Q3 2021 Endo International PLC Earnings Call
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[music].
Good day and thank you for standing by welcome to the Endo International plc third quarter 2021.
Earnings Conference call at this time, all participants are in a listen only mode.
True the speaker's presentation, there will be a question and answer session.
Kathy a question during the session you will need to press star one on your telephone. Please be advised today's conference is being recorded.
If you require any further assistance. Please press star zero I would now like to hand, the context over to speaker today Laurie part.
Senior Vice President of Investor Relations and corporate Affairs. Please go ahead.
Thank you and good morning, Thank you for joining us to discuss our third quarter 2021 financial results.
Joining me on today's call are Blaise Coleman Endo, as president and CEO, Mark glad proudly executive Vice President and CFO and Patrick Barry President Global commercial operations, we've prepared a slide presentation to accompany today's webcast and that presentation as well as other materials are posted.
Did online in the investors section at Endo Dotcom.
I would like to remind you that any forward looking statements made by management are covered under the U S. Private Securities Litigation Reform Act of 1995, and the applicable Canadian Securities laws and are subject to the changes risks and uncertainties described in the press release and in our U S and Canadian Securities filings in them.
Dishing during the course of this call we may refer to non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States and that may be different from non-GAAP financial measures used by other companies.
Investors are encouraged to review <unk> current report on form 8-K furnished with the SEC for Endo as reasons for including those non-GAAP financial measures in its earnings release and presentation. The.
The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures are contained in the earnings press release issued yesterday, unless otherwise noted therein.
I would now like to turn the call over to Blaise. Please. Thank you Lori good morning, everyone and thank you for joining US. We're pleased to report strong financial performance during the third quarter, which exceeded our expectations and was driven by outstanding execution across all of our businesses as well as continued progress against our strategic priorities.
Based on.
The strength of our year to date performance and expectations for the remainder of the year, we are raising our 2021 full year financial guidance.
Turning to slide three our strategic priorities continue to guide all that we do as we work to transform our company.
During the third quarter, we made progress against all three of those priorities.
In expand and enhance our portfolio, we continue to successfully deliver on our <unk> launch plan.
Drive XIAFLEX volume growth through focused commercial execution and investments.
Regress, our internal product pipeline.
And successfully execute new launches.
And reinvent how we work we continue to advance our business transformation initiatives, including the sale of our manufacturing facility in Chestnut Ridge, New York and pending sale of our Irvine, California facility.
And be a force for good we continue to make progress across our many initiatives in support of our ambition to adopt a more sustainable practices that benefit all of our stakeholders.
Endo team members are proud of the positive impact our products have on the lives of patients we serve.
And on the positive impact we have in the communities, where we live and work.
<unk>.
Moving to slide four.
This is a snapshot of our segment and consolidated revenues and our adjusted EBITDA for the quarter.
Third quarter enterprise revenues of $772 million increased by 22% compared to the prior year driven by growth in our sterile injectables generic pharmaceuticals and branded pharmaceutical segments.
Reported third quarter, adjusted EBITDA of $387 million increase.
<unk> increased by 35% compared to the prior year.
This increase was mainly due to higher consolidated revenues and favorable changes in product mix. It.
It was partially offset by higher adjusted operating expenses due to our increased XIAFLEX in quo commercial investments.
Third quarter 2021, consolidated revenues and adjusted EBITDA exceeded our previously communicated expectations due to better than expected performance across our sterile Injectables segment, primarily driven by the district in our generic Pharmaceuticals segment.
Turning to slide five.
Third quarter revenues from our branded pharmaceutical segment increased by 3% compared to the prior year.
This increase was driven by a 16% increase in our specialty products portfolio compared to the same quarter last year.
XIAFLEX revenues increased approximately 20% in the third quarter compared to the prior year driven by strong underlying demand.
Third quarter 2021, XIAFLEX revenue growth was partially impacted by a slowdown in elective procedures patient flow and workforce disruptions and physician offices mainly.
