Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX:
VRX) announces second quarter financial results for 2015.
"We once again exceeded our guidance and delivered our fourth
consecutive quarter of greater than 15% organic growth," stated
J. Michael Pearson, chairman and
chief executive officer. "Our strong second quarter results
were driven by outperformance in our U.S. businesses, strong
results in certain emerging markets and outstanding starts to both
the Salix and Dendreon acquisitions. In addition, we have
signed eight new transactions so far this year and have realized
several significant R&D milestones, including the approval of
Xifaxan for IBS-D and the NDA submissions for Vesneo and Relistor
Oral. As a result, we feel confident in raising our guidance for
the remainder of 2015."
Conference Call and Webcast Information
The Company will host a conference call and a live Internet
webcast along with a slide presentation today at 8:00 a.m. ET (5:00 a.m.
PT), July 23, 2015 to discuss
its second quarter financial results for 2015. The dial-in number
to participate on this call is (877) 876-8393 confirmation code
73333543. International callers should dial (973) 200-3961,
confirmation code 73333543. A replay will be available
approximately two hours following the conclusion of the conference
call through July 30, 2015 and can be
accessed by dialing (855) 859-2056, or (404) 537-3406, confirmation
code 73333543. The live webcast of the conference call may be
accessed through the investor relations section of the Company's
corporate website at www.valeant.com.
About Valeant
Valeant Pharmaceuticals International, Inc. (NYSE/TSX:VRX) is a
multinational specialty pharmaceutical company that develops,
manufactures and markets a broad range of pharmaceutical products
primarily in the areas of dermatology, gastrointestinal disorder,
eye health, neurology and branded generics. More information about
Valeant can be found at www.valeant.com.
Forward-looking Statements
This press release may contain forward-looking statements,
including, but not limited to, statements regarding our expected
future performance, including guidance with respect to revenue,
Cash EPS, adjusted cash flow from operations, and organic
growth. Forward-looking statements may generally be
identified by the use of the words "anticipates," "expects,"
"intends," "plans," "should," "could," "would," "may," "will,"
"believes," "estimates," "potential," "target," or "continue" and
variations or similar expressions. These statements are based upon
the current expectations and beliefs of management and are subject
to certain risks and uncertainties that could cause actual results
to differ materially from those described in the forward-looking
statements. These risks and uncertainties include, but are not
limited to, risks and uncertainties discussed in the Company's most
recent annual or quarterly report and detailed from time to time in
Valeant's other filings with the Securities and Exchange Commission
and the Canadian Securities Administrators, which factors are
incorporated herein by reference. Readers are cautioned not to
place undue reliance on any of these forward-looking statements.
These forward-looking statements speak only as of the date
hereof. Valeant undertakes no obligation to update any of
these forward-looking statements to reflect events or circumstances
after the date of this press release or to reflect actual
outcomes.
Non-GAAP Information
To supplement the financial measures prepared in accordance with
U.S. generally accepted accounting principles (GAAP), the company
uses non-GAAP financial measures that exclude certain items, such
as amortization of inventory step-up, amortization of alliance
product assets & property, plant and equipment step up,
stock-based compensation step-up, contingent consideration fair
value adjustments, restructuring, integration, acquisition-related
and other costs, In-process research and development, impairments
and other charges, ("IPR&D"), legal settlements outside the
ordinary course of business, the impact of currency fluctuations,
amortization including intangible asset impairments and other
non-cash charges, amortization and write-down of deferred financing
costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss
on extinguishment of debt, (gain) loss on assets sold/held for
sale/impairment, net, (gain) loss on investments, net, and adjusts
tax expense to cash taxes. Management uses non-GAAP financial
measures internally for strategic decision making, forecasting
future results and evaluating current performance. By disclosing
non-GAAP financial measures, management intends to provide
investors with a meaningful, consistent comparison of the company's
core operating results and trends for the periods presented.
Non-GAAP financial measures are not prepared in accordance with
GAAP. Therefore, the information is not necessarily
comparable to other companies and should be considered as a
supplement to, not a substitute for, or superior to, the
corresponding measures calculated in accordance with GAAP.
Contact Information:
Laurie W. Little
949-461-6002
laurie.little@valeant.com
Media:
Renee E. Soto/Meghan Gavigan
Sard Verbinnen & Co.
212-687-8080
rsoto@sardverb.com / mgavigan@sardverb.com
Financial Tables follow.
Valeant
Pharmaceuticals International, Inc.
