ENDO HEALTH SOLUTIONS INC. - FORM 8-K - EX-99.3

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8-K - FORM 8-K - ENDO HEALTH SOLUTIONS INC.	d622983d8k.htm
EX-99.1 - EX-99.1 - ENDO HEALTH SOLUTIONS INC.	d622983dex991.htm
EX-99.2 - EX-99.2 - ENDO HEALTH SOLUTIONS INC.	d622983dex992.htm

Endo Health Solutions

3Q 2013 Earnings Report

and

A Compelling Combination:

Endo Health Solutions

and

Paladin Labs

November 5, 2013

Exhibit 99.3

Offer Language Disclosures

This

communication

not

intended

and

does

not

constitute

offer

sell

the

solicitation

offer

to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any

vote

approval

any

jurisdiction

pursuant

the

acquisition

otherwise,

nor

shall

there

any

sale,

issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities

shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act

of 1933, as amended.

Endo Forward Looking Statements; Non-GAAP Financial

Measures

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of

1995. Statements including words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plan,” “will,” “may,” “look

forward,” “intend,” “guidance,” “future” or similar expressions are forward-looking statements. These forward-looking statements may

include, without limitation, statements regarding the completion of the proposed transaction and other statements that are not historical

facts. Although Endo and Paladin each believe its forward-looking statements are reasonable, they are subject to important risks and

uncertainties. Those include, without limitation, the failure to receive, on a timely basis or otherwise, the required approvals by Endo and

Paladin shareholders, the Superior Court of Québec and applicable government and regulatory authorities, the terms of those approvals,

the risk that a condition to closing contemplated by the arrangement agreement may not be satisfied or waived, the inability to realize

expected synergies or cost savings or difficulties related to the integration of Endo and Paladin operations, the ability of the combined

company to retain and hire key personnel and maintain relationships with customers, suppliers or other business partners, or other

adverse events, changes in applicable laws or regulations, competition from other pharmaceutical companies, and other risks disclosed in

Endo and Paladin's public filings, any or all of which could cause actual results to differ materially from future results expressed, projected

or implied by the forward-looking statements. The forward-looking statements in this presentation are qualified by these risk factors. As a

result of these risks and uncertainties, the proposed transaction could be modified, restructured or not be completed, and actual results

and events may differ materially from the results and events contemplated in these forward-looking statements and from historical

results. Neither Endo nor Paladin assumes any obligation to publicly update any forward-looking statements, except as may be required

under applicable securities laws, or to comment on expectations of, or statements made by the other party or third parties in respect of

the proposed transaction. These forward-looking statements are not guarantees of future performance, given that they involve risks and

uncertainties. Investors should not assume that any lack of update to previously issued forward-looking statement constitutes a

reaffirmation of that statement. Continued reliance on forward-looking statements is at investors’ own risk.

This presentation may refer to non-GAAP financial measures, including adjusted diluted EPS, 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 Endo’s current report on Form 8-K filed with the SEC for Endo’s reasons for including thos

non-GAAP financial measures in this presentation. No reconciliation to GAAP amounts has been provided because the majority of the

amounts excluded from the comparable GAAP amounts are not currently possible to estimate with a reasonable degree of accuracy.

Today’s Agenda

Review of Third Quarter Accomplishments and 2013 Financial Results

Provide Updated 2013 Financial Guidance

Overview of Acquisition of Paladin Labs

•

Deal Rationale and Terms

•

Overview of Paladin Business

•

Endo Overview

•

New Endo Operating Model

•

Post Transaction Structure -

Domicile as an Irish plc

Q&A

Third Quarter 2013 Progress on Near-Term Priorities

Enhance operational focus on organic growth drivers

Pursuing accretive, value-creating M&A opportunities

•

Announced $225M acquisition of Boca Pharmacal

•

Expected to be immediately accretive to adjusted diluted EPS upon close

•

Value creating

Exploring strategic alternatives for HealthTronics

Sharpen R&D focus on near-term opportunities

•

Aveed PDUFA date set for February 28, 2014

•

Completed interim analysis of BEMA Buprenorphine

Strengthen talent and organization

•

Announced new CFO and COO, Pharmaceuticals

Q3 2013 Financial Performance

Q3 2012

Q3 2013

$1.28

$1.34

Adjusted Diluted EPS

$0.45

$0.33

Reported Diluted (GAAP) EPS

$750

$715

Revenues ($M)

Drive Organic Growth –

Qualitest

13%

11%

Total Revenue Growth vs.

