The last few weeks have been a wild ride for Valeant shareholders but this morning’s comments that the firm “is confident in its forecasts but there may be more surprises” has spooked investors, compounding the fact that the firm missed expectations with sales plunging 11%, and cut its sales and profit forecast for the year.
As The FT reports, the turnround of Valeant stalled on Tuesday as the Canadian drugmaker slashed its full-year revenues and earnings targets and reported problems in virtually all of its business segments.
Shares have collapsed almost 30% in the pre-market as the pharmaceutical group said it now expected to generate between $4.25bn and $4.35bn in adjusted earnings before interest, tax, depreciation and amortisation this year, down from a previous range of $4.8bn-$4.95bn.
This time last year, Valeant told investors it had set an “ebitda floor” of $7.5bn, meaning that its profit target has plummeted by more than $3bn in the space of 12 months.
It expects revenues to be in the range $9.55bn to $9.65bn, down from its previous forecast of $9.95bn to $10.1bn.
“While we have revised our expectations for the remainder of 2016, I continue to be encouraged by the commitment of our employees,” said Joseph Papa, who was parachuted in as chief executive earlier this year to try to revive the company.
Not pretty… VRX shares are down almost 30% in the pre-market – the lowest since Dec 1999.
As Bloomberg adds, Papa replaced Michael Pearson, a former McKinsey & Co. consultant who jacked up prices and scaled back on research and development.
Pearson and former Chief Financial Officer Howard Schiller are the focus of a criminal probe against the company as authorities build a fraud case related to hidden ties to a specialty pharmacy that Valeant secretly controlled, people familiar with the matter have said.
Valeant is also facing investigations from Congress and the U.S. Securities and Exchange Commission over its accounting and drug pricing. In August, a major shareholder, T. Rowe Price Group Inc., sued the company, accusing its former top executives of using a secret network of pharmacies and deceptive pricing strategies to artificially inflate revenue and profit, among other things.
While one of the presidential candidates will have a bad night tonight, we suspect it will not be as bad a Bill Ackman’s day after this utter disaster.
via http://ift.tt/2fPoUn0 Tyler Durden