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

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 2020 items and comparisons between 2021 and
2020. 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, 2021.
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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 4. Discontinued
Operations and Asset Sales in the Consolidated Financial Statements included in
Part IV, Item 15 of this report.

EXECUTIVE SUMMARY

This executive summary provides 2022 highlights from the results of operations
that follow:
•Total revenues in 2022 were $2,318.9 million compared to $2,993.2 million in
2021 as revenue decreases related to VASOSTRICT® and certain other products in
our Sterile Injectables segment, as well as our Branded Pharmaceuticals and
International Pharmaceuticals segments, were partially offset by increased
revenues from our Generic Pharmaceuticals segment.
•Gross margin percentage in 2022 decreased to 52.9% from 59.2% in 2021,
reflecting unfavorable changes in product mix resulting primarily from decreased
VASOSTRICT® revenues.
•Asset impairment charges in 2022 increased to $2,142.7 million from $415.0
million in 2021.
•We reported Loss from continuing operations of $2,909.6 million in 2022
compared to Loss from continuing operations of $569.1 million in 2021.

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:
•Since 2019, developments related to COVID-19 have continued to evolve rapidly
and are likely to continue to do so. The duration and severity of the direct and
indirect effects of COVID-19 on our results remain difficult to anticipate and,
in many instances, outside of our control. As such, 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, and the evolving
nature of the COVID-19 pandemic could increase the degree to which our results,
including the results of our business segments, fluctuate in the future.
Additionally, the numerous uncertainties related to COVID-19 have impacted our
ability to forecast our future operations; however, any future impact could be
material.
•In November 2020, we announced the initiation of several strategic actions,
collectively referred to herein as the 2020 Restructuring Initiative, to further
optimize operations and increase overall efficiency. We recorded certain charges
to complete these actions in anticipation of realizing annualized cost savings.
For further discussion of these actions, including a discussion of amounts
recognized, refer to Note 5. Restructuring 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, which are further
discussed in Note 15. Debt in the Consolidated Financial Statements included in
Part IV, Item 15 of this report.
•In November 2021, our PSP LLC subsidiary entered into the U.S. Government
Agreement (as defined below), which is 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. For further discussion, 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 competitive generic alternatives to
VASOSTRICT® were launched, beginning with a generic that was launched at risk
and began shipping toward the end of January 2022. Since then, additional
competitive alternatives entered the market, including authorized generics.
These launches began to significantly impact both Endo's market share and
product price toward the middle of the first quarter of 2022, and the effects of
competition have since increased. Additionally, beginning late in the first
quarter of 2022, COVID-19-related hospital utilization levels began to decline,
resulting in significantly decreased market volumes for both branded and
competing generic alternatives to VASOSTRICT®.
•In February 2022, we launched VASOSTRICT® in an RTU bottle, representing the
first and only RTU formulation of the drug. The bottle formulation now
represents a meaningful portion of the overall vasopressin market. Nevertheless,
the factors described in the preceding bullet point could have a material
adverse effect on our business, financial condition, results of operations and
cash flows.
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•In April 2022, we communicated the initiation of certain actions to streamline
and simplify certain functions, including our commercial organization, to
increase our overall organizational effectiveness and better align with current
and future needs. In December 2022, we announced we would be taking certain
additional actions to cease the production and sale of QWO® in light of market
concerns about the extent and variability of bruising following initial
treatment as well as the potential for prolonged skin discoloration. QWO® had
been launched for the treatment of moderate to severe cellulite in the buttocks
of adult women in March 2021. These actions are collectively referred to herein
as the 2022 Restructuring Initiative. We have recorded and may continue to
record certain charges to complete these actions in anticipation of realizing
annualized cost savings. For further discussion of these actions, including a
discussion of amounts recognized and information about any expected future
charges, refer to Note 5. Restructuring in the Consolidated Financial Statements
included in Part IV, Item 15 of this report.
•In May 2022, we announced that our EVL subsidiary had entered into an agreement
to acquire six development-stage RTU injectable product candidates from Nevakar
Injectables, Inc., a subsidiary of Nevakar, Inc., for an upfront cash payment of
$35.0 million, which was recorded as an Acquired in-process research and
development charge in the Consolidated Statements of Operations in the second
quarter of 2022. For further discussion of this agreement, as well as a
discussion of subsequent legal proceedings with Nevakar (as defined below) that
affected both this agreement and a prior 2018 agreement with Nevakar, see Note
12. License, Collaboration and Asset Acquisition Agreements in the Consolidated
Financial Statements included in Part IV, Item 15 of this report.
•In June 2022, we announced that our EVL subsidiary had entered into an
agreement with TLC to commercialize TLC599. During the second quarter of 2022,
we made an upfront cash payment of $30.0 million to TLC, which was recorded as
an Acquired in-process research and development charge in the Consolidated
Statements of Operations in the second quarter of 2022. For further discussion
of this agreement, see Note 12. License, Collaboration and Asset Acquisition
Agreements in the Consolidated Financial Statements included in Part IV, Item 15
of this report.
•Beginning in June 2022, we elected to enter certain 30-day grace periods
related to senior notes interest payments that were originally due to be paid
between June 30, 2022 and August 1, 2022. Certain of these payments were
subsequently paid prior to the expiration of the applicable grace periods;
others were not. Refer to Note 1. Description of Business and Note 15. Debt in
the Consolidated Financial Statements included in Part IV, Item 15 of this
report for further discussion.
•On the Petition Date, the Debtors filed voluntary petitions for relief under
the Bankruptcy Code, which constituted an event of default that accelerated our
obligations under substantially all of our then-outstanding debt instruments.
However, section 362 of the Bankruptcy Code stays creditors from taking any
action to enforce the related financial obligations and creditors' rights of
enforcement in respect of the debt instruments are subject to the applicable
provisions of the Bankruptcy Code. We are subject to risks and uncertainties
associated with our ongoing bankruptcy proceedings, which could have a material
adverse effect on our business, financial condition, results of operations and
cash flows. Refer to Note 1. Description of Business, Note 2. Bankruptcy
Proceedings and Note 15. Debt in the Consolidated Financial Statements included
in Part IV, Item 15 of this report for further discussion.
•During the first quarter of 2023, a competitor launched an alternative generic
version of varenicline tablets. This launch began to impact both Endo's market
share and product price toward the middle of the first quarter of 2023,
resulting in a decline in revenue for our Generic Pharmaceuticals segment. The
effects of competition are likely to increase in future periods.
•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, which are further discussed
herein. Notwithstanding any relief that may be available as a result of our
bankruptcy proceedings, 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. For further discussion, refer to Note 1. Description of
Business, Note 2. Bankruptcy Proceedings and Note 16. Commitments and
Contingencies in the Consolidated Financial Statements included in Part IV, Item
15 of this report, as well as Part I, Item 1A. "Risk Factors."
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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, share-based compensation, liabilities
subject to compromise and reorganization items, net, 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.
Additionally, as a result of our ongoing bankruptcy proceedings, we may sell or
otherwise dispose of or liquidate assets or settle liabilities for amounts other
than those reflected in the accompanying Consolidated Financial Statements. The
possibility or occurrence of any such actions could materially impact the
amounts and classifications of such assets and liabilities reported in our
Consolidated Balance Sheets. Furthermore, our ongoing bankruptcy proceedings and
planned sale process have resulted in and are likely to continue to result in
significant changes to our business, 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.

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.
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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, 2022 and 2021 (in thousands):
                                  Returns and                                                    Other Sales
                                   Allowances           Rebates            Chargebacks           Deductions              Total

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
Current year provision                77,698            634,439             2,229,131               137,758            3,079,026
Prior year provision                  (5,614)            (5,031)                 (965)                 (272)             (11,882)
Payments or credits                  (88,034)          (612,600)           (2,238,647)             (116,429)          (3,055,710)

Balance, December 31, 2022 $ 167,166 $ 213,276 $

  174,702          $     45,013          $   600,157


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.

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, 2022, 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.
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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.

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.
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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, 2022, our combined long-lived assets balance, including
property, plant and equipment and finite-lived intangible assets, is
approximately $2.2 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 and to be held and used, it is 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.
Prior to disposal, 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, 2022
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 4. Discontinued Operations and Asset Sales, 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 certain capital structure considerations. These
assumptions are based on significant inputs and judgments 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 2022 ranged from 9.5% 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 6 years to 16 years, with a weighted average
useful life of approximately 12 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.

As of December 31, 2022, the carrying amount of our intangible assets associated
with developed technology and license rights totaled approximately $1.7 billion.
As a result, if the assumptions used in our impairment tests change, it is
possible that material impairment charges could be recorded in future periods.

Goodwill and indefinite-lived intangible assets

As of December 31, 2022, our goodwill balance is approximately $1.4 billion and
we have no indefinite-lived intangible assets.

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

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. We estimate the fair values of our indefinite-lived intangible
assets using an income approach that utilizes a discounted cash flow model. 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.

The discounted cash flow models reflect 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 rates 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 certain capital structure considerations. Where
appropriate, the weighted average cost of capital may also incorporate certain
risk premiums, such as a company-specific risk premium (CSRP), which represents
the incremental return that investors may require to compensate for the risks,
uncertainties and variability in our estimated future cash flows. These
assumptions are based on significant inputs and judgments 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, together with the aggregate estimated fair value
of its debt, and/or observable bids for the Company, such as the Stalking Horse
Bid (as defined and further described in Note 2. Bankruptcy Proceedings in the
Consolidated Financial Statements included in Part IV, Item 15 of this report).
We use this comparison to calculate an implied control premium (the excess sum
of the reporting units' fair values over Endo's market capitalization, together
with the aggregate estimated fair value of its debt, and/or observable bids) or
an implied control discount (the excess of Endo's market capitalization,
together with the aggregate estimated fair value of its debt, and/or observable
bids 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 and/or the
aggregate estimated fair value of its debt, 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, 2022. For the
purposes of the 2022 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 discount rates used in the October 1, 2022 goodwill tests were 15.0% and
19.5% for the Branded Pharmaceuticals and Sterile Injectables reporting units,
respectively, compared to: (i) 15.0% and 19.5%, respectively, used in the
interim goodwill tests performed in the third quarter of 2022; (ii) 13.5% and
18.5%, respectively, used in the interim goodwill tests performed in the second
quarter of 2022; and (iii) 14.5% and 11.0%, respectively, used in the October 1,
2021 goodwill tests. The discount rates used in these 2022 goodwill tests
reflect certain increases in the CSRP compared to the October 1, 2021 tests,
representing increased risks and uncertainties in the underlying cash flows,
including those related to: (i) our ability to identify, develop and launch new
product candidates, particularly in our Sterile Injectables reporting unit and
(ii) risks and uncertainties associated with our ongoing bankruptcy proceedings.
We believe the discount rates and other inputs and assumptions used in these
various tests were consistent with those that a market participant would have
used.

We recorded goodwill impairment charges of $1,748.0 million and $97.0 million,
respectively, in connection with our second- and third-quarter 2022 interim
impairment tests of our Sterile Injectables reporting unit. No impairment
charges were recorded for our Branded Pharmaceuticals reporting unit as a result
of these tests.

We completed our annual goodwill impairment tests on October 1, 2022; no
additional impairments were recorded in connection with these tests. 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 resulted in a goodwill impairment charge for this
reporting unit of approximately $45 million.

