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Valeant Pharmaceuticals To Restate Earnings

(WXXI News & AP) Valeant Pharmaceuticals stock rose sharply on Tuesday after the beleaguered drug company said it will delay the filing of its annual report with regulators while it sorts out its former relationship with the drug distributor Philidor. By midday, the stock rose by as much as 11 percent. It closed up nearly 4.5 percent, or up $3.35 at $79.27.

Valeant, the parent company of  Bausch + Lomb,  said it expects to lower its reported 2014 earnings by about 10 cents per share and raise its 2015 earnings by about 9 cents because about $58 million in sales to Philidor were improperly recognized.

Valeant cut ties with Philidor last fall amid allegations that Philidor created a network of ``phantom pharmacies'' to steer pharmacy benefit managers toward Valeant's more-expensive drugs over cheaper alternatives.

At Brighton Securities, Chairman George Conboy compared the situation with the earnings statement to a doctor who recommends cancer surgery.

“When it’s disclosed you have a problem like that the surgeon will say we’ve got to get in there, we’ve got to cut all that cancer out and I give credit to Valeant for going in and making public promptly what they found. The real question is, have they found it all , have they fixed all of the problem; I’m not so sure investors will be convinced just because of this morning’s statement.”

In terms of any possible impact on Bausch + Lomb, Conboy says if Valeant can remain financially healthy, it would increase the likelihood the company remains where it is.

“Bausch is a great cash generator and a real strong brand name for Valeant. The too bad thing is, that if Valeant gets into real trouble, than Bausch  could be up for sale again to some large corporate buyer and we’ve got to go through in Rochester again watching a big name here being purchased by someone else,” Conboy told WXXI News.

Valeant plans to released unaudited fourth-quarter results on February 29th.

Randy Gorbman is WXXI's director of news and public affairs. Randy manages the day-to-day operations of WXXI News on radio, television, and online.