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EI

Endo, Inc. (NDOI)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $392.8M (-6% YoY), GAAP diluted EPS was -$1.69, and Adjusted EBITDA was $99.0M; management reaffirmed FY2025 guidance for $1.775–$1.860B revenue and $620–$650M Adjusted EBITDA, citing H2-weighted phasing from XIAFLEX and sterile launches .
  • Branded strength (XIAFLEX +7% YoY to $121.4M) offset ongoing pressure in Sterile Injectables (VASOSTRICT -69% YoY; ADRENALIN vials -49% YoY), while “other” sterile injectables grew +11% YoY and ADRENALIN RTU bag adoption progressed, with additional concentrations launching mid-May .
  • Balance sheet remained stable with $369.7M cash at 3/31/25; CFO noted net debt to Adjusted EBITDA ~3.6x and reiterated H2 improvement in revenue, gross margin, and EBITDA vs H1 .
  • Strategic catalysts: combination with Mallinckrodt (S-4 filed; closing targeted H2’25) and divestiture of International Pharmaceuticals (target close mid-2025) remain on track; company plans to separate combined generics/sterile business post-close .

What Went Well and What Went Wrong

  • What Went Well
    • XIAFLEX delivered another solid quarter: revenues +7% YoY to $121.4M, with growth across both indications; management emphasized ongoing awareness and access initiatives and durable IP .
    • Sterile injectables pipeline execution: three FDA submissions in Q1, 2025 goal of 7 submissions and 3 launches on track; ADRENALIN RTU bag adoption broadening with more dosage forms to come .
    • Guidance held steady despite headwinds; management called out typical H2 weighting, sterile launches ramp, and lower H2 OpEx as drivers of confidence .
  • What Went Wrong
    • Sterile Injectables headwinds persisted: VASOSTRICT -69% YoY and ADRENALIN vials -49% YoY as pricing/competition weighed on legacy vial formats .
    • Mix and investments pressured profitability: Adjusted EBITDA fell to $99.0M (from $146.3M YoY), with lower adjusted gross margin versus prior year tied to segment mix and sterile manufacturing investments .
    • Generics remained soft (-4% YoY), with dexlansoprazole pressure offset by +16% growth in lidocaine patch revenue; management also cited potential tariff exposure concentrated in Generics (imports from India) .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($M)$426.5 $467.5 $392.8
GAAP Diluted EPS ($)-$3.06 -$4.59 -$1.69
Adjusted EBITDA ($M)$151.3 $163.9 $99.0
GAAP Gross Margin (%)(5.1)% 13.9% 24.8%
Adjusted Gross Margin (%)67.4% 64.0% 61.8%
Net Loss ($M)$(232.8) $(349.3) $(128.6)

Segment and key product revenues (Q1 2025 vs Q1 2024):

Segment/Product ($M)Q1 2024Q1 2025YoY
Branded Pharmaceuticals$200.8 $209.5 +4%
- XIAFLEX$113.0 $121.4 +7%
- SUPPRELIN LA$20.1 $27.4 +36%
Sterile Injectables$98.2 $71.3 -27%
- ADRENALIN vials$27.4 $14.1 -49%
- VASOSTRICT$27.0 $8.3 -69%
- Other Sterile Injectables$43.9 $48.9 +11%
Generic Pharmaceuticals$103.3 $99.1 -4%
International Pharmaceuticals$17.2 $13.0 -24%
Total Revenues, Net$419.5 $392.8 -6%

KPIs and cash flow

KPIQ4 2024Q1 2025
Cash & Cash Equivalents ($M)$387.2 (12/31/24) $369.7 (3/31/25)
Cash from Operations ($M)N/A$1.1
Capital Expenditure ($M)N/A$13.6
Net Debt / Adjusted EBITDA (x)N/A~3.6x (CFO)

Notes on non-GAAP adjustments (Q1 2025):

  • Inventory step-up amortization ($84.0M) and intangible amortization ($62.6M) materially depressed GAAP gross margin; integration costs ($22.2M) also impacted operating expenses .

Guidance Changes

MetricPeriodPrevious Guidance (3/13/25)Current Guidance (5/7/25)Change
Total Revenues, NetFY 2025$1.775–$1.860B $1.775–$1.860B Maintained
Adjusted EBITDAFY 2025$620–$650M $620–$650M Maintained
Branded RevenueFY 2025$895–$920M $895–$920M Maintained
Sterile Injectables RevenueFY 2025$360–$395M $360–$395M Maintained
Generics RevenueFY 2025$450–$475M $450–$475M Maintained
International RevenueFY 2025~ $70M ~ $70M Maintained
Adjusted Gross MarginFY 2025~64% ~64% Maintained
Adjusted Operating ExpensesFY 2025$590–$610M $590–$610M Maintained

Context: Guidance excludes tariff changes and will be updated for International divestiture post-close .

