By Amrutha Penumudi and Rod Nickel
Reuters) - Valeant Pharmaceuticals International Inc <VRX.TO> slashed its 2016 forecasts on Tuesday, as its new chief executive said he would focus on rebuilding the reputation of a "distracted organization" with a debt-loaded balance sheet.
The maker of toenail fungus cream Jublia and anti-depressant drug Wellbutrin, which has faced intense scrutiny for business and accounting practices, missed first-quarter profit estimates on weakness in its dermatology business.
The Laval, Quebec-based drugmaker expects full-year adjusted earnings of $6.60-$7.00 per share, compared with its previous forecast of $8.50-$9.50, and revenue of $9.9 billion-$10.1 billion, down from $11.0 billion-$11.2 billion.
The Canadian drugmaker's U.S.-listed shares <VRX.N> slumped to close down 14.6 percent to $24.64, paring earlier losses of as much as 22 percent.
"Negative external attention continues to adversely impact the business and our reputation with patients, physicians and all of you, our shareholders, as well as our distracted organization," Chief Executive Joe Papa, who took over in May, said during a conference call with analysts.
He did not directly answer a question on whether there had been takeover offers for Valeant.
Ruane, Cunniff & Goldfarb Inc, one of Valeant's biggest shareholders, cut its stake by more than half to 4.7 percent as of May 31, it said in a regulatory filing.
The investment firm that runs the Sequoia Fund, long known for its ties to Warren Buffett, was sued by shareholders who claim it recklessly took a huge stake in Valeant.
Papa said the results reflected "significant disruption" over the past nine months. It will take up to six months to stabilize the company, he said, including staff recruitment, improving relationships with doctors and drug payers, selling assets and repaying debt.
Papa did not specify which assets would be put up for sale, but said they do not include core businesses of dermatology, consumer products, Bausch + Lomb eyecare and Salix gastrointestinal drugs.
The company has repaid $730 million of its roughly $30 billion in debt this year, and is aiming for total repayment of $1.7 billion. Valeant racked up much of the debt through its aggressive pace of acquisitions under former CEO Mike Pearson.
Papa called Valeant's problems "speed bumps," but doubts remain for others.
Valeant has $15 billion in debt due by 2020, and "if the business stays the way it is, or continues to deteriorate, we believe Valeant will be challenged in making those debt payments," wrote Wells Fargo analyst David Maris. During the analysts' call, he questioned executives about a lack of transparency in how the company offered guidance.
Up to Monday's close, the stock had fallen nearly 90 percent from its August 2015 high of $263.81.
Valeant filed its 2015 financial report in late April, after missing an original deadline of March 15 due to an in-house review of its accounting practices, allaying concerns about a possible default on its debt. The probe found problems dating back to 2014.
The company, which will hold its 2016 annual meeting of shareholders on June 14, filed its quarterly report on Tuesday with the U.S. regulators, ahead of a July 31 deadline.
Papa said there are still challenges, including with U.S. dermatology sales, which are reliant on a pact with pharmacy Walgreens Boots Alliance Inc <WBA.O>. Dermatology sales dropped 43 percent during the first quarter compared with the same period in the previous year.
Valeant's net loss was $373.7 million, or $1.08 per share in the first quarter, compared with a profit of $97.7 million, or 28 cents per share, a year earlier.
On an adjusted basis, Valeant earned $1.27 per share, missing the average analyst estimate of $1.37, according to Thomson Reuters I/B/E/S.
Total revenue rose 9.3 percent to $2.37 billion, missing the average analyst estimate of $2.38 billion.
(Reporting by Amrutha Penumudi and Ankur Banerjee in Bengaluru and Rod Nickel in Winnipeg; Editing by Saumyadeb Chakrabarty, Alan Crosby and Shounak Dasgupta)