* Drugmaker's 4th-qtr loss equals 29 cents a share
* Revenue up 43 pct; product sales rise 45 pct
* CEO says company open to "merger of equals"
By Rod Nickel
Feb 28 Valeant Pharmaceuticals International Inc
is in talks to make more acquisitions, its chief
executive said on Thursday, adding that Canada's largest
publicly traded drugmaker also remains open to discuss a
potential "merger of equals."
Valeant has made about a dozen deals for smaller companies
or assets over the past year, including the $2.6 billion
purchase of U.S.-based Medicis Pharmaceuticals Corp in December.
Valeant's shares and revenue have soared, although it posted
a quarterly loss on Thursday due to costs related to the Medicis
"We continue to be in active conversations for both large
and small deals, but the timing of deals is unpredictable," CEO
Michael Pearson said on a conference call with analysts to
discuss the fiscal fourth-quarter results.
Pearson repeated a comment he made in early January that
Valeant is open to a "merger of equals."
"I don't think it's too big a surprise that they're looking
at acquisitions, but the magnitude that they're signalling is a
little bit of a surprise," said Morningstar analyst David
Krempa. "By bringing (a merger of equals) up again makes it seem
much more likely."
Valeant stock dropped 29 Canadian cents to C$67.96 in
morning trading on the Toronto Stock Exchange. Shares of the
company, which has a market capitalization of C$20.28 billion
($19.7 billion) are up about 15 percent for the year so far.
Krempa said a huge deal might raise some concern, but he
noted the company has a strong track record in acquisitions that
add to earnings.
Valeant's net quarterly loss was $89.1 million, or 29 cents
a share, compared with a profit of $55.6 million, or 18 cents, a
Cash earnings, or profit adjusted for one-time items,
reached $1.22 a share. Analysts on average expected earnings of
$1.20, according to Thomson Reuters I/B/E/S.
Valeant's acquisitions have pushed its debt up 65 percent to
$10.8 billion, from the end of 2011. The company aims to lower
its debt level to below four times trailing EBITDA (earnings
before interest, taxes, depreciation and amortization) this year
from slightly over four times currently, but said it had no hard
targets for paying down its debt.
"It's a multi-dimensional puzzle," said Chief Financial
Officer Howard Schiller. "We want to make sure our debt levels
are such that we maintain access long-term at competitive
(interest) rates. The other side of the equation is the business
development opportunities we continue to see around the world,
which continue to be quite attractive."
Revenue for the fourth quarter rose 43 percent to $986.3
million, stronger than analysts' average forecast of $949
million, while product sales increased 45 percent to $946.7
Interest expenses jumped to $160.2 million from $94.1
million. Excluding interest expenses related to the Medicis
acquisition, Valeant reported cash earnings of $1.34 per share.
Valeant's acquisition of Medicis brought Botox competitor
Dysport and other skin-care drugs to its portfolio. The deal
looks to be more valuable to Valeant than it earlier expected,
Pearson said, both in terms of higher sales and lower costs.
The acquisitive company, formerly known as Biovail before it
acquired Valeant and assumed its name, has focused on bulking up
its skin-care lines, where patients often pay out of pocket. At
the same time, it cut its exposure to cost-sensitive insurance
In January, Pearson said the company could double or
quadruple revenue "in the foreseeable future."