Valeant Pharmaceuticals shares plunged to their lowest level in years today after its fourth quarter earnings came in below expectations and it warned that the first quarter will be weaker than anticipated.
The Quebec-based drug giant saw its stock lose more than one-quarter of its value in the first 15 minutes of trading after the Toronto and New York stock markets opened, dropping to as low as C$65.51 or US$49.00.
“Our business is not operating on all cylinders,” CEO Michael Pearson said in a conference call. “But we and I are committed to get it back on track.”
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Valeant said it had a net loss of US$336.4 million in the final quarter of 2015 – rather than a profit as analysts had expected – largely due to costs associated with restructuring and acquisitions.
After adjustments, Valeant says it earned US$875.7 million or $2.50 per share – about 11 cents per share below estimates.
Analysts had estimated a net profit of US$462.6 million and adjusted earnings of US$942.8 million, or $2.61 per share, according to Thomson Reuters.
Valeant’s revenue for the fourth quarter was just under US$2.8 billion – in line with analyst estimates – but the company reduced its previous sales and adjusted earnings estimates for the first quarter of 2016.
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Its revenue for the first quarter ending March 31 will be lower than management expected in several of its business units, Valeant said.
Once one of Canada’s most valuable companies, Valeant has been besieged by a number of distractions that have punished its reputation.
Its stock price and market capitalization have been cut by more than half since October, when a critical report disclosed its connections with U.S. mail-order pharmacy Philidor amid political accusations of price-gouging. Valeant has denied the allegations and launched an internal review into its relationship with Philidor.
The company is also facing an investigation from the U.S. Securities and Exchange Commission and scrutiny from Congress over its drug pricing.
Read: Valeant cuts earnings expectations, issues guarded outlook
The results released Tuesday, reported in U.S. dollars, were delayed by the recent return of Pearson after a two-month medical leave.
Valeant now estimates between $2.3 billion and $2.4 billion in revenue for the first quarter of 2016, down from the previous estimate of between $2.8 billion and $3.1 billion. Analysts had estimated $2.8 billion of revenue.
Adjusted earnings are estimated at between $1.30 and $1.55 per share, down from between $2.35 and $2.55 per share. Analysts had estimated $2.63 per share of adjusted earnings.
“In a sense, we’ve botched a quarter,” Pearson said.
The company has said it would delay filing its 2015 annual report with regulators while it continues to sort out the impact of its former relationship with Philidor. Valeant said the source of the problem for its results involves US$58 million of sales to Philidor that were recognized at the wrong time.
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