SOURCE: Endo Pharmaceuticals

October 30, 2008 07:54 ET

Endo Pharmaceuticals Reports Strong Third Quarter Financial Results

-- 18% Growth in Net Sales Driven by Demand for Branded Products

-- Adjusted EPS of $0.64 From Operations, Up 39% From 2007

-- Raises 2008 Adjusted EPS Guidance Range to $2.26 - $2.30

CHADDS FORD, PA--(Marketwire - October 30, 2008) - Endo Pharmaceuticals (NASDAQ: ENDP) today reported double-digit growth in net sales and adjusted earnings for the third quarter of 2008.

Net sales during the third quarter of 2008 increased 18% to $316.8 million compared with $269.5 million in the third quarter of 2007. Net income for the three months ended September 30, 2008 was $68.2 million compared with $59.1 million in the comparable 2007 period. As detailed in the Supplemental Financial Information below, adjusted net income for the three months ended September 30, 2008 was $76.1 million compared with $61.6 million in the same period in 2007.

Diluted earnings per share for the three months ended September 30, 2008 were $0.57 compared with $0.44 in the third quarter of 2007. Adjusted diluted earnings per share for the three months ended September 30, 2008 were $0.64 compared with $0.46 in the same period in 2007.

Net sales for the nine months ended September 30, 2008 were $913.2 million compared with $781.0 million in the comparable 2007 period. Diluted earnings per share for the nine months ended September 30, 2008 were $1.48 compared with $1.31 in the comparable 2007 period. Adjusted diluted earnings per share for the nine months ended September 30, 2008 were $1.70 compared with $1.40 in the same period in 2007.

Selected Product Review

LIDODERM®: For the quarter ended September 30, 2008, net sales of LIDODERM increased 11% to $194.1 million compared with $174.3 million in the same period a year ago. Prescription volume for LIDODERM increased 7% in the third quarter of 2008 versus the comparable 2007 period. For the nine months ended September 30, 2008, net sales of LIDODERM increased 13% to $559.7 million compared with $496.9 million in the same period a year ago. Prescription volume for LIDODERM increased 8% in the nine months of 2008 versus the comparable 2007 period.

OPANA® ER and OPANA®: Combined net sales for the OPANA franchise increased 73% to $41.5 million for the third quarter 2008 compared with $24.0 million in the same period a year ago. Prescription volume for OPANA ER and OPANA increased 80% in the third quarter 2008 versus the comparable 2007 period. For the nine months ended September 30, 2008, net sales for the OPANA franchise increased 64% to $128.2 million compared with $78.3 million in the same period a year ago. The 2007 nine month results include the recognition of $13.8 million in deferred revenue for commercial shipments of OPANA ER and OPANA made to customers in 2006.

PERCOCET®: Net sales of PERCOCET were $31.4 million for the three months ended September 30, 2008 compared with $31.6 million in the same period in 2007. Net sales of PERCOCET were $96.6 million for the nine months ended September 30, 2008 compared with $91.2 million in the same period in 2007.

FROVA®: Net sales of FROVA were $14.3 million for the three months ended September 30, 2008 compared with $13.5 million for the same period in 2007. Prescription volume increased 11% for the first nine months of 2008 versus the comparable 2007 period. For the nine months ended September 30, 2008, net sales of FROVA were $41.2 million compared with $38.4 million in the same period in 2007.

VOLTAREN® GEL: Net sales of VOLTAREN GEL were $11.3 million for the nine months ended September 30, 2008.

Generic Products: For the third quarter of 2008, net sales from the company's generic products were $22.4 million compared with $23.3 million in the same period in 2007. For the nine months ended September 30, 2008, net sales of the company's generic products were $68.2 million compared with $68.4 million in the same period in 2007.

Share Repurchase Program: Under the company's authorized share repurchase program approved in April 2008 by Endo's board of directors, the company has repurchased 17.7 million shares.

2008 Financial Guidance

Endo Pharmaceuticals raises its adjusted full-year 2008 earnings guidance range for fully diluted earnings per share from $2.15-$2.19 to $2.26-$2.30. The company reiterates guidance for 2008 annual net sales to be between $1.245 billion and $1.280 billion. The financial guidance for 2008 excludes the impact of any future business development transactions or acquisitions, estimated milestone payments to partners, certain contract termination costs, the expensing of stock-based compensation charges, certain separation benefits, and any asset impairment charges.

