Q2 2024 Endo Inc Earnings Call

August 27, 2024

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Operator: Thank you for standing by.

Speaker Change: Thank you for standing by welcome to the earnings Conference call for Endo, Inc. This call is being recorded if you have any objections you may disconnect at this time.

Operator: Welcome to the earnings conference call for Endo Inc. This call has been recorded.

Operator: If you have any objections, you may disconnect at this time.

Laurie Park: I would now like to turn the call over to Laurie Park, Senior Vice President, Investor Relations and Corporate Affairs. You may begin.

Laurie Park: I would now like to turn the call over to Laurie Park, Senior Vice President Investor Relations and corporate Affairs, you may begin.

Laurie Park: Good morning, and thank you for joining us to discuss Endo Inc. 2nd quarter, 2024 financial results. Joining me on today's call is Paul Herringine, the Chairman of Endo's Board, Mark Bradley, Executive Vice President and CFO, and Patrick Berry, Executive Vice President and President, Global Commercial Operations.

Speaker Change: Good morning, and thank you for joining us to discuss <unk>, Inc. Second quarter 'twenty 'twenty four financial results.

Speaker Change: Joining me on today's call is Paul Herendeen, Chairman of Endo Sport, Mark Bradley Executive Vice President and CFO, and Patrick Berry Executive Vice President and President Global commercial operations.

Laurie Park: We have prepared a slide presentation to accompany today's webcast, and that full presentation, as well as other materials, are posted online in the Investor section at Endo.com. Additionally, later this morning, a copy of our prepared comments will also be posted online in the Investor section at Endo.com.

Speaker Change: We have prepared a slide presentation to accompany today's webcast and that full presentation as well as other materials are posted online in the investors section at Endo Dotcom. Additionally.

Speaker Change: Additionally, later this morning, a copy of our prepared comments will also be posted online in the investors section at Endo dotcom.

Laurie Park: I would like to remind you that any forward-looking statements made by management on today's call are covered under the U.S. Private Security's Litigation Reform Act of 1995, and are subject to significant changes, risks, and uncertainties described in our earnings release and other press releases, and in our SEC filings. Actual results may differ materially from those set forth in any forward-looking statements.

Speaker Change: I would like to remind you that any forward looking statements made by management on today's call are covered under the U S. Private Securities Litigation Reform Act of 1995 and are subject to significant changes risks and uncertainties described in our earnings release and other press releases and in our SEC.

Speaker Change: <unk>.

Speaker Change: Actual results may differ materially from those set forth in any forward looking statements.

Laurie Park: Substantially, all of Endo International's assets were acquired by Endo Inc. on April 23rd, 2024, pursuant to Endo International's plan of reorganization. The combined 2nd quarter financial results presented today reflect the effects of the plan of reorganization and the application of fresh start accounting. For clarification, during this call, all references to 2nd quarter 2024 results refer to combined Endo Inc. and Endo International PLC results. All references to 2nd quarter 2023 results refer to Endo International plc results. A complete discussion of the impact of the accounting adjustments related to the transactions contemplated in the plan of reorganization, which became effective on April 23rd, 2024.

Speaker Change: Substantially all of Endo International assets were acquired by Endo, Inc. On April 23rd 2024 pursuant to Endo International plan of reorganization.

Speaker Change: <unk> second quarter financial results presented today reflect the effects of the plan of reorganization and the application of fresh start accounting.

Speaker Change: For clarification during this call all references to second quarter 'twenty 'twenty four results refer to combined and Dell, Inc, and Endo International plc results.

Speaker Change: All references to second quarter 2023 results refer to Endo International plc results.

Speaker Change: A complete discussion of the impact of the accounting adjustments related to the transactions contemplated in the plan of reorganization, which became effective on April 23, 2020 for the application of fresh start accounting in accordance with accounting standards codification number 852 and related disclosures will be found in our form 10.

Laurie Park: The application of fresh start accounting in accordance with Accounting Standards Codification number 852 and related disclosures will be found in our Form 10-Qs to be filed in the coming days.

Speaker Change: 10-Q to be filed in the coming days.

Laurie Park: In addition, during the course of today's 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 may differ from non-GAAP financial measures used by other companies. Investors are encouraged to review Endo's current report on Form 8-K, furnished with the SEC, for Endo's reasons for including those non-GAAP financial measures in its earnings release and presentation. The reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are contained in our earnings release issued earlier this morning unless otherwise noted.

Speaker Change: In addition, during the course of today's 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 may differ from non-GAAP financial measures used by other companies.

Speaker Change: Investors are encouraged to review Endo is 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.

Paul: The reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are contained in our earnings release issued earlier. This morning, unless otherwise noted I would now like to turn the call over to Paul.

Paul Herringine: I would now like to turn the call over to Paul. Thank you, Laurie. I'll add my good morning to everyone and thank you for joining us.

Speaker Change: Thank you Laurie I'll add my good morning to everyone and thank you for joining US. This morning, we announced that the board is starting to search Randos next CEO and that Scott Hirsch. Another event. Those directors has been appointed interim CEO on behalf of the board I want to thank Blaise Coleman for his many contributions to endo. We appreciate a successful leadership.

Paul Herringine: This morning, we announced that the board is starting a search for Endo's next CEO and that Scott Hirsch, another of Endo's directors, has been appointed interim CEO. On behalf of the board, I want to thank Blaze Coleman for his many contributions to Endo. We appreciate his successful leadership of the company during very challenging times, and we wish him all the best. As a board, we believe there are significant opportunities on the horizon for Endo. With our instruction complete, the company is free from legacy overhangs and ready to enter its next phase. We sit here today with a clean balance sheet, modest leverage, a diversified portfolio, we're returning to growth, we're generating cash, and now we have the opportunities to deploy that cash for future growth.

Speaker Change: For the company during very challenging times, and we wish him all the best.

Speaker Change: As a board we believe there are significant opportunities on the horizon for Endo with our restructuring complete the company is free from legacy overhangs and ready to enter its next phase we sit here today with a clean balance sheet modest leverage a diversified portfolio. We're returning to growth, we're generating cash and now we have the opportunity to deploy.

Speaker Change: That cash for future growth.

Paul Herringine: The decision to transition to a new CEO at this time was to tailor leadership to our emerging growth opportunities. We'll be looking for a leader with the experience, skill set, and strategic vision to help us leverage our capabilities and pursue additional strategies to drive long-term value for stakeholders. The board will work with purpose to identify and appoint the best candidate to lead the company forward.

Speaker Change: Decision to transition to a new CEO at this time was to tailor leadership to our emerging growth opportunities.

Speaker Change: We'll be looking for a leader with the experience skill set and strategic vision to help us leverage our capabilities to pursue additional strategies to drive long term value for stakeholders.

Speaker Change: Our board will work with purpose to identify and appoint the best candidate to lead the company forward.

Paul Herringine: In the near term, we're confident that Scott is the right person to lead Endo through this transition. He brings deep operating and industry experience in this committed to advancing our mission. Scott was the CEO of Sulta Medical, where he led a growing global business through an expansion cycle. Prior to that, he was the chief business officer and president of the orthoderminal logics and aura farmer business segments at Bouch Health. I worked closely with Scott during his time at Bouch and can personally attest to his ability to adapt to situations quickly, make sound decisions, and keep his eye on the prize.

Scott: In the near term, we're confident that Scott is the right person to lead endo through this transition he brings deep operating and industry experience and is committed to advancing our mission Scott.

Scott: Scott was the CEO of Solta medical where he led a growing global business through expansion cycle. Prior to that he was the chief business officer, and president of the ortho Dermatologic and or a pharma business segments of Bausch health.

