UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________________________________________________

FORM 10-Q

____________________________________________________________________________________________

(Mark One)

x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, ~~2019~~

2020

o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 001-36326

~~ENDO INTERNATIONAL PLC~~Endo International plc

(Exact name of registrant as specified in its charter)



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)

~~011-353-1-268-2000~~011-353-1-268-2000

(Registrant’s telephone number, including area 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	☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.



~~Large~~Indicate by check mark whether the registrant is a large accelerated filer,					þ	~~Accelerated~~ an accelerated filer,	o a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒		Accelerated filer	☐
Non-accelerated filer	o☐		Smaller reporting company	o☐

		Emerging growth company	o☐



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☐



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

	Noþ	☒

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



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

~~Indicate the number of shares outstanding of each of the issuer’s classes of ordinary shares, as of the latest practicable date.~~



The number of Ordinary shares, nominal value $0.0001 ~~par value~~	~~Number of ordinary shares~~per share outstanding as of ~~May 2, 2019:~~	~~226,181,657~~April 30, 2020 was 229,704,840.

ENDO INTERNATIONAL PLC

INDEX



		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~~Income (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	3527
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4539
Item 4.	Controls and Procedures	4640

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	4741
Item 1A.	Risk Factors	4741
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5346
Item 3.	Defaults Upon Senior Securities	5346
Item 4.	Mine Safety Disclosures	5346
Item 5.	Other Information	5346
Item 6.	Exhibits	5447

Signatures		5548

FORWARD-LOOKING STATEMENTS

Statements contained or incorporated by reference in this document contain information that includes or is based on “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). ~~These~~Forward-looking statements ~~including~~include, without limitation, estimated future results of operations, estimates of future revenues, future expenses, future net income and future net income per share, ~~contained~~as well as statements regarding future financing activities, the impact of the novel strain of coronavirus referred to as COVID-19 on the health and welfare of our employees and on our business, including any response to COVID-19 such as anticipated return to historical purchasing decisions by customers, the economic impact of COVID-19, changes in consumer spending, decisions to engage in certain medical procedures, future governmental orders that could impact our operations and the ~~“Management’s Discussion~~ability of our manufacturing facilities and ~~Analysis of Financial Condition~~suppliers to fulfill their obligations to us, and ~~Results of Operations” section of this document, are subject~~any other statements that refer to ~~risks and uncertainties. Forward-looking statements include the information concerning our possible~~Endo’s expected, estimated or ~~assumed results of operations.~~anticipated future results. We have tried, whenever possible, to identify such statements by words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “plan,” “project,” “forecast,” “will,” “may” or similar expressions. We have based these forward-looking statements on our current expectations, assumptions and projections about the growth of our business, our financial performance and the development of our industry. Because these statements reflect our current views concerning future events, these forward-looking statements involve risks and ~~uncertainties. Investors should note that many factors,~~uncertainties including, without limitation, the risks related to the impact of COVID-19 (such as, without limitation, the scope and duration of the pandemic and the resulting economic crisis and levels of unemployment, governmental actions and restrictive measures implemented in response, material delays and cancellations of certain medical procedures, potential manufacturing and supply chain disruptions and other potential impacts to the business as a result of COVID-19) and the other risks and uncertainties more fully described under the caption “Risk Factors” in Part II, Item 1A of this document and in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 filed with the Securities and Exchange Commission (SEC) on February ~~28, 2019~~26, 2020 (the Annual Report),. These risks and ~~as otherwise enumerated herein,~~uncertainties, many of which are outside of our control, and any other risks and uncertainties that we are not currently able to predict or identify, individually or in the aggregate, could ~~affect~~have a material adverse effect on our ~~future~~business, financial condition, results of operations and cash flows and could cause our actual results to differ materially and adversely from those expressed in forward-looking statements contained or incorporated by reference in this document. Additionally, the prolonged impact of COVID-19 could heighten the impact of one or more of such risk factors.

We do not undertake any obligation to update our forward-looking statements after the date of this document for any reason, even if new information becomes available or other events occur in the future, except as may be required under applicable securities ~~law.~~laws. You are advised to consult any further disclosures we make on related subjects in our reports filed with the SEC and with securities regulators in Canada on the System for Electronic Document Analysis and ~~Retrieval (SEDAR).~~Retrieval. Also note that, in Part II, Item 1A of this document and in Part I, Item 1A of the Annual Report, and as otherwise enumerated herein, we provide a cautionary discussion of the risks, uncertainties and possibly inaccurate assumptions relevant to our business. These are factors that, individually or in the aggregate, we think could cause our actual results to differ materially from expected and historical results. We note these factors for investors as permitted by Section 27A of the Securities Act and Section 21E of the Exchange Act. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider this to be a complete discussion of all potential risks or uncertainties.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ENDO INTERNATIONAL PLC

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands, except share and per share data)


	March 31, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	981,739		$	1,149,113		$	1,531,538		$	1,454,531
Restricted cash and cash equivalents	332,547			305,368			200,666			247,457
Accounts receivable, net	487,974			470,570			536,903			467,953
Inventories, net	331,391			322,179			324,962			327,865
Prepaid expenses and other current assets	104,899			56,139			46,537			40,845
Income taxes receivable	33,583			39,781			94,729			47,567
Total current assets	$	2,272,133		$	2,343,150		$	2,735,335		$	2,586,218
MARKETABLE SECURITIES	969			738
PROPERTY, PLANT AND EQUIPMENT, NET	494,429			498,892			492,346			504,865
OPERATING LEASE ASSETS	57,771			—			49,349			51,700
GOODWILL	3,679,801			3,764,636			3,560,011			3,595,184
OTHER INTANGIBLES, NET	3,235,594			3,457,306			2,382,374			2,571,267
DEFERRED INCOME TAXES	—			678			114			2,192
OTHER ASSETS	62,627			66,993			86,351			78,101
TOTAL ASSETS	$	9,803,324		$	10,132,393		$	9,305,880		$	9,389,527
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	840,830		$	1,009,200		$	854,958		$	899,949
Current portion of legal settlement accrual	861,325			905,085			442,233			513,005
Current portion of operating lease liabilities	12,051			—			11,512			10,763
Current portion of long-term debt	35,940			34,150			34,150			34,150
Income taxes payable	1,142			1,661			4,138			2,422
Total current liabilities	$	1,751,288		$	1,950,096		$	1,346,991		$	1,460,289
DEFERRED INCOME TAXES	33,581			34,487			27,024			31,703
LONG-TERM DEBT, LESS CURRENT PORTION, NET	8,075,337			8,224,269			8,354,920			8,359,899
OPERATING LEASE LIABILITIES, LESS CURRENT PORTION	54,258			—			45,057			48,299
OTHER LIABILITIES	383,310			421,824			269,705			355,881
COMMITMENTS AND CONTINGENCIES (NOTE 13)
COMMITMENTS AND CONTINGENCIES (NOTE 12)
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 March 31, 2020 and December 31, 2019							44			45
Ordinary shares, $0.0001 par value; 1,000,000,000 shares authorized; 228,442,736 and 226,802,609 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively							23			23
Additional paid-in capital	8,878,133			8,855,810			8,917,927			8,904,692
Accumulated deficit	(9,148,151		)	(9,124,932		)	(9,422,284		)	(9,552,214		)
Accumulated other comprehensive loss	(224,499		)	(229,229		)	(233,527		)	(219,090		)
Total shareholders' deficit	$	(494,450	)	$	(498,283	)	$	(737,817	)	$	(866,544	)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$	9,803,324		$	10,132,393		$	9,305,880		$	9,389,527

See accompanying Notes to Condensed Consolidated Financial Statements.

ENDO INTERNATIONAL PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Dollars and shares in thousands, except per share data)


	Three Months Ended March 31,						Three Months Ended March 31,
	2019			2018			2020			2019
TOTAL REVENUES, NET	$	720,411		$	700,527		$	820,405		$	720,411
COSTS AND EXPENSES:
Cost of revenues	391,909			403,598			388,799			391,909
Selling, general and administrative	151,123			166,667			166,768			151,123
Research and development	33,486			38,646			31,615			33,486
Litigation-related and other contingencies, net	6			(2,500		)	(17,176		)	6
Asset impairment charges	165,448			448,416			97,785			165,448
Acquisition-related and integration items	(37,501		)	6,835
Acquisition-related and integration items, net							12,462			(37,501		)
Interest expense, net	132,675			123,990			132,877			132,675
Gain on extinguishment of debt	(119,828		)	—			—			(119,828		)
Other expense (income), net	4,802			(2,878		)
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX	$	(1,709	)	$	(482,247	)
INCOME TAX EXPENSE	10,903			15,491
LOSS FROM CONTINUING OPERATIONS	$	(12,612	)	$	(497,738	)
Other (income) expense, net							(13,974		)	4,802
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAX							$	21,249		$	(1,709	)
INCOME TAX (BENEFIT) EXPENSE							(136,332		)	10,903
INCOME (LOSS) FROM CONTINUING OPERATIONS							$	157,581		$	(12,612	)
DISCONTINUED OPERATIONS, NET OF TAX (NOTE 3)	(5,961		)	(7,751		)	(27,651		)	(5,961		)
NET LOSS	$	(18,573	)	$	(505,489	)
NET LOSS PER SHARE—BASIC:
NET INCOME (LOSS)							$	129,930		$	(18,573	)
NET INCOME (LOSS) PER SHARE—BASIC:
Continuing operations	$	(0.06	)	$	(2.23	)	$	0.69		$	(0.06	)
Discontinued operations	(0.02		)	(0.03		)	(0.12		)	(0.02		)
Basic	$	(0.08	)	$	(2.26	)	$	0.57		$	(0.08	)
NET LOSS PER SHARE—DILUTED:
NET INCOME (LOSS) PER SHARE—DILUTED:
Continuing operations	$	(0.06	)	$	(2.23	)	$	0.68		$	(0.06	)
Discontinued operations	(0.02		)	(0.03		)	(0.12		)	(0.02		)
Diluted	$	(0.08	)	$	(2.26	)	$	0.56		$	(0.08	)
WEIGHTED AVERAGE SHARES:
Basic	224,594			223,521			227,198			224,594
Diluted	224,594			223,521			233,014			224,594

See accompanying Notes to Condensed Consolidated Financial Statements.

ENDO INTERNATIONAL PLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~LOSS~~ INCOME (LOSS) (UNAUDITED)

(Dollars in thousands)

Three Months Ended March 31,
2019 2018
NET LOSS $ (18,573 ) $ (505,489 )
OTHER COMPREHENSIVE INCOME (LOSS):
Net unrealized gain (loss) on foreign currency:
Foreign currency translation gain (loss) arising during the period $ 4,730
$ (5,797 )
Less: reclassification adjustments for (gain) loss realized in net loss —
4,730
—
(5,797 )
OTHER COMPREHENSIVE INCOME (LOSS) $ 4,730
$ (5,797 )
COMPREHENSIVE LOSS $ (13,843 ) $ (511,286 )



	Three Months Ended March 31,
	2020			2019
NET INCOME (LOSS)	$	129,930		$	(18,573	)
OTHER COMPREHENSIVE (LOSS) INCOME:
Net unrealized (loss) gain on foreign currency	$	(14,437	)	$	4,730
Total other comprehensive (loss) income	$	(14,437	)	$	4,730
COMPREHENSIVE INCOME (LOSS)	$	115,493		$	(13,843	)

See accompanying Notes to Condensed Consolidated Financial Statements.

ENDO INTERNATIONAL PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

Three Months Ended March 31,
2019 2018
OPERATING ACTIVITIES:
Net loss $ (18,573 ) $ (505,489 )
Adjustments to reconcile Net loss to Net cash (used in) provided by operating activities:

Depreciation and amortization 162,733

191,590
Inventory step-up —

66
Share-based compensation 24,733

17,890
Amortization of debt issuance costs and discount 5,586

5,025
Deferred income taxes (785 )
11,615
Change in fair value of contingent consideration (37,501 )
6,835
Gain on extinguishment of debt (119,828 )
—
Asset impairment charges 165,448

448,416
Loss (gain) on sale of business and other assets 1,294

(2,416 )
Changes in assets and liabilities which (used) provided cash:

Accounts receivable (14,389 )
39,710
Inventories (11,928 )
4,791
Prepaid and other assets 5,059

15,668
Accounts payable, accrued expenses and other liabilities (258,202 ) (187,426 )
Income taxes payable/receivable 5,770

2,571
Net cash (used in) provided by operating activities $ (90,583 )
$ 48,846
INVESTING ACTIVITIES:
Purchases of property, plant and equipment, excluding capitalized interest (15,386 ) (24,874 )
Capitalized interest payments (1,094 ) (751 )
Proceeds from sale of business and other assets, net 103
13,350
Other investing activities —
(3,322 )
Net cash used in investing activities $ (16,377 ) $ (15,597 )


	Three Months Ended March 31,						Three Months Ended March 31,
	2019			2018			2020			2019
OPERATING ACTIVITIES:
Net income (loss)							$	129,930		$	(18,573	)
Adjustments to reconcile Net income (loss) to Net cash provided by (used in) operating activities:
Depreciation and amortization							141,588			162,733
Share-based compensation							17,645			24,733
Amortization of debt issuance costs and discount							4,339			5,586
Deferred income taxes							(911		)	(785		)
Change in fair value of contingent consideration							12,462			(37,501		)
Gain on extinguishment of debt							—			(119,828		)
Asset impairment charges							97,785			165,448
(Gain) loss on sale of business and other assets							(8,192		)	1,294
Changes in assets and liabilities which (used) provided cash:
Accounts receivable							(72,833		)	(14,389		)
Inventories							(324		)	(11,928		)
Prepaid and other assets							(3,581		)	5,059
Accounts payable, accrued expenses and other liabilities							(112,625		)	(258,202		)
Income taxes payable/receivable, net							(142,727		)	5,770
Net cash provided by (used in) operating activities							$	62,556		$	(90,583	)
INVESTING ACTIVITIES:
Purchases of property, plant and equipment, excluding capitalized interest							(19,638		)	(15,386		)
Capitalized interest payments							(492		)	(1,094		)
Proceeds from sale of business and other assets, net							4,167			103
Net cash used in investing activities							$	(15,963	)	$	(16,377	)
FINANCING ACTIVITIES:
Proceeds from issuance of notes, net	1,483,125			—			—			1,483,125
Repayments of notes	(1,499,998		)	—			—			(1,499,998		)
Repayments of term loans	(8,538		)	(8,538		)	(8,537		)	(8,538		)
Repayments of other indebtedness	(1,174		)	(1,283		)	(1,184		)	(1,174		)
Payments of deferred financing fees	(211		)	—
Payments for debt issuance and extinguishment costs							—			(211		)
Payments for contingent consideration	(4,565		)	(11,947		)	(364		)	(4,565		)
Payments of tax withholding for restricted shares	(2,414		)	(1,642		)	(4,398		)	(2,414		)
Proceeds from exercise of options	4			—			—			4
Net cash used in financing activities	$	(33,771	)	$	(23,410	)	$	(14,483	)	$	(33,771	)
Effect of foreign exchange rate	537			(627		)	(1,894		)	537
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS	$	(140,194	)	$	9,212
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS							$	30,216		$	(140,194	)
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, BEGINNING OF PERIOD	1,476,837			1,311,014			1,720,388			1,476,837
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, END OF PERIOD	$	1,336,643		$	1,320,226		$	1,750,604		$	1,336,643
SUPPLEMENTAL INFORMATION:
Cash paid into Qualified Settlement Funds for mesh legal settlements	$	81,582		$	66,108		$	—		$	81,582
Cash paid out of Qualified Settlement Funds for mesh legal settlements	$	54,984		$	50,636		$	47,801		$	54,984
Other cash distributions for mesh legal settlements	$	10,239		$	4,547		$	17,819		$	10,239

See accompanying Notes to Condensed Consolidated Financial Statements.

ENDO INTERNATIONAL PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, ~~2019~~2020

NOTE 1. BASIS OF PRESENTATION

Endo International plc is an Ireland-domiciled ~~global~~ specialty branded and generics 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.

that conducts business through its operating subsidiaries. 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, ~~2019~~2020 and the results of ~~our~~its operations and ~~our~~its cash flows for the periods presented. Operating results for the three months ended March 31, ~~2019~~2020 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2019.~~2020. The year-end Condensed Consolidated Balance Sheet data as of December 31, ~~2018~~2019 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.

Certain prior period amounts have been reclassified to conform to the current period presentation.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of our Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires us to make estimates that affect the amounts and disclosures in the Condensed Consolidated Financial Statements, including the notes thereto, and elsewhere in this report. Uncertainties related to the magnitude and duration of COVID-19, the extent to which it will impact our estimated future financial results, worldwide macroeconomic conditions including interest rates, employment rates, consumer spending and health insurance coverage, the speed of the anticipated recovery and governmental and business reactions to the pandemic have increased the complexity of developing these estimates, including the allowance for expected credit losses and the carrying amounts of long-lived assets, goodwill and other intangible assets. Actual results may differ significantly from our estimates, including as a result of COVID-19.

Significant Accounting Policies Added or Updated since December 31, ~~2018~~2019

Significant changes to our significant accounting policies since December 31, ~~2018~~2019 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.~~Accounts Receivable. The Company adopted Accounting Standards Codification (ASC) Topic ~~842, Leases~~ 326, Financial Instruments-Credit Losses (ASC ~~842)~~326) on January 1, ~~2019.~~2020. For further discussion of the adoption, refer to the ~~“Recent Accounting Pronouncements Adopted or Otherwise Effective as of March 31, 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:~~

Lease payments—Lease payments include fixed and certain variable payments, less lease incentives, together with amounts probable of being owed by the Company under residual value guarantees and, if reasonably certain of being paid, the cost of certain renewal options and early termination penalties set forth in the lease arrangement. Lease payments exclude consideration that is not related to the transfer of goods and services to the Company.

Discount rate—The discount rate must be determined based on information available to the Company upon the commencement of a lease. Lessees are required to use the rate implicit in the lease whenever such rate is readily available; however, as the implicit rate in the Company’s leases is generally not readily determinable, the Company generally uses the hypothetical incremental borrowing rate it would have to pay to borrow an amount equal to the lease payments, on a collateralized basis, over a timeframe similar to the lease term.

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.

~~Recent Accounting Pronouncements~~

~~Recently Issued Accounting Pronouncements Not Yet Adopted as of March 31, 2019~~

~~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.

Recent Accounting Pronouncements Adopted or Otherwise Effective as of March 31, ~~2019~~2020” section below. Subsequent to the adoption of ASC 326, our accounts receivable balance is stated at amortized cost less an allowance for expected credit losses. In addition, our accounts receivable balance is reduced by certain sales deduction reserves where we have the right of offset with the customer. We generally do not require collateral.

Concentrations of Credit Risk and Credit Losses. Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash equivalents, restricted cash equivalents and accounts receivable. From time to time, we invest our excess cash in high-quality, liquid money market instruments maintained by major banks and financial institutions. We have not experienced any losses on our cash equivalents.

With respect to our accounts receivable, we have no history of significant losses. Approximately 89% and 88% of our gross trade accounts receivable balances represent amounts due from 3 customers (Cardinal Health, Inc., McKesson Corporation and AmerisourceBergen Corporation) at March 31, 2020 and December 31, 2019, respectively. We perform ongoing credit evaluations of these and our other customers based on information available to us. We consider these and other factors, including changes in the composition and aging of our accounts receivable, in developing our allowance for expected credit losses. The estimated allowance was not material to the Company’s Condensed Consolidated Financial Statements at March 31, 2020 or December 31, 2019, nor were the changes to the allowance during any of the periods presented.

We do not currently expect our current or future exposures to credit losses to have a significant impact on us. However, our customers’ ability to pay us on a timely basis, or at all, could be affected by factors specific to their respective businesses and/or by economic conditions, including those related to the COVID-19 pandemic, the extent of which cannot be fully predicted.

Recent Accounting Pronouncements Adopted or Otherwise Effective as of March 31, 2020

In ~~February~~June 2016, the ~~FASB~~Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU ~~No. 2016-02,~~ ~~“Leases (Topic 842)”~~ ~~(ASU 2016-02) to establish a comprehensive new accounting standard for leases. ASU 2016-02,~~2016-13, together with a series of subsequently-issued related ASUs, ~~have~~has been codified in ASC ~~842.~~326. ASC ~~842 supersedes the lease accounting~~326 establishes new requirements in ~~Accounting Standards Codification Topic 840, Leases~~ ~~(ASC 840), and requires lessees~~for companies 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.~~

estimate expected credit losses when measuring certain financial assets, including accounts receivables. The Company adopted ASC ~~842~~326 using ~~the~~a 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.~~

2020. 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~~326 did not have a ~~net increase to Accumulated deficit of $4.6 million.~~

~~In August 2018,~~material impact on 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.Company’s Condensed Consolidated Financial Statements.

NOTE 3. DISCONTINUED OPERATIONS

Astora

The operating results of the Company’s Astora business, which the ~~Board~~Company’s board of ~~Directors~~directors (the Board) 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 months ended March 31, ~~2019~~2020 and ~~2018~~2019 (in thousands):



	Three Months Ended March 31,
	2020			2019
Litigation-related and other contingencies, net	$	30,454		$	—
Loss from discontinued operations before income taxes	$	(33,517	)	$	(5,961	)
Income tax benefit	$	(5,866	)	$	—
Discontinued operations, net of tax	$	(27,651	)	$	(5,961	)

Three Months Ended March 31,
2019 2018
Loss from discontinued operations before income taxes $ (5,961 ) $ (7,751 )
Income tax benefit $ —
$ —
Discontinued operations, net of tax $ (5,961 ) $ (7,751 )

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~~$27.7 million and ~~$7.8~~$6.0 million for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively, and the impact of cash activity related to vaginal mesh cases. There were no0 material net cash flows related to Astora discontinued investing activities during the three months ended March 31, ~~2019~~2020 and ~~2018.~~2019. There was no0 depreciation or amortization during the three months ended March 31, 2020 and 2019 ~~or 2018~~ related to Astora.

NOTE 4. ~~RESTRUCTURING~~

Set forth below are disclosures relating to restructuring initiatives that resulted in material expenses or cash expenditures during any of the three months ended March 31, 2019 and 2018 or had material restructuring liabilities at either March 31, 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.

~~2017 Generic Pharmaceuticals Restructuring Initiative~~

On July 21, 2017, the Company announced that after completing a comprehensive review of its manufacturing network, it would be ceasing operations and closing its manufacturing and distribution facilities in Huntsville, Alabama (the ~~2017 Generic Pharmaceuticals Restructuring Initiative~~). The closure of the facilities was completed in June 2018 and the facilities were sold in the fourth quarter of 2018 for net cash proceeds of $23.1 million, resulting in a net gain on disposal of $12.5 million.

~~As a result of the~~ ~~2017 Generic Pharmaceuticals Restructuring Initiative~~, the Company incurred pre-tax charges of $27.7 million during the three months ended March 31, 2018. The expenses consisted of charges relating to accelerated depreciation of $17.1 million, employee separation, retention and other benefit-related costs of $3.8 million, asset impairment charges of $2.6 million and certain other charges of ~~$4.2 million~~. These charges are included in the Generic Pharmaceuticals segment. Accelerated depreciation and employee separation, retention and other benefit-related costs are primarily included in Cost of revenues in the Condensed Consolidated Statements of Operations. Certain other charges are included in both Cost of revenues and Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

~~The Company did not incur any material pre-tax charges as a result of the~~ ~~2017 Generic Pharmaceuticals Restructuring Initiative~~ ~~during the three months ended March 31, 2019 and does not expect to incur additional material pre-tax restructuring-related expenses related to this initiative.~~

~~The liability related to the~~ ~~2017 Generic Pharmaceuticals Restructuring Initiative~~ is primarily included in Accounts payable and accrued expenses in the Condensed Consolidated Balance Sheets. Changes to this liability during the three months ended March 31, 2019 were as follows (in thousands):

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 (2,827 ) (48 ) (2,875 )
Liability balance as of March 31, 2019 $ 1,412
$ —
$ 1,412

~~Substantially all cash payments are expected to be made by the end of the third quarter in 2019.~~

~~January 2018 Restructuring Initiative~~

In January 2018, the Company initiated a restructuring initiative that included a reorganization of its Generic Pharmaceuticals segment’s research and development network, a further simplification of the Company’s manufacturing networks and a company-wide unification of certain corporate functions (the ~~January 2018 Restructuring Initiative). As a result of the~~ ~~January 2018 Restructuring Initiative~~, the Company incurred pre-tax charges of $22.9 million during the three months ended March 31, 2018. The expenses primarily consisted of employee separation, retention and other benefit-related costs of $21.9 million and certain other charges of $1.0 million. Of the total charges incurred, $10.2 million are included in the Generic Pharmaceuticals segment, $5.2 million are included in Corporate unallocated costs, $3.8 million are included in the Sterile Injectables segment, $3.0 million are included in the International Pharmaceuticals segment and $0.7 million are included in the Branded Pharmaceuticals segment. Employee separation, retention and other benefit-related costs are included in Cost of revenues, Selling, general and administrative and Research and development expenses in the Condensed Consolidated Statements of Operations. Certain other charges are primarily included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

~~The Company did not incur any material pre-tax charges as a result of the~~ ~~January 2018 Restructuring Initiative~~ during the three months ended March 31, 2019 and does not expect to incur additional material pre-tax restructuring-related expenses related to this initiative. At December 31, 2018, the remaining liability balance was $1.1 million. Substantially all related cash payments were made by the end of the first quarter of 2019.

~~NOTE 5.~~ SEGMENT RESULTS

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~~4 reportable business segments are ~~set forth below.~~Branded Pharmaceuticals, Sterile Injectables, Generic Pharmaceuticals and International Pharmaceuticals. These segments reflect the level at which the chief operating decision maker (CODM) 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~~segment adjusted income from continuing operations before income tax, which we define as ~~Loss~~Income (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~~continuity 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; certain legal costs; 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. Effective January 1, 2020, the Company revised its definition of segment adjusted income from continuing operations before income tax to exclude certain legal costs in order to reflect changes in how the CODM reviews segment performance. The Company believes that such costs are not indicative of business performance and that excluding them more accurately reflects each segment’s results and better enables management to compare financial results between periods. Prior period results have been adjusted to reflect this change. Specifically, for the three months ended March 31, 2019, certain legal costs of $16.3 million and $0.4 million have been excluded from our Branded Pharmaceuticals and Generic Pharmaceuticals segments, respectively, resulting in increases to the segment adjusted income from continuing operations before income tax for these segments. This change had no impact on our Total consolidated income (loss) from continuing operations before income tax.

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~~total segment adjusted income from continuing operations before income tax is equal to the combined results of each of its ~~segments less these unallocated corporate items.~~segments.

Branded Pharmaceuticals

Our Branded Pharmaceuticals segment includes a variety of branded prescription products to treat and manage conditions in urology, urologic oncology, endocrinology, pain and orthopedics. The products in this segment include XIAFLEX^®, SUPPRELIN^®LA, NASCOBAL^® Nasal Spray, AVEED^®, PERCOCET^®, ~~TESTOPEL~~EDEX^®, LIDODERM^®~~, VOLTAREN~~^®~~Gel, EDEX~~ and TESTOPEL^®~~, FORTESTA~~^®~~Gel and TESTIM~~^®, among others.

Sterile Injectables

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~~Corp.’s (Merck) Invanz^®, and ephedrine sulfate injection, among others.

Generic Pharmaceuticals

Our Generic Pharmaceuticals segment consists of a differentiated product portfolio including solid oral extended-release, solid oral immediate-release, liquids, semi-solids, patches, powders, ophthalmics and sprays and includes products in the pain management, urology, central nervous system disorders, immunosuppression, oncology, women’s health and cardiovascular disease markets, among others.

International Pharmaceuticals

Our International Pharmaceuticals segment includes a variety of specialty pharmaceutical products sold outside the U.S., primarily in Canada through our operating company Paladin Labs Inc. (Paladin). ~~This segment’s~~The key products of this segment serve ~~growing~~various therapeutic areas, including attention deficit hyperactivity disorder, pain, women’s health and oncology.

