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Endo to Trim Workforce

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In a bid to optimize its resources and maximize long-term growth potential, Endo Health Solutions (ENDP) announced that it will trim its work-force by approximately 15%. The move is expected to result in annual savings of approximately $325 million.

The company stated in its press release that it expects to realize $150 million savings by Dec 31, 2013. Endo stated further that the entire $325 million run-rate is expected to be realized by mid-2014, when compared with full-year 2012. Moreover, Endo expects to incur cash implementation charges (including severance costs) of approximately $60 million in 2013

Endo announced more measures aimed at streamlining its operations. The company stated that it is evaluating options for its branded pharmaceutical early stage discovery platform.

The company is also exploring options regarding its struggling HealthTronics (services) segment. Through the segment, Endo currently focuses on providing urological services, products and support systems to multiple healthcare providers in the US. The offerings were added to Endo’s portfolio following its acquisition of HealthTronics in 2010. Endo announced that it intends to pursue prudent acquisitions in future to drive growth.

The company said that it intends to work on driving growth at its other three segments- Qualitest, Branded Pharmaceuticals and American Medical Systems.

In addition to the above initiatives, Endo also announced its new guidance for 2013. The company now expects adjusted earnings per share for 2013 in the range of $4.10–$4.40 per share. The company expects to end 2013 with revenues in the range of $2.65–$2.80 billion. The Zacks Consensus Estimate for 2013 pegs earnings at $4.32 per share on revenues of $2.8 billion.

We remind investors that while announcing its first-quarter 2013 results on May 7, 2013, Endo had stated that it expects adjusted earnings per share for 2013 in the range of $4.40–$4.70 per share and revenues in the range of $2.80–$2.95 billion. However, the company suffered a huge blow a couple of days later when the US Food and Drug Administration turned down its request to prevent the entry of generic versions of its painkiller Opana ER. Endo had stated at that time that it will issue a fresh guidance since it expected the unfavorable ruling to impact its 2013 guidance adversely.

Endo currently carries a Zacks Rank #3 (Hold). However, companies such as Jazz Pharmaceuticals Public Limited Company (JAZZ), Santarus, Inc. (SNTS) and Salix Pharmaceuticals Limited (SLXP) appear to be more attractive with a Zacks Rank #1 (Strong Buy) each. 

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