GNC trades up on possible sale; Whiting mostly quiet after earnings disappoint; Cobalt up

By Rebecca Melvin

New York, May 2 – GNC Holdings Inc.’s 1.5% convertibles due 2020 popped in early trading action on Monday after the Pittsburgh-based specialty health and wellness retailer said it has started looking at strategic options that include a possible sale of the company.

The company has started a “review of a wide range of strategic and financial alternatives,” according to a news release.

GNC’s 1.5% convertibles were up 4 points at 83.17, according to Trace data. GNC shares, which plunged last Thursday on same-store sale declines, were up about 4% in the early going at $25.30, at the time that the convertible bonds traded. But the GNC shares ended higher, up $1.66, or 6.8%, to $26.02.

Whiting Petroleum Corp. was in focus after the Denver-based oil and gas company posted an earnings disappointment that dragged down the common shares by 10%. The Whiting convertibles were lower but didn’t trade overly actively, a New York-based trader said.

Only about $1 million of the Whiting 1.25% convertibles traded, and approximately the same amount of the 6.25% convertibles, while the 6.5% convertibles traded twice, the trader said.

The Whiting 6.5% convertibles changed hands at 106.9, according to Trace data.

Whiting’s quarterly production figure was about 12% lower from the year-earlier quarter. The company anticipates adding production after having entered into a “wellbore participation agreement” in April, under which a private party will pay 65% of drilling and completion cost to earn a 50% working interest in 44 gross Williston Basin wells. Whiting shares closed down about 10% at $10.79.

Cobalt International Energy Inc.’s 2.625% convertibles were mentioned in trade as going up slightly on swap ahead of the Houston-based oil-focused exploration and production company’s quarterly earnings report expected early Tuesday.

The Cobalt 2.625% convertibles bounced around but ended at 51.2, which compared to 50 to 51 previously.

The bonds were up on both an outright and a swap basis. They were called up about 0.25 point to 0.5 point on swap, the trader said.

Blucora Inc.’s convertibles were indicated significantly higher as the shares of the Bellevue, Wash.-based software company continued to spurt higher following positive earnings posted last week. The Blucora 4.5% convertibles were indicated up nearly 10 points at 87.4 on Monday from 78.4 previously. The shares were up another 5.6% to $8.46. They had jumped 24% on Thursday after earnings and moved up again on Friday.

Blucora runs the InfoSpace search business and HowStuffWorks website.

Knowles Corp.’s new 3.25% convertibles, which debuted in the market on Friday, continued to trade up and were seen at 102.5 on Monday from 101.25 on Friday. Shares of the Itasca, Ill.-based advanced micro-acoustic products company slipped 11 cents to $13.26.

The company priced an upsized $150 million of the 5.5-year senior notes at the rich end and beyond the rich end of talk late Thursday.

Also carrying over into Monday action, but moving the opposite way, Molina Healthcare Inc. extended losses for a second straight day after the Long Beach, Calif.-based Medicaid services company posted quarterly earnings that fell well short of estimates on Friday.

The Molina 1.125% convertibles traded late Monday at 134.82, which was down another 4 points from 138.40 on Friday, representing a 26-point skid, according to Trace data.

The Molina 1.625% convertibles traded down to 109 on Monday, which was off from 112.5 last on Friday.

Molina shares ended down $1.97, or 4%, to $49.79.

Molina posted first-quarter net income of $24 million, or 43 cents per share, which was down from 56 cents per share reported in the first quarter in the year-earlier period. The primary reason for the decline in earnings year over year was reduced Medicaid Expansion premium rates that lowered income before taxes by about $50 million, or 55 cents per shares.

Earnings adjusted for amortization were 51 cents a share, which fell well short of estimates for about 81 cents per share.

Strong enrollment growth generated about $1 billion, or 34% more premium revenue in the first quarter of 2016 compared with the first quarter of 2015. Enrollment growth was primarily due to increased Marketplace enrollment, the start-up of the Puerto Rico health plan in April 2015, and acquisitions.

Consolidated premium revenue measured on a per-member, per-month basis fell about 6% in the first quarter year over year. The decline in PMPM premium revenue was mostly due to lower PMPM premiums for Medicaid Expansion and the Marketplace the company said in its earnings statement.

Also in health care, Pacira Pharmaceuticals Inc.’s convertibles were indicated lower after the Parsippany, N.J.-based specialty pharmaceutical company reported a first-quarter loss that was better than expected and adjusted earnings that were better than expected. Pacira shares gained $3.60, or 6.6%, to $50.51.

NuVasive Inc.’s convertibles were under pressure after the San Diego-based medical device maker reported a first-quarter loss of $89 million, compared to positive earnings in the year-earlier period. But excluding items, the company reported earnings were 32 cents per share, which was better than analysts expected, and the spinal device maker posted revenue of $215.1 million in the period, which was better than the about $205.4 million forecast.

NuVasive’s older 2.75% convertibles due 2017, most of which was bought back with proceeds of the new deal, were seen last at 133.75, down 0.25 point on the day. NuVasive’s 2.25% convertibles due 2021, of which $650 million price in March, were not heard in trade. NuVasive shares ended down 33 cents, or 0.6%, to $52.61.

Mentioned in this article:

Blucora Inc. Nasdaq: BCOR

Cobalt International Energy Inc. NYSE: CIE

GNC Holdings Inc. NYSE: GNC

Knowles Corp. NYSE: KN

Molina Healthcare Inc. NYSE: MOH

NuVasive Inc. Nasdaq: NUVA

Pacira Pharmaceuticals Inc. Nasdaq: PCRX

Whiting Petroleum Corp. NYSE: WLL

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