Image source: Getty Images.

What: Shares of Endo International (NASDAQ:ENDP) are up 22% at 12:10 p.m. EDT on Tuesday after the biotech reported decent second-quarter earnings results yesterday after the bell.

So what: Second-quarter revenue increased 25% compared to the year-ago quarter, but the increase was primarily due to the acquisition of Par Pharmaceuticals last September, which helped boost sales of Endo's U.S. generic drugs by 67% year over year. The generics base business declined 5% from the first quarter, but management had already warned the decline was coming as older generics face pricing pressures from increasing competition.

While revenue was up, Endo took on debt and additional shares to make the Par acquisition happen, which pushed adjusted earnings from continuing operations down 20% year over year, to $0.86 per share.

Nevertheless, the declining earnings were expected, and management is sticking with its previously announced guidance of adjusted earnings from continuing operations in the range of $4.50 to $4.80 per share.

Now what: With shares down almost 70% year to date before the earnings release, much of today's excitement comes from a lack of further bad news about the generic-drug business than a strong quarter. This could be the start of a turnaround for Endo, but cautious investors will likely want to wait and see consistently growing earnings before jumping in.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.