Drugmaker Valeant CEO leaving as investor Ackman joins board

Mon Mar 21, 2016 3:37pm EDT
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By Caroline Humer

(Reuters) - Drugmaker Valeant Pharmaceuticals International Inc (VRX.TO: Quote)(VRX.N: Quote) said on Monday its chief executive officer is leaving and billionaire investor William Ackman would join the board as it tries to clean up accounting problems and save its business. The Canadian company, whose operations include prescription drugs, consumer products, and Bausch & Lomb eye care, has lost nearly 90 percent of its value as it came under public scrutiny for its pricing and distribution practices, including investigations by Congress and various government agencies.

Valeant blamed accounting issues on "improper conduct" by top finance executives.

On Monday, shares rose as much as 17 percent in New York trading.

Just three weeks after CEO Michael Pearson returned from a two-month medical leave, the company said he will leave. Also, Ackman of Pershing Square Capital Management will join the board, the second seat given to the activist investment firm in as many weeks. The firm held a 6.3 percent stake as of March 8.

In addition, a board committee said its five-month investigation into Valeant's dealings with pharmacy Philidor Rx Services found broad accounting problems dating back to December 2014. The committee's work is ongoing and more restatements may be needed, Valeant said.

The committee traced the issues in part to the former chief financial officer, Howard Schiller, who had been interim CEO while Pearson was on leave, and is still on the board.

The company said Schiller's and the corporate controller's "improper conduct" contributed to a misstatement of financial results because they provided incorrect information related to revenue recognition to auditors and the board committee.

Valeant pledged on Monday to file its annual report on or before April 29 after missing a deadline last week, which opened the door to a default on part of its $30 billion debt load.   Continued...

Michael Pearson, chairman of the board and chief executive officer of Valeant Pharmaceuticals International Inc, speaks during their annual general meeting in Laval, Quebec May 19, 2015.   REUTERS/Christinne Muschi