Illinois-based Akorn ($AKRX) already has a lot on its plate after announcing last month that it likely had overstated some of its financial results for last year. While it sorts out that mess, the high-flying specialty generics maker is now having to recall more than 355,000 bottles of its generic of Bactrim made by one of its recent acquisitions, a company it blamed for some of its financial woes.
According to the most recent FDA Enforcement Report, Akorn is recalling 354,314 40-ounce bottles of the antibiotics in grape and cherry flavors, as well as 8,400 unit dose cups in grape because they are out of specification for the dissolution of sulfamethoxazole, one of two active ingredients in the product.
The antibiotic was made by Hi-Tech Pharmacal, which the Lake Forest, IL-based Akorn bought in August of 2013 for $640 million as part of a drive to double its earnings. Then in May of last year Akorn grabbed VersaPharm for $440 million. The "acquisition strategy," CEO Raj Rai said at the time was to quickly bulk up its portfolio and double its revenues. In its announcement last month, it blamed the restatement issues in part on the acquisitions of the two companies.
That strategy seemed to be playing out well when it reported 2014 earnings in March, indicating double-digit 2014 growth coming partly from its acquisitions. But a month later it reported that it might have its financials wrong because of its acquisitions of Hi-Tech and VersaPharma and would have to restate three-quarters worth of earnings. That announcement gut-kicked its stock price and prompted half a dozen shareholder lawsuits to materialize.