ENDO INTERNATIONAL PLC Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

The following Management's Discussion and Analysis of Financial Condition and
Results of Operations describes the principal factors affecting the results of
operations, liquidity and capital resources and critical accounting estimates of
Endo International plc.

This section omits discussions about 2019 items and comparisons between 2020 and
2019. Such discussions can be found in Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations in our Annual Report
on Form 10-K for the year ended December 31, 2020.

The discussions in this Management's Discussion and Analysis of Financial
Condition and Results of Operations should be read in conjunction with our
audited Consolidated Financial Statements and the related Notes thereto. 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 to Endo International plc and
its subsidiaries.

The operating results of the Company's Astora business are reported as
Discontinued operations, net of tax in the Consolidated Statements of Operations
for all periods presented. For additional information, see Note 3. Discontinued
Operations in the Consolidated Financial Statements included in Part IV, Item 15
of this report.

EXECUTIVE SUMMARY

This executive summary provides 2021 highlights from the results of operations
that follow:
•Total revenues in 2021 were $2,993.2 million compared to $2,903.1 million in
2020 as revenue increases from the Specialty Products portfolio of our Branded
Pharmaceuticals segment and from our Sterile Injectables segment were partially
offset by decreased revenues from our Generic Pharmaceuticals segment, the
Established Products portfolio of our Branded Pharmaceuticals segment and our
International Pharmaceuticals segment.
•Gross margin percentage in 2021 increased to 59.2% from 50.3% in 2020,
reflecting the reduction in royalty payments recognized in Cost of revenues
resulting from the December 2020 BioSpecifics acquisition, favorable changes in
product mix, decreased amortization expense and decreased expenses for amounts
related to continuity and separation benefits, cost reductions and strategic
review initiatives. The favorable change in product mix in 2021 primarily
resulted from increased revenues from the Specialty Products portfolio of our
Branded Pharmaceuticals segment and from our Sterile Injectables segment.
•Asset impairment charges in 2021 increased to $415.0 million from $120.3
million in 2020.
•We reported Loss from continuing operations of $569.1 million in 2021 compared
to Income from continuing operations of $247.5 million in 2020.
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Additionally, 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:
•In December 2019, COVID-19 was reported to have surfaced in Wuhan, China. In
March 2020, the World 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
some restrictions have been loosened, 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.
•In June 2020, we completed a series of financing transactions, collectively
referred to herein as the June 2020 Refinancing Transactions (as defined below),
which are further discussed in Note 15. Debt in the Consolidated Financial
Statements included in Part IV, Item 15 of this report.
•In September 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).
•In November 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. These sales closed in the
fourth quarter 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 Note 4. Restructuring in the Consolidated Financial Statements included in
Part IV, Item 15 of this report.
•In December 2020, we completed our acquisition of BioSpecifics. Prior to this
acquisition, we had a strategic relationship with BioSpecifics since 2004
pursuant to which BioSpecifics was, among other things, entitled to a royalty
stream from us related to our collagenase-based therapies, including XIAFLEX®
and QWO®. Subsequent to the acquisition, BioSpecifics became our wholly-owned
consolidated subsidiary. As a result, beginning in December 2020, the
BioSpecifics acquisition had the effect of reducing royalty payments recognized
in Cost of revenues. For additional information about the BioSpecifics
acquisition, including information about the purchase consideration and our
pre-acquisition royalty obligations, refer to Note 5. Acquisitions and Note 12.
License and Collaboration Agreements in the Consolidated Financial Statements
included in Part IV, Item 15 of this report.
•In March 2021, we completed a series of financing transactions, collectively
referred to herein as the March 2021 Refinancing Transactions (as defined
below), which are further discussed in Note 15. Debt in the Consolidated
Financial Statements included in Part IV, Item 15 of this report.
•In July 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
a U.S. aesthetics commercial team and the capabilities that enabled us to launch
QWO® in March 2021.
•In November 2021, our PSP LLC subsidiary entered into a cooperative agreement
with the U.S. government to expand our Sterile Injectables segment's fill-finish
manufacturing production capacity and capabilities at our Rochester, Michigan
plant to support the U.S. government's national defense efforts regarding
production of critical medicines advancing pandemic preparation (the U.S.
Government Agreement). For additional information, refer to Note 16. Commitments
and Contingencies in the Consolidated Financial Statements included in Part IV,
Item 15 of this report.
•During the first quarter of 2022, multiple competing generic alternatives to
VASOSTRICT® were launched, beginning with Eagle's generic, which it launched at
risk and began shipping toward the end of January 2022. Since then, additional
competing alternatives have entered the market, including an authorized generic.
We expect these launches to significantly impact both Endo's market share and
product price beginning in the first quarter of 2022, and the effects of
competition are likely to increase throughout 2022 and beyond. Additionally, to
the extent hospitalizations related to COVID-19 decline, overall demand for both
branded and generic versions of VASOSTRICT® could be reduced.
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•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
opioid-related claims pending against us at various stages in the litigation
process. Some cases are at the pleading or discovery stage; others are
approaching the trial stage. Other cases have also been set for trial in various
courts around the country. The timing of any scheduled trial or other legal
proceeding 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 I, Item 1A. "Risk Factors" herein. For further discussion, see Note 16.
Commitments and Contingencies in the Consolidated Financial Statements included
in Part IV, Item 15 of this report.

CRITICAL ACCOUNTING ESTIMATES

The preparation of our Consolidated Financial Statements in conformity with U.S.
generally accepted accounting principles (U.S. GAAP) requires us to make
estimates and assumptions that affect the amounts and disclosures in our
Consolidated Financial Statements, including the Notes thereto, and elsewhere in
this report. For example, we are required to make significant estimates and
assumptions related to revenue recognition, including sales deductions,
long-lived assets, goodwill, other intangible assets, income taxes,
contingencies, financial instruments and share-based compensation, among others.
Some of these estimates can be subjective and complex. Uncertainties related to
the continued magnitude and duration of the COVID-19 pandemic, the extent to
which it will impact our estimated future financial results, worldwide
macroeconomic conditions including interest rates, employment rates, consumer
spending, health insurance coverage, the speed of the anticipated recovery and
governmental and business reactions to the pandemic, including any possible
re-initiation of shutdowns or renewed restrictions, have increased the
complexity of developing these estimates, including the allowance for expected
credit losses and the carrying amounts of long-lived assets, goodwill and other
intangible assets. Furthermore, as a result of the possibility or occurrence of
an unfavorable outcome with respect to any legal proceeding, we have engaged in
and, at any given time, may further engage in strategic reviews of all or a
portion of our business. Any such review or contingency planning could
ultimately result in our pursuing one or more significant corporate transactions
or other remedial measures, including on a preventative or proactive basis.
These actions could include a bankruptcy filing which could ultimately result
in, among other things, asset impairment charges that may be material. Although
we believe that our estimates and assumptions are reasonable, there may be other
reasonable estimates or assumptions that differ significantly from ours.
Further, our estimates and assumptions are based upon information available at
the time they were made. Actual results may differ significantly from our
estimates, including as a result of the uncertainties described in this report,
those described in our other reports filed with the SEC or other uncertainties.

Accordingly, in order to understand our Consolidated Financial Statements, it is
important to understand our critical accounting estimates. We consider an
accounting estimate to be critical if both: (i) the accounting estimate requires
us to make assumptions about matters that were highly uncertain at the time the
accounting estimate was made and (ii) changes in the estimate that are
reasonably likely to occur from period to period, or use of different estimates
that we reasonably could have used in the current period, would have a material
impact on our financial condition, results of operations or cash flows. Our most
critical accounting estimates are described below.

Revenue recognition

With respect to contracts with commercial substance that establish payment terms
and each party's rights regarding goods or services to be transferred, we
recognize revenue when (or as) we satisfy our performance obligations for such
contracts by transferring control of the underlying promised goods or services
to our customers, to the extent collection of substantially all of the related
consideration is probable. The amount of revenue we recognize reflects our
estimate of the consideration we expect to be entitled to receive, subject to
certain constraints, in exchange for such goods or services. This amount is
referred to as the transaction price.

Our revenue consists almost entirely of sales of our products to customers,
whereby we ship products to a customer pursuant to a purchase order. For
contracts such as these, revenue is recognized when our contractual performance
obligations have been fulfilled and control has been transferred to the customer
pursuant to the contract's terms, which is generally upon delivery to the
customer. The amount of revenue we recognize is equal to the fixed amount of the
transaction price, adjusted for our estimates of a number of significant
variable components including, but not limited to, estimates for chargebacks,
rebates, sales incentives and allowances, DSA and other fees for services,
returns and allowances, which we collectively refer to as sales deductions.
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The Company utilizes the expected value method when estimating the amount of
variable consideration to include in the transaction price with respect to each
of the foregoing variable components and the most likely amount method when
estimating the amount of variable consideration to include in the transaction
price with respect to future potential milestone payments that do not qualify
for the sales- and usage-based royalty exception. Variable consideration is
included in the transaction price only to the extent it is probable that a
significant revenue reversal will not occur when the uncertainty associated with
the variable consideration is resolved. The variable component of the
transaction price is estimated based on factors such as our direct and indirect
customers' buying patterns and the estimated resulting contractual deduction
rates, historical experience, specific known market events and estimated future
trends, current contractual and statutory requirements, industry data, estimated
customer inventory levels, current contract sales terms with our direct and
indirect customers and other competitive factors. We subsequently review our
estimates for sales deductions based on new or revised information that becomes
available to us and make revisions to our estimates if and when appropriate.
Refer to "Sales deductions" section below for additional information.

We believe that speculative buying of product, particularly in anticipation of
possible price increases, has been the historical practice of certain of our
customers. The timing of purchasing decisions made by wholesaler and large
retail chain customers can materially affect the level of our sales in any
particular period. Accordingly, our sales may not correlate to the number of
prescriptions written for our products based on external third-party data.

