Valeant Pharmaceuticals total revenues up 109% in fourth quarter 2013

Feb 27 2014

Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) announces fourth quarter financial results for 2013.

Fourth Quarter 2013

• 2013 Fourth Quarter Total Revenue $2.1 billion; an increase of 109% over the prior year
  • 2% organic growth (same store sales) including impact from genericized products; 6% organic growth (pro forma) for total Company
    • 10% organic growth for Bausch + Lomb in Q4 and since close
  • 13% organic growth (same store sales) for the Developed Markets segment, excluding the impact from certain generic products
  • 7% organic growth (same store sales) for the Emerging Markets segment
• 2013 Fourth Quarter GAAP EPS of $0.36; Cash EPS $2.15, an increase of 76% over the prior year
• 2013 Fourth Quarter GAAP Operating Cash Flow $280 million; Adjusted Operating Cash Flow $607 million 

Full Year 2013

• Total 2013 revenue was $5.8 billion; an increase of 66% over the prior year
  • 9% organic growth (same store sales) for the Developed Markets segment, excluding the impact from certain generic products
  • 11% organic growth (same store sales) for the Emerging Markets segment
  • 10% organic growth for Bausch + Lomb since the close
• Total 2013 GAAP EPS loss of $2.70; Cash EPS $6.24, an increase of 51% over the prior year
• Total 2013 GAAP Operating Cash Flow $1.0 billion; Adjusted Operating Cash Flow $1.8 billion

"Our dedicated team of professionals continued to deliver strong top line and bottom line results," stated J. Michael Pearson, chairman and chief executive officer.  "We are particularly pleased with the outperformance of the Bausch + Lomb businesses, coupled with the fact that the Company returned to positive organic growth. Valeant's focus on cash pay businesses, diversification, durable assets, key geographies, and lower risk R&D will continue to benefit our shareholders as we look forward to continuing our track record of outperformance in 2014." 

Valeant Fourth Quarter Financial Results

Valeant's total revenues were $2.1 billion, up 109% compared to the fourth quarter of 2012. Same store organic product sales growth for Valeant was 11%, excluding the impact of the genericization of the Zovirax franchise, Retin-A Micro and BenzaClin. These products accounted for approximately $78 million in lost sales as compared to the year-ago quarter. Including the generic impact of these products, same store organic product sales growth for Valeant was 2% and pro forma organic growth was 6%.

Valeant's Developed Markets revenue was $1.6 billion, up 122% as compared to the fourth quarter of 2012. This increase was primarily led by the acquisition of Bausch+ Lomb, which was completed on August 5, 2013. Same store organic product sales growth was 13%, excluding the impact of the genericization of the Zovirax franchise, Retin-A Micro and BenzaClin. The growth in the Developed Markets was driven by continued growth in certain dermatology prescription brands, our aesthetics, consumer, neurology and other and oral health portfolios, and our Canadian business unit.

Valeant's Emerging Markets revenue was $493 million, up 77% as compared to the fourth quarter of 2012.  This increase was also primarily led by the acquisition of Bausch + Lomb.  Total same store sales growth was 7% for the segment, with pro forma organic growth at 13%. This increase was driven by continued strong growth in all of our emerging market regions, particularly Poland, Russia, China and the Middle East. 

The Company reported net income of $124 million for the fourth quarter of 2013, or $0.36 per diluted share, which included restructuring, integration and other charges of $128 million primarily related to the acquisition of Bausch + Lomb. 

On a Cash EPS basis, adjusted income was $732 million, or $2.15 per diluted share, an increase of 76% over the prior year. 

GAAP cash flow from operations was $280 million in the fourth quarter of 2013, and adjusted cash flow from operations was $607 million, an increase of 43% over the prior year. This increase in adjusted cash flow from operations was driven by growth across all our businesses and an investment in working capital due to the integration of Bausch + Lomb.

The Company's cost of goods sold (COGS) was 26% of product sales in the fourth quarter of 2013, after backing out the fair value adjustment to inventory and other items related to acquisitions.

Selling, General and Administrative expenses were $450 million in the fourth quarter of 2013, or approximately 22% of revenue.  Research and Development expenses were $60 million in the fourth quarter of 2013, or approximately 3% of revenue.

2014 Guidance

The Company is reaffirming its 2014 Cash EPS guidance of $8.25 to $8.75, which includes overcoming the negative impact from currency fluctuations since the beginning of the year of approximately $0.10 per share.  This guidance does not include the positive impact of the PreCision Dermatology, Inc. acquisition, which is expected to close in the second quarter of 2014.  Total revenue for 2014 is expected to be in the range of $8.2 billion to $8.6 billion and adjusted Cash Flow from Operations is expected to be in the range of $2.4 billion to $2.6 billion. The Company expects to raise guidance on Cash EPS, revenue and adjusted cash flow from operations once the acquisition of PreCision has closed.