We performed an additional interim goodwill impairment test for our Sterile
Injectables reporting unit as of December 31, 2022 based, in part, on updates
made to our estimates of future cash flows following the completion of our
annual enterprise-wide long-term strategic planning process beginning in late
fourth-quarter 2022 and concluding in February 2023, which is further described
in Note 11. Goodwill and Other Intangibles in the Consolidated Financial
Statements included in Part IV, Item 15 of this report. The discount rate used
in this test was 14.5%. We believe this discount rate and the other inputs and
assumptions used to estimate fair value were consistent with those that a market
participant would have used in light of the degree of risk associated with the
updated estimated future cash flows used in this impairment test as compared to
the October 1, 2022 tests. As a result of the December 31, 2022 test, we
determined that there was no impairment of goodwill. A 50 basis point increase
in the assumed discount rate utilized in this test would have resulted in a
goodwill impairment charge for this reporting unit of approximately $15 million.

Additional information about our 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.

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As of December 31, 2022, our Branded Pharmaceuticals and Sterile Injectables
reporting units had remaining goodwill of approximately $0.8 billion and $0.5
billion, respectively. As a result, if the assumptions used in our impairment
tests change, it is possible that additional impairment charges could be
recorded in future periods and that these charges could be material.

Each of our reporting units is subject to various risks and uncertainties,
including those described above and in Note 11. Goodwill and Other Intangibles
in the Consolidated Financial Statements included in Part IV, Item 15 of this
report. If actual results for our reporting units differ from our expectations,
as a result of these or other risks and uncertainties, and/or if we make related
changes to our assumptions for these reporting units, the estimated future
revenues and cash flows could be significantly reduced, which could ultimately
result in goodwill impairment charges that may be material.

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. Refer to Note 21. Income Taxes in the Consolidated Financial
Statements included in Part IV, Item 15 of this report for information about our
evaluation for the current reporting period and certain associated risks and
uncertainties.

Contingencies

Material legal proceedings involving the Company 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 are generally 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.
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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.

As of December 31, 2022, our accrual for loss contingencies totaled
$820.8 million, the most significant components of which relate to: (i) various
opioid-related matters as further described herein and (ii) product liability
and related matters associated with transvaginal surgical mesh products, which
we have not sold since March 2016. 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. As of December 31, 2022, our entire accrual for loss contingencies is
classified as Liabilities subject to compromise in the Consolidated Balance
Sheets. As a result of the automatic stay under the Bankruptcy Code and the
uncertain treatment of these liabilities pursuant to a chapter 11 plan or
otherwise, the timing and amount of payment, if any, related to the amounts
accrued for loss contingencies is uncertain.

Liabilities subject to compromise

For periods beginning with the third quarter of 2022, pre-petition unsecured and
undersecured claims related to the Debtors that may be impacted by the
bankruptcy reorganization process have been classified as Liabilities subject to
compromise in the Consolidated Balance Sheets. Liabilities subject to compromise
include pre-petition liabilities for which there is uncertainty about whether
such pre-petition liabilities could be impaired as a result of the Chapter 11
Cases. Liabilities subject to compromise are recorded at the expected amount of
the total allowed claim, even if they may ultimately be settled for different
amounts.

The determination of how liabilities will ultimately be settled or treated
cannot be made until approved by the Bankruptcy Court. Therefore, the amounts
classified as Liabilities subject to compromise are preliminary and may be
subject to future adjustments as a result of, among other things, the
possibility or occurrence of certain Bankruptcy Court actions, further
developments with respect to disputed claims, any rejection by us of executory
contracts and/or any payments by us of amounts classified as Liabilities subject
to compromise, which may be allowed in certain limited circumstances. Amounts
are also subject to adjustments if we make changes to our assumptions or
estimates related to claims as additional information becomes available to us
including, without limitation, those related to the expected amounts of allowed
claims, the value of any collateral securing claims and the secured status of
claims. Such adjustments may be material.
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RESULTS OF OPERATIONS

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, 2022 and
2021 (dollars in thousands):
                                                                                                          % Change
                                                                 2022                  2021             2022 vs. 2021
Total revenues, net                                         $  2,318,875          $ 2,993,206                   (23) %
Cost of revenues                                               1,092,499            1,221,064                   (11) %
Gross margin                                                $  1,226,376          $ 1,772,142                   (31) %
Gross margin percentage                                             52.9  %              59.2  %
Selling, general and administrative                              777,169              861,760                   (10) %
Research and development                                         128,033              123,440                     4  %
Acquired in-process research and development                      68,700               25,120                       NM
Litigation-related and other contingencies, net                  478,722              345,495                    39  %
Asset impairment charges                                       2,142,746              414,977                       NM
Acquisition-related and integration items, net                       408               (8,379)                      NM
Interest expense, net                                            349,776              562,353                   (38) %
Loss on extinguishment of debt                                         -               13,753                  (100) %
Reorganization items, net                                        202,978                    -                       NM
Other income, net                                                (34,054)             (19,774)                   72  %
Loss from continuing operations before income tax           $ (2,888,102)         $  (546,603)                      NM

__________

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

Total revenues, net. Total revenues in 2022 were $2,318.9 million compared to
$2,993.2 million in 2021 as revenue decreases related to VASOSTRICT® and certain
other products in our Sterile Injectables segment, as well as our Branded
Pharmaceuticals and International Pharmaceuticals segments, were partially
offset by increased revenues from our Generic 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, 2022 and 2021, Cost of revenues includes certain amounts that impact its
comparability among periods, as well as the comparability of gross margin
percentage, 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):
                                                                       2022               2021
Amortization of intangible assets (1)                              $ 

337,311 $ 372,907

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

                    $  

61,806 $ 9,058

__________

(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 2022 was primarily driven by prior asset impairment charges and
decreases in the rate of amortization expense for certain assets.
(2)Amounts include, among other things, certain accelerated depreciation
charges, inventory adjustments and net employee separation, continuity and other
benefit-related costs, including amounts related to restructurings. For further
discussion of our restructuring initiatives, including a discussion of amounts
recognized and information about any expected future charges, refer to Note 4.
Discontinued Operations and Asset Sales and Note 5. Restructuring in the
Consolidated Financial Statements included in Part IV, Item 15 of this report.

