Professional Documents
Culture Documents
The Company believes that its non-GAAP measures provide useful information to investors because these are the financial measures used by our management team to evaluate our operating performance, make day to day operating
decisions, prepare internal forecasts, communicate external forward looking guidance to investors, compensate management and allocate the Company’s resources. We believe this presentation also increases comparability of period
to period results.
The Company’s determination of significant charges or credits may not be comparable to similar measures used by other companies and may vary from period to period. The Company uses both GAAP financial measures and the
disclosed non-GAAP adjusted financial measures internally. These non-GAAP adjusted financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
2
Agenda
Q3 2018 Highlights
1 Brent Saunders, Chairman & CEO
Commercial Highlights
2 Bill Meury, Chief Commercial Officer
R&D Update
3 David Nicholson, Chief R&D Officer
5 Q&A
3
BRENT
SAUNDERS
CHAIRMAN & CEO
Strong Business Momentum Continues
Raising FY 2018 Revenue and Non-GAAP Performance Net Income Per Share Guidance
5
Q3 2018: Solid Execution
1. Ozurdex recall in International: $32M in revenues and ~$0.11 in performance net income per share. Med Derm asset sale closed on 9/20/18.
2. $750M represents the portion of the $1.76B debt repurchase in Q3 2018 that is not expected to be refinanced. Gross Debt to Adjusted EBITDA as reported is 2.9x. The pro-forma
ratio of 3.0x assumes only $750M remains retired.
Performance net income per share, performance net income per share growth, operating margin and adjusted EBITDA refer to non-GAAP metrics.
Please refer to the GAAP to non-GAAP tables in appendix for a reconciliation of our non-GAAP results. 6
Q3 2018 Revenue Performance Drivers
$500M $3,911M
$3,411M
+5.9% YoY growth Brands Facing LOE Total Q3 2018
(+7.4% ex. FX) Risk/Divestiture2
Net Revenues
Promoted Brands & Brands • 13% of Q3 2018 Revenues
-3.0% YoY Revenue Growth
With Ongoing Exclusivity (-1.8% ex-FX)
• Includes revenues from
$2,975M divested Med Derm assets
87%
of Q3 2018
Revenues
1. Includes established brands, all other product revenues and other revenues. 2. Includes brands with patent expiration and/or risk of generic competition in 2017-2020 and divested
assets and assets classified as held for sale. 7
Refer to Table 13 in the appendix for details on products included within Promoted brands & Brands with ongoing exclusivity, other product revenues and Brands facing LOE risk/divestiture.
BILL
MEURY
CHIEF COMMERCIAL OFFICER
Strong Growth from Key Promoted Products Continues
Product Revenues Q3’18 ($M)
Botox $880 +16%
$(120.0)
(215.0) $(100.0) $(80.0) $(60.0) $(40.0) $(20.0) $- $20.0 $40.0 $60.0 $80.0 $100.0 $120.0
1. Growth excluding FX
2. Includes Lumigan/Ganfort, Alphagan and Combigan 9
3. Includes: Estrace; Minastrin; Aczone and Namenda XR
Strong Q3 2018 Global Medical Aesthetics Growth of 12.4%
Driven by Facial Aesthetics
Global Facial Aesthetics Business Revenues ($M)
306
• US growth of 2%
266
✓ Consumables Revenue +10% 242
BODY
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018
CONTOURING ✓ System placements up 13%
1% • Systems & add-on applicators
revenue -11% CoolSculpting US Business Performance (pro-forma)
growth Y/Y $M
5,735
• International decline of 3% as integration 5,477 90
5,128
5,500
85
activities continue 5,000 4,800 80
4,463
4,500 4,234 75
3,984 70
4,000
PLASTICS & 65
REGENERATIVE
3,500
• AlloDerm continues to drive growth 60
MEDICINE (+24%) 3,000
55
2,500
50
8% • Breast implants business stable post 2,000
45
growth Y/Y premium Inspira launches in 2017 1,500 40
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018
Cum. # of Systems End of Quarter Consumables Revenues
Therapeutic
Continues to be the Fastest Growing Anti- Strong Growth with Overall Market Share
Psychotic Brand in the past 2 years stable at ~95%
• Q3 revenues annualizing at $550M • 12% Q3 growth vs prior year
• Bipolar depression expected launch 2H 2019
• BOTOX Tx is diverse and durable across multiple indications
✓ $500M market opportunity
$527
Vraylar Total Prescription Botox Tx Revenues ($M)
$0
10,000
$0
.5 .3 $481 $500
8,000
B+ B+ $458
6,000 $472
$453
4,000
2,000
$408
0
Source: IMS TRx, 5-pt boxcar average smoothing function Source: US census data and Allergan internal data
11
Q3 2018 GI and Eye Care Performance Impacted by
Near-Term Headwinds
GROWTH IMPACTED BY OZURDEX
BLOCKBUSTER FRANCHISE AND RESTASIS
•
Strong demand of 12% offset by impact • Glaucoma drops International growth
Constipation
from trade buying patterns (+6%) offset by US Lumigan decline
7% • Driving growth while maximizing
growth Y/Y profitability 2%
growth Y/Y
• Ozurdex continues to grow at double digit
