Endo has decided that the 350 jobs it whacked from its Huntsville, Alabama, manufacturing site last year were not nearly enough. The drugmaker said it will close operations there instead, cutting 875 more jobs.
The Ireland-based company today said the former Qualitest manufacturing and distribution facility had been affected by falling sales of commodity generics and that it will be wound down over the next 12 to 18 months. Endo will take pretax restructuring charges of approximately $325 million and expects to see between $55 million and $65 million in annual net pretax cost savings by Q4 2018.
About 840 remaining employees will lose their jobs. The 875 in cuts include 35 positions that have been left unfilled. The plant had employed about 1,250 until last year when Endo laid off about 350 employees. In that first wave of restructuring, the company also had announced it was divesting a plant in Charlotte, North Carolina, and laying off 390 workers there by year’s end. Late last year it said it had an undisclosed buyer for the plant who intended to keep on about 125 of the employees.
In a note to clients today, RBC Capital Markets analyst Randall Stanicky said the elimination of the Huntsville operations was helpful because he figures it will add between $0.21 to $0.25 in earnings per share support on a full year basis. He indicated that will help offset the approximate $0.35 and $0.30 EPS reductions in 2018 and 2019 respectively that he forecast as a result of Endo pulling pain drug Opana ER from the market at FDA’s request.
Endo’s decision to remove the drug came earlier this month after the FDA recently warned the drugmaker that it would take legal action against Endo if it didn’t. An FDA advisory committee had recommended its removal, saying the benefits of the drug do not outweigh its risks for addiction. Endo, which is taking a $20 million charge on that move, say nearly $160 million in 2016 revenues from the opioid.
Stanicky said Endo’s focus needs to remain on reducing its $8.2 billion in debt and that he expects more detail on the company’s cost-cutting efforts when it reports earnings next month.