- Investors are far from sold on Valeant Pharmaceuticals' plans to offset expected revenue declines. Valeant sunk almost 10% to $1.53 per share in Tuesday morning trading. The stock is down nearly 55% since Papa took the reigns of the company in early 2016. Valeant is well off its highs of over $260 per share.
- The troubled pharma revealed loss of exclusivity (LOE) and foreign exchange rates should deplete about $940 million worth of revenue in 2017 during a fourth quarter earnings call on Tuesday. While Valeant expects greater sales from its branded drug and Bausch & Lomb eyecare business, the upticks would only help reconcile at most about a third of the losses.
- Guidance for this year largely overshadowed fourth quarter performance, in which Valeant met its revised adjusted EBITDA and revenue expectations. The company anticipates $8.9 billion to $9.1 billion in revenues during 2017, down from the about $9.7 billion brought in during 2016.
Valeant's mantra since last year and going through 2018 has been: Stabilize. Turnaround. Transform. And a large part of that strategy has been divestitures, particularly outside the company's core businesses of Bausch & Lomb, gastrointestinal drugs and dermatology medications and core geographies, which include the U.S. and Canada.
"We have not changed our definition of what is core," Valeant CEO Joe Papa said during a Feb. 28 earnings call.
"We identified what we referred to as $2 billion of revenue for what I would refer to as non-core," he said, adding that those assets could generate up to $8 billion in proceeds if unloaded — though he doesn't expect all to sell — and help pay down the the whopping $29 billion in debt looming over his company.
Some analysts are also questioning the plausibility that core asset revenues will make up for impeding losses, however.
"It still doesn't appear that [management] has a realistic outlook on its organic growth," Mizuho Securities wrote in a Feb. 28 note. The investment bank kept its "underperform" rating on Valeant, citing that the company's projected 2017 growth for its branded and Bausch & Lomb products — which sit at 2% to 5% and 5% to 7%, respectively — are unlikely given year-over-year revenue in 2016 was down 12.1% in the former unit and flat in the latter.
"I do question the 5-7% growth assumption on Bausch revenues," EvercoreISI's Umer Raffat said in a note, also highlighting that Vesneo (latanoprostene bunod), a treatment for intraocular pressure in patients with glaucoma or ocular hypertension, won't contribute to those revenues in 2017.