Risk & Compliance

Ex-Valeant CFO Denies ‘Improper Conduct’

Howard Schiller says he is not to blame for the incorrect recognition of $58 million in revenue that has caused Valeant to restate its financial re...
Katie Kuehner-HebertMarch 21, 2016

Former Valeant Pharmaceuticals CFO Howard Schiller on Monday struck back at the troubled drugmaker after it said his “improper conduct” had contributed to the misstatement of financial results.

Valeant has said it will restate its results for 2014 and 2015 after determining that about $58 million in sales to specialty pharmacy company Philidor were incorrectly recognized when drugs were delivered to Philidor rather than when they were dispensed to patients.

In a news release Monday, Valeant pinned some of the blame on Schiller, who resigned as CFO in June 2015, and former controller Tanya Carro.

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“The improper conduct of the company’s former chief financial officer and former corporate controller, which resulted in the provision of incorrect information to the [audit] committee and the company’s auditors, contributed to the misstatement of results,” it said.

Schiller responded later Monday that he did not engage in any improper conduct related to any restatement of revenue and he never provided any incorrect information.

The accounting treatment for the Philidor sales “was the result of a careful and reasoned accounting decision made by the company’s corporate controller based on what she considered to be complete and accurate facts,” he said in a statement.

The exchange between Schiller and Valeant was part of a hectic day in which the company also announced it was replacing CEO J. Michael Pearson and adding billionaire investor William Ackman to its board.

Katharine Stevenson resigned from the board to create a vacancy for Ackman after Schiller refused to step down.

Valeant has lost almost three-quarters of its value since August amid scrutiny of its drug pricing practices (it had a policy of buying old drugs and then raising their prices), distribution system, and accounting. Former employees and others have said Philidor used aggressive tactics to get insurance companies to pay reimbursements for Valeant’s drugs.

“[T]he tone at the top of the organization and the performance-based environment at the company … may have been contributing factors resulting in the company’s improper revenue recognition,” Valeant said Monday.

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