Endo Health Solutions
) third quarter 2013 earnings (excluding special items) of $1.34
per share handsomely beat the Zacks Consensus Estimate of $1.12
and increased 5% from the year-ago period. Earnings in the third
quarter of 2013 were aided by lower costs due to Endo Health's
prudent cost cutting initiatives.
ACTAVIS PLC (ACT): Free Stock Analysis Report
ACTELION LTD (ALIOF): Get Free Report
ENDO PHARMACEUT (ENDP): Free Stock Analysis
ISIS PHARMACEUT (ISIS): Free Stock Analysis
To read this article on Zacks.com click here.
Revenues came in at $715 million in the third quarter of 2013,
down 5%. Revenues easily surpassed the Zacks Consensus Estimate
of $693 million.
Revenues were hurt by lower sales of Endo Health's painkillers
Lidoderm (down 37%), Opana ER (down 4%) and oncology drugs Vantas
(down 26%) and Valstar (down 28%). Reduced sales of the drugs
were primarily responsible for a 12% decline in the quarterly
sales of the Endo Pharmaceuticals division (formerly branded
pharmaceuticals) to $366.1 million.
Lidoderm sales were hurt by generic competition during the third
) launched its generic version of the painkiller in Sep 2013.
Sales in Endo Health's Qualitest (formerly generics) segment
climbed 11% year over year to $183.9 million in the third quarter
of 2013. Increased demand for the generic drugs contributed to
the increase. In a bid to boost its generics portfolio, Endo
Health announced its intention to acquire privately-held generics
company Boca Pharmacal for $225 million in cash. Endo Health
intends to finance the deal, expected to close by year end, with
its available cash balance.
Revenues from the American Medical Systems segment (formerly
devices) came in at $111 million in the reported quarter, down
2%. Segmental sales were hurt by reduced sales in the U.S. The
segment has the following sub-groups: men's health (up 6%),
women's health (down 18%) and benign prostatic hyperplasia
therapy (flat year over year). Revenues from the HealthTronics
segment (formerly services) came in at $53.6 million, down 2%.
Endo Health intends to sell off its struggling HealthTronics unit
and is in discussions regarding the same.
Apart from announcing results for the third quarter of 2013, Endo
Health increased its previously announced earnings guidance for
2013. The company now expects adjusted earnings per share for
2013 in the range of $4.60-$4.75 (old guidance: $4.25-$4.55 per
share). Endo Health upped the bottom end of its revenue guidance
for 2013. The company now expects to end 2013 with revenues in
the range of $2.75-$2.80 billion (old guidance: $2.70-$2.80
billion). The Zacks Consensus Estimate for 2013 hints at earnings
of $4.57 per share on revenues of $2.79 billion. The company
stated that it is on track to meet its objective of reducing
operating costs by $150 million in 2013 over the 2012 figure.
Endo Health Eyes Paladin
Apart from its earnings results, Endo Health announced that it
will acquire Canadian Specialty Pharmaceutical Company Paladin
Labs Inc. for approximately $1.6 billion in a cash and stock
deal. The move is in line with Endo Health's efforts to expand
and counter the declining revenues due to generic competition.
The transaction, cleared by the board of directors of both
companies, is expected to close in the first half of 2014. The
deal, which will strengthen Endo Health's portfolio
substantially, is expected to boost Endo Health's 2014 adjusted
earnings per share.
The acquisition, following closure, is expected to result in
annual savings of at least $75 million. Shareholders at Endo
Health will own 77.5% of the merged entity and Paladin Labs
shareholders will hold the balance. Endo Health's current
management will head the operations of the merged entity.
Endo Health carries a Zacks Rank #3 (Hold). Stocks such as
Isis Pharmaceuticals Inc.
) appear to be more attractive with a Zacks Rank #1 (Strong