Same Period 2012

YTD 2013

Q3 2013

Contribution of New Products

to YTD Growth

On-track for double-digit growth for

full-year

Demand driven growth led by new

products and oral contraceptives

Planning for efficient integration of

Boca Pharmacal

60%

Drive Organic Growth –

Endo Pharmaceuticals

Managing LIDODERM

LOE

Continuing to support ADF

technologies and assert IP covering

OPANA

Commercial support for OPANA

through specialty promotion

Focused on driving performance of

growth assets: SUPPRELIN

LA,

Voltaren

Gel and FORTESTA

Gel

-12%

10%

All Products

All Products (ex -

LIDODERM/OPANA

ER/Actavis Royalty)

Q3 2013 Revenue Growth

vs. Q3 2012

Drive Organic Growth –

AMS

-3%

-2%

YTD 2013

Q3 2013

Total Revenue Growth

vs. Same Period 2012

YTD 2013

Q3 2013

Total (ex-WH) Revenue Growth

vs. Same Period 2012

Continued strength in Men’s Health

Continued strength in GreenLight

supported by medical education

focused on GOLIATH results

Managing impact of market decline in

Women’s Health

Launch of MiniArc

Pro Single-

Incision Sling System for Treatment of

Female Stress Urinary Incontinence

Key drivers of turnaround efforts:

Implement

Lean

Operating

Model

–

Restructuring

Efforts

On-Track

Run-rate by mid-

2014E

2013E

$150

$325

$129

Target

Achieved to date

Reductions Announced Relative

to 2012A ($M)

Key actions taken:

All US headcount reductions

communicated on June 5

External spend reduction under

way

Ongoing focus on gaining

additional efficiencies

2013 Revised Financial Guidance

Measure

Previous 2013 Guidance

Revised 2013 Guidance

Revenues

$2.70B -

$2.80B

$2.75B -

$2.80B

Adjusted Gross

Margin

64% to

66%

Adjusted

Operating

Expenses

Adjusted Diluted EPS

$4.25 to $4.55

$4.60 to $4.75

Adjusted

Effective

Tax Rate

28.5% to 29.5%

28% to 28.5%

Diluted Shares

Outstanding

~117M

~118M

Capital Expenses

~$80M

Reduced by approximately $150

million, which represents a 15%

decline versus 2012

Reduced by approximately $150

million, which represents a 15%

decline versus 2012

64% to 66%

A Compelling Combination:

Endo Health Solutions

and

Paladin Labs

Transformational Opportunity

New Endo

Together creating a top tier specialty healthcare organization

Accelerates transformation into a leading specialty healthcare company

•

Creates international specialty pharmaceutical business

•

Immediately accretive to adjusted diluted earnings per share

•

Enhances cash flow and earnings sustainability while further diversifying revenues in

pharmaceutical segment

•

Product portfolio and geography complementary across companies

•

Highly diversified revenue streams in Canada

•

Access

attractive

emerging

markets

–

South

Africa

and

Latin

America

Focused operating model to maximize organic growth potential and

cash flow

generation supplemented with an active M&A agenda

•

Net debt to adjusted EBITDA 2.4x upon close with rapid de-levering

•

Platform for organic growth with broader options for future M&A

•

Operational and tax synergies resulting in at least $75M after tax savings annually

•

Improved cash conversion leading to enhanced capital structure

Transaction Benefits

beneficial financial platform to facilitate future growth

Domicile as an Irish plc--

Combination Creates Value

Paladin shareholders and employees

•

Monetize outstanding track record of Paladin value creation

•

Direct access to U.S. market and opportunity to accelerate growth through a larger

platform

•

Retain Paladin name for Canadian business

Strategic value for Endo

•

Expanded geographic footprint

•

Diversify revenue base

•

Advantaged platform for growth with future acquisitions

Financially sound

•

Stable and growing cash flows

•

Immediately accretive to adjusted EPS

•

Enables inversion transaction

•

Combined company steady state tax rate of approximately 20%

Proposed Transaction Terms

$77

(CAD)

per

represents

20%

premium

Paladin

Labs’

closing

price

$63.91 as of

November 4, 2013 and values the transaction at approximately $1.6 billion (USD)

