Endo (ENDP) Files for Bankruptcy Amid Litigations, Huge Debt

Endo International ENDP has announced that the company and some of its subsidiaries initiated voluntary prearranged Chapter 11 proceedings in the U.S. Bankruptcy Court for the Southern District of New York (Court).

The cookie has finally crumbled with this filing. ENDP has been in trouble for quite some time, with several litigation suits alleging that it fueled the opioid epidemic in the United States.

Despite making efforts to cut down the huge levels of debt, it failed.

Endo has plunged 90.2% in the year so far compared with the industry’s 17.6% decline.

Image Source: Zacks Investment Research

Endo's India-based entities are not part of the Chapter 11 proceedings. It expects to file recognition proceedings in Canada, the United Kingdom and Australia.

The company announced that it has entered into a restructuring support agreement (RSA) with holders of more than a majority of Endo's first lien debt on a sale transaction that would substantially reduce outstanding indebtedness, address remaining opioid and other litigation-related claims.

Under this agreement, the debtholder group will purchase all of the company's assets and take over certain liabilities for approximately $6 billion.  This group will also establish voluntary trusts with $550 million to be funded over 10 years for certain opioid claims.

Further, attorney General Maura Healey has reached an agreement with Endo and its lenders that would provide up to $450 million to participating states and local governments, ban promotion of Endo’s opioids, and require Endo to turn over millions of documents related to its role in the opioid crisis for publication in a public online archive. 

As of Jun 30, 2022, Endo had approximately $1.2 billion in unrestricted cash and $8.1 billion of debt.

Earlier, companies like Purdue Pharma and Mallinckrodt had also faced bankruptcy due to opioid claims.

Endo currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector are Alkermes ALKS, Bolt Pharmaceuticals BOLT and Dynavax DVAX. All three carry a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ALKS’ earnings estimates for 2022 reversed from a loss of 17 cents to earnings of 20 cents in the past 60 days. Alkermes surpassed earnings in all the trailing four quarters, the average being 325.48%.

Loss estimates for BOLT have narrowed to $2.54 from $2,87 in the past 60 days. BOLT surpassed earnings in three of the trailing four quarters, the average being 2.39%.

Dynavax’s earnings estimates have increased to $1.73 from $1.14 for 2022 over the past 60 days. Earnings of Dynavax have surpassed estimates in two of the trailing four quarters



 

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