Valeant Pharma Turns To Profit In Q3, Lifts 2014 Earnings Outlook

(RTTNews) - Canadian drug maker Valeant Pharmaceuticals International Inc. (VRX, VRX.TO), which has made a hostile takeover bid for Botox maker Allergan Inc. (AGN), on Monday reported a turnaround to profit in the third quarter on strong revenue growth and lower expenses.

Looking ahead, Valeant Pharma raised its adjusted earnings outlook for the fourth quarter as well as fiscal 2014, and also raised the lower end of its full-year revenue guidance range. The company also said it remains focused on completing its takeover of Allergan.

Michael Pearson, chairman and chief executive officer of Valeant Pharma said, "With our acquisition of Bausch + Lomb now annualized (August 5) and the impact of generics largely behind us, the true strength of our business and operating model can be clearly seen by our financial results. We are particularly pleased to deliver over $600 million in GAAP operating cash flow to our shareholders."

Third-quarter net income attributable to the company was $275.4 million or $0.81 per share, compared to net loss of $973.2 million or $2.92 per share in the comparable quarter last year.

On a cash earnings per share basis, adjusted income for the quarter was $2.11 per share, compared to $1.43 in the prior-year period.

Total revenues for the quarter grew 33 percent to $2.06 billion from $1.54 billion in the prior-year period.

Total same-store sales organic growth in the quarter was 19 percent, including the impact from generics. Bausch + Lomb organic growth was 12 percent, adjusted only for foreign exchange.

Total expenses for the quarter declined 44 percent from last year to $1.37 billion, reflecting lower in-process R&D impairments, restructuring costs as well as amortization and impairments.

Dermatology revenues grew 33 percent from the year-ago period to $272.8 million, while consumer segment revenues surged 43 percent to $141.4 million and opthalmology revenues increased 57 percent to $117.8 million.

Contact Lenses revenue jumped 82 percent to $44.8 million and surgical revenue rose 74 percent to $54 million. However, Aesthetics revenue declined 57 percent to $32.3 million.

Valeant Pharma's total U.S. revenue grew 33 percent from last year to $1.09 billion, while emerging markets reported a 37 percent increase in revenue to $548.3 million.

Looking ahead to the fourth quarter, Valeant Pharma raised its outlook for cash earnings by $0.10 to a range of $2.45 to $2.55. The company continues to project double-digit same store organic growth in the quarter.

For fiscal 2014, Valeant Pharma raised its outlook for cash earnings to a range of $8.22 to $8.32 from the prior range of $7.90 to $8.10. The company also raised its outlook for full-year revenue to a range of $8.1 billion to $8.3 billion from the previous range of $8.0 billion to $8.3 billion.

The revised outlook reflects third-quarter performance and stronger-than-expected fourth quarter financial results.

Further ahead for fiscal 2015, Valeant Pharma now forecasts organic revenue growth of 10 percent plus and cash earnings of $10.00 per share, assuming no acquisitions. Earlier, the company projected organic revenue growth of 9 percent and cash earnings of $9.40 per share, assuming no acquisitions.

In late September, Valeant Pharma expressed its continued willingness to negotiate a mutually agreeable merger deal with Botox maker, Allergan. The company also said that Allergan's purported concerns about Valeant Pharma's business were "completely unfounded and disingenuous."

In April, Valeant Pharma along with billionaire investor William Ackman's hedge fund Pershing Square Capital Management, L.P. made a hostile bid to acquire Allergan for $46 billion in cash and stock, but the offer was rejected by Allergan. Pershing Square is the largest shareholder in Allergan with a 9.7 percent stake.

Valeant Pharma later sweetened its bid for Allergan to about $53 billion in May, but that offer too was spurned. Allergan has called Valeant Pharma's business model unsustainable and said that a deal with Valeant Pharma would hurt its research and development program.

VRX closed Friday's trading at $120.21. In Monday's pre-market trades, the stock is up $2.79 or 2.32 percent to $123.00.