Paladin shareholders will receive:

•

1.6331 shares of New Endo for each share of Paladin Labs owned

•

$1.16 (CAD) in cash for each share of Paladin Labs Paladin owned

–

Cash consideration to be received by Paladin Labs shareholders will be

increased if Endo’s average share price declines more than 7% during a pre-

specified period

•

1 share of Knight Therapeutics for each share of Paladin Labs owned

Pro Forma ownership

•

Endo Shareholders to own 77.5% of New Endo

•

Paladin Shareholders to own 22.5% of New Endo

Endo has secured committed financing that will be used to refinance certain elements of the

company’s existing indebtedness and the early repurchase of our convertible notes due April

2015, subject to market conditions

New Endo Structure and Trading

Endo management to lead combined company

•

Jonathan

Ross

Goodman

will

serve

advisor

the

Endo

Board

Directors

Existing management team will continue to operate Paladin

•

Mark Beaudet will continue as President, Paladin reporting to Rajiv De

Silva

New Endo will trade on NASDAQ

Overview of Paladin Labs

Paladin Labs is a specialty pharmaceutical company focused on acquiring or

in-licensing innovative pharmaceutical products for the Canadian and select

international markets

Strong diversified revenue growth

•

5 year revenue growth CAGR of 27%

•

Proven partner for the Canadian market

•

Demonstrated track record of profitable growth

•

Financial strength to drive expansion

Strong, near-term pipeline for growth

•

Solid late stage development pipeline including multiple products currently under

regulatory review

•

Zohydro

ER, Seralaxin

•

Over 15 products in development

Paladin Labs Structure

Company Information

Structure

Adjusted Revenue Mix (prop. consolidation)

Canada Rx, 55%

Litha, 25%

Base Paladin Intl,

Isodiagnostika,

Canada OTC, 11%

1996

Montreal, Canada

Jonathan

Ross

Goodman

Mark Beaudet

127

Paladin

Labs

Base Paladin

International

platforms

Canada

Other

Litha

Latin

America

Mexico

Brazil

Founded:

Headquarters:

Chairman:

Interim CEO:

Employees:

Source: Paladin Labs Inc. management presentation

Paladin’s Year-Over-Year Consecutive Growth ($ CAD)

REVENUE

EBITDA

*Adjusted refers to the proportional consolidation of Litha’s results effective July 2, 2012 and Paladin Mexico’s results effective January 1, 2013

Source: Paladin Labs Inc. Q2 2013 Investor Relations Presentation

YTD

$M CAD

100

120

140

160

180

2006

2007

2008

2009

2010

2011

2012*

2013*

Revenue

EBITDA

Adjusted* revenue for 2012 of $179.0 million, up 27%

over 2011

Guidance for 2013 of $190 million adjusted* revenues

Adjusted* revenues for Q2 2013 of $52.3 million, up

41% versus Q2 2012

9 consecutive years of record EBITDA with EBITDA

representing 39% of revenues in 2012

Adjusted* EBITDA for 2012 of $79.0 million for 2012,

up 17% versus 2011

Adjusted* EBITDA for Q2 2013 of $22.7, up 32% versus

Q2 2012

Aspire to be a leading specialty healthcare company

Continue our commitment to serving our patients and

customers

Participate in specialty areas offering above average growth

and favorable margins

Transform our operating model to maximize growth

potential and cash flow generation

Endo Overview

Allows Endo to maximize shareholder value by adapting to market

dynamics and portfolio changes

Recent Endo Restructuring Actions

•

Endo Pharmaceuticals

•

Qualitest

•

AMS

Drive organic growth through our core businesses

Implement lean operating model

Pursue accretive, value-creating acquisition opportunities

Explore strategic alternatives for HealthTronics

Sharpen R&D focus on near-term opportunities

Strengthen talent and organization

New Endo Operating Model

Lean, efficient operating model

Focused, de-risked R&D

Streamlined and diversified organization with quick decision making

Performance metrics aligned with shareholder interests

Agnostic on therapeutic areas, but with focus in specialty areas

M&A as an important component of building and growing the business long term

New Endo International Strategy

Utilize new operating structure to drive international

expansion and growth

Focus on emerging markets with above average growth

characteristics

Invest in areas with growing healthcare infrastructure and

expanding economies

•

Proven local operators, competency in core business functions

•

International management expertise

Expand presence in markets with favorable reimbursement

environment or a large cash pay component

Corporate Redomicile

Endo

Shareholders

Paladin Labs

Shareholders

Paladin Labs

Shareholders

Endo

(& Subs)

