LongHaul Posted October 23, 2015 Share Posted October 23, 2015 Good point about some of the apple stuff. The apple store were disclosed and legal however and run by someone with retail experience. But I think it doesn't get to the core of the VRX Philidor relationship and why VRX set up Philidor and Philidor's business practices. Philidor was an open secret in the industry. Wall Street didn't know but the pharma industry did. Probably most especially the laid off VRX employees. However when you dig into Philidor there is a trail of deceit a mile long. They even essentially essentially lied in the press release they put out this week. See this article. http://www.propublica.org/article/documents-raise-questions-about-valeant-pharmacy-relationships-california Go investigate how Philidor deals with insurance companies and regulators. Here is a story about Pearson that you should think about. He does a big deal. He meets with the employees in a big meeting. He tells them he will keep the company the same and leave it the way it was. Basically the employees were worried about layoffs and he told them what they wanted to hear. After the deal closes he goes in and lays off like 90% of the employees because he said things had changed etc. Maybe I have a conscious but the above story really bothered me. And guess what he tells Wall street - exactly what they want to hear. Link to comment Share on other sites More sharing options...
Liberty Posted October 23, 2015 Share Posted October 23, 2015 Here is a story about Pearson that you should think about. He does a big deal. He meets with the employees in a big meeting. He tells them he will keep the company the same and leave it the way it was. Basically the employees were worried about layoffs and he told them what they wanted to hear. After the deal closes he goes in and lays off like 90% of the employees because he said things had changed etc. What's the source of this story? What "big deal" was this? Thanks. Link to comment Share on other sites More sharing options...
lessthaniv Posted October 23, 2015 Share Posted October 23, 2015 The Evercore report absolutely demolishes Citron's theory. I wonder if he will issue a retraction? No, too busy swimming in money. Link? Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted October 23, 2015 Share Posted October 23, 2015 By the way, when do you think we'll get a balance sheet? That part is becoming very Enron-like. Does any other company take this long to release a balance sheet after their quarterly conference call? They might be a bit busy over at Valeant HQ. Too busy to provide a balance sheet with earnings?! They should have these balances available on a daily basis. Are you being sarcastic? There is nothing different in terms of the disclosure provided in the 8K for the earnings release with respect to the balance sheet. The full statements will be included in the 10Q. Given the nature of the situation, I imagine that the 10Q will be released on Monday afternoon. Perhaps that is a bit of a longer delay, but I doubt they are going to file the 10Q before the Monday call. I guess I don't understand, what do you mean there is no difference? They did this last quarter as well and the stock was near an all-time high in price and confidence. I don't think it's fair to blame the current situation. What I mean is that there is no difference in terms of the disclosure in the 8K filing for the earnings release. Given that you have presumably done so much diligence on the company, I am surprised that you are so hung up on this particular issue. The 8-K doesn't have a balance sheet/cash flow statement and the 10-Q will. How is that not a big difference? Link to comment Share on other sites More sharing options...
APG12 Posted October 23, 2015 Share Posted October 23, 2015 Can a bear explain what is so nefarious about have the right to purchase your distributor? Link to comment Share on other sites More sharing options...
loganc Posted October 23, 2015 Share Posted October 23, 2015 The 8-K doesn't have a balance sheet/cash flow statement and the 10-Q will. How is that not a big difference? One more time. The disclosure in the earnings release 8K is no different than what has been done in previous quarters. I really don't think I can clarify my point further. Good luck. Link to comment Share on other sites More sharing options...
LongHaul Posted October 23, 2015 Share Posted October 23, 2015 Here is a story about Pearson that you should think about. He does a big deal. He meets with the employees in a big meeting. He tells them he will keep the company the same and leave it the way it was. Basically the employees were worried about layoffs and he told them what they wanted to hear. After the deal closes he goes in and lays off like 90% of the employees because he said things had changed etc. What's the source of this story? What "big deal" was this? Thanks. My own source. Not everything is published on the internet. The dramas in these companies aren't generally published. This was a great post by Shoham. http://cafepharma.com/boards/threads/glossary-of-hostile-takeover-terms-with-discussion.559657/page-26#post-5539609 Link to comment Share on other sites More sharing options...
