Canadian company Valeant Pharmaceuticals International has been under the investigation of the US Securities and Exchange Commission. The company has reportedly lost 21 percent of its market shares right after the start of the investigation.
According to Laurie Little, Valeant's spokesperson, they already received the subpoena from the SEC which was served in the fourth quarter of 2015. She added that they cannot give any details regarding the investigation as of the moment. It was noticed that the company's share fell to 18.4 percent and was able to close the market with a $65.80 per share, as reported by Reuters.
This latest investigation of the SEC is a separate probe from the case wherein it purchased Salix Pharmaceuticals Ltd last year. The company also cancelled the release of their fourth quarter earnings last 2015 and at the same time, withdrew its 2016 financial guidance after its chief executive came out from being hospitalized.
The company has withdrew its guidance as a form of precautionary measures and told investors that the guidance will not actually reflect the real score of the company's standings. They also assured the investors that they are optimistic about the 2016 financial guidance. The company provided their investors with an adjusted earning guidance for 2016 that plays between $13.25 and $13.75 per share.
According to the Wall Street Journal, Dimitry Khmelnitsky, a forensic accountant with Veritas Investment Research in Toronto, said the retraction and postponement of the guidance doesn't send a good signal at all. He added that it is not the proper way to manage a public company. According to Umer Raffat, the anxiety of the investors is primarily focused on the upcoming earnings and they hope that there will be no more major bad news.
Valeant's move on acquiring old drugs and attracting investors like William A. Ackman of Pershing Square Capital Management and Sequoia Capital has raised the company's stocks to new heights. But just this fall, it has lost two-thirds of its market value making the investors question the company's accounting practice and its ability to pay $30 billion in debts, as per New York Times.
The company's stocks have been going up and down for the last months which often gains or losses 5 percent of its shares. The company, however, stated it would restate its earnings to reflect preliminary findings from the board review. Moody's Investors Service rated the company to be reviewed for downgrade and said that the company's operating performance is weaker than expected.
