00015930342019-01-012019-09-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________________________________________ 
FORM 10-Q
____________________________________________________________________________________________ 
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 20192020
or
☐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
(Exact name of registrant as specified in its charter)


Ireland68-0683755
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
First Floor, Minerva House, Simmonscourt Road
Ballsbridge, Dublin 4,IrelandNot Applicable
(Address of Principal Executive Offices)(Zip Code)
011-353-1-268-2000011-353-1-268-2000
(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.Yes☒
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).Yes☒
No☐
No☐
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 accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
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.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes☐
No☒
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Ordinary shares, nominal value $0.0001 per shareENDPThe NasdaqNASDAQ 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 valueNumber of ordinary sharesper share outstanding as of October 29, 2019:226,776,16130, 2020 was 230,292,329.



ENDO INTERNATIONAL PLC
INDEX
Page
i
PART I. FINANCIAL INFORMATION
1
1
2
3
4
56
3736
49
4950
PART II. OTHER INFORMATION
51
51
5153
5153
5153
5153
5155
5256
 




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 statements, including estimates of future revenues, future expenses, future net income and future net income per share contained in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this document, are subject to risks and uncertainties. Forward-looking statements include, without limitation, any future financial results, future cost savings and future litigation relating to the information concerningOffer, the Merger (each, as defined below) and the ability to successfully complete such transactions, future financing activities, the impact of the novel strain of coronavirus referred to as COVID-19 on the health and welfare of our possibleemployees 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 ability of our manufacturing facilities and suppliers to fulfill their obligations to us), and any other statements that refer to 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 noteuncertainties including, without limitation, the risks and uncertainties inherent in the Offer and the Merger, including, among other things, regarding how many of BioSpecifics’ (as defined below) stockholders will tender their shares in the Offer, the possibility that many factors,competing offers will be made, the ability to obtain requisite regulatory approvals relating to the acquisition, the ability to satisfy the conditions to the closing of the Offer and the Merger, the expected timing of the Offer and the Merger, the risk of litigation relating to the transaction, including resulting expense or delay, difficulties or unanticipated expenses in connection with integrating BioSpecifics’ operations into the Company’s and the possibility that anticipated synergies and other benefits of the transaction will not be realized in the amounts anticipated within the expected timeframe or at all, 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 our business as a result of COVID-19) and the other risks and uncertainties more fully described under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018 filedannual, quarterly and other reports that we file with the Securities and Exchange Commission (SEC) on February 28, 2019 (the Annual Report), as amendedincluding this report. These risks and supplemented by the risk factors previously disclosed by us in Part II, Item 1A under the caption “Risk Factors”uncertainties, many of which are outside of our Quarterly Reportscontrol, and any other risks and uncertainties that we are not currently able to predict or identify, individually or in the aggregate, could have a material adverse effect on Form 10-Q for the quarterly periods ended March 31, 2019our business, financial condition, results of operations and June 30, 2019, and as otherwise enumerated herein, could affect our future financial resultscash flows and could cause our actual results to differ materially and adversely from those expressed in forward-looking statements contained or incorporated by referencereferenced 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 I, Item 1A of the Annual Report as amended and supplemented byon Form 10-K for the risk factors previously disclosed by usyear ended December 31, 2019 filed with the SEC on February 26, 2020 (the Annual Report); in Part II, Item 1A underof the caption “Risk Factors” of our Quarterly ReportsReport on Form 10-Q for the quarterly periodsperiod ended March 31, 20192020 filed with the SEC on May 7, 2020 (the First Quarter 2020 Form 10-Q) and June 30, 2019,this report; and as otherwise enumerated herein or therein, 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.

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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)
September 30, 2019 December 31, 2018September 30, 2020December 31, 2019
ASSETS   ASSETS
CURRENT ASSETS:   CURRENT ASSETS:
Cash and cash equivalents$1,526,250
 $1,149,113
Cash and cash equivalents$1,679,738 $1,454,531 
Restricted cash and cash equivalents222,491
 305,368
Restricted cash and cash equivalents162,648 247,457 
Accounts receivable, net420,195
 470,570
Accounts receivable, net473,368 467,953 
Inventories, net338,513
 322,179
Inventories, net354,903 327,865 
Prepaid expenses and other current assets105,349
 56,139
Prepaid expenses and other current assets66,206 40,845 
Income taxes receivable36,337
 39,781
Income taxes receivable65,957 47,567 
Total current assets$2,649,135
 $2,343,150
Total current assets$2,802,820 $2,586,218 
PROPERTY, PLANT AND EQUIPMENT, NET501,352
 498,892
PROPERTY, PLANT AND EQUIPMENT, NET487,691 504,865 
OPERATING LEASE ASSETS53,839
 —
OPERATING LEASE ASSETS38,927 51,700 
GOODWILL3,615,322
 3,764,636
GOODWILL3,560,011 3,595,184 
OTHER INTANGIBLES, NET2,938,217
 3,457,306
OTHER INTANGIBLES, NET2,178,862 2,571,267 
DEFERRED INCOME TAXES—
 678
DEFERRED INCOME TAXES2,192 2,192 
OTHER ASSETS77,001
 67,731
OTHER ASSETS94,740 78,101 
TOTAL ASSETS$9,834,866
 $10,132,393
TOTAL ASSETS$9,165,243 $9,389,527 
LIABILITIES AND SHAREHOLDERS' DEFICIT   LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:   CURRENT LIABILITIES:
Accounts payable and accrued expenses$937,181
 $1,009,200
Accounts payable and accrued expenses$868,404 $899,949 
Current portion of legal settlement accrual674,943
 905,085
Current portion of legal settlement accrual374,754 513,005 
Current portion of operating lease liabilities10,575
 —
Current portion of operating lease liabilities11,449 10,763 
Current portion of long-term debt34,150
 34,150
Current portion of long-term debt34,150 34,150 
Income taxes payable10,878
 1,661
Income taxes payable2,241 2,422 
Total current liabilities$1,667,727
 $1,950,096
Total current liabilities$1,290,998 $1,460,289 
DEFERRED INCOME TAXES32,105
 34,487
DEFERRED INCOME TAXES26,930 31,703 
LONG-TERM DEBT, LESS CURRENT PORTION, NET8,364,911
 8,224,269
LONG-TERM DEBT, LESS CURRENT PORTION, NET8,286,351 8,359,899 
LONG-TERM LEGAL SETTLEMENT ACCRUAL, LESS CURRENT PORTION9,113
 —
OPERATING LEASE LIABILITIES, LESS CURRENT PORTION50,965
 —
OPERATING LEASE LIABILITIES, LESS CURRENT PORTION40,222 48,299 
OTHER LIABILITIES371,522
 421,824
OTHER LIABILITIES303,224 355,881 
COMMITMENTS AND CONTINGENCIES (NOTE 13)


 


COMMITMENTS AND CONTINGENCIES (NOTE 13)
SHAREHOLDERS' DEFICIT:   SHAREHOLDERS' DEFICIT:
Euro deferred shares, $0.01 par value; 4,000,000 shares authorized and issued at both September 30, 2019 and December 31, 201844
 46
Ordinary shares, $0.0001 par value; 1,000,000,000 shares authorized; 226,763,072 and 224,382,791 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively23
 22
Euro deferred shares, $0.01 par value; 4,000,000 shares authorized and issued at both September 30, 2020 and December 31, 2019Euro deferred shares, $0.01 par value; 4,000,000 shares authorized and issued at both September 30, 2020 and December 31, 201947 45 
Ordinary shares, $0.0001 par value; 1,000,000,000 shares authorized; 230,288,796 and 226,802,609 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectivelyOrdinary shares, $0.0001 par value; 1,000,000,000 shares authorized; 230,288,796 and 226,802,609 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively23 23 
Additional paid-in capital8,894,646
 8,855,810
Additional paid-in capital8,930,209 8,904,692 
Accumulated deficit(9,333,571) (9,124,932)Accumulated deficit(9,487,613)(9,552,214)
Accumulated other comprehensive loss(222,619) (229,229)Accumulated other comprehensive loss(225,148)(219,090)
Total shareholders' deficit$(661,477) $(498,283)Total shareholders' deficit$(782,482)$(866,544)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT$9,834,866
 $10,132,393
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT$9,165,243 $9,389,527 
See accompanying Notes to Condensed Consolidated Financial Statements.

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Table of Contents
ENDO INTERNATIONAL PLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars and shares in thousands, except per share data)
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
2019 2018 2019 20182020201920202019
TOTAL REVENUES, NET$729,426
 $745,466
 $2,149,564
 $2,160,689
TOTAL REVENUES, NET$634,860 $729,426 $2,142,853 $2,149,564 
COSTS AND EXPENSES:       COSTS AND EXPENSES:
Cost of revenues389,165
 412,965
 1,169,282
 1,198,468
Cost of revenues348,077 389,165 1,072,972 1,169,282 
Selling, general and administrative168,329
 163,791
 471,749
 478,615
Selling, general and administrative182,259 168,329 522,285 471,749 
Research and development36,519
 39,683
 96,353
 160,431
Research and development32,055 36,519 94,165 96,353 
Litigation-related and other contingencies, net(14,414) (1,750) (4,093) 15,370
Litigation-related and other contingencies, net1,810 (14,414)(23,938)(4,093)
Asset impairment charges4,766
 142,217
 258,652
 613,400
Asset impairment charges8,412 4,766 106,197 258,652 
Acquisition-related and integration items16,025
 1,288
 (26,983) 13,284
Acquisition-related and integration items, netAcquisition-related and integration items, net(1,407)16,025 17,100 (26,983)
Interest expense, net136,903
 131,847
 404,387
 385,896
Interest expense, net135,648 136,903 397,689 404,387 
Gain on extinguishment of debt—
 —
 (119,828) —
Gain on extinguishment of debt0 0 0 (119,828)
Other expense (income), net16,203
 (1,507) 20,408
 (33,216)
Other (income) expense, netOther (income) expense, net(7,194)16,203 (25,318)20,408 
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX$(24,070) $(143,068) $(120,363) $(671,559)LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAX$(64,800)$(24,070)$(18,299)$(120,363)
INCOME TAX EXPENSE17,361
 3,003
 31,732
 24,729
LOSS FROM CONTINUING OPERATIONS$(41,431)
$(146,071)
$(152,095) $(696,288)
INCOME TAX EXPENSE (BENEFIT)INCOME TAX EXPENSE (BENEFIT)4,174 17,361 (124,516)31,732 
(LOSS) INCOME FROM CONTINUING OPERATIONS(LOSS) INCOME FROM CONTINUING OPERATIONS$(68,974)$(41,431)$106,217 $(152,095)
DISCONTINUED OPERATIONS, NET OF TAX (NOTE 3)(37,984) (27,134) (51,898) (43,273)DISCONTINUED OPERATIONS, NET OF TAX (NOTE 3)(6,913)(37,984)(41,616)(51,898)
NET LOSS$(79,415) $(173,205) $(203,993) $(739,561)
NET LOSS PER SHARE—BASIC:       
NET (LOSS) INCOMENET (LOSS) INCOME$(75,887)$(79,415)$64,601 $(203,993)
NET (LOSS) INCOME PER SHARE—BASIC:NET (LOSS) INCOME PER SHARE—BASIC:
Continuing operations$(0.18) $(0.65) $(0.67) $(3.11)Continuing operations$(0.30)$(0.18)$0.46 $(0.67)
Discontinued operations(0.17) (0.12) (0.23) (0.19)Discontinued operations(0.03)(0.17)(0.18)(0.23)
Basic$(0.35) $(0.77) $(0.90) $(3.30)Basic$(0.33)$(0.35)$0.28 $(0.90)
NET LOSS PER SHARE—DILUTED:       
NET (LOSS) INCOME PER SHARE—DILUTED:NET (LOSS) INCOME PER SHARE—DILUTED:
Continuing operations$(0.18) $(0.65) $(0.67) $(3.11)Continuing operations$(0.30)$(0.18)$0.46 $(0.67)
Discontinued operations(0.17) (0.12) (0.23) (0.19)Discontinued operations(0.03)(0.17)(0.18)(0.23)
Diluted$(0.35) $(0.77) $(0.90) $(3.30)Diluted$(0.33)$(0.35)$0.28 $(0.90)
WEIGHTED AVERAGE SHARES:       WEIGHTED AVERAGE SHARES:
Basic226,598
 224,132
 225,804
 223,829
Basic230,040 226,598 228,985 225,804 
Diluted226,598
 224,132
 225,804
 223,829
Diluted230,040 226,598 233,379 225,804 
See accompanying Notes to Condensed Consolidated Financial Statements.

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ENDO INTERNATIONAL PLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS(LOSS) INCOME (UNAUDITED)
(Dollars in thousands)
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
NET LOSS  $(79,415)   $(173,205)   $(203,993)   $(739,561)
OTHER COMPREHENSIVE (LOSS) INCOME:               
Net unrealized (loss) gain on foreign currency:               
Foreign currency translation (loss) gain arising during the period$(2,515)   $4,735
   $6,610
   $(7,033)  
Less: reclassification adjustments for (gain) loss realized in net loss—
 (2,515) —
 4,735
 —
 6,610
 —
 (7,033)
OTHER COMPREHENSIVE (LOSS) INCOME  $(2,515)   $4,735
   $6,610
   $(7,033)
COMPREHENSIVE LOSS  $(81,930)   $(168,470)   $(197,383)   $(746,594)
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
NET (LOSS) INCOME$(75,887)$(79,415)$64,601 $(203,993)
OTHER COMPREHENSIVE INCOME (LOSS):
Net unrealized gain (loss) on foreign currency$2,755 $(2,515)$(6,058)$6,610 
Total other comprehensive income (loss)$2,755 $(2,515)$(6,058)$6,610 
COMPREHENSIVE (LOSS) INCOME$(73,132)$(81,930)$58,543 $(197,383)
See accompanying Notes to Condensed Consolidated Financial Statements.

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ENDO INTERNATIONAL PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
Nine Months Ended September 30,
20202019
OPERATING ACTIVITIES:
Net income (loss)$64,601 $(203,993)
Adjustments to reconcile Net income (loss) to Net cash provided by operating activities:
Depreciation and amortization391,463 468,409 
Share-based compensation33,452 48,909 
Amortization of debt issuance costs and discount12,058 13,799 
Deferred income taxes(4,147)(2,452)
Change in fair value of contingent consideration17,100 (26,983)
Gain on extinguishment of debt0 (119,828)
Asset impairment charges106,197 258,652 
Gain on sale of business and other assets(16,730)(3,101)
Changes in assets and liabilities which (used) provided cash:
Accounts receivable(8,631)58,630 
Inventories(33,062)(32,761)
Prepaid and other assets(18,455)15,577 
Accounts payable, accrued expenses and other liabilities(147,176)(378,547)
Income taxes payable/receivable, net(107,227)22,933 
Net cash provided by operating activities$289,443 $119,244 
INVESTING ACTIVITIES:
Purchases of property, plant and equipment, excluding capitalized interest(52,692)(47,812)
Capitalized interest payments(1,915)(3,207)
Product acquisition costs and license fees(2,000)0 
Proceeds from sale of business and other assets, net6,377 4,780 
Other investing activities0 912 
Net cash used in investing activities$(50,230)$(45,327)
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 Nine Months Ended September 30,
 2019 2018
OPERATING ACTIVITIES:   
Net loss$(203,993) $(739,561)
Adjustments to reconcile Net loss to Net cash provided by operating activities:




Depreciation and amortization468,409

556,503
Inventory step-up—

261
Share-based compensation48,909

43,722
Amortization of debt issuance costs and discount13,799

15,289
Deferred income taxes(2,452)
13,118
Change in fair value of contingent consideration(26,983)
11,731
Gain on extinguishment of debt(119,828)
—
Asset impairment charges258,652

613,400
Gain on sale of business and other assets(3,101)
(29,859)
Changes in assets and liabilities which provided (used) cash:




Accounts receivable58,630

31,634
Inventories(32,761)
52,499
Prepaid and other assets15,577

993
Accounts payable, accrued expenses and other liabilities(378,547) (367,979)
Income taxes payable/receivable22,933

(4,759)
Net cash provided by operating activities$119,244

$196,992
INVESTING ACTIVITIES:   
Purchases of property, plant and equipment, excluding capitalized interest(47,812) (56,544)
Capitalized interest payments(3,207) (2,569)
Proceeds from sale of business and other assets, net4,780
 43,753
Other investing activities912
 1,678
Net cash used in investing activities$(45,327) $(13,682)
FINANCING ACTIVITIES:   
Proceeds from issuance of notes, net1,483,125
 —
Repayments of notes(1,501,788) —
Repayments of term loans(25,614) (25,614)
Proceeds from draw of revolving debt300,000
 —
Repayments of other indebtedness(7,826) (3,921)
Payments for debt issuance and extinguishment costs(6,414) —
Payments for contingent consideration(11,846) (28,664)
Payments of tax withholding for restricted shares(10,077) (5,082)
Proceeds from exercise of options4
 473
Net cash provided by (used in) financing activities$219,564
 $(62,808)
Effect of foreign exchange rate780
 (608)
NET INCREASE IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS$294,261
 $119,894
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, BEGINNING OF PERIOD1,476,837
 1,311,014
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, END OF PERIOD$1,771,098
 $1,430,908
SUPPLEMENTAL INFORMATION:   
Cash paid into Qualified Settlement Funds for mesh legal settlements$185,745
 $216,770
Cash paid out of Qualified Settlement Funds for mesh legal settlements$266,958
 $248,485
Other cash distributions for mesh legal settlements$13,334
 $17,114
Nine Months Ended September 30,
20202019
FINANCING ACTIVITIES:
Proceeds from issuance of notes, net0 1,483,125 
Repayments of notes(57,649)(1,501,788)
Repayments of term loans(25,612)(25,614)
Proceeds from draw of revolving debt0 300,000 
Repayments of other indebtedness(3,626)(7,826)
Payments for debt issuance and extinguishment costs0 (6,414)
Payments for contingent consideration(3,535)(11,846)
Payments of tax withholding for restricted shares(7,935)(10,077)
Proceeds from exercise of options0 4 
Net cash (used in) provided by financing activities$(98,357)$219,564 
Effect of foreign exchange rate(458)780 
NET INCREASE IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS$140,398 $294,261 
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, BEGINNING OF PERIOD1,720,388 1,476,837 
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS, END OF PERIOD$1,860,786 $1,771,098 
SUPPLEMENTAL INFORMATION:
Cash paid into Qualified Settlement Funds for mesh legal settlements$0 $185,745 
Cash paid out of Qualified Settlement Funds for mesh legal settlements$107,225 $266,958 
Other cash distributions for mesh legal settlements$26,559 $13,334 
See accompanying Notes to Condensed Consolidated Financial Statements.

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ENDO INTERNATIONAL PLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 20192020
NOTE 1. BASIS OF PRESENTATION
Endo International plc is an Ireland-domiciled global specialty pharmaceutical company focused on generic and branded pharmaceuticals. We aim to be the premier partner to healthcare professionals and payment providers, delivering an innovative suite of generic and branded drugs to meet patients’ needs.
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 September 30, 20192020 and the results of its operations and its cash flows for the periods presented. Operating results for the three and nine months ended September 30, 20192020 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, 20182019 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 continued magnitude and duration of the COVID-19 pandemic, the extent to which it will impact our estimated future financial results, worldwide macroeconomic conditions including interest rates, employment rates, consumer spending, health insurance coverage, the speed of the anticipated recovery and governmental and business reactions to the pandemic, including any possible re-initiation of shutdowns or renewed restrictions, 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, 20182019
Significant changes to our significant accounting policies since December 31, 20182019 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, Leases326, 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 September 30, 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 90% and 88% of our gross trade accounts receivable balances represent amounts due from three customers (Cardinal Health, Inc., McKesson Corporation and AmerisourceBergen Corporation) at September 30, 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 September 30, 2020 or December 31, 2019, nor were the changes to the allowance during any of the periods presented.
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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 September 30, 2019” section below. ASC 842 applies to a number of arrangements to which the Company is party.
Whenever the Company enters into a new arrangement, it must determine, at the inception date, whether the arrangement is or contains a lease. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset.
If a lease exists, the Company must then determine the separate lease and nonlease components of the arrangement. Each right to use an underlying asset conveyed by a lease arrangement should generally be considered a separate lease component if it both: (i) can benefit the Company without depending on other resources not readily available to the Company and (ii) does not significantly affect and is not significantly affected by other rights of use conveyed by the lease. Aspects of a lease arrangement that transfer other goods or services to the Company but do not meet the definition of lease components are considered nonlease components. The consideration owed by the Company pursuant to a lease arrangement is generally allocated to each lease and nonlease components for accounting purposes. However, the Company has elected, for all of its leases, to not separate lease and nonlease components. Each lease component is accounted for separately from other lease components, but together with the associated nonlease components.
For each lease, the Company must then determine the lease term, the present value of lease payments and the classification of the lease as either an operating or finance lease.
The lease term is the period of the lease not cancellable by the Company, together with periods covered by: (i) renewal options the Company is reasonably certain to exercise, (ii) termination options the Company is reasonably certain not to exercise and (iii) renewal or termination options that are controlled by the lessor.

The present value of lease payments is calculated based on:
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 September 30, 20192020
In August 2018,June 2016, the Financial Accounting Standards Board (FASB) issued ASUAccounting Standards Update (ASU) No. 2018-13,2016-13, “Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement”Measurement of Credit Losses on Financial Instruments (ASU 2018-13)2016-13). 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 September 30, 2019
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (ASU 2016-02) to establish a comprehensive new accounting standard for leases. ASU 2016-02,2016-13, together with a series of subsequently-issued related ASUs, has been codified in ASC 842.326. ASC 842 supersedes the lease accounting326 establishes new requirements in Accounting Standards Codification Topic 840, Leases (ASC 840), and requires lesseesfor 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 receivable. The Company adopted ASC 842326 using thea 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 in326 did not have a net increase to Accumulated deficit of $4.6 million.material impact on the Company’s Condensed Consolidated Financial Statements.
In August 2018, the FASB issued ASU 2018-15. ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (including hosting arrangements where a software license is deemed to exist). ASU 2018-15 also requires the customer to expense any such capitalized implementation costs over the term of the hosting arrangement and to apply the existing impairment guidance for long-lived assets to such capitalized costs. Additionally, ASU 2018-15 sets forth required disclosures and guidance on financial statement classification for expenses, cash flows and balances related to implementation costs within the scope of ASU 2018-15. The Company early adopted this guidance during the first quarter of 2019 on a prospective basis.
NOTE 3. DISCONTINUED OPERATIONS
Astora
The operating results of the Company’s Astora business, which the BoardCompany’s board of Directorsdirectors (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 and nine months ended September 30, 20192020 and 20182019 (in thousands):
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
Litigation-related and other contingencies, net$30,000
 $19,000
 $30,400
 $19,000
Loss from discontinued operations before income taxes$(37,984) $(27,134) $(51,898) $(43,273)
Income tax benefit$—
 $—
 $—
 $—
Discontinued operations, net of tax$(37,984) $(27,134) $(51,898) $(43,273)

Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Litigation-related and other contingencies, net$0 $30,000 $28,351 $30,400 
Loss from discontinued operations before income taxes$(7,134)$(37,984)$(47,158)$(51,898)
Income tax benefit$(221)$0 $(5,542)$0 
Discontinued operations, net of tax$(6,913)$(37,984)$(41,616)$(51,898)
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 $51.9$41.6 million and $43.3$51.9 million for the nine months ended September 30, 20192020 and 2018,2019, respectively, and the impact of cash activity related to vaginal mesh cases. There were 0 material net cash flows related to Astora discontinued investing activities during the nine months ended September 30, 20192020 or 2018.2019. There was 0 depreciation or amortization during the nine months ended September 30, 20192020 or 20182019 related to Astora.

