Valeant Pharma (VRX) Results Suggest Disruption in the Business - Evecore ISI's Raffat

Evercore ISI analyst, Umer Raffat, commented on Valeant Pharma (NYSE: VRX) after the call.

"I think it will be an understatement to say that this has clearly been a very humbling call for me," he said.

".. today's results suggests that while communication issues remain, there may have been a disruption in business - at least in 1Q16"

He highlighted:

• First, yet another communication issue today:
  • - Press release says $6.4-6.6B EBITDA for next 4 quarters … slides say $6B
  • - I clarified on call … turns out, press release made an error … EBITDA for next 4 quarters is $6B
• Next, a financial reporting issue:
  • - SEC corresponded with Valeant and non-gaap tax rate going fwd will be 10-15% (vs 5% previously)
• Finally, and most importantly, there is business disruption in 1Q16:
  • - Xifaxan had a weaker 4Q vs 3Q … and additional inventory workdown in 1Q16 for GI … we previously understood that despite workdown in 4Q, Xifaxan should have been higher than 3Q
  • - Am still trying to understand mgmt commentary around ophthalmology Rx trends in 1Q16

The biggest unknowns for him is if 1Q16 disruption are really driven by just the things noted in the slides (below) or is there more happening?

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