August 2, 2012 / 11:54 AM / in 5 years

UPDATE 3-Valeant reports net loss, raises full-year forecast

* Q2 share loss $0.07 vs. $0.17 EPS year earlier

* Revenue up 35 pct at $820.1 mln

* CEO says integration costs to fall

By Allison Martell

Aug 2 (Reuters) - Valeant Pharmaceuticals International Inc reported a quarterly net loss on Thursday as it paid severance and other costs for a series of acquisitions, but adjusted cash earnings rose and it raised its 2012 cash earnings per share forecast.

Chief Executive Michael Pearson said the margin between earnings and adjusted cash flow would keep narrowing in the next few quarters as integration costs fall for the deals Valeant has done in 2012.

“With many of these acquisitions we did not acquire manufacturing facilities and/or people, so restructuring cash costs in future quarters should continue to decline,” he said on a conference call.

Valeant, Canada’s biggest public drugmaker, has been on the acquisition trail since its 2010 takeover by Biovail Corp, which assumed the Valeant name.

Morningstar analyst David Krempa said Valeant’s results for the second quarter were broadly in line with his expectations.

He said he is happy with Valeant’s deal strategy, avoiding highly competitive locations such as India and China in favor of smaller markets in, for example, South America.

“They’ve got a pretty good strategy that they’re sticking to. I haven’t seen anything that I think is undisciplined,” he said.

Pearson said the company is looking at opportunities in South Africa and in Southeast Asia.

In April, Valeant announced a deal for U.S.-based Pedinol Pharmacal Inc, which specializes in treating foot disorders. Valeant said it paid less than 1.5 times sales. Pedinol’s revenue was about $18 million in 2011.

In June, Valeant said it would buy closely held dental drug company OraPharma for about $312 million.

The company now sees cash earnings per share of $4.55 to $4.75 in 2012, up from its previous forecast of $4.45 to $4.70.

Its net loss for the quarter ended June 30 came in at $21.6 million, or 7 cents a share, compared with a profit of $56.4 million, or 17 cents, a year earlier.

On a cash earnings basis, income rose to $314.5 million, or $1.01 a share, from $240.2 million, or 73 cents. Revenue rose 35 percent to $820.1 million.

Analysts, on average, had expected earnings of 99 cents a share on revenue of $822.9 million.

The stock was little changed, up 0.28 percent at C$47.29 on the Toronto Stock Exchange on Thursday afternoon.

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