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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the Quarterly Period Ended September 30, 2017
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OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
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British Columbia, Canada
(State or other jurisdiction of incorporation or organization) |
98-0448205
(I.R.S. Employer Identification No.) |
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2150 St. Elzéar Blvd. West, Laval, Québec
(Address of principal executive offices) |
H7L 4A8
(Zip Code) |
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
(Do not check if a smaller reporting company) |
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Smaller reporting company
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Emerging growth company
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o
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
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Part I.
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Financial Information
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Item 1.
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Consolidated
Financial Statements (unaudited)
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Item 2.
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Item 3.
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Item 4.
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Part II
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Other Information
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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•
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the expense, timing and outcome of legal and governmental proceedings, investigations and information requests relating to, among other matters, our distribution, marketing, pricing, disclosure and accounting practices (including with respect to our former relationship with Philidor Rx Services, LLC ("Philidor")), including pending investigations by the U.S. Attorney's Office for the District of Massachusetts, the U.S. Attorney's Office for the Southern District of New York and the State of North Carolina Department of Justice, the pending investigations by the U.S. Securities and Exchange Commission (the “SEC”) of the Company, the request for documents and information received by the Company from the Autorité des marchés financiers (the “AMF”) (the Company’s principal securities regulator in Canada), the pending investigation by the California Department of Insurance, a number of pending putative securities class action litigations in the U.S. (including related opt-out actions, including the recently filed securities and RICO claims by Lord Abbett)
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the impact of the changes in and reorganizations to our business structure, including changes to our operating and reportable segments;
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the effectiveness of the measures implemented to remediate the material weaknesses in our internal control over financial reporting that were identified by the Company, our deficient control environment and the contributing factors leading to the misstatement of our previously issued results and the impact such measures may have on the Company and our businesses;
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potential additional litigation and regulatory investigations (and any costs, expenses, use of resources, diversion of management time and efforts, liability and damages that may result therefrom), negative publicity and reputational harm on our Company, products and business that may result from the recent public scrutiny of our distribution, marketing, pricing, disclosure and accounting practices and from our former relationship with Philidor, including any claims, proceedings, investigations and liabilities we may face as a result of any alleged wrongdoing by Philidor and/or its management and/or employees;
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the current scrutiny of our business practices including with respect to pricing (including the investigations by the U.S. Attorney's Offices for the District of Massachusetts and the Southern District of New York, and the State of North Carolina Department of Justice) and any pricing controls or price adjustments that may be sought or imposed on our products as a result thereof;
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pricing decisions that we have implemented, or may in the future elect to implement, whether as a result of recent scrutiny or otherwise, such as the decision of the Company to take no further price increases on our Nitropress® and Isuprel® products and to implement an enhanced rebate program for such products, our decision on the price of our Siliq™ product, the Patient Access and Pricing Committee’s commitment that the average annual price increase for our prescription pharmaceutical products will be set at no greater than single digits and below the 5-year weighted average of the increases within the branded biopharmaceutical industry or any future pricing actions we may take following review by our Patient Access and Pricing Committee (which is responsible for the pricing of our drugs);
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legislative or policy efforts, including those that may be introduced and passed by the U.S. Congress, designed to reduce patient out-of-pocket costs for medicines, which could result in new mandatory rebates and discounts or other pricing restrictions, controls or regulations (including mandatory price reductions);
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ongoing oversight and review of our products and facilities by regulatory and governmental agencies, including periodic audits by the U.S. Food and Drug Administration (the "FDA") and the results thereof;
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any default under the terms of our senior notes indentures or Credit Agreement and our ability, if any, to cure or obtain waivers of such default;
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any delay in the filing of any future financial statements or other filings and any default under the terms of our senior notes indentures or Credit Agreement as a result of such delays;
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our substantial debt (and potential additional future indebtedness) and current and future debt service obligations, our ability to reduce our outstanding debt levels in accordance with our stated intention and the resulting impact on our financial condition, cash flows and results of operations;
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our ability to meet the financial and other covenants contained in our Credit Agreement, indentures and other current or future debt agreements and the limitations, restrictions and prohibitions such covenants impose or may impose on the way we conduct our business, prohibitions on incurring additional debt if certain financial covenants are not met, limitations on the amount of additional debt we are able to incur where not prohibited, and restrictions on our ability to make certain investments and other restricted payments;
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any further downgrade by rating agencies in our credit ratings, which may impact, among other things, our ability to raise debt and the cost of capital for additional debt issuances;
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any reductions in, or changes in the assumptions used in, our forecasts for fiscal year 2017 or beyond, which could lead to, among other things, (i) a failure to meet the financial and/or other covenants contained in our Credit Agreement and/or indentures, and/or (ii) impairment in the goodwill associated with certain of our reporting units (including our Salix reporting unit) or impairment charges related to certain of our products or other intangible assets, which impairments could be material;
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changes in the assumptions used in connection with our impairment analyses or assessments, which would lead to a change in such impairment analyses and assessments and which could result in an impairment in the goodwill associated with any of our reporting units or impairment charges related to certain of our products or other intangible assets;
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the pending and additional divestitures of certain of our assets or businesses and our ability to successfully complete any such divestitures on commercially reasonable terms and on a timely basis, or at all, and the impact of any such pending or future divestitures on our Company, including the reduction in the size or scope of our business or market share, loss of revenue, any loss on sale, including any resultant write-downs of goodwill, or any adverse tax consequences suffered as a result of any such divestitures;
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our shift in focus to much lower business development activity through acquisitions for the foreseeable future as we focus on reducing our outstanding debt levels and as a result of the restrictions imposed by our Credit Agreement that restrict us from, among other things, making acquisitions over an aggregate threshold (subject to certain exceptions) and from incurring debt to finance such acquisitions, until we achieve a specified leverage ratio;
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the uncertainties associated with the acquisition and launch of new products (such as our Siliq™ product), including, but not limited to, our ability to provide the time, resources, expertise and costs required for the commercial launch of new products, the acceptance and demand for new pharmaceutical products, and the impact of competitive products and pricing, which could lead to material impairment charges;
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our ability to retain, motivate and recruit executives and other key employees, including subsequent to retention payments being paid out and as a result of the reputational challenges we face and may continue to face;
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our ability to implement effective succession planning for our executives and key employees;
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the challenges and difficulties associated with managing a large complex business, which has, in the past, grown rapidly;
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our ability to compete against companies that are larger and have greater financial, technical and human resources than we do, as well as other competitive factors, such as technological advances achieved, patents obtained and new products introduced by our competitors;
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our ability to effectively operate, stabilize and grow our businesses in light of the challenges that the Company currently faces, including with respect to its substantial debt, pending investigations and legal proceedings, scrutiny of our pricing, distribution and other practices, reputational harm and limitations on the way we conduct business imposed by the covenants in our Credit Agreement, indentures and the agreements governing our other indebtedness;
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the success of our fulfillment arrangements with Walgreen Co. ("Walgreens"), including market acceptance of, or market reaction to, such arrangements (including by customers, doctors, patients, pharmacy benefit managers ("PBMs"), third party payors and governmental agencies), the continued compliance of such arrangements with applicable laws, and our ability to successfully negotiate any improvements to our arrangements with Walgreens;
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the extent to which our products are reimbursed by government authorities, PBMs and other third party payors; the impact our distribution, pricing and other practices (including as it relates to our former relationship with Philidor, any alleged wrongdoing by Philidor and our current relationship with Walgreens) may have on the decisions of such government authorities, PBMs and other third party payors to reimburse our products; and the impact of obtaining or maintaining such reimbursement on the price and sales of our products;
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the inclusion of our products on formularies or our ability to achieve favorable formulary status, as well as the impact on the price and sales of our products in connection therewith;
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our eligibility for benefits under tax treaties and the continued availability of low effective tax rates for the business profits of certain of our subsidiaries, including the impact on such matters of the proposals published by the Organization for Economic Co-operation and Development ("OECD") respecting base erosion and profit shifting ("BEPS") and various corporate tax reform proposals being considered in the U.S.;
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our recent shift in business strategy as we are seeking to sell a variety of assets, some of which may be material and/or transformative;
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the actions of our third party partners or service providers of research, development, manufacturing, marketing, distribution or other services, including their compliance with applicable laws and contracts, which actions may be beyond our control or influence, and the impact of such actions on our Company, including the impact to the Company of our former relationship with Philidor and any alleged legal or contractual non-compliance by Philidor;
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the risks associated with the international scope of our operations, including our presence in emerging markets and the challenges we face when entering and operating in new and different geographic markets (including the challenges created by new and different regulatory regimes in such countries and the need to comply with applicable anti-bribery and economic sanctions laws and regulations);
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adverse global economic conditions and credit markets and foreign currency exchange uncertainty and volatility in the countries in which we do business (such as the current or recent instability in Brazil, Russia, Ukraine, Argentina, Egypt, certain other countries in Africa and the Middle East, the devaluation of the Egyptian pound, and the adverse economic impact and related uncertainty caused by the United Kingdom's decision to leave the European Union (Brexit));
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our ability to obtain, maintain and license sufficient intellectual property rights over our products and enforce and defend against challenges to such intellectual property;
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the introduction of generic, biosimilar or other competitors of our branded products and other products, including the introduction of products that compete against our products that do not have patent or data exclusivity rights;
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if permitted under our Credit Agreement, and to the extent we elect to resume business development activities through acquisitions, our ability to identify, finance, acquire, close and integrate acquisition targets successfully and on a timely basis;
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factors relating to the acquisition and integration of the companies, businesses and products that have been acquired by the Company and that may in the future be acquired by the Company (if permitted under our Credit Agreement and to the extent we elect to resume business development activities through acquisitions), such as the time and resources required to integrate such companies, businesses and products, the difficulties associated with such integrations (including potential disruptions in sales activities and potential challenges with information technology systems integrations), the difficulties and challenges associated with entering into new business areas and new geographic markets, the difficulties, challenges and costs associated with managing and integrating new facilities, equipment and other assets, the risks associated with the acquired companies, businesses and products and our ability to achieve the anticipated benefits and synergies from such acquisitions and integrations, including as a result of cost-rationalization and integration initiatives. Factors impacting the achievement of anticipated benefits and synergies may include greater than expected operating costs, the difficulty in eliminating certain duplicative costs, facilities and functions, and the outcome of many operational and strategic decisions;
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the expense, timing and outcome of pending or future legal and governmental proceedings, arbitrations, investigations, subpoenas, tax and other regulatory audits, reviews and regulatory proceedings against us or relating to us and settlements thereof;
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our ability to obtain components, raw materials or finished products supplied by third parties (some of which may be single-sourced) and other manufacturing and related supply difficulties, interruptions and delays;
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the disruption of delivery of our products and the routine flow of manufactured goods;
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economic factors over which the Company has no control, including changes in inflation, interest rates, foreign currency rates, and the potential effect of such factors on revenues, expenses and resulting margins;
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interest rate risks associated with our floating rate debt borrowings;
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our ability to effectively distribute our products and the effectiveness and success of our distribution arrangements, including the impact of our arrangements with Walgreens;
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our ability to secure and maintain third party research, development, manufacturing, marketing or distribution arrangements;
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the risk that our products could cause, or be alleged to cause, personal injury and adverse effects, leading to potential lawsuits, product liability claims and damages and/or recalls or withdrawals of products from the market;
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the mandatory or voluntary recall or withdrawal of our products from the market and the costs associated therewith;
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the availability of, and our ability to obtain and maintain, adequate insurance coverage and/or our ability to cover or insure against the total amount of the claims and liabilities we face, whether through third party insurance or self-insurance;
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the difficulty in predicting the expense, timing and outcome within our legal and regulatory environment, including with respect to approvals by the FDA, Health Canada and similar agencies in other countries, legal and regulatory proceedings
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•
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the results of continuing safety and efficacy studies by industry and government agencies;
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the success of preclinical and clinical trials for our drug development pipeline or delays in clinical trials that adversely impact the timely commercialization of our pipeline products, as well as other factors impacting the commercial success of our products (such as our Siliq
™
product), which could lead to material impairment charges;
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•
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the results of management reviews of our research and development portfolio (including following the receipt of clinical results or feedback from the FDA or other regulatory authorities), which could result in terminations of specific projects which, in turn, could lead to material impairment charges;
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the seasonality of sales of certain of our products;
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declines in the pricing and sales volume of certain of our products that are distributed or marketed by third parties, over which we have no or limited control;
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•
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compliance by the Company or our third party partners and service providers (over whom we may have limited influence), or the failure of our Company or these third parties to comply, with health care “fraud and abuse” laws and other extensive regulation of our marketing, promotional and business practices (including with respect to pricing), worldwide anti-bribery laws (including the U.S. Foreign Corrupt Practices Act), worldwide economic sanctions and/or export laws, worldwide environmental laws and regulation and privacy and security regulations;
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•
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the impacts of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Health Care Reform Act”) and potential repeal or amendment thereof and other legislative and regulatory healthcare reforms in the countries in which we operate, including with respect to recent government inquiries on pricing;
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the impact of any changes in or reforms to the legislation, laws, rules, regulation and guidance that apply to the Company and its business and products or the enactment of any new or proposed legislation, laws, rules, regulations or guidance that will impact or apply to the Company or its businesses or products;
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•
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the impact of changes in federal laws and policy under consideration by the new administration and Congress, including the effect that such changes will have on fiscal and tax policies, the potential repeal of all or portions of the Health Care Reform Act, international trade agreements and policies and policy efforts designed to reduce patient out-of-pocket costs for medicines (which could result in new mandatory rebates and discounts or other pricing restrictions);
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•
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illegal distribution or sale of counterfeit versions of our products;
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•
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interruptions, breakdowns or breaches in our information technology systems; and
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•
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risks in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 1, 2017, and risks detailed from time to time in our other filings with the SEC and the Canadian Securities Administrators (the “CSA”), as well as our ability to anticipate and manage the risks associated with the foregoing.
