Valeant Pharmaceuticals International Reports 2011 Third Quarter Financial Results
MISSISSAUGA, Ontario, Nov. 3, 2011 /PRNewswire/ --
- 2011 Third Quarter Total Revenue $601 million
◦Total pro forma revenue growth for the combined company was approximately 40%
- Pro forma organic growth, excluding the impact of foreign exchange and acquired sales, was 15%,
◦This organic growth rate has not been adjusted for the effect of the wholesaler inventory drawdown in the U.S. which would have had a positive impact
◦YTD pro forma organic growth was over 8%
- 2011 Third Quarter GAAP EPS $0.13; Cash EPS $0.66
- 2011 Third Quarter GAAP Cash Flow from Operations was $174 million; Adjusted Cash Flow from Operations was $208 million
- 2011 Cash EPS Guidance updated to $2.80 - $2.95, which does not include the potential $45 million milestone for the U.S. launch of Potiga (now 1Q 2012 Event)
•Board Approves New $1.5 Billion Securities Repurchase Program
Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) announces third quarter financial results for 2011.
"Our operations delivered strong double-digit organic revenue growth in the third quarter and we remain on track to deliver 8% plus pro forma organic growth for the year," stated J. Michael Pearson, chairman and chief executive officer. "We are especially pleased with the performance of our U.S. Dermatology division, which is outpacing our expectations, as well as both of our branded generic divisions that continue to outperform their respective markets. With strong third quarter performance, we are raising our fourth quarter Cash EPS guidance to $0.80 to $0.95, which does not include the potential milestone of $45 million from GlaxoSmithKline that is now scheduled to occur in the first quarter of 2012."
Revenue
Total revenue was $600.6 million in the third quarter of 2011 as compared to $208.3 million in the third quarter of 2010. Product sales were $570.4 million in the third quarter of 2011, as compared to $201.4 million in the year-ago quarter. These increases are primarily due to the acquisition of Valeant Pharmaceuticals International (Legacy Valeant) by Biovail Corporation (Legacy Biovail) which was completed on September 27, 2010. In connection with the acquisition, Biovail was renamed Valeant Pharmaceuticals International, Inc. GAAP results for the third quarter of 2010 only reflect Legacy Biovail revenues and do not include any revenues from Legacy Valeant.
Total pro forma revenue growth for the combined company (Legacy Biovail and Legacy Valeant) was approximately 40% for the third quarter of 2011. Pro forma organic revenue growth for the combined company, excluding the impact of foreign exchange and acquired sales, was 15% for the third quarter of 2011. No adjustment as made for the third quarter wholesaler inventory impact.
Operating Expenses and Gain on Investments
The Company's cost of goods sold, excluding amortization of intangibles, was $162.6 million in the third quarter of 2011 and represented 28% of product sales. This number in the third quarter of 2011 included $5.0 million in acquisition step-up and amortization primarily related to the acquisition of Sanitas AB.
Selling, General and Administrative expenses were $134.8 million in the third quarter of 2011, which includes a $11.1 million step-up in stock based compensation expenses related to the acquisition of Legacy Valeant. Excluding the step-up in stock based compensation, SG&A was approximately 21% of product sales and service and other revenue. Research and Development expenses were $17.5 million in the third quarter of 2011, or approximately 3% of revenue.
Net Income and Cash Flow from Operations
The Company reported net income of $40.9 million for the third quarter of 2011, or $0.13 per diluted share. On a Cash EPS basis, income was $212.1 million, or $0.66 per diluted share.
GAAP cash flow from operations was $174 million in the third quarter of 2011, and adjusted cash flow from operations was $208 million in the third quarter of 2011.
Securities Repurchase Program
Since June 30, 2011, under the Company's existing securities repurchase program, which expires on November 7, 2011, the Company repurchased 1.8 million shares and $95 million principal amount of the 5.375% senior convertible notes due 2014, for an aggregate purchase price of $275 million, bringing the aggregate repurchases to $328 million of the $350 million face value of the 5.375% convertible notes.
The Company's Board of Directors approved a new $1.5 billion securities repurchase program effective November 8, 2011.
2011 Guidance
The Company is revising its previous Cash EPS guidance to $2.80 to $2.95 in 2011, as compared to prior guidance of $2.70 to $3.00. The prior guidance included a potential $45 million milestone payment from GlaxoSmithKline in the fourth quarter for the U.S. launch of Potiga. The launch and subsequent milestone payment is now expected to occur in the first quarter of 2012.
Conference Call and Webcast Information
The Company will host a conference call and a live Internet webcast along with a slide presentation today at 10:00 a.m. ET (7:00 a.m. PT), November 3, 2011 to discuss its third quarter financial results for 2011. The dial-in number to participate on this call is (877) 295-5743, confirmation code 18668216. International callers should dial (973) 200-3961, confirmation code 18668216. A replay will be available approximately two hours following the conclusion of the conference call through November 10, 2011 and can be accessed by dialing (855) 859-2056, or (404) 537-3406, confirmation code 18668216. The live webcast of the conference call may be accessed through the investor relations section of the Company's corporate website at www.valeant.com.
About Valeant
Valeant Pharmaceuticals International, Inc. (NYSE/TSX:VRX) is a multinational specialty pharmaceutical company that develops and markets a broad range of pharmaceutical products primarily in the areas of neurology, dermatology and branded generics. More information about Valeant can be found at www.valeant.com.
Forward-looking Statements
This press release may contain forward-looking statements, including, but not limited to, statements regarding our expected growth and Cash EPS guidance for 2011 and our securities repurchase program. Forward-looking statements may be identified by the use of the words "anticipates," "expects," "intends," "plans," "should," "could," "would," "may," "will," "believes," "estimates," "potential," or "continue" and variations or similar expressions. These statements are based upon the current expectations and beliefs of management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, factors that could affect our operating results, market conditions and the price of our securities, risks and uncertainties discussed in the Company's most recent annual or quarterly report filed with the Securities and Exchange Commission ("SEC") and risks and uncertainties as detailed from time to time in Valeant's filings with the SEC and the Canadian Securities Administrators ("CSA"), which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on any of these forward-looking statements. Valeant undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect actual outcomes.
Note on Guidance
The guidance contained in this press release is only effective as of the date given, November 3, 2011, and will not be updated or affirmed until the Company publicly announces updated or affirmed guidance.
Non-GAAP Information
To supplement the financial measures prepared in accordance with generally accepted accounting principles (GAAP), the company uses non-GAAP financial measures such as Cash EPS measures, organic growth, and adjusted cash flow from operations. Non-GAAP financial measures exclude certain items, such as amortization of inventory step-up, amortization of alliance product assets & property, plant and equipment step up, stock-based compensation step-up, contingent consideration fair value adjustments, restructuring, integration and acquisition-related costs, acquired in-process research and development ("IPR&D"), legal settlements outside the ordinary course of business, amortization and other non-cash charges, amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss on extinguishment of debt, (gain) loss on investments, net, and adjusts tax expense to cash taxes. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a meaningful, consistent comparison of the company's core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP. Therefore, the information is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.