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Endo (ENDP) Q1 Earnings & Revenues Beat Estimates

Zacks Equity Research

Endo International plc ENDP reported better-than-expected results for first-quarter 2019.

The company’s earnings of 53 cents in the reported quarter easily beat the Zacks Consensus Estimate of 42 cents. However, earnings declined from 67 cents recorded in the year-ago quarter.

Revenues came in at $720.4 million in the quarter, surpassing the Zacks Consensus Estimate of $692.2 million and increasing 3% from the year-ago quarter’s figure. This increase was primarily attributable to continued strong growth in the U.S. Branded - Sterile Injectables segment and the Specialty Products portfolio of Branded Pharmaceuticals segment.

Quarterly Highlights

Endo has four reportable business segments — Branded Pharmaceuticals, Generic Pharmaceuticals, Sterile Injectables and International Pharmaceuticals.

Branded Pharmaceuticals revenues were $204 million, up from $200 million in the first quarter due to continued strong growth in the Specialty Products portfolio, offset by ongoing generic competition in Established Products portfolio.

Specialty Products revenues increased 19% to $115 million in the quarter, primarily driven by the continued strong performance from Xiaflex. Sales of Xiaflex increased 20% to $69 million, driven by underlying volume growth in both the Peyronie's Disease and Dupuytren's Contracture indications.

Generic Pharmaceuticals recorded sales of $219 million in the quarter, down 12% due to competitive pressure in the generic business.

Sterile injectables revenues came in at $270 million, up 25% from the year-ago quarter, driven by strong growth of Adrenalin and Vasostrict.  In July 2018, the segment launched ertapenem injection, the authorized generic of Merck's MRK Invanz, which boosted sales.

Endo has decided to terminate the previously-announced acquisition of Somerset Therapeutics, LLC, a New Jersey-based specialty pharmaceutical company, and the business of its India-based affiliate Wintac Limited, which operates as Somerset Therapeutics' contract developer and manufacturer. The decision was taken as certain regulatory approvals in India took longer than anticipated and the company lacks clarity on when those approvals could be received.

2019 Outlook

Endo expects revenues between $2.76 billion and $2.96 billion in 2019. The company expects Xiaflex’s full-year revenues to grow mid-to-high teens. The company anticipates earnings from continuing operations to be $2.00-$2.25 per share.

Our Take

Endo’s first-quarter results were positive, as it beat on both earnings and sales. The company is looking to turn around its business with focus on Branded Pharmaceutical business in the United States. The company has divested its non-core assets and businesses, and repositioned its generics business in the United States by executing a comprehensive product portfolio and manufacturing footprint rationalization initiative.

 

Endo’s stock has gained 10.9% in the year so far compared with the industry’s 8.7% growth.

The company is on track to launch approximately 15 new products in 2019 across its Sterile Injectables, Generic Pharmaceuticals and International Pharmaceuticals segments.

Zacks Rank & Stocks to Consider

Endo currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks are Bristol-Myers Squibb Company BMY and Roche RHHBY. Both the companies have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bristol-Myers’ earnings per share estimates have increased from $4.76 to $4.93 for 2020 in the past 60 days.

Roche’s earnings per share estimates have increased from $2.35 to $2.40 for 2019 in the past 60 days.

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