Speaker Change: I worked closely with Scott during his time at Bausch and can personally attest to his ability to adapt to situations quickly make sound decisions and keep his eye on the prize. We're all grateful that he has agreed to step in to lead endo, while the search is ongoing with that I'll turn the call over to Mark for a review of our financial results.

Paul Herringine: We're all grateful that he has agreed to step in and lead Endo while the search is ongoing.

Mark Bradley: With that, I'll turn the call over to Mark for a view of our financial results. Thank you, Paul. Starting on slide five, for those that are new or just returning to the Endo story, Endo Inc. is a purpose driven, diversified, specially Pharmaceutical company. We are a company that is inspired by our vision to help everyone we serve live their best life, united by our mission to develop and deliver life-enhancing products through focused execution and driven by our aspiration to be a vibrant growth company. We operate across four businesses for endopharmaceuticals, sterile injectables, generic pharmaceuticals, and international pharmaceuticals.

Mark: Thank you Paul starting on slide five for those that are new or just returning to the end of story and don't link is a purpose driven diversified specialty pharmaceutical company.

Mark: We're a company that is inspired by our vision to help everyone. We serve live their best life, United by our mission to develop and deliver life enhancing products through focused execution and driven by our aspiration to be a vibrant growth company, we operate across four businesses.

Mark: Pharmaceuticals, sterile injectables generic pharmaceuticals and international Pharmaceuticals.

Mark Bradley: Our growth businesses include our brand of pharmaceuticals and sterile injectable segments. We believe these businesses have the potential for sustainable revenue growth and profitability. We have invested and planned to continue investing in those businesses to drive profitable growth. Our established businesses include the generic pharmaceuticals and international pharmaceuticals segments. Our objective for those businesses has been to drive steady and stable future cash flows through targeted investments. We have a strong foundation consisting of a broad, durable, and diverse product portfolio with over 180 on-market commercial products across our businesses and an unencumbered balance sheet. Accordingly, we believe Endo is well positioned to achieve sustainable growth.

Mark: Our growth businesses include our branded pharmaceuticals, and sterile Injectables segment.

We believe these businesses have the potential for sustainable revenue growth and profitability.

Mark: We have invested and plan to continue investing in those businesses to drive profitable growth.

Mark: Our established businesses include the generic pharmaceuticals and international pharmaceutical segments.

Mark: Our objective for those businesses has been to drive steady and stable future cash flows through targeted investments.

Mark: We have a strong foundation, consisting of a broad durable and diverse product portfolio with over 180 on market commercial products across our businesses.

Mark: And an unencumbered balance sheet.

Mark: Accordingly, we believe endo was well positioned to achieve sustainable growth.

Mark Bradley: Turning to slide six, we have a growing and durable branded pharmaceuticals business anchored by Zyaflex. Zyaflex is a complex, enzyme-based pipeline and product growth platform. Patrick will cover the Zyaflex on-market indications and the potential new indications that are currently in clinical development later in the presentation. Our sterile injectables business is on the verge of returning to growth, fueled by a deep and differentiated pipeline of over 50 potential new products. The sterile injectables pipeline is concentrated in ready-to-use and other differentiated and durable products. The sterile injectables business is supported by scalable development and commercial capabilities and modernized manufacturing, including our new state-of-the-art indoor India facility and our expanded Rochester, Michigan facility.

Mark: Turning to slide six.

Mark: We have a growing and durable branded pharmaceuticals business anchored by XIAFLEX.

Mark: XIAFLEX is a complex enzyme based pipeline in a product growth platform.

Mark: Patricia will cover the XIAFLEX on market indications and the potential new indications that are currently in clinical development later in the presentation.

Patricia: Our sterile Injectables business is on the verge of returning to growth fueled by a deep and differentiated pipeline of over 50 potential new products.

Patricia: The sterile Injectables pipeline is concentrated in ready to use and other differentiated and durable products.

Patricia: The sterile Injectables business is supported by scalable development and commercial capabilities and modernized manufacturing.

Patricia: Including our new state of the Art Indoor India facility, and our expanded Rochester, Michigan facility.

Mark Bradley: Our generic pharmaceuticals business is focused on the US generic retail market and consists of a portfolio of products spanning several different technologies and dose reforms. Lastly, our small international business primarily consists of Paladin Pharma in Canada. This business is a scalable commercial model with portfolio growth that is fueled through product and licensing.

Patricia: Our generic pharmaceuticals business is focused on the U S generic retail market and consists of a portfolio of products spanning several different technologies and dosage forms.

Patricia: Lastly, our small international business, primarily consists of talent pharma in Canada. This business as a scalable commercial model with portfolio growth that has fueled through product and licensing.

Mark Bradley: Slide 8 includes a snapshot of our segment and total revenues and adjusted EBITDA. Second quarter 2024 total revenues of $447 million were better than we expected due to slightly higher revenues from our generic, branded, and international pharmaceutical segments. Compared to prior year, total revenues decreased by approximately 18%, primarily due to lower Verenacling and Dexlandzoepersol revenues in our generic segment.

Patricia: Slide eight includes a snapshot of our segment and total revenues and adjusted EBITDA.

Patricia: Second quarter 2020 for total revenues of $447 million were better than we expected due to slightly higher revenues from our generic branded and international pharmaceutical segment.

Patricia: Compared to prior year total revenues decreased by approximately 18%, primarily due to lower Varenicline and Dexlansoprazole revenues in our generics segment.

Mark Bradley: Second quarter 2023 also included a non-recurring payment of $33 million in our sterile injectable segment to settle a dispute related to a previous manufacturing and services agreement. Second quarter 2024 adjusted EBITDA of $176 million was better than internal expectations due to higher revenue and favorable product mix, as well as the timing of certain operating expenses. Adjusted EBITDA decreased compared to prior year, primarily due to lower revenues.

Patricia: Second quarter 2023 also included a nonrecurring payment of $33 million in our sterile Injectables segment to settle a dispute related to a previous manufacturing and services agreement.

Patricia: Second quarter 2024, adjusted EBITDA of $176 million was better than internal expectations due to higher revenue and favorable product mix.

Speaker Change: What was the timing of certain operating expenses.

Speaker Change: Adjusted EBITDA decreased compared to prior year, primarily due to lower revenues.

Patrick Berry: Let me now turn the call over to Patrick, who will cover our segment results. Thank you, Mark. Turning to slide 9, second quarter 2024, branded pharmaceuticals segment revenues were $225 million, an increase of 6% compared to prior year. ZFX revenues were $127 million in second quarter 2024, an increase of 8% compared to prior year. This increase was driven by higher average net selling price and underlying demand, which were in line with our expectations. As expected, ZFX volume increased 8% compared to the first quarter 2024 and decreased slightly compared to the second quarter 2023. As we have previously discussed, ZFX growth has been impacted by a number of disruptions over the last several years, most notably the COVID pandemic and the acquisition of our third-party specialty pharmacy provider in 2022.

Patrick: Let me now turn the call over to Patrick who will cover our segment results. Thank you Mark turning to slide nine second quarter 2020 for branded pharmaceutical segment revenues were $225 million, an increase of 6% compared to prior year XIAFLEX revenues were $127 million in second quarter 2024 and <unk>.

Kris: Kris of 8% compared to prior year. This increase was driven by higher average net selling price and underlying demand which were in line with our expectations as expected XIAFLEX volume increased 8% compared to first quarter 'twenty, 'twenty 2024, and decreased slightly compared to second quarter 2023 as we.

Speaker Change: I have previously discussed XIAFLEX growth has been impacted by a number of disruptions over the last several years, most notably the Covid pandemic and the acquisition of our third party specialty pharmacy provider in 2022, However, we believe that business conditions and utilization patterns for XIAFLEX began to normalize in the.

Patrick Berry: However, we believe that business conditions and utilization patterns for ZFX began to normalize in the second half of 2023, and these normalized patterns are reflected in our second half 2024 ZFX revenue expectations.