Mainly as a result of the COVID-19 Delta variant.
However, we anticipate improving conditions throughout the fourth quarter and we remain very encouraged by the continued strong interest of patients willing to seek treatment.
Revenues from our sterile Injectables segment increased by 37% compared to the third quarter of 2020 and exceeded our expectations.
This was driven by a 65% increase in visa strict revenues compared to the prior year, mainly due to higher utilization driven by the COVID-19 Delta buried.
Combined with a return to normal pre COVID-19 population mobility and activity trends.
We anticipate that demand for visa strict will return to more normalized levels in the fourth quarter of 2021 as COVID-19 related hospitalizations declined.
On the visa strict litigation front are appealed the district court's non infringement finding was filed in September and remains pending.
Our full year financial guidance assumes continued to be as a strict market exclusivity through the rest of the year.
However, we continue to take the necessary steps to prepare for a potential near term launch at risk.
It is worth noting that while we cannot comment on the specific terms of any of our executed. These are strict settlement agreements. It is commonplace for settlement agreements include acceleration clauses that allow launches by other filers once theres been a launch at risk, which may also trigger an authorized generic launch.
Moving to slide six.
Revenues from our generic pharmaceutical segment increased by an impressive 29% in the third quarter compared to the prior year.
Third quarter generic pharmaceutical segment revenue surpassed our expectations, mainly due to better than expected lubiprostone branded generic conversion.
Coupled with delayed competition on certain key generic products.
We're very pleased to have received FDA approval for generic for Varenicline during the quarter. Our product is currently the only FDA approved generic <unk> tablets.
While still early days with the launch we have a progressive supply plan that we expect will enable us over time to make this product available to a larger portion of the market.
Finally international pharmaceutical segment revenues for the third quarter were comparable to the third quarter 2020 revenues.
Yes.
On slide seven a key component of our XIAFLEX maximization strategy includes increasing patient awareness through expanded promotion to empower patients to seek non surgical options.
Bind with HCP promotional activities physician education and injection training.
On this front, we're excited to have an integrated branded direct to consumer campaign. The <unk> indication that was launched in late October.
We believe the new multichannel integrated campaign will help drive patients to find a specialized urologists and to empower men with payroll knees to request XIAFLEX.
This launch represents an important milestone as it is the first branded direct to consumer TV campaign for XIAFLEX in the company.
Campaign will utilize multiple media channels and will be pulled through with an integrated HCP effort from our capable men's health fueled salesforce.
This campaign is representative of the consumer activation capability, we've built over the last few years.
During the recent sexual Medicine Society of North American meeting, we were able to share new post hoc data about XIAFLEX in treating PD.
The data analysis points to the potential benefits of completing the full XIAFLEX treatment course for PD and further demonstrates to the HCP community our ongoing commitment to invest in this important treatment in condition.
Lastly, our XIAFLEX maximization plan continues to be supported with ongoing consumer activation activities centered on creating condition awareness of <unk> contracture.
We are in the process of evolving our disease state awareness campaign to its next generation.
Featuring multiple real people living with the condition.
We look forward to launching a new unbranded campaign early next year.
Turning to slide eight and our medical aesthetics business. We remained focused on the successful launch of <unk> building brand awareness and driving trial and adoption. Our launch efforts are centered on building a new category within medical aesthetics by emphasizing product education and the importance of patient selection.
That leads to positive patient outcomes, while building practice success with our onboard and accounts.
We are pleased with our progress and the positive feedback we're receiving from both the medical aesthetics community and the women who had been treated with <unk>.
In terms of our launch execution, we continue to take a disciplined and progressive approach to establishing a base of <unk> injectors and to date, we have trained and certified greater than 300 accounts.
To match interested consumers with treating medical aesthetics practices, we've activated a find a specialist feature.
On our <unk> website with robust activity.
