Endo International plc is an Ireland-domiciled, global specialty pharmaceutical company focused on generic and branded pharmaceuticals. We aim to be the premier partner to healthcare professionals and payment providers, delivering an innovative suite of generic and branded drugs to meet patients’ needs.

Unless otherwise indicated or required by the context, references throughout to “Endo,” the “Company,” “we,” “our” or “us” refer to financial information and transactions of Endo International plc and its subsidiaries.

The accompanying unaudited Condensed Consolidated Financial Statements of Endo International plc and its subsidiaries have been prepared in accordance with United States (U.S.) generally accepted accounting principles (U.S. GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying Condensed Consolidated Financial Statements of Endo International plc and its subsidiaries, which are unaudited, include all normal and recurring adjustments necessary for a fair statement of the Company’s financial position as of ~~March 31,~~June 30, 2019 and the results of our operations and our cash flows for the periods presented. Operating results for the three and six months ended ~~March 31,~~June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. The year-end Condensed Consolidated Balance Sheet data as of December 31, 2018 was derived from audited financial statements but does not include all disclosures required by U.S. GAAP.

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with our Consolidated Financial Statements and accompanying notes included in the Annual Report.

Significant changes to our significant accounting policies since December 31, 2018 are detailed below. For additional discussion of the Company’s significant accounting policies, see Note 2. Summary of Significant Accounting Policies in the Consolidated Financial Statements, included in Part IV, Item 15 of the Annual Report.

Lease Accounting. The Company adopted Accounting Standards Codification Topic 842, Leases (ASC 842) on January 1, 2019. For further discussion of the adoption, refer to the “Recent Accounting Pronouncements Adopted or Otherwise Effective as of ~~March 31,~~June 30, 2019” section below. ASC 842 applies to a number of arrangements to which the Company is party.

Whenever the Company enters into a new arrangement, it must determine, at the inception date, whether the arrangement is or contains a lease. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset.

If a lease exists, the Company must then determine the separate lease and nonlease components of the arrangement. Each right to use an underlying asset conveyed by a lease arrangement should generally be considered a separate lease component if it both: (i) can benefit the Company without depending on other resources not readily available to the Company and (ii) does not significantly affect and is not significantly affected by other rights of use conveyed by the lease. Aspects of a lease arrangement that transfer other goods or services to the Company but do not meet the definition of lease components are considered nonlease components. The consideration owed by the Company pursuant to a lease arrangement is generally allocated to each lease and nonlease components for accounting purposes. However, the Company has elected, for all of its leases, to not separate lease and nonlease components. Each lease component is accounted for separately from other lease components, but together with the associated nonlease components.

For each lease, the Company must then determine the lease term, the present value of lease payments and the classification of the lease as either an operating or finance lease.

The lease term is the period of the lease not cancellable by the Company, together with periods covered by: (i) renewal options the Company is reasonably certain to exercise, (ii) termination options the Company is reasonably certain not to exercise and (iii) renewal or termination options that are controlled by the lessor.

The present value of lease payments is calculated based on:

In making the determination of whether a lease is an operating lease or a finance lease, the Company considers the lease term in relation to the economic life of the leased asset, the present value of lease payments in relation to the fair value of the leased asset and certain other factors, including the lessee's and lessor's rights, obligations and economic incentives over the term of the lease.

Generally, upon the commencement of a lease, the Company will record a lease liability and a right-of-use (ROU) asset. However, the Company has elected, for all underlying assets with initial lease terms of twelve months or less (known as short-term leases), to not recognize a lease liability or ROU asset. Lease liabilities are initially recorded at lease commencement as the present value of future lease payments. ROU assets are initially recorded at lease commencement as the initial amount of the lease liability, together with the following, if applicable: (i) initial direct costs incurred by the lessee and (ii) lease payments made by the lessor, net of lease incentives received, prior to lease commencement.

Over the lease term, the Company generally increases its lease liabilities using the effective interest method and decreases its lease liabilities for lease payments made. The Company generally amortizes its ROU assets over the shorter of the estimated useful life and the lease term and assesses its ROU assets for impairment, similar to other long-lived assets.

For finance leases, amortization expense and interest expense are recognized separately in the Condensed Consolidated Statements of Operations, with amortization expense generally recorded on a straight-line basis and interest expense recorded using the effective interest method. For operating leases, a single lease cost is generally recognized in the Condensed Consolidated Statements of Operations on a straight-line basis over the lease term unless an impairment has been recorded with respect to a leased asset. Lease costs for short-term leases not recognized in the Condensed Consolidated Balance Sheets are recognized in the Condensed Consolidated Statements of Operations on a straight-line basis over the lease term. Variable lease costs not initially included in the lease liability and ROU asset impairment charges are expensed as incurred.

Cloud Computing Arrangements. The Company may from time to time incur costs in connection with hosting arrangements that are service contracts. Subsequent to the Company’s January 1, 2019 adoption of Accounting Standards Update (ASU) No. 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (ASU 2018-15), which is further described below, the Company capitalizes any such implementation costs, expenses them over the terms of the respective hosting arrangements and subjects them to impairment testing consistent with other long-lived assets.

In August 2018, the Financial Accounting Standards Board (FASB) issued ASU No. 2018-13, “Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” (ASU 2018-13). ASU 2018-13 modifies the disclosure requirements on fair value measurements in Accounting Standards Codification Topic 820, Fair Value Measurement. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Certain aspects of ASU 2018-13 require prospective treatment, while others require retrospective treatment. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2018-13 on the Company’s disclosures.

In November 2018, the FASB issued ASU No. 2018-18, “Clarifying the Interaction Between Topic 808 and Topic 606” (ASU 2018-18). The main provisions of ASU 2018-18 include: (i) clarifying that certain transactions between collaborative arrangement participants should be accounted for as revenue when the collaborative arrangement participant is a customer in the context of a unit of account and (ii) precluding the presentation of transactions with collaborative arrangement participants that are not directly related to sales to third parties together with revenue. ASU 2018-18 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. ASU 2018-18 should be applied retrospectively to the date of initial application of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606), which was January 1, 2018 for the Company. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2018-18 on the Company’s consolidated results of operations, financial position and disclosures.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (ASU 2016-02) to establish a comprehensive new accounting standard for leases. ASU 2016-02, together with a series of subsequently-issued related ASUs, have been codified in ASC 842. ASC 842 supersedes the lease accounting requirements in Accounting Standards Codification Topic 840, Leases (ASC 840), and requires lessees to, among other things, recognize on the balance sheet a right-of-use asset and a right-of-use lease liability, representing the present value of future minimum lease payments, for most leases.

The Company adopted ASC 842 using the modified retrospective approach with an effective date of January 1, 2019 for leases that existed on that date. Prior period results continue to be presented under ASC 840 based on the accounting standards originally in effect for such periods.

The Company has elected certain practical expedients permitted under the transition guidance within ASC 842 to leases that commenced before January 1, 2019, including the package of practical expedients, as well as the practical expedient permitting the Company to not assess whether certain land easements contain leases. Due to the Company's election of these practical expedients, the Company has carried forward certain historical conclusions for existing contracts, including conclusions relating to initial direct costs and to the existence and classification of leases.

On January 1, 2019, as a result of adopting ASC 842, the Company recognized new ROU assets, current lease liabilities and noncurrent lease liabilities associated with operating leases of $59.4 million, $11.0 million and $57.3 million, respectively, which were recorded in the Condensed Consolidated Balance Sheets as Operating lease assets, Current portion of operating lease liabilities and Operating lease liabilities, less current portion, respectively. The Company also derecognized certain assets and liabilities related to existing build-to-suit lease arrangements for which construction was completed prior to the date of transition and recognized new finance lease ROU assets and lease liabilities related to those lease arrangements. The net effect of the Company’s adoption of ASC 842 resulted in a net increase to Accumulated deficit of $4.6 million.

In August 2018, the FASB issued ASU 2018-15. ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (including hosting arrangements where a software license is deemed to exist). ASU 2018-15 also requires the customer to expense any such capitalized implementation costs over the term of the hosting arrangement and to apply the existing impairment guidance for long-lived assets to such capitalized costs. Additionally, ASU 2018-15 sets forth required disclosures and guidance on financial statement classification for expenses, cash flows and balances related to implementation costs within the scope of ASU 2018-15. The Company early adopted this guidance during the first quarter of 2019 on a prospective basis.

The operating results of the Company’s Astora business, which the Board of Directors resolved to wind-down in 2016, are reported as Discontinued operations, net of tax in the Condensed Consolidated Statements of Operations for all periods presented.

The following table provides the operating results of Astora Discontinued operations, net of tax, for the three and six months ended ~~March 31,~~June 30, 2019 and 2018 (in thousands):

Loss from discontinued operations before income taxes includes Litigation-related and other contingencies, net, mesh-related legal defense costs and certain other items.

The cash flows from discontinued operating activities related to Astora included the impact of net losses of ~~$6.0~~$13.9 million and ~~$7.8~~$16.1 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019 and 2018, respectively, and the impact of cash activity related to vaginal mesh cases. There were no material net cash flows related to Astora discontinued investing activities during the ~~three~~six months ended ~~March 31,~~June 30, 2019 ~~and~~or 2018. There was no depreciation or amortization during the ~~three~~six months ended ~~March 31,~~June 30, 2019 or 2018 related to Astora.

Set forth below are disclosures relating to restructuring initiatives that resulted in material expenses or cash expenditures during any of the ~~three months~~three- or six-month periods ended ~~March 31,~~June 30, 2019 ~~and~~or 2018 or had material restructuring liabilities at either ~~March 31,~~June 30, 2019 or December 31, 2018. Employee separation, retention and certain other employee benefit-related costs related to our restructurings are expensed ratably over the requisite service period. Other restructuring costs are generally expensed as incurred.

During the first quarter of 2019, the Company changed the names of its reportable segments. This change, which was intended to simplify the segments’ names, had no impact on the Company’s unaudited Condensed Consolidated Financial Statements or segment results for any of the periods presented. The Company’s four reportable business segments are set forth below. These segments reflect the level at which the chief operating decision maker regularly reviews financial information to assess performance and to make decisions about resources to be allocated. Each segment derives revenue from the sales or licensing of its respective products and is discussed in more detail below.

We evaluate segment performance based on each segment’s adjusted income from continuing operations before income tax, which we define as Loss from continuing operations before income tax and before certain upfront and milestone payments to partners; acquisition-related and integration items, including transaction costs and changes in the fair value of contingent consideration; cost reduction and integration-related initiatives such as separation benefits, retention payments, other exit costs and certain costs associated with integrating an acquired company’s operations; asset impairment charges; amortization of intangible assets; inventory step-up recorded as part of our acquisitions; litigation-related and other contingent matters; gains or losses from early termination of debt; gains or losses from the sales of businesses and other assets; foreign currency gains or losses on intercompany financing arrangements; and certain other items.

Certain of the corporate expenses incurred by the Company are not directly attributable to any specific segment. Accordingly, these costs are not allocated to any of the Company’s segments and are included in the results below as “Corporate unallocated costs.” Interest income and expense are also considered corporate items and not allocated to any of the Company’s segments. The Company’s consolidated adjusted income from continuing operations before income tax is equal to the combined results of each of its segments less these unallocated corporate items.

Our Sterile Injectables segment consists primarily of branded sterile injectable products such as VASOSTRICT^®, ADRENALIN^® and APLISOL^®, among others, and certain generic sterile injectable products, including ertapenem for injection, the authorized generic of Merck Sharp & Dohme Corp’s Invanz^®, and ephedrine sulfate injection, among others.

There were no material revenues from external customers attributed to an individual country outside of the U.S. during any of the periods presented. There were no material tangible long-lived assets in an individual country other than the U.S. as of ~~March 31,~~June 30, 2019 or December 31, 2018.

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 and six months ended ~~March 31,~~June 30, 2019 and 2018 (in thousands):

The fair value of contingent consideration liabilities is determined using unobservable inputs; hence, these instruments represent Level 3 measurements within the above-defined fair value hierarchy. These inputs include the estimated amount and timing of projected cash flows, the probability of success (achievement of the contingent event) and the risk-adjusted discount rate used to present value the probability-weighted cash flows. Subsequent to the acquisition date, at each reporting period, the contingent consideration liability is remeasured at current fair value with changes recorded in earnings. Changes in any of these estimated inputs used as of the date of this report could have resulted in significant adjustments to fair value. See Recurring Fair Value Measurements below for additional information on acquisition-related contingent consideration.