KCLarkin Posted October 23, 2015 Share Posted October 23, 2015 Good point about some of the apple stuff. The apple store were disclosed and legal however and run by someone with retail experience. But I think it doesn't get to the core of the VRX Philidor relationship and why VRX set up Philidor and Philidor's business practices. Philidor was an open secret in the industry. Wall Street didn't know but the pharma industry did. Probably most especially the laid off VRX employees. However when you dig into Philidor there is a trail of deceit a mile long. They even essentially essentially lied in the press release they put out this week. See this article. http://www.propublica.org/article/documents-raise-questions-about-valeant-pharmacy-relationships-california Go investigate how Philidor deals with insurance companies and regulators. Yes, I used the facts from that article to build my narrative. Which part doesn't fit? If you read propublica, SIRF, Hempton, Evercore, Valeant disclosures, cafepharma, 800notes, it is very clear that Citron is 100% wrong. Philidor is filling real drugs, for real patients. There may be other shady things, but Citron's accusations do not fit the facts. There were some comments on 800notes.com that seemed to suggest that Philidor was trying to send unwanted prescriptions. A bear suggested this was evidence of "channel stuffing", but those accusations were contradicted by other posters. The one part of my narrative that is shaky: Why was Philidor denied the California license? I assumed that they were trying to hide the relationship with Valeant, but when you read the statement of facts, you almost get the sense they were just incompetent. Link to comment Share on other sites More sharing options...
feynmanresearch Posted October 23, 2015 Share Posted October 23, 2015 Good point about some of the apple stuff. The apple store were disclosed and legal however and run by someone with retail experience. But I think it doesn't get to the core of the VRX Philidor relationship and why VRX set up Philidor and Philidor's business practices. Philidor was an open secret in the industry. Wall Street didn't know but the pharma industry did. Probably most especially the laid off VRX employees. However when you dig into Philidor there is a trail of deceit a mile long. They even essentially essentially lied in the press release they put out this week. See this article. http://www.propublica.org/article/documents-raise-questions-about-valeant-pharmacy-relationships-california Go investigate how Philidor deals with insurance companies and regulators. Yes, I used the facts from that article to build my narrative. Which part doesn't fit? If you read propublica, SIRF, Hempton, Evercore, Valeant disclosures, cafepharma, 800notes, it is very clear that Citron is 100% wrong. Philidor is filling real drugs, for real patients. There may be other shady things, but Citron's accusations do not fit the facts. There were some comments on 800notes.com that seemed to suggest that Philidor was trying to send unwanted prescriptions. A bear suggested this was evidence of "channel stuffing", but those accusations were contradicted by other posters. Just because the accusations were "contradicted" by other posters, does that make them untrue? Also, that's quite audacious of anyone to claim that someone is 100% wrong without themselves knowing that they are 100% right Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted October 23, 2015 Share Posted October 23, 2015 The 8-K doesn't have a balance sheet/cash flow statement and the 10-Q will. How is that not a big difference? One more time. The disclosure in the earnings release 8K is no different than what has been done in previous quarters. I really don't think I can clarify my point further. Good luck. Ok, I also was pretty clear. VRX used to release the 10-Q the day after earnings. Last quarter it took 5 days. Now it's already been 5 days. That's a bad trend. Why is it so hard to provide a balance sheet with earnings? Maybe just agree to disagree. Link to comment Share on other sites More sharing options...
