Endo fourth quarter total revenues increase 31% to $511 million

Endo PharmaceuticalsFeb 28 2011

• Company increases 2011 financial guidance of revenues to a range of $2.35B to $2.45B
• Company increases 2011 financial guidance of adjusted diluted EPS to a range of $4.20 to $4.30 and now expects Reported or GAAP diluted EPS to be in a range of $2.43 to $2.53
• Total quarterly revenues increase 31 percent versus prior year; Total annual revenues increase 17 percent versus prior year;
• Reported quarterly diluted EPS of $0.77, down 38 percent from prior year; adjusted diluted EPS of $1.06 reflecting growth of 31 percent from 2009  
• Reported annual diluted EPS of $2.20, down 3 percent from prior year; adjusted diluted EPS of $3.48, reflecting growth of 23 percent from 2009

Endo Pharmaceuticals (Nasdaq: ENDP) today reported financial results for the fourth quarter 2010.

Total revenues during the fourth quarter of 2010 increased 31 percent to $511 million, compared with $391 million in the same quarter of 2009.  Net income for the three months ended December 31, 2010 was $93 million, compared with $14 8 million in the comparable 2009 period.  As detailed in the supplemental financial information below, adjusted net income for the three months ended December 31, 2010, was $128 million, compared with $95 million in the same period in 2009.  Reported diluted earnings per share for the quarter ended December 31, 2010 were $0.77 compared with $1.25 in the fourth quarter of 2009. Adjusted diluted earnings per share for the same period were $1.06 compared with $0.81 reported in 2009.

"Endo had a terrific fourth quarter and a record year in 2010, with strong performance across every segment of our business," said Dave Holveck, president and CEO of Endo. "We're focused on creating sustainable long-term growth and look forward to delivering a strong performance in 2011."

2011 Financial Guidance

Endo now estimates 2011 revenues to be between $2.35 billion and $2.45 billion, reported (GAAP) diluted earnings per share to be between $2.43 and $2.53 and adjusted diluted earnings per share to be between $4.20 and $4.30.  A detailed reconciliation of projected 2011 adjusted diluted earnings per share to 2011 reported diluted earnings per share is provided below, and is subject to certain assumptions as set forth below, which could have a significant impact on the actual reported diluted earnings per share in the future.  The company's guidance for reported (GAAP) earnings per share does not include any estimates for potential future changes in the fair value of contingent consideration or for potential new business development transactions.

Fourth Quarter and Full Year 2010 Financial Results

The fourth quarter benefitted from very good contributions across our business. Branded and non-promoted drug sales rose 9 percent year-over-year, reflecting strong growth by key products in pain, urology and oncology. Revenues from our generics business, which benefitted from the close of the acquisition of Qualitest Pharmaceuticals, increased 125 percent. The fourth quarter also benefits year-over-year from the performance of the devices and services of our HealthTronics urology business, continued discipline in our investments in R&D and SG&A, as well as a lower effective tax rate, driven in part by the recent renewal of the R&D tax credit in the US.

Selected Operating Highlights

Approval of Fortesta Gel

On December 29, 2010, Endo Pharmaceuticals announced that the U.S. Food and Drug Administration (FDA) approved FORTESTA Gel for the treatment of low testosterone, or 'Low T,' also known as hypogonadism. Symptoms associated with Low T include erectile dysfunction and decreased sexual desire, fatigue and loss of energy, mood depression, regression of secondary sexual characteristics and osteoporosis.  Low T is a condition that has an estimated prevalence in nearly 14 million men in the United States, yet only about 1.3 million (9 percent) are currently being treated. Endo Pharmaceuticals expects to introduce FORTESTA™ Gel in the United States in early 2011.

Completion of High-Yield Offering

On November 18, 2010, Endo Pharmaceuticals announced that it priced $400 million aggregate principal amount of 7.00% senior unsecured notes due 2020 at an issue price of 99.10 percent in connection with its previously announced private offering. Endo used the net proceeds of this offering to partially finance the acquisition of Qualitest Pharmaceuticals, and to pay related fees and expenses.

