Valeant Pharmaceuticals Stock Gains Short Lived Post Q2 Financial Results

Valeant Pharmaceuticals International, Inc. (TSX:VRX) management remains confident and confirmed maintaining its 2017 full-year Adjusted EBITDA guidance range

SmallCapPower | August 9, 2017: Valeant Pharmaceuticals International, Inc. (NYSE:VRX) (TSX: VRX) Tuesday announced its second-quarter 2017 financial results. Total revenues declined by 8% to $2.2 billion as compared to $2.4 billion in the prior year quarter. The decrease was driven primarily by lower volumes in the U.S. Diversified Products segment, attributed to the previously-reported loss of exclusivity for a basket of products, and the dermatology business. The decline also reflects the unfavorable impact of divestitures and discontinuations, primarily the skincare divestiture within the Bausch + Lomb/International segment. Post the results, shares of Valeant Pharmaceuticals climbed 3% to close at $19.74 on Tuesday. On Wednesday, however, its shares were 10% lower in mid-day trading.

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Operating income surged 2x to reach $175 million in the quarter. The increase in operating income primarily reflects lower asset impairments and amortization charges partially offset by a decrease in contribution margin as a result of the decline in product sales from existing businesses.

Valeant Pharmaceuticals recently used $811 million of its proceeds from its Dendreon divestiture to pay down debt to less than $28 billion, although it officially listed $28.46 billion as its total debt by quarter’s end. Valeant Pharmaceuticals remains on track to hit its goal of $5 billion in debt reduction by February 2018.

Valeant’s CEO Joseph C. Papa said, “The investments we are making in our core business are delivering results. The Bausch + Lomb/International segment and Salix business, which together represented 73 percent of our revenue in the quarter, delivered strong organic growth, and we are continuing to reduce debt and resolve legacy issues.”

Additionally, Valeant Pharmaceuticals management remains confident and confirmed maintaining its 2017 full-year Adjusted EBITDA guidance range despite the impact of divestitures made this year.

In terms of valuation, Valeant Pharmaceuticals stock currently trades at TTM price to sales value of 0.58x and price to book value of 1.40x.

Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.

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