Segment Results (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of reportable segments information

The following represents selected information for the Company’s reportable segments for the three and six months ended June 30, 2020 and 2019 (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Net revenues from external customers:
Branded Pharmaceuticals	$	129,521	$	209,013	$	333,594	$	412,538
Sterile Injectables	319,214		244,280		655,604		514,328
Generic Pharmaceuticals	215,879		217,784		467,162		436,310
International Pharmaceuticals (1)	22,974		28,650		51,633		56,962
Total net revenues from external customers	$	687,588	$	699,727	$	1,507,993	$	1,420,138
Segment adjusted income from continuing operations before income tax:
Branded Pharmaceuticals	$	49,174	$	101,535	$	147,596	$	196,818
Sterile Injectables	241,753		172,188		505,649		368,371
Generic Pharmaceuticals	47,394		49,722		104,721		100,133
International Pharmaceuticals	9,304		11,447		23,501		23,542
Total segment adjusted income from continuing operations before income tax	$	347,625	$	334,892	$	781,467	$	688,864

__________

(1)Revenues generated by our International Pharmaceuticals segment are primarily attributable to external customers located in Canada.

The table below provides reconciliations of our Total consolidated income (loss) from continuing operations before income tax, which is determined in accordance with U.S. GAAP, to our total segment adjusted income from continuing operations before income tax for the three and six months ended June 30, 2020 and 2019 (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Total consolidated income (loss) from continuing operations before income tax	$	25,252	$	(94,584)	$	46,501	$	(96,293)
Interest expense, net	129,164		134,809		262,041		267,484
Corporate unallocated costs (1)	33,590		38,365		76,912		86,460
Amortization of intangible assets	104,498		140,418		221,735		286,017

Upfront and milestone payments to partners	444		1,444		2,194		2,383
Continuity and separation benefits and other cost reduction initiatives (2)	9,444		2,124		32,664		4,149
Certain litigation-related and other contingencies, net (3)	(8,572)		10,315		(25,748)		10,321
Certain legal costs (4)	18,005		18,984		33,541		35,673
Asset impairment charges (5)	—		88,438		97,785		253,886
Acquisition-related and integration items, net (6)	6,045		(5,507)		18,507		(43,008)
Gain on extinguishment of debt	—		—		—		(119,828)

Foreign currency impact related to the remeasurement of intercompany debt instruments	3,005		2,262		(4,089)		3,796
Other, net (7)	26,750		(2,176)		19,424		(2,176)
Total segment adjusted income from continuing operations before income tax	$	347,625	$	334,892	$	781,467	$	688,864

__________

(1)Amounts include certain corporate overhead costs, such as headcount, facility and corporate litigation expenses and certain other income and expenses.

(2)Amounts for the three and six months ended June 30, 2020 include $4.1 million and $17.9 million, respectively, of costs associated with certain continuity and transitional compensation arrangements for certain senior management of the Company. Other amounts in 2020 related primarily to certain cost reduction initiatives. Such amounts included accelerated depreciation of $1.8 million and other charges of $3.6 million during the three months ended June 30, 2020 and accelerated depreciation of $8.4 million and other charges of $6.4 million during the six months ended June 30, 2020. Amounts for the three and six months ended June 30, 2019 primarily relate to employee separation costs of $0.4 million and $2.2 million, respectively, and other charges of $1.7 million and $1.9 million, respectively.

(3)Amounts include adjustments to our accruals for litigation-related settlement charges and certain settlement proceeds related to suits filed by our subsidiaries. Our material legal proceedings and other contingent matters are described in more detail in Note 12. Commitments and Contingencies.

(4)Amounts relate to opioid-related legal expenses.

(5)Amounts primarily relate to charges to impair goodwill and intangible assets as further described in Note 8. Goodwill and Other Intangibles.

(6)Amounts primarily relate to changes in the fair value of contingent consideration.

(7)The amounts during the three and six months ended June 30, 2020 primarily relate to $30.7 million of third party fees incurred in connection with the June 2020 Refinancing Transactions, which were accounted for as debt modifications. Refer to Note 11. Debt for additional information. Remaining amounts in this line primarily relate to gains on sales of businesses and other assets, as further described in Note 15. Other (Income) Expense, Net

Disaggregation of revenue

The Company believes these categories depict how the nature, timing and uncertainty of revenue and cash flows are affected by economic factors.


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Branded Pharmaceuticals:
Specialty Products:
XIAFLEX®	$	33,783	$	74,855	$	122,855	$	143,362
SUPPRELIN® LA	15,395		23,714		35,115		45,770
Other Specialty (1)	19,566		25,524		45,071		49,927
Total Specialty Products	$	68,744	$	124,093	$	203,041	$	239,059
Established Products:
PERCOCET®	$	27,578	$	28,878	$	55,281	$	59,638
LIDODERM®	7,056		9,051		14,279		17,120
EDEX®	6,604		7,662		15,172		13,633
Other Established (2)	19,539		39,329		45,821		83,088
Total Established Products	$	60,777	$	84,920	$	130,553	$	173,479
Total Branded Pharmaceuticals (3)	$	129,521	$	209,013	$	333,594	$	412,538
Sterile Injectables:
VASOSTRICT®	$	214,214	$	116,026	$	417,118	$	255,163
ADRENALIN®	33,161		45,835		89,673		93,157
Ertapenem for injection	11,990		25,547		29,864		57,766
APLISOL®	6,511		15,530		16,378		27,911
Other Sterile Injectables (4)	53,338		41,342		102,571		80,331
Total Sterile Injectables (3)	$	319,214	$	244,280	$	655,604	$	514,328
Total Generic Pharmaceuticals (5)	$	215,879	$	217,784	$	467,162	$	436,310
Total International Pharmaceuticals (6)	$	22,974	$	28,650	$	51,633	$	56,962
Total revenues, net	$	687,588	$	699,727	$	1,507,993	$	1,420,138

__________

(1)Products included within Other Specialty are NASCOBAL^®Nasal Spray and AVEED^®.

(2)Products included within Other Established include, but are not limited to, TESTOPEL^®.

(3)Individual products presented above represent the top two performing products in each product category for either the three or six months ended June 30, 2020 and/or any product having revenues in excess of $25 million during any quarterly period in 2020 or 2019.

(4)Products included within Other Sterile Injectables include ephedrine sulfate injection and others.

(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 no intellectual property protection and are sold within the U.S. During the three and six months ended June 30, 2019, colchicine tablets (the authorized generic of Takeda Pharmaceuticals U.S.A., Inc.’s (Takeda) Colcrys^®), which launched in July 2018, made up 7% and 6% of consolidated total revenue, respectively. No other individual product within this segment has exceeded 5% of consolidated total revenues for the periods presented.

(6)The International Pharmaceuticals segment, which accounted for 3% of consolidated total revenues during both the three and six months ended June 30, 2020 and 4% of consolidated total revenues during both the three and six months ended June 30, 2019, includes a variety of specialty pharmaceutical products sold outside the U.S., primarily in Canada through our operating company Paladin.