Valeant shares tumble as drugmaker cuts earnings guidance

Valeant Pharmaceuticals signalled Tuesday that it expects its financial performance to continue deteriorating through next year following a $1.22-billion US loss in the third quarter and expectations of more red ink to come.

The Laval, Que.-based pharmaceutical giant saw its stock tumble to a six-year low in morning trading as it also cut its forecast for this year, saying it expects a weaker fourth quarter.

Joseph Papa, who was brought in as CEO and chairman earlier this year to turn Valeant around, recited a litany of problems confronting what was once the most valuable company on the Toronto Stock Exchange.

"We continue to need to address legacy issues, including negative press coverage, litigation and talent retention and severance," Papa told investors on a conference call.

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"In summary, we face some challenges, but we are taking specific actions that will put us on the right track."

He said some of the measures Valeant is taking include further investments in research and development as well as hiring new talent.

"While it's clear we still have more work to do, I believe we have the right team in place and are on the right path forward."

As expected, Valeant lowered its 2016 estimates. Revenues are forecast to range between $9.55 billion to $9.65 billion, down from $9.9 billion to $10.1 billion. Adjusted earnings per share are now estimated at between $5.30 and $5.50 per share, down from $6.60 to $7 per share.

On the Toronto and New York stock markets, Valeant shares plummeted to levels not seen in more than six years. That came after it reported a $1.22-billion US loss in the three-month period ended Sept. 30, which was mainly tied to a $1.05-billion US goodwill impairment charge for Salix, which it acquired last year.

Its shares lost more than 18 per cent of their value in Toronto to close at $20.85. In New York, the stock lost almost 22 per cent, ending the day at $14.98 US.

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Valeant, which reports in U.S. currency, said its net loss was equal to $3.49 per share, which contrasted with a profit of $49.5 million or 14 cents per share in the third quarter of 2015.

Revenue fell 11 per cent to $2.48 billion, primarily because of lower product sales as well as currency exchange rates and divestitures.

After adjustments that exclude the writedown of Salix and other items, Valeant earned $543 million or $1.55 per share, down from $844.7 million or $2.41 per share.

Valeant said it faced unexpected challenges in the third quarter, including weakness in its dermatology business. Any improvements in its core business are expected to be overwhelmed by the expiry of patents in its neurology division and increased competition for some of its generic drugs, the company said.