude milestone payments to partners of $4,173 and certain separation benefits and other costs incurred in connection with continued efforts to enhance the company’s operations of $3,381.

(4) To exclude the net impact of accruals for litigation-related and other contingencies.

(5) To exclude asset impairment charges.

(6) To exclude acquisition-related and integration costs of $4,909 and a loss of $209 recorded to reflect the change in fair value of the contingent consideration associated with the Qualitest Pharmaceuticals acquisition.

(7) To exclude additional interest expense as a result of the prior adoption of ASC 470-20.

(8) To exclude milestone-related activity.

(9) To reflect the cash tax savings results from our acquisitions and dispositions and the tax effect of the pre-tax adjustments above at applicable tax rates.

(10) To exclude certain items related to the HealthTronics business, which is reported as Discontinued operations, net of tax, that the Company believes does not reflect its core operating performance.

6

The following tables provide a reconciliation of our reported (GAAP) statements of operations to our adjusted statements of operations (Non-GAAP) for each of the twelve months ended December 31, 2013 and 2012 (in thousands, except per share data):

Twelve Months Ended December 31, 2013 (unaudited)	Actual Reported (GAAP)			Adjustments			Non-GAAP Adjusted
REVENUES	$	2,616,907		$	—		$	2,616,907
COSTS AND EXPENSES:
Cost of revenues		1,039,516			(194,748	) (1)		844,768
Selling, general and administrative		849,339			(147,785	) (2)		701,554
Research and development		142,472			(26,216	) (3)		116,256
Litigation-related and other contingencies		484,242			(484,242	) (4)		—
Asset impairment charges		519,011			(519,011	) (5)		—
Acquisition-related and integration items		7,952			(7,952	) (6)		—
OPERATING (LOSS) INCOME	$	(425,625	)	$	1,379,954		$	954,329
INTEREST EXPENSE, NET		173,601			(22,742	) (7)		150,859
LOSS ON EXTINGUISHMENT OF DEBT		11,312			(11,312	) (8)		—
OTHER (INCOME) EXPENSE, NET		(50,971	)		51,448	(9)		477
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX	$	(559,567	)	$	1,362,560		$	802,993
INCOME TAX		(24,067	)		253,130	(10)		229,063
(LOSS) INCOME FROM CONTINUING OPERATIONS	$	(535,500	)	$	1,109,430		$	573,930
DISCONTINUED OPERATIONS, NET OF TAX	$	(96,914	)	$	149,905	(11)	$	52,991
CONSOLIDATED NET (LOSS) INCOME	$	(632,414	)	$	1,259,335		$	626,921
Less: Net income attributable to noncontrolling interests		52,925			—			52,925
NET (LOSS) INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	(685,339	)	$	1,259,335		$	573,996
DILUTED EARNINGS PER SHARE DATA ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.:
Continuing operations	$	(4.73	)				$	4.79
Discontinued operations		(1.32	)					—
DILUTED (LOSS) EARNINGS PER SHARE	$	(6.05	)				$	4.79
DILUTED WEIGHTED AVERAGE SHARES		113,295						119,829

Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:

(1) To exclude amortization of commercial intangible assets related to marketed products of $175,298, certain separation benefits and other costs incurred in connection with continued efforts to enhance the company’s operations of $1,118 and accruals for milestone payments to partners of $18,332.

(2) To exclude certain separation benefits and other costs incurred in connection with continued efforts to enhance the company’s operations of $84,290, amortization of customer relationships of $10,036 and mesh litigation-related defense costs of $53,459.

(3) To exclude milestone payments to partners of $11,371 and certain separation benefits and other costs incurred in connection with continued efforts to enhance the company’s operations of $14,845.

(4) To exclude the net impact of accruals primarily for mesh-related product liability.

(5) To exclude asset impairment charges.

(6) To exclude integration costs of $7,129 and a loss of $823 recorded to reflect the change in fair value of the contingent consideration associated with the Qualitest acquisition.

(7) To exclude additional interest expense as a result of the prior adoption of ASC 470-20.

