San Francisco: Valeant Pharmaceuticals International Inc., the drugmaker that has been under scrutiny for its prices increases and distribution practices, dropped 16% in early US trading after giving a new sales and profit forecast for 2016.

The guidance is lower than predictions Valeant provided in December, then pulled last month after the return of chief executive officer Michael Pearson from a two-month medical leave. Sales for the year will be $11 billion to $11.2 billion, and adjusted earnings per share will be $9.50 to $10.50, the company said Tuesday in a statement.

The shares dropped to $57.76 at 7:12am in New York before the markets opened. Valeant, once a high-flying stock that was a favourite among hedge funds, has lost about three-quarters of its market value since peaking on 5 August, as the scrutiny on its business practices intensified.

“The challenges of the past few months are not yet behind us," Pearson said in the statement.

Fourth-quarter sales were $2.8 billion. Profit, excluding certain items, was $2.50 a share. Because the company pulled guidance and has said it will restate several quarters of earnings related to mail-order pharmacy Philidor Rx Services LLC, the results may not compare with analyst estimates or prior quarters.

Pearson, who took a long medical leave in late December for severe pneumonia, announced his return on 28 February. At the same time, Valeant pulled its financial guidance and delayed reporting fourth-quarter results, saying it would wait until a board committee had finished an investigation of Philidor.

The company is predicting lower growth in its US dermatology, gastrointestinal and women’s health product lines, as well as in regions including Western Europe, according to the statement. Expenses will largely remain unchanged.

Valeant’s dermatology franchise was the most affected by the drugmaker’s decision to stop working with Philidor. Valeant has since signed a deal with Walgreens Boots Alliance Inc. to distribute dermatology and eye medicines through the drugstore chain’s more than 8,000 US pharmacies. The drugmaker’s head of US dermatology products, Deb Jorn, resigned on 2 March for what Valeant said were personal reasons.

Valeant said in December that the fallout from losing Philidor would slash millions of dollars from the company’s earnings in 2016. The company predicted sales of $12.5 billion to $12.7 billion at the time, with adjusted earnings per share of $13.25 to $13.75.

Then, on 22 February, Valeant said it would restate some of its past earnings after reviewing its relationship with Philidor. The restatement affects results from 2014 and 2015, when about $58 million in revenue recognized in 2014 should have been booked in subsequent periods. The company didn’t rule out further disclosures. It has delayed filing an annual report because it’s making an “ongoing assessment of the impact on financial reporting and internal controls."

Valeant will host a conference call at 8am New York time to discuss the results and provide a business update. Bloomberg

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