We have entered into DSAs with certain of our significant wholesaler customers
that obligate the wholesalers, in exchange for fees paid by us, to: (i) manage
the variability of their purchases and inventory levels within specified limits
based on product demand and (ii) provide us with specific services, including
the provision of periodic retail demand information and current inventory levels
for our pharmaceutical products held at their warehouse locations.

Sales deductions

As described above, the amount of revenue we recognize is equal to the fixed
amount of the transaction price, adjusted for our estimates of variable
consideration, including sales deductions. If the assumptions we use to
calculate our estimates for sales deductions do not appropriately reflect future
activity, our financial position, results of operations and cash flows could be
materially impacted. The following table presents the activity and ending
balances, excluding Discontinued operations, for our product sales provisions
for the years ended December 31, 2021 and 2020 (in thousands):
                                  Returns and                                                    Other Sales
                                   Allowances           Rebates            Chargebacks           Deductions              Total

Balance, December 31, 2019 $ 206,248 $ 215,790 $

  205,168          $     33,131          $   660,337
Current year provision                99,001            614,923             2,117,251               154,660            2,985,835
Prior year provision                  (5,857)           (10,049)                  485                (3,674)             (19,095)
Payments or credits                  (91,476)          (641,219)           (2,132,376)             (156,391)          (3,021,462)

Balance, December 31, 2020 $ 207,916 $ 179,445 $

  190,528          $     27,726          $   605,615
Current year provision                81,944            619,279             2,265,277               126,080            3,092,580
Prior year provision                 (16,313)            (6,481)                 (153)                 (911)             (23,858)
Payments or credits                  (90,431)          (595,775)           (2,270,469)             (128,939)          (3,085,614)

Balance, December 31, 2021 $ 183,116 $ 196,468 $

  185,183          $     23,956          $   588,723


Returns and Allowances

Consistent with industry practice, we maintain a return policy that allows our
customers to return products within a specified period of time both subsequent
to and, in certain cases, prior to the products' expiration dates. Our return
policy generally allows customers to receive credit for expired products within
six months prior to expiration and within between six months and one year after
expiration. Our provision for returns and allowances consists of our estimates
for future product returns, pricing adjustments and delivery errors. The primary
factors we consider in estimating our potential product returns include:
•the shelf life or expiration date of each product;
•historical levels of expired product returns;
•external data with respect to inventory levels in the wholesale distribution
channel;
•external data with respect to prescription demand for our products; and
•the estimated returns liability to be processed by year of sale based on
analysis of lot information related to actual historical returns.

In determining our estimates for returns and allowances, we are required to make
certain assumptions regarding the timing of the introduction of new products and
the potential of these products to capture market share. In addition, we make
certain assumptions with respect to the extent and pattern of decline associated
with generic competition. To make these assessments, we utilize market data for
similar products as analogs for our estimations. We use our best judgment to
formulate these assumptions based on past experience and information available
to us at the time. We continually reassess and make appropriate changes to our
estimates and assumptions as new information becomes available to us.
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Our estimate for returns and allowances may be impacted by a number of factors,
but the principal factor relates to the level of inventory in the distribution
channel. Where available, we utilize information received from our wholesaler
customers about the quantities of inventory held, including the information
received pursuant to DSAs, which we have not independently verified. For other
customers, we have estimated inventory held based on buying patterns. In
addition, we evaluate market conditions for products primarily through the
analysis of wholesaler and other third party sell-through data, as well as
internally-generated information, to assess factors that could impact expected
product demand at the estimate date. As of December 31, 2021, we believe that
our estimates of the level of inventory held by our customers is within a
reasonable range as compared to both historical amounts and expected demand for
each respective product.

When we are aware of an increase in the level of inventory of our products in
the distribution channel, we consider the reasons for the increase to determine
whether we believe the increase is temporary or other-than-temporary. Increases
in inventory levels assessed as temporary will not result in an adjustment to
our provision for returns and allowances. Some of the factors that may be an
indication that an increase in inventory levels will be temporary include:
•recently implemented or announced price increases for our products; and
•new product launches or expanded indications for our existing products.

Conversely, other-than-temporary increases in inventory levels may be an
indication that future product returns could be higher than originally
anticipated and, accordingly, we may need to adjust our provision for returns
and allowances. Some of the factors that may be an indication that an increase
in inventory levels will be other-than-temporary include:
•declining sales trends based on prescription demand;
•recent regulatory approvals to shorten the shelf life of our products, which
could result in a period of higher returns related to older product still in the
distribution channel;
•introduction of generic, OTC or other competing products;
•increasing price competition from competitors; and
•changes to the National Drug Codes (NDCs) of our products, which could result
in a period of higher returns related to product with the old NDC, as our
customers generally permit only one NDC per product for identification and
tracking within their inventory systems.

Rebates

Our provision for rebates, sales incentives and other allowances can generally
be categorized into the following four types:
•direct rebates;
•indirect rebates;
•governmental rebates, including those for Medicaid, Medicare and TRICARE, among
others; and
•managed-care rebates.

We establish contracts with wholesalers, chain stores and indirect customers
that provide for rebates, sales incentives, DSA fees and other allowances. Some
customers receive rebates upon attaining established sales volumes. Direct
rebates are generally rebates paid to direct purchasing customers based on a
percentage applied to a direct customer's purchases from us, including fees paid
to wholesalers under our DSAs, as described above. Indirect rebates are rebates
paid to indirect customers that have purchased our products from a wholesaler or
distributor under a contract with us.

We are subject to rebates on sales made under governmental and managed-care
pricing programs based on relevant statutes with respect to governmental pricing
programs and contractual sales terms with respect to managed-care providers and
GPOs. For example, we are required to provide a discount on certain of our
products to patients who fall within the Medicare Part D coverage gap, also
referred to as the donut hole.

We participate in various federal and state government-managed programs whereby
discounts and rebates are provided to participating government entities. For
example, Medicaid rebates are amounts owed based upon contractual agreements or
legal requirements with public sector (Medicaid) benefit providers after the
final dispensing of the product by a pharmacy to a benefit plan participant.
Medicaid reserves are based on expected payments, which are driven by patient
usage, contract performance and field inventory that will be subject to a
Medicaid rebate. Medicaid rebates are typically billed up to 180 days after the
product is shipped, but can be as much as 270 days after the quarter in which
the product is dispensed to the Medicaid participant. Periodically, we adjust
the Medicaid rebate provision based on actual claims paid. Due to the delay in
billing, adjustments to actual claims paid may incorporate revisions of this
provision for several periods. Because Medicaid pricing programs involve
particularly difficult interpretations of complex statutes and regulatory
guidance, our estimates could differ from actual experience.

In determining our estimates for rebates, we consider the terms of our contracts
and relevant statutes, together with information about sales mix (to determine
which sales are subject to rebates and the amount of such rebates), historical
relationships of rebates to revenues, past payment experience, estimated
inventory levels of our customers and estimated future trends. Our provisions
for rebates include estimates for both unbilled claims for end-customer sales
that have already occurred and future claims that will be made when inventory in
the distribution channel is sold through to end-customer plan participants.
Changes in the level of utilization of our products through private or public
benefit plans and GPOs will affect the amount of rebates that we owe.
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Chargebacks

We market and sell products to both: (i) direct customers including wholesalers,
distributors, warehousing pharmacy chains and other direct purchasing entities
and (ii) indirect customers including independent pharmacies, non-warehousing
chains, MCOs, GPOs, hospitals and other healthcare institutions and government
entities. We enter into agreements with certain of our indirect customers to
establish contract pricing for certain products. These indirect customers then
independently select a wholesaler from which to purchase the products at these
contracted prices. Alternatively, we may pre-authorize wholesalers to offer
specified contract pricing to other indirect customers. Under either
arrangement, we provide credit to the wholesaler for any difference between the
contracted price with the indirect customer and the wholesaler's invoice price.
Such credit is called a chargeback.

Our provision for chargebacks consists of our estimates for the credits
described above. The primary factors we consider in developing and evaluating
our provision for chargebacks include:
•the average historical chargeback credits;
•estimated future sales trends; and
•an estimate of the inventory held by our wholesalers, based on internal
analysis of a wholesaler's historical purchases and contract sales.

Other sales deductions

We offer prompt-pay cash discounts to certain of our customers. Provisions for
such discounts are estimated and recorded at the time of sale. We estimate
provisions for cash discounts based on contractual sales terms with customers,
an analysis of unpaid invoices and historical payment experience. Estimated cash
discounts have historically been predictable and less subjective due to the
limited number of assumptions involved, the consistency of historical experience
and the fact that we generally settle these amounts upon receipt of payment by
the customer.

Shelf-stock adjustments are credits issued to our customers to reflect decreases
in the selling prices of our products. These credits are customary in the
industry and are intended to reduce a customer's inventory cost to better
reflect current market prices. The primary factors we consider when deciding
whether to record a reserve for a shelf-stock adjustment include:
•the estimated number of competing products being launched as well as the
expected launch date, which we determine based on market intelligence;
•the estimated decline in the market price of our product, which we determine
based on historical experience and customer input; and
•the estimated levels of inventory held by our customers at the time of the
anticipated decrease in market price, which we determine based upon historical
experience and customer input.

Valuation of long-lived assets

As of December 31, 2021, our combined long-lived assets balance, including property, plant and equipment and finite-lived intangible assets, is approximately $2.8 billion. Our finite-lived intangible assets consist of license rights and developed technology.

Long-lived assets are generally initially recorded at fair value if acquired in
a business combination, or at cost if otherwise. To the extent any such asset is
deemed to have a finite life, it is then amortized over its estimated useful
life using either the straight-line method or, in the case of certain developed
technology assets, an accelerated amortization model. The values of these
various assets are subject to continuing scientific, medical and marketplace
uncertainty. Factors giving rise to our initial estimate of useful lives are
subject to change. Significant changes to any of these factors may result in
adjustments to the useful life of the asset and an acceleration of related
amortization expense, which could cause our net income and net income per share
to decrease. Amortization expense is not recorded on assets held for sale.

