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SEGMENT RESULTS
 12 Months Ended
Dec. 31, 2021
Segment Reporting [Abstract]  
SEGMENT RESULTS
NOTE 6. 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 from continuing operations before income tax, which we define as Loss 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 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 variety 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. 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 years ended December 31, 2021, 2020 and 2019 (in thousands):
202120202019
Net revenues from external customers:
Branded Pharmaceuticals$893,617 $781,780 $855,402 
Sterile Injectables1,266,097 1,238,847 1,063,131 
Generic Pharmaceuticals740,586 783,110 879,882 
International Pharmaceuticals (1)92,906 99,337 115,949 
Total net revenues from external customers$2,993,206 $2,903,074 $2,914,364 
Segment adjusted income from continuing operations before income tax:
Branded Pharmaceuticals$384,186 $377,526 $426,677 
Sterile Injectables998,453 950,145 780,799 
Generic Pharmaceuticals160,046 87,178 159,716 
International Pharmaceuticals30,325 41,022 44,758 
Total segment adjusted income from continuing operations before income tax$1,573,010 $1,455,871 $1,411,950 
__________
(1)Revenues generated by our International Pharmaceuticals segment are primarily attributable to external customers located in Canada.
There were no material revenues from external customers attributed to an individual country outside of the U.S. during any of the periods presented.
The table below provides reconciliations of our Total consolidated loss from continuing operations before income tax, which is determined in accordance with U.S. GAAP, to our Total segment adjusted income from continuing operations before income tax for the years ended December 31, 2021, 2020 and 2019 (in thousands):
202120202019
Total consolidated loss from continuing operations before income tax$(546,603)$(26,518)$(344,904)
Interest expense, net562,353 532,939 538,734 
Corporate unallocated costs (1)180,866 157,723 168,136 
Amortization of intangible assets372,907 427,543 543,862 
Upfront and milestone payments to partners (2)26,451 35,075 6,623 
Amounts related to continuity and separation benefits, cost reductions and strategic review initiatives (3)90,912 126,282 34,598 
Certain litigation-related and other contingencies, net (4)345,495 (19,049)11,211 
Certain legal costs (5)136,148 67,819 65,282 
Asset impairment charges (6)414,977 120,344 526,082 
Acquisition-related and integration items, net (7)(8,379)16,549 (46,098)
Loss (gain) on extinguishment of debt13,753 — (119,828)
Foreign currency impact related to the remeasurement of intercompany debt instruments797 1,919 4,362 
Other, net (8)(16,667)15,245 23,890 
Total segment adjusted income from continuing operations before income tax$1,573,010 $1,455,871 $1,411,950 
__________
(1)Amounts include certain corporate overhead costs, such as headcount, facility and corporate litigation expenses and certain other income and expenses.
(2)Amounts in 2021 primarily relate to upfront payments associated with certain license agreements. Amounts in 2020 include a $28.6 million charge related to in-process research and development assets expensed in connection with the acquisition of BioSpecifics.
(3)Amounts in 2021 include net employee separation, continuity and other benefit-related charges of $8.8 million, accelerated depreciation charges of $24.7 million and other net charges, including those related to strategic review initiatives, of $57.4 million. Amounts in 2020 include net employee separation, continuity and other benefit-related charges of $86.9 million, accelerated depreciation charges of $22.5 million and other net charges, including those related to strategic review initiatives, of $16.9 million. Amounts in 2019 include net employee separation, continuity and other benefit-related charges of $23.6 million and other net charges, including those related to strategic review initiatives, of $11.0 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.
(4)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 16. Commitments and Contingencies.
(5)Amounts relate to opioid-related legal expenses.
(6)Amounts primarily relate to charges to impair goodwill and intangible assets, property, plant and equipment, operating lease right-of-use assets and certain disposal group assets. For additional information, refer to Note 3. Discontinued Operations, Note 4. Restructuring, Note 7. Fair Value Measurements, Note 9. Leases, Note 10. Property, Plant and Equipment and Note 11. Goodwill and Other Intangibles.
(7)Amounts primarily relate to changes in the fair value of contingent consideration.
(8)Amounts in 2021 include gains of $15.5 million associated with the termination of certain contracts, 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 as further discussed in Note 15. Debt. Amounts in 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 as further discussed in Note 15. Debt. Amounts in 2019 include $17.5 million for contract termination costs incurred as a result of certain product discontinuation activities in our International Pharmaceuticals segment and $14.1 million for a premium associated with an extended reporting period endorsement on an expiring insurance program. Other amounts in this row primarily relate to gains or losses on sales of businesses and other assets, as further described in Note 20. Other (Income) Expense, Net.
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 years ended December 31, 2021, 2020 and 2019, 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.
202120202019
Branded Pharmaceuticals:
Specialty Products:
XIAFLEX®$432,344 $316,234 $327,638 
SUPPRELIN® LA114,374 88,182 86,797 
Other Specialty (1)86,432 92,662 105,241 
Total Specialty Products$633,150 $497,078 $519,676 
Established Products:
PERCOCET®$103,788 $110,112 $116,012 
TESTOPEL®43,636 35,234 55,244 
Other Established (2)113,043 139,356 164,470 
Total Established Products$260,467 $284,702 $335,726 
Total Branded Pharmaceuticals (3)$893,617 $781,780 $855,402 
Sterile Injectables:
VASOSTRICT®$901,735 $785,646 $531,737 
ADRENALIN®124,630 152,074 179,295 
Other Sterile Injectables (4)239,732 301,127 352,099 
Total Sterile Injectables (3)$1,266,097 $1,238,847 $1,063,131 
Total Generic Pharmaceuticals (5)$740,586 $783,110 $879,882 
Total International Pharmaceuticals (6)$92,906 $99,337 $115,949 
Total revenues, net$2,993,206 $2,903,074 $2,914,364 
__________
(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 the year ended December 31, 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. During the year ended December 31, 2019, colchicine tablets (the authorized generic of Takeda Pharmaceuticals U.S.A., Inc.’s Colcrys®) made up 6% of consolidated total revenues. 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 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.
The following represents depreciation expense for our reportable segments for the years ended December 31, 2021, 2020 and 2019 (in thousands):
202120202019
Branded Pharmaceuticals$10,632 $11,758 $12,573 
Sterile Injectables17,796 17,400 14,287 
Generic Pharmaceuticals47,343 52,614 32,689 
International Pharmaceuticals4,242 4,530 4,234 
Corporate unallocated4,178 4,962 5,217 
Total depreciation expense$84,191 $91,264 $69,000