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The healthcare sector has been the best-performing sector year to date with a gain of 17.5%.

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In this article, I will feature two healthcare companies that have seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

1. Bristol-Myers Squibb Company (NYSE:BMY), a biopharmaceutical company, discovers, develops, licenses, manufactures, markets, distributes, and sells biopharmaceutical products that help patients prevail over serious diseases worldwide.

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Insider selling by insider (last 30 days)

  • Paul von Autenried sold 25,000 shares on June 10 and currently holds 29,584 shares or less than 0.1% of the company. Paul von Autenried is senior vice president, Enterprise Services and Chief Information Officer.
  • Lamberto Andreotti sold 100,000 shares on June 4 and currently holds 478,562 shares or less than 0.1% of the company. Lamberto Andreotti was designated chief executive officer of the company by the Board of Directors on March 2, 2010, and officially became CEO on May 4, 2010.
  • Samuel Moed sold 58,898 shares on June 4 and currently holds 24,687 shares or less than 0.1% of the company. Samuel Moed is Senior Vice President, Strategic Planning and Analysis.
  • John Elicker sold 25,997 shares on June 5 and currently holds 42,273 shares or less than 0.1% of the company. John Elicker is senior vice president, Public Affairs and Investor Relations.
  • Joseph Caldarella sold 26,275 shares on June 6 and currently holds 68,342 shares or less than 0.1% of the company. Joseph Caldarella is Senior Vice President & Controller.
  • Elliot Sigal sold 227,168 shares on May 30 - June 3 and currently holds 148,221 shares or less than 0.1% of the company. Elliot Sigal has served as chief scientific officer and president of R&D since October 2004.
  • Beatrice Cazala sold 113,282 shares on May 30-31 and currently holds 173,374 shares or less than 0.1% of the company. Beatrice Cazala is Executive Vice President, Commercial Operations, a Corporate Officer and member of the company's Senior Management Team.
  • Giovanni Caforio sold 10,538 shares on May 31 and currently holds 47,316 shares or less than 0.1% of the company. Giovanni Caforio leads the company's pharmaceutical business in the U.S., including Puerto Rico.
  • James Cornelius sold 100,000 shares on May 28 and currently holds 641,824 shares or less than 0.1% of the company. James Cornelius has been Non-Executive Chairman since May 2010.
  • Charles Bancroft sold 25,000 shares on May 28 and currently holds 94,015 shares or less than 0.1% of the company. Charles Bancroft is Executive Vice President and Chief Financial Officer.

Insider selling by calendar month

Here is a table of Bristol-Myers Squibb Company's insider trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
June 2013319,8170
May 2013795,9840
April 2013586,5070
March 2013236,8720
February 2013420,2840
January 2013143,3500

There have been 2,502,814 shares sold and zero shares purchased by the insiders this year.

Financials

The company reported the first-quarter financial results on April 25 with the following highlights:

Revenue$3.8 billion
Net income$609 million
Net debt$2.1 billion

Outlook

The company's 2013 GAAP EPS guidance is in the range of $1.54 to $1.64 and non-GAAP EPS guidance is in the range of $1.78 to $1.88.

Competition

Bristol-Myers Squibb Company's competitors include AstraZeneca PLC (NYSE:AZN), Merck & Co. Inc. (NYSE:MRK) and Roche Holding AG (OTCQX:RHHBY). Here is a table comparing these companies.

CompanyBMYAZNMRKRHHBYIndustry Average (Drug Manufacturers - Major)
Market Cap:75.11B60.19B141.92B199.39B64.52B
Employees:28,00051,70083,00079,13299.49K
Qtrly Rev Growth (yoy):-0.27-0.13-0.090.120.11
Revenue:16.20B27.01B46.21B50.83B27.01B
Gross Margin:0.750.810.650.750.61
EBITDA:4.62B11.09B16.36B19.12B10.37B
Operating Margin:0.220.330.210.330.16
Net Income:1.47B5.68B6.02B10.22BN/A
EPS:0.884.521.962.993.27
P/E:51.7910.6523.9819.6614.20
PEG (5 yr expected):3.08-0.954.422.100.96
P/S:4.642.233.073.922.23

Bristol-Myers Squibb Company is trading above the industry average P/S ratio, which could explain some of the insider selling.

My analysis

There have been 10 different insiders selling the shares and there have not been any insiders buying the shares during the past 30 days. The company has an insider ownership of 0.10%. There are seven analyst buy ratings, 11 neutral ratings and one sell rating with an average target price of $45.69. The stock is trading at a P/E ratio of 51.79 and a forward P/E ratio of 21.56. The company has a book value of $8.34 per share and the stock has a dividend yield of 3.06%. Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The four main reasons for the proposed short entry are relatively high P/S ratio, high P/E ratio, bearish analyst target prices and the intensive insider selling activity.

2. Pacira Pharmaceuticals (NASDAQ:PCRX), a specialty pharmaceutical company, develops, commercializes, and manufactures pharmaceutical products for use in hospitals and ambulatory surgery centers worldwide.

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Insider selling by insider (last 30 days)

  • Andreas Wicki sold 124,394 shares on May 30 - June 19 pursuant to a Rule 10b5-1 trading plan adopted by HBM Healthcare Investments. HBM Healthcare Investments currently controls 2,019,413 shares or 6.2% of Pacira. Andreas Wicki is CEO of HBM Partners AG and HBM BioVentures AG, Europe's largest private equity focused investment company dedicated to life sciences. Andreas Wicki serves as a director of Pacira.
  • Fred Middleton sold 144,100 shares on June 18-20 pursuant to a Rule 10b5-1 trading plan adopted by Sanderling Venture Partners VI, L.P. Fred Middleton currently controls 146,299 shares or 0.4% of Pacira. Fred Middleton joined Sanderling in 1987 as a general partner. Fred Middleton serves as a director of Pacira.
  • John Pratt sold 39,375 shares on June 10-12 and currently holds 131,250 options or 0.4% of the company. John Pratt joined Pacira as General Manager of its San Diego facility in January 2012.
  • Luke Evnin sold 374,863 shares on May 28 - June 12 pursuant to a Rule 10b5-1 trading plan. Luke Evnin currently controls 824,255 shares or 2.5% of Pacira. Luke Evnin serves as a director of Pacira and is managing director of MPM Capital.

Insider selling by calendar month

Here is a table of Pacira's insider trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
June 2013407,1540
May 2013329,313853
April 2013227,7500
March 20132,870,8860
February 201300
January 2013500,0000

There have been 4,335,103 shares sold and 853 shares purchased by the insiders this year.

Financials

The company reported the first-quarter financial results on May 8 with the following highlights:

Revenue$11.6 million
Net loss$23.1 million
Cash$110.2 million
Debt$97.4 million

Outlook

The company expects to be cash flow positive at some point in 2014.

Competition

Pacira's marketed product Exparel is competing with elastomeric pump/catheter devices intended to provide bupivacaine over several days. I-FLOW Corporation (acquired by Kimberly-Clark Corporation (NYSE:KMB) in 2009) has marketed these medical devices in the United States since 2004. In addition, the company anticipates Exparel will compete with currently marketed bupivacaine and opioid analgesics such as morphine.

My analysis

There have been four different insiders selling the shares and there have not been any insiders buying the shares during the past 30 days. The company has an insider ownership of 7.10%. The stock is trading at a forward P/E ratio of 75.38 and the company has a book value of $2.13 per share. Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The main reasons for the proposed short entry is the intensive insider selling activity.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: 2 Healthcare Companies With Recent Intensive Insider Selling