Valeant says sales to Philidor require restatement of results

LAVAL, Que. -- Valeant Pharmaceuticals (TSX:VRX) says it will restate its financial results for 2014 and 2015 after a review found about US$58 million of sales to Philidor were recognized at the wrong time.

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The Quebec-based company says it should have recognized the revenue when the products were dispensed to patients, rather than when delivered to Philidor -- an associated company that sold some Valeant specialty drugs.

Valeant estimates that its 2014 earnings will be reduced by 10 cents per share, in U.S. currency, and 2015 earnings will be increased by nine cents per share.

The amounts involved with the Philidor restatement are tiny compared with Valeant's total revenue and profit in 2014. It reported US$8.3 billion of revenue and $1.56 per share of earnings for the 12 months ended Dec. 31, 2014.

In pre-market trading, Valeant shares made up some of Monday's losses. Prior to the company's late-night announcement, Valeant's stock dropped US$9.07 or 11 per cent to close at US$75.92 per share amid news reports that a restatement was coming. Early Tuesday, before markets opened, the stock was trading at US$78.91, up $2.99 from the previous close.

Apart from the disruption caused by any financial restatement by a publicly traded company, Valeant is coping with a previous controversy that erupted last fall when questions were raised about its relationship with Philidor Rx Services.

Valeant's shares fell from $148.66 to $118.61 in heavy trading on Oct. 21. The stock has continued to trade below those levels and hit a 52-week intraday low of US$69.33 in New York on Nov. 18.

Valeant said on Oct. 30 that it had severed ties with the Pennsylvania-based online specialty pharmacy company after reviewing its practices. Philidor subsequently announced that it would cease operations.

The restatement announced this week will delay the filing of Valeant's audited financial report for 2015. The company has scheduled a Feb. 29 conference call to discuss its unaudited fourth-quarter results.



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