In July 2014, Dimitry Khmelnitsky advised investors to sell Valeant Pharmaceuticals International Inc. and then watched the stock double in a year.

“It was very painful,” Khmelnitsky, an analyst at Veritas Investment Research Corp., said in an telephone interview from his office in Toronto. “What I felt was pain.”

Khmelnitsky was the lone analyst with a sell rating on Valeant for 20 months, sticking to his recommendation through the bull market as star hedge-fund managers including Bill Ackman piled in. Now that Valeant has plummeted almost 75 percent since its August 2015 peak of $262.52 -- as scrutiny intensified over its soaring drug prices, accounting and controversial distribution system -- the downturn has vindicated his research. Yet the analyst, an accountant by training and a former soldier in the Israeli army, doesn’t see it that way.

“It was a mixed feeling of being justified in our prior analysis, but obviously I was feeling pain for all those investors who jumped into Valeant,” Khmelnitsky said.

Veritas, a research firm, started covering Valeant more than four years ago, about a year after the drugmaker relocated to Laval, Quebec, through its acquisition of Biovail Corp.

Organic Revenue

In December 2011, Khmelnitsky issued his first report, “A Valiant Story.” He wrote that Valeant’s methodology to calculate organic revenue -- which excludes acquisitions -- didn’t result in apples-to-apples comparisons, and boosted the reported growth.

“Management guides investors to the Company’s non-GAAP metrics for assessing its business prospects and evaluating current performance,” he said. “However, our review highlights the unreliable nature of these avowed metrics.”

Although Khmelnitsky didn’t give a rating on the shares at the time, he ended the note with “BUYERS BEWARE.” The stock was trading in the $40s at the time.

A Valeant spokeswoman declined to comment.

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