The following represents selected information for the Company’s reportable segments for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 (in thousands):


	Three Months Ended March 31,				Three Months Ended March 31,
	2019		2018		2020		2019
Net revenues from external customers:
Branded Pharmaceuticals	$	203,525	$	200,235	$	204,073	$	203,525
Sterile Injectables	270,048		215,854		336,390		270,048
Generic Pharmaceuticals	218,526		249,240		251,283		218,526
International Pharmaceuticals (1)	28,312		35,198		28,659		28,312
Total net revenues from external customers	$	720,411	$	700,527	$	820,405	$	720,411
Adjusted income from continuing operations before income tax:
Segment adjusted income from continuing operations before income tax:
Branded Pharmaceuticals	$	79,008	$	93,814	$	98,422	$	95,283
Sterile Injectables	196,183		169,445		263,896		196,183
Generic Pharmaceuticals	49,997		74,280		57,327		50,411
International Pharmaceuticals	12,095		13,718		14,197		12,095
Total segment adjusted income from continuing operations before income tax	$	337,283	$	351,257	$	433,842	$	353,972

__________


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

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, 2019 or December 31, 2018.~~

The table below provides reconciliations of our Total consolidated ~~loss~~income (loss) from continuing operations before income tax, which is determined in accordance with U.S. GAAP, to our total segment adjusted income from continuing operations before income tax for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 (in thousands):


	Three Months Ended March 31,						Three Months Ended March 31,
	2019			2018			2020			2019
Total consolidated loss from continuing operations before income tax	$	(1,709	)	$	(482,247	)
Total consolidated income (loss) from continuing operations before income tax							$	21,249		$	(1,709	)
Interest expense, net	132,675			123,990			132,877			132,675
Corporate unallocated costs (1)	48,095			52,460			43,322			48,095
Amortization of intangible assets	145,599			157,172			117,237			145,599
Inventory step-up	—			66
Upfront and milestone payments to partners	939			1,332			1,750			939
Separation benefits and other cost reduction initiatives (2)	2,025			48,987
Continuity and separation benefits and other cost reduction initiatives (2)							23,220			2,025
Certain litigation-related and other contingencies, net (3)	6			(2,500		)	(17,176		)	6
Certain legal costs (4)							15,536			16,689
Asset impairment charges ~~(4)~~(5)	165,448			448,416			97,785			165,448
Acquisition-related and integration items (5)	(37,501		)	6,835
Acquisition-related and integration items, net (6)							12,462			(37,501		)
Gain on extinguishment of debt	(119,828		)	—			—			(119,828		)
Foreign currency impact related to the remeasurement of intercompany debt instruments	1,534			(2,514		)	(7,094		)	1,534
Other, net ~~(6)~~(7)	—			(740		)	(7,326		)	—
Total segment adjusted income from continuing operations before income tax	$	337,283		$	351,257		$	433,842		$	353,972

__________


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

(2)

Amounts for the three months ended March 31, 2020 include $13.7 million of costs associated with certain continuity and transitional compensation arrangements for certain senior management of the Company. Other amounts in 2020 related primarily to certain cost reduction initiatives. Such amounts included accelerated depreciation of $6.6 million, employee separation costs of $0.1 million and other charges of $2.8 million. Amounts for the three months ended March 31, 2019 primarily relate to employee separation costs of $1.8 million and other charges of $0.2 million. Amounts for the three months ended March 31, 2018 primarily relate to employee separation costs of $25.2 million, accelerated depreciation of $17.1 million, charges to increase excess inventory reserves of $2.4 million and other charges of $4.3 million. These charges were related primarily to our restructuring initiatives. See Note 4. Restructuring for discussion of our material restructuring initiatives.


(3)	Amounts include adjustments to our accruals for ~~Litigation-related~~litigation-related settlement charges and certain settlement proceeds related to suits filed by our subsidiaries. Our material legal proceedings and other ~~contingencies, net as further~~contingent matters are described in more detail inNote ~~13.~~12. Commitments and Contingencies.


(4)	Amounts relate to opioid-related legal expenses.


(5)	Amounts primarily relate to charges to impair goodwill and intangible assets as further described in Note 9.8. Goodwill and Other Intangibles.


~~(5)~~(6)	Amounts primarily relate to changes in the fair value of contingent consideration.


~~(6)~~(7)	Amounts primarily relate to gains on sales of businesses and other ~~assets.~~assets, as further described in Note 15. Other (Income) Expense, Net.

Asset information is not reviewed or included within our internal management reporting. Therefore, the Company has not disclosed asset information for each reportable segment.

~~The~~During the three months ended March 31, 2020 and 2019, the Company ~~disaggregates~~disaggregated its revenue from contracts with customers into the categories included in the table below (in thousands). The Company believes these categories depict how the nature, timing and uncertainty of revenue and cash flows are affected by economic factors.


	Three Months Ended March 31,				Three Months Ended March 31,
	2019		2018		2020		2019
Branded Pharmaceuticals:
Specialty Products:
XIAFLEX®	$	68,507	$	57,141	$	89,072	$	68,507
SUPPRELIN® LA	22,056		20,577		19,720		22,056
Other Specialty (1)	24,403		19,027		25,505		24,403
Total Specialty Products	$	114,966	$	96,745	$	134,297	$	114,966
Established Products:
PERCOCET®	$	30,760	$	31,976	$	27,703	$	30,760
TESTOPEL®	15,814		15,170
EDEX®					8,568		5,971
Other Established (2)	41,985		56,344		33,505		51,828
Total Established Products	$	88,559	$	103,490	$	69,776	$	88,559
Total Branded Pharmaceuticals (3)	$	203,525	$	200,235	$	204,073	$	203,525
Sterile Injectables:
VASOSTRICT®	$	139,137	$	113,725	$	202,904	$	139,137
ADRENALIN®	47,322		29,740		56,512		47,322
Ertapenem for injection	32,219		—		17,874		32,219
APLISOL®					9,867		12,381
Other Sterile Injectables (4)	51,370		72,389		49,233		38,989
Total Sterile Injectables (3)	$	270,048	$	215,854	$	336,390	$	270,048
Total Generic Pharmaceuticals (5)	$	218,526	$	249,240	$	251,283	$	218,526
Total International Pharmaceuticals (6)	$	28,312	$	35,198	$	28,659	$	28,312
Total revenues, net	$	720,411	$	700,527	$	820,405	$	720,411

__________


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


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


(3)	Individual products presented above represent the top two performing products in each product category for the three months ended March 31, ~~2019~~2020 and/or any product having revenues in excess of $25 million during any quarterly period in ~~2019~~2020 or ~~2018.~~2019.


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

(5)

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


(6)	The International Pharmaceuticals segment, which accounted for 4%3% and 5%4% of consolidated total revenues during the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively, includes a variety of specialty pharmaceutical products sold outside the U.S., primarily in Canada through our operating company Paladin.

NOTE 6.5. FAIR VALUE MEASUREMENTS

Financial Instruments

The financial instruments recorded in our Condensed Consolidated Balance Sheets include cash and cash equivalents (including money market funds), restricted cash and cash equivalents, accounts receivable, ~~marketable securities,~~ equity ~~and cost~~ method investments, accounts payable and accrued expenses, acquisition-related contingent consideration and debt obligations. Included in cash and cash equivalents and restricted cash and cash equivalents are money market funds representing a type of mutual fund required by law to invest in low-risk securities (for example, U.S. government bonds, U.S. Treasury Bills and commercial paper). Money market funds pay dividends that generally reflect short-term interest rates. Due to their short-term maturity, the carrying amounts of non-restricted and restricted cash and cash equivalents (including money market funds), accounts receivable, accounts payable and accrued expenses approximate their fair values.

The following table presents current and noncurrent restricted cash and cash equivalent balances at March 31, ~~2019~~2020 and December 31, ~~2018~~2019 (in thousands):


	March 31, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Restricted cash and cash equivalents—current portion (1)	$	332,547	$	305,368	$	200,666	$	247,457
Restricted cash and cash equivalents—noncurrent portion (2)	22,357		22,356		18,400		18,400
Restricted cash and cash equivalents—total (3)	$	354,904	$	327,724	$	219,066	$	265,857

__________


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


(2)	These amounts are reported in our Condensed Consolidated Balance Sheets as Other assets.

(3)

Approximately ~~$327.4~~$195.7 million and ~~$299.7~~$242.8 million of our restricted cash and cash equivalents are held in ~~qualified settlement funds~~Qualified Settlement Funds (QSFs) for mesh-related matters at March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. The remaining ~~amount of~~ restricted cash and cash equivalents ~~at March 31, 2019~~ primarily relates to other litigation-related matters. See Note ~~13.~~12. Commitments and Contingencies for further information.

Fair value guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

~~Marketable Securities~~

Equity securities consist of investments in the stock of publicly traded companies, the values of which are based on quoted market prices and thus represent Level 1 measurements within the above-defined fair value hierarchy. These securities are not held to support current operations and are therefore classified as noncurrent assets. Equity securities are included in Marketable securities in our Condensed Consolidated Balance Sheets at March 31, 2019 and December 31, 2018.

Acquisition-Related Contingent Consideration

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~~The estimates of fair value are uncertain and changes in any of ~~these~~the estimated inputs used as of the date of this report could have resulted in significant adjustments to fair value. See the “Recurring Fair Value Measurements” section below for additional information on acquisition-related contingent consideration.

Recurring Fair Value Measurements

The Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, ~~2019~~2020 and December 31, ~~2018~~2019 were as follows (in thousands):


	Fair Value Measurements at March 31, 2019 using:								Fair Value Measurements at March 31, 2020 using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Money market funds	$	641,012	$	—	$	—	$	641,012	$	635,365	$	—	$	—	$	635,365
Equity securities	969		—		—		969
Total	$	641,981	$	—	$	—	$	641,981
Liabilities:
Acquisition-related contingent consideration—current	$	—	$	—	$	28,305	$	28,305	$	—	$	—	$	8,459	$	8,459
Acquisition-related contingent consideration—noncurrent	—		—		39,537		39,537		$	—	$	—	$	30,480	$	30,480
Total	$	—	$	—	$	67,842	$	67,842



	Fair Value Measurements at December 31, 2019 using:
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Money market funds	$	427,033	$	—	$	—	$	427,033
Liabilities:
Acquisition-related contingent consideration—current	$	—	$	—	$	6,534	$	6,534
Acquisition-related contingent consideration—noncurrent	$	—	$	—	$	23,123	$	23,123

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, ~~2019~~2020 and December 31, ~~2018,~~2019, money market funds include ~~$69.1~~$37.4 million and ~~$86.9~~$70.2 million, respectively, in QSFs to be disbursed to mesh-related or other product liability claimants. Amounts in QSFs are considered restricted cash equivalents. See Note ~~13.~~12. Commitments and Contingencies for further discussion of our product liability cases. At March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, the differences between the amortized cost and the fair value of our money market funds ~~and equity securities, as well as the related gross unrealized gains or losses,~~ were not material, individually or in the aggregate.

Fair Value Measurements Using Significant Unobservable Inputs

The following table presents changes to the Company’s liability for acquisition-related contingent consideration, which ~~was~~is measured at fair value on a recurring basis using significant unobservable inputs (Level 3), for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 (in thousands):



	Three Months Ended March 31,
	2020			2019
Beginning of period	$	29,657		$	116,703
Amounts settled	(2,461		)	(11,591		)
Changes in fair value recorded in earnings	12,462			(37,501		)
Effect of currency translation	(719		)	231
End of period	$	38,939		$	67,842

Three Months Ended March 31,
2019 2018
Beginning of period $ 116,703
$ 190,442
Amounts settled (11,591 ) (27,767 )
Changes in fair value recorded in earnings (37,501 ) 6,835
Effect of currency translation 231
(223 )
End of period $ 67,842
$ 169,287

At March 31, ~~2019,~~2020, the fair value measurements of the contingent consideration obligations were determined using risk-adjusted discount rates ranging from approximately ~~9.5%~~10.0% to 15.0% (weighted average rate of approximately ~~11.7%)~~12.3%, weighted based on relative fair value). 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.~~items, net. 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 months ended March 31, ~~2019~~2020 by acquisition (in thousands):



	Balance as of December 31, 2019		Changes in Fair Value Recorded in Earnings			Amounts Settled and Other			Balance as of March 31, 2020
Auxilium acquisition	$	13,207	$	(54	)	$	—		$	13,153
Lehigh Valley Technologies, Inc. acquisitions	6,800		12,897			(2,097		)	17,600
Other	9,650		(381		)	(1,083		)	8,186
Total	$	29,657	$	12,462		$	(3,180	)	$	38,939

Balance as of December 31, 2018 Changes in Fair Value Recorded in Earnings Amounts Settled and Other Balance as of March 31, 2019
Auxilium acquisition $ 14,157
$ 388
$ —
$ 14,545
Lehigh Valley Technologies, Inc. acquisitions 34,700
(400 ) (5,000 ) 29,300
VOLTAREN® Gel acquisition (1) 56,240
(37,784 ) (6,260 ) 12,196
Other 11,606
295
(100 ) 11,801
Total $ 116,703
$ (37,501 ) $ (11,360 ) $ 67,842

~~__________~~


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

Nonrecurring Fair Value Measurements

The Company’s financial assets and liabilities measured at fair value on a nonrecurring basis during the three months ended March 31, ~~2019~~2020 were as follows (in thousands):



	Fair Value Measurements during the Three Months Ended March 31, 2020 (1) using:						Total Expense for the Three Months Ended March 31, 2020
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Expense for the Three Months Ended March 31, 2020
Intangible assets, excluding goodwill (2)	$	—	$	—	$	24,377	$	(63,751	)
Certain property, plant and equipment	—		—		—		(1,248		)
Total	$	—	$	—	$	24,377	$	(64,999	)

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)
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.

(2)

These fair value measurements were determined using risk-adjusted discount rates ranging from approximately 10.0% to 12.0% (weighted average rate of approximately 11.1%, weighted based on relative fair value). The Company also performed fair value measurements in connection with its goodwill impairment tests. Refer to Note 8. Goodwill and Other Intangibles for additional information on goodwill and other intangible asset impairment tests, including information about the valuation methodologies utilized.

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

NOTE 7.6. INVENTORIES

Inventories consist of the following at March 31, ~~2019~~2020 and December 31, ~~2018~~2019 (in thousands):



	March 31, 2020		December 31, 2019
Raw materials (1)	$	115,436	$	124,171
Work-in-process (1)	67,983		65,392
Finished goods (1)	141,543		138,302
Total	$	324,962	$	327,865

March 31, 2019 December 31, 2018
Raw materials (1) $ 127,622
$ 122,825
Work-in-process (1) 84,801
70,458
Finished goods (1) 118,968
128,896
Total $ 331,391
$ 322,179

__________

(1) The components of inventory shown in the table above are net of allowance for obsolescence.

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, ~~2019~~2020 and December 31, ~~2018, $9.9~~2019, $31.1 million and ~~$8.1~~$29.0 million, respectively, of noncurrent inventory was included in Other assets in the Condensed Consolidated Balance Sheets. As of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company’s Condensed Consolidated Balance Sheets included approximately ~~$10.5~~$23.3 million and ~~$12.5~~$17.6 million, respectively, of capitalized pre-launch inventories related to ~~generic and sterile injectable~~ products that were not yet available to be sold.

NOTE 8.7. LEASES

~~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~~right-of-use (ROU) assets and lease liabilities at March 31, 2020 and December 31, 2019 (in thousands):



	Condensed Consolidated Balance Sheets Line Items	March 31, 2020		December 31, 2019
ROU assets:
Operating lease ROU assets	Operating lease assets	$	49,349	$	51,700
Finance lease ROU assets	Property, plant and equipment, net	54,482		56,793
Total ROU assets		$	103,831	$	108,493
Operating lease liabilities:
Current operating lease liabilities	Current portion of operating lease liabilities	$	11,512	$	10,763
Noncurrent operating lease liabilities	Operating lease liabilities, less current portion	45,057		48,299
Total operating lease liabilities		$	56,569	$	59,062
Finance lease liabilities:
Current finance lease liabilities	Accounts payable and accrued expenses	$	5,799	$	5,672
Noncurrent finance lease liabilities	Other liabilities	29,706		31,312
Total finance lease liabilities		$	35,505	$	36,984

Condensed Consolidated Balance Sheets Line Items March 31, 2019
ROU assets:
Operating lease ROU assets Operating lease assets $ 57,771
Finance lease ROU assets Property, plant and equipment, net 57,935
Total ROU assets $ 115,706
Operating lease liabilities:
Current operating lease liabilities Current portion of operating lease liabilities $ 12,051
Noncurrent operating lease liabilities Operating lease liabilities, less current portion 54,258
Total operating lease liabilities $ 66,309
Finance lease liabilities:
Current finance lease liabilities Accounts payable and accrued expenses $ 5,105
Noncurrent finance lease liabilities Other liabilities 33,979
Total finance lease liabilities $ 39,084

The following table presents information about lease costs and expenses and sublease income for the three months ended March 31, 2020 and 2019 (in thousands):


						Three Months Ended March 31,
	Condensed Consolidated Statements of Operations Line Items	Three Months Ended March 31, 2019			Condensed Consolidated Statements of Operations Line Items	2020			2019
Operating lease cost	Various (1)	$	3,499		Various (1)	$	3,992		$	3,499
Finance lease cost:
Amortization of ROU assets	Various (1)	$	2,296		Various (1)	$	2,311		$	2,296
Interest on lease liabilities	Interest expense, net	$	500		Interest expense, net	$	466		$	500
Other lease costs and income:
Variable lease costs (2)	Various (1)	$	2,089		Various (1)	$	2,658		$	2,089
Sublease income	Various (1)	$	(964	)	Various (1)	$	(861	)	$	(964	)

__________

(1)

Amounts are included in ~~Cost~~the Condensed Consolidated Statements of ~~revenues, Selling, general and administrative and/or Research and development~~Operations based on the function that the underlying leased asset supports. ~~Of these~~The following table presents the components of such aggregate amounts ~~a total of~~ ~~$2.7 million~~ ~~was~~ ~~Cost of revenues~~, ~~$4.1 million~~ ~~was~~ ~~Selling, general~~for the three months ended March 31, 2020 and ~~administrative~~ ~~and~~ ~~$0.1 million~~ ~~was~~ ~~Research and development~~.

2019 (in thousands):



	Three Months Ended March 31,
	2020		2019
Cost of revenues	$	3,328	$	2,700
Selling, general and administrative	$	4,721	$	4,169
Research and development	$	51	$	51


(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.

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, 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, 2019 (in thousands):

Operating Leases Finance Leases
2019, excluding amounts already paid $ 11,135
$ 5,240
2020 13,667
7,329
2021 13,021
7,476
2022 12,309
7,626
2023 9,890
7,780
Thereafter 20,622
10,521
Total future lease payments $ 80,644
$ 45,972
Less: amount representing interest 14,335
6,888
Present value of future lease payments (lease liability) $ 66,309
$ 39,084

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

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

~~__________~~


~~(1)~~	~~The Malvern, Pennsylvania headquarters lease arrangement is included under Capital Leases.~~

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



	~~March 31, 2019~~
~~Weighted average remaining lease term (years), weighted based on lease liability balances:~~
~~Operating leases~~	~~6.5 years~~
~~Finance leases~~	~~6.2 years~~
~~Weighted average discount rate (percentages), weighted based on the remaining balance of lease payments:~~
~~Operating leases~~	~~5.8~~	%
~~Finance leases~~	~~5.1~~	%

The following table provides certain cash flow and supplemental noncash information related to our lease liabilities for the three months ended March 31, 2020 and 2019 (in thousands):



	Three Months Ended March 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash payments for operating leases	$	2,981	$	3,692
Operating cash payments for finance leases	$	648	$	473
Financing cash payments for finance leases	$	1,184	$	1,174

Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash payments for operating leases $ 3,692
Operating cash payments for finance leases $ 473
Financing cash payments for finance leases $ 1,174
Lease liabilities arising from obtaining right-of-use assets:
Operating leases $ —
Finance leases $ —

NOTE 9.8. GOODWILL AND OTHER INTANGIBLES

Goodwill

Changes in the carrying amount of our goodwill for the three months ended March 31, ~~2019~~2020 were as follows (in thousands):



	Branded Pharmaceuticals		Sterile Injectables		Generic Pharmaceuticals		International Pharmaceuticals			Total
Goodwill as of December 31, 2019	$	828,818	$	2,731,193	$	—	$	35,173		$	3,595,184
Effect of currency translation	—		—		—		(2,387		)	(2,387		)
Goodwill impairment charges	—		—		—		(32,786		)	(32,786		)
Goodwill as of March 31, 2020	$	828,818	$	2,731,193	$	—	$	—		$	3,560,011

Branded Pharmaceuticals Sterile Injectables Generic Pharmaceuticals International Pharmaceuticals Total
Goodwill as of December 31, 2018 $ 828,818
$ 2,731,193
$ 151,108
$ 53,517
$ 3,764,636
Effect of currency translation —
—
—
1,165
1,165
Goodwill impairment charges —
—
(86,000 ) —
(86,000 )
Goodwill as of March 31, 2019 $ 828,818
$ 2,731,193
$ 65,108
$ 54,682
$ 3,679,801

The carrying amounts of goodwill at March 31, ~~2019~~2020 and December 31, ~~2018~~2019 are net of the following accumulated impairments (in thousands):



	Branded Pharmaceuticals		Sterile Injectables		Generic Pharmaceuticals		International Pharmaceuticals		Total
Accumulated impairment losses as of December 31, 2019	$	855,810	$	—	$	3,142,657	$	500,417	$	4,498,884
Accumulated impairment losses as of March 31, 2020	$	855,810	$	—	$	3,142,657	$	494,499	$	4,492,966

Branded Pharmaceuticals Sterile Injectables Generic Pharmaceuticals International Pharmaceuticals Total
Accumulated impairment losses as of December 31, 2018 $ 855,810
$ —
$ 2,991,549
$ 456,408
$ 4,303,767
Accumulated impairment losses as of March 31, 2019 $ 855,810
$ —
$ 3,077,549
$ 466,317
$ 4,399,676

Other Intangible Assets

Changes in the amount of other intangible assets for the three months ended March 31, ~~2019 are set forth in the table below~~2020 were as follows (in thousands).:



Cost basis:	Balance as of December 31, 2019			Acquisitions			Impairments			Effect of Currency Translation			Balance as of March 31, 2020
Indefinite-lived intangibles:
In-process research and development	$	93,900		$	—		$	—		$	—		$	93,900
Total indefinite-lived intangibles	$	93,900		$	—		$	—		$	—		$	93,900
Finite-lived intangibles:
Licenses (weighted average life of 14 years)	$	457,402		$	—		$	(8,700	)	$	—		$	448,702
Tradenames	6,409			—			—			—			6,409
Developed technology (weighted average life of 11 years)	5,844,439			—			(55,051		)	(19,839		)	5,769,549
Total finite-lived intangibles (weighted average life of 11 years)	$	6,308,250		$	—		$	(63,751	)	$	(19,839	)	$	6,224,660
Total other intangibles	$	6,402,150		$	—		$	(63,751	)	$	(19,839	)	$	6,318,560

Accumulated amortization:	Balance as of December 31, 2019			Amortization			Impairments			Effect of Currency Translation			Balance as of March 31, 2020
Finite-lived intangibles:
Licenses	$	(410,336	)	$	(2,429	)	$	—		$	—		$	(412,765	)
Tradenames	(6,409		)	—			—			—			(6,409		)
Developed technology	(3,414,138		)	(114,808		)	—			11,934			(3,517,012		)
Total other intangibles	$	(3,830,883	)	$	(117,237	)	$	—		$	11,934		$	(3,936,186	)
Net other intangibles	$	2,571,267											$	2,382,374

Cost basis: Balance as of December 31, 2018 Acquisitions Impairments Effect of Currency Translation Balance as of March 31, 2019
Indefinite-lived intangibles:
In-process research and development $ 93,900
$ —
$ —
$ —
$ 93,900
Total indefinite-lived intangibles $ 93,900
$ —
$ —
$ —
$ 93,900
Finite-lived intangibles:
Licenses (weighted average life of 14 years) $ 457,402
$ —
$ —
$ —
$ 457,402
Tradenames 6,409
—
—
—
6,409
Developed technology (weighted average life of 11 years) 6,182,015
—
(78,700 ) 5,356
6,108,671
Total finite-lived intangibles (weighted average life of 11 years) $ 6,645,826
$ —
$ (78,700 ) $ 5,356
$ 6,572,482
Total other intangibles $ 6,739,726
$ —
$ (78,700 ) $ 5,356
$ 6,666,382

Accumulated amortization: Balance as of December 31, 2018 Amortization Impairments Effect of Currency Translation Balance as of March 31, 2019
Finite-lived intangibles:
Licenses $ (398,182 ) $ (4,869 ) $ —
$ —
$ (403,051 )
Tradenames (6,409 ) —
—
—
(6,409 )
Developed technology (2,877,829 ) (140,730 ) —
(2,769 ) (3,021,328 )
Total other intangibles $ (3,282,420 ) $ (145,599 ) $ —
$ (2,769 ) $ (3,430,788 )
Net other intangibles $ 3,457,306
$ 3,235,594

Amortization expense for the three months ended March 31, 2020 and 2019 ~~and 2018~~ totaled ~~$145.6~~$117.2 million and ~~$157.2~~$145.6 million, respectively. Amortization expense is included in Cost of revenues in the Condensed Consolidated Statements of Operations. Estimated amortization of intangibles for the five fiscal years subsequent to December 31, ~~2018~~2019 is as follows (in thousands):



2020	$	427,824
2021	$	389,418
2022	$	373,293
2023	$	331,379
2024	$	292,903

2019 $ 545,757
2020 $ 461,267
2021 $ 419,045
2022 $ 403,142
2023 $ 372,939

Impairments

~~Endo tests goodwill~~Goodwill and indefinite-lived intangible assets are tested for impairment annually ~~or more frequently whenever~~and when events or changes in circumstances indicate that the asset might be impaired. Our annual assessment is performed as of October ~~1st.~~

As part of our goodwill and intangible asset impairment assessments, we estimate the fair values of our reporting units and our intangible assets using an income approach that utilizes a discounted cash flow model or, where appropriate, a market approach.

The discounted cash flow models are dependent upon our estimates of future cash flows and other ~~factors. These~~factors including estimates of ~~future cash flows involve assumptions concerning~~ (i) future operating performance, including future sales, long-term growth rates, operating margins, ~~tax~~discount rates, variations in the amount and timing of cash flows and the probability of achieving the estimated cash flows and (ii) future economic conditions. These assumptions are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy. The discount rates applied to the estimated cash flows are based on the overall risk associated with the particular assets and other market factors. We believe the discount rates and other inputs and assumptions are consistent with those that a market participant would use. Any impairment charges resulting from annual or interim goodwill and intangible asset impairment assessments are recorded to Asset impairment charges in our Condensed Consolidated Statements of Operations.

During the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, the Company incurred the following goodwill and other intangible asset impairment charges (in thousands):



	Three Months Ended March 31,
	2020		2019
Goodwill impairment charges	$	32,786	$	86,000
Other intangible asset impairment charges	$	63,751	$	78,700

Three Months Ended March 31,
2019 2018
Goodwill impairment charges $ 86,000
$ 391,000
Other intangible asset impairment charges $ 78,700
$ 54,200

~~A summary of significant goodwill and other intangible asset impairment tests and related charges is included below. Pre-tax~~Except as described below, pre-tax non-cash ~~intangible~~ asset impairment charges related primarily to certain in-process research and development and/or developed technology intangible assets that were tested for impairment following changes in market conditions and certain other factors impacting recoverability.

As a result of certain business decisions that occurred during the first quarter of 2020, we tested the goodwill of our Paladin reporting unit for impairment as of March 31, 2020. The fair value of the reporting unit was estimated using an income approach that utilized a discounted cash flow model. The discount rate utilized in this test was 9.5%. This goodwill impairment test resulted in a pre-tax non-cash goodwill impairment charge of $32.8 million during the three months ended March 31, 2020, representing the remaining carrying amount. This impairment was primarily attributable to portfolio decisions and updated market expectations during the quarter.

As a result of certain competitive events that occurred during the first quarter of 2019, we tested the goodwill of our Generic Pharmaceuticals reporting unit for impairment as of March 31, 2019. The fair value of the reporting unit was estimated using an income approach that utilized a discounted cash flow model. The discount rate utilized in this test was 10.5%. This goodwill impairment test resulted in a pre-tax non-cash goodwill impairment charge of $86.0 million during the three months ended March 31, 2019, representing the excess of this reporting unit’s carrying amount over its estimated fair value. ~~The~~This Generic Pharmaceuticals impairment can be primarily attributed to the impact of the competitive events referenced above and an increase in the discount rate used in the determination of fair value.

~~During~~We are closely monitoring the ~~first quarter~~impact of ~~2018, a change~~COVID-19 on our business. It is possible that COVID-19 could result in ~~segments resulted in changes~~reductions to ~~our reporting units for goodwill impairment testing purposes, including~~ the ~~creation of a new Sterile Injectables reporting unit, which was previously part~~estimated fair values of our ~~Generics reporting unit. As a~~goodwill and other intangible assets, which could ultimately 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 approachin asset impairment charges that ~~utilizes a discounted cash flow model. The results of these goodwill impairment tests were as follows:~~

~~The former Generics reporting unit’s estimated fair value exceeded its carrying amount, resulting in no related goodwill impairment charge.~~

~~The new Sterile Injectables reporting unit’s estimated fair value exceeded its carrying amount, resulting in no related goodwill impairment charge.~~

~~The new Generic Pharmaceuticals reporting unit’s carrying amount exceeded its estimated fair value, resulting in a pre-tax non-cash goodwill impairment charge of $391.0 million.~~may be material.

NOTE ~~10.~~9. CONTRACT ASSETS AND LIABILITIES

Our revenue consists almost entirely of sales of our pharmaceutical products to customers, whereby we ship products to a customer pursuant to a purchase order. Revenue contracts such as these do not generally give rise to contract assets or contract liabilities because: (i) the underlying contracts generally have only a single performance obligation and (ii) we do not generally receive consideration until the performance obligation is fully satisfied. At March 31, ~~2019,~~2020, the unfulfilled performance obligations for these types of contracts relate to ordered but undelivered products. We generally expect to fulfill the performance obligations and recognize revenue within one week of entering into the underlying contract. Based on the short-term initial contract duration, additional disclosure about the remaining performance obligations is not required.

Certain of our other revenue-generating contracts, including license and collaboration agreements, may result in contract assets and/or contract liabilities. For example, we may recognize contract liabilities upon receipt of certain upfront and milestone payments from customers when there are remaining performance obligations.

