Shares of Valeant Pharmaceuticals International Inc. (NYSE: VRX) slumped 10.7% to $75.91 on Monday, but it rebound 8.47% to $82.35 on Tuesday after the company announced it will delay the filing of its annual financial results with regulators while clear up its former relationship with the drug distributor Philidor.
Valeant expected to lower reported 2014 earnings by approximately $0.1 per share and raise 2015 earnings by about $0.09 because almost $58 million in sales to Philidor were improperly recognized. The misstatements are related to shipments of Philidor which has been at the center of a turbulent few months for Valeant.
Interim CEO Howard Schiller said in a statement from the company that the filing delay was "very disappointing but necessary."
“The last few months have been challenging on many levels,” Howard Schiller said, “We have made mistakes in the past and our focus today is on executing our business plan and rebuilding trust.”
Last year Valeant created the board committee to look into the relationship with Philidor, a specialty pharmacy that drove customers toward expensive Valeant drugs instead of cheaper alternatives. The review is being supervised by the board committee of Valeant and a former deputy U.S. Attorney General now working at the law firm Kirkland & Ellis LLP.
Shares of Valeant have plunged approximately 70% since August 2015, amid political scrutiny of its pricing, questions about its accounting and revelations of its relationship with Philidor.
At the end of 2014, Valeant made a $100 million investment in Philidor that essentially gave it an option to acquire the company without further payment. Valeant officials also helped run the pharmacy in its early days. Philidor accounted for around 7% of Valeant’s revenue at its peak, and Valeant? has said Philidor was committed to ending operations by the end of January.
Valeant decide to host a conference call at Feb. 29 to discuss its fourth quarter financial results and offer a business update.