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SEGMENT RESULTS
 9 Months Ended
Sep. 30, 2021
Segment Reporting [Abstract]  
SEGMENT RESULTS
NOTE 5. SEGMENT RESULTS
The Company’s four reportable business segments are Branded Pharmaceuticals, Sterile Injectables, Generic Pharmaceuticals and International Pharmaceuticals. These segments reflect the level at which the chief operating decision maker regularly reviews financial information to assess performance and to make decisions about resources to be allocated. Each segment derives revenue from the sales or licensing of its respective products and is discussed in more detail below.
We evaluate segment performance based on Segment adjusted income (loss) from continuing operations before income tax, which we define as (Loss) income from continuing operations before income tax and before certain upfront and milestone payments to partners; acquisition-related and integration items, including transaction costs and changes in the fair value of contingent consideration; cost reduction and integration-related initiatives such as separation benefits, continuity payments, other exit costs and certain costs associated with integrating an acquired company’s operations; certain amounts related to strategic review initiatives; asset impairment charges; amortization of intangible assets; inventory step-up recorded as part of our acquisitions; litigation-related and other contingent matters; certain legal costs; gains or losses from early termination of debt; debt modification costs; gains or losses from the sales of businesses and other assets; foreign currency gains or losses on intercompany financing arrangements; and certain other items.
Certain of the corporate expenses incurred by the Company are not directly attributable to any specific segment. Accordingly, these costs are not allocated to any of the Company’s segments and are included in the results below as “Corporate unallocated costs.” Interest income and expense are also considered corporate items and not allocated to any of the Company’s segments. The Company’s Total segment adjusted income (loss) from continuing operations before income tax is equal to the combined results of each of its segments.
Branded Pharmaceuticals
Our Branded Pharmaceuticals segment includes a variety of branded products in the areas of urology, orthopedics, endocrinology, medical aesthetics and bariatrics, among others. The products in this segment include XIAFLEX®, SUPPRELIN® LA, NASCOBAL® Nasal Spray, AVEED®, QWO®, PERCOCET®, TESTOPEL®, EDEX® and LIDODERM®, among others.
Sterile Injectables
Our Sterile Injectables segment consists primarily of branded sterile injectable products such as VASOSTRICT®, ADRENALIN® and APLISOL®, among others, and certain generic sterile injectable products, including ertapenem for injection (the authorized generic of Merck Sharp & Dohme Corp.’s (Merck) Invanz®) and ephedrine sulfate injection, among others.
Generic Pharmaceuticals
Our Generic Pharmaceuticals segment consists of a product portfolio including solid oral extended-release, solid oral immediate-release, liquids, semi-solids, patches, powders, ophthalmics and sprays and includes products that treat and manage a wide of medical conditions.
International Pharmaceuticals
Our International Pharmaceuticals segment includes a variety of specialty pharmaceutical products sold outside the U.S., primarily in Canada through our operating company Paladin Labs Inc. (Paladin). The key products of this segment serve various therapeutic areas, including attention deficit hyperactivity disorder, pain, women’s health, oncology and transplantation.
The following represents selected information for the Company’s reportable segments for the three and nine months ended September 30, 2021 and 2020 (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net revenues from external customers:
Branded Pharmaceuticals$230,977 $223,682 $665,652 $557,276 
Sterile Injectables343,653 251,393 946,998 906,997 
Generic Pharmaceuticals174,306 135,508 522,451 602,670 
International Pharmaceuticals (1)23,092 24,277 68,676 75,910 
Total net revenues from external customers$772,028 $634,860 $2,203,777 $2,142,853 
Segment adjusted income (loss) from continuing operations before income tax:
Branded Pharmaceuticals$105,849 $120,368 $301,277 $267,964 
Sterile Injectables282,300 190,498 751,922 696,147 
Generic Pharmaceuticals34,010 (13,428)89,036 91,293 
International Pharmaceuticals6,764 10,679 24,337 34,180 
Total segment adjusted income (loss) from continuing operations before income tax$428,923 $308,117 $1,166,572 $1,089,584 
__________
(1)Revenues generated by our International Pharmaceuticals segment are primarily attributable to external customers located in Canada.
There were no material revenues from external customers attributed to an individual country outside of the U.S. during any of the periods presented.
