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Allergan (NYSE:AGN)
Q4 2018 Earnings Conference Call
Jan. 29, 2019 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning. My name is Carnisia, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Q4 and full-year 2018 earnings call. [Operator instructions] I would like to turn the conference over to Ms.

Manisha Narasimhan. Ma'am, you may begin.

Manisha Narasimhan -- Investor Relations

Thank you, Carnisia, and good morning, everyone. I'd like to welcome you to the Allergan fourth-quarter and full-year 2018 earnings conference call. Earlier this morning, we issued a press release reporting Allergan earnings for the quarter and fiscal year ended December 31, 2018. The press release and our slide deck, which we're presenting this morning, are available on our corporate website at allergan.com.We're conducting a live webcast of this call, a replay of which will be available on our website after its conclusion.

Please note that today's call is copyrighted material of Allergan and cannot be rebroadcast without the company's expressed written consent. Turning to Slide 2. I'd also like to remind you that during the course of this call, management will make projections or other forward-looking remarks regarding future events or the future financial performance of the company. It's important to note that such statements and events are forward-looking statements and reflect our current perspective of the business trends and information as of today's date.

Actual results may differ materially from current expectations and projections, depending on a number of factors affecting the Allergan business. These factors are detailed in our periodic public filings with the Securities and Exchange Commission. Allergan disclaims any intent or obligation to update these forward-looking statements, except as expressly required by law. During the call, we will refer to non-GAAP figures.

Our GAAP financial metrics and reconciliation from GAAP to non-GAAP metrics can be found in our earnings release issued this morning and posted on our website. In addition, all global and international growth rates referenced this morning are on an ex-FX basis. Turning to Slide 3 and our agenda this morning. With us on today's call are Brent Saunders, chairman and CEO; Bill Meury, chief commercial officer; David Nicholson, chief R&D officer; and Matt Walsh, chief financial officer.

Also on the call and available during Q&A is Bob Bailey, our chief legal officer. With that, I'll turn the call over to Brent.

Brent Saunders -- Chairman and Chief Executive Officer

Thank you, Manisha. Good morning, and thank you, everyone, for joining our fourth-quarter and full-year 2018 earnings call. There are three key themes that I'd like to highlight on the call today. First, we delivered solid financial results in the fourth quarter, finishing up a strong 2018, underscoring the strength of our core business.

Second, our R&D pipeline is advancing, and we expect many significant clinical and regulatory milestones in 2019. And third, based on the strength of our core business, the emerging pipeline and continued focus on strong execution, we feel confident about our outlook in 2019. Turning to Slide 5. 2018 was a year of steady strategic progress for Allergan, and we achieved the financial and operational goals that we had set at the beginning of the year.

I'm very proud of our team's operational, R&D and non-GAAP financial results in 2018. In 2018, we made significant headway with our pipeline and delivered positive clinical results from six late-stage development programs across our therapeutic areas. We made 10 major registrational submissions globally, including for VRAYLAR in bipolar depression, and we expect an FDA decision in May. On the migraine front, we reported compelling data for both ubrogepant in acute treatment and prevention of migraine and atogepant for episodic migraine.

Assuming these two oral CGRPs are approved, we will have one of the most comprehensive migraine portfolios in the industry. We have made significant progress with our eye care pipeline and recorded positive Phase 3 data for abicipar in wet AMD and with Bimatoprost SR in glaucoma and are on track to make regulatory submissions for both later this year. In the GI space, we have advanced three important late-stage programs: Brazikumab, an IL-23 antibody for inflammatory bowel disease; relamorelin for diabetic gastroparesis; and CVC for NASH. With 13 pharmaceutical and 10 device programs in late-stage development, we are well-positioned to launch one or two new products each year for the next several years.

In 2018, despite the sales impact from products losing exclusivity, or LOEs, we maintained healthy margins and invested in our core business for growth. And we took a disciplined approach to capital allocation, which was balanced across driving growth, strengthening our balance sheet and returning attractive levels of capital to our shareholders. In 2018, our net performance -- our performance net income per share came in at $16.69 for the full year, which is above the high end of our most recently provided guidance range. We generated strong cash flows of $5.6 billion, improved our balance sheet and continued to return capital to shareholders.

And we reduced our outstanding debt by over $6 billion and executed more than $2.7 billion in share repurchases in 2018 alone. Our 2018 performance reinforces our commitment to successfully execute our strategy and create a global biopharma leader focused on four key therapeutic areas, medical aesthetics, CNS, eye care, and GI. Taken together, these accomplishments give me confidence in our ability to continue producing solid results in 2019 and beyond, while also delivering innovation that will have an enduring impact on patients, customers and shareholders. Turning to Slide 6.

I will briefly review the key drivers of our 2018 performance. Our core business, which accounted for 87% of our total revenues in 2018, was $13.8 billion, growing 8.3% year-over-year at constant currency. This was driven by robust growth in many of our anchor brands, such as Botox Cosmetic, Botox Therapeutic, Juvéderm, Vraylar, Lo Loestrin and Linzess. Core business growth in 2018 was offset by declines in brand spacing LOEs, divestitures of nonstrategic assets and, in the later part of the year, some shortfalls in the international business associated with the recalls of Ozurdex and textured breast implants in certain international markets.

We believe we have resolved the Ozurdex issue and expect supply to be normalized in the second quarter. Overall, our core business continues to perform well and is poised for durable growth over the long term. Slide 7 provides a brief snapshot of key financial metrics for the quarter and for the full year. You will hear more about this in the financial guidance for 2019 from Matt.

Of note, our guidance does not take into consideration any impact from potential future divestitures. Before I turn to our goals for 2019, I'd like to provide an update on the sale process that we have been conducting for anti-infectives and women's health. On anti-infectives, we are in the final stages of this process and believe that it is -- that this business is more likely than not to be sold. While we do not yet have a completed transaction to announce at this time, and there are always risks to completing a transaction, current facts and circumstances are indicating that a sale of anti-infectives is probable over the near term.

For women's health, we have concluded that the highest value proposition for this business at this time is to continue managing it and optimizing it. As a result, we are winding down the advisory web process. We will continue to explore future opportunities to unlock value with women's health. Several flagship products in women's health were up 15% year-over-year, which is a true testament to the scale and expertise of our women's health team, and I'd like to recognize them for their strong contribution.

Looking ahead to 2019 and beyond, our strategy for long-term growth is clear. Outlined on Slide 8 is a snapshot of our four main businesses, which represent over 80% of our top-line sales. We are committed to these areas and take a long-term view of each of these for three reasons. First, we have product line in depth and own a No.

