Valeant’s stock plunges 51.5%
Shares of Valeant Pharmaceuticals International Inc. crashed Tuesday after the drugmaker failed to reassure investors that it’ s getting back on track and admitted that it’s technically in danger of defaulting on its debt.
The Canadian company faces a smorgasbord of problems: falling sales, increased pressure to cut drug prices, massivedebt, three ongoing federal probes of its accounting and pricing practices, and shareholder lawsuits in the U.S. and Canada.
Valeant’s shares took their biggest one- day tumble ever, falling just over 50% after the company reported its overdue fourth- quarter results. Profit missed expectations. The company also slashed all its 2016 financial forecasts and said its business model, based largely on huge price increases for its drugs, is no longer viable.
Chief Executive Michael Pearson told analysts that Valeant won’t be able to file its annual financial report with the Securities and Exchange Commission before April. That would miss deadlines contained in agreements with bondholders and creditors. If those debtors chose todeclare the companyin default, it couldbeforced to make repayments faster andmay see limits on future borrowing.
Analysts were further upset when a Valeant news release incorrectly stated a figure in the company’s profit forecast. Steve Brozak, president of WBBSecurities, said the gaffe raised questions about whether any of Valeant’s statements could be trusted .“There is no predicting what happens next,” he said. “Valeant has had its worst day ever— so far.”
Pearson said his team can turn things around and return to growth.
Investors sold off Valeant shares furiously, driving the price down $ 35.53, or 51.5%, to $ 33.51. Trading volume for the daywas more than14 times normal levels.
Valeant reported preliminary, unaudited results showing that it lost $ 336.4 million, or 98 cents a share, in the quarter that ended Dec. 31. Excluding one- time items, profit was $2.50 a share; analysts had expected $2.64. Revenue was $2.79 billion, versus projections for $2.76 billion.