Valeant Pharmaceuticals shares fall as it lowers guidance for 2017
MONTREAL — Shares in Valeant Pharmaceuticals tumbled Tuesday after the drugmaker warned revenues and profits will drop more than analysts had anticipated for this year.
The company’s stock fell 9.5 per cent, losing $2.06 at $19.88 in midday trading on the Toronto Stock Exchange.
Valeant (TSX:VRX) said its earnings before interest, tax, depreciation and amortization (EBITDA) are projected to decline by more than 14 per cent to a range of US$3.55 billion and US$3.7 billion for 2017. Analysts had forecasted EBITDA of US$3.9 billion.
Revenue is expected to range between US$8.9 billion to US$9.1 billion this year, down from US$9.67 billion last year.
The guidance doesn’t include the effect of the sale announced in January of its skincare assets to L’Oreal and its interest in Dendreon Pharmaceuticals to a privately owned Chinese conglomerate, Sanpower Group.
The loss of patent protection on several medications and the sale of certain other products are expected to leave a big dent on Valeant over the coming years, reducing revenues by US$785 million and cutting profits by US$715 million this year.
However, Valeant acknowledged that impact could be diminished if more competitors don’t quickly offer generic versions.
“I hope we do a whole lot better with all of those assets, but we’re not going to bet on it,” chief financial officer Paul Herendeen said Tuesday during a conference call.
Analyst Douglas Miehm of RBC Capital Markets said the guidance is conservative and had not previously been adequately explained to investors.
Valeant said it repaid about US$1 billion in net debt last year. It anticipates using US$1.9 billion in net proceeds from asset sales this year towards its target of paying down US$5 billion of debt within the next year.
Once Canada’s largest firm by market capitalization, Valeant’s reputation has suffered over the last year and a half since its previously undisclosed affiliation with Philidor Rx Services, a Pennsylvania-based mail-order pharmacy that mainly distributes some of its specialty drugs, was made public.
Its fortunes soured, with its stock losing 85 per cent of its value last year, after it came under scrutiny for its strategy of acquiring drug companies and imposing dramatic price increases. It also faces a series of shareholder lawsuits and criminal fraud investigations by U.S. authorities.
The Laval, Que.-based company, which reports in U.S. dollars, said Tuesday its fourth-quarter loss grew to $515 million or $1.47 per share compared with a loss of $385 million or $1.12 per share a year earlier. Revenues decreased to $2.4 billion from $2.76 billion in the fourth quarter of 2015.
After adjustments, Valeant said it earned $441 million or $1.26 per share, down from $542 million or $1.55 per share in the fourth quarter of 2015.
Adjusted earnings beat analyst estimates of $1.20 per share, according to Thomson Reuters data. They also marked the first time the company surpassed analyst forecasts in more than a year.
For the full year, Valeant lost $2.41 billion or $6.94 per share on $9.67 billion of revenues. That compared with a loss of $292 million or 85 cents per share on $10.45 billion of revenues in 2015.
It earned $1.92 billion or $5.47 per share in adjusted profits, compared with $2.84 billion or $8.14 per share a year earlier.
Valeant is Canada’s largest publicly traded drug company. In addition to making a wide variety of drugs and medical devices, it owns the Bausch & Lomb contact lens business.
Ross Marowits, The Canadian Press
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