rates in US vs prior year (+16%)
• Growth driven by both share and utilization of
higher strength SKU • International growth impacted by recall
(-45% vs P/Y)
• Continue promotional targeting to high enzyme
9% writers -25% ✓ Mfg. issue identified and resolved
growth Y/Y growth Y/Y
✓ Return to market in 4Q’18
Source: IMS
All growth rates exclude FX. 12
Sustained International Revenue Growth
• Strong double digit growth from Botox and Juvederm offset by Ozurdex
Cosmetics
+33%
Europe
+3%
APAC/
+17% +17% MEA
Therapeutic LACAN +25%
0%
-3% -45%1
Brimonidine DDS Phase 2b TLR for geographic atrophy • Initiation of Phase 3 studies 2H’19
CoolSculpting
• Sub-Mandibular 510(k) Clearance
• CoolSculpting 2.0 (Muscle Stim) 510(k) and CE Mark 2H’19
15
Advancing the Pipeline on Key Programs
Estimated timelines 2017 2018 2019 2020
ESMYA FDA meeting
Uterine fibroids
Ubrogepant
Acute migraine
Ph. III recruitment
complete
Ph. III topline results Launch
Cariprazine
Bipolar Depression Positive Ph. III topline Positive 3rd Ph. III
topline
Launch
Rapastinel Ph. III on track Ph. III topline results Maintenance topline
Depression results
Abicipar Ph. III topline results Maple study results(AMD)
AMD/DME (AMD) Ph. III initiation (DME) Launch (AMD)
16
MATT
WALSH
CHIEF FINANCIAL OFFICER
Q3 2018: Solid Financial Performance
Top Line Performance Solid Operating Margins
Managing Profitability
$ Sustainable Generation of Operating Cash Flow
-1% 2% • Performance net income decline LTM* Operating Cash Flow by end of each Quarter ($B)
$1,472 $4.25 mainly driven by revenue headwinds
$1,453 $6.6 $6.2
$4.15 including LOEs, Ozurdex recall and $5.9 $6.2
FX
$3.7
• Performance net income per share • Strong OCF generation
growth of 2% driven by lower share continued in Q3’18 at $1.44B
count *
* Ozurdex recall impact in Q3: $32M in revenues; gross margin of 0.3pp; and ~$0.11 in performance net income per share
Gross margin, operating margin, performance net income and performance net income per share refer to non-GAAP metrics. Please refer to the GAAP to non-GAAP tables in appendix for 18
a reconciliation of our non-GAAP results.
Q3 2018 Financial Performance
$ millions, except per share amount
Q3 2018 Q3 2017 ∆ Y/Y
Net Revenue 3,911 4,034 -3.0% Revenue decline of 3%1 versus prior year
Gross Margin % 85.2% 86.1% -0.9pp • Decline attributed to LOEs and Ozurdex recall in International markets
more than offsetting strong growth from key brands.
R&D Expense 394 405 -2.9%
% of Revenue 10.1% 10.0% 0.1pp Margins remain strong versus prior year despite headwinds
S&M 753 827 -8.9% • Gross Margin decline of 0.9pp mainly attributed to negative impact from
G&A 278 273 2.0% product mix and Ozurdex recall2
SG&A 1,031 1,100 -6.2% • Operating Margins remained stable as lower operating expenses offset
% of Revenue 26.4% 27.3% -0.9pp gross margin impact
Operating Income 1,905 1,968 -3.2% Net Interest Expense/Other declined due primarily to savings from
Operating Margin % 48.7% 48.8% -0.1pp reduction in overall debt period over period
Net Interest (Expense) /Other (212) (275) -23.1% Share count reduction period over period primarily due to share
buyback programs
Performance NI per Share $4.25 $4.15 2.4%
Diluted Shares 341.7 354.9 -3.7% Strong Cash Flow from Operations at $1.44B
Tax Rate 14.2% 13.1% 1.1%
• 1. -1.8% excluding FX
• 2. Gross Margin impact from Ozurdex recall in Q3 2018 of 0.3pp. 19
• Net Revenue and Cash Flow from Ops refer to GAAP amounts. Please refer to the GAAP to non-GAAP tables in appendix for a reconciliation of our non-GAAP results.
Q3 2018 Performance by Segment
(Revenues $M)
1,725 1,706
1,497
-1.1% 1,381
-7.8% 7.8%
Ex-FX 8711
US Specialized Therapeutics revenue impacted by decline in Restasis and lower CoolSculpting growth
• Contribution margin increased primarily due to sales and marketing cost savings from restructuring program
US General Medicine revenue decline attributed to impact from LOEs (mostly Namenda XR and Estrace) more than offsetting
strong growth from key brands
• Slight decline in contribution margin attributed to LOEs
Strong International revenue from Botox and Juvederm mostly offset by Ozurdex and FX headwinds
• Contribution margin increased due to improved operating leverage despite revenue and gross margin headwinds
> 1. $871M represents net revenues at the prior year exchange rates. Contribution margins refer to non-GAAP. 20
Strong Balance Sheet as of September 30 th 2018
Cash and Marketable $1.2 • ~$5.4B1 in pro-forma debt retirement completed YTD,
Securities
including $750M1 pro-forma debt reduction via open
market repurchase in Q3 2018
Total Debt $23.6
• ~$2B in share buyback completed YTD
1 YTD Allergan paid down $6.4B of net debt, including $1.76B of debt in Q3 18. $750M represents the portion of the $1.76B debt repurchase that is not expected to be refinanced.
