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UPDATE 3-Endo profit, sales beat as the drugmaker enters transition phase
February 28, 2017 / 12:10 PM / 9 months ago

UPDATE 3-Endo profit, sales beat as the drugmaker enters transition phase

* Q4 sales beat due to launch of quetiapine, ezetimibe

* Forecasts 2017 revenue, profit below estimates

* Shares rise as much as 6.47 pct to $14.15 (Adds conf call details)

By Natalie Grover

Feb 28 (Reuters) - Endo International Plc’s quarterly revenue and adjusted profit beat estimates, driven by two recently launched generic drugs, and new CEO Paul Campanelli braced investors for a tough year ahead as the drugmaker enters a period of transition.

With increasing pricing and competitive pressures in its U.S. generics business, Endo is now looking to focus on organic growth and drive margin improvements in 2017, Campanelli said on a post-earnings conference call.

The Dublin, Ireland-based drugmaker’s shares were up as much as 6.47 percent at $14.15 in morning trading on Tuesday.

While the company beat relatively low quarterly expectations, William Blair analysts still do not see a clear path forward for sustainable growth, saying the erosion of Endo’s base business will likely overshadow new product launches.

Campanelli led Endo’s generics business until he took over as CEO in September, inheriting a large debt load and mounting pressure after previous management spent years relying on acquisitions to foster growth.

Since his ascension to the helm, Endo has taken several steps to streamline operations and invest in its core products, particularly its Xiaflex injection, which is used to break down collagen.

Last month, Endo announced a restructuring program and eliminated 90 jobs, and returned the rights to pain drug Belbuca to BioDelivery Sciences International Inc.

Endo said on Tuesday it was divesting in the South Africa-based Litha Healthcare Group for $100 million, and had begun the process for the potential sale of its Mexico-based Somar business.

Adjusted profit and revenue for the fourth quarter, ended Dec. 31, beat Street estimates, driven by the launch of the antipsychotic quetiapine and cholesterol treatment ezetimibe, and demand for Xiaflex.

The drugmaker, however, forecast lower-than-expected 2017 revenue, a projection which is lower than its 2016 revenue of $4.01 billion, as it continues to expect declines in its older generics unit and legacy pain drug business.

Endo also forecast adjusted profit of $3.45-$3.75 per share - including a significant impact from a higher adjusted effective tax rate - below analysts’ estimates.

“We suspect the first full-year forecast under new CEO Paul Campanelli builds in some conservatism. There is no question numbers are light but again, expectations heading in were also very low,” RBC Capital’s Randall Stanicky said in a client note.

Endo’s quarterly net loss attributable to shareholders widened to $3.34 billion from $118.46 million, a year earlier, after taking a $3.5 billion asset impairment charge in the latest quarter, related to its generics unit. (Reporting by Natalie Grover in Bengaluru; Editing by Martina D‘Couto)

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