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Table
1
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Condensed
Consolidated Statements of Income (Loss)
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For the Three and
Six Months Ended June 30, 2015 and 2014
|
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|
|
|
|
|
|
|
|
|
|
|
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Three Months
Ended
|
|
Six Months
Ended
|
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June
30,
|
|
June
30,
|
(In
millions)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Product
sales
|
|
$ 2,695.0
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|
$ 1,994.1
|
|
$ 4,841.9
|
|
$ 3,845.2
|
Other
revenues
|
|
37.4
|
|
47.0
|
|
81.4
|
|
82.1
|
Total
revenues
|
|
2,732.4
|
|
2,041.1
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|
4,923.3
|
|
3,927.3
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|
|
|
|
|
|
|
|
|
Cost of goods sold
(exclusive of amortization and impairments of finite-lived
intangible assets shown separately below)
|
|
669.9
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|
569.6
|
|
1,230.3
|
|
1,073.7
|
Cost of other
revenues
|
|
15.2
|
|
16.0
|
|
29.5
|
|
30.3
|
Selling, general and
administrative ("SG&A")
|
|
685.5
|
|
515.7
|
|
1,259.3
|
|
997.7
|
Research and
development
|
|
81.1
|
|
66.5
|
|
136.9
|
|
127.8
|
Acquisition-related
contingent consideration
|
|
11.7
|
|
1.9
|
|
18.8
|
|
10.8
|
In-process research
and development impairments and other charges
|
|
12.3
|
|
8.4
|
|
12.3
|
|
20.4
|
Other
(income)/expense
|
|
176.9
|
|
(0.4)
|
|
183.0
|
|
(43.7)
|
Restructuring,
integration, acquisition-related and other costs
|
|
152.9
|
|
142.7
|
|
217.7
|
|
277.8
|
Amortization and
impairments of finite-lived intangible assets
|
|
585.4
|
|
365.6
|
|
950.6
|
|
720.8
|
|
|
2,390.9
|
|
1,686.0
|
|
4,038.4
|
|
3,215.6
|
Operating income
(loss)
|
|
341.5
|
|
355.1
|
|
884.9
|
|
711.7
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
(411.8)
|
|
(240.0)
|
|
(708.7)
|
|
(484.7)
|
Loss on
extinguishment of debt
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|
-
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|
-
|
|
(20.0)
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|
(93.7)
|
Gain (loss) on
investments, net
|
|
-
|
|
2.5
|
|
-
|
|
2.5
|
Foreign exchange and
other
|
|
5.6
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|
3.4
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|
(65.5)
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|
(10.0)
|
|
|
|
|
|
|
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|
Income (loss) before
(recovery of) provision for income taxes
|
|
(64.7)
|
|
121.0
|
|
90.7
|
|
125.8
|
|
|
|
|
|
|
|
|
|
(Recovery of)
provision for income taxes
|
|
(13.1)
|
|
(1.0)
|
|
67.8
|
|
24.1
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
(51.6)
|
|
122.0
|
|
22.9
|
|
101.7
|
|
|
|
|
|
|
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Less: Net
income (loss) attributable to noncontrolling interest
|
|
1.4
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|
(3.8)
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2.2
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(1.5)
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Net income (loss)
attributable to Valeant Pharmaceuticals International,
Inc.
|
|
$
(53.0)
|
|
$ 125.8
|
|
$
20.7
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|
$
103.2
|
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|
|
|
|
|
|
|
|
Earnings (loss)
per share:
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|
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|
|
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Basic:
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|
|
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|
|
Earnings
(loss)
|
|
$
(0.15)
|
|
$
0.38
|
|
$
0.06
|
|
$
0.31
|
Shares used in per
share computation
|
|
344.4
|
|
335.3
|
|
340.5
|
|
335.1
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
Earnings
(loss)
|
|
$
(0.15)
|
|
$
0.37
|
|
$
0.06
|
|
$
0.30
|
Shares used in per
share computation
|
|
344.4
|
|
341.3
|
|
347.1
|
|
341.4
|
Valeant
Pharmaceuticals International, Inc.
|
|
|
|
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Table
2
|
Reconciliation of
GAAP EPS to Cash EPS
|
|
|
|
|
|
|
For the Three and
Six Months Ended June 30, 2015 and 2014
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
(In
millions)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Valeant Pharmaceuticals International,
Inc.
|
|
$
(53.0)
|
|
$ 125.8
|
|
$
20.7
|
|
$
103.2
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments (a):
|
|
|
|
|
|
|
|
|
Inventory step-up
(b)
|
|
46.0
|
|
4.3
|
|
70.5
|
|
9.6
|
PP&E step-up/down
(c)
|
|
8.8
|
|
4.6
|
|
15.3
|
|
9.5
|
Stock-based
compensation (d)
|
|
(6.9)
|
|
(1.7)
|
|
1.6
|
|
4.3
|
Acquisition-related
contingent consideration (e)
|
|
11.7
|
|
1.9
|
|
18.8
|
|
10.8
|
In-process research
and development impairments and other charges (f)
|
|
12.3
|
|
8.4
|
|
12.3
|
|
20.4
|
Other
(income)/expense (g)
|
|
176.9
|
|
(0.4)
|
|
183.0
|
|
(43.7)
|
Restructuring,
integration, acquisition-related and other costs (h)
|
|
152.9
|
|
142.7
|
|
217.7
|
|
277.8
|
Amortization and
impairments of finite-lived intangible assets and other non-GAAP
charges (i)
|
|
588.2
|
|
380.6
|
|
956.7
|
|
744.7
|
|
|
989.9
|
|
540.4
|
|
1,475.9
|
|
1,033.4
|
Amortization of
deferred financing costs, debt discounts and ASC 470-20 (FSP APB
14-1) interest (j)
|
|
20.7
|
|
11.2
|
|
111.2
|
|
23.4
|
Loss on
extinguishment of debt
|
|
-
|
|
-
|
|
20.0
|
|
93.7
|
(Gain) loss on
disposal of fixed assets and assets held for sale/impairment,
net
|
|
-
|
|
-
|
|
0.5
|
|
0.8
|
Foreign exchange and
other (k)
|
|
(10.4)
|
|
(5.4)
|
|
65.6
|
|
7.2
|
Tax (l)
|
|
(50.1)
|
|
(21.4)
|
|
12.5
|
|
(11.4)
|
Total
adjustments
|
|
950.1
|
|
524.8
|
|
1,685.7
|
|
1,147.1
|
|
|
|
|
|
|
|
|
|
Adjusted net income
attributable to Valeant Pharmaceuticals International,
Inc.
