SEC raps Valeant again over its use of 'non-GAAP' measures

New correspondence from the SEC shows it’s still got issues with Valeant's use of "non-GAAP" financial measures.

Back in May, the SEC raised some red flags over Valeant’s use of “non-GAAP” financial measures. And now, new correspondence from the commission shows it’s still got issues with the drugmaker’s practices.

In a series of letters made available by the SEC Wednesday, the body said Valeant’s non-GAAP adjusted net income was too similar to cash flow and told the company to stop reporting it on a per-share basis, The Wall Street Journal notes.

Valeant responded that it plans to change its non-GAAP reporting and disclosures; its edits are slated to make their debut when the company rolls out its 2017 earnings guidance and could potentially include a new adjusted net income measure, the company said.

Free Daily Newsletter

Like this story? Subscribe to FiercePharma!

Biopharma is a fast-growing world where big ideas come along daily. Our subscribers rely on FiercePharma as their must-read source for the latest news, analysis and data on drugs and the companies that make them. Sign up today to get pharma news and updates delivered to your inbox and read on the go.

The SEC first got in touch with the Quebec-based pharma over its non-GAAP measures in a letter last December. It took particular issue with the once-acquisitive company’s practice of stripping out pickup-related expenses and also questioned what Valeant meant by “core” operating results, when operations relied on a series of large buys.

SEC staffers are “concerned with your overall format and presentation of the non-GAAP measures and believe revisions to your future earnings releases and investor materials are appropriate,” they wrote.

The SEC gripes join a long list of Valeant problems that seems to just keep getting longer. The drugmaker’s talks with Japan's Takeda over a $10 billion sale of Valeant's Salix business reportedly broke down this week, scuttling a chance for Valeant to pay down a mountain of debt and ease ongoing default worries from investors.

And industry watchers are also still wondering whether more charges are on the way in a federal kickbacks case for the embattled drugmaker or its former C-suiters; U.S. authorities have already charged former company exec Gary Tanner and Andrew Davenport, the former CEO of Valeant-linked specialty pharmacy Philidor, with engineering a multimillion-dollar fraud and kickbacks scheme.

Suggested Articles

The second of AbbVie’s highly anticipated 2019 blockbuster candidates is here: Its crucial Humira follow-up, Rinvoq.

Bristol-Myers Squibb’s takeover of Celgene hasn’t always gone smoothly, but now a once-left-for-dead centerpiece of that deal is ready to launch.

Investors sued Novo Nordisk in Denmark, claiming it misled the public about trouble plaguing its insulin franchise—and demanding $1.75B in damages.