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September 30,
2017 |
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December 31,
2016 |
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Assets
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Current assets:
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Cash and cash equivalents
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$
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964
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$
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542
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Restricted cash
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928
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—
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Trade receivables, net
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2,229
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2,517
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Inventories, net
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1,071
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1,061
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Current assets held for sale
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16
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261
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Prepaid expenses and other current assets
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736
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696
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Total current assets
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5,944
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5,077
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Property, plant and equipment, net
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1,398
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1,312
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Intangible assets, net
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16,023
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18,884
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Goodwill
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15,573
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15,794
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Deferred tax assets, net
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166
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146
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Non-current assets held for sale
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718
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2,132
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Other non-current assets
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152
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184
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Total assets
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$
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39,974
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$
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43,529
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Liabilities
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Current liabilities:
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Accounts payable
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$
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407
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$
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324
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Accrued and other current liabilities
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3,396
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3,227
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Current liabilities held for sale
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—
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57
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Current portion of long-term debt and other
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925
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1
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Total current liabilities
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4,728
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3,609
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Acquisition-related contingent consideration
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345
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840
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Non-current portion of long-term debt
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26,216
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29,845
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Pension and other benefit liabilities
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198
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195
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Liabilities for uncertain tax positions
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265
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184
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Deferred tax liabilities, net
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2,237
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5,434
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Non-current liabilities held for sale
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461
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57
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Other non-current liabilities
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102
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107
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Total liabilities
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34,552
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40,271
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Commitments and contingencies (Note 18)
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Equity
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Common shares, no par value, unlimited shares authorized, 348,582,556 and 347,821,606 issued and outstanding at September 30, 2017 and December 31, 2016, respectively
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10,086
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10,038
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Additional paid-in capital
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368
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351
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Accumulated deficit
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(3,239
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)
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(5,129
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)
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Accumulated other comprehensive loss
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(1,888
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)
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(2,108
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)
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Total Valeant Pharmaceuticals International, Inc. shareholders’ equity
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5,327
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|
|
3,152
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Noncontrolling interest
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95
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|
|
106
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Total equity
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5,422
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|
|
3,258
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Total liabilities and equity
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$
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39,974
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$
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43,529
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|
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|
Three Months Ended
September 30, |
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Nine Months Ended
September 30, |
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2017
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2016
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2017
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2016
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Revenues
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Product sales
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$
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2,186
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$
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2,443
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|
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$
|
6,462
|
|
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$
|
7,168
|
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Other revenues
|
33
|
|
|
36
|
|
|
99
|
|
|
103
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|
||||
|
|
2,219
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|
|
2,479
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|
|
6,561
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|
|
7,271
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|
||||
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Expenses
|
|
|
|
|
|
|
|
||||||||
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Cost of goods sold (excluding amortization and impairments of intangible assets)
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650
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|
|
649
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|
|
1,869
|
|
|
1,917
|
|
||||
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Cost of other revenues
|
9
|
|
|
9
|
|
|
32
|
|
|
29
|
|
||||
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Selling, general and administrative
|
623
|
|
|
661
|
|
|
1,943
|
|
|
2,145
|
|
||||
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Research and development
|
81
|
|
|
101
|
|
|
271
|
|
|
328
|
|
||||
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Amortization of intangible assets
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657
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|
|
664
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|
|
1,915
|
|
|
2,015
|
|
||||
|
Goodwill impairments
|
312
|
|
|
1,049
|
|
|
312
|
|
|
1,049
|
|
||||
|
Asset impairments
|
406
|
|
|
148
|
|
|
629
|
|
|
394
|
|
||||
|
Restructuring and integration costs
|
6
|
|
|
20
|
|
|
42
|
|
|
78
|
|
||||
|
Acquired in-process research and development costs
|
—
|
|
|
31
|
|
|
5
|
|
|
34
|
|
||||
|
Acquisition-related contingent consideration
|
(238
|
)
|
|
9
|
|
|
(297
|
)
|
|
18
|
|
||||
|
Other (income) expense, net
|
(325
|
)
|
|
1
|
|
|
(584
|
)
|
|
(20
|
)
|
||||
|
|
2,181
|
|
|
3,342
|
|
|
6,137
|
|
|
7,987
|
|
||||
|
Operating income (loss)
|
38
|
|
|
(863
|
)
|
|
424
|
|
|
(716
|
)
|
||||
|
Interest income
|
3
|
|
|
3
|
|
|
9
|
|
|
6
|
|
||||
|
Interest expense
|
(459
|
)
|
|
(470
|
)
|
|
(1,392
|
)
|
|
(1,369
|
)
|
||||
|
Loss on extinguishment of debt
|
(1
|
)
|
|
—
|
|
|
(65
|
)
|
|
—
|
|
||||
|
Foreign exchange and other
|
19
|
|
|
(2
|
)
|
|
87
|
|
|
4
|
|
||||
|
Loss before recovery of income taxes
|
(400
|
)
|
|
(1,332
|
)
|
|
(937
|
)
|
|
(2,075
|
)
|
||||
|
Recovery of income taxes
|
(1,700
|
)
|
|
(113
|
)
|
|
(2,829
|
)
|
|
(179
|
)
|
||||
|
Net income (loss)
|
1,300
|
|
|
(1,219
|
)
|
|
1,892
|
|
|
(1,896
|
)
|
||||
|
Less: Net (loss) income attributable to noncontrolling interest
|
(1
|
)
|
|
(1
|
)
|
|
1
|
|
|
(2
|
)
|
||||
|
Net income (loss) attributable to Valeant Pharmaceuticals International, Inc.
|
$
|
1,301
|
|
|
$
|
(1,218
|
)
|
|
$
|
1,891
|
|
|
$
|
(1,894
|
)
|
|
Earnings (loss) per share attributable to Valeant Pharmaceuticals International, Inc.:
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
$
|
3.71
|
|
|
$
|
(3.49
|
)
|
|
$
|
5.40
|
|
|
$
|
(5.47
|
)
|
|
Diluted
|
$
|
3.69
|
|
|
$
|
(3.49
|
)
|
|
$
|
5.38
|
|
|
$
|
(5.47
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted-average common shares
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
350.4
|
|
|
349.5
|
|
|
350.1
|
|
|
346.5
|
|
||||
|
Diluted
|
352.3
|
|
|
349.5
|
|
|
351.4
|
|
|
346.5
|
|
||||
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
Net income (loss)
|
$
|
1,300
|
|
|
$
|
(1,219
|
)
|
|
$
|
1,892
|
|
|
$
|
(1,896
|
)
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
||||||||
|
Foreign currency translation adjustment
|
81
|
|
|
(4
|
)
|
|
227
|
|
|
(37
|
)
|
||||
|
Pension and postretirement benefit plan adjustments, net of income taxes
|
(3
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|
(2
|
)
|
||||
|
Other comprehensive income (loss)
|
78
|
|
|
(5
|
)
|
|
223
|
|
|
(39
|
)
|
||||
|
Comprehensive income (loss)
|
1,378
|
|
|
(1,224
|
)
|
|
2,115
|
|
|
(1,935
|
)
|
||||
|
Less: Comprehensive loss attributable to noncontrolling interest
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
||||
|
Comprehensive income (loss) attributable to Valeant Pharmaceuticals International, Inc.