Paladin Labs

(& Subs)

Paladin Labs

(& Subs)

Irish New Endo

77.5%

22.5%

New Endo -

Capital Structure

Proforma capital structure will continue to support the long

term strategy of Endo

Secured committed financing that will be used to refinance

certain elements of existing indebtedness and the early

repurchase of our convertible notes due April 2015

Proforma leverage ratio is expected to be in line with

current levels

Immediate accretion and improved cash flow conversion will

lead to rapid de-levering

Approvals and Timing

Standard U.S. merger process for Endo

•

Proxy/registration statement

•

Majority approval by Endo shareholders

2/3 vote required by Paladin Labs shareholders

•

Customary regulatory approvals, including Investment Canada

•

Shareholders representing 34% of Paladin Labs outstanding shares

have agreed to vote in favor of deal

Expected closing 1

half 2014

Transaction not currently expected to be taxable to U.S.

shareholders of Endo, as structured, but will be taxable for

shareholders of Paladin

Accelerates transformation into a leading specialty healthcare company

•

Creates international specialty pharmaceutical business

•

Immediately accretive to adjusted diluted earnings per share

•

Enhances cash flow and earnings sustainability while further diversifying revenues in

pharmaceutical segment

•

Product portfolio and geography complementary across companies

•

Highly diversified revenue streams in Canada

•

Access

attractive

emerging

markets

–

South

Africa

and

Latin

America

Focused operating model to maximize organic growth potential and

cash flow

generation supplemented with an active M&A agenda

•

Net debt to adjusted EBITDA 2.4x upon close with rapid de-levering

•

Platform for organic growth with broader options for future M&A

•

Operational and tax synergies resulting in at least $75M after tax savings annually

•

Improved cash conversion leading to enhanced capital structure

Transaction Benefits

beneficial financial platform to facilitate future growth

Domicile as an Irish plc–

Endo Health Solutions

3Q 2013 Earnings Report

and

A Compelling Combination:

Endo Health Solutions

and

Paladin Labs

November 5, 2013

Appendix

Reconciliation of Non-GAAP Measures

Three Months Ended September 30, 2013 (unaudited)

Actual

Reported

(GAAP)

Adjustments

Non-GAAP

Adjusted

REVENUES

714,954

—

714,954

COSTS AND EXPENSES:

Cost of revenues

287,970

(46,105)

(1)

241,865

Selling, general and administrative

199,719

(30,069)

(2)

169,650

Research and development

38,080

(10,005)

(3)

28,075

Litigation-related and other contingencies

30,895

(30,895)

(4)

—

Asset impairment charges

38,807

(38,807)

(5)

—

Acquisition-related and integration items, net

2,207

(2,207)

(6)

—

OPERATING INCOME

117,276

158,088

275,364

INTEREST EXPENSE, NET

43,150

(5,704)

(7)

37,446

OTHER (INCOME) EXPENSE, NET

(17,292)

17,293

(8)

INCOME BEFORE INCOME TAX

91,418

146,499

237,917

INCOME TAX

36,803

26,008

(9)

62,811

CONSOLIDATED NET INCOME

54,615

120,491

175,106

Less: Net income attributable to noncontrolling interests

14,392

—

14,392

NET INCOME ATTRIBUTABLE TO ENDO HEALTH

SOLUTIONS INC.

40,223

120,491

160,714

DILUTED EARNINGS PER SHARE

0.33

1.34

DILUTED WEIGHTED AVERAGE SHARES

120,261

Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:

(1)

To exclude amortization of commercial intangible assets related to marketed products of $44,105 and accruals for

milestone payments to partners of $2,000.

(2)

To exclude certain separation benefits and other costs incurred in connection with continued efforts to enhance the

company's operations of $13,616, amortization of customer relationships of $2,748 and mesh litigation-related defense

costs of $13,705.

(3)

To exclude milestone payments to partners of $1,092 and certain separation benefits and other costs incurred in

connection with continued efforts to enhance the company's operations of $8,913.

(4)

To exclude the net impact of accruals related to mesh -related product liability.