Speaker Change: Half of 2023, and these normalized patterns are reflected in our second half 2020 for XIAFLEX revenue expectations.

Patrick Berry: Non-ZFX specialty product revenues were $36 million in the second quarter 2024 compared to $48 million in the second quarter 2023. This decrease was driven by lower supply and L.A. volumes and the impact of generic competition on NASDAQ fall nasal spray. Established product revenues were $63 million in second quarter 2024 and an increase of 33% compared to prior year. This increase was primarily driven by a $10 million favorable change in non-recurring non-cash adjustments across both the second quarter of 2024 and the second quarter of 2023, related to previously discontinued products, coupled with increased revenues related to products that experienced temporary supply disruption in 2020.

Speaker Change: XIAFLEX specialty products revenues were $36 million in second quarter 2024, compared to $48 million in second quarter of 2023. This decrease was driven by lower <unk> L. A volumes and the impact of generic competition on ask Paul nasal spray.

Speaker Change: Stablish product revenues were $63 million in second quarter 2024, an increase of 33% compared to prior year. This increase was primarily driven by a $10 million favorable change and nonrecurring noncash adjustments across both the second quarter of 2024, and the second quarter of 2023.

Three related to previously discontinued products, coupled with increased revenues related to products that have experienced temporary supply disruption in 2023.

Patrick Berry: Moving to slide 10, Zyflex is the only FDA non-surgical therapeutic option for patients suffering from Peyronie's disease and Dupuytren's contracture. It is estimated that one in 10 men between the ages of 40 and 70 in the U.S. had Peyronie's disease, while more than 14 people in the U.S. have Dupertranscontracture. Despite these relatively high prevalence levels, both have low diagnosis and treatment rates. Given these conditions' prevalence, a small increase in diagnosis rates can have a significant impact on the IFX volumes.

Speaker Change: Moving to slide 10, XIAFLEX is the only FDA nonsurgical therapeutic option for patients suffering from payroll these disease and <unk> contracture. It is estimated that one in 10 men between the ages of 40 and 70 in the U S. Payroll these disease, while more than 14 people in the U S <unk> contracture.

Speaker Change: Despite these relatively high prevalence levels, both have low diagnosis and treatment rates given these conditions prevalent a small increase in diagnosis rates can have a significant impact on XIAFLEX volumes. Accordingly, a major element of our growth strategy is to continue to fund investments to drive sustainable increases in diagnosis rate.

Patrick Berry: Accordingly, a major element of our growth strategy is to continue to fund investments that drive sustainable increases in diagnosis rates for both Peyronie's disease and Dupuytren's contracture. To accomplish this, we are investing in direct consumer advertising for both indications, including unbranded condition awareness TV campaigns, accompanied by targeted, digital, and streaming branded advertising. Our direct consumer investment have proven effective at motivating potential patients to seek a diagnosis and inquire about a non-surgical treatment option. Additionally, our digital platforms make it easy to locate a trained specialist in their area.

<unk> for both payer aunis disease, and <unk> contracture to accomplish this we are investing in direct to consumer advertising for both indications, including unbranded condition awareness TV campaigns, accompanied by targeted digital and streaming branded advertising or direct to consumer investments have proven effective at motivating.

Speaker Change: Central patients to seek a diagnosis and inquire about a nonsurgical treatment option.

Speaker Change: Additionally, our digital platforms make it easy to locate a trained specialist in their area.

Patrick Berry: In addition to integrated consumer activation strategies, we are also focused on the healthcare provider experience. We believe that a high-touch provider approach focused on education and a seamless XIFX acquisition and user experience will increase physician loyalty and will support growing patient demand. We are pleased with XIFX performance today, which is on track with our expectations.

Speaker Change: In addition to integrated consumer activation strategies. We are also focused on the health care provider experience, we believe that our high touch provider approach focused on education, and a seamless XIAFLEX acquisition and user experience will increase physician loyalty and will support growing patient demand. We are pleased with zeiss.

Speaker Change: Flex performance today, which is on track with our expectations.

Patrick Berry: Moving to slide 11, as part of our consumer activation strategy, in June, we launched an unbranded Dupertranscontracture campaign called Simple Reminders. The campaign is focused on emboldening patients living with Dupuytren's contracture to take charge of their own health and provide five simple reminders to help them ask for a non-surgical treatment they feel is right for them. The campaign builds on the awareness from prior campaigns and includes broadcast, streaming, and online TV, along with a full digital ecosystem.

Speaker Change: Moving to slide 11, as part of our consumer activation strategy in June we launched an unbranded <unk> contracture campaign called simple reminders. The campaign is focused on emboldening patients living with <unk> contracture to take charge of their own health and provides five simple reminders to help them ask.

Speaker Change: For a non surgical treatment. They feel is right for them. The campaign builds on the awareness from prior campaigns and includes broadcast streaming and online TV along with a full digital ecosystem.

Patrick Berry: Slide 12 provides the information related to the overall durability of XIFX, including its robust patent estate, which includes indication-specific patents and patents not limited by indication. We believe that our pending indication-specific patents for additional XIFX indications and development would extend into the 2040s once issued. As such, we believe there will be a significant period of intellectual property protection for those indications based on anticipated launch dates. With respect to XIFX patents that are not indication-specific, we have issued patents extending to the late 2030s, including patents that we believe cover recombinant biosimilars of XIFX through September of 2033.

Speaker Change: Slide 12 provides the information related to the overall durability of XIAFLEX, including its robust patent estate, which includes indication specific patents and patents not limited by indication, we believe that our pending indication specific patents for additional XIAFLEX indications in development would extend into the 20 <unk>.

Speaker Change: Once issued as such we believe there will be a significant period of intellectual property protection for those indications based on anticipated launch dates with.

Speaker Change: With respect to XIAFLEX patents that are not indication specific who have issued patents extending to the late 2000, <unk>, including patents that we believe cover recombinant biosimilars of XIAFLEX through September 2033.

Patrick Berry: For context, a non-recombinant biosimilar would require the use of our Clostridium histolyticum cell line, which is physically held under lock and key. A recombinant biosimilar is a biosimilar derived from a different vector or host than our cell line and is a more common pathway in biologics development. That said, it is important to note that the recombinant pathway requires large investments. It involves highly technical chemistry, manufacture, and controls work and has an expansive timeline due to required clinical trials. We are not aware of any approved or filed collagenase or enzyme-based biosimilar products in the U.S. Based on the foregoing, we feel confident in the strengths and robustness of our Zyflex patent estate and the long-term durability of Zyflex.

For context, a non recombinant biosimilar would require the use of our clostridium histological cell line, which is physically held under lock and key.

Speaker Change: They were commented Biosimilar is a biosimilar derived from a different vector or host in our seller and is a more common pathway in biologics development.

Speaker Change: That said it is important to note that the recombinant pathway requires large investments involves highly technical chemistry manufacture and controls work and has an expansive timeline due to required clinical trials.

Speaker Change: We are not aware of any approved or filed collagenase or enzyme based biosimilar products in the U S based.

Speaker Change: Based on the foregoing, we feel confident in the strength and robustness of our XIAFLEX patent estate in the long term durability of XIAFLEX.

Patrick Berry: Turning to slide 13, in addition to the growth potential for Zyflex on-market indications, we have the potential to drive significant, long-term, sustainable Zyflex growth by expanding into new indications. Currently, we have plantar fibromatosis in Phase III and plantar fasciitis in Phase II development. During the second quarter of 2024, we completed patient recruitment for plantar fasciitis ahead of schedule and now expect to report top-line results later this year. Assuming positive Phase II results, we believe we could potentially begin Phase III development in 2025.