Earnings Call Themes & Trends

TopicQ3 2024 (prev-2)Q4 2024 (prev-1)Q1 2025 (current)Trend
AI/technology initiativesNot highlighted in PR Not highlighted in PR Using AI/data science to improve call-center and go-to-market; Apple Vision Pro spatial simulator for PD injections Increasing digital enablement
Supply chain/sterile opsTemporary supply disruptions expected to be resolved by YE’24 Resolution of prior sterile supply disruptions; ADRENALIN RTU launched RTU bag adoption expanding; more dosage forms, supply availability to widen Improving availability; mix shift to RTU
Macro/tariffsNot discussed Not discussed Tariff exposure manageable; ~70% revenue from US-made products; Generics most exposed (India) Risk monitored; mitigation via inventory/location
Product performanceXIAFLEX +13% YoY to $128M XIAFLEX $148M, flat YoY; +8% volume (prior-year reserve reversal) XIAFLEX +7% YoY to $121.4M Sustained growth driver
Regulatory/R&D—ADRENALIN RTU first FDA-approved premix; asset impairment 3 FDA sterile submissions; PFI Phase 3 DMC: continue; new indications planned (hammer toe, urethral stricture, arthrofibrosis) Active pipeline
Corporate actions—Mallinckrodt combination announced S-4 filed, antitrust filed; H2’25 close targeted; International divestiture mid-2025 On track

Management Commentary

  • Interim CEO: “Endo had a good start to the year… all segments… on target… reaffirming full year guidance” .
  • On XIAFLEX growth drivers: “Both indications delivered solid revenue growth… driven by an increase in volumes associated with underlying demand” .
  • On sterile strategy: “Differentiated RTU products… ADRENALIN RTU bag… expect continued growth as we increase supply and introduce additional dosage forms” .
  • On H2 cadence: “Trajectory of revenue is much higher in the second half… higher gross margin… lower OpEx in H2… step-up in revenue, gross margin and EBITDA versus Q1” (CFO) .
  • On tariffs: “~70% of revenues from products produced in the U.S.… Generics segment has the most exposure to potential tariffs, specifically on imports from India” (CFO) .

Q&A Highlights

  • H2-weighted EBITDA cadence: Management comfortable reaffirming guidance; expects revenue, gross margin, and EBITDA to step up in H2 on seasonally higher XIAFLEX and ramp of RTU sterile launches; OpEx lower in H2 than H1 .
  • Gross-to-net: “Nothing unusual” in Q1; segments tracking expectations; no material change in cadence signaled .
  • Sterile competitive dynamics: Strategy focused on differentiated RTU/dosage forms; scaling ADRENALIN RTU across hospitals to offset vial erosion; additional dosage forms broaden solution set .
  • XIAFLEX marketing: Campaigns designed to expand diagnosis/awareness and drive nonsurgical treatment adoption rather than share shifts from another drug .

Estimates Context

  • S&P Global/Capital IQ Wall Street consensus for NDOI was unavailable via our data connector at the time of analysis; therefore, we cannot present revenue/EPS vs-consensus comparisons. Management’s performance is assessed vs. prior-year/quarter and against reaffirmed FY2025 guidance .

Key Takeaways for Investors

  • H2 setup: Seasonal XIAFLEX plus sterile RTU ramp and lower H2 OpEx underpin reaffirmed FY guide despite Q1 margin/EBITDA trough; monitor execution on RTU bag adoption and dosage expansion .
  • Core growth engine intact: XIAFLEX continues steady growth with new awareness efforts and provider training technology; pipeline exploring additional musculoskeletal/urologic indications with objective endpoints .
  • Sterile Injectables mix pivot: Legacy vial erosion remains a headwind, but RTU innovation (first FDA-approved epinephrine premix) and added concentrations (8 mg/250 mL shipping week of May 19) seek to stabilize and grow the segment over 2025 .
  • Balance sheet/Leverage: ~$370M cash and ~3.6x net debt/Adj. EBITDA provide runway; EBITDA phasing should improve leverage optics in H2 if execution holds .
  • Strategic optionality: Mallinckrodt combination and International divestiture on track; potential post-close separation of combined generics/sterile business could sharpen focus and capital allocation .
  • Risk watch: Generics pricing/tariff exposure (India), sterile competition, and mix-related gross margin sensitivity; inventory and sourcing plans are in-flight mitigants .
  • Near-term trading catalysts: ADRENALIN RTU demand trajectory, PFI Phase 3 top-line around year-end, updates on transaction milestones/regulatory approvals, and any guidance updates post-International divestiture close .

Additional Relevant Q1 2025 Press Releases

  • Spatial Computing Injection Simulator launch for Peyronie’s (Apple Vision Pro) to support XIAFLEX injection training and provider confidence .
  • Expansion of ADRENALIN RTU premixed IV bag line (8 mg/250 mL) with shipments commencing week of May 19, 2025; additional concentrations planned .