1 or No. 2 position. Second, we have a clear line of site to innovation and new product flow. And third, our regulatory development and commercial expertise are competitive advantages.

Medical aesthetics and eye care are the largest in global, followed by CNS and GI, which have strong future growth potential. The other key point here is that each of these businesses is supported by several mid- to late-stage pipeline products. In other words, each business has a bench of future growth catalysts and development. I expect that we will launch more new products than any other company in these four therapeutic areas.

And finally, we intend to accomplish these goals with discipline and balanced capital deployment. These clear strategic priorities, combined with our resolute focus on strong execution operationally, commercially and financially, give me confidence that we are well-positioned to create sustainable growth and shareholder value in 2019 and beyond. Now let me turn the call over to Bill for more detail on product highlights.

Bill Meury -- Chief Commercial Officer

Thanks, Brent. Slide 10 is a product-level sales analysis for the fourth quarter ranked in terms of sales growth versus prior year. We had another solid quarter with double-digit sales growth for a number of our major products. Botox, Vraylar, Juvéderm and Lo Loestrin were standouts in the quarter.

Other key brands, including Ozurdex, Alloderm and CoolSculpting, had lower growth rates for the quarter and the year, which I'll discuss shortly. The core business is in an excellent position as we start 2019. At the bottom of the graph, and as expected, total sales growth was impacted by products already facing loss of exclusivity, as well as Restasis sales decline, ahead of anticipated generic competition. Slide 11 reflects full-year sales results for our top eight or flagship products.

These products account for over 50% of the core business and most of our growth. Collectively, sales for these products increased by $1 billion -- approximately $1 billion in 2018, and six of the eight increased by 10% or more versus prior year. Botox was the biggest growth contributor, and Vraylar was the fastest growing. The fundamentals for each one of these businesses are strong for 2019.

Now I'll touch on our key therapeutic areas, starting with our largest one, medical aesthetics. Turning to Slide 12. For the full-year 2018, sales for medical aesthetics were up 13%. Sales for Botox Cosmetic, Juvéderm and Alloderm were very strong and up 14%, 12% and 18%, respectively, and drove the majority of our aesthetics business growth.

Sales of Alloderm were well above expectations, driven by more product utilization per surgery. Sales in the fourth quarter, however, were impacted by constraint for donor material. We anticipate donor capacity to increase during the course of 2019 and that sales will continue to grow. For the full-year 2018, sales for CoolSculpting globally were up 6.3% pro forma.

Consumables sales, which represent 64% of the total, were up 12%, both in the United States and internationally for the year. System sales declined 2% due primarily to price in the United States. Importantly, we added almost 1,200 systems in the United States, representing a 24% increase versus the prior year. In 2009, we estimate sales growth for CoolSculpting will be driven primarily by consumable demand off of a much larger installed systems base and overall greater contribution from our international business.

We estimate roughly 50% of 2019 CoolSculpting growth will come from International and 50% from the U.S. By way of comparison, in 2018, International sales for CoolSculpting represented only about 1/3 of total growth. We will also be launching a new body contouring system in the United States in the fourth quarter of 2019 called CoolTone. This is the first of three new systems that will create the most comprehensive body contouring solution in aesthetics to address fat reduction, which is the foundation of treatment; and muscle toning and skin tightening.

Our CoolTone device is complementary and will be marketed alongside CoolSculpting. In 2019, our primary focus for medical aesthetics is maintaining our market leadership and expanding the category, and we've taken the following steps to maximize sales. We've expanded our field forces for facial injectables and body contouring by 20% to drive better and broader customer coverage. We have significantly increased the scale of our consumer and digital marketing programs, including new consumer campaigns for both Botox, which launched yesterday, and Juvéderm, which launched in October.

We plan more injector and CoolSculpting training programs than we did in 2018. And finally, we expect to launch a new customer service portal in the first quarter, which will make doing business with Allergan even more efficient. The fundamentals and outlook for this business continue to be very strong in 2019 and beyond. Turning to Slide 13 in CNS.

Our flagship products, as you know, are Botox and Vraylar. Sales for Botox were up 13% and were ahead of expectations. Growth was coming from all indications: migraines, spasticity, NOAB and across all channels. I want to take a moment to talk about the impact of new products on Botox, specifically in migraine.

No different from the last quarter, we've not experienced a visible impact on Botox demand from any of the approved CGRP monoclonal antibodies. The branded migraine prevention market has nearly doubled since the launch of Aimovig, and we have a 50% share of new patients with Botox. As I've talked about before, we expect Botox and CGRP antibodies to coexist in a much larger market. And we expect the growth rate in '19 will be at least in the mid- to high single digits.

We estimate today that only 2% of Aimovig patients were switched from Botox, and it appears that combination use is also limited at this time. Finally, medical benefit coverage for Botox in 2018 was broad, and we expect the same in 2019. The underlying growth of this business is volume based. Sales for Vraylar in '18 totaled $487 million, up 69%.

This product continues to exceed expectation on every metric, including prescribers, prescription levels and formulary coverage rates. And our consumer campaign is producing exceptional returns. The growth catalyst for Vraylar in '19 is the anticipated new indication for bipolar depression, which is currently under review at the FDA. Over time, this is projected to be one of the most important products at Allergan.

Turning to Slide 14 on eye care and GI. In eye care, full-year revenues for our glaucoma business were stable on a year-over-year basis. Ozurdex sales declined 6%, impacted by a product recall. We expect to fully resolve the supply situation in the second quarter.

U.S. sales were up 13% versus prior year. Restasis prescription demand was stable year-over-year. This was offset by lower average selling price and lower trade inventory levels.

Turning now to GI. Sales for our IBS line, Linzess and Viberzi, totaled $963 million. Underlying prescription demand for Linzess in 2018 was very strong at 13% versus prior year. This was partially offset by lower average selling price, resulting in a net revenue gain of 9% versus 2017.

The outlook for this business is positive, with OTC conversion being the primary source of growth. We have a strong following in both GI and primary care, very high consumer awareness and widespread formulary coverage. And we will continue to invest in Linzess, alongside our partner, Ironwood, to maximize sales and profitability. Sales for Zenpep in 2018 were up 12%, and growth was coming from increased utilization in the GI segment and from our highest dose.

Zenpep is expected to be a solid growth contributor again in '19. Turning to Slide 15. Our International sales were up 6% in 2018. The growth drivers were Botox Cosmetic, JuvéDerm and CoolSculpting, as well as Botox Therapeutic, which were partially offset by the recalls of Ozurdex and textured implants.

