Endo Completes $8.05B Par Pharma Acquisition, Updates View

Endo International ENDP announced that it has completed the acquisition of privately held Par Pharmaceutical from TPG, a leading global private investment firm. The deal is valued at $8.05 billion.
 
Endo’s generics portfolio and pipeline were augmented by the acquisition. Par Pharma’s portfolio includes approximately 100 products. The deal is expected to drive double-digit growth for Endo's overall business, enhance cash flow generation and increase financial flexibility.

As of Dec 31, 2014, Par Pharma’s pipeline consisted of approximately 115 abbreviated new drug applications under regulatory review while roughly 33% of these are potential first-to-file or first-to-market opportunities.

We note that Endo's combined U.S. Generics segment, including Par Pharmaceutical and Qualitest, will be named Par Pharmaceutical.

Endo has been quite active on the acquisition front. We remind investors that the company was looking to acquire Salix Pharmaceuticals Ltd. earlier this year. However, Endo withdrew its offer after being outbid by Valeant Pharmaceuticals International, Inc. VRX.

Guidance

Endo also provided its guidance for the third quarter and full year 2015 and 2016. The company expects to report revenues of $720 million to $740 million in the third quarter. The Par Pharma acquisition is not expected to have a material impact on the quarter.

For 2015, the company narrowed its earnings guidance. It expects earnings in the range of $4.50–$4.60 per share compared with the previous guidance of $4.40–$4.60. The company continues to expect revenues in the range of $3.22 billion to $3.27 billion. The Zacks Consensus Estimate for 2015 is earnings of $4.47 per share on revenues of approximately $3 billion.

The company expects 2016 earnings per share in the range of $5.85 to $6.15. The Zacks Consensus Estimate for 2016 is earnings of $5.90 per share.

Endo currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Anika Therapeutics Inc. ANIK and Regeneron Pharmaceuticals, Inc. REGN. Both stocks hold a Zacks Rank #1 (Strong Buy).

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