NOTE 4. RESTRUCTURING
Restructuring charges related to nonretirement postemployment benefits that fall under Accounting Standards Codification Topic 712, Compensation—Nonretirement Postemployment Benefits (ASC 712) are recognized when the severance liability is determined to be probable of being paid and reasonably estimable. One-time benefits related to restructurings, if any, are recognized in accordance with Accounting Standards Codification Topic 420, Exit or Disposal Cost Obligations (ASC 420) when the programs are approved, the affected employees are identified, the terms of the arrangement are established, it is determined changes to the plan are unlikely to occur and the arrangements are communicated to employees. Other restructuring costs are generally expensed as incurred.
Set forth below are disclosures relating to restructuring initiatives that resulted in material expenses or cash expenditures during any of the three- or nine-month periods ended September 30, 2020 and 2019 or 2018 or had material restructuring liabilities at either September 30, 20192020 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.2019.
2017 Generic Pharmaceuticals2020 Restructuring Initiative
On July 21, 2017,November 5, 2020, the Company announced that after completing a comprehensive reviewthe initiation of its manufacturing network, it would be ceasingseveral strategic actions to further optimize the Company’s operations and closingincrease overall efficiency (the 2020 Restructuring Initiative). These actions are expected to generate significant cost savings that will be reinvested, among other things, to support the Company’s key strategic priority to expand and enhance its product portfolio. These actions include the following:
•Optimizing the Company’s generic retail business cost structure by exiting manufacturing sites in Irvine, California and Chestnut Ridge, New York, as well as active pharmaceutical ingredient manufacturing and distribution facilitiesbioequivalence study sites in Huntsville, Alabama (the 2017 Generic Pharmaceuticals Restructuring Initiative).India. The closure of the facilities wassites will be exited in a phased approach that is expected to be completed in June 2018the second half of 2022. Certain products currently manufactured at the Irvine and Chestnut Ridge sites are expected to be transferred to other internal and external sites within the facilities were sold in the fourth quarterCompany’s manufacturing network.
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Table of 2018 for net cash proceeds of $23.1 million, resulting in a net gain on disposal of $12.5 million.Contents
•Improving operating flexibility and reducing general and administrative costs by transferring certain transaction processing activities to third-party global business process service providers.
•Increasing organizational effectiveness by further integrating the Company’s commercial, operations and research and development functions, respectively, to support the Company’s key strategic priorities.
As a result of the 20172020 Restructuring Initiative, the Company’s global workforce is expected to be reduced by approximately 560 net full-time positions. The Company expects to realize annualized pre-tax cash savings (without giving effect to the costs described below) of approximately $85 million to $95 million by the first half of 2023, primarily related to reductions in Cost of revenues of approximately $65 million to $70 million and other expenses, including Selling, general and administrative and Research and development expenses, of approximately $20 million to $25 million.
As a result of the 2020 Restructuring Initiative, the Company expects to incur total pre-tax restructuring-related expenses of approximately $163 million to $183 million, of which approximately $125 million to $140 million relates to the Generic Pharmaceuticals segment, with the remaining amounts relating to our other segments and certain corporate unallocated costs. These estimated restructuring charges consist of accelerated depreciation charges of approximately $56 million to $66 million, asset impairment charges of approximately $7 million, employee separation, continuity and other benefit-related costs of approximately $85 million to $90 million and certain other restructuring costs of approximately $15 million to $20 million. Cash outlays associated with the 2020 Restructuring Initiative, are expected to be approximately $100 million to $110 million and consist primarily of employee separation, continuity and other benefit-related costs and certain other restructuring costs. The Company anticipates these actions will be substantially completed by the end of 2022, with substantially all cash payments made by then.
As a result of the 2020 Restructuring Initiative, the Company incurred the following pre-tax net charges during the three and nine months ended September 30, 2020 (in thousands):
Three Months Ended September 30, 2020Nine Months Ended September 30, 2020
Accelerated depreciation charges$6,291 $14,676 
Asset impairment charges7,391 7,391 
Employee separation, continuity and other benefit-related costs (1)53,647 53,647 
Total$67,329 $75,714 
__________
(1)As of $4.8September 30, 2020, all employee-related costs have been recognized in accordance with ASC 712.
During the three and nine months ended September 30, 2020, these pre-tax net charges were primarily attributable to our Generic Pharmaceuticals segment, including $57.8 million and $59.6$66.2 million during the three and nine months ended September 30, 2018,2020, respectively. During the three months endedThe remaining amounts related to our other segments and certain corporate unallocated costs.
As of September 30, 2018, the expenses consisted2020, cumulative amounts incurred to date include accelerated depreciation charges of approximately $14.7 million, asset impairment charges related to identifiable intangible assets and certain operating lease assets of approximately $7.4 million and employee separation, retentioncontinuity and other benefit-related costs of $2.1approximately $53.6 million. Of these amounts, approximately $66.2 million and certain other charges of $2.7 million. During the nine months ended September 30, 2018, the expenses consisted of charges relatingwere attributable to accelerated depreciation of $35.2 million, employee separation, retention and other benefit-related costs of $9.8 million, asset impairment charges of $2.6 million and certain other charges of $12.0 million. These charges are included in the Generic Pharmaceuticals segment. Accelerated depreciationsegment, with the remaining amounts relating to our other segments 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.certain corporate unallocated costs.
The Company did not incur any material pre-tax charges as a result of the 2017 Generic Pharmaceuticals Restructuring Initiative duringDuring the three and nine months ended September 30, 2019 and does not expect to incur additional material2020, the pre-tax restructuring-related expenses related to this initiative.
The liabilitynet charges related to the 2017 Generic Pharmaceuticals2020 Restructuring Initiative were included in our Condensed Consolidated Statements of Operations as follows (in thousands):
Three Months Ended September 30, 2020Nine Months Ended September 30, 2020
Cost of revenues$36,172 $42,198 
Selling, general and administrative20,185 22,130 
Research and development3,581 3,995 
Asset impairment charges7,391 7,391 
Total$67,329 $75,714 
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Changes to the liability for the 2020 Restructuring Initiative during the nine months ended September 30, 2020 were as follows (in thousands):
Employee Separation, Continuity and Other Benefit-Related CostsTotal
Liability balance as of December 31, 2019$0 $0 
Net charges53,647 53,647 
Liability balance as of September 30, 2020$53,647 $53,647 
Of the liability at September 30, 2020, $29.5 million is primarilyclassified as current and is included in Accounts payable and accrued expenses in the Condensed Consolidated Balance Sheets. Changes to this liability duringSheets, with the nine months ended September 30, 2019 wereremaining amount classified 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
 $4,287
Cash distributions(4,239) (48) (4,287)
Liability balance as of September 30, 2019$—
 $—
 $—

January 2018 Restructuring Initiative
In January 2018, the Company initiated a restructuring initiative that included a reorganization of its Generic Pharmaceuticals segment’s researchnoncurrent 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 $23.8 million during the nine months ended September 30, 2018. The expenses primarily consisted of employee separation, retention and other benefit-related costs of $22.1 million and certain other charges of $1.7 million. Of the total charges incurred, $10.8 million are included in the Generic Pharmaceuticals segment, $5.2 million are included in Corporate unallocated costs, $4.0 million are included in the Sterile Injectables segment, $3.1 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.Other liabilities.
The Company did not incur any material pre-tax charges as a result of the January 2018 Restructuring Initiative during any of the other periods presented 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 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’sSegment adjusted income (loss) from continuing operations before income tax, which we define as Loss from continuing operations before income tax and before certain upfront and milestone payments to partners; acquisition-related and integration items, including transaction costs and changes in the fair value of contingent consideration; cost reduction and integration-related initiatives such as separation benefits, retentioncontinuity payments, other exit costs and certain costs associated with integrating an acquired company’scompany'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; debt modification costs; 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 (loss) 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 September 30, 2019, certain legal costs of $14.4 million and $0.1 million have been excluded from our Branded Pharmaceuticals and Generic Pharmaceuticals segments, respectively, and for the nine months ended September 30, 2019, certain legal costs of $49.3 million and $1.0 million have been excluded from our Branded Pharmaceuticals and Generic Pharmaceuticals segments, respectively, resulting in increases to the Segment adjusted income (loss) from continuing operations before income tax for these segments. This change had no impact on our Total consolidated 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 consolidatedTotal segment adjusted income (loss) 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®, LIDODERMEDEX®, VOLTAREN® Gel, EDEX®, FORTESTA® Gel and TESTIMLIDODERM®, 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(the authorized generic of Merck Sharp & Dohme Corp’sCorp.’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.
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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’sThe key products of this segment serve growingvarious 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 and nine months ended September 30, 20192020 and 20182019 (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
2019 2018 2019 20182020201920202019
Net revenues from external customers:       Net revenues from external customers:
Branded Pharmaceuticals$217,313
 $220,100
 $629,851
 $632,972
Branded Pharmaceuticals$223,682 $217,313 $557,276 $629,851 
Sterile Injectables263,635
 237,150
 777,963
 670,847
Sterile Injectables251,393 263,635 906,997 777,963 
Generic Pharmaceuticals218,012
 257,969
 654,322
 748,445
Generic Pharmaceuticals135,508 218,012 602,670 654,322 
International Pharmaceuticals (1)30,466
 30,247
 87,428
 108,425
International Pharmaceuticals (1)24,277 30,466 75,910 87,428 
Total net revenues from external customers$729,426
 $745,466
 $2,149,564
 $2,160,689
Total net revenues from external customers$634,860 $729,426 $2,142,853 $2,149,564 
Adjusted income from continuing operations before income tax:       
Segment adjusted income (loss) from continuing operations before income tax:Segment adjusted income (loss) from continuing operations before income tax:
Branded Pharmaceuticals$91,444

$84,891

$253,417

$262,454
Branded Pharmaceuticals$120,368 $105,864 $267,964 $302,682 
Sterile Injectables197,974

170,329

566,345

513,082
Sterile Injectables190,498 197,974 696,147 566,345 
Generic Pharmaceuticals29,433

82,555

128,738

247,137
Generic Pharmaceuticals(13,428)29,569 91,293 129,702 
International Pharmaceuticals11,511

13,377

35,053

45,594
International Pharmaceuticals10,679 11,511 34,180 35,053 
Total segment adjusted income from continuing operations before income tax$330,362

$351,152

$983,553

$1,068,267
Total segment adjusted income (loss) from continuing operations before income taxTotal segment adjusted income (loss) from continuing operations before income tax$308,117 $344,918 $1,089,584 $1,033,782 
__________
(1)Revenues generated by our International Pharmaceuticals segment are primarily attributable to external customers located in Canada.
(1)Revenues generated by our International Pharmaceuticals segment are primarily attributable to external customers located in Canada.
There were no material revenues from external customers attributed to an individual country outside of the U.S. during any of the periods presented. There were no material tangible long-lived assets in an individual country other than the U.S. as
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Table of September 30, 2019 or December 31, 2018.Contents
The table below provides reconciliations of our Total consolidated loss from continuing operations before income tax, which is determined in accordance with U.S. GAAP, to our totalTotal segment adjusted income (loss) from continuing operations before income tax for the three and nine months ended September 30, 20192020 and 20182019 (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
2019 2018 2019 20182020201920202019
Total consolidated loss from continuing operations before income tax$(24,070) $(143,068) $(120,363) $(671,559)Total consolidated loss from continuing operations before income tax$(64,800)$(24,070)$(18,299)$(120,363)
Interest expense, net136,903
 131,847
 404,387
 385,896
Interest expense, net135,648 136,903 397,689 404,387 
Corporate unallocated costs (1)37,891
 49,187
 124,351
 144,693
Corporate unallocated costs (1)39,976 37,891 116,888 124,351 
Amortization of intangible assets131,932
 161,275
 417,949
 471,662
Amortization of intangible assets104,066 131,932 325,801 417,949 
Inventory step-up—
 71
 —
 261
Upfront and milestone payments to partners1,672
 4,731
 4,055
 43,027
Upfront and milestone payments to partners275 1,672 2,469 4,055 
Retention and separation benefits and other cost reduction initiatives (2)11,023
 4,001
 15,172
 82,141
Continuity and separation benefits and other cost reduction initiatives (2)Continuity and separation benefits and other cost reduction initiatives (2)67,692 11,023 100,356 15,172 
Certain litigation-related and other contingencies, net (3)(14,414) (1,750) (4,093) 15,370
Certain litigation-related and other contingencies, net (3)1,810 (14,414)(23,938)(4,093)
Certain legal costs (4)Certain legal costs (4)18,343 14,556 51,884 50,229 
Asset impairment charges (4)(5)4,766
 142,217
 258,652
 613,400
8,412 4,766 106,197 258,652 
Acquisition-related and integration items (5)16,025
 1,288
 (26,983) 13,284
Acquisition-related and integration items, net (6)Acquisition-related and integration items, net (6)(1,407)16,025 17,100 (26,983)
Gain on extinguishment of debt—
 —
 (119,828) —
Gain on extinguishment of debt0 0 0 (119,828)
Foreign currency impact related to the remeasurement of intercompany debt instruments(922) 1,528
 2,874
 (1,560)Foreign currency impact related to the remeasurement of intercompany debt instruments1,663 (922)(2,426)2,874 
Other, net (6)29,556
 (175) 27,380
 (28,348)
Total segment adjusted income from continuing operations before income tax$330,362
 $351,152
 $983,553
 $1,068,267
Other, net (7)Other, net (7)(3,561)29,556 15,863 27,380 
Total segment adjusted income (loss) from continuing operations before income taxTotal segment adjusted income (loss) from continuing operations before income tax$308,117 $344,918 $1,089,584 $1,033,782 
__________
(1)Amounts include certain corporate overhead costs, such as headcount, facility and corporate litigation expenses and certain other income and expenses.

(1)Amounts include certain corporate overhead costs, such as headcount, facility and corporate litigation expenses and certain other income and expenses.
(2)Amounts for both the three and nine months ended September 30, 2019 include $6.7 million of costs associated with retention bonuses awarded to certain senior management of the Company. Other amounts during each of the periods presented related primarily to our restructuring initiatives. Such amounts included employee separation costs of $2.2 million during the nine months ended September 30, 2019 and other charges of $4.4 million and $6.3 million during the three and nine months ended September 30, 2019, respectively. During the three and nine months ended September 30, 2018, such amounts included employee separation costs of $2.1 million and $32.7 million, respectively, charges to increase excess inventory reserves of $0.2 million and $2.8 million, respectively, and other charges of $1.7 million and $11.4 million, respectively. Also included in the amount for the nine months ended September 30, 2018 is accelerated depreciation of $35.2 million. See Note 4. Restructuring for discussion of our material restructuring initiatives.
(3)
(2)Included within this line are costs associated with certain continuity and transitional compensation arrangements for certain senior management of the Company, including $4.3 million and $22.2 million during the three and nine months ended September 30, 2020, respectively, and $6.7 million during both the three and nine months ended September 30, 2019. Other amounts primarily relate to the 2020 Restructuring Initiative and certain other cost reduction initiatives, including employee separation, continuity and other benefit-related costs of $53.6 million, accelerated depreciation of $6.3 million and miscellaneous charges of $3.4 million during the three months ended September 30, 2020; employee separation, continuity and other benefit-related costs of $53.6 million, accelerated depreciation of $14.7 million and miscellaneous charges of $9.8 million during the nine months ended September 30, 2020; miscellaneous charges of $4.3 million during the three months ended September 30, 2019; and employee separation, continuity and other benefit-related costs of $2.2 million and miscellaneous charges of $6.3 million during the nine months ended September 30, 2019. Refer to Note 4. Restructuring for further discussion of the 2020 Restructuring Initiative.
(3)Amounts include adjustments to our accruals for litigation-related settlement charges and certain settlement proceeds related to suits filed by our subsidiaries. Our material legal proceedings and other contingent matters are described in more detail in Note 13. Commitments and Contingencies.
(4)Amounts relate to opioid-related legal expenses.
(5)Amounts primarily relate to charges to impair goodwill and intangible assets and operating lease right-of-use assets as further described in Note 9. Goodwill and Other Intangibles and Note 8. Leases, respectively.
(6)Amounts primarily relate to changes in the fair value of contingent consideration.
(7)The amount during the nine months ended September 30, 2020 includes $31.1 million of third-party fees incurred in connection with the June 2020 Refinancing Transactions, which were accounted for as debt modifications. Refer to Note 12. Debt for additional information. Amounts during the three and nine months ended September 30, 2019 include $17.5 million for contract termination costs incurred as a result of certain product discontinuation activities in our International Pharmaceuticals segment and $14.1 million for a premium associated with an extended reporting period endorsement on an expiring insurance program. Remaining amounts in this line primarily relate to gains on sales of businesses and other assets, as further described in Note 16. Other (Income) Expense, Net.
(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 during the three and nine months ended September 30, 2019 include $17.5 million for contract termination costs incurred as a result of certain product discontinuation activities in our International Pharmaceuticals segment and $14.1 million for a premium associated with an extended reporting period endorsement on an expiring insurance program. The remaining amounts primarily relate to gains on sales of businesses and other assets.
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
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During the three and nine months ended September 30, 2020 and 2019, the Company disaggregatesdisaggregated 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 September 30,
Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,

2019
2018
2019
20182020201920202019
Branded Pharmaceuticals:       Branded Pharmaceuticals:
Specialty Products:       Specialty Products:
XIAFLEX®$82,756
 $64,214
 $226,118
 $184,855
XIAFLEX®$88,167 $82,756 $211,022 $226,118 
SUPPRELIN® LA20,772
 20,408
 66,542
 60,948
SUPPRELIN® LA28,229 20,772 63,344 66,542 
Other Specialty (1)28,470
 27,614
 78,397
 69,226
Other Specialty (1)23,724 28,470 68,795 78,397 
Total Specialty Products$131,998
 $112,236
 $371,057
 $315,029
Total Specialty Products$140,120 $131,998 $343,161 $371,057 
Established Products:       Established Products:
PERCOCET®$28,561
 $30,730
 $88,199
 $93,539
PERCOCET®$27,508 $28,561 $82,789 $88,199 
TESTOPEL®13,236
 15,962
 40,830
 44,976
TESTOPEL®18,068 13,236 26,877 40,830 
Other Established (2)43,518
 61,172
 129,765
 179,428
Other Established (2)37,986 43,518 104,449 129,765 
Total Established Products$85,315
 $107,864
 $258,794
 $317,943
Total Established Products$83,562 $85,315 $214,115 $258,794 
Total Branded Pharmaceuticals (3)$217,313
 $220,100
 $629,851
 $632,972
Total Branded Pharmaceuticals (3)$223,682 $217,313 $557,276 $629,851 
Sterile Injectables:       Sterile Injectables:
VASOSTRICT®$129,691

$112,333

$384,854

$332,387
VASOSTRICT®$155,412 $129,691 $572,530 $384,854 
ADRENALIN®40,311

35,460

133,468

101,858
ADRENALIN®30,662 40,311 120,335 133,468 
Ertapenem for injectionErtapenem for injection16,784 21,853 46,648 79,619 
APLISOL®28,085
 15,992
 55,996
 49,064
APLISOL®9,443 28,085 25,821 55,996 
Ertapenem for injection21,853
 25,798
 79,619
 25,798
Other Sterile Injectables (4)43,695

47,567

124,026

161,740
Other Sterile Injectables (4)39,092 43,695 141,663 124,026 
Total Sterile Injectables (3)$263,635

$237,150

$777,963

$670,847
Total Sterile Injectables (3)$251,393 $263,635 $906,997 $777,963 
Total Generic Pharmaceuticals (5)$218,012
 $257,969
 $654,322
 $748,445
Total Generic Pharmaceuticals (5)$135,508 $218,012 $602,670 $654,322 
Total International Pharmaceuticals (6)$30,466
 $30,247
 $87,428
 $108,425
Total International Pharmaceuticals (6)$24,277 $30,466 $75,910 $87,428 
Total revenues, net$729,426
 $745,466
 $2,149,564
 $2,160,689
Total revenues, net$634,860 $729,426 $2,142,853 $2,149,564 
__________
(1)
(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 within Other Specialty are NASCOBAL® Nasal Spray and AVEED®.
(2)Products included within Other Established include, but are not limited to, EDEX® and LIDODERM®.
(3)Individual products presented above represent the top two performing products in each product category for either the three or nine months ended September 30, 2020 and/or any product having revenues in excess of $25 million during any quarterly period in 2020 or 2019.
(4)Products included within Other Sterile Injectables include ephedrine sulfate 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 and nine months ended September 30, 2019, colchicine tablets (the authorized generic of Takeda Pharmaceuticals U.S.A., Inc.’s (Takeda) Colcrys®), which launched in July 2018, made up 7% and 6% of consolidated total revenues, respectively. No other individual product within this segment has exceeded 5% of consolidated total revenues for the Established Products portfolio for all periods presented.
(6)The International Pharmaceuticals segment, which accounted for less than 5% of consolidated total revenues for each of the periods presented, includes a variety of specialty pharmaceutical products sold outside the U.S., primarily in Canada through our operating company Paladin.
(2)
Products included within Other Established include, but are not limited to, LIDODERM®, VOLTAREN® Gel, EDEX®, FORTESTA® Gel and TESTIM®, including the authorized generics of FORTESTA® Gel and TESTIM®.
(3)Individual products presented above represent the top two performing products in each product category for either the three or nine months ended September 30, 2019 and/or any product having revenues in excess of $25 million during any quarterly period in 2019 or 2018.
(4)Products included within Other Sterile Injectables include ephedrine sulfate 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 and nine months ended September 30, 2019, colchicine tablets, the authorized generic of Takeda Pharmaceuticals U.S.A., Inc.’s Colcrys®, which launched in July 2018, made up 7% and 6% of consolidated total revenue, respectively. 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% of consolidated total revenues during both the three and nine months ended September 30, 2019 and 4% and 5% of consolidated total revenues during the three and nine months ended September 30, 2018, respectively, includes a variety of specialty pharmaceutical products sold outside the U.S., primarily in Canada through our operating company Paladin.
NOTE 6. FAIR VALUE MEASUREMENTS
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.
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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, equity 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.
Restricted Cash and Cash Equivalents
The following table presents current and noncurrent restricted cash and cash equivalent balances at September 30, 20192020 and December 31, 20182019 (in thousands):
Condensed Consolidated Balance Sheets Line ItemsSeptember 30, 2020December 31, 2019
Restricted cash and cash equivalents—currentRestricted cash and cash equivalents$162,648 $247,457 
Restricted cash and cash equivalents—noncurrentOther assets18,400 18,400 
Total restricted cash and cash equivalents$181,048 $265,857 
 September 30, 2019 December 31, 2018
Restricted cash and cash equivalents—current portion (1)$222,491
 $305,368
Restricted cash and cash equivalents—noncurrent portion (2)22,357
 22,356
Restricted cash and cash equivalents—total (3)$244,848
 $327,724
__________
(1)These amounts are reported in our Condensed Consolidated Balance Sheets as RestrictedThe restricted cash and cash equivalents amounts primarily relate to litigation-related matters, including approximately $136.3 million and $242.8 million held in Qualified Settlement Funds (QSFs) for mesh-related matters at September 30, 2020 and December 31, 2019, respectively. See Note 13. Commitments and Contingencies for further information about mesh-related and cash equivalents.
(2)These amounts are reported in our Condensed Consolidated Balance Sheets as Other assets.
(3)Approximately $221.6 million and $299.7 million of our restricted cash and cash equivalents are held in qualified settlement funds (QSFs) for mesh-related matters at September 30, 2019 and December 31, 2018, respectively. The remaining amount of restricted cash and cash equivalents at September 30, 2019 primarily relates to other litigation-related matters. Additionally, at September 30, 2020, approximately $25.0 million of restricted cash and cash equivalents related to certain insurance-related matters. See Note 13. 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.
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. ChangesThe estimates of fair value are uncertain and changes in any of thesethe estimated inputs used as of the date of this report could have resulted in significant adjustments to fair value. See the “Recurring“Recurring Fair Value Measurements”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 September 30, 20192020 and December 31, 20182019 were as follows (in thousands):
Fair Value Measurements at September 30, 2020 using:
Level 1 InputsLevel 2 InputsLevel 3 InputsTotal
Assets:
Money market funds$628,875 $0 $0 $628,875 
Liabilities:
Acquisition-related contingent consideration—current$0 $0 $9,665 $9,665 
Acquisition-related contingent consideration—noncurrent$0 $0 $28,044 $28,044 
Fair Value Measurements at December 31, 2019 using:
Level 1 InputsLevel 2 InputsLevel 3 InputsTotal
Assets:
Money market funds$427,033 $0 $0 $427,033 
Liabilities:
Acquisition-related contingent consideration—current$0 $0 $6,534 $6,534 
Acquisition-related contingent consideration—noncurrent$0 $0 $23,123 $23,123 
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 Fair Value Measurements at September 30, 2019 using:
 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total
Assets:       
Money market funds$748,441
 $—
 $—
 $748,441
Liabilities:       
Acquisition-related contingent consideration—current$—
 $—
 $20,974
 $20,974
Acquisition-related contingent consideration—noncurrent$—
 $—
 $38,520
 $38,520
 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
 $—
 $—
 $137,215
Liabilities:       
Acquisition-related contingent consideration—current$—
 $—
 $36,514
 $36,514
Acquisition-related contingent consideration—noncurrent$—
 $—
 $80,189
 $80,189

At September 30, 20192020 and December 31, 2018,2019, money market funds include $54.6$30.2 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. Commitments and Contingencies for further discussion of our product liability cases. At September 30, 20192020 and December 31, 2018,2019, the differences between the amortized cost and the fair value of our money market funds 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 is measured at fair value on a recurring basis using significant unobservable inputs (Level 3), for the three and nine months ended September 30, 20192020 and 20182019 (in thousands):
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
Beginning of period$52,930
 $152,098
 $116,703
 $190,442
Amounts settled(9,376) (24,564) (30,541) (73,298)
Changes in fair value recorded in earnings16,025
 769
 (26,983) 11,731
Effect of currency translation(85) 167
 315
 (405)
End of period$59,494
 $128,470
 $59,494
 $128,470

Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Beginning of period$42,057 $52,930 $29,657 $116,703 
Amounts settled(3,103)(9,376)(8,785)(30,541)
Changes in fair value recorded in earnings(1,407)16,025 17,100 (26,983)
Effect of currency translation162 (85)(263)315 
End of period$37,709 $59,494 $37,709 $59,494 
At September 30, 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 11.8%), 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 nine months ended September 30, 20192020 by acquisition (in thousands):
Balance as of December 31, 2018 Changes in Fair Value Recorded in Earnings Amounts Settled and Other Balance as of September 30, 2019Balance as of December 31, 2019Changes in Fair Value Recorded in EarningsAmounts Settled and OtherBalance as of September 30, 2020
Auxilium acquisition$14,157
 $1,086
 $(388) $14,855
Auxilium acquisition$13,207 $4,223 $(1,644)$15,786 
Lehigh Valley Technologies, Inc. acquisitions34,700
 10,566
 (14,466) 30,800
Lehigh Valley Technologies, Inc. acquisitions6,800 11,950 (5,250)13,500 
VOLTAREN® Gel acquisition (1)56,240
 (37,395) (14,601) 4,244
Other11,606
 (1,240) (771) 9,595
Other9,650 927 (2,154)8,423 
Total$116,703
 $(26,983) $(30,226) $59,494
Total$29,657 $17,100 $(9,048)$37,709 

__________
(1)The change in fair value recorded in earnings includes the impact of certain competitive events occurring during the nine months ended September 30, 2019.
Nonrecurring Fair Value Measurements
The Company’s financial assets and liabilities measured at fair value on a nonrecurring basis during the nine months ended September 30, 20192020 were as follows (in thousands):
 Fair Value Measurements during the Nine Months Ended September 30, 2019 (1) using: Total Expense for the Nine Months Ended September 30, 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
 $(104,660)
Certain property, plant and equipment—
 —
 —
 (2,884)
Total$—
 $—
 $41,839
 $(107,544)