Speaker Change: Turning to slide 13 in addition to the growth potential for XIAFLEX on market indications, we have the potential to drive significant long term sustainable XIAFLEX growth by expanding into new indications. Currently we our plants are fibromatosis in phase III and plants are fasciitis in phase II development during the <unk>.

Speaker Change: Quarter 2024, we completed patient recruitment for plants are fasciitis ahead of schedule and now expect to report top line results. Later this year, assuming positive phase II results. We believe we could potentially begin phase III development in 2025.

Patrick Berry: Beyond those two potential indications, we have an early-stage opportunity for arthrophibrosis in the knee and are pursuing several other interesting potential indications in which to build up of excess collagen in place a key role. We are very excited by the opportunity to bring potential innovation to these orthopedic areas.

Speaker Change: Beyond those two potential indications, we have an early stage opportunity for our throw fibrosis, Sydney and are pursuing several other interesting potential indications in which the buildup of excess college and plays a key role. We are very excited by the opportunity to bring these potentially to bring potential innovation to these orthopedic areas.

Patrick Berry: Moving to slide 14, our second quarter 2024 sterile injectables revenues were $91 million compared to $137 million in the prior year. This decrease was primarily driven by a $33 million non-recurring payment received from Nova Manufacturing and Services Agreement, as well as decreased vasistric revenues in second quarter 2024. These decreases were partially offset by the impact of revenues from new products launched in 2023.

Moving to slide 14, our second quarter 2020 for sterile Injectables revenues were $91 million compared to $137 million in the prior year. This decrease was primarily driven by a 33 million nonrecurring payment received from Novavax in second quarter 2023 to settle a dispute related to <unk>.

Many previous manufacturing and services agreement as well as decreased based district revenues in second quarter of 2024. These decreases were partially offset by the impact of revenues from new products launched in 2023.

Patrick Berry: Second quarter 2024 generic pharmaceutical segment revenues were $110 million, a decrease of 38% compared to prior year. This decrease was primarily due to competitive pressure across multiple products, including Verenaclin tablets and Dexon's Opus all delayed release capsule. This decrease was partially offset by increased revenues from lidocaine patch, the generic version of Lidoderm, which was driven by new business opportunities that began in first quarter 2024.

Speaker Change: Second quarter 2024 generic pharmaceutical segment revenues were $110 million, a decrease of 38% compared to prior year. This decrease was primarily due to competitive pressure across multiple products, including varenicline tablets and exxon's Elpers all delayed release capsule capsules. This decrease was partially offset.

Speaker Change: By increased revenues from lidocaine patch the generic version of <unk>, which was driven by new business opportunities that began in first quarter 2024.

Patrick Berry: Second quarter 2024 revenues from the international pharmaceutical segment were approximately $21 million, an increase of 10% compared to the prior year. This increase was driven by increased volumes across multiple products.

Speaker Change: Second quarter 2024 revenues from the international pharmaceutical segment were approximately $21 million, an increase of 10% compared to prior year. This increase was driven by increased volumes across multiple products.

Patrick Berry: Turning to slide 15, our deep sterile injectable pipeline is a critical element of our gross strategy. Over the past several years, we have evolved and expanded our pipeline and our manufacturing capabilities to support the introduction of products meeting the evolving needs of our customers. We currently have over 50 sterile injectable projects in our product pipeline with a focus on RTEUs and other more durable products. RTEUs presentations, reduced preparation time, minimized preparation air, and streamlined inventory management. Approximately 60% of our sterile injectable pipeline are RTEUs and other durable products. Year to date we have launched engineering products and looked to launch three to four sterile injectable products in the second half of the year.

Speaker Change: Turning to slide 15, our deep sterile injectable pipeline is a critical element of our growth strategy over the past several years, we have evolved and expanded our pipeline and our manufacturing capabilities to support the introduction of products meeting the evolving needs of our customers. We currently have over 50 sterile injectable projects in our product pie.

Klein: Klein with a focus on <unk> and other more durable products are to your presentations reduce preparation time minimize preparation air and streamline inventory management, approximately 60% of our sterile injectable pipeline are to you and other durable products.

Klein: Year to date, we have launched new generic products and look to launch three to four sterile injectable products in the second half of the year.

Patrick Berry: I would like to note that we have experienced some slippage on our pipeline project timelines, including with respect to certain products previously expected launch in 2024 and 2025. These delays are primarily related to manufacturing readiness delays by certain of our external contract manufacturers and challenges with obtaining qualified API supply from our third-party providers.

Speaker Change: I would like to note that we have experienced some slippage on our pipeline project timelines, including with respect to certain products previously expected to launch in 2024 and 2025.

Speaker Change: These delays are primarily related to manufacturing readiness delays by certain of our external contract manufacturers and challenges with obtaining qualified API supply from our third party providers.

Mark Bradley: With that, let me turn the call back to Mark, who will take us through the rest of the financial discussion. Thank you, Patrick. On slide 16, you will see a summary of our enterprise financial results for the second quarter of 2024 combined compared to the prior year. As I previously mentioned, second quarter of 2024 to the revenues decreased by approximately 18%, primarily due to lower revenue as both adjusted growth margin as a percentage of revenues and adjusted operating expenses in the second quarter of 2024, we are comparable to the number of sterile injectables segment recorded in the second quarter of 2023.

Speaker Change: With that let me turn the call back to Mark who will take us through the rest of the financial discussion.

Mark: Thank you Patrick on Slide 16, you will see a summary of our enterprise financial results for the second quarter 2024, combined compared to prior year.

Mark: As I previously mentioned second quarter 2024, total revenues decreased by approximately 18% primarily due to lower second quarter 2020 for Varenicline and Dexlansoprazole revenues in our generics segment.

Mark: Coupled with the nonrecurring payment of $33 million in our sterile Injectables segment recorded in the second quarter of 2023.

Mark Bradley: Second quarter of 2024 adjusted EBITDA decreased compared to prior year, primarily due to lower revenues, as both adjusted growth margin as a percentage of revenues and adjusted operating expenses in the second quarter of 2024 were comparable to the second quarter of 2023. Second quarter of 2024 adjusted net income was approximately $105 million compared to approximately $231 million in the second quarter of 2023. This decrease was primarily due to the decrease in adjusted EBITDA, coupled with an increase in interest and income tax expenses compared to prior year. We ended the second quarter of 2024 with a net debt to adjusted EBITDA ratio of approximately 3.5 times.

Mark: Second quarter 2024, adjusted EBITDA decreased compared to prior year, primarily due to lower revenues as both adjusted gross margin as a percentage of revenues and adjusted operating expenses in the second quarter 2024 were comparable to the second quarter 2023.

Mark: Second quarter 2024, adjusted net income was approximately $105 million compared to approximately $231 million in the second quarter 2023.

Mark: This decrease was primarily due to the decrease in adjusted EBITDA, coupled with an increase in interest and income tax expenses compared to prior year.

Mark: We ended the second quarter 2024, with a net debt to adjusted EBITDA ratio of approximately three five times.

Mark Bradley: Advancing to slide 17, based on our second quarter performance, we are raising our full year 2024 financial expectations for revenues and adjusted EBITDA.

Advancing to slide 17 based on our second quarter performance, we are raising our full year 2024 financial expectations for revenues and adjusted EBITDA.

Mark Bradley: As a reminder, full year 2024 financial results include the results of Endo-International PLC from January 1 through April 22 and the results of Endo-Inc from January 1 through December 31. We now expect 2024 revenues to be between $1.72 billion and $1.78 billion, and adjusted EBITDA to be between $635 million and $655 million. We are a highly cash generative business and continue to expect a high EBITDA to pre-tax, unlevered free cash flow conversion ratio. Adjusted growth margin for the full year is expected to remain unchanged at approximately 67% of total revenues. Second half 2024 goes margin as a percentage of total revenues is expected to be slightly lower than the first half 2024 due to the expected shift in product mix.

