On Thursday, shares of pharmaceutical company Valeant Pharmaceuticals Inc. are crashing, down almost 10% in late-morning trading following reports that the company is under a criminal investigation.
According to The Wall Street Journal, U.S. prosecutors opened a criminal investigation into Valeant’s relationship with a specialty pharmacy, Philidor Rx Services, that helped improve its drug sales, and whether or not it hid this relationship from insurers.
Lawyers at the U.S. Attorney’s Manhattan-based office are figuring out if Valeant’s ties with Philidor resulted in defrauding insurers.
“We have been fully cooperating with the authorities throughout the investigation, and we are in frequent contact and continue to cooperate with the U.S. Attorney’s Office,” Valeant said in a statement. “Valeant takes these matters seriously and intends to uphold the highest standards of ethical conduct.”
It was just last year that Valeant came under scrutiny over issues including its business practices, in particular with Philidor. The company cut ties with the pharmacy last October after reports surfaced that Philidor had allegedly used tactics to gain more insurance reimbursements for Valeant drugs.
Valeant has already admitted that about $58 million of incorrectly marked sales were tied to Philidor. Joseph Papa, the drug maker’s new CEO, has made efforts to put these issues behind Valeant—like hiking its drug prices and using Philidor to distribute these newly expensive medicines—and to gain back shareholder trust.
Investors, too, were hoping the worst was behind Valeant. The company reported solid second quarter results on August 9. Despite a loss in profit, the company reaffirmed positive full-year guidance, sending its stock soaring over 18%.
VRX stock has declined more than 90% over the past 12 months due to multiple SEC and Congressional probes into its price hikes. This current investigation into its business practices is not likely to have a positive impact on Valeant shares, and it may be a wise decision to sell before its stock falls even further.
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If You Own Valeant (VRX) Stock, You May Want to Sell Now
On Thursday, shares of pharmaceutical company Valeant Pharmaceuticals Inc. are crashing, down almost 10% in late-morning trading following reports that the company is under a criminal investigation.
According to The Wall Street Journal, U.S. prosecutors opened a criminal investigation into Valeant’s relationship with a specialty pharmacy, Philidor Rx Services, that helped improve its drug sales, and whether or not it hid this relationship from insurers.
Lawyers at the U.S. Attorney’s Manhattan-based office are figuring out if Valeant’s ties with Philidor resulted in defrauding insurers.
“We have been fully cooperating with the authorities throughout the investigation, and we are in frequent contact and continue to cooperate with the U.S. Attorney’s Office,” Valeant said in a statement. “Valeant takes these matters seriously and intends to uphold the highest standards of ethical conduct.”
It was just last year that Valeant came under scrutiny over issues including its business practices, in particular with Philidor. The company cut ties with the pharmacy last October after reports surfaced that Philidor had allegedly used tactics to gain more insurance reimbursements for Valeant drugs.
Valeant has already admitted that about $58 million of incorrectly marked sales were tied to Philidor. Joseph Papa, the drug maker’s new CEO, has made efforts to put these issues behind Valeant—like hiking its drug prices and using Philidor to distribute these newly expensive medicines—and to gain back shareholder trust.
Investors, too, were hoping the worst was behind Valeant. The company reported solid second quarter results on August 9. Despite a loss in profit, the company reaffirmed positive full-year guidance, sending its stock soaring over 18%.
VRX stock has declined more than 90% over the past 12 months due to multiple SEC and Congressional probes into its price hikes. This current investigation into its business practices is not likely to have a positive impact on Valeant shares, and it may be a wise decision to sell before its stock falls even further.
VALEANT PHARMA Price, Consensus and EPS Surprise
VALEANT PHARMA Price, Consensus and EPS Surprise | VALEANT PHARMA Quote
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