The following table shows the opening and closing balances of contract assets and contract liabilities from contracts with customers (dollars in thousands):


	March 31, 2019		December 31, 2018		$ Change			% Change		March 31, 2020		December 31, 2019		$ Change			% Change
Contract assets, net (1)	$	9,406	$	12,065	$	(2,659	)	(22	)%	$	7,325	$	—	$	7,325		NM
Contract liabilities, net (2)	$	22,756	$	19,217	$	3,539		18	%	$	6,451	$	6,592	$	(141	)	(2	)%

__________

NM indicates that the percentage change is not meaningful or is greater than 100%

(1)

At March 31, ~~2019 and December 31, 2018, approximately $9.4 million and $9.3 million, respectively, of these~~2020, the entire contract asset ~~amounts are~~amount is classified as ~~current assets~~a noncurrent asset and ~~are included in Prepaid expenses and other current assets in the Company’s Condensed Consolidated Balance Sheets. The remaining amounts are classified as noncurrent and are~~is included in Other assets. The net ~~decrease~~increase in contract assets during the three months ended March 31, ~~2019~~2020 was primarily due to ~~reclassifications to accounts receivable following the resolution of certain conditions other than the passage of time affecting~~ the Company’s ~~rights to~~estimated consideration for the sale of certain ~~goods, partially offset by certain sales activity during the period.~~intellectual property rights.

(2)

At both March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, approximately ~~$2.8~~$1.4 million ~~and $1.7 million, respectively,~~ of these contract liability amounts are classified as current liabilities and are included in Accounts payable and accrued expenses in the Company’s Condensed Consolidated Balance Sheets. The remaining amounts are classified as noncurrent and are included in Other liabilities. ~~During the three months ended March 31, 2019, the Company entered into new contracts resulting in an increase~~The decrease to contract liabilities ofwas due to approximately ~~$4.0 million. This increase was partially offset by approximately $0.5~~$0.1 million in revenue recognized during the period.

During the three months ended March 31, ~~2019,~~2020, we recognized revenue of ~~$10.1~~$3.9 million relating to performance obligations satisfied, or partially satisfied, in prior periods. Such revenue generally relates to changes in estimates with respect to our variable consideration.

NOTE ~~11.~~10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses include the following at March 31, ~~2019~~2020 and December 31, ~~2018~~2019 (in thousands):



	March 31, 2020		December 31, 2019
Trade accounts payable	$	88,211	$	101,532
Returns and allowances	213,756		206,248
Rebates	115,763		129,056
Chargebacks	1,630		1,594
Accrued interest	100,249		112,860
Accrued payroll and related benefits	59,777		79,869
Accrued royalties and other distribution partner payables	116,702		115,816
Acquisition-related contingent consideration—current	8,459		6,534
Other	150,411		146,440
Total	$	854,958	$	899,949

March 31, 2019 December 31, 2018
Trade accounts payable $ 97,592
$ 96,024
Returns and allowances 223,156
236,946
Rebates 118,658
144,860
Chargebacks 2,481
2,971
Accrued interest 45,351
130,182
Accrued payroll and related benefits 45,037
89,895
Accrued royalties and other distribution partner payables 103,649
122,028
Acquisition-related contingent consideration—current 28,305
36,514
Other 176,601
149,780
Total $ 840,830

$ 1,009,200

NOTE ~~12.~~11. DEBT

The following table presents information about the Company’s total indebtedness at March 31, ~~2019~~2020 and December 31, ~~2018~~2019 (dollars in thousands):



	March 31, 2020						December 31, 2019
	Effective Interest Rate		Principal Amount		Carrying Amount		Effective Interest Rate		Principal Amount		Carrying Amount
7.25% Senior Notes due 2022	7.25	%	$	8,294	$	8,294	7.25	%	$	8,294	$	8,294
5.75% Senior Notes due 2022	5.75	%	182,479		182,479		5.75	%	182,479		182,479
5.375% Senior Notes due 2023	5.62	%	210,440		209,126		5.62	%	210,440		209,018
6.00% Senior Notes due 2023	6.28	%	1,439,840		1,427,814		6.28	%	1,439,840		1,426,998
5.875% Senior Secured Notes due 2024	6.14	%	300,000		296,798		6.14	%	300,000		296,647
6.00% Senior Notes due 2025	6.27	%	1,200,000		1,186,326		6.27	%	1,200,000		1,185,726
7.50% Senior Secured Notes due 2027	7.71	%	1,500,000		1,482,675		7.71	%	1,500,000		1,482,212
Term Loan Facility	6.09	%	3,321,088		3,295,558		6.21	%	3,329,625		3,302,675
Revolving Credit Facility	4.13	%	300,000		300,000		4.25	%	300,000		300,000
Total long-term debt, net			$	8,462,141	$	8,389,070			$	8,470,678	$	8,394,049
Less current portion, net			34,150		34,150				34,150		34,150
Total long-term debt, less current portion, net			$	8,427,991	$	8,354,920			$	8,436,528	$	8,359,899

March 31, 2019 December 31, 2018
Effective Interest Rate Principal Amount Carrying Amount Effective Interest Rate Principal Amount Carrying Amount
7.25% Senior Notes due 2022 7.25 % $ 10,084
$ 10,083
7.91 % $ 400,000
$ 392,947
5.75% Senior Notes due 2022 5.75 % 182,479
182,462
6.04 % 700,000
694,464
5.375% Senior Notes due 2023 5.61 % 210,440
208,733
5.62 % 750,000
743,438
6.00% Senior Notes due 2023 6.28 % 1,439,840
1,424,854
6.28 % 1,635,000
1,616,817
5.875% Senior Secured Notes due 2024 6.14 % 300,000
296,205
6.14 % 300,000
296,062
6.00% Senior Notes due 2025 6.27 % 1,200,000
1,183,979
6.27 % 1,200,000
1,183,415
7.50% Senior Secured Notes due 2027 7.71 % 1,500,000
1,480,876

—
—
Term Loan B Facility Due 2024 6.96 % 3,355,238
3,324,085
7.02 % 3,363,775
3,331,276
Total long-term debt, net $ 8,198,081
$ 8,111,277
$ 8,348,775
$ 8,258,419
Less current portion, net 35,940
35,940
34,150
34,150
Total long-term debt, less current portion, net $ 8,162,141
$ 8,075,337
$ 8,314,625
$ 8,224,269

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, ~~2019.~~2020. The obligations under (i) all of the senior secured notes and (ii) the Credit Agreement (as defined below) and related loan documents are secured on a pari passu basis by a perfected first priority (subject to certain permitted liens) lien on the collateral securing such instruments, which collateral represents substantially all of the assets of the issuers or borrowers and the guarantors party thereto (subject to customary exceptions). Our senior unsecured notes are unsecured and effectively subordinated in right of priority to ~~our credit agreement~~the Credit Agreement and our senior secured notes, in each case to the extent of the value of the collateral securing such instruments.

The aggregate estimated fair value of the Company’s long-term debt, which was estimated using inputs based on quoted market prices for the same or similar debt issuances, was ~~$7.5~~$7.2 billion and ~~$7.2~~$7.4 billion at March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. Based on this valuation methodology, we determined these debt instruments represent Level 2 measurements within the fair value hierarchy.

Credit Facilities

The Company and certain of its subsidiaries are party to a credit agreement (the Credit Agreement), which provides for (i) a $1,000.0 million senior secured revolving credit facility (the Revolving Credit Facility) and (ii) a senior secured term loan facility in an initial principal amount of $3,415.0 million (the Term Loan Facility and, together with the Revolving Credit Facility, the Credit Facilities). Current amounts outstanding under the Credit Facilities are set forth in the table above. After giving effect to borrowings under the Revolving Credit Facility and previously issued and outstanding letters of credit, approximately $696.8 million of remaining credit is available under the Revolving Credit Facility as of March 31, 2020. The Company’s outstanding debt agreements contain a number of restrictive covenants, including certain limitations on the Company’s ability to incur additional indebtedness.

At March 31, 2020 and December 31, 2019, we were in compliance with all covenants contained in the Credit Agreement.

Senior Notes and Senior Secured Notes

At March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, we were in compliance with all covenants contained in the indentures governing our various senior notes and senior secured notes.

~~Credit Facilities~~Debt Financing Transactions

~~The credit facilities consist of a $1,000.0 million revolving credit facility (the Revolving Credit Facility) and a senior secured term loan facility (the Term Loan Facility and, together with~~Set forth below are certain disclosures relating to debt financing transactions that occurred during the ~~Revolving Credit Facility, the Credit Facilities). As of~~three months ended March 31, ~~2019, we had $996.8 million of remaining credit available through~~2020 or the ~~Revolving Credit Facility. At March 31, 2019 and~~year ended December 31, ~~2018, we were in compliance with all covenants contained in the Credit Agreement (as defined below).~~2019.

March 2019 Refinancing

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

~~the~~ entry into an amendment (the Revolving Credit Facility Amendment) to the Company’s existing credit agreement, which was originally dated April 27, 2017 (the ~~Credit Agreement)~~amended credit agreement is described above under the heading “Credit Facilities”);

~~the~~ issuance of ~~$1,500.0~~$1,500.0 million of 7.50% Senior Secured Notes due 2027 (the 2027 Notes);

~~the~~ repurchase of ~~$1,642.2~~$1,642.2 million aggregate principal amount ($1,624.0 million aggregate carrying amount) of certain of the Company’s senior unsecured notes for ~~$1,500.0~~$1,500.0 million in cash, excluding accrued interest (the Notes Repurchases); and

~~the~~ solicitation of consents from the holders of the existing 7.25% Senior Notes due 2022 and 5.75% Senior Notes due 2022 ~~(together, the Consent Notes)~~ to certain amendments to the indentures governing such notes, which eliminated substantially all of the restrictive covenants, certain events of default and other provisions contained in each such indenture.

The Revolving Credit Facility Amendment amended the Credit Agreement to, among other things, (i) extend the maturity of the commitments under the Revolving Credit Facility from April 2022 to March 2024 (with the exception of $76.0 million of commitments that were not extended), (ii) provide greater covenant flexibility by increasing the maximum Secured Net Leverage Ratio described in the Financial Covenant (as defined in the Credit Agreement) from 3.50:1.00 to 4.50:1.00 and (iii) limit the scenarios under which such Financial Covenant will be tested.

The 2027 Notes were issued by Par Pharmaceutical, Inc. (PPI), a wholly-owned indirect subsidiary of the Company, in a private offering to “qualified institutional buyers” (as defined in Rule 144A under the Securities Act) and outside the U.S. to non-U.S. persons in compliance with Regulation S under the Securities Act. The 2027 Notes are guaranteed on a senior secured basis by the Company and its subsidiaries that also guarantee the Credit Agreement (collectively, the Guarantors). The 2027 Notes are senior secured obligations of PPI and the Guarantors and are secured by the same collateral that secures the Credit Agreement and the Company’s existing senior secured notes. Interest on the 2027 Notes is payable semiannually in arrears on April 1 and October 1 of each year, beginning on October 1, 2019.

The 2027 Notes will mature on April 1, 2027; however, the indenture governing these notes allows for redemption prior to maturity, in whole or in part, subject to certain restrictions and limitations described therein, in the following ways:

Before April 1, 2022, the 2027 Notes may be redeemed, in whole or in part, by paying the sum of: (i) 100% of the principal amount being redeemed, (ii) an applicable make-whole premium as described in the indenture and (iii) accrued and unpaid interest, if any, to, but not including, the date of redemption.

On or after April 1, 2022, the 2027 Notes may be redeemed, in whole or in part, at redemption prices set forth in the indenture, plus accrued and unpaid interest, if any, to, but not including, the date of redemption. The redemption prices for the 2027 Notes vary over time pursuant to a step-down schedule set forth in the indenture, beginning at ~~105.625%~~ ~~of the principal amount redeemed and decreasing to~~ ~~100%~~ ~~by April 1, 2025.~~

~~Before April 1, 2022, the 2027 Notes may be redeemed, in part (up to~~ ~~35%~~ ~~of the principal amount outstanding) with the net cash proceeds from specified equity offerings at~~ ~~107.500%~~ ~~of the principal amount redeemed, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.~~

The 2027 Notes indenture contains covenants that, among other things, restrict the Company’s ability and the ability of its Restricted Subsidiaries (as defined in the indenture) 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. 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 upon the 2027 Notes receiving investment grade credit ratings.

The Company used the net proceeds of the 2027 Notes and cash on hand primarily to fund the Notes Repurchases and to pay certain premiums, fees and expenses related thereto. The Notes Repurchases were completed by Endo Finance LLC (Endo Finance), a wholly-owned subsidiary of the Company, pursuant to a tender offer to repurchase portions of the Company’s outstanding ~~7.25% Senior Notes due 2022~~, ~~5.75% Senior Notes due 2022~~, ~~5.375% Senior Notes due 2023~~ ~~and~~ ~~6.00% Senior Notes due 2023. In connection with the Notes Repurchases, Endo Finance repurchased~~ ~~$1,642.2 million~~ ~~of senior unsecured note indebtedness, representing the aggregate principal amount repurchased, for~~ ~~$1,500.0 million~~ ~~in cash (including certain cash premiums related thereto). The~~ ~~$1,642.2 million~~ ~~aggregate repurchase amount consisted of (i) $389.9 million aggregate principal amount of the~~ ~~7.25% Senior Notes due 2022, (ii) $517.5 million aggregate principal amount of the~~ ~~5.75% Senior Notes due 2022, (iii) $539.6 million aggregate principal amount of the~~ ~~5.375% Senior Notes due 2023~~ ~~and (iv) $195.2 million aggregate principal amount of the~~ ~~6.00% Senior Notes due 2023. The aggregate carrying amount of notes repurchased was~~ ~~$1,624.0 million~~. In conjunction with the Notes Repurchases, Endo Finance also solicited consents from holders of the Consent Notes to certain proposed amendments to the applicable indentures under which each series of Consent Notes were issued, which would eliminate substantially all restrictive covenants, certain events of default and certain other provisions contained in each such indenture.The proposed amendments were effected pursuant to a supplemental indenture to each such indenture executed by Endo Finance and the guarantors of the Consent Notes, which became operative upon the repurchase of at least the requisite consent amount of the applicable series of Consent Notes tendered.

The difference between the cash paid and the carrying amount of notes repurchased in the Notes Repurchases resulted in a ~~$124.0~~$124.0 million ~~gain recorded as~~ ~~Gain on extinguishment of debt~~ ~~in the Condensed Consolidated Statements of Operations.~~ gain. In connection with the March 2019 Refinancing Transactions, we also incurred costs and fees totaling ~~$26.2~~$26.2 million,, of which ~~$4.2~~$4.2 million related to the Notes Repurchases, ~~$19.1~~$19.1 million related to the 2027 Notes issuance and ~~$2.9~~$2.9 million related to the Revolving Credit Facility Amendment. The costs incurred in connection with the Notes Repurchases were charged to expense in the first quarter of 2019 and recorded as ana partial offset to the ~~Gain on extinguishment of debt~~.gain. The costs incurred in connection with the 2027 Notes issuance and the Revolving Credit Facility Amendment, together with previously deferred debt issuance costs associated with the Revolving Credit Facility, have been deferred ~~and will~~to be amortized as interest expense over the terms of the respective instruments. The net gain resulting from the March 2019 Refinancing Transactions was included in the Gain on extinguishment of debt line item in the Condensed Consolidated Statements of Operations.

June 2019 Revolving Credit Facility Borrowing

In June 2019, the Company borrowed $300.0 million under the Revolving Credit Facility to be used for purposes consistent with the Company’s capital allocation priorities, including for general corporate purposes.

Maturities

The following table presents, as of March 31, 2020, the maturities on our long-term debt for each of the five fiscal years subsequent to December 31, ~~2018~~2019 (in thousands):


	Maturities (1)		Maturities (1)
2019 (2)	$	34,150
2020	$	34,150	$	34,150
2021	$	34,150	$	34,150
2022 (2)	$	226,713	$	247,723
2023	$	1,684,430	$	1,684,430
2024 (2)			$	3,770,225

__________

(1)

Certain amounts borrowed pursuant to the Credit Facilities will immediately mature if certain of our senior notes are not refinanced or repaid in full prior to the date that is 91 days prior to the respective stated maturity dates thereof. Accordingly, we may seek to repay or refinance certain senior notes prior to their stated maturity dates. The amounts in this maturities table do not reflect any such early repayment or refinancing; rather, they reflect stated maturity dates.


(2)	~~In April 2019,~~Based on the ~~Company redeemed $1.8~~Company’s borrowings under the Revolving Credit Facility that were outstanding at March 31, 2020, $22.8 million ~~of senior notes, which had a stated maturity date~~will mature in ~~2022. The amounts~~2022, with the remainder maturing in ~~this table do not reflect this early redemption; rather, they reflect stated maturity dates.~~2024.

NOTE ~~13.~~12. COMMITMENTS AND CONTINGENCIES

Legal Proceedings and Investigations

We and certain of our subsidiaries are involved in various claims, legal proceedings and internal and governmental investigations (collectively, proceedings) that arise from time to time, including, among others, those relating to product liability, intellectual property, regulatory compliance, consumer protection, tax and commercial matters. While we cannot predict the outcome of these proceedings and we intend to vigorously prosecute or defend our position as appropriate, there can be no assurance that we will be successful or obtain any requested ~~relief, and an~~relief. An adverse outcome in any of these proceedings could have a material adverse effect on our business, financial condition, results of operations and cash flows. Matters that are not being disclosed herein are, in the opinion of our management, immaterial both individually and in the aggregate with respect to our financial position, results of operations and cash flows. If and when such matters, in the opinion of our management, become material, either individually or in the aggregate, we will disclose them.

We believe that certain settlements and judgments, as well as legal defense costs, relating to certain product liability or other matters are or may be covered in whole or in part under our insurance policies with a number of insurance carriers. In certain circumstances, insurance carriers reserve their rights to contest or deny coverage. We intend to contest vigorously any ~~and all~~ disputes with our insurance carriers and to enforce our rights under the terms of our insurance policies. Accordingly, we will record receivables with respect to amounts due under these policies only when the realization of the potential claim for recovery is considered probable. Amounts recovered under our insurance policies could be materially less than ~~the~~ stated coverage limits and may not be adequate to cover damages, other relief and/or costs relating to claims. In addition, there is no guarantee that insurers will pay claims or that coverage will otherwise be available.See the risk factor “We may not have and may be unable to obtain or maintain insurance adequate to cover potential liabilities” in the Annual Report for more information.

As of March 31, ~~2019,~~2020, our accrual for loss contingencies totaled ~~$861.3~~$442.2 million, the most significant components of which relate to product liability and related matters associated with ~~vaginal~~transvaginal surgical mesh ~~and testosterone.~~products, which we have not sold since March 2016. Although we believe there is a reasonable possibility that a loss in excess of the amount recognized exists, we are unable to estimate the possible loss or range of loss in excess of the amount recognized at this time. While the timing of the resolution of certain of the matters accrued for as loss contingencies remains uncertain and could extend beyond 12 months, as of March 31, ~~2019,~~2020, the entire liability accrual amount is classified in the Current portion of legal settlement accrual in the Condensed Consolidated Balance Sheets.

Product Liability and Related Matters

We and certain of our subsidiaries have been named as defendants in numerous lawsuits in various U.S. federal and state courts, ~~as well as~~and in Canada, Australia and other countries, alleging personal injury resulting from the use of certain products of our ~~subsidiaries. These~~subsidiaries, including the product liability and other related matters ~~are~~ described below in more detail.

Vaginal Mesh. Since 2008, we and certain of our subsidiaries, including American Medical Systems Holdings, Inc. (AMS) (subsequently converted to Astora Women’s Health Holding LLC and merged into Astora Women’s Health LLC and referred to herein as ~~AMS)~~AMS and/or ~~Astora,~~Astora), have been named as defendants in multiple lawsuits in various state and federal courts in the U.S. (including a federal multidistrict litigation (MDL) ~~pending~~ in the U.S. District Court for the Southern District of West ~~Virginia (MDL No. 2325))~~Virginia), and in Canada, Australia and other countries, alleging personal injury resulting from the use of transvaginal surgical mesh products designed to treat pelvic organ prolapse (POP) and stress urinary incontinence (SUI). In January 2018, a representative proceeding (class action) was filed in the Federal Court of Australia against American Medical Systems, LLC. In the various class action and individual complaints, plaintiffsOur subsidiaries have not sold such products since March 2016. Plaintiffs claim a variety of personal injuries, including chronic pain, incontinence, inability to control bowel function and permanent deformities, and seek compensatory and punitive damages, where available.

~~We and certain plaintiffs’ counsel representing mesh-related product liability claimants have entered into various~~Various Master Settlement Agreements (MSAs) and other agreements ~~to resolve~~have resolved up to approximately 71,000 filed and unfiled U.S. mesh ~~claims handled or controlled by the participating counsel.~~claims. These MSAs and other agreements were entered into at various times between June 2013 and the present, were solely by way of compromise and settlement and were not in any way an admission of liability or fault by us or any of our subsidiaries.

All MSAs are subject to a process that includes guidelines and procedures for administering the settlements and the release of funds. In certain cases, the MSAs provide for the creation of QSFs into which the settlement funds ~~may~~will be deposited, ~~pursuant to certain schedules set forth in those agreements. All MSAs have~~establish participation requirements ~~regarding the claims represented by each law firm party to the MSA. In addition, one agreement gives us~~and allow for a ~~unilateral right~~reduction of ~~approval regarding which claims may be eligible to participate under that settlement. To the extent fewer claims than are authorized under an agreement participate,~~ the total settlement payment ~~under that agreement will be reduced by an agreed-upon amount for each such non-participating claim.~~in the event participation thresholds are not met. Funds deposited in QSFs are considered restricted cash and/or restricted cash equivalents.

Distribution of funds to any individual claimant is conditioned upon the receipt of documentation substantiating the validity of the claim, a full release and dismissal of the entire action or claim as to all AMS parties and affiliates. Prior to receiving funds, an individual claimant is required to represent and warrant that liens, assignment rights or other claims identified in the claims administration process have been or will be satisfied by the individual claimant. Confidentiality provisions apply to the amount of settlement awards to participating claimants, the claims evaluation process and procedures used in conjunction with award distributions, and the negotiations leading to the settlements.

In June 2017, the MDL court entered a case management order which, among other things, requires plaintiffs in newly-filed MDL cases to provide expert disclosures on specific causation within one hundred twenty (120) days of filing a claim (the Order). Under the Order, a plaintiff's failure to meet the foregoing deadline may be grounds for the entry of judgment against such plaintiff. In July 2017, a similar order was entered in Minnesota state court. In June 2018, at the request of the MDL court, the Judicial Panel on Multidistrict Litigation entered a minute order suspending the transfer of cases into the MDL. Subsequently, the MDL court issued a pretrial order discontinuing the direct filing of claims in MDL No. 2325. The MDL court also issued similar orders in other MDLs involving claims against other mesh manufacturers.

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 liability accrual may be required. This could have a material adverse effect on our business, financial condition, results of operations and cash flows.

~~The following table presents the changes in the QSFs and mesh liability accrual balances during the three months ended March 31, 2019 (in thousands):~~

Qualified Settlement Funds Mesh Liability Accrual
Balance as of January 1, 2019 $ 299,733
$ 748,606
Additional charges —
—
Cash contributions to Qualified Settlement Funds 81,582
—
Cash distributions to settle disputes from Qualified Settlement Funds (54,984 ) (54,984 )
Cash distributions to settle disputes —
(10,239 )
Other (1) 1,057
1,057
Balance as of March 31, 2019 $ 327,388
$ 684,440

~~__________~~


~~(1)~~	Amounts deposited in the QSFs may earn interest, which is generally used to pay administrative costs of the fund and is reflected in the table above as an increase to the QSF and Mesh Liability Accrual balances. Any interest remaining after all claims have been paid will generally be distributed to the claimants who participated in that settlement.

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 million of which remains in the QSFs as of March 31, 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 investigations.

We will continue to vigorously defend any unresolved claims 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 additional losses that could be incurred.

~~Testosterone.~~ Various manufacturers of prescription medications containing testosterone, including our subsidiaries Endo Pharmaceuticals Inc. (EPI) and Auxilium Pharmaceuticals, Inc. (subsequently converted to Auxilium Pharmaceuticals, LLC and hereinafter referred to as Auxilium), have been named as defendants in multiple lawsuits alleging personal injury resulting from the use of such medications, including FORTESTA^® ~~Gel, DELATESTRYL~~^®~~, TESTIM~~^®~~, TESTOPEL~~^®~~, AVEED~~^® ~~and STRIANT~~^®. Plaintiffs in these suits generally allege various personal injuries, including pulmonary embolism, stroke or other vascular and/or cardiac injuries, and seek compensatory and/or punitive damages, where available.

~~As of May 2, 2019, we were aware of approximately~~ ~~935~~ testosterone cases (some of which may have been filed on behalf of multiple plaintiffs) pending against one or more of our subsidiaries in federal or state court. Most of these cases have been coordinated in a federal MDL pending in the U.S. District Court for the Northern District of Illinois (MDL No. 2545). An MDL trial against Auxilium involving TESTIM^® ~~took place in November 2017 and resulted in a defense verdict. A trial against Auxilium involving TESTIM~~^® ~~was scheduled for January 2018 in the Philadelphia Court of Common Pleas but resolved prior to trial.~~

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.

The MSA is subject to a process that includes guidelines and procedures for administering the settlement and the release of funds. Among other things, the MSA provides for the creation of a QSF into which the settlement funds will be deposited, establishes participation requirements and allows for a reduction of the total settlement payment in the event the participation threshold is not met. Distribution of funds to any individual claimant is conditioned upon the receipt of documentation substantiating product use, ~~and injury as determined by a third-party special master,~~ the dismissal of any lawsuit and the release of the claim as to us and all affiliates. Prior to receiving funds, an individual claimant must represent and warrant that liens, assignment rights or other claims identified in the claims administration process have been or will be satisfied by the individual claimant. Confidentiality provisions apply to the settlement funds, amounts allocated to individual claimants and other terms of the agreement.

~~Although~~

In October 2019, the Ontario Superior Court of Justice approved a class action settlement covering unresolved claims by Canadian women implanted with an AMS vaginal mesh device. Astora funded the settlement in February 2020.

The following table presents the changes in the QSFs and mesh liability accrual balances during the three months ended March 31, 2020 (in thousands):



	Qualified Settlement Funds			Mesh Liability Accrual
Balance as of December 31, 2019	$	242,842		$	454,031
Additional charges	—			30,454
Cash distributions to settle disputes from Qualified Settlement Funds	(47,801		)	(47,801		)
Cash distributions to settle disputes	—			(17,819		)
Other (1)	694			(2,180		)
Balance as of March 31, 2020	$	195,735		$	416,685

__________

(1)

Amounts deposited in the QSFs may earn interest, which is generally used to pay administrative costs of the fund and is reflected in the table above as an increase to the QSF and Mesh Liability Accrual balances. Any interest remaining after all claims have been paid will generally be distributed to the claimants who participated in that settlement. Also included within this line are foreign currency adjustments for settlements not denominated in U.S. dollars.

As of March 31, 2020, the Company ~~believes it~~ has ~~appropriately estimated~~made total cumulative mesh liability payments of approximately $3.6 billion, $195.7 million of which remains in the ~~probable total amount of loss associated with testosterone-related product liability matters~~QSFs as of March 31, 2020. We currently expect to fund the ~~date~~remaining payments under all previously executed settlement agreements into the QSFs during 2020. As the funds are disbursed out of ~~this report, it is reasonably possible that further claims may be filed or asserted and that adjustments~~the QSFs from time to ~~our~~time, the liability accrual ~~may~~will be ~~required. This could have~~reduced accordingly with a ~~material adverse effect on our business, financial condition, results of operations~~corresponding reduction to restricted cash and cash ~~flows.~~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 U.S. 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 the investigations.

The MDL ~~also included a lawsuit filed~~court has been remanding MDL cases to their districts of origin for further proceedings. Other cases are proceeding in ~~November 2014 in~~various state and federal courts. The earliest trial is currently scheduled for August 2020; however, trials may occur earlier or later as timing remains uncertain due to the ~~U.S. District for the Northern District~~impact of ~~Illinois against EPI, Auxilium and various other manufacturers of testosterone products on behalf of a proposed class of health insurance companies~~COVID-19 and other third party payers that claim to have paid for certain testosterone products. This lawsuit is not part of the settlement described above. After a series of motions to dismiss, plaintiff filed a third amended complaint in April 2016, asserting civil claims for alleged violations of the Racketeer Influenced and Corrupt Organizations Act and negligent misrepresentation based on defendants’ marketing of certain testosterone products. The court denied a motion to dismiss this complaint in August 2016. In July 2018, the court denied plaintiff’s motion for class certification. In February 2019, the court granted defendants’ motion for summary judgment. Plaintiffs have appealed to the U.S. Court of Appeals for the Seventh Circuit.

factors. We will continue to vigorously defend any unresolved claims 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 additional losses that could be incurred.

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, litigation 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.

