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Endo (ENDP) Q2 Earnings & Revenues Beat Estimates, Down Y/Y

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

However, investors were not much impressed by the results as the company did not raise guidance. The stock crashed 21% following the results. Notably, shares of Endo have lost 68.1% in the year so far against the industry’s 7.3% growth.

 

The company’s earnings of 52 cents in the reported quarter easily beat the Zacks Consensus Estimate of 47 cents. However, earnings declined from 76 cents in the year-ago quarter.

Revenues came in at $699.7 million in the quarter, surpassing the Zacks Consensus Estimate of $697 million but decreasing 2% from the year-ago quarter’s figure. The decrease was primarily attributable to competitive pressure in the Generic Pharmaceuticals segment, the Established Products portfolio of the Branded Pharmaceuticals segment and the International segment. Nevertheless, strong growth in the Sterile Injectables segment and the Specialty Products portfolio of the Branded Pharmaceuticals segment partially offset the decline.

Quarterly Highlights

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

Branded Pharmaceuticals revenues were $209 million, down from $213 million in the year-ago quarter due to the ongoing generic competition in Established Products portfolio.  Specialty Products revenues increased 17% to $124 million, driven by the continued strong performance of Xiaflex. Sales of Xiaflex increased 18% to $75 million, owing to higher demand in the Peyronie's Disease and the Dupuytren's Contracture indications, driven by continued commercial execution and investment in promotional activities.

The company is on track to submit a BLA for the collagenase clostridium histolyticum program for the treatment of cellulite in the second half of 2019.

Generic Pharmaceuticals recorded sales of $218 million in the quarter, down 9.5% due to competitive pressure in the generic business. During the quarter under review, this segment launched three products.

Sterile Injectables revenues came in at $244 million, up 12% year over year, driven by strong growth of Adrenalin and Vasostrict.  In July 2018, the segment launched the ertapenem injection, the authorized generic of Merck's (MRK - Free Report) Invanz, which boosted sales.

International Pharmaceuticals revenues were $29 million, down from $43 million in the year-ago quarter.

2019 Outlook Reiterated

Endo expects revenues between $2.76 billion and $2.96 billion for 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 reported better-than-expected results for the second quarter of 2019, wherein it beat on both earnings and sales. However, the decline in revenues due to competitive pressure in the generic pharmaceuticals segment is a concern. The company is looking to turn around its business, with focus on the Branded Pharmaceuticals segment in the United States.

Zacks Rank & Stocks to Consider

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

A couple of better-ranked stocks in the healthcare sector are Galectin Therapeutics, Inc. (GALT - Free Report) and Portola Pharmaceuticals, Inc. . Both stocks carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Galectin’s loss per share estimates have narrowed from 59 cents to 51 cents for 2019 in the past 60 days.

Portola’s loss per share estimates have narrowed from $4.13 to $4.12 for 2019 in the past 60 days.

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