MISSISSAUGA, Ontario, Aug. 4, 2011 /PRNewswire/ --
- 2011 Second Quarter Total Revenue $609 million, including $40 million related to Trobalt milestone
- Total pro forma revenue growth for the combined company was approximately 27%
- Excluding the impact of foreign exchange, acquisitions and milestones, pro forma organic growth was approximately 4%
- Also excluding impact from Diastat and Efudex, pro forma organic growth for the combined company was approximately 7%
- 2011 Second Quarter GAAP EPS $0.17; Cash EPS $0.73,
- Includes $0.06 gain from Cephalon investment
- 2011 Second Quarter GAAP Cash Flow from Operations was $227 million; Adjusted Cash Flow from Operations was $260 million
- 2011 Cash EPS Guidance raised to $2.70 - $3.00
Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) announces second quarter financial results for 2011.
The second quarter once again demonstrated the strength of our diversified business model, stated J. Michael Pearson, chairman and chief executive officer. While the organic growth in our U.S. operations faced a number of headwinds this quarter, such as a tough comparison to the second quarter of 2010 when Legacy Biovail product sales were at unusually high levels, coupled with lower than expected results delivered by partnered Legacy Biovail generic products, we still delivered solid pro forma organic growth. We remain confident that our full year pro forma organic growth should be approximately 8 percent due in part to the strong performance from our businesses in Europe, Latin America, Canada and Australia. In addition, we are pleased to report that our cash flow from operations generation was particularly robust this quarter, demonstrating the solid execution of our business strategy.
Revenue
Total revenue was $609.4 million in the second quarter of 2011 as compared to $238.8 million in the second quarter of 2010. Included in total revenue for 2011 was $40.0 million of alliance and royalty revenue related to the milestone payment for European launch of retigabine (Trobalt) from GlaxoSmithKline (GSK). Product sales were $530.0 million in the second quarter of 2011, as compared to $231.2 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 in September 2010. In connection with the acquisition, Biovail was renamed Valeant Pharmaceuticals International, Inc. GAAP results for the second 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 27% for the second quarter of 2011. Pro forma organic revenue growth for the combined company, excluding the impact of foreign exchange and acquisitions, was approximately 4% for the second quarter of 2011. Also, excluding the genericization impact from Diastat and Efudex, pro forma organic revenue growth for the combined company was approximately 7%.
Operating Expenses and Gain on Investments
The Companys cost of goods sold, excluding amortization of intangibles, was $169.9 million in the second quarter of 2011 and represented 32% of product sales. This number in the second quarter of 2011 included $18.2 million in acquisition step up and amortization primarily related to the acquisition of PharmaSwiss. Excluding the adjustments, cost of goods for the second quarter of 2011 was 29% of product sales.
Selling, General and Administrative expenses were $149.7 million in the second quarter of 2011, which includes a $16.1 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 25% of product sales and service and other revenue. Research and Development expenses were $17.8 million in the second quarter of 2011, or approximately 3% of revenue.
In connection with an offer to acquire Cephalon, Inc., Valeant acquired approximately 1.0 million shares of common stock of Cephalon. Subsequently, Cephalon agreed to be acquired by Teva Pharmaceuticals Industries Inc. and consequently, Valeant disposed of its entire investment, which resulted in a realized gain of approximately $0.06 diluted earnings per share.
Net Income and Cash Flow from Operating Activities
The Company reported net income of $56.4 million for the second quarter of 2011, or $0.17 per diluted share. On a Cash EPS basis, income was $240.2 million, or $0.73 per diluted share.
GAAP cash flow from operating activities was $227 million in the second quarter of 2011, and adjusted cash flow from operations was $260 million in the second quarter of 2011.
Securities Repurchase Program
Since March 31st, 2011, under Valeants securities repurchase program, the Company repurchased an additional $68 million principal amount of the 5.375% senior convertible notes due 2014, for an aggregate purchase price of $244 million, bringing the aggregate repurchases to $247 million of the $350 million face value of the 5.375% convertible notes.
2011 Guidance
The Company is raising its previous Cash EPS guidance to $2.70 to $3.00 in 2011, as compared to prior guidance of $2.65 to $2.90.
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), August 4, 2011 to discuss its second quarter financial results for 2011. The dial-in number to participate on this call is (877) 295-5743, confirmation code 84713375. International callers should dial (973) 200-3961, confirmation code 84713375. A replay will be available approximately two hours following the conclusion of the conference call through August 11, 2011 and can be accessed by dialing (855) 859-2056, or (404) 537-3406, confirmation code 84713375. The live webcast of the conference call may be accessed through the investor relations section of the Companys 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. 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, 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 Valeants 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, August 4, 2011, 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 & 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 companys 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.