Excluding these events, International sales grew 9% for the full year. The Asia Pacific/Middle East/Africa regions continue to be the most important growth drivers for us, and the outlook for the International business is very strong. And with that, let me turn the call over to David.

David Nicholson -- Chief R&D Officer

Thank you, Bill. 2018 was another important year for the R&D organization. As highlighted on Slide 17, we've progressed our pipeline in all four of our key therapeutic areas. We have positive data readouts from several late-stage programs.

For cariprazine, we reported positive Phase 3 data and have a regulatory submission under review for the bipolar depression indication with an FDA action date in May. We have also initiated additional clinical studies for cariprazine as an adjunctive treatment in major depressive disorder. For ubrogepant, our oral CGRP inhibitor for the acute treatment of migraine, we reported positive data from two Phase 3 efficacy and safety studies, a long-term safety study and also a safety study in healthy volunteers. We expect a regulatory filing in -- with the FDA very soon.

For atogepant, our oral CGRP inhibitor for the prevention of episodic migraine, we reported positive data from a Phase 2/3 study and have a Phase 3 study in episodic migraine, as well as the requisite long-term safety study ongoing. We will initiate Phase 3 studies in chronic migraine in the first half of the year. For Bimatoprost SR, we have reported data from two positive Phase 3 studies, and I will be providing some additional details on this program later in the call. For abicipar, we reported and presented data from two positive Phase 3 studies and expect to report data from the ongoing Maple Study in the first half of this year.

This study evaluates a further-optimized formulation. For Brimonidine DDS in geographic atrophy, we reported and presented positive Phase 2 data in 2018 and expect to initiate Phase 3 studies in the second half of the year. Our Rapastinel Phase 3 program for major depressive disorder is ongoing, and we expect to report in the first half of the year top-line data from three studies of Rapastinel in the adjunctive setting, as well as data from a relapse prevention study. Separate Phase 3 studies of Rapastinel as monotherapy in major depressive disorder are either under way or about to commence.

We also have a Phase 2 study of Rapastinel for suicidality in major depressive disorder ongoing. AGN-241751, our oral NMDA modulator, is in Phase 2 clinical development for MDD. This agent received fast track designation from the FDA. Turning to Slide 18 on Bimatoprost SR.

Here, we have reported data from two positive Phase 3 data studies. Bimatoprost SR is a first-in-class, biodegradable, intracameral implant providing slow release of bimatoprost, a differentiated approach to treat glaucoma beyond daily eye drop treatments. While drops are effective, compliance remains a big challenge and results in suboptimal outcomes for patients. Our U.S.

Phase 3 program provides two identical studies, each enrolling over 500 patients with open-angle glaucoma or ocular hypertension. They were randomized to receive either Bimatoprost SR or Timolol. Over the 12-week primary efficacy period, Bimatoprost SR reduced intraocular pressure by approximately 30%, easily meeting the predefined criteria for noninferiority to the study comparator, Timolol, in both studies. Importantly, both the studies demonstrate the potential for the majority of patients to remain treatment-free for at least one year after their last of three implants was inserted at four monthly intervals.

In both studies, Bimatoprost SR was well tolerated by the majority of the patients. Based on these positive data, we plan to make a regulatory submission with the FDA in the second half of 2019. Turning now to Slide 19. As you heard from Brent, 2019 is shaping up to be another critical year for pipeline progress and data readouts.

Summarized here are some of the key events we anticipate this year and beyond. We plan to make significant advances in late-stage programs across all four of our key therapeutic areas. In addition to the important developments in the pharmaceutical pipeline, we are also making significant progress with innovation in medical aesthetics, including the anticipated launch of CoolTone in the fourth quarter of 2019. Before I turn the call over to Matt, I would like to take a minute to highlight both our pharmaceutical, as well as our device pipeline.

Turning to Slide 20. Our pharmaceutical pipeline has over 45 programs in various stages of development. With 13 programs in Phase 3, including innovative earlier-stage programs in the areas of medical aesthetics, genetically validated targets, gene editing, optogenetics and the microbiome. Whilst all of these programs may be successful, we have depth across all our therapeutic areas.

Turning to Slide 21. On the device side, we have 30 programs in development. The majority of these programs enhance our medical aesthetics portfolio and include a new line of facial fillers. As always, I thank my colleagues in R&D for their hard work, as well as the physicians and especially the patients who participate in our clinical trials.

With that, I would now like to turn the call over to Matt.

Matt Walsh -- Chief Financial Officer

Thank you, David. Turning now to the key financial highlights on Page 23. Fourth-quarter results exceeded the high-end of guidance that we provided last quarter, both for revenue and non-GAAP performance net income per share. Net revenues for the fourth quarter were $4.08 billion, a 5.7% decline compared to the prior-year period.

In addition to the impact from LOEs and divesting the medical dermatology business, fourth-quarter results also faced a challenging comparison to the prior-year period, which happened to be a very strong quarter. Net revenues for the full-year were $15.8 billion, a narrower 1.1% decline versus prior year. Foreign currency translation created a 1.3 percentage point growth headwind for Q4, but had a de minimis impact on fiscal year revenues.In the fourth quarter, the core business grew 3% year-on-year on a reported basis and 4.5% at constant currency. We saw three near-term headwinds, which impacted results in total, though none were significant individually.

First, the Ozurdex recall, which occurred in Q3 and carried into Q4. And second, the recall of textured implants in certain international markets; and third, the negative impact from foreign exchange translation. Normalizing for the impact of these near-term headwinds, the underlying core business growth was 6.4% at constant currency, which more closely aligns with the strong core business growth realized in prior quarters. For fiscal year 2018, the core business delivered over $1 billion in revenue growth, offsetting almost the entire $1.2 billion of revenue decline from LOEs.

Strong performance in the promoted brands with ongoing exclusivity, together with all other revenues, drove 6.9% core business growth. This figure represents true organic growth, and it excludes benefits of the 2017 acquisitions of CoolSculpting and regenerative medicine, as well as the impact of foreign exchange translation. Now moving to the -- now moving to margins in the middle of the page. Fiscal year operating margin of 47.9% aligned closely to prior year as the impact of lower operating cost due to restructuring essentially offset a 1 percentage point decline in gross margin, which was driven by product mix and, to a lesser extent, the product recalls just discussed.

You can also see that our fourth-quarter operating margin declined 330 basis points as compared to a very strong result in the prior-year period. The decline was due to lower revenues, as previously explained, and also the phasing of both R&D and SG&A spending, which were more heavily weighted to the fourth quarter, in part due to reinvestment of Restasis profits back into the core business to fund growth initiatives. Moving to the lower section. Non-GAAP performance net income per share in the fourth quarter declined 12%, reflecting the revenue and margin issues just described.

