Exhibit 99.1
Exhibit 99.1
Endo – The Path Forward
June 5, 2013
@2013 Endo Pharmaceuticals, Inc. All rights reserved.
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. Because these statements reflect our current views, expectations and beliefs concerning future events, these forward-looking statements involve risks and uncertainties. Investors should note that many factors, as more fully described under the caption “Risk Factors” in our Form 10-K, Form 10-Q and Form 8-K filings with the Securities and Exchange Commission and as otherwise enumerated herein or therein, could affect our future financial results and could cause our actual results to differ materially from those expressed in forward-looking statements contained in our Annual Report on Form 10-K. The forward-looking statements in this presentation are qualified by these risk factors. These are factors that, individually or in the aggregate, could cause our actual results to differ materially from expected and historical results. We assume no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.
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 those 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.
© 2013 Endo Pharmaceuticals Inc. All rights reserved 2
Assessment of strategy and businesses
Initiated a comprehensive business assessment in late March
Incorporated input from a variety of stakeholders, including investors and customers
Developed a revised strategy
@2013 Endo Pharmaceuticals, Inc. All rights reserved
.
New Strategic Direction for Endo
Aspire to be a top tier specialty healthcare company
Shift focus from integrated health solutions to
maximizing value of each of our core businesses
Participate in specialty areas offering above average
growth and favorable margins
Transform our operating model to maximize growth
potential and cash flow generation
Continue our commitment to serving our patients
and customers
Allows Endo to maximize shareholder value by
adapting to market realities and portfolio changes
@2013 Endo Pharmaceuticals, Inc. All rights reserved.
Near-term implications of our revised strategic direction
| | 1 | | Drive organic growth through our core businesses |
| | 2 | | Explore strategic alternatives for HealthTronics |
| | 3 | | Implement lean operating model |
| | 4 | | Sharpen R&D focus on near-term opportunities |
| | 5 | | Pursue accretive, value-creating M&A opportunities |
| | 6 | | Optimize capital structure |
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13 Endo Pharmaceuticals, Inc. All rights reserved.
Endo Pharmaceuticals
Drive performance of growth assets: SUPPRELIN® LA, Voltaren® Gel, FORTESTA® Gel
Maximize potential of late stage assets, e.g., BEMA-buprenorphine, AVEED™
Optimize value capture for OPANA® ER
Adopt a targeted model for product commercialization
@2013 Endo Pharmaceuticals, Inc. All rights reserved.
Qualitest
Maximize sales from existing core products and capitalize on market opportunities
Drive launches from ANDA pipeline
Expand generics R&D capabilities to enter additional attractive segments with high barriers to entry
Make capital investments to improve margins and upgrade capabilities
@2013 Endo Pharmaceuticals, Inc. All rights reserved.
AMS
Men’s health: Maintain profitability and grow implant
volume
Women’s health: Limit product decline with a focus
on physician education
Prostate Health: Leverage Goliath clinical and
economic data to drive performance
International: Maximize growth and margins by
optimizing go-to-market models
@2013 Endo Pharmaceuticals, Inc. All rights reserved.
HealthTronics
HealthTronics has limited fit with new strategic direction given its services focus and margin structure
In process of evaluating strategic options for
HealthTronics (as a full business or for its component parts)
In the interim, we remain fully committed to our customers
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@2013 Endo Pharmaceuticals, Inc. All rights reserved.
Implement lean operating model
Reductions in OPEX
relative to 2012A ($M)
? Opex savings identified through:
325
? Rationalization of G&A spend
? Optimization of commercial spend
150 relative to product portfolio
? Re-focusing of R&D spend on lower-
risk projects
? Overall ~15% reduction in total
2013 Run-rate headcount
achieved by
mid-2014
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@2013 Endo Pharmaceuticals, Inc. All rights reserved.
Sharpen R&D Focus
Prudently invest in the near-term while preserving our capability to drive long-term organic growth
Refocus branded pharma R&D on development capabilities and late stage development programs
Focus AMS R&D footprint while preserving development expertise and select late-stage assets
Invest in Qualitest to strengthen generics capabilities in attractive segments
Monetize non-core programs / projects
Share capabilities and platforms across Endo businesses to drive further efficiencies
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@2013 Endo Pharmaceuticals, Inc. All rights reserved.
Pursue accretive, value-creating M&A opportunities
Guiding Principles for M&A
Focus on shareholder value creation
Pursue opportunities with near-term accretion
??Target on market opportunities
??Focus on cost synergies and revenue upsides
Execute deals within rigorous capital allocation framework using robust hurdle rates
Evaluate a range of opportunities
??Opportunistic without constraint of current therapeutic footprint
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@2013 Endo Pharmaceuticals, Inc. All rights reserved.
Optimize capital structure
Grow EBITDA through cost reductions and accretive acquisitions
Optimize working capital
Maintain capital structure flexibility to support acquisitions and drive shareholder value
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@2013 Endo Pharmaceuticals, Inc. All rights reserved.
Strengthen talent and organization
Move to integrated and empowered business units with decentralized decision making and well-defined accountabilities
Retain, augment, and develop top talent with both strategic and operational expertise
Strengthen company culture by emphasizing incentive structure designed to deliver high-performance orientation
Develop and deploy lean and agile operating structure with enhanced execution capabilities and operating efficiencies
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@2013 Endo Health solutions Inc. All rights reserved.
Strategic priorities for next 12-18 months
Key priorities
??Drive organic growth
??Progress late-stage pipeline
??Improve operating margins through OPEX optimization
??Explore alternatives for non-core assets (HealthTronics and select R&D programs)
??Execute 2-3 accretive deals and integrate successfully
??Optimize capital structure
??Implement new organizational model and bolster key talent
??Successfully deploy Qualitest CAPEX program and capture upsides
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@2013 Endo Pharmaceuticals, Inc. All rights reserved.
How we will measure and communicate our performance
Traditional metrics Additional measures
Revenue growth Adjusted cash flow from operations
Adjusted diluted EPS Performance on near-term strategic priorities
Total return to shareholders
Synergy/cost reduction realization
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@2013 Endo Pharmaceuticals, Inc. All rights reserved.
2013 Revised Financial Guidance
Measure 2013 Guidance Revenues $2.65B—$2.80B
Adjusted Gross Margin 64% to 66%
Adjusted Operating Expenses Reduced by approximately $150 million, which represents a 15% decline versus 2012
Adjusted Diluted EPS $4.10 to $4.40 Adjusted Effective Tax Rate 27.5% to 28.5% Diluted Shares Outstanding ~116M
Capital Expenses ~$80M
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@2013 Endo Pharmaceuticals, Inc. All rights reserved.
Endo – The Path Forward
June 5, 2013
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@2013 Endo Pharmaceuticals, Inc. All rights reserved.
Appendix
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@2013 Endo Pharmaceuticals, Inc. All rights reserved.
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 $1.49 $1.79
Upfront and milestone-related payments to partners $0.17 $0.17
Amortization of commercial intangible assets and inventory step-up $1.65 $1.65
Integration and Restructuring and Other Cost Reduction Implementation $0.81 $0.81
Charges
Charges for Litigation and other legal matters $0.75 $0.75
Watson litigation settlement($0.38)($0.38)
Interest expense adjustment for ASC 470-20 and other treasury items $0.30 $0.30
Tax effect of pre-tax adjustments at the applicable tax rates and certain($0.69)($0.69)
other expected cash tax savings as a result of recent acquisitions
Diluted adjusted income per common share guidance $4.10 $4.40
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 June 6, 2013
© 2013 Endo Pharmaceuticals Inc. All rights reserved 20
