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 ofEndo 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" 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 toEndo International plc and its subsidiaries. 35 -------------------------------------------------------------------------------- Table of Contents RESULTS OF OPERATIONS Our quarterly results have fluctuated in the past and may continue to fluctuate. These fluctuations may be due to the business and financial statement effects of, among other things, new product launches by us or our competitors; market acceptance of our products; purchasing patterns of our customers; pricing; changes in the availability of our products; litigation-related and other contingencies; mergers, acquisitions, divestitures and other related activity; restructurings and other cost-reduction initiatives; financing transactions; COVID-19; upfront and milestone payments to partners; asset impairment charges; share-based and other long-term incentive compensation; and changes in the fair value of financial instruments. The following summary highlights certain recent developments that have resulted in and/or could in the future result in fluctuations in our results of operations and/or changes in our liquidity and capital resources: •InDecember 2019 , COVID-19 was reported to have surfaced inWuhan, China . InMarch 2020 , theWorld Health Organization declared the COVID-19 outbreak a pandemic. Many countries and localities announced aggressive actions to reduce the spread of the disease, including limiting non-essential gatherings of people, suspending all non-essential travel, ordering certain businesses and government agencies to cease non-essential operations at physical locations and issuing shelter-in-place orders (subject to limited exceptions). Since then, developments have evolved rapidly and are likely to continue to do so. While there has been loosening of restrictions, an increase in diagnosed cases may lead to the reinstatement of various restrictions. The impact on our results from COVID-19 and related changes in economic conditions, including changes to consumer spending, 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, the impacts from COVID-19 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 any future periods. COVID-19 could also increase the degree to which our results, including the results of our business segments, fluctuate in the future. •InJune 2020 , we completed a series of financing transactions, collectively referred to herein as theJune 2020 Refinancing Transactions, which are further discussed in Note 12. Debt of the Condensed Consolidated Financial Statements included in Part I, Item 1. •InSeptember 2020 , we announced that we had entered into a non-exclusive agreement with Novavax, Inc. to provide fill-finish manufacturing services for its COVID-19 vaccine candidate (NVX-CoV2373). •InNovember 2020 , we announced the initiation of several strategic actions, collectively referred to as the 2020 Restructuring Initiative, to further optimize operations and increase overall efficiency. We have been progressing these actions. For example, during the third quarter of 2021, we entered into definitive agreements to sell certain assets related to our retail generics business, as well as certain associated liabilities. Certain of the sales closed inOctober 2021 , with the remainder expected to close prior to the end of 2021. 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 amounts recognized and expected future charges, refer to Note 3. Discontinued Operations and Held for Sale and Note 4. Restructuring of the Condensed Consolidated Financial Statements included in Part I, Item 1. •InDecember 2020 , we completed our acquisition ofBioSpecifics Technologies Corp (BioSpecifics ). Prior to this acquisition, we had a strategic relationship withBioSpecifics since 2004 pursuant to whichBioSpecifics was, among other things, entitled to a royalty stream from us related to our collagenase-based therapies, including XIAFLEX® and QWO® (collagenase clostridium histolyticum-aaes). Subsequent to the acquisition,BioSpecifics became our wholly-owned consolidated subsidiary. As a result, beginning inDecember 2020 , theBioSpecifics acquisition had the effect of reducing royalty payments recognized in Cost of revenues. •InMarch 2021 , we completed a series of financing transactions, collectively referred to herein as theMarch 2021 Refinancing Transactions, which are further discussed in Note 12. Debt of the Condensed Consolidated Financial Statements included in Part I, Item 1. •InJuly 2020 , we received FDA approval for QWO® for the treatment of moderate to severe cellulite in the buttocks of adult women. During 2020, we put in place aU.S. aesthetics commercial team and the capabilities that enabled us to launch QWO® inMarch 2021 . 36 -------------------------------------------------------------------------------- Table of Contents •In addition to our other legal proceedings, we, along with others, are the subject of various legal proceedings regarding the sale, marketing and/or distribution of prescription opioid medications. We have not been able to settle most of the opioid claims made against us and, as a result, there are claims currently against us at various stages in the litigation process. Some cases are at the pleading or discovery stage; others are at the trial stage or may otherwise be nearing a decision. Other cases have also been set for trial in various courts around the country. The timing of any scheduled trial is subject to change. It is possible that our legal proceedings, including those relating to opioid claims, could have a material adverse effect on our business, financial condition, results of operations and cash flows, including in the short term. The implications of these legal proceedings could result in a possible restructuring of our or our subsidiaries' obligations through a bankruptcy filing which, if it were to occur, would subject us to additional risks and uncertainties that could adversely affect our business prospects and ability to continue as a going concern, as further described in Part II, Item 1A. "Risk Factors" herein. For further discussion, see Note 13. Commitments and Contingencies of the Condensed Consolidated Financial Statements included in Part I, Item 1. 