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Endo's (ENDP) Earnings & Revenues Trump Estimates in Q4

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Endo International plc (ENDP - Free Report) reported better-than-expected results for fourth-quarter 2019.

The company’s earnings of 74 cents easily beat the Zacks Consensus Estimate of 57 cents in the reported quarter. However, earnings came in lower by a penny from the year-ago quarter’s 75 cents.

Revenues came in at $764.8 million in the quarter, surpassing the Zacks Consensus Estimate of $726.7 million. The revenue figure, however, declined 3% from the year-ago quarter. This decrease primarily resulted from competitive pressure in the Generic Pharmaceuticals segment and the Established Products portfolio of the Branded Pharmaceuticals segment. However, this was partially offset by continued solid growth in the Sterile Injectables segment and the Specialty Products portfolio of the Branded Pharmaceuticals segment.

Quarterly Highlights

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

Branded Pharmaceuticals revenues were $226 million, down from the year-ago quarter’s $230 million, due to the prevalent generic competition in the Established Products portfolio.  Specialty Products revenues increased 15% to $149 million on continued strong performance of Xiaflex. Sales of Xiaflex rose 27% to $102 million, primarily attributable to demand growth in both Peyronie's Disease and Dupuytren's Contracture indications, driven by continued commercial execution and investment in promotional activities.

In November 2019, the FDA accepted the company's original Biologics License Application (BLA) for its Collagenase Clostridium Histolyticum (CCH) product, for the treatment of cellulite in the buttocks. The target action date for the BLA has been set for Jul 6, 2020.

Sterile Injectables revenues came in at $285 million, up 10% year over year, aided by robust growth of Adrenalin and Vasostrict.

Generic Pharmaceuticals recorded sales of $226 million in the fourth quarter, down 14% due to competitive pressure on commoditized generic products. Nevertheless, the contribution of certain recent product launches partially negated the decline.

International Pharmaceuticals revenues came in at $29 million, marking a decline of 16% year on year.

2019 Results

Revenues came in at $2.9 billion for full-year 2019, down 1% from 2018. Earnings per share for 2019 came in at $2.38 compared with the prior year’s $2.89.

2020 Guidance

Endo expects revenues between $2.72 billion and $2.92 billion for 2020.  The guidance assumes further erosion and competitive pressure for established brands. The company anticipates earnings from continuing operations to be $2.15-$2.40.

Our Take

Endo reported better-than-expected results for the fourth quarter of 2019, wherein it beat on both earnings and sales. Nevertheless, 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.

Nevertheless, Xiaflex revenues are projected to be up approximately 20%.

However, shares depreciated 2.76% post earnings announcement. Notably, shares of Endo have lost 38.6% in the past compared with the industry’s 10.7% decline.

 

Endo, like many other companies like Teva Pharmaceuticals (TEVA - Free Report) , Mallinckrodt (MNK - Free Report) and Johnson & Johnson (JNJ - Free Report) , has been embroiled in various opioid litigations lately, which affected the share price.

Zacks Rank & Stocks to Consider

Endo currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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