Note to Investors

Endo will conduct a conference call with financial analysts to discuss this news release today at 10:00 a.m. ET. Investors and other interested parties may call 800-591-6930 (domestic) or 617-614-4908 (international) and enter code 75851962. Please dial in 10 minutes prior to the scheduled start time.

A replay of the call will be available from October 30 at 1:00 p.m. ET until 12:00 a.m. ET on November 6 by dialing 888-286-8010 (domestic) or 617-801-6888 (international), passcode 83201262. A simultaneous webcast of the call may be accessed by visiting www.endo.com. In addition, a replay of the webcast will be available until 12:00 a.m. ET on November 6. The replay can be accessed by clicking on "Events" in the Investor Relations section of the website.

Supplemental Financial Information

The following tables provide a reconciliation of our GAAP statements of operations to our Adjusted statements of operations for each of the three months ended September 30, 2008 and September 30, 2007 (Certain prior period amounts have been reclassified to conform to the current period presentation) (in thousands, except per share data):

              Three Months Ended September 30, 2008
                           (Unaudited)

                             Upfront
                             and
                     Stock-  mile-                      Impair-
                     based   stone             Contract ment of
                     compen- payments Separa-  termina- long-
             Actual  sation  to       tion     tion     lived
             (GAAP)  expense partners benefits costs    assets    Adjusted
            -------- ------- -------- -------- -------- --------  --------

Net sales   $316,768      --       --       --       --       --  $316,768
Costs and
 expenses:
  Costs of
   sales      71,027      --       --       --       --       --    71,027
  Selling,
   general
   and
   administ-
   rative    116,249  (4,388)      --   (1,561)    (540)  (1,482)  108,278
  Research &
   develop-
   ment        22,165   (367)      --       --   (4,551)      --    17,247
            -------- ------- -------- -------- -------- --------  --------
Operating
 income      107,327   4,755       --    1,561    5,091    1,482   120,216
  Interest
   expense     2,830      --       --       --       --       --     2,830
  Interest
   and other
   income     (5,017)     --       --       --       --       --    (5,017)
            -------- ------- -------- -------- -------- --------  --------
Income
 before
 income
 taxes       109,514   4,755       --    1,561    5,091    1,482   122,403
  Income
   taxes      41,268                                                46,264
            --------                                              --------
Net income  $ 68,246                                              $ 76,139
            ========                                              ========

Diluted
 earnings
 per share   $  0.57                                              $   0.64
Diluted
 weighted
 average
 shares      119,954                                               119,794




                Three Months Ended September 30, 2007
                            (Unaudited)

                             Upfront
                             and
                     Stock-  mile-                      Impair-
                     based   stone             Contract ment of
                     compen- payments Separa-  termina- long-
            Actual   sation  to       tion     tion     lived
            (GAAP)   expense partners benefits  costs   assets    Adjusted
            -------- ------- -------- -------- -------- --------  --------
Net sales   $269,470      --       --       --       --       --  $269,470
Costs and
 expenses:
  Costs of
   sales      51,009      --       --       --       --       --    51,009
  Selling,
   general
   and
   adminis-
   trative   109,833  (3,320)      --       --       --       --   106,513
  Research
   &
   develop-
   ment       28,290    (387)    (439)      --       --       --    27,464
            -------- ------- -------- -------- -------- --------  --------
Operating
 income       80,338   3,707      439       --       --       --    84,484
  Interest
   expense        43      --       --       --       --       --        43
  Interest
   and
   other
   income     (9,776)     --       --       --       --       --    (9,776)
            -------- ------- -------- -------- -------- --------  --------
Income
 before
 income
 taxes        90,071   3,707      439       --       --       --    94,217
  Income
   taxes      30,924                                                32,582
            --------                                              --------
Net income  $ 59,147                                              $ 61,635
            ========                                              ========
Diluted
 earnings
 per share  $   0.44                                              $   0.46
Diluted
 weighted
 average
 shares      134,611                                               134,621

The following tables provide a reconciliation of our GAAP statements of operations to our Adjusted statements of operations for each of the nine months ended September 30, 2008 and September 30, 2007 (Certain prior period amounts have been reclassified to conform to the current period presentation) (in thousands, except per share data):