Fair Value Measurements at December 31, 2018 using:
Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total
Assets:
Money market funds $ 137,215
$ —
$ —
$ 137,215
Equity securities 738
—
—
738
Total $ 137,953
$ —
$ —
$ 137,953
Liabilities:
Acquisition-related contingent consideration—current $ —
$ —
$ 36,514
$ 36,514
Acquisition-related contingent consideration—noncurrent —
—
80,189
80,189
Total $ —
$ —
$ 116,703
$ 116,703

At ~~March 31,~~June 30, 2019, the fair value measurements of the contingent consideration obligations were determined using risk-adjusted discount rates ranging from approximately 9.5% to 15.0% (weighted average rate of approximately ~~11.7%~~11.4%). Changes in fair value recorded in earnings related to acquisition-related contingent consideration are included in our Condensed Consolidated Statements of Operations as Acquisition-related and integration items. Amounts recorded for the current and noncurrent portions of acquisition-related contingent consideration are included in Accounts payable and accrued expenses and Other liabilities, respectively, in our Condensed Consolidated Balance Sheets.

The following table presents changes to the Company’s liability for acquisition-related contingent consideration during the ~~three~~six months ended ~~March 31,~~June 30, 2019 by acquisition (in thousands):

The Company’s financial assets and liabilities measured at fair value on a nonrecurring basis during the ~~three~~six months ended ~~March 31,~~June 30, 2019 were as follows (in thousands):

Additionally, the Company recorded aggregate pre-tax non-cash goodwill impairment charges during the ~~three~~six months ended ~~March 31,~~June 30, 2019 of ~~$86.0~~$151.1 million. Refer to Note 9. Goodwill and Other Intangibles for further description, including the valuation methodologies utilized.

Inventory that is in excess of the amount expected to be sold within one year is classified as noncurrent inventory and is not included in the table above. At ~~March 31,~~June 30, 2019 and December 31, 2018, ~~$9.9~~$22.9 million and $8.1 million, respectively, of noncurrent inventory was included in Other assets in the Condensed Consolidated Balance Sheets. As of ~~March 31,~~June 30, 2019 and December 31, 2018, the Company’s Condensed Consolidated Balance Sheets included approximately ~~$10.5~~$11.2 million and $12.5 million, respectively, of capitalized pre-launch inventories related to generic and sterile injectable products that were not yet available to be sold.

We have entered into contracts with third parties to lease a variety of assets, including certain real estate, machinery, equipment, automobiles and other assets.

Our leases frequently allow for lease payments that could vary based on factors such as inflation or the degree of utilization of the underlying asset and the incurrence of contractual charges such as those for common area maintenance or utilities.

Renewal and/or early termination options are common in our lease arrangements, particularly with respect to our real estate leases. Our ROU assets and lease liabilities generally exclude periods covered by renewal options and include periods covered by early termination options (based on our conclusion that it is not reasonably certain that we will exercise such options).

Our most significant lease is for our U.S. headquarters in Malvern, Pennsylvania. The initial term of the lease is through 2024 and includes three renewal options, each for an additional 60-month period. These renewal options are not considered reasonably certain of exercise and are therefore excluded from the ROU asset and lease liability.

We are party to certain sublease arrangements, primarily related to our real estate leases, where we act as the lessee and intermediate lessor. For example, we sublease portions of our Malvern, Pennsylvania facility to multiple tenants through sublease arrangements ending in 2024, with certain limited renewal and early termination options.

The following table presents information about the Company's ROU assets and lease liabilities at ~~March 31,~~June 30, 2019 (in thousands):

The following table presents information about lease costs and expenses and sublease income for the three and six months ended ~~March 31,~~June 30, 2019 (in thousands):

The following table, determined in accordance with ASC 842, provides the undiscounted amount of future cash flows included in our lease liabilities at ~~March 31,~~June 30, 2019 for each of the five years subsequent to December 31, 2018 and thereafter, as well as a reconciliation of such undiscounted cash flows to our lease liabilities at ~~March 31,~~June 30, 2019 (in thousands):

The Company’s future minimum lease commitments as of December 31, 2018 under ASC 840, as reported in the Annual Report, were as follows:

The following table provides the weighted average remaining lease term and weighted average discount rates for our leases as of ~~March 31,~~June 30, 2019:

The following table provides certain cash flow and supplemental noncash information related to our lease liabilities for the ~~three~~six months ended ~~March 31,~~June 30, 2019 (in thousands):

The carrying amounts of goodwill at ~~March 31,~~June 30, 2019 and December 31, 2018 are net of the following accumulated impairments (in thousands):

During the first quarter of 2018, a change in segments resulted in changes to our reporting units for goodwill impairment testing purposes, including the creation of a new Sterile Injectables reporting unit, which was previously part of our Generics reporting unit. As a result of these changes, under U.S. GAAP, we tested the goodwill of the former Generics reporting unit immediately before the segment realignment and the goodwill of both the new Sterile Injectables and Generic Pharmaceuticals reporting units immediately after the segment realignment. These goodwill tests were performed using an income approach that utilizes a discounted cash flow model. The results of these goodwill impairment tests were as follows:

The following table presents information about the Company’s total indebtedness at ~~March 31,~~June 30, 2019 and December 31, 2018 (dollars in thousands):

In March 2019, the Company executed several transactions (the March 2019 Refinancing Transactions), which included:

Charges related to vaginal mesh liability and associated legal fees and other expenses for all periods presented are reported in Discontinued operations, net of tax in our Condensed Consolidated Statements of Operations.

To date, the Company has made total mesh liability payments of approximately $3.4 billion, ~~$327.4~~$306.4 million of which remains in the QSFs as of ~~March 31,~~June 30, 2019. We currently expect to fund into the QSFs the remaining payments under all settlement agreements during 2019. As the funds are disbursed out of the QSFs from time to time, the liability accrual will be reduced accordingly with a corresponding reduction to restricted cash and cash equivalents. In addition, we may pay cash distributions to settle disputes separate from the QSFs, which will also decrease the liability accrual and decrease cash and cash equivalents.

We were contacted in October 2012 regarding a civil investigation initiated by various state attorneys general into mesh products, including transvaginal surgical mesh products designed to treat POP and SUI. In November 2013, we received a subpoena relating to this investigation from the state of California, and we have subsequently received additional subpoenas from California and other states. We are cooperating with ~~these~~the investigations.

Although the Company believes it has appropriately estimated the probable total amount of loss associated with all mesh-related matters as of the date of this report, fact and expert discovery is ongoing in certain cases that have not settled, and it is reasonably possible that further claims may be filed or asserted and that adjustments to our overall liability accrual may be required. This could have a material adverse effect on our business, financial condition, results of operations and cash flows.

In June 2018, counsel for plaintiffs, on the one hand, and Auxilium and EPI, on the other, executed an MSA allowing for the resolution of all known testosterone replacement therapy product liability claims against our subsidiaries. The MSA was solely by way of compromise and settlement and was not in any way an admission of fault by us or any of our subsidiaries.

Although the Company believes it has appropriately estimated the probable total amount of loss associated with testosterone-related product liability matters as of the date of this report, it is reasonably possible that further claims may be filed or asserted and that adjustments to our liability accrual may be required. This could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Since 2014, multiple U.S. states, counties, other governmental persons or entities and private plaintiffs have filed suit against us and/or certain of our subsidiaries, including Endo Health Solutions Inc. (EHSI), EPI, PPI, Par Pharmaceutical Companies, Inc. (PPCI), Endo Generics Holdings, Inc. (EGHI), Vintage Pharmaceuticals, LLC, Generics Bidco I, LLC and DAVA Pharmaceuticals, LLC, as well as various other manufacturers, distributors and/or others, asserting claims relating to defendants’ alleged sales, marketing and/or distribution practices with respect to prescription opioid medications, including certain of our products. As of ~~May 2,~~July 29, 2019, the cases of which we were aware include, but are not limited to, approximately 1318 cases filed by or on behalf of states; approximately ~~1,925~~2,300 cases filed by counties, cities, Native American tribes and/or other government-related persons or entities; approximately ~~136~~153 cases filed by hospitals, health systems, unions, health and welfare funds or other third-party payers and approximately 59131 cases filed by individuals. Certain of the cases have been filed as putative class actions. In addition to the litigation in the U.S., in August 2018, an action against Paladin Labs Inc., EPI, the Company and various other manufacturers and distributors was commenced in British Columbia on behalf of a proposed class of all federal, provincial and territorial governments and agencies in Canada that paid healthcare, pharmaceutical and treatment costs related to opioids. In May 2019, two putative class actions were filed in Canada, seeking relief on behalf of Canadian residents who were prescribed opioid medications. One of the actions (filed in Ontario Superior Court) names Paladin Labs Inc., the Company and EPI along with several other defendants, and the other action (filed in Quebec Superior Court) names Paladin Labs Inc. along with several other defendants.

Many of the U.S. cases have been coordinated in a federal MDL pending in the U.S. District Court for the Northern District of Ohio (MDL No. 2804). In March 2018, the U.S. Department of Justice (DOJ) filed a statement of interest in the case, and in April 2018 it filed a motion to participate in settlement discussions as a friend of the court, which the MDL court granted. The MDL court has issued a series of case management orders permitting motions to dismiss addressing threshold legal issues in certain cases (and has issued orders granting in part and denying in part some of those motions), setting a trial date in October 2019 for the claims of two Ohio counties (Track One plaintiffs), allowing certain discovery and establishing certain other deadlines and procedures, among other things. In June 2019, defendants in the Track One cases, including our subsidiaries, filed various motions for summary judgment, and the Track One plaintiffs also filed motions for summary judgment on certain issues.

Other cases remain pending in various state courts. In some jurisdictions, such as Connecticut, Illinois, New York, Pennsylvania, South Carolina, Texas and ~~Texas,~~West Virginia, certain state court cases have been transferred to a single court within their respective state court systems for coordinated pretrial proceedings. The state cases are generally at the pleading and/or discovery stage with certain of these cases scheduled for trial beginning in 2020.

The complaints in the cases assert a variety of claims including, but not limited to, claims for alleged violations of public nuisance, consumer protection, unfair trade practices, racketeering, Medicaid fraud and/or drug dealer liability statutes and/or common law claims for public nuisance, fraud/misrepresentation, strict liability, negligence and/or unjust enrichment. The claims are generally based on alleged misrepresentations and/or omissions in connection with the sale and marketing of prescription opioid medications and/or an alleged failure to take adequate steps to prevent abuse and diversion. Plaintiffs generally seek declaratory and/or injunctive relief; compensatory, punitive and/or treble damages; restitution, disgorgement, civil penalties, abatement, attorneys’ fees, costs and/or other relief.

We will continue to vigorously defend the foregoing matters and to explore other options as appropriate in our best interests. Similar matters may be brought by others or the foregoing matters may be expanded. We are unable to predict the outcome of these matters or to estimate the possible range of any losses that could be incurred. ~~Such matters~~Adjustments to our overall liability accrual may be required in the future, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

In addition to the lawsuits described above, the Company and/or its subsidiaries have received certain subpoenas, civil investigative demands (CIDs) and informal requests for information concerning the sale, marketing and/or distribution of prescription opioid medications, including the following:

Various state attorneys general have served subpoenas and/or CIDs on EHSI and/or EPI. We are cooperating with ~~these~~the investigations.

In January 2018, our subsidiary EPI received a federal grand jury subpoena from the U.S. District Court for the Southern District of Florida in connection with an investigation being conducted by the U.S. Attorney’s Office for the Southern District of ~~Florida in conjunction with the U.S. Food and Drug Administration (FDA).~~Florida. The subpoena seeks information related to OPANA^® ER, ~~and~~ other oxymorphone ~~products. EPI is~~products and marketing of opioid medications. We are cooperating with the investigation.

In December 2014, we received a grand jury subpoena from the Antitrust Division of the DOJ issued by the U.S. District Court for the Eastern District of Pennsylvania addressed to Par Pharmaceuticals. The subpoena requested documents and information focused primarily on product and pricing information relating to the authorized generic version of Lanoxin (digoxin) oral tablets and generic doxycycline products, and on communications with competitors and others regarding those products. We are cooperating with the investigation.

In May 2018, we and our subsidiary PPCI each received a CID from the DOJ in relation to a False Claims Act investigation concerning whether generic pharmaceutical manufacturers engaged in price-fixing and market allocation agreements, paid illegal remuneration and caused the submission of false claims. We are cooperating with the investigation.