The decrease in Cost of revenues in 2022 was primarily due to decreased revenues
and decreased amortization expense, partially offset by unfavorable changes in
product mix resulting primarily from decreased VASOSTRICT® revenues, as well as
increased costs for amounts related to continuity and separation benefits, cost
reductions and strategic review initiatives.

The decrease in gross margin percentage in 2022 was primarily due to unfavorable
changes in product mix resulting primarily from decreased VASOSTRICT® revenues.

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Selling, general and administrative expenses. The decrease in 2022 was primarily
due to decreased costs associated with our commercial investment in QWO® and
certain legal matters. Additionally, in 2022, Selling, general and
administrative expenses reflected the recovery of certain previously-incurred
opioid-related legal expenses. These decreases were partially offset by
increased Selling, general and administrative expenses associated with our
investment in consumer marketing efforts supporting XIAFLEX® and certain
strategic review initiatives, restructuring and/or other cost reduction
initiatives, including costs incurred in connection with our bankruptcy
proceedings, which are included in Selling, general and administrative expenses
until the Petition Date and in Reorganization items, net thereafter. Refer to
Note 5. Restructuring in the Consolidated Financial Statements included in Part
IV, Item 15 of this report for further discussion of certain restructuring
initiatives, including a discussion of amounts recognized and information about
any expected future charges.

R&D expenses. Our R&D efforts are focused on the development of a diversified
portfolio of innovative and clinically differentiated product candidates. 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, certain of which are further described
below.

We continue to invest in our Branded Pharmaceuticals segment. In early 2020, we
announced that we had initiated our XIAFLEX® development program for the
treatment of plantar fibromatosis, for which we anticipate Phase 2 top-line data
by the end of the first quarter of 2023. We also initiated a proof-of-concept
study in plantar fasciitis during the fourth quarter of 2022. Additionally,
until late 2022, we had been advancing our development programs for QWO®, which
was launched in March 2021 for the treatment of moderate to severe cellulite in
the buttocks of adult women. However, as further discussed in Note 5.
Restructuring in the Consolidated Financial Statements included in Part IV, Item
15 of this report, in December 2022, we announced we would be ceasing the
production and sale of QWO® in light of market concerns about the extent and
variability of bruising following initial treatment as well as the potential for
prolonged skin discoloration.

We expect to continue to focus investments in RTU and other product candidates
in our Sterile Injectables segment, potentially including acquisitions and/or
license and commercialization agreements such as the 2022 Nevakar Agreement that
is further described in Note 12. License, Collaboration and Asset Acquisition
Agreements in the Consolidated Financial Statements included in Part IV, Item 15
of this report.

The increase in R&D expense in 2022 was primarily driven by increased costs
associated with our XIAFLEX® development programs, certain restructuring and
other cost reduction initiatives and certain post-marketing commitments. These
increases were partially offset by decreased costs associated with QWO®,
including as a result of actions taken in connection with the discontinuation of
QWO® discussed above. Refer to Note 5. Restructuring in the Consolidated
Financial Statements included in Part IV, Item 15 of this report for further
discussion of certain restructuring initiatives, including a discussion of
amounts recognized and information about any expected future charges.

As our development programs progress, it is possible that our R&D expenses could
increase.

Acquired in-process research and development. Acquired in-process research and
development charges are generally recognized in periods in which in-process
research and development assets (with no alternative future use in other
research and development projects) are acquired from third parties in connection
with an asset acquisition, or when costs are incurred (up to the point of
regulatory approval) for upfront or milestone payments to third parties
associated with in-process research and development. The increase in Acquired
in-process research and development charges in 2022 was primarily driven by the
incurrence, during the second quarter of 2022, of expenses related to upfront
payments associated with the 2022 Nevakar Agreement and the TLC Agreement of
$35.0 million and $30.0 million, respectively, which are further described in
Note 12. License, Collaboration and Asset Acquisition Agreements in the
Consolidated Financial Statements included in Part IV, Item 15 of this report.
This increase was partially offset by the incurrence, during 2021, of
approximately $25.1 million of expenses, which primarily related to upfront
payments associated with various license agreements. To the extent we enter into
agreements to acquire in-process research and development in the future and/or
incur expenses related to upfront or milestone payments to third parties
associated with existing or potential future agreements, Acquired in-process
research and development charges could increase in the future, and the amounts
of any increases could be material.

Litigation-related and other contingencies, net. Included within
Litigation-related and other contingencies, net are changes to our accruals for
litigation-related charges. 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. Notwithstanding any relief that may be available as a result of our
bankruptcy proceedings, 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. For further discussion, refer to Note 1. Description of
Business, Note 2. Bankruptcy Proceedings and Note 16. Commitments and
Contingencies in the Consolidated Financial Statements included in Part IV, Item
15 of this report.
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Asset impairment charges. The following table presents the components of our
total Asset impairment charges for the years ended December 31, 2022 and 2021
(in thousands):
                                                             2022           

2021

      Goodwill impairment charges                        $ 1,845,000      $

363,000

      Other intangible asset impairment charges              288,701       

7,811

Property, plant and equipment impairment charges 9,045

2,011

      Disposal group impairment charges                            -       

42,155

      Total asset impairment charges                     $ 2,142,746      $

414,977

For additional information, refer to Note 4. Discontinued Operations and Asset
Sales, Note 5. Restructuring, Note 7. Fair Value Measurements, Note 9. Leases,
Note 10. Property, Plant and Equipment and Note 11. Goodwill and Other
Intangibles in the Consolidated Financial Statements included in Part IV, Item
15 of this report, as well as the "CRITICAL ACCOUNTING ESTIMATES" section
herein.