|
$
|
1,379
|
|
|
$
|
(1,224
|
)
|
|
$
|
2,118
|
|
|
$
|
(1,932
|
)
|
|
|
Nine Months Ended
September 30, |
||||||
|
|
2017
|
|
2016
|
||||
|
Cash Flows From Operating Activities
|
|
|
|
||||
|
Net income (loss)
|
$
|
1,892
|
|
|
$
|
(1,896
|
)
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
|
Depreciation and amortization of intangible assets
|
2,039
|
|
|
2,159
|
|
||
|
Amortization and write-off of debt discounts and debt issuance costs
|
100
|
|
|
89
|
|
||
|
Asset impairments
|
629
|
|
|
394
|
|
||
|
Acquisition accounting adjustment on inventory sold
|
—
|
|
|
38
|
|
||
|
Gain on disposals of assets and businesses, net
|
(695
|
)
|
|
(11
|
)
|
||
|
Acquisition-related contingent consideration
|
(297
|
)
|
|
18
|
|
||
|
Allowances for losses on trade receivable and inventories
|
71
|
|
|
96
|
|
||
|
Deferred income taxes
|
(2,985
|
)
|
|
(310
|
)
|
||
|
Additions (reductions) to accrued legal settlements
|
112
|
|
|
(32
|
)
|
||
|
Insurance proceeds for legal settlement
|
60
|
|
|
—
|
|
||
|
Payments of accrued legal settlements
|
(221
|
)
|
|
(68
|
)
|
||
|
Goodwill impairment
|
312
|
|
|
1,049
|
|
||
|
Loss on deconsolidation
|
—
|
|
|
18
|
|
||
|
Share-based compensation
|
70
|
|
|
134
|
|
||
|
Foreign exchange gain
|
(83
|
)
|
|
(15
|
)
|
||
|
Loss on extinguishment of debt
|
65
|
|
|
—
|
|
||
|
Payment of contingent consideration adjustments, including accretion
|
(3
|
)
|
|
(27
|
)
|
||
|
Other
|
(24
|
)
|
|
(12
|
)
|
||
|
Changes in operating assets and liabilities:
|
|
|
|
||||
|
Trade receivables
|
338
|
|
|
(31
|
)
|
||
|
Inventories
|
1
|
|
|
(166
|
)
|
||
|
Prepaid expenses and other current assets
|
32
|
|
|
118
|
|
||
|
Accounts payable, accrued and other liabilities
|
299
|
|
|
30
|
|
||
|
Net cash provided by operating activities
|
1,712
|
|
|
1,575
|
|
||
|
|
|
|
|
||||
|
Cash Flows From Investing Activities
|
|
|
|
||||
|
Acquisition of businesses, net of cash acquired
|
—
|
|
|
(19
|
)
|
||
|
Acquisition of intangible assets and other assets
|
(146
|
)
|
|
(48
|
)
|
||
|
Purchases of property, plant and equipment
|
(118
|
)
|
|
(181
|
)
|
||
|
Reduction of cash due to deconsolidation
|
—
|
|
|
(30
|
)
|
||
|
Purchases of marketable securities
|
(4
|
)
|
|
(1
|
)
|
||
|
Proceeds from sale of marketable securities
|
2
|
|
|
17
|
|
||
|
Proceeds from sale of assets and businesses, net of costs to sell
|
3,063
|
|
|
131
|
|
||
|
Net cash provided by (used in) investing activities
|
2,797
|
|
|
(131
|
)
|
||
|
|
|
|
|
||||
|
Cash Flows From Financing Activities
|
|
|
|
||||
|
Issuance of long-term debt, net of discount
|
6,231
|
|
|
1,220
|
|
||
|
Repayments of long-term debt
|
(9,249
|
)
|
|
(1,917
|
)
|
||
|
Borrowings of short-term debt
|
—
|
|
|
3
|
|
||
|
Repayments of short-term debt
|
(8
|
)
|
|
(3
|
)
|
||
|
Proceeds from exercise of stock options
|
—
|
|
|
33
|
|
||
|
Payment of employee withholding tax upon vesting of share-based awards
|
(4
|
)
|
|
(9
|
)
|
||
|
Payments of contingent consideration
|
(34
|
)
|
|
(94
|
)
|
||
|
Payments of deferred consideration
|
—
|
|
|
(517
|
)
|
||
|
Payments of financing costs
|
(39
|
)
|
|
(96
|
)
|
||
|
Other
|
(18
|
)
|
|
(8
|
)
|
||
|
Net cash used in financing activities
|
(3,121
|
)
|
|
(1,388
|
)
|
||
|
Effect of exchange rate changes on cash and cash equivalents
|
39
|
|
|
6
|
|
||
|
Net increase in cash and cash equivalents and restricted cash
|
1,427
|
|
|
62
|
|
||
|
Cash and cash equivalents and restricted cash, beginning of period
|
542
|
|
|
597
|
|
||
|
Cash and cash equivalents and restricted cash, end of period
|
$
|
1,969
|
|
|
$
|
659
|
|
|
|
|
|
|
||||
|
Cash and cash equivalents, end of period
|
$
|
964
|
|
|
$
|
659
|
|
|
Restricted cash, end of period
|
928
|
|
|
—
|
|
||
|
Restricted cash included in Other non-current assets, end of period
|
77
|
|
|
—
|
|
||
|
Cash and cash equivalents and restricted cash, end of period
|
$
|
1,969
|
|
|
$
|
659
|
|
|
1.
|
DESCRIPTION OF BUSINESS
|
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES
|
|
|
Three Months Ended September 30, 2016
|
|
Nine Months Ended September 30, 2016
|
||||||||||||||||||||
|
(in millions)
|
As Initially Reported
|
|
Reclassification
|
|
As Reclassified
|
|
As Initially Reported
|
|
Reclassification
|
|
As Reclassified
|
||||||||||||
|
Amortization of intangible assets
|
$
|
807
|
|
|
$
|
(143
|
)
|
|
$
|
664
|
|
|
$
|
2,389
|
|
|
$
|
(374
|
)
|
|
$
|
2,015
|
|
|
Asset impairments
|
—
|
|
|
148
|
|
|
148
|
|
|
—
|
|
|
394
|
|
|
394
|
|
||||||
|
Acquired in-process research and development costs
|
36
|
|
|
(5
|
)
|
|
31
|
|
|
54
|
|
|
(20
|
)
|
|
34
|
|
||||||
|
|
$
|
843
|
|
|
$
|
—
|
|
|
$
|
843
|
|
|
$
|
2,443
|
|
|
$
|
—
|
|
|
$
|
2,443
|
|
|
3.
|
ACQUISITIONS
|
|
4.
|
DIVESTITURES
|
|
(in millions)
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
Current assets held for sale:
|
|
|
|
|
||||
|
Cash
|
|
$
|
—
|
|
|
$
|
1
|
|
|
Trade receivables
|
|
—
|
|
|
86
|
|
||
|
Inventories
|
|
14
|
|
|
147
|
|
||
|
Other
|
|
2
|
|
|
27
|
|
||
|
Current assets held for sale
|
|
$
|
16
|
|
|
$
|
261
|
|
|
|
|
|
|
|
||||
|
Non-current assets held for sale:
|
|
|
|
|
||||
|
Intangible assets, net
|
|
$
|
717
|
|
|
$
|
680
|
|
|
Goodwill
|
|
—
|
|
|
1,355
|
|
||
|
Other
|
|
1
|
|
|
97
|
|
||
|
Non-current assets held for sale
|
|
$
|
718
|
|
|
$
|
2,132
|
|
|
5.
|
RESTRUCTURING AND INTEGRATION COSTS
|
|
6.
|
FAIR VALUE MEASUREMENTS
|
|
•
|
Level 1 — Quoted prices in active markets for identical assets or liabilities;
|
|
•
|
Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
|
|
•
|
Level 3 — Unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using discounted cash flow methodologies, pricing models, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
|
(in millions)
|
|
Carrying
Value
|
|
Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Carrying
Value
|
|
Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Cash equivalents
|
|
$
|
481
|
|
|
$
|
450
|
|
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
242
|
|
|
$
|
179
|
|
|
$
|
63
|
|
|
$
|
—
|
|
|
Restricted cash
|
|
$
|
928
|
|
|
$
|
928
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Other non-current assets
|
|
$
|
77
|
|
|
$
|
77
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Acquisition-related contingent consideration
|
|
$
|
(390
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(390
|
)
|
|
$
|
(892
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(892
|
)
|
|
(in millions)
|
|
|
|
|
||||
|
Balance, January 1, 2017
|
|
|
|
$
|
892
|
|
||
|
Adjustments to Acquisition-related contingent consideration:
|
|
|
|
|
||||
|
Accretion for the time value of money
|
|
$
|
48
|
|
|
|
||
|
Fair value adjustments to the expected future royalty payments for Addyi®
|
|
(312
|
)
|
|
|
|||
|
Fair value adjustments due to changes in estimates of other future payments
|
|
(33
|
)
|
|
|
|||
|
Acquisition-related contingent consideration
|
|
|
|
(297
|
)
|
|||
|
Reclassified to liabilities held for sale
|
|
|
|
(168
|
)
|
|||
|
Payments
|
|
|
|
(37
|
)
|
|||
|
Balance, September 30, 2017
|
|
|
|
390
|
|
|||
|
Current portion
|
|
|
|
45
|
|
|||
|
Non-current portion
|
|
|
|
$
|
345
|
|
||
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
|
(in millions)
|
|
Carrying
Value
|
|
Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Carrying
Value
|
|
Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||||||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Non-current assets held for sale
|
|
$
|
706
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
706
|
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
38
|
|
|
7.
|
INVENTORIES
|
|
(in millions)
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
Raw materials
|
|
$
|
281
|
|
|
$
|
256
|
|
|
Work in process
|
|
140
|
|
|
125
|
|
||
|
Finished goods
|
|
650
|
|
|
680
|
|
||
|
|
|
$
|
1,071
|
|
|
$
|
1,061
|
|
|
8.
|
INTANGIBLE ASSETS AND GOODWILL
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
(in millions)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization,
Including
Impairments
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization,
Including
Impairments
|
|
Net
Carrying
Amount
|
||||||||||||
|
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Product brands
|
|
$
|
20,768
|
|
|
$
|
(8,512
|
)
|
|
$
|
12,256
|
|
|
$
|
20,725
|
|
|
$
|
(6,883
|
)
|
|
$
|
13,842
|
|
|
Corporate brands
|
|
934
|
|
|
(161
|
)
|
|
773
|
|
|
999
|
|
|
(146
|
)
|
|
853
|
|
||||||
|
Product rights/patents
|
|
3,273
|
|
|
(2,290
|
)
|
|
983
|
|
|
4,240
|
|
|
(2,118
|
)
|
|
2,122
|
|
||||||
|
Partner relationships
|
|
172
|
|
|
(154
|
)
|
|
18
|
|
|
152
|
|
|
(128
|
)
|
|
24
|
|
||||||
|
Technology and other
|
|
212
|
|
|
(143
|
)
|
|
69
|
|
|
252
|
|
|
(160
|
)
|
|
92
|
|
||||||
|
Total finite-lived intangible assets
|
|
25,359
|
|
|
(11,260
|
)
|
|
14,099
|
|
|
26,368
|
|
|
(9,435
|
)
|
|
16,933
|
|
||||||
|
Acquired IPR&D not in service
|
|
226
|
|
|
—
|
|
|
226
|
|
|
253
|
|
|
—
|
|
|
253
|
|
||||||
|
B&L Trademark
|
|
1,698
|
|
|
—
|
|
|
1,698
|
|
|
1,698
|
|
|
—
|
|
|
1,698
|
|
||||||
|
|
|
$
|
27,283
|
|
|
$
|
(11,260
|
)
|
|
$
|
16,023
|
|
|
$
|
28,319
|
|
|
$
|
(9,435
|
)
|
|
$
|
18,884
|
|
|
(in millions)
|
|
|
||
|
October through December 2017
|
|
$
|
584
|
|
|
2018
|
|
2,275
|
|
|
|
2019
|
|
2,059
|
|
|
|
2020
|
|
1,966
|
|
|
|
2021
|
|
1,781
|
|
|
|
2022
|
|
1,641
|
|
|
|
Thereafter
|
|
3,793
|
|
|
|
Total
|
|
$
|
14,099
|
|
|
(in millions)
|
|
Developed Markets
|
|
Emerging Markets
|
|
Bausch + Lomb/ International
|
|
Branded Rx
|
|
U.S. Diversified Products
|
|
Total
|
||||||||||||
|
Balance, January 1, 2016
|
|
$
|
16,141
|
|
|
$
|
2,412
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18,553
|
|
|
Acquisitions
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
|
Divestiture of a portfolio of neurology medical device products
|
|
(36
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36
|
)
|
||||||
|
Goodwill related to Ruconest® reclassified to assets held for sale
|
|
(37
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37
|
)
|
||||||
|
Foreign exchange and other
|
|
47
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
||||||
|
Impairment to goodwill of the former U.S. reporting unit
|
|
(905
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(905
|
)
|
||||||
|
Realignment of segment goodwill
|
|
(15,211
|
)
|
|
(2,400
|
)
|
|
6,708
|
|
|
7,873
|
|
|
3,030
|
|
|
—
|
|
||||||
|
Impairment to goodwill of the Salix reporting unit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(172
|
)
|
|
—
|
|
|
(172
|
)
|
||||||
|
Divestitures
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
||||||
|
Goodwill reclassified to assets held for sale
|
|
—
|
|
|
—
|
|
|
(947
|
)
|
|
(431
|
)
|
|
—
|
|
|
(1,378
|
)
|
||||||
|
Foreign exchange and other
|
|
—
|
|
|
—
|
|
|
(257
|
)
|
|
(5
|
)
|
|
—
|
|
|
(262
|
)
|
||||||
|
Balance, December 31, 2016
|
|
—
|
|
|
—
|
|
|
5,499
|
|
|
7,265
|
|
|
3,030
|
|
|
15,794
|
|
||||||
|
Realignment of segment goodwill
|
|
—
|
|
|
—
|
|
|
264
|
|
|
(264
|
)
|
|
—
|
|
|
—
|
|
||||||
|
Balance, January 1, 2017
|
|
—
|
|
|
—
|
|
|
5,763
|
|
|
7,001
|
|
|
3,030
|
|
|
15,794
|
|
||||||
|
Goodwill reclassified to assets held for sale
|
|
—
|
|
|
—
|
|
|
(31
|
)
|
|
(63
|
)
|
|
(76
|
)
|
|
(170
|
)
|
||||||
|
Impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(312
|
)
|
|
—
|
|
|
(312
|
)
|
||||||
|
Foreign exchange and other
|
|
—
|
|
|
—
|
|
|
262
|
|
|
(1
|
)
|
|
—
|
|
|
261
|
|
||||||
|
Balance, September 30, 2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,994
|
|
|
$
|
6,625
|
|
|
$
|
2,954
|
|
|
$
|
15,573
|
|
|
•
|
Under the former reporting unit structure, the fair value of each reporting unit exceeded its carrying value by more than
15%
, except for the former U.S. reporting unit whose carrying value exceeded its fair value by
2%
. As a result, the Company proceeded to perform step two of the goodwill impairment test for the former U.S. reporting unit and determined that the carrying value of the unit's goodwill exceeded its implied fair value. However, as the estimate of fair value is
|
|
•
|
Under the current reporting unit structure, the carrying value of the Salix reporting unit exceeded its fair value, as updates to the unit's forecast resulted in a lower estimated fair value for the business. As a result, the Company proceeded to perform step two of the goodwill impairment test for the Salix reporting unit and determined that the carrying value of the unit's goodwill exceeded its implied fair value. However, the Company could not complete step two of the testing prior to the release of its financial statements for the period ended September 30, 2016. Using its best estimate, the Company recorded an initial goodwill impairment charge of
$211 million
as of September 30, 2016. In the fourth quarter of 2016, step two testing was completed and the Company concluded that the excess of the carrying value of the Salix reporting unit's unadjusted goodwill over its implied value as of September 30, 2016 was
$172 million
and recognized a credit to the initial goodwill impairment charge of
$39 million
for the fourth quarter of 2016. As of the date of testing, after all adjustments, the Salix reporting unit had a carrying value of
$14,066 million
, an estimated fair value of
$10,409 million
and goodwill with a carrying value of
$5,128 million
.
