Endo Pharmaceuticals’ (ENDP) second quarter 2011 earnings (excluding special items) of $1.05 per share, surpassed the year-ago earnings by $0.24. Earnings, however, fell short of the Zacks Consensus Estimate by a penny. The year-over-year rise in earnings was attributable to a surge in revenues.
Quarter in Details
Revenues climbed 53% to $607.6 million in the reported quarter. The revenue increase was attributable to impressive performances across all segments at Endo Pharma. Revenues handsomely beat the Zacks Consensus Estimate of $595 million.
The second quarter of 2011 witnessed an 8% rise in the sale of branded drugs to $398.3 million. The impressive showing by key products in the pain franchise drove the increase. The sale of generic products at Endo Pharma jumped 381% to $133.0 million in the second quarter of 2011.
The segment was boosted by the acquisition of privately-held generic company Qualitest Pharmaceuticals in December 2010. Endo Pharma currently has 49 abbreviated new drug applications (ANDAs) under review by the US Food and Drug Administration (FDA).
The company filed 6 ANDAs in the first six months of 2011 and intends to file 8 more ANDAs in 2011. Endo expects 14 ANDAs to be cleared in 2011 of which 5 have been cleared till date.
Revenues from devices and services came in at $76.3 million in the reported quarter. Bulk of the revenues from the segment (approximately 64.5%) came from HealthTronics, a provider of urology products and services, which was acquired by Endo Pharma in July 2010.
The remaining revenues from the segment came from American Medical Systems, a leading pelvic-health devices provider, which was acquired in June 2011. Second quarter sales included revenues from American Medical Systems for the final 12 days of the quarter.
We note that the purchase of American Medical is the fourth major acquisition for Endo Pharma, which is on an acquisition spree to expand its business over the last one year. Endo completed three major acquisitions in 2010. In December 2010, Endo acquired Qualitest Pharmaceuticals for $1.2 billion. During 2010, Endo also bought Penwest Pharmaceuticals Co. and HealthTronics Inc.
2011 View Upped
Following solid second quarter results, Endo Pharma upped its 2011 earnings guidance. Endo Pharma now expects to earn (on an adjusted basis) in the range of $4.55-$4.65 per share on revenues of $2.72-$2.80 billion, as opposed to the previously forecasted adjusted earnings range of $4.20-$4.30 per share on revenues of $2.35-$2.45 billion. The Zacks Consensus Estimate for 2011 hints at earnings of $4.55 per share on revenues of $2.60 billion.
Our Recommendation
We currently have a Neutral recommendation on Endo Pharma. The stock carries a Zacks #3 Rank (Hold rating) in the short run.
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