Acquisition-related and integration items, net. Acquisition-related and
integration items, net primarily consist of the net expense (benefit) 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, 2022 and 2021 are as follows (in thousands):

                                               2022           2021
                    Interest expense        $ 350,740      $ 562,937
                    Interest income              (964)          (584)
                    Interest expense, net   $ 349,776      $ 562,353


The decrease in interest expense in 2022 was primarily attributable to the fact
that we ceased the recognition of interest expense related to our indebtedness
beginning on the Petition Date as a result of the Chapter 11 Cases.
Additionally, when compared to the prior year period, there have been decreases
to interest expense resulting from reductions in the aggregate principal amount
of our indebtedness, which were primarily attributable to the partial repayment
of the Revolving Credit Facility in October 2021, the January 2022 Senior Notes
Repayments and certain quarterly payments made on the Term Loan Facility. These
decreases in interest expense were partially offset by increases in the weighted
average interest rate applicable to our total indebtedness through the Petition
Date. Beginning during the third quarter of 2022, we also became obligated to
make certain adequate protection payments as a result of the Chapter 11 Cases,
which are currently being accounted for as a reduction of the carrying amount of
the related debt instruments. Some or all of the adequate protection payments
may later be recharacterized as interest expense depending upon certain
developments in the Chapter 11 Cases, which could result in increases in
interest expense in future periods that may be material. Refer to Note 15. Debt
in the Consolidated Financial Statements included in Part IV, Item 15 of this
report for further discussion.

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 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.
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Reorganization items, net. Amounts relate to the net expense or income
recognized during our bankruptcy proceedings required to be presented as
Reorganization items, net under Accounting Standards Codification Topic 852,
Reorganizations (ASC 852). Refer to Note 2. Bankruptcy Proceedings in the
Consolidated Financial Statements included in Part IV, Item 15 of this report
for further details. Costs related to our bankruptcy proceedings that were
incurred prior to the Petition Date are generally reflected as Selling, general
and administrative expenses in our Consolidated Statements of Operations. We
expect to continue to incur significant expenses in connection with our ongoing
bankruptcy proceedings and certain related transactions and it is possible that
such costs will increase over time, particularly if we incur certain associated
success-related and/or other contingent fees, which could be significant. In
addition, the longer the Chapter 11 Cases continue, the higher our expenses for
these matters could be.

Other income, net. The components of Other income, net for the years ended
December 31, 2022 and 2021 are as follows (in thousands):

                                                                        2022               2021
Net gain on sale of business and other assets                       $ (26,183)         $  (4,516)
Foreign currency (gain) loss, net                                      (2,087)             1,253
Net loss from our investments in the equity of other companies            378                453
Other miscellaneous, net                                               (6,162)           (16,964)
Other income, net                                                   $ (34,054)         $ (19,774)


For additional information on the components of Other income, net, refer to Note
20. Other Income, 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 and Effective tax
rate for the years ended December 31, 2022 and 2021 (dollars in thousands):

                                                             2022           

2021

  Loss from continuing operations before income tax     $ (2,888,102)      $ (546,603)
  Income tax expense                                    $     21,516       $   22,478
  Effective tax rate                                            (0.7) %          (4.1) %


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 2022 compared to the 2021 income tax expense
primarily relates to an increase in accrued interest on uncertain tax positions
and changes in the geographic mix of pre-tax earnings. 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.

As previously disclosed, the Company concluded that there was substantial doubt
about its ability to continue as a going concern within one year after the date
of issuance of the Condensed Consolidated Financial Statements included in the
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022 filed
with the SEC on August 9, 2022 (the Second-Quarter 2022 Form 10-Q). The Company
considered this in determining that certain net deferred tax assets were no
longer more likely than not realizable. As a result, an immaterial increase in
valuation allowance on the Company's net deferred tax assets was recorded in
various jurisdictions during the second quarter of 2022.

The Company maintains a full valuation allowance against the net deferred tax
assets in the U.S., Luxembourg, Ireland and certain other foreign tax
jurisdictions as of December 31, 2022. 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.

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.
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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.

Additionally, as further discussed in Note 21. Income Taxes in the Consolidated
Financial Statements included in Part IV, Item 15 of this report, the IRS has
filed multiple proofs of claim against several of the Debtors in connection with
our ongoing bankruptcy proceedings.