(8) To exclude the unamortized debt issuance costs written off and recorded as a loss on extinguishment of debt upon our March 2013 prepayment on our Term Loan indebtedness as well as upon the amendment and restatement of our existing credit facility.

(9) To exclude $50,400 related to patent litigation settlement income and other income of $1,048.

(10) To reflect the cash tax savings results from our acquisitions and dispositions and the tax effect of the pre-tax adjustments above at applicable tax rates.

(11) To exclude certain items related to the HealthTronics business, which is reported as Discontinued operations, net of tax, that the Company believes does not reflect its core operating performance.

7

Twelve Months Ended December 31, 2012 (unaudited)	Actual Reported (GAAP)			Adjustments			Non-GAAP Adjusted
REVENUES	$	2,815,736		$	—		$	2,815,736
COSTS AND EXPENSES:
Cost of revenues		1,135,681			(316,257	)(1)		819,424
Selling, general and administrative		864,339			(46,879	)(2)		817,460
Research and development		219,139			(63,755	)(3)		155,384
Patent litigation settlement, net		85,123			(85,123	)(4)		—
Litigation-related and other contingencies		316,425			(316,425	)(5)		—
Asset impairment charges		715,551			(715,551	)(6)		—
Acquisition-related and integration items		19,413			(19,413	)(7)		—
OPERATING (LOSS) INCOME	$	(539,935	)	$	1,563,403		$	1,023,468
INTEREST EXPENSE, NET		182,834			(20,762	)(8)		162,072
LOSS ON EXTINGUISHMENT OF DEBT		7,215			(7,215	)(9)		—
OTHER EXPENSE, NET		439			—			439
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX	$	(730,423	)	$	1,591,380		$	860,957
INCOME TAX		(36,415	)		300,960	(10)		264,545
(LOSS) INCOME FROM CONTINUING OPERATIONS	$	(694,008	)	$	1,290,420		$	596,412
DISCONTINUED OPERATIONS, NET OF TAX	$	5,987		$	50,051	(11)	$	56,038
CONSOLIDATED NET (LOSS) INCOME	$	(688,021	)	$	1,340,471		$	652,450
Less: Net income attributable to noncontrolling interests		52,316			—			52,316
NET (LOSS) INCOME ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.	$	(740,337	)	$	1,340,471		$	600,134
DILUTED EARNINGS PER SHARE DATA ATTRIBUTABLE TO ENDO HEALTH SOLUTIONS INC.:
Continuing operations	$	(6.00	)				$	4.99
Discontinued operations		(0.40	)					0.03
DILUTED (LOSS) EARNINGS PER SHARE	$	(6.40	)				$	5.02
DILUTED WEIGHTED AVERAGE SHARES		115,719						119,545

Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:

(1) To exclude amortization of commercial intangible assets related to marketed products of $210,299, the impact of inventory step-up recorded as part of acquisition accounting of $880, the accrual for the payment to Impax related to sales of OPANA ER of $102,000, net milestone payments to partners of $2,927 and certain separation benefits and other costs incurred in connection with continued efforts to enhance the company’s operations of $151.

(2) To exclude certain separation benefits and other costs incurred in connection with continued efforts to enhance the company’s operations of $36,858 and amortization of customer relationships of $10,021.

(3) To exclude milestone payments to partners of $57,851 and certain separation benefits and other costs incurred in connection with continued efforts to enhance the company’s operations of $5,904.

(4) To exclude the net impact of the Actavis (Watson) litigation settlement.

(5) To exclude the net impact of accruals for litigation-related and other contingencies.

(6) To exclude asset impairment charges.

(7) To exclude acquisition-related and integration costs of $19,176 and a loss of $237 recorded to reflect the change in fair value of the contingent consideration associated with the Qualitest Pharmaceuticals acquisition.

(8) To exclude additional interest expense as a result of the prior adoption of ASC 470-20.

(9) To exclude the unamortized debt issuance costs written off and recorded as a loss on extinguishment of debt upon our 2012 prepayments on our Term Loan indebtedness.

