Valeant Picks New CFO From Zoetis in Ongoing Company ShakeupBy
Paul Herendeen replaces Rob Rosiello as Valeant seeks comeback
Drugmaker’s shares rise 9.2 percent on news of new CFO
Valeant Pharmaceuticals International Inc. chose Paul Herendeen, a former executive at Warner Chilcott Plc and veterinary drugmaker Zoetis Inc., as its new chief financial officer in an ongoing leadership shakeup sparked by an accounting scandal.
The shares rose after the news, and were up 9.2 percent to $31.39 a share at 2:21 p.m. in New York. Herendeen spent 16 years as finance chief of specialty drugmaker Warner Chilcott and health-care company MedPointe, before joining Zoetis in September 2014, according to a statement Monday. His appointment at Valeant is effective immediately.
The drugmaker, which has about $31 billion in debt, is making key executive changes while attempting to recover from accounting and business-practices problems, and restore investors’ confidence. Valeant replaced Chief Executive Officer Michael Pearson this year with Joseph Papa, who had been CEO of Perrigo Co. Two months after announcing the CEO change, Valeant appointed a new chief accounting officer. Other top executives have left as well.
Herendeen’s experience at Warner Chilcott may prove valuable, because that drugmaker was also managing a heavy debt burden brought on by acquisitions, BTIG analyst Tim Chiang said.
“Paul knows this business model from a financial perspective,” said Chiang, who has a neutral rating on the stock. “By bringing in the right people at the exec level, I think the board’s hope is that they can create a floor to this hole, that the company doesn’t sink any deeper.”
The shares, which have lost 88 percent of their value since their August 2015 peak, have rebounded in recent weeks as some analysts started to regain faith in the embattled drugmaker.
Robert L. Rosiello, who had been CFO, will remain at Valeant as executive vice president for corporate development and strategy, the company said in the statement. The accounting scandal has led the company had to restate some sales figures from 2014 and 2015, and the board said in March that the CFO who preceded Rosiello, Howard Schiller, had engaged in “improper conduct,” a charge he denied.
The Laval, Quebec-based company is facing investigations from Congress, the U.S. Securities and Exchange Commission, and federal prosecutors. Last week T. Rowe Price Group Inc. sued Valeant, alleging that top executives artificially inflated revenue and profit through their use of the mail-order pharmacy Philidor Rx Services LLC. Valeant’s shares have dropped almost 90 percent from their August 2015 high.
The drugmaker last week said it had renegotiated its agreement with lenders, allowing it to miss some of its own forecasts without risking default.
Herendeen’s appointment was reported earlier by the Wall Street Journal.
— With assistance by Doni Bloomfield, and Chitra Somayaji