Similar investigations may be brought by others or the foregoing matters may be expanded or result in litigation. We are unable to predict the outcome of these matters or to estimate the possible range of any losses that could be incurred. Adjustments to our overall liability accrual may be required in the future, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Since March 2016, various private plaintiffs and state attorneys general have filed cases against our subsidiary PPI and/or, in some instances, the Company, Generics Bidco I, LLC, DAVA Pharmaceuticals, LLC and/or PPCI, as well as other pharmaceutical manufacturers and, in some instances, other corporate and/or individual defendants, alleging price-fixing and other anticompetitive conduct with respect to generic pharmaceutical products. These cases, which include proposed class actions filed on behalf of direct purchasers, end-payers and indirect purchaser resellers, as well as non-class action suits, have been consolidated and/or coordinated for pretrial proceedings in a federal MDL pending in the U.S. District Court for the Eastern District of Pennsylvania under the caption In re Generic Pharmaceuticals Pricing Antitrust Litigation (MDL No. 2724).

The various complaints and amended complaints generally assert claims under federal and/or state antitrust law, state consumer protection statutes and/or state common law, and seek damages, treble damages, civil penalties, disgorgement, declaratory and injunctive relief, costs and attorneys’ fees. Some claims are based on alleged product-specific conspiracies. ~~With respect~~The allegations relating to our subsidiaries ~~the allegations~~ in certain of the various complaints focus primarily on one or more of the following products: amitriptyline, baclofen, budesonide, digoxin, divalproex ER, doxycycline hyclate, doxycycline monohydrate, entecavir, fluoxetine, flutamide, hydroxyurea, labetalol, nystatin, omega-3-acid ethyl esters, propranolol and/or zoledronic acid. Other claims allege broader, multiple-product conspiracies involving various combinations of these and/or other products. Under these overarching conspiracy theories, plaintiffs seek to hold all alleged participants in a particular conspiracy jointly and severally liable for all harms caused by the alleged conspiracy, not just harms related to the products manufactured and/or sold by a particular defendant.

In October 2018, the MDL court denied defendants’ motions to dismiss federal antitrust claims relating to digoxin, divalproex ER and doxycycline hyclate, among other products. In February 2019, the MDL court dismissed certain state law claims relating to these same products, but allowed other state law claims relating to those products to proceed. In February 2019, the defendants moved to dismiss plaintiffs’ overarching conspiracy claims; that motion remains pending. The MDL court has also allowed certain discovery.

In May 2019, our subsidiary PPCI received written notice from certain state attorneys general that they intend to assert federal and/or state antitrust and/or consumer protection law claims with respect to additional generic pharmaceutical products. We do not know when or against whom such claims will be filed or the substance of such claims.

Beginning in November 2013, multiple direct and indirect purchasers of LIDODERM^® filed a number of cases against our subsidiary EPI and other pharmaceutical companies generally alleging that they had entered into an anticompetitive agreement to restrain trade through the settlement of patent infringement litigation concerning U.S. Patent No. 5,827,529 (the ‘529 patent) and other patents. The complaints asserted claims under Sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1, 2), and/or various state antitrust and consumer protection statutes, as well as common law claims, and generally sought damages, treble damages, disgorgement of profits, restitution, injunctive relief and attorneys’ fees. The cases were consolidated and/or coordinated in April 2014 in a federal MDL in the U.S. District Court for the Northern District of California (MDL No. 2521). The MDL court certified classes of direct and indirect purchasers in February 2017. EPI settled with certain opt-out retailer plaintiffs in October 2017. In September 2018, the court approved EPI’s settlement with the class plaintiffs and entered judgment dismissing the class cases with prejudice. In connection with the settlements, several indirect purchasers which previously had opted out were permitted to rejoin the class. The class settlement agreements provide for aggregate payments of approximately $100 million. As of ~~May 2,~~July 29, 2019, EPI had paid approximately $90 million of this total, including approximately $60 million in 2018 and $30 million in the first quarter of 2019. The remaining $10 million is included in our accrual for loss contingencies.

Beginning in June 2014, multiple direct and indirect purchasers of OPANA^® ER filed cases against our subsidiaries EHSI and EPI and other pharmaceutical companies, including Impax Laboratories, LLC (formerly Impax Laboratories, Inc. and referred to herein as Impax) and Penwest Pharmaceuticals Co., which our subsidiary EPI had acquired. Some cases were filed on behalf of putative classes of direct and indirect purchasers, while others were filed on behalf of individual retailers or health care benefit plans. All cases have been consolidated and/or coordinated for pretrial proceedings in a federal MDL pending in the U.S. District Court for the Northern District of Illinois (MDL No. 2580). Plaintiffs generally allege that an agreement reached by EPI and Impax to settle patent infringement litigation concerning multiple patents pertaining to OPANA^® ER and EPI’s introduction of reformulated OPANA^® ER violated antitrust laws. The complaints assert claims under Sections 1 and 2 of the Sherman Act, various state antitrust and consumer protection statutes and/or state common law. Plaintiffs generally seek damages, treble damages, disgorgement of profits, restitution, injunctive relief and attorneys’ fees. In February 2016, the MDL court issued orders (i) denying defendants’ motion to dismiss the claims of the direct purchasers, (ii) denying in part and granting in part defendants’ motion to dismiss the claims of the indirect purchasers, but giving them permission to file amended complaints and (iii) granting defendants’ motion to dismiss the complaints filed by certain retailers, but giving them permission to file amended complaints. In response to the MDL court’s orders, the indirect purchasers filed an amended complaint to which the defendants filed a renewed motion to dismiss certain claims, and certain retailers also filed amended complaints. The court has dismissed the indirect purchaser unjust enrichment claims arising under the laws of the states of California, Rhode Island and Illinois. The cases are currently in expert discovery. In March 2019, direct and indirect purchaser plaintiffs filed motions for class certification. ~~We will continue to vigorously defend these matters and to explore other options as appropriate in our best interests.~~

Beginning in February 2009, the FTC and certain private plaintiffs, including distributors and retailers, filed suit against our subsidiary Par Pharmaceutical Companies, Inc. (since June 2016, ~~Endo Generics Holdings, Inc., and referred to in this Commitments and Contingencies note as~~ EGHI) and other pharmaceutical companies alleging violations of antitrust law arising out of their settlement of certain patent litigation concerning the generic version of AndroGel^®. Generally, the complaints seek damages, treble damages, equitable relief and attorneys’ fees and costs. The cases have been consolidated and/or coordinated for pretrial proceedings in a federal MDL pending in the U.S. District Court for the Northern District of Georgia (MDL No. 2084). In September 2012, the MDL court granted summary judgment to defendants on plaintiffs’ claims of sham litigation. In May 2016, plaintiffs representing a putative class of indirect purchasers voluntarily dismissed their claims with prejudice. In February 2017, the FTC voluntarily dismissed its claims against EGHI with prejudice. Claims by certain alleged direct purchasers or their assignees are still pending against EGHI and other defendants. In June 2018, the MDL court granted in part and denied in part various summary judgment and evidentiary motions filed by defendants. In particular, the court rejected two of direct purchasers’ three causation theories, rejected damages claims related to AndroGel^® 1.62% and granted in part a motion seeking to exclude part of plaintiffs’ proposed manufacturing expert’s opinions. The motions were denied in all other respects, and the court denied a motion for reconsideration, or in the alternative leave to file an interlocutory appeal, in October 2018. In July 2018, the ~~district~~ court denied certain plaintiffs’ motion for certification of a direct purchaser class. The ~~MDL~~ court has scheduled a trial for February 2020. ~~We will continue to vigorously defend these matters and to explore other options as appropriate in our best interests.~~

Beginning in February 2018, several alleged indirect purchasers filed proposed class actions against our subsidiary PPI and others alleging a conspiracy to delay generic competition and monopolize the market for Zetia^®(ezetimibe) and its generic equivalents. The complaints generally asserted claims under Sections 1 and 2 of the Sherman Act, various state antitrust and consumer protection statutes and state common law and seek injunctive relief, damages, treble damages, attorneys’ fees and costs. In June 2018, these and other cases, including proposed direct purchaser class actions in which PPI was not named as a defendant, were consolidated and/or coordinated for pretrial proceedings in a federal MDL pending in the U.S. District Court for the Eastern District of Virginia (MDL No. 2836). In September 2018, the indirect purchaser plaintiffs dismissed their claims against PPI without prejudice. In May 2019, the direct purchaser plaintiffs filed a motion seeking leave of court to file an amended consolidated class complaint adding PPI as a defendant in the direct purchaser ~~actions.~~actions, which leave was granted in June 2019; certain retailer plaintiffs filed a similar motion, which was granted in July 2019. In July 2019, PPI entered into settlement agreements with both the direct purchaser plaintiffs and the retailer plaintiffs. The direct purchaser settlement is subject to court approval. The settlement agreements involve no admission of liability and no monetary payment.

In August 2019, an alleged direct purchaser filed a proposed class action in the U.S. District Court for the Southern District of New York against PPI and others alleging a conspiracy to delay generic competition and monopolize a market for Seroquel XR^®(extended release quetiapine fumarate) and its generic equivalents. The claims against PPI are based on allegations that PPI entered into an exclusive acquisition and license agreement with Handa Pharmaceuticals, LLC (Handa) in 2012 pursuant to which Handa assigned to PPI certain rights under a prior settlement agreement between Handa and AstraZeneca resolving certain patent litigation. The complaint generally asserts claims under Sections 1 and 2 of the Sherman Act and seeks declaratory relief, damages, treble damages, attorneys’ fees and costs.

In November 2014, EPI received a CID from Florida’s Office of the Attorney General seeking documents and other information concerning EPI’s agreement with Actavis settling the LIDODERM^® patent litigation, as well as information concerning marketing and sales of LIDODERM^®. EPI and/or EHSI later received similar CIDs from ~~other states. A CID from Alaska’s Office~~Alaska and South Carolina. In May 2019, we and EPI entered into a settlement with the state of California resolving potential antitrust and consumer protection claims concerning EPI’s agreement with Actavis settling the LIDODERM^® patent litigation, and in July 2019, we and EPI entered into a similar settlement with 18 additional states: Alabama, Arkansas, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Maryland, Minnesota, Mississippi, Missouri, Ohio, Oklahoma, Utah, Virginia, Washington and Wisconsin. The settlements involve no admission of liability, and payments provided for in the settlements are not material to the Company. As part of the ~~Attorney General~~settlements, we agreed to certain covenants relating to the future settlement of patent infringement litigation through February 2027. These covenants, which are consistent with Endo’s current practices in ~~February 2015~~settling patent infringement cases and consistent with the settlement agreement we reached with the Federal Trade Commission in January 2017, include a prohibition on patent settlement agreements that prevent the marketing of authorized generic products or that involve certain payments to generic manufacturers. The covenants are included ~~requests~~in stipulated orders subject to approval by the U.S. District Court for ~~documents~~the Northern District of California. The court approved the stipulated order relating to the California settlement in June 2019; with respect to the other settlement, a joint motion for entry of the stipulated order remains pending.

To the extent unresolved, we will continue to vigorously defend the foregoing matters and ~~information concerning agreements with Actavis and Impax settling~~to explore other options as appropriate in our best interests. Similar matters may be brought by others or the ~~OPANA~~^® ~~ER patent litigation.~~foregoing matters may be expanded. We are ~~cooperating with~~unable to predict the outcome of these ~~investigations.~~matters or to estimate the possible range of any losses that could be incurred. Adjustments to our overall liability accrual may be required in the future, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

In July 2019, EPI received a CID from the Federal Trade Commission seeking production of certain documents and information regarding oxymorphone ER and EPI’s settlement of a contract dispute with Impax Laboratories in August 2017. We are cooperating with the investigation.

In May 2016, a putative class action entitled Craig Friedman v. Endo International plc, Rajiv Kanishka Liyanaarchchie de Silva and Suketu P. Upadhyay was filed in the U.S. District Court for the Southern District of New York by an individual shareholder on behalf of himself and all similarly situated shareholders. In August 2016, the court appointed Steamfitters’ Industry Pension Fund and Steamfitters’ Industry Security Benefit Fund as lead plaintiffs in the action. In October 2016, plaintiffs filed a second amended complaint that, among other things, added Paul Campanelli as a defendant, and we filed a motion to dismiss. In response, and without resolving the motion, the court permitted lead plaintiffs to file a third amended complaint. The amended complaint alleged violations of Sections 10(b) and 20(a) of the Exchange Act based on the Company’s revision of its 2016 earnings guidance and certain disclosures about its generics business, the integration of Par Pharmaceutical Holdings, Inc. and its subsidiaries, certain other alleged business issues and the receipt of a CID from the U.S. Attorney’s Office for the Southern District of New York regarding contracts with pharmacy benefit managers concerning FROVA^®. Lead plaintiffs sought class certification, damages in an unspecified amount and attorneys’ fees and costs. We filed a motion to dismiss the third amended complaint in December 2016. In January 2018, the court granted our motion and dismissed the case with prejudice. In February 2018, lead plaintiffs filed a motion for relief from the judgment and leave to file a fourth amended complaint; the court denied this motion in April 2018. Lead plaintiffs appealed to the U.S. Court of Appeals for the Second Circuit. In April 2019, the Court of Appeals affirmed the District Court’s decision in full.

