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Endo (ENDP) Q1 Earnings Beat on Coronavirus-Led Stockpiling

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Endo International plc (ENDP - Free Report) beats on both earnings and sales in the first quarter on increased demand and favorable customer inventory purchasing due to the COVID-19 pandemic. However, the company withdrew its guidance due to the uncertain environment.

The company’s earnings of 95 cents easily beat the Zacks Consensus Estimate of 54 cents in the reported quarter and rose from the year-ago quarter’s 60 cents.

Revenues came in at $820.4 million in the quarter, surpassing the Zacks Consensus Estimate of $714 million and increasing 14% from the year-ago quarter.  The increase was attributable to strong growth in the Sterile Injectables segment and the Specialty Products portfolio of the Branded Pharmaceuticals segment. Recent product launches in the Generic Pharmaceuticals segment also boosted performance. Moreover, sales benefited from higher patient demand and increased customer inventory purchasing due to the COVID-19 pandemic. However, continued competitive pressure in the Established Products portfolio of the Branded Pharmaceuticals segment partially offset the increase.

Endo International plc Price, Consensus and EPS Surprise

 

Endo International plc Price, Consensus and EPS Surprise

Endo International plc price-consensus-eps-surprise-chart | Endo International plc Quote

Quarterly Highlights

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

Branded Pharmaceuticals revenues were $204 million, flat year over year as growth in the segment's Specialty Products portfolio was offset by the ongoing generic competition in the segment's Established Products portfolio. Specialty Products revenues increased 17% year over year to $134 million, primarily driven by the strong performance of Xiaflex. Sales of Xiaflex grew 30% to $89 million owing to demand growth in both Peyronie's Disease and Dupuytren's Contracture indications, driven by continued commercial execution and investments 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. Endo is moving its anticipated product launch to first-quarter 2021, pending FDA approval, due to the COVID-19 pandemic.

Sterile Injectables revenues came in at $336 million, up 25% year over year.

The upside was led by robust growth of Adrenalin and Vasostrict, resulting primarily from increased sales volume toward the end of the quarter due to higher utilization mainly to treat patients infected with COVID-19, increased channel inventory stocking and price.

Generic Pharmaceuticals reported sales of $251 million in the quarter, up 15% on recent product launches and accelerated prescription fulfillment arising from COVID-19 concerns.

International Pharmaceuticals revenues came in at $29 million, flat year over year.

2020 Guidance

The company withdrew its earlier provided guidance (revenues of $2.72-$2.92 billion and earnings of $2.15 -$2.40 per share) due to uncertainties regarding the continued impact of the COVID-19 pandemic.

For the second quarter, Endo anticipates the Sterile Injectables segment’s revenues to increase sequentially owing to higher utilization and channel inventory stocking. However, revenues from Branded Pharmaceuticals and Generic Pharmaceuticals are estimated to decline sequentially.

Our Take

Endo reported better-than-expected results for the first quarter, driven by higher patient demand and increased customer inventory purchasing due to the COVID-19 pandemic.

Shares of Endo have lost 11.3% in the year so far compared with the industry’s 11.4% decline.

 

Forward purchasing due to the COVID-19 outbreak has positively impacted many other companies’ results as well. However, the second-quarter results will be adversely impacted.

Earlier, Mallinckrodt (MNK - Free Report) too warned that the next few quarters will be challenging due to the impact of COVID-19. Bausch (BHC - Free Report) too lowered its 2020 guidance for the same reason. 

Zacks Rank & A Stock To Consider

Endo currently carries a Zacks Rank # 2 (Buy).   Another stock to consider in this sector is Infinity Pharmaceuticals (INFI - Free Report) , which carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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