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Valeant Pharmaceuticals stock jumped Tuesday after the Quebec-based drugmaker reported its first net profit in six quarters, raised its 2017 adjusted earnings forecast and said it made further progress in paying down debt.
On the Toronto Stock Exchange, the company's stock (TSX:VRX) gained $2.02 or 15 per cent at C$15.38 in morning trading, well off its 52-week high of $42.25 but the strongest in weeks.
Senior executives said they expect Valeant's low share price will continue to improve as the company further reduces debt.
"We think that's going to help us tremendously with the share price going forward," CEO Joseph Papa said during a conference call about first-quarter results.
Valeant's debt was reduced by US$1.3 billion in the quarter and by US$3.6 billion since the first quarter of last year.
The Montreal-area drug and medical device maker, which reports in U.S. currency, earned $628 million or $1.79 per diluted share, thanks to a $908-million non-cash tax benefit from an internal restructuring.
That was Valeant's first net profit since the third quarter of 2015, prior to a series of problems that pushed Valeant's stock price below $200 per share in October 2015.
Revenues for the period ended March 31 were down 11 per cent to $2.11 billion. Revenues for branded prescriptions fell 9.2 per cent on weakness from Xifaxan and U.S. diversified products were down 37 per cent, largely due to the loss of patent exclusivity. Bausch & Lomb and international revenues grew slightly.
Excluding one-time items, adjusted profits were 78 cents per share. Valeant was expected to earn 87 cents per share in adjusted profits on $2.18 billion of revenues, according to analysts polled by Thomson Reuters.
Valeant says its adjusted EBITDA (earnings before income taxes, depreciation and amortization) was $861 million.
Valeant increased its full-year guidance for adjusted EBITDA to between $3.6 billion to $3.75 billion, from $3.55 billion to $3.70 billion.
Douglas Miehm of RBC Capital Markets said that the higher guidance may provide some comfort to investors, although the lower branded revenues is a concern.
