Allergan Reports Strong First Quarter 2016 Continuing Operations Performance with 48% Increase in Net Revenue to $3.8 Billion and 15% Growth in Non-GAAP Diluted EPS to $3.04

DUBLIN, May 10, 2016 /PRNewswire/ -- Allergan plc AGN reported strong performance with net revenue from continuing operations increasing 48 percent to $3.8 billion for the quarter ended March 31, 2016, compared to $2.6 billion in the first quarter 2015. On a non-GAAP basis, diluted earnings per share from continuing operations increased 15 percent to $3.04 for the first quarter 2016, compared to $2.65 in the first quarter 2015. GAAP loss from continuing operations per diluted share for the first quarter 2016 was $0.38, compared to GAAP loss from continuing operations per diluted share of $2.80 in the prior year period. GAAP results were impacted by amortization, acquisition-related expenses, research and development (R&D) expenses resulting from the acquisition of R&D assets from Anterios, Pfizer-related expenses, acquisition accounting valuation related expenses and severance associated with acquired businesses, mainly the acquisition of Allergan on March 17, 2015. These results include Allergan results as of the date of the close of the acquisition, March 17, 2015.

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"Allergan once again delivered strong performance in the first quarter of 2016, powered by double-digit pro forma branded revenue growth² and our top global products within the U.S. Brands, U.S. Medical and International Brands segments. We also grew our Non-GAAP EPS by 15 percent, marking the seventh consecutive quarter of double-digit, year-over-year EPS growth since I became the CEO in July 2014," said Brent Saunders, CEO and President of Allergan. "Thanks to the effort of our 30,000 colleagues around the world, Allergan remains the most dynamic and exciting company in our industry. That dynamism is evident in our results, in the way we operate our business, in the way we build category leadership through our Open Science model and in our highly responsive, service oriented approach to customers."

"Our branded business continues to grow at a fast pace and is very well positioned in each of our seven therapeutic areas.  As we look ahead, we see durable global brands with strong fundamentals, broad-based geographic expansion, and many opportunities to continue growing our innovative business," added Saunders.

For the first quarter 2016, adjusted EBITDA from continuing operations increased 65 percent to $1.8 billion, compared to $1.1 billion for the first quarter 2015. Non-GAAP operating income from continuing operations in the first quarter 2016 was $1.75 billion. GAAP operating loss from continuing operations in the first quarter 2016 was $154 million. Cash flow from operations for the first quarter of 2016 was $1.2 billion and cash and marketable securities were $2.3 billion as of March 31, 2016. Cash from operations in the quarter was impacted by the acquired R&D assets from Anterios and integration expenses.

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¹ Excludes Fx impact, Namenda IR and divestitures
² Excludes Fx impact, Namenda IR and divestitures

Operating Expenses
Total non-GAAP SG&A was $1.0 billion for the first quarter 2016 compared to $609 million in the prior year period. Non-GAAP R&D investment for the first quarter 2016 was $277 million. As of March 31, 2016, the Company had outstanding indebtedness of $42.6 billion primarily as a result of legacy Allergan, Forest and other recent acquisitions.

Amortization and Tax
Amortization expense for the first quarter 2016 was $1.6 billion, compared to $788 million in the first quarter of 2015. The increase was primarily due to the Allergan acquisition. 

The Company's non-GAAP continuing operations tax rate was 9.7 percent in the first quarter 2016. The Company experienced a benefit to its tax rate as a result of the impact of its entire interest expense being included within continuing operations earnings.

Top Global Branded Product Highlights
The following table represents revenue from Allergan's top promoted products.

For the first quarter 2016, total global branded product revenues were $3.4 billion versus $2.0 billion in the prior year quarter. Top key branded product highlights in the quarter included:

• Botox^® revenues in the first quarter of 2016 were $638 million, driven by continued strong performance in both aesthetic and therapeutic indications.
• Restasis^® revenues in the first quarter of 2016 were $314 million, driven by continuing strong promotional efforts.
• Fillers' revenues in the first quarter of 2016 were $215 million, reflecting continued strong performance.
• Namenda^® XR revenues in the first quarter of 2016 were $173 million, as prescriptions and formulary coverage remained stable following the loss of exclusivity of Namenda^® IR.
• Lumigan^®/Ganfort^® revenues in the first quarter of 2016 were $170 million reflecting stable performance across Allergan's glaucoma product franchise.
• Bystolic^® revenues in the first quarter of 2016 remained stable at $164 million.
• Linzess^®/Constella^® revenues in the first quarter of 2016 were $141 million, driven by continued strong OTC conversion momentum and increasing sales in the long-term care market.
• Asacol^®/Delzicol^® revenues in the first quarter of 2016 were $121 million, impacted by lower prescriptions and trade buying patterns.
• Viibryd^®/Fetzima^® revenues in the first quarter of 2016 were $83 million, driven by double digit prescription growth in Fetzima^®.
• Lo Loestrin^® revenues in the first quarter of 2016 were $89 million, driven by continuing strong demand and promotional efforts.
• Minastrin^® and Estrace^® Cream revenues in the first quarter of 2016 were $80 million and $81 million, respectively.
• Silicone breast implant revenues in the first quarter of 2016 were $67 million, as a result of increased market share.