Fair Value Measurements during the Nine Months Ended September 30, 2020 (1) using:Total Expense for the Nine Months Ended September 30, 2020
Level 1 InputsLevel 2 InputsLevel 3 Inputs
Intangible assets, excluding goodwill (2)$0 $0 $24,377 $(65,771)
Certain property, plant and equipment0 0 0 (1,248)
Operating lease right-of-use assets0 0 0 (6,392)
Total$0 $0 $24,377 $(73,411)
__________
(1)
(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.
Additionally, 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 15.0% (weighted average rate of approximately 12.2%, weighted based on relative fair value). The Company recorded aggregate pre-tax non-cashalso performed fair value measurements in connection with its goodwill impairment charges during the nine months ended September 30, 2019 of $151.1 million.tests. Refer to Note 9. Goodwill and Other Intangibles for further description,additional information on goodwill and other intangible asset impairment tests, including information about the valuation methodologies utilized.
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NOTE 7. INVENTORIES
Inventories consist of the following at September 30, 20192020 and December 31, 20182019 (in thousands):
 September 30, 2019 December 31, 2018
Raw materials (1)$123,608
 $122,825
Work-in-process (1)68,880
 70,458
Finished goods (1)146,025
 128,896
Total$338,513
 $322,179

September 30, 2020December 31, 2019
Raw materials (1)$108,961 $124,171 
Work-in-process (1)75,913 65,392 
Finished goods (1)170,029 138,302 
Total$354,903 $327,865 
__________
(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 September 30, 20192020 and December 31, 2018, $23.72019, $34.6 million and $8.1$29.0 million, respectively, of noncurrent inventory was included in Other assets in the Condensed Consolidated Balance Sheets. As of September 30, 20192020 and December 31, 2018,2019, the Company’s Condensed Consolidated Balance Sheets included approximately $18.2$39.0 million and $12.5$17.6 million, respectively, of capitalized pre-launch inventories related to products that were not yet available to be sold.
NOTE 8. 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 3 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 ROUright-of-use (ROU) assets and lease liabilities at September 30, 2020 and December 31, 2019 (in thousands):
Condensed Consolidated Balance Sheets Line ItemsSeptember 30, 2020December 31, 2019
ROU assets:
Operating lease ROU assetsOperating lease assets$38,927 $51,700 
Finance lease ROU assetsProperty, plant and equipment, net49,860 56,793 
Total ROU assets$88,787 $108,493 
Operating lease liabilities:
Current operating lease liabilitiesCurrent portion of operating lease liabilities$11,449 $10,763 
Noncurrent operating lease liabilitiesOperating lease liabilities, less current portion40,222 48,299 
Total operating lease liabilities$51,671 $59,062 
Finance lease liabilities:
Current finance lease liabilitiesAccounts payable and accrued expenses$6,081 $5,672 
Noncurrent finance lease liabilitiesOther liabilities26,617 31,312 
Total finance lease liabilities$32,698 $36,984 
 Condensed Consolidated Balance Sheets Line Items September 30, 2019
ROU assets:   
Operating lease ROU assetsOperating lease assets $53,839
Finance lease ROU assetsProperty, plant and equipment, net 59,104
Total ROU assets $112,943
Operating lease liabilities:   
Current operating lease liabilitiesCurrent portion of operating lease liabilities $10,575
Noncurrent operating lease liabilitiesOperating lease liabilities, less current portion 50,965
Total operating lease liabilities $61,540
Finance lease liabilities:   
Current finance lease liabilitiesAccounts payable and accrued expenses $5,550
Noncurrent finance lease liabilitiesOther liabilities 32,768
Total finance lease liabilities $38,318
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The following table presents information about lease costs and expenses and sublease income for the three and nine months ended September 30, 2020 and 2019 (in thousands):
Condensed Consolidated Statements of Operations Line ItemsThree Months Ended September 30,Nine Months Ended September 30,
Condensed Consolidated Statements of Operations Line Items Three Months Ended September 30, 2019 Nine Months Ended September 30, 20192020201920202019
Operating lease costVarious (1) $3,510
 $10,269
Operating lease costVarious (1)$3,339 $3,510 $10,443 $10,269 
Finance lease cost:    Finance lease cost:
Amortization of ROU assetsVarious (1) $2,311
 $7,096
Amortization of ROU assetsVarious (1)$2,311 $2,311 $6,933 $7,096 
Interest on lease liabilitiesInterest expense, net $271
 $1,256
Interest on lease liabilitiesInterest expense, net$416 $271 $1,323 $1,256 
Other lease costs and income:    Other lease costs and income:
Variable lease costs (2)Various (1) $2,318
 $7,185
Variable lease costs (2)Various (1)$2,601 $2,318 $7,443 $7,185 
Operating lease ROU asset impairment chargesOperating lease ROU asset impairment chargesAsset impairment charges$6,392 $0 $6,392 $0 
Sublease incomeVarious (1) $(932) $(2,828)Sublease incomeVarious (1)$(1,077)$(932)$(2,870)$(2,828)
__________
(1)
(1)Amounts are included in the Condensed Consolidated Statements of Operations based on the function that the underlying leased asset supports. The following table presents the components of such aggregate amounts for the three and nine months ended September 30, 2019 (in thousands):
 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
Cost of revenues$2,793
 $8,425
Selling, general and administrative$4,347
 $13,145
Research and development$67
 $152
(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, providespresents the undiscounted amountcomponents of future cash flows included in our lease liabilities atsuch aggregate amounts for the three and nine months ended September 30, 2019 for each of the five years subsequent to December 31, 20182020 and thereafter, as well as a reconciliation of such undiscounted cash flows to our lease liabilities at September 30, 2019 (in thousands):
 Operating Leases Finance Leases
2019, excluding amounts already paid$3,740
 $1,826
202013,771
 7,447
202113,996
 7,594
202212,424
 7,744
202310,012
 7,898
Thereafter20,549
 21,881
Total future lease payments$74,492
 $54,390
Less: amount representing interest12,952
 16,072
Present value of future lease payments (lease liability)$61,540
 $38,318

The Company’s future minimum
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Cost of revenues$2,815 $2,793 $8,589 $8,425 
Selling, general and administrative$4,309 $4,347 $13,209 $13,145 
Research and development$50 $67 $151 $152 
(2)Amounts represent variable lease commitments as of December 31, 2018 under ASC 840, as reportedcosts incurred that were not included in the Annual Report, wereinitial measurement of the lease liability such as follows:
 Capital Leases (1) Operating Leases
2019$6,884
 $15,800
20206,819
 14,519
20216,921
 12,883
20227,072
 12,454
20237,225
 9,945
Thereafter9,127
 20,573
Total minimum lease payments$44,048
 $86,174
Less: Amount representing interest4,084
  
Total present value of minimum payments$39,964
  
Less: Current portion of such obligations5,845
  
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 termcommon area maintenance and weighted average discount rates forutilities costs associated with leased real estate and certain costs associated with our leases as of September 30, 2019:
September 30, 2019
Weighted average remaining lease term (years), weighted based on lease liability balances:
Operating leases6.0 years
Finance leases9.7 years
Weighted average discount rate (percentages), weighted based on the remaining balance of lease payments:
Operating leases5.8%
Finance leases5.5%

automobile leases.

The following table provides certain cash flow and supplemental noncash information related to our lease liabilities for the nine months ended September 30, 2020 and 2019 (in thousands):
 Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities: 
Operating cash payments for operating leases$11,200
Operating cash payments for finance leases$1,535
Financing cash payments for finance leases$7,826
Lease liabilities arising from obtaining right-of-use assets: 
Operating leases$623
Finance leases$5,901

Nine Months Ended September 30,
20202019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash payments for operating leases$10,819 $11,200 
Operating cash payments for finance leases$1,982 $1,535 
Financing cash payments for finance leases$3,626 $7,826 
Lease liabilities arising from obtaining right-of-use assets:
Operating leases$0 $623 
Finance leases$0 $5,901 
NOTE 9. GOODWILL AND OTHER INTANGIBLES
Goodwill
Changes in the carrying amount of our goodwill for the nine months ended September 30, 20192020 were as follows (in thousands):
Branded PharmaceuticalsSterile InjectablesGeneric PharmaceuticalsInternational PharmaceuticalsTotal
Goodwill as of December 31, 2019$828,818 $2,731,193 $0 $35,173 $3,595,184 
Effect of currency translation0 0 0 (2,387)(2,387)
Goodwill impairment charges0 0 0 (32,786)(32,786)
Goodwill as of September 30, 2020$828,818 $2,731,193 $0 $0 $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—
 —
 —
 1,794
 1,794
Goodwill impairment charges—
 —
 (151,108) —
 (151,108)
Goodwill as of September 30, 2019$828,818
 $2,731,193
 $—
 $55,311
 $3,615,322
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The carrying amounts of goodwill at September 30, 20192020 and December 31, 20182019 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, 2018$855,810
 $—
 $2,991,549
 $456,408
 $4,303,767
Accumulated impairment losses as of September 30, 2019$855,810
 $—
 $3,142,657
 $470,181
 $4,468,648

Branded PharmaceuticalsSterile InjectablesGeneric PharmaceuticalsInternational PharmaceuticalsTotal
Accumulated impairment losses as of December 31, 2019$855,810 $0 $3,142,657 $500,417 $4,498,884 
Accumulated impairment losses as of September 30, 2020$855,810 $0 $3,142,657 $522,184 $4,520,651 
Other Intangible Assets
Changes in the amount of other intangible assets for the nine months ended September 30, 2019 are set forth in the table below2020 were as follows (in thousands).:
Cost basis:Balance as of December 31, 2018 Acquisitions Impairments Other (1) Effect of Currency Translation Balance as of September 30, 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
Tradenames6,409
 —
 —
 —
 —
 6,409
Developed technology (weighted average life of 11 years)6,182,015
 —
 (104,660) (2,196) 7,443
 6,082,602
Total finite-lived intangibles (weighted average life of 11 years)$6,645,826
 $—
 $(104,660) $(2,196) $7,443
 $6,546,413
Total other intangibles$6,739,726
 $—
 $(104,660) $(2,196) $7,443
 $6,640,313
            
Accumulated amortization:Balance as of December 31, 2018 Amortization Impairments Other (1) Effect of Currency Translation Balance as of September 30, 2019
Finite-lived intangibles:           
Licenses$(398,182) $(9,726) $—
 $—
 $—
 $(407,908)
Tradenames(6,409) —
 —
 —
 —
 (6,409)
Developed technology(2,877,829) (408,223) —
 2,196
 (3,923) (3,287,779)
Total other intangibles$(3,282,420) $(417,949) $—
 $2,196
 $(3,923) $(3,702,096)
Net other intangibles$3,457,306
         $2,938,217

Cost basis:Balance as of December 31, 2019AcquisitionsImpairmentsOther (1)Effect of Currency TranslationBalance as of September 30, 2020
Indefinite-lived intangibles:
In-process research and development$93,900 $0 $0 $(90,900)$0 $3,000 
Total indefinite-lived intangibles$93,900 $0 $0 $(90,900)$0 $3,000 
Finite-lived intangibles:
Licenses (weighted average life of 14 years)$457,402 $0 $(8,700)$0 $0 $448,702 
Tradenames6,409 0 0 0 0 6,409 
Developed technology (weighted average life of 11 years)5,844,439 0 (57,071)(15,428)(6,633)5,765,307 
Total finite-lived intangibles (weighted average life of 11 years)$6,308,250 $0 $(65,771)$(15,428)$(6,633)$6,220,418 
Total other intangibles$6,402,150 $0 $(65,771)$(106,328)$(6,633)$6,223,418 
Accumulated amortization:Balance as of December 31, 2019AmortizationImpairmentsOther (1)Effect of Currency TranslationBalance as of September 30, 2020
Finite-lived intangibles:
Licenses$(410,336)$(6,162)$0 $0 $0 $(416,498)
Tradenames(6,409)0 0 0 0 (6,409)
Developed technology(3,414,138)(319,639)0 108,328 3,800 (3,621,649)
Total other intangibles$(3,830,883)$(325,801)$0 $108,328 $3,800 $(4,044,556)
Net other intangibles$2,571,267 $2,178,862 
__________
(1)Other adjustments relate to the removal of certain fully amortized intangible assets.
(1)Amounts include reclassification adjustments of $90.9 million from In-process research and development to Developed technology for certain assets that were placed in service during the nine months ended September 30, 2020. The remaining amounts primarily relate to the removal of certain fully amortized Developed technology intangible assets.
Amortization expense for the three and nine months ended September 30, 2020 totaled $104.1 million and $325.8 million, respectively. Amortization expense for the three and nine months ended September 30, 2019 totaled $131.9 million and $417.9 million, respectively. Amortization expense for the three and nine months ended September 30, 2018 totaled $161.3 million and $471.7 million, respectively. Amortization expense is included in Cost of revenues in the Condensed Consolidated Statements of Operations. EstimatedFor intangible assets subject to amortization, of intangiblesestimated amortization expense for the five fiscal years subsequent to December 31, 20182019 is as follows (in thousands):
2020$428,828 
2021$394,331 
2022$379,640 
2023$336,465 
2024$298,198 
2019$543,795
2020$457,248
2021$415,637
2022$399,886
2023$369,619
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Impairments
Endo tests goodwillGoodwill and indefinite-lived intangible assets are tested for impairment annually and wheneverwhen events or changes in circumstances indicate that such assetsthe asset might be impaired. Our annual assessment is performed as of October 1st.

1.
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. Thesefactors including estimates of future cash flows involve assumptions concerning (i) future operating performance, including future sales, long-term growth rates, operating margins, taxdiscount 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 and nine months ended September 30, 20192020 and 2018,2019, the Company incurred the following goodwill and other intangible asset impairment charges (in thousands):
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
Goodwill impairment charges$—
 $—
 $151,108
 $391,000
Other intangible asset impairment charges$4,261
 $140,609
 $104,660
 $217,576

Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Goodwill impairment charges$0 $0 $32,786 $151,108 
Other intangible asset impairment charges$2,020 $4,261 $65,771 $104,660 
A summary of significant goodwill and other intangible asset impairment tests and related charges is included below. Pre-taxExcept 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. 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 the second quarter of the 2019, unfavorable competitive and pricing events occurred that caused us to update certain assumptions from those used in our first-quarter 2019 Generic Pharmaceuticals goodwill impairment test. The CompanyWe considered these events, together with the fact that this reporting unit’s carrying amount equaled its fair value immediately subsequent to the first-quarter 2019 goodwill impairment charge, as part of itsour qualitative assessment of goodwill triggering events for the second quarter of 2019. As a result, we concluded that it was more likely than not that the fair value of this reporting unit was below its carrying amount as of June 30, 2019 and a goodwill impairment test was required. After performing this quantitative test, we determined that this reporting unit’s carrying amount exceeded its estimated fair value. 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%. Based on the excess of this reporting unit’s carrying amount over its estimated fair value, we recorded a pre-tax non-cash goodwill impairment charge of $65.1 million during the three months ended June 30, 2019, representing the entire remaining amount of this reporting unit’s goodwill.
DuringWe are closely monitoring the first quarterimpact of 2018, a changeCOVID-19 on our business. It is possible that COVID-19 could result in segments resulted in changesreductions to our reporting units for goodwill impairment testing purposes, including the creation of a new Sterile Injectables reporting unit, which was previously partestimated fair values of our Generics reporting unit. As agoodwill and other intangible assets, which could ultimately result in asset impairment charges that may be material.
18
Table of these changes, under U.S. GAAP, we tested the goodwill of the former Generics reporting unit immediately before the segment realignment and the goodwill of both the new Sterile Injectables and Generic Pharmaceuticals reporting units immediately after the segment realignment. These goodwill tests were performed using an income approach that utilizes a discounted cash flow model. The results of these goodwill impairment tests were as follows:Contents
The former Generics reporting unit’s estimated fair value exceeded its carrying amount, resulting in 0 related goodwill impairment charge.
The new Sterile Injectables reporting unit’s estimated fair value exceeded its carrying amount, resulting in 0 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.

NOTE 10. 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 September 30, 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):
September 30, 2019 December 31, 2018 $ Change % ChangeSeptember 30, 2020December 31, 2019$ Change% Change
Contract assets, net (1)$4,283
 $12,065
 $(7,782) (65)%Contract assets, net (1)$13,625 $0 $13,625 NM
Contract liabilities, net (2)$6,864
 $19,217
 $(12,353) (64)%Contract liabilities, net (2)$7,725 $6,592 $1,133 17 %
__________
(1)At September 30, 2019 and December 31, 2018, approximately $4.3 million and $9.3 million, respectively, of these contract asset amounts are classified as current assets 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 included in Other assets. The net decrease in contract assets during the nine months ended September 30, 2019 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 consideration for the sale of certain goods, partially offset by certain sales activity during the period.
(2)At September 30, 2019 and December 31, 2018, approximately $2.1 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 nine months ended September 30, 2019, the Company entered into new contracts resulting in an increase to contract liabilities of approximately $4.0 million. This increase was more than offset by approximately $14.9 million in reductions following certain product discontinuation activities in our International Pharmaceuticals segment and approximately $1.1 million in revenue recognized during the period.
NM indicates that the percentage change is not meaningful or is greater than 100%.
(1)At September 30, 2020, approximately $2.6 million of this contract asset amount is classified as current and is included in Prepaid expenses and other current assets in the Company’s Condensed Consolidated Balance Sheets. The remaining amount is classified as noncurrent and is included in Other assets. The net increase in contract assets during the nine months ended September 30, 2020 was primarily due to the Company’s estimated consideration for the sale of certain intellectual property rights.
(2)At September 30, 2020 and December 31, 2019, approximately $2.9 million and $1.4 million, respectively, of these contract liability amounts are classified as current 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. The increase in contract liabilities during the nine months ended September 30, 2020 was primarily due to a new agreement entered into during the nine months ended September 30, 2020, partially offset by approximately $0.4 million in revenue recognized during the period.
During the nine months ended September 30, 2019,2020, we recognized revenue of $6.7$14.0 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. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses include the following at September 30, 20192020 and December 31, 20182019 (in thousands):
September 30, 2020December 31, 2019
Trade accounts payable$104,621 $101,532 
Returns and allowances205,962 206,248 
Rebates119,265 129,056 
Chargebacks2,589 1,594 
Accrued interest135,199 112,860 
Accrued payroll and related benefits112,256 79,869 
Accrued royalties and other distribution partner payables61,355 115,816 
Acquisition-related contingent consideration—current9,665 6,534 
Other117,492 146,440 
Total$868,404 $899,949 
 September 30, 2019 December 31, 2018
Trade accounts payable$110,074
 $96,024
Returns and allowances208,264
 236,946
Rebates140,184
 144,860
Chargebacks1,578
 2,971
Accrued interest101,085
 130,182
Accrued payroll and related benefits71,867
 89,895
Accrued royalties and other distribution partner payables111,347
 122,028
Acquisition-related contingent consideration—current20,974
 36,514
Other171,808
 149,780
Total$937,181

$1,009,200
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NOTE 12. DEBT
The following table presents information about the Company’s total indebtedness at September 30, 20192020 and December 31, 20182019 (dollars in thousands):
 September 30, 2019 December 31, 2018
 Effective Interest Rate Principal Amount Carrying Amount Effective Interest Rate Principal Amount Carrying Amount
7.25% Senior Notes due 20227.25% $8,294
 $8,294
 7.91% $400,000
 $392,947
5.75% Senior Notes due 20225.75% 182,479
 182,479
 6.04% 700,000
 694,464
5.375% Senior Notes due 20235.62% 210,440
 208,912
 5.62% 750,000
 743,438
6.00% Senior Notes due 20236.28% 1,439,840
 1,426,195
 6.28% 1,635,000
 1,616,817
5.875% Senior Secured Notes due 20246.14% 300,000
 296,497
 6.14% 300,000
 296,062
6.00% Senior Notes due 20256.27% 1,200,000
 1,185,135
 6.27% 1,200,000
 1,183,415
7.50% Senior Secured Notes due 20277.71% 1,500,000
 1,481,758
 


 —
 —
Term Loan B Facility Due 20246.59% 3,338,162
 3,309,791
 7.02% 3,363,775
 3,331,276
Revolving Credit Facility4.63% 300,000
 300,000
 


 —
 —
Total long-term debt, net  $8,479,215
 $8,399,061
   $8,348,775
 $8,258,419
Less current portion, net  34,150
 34,150
   34,150
 34,150
Total long-term debt, less current portion, net  $8,445,065
 $8,364,911
   $8,314,625
 $8,224,269

September 30, 2020December 31, 2019
Effective Interest RatePrincipal AmountCarrying AmountEffective Interest RatePrincipal AmountCarrying Amount
7.25% Senior Notes due 20227.25 %$8,294 $8,294 7.25 %$8,294 $8,294 
5.75% Senior Notes due 20225.75 %172,048 172,048 5.75 %182,479 182,479 
5.375% Senior Notes due 20235.62 %6,127 6,095 5.62 %210,440 209,018 
6.00% Senior Notes due 20236.28 %56,436 56,029 6.28 %1,439,840 1,426,998 
5.875% Senior Secured Notes due 20246.14 %300,000 297,109 6.14 %300,000 296,647 
6.00% Senior Notes due 20256.27 %21,578 21,354 6.27 %1,200,000 1,185,726 
7.50% Senior Secured Notes due 20277.70 %2,015,479 1,994,514 7.71 %1,500,000 1,482,212 
9.50% Senior Secured Second Lien Notes due 20279.68 %940,590 932,175 0 0 
6.00% Senior Notes due 20286.11 %1,260,416 1,251,498 0 0 
Term Loan Facility5.21 %3,304,013 3,281,385 6.21 %3,329,625 3,302,675 
Revolving Credit Facility2.69 %300,000 300,000 4.25 %300,000 300,000 
Total long-term debt, net$8,384,981 $8,320,501 $8,470,678 $8,394,049 
Less current portion, net34,150 34,150 34,150 34,150 
Total long-term debt, less current portion, net$8,350,831 $8,286,351 $8,436,528 $8,359,899 
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 September 30, 2019.2020. The obligations under (i) all of the senior secured notes5.875% Senior Secured Notes due 2024, (ii) the 7.50% Senior Secured Notes due 2027 and (ii)(iii) the Credit Agreement (as defined below) and related loan documents are secured on a pari passubasis by a perfected first priority lien (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). The obligations under the 9.50% Senior Secured Second Lien Notes due 2027 are secured by a second priority lien (subject to certain permitted liens) on, and on a junior basis with respect to, the collateral securing the obligations under the Credit Agreement, the 5.875% Senior Secured Notes due 2024 and the 7.50% Senior Secured Notes due 2027 and the related guarantees. Our senior unsecured notes are unsecured and effectively subordinated in right of priority to our credit agreementthe Credit Agreement, the 5.875% Senior Secured Notes due 2024, the 7.50% Senior Secured Notes due 2027 and our senior secured notes,the 9.50% Senior Secured Second Lien Notes due 2027, 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 $6.9$8.1 billion and $7.2$7.4 billion at September 30, 20192020 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.
Senior Notes and Senior Secured Notes
At September 30, 2019 and December 31, 2018, we were in compliance with all covenants contained in the indentures governing our various senior notes and senior secured notes.
Credit Facilities
The Company and certain of its subsidiaries are party to a credit facilities consist ofagreement (as amended from time to time, 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). In June 2019,Current amounts outstanding under the Company borrowed $300.0 millionCredit Facilities are set forth in the table above. After giving effect to borrowings under the Revolving Credit Facility. The proceeds will be used for purposes consistent with the Company’s capital allocation priorities, including for general corporate purposes.
After giving effect to this transactionFacility and previously issued and outstanding letters of credit, approximately $696.8$696.2 million of remaining credit is available under the Revolving Credit Facility. However, theFacility as of September 30, 2020. The Company’s outstanding debt agreements contain a number of restrictive covenants, including certain conditions that limitlimitations on the Company’s ability to incur additional secured indebtedness, including borrowings under the Revolving Credit Facility, which significantly restrict the Company’s access to this remaining available credit.indebtedness.
At September 30, 20192020 and December 31, 2018,2019, we were in compliance with all covenants contained in the Credit AgreementAgreement.
Senior Notes and Senior Secured Notes
The June 2020 Refinancing Transactions (as defined below). resulted in certain changes to our senior notes and senior secured notes that are further described under the heading “Debt Financing Transactions” below.
March 2019
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Following the June 2020 Refinancing
In March 2019, the Company executed several transactions (the March 2019 Refinancing Transactions), which 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);
•
the issuance of $1,500.0 million of 7.50% Senior Secured Notes due 2027 (the 2027 Notes);