(10) To reflect the cash tax savings results from our acquisitions and the tax effect of the pre-tax adjustments above at applicable tax rates.

(11) To exclude certain items related to the HealthTronics business, which is reported as Discontinued operations, net of tax, that the Company believes does not reflect its core operating performance.

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Non-GAAP Adjusted net income and its components and Non-GAAP Adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. Despite the importance of these measures to management in goal setting and performance measurement, we stress that these are Non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, Non-GAAP Adjusted net income and its components (unlike U.S. GAAP net income 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. See Endo’s Current Report on Form 8-K filed today with the Securities and Exchange Commission for an explanation of Endo’s reasons for using non-GAAP measures.

Reconciliation of Projected GAAP Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share Guidance for 2014

	Year Ending December 31, 2014
Projected GAAP diluted income per common share	$	1.36		To	$	1.81
Upfront and milestone-related payments to partners		0.25				0.25
Amortization of commercial intangible assets and inventory step-up		1.45				1.17
Integration and restructuring charges		0.27				0.27
Charges for litigation and other legal matters		0.38				0.38
Interest expense adjustment for ASC 470-20 and other treasury related items		0.15				0.15
Tax effect of pre-tax adjustments at the applicable tax rates and certain other expected cash tax savings as a result of acquisitions		(0.46	)			(0.38	)
Diluted adjusted income per common share guidance	$	3.40		To	$	3.65

The company’s guidance is being issued based on certain assumptions including:

• Certain of the above amounts are based on estimates and there can be no assurance that Endo will achieve these results.

• Includes all completed business development transactions as of Feb 28, 2014.

About Endo

Endo Health Solutions Inc. is a U.S.-based specialty healthcare company with business segments that are focused on branded pharmaceuticals, generics, and medical devices which deliver quality products to its customers intended to improve the lives of patients. Through its operating companies - Endo Pharmaceuticals, Qualitest, and AMS - Endo is dedicated to delivering value to our stakeholders: customers, patients, and shareholders. Learn more at www.endo.com.

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(Tables Attached)

The following tables present Endo’s unaudited Net Revenues for the three and twelve months ended December 31, 2013 and 2012:

Endo Health Solutions Inc.

Net Revenues (unaudited)

(in thousands)

	Three Months Ended December 31,					Percent Growth			Twelve Months Ended December 31,				Percent Growth
	2013			2012					2013		2012
Endo Pharmaceuticals:
LIDODERM®	$	36,372		$	271,378		(87	)%	$	602,998	$	947,680		(36	)%
OPANA® ER		53,664			62,556		(14	)%		227,878		299,287		(24	)%
Voltaren® Gel		46,904			38,390		22	%		170,841		117,563		45	%
PERCOCET®		26,996			29,993		(10	)%		105,814		103,406		2	%
FORTESTA® Gel		18,704			9,063		106	%		65,860		30,589		115	%
FROVA®		16,811			15,989		5	%		60,927		61,341		(1	)%
SUPPRELIN® LA		14,206			14,639		(3	)%		58,334		57,416		2	%
VALSTAR®		7,330			6,346		16	%		23,657		27,063		(13	)%
VANTAS®		3,228			5,155		(37	)%		13,241		17,507		(24	)%
Other Branded Products		(133	)		780		NM			1,700		2,568		(34	)%
Royalty and Other Revenue		30,561			690		4,329	%		62,765		13,564		363	%
Total Endo Pharmaceuticals	$	254,643		$	454,979		(44	)%	$	1,394,015	$	1,677,984		(17	)%
Total Qualitest	$	197,944		$	161,955		22	%	$	730,666	$	633,265		15	%
American Medical Systems:
Men’s Health		73,158			67,151		9	%		270,343		259,879		4	%
Women’s Health		28,628			32,458		(12	)%		109,098		128,221		(15	)%
BPH Therapy		30,573			33,277		(8	)%		112,785		116,387		(3	)%
Total AMS		132,359			132,886		—	%		492,226		504,487		(2	)%
Total Revenue	$	584,946		$	749,820		(22	)%	$	2,616,907	$	2,815,736		(7	)%

