Akorn Pharmaceuticals screwed up its numbers, and now the stock is getting crushed.
In a statement on Friday, the company said there are errors in its financial statements for the financial year ended December 31, 2014, as well as the quarters ended June 30, 2014, and September 30, 2014.
This is the second such announcement in just a few weeks.
From the statement:
“While the exact impact to the Company’s financial statements has not been determined, based on management’s preliminary assessment, the errors related to the understatements of rebates and other sales allowances are estimated to have resulted in an overstatement to net revenue and pretax income from continuing operations of $US20 million to $US35 million for the year ending December 31, 2014.”
Akorn said this will delay the announcement of its first quarter earnings report as a result.
The stock fell by up to 20% on Monday to around $US44 a share. The stock has rallied 85% in the last 12 months.
Akorn has a market cap of $US5 billion.
In a note to clients, analysts at Piper Jaffray write that they are not impressed by this latest misstep:
“Though management does not believe the accounting issues will impact 1Q15 results, and it is sticking with its 2015 guidance, there is in our view far too large of a credibility gap to simply take those statements at face value. We believe that significant management changes will be needed to restore Akorn’s credibility and further find it difficult to envision how these missteps will not result in a change in the CFO position.”
Piper downgraded the stock to “Neutral” from “Overweight” with a price target of $US53.
Here’s a chart showing the plunge in trading on Monday: