Shares of Valeant Pharmaceuticals slipped today after reports that former CEO Michael Pearson’s health is improving and that he could return to the drug and consumer product company soon. The stock has been extremely volatile for quite some time, although it remains well below its 52-week high of $263.81. Shares are off by more than 18% since the beginning of the year.
Valeant’s board said to debate Pearson’s return
CNBC had the initial report and cited unnamed sources for the information, adding that the company’s board of directors is debating whether he’s actually ready to return. A spokesperson for Valeant confirmed to Bloomberg that Pearson’s health is indeed improving but also said that he’s still on medical leave at this time. About a month ago, the executive addressed employees in a memo, saying that “unexpected complications” extended his hospital stay beyond what had initially been expected.
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Pearson took the helm at Valeant Pharmaceuticals in 2010 and went on medical leave in December after being hospitalized with pneumonia. Last month, the drug maker appointed former CFO Howard Schiller to serve in the post until he is able to return to work, and the company spokesperson said he still is acting as interim CEO.
In a letter sent to investors before the latest news and reviewed by ValueWalk, ValueAct stated:
At Valeant, we will continue to help the company navigate out of the storm of pundit criticism, short seller allegations, and management turmoil. Today, with CEO Mike Pearson on medical leave and the ongoing board investigation of Philidor, a lot seems uncertain. However, we believe much of this will be resolved in 2016 as the team delivers operating results and cash flows.
Valeant Pharmaceuticals still under fire
When Pearson went on medical leave late last year, Valeant was under fire due to its extreme price increases for some of its generic drugs. A house panel said earlier this month that the drug maker set sales goals and then upped drug prices by 800% or possibly even more in some cases just to hit those sales goals. Democratic presidential candidate Hillary Clinton highlighted an apparent outrageous price increase by Valeant at a recent town hall meeting while on the campaign trail.
Valeant was also in trouble for its association with controversial mail-order pharmacy Philidor, which it cut ties with and signed an agreement with Walgreens to replace it with. The drug maker has since said it will restate its GAAP earnings for 2014 and 2015 after it uncovered evidence that $58 million in sales it made to Philidor that were recognized in 2014 should actually have been recognized later when the drugs were dispensed.
The company has scheduled a conference call for Monday to talk over its fourth quarter earnings results with investors.
Shares of Valeant Pharmaceuticals declined by as much as 0.88% to $83.09 in afternoon trades.