KCLarkin Posted October 23, 2015 Share Posted October 23, 2015 Just because the accusations were "contradicted" by other posters, does that make them untrue? Also, that's quite audacious of anyone to claim that someone is 100% wrong without themselves knowing that they are 100% right No, it just makes it very weak evidence when you are accusing someone of fraud: Got a call from Alec at Phillico pharmacy last night at 5:09pm for my husband. They said they have his prescription ready and need more info before they can ship it and to call an 855 phone number back. Sounds in background r a call center. Our insurance plan doesn't work this way, I wasn't home to get the call, and I won't call back. Obvious scam......be careful To me this seems like someone who is just confused. Regarding Citron. Provide one fact that supports his claim that Valeant was using Philidor for sham transactions. There isn't even one fact. It doesn't even make logical sense. If they are just inventing orders, why are they doing robo-calls? Why is Reitz holding millions of dollars in reimbursements hostage? I am 100% sure that Left is wrong. There might be other illegal activity, but that Citron report is rubbish. The Hempton, SIRF, and propublica reports are all good. All fact based. Link to comment Share on other sites More sharing options...
Liberty Posted October 23, 2015 Share Posted October 23, 2015 Here is a story about Pearson that you should think about. He does a big deal. He meets with the employees in a big meeting. He tells them he will keep the company the same and leave it the way it was. Basically the employees were worried about layoffs and he told them what they wanted to hear. After the deal closes he goes in and lays off like 90% of the employees because he said things had changed etc. What's the source of this story? What "big deal" was this? Thanks. My own source. Not everything is published on the internet. The dramas in these companies aren't generally published. This was a great post by Shoham. http://cafepharma.com/boards/threads/glossary-of-hostile-takeover-terms-with-discussion.559657/page-26#post-5539609 Ok. I'm very careful with these anonymous site/forum these days (consumer complaints, reports from supposed employees inside valeant, etc). The shorts have a history of creating multiple fake accounts and posting "soft evidence" all over. In fact, I'm pretty sure some of the accounts on this forum belong to that clique. Pretty sure that Philidor thread on Cafepharma and those Philidor consumer complaints that all popped up within the past couple months are mostly posted by sock puppets of that gang. These guys have done it in the past, and aren't out to witn a Pulitzer with an editor looking over their shoulder, they have millions to gain, and I doubt very many scruples. So I mostly discount it to zero to be safe. Pearson's model has been pretty consistent and public since the day he became CEO, so I'd be surprised if any company didn't expect cuts. I know they cut more at Medicis than elsewhere, so maybe that's what you are referring to. They later said that was a mistake. I suppose that when you already have back-office capabilities and a sales distribution channel, it's sometimes tempting to cut a lot and just plug-in the assets into the existing business, especially when you buy a company that wasn't super well run (they tend to buy things that have some fixable problems). I'm sure there are many personal tragedies when cuts are made, but I'm not sure what the alternative is. Pearson has a theory that the industry is bloated and that he has a better model, and I think he should be able to try to prove it out. It happens in various industries over cycles, when things get fat, and then lean again. When Buffett praises his ceos who count sheets of toilet paper and paint only two sides of a building and the 3G guys or Fastenal or whatever, I don't think these guys run with more people than they need to. I'm sure it would suck to be a redundant Heinz or Kraft employee right now, but over the long term, if the economy can't try to allocate resources where they are most productive and try various models, things tend to become worse for everybody. I believe that contracts between employees and employers are two-way streets; it wouldn't be fair for employees to be able to resign at any time, but for employers not to be able to cut employees who they don't feel they need anymore (with proper severance, etc). Link to comment Share on other sites More sharing options...
feynmanresearch Posted October 23, 2015 Share Posted October 23, 2015 Just because the accusations were "contradicted" by other posters, does that make them untrue? Also, that's quite audacious of anyone to claim that someone is 100% wrong without themselves knowing that they are 100% right No, it just makes it very weak evidence when you are accusing someone of fraud: Got a call from Alec at Phillico pharmacy last night at 5:09pm for my husband. They said they have his prescription ready and need more info before they can ship it and to call an 855 phone number back. Sounds in background r a call center. Our insurance plan doesn't work this way, I wasn't home to get the call, and I won't call back. Obvious scam......be careful To me this seems like someone who is just confused. Regarding Citron. Provide one fact that supports his claim that Valeant was using Philidor for sham transactions. There isn't even one fact. It doesn't even make logical sense. If they are just inventing orders, why are they doing robo-calls? Why is Reitz holding millions of dollars in reimbursements hostage? I am 100% sure that Left is wrong. There might be other illegal activity, but that Citron report is rubbish. The Hempton, SIRF, and propublica reports are all good. All fact based. What makes an evidence weak or strong? You seem to believe in the fallacy of conformity=truth. News flash, it doesn't Link to comment Share on other sites More sharing options...
