Valeant shares drop 23% in March: 4 key notes

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Laval, Canada-based Valeant Pharmaceuticals saw its share price drop 23 percent in March 2017, The Motley Fool reports.

The Motley Fool identified four issues that contributed to the decrease.

1. In the fourth quarter of fiscal year 2016:

  • Valeant’s Branded Rx drug segment saw its sales drop 17 percent.
  • Revenues from its Bausch & Lomb operation dropped 1 percent.
  • Valeant set an EBITDA between $3.55 billion to $3.7 billion, which was approximately two times more than what it will pay in interest on its debt. Motley Fool said, “That’s worrisomely low.”

2. Valeant completed a series of refinancing deals. Although the refinancing pushes back its debt schedule, it adds fees or a higher interest rate.

3. Longtime Valeant supporter and hedge fund manager Bill Ackman sold his entire state in the company. Mr. Ackman lost approximately $4 billion from the investment.

4. Former CEO J. Michael Pearson announced that he was suing Valeant over unpaid compensation.

The Motley Fool said there’s no simple fix to Valeant’s issues. It recommends avoiding the stock.

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