The company lowered its growth outlook for numerous lines of business including gastrointestinal, dermatology and women’s health products, in addition to set geographies such as Western Europe whilst expenses remained mostly unchanged.
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Valeant Pharmaceuticals shares have plunged about 16 per cent in pre-market trading after its fourth quarter earnings came in below analyst estimates and the Quebec-based company warned that the first quarter will be weaker than expected. Track the stock here.
For the full year, the company expects adjusted earnings of $9.50 to $10.50 a share, down from previous guidance of $13.25 to $13.75 a share.
For the current quarter, the drug manufacturer has reduced its EPS forecast from $2.35-2.55 to $1.30-1.55 compared to the consensus estimates of $2.63.
Shares in the Canadian pharmaceutical firm were down 46% in midday trading at $37.42, after the company slashed earnings and sales guidance and said it may breach loan covenants if it fails to produce an already delayed annual report by April. Excluding certain items, profit was $2.50 per share. On the call, Pearson reversed course and said that this year Valeant will be divesting noncore assets rather than acquiring them, and that reducing debt is a top priority. The company has a market capitalization of $11.50 billion and a PE ratio of 19.25. The company posted revenue of $2788.70 million in the period, compared to analysts expectations of $2762.59 million.
“We believe that the extent of today’s revision, relative to the company’s initial guidance, will raise further concerns regarding management’s credibility and its effectiveness in managing the business through a hard operating environment”, Mukherjee wrote in a report.
The potential new measures advocated by investors include providing more details of Chief Executive Michael Pearson’s recent illness, which sidelined him for at least two months, as well as adding managers with expertise in accounting and financial controls to Pearson’s inner circle, the people said.
There are a number of Equity research analysts covering shares of Valeant Pharmaceuticals International, Inc.
Until Tuesday, Evercore ISI analyst Umer Raffat had maintained that Valeant’s main problem was poor communication. Valeant has since signed a deal with Walgreens Boots Alliance Inc.to distribute dermatology and eye medicines through the drugstore chain’s more than 8,000 United States pharmacies.
Valeant had earlier revealed it had wrongly booked some $53 million in sales in 2014 that should have been reported as 2015 income.
Also plaguing Valeant are ongoing Congressional and Justice Department investigations of its pricing policies and a Federal Trade Commission antitrust probe of a contact-lens related acquisition.
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Mr. Pearson, meanwhile, has faced a fresh round of criticism and doubts about the company’s financial disclosures and business practices.
