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. 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, but the stock cratered by more than 15 percent. Morgan Stanley analyst David Risinger put out a negative note on the commercial viability of Endo’s Xiaflex, which may have cause put pressure on the stock.


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