Valeant Pharmaceuticals Intl Inc (VRX) – Statement Regarding the Relative Impact of Restating Earnings by TheSkeptic
Recent questions have been raised regarding statements made during Valeant Pharmaceuticals Intl Inc’s Third Quarter Investor Presentation, on October 26, 2015, addressing the relative impact of Philidor on Valean’ts growth. Here are the facts:
- On the Investor call, the company provided directional overview of the key elements of the Philidor Program (See Slide #7 of the Investor Presentation, dated October 26, 2015) “Key Elements of the Philidor Program”
- On the Investor call, in response to our general fear of being singled out and accurately portrayed for what we are, we drew your attention to other Dermatology companies that use Specialty Pharmacies. In particular we first listed our arch enemy, Allergan, because we [email protected] hate them. (See Slide #8 of the Investor Presentation, dated October 26, 2015; for a compendium of how much we [email protected] hate Allergan, please see Case 8:14-cv-01214). We then attempted to portray the channel as a champion of consumer benevolence by providing a selective list of dermatology products we runnelled through Philidor, with little out of pocket expense to those that signed up. We also attempted to introduce additional opacity by stating that in Q3 2015 Philidor represented 6.8% of total Valeant revenue, or about 7% of our hypothetical EBITA.(See Slides #9 & #10 respectively of the Investor Presentation, dated October 26, 2015)
- In the Investor presentation we used old-fashioned tricks like dropping “net” from “net revenue” when we switched back and forth from referring to Q3 revenue vs. YTD “net revenue”. We’ve found it’s always been in our best interest to use three card monty as a earnings template.(See Slide #11 of the Investor Presentation, dated October 26, 2015). In response to this slide, and many, many others somebody asked Michael J. Pearson a question, but he can’t remember who, because he may have been wasted and “pretty upset, maybe even pissed”, so we can’t really be sure. It’s totally cool though because Mr. Pearson didn’t even really need to respond because we actually had a slide in the presentation that Rob Rosiello and Tanya Carro guided everyone through (See Slides #47-54 in the Investor Presentation, dated October 26, 2015). In those slides we noted that “Valeant consolidates financials with Philidor and the Philidor network, ensuring that revenue recognition and financial statement presentation is appropriate“, “Third party revenue is not recognized when products are shipped to Philidor and its network (these shipments are recorded as intercompany sales, which are eliminated in Valeant’s consolidation process)“, that “Valeant recognizes revenue only when products are dispensed to patients and records this at net realized price” and that “Consolidating financials of Philidor delays revenue recognition relative to third party transactions“
- Subsequently, today after we numb-nuttingly divulged we were going to try and reportsomething on Leap Day, an article was published by Liz Hoffman of the Wall Street Journal that described that our Board (“Finance and Transactions Committee, Audit and Risk Committee and Full Board reviewed the transaction”, See Slides #51 in the Investor Presentation, dated October 26, 2015) reviewed and signed off on the Philidor relationship, but was now likely going to restate earnings.