Valeant panel concludes Philidor investigation, finds no more misstatements
- Concluding a months-long investigation, a special investigatory panel of Valeant's board of directors said it found no further errors in the company's financial statements. The ad hoc committee had been investigating accounting practices tied to the now-severed relationship with the specialty pharmacy Philidor.
- Valeant also said the ad hoc committee would be dissolved and its oversight responsibilities transferred to the board of directors due to the completion of the investigation.
- The company still intends to file its Form 10-K "on or before" April 29, the date when a failure to file would trigger a default on its loans.
The special committee had been investigating the murky accounting used in Valeant's relationship with Philidor, a mail-order pharmacy. In February, the company disclosed preliminary findings by the committee showing approximately $58 million in revenue which should not have been recognized on its 2014 year-end earnings report.
This had a ripple effect on Valeant's financial statements and led the board to declare the 2014 year end report, along with Q1, Q2, and Q3 earnings, unreliable.
"After conducting more than 70 interviews and reviewing over one million documents, the Ad Hoc Committee has not identified any additional items requiring restatements beyond those matters previously disclosed," Chairman of the Board Robert Ingram said.
The improper accounting first emerged in October of last year and has been a major factor in the dramatic decline in the company's fortunes. Valeant stock has declined by roughly 90% since its peak in August. In addition to the Philidor investigation, the drugmaker has been buffeted by attacks on its drug pricing strategy, Congressional and federal investigations, and weak sales in key departments.
Due to the investigation, Valeant had delayed the submission of its annual 10-K report, originally due in March. The delays forced the company to warn of a potential default if it did not file by April 29. Last week, the company asked its creditors for an extension until May 31 to give it more time if it can't meet the April deadline.
However, in the most recent announcement, Ingram said the company is on schedule to file on or before April 29.
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