Valeant Pharmaceuticals’ announced financial restatement, which is projected to shift roughly $58 million in revenue from the second half of 2014 to the first half of 2015, has raised larger questions about the drug company’s compliance program and its business model. It could also serve as an early warning to all publicly listed U.S. companies about the increased room for misjudging the booking of sales once the Financial Accounting Standards Board rolls out its new revenue recognition standards in 2019.
The Canadian company said on February 22 that it would delay filing its 2015 Form 10-K until an ad hoc committee of its board has completed a review of accounting matters related to sales through a specialty distributor, Philidor Rx Services. Plans to proceed with a February 29 earnings call to discuss unaudited fourth-quarter results were revised when Valeant released a management and business update on February 28, announcing the immediate return of CEO Michael Pearson from a two-month medical leave for severe pneumonia, which would postpone reporting of preliminary fourth-quarter results. That, and the announcement of a previously undisclosed SEC probe prompted a selloff in shares, with the price ending 18 percent lower by the close of trading on February 29.