Opioid-Related Matters

Since 2014, multiple U.S. states ~~counties,~~as well as other governmental persons or entities and private plaintiffs in the U.S. and Canada have filed suit against us and/or certain of our subsidiaries, including Endo Health Solutions Inc. (EHSI), ~~EPI, PPI,~~Endo Pharmaceuticals Inc. (EPI), Par Pharmaceutical, Inc. (PPI), Par Pharmaceutical Companies, Inc. (PPCI), Endo Generics Holdings, Inc. (EGHI), Vintage Pharmaceuticals, LLC, Generics Bidco I, LLC and DAVA Pharmaceuticals, LLC, and in Canada, Paladin, as well as various other manufacturers, distributors, pharmacies 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, 2019,~~April 30, 2020, filed cases in the ~~cases~~U.S. of which we were aware include, but are not limited to, approximately 1320 cases filed by or on behalf of states; approximately ~~1,925~~2,780 cases filed by counties, cities, Native American tribes and/or other government-related persons or entities; approximately ~~136~~280 cases filed by hospitals, health systems, unions, health and welfare funds or other third-party payers and approximately 59160 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,~~The Canadian cases include an action ~~against Paladin Labs Inc., EPI, the Company and various other manufacturers and distributors was commenced in~~filed by 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.~~opioids, as well as 3 additional putative class actions, filed in Ontario, Quebec and British Columbia, seeking relief on behalf of Canadian residents who were prescribed and/or consumed opioid medications.

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~~Ohio. Other cases are pending in ~~the case, and in April 2018 it filed a motion~~various federal or state courts. The cases are at various stages. The first MDL trial, relating 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~~2 Ohio counties ~~allowing certain discovery~~(Track One plaintiffs), was set for October 2019 but did not go forward after most defendants settled. EPI, EHSI, PPI and ~~establishing certain~~PPCI executed a settlement agreement with the Track One plaintiffs in September 2019 which provided for payments totaling $10 million and up to $1 million of VASOSTRICT^® and/or ADRENALIN^®. Under the settlement agreement, the Track One plaintiffs may be entitled to additional payments in the event of a comprehensive resolution of government-related opioid claims. The settlement agreement was solely by way of compromise and settlement and was not in any way an admission of liability or fault by us or any of our subsidiaries. The earliest trial is currently scheduled for August 2020; however, trials may occur earlier or later as timing remains uncertain due to the impact of COVID-19 and other ~~deadlines and procedures, among other things.~~

~~Other~~factors. Most cases remain pending in various state courts. In some jurisdictions, such as Connecticut, Illinois, New York, Pennsylvania, South Carolina and Texas, 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.~~stage.

The complaints in the cases assert a variety of claims, including but not limited to statutory claims ~~for alleged~~asserting violations of public nuisance, consumer protection, unfair trade practices, racketeering, Medicaid fraud and/or drug dealer liability ~~statutes~~laws 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~~failures to take adequate steps to identify and report suspicious orders and to prevent abuse and diversion. Plaintiffs have generally ~~seek~~sought various remedies including, without limitation, 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~~seeking documents and ~~Drug Administration (FDA). 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 September 2019, EPI, EHSI, PPI and PPCI received subpoenas from the New York State Department of Financial Services seeking documents and information regarding the marketing, sale and distribution of opioid medications in New York. We are providing information responsive to these subpoenas.

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. ~~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 January 2020, EPI and PPI executed a settlement agreement with the state of Oklahoma providing for a payment of approximately $8.75 million in resolution of potential opioid-related claims. The settlement agreement was solely by way of compromise and settlement and was not in any way an admission of liability or fault by us or any of our subsidiaries.

Generic Drug Pricing Matters

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, EPI, EHSI 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 generally 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.

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 and other claims allege broader, multiple-product conspiracies. 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.

The MDL court has issued various case management and substantive orders, including orders denying certain motions to dismiss, and discovery is ongoing.

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. 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 December 2014, weour subsidiary PPI received ~~a grand jury subpoena~~ from the Antitrust Division of the ~~DOJ~~U.S. Department of Justice (DOJ) a federal grand jury subpoena issued by the U.S. District Court for the Eastern District of Pennsylvania addressed to ~~Par~~“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~~Other Antitrust Matters

Beginning in November 2013, multiple alleged purchasers of LIDODERM^® sued our subsidiary ~~PPI~~EPI and other pharmaceutical companies alleging violations of antitrust law arising out of their settlement of certain patent infringement litigation. The various complaints asserted claims under Sections 1 and 2 of the Sherman Act, state antitrust and consumer protection statutes and/or ~~in some instances, the Company, Generics Bidco I, LLC, DAVA Pharmaceuticals, LLC~~state common law and sought damages, treble damages, disgorgement of profits, restitution, injunctive relief and attorneys’ fees. These cases were consolidated and/or ~~PPCI, as well as~~coordinated in a federal MDL in the U.S. District Court for the Northern District of California. The last cases remaining in the MDL were dismissed with prejudice in September 2018, when the court approved EPI’s settlements with direct and indirect purchaser classes. Those settlement agreements provided for aggregate payments of approximately $100 million. Of this total, EPI paid approximately $60 million in 2018, $30 million in the first quarter of 2019 and $10 million in the first quarter of 2020. In September 2019, Blue Cross Blue Shield of Michigan and Blue Care Network of Michigan filed a complaint against EPI and other pharmaceutical ~~manufacturers~~companies in the Third Judicial Circuit Court, Wayne County, Michigan, asserting claims substantially similar to those asserted in the MDL. In October 2019, certain defendants removed the case to federal court; in April 2020, the case was remanded back to state court.

Beginning in June 2014, multiple alleged purchasers of OPANA^® ER sued our subsidiaries EHSI and ~~in some instances, other corporate and/or individual defendants, alleging price-fixing~~EPI and other ~~anticompetitive conduct with respect~~pharmaceutical companies including Impax Laboratories, LLC (formerly Impax Laboratories, Inc. and referred to ~~generic pharmaceutical products. These~~herein as Impax) and Penwest Pharmaceuticals Co., which our subsidiary EPI had acquired, alleging violations of antitrust law arising out of an agreement reached by EPI and Impax to settle certain patent infringement litigation and EPI’s introduction of reformulated OPANA^® ER. Some cases ~~which include proposed class actions~~were filed on behalf of putative classes of direct ~~purchasers, end-payers~~ and indirect ~~purchaser resellers, as well as non-class action suits,~~purchasers, while others were filed on behalf of individual retailers or health care benefit plans. 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 Illinois. The various complaints assert claims under Sections 1 and 2 of the Sherman Act, 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 March 2019, direct and indirect purchaser plaintiffs filed motions for class certification, which remain pending. In April 2020, defendants filed motions for summary judgment.

Beginning in February 2009, the Federal Trade Commission (FTC) and certain private plaintiffs sued our subsidiaries PPCI (since June 2016, EGHI) and/or PPI as well as other pharmaceutical companies alleging violations of antitrust law arising out of the settlement of certain patent litigation concerning the generic version of AndroGel^® and seeking damages, treble damages, equitable relief and attorneys’ fees and costs. The cases were consolidated and/or coordinated for pretrial proceedings in a federal MDL pending in the U.S. District Court for the Northern District of Georgia. 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. In June 2018, the MDL court granted in part and denied in part various summary judgment and evidentiary motions filed by defendants. In particular, among other things, the court rejected two of the remaining plaintiffs’ causation theories and rejected damages claims related to AndroGel^® 1.62%. In July 2018, the court denied certain plaintiffs’ motion for certification of a direct purchaser class. In November 2019, PPI and PPCI entered into settlement agreements with all but one of the remaining plaintiffs in the MDL. The settlement agreements were solely by way of compromise and settlement and were not in any way an admission of liability or fault. Separately, in August 2019, several alleged direct purchasers filed suit in the U.S. District Court for the Eastern District of Pennsylvania ~~under~~asserting claims substantially similar to those asserted in the ~~caption~~ MDL, as well as additional claims against other defendants relating to other alleged conduct. In ~~re Generic Pharmaceuticals Pricing Antitrust Litigation~~ ~~(MDL No. 2724).~~January 2020, the U.S. District Court for the Eastern District of Pennsylvania denied defendants’ motion to transfer venue to the Northern District of Georgia.

Beginning in February 2018, several alleged indirect purchasers filed proposed class actions against our subsidiary PPI and other pharmaceutical companies alleging violations of antitrust law arising out of the settlement of certain patent litigation concerning the generic version of Zetia^® (ezetimibe). The various complaints ~~and amended complaints generally assert~~asserted claims under ~~federal and/or~~Sections 1 and 2 of the Sherman Act, state antitrust ~~law, state~~and consumer protection statutes and/or state common law and sought injunctive relief, damages, treble damages, attorneys’ fees and costs. In June 2018, these and other related 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 in the U.S. District Court for the Eastern District of Virginia. In September 2018, the indirect purchaser plaintiffs dismissed their claims against PPI without prejudice. In June and July 2019, the MDL court granted the direct purchaser plaintiffs and certain retailer plaintiffs leave to file amended complaints adding PPI as a defendant. In July 2019, PPI entered into settlement agreements with both the direct purchaser plaintiffs and the retailer plaintiffs. The direct purchaser settlement was subject to court approval, which was granted in March 2020. The settlement agreements were solely by way of compromise and settlement, were not in any way an admission of liability or fault and involved no monetary payment.

Beginning in May 2018, multiple complaints were filed in the U.S. District Court for the Southern District of New York against PPI, EPI and/or us, as well as other pharmaceutical companies, alleging violations of antitrust law arising out of the settlement of certain patent litigation concerning the generic version of Exforge^® (amlodipine/valsartan). Some cases were filed on behalf of putative classes of direct and indirect purchasers; others are non-class action suits. The various complaints assert claims under Sections 1 and 2 of the Sherman Act, state antitrust and consumer protection statutes and/or state common law. Plaintiffs generally seek damages, treble damages, ~~civil penalties, disgorgement, declaratory and injunctive~~equitable relief ~~costs~~ and attorneys’ ~~fees. Some~~fees and costs. In September 2018, the putative class plaintiffs stipulated to the dismissal without prejudice of their claims against EPI and us, and the retailer plaintiffs later did the same. PPI filed a partial motion to dismiss certain claims in September 2018, which was granted in August 2019. The cases are currently in discovery.

Beginning in August 2019, multiple complaints were filed in the U.S. District Court for the Southern District of New York against PPI and other pharmaceutical companies alleging violations of antitrust law arising out the settlement of certain patent litigation concerning generic versions of Seroquel XR^®(extended release quetiapine fumarate). The claims against PPI are based on ~~alleged product-specific conspiracies. With respect~~allegations that PPI entered into an exclusive acquisition and license agreement with Handa Pharmaceuticals, LLC (Handa) in 2012 pursuant to ~~our subsidiaries, the allegations in the~~which Handa assigned to PPI certain rights under a prior settlement agreement between Handa and AstraZeneca resolving certain patent litigation. Some cases were filed on behalf of putative classes of direct and indirect purchasers; others are non-class action suits. The various complaints ~~focus on amitriptyline, baclofen, digoxin, divalproex ER, doxycycline hyclate, doxycycline monohydrate, nystatin, propranolol~~assert claims under Sections 1 and 2 of the Sherman Act, state antitrust and consumer protection statutes 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~~state common law. Plaintiffs generally seek ~~to hold all alleged participants in a particular conspiracy jointly~~damages, treble damages, equitable relief 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.~~

attorneys’ fees and costs. In October ~~2018,~~2019, the ~~MDL court denied defendants’~~defendants filed various motions to dismiss ~~federal antitrust claims relating to digoxin, divalproex ER~~ and, ~~doxycycline hyclate, among other products. In February 2019,~~in 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~~alternative, moved to ~~dismiss plaintiffs’ overarching conspiracy claims; that motion remains pending. The MDL court has also allowed certain discovery.~~transfer the litigation to the U.S. District Court for the District of Delaware.

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 orTo the ~~substance of such claims.~~

Weextent unresolved, 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.

~~Other Antitrust Matters~~

~~Beginning in November 2013, multiple direct and indirect purchasers of LIDODERM~~^® ~~filed a number of cases against~~ Adjustments to 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 MDLoverall liability accrual may be required in the ~~U.S. District Court for the Northern District~~future, which could have a material adverse effect on our business, financial condition, results of ~~California (MDL No. 2521). The MDL court certified classes of direct~~operations 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, 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.~~cash flows.

~~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 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 May 2018, multiple alleged direct and indirect purchasers filed complaints in the U.S. District Court for the Southern District of New York against PPI, EPI and/or us, as well as others, alleging a conspiracy to delay generic competition and monopolize the market for Exforge^® (amlodipine/valsartan) and its generic equivalents. Some cases were filed on behalf of putative classes of direct and indirect purchasers; others are non-class action suits. The plaintiffs generally assert claims under Sections 1 and 2 of the Sherman Act, various state antitrust and consumer protection statutes and state common law and seek damages, treble damages, equitable relief and attorneys’ fees and costs. In September 2018, the putative class plaintiffs stipulated to the dismissal without prejudice of their claims against EPI and us, and the retailer plaintiffs later did the same. PPI filed a partial motion to dismiss certain claims in September 2018. We intend 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 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.

~~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 of the Attorney General in February 2015 included requests for documents and information concerning agreements with Actavis and Impax settling the OPANA^® ~~ER patent litigation. We are cooperating with these investigations.~~

In February 2015, EGHI and affiliates received a CID from the Office of the Attorney General for the state of Alaska seeking ~~production of certain~~ documents and information regarding EGHI’s settlement of ~~the~~ AndroGel^® patent litigation as well as documents produced in the aforementioned litigation filed by the FTC. Also in February 2015, EHSI received a CID from Alaska’s Office of the Attorney General seeking production of certain documents and information concerning agreements with Actavis and Impax settling OPANA^® ER patent litigation. We are cooperating with ~~this~~the investigations.

In July 2019, EPI received a CID from the FTC seeking documents and information regarding oxymorphone ER and EPI’s settlement of a contract dispute with Impax (now Amneal) in August 2017. We are cooperating with the investigation.

Similar ~~matters~~investigations may be brought by others or the foregoing matters may be ~~expanded.~~expanded or result in litigation. We are unable to predict the outcome of these matters or to estimate the possible range of any additional 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.

Securities Litigation

~~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.~~offering. The ~~lawsuit alleges~~complaint alleged violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 against ~~Endo,~~us, certain of ~~its~~our 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 AprilJune 2019, the parties ~~informed the court that they had reached~~entered into a settlement ~~in principle. The settlement in principle would provide~~providing for, among other things, a $50 million payment to the investor class ~~$50 million~~ in exchange for a release of their ~~claims;~~claims. In December 2019, the ~~settlement is subject~~court denied a petition to ~~court approval.~~intervene filed by the lead plaintiff in the Pelletier litigation described below, and granted final approval of the settlement. In December 2019, the putative intervenor appealed the denial of its petition to intervene and the final approval order to Pennsylvania Superior Court. That appeal remains pending. As a result of the settlement, during the first quarter of 2019, the Company recorded an increase of approximately ~~$50~~$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~~was recorded as Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets. The Company’s insurers funded the settlement during the third quarter of 2019, resulting in corresponding decreases to the Company’s accrual for loss contingencies and insurance receivable.

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 statement of claim ~~generally seeks~~sought class certification, declaratory relief, damages, interest and costs based on alleged violations of the Ontario Securities ~~Act. The statement~~Act arising out 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~~2017, based on ~~the Company’s~~our decision to voluntarily remove reformulated OPANA^® ~~ER from the market.~~

~~In August 2017, a putative class action entitled~~ ~~Bier v. Endo International plc, et al.~~ was filed in the U.S. District Court for the Eastern District of Pennsylvania by an individual shareholder on behalf of himself and all similarly situated shareholders. The original complaint alleged violations of Section 10(b) and 20(a) of the Exchange Act against Endo and four current and former directors and officers, based on the Company’s decision to remove reformulated OPANA^® ER from the market. In ~~December 2017,~~April 2020, the parties reached a settlement in principle, which will be subject to court ~~appointed SEB Investment Management AB lead plaintiff in the action. In February 2018, the lead plaintiff filed an amended complaint, which added claims alleging violations of Sections 11 and 15~~approval. The amount of the ~~Securities Act in connection with the June 2015 offering. The amended complaint named~~settlement is not material to the Company ~~EHSI~~ and ~~20 current and former directors, officers and employees of Endo as defendants. In April 2018,~~is expected to be funded by the defendants moved to dismiss the amended complaint. In December 2018, the court dismissed the plaintiff’s claims against four individual defendants, but otherwise denied the motion to dismiss. The case is currently in discovery.Company’s insurers.

In November 2017, a putative class action entitled Pelletier v. Endo International plc, Rajiv Kanishka Liyanaarchchie De Silva, Suketu P. Upadhyay and Paul V. Campanelli was filed in the U.S. District Court for the Eastern District of Pennsylvania by an individual shareholder on behalf of himself and all similarly situated shareholders. The lawsuit alleges violations of Section 10(b) and 20(a) of the Exchange Act relating to the pricing of various generic pharmaceutical products. In June 2018, the court appointed Park Employees’ and Retirement Board Employees’ Annuity ~~and~~ Benefit Fund of Chicago lead plaintiff in the action. In ~~August 2018, the lead plaintiff filed an amended complaint. In~~ September 2018, the defendants ~~moved~~filed a motion to dismiss, which the ~~amended complaint. That~~court granted in part and denied in part in February 2020. In particular, the court granted the motion ~~remains pending.~~and dismissed the claims with prejudice insofar as they were based on an alleged price-fixing conspiracy; the court otherwise denied the motion to dismiss, allowing other aspects of lead plaintiff’s claims to proceed.

WeTo the extent unresolved, 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. 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.

VASOSTRICT^®Related Matters

In July 2016, Fresenius Kabi USA, LLC (Fresenius) ~~filed a complaint against~~sued our subsidiaries PPCI and ~~its affiliate~~ Par Sterile Products, LLC ~~(PSP)~~(PSP LLC) in the U.S. District Court for the District of New Jersey alleging ~~that Par Pharmaceutical Companies, Inc. and its affiliate engaged in~~ an anticompetitive scheme to exclude competition for PPCI’s VASOSTRICT^® ~~(vasopressin) product. The complaint alleges~~, a vasopressin-based cardiopulmonary drug. In particular, Fresenius alleged 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~~our subsidiaries entered into exclusive supply agreements with one or more active pharmaceutical ingredient (API) manufacturers and that, as a result, Fresenius ~~has been unable to~~could not 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~~sought actual, treble and punitive damages, attorneys’ fees and costs and injunctive relief. In ~~September 2016, PPCI~~February 2020, the court granted our subsidiaries’ motion for summary judgment on all claims and ~~its affiliate~~denied Fresenius’s cross-motion for partial summary judgment. In March 2020, Fresenius filed a ~~motion~~notice of appeal to ~~dismiss, which~~ the ~~district court denied in February 2017. The case is currently in discovery.~~U.S. Court of Appeals for the Third Circuit.

In August 2017, our subsidiaries PPI and PSP LLC 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~~Appeals 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.

In ~~October 2017, Endo Par Innovation Company, LLC (EPIC) and PSP filed a complaint~~September 2019, following the decision in ~~the U.S. District Court for the District of Columbia challenging the legality of~~Athenex Inc. v. Azar, No. 19-cv-00603, 2019 WL 3501811 (D.D.C. Aug. 1, 2019), which upheld the FDA’s ~~Interim Policy on Compounding Using Bulk Drug Substances Under Section 503B of the Federal Food, Drug, and Cosmetic Act~~ ~~(January 2017) with respect to the listing of vasopressin in Category 1 of the~~ ~~Interim Policy. The complaint contends~~determination that ~~the~~ ~~Interim Policy~~ ~~is unlawful because it is inconsistent with the Federal Food, Drug, and Cosmetic Act, including, but not limited to, Section 503B of that Act. The complaint sought (i) a declaration that FDA’s~~ ~~Interim Policy~~ ~~and its listing of vasopressin in Category 1 of the~~ ~~Interim Policy~~ ~~are unlawful and (ii) an order enjoining and vacating the~~ ~~Interim Policy~~ ~~and the FDA’s listing of vasopressin in Category 1 of the~~ ~~Interim Policy~~. In January 2018, EPIC and PSP agreed to a temporary 60-day stay of the litigation in light of the FDA’s announcement that forthcoming guidance would address the concerns set forth in the Company’s complaint. In March 2018, the FDA released new draft guidance for industry entitled “Evaluation of Bulk Drug Substances Nominated for Use in Compounding Under Section 503B of the Federal Food, Drug, and Cosmetic Act.” Shortly thereafter, the parties agreed to extend the temporary stay for an additional 180 days. In August 2018, before the 180-day stay period expired, Athenex Pharma Solutions, LLC and Athenex Pharmaceutical Division, LLC announced they had commenced bulk compounding of vasopressin, and moved to intervene in EPIC and PSP’s case against the FDA. Later that month, EPIC and PSP invoked their ability to terminate the stay and filed a Motion for Preliminary Injunction. Before responding to the Motion for Preliminary Injunction, the FDA issued a notice containing a proposed finding that there is no clinical need to bulk compound vasopressin under Section 503B in August 2018. In September 2018, the FDA advised EPIC and PSP that it would agree to use its best efforts to finalize the vasopressin clinical need rulemaking by December 31, 2018, if the case were again stayed. EPIC and PSP agreed to the requested stay. In December 2018, the appropriations act that had been funding the DOJ and components of the FDA expired, resulting in a lapse of appropriations; therefore, the FDA moved the court for a further stay of the case until appropriations were restored. The court granted the motion in January 2019, ordering the FDA to file a notification with the court within three business days of DOJ operations resuming. After government appropriations were restored, the FDA advised that it would use its best efforts to finalize the vasopressin clinical need determination by March 15, 2019. The FDA finalized the vasopressin clinical need determination on March 4, 2019, finding that because of VASOSTRICT^®~~’s availability,~~ there is no clinical need for outsourcing facilities to compound drugs using bulk ~~vasopressin. That same day, Athenex, Inc., Athenex Pharma Solutions, LLC,~~vasopressin, the parties submitted a proposed consent order to the district court agreeing to a lifting of the preliminary injunction against QuVa but reserving PPI and ~~Athenex Pharmaceutical Division, LLC~~PSP LLC’s right to seek return or reduction of the bond. In January 2020, the court granted our motion to dismiss the defendants’ counterclaims and ordered the preliminary injunction lifted while the bond remains in place pending an adjudication on the merits. In March 2020, we filed a ~~complaint in~~motion for partial summary judgment on the ~~U.S. District Court for the District~~merits of ~~Columbia, challenging the FDA’s clinical need determination for vasopressin. EPIC~~PPI and PSP ~~intervened as defendants~~LLC’s breach of contract claims.

Beginning in the action. The parties and the court agreed to an expedited summary judgment briefing, and a hearing on cross-motions for summary judgment was held in April 2019. EPIC and PSP expect a ruling by early summer. EPIC and PSP’s suit against the FDA remains stayed until that ruling issues.

~~In August 2018, Athenex filed a declaratory judgment action in the U.S. District Court for the Western District of New York, a case styled~~ ~~Athenex v. Par, alleging non-infringement and/or invalidity of the patents the Company has listed in the Orange Book in view of VASOSTRICT~~^®. The Company moved to dismiss Athenex’s case on multiple grounds in October 2018, which motion was opposed by Athenex in December 2018. The Company responded to this opposition in December 2018. This motion has not yet been decided.

In April 2018, PSP LLC and PPI received a notice ~~letter~~letters from Eagle Pharmaceuticals, Inc. ~~(Eagle)~~, Sandoz, Inc., Amphastar Pharmaceuticals, Inc., Amneal Pharmaceuticals LLC, American Regent, Fresenius, Dr. Reddy’s Laboratories, Inc. and Aurobindo Pharma Limited advising of the filing by such ~~company~~companies of ~~an ANDA~~ANDAs/New Drug Applications (NDAs) for a generic ~~version~~versions of VASOSTRICT^® (vasopressin IV solution (infusion)) 20 units/ml and/or 200 units/10 ml. InBeginning in May 2018, PSP LLC, PPI and PPI received a second notice letter from Eagle advising of the same filing, but adding an additional patent. The Paragraph IV notices refer to U.S. Patent Nos. 9,375,478; 9,687,526; 9,744,209; 9,744,239; 9,750,785; and 9,937,223, which variously cover either vasopressin-containing pharmaceutical compositions or methods of using a vasopressin-containing dosage form to increase blood pressure in humans. In May 2018, PPI, PSP and EPICEndo Par Innovation Company, LLC filed ~~a lawsuit~~lawsuits against Eagle Pharmaceuticals, Inc., Sandoz, Inc., Amphastar Pharmaceuticals, Inc., Amneal Pharmaceuticals LLC, American Regent and Fresenius 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. In August 2018, Eagle filed an answer and a counterclaim for non-infringement and invalidity of asserted patents. A claim construction hearing is scheduled for May 2019, with a bench trial scheduled for May 2020.

~~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~~or 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~~The earliest trial is presently scheduled for January 2021; however, 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~~trial may occur earlier or later as timing remains uncertain due to the ~~Hatch-Waxman legislative scheme. The Company continues to vigorously defend its intellectual property.~~impact of COVID-19 and other factors.

~~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 March 2019, PSP and PPI received a notice letter from Amneal Pharmaceuticals LLC (Amneal) advising of the filing by such company of an ANDA for a generic version of VASOSTRICT~~^® (vasopressin IV solution (infusion)) 20 units/1 ml and 200 units/10 ml. In April 2019, PPI, PSP and EPIC filed a lawsuit against Amneal 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.

~~The Company’s accrual for loss contingencies includes, among other things, an estimated accrual for certain VASOSTRICT~~^®~~-related matters.~~ We will continue to vigorously defend or prosecute the foregoing matters as appropriate, to protect our intellectual property rights, to pursue all available legal and regulatory avenues 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 additional losses that could be incurred.

~~Paragraph IV Certifications on OPANA~~^® ER

~~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~~ Adjustments to our overall liability accrual may be required in the ~~U.S. District Court for the District~~future, which could have a material adverse effect on our business, financial condition, results of ~~Delaware alleging infringement of these new patents, which expire in 2027~~operations and 2029, respectively. On November 17, 2015, the District Court held the ‘737 patent invalid for claiming unpatentable subject matter. That patent has been 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 appeal, the court ruled in Endo’s favor in April 2019, holding that the ‘737 patent is not invalid for claiming a natural law. Once the remaining appeals are decided, this case will be referred back to the District Court.

We will continue to vigorously defend or prosecute the foregoing matter as appropriate, to protect our intellectual property rights, to pursue all available legal and regulatory avenues and to explore other options as appropriate in our best interests in defense of our intellectual property, including enforcement of the product’s intellectual property rights and approved labeling. We are unable to predict the outcome of these matters or to estimate the possible range of any losses that could be incurred.cash flows.

Other Proceedings and Investigations

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.

NOTE ~~14.~~13. OTHER COMPREHENSIVE (LOSS) INCOME ~~(LOSS)~~

~~There~~During the three months ended March 31, 2020 and 2019, there were no0 tax effects allocated to any component of Other comprehensive (loss) income ~~(loss) for the three months ended March 31, 2019~~ and ~~2018.~~there were 0 reclassifications out of Accumulated other comprehensive loss. Substantially all of the Company’s Accumulated other comprehensive loss balances at March 31, ~~2019~~2020 and December 31, ~~2018 consists~~2019 consist of Foreign currency translation loss.

NOTE ~~15.~~14. SHAREHOLDERS' DEFICIT

The following table presents a reconciliation of the beginning and ending balances in Total shareholders' deficit for the three months ended March 31, 2020 (in thousands):



	Euro Deferred Shares			Ordinary Shares		Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Shareholders' Deficit
BALANCE, DECEMBER 31, 2019	$	45		$	23	$	8,904,692		$	(9,552,214	)	$	(219,090	)	$	(866,544	)
Net income	—			—		—			129,930			—			129,930
Other comprehensive loss	—			—		—			—			(14,437		)	(14,437		)
Compensation related to share-based awards	—			—		17,645			—			—			17,645
Tax withholding for restricted shares	—			—		(4,398		)	—			—			(4,398		)
Other	(1		)	—		(12		)	—			—			(13		)
BALANCE, MARCH 31, 2020	$	44		$	23	$	8,917,927		$	(9,422,284	)	$	(233,527	)	$	(737,817	)

The following table presents a reconciliation of the beginning and ending balances in Total shareholders' deficit for the three months ended March 31, 2019 (in thousands):



	Euro Deferred Shares			Ordinary Shares		Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Shareholders' Deficit
BALANCE, DECEMBER 31, 2018, PRIOR TO THE ADOPTION OF ASC 842, LEASES	$	46		$	22	$	8,855,810		$	(9,124,932	)	$	(229,229	)	$	(498,283	)
Effect of adopting ASC 842, Leases	—			—		—			(4,646		)	—			(4,646		)
BALANCE, JANUARY 1, 2019	$	46		$	22	$	8,855,810		$	(9,129,578	)	$	(229,229	)	$	(502,929	)
Net loss	—			—		—			(18,573		)	—			(18,573		)
Other comprehensive income	—			—		—			—			4,730			4,730
Compensation related to share-based awards	—			—		24,733			—			—			24,733
Exercise of options	—			—		4			—			—			4
Tax withholding for restricted shares	—			—		(2,414		)	—			—			(2,414		)
Other	(1		)	—		—			—			—			(1		)
BALANCE, MARCH 31, 2019	$	45		$	22	$	8,878,133		$	(9,148,151	)	$	(224,499	)	$	(494,450	)

Euro Deferred Shares Ordinary Shares Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Shareholders' Deficit
BALANCE, DECEMBER 31, 2018, PRIOR TO THE ADOPTION OF ASC 842 (1) $ 46
$ 22
$ 8,855,810
$ (9,124,932 ) $ (229,229 ) $ (498,283 )
Effect of adopting ASC 842 (1) —
—
—
(4,646 ) —
(4,646 )
BALANCE, JANUARY 1, 2019 $ 46
$ 22
$ 8,855,810
$ (9,129,578 ) $ (229,229 ) $ (502,929 )
Net loss —
—
—
(18,573 ) —
(18,573 )
Other comprehensive income —
—
—
—
4,730
4,730
Compensation related to share-based awards —
—
24,733
—
—
24,733
Exercise of options —
—
4
—
—
4
Tax withholding for restricted shares —
—
(2,414 ) —
—
(2,414 )
Other (1 ) —
—
—
—
(1 )
BALANCE, MARCH 31, 2019 $ 45
$ 22
$ 8,878,133
$ (9,148,151 ) $ (224,499 ) $ (494,450 )

~~__________~~


~~(1)~~	~~Refer to Note 2. Summary of Significant Accounting Policies for further description of ASC 842.~~

~~The following table presents a reconciliation of the beginning and ending balances in Total shareholders' equity (deficit) for the three months ended March 31, 2018 (in thousands):~~

Euro Deferred Shares Ordinary Shares Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Shareholders' Equity (Deficit)
BALANCE, DECEMBER 31, 2017, PRIOR TO THE ADOPTION OF ASC 606 (1) $ 48
$ 22
$ 8,791,170
$ (8,096,539 ) $ (209,821 ) $ 484,880
Effect of adopting ASC 606 (1) —
—
—
3,076
—
3,076
BALANCE, JANUARY 1, 2018 $ 48
$ 22
$ 8,791,170
$ (8,093,463 ) $ (209,821 ) $ 487,956
Net loss —
—
—
(505,489 ) —
(505,489 )
Other comprehensive loss —
—
—
—
(5,797 ) (5,797 )
Compensation related to share-based awards —
—
17,890
—
—
17,890
Tax withholding for restricted shares —
—
(1,642 ) —
—
(1,642 )
Other 1
—
(12 ) —
—
(11 )
BALANCE, MARCH 31, 2018 $ 49
$ 22
$ 8,807,406
$ (8,598,952 ) $ (215,618 ) $ (7,093 )

~~__________~~

~~(1)~~

The Company adopted ASC 606 on January 1, 2018 using the modified retrospective method for all revenue-generating contracts, including modifications thereto, that were not completed contracts at the date of adoption. As a result of adopting ASC 606, the Company recorded a net decrease of $3.1 million to its accumulated deficit at January 1, 2018, representing the cumulative impact of adopting ASC 606.