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 Senior Executive 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 implemented alternative working practices and work-from-home requirements for appropriate employees, inclusive of our executive leadership team. We limited international and domestic travel, increased our already-thorough cleaning protocols throughout our facilities and prohibited non-essential visitors from our sites. We also implemented temperature screenings, health questionnaires, social distancing, modified schedules, shift rotation and/or other similar policies at our manufacturing facilities. We have continued to pay full wages to our workforce. 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 from time to time. We have since begun to adjust certain of these practices, reflecting the evolved guidelines from health and other governmental authorities, including the elimination of certain social distancing requirements for fully vaccinated team members. We launched a hybrid approach selling model inJune 2020 for our field employees, which allows virtual and/or live engagement with healthcare providers and other customers. Additionally, where conditions allowed, we transitioned from our work-from-home requirements during the third quarter of 2021 and implemented flexible work options for our employees. We will continue to evaluate our practices. 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 including, in the case of VASOSTRICT®, for the treatment of patients with vasodilatory shock. The increase in sales volumes for VASOSTRICT® was followed by significant inventory destocking for the remainder of the second quarter of 2020 and a continued decline in sales volumes toward pre-COVID-19 levels during the third quarter of 2020. Beginning in the fourth quarter of 2020 and continuing into 2021, we experienced increased sales volumes based on a resurgence of COVID-19 cases in certain parts of theU.S. While sales volumes began to decline toward more normal pre-COVID-19 levels in the second quarter of 2021, we again experienced increased sales volumes during the third quarter of 2021 based on increasedU.S. hospitalizations related to: (i) COVID-19, including as a result of the delta variant, and (ii) other causes, which we believe have been driven in part by higher levels of population mobility and activity as COVID-19-related lockdowns and other restrictions were lifted. Despite these quarterly fluctuations, VASOSTRICT® has generally continued to experience increased sales volumes during the COVID-19 pandemic as compared to pre-COVID-19 levels. 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 the prior year because of the COVID-19 pandemic. Since then, sales volumes for these products have generally been recovering as physician office activity and patient office visits have increased; however, during the third quarter of 2021, a resurgence of COVID-19 related to the delta variant has begun to affect this recovery, resulting in a slowing of year-over-year revenue growth for XIAFLEX®. Future changes in the COVID-19 pandemic could further impact future revenues for these and/or other products. 37 -------------------------------------------------------------------------------- Table of Contents 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, as further described above, as well as changes in our workforce availability, have impacted our manufacturing and supply chain productivity at certain of our facilities and have, from time to time, 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 facilities located in theU.S. andIndia , supply agreements and strong business relationships with numerous contract manufacturing organizations throughout the world, including in theU.S. ,Canada ,Europe andIndia , 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 inIreland , 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. However, as the pandemic continues to impact the supply of goods and services worldwide, we do face the risk of increased pressure on global logistics network infrastructure and capacity, which could result in interruptions of supply and/or increased costs based upon inability to obtain, and/or delayed deliveries of, raw materials and/or critical supplies necessary to continue our manufacturing activities and/or those of our third party suppliers. 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 moved the 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 an 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 measures we may implement from time to time in response to COVID-19, workforce availability and/or an inability to obtain, and/or delayed deliveries of, raw materials and/or critical supplies necessary to continue our manufacturing activities and/or those of our third party suppliers, (iii) potential idle capacity charges based on the impact of any of the conditions described above 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. Our estimated revenue trends for the full year 2021 compared to the full year 2020 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, among other things, 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 2021, we expect an increase in revenues from the Specialty Products portfolio of ourBranded Pharmaceuticals segment as compared to 2020, primarily driven by increased revenues of XIAFLEX® and SUPPRELIN® LA. The expected increases in XIAFLEX® and SUPPRELIN® LA revenues are primarily driven by anticipated increases in demand driven by our investments in and promotional efforts behind these products, as well as anticipated increases in physician office activity and patient office visits in 2021 compared to 2020. Additionally, SUPPRELIN® LA revenues are expected to increase as a result of better than expected volume performance due to a temporary competitor supply disruption. We also launched QWO® inMarch 2021 , which we expect will contribute to the overall increase inBranded Pharmaceuticals segment revenues in 2021. •For the full year 2021, we expect revenues from our Sterile Injectables segment to be generally in line with 2020, as anticipated increases in VASOSTRICT® revenues are expected to be offset by competitive pressures impacting this segment's product portfolio. •For the full year 2021, we expect revenues from the Established Products portfolio of ourBranded Pharmaceuticals segment and from ourGeneric Pharmaceuticals andInternational Pharmaceuticals segments to decline as compared to 2020, primarily driven by competitive pressures impacting these product portfolios. 