|
|
$ 897.1
|
|
$ 650.6
|
|
$ 1,706.4
|
|
$ 1,250.3
|
|
|
|
|
|
|
|
|
|
GAAP earnings (loss)
per share - diluted
|
|
$
(0.15)
|
|
$
0.37
|
|
$
0.06
|
|
$
0.30
|
|
|
|
|
|
|
|
|
|
Cash earnings per
share - diluted
|
|
$
2.56
|
|
$
1.91
|
|
$
4.92
|
|
$
3.66
|
|
|
|
|
|
|
|
|
|
Shares used in
diluted per share calculation - GAAP earnings per share
|
|
344.4
|
|
341.3
|
|
347.1
|
|
341.4
|
|
|
|
|
|
|
|
|
|
Shares used in
diluted per share calculation - Cash earnings per share
|
|
350.9
|
|
341.3
|
|
347.1
|
|
341.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) See footnote (a)
to Table 2a and Table 2b.
|
(b) See footnote (b)
to Table 2a and Table 2b..
|
(c) See footnote (c)
(d) to Table 2a and Table 2b.
|
(d) See footnote (d)
to Table 2a and Table 2b.
|
(e) See footnote (e)
to Table 2a and Table2b.
|
(f) See footnote (f)
to Table 2a and Table 2b.
|
(g) See footnote (g)
to Table 2a and 2b.
|
(h) See footnote (h)
(i) to Table 2a and Table 2b.
|
(i) See footnote (c)
to Table 2a and Table 2b.
|
(j) See footnote (j)
to Table 2a and Table 2b.
|
(k) See footnote (k)
to Table 2a and Table 2b.
|
(l) See footnote (l)
to Table 2a and Table 2b.
|
Valeant
Pharmaceuticals International, Inc.
|
|
|
|
Table
2a
|
|
Reconciliation of
GAAP EPS to Cash EPS
|
|
|
|
|
|
For the Three
Months Ended June 30, 2015 and 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjustments(a) for
|
|
|
|
Three Months
Ended
|
|
|
|
June
30,
|
|
(In
millions)
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
Product
sales
|
|
$
-
|
|
$
-
|
|
Other
revenues
|
|
-
|
|
-
|
|
Total
revenues
|
|
-
|
|
-
|
|
|
|
|
|
|
|
Cost of goods sold
(exclusive of amortization and impairments of finite-lived
intangible assets shown separately below)
|
|
(54.7)
|
(b)(c)
|
(17.7)
|
(b)(c)
|
Cost of other
revenues
|
|
-
|
|
-
|
|
Selling, general and
administrative ("SG&A")
|
|
4.4
|
(d)
|
(4.1)
|
(d)
|
Research and
development
|
|
(0.4)
|
|
(0.4)
|
|
Acquisition-related
contingent consideration
|
|
(11.7)
|
(e)
|
(1.9)
|
(e)
|
In-process research
and development impairments and other charges
|
|
(12.3)
|
(f)
|
(8.4)
|
(f)
|
Other
income/(expense)
|
|
(176.9)
|
(g)
|
0.4
|
|
Restructuring,
integration, acquisition-related and other costs
|
|
(152.9)
|
(h)
|
(142.7)
|
(i)
|
Amortization and
impairments of finite-lived intangible assets
|
|
(585.4)
|
|
(365.6)
|
|
|
|
(989.9)
|
|
(540.4)
|
|
Operating income
(loss)
|
|
989.9
|
|
540.4
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
20.7
|
(j)
|
11.2
|
(j)
|
Loss on
extinguishment of debt
|
|
-
|
|
-
|
|
(Gain) loss on
investments, net
|
|
-
|
|
-
|
|
Foreign exchange and
other
|
|
(10.4)
|
(k)
|
(5.4)
|
(k)
|
|
|
|
|
|
|
Income (loss) before
(recovery of) provision for income taxes
|
|
1,000.2
|
|
546.2
|
|
|
|
|
|
|
|
(Recovery of)
provision for income taxes
|
|
(50.1)
|
(l)
|
(21.4)
|
(l)
|
|
|
|
|
|
|
Total adjustments to
net income (loss) attributable to Valeant Pharmaceuticals
International, Inc.
|
$ 950.1
|
|
$ 524.8
|
|
|
|
|
|
|
|
Earnings (loss)
per share:
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
Total adjustments to
earnings (loss)
|
|
$ 2.71
|
|
$
1.54
|
|
Shares used in per
share computation
|
|
350.9
|
|
341.3
|
|
|
|
|
|
|
|
(a) To supplement the
financial measures prepared in accordance with U.S. generally
accepted accounting principles (GAAP), the company uses non-GAAP
financial measures that exclude certain items, such as amortization
of inventory step-up, amortization of alliance product assets &
property, plant and equipment step-up, stock-based compensation
step-up, contingent consideration fair value adjustments,
restructuring, integration, acquisition-related and other costs,
In-process research and development, impairments and other charges,
("IPR&D"), legal settlements outside the ordinary course of
business, the impact of currency fluctuations, amortization
including intangible asset impairments and other non-cash charges,
amortization and write-down of deferred financing costs, debt
discounts and ASC 470-20 (FSP APB 14-1) interest, loss on
extinguishment of debt, (gain) loss on assets sold/held for
sale/impairment, net, (gain) loss on investments, net, and adjusts
tax expense to cash taxes.
|
|
Management uses
non-GAAP financial measures internally for strategic decision
making, forecasting future results and evaluating current
performance. By disclosing non-GAAP financial measures, management
intends to provide investors with a meaningful, consistent
comparison of the company's core operating results and trends for
the periods presented. Non-GAAP financial measures are not prepared
in accordance with GAAP. Therefore, the information is not
necessarily comparable to other companies and should be considered
as a supplement to, not a substitute for, or superior to, the
corresponding measures calculated in accordance with
GAAP.
|
|
(b) ASC 805, Business
Combinations, requires an inventory fair value step-up whose total
impact for the three months ended June 30, 2015 is $46.0 million
primarily due to the acquisitions of Salix Pharmaceuticals Ltd on
April 1, 2015 and Marathon Pharmaceuticals, LLC on February 10,
2015. For the three months ended June 30, 2014 the impact of
inventory fair value step-up is $4.3 million primarily due to the
acquisition of Solta Medical, Inc. on January 23, 2014.
