Shares of the embattled drugmaker Valeant Pharmaceuticals International (NYSE:BHC) rose by as much as 17.1% today on extremely heavy volume. The catalyst?
Valeant's shares are responding positively to three material events:
- The company reported stronger-than-expected sales in the first quarter, beating consensus by a healthy $45 million.
- Based on the strength of its Bausch & Lomb and branded drug segments, Valeant also revised its annual revenue guidance for the year to between $8.15 billion and $8.35 billion. The company's previous guidance called for annual sales to range from $8.10 billion to $8.30 billion.
- Lastly, Valeant announced that it will change its name this coming July to Bausch Health Companies Inc. in order to move past the misdeeds of the company's former management team.
As of 2:30 p.m. EDT, Valeant's shares are still up by a noteworthy 8.15% on the back of this news.
Investors are obviously happy that the company is finally starting to see its Bausch & Lomb and branded drug businesses pick up in a meaningful way. That being said, Valeant's efforts to whittle down its monstrous debt load are starting to slow down as predicted.
In the first quarter of 2018, for instance, the company reported that it doled out $280 million toward its debt load, which now stands at an unseemly $25.6 billion. Prior to this quarter, Valeant had been averaging $827 million in debt reduction on a quarterly basis, thanks to a slew of asset divestitures.
Although a name change is arguably a good idea for Valeant at this point, the fact remains that the company is drowning in debt and it simply doesn't have the assets in place to change this fundamental problem anytime soon. So, even though Valeant's core growth drivers are starting to show signs of life, this stock remains a high-risk play.