In February 2017, a putative class action entitled Public Employees’ Retirement System of Mississippi v. Endo International plc was filed in the Court of Common Pleas of Chester County, Pennsylvania by an institutional purchaser of shares in our June 2, 2015 public offering, on behalf of itself and all similarly situated purchasers. The ~~lawsuit alleges~~complaint alleged violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 against Endo, certain of its current and former directors and officers, and the underwriters who participated in the offering, based on certain disclosures about Endo’s generics business. In March 2017, defendants removed the case to the U.S. District Court for the Eastern District of Pennsylvania. In August 2017, the court remanded the case back to the Chester County Court of Common Pleas. In October 2017, plaintiff filed an amended complaint. In December 2017, defendants filed preliminary objections to the amended complaint. The court denied those preliminary objections in April 2018. Plaintiff filed its motion for class certification in July 2018. In ~~April~~June 2019, the parties ~~informed the court that they had reached~~entered into a settlement, ~~in principle. The settlement in principle would provide~~subject to court approval, which provides for a $50 million payment to the investor class ~~$50 million~~ in exchange for a release of their ~~claims;~~claims. The court preliminarily approved the settlement ~~is subject to court approval.~~in July 2019 and scheduled a final approval hearing for October 2019. As a result of the settlement, during the first quarter of 2019, the Company recorded an increase of approximately $50 million to its accrual for loss contingencies. As the Company’s insurers have agreed to fund the foregoing settlement, the Company also recorded a corresponding insurance receivable of approximately $50 million during the first quarter of 2019, which is included in Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.

In April 2017, a putative class action entitled Phaedra A. Makris v. Endo International plc, Rajiv Kanishka Liyanaarchchie de Silva and Suketu P. Upadhyay wasfiled in the Superior Court of Justice in Ontario, Canada by an individual shareholder on behalf of herself and similarly-situated Canadian-based investors who purchased Endo’s securities between January 11 and May 5, 2016. The original statement of claim generally ~~seeks~~sought class certification, declaratory relief, damages, interest and costs based on alleged violations of the Ontario Securities Act. The original statement of claim ~~alleges~~alleged negligent misrepresentations concerning the Company’s revenues, profit margins and earnings per share; its receipt of a subpoena from the state of Connecticut regarding doxycycline hyclate, amitriptyline hydrochloride, doxazosin mesylate, methotrexate sodium and oxybutynin chloride; and the erosion of the Company’s U.S. generic pharmaceuticals business. In January 2019, plaintiff amended her statement of claim to add a claim on behalf of herself and similarly-situated Canadian investors who purchased Endo’s securities between January 11, 2016 and June 8, 2017. This new claim is based on the Company’s decision to remove reformulated OPANA^® ER from the market.

In July 2016, Fresenius Kabi USA, LLC (Fresenius) filed a complaint against PPCI and its affiliate Par Sterile Products, LLC (PSP) in the U.S. District Court for the District of New Jersey alleging that ~~Par Pharmaceutical Companies, Inc.~~PPCI and its affiliate engaged in an anticompetitive scheme to exclude competition for PPCI’s VASOSTRICT^® (vasopressin) product. The complaint alleges violations of Sections 1 and 2 of the Sherman Antitrust Act, as well as state antitrust and common law, based on assertions that PPCI and its affiliate entered into exclusive supply agreements with one or more active pharmaceutical ingredient (API) manufacturers and that, as a result, Fresenius has been unable to obtain vasopressin API in order to file an Abbreviated New Drug Application (ANDA) to obtain ~~FDA~~U.S. Food and Drug Administration (FDA) approval for its own vasopressin product. Fresenius seeks actual, treble and punitive damages, attorneys’ fees and costs and injunctive relief. In September 2016, PPCI and its affiliate filed a motion to dismiss, which the district court denied in February 2017. The ~~case is currently~~parties filed cross-motions for summary judgment in ~~discovery.~~July 2019.

In August 2017, our subsidiaries PPI and PSP filed a complaint for actual, exemplary and punitive damages, injunctive relief and other relief against QuVa Pharma, Inc. (QuVa), Stuart Hinchen, Peter Jenkins and Mike Rutkowski in the U.S. District Court for the District of New Jersey. The complaint alleges misappropriation in violation of the federal Defend Trade Secrets Act, New Jersey’s Trade Secrets Act and New Jersey common law, as well as unfair competition, breach of contract, breach of fiduciary duty, breach of the duty of loyalty, tortious interference with contractual relations and breach of the duty of confidence in connection with VASOSTRICT^®, a vasopressin-based cardiopulmonary drug. In November 2017, we filed a motion for preliminary injunction seeking various forms of relief. In January 2018, we filed a first amended complaint adding four former employees and one former consultant of PSP as defendants and numerous causes of action against some or all of those individuals, including misappropriation under the federal Defend Trade Secrets Act, New Jersey’s Trade Secrets Act and New Jersey common law, as well as breach of contract, breach of the duty of loyalty and breach of the duty of confidence. In March 2018, the court granted in part our motion for preliminary injunction and enjoined QuVa from marketing and releasing its planned vasopressin product through the conclusion of trial. We subsequently deposited a bond to the court’s interest-bearing account to secure the preliminary injunction. Defendants filed a motion asking the court to reconsider the bond amount, which the court denied. Also in March 2018, QuVa and seven of the individual defendants filed a motion to dismiss the New Jersey common law claims, four of the individual defendants filed a motion to dismiss for lack of personal jurisdiction and one of the individuals filed a motion to dismiss the breach of contract claim. In April 2018, another individual defendant filed a motion to dismiss asserting numerous arguments, including lack of personal jurisdiction, improper venue and choice of law. Discovery began in May 2018. Also in May 2018, defendants filed a notice of appeal to the Third Circuit Court of Appeal indicating intent to appeal the court’s preliminary injunction. The parties completed appellate briefing in January 2019. Also in January 2019, the court denied all four of defendants’ pending motions to dismiss. In February 2019, the defendants filed their answers and affirmative defenses, and certain defendants also filed counterclaims for defamation, tortious interference with contract, tortious interference with prospective business relations and witness interference. The counterclaims seek actual, exemplary and punitive damages and other relief. In March 2019, we filed a motion to dismiss all of the defendants’ counterclaims. This motion is still pending. In April 2019, the Third Circuit Court of Appeals affirmed the court’s preliminary injunction but remanded for additional fact-finding concerning the duration of the preliminary injunction and, if needed, consideration of the additional trade secrets raised in our motion for preliminary injunction but not addressed by the preliminary injunction order. The parties completed remand briefing in June 2019 and, following oral argument in July 2019, the court took the issue under submission.

In September 2018, PSP and PPI received a notice letter from Sandoz Inc. (Sandoz) advising of the filing by such company of an ANDA for a generic version of VASOSTRICT^® (vasopressin IV solution (infusion)) 200 units/10 ml. In October 2018, PPI, PSP and EPIC filed a lawsuit against Sandoz in the U.S. District Court for the District of New Jersey within the 45-day deadline to invoke a 30-month stay of FDA approval pursuant to the Hatch-Waxman legislative scheme. In October 2018, PSP and PPI received an additional notice letter from Sandoz advising of the filing by such company of an ANDA for a generic version of the 20 units/1 ml presentation for VASOSTRICT^®. In November 2018, the complaint was amended to add a claim for the additional notice letter, within the 45-day deadline to invoke a 30-month stay of FDA approval pursuant to the Hatch-Waxman legislative scheme. ~~The Company continues to vigorously defend its intellectual property.~~

In November 2018, PSP and PPI received a notice letter from Amphastar Pharmaceuticals, Inc. (Amphastar) advising of the filing by such company of an ANDA for a generic version of VASOSTRICT^® (vasopressin IV solution (infusion)) 20 units/1 ml. In December 2018, PPI, PSP and EPIC filed a lawsuit against Amphastar in the U.S. District Court for the District of Delaware within the 45-day deadline to invoke a 30-month stay of FDA approval pursuant to the Hatch-Waxman legislative scheme. ~~The Company continues to vigorously defend its intellectual property.~~

In June 2019, PSP and PPI received a notice letter from American Regent advising of the filing by such company of an ANDA for a generic version of VASOSTRICT^® (vasopressin IV solution (infusion)) 20 units/1 ml. The ~~Company continues~~45-day deadline to ~~vigorously defend its intellectual property.~~invoke a 30-month stay of FDA approval pursuant to the Hatch-Waxman legislative scheme has not yet expired.

In August 2014 and October 2014, the U.S. Patent Office issued U.S. Patent Nos. 8,808,737 (the ‘737 patent) and 8,871,779 (the ‘779 patent) respectively, which cover a method of using OPANA^® ER and a highly pure version of the API of OPANA^® ER. In November 2014, EPI filed lawsuits against Teva, ThoRx, Actavis, Impax, Ranbaxy, Roxane, Amneal and Sandoz Inc. based on their ANDAs filed against both the INTAC^® technology and non-INTAC^® technology versions of OPANA^® ER. Those lawsuits were filed in the U.S. District Court for the District of Delaware alleging infringement of these new patents, which expire in 2027 and 2029, respectively. On November 17, 2015, the District Court held the ‘737 patent invalid for claiming unpatentable subject matter. That patent ~~has been~~was dismissed from all suits and the suits administratively closed as to that patent, subject to appeal at the end of the case on the ‘779 patent. In July 2016, a three-day trial was held in the U.S. District Court for the District of Delaware against Teva and Amneal for infringement of the ‘779 patent. In October 2016, the District Court issued an opinion holding that the defendants infringed the claims of U.S. Patent No. 8,871,779. The opinion also held that the defendants had failed to show that the ‘779 patent was invalid. The District Court issued an order enjoining the defendants from launching their generic products until the expiration of the ‘779 patent in November 2029. A trial for infringement of the ‘779 patent by Actavis was held in February 2017 in the same court (U.S. District Court for the District of Delaware) in front of the same judge. In August 2017, the District Court issued an opinion holding that Actavis infringed the claims of the ‘779 patent and that Actavis had failed to show that the ‘779 patent was invalid. Teva, Amneal and Actavis have appealed these holdings. We have appealed the holding that the ‘737 patent is invalid. ~~A hearing on those appeals took place in December 2018. We are awaiting decisions on the Teva, Amneal and Actavis appeals.~~ On ~~Endo’s~~our appeal, the court ruled in ~~Endo’s~~our favor in ~~April~~March 2019, holding that the ‘737 patent is not invalid for claiming a natural law. ~~Once~~In May 2019, the ~~remaining appeals are decided, this case will be referred back~~appellate court upheld the lower court’s ruling that the defendants infringed the claims of the ‘779 patent. As a result, the lower court issued injunctions in May, June and July 2019 against the defendants from launching their generic product prior to the ~~District Court.~~

Proceedings similar to those described above may also be brought in the future. Additionally, we are involved in, or have been involved in, arbitrations or various other proceedings that arise from the normal course of our business. We cannot predict the timing or outcome of these other proceedings. Currently, neither we nor our subsidiaries are involved in any other proceedings that we expect to have a material effect on our business, financial condition, results of operations and cash flows.

There were no tax effects allocated to any component of Other comprehensive income (loss) for the three and six months ended ~~March 31,~~June 30, 2019 and 2018. Substantially all of the Company’s Accumulated other comprehensive loss balances at ~~March 31,~~June 30, 2019 and December 31, 2018 ~~consists~~consist of Foreign currency translation loss.

Net ~~loss (gain)~~gain on sale of business and other assets primarily relates to the sales of various ANDAs. Amounts of Foreign currency loss (gain), net result from the remeasurement of the Company’s foreign currency denominated assets and liabilities. Net loss (gain) from our investments in the equity of other companies includes the income statement impacts of our investments in the equity of other companies, ~~including those~~which primarily relate to investments accounted for under the equity ~~method and those classified as marketable securities.~~method.

