Mallinckrodt Misses on Earnings & Sales - Analyst Blog

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Mallinckrodt ( MNK ) reported fourth-quarter of fiscal 2013 (ending Sept 2013) adjusted earnings of 77 cents per share, missing the Zacks Consensus Estimate of 86 cents. Earnings were above the year-ago figure of 49 cents per share.

Net sales for the quarter were $552.2 million, up 7.6% from the year-ago quarter. Revenues missed the Zacks Consensus Estimate of $576 million. Revenues were mainly driven by sales from the Specialty Pharmaceuticals segment.

Full year 2013 earnings per share were $1.33 as against the year-ago loss of $2.59 per share. Revenues in 2013 were $2.2 billion, compared with $2.1 billion in 2012.

Quarter in Details

Mallinckrodt reports revenues under two segments, Specialty Pharmaceuticals and Global Medical Imaging.

Sales from the Specialty Pharmaceuticals segment were $311.4 million in the reported quarter, up from $258.9 million in the prior-year quarter. This segment is composed of Brands as well as Generics and Active Pharmaceutical Ingredients (API) sub segments. Net sales in Brands were $53.9 million, up 36.1% driven by net sales from Exalgo ($30.7 million). Net sales in Generics and API were $257.5 million, up 17.4%. This was driven by net sales from Methylphenidate HCl Extended-Release Tablets ($63 million).

Sales from the Global Medical Imaging segment were $229 million in the reported quarter, down from $242.8 million in the prior-year quarter. This segment is composed of Contrast Media and Delivery Systems (CMDS) as well as Nuclear Imaging sub segments. Net sales in CMDS were $119.6 million, down 11% driven by continued commoditization in mature markets. Net sales in Nuclear Imaging segment were almost flat at $109.4 million.

In the fourth quarter of fiscal 2013, research and development (R&D) expenses were $44.1 million, compared with $36.6 million in the year-ago quarter. The increase in R&D spend reflects expenses in support of developing its pipeline and milestone payment related to MNK-795 (to treat moderate-to-severe acute pain)

Selling, general and administrative (SG&A) expenses were $137 million, compared with $140 million in the year-ago quarter. The expenses fell mainly due to cost control and benefits from restructuring initiatives.

Pipeline Update

Mallinckrodt has several late-stage candidates in its pipeline including MNK-795 and MNK-395, which are currently under regulatory review. In July 2013, the U.S. Food and Drug Administration (FDA) accepted the marketing application for MNK-795 for treating moderate-to-severe acute pain. The regulatory body is reviewing the marketing application on a priority review. The FDA decision will be out by year end.

The marketing application for MNK-395 in pain associated with osteoarthritis of the knee was submitted in Aug 2013. The FDA decision will be out by early 2014.

Another pain candidate, MNK-155, is currently being evaluated in phase III trials with regulatory submission expected by the first half of calendar 2014.

Outlook 2014

Mallinckrodt expects net sales in the range of $2.15 billion to $2.25 billion in fiscal 2014. The Zacks Consensus Estimate currently stands at $2.19 billion. Adjusted earnings per share are expected in the range of $2.45 to $2.65 per share. The Zacks Consensus Estimate currently stands at $2.58 per share.

Mallinckrodt carries a Zacks Rank #3 (Hold). Currently, companies like Jazz Pharmaceuticals Ltd. ( JAZZ ), Impax Laboratories Inc. ( IPXL ) and Actelion Ltd. ( ALIOF ) look well-positioned with a Zacks Rank #1 (Strong Buy).



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: ALIOF , API , IPXL , JAZZ , MNK

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