38 -------------------------------------------------------------------------------- Table of Contents 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 endedSeptember 30, 2021 and 2020 (dollars in thousands): Three Months Ended September 30, % Change Nine Months Ended September 30, % Change 2021 2020 2021 vs. 2020 2021 2020 2021 vs. 2020 Total revenues, net$ 772,028 $ 634,860 22 %$ 2,203,777 $ 2,142,853 3 % Cost of revenues 286,068 348,077 (18) % 909,841 1,072,972 (15) % Gross margin$ 485,960 $ 286,783 69 %$ 1,293,936 $ 1,069,881 21 % Gross margin percentage 62.9 % 45.2 % 58.7 % 49.9 % Selling, general and administrative$ 246,864 $ 182,259 35 %$ 611,657 $ 522,285 17 % Research and development 25,616 32,055 (20) % 90,024 94,165 (4) % Litigation-related and other contingencies, net 83,495 1,810 NM 119,327 (23,938) NM Asset impairment charges 42,155 8,412 NM 50,393 106,197 (53) % Acquisition-related and integration items, net (1,432) (1,407) 2 % (6,357) 17,100 NM Interest expense, net 142,958 135,648 5 % 418,852 397,689 5 % Loss on extinguishment of debt - - NM 13,753 - NM Other income, net (5,955) (7,194) (17) % (4,671) (25,318) (82) % (Loss) income from continuing operations before income tax$ (47,741) $ (64,800) (26) % $ 958$ (18,299) NM __________ NM indicates that the percentage change is not meaningful or is greater than 100%. Total revenues, net. The increase in revenues for the three months endedSeptember 30, 2021 was primarily due to increased revenues from ourSterile Injectables and Generic Pharmaceuticals segments, as well as the Specialty Products portfolio of ourBranded Pharmaceuticals segment, partially offset by decreased revenues from the Established Products portfolio of ourBranded Pharmaceuticals segment. Total revenues for the nine months endedSeptember 30, 2021 increased as compared to the prior year period as revenue increases from the Specialty Products portfolio of ourBranded Pharmaceuticals segment and from our Sterile Injectables segment were partially offset by decreased revenues from ourGeneric Pharmaceuticals segment, the Established Products portfolio of ourBranded Pharmaceuticals segment and ourInternational Pharmaceuticals segment. Our revenues are further disaggregated and described below under the heading "Business Segment Results Review." Cost of revenues and gross margin percentage. During the three and nine months endedSeptember 30, 2021 and 2020, Cost of revenues includes certain amounts that impact comparability, including amortization expense and amounts related to continuity and separation benefits, cost reductions and strategic review initiatives. The following table summarizes such amounts (in thousands): Three Months Ended September
30, Nine Months Ended
2021 2020 2021 2020
Amortization of intangible assets (1)
Amounts related to continuity and separation benefits, cost reductions and strategic review initiatives (2)$ (10,259) $ 36,551 $ 10,007 $ 43,692 __________ (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 endedSeptember 30, 2021 were primarily driven by prior 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 previously put into service. (2)Amounts primarily relate to certain employee separation, continuity and other benefit-related costs, excess inventory reserves and accelerated depreciation. As further discussed in Note 3. Discontinued Operations and Held for Sale and Note 4. Restructuring of the Condensed Consolidated Financial Statements included in Part I, Item 1, amounts during the third quarter of 2021 include a pre-tax reversal of accrued employee separation charges related to certain site sales. For further discussion of our material restructuring initiatives, including a discussion of amounts recognized and expected future charges, refer to Note 4. Restructuring. The decreases in Cost of revenues for both the three and nine months endedSeptember 30, 2021 were primarily due to decreased expenses for amounts related to continuity and separation benefits, cost reductions and strategic review initiatives, decreased amortization expense, the reduction in royalty payments recognized in Cost of revenues resulting from theDecember 2020 BioSpecifics acquisition and favorable changes in product mix as described below, partially offset by increased revenues. 39 -------------------------------------------------------------------------------- Table of Contents Gross margin percentage increased for both the three and nine months endedSeptember 30, 2021 as a result of the reduction in royalty payments recognized in Cost of revenues resulting from theDecember 2020 BioSpecifics acquisition, favorable changes in product mix, decreased expenses for amounts related to continuity and separation benefits, cost reductions and strategic review initiatives and decreased amortization expense. The favorable changes in product mix for the three and nine months endedSeptember 30, 2021 primarily resulted from increased revenues from the Specialty Products portfolio of ourBranded Pharmaceuticals segment and from our Sterile Injectables segment. Selling, general and administrative expenses. The increases for the three and nine months endedSeptember 30, 2021 were primarily due to increased costs associated with our commercial launch of QWO®, our investment