(5)

To exclude asset impairment charges.

(6)

To exclude integration costs of $2,144 and a loss of $63 recorded to reflect the change in fair value of the contingent

consideration associated with the Qualitest acquisition.

(7)

To exclude additional interest expense as a result of the prior adoption of ASC 470 -20.

(8)

To exclude $(14,628) related to patent litigation settlement income and $(2,665) for a gain on sale of business.

To reflect the cash tax savings results from our acquisitions and the tax effect of the pre -tax adjustments above at applicable tax

rates.

Reconciliation of Non-GAAP Measures

Three Months Ended September 30, 2012 (unaudited)

Actual

Reported

(GAAP)

Adjustments

Non

-GAAP

Adjusted

REVENUES

750,482

—

750,482

COSTS AND EXPENSES:

Cost of revenues

294,267

(52,762)

(1)

241,505

Selling, general and administrative

210,446

(10,480)

(2)

199,966

Research and development

48,952

(6,421)

(3)

42,531

Patent litigation settlement, net

(46,238)

46,238

(4)

—

Litigation-related and other contingencies

82,600

(82,600)

(5)

—

Asset impairment charges

11,163

(11,163)

(6)

—

Acquisition-related and integration items, net

5,776

(5,776

(7)

—

OPERATING INCOME

143,516

122,964

266,480

INTEREST EXPENSE, NET

45,505

(8)

40,296

LOSS ON EXTINGUISHMENT OF DEBT

1,789

(1,789)

(9)

—

OTHER INCOME, NET

(250)

—

(250)

INCOME BEFORE INCOME TAX

96,472

129,962

226,434

INCOME TAX

28,287

30,678

(10)

58,965

CONSOLIDATED NET INCOME

68,185

99,284

167,469

Less: Net income attributable to noncontrolling interests

14,376

—

14,376

NET INCOME ATTRIBUTABLE TO ENDO HEALTH

SOLUTIONS INC.

53,809

99,284

153,093

DILUTED EARNINGS PER SHARE

0.45

1.28

DILUTED WEIGHTED AVERAGE SHARES

119,579

Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:

(1)

To exclude amortization of commercial intangible assets related to marketed products of $55,999, net

milestone payments and receipts of $1,440, an adjustment to the accrual for the payment to Impax related

to sales of OPANA ER of $(6,000) and certain separation benefits and other costs incurred in connection

with continued efforts to enhance the company’s operations of $1,323.

(2)

To exclude certain separation benefits and other costs incurred in connection with continued efforts to enhance the

company’s operations of $7,744 and amortization of customer relationships of $2,736.

(3)

To exclude milestone payments to partners of $3,898 and certain separation benefits and other costs incurred in

connection with continued efforts to enhance the company’s operations of $2,523.

(4)

To exclude the net impact of the Actavis (Watson) litigation settlement.

(5)

To exclude the net impact of accruals for litigation-related and other contingencies.

(6)

To exclude asset impairment charges.

(7)

To exclude acquisition-related and integration costs of $5,680 and a loss of $96 recorded to reflect the change in fair value

of the contingent consideration associated with the Qualitest Pharmaceuticals acquisition.

(8)

To exclude additional interest expense as a result of the prior adoption of ASC 470-20.

(9)

To exclude the unamortized debt issuance costs written off and recorded as a loss on extinguishment of debt upon our third

quarter 2012 prepayments on our Term Loan indebtedness.

(10)

To reflect the cash tax savings results from our acquisitions and the tax effect of the pre-tax adjustments above at

applicable tax rates.

(5,209)

Reconciliation of Non-GAAP Measures

Nine Months Ended September 30, 2013 (unaudited)

Actual

Reported

(GAAP)

Adjustments

Non

-GAAP

Adjusted

REVENUES

2,189,982

—

2,189,982

COSTS AND EXPENSES:

Cost of revenues

883,063

(149,045)

(1)

734,018

Selling, general and administrative

689,436

(117,485)

(2)

571,951

Research and development

113,740

(19,187)

(3)

94,553

Litigation-related and other contingencies

159,098

(159,098)

(4)

—

Asset

impairment charges

46,994

(46,994)

(5)

—

Acquisition-related and integration items, net

6,165

(6,165)

(6)

—

OPERATING INCOME

291,486

497,974

789,460

INTEREST EXPENSE, NET

129,939

(16,816)

(7)

113,123

LOSS ON EXTINGUISHMENT OF DEBT

11,312

(11,312)

(8)

—

OTHER (INCOME) EXPENSE, NET

(51,873)

54,113

(9)

2,240

INCOME BEFORE INCOME TAX

202,108

471,989

674,097

INCOME TAX

72,779

112,260

(10)

185,039

CONSOLIDATED NET INCOME

129,329

359,729

489,058

Less: Net income attributable to noncontrolling interests

38,758

—

38,758

NET INCOME ATTRIBUTABLE TO ENDO HEALTH

SOLUTIONS INC.