On a full-year basis, our fiscal year 2018 non-GAAP performance net income per share increased 2% versus prior year as the decline in non-GAAP performance net income was more than offset by lower share count due to buybacks that we executed throughout the year. On Slide 24, you can see a more complete look at our key P&L line items for the fourth quarter and the full year as compared to prior year. I've already covered most of the highlights, but a couple of additional items to touch on. Net interest expense improved in both Q4 and the full year, largely due to lower average debt balances as we continue to reduce debt.

Net interest expense was further reduced as a result of our 2018 leverage neutral refinancing, which we undertook to optimize the currency mix of our total debt. Not otherwise mentioned on the slide is the GAAP accounting item for which I'd like to provide some color. We monitor goodwill and intangible assets for indicators of impairment each and every quarter. This quarter, we recorded a GAAP impairment charge of $5.4 billion, with the key drivers being a $1.6 billion intangible asset impairment related to Kybella and a $3.5 billion impairment related to goodwill of our U.S.

general medicine segment, a portion of which was allocated to our anti-infectives business, which is now classified as held for sale as a result of the advanced status of the sale process, which Brent covered at the outset of the call. Turning now to our fourth-quarter performance versus prior year by reporting segment on Slide 25. U.S. specialized therapeutics revenue decline of 3.9% was mainly due to lower Restasis, as well as lower sales of the divested med derm business.

Contribution margin also decreased 350 basis points due to the revenue decline, coupled with higher sales and marketing expenses, which were in part driven by timing. U.S. general medicine continues to be the segment was impacted by LOEs, as reflected by the revenue decline of 8.4%, which more than offset the strong performance of Vraylar and Lo Loestrin. Contribution margin increased 140 basis points as the impact of lower revenues was more than offset by a favorable partnership true-up credit on Linzess and expense savings from restructuring.International revenue decline of 5% was significantly impacted by foreign exchange translation, as well as the impact of recalls.

At constant currency, revenue grew 1% versus prior year, which expands to 8.5%, excluding the impact of Ozurdex and textured implants. Contribution margin was also impacted by the same issues, resulting in a 310 basis point decline versus prior year. Turning to Slide 26. You can see on the left, operating cash flow on a last 12-month basis for each ending period.

In the fourth quarter, operating cash flow was strong at $1.5 billion, driving our fiscal year 2018 operating cash flow to $5.6 billion, which was above our prior guidance. On the right, our capitalization table shows the disciplined actions taken toward capital deployment and return of capital to stakeholders. Couple of points to make here. We ended the year with total debt of $23.8 billion after paying down $6.2 billion or approximately 21% of debt outstanding at the start of the year.

Gross and net leverage ratios are down to 3x and 2.8x, respectively, as of December 31. On share buybacks, we repurchased a total of $2.7 billion in 2018, including $750 million completed during the fourth quarter. We have $800 million remaining under the 2018 $2 billion share buyback authorization. And as we announced this morning, our board just recently authorized a new $2 billion share buyback program, which we expect to deploy similarly, and that is with the priority on offsetting dilution created by long-term incentive plans, as well as potential earnings dilution from asset divestitures that we may complete.

Our capital allocation priorities continue, as stated previously. First, reinvestment in our business for growth in our four key therapeutic areas. Second, debt reduction, which is important in the context of the anticipated loss of Restasis exclusivity. We continue to pursue a target net leverage ratio of 2.5x by the end of 2020, and we will maintain our commitment to an investment-grade credit rating.

Three, funding the current dividend and prudently growing that dividend annually as the performance of our business allows. And last -- and finally, share buybacks, as we just talked about. Moving now to Slide 27, our 2019 guidance. Let's start with net revenues.

We expect fiscal year 2019 net revenues to be between $15 billion and $15.3 billion, which assumes Restasis exclusivity through March 31. This revenue guidance also includes anticipated headwinds previously discussed related to Ozurdex and textured implants in certain international markets, as well as industrywide pricing pressures and foreign exchange translation headwinds. We expect non-GAAP gross margin for 2019 to be between 85% and 85.5%, reflecting the impact of product mix, including the anticipated Restasis LOE. Our non-GAAP SG&A expense is expected to be between $4.1 billion and $4.3 billion, which supports continued investments in key long-term growth drivers within the core business.

We expect non-GAAP R&D expense to be between $1.6 billion and $1.7 billion, which reflects increased investment in our pipeline, as we continue to advance key programs in clinical development, as you just heard from David. Net interest expense/other of approximately $800 million reflects interest savings from debt reduction, but also lower interest income from reduced cash balances relative to 2018. Our non-GAAP effective tax rate in 2019 is expected to be between 13% and 13.5%. And our average 2019 share account is forecasted to be approximately 332 million shares, which assumes completion of the remaining $800 million under the 2018 $2 billion share buyback authorization.

As a result, and as previously committed, we expect full-year 2019 non-GAAP performance net income per share to be greater than or equal to $16.36. And please note that any significant asset divestiture, should they be completed, will be dilutive enough to non-GAAP performance net income per share, and we would have to revisit this and most of the other metrics for which we provide guidance. Continuing down the page, reported cash flow from operations for 2019 is expected to be between $5 billion and $5.5 billion with the key assumptions being Restasis exclusivity through March 31 and success-based development milestones premised upon 100% achievement. In line with our previous commentary, we will continue to provide quarterly guidance until there is a Restasis generic entrant.

So for the first quarter of 2019, we expect total reported net revenue between $3.4 billion and $3.55 billion, as most of the revenue pressures in 2019 we've discussed are more heavily weighted in the first half of the year and non-GAAP performance net income per share between $3.40 and $3.60, which reflects a more even phasing of operating expenses throughout the year.Then wrapping up the financial discussion, we finished 2018 with solid results. Our core business drivers continue to deliver strong growth. We've rightsized the business to absorb the impact of LOEs and other headwinds, all of which positions us well to achieve the targets we've set for ourselves in the coming year. And with that, I'll turn the call back to Brent.

Brent Saunders -- Chairman and Chief Executive Officer

Thank you, Matt. We are pleased with our performance and progress we achieved in 2018. Looking into 2019, we are taking off from a position of strength and expect another year of rapid progress and execution. I'm excited about the future of Allergan and its potential for long-term value creation, which will be driven by our product lines and development of our highly promising pipeline across all four key therapeutic areas.

I would like to thank talented and hardworking Allergan colleagues around the globe who are driving our strategy forward. I'd now like to turn the call over to the Q&A section. Operator?

Questions and Answers:

Operator

[Operator instructions] Your first question is from Chris Schott with JP Morgan.

