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Valeant Pharmaceuticals (VRX) Chips Away at Debt With Asset Disposals

The events that ruined Valeant Pharmaceuticals Intl. Inc.’s market value are well documented. Moving into the second half of 2017, analysts continue to cite the company’s sky-high debt, legal issues and reduced influence as its biggest problems.

Yet in the face of very poor a financial situation, investment cuts and bankruptcy, the Canadian firm knuckled down and made considerable efforts to turn things around. This year sees Valeant enhance its bid to sell its way out of large liabilities.

Those effort have also not gone unnoticed. Recent months show VRX stock livening up, somewhat. I mean, sure, they are a long, long way away from redemption, yet the company has pulled itself from below the $10 mark. That saga really had Wall Street on edge, drawing reports warning about a $0 stock value.

valeant pharmaceuticals NYSE:VRX

Right now though, the drugmaker’s first priority is to shed its huge debt pile. Valeant Pharmaceuticals has made commendable moves in that regard. The company has very profitably disposed of several non-core businesses. It even shed a few subsidiaries which were close to its heart too.

Valeant claims to understand the sacrifices it needs for a successful turnaround. Its CFO, Paul Herendeen, has commented on the firm’s choice to sell core businesses to stay ahead of it debts. Simply put, the company is willing to consider shedding core assets too, if the right proposal comes along.

“Our preference is to keep the business we identify as core,” the CFO explained. “But not at all costs.”

This year sees the Canadian drug giant take massive steps to chip away at its liabilities. Combining those with haunting legal issues and a damaged public image, and you get a stock that forces investors to stay clear of it.

Valeant Pharmaceuticals Intl Inc forges on though, and has made several good sales and shown great gains. The year began with the firm’s debt sitting above $30 billion. Since then it has sold several of its companies in the name of lowering debts. The company would like to be 16 percent below its early 2017 liabilities by mid-2018.

Granted, this might not seem like much. However, pulling this off will put the firm a step closer to winning back investor confidence. Consider the following sales made by Valeant Pharmaceuticals this year so far.

$2 billion made off Dendreon and skincare products

Dendreon was let go this year. The Valeant-owned cancer drug and research business was reported to be up for sale not long into the new year. Executives insisted that its sale, along with that of three skincare products would rake in $2 billion in total.

The company made three times more on these sales than the prices at which they were acquired. Bulls and bears alike can’t deny that Valeant Pharmaceuticals has managed numerous assets of considerable worth. In fact, several more assets were disposed of at multiple times their purchase value this year.

Considering Dendreon, the drugmaker forked out more than $494 billion for its purchase in February 2015. A formidable drug maker in China, Sanpower Group bought the cancer company this year. In the first week of January 2017, Valeant announced that Dendreon’s disposal would pull in around $820 million.

That was a profit of 65 percent in under two years. Not bad for Valeant, all things considered. The same period has seen Valeant lose over 90 percent of its stock value. However, if investors think Dendreon’s sale was impressive, the Canadian firm’s skincare sales are even better.

L’Oreal got its hands on three of Valeant’s skin-health units this year. Ambi, CeraVE and AnceFree were all secured over a certain period up to late 2012. Collectively, they cost Valeant Pharmaceuticals $150 million. Valeant sold all of those for a combined $1.3 billion, nearly 9 times more than acquired.

iNova sold by Valeant Pharmaceuticals for nearly $1 billion

Valeant also made a report which states iNova Pharmaceutics is now on offer for $930 million. The move forms part of Valeant’s valiant debt-shedding strategy. The company says iNova will be bought by a firm owned and advised by both The Carlyle Group and Pacific Equity.

Valeant’s long-term liabilities were sat at $28.54 billion as off March 31. The sale of iNova promises to go a long way towards shedding those debts. The company makes and sells diverse over-the-counter and prescription drugs. It specializes in cold and flu products, treatments to manage weight, pain and cardio-related ailments too.

CEO and chairman Joseph Papa commented on the Valeant decision. He assures investors and the public that iNova is favorable, diversified and works in more than 15 countries worldwide. The firm on sale holds a dominant market stake in southern regions like South Africa and Australia. Beyond that, iNova “also has an established platform in Asia.”

The sales covered in this article cover around $3 billion in debt-shedding sales in under 6 months. Whether the company can sell its way out of the woods is yet to be seen.

Valeant Pharmaceuticals International Inc. is a Canadian-based, multinational drug firm. The firm has securities in drugmakers across the board. These include products for eye health, dermatology, branded genetics, neurology and gastrointestinal disorders too. Company shares soared to heights in 2015. They were knocked down because of huge debts concerns, regulation scandals and a subsequent loss of influence.

All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
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