Long-lived assets are assessed for impairment whenever events or changes in
circumstances indicate the assets may not be recoverable. Recoverability of an
asset that will continue to be used in our operations is measured by comparing
the carrying amount of the asset to the forecasted undiscounted future cash
flows related to the asset. In the event the carrying amount of the asset
exceeds its undiscounted future cash flows and the carrying amount is not
considered recoverable, impairment may exist. An impairment loss, if any, is
measured as the excess of the asset's carrying amount over its fair value,
generally based on a discounted future cash flow method, independent appraisals
or offers from prospective buyers. An impairment loss would be recognized in the
Consolidated Statements of Operations in the period that the impairment occurs.

In the case of long-lived assets to be disposed of by sale or otherwise,
including assets held for sale, the assets and the associated liabilities to be
disposed of together as a group in a single transaction (the disposal group) are
measured at the lower of their carrying amount or fair value less cost to sell.
Losses are recognized for any initial or subsequent write-down to fair value
less cost to sell, while gains are recognized for any subsequent increase in
fair value less cost to sell, but not in excess of any cumulative losses
previously recognized. Any gains or losses not previously recognized that result
from the sale of a disposal group shall be recognized at the date of sale.

As a result of the significance of our long-lived assets, any recognized losses
could have a material adverse impact on our financial position and results of
operations.
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Our reviews of long-lived assets during the two years ended December 31, 2021
resulted in certain impairment charges. The majority of these charges related to
finite-lived intangible assets and certain assets associated with disposal
groups, which are further described in Note 11. Goodwill and Other Intangibles
and Note 3. Discontinued Operations, respectively, in the Consolidated Financial
Statements included in Part IV, Item 15 of this report. Our impairment charges
relating to long-lived assets were generally based on fair value estimates
determined using discounted cash flow models or, in the case of disposal groups,
a market approach. When testing a long-lived asset using a discounted cash flow
model, we utilize assumptions related to the future operating performance of the
corresponding product based on management's annual and ongoing budgeting,
forecasting and planning processes, which represent our best estimate of future
cash flows. These estimates are subject to many assumptions, such as the
economic environment in which our segments operate, demand for our products,
competitor actions and factors which could affect our tax rate. Estimated future
pre-tax cash flows are adjusted for taxes using a market participant tax rate
and discounted to present value using a market participant, weighted average
cost of capital. Financial and credit market volatility directly impacts certain
inputs and assumptions used to develop the weighted average cost of capital such
as the risk-free interest rate, industry beta, debt interest rate and our market
capital structure. These assumptions are based on significant inputs not
observable in the market and thus represent Level 3 measurements within the fair
value hierarchy. The use of different inputs and assumptions would increase or
decrease our estimated discounted future cash flows, the resulting estimated
fair values and the amounts of our related impairments, if any. The discount
rates applied to intangible long-lived assets impaired in 2021 ranged from 10.0%
to 12.0%.

Events giving rise to impairment are an inherent risk in the pharmaceutical
industry and cannot be predicted with certainty. Factors that we consider in
deciding when to perform an impairment review include significant
under-performance of a product line in relation to expectations, competitive
events affecting the expected future performance of a product line, significant
negative industry or economic trends and significant changes or planned changes
in our use of the assets.

Each category of long-lived intangible assets is described further below.

Developed Technology. Our developed technology assets subject to amortization
have useful lives ranging from 4 years to 20 years, with a weighted average
useful life of approximately 11 years. We determine amortization periods and
methods of amortization for developed technology assets based on our assessment
of various factors impacting estimated useful lives and the timing and extent of
estimated cash flows of the acquired assets, including the strength of the
intellectual property protection of the product (if applicable), contractual
terms and various other competitive and regulatory issues.

License Rights. Our license rights subject to amortization have useful lives
ranging from 7 years to 15 years, with a weighted average useful life of
approximately 14 years. We determine amortization periods for licenses based on
our assessment of various factors including the expected launch date of the
product, the strength of the intellectual property protection of the product (if
applicable), contractual terms and various other competitive, developmental and
regulatory issues.

Goodwill and indefinite-lived intangible assets

As of December 31, 2021, our goodwill balance is approximately $3.2 billion and we have no remaining indefinite-lived intangible assets.

Goodwill and, if applicable, indefinite-lived intangible assets are tested for
impairment annually and when events or changes in circumstances indicate that
the asset might be impaired. Our annual assessment is performed as of October 1.

We perform the goodwill impairment test by estimating the fair value of the
reporting units using an income approach that utilizes a discounted cash flow
model or, where appropriate, a market approach. Any goodwill impairment charge
we recognize for a reporting unit is equal to the lesser of (i) the total
goodwill allocated to that reporting unit and (ii) the amount by which that
reporting unit's carrying amount exceeds its fair value.

Similarly, if applicable, we perform our indefinite-lived intangible asset
impairment tests by comparing the fair value of each intangible asset with its
carrying amount. If the carrying amount of an indefinite-lived intangible asset
exceeds its fair value, an impairment loss is recognized in an amount equal to
that excess.

We estimate the fair values of our reporting units and of any identified
indefinite-lived intangible assets using an income approach that utilizes a
discounted cash flow model or, where appropriate, a market approach. The
discounted cash flow models are dependent upon our estimates of future cash
flows and other factors including estimates of (i) future operating performance,
including future sales, long-term growth rates, gross margins, operating
expenses, discount rate and the probability of achieving the estimated cash
flows and (ii) future economic conditions, all of which may differ from actual
future cash flows.
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Assumptions related to future operating performance are based on management's
annual and ongoing budgeting, forecasting and planning processes, which
represent our best estimate of future cash flows. These estimates are subject to
many assumptions, such as the economic environment in which our segments
operate, demand for our products, competitor actions and factors which could
affect our tax rate. Estimated future pre-tax cash flows are adjusted for taxes
using a market participant tax rate and discounted to present value using a
market participant, weighted average cost of capital. Financial and credit
market volatility directly impacts certain inputs and assumptions used to
develop the weighted average cost of capital such as the risk-free interest
rate, industry beta, debt interest rate and our market capital structure. These
assumptions are based on significant inputs not observable in the market and
thus represent Level 3 measurements within the fair value hierarchy. The use of
different inputs and assumptions would increase or decrease our estimated
discounted future cash flows, the resulting estimated fair values and the
amounts of our related impairments, if any.

In order to assess the reasonableness of the calculated fair values of our
reporting units, we also compare the sum of the reporting units' fair values to
Endo's market capitalization and calculate an implied control premium (the
excess sum of the reporting units' fair values over the market capitalization)
or an implied control discount (the excess sum of total invested capital over
the sum of the reporting units' fair values). The Company evaluates the implied
control premium or discount by comparing it to control premiums or discounts of
recent comparable market transactions, as applicable. If the control premium or
discount is not reasonable in light of comparable recent transactions, or recent
movements in the Company's share price, we reevaluate the fair value estimates
of the reporting units to determine whether it is appropriate to adjust discount
rates and/or other assumptions. This re-evaluation could correlate to different
implied fair values for certain or all of the Company's reporting units.

As further described in Note 11. Goodwill and Other Intangibles in the
Consolidated Financial Statements included in Part IV, Item 15 of this report,
Endo performed its annual impairment tests as of October 1, 2021. For the
purpose of the 2021 annual tests, the Company had two reporting units with
goodwill: Branded Pharmaceuticals and Sterile Injectables; the Company did not
have any indefinite-lived intangible assets. The fair values of each of our
reporting units were determined using an income approach utilizing discount
rates determined based on the overall risk associated with the particular assets
and other market factors.

The discount rates used in the October 1, 2021 goodwill tests were 14.5% and
11.0% for the Branded Pharmaceuticals and Sterile Injectables reporting units,
respectively, compared to 15.0% and 10.0%, respectively, used in the October 1,
2020 goodwill tests. We believe the discount rates and other inputs and
assumptions are consistent with those that a market participant would use. As a
result of the October 1, 2021 tests, we did not record a goodwill impairment
charge related to our Branded Pharmaceuticals reporting unit; however, we did
record a pre-tax non-cash goodwill impairment charge of $363.0 million related
to our Sterile Injectables reporting unit. A 50 basis point increase in the
assumed discount rate utilized in the Branded Pharmaceuticals test would not
have changed the outcome of that test; however, a 50 basis point increase in the
assumed discount rate utilized in the Sterile Injectables test would have
increased the goodwill impairment charge for this reporting unit by
approximately $190 million.

Additional information about the impairment tests is provided in Note 11. Goodwill and Other Intangibles in the Consolidated Financial Statements included in Part IV, Item 15 of this report.

As further discussed under the heading "RESULTS OF OPERATIONS," our Generic
Pharmaceuticals segment and certain of the products in our Sterile Injectables
segment are subject to risks and uncertainties related to competition, including
the effects of the competing generic alternatives to VASOSTRICT® that were
introduced beginning in January 2022 and may continue to be introduced. If
actual results for these segments differ from our expectations, as a result of
competition or otherwise, and/or if we make changes to our assumptions for these
segments relating to competition or any other risks or uncertainties, the
estimated future revenues and cash flows could be significantly reduced, which
could ultimately result in asset impairment charges that may be material, which
could relate to, among other things, our Sterile Injectables segment's remaining
goodwill balance of approximately $2.4 billion and/or our Sterile Injectables
segment's and/or our Generic Pharmaceuticals segment's long-lived and other
assets.

