Endo Closes Boca Pharmacal Acquisition - Analyst Blog
February 04 2014 - 6:45PM
Zacks
Endo Health Solutions (ENDP) completed its
acquisition of privately held generics company Boca Pharmacal for
$225 million in cash. The acquisition, which will be earnings
accretive immediately, should boost Endo’s Qualitest (formerly
generics) portfolio.
The decision to buy Boca Pharmacal, which focuses on the
commercialization and development of products including controlled
substances, semisolids, and solutions, is a strategic move by Endo
as it strives to combat the lost revenues from genericization of
its key painkillers and other drugs.
We note that the Qualitest segment at Endo performed well in the
third quarter of 2013 with sales climbing 11% to $183.9 million
driven by increased demand for generic drugs. The acquisition of
Boca Pharmacal should boost segmental sales further.
Endo also announced that it has completed its divestiture of the
struggling HealthTronics division (formerly sevices) to Altaris
Capital Partners, LLC for an upfront cash payment of $85 million.
Endo is also eligible to receive up to $45 million depending on the
performance of the HealthTronics division. The deal was announced
in Jan 2014.
We note that Endo had earlier sold two sub-groups -- image guided
radiation therapy and anatomical pathology – of the HealthTronics
unit for a total of $25 million. We remind investors that Endo had
acquired HealthTronics in 2010. The business, which provided
urological services, products and support systems, was
underperforming for quite some time.
We note that HealthTronics was not the only concern plaguing the
company. The threat of genericization looms large over Endo. Endo's
third-quarter 2013 revenues declined year over year as its
painkillers Opana ER and Lidoderm faced stiff generic competition
from companies like Actavis (ACT).
Endo carries a Zacks Rank #3 (Hold). Some better-ranked stocks
include Affymetrix Inc. (AFFX) and
Actelion Ltd. (ALIOF). Both the stocks hold a
Zacks Rank #1 (Strong Buy).
ACTAVIS PLC (ACT): Free Stock Analysis Report
AFFYMETRIX INC (AFFX): Free Stock Analysis Report
ACTELION LTD (ALIOF): Get Free Report
ENDO PHARMACEUT (ENDP): Free Stock Analysis Report
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