Morning Commentary: Salix slumps on earnings miss, lowered guidance; AllScripts Healthcare drops

By Rebecca Melvin

New York, Nov. 7 – Salix Pharmaceuticals Ltd.’s convertibles moved lower in active trade on an outright basis early Friday and were mostly in line with lower shares after the Raleigh, N.C.-based drug company posted disappointing earnings and reported the resignation of its chief financial officer.

The earnings report was followed by multiple downgrades.

Salix’s 2.75% convertibles due 2015 were seen at 189 bid, 190 offered versus an underlying share price of $87.50, according to a trader.

The Salix 1.5% convertibles due 2019 were quoted at 146 bid, 147 offered versus the same share price.

“Guys made or lost money depending on their hedge. I don’t think it was a disaster for arbs,” the trader said.

Salix shares opened down at $90.20 after closing Thursday at $138.55. The shares were last at $86.85, which was down $51.70, or 37%.

Salix announced a revision of its accounting of drug inventories and also lowered full-year earnings guidance to $400 million, or $5.20 per share, down from earlier estimates of $475 million, or $6.16 per share.

Allscripts Healthcare Solutions Inc.’s convertibles plunged along with the underlying shares after the Chicago-based medical software company posted quarterly results that missed estimates.

Allscripts Healthcare’s 1.25% convertibles due 2020 slumped more than 8 points to 93.7, according to Trace data.

Allscripts shares were down 14%. The company said that it lost $25.8 million, or 15 cents a share. Adjusted earnings were 6 cents. Revenue came in a little better than for the same period of last year at $345.4 million but were also short of analysts’ estimates.

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