- In a statement, Mallinckrodt (MNK -1.6%) says short-seller Citron Research is off-base with its claims about Acthar Gel and the company's financial position. Specifically:
- Citron's assertion that it carries $8B in debt are not true. Per its most recent 10-Q, net debt was ~$6B ($5.8B net of cash).
- Theories that the company would face bankruptcy if the price of Acthar dropped by half are not true since there are no debt covenants tied exclusively to Acthar, although its $900M credit revolver stipulates a net debt leverage ratio cap of 5.25x. Currently, the ratio is 3.8x and there are no outstanding borrowings under the revolver.
- Claims that the company would be unable to service its debt without Acthar are wrong considering it posted $617M in GAAP operating income last year ($1.4B non-GAAP). Management has not provided guidance for this year, but the consensus view for non-GAAP OI is more than $1B (down 29%). The specific contribution by Acthar is not provided.
- The company adds that all of Acthar Gel's indications are strongly backed by evidence. The FDA reviewed the label in 2010 and supported the 19 indications of the product that is "priced responsibly."
- It says it contracts with a network of independent specialty pharmacies to process prescriptions and deliver Acthar directly to patients. Express Scripts' Accredo is in its network as are ESRX's CuraScript SD and United BioSource Corp.
- Previously: Mallinckrodt down 7% on new Citron report (June 5)
- Now read: Endologix (ELGX) Investor Presentation - Slideshow
Original article