Missouri Minute: Mallinckrodt faces new federal lawsuit; Centene lowers profit forecast

Good morning, MBA readers,

So far, no cases of coronavirus have been reported in Missouri, but the state is beginning to feel the disease’s economic ripple effects.

Chief among these is the potential the virus has to cripple the global supply chain. Firms that once depended on suppliers in China, the epicenter of the outbreak, are now turning to domestic companies for materials. However, these U.S. suppliers, like St. Louis manufacturer Bachman Machine Co., say they cannot match the cheaper prices offered in China.

Bachman’s not alone among St. Louis-area companies fearing the effects of the virus. Ferguson-based Emerson Electric announced last week that it expects to lose $100 to $150 million in sales in the second quarter due to the disease. That’s up from the industrial conglomerate’s earlier predicted revenue hit of $75 million to $100 million.

In the world of entertainment, Leawood, Kansas-based AMC Entertainment has seen its share price tumble about 24% since the Friday closing bell two weeks ago. Yet AMC, whose majority owner is China’s Dalian Wanda Group, said it expects “little or no pain” from the outbreak — at least in the U.S. Overseas, AMC had shuttered about half its theaters in Italy as of late last week due to a surge of reported cases of COVID-19 there.

In response to all the virus-related economic anxiety, the Federal Reserve Bank on Tuesday announced an interest rate cut — the first unscheduled rate reduction since 2008. Scroll down to read more about the Fed’s decision, other coronavirus ripple effects and the rest of the day’s top business news.

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Centene lowers 2020 profit forecast
The Clayton-based health insurer lowered its profit expectations for the year, sending shares down 3%. The company is now pegging expected profits at between $4.56 and $4.76 per share, down from previous forecasts of $4.64 to $4.84 per share. (Reuters)

St. Louis’ Core & Main makes 10th acquisition
The water, sewer and fire protection products distributor will acquire R&B Co., a waterworks supplier based in San Jose, California. It marks the company’s 10th acquisition since becoming independent in 2017. (St. Louis Business Journal)

City Foundry gets $40 million investment
Florida’s CapStone Holdings announced Tuesday it had acquired a stake in the $210 million City Foundry development, which is renovating an abandoned St. Louis factory into a food hall and theater. The project is located in an Opportunity Zone, which offers tax benefits to real estate investors. (St. Louis Post-Dispatch)

American Century Investments to offer voluntary separation program
The Kansas City investment management firm will offer buyouts to nearly 10% of its workforce in anticipation of a retirement wave. The buyouts, which are only being offered to a few departments, will only be offered to workers who have been at the company for five years or more and have their age plus their years of service equal at least 70. (Kansas City Business Journal)

USDA may not be enough to save AT&T tower
Financial filings show the U.S. Department of Agriculture plans to move into the vacant St. Louis building to make it more attractive to potential buyers, but some real estate experts are questioning whether that’s a financially feasible plan. (St. Louis Business Journal)

Black & Veatch monitors two employees amid virus scare
The Overland Park, Kansas-based engineering firm revealed this week that two of its employees may have been exposed to coronavirus while traveling abroad last week. The company briefly closed a nearby office where the two worked and has asked employees who came in contact with them to self-quarantine. (WDAF)

Regal Distributing names new CEO
Alex Kopulos will succeed his father Greg Kopulos as CEO of the Kansas City-area distributor of office and janitorial products and food service items. He previously served as the company’s vice president. (Kansas City Business Journal)

Area Targets see ‘aggressive shopping’ amid coronavirus fears
Target’s CEO said Tuesday that the retailer has seen an uptick in shopping amid the virus outbreak but don’t expect it will hurt 2020 profits, adding that the company is monitoring the situation “hour-by-hour.” (St. Louis Business Journal)

Distillery makes acquisition
MGP Ingredients, based in Atchison, Kansas, will acquire New Columbia Distillers, which markets Green Hat Gin in Washington, D.C. (Kansas City Business Journal)

Urban Chestnut brews Stan Musial beer
The St. Louis-based brewery is launching a new beer to celebrate the 100-year anniversary of the local baseball icon’s birth, using a pre-Prohibition recipe. The beer will go on sale March 16. (St. Louis Post-Dispatch)

Show me

Income is distributed unevenly across Missouri, according to the most recent estimates from the Bureau of Labor Statistics, with residents of the state’s top-earning county bringing in nearly three times as much annually as residents of the lowest-income county.

Say that again

“We do recognize a rate cut won’’ reduce the rate of infection. It won’t fix a broken supply chain. We get that; we don’t think we have all the answers.”

That’s Federal Reserve Chairman Jerome Powell, who in a news conference Tuesday underscored the central bank’s limited ability to deal with the coronavirus outbreak, Politico reports. Powell’s comment followed the Fed’s decision to cut its benchmark interest rate by half a percentage point to around 1% in response to the virus and its impact on the economy. The cut, which is twice the size of a typical Fed rate cut, is the first unscheduled interest rate change since 2008. Powell added that the “ultimate solution” to the outbreak will have to come from federal health officials, policymakers and the white house. U.S. stocks rallied briefly after the rate cut, but fears of a passive Fed sent the S&P 500 down 2.8%, according to The New York Times. The yield on 10-year U.S. treasuries fell below 1% for the first time in history, stoking fears of an impending recession, per Barron’s.

Go figure


That’s how much it costs for a bottle of Acthar Gel, a drug marketed by Mallinckrodt to treat spasms and multiple sclerosis in infants, and the focus of a new lawsuit by the federal government, Reuters reports. It’s a far cry from 2001, when the drug cost just $50 a bottle. Acthar made up 30% of the pharmaceutical company’s $3.2 billion in revenue in fiscal 2019. On Tuesday, the U.S. Department of Justice joined a civil whistleblower lawsuit against Mallinckrodt, which has corporate offices in the St. Louis area. The suit claims the company illegally withheld Medicaid rebates related to Acthar, and that Mallinckrodt’s rebates did not reflect the price increase, thereby defying government warnings. Just last week, Mallinckrodt agreed to a $1.6 billion settlement for its role in the U.S. opioid crisis.

Hello, my name is

EWR Radar Systems

This Kirkwood-based weather radar maker has won a $20.7 million contract from the U.S. Air Force, the St. Louis Business Journal reports. Under the contract, EWR will deliver 22 portable doppler weather radar systems. The deal includes an option for the Air Force to buy another 14. EWR said it plans to manufacture the devices locally and increase its headcount as a result of the contract.

It’s been a pleasure doing business with you this morning.


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