MISSISSAUGA, Ontario, Feb. 27, 2012 /PRNewswire/ --
Fourth Quarter 2011
- 2011 Fourth Quarter Total Revenue $688.5 million; an increase of 34% over the prior year
- Pro forma organic growth, excluding the impact of foreign exchange and acquisitions, was 10%
- 2011 Fourth Quarter GAAP EPS $0.18; Cash EPS $0.94
- 2011 Fourth Quarter GAAP Operating Cash Flow $190 million; Adjusted Operating Cash Flow $253 million
Full Year 2011
- Total 2011 revenue was $2.46 billion
- Total 2011 pro forma organic growth, excluding the impact of foreign exchange and acquisitions, was 9%
- Total 2011 GAAP EPS $0.49; Cash EPS $2.93
- Total 2011 GAAP Operating Cash Flow $676 million; Adjusted Operating Cash Flow $925 million
Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) announces fourth quarter financial results for 2011.
“We are pleased by our financial results for the fourth quarter and the full year,” said J. Michael Pearson, chairman and chief executive officer. “Our performance continues to demonstrate the strength of our diversified model and our capacity to integrate acquisitions and still deliver strong top-line and bottom-line results.”
Revenue
Total reported revenue was $688.4 million in the fourth quarter of 2011 as compared to $514.6 million in the fourth quarter of 2010 primarily attributable to acquisitions completed in 2011 and the growth of key dermatology brands, partly offset by a negative foreign exchange impact.
Product sales were $654.2 million in the fourth quarter of 2011, as compared to $488.7 million in the 2010 year quarter. Pro forma organic growth for the Company was 10% for the fourth quarter of 2011 and 9% for the full year 2011.
Operating Expenses
The Company’s cost of goods sold was $182.0 million in the fourth quarter of 2011, and represented 28% of product sales, as compared to $210.6 million in the fourth quarter of 2010, representing 43% of product sales. Cost of goods sold in the fourth quarter of 2011 included an $18.3 million fair value adjustment to inventory, amortization and other non-GAAP items, while the comparable quarter in 2010 included $60.4 million fair value adjustment to inventory and other non-GAAP items related to acquisitions. Excluding the adjustments, cost of goods for the fourth quarter of 2011 and 2010 were 25% and 31% of product sales, respectively.
Selling, General and Administrative (SG&A) expenses were $148.5 million in the fourth quarter of 2011 and included a $12.9 million step-up in stock based compensation expenses related to the acquisition of Legacy Valeant. This compares to SG&A expenses of $127.8 million in the fourth quarter of 2010 including a $17.0 million step-up in stock based compensation. Excluding the step-up in stock based compensation expenses related to the acquisition of Legacy Valeant, SG&A as a percentage of product sales in 2011 and 2010 was 21% and 22%, respectively.
Research and Development expenses were $16.8 million in the fourth quarter of 2011, or 2% of revenue, as compared to $18.3 million in the fourth quarter of 2010, or 4% of revenue.
Merger Related Costs & Expenses
We recorded restructuring and acquisition-related costs of $56.7 million in the quarter, virtually all of which arise from acquisitions and are primarily employee severance costs, contract cancellations fees and facility related costs.
Net Income and Cash Flow from Operations
The Company reported net income of $55.9 million for the fourth quarter of 2011, or $0.18 per diluted share. On an adjusted Cash EPS basis, adjusted income was $297.7 million, or $0.94 per diluted share, as compared to guidance of $0.83 to $0.87 per diluted share.
GAAP cash flow from operations, which includes acquisition transaction fees, was $189.8 million in the quarter. Adjusted cash flow from operations was $253.1 million in the fourth quarter of 2011, as compared to guidance of greater than $230 million.
Foreign Currency Impact
Valeant’s foreign operations having a functional currency other than the U.S. dollar are translated into U.S. dollars at the exchange rate prevailing at the balance sheet date, and at the average exchange rate for the reporting period for revenue and expense accounts. Due to the strengthening of the U.S. dollar in the fourth quarter of 2011, product sales were negatively impacted by approximately $36 million as compared to originally budgeted rates, consistent with previously announced expectations.
In connection with the acquisition of iNova, Valeant entered into foreign currency forward-exchange contracts to buy AUD$625.0 million, which were settled on December 20, 2011. The Company recorded a $16.4 million foreign exchange gain on the settlement of these contracts, which was recognized in Other Income in the consolidated statements of income for the year ended December 31, 2011.
Cash EPS for the fourth quarter of 2011 was negatively impacted by foreign currency by approximately $0.06 per diluted share, which was offset by the positive impact of approximately $0.05 related to the foreign currency forward-exchange contracts entered into as part of the iNova transaction.
Acquisitions Completed in the Fourth Quarter
During the fourth quarter of 2011, Valeant completed four strategic transactions including: iNova, a company that sells and distributes a range of prescription and OTC products in Australia, New Zealand, Southeast Asia and South Africa; Dermik, a dermatological unit of Sanofi in the U.S. and Canada that manufactures, markets and sells a range of therapeutic and aesthetic dermatology products; Ortho Dermatologics, a division of Janssen Pharmaceuticals, Inc. that develops products to treat skin disorders; and Afexa Life Sciences, Inc., a Canadian company that markets several consumer brands, such as COLD-FX®, Canada‘s leading OTC cold and flu treatment, and COLDSORE-FX®, a topical OTC cold sore treatment.
2012 Guidance
The Company is not updating 2012 annual guidance of $3.95 - $4.20 Cash EPS provided on January 6, 2012. This guidance does not include transactions announced so far in 2012 and future acquisitions.
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), February 27, 2012 to discuss its fourth quarter financial results for 2011. The dial-in number to participate on this call is (877) 876-8393, confirmation code 49361027. International callers should dial (973) 200-3961, confirmation code 49361027. A replay will be available approximately two hours following the conclusion of the conference call through March 5, 2012 and can be accessed by dialing (855) 859-2056, or (404) 537-3406, confirmation code 49361027. 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.
