Endo International Plc. (ENDP, Financial) recently revealed its first-quarter results for fiscal 2015 with better-than-expected earnings. The specialty healthcare business narrowed its net attributable losses from $436.91 million or $3.41 a share in Q1 2014 to a loss of $75.72 million or $0.43 a share in Q1 2015. Further, Endo posted adjusted net income of $207.36 million or $1.17 a share for the first quarter compared to $108.48 or 75 cents a share in the prior-year quarter, beating the consensus estimate of $1.07 a share. However, following the results, Endo International shares dropped to $86.66 at closing bell after climbing 9.09% to $94.95 during pre-market trading.
Acquisitions contribute to revenue jump
Endo International posted 52% year-over-year growth in revenues to $714.13 million for the first quarter of fiscal 2015, falling slightly short of the consensus estimate of $714.42 million. The company’s profits from continuing operations for the quarter stood at $150.49 million, translating to EPS of 85 cents a share, up significantly from the prior-year quarter’s loss of $47.40 million or 37 cents a share.
During the first quarter, Endo closed its $2.6 billion acquisition of Auxilium Pharmaceuticals Inc. (AUXL, Financial), followed by the acquisition of DAVA Pharmaceutical and Boca Pharmacal. At the same time, the company sold its Men’s Health business to Boston Scientific in a $1.6 million deal, aiming to shift back focus on its core pharmaceutical business. Segmentwise, the company saw a 68% year-over-year jump in its Generic sales to $357 million, on the back of the DAVA and Boca acquisitions that contributed to 31% of revenue growth in the segment. At the same time, the Auxilium deal helped boost sales to 21% year-over-year at Endo’s U.S. Branded Pharmaceutical segment to $285 million. In the International Pharmaceutical segment, Endo saw revenues growing from $24.8 million in the prior-year quarter to $72.7 million in Q1 2015.
The road ahead
Following the results, the company, which competes with other major drug manufacturers such as Pfizer Inc. (PFE, Financial) and Abbott Laboratories (ABT, Financial), also raised its adjusted EPS guidance for fiscal 2015. Endo now expects its adjusted earnings for FY2015 to lay in the $4.40 to $4.60 a share range, compared to the earlier guidance of $4.35 to $4.55 a share. Concurrently, revenues for the fiscal are expected to come in the $2.90 billion to $3.00 billion range. Consensus estimates peg the company’s full-fiscal earnings at $4.48 a share on revenues of $2.99 billion.
Endo also separately announced plans to expand its presence in the South African market with the acquisition of a portfolio of generic and branded drugs from Aspen Holdings. The $130 million is expected to close in the third quarter of fiscal 2015.
Final thoughts
Endo International posted better-than-expected earnings for Q1 2015, while revenues fell shy of the consensus estimate mark. The company has benefited significantly from its several recent acquisitions as well as the divesture of its underperforming Men’s Health business during the quarter. Consequently, the company is continuing to acquire more businesses to spread its domestic and global reach. At the same time, Endo also raised its FY2015 guidance, which is now almost in line with the consensus estimates. Although the market is bearish on the company’s near-term prospects, experts are looking at 9.33% average annual earnings growth rate for Endo over the next five years with a peak expected in fiscal 2016. Consequently, the Endo International stock currently carries a "buy" guidance.
