Valeant shares surge as company makes progress on debt reduction
TORONTO — Shares in Valeant Pharmaceuticals International (TSX:VRX) shot higher Tuesday after senior executives said the company has made significant progress towards resolving the many legal and financial issues that have beset the company for nearly two years.
The beleagured drug company said it’s ahead of schedule on a critical debt reduction program and has made progress on outstanding legal issues.
Moreover, Valeant’s core businesses — Bausch + Lomb/ International and Salix — grew their combined revenue by 8 per cent after excluding the impact of divestitures.
“We clearly are looking at what we think are exciting opportunities for the future of Valeant,” said Joseph Papa, Valeant’s chairman and chief executive.
He noted that Valeant’s dermatology business continues to underperform and it will continue to work towards resolving its legacy legal issues.
“And that will really be our focus for the next three months and next year,” Papa said.
Earlier, Valeant announced its second-quarter loss was reduced to US$38 million attributable to shareholders as the company sold assets and reduced debt. The loss, reported in U.S. dollars, amounted to 11 cents per share compared with a loss of $302 million or 88 cents per share for the 2016 second quarter.
Revenue also fell year-overyear, to US$2.23 billion from US$2.42 billion.
Adjusted earnings before interest, taxes, depreciation and amoritization slipped to $951 million for the second quarter of 2017, from $1.09 billion last year.
The company attributed the drop in revenue to several factors, including lower prices for some products and the divestiture of a skin care business within its Bausch + Lomb International business.
Valeant also lowered its 2017 revenue guidance range to between $8.70 billion and $8.80 billion, from between $8.90 billion and $9.10 billion, citing the divestitures — which have been key to reducing its debt and improving profit margins.
The company says it is on track to achieve between $3.60 billion and $3.75 billion in adjusted earnings before interest, taxes, depreciation and amoritization this year.
Valeant shares were up $1.91 or about 10 per cent at $21.06 in latemorning trading on the Toronto Stock Exchange.
But the stock remains a shadow of its former self when it traded for more than $300 before a series of events that included questions about the sales it generated through online pharmacy Philidor Rx Services.
The company also came under political and regulatory scrutiny in the United States and replaced chief executive Michael Pearson.