Share-Based Compensation

The Company recognized share-based compensation expense of ~~$24.7~~$17.6 million and ~~$17.9~~$24.7 million during the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively. As of March 31, ~~2019~~2020, the total remaining unrecognized compensation cost related to non-vested share-based compensation awards amounted to ~~$88.4~~$49.3 million.

~~There are 0.2 million performance share units outstanding as~~As of March 31, ~~2019, representing target amounts, for which a grant date has not been established. No~~ fair value has been ascribed to these awards as no grant date has been established. Accordingly, they are not reflected in the remaining unrecognized compensation cost above or the weighted average remaining requisite service period below.

~~As of~~ ~~March 31, 2019~~2020, the weighted average remaining requisite service period for non-vested stock options was ~~1.5~~0.6 years and for non-vested restricted stock units was ~~2.2~~1.8 years.

NOTE ~~16.~~15. OTHER (INCOME) EXPENSE, ~~(INCOME),~~ NET

The components of Other (income) expense, ~~(income),~~ net for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 are as follows (in thousands):



	Three Months Ended March 31,
	2020			2019
Net (gain) loss on sale of business and other assets (1)	$	(8,192	)	$	1,294
Foreign currency (gain) loss, net (2)	(5,639		)	1,716
Net loss from our investments in the equity of other companies (3)	249			2,086
Other miscellaneous, net	(392		)	(294		)
Other (income) expense, net	$	(13,974	)	$	4,802

Three Months Ended March 31,
2019 2018
Net loss (gain) on sale of business and other assets $ 1,294
$ (2,416 )
Foreign currency loss (gain), net 1,716

(2,085 )
Net loss from our investments in the equity of other companies 2,086

2,626
Other miscellaneous, net (294 )
(1,003 )
Other expense (income), net $ 4,802

$ (2,878 )
__________

Net loss (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 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 accounted for under the equity method and those classified as marketable securities.


(1)	Amounts primarily relate to the sales of various ANDAs.


(2)	Amounts relate to the remeasurement of the Company’s foreign currency denominated assets and liabilities.


(3)	Amounts relate to the income statement impacts of our investments in the equity of other companies, including investments accounted for under the equity method.

NOTE ~~17.~~16. INCOME TAXES

The following table displays our ~~Loss~~Income (loss) from continuing operations before income tax, Income tax (benefit) expense and Effective tax rate for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 (dollars in thousands):



	Three Months Ended March 31,
	2020			2019
Income (loss) from continuing operations before income tax	$	21,249		$	(1,709	)
Income tax (benefit) expense	$	(136,332	)	$	10,903
Effective tax rate	(641.6		)%	(638.0		)%

Three Months Ended March 31,
2019 2018
Loss from continuing operations before income tax $ (1,709 ) $ (482,247 )
Income tax expense $ 10,903
$ 15,491
Effective tax rate (638.0 )% (3.2 )%

The income tax ~~expense~~benefit for the three months ended March 31, ~~2019~~2020 primarily relates to ~~a taxable gain~~the discrete tax benefit arising from the ~~extinguishment of debt in the March 2019 Refinancing Transactions.~~Coronavirus Aid, Relief, and Economic Security Act (CARES Act), as discussed below. As of March 31, ~~2019,~~2020, we had valuation allowances established against our deferred tax assets in most jurisdictions in which we operate, with the exception of Canada and India. The income tax expense for the comparable ~~2018~~2019 period primarily relates to a taxable gain arising from the ~~geographic mix~~extinguishment of ~~pre-tax earnings~~debt in the March 2019 Refinancing Transactions.

On March 27, 2020, the CARES Act was enacted by the U.S. government in response to the COVID-19 pandemic. The CARES Act, among other things, permits net operating loss (NOL) carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019 and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. In the first quarter of 2020, the Company has recorded a discrete tax ~~expense incurred~~benefit in ~~connection with an intercompany asset restructuring.~~continuing operations of $137.3 million as a result of the change in the NOL carryback period.

NOTE ~~18.~~17. NET ~~LOSS~~INCOME (LOSS) PER SHARE

The following is a reconciliation of the numerator and denominator of basic and diluted net ~~loss~~income (loss) per share for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 (in thousands):



	Three Months Ended March 31,
	2020			2019
Numerator:
Income (loss) from continuing operations	$	157,581		$	(12,612	)
Loss from discontinued operations, net of tax	(27,651		)	(5,961		)
Net income (loss)	$	129,930		$	(18,573	)
Denominator:
For basic per share data—weighted average shares	227,198			224,594
Dilutive effect of ordinary share equivalents	5,816			—
For diluted per share data—weighted average shares	233,014			224,594

Three Months Ended March 31,
2019 2018
Numerator:
Loss from continuing operations $ (12,612 ) $ (497,738 )
Loss from discontinued operations, net of tax (5,961 ) (7,751 )
Net loss $ (18,573 ) $ (505,489 )
Denominator:
For basic per share data—weighted average shares 224,594
223,521
Dilutive effect of ordinary share equivalents —
—
For diluted per share data—weighted average shares 224,594
223,521

Basic net ~~loss~~income (loss) per share amounts are computed based on the weighted average number of ordinary shares outstanding during the period. Diluted net ~~loss~~income (loss) per share amounts are computed based on the weighted average number of ordinary shares outstanding and, if there is net income from continuing operations during the period, the dilutive ~~impact~~effect of ordinary share equivalents outstanding during the period.

The dilutive effect of ordinary share equivalents is measured using the treasury stock method. Stock options and awards that have been issued but for which a grant date has not yet been established ~~such as the performance share units discussed in Note 15. Shareholders' Deficit,~~ are not considered in the calculation of basic or diluted weighted average shares.

For the three months ended March 31, 2020, aggregate stock options and stock awards of 7.2 million and 3.3 million, respectively, were excluded from the diluted share calculation because their effect would have been anti-dilutive. All potentially dilutive items were excluded from the diluted share calculation for the three months ended March 31, 2019 ~~and 2018~~ because their effect would have been anti-dilutive as the Company was in a loss position.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations describes the principal factors affecting the results of operations, liquidity and capital resources and critical accounting estimates of Endo International plc. This discussion should be read in conjunction with the accompanying quarterly unaudited Condensed Consolidated Financial Statements and related notes thereto and the Annual Report. The Annual Report includes additional information about our significant accounting policies, practices and the transactions that underlie our financial results, as well as a detailed discussion of the most significant risks and uncertainties associated with our financial and operating results. Except for the historical information contained in this report, including the following discussion, this report contains forward-looking statements that involve risks and uncertainties. See ~~"Forward-Looking Statements"~~“Forward-Looking Statements” beginning on page i of this report.

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.

RESULTS OF OPERATIONS

Our quarterly results have fluctuated in the past and may continue to fluctuate. These fluctuations are primarily due to (1) the timing of new product launches, (2) purchasing patterns of our customers, (3) market acceptance of our products, (4) the impact of competitive products and products we recently acquired, (5) pricing of our products, (6) the timing of mergers, acquisitions, divestitures and other related activity and (7) other actions taken by the Company which may impact the availability of our products. These fluctuations are also attributable to charges incurred for compensation related to share-based payments, amortization of intangible assets, asset impairment charges, litigation-related charges, restructuring charges and certain upfront, milestone and other payments made or accrued pursuant to acquisition or licensing agreements.

Additionally, as further described below, the impact on our results of COVID-19 and related changes in economic conditions, including changes to consumer spending resulting from the rapid rise in local and national unemployment rates, are highly uncertain and, in many instances, outside of our control. The duration and severity of the direct and indirect effects of COVID-19 are evolving rapidly and in ways that are difficult to anticipate. There are numerous uncertainties related to the COVID-19 pandemic that have impacted our ability to forecast our future operations. The extent to which COVID-19 will affect our business, financial position and operating results cannot be predicted with certainty; however, any such impact could be material. In addition, because COVID-19 did not begin to affect our financial results until late in the first quarter of 2020, its impact on our consolidated results and the results of our business segments in the first quarter of 2020 may not be directly comparable to any historical period and are not necessarily indicative of its impact on our results for the remainder of 2020 or any subsequent periods. COVID-19 could also increase the degree to which our quarterly results, including the results of our business segments, fluctuate in the future. Refer to “Risk Factors” in Part II, Item 1A of this report for further details.

COVID-19 Update and Other Key Trends

In December 2019, COVID-19 was reported to have surfaced in Wuhan, China. In March 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic. Many countries and localities have announced aggressive actions to reduce the spread of the disease, including limiting non-essential gatherings of people, suspending all non-essential travel, ordering certain businesses and government agencies to cease non-essential operations at physical locations and issuing shelter-in-place orders (subject to limited exceptions). We are closely monitoring the impact of COVID-19 on all aspects of our business, the pharmaceutical industry and the economy as a whole, including how it has and will continue to impact our workforce, our customers and the patients they serve, our manufacturing and supply chain operations, our research and development (R&D) programs and regulatory approval processes and our liquidity and access to capital. In addition to our existing business continuity plans, we have established a team, led by our President and Chief Executive Officer and our executive leadership team, which has developed and implemented a range of proactive measures to address the risks, uncertainties and operational challenges associated with COVID-19. This team is closely monitoring the rapidly evolving situation and is implementing plans intended to limit the impact of COVID-19 on our business so that we can continue to produce the critical care medicines that hospitals and healthcare providers need to treat patients, including those with COVID-19. Actions we have taken to date and expected key trends are further described below.

Workforce. We have taken, and will continue to take, proactive measures to provide for the well-being of our workforce around the globe while continuing to safely produce products upon which patients and their healthcare providers rely. In addition to employing and paying full wages to our workforce, we are providing additional compensation to certain of our on-site operations employees for the hours worked during the COVID-19 pandemic. We have implemented alternative working practices and mandatory work-from-home requirements for appropriate employees, inclusive of our executive leadership team. We have suspended international and domestic travel, increased our already-thorough cleaning protocols throughout our facilities and prohibited non-essential visitors from our sites. We have also implemented various social distancing, modified schedules, shift rotation and other similar policies at our manufacturing facilities. Certain of these measures have resulted in increased and unexpected costs and, as further described below, resulted in the prioritization of certain products in our production plans.

Customers and the Patients They Serve. We have experienced, and expect to continue to experience, changes in customer demand as the COVID-19 pandemic evolves. Beginning late in the first quarter of 2020, we experienced a significant increase in sales volumes for certain of our critical care products administered to patients infected with COVID-19, such as VASOSTRICT^®, ADRENALIN^® and albuterol sulfate HFA inhaler, the authorized generic of Merck’s Proventil^®. These higher volumes resulted from increased utilization and channel inventory stocking of these products, primarily to treat patients infected with COVID-19. Other products not used to treat COVID-19, such as everolimus tablets, a generic version of Novartis Pharmaceuticals Corporation’s Afinitor^®, have also experienced increased demand due to accelerated prescription fulfillment that we believe is a result of concerns of healthcare providers and consumers regarding their ability to access medications because of shelter-in-place and similar measures taken by governments. At the same time, certain products that are physician administered, including XIAFLEX^® and SUPPRELIN^® LA, began experiencing decreased demand during the last two weeks of the first quarter of 2020 due to a reduction in physician activity and a slowing of patient office visits resulting from shelter-in-place orders. Additionally, as a result of our work-from-home requirements, we have transitioned to a “virtual” engagement model to continue supporting healthcare professionals, patient care and access to medicines.

Manufacturing and Supply Chain Operations. As of the date of this report, our business has not experienced any material supply issues related to COVID-19 and our manufacturing and quality assurance facilities across the globe have continued to operate. We have taken, and plan to continue to take, commercially practical measures to keep these facilities open as they are critical to our ability to reliably supply required critical care and medically necessary products. These measures, including the implementation of social distancing, modified schedules, shift rotation and other similar policies at our manufacturing facilities, as well as changes in our workforce availability have impacted our manufacturing and supply chain productivity at certain of our facilities and resulted in the prioritization of certain products, such as VASOSTRICT^®, in our production plans to provide for their continued availability during and after the pandemic. We believe that our diversified manufacturing footprint, which includes a combination of Endo owned and leased facilities located in the U.S. and India, supply agreements and strong business relationships with numerous contract manufacturing organizations throughout the world, including in the U.S., Canada, Europe and India, and our proven ability to be a preferred partner of choice to large pharmaceutical companies seeking authorized generic distributors for their branded products, is a critical factor to mitigate significant risks related to manufacturing and supply chain disruption. This footprint, overseen by our global quality and supply chain teams in Ireland, combined with a skilled management team with significant experience in manufacturing and supply chain operations, has enabled us to respond quickly and effectively to the evolving COVID-19 pandemic to date.

Clinical and Development Programs. We have a number of ongoing clinical trials. We are committed to the safety of our patients, employees and others involved in these trials. We are monitoring COVID-19 closely and continue to partner with the FDA on our ongoing clinical trials, regulatory applications and other R&D activities. Based on an assessment of our R&D programs, including our clinical trials, we have developed a plan and timeline for each study in order to enhance communication with patients, sites and vendors. However, we may experience delays in some of our clinical trials and product development and commercialization programs, including obtaining adequate patient enrollment, receiving regulatory approvals and successfully bringing product candidates to market. For example, as a result of COVID-19 and its impact on medical aesthetics physician office closures and consumer spending, we are planning on changing the anticipated product launch of collagenase clostridium histolyticum (CCH) for the treatment of cellulite in the buttocks, if approved, to 2021.

Key Trends. Although we did not experience significant disruptions to our business during the three months ended March 31, 2020 from COVID-19, we have since experienced and expect that we, and our industry as a whole, will continue to experience a greater impact going forward. The most significant trends we face as a result of the COVID-19 pandemic include: (i) decreases in demand for certain of our physician administered products due to physician office closures and a decline in patients electing to be treated, (ii) potential temporary decreases to the supply of certain of our products due to modified production schedules to safely maintain operations in response to COVID-19 and other factors including, without limitation, workforce availability, (iii) potential idle capacity charges based on implementation of social distancing, modified schedules, shift rotation and other similar policies at our manufacturing facilities and (iv) potential delays in our ability to launch some new products due to production prioritization and economic conditions and other factors outside of our control. For further information regarding the impact of COVID-19 on the Company, ~~adopted ASC 842~~please refer to “Risk Factors” in Part II, Item 1A.

Our estimated revenue trends for the full year 2020 compared to the full year 2019 are set forth below. These estimated revenue trends reflect the current expectations of our management team based on ~~January 1, 2019 for leases~~information currently available to them. Our estimates are subject to significant risks and uncertainties that ~~existed on that date. The Company has elected~~could cause our actual results to ~~apply~~differ materially from those indicated below, including our assumptions about the ~~provisions~~duration and severity of ~~ASC 842 retrospectively at January 1, 2019 through a cumulative-effect adjustment. Prior period results continue~~COVID-19 and the impact of any related governmental, business or other actions, any of which could cause the impact of COVID-19 to be ~~presented under ASC 840 based~~more significant than our current expectations.

•

For the full year 2020, we expect increased revenues from our Sterile Injectables segment as compared to 2019, primarily driven by increased sales of VASOSTRICT^®. Beginning late in the first quarter of 2020, we experienced a significant increase in sales volumes for VASOSTRICT^® compared to pre-COVID-19 levels resulting from increased utilization and channel inventory stocking of this product, primarily to treat patients infected with COVID-19. We expect that there will be an increase in revenues in the second quarter of 2020 compared to the first quarter, primarily due to higher utilization and channel inventory stocking. During the second half of 2020, we anticipate a period of destocking with a subsequent return toward pre-COVID-19 purchasing levels. Additionally, we expect the increase in VASOSTRICT^® in 2020 to be partially offset by decreases in certain other Sterile Injectables, primarily due to assumed competitive pressures not related to COVID-19.

•

For the full year 2020, we expect a decline in revenues from the Specialty Products portfolio of our Branded Pharmaceuticals segment as compared to 2019. During the last two weeks of the first quarter of 2020, we began to experience decreased demand as compared to pre-COVID-19 levels for physician administered products, including XIAFLEX^®, SUPPRELIN^® LA and AVEED^®, due to physician office closures and a decline in patients electing to be treated. We expect to see a continuation of the decline in demand for these products during the second quarter of 2020, followed by a gradual increase in volumes beginning in the second half of the year to the extent that physician and patient activities return toward pre-COVID-19 levels.

For the full year 2020, we expect a decline in revenues from our Generic Pharmaceuticals segment as compared to 2019, driven by modified production schedules to safely maintain operations in response to COVID-19, which could result in potential temporary supply decreases and potential launch delays for certain medications in this segment, as well as continued competitive pressures on certain commoditized generic products not related to COVID-19. We expect this decline to be partially offset by sales resulting from certain 2019 product launches, as further described below, and increased demand compared to pre-COVID-19 levels resulting from the ~~accounting standards originally~~utilization of certain of our generic products used to treat patients infected with COVID-19.

For the full year 2020, we expect declines in ~~effect for such periods. Refer~~revenues from the Established Products portfolio of our Branded Pharmaceuticals segment and the International Pharmaceuticals segment as compared to ~~Note 2. Summary of Significant Accounting Policies of the Condensed Consolidated Financial Statements included in~~ ~~Part I, Item 1~~ ~~for additional information.~~2019, primarily driven by competitive pressures impacting these product portfolios.

Consolidated Results Review

The following table displays our revenue, gross margin, gross margin percentage and other pre-tax expense or income for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 (dollars in thousands):


	Three Months Ended March 31,						% Change		Three Months Ended March 31,						% Change
	2019			2018			2019 vs. 2018		2020			2019			2020 vs. 2019
Total revenues, net	$	720,411		$	700,527		3	%	$	820,405		$	720,411		14	%
Cost of revenues	391,909			403,598			(3	)%	388,799			391,909			(1	)%
Gross margin	$	328,502		$	296,929		11	%	$	431,606		$	328,502		31	%
Gross margin percentage	45.6		%	42.4		%			52.6		%	45.6		%
Selling, general and administrative	$	151,123		$	166,667		(9	)%	$	166,768		$	151,123		10	%
Research and development	33,486			38,646			(13	)%	31,615			33,486			(6	)%
Litigation-related and other contingencies, net	6			(2,500		)	NM		(17,176		)	6			NM
Asset impairment charges	165,448			448,416			(63	)%	97,785			165,448			(41	)%
Acquisition-related and integration items	(37,501		)	6,835			NM
Acquisition-related and integration items, net									12,462			(37,501		)	NM
Interest expense, net	132,675			123,990			7	%	132,877			132,675			—	%
Gain on extinguishment of debt	(119,828		)	—			NM		—			(119,828		)	(100	)%
Other expense (income), net	4,802			(2,878		)	NM
Loss from continuing operations before income tax	$	(1,709	)	$	(482,247	)	(100	)%
Other (income) expense, net									(13,974		)	4,802			NM
Income (loss) from continuing operations before income tax									$	21,249		$	(1,709	)	NM

__________

NM indicates that the percentage change is not meaningful or is greater than 100%.

Total revenues, net. The increase in revenue for the three months ended March 31, ~~2019 is~~2020 was primarily due to ~~continued strong performance~~increases from our Sterile Injectables segment, including VASOSTRICT^®, and ADRENALIN^® ~~and ertapenem for injection, the authorized generic of Invanz~~^®, our Branded Pharmaceuticals segment’s Specialty Products portfolio, led by XIAFLEX^®, and ~~new~~recent product launches ~~such~~in our Generic Pharmaceuticals segment as ~~colchicine tablets,~~further discussed below. Revenue also increased as a result of higher patient demand and increased customer inventory purchasing for certain of our products due to the ~~authorized generic of Colcrys~~^®.COVID-19 pandemic. These increases were partially offset by ~~continued~~the impact of competitive ~~pressure on commoditized generic products and generic competition~~pressures on our Branded Pharmaceuticals segment’s Established Products portfolio. 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 months ended March 31, ~~2019~~2020 and ~~2018,~~2019, we incurred certain charges that impact the comparability of total Cost of revenues, including those related to amortization expense and continuity and separation benefits and other cost reduction ~~initiatives, including restructurings.~~initiatives. The following table summarizes such amounts (in thousands):


	Three Months Ended March 31,				Three Months Ended March 31,
	2019		2018		2020		2019
Amortization of intangible assets (1)	$	145,599	$	157,172	$	117,237	$	145,599
Separation benefits and other cost reduction initiatives (2)	$	—	$	29,606
Continuity and separation benefits and other cost reduction initiatives (2)					$	6,238	$	—

__________

(1)

Amortization expense fluctuates based on changes in the total amount of amortizable intangible assets and the rate of amortization in effect for each intangible asset, both of which can vary based on factors such as the amount and timing of acquisitions, dispositions, asset impairment charges, transfers between indefinite- and finite-lived intangibles assets, changes in foreign currency rates and changes in the composition of our intangible assets impacting the weighted average useful lives and amortization methodologies being utilized. The decrease during the three months ended March 31, ~~2019~~2020 was primarily driven by asset impairment charges and decreases in the rate of amortization expense for certain ~~assets, partially offset by the impact of certain in-process research and development assets put into service.~~assets.

(2)

Amounts ~~in 2018~~ primarily relate to certain accelerated depreciation charges and employee continuity and separation costs, charges to increase excess inventory reserves related to restructurings and other cost reduction and restructuring charges. See Note 4. Restructuring of the Condensed Consolidated Financial Statements included in Part I, Item 1 for discussion of our material restructuring initiatives.benefits.

The decrease toin amortization expense during the three months ended March 31, 2020 resulted in decreased Cost of revenues and ~~decreased restructuring charges were the primary factors leading to the overall period-over-period~~increased gross margin percentage. The decrease in Cost of revenues was partially offset by increased revenues as described above and increased expenses related to continuity and separation benefits and other cost reduction initiatives. In addition, favorable changes in product mix resulting primarily from increased revenues of VASOSTRICT^® and ADRENALIN^® contributed to the overall increase in gross margin percentage.

Selling, general and administrative expenses. The increase for the three months ended March 31, ~~2019. Partially offsetting these decreases was the impact of the previously described increase in total revenues.~~

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.

~~Selling, general and administrative expenses.~~ ~~The decrease for the three months ended March 31, 2019~~2020 was primarily ~~driven by~~due to a ~~lower~~higher branded prescription drug fee, increased long-term incentive compensation costs and ~~the impact of~~increased costs associated with continuity bonuses for certain ~~restructuring and other cost reduction initiatives. Partially offsetting these decreases was an increase in costs related to our continued investment and promotional efforts behind XIAFLEX~~^®~~. Our material restructuring initiatives are described more fully in Note 4. Restructuring~~senior management of the ~~Condensed Consolidated Financial Statements included in~~ ~~Part I, Item 1~~.

~~Research and development expenses.~~ ~~In November 2018,~~Company. Additionally, we ~~reported positive results from two Phase 3 clinical trials~~incurred increased costs associated with preparing for our planned commercial launch of ~~collagenase clostridium histolyticum (CCH)~~CCH for the treatment of cellulite in the ~~buttocks. Trial subjects receiving CCH showed highly statistically~~buttocks, if approved, and expect such costs to continue to increase in 2020 as compared to 2019.

R&D expenses. The amount of R&D expense we record in any period varies depending on the nature and stage of development of our R&D programs and can also vary in periods in which we incur significant ~~levels~~upfront or milestone charges related to agreements with third parties.

In recent years, our R&D efforts have focused primarily on developing a balanced, diversified portfolio of ~~improvement~~innovative and clinically differentiated product candidates. We have been progressing and expect to continue to progress our cellulite treatment development program. In early 2020, we announced that we had initiated our XIAFLEX^®development programs for the treatment of plantar fibromatosis and adhesive capsulitis. We also expect to continue to focus investments in ~~the appearance of cellulite with treatment,~~our Sterile Injectables segment, potentially including license and commercialization agreements such as ~~measured by the trials’ primary endpoint.~~our Nevakar, Inc. agreement. In addition, ~~the RELEASE-1 trial passed 8 out~~we are conducting an open-label Phase 1 pharmacokinetic (PK) study of ~~8 key secondary endpoints and the RELEASE-2 trial passed 7 out of 8 key secondary endpoints. Finally, CCH was well-tolerated~~ VASOSTRICT^®in ~~the actively-treated subjects~~healthy volunteers, studying plasma clearance 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.~~TT genotype versus AA/AT genotype.

~~Also during the first quarter of 2018, we announced the~~ ~~January 2018 Restructuring Initiative, which included a reorganization of our Generic Pharmaceuticals segment’s research and development network. 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~~.

The decrease in R&D expense for the three months ended March 31, ~~2019~~2020 was ~~primarily a result of the~~ ~~January 2018 Restructuring Initiative~~ ~~and other cost reduction initiatives. Additionally, costs associated with our clinical trials of CCH for the treatment of cellulite~~driven by decreased ~~for the three months ended March 31, 2019. Partially offsetting these decreases was the impact of~~ costs associated with certain post-marketing ~~commitments.~~R&D commitments, offset in part by increased costs associated with our Sterile Injectables segment.

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.~~12. 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 months ended March 31, ~~2019~~2020 and ~~2018~~2019 (in thousands):


	Three Months Ended March 31,				Three Months Ended March 31,
	2019		2018		2020		2019
Goodwill impairment charges	$	86,000	$	391,000	$	32,786	$	86,000
Other intangible asset impairment charges	78,700		54,200		63,751		78,700
Property, plant and equipment impairment charges	748		3,216		1,248		748
Total asset impairment charges	$	165,448	$	448,416	$	97,785	$	165,448

The factors leading to our material goodwill and intangible asset impairment tests, as well as the results of these tests, are further described in Note 9.8. Goodwill and Other Intangibles of the Condensed Consolidated Financial Statements included in Part I, Item 1. A discussion of critical accounting estimates made in connection with certain of our impairment tests is included below under the caption “CRITICAL ACCOUNTING ESTIMATES.”

~~Acquisition-related and integration items.~~ Acquisition-related and integration items, net. Acquisition-related and integration items, net for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 primarily consist of the net expense (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 incurring, and extent to which we ~~will~~could incur, related contingent obligations. See Note 6.5. 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 months ended March 31, ~~2019~~2020 and ~~2018~~2019 are as follows (in thousands):


	Three Months Ended March 31,						Three Months Ended March 31,
	2019			2018			2020			2019
Interest expense	$	137,106		$	127,513		$	136,373		$	137,106
Interest income	(4,431		)	(3,523		)	(3,496		)	(4,431		)
Interest expense, net	$	132,675		$	123,990		$	132,877		$	132,675

The ~~increase~~decrease in interest expense for the three months ended March 31, ~~2019~~2020 was primarily attributable to ~~higher interest rates driven by increases in~~decreases to the London Interbank Offered Rate (LIBOR) that impacted our variable-rate ~~debt.~~

~~Although we cannot predict future interest rates with certainty, absent actions~~debt and reductions 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~~indebtedness associated with the March 2019 Refinancing Transactions, ~~that increased~~partially offset by increases to the weighted average interest rate applicable to our senior notes and ~~reduced~~senior secured notes following the ~~outstanding principal~~March 2019 Refinancing Transactions and interest expense associated with our June 2019 Revolving Credit Facility draw of ~~our debt.~~$300.0 million. Refer to Note ~~12.~~11. Debt of the Condensed Consolidated Financial Statements included in Part I, Item 1 for further discussion of these transactions.

