Valeant shares surge 25% despite earnings miss
Corrections and clarifications: A previous version of this story incorrectly stated Valeant's projection on full-year 2016 revenue. It is $9.9 billion to $10.1 billion.
Valeant Pharmaceuticals International posted lower second-quarter revenue and a worsening loss but its stock jumped after the embattled company's new CEO signaled plans to retool.
The Montreal-based company's shares rose $5.71, or 25%, to close Tuesday at $28.16.
Revenue fell 11.4% to $2.42 billion for the quarter, missing S&P Global Market Intelligence analyst estimates of $2.45 billion.
The company's loss similarly widened to $302 million from $53 million a year ago, missing estimates of $261 million.
The results came just over a year after Valeant's shares peaked at $262.52, before starting a plunge that erased roughly 90% of their value. The slide came amid multiple investigations of the company's drug pricing and marketing practices, as well as allegations about Valeant's since-cancelled distribution deal with specialty pharmacy Philidor Rx Services.
Valeant shares (VRX) surged after CEO Joseph Papa issued a statement announcing "a new strategic direction" that "at its heart has a mission to improve patients' lives and will involve reorganizing our company and reporting segments."
"Although it will take time to implement and execute our turnaround plan, I am confident that we will show progress in the coming quarters," said Papa, who succeeded former CEO J. Michael Pearson in May.
Valeant reaffirmed its full-year guidance after a series of earlier cuts. The company projected 2016 adjusted earnings per share of $6.60 to $7, and total revenue of $9.9 billion to $10.1 billion. If met, the projections would keep the company from violating its debt covenants.
The company also said that it had reached a deal to sell its North American sales rights to a drug called Ruconest to Pharming Group for up to $125 million.
That deal is part of recent steps to offload certain intellectual property totaling upfront payments of $181 million and up to $329 million in potential additional capital based on certain benchmarks.
At the same time, Valeant signaled plans to cut more than $5 billion from the company's $30.7 billion in long-term debt over the next year and a half.
In a conference call with Wall Street analysts, Papa said Valeant had stabilized turnover in its sales force and is moving forward with the second phase of a branded prescription distribution agreement with pharmacy giant Walgreens.
Valeant is also examining a potential reformulation of its top-selling drub Xifaxan, a medication that treats irritable bowel syndrome, "to improve the customer experience," Papa said. The plan follows the February disclosure by Ireland-based rival Allergan that it is seeking U.S. Food and Drug Administration approval to produce a generic version.
Follow Paste BN reporter Nathan Bomey on Twitter @NathanBomey.