This is a good early indicator of potential future patient demand for <unk> as well as an example of our commitment to building a category and supporting demand generation.
Our PR and media planning continues to generate excellent brand awareness and consumer enthusiasm in the marketplace.
<unk> recently made the cover of the lower magazine under the headlines the science of beauty.
And later this month, we plan to host a media event, along with one of our HCP partners to reach Latina women with our core product offering.
Additionally, we plan to launch our quote direct to consumer campaign titled but first next year with the initial teaser campaign recently relaunched.
Our approach will continue focusing on supporting practices to successfully launch and integrate quo to achieve positive patient outcomes and increase trial and adoption.
We are pleased that our debt based on our ongoing <unk> market Research survey of aesthetic clinicians, who was already leading the cellulite treatment category with the highest level of unaided awareness.
Moving to slide nine and discussing our ongoing branded segment clinical studies and pipeline starting with <unk>. Our data generation plans remain focused on dosing injection technique durability and responses in target patient populations for.
For example, as we've previously highlighted our 305 phase III <unk> study looked at <unk> effectiveness in a real world population as well as <unk> injection technique and overall investigator experience.
At day 90, greater than 90% of investigators perceived improvement in say late appearance and 90% investigators agreed or strongly agreed to incorporate <unk> into their practice.
The results and analysis from these studies are key to our publication and presentation strategies.
We continue to make progress in our XIAFLEX clinical development programs with respect to plantar Fibromatosis based on our interim analysis of the proof of concept study we plan to progress. This program with the initiation of the Phase II study later this year.
In terms of adhesive Capsulitis, our phase II B study interim analysis is anticipated towards the end of the year.
We believe both plantar fibromatosis and adhesive capsulitis represent opportunities to bring innovative treatment options to address potential large unmet needs for patients who are seeking non surgical approaches to treatment and.
And both development programs are important components of our XIAFLEX maximization plan.
Turning to slide 10, we continue to evolve our R&D pipeline and manufacturing capabilities to support the introduction of an increasing number of sterile products that focus on the evolving needs of our customers.
As of the end of the third quarter, we have approximately 40 R&D projects in our pipeline.
An increase of more than 30% since the beginning of the year, which is mainly driven by an increase in sterile injectable projects Oh.
Overall greater than 85% of our R&D pipeline consists of projects across the sterile injectable product continuum.
With approximately two thirds and ready to use in other more differentiated products.
Year to date, we've launched five products and expect to launch approximately 10 products in 2021 across our sterile injectables and generic pharmaceuticals segments.
In addition to our organic efforts to enhance and expand our portfolio. We continue to remain active on the business development front.
We remained focused on opportunities in our core areas of growth aimed at enabling us to further leverage our existing capabilities.
We have taken and will continue to take a disciplined approach to deploying capital and business development opportunities that align with our strategy.
Now, let me turn the call over to Mark to further discuss the company's financial results and our financial guidance Mark.
Thank you Blake and good morning, everyone first on Slide 11, you will see a snapshot of our third quarter GAAP and non-GAAP financial results.
Place covered consolidated and segment revenues earlier, so I will not review that again.
GAAP basis loss from continuing operations was approximately $49 million were 21 per share on a diluted basis in the third quarter of 2021 compared to loss from continuing operations of approximately $69 million or <unk> 30 per share on a diluted basis.
In the third quarter of 2020.
This result was primarily attributable to increased revenue and favorable changes in product mix, which were partially offset by higher opioid litigation related costs and settlements.
Asset impairment charges and higher operating expenses due to increased XIAFLEX and <unk> commercial investments.
On an adjusted basis income from continuing operations was $189 million or <unk> 80 per share on a diluted basis.
In the third quarter of 2021.
Third to income from continuing operations of $122 million were <unk> 52 per share on a diluted basis in the third quarter of 2020.
This increase was primarily due to higher revenues and favorable changes in product mix in the third quarter of 2021 compared to the prior year and was partially offset by an increase in operating expenses due to increased XIAFLEX and quote commercial investments.