90,571

359,729

450,300

DILUTED EARNINGS PER SHARE

0.77

3.85

DILUTED WEIGHTED AVERAGE SHARES

116,890

Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:

(1)

To exclude amortization of commercial intangible assets related to marketed products of $140,355, certain separation

benefits and other costs incurred in connection with continued efforts to enhance the company's operations of $2,690 and

accruals for milestone payments to partners of $6,000.

(2)

To exclude certain separation benefits and other costs incurred in connection with continued efforts to enhance the company's

operations of $74,363, amortization of customer relationships of $8,251and mesh litigation-related defense costs of $34,871.

(3)

To exclude milestone payments to partners of $5,064 and certain separation benefits and other costs incurred in

connection with continued efforts to enhance the company's operations of $14,123 .

(4)

To exclude the net impact of accruals primarily for mesh-related product liability.

(5)

To exclude asset impairment charges.

(6)

To exclude integration costs of $6,002 and a loss of $163 recorded to reflect the change in fair value of the contingent

consideration associated with the Qualitest acquisition.

(7)

To exclude additional interest expense as a result of the prior adoption of ASC 470-20.

(8)

To exclude the unamortized debt issuance costs written off and recorded as a loss on extinguishment of debt upon our March

2013 prepayment on our Term Loan indebtedness as well as upon the amendment and restatement of our existing credit

facility.

(9)

To exclude $(50,400) related to patent litigation settlement income, $(2,665) for a gain on sale of business and other

income of $(1,048).

To reflect the cash tax savings results from our acquisitions and the tax effect of the pre-tax adjustments above at applicable tax rates.

Reconciliation of Non-GAAP Measures

Nine Months Ended September 30, 2012 (unaudited)

Actual

Reported

(GAAP)

Adjustments

Non

-GAAP

Adjusted

REVENUES

2,226,303

—

2,226,303

COSTS AND EXPENSES:

Cost of revenues

953,657

(272,857)

(1)

680,800

Selling, general and administrative

698,522

(30,044)

(2)

668,478

Research and development

183,067

(56,201)

(3)

126,866

Patent litigation settlement, net

85,123

(85,123)

(4)

—

Litigation-related and other contingencies

82,600

(82,600)

(5)

—

Asset impairment charges

54,163

(54,163)

(6)

—

Acquisition-related and integration items, net

16,580

(16,580)

(7)

—

OPERATING INCOME

152,591

597,568

750,159

INTEREST EXPENSE, NET

138,386

(15,354)

(8)

123,032

LOSS ON EXTINGUISHMENT OF DEBT

7,215

(7,215)

(9)

—

OTHER EXPENSE, NET

498

(300

(10)

198

INCOME BEFORE INCOME TAX

6,492

620,437

626,929

INCOME TAX

(9,263)

182,820

(11)

173,557

CONSOLIDATED NET INCOME

15,755

437,617

453,372

Less: Net income attributable to noncontrolling interests

39,826

—

39,826

NET (LOSS) INCOME ATTRIBUTABLE TO ENDO HEALTH

SOLUTIONS INC.

(24,071)

437,617

413,546

DILUTED (LOSS) EARNINGS PER SHARE

(0.21)

3.42

DILUTED WEIGHTED AVERAGE SHARES

116,688

121,083

Notes to reconciliation of our GAAP statements of operations to our adjusted statements of operations:

(1)

To exclude amortization of commercial intangible assets related to marketed products of $162,414, the impact of

inventory step-up recorded as part of acquisition accounting of $880, the accrual for the payment to Impax related to

sales of OPANA ER of $104,000, net milestone payments to partners of $2,927 and certain separation benefits and other

costs incurred in connection with continued efforts to enhance the company’s operations of $2,636.

