Valeant Slashes Guidance for Revenue and Earnings

Guggenheim cut their price target on Valeant Pharmaceuticals Intl from $300.00 to $195.00 and set a “buy” rating for the company in a report on Friday, November 6th.

Valeant Pharmaceuticals International Inc. said that the fallout and remedies from its relationship with a controversial mail-order pharmacy, Philidor Rx Services, will slash hundreds of millions of dollars from the company’s earnings this quarter and next year. It will drop wholesale prices for branded prescription-based skin and eye-care products by 10 per cent.

“We’ve ignored the external factors and we’re continuing to grow, grow, grow”.

“We have been through a lot”, CEO Michael Pearson told investors during a four-hour webcast.

Since this past summer, though, the business has been hit with questions regarding its drug pricing, accounting, disclosures and overall business practices.

Valeant was a highflier through its acquisition of other drugs as well as drug companies and then raising the prices of drugs, instead of the traditional industry growth method of discovering new treatments through both research & development.

Valeant on Wednesday lowered its per-share profit expectations for the year from between $11.67 and $11.87, to between $10.23 and $10.33. Analysts were expecting per share profit to be $11.11 in 2015 on revenue of over $10.77.

For 2016, Valeant expects adjusted earnings to range between $13.25 and $13.75 per share.

The deal will allow consumers to get Valeant’s dermatology and ophthalmology products – including Luzu and Zylet – at a lower out-of-pocket cost from more than 8,000 Walgreens U.S. retail pharmacy locations and participating independent retailers.

“The opportunity for volume growth is huge”, Pearson said.

The company said that the agreement would help it to lower prices of its branded prescription based dermatological and ophthalmological products by close to 10 percent.

The company plans pay down $2.25 billion in debt next year, including mandatory payments and maturities.

In a move that boosted investor confidence, Valeant said on Tuesday it had signed a distribution deal with leading pharmacy chain Walgreens Boots Alliance, offering discounts on its products.

Financial analysts quizzed Valeant officials about the Walgreens deal during the investor presentation, questioning whether it would pass muster with pharmacy benefit managers.

A high ranking US politician issued a letter to Valeant – released to the media ahead of the company’s briefing – that says the company’s failure to disclose information as requested has obstructed the congressional investigation.

In recent months, Valeant caused a furor by sharply increasing prices for heart drugs shortly after buying them from Marathon Pharmaceuticals, a small drug developer from suburban Chicago.