Mallinckrodt stock is up over 5% today after the drug manufacturer announced it had reached a settlement with opioid litigators in Ohio.
Mallinckrodt Stock Near 52-Week Low
Mallinckrodt plc (NYSE:MNK) has been the subject of lawsuits in two Cuyahoga and Summit Counties, both in Ohio, for its role in contributing to the opioid crisis. MNK has been struggling more than most pharmaceuticals under the weight of the opioid crisis after a federal database was made public earlier this year, which revealed that the company was the largest manufacturer of opioid painkiller between 2006 and 2012. Mallinckrodt stock hit a 52-week low earlier this month, having lost over 90% of its value in 2019.
Mallinckrodt was expected to go to trial in October, but that has been avoided by today’s settlement. The company has agreed to pay $24 million USD in cash and provide $6 million USD worth of generic products, including addiction treatment products, as well as a $500,000 USD payment in two years in recognition of the counties’ time and expenses. Investors in Mallinckrodt shares have clearly welcomed today’s settlement and the avoidance of any court dates.
Future Still Bleak for Mallinckrodt Stock
Mallinckrodt stock has been tanking throughout 2019 and took a further hit at the beginning of September when reports emerged that the company had brought in turnaround experts AlixPartners LLP as the company faced bankruptcy. Settlement payments continue to add up for the troubled drugmaker after a $15.4 million payout was agreed earlier this month in relation to a drug bribery investigation by the Department of Justice into Questcor, which MNK acquired in 2014.
Despite the rise in Mallinckrodt stock today, the future is still looking very bleak for investors. In August, the company revealed that it had used the last $95 million USD of its credit line, thus leaving it with no borrowing power. The company’s net debt is more than $550 million USD, and it looks like this may continue to add up as the company is involved in several other lawsuits relating to the opioid crisis.
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