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UPDATE 2-Valeant shares dive after reduced sales forecast, loss

Rod Nickel and Sayantani Ghosh
Thursday, 31 Oct 2013 | 10:43 AM ET

* 3rd-qtr net loss $2.92/shr vs profit 2 cents/shr year ago

* CFO: Small, cash-based acquisitions likely in near term

(Adds company comments on outlook, M&A, analyst comment)

Oct 31 (Reuters) - Valeant Pharmaceuticals International Inc , Canada's biggest publicly traded drugmaker, posted a quarterly net loss on Thursday after restructuring and impairment charges, and cut its full-year revenue outlook.

Valeant shares fell 4.6 percent to $104.02 in U.S. trading, and 5 percent to C$108.73 in Toronto action, hitting one-month lows. U.S.-listed shares are up about 74 percent in 2013.

The company, which bought contact lens maker Bausch & Lomb in August for $8.7 billion, said it expects full-year revenue of $5.7 billion to $5.9 billion, down from its earlier forecast of $5.8 billion to $6.2 billion.

The lower forecast reflected the early launch in August of generic competition for its dermatology product Retin-A Micro, unfavorable foreign exchange fluctuations and slower sales of Bausch & Lomb surgical equipment, Chief Financial Officer Howard Schiller said.

Valeant also tightened its full-year adjusted profit range to between $6.11-$6.16 per share from a prior estimate of $6.00-$6.20 per share.

The lowered earnings outlook was not as negative as it appeared, since it would have increased if not for the early generic competition for Retin-A and currency factors, J.P. Morgan analyst Chris Schott said in a note to clients.

Valeant has aggressively pursued acquisitions since its 2010 takeover by Biovail Corp, which assumed the Valeant name. It has favored segments where patients often pay out of pocket, like opthalmology and dermatology, cutting its exposure to cost-sensitive insurers.

The company said it expects to realize synergies of more than $850 million from the Bausch & Lomb acquisition.

CFO Schiller said he sees small, cash-based acquisitions likely in the near term, and Chief Executive Michael Pearson said the company was also interested in a "merger of equals" involving a stock swap.

Pearson said such a merger will happen, but was unsure of the timing. "Clearly, it's something that we're interested in, (but) we are not going to do it at a premium."

A round of cost-cutting this year at several of the largest pharmaceutical companies has not changed the price of potential acquisitions, but opportunities have multiplied as Valeant becomes better known, Pearson said.

The company posted a third-quarter net loss of $973.2 million, or $2.92 per share, compared with a profit of $7.6 million, or 2 cents per share, a year earlier.

The loss includes a restructuring charge of $305 million primarily related to the acquisition of Bausch & Lomb and an impairment charge of $645 million.

The loss also includes a $142.5 million payment to Anacor Pharmaceuticals Inc as part of settling a breach of contract dispute.

Third-quarter cash earnings, or profit adjusted for one-time items, was $486 million, or $1.43 per share.

Total revenue jumped 74 percent to $1.51 billion.

Analysts expected cash earnings of $1.42 on revenue of $1.67 billion, according to Thomson Reuters I/B/E/S.

Also on Thursday, Israel's Teva Pharmaceutical Industries Ltd , the world's largest generic drugmaker, reported flat earnings.

(Reporting by Sayantani Ghosh in Bangalore and Rod Nickel in Winnipeg; Editing by Robin Paxton and Jeffrey Benkoe)

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