Valeant's shares suffered a 50% decline earlier in the week and the company warned that it may default on its $30B debt. The cause of the debt warning is that the company is not sure whether it will be able to file its earnings report on a timely basis, which would breach covenants in the company's bonds.
The straw that broke the camel's back was a press release that the company issued forecasting $6.4B in adjusted earnings in the 12 months starting in April. But a slide deck that accompanied that press release forecast $6.0B in adjusted earnings over the same time period. The company was forced to issue a correction to the press release stating that $6.0B is the correct forecast. It has been widely reported that there are significant differences of opinion among Valeant's board members and management about the right way to forecast its earnings. The press release / slide deck mix up brought that disagreement to the forefront.
At iBoardrooms, we blogged recently about how important it is to keep documents organized so that board members and executives aren't working off of different versions, which is what we call being a Version Victim. Valeant shows just how important keeping things organized is, especially in times of stress and confusion. For Valeant, the stock price is down roughly 80% from its peak and there are serious questions about whether it will be able to continue its previous strategy of making strategic acquisitions in the healthcare space.
Don't be a Version Victim. Stay organized, especially in tough times. Try iBoardrooms for 30 days free and see how we can help.