2 The pro forma ratio of 3.0x assumes only $750M remains retired. Gross Debt to Adjusted EBITDA as reported is 2.9x. 21
Adjusted EBITDA refers to non-GAAP. Please refer to the GAAP to non-GAAP tables in appendix for a reconciliation of our non-GAAP results.
Increased and Narrowed FY 2018 Guidance
$ In millions, except FY 2018 Prior FY 2018 Updated
Assumptions
for share amounts Guidance Guidance
• Restasis generic entry between November 1st –
January 1st
Total Net Revenue $15,450 – $15,600 $15,550 – $15,700
• Includes impact from Ozurdex, Med Derm asset
sale & FX
Gross Margin 85.5% – 86.0% ~85.5% • Reflects impact from product mix and Ozurdex
Please refer to the GAAP to non-GAAP tables in the appendix for a reconciliation of our non-GAAP guidance.
22
APPENDIX
Potential Cash Impact from R&D and Approval Milestones
✓ SUCCESS BASED DEVELOPMENT AND APPROVAL MILESTONES CASH FLOW POTENTIAL IMPACT
($M) Q1 2018 Q2 2018 Q3 2018 Q4 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Thereafter
CF Operating 37 177 20 296 105 226 162 124 1 1,178
CF Financing - - - 7 - 58 150 - 42 54
Amounts in the table above represent payments assuming all anticipated milestones are achieved on commitments in place as of September 30, 2018, including those accrued but not paid in
the consolidated balance sheet. Amounts and timing are subject to change depending on project status. The table above does not include the purchase consideration associated with the
October acquisition of BonTi, Inc. for $195M upfront.
Amounts in the table above only reflect R&D Milestone payments and Approval Milestones; Sales Milestones are not included. Such milestone payments will only be payable in the event that
the Company achieves contractually defined, success-based milestones, such as the advancement of the specified research and development programs or the receipt of regulatory approval for
the specified compounds or products.
25
Q3 2018 Cash and Marketable Securities
Includes: Includes: Includes:
Severance payments - reduction in accrued liabilities (14) Med Derm divestiture 550.0 Dividends (244.0)
Integration payments - component of net income (11) Share buybacks (451.0)
Payments for R&D milestones - component of net income (20) Net repayments of LT indebtedness (1,754.0)
$504
($M)
$1,443 ($2,432)
$1 ($2)
$1,696
$1,210
06/30/18 Cash Flow from Cash Flow from Cash Flow from Change in Marketable Other comprehensive 09/30/18
Cash & Marketable Operations Investing Financing Securities income on Cash & Cash & Marketable
Securities Marketable Securities Securities
26
Continue to Advance the Pipeline …
2018 Achievements and Key 2019 Highlights
THERAPEUTIC AREAS APPROVALS SUBMISSIONS DEVELOPMENT MILESTONES
Microcell
Volift-NLF CoolSculpting Tissue Shapes for Voluma XC (Cannula)
MEDICAL
Volift-NLF
(JPN) 1H Volux
CE Mark (EU) 1H
Inspira
(US) 1H
(China) 2H EMS 2H Pre-Pec Launch (US)
1H
topline 2H
Botox
AESTHETICS/
DERMATOLOGY
CoolSculpting
Jawline
CFL (China) 2H
CoolSculpting
Microcell TE
410 (US) 1H
Voluma Chin
(US) 1H
Botox Skin
Quality FPD 1H
Voluma Nose
(China) FPD 1H
(US) 2H EMS 2H
GI
Linzess
Abdominal Symptoms
Brazikumab
Crohn’s Ph3 entry 2H
Brazikumab UC
Ph 2 Initiation 2H
(US) 2H CVC + Tropifexor
Entry Ph 2b 2H
Results 1H
(US) 1H (US) 2H (US) 1H Cariprazine
Bipolar Depression
TLR 1H
Oral NMDA
modulator
Ph 2 Initiation 1H
Atogepant
Ph 3 Initiation 1H
WH,
Biosimilar
Avastin
EU 1H
Biosimilar
Herceptin
(EU) 1H
Biosimilar
Rituxan
(US/EU) 2H
URO, AI,
OTHER
Avycaz
HABP/VABP
US 1H
Achieved YTD 2018 2019
27
Q3 2018 Reconciliation Tables
Table 1: Allergan plc’s statement of operations for the three and nine months ended September 30, 2018 and 2017
Table 2: Allergan plc's product revenue for significant promoted products globally, within the U.S. and international for the three and nine months ended September 30,
2018 and 2017
Table 3: Allergan plc’s Condensed Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017
Table 4: Allergan plc’s Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2018 and 2017
Table 5: GAAP to Non-GAAP adjustments for the three and nine months ended September 30, 2018 and 2017
Table 6: Reconciliation of Allergan plc's reported net (loss) from continuing operations attributable to shareholders and diluted earnings per share to non-GAAP
performance net income and non-GAAP performance net income per share for the three and nine months ended September 30, 2018 and 2017