|
|
(c) For the three
months ended June 30, 2015 and 2014, cost of goods sold include
$2.9 million and $7.0 million, respectively, of costs associated
with integration related tech transfers, PP&E step-up of $5.8
million and $4.9 million, respectively, primarily relating to the
acquisition of Bausch & Lomb Holdings Incorporated. For
the three months ended June 30, 2014, cost of goods sold also
includes $1.5 million amortization of a BMS fair value inventory
adjustment.
|
|
(d) For the three
months ended June 30, 2015, SG&A primarily includes PP&E
step-up of $2.5 million primarily relating to the acquisition of
Bausch & Lomb Holdings Incorporated more than offset by $6.9
million of stock-based compensation which primarily reflects the
reversal of unvested equity awards for an executive who
terminated his employment. For the three months ended
June 30, 2014, SG&A primarily includes ($1.7) million of
stock-based compensation which reflects the acceleration of certain
equity instruments and registration fees associated with the
proposed Allergan transaction, $6.2 million.
|
|
(e) Net
expense/(income) from the changes in acquisition-related contingent
consideration for the three months ended June 30, 2015 and 2014 is
$11.7 million and $1.9 million, respectively.
|
|
(f) In-process
research and development impairments and other charges for
the three months ended June 30, 2015, $12.3 million, related
to the write-off of Arestin® Peri-Implantitis developmental
program. In-process research and development impairments and
other charges for the three months ended June 30, 2014, $8.4
million is primarily due to payments to third parties with the
achievement of specific development and regulatory milestones under
our R&D programs, including Jublia®.
|
|
(g) For the three
months ended June 30, 2015, other (income)/expense of $176.9
million primarily relates to post-combination expense of $168.4
million related to the acceleration of unvested restricted stock
for Salix employees and a loss on sale of divested assets of $3.8
million.
|
|
(h) Restructuring,
integration, acquisition-related and other costs of $152.9 million
primarily relates to the acquisitions of Salix Pharmaceuticals, Ltd
and Dendreon Corporation. These include $80.0
million of employee severance costs, $58.2 million of contract
terminations, integration consulting, transition services,
duplicative labor and other, $9.5 million of acquisition
costs, $2.9 million of other, $2.2 million of facility closure
costs and $0.1 million of non-personnel manufacturing integration
costs.
|
|
(i) Restructuring,
integration, acquisition-related and other costs of $142.7 million
primarily represents costs relating to the restructuring of a
manufacturing facility in Waterford, Ireland the acquisitions of
Bausch & Lomb Holdings Incorporated and Solta Medical, Inc.,
other Valeant restructuring and integration initiatives and the
acquisition of OnPharma Inc. These include $69.1 million of
employee severance costs, $50.2 million of contract terminations,
integration consulting, transition services, duplicative labor and
other, $14.4 million of facility closure costs, $5.6 million
of other, $2.8 million of non-personnel manufacturing integration
costs and $0.6 million of acquisition costs.
|
|
(j) Non-cash interest
expense associated with amortization and write-down of deferred
financing costs and debt discounts for the three months ended June
30, 2015 and 2014 is $20.7 million and $11.2 million,
respectively.
|
|
(k) Unrealized
foreign exchange gain on intercompany financing arrangements for
the three months ended June 30, 2015 and 2014 is ($10.4) million
and ($5.4) million, respectively.
|
|
(l) Total tax effect
of non-GAAP pre-tax adjustments, resolution of uncertain tax
positions and change in deferred taxes.
|
Valeant
Pharmaceuticals International, Inc.
|
|
|
|
Table
2b
|
|
Reconciliation of
GAAP EPS to Cash EPS
|
|
|
|
|
|
For the Six Months
Ended June 30, 2015 and 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjustments(a) for
|
|
|
|
Six Months
Ended
|
|
|
|
June
30,
|
|
(In
millions)
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
Product
sales
|
|
$
-
|
|
$
-
|
|
Other
revenues
|
|
-
|
|
-
|
|
Total
revenues
|
|
-
|
|
-
|
|
|
|
|
|
|
|
Cost of goods sold
(exclusive of amortization and impairments of finite-lived
intangible assets shown separately below)
|
|
(88.7)
|
(b)(c)
|
(37.3)
|
(b)(c)
|
Cost of other
revenues
|
|
-
|
|
-
|
|
Selling, general and
administrative ("SG&A")
|
|
(4.6)
|
(d)
|
(10.1)
|
(d)
|
Research and
development
|
|
(0.7)
|
|
(0.7)
|
|
Acquisition-related
contingent consideration
|
|
(18.8)
|
(e)
|
(10.8)
|
(e)
|
In-process research
and development impairments and other charges
|
|
(12.3)
|
(f)
|
(20.4)
|
(f)
|
Other
income/(expense)
|
|
(183.0)
|
(g)
|
43.7
|
(g)
|
Restructuring,
integration, acquisition-related and other costs
|
|
(217.7)
|
(h)
|
(277.8)
|
(i)
|
Amortization and
impairments of finite-lived intangible assets
|
|
(950.6)
|
|
(720.8)
|
|
|
|
(1,476.4)
|
|
(1,034.2)
|
|
Operating income
(loss)
|
|
1,476.4
|
|
1,034.2
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
111.2
|
(j)
|
23.4
|
(j)
|
Loss on
extinguishment of debt
|
|
20.0
|
|
93.7
|
|
Foreign exchange and
other
|
|
65.6
|
(k)
|
7.2
|
(k)
|
|
|
|
|
|
|
Income (loss) before
(recovery of) provision for income taxes
|
|
1,673.2
|
|
1,158.5
|
|
|
|
|
|
|
|
(Recovery of)
provision for income taxes
|
|
12.5
|
(l)
|
(11.4)
|
(l)
|
|
|
|
|
|
|
Total adjustments to
net income (loss) attributable to Valeant Pharmaceuticals
International, Inc.
