What happened
Endo International (ENDP 16.67%), a specialty pharmaceutical company, saw its shares fall 69% on Wednesday. The stock closed at $1.16 on Tuesday then opened at $1.13 on Wednesday. Shortly after noon on Wednesday, it descended rapidly to $0.3615 a share, its 52-week low. The stock's 52-week high is $7.07, and the stock is down more than 83% so far this year.
Image source: Getty Images.
So what
It was already a bad day for many companies with the Dow and the S&P 500 down more than 3% and the NASDAQ falling more than 4%. The biggest reason for Endo's massive drop came when The Wall Street Journal reported the company was negotiating to restructure its more-than $8 billion in debt with its lenders and senior bondholders.
Endo has been reeling, with generic competition hurting sales of its lead injectable drug Vasostrict, used to increase blood pressure in adults undergoing vasodilatory shock. The company is also embroiled in opioid litigation.
In the first quarter, the company reported revenue of $652 million, down 9% year over year. The big concern, though, was a loss in net income of $65 million and $0.28 in earnings per share (EPS) compared to positive net income of $47 million and EPS of $0.20 in the same period last year. The company attributed the earnings loss to the loss of revenue, particularly a 22% year-over-year decline in its sterile-injectables segment sales, along with opioid litigation expenses and increased marketing expenses for Xiaflex. The company also declined to give guidance for the remainder of the year.
Now what
The stock will likely bounce back a bit because it hit a 52-week low. Long-term investors, however, will wait to see exactly what the debt restructuring means.
The company does have a few bright spots. In Q1, its generic segment sales were $186 million, up 3% year over year. There's also strong potential for Xiaflex, already approved to treat Peyronie's disease, a condition in adult men that causes scar tissue or plaque to develop under the skin of the penis. Xiaflex is also approved to treat Dupuytren's contracture, which causes an abnormal thickening of the tissue in the palm of the hand, sometimes leading to a permanent bend in a finger.
Endo also has Xiaflex in phase 2/3 trials as a therapy for adhesive capsulitis (commonly known as a frozen shoulder in which inflammation causes shoulder pain and stiffness) and plantar fibromatosis (a rare condition in which noncancerous tumors grow on the bottom of the foot).
The company also said it has plans for 10 new injectable products this year. Late last year, it launched Qwo (collagenase clostridium histolyticum-aaes), an injectable therapy used to treat buttocks cellulite in adult women. The company began a direct-to-customer marketing campaign for Qwo in March. Endo also recently purchased from Nevakar six injectable candidates, which are expected to begin launching in 2025.