Additionally, we are continuing to closely monitor the impact of COVID-19 on our
business. It is possible that COVID-19 could result in reductions to the
estimated fair values of our goodwill and other intangible assets, which could
ultimately result in asset impairment charges that may be material.

Furthermore, as a result of the possibility or occurrence of an unfavorable
outcome with respect to any legal proceeding, we have engaged in and, at any
given time, may further engage in strategic reviews of all or a portion of our
business. Any such review or contingency planning could ultimately result in our
pursuing one or more significant corporate transactions or other remedial
measures, including on a preventative or proactive basis. These actions could
include a bankruptcy filing which could ultimately result in, among other
things, asset impairment charges that may be material.
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Income taxes

Our income tax expense, deferred tax assets and liabilities, income tax payable
and reserves for unrecognized tax benefits reflect our best assessment of
estimated current and future taxes to be paid. We are subject to income taxes in
the U.S. and numerous other jurisdictions in which we operate. Significant
judgments and estimates are required in determining the consolidated income tax
expense or benefit for financial statement purposes. Deferred income taxes arise
from temporary differences, which result in future taxable or deductible
amounts, between the tax basis of assets and liabilities and the corresponding
amounts reported in our Consolidated Financial Statements. In assessing the
ability to realize deferred tax assets, we consider, when appropriate, future
taxable income by tax jurisdiction and tax planning strategies. Where
appropriate, we record a valuation allowance to reduce our net deferred tax
assets to equal an amount that is more likely than not to be realized. In
projecting future taxable income, we consider historical results, adjusted in
certain cases for the results of discontinued operations, changes in tax laws or
nonrecurring transactions. We incorporate assumptions about the amount of future
earnings within a specific jurisdiction's pretax income, adjusted for material
changes included in business operations. The assumptions about future taxable
income require significant judgment and, while these assumptions rely heavily on
estimates, such estimates are consistent with the plans we are using to manage
the underlying business. Future changes in tax laws and rates, including
administrative or regulatory guidance, could affect recorded deferred tax assets
and liabilities. Any adjustments to these estimates will generally be recorded
as an income tax expense or benefit in the period the adjustment is determined.

The calculation of our tax liabilities often involves dealing with uncertainties
in the application of complex tax laws and regulations in a multitude of
jurisdictions across our global operations. A benefit from an uncertain tax
position may be recognized when it is more likely than not that the position
will be sustained on the basis of the technical merits upon examination,
including resolutions of any related appeals or litigation processes. We first
record unrecognized tax benefits as liabilities and then adjust these
liabilities when our judgment changes as a result of the evaluation of new
information not previously available at the time of establishing the liability.
Because of the complexity of some of these uncertainties, the ultimate
resolution may result in a payment, potentially including interest and
penalties, that is materially different from our current estimate of the
unrecognized tax benefit liabilities. These differences, along with any related
interest and penalties, will generally be reflected as increases or decreases to
income tax expense in the period in which new information becomes available.

We make an evaluation at the end of each reporting period as to whether or not
some or all of the undistributed earnings of our subsidiaries are indefinitely
reinvested. While we currently have no intention to distribute such earnings and
consider them indefinitely reinvested, facts and circumstances may change in the
future. Changes in facts and circumstances may include changes in the estimated
capital needs of our subsidiaries or in our corporate liquidity requirements.
Such changes could result in our management determining that some or all of such
undistributed earnings are no longer indefinitely reinvested. In that event, we
would be required to adjust our income tax provision in the period we determined
that the earnings will no longer be indefinitely reinvested outside the relevant
tax jurisdiction. For additional information, refer to Note 21. Income Taxes in
the Consolidated Financial Statements included in Part IV, Item 15 of this
report.

Contingencies

The Company is subject to various patent challenges, product liability claims,
government investigations and other legal proceedings in the ordinary course of
business. Material legal proceedings are discussed in Note 16. Commitments and
Contingencies in the Consolidated Financial Statements included in Part IV, Item
15 of this report. Contingent accruals and legal settlements are recorded in the
Consolidated Statements of Operations as Litigation-related and other
contingencies, net (or as Discontinued operations, net of tax in the case of
vaginal mesh matters) when the Company determines that a loss is both probable
and reasonably estimable. Legal fees and other expenses related to litigation
are expensed as incurred and included in Selling, general and administrative
expenses in the Consolidated Statements of Operations (or as Discontinued
operations, net of tax in the case of vaginal mesh matters).

Due to the fact that legal proceedings and other contingencies are inherently
unpredictable, our estimates of the probability and amount of any such
liabilities involve significant judgment regarding future events. The factors we
consider in developing our liabilities for legal proceedings include the merits
and jurisdiction of the proceeding, the nature and the number of other similar
current and past proceedings, the nature of the product and the current
assessment of the science subject to the proceeding, if applicable, and the
likelihood of the conditions of settlement being met.

In order to evaluate whether a claim is probable of loss, we may rely on certain
information about the claim. Without access to and review of such information,
we may not be in a position to determine whether a loss is probable. Further,
the timing and extent to which we obtain any such information, and our
evaluation thereof, is often impacted by items outside of our control including,
without limitation, the normal cadence of the litigation process and the
provision of claim information to us by plaintiff's counsel. The amount of our
liabilities for legal proceedings may change as we receive additional
information and/or become aware of additional asserted or unasserted claims.
Additionally, there is a possibility that we will suffer adverse decisions or
verdicts of substantial amounts or that we will enter into additional monetary
settlements, either of which could be in excess of amounts previously accrued
for. Any changes to our liabilities for legal proceedings could have a material
adverse effect on our business, financial condition, results of operations and
cash flows.
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As of December 31, 2021, our accrual for loss contingencies totaled
$581.0 million, the most significant components of which relate to: (i) product
liability and related matters associated with transvaginal surgical mesh
products, which we have not sold since March 2016; (ii) various opioid-related
matters as further described herein; and (iii) a settlement relating to the
Pelletier securities case further described herein, which has been funded by the
Company's insurers. Although we believe there is a possibility that a loss in
excess of the amount recognized exists, we are unable to estimate the possible
loss or range of loss in excess of the amount recognized at this time.

RESULTS OF OPERATIONS

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 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 Senior Executive 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 in June 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 intend to continue to
evaluate our practices as circumstances and governmental guidance evolve.

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 the U.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 second
half of 2021 based on increased utilization levels. 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, 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 because of the COVID-19 pandemic. Since then, sales
volumes for these products have generally been recovering. However, these
products continue to be impacted by COVID-19-related market conditions for
specialty product office-based procedures, including medical and administrative
staff shortages in physicians' offices, reduced physician office activity and
significantly lower numbers of in-person patient office visits. These conditions
have contributed to some variability in these products' recoveries, as well as
uncertainty about future revenues.

Future changes in the COVID-19 pandemic could further impact future revenues for these and/or other products.

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Manufacturing and Supply Chain Operations. As of the date of this report, our
business has not experienced any material supply issues related to COVID-19 and
our manufacturing facilities across the globe have continued to operate. We have
taken, and plan to continue to take, commercially practical measures to keep
these facilities open as they are critical to our ability to reliably supply
required critical care and medically necessary products. These measures, 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 the U.S. and India, supply agreements and strong business
relationships with numerous contract manufacturing organizations throughout the
world, including in the U.S., Canada, Europe and India, and our proven ability
to be a preferred partner of choice to large pharmaceutical companies seeking
authorized generic distributors for their branded products, is a critical factor
to mitigate significant risks related to manufacturing and supply chain
disruption. This footprint, overseen by our global quality and supply chain
teams in Ireland, combined with a skilled management team with significant
experience in manufacturing and supply chain operations, has enabled us to
respond quickly and effectively to the evolving COVID-19 pandemic to date.
However, as the pandemic continues to impact the supply of goods and services
worldwide, we 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 March
2021.

Key Trends. Since the first quarter of 2020, we, and our industry as a whole,
have been impacted by COVID-19 and may continue to 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 certain new products due to production
prioritization and economic conditions and other factors outside of our control.

Due to uncertainties in certain key assumptions related to COVID-19 (including
the rate and extent to which the market for specialty product office-based
procedures recovers from COVID-19-related market challenges) and other factors
(including the timing and impact of VASOSTRICT® generic competition), the
Company is only providing information about estimated revenue trends through
March 31, 2022 at this time. These estimated revenue trends reflect the
expectations of our management team based on information available to them at
the time such estimates were made. Our estimates are subject to significant
risks and uncertainties that could cause our actual results to differ materially
from those indicated below. Additionally, these estimates are not necessarily
indicative of future period results.
•For the first quarter of 2022, we expect XIAFLEX® revenues to continue to be
impacted by COVID-19-related market conditions, which could result in XIAFLEX®
revenues remaining consistent with or declining compared to the first quarter of
2021. We also expect an overall decline in revenues from our Branded
Pharmaceuticals segment, primarily driven by expected competitive and other
pricing pressures impacting this segment.
•For the first quarter of 2022, we expect revenues from our Sterile Injectables
segment to decline significantly as compared to the first quarter of 2021,
primarily driven by competition for VASOSTRICT®, as further described herein.
•For the first quarter of 2022, we expect our Generic Pharmaceuticals segment
revenues to continue to be impacted by competitive pressures for certain
products in this portfolio, resulting in revenue decreases as compared to the
first quarter of 2021, which are expected to be partially or fully offset by the
impact of certain 2021 product launches.
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Consolidated Results Review

The following table displays our revenue, gross margin, gross margin percentage
and other pre-tax expense or income for the years ended December 31, 2021 and
2020 (dollars in thousands):
                                                                                                         % Change
                                                                 2021                 2020             2021 vs. 2020
Total revenues, net                                         $ 2,993,206          $ 2,903,074                     3  %
Cost of revenues                                              1,221,064            1,442,511                   (15) %
Gross margin                                                $ 1,772,142          $ 1,460,563                    21  %
Gross margin percentage                                            59.2  %              50.3  %
Selling, general and administrative                             861,760              698,506                    23  %
Research and development                                        148,560              158,902                    (7) %
Litigation-related and other contingencies, net                 345,495              (19,049)                      NM
Asset impairment charges                                        414,977              120,344                       NM
Acquisition-related and integration items, net                   (8,379)              16,549                       NM
Interest expense, net                                           562,353              532,939                     6  %
Loss (gain) on extinguishment of debt                            13,753                    -                       NM
Other (income) expense, net                                     (19,774)             (21,110)                   (6) %
Loss from continuing operations before income tax           $  (546,603)         $   (26,518)                      NM

__________

NM indicates that the percentage change is not meaningful or is greater than 100%.

