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Valeant Pharmaceuticals’ (VRX - Analyst Report)  fourth quarter 2012 earnings of $1.21 per share (excluding special items but including stock-based compensation expense) were short of the Zacks Consensus Estimate of $1.25 but were up from the year-ago earnings of 90 cents per share.

Revenues for the quarter were $986 million, up 43% from the year-ago period. The year-over-year improvement in revenues was primarily attributable to higher product sales. Revenues surpassed the Zacks Consensus Estimate of $959 million.

For 2012, revenues came in at $3.55 billion, up 44% year over year and surpassed the Zacks Consensus Estimate of $3.51 billion. Product sales came in at $3.31 billion, an increase of 47% year over year. Product sales were negatively impacted by generic competition ($161 million) and foreign currency movements (over $100 million).

2012 earnings of $4.42 per share (excluding special items but including stock-based compensation expense) were short of the Zacks Consensus Estimate of $4.47 but were up 61.9% year over year.

Quarterly Highlights

Product sales at Valeant Pharma amounted to $947.0 million during the fourth quarter of 2012, up 45% year over year. Strong sales in the US Dermatology and the Emerging Markets segments contributed to the increase.

Organic growth (same store sales) was approximately 7%. On a pro forma basis, (including the impact of acquisitions and foreign exchange) revenues grew 9% from the year-ago quarter.

Research & development (R&D) expenses climbed 20.2% to $20.2 million.

Selling, general & administrative (SG&A) expenses for the fourth quarter of 2012 increased 37.8% to $204.7 million due to a $2.7 million step-up in stock-based compensation expenses related to the acquisitions and $3.7 million loss on the disposal of fixed assets. Excluding these items, SG&A was approximately 20% of revenue.


Valeant Pharma reaffirmed its guidance for 2013 provided on Jan 4, 2013. Valeant continues to expect revenues between $4.4 billion and $4.8 billion in 2013, up 30% from 2012, excluding potential acquisitions other than the Natur Produkt acquisition (which was completed in Feb 2013). Earnings per share are projected around $5.45 – $5.75. Valeant expects generics to hit revenues by about $100 million.

The Zacks Consensus Estimate for 2013 hints at earnings of $4.47 per share on revenues of $4.6 billion.

Solodyn (minocycline) revenues are expected in the range of $250 million to $275 million in 2013. Valeant plans to divest several assets generating approximately $40 million to $50 million in annual revenues.

Valeant expects to obtain synergies of more than $275 million in 2013. However, the company does not expect these synergies to materialize before late 2013 as most of it relates to the litigation matters and the winding down of a number of R&D programs. 

Valeant Pharmaceuticals currently carries a Zacks Rank #3 (Hold). Right now, Salix Pharmaceuticals Ltd. (SLXP - Analyst Report), Avanir Pharmaceuticals Inc (AVNR - Snapshot Report) and Furiex Pharmaceuticals Inc look better positioned with a Zacks Rank #2 (Buy).

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