Valeant’s press release didn’t specify the reason for the reduced expectations – which come as the Quebec-based company faces investor dissatisfaction over its handling of a controversy over its pricing and distribution practices, which are being investigated by US authorities.
Advertisement
The company expects double-digit same store organic sales growth from its business next year, due to be mainly driven through volume.
Valeant slashed its 2015 adjusted earnings per share (EPS) target to the range of $10.23-10.33, from a prior estimate of $11.67-11.87. Analysts have predicted earnings of $14.27 a share and $12.55 billion in sales, the Wall Street Journal reported.
Valeant said that for 2016 it is expecting its adjusted earnings to be between $13.25 and $13.75 per share with revenue between $12.5 billion and $12.7 billion.
Valeant added that it will try and reduce debt by about $2.25 billion in 2016.
Shares in Valeant, down 53% over the past three months through Tuesday’s close, fell 4.2% in premarket trading. In addition, Walgreens agreed to sell at low generic prices more than 30 other Valeant branded drugs that have been struggling with low-price competition.
Patient advocates, doctors and Congressional leaders have attacked Valeant and other drug companies like Turing Pharmaceuticals for aggressively increasing prices on some prescription drugs.
Just this morning, Valeant announced a 20-year agreement with Walgreens Boots Alliance, Inc., the largest pharmacy chain in the US with more than 8,000 units, which will “more than replace” Valeant’s Philidor specialty pharmacy distribution.
Chief Executive Officer Michael Pearson said Wednesday that Valeant should be judged based on its ongoing growth and strategy and its “great brands”, not its small research budget or the controversial business practices that have triggered government probes and created turmoil.
With direct reference to Valeant’s plans to distribute the generic priced branded products, analysts at Morgan Stanley further raised their concerns in their latest report, questioning the amount of Valeant’s discounts that would be retained by Walgreens versus being passed on to payers.
“While some components of the guidance may appear disappointing, we suspect that it is conservative”, said Alex Arfaei, an analyst with BMO Capital Markets. By then, we estimate that Valeant’s stock price will be substantially in excess of $60 per share, potentially several multiples of this price.
On Tuesday, Cummings sent another letter to Pearson reiterating his request for the documents related to the company drug price increases or present employees with knowledge about its business relationship with Philidor RX Services.
Cummings said he wants the company to produce records and interviews by January 8.
The new guidance comes ahead of investor day for Valeant, which begins today.
Advertisement
Usually, it is not good news for shareholders when a company decides to cut product’s price, but not in this case.