|
|
$ 1,685.7
|
|
$ 1,147.1
|
|
|
|
|
|
|
|
Earnings (loss)
per share:
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
Total adjustments to
earnings (loss)
|
|
$
4.86
|
|
$
3.36
|
|
Shares used in per
share computation
|
|
347.1
|
|
341.4
|
|
|
|
|
|
|
|
|
(a) To supplement the
financial measures prepared in accordance with U.S. generally
accepted accounting principles (GAAP), the company uses non-GAAP
financial measures that exclude certain items, such as amortization
of inventory step-up, amortization of alliance product assets &
property, plant and equipment step-up, stock-based compensation
step-up, contingent consideration fair value adjustments,
restructuring, integration, acquisition-related and other costs,
In-process research and development, impairments and other charges,
("IPR&D"), legal settlements outside the ordinary course of
business, the impact of currency fluctuations, amortization
including intangible asset impairments and other non-cash charges,
amortization and write-down of deferred financing costs, debt
discounts and ASC 470-20 (FSP APB 14-1) interest, loss on
extinguishment of debt, (gain) loss on assets sold/held for
sale/impairment, net, (gain) loss on investments, net, and adjusts
tax expense to cash taxes.
|
|
Management uses
non-GAAP financial measures internally for strategic decision
making, forecasting future results and evaluating current
performance. By disclosing non-GAAP financial measures, management
intends to provide investors with a meaningful, consistent
comparison of the company's core operating results and trends for
the periods presented. Non-GAAP financial measures are not prepared
in accordance with GAAP. Therefore, the information is not
necessarily comparable to other companies and should be considered
as a supplement to, not a substitute for, or superior to, the
corresponding measures calculated in accordance with
GAAP.
|
|
(b) ASC 805, Business
Combinations, requires an inventory fair value step-up whose total
impact for the six months ended June 30, 2015 is $70.5 million
primarily due to the acquisitions of Marathon Pharmaceuticals, LLC
on February 10, 2015 and Salix Pharmaceuticals Ltd on April 1, 2015
. For the six months ended June 30, 2014 the impact of
inventory fair value step-up is $9.6 million primarily due to the
acquisition of Solta Medical, Inc. on January 23, 2014.
|
|
(c) For the six
months ended June 30, 2015 and 2014, cost of goods sold include
$6.1 million and $14.6 million, respectively, of costs associated
with integration related tech transfers, PP&E step-up of $12.1
million and $10.1 million, respectively, primarily relating to the
acquisition of Bausch & Lomb Holdings Incorporated. For
the six months ended June 30, 2014, cost of goods sold also
includes $3.0 million amortization of a BMS fair value inventory
adjustment.
|
|
(d) For the six
months ended June 30, 2015, SG&A primarily includes $1.6
million of stock-based compensation which reflects the acceleration
of certain equity instruments offset by the reversal of unvested
equity awards for an executive who terminated his employment
and PP&E step-up of $2.5 million primarily relating to the
acquisition of Bausch & Lomb Holdings Incorporated. For
the six months ended June 30, 2014, SG&A primarily includes
$4.3 million of stock-based compensation which reflects
acceleration of certain equity instruments and registration fees
associated with the proposed Allergan transaction, $6.2
million.
|
|
(e) Net
expense/(income) from the changes in acquisition-related contingent
consideration for the six months ended June 30, 2015 and 2014 is
$18.8 million and $10.8 million, respectively.
|
|
(f) In-process
research and development impairments and other charges for the six
months ended June 30, 2015, $12.3 million, related to the write-off
of Arestin® Peri-Implantitis developmental program.
In-process research and development impairments and other charges
for the six months ended June 30, 2014, $20.4 million is primarily
due to an upfront payment made in connection with an amendment to a
license and distribution agreement with a third party, $12.0
million, and payments to third parties with the achievement of
specific developmental and regulatory milestones under our R&D
programs, including Jublia®, $8.4 million.
|
|
(g) For the six
months ended June 30, 2015, other (income)/expense of $183.0
million primarily relates to post-combination expense of $168.4
million related to the acceleration of unvested restricted stock
for Salix employees and a loss on sale of divested assets of $8.4
million . For the six months ended June 30, 2014, other
(income)/expense of ($43.7) million primarily relates to the
reversal of the AntiGrippin® litigation reserve of ($50.0) million,
partially offset by $5.6 million expense related to a settlement of
a preexisting relationship with respect to the acquisition of Solta
Medical, Inc.
|
|
(h) Restructuring,
integration, acquisition-related and other costs of $217.7 million
primarily relates to the acquisitions of Salix Pharmaceuticals,
Ltd, Dendreon Corporation, Bausch & Lomb Holdings Incorporated,
Medicis Pharmaceutical Corporation, and Marathon Pharmaceuticals,
LLC. These include $104.8 million of employee severance
costs, $83.0 million of contract terminations, integration
consulting, transition services, duplicative labor and other,
$19.3 million of acquisition costs, $6.0 million of other, $3.7
million of facility closure costs and $0.9 million of non-personnel
manufacturing integration costs.
|
|
(i) Restructuring,
integration, acquisition-related and other costs of $277.8 million
primarily relates to the acquisitions of Bausch & Lomb Holdings
Incorporated, the restructuring of a manufacturing facility in
Waterford, Ireland, the acquisition of Solta Medical, Inc., other
Valeant restructuring and integration initiatives and the
acquisition of OnPharma Inc. These include $123.8 million of
contract terminations, integration consulting, transition services,
duplicative labor and other, $102.9 million of employee severance
costs, $27.6 million of facility closure costs, $13.4 million of
other, $4.5 million of non-personnel manufacturing integration
costs, $3.5 million of stock-based compensation and $2.1 million of
acquisition costs.