Chris Schott -- J.P. Morgan -- Analyst

Great. Thanks very much for the questions. I guess, my first one is just on CoolSculpting dynamics in 2019. I guess, two parts here.

First, I know you -- we -- you said we should expect consumable-driven growth. But should we still think about system sales declining as we go through '19? And can you also, on that same topic, just some additional color on the growth drivers internationally? Is there any markets in particular we should be thinking about there? My second question, which is on U.S. BOTOX Therapeutic as we move into 2019. Hello?

Brent Saunders -- Chairman and Chief Executive Officer

Chris, go ahead.

Chris Schott -- J.P. Morgan -- Analyst

I guess my question there. Are you just -- are you more confident in your outlook for growth there now that we've seen a few quarters of the CGRP launch? Or is it still too early to tell at this point?

Brent Saunders -- Chairman and Chief Executive Officer

Great. So Bill, you want to take this?

Bill Meury -- Chief Commercial Officer

Yes, Chris. As it relates to CoolSculpting and the outlook for 2019, I would expect that systems revenue over the next 12 months will trade in the mid-single digits and will be primarily driven by the International recovery, which, as you saw in the fourth quarter, was very, very strong. We placed a record number of systems in 2018. That's going to provide an important platform for consumable growth, which, I think, can trade in the double digits.

And then I would, again, keep your eye on that international business, which looks very good right now. And then, finally, the launch of the CoolTone system. And I think that pretty much covers the questions on CoolSculpting. As it relates to Botox Therapeutic, I thought about it this way.

There were two tests. The first test was 2018, and I think that we passed it. The growth rate in the quarter was 13%. The business looks very, very good.

But to be fair, there's a second test. And I think, by the second half of 2019, we'll have a better sense of how this migraine market is going to look. There's no question, when you look at the IMS data that the market is much bigger today than it was nine months ago. There's also no question that demand for Botox has been stable.

We didn't have a quarter in 2018 that was below 10%. And so I like the way it looks as we go into the year, and we'll provide an update on the next call.

Brent Saunders -- Chairman and Chief Executive Officer

Operator, next question?

Operator

Your next question is from David Maris with Wells Fargo.

David Maris -- Wells Fargo Securities -- Analyst

Good morning. On the Botox competition that's expected this year and next year, Brent, if -- what do you expect if Evolus is approved that its discount would be relative to your list price just to gain share? And does your guidance include the increased ad spending, as well as any sort of additional promotion that you'll have to do, if you do any, to combat this new potential entrant? Thank you.

Brent Saunders -- Chairman and Chief Executive Officer

Yes. So I'll take a stab at it, and then Bill, please feel free to add any commentary. Look, I think that with respect to our guidance, we have full -- fully baked in our increased spend to support Botox and anticipate -- anticipated competition in the marketplace. So that is completely within the numbers Matt provided.

With respect to discounting, I would tell you that if you looked kind of anecdotally at what happened during the Christmas season with discounting from the exist -- the already existing competitors on the marketplace, it was fairly significant versus the price of Botox. And so we have been competing against very steep discounted products for years, and Botox has done very well despite that. So I don't -- I can't speculate what they'll do, but I don't think there's a lot of room to be successful with just a pure discounting strategy. I don't know if Bill has anything else he'd add.

Bill Meury -- Chief Commercial Officer

Yes. The only thing I'd add, David, is, one, is it's not a zero-sum game. This market has as much growth potential as, I think, any market in healthcare. We don't view it as a market share battle at this point.

I don't think toxins are interchangeable. They are definitely similar, but in the hands of very large injectors. There are differences. And even if they're subtle, they're important.

I think there are two market segments here. There's the branded segment, which is essentially Botox and then there's a non-differentiated segment. And it's an efficient market. And over time, I don't think it's going to support more than three products.

It's not going to support four, five or six. I don't see why an aesthetic specialist would buy inventory and inject so many different toxins. And Botox has been a practice builder for these physicians. It's the only toxin that is requested.

And it's a gateway for physicians. And our focus is on maintaining it. And it's supported by the largest sales force in aesthetics, the largest training program in aesthetics and the only -- really, the only loyalty program in aesthetics. And so I think the outlook for this business over '19 and beyond is still very good.

Brent Saunders -- Chairman and Chief Executive Officer

Thanks, David.

David Maris -- Wells Fargo Securities -- Analyst

And just one follow-up. For the new Botox ad, I think, that came out today or recently and then the filler ad that came out in the fourth quarter, as those are rolling out, are you seeing patient acquisition that looks different from what you've had in the past? And I don't mean just the volume of patients, but the age grouping or gender. Or is it really just an expansion of what you already have? Thank you.

Bill Meury -- Chief Commercial Officer

It's a good question. Total patient acquisition is climbing. And the first place we see it is in our BD enrollment, which is up significantly since we launched the JuvéDerm campaign. But the age cohort for Botox has been trending younger and younger, given, as you know, this millennial movement.

In the past five years, the number of millenial users in aesthetics has tripled from our estimation just under 300,000 to over 1 million. I would say, in the next five years, millennials will be the largest consumer of aesthetics products and services, replacing the generation X. Thanks, David. Operator, next question.

Operator

Your next question is from Jason Gerberry with Bank of America.

Jason Gerberry -- Bank of America Merrill Lynch -- Analyst

Hi. Thanks for taking my questions. I guess, Bill, just a follow-up on CoolSculpting. Can you just comment where you think you're going in terms of additional hardware placements in the U.S.

market in the coming year? And how quickly are you getting a turnaround on that investment or, what I call, an investment right in terms of offering it at a lower price to your end customer? And then my second question is just on U.S. drug pricing. Realizing that your recent pricing increases were in line with your prior company pledge, I'm just kind of curious. We're seeing the industry pivot to more mid-single-digit list price increases.

And so just curious, Brent, to get your comments on, is this sort of where you think the industry is headed in terms of further kind of compression around list price dynamics? Thanks.

Brent Saunders -- Chairman and Chief Executive Officer

Yes. So maybe I'll take the drug pricing question and turn it over to Bill for the CoolSculpting question, Jason. Look, I think with respect to drug pricing, we have anticipated for years now that price would not be a lever that could be pulled by this industry. And in fact, we did memorialize that in our social contract a couple of years ago and changed our strategy several years ago to focus on more innovative pipeline developments across our therapeutic areas.

When you look at price, and this is consistent and -- of how we thought about it last year, this year and over the next several years, it's basically a nonfactor, right? We saw no price appreciation on a net basis in '18. We anticipate no price appreciation on a net basis in '19. And we baked no price appreciation into our outlook on a go-forward basis. So I think the facts support what our assumption was a few years ago, which is price was not going to be a growth driver in any way, shape or form in this industry, not unique to Allergan, but across the entire industry, as you would expect it to.

