Aceto Corp. is exploring the sale of the company or some of its divisions because of falling prices for some of its generic drugs, executives announced Wednesday.
The Port Washington-based manufacturer of drugs and chemicals has hired the investment bank PJT Partners and Lowenstein Sandler LLP attorneys, both in Manhattan, “to assist in this strategic review process.”
The process will consider “the sale of key business segments, a merger or other business combination with another party, continuing as a stand-alone entity or other potential alternatives,” Aceto said in a statement released Wednesday night.
The announcement came after the stock market closed. In after-hours trading, Aceto shares fell $2.41, or 33 percent, to $4.99 on the Nasdaq Stock Market. They had closed up 3 cents, or less than 1 percent, to $7.40.
The company said it expects to take a noncash charge of $230 million to $260 million because some drugs are selling for lower prices than executives had projected. The charge will be against earnings for the three months ended March 31.
Aceto also announced the resignation of chief financial officer Edward Borkowski after only two months on the job, the selection of Rebecca Roof to be interim CFO, and negotiations with its lenders on a waiver of its loan covenants.
“Given the continuing headwinds in the generics market, the board has taken decisive action,” said board of directors chairman Al Eilender.
The moves come less than two months after Aceto disclosed it was facing the potential loss of federal government contracts to supply generic drugs to veterans because the active ingredients in some of them come from India, not the United States. The U.S. Department of Veterans Affairs had ordered Aceto to find domestic sources for the ingredients and to begin providing generic drugs without Indian ingredients by March 26 or face termination of the supply contracts.The drugs now under review are produced by Aurolife Pharma LLC in Dayton, New Jersey, and sold by Aceto to the VA.
The VA dispute involves 11 drugs that Aceto purchased in late 2016 from Lucid Pharma LLC in New Jersey as part of a $462 million deal with Lucid affiliate Citron Pharma LLC in East Brunswick, New Jersey. The transaction was part of a strategy to expand Aceto's presence in pharmaceuticals after years of selling ingredients to drugmakers.
Aceto hasn't publicly said how the VA dispute was resolved. A company spokeswoman did not immediately respond to a request for comment on Wednesday.
Aceto employed 286 as of June 2017, according to a securities filing.
The company reported a loss of $13.4 million in the six months ended Dec. 31, 2017 compared with a profit of $4 million in the same period a year earlier. Sales totaled $356 million in the six months ended Dec. 31, a 41 percent increase from 2016.
At a glance
Name: Aceto Corp.
What it does: manufacturer and seller of chemicals, generic drugs and drug ingredients
Sales (2017): $638 million
Profit (2017): $11.4 million
Ownership: public company with shares traded on the NASDAQ stock market.
SOURCE: Securities filings