The shares of Valeant Pharmaceuticals Intl (NYSE:VRX) suffered a significant decline after releasing its preliminary unaudited fourth quarter 2015 financial results and 2016 financial guidance.
The stock price of the Canadian pharmaceuticals company declined more than 45% to $37.63 at the time of this writing around 1:06 in the afternoon in New York.
Fourth quarter 2015 preliminary results
Valeant Pharmaceuticals reported that unaudited fourth-quarter results are preliminary because the Ad Hoc Committee of its Board of Directors is still reviewing its relationship with Philidor and other matters. The Committee is also still assessing the impact of its findings on the company’s financial reporting and internal controls.
According to the company its preliminary unaudited GAAP earnings were -$0.98 per share and non-GAAP earnings were $2.50 per for the fourth quarter of 2015. Its unaudited preliminary revenue was $2.8 billion.
Valeant Pharmaceuticals 2016 business outlook
For the first quarter of 2016, Valeant Pharmaceuticals expected to generated adjusted earnings of around $1.30 to $1.55 per share, down from its previous guidance of around $2.35 per share to $2.55 per share.
The company expected its revenue in the range of $2.3 billion to $2.4 billion, lower than its previous guidance of around $2.8 billion to $3.1 billion.
For the year 2016, Valeant Pharmaceuticals estimated to achieve adjusted earnings of around $9.50 to $10.50 per share, down from $13.25 to $13.75 per share.
The company expected its revenue to be around $11 billion to $11.2 billion, lower than its previous estimate of around $12.5 billion to $12.7 billion.
In a statement, Valeant Pharmaceuticals CEO Michael Pearson said the challenges confronting the company are not yet behind them and their objective is to balance their priorities. He added, “We plan to work hard to improve these metrics by delivering higher revenues and reducing our costs and if successful, we hope to beat this guidance in the quarters to come.”
Valeant Pharmaceuticals in facing regulatory investigations in connection with its business and accounting practices. The company reiterated that it is working diligently to be able to file its Form 10K promptly as reasonably practicable.
According to the company, its failure to submit its annual report by Tuesday could result into its breach of covenant and the holders of at least 25% of any series of its notes could send a notice of default.
Lender could demand faster repayment from Valeant Pharmaceuticals and place restrictions on its ability to borrow further if it defaults on debt. The company had around $30 billion of long-term debt as of September 30.
Pearson said he is “comfortable” with the company’s liquidity and it could meet its obligations. Valeant Pharmaceuticals intends to repay at least $1.7 billion of debt this year.