•
the repurchase of $1,642.2 million aggregate principal amount of certain of the Company’s senior unsecured notes for $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 Transactions, our various senior notes and senior secured notes mature between 2022 and 5.75% Senior Notes due 2022 (together, the Consent Notes) to certain amendments to the2028. 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 allowsgenerally allow 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,•Until a date specified in each indenture (the Non-Call Period), the 2027 Notesnotes 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 theeach indenture and (iii) accrued and unpaid interest if any, to, but not including,excluding, the redemption date. As of September 30, 2020, the Non-Call Period has expired for each of our notes except for the 7.50% Senior Secured Notes due 2027, the 9.50% Senior Secured Second Lien Notes due 2027 and the 6.00% Senior Notes due 2028.
•After the Non-Call Period specified in each indenture, the notes may be redeemed, in whole or in part, at redemption prices set forth in each indenture, plus accrued and unpaid interest to, but excluding, the redemption date. The redemption prices for each of our notes vary over time. The redemption prices pursuant to this clause range from 100.000% to 107.125% of principal at September 30, 2020; however, these redemption prices generally decrease to 100% of the principal amount of the applicable notes over time as the notes approach maturity pursuant to a step-down schedule set forth in each of the indentures.
•Until a date specified in each indenture, the notes may be redeemed, in part (up to 35% or 40% 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.
Thethe principal amount outstanding as specified in each indenture), with the net cash proceeds from specified equity offerings at redemption prices set forth in each indenture, plus accrued and unpaid interest to, but excluding, the redemption date. As of September 30, 2020, this clause has expired for each of our notes except for the 7.50% Senior Secured Notes due 2027, the 9.50% Senior Secured Second Lien Notes indenture containsdue 2027 and the 6.00% Senior Notes due 2028, for which the specified redemption premiums are 107.500%, 109.500% and 106.000%, respectively.
Following the June 2020 Refinancing Transactions, the indentures governing our various senior secured notes and the 6.00% Senior Notes due 2028 contain affirmative and negative covenants that the Company believes to be 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 Subsidiariesrestricted subsidiaries (as defined in the indenture)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. 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 2027 Notesnotes receiving investment grade credit ratings.
The Company used At September 30, 2020 and December 31, 2019, we were in compliance with all covenants contained in the net proceedsindentures governing our various senior notes and senior secured notes. As further described under the heading “Debt Financing Transactions” below, we have eliminated substantially all of the 2027restrictive covenants and certain events of default in the indentures governing our senior unsecured notes, except for those in the 6.00% Senior Notes due 2028 indenture.
There have been no other significant changes to our senior notes and cash on hand primarilysenior secured notes since December 31, 2019.
Debt Financing Transactions
Set forth below are certain disclosures relating to funddebt financing transactions that occurred during 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 ofnine months ended September 30, 2020 or the year ended December 31, 2019.
March 2019 Refinancing
In March 2019, the Company pursuantexecuted certain transactions (the March 2019 Refinancing Transactions) that included:
•entry into an amendment (the Revolving Credit Facility Amendment) to a tender offer to the Credit Agreement;
•issuance of $1,500.0 million of 7.50% Senior Secured Notes due 2027;
•repurchase portionsof $1,642.2 million aggregate principal amount ($1,624.0 million aggregate carrying amount) of certain of the Company’s outstandingsenior unsecured notes for $1,500.0 million in cash, excluding accrued interest (the Notes Repurchases); and
•solicitation of consents from the holders of the existing 7.25% Senior Notes due 2022 and 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 undergoverning such notes, which each series of Consent Notes were issued, which would eliminateeliminated substantially all of the 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 7.50% Senior Secured Notes due 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 7.50% Senior Secured Notes due 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 willto 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.
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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.
June 2020 Refinancing
In June 2020, the Company executed certain transactions (the June 2020 Refinancing Transactions) that included: (i) the solicitation of consents from the holders of the Old Notes (defined below) to certain amendments to the indentures governing such notes, which, pursuant to a supplemental indenture to each such indenture executed by the respective issuers and guarantors, eliminated substantially all of the restrictive covenants, certain events of default and other provisions contained in each such indenture and (ii) the exchanges (collectively, the Exchange Offers), by certain of the Company’s wholly-owned subsidiaries, of the following:
•$204.3 million aggregate principal amount of outstanding 5.375% Senior Notes due 2023, issued by Endo Finance LLC (Endo Finance) and Endo Finco Inc. (Endo Finco) (the Old 5.375% 2023 Notes);
•$1,383.4 million aggregate principal amount of outstanding 6.00% Senior Notes due 2023, co-issued by Endo Designated Activity Company (Endo DAC), Endo Finance and Endo Finco (the Old 6.00% 2023 Notes); and
•$1,178.4 million aggregate principal amount of outstanding 6.00% Senior Notes due 2025, co-issued by Endo DAC, Endo Finance and Endo Finco (the Old 6.00% 2025 Notes, and collectively with the Old 5.375% 2023 Notes and Old 6.00% 2023 Notes, the Old Notes)
for:
•$515.5 million aggregate principal amount of additional 7.50% Senior Secured Notes due 2027 issued by Par Pharmaceutical, Inc. (PPI) (the Additional 7.50% Senior Secured Notes due 2027);
•$940.6 million aggregate principal amount of new 9.50% Senior Secured Second Lien Notes due 2027 co-issued by Endo DAC, Endo Finance and Endo Finco (together with the Additional 7.50% Senior Secured Notes due 2027, the New Secured Notes);
•$1,260.4 million aggregate principal amount of new 6.00% Senior Notes due 2028 co-issued by Endo DAC, Endo Finance and Endo Finco (collectively with the Additional 7.50% Senior Secured Notes due 2027 and the 9.50% Senior Secured Second Lien Notes due 2027, the New Senior Notes); and
•$47.2 million in cash.
The New Senior Notes were issued 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 Additional 7.50% Senior Secured Notes due 2027 are an additional issuance of our existing $1,500.0 million aggregate principal amount of 7.50% Senior Secured Notes due 2027 issued on March 28, 2019, which we refer to collectively as the 7.50% Senior Secured Notes due 2027. The 7.50% Senior Secured Notes due 2027 are guaranteed on a senior secured basis by the Company and its subsidiaries that also guarantee the Credit Agreement (collectively, the Guarantors). The 7.50% Senior Secured Notes due 2027 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 Additional 7.50% Senior Secured Notes due 2027 is payable semiannually in arrears on April 1 and October 1 of each year, beginning on October 1, 2020.
The 7.50% Senior Secured Notes due 2027 will mature on April 1, 2027; however, the indenture governing these notes generally 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 7.50% Senior Secured Notes due 2027 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 to, but excluding, the redemption date.
•On or after April 1, 2022, the 7.50% Senior Secured Notes due 2027 may be redeemed, in whole or in part, at redemption prices set forth in the indenture, plus accrued and unpaid interest to, but excluding, the redemption date. The redemption prices for the 7.50% Senior Secured Notes due 2027 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 7.50% Senior Secured Notes due 2027 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 to, but excluding, the redemption date.
The 9.50% Senior Secured Second Lien Notes due 2027 are guaranteed on a senior secured second lien basis by the Company and the Guarantors. The 9.50% Senior Secured Second Lien Notes due 2027 are senior secured second lien obligations of Endo DAC, Endo Finance, Endo Finco and the Guarantors and are secured by a second priority lien on, and on a junior basis with respect to, the same collateral that secures the Credit Agreement and the Company’s existing senior secured notes. Interest on the 9.50% Senior Secured Second Lien Notes due 2027 is payable semiannually in arrears on January 31 and July 31 of each year, beginning on January 31, 2021.
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The 9.50% Senior Secured Second Lien Notes due 2027 will mature on July 31, 2027; however, the indenture governing these notes generally allows for redemption prior to maturity, in whole or in part, subject to certain restrictions and limitations described therein, in the following ways:
•Before July 31, 2023, the 9.50% Senior Secured Second Lien Notes due 2027 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 to, but excluding, the redemption date.
•On or after July 31, 2023, the 9.50% Senior Secured Second Lien Notes due 2027 may be redeemed, in whole or in part, at redemption prices set forth in the indenture, plus accrued and unpaid interest to, but excluding, the redemption date. The redemption prices for the 9.50% Senior Secured Second Lien Notes due 2027 vary over time pursuant to a step-down schedule set forth in the indenture, beginning at 107.125% of the principal amount redeemed and decreasing to 100% by July 31, 2026.
•Before July 31, 2023, the 9.50% Senior Secured Second Lien Notes due 2027 may be redeemed, in part (up to 40% of the principal amount outstanding) with the net cash proceeds from specified equity offerings at 109.500% of the principal amount redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
The 6.00% Senior Notes due 2028 are unsecured and effectively subordinated to all of our existing and future secured indebtedness (including the obligations under the Credit Agreement, the existing secured notes and the New Secured Notes) to the extent of the value of the collateral securing such instruments. Interest on the 6.00% Senior Notes due 2028 is payable semiannually in arrears on June 30 and December 30 of each year, beginning on December 30, 2020.
The 6.00% Senior Notes due 2028 will mature on June 30, 2028; however, the indenture governing these notes generally allows for redemption prior to maturity, in whole or in part, subject to certain restrictions and limitations described therein, in the following ways:
•Before June 30, 2023, the 6.00% Senior Notes due 2028 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 to, but excluding, the redemption date.
•On or after June 30, 2023, the 6.00% Senior Notes due 2028 may be redeemed, in whole or in part, at redemption prices set forth in the indenture, plus accrued and unpaid interest to, but excluding, the redemption date. The redemption prices for the 6.00% Senior Notes due 2028 vary over time pursuant to a step-down schedule set forth in the indenture, beginning at 104.500% of the principal amount redeemed and decreasing to 100% by June 30, 2026.
•Before June 30, 2023, the 6.00% Senior Notes due 2028 may be redeemed, in part (up to 40% of the principal amount outstanding) with the net cash proceeds from specified equity offerings at 106.000% of the principal amount redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
The June 2020 Refinancing Transactions were accounted for as debt modifications. Previously deferred and unamortized amounts associated with the Old Notes exchanged will be amortized over the respective terms of the New Senior Notes. In connection with the June 2020 Refinancing Transactions, we incurred fees to third parties of approximately $31.1 million, which were charged to expense and included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.
August 2020 Tender Offer
In August 2020, Endo Finance repurchased and retired approximately $10 million aggregate principal of 5.75% Senior Notes due 2022 pursuant to a tender offer (the August 2020 Tender Offer).
Maturities
The following table presents, as of September 30, 2020, the maturities on our long-term debt for each of the five fiscal years subsequent to December 31, 20182019 (in thousands):
  Maturities (1)
2019 $34,150
2020 $34,150
2021 $34,150
2022 (2) $247,723
2023 $1,684,430
Maturities (1)(2)
2020 (3)$34,150 
2021$34,150 
2022 (4)$237,292 
2023$96,713 
2024 (4)$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 91Certain 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)With respect to the notes impacted by the Exchange Offers and the August 2020 Tender Offer, amounts included in the table above represent maturities as of September 30, 2020 after giving effect to such transactions.
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(3)With respect to the Term Loan Facility, amounts in 2020 include both payments made through September 30, 2020 and expected payments for the remainder of 2020.
(4)Based on the Company’s borrowings under the Revolving Credit Facility that were outstanding at September 30, 2020, $22.8 million will mature in 2022, with the remainder maturing in 2024.
(2)This amount includes $22.8 million, representing the portion of our borrowing under the Revolving Credit Facility associated with the commitments that were not extended in connection with the March 2019 Refinancing Transactions.
NOTE 13. 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 arisearising 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 anrelief. 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. MattersWe are subject to a number of matters that are not being disclosed herein are,because, in the opinion of our management, these matters are 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 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 in the amounts that we expect 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 September 30, 2019,2020, our accrual for loss contingencies totaled $684.1$374.8 million, the most significant components of which relate to product liability and related matters associated with vaginaltransvaginal 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. AsWhile 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 September 30, 2019, $674.9 million of our2020, the entire liability accrual for loss contingenciesamount is classified in the Current portion of legal settlement accrual in the Condensed Consolidated Balance Sheets, with the remainder classified as Long-term legal settlement accrual, less current portion. However, the timing of the resolution of certain of these matters remains uncertain.Sheets.
Product Liability and RelatedVaginal Mesh 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 in Canada and other countries, alleging personal injury resulting from the use of certain products of our subsidiaries. These 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 and/or 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)), 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, plaintiffsWe 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 variousVarious Master Settlement Agreements (MSAs) and other agreements to resolve up tohave resolved approximately 71,000 filed and unfiled U.S. mesh claims handled or controlled by the participating counsel.as of September 30, 2020. 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 maywill be deposited, pursuant to certain schedules set forth in those agreements. All MSAs haveestablish participation requirements regarding the claims represented by each law firm party to the MSA. In addition, one agreement gives usand allow for a unilateral rightreduction 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 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.
The following table presents the changes in the QSFs and mesh liability accrual balances during the nine months ended September 30, 2019 (in thousands):
 Qualified Settlement Funds Mesh Liability Accrual
Balance as of January 1, 2019$299,733
 $748,606
Additional charges—
 30,000
Cash contributions to Qualified Settlement Funds185,745
 —
Cash distributions to settle disputes from Qualified Settlement Funds(266,958) (266,958)
Cash distributions to settle disputes—
 (13,334)
Other (1)3,125
 3,256
Balance as of September 30, 2019$221,645
 $501,570
__________
(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 $3.5 billion, $221.6 million of which remains in the QSFs as of September 30, 2019. We currently expect to fund into the QSFs the remaining payments under all settlement agreements during 2019 and 2020. 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 the 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.
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, trials may occur as early as December 2019, 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.
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 have generally alleged various personal injuries, including pulmonary embolism, stroke or other vascular and/or cardiac injuries, and sought compensatory and/or punitive damages, where available.
As of October 29, 2019, we were aware of approximately 882 testosterone cases (some of which may have been filed on behalf of multiple plaintiffs) pending against one or more of our subsidiaries. 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).
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.agreements.
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.
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The MDL also included a lawsuit filed in November 2014following table presents the changes in the QSFs and mesh liability accrual balances during the nine months ended September 30, 2020 (in thousands):
Qualified Settlement FundsMesh 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(107,225)(107,225)
Cash distributions to settle disputes— (26,559)
Other (1)726 616 
Balance as of September 30, 2020$136,343 $351,317 
__________
(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. District for the Northern District of Illinois against EPI, Auxiliumdollars.
Charges related to vaginal mesh liability and various other manufacturers of testosterone products on behalf of a proposed class of health insurance companiesassociated legal fees and other third party payers. This lawsuit is not partexpenses for all periods presented are reported in Discontinued operations, net of tax in our Condensed Consolidated Statements of Operations.
As of September 30, 2020, the Company has made total cumulative mesh liability payments of approximately $3.6 billion, $136.3 million of which remains in the QSFs as of September 30, 2020. We currently expect to fund substantially all of the remaining payments under all previously executed settlement described above. After a series of motions to dismiss, plaintiff filed a third amended complaint in April 2016, asserting civil claims for alleged violationsagreements into the QSFs during 2020 and 2021. As funds are disbursed out of the Racketeer InfluencedQSFs from time to time, the liability accrual will be reduced accordingly with a corresponding reduction to restricted cash and Corrupt Organizations Actcash equivalents. In addition, we may pay cash distributions to settle disputes separate from the QSFs, which will also decrease the liability accrual and negligent misrepresentation based on defendants’ marketingdecrease 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 certain testosterone products. The court denied a motion to dismiss this complaint in August 2016. In July 2018,California, and we subsequently received additional subpoenas from California and other states. We are cooperating with the court denied plaintiff’s motion for class certification. In February 2019, the court granted defendants’ motion for summary judgment. Plaintiff’s appeal to the U.S. Court of Appeals for the Seventh Circuit remains pending.investigations.
We will continue to vigorously defend any unresolved claims and to explore other options as appropriate in our best interests. The earliest trial is currently scheduled for February 2021; however, the timing of trials is uncertain due to the impact of COVID-19 and other factors.
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 testosterone-relatedall 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,Endo Pharmaceuticals Inc. (EPI), PPI, Par Pharmaceutical Companies, Inc. (PPCI), Endo Generics Holdings, Inc. (EGHI), Vintage Pharmaceuticals, LLC, Generics Bidco I, LLC, and DAVA Pharmaceuticals, LLC, Par Sterile Products, LLC (PSP 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 October 29, 2019,30, 2020, filed cases in the casesU.S. of which we were aware include, but are not limited to, approximately 1820 cases filed by or on behalf of states; approximately 2,5002,870 cases filed by counties, cities, Native American tribes and/or other government-related persons or entities; approximately 240295 cases filed by hospitals, health systems, unions, health and welfare funds or other third-party payers and approximately 140175 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 infiled 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. In May 2019, 2opioids, an action filed by the City of Grand Prairie, Alberta on behalf of a proposed class of all local or municipal governments in Canada, as well as 3 additional putative class actions, were filed in Canada,Ontario, Quebec and British Columbia, seeking relief on behalf of Canadian residents who were prescribed and/or consumed opioid medications. One
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Table of the actions (filed in Ontario Superior Court) names Paladin Labs Inc., the Company and EPI along with several other defendants, and the other action (filed in Quebec Superior Court) names Paladin Labs Inc. along with several other defendants. In the Quebec action, an amended application was filed in October 2019; among other things, the amended application substituted in a new plaintiff.Contents
Many of the U.S. cases have been coordinated in a federal MDLmultidistrict litigation (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 interestOhio. Other cases are pending in various federal or state courts. The cases are at various stages in the case, and in April 2018 it filed a motion to participate in settlement discussions as a friend of the court, which the MDL court granted. The MDL court has issued various case management and substantive orders in certain cases.litigation process. The first MDL trial, relating to the claims of two2 Ohio counties (Track One plaintiffs), was set for October 2019 but did not go forward after most defendants settled. In September 2019, EPI, EHSI, PPI and PPCI executed a settlement agreement with the Track One plaintiffs providingin September 2019 which provided for payments totaling $10$10 million and up to $1$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.
Other The earliest trial is currently scheduled for 2021; however, trials may occur earlier or later as timing remains uncertain due to the impact of COVID-19 and other factors. Most cases remain pending in various state courts. In some jurisdictions, 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 allegedasserting violations of public nuisance, consumer protection, unfair trade practices, racketeering, Medicaid fraud and/or drug dealer liability statuteslaws 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 failurefailures to take adequate steps to identify and report suspicious orders and to prevent abuse and diversion. Plaintiffs have generally seeksought 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. 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 September 2019, EPI, EHSI, PPI and PPCI received subpoenas from the New York State Department of Financial Services (DFS) seeking documents and information regarding the marketing, sale and distribution of opioid medications in New York. In June 2020, DFS commenced an administrative action against the Company, EPI, EHSI, PPI and PPCI alleging violations of the New York Insurance Law and New York Financial Services Law. The statement of charges alleges that fraudulent or otherwise wrongful conduct in the marketing, sale and/or distribution of opioid medications caused false claims to be submitted to insurers and seeks civil penalties for each allegedly fraudulent prescription as well as injunctive relief. The action is currently set for hearing in January 2021.
In addition to the lawsuits and administrative matters 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 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. The subpoena seeksseeking documents and information related to OPANA® ER, other oxymorphone 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 production of certain 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. 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.
Generic Drug PricingIn 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.
Ranitidine Matters
In December 2014, we received a grand jury subpoena from the Antitrust Division of the DOJ issued byJune 2020, an MDL pending in the U.S. District Court for the EasternSouthern District of Pennsylvania addressedFlorida, In re Zantac (Ranitidine) Products Liability Litigation, was expanded to Par Pharmaceuticals.add PPI and numerous other manufacturers and distributors of generic ranitidine as defendants. The subpoena requested documents and information focused primarilyclaims are generally based on product and pricing information relating toallegations that under certain conditions the authorized generic version of Lanoxin (digoxin) oral tabletsactive ingredient in Zantac® and generic doxycycline products,ranitidine medications can break down to form an alleged carcinogen known as N-Nitrosodimethylamine (NDMA). PPI and on communications with competitorsits subsidiaries have not manufactured or sold ranitidine since 2016.
The MDL includes individual plaintiffs as well as putative classes of consumers and others regarding those products. third-party payers. The complaints assert a variety of claims, including but not limited to various product liability, breach of warranty, fraud, negligence, statutory and unjust enrichment claims. Plaintiffs generally seek various remedies including, without limitation, compensatory, punitive and/or treble damages; restitution, disgorgement, civil penalties, abatement, attorneys’ fees and costs as well as injunctive and/or other relief.
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The MDL court has issued various case management orders, including a scheduling order for briefing of defendants’ motions to dismiss and orders allowing certain discovery to commence.
We are cooperating withwill continue to vigorously defend the investigation.
In May 2018, weforegoing matters and to explore other options as appropriate in 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.
best interests. Similar investigationsmatters may be brought by others or the foregoing matters may be expanded or result in litigation.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.
Generic Drug Pricing Matters
Since March 2016, various private plaintiffs, and state attorneys general and other governmental entities 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 underPennsylvania. There is also a proposed class action filed in the caption In re Generic Pharmaceuticals Pricing Antitrust Litigation (MDL No. 2724).Federal Court of Canada on behalf of a proposed class of Canadian purchasers.
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. The allegations relating to our subsidiaries in certain of the various complaints focus primarily on one or more of the following products: amitriptyline, baclofen, budesonide, digoxin, divalproex ER, doxycycline hyclate, doxycycline monohydrate, entecavir, fluoxetine, flutamide, hydroxyurea, labetalol, methimazole, nystatin, omega-3-acid ethyl esters, propranolol and/or zoledronic acid. Otherconspiracies and other claims allege broader, multiple-product conspiracies involving various combinations of these and/or other products.conspiracies. Under these overarching conspiracy theories, plaintiffs generally 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, our subsidiary PPI received from the Antitrust Division of the 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 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.
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Other Antitrust Matters
Beginning in November 2013, multiple alleged purchasers of LIDODERM® filed a number of cases againstsued our subsidiary EPI and other pharmaceutical companies generally alleging that they had entered into an anticompetitive agreement to restrain trade throughviolations of antitrust law arising out of the defendants’ 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 state common law. Plaintiffs generallylaw and sought damages, treble damages, disgorgement of profits, restitution, injunctive relief and attorneys’ fees. TheThese cases were consolidated and/or coordinated in April 2014 in a federal MDL in the U.S. District Court for the Northern District of California (MDL No. 2521).California. The last cases remaining in the MDL court certified classes of direct and indirect purchaserswere dismissed with prejudice in February 2017. EPI settled with certain opt-out retailer plaintiffs in October 2017. In September 2018, when the court approved EPI’s settlementsettlements with the class plaintiffsdirect 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 classpurchaser classes. Those settlement agreements provideprovided for aggregate payments of approximately $100 million. As of October 29, 2019,$100 million. Of this total, EPI had paid approximately $90$60 million of this total, including approximately $60 million in 2018, and $30$30 million in the first quarter of 2019. The remaining2019 and $10 million is included in our accrual for loss contingencies.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 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. In June 2020, defendants filed a motion for summary disposition, which was granted in part and denied in part in October 2020.
Beginning in June 2014, multiple alleged purchasers of OPANA® ER filed cases againstsued 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.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 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. AllThe 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.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. Expert discovery is ongoing.In April 2020, defendants filed motions for summary judgment, which remain pending.
Beginning in February 2009, the FTCFederal Trade Commission (FTC) and certain private plaintiffs filed suit againstsued our subsidiary Par Pharmaceutical Companies, Inc.subsidiaries PPCI (since June 2016, EGHI) andand/or PPI as well as other pharmaceutical companies alleging violations of antitrust law arising out of theirthe settlement of certain patent litigation concerning the generic version of AndroGel®. Generally, the complaints seek and seeking damages, treble damages, equitable relief and attorneys’ fees and costs. The cases have beenwere 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.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. 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, among other things, the court rejected 2two of direct purchasers’ 3the remaining plaintiffs’ causation theories and 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.. 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 MDL court has scheduled a trial for February 2020. Insettlement 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, following the MDL court’s denial of class certification, several alleged direct purchasers filed a separate suit in the U.S. District Court for the Eastern District of Pennsylvania asserting claims substantially similar to those asserted in the MDL, as well as additional claims against other defendants relating to other patent settlement agreements.alleged conduct. In September 2019,January 2020, the defendants filed aU.S. District Court for the Eastern District of Pennsylvania denied defendants’ motion to transfer venue to the Northern District of GeorgiaGeorgia.
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 asserted claims under Sections 1 and 2 of the Sherman Act, state antitrust 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 permit coordinationfile amended complaints adding PPI as a defendant. In July 2019, PPI entered into settlement agreements with both the MDL. That motion remains pending.direct purchaser plaintiffs and the retailer plaintiffs. In September 2020, United Health Care Services, Inc. (UHC) filed a separate complaint against various defendants, including PPI; this complaint was also transferred to the MDL for pretrial proceedings. In October 2020, PPI entered into a settlement agreement with UHC. The direct purchaser settlement was subject to court approval, which was granted in March 2020. The various 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.
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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 theirthe 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, 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, which was granted in August 2019. The case iscases are currently in discovery.

