April 8, 2016
By Alex Keown, BioSpace.com Breaking News Staff
LAVAL, Quebec – Bausch & Lomb is not for sale.
That was the message Valeant Pharmaceutical ’s Bill Ackman delivered Thursday, CNBC reported.
“It’s a core asset,” Ackman said during an investors call, according to CNBC. “We’re only considering selling non-core assets.”
The embattled Canadian pharmaceutical company has talked about divesting itself of some of its assets in order to pay down its massive debt. At one time, Bausch & Lomb was considered by Ackman to be on the table for divesture, but that tune has changed. Since Ackman joined the company’s board of directors, Valeant, one of the recent kings of M&A activity, snapped up Bausch & Lomb in 2013 for $8.7 billion. The company known for its contact lens and lens-care products, generates about $1.5 billion in annual revenue. Bausch & Lomb has a long history of being a stable company and if Valeant would place the division up for sale, it would likely earn top dollar, Fox Business noted.
Valeant has a debt of about $30 billion in large part due to its string of acquisitions and sales of assets have been considered as an appropriate course of action by company leadership. The debt concern is even more concerning for the company as it is struggling to file its annual 10-K report to the U.S. Securities and Exchange Commission. Failing to file by the deadline could mean the company defaults on some of its debt. Valeant executives, including ousted Chief Executive Officer Michael Pearson, have been working to extend those deadlines. That delay was prompted after Valeant reported in February that 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, which is part of the reason the company was forced to delay filing its financial reports. Valeant laid the blame on Howard Schiller, the company’s former chief financial officer, who briefly served as interim-CEO while Pearson battled pneumonia. The company said the “improper conduct” of Schiller resulted in the provision of incorrect information to the company and “contributed to the misstatement of results.”
Valeant has been embattled by for months. What once was seen as a strong performer in the market due to its aggressive mergers and acquisitions, may now seem like only a shell of itself to investors. In August, Valeant stock was trading as high as $263.70, but accounting concerns over its specialty pharmacy company Philidor Rx Services and other issues have negatively impacted the company. Shares of Valeant stock have rebounded this week after hitting a one-year low of $26.11 on April 4. This week stocks have climbed back to $37.28 per share, but have slipped in early morning trading today.
Earlier this week, Ackman announced that Valeant could tap a new CEO within weeks to replace Pearson, who was ousted by the board of directors in March.
Ackman, who is the director of Pershing Capital Management LP, has followed through on his promise to take a more active role in the management of Valeant. Pershing has a 9 percent stake in Valeant, making it one of the largest shareholders. Pershing lost about 25 percent of its worth primarily due to its investments in Valeant, Bloomberg reported, which is the primary reason Ackman has taken a firmer hand on the company reins. Ackman has also threatened to replace Valeant leadership if they do not turn the company around. Ackman told Bloomberg he believes Pershing will recover its losses with a turnaround of Valeant.
