ViewPoints: Valeant looks to press reset button – but misses, badly

Under-fire Valeant Pharmaceuticals has finally reported its fourth-quarter results, but a lot of questions need answering. Shareholders are not hanging around for the answers. Worth $90 billion six months ago, Valeant's market cap is now valued at just $11 billion.

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Having delayed its fourth-quarter results on two prior occasions, Tuesday's announcement was highly anticipated, but delivered much disappointment – and at least one moment of incredulity; Valeant announced lower revenue and earnings guidance for the year ahead and was then forced to concede on the subsequent conference call that its EBITDA this year would be marginally lower than the figure stipulated on its press release.

CEO Mike Pearson – recently returned to his post following a leave of medical absence – spoke about new beginnings, for him and the company, and conceded that "the (pharmaceutical) world has changed to some degree since December, but we have to do a better job." Why then, asked one analyst, should investors be confident today about the business given positive comments from management at the turn of the year?

With management credibility in tatters, Pearson conceded that both himself and the board would need to "earn it" over the coming months. The first steps to achieving this will largely be dictated by clearer indication as to when audited 2015 results will be filed and greater visibility on how Valeant will begin to pay down a daunting debt pile.

The two issues are at risk of becoming fatefully intertwined. Pearson confirmed that the aim was to file audited financial results for 2015 in April, but conceded delay in the process could prompt a debt default risk. This threat, combined with reduced full-year guidance for 2016, prompted Valeant shares to fall more than 50 percent on Tuesday. The company will address its debt by divesting several non-core assets over the next 12 months, suggested Pearson, but few specifics were offered to investors who were desperate for clarity and are now leaving in their droves.

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