Total revenues, net. Total revenues in 2021 were $2,993.2 million compared to
$2,903.1 million in 2020 as revenue increases from the Specialty Products
portfolio of our Branded Pharmaceuticals segment and from our Sterile
Injectables segment were partially offset by decreased revenues from our Generic
Pharmaceuticals segment, the Established Products portfolio of our Branded
Pharmaceuticals segment and our International 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 years ended December
31, 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):
                                                                       2021               2020
Amortization of intangible assets (1)                              $ 

372,907 $ 427,543

Amounts related to continuity and separation benefits, cost reductions and strategic review initiatives (2)

                    $   

9,058 $ 55,413

__________

(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 decrease in 2021 was 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 Note 4.
Restructuring in the Consolidated Financial Statements included in Part IV, Item
15 of this report, amounts in 2021 include a net pre-tax reversal of expense,
primarily related to avoided severance costs for employees that transitioned to
the purchasers in connection with 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 decrease in Cost of revenues in 2021 was primarily due to decreased
amortization expense, decreased expenses for amounts related to continuity and
separation benefits, cost reductions and strategic review initiatives, the
reduction in royalty payments recognized in Cost of revenues resulting from the
December 2020 BioSpecifics acquisition and favorable changes in product mix as
described below, partially offset by increased revenues.

Gross margin percentage increased in 2021 as a result of the reduction in
royalty payments recognized in Cost of revenues resulting from the December 2020
BioSpecifics acquisition, favorable changes in product mix, decreased
amortization expense and decreased expenses for amounts related to continuity
and separation benefits, cost reductions and strategic review initiatives. The
favorable change in product mix in 2021 primarily resulted from increased
revenues from the Specialty Products portfolio of our Branded Pharmaceuticals
segment and from our Sterile Injectables segment.
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Selling, general and administrative expenses. The increase in 2021 was primarily
due to increased costs associated with our commercial launch of QWO®, our
investment and promotional efforts behind XIAFLEX®, certain legal matters and
certain strategic review initiatives, partially offset by decreased costs
associated with both the debt financing transactions that are further discussed
in Note 15. Debt in the Consolidated Financial Statements included in Part IV,
Item 15 of this report and the 2020 Restructuring Initiative, which is further
discussed in Note 4. Restructuring in the Consolidated Financial Statements
included in Part IV, Item 15 of this report.

Selling, general and administrative expenses may continue to be impacted by the
2020 Restructuring Initiative. Refer to Note 4. Restructuring in the
Consolidated Financial Statements included in Part IV, Item 15 of this report
for discussion of this initiative, including a discussion of amounts recognized
and expected future charges.

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 in July 2020 for
the treatment of moderate to severe cellulite in the buttocks of adult women. 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. For example, we recently progressed our plantar
fibromatosis development program with the initiation of a Phase 2 study in the
fourth quarter of 2021. We also expect to continue to focus investments in RTU
and other product candidates in our Sterile Injectables segment, potentially
including license and commercialization agreements such as our Nevakar, Inc.
agreement. As our development programs progress, it is possible that our R&D
expenses could increase.

The decrease in R&D expense in 2021 was primarily driven by the fact that the
prior year period's amount included a $28.6 million charge related to in-process
research and development assets that were expensed in connection with the 2020
acquisition of BioSpecifics, which is further described in Note 5. Acquisitions
in the Consolidated Financial Statements included in Part IV, Item 15 of this
report. Additionally, R&D expense in 2021 decreased as a result of lower costs
associated with both our Generic Pharmaceuticals segment and the 2020
Restructuring Initiative, which is further discussed in Note 4. Restructuring in
the Consolidated Financial Statements included in Part IV, Item 15 of this
report. These decreases were partially offset by 2021 charges related to upfront
payments associated with certain license agreements entered into in 2021 and
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 in the Consolidated Financial Statements included
in Part IV, Item 15 of this report 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 16. Commitments and
Contingencies in the Consolidated Financial Statements included in Part IV, Item
15 of this report. 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.

Asset impairment charges. The following table presents the components of our
total Asset impairment charges for the years ended December 31, 2021 and 2020
(in thousands):
                                                                2021        

2020

Goodwill impairment charges                              $ 363,000

$ 32,786

    Other intangible asset impairment charges                    7,811     

79,917

    Property, plant and equipment impairment charges             2,011     

1,249

    Operating lease right-of-use asset impairment charges            -     

6,392

    Disposal group impairment charges                           42,155     

-

    Total asset impairment charges                           $ 414,977

$ 120,344

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 11.
Goodwill and Other Intangibles in the Consolidated Financial Statements included
in Part IV, Item 15 of this report. A discussion of critical accounting
estimates made in connection with certain of our impairment tests is included
under the caption "CRITICAL ACCOUNTING ESTIMATES." For further discussion of the
disposal group impairment charges, refer to Note 3. Discontinued Operations in
the Consolidated Financial Statements included in Part IV, Item 15 of this
report.
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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 7. Fair Value Measurements in
the Consolidated Financial Statements included in Part IV, Item 15 of this
report for further discussion of our acquisition-related contingent
consideration.

Interest expense, net. The components of Interest expense, net for the years ended December 31, 2021 and 2020 are as follows (in thousands):

                                               2021           2020
                    Interest expense        $ 562,937      $ 537,109
                    Interest income              (584)        (4,170)
                    Interest expense, net   $ 562,353      $ 532,939


The increase in interest expense in 2021 was primarily attributable to the
increases to the weighted average interest rates applicable to: (i) our notes
following the June 2020 Refinancing Transactions and (ii) our total indebtedness
following the March 2021 Refinancing Transactions. These increases were
partially offset by net decreases to LIBOR that impacted our variable-rate debt
and the reduction to the amount of our indebtedness associated with the June
2020 Refinancing Transactions. Refer to Note 15. Debt in the Consolidated
Financial Statements included in Part IV, Item 15 of this report for further
discussion of these transactions. Changes in interest rates could increase our
interest expense in the future, which could have a material adverse effect on
our business, financial condition, results of operations and cash flows.

Interest income varies primarily based on the amounts of our interest-bearing
investments, such as money market funds, as well as changes in the corresponding
interest rates.

Loss (gain) on extinguishment of debt. The amount in 2021 relates to the March
2021 Refinancing Transactions. Refer to Note 15. Debt in the Consolidated
Financial Statements included in Part IV, Item 15 of this report for further
discussion.

Other (income) expense, net. The components of Other (income) expense, net for the years ended December 31, 2021 and 2020 are as follows (in thousands):

                                                                        2021               2020
Net gain on sale of business and other assets                       $  (4,516)         $ (16,353)
Foreign currency loss, net                                              1,253              2,466
Net loss (gain) from our investments in the equity of other
companies                                                                 453             (2,160)
Other miscellaneous, net                                              (16,964)            (5,063)
Other (income) expense, net                                         $ (19,774)         $ (21,110)

For additional information on the components of Other (income) expense, net, refer to Note 20. Other (Income) Expense, Net in the Consolidated Financial Statements included in Part IV, Item 15 of this report.

Income tax expense (benefit). The following table displays our Loss from continuing operations before income tax, Income tax expense (benefit) and Effective tax rate for the years ended December 31, 2021 and 2020 (dollars in thousands):

                                                             2021           

2020

Loss from continuing operations before income tax $ (546,603) $

(26,518)

   Income tax expense (benefit)                          $   22,478       $ (273,982)
   Effective tax rate                                          (4.1) %       1,033.2  %


Our tax rate is affected by recurring items, such as tax rates in non-U.S.
jurisdictions as compared to the notional U.S. federal statutory tax rate, and
the relative amount of income or loss in those various jurisdictions. It is also
impacted by certain items that may occur in any given period, but are not
consistent from period to period.

The change in income tax expense in 2021 compared to the 2020 income tax benefit
primarily relates to the 2020 tax benefit for the CARES Act and changes in
deferred tax liabilities following the BioSpecifics acquisition during 2020. For
additional discussion of the effective tax rate, see Note 21. Income Taxes in
the Consolidated Financial Statements included in Part IV, Item 15 of this
report.

The Company maintains a full valuation allowance against the net deferred tax
assets in the U.S., Luxembourg and certain other foreign tax jurisdictions as of
December 31, 2021. It is possible that within the next 12 months there may be
sufficient positive evidence to release a portion or all of the valuation
allowance. Release of these valuation allowances would result in a benefit to
income tax expense for the period the release is recorded, which could have a
material impact on net earnings. The timing and amount of the potential
valuation allowance release are subject to significant management judgment and
prospective earnings.
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We are incorporated in Ireland and also maintain subsidiaries in, among other
jurisdictions, the U.S., Canada, India, the United Kingdom and Luxembourg. The
IRS and other taxing authorities may continue to challenge our tax positions.
The IRS presently is examining certain of our subsidiaries' U.S. income tax
returns for fiscal years ended between December 31, 2011 and December 31, 2015
and, in connection with those examinations, is reviewing our tax positions
related to, among other things, certain intercompany arrangements, including the
level of profit earned by our U.S. subsidiaries pursuant to such arrangements,
and a product liability loss carryback claim. For additional information,
including a discussion of related recent developments and their potential impact
on us, refer to Note 21. Income Taxes in the Consolidated Financial Statements
included in Part IV, Item 15 of this report.

