Valeant falls woefully short of expectations but investors cheer full year guidance, sending the share price higher
Valeant Pharmaceuticals – the Canadian drug giant that's been through a whirlwind year – has fallen far short of expectations in its second quarter.
Investors were cheered however by the company dodging another profit warning as it reconfirmed its guidance for full-year profits.
Shares climbed by over seven per cent in the pre-market before paring back gains.
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Over the quarter total revenues slumped by 11 per cent to $2.42bn (£1.86bn), down from $2.73bn in the second quarter of last year.
Earnings fell to $1.40 a share on an adjusted basis, from $2.14 in the same period last year.
Analysts polled by Thomson Reuters had pencilled in adjusted earnings of $1.48 a share on $2.46bn in revenue.
The company blamed a decline in product sale revenues from its existing business, as well as a negative foreign currency exchange impact.
This was however partially offset by "incremental product sales revenues from acquisitions completed in 2015".
Joseph Papa, chairman and chief executive, said the company is still working to become more stable.
We are also announcing a new strategic direction for Valeant today, which, at its heart has a mission to improve patients' lives, and will involve reorganizing our company and reporting segments.
I am continuously encouraged by the commitment of our employees who work hard daily, rebuilding our relationships with prescribers, patients and payors, and regaining the trust of our debt holders and shareholders.
Although it will take time to implement and execute our turnaround plan, I am confident that we will show progress in the coming quarters.
Papa joined the struggling company in May has said he's open to selling off more of the firm to try and clear its mounting debt pile and would assess offers for any of its assets.
Today Valeant revealed it sold off the rights to various drugs for $181m, with the possibility of a further $329m form the deal if targets are met.
Valeant shares have ditched 90 per cent of their value over the last 12 months following a string of profit warnings brought on by an accounting scandal delaying its accounts, and questions over pricing strategies.
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Valeant was called before a US congressional hearing earlier this year – alongside the infamous Turning Pharmaceuticals' Martin Shkreli – to defend its drug pricing policy.
Since then one of Valeant Pharmaceuticals largest shareholders has offloaded its stake in the firm.
Mutual fund Sequoia told investors (the letter can be read here) it no longer owned any shares of Valeant.
At one time Valeant made up 30 per cent of Sequoia's portfolio, but the intense scrutiny of Valeant's business practices as well as delays to its corporate accounts has ramped up pressure on Sequoia to cut its loses.
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The source of many of Valeants troubles was also revealed to be staying on as an advisor to the company.
Michael Pearson, the former Valeant chief executive that was ousted from the company earlier this year, will remain on as a consultant and pocket a $9m (£5m) severance payment.