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BUSINESS A25
Wednesday 16 March 2016
Valeant shocks with missed 4Q results, slashed 2016 guidance
LINDA A. JOHNSON ant’s businesses are “worth A trading post on the floor of the New York Stock Exchange displays the Valeant Pharmaceuti-
AP Business Writer multiples of” the current
Shares of Valeant Pharma- price, but that shares won’t cals logo, Tuesday, March 15, 2016. Valeant Pharmaceuticals cut its estimates for 2016 and said
ceuticals crashed Tuesday hit that value until man-
after the embattled drug- agement regains share- it could default on some of its debt if it does not complete required financial statements by late
maker failed to reassure holder confidence. The
investors that it’s getting note added that Valeant April. (AP Photo/Richard Drew)
back on track and even “shocked the market” with
conceded for the first time revenue and earnings fore- of management,” said Erik paying down debt,” he told demands from insurers for
that it’s technically in dan- casts that don’t seem to fit Gordon, a professor and analysts, adding, “In terms much-bigger discounts.
ger of defaulting on its with “favorable prescrip- pharmaceuticals analyst of management credibility, The company has made
debt. tion trends” or manage- at University of Michigan’s we have to earn it.” some concessions to share-
The company faces a ment’s comments on the Ross School of Business. Investors, already livid holders, this month adding
virtual Murphy’s Law of strength of its businesses. “This is a fabulous exam- that Valeant shares had three directors to its board,
problems: falling sales, in- Valeant CEO Michael ple of getting everything plunged from their $263.81 including a Pershing Square
creased pressure to cut Pearson told the analysts wrong” when you’re trying high last August, didn’t buy executive.
drug prices, massive debt, on a lengthy conference to reassure investors. Pearson’s pitch. They sold Pearson said Valeant is in
three ongoing federal call that an ongoing probe Analyst Steve Brozak, presi- off shares furiously, driv- confidential discussions
probes of its accounting of Valeant’s 2014 financial dent of WBB Securities, like- ing the price down $35.53, with partners on selling
and pricing practices, and reporting by an ad hoc wise said the gaffe raised or 51.5 percent, to $33.51. some noncore assets and
shareholder lawsuits in the committee it appointed questions about whether Trading volume for the hopes to use that and other
U.S. and Canada. means Valeant won’t be any of Valeant’s state- day exceeded 137 million money this year to pay off
Valeant’s already de- able to file its annual finan- ments could be trusted. shares, more than 14 times $1.7 billion of its debt, ac-
pressed shares took their cial report with the Securi- “There is no predicting what normal volume. cumulated from a spree of
biggest one-day tumble ties and Exchange Com- happens next,” Brozak said. Valeant is facing an SEC in- acquisitions in recent years.
ever, falling just over 50 mission until sometime in “Valeant has had its worst vestigation of its account- Valeant reported pre-
percent Tuesday after the April at the earliest. day ever — so far.” ing from 2014, plus scrutiny liminary, unaudited results
company finally reported That would miss filing dead- Pearson, who recently re- from Congress and attor- showing it lost $336.4 mil-
its overdue fourth-quarter lines of March 16 and turned from a two-month neys general in two states lion, or 98 cents per share,
results, which missed prof- March 30 contained in Va- medical leave, said his over its practice of buying in the three months ended
it expectations. Valeant leant’s agreements with team can turn things rights to old drugs and rais- Dec. 31. Excluding one-
Pharmaceuticals Interna- bondholders and creditors, around and return to ing their prices a few hun- time items, earnings were
tional Inc. also slashed all respectively. If those debt- growth.“We do think we dred percent. Valeant said $2.50 per share, far short of
its 2016 financial forecasts ors chose to declare the have a plan that will pro- it now will stick to modest or the $2.64 that analysts ex-
and said its business mod- company in default on its duce cash flow and allow no price increases, noting pected.
el, based largely on huge debt, which totals about
price hikes for its drugs, is no $30 billion, Valeant could
longer viable, given strong be forced to make repay-
pushback from payers and ments faster and see limits
other strains. on future borrowing.
The turmoil led Pershing Analysts were further up-
Square Capital Manage- set when the company
ment — activist investor Bill incorrectly said in a press
Ackman’s hedge fund and release that adjusted profit
one of Valeant’s biggest for the four quarters begin-
shareholders — to send its ning in April would be $6.2
own investors a note stat- billion to $6.6 billion. A slide
ing it will “take a much included in Valeant’s pre-
more proactive role at the sentation to analysts had
company to protect” its in- the correct number, $6
vestment. billion. “It’s kind of the In-
Pershing wrote that Vale- spector Clouseau school
Chipotle:
Sales recovering, but down 26% in February
NEW YORK (AP) — Chipo- is trying to bounce back af- recovery began the week
tle says sales trends are ter an E. coli outbreak and of Feb. 8, when it offered
showing improvement but other incidents sent sales people a chance to get
were still down 26 percent plummeting starting at the coupons for free burritos.
for February as it tries to re- end of October. Executive It said the recovery con-
cover from a series of food have since said they’ve tinued into March, with its
scares. The drop in sales at stepped up food safety sales decline easing to 22
established locations for measures and that the in- percent for the first week.
February follows a 36 per- cidents are behind them. But the second week of
cent decline for January. To get customers back in March worsened to a de-
The February results were stores, the chain known for cline of 27 percent follow-
boosted by an extra day its burritos and bowls has ing the temporary closure
in the month this year, the stepped up marketing and of a Boston restaurant after
Denver company said. promotions. workers were reported to
Chipotle Mexican Grill Inc. The company said it sales be sick.