|
|
(j) Non-cash interest
expense associated with amortization of deferred financing costs
and debt discounts for the six months ended June 30, 2015 and 2014
is $30.8 million and $23.4 million, respectively. The six
months ended June 30, 2015 also includes $72.4 million write-down
of deferred finance costs and $8.0 million of interest expense
resulting from the acquisition of Salix Pharmaceuticals,
Ltd.
|
|
(k) Unrealized
foreign exchange loss on intercompany financing arrangements for
the six months ended June 30, 2015 and 2014 is $39.0 million and
$7.2 million, respectively. The six months ended June 30,
2015 also includes unrealized foreign exchange loss of $26.6M
relating to a foreign currency forward-exchange
contracts.
|
|
(l) Total tax effect
of non-GAAP pre-tax adjustments, resolution of uncertain tax
positions and change in deferred taxes.
|
Valeant
Pharmaceuticals International, Inc.
|
|
|
|
|
|
|
Table
3
|
Statement of
Revenues - by Segment
|
|
|
|
|
|
|
|
|
For the Three and
Six Months Ended June 30, 2015 and 2014
|
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
June
30,
|
Revenues(a)(b)
|
|
2015
GAAP
|
|
2014
GAAP
|
|
%
Change
|
|
2015 currency
impact
|
|
2015 excluding
currency impact
non-GAAP
|
|
%
Change
|
Dermatology
|
|
$
461.8
|
|
$ 298.3
|
|
55%
|
|
$
-
|
|
$ 461.8
|
|
55%
|
Consumer
|
|
163.2
|
|
160.6
|
|
2%
|
|
-
|
|
163.2
|
|
2%
|
Ophthalmology
Rx
|
|
135.4
|
|
116.5
|
|
16%
|
|
-
|
|
135.4
|
|
16%
|
Contact
Lenses
|
|
51.2
|
|
42.1
|
|
22%
|
|
-
|
|
51.2
|
|
22%
|
Surgical
|
|
56.5
|
|
56.2
|
|
1%
|
|
-
|
|
56.5
|
|
1%
|
Neuro &
Other/Generics
|
|
526.2
|
|
332.7
|
|
58%
|
|
-
|
|
526.2
|
|
58%
|
Dental
|
|
59.0
|
|
31.7
|
|
86%
|
|
-
|
|
59.0
|
|
86%
|
Oncology/Urology
|
|
73.7
|
|
-
|
|
|
|
-
|
|
73.7
|
|
|
GI
|
|
313.3
|
|
-
|
|
|
|
-
|
|
313.3
|
|
|
Total U.S.
|
|
1,840.3
|
|
1,038.1
|
|
77%
|
|
-
|
|
1,840.3
|
|
77%
|
ROW Developed
|
|
397.3
|
|
441.6
|
|
-10%
|
|
75.2
|
|
472.5
|
|
7%
|
Developed
Markets
|
|
2,237.6
|
|
1,479.7
|
|
51%
|
|
75.2
|
|
2,312.8
|
|
56%
|
Emerging Markets-Europe/Middle East/Africa
|
|
254.9
|
|
315.5
|
|
-19%
|
|
72.8
|
|
327.7
|
|
4%
|
Emerging Markets-Latin America
|
|
94.3
|
|
109.8
|
|
-14%
|
|
21.2
|
|
115.5
|
|
5%
|
Emerging Markets-Asia
|
|
145.6
|
|
136.1
|
|
7%
|
|
3.6
|
|
149.2
|
|
10%
|
Emerging
Markets
|
|
494.8
|
|
561.4
|
|
-12%
|
|
97.6
|
|
592.4
|
|
6%
|
Total
revenues
|
|
$ 2,732.4
|
|
$ 2,041.1
|
|
34%
|
|
$ 172.8
|
|
$ 2,905.2
|
|
42%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
June
30,
|
Revenues(a)(b)
|
|
2015
GAAP
|
|
2014
GAAP
|
|
%
Change
|
|
2015 currency
impact
|
|
2015 excluding
currency impact
non-GAAP
|
|
%
Change
|
Dermatology
|
|
$
881.1
|
|
$ 602.5
|
|
46%
|
|
$
-
|
|
$ 881.1
|
|
46%
|
Consumer
|
|
318.7
|
|
304.6
|
|
5%
|
|
-
|
|
318.7
|
|
5%
|
Ophthalmology
Rx
|
|
264.5
|
|
215.8
|
|
23%
|
|
-
|
|
264.5
|
|
23%
|
Contact
Lenses
|
|
98.9
|
|
83.0
|
|
19%
|
|
-
|
|
98.9
|
|
19%
|
Surgical
|
|
104.6
|
|
104.5
|
|
0%
|
|
-
|
|
104.6
|
|
0%
|
Neuro &
Other/Generics
|
|
1,065.3
|
|
684.2
|
|
56%
|
|
-
|
|
1,065.3
|
|
56%
|
Dental
|
|
93.8
|
|
49.9
|
|
88%
|
|
-
|
|
93.8
|
|
88%
|
Oncology/Urology
|
|
103.8
|
|
-
|
|
|
|
-
|
|
103.8
|
|
|
GI
|
|
313.3
|
|
-
|
|
|
|
-
|
|
313.3
|
|
|
Total U.S.
