3 q13 presentation final final2

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  • {"2":"As always, please be advised that we might be making forward-looking statement during this presentation and we caution you to read possible risk factors detailed in our SEC filings available on our website. \n"}
  • 3 q13 presentation final final2

    1. 1. Third Quarter 2013 Financial Results Conference Call October 31, 2013
    2. 2. Forward-looking Statements Forward-looking Statements Certain statements made in this presentation may constitute forward-looking statements, including, but not limited to, statements regarding the performance of our business, synergies, pipeline approvals, patent risk and product exclusivity, strategy, research and development, and financial guidance. Forward-looking statements may be identified by the use of the words “anticipates,” “expects,” “intends,” “plans,” “could,” “should,” “would,” “may,” “will,” “believes,” “estimates,” “potential,” or “continue” and variations or similar expressions. These statements are based upon the current expectations and beliefs of management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, risks and uncertainties discussed in the Company's most recent annual or quarterly report filed with the Securities and Exchange Commission ("SEC") and other risks and uncertainties detailed from time to time in the Company's filings with the SEC and the Canadian Securities Administrators ("CSA"), which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on any of these forward-looking statements. The Company undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect actual outcomes. Non-GAAP Information To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the company uses non-GAAP financial measures that exclude certain items, such as amortization of inventory step-up, amortization of alliance product assets & property, plant and equipment step up, stock-based compensation step-up, contingent consideration fair value adjustments, restructuring, acquisition-related and other costs, In-process research and development, impairments and other charges, ("IPR&D"), legal settlements outside the ordinary course of business, the impact of currency fluctuations, amortization and other non-cash charges, amortization including intangible asset impairments and write-down of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss on extinguishment of debt, (gain) loss on assets held for sale/impairment, net, (gain) loss on investments, net, and adjusts tax expense to cash taxes. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a meaningful, consistent comparison of the company’s core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP. Therefore, the information is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Non-GAAP reconciliations can be found in our press tables under the Investor Relations tab on www.valeant.com Note 1: The guidance in this presentation is only effective as of the date given, October 31, 2013, and will not be updated or affirmed unless and until the Company publicly announces updated or affirmed guidance. 2
    3. 3. Agenda 1. Third Quarter Update 2. Bausch + Lomb Update 3. Financial Review and Guidance 3
    4. 4. Strong Q3 2013 Earnings and Cash Generation Performance Excluding Impact of B+L Financing Pre-Close Q3 2013* Q3 2012 2013 vs 2012 Total Revenue $1.542 B $884 M 74% Product Sales $1.506 B $853 M 77% $486 M $358 M Cash EPS $1.43 Adjusted Cash Flow $408 M Cash Net Income Q3 2013* 2013 vs. 2012 35% $498 M 39% $1.15 24% $1.51 31% $241 M 69% * Q3 Results also reflect the impact of an earlier than expected generic entrant for Retin-A Micro of $0.04 per share 4
    5. 5. Revenue Breakout Based on projected 2013 pro forma revenues Devices Durable Rx Products 21% 76% Gx/BGx 18% 41% 20% 24%* Rx Public Pay Rx Products 75 25% Subject to Patent Cliff OTC / Solutions * 24% of Rx revenue but only 10% of total revenue 5
    6. 6. Limited Patent Risk 2013* Products Total 2013 Revenue % of pro forma 2013 Revenue * 2014 1) Bromday 2) Retin-A Micro 3) Wellbutrin XL (CAD) 4) Vanos 1) Atralin 2) Lotemax ~$250 million ~3.1% Does not include Zovirax franchise 2015 2016 2017 1) Xenazine 1) Ziana 2) Zirgan 3) Targretin 1) Lotemax Gel 2) Macugen ~$160 million ~$150 million ~$200 million ~$50 million ~2.0% ~2.0% ~2.6% ~0.6% Suspension 3) Alrex 6
    7. 7. U.S. Business Profile Top 10 U.S. Products           Arestin CeraVe Dysport Elidel Lotemax PreserVision Restylane Solodyn Wellbutrin XL Xenazine 7
    8. 8. Q3 2013 Organic Growth Same Store Sales Excluding Zovirax Franchise, RAM, BenzaClin U.S. 5% ROW Developed 1% Total Developed Markets 4% Total Emerging Markets 14% Total Company 7% Pro Forma U.S. 5% ROW Developed 2% Total Developed Markets 4% Total Emerging Markets 13% Total Company 6% 8
