Endo Pharmaceuticals (ENDP) reported Q3 2018 revenue of $745.47 million and non-GAAP eps of $0.71. It beat on revenue and non-GAAP eps. I thought the results were remarkable. In my previous research I acknowledged that Endo lacked a moat:

The company’s top-line continued to erode for both generics and pain-related drugs. I understood the demise of opioids given the government’s desire to tamp down opioid prescriptions. However, I assumed generics would be a moat, and it was not. The company successfully cut costs and rightsized its operations to help soften the blow of revenue declines. With debt at over 5x EBITDA I surmised it could be difficult to service debt from existing operations.

Q1 2018 results were practically more of the same. Revenue fell by 30% Y/Y, but core products like Sterile Injectables and Specialty products could be the future of the company. A silver lining is that core specialty products (including Xiaflex and Supprelin) made up about 55% of the total U.S. Branded – Specialty segment. They actually grew 7% Y/Y.

In Xiaflex and Sterile Injectables the company may have found drugs that will define its future. However, the market was not impressed with Q3 results. The stock was down by over 17%. Total Q3 revenue was down 5% Y/Y. This followed a double-digit decline in Q2. Revenue from Sterile Injectables rose 17% Y/Y while every other segment fell.

However, Vasostrict and Xiaflex – the two growth engines – now make up about 24% of total revenue. EBITDA margins continue to stabilize and Phase 3 results for CCH in cellulite studies showed statistically significant improvement. These results were remarkable. Read more:


Please enter your comment!
Please enter your name here