Valeant announces CEO succession plan, financial update

Valeant Pharmaceuticals International announced in a press released that it has initiated a search for a new CEO to succeed J. Michael Pearson and has made changes to its board of directors.

Pearson will continue to serve as CEO and a director until a replacement is appointed, according to the release.

"It's been a privilege to lead Valeant for the past eight years," Pearson stated in the release. "While I regret the controversies that have adversely impacted our business over the past several months, I know that Valeant is a strong and resilient company, and I am committed to doing everything I can to ensure a smooth transition to new leadership."

“While the past few months have been difficult, Valeant has a collection of leading brands, valuable franchises and great people, and I am confident that the company will be able to rebuild its reputation and thrive under new leadership.” Robert Ingram, chairman of the board, stated in the release. “We thank Mike for his dedicated service to Valeant and for agreeing to stay on until we conclude our search.”

Valeant also announced in the release that William A. Ackman, CEO of Pershing Square Capital Management, L.P., will join its board of directors. Ackman’s firm has a 9% stake in Valeant, and he will joint Stephen Fraidin, Pershing Square’s vice chairman, on the board.

Katharine B. Stevenson voluntarily resigned from the board of directors to create a vacancy to permit Ackman's appointment, according to the release.

While the board requested that Howard Schiller, former chief financial officer, tender his resignation as a director, he has not so, according to the release.

The company also provided a financial reporting update.

On Feb. 22, based on the work of an ad hoc committee of the board established to review allegations regarding the company's relationship with Philidor and related matters, as well as additional work and analysis by the company, the company preliminarily determined that approximately $58 million in net revenue relating to sales to Philidor in the second half of 2014 should not have been recognized upon delivery of product to Philidor, the release reported.

“While the Ad Hoc Committee is still reviewing certain accounting related items, and has identified certain concerns related to those items with respect to the tone of the organization, it has not identified any additional items affecting the financial statements to date,” Ingram said in the release.

The company has identified misstatements that would “reduce previously reported fiscal year 2014 revenue by approximately $58 million, net income attributable to Valeant by approximately $33 million, and increase basic and diluted earnings per share by $.09,” the release reported.

The earnings impact of these misstatements will reverse in the first quarter of 2015, according to the release.

Reference: www.valeant.com