Changes in interest rates could increase our interest expense in the future, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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

Gain on extinguishment of debt. ~~Gain~~ The gain on extinguishment of debt ~~totaled $119.8 million for the three months ended March 31, 2019, with no such amounts recorded in any of the other periods presented. The amount~~recognized during the three months ended March 31, 2019 ~~related~~relates to the March 2019 Refinancing Transactions. Refer to Note ~~12.~~11. 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 months ended March 31, ~~2019~~2020 and ~~2018~~2019 are as follows (in thousands):

Three Months Ended March 31,
2019 2018
Net loss (gain) on sale of business and other assets $ 1,294
$ (2,416 )
Foreign currency loss (gain), net 1,716
(2,085 )
Net loss from our investments in the equity of other companies 2,086
2,626
Other miscellaneous, net (294 ) (1,003 )
Other expense (income), net $ 4,802
$ (2,878 )



	Three Months Ended March 31,
	2020			2019
Net (gain) loss on sale of business and other assets	$	(8,192	)	$	1,294
Foreign currency (gain) loss, net	(5,639		)	1,716
Net loss from our investments in the equity of other companies	249			2,086
Other miscellaneous, net	(392		)	(294		)
Other (income) expense, net	$	(13,974	)	$	4,802

~~Net loss (gain)~~For additional information on ~~sale~~the components of ~~business and other assets primarily relates~~Other (income) expense, net, refer to ~~the sales of various ANDAs. Amounts of Foreign currency loss (gain), net result from the remeasurement~~Note 15. Other (Income) Expense, Net of the ~~Company’s foreign currency denominated assets and liabilities. Net loss from our investments~~Condensed Consolidated Financial Statements included in ~~the equity~~Part I, Item 1 of other companies includes the income statement impacts of our investments in the equity of other companies, including those accounted for under the equity method and those classified as marketable securities.this report.

Income tax (benefit) expense. The following table displays our ~~Loss~~Income (loss) from continuing operations before income tax, Income tax (benefit) expense and Effective tax rate for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 (dollars in thousands):

Three Months Ended March 31,
2019 2018
Loss from continuing operations before income tax $ (1,709 ) $ (482,247 )
Income tax expense $ 10,903
$ 15,491
Effective tax rate (638.0 )% (3.2 )%



	Three Months Ended March 31,
	2020			2019
Income (loss) from continuing operations before income tax	$	21,249		$	(1,709	)
Income tax (benefit) expense	$	(136,332	)	$	10,903
Effective tax rate	(641.6		)%	(638.0		)%

Our tax rate is affected by recurring items, such as tax rates in non-U.S. jurisdictions as compared to the notional U.S. federal statutory tax rate, and the relative amount of income or loss in those various jurisdictions. It is also impacted by certain items that may occur in any given period, but are not consistent from period to period.

The income tax ~~expense~~benefit for the three months ended March 31, 2020 primarily relates to the discrete tax benefit arising from the CARES Act. The income tax expense for the comparable 2019 period primarily relates to a taxable gain arising from the extinguishment of debt in the March 2019 Refinancing Transactions. The income tax expense for the comparable 2018 period primarily relates to the geographic mix of pre-tax earnings and discrete tax expense incurred in connection with an intercompany asset restructuring.

We have valuation allowances established against our deferred tax assets in most jurisdictions in which we operate, with the exception of Canada and India. Accordingly, it would be unlikely for future pre-tax losses to create a tax benefit that would be more likely than not to be realized. Although the Company has valuation allowances established against deferred tax assets in most major jurisdictions as of March 31, ~~2019,~~2020, it is possible that there could be material reversals, particularly if certain proposed law changes were to be enacted.

The Internal Revenue Service (IRS) presently is examining certain of our subsidiaries’ U.S. income tax returns for fiscal years ~~ending~~ended 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 Canada Revenue Agency, 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 examinations. 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.

For additional information on our income taxes, including information about the impact of the CARES Act, see Note ~~17.~~16. Income Taxes of the Condensed Consolidated Financial Statements included in Part I, Item 1.

Discontinued operations, net of tax. The operating results of ~~our~~the Company’s Astora business, which the Board 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 results of our discontinued operations, net of tax, were losses of ~~$6.0~~$27.7 million and ~~$7.8~~$6.0 million during the three months ended March 31, 2020 and 2019, respectively. During the three months ended March 31, 2020, we recorded a $30.5 million charge for mesh-related litigation. The remaining amounts during the three months ended March 31, 2020 and ~~2018, respectively. Included in these amounts are Litigation-related and other contingencies, net,~~2019 were primarily related to mesh-related legal defense costs and certain other items. Additionally, we recorded an income tax benefit of $5.9 million related to discontinued operations during the three months ended March 31, 2020. For additional discussion of mesh-related matters, refer to Note ~~13.~~12. 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:~~


•	~~growth in the Specialty Products portfolio of our Branded Pharmaceuticals segment, primarily driven by increased revenues following continued investments in XIAFLEX~~^®;


•	~~growth in the Sterile Injectables segment, driven by continued performance of VASOSTRICT~~^® ~~and ADRENALIN~~^® ~~and the full-year impact of ertapenem for injection, which launched during the third quarter of 2018; and~~

declines in the Generic Pharmaceuticals segment, the Established Products portfolio of the Branded Pharmaceuticals segment and the International Pharmaceuticals segment, primarily driven by continued competitive pressures impacting these product portfolios.

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.

Business Segment Results Review

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, referRefer to Note 5.4. Segment Results of the Condensed Consolidated Financial Statements included in Part I, Item 1. of this report for further details regarding our reportable segments and segment adjusted income from continuing operations before income tax (the measure we use to evaluate segment performance), as well as reconciliations of Total consolidated income (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.

We refer to segment adjusted income from continuing operations before income tax, a financial measure not ~~determined in accordance with~~defined by 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 segment adjusted income from continuing operations before income tax may be useful to investors as we are aware that certain of our significant shareholders utilize segment adjusted income from continuing operations before income tax to evaluate our financial performance. Finally, segment 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. Effective January 1, 2020, the Company revised its definition of segment adjusted income from continuing operations before income tax to exclude certain legal costs in order to reflect changes in how the CODM reviews segment performance. Refer to Note 4. Segment Results of the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report for further details regarding this revision.

There are limitations to using financial measures such as segment adjusted income from continuing operations before income tax. Other companies in our industry may define segment adjusted income from continuing operations before income tax differently than we do. As a result, it may be difficult to use segment 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, segment 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, in Note 4. Segment Results of the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report, reconciliations of ~~our total segment adjusted income from continuing operations before income tax to our~~ Total consolidated ~~loss~~income (loss) from continuing operations before income tax, which is determined in accordance with U.S. GAAP, ~~and included in~~to our ~~Condensed Consolidated Statements of Operations.~~total segment adjusted income from continuing operations before income tax.

Revenues, ~~Net.~~ net. The following table displays our revenue by reportable segment for the three months ended March 31, 2020 and 2019 ~~and 2018 (in~~(dollars in thousands):


	Three Months Ended March 31,				% Change		Three Months Ended March 31,				% Change
	2019		2018		2019 vs. 2018		2020		2019		2020 vs. 2019
Branded Pharmaceuticals	$	203,525	$	200,235	2	%	$	204,073	$	203,525	—	%
Sterile Injectables	270,048		215,854		25	%	336,390		270,048		25	%
Generic Pharmaceuticals	218,526		249,240		(12	)%	251,283		218,526		15	%
International Pharmaceuticals (1)	28,312		35,198		(20	)%	28,659		28,312		1	%
Total net revenues from external customers	$	720,411	$	700,527	3	%	$	820,405	$	720,411	14	%

__________


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

Branded Pharmaceuticals. The following table displays the significant components of our Branded Pharmaceuticals revenues from external customers for the three months ended March 31, 2020 and 2019 ~~and 2018 (in~~(dollars in thousands):


	Three Months Ended March 31,				% Change		Three Months Ended March 31,				% Change
	2019		2018		2019 vs. 2018		2020		2019		2020 vs. 2019
Specialty Products:
XIAFLEX®	$	68,507	$	57,141	20	%	$	89,072	$	68,507	30	%
SUPPRELIN® LA	22,056		20,577		7	%	19,720		22,056		(11	)%
Other Specialty (1)	24,403		19,027		28	%	25,505		24,403		5	%
Total Specialty Products	$	114,966	$	96,745	19	%	$	134,297	$	114,966	17	%
Established Products:
PERCOCET®	$	30,760	$	31,976	(4	)%	$	27,703	$	30,760	(10	)%
TESTOPEL®	15,814		15,170		4	%
EDEX®							8,568		5,971		43	%
Other Established (2)	41,985		56,344		(25	)%	33,505		51,828		(35	)%
Total Established Products	$	88,559	$	103,490	(14	)%	$	69,776	$	88,559	(21	)%
Total Branded Pharmaceuticals (3)	$	203,525	$	200,235	2	%	$	204,073	$	203,525	—	%

__________


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


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


(3)	Individual products presented above represent the top two performing products in each product category for the three months ended March 31, ~~2019~~2020 and/or any product having revenues in excess of $25 million during any quarterly period in ~~2019~~2020 or ~~2018.~~2019.

Specialty Products

The increase in ~~net sales of~~ XIAFLEX^® for the three months ended March 31, ~~2019~~2020 was primarily attributable to demand growth driven by the continued investment and promotional efforts behind XIAFLEX^®, and increases in inventory stocking due to future access concerns during the COVID-19 pandemic, as well as price.

The ~~increase~~decrease in ~~net sales of~~ SUPPRELIN^® LA, a physician administered product, for the three months ended March 31, ~~2019~~2020 was primarily ~~attributable~~due to ~~increases~~a reduction in ~~both volume~~physician activity and ~~price.~~a slowing of patient office visits resulting from shelter-in-place orders, which led to decreased demand for SUPPRELIN^® LA.

The increase in ~~net sales of~~ Other Specialty Products for the three months ended March 31, ~~2019~~2020 was primarily attributable to increased sales of ~~both NASCOBAL~~AVEED^® ~~Nasal Spray~~ as a result of price and ~~AVEED~~volume increases.

XIAFLEX^®~~. When compared~~, SUPPRELIN^® LA and certain of our Other Specialty Products are physician administered products. During the last two weeks of the first quarter of 2020, these products began to experience decreased demand due to a reduction in physician activity and a slowing of patient office visits resulting from shelter-in-place orders. We expect to see a continuation of the decline in demand for these products during the second quarter of 2020, followed by a gradual increase in volumes beginning in the second half of the year to the ~~three months ended March 31, 2018, these products generally benefited from increased volumes.~~extent that physician and patient activities return toward pre-COVID-19 levels.

Established Products

The decrease in ~~net sales of~~ PERCOCET^® for the three months ended March 31, ~~2019~~2020 was primarily attributable to volume decreases, partially offset by price increases.

The increase in ~~net sales of TESTOPEL~~EDEX^® for the three months ended March 31, ~~2019~~2020 was primarily attributable to volume increases.

The decrease in ~~net sales of~~ Other Established Products for the three months ended March 31, ~~2019~~2020 was primarily attributable to volume decreases as a result of ongoing competitive ~~pressure from generic competition, partially offset by price increases.~~pressures.

Sterile Injectables. The following table displays the significant components of our Sterile Injectables revenues from external customers for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 (dollars in thousands):


	Three Months Ended March 31,				% Change		Three Months Ended March 31,				% Change
	2019		2018		2019 vs. 2018		2020		2019		2020 vs. 2019
VASOSTRICT®	$	139,137	$	113,725	22	%	$	202,904	$	139,137	46	%
ADRENALIN®	47,322		29,740		59	%	56,512		47,322		19	%
Ertapenem for injection	32,219		—		NM		17,874		32,219		(45	)%
APLISOL®							9,867		12,381		(20	)%
Other Sterile Injectables (1)	51,370		72,389		(29	)%	49,233		38,989		26	%
Total Sterile Injectables (2)	$	270,048	$	215,854	25	%	$	336,390	$	270,048	25	%

__________

~~NM indicates that the percentage change is not meaningful or is greater than 100%.~~


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


(2)	Individual products presented above represent the top two performing products within the Sterile Injectables segment for the three months ended March 31, ~~2019~~2020 and/or any product having revenues in excess of $25 million during any quarterly period in ~~2019~~2020 or ~~2018.~~2019.

~~Net sales of~~The increase in VASOSTRICT^® ~~and ADRENALIN~~^® ~~increased during~~ for the three months ended March 31, ~~2019~~2020 was primarily attributable to increases in both volume and price. Beginning late in the first quarter of 2020, we experienced a significant increase in sales volumes for VASOSTRICT^® resulting from increased utilization and channel inventory stocking of this product, primarily to treat patients infected with COVID-19. We expect that there will be an increase in revenues in the second quarter of 2020 compared to the first quarter, primarily due to ~~both increased price~~higher utilization and ~~volume. The increase in volume for VASOSTRICT~~^® ~~reflects~~channel inventory stocking. During the second half of 2020, we anticipate a ~~benefit from the timing~~period of ~~shipments.~~destocking with a subsequent return toward pre-COVID-19 purchasing levels.

As further discussed in Note 13. Commitments and Contingencies of the Condensed Consolidated Financial Statements included in Part I, Item 1, as a result of the FDA finalizing the vasopressin clinical need determination in March 2019, it is unlawful for outsourcing facilities to sell compounded vasopressin products unless they manufacture those products using an FDA-approved vasopressin. VASOSTRICT^® is currently the only vasopressin product approved by the FDA. However, Athenex, Inc., Athenex Pharma Solutions, LLC, and Athenex Pharmaceutical Division, LLC filed a complaint in the U.S. District Court for the District of Columbia, challenging the FDA’s clinical need determination for vasopressin. EPIC and PSP intervened as defendants in the action. The parties and the court agreed to an expedited summary judgment briefing, and a hearing on cross-motions for summary judgment was held in April 2019. The FDA has indicated that they will exercise enforcement discretion against the Athenex entities until the court reaches its decision.

As of March 31, ~~2019,~~2020, 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~~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~~ As further discussed in Note ~~13.~~12. 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 received notice letters from certain other pharmaceutical companies advising of the filing by such companies of ANDAs for generic versions of VASOSTRICT^®. 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 increase in ADRENALIN^® for the three months ended March 31, 2020 was primarily attributable to increases in both volume and price. Beginning late in the first quarter of 2020, we experienced a significant increase in sales volumes for ADRENALIN^® resulting from increased utilization and channel inventory stocking of this product, primarily to treat patients infected with COVID-19.

The decrease in Ertapenem for injection, the authorized generic of Merck’s Invanz^®, ~~launched during the third quarter~~was primarily attributable to decreased volume and price as a result of ~~2018 and had no sales during~~increased competition.

The decrease in APLISOL^® for the three months ended March 31, ~~2018.~~2020 was primarily driven by destocking as wholesalers continued to normalize inventory levels following increased purchasing in the third quarter of 2019 subsequent to a temporary supply shortage.

The ~~decrease~~increase in ~~net sales of~~ Other Sterile Injectables for the three months ended March 31, ~~2019~~2020 was primarily driven by increased volume across multiple products within the ~~timing of shipments for certain products in this portfolio and certain competitive pressures.~~product portfolio.

Generic Pharmaceuticals. ~~The decrease in revenue~~ Revenue for the Generic Pharmaceuticals segment ~~for~~increased during the three months ended March 31, ~~2019 was~~2020, primarily ~~attributable~~due to ~~continued competitive pressure on commoditized generic products. Partially offsetting the decrease was the impact of~~ certain recent product launches including, among others, ~~colchicine tablets.~~the fourth-quarter 2019 launch of everolimus tablets, a generic version of Novartis Pharmaceuticals Corporation’s Afinitor^®, the second-quarter 2019 launch of albuterol sulfate HFA inhaler, the authorized generic of Merck’s Proventil^®, and the third-quarter 2019 launch of posaconazole tablets, the authorized generic of Merck’s Noxafil^®. Additionally, certain of these and other products in our Generic Pharmaceuticals segment experienced increased demand during the three months ended March 31, 2020, resulting from their utilization to treat patients infected with COVID-19 and from the impact of accelerated prescription fulfillment that we believe is a result of concerns of healthcare providers and consumers regarding their ability to access medications because of shelter-in-place and similar measures taken by governments. Partially offsetting the increase were the impacts of continued competitive pressures on certain commoditized generic products.

In the second quarter of 2020, we expect to see a decline in revenue for this segment compared to the first quarter driven by lower prescription trends following accelerated first-quarter prescription fulfillment, modified production schedules to safely maintain operations in response to COVID-19, which could result in potential temporary supply decreases and potential launch delays for certain medications in this segment, and continued competitive pressures on certain commoditized generic products.

International Pharmaceuticals. ~~The decrease in revenue~~Revenue for the International Pharmaceuticals segment for the three months ended March 31, ~~2019~~2020 was ~~primarily attributable to competitive pressures~~ in ~~the Canadian market and a shift in timing of sales on certain products compared to the same period in 2018.~~line with prior year.

~~Adjusted~~

Segment adjusted income from continuing operations before income tax. The following table displays our ~~Adjusted~~segment adjusted income from continuing operations before income tax by reportable segment for the three months ended March 31, 2020 and 2019 ~~and 2018 (in~~(dollars in thousands):


	Three Months Ended March 31,				% Change		Three Months Ended March 31,				% Change
	2019		2018		2019 vs. 2018		2020		2019		2020 vs. 2019
Branded Pharmaceuticals	$	79,008	$	93,814	(16	)%	$	98,422	$	95,283	3	%
Sterile Injectables	196,183		169,445		16	%	$	263,896	$	196,183	35	%
Generic Pharmaceuticals	49,997		74,280		(33	)%	$	57,327	$	50,411	14	%
International Pharmaceuticals	12,095		13,718		(12	)%	$	14,197	$	12,095	17	%
Total segment adjusted income from continuing operations before income tax	$	337,283	$	351,257	(4	)%

Branded Pharmaceuticals. The decrease for the three months ended March 31, 2019 was primarily attributable to increased expenses, including legal costs related to certain litigation matters and costs related to our continued investment and promotional efforts behind XIAFLEX^®~~, partially offset by increased gross margin resulting from the revenue increases described above.~~

~~Sterile Injectables.~~ The increase for the three months ended March 31, ~~2019~~2020 was primarily attributable to increased gross margins resulting from changes in product mix and lower R&D expense resulting from lower costs associated with certain post-marketing R&D commitments. This was partially offset by increased costs associated with our planned commercial launch of CCH for the treatment of cellulite in the buttocks, if approved by the FDA.

Sterile Injectables. The increase for the three months ended March 31, 2020 was primarily driven by increased revenues and gross margins resulting from strong performance ~~of a variety of~~across several products in this segment, including increases in revenues related to COVID-19, as further described above.

Generic Pharmaceuticals. The ~~decrease~~increase for the three months ended March 31, ~~2019~~2020 was primarily attributable to ~~decreased~~increased revenues as described above and the resulting ~~reduction~~increases to gross margin. This ~~decrease~~increase was partially offset by ~~reduced expenses including a~~negative impacts to gross margin due to changes in product mix resulting from increased sales of certain lower ~~branded prescription drug fee and the cost savings associated with the restructuring initiatives described in Note 4. Restructuring of the Condensed Consolidated Financial Statements included in~~ ~~Part I, Item 1~~.margin authorized generic products.

International Pharmaceuticals. The ~~decrease~~increase for the three months ended March 31, ~~2019~~2020 was primarily attributable to ~~decreased revenues as described above and the resulting reduction to~~increased gross margin ~~partially offset by decreases to selling, general and administrative expenses.~~

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

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

~~__________~~


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

~~(2)~~

Amounts for the three months ended March 31, 2019 primarily relate to employee separation costs of $1.8 million and other charges of $0.2 million. Amounts for the three months ended March 31, 2018 primarily relate to employee separation costs of $25.2 million, accelerated depreciation of $17.1 million, charges to increase excess inventory reserves of $2.4 million and other charges of $4.3 million. These charges were related primarily to our restructuring initiatives. See Note 4. Restructuring of the Condensed Consolidated Financial Statements included in Part I, Item 1 for discussion of our material restructuring initiatives.


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


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


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


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

LIQUIDITY AND CAPITAL RESOURCES

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~~$1,388.3 million at March 31, ~~2019~~2020 compared to working capital of ~~$393.1~~$1,125.9 million at December 31, ~~2018.~~2019. The amounts at March 31, ~~2019~~2020 and December 31, ~~2018~~2019 include restricted cash and cash equivalents of ~~$327.4~~$195.7 million and ~~$299.7~~$242.8 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.

Cash and cash equivalents, which primarily consisted of bank deposits and money market accounts, totaled ~~$981.7~~$1,531.5 million at March 31, ~~2019~~2020 compared to ~~$1,149.1~~$1,454.5 million at December 31, ~~2018. We~~2019. While we currently expect our operating cash ~~generated from operations~~flows, together with our cash, cash equivalents, restricted cash and restricted cash equivalents, ~~and the Revolving Credit Facility~~ to be sufficient to cover our principal liquidity requirements over the next ~~year. However,~~year, the extent to which COVID-19 could impact our business, financial condition, results of operations and cash flows in the short- and medium-term cannot be predicted with certainty, but such impact could be material. Although we did not experience significant disruptions to our business during the three months ended March 31, 2020 from COVID-19, we have since experienced and expect that we, and our industry as a whole, will continue to experience a greater impact going forward. To the extent COVID-19 has resulted in any increase to our Cash and cash equivalents, including as a result of any increase in revenues as described above, such increase could be temporary. Additionally, on a longer term basis, we may not be able to accurately predict the effect of certain developments on our sales and gross margins, such as the degree of market acceptance, patent protection and exclusivity of our products, pricing pressures (including those due to the impact of competition), the effectiveness of our sales and marketing efforts and the outcome of our current efforts to develop, receive approval for and successfully launch our product candidates. We may also face unexpected ~~expenses~~costs in connection with our business operations, ~~including expenses related to~~ our ongoing and future legal proceedings, ~~and~~ governmental investigations and other contingent ~~liabilities.~~liabilities, including potential costs related to settlements and judgments, as well as legal defense costs, and the implementation of our COVID-19 related policies and procedures. Furthermore, we may not be successful in implementing, or may face unexpected changes or expenses in connection with our strategic direction, including the potential for opportunistic corporate development transactions. Any of the above could have a material adverse effect on our business, financial condition, results of operations and cash ~~flows.~~flows and require us to seek additional sources of liquidity and capital resources as described below. For information regarding the impact of COVID-19 on the Company, including on our liquidity and capital resources, please refer to “Risk Factors” in Part II, Item 1A.

~~From~~

To the extent our operating cash flows, together with our cash, cash equivalents, restricted cash and restricted cash equivalents, become insufficient to cover our liquidity and capital requirements, including funds for any future acquisitions and other corporate transactions, we may be required to seek third-party financing, including additional draws on our Revolving Credit Facility or additional credit facilities, and/or engage in one or more capital markets transactions. The COVID-19 pandemic has resulted in significant disruptions to and volatility in the local, national and global financial markets and there can be no assurance that we would be able to obtain any required financing on a timely basis or at all. Further, lenders and other financial institutions could require us to agree to more restrictive covenants, grant liens on our assets as collateral (resulting in an increase in our total outstanding secured indebtedness) and/or accept other terms that are not commercially beneficial to us in order to obtain financing, as a result of the actual or perceived impact that financial institutions believe the pandemic will have on our business. Such terms could further restrict our operations and exacerbate any impact on our results of operations and liquidity that may result from COVID-19.

We may also, 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 or other debt (including exchanges of unsecured debt for secured debt), to issue equity (including convertible securities) or to repurchase, redeem, exchange or refinance our existing indebtedness (including the Credit Agreement)~~. In order to finance any such transactions, we may need to obtain additional funding.~~ as well as our outstanding senior notes. Any of these transactions could impact our ~~liquidity.~~

~~We may also require additional~~liquidity or results of operations. Our ability to obtain any third-party financing needed for such transactions is subject to ~~fund our future operational needs or for future corporate~~the same uncertainties relating to the disruptions to and volatility in the financial markets described above. Further, the terms of any such transactions, including ~~acquisitions. We~~the amount of any exchange consideration and terms of any refinanced debt, could also be less favorable than we have ~~historically had broad access~~been able to ~~financial markets that provide liquidity; however, we cannot be certain that funding will be available to us~~obtain in the ~~future~~past, including a requirement that we grant liens on ~~terms acceptable to us, or at all. Any issuances of equity securities or convertible securities,~~our assets as collateral (resulting in ~~connection with~~ an ~~acquisition or otherwise, could have a dilutive effect on the ownership interest of~~increase in 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~~total outstanding secured indebtedness), as a result of ~~acquisition efforts, if any, we are likely to experience significant charges to earnings for merger~~changing market conditions and ~~related expenses (whether or not~~investment interest from the ~~acquisitions are consummated) that may include transaction costs, closure costs or costs of restructuring activities.~~pandemic and its impact on our business and the financial markets.

~~Borrowings.~~Indebtedness. The Company and/or certain of its subsidiaries are party to the Credit Agreement ~~which governs~~governing the Credit Facilities and the indentures governing our various senior secured and senior unsecured notes. As of March 31, ~~2019,~~2020, 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.

After giving effect to previous borrowings and issued and outstanding letters of credit, approximately ~~$996.8 million~~$0.7 billion of remaining credit was available under the Revolving Credit ~~Facility.~~

~~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~~Facility at March 31, ~~2019.~~2020. The Company’s outstanding debt agreements contain a number of restrictive covenants, including certain limitations on the Company’s ability to incur additional indebtedness.

The Credit Agreement and the indentures governing our various notes contains affirmative and negative covenants that the Company believes to be usual and customary for a senior secured credit facility of this type. The negative covenants include, among other things, limitations on asset sales, mergers and acquisitions, indebtedness, liens, dividends and other restricted payments, investments and transactions with the Company’s affiliates.certain covenants. As of March 31, ~~2019~~2020 and December 31, ~~2018, we were~~2019, the Company was in compliance with all such covenants.

~~The Company’s notes mature between 2022 and 2027, subject~~Refer to ~~earlier repurchase or redemption in accordance with the terms~~Note 11. Debt of the ~~respective indentures. Interest rates on these notes range from 5.375% to 7.50%. Certain~~Condensed Consolidated Financial Statements included in Part I, Item 1 of ~~these notes are senior unsecured obligations~~this report and Note 14. Debt in the Consolidated Financial Statements included in Part IV, Item 15 of the ~~Company’s subsidiaries party to the applicable indentures governing such notes.~~Annual Report for additional information about our indebtedness, including information about covenants, maturities, interest rates, security and priority.

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, 2019 and December 31, 2018, we were in compliance with all such covenants.

~~The obligations under (i) the Credit Agreement and related loan documents and (ii) the indentures governing the senior secured notes and related documents are secured on a~~ ~~pari passu~~ ~~basis by a perfected first priority (subject to certain permitted liens) lien on substantially all of the assets of the borrowers and the guarantors (subject to customary exceptions).~~

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~~negative outlook, respectively. No report of any rating agency is being incorporated by reference herein.

Working capital. The components of our working capital and our liquidity at March 31, ~~2019~~2020 and December 31, ~~2018~~2019 are below (dollars in thousands):


	March 31, 2019			December 31, 2018			March 31, 2020		December 31, 2019
Total current assets	$	2,272,133		$	2,343,150		$	2,735,335	$	2,586,218
Less: total current liabilities	(1,751,288		)	(1,950,096		)	1,346,991		1,460,289
Working capital	$	520,845		$	393,054		$	1,388,344	$	1,125,929
Current ratio (total current assets divided by total current liabilities)	1.3:1			1.2:1			2.0:1		1.8:1

Net working capital increased by ~~$127.8~~$262.4 million from December 31, ~~2018~~2019 to March 31, ~~2019.~~2020. This increase primarily reflects the favorable impact to net current assets resulting from operations during the three months ended March 31, ~~2019. These increases were~~2020. This activity was partially offset by certain items that occurred during the three months ended March 31, 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~~19.6 million ~~and our incurrence of financing fees in connection with the~~ during three months ended March ~~2019 Refinancing Transactions.~~31, 2020.

The following table summarizes our Condensed Consolidated Statements of Cash Flows for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 (in thousands):


							Three Months Ended March 31,
	2019			2018			2020			2019
Net cash flow provided by (used in):
Operating activities	$	(90,583	)	$	48,846		$	62,556		$	(90,583	)
Investing activities	(16,377		)	(15,597		)	(15,963		)	(16,377		)
Financing activities	(33,771		)	(23,410		)	(14,483		)	(33,771		)
Effect of foreign exchange rate	537			(627		)	(1,894		)	537
Movement in cash held for sale	—			—
Net (decrease) increase in cash, cash equivalents, restricted cash and restricted cash equivalents	$	(140,194	)	$	9,212
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents							$	30,216		$	(140,194	)

Operating activities. Net cash provided by (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~~$153.1 million change in Net cash provided by (used in) ~~provided by~~ operating activities during the three months ended March 31, ~~2019~~2020 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~~Additionally, cash paid for ~~legal matters increased~~interest decreased by approximately $72.4 million during the three months ended March 31, ~~2019 compared to the prior year period as a result of increased cash outflows for certain mesh-related and LIDODERM~~^®~~-related matters of approximately $10.0 million and~~ ~~$30.0 million~~, respectively. Additionally, 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 early2020 as a result of the ~~Notes Repurchases described in Note 12. Debt~~timing and amounts of ~~the Condensed Consolidated Financial Statements included in Part I, Item 1.~~interest payments related to our indebtedness.

