I hit it on the money.....
Valeant on Wednesday lowered its per-share 2015 profit expectations to $10.23 to $10.33, from between $11.67 and $11.87 — well short of the $11.11 that Wall Street had projected. Valeant also chopped its outlook for the current quarter to between $2.55 and $2.65 per share, from $4.00 to $4.20. Analysts expect, on average, $3.47 per share.
For 2016, Valeant expects adjusted earnings to range between $13.25 and $13.75 per share, below expectations for $14.20.
Chief Financial Officer Robert Rosiello said the 2015 forecast was hurt by an expected reduction of $600 million in revenue, or $1.45 per share. That includes the costs of ending its Philidor distribution deal — responsible for nearly all of the 20 percent drop in prescriptions filled in the fourth quarter — and transitioning to the new Walgreens deal, plus canceling some planned price increases.
"You'll not see abnormally high price increases at all, this year or next," Pearson said.
Valeant has grown rapidly since Pearson joined the then-small company in 2008 and instituted a strategy of buying smaller drug developers, hiking drug prices and then slashing spending on research on new drugs. Among the more egregious examples, Valeant bought the life-saving heart drugs Nitropress and Isuprel in February, then tripled the price of one and raised the other sixfold.
Pearson noted the company was the first to do a tax inversion, moving its official tax headquarters from the U.S. to Laval, Quebec, to reduce its tax rate, and that it now has the pharmaceutical industry's lowest tax rate.
He said Valeant could get three new drugs approved next year, when the company plans to use its cash flow to pay down debt, rather than acquire more businesses.
"Next year, we'll be about a $13 billion company. We will have double-digit organic growth, not just next year, but the year after that and the year after," Pearson predicted.
He said the 20-year-deal with Walgreens, to which it will directly supply its dermatology and ophthalmology medicines at a slight discount, "is going to change the industry and create tremendous value for both companies."
The Walgreens deal replaces Valeant's arrangement to have those products — which account for about 40 percent of revenue — distributed by Philidor. Valeant cut ties with that company in October, amid allegations Philidor created a network of "phantom pharmacies" to steer pharmacy benefit managers toward Valeant's more-expensive drugs over cheaper alternatives, and that Valeant executives were involved in running Philidor.
Congressional committees have targeted Valeant as they investigate huge hikes in prices for some drugs, which have become a top concern for consumers and a big issue in the 2016 presidential campaign. After the heart drug price increases drew scrutiny in the summer, investors began selling off Valeant shares, which had peaked at nearly $264 in August. The stock's slide worsened when the Philidor allegations emerged, and shares hit a $69 low.
On Wednesday, the ranking Democrat on the House Committee on Oversight and Government Reform demanded Valeant supply previously requested and additional documents on its price hikes and its dealings with Philidor. Rep. Elijah E. Cummings, D-Maryland, wrote to Pearson, asking the Valeant CEO to provide the documents and interviews with company officials by Jan. 8, 2016, before a committee hearing on soaring medication prices.
"Your refusal to provide any documents or witnesses is obstructing this congressional investigation and preventing a full understanding of your company's suspect actions," Cummings' letter states, adding Pearson should comply voluntarily so a "subpoena will not be necessary."
