Mallinckrodt 1Q 2019 earnings

Mallinckrodt Pharmaceuticals soared in premarket trading Tuesday after the company released first-quarter earnings that beat Wall Street’s expectations and raised its profit outlook for the year.

The drugmaker’s shares jumped by more than 9% in premarket trading. Mallinckrodt attributed its strong performance to sales of hospital products and generic drugs.

Here’s how the company did compared with average analyst estimates compiled by Refinitiv:

• Adjusted earnings per share: $1.94 versus $1.70 expected
• Revenue: $790.6 million versus $767.2 million expected

“We have started 2019 with continued strong operational execution, achieving robust top- and bottom-line growth, and resulting in significant cash generation as we continue to transform our company,” CEO Mark Trudeau  said in a statement. “The hospital portfolio continued its positive momentum, and as anticipated we saw the return to growth reported for the Specialty Generics products.”

Mallinckrodt raised its sales projections for its specialty generic drugs, saying they will grow by 2% to 5%, up from its original guidance of 1% to 4%. The company also raised guidance for its 2019 adjusted earnings to $8.30 to $8.60 per share, up from its original estimate of $8.10 to $8.40 per share.

Sales of one of the company’s best-performing drugs, H.P. Acthar Gel, fell 8.2%, bringing in $223.9 million compared to last year’s $243.8 million. The company said it still expects sales for the drug to exceed $1 billion this year.

Used to treat multiple sclerosis and seizures in children, H.P. Acthar Gel accounted for 35% of Mallinckrodt’s net sales in 2018. The drug is also the target of two whistleblower lawsuits that say a drugmaker Mallinckrodt acquired in 2014, Questcor Pharmaceuticals, bribed doctors to prescribe the drug. The suits also claim Questcor defrauded Medicare by illegally marketing H.P. Acthar Gel.

H.P. Acthar Gel is known for its sharp price hike in 2007. That year Questcor raised the price of one vial of the medicine too $28,000 from $2,000 — it now costs more than $40,000.

According to analysts at Mizuho, the miss in net sales for the Acthar Gel seemed to be priced into the stock already.

“The Acthar miss was likely already in the stock to some extent, in our view, but remains an important driver of the stock during earnings,” the Mizuho analysts said.