MNK Stock Sinks as Sales Fall Well Short of Expectations

MNK Stock

MNK stock is down over 6% today after Mallinckrodt PLC (NYSE:MNK) reported its third-quarter earnings this week, with sales falling well short of analysts’ expectations.

MNK Stock Trades Near All-Time Low

The Irish tax-registered pharmaceutical firm reported earnings for the quarter of $2.07 a share, beating Wall Street analyst expectations of $1.96, according to FactSet. However, sales of $743.7 million USD, well short of the FactSet consensus of $770.5 million USD. Mallinckrodt also slightly raised its guidance for the full 2019 fiscal year, saying it expected earnings per share of between $8.50 and $8.70, up from its earlier guidance of between $8.40 and $8.50. MNK stock is hovering near a 52-week low, after losing 90% of its value in 2019.

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The increased guidance could be a sign of hope for investors after the company brought in restructuring advisors in September with the looming threat of bankruptcy becoming an increasing reality. Mallinckrodt has been at the center of the judicial storm of the opioid crisis 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 shares were valued as high as $132.47 less than five years ago, and are now trading for just $3.12.

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To further exacerbate the impact that the disappointing sales had on MNK stock, Mallinckrodt also said that it has been subpoenaed by the SEC for documents related to the drugmaker’s lawsuit against the US Department of Health and Human Services. Mallinckrodt filed a suit in May in relation to a change in how Medicaid calculates discounts for its Acthar gel, the company’s biggest selling product. The company estimates that these changes had a 10% hit on annual sales of the gel.

Future Trials a Worry for Investors

While there were a few positives for investors to take away from yesterday’s earnings, the future still remains very bleak for MNK stock against the backdrop of pending litigations relating to the opioid crisis. The company reached a $30 million USD settlement in September over a landmark case in Ohio, which many felt was merely a slap on the wrist for the company, yet net debt remains at over $550 billion USD with further trials on the horizon.

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