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EI

Endo, Inc. (NDOI)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 net revenue was $426.506M, down 6% YoY; GAAP diluted EPS was $(3.06); Adjusted EBITDA rose 6% YoY to $151.299M, reflecting cost reductions and improved adjusted gross margin .
  • Management reaffirmed FY2024 guidance for total net revenue ($1.72–$1.78B) and adjusted EBITDA ($635–$655M), while lowering Sterile Injectables and raising Generic Pharmaceuticals assumptions; the mix shift underscores ongoing pressure in injectables and resilience in generics .
  • XIAFLEX revenue increased 13% YoY to $127.992M on strong demand and higher net price; CEO highlighted the franchise as a growth driver in both Peyronie’s disease and Dupuytren’s contracture .
  • Liquidity remained solid with $367.574M in unrestricted cash at quarter-end; October repricing of the $1.5B term loan reduces interest by ~$8M annually, a tangible cash interest tailwind into 2025 .
  • Near-term catalysts: FY24 guidance reaffirmation, continued XIAFLEX momentum, resolution of temporary supply disruptions by year-end, and lower cash interest from the loan repricing .

What Went Well and What Went Wrong

What Went Well

  • XIAFLEX revenues up 13% YoY to $127.992M, driven by strong underlying demand and higher average net selling price; “XIAFLEX® franchise grew 13%” (Interim CEO Scott Hirsch) .
  • Adjusted EBITDA increased to $151.299M (+6% YoY), aided by reduced operating costs and improved adjusted gross margin (67.4%) .
  • Guidance reaffirmed at the consolidated level (Total Revenues and Adjusted EBITDA), signaling confidence despite segment mix changes; Generics assumptions were raised ($430–$440M from $410–$420M) .

What Went Wrong

  • Total net revenue fell 6% YoY due to competitive pressure in Generics and Sterile Injectables; GAAP gross margin was negative (-5.1%) on inventory step-up (fresh-start accounting) .
  • Sterile Injectables revenue dropped 16% YoY to $80.128M, with VASOSTRICT down 26% YoY amid competitive pressures and temporary supply disruptions .
  • GAAP net loss widened to $(232.776)M versus $(28.483)M in the prior year, largely from fresh-start accounting effects; operating cash flow in the quarter was approximately $12M vs. ~$131M in Q3 2023 due to escrowed professional fee payments and higher interest/taxes .

Financial Results

Consolidated metrics vs prior periods

MetricQ3 2023Q2 2024 (Combined)Q3 2024
Total Revenues, Net ($USD Millions)$451.665 $446.630 $426.506
GAAP Diluted EPS ($USD)$(0.12) $(1.95) $(3.06)
Adjusted EBITDA ($USD Millions)$143.050 $175.781 $151.299
Adjusted Net Income ($USD Millions)$131.441 $104.693 $61.963
Adjusted Gross Margin (%)63.6% 67.4% 67.4%
GAAP Gross Margin (%)49.0% (17.4)% (5.1)%

Segment revenue breakdown

Segment ($USD Millions)Q3 2023Q2 2024 (Combined)Q3 2024
Branded Pharmaceuticals$203.368 $225.069 $217.180
Sterile Injectables$95.381 $90.771 $80.128
Generic Pharmaceuticals$134.382 $110.082 $110.830
International Pharmaceuticals$18.534 $20.708 $18.368
Total Revenues, Net$451.665 $446.630 $426.506

Product KPIs

KPI ($USD Millions unless noted)Q3 2023Q2 2024 (Combined)Q3 2024
XIAFLEX Revenue$113.053 $126.642 $127.992
SUPPRELIN LA Revenue$21.590 $20.596 $19.130
VASOSTRICT Revenue$20.827 $15.282 $15.412
ADRENALIN Revenue$22.873 $25.875 $21.463

Liquidity snapshot

MetricQ2 2024 (Successor)Q3 2024 (Successor)
Unrestricted Cash & Cash Equivalents ($USD Millions)$293.536 $367.574
Term Loan Repricing (SOFR + 4.0%, annual interest savings)—~$8M savings per year

