Why Impax Labs Is Crashing 23.44% Today

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What happened

After reporting third-quarter results below industry watchers' forecast and lowering full-year guidance,Impax Laboratories (NASDAQ: IPXL)shares are dropping 23.44% at 2:00 p.m. EST Wednesday.

So what

The generic drug company's sales increased 3.1% year over year to $227.9 million, and EPS came in at $0.37. Analysts were looking for sales and EPS of $234.75 million and $0.39, respectively.

In the quarter, a 30% increase in specialty pharmaceuticals sales due to higher sales of Rytaryand Zomig nasal spray were offset by a 3% decline in the company's generic drug segment. Generic drug sales were negatively impacted by market share losses on the company'sdiclofenac sodium gel 3%, mixed amphetamine salts, and metaxalone.

The performance led management to lower its full-year sales outlook to between$840 million and $855 million from previously announced expectations of between $900 million and $940 million. Management also cut its adjusted EPS guidance to $1.10 to $1.20 from $1.57 to $1.70.

Now what

Impax Laboratories recently acquired 15 generic drugs from Teva Pharmaceuticaland that did offset some of the headwind from lost diclofenac sales. Sales and profit uncertainty, however, remains a big overhang on this company's stock. Until it can prove to investors that it's overcoming obstacles, I think it's best to focus on other investment ideas that have a clearer path to upside.

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Todd Campbell has no position in any stocks mentioned.Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned.Like this article? Follow him onTwitter where he goes by the handle@ebcapitalto see more articles like this.

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