Valeant to report Bausch + Lomb results separately
Valeant Pharmaceuticals International will report financials for Bausch + Lomb as a separate division beginning in the third quarter of 2016, the company announced Tuesday — a move likely to fuel speculation that the parent company is readying the business for sale.
B+L/International will be one of three reportable segments as part of a new organizational structure. Valeant posted lower second-quarter revenue and a worsening loss but its stock jumped after the embattled company's new CEO signaled plans to retool.
"I suspect Valeant management would very much like to keep Bausch + Lomb," said George Conboy, an investor and chairman of Brighton Securities. "You only throw something over the side if you have to lighten the load of a sinking ship. It's not clear this ship is sinking — but Valeant wants to make sure B+L is on deck, just in case."
The Montreal-based company's shares rose $5.71, or 25 percent, to close Tuesday at $28.16. That is still far below the $100 mark it held at the first of the year.
Revenue fell 11.4 percent to $2.42 billion for the quarter, missing S&P Global Market Intelligence analyst estimates of $2.45 billion.
The company's loss similarly widened to $302 million from $53 million a year ago, missing estimates of $261 million.
Clausen: Bausch + Lomb's uncertain future at Valeant
The results came just over a year after Valeant's shares peaked at $262.52, before starting a plunge that erased roughly 90 percent of their value. The slide came amid multiple investigations of the company's drug pricing and marketing practices, as well as allegations about Valeant's since-canceled distribution deal with specialty pharmacy Philidor Rx Services.
Valeant shares surged after CEO Joseph Papa issued a statement announcing "a new strategic direction" that "at its heart has a mission to improve patients' lives and will involve reorganizing our company and reporting segments."
"Although it will take time to implement and execute our turnaround plan, I am confident that we will show progress in the coming quarters," said Papa, who succeeded former CEO J. Michael Pearson in May.
Valeant reaffirmed its full-year guidance after a series of earlier cuts. The company projected 2016 adjusted earnings per share of $6.60 to $7, and total revenue of $9.9 billion to $20.1 billion. If met, the projections would keep the company from violating its debt covenants.
The company also said that it had reached a deal to sell its North American sales rights to a drug called Ruconest to Pharming Group for up to $125 million.
That deal is part of recent steps to offload certain intellectual property totaling upfront payments of $181 million and up to $329 million in potential additional capital based on certain benchmarks.
At the same time, Valeant signaled plans to cut more than $5 billion from the company's $30.7 billion in long term debt over the next year and a half.
In a conference call with Wall Street analysts, Papa said Valeant had stabilized turnover in its sales force and is moving forward with the second phase of a branded prescription distribution agreement with pharmacy giant Walgreens.
Valeant is also examining a potential reformulation of its top-selling drug Xifaxan, a medication that treats irritable bowel syndrome, "to improve the customer experience," said Papa. The plan follows the February disclosure by Ireland-based rival Allergan that it is seeking U.S. Food and Drug Administration approval to produce a generic version.
Includes reporting by staff writer Brian Sharp, and USA Today reporters Nathan Bomey and Kevin McCoy.