The table below provides reconciliations of our Total consolidated (loss) income from continuing operations before income tax, which is determined in accordance with U.S. GAAP, to our Total segment adjusted income (loss) from continuing operations before income tax for the three and nine months ended September 30, 2021 and 2020 (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Total consolidated (loss) income from continuing operations before income tax$(47,741)$(64,800)$958 $(18,299)
Interest expense, net142,958 135,648 418,852 397,689 
Corporate unallocated costs (1)65,317 39,976 141,291 116,888 
Amortization of intangible assets91,901 104,066 281,101 325,801 
Upfront and milestone payments to partners525 275 6,206 2,469 
Amounts related to continuity and separation benefits, cost reductions and strategic review initiatives (2)19,829 67,692 58,632 100,356 
Certain litigation-related and other contingencies, net (3)83,495 1,810 119,327 (23,938)
Certain legal costs (4)38,842 18,343 82,961 51,884 
Asset impairment charges (5)42,155 8,412 50,393 106,197 
Acquisition-related and integration items, net (6)(1,432)(1,407)(6,357)17,100 
Loss on extinguishment of debt— — 13,753 — 
Foreign currency impact related to the remeasurement of intercompany debt instruments(2,036)1,663 466 (2,426)
Other, net (7)(4,890)(3,561)(1,011)15,863 
Total segment adjusted income (loss) from continuing operations before income tax$428,923 $308,117 $1,166,572 $1,089,584 
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(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 months ended September 30, 2021 include net employee separation, continuity and other benefit-related charge reversals of $11.3 million, accelerated depreciation charges of $6.4 million and other net charges, including those related to strategic review initiatives, of $24.8 million. Amounts for the nine months ended September 30, 2021 include net employee separation, continuity and other benefit-related charge reversals of $1.2 million, accelerated depreciation charges of $22.3 million and other net charges, including those related to strategic review initiatives, of $37.5 million. Amounts for the three months ended September 30, 2020 include net employee separation, continuity and other benefit-related charges of $58.0 million, accelerated depreciation charges of $6.3 million and other net charges, including those related to strategic review initiatives, of $3.4 million. Amounts for the nine months ended September 30, 2020 include net employee separation, continuity and other benefit-related charges of $75.9 million, accelerated depreciation charges of $14.7 million and other net charges, including those related to strategic review initiatives, of $9.8 million. These amounts relate primarily to our restructuring activities as further described in Note 4. Restructuring, certain continuity and transitional compensation arrangements, certain other cost reduction initiatives and certain strategic review initiatives.
(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 13. 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 9. Goodwill and Other Intangibles, as well as certain disposal group impairment charges as further discussed in Note 3. Discontinued Operations and Held for Sale.
(6)Amounts primarily relate to changes in the fair value of contingent consideration.
(7)Amounts for the three and nine months ended September 30, 2021 primarily relate to a gain of $4.9 million associated with the resolution of a prior contract dispute. For the nine months ended September 30, 2021, this gain was partially offset by $3.9 million of third party fees incurred in connection with the March 2021 Refinancing Transactions, which were accounted for as debt modification costs. Amounts for the nine months ended September 30, 2020 include $31.1 million of third party fees incurred in connection with the June 2020 Refinancing Transactions, which were accounted for as debt modification costs. Refer to Note 12. Debt for additional information. Other amounts in this row primarily relate to gains on sales of businesses and other assets.
Asset information is not reviewed or included within our internal management reporting. Therefore, the Company has not disclosed asset information for each reportable segment.
During the three and nine months ended September 30, 2021 and 2020, the Company disaggregated its revenue from contracts with customers into the categories included in the table below (in thousands). 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 September 30,Nine Months Ended September 30,
2021202020212020
Branded Pharmaceuticals:
Specialty Products:
XIAFLEX®
$105,509 $88,167 $312,266 $211,022 
SUPPRELIN® LA
30,069 28,229 85,665 63,344 
Other Specialty (1)26,339 23,724 74,407 68,795 
Total Specialty Products$161,917 $140,120 $472,338 $343,161 
Established Products:
PERCOCET®
$26,914 $27,508 $78,695 $82,789 
TESTOPEL®
11,686 18,068 32,314 26,877 
Other Established (2)30,460 37,986 82,305 104,449 
Total Established Products$69,060 $83,562 $193,314 $214,115 
Total Branded Pharmaceuticals (3)$230,977 $223,682 $665,652 $557,276 
Sterile Injectables:
VASOSTRICT®
$255,697 $155,412 $676,764 $572,530 
ADRENALIN®
28,722 30,662 88,136 120,335 
Other Sterile Injectables (4)59,234 65,319 182,098 214,132 
Total Sterile Injectables (3)$343,653 $251,393 $946,998 $906,997 
Total Generic Pharmaceuticals (5)$174,306 $135,508 $522,451 $602,670 
Total International Pharmaceuticals (6)$23,092 $24,277 $68,676 $75,910 
Total revenues, net$772,028 $634,860 $2,203,777 $2,142,853 
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(1)Products included within Other Specialty include NASCOBAL® Nasal Spray, AVEED® and QWO®.
(2)Products included within Other Established include, but are not limited to, EDEX® and LIDODERM®.
(3)Individual products presented above represent the top two performing products in each product category for either the three or nine months ended September 30, 2021 and/or any product having revenues in excess of $25 million during any quarterly period in 2021 or 2020.
(4)Products included within Other Sterile Injectables include ertapenem for injection, APLISOL® 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. No individual product within this segment has exceeded 5% of consolidated total revenues for the periods presented.
(6)The International Pharmaceuticals segment, which accounted for less than 5% of consolidated total revenues for each of the periods presented, includes a variety of specialty pharmaceutical products sold outside the U.S., primarily in Canada through our operating company Paladin.