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Mallinckrodt to Spin Off Specialty Generics Unit, Shares Down
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Shares of Mallinckrodt plc fell about 5% after the company announced that it will spin off a new company consisting of the Specialty Generics/Active Pharmaceutical Ingredients (Specialty Generics) business to its shareholders. Shares of the company have decreased 39.2% year to date compared with the industry’s decline of 11.3%.
With the spin off, two independent, publicly-traded companies will be created. One of the companies will be focused on innovative specialty branded pharmaceuticals (Specialty Brands company), while the other will be focused on specialty generic products and APIs1 manufacturing.
The company had announced in December 2018 that the new Specialty Generics company would include constipation medicine Amitiza (lubiprostone). However, given the strong, return-to-growth performance of the Specialty Generics business, it was decided that the Amitiza product will remain with the Specialty Brands company. Per the company, retaining the Amitiza product will better serve the needs of the Specialty Brands company, providing revenue diversification and stronger cash flows to enable debt reduction.
The separation will be executed by distributing the common stock of Mallinckrodt Inc (the newly formed company's name which will hold the Specialty Generics business) through a pro-rata distribution to Mallinckrodt plc's shareholders. The spin-off is expected to close in the second half of 2019 and subject to board approval. It is expected that Mallinckrodt Inc will be listed on the New York Stock Exchange (NYSE) and will assume the MNK ticker symbol along with the Mallinckrodt name. At separation, the Specialty Brands company will continue to be listed on the NYSE, renamed Sonorant Therapeutics plc, and is expected to adopt ‘SRTX’ as its ticker symbol.
The company reconfirmed Matthew Harbaugh as the president and the CEO, and announced Eric Slusser as the chief financial officer (CFO)for the new Specialty Generics company, following the spin-off. The company further announced James Sulat as the independent chairman of the board of the new company. Michael Atieh has been nominated as chair of the audit committee in the new board of directors.Matthew Harbaugh, current president of Mallinckrodt's Specialty Generics business and the former CFO of the company, is expected to become the president and CFO of the new Specialty Generics company upon completion of the separation..
The newly separated company, with about 1600 employees, will include a leading acetaminophen business. Prior to the spin-off of the new Specialty Generics company, Mallinckrodt expects raising a debt ofup to $300 million. Net proceeds from the debt will be distributed to the parent after deducting for standard transaction costs and operating needs.
As a result of this spin-off, Mallinckrodt believes that the new Specialty Generics company will emerge with significantly less debt than previously expected, and have greater flexibility to pursue growth and investment strategies aligned with its goals. Without the Amitiza drug, for the twelve months ended Mar 29, 2019, the collective net sales from the Specialty Generics business were $722.6 million on an as-reported basis.
Anika’s earnings per share estimates have moved up from $1.22 to $1.28 for 2019 and from $1.21 to $1.33 for 2020 in the past 60 days. The company delivered a positive earnings surprise in the trailing four quarters, with average beat of 72.00%.
Applied Genetics’ loss per share estimates have narrowed from $1.25 to 1 cent for 2019 and from $2.39 to $2.15 for 2020 in the past 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with average beat of 83.47%.
Axovant Sciences’ loss per share estimates have narrowed from $9.76 to $9.42 for 2019 and from $7.97 to $7.00 for 2020 in the past 60 days.
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One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.”
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Mallinckrodt to Spin Off Specialty Generics Unit, Shares Down
Shares of Mallinckrodt plc fell about 5% after the company announced that it will spin off a new company consisting of the Specialty Generics/Active Pharmaceutical Ingredients (Specialty Generics) business to its shareholders. Shares of the company have decreased 39.2% year to date compared with the industry’s decline of 11.3%.
With the spin off, two independent, publicly-traded companies will be created. One of the companies will be focused on innovative specialty branded pharmaceuticals (Specialty Brands company), while the other will be focused on specialty generic products and APIs1 manufacturing.
The company had announced in December 2018 that the new Specialty Generics company would include constipation medicine Amitiza (lubiprostone). However, given the strong, return-to-growth performance of the Specialty Generics business, it was decided that the Amitiza product will remain with the Specialty Brands company. Per the company, retaining the Amitiza product will better serve the needs of the Specialty Brands company, providing revenue diversification and stronger cash flows to enable debt reduction.
The separation will be executed by distributing the common stock of Mallinckrodt Inc (the newly formed company's name which will hold the Specialty Generics business) through a pro-rata distribution to Mallinckrodt plc's shareholders. The spin-off is expected to close in the second half of 2019 and subject to board approval. It is expected that Mallinckrodt Inc will be listed on the New York Stock Exchange (NYSE) and will assume the MNK ticker symbol along with the Mallinckrodt name. At separation, the Specialty Brands company will continue to be listed on the NYSE, renamed Sonorant Therapeutics plc, and is expected to adopt ‘SRTX’ as its ticker symbol.
The company reconfirmed Matthew Harbaugh as the president and the CEO, and announced Eric Slusser as the chief financial officer (CFO)for the new Specialty Generics company, following the spin-off. The company further announced James Sulat as the independent chairman of the board of the new company. Michael Atieh has been nominated as chair of the audit committee in the new board of directors.Matthew Harbaugh, current president of Mallinckrodt's Specialty Generics business and the former CFO of the company, is expected to become the president and CFO of the new Specialty Generics company upon completion of the separation..
The newly separated company, with about 1600 employees, will include a leading acetaminophen business. Prior to the spin-off of the new Specialty Generics company, Mallinckrodt expects raising a debt ofup to $300 million. Net proceeds from the debt will be distributed to the parent after deducting for standard transaction costs and operating needs.
As a result of this spin-off, Mallinckrodt believes that the new Specialty Generics company will emerge with significantly less debt than previously expected, and have greater flexibility to pursue growth and investment strategies aligned with its goals. Without the Amitiza drug, for the twelve months ended Mar 29, 2019, the collective net sales from the Specialty Generics business were $722.6 million on an as-reported basis.
Mallinckrodt public limited company Price
Mallinckrodt public limited company price | Mallinckrodt public limited company Quote
Zacks Rank and Stocks to Consider
Mallinckrodt currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks worth considering are Anika Therapeutics Inc. (ANIK - Free Report) , Applied Genetics Technologies Corp. and Axovant Sciences Ltd. . All of them carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Anika’s earnings per share estimates have moved up from $1.22 to $1.28 for 2019 and from $1.21 to $1.33 for 2020 in the past 60 days. The company delivered a positive earnings surprise in the trailing four quarters, with average beat of 72.00%.
Applied Genetics’ loss per share estimates have narrowed from $1.25 to 1 cent for 2019 and from $2.39 to $2.15 for 2020 in the past 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with average beat of 83.47%.
Axovant Sciences’ loss per share estimates have narrowed from $9.76 to $9.42 for 2019 and from $7.97 to $7.00 for 2020 in the past 60 days.
Will you retire a millionaire?
One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.”
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