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Valeant delays filing of 2015 annual report; Philidor-related adjustments raise EPS $0.09; shares up 6% premarket

  • Based on its own internal investigation and on the work of the Board's Ad Hoc Committee, Valeant Pharmaceuticals' (VRX) announces that it has determined that certain sales to Philidor were improperly accounted for. Specifically, ~$58M in net revenues were recognized in H2 2014 upon delivery of product to the specialty pharmacy instead being recognized when dispensed to patients.
  • The issue was resolved when the company entered into an option to acquire Philidor in December 2014 and it began to consolidate its accounts. At that point, sales were recognized only when dispensed to patients. No further sales-related adjustments will be necessary beyond this time frame.
  • Correcting the misstatements will reduce 2014 GAAP EPS by ~$0.10 and increase 2015 GAAP EPS by ~$0.09.
  • Valeant will delay the filing of its 2015 10-K until it completes its review of its accounting. Interim chief Howard Schiller says, "This determination and the need to delay our 10-K filing are very disappointing but necessary. We remain committed to improving reporting procedures, internal controls and transparency for our investors."
  • Management will host a conference call on Monday, February 29 at 8:00 am ET to discuss its unaudited Q4 results and provide a business update.
  • Shares are up 6% premarket on robust volume.

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