Mallinckrodt Q4 Results Top Estimates On Contribution From Acquisitions

(RTTNews) - Specialty pharmaceuticals company Mallinckrodt plc (MNK) reported Wednesday a hefty net loss for the fourth quarter compared to a profit last year, hurt by significant non-restructuring impairment charges primarily related to global medical imaging segment goodwill and intangible.

Stripping down the charges, adjusted earnings per share topped analysts' expectations, reflecting improved margins and strong double-digit revenue growth amid contribution from acquisitions.

"We had a solid quarter in what was a strong year for Mallinckrodt, and believe that we are well-positioned strategically and financially for long-term success. The meaningful top-line and bottom-line growth we achieved is being driven by strength in our Specialty Pharmaceuticals segment in both the Brands and Specialty Controlled Substance Generics portfolios, paired with streamlined costs from our ongoing restructuring initiatives," President and CEO Mark Trudeau said in a statement.

The Dublin, Ireland-based generic drug maker reported a net loss of $352.4 million or $4.14 per share for the fourth quarter, compared to net income of $33.5 million or $0.58 per share in the prior-year quarter, which included $0.04 per share of gain from discontinued operations.

Results for the latest quarter primarily include non-restructuring impairment charges of $4.17 per share, intangible asset amortization charge of $1.01 per share and net restructuring charges of $0.88 per share.

Excluding items, adjusted net income for the quarter was $145.2 million or $1.68 per share, compared to $56.8 million or $0.98 per share in the year-ago quarter.

On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $1.41 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter surged 44.8 percent to $789.3 million from $545.2 million in the same quarter last year, and topped eleven Wall Street analysts' consensus estimate of $757.86 million.

The company attributed the strong sales growth to the inclusion and performance of H.P. Acthar Gel (Acthar) repository corticotropin injection and pain drug Ofirmev (acetaminophen) injection, acquired in August 2014 and March 2014, respectively, as well as the continuing strength in its base specialty controlled substance generics portfolio.

H.P. Acthar Gel contributed sales of $122.9 million and Ofirmev contributed sales of $65.9 million.

Mallinckrodt, which was spun-off from Covidien plc, acquired H.P. Acthar Gel and Ofirmev through the $5.8 billion acquisition of Questcor Pharmaceuticals Inc. in August, and the $1.3 billion acquisition of pain-treatment company Cadance Pharmaceuticals Inc., respectively.

Specialty pharmaceuticals sales surged 85.5 percent to $564.8 million from last year, with specialty generics and API sales improving 41.9 percent as well as brands sales soaring 274.6 percent.

Meanwhile, global medical imaging sales declined 6.8 percent to $213.4 million from the year-ago quarter, with contrast media and delivery systems sales slipping 8.9 percent as well as nuclear imaging sales dropping 4.5 percent.

Gross profit margin for the quarter improved 460 basis points to 50.8 percent from last year's 46.2 percent, driven by the ongoing shift to high-margin specialty pharmaceuticals.

This was more than offset by a 10.6 percentage points surge in SG&A expenses as a percentage of net sales to 35.5 percent from last year, reflecting the addition of Acthar and Ofirmev selling expenses.

"We continue to be pleased with the performance of our Specialty Pharmaceuticals business, including the growth we have seen with OFIRMEV and the promise of Acthar now that it has been added to the portfolio in the fourth quarter," Trudeau added.

In Wednesday's regular trading session, MNK is currently trading at $84.75, down $4.05 or 4.56% on a volume of 0.89 million shares.