Endo Health Solutions (NSDQ:ENDP) managed to boost its profits by 270% during the 2nd quarter, despite declining sales and a $60 million set-aside for lawsuits filed over the pelvic mesh business it acquired along with American Medical Systems for nearly $3 billion in 2011.
Endo Health posted profits of $35.0 million, or 30¢ per share, on sales of $766.5 million during the 3 months ended June 30. That represents a bottom-line gain of 269.8% but a sales decline of 2.4% compared with Q2 2012.
Adjusted to exclude 1-time items, including the $60 million charge from the settlement of legal claims against AMS stemming from its transvaginal surgical mesh products designed to treat pelvic organ prolapse and stress urinary incontinence.
"I’m pleased with the progress that the company has made in implementing our new strategic vision," president & CEOP Rajiv De Silva said in prepared remarks. "We’re making good progress on all of the actions we announced on June 5. Our expense reduction efforts are on track to meet our objectives, we have made progress in the exploration of strategic alternatives for HealthTronics and our branded pharmaceutical discovery platform, and we have positive organic growth momentum within each of our core businesses. I believe that with a continued sharp focus on our strategic priorities, the right cost structure and disciplined execution, Endo will meet and strive to exceed the expectations of our customers, employees, shareholders and patients."
Sales for AMS during the quarter were down 2% to $126 million, "primarily attributable to a decrease in U.S.-based sales," according to a press release.
"The decrease in U.S.-based sales is primarily attributable to a continued decrease in women’s health sales. Worldwide sales of women’s health products decreased 15% in the 2nd quarter 2013, compared to the same period last year," according to the release. "The decrease in women’s health sales is attributable to year-over-year declines in U.S.-based procedural volumes reflecting on-going industry shifts following the FDA’s September 2011 advisory committee meeting regarding the use of surgical mesh in pelvic organ prolapse. AMS remains focused on educational activities as part of an overall effort to continue to encourage patients and physicians to discuss the risks and benefits of AMS’s surgical mesh devices as an important treatment option for patients who suffer from stress urinary incontinence and/or pelvic organ prolapse."
Endo Health said it expects sales of between $2.70 billion and $2.80 billion for 2013, with earnings per share of $1.47-$1.77 and adjusted EPS of $4.25-$4.55.
The news sent ENDP shares down 3.1% to a $36.30 close yesterday. The stock was trading at $36.85 per share as of about 3:45 p.m. today, up 1.5%.