Why Mallinckrodt Is Up 20 Percent

10:23 08/07/2018

Mallinckrodt Public Limited Company MNK  today reported results for the three months ended June 29, 2018. Unless otherwise noted, the quarter comparisons are to the prior year comparable three months ended June 30, 2017.

Net sales were $631.7 million in the quarter as compared to $600.1 million, up 5.3%, or 5.0% on a constant-currency basis.

GAAP gross profit was $317.0 million with gross profit as a percentage of net sales of 50.2%, compared with 53.3%, primarily due to recent acquisitions. Adjusted gross profit was $531.2 million, compared with $489.6 million. Adjusted gross profit as a percentage of net sales was 84.1% versus 81.6%.

"We are pleased with our overall results for the quarter, which built on a solid first quarter performance. With this, and with continued strong execution, our confidence has increased on the outlook for 2018 and we are raising guidance for the fiscal year," said Mark Trudeau, President and Chief Executive Officer, Mallinckrodt. "We continue to see good performance across our hospital products, especially INOMAX® and OFIRMEV®. H.P. Acthar® Gel performed essentially as expected in the quarter, and we were pleased with the positive preliminary data related to the drug in rheumatoid arthritis and multiple sclerosis presented in the quarter. Additionally, we are making strong progress and are ahead of our expectations in reducing debt."

Trudeau continued, "We look forward to further H.P. Acthar Gel data updates in coming quarters supporting our efforts to ensure appropriate patient access. Likewise, across our development portfolio we continue to make progress and look forward to other upcoming data reports, including the anticipated readout of VTS-270 top-line results in the near term."

GAAP selling, general and administrative (SG&A) expenses were $164.3 million or 26.0% of net sales, as compared to $214.6 million, or 35.8%, resulting primarily from the benefits of 2017 restructuring activities, benefits from recent acquisition synergies and fair value adjustments to contingent consideration. Adjusted SG&A expenses were $190.2 million or 30.1% of net sales, compared with $208.8 million or 34.8%.

Research and development expenses were $81.3 million or 12.9% of net sales, as compared to $52.3 million or 8.7%, resulting from increased pipeline investment and in-line portfolio data generation.

Income tax benefit was $53.4 million, for an effective tax rate of 65.5%. The adjusted effective tax rate was 10.0%.

Based on its second quarter performance and continued commitment to strong execution, the company is raising its net sales and adjusted diluted earnings per share guidance for fiscal 2018. Guidance for net interest expense and adjusted effective tax rate remains unchanged.

This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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