Valeant Pharmaceuticals International Inc will sell billions of dollars in assets to pay down debt and focus on businesses like dermatology and Bausch & Lomb eyecare, the Canadian drug maker said on Tuesday, driving its shares up 13 percent.Laval, Quebec-based Valeant’s USA shares are still down around 90 percent since hitting a record high last August.
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The Quebec-based drugmaker (TSX:VRX) was the most valuable company in Canada by market capitalization a year ago, but has since seen almost 90 per cent of its value evaporate and changed CEOs as it struggles to rebuild public and investor trust.
Valeant said those asset sales and the company’s regular cash flows will help it shore up its balance sheet by cutting its debt by more than $5 billion over the next year and a half.
As a result, Valeant affirmed its full-year guidance.
The shares closed up almost 25 per cent to C$36.88 on heavy trading Tuesday on the Toronto Stock Exchange, despite reporting a US$302-million net loss for its second quarter – almost six times bigger than during the same period a year ago.
After ending a collaboration with a mail-order pharmacy, Valeant joined with Walgreens to fill numerous prescriptions, though it was selling some of those drugs at a loss. Valeant Pharmaceuticals Intl Inc (NYSE:VRX) has declined 77.21% since January 4, 2016 and is downtrending.
Also, Valeant reported 2016 second quarter earnings and revenue this morning, falling short of analysts’ estimates but reiterating upbeat guidance for the year.
“Nonetheless, we believe that new CEO Joseph Papa must continue to build credibility during the early stages of his tenure, and investor confidence can only be fostered through execution and delivery of targets”, he wrote in a report. Since the dermatology market is growing 15% annually and Valeant still retains 16% market share, getting this business back on its feet is very important to its turnaround. The company is also working closely towards getting an approval for Vesneo and would also be prepared for manufacturing re-inspection in the coming six months.
Mr. Papa said the quarter showed that the company is stabilizing. Unlike traditional relationships, Walgreens doesn’t purchase Valeant’s drugs and resell them to consumers and payers. The latest example is the drugmaker’s plans to sell its North American rights for Ruconest to Pharming Group N.V. for up to $125 million.
Valeant, which will hold a conference call at 8:00 a.m. ET, did not elaborate on its reorganization plan.
While looking at the Stock’s Performance, Valeant Pharmaceuticals International, Inc. now shows a Weekly Performance of 7.47%, where Monthly Performance is -3.44%, Quarterly performance is -20.02%, 6 Months performance is -74.95% and yearly performance percentage is -90.94%. Adjusted earnings were $1.40 per share, compared with $2.14 per share in the second quarter of 2015.
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Keith Speights has no position in any stocks mentioned. Try any of our Foolish newsletter services free for 30 days.