and promotional efforts behind XIAFLEX®, certain legal matters, certain strategic review initiatives and the timing and amount of patient assistance contributions, partially offset by decreased costs associated with the 2020 Restructuring Initiative, as further discussed in Note 4. Restructuring of the Condensed Consolidated Financial Statements included in Part I, Item 1. Additionally, for the nine months endedSeptember 30, 2021 , costs associated with the debt financing transactions decreased. For further discussion, refer to Note 12. Debt of the Condensed Consolidated Financial Statements included in Part I, Item 1. Selling, general and administrative expenses may continue to be impacted by the 2020 Restructuring Initiative. Refer to Note 4. Restructuring of the Condensed Consolidated Financial Statements included in Part I, Item 1 for discussion of this initiative, including a discussion of amounts recognized and expected future charges. We expect Selling, general and administrative expenses to increase as compared to amounts in 2020, primarily as a result of increased costs associated with our commercial launch of QWO®, increased investment and promotional efforts behind XIAFLEX® and increased costs associated with certain legal matters and certain strategic review initiatives. R&D expenses. The amount of R&D expense we record in any period varies depending on the nature and stage of development of our R&D programs and can also vary in periods in which we incur significant upfront or milestone charges related to agreements with third parties. Our R&D efforts are focused on the development of a diversified portfolio of innovative and clinically differentiated product candidates. We have been progressing and expect to continue to progress our cellulite treatment development programs for QWO®, which was approved by the FDA for the treatment of moderate to severe cellulite in the buttocks of adult women inJuly 2020 . In early 2020, we announced that we had initiated our XIAFLEX® development programs for the treatment of plantar fibromatosis and adhesive capsulitis, which are continuing to progress. We expect to progress our plantar fibromatosis development program with the initiation of a Phase 2 study later in 2021. We also expect to continue to focus investments in ready-to-use and other product candidates in our Sterile Injectables segment, potentially including license and commercialization agreements such as ourNevakar, Inc. agreement. In 2019, Endo initiated an open-label Phase 1 pharmacokinetic (PK) study of VASOSTRICT® in healthy volunteers, studying plasma clearance with TT genotype versus AA/AT genotype. Based on the study results, we were issued two new patents by theU.S. Patent and Trademark Office (PTO), both of which expire in 2040. Endo also submitted a Prior Approval Supplement (PAS) application for revised labeling for VASOSTRICT® to the FDA, which was subsequently accepted by the agency. InMay 2021 , the FDA issued a Complete Response Letter in response to our PAS application for revised labeling. We are considering how to respond. The timing and outcome of any FDA review of the PAS application are within theFDA's discretion. As our development programs progress, it is possible that our R&D expenses could increase. The decreases in R&D expense for the three and nine months endedSeptember 30, 2021 were primarily driven by decreased costs associated with the 2020 Restructuring Initiative, as further discussed in Note 4. Restructuring of the Condensed Consolidated Financial Statements included in Part I, Item 1, and decreased costs associated with ourGeneric Pharmaceuticals segment, partially offset by increased costs associated with our XIAFLEX® development programs. R&D expenses may continue to be impacted by the 2020 Restructuring Initiative. Refer to Note 4. Restructuring of the Condensed Consolidated Financial Statements included in Part I, Item 1 for discussion of this initiative, including a discussion of amounts recognized and expected future charges. 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. As further described therein, adjustments to the corresponding liability accruals may be required in the future, including in the short term. This could have a material adverse effect on our business, financial condition, results of operations and cash flows. 40 -------------------------------------------------------------------------------- Table of Contents Asset impairment charges. The following table presents the components of our total Asset impairment charges for the three and nine months endedSeptember 30, 2021 and 2020 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Goodwill impairment charges $ - $ - $ -$ 32,786 Other intangible asset impairment charges - 2,020 7,811 65,771 Property, plant and equipment impairment charges - - 427 1,248 Operating lease right-of-use asset impairment charges - 6,392 - 6,392 Disposal group impairment charges 42,155 - 42,155 - Total asset impairment charges$ 42,155 $ 8,412
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. A discussion of critical accounting estimates made in connection with certain of our impairment tests is included below under the caption "CRITICAL ACCOUNTING ESTIMATES." For further discussion of the disposal group impairment charges, refer to Note 3. Discontinued Operations and Held for Sale of the Condensed Consolidated Financial Statements included in Part I, Item 1. Acquisition-related and integration items, net. Acquisition-related and integration items, net primarily consist of the net (benefit) expense from changes in the fair value of acquisition-related contingent consideration liabilities resulting from changes to our estimates regarding the timing and amount of the future revenues of the underlying products and changes in other assumptions impacting the probability of incurring, and extent to which we 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 endedSeptember 30, 2021 and 2020 are as follows (in thousands):
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