(2)

To exclude certain separation benefits and other costs incurred in connection with continued efforts to enhance the

company’s operations of $21,799 and amortization of customer relationships of $8,245.

(3)

To exclude milestone payments to partners of $53,678 and certain separation benefits and other costs incurred in

connection with continued efforts to enhance the company’s operations of $2,523.

(4)

To exclude the net impact of the Actavis (Watson) litigation settlement.

(5)

To exclude the net impact of accruals for litigation-related and other contingencies.

(6)

To exclude asset impairment charges.

(7)

To exclude acquisition-related and integration costs of $16,552 and a loss of $28 recorded to reflect the change in fair

value of the contingent consideration associated with the Qualitest Pharmaceuticals acquisition.

(8)

To exclude additional interest expense as a result of the prior adoption of ASC 470-20.

(9)

To exclude the unamortized debt issuance costs written off and recorded as a loss on extinguishment of debt upon our

2012 prepayments on our Term Loan indebtedness.

(10)

To exclude milestone and upfront payments to partners.

To reflect the cash tax savings results from our acquisitions and the tax effect of the pre-tax adjustments above at applicable tax rates.

Reconciliation of Non-GAAP Measures

Endo Health Solutions Inc. Net Revenues (unaudited) (in thousands)

Three Months Ended September 30,

Percent

Growth

Nine Months Ended September 30,

Percent

Growth

2013

2012

2013

2012

Endo Pharmaceuticals:

LIDODERM®

149,946

238,282

(37)%

566,626

676,302

(16)%

OPANA®

59,936

62,232

(4)%

174,214

236,731

(26)%

Voltaren®

Gel

45,044

35,483

27%

123,937

79,173

57%

PERCOCET®

26,250

24,209

78,818

73,413

FROVA®

16,027

15,706

44,116

45,352

(3)%

FORTESTA®

Gel

15,025

8,823

70%

47,156

21,526

119%

SUPPRELIN®

14,105

14,534

(3)%

44,128

42,777

VANTAS®

3,039

4,114

(26)%

10,013

12,352

(19)%

VALSTAR®

6,024

8,394

(28)%

16,327

20,717

(21)%

Other Branded Products

508

933

(46)%

1,833

1,788

Royalty and Other

30,232

3,935

668%

32,204

12,874

150%

Total Endo Pharmaceuticals

366,136

416,645

(12)%

1,139,372

1,223,005

(7)%

Total Qualitest

183,939

166,070

11%

532,722

471,310

13%

American Medical Systems:

Men's Health

61,536

58,316

197,185

192,728

Women's Health

24,200

29,399

(18)%

80,470

95,763

(16)%

BPH Therapy

25,508

25,589

—%

82,212

83,110

(1)%

Total AMS

111,244

113,304

(2)%

359,867

371,601

(3)%

HealthTronics

53,635

54,463

(2)%

158,021

160,387

(1)%

Total Revenue

714,954

750,482

(5)%

2,189,982

2,226,303

(2)%

Reconciliation of Non-GAAP Measures

For an explanation of Endo’s reasons for using non-GAAP measures, see Endo’s Current Report on Form 8-K filed today with

the Securities and Exchange Commission

Reconciliation of Projected GAAP Diluted Earnings Per Share to Adjusted Diluted Earnings Per Share Guidance for the Year

Ending December 31, 2013

Lower End of Range

Upper End of Range

Projected GAAP diluted income per common share

$0.95

$1.10

Upfront and milestone-related payments to partners

$0.20

Amortization of commercial intangible assets and inventory step-up

$1.64

Integration and Restructuring Charges

$0.86

Charges for Litigation and other legal matters

$1.79

Asset Impairment Charges

$0.41

Actavis (Watson) litigation settlement

($0.44)

Interest expense adjustment for ASC 470-20 and other treasury items

$0.29

Tax effect of pre-tax adjustments at the applicable tax rates and certain other

expected cash tax savings as a result of recent acquisitions

($1.10)

Diluted adjusted income per common share guidance

$4.60

$4.75

The company's guidance is being issued based on certain assumptions including:

•Certain of the above amounts are based on estimates and there can be no assurance that Endo will achieve these results

•Includes all completed business development transactions as of November 5, 2013

Attached files

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ENDO HEALTH SOLUTIONS INC. Reports