Insiders made noteworthy buys (see definition below) in six healthcare sector stocks this past week (June 11th to 15th, 2012), and sold five others. These, along with insider buys and sells last week in other sectors and groups (discussed in prior articles on the consumer sector and the retail sector) were selected based on a review of over 1,300 separate SEC Form 4 (insider trading) filings last week, as part of our daily and weekly coverage of insider trades.
The filings are noteworthy based on the dollar amount sold, the number of insiders buying or selling, and based on whether the overall buying or selling represents a strong pick-up based on historical buying and selling in the stock (for more info on how to interpret insider trades, please refer to our instablog discussion on insider trading):
Allscripts Healthcare Solutions (MDRX): MDRX is a provider of clinical, connectivity and patient information software applications for healthcare providers. On Monday and Friday, two insiders filed SEC Forms 4 indicating that they purchased 18,230 shares for $0.2 million, including Director Paul Black purchasing 9,130 shares and Director Robert Cindrich purchasing 9,100 shares, both new positions in their respective portfolios. In comparison, insiders purchased 31,730 shares in the past two years.
MDRX shares have plunged this year, cut almost in half from its $21.66 highs earlier this year in February. The slide started after the company reported a lackluster Q4 (December) in mid-February, that prompted a number of brokers to downgrade the shares amid concerns that growth was slowing down. Those concerns did finally come to bear when the company reported a disappointing Q1 (March), missing analyst revenue and earnings estimates (12c v/s 24c), and also guiding down FY 2012 revenue and earnings (74c-80c v/s $1.09). In the aftermath of the report, the company's then Chairman Phil Pead's service was terminated, three directors that disagreed with the decision tendered their resignation, and the CFO also stepped down. As a result, the stock gapped down and plunged almost 80% the next day, and continues to trade near those lows.
MDRX shares currently trade at a steep discount of 12 forward P/E and 1.4 P/B compared to averages of 36.2 and 4.0 for its peers in the medical information systems group, while earnings are projected to drop slightly from 93c in 2011 to 90c in 2013. Of the 25 analysts that cover the company, eighteen rate it at hold, four at buy/strong buy, and the remaining one at sell, with a price target of $12, slightly above current prices in the $10.80s.
In addition to MDRX, insiders also reported noteworthy buys this past week in five other healthcare sector stocks, the first two of which listed below have also been plunging recently:
- Achillion Pharmaceutical (ACHN), that is a clinical-stage biotech focused on developing new treatments to patients with infectious diseases, including HCV and resistant bacterial infections, in which Director Dennis Liotta filed SEC Form 4 indicating that he purchased 20,000 shares for $123,890, ending with 65,000 shares after the purchase, and in comparison to insiders purchasing 35,000 shares in the past year;
- Targacept Inc. (TRGT), that is a development-stage biotech that discovers and develops NNR Therapeutics, a new class of drugs for the treatment of CNS diseases and disorders, in which Director John Richard filed SEC Form 4 indicating that he purchased 7,500 shares for $31,192, the only insider purchase at least in the past two years;
- Endo Pharmaceuticals Holding (ENDP), a developer of branded and generic pharmaceutical products that treat various conditions such as pain and overactive bladder, in which CEO David Holveck filed SEC Form 4 indicating that he purchased 8,550 shares for $0.25 million, ending with 24,072 shares after the purchase, and in comparison to 17,750 shares purchased by insiders in the past two years;
- Nanosphere (NSPH), that is a developer of an advanced molecular diagnostic platform to enable low-cost and highly sensitive genomic and protein testing, in which Director Mark Slezak filed SEC Forms 4 indicating that he purchased 75,000 shares for $0.15 million, in comparison to insiders purchasing 1.1 million shares in the past year; and
- United Therapeutics Corp. (UTHR), a biotech company focused on developing therapies to treat cardiovascular, inflammatory and infectious diseases, in which CEO Martine Rothblatt filed SEC Forms 4 indicating that she purchased 22,279 shares for $1.0 million, in comparison to an additional 76,038 shares purchased by insiders in the past two years.
On top of these, noteworthy insider sells this past week in the healthcare sector included:
- a $3.6 million sale by EVP Harvey Demovick at Coventry Health Care (CVH), that is a provider of managed healthcare services through HMO, PPO and POS plans, and Medicare and Medicaid products;
- a $2.6 million sale by two insiders at Seattle Genetics Inc. (SGEN), that is a biotech company focused on the development of monoclonal antibody-based therapeutics for the treatment of cancer and autoimmune diseases;
- a $2.2 million sale by CVP of Heart Valve Therapy, Donald Bobo, at cardiovascular medical products company Edwards Lifesciences Corp. (EW);
- a $1.9 million sale by two insiders at Vivus Inc. (VVUS), that is a biopharmaceutical company developing therapeutic products to address unmet medical needs in obesity, diabetes and sexual health; and
- a $1.4 million sale by CEO Don Bailey at Questcor Pharmaceuticals (QCOR), that is an integrated specialty pharmaceutical company focused on the development, acquisition and marketing of innovative, acute care and critical care hospital and specialty pharmaceutical products, with its primary product being H.P. Acthar Gel.
Credit: Fundamental data in this article and company descriptions are based on SEC filings, Zacks Investment Research, Yahoo, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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