Endo, Inc. Reports Significant Financial Changes Following Chapter 11 Bankruptcy Reorganization

Endo, Inc. reported significant financial changes in its recent 10-Q filing, reflecting its transition following a Chapter 11 bankruptcy reorganization. For the nine months ended September 30, 2024, the company recorded a comprehensive loss of $381.0 million, a stark contrast to a comprehensive income of $6.6 million during the predecessor period from January 1, 2024, to April 23, 2024. This loss is also a notable increase from a loss of $8.3 million in the same period of the previous year.

Total net revenues for the Successor period were $710.7 million, down 53% from $1.5 billion in the prior year. The decline was attributed to competitive pressures in the Generic Pharmaceuticals segment and decreased sales in the Sterile Injectables segment, although revenues from the Branded Pharmaceuticals segment, particularly from XIAFLEX®, showed growth. Specifically, Branded Pharmaceuticals revenues increased to $363.3 million from $279.7 million in the predecessor period, but decreased from $613.3 million in the prior year.

The company’s gross margin for the Successor period was negative $71.4 million, compared to a positive margin of $816.9 million in the previous year, primarily due to inventory step-up amortization and unfavorable product mix changes. Selling, general, and administrative expenses rose to $148.3 million, up 7% from the predecessor period, while research and development expenses decreased significantly to $20.2 million, down 36% from the previous year.

Endo, Inc. incurred a net loss of $232.8 million for the three months ended September 30, 2024, compared to a loss of $28.5 million in the same period of 2023. The increase in losses was driven by higher costs of revenues, which surged to $448.3 million from $230.3 million in the prior year, reflecting the impact of fresh start accounting.

Strategically, Endo, Inc. emerged from bankruptcy with a new capital structure, including $2.5 billion in total indebtedness, comprising a $1.5 billion senior secured term loan and $1.0 billion in senior secured notes. The company has also established a new board of directors and is focused on attracting key personnel to navigate its post-bankruptcy landscape. The reorganization plan included settlements with various stakeholders, including a $364.9 million payment obligation to the U.S. government over ten years, contingent on EBITDA performance.

As of September 30, 2024, Endo, Inc. had total current assets of $1.5 billion and a working capital of $980.0 million, indicating a current ratio of 2.8:1. However, cash and cash equivalents decreased to $367.6 million from $777.9 million at the end of 2023, reflecting the financial pressures following the reorganization. The company continues to face challenges, including competitive pressures, legal liabilities, and the need to manage its substantial debt load effectively.