Shares of Canada-based Valeant Pharmaceuticals tanked Monday, amid ongoing turmoil over the embattled drugmaker’s delayed financial results and its leader’s health.
Even news Sunday that CEO Michael Pearson is returning immediately after nine weeks recovering from pneumonia and unspecified complications failed to buoy Valeant shares.
The board also decided to split the roles of chairman and CEO, both of which had been held by Pearson, and appoint Robert Ingram as chairman of the board. Ingram has been on Valeant’s board since 2010 and previously served as chairman for a few months at the start of 2011.
Ingram is a former top executive at GlaxoSmithKline, the United Kingdom-based pharmaceutical company with a major Triangle presence, and a general partner at Durham-based Hatteras Venture Partners. He is also a former director of Charlotte-based Wachovia bank.
After falling 18 percent to $65.80 on Monday, the shares are trading at about one-fourth of their $263.81 high last August. That was right before Valeant’s practice of buying rights to old drugs and jacking up the prices came under congressional scrutiny, and a few months before its questionable relationship with a drug distributor raised concerns about the accuracy of its financial reporting.
Valeant on Monday confirmed that it faces “several ongoing investigations, including investigations by the U.S. Attorney’s Offices for Massachusetts and the Southern District of New York, the SEC, and Congress.”
Investors appear to be reacting to Valeant’s announcement in a statement Sunday that is withdrawing all its financial forecasts.
Nomura equity analyst Shibani Malhotra wrote Monday that while Pearson’s return to the helm is a “positive,” for the company, she’s concerned by Valeant’s decision to withdraw its 2016 guidance, which was confirmed just six weeks ago.
Valeant Pharmaceuticals International Inc., based in Laval, Quebec, also again delayed announcing its preliminary fourth-quarter and 2015 financial results, which were to be released Monday. The company cited Pearson’s return to work as the reason.
“Valeant won’t turn around until it restores its credibility, and it doesn’t help to bring back the CEO who created the questions about financial reporting on his watch and his handling of questions about Philidor,” Erik Gordon, a professor and pharmaceuticals analyst at University of Michigan’s Ross School of Business, wrote in an email.
Pearson’s convalescence, and the limited information the company released about his condition, aren’t the only concerns dragging down Valeant shares.
Last Tuesday, Valeant said it would delay filing its 2015 annual report with regulators while it sorts out its former relationship with the mail-order pharmacy Philidor. Valeant said it expected to lower reported 2014 earnings by about 10 cents per share and raise 2015 earnings by about 9 cents. That’s because about $58 million in sales to Philidor were improperly recognized too early – when they were delivered to Philidor, rather than when patients received the products.
Moody’s Investor’s Service on Monday put all ratings of Valeant and its subsidiaries under review for possible downgrade. It cited concerns that “Valeant’s underlying operating performance is weaker than Moody’s previous expectations, potentially impeding the company’s” plans to reduce its debt.
Bloomberg News and staff writer Rick Rothacker contributed