VRX Bausch Health Cos

By Michael Rapoport, Jacquie McNish and Nathan Becker 

Valeant Pharmaceuticals International Inc. filed its overdue annual report on Friday morning, likely resolving the looming danger of debt default for the Canadian company.

The filing, known as a 10-K, had been delayed as Valeant sorted out its financials after an internal investigation found an error that was likely to result in an earnings restatement.

Valeant had said it aimed to file the report by April 29 to avoid being considered in default by its lenders, though it had cut a deal with holders of its bank loans to give the company until late May to file the report.

Valeant had received notices of default on some of its senior notes in April because it hadn't filed the report on time, though they had been waived. On Friday, Valeant said the defaults were "cured in all respects" by the report's filing.

The audited financial statements released Friday restate results for the year ended Dec. 31, 2014, the three months ended Dec. 31, 2014, the three months ended March 31, 2015, the six months ended June 30, 2015, and the nine months ended Sep. 30, 2015.

Valeant has said the internal investigation of its relationship with mail-order pharmacy Philidor Rx Services LLC is finished and didn't reveal any financial problems requiring restatement beyond a previously disclosed misbooking of $58 million in revenue. It backed that number on Friday and said net income for the 2014 fiscal year was dented by about $33 million, and earnings by 9 cents a share.

The company said it also identified misstatements in the first quarter of 2015, consisting primarily of the reversing effect on earnings of the 2014 misstatements, which reduce revenue by about $21 million, increase net income by about $24 million and increase earnings by about 7 cents a share. The company had previously reported first-quarter earnings of $74 million, or 21 cents a share, on revenue of $2.19 billion.

Valeant offered new information about ongoing Justice Department investigations. It said two probes by districts in Massachusetts and the Southern District of New York relate to matters including its patient assistance program, former relationship with the specialty pharmacy Philidor Rx Services LLC and its accounting treatment of sales to specialty pharmacies. The company said the investigations also focus on financial support provided by Valeant for patients, its distribution of products and information provided to the Centers for Medicare and Medicaid Services.

The company also disclosed it is under investigation by State of North Carolina Justice Department regarding the production, marketing, distribution, sale and pricing of some of its products.

Valeant said its report was audited and found clean by PricewaterhouseCoopers LLP.

Meanwhile, Valeant is also expected to announce sweeping board changes as the company, under fire from lawmakers and investors, looks to change the tone among its top brass.

The Wall Street Journal had reported details of the board turnover on Wednesday, citing people familiar with the matter. William Ackman, a Valeant director and major shareholder, had signaled change was coming during his testimony at a Senate Committee hearing on Wednesday during which he, outgoing CEO Michael Pearson and director Howard Schiller faced tough questioning over Valeant's widespread drug price increases.

"A lot of the board is going to turn over," Mr. Ackman told the committee. He also promised swift changes to the expensive price tags on many Valeant drugs.

The board reshuffling follows the addition of four new directors, including Mr. Ackman, earlier this year.

Mr. Pearson is set to depart the company soon, to be replaced as chief executive by Joseph Papa, whom Valeant lured away from Perrigo Co. Mr. Papa is expected to start work for Valeant on Monday.

Valeant has also disclosed that it is under investigation by multiple regulators, including the Securities and Exchange Commission and the Justice Department, over its drug pricing and other issues.

Write to Michael Rapoport at Michael.Rapoport@wsj.com, Jacquie McNish at Jacquie.McNish@wsj.com and Nathan Becker at nathan.becker@wsj.com

(END) Dow Jones Newswires

April 29, 2016 08:27 ET (12:27 GMT)

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