Turning to slide 12 based on better than expected performance across all.
Of our businesses in the third quarter and our expectations for the remainder of the year, we are raising our 2021 full year financial guidance.
We now expect full year 2021, total revenues to be between $2 9 billion and $2 $94 billion.
Adjusted EBITDA to be between $1 4 billion.
142 billion.
And adjusted diluted net income per share from continuing operations.
To be between $2 80.
And $2 85.
Our full year 2021 guidance now assumes an adjusted gross margin of approximately 71, 5%.
Adjusted operating expenses as a percentage of revenue of approximately 26, 5%.
And an adjusted effective tax rate of approximately 13%.
Our full year 2021 guidance continues to assume adjusted interest expense of approximately $560 million.
While our full year guidance ranges contemplate a number of different uncertainties.
Our guidance does not assume a significant resurgence of COVID-19 related hospitalization to restrictions during the remainder of the year.
Switching to slide 13. This is a summary of full year segment revenue and adjusted gross margin assumptions, we have updated the full year assumptions for all of our segments as well as preside flex and <unk> district.
Advancing to slide 14, and wrapping up the financial discussion unrestricted cash flow prior to debt payments with $401 million.
For the first nine months of 2021 compared to $308 million in the prior year.
This increase was primarily due to higher adjusted EBITDA and increased cash flow from changes in net working capital and was partially offset by an increase in opioid related legal expenses and settlements.
We ended the third quarter of 2021 with approximately $1 6 billion of unrestricted cash and a net debt to adjusted EBITDA leverage ratio of approximately four six times.
For the full year 2021, we are updating our expectations for unrestricted cash flow prior to debt payment to be between approximately $265 million and $285 million compared to our prior estimate of between $195 million and $245 million.
This change primarily reflects the increase in adjusted EBITDA previously discussed.
As well as a shift in the estimated timing of cash distributions to settle mesh claims from 2021 to 2022 and is expected to be partially offset by increases in certain prepaid expenses and opioid related legal expenses and settlements.
Let me now turn the call back over to Blaise place. Thank you Mark prior to turning the call over to Lori to manage our question and answer period, we understand that there are many questions regarding our opioid litigation matters a whole.
However, as I'm sure you can appreciate we are limited in what we can say on this front.
With respect to the California case, the court issued a tentative ruling on November one in favor of Endo any other defendants finding no liability on all counts and directed the defendants to prepare and file a proposed settlement of decision and a proposed judgment consistent with the tentative ruling within 30 days.
With respect to the opioid litigation as a whole we're focused on our primary goal of achieving a global settlement of all remaining opioid claims at the same time, we will continue to actively defend the company and court when necessary and we will pursue individual settlements. When we believe they are in the best interest of the company.
Additionally, we are actively exploring other strategic alternatives both in support of achieving a global settlement.
And in the event, we are unable to achieve such settlement.
As with any thorough analysis of a complex situation the path toward resolution will continue to take time, and we cannot speculate on the likelihood nature or timing of any outcome.
More importantly, while we continue to address the opioid litigation our Endo team remains highly focused on our day to day business execution, and advancing our strategic priorities and delivering our portfolio of life enhancing products to our customers and the patients they serve.
I want to thank each of our endo team members for their strong execution during the quarter and continued commitment to helping us transform the company, we aspire to be in the future.
Let's now move to the question and answer period Laurie.
In the interest of time, if you could limit your initial questions to allow us to get in as many as possible. We'd appreciate it operator, our first question. Please.
Our first question comes from the line of David <unk> from Piper Sandler Your line is open.
Thanks, So on Clos can I know you didn't break it out.
But can you discuss what sales levels were and what portion of your target inject our audience have you.
<unk> already trained and then secondly.
Just a little more color on the Champix generic.
How long do you think thats going to be a.
Limited or no competition product.