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 their settlement of certain patent litigation concerning the generic version of Zetia® (ezetimibe). 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 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 pending in the U.S. District Court for the Eastern District of Virginia (MDL No. 2836). In September 2018, the indirect purchaser plaintiffs dismissed their claims against PPI without prejudice. In May 2019, the direct purchaser plaintiffs filed a motion seeking leave of court to file an amended consolidated class complaint adding PPI as a defendant in the direct purchaser actions, which leave was granted in June 2019; certain retailer plaintiffs filed a similar motion, which was granted in July 2019. In July 2019, PPI entered into settlement agreements with both the direct purchaser plaintiffs and the retailer plaintiffs. The direct purchaser settlement is subject to court approval. The settlement agreements involve no admission of liability and no monetary payment.
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 allegations that PPI entered into an exclusive acquisition and license agreement with Handa Pharmaceuticals, LLC (Handa) in 2012 pursuant to which Handa assigned to PPI certain rights under a prior settlement agreement between Handa and AstraZeneca resolving certain patent litigation. 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, equitable relief and attorneys’ fees and costs. In October 2019, the defendants filed various motions to dismiss and, in the alternative, moved to transfer the litigation to the U.S. District Court for the District of Delaware. In August 2020, the Southern District of New York granted the motion to transfer without ruling on the motions to dismiss. The cases are now pending in the District of Delaware.
In November 2014, EPI received a CID from Florida’s Office of the Attorney General seeking documentsBeginning in June 2020, several alleged indirect purchasers filed proposed class actions against Jazz Pharmaceuticals and other information concerning EPI’s agreement with Actavis settling the LIDODERM® patent litigation, as well as information concerning marketingpharmaceutical companies, including PPI, alleging violations of state and sales of LIDODERM®. EPI and/or EHSI later received similar CIDs from Alaska and South Carolina. In May 2019, we and EPI entered into a settlement with the state of California resolving potentialfederal antitrust and consumer protection claims concerning EPI’s agreement with Actavis settling the LIDODERM® patent litigation, andlaws in July 2019, we and EPI entered into a similar settlement with 18 additional states: Alabama, Arkansas, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Maryland, Minnesota, Mississippi, Missouri, Ohio, Oklahoma, Utah, Virginia, Washington and Wisconsin. The settlements involve no admission of liability, and payments provided for in the settlements are not material to the Company. As part of the settlements, we agreed to certain covenants relating to the future settlement of patent infringement litigation through February 2027. These covenants, which are consistent with Endo’s current practices in settling patent infringement cases and consistentconnection with the settlement agreement we reached with the Federal Trade Commissionof certain patent litigations concerning generic versions of Xyrem® (sodium oxybate). Certain complaints were filed in January 2017, include a prohibition on patent settlement agreements that prevent the marketing of authorized generic products or that involve certain payments to generic manufacturers. The covenants are included in stipulated orders subject to approval by the U.S. District Court for the Northern District of Illinois; others were filed in the U.S. District Court for the Northern District of California or the U.S. District Court for the Southern District of New York. The various complaints allege that Jazz entered into a series of “reverse-payment” settlements, including with PPI, to delay generic competition for Xyrem® and assert claims under Sections 1 and 2 of the Sherman Act, Section 16 of the Clayton Act, state antitrust and consumer protection statutes and/or state common law. Plaintiffs generally seek damages, treble damages, equitable relief and attorneys’ fees and costs. In July 2020, certain plaintiffs who had filed in the Northern District of Illinois voluntarily dismissed their cases and re-filed them in the Northern District of California. The court approvedIn August 2020, a plaintiff petitioned the stipulated order relatingJudicial Panel on Multidistrict Litigation (the JPML) to consolidate all related actions in the Southern District of New York. In October 2020, the actions filed in the Northern District of California settlement in June 2019; with respect towere stayed pending a decision by the other settlement, the court approved the stipulated order in August 2019.JPML.
To 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.
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 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 the investigations.
In July 2019, EPI received a CID from the Federal Trade CommissionFTC seeking production of certain documents and information regarding oxymorphone ER and EPI’s settlement of a contract dispute with Impax Laboratories (now Amneal Pharmaceuticals)Amneal) in August 2017. 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 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.

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Securities Litigation
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. The complaint alleged violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 against Endo,us, certain of itsour current and former directors and officers, and the underwriters who participated in the offering, based on certain disclosures about Endo’s generics business. In June 2019, the parties entered into a settlement subject to court approval, which providesproviding for, among other things, a $50 million payment to the investor class in exchange for a release of their claims. TheIn December 2019, the court preliminarily approveddenied a petition to intervene filed by the settlementlead plaintiff in July 2019; athe Pelletier litigation described below, and granted final approval hearing is set for November 2019.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 agreed to fund the settlement, the Company also recorded a corresponding insurance receivable of approximately $50 million during the first quarter of 2019, which 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 was filed in the Superior Court of Justice in Ontario, Canada by an individual shareholder on behalf of herself and similarly-situated Canadian-based investors who purchased Endo’s securities between January 11 and May 5, 2016. The original statement of claim generally sought class certification, declaratory relief, damages, interest and costs based on alleged violations of the Ontario Securities Act. The original statementAct arising out of claim 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 additional claim is2017, based on the Company’sour decision to voluntarily remove reformulated OPANA® ER from the market.
In August 2017, an alleged individual shareholder filed a putative class action entitled Bier v. Endo International plc, et al. in the U.S. District Court for the Eastern District of Pennsylvania. The original complaint alleged violations of Sections 10(b) and 20(a) of the Exchange Act against Endo and 4 current and former directors and officers, based on the Company’s decision to remove reformulated OPANA® ER from the market. In December 2017, the 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 of the Securities Act in connection with the June 2015 offering. The amended complaint named the Company, EHSI and 20 current and former directors, officers and employees of Endo as defendants. In December 2018, the court dismissed the plaintiff’s claims against 4 individual defendants. In May 2019, the parties stipulated to the dismissal of the claims brought pursuant to Sections 11 and 15 of the Securities Act, which the court accordingly dismissed without prejudice. In August 2019,2020, the parties entered into a settlement subject to court approval, which provides for a payment of $82.5 million toagreement resolving the investor class in exchange for a release of their claims.case. The court preliminarily approved the settlement in September 2019 and scheduled a final approval hearing for December 2019. As a resultOctober 2020. The amount of the settlement during the second quarter of 2019,is not material to the Company recorded an increase of approximately $82.5 million to its accrual for loss contingencies. Asand has been funded by the Company’s insurers agreed to fund the settlement, the Company also recorded a corresponding insurance receivable of approximately $82.5 million during the second quarter of 2019, which was recorded as Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets. The Company’s insurers funded $20.0 million of the settlement amount during the third quarter of 2019, resulting in corresponding decreases to the Company’s accrual for loss contingencies and insurance receivable. The Company’s insurers funded the remainder in October 2019.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 and Rule 10b-5 promulgated thereunder 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 movedfiled a motion to dismiss, which the amended complaint. Thatcourt granted in part and denied in part in February 2020. In particular, the court granted the motion 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. In June 2020, the lead plaintiff moved for class certification; that motion remains pending.
In June 2020, a putative class action entitled Benoit Albiges v. Endo International plc, Paul V. Campanelli, Blaise Coleman, and Mark T. Bradley was filed in the U.S. District Court for the District of New Jersey 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 and Rule 10b-5 promulgated thereunder, relating to the marketing and sale of opioid medications and the New York Department of Financial Services’ administrative action against the Company, EPI, EHSI, PPI and PPCI. In September 2020, the court appointed Curtis Laakso lead plaintiff in the action.
To 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.

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VASOSTRICT® Related Matters
In July 2016, Fresenius Kabi USA, LLC (Fresenius) filed a complaint againstsued our subsidiaries PPCI and its affiliate Par Sterile Products,PSP LLC (PSP) in the U.S. District Court for the District of New Jersey alleging that PPCI and its affiliate engaged in an anticompetitive scheme to exclude competition for PPCI’s VASOSTRICT®, a vasopressin-based cardiopulmonary drug. The complaint allegesIn 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 affiliateour subsidiaries entered into exclusive supply agreements with one or more active pharmaceutical ingredient (API) manufacturers and that, as a result, Fresenius could not obtain vasopressin API in order to file an Abbreviated New Drug Application (ANDA) to obtain U.S. Food and Drug Administration (FDA) approval for its own vasopressin product. Fresenius seekssought actual, treble and punitive damages, attorneys’ fees and costs and injunctive relief. The parties filed cross-motionsIn February 2020, the court granted our subsidiaries’ motion for summary judgment in July 2019; those motions remainon all claims and denied Fresenius’s cross-motion for partial summary judgment. Fresenius has appealed to the U.S. Court of Appeals for the Third Circuit; the appeal remains pending.
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®. 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 4 former employees and 1 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 7 of the individual defendants filed a motion to dismiss the New Jersey common law claims, 4 of the individual defendants filed a motion to dismiss for lack of personal jurisdiction and 1 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 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 4 of defendants’ pending motions to dismiss. In February 2019, the defendants filed their answers and affirmative defenses and certain defendants also filed counterclaims for defamation, tortious interference with contract, tortious interference with prospective business relations and witness interference. The counterclaims seek actual, exemplary and punitive damages and other relief. In March 2019, we filed a motion to dismiss all of the defendants’ counterclaims. This motion is still pending. In April 2019, the Third Circuit Court of Appeals affirmed the court’s preliminary injunction but remanded for additional fact-finding concerning the duration of the preliminary injunction and, if needed, consideration of the additional trade secrets raised in our motion for preliminary injunction but not addressed by the preliminary injunction order. The parties completed remand briefing in June 2019 and, following oral argument in July 2019, the court took the issue under submission. In September 2019, following the decision in the Athenex Inc. v. Azar matter upholding, No. 19-cv-00603, 2019 WL 3501811 (D.D.C. Aug. 1, 2019), which upheld the FDA’s determination that there is no clinical need for outsourcing facilities to compound drugs using bulk vasopressin, (described below), 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 PSP’sPSP LLC’s right to seek return or reduction of the bond. The court has not yet ruled on PPI and PSP’s request for return or reduction of the bond.

In October 2017, Endo Par Innovation Company, LLC (EPIC) and PSP filed a complaint in the U.S. District Court for the District of Columbia challenging the legality of 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 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 3 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 in March 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, 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. In August 2019, the court granted defendants’ motion for summary judgment and denied plaintiffs’ motion for summary judgment. The court subsequently denied plaintiffs’ motion for a stay or injunction of the court’s order pending appeal to the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit). Plaintiffs then withdrew their appeal and the D.C. Circuit dismissed the case. In September 2019, all parties also stipulated to the dismissal without prejudice of EPIC and PSP’s suit against the FDA, and that case was closed.
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. In July 2019,2020, the court granted our motion to dismiss the defendants’ counterclaims and dismissed Athenex’s declaratoryordered the preliminary injunction lifted while the bond remains in place pending an adjudication on the merits. In March 2020, we filed a motion for partial summary judgment actionon the merits of PPI and the time for Athenex to appeal has expired. This matter is now closed.PSP LLC’s breach of contract claims. That motion was denied in October 2020.
InBeginning in April 2018, PSP LLC and PPI received a notice letterletters 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 companycompanies of an ANDAANDAs/New Drug Applications (NDAs) for a generic versionversions 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 lawsuitlawsuits 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 was held in May 2019 and a bench trial is 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 ofor 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 forMay 2020 we reached a generic version of the 20 units/1 ml presentation for VASOSTRICT®.settlement with American Regent. In November 2018, the complaint was amended to addJune 2020 we reached a claim for the additional notice letter, within the 45-day deadline to invokesettlement with Sandoz. In August 2020, we reached a 30-month stay of FDA approval pursuant to the Hatch-Waxman legislative scheme.
In November 2018, PSP and PPI received a notice letter fromsettlement with Amphastar Pharmaceuticals Inc. (Amphastar) advisingand in September 2020, we reached a settlement with Fresenius. As a result of settling 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 AmphastarSandoz case, all remaining cases are pending 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. ADelaware. The remaining cases against Eagle Pharmaceuticals, Inc. and Amneal Pharmaceuticals LLC have been consolidated and trial is presently scheduled for January 2021.

In March 2019, PSP and PPI received2021; however, 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 pursuanttrial may occur earlier or later as timing remains uncertain due to the Hatch-Waxman legislative scheme. A trial is scheduled for January 2021.impact of COVID-19 and other factors.
In June 2019, PSP and PPI received a notice letter from American Regent advising of the filing by such company of an ANDA for a generic version of VASOSTRICT® (vasopressin IV solution (infusion)) 20 units/1 ml. In August 2019, PPI, PSP and EPIC filed a lawsuit against American Regent 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. A trial is scheduled for January 2021.
In September 2019, PSP and PPI received a notice letter from Fresenius Kabi 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 October 2019, PPI, PSP and EPIC filed a lawsuit against Fresenius Kabi 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’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. 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.
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.
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NOTE 14. OTHER COMPREHENSIVE INCOME (LOSS)
ThereDuring the three and nine months ended September 30, 2020 and 2019, there were 0 tax effects allocated to any component of Other comprehensive income (loss) income for the three and nine months ended September 30, 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 September 30, 20192020 and December 31, 20182019 consist of Foreign currency translation loss.

NOTE 15. SHAREHOLDERS' DEFICIT
The following table presents a reconciliation of the beginning and ending balances in Total shareholders' deficit for the three and nine months ended September 30, 20192020 (in thousands):
Euro Deferred SharesOrdinary SharesAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive LossTotal 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)
Net income— — — 10,558 — 10,558 
Other comprehensive income— — — — 5,624 5,624 
Compensation related to share-based awards— — 9,222 — — 9,222 
Tax withholding for restricted shares— — (2,467)— — (2,467)
Other1 — 12 — — 13 
BALANCE, JUNE 30, 2020$45 $23 $8,924,694 $(9,411,726)$(227,903)$(714,867)
Net loss— — — (75,887)— (75,887)
Other comprehensive income— — — — 2,755 2,755 
Compensation related to share-based awards— — 6,585 — — 6,585 
Tax withholding for restricted shares— — (1,070)— — (1,070)
Other2 — — — — 2 
BALANCE, SEPTEMBER 30, 2020$47 $23 $8,930,209 $(9,487,613)$(225,148)$(782,482)
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 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)
Net loss—
 —
 —
 (106,005) —
 (106,005)
Other comprehensive income—
 —
 —
 —
 4,395
 4,395
Compensation related to share-based awards—
 —
 12,600
 —
 —
 12,600
Tax withholding for restricted shares—
 —
 (7,013) —
 —
 (7,013)
Other—
 1
 —
 —
 —
 1
BALANCE, JUNE 30, 2019$45
 $23
 $8,883,720
 $(9,254,156) $(220,104) $(590,472)
Net loss—
 —
 —
 (79,415) —
 (79,415)
Other comprehensive loss—
 —
 —
 —
 (2,515) (2,515)
Compensation related to share-based awards—
 —
 11,576
 —
 —
 11,576
Tax withholding for restricted shares—
 —
 (650) —
 —
 (650)
Other(1) —
 —
 —
 —
 (1)
BALANCE, SEPTEMBER 30, 2019$44
 $23
 $8,894,646
 $(9,333,571) $(222,619) $(661,477)
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__________
(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)deficit for the three and nine months ended September 30, 20182019 (in thousands):
Euro Deferred SharesOrdinary SharesAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive LossTotal 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)
Net loss— — — (106,005)— (106,005)
Other comprehensive income— — — — 4,395 4,395 
Compensation related to share-based awards— — 12,600 — — 12,600 
Tax withholding for restricted shares— — (7,013)— — (7,013)
Other— 1 — — — 1 
BALANCE, JUNE 30, 2019$45 $23 $8,883,720 $(9,254,156)$(220,104)$(590,472)
Net loss— — — (79,415)— (79,415)
Other comprehensive loss— — — — (2,515)(2,515)
Compensation related to share-based awards— — 11,576 — — 11,576 
Tax withholding for restricted shares— — (650)— — (650)
Other(1)0 — — — (1)
BALANCE, SEPTEMBER 30, 2019$44 $23 $8,894,646 $(9,333,571)$(222,619)$(661,477)
 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)
Other1
 —
 (12) —
 —
 (11)
BALANCE, MARCH 31, 2018$49
 $22
 $8,807,406
 $(8,598,952) $(215,618) $(7,093)
Net loss—
 —
 —
 (60,867) —
 (60,867)
Other comprehensive loss—
 —
 —
 —
 (5,971) (5,971)
Compensation related to share-based awards—
 —
 12,096
 —
 —
 12,096
Tax withholding for restricted shares—
 —
 (234) —
 —
 (234)
Other(2) —
 (6) —
 —
 (8)
BALANCE, JUNE 30, 2018$47
 $22
 $8,819,262
 $(8,659,819) $(221,589) $(62,077)
Net loss—
 —
 —
 (173,205) —
 (173,205)
Other comprehensive income—
 —
 —
 —
 4,735
 4,735
Compensation related to share-based awards—
 —
 13,736
 —
 —
 13,736
Exercise of options—
 —
 473
 —
 —
 473
Tax withholding for restricted shares—
 —
 (3,206) —
 —
 (3,206)
Other(1) —
 86
 —
 —
 85
BALANCE, SEPTEMBER 30, 2018$46
 $22
 $8,830,351
 $(8,833,024) $(216,854) $(219,459)
__________
(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 $11.6$6.6 million and $13.7$11.6 million during the three months ended September 30, 20192020 and 2018,2019, respectively, and $48.9$33.5 million and $43.7$48.9 million during the nine months ended September 30, 20192020 and 2018,2019, respectively. As of September 30, 2019,2020, the total remaining unrecognized compensation cost related to non-vested share-based compensation awards amounted to $61.6$30.7 million.
As of September 30, 2019,2020, the weighted average remaining requisite service period for non-vested stock options was 1.10.4 years and for non-vested restricted stock units was 1.81.5 years.
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NOTE 16. OTHER (INCOME) EXPENSE, (INCOME), NET
The components of Other (income) expense, (income), net for the three and nine months ended September 30, 20192020 and 20182019 are as follows (in thousands):
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
Net gain on sale of business and other assets (1)$(1,933) $(2,866) $(3,101) $(29,859)
Foreign currency loss (gain), net (2)579
 1,354
 4,336

(734)
Net loss from our investments in the equity of other companies (3)191
 842
 2,546

3,163
Other miscellaneous, net (4)17,366
 (837) 16,627

(5,786)
Other expense (income), net$16,203
 $(1,507) $20,408

$(33,216)

Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Net gain on sale of business and other assets (1)$(1,888)$(1,933)$(16,730)$(3,101)
Foreign currency loss (gain), net (2)1,332 579 (1,491)4,336 
Net (gain) loss from our investments in the equity of other companies (3)(2,609)191 (2,373)2,546 
Other miscellaneous, net (4)(4,029)17,366 (4,724)16,627 
Other (income) expense, net$(7,194)$16,203 $(25,318)$20,408 
__________
(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.
(4)Amounts during the three and nine months ended September 30, 2019 primarily relate to $17.5 million of contract termination costs incurred as a result of certain product discontinuation activities in our International Pharmaceuticals segment.
(1)Amounts primarily relate to the sales of certain intellectual property rights.
(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.
(4)Amounts during the three and nine months ended September 30, 2019 primarily relate to $17.5 million of contract termination costs incurred as a result of certain product discontinuation activities in our International Pharmaceuticals segment.
NOTE 17. INCOME TAXES
The following table displays our Loss from continuing operations before income tax,, Income tax expense (benefit) and Effective tax rate for the three and nine months ended September 30, 20192020 and 20182019 (dollars in thousands):
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
Loss from continuing operations before income tax$(24,070) $(143,068) $(120,363) $(671,559)
Income tax expense$17,361
 $3,003
 $31,732
 $24,729
Effective tax rate(72.1)% (2.1)% (26.4)% (3.7)%

Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Loss from continuing operations before income tax$(64,800)$(24,070)$(18,299)$(120,363)
Income tax expense (benefit)$4,174 $17,361 $(124,516)$31,732 
Effective tax rate(6.4)%(72.1)%680.5 %(26.4)%
The incomechange in Income tax expense (benefit) for the three months ended September 30, 20192020 primarily relates to accrued interest on uncertain tax positions as well aschanges in the geographic mix of pre-tax earnings. As of
The change in Income tax expense (benefit) for the nine months ended September 30, 2019, we had2020 primarily relates to the 2020 discrete tax benefit arising from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), as discussed below, and changes in the geographic mix of pre-tax earnings.
We have 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
On March 27, 2020, the comparable 2018 period primarily relatesCARES Act was enacted by the U.S. government in response to the geographic mixCOVID-19 pandemic. The CARES Act, among other things, permits net operating loss (NOL) carryovers and carrybacks to offset 100% of pre-tax earnings.
Thetaxable income tax expense 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. During the nine months ended September 30, 2019 primarily relates to2020, the Company recorded a taxable gain arising fromdiscrete tax benefit in continuing operations of $129.0 million as a result of the extinguishment of debtchange in the March 2019 Refinancing Transactions, the geographic mix of pre-tax earnings and accrued interest on uncertain tax positions. The income tax expense for the comparable 2018 period primarily relates to the geographic mix of pre-tax earnings and discrete tax expense incurredNOL carryback period.
On June 3, 2020, in connection with the Internal Revenue Service's (IRS) examination of our U.S. income tax return for the fiscal year ended December 31, 2015 (2015 Return), we received an intercompany asset restructuring.acknowledgement of facts (AoF) from the IRS related to transfer pricing positions taken by Endo U.S., Inc. and its subsidiaries (Endo U.S.). The AoF asserted that Endo U.S. overpaid for certain pharmaceutical products that it purchased from certain non-U.S. related parties and proposed a specific adjustment to our 2015 U.S. income tax return position. On September 4, 2020, we received a Form 5701 Notice of Proposed Adjustment (NOPA) that is consistent with the previously disclosed AoF. We believe that the terms of the subject transactions are consistent with comparable transactions for similarly situated unrelated parties, and we intend to contest the proposed adjustment. While the NOPA is not material to our business, financial condition, results of operations or cash flows, the IRS could seek to apply its position to subsequent tax periods and propose similar adjustments. The aggregate impact of these adjustments, if sustained, could have a material adverse effect on our business, financial condition, results of operations and cash flows. Although the timing of the outcome of this matter is uncertain, it is possible any final resolution of the matter could take a number of years.
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In connection with the IRS’s examination of the 2015 Return, we understand that the IRS intends to issue a Technical Advice Memorandum (TAM) regarding the portion of our 2015 NOL relating to our worthless stock deduction that we believe qualifies as a specified product liability loss. Based on our discussions with the IRS, we expect the views expressed in the TAM to be contrary to the positions taken on our 2015 Return. If the IRS’s position is in whole or in part sustained, we could be required to repay a portion of the $760 million tax refund we disclosed in our 2016 Annual Report on Form 10-K, exclusive of interest. This result could have a material adverse effect on our business, financial condition, results of operations and cash flows. We disagree with the IRS’s expected position in the TAM and, if necessary, intend to contest any proposed adjustment. Although the timing of the outcome of this matter is uncertain, it is possible any final resolution of the matter could take a number of years.
NOTE 18. NET LOSS(LOSS) INCOME PER SHARE
The following is a reconciliation of the numerator and denominator of basic and diluted net loss(loss) income per share for the three and nine months ended September 30, 20192020 and 20182019 (in thousands):
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
Numerator:       
Loss from continuing operations$(41,431) $(146,071) $(152,095) $(696,288)
Loss from discontinued operations, net of tax(37,984) (27,134) (51,898) (43,273)
Net loss$(79,415) $(173,205) $(203,993) $(739,561)
Denominator:       
For basic per share data—weighted average shares226,598
 224,132
 225,804
 223,829
Dilutive effect of ordinary share equivalents—
 —
 —
 —
For diluted per share data—weighted average shares226,598
 224,132
 225,804
 223,829


Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Numerator:
(Loss) income from continuing operations$(68,974)$(41,431)$106,217 $(152,095)
Loss from discontinued operations, net of tax(6,913)(37,984)(41,616)(51,898)
Net (loss) income$(75,887)$(79,415)$64,601 $(203,993)
Denominator:
For basic per share data—weighted average shares230,040 226,598 228,985 225,804 
Dilutive effect of ordinary share equivalents0 0 4,394 0 
For diluted per share data—weighted average shares230,040 226,598 233,379 225,804 
Basic net loss per share amounts are computed based on the weighted average number of ordinary shares outstanding during the period. Diluted net 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 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 are not considered in the calculation of basic or diluted weighted average shares.
All potentially dilutive items were excluded from the diluted share calculation for the three months ended September 30, 2020 because their effect would have been anti-dilutive as the Company was in a loss position. For the nine months ended September 30, 2020, aggregate stock options and stock awards of 7.1 million and 6.4 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 and nine months ended September 30, 2019 and 2018 because their effect would have been anti-dilutive as the Company was in a loss position.
NOTE 19. SUBSEQUENT EVENTS
Plan to Acquire BioSpecifics Technologies Corp.
On October 19, 2020, the Company entered into an Agreement and Plan of Merger (the Merger Agreement) with Beta Acquisition Corp., a Delaware corporation and wholly-owned indirect subsidiary of the Company (Purchaser) and BioSpecifics Technologies Corp., a Delaware corporation and a commercial-stage biopharmaceutical company (BioSpecifics). Pursuant to the Merger Agreement, and on the terms and subject to the conditions thereof, Purchaser commenced a tender offer (the Offer) on November 2, 2020 to acquire all of BioSpecifics’ issued and outstanding shares of common stock (BioSpecifics Shares) at a purchase price of $88.50 per BioSpecifics Share (Offer Price), net to the holder thereof in cash, subject to reduction for any applicable withholding taxes and without interest.
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Following the consummation of the Offer and subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement, Purchaser will merge with and into BioSpecifics, with BioSpecifics surviving as a wholly owned subsidiary of the Company, pursuant to Section 251(h) of the General Corporation Law of the State of Delaware without a vote of BioSpecifics’ stockholders (Merger). At the effective time of the Merger (Effective Time), and without any action on the part of the holders of BioSpecifics Shares, each BioSpecifics Share, other than any BioSpecifics Shares (i) owned at the commencement of the Offer and immediately prior to the Effective Time by the Company, Purchaser or BioSpecifics or any direct or indirect wholly-owned subsidiary thereof, (ii) irrevocably accepted for purchase pursuant to the Offer or (iii) owned by BioSpecifics stockholders who are entitled to demand and have properly and validly demanded their appraisal rights under Delaware law, will be automatically converted into the right to receive an amount in cash equal to the Offer Price, subject to reduction for any applicable withholding taxes and without interest.
The Company has had a strategic relationship with BioSpecifics since 2004. Under the terms of the relationship, BioSpecifics receives a royalty stream from the Company related to the Company’s collagenase-based therapies, which currently include XIAFLEX®, currently marketed by the Company for the treatment of Dupuytren’s contracture and Peyronie’s disease, and Qwo™ (collagenase clostridium histolyticum-aaes), the first FDA-approved injectable treatment for cellulite, which is expected to be launched in spring 2021.
In connection with the Merger Agreement, the Marital Trust U/W/O Edwin H. Wegman Dated 8-10-06 (Stockholder) entered into a support agreement with the Company and Purchaser (Support Agreement). The Support Agreement generally requires that the Stockholder validly tender all of its shares after commencement of the Offer and to vote against any action, agreement or transaction involving BioSpecifics that can impede, interfere with or prevent the consummation of the transaction. The Stockholder beneficially owned, in the aggregate, 935,073 BioSpecifics Shares, which represented approximately 12.7% of BioSpecifics’ total outstanding shares based on 7,344,955 outstanding shares as of October 28, 2020.
The transaction is expected to close in late 2020, subject to customary closing conditions, and the Company expects to fund the transaction with cash on hand. The estimated value of the transaction is approximately $540 million (net of approximately $120 million in estimated cash, cash equivalents and investments acquired) at the anticipated time of deal closure.
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.products and (8) more recently, the impact of COVID-19. 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 related to litigation, restructuring charges and certain upfront, milestone and other payments made or accrued pursuant to acquisition or licensing agreements. Additionally,The following are examples of recent developments that could result in fluctuations in our quarterly results:
•In December 2019, COVID-19 was reported to have surfaced in Wuhan, China. In March 2020, the Company adopted ASC 842 on January 1, 2019 for leases that existed on that date. The Company has electedWorld Health Organization declared the COVID-19 outbreak a global pandemic. Many countries and localities announced aggressive actions to applyreduce the provisionsspread of ASC 842 retrospectivelythe 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 January 1, 2019 through a cumulative-effect adjustment. Prior period resultsphysical locations and issuing shelter-in-place orders (subject to limited exceptions). Since then, developments have evolved rapidly and are likely to continue to be presented under ASC 840 based ondo so. While there has been some loosening of restrictions, an increase in diagnosed cases may lead to the accounting standards originallyreinstatement of various restrictions.
•On July 6, 2020, we announced that we had received FDA approval of QWO for the treatment of moderate to severe cellulite in effect for such periods. Referthe buttocks of adult women. As further described below, the anticipated launch of QWO is in spring 2021. We have incurred and expect to continue to incur costs associated with the planned commercial launch of QWO.
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•On October 19, 2020, we announced we had agreed to acquire all of the outstanding shares of BioSpecifics in a transaction valued at approximately $540 million (net of approximately $120 million in estimated cash acquired) at the anticipated time of deal closure, which is expected to occur in late 2020. BioSpecifics currently receives a royalty stream from us related to our collagenase-based therapies, which currently include XIAFLEX® and QWO. We expect to incur certain expenses, including transaction costs, associated with the completion of this transaction.
•On November 5, 2020, we announced the initiation of several strategic actions, collectively referred to as the 2020 Restructuring Initiative, to further optimize the Company’s operations and increase overall efficiency. We have recorded and expect to record certain charges to complete these activities in anticipation of realizing annualized cost savings. For further discussion of this initiative, including a discussion of related charges and expected future charges, refer to Note 2. Summary of Significant Accounting Policies4. Restructuring of the Condensed Consolidated Financial Statements included in Part I, Item 1.
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 in the future 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 to date 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
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, our executive leadership team has developed and implemented a range of proactive measures to address the risks, uncertainties and operational challenges associated with COVID-19. We continue to closely monitor the rapidly evolving situation and implement 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. We have implemented alternative working practices and work-from-home requirements for appropriate employees, inclusive of our executive leadership team, and are continuing to pay full wages to our workforce. We have limited 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 temperature screenings, health questionnaires, social distancing, modified schedules, shift rotation and other similar policies at our manufacturing facilities. We launched a hybrid approach selling model as of June 1, 2020 for our field employees, which allows virtual and/or live engagement with healthcare providers and other customers. Certain of these measures have resulted in increased 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 continues to evolve, which are difficult to predict. Beginning in late first-quarter 2020 and into early second-quarter 2020, we experienced an increase in sales volumes for some of our critical care products, including VASOSTRICT®. These higher volumes resulted from significant channel inventory stocking of these products in anticipation of treating certain patients infected with COVID-19. This increase in sales volume was followed by significant inventory destocking for the remainder of the second quarter of 2020. Sales volumes returned toward pre-COVID-19 levels during the third quarter of 2020. Additionally, beginning during the last two weeks of the first quarter of 2020 and continuing into the second quarter of 2020, certain of our products that are physician administered, including XIAFLEX® and SUPPRELIN® LA, began experiencing significantly decreased sales volumes due to reduced physician office activity and patient office visits compared to prior year because of the COVID-19 pandemic. During the second and third quarters of 2020, sales volumes began to recover toward pre-COVID-19 levels as certain physician offices reopened. A resurgence in the cases of COVID-19 and new lockdowns could further impact future demand for additional information.these products.

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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 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 temperature screenings, health questionnaires, 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. To date, the impacts of COVID-19 have resulted in modest delays and could continue to cause delays to certain 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. Additionally, as a result of COVID-19 and its impact on medical aesthetics physician office closures and consumer spending, we have moved the anticipated product launch of QWO to spring 2021.
Key Trends. Since the first quarter of 2020, we, and our industry as a whole, have been impacted by COVID-19 and may 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 because of the COVID-19 pandemic, (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 certain of the policies described above 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, please refer to “Risk Factors” in Part II, Item 1A of this report.
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 information currently available to them. Our estimates are subject to significant risks and uncertainties that could cause our actual results to differ materially from those indicated below, including our assumptions about the duration and severity of 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 more significant than our current expectations.
•For the full year 2020, we expect revenues from our Sterile Injectables segment to be above 2019, primarily driven by increased sales of VASOSTRICT®. Beginning in late first-quarter 2020 and into early second-quarter 2020, we experienced an increase in sales volumes for VASOSTRICT® compared to pre-COVID-19 levels resulting from significant channel inventory stocking of this product in anticipation of treating vasodilatory shock in patients infected with COVID-19. This increase in sales volume was followed by significant inventory destocking for the remainder of the second quarter of 2020. Sales volumes returned toward pre-COVID-19 levels during the third quarter of 2020, which we expect to continue for the remainder of 2020. Additionally, we expect the anticipated full-year 2020 increase in VASOSTRICT® to be partially offset by decreases in certain other Sterile Injectables, primarily due to 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. Beginning during the last two weeks of the first quarter of 2020 and continuing into the second quarter of 2020, certain of our products that are physician administered, including XIAFLEX® and SUPPRELIN® LA, began experiencing significantly decreased sales volumes as compared to pre-COVID-19 levels due to physician office closures and a decline in patients electing to be treated because of the COVID-19 pandemic. During the second and third quarters of 2020, sales volumes began to recover toward pre-COVID-19 levels as certain physician offices reopened. We expect XIAFLEX® sales volumes to continue to recover in the fourth quarter of 2020 if and to the extent physician and patient activities continue to return toward pre-COVID-19 levels.
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•For the full year 2020, we expect a decline in revenues from our Generic Pharmaceuticals segment as compared to 2019, driven primarily by continued competitive pressures on certain commoditized generic products. We expect these declines to be partially offset by sales resulting from certain 2019 and 2020 product launches.
•For the full year 2020, we expect declines in revenues from the Established Products portfolio of our Branded Pharmaceuticals segment and the International Pharmaceuticals segment as compared to 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 and nine months ended September 30, 20192020 and 20182019 (dollars in thousands):
Three Months Ended September 30, % Change Nine Months Ended September 30, % ChangeThree Months Ended September 30,% ChangeNine Months Ended September 30,% Change
2019 2018 2019 vs. 2018 2019 2018 2019 vs. 2018202020192020 vs. 2019202020192020 vs. 2019
Total revenues, net$729,426
 $745,466
 (2)% $2,149,564
 $2,160,689
 (1)%Total revenues, net$634,860 $729,426 (13)%$2,142,853 $2,149,564 — %
Cost of revenues389,165
 412,965
 (6)% 1,169,282
 1,198,468
 (2)%Cost of revenues348,077 389,165 (11)%1,072,972 1,169,282 (8)%
Gross margin$340,261
 $332,501
 2 % $980,282
 $962,221
 2 %Gross margin$286,783 $340,261 (16)%$1,069,881 $980,282 9 %
Gross margin percentage46.6% 44.6%   45.6% 44.5%  Gross margin percentage45.2 %46.6 %49.9 %45.6 %
Selling, general and administrative$168,329
 $163,791
 3 % $471,749
 $478,615
 (1)%Selling, general and administrative$182,259 $168,329 8 %$522,285 $471,749 11 %
Research and development36,519
 39,683
 (8)% 96,353
 160,431
 (40)%Research and development32,055 36,519 (12)%94,165 96,353 (2)%
Litigation-related and other contingencies, net(14,414) (1,750) NM
 (4,093) 15,370
 NM
Litigation-related and other contingencies, net1,810 (14,414)NM(23,938)(4,093)NM
Asset impairment charges4,766
 142,217
 (97)% 258,652
 613,400
 (58)%Asset impairment charges8,412 4,766 77 %106,197 258,652 (59)%
Acquisition-related and integration items16,025
 1,288
 NM
 (26,983) 13,284
 NM
Acquisition-related and integration items, netAcquisition-related and integration items, net(1,407)16,025 NM17,100 (26,983)NM
Interest expense, net136,903
 131,847
 4 % 404,387
 385,896
 5 %Interest expense, net135,648 136,903 (1)%397,689 404,387 (2)%
Gain on extinguishment of debt—
 —
 NM
 (119,828) —
 NM
Gain on extinguishment of debt— — NM— (119,828)(100)%
Other expense (income), net16,203
 (1,507) NM
 20,408
 (33,216) NM
Other (income) expense, netOther (income) expense, net(7,194)16,203 NM(25,318)20,408 NM
Loss from continuing operations before income tax$(24,070) $(143,068) (83)% $(120,363) $(671,559) (82)%Loss from continuing operations before income tax$(64,800)$(24,070)NM$(18,299)$(120,363)(85)%
__________
NM indicates that the percentage change is not meaningful or is greater than 100%.
Total revenues, net. Revenues from our Sterile Injectables segment, including VASOSTRICT®, ADRENALIN® and APLISOL® our Branded Pharmaceuticals segment’s Specialty Products portfolio, led by XIAFLEX®, and recent product launches such as colchicine tablets,The decrease in revenue for the authorized generic of Colcrys®, increased during both the three and nine months ended September 30, 2019. Revenues2020 was primarily due to decreased revenues from our Generic Pharmaceuticals, Sterile Injectables and International Pharmaceuticals segments, partially offset by increased revenues from the Specialty Products portfolio of our Branded Pharmaceuticals segment’s Established Products portfolio and our Generic Pharmaceuticals segment decreased during both the three and nine months ended September 30, 2019. Additionally, revenues from our International Pharmaceuticals segment decreased duringsegment. The decrease in revenue for the nine months ended September 30, 2019.2020 was primarily driven by decreased revenues from our Branded Pharmaceuticals, Generic Pharmaceuticals and International Pharmaceuticals segments, partially offset by increased revenues from our Sterile Injectables segment. Our revenues are further disaggregated and described below under the heading “Business“Business Segment Results Review.Review.”
Cost of revenues and gross margin percentage. During the three and nine months ended September 30, 20192020 and 2018,2019, we incurred certain charges that impact the comparability of total Cost of revenues, including those related to amortization expense and retentioncontinuity and separation benefits and other cost reduction initiatives, including restructurings.initiatives. The following table summarizes such amounts (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
2019 2018 2019 20182020201920202019
Amortization of intangible assets (1)$131,932
 $161,275
 $417,949
 $471,662
Amortization of intangible assets (1)$104,066 $131,932 $325,801 $417,949 
Retention and separation benefits and other cost reduction initiatives (2)$1,004
 $3,833
 $1,004
 $60,254
Continuity and separation benefits and other cost reduction initiatives (2)Continuity and separation benefits and other cost reduction initiatives (2)$36,551 $1,004 $43,692 $1,004 
__________
(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 decreases during both the three and nine months ended September 30, 2019 were 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.
(2)Amounts in 2018 primarily relate to certain accelerated depreciation charges, employee 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.
Reductions(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 decreases during the three and nine months ended September 30, 2020 were primarily driven by asset impairment charges and decreases in the rate of amortization expense for certain assets.
(2)Amounts primarily relate to certain accelerated depreciation charges and employee separation, continuity and other benefit-related costs. For further discussion of our restructuring initiatives, including a discussion of related charges and expected future charges, refer to Note 4. Restructuring of the Condensed Consolidated Financial Statements included in Part I, Item 1.
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The decrease in Cost of revenues for the three months ended September 30, 2020 was primarily due to decreased amortization expense and decreased revenues, partially offset by increased costs related to continuity and separation benefits and other cost reduction initiatives. The decrease in Cost of revenues for the nine months ended September 30, 2020 was primarily due to decreased amortization expense and favorable changes in product mix as described below, partially offset by increased expenses related to retentioncontinuity and separation benefits and other cost reduction initiatives.
Gross margin percentage decreased for the three months ended September 30, 2020 as a result of increased costs related to continuity and separation benefits and other cost reduction initiatives, during bothpartially offset by decreased amortization expense. Gross margin percentage increased for the three and nine months ended September 30, 2019 resulted in decreases to Cost2020 as a result of revenuesdecreased amortization expense and increases in gross margin percentage. The overall decreases in revenues described above also contributed to the decreases in Cost of revenues. Partially offsetting these items werefavorable changes in product mix. These changesmix, partially offset by increased expenses related to continuity and separation benefits and other cost reduction initiatives. The favorable change in product mix included bothfor the favorable impactsnine months ended September 30, 2020 primarily resulted from increased revenues of overall shifts from lower margin Generic Pharmaceuticals and Established Products to higher margin Sterile Injectables and Specialty Products and the unfavorable impacts of increases in salesVASOSTRICT®, partially offset by increased revenues of certain lower margin authorized generic products launched in the third quarter of 2018.

products.
Selling, general and administrative expenses. The increase for the three months ended September 30, 20192020 was primarily due to increases in costs related toassociated with the 2020 Restructuring Initiative and increased costs associated with preparing for our continued investment and promotional efforts behind XIAFLEX®,planned spring 2021 commercial launch of QWO, partially offset by a third-quarter 2019 premium associated with an extended reporting period endorsement on an expiring insurance program and costs related to retention bonuses awarded to certain senior management ofthat did not reoccur during the Company in 2019. Partially offsetting these amounts were the impacts of decreased expenses for separation benefits and other cost reduction initiatives and decreases in long-term incentive compensation costs related primarily to the timing of certain 2018 awards.three months ended September 30, 2020.
The decreaseincrease for the nine months ended September 30, 20192020 was primarily driven by decreases indue to costs of $31.1 million associated with the June 2020 Refinancing Transactions, costs associated with the 2020 Restructuring Initiative, a higher branded prescription drug fee, increased long-term incentive compensation costs related primarily to the timingand increased costs associated with preparing for our planned commercial launch of certain 2018 awards, the impact of certain separations, restructurings and other cost reduction initiatives and a lower branded prescription drug fee. These decreases wereQWO, partially offset by increases in costs related to our continued investment and promotional efforts behind XIAFLEX®, a third-quarter 2019 premium associated with an extended reporting period endorsement on an expiring insurance program increasedthat did not reoccur during the nine months ended September 30, 2020 as well as reduced legal costs related toassociated with certain litigation matters and costs related to retention bonuses awarded to certain senior managementmatters.
For further discussion of the Company in 2019. Our material restructuring initiatives2020 Restructuring Initiative, including a discussion of related charges and legal proceedings and other contingent matters are described more fully inexpected future charges, refer to Note 4. Restructuring and Note 13. Commitments and Contingencies, respectively, of the Condensed Consolidated Financial Statements included in Part I, Item 11.
We expect costs associated with preparing for and executing on our planned commercial launch of QWO to continue to increase. Additionally, we expect costs associated with our continued investment and promotional efforts behind XIAFLEX.® to increase.
Research and developmentR&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 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 innovative and clinically differentiated product candidates. We are currentlyhave been progressing theand expect to continue to progress our cellulite treatment development programprograms for collagenase clostridium histolyticum (CCH). In September 2019, we submitted a Biologics License Application (BLA) toQWO, which was approved by the FDA for CCH for the treatment of moderate to severe cellulite in the buttocks. The submission is based on positive results from two identical Phase 3 clinical trials. Trial subjects receiving CCH showed highly statistically significant levelsbuttocks of improvementadult women in July 2020. In early 2020, we announced that we had initiated our XIAFLEX® development programs for the appearancetreatment of cellulite with treatment, as measured by the trials’ primary endpoint. In addition, the RELEASE-1 trial passed 8 out of 8 key secondary endpointsplantar fibromatosis and the RELEASE-2 trial passed 7 out of 8 key secondary endpoints. Finally, CCH was well-tolerated in the actively-treated subjects with most adverse events being mildadhesive capsulitis, which are continuing to moderate in severity and primarily limitedprogress. We also expect to the local injection area. The FDA has a 60-day filing review periodcontinue to determine whether the BLA is complete and acceptable for filing.
Our remaining pipeline consists mainly of a variety of pharmaceutical productsfocus investments in our Sterile Injectables and Generic Pharmaceuticals segments. Our primary approach to developing products in these segments is to target high-barrier-to-entry product opportunities,segment, potentially including first-to-file or first-to-market opportunities that are difficult to formulate or manufacture or face complex legal and regulatory challenges. We expect such product opportunities to result in products that are either the exclusive generic or have two or fewer generic competitors when launched, which we believe tends to lead to more sustainable market share and profitability for our product portfolio. In our Sterile Injectables business, we also focus on developing branded injectable products with inherent scientific, regulatory, legal and technical complexities and developing other dosage forms and technologies.
As of September 30, 2019, these two segments are actively pursuing approximately 120 product candidates, which included approximately 65 ANDAs pending with the FDA. Of the 65 ANDAs, approximately half represent first-to-file opportunities or first-to-market opportunities. These numbers do not include five sterile injectable product candidates relating to a second-quarter 2018 development, license and commercialization agreement withagreements such as our Nevakar, Inc. These numbers reflect recent actions taken agreement. In addition, we are conducting an open-label Phase 1 pharmacokinetic (PK) study of VASOSTRICT® in connectionhealthy volunteers, studying plasma clearance with TT genotype versus AA/AT genotype. As these and certain other programs progress, it is possible that our review and management of our pipeline.R&D expenses could increase.
The decreases in R&D expense for both the three and nine months ended September 30, 20192020 were driven in part by reduced costs associated with our clinical trials of CCH and the January 2018 Restructuring Initiative and other cost reduction initiatives. Additionally, R&D expense for the nine months ended September 30, 2018 included the impact of an upfront payment of $35.0 million related to the Nevakar, Inc. agreement described above, which was recorded as Research and development expense during the three months ended June 30, 2018. Partially offsetting these decreases for both periods was the impact ofdecreased costs associated with certain post-marketing commitments.R&D commitments, partially offset by increased costs associated with our Sterile Injectables segment and costs associated with the 2020 Restructuring Initiative. For further discussion of the 2020 Restructuring Initiative, including a discussion of related charges and expected future charges, refer to Note 4. Restructuring of the Condensed Consolidated Financial Statements included in Part I, Item 1.
Litigation-related and other contingencies, net. Included within Litigation-related and other contingencies, net are changes to our accruals for litigation-related settlement charges and certain settlement proceeds related to suits filed by our subsidiaries. Our material legal proceedings and other contingent matters are described in more detail in Note 13. Commitments and Contingencies of the Condensed Consolidated Financial Statements included in Part I, Item 1.1. As further described therein, adjustments to the corresponding liability accruals may be required in the future. This could have a material adverse effect on our business, financial condition, results of operations and cash flows.
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Asset impairment charges. The following table presents the components of our total Asset impairment charges for the three and nine months ended September 30, 20192020 and 20182019 (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Goodwill impairment charges$— $— $32,786 $151,108 
Other intangible asset impairment charges2,020 4,261 65,771 104,660 
Property, plant and equipment impairment charges— 505 1,248 2,884 
Operating lease right-of-use asset impairment charges6,392 — 6,392 — 
Total asset impairment charges$8,412 $4,766 $106,197 $258,652 
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
Goodwill impairment charges$—
 $—
 $151,108
 $391,000
Other intangible asset impairment charges4,261
 140,609
 104,660
 217,576
Property, plant and equipment impairment charges505
 1,608
 2,884
 4,824
Total asset impairment charges$4,766
 $142,217
 $258,652
 $613,400

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. Goodwill and Other Intangibles of the Condensed Consolidated Financial Statements included in Part I, Item 1.1. A discussion of critical accounting estimates made in connection with certain of our impairment tests is included below under the caption “CRITICAL“CRITICAL ACCOUNTING ESTIMATES.ESTIMATES.”
Acquisition-related and integration items.items, net. Acquisition-related and integration items, net for the three and nine months ended September 30, 20192020 and 20182019 primarily consist of the net (benefit) expense (benefit) 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 could incur, related contingent obligations. See Note 6. Fair Value Measurements of the Condensed Consolidated Financial Statements included in Part I, Item 1 for further discussion of our acquisition-related contingent consideration.
Interest expense, net. The components of Interest expense, net for the three and nine months ended September 30, 20192020 and 20182019 are as follows (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
2019 2018 2019 20182020201920202019
Interest expense$143,013
 $134,829
 $419,962
 $395,681
Interest expense$135,829 $143,013 $401,764 $419,962 
Interest income(6,110) (2,982) (15,575) (9,785)Interest income(181)(6,110)(4,075)(15,575)
Interest expense, net$136,903
 $131,847
 $404,387
 $385,896
Interest expense, net$135,648 $136,903 $397,689 $404,387 
The increasesdecrease in interest expense for both the three and nine months ended September 30, 2019 were2020 was primarily attributable to changesdecreases to the London Interbank Offered Rate (LIBOR) that impacted our variable-rate debt and the reduction to the amount of our indebtedness associated with the June 2020 Refinancing Transactions, partially offset by the increase to the weighted average interest rate applicable to our notes following the June 2020 Refinancing Transactions. The decrease in interest expense for the nine months ended September 30, 2020 was primarily attributable to decreases to LIBOR that impacted our variable-rate debt and the reductions to the amount of our indebtedness associated with the March 2019 Refinancing Transactions and June 2020 Refinancing Transactions, partially offset by the increases to the weighted average interest rate applicable to our senior notes and senior secured notes following the March 2019 Refinancing Transactions and June 2020 Refinancing Transactions, as well as interest expense associated with our June 2019 Revolving Credit Facility draw of $300.0 million. These increases were partially offset by the reductions to the amount of our indebtedness associated with the March 2019 Refinancing Transactions. Refer to Note 12. Debt of the Condensed Consolidated Financial Statements included in Part I, Item 1 for further discussion of these transactions.
Although we cannot predict future Changes in interest rates with certainty, absent actions to reduce the weighted average interest rate or the principal amount ofcould increase our debt, interest expense is likely to continue to increase in 2019 as compared to 2018, primarily asthe future, which could have a resultmaterial adverse effect on our business, financial condition, results of increases in LIBOR, the impact of the March 2019 Refinancing Transactions, which increased our weighted average interest rateoperations and reduced the outstanding principal of our debt, and the June 2019 Revolving Credit Facility draw of $300.0 million.cash flows.
Interest income varies primarily based on the amounts of our interest-bearing investments, such as money market funds, as well as changes in the corresponding interest rates.
Gain on extinguishment of debt. Gain on extinguishment of debt totaled $119.8 million for the nine months ended September 30, 2019, with no such amounts recorded in any of the other periods presented. The amount during the nine months ended September 30, 2019 relatedrelates to the March 2019 Refinancing Transactions. Refer to Note 12. Debt of the Condensed Consolidated Financial Statements included in Part I, Item 1 for further discussion.
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Other (income) expense, (income), net. The components of Other (income) expense, (income), net for the three and nine months ended September 30, 20192020 and 20182019 are as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Net gain on sale of business and other assets$(1,888)$(1,933)$(16,730)$(3,101)
Foreign currency loss (gain), net1,332 579 (1,491)4,336 
Net (gain) loss from our investments in the equity of other companies(2,609)191 (2,373)2,546 
Other miscellaneous, net(4,029)17,366 (4,724)16,627 
Other (income) expense, net$(7,194)$16,203 $(25,318)$20,408 
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
Net gain on sale of business and other assets (1)$(1,933) $(2,866) $(3,101) $(29,859)
Foreign currency loss (gain), net (2)579
 1,354
 4,336
 (734)
Net loss from our investments in the equity of other companies (3)191
 842
 2,546
 3,163
Other miscellaneous, net (4)17,366
 (837) 16,627
 (5,786)
Other expense (income), net$16,203
 $(1,507) $20,408
 $(33,216)
__________
(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.
(4)Amounts during the three and nine months ended September 30, 2019 primarily relate to $17.5 million of contract termination costs incurred as a result of certain product discontinuation activities in our International Pharmaceuticals segment.