So we kind of don't think about price, essentially.

Bill Meury -- Chief Commercial Officer

As it relates to the CoolSculpting, we -- as I said, we placed a record number of systems in '18, which was roughly 1,200. I think we could trade right around 1,000 in 2019. We did have some choppiness, as you saw, in the third and fourth quarters. But look, we've just -- I think we've just scratched the surfaces of body contouring market.

Over time or since the introduction of CoolSculpting, we've treated roughly 1.5 million people. And based on countless number of surveys that we've done, we estimate that there could be 30 million or 40 million people who are aesthetically minded and interested in a fat-reducing-type treatment, like CoolSculpting. And so I think the runway here is still very, very good. I think the launch of CoolTone and any other new system that we introduce over the next several years, and we have two other, which I would call 3.0 and 4.0, this business has the potential to grow at a nice, steady rate.

Brent Saunders -- Chairman and Chief Executive Officer

Thanks, Jason. Operator, next question.

Operator

[Operator instructions] Your next question is from Marc Goodman with SVB Leerink.

Marc Goodman -- SVB Leerink -- Analyst

Good morning. First question is on the revenue guidance for 2019. It just seems a little weaker than we were expecting. And I would -- you mentioned some of the issues, but I was hoping you could help quantify it.

Like how much is FX impacting? How much is the breast aesthetics issue impacting Ozurdex impacting? And then second of all, Dave, maybe you could just talk about cariprazine in depression. What studies have been done? What needs to be done? Just give us the time lines on that, so we can have an understanding there. And then on ubrogepant data at a medical meeting, when can we be expecting to see that for the long-term safety data? Thanks.

Brent Saunders -- Chairman and Chief Executive Officer

Great. Thanks, Marc, Matt, you want to take the first revenue guidance?

Matt Walsh -- Chief Financial Officer

Sure, sure. So for our 2019 guidance, let's start out by noting that the core business will be growing on the same order that we saw in 2018. So that 6.9% growth in the core business that we realized in 2018, that will roll forward into 2019 in excess of 6%. It'll add about $1 billion of top-line growth.

We're expecting about $1.4 billion of LOEs. And then the other issues related to the near-term headwinds, I'll try and dimensionalize those a bit for you in terms of how they were incorporated into our planning. So for textured implants, we had said that the international market for textured implants was about $60 million. As we incorporated that into our planning for 2019, we've expanded that a bit to include some knock-on effects in other ex U.S.

market. So that's about $100 million relative to what our normalized expectation for 2019 would have been. Ozurdex is about half that. Let's call it about $50 million.

And pretty importantly, FX translation will be impacting us relative to 2018. That enumerates to about $150 million. But I'd just close out by saying that the core business will be delivering growth aligned with what we saw in 2018.

Brent Saunders -- Chairman and Chief Executive Officer

So David, you want to cover cariprazine in MDD?

David Nicholson -- Chief R&D Officer

Yes, ubrogepant. Yes, happy to do that. Yes, so with cariprazine as adjunctive treatment for MDD, we already have one positive study. Late last year, we initiated two more, so we're presently enrolling patients in two more adjunctive MDD studies.

Enrollment is going well. We anticipate enrollment being completed by mid-'21, but that obviously depends on recruitment rates. You also asked about ubrogepant and when we'll be presenting the additional data. We're planning to make presentations on ubrogepant at the -- at AAN, at the Headache Association, as well as the International Headache Society.

We are in the process of submitting abstracts. And exactly what data we present will obviously depends on approval and acceptance of the abstracts. But we will be making presentations at all three of those major meetings during the course of this year.

Brent Saunders -- Chairman and Chief Executive Officer

Thanks, Marc. Operator, next question. Operator?

Operator

Your next question is from Vamil Divan with Credit Suisse.

Vamil Divan -- Credit Suisse -- Analyst

Hi. Great. Thanks for taking my questions. So a couple I have here.

One, just on the impairment charge you took. I know you mentioned $1.6 billion was related to Kybella and then $3.5 billion was goodwill, $622 million is what I think was for anti-infectives. Can you just parse out the rest of that goodwill impairment because a pretty large delta between that and the anti-infectives, one? And then second one I have was on Rapastinel. I'm just trying to get your perspective on -- I know you have the data coming up from the acute studies in the first half of the year and I'm trying to get a sense of how important that data is as you think about the outlook of that product.

We've been highlighting it as a potential important catalyst, important data set, but I noticed in your press release you didn't sort of list it under your key development when you listed out your key pipeline updates for milestones for 2019. So just want to make sure we're not overstating that and to wait for the longer-term data there. Thanks.

Brent Saunders -- Chairman and Chief Executive Officer

Great. So you want to talk about, Matt, the impairment?

Matt Walsh -- Chief Financial Officer

Yes, sure. So the impairment of goodwill really relates to the gen med segment as a whole. And so for accounting purposes, because of the held-for-sale status of anti-infectives, a portion of that had to be allocated to that business. But really, what we're looking at is an adjustment to the carrying value of the entire segment.

It's not done on an individual asset-by-asset basis.

Brent Saunders -- Chairman and Chief Executive Officer

OK. With respect to Rapastinel, I'll give you my two cents, and David, feel free to chime in. Clearly, it is an important development. We have about five programs for Rapastinel or studies ongoing for Rapastinel.

And concluding all of them and getting the data is an important milestone for us. I'd put that in the context of the category, which is there is a tremendous need for a novel and rapid-onset antidepressant. And so not only for Allergan, but for patients, this is and could be a very important advance. So we're very interested in seeing those results later in the first half of this year.

We also have 13 other Phase 3 programs that we're equally excited about. And so it's like trying to pick your favorite child, but all of them are important to us. And I'm not sure I would read anything into the press release as trying to diminish the importance of any one of these late-stage programs. David, anything you'd like to add?

David Nicholson -- Chief R&D Officer

No, I think you covered it, Brent. Yes, it's good.

Brent Saunders -- Chairman and Chief Executive Officer

Great. Thank you.

Vamil Divan -- Credit Suisse -- Analyst

OK, thank you.

Operator

Your next question is from Ronny Gal with Bernstein.

Ronny Gal -- Bernstein -- Analyst

Hi. Good morning. And thank you for taking my questions. Three, if you don't mind.

