Valeant Pharmaceuticals Intl Inc. (NYSE:VRX, TSE:VRX) still suffers from a bad reputation. Allegations of wrongdoing and a criminal investigation of some key company managers have not helped. But, the company’s results have only made matters worse. This week, Valeant announced over $1.0 billion in losses for the last quarter. It also revised guidance—downward. Shortly after markets opened on November 8, Valeant had already lost a quarter of its value.
By now, just about anyone interested in the pharma sectors knows that Valeant has been in turmoil for almost a year. This week, it reported a loss of $1.22 billion ($3.49 per share) for the third quarter. It attributed the loss to an asset impairment charge of $1.05 billion, as related to its subsidiary, Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP). To gauge just how difficult the past quarter was, consider that in the same period a year ago, the company showed a profit of $49.5 million ($0.14 per share). However, revenues also dropped this quarter. (Source: “Valeant Reports Third Quarter 2016 Financial Results,” Valeant Pharmaceuticals Intl Inc., November 8, 2016.)
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In this context, few were surprised by Valeant’s revised guidance. The company has cut guidance to about $5.30/share from $6.60-$7.00/share. But, a criminal investigation is making matters more complicated. Last August, The Wall Street Journal reported that Valeant had gotten in the law’s crosshairs. Prosecutors have accused the company of alleged fraud as part of its relationship with Philidor RX Services, a pharmacy that delivered the drugs through the post.
Since the beginning of the year, the stock has lost more than 85%. Valeant’s board wants to improve its reputation. This is a key step—not the only one, of course—to improve its value. Board member and activist investor Bill Ackman said that changing the company’s name was likely. Valeant has already changed its CEO, whose main job it seems, has been to look for the best assets to sell to cut the company’s $30.0-billion debt load.(Source: “Bill Ackman Says Valeant Might Change Its Name to Fix Its Reputation,” Fortune, November 11, 2016.)
