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

  • Valeant shares hit 2017 high following Dendreon sale

    Economic CTV News
    LAVAL, Que. -- Shares in Valeant Pharmaceuticals hit a new high for the year on the Toronto Stock Exchange this morning after the company completed the sale of its Dendreon subsidiary for US$819.9 million cash. Source
  • Murdoch takeover bid for Sky delayed for extra scrutiny

    Economic CTV News
    LONDON -- Britain's government stalled Twenty-First Century Fox's takeover of the Sky pay television and broadband network Thursday after regulators said the deal could give Rupert Murdoch and his family too much influence over the country's media. Source
  • Tim Hortons adds Canada 150 'poutine donut' for Americans only

    Economic CTV News
    Tim Hortons has added a poutine-flavoured doughnut to its menu for Canada's 150th anniversary, but the cheesy abomination of Canadiana will only be available in the United States. The American-owned, Canadian-founded coffee chain plans to roll out the poutine doughnut on Canada Day in the U.S. Source
  • Tip Top Tailors owner strikes deal to stay open after CCAA refinancing

    Economic CBC News
    The company that owns Tip Top Tailors, George Richards, Kingsport and Mr. Big and Tall will remain open with 140 stores after a refinancing plan that will see the company sold to U.S.-based GSO Capital Partners. Source
  • Home Capital says fight to survive added $175 million to its Q2 expenses

    Economic CTV News
    TORONTO - Home Capital Corp. says its expenses soared $175 million above normal during the second quarter as it fought to survive a cash shortage that erupted as customers withdrew most of the money they had deposited in the company's savings accounts. Source
  • A Canada Day miracle: Gas prices at 7-year low for July long weekend

    Economic CBC News
    In what might be described as a Canada Day miracle, the price of gasoline across the country is expected to be the lowest it's been in seven years for a July long weekend. According to research done by GasBuddy.com, gasoline prices in Canada are averaging $1.04 per litre, 14 cents per litre lower than the 10-year average. Source
  • Tim Hortons offering poutine doughnut on Canada Day — but only in the U.S.

    Economic CBC News
    To celebrate Canada's 150th birthday, Tim Hortons is serving up patriotic food. On the menu: a doughnut smothered in poutine and an Iced Capp coffee drink topped with whipped cream, maple flakes and bacon bits. Source
  • Online thrift store ThredUp expanding to Canada

    Economic CTV News
    TORONTO - After operating in the U.S. for nearly a decade, online thrift store ThredUp is expanding into Canada and setting its sights on shoppers who want to stay stylish but save their dimes. Some retail experts caution the company may find it difficult amid the growing popularity and proliferation of charity-based organizations and fast-fashion retailers who already appeal to the budget-conscious. Source
  • Global shares mixed as Asia rally sputters in Europe

    Economic CTV News
    HONG KONG -- Global shares are mixed after a rally in Asia sputtered out in early European trading. KEEPING SCORE: European shares fell back after opening mostly higher. Britain's FTSE 100 gained 0.3 per cent to 7,407.33 and Germany's DAX ticked down a fraction of a per cent to 12,645.28. Source
  • Asian stocks rally after Wall Street rebounds

    Economic CTV News
    HONG KONG -- Asian shares rallied Thursday following Wall Street's rebound as investors regained confidence in the global economic outlook. KEEPING SCORE: Japan's benchmark Nikkei 225 index rose 0.6 per cent to 20,242.63 and South Korea's Kospi advanced 0.7 per cent to 2,399.41. Source