The first one around Botox neurology. I understand the statement about the success there in maintaining the growth of the franchise. But can you take us a little bit deeper? I mean, you've got -- it's over 100,000 patients have begun to use anti-CGRP this last quarter. How come Botox is not being hit? Is it being served to a different group of physician, different channels? Are patients being presented with the option of using the CGRP using Botox instead? Is it people who'd failed or not eligible for anti-CGRPs? It's just trying to understand if this is some sort of a data fluke or actually there's something you can point to that makes this more sustainable.

And second, and it's a second commercial question, is you have multiple questions with very, very high gross to net. Now you can significantly reduce the amount of money paid to the channel if you reduce the list price of some of those products, especially in eye care. I was kind of wondering how you think about the gives and takes of reducing list price on some of those products. And is this something that we could potentially see in 2019?

Bill Meury -- Chief Commercial Officer

Yes. Thanks, Ronny. As it relates to Botox and neurology, first of all, I think if you look at the IMS data, I think it has a new name now because they were required. There's -- yes, IQVIA.

There's nearly 200,000 new patients that have been placed on the CGRPs and mostly Aimovig. At least. That's -- you can ask the management teams at Amgen, Teva and Lilly, but that's at least my take on it. And the reason why I think you haven't seen a material impact on Botox is fairly straightforward.

First of all, half of those 200,000 patients have episodic migraine. And so they're really not in our universe of users. You can see that in the IQVIA data, too. Next is think about the large off-label market for the prevention of migraine.

You have literally over 15 million prescriptions being written between products, like Topamax or generic topiramate, TCAs and beta blockers. And so if you look -- although this data is not perfect, if you look at the IMS data, you have roughly 70% of use for CGRPs, it appears to me, coming from new patients, continuing patients and then switches from generic agents, like topiramate. And so it's not surprising that you have Botox coexisting in the market with the CGRPs. And to be fair, what I think is most reassuring, as we think about Botox long term, is that with the number of new patients for the prevention of migraine, the branded prevention of migraine nearly doubling, the CGRPs, to a certain extent, become a gateway to Botox.

And I suppose the reverse is true. And when you look at the data on Botox, the effect of Botox on migraine in terms of prevention of migraine days on a monthly basis can't be beat by any of the CGRPs. And it's a -- and the benefit-risk ratio of Botox is pretty well characterized. And so like I said, there are two tests.

Year '18 was the first one. And I think the second -- the first half of 2019 is the second one. It's too early to call this, but the business looks very healthy right now.

Brent Saunders -- Chairman and Chief Executive Officer

And I would just underscore the one point Bill made, Ronny, which is while the CGRP antibodies are clearly a good advance -- a needed advance for migraine sufferers, to the Wall Street community, they're new and they're exciting. But to the headache specialists that I interact with and Bill interacts with, it's just another tool. They don't view it as superior to Botox. And so we should keep in mind, while the pharmaceutical industry and the people who follow the industry are excited about a novel new entrant, the clinical implication is just another tool, a good tool but just another tool.

And so they will select for their patients as they feel appropriate between the two therapies.

Bill Meury -- Chief Commercial Officer

And then as it relates to your question on eye care and pricing, look, you know that pricing and discount dynamics are fairly complicated. There are multiple stakeholders involved. It's going to take time to figure out. What I'm focused on right now is that we have a pretty good handle on our discount rate in eye care as we look out to 2019.

And then when I look at the pipeline, which will be abicipar, Bimatoprost SR, the bim ring, I think those products are going to be easier to price than the products that we have in the market today. And that's how I think about it for now.

Brent Saunders -- Chairman and Chief Executive Officer

Thanks, Ronny. Operator.

Operator

Your next question is from David Risinger with Morgan Stanley.

David Risinger -- Morgan Stanley -- Analyst

Yes. Thanks very much. So Brent, could you just discuss a little bit how you're thinking about bigger-picture strategic optionality longer term? Some investors are convinced that the best course for the company is ultimately to have the attractive, high-value portfolio as part of a higher-valued company and the lower-valued assets elsewhere. Just wondering if that's still something that might be possible down the line.

And then, Matt, could you just comment on the IRS proposal to close the tax loophole related to intercompany loans and how we should think about the risk to the tax rate going up longer term? Thank you.

Brent Saunders -- Chairman and Chief Executive Officer

Yes, sure. Thanks, David. Look, our focus at Allergan is to really have winning strategies for our four core therapeutic areas: medical aesthetics, CNS, eye care and GI. I think I covered that well in the prepared remarks, both in our capabilities in those areas, as well as our current portfolio of products and our bench of late-stage and mid- to the early stage pipeline products.

So we feel reassured about our ability to compete for the long term in all four of those. Our board is constantly thinking about strategic alternatives and value-creation moves. We do that on a regular basis and, very specifically, on an annual basis in a more formal way. Right now, our strategic direction is quite clear, as I just outlined.

But as the industry develops, and as we develop within the industry, we're always thinking of what's the right move for our shareholders for the long term. So anything is always possible.

Matt Walsh -- Chief Financial Officer

And on the tax part of your question, David, so to state the obvious, Allergan, like all taxpayers, is subject to the rules that you mentioned. These have been a long time coming. They're not a surprise. So we've been orienting our tax planning appropriately for some time.

So -- including the new December proposed regulations. So our tax rate at 13% to 13.5% for 2019 incorporates all of that already.

Brent Saunders -- Chairman and Chief Executive Officer

Great. Operator, next question.

Operator

Your next question is from Seamus Fernandez with Guggenheim.

Seamus Fernandez -- Guggenheim Securities -- Analyst

Great. Thanks for the question. So can you guys just talk a little bit about Rapastinel and your plans for revealing the data? Do you have any data in-house yet? And if not, what's the plan for revealing the data? Should we expect multiple press releases with each trial? Or is the plan really to bring in all of the data at one and then reveal multiple trials simultaneously? And is that what we're likely to see later in the first half of this year, as you mentioned? And then just a quick second question. Haven't really had many questions on the GI biz.

Can you guys just give us your sense of the key drivers to the GI biz -- business near term and then longer-term with the two main Phase 3 pipeline assets that are rolling through the pipeline?

Brent Saunders -- Chairman and Chief Executive Officer

Sure. David, you want to cover Rapastinel?

David Nicholson -- Chief R&D Officer

Yes, sure. Thanks for the question, Seamus. Yes, look, the three acute maintenance on the open-label trials have completed enrollment. That's all on clinicaltrials.gov.

And we are absolutely on schedule and plan to have the top-line results in the first half of the year. If the studies are coming close enough to each other, we're going to top-line result, all three at the same time. If, for whatever reason, they end up being spread far apart, then we will outline them separately.

