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SEGMENT RESULTS
 3 Months Ended
Mar. 31, 2023
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 Income (loss) from continuing operations before income tax and before acquired in-process research and development charges; 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; reorganization items, net; and certain other items.
Certain 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 and bariatrics, among others. Products in this segment include XIAFLEX®, SUPPRELIN® LA, AVEED®, NASCOBAL® Nasal Spray, PERCOCET®, TESTOPEL® and EDEX®, 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®), among others.
Generic Pharmaceuticals
Our Generic Pharmaceuticals segment consists of a product portfolio including solid oral extended-release products, solid oral immediate-release products, 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, including over-the-counter (OTC) products, sold outside the U.S., primarily in Canada through our operating company Paladin Labs Inc. (Paladin).
The following represents selected information for the Company’s reportable segments for the three months ended March 31, 2023 and 2022 (in thousands):
Three Months Ended March 31,
20232022
Net revenues from external customers:
Branded Pharmaceuticals$197,573 $204,861 
Sterile Injectables101,255 240,028 
Generic Pharmaceuticals198,180 185,944 
International Pharmaceuticals (1)18,259 21,426 
Total net revenues from external customers$515,267 $652,259 
Segment adjusted income from continuing operations before income tax:
Branded Pharmaceuticals$96,265 $77,666 
Sterile Injectables41,090 191,254 
Generic Pharmaceuticals91,687 66,382 
International Pharmaceuticals5,347 4,381 
Total segment adjusted income from continuing operations before income tax$234,389 $339,683 
__________
(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 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 months ended March 31, 2023 and 2022 (in thousands):
Three Months Ended March 31,
20232022
Total consolidated income (loss) from continuing operations before income tax$2,950 $(67,115)
Interest expense, net109 134,949 
Corporate unallocated costs (1)39,657 43,281 
Amortization of intangible assets65,256 90,234 
Acquired in-process research and development charges— 2,900 
Amounts related to continuity and separation benefits, cost reductions and strategic review initiatives (2)11,673 57,649 
Certain litigation-related and other contingencies, net (3)15,200 25,154 
Certain legal costs (4)1,560 32,732 
Asset impairment charges (5)146 19,953 
Acquisition-related and integration items, net (6)397 (1,377)
Foreign currency impact related to the remeasurement of intercompany debt instruments284 1,198 
Reorganization items, net (7)85,352 — 
Other, net (8)11,805 125 
Total segment adjusted income from continuing operations before income tax$234,389 $339,683 
__________
(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 March 31, 2023 include net employee separation, continuity and other benefit-related charges of $10.8 million, inventory charges related to restructurings of $0.3 million and other net charges of $0.6 million. Amounts for the three months ended March 31, 2022 include net employee separation, continuity and other benefit-related charges of $32.3 million, accelerated depreciation charges of $3.7 million and other net charges, including those related to strategic review initiatives, of $21.6 million. These amounts relate primarily to our restructuring activities as further described in Note 5. Restructuring, certain continuity and transitional compensation arrangements, certain other cost reduction initiatives and certain strategic review initiatives, including costs incurred in connection with our bankruptcy proceedings, which are included in this row until the Petition Date and in the Reorganization items, net row thereafter.
(3)Amounts include adjustments to our accruals for litigation-related settlement charges. Our material legal proceedings and other contingent matters are described in more detail in Note 15. Commitments and Contingencies.
(4)Amounts relate to opioid-related legal expenses.
(5)The amount for the three months ended March 31, 2022 primarily relates to charges to impair intangible assets. For additional information, refer to Note 10. Goodwill and Other Intangibles.
(6)Amounts primarily relate to changes in the fair value of contingent consideration.
(7)Amounts relate to the net expense or income recognized during our bankruptcy proceedings required to be presented as Reorganization items, net under ASC 852. Refer to Note 2. Bankruptcy Proceedings for further details.
(8)The amount for the three months ended March 31, 2023 primarily relates to a charge of approximately $9.2 million associated with the rejection of certain equity award agreements, which was approved by the Bankruptcy Court in March 2023.
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 months ended March 31, 2023 and 2022, 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 March 31,
20232022
Branded Pharmaceuticals:
Specialty Products:
XIAFLEX®$96,910 $99,484 
SUPPRELIN® LA23,577 28,830 
Other Specialty (1)21,694 20,744 
Total Specialty Products$142,181 $149,058 
Established Products:
PERCOCET®$26,056 $26,175 
TESTOPEL®10,989 8,880 
Other Established (2)18,347 20,748 
Total Established Products$55,392 $55,803 
Total Branded Pharmaceuticals (3)$197,573 $204,861 
Sterile Injectables:
VASOSTRICT®$25,951 $155,890 
ADRENALIN®25,575 33,823 
Other Sterile Injectables (4)49,729 50,315 
Total Sterile Injectables (3)$101,255 $240,028 
Total Generic Pharmaceuticals (5)$198,180 $185,944 
Total International Pharmaceuticals (6)$18,259 $21,426 
Total revenues, net$515,267 $652,259 
__________
(1)Products included within Other Specialty include AVEED®, NASCOBAL® Nasal Spray and QWO®.
(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 the three months ended March 31, 2023 and/or any product having revenues in excess of $25 million during any completed quarterly period in 2023 or 2022.
(4)Products included within Other Sterile Injectables include APLISOL®, ertapenem for 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 limited or no intellectual property protection and are sold within the U.S. During the three months ended March 31, 2023 and 2022, varenicline tablets (Endo’s generic version of Pfizer Inc.’s Chantix®), which launched in September 2021, made up 15% and 10%, respectively, of consolidated total revenues. During the three months ended March 31, 2023, dexlansoprazole delayed release capsules (Endo’s generic version of Takeda Pharmaceuticals USA, Inc.’s Dexilant®), which launched in November 2022, 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 Endo’s operating company Paladin.