First Quarter 2016 Business Segment Results

U.S. Brands

U.S. Brands net revenue of $2.3 billion for the first quarter 2016 represents a 27 percent increase over $1.8 billion in the first quarter of 2015. Growth was mainly attributed to the acquisition of legacy Allergan products, including Botox^®, Restasis^®, Lumigan^®/Ganfort^®, and Combigan^®, and strong growth from Linzess^®/Constella^®, Carafate^®/Sulcrate^®, Zenpep^®, Namenda XR^®, Lo Loestrin^®, Estrace^® Cream and Minastrin^® 24 and new product launches Avycaz^®, Dalvance^® and Liletta^®.

U.S. Brands gross margin for the first quarter of 2016 was 88.7 percent. Selling & marketing (S&M) expenses increased 16 percent in the first quarter 2016 due mainly to the acquisition of legacy Allergan and the launches of Viberzi^® and Vraylar^® offset, in part, by the impact of synergies from Forest Laboratories and Allergan acquisitions. G&A expenses increased versus first quarter 2015 reflecting the addition of legacy Allergan, which was offset by related synergies from the acquisitions of Forest Laboratories and Allergan. Overall, net segment contribution for the first quarter 2016 increased 33 percent over the prior year period to $1.5 billion primarily as a result of the Allergan acquisition.

U.S. Medical Aesthetics

First quarter 2016 U.S. Medical Aesthetics net revenue was $450 million reflecting continued strong performance in BOTOX^® and Fillers including Juvederm^®.  

U.S. Medical Aesthetics selling and marketing (S&M) expenses for the first quarter of 2016 were $110 million, and general & administrative expenses (G&A) for the first quarter of 2016 were $13 million.

U.S. Medical Aesthetics segment gross margin for the first quarter of 2016 was 93.1 percent compared to 94.4 percent in the prior year quarter.

International Brands

International Brands net revenues for the first quarter of 2016 was $673 million compared to $119 million in the first quarter of 2015. Growth was mainly attributed to revenues associated with acquired legacy Allergan products, including Botox^®, Juvederm^® and Ozurdex^®. 

International Brands selling and marketing (S&M) expenses for the first quarter of 2016 were $187 million, and general & administrative expense (G&A) were $28 million. International Brands segment gross margin for the first quarter of 2016 was 85.3 percent compared to 80.0 percent in the prior year quarter.

Anda Distribution

Anda Distribution net revenues for the first quarter of 2016 were $365 million, reflecting a $189.6 million decline primarily due to the loss of Target Corporation business due to CVS Health acquiring Target's in store pharmacies.

Anda Distribution gross margin for the first quarter of 2016 was 16.9 percent compared to 14.6 percent in the previous year period.

Discontinued Operations
As a result of the proposed divestiture of Allergan's Global Generics business to Teva on July 27, 2015, the financial results of the Company's Global Generics business are being reported as discontinued operations in the condensed consolidated statements of operations. These portions of the Company's results will continue to be reported as discontinued operations until the close of that transaction. Continuing operations includes the U.S. Brands, U.S. Medical, International Brands and Anda Distribution segments. All prior year results have been recast to reflect continuing operations results.

Pipeline Update
R&D productivity continued during the quarter. Key development highlights included:

First Quarter U.S. and International Branded Product Approvals and Launches

• ACZONE^® (dapsone) Gel, 7.5%, received U.S. Food and Drug Administration (FDA) approval for the topical treatment for acne in patients 12 years of age and older.
• BOTOX^® (onabotulinumtoxinA) received FDA approval for the treatment of lower limb spasticity in adult patients to decrease the severity of increased muscle stiffness in ankle and toe muscles.
• DALVANCE^® (dalbavancin) for injection received FDA approval for its supplemental New Drug Application (sNDA) and EU approval to expand the product's label. The expanded label includes a single-dose administered as a 30-minute intravenous (IV) infusion of DALVANCE for the treatment of acute bacterial skin and skin structure infections (ABSSSI) caused by designated susceptible Gram-positive bacteria in adults, including infections caused by methicillin-resistant Staphylococcus aureus (MRSA).
• Allergan launched VRAYLAR™ (cariprazine), a once-daily oral atypical antipsychotic in the U.S. VRAYLAR was approved by the FDA in September 2015 for the treatment of acute manic or mixed episodes of bipolar I disorder and schizophrenia in adults.

