Valeant is predicting lower growth in its USA dermatology, gastrointestinal and women’s health product lines, as well as in regions including Western Europe.
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Valeant Pharmaceuticals International Inc.’s shares plunged to their lowest point in months on Tuesday after Bausch & Lomb Inc.’s parent said delay of its annual report is putting it in danger of defaulting on bonds. Track the stock here.
The company’s latest estimate for 2016 is that it will generate between $5.6 billion and $5.8 billion of adjusted earnings before interest, taxes, depreciation and amortization, a significant drop from its December guidance of $6.9 billion to $7.1 billion. Revenue has now been forecast to come in within a range of $2.3 billion and $2.4 billion dropping from prior guidance of $2.8 billion to $3.1 billion. The company’s revenue was up 22.3% compared to the same quarter past year.
The company’s shares fell more than 50% as investors voted with their feet, spooked by the company’s statement that it will not meet previous earnings targets and is at risk of failing to meet deadlines for filing its report for full-year 2015.
Valeant said it’s “working diligently” to file the annual report, known as a 10-K, “as promptly as reasonably practicable”.
The company has made some concessions to shareholders, this month adding three directors to its board, including an executive from Pershing Square Capital Management, activist investor Bill Ackman’s hedge fund. Pershing is one of Valeant’s biggest shareholders.
Valeant’s financial rollercoaster took another sharp turn yesterday after the company cut its revenue forecasts for 2016 and reported a fourth-quarter loss.
That’s within the range of the company’s revised forecast issued in mid-December.
Valeant is under investigation by the U.S. Securities and Exchange Commission over its relationship with Philidor, Reuters has reported.
Shares in the company plummeted more than 25% in early deals to $50.50. Adjusted earnings were $2.50 a share, below analysts’ expectations of $2.51.
The movement in stock demonstrates the rise and fall of share prices at the once high flying pharmaceutical company. Its shares have lost about three-quarters of their value since peaking last summer amid questions about its business practices and disclosures of government investigations. Valeant has said that Philidor’s pharmacy network includes R&O. In fact, Valeant sharply downgraded its outlook for first-quarter profits in part due to the “cancellation of “almost all price increases” amid a flurry of legal scrutiny”.
“In terms of management credibility, we have to earn it”, said CEO Michael Pearson during a conference call following the company reporting fourth quarter 2015 financial information and updated 2016 guidance. Furthermore, the company’s 10-K has been delayed requiring the company seek a waiver under its credit agreement.
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Pershing Square’s Ackman told his clients in a letter that he expects banks to grant Valeant a waiver, but warned that “the potential for a default creates enormous investor fear”.
