Valeant Pharmaceuticals’ (VRX) second quarter 2013 cash earnings per share of $1.34 (excluding special items and non-cash expenses) easily beat the Zacks Consensus Estimate of $1.28 and were up from the year-ago earnings of 0.87 per share.
Revenues for the quarter were $1.1 billion, up 34% from the year-ago period. The year-over-year improvement in revenues was primarily attributable to higher product sales. Revenues were in-line with the Zacks Consensus Estimate.
Product sales at Valeant amounted to $1.06 billion during the second quarter of 2013, up 43% year over year.
Strong sales in the U.S. Promoted (previously U.S. Dermatology) and Emerging Markets segments contributed to the increase.
Total sales from developed markets jumped 37% year over year to $792 million fuelled by a 90% jump in U.S. Promoted sales to $487 million.
The aesthetics franchise, OraPharma, skin care, and topical acne portfolio drove growth along with the strong performances of Dysport and CeraVe.
Sales from emerging markets grew 26% year over year driven by continued strong growth in Poland, Russia, Brazil, Mexico, South East Asia and South Africa.
Research & development (R&D) expenses climbed 38.1% to $24.5 million.
Selling, general & administrative (SG&A) expenses for the second quarter of 2013 increased 38.8% to $257.4 million due to the integration of Medicis operations.
We note that Valeant recently completed the acquisition of Bausch + Lomb Holdings Incorporated for $8.7 billion. The deal was first announced in May 2013.
Valeant now expects synergies more than the earlier estimate of $800 million from this acquisition. Of the total projected synergies, $500 million is expected in 2013.
2013 Guidance Upped
Valeant upped its guidance for 2013 to include the Bausch+Lomb acquisiton. Valeant now expects revenues between $5.8 billion and $6.2 billion, up from the previous projection of $4.4 billion – $4.8 billion.
Earnings per share on a cash basis are now projected around $6.00 – $6.20, up from the earlier projection of $5.55 –$5.85.
The Zacks Consensus Estimate for 2013 hints at earnings of $5.82 per share on revenues of $5.2 billion.
EPS for the third and fourth quarters of 2013 are projected at $1.33 to $1.43 and $2.03 to $2.13, respectively.
We are encouraged by the second -quarter results, which beat our expectations. We believe the acquisition of Bausch + Lomb will significantly strengthen Valeant’s ophthalmology business given the former’s leading portfolio of eye health products.
The acquisition should also enable Valeant to penetrate into the growing eye health market fueled by an aging patient population, an increased rate of diabetes, and increasing demand from the emerging markets.
We note that Valeant has been active on the acquisition front lately, thereby using its cash reserves. We are also impressed by the company’s integration efforts and increase in expected synergies.
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