First Quarter 2016 Regulatory Milestones & Clinical Updates

• Allergan announced that rapastinel (GLYX-13) received Breakthrough Therapy designation from the FDA for adjunctive treatment of Major Depressive Disorder (MDD). This follows the Fast Track Designation for rapastinel granted by the FDA in 2014.
• Allergan announced that the FDA accepted for filing the company's supplemental New Drug Application (sNDA) for TEFLARO^® (ceftaroline fosamil). If approved, this filing will expand the label of TEFLARO beyond adults to include the treatment of children two months of age and older with acute bacterial skin and skin structure infections (ABSSSI) including infections caused by methicillin-resistant Staphylococcus aureus (MRSA) and community-acquired bacterial pneumonia (CABP) caused by Staphylococcus pneumoniae and other designated susceptible bacteria.
• Allergan announced that the FDA accepted for filing the company's supplemental New Drug Application (sNDA) for AVYCAZ^® (ceftazidime and avibactam). This filing will add important new clinical data to the current label from two Phase 3 trials evaluating the safety and efficacy of AVYCAZ, in combination with metronidazole, for the treatment of complicated intra-abdominal infections (cIAI), including patients with infections due to ceftazidime-nonsusceptible (CAZ-NS) pathogens.
• Allergan has submitted an NDA to the FDA for Oxymetazoline, a potential treatment for rosacea.
• Allergan submitted an sNDA to the FDA for Linzess 72 mcg for the treatment of Chronic Idiopathic Constipation (CIC).
• Allergan submitted an sNDA to the FDA for a single-inserter with optimized packaging for use with Liletta^®.
• FDA accepted an NDA submission for SER 120, an investigational treatment for nocturia.
• Top-line results from the first Phase 3 study of Ulipristal Acetate were reported in the first half of 2016. The study met all co-primary and secondary endpoints with both ulipristal treatment arms achieving statistically significant results over placebo (p<0.0001).
• Allergan initiated a Phase 3 study for Cariprazine in Bipolar Depression in the first half of 2016.

Full Year 2016 Continuing Operations Guidance
Allergan's full year 2016 continuing operations standalone estimates are based on management's current belief about prescription trends, pricing levels, inventory levels and the anticipated timing of future product launches and events. Continuing operations includes the U.S. Brands, U.S. Medical, International Brands and Anda distribution segments.

 

• Total Non-GAAP Net Revenues are expected to be ~$17 Billion
  • Non-GAAP Branded Net Revenues are expected to be ~$15 Billion (10% Growth¹)
• No material changes to gross margin from current levels in each segment
• Non-GAAP R&D investment is expected to be ~$1.5 Billion
• SG&A as a percent of non-GAAP Net Revenues is expected to be ~25% reflecting plans to restructure and simplify the business following the divestiture of the Global Generics business to Teva
• Non-GAAP tax rate anticipated to return to normalized levels following the close of Teva of ~14%

¹ Excluding Namenda IR, divestitures and Anda.

Share Repurchase Program
Allergan today announced that the Company's board of directors has authorized a new share repurchase program of up to $10 billion of the Company's common stock. Allergan expects to execute $4 - $5 billion in open market repurchases over four to six months subject to favorable market conditions. If favorable market conditions persist, the Company will consider extending the program following completion of the initial portion of the share repurchase program.

The share repurchase program is pending the completion of and receipt of proceeds from the divestiture of Allergan's Global Generics business to Teva, expected to close by the end of June 2016.

First-Quarter 2016 Conference Call and Webcast Details
Allergan will host a conference call and webcast today at 8:30 a.m. Eastern Time to discuss first quarter 2016 results. The dial-in number to access the call is U.S./Canada (877) 251-7980, International (706) 643-1573, and the conference ID is 94452083. To access the live webcast, go to Allergan's Investor Relations Web site at http://ir.allergan.com.

A taped replay of the conference call will also be available beginning approximately two hours after the call's conclusion and will remain available through 11:30 PM Eastern Time on May 24, 2016. The replay may be accessed by dialing (855) 859-2056 and entering conference ID 94452083.  From international locations, the replay may be accessed by dialing (404) 537-3406 and entering the same conference ID. To access the webcast, go to Allergan's Investor Relations Web site at http://ir.allergan.com. A replay of the webcast will also be available.

