February 27, 2012 / 2:08 PM / 6 years ago

UPDATE 4-Valeant beats forecasts, looks to Latam for growth

* Q4 EPS $0.18 vs shr loss $0.10 a year earlier

* Revenue up 34 pct at $688.5 million

* Looking for deals in Colombia, Chile

By Allison Martell

TORONTO Feb 27 (Reuters) - Valeant Pharmaceuticals International reported a higher than expected adjusted profit on Monday as acquisitions and growth in its dermatology business boosted revenue, offsetting the impact of a stronger U.S. dollar.

Susquehanna Financial Group analyst Gary Nachman said the results were strong overall, although they may have fallen short of expectations in Central and Eastern Europe due in part to currency fluctuations.

Drops in European currencies, reflecting fears about major economies, hurt Valeant’s results when translated into the U.S. dollars in which the company reports.

“I think a lot of that had to do with currency and also probably some of the macro factors that are plaguing Europe right now,” Nachman said. “Other businesses (in the U.S. and Canada) performed a lot better than expectations.”

Speaking on a conference call, Chief Executive Michael Pearson said Valeant’s European business is strong.

“Clearly Western Europe does have some impact on our business because a lot of exports from Central and Eastern Europe go into Western Europe. But our business remains solid,” he said.

The Mississauga, Ontario-based company has been increasing revenues, mostly through acquisitions, since Biovail Corp, Canada’s largest publicly owned pharmaceutical company, took over U.S.-based Valeant and assumed the Valeant name in September 2010.


Valeant avoided deals in Latin America in 2011 because of high asset prices, but Pearson said prices are now more attractive. The company bought Brazilian food supplement maker Probiotica Laboratorios in early February.

“We still think the fundamentals are quite strong, in Brazil in particular. The pharmaceutical market in Brazil last year grew over 15 percent,” he said, adding that Valeant’s Mexican business is also doing well.

“In terms of other countries, we like Colombia, we like Chile, and there’s a few others, but those would probably be the two next priorities.”

Pearson said Valeant would not shy away from hostile bids despite its recent failed attempt to buy Ista Pharmaceuticals Inc. But he said hostile takeovers are not the drugmaker’s main focus.

In the fourth quarter, Valeant bought Australia’s iNova Pharmaceuticals from private equity firms Archer Capital and Ironbridge for A$625 million ($669.25 million).

It also completed its acquisition of Canadian cold and flu medicine maker Afexa Life Sciences, Sanofi dermatology business Dermik, and Janssen Pharmaceuticals’ dermatology division, Ortho Dermatologics.

The company left its 2012 earnings forecast of $3.95 to $4.20 a share unchanged, and noted that the forecast does not include 2012 acquisitions.

Fourth quarter net income was $55.9 million, or 18 cents a share, compared with a net loss of $31.1 million, or 10 cents, a year earlier. Revenue rose 34 percent to $688.5 million.

Adjusted cash income was $297.7 million, or 94 cents a share. Analysts, on average, had expected earnings of 85 cents a share on revenue of $667.3 million, according to Thomson Reuters I/B/E/S.

Shares of Valeant rose 4.1 percent to C$49.98 on the Toronto Stock Exchange on Monday.

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