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Biovail Reports Second-Quarter 2010 Financial Results

Biovail Corporation (NYSE/TSX: BVF) today announced financial results for the three-month and six-month periods ended June 30, 2010. To the extent that this news release contains forward-looking statements, investors are cautioned that these are based on the Company’s current views, and actual outcomes are not certain. For more information, see the note on forward-looking information following the conference call details in this news release.

“I am pleased by the strong financial performance in the second quarter of 2010, and the continuation of the positive momentum we’ve seen over the past two years,” said Biovail Chief Executive Officer Bill Wells. “Going forward, I am particularly enthusiastic about our proposed merger with Valeant Pharmaceuticals International, which will create a leading specialty pharmaceuticals company with large cash flows and exciting growth prospects.”

Financial Results

Total revenues for the three months ended June 30, 2010 were $238.8 million, compared with $193.5 million for the second quarter of 2009, an increase of 23%. Total revenues for the six months ended June 30, 2010 were $458.4 million, compared with $366.9 million for the first six months of 2009. Second-quarter 2010 net income, in accordance with United States Generally Accepted Accounting Principles (GAAP), was $34.0 million compared with $24.1 million for the corresponding 2009 period, an increase of 41%. Net income for the first half of 2010 was $30.8 million, compared with $63.1 million in the same period a year earlier. On a per-share basis, Biovail recorded GAAP diluted earnings per share (EPS) of $0.21 for the second quarter of 2010, compared with $0.15 for the second quarter of 2009, an increase of 40%. In the first half of 2010, GAAP EPS were $0.19, compared with EPS of $0.40 for the first half of 2009.

Specific Items Affecting Operations

The following table displays specific items that affected results in the second quarter and first half of 2010 and 2009, respectively, and the impact of each individual item on diluted EPS.

  Three Months Ended June 30   Six Months Ended June 30
2010   2009 2010   2009

 

 

Diluted EPS

 

 

Diluted EPS

  Diluted EPS   Diluted EPS
[$ in 000s, except per share data; Income (Expense)]   Amount   Impact   Amount   Impact   Amount   Impact   Amount   Impact
IPR&D (1) $ (10,242 ) $ (0.06 ) $ (30,414 ) $ (0.19 ) $ (61,245 ) $ (0.38 ) $ (30,414 ) $ (0.19 )
Acquisition-related costs (7,577 ) (0.05 ) (5,596 ) (0.04 ) (7,577 ) (0.05 ) (5,596 ) (0.04 )
Restructuring costs (2,881 ) (0.02 ) (11,367 ) (0.07 ) (3,494 ) (0.02 ) (12,715 ) (0.08 )
SEC/OSC independent consultant and related costs (2) (150 ) - (1,546 ) (0.01 ) (781 ) - (2,973 ) (0.02 )
Impairment losses on debt securities (392 ) - (1,617 ) (0.01 ) (547 ) - (4,324 ) (0.03 )
Gain on auction rate security settlement - - 22,000 0.14 - - 22,000 0.14
Proxy contest costs (2) - - (629 ) - - - (629 ) -
Write-down of deferred financing costs (3) - - (537 ) - - - (537 ) -
Legal settlements - - - - - - (241 ) -
Gain on disposal of investments   -       -     344       -     -       -     338       -  
Total $ (21,242 )   $ (0.13 ) $ (29,362 )   $ (0.19 ) $ (73,644 )   $ (0.46 ) $ (35,091 )   $ (0.22 )
 
(1) Included in research and development expenses.
(2) Included in selling, general and administrative expenses.
(3) Included in interest expense.

In the second quarter of 2010, Biovail’s financial performance was affected by a number of items that, in aggregate, negatively impacted net income by $21.2 million and EPS by $0.13. These include $10.2 million (including transaction costs) of in-process research and development (IPR&D) expenses related to the license of istradefylline from Kyowa Hakko Kirin Co., Ltd. (“Kyowa”); $7.6 million in acquisition-related costs, including banking, legal, accounting and other transaction costs, directly related to the proposed merger with Valeant Pharmaceuticals International (“Valeant”); and $2.9 million in restructuring costs, primarily related to employee termination costs as a result of the sale of Biovail’s Contract Research Division (“CRD”) to Lambda Therapeutic Research Inc. (“Lambda”). Accordingly, EPS Excluding Specific Items was $0.34 in the second quarter of 2010.

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