Valeant Pharmaceuticals share plunge

February 24 04:48 2016

Shares of embattled drugmaker Valeant Pharmaceuticals International  International (VRX) nosedived Monday amid a report late Monday that the Canada-based company would restate some of its financial previous earnings. The stock plunged 10.67% to a $75.92 close in regular trading, then plummeted an additional 8.76% in after-hours trading to $69.13. The fall came as The Wall Street Journal reported that Valeant would likely restate some of the company’s financial results based on an internal review that the company conducted of its business with former medication distributor Philidor Rx Services. The report cited information from unidentified people familiar with the issue.0528valeant

Valeant did not immediately respond to email messages seeking comment, The company in late October initially said a preliminary internal review had “confirmed the appropriateness” of revenue recognition and accounting treatment of Valeant prescriptions processed through Philidor, a Pennsyslvania-based specialty pharmacy. But Valeant later named a special committee of its board members to conduct a more detailed examination. Questions about the Valeant-Philidor relationship intensified after a report by Citron Research and its executive editor, activist short-seller Andrew Left, alleged that Valeant created “phantom accounts” as part of a purported “fraud to create invoices to deceive the auditors and book revenue.”

Valeant denied the report, and characterized the allegations as part of an effort to drive down the company’s stock price. However, the drugmaker days later cut ties with Philidor after the nation’s three largest pharmacy benefit providers, CVS Health’s(CVS) Caremark, Express Scripts Holding (ESRX) and UnitedHealth Group’s (UNH) OptumRx, all said they had ended interactions with the specialty pharmacy. A final decision on whether to restate earnings for the period between late 2014 and early 2015 has not yet been made, according to the Wall Street Journal report. Valeant has not yet scheduled its fourth-quarter earnings report, company spokeswoman Laurie Little said in an email message earlier Monday.

The company has coped with several major issues in recent months, including the illness of CEO J. Michael Pearson in December. Pearson, said by the company to be suffering from severe pneumonia, was placed on medical leave. He was succeeded on an interim basis by former Valeant chief operating officer Howard Schiller.