Valeant Pharmaceuticals International will sell billions of dollars in assets to pay down debt and focus on businesses such as dermatology and Bausch & Lomb eyecare, the Canadian drug maker said on Tuesday, driving its shares up 13 per cent.
Valeant’s US shares are still down around 90 per cent since hitting a record high last August. The decline came amid a political and investor backlash against its steep drug price increases and unorthodox business practices. The company is also under investigation by several US government agencies.
Valeant was previously a stock-market darling as it rapidly acquired other companies and cut research costs. But chief executive Joe Papa, who took over in May and this week changed some of his management team, said he is focused on stabilising the company.
“I don’t want to suggest for an instant that there [aren’t] challenges, but we like our position for 2016,” said Mr Papa during a during a conference call to discuss the second quarter results. Adjusted earnings and revenue fell short of analyst expectations, though Valeant stuck by full-year forecasts.
Default notices
Valeant, which has $30.77 billion in long-term debt, has previously missed deadlines for filing financial reports, triggering default notices. It has repaid $1.29 billion in debt this year and wants to renegotiate lender agreements to give itself a larger “cushion”, Mr Papa said.
The company will break into three business segments around its Bausch & Lomb eyecare business; branded products including gastrointestinal drug Xifaxan and toenail treatment Jublia; and certain products including Obagi skin care treatments.
Wells Fargo analyst David Maris, a long-time critic, on the call questioned whether the makeover plan was just "new paint on the same old shed".
Valeant said it still expected full-year revenue of $9.9-$10.1 billion and adjusted earnings of $6.60-$7 per share.
Second-quarter revenue fell to $2.42 billion from $2.73 billion a year earlier. Analysts on average had expected revenue of $2.46 billion.
Excluding items, Valeant earned $1.40 per share, missing analysts' average estimate of $1.48. – Reuters
