Valeant Pharmaceuticals Intl Inc. (NYSE: VRX) announced its long-delayed annual report and further overhauled its board Friday, resolving the company’s looming danger of debt default and positioning it to aim for a fresh start after months of concerns over its accounting and business practices.
The moves briefly nudged up Valeant's battered shares, but the stock quickly headed south amid a broader market sell-off and the realization that the former Wall Street darling's future is still in question.
Valeant said its danger of default was “cured in all respects” by its 10-K annual report filed with the SEC early Friday. The report, originally due in February, had been delayed as Valeant sorted out its financials in the wake of an internal investigation into its now-ended relationship with mail-order pharmacy Philidor Rx Services LLC. The failure to file violated Valeant’s borrowing agreements, and the company’s banks and bondholders could have accelerated the company’s payments on billions of dollars in debt if it hadn’t filed the report by late May.
On Friday, the company announced a slate of 11 nominees to Valeant's board, including current member Ackman and incoming CEO Joseph C. Papa, the chairman and CEO of drugmaker Perrigo Co. Papa takes over in early May, while the elections are set for an annual meeting on June 14.
"The big questions are whether a new CEO and a few new board members are enough to create trust in a company that has been so publicly disgraced and whether the company can create and execute a business model that will make it a legitimate and profitable player in pharmaceuticals," said Erik Gordon, an analyst and professor at University of Michigan's Ross School of Business.
Valeant's corrected 2015 financial report states that it had a net loss of $291.7 million, versus net income of $880.7 million in 2014. Revenue totaled $10.45 billion, up 27 percent from a restated $8.21 billion in 2014.