The following is a reconciliation of the numerator and denominator of basic and diluted net loss per share for the three and six months ended ~~March 31,~~June 30, 2019 and 2018 (in thousands):

Unless otherwise indicated or required by the context, references throughout to “Endo,” the “Company,” “we,” “our” or “us” refer to financial information and transactions of Endo International plc and its subsidiaries.

The following table displays our revenue, gross margin, gross margin percentage and other pre-tax expense or income for the three and six months ended ~~March 31,~~June 30, 2019 and 2018 (dollars in thousands):

Total revenues, net. ~~The increase for the three months ended March 31, 2019 is primarily due to continued strong performance~~ Revenues from our Sterile Injectables segment, including VASOSTRICT^®, ADRENALIN^® and ertapenem for injection, ~~the authorized generic of Invanz~~^®, our Branded Pharmaceuticals segment’s Specialty Products portfolio, led by XIAFLEX^®, and new product launches such as colchicine tablets, the authorized generic of Colcrys^®~~. These increases were partially offset by continued competitive pressure on commoditized generic products~~, increased during both the three and ~~generic competition on~~six months ended June 30, 2019. Revenues from our Branded Pharmaceuticals segment’s Established Products ~~portfolio.~~portfolio, our Generic Pharmaceuticals segment and our International Pharmaceuticals segment decreased during both the three and six months ended June 30, 2019 as a result of continued competitive pressures, generic competition and certain other factors. Our revenues are further disaggregated and described below under the heading “Business Segment Results Review.”

Cost of revenues and gross margin percentage. During the three and six months ended ~~March 31,~~June 30, 2019 and 2018, we incurred certain charges that impact the comparability of total Cost of revenues, including those related to amortization expense and separation benefits and other cost reduction initiatives, including restructurings. The following table summarizes such amounts (in thousands):

Reductions to these charges during the three and six months ended June 30, 2019 resulted in decreases to Cost of revenues and increases in gross margin percentage. Our Cost of revenues and gross margin percentage were also impacted by changes in the amounts and mix of our revenues during the three and six months ended June 30, 2019. These changes in mix included both the favorable impacts of overall shifts from lower margin Generic Pharmaceuticals and Established Products to higher margin Sterile Injectables and Specialty Products and the unfavorable impacts of increases in sales of certain lower margin authorized generic products launched in the third quarter of 2018.

The increase in Cost of revenues and the decrease in gross margin percentage during the three months ended June 30, 2019 related primarily to product mix, partially offset by decreases to amortization expense and ~~decreased~~ restructuring ~~charges were the primary factors leading to~~charges. The increase in Cost of revenues was also partially offset by the overall ~~period-over-period~~decrease in revenues described above.

The decrease in Cost of revenues and the increase in gross margin percentage during the six months ended June 30, 2019 related primarily to decreases to amortization expense and restructuring charges, partially offset by product mix.

Selling, general and administrative expenses. The increase for the three months ended ~~March 31, 2019. Partially offsetting these decreases~~June 30, 2019 was ~~the impact of the previously described increase~~primarily driven by increases in ~~total revenues.~~costs related to our continued investment and promotional efforts behind XIAFLEX^®.

The changes in gross margin percentage for the three months ended March 31, 2019 were primarily attributable to the gross margin effects of the net Cost of revenues decreases included in the table above and the impact of changes in product mix, which included the favorable impact of a shift in product mix to higher margin Sterile Injectables revenues, offset by the impact of the revenue performance of certain authorized generic products launched in 2018.

Research and development expenses. We are currently progressing the cellulite treatment development program for collagenase clostridium histolyticum (CCH). In November 2018, we reported positive results from two Phase 3 clinical trials of ~~collagenase clostridium histolyticum (CCH)~~CCH for the treatment of cellulite in the buttocks. Trial subjects receiving CCH showed highly statistically significant levels of improvement in the appearance of cellulite with treatment, as measured by the trials’ primary endpoint. In addition, the RELEASE-1 trial passed 8 out of 8 key secondary endpoints and the RELEASE-2 trial passed 7 out of 8 key secondary endpoints. Finally, CCH was well-tolerated in the actively-treated subjects with most adverse events being mild to moderate in severity and primarily limited to the local injection area. These trials had been initiated during the first quarter of 2018.

~~Also during~~Our remaining pipeline consists mainly of a variety of pharmaceutical products in our Sterile Injectables and Generic Pharmaceuticals segments. Our primary approach to developing products in these segments is to target high-barrier-to-entry product opportunities, including first-to-file or first-to-market opportunities that are difficult to formulate or manufacture or face complex legal and regulatory challenges. We expect such product opportunities to result in products that are either the ~~first quarter~~exclusive generic or have two or fewer generic competitors when launched, which we believe tends to lead to more sustainable market share and profitability for our product portfolio. In our Sterile Injectables business, we also focus on developing branded injectable products with inherent scientific, regulatory, legal and technical complexities and developing other dosage forms and technologies.

As of ~~2018, we announced the~~ ~~January 2018 Restructuring Initiative~~,June 30, 2019, these two segments are actively pursuing approximately 120 product candidates, which included approximately 65 ANDAs pending with the FDA. Of the 65 ANDAs, approximately half represent first-to-file opportunities or first-to-market opportunities. These numbers do not include five sterile injectable product candidates relating to a ~~reorganization~~second-quarter 2018 development, license and commercialization agreement with Nevakar, Inc. These numbers reflect recent actions taken in connection with our review and management of our ~~Generic Pharmaceuticals segment’s research and development network.~~ pipeline.

The ~~January 2018 Restructuring Initiative~~ ~~is described more fully in Note 4. Restructuring of the Condensed Consolidated Financial Statements included in~~ ~~Part I, Item 1~~.

Litigation-related and other contingencies, net. Included within Litigation-related and other contingencies, net are changes to our accruals for litigation-related settlement charges and certain settlement proceeds related to suits filed by our subsidiaries. Our material legal proceedings and other contingent matters are described in more detail in Note 13. Commitments and Contingencies of the Condensed Consolidated Financial Statements included in Part I, Item 1. As further described therein, adjustments to the corresponding liability accruals may be required in the future. This could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Asset impairment charges. The following table presents the components of our total Asset impairment charges for the three and six months ended ~~March 31,~~June 30, 2019 and 2018 (in thousands):

Acquisition-related and integration items. Acquisition-related and integration items for the three and six months ended ~~March 31,~~June 30, 2019 and 2018 primarily consist of the net (benefit) expense from changes in the fair value of acquisition-related contingent consideration liabilities resulting from changes to our estimates regarding the timing and amount of the future revenues of the underlying products and changes in other assumptions impacting the probability of, and extent to which we will incur related contingent obligations. See Note 6. Fair Value Measurements of the Condensed Consolidated Financial Statements included in Part I, Item 1 for further discussion of our acquisition-related contingent consideration.

Interest expense, net. The components of Interest expense, net for the three and six months ended ~~March 31,~~June 30, 2019 and 2018 are as follows (in thousands):

The ~~increase~~increases in interest expense for both the three and six months ended ~~March 31,~~June 30, 2019 ~~was~~were primarily attributable to ~~higher interest rates driven by~~ increases into the London Interbank Offered Rate (LIBOR) that impacted our variable-rate ~~debt.~~

Although we cannot predict future interest rates with certainty, absent actions to reduce the weighted average interest rate or ~~to further reduce~~ the principal amount of our debt, interest expense is likely to increase in 2019 as compared to 2018, primarily as a result of increases in LIBOR, ~~together with~~the impact of the March 2019 Refinancing Transactions, ~~that~~which increased ~~the~~our weighted average interest rate and reduced the outstanding principal of our ~~debt.~~debt, and the June 2019 Revolving Credit Facility draw of $300.0 million. Refer to Note 12. Debt of the Condensed Consolidated Financial Statements included in Part I, Item 1 for further discussion of these transactions.

Interest income varies primarily based on the amounts of our interest-bearing investments, such as money markets, as well as changes in the corresponding interest rates.

Gain on extinguishment of debt. Gain on extinguishment of debt totaled $119.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2019, with no such amounts recorded in any of the other periods presented. The amount during the ~~three~~six months ended ~~March 31,~~June 30, 2019 related to the March 2019 Refinancing Transactions. Refer to Note 12. Debt of the Condensed Consolidated Financial Statements included in Part I, Item 1 for further discussion.

Other (income) expense, ~~(income),~~ net. The components of Other (income) expense, ~~(income),~~ net for the three and six months ended ~~March 31,~~June 30, 2019 and 2018 are as follows (in thousands):

Net ~~loss (gain)~~gain on sale of business and other assets primarily relates to the sales of various ANDAs. Amounts of Foreign currency loss (gain), net result from the remeasurement of the Company’s foreign currency denominated assets and liabilities. Net loss (gain) from our investments in the equity of other companies includes the income statement impacts of our investments in the equity of other companies, ~~including those~~which primarily relate to investments accounted for under the equity ~~method and those classified as marketable securities.~~method.

The Internal Revenue Service (IRS) presently is examining certain of our subsidiaries’ U.S. income tax returns for fiscal years ending between December 31, 2011 and December 31, 2015 and, in connection with those examinations, is reviewing our tax positions related to, among other things, certain intercompany arrangements, including the level of profit earned by our U.S. subsidiaries pursuant to such arrangements, and a worthless stock deduction directly attributable to product liability losses. The IRS may examine our tax returns for other fiscal years and/or for other tax positions. Similarly, other tax authorities ~~may examine~~including the Canadian Revenue Authority are currently examining our non-U.S. tax ~~returns and propose adjustments~~returns. Additionally, other jurisdictions where we are not currently under audit remain subject to ~~our taxes.~~potential future examination. Such examinations may lead to proposed or actual adjustments to our taxes that may be material, individually or in the aggregate. An adverse outcome of these tax examinations could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Discontinued operations, net of tax. The operating results of ~~our~~the Company’s Astora business, which the Board of Directors resolved to wind-down in 2016, are reported as Discontinued operations, net of tax in the Condensed Consolidated Statements of Operations for all periods presented. The following table provides the operating results of ~~our discontinued~~Astora Discontinued operations, net of tax, ~~were losses of $6.0 million and $7.8 million during~~for the three and six months ended ~~March 31,~~June 30, 2019 and 2018 ~~respectively. Included in these~~(in thousands):

These amounts ~~are~~include Litigation-related and other contingencies, net, mesh-related legal defense costs and certain other items. For additional discussion of mesh-related matters, refer to Note 13. Commitments and Contingencies of the Condensed Consolidated Financial Statements included in Part I, Item 1.

Key Trends. We estimate that the following factors will impact our 2019 total revenues as compared to 2018:

These estimated trends reflect the current expectations of the Company’s management team based on information currently known to them. These estimates are subject to risks and uncertainties that could cause our actual results to differ materially from those indicated by such estimated trends.

During the first quarter of 2019, the Company changed the names of its reportable segments. This change, which was intended to simplify the segments’ names, had no impact on the Company’s unaudited Condensed Consolidated Financial Statements or segment results for any of the periods presented. For further details regarding this change and a discussion of our reportable segments and how we evaluate segment performance, refer to Note 5. Segment Results of the Condensed Consolidated Financial Statements included in Part I, Item 1.

We refer to adjusted income from continuing operations before income tax, a financial measure not determined in accordance with U.S. GAAP, in making operating decisions because we believe it provides meaningful supplemental information regarding our operational performance. For instance, we believe that this measure facilitates internal comparisons to our historical operating results and comparisons to competitors’ results. We believe this measure is useful to investors in allowing for greater transparency related to supplemental information used in our financial and operational decision-making. Further, we believe that adjusted income from continuing operations before income tax may be useful to investors as we are aware that certain of our significant shareholders utilize adjusted income from continuing operations before income tax to evaluate our financial performance. Finally, adjusted income from continuing operations before income tax is utilized in the calculation of other ~~non-GAAP~~ financial measures ~~which~~not determined in accordance with U.S. GAAP that are used by the Compensation Committee of the Company’s Board of Directors in assessing the performance and compensation of substantially all of our employees, including our executive officers.

There are limitations to using financial measures such as adjusted income from continuing operations before income tax. Other companies in our industry may define adjusted income from continuing operations before income tax differently than we do. As a result, it may be difficult to use adjusted income from continuing operations before income tax or similarly named adjusted financial measures that other companies may use to compare the performance of those companies to our performance. Because of these limitations, adjusted income from continuing operations before income tax is not intended to represent cash flow from operations as defined by U.S. GAAP and should not be used as an indicator of operating performance, a measure of liquidity or as alternative to net income, cash flows or any other financial measure determined in accordance with U.S. GAAP. We compensate for these limitations by providing reconciliations of our total segment adjusted income from continuing operations before income tax to our Total consolidated loss from continuing operations before income tax, which is determined in accordance with U.S. GAAP and included in our Condensed Consolidated Statements of Operations.

