Another blow for embattled drugmaker Valeant
Investors pounded shares Tuesday of embattled drugmaker Valeant Pharmaceuticals International after it lowered its outlook for 2016 revenue and profit, compounding the company's troubles as it faces a federal fraud investigation and seeks to remake itself under new leadership.
Valeant (VRX) swung to a net loss of $1.22 billion in the third quarter compared to net income of $49.5 million in the same period last year. The loss was primarily attributable to a $1.05 billion write-down in the value of certain U.S. businesses, including primarily the Salix product line that the company is reportedly seeking to sell.
The company projected full-year 2016 revenue of $9.55 billion to $9.65 billion, down from a previous range of $9.9 billion to $10.1 billion. Projected adjusted earnings per share are now $5.30 to $5.50, down from a previous estimate of $6.60 to $7.
Disappointed investors beat the company's stock down 21.7% to a close of $14.98, off $4.15.
The company is facing multiple federal investigations, including a fraud probe into its previous ties to specialty pharmacy Philidor Rx Services.
Valeant has also been at the center of a national controversy over sharp increases in certain pharmaceuticals.
"With this announcement we think that credibility of the new management team has been impaired, and hopes of a quick business turnaround should be discarded," Mizuho Securities analyst Irina Koffler said in a research note.
Evercore ISI analyst Umer Raffat said in a note that despite the disappointing quarter, the significantly lowered profit outlook "may be setting up for a beat" when full-year earnings are reported.
The troubled drugmaker's third-quarter revenue tumbled 11%. On a per-share basis, the company lost $3.49, missing S&P Global Market Intelligence estimates of a 49-cent loss.
The earnings statement comes as new CEO Joseph Papa is trying a chart a course back to stability for Valeant.
"While we have revised our expectations for the remainder of 2016, I continue to be encouraged by the commitment of our employees who work each day toward meeting our mission of helping improve people's lives through our healthcare products," Papa said in a statement.
Follow Paste BN reporter Nathan Bomey on Twitter @NathanBomey.