Valeant Shares Plunge as It Slashes Guidance Again
Source: The Wall Street Journal.
Valeant Shares Plunge as It Slashes Guidance Again
Shares plunge the company posts a $1.22 billion loss and indicates 2017 could be ‘a down year’
By Anne Steele and Jonathan D. Rockoff
anne.steele@wsj.com
http://twitter.com/AnneMarieSteele
Jonathan.Rockoff@wsj.com
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Updated Nov. 8, 2016 10:11 a.m. ET
Valeant Pharmaceuticals International Inc. cut its annual outlook again Tuesday as the drug company, struggling to remake its business after a series of missteps, signaled its turnaround may take longer than expected.
Shares of the company tumbled 25% to $14.42, the stock’s lowest point in six years.
In the third quarter, the Canada-based company posted a $1.22 billion loss and wrote down the value of the Salix stomach-drugs business it is reportedly trying to sell. It also said health regulators delayed a decision on approving an experimental psoriasis drug and issued a warning letter for the company’s Rochester, N.Y., site.
Valeant had once been one of Wall Street’s darlings, as the company grew through acquisitions and price increases. But the stock has lost more than 85% of its value this year amid a slate of concerns, including accounting problems, a brush with a potential debt default and investigations by Congress and federal regulators over drug prices.
Read more: http://www.wsj.com/articles/valeant-goes-back-to-slashing-guidance-1478604091
Valeant Pharmaceuticals International, Inc. is a multinational specialty pharmaceutical company based in Laval, Quebec, Canada. Valeant develops, manufactures and markets a broad range of pharmaceutical products primarily in the areas of dermatology, gastrointestinal disorders, eye health, neurology and branded generics. Valeant owns Bausch & Lomb, one of the largest manufacturers of contact lenses.
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In 2015–2016 the company was involved in a controversy about drug price hikes and the use of a specialty pharmacy for the distribution of its specialty drugs. The company's stock price plummeted nearly 90 percent since the peak. Valeant reversed the price hikes and ended cooperation with specialty pharmacy Philidor Rx Services and Walgreens took over distribution.
Valeant is under investigation by the U.S. Securities and Exchange Commission. Beginning May 2016 Joseph C. Papa leads the company. Bill Ackman's Pershing Square fund has a major stake in the company.
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History
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2016
In February 2016, Valeant disclosed that it was under investigation by the U.S. Securities and Exchange Commission, and by the U.S. Attorney's Offices for the Southern District of New York.
The company has been criticized for pioneering the highly lucrative business model of acquiring pharmaceutical companies or their drugs, incorporating these drugs into Valeant's sales and supply chain and then raising the prices of these medications to levels contemporaneous with similar pharmaceutical products. From 2015 to 2016 Valeant shares plummeted 85 percent with stocks that were over $200 in 2015, now worth c. $36. Large hedge funds such as Bill Ackman's Pershing Square Capital Management, Paulson & Company, Viking Global Investors and Brahman Capital lost billions in what has been described as hedge fund herding by Cornell University professor Andrew Karolyi. In early 2015, hedge funds owned about 23 percent of Valeant shares. By April 2016, the market value of hedge fund holdings in Valeant had fallen by $7.3 billion. However, hedge fund herding continues to incite hedge fund portfolio manager's to continue to buy Valeant shares. Between August 2015 and April 2016 Valeant's shares fell 80 per cent. In their 2015 annual report filed on April 29, 2016 Valeant "Valeant said that it is the "subject of investigations" by the Securities and Exchange Commission, the U.S. Attorney’s Offices in Massachusetts and New York, the state of Texas, the North Carolina Department of Justice, the Senate’s Special Committee on Aging and the House’s Committee on Oversight and Reform, and has received document requests from the Autorite de Marches Financiers in Canada and the New Jersey State Bureau of Securities." On April 27, 2016 Bill Ackman, J. Michael Pearson and Howard Schiller appeared before the United States Senate Special Committee on Aging to answer to concerns about the repercussions for patients and the health care system faced with Valeant's business model.
