What: Valeant Pharmaceuticals (NYSE:BHC) announced its CEO plans to leave, a board shake up, and some accounting matters, leading to the stock being up as much as 17% Monday, although it's given up about half of that gain in midday trading.
So what: Valeant has been subject to much controversy lately, including accounting irregularities that resulted in booking $58 million in sales to Philidor Rx Services that Valeant shouldn't have recognized. So it shouldn't come as much of a surprise that investors would welcome a shakeup at the company.
In addition to CEO J. Michael Pearson leaving -- he's sticking around until his replacement is found -- William Ackman, CEO of Pershing Square Capital Management a major investor in Valeant is taking Katharine Stevenson's spot on the board of directors. Stevenson voluntarily stepped down specifically to open a spot for Ackman.
It appears the board would have rather had Ackman take the spot of Valeant's former CFO Howard Schiller, but Schiller refused the board's request to resign from the board of directors. The company also put its former corporate controller on administrative leave, concluding that the lack of oversight by the CFO and controller as well as pressure to meet goals led to the improper revenue recognition.
Valeant also said that it plans to file its 2015 financial statement -- including the restated results -- with the SEC and the Canadian Securities Regulators on or before April 29. That day is key because it can cure a default under its credit facility -- that'll happen if it doesn't file before March 30 -- by submitting its 10-K within 30 days of the default.
Now what: Valeant's moves on Monday are clearly designed to get it onto the road to recovery. But it's going to take a lot more than a shakeup at the top to get its stock price back to where it was in the middle of last year.