I guess with that launch, what's the extent to which that could be a contributor such that it might offset some pressure on vast district. If you did last.
<unk> just wanted to get your general thoughts there. Thanks, Okay. David. Thank you very much for those questions I'll take the second one first and then Patrick will help on the close side, so with the with the launch of our generic branded click Varenicline, obviously very excited to be the first approved.
By the FDA for that and right now our expectations are that we will see near term competition Thats, how we planned out our guidance. So that's how we are factoring that in that said, we have a progressive supply plan in place to really increase our capacity for this product over time, and we're going to obviously seize that opportunity, particularly if there is.
Less competition there than we're currently anticipating.
Anticipating on the <unk> question on the first part with regards to sales David we're not we're not disclosing that right now it doesn't meet our requirements for four disclosure from a revenue standpoint, and obviously our focus right now is really driving awareness trial and adoption, but I'll, let Patrick talk to you about how we're progressing in some of the places that we've really focused in on in and penetrate.
To date thanks.
Thanks for the question David as we've mentioned in the call were take.
Taking a progressive and disciplined approach to Onboarding, we're really very pleased that at this point in that with that approach we've on boarded about 1300 accounts.
Our focus continues to be on patient selection product education, and integrating quo deeply into their accounts. We are beginning to see reorders, which is exactly what we would want to be doing and we're going to continue with that progressive disciplined approach for the remainder of the year. So you can.
Begin to envision a very similar run rate between now and the end of the year and Thats really job one in terms of sizing the market opportunity. What we're trying to do is to establish a base of accounts over time over the next say 12 to 18 months and you've got a really rich facial filler market, which would allow us to establish.
A good base of accounts, along with a really robust and growing body contouring market and so that's really job one to establish over the next several months.
A base of injectors that are driving.
Driving reorder rates and trial and adoption. So that's essentially where we're at in.
In terms of sizing the overall market.
Again, we're not going to comment on the relative size of the market, but you can look at the facial filler market in terms of the injector base that we're drawing from and the body contouring market that we're drawing on and those would be.
How we're going to go about establishing a quality base of injectors over time next.
Next question please.
Our next question comes from the line of Nevada tie from Citi. Your line is open.
Hi, good morning, Thanks for taking my question.
Thanks for your comment.
And on the California trial decision given that most trial based on public you reason clean does it make you more confident for upcoming trials and for a global settlement and then my second question is on that is shake.
If you have any comments that would help us in 2000 <unk> Kevin.
Multiple entry in Q1 next year and next generation closes do you expect some mitigation from the injectable nature vessel or and does defense strategy. Thank you.
Great. Thank you for those questions first on the question around California, I mean, here's where I would say is that fair.
First we believe the California tenant really really reflects the evidence that endo did not make any false or misleading statements in the endo.
Lawful conduct did not cause a widespread public nuisance alleged by the plaintiffs so.
That's clearly what came through in the California trial now with.
With that tenant ruling our strategy and approach to this overall matter stays the same which is our approaches to design really to help us achieve our primary objective, which is to achieve a global settlement.
Under that approach as I said in a pre prepared remarks that we're going to continue to spend the company.
When necessary, we are going to.
Execute individual settlements, where we think that's in the best interest of the company.
We're going to have to continue to explore other strategic alternatives in support of us achieving our objective, which is a global settlement that also in the instance, where we're unable to do that so thats going to be our go forward approach, obviously very satisfied with the finding in California and completely aligned with what we believe is the key.
Company now in terms of visa strict sort of the question around durability.
We're not really going to make.
Predictions here in terms of the potential outcome.
When we might see we might see competition and what that impact is going to be we feel very good about the preparation we have in place that is competition does show up what we're going to be doing commercially.
And so feel very well prepared if if we find ourselves in that in that in that situation sooner rather than later.
Next question please.
Our next question comes from the line of <unk> Prasad from Barclays. Your line is open.
Hi, Good morning, just two follow up questions from me firstly on the campaigns both for full and.
