Valeant says it's on road to recovery despite cutting forecasts for 2015

Valeant Pharmaceuticals says it's on the road to recovery after taking big financial and PR hits from its association with a controversial U.S.

See Full Article

mail-order pharmacy.

The Quebec-based company expects its revenues and adjusted earnings will increase by double digits in 2016 and its battered share price will once again reflect the fundamentals of its business.

"We have been through a lot," CEO Michael Pearson told investors during a four-hour webcast.

Pearson said he was "pissed" at the "false" allegations about the company from a short seller that drove its share price collapse and prompted some calls for him to be replaced.

"If the board wants to fire me they are welcome to fire me but until they do we're going to get through this thing."

Valeant said the October split from specialty pharmaceutical partner Philidor Rx Services caused a big short-term disruption to its business that will reduce its expectations for the fourth quarter and 2015 as a whole.

However, Pearson said a new distribution deal with a prominent U.S. drugstore chain, Walgreens, is a better arrangement than the one with Philidor, a low-profile company that distributed specialty drugs for Valeant.

Despite cutting prices, Valeant expects it will make more money by gaining access to the 8,000-store network of the largest American pharmacy retailer.

"The opportunity for volume growth is huge," he told analysts.

Pearson said Walgreens was "courageous" for partnering with Valeant given the negative attention heaped on the company in the last few months.

"(But) we both fundamentally believe that this is going to change the industry, it's going to create enormous value for both our shareholders."

Valeant conceded the company, which has been accused of price-gouging for some of its products, has altered its strategy to pursue volume growth by lowering prices and reducing costs.

The deal with Walgreens is forecast to deliver up to US$600 million in annual savings to the U.S. health-care system starting next year after Valeant agreed to cut the prices of several of its drugs as part of the distribution agreement.

Alex Arfaei of BMO Capital Markets said the 2016 revenue guidance of US$12.5 billion to US$12.7 billion is in line with forecasts, but targeted earnings are weaker than predicted.

That "indicates to us that the increase in expected volume from the Walgreens agreement is not enough to offset the loss of more profitable products from the specialty pharmacy business at higher prices, at least in the near term," he wrote in a report.

The Montreal-area company's previously obscure relationship with Philidor and its pricing policies, which are under investigation by U.S. authorities, have contributed to a major decline in the company's stock.

Shares were up nearly eight per cent to $161.26 in Wednesday afternoon trading on the Toronto Stock Exchange.

That's compared to the 52-week low of $92.65 and the $347.84 high in August before its troubles began.

The company faces several U.S. investigations, including at a committee of the U.S. House of Representatives that will be holding a hearing in the new year on increasing prices for medication.

A high-ranking U.S. politician released a letter sent to Valeant that accuses the firm of failing to disclose information as requested and obstructing the congressional investigation.

"Your refusal to provide any documents or witnesses is obstructing this congressional investigation and preventing a full understanding of your company's suspect actions," wrote Elijah Cummings, the committee's ranking Democrat.



Advertisements

Latest Economic News

  • Homeland Security chief mulling greatly expanded airplane laptop ban

    Economic CBC News
    Department of Homeland Security Secretary John Kelly said Sunday he's considering banning laptops from the passenger cabins of all international flights to and from the United States. That would dramatically expand a ban announced in March that affects about 50 flights per day from 10 cities, mostly in the Middle East. Source
  • U.S. mulls banning laptops on all flights to and from the country

    Economic CTV News
    WASHINGTON -- Homeland Security Secretary John Kelly said Sunday he's considering banning laptops from the passenger cabins of all international flights to and from the United States. That would dramatically expand a ban announced in March that affects about 50 flights per day from 10 cities, mostly in the Middle East. Source
  • Most Airbnb hosts still not registered in Quebec under year-old regulations

    Economic CTV News
    The majority of Quebecers who list their properties on Airbnb and other home rental websites are not registering with the province, just over a year since it implemented a law regulating them, new data suggests. Source
  • Advocate calls for chicken irradiation in Canada

    Economic CTV News
    A consumer advocate is pushing Ottawa to promote the irradiation of chicken to kill illness-causing bugs and to do a better job of getting buyers on board. Bruce Cran of the Consumers Association of Canada said the federal government has done "an incompetent job" informing Canadians that irradiation is safe and he worries that a lack of action could lead to a deadly outbreak. Source
  • British Airways aims to recover from IT failure

    Economic CTV News
    LONDON -- British Airways said Sunday it was still working to restore its computer systems but hoped to resume flights from London airports, a day after a global IT failure crippled its services. The airline said that it hopes to operate a "near normal schedule" at Gatwick and the "majority of services" from Heathrow on Sunday. Source
  • Canadian teenagers smarter than most about money, OECD finds

    Economic CBC News
    Canadian teenagers are more financially literate than most people their age in other rich countries, but more than one out of eight still fails to meet what the OECD considers a baseline level of proficiency in the topic. Source
  • People with serious food allergies want impostors to stop faking it in restaurants

    Economic CBC News
    Sarah Elliott has had it with people faking food allergies in restaurants. She has life-threatening allergies to eggs, dairy and nuts and fears the impostors are hurting her chances of safely dining out. Source
  • GM's emissions scandal and dangerous avocados: CBC's Marketplace consumer cheat sheet

    Economic CBC News
    If you've been too busy to follow the consumer news this week, here's our cheat sheet. And you can get the Marketplace newsletter in your inbox every week. GM accused of emissions cheating A class-action suit in the U.S. Source
  • CN Rail employees issue strike notice

    Economic CTV News
    MONTREAL -- A union representing employees at CN Rail is threatening job action to back contract demands. The Teamsters union has given the company 72 hour strike notice and could legally walk off the job Tuesday morning. Source
  • British Airways cancels flights amid global computer outage

    Economic CTV News
    LONDON -- British Airways cancelled all flights from London's Heathrow and Gatwick airports Saturday as a global IT failure caused severe disruption for travellers on a busy holiday weekend. The airline said it was suffering a "major IT systems failure" around the world. Source