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Shares of Concordia International plunged more than 27 percent Friday after the company slashed its outlook, suspended its dividend and replaced their chief financial officer.
The news stoked questions that have dogged the Canadian drugmaker for weeks as some observers drew a comparison between Concordia's business model and that of Valeant Pharmaceuticals. Like Valeant, Concordia has grown through acquisitions rather than research and development.
On Friday, Concordia said Chief Financial Officer Adrian de Saldanha would depart "to pursue other opportunities." He will be replaced by Executive Vice President Edward Borkowski, who will step down from his position on the board. Saldanha will remain with the company throughout the transition period.
The company also reported second-quarter adjusted earnings of $1.38 per share, shy of estimates, on revenue of $231.7 million. Analysts predicted adjusted earnings of $1.44 per share on revenue of $231.3 million, according to Thompson Reuters.
For the full year, Concordia cut its revenue forecast to a range of $859 million to $888 million, from a prior estimate of $1.02 billion to $1.06 billion. Adjusted EBITDA is now expected to between $510 million and $540 million, compared with a prior forecast of $610 million to $640 million.
"Notwithstanding these revisions, we continue to maintain a strong free cash flow profile, our debt structure has no ongoing maintenance covenants and we are in compliance with all of our debt covenants,"Mark Thompson, Chairman and CEO of Concordia, said in a press release.
Concordia's stock has fallen significantly this year, dropping more than 59 percent.
Late last month, the company's CEO sued Marc Cohodes, a short seller, for libel after comments the investor made regarding Thompson's tenure at another pharmaceutical company, The Wall Street Journalreported. Thompson is seeking 4 million Canadian dollars in damages.
On Monday, Andre Uddin, an analyst at Mackie Research Capital Corporation, released a report terminating coverage of Concordia. The analyst said Concordia remains an "extremely high risk" investment and said the company overpaid for weak assets and took on too much debt.
"Investors should really ask themselves why management is targeting a short seller, rather than being focused on running the business," Uddin said, in his note. "Short selling provides buying power for a stock after it falls and is a normal part of the capital markets."
Uddin cited Concordia's low spending on research and development as a factor in its decision to stop covering the company.
Concordia in April began a strategic review of its business, and said last week that the process is ongoing.
"There can be no assurance that any transaction will occur," the company said in a press release. "Concordia does not intend to make any additional comments at this time regarding various strategic alternatives potentially available to the company."
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