And.
Do you see scope to thank Neal these campaigns well into 'twenty clinical and on any kind of potential impact.
Results are you anticipating from these campaigns I can quantify.
And secondly on sterile injectables.
Launched filed the patent that you had anticipated launch just curious to understand if there's any particular reason why five of these have been bunched up now in the last 12 months of the of the year and if you can give some color on the nature of these products and impact to revenue is our goal that AD spend that would be great. Thank you.
Great. Thank you for those questions on the second question first listen product launches come.
Come when they come in so we will take them when we can get them. There is nothing specific to why they are coming to the end of the year.
But obviously the impact from those launches are really going to be felt in 2022, not going to dimensionalize. The size of those but we feel good about getting those launches out at the end of the year and then really seen the impact of those in 2022 in terms of your question on our campaigns for colon XIAFLEX I'll, certainly turn it over to Patrick to talk about our.
Our focus there in terms of <unk>.
Consumer activation and this is definitely something that we're committed to over time and maybe the only point I would make on XIAFLEX as you know this idea.
Around what we've been able to do to drive XIAFLEX growth to date is particularly PD has been around disease awareness and we think it's a very natural progression for us now to move to a branded <unk>.
Discussion and really a solution for that for that condition, but I'll turn it over to Patrick to really talk more about it yes. Thanks place first first of all I'll start with XIAFLEX first of all as Blake said, we know consumer activation as effective and it's working it's driven growth over the last few years with our conditional awareness campaign, we really normalize the conversation.
And we feel like we have an opportunity to further medicalized discussion our condition awareness.
With the effectiveness demonstrated at about 25% of the time that would result in a XIAFLEX treatment requests and we believe that.
Beyond heard anywhere between 65% to 70% of the time. So we believe our branded XIAFLEX campaign that takes this normalized discussion and further medicalize. It Medicalizes and also results in a XIAFLEX request will further enhance our growth. So we're really excited about the campaign, we think that bet carat campaign.
As a friendly tasteful than <unk>.
Visual approach to a condition that can be embarrassing for men and they may feel that it's too intimate to discuss but we believe the campaign is going to be memorable easy to recall and it's really going to build upon the disease state conditional awareness that we've been doing over the last three years. So we're very excited about it early feedback from.
Our key urologists has been very positive in terms of taste and tone and effectiveness and so we're excited about what a branded campaign can mean to XIAFLEX for our peroni as indication on quo again.
We have continued to to say, what we were going to do and continue to do what we said we were going to do so we began with conditional awareness to begin to create an understanding of the underlying causes of cellulite informing women as to the causes of the condition of cellulite. So they can be informed consumers.
We've worked really hard to begin to establish a base of injectors and we're moving into an era, where with the base of injectors. It would be only natural that we would flip to more of a branded campaign and so we're very excited about our but first campaign again striking the right tone taste and tone in the marketplace.
We are launching with some teasers mainly on digital channels.
And over time, we would look and look to broaden our efforts around the branded campaign for <unk> as well.
Next question please.
Our next question comes from the line of Jerry Mcmahon from BMO capital markets. Your line is open.
Hi, Good morning, guys first on XIAFLEX, just a little more on why it was down sequentially in the third quarter.
In addition to the Covid headwinds with a seasonal effect in the summer months.
How quickly do you think that could bounce back in the fourth quarter and have momentum into next year just in terms of dynamics in a physician's office says I'm just curious what youre seeing there.
And then with the additional cash flow that you generate some data strict.
Can you pay down debt more aggressively or do you need to keep that on the balance sheet with the opioid litigation outstanding and just how much flexibility do you have on business development at this point just given the opioid overhang you mentioned that that's still a focus for you guys. So I'm curious how much you could do on that.
Potentially.
Great. Thanks, Gary what I'll do is I'll, let Patrick take the the bounce back question going forward I'll have mark take the BD question on your question on XIAFLEX sequentially.