For additional information on our income taxes, 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,
2022 and 2021 (in thousands):
                                                                2022        

2021

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

Loss from discontinued operations before income taxes $ (15,543) $ (49,594)

    Income tax benefit                                       $  (2,056)    

$ (5,430)

    Discontinued operations, net of tax                      $ (13,487)    

$ (44,164)

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 2022 and 2021 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

Revenues, net. The following table displays our revenue by reportable segment
for the years ended December 31, 2022 and 2021 (dollars in thousands):

                                                                                   % Change
                                                  2022             2021          2022 vs. 2021
 Branded Pharmaceuticals                      $   851,142      $   893,617                (5) %
 Sterile Injectables                              589,633        1,266,097               (53) %
 Generic Pharmaceuticals                          795,457          740,586                 7  %
 International Pharmaceuticals (1)                 82,643           92,906               (11) %

Total net revenues from external customers $ 2,318,875 $ 2,993,206

              (23) %

__________

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

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Branded Pharmaceuticals. The following table displays the significant components
of our Branded Pharmaceuticals revenues from external customers for the years
ended December 31, 2022 and 2021 (dollars in thousands):
                                                                              % Change
                                                2022           2021         2022 vs. 2021
       Specialty Products:
       XIAFLEX®                              $ 438,680      $ 432,344                 1  %
       SUPPRELIN® LA                           113,011        114,374                (1) %
       Other Specialty (1)                      70,009         86,432               (19) %
       Total Specialty Products              $ 621,700      $ 633,150                (2) %
       Established Products:
       PERCOCET®                             $ 103,943      $ 103,788                 -  %
       TESTOPEL®                                38,727         43,636               (11) %
       Other Established (2)                    86,772        113,043               (23) %
       Total Established Products            $ 229,442      $ 260,467               (12) %
       Total Branded Pharmaceuticals (3)     $ 851,142      $ 893,617                (5) %

__________

(1)Products included within Other Specialty include AVEED®, NASCOBAL® Nasal
Spray and QWO®.
(2)Products included within Other Established include, but are not limited to,
EDEX®.
(3)Individual products presented above represent the top two performing products
in each product category for the year ended December 31, 2022 and/or any product
having revenues in excess of $25 million during any completed quarterly period
in 2022 or 2021.

Specialty Products

Certain of our products that are physician administered, including XIAFLEX®,
generally experienced decreased sales volumes during the COVID-19 pandemic due
to reduced physician office activity and patient office visits because of the
COVID-19 pandemic. While these products have generally been recovering since
early 2020, they have at times continued to be impacted by COVID-19-related and,
more recently, other market conditions for specialty product office-based
procedures, including medical and administrative staff shortages in physicians'
offices, reduced physician office activity and lower numbers of in-person
patient office visits. The pandemic and other market conditions also created a
high backlog of demand for non-elective urology procedures, which has in certain
cases reduced the utilization of XIAFLEX® by healthcare providers. Additionally,
we believe that concerns by healthcare providers regarding economic uncertainty
have impacted purchasing patterns of XIAFLEX®. Changes in market conditions and
certain other factors could result in revenue decreases or otherwise impact
future periods, which could have a material adverse effect on our business,
financial condition, results of operations and cash flows.

The increase in XIAFLEX® revenues in 2022 was primarily attributable to
increased net price, partially offset by lower volumes. The decrease in volumes
was primarily driven by continued challenging market conditions as further
described above and the ongoing impact from a disruption experienced by our
third-party specialty pharmacy provider during the third quarter of 2022. While
we have since seen some recovery in volumes related to this disruption, volumes
have not yet returned to pre-disruption levels.

The decrease in SUPPRELIN® LA revenues in 2022 was primarily attributable to
decreased volumes, partially offset by increased net price.

The decrease in Other Specialty revenues in 2022 was primarily attributable to
decreased NASCOBAL® Nasal Spray revenues, partially offset by increased AVEED®
revenues.

Established Products

The decrease in TESTOPEL® revenues in 2022 was primarily attributable to
decreased volumes.

The decrease in Other Established revenues in 2022 was primarily attributable to
ongoing competitive pressures impacting this product portfolio and certain other
factors.

Our Established Products portfolio is likely to continue to be affected by
ongoing competitive pressures. This could result in revenue decreases or
otherwise impact future periods, which could have a material adverse effect on
our business, financial condition, results of operations and cash flows.

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Sterile Injectables. The following table displays the significant components of
our Sterile Injectables revenues from external customers for the years ended
December 31, 2022 and 2021 (dollars in thousands):

                                                                            % Change
                                            2022            2021          2022 vs. 2021
        VASOSTRICT®                      $ 253,696      $   901,735               (72) %
        ADRENALIN®                         114,304          124,630                (8) %

        Other Sterile Injectables (1)      221,633          239,732                (8) %
        Total Sterile Injectables (2)    $ 589,633      $ 1,266,097               (53) %

__________

(1)Products included within Other Sterile Injectables include APLISOL®,
ertapenem for injection and others.
(2)Individual products presented above represent the top two performing products
within the Sterile Injectables segment for the year ended December 31, 2022
and/or any product having revenues in excess of $25 million during any completed
quarterly period in 2022 or 2021.

The decrease in VASOSTRICT® revenues in 2022 was primarily driven by decreases
to both net price and volumes, which were primarily attributable to the impact
of generic competition as well as lower overall market demand as
COVID-19-related hospital utilization levels declined. During the first quarter
of 2022, multiple competitive generic alternatives to VASOSTRICT® were launched,
beginning with a generic that was launched at risk and began shipping toward the
end of January 2022. Since then, additional competitive alternatives entered the
market, including authorized generics. These launches began to significantly
impact both Endo's market share and product price toward the middle of the first
quarter of 2022, and the effects of competition have since increased.
Additionally, beginning late in the first quarter of 2022, COVID-19-related
hospital utilization levels began to decline, resulting in significantly
decreased market volumes for both branded and competing generic alternatives to
VASOSTRICT®. In February 2022, we launched VASOSTRICT® in an RTU bottle,
representing the first and only RTU formulation of the drug. The bottle
formulation now represents a meaningful portion of the overall vasopressin
market. Nevertheless, the factors described above 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 "Patent Matters."

The decrease in ADRENALIN® revenues in 2022 was primarily attributable to
decreased net price and volumes.

The decrease in Other Sterile Injectables revenues in 2022 was primarily
attributable to decreased price, partially offset by increased volumes.

