Valeant shares drop as CEO returns, cancels earnings report

Mon Feb 29, 2016 10:29am EST
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Feb 29 (Reuters) - Shares in embattled drugmaker Valeant Pharmaceuticals International Inc fell 9 percent on Monday a day after the company said its chief executive officer had returned from medical leave, canceled the release of fourth-quarter earnings, and withdrew 2016 financial guidance.

Valeant shares traded at $73.43 in New York, down $7.30 and were not far from a 52-week low of $69.34 on Nov. 18.

The stock has been see-sawing for the past month, often gaining or losing 5 percent or more in intraday trading, as speculation has swirled about its future.

The timing of the return of CEO Michael Pearson had been unknown after suffering from severe pneumonia, and there was speculation on Wall Street on whether he would return at all.

The full outcome of its board investigation into the relationship with pharmacy Philidor RX Services, now terminated, is still unknown.

Investors have questioned how the company will regain sales of many dermatological products that Philidor sold, and do not know the terms of a new distribution agreement with Walgreens Boots Alliance Inc.

Last week the company said it would restate earnings to reflect preliminary findings from the board review, adding that it should have accounted for $58 million of revenue later than it did. It also said it would delay filing its quarterly results with the Securities and Exchange Commission, and had set Monday for releasing unaudited results to Wall Street. A conference call to discuss quarterly earnings was also canceled.

On Sunday night, the company canceled the Monday presentation, withdrew its financial outlook for 2016 and said its CEO had returned from a two-month medical leave attributed to severe pneumonia. The company also gave the post of chairman to board member Robert Ingram.

Wall Street analysts said they were encouraged by the CEO's return, but that the delays were a negative for the stock.

"While we do not anticipate this process will be lengthy, the earnings delay and the guidance withdrawal are nonetheless unfortunate, given ongoing controversies in the story," JP Morgan analyst Chris Schott wrote in a research note.

Shares have not closed above $100 since Jan. 6, far from their high of $263.70 on Aug. 5, 2015. (Reporting by Caroline Humer in New York; Editing by Jeffrey Benkoe)