$1,000, 5 Years Later: Valeant's Wild Ride To Bausch Health

Investors who have owned stocks since 2016 generally have experienced some big gains. In fact, the SPDR S&P 500 SPY total return in the last five years is 131.9%. But there is no question some big-name stocks performed better than others along the way.

Valeant’s Downfall: One company that has been a disastrous investment in the last five years is health care company Bausch Health Companies Inc BHC, formerly known as Valeant Pharmaceuticals.

Not only has Bausch lagged the overall market in the last five years, Valeant represents one of the most infamous stock collapses in recent decades.

Bausch produces pharmaceutical products and generic drugs. It is also the parent company of eye health products leader Bausch & Lomb.

In the 2010s, Valeant went on an unsustainable acquisition spree that drove its share price from around $20 per share to as high as $263.81 in 2015 — but left the company buried under a mountain of debt.

At that point, Citron Research founder Andrew Left accused Valeant of fraudulent transactions with Philidor RX Services and its affiliates. While the company never admitted to fraud, it cut ties with Philidor following allegations of aggressive billing practices.

That same year, Valeant and CEO J. Michael Pearson became the target of Hillary Clinton and other politicians as a result of the company’s aggressive drug pricing hikes.

As a result of the multiple controversies, the company’s share price began to tank.

At the beginning of 2016, Valeant shares had already dropped from their 2015 high of above $260 to around $98. Unfortunately for Valeant shareholders, the sell-off was far from over.

In the first half of 2016, Valeant reduced its full-year EPS guidance by 50% and its revenue guidance by 20%. Pearson was booted from the CEO position in March 2016.

By early 2017, Valeant shares dropped as low as $8.31. Fortunately for investors, the stock finally stabilized at that point.

Related Link: Green With Envy For Bausch Stock: How Much $1,000 Invested 5 Years Ago Would Be Worth Today

In July 2018, Valeant changed its name to Bausch Health Companies and its stock ticker from "VRX" to "BHC."

By late 2019, the stock had climbed all the way back to a pre-pandemic high of $31.97.

During the March 2020 market sell-off, Bausch shares dropped back down to as low as $11.15.

Bausch In 2021, Beyond: Bausch shares bounced off that March low and rallied along with the rest of the market in the second half of 2020. In early 2021, Bausch shares made it as high as $32.31, their highest level since 2016.

Even with the stock now back near multiyear highs, Bausch investors who bought five years ago have still taken a beating. In fact, $1,000 in Bausch stock bought in 2016 would be worth about $641 today.

Looking ahead, analysts aren’t very optimistic about the next 12 months either. The average price target among the 16 analysts covering the stock is $27.50, suggesting just 13.2% downside from current levels.