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The following table presents unaudited condensed consolidated Balance Sheet data at December 31, 2013 and December 31, 2012:

	December 31, 2013		December 31, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	526,597	$	529,689
Restricted cash and cash equivalents		770,000		—
Accounts receivable		725,827		650,547
Inventories, net		374,439		344,935
Assets held for sale		160,257		330,663
Other assets		297,387		357,261
Total current assets	$	2,854,507	$	2,213,095
PROPERTY, PLANT AND EQUIPMENT, NET		372,077		359,293
GOODWILL		1,372,832		1,853,566
OTHER INTANGIBLES, NET		1,872,926		2,047,292
OTHER ASSETS		99,514		95,313
TOTAL ASSETS	$	6,571,856	$	6,568,559
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	1,243,205	$	1,554,261
Liabilities related to assets held for sale		31,571		58,576
Other current liabilities		421,896		138,351
Total current liabilities	$	1,696,672	$	1,751,188
DEFERRED INCOME TAXES		310,764		496,778
LONG-TERM DEBT, LESS CURRENT PORTION, NET		3,323,844		3,035,031
OTHER LIABILITIES		655,360		152,356
STOCKHOLDERS’ EQUITY:
Total Endo Health Solutions Inc. stockholders’ equity	$	526,018	$	1,072,856
Noncontrolling interests		59,198		60,350
Total stockholders’ equity	$	585,216	$	1,133,206
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	6,571,856	$	6,568,559

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The following table presents unaudited condensed consolidated Statement of Cash Flow data for the twelve months ended December 31, 2013 and 2012:

	Twelve Months Ended December 31,
	2013			2012
OPERATING ACTIVITIES:
Consolidated net loss	$	(632,414	)	$	(688,021	)
Adjustments to reconcile consolidated Net loss to Net cash provided by operating activities
Depreciation and amortization		255,663			285,524
Stock-based compensation		38,998			59,395
Amortization of debt issuance costs and premium / discount		36,264			36,699
Other		540,275			585,889
Changes in assets and liabilities which provided cash		59,731			454,393
Net cash provided by operating activities		298,517			733,879
INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net		(94,626	)		(98,392	)
Acquisitions, net of cash acquired		(3,645	)		(3,175	)
Settlement escrow		(11,518	)		—
Increase in restricted cash and cash equivalents		(770,000	)		—
Other		(3,850	)		13,100
Net cash used in investing activities		(883,639	)		(88,467	)
FINANCING ACTIVITIES:
Issuance of common stock from treasury, net of (purchases)		5,310			(249,938	)
Cash distributions to noncontrolling interests		(52,711	)		(53,269	)
Principal borrowings (payments) on indebtedness, net		548,442			(363,040	)
Exercise of Endo Health Solutions Inc. stock options		97,129			19,358
Other		(18,645	)		1,342
Net cash provided by (used in) financing activities		579,525			(645,547	)
Effect of foreign exchange rate		1,692			431
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(3,905	)		296
LESS: NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS OF DISCONTINUED OPERATIONS		(813	)		(2,749	)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS OF CONTINUING OPERATIONS		(3,092	)		3,045
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		529,689			526,644
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	526,597		$	529,689

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Safe Harbor Statement

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 these statements reflect our current views, expectations and beliefs concerning future events, these forward-looking statements involve risks and uncertainties. Investors should note that many factors, as more fully described under the caption “Risk Factors” in our Form 10-K, Form 10-Q and Form 8-K filings with the Securities and Exchange Commission and as otherwise enumerated herein or therein, could affect our future financial results and could cause our actual results to differ materially from those expressed in forward-looking statements contained in our Annual Report on Form 10-K. The forward-looking statements in this press release are qualified by these risk factors. These are factors that, individually or in the aggregate, could cause our actual results to differ materially from expected and historical results. We assume no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

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