Good news, investors: Valeant's ($VRX) ad hoc committee investigation into a short seller's channel-stuffing claims is complete. At least, the company thinks so.
Valeant left some room for doubt Tuesday with the announcement, noting that the company "believes that its review" of accounting matters related to specialty pharmacy Philidor--central to the allegations lobbed at Valeant last October--is over. And now, the Canadian drugmaker will pass all oversight duties--along with its "assessment of related internal controls and remediation matters"--to its board.
Along with reassurance from Chairman Robert Ingram that the Quebec company was on track to file its already-delayed 10-K on or before April 29, the news had shareholders hopeful, and Valeant's stock posted its biggest one-day gain since a disastrous March conference call pummeled shares by 51%.
Valeant Chairman Robert Ingram
"After conducting more than 70 interviews and reviewing over one million documents, the ad hoc committee has not identified any additional items requiring restatements beyond those matters previously disclosed. We believe it is appropriate to transfer responsibility for any continuing work to the Board's independent directors," Ingram said in a statement.
Valeant's ad hoc committee has been hard at work since last year, when Citron Research called Valeant "the next Enron" and pointed the finger at its shady specialty pharmacy connections. After a series of media reports highlighting questionable business practices at Philidor and a relationship between the two companies that investors found troubling, Valeant cut ties with the pharmacy at the end of October.
Since then, though, the ad hoc committee has turned up $58 million in Philidor-related accounting missteps, and those have caused plenty of problems on their own. A need to restate earnings delayed Valeant's financial filings, thus putting it at risk of defaulting on its debt. Investors didn't take kindly to the news, and creditors haven't exactly loved Valeant's proposal to relax its lending agreement, either: It needs more than half of the investors holding its more than $11 billion of secured loans to sign off on its blueprints by Wednesday in order to dodge a default and loosen restrictions on its debt, and as sources told Bloomberg Monday, some of them are pushing back.
Special Report: The most influential people in biopharma today - J. Michael Pearson - Valeant
Valeant pitches deadline delays to creditors in debt rescue plan
Valeant heeds calls for new CEO, links iffy financials to hard-charging 'tone at the top'
Valeant chief to employees: Don't worry. We're not going bankrupt
Creditors may put the screws to Valeant as default risk looms: Reuters
Valeant fiasco need-to-know, featuring Inspector Clouseau, a black box, and a cigarette butt
Valeant investors, shocked by lightweight guidance, aren't buying CEO Pearson's recovery plans
Another snafu for Valeant as internal probe triggers restated earnings
Valeant cuts ties with shadowy pharmacy Philidor