(Adds CEO, analyst comments, sales of Bausch & Lomb brands)
By Ransdell Pierson
July 31 Valeant Pharmaceuticals International
Inc, embroiled in a bitter battle to take over
Botox-maker Allergan Inc, reported disappointing
quarterly earnings and cut its 2014 and 2015 profit forecasts on
Thursday, sending its shares down 7.2 percent.
"People were disappointed in Valeant's outlook for the
remainder of 2014, and especially its 2015 earnings guidance,
which is about $1 per share below expectations," said Raghuram
Selvaraju, an analyst with Aegis Capital.
The Laval, Quebec-based company teamed up with activist
investor Bill Ackman on April 21 to make a cash and stock offer
for Allergan now worth about $50 billion. Allergan says the deal
would hurt its growth and compromise shareholders.
Even as it lowered its profit forecasts, Valeant argued that
second quarter results should bolster its attractiveness to
Valeant, which paid $8.7 billion for eye care company Bausch
& Lomb last year, said sales of those products rose 12 percent
to $891 million in the quarter.
"They'll use that to argue that the Allergan business won't
go to pot if acquired by Valeant," Selvaraju said.
Allergan has questioned Valeant's marketing ability and said
it believed the Bausch & Lomb products were stagnating.
Valeant, which has grown swiftly through acquisitions, now
expects 2014 profit, excluding special items, of $7.90-$8.10 per
share, on revenue of $8 billion to $8.3 billion. That is down
from its forecast in April of $8.55 to $8.80 per share on
revenue of $8.3 billion to $8.7 billion.
Valeant said it lowered its 2014 forecasts to reflect its
recent sale of rights to several skin care products.
For next year, it forecast earnings of about $9.65 per
share, well below the Thomson Reuters forecast of $10.42. It
expects revenue of about $9.3 billion next year, rising to $11.4
billion in 2016. For 2016, it expects earnings of $12.30 per
The outlooks assume acquisitions of about $5 billion in 2015
and $10 billion in 2016, Valeant executives said in a conference
call with investors. The forecasts represent "conservative
assumptions," including stable research spending and the
negative impact of patent expirations, said Chief Financial
Officer Howard Schiller.
Valeant said it remains intent on acquiring Allergan and
that Allergan shareholders, should the merger go through, would
get twice the earnings per share in 2016 than they would receive
if Allergan remained independent.
Chief Executive Michael Pearson said Valeant is also
interested in other acquisitions, including innovative contact
lenses. He said the company could not be content to remain the
No. 4 global player in the field.
Valeant said it earned $126 million, or 37 cents per share,
in the second quarter, from $10.8 million, or 3 cents per share,
a year earlier.
Excluding special items, Valeant earned $1.91 per share,
below the Thomson Reuters forecast of $1.96. Total revenue rose
86 percent to $2.04 billion, in line with Wall Street
(Reporting by Ransdell Pierson in New York and Ashutosh Pandey
in Bangalore; Editing by Maju Samuel, Ted Kerr, Chris Reese and