(Reuters) - Endo International Plc (ENDP.O) reported a higher-than-expected quarterly adjusted profit, driven by strong demand for its newly launched generic drugs, sending its shares up more than 16 percent.
The strong results, particularly in the generics business, allayed investor concerns amid intense political and regulatory scrutiny into the drugmaker for suspected price collusion.
Endo, along with many of its peers, is being investigated by U.S. federal regulators for price-fixing of generic drugs.
The company warned in November of increasing pressure on its generics business in 2017. The unit accounted for more than half of the company’s revenue in 2016.
Endo said total U.S. sales of generic drugs increased about 24 percent to $722 million in the first quarter ended March 31, topping the average Wall Street estimate of $703 million, according to RBC Capital Markets.
U.S. generics sales were mainly driven by the launch of Endo’s anti-psychotic drug quetiapine and cholesterol treatment ezetimibe.
The two drugs generated about $200 million in combined sales in the quarter, Endo Chief Executive Paul Campanelli said, but added that the number was lower than the company’s own expectations.
The company also forecast lower sales for the two drugs for the rest of the year.
Excluding sales from the company’s new generic drugs and its sterile injectables business, sales in the U.S. generic business dropped 32 percent, primarily due to product discontinuation and competition.
“While we continue to have concerns about Endo’s long-term earnings power – and even the sustainability into second half of 2017 – we expect this earnings report will be greeted by a measure of relief,” Barclays analysts wrote in a client note.
Net loss attributable to Endo shareholders widened to $173.8 million, or 78 cents per share, from $133.9 million, or 60 cents per share, a year earlier.
The latest quarter included an asset impairment charge of about $204 million, compared with a charge of about $130 million a year earlier.
Excluding items, Endo earned $1.23 per share, well above the average analysts estimate of $1.10 per share, according to Thomson Reuters I/B/E/S.
The Dublin, Ireland-based drugmaker, which reaffirmed its full-year adjusted profit and revenue forecast, said total revenue rose 7.7 percent to $1.04 billion, narrowly beating the average estimate of $1.02 billion.
Endo’s shares were trading 16 percent higher at $12.63. Up to Friday’s close, the stock had fallen 32 percent in last 12 months.
Reporting by Divya Grover in Bengaluru; Editing by Anil D'Silva and Saumyadeb Chakrabarty