Branded Pharmaceuticals. The following table displays the significant components of our Branded Pharmaceuticals revenues from external customers for the three and six months ended ~~March 31,~~June 30, 2019 and 2018 (in thousands):

The ~~increase~~increases in net sales of XIAFLEX^® for both the three and six months ended ~~March 31,~~June 30, 2019 ~~was~~were primarily attributable to demand growth driven by the continued investment and promotional efforts behind XIAFLEX^®, as well as price.

The ~~increase~~increases in net sales of SUPPRELIN^® LA for both the three and six months ended ~~March 31,~~June 30, 2019 ~~was~~were primarily attributable to increases in both volume and price.

The ~~increase~~increases in net sales of Other Specialty Products for both the three and six months ended ~~March 31,~~June 30, 2019 ~~was~~were primarily attributable to increased sales of both NASCOBAL^® Nasal Spray and AVEED^®. When compared to the three and six months ended ~~March 31,~~June 30, 2018, these products generally benefited from increased volumes.

The ~~decrease~~decreases in net sales of PERCOCET^® for both the three and six months ended ~~March 31,~~June 30, 2019 ~~was~~were primarily attributable to volume decreases, partially offset by price increases.

The ~~increase~~decrease in net sales of TESTOPEL^® for the three months ended ~~March 31,~~June 30, 2019 was primarily attributable to decreased volume. The decrease in net sales for the six months ended June 30, 2019 was attributable to both price and volume ~~increases.~~decreases.

The ~~decrease~~decreases in net sales of Other Established Products for both the three and six months ended ~~March 31,~~June 30, 2019 ~~was~~were primarily attributable to volume decreases as a result of ongoing competitive pressure from generic ~~competition, partially offset by price increases.~~competition.

~~Net~~The increases in net sales of VASOSTRICT^® ~~and ADRENALIN~~^® ~~increased during~~ for the three and six months ended ~~March 31,~~June 30, 2019 ~~due~~were primarily attributable to ~~both increased~~changes in price and ~~volume. The increase in volume for VASOSTRICT~~^® ~~reflects a benefit from the timing~~mix of ~~shipments.~~

As of ~~March 31,~~June 30, 2019, we have six patents for VASOSTRICT^® listed in the Orange Book and additional patents pending with the U.S. Patent and Trademark Office. The FDA requires any applicant seeking FDA approval for vasopressin prior to patent expiry and relying on VASOSTRICT^® as the Reference Listed Drug to notify us of its filing before the FDA will issue an approval.

We are aware of certain competitive actions taken by other pharmaceutical companies related to VASOSTRICT^®. These matters are further discussed in Note 13. Commitments and Contingencies of the Condensed Consolidated Financial Statements included in Part I, Item 1 under the heading ~~“VASOSTRICT~~“VASOSTRICT^®Related ~~Matters.~~Matters.” We have taken and plan to continue to take actions in our best interest to protect our rights with respect to VASOSTRICT^®. The introduction of any competing versions of VASOSTRICT^® could result in reductions to our market share, revenues, profitability and cash flows.

The increases in net sales of ADRENALIN^® for the three and six months ended June 30, 2019 were primarily attributable to increased price and volume.

Ertapenem for injection, the authorized generic of Invanz^®, launched during the third quarter of 2018 and had no sales during the three and six months ended ~~March 31,~~June 30, 2018.

The ~~decrease~~decreases in net sales of Other Sterile Injectables for both the three and six months ended ~~March 31,~~June 30, 2019 ~~was~~were primarily driven by the timing of shipments for certain products in this portfolio and certain competitive pressures.

Generic Pharmaceuticals. The ~~decrease~~decreases in revenue for the Generic Pharmaceuticals segment for both the three and six months ended ~~March 31,~~June 30, 2019 ~~was~~were primarily attributable to continued competitive pressure on commoditized generic products. Partially offsetting the ~~decrease was~~decreases were the ~~impact~~impacts of certain recent product launches including, among others, colchicine tablets.

International Pharmaceuticals. The ~~decrease~~decreases in revenue for the International Pharmaceuticals segment for both the three and six months ended ~~March 31,~~June 30, 2019 ~~was~~were primarily attributable to competitive pressures in certain international markets and the ~~Canadian market and a shift in timing~~impact of ~~sales on certain products compared~~actions taken related to ~~the same period in 2018.~~planned product discontinuations.

Adjusted income from continuing operations before income tax. The following table displays our Adjusted income from continuing operations before income tax by reportable segment for the three and six months ended ~~March 31,~~June 30, 2019 and 2018 (in thousands):

Sterile Injectables. The decrease during the three months ended June 30, 2019 reflects the impact of changes in product mix, including the revenue increase related to ertapenem for injection, which is an authorized generic product that launched in the third quarter of 2018. The increase during the six months ended June 30, 2019 was primarily attributable to increased revenues and gross margins resulting from the strong performance of a variety of products in this ~~segment as described above.~~segment.

Generic Pharmaceuticals. The ~~decrease~~decreases for both the three and six months ended ~~March 31,~~June 30, 2019 ~~was~~were primarily attributable to decreased revenues as described above and the resulting ~~reduction~~reductions to gross margin. ~~This decrease was~~These decreases were partially offset by reduced expenses, including cost savings associated with certain restructuring and other cost saving initiatives and, during the six months ended June 30, 2019, a lower branded prescription drug ~~fee and the cost savings associated with the~~fee. Our material restructuring initiatives are described in Note 4. Restructuring of the Condensed Consolidated Financial Statements included in Part I, Item 1.

International Pharmaceuticals. The ~~decrease~~decreases for both the three and six months ended ~~March 31,~~June 30, 2019 ~~was~~were primarily attributable to decreased revenues as described above and the resulting ~~reduction~~reductions to gross margin, partially offset by decreases to ~~selling,~~Selling, general and administrative expenses.

Our principal source of liquidity is cash generated from operations. Our principal liquidity requirements are primarily for working capital for operations, licenses, milestone payments, capital expenditures, acquisitions, contingent liabilities, debt service payments and litigation-related matters, including vaginal mesh liability payments. The Company’s working capital was ~~$520.8~~$919.2 million at ~~March 31,~~June 30, 2019 compared to working capital of $393.1 million at December 31, 2018. The amounts at ~~March 31,~~June 30, 2019 and December 31, 2018 include restricted cash and cash equivalents of ~~$327.4~~$306.4 million and $299.7 million, respectively, held in QSFs for mesh-related matters. Although these amounts in QSFs are included in working capital, they are required to be used for mesh product liability settlement agreements.

From time to time, we may seek to enter into certain transactions to reduce the extent of our leverage and/or interest expense and/or to extend the maturities of our outstanding indebtedness. Such transactions could include, for example, transactions to exchange existing indebtedness for our ordinary shares, to issue equity (including convertible securities) or to repurchase, redeem or refinance our existing indebtedness (including the Credit Agreement). In order to finance any such transactions, we may need to obtain additional funding. Any of these transactions could impact our liquidity.

We may also require additional financing to fund our future operational needs or for future corporate transactions, including acquisitions. We have historically had broad access to financial markets that provide liquidity; however, we cannot be certain that funding will be available to us in the future on terms acceptable to us, or at all. Any issuances of equity securities or convertible securities, in connection with an acquisition or otherwise, could have a dilutive effect on the ownership interest of our current shareholders and may adversely impact net income per share in future periods. An acquisition may be accretive or dilutive and, by its nature, involves numerous risks and uncertainties. As a result of acquisition efforts, if any, we are likely to experience significant charges to earnings for merger and related expenses (whether or not the acquisitions are consummated) that may include transaction costs, closure costs or costs of restructuring activities.

~~Borrowings.~~Borrowings. The Company and/or certain of its subsidiaries are party to the Credit Agreement, which governs the Credit Facilities, and the indentures governing our various senior secured and senior unsecured notes. As of ~~March 31,~~June 30, 2019, approximately ~~$3.4~~$3.3 billion was outstanding under the Term Loan Facility, approximately $0.3 billion was outstanding under the Revolving Credit Facility and approximately $4.8 billion was outstanding under the senior secured and senior unsecured ~~notes~~notes.

The $300.0 million under the Revolving Credit Facility was borrowed by the Company in June 2019. The Company expects to use the proceeds from this borrowing for purposes consistent with the Company’s previously stated capital allocation priorities, including for general corporate purposes. After giving effect to this transaction and previously issued and outstanding letters of credit, approximately ~~$996.8~~$696.8 million ~~was~~of remaining credit is available under the Revolving Credit Facility. However, the Company’s debt agreements contain certain conditions that limit the Company’s ability to incur additional secured indebtedness, including borrowings under the Revolving Credit Facility, which significantly restrict the Company’s access to this remaining available credit.

The Company and its subsidiaries, with certain customary exceptions, guarantee or serve as issuers or borrowers of the debt instruments representing substantially all of the Company’s indebtedness at ~~March 31,~~June 30, 2019.

The Company’s notes mature between 2022 and 2027, subject to earlier repurchase or redemption in accordance with the terms of the respective indentures. Interest rates on these notes range from 5.375% to 7.50%. Certain of these notes are senior unsecured obligations of the Company’s subsidiaries party to the applicable indentures governing such notes.

The indentures governing our various senior notes contain affirmative and negative covenants that the Company believes to be usual and customary for similar indentures. Under the senior secured notes indentures, the negative covenants, among other things, restrict the Company’s ability and the ability of its Restricted Subsidiaries (as defined in the indentures) to incur certain additional indebtedness and issue preferred stock; make certain dividends, distributions, investments and other restricted payments; sell certain assets; enter into sale and leaseback transactions; agree to certain restrictions on the ability of restricted subsidiaries to make certain payments to the Company or any of its restricted subsidiaries; create certain liens; merge, consolidate or sell all or substantially all of the Company’s assets; enter into certain transactions with affiliates or designate subsidiaries as unrestricted subsidiaries. Under the senior unsecured notes indentures, the negative covenants, among other things, restrict the ability of Endo Designated Activity Company and its Restricted Subsidiaries (as defined in the indentures) to incur certain additional indebtedness and issue preferred stock; make certain dividends, distributions, investments and other restricted payments; sell certain assets; enter into sale and leaseback transactions; agree to certain restrictions on the ability of restricted subsidiaries to make certain payments to the issuer or any of the restricted subsidiaries; create certain liens; merge, consolidate or sell all or substantially all of Endo Designated Activity Company’s, its co-issuers’ or guarantors’ assets; enter into certain transactions with affiliates or designate subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of exceptions and qualifications, including the fall away or revision of certain of these covenants and release of collateral in the case of the senior secured notes, upon the notes receiving investment grade credit ratings. As of ~~March 31,~~June 30, 2019 and December 31, 2018, we were in compliance with all such covenants.

Credit ratings. The Company’s corporate credit ratings assigned by Moody’s Investors Service and Standard & Poor’s are B2B3 with a ~~negative~~stable outlook and B with a stable outlook, respectively.

Working capital. The components of our working capital and our liquidity at ~~March 31,~~June 30, 2019 and December 31, 2018 are below (dollars in thousands):

Net working capital increased by ~~$127.8~~$526.2 million from December 31, 2018 to ~~March 31,~~June 30, 2019. This increase primarily reflects the increase to cash of $300.0 million as a result of the June 2019 borrowing under the Revolving Credit Facility and the favorable impact to net current assets resulting from operations during the ~~three~~six months ended ~~March 31,~~June 30, 2019. ~~These increases were~~This activity was partially offset by certain items that occurred during the ~~three~~six months ended ~~March 31,~~June 30, 2019 including, but not limited to, the impact of adopting ASC 842, which resulted in a net decrease to working capital of approximately $10.7 million, purchases of property, plant and equipment, excluding capitalized interest, of $~~15.4~~23.6 million and our incurrence of financing fees in connection with the March 2019 Refinancing Transactions.

The following table summarizes our Condensed Consolidated Statements of Cash Flows for the ~~three~~six months ended ~~March 31,~~June 30, 2019 and 2018 (in thousands):

Operating activities. Net cash ~~(used in)~~ provided by operating activities represents the cash receipts and cash disbursements from all of our activities other than investing activities and financing activities. Changes in cash from operating activities reflect, among other things, the timing of cash collections from customers, payments to suppliers, managed care organizations, government agencies, collaborative partners and employees, as well as tax payments and refunds in the ordinary course of business.

