WASHINGTON (Reuters) - Bausch Health Companies Inc (BHC.TO) has agreed to pay $45 million, and three of former top executives also agreed to penalties, to settle charges of improper revenue recognition and misleading disclosures in U.S. regulatory filings, the U.S. Securities and Exchange Commission (SEC) said on Friday.
Canadian-based Bausch Health, formerly known as Valeant Pharmaceuticals, misstated revenue transactions and included erroneous revenue allocations in filings and earnings presentations, the SEC said in a statement.
The firm’s former chief executive officer, chief financial officer and controller used non-standard financial measures to tout quarterly growth for five consecutive quarters in 2014 and 2015 and improperly recognized revenue from a mail-order pharmacy business, Philidor Rx Services, the agency said in charging documents.
Bausch also failed to disclose the impact of certain revenue from drug wholesalers after a 500% price increase of a drug called Glumetza it acquired in 2015, attributing that revenue to 106 unrelated products, the SEC charges said.
The company, which did not admit or deny the regulator’s findings, said in a statement that it cooperated with the SEC and the resolution marked an “important step in the ongoing transformation of Bausch Health.”
Former CEO Michael Pearson and former CFO Howard Schiller agreed to pay penalties of $250,000 and $100,000 respectively, and to reimburse the firm $450,000 and $110,000, representing a portion of their incentive compensation, the SEC said.
Former controller Tanya Carro agreed to pay $75,000 and will be suspended from reporting or audits of public companies. Carro can apply for reinstatement after a year, SEC said.
The executives also did not admit or deny the SEC’s findings. A lawyer for Pearson declined to comment. Counsel for Schiller and Carro did not immediately respond to requests for comment.
Another former Valeant executive and the former head of Philidor in 2018 were sentenced to a year in prison after being convicted of fraud related to a secret kickback scheme unrelated to the SEC charges.
Reporting by Tim Ahmann and Chris Prentice in Washington; Writing by Mohammad Zargham; Editing by Bill Berkrot