Endo Pharmaceuticals Holdings (ENDP) Q3 2011 Earnings Call October 27, 2011 10:00 am ET Executives Alan G. Levin - Chief Financial Officer and Executive Vice President Julie H. McHugh - Chief Operating Officer Ivan P. Gergel - Executive Vice President of Research & Development Blaine T. Davis - Vice President of Investor Relations & Corporate Communications
I would like to remind you that any forward-looking statements by management are covered under the Private Securities Litigation Reform Act of 1995 and subject to change, risks and uncertainties described in today's press release and in our filings with the SEC.In addition, during the course of this call, we may refer to non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States and that may be different from non-GAAP financial measures used by other companies. Investors are encouraged to review Endo's current report on Form 8-K filed with the SEC for Endo's reasons for including those non-GAAP financial measures in this earnings announcement. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is contained in our sales and earnings press release issued earlier this morning. With that, I'd like to turn the call over to Dave. David P. Holveck Thank you, and good morning. Endo had a strong third quarter, with record revenues of $759 million and adjusted diluted earnings per share of $1.25. These results reflect our continued focus on integration of our newly acquired businesses, solid demand for our products and our commitment to financial discipline and debt reduction. Our core business has continued to grow and performed well, with strong contributions from OPANA ER, Voltaren Gel and LIDODERM. Sales of branded and non-promoted drugs in our legacy business rose 17% year-over-year. Our acquisitions have added growth and created substantial diversification for our company. In the third quarter, the Generics and Devices and Services segments contributed 44% of company revenues. You may recall that we significantly increased our financial guidance during our August earning call. Reflecting on our continued focus on robust operational execution this year, we are reaffirming that guidance for 2011 of $2.72 billion to $2.8 billion in revenue and adjusted diluted earnings per share of $4.55 to $4.65.
But consistent with our strategic objectives, the primary use of our free cash is to pay down debt. During the quarter, we made payments of $151 million to reduce term loan debt associated with our recent acquisition of American Medical Systems. Over the last several months, we solidified our expectations for the range of revenue and costs synergies associated with the AMS transaction.We've taken steps to solidify our relationships with urologists and urogynecologists. Those relationships are an important driver of growth in our urology franchise. We are now calling on a majority of urologists in the United States, up significantly from last year. Importantly, there is relatively minimal overlap across the different components of our commercial organization. This, we believe, will ultimately lead to a larger number of more comprehensive relationships with providers and a higher return on our promotional investments. We've identified potential cross-selling opportunities for the AMS Men's Health franchise and FORTESTA Gel. In addition, the company is exploring opportunities to expand the utilization of Endocare cryoablation therapy and the AMS GreenLight laser through our HealthTronics franchise. These and other initiatives are now being piloted by our commercial organization, and we expect to see the results of this pilot effort early next year, at which time, we will assess whether these efforts should be scaled nationally. Looking forward, we believe that having good data is critical to enhancing the organic growth potential of our urology franchise. Data gives us unique insights into our customers, both providers and payers, and helps us chart the path forward in urology. In order to support this strategy, our HealthTronics business recently made 2 strategic investments in UroChart and meridian, 2 profitable providers of electronic medical records software for urologists. These investments will enhance HealthTronics service offerings in the urology practice management and further solidify Endo's contractual relationship with approximately 1,800 practicing urologists, many of whom are new to Endo. Read the rest of this transcript for free on seekingalpha.com