Mark: As a reminder, full year 2024 financial results include the results of Endo International plc from January one through April 20 <unk>.

Mark: And the results of <unk>, Inc. From January one through December 31.

Mark: We now expect 2020 for revenues to be between $1 72 billion and $1 78 billion and adjusted EBITDA to be between $635 million and $655 million.

Mark: We are a highly cash generative business and continue to expect a high EBITDA to pretax unlevered free cash flow conversion ratio.

Mark: Adjusted gross margin for the full year is expected to remain unchanged at approximately 67% of total revenues.

Mark: Second half 2020 for gross margin as a percentage of total revenues is expected to be slightly lower than the first half of 2024 due to the expected shift in product mix, primarily within the sterile and generics segments, coupled with certain credits and other adjustments that benefited the first half that are not expected to occur in the.

Mark Bradley: Primarily within the sterile and generic segments, coupled with certain credits and other adjustments that benefit at the first half that are not expected to occur in the second half of 2024. Adjusted operating expenses for the full year are now expected to be between $595 million and $615 million.

Mark: Half of 2024.

Mark: Adjusted operating expenses for the full year are now expected to be between $595 million and $615 million.

Mark Bradley: The increase from prior expectations is primarily driven by higher expected depreciation resulting from the step-up in certain asset values following the application of fresh start accounting.

Mark: The increase from prior expectations is primarily driven by higher expected depreciation, resulting from the step up in certain asset values. Following the application of fresh start accounting.

Mark Bradley: Moving to slide 18 and wrapping up the financial discussion, in light of the recent developments related to the expected timing of certain new product launches that Patrick mentioned and that were included in the long-term projections disclosed by Endo International PLC in connection with its Chapter 11 process. We are providing expected 2025 growth rates for total and segment level revenues and total adjusted EBITDA. While we expect a return to growth in 2025, the delayed product launches have impacted our previously anticipated growth rates, primarily relating to the sterile injectable segment. Specifically, we now expect the 2025 growth rate for total revenues to be in the low single digits, and the 2025 growth rate for adjusted EBITDA to be in the mid to high single digits compared to the midpoint of our 2024 financial expectations.

Speaker Change: Moving to slide 18, and wrapping up the financial discussion in light of the recent developments related to the expected timing of certain new product launches that Patrick mentioned and that were included in the long term projections disclosed by Endo International plc in connection with its chapter 11 process, we are providing expected 2020.

Speaker Change: <unk> growth rates for total and segment level revenues and total adjusted EBITDA.

Speaker Change: While we expect a return to growth in 2025, the delayed product launches has impacted our previously anticipated growth rates, primarily relating to the sterile Injectables segment.

Specifically, we now expect the 2025 growth rate for total revenues to be in the low single digits and the 2025 growth rate for adjusted EBITDA to be in the mid to high single digits compared to the midpoint of our 2024 financial expectations.

Mark Bradley: At the segment level, we now expect the 2025 growth rates for both branded pharmaceuticals and sterile injectables revenues to be in the low to mid single digits compared to the midpoint of our 2024 guidance. In addition, we expect generic pharmaceuticals revenues to be flat to decline in the mid-single-digit percentage range, and international pharmaceuticals revenues to be flat compared to the midpoint of our 2024 guidance.

Speaker Change: At the segment level, we now expect the 2025 growth rates for both branded pharmaceuticals, and sterile injectables revenues to be in the low to mid single digits compared to the midpoint of our 2020 guidance.

Speaker Change: In addition, we expect generic pharmaceuticals revenues to be flat to decline in the mid single digit percentage range and international pharmaceuticals revenues to be flat compared to the midpoint of our 2020 for guidance.

Mark Bradley: I would like to emphasize that the guidance being provided is forward-looking information and it updates and supersedes all prior forward-looking information provided by Endo International PLC or Endo Inc. We plan to provide more detailed 2025 financial guidance in the normal course in early 2025.

Speaker Change: I would like to emphasize that the guidance being provided is forward looking information and it updates and supersedes all prior forward looking information provided by Endo International plc or Endo, Inc.

Speaker Change: We plan to provide more detailed 2025 financial guidance in the normal course in early 2025.

Paul Herringine: Before opening the call to any questions, I would like to turn the call back over to Paul for a few closing remarks. Thank you, Mark. As I shared in my earlier comments, Endo has made considerable progress in the strong position to execute on a growth strategy that delivers long-term value for stakeholders.

Speaker Change: Before opening the call to any questions I would like to turn the call back over to Paul for a few closing remarks.

Paul: Thank you Mark yes, as I shared my earlier comments <unk> made considerable progress in is in a strong position to execute on our growth strategy to deliver long term value for stakeholders. I also want to take the time to thank all endo team members for their passion and commitment to serving our customers and their patients we have a great team here at Endo.

Paul Herringine: I also want to take the time to thank all Endo team members for their passion and commitment to serving our customers and their patients. We have a great team here at Endo.

Laurie Park: I'll turn to Paul back over to Laurie to manage questions.

Paul: I will turn the call back over to Lori to manage questions. Thank you Paul Joe Allison we have the first question.

Laurie Park: Thank you, Paul. So, Al, can we have the first question for you? Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press star followed by the one on your touch-tone phone. You will hear prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speaker phone, please let the handset before pressing any keys. One moment, please. Feel your first question.

Paul: Sure.

Speaker Change: Thank you, ladies and gentlemen, well now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone you'll hear from that your hand has been raised should you wish to decline from the polling process. Please press star followed by the two if you are using a speaker phone. Please lift the handset before pressing any Keith one moment. Please for your first.

Operator: Your first question comes from Nutrishi.

Paul: <unk>.

Nutrition: Your first question comes from nutrition.

Nutrishi: A week with JP Morgan. Your line is now open. Hi, thank you for taking my questions. Paul, I greatly hear your voice. First on the, you did elaborate on the timing issue with regards to 2025. Your 2024 EBITDA targets are within the plan that you have filed in January. Obviously, your 25 is not, and you noticed some timing issues. I was just hoping that you could further elaborate on what these timing issues are. Are they CRLs? How long do you think that these timing issues will continue to affect the results? And more importantly, do you expect the delays in 25 to completely shift into 26?

Nutrition: <unk> with JP Morgan Your line is now open.

Nutrition: Alright, Thank you for taking my questions and follow up great to hear your voice.

Speaker Change: First on the <unk> did elaborate on the timing issue with regards to 2025. Your 2024 EBITDA targets are within the plan that you filed in January and obviously, you're 25 is not and you noted some timing issue. So I was just hoping that you could further elaborate on what these timing issues are.

Speaker Change: Sure <unk>, how long do you think that these timing issues will continue to impact the results and more importantly.

Speaker Change: Do you expect the delays on 25 G completely shifted to 26, what is your visibility around these.

Nutrishi: What is your visibility around these issues?

Speaker Change: Issues.

Paul Herringine: Yes, thank you for the question. So, as Patrick mentioned, we were experiencing delays across a number of our sterile injectable products, which is impacting our expectations for 2025. And these are; the delays are primarily impacting 2024 and 2025 sterile injectable launches, but there are other products in the portfolio that are also experiencing some delays. And as Patrick mentioned, those delays are primarily related to issues with third parties, specifically related to the sourcing of API and also manufacturing readiness by certain of our CMO partners. We are actively working with those partners to address the root causes.

Yes. Thank you for the question so as Patrick mentioned.

Speaker Change: We are experiencing delays across a number of our sterile injectable products, which is impacting our expectations for 2025.