During the third quarter of 2020, the IRS opened an examination into certain of
our subsidiaries' U.S. income tax returns for fiscal years ended between
December 31, 2016 and December 31, 2018. The IRS will likely examine our tax
returns for other fiscal years and/or for other tax positions. Similarly, other
tax authorities are currently examining our non-U.S. tax returns. Additionally,
other jurisdictions where we are not currently under audit remain subject to
potential future examinations. Such examinations may lead to proposed or actual
adjustments to our taxes that may be material, individually or in the aggregate.
See the risk factor "The IRS and other taxing authorities may continue to
challenge our tax positions and we may not be able to successfully maintain such
positions" in Part I, Item 1A of this report for more information.

For additional information on our income taxes, including information about the
impact of the CARES Act, see Note 21. Income Taxes in the Consolidated Financial
Statements included in Part IV, Item 15 of this report.

Discontinued operations, net of tax. The operating results of the Company's
Astora business, which the Board resolved to wind down in 2016, are reported as
Discontinued operations, net of tax in the Consolidated Statements of Operations
for all periods presented. The following table provides the operating results of
Astora Discontinued operations, net of tax, for the years ended December 31,
2021 and 2020 (in thousands):
                                                                2021        

2020

Litigation-related and other contingencies, net $ 25,000 $ 41,097

Loss from discontinued operations before income taxes $ (49,594) $ (67,847)

    Income tax benefit                                       $  (5,430)

$ (4,327)

    Discontinued operations, net of tax                      $ (44,164)

$ (63,520)

Amounts included in the Litigation-related and other contingencies, net line of
the table above are for mesh-related litigation. The remaining pre-tax amounts
in 2021 and 2020 were primarily related to mesh-related legal defense costs and
certain other items. For additional discussion of mesh-related matters, refer to
Note 16. Commitments and Contingencies in the Consolidated Financial Statements
included in Part IV, Item 15 of this report.

Business Segment Results Review

Refer to Note 6. Segment Results in the Consolidated Financial Statements
included in Part IV, Item 15 of this report for further details regarding our
reportable segments and Segment adjusted income from continuing operations
before income tax (the measure we use to evaluate segment performance), as well
as reconciliations of Total consolidated loss from continuing operations before
income tax, which is determined in accordance with U.S. GAAP, to our Total
segment adjusted income from continuing operations before income tax.

We refer to Segment adjusted income from continuing operations before income
tax, a financial measure not defined by U.S. GAAP, in making operating decisions
because we believe it provides meaningful supplemental information regarding our
operational performance. For instance, we believe that this measure facilitates
internal comparisons to our historical operating results and comparisons to
competitors' results. We believe this measure is useful to investors in allowing
for greater transparency related to supplemental information used in our
financial and operational decision-making. Further, we believe that Segment
adjusted income from continuing operations before income tax may be useful to
investors as we are aware that certain of our significant shareholders utilize
Segment adjusted income from continuing operations before income tax to evaluate
our financial performance. Finally, Segment adjusted income from continuing
operations before income tax is utilized in the calculation of other financial
measures not determined in accordance with U.S. GAAP that are used by the
Compensation & Human Capital Committee of the Company's Board in assessing the
performance and compensation of substantially all of our employees, including
our executive officers.
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There are limitations to using financial measures such as Segment adjusted
income from continuing operations before income tax. Other companies in our
industry may define Segment adjusted income from continuing operations before
income tax differently than we do. As a result, it may be difficult to use
Segment adjusted income from continuing operations before income tax or
similarly named adjusted financial measures that other companies may use to
compare the performance of those companies to our performance. Because of these
limitations, Segment adjusted income from continuing operations before income
tax is not intended to represent cash flow from operations as defined by U.S.
GAAP and should not be used as an indicator of operating performance, a measure
of liquidity or as alternative to net income, cash flows or any other financial
measure determined in accordance with U.S. GAAP. We compensate for these
limitations by providing, in Note 6. Segment Results in the Consolidated
Financial Statements included in Part IV, Item 15 of this report,
reconciliations of Total consolidated loss from continuing operations before
income tax, which is determined in accordance with U.S. GAAP, to our Total
segment adjusted income from continuing operations before income tax.

Revenues, net. The following table displays our revenue by reportable segment for the years ended December 31, 2021 and 2020 (dollars in thousands):

                                                                                   % Change
                                                  2021             2020          2021 vs. 2020
 Branded Pharmaceuticals                      $   893,617      $   781,780                14  %
 Sterile Injectables                            1,266,097        1,238,847                 2  %
 Generic Pharmaceuticals                          740,586          783,110                (5) %
 International Pharmaceuticals (1)                 92,906           99,337                (6) %

Total net revenues from external customers $ 2,993,206 $ 2,903,074

                3  %

__________

(1)Revenues generated by our International Pharmaceuticals segment are primarily attributable to external customers located in Canada.

Branded Pharmaceuticals. The following table displays the significant components
of our Branded Pharmaceuticals revenues from external customers for the years
ended December 31, 2021 and 2020 (dollars in thousands):
                                                                              % Change
                                                2021           2020         2021 vs. 2020
       Specialty Products:
       XIAFLEX®                              $ 432,344      $ 316,234                37  %
       SUPPRELIN® LA                           114,374         88,182                30  %
       Other Specialty (1)                      86,432         92,662                (7) %
       Total Specialty Products              $ 633,150      $ 497,078                27  %
       Established Products:
       PERCOCET®                             $ 103,788      $ 110,112                (6) %
       TESTOPEL®                                43,636         35,234                24  %
       Other Established (2)                   113,043        139,356               (19) %
       Total Established Products            $ 260,467      $ 284,702                (9) %
       Total Branded Pharmaceuticals (3)     $ 893,617      $ 781,780                14  %

__________

(1)Products included within Other Specialty include NASCOBAL® Nasal Spray,
AVEED® and QWO®.
(2)Products included within Other Established include, but are not limited to,
EDEX® and LIDODERM®.
(3)Individual products presented above represent the top two performing products
in each product category for the year ended December 31, 2021 and/or any product
having revenues in excess of $25 million during any quarterly period in 2021 or
2020.

Specialty Products

As discussed above, 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 because of the COVID-19 pandemic. Since then, sales
volumes for these products have generally been recovering. However, these
products continue to be impacted by COVID-19-related market conditions for
specialty product office-based procedures, including medical and administrative
staff shortages in physicians' offices, reduced physician office activity and
significantly lower numbers of in-person patient office visits. These conditions
have contributed to some variability in these products' recoveries, as well as
uncertainty about future revenues. Further changes as a result the COVID-19
pandemic could have a material adverse effect on our business, financial
condition, results of operations and cash flows.

The increase in XIAFLEX® revenues in 2021 was primarily attributable to
increased demand-related volumes, including as a result of the recovery noted
above and our increased investment and promotional efforts behind XIAFLEX®, as
well as increased net price.
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The increase in SUPPRELIN® LA revenues in 2021 was primarily attributable to increased volumes, including as a result of the recovery noted above, our investment and promotional efforts behind SUPPRELIN® LA and a temporary competitor supply disruption, partially offset by decreased price.

The decrease in Other Specialty Products revenues in 2021 was primarily
attributable to net decreases in price and volumes for multiple products in this
portfolio, partially offset by revenues from QWO®, which we launched in March
2021.

Established Products

The decrease in PERCOCET® revenues in 2021 was primarily attributable to decreased volumes, partially offset by increased price.

During the first half of 2020, TESTOPEL® experienced a temporary supply
disruption that was resolved during the third quarter of 2020. The increase in
TESTOPEL® revenues in 2021 was primarily attributable to higher sales in 2021
following the third-quarter 2020 resolution of the supply disruption.

The decrease in Other Established Products revenues in 2021 was primarily attributable to ongoing competitive pressures impacting this product portfolio and certain other factors.

Sterile Injectables. The following table displays the significant components of
our Sterile Injectables revenues from external customers for the years ended
December 31, 2021 and 2020 (dollars in thousands):

                                                                             % Change
                                            2021             2020          2021 vs. 2020
       VASOSTRICT®                      $   901,735      $   785,646                15  %
       ADRENALIN®                           124,630          152,074               (18) %

       Other Sterile Injectables (1)        239,732          301,127               (20) %
       Total Sterile Injectables (2)    $ 1,266,097      $ 1,238,847                 2  %

__________

(1)Products included within Other Sterile Injectables include ertapenem for
injection, APLISOL® and others.
(2)Individual products presented above represent the top two performing products
within the Sterile Injectables segment for the year ended December 31, 2021
and/or any product having revenues in excess of $25 million during any quarterly
period in 2021 or 2020.

The increase in VASOSTRICT® revenues in 2021 was driven by increased sales volumes resulting primarily from increased utilization levels, as well as increased price. Despite quarterly fluctuations, VASOSTRICT® has generally continued to experience increased sales volumes during the COVID-19 pandemic as compared to pre-COVID-19 levels.

During the first quarter of 2022, multiple competing generic alternatives to
VASOSTRICT® were launched, beginning with Eagle's generic, which it launched at
risk and began shipping toward the end of January 2022. Since then, additional
competing alternatives have entered the market, including an authorized generic.
We expect these launches to significantly impact both Endo's market share and
product price beginning in the first quarter of 2022, and the effects of
competition are likely to increase throughout 2022 and beyond. Additionally, to
the extent hospitalizations related to COVID-19 decline, overall demand for both
branded and generic versions of VASOSTRICT® could be reduced. Any of these
factors could have a material adverse effect on our business, financial
condition, results of operations and cash flows. For additional information,
refer to Note 16. Commitments and Contingencies in the Consolidated Financial
Statements included in Part IV, Item 15 of this report under the heading
"VASOSTRICT® Related Matters."

