MRX Medicis Pharmaceutical Corp.

Valeant Pharmaceuticals International’s (VRX)  third quarter 2012 earnings of $1.11 per share (excluding special items but including stock-based compensation expense) was above the Zacks Consensus Estimate of $1.09 and the year-ago earnings of approximately 62 cents per share.

Revenues for the quarter were $884.1 million, up 47.2% from the year-ago period. The year-over-year improvement in revenues was primarily attributable to higher product sales. Revenues surpassed the Zacks Consensus Estimate of $873 million.

Quarterly Highlights

Product sales at Valeant Pharma amounted to $856.9 million during the third quarter of 2012, up 50%. Strong sales in the US Dermatology and the Emerging Markets segments contributed to the increase. Organically, (excluding the impact of acquisitions and foreign exchange), revenues grew 12% from the year-ago quarter.

Research & development (R&D) expenses climbed 9.7% to $19.2 million. Selling, general & administrative (SG&A) expenses for the third quarter of 2012 increased 40% to $188.7 million.

Guidance

Valeant Pharma adjusted its earnings guidance for fiscal 2012. Cash earnings are now expected in the range of $4.60–$4.65 per share (previous guidance: $4.55–$4.75 per share). Valeant continues to expect total revenue in the range of $3.4 billion – $3.6 billion. The Zacks Consensus Estimate for 2012 hints at earnings of $4.50 per share on revenues of $3.5 billion.

Cash earnings for the final quarter of 2012 are expected in the range of $1.30-$1.35 per share (previous guidance: $1.25–$1.45 per share). The guidance does not include new interest expense of 12 cents per share pertaining to Valeant’s impending acquisition of Medicis Pharmaceutical Corporation (MRX). The Zacks consensus Estimate for the fourth quarter of 2012 currently stands at $1.31 per share.  

Our Recommendation

We have a Neutral recommendation on Valeant Pharma. Valeant Pharma carries a Zacks #4 Rank (Sell rating) in the short run.

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