Speaker Change: And these are the delays are primarily impacting 2024, and 2025 sterile injectable launches, but there are other products in the portfolio that are also experiencing some delays and as Patrick mentioned those delays were primarily related to issues with third parties, specifically related to the sourcing of.

Patrick: Of API and also manufacturing readiness by certain of our CMO partners.

Patrick: We are actively working with those partners.

Patrick: To address.

Patrick: The root causes.

Paul Herringine: We have people on site at many of these partners to address and work with the partners to address these root causes. And we'll continue to do that in the normal course going forward.

Speaker Change: Have people.

Speaker Change: On site at many of these partners to address and work with the partners to address. These these root causes and we will continue to do that in the normal course going forward.

Operator: Thank you for standing by. Welcome to the earnings conference call for Endo Inc. This call has been recorded. If you have any objections, you may disconnect at this time.

Operator: Thank you for standing by.

Operator: Welcome to the earnings conference call for Endo Inc. This call has been recorded. If you have any objections, you may disconnect at this time.

Nutrishi: Okay, great. And with regards to just free cash flow, obviously you've been on a pretty strong trend for free cash flow. Any thoughts or expectations for next year?

Speaker Change: Okay great.

Speaker Change: With regards to just free cash flow, obviously, your <unk> been on a pretty strong trend for free cash flow any any thoughts or expectations for next year.

Laurie Park: I would now like to turn the call over to Laurie Park, Senior Vice President, Investor Relations and Corporate Affairs. You may begin.

Paul Herringine: We're not providing free cash flow guidance for 2025. However, as I mentioned in my prepared remarks, we do expect and have experienced recently a fairly high cash conversion ratio, free cash flow conversion ratio relative to EBITDA. And we would expect that to continue going forward.

Speaker Change: We're not providing free cash flow guidance for 2025, However, as I mentioned in my prepared remarks, we do expect.

Laurie Park: 2nd quarter, 2024 financial results. Joining me on today's call is Paul Herringine, the Chairman of Endo's Board, Mark Bradley, Executive Vice President and CFO, and Patrick Berry, Executive Vice President and President Global Commercial Operations.

Speaker Change: And have experienced recently are fairly high.

Speaker Change: Cash conversion ratio of free cash flow conversion ratio relative to EBITDA, and we would expect that to continue going forward.

Nutrishi: Great. Thank you.

Speaker Change: Great. Thank you.

Speaker Change: Okay.

Operator: Next question, please. Ladies and gentlemen, as a reminder, should you have a question, please press star one.

Speaker Change: Next question please.

Laurie Park: We have prepared a slide presentation to accompany today's webcast, and that full presentation, as well as other materials are posted online in the Investor section at Endo.com. Additionally, later this morning, a copy of our prepared comments will also be posted online in the Investor section at Endo.com. I would like to remind you that any forward-looking statements made by management on today's call are covered under the U.S. Private Security's Litigation Reform Act of 1995, and are subject to significant changes, risks and uncertainties described in our earnings release and other press releases, and in our SEC filings. Actual results may differ materially from those set forth in any forward-looking statements.

Speaker Change: Ladies and gentlemen, as a reminder, should you have a question. Please press star one.

Speaker Change: Yes.

Operator: There are no further questions at this time.

Speaker Change: There are no further questions at this time I will now turn the call over to Laura for closing remarks.

Laurie Park: I will now turn the call over to Lord for closing remarks. Thank you, everyone, for joining us this morning. We look forward to providing you with updates as we move forward. And we hope everyone has a great day. Have a good way.

Laura: Thank you everyone for joining us. This morning, we look forward to providing you with updates as we move forward and we hope everyone has a great day have a good way.

Laura: <unk>.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating in that. Please disconnect your lines.

Speaker Change: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.

Laurie Park: Substantially, all of Endo International's assets were acquired by Endo Inc, on April 23rd, 2024, pursuant to Endo International's plan of reorganization. The combined 2nd quarter financial results presented today reflect the effects of the plan of reorganization and the application of fresh start accounting. For clarification, during this call, all references to 2nd quarter 2024 results refer to combined Endo Inc, and Endo International PLC results. All references to 2nd quarter 2023 results refer to Endo International PLC results.

Speaker Change: Yes.

Speaker Change: Yeah.

Laurie Park: A complete discussion of the impact of the accounting adjustments related to the transactions contemplated in the plan of reorganization, which became effective on April 23rd, 2024. The application of fresh start accounting in accordance with accounting standards codification number 852 and related disclosures will be found in our form 10Qs to be filed in the coming days. In addition, during the course of today's call, we may refer to non-GAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States and may differ from non-GAP financial measures used by other companies.

Laurie Park: Investors are encouraged to review Endo's current report on form 8K, furnished with the SEC, for Endo's reasons for including those non-GAP financial measures in its earnings release and presentation. The reconciliations of non-GAP financial measures to the most directly comparable gap financial measures are contained in our earnings release issued earlier this morning unless otherwise noted.

Paul Herringine: I would now like to turn the call over to Paul. Thank you, Laurie. I'll add my good morning to everyone and thank you for joining us.

Paul Herringine: With our instruction complete, the company is free from legacy overhangs and ready to enter its next phase. We sit here today with a clean balance sheet, modest leverage, a diversified portfolio, we're returning to growth, we're generating cash, and now we have the opportunities to deploy that cash for future growth. The decision to transition to a new CEO at this time was to tailor leadership to our emerging growth opportunities. We'll be looking for a leader with the experience, skill set, and strategic vision to help us leverage our capabilities and pursue additional strategies to drive long-term value for stakeholders.

Paul Herringine: The board will work with purpose to identify and appoint the best candidate to lead the company forward. In the near term, we're confident that Scott is the right person to lead Endo through this transition. He brings deep operating and industry experience in this committed to advancing our mission. Scott was the CEO of Sulta Medical, where he led a growing global business through an expansion cycle. Prior to that, he was the chief business officer and president of the orthoderminal logics and aura farmer business segments at Bouch Health.

Paul Herringine: I worked closely with Scott during his time at Bouch and can personally attest to his ability to adapt to situations quickly, make sound decisions, and keep his eye on the prize. We're all grateful that he has agreed to step in and lead Endo while the search is ongoing.

Mark Bradley: With that, I'll turn the call over to Mark for a view of our financial results. Thank you, Paul.

Mark Bradley: Starting on slide five, for those that are new or just returning to the Endo story, Endo Inc, is a purpose driven, diversified, specially pharmaceutical company. We are a company that is inspired by our vision to help everyone we serve live their best life, united by our mission to develop and deliver life-enhancing products through focused execution and driven by our aspiration to be a vibrant growth company. We operate across four businesses for endopharmaceuticals, sterile injectables, generic pharmaceuticals, and international pharmaceuticals.

Mark Bradley: Our growth businesses include our brand of pharmaceuticals and sterile injectable segments. We believe these businesses have the potential for sustainable revenue growth and profitability. We have invested and planned to continue investing in those businesses to drive profitable growth. Our established businesses include the generic pharmaceuticals and international pharmaceuticals segments. Our objective for those businesses has been to drive steady and stable future cash flows through targeted investments. We have a strong foundation consisting of a broad, durable and diverse product portfolio with over 180 on-market commercial products across our businesses and an unencumbered balance sheet.

Mark Bradley: Our established businesses include the generic pharmaceuticals and international pharmaceuticals segments. Our objective for those businesses has been to drive steady and stable future cash flows through targeted investments. We have a strong foundation consisting of a broad, durable and diverse product portfolio with over 180 on-market commercial products across our businesses and an unencumbered balance sheet. Accordingly, we believe Endo is well-positioned to achieve sustainable growth.

Mark Bradley: Accordingly, we believe Endo is well-positioned to achieve sustainable growth.