Investing activities.~~The $0.8 million increase in~~ Net cash used in investing activities during the three months ended March 31, ~~2019 compared to~~2020 was in line with the prior year period reflects a decrease in Proceeds from sale of business and other assets, net of $13.2 million, offset in part by a decrease in Purchases of property, plant and equipment, excluding capitalized interest of $9.5 million and a decrease in payments for Other investing activities of $3.3 million.period.

Financing activities. During the three months ended March 31, 2020, Net cash used in financing activities ~~increased $10.4~~related primarily to Repayments of term loans of $8.5 million ~~during~~and Payments of tax withholding for restricted shares of $4.4 million.

During the three months ended March 31, 2019, ~~compared~~Net cash used in financing activities related primarily to Repayments of term loans of $8.5 million, Payments for contingent consideration of $4.6 million and the ~~prior year period. This increase was primarily due to~~net effect of the March 2019 Refinancing Transactions, which resulted in Repayments of notes totaling $1,500.0 million and Payments for debt issuance and extinguishment costs of $0.2 million, partially offset by Proceeds from issuance of notes, net of $1,483.1 million, cash used for Repayments of notes totaling $1,500.0 million and Payments of deferred financing fees of $0.2 million during the three months ended March 31, 2019. Partially offsetting this increase was a decrease in Payments for contingent consideration of $7.4 million.

Contractual Obligations. As of March 31, ~~2019,~~2020, there were no material changes in our contractual obligations from those disclosed in the Annual Report except for those related to the March 2019 Refinancing Transactions described in Note 12. Debt of the Condensed Consolidated Financial Statements included in Part I, Item 1. Additionally, Note 8. Leases of the Condensed Consolidated Financial Statements included in Part I, Item 1 includes the undiscounted amounts of future cash flows included in our lease liabilities at March 31, 2019 for each of the five years subsequent to December 31, 2018 and thereafter.Report.

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. The impact of COVID-19 may heighten these fluctuations in our operating results.

Additionally, the current economic crisis and rising unemployment rates resulting from COVID-19 have significantly reduced individual disposable income and depressed consumer confidence, which could limit the ability of some consumers to purchase certain pharmaceutical products and reduce consumer spend on certain medical procedures in both the short- and medium-term. Additionally, as part of the measures to address COVID-19, certain healthcare providers are not currently performing various medical procedures.

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.

CRITICAL ACCOUNTING ESTIMATES

Significant changes to our critical accounting estimates since December 31, ~~2018~~2019 are detailed below. For additional discussion of the Company’s critical accounting estimates, see “Critical Accounting Estimates” in Item 7 of the Annual Report.

Goodwill and indefinite-lived intangible assets

As further described in Note 9.8. Goodwill and Other Intangibles of the Condensed Consolidated Financial Statements included in Part I, Item 1, we recorded a pre-tax, non-cash goodwill impairment charge relating to our ~~Generic Pharmaceuticals~~Paladin reporting unit of ~~$86.0~~$32.8 million during the first quarter of ~~2019. A 50 basis point increase in the assumed discount rate used in the~~2020. Following this impairment, ~~test would have increased~~there was no remaining goodwill associated with this ~~goodwill impairment charge by approximately $46 million.~~reporting unit.

We have not made any substantial changes to our methodology used in our impairment tests since our previous assessment. Determination of the fair value of a reporting unit is a matter of judgment and involves the use of estimates and assumptions, which are based on management’s best estimates at the time. The use of different assumptions would increase or decrease our estimated discounted future cash flows and the resulting estimated fair value of our reporting units, ~~and~~which could result in the fair value of a reporting unit being less than its carrying amount in ~~the~~an impairment test. ~~Any resulting non-cash~~

We are closely monitoring the impact of COVID-19 on our business. It is possible that COVID-19 could result in reductions to the estimated fair values of our goodwill and other intangible assets, which could ultimately result in asset impairment charges ~~could~~that may be material. For further information regarding the impact of COVID-19 on the Company, please refer to “Risk Factors” in Part II, Item 1A.

RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of recent accounting pronouncements, refer to Note 2. Summary of Significant Accounting Policies of the Condensed Consolidated Financial Statements included in Part I, Item 1.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential loss arising from adverse changes in the financial markets, including interest rates and foreign currency exchange rates.

Interest Rate Risk

Our exposure to interest rate risk relates primarily to our variable-rate indebtedness associated with our ~~Term Loan Facility and Revolving~~ Credit ~~Facility.~~Facilities. At March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, the aggregate principal amounts of such variable-rate indebtedness were ~~$3,355.2~~$3,621.1 million and ~~$3,363.8~~$3,629.6 million, respectively. Borrowings under the Credit Facilities may from time to time bear interest at variable rates, ~~which rates are~~as further described in Note ~~12.~~11. Debt of the Condensed Consolidated Financial Statements included in Part I, Item 1, in certain cases subject to a floor. At ~~both~~ March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, a hypothetical 1% increase in the applicable rate over the floor would have resulted in ~~$33.6~~$36.2 million and $36.3 million, respectively, of incremental ~~annual~~ interest expense (representing the annual rate of expense) related to our variable-rate debt borrowings.

To the extent that we utilize additional amounts under the Revolving Credit Facility or ~~take on additional variable rate~~otherwise increase the amount of our variable-rate indebtedness, we will be exposed to additional interest rate risk.

As of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, we had no other assets or liabilities with significant interest rate sensitivity.

Foreign Currency Exchange Rate Risk

We operate and transact business in various foreign countries and are therefore subject to risks associated with foreign currency exchange rate fluctuations. The Company manages this foreign currency risk, in part, through operational means including managing foreign currency revenues in relation to ~~same currency~~same-currency costs and foreign currency assets in relation to ~~same currency~~same-currency liabilities. The Company is also exposed to ~~the~~ potential earnings effects from intercompany foreign currency assets and liabilities that arise from normal trade receivables and payables and other intercompany loans. Additionally, certain of the Company’s subsidiaries maintain their books of record in currencies other than their respective functional currencies. These subsidiaries’ financial statements are remeasured into their respective functional ~~currencies using current or historic exchange rates.~~currencies. Such remeasurement adjustments could have a material adverse effect on ~~the Company’s~~our business, financial condition, results of ~~operations.~~operations and cash flows.

All assets and liabilities of our international subsidiaries, which maintain their financial statements in local currency, are translated to U.S. dollars at period-end exchange rates. Translation adjustments arising from the use of differing exchange rates are included in Accumulated other comprehensive loss. Gains and losses on foreign currency transactions and short-term intercompany receivables from foreign subsidiaries are included in Other (income) expense, ~~(income),~~ net in the Condensed Consolidated Statements of Operations. Refer to Note ~~16.~~15. Other (Income) Expense, ~~(Income),~~ Net of the Condensed Consolidated Financial Statements included in Part I, Item 1 for the amount of Foreign currency (gain) loss, ~~(gain),~~ net.

Based on the Company’s significant foreign currency denominated intercompany loans, ~~existing at March 31, 2019 and December 31, 2018,~~ we ~~estimate that~~separately considered the hypothetical impact of a 10% change in the underlying currencies of our foreign currency denominated intercompany loans, relative to the U.S. ~~Dollar, could~~dollar, at March 31, 2020 and December 31, 2019. A 10% change at March 31, 2020 would have resulted in approximately ~~$8 million and~~ $9 million in incremental foreign currency losses ~~respectively.~~on such date. A 10% change at December 31, 2019 would have resulted in approximately $11 million in incremental foreign currency losses on such date.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Principal Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of March 31, ~~2019.~~2020. Based on that evaluation, the Company’s Chief Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, ~~2019.~~2020.

Changes in Internal Control over Financial Reporting

~~During the fiscal quarter ended March 31, 2019, in connection with the adoption of ASC 842, the Company made certain changes to processes and controls related to lease accounting and disclosure.~~ There have been no ~~other~~ changes in the Company’s internal control over financial reporting during the fiscal quarter ended March 31, ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.Legal Proceedings

The disclosures under Note ~~13.~~12. Commitments and Contingencies of the Condensed Consolidated Financial Statements included in Part I, Item 1 are incorporated into this Part II, Item 1 by reference.

Item 1A.Risk Factors

For a discussion of our risk factors, see the information in Part 1,I, Item 1A. “Risk Factors” in the Annual Report. There have been no material changes to our risk factors from those described in the Annual Report ~~or our Quarterly Reports on Form 10-Q,~~ except as set forth below.

IfWidespread health problems, including the recent global coronavirus, could materially and adversely affect our business.

Public health outbreaks, epidemics or pandemics, such as the coronavirus, could materially and adversely impact our business. For example, in December 2019, COVID-19 was reported to have surfaced in Wuhan, China. In March 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic. COVID-19 has resulted in global business and economic disruption and extreme volatility in the financial markets as many jurisdictions have placed restrictions on travel and non-essential business operations and implemented social distancing, shelter-in-place, quarantine and other ~~pharmaceutical companies use litigation~~similar measures for their residents to contain the spread of the virus. In response to these public health directives and ~~regulatory means~~orders, we have implemented alternative working practices and mandatory work-from-home requirements for appropriate employees, as well as social distancing, modified schedules, shift rotation and other similar policies at our manufacturing facilities, and have transitioned to ~~obtain approval~~a “virtual” engagement model to continue supporting healthcare professionals, patient care and access to medicines. We have also suspended international and domestic travel. The effects of COVID-19, including these public health directives and orders and our policies, have had an impact on our business and may in the future materially disrupt our business, including our manufacturing and supply chain operations by significantly reducing our output, negatively impact our productivity and delay our product development programs.

The global pandemic may have significant impacts on third-party arrangements, including those with our manufacturing, supply chain and distribution partners, information technology and other vendors and other service providers and business partners. For example, there may be significant disruptions in the ability of any or all of these third-party providers to meet their obligations to us on a timely basis, or at all, which may be caused by their own financial or operational difficulties, including any closures of their facilities pursuant to a governmental order or otherwise. As a result of these disruptions and other factors, including changes in our workforce availability and increased demand for ~~generic, over-the-counter or other competing versions~~certain of our ~~drugs,~~critical care products during this pandemic, our ~~sales~~ability to meet our obligations to third-party distribution partners may ~~suffer.~~

~~Under~~be negatively impacted. As a result, we have recently delivered, and in the ~~Hatch-Waxman Act,~~future we or our third-party providers may deliver, notices of the ~~FDA can approve an ANDA for a generic bioequivalent version~~occurrence of a ~~previously approved drug without requiring~~force majeure or similar event under certain of our third-party contracts, which could result in prolonged commercial disputes and ultimately legal proceedings to enforce contractual performance and/or recover losses. Any such occurrences could result in significant management distraction and use of resources and, in the ~~ANDA applicant to undertake~~event of an adverse judgment, could result in significant cash payments. Further, the ~~full clinical testing necessary to obtain approval to market a new branded drug. In place~~publicity of any such ~~clinical studies, an ANDA applicant usually needs only to submit data demonstrating that its generic product is~~dispute could harm our reputation and make the ~~same as~~negotiation of any replacement contracts more difficult and costly, thereby prolonging the ~~referenced listed drug~~effects of any resulting disruption in our operations. Such disruptions could be acute with respect to the active ingredient and is bioequivalent to the branded product. Over-the-counter (OTC) drugs may be developed under either the New Drug Applications (NDA) or OTC monograph process. The OTC monograph process allows for OTC products to be marketed without pre-market approval and generally does not require clinical studies.

~~Various manufacturers have filed ANDAs seeking FDA approval for generic versions of~~ certain of our ~~key pharmaceutical products including, but not limited to, LIDODERM~~^®~~, VASOSTRICT~~^® ~~and AVEED~~^®~~. In connection with such filings, these manufacturers have challenged the validity and/or enforceability of one or more of the underlying patents protecting our products. In the case of LIDODERM~~^®~~, we no longer have patent protection in the markets~~raw material suppliers where we ~~sell~~may not have readily accessible alternatives or alternatives may take longer to source than usual. While we attempt, when possible, to mitigate our raw material supply risks through stock management and alternative sourcing strategies, some raw materials are only available from one source. Any of these ~~products. Our revenues from LIDODERM~~^® ~~have been negatively affected by multiple competing generic versions of LIDODERM~~^®~~, the first of which launched~~disruptions could harm our ability to meet consumer demand, including any increase in ~~September 2013. We anticipate that these revenues could decrease further should one or more additional generic versions of LIDODERM~~^® ~~launch.~~

~~Additionally, we recently received notice from a competing pharmaceutical company that manufactures one~~demand for any of our products, including our critical care products used during a pandemic.

We have experienced, and may continue to experience, changes in customer demand as the COVID-19 pandemic evolves. The current economic crisis and rising unemployment rates resulting from COVID-19 have the potential to significantly reduce individual disposable income and depress consumer confidence, which could limit the ability of some consumers to purchase certain pharmaceutical products and reduce consumer spend on certain medical procedures in both the short- and medium-term. Additionally, as part of the measures to address COVID-19, certain healthcare providers are not currently performing various medical procedures, including those that ~~it intends~~use certain of our products. For example, during the last two weeks of the first quarter of 2020, we experienced decreased demand for certain products that are physician administered, including XIAFLEX^® and SUPPRELIN^® LA. Furthermore, we are unable to ~~seek approval to launch a competing OTC version~~predict the impact that COVID-19 may have going forward on the business, results of ~~such product. We cannot assure you that this,~~operations or ~~any other manufacturer, will not take similar actions with respect to other products. Any launch of competing OTC versions~~financial position of any of our major customers, which could impact each customer to varying degrees and at different times and could ultimately impact our own financial performance. Certain of our competitors may also be better equipped to weather the impact of COVID-19 both domestically and abroad and better able to address changes in customer demand.

Additionally, our product development programs may be adversely affected by the global pandemic and the prioritization of production during this pandemic. The public health directives in response to COVID-19 requiring social distancing and restricting non-essential business operations have in certain cases caused and may continue to cause delays, increased costs and additional challenges in our product development programs, including obtaining adequate patient enrollment and successfully bringing product candidates to market. In addition, we may face additional challenges receiving regulatory approvals as previously scheduled dates or anticipated deadlines for action by the FDA on our applications and products in development, including dates scheduled for 2020, could be subject to delays beyond our control as regulators such as the FDA focus on COVID-19. For example, as a result of COVID-19 and its impact on medical aesthetics physician office closures and consumer spending, we are planning on changing the anticipated product launch of CCH for the treatment of cellulite in the buttocks, if approved, to 2021. In addition, we have assessed and expect to continue to assess the timeline for commercialization of other products.

Additionally, COVID-19 could increase the magnitude of many of the other risks described herein and in the Annual Report and have other adverse effects on our operations that we are not currently able to predict. For example, the global economic disruptions and volatility in the financial markets could further depress our ability to obtain or renew insurance on satisfactory terms or at all. Additionally, we may also be required to delay or limit our internal strategies in the short- and medium-term by, for example, redirecting significant resources and management attention away from implementing our strategic priorities or executing opportunistic corporate development transactions.

The magnitude of the effect of COVID-19 on our business will depend, in part, on the length and severity of the restrictions (including the effects of recently announced “re-opening” plans following a recent slowdown of the virus infection rate in certain countries and localities) and other limitations on our ability to conduct our business in the ordinary course. The longer the pandemic continues or resurges, the more severe the impacts described above will be on both our domestic and international business. The extent, length and consequences of the pandemic are uncertain and impossible to predict, but could be material. COVID-19 and other similar outbreaks, epidemics or pandemics could have a material adverse effect on our business, financial condition, results of operations and cash ~~flows.~~

~~With respect to AVEED~~^®~~, VASOSTRICT~~^®flows and ~~other branded pharmaceutical products, it has been and continues to be our practice to vigorously defend and pursue all available legal and regulatory avenues~~could cause significant volatility in ~~defense of~~ the ~~intellectual property rights protecting our products. Despite our efforts to defend our products, litigation is inherently uncertain, and we cannot predict the timing or outcome~~trading prices of our efforts. If we are not successful in defending our intellectual property rights or opt to settle, or if a product’s marketing exclusivity rights expire or become otherwise unenforceable, our competitors could ultimately launch generic, OTC or other competing versions of our products, which would likely cause sales and revenues of the affected products to decline rapidly and materially, could require us to write off a portion or all of the intangible assets associated with the affected product and could have a material adverse effect on our business, financial condition, results of operations and cash flows.securities.

~~In the case of VASOSTRICT~~^®~~, PSP and PPI received a notice letter from Eagle in April 2018 advising of the filing by such company of an ANDA for a generic version of VASOSTRICT~~^® (vasopressin IV solution (infusion)). The Paragraph IV notice refers to patents the Company has listed in the Orange Book covering either vasopressin-containing pharmaceutical compositions or methods of using a vasopressin-containing dosage form to increase blood pressure in humans. In May 2018, PPI, PSP and EPIC filed a lawsuit against Eagle 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. We intend to vigorously defend VASOSTRICT^®~~’s intellectual property rights and to pursue all available legal, business and regulatory avenues in defense of VASOSTRICT~~^®~~, including enforcement of the product’s intellectual property rights. However, there can be no assurance that our defense will be successful. If a generic version of VASOSTRICT~~^® ~~were introduced to the market before 2020, our revenues from VASOSTRICT~~^® ~~would decrease significantly and, depending on the timing of such introduction and its effect on VASOSTRICT~~^® ~~pricing, could have a material adverse effect on our business, financial condition, results of operations and cash flows.~~

There are currently ongoing legal proceedings brought by us and/or our subsidiaries, and in certain cases our third party partners, against manufacturers seeking FDA approval for generic versions of our products. For a description of the material related legal proceedings, see Note 13. Commitments and Contingencies of the Condensed Consolidated Financial Statements included in ~~Part I, Item 1~~.

We also believe it is likely that manufacturers may seek FDA approvals for generic, OTC or other competing versions of other of our key pharmaceutical products, either through the filing of ANDAs, through the OTC monograph process or the use of other means.

We have been and expect to continue to ~~be and may~~ be the subject of lawsuits, product liability claims, other significant legal proceedings, ~~government~~governmental investigations or product recalls, ~~for~~any of which ~~we may not~~could have ~~and may be unable to obtain or maintain insurance adequate to cover potential liabilities.~~a material adverse effect on our company.

Our business exposes us to significant potential risks from lawsuits, product liability claims, other significant legal proceedings, ~~government~~governmental investigations and/or product recalls, including, but not limited to, ~~such~~ matters associated with the testing, manufacturing, marketing, sale and ~~sale~~use of our products. Some plaintiffs have received substantial damage awards ~~in some jurisdictions~~ against or entered into significant settlements with healthcare companies based upon various legal theories, including without limitation, claims for injuries allegedly caused by the use of their products. We have been, and expect to continue to ~~be and may~~ be subject to various lawsuits, product liability ~~cases, as well as~~claims, other significant legal proceedings and ~~government investigations.~~governmental investigations or product recalls, any of which could have a material adverse effect on our company or cause us to take significant corporate transactions and remedial measures.

For example, we, ~~and our subsidiaries,~~ along with other manufacturers of prescription opioid medications, as well as distributors and other sellers of such medications, are the subject of lawsuits and have received subpoenas and other requests for information from various federal, state and local government agencies regarding the sale, marketing and/or distribution of prescription opioid medications. Numerous claims against opioid manufacturers, including us, have been and may continue to be filed by or on behalf of various plaintiffs, including states, counties, cities, Native American tribes, other government-related persons or entities, hospitals, health systems, unions, health and welfare funds, other third-party payers and/or individuals. See Note ~~13.~~12. Commitments and Contingencies inof the Condensed Consolidated Financial Statements included in Part I, Item 1 for more information. In these cases, plaintiffs ~~seek~~have sought various remedies, including without limitation, declaratory and/or injunctive relief; compensatory, punitive and/or treble damages; restitution, disgorgement, civil penalties, abatement, attorneys’ fees, costs and/or other relief. In these cases, settlement demands and discussions often seek significant monetary and other remedies, and we have received some settlement offers that are on terms that we do not consider reasonable under the circumstances or indicative of the merits or potential outcome of any court proceeding with respect to the underlying claims. Additionally, while we have made the decision to settle some claims, there can be no assurance that settlement opportunities will continue to be available generally, or be consistent with our historic experience. We may not be able to settle all of our opioid claims successfully, and as a result, we may go to trial in certain of these cases. Awards against and settlements by us or our competitors could also incentivize parties to bring additional claims against us. In addition to the risks of direct expenditures for ~~damages, settlement and~~ defense costs, settlements and/or judgments in connection with these claims, proceedings and investigations, there is a possibility of loss of revenues, injunctions and disruption of business. Additionally, we have, and may continue to receive, claims or requests for indemnification from certain of our customers. Furthermore, we and other manufacturers of prescription opioid medications have been, and will likely continue to be, subject to negative publicity and press, which could harm our brand and the demand for our products. ~~There are also regulatory and legislative proposals being made that could impact us and~~Certain other manufacturers of prescription opioid ~~medications. See~~medications have publicly commenced, or announced their intention to commence, cases to seek the ~~risk factor “Our business and financial condition may be adversely affected by legislation”~~protections under Chapter 11 of the Bankruptcy Code to address the claims being asserted against such manufacturers in ~~Part 1, Item 1A. “Risk Factors” in the Annual Report for more information.~~these opioid lawsuits.

Our current and former products may cause or ~~may~~ appear to cause serious adverse side effects or potentially dangerous drug interactions if misused or improperly prescribed or as a result of faulty surgical technique. For example, we ~~and/or certain of our subsidiaries~~ and certain other manufacturers have been named as defendants in multiple lawsuits in various federal and state courts alleging personal injury resulting from use of transvaginal surgical mesh products designed to treat POP and SUI. The FDA held a public advisory committee meeting in February 2019 during which the members of the Obstetrics and Gynecology Devices Panel of the Medical Devices Advisory Committee discussed and made recommendations regarding the safety and effectiveness of surgical mesh to treat POP. In April 2019, following the meeting, the FDA ordered that the manufacturers of all remaining surgical mesh products indicated for the transvaginal repair of POP cease selling and distributing their products in the U.S. effective immediately. Although we have not sold transvaginal surgical mesh products since March 2016, it is possible that the FDA’s order and any additional FDA actions based on the outcome of the advisory committee meeting could result in additional litigation against the Company. See Note ~~13.~~12. Commitments and Contingencies inof the Condensed Consolidated Financial Statements included in Part I, Item 1 for more information.

Any failure to effectively identify, analyze, report and protect adverse event data and/or to fully comply with relevant laws, rules and regulations around adverse event reporting could expose the Company to legal proceedings, penalties, fines ~~and~~and/or reputational damage.

In addition, in the age of social media, plaintiffs’ attorneys have a wide variety of tools to advertise their services and solicit new clients for litigation, including using judgments and settlements obtained in litigation against us or other pharmaceutical companies as an advertising tool. For these or other reasons, any ~~significant~~ product liability or ~~mass tort~~other litigation in which we are a defendant could have a larger number of plaintiffs than such actions have seen historically and we could also see an increase in the number of cases filed against us because of the increasing use of widespread and media-varied advertising. Furthermore, a ruling against other pharmaceutical companies in product liability or ~~mass tort~~other litigation in which we are not a defendant could have a negative impact on pending litigation where we are a defendant.

In addition, in certain circumstances, such as in the case of products that do not meet approved specifications or ~~for~~ which subsequent data demonstrate ~~such products~~ may be unsafe, ineffective or misused, it may be necessary for us to initiate voluntary or mandatory recalls or withdraw such products from the market. Any such recall or withdrawal could result in adverse publicity, costs connected to the recall and loss of revenue. Adverse publicity could also result in an increased number of additional product liability claims, whether or not these claims have a basis in scientific fact. See the risk factor ~~“Public~~“Public concern around the abuse of opioids or other products, including without limitation law enforcement concerns over diversion ~~and~~or marketing ~~of opioids, and~~practices, regulatory efforts to combat abuse, and litigation could result in costs to our ~~business” in Part 1, Item 1A. “Risk Factors”~~business” in the Annual Report for more information.

If we are found liable in any lawsuits, ~~such as a~~including product liability ~~claim~~claims or ~~series of claims, including those described above and below, or in connection with other legal proceedings, including those~~actions related to our sales, marketing or pricing practices ~~government investigations, product recalls~~ or the sale, marketing and/or distribution of prescription opioid medications, or if we are subject to governmental investigations or product recalls, it could result in the imposition of material damages, including punitive damages, ~~substantial~~ fines, ~~significant~~ reputational harm, civil lawsuits, ~~and~~ criminal penalties, interruptions of business, modification of business practices, equitable remedies and other sanctions against us or our personnel as well as significant legal and other costs. We may also voluntarily settle cases even if we believe that we have meritorious defenses because of the significant legal and other costs that may be required to defend such actions. Any judgments, claims, settlements and related costs could be well in excess of any applicable insurance. As a result, we may experience significant negative impacts on our ~~operations.~~operations or financial position. To satisfy judgments or settlements, we also may need to seek financing or bonding, which may not be available on terms acceptable to us, or at all, when ~~required.~~required, particularly given the extreme volatility in the capital markets. Judgments also could cause defaults under our debt agreements and/or restrictions on ~~our~~ product use or business practices and we could incur losses as a result. Any of the risks above could have a material adverse effect on our business, financial condition, results of operations and cash ~~flows.~~flows and could be further exacerbated by the impact of COVID-19.

~~Any~~The occurrence or possibility of any such result may cause us to ~~pursue~~engage in a strategic review that ultimately results in us pursuing one or more significant corporate transactions or remedial measures. Any such actions or measures ~~including internal reorganizations and/~~could include reorganization or restructuring activities, asset sales or other ~~restructuring activities, strategic corporate alignment and~~divestitures, cost-saving initiatives or other ~~significant~~ corporate ~~transactions.~~realignments, seeking strategic partnerships and exiting certain product or geographic markets. See the risk factor ~~“Our~~“Our ability to fund our operations, maintain adequate liquidity 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” in the Annual Report~~uncertainties” for more information. ~~Likewise, any internal reorganizations and/or other restructuring activities, strategic corporate alignment and cost-saving initiatives or other significant corporate transactions~~Any of such actions may be complex, could entail significant ~~cost~~costs and charges or could otherwise negatively impact shareholder value and there can be no assurance that we will be able to accomplish any of these alternatives on terms acceptable to us, or at ~~all.~~

We may not have and may be unable to obtain or maintain in the future insurance on acceptable terms or with adequate coverage against potential liabilities or other losses, 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 insuranceall, or that ~~the indemnitors or insurers~~they 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.~~result in their intended benefits.

See Note ~~13.~~12. Commitments and Contingencies inof the Condensed Consolidated Financial Statements included in Part I, Item 1 for further discussion of the ~~forgoing~~foregoing and other material legal proceedings.

~~The pharmaceutical industry~~Our ability to fund our operations, maintain adequate liquidity and meet our financing obligations is ~~heavily regulated,~~reliant on our operations, which ~~creates uncertainty about~~are subject to significant risks and uncertainties.

We rely on cash from operations as well as access to the financial markets to fund our operations, maintain liquidity and meet our financial obligations. Our operations are subject to many significant risks and uncertainties described in this “Risk Factors” section and in Part I, Item 1A. “Risk Factors” in the Annual Report, including those related to generic competition and legal challenges that could impact our key products, including VASOSTRICT^®, outstanding and future legal proceedings and governmental investigations, including those related to our sale, marketing and/or distribution of prescription opioid medications, and others. Any negative development or outcome in connection with any or all of these risks and uncertainties could result in significant consequences, including one or more of the following:

causing a substantial portion of our cash flows from operations to be dedicated to the payment of legal or related expenses and therefore unavailable for other purposes, including the payment of principal and interest on our indebtedness, our operations, capital expenditures and future business opportunities;

limiting our ability to ~~bring new products~~adjust to changing market conditions, causing us to be more vulnerable to periods of negative or slow growth in the general economy or in our business, causing us to be unable to carry out capital spending that is important to our growth and ~~imposes substantial~~placing us at a competitive disadvantage;

limiting our ability to attract and retain key personnel;

causing us to be unable to maintain compliance ~~costs on~~with or making it more difficult for us to satisfy our ~~business.~~financial obligations under certain of our outstanding debt obligations, causing a downgrade of our debt and long-term corporate ratings (which could increase our cost of capital) and exposing us to potential events of default (if not cured or waived) under financial and operating covenants contained in our or our subsidiaries’ outstanding indebtedness;

~~Governmental authorities~~limiting our ability to incur additional borrowings under the covenants in our then-existing facilities or to obtain additional debt or equity financing for working capital, capital expenditures, business development, debt service requirements, acquisitions or general corporate or other purposes, or to refinance our indebtedness; and/or

otherwise causing us to be unable to fund our operations and liquidity needs, such as ~~the FDA impose~~future capital expenditures and payment of our indebtedness.