|
|
9.
|
ACCRUED AND OTHER CURRENT LIABILITIES
|
|
(in millions)
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
Product rebates
|
|
$
|
1,039
|
|
|
$
|
897
|
|
|
Product returns
|
|
815
|
|
|
708
|
|
||
|
Interest
|
|
385
|
|
|
337
|
|
||
|
Employee compensation and benefit costs
|
|
258
|
|
|
198
|
|
||
|
Income taxes payable
|
|
163
|
|
|
213
|
|
||
|
Legal liabilities assumed in the Salix Acquisition
|
|
52
|
|
|
281
|
|
||
|
Other
|
|
684
|
|
|
593
|
|
||
|
|
|
$
|
3,396
|
|
|
$
|
3,227
|
|
|
10.
|
FINANCING ARRANGEMENTS
|
|
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
(in millions)
|
|
Maturity
|
|
Principal Amount
|
|
Net of Discounts and Issuance Costs
|
|
Principal Amount
|
|
Net of Discounts and Issuance Costs
|
||||||||
|
Senior Secured Credit Facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Revolving Credit Facility
|
|
April 2018
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
875
|
|
|
$
|
875
|
|
|
Revolving Credit Facility
|
|
April 2020
|
|
425
|
|
|
425
|
|
|
—
|
|
|
—
|
|
||||
|
Series A-3 Tranche A Term Loan Facility
|
|
October 2018
|
|
—
|
|
|
—
|
|
|
1,032
|
|
|
1,016
|
|
||||
|
Series A-4 Tranche A Term Loan Facility
|
|
April 2020
|
|
—
|
|
|
—
|
|
|
668
|
|
|
658
|
|
||||
|
Series D-2 Tranche B Term Loan Facility
|
|
February 2019
|
|
—
|
|
|
—
|
|
|
1,068
|
|
|
1,048
|
|
||||
|
Series C-2 Tranche B Term Loan Facility
|
|
December 2019
|
|
—
|
|
|
—
|
|
|
823
|
|
|
805
|
|
||||
|
Series E-1 Tranche B Term Loan Facility
|
|
August 2020
|
|
—
|
|
|
—
|
|
|
2,456
|
|
|
2,429
|
|
||||
|
Series F Tranche B Term Loan Facility
|
|
April 2022
|
|
5,800
|
|
|
5,685
|
|
|
3,892
|
|
|
3,815
|
|
||||
|
Senior Secured Notes:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
6.50% Secured Notes
|
|
March 2022
|
|
1,250
|
|
|
1,235
|
|
|
—
|
|
|
—
|
|
||||
|
7.00% Secured Notes
|
|
March 2024
|
|
2,000
|
|
|
1,975
|
|
|
—
|
|
|
—
|
|
||||
|
Senior Unsecured Notes:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
6.75%
|
|
August 2018
|
|
—
|
|
|
—
|
|
|
1,600
|
|
|
1,593
|
|
||||
|
5.375%
|
|
March 2020
|
|
2,000
|
|
|
1,988
|
|
|
2,000
|
|
|
1,985
|
|
||||
|
7.00%
|
|
October 2020
|
|
690
|
|
|
689
|
|
|
690
|
|
|
689
|
|
||||
|
6.375%
|
|
October 2020
|
|
2,250
|
|
|
2,235
|
|
|
2,250
|
|
|
2,231
|
|
||||
|
7.50%
|
|
July 2021
|
|
1,625
|
|
|
1,615
|
|
|
1,625
|
|
|
1,613
|
|
||||
|
6.75%
|
|
August 2021
|
|
650
|
|
|
647
|
|
|
650
|
|
|
647
|
|
||||
|
5.625%
|
|
December 2021
|
|
900
|
|
|
895
|
|
|
900
|
|
|
894
|
|
||||
|
7.25%
|
|
July 2022
|
|
550
|
|
|
544
|
|
|
550
|
|
|
543
|
|
||||
|
5.50%
|
|
March 2023
|
|
1,000
|
|
|
993
|
|
|
1,000
|
|
|
992
|
|
||||
|
5.875%
|
|
May 2023
|
|
3,250
|
|
|
3,223
|
|
|
3,250
|
|
|
3,220
|
|
||||
|
4.50% euro-denominated debt
|
|
May 2023
|
|
1,772
|
|
|
1,757
|
|
|
1,578
|
|
|
1,563
|
|
||||
|
6.125%
|
|
April 2025
|
|
3,250
|
|
|
3,221
|
|
|
3,250
|
|
|
3,218
|
|
||||
|
Other
|
|
Various
|
|
14
|
|
|
14
|
|
|
12
|
|
|
12
|
|
||||
|
Total long-term debt
|
|
|
|
$
|
27,426
|
|
|
27,141
|
|
|
$
|
30,169
|
|
|
29,846
|
|
||
|
Less: Current portion of long-term debt and other
|
|
|
|
925
|
|
|
|
|
|
1
|
|
|||||||
|
Non-current portion of long-term debt
|
|
|
|
|
|
$
|
26,216
|
|
|
|
|
|
$
|
29,845
|
|
|||
|
(in millions)
|
|
||
|
October through December 2017
|
$
|
923
|
|
|
2018
|
2
|
|
|
|
2019
|
—
|
|
|
|
2020
|
5,365
|
|
|
|
2021
|
3,175
|
|
|
|
2022
|
6,677
|
|
|
|
Thereafter
|
11,284
|
|
|
|
Total gross maturities
|
27,426
|
|
|
|
Unamortized discounts
|
(285
|
)
|
|
|
Total long-term debt
|
$
|
27,141
|
|
|
11.
|
PENSION AND POSTRETIREMENT EMPLOYEE BENEFIT PLANS
|
|
|
|
Pension Benefit Plans
|
|
Postretirement
Benefit
Plan
|
||||||||||||||||||||
|
|
U.S. Plan
|
|
Non-U.S. Plans
|
|
||||||||||||||||||||
|
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||
|
(in millions)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
|
Service cost
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
Interest cost
|
|
2
|
|
|
2
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
—
|
|
||||||
|
Expected return on plan assets
|
|
(4
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
||||||
|
Amortization of prior service credit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||||
|
Amortization of net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Net periodic (benefit) cost
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
Pension Benefit Plans
|
|
Postretirement
Benefit
Plan
|
||||||||||||||||||||
|
|
U.S. Plan
|
|
Non-U.S. Plans
|
|
||||||||||||||||||||
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
|
(in millions)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
|
Service cost
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
Interest cost
|
|
6
|
|
|
6
|
|
|
3
|
|
|
4
|
|
|
2
|
|
|
1
|
|
||||||
|
Expected return on plan assets
|
|
(10
|
)
|
|
(10
|
)
|
|
(4
|
)
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
||||||
|
Amortization of prior service credit
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||||
|
Amortization of net loss
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Net periodic (benefit) cost
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
12.
|
SHARE-BASED COMPENSATION
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
(in millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
Stock options
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
14
|
|
|
$
|
11
|
|
|
RSUs
|
15
|
|
|
33
|
|
|
56
|
|
|
123
|
|
||||
|
|
$
|
19
|
|
|
$
|
37
|
|
|
$
|
70
|
|
|
$
|
134
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Research and development expenses
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
6
|
|
|
$
|
5
|
|
|
Selling, general and administrative expenses
|
17
|
|
|
35
|
|
|
64
|
|
|
129
|
|
||||
|
|
$
|
19
|
|
|
$
|
37
|
|
|
$
|
70
|
|
|
$
|
134
|
|
|
13.
|
ACCUMULATED OTHER COMPREHENSIVE LOSS
|
|
(in millions)
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
Foreign currency translation adjustments
|
|
$
|
(1,850
|
)
|
|
$
|
(2,074
|
)
|
|
Pension and postretirement benefit plan adjustments, net of tax
|
|
(38
|
)
|
|
(34
|
)
|
||
|
|
|
$
|
(1,888
|
)
|
|
$
|
(2,108
|
)
|
|
14.
|
RESEARCH AND DEVELOPMENT
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
(in millions)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
Product related research and development
|
|
$
|
73
|
|
|
$
|
91
|
|
|
$
|
245
|
|
|
$
|
301
|
|
|
Quality assurance
|
|
8
|
|
|
10
|
|
|
26
|
|
|
27
|
|
||||
|
|
|
$
|
81
|
|
|
$
|
101
|
|
|
$
|
271
|
|
|
$
|
328
|
|
|
15.