For additional information on the components of Other (income) expense, net, refer to Note 16. Other (Income) Expense, Net of the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.
Income tax expense (benefit). The following table displays our Loss from continuing operations before income tax,, Income tax expense (benefit) and Effective tax rate for the three and nine months ended September 30, 20192020 and 20182019 (dollars in thousands):
Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
2019 2018 2019 20182020201920202019
Loss from continuing operations before income tax$(24,070) $(143,068) $(120,363) $(671,559)Loss from continuing operations before income tax$(64,800)$(24,070)$(18,299)$(120,363)
Income tax expense$17,361
 $3,003
 $31,732
 $24,729
Income tax expense (benefit)Income tax expense (benefit)$4,174 $17,361 $(124,516)$31,732 
Effective tax rate(72.1)% (2.1)% (26.4)% (3.7)%Effective tax rate(6.4)%(72.1)%680.5 %(26.4)%
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 incomechange in Income tax expense (benefit) for the three months ended September 30, 20192020 primarily relates to accrued interest on uncertain tax positions as well as the geographic mix of pre-tax earnings. The income tax expense for the comparable 2018 period primarily relates tochanges in the geographic mix of pre-tax earnings.
The incomechange in Income tax expense (benefit) for the nine months ended September 30, 20192020 primarily relates to a taxable gainthe 2020 discrete tax benefit arising from the extinguishment of debtCARES Act and changes in the March 2019 Refinancing Transactions, the geographic mix of pre-tax earnings and accrued interest on uncertain tax positions. 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.earnings.
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 September 30, 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)IRS presently is examining certain of our subsidiaries’ U.S. income tax returns for fiscal years 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. For additional information, including a discussion of related recent developments and their potential impact on us, refer to Note 17. Income Taxes of the Condensed Consolidated Financial Statements included in Part I, Item 1.
During the third quarter of 2020, the IRS opened an examination into certain of our subsidiaries’ U.S. income tax returns for fiscal years ended between December 31, 2016 and December 31, 2018. The IRS maywill likely examine our tax returns for other fiscal years and/or for other tax positions. Similarly, other tax authorities, including the CanadianCanada Revenue AuthorityAgency, are currently examining our non-U.S. tax returns. Additionally, other jurisdictions where we are not currently under audit remain subject to potential future examination.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. Income Taxes of the Condensed Consolidated Financial Statements included in Part I, Item 11.
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Discontinued operations, net of tax. The operating results of the Company’s Astora business, which the Board of Directors resolved to wind-down in 2016, are reported as Discontinued operations, net of tax in the Condensed Consolidated Statements of Operations for all periods presented. The following table provides the operating results of Astora Discontinued operations, net of tax, for the three and nine months ended September 30, 20192020 and 20182019 (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Litigation-related and other contingencies, net$— $30,000 $28,351 $30,400 
Loss from discontinued operations before income taxes$(7,134)$(37,984)$(47,158)$(51,898)
Income tax benefit$(221)$— $(5,542)$— 
Discontinued operations, net of tax$(6,913)$(37,984)$(41,616)$(51,898)
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
Discontinued operations, net of tax$(37,984) $(27,134) $(51,898) $(43,273)
These amounts consist ofAmounts included in the Litigation-related and other contingencies, net including third-quarterline of the table above are for mesh-related litigation. The remaining pre-tax amounts during the three and nine months ended September 30, 2020 and 2019 and third-quarter 2018 mesh-related charges of $30.0 million and $19.0 million, respectively,were primarily related to mesh-related legal defense costs and certain other items. For additional discussion of mesh-related matters, refer to Note 13. Commitments and Contingencies of the Condensed Consolidated Financial Statements included in Part I, Item 1.1.
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. 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 (loss) from continuing operations before income tax (the measure we use to evaluate segment performance), as well as reconciliations of Total consolidated loss from continuing operations before income tax, which is determined in accordance with U.S. GAAP, to our Total segment adjusted income (loss) from continuing operations before income tax.
We refer to Segment adjusted income (loss) from continuing operations before income tax, a financial measure not determined in accordance withdefined 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 (loss) 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 (loss) from continuing operations before income tax to evaluate our financial performance. Finally, Segment adjusted income (loss) from continuing operations before income tax is utilized in the calculation of other financial measures 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 (loss) 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 5. 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 (loss) from continuing operations before income tax. Other companies in our industry may define Segment adjusted income (loss) from continuing operations before income tax differently than we do. As a result, it may be difficult to use Segment adjusted income (loss) 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 (loss) 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 5. 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 from continuing operations before income tax, which is determined in accordance with U.S. GAAP, and included into our Condensed Consolidated StatementsTotal segment adjusted income (loss) from continuing operations before income tax.
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Revenues, Net.net. The following table displays our revenue by reportable segment for the three and nine months ended September 30, 2020 and 2019 and 2018 (in(dollars in thousands):
Three Months Ended September 30, % Change Nine Months Ended September 30, % ChangeThree Months Ended September 30,% ChangeNine Months Ended September 30,% Change
2019 2018 2019 vs. 2018 2019 2018 2019 vs. 2018202020192020 vs. 2019202020192020 vs. 2019
Branded Pharmaceuticals$217,313
 $220,100
 (1)% $629,851
 $632,972
 — %Branded Pharmaceuticals$223,682 $217,313 3 %$557,276 $629,851 (12)%
Sterile Injectables263,635
 237,150
 11 % 777,963
 670,847
 16 %Sterile Injectables251,393 263,635 (5)%906,997 777,963 17 %
Generic Pharmaceuticals218,012
 257,969
 (15)% 654,322
 748,445
 (13)%Generic Pharmaceuticals135,508 218,012 (38)%602,670 654,322 (8)%
International Pharmaceuticals (1)30,466
 30,247
 1 % 87,428
 108,425
 (19)%International Pharmaceuticals (1)24,277 30,466 (20)%75,910 87,428 (13)%
Total net revenues from external customers$729,426
 $745,466
 (2)% $2,149,564
 $2,160,689
 (1)%Total net revenues from external customers$634,860 $729,426 (13)%$2,142,853 $2,149,564 — %
__________
(1)Revenues generated by our International Pharmaceuticals segment are primarily attributable to external customers located in Canada.

(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 and nine months ended September 30, 2020 and 2019 and 2018 (in(dollars in thousands):
Three Months Ended September 30, % Change Nine Months Ended September 30, % ChangeThree Months Ended September 30,% ChangeNine Months Ended September 30,% Change
2019 2018 2019 vs. 2018 2019 2018 2019 vs. 2018202020192020 vs. 2019202020192020 vs. 2019
Specialty Products:           Specialty Products:
XIAFLEX®$82,756

$64,214
 29 % $226,118

$184,855
 22 %XIAFLEX®$88,167 $82,756 7 %$211,022 $226,118 (7)%
SUPPRELIN® LA20,772

20,408
 2 % 66,542

60,948
 9 %SUPPRELIN® LA28,229 20,772 36 %63,344 66,542 (5)%
Other Specialty (1)28,470

27,614
 3 % 78,397

69,226
 13 %Other Specialty (1)23,724 28,470 (17)%68,795 78,397 (12)%
Total Specialty Products$131,998

$112,236
 18 % $371,057

$315,029
 18 %Total Specialty Products$140,120 $131,998 6 %$343,161 $371,057 (8)%
Established Products:




   




  Established Products:
PERCOCET®$28,561
 $30,730
 (7)% $88,199
 $93,539
 (6)%PERCOCET®$27,508 $28,561 (4)%$82,789 $88,199 (6)%
TESTOPEL®13,236
 15,962
 (17)% 40,830
 44,976
 (9)%TESTOPEL®18,068 13,236 37 %26,877 40,830 (34)%
Other Established (2)43,518
 61,172
 (29)% 129,765
 179,428
 (28)%Other Established (2)37,986 43,518 (13)%104,449 129,765 (20)%
Total Established Products$85,315

$107,864
 (21)% $258,794

$317,943
 (19)%Total Established Products$83,562 $85,315 (2)%$214,115 $258,794 (17)%
Total Branded Pharmaceuticals (3)$217,313

$220,100
 (1)% $629,851

$632,972
 — %Total Branded Pharmaceuticals (3)$223,682 $217,313 3 %$557,276 $629,851 (12)%
__________
(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.
(1)Products included within Other Specialty are NASCOBAL® Nasal Spray and AVEED®.
(2)Products included within Other Established include, but are not limited to, EDEX® and LIDODERM®.
(3)Individual products presented above represent the top two performing products in each product category for either the three or nine months ended September 30, 2020 and/or any product having revenues in excess of $25 million during any quarterly period in 2020 or 2019.
(2)
Products included within Other Established include, but are not limited to, LIDODERM®, VOLTAREN® Gel, EDEX®, FORTESTA® Gel and TESTIM®, including the authorized generics of FORTESTA® Gel and TESTIM®.
(3)Individual products presented above represent the top two performing products in each product category for either the three or nine months ended September 30, 2019 and/or any product having revenues in excess of $25 million during any quarterly period in 2019 or 2018.
Specialty Products
XIAFLEX®, SUPPRELIN® LA and certain of our Other Specialty Products are physician administered products. Beginning during the last two weeks of the first quarter of 2020 and continuing into the second quarter of 2020, certain of our products that are physician administered, including XIAFLEX® and SUPPRELIN® LA, began experiencing significantly decreased sales volumes due to reduced physician office activity and patient office visits compared to prior year because of the COVID-19 pandemic. During the second and third quarters of 2020, sales volumes began to recover toward pre-COVID-19 levels as certain physician offices reopened. However, for the nine months ended September 30, 2020, overall sales volumes for these products decreased, resulting in decreased revenues. The increasesdecrease in XIAFLEX® revenues for boththe nine months ended September 30, 2020 was partially offset by price.
The increase in XIAFLEX® revenues for the three months ended September 30, 2020 compared to the prior year period was primarily driven by price. The increase in SUPPRELIN® LA revenues for the three months ended September 30, 2020 compared to the prior year period was primarily driven by volume.
We expect XIAFLEX® sales volumes to continue to recover in the fourth quarter of 2020 if and to the extent physician and patient activities continue to return toward pre-COVID-19 levels.
The decrease in Other Specialty Products for the three months ended September 30, 2020 was primarily driven by decreased price and volume. The decrease in Other Specialty Products for the nine months ended September 30, 2020 was primarily driven by decreased volume.
Established Products
The decreases in PERCOCET® revenues for the three and nine months ended September 30, 2019 were primarily attributable to demand growth driven by the continued investment and promotional efforts behind XIAFLEX®, as well as price.
The increase in SUPPRELIN® LA for the nine months ended September 30, 2019 was primarily attributable to increases in both volume and price.
The increases in Other Specialty Products for both the three and nine months ended September 30, 2019 were primarily attributable to increased sales of both NASCOBAL® Nasal Spray and AVEED®. When compared to the three and nine months ended September 30, 2018, these products generally benefited from increased volume.
Established Products
The decreases in PERCOCET® for both the three and nine months ended September 30, 20192020 were primarily attributable to volume decreases, partially offset by price increases.
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The increase in TESTOPEL® revenues for the three months ended September 30, 2020 was primarily attributable to increased sales following the third-quarter 2020 resolution of a temporary supply disruption. The decrease in TESTOPEL® revenues for the nine months ended September 30, 2020 was primarily attributable to a temporary supply disruption, which was subsequently resolved in the third quarter of 2020.
The decreases in TESTOPEL®Other Established Products revenues for both the three and nine months ended September 30, 2019 were primarily attributable to both price and volume decreases.
The decreases in Other Established Products for both the three and nine months ended September 30, 20192020 were primarily attributable to volume decreases as a result of ongoing competitive pressures.
Sterile Injectables. The following table displays the significant components of our Sterile Injectables revenues from external customers for the three and nine months ended September 30, 20192020 and 20182019 (dollars in thousands):
Three Months Ended September 30,% ChangeNine Months Ended September 30,% Change
Three Months Ended September 30, % Change Nine Months Ended September 30, % Change202020192020 vs. 2019202020192020 vs. 2019
2019 2018 2019 vs. 2018 2019 2018 2019 vs. 2018
VASOSTRICT®$129,691
 $112,333
 15 % $384,854
 $332,387
 16 %
ADRENALIN®40,311
 35,460
 14 % 133,468
 101,858
 31 %
APLISOL®28,085
 15,992
 76 % 55,996
 49,064
 14 %
VASOSTRICT®
VASOSTRICT®
$155,412 $129,691 20 %$572,530 $384,854 49 %
ADRENALIN®
ADRENALIN®
30,662 40,311 (24)%120,335 133,468 (10)%
Ertapenem for injection21,853
 25,798
 (15)% 79,619
 25,798
 NM
Ertapenem for injection16,784 21,853 (23)%46,648 79,619 (41)%
APLISOL®
APLISOL®
9,443 28,085 (66)%25,821 55,996 (54)%
Other Sterile Injectables (1)43,695
 47,567
 (8)% 124,026
 161,740
 (23)%Other Sterile Injectables (1)39,092 43,695 (11)%141,663 124,026 14 %
Total Sterile Injectables (2)$263,635
 $237,150
 11 % $777,963
 $670,847
 16 %Total Sterile Injectables (2)$251,393 $263,635 (5)%$906,997 $777,963 17 %
__________
NM indicates that(1)Products included within Other Sterile Injectables include ephedrine sulfate injection and others.
(2)Individual products presented above represent the percentage change is not meaningfultop two performing products within the Sterile Injectables segment for either the three or is greater than 100%.nine months ended September 30, 2020 and/or any product having revenues in excess of $25 million during any quarterly period in 2020 or 2019.
(1)Products included within Other Sterile Injectables include ephedrine sulfate injection and others.

(2)Individual products presented above represent the top two performing products within the Sterile Injectables segment for either the three or nine months ended September 30, 2019 and/or any product having revenues in excess of $25 million during any quarterly period in 2019 or 2018.
The increases in VASOSTRICT® revenues for the three and nine months ended September 30, 20192020 were primarily attributable to changes ina combination of increased volume price and mixresulting from the impacts of business. COVID-19 described above, as well as price.
As of September 30, 2019,2020, we have six14 patents forcovering VASOSTRICT® listed in the Orange Book, including with respect to presentations that have not yet been commercialized, 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 Drugreference-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 areAs further discussed in Note 13. Commitments and Contingencies of the Condensed Consolidated Financial Statements included in Part I, Item 1 under the heading ““VASOSTRICTVASOSTRICT® Related 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, profitabilityand could have a material adverse effect on our business, financial condition, results of operations and cash flows.
The increasesdecreases in ADRENALIN® revenues for the three and nine months ended September 30, 20192020 were primarily attributabledriven by the impact of a competitive entry. The introduction of one or more additional competing versions of ADRENALIN® could result in further reductions to increased priceour market share and volume.could have a material adverse effect on our business, financial condition, results of operations and cash flows.
The increasesdecreases in APLISOLrevenues of ertapenem for injection (the authorized generic of Merck’s Invanz®) for the three and nine months ended September 30, 20192020 were primarily driven by wholesalers restocking during the three months ended September 30, 2019 after a temporary supply shortage.
Ertapenem for injection, the authorized generic of Invanz®, launched during the third quarter of 2018. The decrease for the three months ended September 30, 2019 was primarily attributable to competitive pressures. The increase for the nine months ended September 30, 2019 was driven by the timingdecreased volume and price as a result of this product’s launch.increased competition.
The decreases in Other Sterile InjectablesAPLISOL® revenues for the three and nine months ended September 30, 2020 were driven in part by decreased volumes resulting from competition. Additionally, during the third quarter of 2019, were primarily driven by certain competitive pressures impacting multiple products in this portfolio.
APLISOLGeneric Pharmaceuticals.® The decreases for the Generic Pharmaceuticals segment for bothrevenues benefited from wholesalers restocking after a temporary supply shortage. This benefit did not reoccur during the three and nine months ended September 30, 2019 were primarily attributable to continued competitive pressure on commoditized generic products. Partially offsetting the decreases were the impacts of certain recent product launches including, among others, colchicine tablets.2020.
International Pharmaceuticals. The decrease in Other Sterile Injectables revenues for the International Pharmaceuticals segmentthree months ended September 30, 2020 was primarily driven by decreased prices, partially offset by increased volumes across multiple products within the product portfolio. The increase in Other Sterile Injectables revenues for the nine months ended September 30, 20192020 was primarily driven by increased volumes, partially offset by decreased prices across multiple products within the product portfolio.
Generic Pharmaceuticals. The decreases in Generic Pharmaceuticalsrevenues for the three and nine months ended September 30, 2020 were primarily attributable to decreased sales of colchicine tablets (the authorized generic of Takeda’s Colcrys®) resulting from competition, as well as competitive pressures on certain other generic products, partially offset by increased revenues from certain recent product launches.
International Pharmaceuticals. The decreases in International Pharmaceuticals revenues for the three and nine months ended September 30, 2020 were primarily attributable to competitive pressures in certain international markets and the impact of certain product discontinuation activities.
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Segment adjusted income (loss) from continuing operations before income tax. The following table displays our AdjustedSegment adjusted income (loss) from continuing operations before income tax by reportable segment for the three and nine months ended September 30, 2020 and 2019 and 2018 (in(dollars in thousands):
Three Months Ended September 30,% ChangeNine Months Ended September 30,% Change
202020192020 vs. 2019202020192020 vs. 2019
Branded Pharmaceuticals$120,368 $105,864 14 %$267,964 $302,682 (11)%
Sterile Injectables$190,498 $197,974 (4)%$696,147 $566,345 23 %
Generic Pharmaceuticals$(13,428)$29,569 NM$91,293 $129,702 (30)%
International Pharmaceuticals$10,679 $11,511 (7)%$34,180 $35,053 (2)%
 Three Months Ended September 30, % Change Nine Months Ended September 30, % Change
 2019 2018 2019 vs. 2018 2019 2018 2019 vs. 2018
Branded Pharmaceuticals$91,444
 $84,891
 8 % $253,417
 $262,454
 (3)%
Sterile Injectables197,974
 170,329
 16 % 566,345
 513,082
 10 %
Generic Pharmaceuticals29,433
 82,555
 (64)% 128,738
 247,137
 (48)%
International Pharmaceuticals11,511
 13,377
 (14)% 35,053
 45,594
 (23)%
Total segment adjusted income from continuing operations before income tax$330,362
 $351,152
 (6)% $983,553
 $1,068,267
 (8)%
__________
NM indicates that the percentage change is not meaningful or is greater than 100%.
Branded Pharmaceuticals. The increase in Segment adjusted income (loss) from continuing operations before income tax for the three months ended September 30, 20192020 was primarily attributable to decreased Selling, generalthe gross margin effect of the increased revenues from the Specialty Products portfolio of our Branded Pharmaceuticals segment described above and administrative expenses, including reduced legal costs related to certain litigation matters, partially offset by increased costs related to our continued investment and promotional efforts behind XIAFLEX®. Additionally, Research and developmentR&D expense decreased as a result of reducedresulting from lower costs associated with our clinical trials of CCH,certain post-marketing R&D commitments, partially offset by increased costs associated with certain post-marketing commitments.
preparing for our planned commercial launch of QWO. The decrease in Segment adjusted income (loss) from continuing operations before income tax for the nine months ended September 30, 20192020 was primarily attributable to the gross margin effect of decreased revenues, including from physician administered products resulting from the impacts of COVID-19 as further described above, a higher branded prescription drug fee and increased costs related toassociated with preparing for our continued investment and promotional efforts behind XIAFLEX®. This wasplanned commercial launch of QWO, partially offset by lower Research and developmentreduced R&D expense resulting from reduced costs associated with our clinical trials of CCH, partially offset by increasedlower costs associated with certain post-marketing commitments.R&D commitments and reduced legal costs associated with certain matters.
Sterile Injectables. The increases during the three and nine months ended September 30, 2019 were primarily driven by increased revenues and gross margins resultingdecrease in Segment adjusted income (loss) from strong performance across several products in this segment.

Generic Pharmaceuticals. The decreases for both the three and nine months ended September 30, 2019 were primarily attributable to decreased revenues as described above and the resulting reductions to gross margin. Additionally, gross margin was negatively impacted by changes in product mix resulting from increased sales of certain lower margin authorized generic products. These decreases were partially offset by reduced expenses including, during both the three and nine months ended September 30, 2019, the impact of certain restructuring and other cost saving initiatives and, during the nine months ended September 30, 2019, a lower branded prescription drug fee. Our material restructuring initiatives are described in Note 4. Restructuring of the Condensed Consolidated Financial Statements included in Part I, Item 1.
International Pharmaceuticals. The decreasecontinuing operations before income tax for the three months ended September 30, 20192020 was primarily attributable to increased Selling, general and administrative expenses.the gross margin effect of the decreased revenues further described above. The decreaseincrease in Segment adjusted income (loss) from continuing operations before income tax for the nine months ended September 30, 20192020 was primarily attributable to decreasedthe gross margin effect of the increased revenues asfurther described above and the resulting reductions to gross margin.above.
Generic Pharmaceuticals.The table below provides reconciliations of our Total consolidated loss from continuing operations before income tax, which is determinedunfavorable changes in accordance with U.S. GAAP, to our total segmentSegment adjusted income (loss) from continuing operations before income tax for the three and nine months ended September 30, 20192020 were primarily attributable to the gross margin effects of the decreased revenues further described above.
International Pharmaceuticals. The decreases in Segment adjusted income (loss) from continuing operations before income tax for the three and 2018 (in thousands):nine months ended September 30, 2020 were primarily attributable to the gross margin effects of the decreased revenues further described above.
 Three Months Ended September 30, Nine Months Ended September 30,
 2019 2018 2019 2018
Total consolidated loss from continuing operations before income tax$(24,070) $(143,068) $(120,363) $(671,559)
Interest expense, net136,903
 131,847
 404,387
 385,896
Corporate unallocated costs (1)37,891
 49,187
 124,351
 144,693
Amortization of intangible assets131,932
 161,275
 417,949
 471,662
Inventory step-up—
 71
 —
 261
Upfront and milestone payments to partners1,672
 4,731
 4,055
 43,027
Retention and separation benefits and other cost reduction initiatives (2)11,023
 4,001
 15,172
 82,141
Certain litigation-related and other contingencies, net (3)(14,414) (1,750) (4,093) 15,370
Asset impairment charges (4)4,766
 142,217
 258,652
 613,400
Acquisition-related and integration items (5)16,025
 1,288
 (26,983) 13,284
Gain on extinguishment of debt—

—

(119,828)
—
Foreign currency impact related to the remeasurement of intercompany debt instruments(922) 1,528
 2,874
 (1,560)
Other, net (6)29,556
 (175) 27,380
 (28,348)
Total segment adjusted income from continuing operations before income tax$330,362
 $351,152
 $983,553
 $1,068,267
__________
(1)Amounts include certain corporate overhead costs, such as headcount, facility and corporate litigation expenses and certain other income and expenses.
(2)Amounts for both the three and nine months ended September 30, 2019 include $6.7 million of costs associated with retention bonuses awarded to certain senior management of the Company. Other amounts during each of the periods presented related primarily to our restructuring initiatives. Such amounts included employee separation costs of $2.2 million during the nine months ended September 30, 2019 and other charges of $4.4 million and $6.3 million during the three and nine months ended September 30, 2019, respectively. During the three and nine months ended September 30, 2018, such amounts included employee separation costs of $2.1 million and $32.7 million, respectively, charges to increase excess inventory reserves of $0.2 million and $2.8 million, respectively, and other charges of $1.7 million and $11.4 million, respectively. Also included in the amount for the nine months ended September 30, 2018 is accelerated depreciation of $35.2 million. 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 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 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 during the three and nine months ended September 30, 2019 include $17.5 million for contract termination costs incurred as a result of certain product discontinuation activities in our International Pharmaceuticals segment and $14.1 million for a premium associated with an extended reporting period endorsement on an expiring insurance program. The remaining 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, mergers and acquisitions (including the pending acquisition of the common stock of BioSpecifics), contingent liabilities, debt service payments, income taxes and litigation-related matters, including in connection with vaginal mesh liability payments.matters and other matters. The Company’s working capital was $981.4$1,511.8 million at September 30, 20192020 compared to working capital of $393.1$1,125.9 million at December 31, 2018.2019. The amounts at September 30, 20192020 and December 31, 20182019 include restricted cash and cash equivalents of $221.6$136.3 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.
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Cash and cash equivalents, which primarily consisted of bank deposits and money market accounts, totaled $1,526.3$1,679.7 million at September 30, 20192020 compared to $1,149.1$1,454.5 million at December 31, 2018. We2019. While we currently expect our operating cash flows, together with our cash, cash equivalents, restricted cash and restricted cash equivalents, 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. 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 expensescosts 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 of this report.
FromTo 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 market transactions. 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. 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 financing to fund our future operational needsliquidity or for future corporateresults of operations. Further, the terms of any such transactions, including acquisitions. Wethe amount of any exchange consideration and terms of any refinanced debt, could also be less favorable than we have historically had broad accessbeen able to financial markets that provide liquidity; however, we cannot be certain that funding will be available to usobtain in the future on terms acceptable to us, or at all. Any issuances of equity securities or convertible securities, in connection with an acquisition or otherwise, could have a dilutive effect on the ownership interest of our current shareholders and may adversely impact net income per share in future periods. An acquisition may be accretive or dilutive and, by its nature, involves numerous risks and uncertainties. As a result of acquisition efforts, if any, we are likely to experience significant charges to earnings for merger and related expenses (whether or not the acquisitions are consummated) that may include transaction costs, closure costs or costs of restructuring activities.past.
Borrowings.Indebtedness. The Company and/orand certain of its subsidiaries are party to the Credit Agreement which governsgoverning the Credit Facilities and the indentures governing our various senior secured and senior unsecured notes. As of September 30, 2019,2020, approximately $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.
The $0.3 billion outstanding under the Revolving Credit Facility was borrowed by the Company in June 2019. The proceeds will be used for purposes consistent with the Company’s previously stated capital allocation priorities, including for general corporate purposes. After giving effect to this transactionprevious borrowings and previously issued and outstanding letters of credit, approximately $696.8 million$0.7 billion of remaining credit was available under the Revolving Credit Facility at September 30, 2019. However, the2020. The Company’s outstanding debt agreements contain a number of restrictive covenants, including certain conditions that limitlimitations on the Company’s ability to incur additional secured indebtedness, including borrowings under the Revolving Credit Facility, which significantly restrict the Company’s access to this remaining available credit.
The Company and its subsidiaries, with certain customary exceptions, guarantee or serve as issuers or borrowers of the debt instruments representing substantially all of the Company’s indebtedness at September 30, 2019.indebtedness.
The Credit Agreement contains affirmative and negative covenants that the Company believes to be usual and customary for aindentures governing our various senior secured credit facility of this type. The negative covenants include, among other things, limitations on asset sales, mergersnotes and acquisitions, indebtedness, liens, dividends and other restricted payments, investments and transactions with the Company’s affiliates.6.00% Senior Notes due 2028 contain certain covenants. As of September 30, 20192020 and December 31, 2018, we were2019, the Company was in compliance with all such covenants.
The Company’s notes mature between 2022 Following the March 2019 Refinancing Transactions and 2027, subject to earlier repurchase or redemption in accordance with the terms of the respective indentures. Interest rates on these notes range from 5.375% to 7.50%. Certain of these notes are senior unsecured obligations of the Company’s subsidiaries party to the applicable indentures governing such notes.

