Glenview Capital and Endo International
Glenview Capital Management added to its position in Endo International Plc (ENDP) in the third quarter. Currently, the position accounts for 2.02% of the fund’s total portfolio. The fund added 1,727,854 shares to its existing holding during the quarter.
Overview of Endo International
ENDP is a global specialty healthcare company. It develops, manufactures, markets, and distributes quality branded pharmaceutical and generic products and medical devices through its operating companies—mainly Endo Pharmaceuticals, QualiTest, American Medical Systems (AMMD), Paladin Labs, and Somar. It has its global headquarters in Dublin, Ireland. Its US headquarters are in Malvern, Pennsylvania.
In July, ENDP completed the acquisition of Grupo Farmaceutico Somar, or Somar. It’s a leading, privately-owned specialty pharmaceuticals company based in Mexico City. On August 6, it completed the acquisition of DAVA Pharmaceuticals, Inc. DAVA is a privately-held company. It specializes in generic pharmaceuticals.
ENDP has four reportable segments:
- US Branded Pharmaceuticals—Endo Pharmaceuticals
- US Generic Pharmaceuticals—Qualitest
- International Pharmaceuticals
ENDP to merge with Auxilium
In October, ENDP and Auxilium Pharmaceuticals announced a merger agreement. The transaction is valued at $2.6 billion, including the repayment and assumption of debt. A release said after the transaction is complete, ENDP’s pharmaceutical portfolio will have a broader offering of urology and orthopedic products. The offerings are natural complements to its current men’s health and pain products. It expects the combined company to achieve annual cost synergies of ~$175 million.
Revenues grow 16%, swings to a net loss
ENDP’s third quarter revenues came at $764 million. This was an increase of 16%—compared to 3Q13 revenues of $661 million. The increased revenue was due to growth in its US Generic Pharmaceuticals segment, revenues related to the February 2014 acquisition of Paladin, and the acquisition of Somar in July 2014.
3Q14 generic product net sales of $319 million increased 74%—compared to 3Q13 generic product net sales. This was due to the addition of sales from Boca Pharmacal and DAVA Pharmaceuticals.
ENDP reported a net loss of $252 million in 3Q14—compared to net income of $40 million in 3Q13. Adjusted diluted EPS (earnings per share) fell 14% to $1.15—compared to $1.34 for the same period in 2013. This was mainly due to the loss of exclusivity for the branded drug Lidoderm. It treats a specific type of nerve-related pain associated with shingles.
Glenview’s positions in 3Q14
The fund added new positions in Actavis (ACT), Danaher Corp. (DHR), Realogy Holdings Corp. (RLGY), and 21st Century Fox (FOXA). Its top exit was Walgreens (WAG). It raised stakes in Pentair Plc (PNR), Liberty Global Plc (LBTYA), ENDP, and Fidelity National Financial (FNF).
The next part of this series will highlight the fund’s position change in FNF.