Table 7: Reconciliation of Allergan plc's reported net (loss) from continuing operations attributable to shareholders for the three and nine months ended September 30,
2018 and 2017 to adjusted EBITDA and non-GAAP operating income
Table 8: Allergan plc's segment contribution reconciled to the non-GAAP contribution for the same financial statement line items for the three and nine months ended
September 30, 2018 and 2017
Table 9: Allergan plc's product revenue for significant promoted products and segment contribution within the US Specialized Therapeutics segment for the three and
nine months ended September 30, 2018 and 2017
Table 10: Allergan plc's product revenue for significant promoted products and segment contribution within the US General Medicine segment for the three and nine
months ended September 30, 2018 and 2017
Table 11: Allergan plc's product revenue for significant promoted products and segment contribution within the International segment for the three and nine months
ended September 30, 2018 and 2017
Table 12: Reconciliation of anticipated GAAP loss from continuing operations to non-GAAP performance net income attributable to shareholders for the year ending
December 31, 2018
Table 13: Three and nine months ended September 30, 2018 and 2017 non-GAAP Revenue Performance Drivers by product
28
Table 1: Allergan plc’s statement of operations for the three and nine months ended September
30, 2018 and 2017 Table 1
ALLERGAN PLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in millions, except per share amounts)
Operating expenses:
Cost of sales (excludes amortization and impairment of
acquired intangibles including product rights) 596.8 586.5 1,601.4 1,587.1
Research and development 424.2 442.6 1,588.1 1,691.9
Selling, general and administrative 1,044.8 1,169.7 3,328.2 3,749.9
Amortization 1,588.5 1,781.0 4,983.2 5,274.9
In-process research and development impairments - 202.0 798.0 1,245.3
Asset sales and impairments, net (0.4) 3,874.8 272.3 3,896.2
Total operating expenses 3,653.9 8,056.6 12,571.2 17,445.3
Operating income / (loss) 257.5 (4,022.3) (863.5) (5,830.7)
29
Table 2: Allergan plc's product revenue for significant promoted products globally, within the U.S.
and international for the three and nine months ended September 30, 2018 and 2017
AL L E RG AN P L C
NE T RE V E NUE S T O P G L O BAL P RO DUCT S
( Un au d ited ; in m illion s)
Thre e Months Ende d S e pte mbe r 3 0 , 2 0 18 Thre e Months Ende d S e pte mbe r 3 0 , 2 0 17 Move me nt
US S pe c ia lize d US G e ne ra l US S pe c ia lize d US G e ne ra l Tota l Cha nge
The ra pe utic s Me dic ine Inte rna tiona l Corpora te Tota l The ra pe utic s Me dic ine Inte rna tiona l Corpora te Tota l Tota l Cha nge P e rc e nta ge
J uve de rm® Colle c tion 127.2 - 138.6 - 265.8 115.6 - 126.5 - 242.1 23.7 9.8%
Lumiga n®/Ga nfort® 78.0 - 94.8 - 172.8 83.3 - 91.5 - 174.8 (2.0) (1.1)%
Linze s s ®/Cons te lla ® - 204.8 5.7 - 210.5 - 190.9 5.7 - 196.6 13.9 7.1%
Bys tolic ® /Byva ls on® - 151.2 0.5 - 151.7 - 164.2 0.5 - 164.7 (13.0) (7.9)%
Alpha ga n®/Combiga n® 95.4 - 40.5 - 135.9 92.7 - 43.4 - 136.1 (0.2) (0.1)%
Bre a s t Impla nts 58.2 - 35.6 - 93.8 58.0 - 38.1 - 96.1 (2.3) (2.4)%
Viibryd®/Fe tzima ® - 88.5 1.8 - 90.3 - 86.5 1.0 - 87.5 2.8 3.2%
Eye Drops 54.8 - 66.8 - 121.6 53.7 - 71.2 - 124.9 (3.3) (2.6)%
As a c ol®/De lzic ol® - 32.1 10.9 - 43.0 - 49.5 11.9 - 61.4 (18.4) (30.0)%
Cools c ulpting® Cons uma ble s 55.5 - 14.2 - 69.7 50.3 - 13.8 - 64.1 5.6 8.7%
Cools c ulpting® S ys te ms & Add On Applic a tors 29.4 - 8.3 - 37.7 33.1 - 10.2 - 43.3 (5.6) (12.9)%
Ca na s a ®/S a lofa lk® - 46.8 4.4 - 51.2 - 39.0 4.6 - 43.6 7.6 17.4%
Vibe rzi® - 46.8 0.3 - 47.1 - 40.9 0.2 - 41.1 6.0 14.6%
S kinMe dic a ® 19.9 - 1.7 - 21.6 18.7 - 1.4 - 20.1 1.5 7.5%
Kybe lla ® /Be lkyra ® 5.2 - 1.6 - 6.8 9.6 - 1.6 - 11.2 (4.4) (39.3)%
Allode rm® 105.8 - 1.0 - 106.8 84.6 - 1.5 - 86.1 20.7 24.0%
Othe r P roduc ts Re ve nue s 67.3 154.0 94.4 2.3 318.0 71.5 170.2 98.4 4.3 344.4 (26.4) (7.7)%
To ta l Ne t Re ve n u e s $ 1, 7 0 6 . 2 $ 1, 3 8 1. 3 $ 8 2 1. 6 $ 2 .3 3 , 9 11. 4 $ 1, 7 2 4 . 8 $ 1, 4 9 7 . 4 $ 8 0 7 .8 $ 4 .3 4 ,0 3 4 .3 $ (12 2 . 9 ) (3 . 0 )%
30
Table 2: (cont’d) Allergan plc's product revenue for significant promoted products globally, within
the U.S. and international for the three and nine months ended September 30, 2018 and 2017
Nin e Mo n th s En d e d S e p te mb e r 3 0 , 2 0 18 Nin e Mo n th s En d e d S e p te mb e r 3 0 , 2 0 17 Mo ve me n t