The ~~$139.4~~$132.5 million ~~change~~decrease in Net cash ~~(used in)~~ provided by operating activities during the ~~three~~six months ended ~~March 31,~~June 30, 2019 compared to the prior year period was primarily ~~the result~~due to our results of operations as described above and the timing of cash collections and cash payments related to our operations. ~~Cash outlays for legal matters increased during~~Included within this decrease were the ~~three months ended March 31, 2019 compared to the prior year period as a result~~impacts of increased cash outflows for certain mesh-related and LIDODERM^®-related matters of approximately ~~$10.0~~$1.2 million and $30.0 million, ~~respectively. Additionally,~~respectively, and higher cash paid for interest ~~during the three months ended March 31, 2019 increased as compared to the prior year period~~ as a result of increased interest rates and approximately $20.3 million of interest paid early as a result of the Notes Repurchases described in Note 12. Debt of the Condensed Consolidated Financial Statements included in Part I, Item 1. Additionally, we increased inventory levels during the six months ended June 30, 2019 in advance of certain recent and planned future product launches, which utilized cash. We expect that payments for previously accrued legal matters, which are further discussed in Note 13. Commitments and Contingencies of the Condensed Consolidated Financial Statements included in Part I, Item 1, and the potential increases to interest expense discussed above will continue to impact our Net cash provided by operating activities in future periods.

Investing activities. The ~~$0.8~~$13.3 million increase in Net cash used in investing activities during the ~~three~~six months ended ~~March 31,~~June 30, 2019 compared to the prior year period reflects a decrease in Proceeds from sale of business and other assets, net of ~~$13.2~~$35.4 million, offset in part by a decrease in Purchases of property, plant and equipment, excluding capitalized interest of ~~$9.5~~$18.3 million and ~~a decrease~~changes in ~~payments for~~ Other investing activities of ~~$3.3~~$4.2 million.

Financing activities. During the six months ended June 30, 2019, Net cash ~~used in~~provided by financing activities ~~increased $10.4 million during the three months ended March 31, 2019 compared~~related primarily to the ~~prior year period. This increase was primarily due to~~$300.0 million June 2019 borrowing under the Revolving Credit Facility. The proceeds from this transaction were offset by Repayments of term loans of $17.1 million, Payments for contingent consideration of $8.2 million, Payments of tax withholding for restricted shares of $9.4 million, Repayments of other indebtedness of $6.7 million and the net effect of the March 2019 Refinancing Transactions, which resulted in Proceeds from issuance of notes, net of $1,483.1 million, cash used for Repayments of notes totaling $1,500.0 million and Payments for debt issuance and extinguishment costs of ~~deferred financing fees of $0.2 million during~~$5.1 million.

During the ~~three~~six months ended ~~March 31, 2019. Partially offsetting this increase was a decrease~~June 30, 2018, Net cash used in financing activities related primarily to Payments for contingent consideration of ~~$7.4~~$19.3 million and Repayments of term loans of $17.1 million.

Fluctuations. Our quarterly results have fluctuated in the past and may continue to fluctuate. These fluctuations may be due to the timing of new product launches, purchasing patterns of our customers, market acceptance of our products, the impact of competitive products and pricing, certain actions taken by us which may impact the availability of our products, asset impairment charges, litigation-related charges, restructuring costs including separation benefits business combination transaction costs, the impact of financing transactions, upfront, milestone and certain other payments made or accrued pursuant to licensing agreements and changes in the fair value of financial instruments and contingent assets and liabilities recorded as part of business combinations. Further, a substantial portion of our total revenues are through three wholesale drug distributors who in turn supply our products to pharmacies, hospitals and physicians. Accordingly, we are potentially subject to a concentration of credit risk with respect to our trade receivables.

Inflation. We do not believe that inflation had a material adverse effect on our financial statements for the periods presented.

Off-balance sheet arrangements. We have no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

Media stories regarding prescription drug abuse and the ~~Annual Report~~diversion of opioids and other controlled substances are commonplace. Aggressive enforcement and unfavorable publicity regarding, for ~~more information.~~

~~Any~~Manufacturers of prescription opioid medications have been the subject of significant civil and criminal investigatory and enforcement action even in cases where such ~~result may cause us~~medications have received approval from the FDA or similar regulatory authorities. In addition, numerous governmental and private persons and entities are pursuing civil litigation against opioid manufacturers and distributors, invoking current laws and regulations relating to ~~pursue one or more remedial measures, including internal reorganizations~~opioids and/or other ~~restructuring activities, strategic corporate alignment~~prescription medicines, as well as novel uses of other laws that seek to hold accountable opioid manufacturers for opioid misuse. See Note 13. Commitments and ~~cost-saving initiatives~~Contingencies of the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report for more information.

Regulatory actions at the federal, state and local level may seek to limit or ~~other significant corporate transactions.~~restrict the manufacturing, distribution or sale of opioids, both directly and indirectly, and/or to impose novel policy or regulatory mechanisms regarding the manufacturing, distribution or sales of opioids. For example, in April 2019, New York enacted an excise tax on opioids. See the risk factor ~~“Our ability to fund our operations, maintain liquidity~~“Our business and ~~meet our financing obligations is reliant on our operations, which are subject to significant risks and uncertainties” in Part 1, Item 1A. “Risk Factors”~~financial condition may be adversely affected by legislation” in the Annual Report for more information. ~~Likewise, any internal reorganizations and/~~Many state legislatures are considering various bills intended to reduce opioid abuse such as by, for example, establishing prescription drug monitoring programs and mandating prescriber education.

Under current law, we are expected to be treated as a non-U.S. corporation for U.S. federal income tax purposes. However, changes to the rules in Section 7874 of the Internal Revenue Code (the Code) or regulations promulgated thereunder or other ~~significant corporate transactions may be complex,~~guidance issued by the Treasury or the U.S. IRS could ~~entail significant cost~~adversely affect our status as a non-U.S. corporation for U.S. federal income tax purposes, and ~~charges~~any such changes could have prospective or ~~could otherwise negatively impact shareholder value~~retroactive application to us, EHSI and/or their respective shareholders and affiliates. Consequently, there can be no assurance that wethere will ~~be able to accomplish any of these alternatives on terms acceptable to us, or at all.~~

In addition, recent Irish legislation created a “controlled foreign corporation” tax regime and future proposals may limit deductibility of certain interest and/or other ~~losses,~~payments made by our Irish subsidiaries from which we currently benefit. If such as the cost of a recall, if any claim is brought against us, regardless of the success or failure of the claim. For example, we generally no longer have product liability insurance to cover the claims in connection with the mesh-related litigation described above. Additionally, we may be limited by the surviving insurance policies of our acquired subsidiaries, which may not be adequate to cover against potential liabilities or other losses. Even where claims are submitted to insurance carriers for defense and indemnity, there can be no assurance that the claims will be fully covered by insurance or that the indemnitors or insurers will remain financially viable. The failure to generate sufficient cash flow or to obtain other financing could affect our ability to pay the amounts due under those liabilities not covered by insurance.

In addition, ~~specifically with respect to pharmaceutical products,~~Ireland’s Department of Finance, Luxembourg’s Ministry of Finance, the ~~submission of~~Organization for Economic Co-operation and Development, the European Commission and other government agencies in jurisdictions where we and our affiliates do business have had an ~~NDA, ANDA, Biologics License Application or supplemental Biologics License Application~~extended focus on issues related to the ~~FDA~~taxation of multinational corporations and there are several current proposals that, if enacted, would substantially change the taxation of multinational corporations. One example is in the area of “base erosion and profit shifting,” where payments are made between affiliates from a jurisdiction with ~~supporting clinical safety~~high tax rates to a jurisdiction with lower tax rates. As a result, the tax laws in the jurisdictions in which we operate could change on a prospective or retroactive basis, and ~~efficacy data, for example, does not guarantee that~~any such changes, including those related to the FDA will grant approval to market the product. Meeting the FDA’s regulatory requirements to obtain approval to market a drug product, which varies substantially based on the type, complexity and noveltyallocation of the pharmaceutical product, typically takes years, if approved at all, and is subject to uncertainty. In addition, even if we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we may request, may grant approval contingent on conditions such as the performance and results of costly post-marketing clinical trials or Risk Evaluation and Mitigation Strategy (REMS) or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate, or reimbursement by government payers or other payers may not be approved at the price we intend to charge for our products. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.

~~None.~~On July 30, 2019, the Company’s Compensation Committee approved cash contribution retention arrangements and individual contribution retention bonus amounts (the Contribution Bonus) for certain senior management of the Company, excluding the Chief Executive Officer but including the following three named executive officers (each an NEO): Mr. Blaise Coleman, Executive Vice President and Chief Financial Officer, Mr. Terrance Coughlin, Executive Vice President and Chief Operating Officer and Mr. Matthew Maletta, Executive Vice President and Chief Legal Officer. The cash Contribution Bonus is being awarded to each NEO based on the critical nature of their leadership and contributions to the planning and execution of Endo’s transformational strategy and multi-year turnaround plan.

The NEOs awarded the cash Contribution Bonus will each receive an aggregate award of $1,250,000, as outlined in each recipient’s letter agreement (collectively, the Letter Agreements). Each cash Contribution Bonus award is scheduled to be paid in equal installments of $312,500 within thirty (30) days after each of the following dates: (1) September 30, 2019; (2) December 31, 2019; (3) June 30, 2020 and (4) December 31, 2020. Payment of each cash Contribution Bonus will be accelerated if a recipient’s employment is terminated by the Company without cause before December 31, 2020 and will be paid within 30 days of the termination date. Any unearned cash Contribution Bonus amounts will be forfeited if a recipient NEO is terminated for cause or if the recipient NEO resigns. The foregoing description of the Letter Agreements does not purport to be complete and is qualified in its entirety to the full text of the Letter Agreements, copies of which are filed with this Quarterly Report on Form 10-Q as Exhibits 10.2, 10.3 and 10.4 and incorporated herein by reference.



Ireland		68-0683755
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

First Floor, Minerva House, Simmonscourt Road
Ballsbridge, Dublin 4,	Ireland	Not Applicable
(Address of ~~principal executive offices)~~Principal Executive Offices)		(Zip Code)



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.	Yesþ No o	☒

	No	☐



Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).	Yesþ	☒

	Noo	☐



Large accelerated filer	þ☒	Accelerated filer	o☐

Non-accelerated filer	o☐	Smaller reporting company	o☐

		Emerging growth company	o



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).	Yeso	☐

	Noþ	☒

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			o☐



Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Ordinary shares, nominal value $0.0001 per share	ENDP	The ~~NASDAQ~~Nasdaq Global Select Market



Ordinary shares, $0.0001 par value	Number of ordinary shares outstanding as of ~~May 2,~~July 29, 2019:	~~226,181,657~~226,392,282



		Page
Forward-Looking Statements		i

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets (Unaudited)	1
	Condensed Consolidated Statements of Operations (Unaudited)	2
	Condensed Consolidated Statements of Comprehensive Loss (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows (Unaudited)	4
	Notes to Condensed Consolidated Financial Statements (Unaudited)	65
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3536
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4547
Item 4.	Controls and Procedures	4648

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	4749
Item 1A.	Risk Factors	4749
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5350
Item 3.	Defaults Upon Senior Securities	5350
Item 4.	Mine Safety Disclosures	5350
Item 5.	Other Information	5350
Item 6.	Exhibits	5450

