(Adds analyst's comment in 11th paragraph)
Feb 23 (Reuters) - Shares of Valeant Pharmaceuticals International Inc rose 9 percent on Tuesday, the morning after the drugmaker said a board committee investigation into its dealings with distributor Philidor Rx Services would result in a profit restatement.
Valeant said based on the preliminary review, it would restate results for 2014 and 2015 to reflect its findings that some revenue should have been recognized at the time drugs were dispensed to patients, not when they were delivered to Philidor.
The company, based in Laval, Quebec, said it would release unaudited earnings on Feb. 29 and hold a conference call.
Valeant shares, which were trading at $82.71 on Tuesday morning, fell more than 19 percent on Friday and Monday.
In part, investors were worried that the company had not yet set a date for its earnings announcement, which they had been expecting by the end of February.
In addition, Wells Fargo on Friday initiated coverage with an "underperform" rating and a valuation of $65 to $68 per share. Wells Fargo analyst David Maris said on Tuesday in a follow-up note that the restatement could unsettle investors.
Evercore ISI analyst Umer Raffat said investors were expecting a big restatement after the Wall Street Journal on Monday evening reported that the company was about to announce an earnings restatement, based on unnamed sources. Valeant sent out its own press release on Monday night outlining the $58 million in revenue it said was at issue.
"It ended up being fairly benign," Raffat said in an email.
One investor who asked for anonymity said that the company finally set an earnings announcement date was a relief.
"People were imagining all sorts of stuff. There definitely could have been worse reasons behind it," the investor said.
Guggenheim Securities analyst Louise Chen said she expects the stock to continue to be volatile this week ahead of the Feb. 29 report. If the main finding of the committee's review turns out to be the restatement, the stock will likely rise, she said.
Valeant cut ties with Philidor Rx in October after it was revealed that the distributor had used aggressive tactics to try to increase insurer reimbursements, mostly for dermatology drugs. Valeant also established an ad hoc committee to investigate its dealings with Philidor.
The restatement will reduce its reported 2014 GAAP earnings by about 10 cents per share and increase 2015 GAAP earnings by about 9 cents per share, Valeant said. (Reporting by Caroline Humer and Carl O'Donnell in New York and Amrutha Penumudi in Bengaluru; Editing by Ted Kerr, Bill Trott and Alan Crosby)