Valeant Pharmaceuticals (VRX): Range-bound

After topping out at $18 a share in the summer, Valeant (TSX: VRX) has neither any downside nor upside. Its
share price is stuck at the $13 - $14 range but could break out in the next quarter. Better sales growth
from B+L and the Salix unit, coupled with asset sales fetching better prices, will give Valeant’s stock a lift.
Last week, Valeant closed the iNova Pharma sale, bringing in $920 million in cash. iNova takes away
$65 million in revenue and $35M in non-GAAP EBITDA for the fourth quarter. This is a good trade-off as debt levels fall further and lower interest costs. Valeant paid around $700 million AUS in 2011. The sale
represents a decent positive gain.
The company’s debt should now be around $26 billion, with $20 billion a comfortable level for the
company. Selling more assets totaling $6 billion will finally stabilize the company’s balance sheet.
Looking ahead, Vyzulta, which treats glaucoma, should adding meaningfully to B+L’s revenue. The U.S. Food and Drug Administration  sent a complete response letter to Valeant on August 11. In the dermatology space, investors will soon learn the success of Siliq’s launch when the company reports results.