) second quarter 2013 cash earnings per share of $1.34 (excluding
special items and non-cash expenses) easily beat the Zacks
Consensus Estimate of $1.28 and were up from the year-ago
earnings of 0.87 per share.
Revenues for the quarter were $1.1 billion, up 34% from the
year-ago period. The year-over-year improvement in revenues was
primarily attributable to higher product sales. Revenues were
in-line with the Zacks Consensus Estimate.
Product sales at Valeant amounted to $1.06 billion during the
second quarter of 2013, up 43% year over year.
Strong sales in the U.S. Promoted (previously U.S.
Dermatology) and Emerging Markets segments contributed to the
Total sales from developed markets jumped 37% year over year
to $792 million fuelled by a 90% jump in U.S. Promoted sales to
The aesthetics franchise, OraPharma, skin care, and topical
acne portfolio drove growth along with the strong performances of
Dysport and CeraVe.
Sales from emerging markets grew 26% year over year driven by
continued strong growth in Poland, Russia, Brazil, Mexico, South
East Asia and South Africa.
Research & development (R&D) expenses climbed 38.1% to
Selling, general & administrative (SG&A) expenses for
the second quarter of 2013 increased 38.8% to $257.4 million due
to the integration of Medicis operations.
We note that Valeant recently completed the acquisition of
Bausch + Lomb Holdings Incorporated for $8.7 billion. The deal
was first announced in May 2013.
Valeant now expects synergies more than the earlier estimate
of $800 million from this acquisition. Of the total projected
synergies, $500 million is expected in 2013.
2013 Guidance Upped
Valeant upped its guidance for 2013 to include the Bausch+Lomb
acquisiton. Valeant now expects revenues between $5.8 billion and
$6.2 billion, up from the previous projection of $4.4 billion -
Earnings per share on a cash basis are now projected around
$6.00 - $6.20, up from the earlier projection of $5.55
The Zacks Consensus Estimate for 2013 hints at earnings of
$5.82 per share on revenues of $5.2 billion.
EPS for the third and fourth quarters of 2013 are projected at
$1.33 to $1.43 and $2.03 to $2.13, respectively.
We are encouraged by the second -quarter results, which beat
our expectations. We believe the acquisition of Bausch + Lomb
will significantly strengthen Valeant's ophthalmology business
given the former's leading portfolio of eye health products.
The acquisition should also enable Valeant to penetrate into
the growing eye health market fueled by an aging patient
population, an increased rate of diabetes, and increasing demand
from the emerging markets.
We note that Valeant has been active on the acquisition front
lately, thereby using its cash reserves. We are also impressed by
the company's integration efforts and increase in expected
Valeant currently carries a Zacks Rank #3 (Hold). Right now,
) look attractive with a Zacks Rank #2 (Buy).
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