|
|
3,244.0
|
|
2,044.5
|
|
59%
|
|
-
|
|
3,244.0
|
|
59%
|
ROW Developed
|
|
758.0
|
|
857.0
|
|
-12%
|
|
137.2
|
|
895.2
|
|
4%
|
Developed
Markets
|
|
4,002.0
|
|
2,901.5
|
|
38%
|
|
137.2
|
|
4,139.2
|
|
43%
|
Emerging Markets-Europe/Middle East/Africa
|
|
467.0
|
|
564.2
|
|
-17%
|
|
132.9
|
|
599.9
|
|
6%
|
Emerging Markets-Latin
America
|
|
183.3
|
|
209.1
|
|
-12%
|
|
35.2
|
|
218.5
|
|
4%
|
Emerging
Markets-Asia
|
|
271.0
|
|
252.5
|
|
7%
|
|
7.1
|
|
278.1
|
|
10%
|
Emerging
Markets
|
|
921.3
|
|
1,025.8
|
|
-10%
|
|
175.2
|
|
1,096.5
|
|
7%
|
Total
revenues
|
|
$ 4,923.3
|
|
$ 3,927.3
|
|
25%
|
|
$ 312.4
|
|
$ 5,235.7
|
|
33%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Note: Currency
effect for constant currency sales is determined by comparing 2015
reported amounts adjusted to exclude currency impact, calculated
using 2014 monthly average exchange rates, to the actual 2014
reported amounts. Constant currency sales is not a GAAP-defined
measure of revenue growth. Constant currency sales as defined and
presented by us may not be comparable to similar measures reported
by other companies.
|
|
(b) See footnote (a)
to Table 2a.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valeant
Pharmaceuticals International, Inc.
|
|
|
|
|
|
Table
4
|
Reconciliation of
GAAP Cost of Goods Sold to Non-GAAP Cost of Goods Sold - by
Segment
|
|
|
For the Three and
Six Months Ended June 30, 2015
|
|
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
Cost of goods sold
(a)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
June
30,
|
|
|
|
2015
as reported
GAAP
|
|
%
of product sales
|
|
2015
fair value step-up adjustment to inventory and other
non-GAAP (b)
|
|
2015 excluding
fair value step-up adjustment to inventory and other
non-GAAP
|
|
%
of product sales
|
|
Developed
Markets
|
|
$ 474.6
|
|
22%
|
|
$
53.0
|
|
$ 421.6
|
|
19%
|
|
Emerging
Markets
|
|
195.3
|
|
40%
|
|
1.7
|
|
193.6
|
|
40%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 669.9
|
|
25%
|
|
$
54.7
|
|
$ 615.2
|
|
23%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
June
30,
|
|
|
|
2015
as reported
GAAP
|
|
%
of product sales
|
|
2015
fair value step-up adjustment to inventory and other
non-GAAP (c)
|
|
2015 excluding
fair value step-up adjustment to inventory and other
non-GAAP
|
|
%
of product sales
|
|
Developed
Markets
|
|
$ 872.2
|
|
22%
|
|
$
85.1
|
|
$ 787.1
|
|
20%
|
|
Emerging
Markets
|
|
358.1
|
|
40%
|
|
3.6
|
|
354.5
|
|
39%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 1,230.3
|
|
25%
|
|
$
88.7
|
|
$ 1,141.6
|
|
24%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) See footnote (a)
to Table 2a.
|
|
|
|
(b) Developed Markets
include $46.0 million of fair value step-up adjustment to
inventory, PP&E net step-up adjustment of $5.5 million and $1.5
million of integration related tech transfer costs. Emerging
Markets include $1.4 million of integration related tech transfer
costs and $0.3 million of PP&E step-up adjustment.
|
|
|
|
(c) Developed Markets
include $70.5 million of fair value step-up adjustment to
inventory, PP&E net step-up adjustment of $11.4 million and
$3.2 million of integration related tech transfer costs.
Emerging Markets include $2.9 million of integration related tech
transfer costs and $0.7 million of PP&E step-up
adjustment.
|
|
Valeant
Pharmaceuticals International, Inc.
|
|
|
|
Table
5
|
|
Consolidated
Balance Sheet and Other Data
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
As
of
|
|
As
of
|
|
|
|
June
30,
|
|
December
31,
|
|
5.1
|
Cash
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
958.0
|
|
$
322.6
|
|
|
Marketable
securities
|
-
|
|
-
|
|
|
Total cash and
marketable securities
|
$
958.0
|
|
$
322.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
|
|
|
|
|
|
|
|
|
|
Revolving Credit
Facility
|
$
-
|
|
$
165.0
|
|
|
Series A-1 Tranche A
Term Loan Facility
|
139.3
|
|
139.3
|
|
|
Series A-2 Tranche A
Term Loan Facility
|
135.9
|
|
135.5
|
|
|
Series A-3 Tranche A
Term Loan Facility
|
1,876.2
|
|
1,633.8
|
|
|
Series A-4 Tranche A
Term Loan Facility
|
974.6
|
|
-
|
|
|
Series D-2 Tranche B
Term Loan Facility
|
1,084.1
|
|
1,088.4
|
|
|
Series C-2 Tranche B
Term Loan Facility
|
832.3
|
|
835.0
|
|
|
Series E-1 Tranche B
Term Loan Facility
|
2,529.4
|
|
2,543.8
|
|
|
Series F Tranche B
Term Loan Facility
|
4,070.0
|
|
-
|
|
|
Senior
Notes
|
19,226.9
|
|
8,675.2
|
|
|
Other
|
12.4
|
|
12.9
|
|
|
|
30,881.1
|
|
15,228.9
|
|
|
Less: current
portion
|
(590.9)
|
|
(0.9)
|
|
|
Total long-term
debt
|
$ 30,290.2
|
|
$ 15,228.0
|
|
|
|
|
|
|
|
5.2
|
Summary of Cash
Flow Statements
|
Three Months
Ended
|
|
|
|
June
30,
|
|
|
|
2015
|
|
2014
|
|
|
Cash flow provided by
(used in):
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities (GAAP)
|
$
410.5
|
|
$
376.0
|
|
|
Restructuring,
integration and acquisition-related costs(c)
|
152.9
|
|
142.0
|
|
|
Payment of accrued
legal settlements
|
2.9
|
|
0.9
|
|
|
Tax benefit from
stock options exercised (a)
|
7.6
|
|
-
|
|
|
Acquired in-process
research and development
|
-
|
|
3.0
|
|
|
Working capital
change related to business development activities
|
268.5
|
|
6.0
|
|
|
Changes in working
capital related to restructuring, integration and
acquisition-related costs(c)
|
(69.6)
|
|
(27.7)
|
|
|
Adjusted cash flow
from operations (Non-GAAP)(b)
|
$
772.8
|
|
$
500.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes stock
option tax benefit which will reduce taxes in future
periods.
