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The Accounting Technique Valeant Used to Help It Buy Company After Company

Accounting conventions known as add-backs helped flatter the Canadian pharmaceutical company’s debt profile.
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Inside Valeant’s Decision to Cut Ties With Philidor

“In Valeant, a financialized age has produced a financialized pharma company,” Jim Grant, legendary contrarian investor, wrote in March of last year. More than a year later, the wider markets are only just beginning to unpick the complicated underpinnings behind Valeant’s stunning run.

As the assumptions bolstering Valeant’s growth story quickly unravel, attention has turned to the company’s deviation from standardized accounting measures known as generally accepted accounting principles, or GAAP. Writing for the New York Times over the weekend, Gretchen Morgenson is the latest in a long line to underscore controversies in Valeant’s accounting methods.