Shares in Valeant Pharmaceuticals Intl (NYSE:VRX) zipped higher in pre-market trade after the Canadian drugmaker reported a stronger-than-expected second quarter profit.
Excluding one-off items, Valeant posted earnings per share of US$1.05 in the three months ended June 30 – ahead of the US$0.94 analysts had initially forecast.
Net loss attributable to the company narrowed to US$38mln from a US$302mln loss a year earlier.
That narrower loss came despite a fall in revenues, which slipped almost 8% to US$2.23bn, hampered by the loss of exclusivity for a number of products in its US Diversified Products division.
Full-year revenue forecasts lowered, underlying earnings on track
Given the weak top-line performance in the latest quarter, Valeant has told investors that it now expects to generate full-year revenues of between US$8.7bn to US$8.9bn, down from its previous guidance of US$8.9bn to US$9.1bn.
As for adjusted underlying earnings (EBITDA), that remains on track to hit the company’s target of US3.6bn to US$3.75bn “despite the impact of divestitures that have closed in 2017”.
Set to repay US$5bn of debts in next six months
The maker of Bausch + Lomb contact lenses has been offloading various parts of its business in recent months as it looks to pay down some its towering debt mountain, which stood at around US$28.5bn as of end June.
The debt piled up following an intense acquisition spree between 2010 and 2015.
Things haven’t quite panned out the way it had hoped though, and earlier this year Valeant sold off its Dendreon unit and iNova Pharmaceuticals business for US$810mln and US$930mln respectively. Both had been acquired during that furious spate of deal-making.
There have also been sales of other divisions, including three of its skincare brands – CeraVe, AcneFree and Ambi – to French cosmetics giant L’Oreal for US$1.3bn.
Valeant told investors today that it expects to pay down more than US$5bn of debt before February 2018, using proceeds from these sales and free cash flow.
‘Legacy issues starting to be resolved’
“The investments we are making in our core business are delivering results," said chief executive Joseph Papa.
“The Bausch + Lomb/International segment and Salix business, which together represented 73 percent of our revenue in the quarter, delivered strong organic growth, and we are continuing to reduce debt and resolve legacy issues.”
Shares added almost 8% in pre-market trading to US$16.59. Less than two years ago the stock was changing hands for more than US$250 but various investigations and pricing scandals, coupled with concerns over the high levels of debt have weighed heavily.