Normally, one bankruptcy in a lifetime is more than most people want to see. But for healthcare stock Mallinckrodt Pharmaceuticals (NYSE:MNK), it’s starting to look less like a one-off and more like a tradition. The news was too much for investors to bear, and Mallinckrodt stock was down over 40% at the time of writing.
Don't Miss Our Christmas Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Mallinckrodt filed for bankruptcy once already back in October 2020. Amazingly, it had nothing to do with COVID-19 but rather everything to do with an opioid settlement. Now, Mallinckrodt is facing down a payment on said opioid settlement—$200 million worth—and it’s considering filing for bankruptcy again. The $200 million is due this Friday as part of a $1.7 billion pool for those who suffered from opioids in some way.
Mallinckrodt already exited its last bankruptcy back in October. Now, with less than a year between the last completed bankruptcy and the latest bankruptcy to come, it’s planning to go back. There are potentially other options, however. A Wall Street Journal report noted that Mallinckrodt may try to renegotiate the payment to avoid bankruptcy. Yet a Reuters report noted that even Mallinckrodt’s lenders were suggesting it go back into bankruptcy to avoid the payment.
And yet, in spite of all this, Mallinckrodt insiders are buying company stock. Currently, based on insider trading figures, Mallinckrodt insiders are “Very Positive” on the stock right now. In fact, Mallinckrodt insiders bought $339,800 worth of shares in the last three months alone. Not one insider has sold a share of Mallinckrodt stock in the last six months.
