On Tuesday shares spiked on news the company had reached drug pricing and distribution deals with Walgreens.
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Valeant noted that it expects to reduce its debt by $2.25 billion next year. Instead of expected revenues of $11 billion to $11.2 billion in 2015, Valeant now expects $10.4 billion to $10.5 billion.
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For its full-year, Valeant is anticipating its adjusted profit will be between $10.23 and $10.33 per share with sales of between $10.4 billion and $10.5 billion. Total revenue is now expected between $10.4 -$10.5 billion compared to prior guidance of $11.0 – $11.2 billion.
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The company plans pay down $2.25 billion in debt next year, including mandatory payments and maturities.
Under the 20-year deal, which was announced a day ahead of Valeant’s investor day on Wednesday (more on that below), Valeant will also be axing prices on its branded dermatology and ophthalmology franchises by about 10% within the next year, as well as for other branded medications such as the diabetes med Glumetza (whose price Valeant bumped 8-fold after acquiring it). Analysts have predicted earnings of $14.27 a share and $12.55 billion in sales, the Wall Street Journal reported. After the heart drug price increases drew scrutiny in the summer, investors began selling off Valeant shares, which had peaked at almost $264 in August.
The deal with Walgreen’s helped to assuage concerns among investors who fear Valeant will not be able to find a new distribution partner to recover its nearly 7% of sales previously handled by Philidor.
“We have listened to what the marketplace is saying, and we’ve taken positive steps to respond”, J. Michael Pearson, Valeant Chairman and CEO said in a statement.
“We believe it is going to save the (health care) system money”, said Pearson. Valeant cut ties with that company in October, amid allegations Philidor created a network of “phantom pharmacies” to steer pharmacy benefit managers toward Valeant’s more-expensive drugs over cheaper alternatives, and that Valeant executives were involved in running Philidor. Jefferies Group dropped their price objective on Valeant Pharmaceuticals Intl from $224.00 to $172.00 and set a “buy” rating for the company in a report on Monday, November 2nd. “It’s our obligation to prove what they said is false”.
A special Valeant board committee is examining specifics of the Philidor arrangement.
Company officials refused to answer any analyst questions on the investigations or the company’s much-criticized drug price hikes.
Separately, federal prosecutors in MA and NY have subpoenaed information about Valeant’s drug-pricing and distribution policies. Deutsche Bank restated a hold rating and issued a $204.00 price target (down from $220.00) on shares of Valeant Pharmaceuticals Intl in a research report on Tuesday, October 20th. 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.
Pearson sought to project a more upbeat future on Wednesday.
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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.
