Valeant Shares On A Slide, To Host Emergency Board Meeting

Valeant Pharmaceuticals International, Inc.’s (VRX – Analyst Report) shares have been falling persistently over the last week. The company has hit a rough patch ever since it came under the spotlight for increasing the prices of two drugs (Nitropress and Isuprel) in September 2015.

The company’s shares lost 7.7% despite reporting better-than-expected earnings per share in the third quarter of 2015 on Oct 19, 2015. Since the announcement of third-quarter results, Valeant’s shares have tanked as much as 38.1%, amid allegations of debatable transactions with specialty pharmacies.

Valeant Accused of Erroneous Financial Reporting

Investors have raised questions regarding the accounting and business practices of Valeant, particularly its relationship with specialty pharmacies. We note that specialty pharmacies offer costly drugs to patients at a lower cost compared to retail pharmacies. However, doubts have surfaced regarding Valeant’s relationship with Philidor and its network of other pharmacies, as well as the fact that the company has kept the full extent of its relationship with such pharmacies undisclosed.

In response, earlier this week, Valeant issued a press release defending itself against recent accusations targeted toward its financial reporting and operations. The company clarified in its statement that it does not enjoy sales benefit from any inventory held at these specialty pharmacies. The company further explained that the shipments to Philidor Rx Services and other pharmacies in the Philidor pharmacy network including R&O are not included in its consolidated net revenue. According to Valeant, inventory held at the Philidor network pharmacies is reflected in the company’s reported inventory levels and sales are recorded only upon dispensing a product to the patient.

Moreover, Valeant has decided to host an investor conference on Oct. 26, 2015 to discuss several issues including allegations regarding its relationship with Philidor and R&O, its accounting practices, channel stuffing and speculations involving the company, which it considers incorrect and detrimental to the interest of shareholders.