May 9, 2011 / 12:38 PM / 6 years ago

UPDATE 4-Valeant profit tops expectations; raises outlook

* Q1 cash earnings of $0.62/shr vs expected $0.51

* Company says in active discussions with several firms

* Shares end up 2.81 percent on TSX (Updates share price to close; in U.S. dollars unless noted)

By John McCrank and S. John Tilak

TORONTO, May 9 (Reuters) - Valeant Pharmaceuticals International Inc (VRX.TO) (VRX.N), which last week dropped its $5.7 billion bid for Cephalon Inc CEPH.O, posted a higher-than-expected profit and raised its outlook on Monday, crediting its specialty and generic drug businesses.

Shares of the Mississauga, Ontario-based company rose nearly 3 percent on the results and after it affirmed its intention to pursue more acquisitions in spite of the Cephalon setback.

While Valeant has made around 20 acquisitions in the past three years, its strong performance was more than just a mergers and acquisitions story, said Gary Nachman, an analyst at Susquehanna Financial in New York. He said the company’s whole basket of products was growing organically.

The Canadian drugmaker sells branded generics, dermatology products, and neurology drugs, with a focus on North America, Central Europe, Mexico, Brazil, and Australia.

“We feel very confident that this isn’t the last time (the company) will be taking up guidance this year,” Nachman said.

Valeant also increased its full-year outlook on Monday to a range of $2.65 to $2.90 from a previous range of $2.45 to $2.70, based on the stronger-than-expected quarterly operating results.

RIGHT PROPERTY, RIGHT PRICE

Valeant scrapped its bid for Pennsylvania-based specialty drug company Cephalon after Israel’s Teva Pharmaceutical Industries (TEVA.TA) countered with an $81.50 a share bid, topping Valeant’s $73 a share offer. [ID:nN02205566]

Valeant said that acquisitions are still a key part of its strategy and that it is in active discussions with a number of companies of all sizes, in various geographies, on possible deals. [ID:nN03296142]

The one place it said it has no interest in growing right now was Western Europe.

The company is in no hurry to consummate a large deal -- Cephalon would have been the biggest in its history -- but if the right property at the right price comes along, it will act, Michael Pearson, Valeant’s chief executive, said on a call with analysts.

As a major Cephalon shareholder, Valeant has benefited from the Teva deal, Peason said. The company can cover the majority of expenses from its failed bid through the sale of the shares, which are up over 35 percent since late March.

Valeant came into being through a complex deal in which Canada’s Biovail acquired U.S.-based Valeant for $3.3 billion and assumed the target company’s name last September.

SAVINGS REALIZED

Valeant said it realized $75 million in synergies from that deal in the first quarter and it expects to have achieved over $300 million in synergies for the full year.

The drugmaker reported first-quarter earnings of $6.5 million, or 2 cents a share, compared with a loss of $3.2 million, or 2 cents a share, a year earlier. It reported cash earnings of 62 cents a share.

Analysts, on average, had forecast cash earnings per share of 51 cents, according to Thomson Reuters I/B/E/S.

Valeant said the performance of its branded generic operations, particularly in Central Europe, exceeded its expectations, as did its specialty businesses.

Revenue reached $565 million, including $36 million of alliance and royalty revenue related to licensing of product rights for Cloderm, a mid-potency steroid.

That compares to year-ago revenue of $219 million, which only includes legacy Biovail revenue.

Shares of the company ended up 2.81 percent at C$50.04 on the Toronto Stock Exchange on Monday.

$1=$0.96 Canadian Reporting by John McCrank and S. John Tilak in Toronto; editing by Frank McGurty

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