|
OTHER (INCOME) EXPENSE, NET
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
(in millions)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
Gain on the iNova Sale (Note 4)
|
|
$
|
(306
|
)
|
|
$
|
—
|
|
|
$
|
(306
|
)
|
|
$
|
—
|
|
|
Gain on the Skincare Sale (Note 4)
|
|
3
|
|
|
—
|
|
|
(316
|
)
|
|
—
|
|
||||
|
Gain on the Dendreon Sale (Note 4)
|
|
(25
|
)
|
|
—
|
|
|
(98
|
)
|
|
—
|
|
||||
|
Net loss (gain) on other sales of assets
|
|
—
|
|
|
—
|
|
|
25
|
|
|
(9
|
)
|
||||
|
Deconsolidation of Philidor
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
||||
|
Litigation and other matters
|
|
3
|
|
|
1
|
|
|
112
|
|
|
(32
|
)
|
||||
|
Other, net
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
2
|
|
||||
|
|
|
$
|
(325
|
)
|
|
$
|
1
|
|
|
$
|
(584
|
)
|
|
$
|
(20
|
)
|
|
16.
|
INCOME TAXES
|
|
17.
|
EARNINGS (LOSS) PER SHARE
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
(in millions, except per share amounts)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
Net income (loss) attributable to Valeant Pharmaceuticals International, Inc.
|
$
|
1,301
|
|
|
$
|
(1,218
|
)
|
|
$
|
1,891
|
|
|
$
|
(1,894
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
|
Basic weighted-average number of common shares outstanding
|
350.4
|
|
|
349.5
|
|
|
350.1
|
|
|
346.5
|
|
||||
|
Diluted effect of stock options, RSUs and other
|
1.9
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
||||
|
Diluted weighted-average number of common shares outstanding
|
352.3
|
|
|
349.5
|
|
|
351.4
|
|
|
346.5
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Earnings (loss) per share attributable to Valeant Pharmaceuticals International, Inc.:
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
$
|
3.71
|
|
|
$
|
(3.49
|
)
|
|
$
|
5.40
|
|
|
$
|
(5.47
|
)
|
|
Diluted
|
$
|
3.69
|
|
|
$
|
(3.49
|
)
|
|
$
|
5.38
|
|
|
$
|
(5.47
|
)
|
|
(in millions)
|
Three months ended
September 30, 2016
|
|
Nine months ended
September 30, 2016
|
||
|
Basic weighted-average number of common shares outstanding
|
349.5
|
|
|
346.5
|
|
|
Diluted effect of stock options, RSUs and other
|
0.8
|
|
|
3.4
|
|
|
Diluted weighted-average number of common shares outstanding
|
350.3
|
|
|
349.9
|
|
|
18.
|
LEGAL PROCEEDINGS
|
|
•
|
In respect of any settlement relating to the Allergan Litigation that receives the mutual consent of both the Valeant Parties and the Pershing Square Parties, the payments in connection with such settlement will be paid
60%
by the Valeant Co Parties and
40%
by the Pershing Square Parties. The agreement does not provide for any allocation of costs in a settlement that is not consented to by both parties;
|
|
•
|
The first
$10 million
in legal fees and litigation expenses incurred by the Valeant Parties and the Pershing Square Parties after the date of the Litigation Management Agreement in connection with the Allergan Litigation will be paid
50%
by the Valeant Co Parties and
50%
by the Pershing Square Parties; and
|
|
•
|
The Litigation Management Agreement had an original termination date of November 1, 2017 if a stipulation of settlement with regards to the current consolidated Basile action has not been executed by that date. The parties agreed to extend the Litigation Management Agreement on October 30, 2017 by
two
months, to December 31, 2017.
|
|
19.
|
SEGMENT INFORMATION
|
|
•
|
The Bausch + Lomb/International segment
consists of: (i) sales in the U.S. of pharmaceutical products, OTC products and medical device products, primarily comprised of Bausch + Lomb products, with a focus on the Vision Care, Surgical, Consumer and Ophthalmology Rx products and (ii) sales in Canada, Europe, Asia, Australia and New Zealand, Latin America, Africa and the Middle East of branded pharmaceutical products, branded generic pharmaceutical products, OTC products, medical device products, and Bausch + Lomb products.
|
|
•
|
The Branded Rx segment
consists of sales in the U.S. of: (i) Salix products (gastrointestinal products), (ii) Ortho Dermatologics (dermatological products) and (iii) oncology (or Dendreon), dentistry and women’s health products. As a result of the Dendreon Sale completed on June 28, 2017, the Company exited the oncology business.
|
|
•
|
The U.S. Diversified Products segment
consists of sales in the U.S. of: (i) pharmaceutical products, OTC products and medical device products in the areas of neurology and certain other therapeutic classes, including aesthetics which includes the Solta business and the Obagi business and (ii) generic products.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
(in millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
Revenues:
|
|
|
|
|
|
|
|
||||||||
|
Bausch + Lomb/International
|
$
|
1,254
|
|
|
$
|
1,243
|
|
|
$
|
3,645
|
|
|
$
|
3,666
|
|
|
Branded Rx
|
633
|
|
|
766
|
|
|
1,873
|
|
|
2,084
|
|
||||
|
U.S. Diversified Products
|
332
|
|
|
470
|
|
|
1,043
|
|
|
1,521
|
|
||||
|
|
$
|
2,219
|
|
|
$
|
2,479
|
|
|
$
|
6,561
|
|
|
$
|
7,271
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Segment profits:
|
|
|
|
|
|
|
|
||||||||
|
Bausch + Lomb/International
|
$
|
387
|
|
|
$
|
381
|
|
|
$
|
1,097
|
|
|
$
|
1,072
|
|
|
Branded Rx
|
357
|
|
|
484
|
|
|
1,024
|
|
|
1,078
|
|
||||
|
U.S. Diversified Products
|
238
|
|
|
379
|
|
|
757
|
|
|
1,227
|
|
||||
|
|
982
|
|
|
1,244
|
|
|
2,878
|
|
|
3,377
|
|
||||
|
Corporate
|
(126
|
)
|
|
(185
|
)
|
|
(432
|
)
|
|
(525
|
)
|
||||
|
Amortization of intangible assets
|
(657
|
)
|
|
(664
|
)
|
|
(1,915
|
)
|
|
(2,015
|
)
|
||||
|
Goodwill impairments
|
(312
|
)
|
|
(1,049
|
)
|
|
(312
|
)
|
|
(1,049
|
)
|
||||
|
Asset impairments
|
(406
|
)
|
|
(148
|
)
|
|
(629
|
)
|
|
(394
|
)
|
||||
|
Restructuring and integration costs
|
(6
|
)
|
|
(20
|
)
|
|
(42
|
)
|
|
(78
|
)
|
||||
|
Acquired in-process research and development costs
|
—
|
|
|
(31
|
)
|
|
(5
|
)
|
|
(34
|
)
|
||||
|
Acquisition-related contingent consideration
|
238
|
|
|
(9
|
)
|
|
297
|
|
|
(18
|
)
|
||||
|
Other income (expense), net
|
325
|
|
|
(1
|
)
|
|
584
|
|
|
20
|
|
||||
|
Operating income (loss)
|
38
|
|
|
(863
|
)
|
|
424
|
|
|
(716
|
)
|
||||
|
Interest income
|
3
|
|
|
3
|
|
|
9
|
|
|
6
|
|
||||
|
Interest expense
|
(459
|
)
|
|
(470
|
)
|
|
(1,392
|
)
|
|
(1,369
|
)
|
||||
|
Loss on extinguishment of debt
|
(1
|
)
|
|
—
|
|
|
(65
|
)
|
|
—
|
|
||||
|
Foreign exchange and other
|
19
|
|
|
(2
|
)
|
|
87
|
|
|
4
|
|
||||
|
Loss before recovery of income taxes
|
$
|
(400
|
)
|
|
$
|
(1,332
|
)
|
|
$
|
(937
|
)
|
|
$
|
(2,075
|
)
|
|
(in millions)
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
Assets:
|
|
|
|
||||
|
Bausch + Lomb/International
|
$
|
15,608
|
|
|
$
|
16,201
|
|
|
Branded Rx
|
18,455
|
|
|
21,143
|
|
||
|
U.S. Diversified Products
|
5,172
|
|
|
5,820
|
|
||
|
|
39,235
|
|
|
43,164
|
|
||
|
Corporate
|
739
|
|
|
365
|
|
||
|
Total assets
|
$
|
39,974
|
|
|
$
|
43,529
|
|
|
20.
|
SUBSEQUENT EVENTS
|
|
•
|
The Bausch + Lomb/International segment
consists of: (i) sales in the U.S. of pharmaceutical products, OTC products and medical device products, primarily comprised of Bausch + Lomb products, with a focus on the Vision Care, Surgical, Consumer and Ophthalmology Rx products and (ii) sales in Canada, Europe, Asia, Australia and New Zealand, Latin America, Africa and the Middle East of branded pharmaceutical products, branded generic pharmaceutical products, OTC products, medical device products, and Bausch + Lomb products.
|
|
•
|
The Branded Rx segment
consists of sales in the U.S. of: (i) Salix products (gastrointestinal (“GI”) products), (ii) Ortho Dermatologics (dermatological products) and (iii) oncology (or Dendreon (as defined below)), dentistry and women’s health products. As a result of the Dendreon Sale (as defined below) completed on June 28, 2017, the Company exited the oncology business.
|
|
•
|
The U.S. Diversified Products segment
consists of sales in the U.S. of: (i) pharmaceutical products, OTC products and medical device products in the areas of neurology and certain other therapeutic classes, including aesthetics which includes the Solta business and the Obagi business and (ii) generic products.
|
|
•
|
Sales Force Stabilization
- We believe that new leadership and the enhanced focus on core assets have enabled the Company to recruit and retain stronger talent for its sales initiatives. We continue to focus on stabilizing our sales forces, which, in turn, will allow us to deliver more consistent and concise messages in the marketplace.
|
|
•
|
Patient Access and Pricing Committee and New Pricing Actions
- In May 2016, we formed the Patient Access and Pricing Committee responsible for setting, changing and monitoring the pricing of our Branded Rx and other pharmaceutical products. Following this committee's recommendation, we implemented an enhanced rebate program to all hospitals in the U.S. to reduce the price of our Nitropress® and Isuprel® products. In October 2016, the Patient Access and Pricing Committee approved 2% to 9% increases to our gross selling price (wholesale acquisition cost or “WAC”) for products in our neurology, GI and urology portfolios. The changes are aligned with the Patient Access and Pricing Committee's commitment that the average annual price increase for our prescription pharmaceutical products will be set at no greater than single digits and below the 5-year weighted average of the increases within the branded biopharmaceutical industry. In addition, in 2016, no pricing increases were taken on our dermatology and ophthalmology products and, in 2016, net pricing of our dermatology and ophthalmology products, after taking into account the impact of rebates and other adjustments, decreased by greater than 10% on average. On April 21, 2017, the Company announced that, following the evaluation and approval of the Patient Access and Pricing Committee, it had decided to list Siliq™ (brodalumab) injection at $3,500 per month, which represented the lowest-priced injectable biologic psoriasis treatment based on total annual costs on the market at the time of the announcement. In the future, we expect that the Patient Access and Pricing Committee will implement or recommend additional price changes and/or new programs to enhance patient access to our drugs and that these pricing changes and programs could affect the average realized pricing for our products and may have a significant impact on our revenue trends.
|
|
•
|
Dermatology -
On July 27, 2017, we launched Siliq™ in the U.S. Siliq™ is an IL-17 receptor blocker monoclonal antibody biologic for treatment of moderate-to-severe plaque psoriasis, which we estimate to be an over $5,000 million market in the U.S. The FDA approved the Biologics License Application (“BLA”) for Siliq™ injection, for subcutaneous
|
|
•
|
Dermatology
- IDP-118 is the first and only topical lotion that contains a unique combination of halobetasol propionate and tazarotene for the treatment of moderate-to-severe plaque psoriasis in adults. Halobetasol propionate and tazarotene are each approved to treat plaque psoriasis when used separately, but are limited in duration of use. Halobetasol propionate may be used for up to two weeks and tazarotene may be limited due to irritation. Based on existing data from clinical studies, the combination of these ingredients in IDP-118 with a dual mechanism of action, potentially allows for expanded duration of use, with reduced adverse events. On September 5, 2017, we announced that we had submitted a New Drug Application (“NDA”) for IDP-118 to the FDA which included data from two successful Phase 3 clinical trials. On November 2, 2017, we announced that the FDA had accepted the NDA for review, and set a Prescription Drug User Fee Act (“PDUFA”) action date of June 18, 2018.
