) reported second quarter 2014 cash earnings per share of $1.91
(excluding special items and non-cash expenses), up from the
year-ago earnings of $1.34 per share.
Excluding stock-based compensation expense, earnings per share
came in at $1.90. The Zacks Consensus Estimate for the second
quarter was $1.91.
Revenues for the quarter soared 86.3% year over year to $2.0
billion due to the acquisition of Bausch + Lomb in 2013. Revenues
were in line with the Zacks Consensus Estimate.
Product sales at Valeant amounted to $2.0 billion during the
second quarter, up 87.5% year over year. Growth in sales was driven
by a rebound in the emerging markets of Europe, strong results in
Asia, and solid performance of the contact lens and consumer
businesses of Bausch + Lomb in the U.S.
Total sales from developed markets jumped nearly 85% year over
year to $1.5 billion buoyed by the acquisition of Bausch +
Same-store organic product sales increased 4%. During the
quarter, Valeant launched 17 new products in the U.S.
Excluding the impact of generics for Retin-A Micro and Vanos
franchises in the U.S., and Wellbutrin XL in Canada, same-store
organic product sales increased 10%.
Sales from emerging markets grew 89.7% year over year driven by
the acquisition of Bausch + Lomb.
Research & development (R&D) expenses jumped 171.4% to
$66.5 million. Selling, general & development (R&D)
expenses almost doubled to $515.7 million due to the launch of
numerous products and efforts to significantly increase the size of
We note that Valeant acquired Bausch + Lomb in Aug 2013 to
strengthen its ophthalmology business, which was a miniscule
portion of Valeant's overall portfolio.
Valeant has been relentlessly pursuing
) since Apr 2014. On Jun 18, 2014, Valeant announced that it has
commenced an exchange offer for the common stock of Allergan, Inc.
after the latter rejected its previous offer a couple of times.
As per the terms of the offer, shareholders of Allergan could
exchange each of their shares for $72.00 in cash and 0.83 shares of
Valeant common stock. Allergan shareholders can also opt for cash
and a number of Valeant shares, subject to proration.
Earlier in the month, Valeant sold some of its injectable
products (Restylane, Perlane, Emervel, Sculptra, and Dysport) to
Galderma for $1.4 billion. Valeant expects to use the funds from
the divestment of assets for the potential Allergan transaction and
other future business development opportunities.
Allergan, a global multi-specialty pharmaceutical company,
develops and commercializes innovative products for eye care,
neurological, medical aesthetics, medical dermatology, breast
aesthetics, urological and other specialty markets.
Valeant lowered its guidance for 2014 to include the impact of
divestiture of some of its injectables. Revenues are now projected
in the range of $8.0 billion and $8.3 billion, down from the
earlier projection of $8.3 billion - $8.7 billion and short of the
Zacks Consensus Estimate of $8.4 billion. Earnings per share, on a
cash basis, are now projected between $7.90 and $8.10, compared to
the earlier projection of $8.55 - $8.80 per share.
Valeant currently carries a Zacks Rank #3 (Hold). Second quarter
results and the subsequent lowering of guidance were
Valeant, a Canada-based specialty pharmaceutical company, has
been quite aggressive on the acquisition front in the last two
years, which contributed to its solid growth. Dermatology is the
key focal area for Valeant.
In Apr 2013, Valeant acquired Obagi Medical Products. In Dec
2012, Valeant acquired all of the outstanding common stock of
Medicis Pharmaceutical Corporation. Apart from dermatology, Valeant
is also keen on developing its ophthalmology portfolio. In Aug
2013, Valeant acquired Bausch + Lomb Holdings Inc. for $8.7 billion
However, Allergan has made it clear that it is reluctant to
accept Valeant's offer. We expect investor focus to remain on
further updates from Valeant and Allergan on the acquisition
Right now, stocks like Salix Pharmaceuticals (
) and AstraZeneca (
) look well placed in the healthcare sector. Both carry a Zacks
Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
VALEANT PHARMA (VRX): Free Stock Analysis
ASTRAZENECA PLC (AZN): Free Stock Analysis
ALLERGAN INC (AGN): Free Stock Analysis Report
SALIX PHARM-LTD (SLXP): Free Stock Analysis
To read this article on Zacks.com click here.