What happened

Pharmaceutical specialist Perrigo (NYSE:PRGO) trailed the market by a wide margin last month as the stock lost 38% compared to a 9% slump in the S&P 500, according to data provided by S&P Global Market Intelligence.

Two scientists performing clinical research.

Image source: Getty Images.

So what

December's swoon came as investors reacted to some shocking tax news. Perrigo revealed late in the month that the Irish Tax Appeals Commission has sent it a tax bill of roughly $1.9 billion, plus interest and penalties, or about one quarter of the company's market capitalization before the stock decline. Irish tax authorities found that Perrigo didn't pay the appropriate taxes related to its sale of the rights to its multiple sclerosis drug Tysabri.

Now what

Perrigo disagrees with the Irish authorities' assessment and says that the company will ultimately prevail in contesting the charge. Any payments won't be due until a final ruling, too, which won't be for years. However, a $2 billion potential charge is a significant risk clouding investors' view of Perrigo's finances right now. Thus, until more clarity develops on the issue that supports management's claims that the charge won't be applied, the stock isn't likely to recover from its December hit.

Check out the latest Perrigo earnings call transcript.