US S p e c ia liz e d US G e n e ra l US S p e c ia liz e d US G e n e ra l To ta l Ch a n g e
Th e ra p e u tic s Me d ic in e In te rn a tio n a l Co rp o ra te G lo b a l Th e ra p e u tic s Me d ic in e In te rn a tio n a l Co rp o ra te G lo b a l To ta l Ch a n g e P e rc e n ta g e
J uve de rm® Colle c tion 389.8 - 440.8 - 830.6 361.6 - 386.0 - 747.6 83.0 11.1%
Lumiga n®/Ga nfort® 217.8 - 295.7 - 513.5 236.6 - 271.8 - 508.4 5.1 1.0%
Linze s s ®/Cons te lla ® - 555.9 17.7 - 573.6 - 506.3 16.1 - 522.4 51.2 9.8%
Bys tolic ® /Byva ls on® - 432.1 1.6 - 433.7 - 454.7 1.5 - 456.2 (22.5) (4.9)%
Alpha ga n®/Combiga n® 277.7 - 129.3 - 407.0 275.5 - 128.4 - 403.9 3.1 0.8%
Bre a s t Impla nts 194.8 - 119.6 - 314.4 173.6 - 116.8 - 290.4 24.0 8.3%
Viibryd®/Fe tzima ® - 246.9 4.9 - 251.8 - 244.2 2.1 - 246.3 5.5 2.2%
Eye Drops 154.8 - 208.0 - 362.8 152.2 - 207.2 - 359.4 3.4 0.9%
As a c ol®/De lzic ol® - 102.9 35.0 - 137.9 - 152.7 36.8 - 189.5 (51.6) (27.2)%
Cools c ulpting® Cons uma ble s 180.8 - 40.8 - 221.6 98.2 - 26.3 - 124.5 97.1 78.0%
Cools c ulpting® S ys te ms & Add On Applic a tors 99.5 - 21.8 - 121.3 64.1 - 20.4 - 84.5 36.8 43.6%
Allode rm® 312.4 - 5.5 - 317.9 223.3 - 5.0 - 228.3 89.6 39.2%
Ca na s a ®/S a lofa lk® - 130.4 13.1 - 143.5 - 115.7 13.3 - 129.0 14.5 11.2%
Vibe rzi® - 127.6 0.7 - 128.3 - 113.7 0.3 - 114.0 14.3 12.5%
S kinMe dic a ® 58.8 - 5.3 - 64.1 72.1 - 1.4 - 73.5 (9.4) (12.8)%
Kybe lla ® /Be lkyra ® 24.6 - 5.3 - 29.9 37.4 - 5.1 - 42.5 (12.6) (29.6)%
Othe r P roduc ts Re ve nue s 210.2 482.5 290.5 36.7 1,019.9 201.2 501.6 287.5 18.3 1,008.6 11.3 1.1%
31
Table 3: Allergan plc’s Condensed Consolidated Balance Sheets as of September 30, 2018 and
December 31, 2017
Table 3
ALLERGAN PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions)
September 30, December 31,
2018 2017
Assets
Cash and cash equivalents $ 1,187.9 $ 1,817.2
Marketable securities 22.0 4,632.1
Accounts receivable, net 2,826.9 2,899.0
Inventories 894.6 904.5
Prepaid expenses and other current assets 801.5 1,123.9
Assets held for sale 177.0 81.6
Property, plant and equipment, net 1,756.6 1,785.4
Investments and other assets 1,292.2 587.0
Product rights and other intangibles 48,127.4 54,648.3
Goodwill 49,456.4 49,862.9
Total assets $ 106,542.5 $ 118,341.9
32
Table 4: Allergan plc’s Consolidated Statements of Cash Flows for the three and nine months
ended September 30, 2018 and 2017 ALLERGAN PLC
Table 4
33
Table 5: GAAP to Non-GAAP adjustments for the three and nine months ended September 30,
2018 and 2017
Table 5
ALLERGAN PLC
GAAP TO NON-GAAP ADJUSTMENTS
(Unaudited; in millions)
Purchase accounting impact on stock-based compensation for acquired awards - (0.3) (0.6) (1.2) (0.4) - - - - -
Severance due to integration of acquired entities - - - - - - - - - -
Non-acquisition related severance and restructuring - (6.6) (0.9) (1.3) (1.3) - - - - -
Costs associated with disposed businesses - - - - 0.5 - - - - -
Integration charges of acquired businesses - (0.2) (0.2) (0.3) (8.5) - - - - -
Milestones and upfront expenses for asset acquisitions
Merck & Co. - - (30.0) - - - - - - -
Editas Medicine, Inc. - - (15.0) - - - - - - -
Other - - (5.1) - - - - - - -
Accretion and fair-value adjustments to contingent consideration - (10.0) 21.4 - - - - - - -
Non-cash amortization of debt premium recognized in purchase accounting - - - - - - - (5.5) - -
Asset sales and impairments, other - - - - - - 0.4 - - -
Gain on the sale of business - - - - - - - - (129.6) -
Loss on bond repurchases - - - - - - - - 7.5 -
Litigation settlement related charges - - - - (1.1) - - - - -
Other adjustments - (0.1) (0.1) - 0.2 (1,588.5) - - (3.9) -
Income taxes on pre-tax adjustments - - - - - - - - - 94.2
Discrete income tax events - - - - - - - - - (67.6)
Non-GAAP Adjusted $ 3,911.4 $ 579.6 $ 393.7 $ 752.8 $ 278.6 $ - $ - $ (215.9) $ 4.0 $ 240.0
34
Table 5: (cont’d) GAAP to Non-GAAP adjustments for the three and nine months ended September
30, 2018 and 2017
Non-GAAP Adjusted $ 4,034.3 $ 558.8 $ 405.3 $ 826.5 $ 273.1 $ - $ - $ (260.9) $ (14.5) $ 221.8
The non-GAAP income tax expense is determined based on our pre-tax income, adjusted for non-GAAP items on a jurisdiction by jurisdiction basis. The non-GAAP effective tax rate in the three months ended September 30, 2018 was impacted by U.S. income taxed at rates higher than the Irish statutory rate, partially offset by income earned in jurisdictions with tax rates lower than the Irish statutory rate.
