Valeant Keeps Eyes Forward

The first-quarter loss is narrower than expected, but revenue misses forecasts.
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Valeant Pharmaceuticals

(VRX)

reported a narrower-than-expected first-quarter loss Thursday, but revenue didn't grow as much year-over-year as analysts had been hoping to see.

Sales totaled $198.8 million compared with $181.1 million a year ago. However, on average, analysts surveyed by Thomson First Call were expecting sales to reach $201.1 million.

"Our first-quarter results were disappointing and not indicative of our expectations for the rest of 2006, although in line with our recently communicated expectations." says President and CEO Timothy C. Tyson.

Revenue in the quarter was driven primarily by North American sales of acquired products, as well as growth in sales the drugs Kinerase, Cesamet and Bedoyecta. Sales of Efudex, Librax and Solcoseryl were among the products whose sales declined, the company said in a press release Thursday.

Sales of Infergen, a treatment acquired at the end of last year for chronic hepatitis C, were $13.7 million. Valeant collected $18.3 million in revenue from products it acquired through the purchase of specialty pharmaceutical company Xcel.

Excluding the impact of acquisitions, sales fell 4%, mainly because of a change in wholesaler buying patterns in Europe and Latin America, the company says. Results were also hit by a temporary plant shutdown in Mexico and other manufacturing problems during the quarter.

"We have taken aggressive actions to address these manufacturing issues, and we expect that future results will be further improved by our restructuring initiative," the company says.

Overall for the quarter, Valeant lost $6.4 million, or 7 cents a share, vs. a loss of $139.3 million, or $1.57 a share in the same period last year. Excluding charges and certain other items, the company lost $600,000, or a 1 cent a share, in the most recent quarter. Analysts were expecting a loss of 3 cents.

As a result of its restructuring plans, Valeant says it expects to achieve significant cost savings and earn, on an adjusted basis, more than 50 cents a share in 2006, $1 a share in 2007 and $1.90 a share in 2008.

Shares of Valeant were lower by 60 cents, or 3.3%, at $17.36 following the quarterly report.