Mark Bradley: Our sterile injectables business is on the verge of returning to growth fueled by a deep and differentiated pipeline of over 50 potential new products. The sterile injectables pipeline is concentrated in ready-to-use and other differentiated and durable products. The sterile injectables business is supported by scalable development and commercial capabilities and modernized manufacturing, including our new state-of-the-art indoor India facility and our expanded Rochester Michigan facility.

Mark Bradley: Slide 8 includes a snapshot of our segment and total revenues and adjusted EBITDA. Second quarter 2024 total revenues of $447 million were better than we expected to to slightly hire revenues from our generic, branded, and international pharmaceutical segments. Compared to prior year, total revenues decreased by approximately 18%, primarily due to lower verenacling and dexlandzoepersol revenues in our generic segment.

Patrick Berry: Let me now turn the call over to Patrick who will cover our segment results. Thank you, Mark. Turning to slide 9, second quarter 2024, branded pharmaceuticals segment revenues were $225 million and increase of 6% compared to prior year. ZFX revenues were $127 million in second quarter 2024 and increase of 8% compared to prior year. This increase was driven by higher average net selling price and underlying demand which were in line with our expectations.

Patrick Berry: As expected, ZFX volume increased 8% compared to first quarter 2024 and decreased slightly compared to second quarter 2023. As we have previously discussed, ZFX growth has been impacted by a number of disruptions over the last several years, most notably the COVID pandemic and the acquisition of our third-party specialty pharmacy provider in 2022. However, we believe that business conditions and utilization patterns for ZFX began to normalize in the second half of 2023 and these normalized patterns are reflected in our second half 2024 ZFX revenue expectations.

Patrick Berry: Non-ZFX specialty product revenues were $36 million in second quarter 2024 compared to $48 million in second quarter 2023. This decrease was driven by lower supply and L.A, volumes and the impact of generic competition on NASDAQ fall nasal spray. Established product revenues were $63 million in second quarter 2024 and increase of 33% compared to prior year. This increase was primarily driven by a $10 million favorable change in non-recurring non-cash adjustments across both the second quarter of 2024 and the second quarter of 2023, related to previously discontinued products coupled with increased revenues related to products that experienced temporary supply disruption in 2020.

Patrick Berry: Moving to slide 10, Zyflex is the only FDA non-surgical therapeutic option for patients suffering from Peyroni's disease and Dupertranscontracture. It is estimated that one in 10 men between the ages of 40 and 70 in the U.S, had Peyroni's disease, while more than 14 people in the U.S, have Dupertranscontracture. Despite these relatively high prevalence levels, both have low diagnosis and treatment rates. Given these conditions' prevalence, a small increase in diagnosis rates can have a significant impact on the IFX volumes.

Patrick Berry: Given these conditions' prevalence, a small increase in diagnosis rates can have a significant impact on the IFX volumes. Accordingly, a major element of our growth strategy is to continue to fund investments that drive sustainable increases in diagnosis rates for both Peyroni's disease and Dupertranscontracture. To accomplish this, we are investing in direct consumer advertising for both indications, including unbranded condition awareness TV campaigns, accompanied by targeted, digital and streaming branded advertising. Our direct consumer investment have proven effective at motivating potential patients to seek a diagnosis and inquire about a non-surgical treatment option. Additionally, our digital platforms make it easy to locate a trained specialist in their area.

Patrick Berry: Accordingly, a major element of our growth strategy is to continue to fund investments that drive sustainable increases in diagnosis rates for both Peyroni's disease and Dupertranscontracture. To accomplish this, we are investing in direct consumer advertising for both indications, including unbranded condition awareness TV campaigns, accompanied by targeted, digital and streaming branded advertising. Our direct consumer investment have proven effective at motivating potential patients to seek a diagnosis and inquire about a non-surgical treatment option.

Patrick Berry: Additionally, our digital platforms make it easy to locate a trained specialist in their area. In addition to integrated consumer activation strategies, we are also focused on the healthcare provider experience. We believe that a high-touch provider approach focused on education and a seamless XIFX acquisition and user experience will increase physician loyalty and will support growing patient demand. We are pleased with XIFX performance today, which is on track with our expectations.

Patrick Berry: Moving to slide 11, as part of our consumer activation strategy, in June, we launched an unbranded Dupertranscontracture campaign called Simple Reminders. The campaign is focused on emboldening patients living with Dupertranscontracture to take charge of their own health and provide five simple reminders to help them ask for a non-surgical treatment they feel is right for them. The campaign builds on the awareness from prior campaigns and includes broadcast, streaming, and online TV along with a full digital ecosystem.

Patrick Berry: Moving to slide 11, as part of our consumer activation strategy, in June, we launched an unbranded Dupertranscontracture campaign called Simple Reminders. The campaign is focused on emboldening patients living with Dupertranscontracture to take charge of their own health and provide five simple reminders to help them ask for a non-surgical treatment they feel is right for them.

Patrick Berry: The campaign builds on the awareness from prior campaigns and includes broadcast, streaming, and online TV along with a full digital ecosystem.

Patrick Berry: For context, a non-recombinant biosimilar would require the use of our clostridium histolideicum cell line, which is physically held under lock and key. A recombinant biosimilar is a biosimilar derived from a different vector or host than our cell line and is a more common pathway in biologics development. That said, it is important to note that the recombinant pathway requires large investments. It involves highly technical chemistry, manufacture and controls work and has an expansive timeline due to required clinical trials.

Patrick Berry: We are not aware of any approved or filed collagenase or enzyme-based biosomar products in the U.S. Based on the foregoing, we feel confident in the strengths and robustness of our Zyflex patent estate and the long-term durability of Zyflex.

Patrick Berry: Turning to slide 13, in addition to the growth potential for Zyflex on-market indications, we have the potential to drive significant, long-term, sustainable Zyflex growth by expanding into new indications. Currently, we have Plantar Fibromatosis in Phase III and Plantar Fasciitis in Phase II development. During the second quarter of 2024, we completed patient recruitment for Plantar Fasciitis ahead of schedule and now expect to report top-line results later this year. Assuming positive Phase II results, we believe we could potentially begin Phase III development in 2025. Beyond those two potential indications, we have an early-stage opportunity for arthrophibrosis in the knee and are pursuing several other interesting potential indications in which to build up of excess college in place a key role.

Patrick Berry: Turning to slide 13, in addition to the growth potential for Zyflex on-market indications, we have the potential to drive significant, long-term, sustainable Zyflex growth by expanding into new indications. Currently, we have Plantar Fibromatosis in Phase III and Plantar Fasciitis in Phase II development. During the second quarter of 2024, we completed patient recruitment for Plantar Fasciitis ahead of schedule and now expect to report top-line results later this year. Assuming positive Phase II results, we believe we could potentially begin Phase III development in 2025.

Patrick Berry: Beyond those two potential indications, we have an early-stage opportunity for arthrophibrosis in the knee and are pursuing several other interesting potential indications in which to build up of excess college in place a key role. We are very excited by the opportunity to bring potential innovation to these orthopedic areas.

Patrick Berry: We are very excited by the opportunity to bring potential innovation to these orthopedic areas.

Patrick Berry: Moving to slide 14, our second quarter 2024 sterile injectables revenues were $91 million compared to $137 million in the prior year.

Patrick Berry: This decrease was primarily driven by a $33 million non-recurring payment received from Nova Manufacturing and Services Agreement, as well as decreased vasistric revenues in second quarter 2024. These decreases were partially offset by the impact of revenues from new products launched in 2023.

Patrick Berry: Second quarter 2024 generic pharmaceutical segment revenues were $110 million, a decrease of 38% compared to prior year. This decrease was primarily due to competitive pressure across multiple products, including Verenaclin tablets and Dexon's opus all delayed release capsule. This decrease was partially offset by increased revenues from lidocaine patch, the generic version of lidoderm, which was driven by new business opportunities that began in first quarter 2024.

