Endo Health Solutions Inc. on Wednesday partially reversed course on several years of expansion, saying it will explore strategic options for two businesses and eliminate almost 700 jobs.
The company said it will consider options for its HealthTronics urology business and for its branded drug development platform. It also plans to eliminate about 15 percent of its staff positions and reduce annual spending by about $325 million. Endo said it will take $60 million in one-time charges this year, mostly from severance payments, and estimated savings of about $150 million in 2013. It expects to reach its savings targets by mid-2014.
Endo had 4,629 employees as of Feb. 20.
CEO Rajiv De Silva, who joined the company in March, said Endo will focus on branded drugs, generic drugs made by its Qualitest unit, and its American Medical Systems business, which sells urology products and services.
The company wants to make its research and development more efficient and effective, focusing on developing drugs that will bring it more revenue in the near future like generic drugs and lower-risk projects. Endo also said it will pursue acquisitions that will add to its net income and will be disciplined in its spending.
In 2010 and 2011 Endo spent about $4.5 billion to buy Qualitest, American Medical Systems, HealthTronics, and Penwest Pharmaceuticals. The moves changed Endo from a drug company to a bigger company that made drugs and medical devices along with urology products and software. In late 2012 Endo reported disappointing third-quarter pharmaceutical sales and lowered its outlook, and in December it said President and CEO David Holveck would retire in 2013.
Last month, the Food and Drug Administration refused to block a generic version of Endo’s pain drug Opana ER, a move the company said would reduce its net income by 55 cents per share and its sales by about $120 million.
Endo said Wednesday that it now expects annual net income of $1.49 to $1.79 per share on $2.65 billion to $2.8 billion in revenue. Excluding one-time items, Endo expects to earn $4.10 to $4.40 per share. The changes include the effects of generic competition for Opana ER and the moves the company announced Wednesday.
The company had projected net income of $4.40 to $4.70 per share on $2.8 billion to $2.95 billion in revenue.
Analysts expect the company to report net income of $4.26 per share on $2.8 billion in revenue, according to FactSet.
Endo shares lost 50 cents to $35.96 Wednesday and picked up 4 cents to $36 in after-hours trading.