The indentures governing our various senior notes contain affirmative and negative covenants that the Company believes to be usual and customary for similar indentures. Under the senior secured notes indentures, the negative covenants, among other things, restrict the Company’s ability and the ability of its Restricted Subsidiaries (as defined in the indentures) to incur certain additional indebtedness and issue preferred stock; make certain dividends, distributions, investments and other restricted payments; sell certain assets; enter into sale and leaseback transactions; agree to certain restrictions on the ability of restricted subsidiaries to make certain payments to the Company or any of its restricted subsidiaries; create certain liens; merge, consolidate or sell all orJune 2020 Refinancing Transactions, we have eliminated substantially all of the Company’s assets; enter intorestrictive covenants and certain transactions with affiliates or designate subsidiaries as unrestricted subsidiaries. Underevents of default in the indentures governing our senior unsecured notes, indentures, the negative covenants, among other things, restrict the ability of Endo Designated Activity Company and its Restricted Subsidiaries (as definedexcept for those in the indentures)indenture governing the 6.00% Senior Notes due 2028.
Refer 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 anyNote 12. Debt of the restricted subsidiaries; create certain liens; merge, consolidate or sell all or substantially allCondensed Consolidated Financial Statements included in Part I, Item 1 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 exceptionsthis report and qualifications, including the fall away or revision of certain of these covenants and release of collateralNote 14. Debt in the caseConsolidated Financial Statements included in Part IV, Item 15 of the senior secured notes, upon the notes receiving investment grade credit ratings. As of September 30, 2019Annual Report for additional information about our indebtedness, including our debt refinancing transactions and December 31, 2018, we were in compliance with all such covenants.
The obligations under (i) the Credit Agreementinformation about covenants, maturities, interest rates, security 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).priority.
Credit ratings. The Company’s corporate credit ratings assigned by Moody’s Investors Service and Standard & Poor’s are B3 with a stable outlook and B with a negative outlook, respectively. No report of any rating agency is being incorporated by reference herein.
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Working capital. The components of our working capital and our liquidity at September 30, 20192020 and December 31, 20182019 are below (dollars in thousands):
September 30, 2020December 31, 2019
Total current assets$2,802,820 $2,586,218 
Less: total current liabilities1,290,998 1,460,289 
Working capital$1,511,822 $1,125,929 
Current ratio (total current assets divided by total current liabilities)2.2:11.8:1
 September 30, 2019 December 31, 2018
Total current assets$2,649,135
 $2,343,150
Less: total current liabilities1,667,727
 1,950,096
Working capital$981,408
 $393,054
Current ratio (total current assets divided by total current liabilities)1.6:1
 1.2:1
Net working capital increased by $588.4$385.9 million from December 31, 20182019 to September 30, 2019.2020. This increase primarily reflects the increase to cash of $300.0 million as a result of the June 2019 borrowing under the Revolving Credit Facility and the favorable impact to net current assets resulting from operations during the nine months ended September 30, 2019.2020. This activityincrease was partially offset by certain itemsthe impact of the June 2020 Refinancing Transactions that, occurred during the nine months ended September 30, 2019 including, but not limited2020, resulted in the incurrence of approximately $31.1 million of fees to third parties and cash expenditures of $47.2 million to settle noncurrent debt obligations, as well as the impact of adopting ASC 842,the August 2020 Tender Offer, which resulted in a net decreasecash expenditures of approximately $10 million to settle noncurrent debt obligations. Additionally, working capital decreased as a result of approximately $10.7 million, purchasesPurchases of property, plant and equipment, excluding capitalized interest, of $47.8$52.7 million and our incurrence of financing fees in connection with the March 2019 Refinancing Transactions. during nine months ended September 30, 2020.
The following table summarizes our Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 20192020 and 20182019 (in thousands):
Nine Months Ended September 30,
2019 201820202019
Net cash flow provided by (used in):   Net cash flow provided by (used in):
Operating activities$119,244
 $196,992
Operating activities$289,443 $119,244 
Investing activities(45,327) (13,682)Investing activities(50,230)(45,327)
Financing activities219,564
 (62,808)Financing activities(98,357)219,564 
Effect of foreign exchange rate780
 (608)Effect of foreign exchange rate(458)780 
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents$294,261
 $119,894
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents$140,398 $294,261 
Operating activities. Net cash 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.business, as well as the timing and amount of cash payments and/or receipts related to interest, litigation-related matters, restructurings, income taxes and certain other items.

The $77.7$170.2 million decreaseincrease in Net cash provided by operating activities during the nine months ended September 30, 20192020 compared to the prior year period was primarily due to a decrease of $146.5 million in cash outflows for certain mesh-related matters. The amounts of Net cash provided by operating activities for the nine months ended September 30, 2020 and 2019 were also impacted by our results of operations as described above and the timing of cash collections and cash payments related to our operations. Included within this decrease wereWe currently expect to fund substantially all of the impacts of increasedremaining payments under all previously executed mesh-related settlement agreements into the related QSFs during 2020 and 2021, which could result in reductions to our operating cash outflows for certainflows. For additional information about mesh-related and LIDODERM®-related matters, of approximately $14.7 million and $30.0 million, respectively. Additionally, we increased inventory levels during the nine months ended September 30, 2019 in advance of certain recent and planned future product launches, which utilized cash. We expect that payments for previously accrued legal matters, which are further discussed inrefer to Note 13. Commitments and Contingencies of the Condensed Consolidated Financial Statements included in Part I, Item 1, and the potential increases to interest expense discussed above will continue to impact our Net cash provided by operating activities in future periods. of this report.
Investing activities.The $31.6$4.9 million increase in Net cash used in investing activities during the nine months ended September 30, 20192020 compared to the prior year period reflects a decreasewas primarily due to an increase in Purchases of property, plant and equipment, excluding capitalized interest of $4.9 million and an increase in Product acquisition costs and license fees of $2.0 million, partially offset by an increase in Proceeds from sale of business and other assets, net of $39.0 million, offset in part by a decrease in Purchases of property, plant and equipment, excluding capitalized interest of $8.7$1.6 million.
Financing activities. During the nine months ended September 30, 2020, Net cash used in financing activities related primarily to Repayments of notes of $57.6 million associated with the June 2020 Refinancing Transactions and August 2020 Tender Offer, Repayments of term loans of $25.6 million and Payments of tax withholding for restricted shares of $7.9 million.
During the nine months ended September 30, 2019, Net cash provided by financing activities related primarily to the $300.0 million June 2019 borrowing under the Revolving Credit Facility. The proceeds from this transaction were offset by Repayments of term loans of $25.6 million, Payments for contingent consideration of $11.8 million, Payments of tax withholding for restricted shares of $10.1 million, Repayments of other indebtedness of $7.8 million and the net effect of the March 2019 Refinancing Transactions, which resulted in Proceeds from issuance of notes, net of $1,483.1 million, cash used for Repayments of notes totaling $1,500.0 million and Payments for debt issuance and extinguishment costs of $6.4 million, partially offset by Proceeds from issuance of notes, net of $1,483.1 million.
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During the nine months ended September 30, 2018, Net cash used in financing activities related primarily to Payments for contingent consideration of $28.7 million, Repayments of term loans of $25.6 million and Payments of tax withholding for restricted shares of $5.1 million.
Contractual Obligations. As of September 30, 2019,2020, there were no material changes in our contractual obligations from those disclosed in the Annual Report except for those related to the financing transactions described in Note 12. Debt of the Condensed Consolidated Financial Statements included in Part I, Item 1. Additionally, Note 8. Leases1 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 September 30, 2019 for each of the five years subsequent to December 31, 2018 and thereafter.this 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 related to litigation, 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 increased 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, 20182019 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. 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 chargescharge relating to our Generic PharmaceuticalsPaladin reporting unit of $86.0 million and $65.1$32.8 million during the first and second quartersquarter of 2019, respectively.2020. Following the second-quarter 2019this impairment, there was no remaining goodwill associated with this 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, andwhich could result in the fair value of a reporting unit being less than its carrying amount in thean 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 couldthat may be material.

In August 2019, For further information regarding the Canadian government issued the final draftimpact of the Regulations Amending the Patented Medicines Regulations (Additional Factors and Information Reporting Requirements), which will become effective July 1, 2020. Final implementation guidelines are expected in February 2020. The Company will continue to evaluate what effect, if any, the implementation of these regulations will haveCOVID-19 on the Company. These regulations could have a material adverse effect onCompany, please refer to “Risk Factors” in Part II, Item 1A of this report.
Additionally, as further discussed above under the business, financial condition, results of operations and cash flows of the Internationalheading “RESULTS OF OPERATIONS,” our Generic Pharmaceuticals segment and certain of the products in our Sterile Injectables segment, including VASOSTRICT®, are subject to risks and uncertainties related to future competition. If actual results for these segments differ from our expectations, as a result of competition or otherwise, and/or if we make changes to our assumptions for these segments relating to competition or any other risks or uncertainties, the estimated future cash flows could be reduced, which could ultimately result in pre-tax non-cash asset impairment charges which couldthat may be material. As of September 30, 2019,2020, the carrying amount of goodwill associated with our International PharmaceuticalsSterile Injectables segment had other intangible assets and goodwill of $125.6 million and $55.3 million, respectively.was approximately $2.7 billion.
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 1.1.
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.
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Interest Rate Risk
Our exposure to interest rate risk relates primarily to our variable-rate indebtedness associated with our Credit Facilities. At September 30, 20192020 and December 31, 2018,2019, the aggregate principal amounts of such variable-rate indebtedness were $3,638.2$3,604.0 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, as further described in Note 12. Debt of the Condensed Consolidated Financial Statements included in Part I, Item 1, in certain cases subject to a floor. At September 30, 20192020 and December 31, 2018,2019, a hypothetical 1% increase in the applicable rate over the floor would have resulted in $36.4$36.0 million and $33.6$36.3 million, respectively, of incremental 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 otherwise increase the amount of our variable-rate indebtedness, we will be exposed to additional interest rate risk.
As of September 30, 20192020 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 costs and foreign currency assets in relation to same-currency liabilities. The Company is also exposed to 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. Such remeasurement adjustments could have a material adverse effect on the Company’sour business, financial condition, results of operations.operations and cash flows.
AllThe assets and liabilities of certain of our international subsidiaries which maintain their financial statements in local currency, are also 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. Other (Income) Expense, (Income), Net of the Condensed Consolidated Financial Statements included in Part I, Item 1 for the amountamounts of Foreign currency loss (gain), net.
Based on the Company’s significant foreign currency denominated intercompany loans, we 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,dollar, at September 30, 20192020 and December 31, 2018.2019. A 10% change at September 30, 20192020 would have resulted in approximately $10 million in incremental foreign currency losses on September 30, 2019.such date. A 10% change at December 31, 20182019 would have resulted in approximately $9$11 million in incremental foreign currency losses on December 31, 2018.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 September 30, 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 September 30, 2019.

2020.
Changes in Internal Control over Financial Reporting
ThereDuring the fiscal quarter ended September 30, 2020, the Company changed the enterprise resource planning (ERP) system used by certain of its subsidiaries. Where appropriate, the Company made changes to its internal controls to address these system changes.
With the exception of the ERP system migration noted above, there have been no other changes in the Company’s internal control over financial reporting during the fiscal quarter ended September 30, 20192020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION
Item 1.    Legal Proceedings
The disclosures under Note 13. 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 and the information in Part II, Item 1A under the caption1A. “Risk Factors” of our Quarterly ReportsFirst Quarter 2020 Form 10-Q. Except as set forth below, there have been no material changes to our risk factors from those described in the Annual Report, as supplemented and amended by our First Quarter 2020 Form 10-Q.
We may not complete the acquisition of BioSpecifics within the time frame we anticipate or at all. If it is completed, it may not be accretive, which may negatively affect the market price of our shares.
The completion of the acquisition of BioSpecifics is subject to a number of conditions, including, among others: (i) that, immediately prior to the expiration of the Offer, there be validly tendered and not withdrawn in accordance with the terms of the Offer a number of BioSpecifics Shares that, together with the BioSpecifics Shares then-owned by the Company, Purchaser and their respective affiliates (if any), represents at least a majority of all then-outstanding BioSpecifics Shares on Form 10-Qa fully diluted basis; (ii) the expiration or termination of any waiting period (and extensions thereof) applicable to the transactions contemplated by the Merger Agreement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976; (iii) the absence of any law or order prohibiting or otherwise preventing the consummation of the Offer or the Merger and (iv) other customary conditions set forth in the Merger Agreement.
No assurance can be given that a sufficient number of shares will be tendered, that the required regulatory approvals will be obtained or that the required conditions to closing will be satisfied and, even if all such approvals are obtained and the conditions are satisfied, no assurance can be given as to the terms, conditions and timing of the approvals. The failure to satisfy all of the required conditions could delay the completion of the acquisition for a significant period of time or prevent it from occurring at all. Any delay in completing the quarterly periods ended March 31, 2019acquisition could cause the Company not to realize some or all of the benefits, or realize them on a different timeline than expected. In addition, if the acquisition is not consummated on the current terms or at all, the market price of our ordinary shares could be adversely affected and the value of your investment could decline.
Although we currently anticipate that the acquisition of BioSpecifics will occur and will be accretive to earnings per share, this expectation is based on assumptions about our business and preliminary estimates, which may change materially.
We may not realize all or some of the anticipated benefits from our strategic actions.
We continuously seek to optimize our operations and increase our overall efficiency through strategic actions. These actions may involve decisions to exit manufacturing or research sites, transfer the manufacture of products to other internal and external sites within our manufacturing network and simplify business process activities. For example, we announced plans on November 5, 2020 to optimize our generic retail business cost structure, transfer certain transaction processing activities to third-party global business process service providers and further integrate the Company’s commercial, operations and research and development functions, respectively. There can be no assurance that we will achieve the benefits and savings of such actions in the amounts and expected timing, if at all. We will also incur certain charges in connection with such actions and future costs could also be incurred. It is also possible that charges and cash expenditures associated with such actions could be higher than estimated. Any of these risks could ultimately have a material adverse effect on our business, financial condition, results of operations and cash flows.
Widespread 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, the COVID-19 pandemic 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 similar measures for their residents to contain the spread of the virus. In response to these public health directives and orders, we have implemented alternative working practices and work-from-home requirements for appropriate employees, as well as temperature screenings, health questionnaires, social distancing, modified schedules, shift rotation and other similar policies at our manufacturing facilities. We launched a hybrid approach selling model as of June 30, 2019.1, 2020 for our field employees, which allows virtual and/or live engagement with healthcare providers and other customers. 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.
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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 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. Due to these disruptions and other factors, including changes in our workforce availability and increased demand for some of our critical care products during this pandemic, our ability to meet our obligations to third-party distribution partners may be negatively impacted. As a result, we have delivered, and in the future we or our third-party providers may deliver, notices of the occurrence of a force majeure or similar events 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 event of an adverse judgment, could result in significant cash payments. Further, the publicity of any such dispute could harm our reputation and make the negotiation of any replacement contracts more difficult and costly, thereby prolonging the effects of any resulting disruption in our operations. Such disruptions could be acute with respect to certain of our raw material suppliers where we 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 disruptions could harm our ability to meet consumer demand, including any increase in demand for any of our products, including our critical care products used during a pandemic.
We have experienced, and expect to continue to experience, changes in customer demand as the COVID-19 pandemic continues to evolve, which are difficult to predict. The current economic crisis and increased 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 use certain of our products. For example, beginning in the last two weeks of the first quarter of 2020, certain of our products that are physician administered, including XIAFLEX® and SUPPRELIN® LA, experienced significantly decreased sales volumes due to reduced physician office activity and patient office visits compared to prior year because of the COVID-19 pandemic. Furthermore, we are unable to predict the impact that COVID-19 may have going forward on the business, results of operations or 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 have been, and may continue to 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 have moved the anticipated product launch of QWO to spring 2021. In addition, we have assessed, and expect to continue to assess, the timeline for commercialization of other products.
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 market transactions. 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. Such terms could further restrict our operations and exacerbate any impact on our results of operations and liquidity that may result from COVID-19. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business and the value of our ordinary shares.
Additionally, COVID-19 could increase the magnitude of many of the other risks described herein and in the Annual Report, as subsequently supplemented and amended, 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.
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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 any “re-opening” actions and plans) 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 and could cause significant volatility in the trading prices of our securities.
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 September 30, 2019.2020.
Item 3.    Defaults Upon Senior Securities
None.
Item 4.    Mine Safety Disclosures
Not applicable.
Item 5.    Other Information
None.2020 Restructuring Initiative
On November 5, 2020, the Company announced the initiation of several strategic actions to further optimize the Company’s operations and increase overall efficiency (the 2020 Restructuring Initiative). The Board of Directors approved the 2020 Restructuring Initiative on November 4, 2020. These actions are expected to generate significant cost savings that will be reinvested, among other things, to support the Company’s key strategic priority to expand and enhance its product portfolio. These actions include the following:
•Optimizing the Company’s generic retail business cost structure by exiting manufacturing sites in Irvine, California and Chestnut Ridge, New York, as well as active pharmaceutical ingredient manufacturing and bioequivalence study sites in India. The sites will be exited in a phased approach that is expected to be completed in the second half of 2022. Certain products currently manufactured at the Irvine and Chestnut Ridge sites are expected to be transferred to other internal and external sites within the Company’s manufacturing network.
•Improving operating flexibility and reducing general and administrative costs by transferring certain transaction processing activities to third-party global business process service providers.
•Increasing organizational effectiveness by further integrating the Company’s commercial, operations and research and development functions, respectively, to support the Company’s key strategic priorities.
As a result of the 2020 Restructuring Initiative, the Company’s global workforce is expected to be reduced by approximately 560 net full-time positions.
For further details of the 2020 Restructuring Initiative, including the costs expected to be incurred, see Note 4. Restructuring of the Condensed Consolidated Financial Statements included in Part I, Item 1 of this report.
Chief Operating Officer Separation
Mr. Terrance J. Coughlin will cease serving in his role as Chief Operating Officer of the Company, effective November 4, 2020, and will continue to provide transition services as an employee of the Company until March 1, 2021 (the Separation Date). Following the Separation Date, Mr. Coughlin will be eligible to receive, subject to the timely execution of a release of claims, the following payments and benefits to which he is entitled under his employment agreement with EHSI, an indirect, wholly-owned subsidiary of the Company, dated December 9, 2019 (the Coughlin Employment Agreement): (i) cash severance in an amount equal to $2,235,500, payable in a lump sum no later than sixty (60) days after the Separation Date, (ii) continued medical and life insurance benefits at active employee rates for twenty-four (24) months following the Separation Date and (iii) a pro-rata cash bonus based on actual performance and payable in a lump sum at the time such bonuses are payable to other participants in the Company’s annual bonus program. Mr. Coughlin will also receive twelve (12) months of outplacement services, up to a maximum cost of $9,000. In addition to the foregoing payments and benefits, 107,750 restricted stock units and $228,625 in long-term cash awards held by Mr. Coughlin will vest on the Separation Date and, in accordance with the underlying award agreements, be settled as soon as practicable after vesting. Outstanding unvested performance share units held by Mr. Coughlin will be eligible to vest based on actual Company performance as of the Separation Date in accordance with the underlying award agreements, pro-rated based on the portion of the applicable service period elapsing prior to the Separation Date and will be settled in shares of Company stock as soon as practicable after vesting. All other equity- and cash-based awards held by Mr. Coughlin will be forfeited for no consideration as of the Separation Date.
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Upon separation from service, Mr. Coughlin will continue to be subject to certain restrictive covenants provided in the Coughlin Employment Agreement, including non-competition and non-solicitation covenants for eighteen (18) months after the Separation Date, a non-disparagement covenant and a covenant providing for cooperation in connection with any investigations and/or litigation.
Chief Legal Officer Employment Agreement
EHSI entered into a new executive employment agreement with Mr. Matthew J. Maletta, the Company’s Executive Vice President, Chief Legal Officer and Company Secretary, dated as of November 4, 2020 (the Maletta Employment Agreement), effective as of February 13, 2021 immediately following the expiration of Mr. Maletta’s current employment agreement with EHSI. The Maletta Employment Agreement has a term of three years ending on February 13, 2024, unless earlier terminated. Under the Maletta Employment Agreement, Mr. Maletta is entitled to an annual base salary of $650,000 and he is eligible to receive a target annual cash bonus of 60% of his base salary.
During the term of the Maletta Employment Agreement, Mr. Maletta is also eligible to receive long-term incentive compensation, which may be subject to the achievement of certain performance targets set by the Compensation Committee of the Company’s Board of Directors. Beginning with grants made in 2021, Mr. Maletta is eligible to receive long-term incentive compensation awards with a targeted grant date fair market value equal to 300% of his base salary.
The Maletta Employment Agreement also provides that in the event of a termination of Mr. Maletta’s employment by the Company without Cause or by Mr. Maletta for Good Reason (as these terms are defined in the Maletta Employment Agreement), Mr. Maletta will be entitled to the following benefits, subject to his execution of a release of claims: (i) a prorated bonus for the year of termination (based on actual performance results), (ii) cash severance in an amount equal to two times the sum of his base salary and target bonus and (iii) continued medical and life insurance benefits for twenty-four (24) months following termination. Mr. Maletta may elect to reduce his severance payments to the extent these payments would constitute “excess parachute payments” under Sections 280G and 4999 of the Internal Revenue Code. Payments upon termination due to death or disability include a prorated bonus for the year of termination (based on actual performance results), continued medical and life insurance benefits for Mr. Maletta and/or his dependents for twenty-four (24) months following such termination and, in the event of disability, twenty-four (24) months of salary continuation offset by disability benefits.
The Maletta Employment Agreement also contains a twelve (12) month non-competition covenant, a twelve (12) month non-solicitation covenant, a non-disparagement covenant and a covenant providing for cooperation by Mr. Maletta in connection with any investigations and/or litigation.
The foregoing description of the Maletta Employment Agreement does not purport to be complete and is qualified in its entirety by the full text of the Maletta Employment Agreement, a copy of which is filed herewith as Exhibit 10.2 and is incorporated herein by reference.
2020 Continuity Compensation Arrangements
On November 4, 2020, the Company’s Compensation Committee approved cash continuity arrangements (the Continuity Compensation) for certain senior management of the Company, including the following recipients: Mr. Blaise Coleman, President and Chief Executive Officer; Mr. Mark Bradley, Executive Vice President and Chief Financial Officer; Mr. Matthew Maletta, Executive Vice President, Chief Legal Officer and Company Secretary; and Mr. Patrick Barry, Executive Vice President and President, Global Commercial Operations. The Continuity Compensation was authorized for each recipient based on the critical nature of the recipient’s leadership and to advance the Company’s management continuity priorities.
The Continuity Compensation approved for the above-named recipients will be equal to one-times the recipient’s base salary: $850,000 for Mr. Coleman; $575,000 for Mr. Bradley; $650,000 for Mr. Maletta; and $550,000 for Mr. Barry, and will be paid in three equal installments within sixty (60) days after each of the following vesting dates: (1) June 15, 2021; (2) September 15, 2021; and (3) December 15, 2021. Payment of any unpaid portion of the Continuity Compensation will be accelerated if a recipient’s employment is terminated by the Company without cause before December 15, 2021 and will be paid within sixty (60) days of the termination date. Any unearned Continuity Compensation will be forfeited if a recipient is terminated for cause or if a recipient resigns before December 15, 2021.
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Item 6. Exhibits
Incorporated by Reference from:
NumberDescriptionFile NumberFiling TypeFiling Date
2.1†001-36326Current Report on Form 8-KOctober 19, 2020
Incorporated by Reference from:
NumberDescriptionFile NumberFiling TypeFiling Date
4.1
10.1001-36326Current Report on Form 8-KOctober 19, 2020
10.2Not applicable; filed herewith
4.231.1Not 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
31.2Not applicable; filed herewith
32.1Not applicable; furnished herewith
32.2Not applicable; furnished herewith
101.INSXBRLiXBRL Instance Document - the 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.SCHXBRLiXBRL Taxonomy Extension Schema DocumentNot applicable; submitted herewith
101.CALXBRLiXBRL Taxonomy Extension Calculation Linkbase DocumentNot applicable; submitted herewith
101.DEFXBRLiXBRL Taxonomy Extension Definition Linkbase DocumentNot applicable; submitted herewith
101.LABXBRLiXBRL Taxonomy Extension Label Linkbase DocumentNot applicable; submitted herewith
101.PREXBRLiXBRL Taxonomy Extension Presentation Linkbase DocumentNot applicable; submitted herewith
104Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101Not applicable; submitted herewith
†Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

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Table of Contents
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)
ENDO INTERNATIONAL PLC/S/ BLAISE COLEMAN
Name:(Registrant)Blaise Coleman
Title:
/S/ PAUL V. CAMPANELLI
Name:Paul V. Campanelli
Title:President and Chief Executive Officer
(Principal Executive Officer)
/S/ BLAISE COLEMANMARK T. BRADLEY
Name:Blaise ColemanMark T. Bradley
Title:Executive Vice President, Chief Financial Officer
(Principal Financial Officer)
Date: November 4, 2019

6, 2020
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