Valeant Pharmaceuticals cuts revenue forecast by 12%

Valeant Pharmaceuticals International Inc cut its 2016 revenue forecast by about 12 per cent and said a delay in filing its annual report could pose a default risk.

The Canadian drug maker, which is under investigation by US agencies over its business and accounting practices, said it would delay filing its annual report with US regulators. It however, for the first time said raised the possibility of a default as a result.

Valeant, whose US-listed shares plunged 18.3 per cent in pre-market trading, said failure to file the report by Tuesday's deadline would mean it would be in breach of a covenant and that holders of at least 25 per cent of any series of notes may deliver a notice of default.

As of 30 September Valeant had about $30 billion of long-term debt, but chief executive Michael Pearson was optimistic about the company's finances.

"We are comfortable with our current liquidity position and cash flow generation for the rest of the year, and remain well positioned to meet our obligations," he said in a statement.

Last month, the company had said it would delay filing its annual report even as a board committee looked into its accounting practices. The company added it would restate 2014 and 2015 financial statements.

The company's troubles started late last year when its drug pricing strategy was questioned and allegations emerged were made that it was using drug distributor Philidor RX Services to inflate revenue in its dermatology business.

On 3 March, the company replaced Deb Jorn, the executive vice president who had oversight on US dermatology and gastrointestinal businesses.

"The challenges of the past few months are not yet behind us and our goal for 2016 is to better balance our priorities across all of our constituencies - physicians, patients, employees, payers, debt holders and shareholders," Pearson said in a statement.