Endo Health Beats on All Fronts - Analyst Blog


Endo Health Solutions ' ( ENDP ) second quarter 2012 earnings (excluding special items) of $1.27 per share beat the Zacks Consensus Estimate of $1.19 and increased 21% from the year-ago period.  Higher revenues boosted earnings in the second quarter of 2012.

Revenues climbed 29.2% in the reported quarter to $785.2 billion, beating the Zacks Consensus Estimate of $774 million. The increase was attributable to impressive performances across all segments at Endo Health.

The company reports results through four segments - Endo Pharmaceuticals (formerly branded pharmaceuticals), Qualitest (formerly generics), American Medical Systems (formerly devices) and HealthTronics (formerly services).

The second quarter of 2012 witnessed an 11% rise in branded drugs sales which came in at $443 million. Key drugs such as Lidoderm (up 16% to $228 million), Voltaren Gel (up 19% to $43.7 million) and Opana ER (up 1% to $93.4 million) contributed to the increase in segmental sales.

We are pleased with the improved sequential performance of Opana ER and Voltaren Gel. While sales of Voltaren Gel were absent during the first quarter of 2012, Opana ER sales were only $81 million. First quarter sales of the two drugs were hurt by the temporary shutdown of the facility at Novartis ( NVS ) where the drugs are manufactured. The resolution of the issue contributed to the improved performance of the two drugs.

Endo Health's Qualitest segment performed well with sales climbing 20% to $159.9 million in the second quarter of 2012. The increase was driven by favorable pricing and strong demand for the generic drugs. We remind investors that Qualitest Pharmaceuticals (a generic company) was purchased by Endo Health in 2010.

Revenues from the American Medical Systems segment came in at $128 million in the reported quarter, down 1.5% sequentially but up 378% year-over-year. The massive year-over-year jump was due to the presence of results from the erstwhile American Medical Systems for only twelve days in the second quarter of 2011.

Revenues from the HealthTronics segment came in at $54 million, up 10%. HealthTronics was acquired by Endo Health in July 2010.

Adjusted operating expenses climbed 27.2% to approximately $271 million. Costs related to the acquisition of American Medical Systems contributed to the increase.

2012 Projection Tweaked

Apart from disclosing financial results, Endo Health adjusted its guidance for 2012. The company revised its guidance range for 2012 revenues to $3.05-$3.175 billion from $3.15-$3.30 billion. Endo Health continues to expect to end 2012 with adjusted earnings in the range of $5.00-$5.20 per share.  The Zacks Consensus Estimate for 2012 hints at earnings of $5.07 per share on revenues of approximately $3.14 billion.

Our Recommendation

We currently have a Neutral recommendation on Endo Health. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

ENDO PHARMACEUT (ENDP): Free Stock Analysis Report
NOVARTIS AG-ADR (NVS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ENDP , NVS



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