The decrease in ADRENALIN® revenues in 2021 was primarily attributable to the
impact of competitive entrants. The introduction of one or more additional
competing versions of ADRENALIN® could result in further reductions to our
market share and could have a material adverse effect on our business, financial
condition, results of operations and cash flows.

The decrease in Other Sterile Injectables revenues in 2021 was primarily attributable to competitive pressures across multiple products within the product portfolio.

Generic Pharmaceuticals. The decrease in Generic Pharmaceuticals revenues in
2021 was primarily attributable to competitive pressures on certain generic
products, partially offset by increased revenues from certain recent product
launches.

International Pharmaceuticals. The decrease in International Pharmaceuticals
revenues in 2021 was primarily attributable to competitive pressures in certain
international markets and the impact of certain product discontinuation
activities.
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Segment adjusted income from continuing operations before income tax. The
following table displays our Segment adjusted income from continuing operations
before income tax by reportable segment for the years ended December 31, 2021
and 2020 (dollars in thousands):

                                                                                 % Change
                                             2021           2020               2021 vs. 2020
         Branded Pharmaceuticals          $ 384,186      $ 377,526                       2  %
         Sterile Injectables              $ 998,453      $ 950,145                       5  %
         Generic Pharmaceuticals          $ 160,046      $  87,178                      84  %
         International Pharmaceuticals    $  30,325      $  41,022                     (26) %


Branded Pharmaceuticals. The increase in Segment adjusted income from continuing
operations before income tax in 2021 was primarily attributable to the gross
margin effect of increased revenues, as further described above, the reduction
to royalty payments relating to the BioSpecifics acquisition and favorable
changes in product mix, partially offset by increased costs associated with our
commercial launch of QWO® and our R&D investments in and promotional efforts
behind XIAFLEX®.

Sterile Injectables. The increase in Segment adjusted income from continuing
operations before income tax in 2021 was primarily attributable to the gross
margin effect of the increased revenues further described above and favorable
changes in product mix.

Generic Pharmaceuticals. The increase in Segment adjusted income from continuing
operations before income tax in 2021 was primarily attributable to favorable
changes in product mix, decreased R&D expenses and cost savings related to the
restructuring activities further described in Note 4. Restructuring in the
Consolidated Financial Statements included in Part IV, Item 15 of this report,
partially offset by the gross margin effect of the decreased revenues further
described above.

International Pharmaceuticals. The decrease in Segment adjusted income from continuing operations before income tax in 2021 was primarily attributable to the gross margin effects of the decreased revenues further described above.

LIQUIDITY AND CAPITAL RESOURCES

Our principal source of liquidity is cash generated from operations. Our
principal liquidity requirements are primarily for working capital for
operations, licenses, milestone payments, capital expenditures, mergers and
acquisitions, contingent liabilities, debt service payments, income taxes and
litigation-related matters. The Company's working capital was $1,084.6 million
at December 31, 2021 compared to working capital of $1,159.4 million at
December 31, 2020. The amounts at December 31, 2021 and December 31, 2020
include restricted cash and cash equivalents of $78.4 million and
$127.0 million, respectively, held in Qualified Settlement Funds (QSFs) for
mesh-related matters. Although these amounts in QSFs are included in working
capital, they are required to be used for mesh product liability settlement
agreements.

Cash and cash equivalents, which primarily consisted of bank deposits and money
market accounts, totaled $1,507.2 million at December 31, 2021 compared to
$1,213.4 million at December 31, 2020. While we currently expect our operating
cash flows, together with our cash, cash equivalents, restricted cash and
restricted cash equivalents, to be sufficient to cover our principal liquidity
requirements over the next year, the extent to which COVID-19 could impact our
business, financial condition, results of operations and cash flows in the
short- and medium-term cannot be predicted with certainty, but such impact could
be material. To the extent COVID-19 has resulted in any increase to our Cash and
cash equivalents, including as a result of any increase in revenues as described
above, such increase could be temporary. Additionally, on a longer-term basis,
we may not be able to accurately predict the effect of certain developments on
our sales and gross margins, such as the degree of market acceptance, patent
protection and exclusivity of our products, pricing pressures (including those
due to the impact of competition), the effectiveness of our sales and marketing
efforts and the outcome of our current efforts to develop, receive approval for
and successfully launch our product candidates. We may also face unexpected
costs in connection with our business operations, our ongoing and future legal
proceedings, governmental investigations and other contingent liabilities,
including potential costs related to settlements and judgments, as well as legal
defense costs, and the implementation of our COVID-19 related policies and
procedures. Furthermore, as a result of the possibility or occurrence of an
unfavorable outcome with respect to any legal proceeding, we have engaged in
and, at any given time, may further engage in strategic reviews of all or a
portion of our business. Any such review or contingency planning could
ultimately result in our pursuing one or more significant corporate transactions
or other remedial measures, including on a preventative or proactive basis.
Those remedial measures could include a potential 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 I, Item 1A. "Risk Factors" herein. We may
not be successful in implementing, or may face unexpected changes or expenses in
connection with, our strategic direction, including the potential for
opportunistic corporate development transactions. Any of the above could have a
material adverse effect on our business, financial condition, results of
operations and cash flows and require us to seek additional sources of liquidity
and capital resources as described below.
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To the extent our operating cash flows, together with our cash, cash
equivalents, restricted cash and restricted cash equivalents, become
insufficient to cover our liquidity and capital requirements, including funds
for any future acquisitions and other corporate transactions, we may be required
to seek third-party financing, including additional draws on our Revolving
Credit Facility or additional credit facilities, and/or engage in one or more
capital market transactions. There can be no assurance that we would be able to
obtain any required financing on a timely basis or at all. Further, lenders and
other financial institutions could require us to agree to more restrictive
covenants, grant liens on our assets as collateral (resulting in an increase in
our total outstanding secured indebtedness) and/or accept other terms that are
not commercially beneficial to us in order to obtain financing. Such terms could
further restrict our operations and exacerbate any impact on our results of
operations and liquidity that may result from COVID-19.

We may also, from time to time, seek to enter into certain transactions to
reduce our leverage and/or interest expense and/or to extend the maturities of
our outstanding indebtedness or obtain greater covenant flexibility. Such
transactions could include, for example, transactions to exchange existing
indebtedness for our ordinary shares or other debt (including exchanges of
unsecured debt for secured debt), to issue equity (including convertible
securities) or to repurchase, redeem, exchange or refinance our existing
indebtedness (including the Credit Agreement) as well as our outstanding senior
notes. Any of these transactions could impact our liquidity or results of
operations, including requiring us to take charges. Further, the terms of any
such transactions, including the amount of any exchange consideration and terms
of any refinanced debt, could also be less favorable than we have been able to
obtain in the past.

We may also require additional financing to fund our future operational needs or
for future corporate transactions, including acquisitions. We have historically
had broad access to financial markets that provide liquidity; however, we cannot
be certain that funding will be available to us in the future on terms
acceptable to us, or at all. Any issuances of equity securities or convertible
securities, in connection with an acquisition or otherwise, could have a
dilutive effect on the ownership interest of our current shareholders and may
adversely impact net income per share in future periods. An acquisition may be
accretive or dilutive and, by its nature, involves numerous risks and
uncertainties. As a result of acquisition efforts, if any, we are likely to
experience significant charges to earnings for merger and related expenses
(whether or not the acquisitions are consummated) that may include transaction
costs, closure costs or costs of restructuring activities.

We consider the undistributed earnings from the majority of our subsidiaries as
of December 31, 2021 to be indefinitely reinvested outside of Ireland and,
accordingly, neither income tax nor withholding taxes have been provided
thereon. As of December 31, 2021, indefinitely reinvested earnings were
approximately $119.7 million. We do not anticipate incurring tax in deploying
funds to satisfy liquidity needs arising in the ordinary course of business.

Indebtedness. The Company and certain of its subsidiaries are party to the
Credit Agreement governing the Credit Facilities (as defined below) and the
indentures governing our various senior secured and senior unsecured notes. As
of December 31, 2021, approximately $2.0 billion was outstanding under the Term
Loan Facility, approximately $0.3 billion was outstanding under the Revolving
Credit Facility and approximately $6.1 billion was outstanding under the senior
secured and senior unsecured notes.

After giving effect to net borrowings under the Revolving Credit Facility and
issued and outstanding letters of credit, approximately $0.6 billion of
remaining credit was available under the Revolving Credit Facility at
December 31, 2021. Additionally, the Company's outstanding debt agreements
contain a number of restrictive covenants, including certain limitations on the
Company's ability to incur additional indebtedness.

The Credit Agreement and the indentures governing our various senior secured
notes and the 6.00% Senior Notes due 2028 contain certain covenants and events
of default. As of December 31, 2021 and December 31, 2020, the Company was in
compliance with all such covenants. We have eliminated substantially all of the
restrictive covenants and certain events of default in the indentures governing
our senior unsecured notes, except for those in the indenture governing the
6.00% Senior Notes due 2028.

In addition, after each fiscal year-end, the Company is required to perform a
calculation of Excess Cash Flow (as defined in the Credit Agreement), which
could result in certain pre-payments of the outstanding loans under the Term
Loan Facility in accordance with the terms of the Credit Agreement. No such
payment is required at December 31, 2021.

Refer to Note 15. Debt in the Consolidated Financial Statements included in Part
IV, Item 15 of this report for additional information about our indebtedness,
including our debt refinancing transactions and information about covenants,
maturities, interest rates, security and priority.

