Valeant raises forecasts after topping expectations in first quarter

Fast-growing company loses CFO Howard Schiller as it looks to address issues with $11bn Salix Pharma acquisition

 

Valeant Pharmaceuticals, the Canadian drugmaker known for its serial acquisitions, reported first-quarter profit that topped analysts’ estimates and raised its forecast for the year.

Earnings excluding one-time items rose to $2.36 a share from $1.76 a year earlier. Analysts had forecast $2.34 on average.

Revenue increased to $2.19 billion, the company said Thursday in a statement. Analysts had predicted $2.15 billion.

The drugmaker predicted earnings will be between $10.90 and $11.20 a share this year, with sales as high as $10.6 billion. That’s an increase on projections in January when Valeant said it expected earnings in 2015 to be $10.10 to $10.40 a share, and sales of to be $9.2 billion to $9.3 billion.

Valeant is seeking to become one of the world’s biggest drug companies, mainly through a series of acquisitions.

Last year, it failed in an attempt to acquire Allergan, the maker of Botox, with the help of Bill Ackman’s Pershing Square Capital Management LP, eventually losing out to acquisitive rival Actavis, which is domiciled in Ireland following a corportate inversion.

In March, Valeant beat Endo International, another Irish-domiciled company, in a bidding war to acquire Salix Pharmaceuticals for $11 billion.

It is also the parent of lens and eyecare group Bausch & Lomb.

Valeant now has to work through the accounting woes at Salix, which reported in January that it let months’ worth of unsold product build up with wholesalers and had to restate seven quarters worth of results.

“Salix represents a unique situation since the mismanagement of wholesaler inventory levels forces Valeant to correct those in the near-term,” Barclays analyst Douglas Tsao said Tuesday in a note to clients.

Mr Tsao said this would artificially suppress revenue by about $500 million in 2015.

First-quarter net income totaled $73.7 million, rebounding from a $22.6 million net loss a year earlier.

Chief financial officer Howard Schiller said Wednesday he’s leaving Valeant to pursue other business interests. He’ll stay with the company while it looks for a new CFO and will remain on the board and seek re-election in May.

Chief executive Michael Pearson praised Mr Schiller (53) in a statement.

“Mr Schiller and Mr Pearson are the faces of Valeant, and now half of that team is gone,” Alex Arfaei, an analyst at BMO Capital Markets, said Wednesday in a note. – Bloomberg