LCI Lannett CO

Endo Health Solutions’ (ENDP) first quarter 2013 earnings (excluding special items) of $1.09 per share beat the Zacks Consensus Estimate by a penny and increased 25% from the year-ago period. Earnings in the first quarter of 2013 were aided by lower costs.

Revenues came in at $708.5 million in the first quarter of 2013, up 3%. Revenues were well short of the Zacks Consensus Estimate of $744 million.

The First Quarter in Detail

Revenues were hurt by lower sales of Endo Health’s painkillers, Lidoderm (down 11%) and Opana ER (down 31%). Reduced sales of the drugs were primarily responsible for 2% decline in the quarterly sales of the Endo Pharmaceuticals division (formerly branded pharmaceuticals) to $357.6 million.

We remind investors that in Aug 2012, the US Food and Drug Administration cleared Actavis, Inc.’s (ACT) generic version of Lidoderm. However, Actavis’ agreement with Endo Health prohibits the former from selling the drug prior to Sep 15, 2013.

Sales of oncology drugs Valstar and Vantas dropped 13% and 1% to $5.4 million and $3.9 million, respectively, in the reported quarter.

Sales in Endo Health’s Qualitest (formerly generics) segment climbed 23% year over year to $178.3 million in the first quarter of 2013. Favorable pricing coupled with increased demand for the generic drugs contributed to the increase.

Revenues from the American Medical Systems segment (formerly devices) came in at $123 million in the reported quarter, down 6%. Segmental sales were hurt by reduced sales in the US. The segment has the following sub-groups: men’s health (flat year over year), women’s health (down 16%) and benign prostatic hyperplasia therapy (down 8%). Revenues from the HealthTronics segment (formerly services) came in at $50 million, down 3%.

Adjusted operating expenses declined 11.3% to approximately $250 million. The decline was attributable to Endo Health’s prudent cost management.

2013 View Backed

Endo Health maintained its 2013 guidance, issued in January. The US-based diversified healthcare company continues to expect adjusted earnings per share for 2013 in the range of $4.40–$4.70 per share. The company still expects to end 2013 with revenues in the range of $2.80–$2.95 billion. The Zacks Consensus Estimate for 2013 pegs earnings at $4.51 per share on revenues of $2.92 billion.

Endo Health currently carries a Zacks Rank #2 (Buy). Cubist Pharmaceuticals, Inc. (CBST) appears to be equally attractive with a Zacks Rank #2. Lannett, Inc. (LCI) seems to be more favorably placed with a Zacks Rank #1 (Strong Buy).

 
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