The non-GAAP effective tax rate for the three months ended September 30, 2018 excludes a net discrete tax detriment of approximately $67.6 million related to a change in the applicable tax rate on certain temporary differences, the tax effects of uncertain tax positions and other individually insignificant items.
35
Table 5: (cont’d) GAAP to Non-GAAP adjustments for the three and nine months ended September
30, 2018 and 2017
Purchase accounting impact on stock-based compensation for acquired awards - (1.8) (4.2) (7.2) (2.5) - - - - -
Severance due to integration of acquired entities - - - (0.7) (0.8) - - - - -
Non-acquisition related severance and restructuring - (28.5) (1.8) (18.5) (5.6) - (13.6) - - -
Costs associated with disposed businesses - (1.5) - - (2.8) - - - - -
Integration charges of acquired businesses - (0.2) (0.8) (1.0) (33.1) - - - - -
Milestones and upfront expenses for asset acquisitions
Elastagen Pty Ltd - - (96.1) - - - - - - -
AstraZeneca plc - - (90.0) - - - - - - -
Merck & Co. - - (115.0) - - - - - - -
Chase Pharmaceuticals Corporation - - (75.0) - - - - - - -
Repros Therapeutics, Inc. - - (33.2) - - - - - - -
Editas Medicine, Inc. - - (15.0) - - - - - - -
Other - - (16.5) - - - - - - -
Accretion and fair-value adjustments to contingent consideration - 115.4 (2.2) - - - - - - -
Non-cash amortization of debt premium recognized in purchase accounting - - - - - - - (15.7) - -
Impairment of IPR&D products acquired in the Allergan acquisition - - - - - - (236.0) - - -
Impairment of IPR&D products acquired in the Vitae acquisition - - - - - - (40.0) - - -
Impairment of assets held for sale - - - - - - (252.0) - - -
Impairment of RORgt IPR&D product - - - - - - (522.0) - - -
Asset sales and impairments, other - - - - - - (6.7) - - -
Gain on Teva securities - - - - - - - - (60.6) -
Milestone component of ongoing intellectual property agreement (25.0) - - - - - - - - -
Gain on the sale of business - - - - - - - - (182.6) -
Gain on bond repurchases - - - - - - - - (1.7) -
Litigation settlement related charges - - - - (40.4) - - - - -
Other adjustments - - 0.1 - (1.1) (4,983.2) - - (3.7) -
Income taxes on pre-tax adjustments - - - - - - - - - 847.3
Discrete income tax events - - - - - - - - - 334.0
Non-GAAP Adjusted $ 11,682.7 $ 1,684.8 $ 1,138.4 $ 2,381.6 $ 832.9 $ - $ - $ (683.1) $ 18.0 $ 707.3
36
Table 5: (cont’d) GAAP to Non-GAAP adjustments for the three and nine months ended September
30, 2018 and 2017
The non-GAAP effective tax rate for the nine months ended September 30, 2018 excludes a net discrete tax benefit of approximately $334.0 million related to the tax effects of integration activities, a change in the applicable tax rate on certain temporary differences, share-based compensation, uncertain tax positions and other individually insignificant items.
