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Valeant (VRX) Announces Pricing of Senior Secured Notes

Zacks Equity Research
Updated

Valeant Pharmaceuticals International, Inc. VRX announced that it has priced its previously announced offering of $750,000,000 aggregate principal amount of 5.500% senior secured notes due 2025. These will be additional notes and form part of the same series as the existing 5.500% senior secured notes due 2025.Valeant will sell the notes at a price of 100.0% of the principal amount thereof plus accrued interest from Oct 17, 2017.

The offering will close on Nov 21, 2017.

The company expects to use the net proceeds from the offering along with cash on hand to repay a portion of its outstanding debt due 2022 and to pay related fees and expenses.

Of late, Valeant is divesting its non-core assets to repay its huge levels of debt.  Valeant sold its equity interests in Dendreon Pharmaceuticals, Inc. to the China based Sanpower Group Co. Ltd. The divestiture of non-core assets should help the company streamline its product portfolio and focus better on core areas of dermatology and pay down debt as well. Valeant has also decided to sell Obagi. The company also sold iNova Pharmaceuticals for $930 million.

 

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Valeant’s stock has increased 1.5% in the last six months compared with the industry’s loss of 2.2%.

The company is also divesting Sprout Pharmaceuticals and ADDYI businesses. As of Nov 7, 2017, the company has reduced total debt by approximately $6 billion since the end of first-quarter 2016.

Although third-quarter results were encouraging, the company trimmed its guidance due to recent divestitures. After a tumultuous period, Valeant started a rebuilding process with its CEO, Joseph C. Papa. Even though it is still early to comment on the rebuilding process, but the company’s efforts to sell non-core assets and pay down huge levels of debt is commendable and should bode well in the upcoming quarters.

In particular, uptake of Xifaxan and the launch of Relistor tablets drove prescription growth by 61%. New drug approvals are also expected to boost growth and offset the weakness in the dermatology segment. Meanwhile, pricing in the dermatology business is beginning to stabilize.

Zacks Rank & Key Picks

Valeant currently carries a Zacks Rank #3 (Hold).

Some better-ranked health care stocks in the same space include Sucampo Pharmaceuticals, Inc. SCMP, Ligand Pharmaceuticals Incorporated LGND and Corcept Therapeutics Incorporated CORT.  While Sucampo sports a Zacks Rank#1 (Strong Buy), Ligand  and Corcept carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sucampo’s earnings per share estimates have moved up from $1.01 to $1.11 for 2017 and from $1.06 to $1.21 for 2018 over the last 60 days. The company pulled off positive earnings surprises in three of the trailing four quarters, with an average beat of 15.63%.

Ligand’s earnings per share estimates have moved up from $3.68 to $3.70 for 2018 over the last 60 days. The company pulled off positive earnings surprises in two of the trailing four quarters, with an average beat of 8.22%.

Corcept’s earnings per share estimates have moved up from 45 cents to 47 cents for 2017 and from 77 cents to 80 cents for 2018 over the last 60 days. The company delivered positive earnings surprises in two of the trailing four quarters, with an average beat of 14.32%.

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Ligand Pharmaceuticals Incorporated (LGND) : Free Stock Analysis Report
 
Valeant Pharmaceuticals International, Inc. (VRX) : Free Stock Analysis Report
 
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Corcept Therapeutics Incorporated (CORT) : Free Stock Analysis Report
 
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