Patrick Berry: Second quarter 2024 revenues from the international pharmaceutical segment were approximately $21 million, an increase of 10% compared to prior year. This increase was driven by increased volumes across multiple products.

Patrick Berry: Approximately 60% of our sterile injectable pipeline are RTEUs and other durable products, year to date we have launched engineering products and looked to launch three to four sterile injectable products in the second half of the year. I would like to note that we have experienced some slippage on our pipeline project timelines including with respect to certain products previously expected launch in 2024 and 2025. These delays are primarily related to manufacturing readiness delays by certain of our external contract manufacturers and challenges with obtaining qualified API supply from our third-party providers.

Patrick Berry: I would like to note that we have experienced some slippage on our pipeline project timelines including with respect to certain products previously expected launch in 2024 and 2025. These delays are primarily related to manufacturing readiness delays by certain of our external contract manufacturers and challenges with obtaining qualified API supply from our third-party providers.

Mark Bradley: With that, let me turn the call back to Mark who will take us through the rest of the financial discussion. Thank you Patrick.

Mark Bradley: On slide 16, you will see a summary of our enterprise financial results for the second quarter of 2024 combined compared to prior year. As I previously mentioned, second quarter of 2024 to the revenues decreased by approximately 18%, primarily due to lower revenue as both adjusted growth margin as a percentage of revenues and adjusted operating expenses in the second quarter of 2024, we are comparable to the number of sterile injectables segment recorded in the second quarter of 2023.

Mark Bradley: Second quarter of 2024 adjusted EBITDA decreased compared to prior year, primarily due to lower revenues as both adjusted growth margin as a percentage of revenues and adjusted operating expenses in the second quarter of 2024 were comparable to the second quarter of 2023.

Mark Bradley: Second quarter of 2024 adjusted net income was approximately $105 million compared to approximately $231 million in the second quarter of 2023. This decrease was primarily due to the decrease in adjusted EBITDA coupled with an increase in interest and income tax expenses compared to prior year. We ended the second quarter of 2024 with a net debt to adjusted EBITDA ratio of approximately 3.5 times.

Mark Bradley: Advancing to slide 17 based on our second quarter performance, we are raising our full year 2024 financial expectations for revenues and adjusted EBITDA. As a reminder, full year 2024 financial results include the results of endo-international PLC from January 1 through April 22 and the results of endo-inc from January 1 through December 31. We now expect 2024 revenues to be between $1.72 billion and $1.78 billion and adjusted EBITDA to be between $635 million and $655 million.

Mark Bradley: We are a highly cash generative business and continue to expect a high EBITDA to pre-tax, unlevered free cash flow conversion ratio. Adjusted growth margin for the full year is expected to remain unchanged at approximately 67% of total revenues. Second half 2024 goes margin as a percentage of total revenues is expected to be slightly lower than the first half 2024 due to the expected shift in product mix. Primarily within the sterile and generic segments, coupled with certain credits and other adjustments that benefit at the first half that are not expected to occur in the second half of 2024.

Mark Bradley: Adjusted operating expenses for the full year are now expected to be between $595 million and $615 million. The increase from prior expectations is primarily driven by higher expected depreciation resulting from the step-up in certain asset values following the application of fresh start accounting.

Mark Bradley: Moving to slide 18 and wrapping up the financial discussion, in light of the recent developments related to the expected timing of certain new product launches that Patrick mentioned and that were included in the long-term projections disclosed by Endo International PLC in connection with its chapter 11 process. We are providing expected 2025 growth rates for total and segment level revenues and total adjusted EBITDA. While we expect a return to growth in 2025, the delayed product launches have impacted our previously anticipated growth rates, primarily relating to the sterile injectable segment.

Mark Bradley: Specifically, we now expect the 2025 growth rate for total revenues to be in the low single digits and the 2025 growth rate for adjusted EBITDA to be in the mid to high single digits compared to the midpoint of our 2024 financial expectations. At the segment level, we now expect the 2025 growth rates for both branded pharmaceuticals and sterile injectables revenues to be in the low to mid single digits compared to the midpoint of our 2024 guidance. In addition, we expect generic pharmaceuticals revenues to be flat to decline in the mid single digit percentage range and international pharmaceuticals revenues to be flat compared to the midpoint of our 2024 guidance.

Mark Bradley: I would like to emphasize that the guidance being provided is forward looking information and it updates and supersedes all prior forward looking information provided by Endo International PLC or Endo Inc. We plan to provide more detailed 2025 financial guidance in the normal course in early 2025.

Mark Bradley: We plan to provide more detailed 2025 financial guidance in the normal course in early 2025.

Paul Herringine: I also want to take the time to thank all Endo team members for their passion and commitment to serving our customers and their patients. We have a great team here at Endo.

Laurie Park: I'll turn to Paul back over to Laurie to manage questions. Thank you, Paul.

Operator: So, Al, can we have the first question for you? Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press star followed by the one on your touch tone phone. You will hear prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speaker phone, please let the hand set before pressing any keys. One moment, please feel your first question.

Operator: Your first question comes from Nutrishi.

Nutrishi: Are they CRLs? How long do you think that these timing issues will continue to affect the results? And more importantly, do you expect the delays in 25 to completely shift into 26? What is your visibility around these issues? Yes, thank you for the question. So, as Patrick mentioned, we were experiencing delays across a number of our sterile injectable products, which is impacting our expectations for 2025. And these are, the delays are primarily impacting 2024 and 2025 sterile injectable launches, but there are other products in the portfolio that are also experiencing some delays.

Paul Herringine: Yes, thank you for the question. So, as Patrick mentioned, we were experiencing delays across a number of our sterile injectable products, which is impacting our expectations for 2025. And these are, the delays are primarily impacting 2024 and 2025 sterile injectable launches, but there are other products in the portfolio that are also experiencing some delays. And as Patrick mentioned, those delays are primarily related to issues with third parties, specifically related to the sourcing of API and also manufacturing readiness by certain of our CMO partners.

Nutrishi: And as Patrick mentioned, those delays are primarily related to issues with third parties, specifically related to the sourcing of API and also manufacturing readiness by certain of our CMO partners. We are actively working with those partners to address the root causes. We have people on site at many of these partners to address and work with the partners to address these root causes. And we'll continue to do that in the normal course going forward.

Paul Herringine: We are actively working with those partners to address the root causes. We have people on site at many of these partners to address and work with the partners to address these root causes. And we'll continue to do that in the normal course going forward.

Nutrishi: Okay, great. And with regards to just free cash flow, obviously you've been on a pretty strong trend for free cash flow. Any thoughts or expectations for next year? We're not providing free cash flow guidance for 2025. However, as I mentioned in my prepared remarks, we do expect and have experienced recently a fairly high cash conversion ratio, free cash flow conversion ratio relative to EBITDA. And we would expect that to continue going forward. Great.

Paul Herringine: Okay, great. And with regards to just free cash flow, obviously you've been on a pretty strong trend for free cash flow. Any thoughts or expectations for next year? We're not providing free cash flow guidance for 2025. However, as I mentioned in my prepared remarks, we do expect and have experienced recently a fairly high cash conversion ratio, free cash flow conversion ratio relative to EBITDA. And we would expect that to continue going forward.

Nutrishi: Thank you.

Nutrishi: Great. Thank you.

Operator: Next question, please. Ladies and gentlemen, as a reminder, should you have a question, please press star one. There are no further questions at this time.

Operator: Next question, please. Ladies and gentlemen, as a reminder, should you have a question, please press star one.

Operator: There are no further questions at this time.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating in that. Please disconnect your lines.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating in that.

Operator: Please disconnect your lines.

Q2 2024 Endo Inc Earnings Call

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Earnings