Valeant’s year of hell continues but restructuring is on track
The Quebec-based pharmaceutical giant reported a US$302M loss for Q2, but promises progress in the remainder of 2016
LAVAL, Que.—Valeant Pharmaceuticalsis reporting a US$302 million net loss for its second quarter—nearly six times bigger than during the same period last year—but the company is sending a message that things will get better.
“Although it will take time to implement and execute our turnaround plan, I am confident that we will show progress in the coming quarters,” chairman and CEO Joseph Pappa said in a statement ahead of a conference call with analysts.
One bright point for the company, which has seen its value plunge over the past year as a result of numerous issues, was an increase in cash flow from operations. It was up nine per cent to $448 million.
However, the Quebec-based company had lower adjusted earnings, which fell to $488 million from $751 million in the second quarter of 2015.
Valeant’s net loss equalled 88 cents per share, compared with the year-earlier loss of 15 cents per share. Adjusted earnings were $1.40 per share, compared with $2.14 per share in the second quarter of 2015.
Revenue fell by 11 per cent to $2.42 billion from $2.73 billion, mainly because of reduced sales from its existing businesses and a negative impact from a shift in foreign exchange rates. Acquired businesses provided a partial offset.
Analysts had estimated revenue would drop 10 per cent to US$2.46 billion and adjusted profits to plummet to US$512.44 million or $1.48 per share
But the company also said it’s on track to meet previously announced lowered financial objectives for 2016.
As expected, Valeant had some improvements compared with the first quarter of 2016. However, revenue was essentially flat and cash flow was lower than in the three months ended March 31, often a seasonally weak period for Valeant.
Industry analysts remain cautious about Valeant’s prospects, fearing Valeant’s US$30-million debt and the potential for loan covenants to be breached if “fundamentals” don’t improve.
They are waiting for assurances that wrinkles have been worked out in the deal with U.S. pharmacy retailer Walgreens to distribute Valeant’s products following the collapse of Philidor Rx Services. They have also been awaiting the sale of non-core assets to pay down debt.
Valeant also announced that it has agreed to divest all North American commercialization rights to Ruconext to Pharming Group NV, for up to $125 million. Part of that is up to $65 million that will be paid if certain sales milestones are achieved.