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Why Impax Labs Soared 37.3% Today

By Todd Campbell - Mar 27, 2017 at 6:00PM

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A new CEO is sparking optimism that this company can turn a corner to better days.

What happened

After the company reported it has hired Allergan's ( AGN ) former executive chairman as its new president and CEO, investors sent shares in Impax Laboratories ( IPXL ) surging 37.3% today.

So what

Impax Labs' shareholders have suffered significantly since 2015, but optimism was rekindled today by the announcement that industry veteran Paul M. Bisaro is the company's new president and CEO.

A businessman shakes hands after agreeing to terms.


Bisaro sports a 25-year track record of success in the generic-drug industry. He served in various roles at Barr Labs between 1999 and 2007, finishing his tenure there as president and chief operating officer. After Barr Labs, Bisaro served as president and CEO of Actavis, and executive chairman of Allergan (after Actavis acquired Allergan and changed its name).

Adding someone with Bisaro's experience is a coup for Impax Labs, which has struggled following a drop-off in sales tied to increased competition and weaker pricing on top-selling medicines, including diclofenac sodium gel 3%, metaxaline, fenofibrite, and mixed amphetamine salts ER. 

The company's performance has also been weighed down by over $500 million in impairment charges taken in the past two quarters that are due to its acquisition of certain generic drugs from Teva Pharmaceutical that didn't pan out as hoped. 

Now what

Bisaro has a lot of work to do. Despite cutting its full-year sales and EPS guidance significantly exiting the third quarter, the company still failed to hit its $840 million or better sales target. Overall, revenue fell 4.2% to $824.4 million.

The good news, however, is that the company still turned a profit in 2016, earning an adjusted $1.16 per share in 2016, and it has a pipeline of generic drugs making their way to market that could help shore up sales.

Although the addition of Bisaro removes C-suite uncertainty, this company's struggles have been significant, and while I think Bisaro conceivably has the tools to fix this company's financials, investors are probably better served concentrating on other ideas until we see quarterly results that show any strategy he puts in place is working. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Impax Laboratories, Inc. Stock Quote
Impax Laboratories, Inc.
Allergan plc Stock Quote
Allergan plc
Teva Pharmaceutical Industries Limited Stock Quote
Teva Pharmaceutical Industries Limited
$8.18 (-0.85%) $0.07

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