|
|
•
|
Dermatology -
IDP-122 is a novel psoriasis product, for which we expect to file an NDA in 2017.
|
|
•
|
Dermatology -
IDP-121 is a novel acne product for which we expect to file an NDA in 2017.
|
|
•
|
Dermatology -
IDP-123 is an acne product containing lower concentration of tazarotene in a lotion form to help reduce irritation while keeping efficacy currently in Phase 3 testing.
|
|
•
|
Dermatology -
IDP-120 - is an acne product with a fixed combination of mutually incompatible ingredients; benzoyl peroxide and tretinoin. We plan to begin Phase 3 testing of this product in the first half of 2018.
|
|
•
|
Dermatology
- IDP-126 - is an acne product with a fixed combination of benzoyl peroxide, clindamycin phosphate and adapalene currently in Phase 2 testing.
|
|
•
|
Gastrointestinal
- A new formulation of rifaximin, which we acquired as part of the Salix Acquisition, is scheduled to begin Phase 2b/3 testing in 2017.
|
|
•
|
Eye Health
- Luminesse™ (
provisional name
) (brimonidine tartrate ophthalmic solution, 0.025%) is being developed as an ocular redness reliever. On February 27, 2017, we filed the NDA for Luminesse™ with the FDA. In May 2017, we announced that the FDA had accepted the NDA for review, and set a PDUFA action date of December 27, 2017.
|
|
•
|
Eye Health
- Vyzulta™ (latanoprostene bunod ophthalmic solution, 0.024%) is an intraocular pressure lowering single-agent eye drop dosed once daily for patients with open angle glaucoma or ocular hypertension. In September 2015, we announced that the FDA had accepted for review the NDA for this product and set a PDUFA action date of July 21, 2016. On July 22, 2016, we announced that we had received a Complete Response Letter (“CRL”) from the FDA regarding the NDA for this product. On February 24, 2017, we refiled the NDA and, on August 7, 2017, we received another CRL from the FDA regarding the NDA for this product. The concerns raised by the FDA in both CRLs pertain to the findings of Current Good Manufacturing Practices ("GMP") inspections at our manufacturing facility in Tampa, Florida, where certain deficiencies were identified by the FDA. However, neither CRL identified any efficacy or safety concerns with respect to this product or additional clinical trials needed for the approval of the NDA. On August 16, 2017, we announced that the FDA confirmed that all issues related to the Current Good Manufacturing Practice inspection at the Tampa, Florida facility are being satisfactorily resolved, and a Voluntary Action Indicated inspection classification has since been issued by the FDA for this facility. Then on November 2, 2017, we announced that the FDA approved the NDA for Vyzulta™. We expect to launch Vyzulta™ in 2017.
|
|
•
|
Eye Health
- Vitesse™ is a novel technology using ultrasonic energy for vitreous removal with reduced surgical trauma. On April 26, 2017, Vitesse™ received 510(k) clearance from the FDA. We expect to launch this product in 2017.
|
|
•
|
Dermatology
- Traser™ is an energy-based platform device with significant versatility and power capabilities to address various dermatological conditions, including vascular and pigmented lesions. Product launch is currently planned for the second half of 2019.
|
|
•
|
Eye Health
- We expect to file a Premarket Approval application with the FDA in 2017 for 7-day extended wear for our Bausch + Lomb ULTRA® monthly planned replacement contact lenses.
|
|
•
|
Eye Health
- On April 6, 2017, we announced that our Stellaris Elite™ Vision Enhancement System received 510(k) clearance from the FDA. The Stellaris Elite™ Vision Enhancement System is our next generation phacoemulsification
|
|
•
|
Eye Health
- Biotrue® ONEday for Astigmatism is a daily disposable contact lens for astigmatic patients. The Biotrue® ONEday lenses incorporates Surface Active Technology
TM
to provide a dehydration barrier. The Biotrue® ONEday for Astigmatism also includes evolved peri-ballast geometry to deliver stability and comfort for the astigmatic patient. We launched this product in December 2016 and launched the complete extended power range in 2017.
|
|
•
|
Eye Health
- Bausch + Lomb ULTRA® for Astigmatism is a monthly planned replacement contact lens for astigmatic patients. The Bausch + Lomb ULTRA® for Astigmatism lens was developed using the proprietary MoistureSeal® technology. In addition, the Bausch + Lomb ULTRA® for Astigmatism lens integrates a OpticAlign™ design engineered for lens stability and to promote a successful wearing experience for the astigmatic patient. We launched this product and the extended power range for this product in 2017.
|
|
•
|
Eye Health
- Bausch + Lomb ULTRA® for Presbyopia is a monthly planned replacement contact lens for presbyopic patients. The Bausch + Lomb ULTRA® for Presbyopia lens was developed using the proprietary MoistureSeal® technology. In addition, the Bausch + Lomb ULTRA® for Presbyopia lens integrates a 3 zone progressive design for near, intermediate and distance vision. We will continue to launch expanded parameters of this product throughout 2017.
|
|
•
|
Eye Health
- Bausch + Lomb ScleralFil™ solution is a novel contact lens care solution that makes use of a preservative free buffered saline solution for use with the insertion of scleral lenses. This contact lens care solution was launched in 2017.
|
|
•
|
Eye Health
- Bausch + Lomb Renu® Advanced Formula multi-purpose solution is a novel soft and silicone hydrogel contact lenses solution that makes use of three disinfectants and two moisture agents. This contact lens multipurpose care solution was launched in May 2017.
|
|
•
|
Eye Health
- On February 21, 2017, EyeGate Pharmaceuticals, Inc. granted the Company the exclusive licensing rights to manufacture and sell its EyeGate® II Delivery System and EGP-437 combination product candidate worldwide for the treatment of post-operative pain and inflammation in ocular surgery patients. EyeGate Pharmaceuticals, Inc. will be responsible for the continued development of this product candidate in this field in the U.S. and all associated costs. The Company has the right to further develop the product in this field outside of the U.S., at its cost. In July 2017, EyeGate Pharmaceuticals, Inc. enrolled its first patient in a new Phase IIB clinical study for cataract surgery.
|
|
•
|
Eye Health
- We are developing a new Ophthalmic Viscosurgical Device product, with a formulation to protect corneal endothelium during Phaco emulsification process during a cataract surgery and to help chamber maintenance and lubrication during intraocular lens delivery. We expect to initiate an investigative device exemption (“IDE”) study in 2017.
|
|
•
|
Dermatology
- Next Generation Thermage® is a fourth-generation non-invasive treatment option using a radiofrequency platform designed to optimize key functional characteristics, expand clinical indication set and improve patient outcomes. On September 22, 2017, we received 510(k) clearance from the FDA and expect to launch this product in 2017.
|
|
•
|
Gastrointestinal
- NER1006 (provisionally named Plenvu®) is a novel, lower-volume polyethylene glycol-based bowel preparation that has been developed to help provide complete bowel cleansing, with an additional focus on the ascending colon. In June 2017, we announced that the FDA accepted for review the NDA for NER1006 and we expect an FDA decision in 2018. NER1006 was licensed by Norgine B.V. to Salix in August 2016.
|
|
•
|
Eye Health
- Loteprednol Gel 0.38% is a new formulation for the treatment of post-operative ocular inflammation and pain with lower drug concentration and less frequent dosing and has completed Phase III testing.
|
|
•
|
Eye Health
- enVista® Trifocal intraocular lens is an innovative lens design, for which we expect to initiate an IDE study in 2017.
|
|
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
(in millions)
|
|
Maturity
|
|
Principal Amount
|
|
Net of Discounts and Issuance Costs
|
|
Principal Amount
|
|
Net of Discounts and Issuance Costs
|
||||||||
|
Senior Secured Credit Facilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Revolving Credit Facility
|
|
April 2018
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
875
|
|
|
$
|
875
|
|
|
Revolving Credit Facility
|
|
April 2020
|
|
425
|
|
|
425
|
|
|
—
|
|
|
—
|
|
||||
|
Series A-3 Tranche A Term Loan Facility
|
|
October 2018
|
|
—
|
|
|
—
|
|
|
1,032
|
|
|
1,016
|
|
||||
|
Series A-4 Tranche A Term Loan Facility
|
|
April 2020
|
|
—
|
|
|
—
|
|
|
668
|
|
|
658
|
|
||||
|
Series D-2 Tranche B Term Loan Facility
|
|
February 2019
|
|
—
|
|
|
—
|
|
|
1,068
|
|
|
1,048
|
|
||||
|
Series C-2 Tranche B Term Loan Facility
|
|
December 2019
|
|
—
|
|
|
—
|
|
|
823
|
|
|
805
|
|
||||
|
Series E-1 Tranche B Term Loan Facility
|
|
August 2020
|
|
—
|
|
|
—
|
|
|
2,456
|
|
|
2,429
|
|
||||
|
Series F Tranche B Term Loan Facility
|
|
April 2022
|
|
5,800
|
|
|
5,685
|
|
|
3,892
|
|
|
3,815
|
|
||||
|
Senior Secured Notes:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
6.50% Secured Notes
|
|
March 2022
|
|
1,250
|
|
|
1,235
|
|
|
—
|
|
|
—
|
|
||||
|
7.00% Secured Notes
|
|
March 2024
|
|
2,000
|
|
|
1,975
|
|
|
—
|
|
|
—
|
|
||||
|
Senior Unsecured Notes:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
6.75%
|
|
August 2018
|
|
—
|
|
|
—
|
|
|
1,600
|
|
|
1,593
|
|
||||
|
All other Senior Unsecured Notes
|
|
March 2020 through April 2025
|
|
17,937
|
|
|
17,807
|
|
|
17,743
|
|
|
17,595
|
|
||||
|
Other
|
|
Various
|
|
14
|
|
|
14
|
|
|
12
|
|
|
12
|
|
||||
|
Total long-term debt
|
|
|
|
$
|
27,426
|
|
|
$
|
27,141
|
|
|
$
|
30,169
|
|
|
$
|
29,846
|
|
|
(in millions)
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
October through December 2017
|
|
$
|
923
|
|
|
$
|
—
|
|
|
2018
|
|
2
|
|
|
3,738
|
|
||
|
2019
|
|
—
|
|
|
2,122
|
|
||
|
2020
|
|
5,365
|
|
|
7,723
|
|
||
|
2021
|
|
3,175
|
|
|
3,215
|
|
||
|
2022
|
|
6,677
|
|
|
4,281
|
|
||
|
Thereafter
|
|
11,284
|
|
|
9,090
|
|
||
|
Gross maturities
|
|
$
|
27,426
|
|
|
$
|
30,169
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||||
|
(in millions, except per share data)
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||||||||||||
|
Revenues
|
|
$
|
2,219
|
|
|
$
|
2,479
|
|
|
$
|
(260
|
)
|
|
$
|
6,561
|
|
|
$
|
7,271
|
|
|
$
|
(710
|
)
|
|
Operating income (loss)
|
|
$
|
38
|
|
|
$
|
(863
|
)
|
|
$
|
901
|
|
|
$
|
424
|
|
|
$
|
(716
|
)
|
|
$
|
1,140
|
|
|
Loss before recovery of income taxes
|
|
$
|
(400
|
)
|
|
$
|
(1,332
|
)
|
|
$
|
932
|
|
|
$
|
(937
|
)
|
|
$
|
(2,075
|
)
|
|
$
|
1,138
|
|
|
Net income (loss) attributable to Valeant Pharmaceuticals International, Inc.