Our Sterile Injectables segment is likely to continue to be affected by ongoing
competitive pressures. This could result in revenue decreases or otherwise
impact future periods, which could have a material adverse effect on our
business, financial condition, results of operations and cash flows.

Generic Pharmaceuticals. The increase in Generic Pharmaceuticals revenues in
2022 was primarily attributable to revenues from varenicline tablets (our
generic version of Pfizer Inc.'s Chantix®), which launched in September 2021,
partially offset by competitive pressures on certain generic products.

During the first quarter of 2023, a competitor launched an alternative generic
version of varenicline tablets. This launch began to impact both Endo's market
share and product price toward the middle of the first quarter of 2023,
resulting in a decline in revenue for our Generic Pharmaceuticals segment. The
effects of competition are likely to increase in future periods. Other products
in our Generic Pharmaceuticals segment are also likely to continue to be
affected by ongoing competitive pressures. These factors could result in revenue
decreases or otherwise impact future periods, which could have a material
adverse effect on our business, financial condition, results of operations and
cash flows.

International Pharmaceuticals. The decrease in International Pharmaceuticals
revenues in 2022 was primarily attributable to competitive pressures and the
expiration of a product agreement. This segment is likely to continue to be
affected by ongoing competitive pressures. This could result in revenue
decreases or otherwise impact future periods, which could have a material
adverse effect on our business, financial condition, results of operations and
cash flows.
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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 (the measure we use to evaluate segment performance) by
reportable segment for the years ended December 31, 2022 and 2021 (dollars in
thousands):

                                                                                 % Change
                                             2022           2021               2022 vs. 2021
         Branded Pharmaceuticals          $ 366,554      $ 384,186                      (5) %
         Sterile Injectables              $ 349,424      $ 998,453                     (65) %
         Generic Pharmaceuticals          $ 336,133      $ 160,046                         NM
         International Pharmaceuticals    $  19,920      $  30,325                     (34) %

__________

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

Branded Pharmaceuticals. The decrease in Segment adjusted income from continuing
operations before income tax in 2022 was primarily attributable to the gross
margin effects of the decreased segment revenues further described above, as
well as increased costs associated with our investment in consumer marketing
efforts supporting XIAFLEX® and certain legal matters, partially offset by
decreased costs associated with our commercial investment in QWO®.

Sterile Injectables. The decrease in Segment adjusted income from continuing
operations before income tax in 2022 was primarily attributable to the gross
margin effects of the decreased segment revenues further described above.

Generic Pharmaceuticals. The increase in Segment adjusted income from continuing
operations before income tax in 2022 was primarily attributable to the gross
margin effects of the increased segment revenues further described above, as
well as the favorable changes in product mix, which primarily related to
varenicline tablets.

International Pharmaceuticals. The decrease in Segment adjusted income from
continuing operations before income tax in 2022 was primarily attributable to
the gross margin effects of the decreased segment revenues further described
above.

LIQUIDITY AND CAPITAL RESOURCES

On the Petition Date, the Debtors filed voluntary petitions for relief under the
Bankruptcy Code, which constituted an event of default that accelerated our
obligations under substantially all of our then-outstanding debt instruments.
However, section 362 of the Bankruptcy Code stays creditors from taking any
action to enforce the related financial obligations and creditors' rights of
enforcement in respect of the debt instruments are subject to the applicable
provisions of the Bankruptcy Code. Refer to Note 1. Description of Business,
Note 2. Bankruptcy Proceedings and Note 15. Debt in the Consolidated Financial
Statements included in Part IV, Item 15 of this report for further discussion.

Our principal source of liquidity is cash generated from operations. Cash and
cash equivalents, which primarily consisted of bank deposits and money market
accounts, totaled $1,018.9 million at December 31, 2022 compared to
$1,507.2 million at December 31, 2021. Our principal liquidity requirements are
primarily for working capital for operations, licenses, capital expenditures,
mergers and acquisitions (including upfront and milestone payments to third
parties), income taxes, litigation-related and other contingent liabilities,
debt service payments (including adequate protection payments on our First Lien
Debt Instruments (as defined below)) and other amounts related to our bankruptcy
proceedings.

Our business is exposed to a variety of material risks as further described
herein. For example, we may face decreased revenues as a result of COVID-19 and,
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, such increase
could be temporary. We may 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), our
ongoing bankruptcy proceedings and the implementation of our COVID-19 related
policies and procedures. 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. Furthermore, 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. Additionally, as further
discussed in Note 1. Description of Business in the Consolidated Financial
Statements included in Part IV, Item 15 of this report, management has concluded
that there is substantial doubt regarding our ability to continue as a going
concern. 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 we are required or choose to seek third-party financing in the
future, there can be no assurance that we would be able to obtain any such
required financing on a timely basis or at all, particularly in light of our
ongoing bankruptcy proceedings and the corresponding event of default on our
existing debt instruments. Additionally, any future financing arrangements could
include terms that are not commercially beneficial to us, which could further
restrict our operations and exacerbate any impact on our results of operations
and liquidity that may result from any of the factors described herein or other
factors.

Refer to Note 21. Income Taxes in the Consolidated Financial Statements included
in Part IV, Item 15 of this report for a discussion of our indefinite
reinvestment assertion relating to undistributed earnings of certain of our
subsidiaries.

Indebtedness. The Company and certain of its subsidiaries are party to the
Credit Agreement (as defined below) governing the Credit Facilities (as defined
below) and the indentures governing our various senior secured and senior
unsecured notes. Refer to Note 2. Bankruptcy Proceedings and Note 15. Debt in
the Consolidated Financial Statements included in Part IV, Item 15 of this
report for additional information about our indebtedness, including information
about amounts currently outstanding, maturities, interest rates, security,
priority, certain recent debt financing transactions and the effects of
bankruptcy-related proceedings and the corresponding event of default.

Working capital. The components of our working capital and our liquidity at
December 31, 2022 and December 31, 2021 are below (dollars in thousands):

December 31, December 31,

                                                                        2022                  2021
Total current assets                                               $  2,076,768          $  2,714,586
Less: total current liabilities                                         689,627             1,629,962
Working capital                                                    $  

1,387,141 $ 1,084,624
Current ratio (total current assets divided by total current
liabilities)

                                                                 3.0:1                 1.7:1


Net working capital increased by $302.5 million from December 31, 2021 to
December 31, 2022. During this period, working capital benefited from the
favorable impacts to net current assets resulting from revenues and gross
margins, which are further described above. These benefits were partially offset
by, among other things, the following current period activity: (i) Capital
expenditures, excluding capitalized interest, net of Proceeds from the U.S.
Government Agreement, of $81.1 million; (ii) Acquired in-process research and
development charges of $68.7 million; and (iii) certain expenses incurred in
connection with our bankruptcy proceedings and certain restructuring and other
cost reduction initiatives.

Our bankruptcy proceedings have also resulted in adjustments to the
classification of certain assets and liabilities in our Consolidated Balance
Sheets during 2022, which have resulted in significant changes to our working
capital. For example, many liabilities previously included in current
liabilities have been reclassified as Liabilities subject to compromise and are
therefore no longer part of our working capital. The classification of our
assets and liabilities in our Consolidated Balance Sheets may continue to change
significantly during bankruptcy proceedings, which could result in material
changes to our working capital in future periods. Refer to Note 2. Bankruptcy
Proceedings and Note 15. Debt in the Consolidated Financial Statements included
in Part IV, Item 15 of this report for additional information.

The following table summarizes our Consolidated Statements of Cash Flows for the
years ended December 31, 2022 and 2021 (in thousands):

                                                                       2022                2021
Net cash flow provided by (used in):
Operating activities                                               $  269,193          $ 411,050
Investing activities                                                 (133,147)           (59,544)
Financing activities                                                 (513,873)          (105,481)
Effect of foreign exchange rate                                        (4,242)               285

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

                                    $ 

(382,069) $ 246,310

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, MCOs, 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, reorganization items, income taxes
and certain other items.
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The $141.9 million decrease in Net cash provided by operating activities in 2022
compared to the prior year period was primarily due to reduced VASOSTRICT®
revenues, partially offset by decreased payments to settle a variety of
liabilities resulting from payment delays and/or other reductions related to our
contingency planning and bankruptcy proceedings. Additionally, as further
discussed in Note 15. Debt in the Consolidated Financial Statements included in
Part IV, Item 15 of this report, we are not currently making interest payments
(which have historically been reflected as operating cash flows) on most of our
debt instruments; we have instead begun making certain adequate protection
payments related to our First Lien Debt Instruments, which are currently being
reflected as financing cash flows.

It is possible that our operating cash flows could decline in the future as a
result of, among other things, reductions to revenues and payments in future
periods related to liabilities for which payment has been delayed as part of our
contingency planning and bankruptcy proceedings. Additionally, it is possible
that some or all of the adequate protection payments described above may later
be recharacterized as interest expense depending upon certain developments in
the Chapter 11 Cases, which could result adequate protection payments being
reflected as operating cash flows in future periods, which could in turn lead to
decreases to our operating cash flows that may be material.

Investing activities. The $73.6 million increase in Net cash used in investing
activities in 2022 compared to the prior year period was primarily attributable
to: (i) an increase in Acquisitions, including in-process research and
development, net of cash and restricted cash acquired of $85.3 million and (ii)
an increase in Capital expenditures, excluding capitalized interest of $21.8
million. The changes were partially offset by: (i) an increase in Proceeds from
the U.S. Government Agreement of $18.6 million and (ii) an increase in Proceeds
from sale of business and other assets, net of $11.1 million.

Financing activities. During 2022, Net cash used in financing activities
primarily related to: (i) Adequate protection payments of $313.1 million; (ii)
Repayments of notes of $180.3 million; and (iii) Repayments of term loans of
$10.0 million.

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.

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, collaboration and asset acquisition agreements. We could become
obligated to make certain contingent payments pursuant to our license,
collaboration and asset acquisition agreements. Except for upfront payments,
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.

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,
2022, 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) payments related to our debt, including
principal and interest and/or adequate protection payments; (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.
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Refer to Note 9. Leases, Note 12. License, Collaboration and Asset Acquisition
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.

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.

The Chapter 11 Cases have affected and are likely to continue to affect certain
of the obligations described above, as further discussed herein. As the Chapter
11 Cases progress, certain of our contractual arrangements could be amended or
rejected, which could result in changes to our cash requirements for such
obligations.

Additionally, we have made significant cash payments to date as a direct result
of our ongoing bankruptcy proceedings, including payments for related
professional fees. We expect to continue to incur significant expenditures in
the future as a result of our bankruptcy proceedings and certain related
transactions. It is possible that our expenditures will increase over time,
particularly if we incur certain associated success-related and/or other
contingent fees, which could be significant. In addition, the longer the Chapter
11 Cases continue, the higher our expenditures for these matters could be.

For additional discussion of our bankruptcy proceedings, refer to Note 2.
Bankruptcy Proceedings in the Consolidated Financial Statements included in Part
IV, Item 15 of this report.

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; changing inflation and interest rates; 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; bankruptcy proceedings and strategic
review initiatives; financing activities; COVID-19; acquired in-process research
and development charges; 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 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.

Inflation. 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. While we do not believe that inflation had a
material adverse effect on our financial statements for the periods presented,
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.

Off-balance sheet arrangements. We have no off-balance sheet arrangements.