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenues, Net ($USD Millions)FY2024$1,720–$1,780 $1,720–$1,780 Maintained
Adjusted EBITDA ($USD Millions)FY2024$635–$655 $635–$655 Maintained
Branded Pharmaceuticals ($USD Millions)FY2024$875–$905 $875–$905 Maintained
Sterile Injectables ($USD Millions)FY2024$370–$390 $350–$370 Lowered
Generic Pharmaceuticals ($USD Millions)FY2024$410–$420 $430–$440 Raised
International Pharmaceuticals ($USD Millions)FY2024~$65 ~$65 Maintained
Adjusted Gross Margin (%)FY2024~67% ~67% Maintained
Adjusted Operating Expenses ($USD Millions)FY2024$595–$615 $595–$615 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3)Trend
XIAFLEX performanceQ2: XIAFLEX $127M (+8% YoY), volume +8% vs Q1; stable demand/pricing Q3: XIAFLEX $127.992M (+13% YoY), demand and price strength Improving YoY momentum
Sterile Injectables pressuresQ2: -34% YoY; Novavax settlement boosted prior-year base; competitive pressures Q3: -16% YoY; VASOSTRICT decline; temporary supply issues expected to resolve by YE24 Still pressured; supply easing expected
Generic pricing/mixQ2: -38% YoY; pressure in varenicline/dexlansoprazole; lidocaine patch offset Q3: -18% YoY; similar pressures; FY24 guidance raised for Generics Stabilizing into FY24
R&D execution (PFA with CCH)Q2: Phase 2 initiated; assessing data timing Q3: Phase 2 did not meet primary endpoint; post-hoc suggests clinical benefit in moderate–severe subgroup; next steps under evaluation Mixed; subgroup signal, primary endpoint miss
Supply chainQ2: Temp disruptions impacted some brands in 2023; improvement noted Q3: Temp supply disruptions expected to be substantially resolved by end of 2024 Improving by YE24
Financing/interestQ2: Exit financing used to acquire assets; term structure established Q3: Term loan repriced; ~50 bps rate cut, ~$8M annual interest savings Positive interest tailwind
Legal/regulatoryQ2: Litigation-related items impacted prior periods; non-GAAP adjustments Q3: Litigation-related and other contingencies $0.200M; non-GAAP reconciliation provided Stable/low impact

Management Commentary

  • “During the quarter, Endo’s XIAFLEX® franchise grew 13%, with strong performance from both the Peyronie’s disease and Dupuytren’s contracture indications.” — Scott Hirsch, Interim CEO .
  • “We continue to achieve our 2024 financial objectives, underscoring both our dedication to patients and our focus on delivering value to our stakeholders.” — Scott Hirsch .
  • Temporary supply disruptions across several injectables are expected to be substantially resolved by year-end 2024, supporting segment normalization .
  • On PFA Phase 2: primary endpoint not met, but post-hoc analysis suggests clinically meaningful benefit in moderate–severe subgroup; safety consistent with prior CCH studies .
  • Term loan repricing: SOFR + 4.0% rate, ~50 bps lower, expected ~$8M annual interest expense savings, with maturity unchanged .

Q&A Highlights

  • The company hosted an investor call at 8:30 a.m. ET on November 5, 2024; however, a call transcript was not available in the document set. As such, specific Q&A themes and management responses cannot be summarized .

Estimates Context

  • S&P Global consensus estimates (EPS, revenue, EBITDA, target price, recommendation) for NDOI were unavailable due to missing CIQ mapping; therefore, we cannot quantify Street beats/misses for Q3 2024. We will revisit when the mapping is added to SPGI systems [SpgiEstimatesError: Missing CIQ mapping for NDOI].
  • Management’s October 21 pre-announcement estimated Q3 revenue “$425M” and adjusted EBITDA “$150M,” which aligned with the reported $426.506M and $151.299M; this indicates delivery against internal expectations, not Wall Street consensus .

Key Takeaways for Investors

  • XIAFLEX remains the core growth engine, with double-digit YoY growth and supportive pricing dynamics; sustained performance here is central to the Branded segment thesis .
  • Sterile Injectables headwinds persist, but supply issues are expected to ease by year-end, potentially stabilizing performance into FY2025 .
  • Generics outlook improved (FY24 guidance raised), suggesting mix resilience despite category pressure; watch lidocaine patch offsets vs. varenicline/dexlansoprazole declines .
  • Reaffirmed FY24 consolidated guidance supports confidence in near-term execution; monitor Q4 trajectory to validate full-year targets .
  • The ~$8M annual interest savings from the term loan repricing is a clear cash interest tailwind, enhancing free cash flow durability into 2025 .
  • Fresh-start accounting effects (inventory step-up) depress GAAP margins; rely on adjusted metrics (67.4% adjusted gross margin) for run-rate profitability signaling .
  • R&D/PFA pathway remains uncertain after the Phase 2 miss; subgroup signal offers optionality, but regulatory path will depend on further analyses and FDA interactions .