ACHI came out with its 2012 and 2013 financial restatements on Dec 30th. This was a huge milestone for a company. The financial revenue numbers weren’t a major concern for me. What I was interested in was the cash position, customers, and what the future projections are. On the cash balance, it was a huge let down. The company spend $70M on the restatements. This is an absurd amount of money that was wasted. Taro Pharma, one of prior investments, had to do restatements after Sun Pharma took over. I think Sun Pharma spent less than 35M on the restatements.
As for the customers, it was good to hear that the customers haven’t left the company. They lost 2 customers and one of them resigned with the company via different contract terms.
The future projections look good. The company expects 2014 to be slow, although they did see things pick up in late 2014. Also, for 2015 the company is expecting growth.
I sold out of my shares a few days after the restatement. The company’s future looks good. The industry it is in, will see a huge demand for their service. Also, now with the restatements done the company can focus on operations. But my initial investment thesis was the restatement would be good for investor perspective. The uncertainty would be gone and the strong cash balance would be verified against audited financial statements. This didn’t work out as planned, uncertainty was gone but the drop in cash balance was unexpected.
This was another special situation case in which the investment didn’t work out for me. We have sold the shares and are sitting on the cash for now. Although this had a negative return for us, our 2014 returns were good enough to eat the loss.