Shares for Valeant Pharmaceuticals International (VRX) plummeted as much as 34% Tuesday, its lowest level in four years, as the company slashed its 2016 outlook. The reduced outlook marked the battered company’s first detailed update in months, and did little to ease investor concerns over the drugmaker’s accounting and strategy.
Mike Pearson, CEO of Valeant, stated that Valeant’s businesses are not running on “all cylinders.” Pearson returned from medical leave two weeks ago.
Valeant’s new earnings and sales forecast for the year was much lower than the company’s initial projections in December. Gastrointestinal and dermatology drugs, which were previously major growth drivers for the company, are not meeting expectations.
No major asset sales are planned, according to Pearson, but smaller businesses may be divested this year to ease Valeant’s debt burden, which has swelled to over $30 billion.
Shares for the company plunged 33% to $46.42 in morning trade. Bonds slumped as well.
Valeant was once a high-performing stock and a favorite among hedge funds, but has lost over three-quarters of its market value over the last four months. Valeant’s accounting and distribution practices as well as its price increases have been scrutinized.
Sales for 2016 are projected to be between $11 billion and $11.2 billion. Adjusted earnings per share will be between $9.50 and $10.50, the company stated on Tuesday.
Valeant also reiterated that it was committed to paying down its debt by at least $1.7 billion this year. In December, the company predicted that it would pay down $2.25 billion in debt in 2016.
Sales for the fourth quarter were $2.8 billion. Excluding certain items, profit was $2.50 per share.
The company’s dermatology unit took the biggest hit after Valeant made the decision to cut ties with Philidor RX Services LLC. The company has since made a deal with Walgreens Boots Alliance Inc. (WBA) to distribute eye and dermatology medicines through the chain’s 8,000 stores in the U.S.