|
|
|
(b) See footnote (a)
to Table 2a.
|
|
|
(c) Total
restructuring, integration and acquisition-related costs cash
payments of $83.3 million are broken down as follows:
|
|
|
|
|
|
Project
Type
|
Cash
Paid
|
|
Expensed
|
|
|
|
|
|
|
|
|
Salix
Pharmaceuticals, Ltd
|
42.1
|
|
121.6
|
|
|
Dendreon
Corporation
|
17.9
|
|
17.7
|
|
|
Bausch &
Lomb/Project
Vision/Waterford
|
8.1
|
|
(1.2)
|
|
|
Europe (Various
Deals)
|
2.8
|
|
3.0
|
|
|
Precision
Dermatology
|
1.2
|
|
0.6
|
|
|
Other (Various
deals)
|
11.2
|
|
11.2
|
|
|
|
|
|
|
|
|
Total
|
83.3
|
|
152.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense
Type
|
Cash
Paid
|
|
|
|
|
|
|
|
|
|
|
Severance
payments
|
41.6
|
|
|
|
|
Integration related
consulting, duplicative labor, transition services, and
other
|
32.4
|
|
|
|
|
Acquisition-related
costs paid to 3rd parties
|
6.9
|
|
|
|
|
Facility closure
costs, other manufacturing integration, and other
|
2.4
|
|
|
|
|
|
|
|
|
|
|
Total
|
83.3
|
|
|
|
Valeant
Pharmaceuticals International, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
Table
6
|
Organic Growth -
by Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended June 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
reported
|
|
For the
Three Months Ended June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic
growth
|
|
|
|
|
|
|
|
|
|
(a)
|
(b)
|
|
|
|
(b)
|
|
(b)
|
|
(1) Q2
2015
|
(2) Acq
impact
|
(3) Q2
2015
Same store
|
|
(4) Q2
2014
|
(5)Pro Forma
Adj
|
(6)
Q2 2014
|
|
(7)Currency
impact Same store
|
(8)
Currency impact Acq
|
|
(9)
Divestitures / Discontinuations (c )
|
|
Pro
Forma (1)+(7)+(8) / (6)-(9)
(e)
|
|
Same store
(3)+(7) / (4)-(9)
(e)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
U.S. (d)
|
1,822.8
|
533.7
|
1,289.1
|
|
1,016.7
|
527.8
|
1,544.5
|
|
-
|
-
|
|
42.9
|
|
21%
|
|
32%
|
ROW
Developed
|
384.8
|
12.6
|
372.2
|
|
425.4
|
14.4
|
439.8
|
|
70.3
|
2.6
|
|
5.6
|
|
5%
|
|
5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed
Markets
|
2,207.6
|
546.3
|
1,661.3
|
|
1,442.1
|
542.1
|
1,984.3
|
|
70.3
|
2.6
|
|
48.5
|
|
18%
|
|
24%
|
Emerging
Markets
|
487.9
|
13.2
|
474.8
|
|
552.0
|
11.7
|
563.6
|
|
95.4
|
1.0
|
|
4.6
|
|
5%
|
|
4%
|
Total product
sales
|
2,695.5
|
559.4
|
2,136.1
|
|
1,994.1
|
553.8
|
2,547.9
|
|
165.7
|
3.7
|
|
53.1
|
|
15%
|
|
19%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Note: Currency
effect for constant currency sales is determined by comparing 2015
reported amounts adjusted to exclude currency impact, calculated
using 2014 monthly average exchange rates, to the actual 2014
reported amounts. Constant currency sales is not a GAAP-defined
measure of revenue growth. Constant currency sales as defined and
presented by us may not be comparable to similar measures reported
by other companies.
|
(b) See footnote (a)
to Table 2a.
|
(c) Includes
divestitures, discontinuations and supply interruptions.
|
(d) Includes
Valeant's attributable portion of revenue from joint ventures (JV)
- $0.7M Q1'15.
|
(e) Organic Growth
Definitions:
|
Same Store (SS): This
measure provides growth rates for businesses that have been owned
for one year or more.
|
((Current Year Total
product sales – acquisitions within the last year + YoY FX impact)-
(Prior Year Total product sales – divestitures &
discontinuations))/( Prior Year Total product sales – divestitures
& discontinuations)
|
Pro Forma (PF):
This measure provides year over year growth rates for the entire
business, including those that have been acquired within the last
year.
|
((Current Year Total
product sales + YoY FX impact) – (Prior Year Total product sales +
Pro Forma impact of acquisitions within the last year -
divestitures or discontinuations))/(Prior Year Total product sales
+ Pro Forma impact of acquisitions within the last year -
divestitures or discontinuations).
|
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SOURCE Valeant Pharmaceuticals International, Inc.