Recent Acquisitions

On December 1, 2010, Endo Pharmaceuticals announced the completion of its acquisition of Qualitest Pharmaceuticals, a leading, privately held generics company in the U.S., for approximately $1.2 billion in cash.

On November 4, 2010, Endo Pharmaceuticals announced the completion of its acquisition of Penwest Pharmaceuticals, its partner on OPANA ER.

Octreotide Implant

In February 2011, the FDA requested additional pre-clinical studies, including a carcinogenicity study, be completed prior to the submission of the NDA for the Octreotide implant for the treatment of acromegaly.  Although this development potentially causes a delay of up to four years in the timing associated with regulatory approval of Octreotide for acromegaly, the company remains committed to this program and is encouraged by recent preliminary results from its Phase III study.  In addition, the company recently assessed all of its in-process research and development assets and concluded, separately, to discontinue development of its Octreotide implant for the treatment of carcinoid syndrome.  

Selected Product Review

PAIN PRODUCTS

LIDODERM®:  For the quarter ended December 31, 2010, net sales of LIDODERM increased 2 percent to $208 million, compared with $204 million in the same period a year ago. For the twelve months ended December 31, 2010, net sales of LIDODERM increased 2 percent to $783 million, compared with $764 million reported in the same period a year ago.

OPANA® ER and OPANA®:  Combined net sales for the OPANA franchise increased 30 percent to $83 million for the fourth quarter 2010, compared with $64 million in the same period a year ago. Combined net sales for the OPANA franchise increased 30 percent to $299 million for the twelve months ended December 31, 2010, compared with $231 million in the same period a year ago.

Voltaren® Gel: Fourth quarter 2010 net sales of Voltaren Gel increased 46 percent to $31 million, compared with $21 million for the same period in 2009. Net sales of Voltaren Gel for the twelve months ended December 31, 2010 increased 33 percent to $105 million, compared with $79 million for the same period in 2009.   

FROVA®: Net sales of FROVA were $15 million for the three months ended December 31, 2010, compared with $15 million for the same period in 2009. Net sales of FROVA were $59 million for the twelve months ended December 31, 2010, compared with $58 million for the same period in 2009.

PERCOCET®: Net Sales of PERCOCET were $31 million for the three months ended December 31, 2010, compared with net sales of PERCOCET in the same period in 2009 of $31 million.  For the twelve months ended December 31, 2010, net sales of PERCOCET were $121 million, compared with $127 million in the same period in 2009.

ONCOLOGY/ENDOCRINOLOGY PRODUCTS

SUPPRELIN® LA: Net sales of SUPPRELIN LA for the fourth quarter were $13 million compared with $10 million for the same period in 2009. Net sales of SUPPRELIN LA for the twelve months ended December 31, 2010 were $47 million compared with $28 million for the same period in 2009.  

VANTAS®: Net sales of VANTAS for the fourth quarter were $4 million compared with $6 million for the same period in 2009. Net sales of VANTAS for the twelve months ended December 31, 2010 were $17 million compared with $20 million for the same period in 2009.  

VALSTAR™: Net sales of VALSTAR for the fourth quarter were $5 million. Net sales of VALSTAR for the twelve months ended December 31, 2010 were $14 million.

OTHER BRANDED PRODUCTS

For the fourth quarter of 2010, net sales of other branded products were $5 million, compared with $8 million in the same period in 2009. For the twelve months ended December 31, 2010, net sales of other branded products were $22 million, compared with $27 million in the same period in 2009.

GENERIC PRODUCTS

For the fourth quarter of 2010, net sales from the company's generic products, which include Qualitest Pharmaceuticals results as of December 1, 2010, were $66 million, compared with $29 million in the same period in 2009. For the twelve months ended December 31, 2010, net sales from the company's generic products were $147 million, compared with $125 million in the same period in 2009.

DEVICES AND SERVICES

On July 12, 2010, Endo Pharmaceuticals completed its merger with HealthTronics, as a result of which HealthTronics has been acquired by, and is a wholly owned subsidiary of, Endo. Revenues from the HealthTronics subsidiary for the fourth quarter were $50 million. Revenues reported from the HealthTronics subsidiary for the twelve months ended December 31, 2010 were $102 million.