Canada based Valeant Pharmaceuticals International has a problem with its underlying business not its critics or leadership.
Shares of the pharmaceutical company plunged during early Tuesday trading as its new CEO Joseph Papa cut the forecast for earnings, marking a huge reset point as the one time highflying pharma attempts to find its mojo.
Earnings for the first quarter, the final set of complete results under Michael Pearson the former CEO, gave investors a first detailed look of the struggles of the drug maker to sell products during the most recent months that the company was in chaos.
Two of the key categories at Valeant – prescription ophthalmology and dermatology, dropped by 30% and 43% respectively.
For dermatology, the company has been facing a pushback from pharmacy benefit manager as well as health insurers following its increase in prices.
The truth is that looking across many segments there are many question marks, an analyst on Wall Street said.
Shares of Valeant were down more than 17% in New York before the opening bell.
Papa, who came to Valeant from generic and over the counter medication maker Perrigo Co last month, took the CEO position at Valeant after a number of months of chaos that eliminated close to 90% of the value of stock amidst a federal investigation in the U.S. scrutiny over the increase in drug prices and a scandal in its accounting department.
Earnings in 2016 will be between $6.60 and $7.00 per share, excluding certain items, said the company in a prepared statement on Tuesday.
During March, under Pearson the former CEO, Valeant forecast earnings between $8.50 and $9.50 per share. Analysts predicted earnings for 2016 to be $8.49 per share.
During the first quarter, Valeant’s $1.27 per share earnings fell short of analyst predictions of $1.37.
Papa said in a prepared statement that the results from the first quarter reflected in part the strong impact of a disruption of significant proportion that was faced by the organization over the last nine months.
The company has delayed its financial results due to restating earnings, which led to it receiving default notices from certain bondholders.
The drug maker however reiterated that it is expecting to file its statement for the first quarter with the Securities and Exchange Commission in the U.S. this week, which is ahead of its latest deadline.
One critical part of the job Papa has at Valeant is regaining the debt holders’ trust. Long term debt ballooned under Pearson.