Valeant Earnings Soar on Tax Benefit
Valeant Pharmaceuticals International Inc. (NYSE: VRX) reported third-quarter 2017 results before markets opened Tuesday. The company reported quarterly diluted earnings per share (EPS) of $3.69 and revenues of $2.22 billion. In the same period a year ago, Valeant reported a loss per share of $1.08 on revenues of $2.48 billion. Third-quarter results also compare to consensus estimates for EPS of $0.90 and $2.17 billion in revenues.
Adjusted EBITDA totaled $951 million, compared with $1.16 billion in the year-ago quarter. Valeant attributed the revenue declines to the loss of exclusivity impact on the U.S. Diversified Products segment, volume declines in the Ortho Dermatologics business and the previously announced divestitures, partially offset by lower selling, general and administrative and research and development expenses.
Net income for the quarter totaled $1.3 billion compared with a net loss of $1.22 billion in the third quarter of 2016. The company attributed the sharp swing mainly to the increase in the benefit of income taxes for the quarter, primarily due to the completion of the internal tax reorganization efforts begun in the fourth quarter of 2016. The completion of these efforts generated a tax benefit of $1.4 billion in the quarter.
CEO Joseph C. Papa commented:
Our strong third-quarter performance demonstrates our continued progress in the turnaround of Valeant. Driven by solid execution in our Bausch + Lomb/International segment and our Salix business, we delivered strong organic revenue growth1 across approximately 77% of our business in the quarter. Valeant is a very different company today than it was a year ago. Under a new management team, we have strengthened our balance sheet and stabilized the Company by simplifying our business and allocating resources more efficiently
Valeant maintained its guidance for 2017 adjusted EBITDA in a range of $3.60 to $3.75 per share. Full-year revenue guidance was trimmed from a prior estimated range of $8.7 billion to $8.9 billion to a new range of $8.65 billion to $8.7 billion.
Updated guidance reflects the impact of the sales of the CeraVe, AcneFree and AMBI skin care brands; the sale of Dendreon Pharmaceuticals; the sale of the iNova Pharmaceuticals business; and the sale of the Obagi Medical Products business, which is expected to close before the end of this year.
The better-than-expected profits and the improved guidance sent shares sharply higher in Tuesday’s premarket session. The stock traded up about 12.2% to $13.51, in a 52-week range of $8.31 to $19.13.