Shares of Mallinckrodt (NYSE:MNK) were tumbling 14.9% lower as of 3:43 p.m. EDT on Tuesday. The decline came after the drugmaker announced its first-quarter results before the market opened. Mallinckrodt reported net sales of $665.8 million, down nearly 16% year over year and below the average analyst estimate of $689.5 million. The company posted adjusted Q1 earnings of $1.64 per share, also down nearly 16% year over year but higher than the consensus Wall Street expectation of adjusted EPS of $1.45.
Probably the most concerning part of Mallinckrodt's Q1 update for investors was the company's outlook. CEO Mark Trudeau said that Mallinckrodt expects that "the next few quarters will be challenging due to the impact of COVID-19, as some of our products are sensitive to reduced numbers of surgical procedures and doctor visits."
Despite Mallinckrodt's earnings beat, there wasn't much for investors to be happy about with the company's first-quarter update. Sales fell pretty much across the board. Acthar Gel continued to face reimbursement challenges, with sales plunging 25.1% year over year. Sales also fell for other top products including Inomax, Ofirmev, and Amitiza. Mallinckrodt's specialty generics segment also continued to struggle, with sales declining 6% year over year primarily due to a short-term disruption in the production of acetaminophen.
The only bright spot in the otherwise dismal results wasn't all that bright. Sales for the company's Therakos immunology platform rose 3.1% year over year to $63.7 million.
Mallinckrodt felt the effects of the COVID-19 pandemic in most of these areas. Patients staying at home resulted in lower demand for Acthar (a drug that stimulates the production of steroids in the body) and Therakos (an immunology platform). Delays in elective surgeries caused lower sales for Ofirmev (injectable acetaminophen). On the other hand, Inomax sales were higher than they would have otherwise been due to the use of inhaled nitric oxide by COVID-19 patients. However, the product faces stiffer competition than in the past.
The pharma stock is likely to remain highly volatile as long as the COVID-19 pandemic keeps patients from visiting their physicians and pushing back elective surgeries. There is also uncertainty for Mallinckrodt related to its ongoing litigation with the U.S. Department of Health and Human Services and Centers for Medicare and Medicaid Services (CMS) related to the calculation of Medicaid drug rebates for Acthar.