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Mallinckrodt Beats on Q3 Earnings and Revenues, Ups View - Analyst Blog

Shares of Mallinckrodt plc ( MNK ) gained 0.46% following the company's third quarter fiscal 2014 (ended Jun 27, 2014) earnings report last week. Shares have declined marginally since then.

Mallinckrodt reported adjusted earnings of $1.20 per share, beating 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 $653.1 million, up 14.6% from the year-ago quarter, beating the Zacks Consensus Estimate of $605 million.

Results were boosted by the performance of the Specialty Pharmaceuticals segment, led by the pain drug Ofirmev.

Quarter in Details

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

Sales from the Specialty Pharmaceuticals segment were $414.3 million in the reported quarter, up 34.3%. This segment comprises two sub-segments, Brands and Generics and Active Pharmaceutical Ingredients (API). Net sales in Brands were $84.9 million, up 54.6%, mainly driven by Ofirmev ($53.2 million).

Net sales in Generics and API were $329.4 million, up 29.8%. This was driven by net sales of methylphenidate HCl extended-release tablets ($54.7 million). Mallinckrodt upped its fiscal 2014 guidance for methylphenidate HCl extended-release tablets to at least $190 million (old guidance: at least $160 million).

Net Specialty Pharmaceuticals sales are now expected in the range of $1.425 billion to $1.5 billion, up from the earlier guidance of $1.38 billion to $1.43 billion.

Sales from the Global Medical Imaging segment were $227.1 million in the reported quarter, down 8.4%. This segment includes Contrast Media and Delivery Systems (CMDS) as well as Nuclear Imaging sub segments. Net sales in CMDS were $116.7 million, down 16% due to pricing pressure. Net sales in the Nuclear Imaging segment were $110.4 million, up 1.3% due to rising costs and supply chain challenges.

In the third quarter fiscal 2014, research and development (R&D) expenses were $42.7 million, down 4.7% from the year-ago quarter.

Selling, general and administrative (SG&A) expenses were $221.3 million, up 32.6%. The increase was due to higher Ofirmev selling expenses, transaction costs related to the impending Questcor acquisition and other related legal settlement costs.

Mallinckrodt expects its pain candidates PENNSAID 2% and Xartemis XR to contribute significantly to its brand portfolio in the coming quarters.The company also announced that the FDA has accepted its New Drug Application for MNK-155 based on positive phase III results.

2014 Outlook Raised

Mallinckrodt now expects net sales in the range of $2.35 billion to $2.45 billion in fiscal 2014, up from the earlier guidance of $2.28 billion to $2.38 billion. The Zacks Consensus Estimate currently stands at $2.46 billion, marginally above the guidance range.

Adjusted earnings per share are expected in the range of $4.00 to $4.30 per share, up from the previous guidance range of $3.30 to $3.60 per share. The Zacks Consensus Estimate currently stands at $4.43 per share, on the higher end of the guidance range.

Mallinckrodt carries a Zacks Rank #1 (Strong Buy). Investors looking for other well-ranked stocks in the healthcare sector can consider Akorn, Inc. ( AKRX ), Acasti Pharma Inc. ( ACST ) and Acura Pharmaceuticals, Inc. ( ACUR ). While Akorn carries a Zacks Rank #1 (Strong Buy), Acasti Pharma and Acura Pharma are Zacks Rank #2 (Buy) stocks.

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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 Nasdaq, Inc.


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

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