On Monday, Citron tweeted that Mallinckrodthas significantly more downside than Valeant (VRX) does, and is a "far worse offender" of the reimbursement system.
Andrew Left, head of the short-selling firm, elaborated upon Citron's claims yesterday by alleging that Mallinckrodt might have misrepresented the effectiveness of its H.P. Acthar Gel, a high-priced specialty drug, CNBC.com reported.
The drug's sales indicate that Mallinckrodt might have issues with reimbursement from insurers, Left alleged, CNBC.com adds. He also called the company the "poster child" for price inflation.
Mallinckrodt CEO responded that "the facts he quoted were mostly, if not completely wrong."
Last month, Valeant stock collapsed after Citron alleged that the pharmaceutical company collaborated with specialty pharmacy Philidor to not only boost drug prices but also create a network of "phantom" pharmacies to falsify sales and avoid auditor scrutiny.
"Mallinckrodt is not Valeant, it is worse," Citron's Andrew Left said on CNBC. "There's no company like this."
Separately, TheStreet Ratings team rates MALLINCKRODT PLC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
We rate MALLINCKRODT PLC (MNK) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, a generally disappointing performance in the stock itself and generally higher debt management risk.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 7.1%. Since the same quarter one year prior, revenues rose by 47.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 340.7% when compared to the same quarter one year prior, rising from -$24.10 million to $58.00 million.
- MALLINCKRODT PLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MALLINCKRODT PLC swung to a loss, reporting -$3.57 versus $0.06 in the prior year. This year, the market expects an improvement in earnings ($7.31 versus -$3.57).
- The debt-to-equity ratio of 1.01 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, MNK's quick ratio is somewhat strong at 1.12, demonstrating the ability to handle short-term liquidity needs.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Pharmaceuticals industry and the overall market, MALLINCKRODT PLC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: MNK
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.