Valeant Pharmaceuticals (VRX, Financial) reported its second quarter earnings on Aug. 9. The second quarter earnings report was also the second report for new CEO Joseph Papa, who took over the company in May.
A leading holding for many hedge funds, Valeant experienced a number of legal issues regarding its drug pricing strategies at the end of 2015 that eventually led to the company’s new executive management. Under the new management, the company is continuing to struggle. Since Papa took over, the stock is down 20% and for the year the stock is down 75%. Currently, the stock is selling for about $27.
In the second quarter Valeant reported revenue of $2.42 billion, missing estimates by $40 million. Earnings per share of $1.40 missed by 8 cents.
Revenue for the quarter was down 11% from the comparable quarter. In the U.S., sales were down 17%. Losses were led by dermatology and ophthalmology. Gains were led by Valeant’s gastrointestinal and contact lenses business segments. Developed market and emerging market sales were stable with 2% and 0% growth.
Earnings for the quarter were also lower on generally accepted accounting practices (GAAP) and non-GAAP basis. GAAP net income for the quarter was down $249 million from the comparable quarter at -$302.30 million. Non-GAAP adjusted net income was down 35% from the comparable quarter at $487.5 million. Earnings per share of $1.40 were down 35% from the second quarter of 2015.
In a CNBC report following the company’s earnings announcement, Meg Tirrell provided further insight on the company’s second-quarter earnings and outlook for the remainder of the year.
With the stock down 75% for the year, returns have been suffering for hedge fund managers holding Valeant. Pershing Square’s Bill Ackman (Trades, Portfolio) has been a leading holder of Valeant’s stock; Pershing Square owns 21.6 million shares, which accounts for approximately 6% of the portfolio and 6% of the outstanding shares. Ackman has decreased the portfolio position in Valeant recently from 13.5%.
Disclosure: I do not hold any shares of Valeant.
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