Valeant Pharmaceuticals reports double-digit growth, ends Q3 with $5.6 billion of debt

By Lisa Kerner

Charlotte, N.C., Nov. 3 - Valeant Pharmaceuticals International, Inc.'s double-digit organic revenue growth from operations in the third quarter has the company on track to deliver 8% plus pro forma organic growth for the year, according to chief executive officer J. Michael Pearson.

The company's U.S. Dermatology division outpaced expectations and both branded generic divisions outperformed their respective markets.

Valeant raised its fourth-quarter earnings per share guidance to $0.95 from $0.80.

During the third-quarter earnings call on Thursday, Pearson said Valeant ended the quarter with total debt of $5.6 billion, not including a $275 million revolver it has not accessed.

Remaining debt will be used to close the company's $775 million dermatology deals.

As previously reported in October, Valeant closed on $2 billion of 41/2-year pro rata credit facilities and increased its revolver to $275 million from $200 million and its funded term loan A to $1.225 billion from $1 billion.

With new debt in place, Valeant's leverage ratio is 3.6 times, well within the company's comfort level of less than 4 times, said Pearson.

The average cost of the company's debt was reduced to 5.84% from 6.91%.

Third-quarter results

For the third quarter, Valeant reported total revenue of $600.6 million, compared to $208.3 million in the prior-year period.

Product sales more than doubled from the year before to $570.4 million from $201.4 million due primarily to the acquisition of Valeant Pharmaceuticals International (Legacy Valeant) by Biovail Corp. in September.

Net income for the quarter was $40.9 million for the third quarter of 2011, or $0.13 per diluted share.

Valeant said since June 30, 2011 it has repurchased 1.8 million shares and $95 million principal amount of the 5.375% senior convertible notes due 2014, for $275 million, bringing the total repurchases to $328 million of the $350 million face value of the 5.375% convertible notes. The company's existing securities repurchase program expires on Nov. 7.

Valeant is a specialty pharmaceutical company based in Mississauga, Ont., with a focus on neurology, dermatology and branded generics.

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