KCLarkin Posted October 23, 2015 Share Posted October 23, 2015 Also, that's quite audacious of anyone to claim that someone is 100% wrong without themselves knowing that they are 100% right Here are Citron's claims: Citron believes the whole thing is a fraud to create invoices to deceive the auditors and book revenue. PHANTOM ACCOUNTS. It is apparent to Citron that Valeant has created a network of “pharmacies” as clones of Philidor. Why do these exist? Citron believes it is merely for the purpose of phantom sales or stuff the channel, and avoid scrutiny from the auditors. While it is impossible for Citron to state for certain at this point, this has the distinct aroma of product being jammed into a channel. It had to have started small, and now it's just too big. "We have an option to purchase Philidor" is simply ... trying to put the genie back in the bottle. Seriously, you don't think I can be 100% certain he is wrong? Link to comment Share on other sites More sharing options...
KCLarkin Posted October 23, 2015 Share Posted October 23, 2015 What makes an evidence weak or strong? You seem to believe in the fallacy of conformity=truth. News flash, it doesn't Anyone who has ever prepared a legal briefing knows that anonymous internet postings are not admissible evidence. I am sincerely interested in finding evidence that Valeant is a fraud. I have a very significant long position. I am not trying to convince you. If you have any facts, please provide them. Link to comment Share on other sites More sharing options...
Guest roark33 Posted October 23, 2015 Share Posted October 23, 2015 Here is the lawsuit where Evercore gets a lot of its facts regarding the relationship between R&O pharmacy and Philidor. If you read the lawsuit, you will see clearly that Citron is completely wrong, but that there might be another issue of how aggressive Philidor was in using R&O to get a "backdoor" license into CA. It is unclear whether VRX would be liable for those bad actions and what damages those would be. However, my spidey sense tells me it is nowhere near the loss in market cap for VRX this week.... http://www.docdroid.net/izhHFWD/isolani-complaint-against-rietz.pdf.html Link to comment Share on other sites More sharing options...
maxthetrade Posted October 23, 2015 Share Posted October 23, 2015 Jason Doneville on BNN: http://www.bnn.ca/Video/player.aspx?vid=733570 Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted October 23, 2015 Share Posted October 23, 2015 Evercore ISI on the Valeant-Philidor relationship: Valeant disclosed this week that it has an option to buy one of the pharmacies in question, Philidor RX Services, a relationship other companies don’t appear to have, said Mark Schoenebaum, an analyst with Evercore ISI. He said Pfizer Inc., Amgen Inc., Gilead Sciences Inc. and seven other drugmakers of comparable size don’t have such arrangements. Horizon Pharma Plc and Endo International Plc., two other specialty pharmaceutical companies, said they don’t have ownership interests in the pharmacies they work with. http://www.bloomberg.com/news/articles/2015-10-22/valeant-still-has-explaining-to-do-citron-research-s-left-says Link to comment Share on other sites More sharing options...
ZenaidaMacroura Posted October 23, 2015 Share Posted October 23, 2015 I think most of us are in agreement that Citron is more wrong than right. But maybe some of the longs can answer how they are comfortable with the "backdooring into CA" issue or the possibility that Philidor's "Apple retail store" strategy isn't the major contribution to how VRX delivers consistent guidance beats quarter after quarter. How do you handicap the potential impairment of VRX's model due to these two issues? There is a lot of debt, so if they get push back from the insurance co's/regulators with regards to their Specialty Pharma distribution model this could be a problem no? How does teh 69mm/25mm reflect on their statements? As receiveables still? Are there other R&Os out there that they own? Link to comment Share on other sites More sharing options...