|
|
$
|
1,301
|
|
|
$
|
(1,218
|
)
|
|
$
|
2,519
|
|
|
$
|
1,891
|
|
|
$
|
(1,894
|
)
|
|
$
|
3,785
|
|
|
Earnings (loss) per share attributable to Valeant Pharmaceuticals International, Inc.:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Basic
|
|
$
|
3.71
|
|
|
$
|
(3.49
|
)
|
|
$
|
7.20
|
|
|
$
|
5.40
|
|
|
$
|
(5.47
|
)
|
|
$
|
10.87
|
|
|
Diluted
|
|
$
|
3.69
|
|
|
$
|
(3.49
|
)
|
|
$
|
7.18
|
|
|
$
|
5.38
|
|
|
$
|
(5.47
|
)
|
|
$
|
10.85
|
|
|
•
|
a decrease
in contribution (Product sales revenue less Cost of goods sold, excluding amortization and impairments of intangible assets) of
$258 million
. The
decrease
is primarily driven by: (i) the decrease in product sales of our existing business (excluding the effects of foreign currencies and divestitures and discontinuances) and includes
decrease
s in contribution from lower volumes, (ii) the impact of divestitures and discontinuances and (iii) higher third-party royalty costs;
|
|
•
|
a decrease
in Selling, general, and administrative (“SG&A”) expenses of
$38 million
primarily attributable to: (i) retention costs for key employees in 2016 and (ii) the impact of 2017 divestitures. These decreases were partially offset by higher professional fees;
|
|
•
|
a decrease
in
Research and development
of
$20 million
due to the timing of costs on projects in development;
|
|
•
|
a decrease
in
Amortization of intangible assets
of
$7 million
which is reflective of impairments to intangible assets in 2016 and divestitures and discontinuances of product lines as the Company focuses on its core assets;
|
|
•
|
a decrease
in
Goodwill impairments
of
$737 million
. In 2016, we recognized Goodwill impairments of
$1,049 million
in connection with the realignment of our segment structure that took place during the three months ended September 30, 2016. In 2017, we recognized Goodwill impairments of
$312 million
in connection with a change in a reporting unit that took place during the three months ended September 30, 2017;
|
|
•
|
an increase
in
Asset impairments
of
$258 million
primarily related to the Sprout business classified as held for sale;
|
|
•
|
a decrease
in
Acquisition-related contingent consideration
of
$247 million
primarily due to a fair value adjustment of $259 million reflecting a decrease in forecasted sales for the Addyi® product which impacted the expected future royalty payments; and
|
|
•
|
Other income of
$325 million
during the
three months ended September 30, 2017
primarily due to the Gain on the iNova Sale of
$306 million
and a working capital adjustment related to the Gain on the Dendreon Sale of
$25 million
.
|
|
•
|
a decrease
in contribution of
$658 million
. The
decrease
is primarily driven by the decrease in product sales of our existing business and includes decreases in contribution from: (i) lower volumes and (ii) the impact of divestitures and discontinuances;
|
|
•
|
a decrease
in SG&A expenses of
$202 million
primarily attributable to (i) a net decrease in advertising and promotional expenses, (ii) higher severance and other benefits in 2016 associated with exiting executives and on-boarding a new executive team and other key employees, (iii) termination benefits associated with our former Chief Executive Officer in 2016, and (iv) the impact of divestitures. These factors were partially offset by an increase in professional fees;
|
|
•
|
a decrease
in
Research and development
of
$57 million
due to the timing of costs on projects in development;
|
|
•
|
a decrease
in
Amortization of intangible assets
of
$100 million
which is reflective of impairments to intangible assets in 2016 and divestitures and discontinuances of product lines as the Company focuses on its core assets;
|
|
•
|
a decrease
in
Goodwill impairments
of
$737 million
. In 2016, we recognized Goodwill impairments of
$1,049 million
in connection with the realignment of our segment structure that took place during the three months ended September 30, 2016. In 2017, we recognized Goodwill impairments of
$312 million
in connection with a change in a reporting unit that took place during the three months ended September 30, 2017;
|
|
•
|
an increase
in
Asset impairments
of
$235 million
primarily related to the Sprout business classified as held for sale;
|
|
•
|
a decrease
in Restructuring and integration costs of
$36 million
as the integration of acquisitions in 2015 and prior is substantially complete;
|
|
•
|
a decrease
in
Acquisition-related contingent consideration
of
$315 million
primarily due to a fair value adjustment of $312 million reflecting a decrease in forecasted sales for the Addyi® product which impacted the expected future royalty payments; and
|
|
•
|
Other income, net of
$584 million
for the
nine months ended September 30, 2017
which includes: (i) the
Gain on the Skincare Sale
of
$316 million
, (ii) the
Gain on the iNova Sale
of
$306 million
, and (iii) the
Gain on the Dendreon Sale
of
$98 million
, as adjusted. These other income amounts during the
nine months ended September 30, 2017
were partially offset by: (i) accruals for Litigation and other matters of
$112 million
and (ii) the net loss from the sale of other assets of
$25 million
.
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||||||||||
|
(in millions)
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
||||||||||||
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Product sales
|
$
|
2,186
|
|
|
$
|
2,443
|
|
|
$
|
(257
|
)
|
|
$
|
6,462
|
|
|
$
|
7,168
|
|
|
$
|
(706
|
)
|
|
Other revenues
|
33
|
|
|
36
|
|
|
(3
|
)
|
|
99
|
|
|
103
|
|
|
(4
|
)
|
||||||
|
|
2,219
|
|
|
2,479
|
|
|
(260
|
)
|
|
6,561
|
|
|
7,271
|
|
|
(710
|
)
|
||||||
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Cost of goods sold (excluding amortization and impairments of intangible assets)
|
650
|
|
|
649
|
|
|
1
|
|
|
1,869
|
|
|
1,917
|
|
|
(48
|
)
|
||||||
|
Cost of other revenues
|
9
|
|
|
9
|
|
|
—
|
|
|
32
|
|
|
29
|
|
|
3
|
|
||||||
|
Selling, general and administrative
|
623
|
|
|
661
|
|
|
(38
|
)
|
|
1,943
|
|
|
2,145
|
|
|
(202
|
)
|
||||||
|
Research and development
|
81
|
|
|
101
|
|
|
(20
|
)
|
|
271
|
|
|
328
|
|
|
(57
|
)
|
||||||
|
Amortization of intangible assets
|
657
|
|
|
664
|
|
|
(7
|
)
|
|
1,915
|
|
|
2,015
|
|
|
(100
|
)
|
||||||
|
Goodwill impairments
|
312
|
|
|
1,049
|
|
|
(737
|
)
|
|
312
|
|
|
1,049
|
|
|
(737
|
)
|
||||||
|
Asset impairments
|
406
|
|
|
148
|
|
|
258
|
|
|
629
|
|
|
394
|
|
|
235
|
|
||||||
|
Restructuring and integration costs
|
6
|
|
|
20
|
|
|
(14
|
)
|
|
42
|
|
|
78
|
|
|
(36
|
)
|
||||||
|
Acquired in-process research and development costs
|
—
|
|
|
31
|
|
|
(31
|
)
|
|
5
|
|
|
34
|
|
|
(29
|
)
|
||||||
|
Acquisition-related contingent consideration
|
(238
|
)
|
|
9
|
|
|
(247
|
)
|
|
(297
|
)
|
|
18
|
|
|
(315
|
)
|
||||||
|
Other (income) expense, net
|
(325
|
)
|
|
1
|
|
|
(326
|
)
|
|
(584
|
)
|
|
(20
|
)
|
|
(564
|
)
|
||||||
|
|
2,181
|
|
|
3,342
|
|
|
(1,161
|
)
|
|
6,137
|
|
|
7,987
|
|
|
(1,850
|
)
|
||||||
|
Operating income (loss)
|
38
|
|
|
(863
|
)
|
|
901
|
|
|
424
|
|
|
(716
|
)
|
|
1,140
|
|
||||||
|
Interest income
|
3
|
|
|
3
|
|
|
—
|
|
|
9
|
|
|
6
|
|
|
3
|
|
||||||
|
Interest expense
|
(459
|
)
|
|
(470
|
)
|
|
11
|
|
|
(1,392
|
)
|
|
(1,369
|
)
|
|
(23
|
)
|
||||||
|
Loss on extinguishment of debt
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
(65
|
)
|
|
—
|
|
|
(65
|
)
|
||||||
|
Foreign exchange and other
|
19
|
|
|
(2
|
)
|
|
21
|
|
|
87
|
|
|
4
|
|
|
83
|
|
||||||
|
Loss before recovery of income taxes
|
(400
|
)
|
|
(1,332
|
)
|
|
932
|
|
|
(937
|
)
|
|
(2,075
|
)
|
|
1,138
|
|
||||||
|
Recovery of income taxes
|
(1,700
|
)
|
|
(113
|
)
|
|
(1,587
|
)
|
|
(2,829
|
)
|
|
(179
|
)
|
|
(2,650
|
)
|
||||||
|
Net income (loss)
|
1,300
|
|
|
(1,219
|
)
|
|
2,519
|
|
|
1,892
|
|
|
(1,896
|
)
|
|
3,788
|
|
||||||
|
Less: Net (loss) income attributable to noncontrolling interest
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
1
|
|
|
(2
|
)
|
|
3
|
|
||||||
|
Net income (loss) attributable to Valeant Pharmaceuticals International, Inc.
|
$
|
1,301
|
|
|
$
|
(1,218
|
)
|
|
$
|
2,519
|
|
|
$
|
1,891
|
|
|
$
|
(1,894
|
)
|
|
$
|
3,785
|
|
|
|
|
Three Months Ended September 30,
|
||||||||||||
|
|
|
2017
|
|
2016
|
||||||||||
|
(in millions)
|
|
Amount
|
|
Pct.
|
|
Amount
|
|
Pct.
|
||||||
|
Gross product sales
|
|
$
|
3,777
|
|
|
100
|
%
|
|
$
|
4,088
|
|
|
100
|
%
|
|
Provisions to reduce gross product sales to net product sales
|
|
|
|
|
|
|
|
|
||||||
|
Discounts and allowances
|
|
214
|
|
|
6
|
%
|
|
193
|
|
|
5
|
%
|
||
|
Returns
|
|
104
|
|
|
3
|
%
|
|
100
|
|
|
2
|
%
|
||
|
Rebates
|
|
656
|
|
|
17
|
%
|
|
684
|
|
|
17
|
%
|
||
|
Chargebacks
|
|
546
|
|
|
14
|
%
|
|
562
|
|
|
14
|
%
|
||
|
Distribution fees
|
|
71
|
|
|
2
|
%
|
|
106
|
|
|
2
|
%
|
||
|
Total provisions
|
|
1,591
|
|
|
42
|
%
|
|
1,645
|
|
|
40
|
%
|
||
|
Net product sales
|
|
2,186
|
|
|
58
|
%
|
|
2,443
|
|
|
60
|
%
|
||
|
Other revenues
|
|
33
|
|
|
|
|
36
|
|
|
|
||||
|
Revenues
|
|
$
|
2,219
|
|
|
|
|
$
|
2,479
|
|
|
|
||
|
•
|
an increase in discounts and allowances as a percentage of product sales, primarily associated with the generic release of Glumetza® Authorized Generic (“AG”) partially offset by lower sales of Zegerid® AG due to generic competition.
