By Marian Briggs, Executive Vice President, PadillaCRT
It started when I turned on CNBC in my hotel room early on March 16. The biotech reporter was recounting the myriad issues beleaguered Valeant Pharmaceuticals faced on a conference call the day before. For instance, the company was already late releasing its Q4 numbers and what they did issue was preliminary… The 10K may not be filed anytime soon… CEO Michael Pearson is just back from a two-month medical leave… And then this: The company had to correct numbers in their cited adjusted EBITDA guidance range. Apparently the numbers in the script differed from those in the accompanying investor deck.
Next, I read The Wall Street Journal’s coverage of the call. The Journal made an interesting point: The number variance wasn’t that large, but when a company is under siege, mistakes are magnified.
Let me state at this point that I don’t know the investor relations team at Valeant. My knowledge is limited to publicly available information. But believe me, I felt for those people! And whenever I study a tough IR situation, I ask myself as a practitioner: What can I learn from this set of facts? How can I avoid that pitfall?
Here the lesson stems from The Journal’s observation. Everyone makes mistakes, and usually you correct the error, and that’s the end of it. But when you’re in crisis IR mode, the stakes are higher. At Valeant, someone changed the numbers one place and I’d venture to guess that things were chaotic in the minutes leading up to the call. Time ran out and that step of double checking simply got missed. I tell young people entering IR that details and accuracy are critical in this profession – more so than in other branches of communication.
The Valeant conference call reminds us that part of restoring investor confidence means not giving Wall Street another reason to question your credibility.