Please ensure Javascript is enabled for purposes of website accessibility

Why Akorn, Inc. Shares Dropped 10% Today

By Todd Campbell - May 6, 2016 at 4:23PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company plans to file restated full-year financials for 2014 and full-year audited 2015 financials with the SEC next week.

Image source: Akorn, Inc.

What: After updating investors on its timeline to bring its financial filings with the SEC up to date, shares of Akorn (AKRX) traded lower by 9.4% at 3:45 p.m. EDT today.

So what: The company has been bogged down by a review of its accounting practices stemming from two acquisitions it made in 2014. However, that review has wrapped up, and the company had previously indicated plans to file its financials with the SEC by May 10.

Today, Akorn's management said it will file annual reports for 2014 and 2015 with the SEC after the market's closing bell on May 9. The company also plans to issue a press release with its audited and restated results at the same time. 

Management also indicated that it is filing for an automatic extension for filing its first-quarter financials with the SEC. It will then file its quarterly financials with the SEC after the bell on May 16. 

Now what: According to previous reports, Akorn's tight-fisted approach to spending last year allowed it to boost its cash position to $346 million last year from $71 million exiting 2014. It also allowed it to pay down $200 million in debt, and that lowered its leverage ratio to 1.6. Using cash flow from this year, the company believes it will be able to reduce that leverage to 1 by the end of the year. 

Getting its financial house in order will be critical to restoring the credibility that allows investors to focus on the opportunity ahead for this generic drugmaker. However, it appears that investors want to take a wait-and-see approach regarding the financials, and given the company's history, I don't blame them.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Akorn, Inc. Stock Quote
Akorn, Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/21/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.