MONTREAL -- Valeant Pharmaceuticals warned Tuesday that its financial performance will continue to deteriorate next year as it posted a $1.22-billion loss in the third quarter, driving its shares down to a six-year low.
Once Canada's largest firm by market capitalization, the Laval, Que.-based drug giant saw its stock tumble to its lowest level since mid-2010 after cutting its forecast for this year with expectations of a weaker fourth quarter.
Joseph Papa, who was brought in as CEO and chairman earlier this year to turn Valeant around, recited a litany of problems confronting the company.
"We continue to need to address legacy issues, including negative press coverage, litigation and talent retention and severance," Papa told investors on a conference call.
Valeant's fortunes have turned sour, with its stock losing 85 per cent of its value since it came under scrutiny last year for its strategy of acquiring drug companies and imposing dramatic price increases. It also faces a series of shareholder lawsuits and criminal fraud investigations by U.S. authorities.
Papa said he has taken steps to put Valeant back on track, citing further investments in research and development as well as hiring new talent.
Chief financial officer Paul Herendeen said Valeant remains a company in transition as he warned that 2017 will be another "down year." Improvements in its core business should be offset by the expiry of patents in its neurology division and increased competition for some of its generic drugs, he said.
"We will dig our way out of part of the growth hole ... but we will not crawl all the way out of that hole," he told analysts.
"We take fire from the press and the folks in the investment community just about every day, focused on the company's past. We can't change the things that are in the past, we can only deal with them and change our future."
Valeant lowered its 2016 estimates. The forecast for adjusted earnings has been slashed by about 20 per cent to between $5.30 and $5.50 per share, with revenues being trimmed to between $9.55 billion to $9.65 billion.
"While the 2016 guidance revision was widely expected, both the magnitude and spillover into next year were not," said Neil Maruoka of Canaccord Genuity. "We believe investors are now fleeing the stock as the path to growth has grown murkier."
On the Toronto and New York stock markets, Valeant (TSX:VRX) shares plummeted, losing almost 22 per cent of their value. On the TSX, its stock closed at C$19.92, down $5.59, after hitting a low of $18.41.
The loss reported in the three-month period ended Sept. 30 was mainly tied to a US$1.05-billion goodwill impairment charge for the Salix stomach drug business that it acquired last year and is considering putting up for sale.
Excluding one-time items such as the Salix writedown, Valeant earned US$543 million or $1.55 per share, 20 cents lower than analyst forecasts. A year ago, adjusted profits were $844.7 million or $2.41 per share. Revenues fell 11 per cent to $2.48 billion.
Valeant reduced its US$31-billion debt by paying $450 million since its second quarter. It expects to pay down more than US$5 billion of debt by early 2018 with proceeds from non-core asset sales.
