Valeant profit beats forecasts on Bausch & Lomb strength

(Reuters) - Valeant Pharmaceuticals International Inc VRX.TO reported a better-than-expected quarterly profit on strength in its Bausch and Lomb eye care business, sending its shares up more than 15 percent.

The headquarters of Valeant Pharmaceuticals International Inc is seen in Laval, Quebec in this file picture taken November 9, 2015. REUTERS/Christinne Muschi/File Photo

The Canadian drugmaker also maintained its full-year adjusted earnings forecast, despite losing revenue from businesses it sold off to lighten a heavy debt load.

Chief Executive Joseph Papa, who took over the helm in April 2016, has been working to reshape the company and regain investor confidence, after a flurry of investigations into Valeant’s accounting and pricing practices that hit its shares.

One of Papa’s biggest challenges has been to slash Valeant’s debt, which ballooned to more than $30 billion following a spate of deal-making under its previous CEO, Mike Pearson.

The company said it reduced its total debt by about $6 billion since April 2016, exceeding its commitment to cut $5 billion of debt by February.

“We’ve paid down our debt commitment to our shareholders,” Papa said in an interview, adding that the company was “very comfortable” with its assets.

“We’re going to be much more opportunistic tomorrow as we think about where we are with any potential asset sales. We like our portfolio of eye care, dermatology and GI (gastrointestinal products),” he said.

Valeant said it had 6 percent organic revenue growth over the quarter at both its Bausch and Lomb and its Salix business, which makes its GI drugs.

It said its total long-term debt, net of unamortized discounts and issuance costs, stood at $27.14 billion. It has no long-term debt maturities until 2020.

Net income attributable to Valeant was $1.30 billion, or $3.69 per share, in the third quarter ended Sept. 30, compared with a loss of $1.22 billion, or $3.49 per share, a year earlier.

The reported quarter included a tax benefit of about $1.4 billion, the company said.

Excluding one-off items, the company earned $1.04 per share, according to Thomson Reuters I/B/E/S calculations, above analysts’ average estimate of 88 cents.

Total revenue fell 10.5 percent to $2.22 billion, largely due to volume decreases in its U.S. diversified products and branded businesses, but beat estimates of $2.15 billion.

The company maintained its forecast for full-year adjusted earnings before interest, taxes, depreciation and amortization of $3.60 billion to $3.75 billion.

Valeant's U.S.-listed shares VRX.N rose 16 percent to $13.97 in early afternoon trading. They have lost more than 90 percent of their value since their 2015 peaks, with former executives facing criminal charges and the company contending with lawsuits.

Papa said the company has had positive outcomes or dismissals in 21 litigations and investigations since last quarter’s post-earnings conference call.

Reporting by Michael Erman in New York and Ankur Banerjee in Bengaluru; Editing by Sriraj Kalluvila and Rosalba O’Brien