Valeant CEO expects quarterly profit to exceed forecast
By Rod Nickel
(Reuters) - Valeant Pharmaceuticals Inc (VRX.TO: Quote)(VRX.N: Quote) expects third-quarter revenue to beat analyst expectations and adjusted earnings per share to surpass the company's forecast, its CEO said on Wednesday, seeking to bolster a hostile takeover bid for Allergan Inc (AGN.N: Quote).
Valeant will also beat guidance for third-quarter organic growth, restructuring charges and adjusted cash flow from operations, Chief Executive Officer Michael Pearson wrote in a letter to Allergan CEO David Pyott and lead independent director Michael Gallagher. Shares of both companies jumped.
Laval, Quebec-based Valeant has offered $51 billion in stock and cash for Allergan, the California-based maker of Botox anti-wrinkle injections. Valeant's third-quarter results, due Oct. 20, are seen as pivotal to its efforts with activist investor Bill Ackman to remove most Allergan directors in a special shareholder meeting scheduled for Dec. 18.
Some have criticized Valeant for modest organic growth, a metric that excludes acquisitions. But Pearson said he expects to show double-digit growth across most of Valeant's businesses and gains in market share.
The improved guidance reflects, in part, new product launches such as Jublia, a treatment for a nail infection, said Tim Chiang, analyst at CRT Capital Group.
"I actually thing Valeant's business is going to improve in the second half of the year, and they're highlighting that," Chiang said. "I think Valeant has a shot at acquiring Allergan. A lot of it is going to come down to the special meeting."
Pearson did not offer further details on expected third-quarter revenue and adjusted profit, which Valeant calls cash earnings per share.
Valeant had forecast adjusted earnings of $1.90 to $2.00 per share for the third quarter. Analysts were expecting earnings of $1.97 per share and revenue of $2.045 billion, according to Thomson Reuters I/B/E/S. Continued...