                 Nine Months Ended September 30, 2008
                            (Unaudited)

                             Upfront
                             and
                     Stock-  mile-                      Impair-
                     based   stone             Contract ment of
                     compen- payments Separa-  termina- long-
             Actual  sation  to       tion     tion     lived
             (GAAP)  expense partners benefits costs    assets    Adjusted
            -------- ------- -------- -------- -------- --------  --------
Net sales   $913,200      --       --       --       --       --  $913,200
Costs and
 expenses:
  Costs of
   sales     190,554      --       --       --       --       --   190,554
  Selling,
   general
   and
   administ-
   rative    357,775 (12,642)      --  (10,459)    (540)  (1,482)  332,652
  Research &
   develop-
   ment        82,244 (1,071)  (2,000)    (825)  (4,551)  (3,115)   70,682
  Impairment
   of other
   intangib-
   le assets   8,083      --       --       --       --   (8,083)       --
            -------- ------- -------- -------- -------- --------  --------
Operating
 income      274,544  13,713    2,000   11,284    5,091   12,680   319,312
  Interest
   expense     5,549      --       --       --       --       --     5,549
  Interest
   and other
   income    (21,295)     --       --       --       --       --   (21,295)
            -------- ------- -------- -------- -------- --------  --------
Income
 before
 income
 taxes       290,290  13,713    2,000   11,284    5,091   12,680   335,058
  Income
   taxes     103,491                                               120,571
            --------                                              --------
Net income  $186,799                                              $214,487
            ========                                              ========
Diluted
 earnings
 per share  $   1.48                                              $   1.70
Diluted
 weighted
 average
 shares      126,012                                               125,886


                    Nine Months Ended September 30, 2007
                               (Unaudited)

                             Upfront
                             and
                     Stock-  mile-                      Impair-
                     based   stone             Contract ment of
                     compen- payments Separa-  termina- long-
             Actual  sation  to       tion     tion     lived
             (GAAP)  expense partners benefits costs    assets    Adjusted
            -------- ------- -------- -------- -------- --------  --------
Net sales   $781,026      --       --       --       --       --   781,026
Costs and
 expenses:
  Costs of
   sales     155,324      --       --       --       --       --   155,324
  Selling,
   general
   and
   adminis-
   trative   292,419  (9,694)      --       --       --       --   282,725
  Research
   &
   develop-
   ment       83,663  (1,246)  (8,070)      --       --       --    74,347
  Impair-
   ment of
   other
   intangi-
   ble
   assets         --      --       --       --       --       --        --
            -------- ------- -------- -------- -------- --------  --------
Operating
 income      249,620  10,940    8,070       --       --       --   268,630
  Interest
   expense        90      --       --       --       --       --        90
  Interest
   and
   other
   income    (25,105)     --       --       --       --       --   (25,105)
            -------- ------- -------- -------- -------- --------  --------
Income
 before
 income
 taxes       274,635  10,940    8,070       --       --       --   293,645
  Income
   taxes      97,793                                               105,154
            --------                                              --------
Net income  $176,842                                              $188,491
            ========                                              ========
Diluted
 earnings
 per share  $   1.31                                              $   1.40
Diluted
 weighted
 average
 shares      134,491                                               134,566

For an explanation of Endo's reasons for using non-GAAP measures, see Endo's Current Report on Form 8-K filed today with the Securities and Exchange Commission.