    9. 9. Legacy Valeant - U.S.  Derm Rx Increased generic penetration impacting total U.S. branded market  Most Valeant brands continue to maintain/grow market share     e.g. Elidel; Acanya; Atralin; Carac; CeraVe Solodyn stabilized at ~$200M per year Aesthetics Another strong quarter  Continues to gain market share – particularly Dysport  MVP program well received     Benefits from Mentor relationship OraPharma continues to deliver double digit growth Neuro & Other portfolio: Strong double digit growth in Orphan drug portfolio and Xenazine  Wellbutrin XL continues to be stable at ~$150M per year  Partnered products* continue to decline  * Teva and Forest generic products 9
    10. 10. Legacy Valeant - Emerging Markets  Central & Eastern Europe grew at 15% (same store sales)   South East Asia/South Africa continues extremely strong growth trend   Two largest markets (Poland and Russia) continue to outpace market growth Same store sales growth nearly 20% Latin America continues to deliver double digit growth 10
    11. 11. Key Take Aways on Bausch + Lomb      Businesses continue to perform extremely well during integration Synergies tracking ahead of expectations Decentralization has been embraced across the company – especially outside the U.S. Opportunity for additional synergies in supply chain and manufacturing Opportunity for localized business/business development strategies 11
    12. 12. Key Take Aways on Bausch + Lomb   Continued As expected, R&D spend will be higher in first half of 2014 due to multiple Phase III programs reaching completion A number of key R&D developments since announcement: Approved/Launched: 1) Peroxide Lens Cleaning Solution 2) Novel Silicone Hydrogel Monthly Disposable Contact Lens 3) Trulign Toric IOL 4) Soothe Long-lasting Dry Eye Therapy 5) PreserVision AREDS 2 6) PureVision 2 Multifocal for Presbyopia 7) BioTrueOne Day/PureVision2 Contact Lens (Japan) 8) Naturelle Contact Lens (China)  Besivance patent extended to 2030  12
    13. 13. Bausch + Lomb Integration Update
    14. 14. Integration and Synergy Update  >$850 million in synergies already identified     Cost to achieve synergies will be approximately half of full synergies   Integrated 3 global Bausch + Lomb businesses into Valeant’s decentralized structure Synergizing corporate, global, regional and back office functions Rationalizing R&D portfolio Spent ~$128M to date IP integration on track to be completed January 1, 2014 14
    15. 15. Bausch + Lomb Performance Since Acquisition Close Same Store Organic Growth U.S. 15% ROW Developed 3% Total Developed Markets 9% Total Emerging Markets 14% Total Company 10% 15
    16. 16. How We View Our Bausch + Lomb Businesses Description Strategy Example Markets Businesses performing well Accelerate U.S.; Russia; China; Turkey; Middle East; Germany Localized strategies to accelerate growth Turbo Charge Japan; Mexico; Brazil; South East Asia; Canada Reinvigorate Turn Around U.K.; Italy; Spain; Nordics; Australia; South Africa 16
    17. 17. Financial Report
    18. 18. Financial Summary Q3 2012 Product Sales Ongoing Service/Alliance Revenue Total Revenue Q4 2012 Q1 2013 Q2 2013 Q3 2013 $853M $942M $1,039M $1,064M $1,506M $31M $44 M $29M $32M $35M $884M $986M $1,068M $1,096M $1,542M Cost of Goods Sold% (% of product sales) 23% 24% 22% 23% 27% SG&A% (% of total revenue) 20% 20% 23% 22% 23% $19M $20M $24M $24M $49M (excluding amortization) 54% 53% 52% 52% 47% Cash EPS (Reported) $1.15 $1.22 $1.30 $1.34 $1.43 Operations $241M $423M $345M $423M $408M Fully Diluted Share Count 312 M 312 M 312 M 314 M 340 M R&D Expense Operating Margin (% of total revenue) Adjusted Cash Flow from 18
    19. 19. 3Q Headwinds  Negative currency impact on revenue and profit    $20m+ revenue impact $0.03 Cash EPS impact Significant new currency exposures:   Bausch + Lomb pre-close interest expense and additional share count   Euro; Yen; Chinese Renminbi; Turkish Lira; Argentinian Peso; Indian Rupee Negative impact of $0.09 Retin-A Micro generic launched August 2013  Previous guidance assumed Q1 2014 launch   Negative Cash EPS impact of $0.04 in Q3 Negative Cash EPS impact of $0.08 expected in Q4 19
    20. 20. Financial Guidance for 2013 as of October 31, 2013 Previous Guidance New Guidance Implied Q4 2013  Revenue $5.8 - $6.2 billion  Revenue $5.7 $5.9 billion  Revenue $2.0 $2.2 billion  $6.00 - $6.20 Adjusted Cash EPS  $6.11 - $6.16 Adjusted Cash EPS  $2.05 - $2.10 Adjusted Cash EPS  >$1.75 billion in Adjusted Cash Flow from Operations  >$1.8 billion in Adjusted Cash Flow from Operations  >$625 million in Adjusted Cash Flow from Operations See Note 1 regarding guidance 20
    21. 21. Third Quarter 2013 Financial Results Conference Call October 31, 2013
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