Endo Health Solutions
) third quarter 2012 earnings (excluding special items) of $1.28
per share beat the Zacks Consensus Estimate of $1.26 and
increased 2% from the year-ago period.
ENDO PHARMACEUT (ENDP): Free Stock Analysis
WATSON PHARMA (WPI): Free Stock Analysis
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Revenues declined 1% in the third quarter of 2012 to $750
million. Revenues were well short of the Zacks Consensus Estimate
of $788 million.
Revenues were hurt by lower sales of Endo Health's painkiller
Opana ER (down 36%). Reduced sales of the drug was responsible
for Endo Pharmaceuticals division (formerly branded
pharmaceuticals), which reflected a 2% decline in sales in the
third quarter of 2012. Sales of another pain drug Voltaren Gel
dropped 2% to $35.5 million in the reported quarter. Sales of
Endo Health's key pain drug Lidoderm increased 15% in the third
quarter of 2012 to $238.3 million.
We remind investors that in August 2012 the US Food and Drug
Administration (FDA) cleared
) generic version of Lidoderm. However, Watson Pharma's agreement
with Endo Health prohibits the former from selling the drug prior
to September 15, 2013.
Endo Health's Qualitest (formerly generics) segment performed
well with sales climbing 12% to $166 million in the third 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
Revenues from the American Medical Systems segment (formerly
devices) came in at $113 million in the reported quarter, down
14%. The segment has the following sub-groups: men's health,
women's health, and benign prostatic hyperplasia therapy. All the
sub-groups performed disappointingly in the third quarter of
Revenues from the HealthTronics segment (formerly services) came
in at $54.5 million, up 1%. HealthTronics was acquired by Endo
Health in July 2010.
Adjusted operating expenses declined 10.4% to approximately $242
million. The decline was attributable to Endo Health's prudent
2012 Projection Lowered
Apart from disclosing its financial results, Endo Health lowered
its guidance for 2012. Endo Health now expects to end 2012 with
revenues of $3.05 billion (previous guidance: $3.05-$3.175
billion). Endo Health expects to end 2012 with adjusted earnings
of $5.00 per share (previous guidance: $5.00-$5.20 per share).
The Zacks Consensus Estimate currently pegs earnings at $5.02 per
share on revenues of $3.1 billion.
We currently have a Neutral recommendation on Endo Health. The
stock carries a Zacks #3 Rank (Hold rating) in the short run.