Actavis plc’s (ACT) second quarter 2014 earnings came in at $3.42 per share, beating the Zacks Consensus Estimate of $3.37 per share and increasing 70.1% from the year-ago earnings.

Revenues for the reported quarter came in at $2.67 billion, up 34% from the year-ago period, beating the Zacks Consensus Estimate of $2.56 billion.

Results were boosted by the inclusion of products from the Warner Chilcott acquisition.

Quarterly Details

Actavis has two revenue producing segments -- Actavis Pharma and Anda Distribution.

While Actavis Pharma includes all branded, branded generic, generic and over-the-counter products, Anda Distribution includes revenue from the distribution of third-party products.

The Actavis Pharma segment posted sales of $2.24 billion, up 30.7%. Results benefited from the Warner Chilcott acquisition, new product launches, and higher international revenues.

North American Brands revenue soared 305.5% to $587.2 million, driven by the Warner Chilcott acquisition and increased sales of key legacy products.

While Women's Health revenues were $230.8 million, Urology and Gastroenterology revenues increased 284.4% to $214.5 million. Dermatology and Established Brands revenue increased 109.6% to $141.9 million.

North American Generics revenues increased 8.6% to $1.03 billion driven by the strong performance of the generic versions of Cymbalta and Lidoderm. Generic Concerta sales, however, were impacted by competition.

International revenues increased marginally to $621.6 million.

Net revenues from the Anda Distribution segment increased 54.8% during the quarter to $427 million reflecting higher volume and new third-party launches.

Provides Outlook for Second Half 2014 and 2015

Actavis, which recently acquired Forest Laboratories, provided its outlook for the second half of the year. The company expects to earn $6.25 - $6.50 per share on total net revenues of about $7 billion.

Full year earnings are expected in the range of $13.02 and $13.32 per share – this is below the current Zacks Consensus Estimate of $13.67 per share.

The company also provided its initial outlook for 2015. Actavis expects to earn $15.60 and $16.80 per share on net revenues of about $15 billion. The Zacks Consensus Estimate for earnings and revenue are $16.72 per share and $14.2 billion, respectively.

Actavis expects to spend about $1.2 billion on R&D in 2015.

Our Take

Actavis’ second quarter results were once again strong with the company beating on the top- and bottom-line. Meanwhile, the company, which recently acquired Forest, provided its outlook for the second half of 2014 and 2015.

The Forest acquisition is in line with the company’s strategy of building its branded product portfolio. With a fewer number of blockbuster products slated to lose patent protection in the coming years, quite a few generic companies have been focusing on strengthening their branded product offerings.

Actavis is a Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the health care sector include Mallinckrodt plc (MNK), Actelion Ltd. (ALIOF) and Alexion Pharmaceuticals (ALXN). While Mallinckrodt and Actelion are Zacks Rank #1 (Strong Buy) stocks, Alexion is a Zacks Rank #2 (Buy) stock.

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