At Valeant, more chaos with no reassurance

Michael Pearson and his company, Valeant Pharmaceuticals International Inc., were supposed to calm Wall Street doubters on Tuesday. Instead: chaos. What began before dawn with disappointing financial news snowballed into the worst day in the drug company’s history, leaving investors wondering if Pearson, its controversial chief, can regain his grip.

The CEO, who built Valeant on a stream of acquisitions, returned from a two-month medical leave just two weeks ago. He found the company in worse shape than he left it.

And then came Tuesday. The indignities came fast and furious: a $600-million typo in a press release; a conference call that left analysts and investors baffled and angry; Valeant’s top investor, Ruane Cunniff & Goldfarb, losing $1.26 billion on a 51-per-cent stock drop; and news that the company doesn’t have its numbers straight enough to file its earnings reports on time, potentially imperiling its ability to stay compliant with the repayment of debt that’s ballooned to $30 billion.

“Every time the company convenes a call it seems that there’s something new revealed that’s worrisome,” said David Amsellem of Piper Jaffray & Co. in New York. “All of this leads me to conclude that the management doesn’t have a good handle on these various businesses.”

On Tuesday, Valeant saw its biggest share drop ever to $33.51. In July, it was as high as $257.53.

Laurie Little, a Valeant spokeswoman, declined to comment.

Standard & Poor’s said Wednesday it was considering a cut to Valeant’s credit rating, which is already speculative grade, given the drugmaker’s “preponderance of risks.” Such a move could make Valeant’s debt repayments more expensive.