What Valeant’s soaring stock price isn’t telling you

Mike Pearson, chairman and chief executive officer of Valeant Pharmaceuticals International Inc.

You wouldn\’t be able to tell by Valeant Pharmaceuticals International Inc.\’s stock price, but things haven\’t gone exactly according to plan.

As new Valeant CFO, merger expert Robert Rosiello prepared to maintain M&A momentum

Canadian Press

Valeant Pharmaceuticals International Inc\’s new Chief Financial Officer made his mark being an expert in healthcare mergers and acquisitions, and this is exactly what he really wants to continue doing at Canada\’s largest publicly-traded drug company.

\”This is definitely an organization that totally sweats the facts and understands how to not only employ capital, but make it perform,\” said Robert Rosiello, who had been appointed CFO by the Laval, Que.-based company on Thursday.

Continue reading.

The US$78-billion company has been on a mission to become one of the world\’s five leading drugmakers, joining the ranks of Pfizer Inc. and Novartis AG, by looking into making acquisition after acquisition. Answer to this objective was its quest for Allergan Inc., the producer of Botox injections. It lost on that US$60 billion-plus prize to Actavis Plc.

There are few alternatives big enough, with as lucrative of the product line to help Laval, Quebec-based Valeant jolt earnings growth and lower financial leverage. Its debt-fuelled takeover binge has pushed the amount of money it owes banks and bondholders to 6.6 times what it earned before interest, taxes, depreciation and amortization previously 12 months, based on data compiled by Bloomberg. The average Standard & Poor\’s 500 clients are half as indebted.

\”The Allergan deal would be a disappointment for Valeant management,\” said Michael Waterhouse, an analyst for Morningstar Inc.

Even so, Valeant\’s New York-listed stock has climbed 94 per cent in the past Twelve months, its best rolling 12-month performance because the company was formed from a tax-inversion deal in 2010. Even Valeant\’s bonds are outperforming the broader high-yield market, based on Bank of America Merrill Lynch Indexes.

\”We are continuing to pay attention to building diversified, durable businesses with strong organic growth platforms and pursuing disciplined business development opportunities,\” said Laurie Little, a spokeswoman for Valeant. \”With 2015 off to a strong start, we\’re well positioned for another year of outperformance.\”