February 29, 2016
By Alex Keown, BioSpace.com Breaking News Staff
LAVAL, Quebec – Michael Pearson is set to return to his chief executive officer spot at Valeant Pharmaceuticals after battling pneumonia, the company announced Feb. 28.
Pearson is returning to a company that is still reeling from a number of scandals that have caused some of the company investors to be spooked. And from early morning trading, it appears Valeant’s investors may be skeptical that Pearson can turn the company around. Valeant stock is down more than 7 percent this morning, trading below $75 per share at the time of this writing. In August, Valeant was trading at $262.52 per share, which shows how far the stock has fallen in the wake of those scandals, which includes questions over company earnings statements, its aggressive pricing policies for newly acquired drugs, its relationship with a specialty pharmacy company and more. But, those are challenges the veteran CEO Pearson recognizes must be overcome and something he began working on prior to his hospitalization.
“I realize that recent events are disappointing to everyone and it is my responsibility to set the appropriate tone for the organization. My immediate priority will be to build stronger relationships with important constituents, such as managed care and other channel partners, regulators and government representatives, while improving Valeant’s reporting procedures, internal controls and transparency,” Pearson said in a statement.
Pearson’s immediate return will cause the company to delay its release of fourth quarter statements, the company said. Initially Valeant planned on releasing its figures today, but will now delay the earnings call, as well as its 2016 financial outlook until the “near term.”
In a Reuters article, ISI Evercore analyst Umer Raffat said Pearson’s return was a “positive development that should calm investors.” However, Raffat also said rescheduling the earnings call and withdrawing 2016 guidance was a negative for investors.
Pearson has his work cut out for him. Most recently, the company saw a loss of $6 billion in market value due to the planned restatement of earnings following an internal review. In a statement issued Feb. 22, Valeant said an ad hoc committee delving into the company’s involvement with Philidor that provided a number of the company’s prescription medications. According to the statement, Valeant said it believes approximately $58 million of net revenues reported in the second half of 2014 “should not have been recognized upon delivery of product to Philidor.” Correcting the misstatements is “expected to reduce reported 2014 GAAP EPS by approximately $0.10 and increase 2015 GAAP EPS by approximately $0.09,” Valeant said. As a result of the restatement, Valeant said it was expecting a delay in the filing of those financial reports. Valeant said it plans to host a conference call on Feb. 29 to “discuss unaudited financial results for the fourth quarter of 2015, and provide a business update.”
Last week there was some reported debate among members of Valeant’s board of directors over whether or not Pearson was ready to return to helming the embattled company that has seen a loss of more than 75 percent of its market share over the past year. However, this morning Valeant announced that Pearson was returning immediately to the position he temporarily vacated in December following his hospitalization for pneumonia. Howard Schiller, the company’s former chief financial officer, stepped into the role of interim CEO during Pearson’s illness. He will now move to a position on the company board of directors, Valeant said.