KCLarkin Posted October 23, 2015 Share Posted October 23, 2015 Are there other R&Os out there that they own? Yes (indirectly) Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted October 23, 2015 Share Posted October 23, 2015 Evercose says that the 10% of R/O that Philidor bought cost them $350k. Now, even if Philidor is much bigger than R/O, isn't it possible that Philidor just isn't that big compared to a large cap and the option to buy control would fall in the bucket where Valeant puts non-material deals that they don't disclose because they're too small? This would make sense if Philidor moves a lot of product but only captures a very tiny slice as margin, making the business not worth that much compared to its revenues. http://sirf-online.org/2015/10/19/hidden-in-plain-sight-valeants-big-crazy-sort-of-secret-story/ SIRF estimated Philidor's revenue at $1.5b based on daily prescriptions (tough to say how accurate this is since I have no idea how to judge if $480 is a conservative estimate). 52 weeks * 5 day/week * 12,000 prescriptions/day * ~$480/prescription *Adj the math as necessary If Philidor only sells US branded pharmaceuticals which are the highest-margin products VRX has. R&O should be fairly large even if they only handled CA prescriptions. Both pharmacies appear to be large enough to warrant disclosure though. Link to comment Share on other sites More sharing options...
Liberty Posted October 23, 2015 Share Posted October 23, 2015 And why should we trust Roddy Boyd's estimate? Boyd might cloak himself in journalism and create a website that looks like some non-profit public interest group, but he's not very different from Left and Hempton, and is probably working with them. I'll be waiting for the actual facts about Philidor and R/O from people who will be held accountable if they lie. Let's wait until Monday. Link to comment Share on other sites More sharing options...
Picasso Posted October 23, 2015 Share Posted October 23, 2015 Evercose says that the 10% of R/O that Philidor bought cost them $350k. Now, even if Philidor is much bigger than R/O, isn't it possible that Philidor just isn't that big compared to a large cap and the option to buy control would fall in the bucket where Valeant puts non-material deals that they don't disclose because they're too small? This would make sense if Philidor moves a lot of product but only captures a very tiny slice as margin, making the business not worth that much compared to its revenues. http://sirf-online.org/2015/10/19/hidden-in-plain-sight-valeants-big-crazy-sort-of-secret-story/ SIRF estimated Philidor's revenue at $1.5b based on daily prescriptions (tough to say how accurate this is since I have no idea how to judge if $480 is a conservative estimate). 52 weeks * 5 day/week * 12,000 prescriptions/day * ~$480/prescription *Adj the math as necessary If Philidor only sells US branded pharmaceuticals which are the highest-margin products VRX has. R&O should be fairly large even if they only handled CA prescriptions. Both pharmacies appear to be large enough to warrant disclosure though. Let's just ignore that his specialty pharma estimate was way wrong: A better description is a "specialty pharmacy," filling, shipping and getting insurance approval for prescriptions of the more complex drugs Valeant makes. In its third quarter conference call last year, the only instance where Philidor has been publicly mentioned by an analyst, Valeant chief executive Mike Pearson said that perhaps 40% of its business flows through specialty pharmacies. In July, he reiterated the company's guidance for up to $11.1 billion in 2015 revenue, implying that as much as $4.4 billion in product could move through this channel. He applied 40% of all revenue when Valeant referred to 40% of Jublia revenue. Very different things. Link to comment Share on other sites More sharing options...
nodnub Posted October 23, 2015 Share Posted October 23, 2015 Jason Doneville on BNN: http://www.bnn.ca/Video/player.aspx?vid=733570 quote from Donville. "I'm comfortable with the accounting. Ackman says he is comfortable with the accounting...Jim Cramer on CNBC says he is comfortable with the accounting" LOL... Cramer. Sign me up then! Link to comment Share on other sites More sharing options...
obtuse_investor Posted October 23, 2015 Share Posted October 23, 2015 Jason Doneville on BNN: http://www.bnn.ca/Video/player.aspx?vid=733570 He is downright livid and almost delirious. I don't know if this interview says much about Valeant- it certainly says a lot about Jason Donville. Link to comment Share on other sites More sharing options...
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