NEW YORK (TheStreet) -- Pacira Pharmaceuticals (PCRX - Get Report) shares down 9.76% to $83.37 in trading on Thursday after the company said that the Justice Department subpoenaed the company for access to documents pertaining to the marketing and promotional practices for its flagship pain medication Exparel.
The company received correspondence from the Food and Drug Administration saying that the company overstated the effectiveness of Exparel due to an advertisement's claim that the drug offered 72 hour pain relief when if fact it was only deemed effective for a 24 hour period.
The drug, which was launched in 2012, brought in $189 million in revenue in 2014, more than double the $76 million it generated in 2013, according to the Wall Street Journal. For the current year, the company forecast another sharp increase in revenue to between $310 million and $330 million.
TheStreet Ratings team rates PACIRA PHARMACEUTICALS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate PACIRA PHARMACEUTICALS INC (PCRX) 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, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- PCRX's very impressive revenue growth greatly exceeded the industry average of 8.3%. Since the same quarter one year prior, revenues leaped by 84.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.60, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.29, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has significantly increased by 307.18% to $13.01 million when compared to the same quarter last year. In addition, PACIRA PHARMACEUTICALS INC has also vastly surpassed the industry average cash flow growth rate of -8.61%.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, PACIRA PHARMACEUTICALS INC'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: PCRX Ratings Report