Valeant Shares Surge on Surprise Profit, Better Outlook

Valeant Pharmaceuticals Intl Inc. (TSX:VRX)(NYSE:VRX) finally gave exhausted shareholders a reason for optimism on Tuesday after the company posted better-than-expected quarterly results.

The company reported a first-quarter profit of $628 million, or $1.79 per share. That compares to a loss of $374 million a year ago, or $1.08 per share. The whole reason for the profit was a one-time income tax benefit of $908 million, thanks to a restructuring move. Valeant listed its adjusted net profit as $273 million.

The company is also more bullish about the rest of 2017. It told investors that it expects to post adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of between $3.6 and $3.75 billion for 2017, up slightly from previous estimates.

Valeant also said it’s on pace to pay off $5 billion worth of debt between now and February 2018. Its long-term debt currently sits at approximately $28.5 billion. The company must continue to slash debt or it runs the risk of eventual insolvency.

It wasn’t all good news, however. Valeant did miss analyst expectations for top-line sales. First quarter revenue dipped from $2.37 billion in 2016 to $2.11 billion. Analysts projected the company would generate $2.18 billion in sales.

The company is also interested in renaming itself. This is a positive move. The Valeant name is synonymous with scandal and deceit. A name change will help the company get a fresh start.

Valeant shares surged during Tuesday’s trading, increasing $3.19 each or 23.8% to $16.55 on the Toronto Stock Exchange.