Losses and profit forecast cuts send shares tumbling again at Valeant
Valeant Pharmaceuticals has published its results for the first quarter, which has seen the firm post a net loss of $373.7 million, versus $97.7 in net income for the same period last year.
The company also posted a loss in earnings per share of $1.08 versus $0.28 earnings per share for Q1 2015. Although sales remained steady in many areas, the company’s dermatology business suffered greatly, with sales down 43% on the previous year.
The company has now cut its forecasts for the year, with full-year earnings per share expected to be $6.60-$7, compared to previous estimates of $8.50-$9.50. Its adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of between $4.8-$4.95 billion this year, with estimates as recent as March expecting an EBITDA of $5.6-$5.8 billion.
New CEO Joseph Papa acknowledged the difficult circumstances in which the company is currently operating in a statement. He comments: “The first quarter’s results reflect, in part, the impact of significant disruption this organisation has faced over the past nine months. This has been a difficult period for Valeant and its stakeholders, and while there are some challenges to work through in certain business operations in 2016, such as our US dermatology unit, the majority of our businesses are performing according to expectations.”
With numerous default notices issued to Valeant by bondholders in recent times, and the continued controversy over its drug pricing in the US, these financial results reflect the recent turmoil at the company. Shares at the company fell 14% upon the announcement of these results and revised outlook.
It has also emerged that one of Valeant’s largest shareholders has cut its stake in the company by almost half. New York-based money manager Ruane, Cunniff & Goldfarb had held 30.3 million shares in the company at the end of March, but this has been cut to 16.1 million by May 31. It is estimated that the Ruane-managed Sequoia Fund made heavy losses when Valeant’s share price began to fall in mid-August 2015.
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