ALISO VIEJO, Calif., Feb. 24 /PRNewswire-FirstCall/ -- Valeant Pharmaceuticals International today announced fourth quarter and full year financial results for 2008.
“With our new strategic initiatives beginning to take hold in the fourth quarter, we continue to make strides in staging Valeant for sustainable future growth,” said J. Michael Pearson, chairman and chief executive officer. “We added to our future revenue and cash flow potential by acquiring three solid dermatology businesses, while we continue to see the impact of our cost reduction efforts. We exceeded our goal of $0.60 - $0.80 cash earnings per share for 2008 and expect this solid progress to continue into 2009.”
New Segment Information:
We restructured our organization in the fourth quarter of 2008 in order to improve our execution and align our resources and product development efforts in the markets in which we operate. Our products are sold through three new segments comprising of Specialty Pharmaceuticals, Branded Generic - Europe and Branded Generic - Latin America. The Specialty Pharmaceuticals segment includes product revenues primarily from the U.S., Canada, Australia and divested businesses located in Argentina, Uruguay and Asia. The Branded Generic - Europe segment includes product revenues from branded generic pharmaceutical products primarily in Poland, Hungary, the Czech Republic and Slovakia. The Branded Generic - Latin America segment includes product revenues from branded generic pharmaceutical products primarily in Mexico and Brazil.
Revenues:
Total revenue was $183.0 million in the fourth quarter of 2008 as compared to $188.9 million in the fourth quarter of 2007.
Specialty Pharmaceutical product sales were $89.2 million in the fourth quarter of 2008, as compared to $91.7 million in the fourth quarter of 2007, a decrease of 3% primarily due to operations divested in the first half of 2008 and the impact of unfavorable currency fluctuations, partially offset by product sales from acquisitions completed in the fourth quarter of 2008. At constant exchange rates, net of acquired and divested product sales, specialty pharmaceutical product sales in the fourth quarter of 2008 were flat as compared to the fourth quarter of 2007. Excluding divested businesses, product sales for the specialty pharmaceutical operations grew 6% for the quarter, and 11% at constant exchange rates.
Sales in Branded Generic - Latin America in the 2008 fourth quarter were $36.9 million as compared to $44.4 million in the same period in the prior year, primarily due to unfavorable currency fluctuations of $7.3 million. Product sales at constant exchange rates in Latin America were flat as compared to the fourth quarter of 2007.
Sales in Branded Generic - Europe were $35.9 million in the 2008 fourth quarter as compared to $35.9 million in the same period in the prior year. Product sales at constant exchange rate increased $4.4 million, or 12% over the fourth quarter in the prior year.
Alliance revenue increased 24% to $21.0 million in the 2008 fourth quarter as compared to $16.9 million in the same period in 2007. This increase is due to the recognition of deferred revenues of $4.4 million from the retigabine collaboration agreement with GlaxoSmithKline (GSK).
Operating Expenses/Earnings:
The company’s cost of goods sold was 26% for both the 2008 fourth quarter and the fourth quarter of 2007.
Selling, General and Administrative expenses decreased 7% in the fourth quarter of 2008 to $66.4 million as compared to $71.5 million in the fourth quarter of 2007, primarily due to the benefit of exchange rates and cost reduction activities at the company.
Research and development costs decreased 60% to $11.9 million in the 2008 fourth quarter as compared to $29.4 million reported in the same period in 2007. This decrease is due to the effect of the GSK collaboration, as well as cost reduction efforts by the company. Under collaboration accounting R&D spending in the quarter on the collaboration was offset by a credit from the initial upfront payment.
In the fourth quarter, the company recorded purchased in-process research and development charges of $186.3 million, related primarily to the previously announced acquisition of Dow Pharmaceutical Sciences, Inc. The company also recorded restructuring, asset impairment and disposition expenses of $17.0 million in the quarter.
Loss from continuing operations was $150.5 million for the fourth quarter of 2008, or a loss of $1.82 per diluted share as compared to income from continuing operations of $2.1 million, or $0.02 per diluted share for the fourth quarter of 2007. Valeant intends to continue to buy assets in the future, which means that company financials will be subject to certain adjustments for purchase accounting that could significantly change GAAP EPS. Valeant believes that excluding these adjustments, such as acquired in-process research and development (IPR&D), restructuring, asset impairments and dispositions, amortization expense, gain on early extinguishment of debt and the tax effect of such changes, facilitates investors’ understanding of the trends in the company’s underlying business. Therefore, the company uses a Cash EPS metric to evaluate company financial performance. On a non-GAAP basis, or Cash EPS basis, adjusted income from continuing operations was $43.2 million or $0.52 per diluted share in the fourth quarter of 2008 as compared to adjusted income from continuing operations of $25.1 million, or $0.28 per diluted share in the fourth quarter of 2007. For the full 2008 year, Cash EPS was $0.81 as compared to $0.86 for the full year 2007.
2009 Guidance
The company has provided a Cash EPS target of between $1.35 and $1.60 in 2009. This calculation of Cash EPS will exclude certain items, such as acquired IPR&D, restructuring, asset impairments and dispositions, amortization expense and the tax effect of such changes and, for 2009, the new non-cash accounting charge for interest on the convertible debt related to FSP APB 14-1.
Conference Call and Webcast Information:
Valeant will host a conference call today at 11:00 a.m. EST (8:00 a.m. PST) to discuss its 2008 fourth quarter and year end results. The dial-in number to participate on this call is (877) 295-5743, confirmation code 83660030. International callers should dial (973) 200-3961, confirmation code 83660030. A replay will be available approximately two hours following the conclusion of the conference call through March 3, 2009 and can be accessed by dialing (800) 642-1687, or (706) 645-9291, confirmation code 83660030. The company will webcast the conference call live over the Internet. The webcast may be accessed through the investor relations section of Valeant’s corporate Web site at www.valeant.com.
About Valeant:
Valeant Pharmaceuticals International is a multinational specialty pharmaceutical company that develops and markets a broad range of pharmaceutical products primarily in the areas of neurology and dermatology. More information about Valeant can be found at www.valeant.com.
Forward-looking Statements:
This press release contains forward-looking statements, including, but not limited to, statements regarding the growth and future development of the company, future acquisitions or dispositions of assets and guidance with respect to expected results of operation. 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 related to the company’s ability to realize the benefits of its strategic restructuring plan, market conditions and other factors that may influence the company’s determination as to whether and when to repurchase its securities, the ability of the company to complete the programs in compliance with applicable requirements, and other risks and uncertainties discussed in the company’s annual report on Form 10-K for the year ended December 31, 2007 and other filings with the SEC. Valeant wishes to caution the reader that these factors are among the factors that could cause actual results to differ materially from the expectations described in the forward-looking statements. Valeant also cautions the reader that undue reliance should not be placed on any of the forward-looking statements, which speak only as of the date of this release. The company undertakes no obligation to update any of these forward- looking statements to reflect events or circumstances after the date of this release or to reflect actual outcomes.
Non-GAAP Information:
To supplement the consolidated financial results prepared in accordance with generally accepted accounting principles (GAAP), the company uses non- GAAP financial measures that exclude certain items, such as in-process research and development, restructuring, amortization, gain on early extinguishment of debt, and certain taxes. Management does not consider the excluded items part of day-to-day business or reflective of the core operational activities of the company as they result from transactions outside the ordinary course of business. 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 more 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.
CONTACT: Laurie W. Little of Valeant Pharmaceuticals, +1-949-461-6002,
laurie.little@valeant.com
Web site: http://www.valeant.com//
