Endo International’s ENDP second-quarter 2015 earnings of $1.08 per share beat the Zacks Consensus Estimate of $1.02 and increased 21% from the year-ago period. The upside was primarily driven by higher revenues.
Revenues came in at $735.2 million in the second quarter of 2015, up 24%. Revenues were slightly above the Zacks Consensus Estimate of $731 million.
The Second Quarter in Details
The company reports results through three segments – Branded Pharmaceuticals (U.S.), Generic Pharmaceuticals (U.S.) and International Pharmaceuticals.
U.S. Branded Pharmaceuticals sales were up 27% to $316 million primarily attributable to the inclusion of Auxilium Pharmaceuticals revenues. While Voltaren Gel sales were up 11% driven by demand growth, revenues were hurt by lower sales of Opana ER (down 20%) due to generic competition and lower average pricing.
Endo reported generic product net sales of $338 million in the quarter, up 24%. The addition of DAVA Pharmaceuticals’ (acquisition completed in Aug 2014) products led to higher segmental sales. Endo launched an authorized generic version of Lidoderm in May 2014 through its generic unit. The move also resulted in higher segmental sales.
The newly formed International Pharmaceuticals division contributed $81 million to total revenues in the second quarter compared with $73 million in the preceding quarter.
2015 Outlook Maintained
Endo reiterated its 2015 guidance. The company expects earnings per share for 2015 in the range of $4.40 to $4.60. The company continues to expect revenues in the range of $2.90 billion to $3.00 billion. The Zacks Consensus Estimate for 2015 is earnings of $4.49 per share on revenues of approximately $3 billion.
Our Take
We are impressed by Endo’s performance in the second quarter. Generic and branded revenues were encouraging. The company has been quite active on the acquisition front. We expect to see more such deals in the near term.
Meanwhile, the company has also been divesting its underperforming assets and focusing on core business. It has sold its men's and prostate health businesses to Boston Scientific BSX. Earlier this month, Endo announced another strategic divestiture. The company is set to divest its portfolio of device, vaccine and other non-core products from its international subsidiary in South Africa.
Endo carries a Zack Rank #4 (Sell). Some better-ranked stocks in the health care sector are Ligand Pharmaceuticals Incorporated LGND and Valeant Pharmaceuticals International, Inc. VRX. Both Ligand and Valeant carry a Zacks Rank #1 (Strong Buy).
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