37
Table 6: Reconciliation of Allergan plc's reported net (loss) from continuing operations
attributable to shareholders and diluted earnings per share to non-GAAP performance net income
and non-GAAP performance net income per share for the three and nine months ended September
30, 2018 and 2017 Table 6
ALLERGAN PLC
RECONCILIATION TABLE
(Unaudited; in millions except per share amounts)
GAAP (loss) from continuing operations attributable to shareholders $ (37.9) $ (3,949.6) $ (796.5) $ (7,229.2)
Adjusted for:
Amortization 1,588.5 1,781.0 4,983.2 5,274.9
Acquisition, divestiture and licensing (income) / charges (77.7) 1,404.5 235.8 4,036.1
Accretion and fair-value adjustments to contingent consideration (11.4) (66.8) (113.2) (51.6)
Impairment/asset sales and related costs (0.4) 4,076.8 1,070.3 5,141.5
Other 7.5 13.8 (26.7) 187.9
Non-acquisition restructurings, including Global Supply Chain initiatives 10.1 39.7 54.4 39.7
Legal settlements 1.1 32.9 40.4 74.3
Income taxes on items above and other discrete income tax adjustments (26.6) (1,860.6) (1,181.3) (3,371.0)
Non-GAAP performance net income attributable to shareholders $ 1,453.2 $ 1,471.7 $ 4,266.4 $ 4,102.6
Diluted (loss) per share from continuing operations attributable to shareholders- GAAP
$ (0.11) $ (11.84) $ (2.36) $ (21.61)
Non-GAAP performance net income per share attributable to shareholders $ 4.25 $ 4.15 $ 12.41 $ 11.51
Basic weighted average ordinary shares outstanding 339.0 333.5 337.6 334.6
Effect of dilutive securities:
Dilutive shares 2.7 21.4 6.2 21.9
Diluted weighted average ordinary shares outstanding 341.7 354.9 343.8 356.5
38
Table 7: Reconciliation of Allergan plc's reported net (loss) from continuing operations
attributable to shareholders for the three and nine months ended September 30, 2018 and 2017
to adjusted EBITDA and non-GAAP operating income Table 7
ALLERGAN PLC
ADJUSTED EBITDA and NON-GAAP OPERATING INCOME, RECONCILIATION TABLE
(Unaudited; in millions)
GAAP (loss) from continuing operations attributable to shareholders $ (37.9) $ (3,949.6) $ (796.5) $ (7,229.2)
Plus:
Interest expense 220.4 265.2 701.0 832.3
Interest income (10.0) (11.1) (33.6) (53.0)
Provision / (benefit) for income taxes 213.4 (1,638.8) (474.0) (2,752.1)
Depreciation 44.5 42.0 149.7 123.2
Amortization 1,588.5 1,781.0 4,983.2 5,274.9
EBITDA $ 2,018.9 $ (3,511.3) $ 4,529.8 $ (3,803.9)
Adjusted for:
Acquisition, divestiture and licensing (income) / charges (74.7) 1,394.3 227.6 3,972.9
Impairment/asset sales and related costs (0.4) 4,076.8 1,070.3 5,141.5
Other 7.5 13.8 (26.7) 187.9
Non-acquisition restructurings, including Global Supply Chain initiatives, excluding depreciation
39
Table 8: Allergan plc's segment contribution reconciled to the non-GAAP contribution for the same
financial statement line items for the three and nine months ended September 30, 2018 and 2017
Table 8
ALLERGAN PLC
Segment Contribution to Non-GAAP Allergan plc Contribution
(Unaudited; $ in millions)
Three Months Ended September 30, 2018 Three Months Ended September 30, 2017
US Specialized US Specialized
Therapeutics US General International Therapeutics US General International
Segment Medicine Segment Segment Corporate Total Company Segment Medicine Segment Segment Corporate Total Company
Net revenues $ 1,706.2 $ 1,381.3 $ 821.6 $ 2.3 $ 3,911.4 $ 1,724.8 $ 1,497.4 $ 807.8 $ 4.3 $ 4,034.3
Operating expenses:
Cost of sales (1) 143.0 219.6 130.7 86.3 579.6 131.4 225.5 116.3 85.6 558.8
Selling and marketing 313.7 233.2 206.0 (0.1) 752.8 353.5 247.7 224.8 0.5 826.5
General and administrative 47.3 37.7 35.1 158.5 278.6 54.8 47.7 28.3 142.3 273.1
Segment contribution $ 1,202.2 $ 890.8 $ 449.8 $ (242.4) $ 2,300.4 $ 1,185.1 $ 976.5 $ 438.4 $ (224.1) $ 2,375.9
Segment margin 70.5% 64.5% 54.7% n.m. 58.8% 68.7% 65.2% 54.3% n.m. 58.9%
(2)
Segment gross margin 91.6% 84.1% 84.1% n.m. 85.2% 92.4% 84.9% 85.6% n.m. 86.1%
(1) Excludes amortization and impairment of acquired intangibles including product rights.
(2) Defined as net revenues less segment related cost of sales as a percentage of net revenues.
Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017
US Specialized US Specialized
Therapeutics US General International Therapeutics US General International
Segment Medicine Segment Segment Corporate Total Company Segment Medicine Segment Segment Corporate Total Company
Net revenues $ 5,111.5 $ 3,925.0 $ 2,634.5 $ 11.7 $ 11,682.7 $ 4,921.8 $ 4,270.9 $ 2,403.6 $ 18.3 $ 11,614.6
Operating expenses:
(1)
Cost of sales 425.9 604.0 391.0 263.9 1,684.8 349.4 623.2 341.6 207.4 1,521.6
Selling and marketing 970.2 713.5 697.9 - 2,381.6 1,040.7 838.3 673.2 3.5 2,555.7
General and administrative 145.6 111.3 100.4 475.6 832.9 149.4 129.7 86.5 500.7 866.3
Segment contribution $ 3,569.8 $ 2,496.2 $ 1,445.2 $ (727.8) $ 6,783.4 $ 3,382.3 $ 2,679.7 $ 1,302.3 $ (693.3) $ 6,671.0
Segment margin 69.8% 63.6% 54.9% n.m. 58.1% 68.7% 62.7% 54.2% n.m. 57.4%
Segment gross margin (2) 91.7% 84.6% 85.2% n.m. 85.6% 92.9% 85.4% 85.8% n.m. 86.9%
(1) Excludes amortization and impairment of acquired intangibles including product rights.