The occurrence or possibility of any such result may cause us to engage in a strategic review that ultimately results in us pursuing one or more significant corporate transactions or remedial measures. Any such actions or measures could include reorganization or restructuring activities, asset sales or other divestitures, cost-saving initiatives or other corporate realignments, seeking strategic partnerships and exiting certain product or geographic markets. Additionally, we may need to refinance all or part of our then-existing indebtedness, reduce or delay capital expenditures or seek to raise additional capital. Any refinancing of our substantial ~~requirements~~indebtedness could be at significantly higher interest rates, which will depend on the ~~development, manufacture, holding, labeling, marketing, advertising, promotion, distribution~~conditions of the markets (particularly given the disruptions to and ~~sale~~extreme volatility in the capital markets from COVID-19) and our financial condition at such time, and may require us to comply with more onerous covenants, which could further restrict our business operations. Any refinancing may also increase the amount of ~~therapeutic pharmaceutical products through lengthy and detailed laboratory and clinical testing and other costly and time-consuming procedures.~~our secured indebtedness. In addition, ~~before obtaining regulatory approvals for certain generic products, we must conduct limited bioequivalence studies and other research to show comparability to~~ the ~~branded products. A failure to obtain satisfactory results in required pre-marketing trials~~terms of existing or future debt agreements may ~~prevent~~restrict us from ~~obtaining required regulatory approvals. The FDA~~consummating any of these alternatives. Likewise, any reorganizations or restructuring activities, corporate realignments, asset sales or divestitures, strategic partnerships or other actions that we take may ~~also require companies to conduct post-approval studies~~be complex, could entail significant costs and ~~post-approval surveillance regarding their drug products~~charges or could otherwise negatively impact shareholder value and ~~to report adverse events.~~

~~Before obtaining regulatory approvals for the sale of any new product candidate,~~there can be no assurance that we must demonstrate through preclinical studies and clinical trials that such product candidate is safe and effective for each intended use. Preclinical and clinical studies may fail to demonstrate the safety and effectiveness of a product candidate. Likewise, we may notwill be able to ~~demonstrate through clinical trials~~accomplish any of these alternatives on terms acceptable to us, or at all, or that a product candidate’s therapeutic benefits outweigh its risks. Even promising results from preclinical and early clinical studies do not always accurately predict results in later, large scale trials. A failure to demonstrate safety and efficacy wouldthey will result in ~~our failure~~their intended benefits. COVID-19 has had a significant impact on the financial markets, which could make it more difficult to ~~obtain regulatory approvals. Clinical trials can be delayed for reasons outside~~consummate any refinancing or result in in more onerous or expensive terms.

Decreases in the degree to which individuals are covered by healthcare insurance could result in decreased use of our ~~control, which can~~products.

Employers may seek to reduce costs by reducing or eliminating employer group healthcare plans or transferring a greater portion of healthcare costs to their employees. Job losses or other economic hardships may also result in reduced levels of coverage for some individuals, potentially resulting in lower levels of healthcare coverage for themselves or their families. Further, in addition to the fact that the Tax Cuts and Jobs Act of 2017 eliminated the Patient Protection and Affordable Care Act (PPACA)’s requirement that individuals maintain insurance or face a penalty, additional steps by the Trump Administration or other parties to limit or end cost-sharing subsidies to lower-income Americans may increase instability in the insurance marketplace and the number of uninsured Americans. These economic conditions may affect patients’ ability to afford healthcare as a result of increased co-pay or deductible obligations, greater cost sensitivity to existing co-pay or deductible obligations and lost healthcare insurance coverage or for other reasons. We believe such conditions could lead to ~~increased development costs~~changes in patient behavior and ~~delays in regulatory approval. For example, there is substantial competition to enroll patients in clinical trials, and such competition has delayed clinical development~~spending patterns that negatively affect usage of certain of our products, including some patients delaying treatment, rationing prescription medications, leaving prescriptions unfilled, reducing the frequency of visits to healthcare facilities, utilizing alternative therapies or foregoing healthcare insurance coverage. Such changes may result in the past. For example, patients may not enroll in clinical trials at the rate expected or patients may drop out after enrolling in the trials or during the trials. In addition, we rely on collaboration partners that may control or make changes in trial protocol and design enhancements, or encounter clinical trial compliance-related issues, which may also delay clinical trials. Product supplies may be delayed or be insufficient to treat the patients participating in the clinical trials, or manufacturers or suppliers may not meet the requirements of the FDA or foreign regulatory authorities, such as those relating to Good Manufacturing Practice (cGMP). We also may experience delays in obtaining, or we may not obtain, required initial and continuing approval of our clinical trials from institutional review boards. We may experience delays or undesired results in these or any other of our clinical trials.

~~The FDA and/or foreign regulatory agencies may not approve, clear~~reduced demand for ~~marketing or certify any products developed by us. Any approval by regulatory agencies may subject the marketing of~~ our products, to certain limits on indicated use. The FDA or foreign regulatory authorities may not agree with our assessment of the clinical data or they may interpret it differently. Such regulatory authorities may require additional or expanded clinical trials. Any limitation on use imposed by the FDA or delay in or failure to obtain FDA approvals or clearances of products developed by us would adversely affect the marketing of these products and our ability to generate product revenue, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

In ~~addition, specifically with respect~~December 2018, the U.S. District Court for the Northern District of Texas held in Texas v. Azar that, because the provisions of the PPACA requiring certain individuals to ~~pharmaceutical products,~~either obtain health insurance or pay a shared responsibility payment (known as the ~~submission of an NDA, ANDA, Biologics License Application or supplemental Biologics License Application~~individual mandate) are no longer permissible under the U.S. Congress’ taxing power, the entire PPACA is no longer constitutional. The decision was appealed to the ~~FDA with supporting clinical safety and efficacy data,~~U.S. Court of Appeals for ~~example, does not guarantee~~the Fifth Circuit. In December 2019, the Fifth Circuit issued an opinion holding that, while the individual mandate was no longer constitutional, the case must be remanded to the district court to further evaluate whether the mandate can be severed from the PPACA or the entire PPACA must be stricken down. In January 2020, petitions for certiorari were filed requesting that the ~~FDA will grant approval to market~~U.S. Supreme Court review the ~~product. Meeting~~Fifth Circuit’s decision and ultimately decide the ~~FDA’s regulatory requirements to obtain approval to market a drug product, which varies substantially based on the type, complexity and novelty~~constitutionality of the ~~pharmaceutical product, typically takes years, if approved at all,~~PPACA. In March 2020, the U.S. Supreme Court granted certiorari in the consolidated cases of Texas v. California and ~~is subject~~California v. Texas, both of which address the Fifth Circuit’s decision to ~~uncertainty. In addition, even if we were~~strike down the individual mandate, while sending back to ~~obtain approval, regulatory authorities may approve any~~the district court the question 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 payersoverall law’s constitutionality. Changes in law resulting from this ongoing lawsuit 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.~~

Additional delays may result if an FDA Advisory Committee or other regulatory authority recommends non-approval or restrictions on approval. Although the FDA is not required to follow the recommendations of its Advisory Committees, it usually does. A negative Advisory Committee meeting could signal a lower likelihood of approval, although the FDA may still end up approving our application. Regardless of an Advisory Committee meeting outcome or the FDA’s final approval decision, public presentation of our data may shed positive or negative light on our application.

~~With respect to our Supplemental New Drug Application for OPANA~~^® ER, the FDA scheduled a Joint Meeting of the Drug Safety and Risk Management Advisory Committee and the Anesthetic and Analgesic Drug Products Advisory Committee in March 2017 to discuss pre- and post-marketing data about the abuse of OPANA^® ER and the overall risk-benefit of this product. The Advisory Committees were also scheduled to discuss abuse of generic oxymorphone ER and oxymorphone immediate-release products. In March 2017, the Advisory Committees voted 18 to eight, with one abstention, that the benefits of reformulated OPANA^® ~~ER no longer outweigh its risks. While several of the Advisory Committee members acknowledged the role of OPANA~~^® ER in clinical practice, others believed its benefits were overshadowed by the continuing public health concerns around the product's misuse, abuse and diversion. In June 2017, the FDA requested that we voluntarily withdraw OPANA^® ~~ER from the market and, in July 2017, after careful consideration and consultation with the FDA, we decided to voluntarily remove OPANA~~^®~~ER from the market~~court challenges to the Company’s financial detriment. During the second quarter of 2017, we began to work with the FDA to coordinate an orderly withdrawal of the product from the market. By September 1, 2017, we ceased shipments of OPANA^® ~~ER to customers and we expect the NDA will be withdrawn. These actions had an~~PPACA could have a material adverse effect on our ~~revenues~~business, financial condition, results of operations and cash flows.

We have a substantial amount of indebtedness which could adversely affect our financial position and prevent us from fulfilling our obligations under such indebtedness, which may require us to refinance all or part of our then-outstanding indebtedness. Any refinancing of this substantial indebtedness could be at significantly higher interest rates. Additionally, we have a significant amount of floating rate indebtedness and an increase in interest rates would increase the cost of servicing our indebtedness. Despite our current level of indebtedness, we may still be able to incur substantially more indebtedness. This could increase the risks associated with our substantial indebtedness.

We currently have a substantial amount of indebtedness. As of March 31, 2020, we have total debt of approximately $8.46 billion in aggregate principal amount. Our substantial indebtedness may:

make it difficult for us to satisfy our financial obligations, including making scheduled principal and interest payments on our indebtedness;

limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general business purposes;

limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general business purposes;

expose us to the risk of rising interest rates with respect to the borrowings under our variable rate indebtedness;

require us to use a substantial portion of our cash on hand and/or from future operations to make debt service payments;

limit our flexibility to plan for, or react to, changes in our business and industry;

place us at a competitive disadvantage compared to our less leveraged competitors; and

increase our vulnerability to the impact of adverse economic and industry conditions, such as those resulting from the COVID-19 pandemic, which may further limit our ability to satisfy our financial obligations.

If we are unable to pay amounts due under our outstanding indebtedness or to fund other liquidity needs, such as future capital expenditures or contingent liabilities as a result of ~~these actions,~~adverse business developments, including expenses related to our ongoing and future legal proceedings and governmental investigations, decreased revenues or increased costs and expenses related to the impact of COVID-19 on our business, as well as increased pricing pressures or otherwise, we ~~have incurred and expect~~may be required to ~~incur certain charges. Actions similar to these, such as recalls~~refinance all or ~~withdrawals, could divert management time and attention, reduce market acceptance of all~~part of our ~~products, harm our reputation,~~then-existing indebtedness, sell assets, reduce ~~our revenues, lead~~or delay capital expenditures or seek to raise additional ~~charges or expenses or result in product liability claims,~~capital, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Some drugs are available in the U.S. that are not the subject of an FDA-approved NDA. In 2011, the FDA’s Center for Drug Evaluation and Research (CDER) Office of Compliance modified its enforcement policy with regard to the marketing of such “unapproved” marketed drugs. Under CDER’s revised guidance, the FDA encourages manufacturers to obtain NDA approvals for such drugs by requiring unapproved versions to There can be removed from the market after an approved version has been introduced, subject to a grace period at the FDA’s discretion. This grace period is intended to allow an orderly transition of supply to the market and to mitigate any potential related drug shortage. Depending on the length of the grace period and the time it takes for subsequent applications to be approved, this may result in a period of de facto market exclusivity to the first manufacturer that has obtained an approved NDA for the previously unapproved marketed drug. We may seek FDA approval for certain unapproved marketed drug products through the 505(b)(2) regulatory pathway. Even if we receive approval for an NDA under section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act (FFDCA), the FDA may not take timely enforcement action against companies marketing unapproved versions of the drug; therefore, we cannot be sure thatno assurance that we will ~~receive~~be able to accomplish any of these alternatives on terms acceptable to us, or at all. Any refinancing of this substantial indebtedness could be at significantly higher interest rates, which will depend on the ~~benefit~~conditions of the markets (particularly given the extreme volatility in the capital markets) and our financial condition at such time. In addition, we may be able to incur substantial additional indebtedness in the future, including secured indebtedness. If new indebtedness is added to our current debt levels, the related risks that we and our subsidiaries now face could intensify. At any time and from time to time, we may also be pursuing activities to extend our debt maturities, lower principal balances, reduce interest expense or obtain covenant flexibility. Activities could include, without limitation, one or more tender offers, exchange offers, debt-for-equity exchanges or consent solicitations. The terms of any ~~de facto exclusive marketing period or~~such transactions, including the amount of any exchange consideration and terms of any refinanced debt, could potentially be negatively impacted by a downgrade of our debt ratings and could also be less favorable than we have been able to obtain in the past, including a requirement that we grant liens on our assets as collateral (resulting in an increase in our total outstanding secured indebtedness), as a result of changing market conditions and investment interest from the pandemic and its impact on our business and the financial markets, including requiring us to incur additional secured indebtedness. We cannot predict if or when we would conduct any such activity, whether any such activities will ~~fully recoup~~achieve their intended results or whether any such activity could impact our financial results or be dilutive.

While interest rates have been at record low levels in recent years (most recently as a result of economic conditions resulting from the ~~expenses incurred to obtain an approval. In addition, certain competitors~~COVID-19 pandemic), this low interest rate environment likely will not continue indefinitely. At March 31, 2020, approximately $3.3 billion and ~~others have objected to~~$0.3 billion of principal amounts outstanding under the ~~FDA’s interpretation of Section 505(b)(2). If~~Term Loan Facility and the ~~FDA’s interpretation of Section 505(b)(2) is successfully challenged, this could delay or even prevent the FDA from approving any NDA that we submit under Section 505(b)(2).~~

Moreover, even if our product candidates are approved under Section 505(b)(2), the approval may be subject to limitations on the indicated uses for which the products may be marketed or to other conditions of approval, or may contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacyRevolving Credit Facility (each as defined in Note 11. Debt of the ~~products.~~

~~The ANDA approval process for a new product varies~~Condensed Consolidated Financial Statements included in ~~time, generally requiring a minimum of 10 months following submission of~~Part I, Item 1), respectively, bear interest at variable rates. Any future borrowings by the ~~ANDA to FDA, but~~Company could also take several years from the date of application. The timing for the ANDA approval process for generic products is difficult to estimate and can vary significantly. ANDA approvals, if granted, may not include all uses (known as indications) for which a company may seek to market a product.

Further, once a product is approved or cleared for marketing, failure to comply with applicable regulatory requirements can result in, among other things, suspensions or withdrawals of approvals or clearances; seizures or recalls of products; injunctions against the manufacture, holding, distribution, marketing and sale of a product; and civil and criminal sanctions. Furthermore, changes in existing regulations or the adoption of new regulations could prevent us from obtaining, or affect the timing of, future regulatory approvals or clearances. Meeting regulatory requirements and evolving government standards may delay marketing of our new products for a considerable period of time, impose costly procedures upon our activities and result in a competitive advantage to larger companies that compete against us.

Based on scientific developments, post-market experience or other legislative or regulatory changes, the current FDA standards of review for approving new pharmaceutical products, or new indications or uses for approved or cleared products, are sometimes more stringent than those that were applied in the past.

~~Some new or evolving FDA review standards or conditions for approval or clearance were not applied to many established products currently on the market, including certain opioid products.~~have variable interest rates. As a result, to the ~~FDA does~~extent we have not ~~have safety databases on these products that are as extensive as some products developed more recently. Accordingly, we believe the FDA has expressed~~hedged against rising interest rates, an intention to develop such databases for certain of these products, including many opioids. In particular, the FDA has expressed interest in specific chemical structures that may be present as impurities in a number of opioid narcotic active pharmaceutical ingredients, such as oxycodone, which, based on certain structural characteristics and laboratory tests, may indicate the potential for having mutagenic effects. The FDA has required, and may continue to require, more stringent controls of the levels of these impurities in drug products for approval.

Also, the FDA may require labeling revisions, formulation or manufacturing changes and/or product modifications for new or existing products containing such impurities. The FDA’s more stringent requirements, together with any additional testing or remedial measures that may be necessary, could result in increased costs for, or delays in, obtaining approval for certain of our products. Although we do not believe that the FDA would seek to remove a currently marketed product from the market unless such mutagenic effects are believed to indicate a significant risk to patient health, we cannot make any such assurance.

In May of 2016, an FDA advisory panel recommended mandatory training of all physicians who prescribe opioids on the risks of prescription opioids. In 2016, the Centers for Disease Control and Prevention also issued a guideline for prescribing opioids for chronic pain that provides recommendations for primary care clinicians who are prescribing opioids for chronic pain outside of active cancer treatment, palliative care and end-of-life care. In addition, state health departments and boards of pharmacy have authority to regulate distribution and may modify their regulations with respect to prescription narcotics in an attempt to curb abuse. In either case, these or any new regulations or requirements may be difficult and expensive for us to comply with, may delay our introduction of new products, may adversely affect our total revenues and may have a material adverse effect on our business, financial condition, results of operations and cash flows.

The FDA has the authority to require companies to undertake additional post-approval studies to assess known or signaled safety risks, to make any labeling changes to address those risks and to formulate approved REMS to confirm a drug’s benefits outweigh its risks. For example, in 2015, the FDA sent letters to a number of manufactures, including Endo, requiring that a randomized, double-blind, placebo-controlled clinical trial be conducted to evaluate the effect of testosterone replacement therapy on the incidence of major adverse cardiovascular events in men. The letter received by Endo required that we include new safety informationincrease in the ~~labeling~~applicable benchmark interest rates would increase our cost of servicing our indebtedness and ~~Medication Guide for certain prescription medications containing testosterone, such as TESTIM~~^®.

The FDA’s exercise of its authority under the FFDCA could result in delays or increased costs during product development, clinical trials and regulatory review, increased costs to comply with additional post-approval regulatory requirements and potential restrictions on sales of approved products. Foreign regulatory agencies often have similar authority and may impose comparable requirements and costs. Post-marketing studies and other emerging data about marketed products, such as adverse event reports, may also adversely affect sales of our products. Furthermore, the discovery of significant safety or efficacy concerns or problems with a product in the same therapeutic class as one of our products that implicate or appear to implicate the entire class of products could have an adverse effect on sales of our product or, in some cases, result in product withdrawals. The FDA has continuing authority over the approval of an NDA or ANDA and may withdraw approval if, among other reasons, post-marketing clinical or other experience, tests or data show that a drug is unsafe for use under the conditions upon which it was approved, or if FDA determines that there is a lack of substantial evidence of the drug’s efficacy under the conditions described in its labeling. Furthermore, new data and information, including information about product misuse or abuse at the user level, may lead government agencies, professional societies, practice management groups or patient or trade organizations to recommend or publish guidance or guidelines related to the use of our products, which may lead to reduced sales of our products.

The FDA and the Drug Enforcement Administration (DEA) have important and complementary responsibilities with respect to our business. The FDA administers an application and post-approval monitoring process to confirm that products that are available in the market are safe, effective and consistently of uniform, high quality. The DEA administers registration, drug allotment and accountability systems to satisfy against loss and diversion of controlled substances. Both agencies have trained investigators that routinely, or for cause, conduct inspections, and both have authority to seek to enforce their statutory authority and regulations through administrative remedies as well as civil and criminal enforcement actions.

The FDA regulates and monitors the quality of drug clinical trials to provide human subject protection and to support marketing applications. The FDA may place a hold on a clinical trial and may cause a suspension or withdrawal of product approvals if regulatory standards are not maintained. The FDA also regulates the facilities, processes and procedures used to manufacture and market pharmaceutical products in the U.S. Manufacturing facilities must be registered with the FDA and all products made in such facilities must be manufactured in accordance with the latest cGMP regulations, which are enforced by the FDA. Compliance with clinical trial requirements and cGMP regulations requires significant expenditures and the dedication of substantial resources. In the event an approved manufacturing facility for a particular drug is required by the FDA to curtail or cease operations, or otherwise becomes inoperable, or a third party contract manufacturing facility faces manufacturing problems, obtaining the required FDA authorization to manufacture at the same or a different manufacturing site could result in production delays, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The FDA is authorized to perform inspections of U.S. and foreign facilities under the FFDCA. At the end of such an inspection, the FDA could issue a Form 483 Notice of Inspectional Observations, which could cause us to modify certain activities identified during the inspection. Following such inspections, the FDA may issue an untitled letter as an initial correspondence that cites violations that do not meet the threshold of regulatory significance for a Warning Letter. FDA guidelines also provide for the issuance of Warning Letters for violations of “regulatory significance” for which the failure to adequately and promptly achieve correction may be expected to result in an enforcement action. The FDA also may issue Warning Letters and untitled letters in connection with events or circumstances unrelated to an FDA inspection.

Similar to other healthcare companies, our facilities in multiple countries across the full range of our business units are subject to routine and new-product related inspections by regulatory authorities including the FDA, the Medicines and Healthcare products Regulatory Agency, the Health Products Regulatory Authority and Health Canada. In the past, some of these inspections have resulted in inspection observations (including FDA Form 483 observations). We have responded to all inspection observations within the required timeframe and have implemented, or are continuing to implement, the corrective action plans as agreed with the relevant regulatory agencies.

Several of our core products contain controlled substances. The stringent DEA regulations on our use of controlled substances include restrictions on their use in research, manufacture, distribution and storage. A breach of these regulations could result in imposition of civil penalties, refusal to renew or action to revoke necessary registrations, or other restrictions on operations involving controlled substances. In addition, failure to comply with applicable legal requirements subjects the manufacturing facilities of our subsidiaries and manufacturing partners to possible legal or regulatory action, including shutdown. Any such shutdown may adversely affect their ability to supply us with product and thus, our ability to market affected products. This could have a negative impact on our business, results of operations, financial condition, cash flows and competitive position. See also the risk described under the caption “The DEA limits the availability of the active ingredients used in many of our products as well as the production of these products, and, as a result, our procurement and production quotas may not be sufficient to meet commercial demand or complete clinical trials” in Part 1, Item 1A. “Risk Factors” in the Annual Report.

In addition, we are subject to the Federal Drug Supply Chain Security Act (DSCSA) enacted by the U.S. government, which requires development of an electronic pedigree to track and trace each prescription drug at the salable unit level through the distribution system, which will be effective incrementally over a 10-year period. Compliance with DSCSA and future U.S. federal or state electronic pedigree requirements may increase our operational expenses and impose significant administrative burdens.

We cannot determine what effect changes in regulations or legal interpretations or requirements by the FDA, the courts or others, when and if promulgated or issued, or advisory committee meetings may have on our business in the future. Changes could, among other things, require different labeling, monitoring of patients, interaction with physicians, education programs for patients or physicians, curtailment of necessary supplies or limitations on product distribution. Any such changes could result in additional litigation and may have a material adverse effect on our business, financial condition, results of operations and cash flows. The evolving and complex nature of regulatory science and regulatory requirements, the broad authority and discretion of the FDA and the generally high level of regulatory oversight results in a continuing possibility that, from time to time, we will be adversely affected by regulatory actions despite our ongoing efforts and commitment to achieve and maintain full compliance with all regulatory requirements.

We are currently dependent on outside manufacturers for the manufacture of a significant amount of our products; therefore, we have and will continue to have limited control of the manufacturing process and related costs. Certain of our manufacturers currently constitute the sole source of one or more of our products.

Third party manufacturers currently manufacture a significant amount of our products pursuant to contractual arrangements. Certain of our manufacturers currently constitute the sole source of our products. For example, Teikoku Seiyaku Co., Ltd. is our sole source of LIDODERM^® ~~and GlaxoSmithKline plc is our sole source of VOLTAREN~~^® Gel. Because of contractual restraints and the lead-time necessary to obtain FDA approval and/or DEA registration of a new manufacturer, there are no readily accessible alternatives to these manufacturers and replacement of any of these manufacturers may be expensive and time consuming and may cause interruptions in our supply of products to customers. Our business and financial viability are dependent on these third party manufacturers for continued manufacture of our products, the continued regulatory compliance of these manufacturers and the strength, validity and terms of our various contracts with these manufacturers. Any interruption or failure by these manufacturers to meet their obligations pursuant to various agreements with us on schedule or in accordance with our expectations, or any termination by these manufacturers of our supply arrangements, which, in each case, could be the result of one or many factors outside of our control, could delay or prevent our ability to achieve sales expectations, cause interruptions in our supply of products to customers, cause us to incur failure-to-supply penalties, disrupt our operations or cause reputational harm to our company, any or all of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no purchases or sales of equity securities by the Company during the three months ended March 31, ~~2019.~~2020.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits



		Incorporated by Reference from:
Number	Description	File Number	Filing Type	Filing Date
~~4.1~~	Indenture, dated as of March 28, 2019, among Par Pharmaceutical, Inc., the guarantors named therein and Wells Fargo Bank, National Association, as trustee, relating to the 7.500% Senior Secured Notes due 2027	~~001-36326~~	~~Current Report on Form 8-K~~	~~March 28, 2019~~
~~4.2~~	~~Form of 7.500% Senior Secured Notes due 2027 (included in Exhibit 4.1)~~	~~001-36326~~	~~Current Report on Form 8-K~~	~~March 28, 2019~~
10.1	First Amendment, dated as of March 28, 2019 (to the Credit Agreement, dated as of April 27, 2017), by and among Endo International plc, Endo Luxembourg Finance Company I Sarl and Endo LLC, as borrowers, the lenders and other parties party thereto and JPMorgan Chase Bank, N.A. as administrative agent, issuing bank and swingline lender	~~001-36326~~	~~Current Report on Form 8-K~~	~~March 28, 2019~~
~~10.2~~	~~Second Amendment to Second Amended and Restated Development and License Agreement, dated February 26, 2019, by and between BioSpecifics Technologies Corp. and Endo Global Ventures~~	~~Not applicable; filed herewith~~
~~10.3~~	Form of Performance Award Agreement under the Endo International plc Amended and Restated 2015 Stock Incentive Plan	Not applicable; filed herewith
10.2	Form of Long-Term Cash Award Agreement under the Endo International plc Amended and Restated 2015 Stock Incentive Plan	Not applicable; filed herewith
10.3	Executive Employment Agreement between Endo Health Solutions Inc. and Patrick Barry, effective April 26, 2020	Not applicable; filed herewith
10.4	~~Executive Employment~~Cash Contribution Bonus Agreement between Endo ~~Health Solutions Inc.~~ and ~~Paul Campanelli,~~Patrick Barry, dated ~~as of April 24,~~August 1, 2019	~~001-36326~~			~~Current Report on Form 8-K~~	~~April 26, 2019~~
~~10.5~~	~~Retirement Agreement between Endo Health Solutions Inc. and Tony Pera, dated as of April 25, 2019~~	~~001-36326~~	~~Current Report on Form 8-K~~	~~April 26, 2019~~Not applicable; filed herewith
31.1	Certification of the President and Chief Executive Officer of Endo pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Not applicable; filed herewith
31.2	Certification of the Chief Financial Officer of Endo pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Not applicable; filed herewith
32.1	Certification of the President and Chief Executive Officer of Endo pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Not applicable; furnished herewith
32.2	Certification of the Chief Financial Officer of Endo pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Not applicable; furnished herewith
~~101~~101.INS	~~The following materials from Endo International plc’s Quarterly Report on Form 10-Q for~~iXBRL Instance Document - the ~~quarter ended March 31, 2019,~~instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.	Not applicable; submitted herewith
101.SCH	iXBRL Taxonomy Extension Schema Document	Not applicable; submitted herewith
101.CAL	iXBRL Taxonomy Extension Calculation Linkbase Document	Not applicable; submitted herewith
101.DEF	iXBRL Taxonomy Extension Definition Linkbase Document	Not applicable; submitted herewith
101.LAB	iXBRL Taxonomy Extension Label Linkbase Document	Not applicable; submitted herewith
101.PRE	iXBRL Taxonomy Extension Presentation Linkbase Document	Not applicable; submitted herewith
104	Cover Page Interactive Data File, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Loss, (iv) the Condensed Consolidated Statements of Cash FlowsiXBRL and ~~(v) the Notes to Condensed Consolidated Financial Statements~~contained in Exhibit 101	Not applicable; submitted herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	ENDO INTERNATIONAL PLC
	(Registrant)

	/~~s/ PAUL V. CAMPANELLI~~S/ BLAISE COLEMAN
Name:	~~Paul V. Campanelli~~Blaise Coleman
Title:	President and Chief Executive Officer
	(Principal Executive Officer)

	/~~s/ BLAISE COLEMAN~~S/ MARK T. BRADLEY
Name:	~~Blaise Coleman~~Mark T. Bradley
Title:	Executive Vice President, Chief Financial Officer
	(Principal Financial Officer)

Date: May ~~9, 2019~~7, 2020

5548



	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	(2,827		)	(48		)	(2,875		)
Liability balance as of March 31, 2019	$	1,412		$	—		$	1,412



	Balance as of December 31, 2018		Changes in Fair Value Recorded in Earnings			Amounts Settled and Other			Balance as of March 31, 2019
Auxilium acquisition	$	14,157	$	388		$	—		$	14,545
Lehigh Valley Technologies, Inc. acquisitions	34,700		(400		)	(5,000		)	29,300
VOLTAREN® Gel acquisition (1)	56,240		(37,784		)	(6,260		)	12,196
Other	11,606		295			(100		)	11,801
Total	$	116,703	$	(37,501	)	$	(11,360	)	$	67,842



	Operating Leases		Finance Leases
2019, excluding amounts already paid	$	11,135	$	5,240
2020	13,667		7,329
2021	13,021		7,476
2022	12,309		7,626
2023	9,890		7,780
Thereafter	20,622		10,521
Total future lease payments	$	80,644	$	45,972
Less: amount representing interest	14,335		6,888
Present value of future lease payments (lease liability)	$	66,309	$	39,084



	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



2019	$	545,757
2020	$	461,267
2021	$	419,045
2022	$	403,142
2023	$	372,939



	Qualified Settlement Funds			Mesh Liability Accrual
Balance as of January 1, 2019	$	299,733		$	748,606
Additional charges	—			—
Cash contributions to Qualified Settlement Funds	81,582			—
Cash distributions to settle disputes from Qualified Settlement Funds	(54,984		)	(54,984		)
Cash distributions to settle disputes	—			(10,239		)
Other (1)	1,057			1,057
Balance as of March 31, 2019	$	327,388		$	684,440