Signatures		5551


	March 31, 2019			December 31, 2018			June 30, 2019			December 31, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	981,739		$	1,149,113		$	1,446,949		$	1,149,113
Restricted cash and cash equivalents	332,547			305,368			307,587			305,368
Accounts receivable, net	487,974			470,570			442,078			470,570
Inventories, net	331,391			322,179			335,890			322,179
Prepaid expenses and other current assets	104,899			56,139			183,147			56,139
Income taxes receivable	33,583			39,781			39,401			39,781
Total current assets	$	2,272,133		$	2,343,150		$	2,755,052		$	2,343,150
MARKETABLE SECURITIES	969			738
PROPERTY, PLANT AND EQUIPMENT, NET	494,429			498,892			494,501			498,892
OPERATING LEASE ASSETS	57,771			—			56,098			—
GOODWILL	3,679,801			3,764,636			3,615,697			3,764,636
OTHER INTANGIBLES, NET	3,235,594			3,457,306			3,075,654			3,457,306
DEFERRED INCOME TAXES	—			678			—			678
OTHER ASSETS	62,627			66,993			77,287			67,731
TOTAL ASSETS	$	9,803,324		$	10,132,393		$	10,074,289		$	10,132,393
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	840,830		$	1,009,200		$	931,207		$	1,009,200
Current portion of legal settlement accrual	861,325			905,085			854,847			905,085
Current portion of operating lease liabilities	12,051			—			12,092			—
Current portion of long-term debt	35,940			34,150			34,150			34,150
Income taxes payable	1,142			1,661			3,524			1,661
Total current liabilities	$	1,751,288		$	1,950,096		$	1,835,820		$	1,950,096
DEFERRED INCOME TAXES	33,581			34,487			33,397			34,487
LONG-TERM DEBT, LESS CURRENT PORTION, NET	8,075,337			8,224,269			8,369,972			8,224,269
OPERATING LEASE LIABILITIES, LESS CURRENT PORTION	54,258			—			52,186			—
OTHER LIABILITIES	383,310			421,824			373,386			421,824
COMMITMENTS AND CONTINGENCIES (NOTE 13)
SHAREHOLDERS' DEFICIT:
Euro deferred shares, $0.01 par value; 4,000,000 shares authorized and issued at both March 31, 2019 and December 31, 2018	45			46
Ordinary shares, $0.0001 par value; 1,000,000,000 shares authorized; 224,864,678 and 224,382,791 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively	22			22
Euro deferred shares, $0.01 par value; 4,000,000 shares authorized and issued at both June 30, 2019 and December 31, 2018							45			46
Ordinary shares, $0.0001 par value; 1,000,000,000 shares authorized; 226,391,081 and 224,382,791 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively							23			22
Additional paid-in capital	8,878,133			8,855,810			8,883,720			8,855,810
Accumulated deficit	(9,148,151		)	(9,124,932		)	(9,254,156		)	(9,124,932		)
Accumulated other comprehensive loss	(224,499		)	(229,229		)	(220,104		)	(229,229		)
Total shareholders' deficit	$	(494,450	)	$	(498,283	)	$	(590,472	)	$	(498,283	)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$	9,803,324		$	10,132,393		$	10,074,289		$	10,132,393


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2019			2018
TOTAL REVENUES, NET	$	720,411		$	700,527		$	699,727		$	714,696		$	1,420,138		$	1,415,223
COSTS AND EXPENSES:
Cost of revenues	391,909			403,598			388,208			381,905			780,117			785,503
Selling, general and administrative	151,123			166,667			152,297			148,157			303,420			314,824
Research and development	33,486			38,646			26,348			82,102			59,834			120,748
Litigation-related and other contingencies, net	6			(2,500		)	10,315			19,620			10,321			17,120
Asset impairment charges	165,448			448,416			88,438			22,767			253,886			471,183
Acquisition-related and integration items	(37,501		)	6,835			(5,507		)	5,161			(43,008		)	11,996
Interest expense, net	132,675			123,990			134,809			130,059			267,484			254,049
Gain on extinguishment of debt	(119,828		)	—			—			—			(119,828		)	—
Other expense (income), net	4,802			(2,878		)
Other (income) expense, net							(597		)	(28,831		)	4,205			(31,709		)
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX	$	(1,709	)	$	(482,247	)	$	(94,584	)	$	(46,244	)	$	(96,293	)	$	(528,491	)
INCOME TAX EXPENSE	10,903			15,491			3,468			6,235			14,371			21,726
LOSS FROM CONTINUING OPERATIONS	$	(12,612	)	$	(497,738	)	$	(98,052	)	$	(52,479	)	$	(110,664	)	$	(550,217	)
DISCONTINUED OPERATIONS, NET OF TAX (NOTE 3)	(5,961		)	(7,751		)	(7,953		)	(8,388		)	(13,914		)	(16,139		)
NET LOSS	$	(18,573	)	$	(505,489	)	$	(106,005	)	$	(60,867	)	$	(124,578	)	$	(566,356	)
NET LOSS PER SHARE—BASIC:
Continuing operations	$	(0.06	)	$	(2.23	)	$	(0.43	)	$	(0.23	)	$	(0.49	)	$	(2.46	)
Discontinued operations	(0.02		)	(0.03		)	(0.04		)	(0.04		)	(0.06		)	(0.07		)
Basic	$	(0.08	)	$	(2.26	)	$	(0.47	)	$	(0.27	)	$	(0.55	)	$	(2.53	)
NET LOSS PER SHARE—DILUTED:
Continuing operations	$	(0.06	)	$	(2.23	)	$	(0.43	)	$	(0.23	)	$	(0.49	)	$	(2.46	)
Discontinued operations	(0.02		)	(0.03		)	(0.04		)	(0.04		)	(0.06		)	(0.07		)
Diluted	$	(0.08	)	$	(2.26	)	$	(0.47	)	$	(0.27	)	$	(0.55	)	$	(2.53	)
WEIGHTED AVERAGE SHARES:
Basic	224,594			223,521			226,221			223,834			225,408			223,677
Diluted	224,594			223,521			226,221			223,834			225,408			223,677



	Employee Separation and Other Benefit-Related Costs			Other Restructuring Costs			Total
Liability balance as of January 1, 2019	$	4,239		$	48		$	4,287
Cash distributions	(4,070		)	(48		)	(4,118		)
Liability balance as of June 30, 2019	$	169		$	—		$	169


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


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


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


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018		2019		2018
Branded Pharmaceuticals:
Specialty Products:
XIAFLEX®	$	68,507	$	57,141	$	74,855	$	63,500	$	143,362	$	120,641
SUPPRELIN® LA	22,056		20,577		23,714		19,963		45,770		40,540
Other Specialty (1)	24,403		19,027		25,524		22,585		49,927		41,612
Total Specialty Products	$	114,966	$	96,745	$	124,093	$	106,048	$	239,059	$	202,793
Established Products:
PERCOCET®	$	30,760	$	31,976	$	28,878	$	30,833	$	59,638	$	62,809
TESTOPEL®	15,814		15,170		11,780		13,844		27,594		29,014
Other Established (2)	41,985		56,344		44,262		61,912		86,247		118,256
Total Established Products	$	88,559	$	103,490	$	84,920	$	106,589	$	173,479	$	210,079
Total Branded Pharmaceuticals (3)	$	203,525	$	200,235	$	209,013	$	212,637	$	412,538	$	412,872
Sterile Injectables:
VASOSTRICT®	$	139,137	$	113,725	$	116,026	$	106,329	$	255,163	$	220,054
ADRENALIN®	47,322		29,740		45,835		36,658		93,157		66,398
Ertapenem for injection	32,219		—		25,547		—		57,766		—
Other Sterile Injectables (4)	51,370		72,389		56,872		74,856		108,242		147,245
Total Sterile Injectables (3)	$	270,048	$	215,854	$	244,280	$	217,843	$	514,328	$	433,697
Total Generic Pharmaceuticals (5)	$	218,526	$	249,240	$	217,784	$	241,236	$	436,310	$	490,476
Total International Pharmaceuticals (6)	$	28,312	$	35,198	$	28,650	$	42,980	$	56,962	$	78,178
Total revenues, net	$	720,411	$	700,527	$	699,727	$	714,696	$	1,420,138	$	1,415,223


(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.~~assets.


(1)	Products included within Other Specialty are NASCOBAL^®Nasal Spray and AVEED^®. Beginning with our ~~first quarter~~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 either the three or six months ended ~~March 31,~~June 30, 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.


(1)	These amounts are reported in our Condensed Consolidated Balance Sheets as Restricted cash and cash equivalents.


	Fair Value Measurements at March 31, 2019 using:								Fair Value Measurements at June 30, 2019 using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Money market funds	$	641,012	$	—	$	—	$	641,012	$	308,208	$	—	$	—	$	308,208
Equity securities	969		—		—		969
Total	$	641,981	$	—	$	—	$	641,981
Liabilities:
Acquisition-related contingent consideration—current	$	—	$	—	$	28,305	$	28,305	$	—	$	—	$	20,412	$	20,412
Acquisition-related contingent consideration—noncurrent	—		—		39,537		39,537		$	—	$	—	$	32,518	$	32,518
Total	$	—	$	—	$	67,842	$	67,842



	Balance as of December 31, 2018		Changes in Fair Value Recorded in Earnings			Amounts Settled and Other			Balance as of June 30, 2019
Auxilium acquisition	$	14,157	$	730		$	(388	)	$	14,499
Lehigh Valley Technologies, Inc. acquisitions	34,700		(4,531		)	(10,069		)	20,100
VOLTAREN® Gel acquisition (1)	56,240		(39,023		)	(10,038		)	7,179
Other	11,606		(184		)	(270		)	11,152
Total	$	116,703	$	(43,008	)	$	(20,765	)	$	52,930


(1)	The change in fair value recorded in earnings includes the impact of certain competitive events occurring during the ~~three~~six months ended ~~March 31,~~June 30, 2019.



	Fair Value Measurements during the Six Months Ended June 30, 2019 (1) using:						Total Expense for the Six Months Ended June 30, 2019
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Expense for the Six Months Ended June 30, 2019
Assets:
Intangible assets, excluding goodwill (Note 9)	$	—	$	—	$	41,839	$	(100,399	)
Certain property, plant and equipment	—		—		—		(2,379		)
Total	$	—	$	—	$	41,839	$	(102,778	)



	Fair Value Measurements during the Three Months Ended March 31, 2019 (1) using:						Total Expense for the Three Months Ended March 31, 2019
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Expense for the Three Months Ended March 31, 2019
Assets:
Intangible assets, excluding goodwill (Note 9)	$	—	$	—	$	41,839	$	(78,700	)
Certain property, plant and equipment	—		—		—		(748		)
Total	$	—	$	—	$	41,839	$	(79,448	)


(1)	The fair value amounts are presented as of the date of the fair value measurement as these assets are not measured at fair value on a recurring basis. Such measurements generally occur in connection with our quarter-end financial reporting close procedures.



	June 30, 2019		December 31, 2018
Raw materials (1)	$	123,819	$	122,825
Work-in-process (1)	70,377		70,458
Finished goods (1)	141,694		128,896
Total	$	335,890	$	322,179



	Condensed Consolidated Balance Sheets Line Items	June 30, 2019
ROU assets:
Operating lease ROU assets	Operating lease assets	$	56,098
Finance lease ROU assets	Property, plant and equipment, net	61,770
Total ROU assets		$	117,868
Operating lease liabilities:
Current operating lease liabilities	Current portion of operating lease liabilities	$	12,092
Noncurrent operating lease liabilities	Operating lease liabilities, less current portion	52,186
Total operating lease liabilities		$	64,278
Finance lease liabilities:
Current finance lease liabilities	Accounts payable and accrued expenses	$	5,748
Noncurrent finance lease liabilities	Other liabilities	33,816
Total finance lease liabilities		$	39,564


	Condensed Consolidated Statements of Operations Line Items	Three Months Ended March 31, 2019			Condensed Consolidated Statements of Operations Line Items	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Operating lease cost	Various (1)	$	3,499		Various (1)	$	3,260		$	6,759
Finance lease cost:
Amortization of ROU assets	Various (1)	$	2,296		Various (1)	$	2,489		$	4,785
Interest on lease liabilities	Interest expense, net	$	500		Interest expense, net	$	485		$	985
Other lease costs and income:
Variable lease costs (2)	Various (1)	$	2,089		Various (1)	$	2,778		$	4,867
Sublease income	Various (1)	$	(964	)	Various (1)	$	(932	)	$	(1,896	)


(2)	Amounts represent variable lease costs incurred that were not included in the initial measurement of the lease liability, such as common area maintenance and utilities costs associated with leased real estate and certain costs associated with our automobile leases.



	Operating Leases		Finance Leases
2019, excluding amounts already paid	$	7,501	$	3,654
2020	13,821		7,450
2021	13,612		7,597
2022	12,471		7,747
2023	10,055		7,901
Thereafter	20,697		21,838
Total future lease payments	$	78,157	$	56,187
Less: amount representing interest	13,879		16,623
Present value of future lease payments (lease liability)	$	64,278	$	39,564



	Capital Leases (1)		Operating Leases
2019	$	6,884	$	15,800
2020	6,819		14,519
2021	6,921		12,883
2022	7,072		12,454
2023	7,225		9,945
Thereafter	9,127		20,573
Total minimum lease payments	$	44,048	$	86,174
Less: Amount representing interest	4,084
Total present value of minimum payments	$	39,964
Less: Current portion of such obligations	5,845
Long-term capital lease obligations	$	34,119