Embattled Valeant Pharmaceuticals has slashed its expectations for the fourth quarter and all of 2015, with about two weeks left in both, and issued a guarded outlook for next year as well.
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Valeant conceded the company, which has been accused of price-gouging for some of its products, has altered its strategy to pursue volume growth by lowering prices and reducing costs.
“We’ve ignored the external factors and we’re continuing to grow, grow, grow”.
Since this past summer, though, the business has been hit with questions regarding its drug pricing, accounting, disclosures and overall business practices.
Vetr lowered shares of Valeant Pharmaceuticals Intl from a strong-buy rating to a buy rating and set a $122.10 price target on the stock.in a research report on Monday, October 26th. Valeant also chopped its outlook for the current quarter to between $2.55 and $2.65 per share, from $4.00 to $4.20. Analysts were looking for a profit of $11.11 a share this year on $10.77 billion in revenue. Its exploding debt load of more than $30 billion is expected to be reduced by an estimated $2.25 billion in 2016, with its net leverage ratio pegged to come down to almost four times of its pro forma adjusted EBITDA by next year’s end.
Miehm said he had already expected the company to face significant revenue reductions as it realigns its distribution network.
Walgreens has more than 8,000 pharmacy locations across the US, and the new prices will be available from independent retailers as well. Online investment research company Citron Research has called Valeant the “pharmaceutical Enron”. For example, Valeant bought the life-saving heart drugs Nitropress and Isuprel in February, then tripled the price of one and raised the other sixfold.
Valeant Pharmaceuticals International Inc. shares surged more than 17% Tuesday, as analysts cheered the company’s new pricing and distribution pact with Walgreens Boots Alliance Inc., the biggest pharmacy chain in the U.S.
Valeant forecast that another closely watched metric, cash earnings, would be US$6.9 billion to US$7.1 billion in 2016.
The 20-year deal takes effect early next year.
Financial analysts quizzed Valeant officials about the Walgreens deal during the investor presentation, questioning whether it would pass muster with pharmacy benefit managers.
Valeant and Chief Executive Officer Michael Pearson have been criticized for steep price increases on some drugs and for close ties to a specialty pharmacy that used aggressive methods to overcome insurer barriers to reimbursements.
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A high ranking US politician issued a letter to Valeant – released to the media ahead of the company’s briefing – that says the company’s failure to disclose information as requested has obstructed the congressional investigation.
