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Endo International Fires on All Cylinders in Q1 Thanks to COVID-19 Impact

By Keith Speights - May 7, 2020 at 3:11PM

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The drugmaker easily beat revenue and earnings estimates with a big jump in sterile injectables sales.

Endo International (ENDP 0.16%) got off to a great start in 2020 after a dismal stock performance last year. But then the COVID-19 pandemic hit, causing Endo's share price to plunge more than 60% at one point in March. The good news, though, is that the stock has made a huge comeback in recent weeks.    

That rebound now seems likely to continue after Endo announced its first-quarter results before the market opened on Thursday. Here are the highlights from the drugmaker's Q1 update. 

Blue pills on a prescription pad

Image source: Getty Images.

By the numbers

Endo reported revenue in the first quarter of $820 million. This reflected a 14% increase from the prior-year period revenue total of $720 million. It also blew past the average analysts' Q1 revenue estimate of $712.9 million.

The company announced Q1 net income of $129.9 million, or $0.56 per share, based on generally accepted accounting principles (GAAP). In the prior-year period, Endo recorded a GAAP net loss of $18.6 million, or $0.08 per share.

Endo's adjusted non-GAAP bottom line also trended in the right direction. The drugmaker posted adjusted net income from continuing operations in the first quarter of $220.4 million, or $0.95 per share. This reflected significant improvement from adjusted earnings of $138.8 million, or $0.60 per share, reported in the prior-year period. And it handily beat the consensus Wall Street estimate of Q1 adjusted earnings of $0.54 per share.

Behind the numbers

Endo's sterile injectables segment generated the strongest revenue growth, with sales soaring 25% year over year to $336 million. This increase was primarily due to higher sales of Vasostrict and Adrenalin with heavier utilization at the end of the first quarter related to treating patients with COVID-19.

The company's generic pharmaceuticals segment also performed well, with revenue rising 15% year over year to $251 million. Much of this growth was driven by recent product launches and individuals refilling prescriptions earlier than normal because of the coronavirus outbreak.

Endo's two other segments delivered similar results as they did in the prior-year period. The company reported branded pharmaceuticals revenue in Q1 of $204 million. Although specialty products sales jumped 17% to $134 million, the gain was offset by lower sales in the segment's established products line due to generic competition. Endo's international pharmaceuticals segment's Q1 revenue was also comparable to the prior-year period.

Looking ahead

Like many other companies in the healthcare sector, Endo withdrew its full-year 2020 guidance because of the uncertainties created by the COVID-19 pandemic. However, the drugmaker did provide a limited Q2 outlook. Endo expects Q2 revenue will decline by a little over 20% from the first quarter of 2020. It also anticipates adjusted gross margin in Q2 of around 60% with adjusted operating expenses of around 25% of revenue.

The anticipated revenue decline in Q2 is a direct result of the COVID-19 outbreak. Endo looks for sterile injectables sales to continue to increase, but it expects branded pharmaceuticals and generic pharmaceuticals sales to fall.

Endo expects to receive FDA approval of collagenase clostridium histolyticum (CCH) for the treatment of cellulite in the buttocks by July 6, 2020. The company has decided to delay the commercial launch of the product, pending approval, to the first quarter of 2021 due to the challenges presented by the COVID-19 pandemic.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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