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Endo Pharmaceuticals Holdings Inc. Reports Operating Results (10-Q)

August 02, 2010 | About:
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10qk

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Endo Pharmaceuticals Holdings Inc. (ENDP) filed Quarterly Report for the period ended 2010-06-30.

Endo Pharmaceuticals Holdings Inc. has a market cap of $2.79 billion; its shares were traded at around $24.01 with a P/E ratio of 8.03 and P/S ratio of 1.91. Endo Pharmaceuticals Holdings Inc. had an annual average earning growth of 32.8% over the past 10 years.ENDP is in the portfolios of John Hussman of Hussman Economtrics Advisors, Inc., Chuck Royce of Royce& Associates, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Paul Tudor Jones of The Tudor Group, Bruce Kovner of Caxton Associates, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC.

Highlight of Business Operations:

On July 2, 2010 (referred to as the HealthTronics Acquisition Date), Endo completed its initial tender offer (the Offer) for all outstanding shares of common stock, par value $0.01 per share (the Shares), of HealthTronics, at a price of $4.85 per Share. On the HealthTronics Acquisition Date, Endo acquired a controlling financial interest in HealthTronics. On July 12, 2010, Endo completed its acquisition of HealthTronics for approximately $212.9 million in aggregate cash consideration for 100% of the outstanding shares. In addition, Endo paid $9.9 million for the acceleration of the HealthTronics outstanding stock-based compensation. In July of 2010, Endo also paid $40.2 million to retire HealthTronics debt that had been outstanding under its Senior Credit Facility. As a result of the acquisition, the HealthTronics Senior Credit Facility was terminated.

Other brands. Net sales of our other branded products for the three months ended June 30, 2010 increased by $1.9 million from the comparable 2009 period. Net sales of our other branded products for the six months ended June 30, 2010 increased by $6.7 million from the comparable 2009 period. This increase is primarily driven by our February 2009 acquisition of Indevus, which contributed approximately $5.5 million and $10.7 million of net sales during the three months ended June 30, 2009 and the period from February 23, 2009 through June 30, 2009, respectively. This compares to $10.5 million and $19.8 million for the full three and six months ended June 30, 2010, which also included revenues from our launch of ValstarTM in the third quarter of 2009.

Royalty and other revenues. Royalty and other revenues for the three and six months ended June 30, 2010 were $2.4 million and $6.5 million. Royalty and other revenues for the three and six months ended June 30, 2009 were $2.5 million and $3.8 million. These amounts consist primarily of royalties earned on net sales of Sanctura® and Sanctura XR®.

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the three months ended June 30, 2010 increased to $133.3 million from $129.6 million in the comparable 2009 period. Selling, general and administrative expenses for the six months ended June 30, 2010 increased to $266.6 million from $249.6 million in the comparable 2009 period. The increase is primarily attributable to our acquisition of Indevus during the first quarter of 2009 and the recognition of a full six months of Indevus expenses during the six months ended June 30, 2010 as well as approximately $9.0 million of certain costs incurred in connection with continued efforts to enhance the cost structure of the Company.

Research and Development Expenses. Research and development expenses for the three months ended June 30, 2010 decreased to $44.7 million from $48.5 million in the comparable 2009 period. Research and development expenses for the six months ended June 30, 2010 decreased to $73.8 million from $76.9 million in the comparable 2009 period. These decreases are primarily a result of less upfront and milestone payments in 2010 as compared to 2009. We expect research and development expenses to increase in the future as a result of the recent investments in our pipeline including the recent acquisition of Indevus as well as our collaborative agreements with various partners.

Acquisition Related Items. Acquisition-related expenses for the three months ended June 30, 2010 and 2009 decreased to $4.8 million from $35.0 million in the comparable 2009 period. Acquisition-related expenses for the six months ended June 30, 2010 and 2009 decreased to $6.3 million from $61.4 million. As a result of our acquisition of Indevus Pharmaceuticals, Inc. in the first quarter of 2009, we incurred $26.4 million of acquisition related costs, which were attributable to transaction fees, professional service fees, employee retention and separation arrangements and other costs related to the acquisition. This compares to $7.0 million in 2010 primarily reflecting changes in the fair value of the acquisition-related contingent consideration of $1.2 million and $4.6 million in transaction-related expenses for the acquisition of HealthTronics incurred during the three months ended June 30, 2010.

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