Demand for XIAFLEX sequentially, it was actually flat and what Youre seeing from a revenue standpoint is that we actually had destocking between Q2 and Q3 during the year. So the reason it was down was really a function of Destocking demand was was relatively flat and that was really related to the COVID-19, Delta Varian impact, but I'll, let Patrick talk about the <unk>.
<unk> yeah, good comment on the sequential impact of the inventory burn as we look at revenue growth overall, we as we noted on the call.
20% year over year revenue growth that was the underpinning of that revenue growth was really driven by a 19% demand growth and so despite some headwinds that we saw in the quarter that really came in at the beginning of August into September.
Again due.
Due to COVID-19 Delta variant, we did see a slowing of that that growth mainly dampening of electric procedures in the orthopedics segment, some consumer traffic slowdown in both urology as well as orthopedics and frankly, we saw our physician customers.
B a bit challenge with workforce disruptions associated with Covid, all that being said, we're very encouraged by the fact that despite that transitory effect of COVID-19, we were still producing very strong demand growth of 19% in fact, both indications did demonstrate positive growth and so as we look into.
The remainder of the year, we would anticipate a.
Our recovery to travel along with Covid.
COVID-19 dissipate.
Our our goal would be to continue to drive underlying demand growth in <unk>.
XIAFLEX overall in the midterm long term have a growth trajectory very similar to what we saw in 2019.
Now I'll, let mark take the capital allocation question around debt and our ability to invest from a BD standpoint, mark. So thanks for the question, Yes, I think we've been pretty clear that our capital allocation priorities are really focused on investing in our internal asset first and.
And getting everything we can out of those assets. Then we would look to complementary business development and then we would look to debt paydowns.
I think our core areas of growth really remain unchanged, we look to invest behind XIAFLEX as we're doing with the DTC program that Patrick and others have mentioned.
We're fully investing behind <unk> and <unk>.
And our medical aesthetics capabilities, we are investing behind XIAFLEX.
Pipeline opportunities and we're also investing behind our sterile injectables pipeline and capabilities.
We believe that deleveraging really.
It really will come through an expansion of EBITDA first and Thats why were really focused on the portfolio and investing behind our portfolio.
We then look to complementary business development opportunities along those same core areas of growth.
Then after that like I mentioned, we would consider debt pay down.
Next question please.
Our next question comes from the line of anabolic stemming from Stifel. Your line is open.
Hi, Thanks for taking my questions I had two.
First on Clos, I guess now that Youre in a number of practices moving from $3 50, so that 3200.
I'm curious about the feedback that youre getting from the practices on the results that they're seeing in the level of satisfaction.
Of the patients relative to the time commitment they need to make for the administration over the three courses and how do you think they are managing this within their practice is it moving more towards the technician or is it something that they have to figure out how to balance.
And then second I guess.
You mentioned a couple of times that.
In light of the global of the HUD settlement.
Possibly pursuing strategic.
Different strategic decision so maybe maybe you can.
Tell us what you mean by some of the strategic initiatives kicking in light of a global settlement and then putting aside anything related to the opioid settlement is there any more thought to divestiture as part of our strategic focus such as <unk>.
Do you need to be in international where is that giving you other than flat growth or declining growth. So I was just launched and how youre thinking about this.
Tricky strategic decision okay.
Okay. Thanks, Annabel so on your second question I'll take that first in terms of divestitures divestitures are always something we're constantly looking at in terms of are we in the right businesses. These businesses makes sense for us going forward I will tell you that over the last 12 months 20 months, we feel that having a diversified set of businesses has served us very well in terms of.
Obviously, what we just went through through through COVID-19 that all being said that's something we continue to look at and we'll continue to look at going forward and we'll make those decisions.
As we move forward on your question around strategic alternatives in terms of what we've referenced we're not going to comment on any specific alternatives. The company may be exploring other than to say the.
