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How Did Valeant Fare in 2Q16?


Nov. 20 2020, Updated 3:38 p.m. ET

Revenue during 2Q16

Valeant Pharmaceuticals (VRX) announced earnings for 2Q16 on August 9, 2016. During the second quarter of 2016, Valeant reported sales amounting to $2.42 billion, which were lower than Wall Street analysts’ projections of $2.46 billion. Although there was a revenue miss by 1.8% in 2Q16, VRX was up by ~25% with a closing stock price of $28.16 on August 9 from the previous day’s closing of $22.45. Valeant reaffirmed its fiscal 2016 guidance, and perhaps this was the major reason behind the jump in the stock price. We’ll discuss VRX’s guidance and why it might have made analysts happy in the next article.

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The revenue fell by 11.4% in 2Q16 on an annual comparison basis. A slower recovery in the dermatology portfolio could be a major reason behind the revenue miss. The Salix and dermatology portfolio recovery is the key to Valeant’s growth in the near term. To understand Valeant’s plan of action to fix its dermatology portfolio, please read Valeant’s Dermatology Portfolio: A Key Factor for Recovery?

Revenue growth for peers

In the specialty pharma industry, Valeant’s peers include Mallinckrodt (MNK), Endo International (ENDP), and Perrigo (PRGO). In 3Q16, MNK’s revenue grew by 10.6% to stand $971 million. Endo witnessed 25.3% revenue growth and earned $921 million during 2Q16, whereas Perrigo is expected to report revenue amounting to $1.4 billion, translating to a yearly decline by 6.7% during the period.

EPS during 2Q16

Wall Street analysts expected EPS (earnings per share) for Valeant during 2Q16 to be $1.47. Valeant reported adjusted non-GAAP (generally accepted accounting principle) EPS of $1.4, leading to a negative earnings surprise by 4.7% during the period. Higher-than-projected R&D (research and development) expense led to squeezed margins in 2Q16.

To remain on the safer side and still have exposure to Valeant, you can choose to invest in ETFs. One such option is the Pharmaceutical ETF (PPH). Valeant accounts for 2.1% of PPH’s total holdings.


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