What happened
Shares of Endo International plc (ENDP), a pharmaceutical company that's been beaten down over the past couple years, rose 11.1% higher as of 3:50 p.m. EDT during Thursday's session. Yesterday, the company announced a "pleasing" development concerning transvaginal mesh litigation.
So what
Last year, Endo International recorded $1.13 billion in cash distributions to settle legal disputes concerning transvaginal surgical mesh products it acquired from American Medical Systems for about $2.6 billion in 2011. That's a big chunk of change for a company that posted a $3.35 billion net loss last year.
Image source: Getty Images.
As you can imagine, investors breathed a sigh of relief following yesterday's announcement. According to Endo, a district court judge entered a case management order that will require plaintiffs in newly filed cases concerning the pelvic repair systems to provide expert disclosures on specific causation within 120 days of filing their claims.
Now what
Requiring plaintiffs to jump through an extra hoop should help Endo close the door on the disastrous purchase of American Medical Systems and return to profitability. Although the company has posted heavy net losses recently, its continuing operations generated $738 million in free cash flow during the past year.
Despite today's bump, shares of Endo International are trading at just 5.2 times trailing free cash flow. If the recently issued case management order significantly reduces the company's legal bills, and its recently launched generic drugs keep pushing up total sales, this could be a deep-value stock for courageous investors.
