) shares have been moving downwards following the company's revenue
miss in the second quarter of fiscal 2014 (ended Mar 28, 2014),
results of which were reported on May 8. Mallinckrodt reported
adjusted earnings of 95 cents per share, beating the Zacks
Consensus Estimate of 79 cents. Earnings were below the year-ago
figure of $1.00 per share.
Net sales for the quarter were $557.8 million, down 47% from the
year-ago quarter. Revenues were well short of the Zacks Consensus
Estimate of $567 million. A 6% decline in the Specialty
Pharmaceuticals division sales to $324.3 million was the primary
reason behind the year-over-year fall in revenues. Sales in
Mallinckrodt's other division -Global Medical Imaging - were also
down 3% to $222.4 million in the reported quarter.
The Specialty Pharmaceuticals segment comprises of two
sub-segments, Brands and Generics and Active Pharmaceutical
Ingredients (API). Net sales in Brands were $55.1 million, up
15.3%. Results were aided by the addition of pain drug Ofirmev
following Mallinckrodt's acquisition of Cadence Pharma in the
reported quarter. Net sales in Generics and API were $269.2
million, down 9.2%. We note that the year-ago figure benefited from
increased sales of methylphenidate HCl extended-release tablets.
Excess competition also hurt segmental results in the second
quarter of fiscal 2014.
The Global Medical Imaging segment includes Contrast Media and
Delivery Systems (CMDS) as well as Nuclear Imaging sub segments.
Net sales in CMDS were $112.6 million, down 4.7%. Net sales in the
Nuclear Imaging segment were $109.8 million, down 1% due to supply
In the second quarter of fiscal 2014, research and development
(R&D) expenses on a reported basis were $41.4 million, up 5.6%
from the year-ago quarter due to the company's efforts to develop
its pipeline. Selling, general and administrative (SG&A)
expenses on a reported basis climbed 20.8% to $194.1 million.
During the quarter, Mallinckrodt launched pain drugs PENNSAID 2%
and XARTEMIS XR. Costs associated with the launches were one of the
reasons for the rise in SG&A costs.
Fiscal 2014 Outlook
Mallinckrodt increased its guidance for fiscal 2014. The company
expects net sales in the range of $2.28 billion - $2.38 billion
(old guidance: $2.2 billion - $2.3 billion) in fiscal 2014. The
Zacks Consensus Estimate currently stands at $2.33 billion, well
within the guidance range. The company increased its outlook on the
basis of the strength of its base business and the purchase of
Net Specialty Pharmaceuticals sales are now expected in the range
of $1.38 billion - $1.43 billion (old guidance: $1.3 billion -
$1.35 billion). The company upped its fiscal 2014 guidance for
methylphenidate HCl extended-release tablets to at least $160
million (old guidance: at least $150 million). Net Global Medical
Imaging segment sales are still expected in the range of $850
million to $900 million.
Adjusted earnings per share are now expected in the range of $3.30
- $3.60 per share, up from the previous guidance range of $2.65 -
$2.95 per share. The Zacks Consensus Estimate currently stands at
$3.45 per share.
Mallinckrodt carries a Zacks Rank #1 (Strong Buy). Stocks like
Akorn, Inc. (
Spectrum Pharmaceuticals, Inc.
) also carry the same rank as Mallinckrodt.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
AKORN INC (AKRX): Free Stock Analysis Report
GILEAD SCIENCES (GILD): Free Stock Analysis
MALLINCKRODT PL (MNK): Free Stock Analysis
SPECTRUM PHARMA (SPPI): Free Stock Analysis
To read this article on Zacks.com click here.