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Stocks K / King Pharmaceuticals

URL:  http://boards.fool.com/difficult-times-ahead-for-the-king-20818842.aspx

Subject:  Difficult times ahead for the King Date:  5/26/2004  11:13 AM
Author:  steveting Number:  236 of 253

Hi guys,

I'll say it up-front that there are difficult times ahead for King Pharmaceuticals.

With the sudden resignation of the CEO and Chairman Jefferson J Gregory and President Kyle P Macione, questions are being asked about the credibility of the company's management and how a current team would lead KG out of the slump that they got themselves into in the first place.

2003 has been a horrible year for KG and its disappointing that management didn't acknowledge this. From the press releases, annual report and conference calls, one could easily be misled from management's spin that things are great with increased revenues and great cash being generated from operations. But when management hypes the good news and fails to address the problems related to the business, investors should be hearing alarm bells and cast a skeptical eye. Some of the things that that investors should be concerned about is:

(1) SEC investigation. Basically KG was caught with their pants down by overcharging Medicaid. Why didn't management have a system in place that would ensure Medicaid and other governmental agencies weren't over charged in the first place? From the 10K it appears that management is still having difficulty in calculating the amount due to Medicaid, since they consider it to be subjective and have to do the calculations manually. How can this be? Unless this is an industry wide problem in which the majority of pharmaceutical/biotechnology companies a