Valeant CEO Michael Pearson will leave fafter being alleged of improper financial conduct.
Valeant Pharmaceuticals International Inc. said Monday that it has begun a search for a new chief executive to succeed Michael Pearson as the drugmaker alleged improper conduct by its top financial officers—accusations that the former financial chief denied. The company also named William Ackman to its board. Mr. Ackman’s firm, Pershing Square Capital Management L.P., has a 9% stake in Valeant.The moves followed a turbulent week for Valeant in which the Laval, Quebec, company lost more than half of its market value. Valeant last week reduced its earnings guidance, warned about a potential debt default and held a contentious call that turned off analysts. The disclosures Monday suggest disagreement at the highest levels of the company and adds to the challenges for a drug company that also is trying to mend relationships with investors, doctors and insurers. Mr. Pearson, who last week returned from a two-month sick leave, will remain CEO and a director until his replacement is appointed. Valeant said Mr. Ackman will join the board immediately, sitting along side Pershing’s vice chairman, Stephen Fraidin, on the board.
Valeant pledged on Monday to file its annual report on or before April 29 after missing a deadline last week, which opened the door to a default on part of its $30 billion debt load. Last week, the company's stock, hovering around $60, lost one-half of its value as investors wondered if it could manage the debt, built up from a stream of acquisitions. Since August, it has lost $80 billion in market value. Valeant's prescription drug sales began to unravel last year as its history of large price increases drew sharp criticism and the attention of lawmakers as well as New York and Massachusetts attorneys general, which opened investigations. The company's profitable dermatology franchise faltered as it stopped distribution through pharmacy Philidor due to investor and media scrutiny. In January, while Pearson was still on leave, the company said it would need to restate earnings from 2014 and 2015 due to revenue recognition issues.
The improper conduct of the company's former Chief Financial Officer and former Corporate Controller, which resulted in the provision of incorrect information to the Committee and the company's auditors, contributed to the misstatement of results. That former CFO, who wasn't named directly in the release, is Howard Schiller. He just finished a stint serving as interim CEO when Pearson was on medical leave. He even got grilled by Congress over Valeant's drug-pricing practices. Schiller was CFO of Valeant from December 2011 to June 2015. He's now on the company's board, and he released a statement through his lawyers on Monday saying he was refusing a request that he resign.