Forecast-beating Valeant ups 2015 guidance with fast-growing Xifaxan in mind

Valeant's ($VRX) M&A-focused business model may have its critics, but it came through for the company in Q2, helping it beat analyst estimates for both EPS and revenue.

For the period, the Canadian pharma recorded cash EPS of $2.56, topping Thomson Reuters' average analyst forecast of $2.46. And on the revenue side, Valeant raked in $2.73 billion--with $313 million coming from new pickup Salix--to beat out Wall Street's expected $2.54 billion.

Speaking of Salix, Valeant raised its guidance for the year to reflect stronger sales for its acquisition's lead drug, GI product Xifaxan. The company now predicts 2015 revenue in the $10.7 billion to $11.1 billion range, up from $10.4 billion to $10.6 billion. It took its adjusted profit range higher, too, moving it to $11.50 to $11.80 per share from $10.90 to $11.20 per share.

Part of Xifaxan's success will come from a new indication in IBS-D, which has resulted in "immediate growth and script uptake," CEO J. Michael Pearson told investors on a Thursday conference call. Valeant, known for job-chopping, has Salix's specialized sales reps to thank; it vowed to keep them on in the wake of the transaction, with Pearson noting that "customer-facing roles have played and will play a huge role" in the company's success.

Aside from Salix, Valeant took time on the call to talk up its acquisition track record, too, which Pearson said "speaks for itself." Its largest acquisitions--Biovail, Medicis, Bausch + Lomb and Salix--are all in-line with or "significantly" ahead of their deal models. Looking at its recent pickups in the $300 million to $1 billion range, 10 of 11 are tracking to internal rates of return of 20% or higher, Valeant. About 50 smaller deals combined are exceeding that mark, too, Valeant said.

That's not to say the company isn't spurring any internal growth; without Salix's contributions, revenue grew 27% over the year-ago period, with dermatology, contact lenses and dental--fast-growing areas Pearson has recently targeted--coming up big. Within dermatology, new launches Jublia, Onexton and Luzu did their part, buoyed by forays into DTC marketing that marked new territory for the serial buyer.

And that's the success Valeant has been quick to tout in the wake of last year's failed Allergan ($AGN) buyout. Attacks on the company's M&A-centric business model were frequent during the months-long hostile takeover war, which ultimately ended with a white-knight swoop in from Actavis.

Valeant has had no trouble rebounding, though--at least where dealmaking is concerned. In addition to Salix, it this year has snagged the assets from bankrupt Dendreon, and earlier this year, it agreed to buy Egypt's Amoun Pharma--an asset it hopes will help it springboard into other Middle East markets.

- read the release
- see Reuters' take

Special Reports: The most influential people in biopharma today - J. Michael Pearson, Valeant | Pharma's top 10 M&A deals of 2013 - Valeant/Bausch + Lomb

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