Segment Results (Tables)

3 Months Ended

Mar. 31, 2019

Schedule of reportable segments information

The following represents selected information for the Company’s reportable segments for the three months ended March 31, 2019 and 2018 (in thousands):



	Three Months Ended March 31,
	2019		2018
Net revenues from external customers:
Branded Pharmaceuticals	$	203,525	$	200,235
Sterile Injectables	270,048		215,854
Generic Pharmaceuticals	218,526		249,240
International Pharmaceuticals (1)	28,312		35,198
Total net revenues from external customers	$	720,411	$	700,527
Adjusted income from continuing operations before income tax:
Branded Pharmaceuticals	$	79,008	$	93,814
Sterile Injectables	196,183		169,445
Generic Pharmaceuticals	49,997		74,280
International Pharmaceuticals	12,095		13,718
Total segment adjusted income from continuing operations before income tax	$	337,283	$	351,257

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(1)	Revenues generated by our International Pharmaceuticals segment are primarily attributable to external customers located in Canada

The table below provides reconciliations of our Total consolidated loss from continuing operations before income tax, which is determined in accordance with U.S. GAAP, to our total segment adjusted income from continuing operations before income tax for the three months ended March 31, 2019 and 2018 (in thousands):



	Three Months Ended March 31,
	2019			2018
Total consolidated loss from continuing operations before income tax	$	(1,709	)	$	(482,247	)
Interest expense, net	132,675			123,990
Corporate unallocated costs (1)	48,095			52,460
Amortization of intangible assets	145,599			157,172
Inventory step-up	—			66
Upfront and milestone payments to partners	939			1,332
Separation benefits and other cost reduction initiatives (2)	2,025			48,987
Certain litigation-related and other contingencies, net (3)	6			(2,500		)
Asset impairment charges (4)	165,448			448,416
Acquisition-related and integration items (5)	(37,501		)	6,835
Gain on extinguishment of debt	(119,828		)	—
Foreign currency impact related to the remeasurement of intercompany debt instruments	1,534			(2,514		)
Other, net (6)	—			(740		)
Total segment adjusted income from continuing operations before income tax	$	337,283		$	351,257

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(1)	Amounts include certain corporate overhead costs, such as headcount, facility and corporate litigation expenses and certain other income and expenses.

(2)

Amounts for the three months ended March 31, 2019 primarily relate to employee separation costs of $1.8 million and other charges of $0.2 million. Amounts for the three months ended March 31, 2018 primarily relate to employee separation costs of $25.2 million, accelerated depreciation of $17.1 million, charges to increase excess inventory reserves of $2.4 million and other charges of $4.3 million. These charges were related primarily to our restructuring initiatives. See Note 4. Restructuring for discussion of our material restructuring initiatives.


(3)	Amounts include adjustments for Litigation-related and other contingencies, net as further described in Note 13. Commitments and Contingencies.


(4)	Amounts primarily relate to charges to impair goodwill and intangible assets as further described in Note 9. Goodwill and Other Intangibles.


(5)	Amounts primarily relate to changes in the fair value of contingent consideration.


(6)	Amounts primarily relate to gains on sales of businesses and other assets.

Disaggregation of revenue

The Company disaggregates its revenue from contracts with customers into the categories included in the table below (in thousands). The Company believes these categories depict how the nature, timing and uncertainty of revenue and cash flows are affected by economic factors.



	Three Months Ended March 31,
	2019		2018
Branded Pharmaceuticals:
Specialty Products:
XIAFLEX®	$	68,507	$	57,141
SUPPRELIN® LA	22,056		20,577
Other Specialty (1)	24,403		19,027
Total Specialty Products	$	114,966	$	96,745
Established Products:
PERCOCET®	$	30,760	$	31,976
TESTOPEL®	15,814		15,170
Other Established (2)	41,985		56,344
Total Established Products	$	88,559	$	103,490
Total Branded Pharmaceuticals (3)	$	203,525	$	200,235
Sterile Injectables:
VASOSTRICT®	$	139,137	$	113,725
ADRENALIN®	47,322		29,740
Ertapenem for injection	32,219		—
Other Sterile Injectables (4)	51,370		72,389
Total Sterile Injectables (3)	$	270,048	$	215,854
Total Generic Pharmaceuticals (5)	$	218,526	$	249,240
Total International Pharmaceuticals (6)	$	28,312	$	35,198
Total revenues, net	$	720,411	$	700,527

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(1)	Products included within Other Specialty are NASCOBAL^®Nasal Spray and AVEED^®. Beginning with our first quarter 2019 reporting, TESTOPEL^®, which was previously included in Other Specialty, has been reclassified and is now included in the Established Products portfolio for all periods presented.


(2)	Products included within Other Established include, but are not limited to, LIDODERM^®, VOLTAREN^® Gel, EDEX^®, FORTESTA^® Gel, and TESTIM^®, including the authorized generics of TESTIM^® and FORTESTA^® Gel.


(3)	Individual products presented above represent the top two performing products in each product category for the three months ended March 31, 2019 and/or any product having revenues in excess of $25 million during any quarterly period in 2019 or 2018.


(4)	Products included within Other Sterile Injectables include, but are not limited to, APLISOL^® and ephedrine sulfate injection.

(5)

The Generic Pharmaceuticals segment is comprised of a portfolio of products that are generic versions of branded products, are distributed primarily through the same wholesalers, generally have no intellectual property protection and are sold within the U.S. During the three months ended March 31, 2019, colchicine tablets, the authorized generic of Takeda Pharmaceuticals U.S.A., Inc.’s Colcrys^®, which launched in July 2018, made up 6% of consolidated total revenue. No other individual product within this segment has exceeded 5% of consolidated total revenues for the periods presented.


(6)	The International Pharmaceuticals segment, which accounted for 4% and 5% of consolidated total revenues during the three months ended March 31, 2019 and 2018, respectively, includes a variety of specialty pharmaceutical products sold outside the U.S., primarily in Canada through our operating company Paladin.