There’s nothing worse for an acquirer than finding out that what they are buying is not what it seems. Good news for Endo Health (ENDP) as Paladin Labs (PLB.TO) posted solid third quarter results.
Last week, Endo Health announced plans to purchase Paladin Labs, a Canadian specialty pharmaceutical manufacturer, for $1.6 billion. Both companies will be folded into a newly-formed Irish holding company. ENDP expects the acquisition to boost profits as soon as the transaction closes in early 2014.
PropThink has been bullish on ENDP all year. The stock fell 25% in 2012 based on growing concerns about declining sales for its opiate painkiller, Opana ER.
Paladin reported $71 million in revenues for the third quarter, ended September 30 2013, an increase of 6%. The increase is mostly attributable to the acquisition of Binotal and the sales growth of Paladin’s promoted products. Revenues were slightly behind consensus estimates of $72.7 million.
Net income was $13.6 million or $0.64 per fully diluted share, in line with consensus estimates of $0.63. Results compare to net income of $24.9 million or $1.19 per fully diluted share the same quarter a year ago. The drop in net income was largely attributable to a revaluation of investments in the year-earlier period that resulted in a $12.2 million pretax gain.
As at September 30 2013, Paladin’s cash, cash equivalents and investments in marketable securities, net of bank overdraft, totaled $230.7 million.