Posted 2/5/2018 12:00 am
Updated 2 weeks ago
Cantrell Drug Co. of North Little Rock said last week that it has hired about 25 people since filing for Chapter 11 bankruptcy reorganization in November.
“We’ve got so much production, and sales are back up,” said Steve Weintz, vice president of sales and marketing for the company, which sells sterile injectable pharmaceuticals that are mainly used in hospitals. The company has about 85 employees, he said.
The company’s monthly operating report on file in U.S. Bankruptcy Court in the Eastern District of Arkansas showed sales were $1.1 million in December. From Nov. 7, the day it filed for bankruptcy, through Nov. 30, it had sales of $360,800. The company reported a loss of $16,000 in December and $300,600 for the reporting period in November.
Weintz said he couldn’t comment further on the company, and its CEO and co-owner, Dr. James L. McCarley Jr., was unavailable for comment last week. McCarley’s wife, Lynn, also is a co-owner.
Founded in 1952 as a neighborhood pharmacy, Cantrell Drug has grown into a specialty pharmaceutical company that provides custom medications and a compounding service to hospital pharmacies in the U.S., according to a filing by the company’s bankruptcy attorney, Kevin Keech of Little Rock. Its customers also include surgery centers and physicians groups.
In 2017, Cantrell Drug reported revenue of $11.5 million, a steep decline from $23 million in 2016 and $18.5 million in 2015, according to its bankruptcy filing. Its loss for 2017 was $3.2 million. The bankruptcy filings don’t list the net income for 2015 or 2016.
While the company’s revenue was rising, it was also dealing with the U.S. Food & Drug Administration. In January 2015, the FDA issued Cantrell Drug a warning letter after inspecting its facility at 7321 Cantrell Road in Little Rock. “The investigators observed serious deficiencies in your practices for producing sterile drug products, which put patients at risk,” the FDA letter said.
Cantrell’s response letter said the company didn’t believe it put patients at risk, “nor does it believe the production environment at the time of the inspection posed a significant risk of contamination.”
Nevertheless, Cantrell Drug said its senior management team “is committed to quality and addressing all items noted in the warning letter.”
More trouble would follow. In November 2016, Cantrell Drug voluntarily recalled certain unexpired sterile drug products “due to lack of sterility assurance,” according to a news release from the company. Those products were distributed nationwide to health care facilities.
About eight months later, in July 2017, Cantrell Drug made a similar announcement, but this time it was for all sterile drug products, also “due to lack of sterility assurance,” according to a company news release. The products were distributed to health care facilities nationwide, except to its customers in Connecticut, Hawaii, South Carolina and Vermont. “We are voluntarily issuing a recall out of an abundance of caution after several issues were identified during a recent inspection of our facility,” McCarley said in a July 2017 news release.
After customers either shipped back or destroyed the recalled product, Cantrell Drug issued them a credit. The health care facilities holding recall credits at the time Cantrell filed bankruptcy totaled $1.6 million of the $5 million of unsecured debt owed. (Cantrell Drug also owes Regions Bank of Birmingham, Alabama, $1.8 million for seven loans, but that is secured by assets.) Cantrell Drug listed $7.46 million in debts and $15.1 million in assets in its bankruptcy.
“Above all I want to make it clear to everyone that our intent is to pay one hundred cents on the dollar to all our creditors,” McCarley said in a release in November. “We have no intention of any sort of liquidation, cram down or write off. I’ve asked our vendors to work with us, to give us time to get back on our feet. So far, I’ve been very pleased with the understanding and support we’ve received from the trade.”