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Shares of Valeant Pharmaceuticals International ( VRX ) plunged to a four-year low Tuesday after the specialty drugmaker’s Q4 earnings and guidance missed analysts’ expectations. Valeant reported adjusted earnings of $2.50 a share, 11 cents short of the consensus estimate of analysts polled by Thomson Reuters. Revenue of $2.79 billion beat consensus by about $40 million. The results were preliminary and unaudited because of an ongoing review of the company’s current and past financial reporting after a scandal broke out last fall, delaying the filing of the 10-K annual report. Valeant didn’t provide year-over-year comparisons because 2014 financials are still under review, but it previously reported Q4 2014 earnings of $2.58 a share on revenue of $2.28 billion, so on that basis EPS fell 3% and sales rose 22%. Valeant slashed its guidance for the current quarter. It now expects revenue of $2.3 billion to $2.4 billion, more than $500 million below its previous guidance, with EPS guidance down about $1 to a range of $1.30 to $1.55. For the year, Valeant hacked more than $1 billion off its sales guidance, now $11 billion to $11.2 billion, with the EPS range down more than $3 at $9.50 to $10.50. Valeant stock plunged 44.5% to 38.34 in late morning trade on the stock market today , its lowest point since November 2011. There were multiple reasons for the shortfall, many to do with the messy transition of the company’s business model in the wake of the scandal. Valeant had severed its relationship with now-defunct specialty pharmacy Philidor after a number of allegations were lodged against it. In December, Valeant announced a new partnership with Walgreens Boots Alliance ( WBA ) to distribute the dermatology and ophthalmology drugs previously channeled mostly through Philidor, but Valeant CEO J. Michael Pearson admitted on the company’s earnings conference call with analysts that the deal hadn’t been well received, and Valeant has made unspecified changes after complaints from distributors. Pearson said Valeant has also been negotiating with payers over the pricing and rebating of drugs, which also contributed to the reduced guidance. Valeant has been the target of criticism all the way up to the U.S. Congress over its historic price increases, but the Walgreens deal brought with it a 10% price cut across the board. Pearson said that, overall, Valeant’s price increases this year are among the lowest in the industry, as it’s tried to accommodate payers. Pearson said that the impact of most of this is being felt in Q1, and that “we in essence lost a quarter.” For that reason, Valeant gave guidance for the 12 months starting April 1, which it says is more representative of its business going forward. Valeant expects EPS of $10.75 to $11.25 for the period, which is still below the Street’s average estimate of $15.02. It forecast revenue of $11.6 billion to $11.8 billion, which has no point of comparison, since there isn’t a consensus revenue number for Q1 2017. Scalper1 News
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