Credit ratings. The Company's corporate credit ratings assigned by Moody's
Investors Service and Standard & Poor's are Caa1 with a negative outlook and
CCC+ with a negative outlook, respectively. No report of any rating agency is
being incorporated by reference herein.
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Working capital. The components of our working capital and our liquidity at December 31, 2021 and December 31, 2020 are below (dollars in thousands):

December 31, December 31,

                                                                        2021                  2020
Total current assets                                               $  2,714,586          $  2,413,258
Less: total current liabilities                                       1,629,962             1,253,824
Working capital                                                    $  

1,084,624 $ 1,159,434 Current ratio (total current assets divided by total current liabilities)

                                                                 1.7:1                 1.9:1


In 2021, working capital benefited from the favorable impacts to net current
assets resulting from our current period revenues and gross margins, which are
further described above. However, this benefit was more than offset by the
following current period activity, resulting in a net decrease to working
capital of $74.8 million from December 31, 2020 to December 31, 2021: (i) net
charges of $370.5 million related to litigation-related and other contingencies,
which are further described in Note 16. Commitments and Contingencies in the
Consolidated Financial Statements included in Part IV, Item 15 of this report;
(ii) an increase in the Current portion of long-term debt of $166.2 million
relating to debt expected to be paid within the next twelve months; (iii) the
incurrence of costs and fees related to the March 2021 Refinancing Transactions,
which are further described in Note 15. Debt in the Consolidated Financial
Statements included in Part IV, Item 15 of this report; and (iv) Capital
expenditures, excluding capitalized interest, of $77.9 million.

The following table summarizes our Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020 (in thousands):

                                                                       2021               2020
Net cash flow provided by (used in):
Operating activities                                               $ 411,050          $  397,392
Investing activities                                                 (59,544)           (624,867)
Financing activities                                                (105,481)           (108,567)
Effect of foreign exchange rate                                          285                 654

Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents

                                    $ 

246,310 $ (335,388)

Operating activities. Net cash provided by operating activities represents the
cash receipts and cash disbursements from all of our activities other than
investing activities and financing activities. Changes in cash from operating
activities reflect, among other things, the timing of cash collections from
customers, payments to suppliers, managed care organizations, government
agencies, collaborative partners and employees in the ordinary course of
business, as well as the timing and amount of cash payments and/or receipts
related to interest, litigation-related matters, restructurings, income taxes
and certain other items.

The $13.7 million increase in Net cash provided by operating activities in 2021
compared to the prior year period was primarily due to our results of operations
as described above and the timing of cash collections and cash payments related
to our operations. When compared to 2020, our 2021 Net cash provided by
operating activities included a decrease of approximately $71.6 million in cash
outflows for the settlement of certain mesh-related matters and an increase of
approximately $76.3 million in cash outflows for the settlement of certain
opioid-related matters. It is possible that operating cash flows could decline
in the future as a result of, among other things, cash outflows for
litigation-related matters and, as further discussed above, expected reductions
in VASOSTRICT® revenues.

Investing activities. The $565.3 million decrease in Net cash used in investing
activities in 2021 compared to the prior year period was primarily attributable
to: (i) a decrease in Acquisitions, including in-process research and
development, net of cash and restricted cash acquired of $644.5 million, which
primarily relates to the 2020 BioSpecifics acquisition that is further discussed
in Note 5. Acquisitions in the Consolidated Financial Statements included in
Part IV, Item 15 of this report, and (ii) an increase in Proceeds from sale of
business and other assets, net of $23.5 million, which primarily relates to the
sale transactions that are further discussed in Note 3. Discontinued Operations
in the Consolidated Financial Statements included in Part IV, Item 15 of this
report. These items were partially offset by: (i) a decrease in Proceeds from
sales and maturities of investments of $92.8 million, which primarily relates to
investments acquired as part of the 2020 BioSpecifics acquisition that were
fully liquidated in 2020, and (ii) an increase in Capital expenditures,
excluding capitalized interest of $8.0 million.

Financing activities. During 2021, Net cash used in financing activities related
primarily to: (i) the March 2021 Refinancing Transactions, including the payment
of approximately $43.6 million of associated costs and fees; (ii) Repayments of
revolving debt of $22.8 million; (iii) Repayments of term loans subsequent to
the March 2021 Refinancing Transactions of $15.0 million; and (iv) Payments of
tax withholding for restricted shares of $14.8 million.
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During 2020, Net cash used in financing activities related primarily to: (i)
Repayments of notes of $57.6 million associated with the June 2020 Refinancing
Transactions and August 2020 Tender Offer (as defined below); (ii) Repayments of
term loans of $34.2 million; and (iii) Payments of tax withholding for
restricted shares of $8.0 million.

R&D. As further described above under the heading "RESULTS OF OPERATIONS," in
recent years, we have incurred significant expenditures related to R&D. We
expect to continue incur R&D expenditures related to the development and
advancement of our current product pipeline and any additional product
candidates we may add via license, acquisition or organically. There can be no
assurance that the results of any ongoing or future nonclinical or clinical
trials related to these projects will be successful, that additional trials will
not be required, that any compound, product or indication under development will
receive regulatory approval in a timely manner or at all or that such compound,
product or indication could be successfully manufactured in accordance with
local current good manufacturing practices or marketed successfully, or that we
will have sufficient funds to develop or commercialize any of our products.

Manufacturing, supply and other service agreements. We contract with various
third party manufacturers, suppliers and service providers to supply our
products, or materials used in the manufacturing of our products, and to provide
additional services such as packaging, processing, labeling, warehousing,
distribution and customer service support. Any interruption to the goods or
services provided for by these and similar contracts could have a material
adverse effect on our business, financial condition, results of operations and
cash flows.

License and collaboration agreements. We could become obligated to make certain
contingent payments pursuant to our license, collaboration and other agreements.
Payments under these agreements generally become due and payable only upon the
achievement of certain developmental, regulatory, commercial and/or other
milestones. Due to the fact that it is uncertain whether and when certain of
these milestones will be achieved, they have not been recorded in our
Consolidated Balance Sheets. In addition, we may be required to make sales-based
royalty or similar payments under certain arrangements.

Acquisitions. Going forward, our primary focus will be on organic growth.
However, we may consider and, as appropriate, make acquisitions of other
businesses, products, product rights or technologies. Our cash reserves and
other liquid assets may be inadequate to consummate such acquisitions and it may
be necessary for us to issue ordinary shares or raise substantial additional
funds in the future to complete future transactions. In addition, as a result of
any acquisition efforts, we are likely to experience significant charges to
earnings for merger and related expenses (whether or not our efforts are
successful) that may include transaction costs, closure costs, integration costs
and/or costs of restructuring activities.

Legal proceedings. We are subject to various patent challenges, product
liability claims, government investigations and other legal proceedings in the
ordinary course of business. Contingent accruals are recorded when we determine
that a loss is both probable and reasonably estimable. Due to the fact that
legal proceedings and other contingencies are inherently unpredictable, our
assessments involve significant judgments regarding future events. For
additional discussion of legal proceedings, see Note 16. Commitments and
Contingencies in the Consolidated Financial Statements included in Part IV, Item
15 of this report.

Cash Requirements for Contractual and Other Obligations. As of December 31,
2021, we have various contractual and other obligations that we expect will
require the use of cash in both the short-term and long-term. These include,
without limitation, the following: (i) principal and interest payments related
to our debt; (ii) lease payments; (iii) obligations related to license and
collaboration agreements; (iv) commitments for capital expenditures; (v) other
purchase obligations, which represent enforceable and legally binding
obligations for purchases of goods and services, including minimum inventory
contracts, that specify all significant terms, including fixed or minimum
quantities to be purchased, fixed, minimum or variable price provisions and
timing; and (vi) contractual payments for certain legal liability settlements.

Refer to Note 9. Leases, Note 12. License and Collaboration Agreements, Note 15.
Debt and Note 16. Commitments and Contingencies in the Consolidated Financial
Statements included in Part IV, Item 15 of this report for additional
information about these obligations including, to the extent material,
quantitative information about the related cash requirements.

Additionally, information about our unrecognized income tax positions is
included in Note 21. Income Taxes in the Consolidated Financial Statements
included in Part IV, Item 15 of this report. Due to the nature and timing of the
ultimate outcome of these unrecognized income tax positions, we cannot make a
reliable estimate of the amount and period of related future payments, if any.

Fluctuations. 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; changes in 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.
Additionally, a substantial portion of our total revenues are through three
wholesale drug distributors who in turn supply our products to pharmacies,
hospitals and physicians. Accordingly, we are potentially subject to a
concentration of credit risk with respect to our trade receivables.
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Tabl e of Contents

Growth opportunities. We continue to evaluate growth opportunities including
investments, licensing arrangements, acquisitions of product rights or
technologies, businesses and strategic alliances and promotional arrangements,
any of which could require significant capital resources. We continue to focus
our business development activities on further diversifying our revenue base
through product licensing and company acquisitions, as well as other
opportunities to enhance shareholder value. Through execution of our business
strategy, we focus on developing new products both internally and with contract
and collaborative partners; expanding our product lines by acquiring new
products and technologies, increasing revenues and earnings through sales and
marketing programs for our innovative product offerings and effectively using
our resources; and providing additional resources to support our businesses.

Non-U.S. operations. Fluctuations in foreign currency rates resulted in a net loss of $1.3 million in 2021 and a net loss of $2.5 million in 2020.

Inflation. We do not believe that inflation had a material adverse effect on our
financial statements for the periods presented. However, materials, equipment
and labor shortages, shipping, logistics and other delays and other supply chain
and manufacturing disruptions, whether due to the evolving effects of the
COVID-19 pandemic or otherwise, continue to make it more difficult and costly
for us to obtain raw materials, supplies or services from third parties, to
manufacture our own products and to pursue clinical development activities.
Economic or political instability or disruptions, such as the conflict in
Ukraine, could negatively affect our supply chain or increase our costs. If
these types of events or disruptions continue to occur, they could have a
material adverse effect on our business, financial condition, results of
operations and cash flows.

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