About Endo

Endo Pharmaceuticals is a specialty pharmaceutical company engaged in the research, development, sale and marketing of branded and generic prescription pharmaceuticals used primarily to treat and manage pain. More information, including this and past press releases of Endo Pharmaceuticals Holdings Inc., is available at www.endo.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding, among other things, the company's financial position, results of operations, market position, product development and business strategy, as well as estimates of future net sales, future expenses, future net income and future earnings per share. Statements including words such as "believes," "expects," "anticipates," "intends," "estimates," "plan," "will," "may," "intend," "guidance" or similar expressions are forward-looking statements. Because these statements reflect our current views, expectations and beliefs concerning future events, these forward-looking statements involve risks and uncertainties. Investors should note that many factors could affect our future financial results and could cause our actual results to differ materially from those expressed in forward-looking statements contained in this press release. These factors include, but are not limited to: the inherent uncertainty of the timing and success of, and expense associated with, research, development, regulatory approval and commercialization of our products and pipeline products; competition in our industry, including for branded and generic products, and in connection with our acquisition of rights to assets, including intellectual property; government regulation of the pharmaceutical industry; our dependence on a small number of products and on outside manufacturers for the manufacture of our products; our dependence on third parties to supply raw materials and to provide services for certain core aspects of our business; new regulatory action or lawsuits relating to our use of controlled substances in many of our core products; our exposure to product liability claims and product recalls and the possibility that we may not be able to adequately insure ourselves; our ability to protect our proprietary technology; our ability to successfully implement our in-licensing and acquisition strategy; the availability of third-party reimbursement for our products; the outcome of any pending or future litigation or claims by the government; our dependence on sales to a limited number of large pharmacy chains and wholesale drug distributors for a large portion of our total net sales; a determination by a regulatory agency that we are engaging in inappropriate sales or marketing activities, including promoting the "off-label" use of our products; the loss of branded product exclusivity periods and related intellectual property; and exposure to securities that are subject to market risk including auction-rate securities the market for which is currently illiquid; and other risks and uncertainties, including those detailed from time to time in our periodic reports filed with the Securities and Exchange Commission, including our current reports on Form 8-K, quarterly reports on Form 10-Q and annual reports on Form 10-K, particularly the discussion under the caption "Item 1A, RISK FACTORS" in our annual report on Form 10-K/A for the year ended December 31, 2007, which was filed with the Securities and Exchange Commission on April 29, 2008. The forward-looking statements in this press release and on the related conference call are qualified by these risk factors. These are factors that, individually or in the aggregate, we think could cause our actual results to differ materially from expected and historical results. We assume no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

The following tables present Endo's unaudited net sales for the three months ended September 30, 2008 and September 30, 2007:

                    Endo Pharmaceuticals Holdings Inc.
                          Net Sales (unaudited)
                             (in thousands)

                              Three Months Ended
                                 September 30,

                               2008         2007
                            ---------    ---------
LIDODERM®                   $ 194,138    $ 174,326
OPANA® ER AND OPANA®           41,496       23,998
PERCOCET®                      31,371       31,644
FROVA®                         14,306       13,465
VOLTAREN® GEL                  10,299            -
Other Brands                    2,748        2,707
                            ---------    ---------
Total Brands                $ 294,358    $ 246,140

Total Generics              $  22,410    $  23,330
                            ---------    ---------
    Total Net Sales         $ 316,768    $ 269,470
                            =========    =========

The following tables present Endo's unaudited net sales for the nine months ended September 30, 2008 and September 30, 2007:

                    Endo Pharmaceuticals Holdings Inc.
                          Net Sales (unaudited)
                             (in thousands)

                              Nine Months Ended
                                 September 30,

                               2008         2007
                            ---------    ---------
LIDODERM®                   $ 559,712    $ 496,926
OPANA® ER AND OPANA®          128,171       78,274
PERCOCET®                      96,553       91,183
FROVA®                         41,247       38,365
VOLTAREN® GEL                  11,296            -
Other Brands                    8,031        7,837
                            ---------    ---------
Total Brands                $ 845,010    $ 712,585

Total Generics              $  68,190    $  68,441
                            ---------    ---------
    Total Net Sales         $ 913,200    $ 781,026
                            =========    =========

The following table presents condensed consolidated cash flow data for the nine months ended September 30, 2008 and September 30, 2007:

                    Endo Pharmaceuticals Holdings Inc.
            Condensed Consolidated Cash Flow Data (unaudited)
                             (in thousands)

                                                       Nine Months Ended
                                                          September 30,

                                                         2008       2007
                                                      ---------  ---------
Net cash provided by operating activities             $ 228,109  $ 287,431
Net cash provided by (used in) investing activities     153,486   (630,624)
Net cash used in financing activities                   (98,961)   (10,008)
                                                      ---------  ---------
Net increase (decrease) in cash and cash equivalents  $ 282,634  $(353,201)
                                                      ---------  ---------
Cash and cash equivalents, beginning of period        $ 350,325  $ 628,085
Cash and cash equivalents, end of period              $ 632,959  $ 274,884
                                                      =========  =========

Contact Information

  • CONTACT:
    Blaine Davis
    (610) 459-7158