About Allergan

Allergan plc AGN, headquartered in Dublin, Ireland, is a unique, global pharmaceutical company and a leader in a new industry model – Growth Pharma.  Allergan is focused on developing, manufacturing and commercializing innovative branded pharmaceuticals, high-quality generic and over-the-counter medicines and biologic products for patients around the world.

Allergan markets a portfolio of best-in-class products that provide valuable treatments for the central nervous system, eye care, medical aesthetics, gastroenterology, women's health, urology, cardiovascular and anti-infective therapeutic categories, and operates the world's third-largest global generics business, providing patients around the globe with increased access to affordable, high-quality medicines. Allergan is an industry leader in research and development, with one of the broadest development pipelines in the pharmaceutical industry and a leading position in the submission of generic product applications globally.

With commercial operations in approximately 100 countries, Allergan is committed to working with physicians, healthcare providers and patients to deliver innovative and meaningful treatments that help people around the world live longer, healthier lives.

For more information, visit Allergan's website at www.allergan.com.

Forward-Looking Statement

Statements contained in this press release that refer to future events or other non-historical facts are forward-looking statements that reflect Allergan's current perspective of existing trends and information as of the date of this release. Except as expressly required by law, Allergan disclaims any intent or obligation to update these forward-looking statements. Actual results may differ materially from Allergan's current expectations depending upon a number of factors affecting Allergan's business. These factors include, among others, the difficulty of predicting the timing or outcome of FDA approvals or actions, if any; the impact of competitive products and pricing; market acceptance of and continued demand for Allergan's products; difficulties or delays in manufacturing; and other risks and uncertainties detailed in Allergan's periodic public filings with the Securities and Exchange Commission, including but not limited to Allergan's Annual Report on Form 10-K for the year ended December 31, 2015. Except as expressly required by law, Allergan disclaims any intent or obligation to update these forward-looking statements.

Non‐GAAP Financial Measures

This document contains non‐GAAP financial measures. The Appendix hereto presents reconciliations of certain non‐GAAP financial measures to the most directly comparable GAAP measures.

The non‐GAAP measures include non-GAAP net income, non-GAAP earnings per share, adjusted EBITDA, adjusted gross margin as a percentage of adjusted net revenues, adjusted SG&A as a percentage of adjusted net revenues and adjusted R&D expense.

We believe these non‐GAAP measures provide useful information to investors because these are among the measures used by our management team to evaluate our operating performance and to make day‐to‐day operating decisions. We believe this presentation also increases comparability of period‐to‐period results. We also consider pro forma capital ratios defined by banking regulators but not effective at each period end to be non‐GAAP financial measures. Since analysts and banking regulators may assess our capital adequacy using these pro forma ratios, we believe they are useful to provide investors the ability to assess our capital adequacy on the same basis.

Other companies may use similarly titled non GAAP financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non GAAP financial measures may not be comparable to similar non‐measures. Accordingly, non‐measures used by other companies. We caution investors not to place undue reliance on such non‐GAAP measures, but instead to consider them with the most directly comparable GAAP measure. Non‐GAAP financial measures have limitations as analytical tools and should not be considered in isolation, or as a substitute for our results as reported under GAAP.

The following table presents Allergan plc's GAAP to Non-GAAP statement of operations for the three months ended March 31, 2016 and 2015:

 

The following table presents Allergan plc's Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015.

 

The following table presents Allergan plc's Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015.

The following table presents a reconciliation of Allergan plc's reported net (loss) from continuing operations attributable to shareholders and diluted earnings per share to non-GAAP net income and diluted earnings per share for the three months ended March 31, 2016 and 2015:

 

The following table presents a reconciliation of Allergan plc's reported net (loss) from continuing operations attributable to shareholders for the three months ended March 31, 2016 and 2015 to adjusted EBITDA:

 

The following tables present a reconciliation of Allergan plc's reported net revenues, cost of sales and SG&A for the three months ended March 31, 2016 and 2015 to adjusted net revenues, adjusted cost of sales, adjusted gross profit, adjusted gross profit as a percentage of adjusted net revenues, adjusted SG&A and adjusted SG&A as a percentage of adjusted net revenues:

 

The following table presents a reconciliation of Allergan plc's expected GAAP Research & Development expense to adjusted Research & Development expense for the three months ended March 31, 2016 and 2015, respectively:

 

CONTACTS:     

Allergan:
Investors:
Lisa DeFrancesco
(862) 261-7152

Media:
Mark Marmur
(862) 261-7558

 

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