A No-Good, Really Bad, Awful Year for This Pharmaceutical Company
With the year quickly coming to an end, it's always a good idea to check in on how some of our most watched stocks are doing. By continually completing our due diligence, we're able to get a sense for where a business is coming from, and where it's going.
Today, we'll be examining K-V Pharmaceutical (NYS: KV.A) , which provides medical solutions, primarily for women.
We'll go over the specifics of the company below, but first, here are the vital statistics:
Stats on K-V
|Year-to-Date Stock Return||(47.8%)|
|Market Cap||$79 million|
|1-Year Revenue Growth||(82.1%)|
|1-Year EPS Growth||NM|
|CAPS Rating (out of 5)||***|
Source: Yahoo! Finance, Google Finance, fool.com. NM = not meaningful, as the company was not profitable one year ago.
Lack of leadership
The year ended with CEO Greg Divis ranked No. 2 on our Worst CEOs list. How did he get there?
Well, it all started in February, when the company got approval for the use of Makena -- it's new drug developed with Hologic (NAS: HOLX) that prevents pre-term births. The possibilities seemed endless for the company, and the stock absolutely took off, gaining over 700% in just over one month!
And then, with the good will of the medical and investment community pushing it forward, Divis decided to make one of the worst PR decisions in recent history: pricing Makena at an eye-popping $1,500 dollars per dose, when it was previously compounded by doctors for as little as $15.
Not content to have raised the ire of the public, the company tried to argue that it had exclusive rights to the pre-term birth treatment. The FDA promptly announced that it'd be allowing doctors to use the previous combination of drugs that ran for $15 in order to avoid the heavy costs associated with Makena.
The threat of congressional intervention even surfaced. In May, AVANIR (NAS: AVNR) was forced to justify the price of its Neudexta to elected officials. Many thought at the time that Dendreon's (NAS: DNDN) Provenge, Bristol-Myers Squibb's (NYS: BMY) Yervoy, and K-V would be the next targets.
Make no mistake, some company is bound to make money off of sick or dying babies, but the 10,000% jack-up in price paints capitalism in just about the worst way possible. That's a stain that'll be tough for K-V to ever remove.
Just look at how the rest of the year has gone since the announcement.
Clearly, looking toward 2012, there are better options out there for you than K-V Pharma. I suggest you take a look at our special free report, The Motley Fool's Top Stock for 2012.
Inside, you'll learn about a company that has all the greatness of Costco, but is laying down roots in the fast-growing economies of Central and South America. Get your report today, absolutely free!
At the time this article was published Fool contributor Brian Stoffel does not own shares in any of the companies mentioned. You can follow him on Twitter at @TMFStoffel.The Motley Fool owns shares of Dendreon. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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