Brent Saunders -- Chairman and Chief Executive Officer

Yes, which is essentially our policy within Allergan. If close in time, we bundle them. And if there's a substantial difference between the time that the multiple studies read out, we do them individually. It's quite conventional in the industry to do it that way.

David Nicholson -- Chief R&D Officer

Yes.

Brent Saunders -- Chairman and Chief Executive Officer

Bill, you want to talk about the GI?

Bill Meury -- Chief Commercial Officer

Yes. Listen, in terms of the marketed products, I would -- we have really four: Linzess, Viberzi, Carafate, and Zenpep. I would take Linzess and Zenpep and put that into the growing bucket and then Viberzi and Carafate into the stable bucket. Clearly, of the four, Linzess is the flagship.

I think the underlying prescription demand for that business is very, very reassuring, despite some of the pricing headwinds that we're facing. We had a very, very good quarter, both in terms of underlying prescription growth and top-line growth. And the partnership with Ironwood continues to be very productive. And then when you look at the pipeline, I think it's a little underappreciated right now because we're in the middle of Phase 3, and we need data.

Brazikumab is an IL-23 biologic for IBD, Crohn's and ulcerative colitis. And we're doing head-to-head studies versus Humira and versus Stelara. And so if those studies are positive, it should be a significant contributor in the future. Relamorelin is probably the most potent prokinetic on the market for gastroparesis.

And again, that's in Phase 3. There's really nothing available for gastroparesis. You could look to Reglan or Propulsid as the last two pro-motility agents, both very successful commercially. We have to produce more data.

And then of course, we have the CVC program, which we'll report out toward the end of 2009 -- 2019, 2020 -- or excuse me, beyond that. And that's also very interesting. And so we're building a bridge, I would describe it, from the market of products today, which are in a good position to a pipeline that could be very promising.

Brent Saunders -- Chairman and Chief Executive Officer

Great. I think we have time for one or two more questions. Operator?

Operator

Your next question is from Umer Raffat with Evercore.

Umer Raffat -- Evercore ISI -- Analyst

Hi. Thanks so much for taking my question. I realize there's been a few questions on Rapastinel, but I just want to clarify. Have you guys not had any Phase 3 report internally yet? And should we expect volatility and variability between depression trials as we've seen with other programs? And then Bill, just very briefly on Linzess.

Do you see commercial dynamics evolving once Trulance starts leveraging Celexa's portfoliowide rebating structures?

Brent Saunders -- Chairman and Chief Executive Officer

David, do you want to?

David Nicholson -- Chief R&D Officer

Sure. Yes. So regarding Rapastinel, as I mentioned in answer to the previous question, yes, we expect to be able to top line the results in the first half of 2019. Thanks for your question about the variability of depression studies.

Look, we -- certainly, with the monoamines modulators, the -- which are effective antidepressants, the ability to distinguish those agents from placebo in clinical trials is a well-known issue with a smaller proportion of well-controlled clinical studies actually demonstrating a significant difference between the active drug and the placebo. Clearly, as we move into the -- into a new mechanism of action, we still anticipate large placebo effects in the trials. Whether or not it's going to be more difficult to distinguish the activity of agents, like Rapastinel, with other mechanisms of action, the monoamines modulation from placebo, time will tell as we roll out the data.

Bill Meury -- Chief Commercial Officer

And then Umer, as it relates to Trulance, I don't see it as a threat. Linzess has got two indications, three doses, formulary coverage that took us eight years to build. We have over a thousand people promoting it, and we spent tens of millions of dollars in direct-to-consumer advertising. And I don't want to minimize the impact of an alternative, but I can't imagine Trulance is going to be relevant to Linzess in '19 or any year after that.

Operator

Your next question is from Liav Abraham with Citi.

Liav Abraham -- Citi -- Analyst

Good morning. Thanks for fitting me in. A couple of questions. Firstly, on Botox aesthetic growth in 2019, growth in Botox aesthetic was very strong in 2018 at double digit.

What assumptions do you have in your guidance on Botox aesthetic in 2019 given the impact from a potential new competitor? Do you still anticipate that double-digit growth can be maintained? And then secondly, maybe forgive me, Matt, for asking the question again, but I didn't quite understand your response to a previous question regarding the impairment charge on the general medicines business. What was the driver behind this fairly large charge? Can you be a little bit more specific, or repeat your answer? Thank you.

Brent Saunders -- Chairman and Chief Executive Officer

Great. So Bill, you want to talk about Botox?

Bill Meury -- Chief Commercial Officer

Yes. Liav, I would say that in 2019, you have a U.S. and an international business. Internationally, we should be trading in the double-digit range.

And in the United States, that could be a high single-digit to double-digit outlook.

Brent Saunders -- Chairman and Chief Executive Officer

Great. And Matt, do you want to cover the impairment driver for gen med?

Matt Walsh -- Chief Financial Officer

Sure. On the goodwill impairment, let's just quantify. The adjustment to the carrying value of that segment was on the order of 10%. And in our second-quarter Q, we disclosed that that was a segment that had among the lowest headroom for impairments of our reporting segments.

And then we ended the year with a enterprise value of the company given where the stock was trading that then caused that headroom to fall south of book value. And that was combined with a general increase in market interest rates, which raised our cost of capital for these calculations by about 1 point. So the adjustment relates more to those sort of macro issues than it does to any single individual asset or group of assets in the portfolio. It's just how the calculations are done.

Liav Abraham -- Citi -- Analyst

Thank you.

Brent Saunders -- Chairman and Chief Executive Officer

Great. So I'd like to thank everyone for participating in the call. We look forward to keeping you updated as the year progresses, and I'd like to thank our colleagues around the world for a very strong 2018. And we look forward to delivering another strong 2019.

Thank you, guys.

Operator

[Operator signoff]

Duration: 73 minutes

Call Participants:

Manisha Narasimhan -- Investor Relations

Brent Saunders -- Chairman and Chief Executive Officer

Bill Meury -- Chief Commercial Officer

David Nicholson -- Chief R&D Officer

Matt Walsh -- Chief Financial Officer

Chris Schott -- J.P. Morgan -- Analyst

David Maris -- Wells Fargo Securities -- Analyst

Jason Gerberry -- Bank of America Merrill Lynch -- Analyst

Marc Goodman -- SVB Leerink -- Analyst

Vamil Divan -- Credit Suisse -- Analyst

Ronny Gal -- Bernstein -- Analyst

David Risinger -- Morgan Stanley -- Analyst

Seamus Fernandez -- Guggenheim Securities -- Analyst

Umer Raffat -- Evercore ISI -- Analyst

Liav Abraham -- Citi -- Analyst

More AGN analysis

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