(2) Defined as net revenues less segment related cost of sales as a percentage of net revenues.
40
Table 9: Allergan plc's product revenue for significant promoted products and segment
contribution within the US Specialized Therapeutics segment for the three and nine months ended
September 30, 2018 and 2017
41
Table 9: (cont’d) Allergan plc's product revenue for significant promoted products and segment
contribution within the US Specialized Therapeutics segment for the three and nine months ended
September 30, 2018 and 2017
42
Table 10: Allergan plc's product revenue for significant promoted products and segment
contribution within the US General Medicine segment for the three and nine months ended
September 30, 2018 and 2017
Table 10
ALLERGAN PLC
US General Medicine Product Revenue
(Unaudited; in millions)
Operating expenses:
Cost of sales (1) 219.6 225.5 (5.9) (2.6)%
Selling and marketing 233.2 247.7 (14.5) (5.9)%
General and administrative 37.7 47.7 (10.0) (21.0)%
Segment contribution $ 890.8 $ 976.5 $ (85.7) (8.8)%
Segment margin 64.5% 65.2% (0.7)%
(2)
Segment gross margin 84.1% 84.9% (0.8)%
(1) Excludes amortization and impairment of acquired intangibles including product rights.
(2) Defined as net revenues less segment related cost of sales as a percentage of net revenues.
43
Table 10: (cont’d) Allergan plc's product revenue for significant promoted products and segment
contribution within the US General Medicine segment for the three and nine months ended
September 30, 2018 and 2017 Nine Months Ended September 30, Change
2018 2017 Dollars %
Operating expenses:
Cost of sales (1) 604.0 623.2 (19.2) (3.1)%
Selling and marketing 713.5 838.3 (124.8) (14.9)%
General and administrative 111.3 129.7 (18.4) (14.2)%
Segment contribution $ 2,496.2 $ 2,679.7 $ (183.5) (6.8)%
Segment margin 63.6% 62.7% 0.9%
Segment gross margin(2) 84.6% 85.4% (0.8)%
(1) Excludes amortization and impairment of acquired intangibles including product rights.
(2) Defined as net revenues less segment related cost of sales as a percentage of net revenues.
44
Table 11: Allergan plc's product revenue for significant promoted products and segment
contribution within the International segment for the three and nine months ended September
30, 2018 and 2017 ALLERGAN PLC
Table 11
Operating expenses:
Cost of sales (1) 130.7 116.3 14.4 12.4%
Selling and marketing 206.0 224.8 (18.8) (8.4)%
General and administrative 35.1 28.3 6.8 24.0%
Segment contribution $ 449.8 $ 438.4 $ 11.4 2.6%
Segment margin 54.7% 54.3% 0.4%
(2)
Segment gross margin 84.1% 85.6% (1.5)%
(1) Excludes amortization and impairment of acquired intangibles including product rights.
(2) Defined as net revenues less segment related cost of sales as a percentage of net revenues.
45
Table 11: (cont’d) Allergan plc's product revenue for significant promoted products and segment
contribution within the International segment for the three and nine months ended September
30, 2018 and 2017 Nine Months Ended September 30, Change
2018 2017 Dollars %
Operating expenses:
Cost of sales (1) 391.0 341.6 49.4 14.5%
Selling and marketing 697.9 673.2 24.7 3.7%
General and administrative 100.4 86.5 13.9 16.1%
Segment contribution 1,445.2 1,302.3 142.9 11.0%
Segment margin 54.9% 54.2% 0.7%
(2)
Segment gross margin 85.2% 85.8% (0.6)%
(1) Excludes amortization and impairment of acquired intangibles including product rights.
(2) Defined as net revenues less segment related cost of sales as a percentage of net revenues.
46
Table 12: Reconciliation of anticipated GAAP loss from continuing operations to non-GAAP
performance net income attributable to shareholders for the year ending December 31, 2018
Table 12
47
Table 13: Three and nine months ended September 30, 2018 and 2017 non-GAAP Revenue
Performance Drivers by product
48
Table 13: (cont’d) Three and nine months ended September 30, 2018 and 2017 non-GAAP
Revenue Performance Drivers by product
Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017 Movement
Global
US Specialized US General US Specialized US General Change
Therapeutics Medicine International Corporate Global Therapeutics Medicine International Corporate Global Global Change Percentage
Total Brands facing LOE Risk/Divested 1,046.0 349.2 101.5 1,496.7 1,296.7 962.0 103.1 2,361.8 (865.1) -36.6%
Total Net Revenues $ 5,111.5 $ 3,925.0 $ 2,634.5 $ 11.7 11,682.7 $ 4,921.8 $ 4,270.9 $ 2,403.6 $ 18.3 11,614.6 $ 68.1 0.6%
49