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Valeant Pharmaceuticals International (VRX) Reports 2012 Second Quarter Financial Results

8/2/2012 1:22:37 PM

MONTREAL, Aug. 2, 2012 /PRNewswire/ --

  • 2012 Second Quarter Total Revenue $820 million, including $45 million related to Potiga launch milestone
    • Organic growth (same store sales) was approximately 6%
    • Pro forma organic growth was approximately 10%
  • 2012 Second Quarter GAAP EPS Loss of $0.07; Cash EPS $1.01
    • Excluding impact from Potiga milestone, Cash EPS was $0.87
  • 2012 Second Quarter GAAP Cash Flow from Operations was $255 million; Adjusted Cash Flow from Operations was $307 million
  • 2012 Guidance increased to $4.55 - $4.75 Cash EPS
    • $4.18 - $4.38 excluding one-time items

Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) announces second quarter financial results for 2012.

"The second quarter continued our track record of delivering solid results," said J. Michael Pearson, chairman and chief executive officer. "With our diversified operations, we were able to mitigate headwinds caused by foreign exchange and the continued genericization impact of Cardizem® CD and Ultram® ER, and still report solid top and bottom line results. We are also pleased with our significant increase in cash flow from operations, both from a GAAP and non-GAAP basis. We look forward to a strong second half of the year."

Business Performance

Valeant's business continued to perform well in the second quarter of 2012 and - with the exception of the U.S. Neurology and Other segment - each business delivered positive revenue growth, both in terms of total revenue and organic growth. Total revenue was $820.1 million in the second quarter of 2012, as compared to $609.4 million in the second quarter of 2011, an increase of 35%. Product sales were $748.7 million in the second quarter of 2012, as compared to $530.0 million in the year-ago quarter, an increase of 41%.

Overall, Valeant's business continued to deliver strong organic growth. Same store organic growth was approximately 6% and pro forma organic growth was approximately 10% for the second quarter of 2012. (See Table 5) Particularly positive was Valeant's U.S. Dermatology business, which continued its exceptional growth performance in the second quarter. Key contributors to organic growth included Zovirax®, Acanya®, Atralin® and CeraVe®.

We are also pleased with our Emerging Markets segment, which delivered double digit organic growth. We continue to see strong performance in Poland against a tough market environment and exceptional growth from our Russian/CIS operations as we gained critical mass in this market. We remain excited about our new operations in South East Asia/South Africa, where our business demonstrated outstanding growth.

The Canadian and Australian segment delivered slower organic growth this quarter due to the genericization of Cesamet® that occurred in March 2012 and wholesaler buying patterns in Australia.

Finally, the U.S. Neurology and Other portfolio continued to decline. Wellbutrin XL®, Diastat®, Ultram® ER and Cardizem® CD all declined as expected, with generic competitors for certain strengths for the latter two products being introduced in September 2011 and November 2011, respectively. Excluding these products, the remaining U.S. Neurology and Other segment increased 3%, as compared to the second quarter of 2011.

Included in total revenue for the second quarter of 2012 was $45.0 million of alliance and royalty revenue related to the milestone payment for the U.S. launch of ezogabine (Potiga) from GlaxoSmithKline (GSK), while the second quarter of 2011 included $40.0 million of alliance and royalty revenue related to the milestone payment from GSK for the European launch of retigabine (Trobalt).

Financial Performance

The Company reported a net loss of $21.6 million for the second quarter of 2012, or $0.07 per diluted share. On a Cash EPS basis, adjusted income was $314.5 million, or $1.01 per diluted share. Excluding the Potiga milestone, adjusted income was $269.5 million, or $0.87 per diluted share.

GAAP cash flow from operations was $254.6 million in the second quarter of 2012, and adjusted cash flow from operations was $307.5 million in the second quarter of 2012. Both figures include the milestone payment of $45.0 million.

The Company's cost of goods sold (COGS) was $197.3 million in the second quarter of 2012. After backing out a fair value adjustment to inventory, amortization expense and other items related to acquisitions of approximately $14.0 million, COGS represented 24% of product sales.

Selling, General and Administrative expenses were $185.4 million in the second quarter of 2012, which includes a $5.1 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 22% of revenue. Research and Development expenses were $17.7 million in the second quarter of 2011, or approximately 2% of revenue.

2012 Guidance

The Company is updating its previous Cash EPS guidance and is increasing Cash EPS to $4.55 to $4.75 (or $4.18 to $4.38 excluding one-time items) in 2012, up from prior guidance of $4.45 to $4.70, and maintaining prior guidance of total revenue in the range of $3.4 to $3.6 billion and adjusted cash flow from operations of greater than $1.4 billion.

Conference Call and Webcast Information

The Company will host a conference call and a live Internet webcast along with a slide presentation today at 8:00 a.m. ET (5:00 a.m. PT), August 2, 2012 to discuss its second quarter financial results for 2012. The dial-in number to participate on this call is (877) 876-8393, confirmation code 10552994. International callers should dial (973) 200-3961, confirmation code 10552994. A replay will be available approximately two hours following the conclusion of the conference call through August 8, 2012 and can be accessed by dialing (855) 859-2056, or (404) 537-3406, confirmation code 10552994. The live webcast of the conference call may be accessed through the investor relations section of the Company's corporate website at

About Valeant

Valeant Pharmaceuticals International, Inc. (NYSE/TSX:VRX) is a multinational specialty pharmaceutical company that develops, manufactures and markets a broad range of pharmaceutical products primarily in the areas of dermatology, neurology and branded generics. More information about Valeant can be found at

Forward-looking Statements

This press release may contain forward-looking statements, including, but not limited to, statements regarding future results and performance, financial guidance, expected revenue and adjusted cash flow from operations and anticipated Cash EPS for 2012. Forward-looking statements may generally be identified by the use of the words "anticipates," "expects," "intends," "plans," "should," "could," "would," "may," "will," "believes," "estimates," "potential," "target", 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, risks and uncertainties discussed in the Company's most recent annual or quarterly report and detailed from time to time in Valeant's other filings with the Securities and Exchange Commission ("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. These forward-looking statements speak only as of the date hereof. 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, August 2, 2012, and will not be updated or confirmed 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 that exclude certain items, such as amortization of inventory step-up, amortization of alliance product assets & pp&e step up, stock-based compensation step-up, contingent consideration fair value adjustments, restructuring, acquisition-related and other costs, acquired in-process research and development ("IPR&D"), legal settlements outside the ordinary course of business, the impact of currency fluctuations, 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 assets held for sale/impairment, net, (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.

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