By Euan Rocha and Rod Nickel
(Reuters) - Cutting ties with a controversial specialty pharmacy will hurt Valeant Pharmaceuticals International Inc (TO:VRX) (N:VRX) in the short term, the company's chief executive said on Tuesday.
As of last week, Philidor Rx Services has stopped adjudicating insurance claims for drugs and it will cease operations by the end of January, Valeant Chief Executive Officer Mike Pearson (L:PSON) said in a conference call with investors and analysts.
Valeant shares fell 2.4 percent during the call before normal trading hours in New York. Pearson said Valeant would give details when it updates financial guidance in December.
"The past few weeks have been a painful learning experience for me personally," said Pearson, who sounded tired and at times stumbled over prepared remarks about the company's missteps.
Pearson said short-term disruption in Valeant's dermatology business would be significant, affecting both average prices and sales volume for drugs in the fourth quarter as Philidor winds down. The company will aim to put a new program in place within 90 days for selling its dermatology products.
Valeant's priority for the near term will be paying down debt, Pearson said. The company's long-term debt was more than $30 billion as of Sept. 30, nearly double its level a year earlier.
The CEO has come under increasing pressure as the company's stock plunged from $263.70 on Aug. 5 to close below $86 on Monday on scrutiny over high price mark-ups for its drugs and accusations it used Philidor to inflate revenue.
Valeant has denied the allegations, but has not allayed investor concerns as new reports surface of questionable billing practices at Philidor.
Pearson, who said he remains committed to Valeant, said he feels "very good" about the company's controls, in response to a question about whether scrutiny of Valeant could turn up other concerns.
Activist investor Bill Ackman, whose Pershing Square owns a large position in Valeant, said on Monday that Valeant's stock was now an "extraordinary bargain."