Endo Health Solutions
) fourth-quarter 2012 earnings (excluding special items) of $1.62
per share beat the Zacks Consensus Estimate of $1.56 and
increased 15.7% from the year-ago period. Earnings in the final
quarter of 2012 were boosted by lower costs.
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Revenues came in at $803 million in the fourth quarter of 2012,
flat year over year. Revenues were well short of the Zacks
Consensus Estimate of $808 million.
Full-year earnings came in at $5.02 per share, well above the
Zacks Consensus Estimate of $4.96 and 7% above the year-ago
earnings. Full-year earnings were in line with the guidance
provided by the company in Jan 2013. The company had guided
toward 2012 adjusted earnings at or below the low end of the
range of $5.00-$5.10 per share. Revenues climbed 11% to $3.03
billion in 2012, in line with the Zacks Consensus Estimate.
The Fourth Quarter in Details
Revenues were hurt by lower sales of Endo Health's painkiller
Opana ER (down 43%). Reduced sales of the drug were primarily
responsible for 1% decline in the quarterly sales of the Endo
Pharmaceuticals division (formerly branded pharmaceuticals) to
$454.9 million. Sales of oncology drug Vantas dropped 38% to $5.1
million in the reported quarter. Sales of Endo Health's key pain
drug Lidoderm increased 17% in the fourth quarter of 2012 to
We remind investors that in Aug 2012 the US Food and Drug
Administration (FDA) cleared
) generic version of Lidoderm. However, Actavis' agreement with
Endo Health prohibits the former from selling the drug prior to
Sep 15, 2013.
Sales in Endo Health's Qualitest (formerly generics) segment
climbed 7% year over year to $161.9 million in the final quarter
of 2012. However, segmental sales declined 2.5%. Fourth-quarter
sales were hurt primarily by the company's decision to recall
hydrocodone products. Consequently, there was a significant build
of back orders (worth approximately $15 million of sales). The
company intends to recapture a significant part of the back
orders in 2013.
Revenues from the American Medical Systems segment (formerly
devices) came in at $133 million in the reported quarter, down
6%. The segment has the following sub-groups: men's health (down
3%), women's health (down 18%) and benign prostatic hyperplasia
therapy (up 1%). Revenues from the HealthTronics segment
(formerly services) came in at $51.2 million, down 1%.
Adjusted operating expenses declined 22.5% to approximately $217
million. The decline was attributable to Endo Health's prudent
2013 View Backed
Endo Health maintained the guidance for 2013, issued by it in Jan
2013. The US-based diversified healthcare company continues to
expect adjusted earnings per share for 2013 in the range of
$4.40-$4.70 per share. The Zacks Consensus Estimate of $4.50 is
well within the guidance range provided by Endo Health.
The company continues to expect to end 2013 with revenues in the
range of $2.80-$2.95 billion. The Zacks Consensus Estimate of
$3.0 billion is above the company's projected range.
Endo Health currently carries a Zacks Rank #5 (Strong Sell). Not
all stocks are performing as poorly as Endo Health. Favorably
placed pharma stocks include
Avanir Pharmaceuticals, Inc.
). Both companies carry a Zacks Rank #2 (Buy).