<unk> turns we're exploring are broad based in nature, and we're committed to making sure. We take all actions possible to really help us achieve our overall goal, which is trying to get to a reasonable settlement on the opioid litigation for your question on feedback from what we're hearing from the practices I'll turn it over to Patrick. Thank you play. So we're very pleased I mean, it's certainly early in the launch but we.
We are pleased with our progress and the positive feedback we're receiving both from.
Practicing physicians medical the medical aesthetic community overall, and the women who have been treated with <unk> we.
We referenced from HEU market research during the call and then within a short period of time, we're very excited that now quo is not only the leading product in the cellulite category, but it is also receiving the highest satisfaction amongst among.
Among cellulite treatments.
And so certainly market researches, we look at market research for trends and attitudes trial and usage and that's certainly informative, but I would continue to look back at the robust real world data that we have I'd point to the real world data as a better determinant on how the product is performing and the satisfaction.
And I would point to the 305 phase III B real study, where we looked at <unk> effectiveness in a real world population and at day 90 investigator perceived improvement scores were higher than 90%.
In cellulite appearance and investigate the investigators strongly agree that they would incorporate it into the practice and so in the real world. That's what we're seeing we're seeing that line up pretty well and pretty consistently.
So it's early days and a lot of work to do.
A lot of accounts to onboard, but we're very pleased with the progress we're making with this progressive disciplined approach next question. Please.
Again to ask a question press star one on your telephone we have a follow up question from Nevada tie from Citi. Your line is open.
Hi, and thanks for taking my additional question.
Encore.
Heard of about post procedure or anything which you have also mentioned has it impacted your <unk> and how do you educate physicians and patients about the burden. Thank you.
Sure I think we've been very upfront about the perusing I'll, let Patrick talk about our approach and what we are seeing sure. Thank you for the follow up question, Yes, we've been very consistent on this and again. This is feedback that we heard loud and clear when we were doing our market research. When we were hearing from advisors that bruising is the most common side effect.
In most cases are resolved on its own.
And I think we've done a good job of setting that expectation in the marketplace with our customers and we will continue to do so and when our customers do set that expectation with their patients.
They understand what the patient experience is going to be like and we've seen that that's been a really effective approach. So we're going to continue to lean into that and and assist our customers with good information around birthday next question. Please.
We have a follow up question from Gary Nachman from BMO capital markets. Your line is open.
Hi, Thanks for the follow up I'm, just curious with the sale of the Chesnut in Irvine facility.
Does that impact your generic portfolio at all.
Transferred everything out of those or rationalize the portfolio as a result, I'm just curious what the impact to the businesses as a result of the sale of those facilities.
Thanks, Gary for that follow up question. So you might recall back in November of 'twenty, We announced a set of business transformation initiatives and really the goal was from our generic pharmaceutical segment standpoint was to make us more competitive in that space and what we're focused in on is really driving down what we would consider our cost per unit sold.
So this is all of the sale of Chestnut ridge and the pending silver behind those.
Those two sites were identified for closure as part of our plan and so this is a great outcome for us in terms of being able to sell these facilities.
First it saves a lot of jobs in both those locations two it provides us cash proceeds that we otherwise wouldn't have had avoided cost of change.
Cost as well and from a continuity supply standpoint, it's really helping us as we performed some transfers that we have been ongoing over the last year now.
Two our different facilities and third party. So this is actually a really positive development in terms of what we're trying to do to make our generic pharmaceutical segment more competitive going forward and there's really no no meaningful impact from a portfolio standpoint in terms of some of the Andas that we sold as part of this really.
From a gross margin standpoint were not significant contributors for us.
Next question please.
There are no further questions at this time now I'll turn the call back over to our CEO. Please Coleman for closing remarks.
Thank you operator, thank you everyone for joining us. This morning, we look forward to providing you updates as we move forward and we hope everybody has a fantastic weekend.
Okay.
This concludes today's conference call and thank you for participating you may now disconnect.
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