Solid Q1 Driven By Rebound in North American OperationsScotia Bank OUR TAKE: CXRX reported a solid Q1 that was in line with our forecasts. The company performed well operationally, especially in North America, launched 10 new products in the UK since acquiring AMCo, and recently completed a small tuck-in acquisition of four new products. As a result, we believe the business is well positioned to produce solid results in the remainder of the year. We maintain our Sector Outperform rating and believe investors buying shares at current levels should benefit from both improving fundamentals and the optionality of a potential takeout should the Special Committee identify an attractive strategic alternative. KEY POINTS Q1 revenue was $228.5 million, slightly beating our $227.3 million estimate and consensus of $227.8 million. As expected, North American (NA) sales bounced back from the issues it faced in Q4 and was positively impacted by Lanoxin AG's increased market share, resolution of the Plaquenil supply issues, and Nilandron's stabilizing volumes. The international business performed in line but was negatively affected by foreign exchange headwinds. That said, the company has successfully launched 10 new products since acquiring AMCo in October 2015 and is well on its way to launching the 60 products it has promised over the next 3 years. In addition, management acquired global rights to four new generic products at an attractive 2.6x sales multiple, which indicates the company is continuing to execute its operational plans despite the noise in the markets. As a result, we continue to hold a positive view of the AMCo business and believe it will be the key driver of growth for the company. Adj. EBITDA was $140.8 million, slightly ahead of our estimate of $139.3 million and consensus of $139.1 million. North American margins were negatively impacted by product mix as the authorized generic products continue to grow. However, this impact was more than offset by International margins that were >250bp above our forecasts at 58.8%. As a result, the overall business continues to provide efficient cash flows and we believe these margins are sustainable in the future. The company reiterated 2016 guidance on a constant currency basis that does not include the recent tuck-in acquisition or any other potential future deals. As we expected, the company did not discuss in detail the work of the Special Committee of independent directors that was formed to look at strategic alternatives. We continue to believe a potential takeout or other strategic alternative could provide upside to the stock at current price levels.