Mallinckrodt Plc (NYSE:MNK) has reportedly brought in restructuring advisors as the company considers bankruptcy, plunging MNK stock by over 40%.
The pharmaceutical firm has felt the burden of the opioid crisis more than most of its counterparts after a federal database made public earlier this year found the company to be the largest manufacturer of opioid painkillers between 2006 and 2012. MNK stock was trading as high as $33 in the last 12 months but has subsequently lost over 90% of its value since and is currently worth just $1.64. Today’s value is an even further cry from the 2015 peak of $132.
Mallinckrodt faces its first federal trial next month for its role in the opioid crisis and is reportedly exploring the option of bankruptcy should the costs arising from going to trial become insurmountable. Yesterday, the company agreed to pay $15.4 million USD to settle a drug bribery investigation by the Department of Justice into Questcor, which MNK acquired in 2014. Also yesterday, Mallinckrodt hired law firm Latham & Watkins LLP and turnaround firm AlixPartners LLP in a bid to turn the company’s fortunes, and MNK shares, around.
“While we can’t really comment specifically on any specific rumors, what we can say is like any company hires advisers for all different kinds of things all the time. Unfortunately, people are putting a whole variety of things together and making assumptions of things completely independent of what we’re trying to do as a company,” said CEO Mark Trudeau in a thinly veiled attempt to protect MNK stock.
The future is very bleak for investors in MNK stock, especially considering the company’s financial position as a result of its ongoing struggles. Last month, the company revealed that it had used the last $95 million USD of its credit line, leaving the company with no remaining borrowing power. While the company does have $550 million USD cash on hand, it also has more than $5 billion USD in net debt. Looking at the current situation, it’s almost impossible to see a way back for MNK stock.
While the opioid crisis threatens to topple major pharma, why not look at our picks of healthcare stocks to boost your portfolio.
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