|
|
•
|
an increase in returns as a percentage of product sales attributable to certain drugs facing generic competition.
|
|
•
|
rebates as a percentage of product sales was unchanged as increased sales of products that carry higher contractual rebates and co-pay assistance programs, including the impact of gross price increases where customers receive incremental rebates based on contractual price increase limitations. The comparisons were impacted primarily by higher provisions for rebates and the co-pay assistance programs for launch products and other promoted products. These increases were offset by a decrease in rebates for Solodyn®, Jublia®, Carac® and Glumetza® as generic competition caused a decline in volume year over year; and
|
|
•
|
chargebacks as a percentage of gross product sales was unchanged as higher chargebacks resulting from higher year over year sales of certain generic drugs such as Glumetza® AG and Targretin® AG and certain branded drugs such as Nifedical®, and Xifaxan®. These increases were offset by decreases associated with: (i) lower utilization by the U.S. government of certain products such as Minocin®, Ativan®, and Mysoline®, (ii) lower year over year sales of Zegerid® AG and Nitropress® and other drugs due to generic competition and Provenge®, which was divested with the Dendreon Sale and (iii) better contract pricing as a result of the Company's pricing discipline. During much of 2016, the Company was subject to higher chargeback rates as a result of its 2015 pricing strategies. As a result of corrective actions taken by the Company, and its continued pricing discipline during 2016, the previous chargeback rates, which were substantial, are no longer effective during 2017.
|
|
|
|
Three Months Ended September 30,
|
||||||
|
(in millions)
|
|
2017
|
|
2016
|
||||
|
Gain on the iNova Sale
|
|
$
|
(306
|
)
|
|
$
|
—
|
|
|
Gain on the Skincare Sale
|
|
3
|
|
|
—
|
|
||
|
Gain on the Dendreon Sale
|
|
(25
|
)
|
|
—
|
|
||
|
Litigation and other matters
|
|
3
|
|
|
1
|
|
||
|
|
|
$
|
(325
|
)
|
|
$
|
1
|
|
|
•
|
The Bausch + Lomb/International segment
consists of: (i) sales in the U.S. of pharmaceutical products, OTC products and medical device products, primarily comprised of Bausch + Lomb products, with a focus on the Vision Care, Surgical, Consumer and Ophthalmology Rx products and (ii) sales in Canada, Europe, Asia, Australia and New Zealand, Latin America, Africa and the Middle East of branded pharmaceutical products, branded generic pharmaceutical products, OTC products, medical device products, and Bausch + Lomb products.
|
|
•
|
The Branded Rx segment
consists of sales in the U.S. of: (i) Salix products (GI products), (ii) Ortho Dermatologics (dermatological products) and (iii) oncology (or Dendreon), dentistry and women’s health products. As a result of the Dendreon Sale completed on June 28, 2017, the Company exited the oncology business.
|
|
•
|
The U.S. Diversified Products segment
consists of sales in the U.S. of: (i) pharmaceutical products, OTC products and medical device products in the areas of neurology and certain other therapeutic classes, including aesthetics which includes the Solta business and the Obagi business and (ii) generic products.
|
|
|
|
Three Months Ended September 30,
|
|||||||||||||||||||
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
|
(in millions)
|
|
Amount
|
|
Pct.
|
|
Amount
|
|
Pct.
|
|
Amount
|
|
Pct.
|
|||||||||
|
Segment Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Bausch + Lomb/International
|
|
$
|
1,254
|
|
|
56
|
%
|
|
$
|
1,243
|
|
|
50
|
%
|
|
$
|
11
|
|
|
1
|
%
|
|
Branded Rx
|
|
633
|
|
|
29
|
%
|
|
766
|
|
|
31
|
%
|
|
(133
|
)
|
|
(17
|
)%
|
|||
|
U.S. Diversified Products
|
|
332
|
|
|
15
|
%
|
|
470
|
|
|
19
|
%
|
|
(138
|
)
|
|
(29
|
)%
|
|||
|
Total revenues
|
|
$
|
2,219
|
|
|
100
|
%
|
|
$
|
2,479
|
|
|
100
|
%
|
|
$
|
(260
|
)
|
|
(10
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Segment Profits / Segment Profit Margins
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Bausch + Lomb/International
|
|
$
|
387
|
|
|
31
|
%
|
|
$
|
381
|
|
|
31
|
%
|
|
$
|
6
|
|
|
2
|
%
|
|
Branded Rx
|
|
357
|
|
|
56
|
%
|
|
484
|
|
|
63
|
%
|
|
(127
|
)
|
|
(26
|
)%
|
|||
|
U.S. Diversified Products
|
|
238
|
|
|
72
|
%
|
|
379
|
|
|
81
|
%
|
|
(141
|
)
|
|
(37
|
)%
|
|||
|
Total segment profits
|
|
$
|
982
|
|
|
44
|
%
|
|
$
|
1,244
|
|
|
50
|
%
|
|
$
|
(262
|
)
|
|
(21
|
)%
|
|
•
|
an increase in product sales volume from our existing business (excluding foreign currency and divestitures and discontinuations) of
$58 million
. The increase in volume was
driven by the U.S. Bausch + Lomb Consumer, international and U.S. Bausch + Lomb Vision Care businesses
; and
|
|
•
|
an increase in average realized pricing of
$20 million
, primarily in Egypt.
|
|
•
|
the impact of other divestitures and discontinuations of
$51 million
; and
|
|
•
|
the unfavorable impact of foreign currencies of
$15 million
, which includes the unfavorable impact from the Egyptian pound of $40 million. In November 2016, as a result of the Egyptian government’s decision to float the Egyptian
|
|
•
|
an increase in contribution as a result of the increases in volume and average realized pricing as discussed above; and
|
|
•
|
a decrease in operating expenses (excluding amortization and impairments of intangible assets) of
$6 million
primarily in advertising and promotion as a result of the Skincare Sale and other divestitures and discontinuances.
|
|
•
|
the decrease in contribution from other divestitures and discontinuations of
$33 million
; and
|
|
•
|
the unfavorable impact of foreign currencies on the existing business of
$3 million
, primarily the Egyptian pound.
|
|
•
|
a decrease in volume from our existing business of
$88 million
primarily driven by: (i) the dermatology business, most notably with our Jublia® and Solodyn® products which have experienced lower volumes since the change in our fulfillment model and (ii) generic competition as certain products lost exclusivity, such as our Zegerid® product in our GI business and our Targetin®, Carac®, and Ziana® products in our dermatology business unit; and
|
|
•
|
the impact of the Dendreon Sale and other divestitures and discontinuations of
$86 million
.
|
|
•
|
a decrease in contribution from the impact of: (i) the Dendreon Sale and other divestitures and discontinuations of
$77 million
, (ii) lower volume partially offset by higher average realized pricing in our existing business, and (iii) higher third-party royalty costs on certain drugs; and
|
|
•
|
an increase in operating expenses of
$8 million
primarily related to an increase in legal fees associated with certain intellectual property matters and the sales field force expansion in GI.
|
|
|
|
Three Months Ended September 30,
|
|||||||||||||||||||
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
|
(in millions)
|
|
Amount
|
|
Pct.
|
|
Amount
|
|
Pct.
|
|
Amount
|
|
Pct.
|
|||||||||
|
Wellbutrin®
|
|
$
|
61
|
|
|
18
|
%
|
|
$
|
65
|
|
|
14
|
%
|
|
$
|
(4
|
)
|
|
(6
|
)%
|
|
Xenazine US®
|
|
28
|
|
|
8
|
%
|
|
35
|
|
|
7
|
%
|
|
(7
|
)
|
|
(20
|
)%
|
|||
|
Isuprel®
|
|
23
|
|
|
7
|
%
|
|
30
|
|
|
6
|
%
|
|
(7
|
)
|
|
(23
|
)%
|
|||
|
Cuprimine®
|
|
20
|
|
|
6
|
%
|
|
29
|
|
|
6
|
%
|
|
(9
|
)
|
|
(31
|
)%
|
|||
|
Syprine®
|
|
18
|
|
|
5
|
%
|
|
26
|
|
|
6
|
%
|
|
(8
|
)
|
|
(31
|
)%
|
|||
|
Mephyton®
|
|
14
|
|
|
4
|
%
|
|
15
|
|
|
3
|
%
|
|
(1
|
)
|
|
(7
|
)%
|
|||
|
Migranal® AG
|
|
14
|
|
|
4
|
%
|
|
15
|
|
|
3
|
%
|
|
(1
|
)
|
|
(7
|
)%
|
|||
|
Ativan®
|
|
13
|
|
|
4
|
%
|
|
13
|
|
|
3
|
%
|
|
—
|
|
|
—
|
%
|
|||
|
Glumetza® AG
|
|
9
|
|
|
3
|
%
|
|
—
|
|
|
—
|
%
|
|
9
|
|
|
—
|
%
|
|||
|
Obagi Nu-Derm®
|
|
8
|
|
|
2
|
%
|
|
8
|
|
|
2
|
%
|
|
—
|
|
|
—
|
%
|
|||
|
Other product revenues
|
|
119
|
|
|
36
|
%
|
|
229
|
|
|
49
|
%
|
|
(110
|
)
|
|
(48
|
)%
|
|||
|
Other revenues
|
|
5
|
|
|
2
|
%
|
|
5
|
|
|
1
|
%
|
|
—
|
|
|
—
|
%
|
|||
|
Total U.S. Diversified revenues
|
|
$
|
332
|
|
|
100
|
%
|
|
$
|
470
|
|
|
100
|
%
|
|
$
|
(138
|
)
|
|
(29
|
)%
|
|
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
|
2017
|
|
2016
|
||||||||||
|
(in millions)
|
|
Amount
|
|
Pct.
|
|
Amount
|
|
Pct.
|
||||||
|
Gross product sales
|
|
$
|
11,085
|
|
|
100
|
%
|
|
$
|
11,992
|
|
|
100
|
%
|
|
Provisions to reduce gross product sales to net product sales
|
|
|
|
|
|
|
|
|
||||||
|
Discounts and allowances
|
|
613
|
|
|
6
|
%
|
|
561
|
|
|
5
|
%
|
||
|
Returns
|
|
326
|
|
|
3
|
%
|
|
343
|
|
|
3
|
%
|
||
|
Rebates
|
|
1,894
|
|
|
17
|
%
|
|
1,880
|
|
|
15
|
%
|
||
|
Chargebacks
|
|
1,568
|
|
|
14
|
%
|
|
1,708
|
|
|
14
|
%
|
||
|
Distribution fees
|
|
222
|
|
|
2
|
%
|
|
332
|
|
|
3
|
%
|
||
|
Total provisions
|
|
4,623
|
|
|
42
|
%
|
|
4,824
|
|
|
40
|
%
|
||
|
Net product sales
|
|
6,462
|
|
|
58
|
%
|
|
7,168
|
|
|
60
|
%
|
||
|
Other revenues
|
|
99
|
|
|
|
|
103
|
|
|
|
||||
|
Revenues
|
|
$
|
6,561
|
|
|
|
|
$
|
7,271
|
|
|
|
||
|
•
|
an increase in discounts and allowances as a percentage of product sales primarily associated with the generic release of Glumetza® AG partially offset by lower sales of Zegerid® AG due to generic competition;
|
|
•
|
rebates as a percentage of product sales was higher as increased sales of products that carry higher contractual rebates and co-pay assistance programs, including the impact of gross price increases where customers receive incremental rebates based on contractual price increase limitations. The comparisons were impacted primarily by higher provisions for rebates and the co-pay assistance programs for launch products and other promoted products. These increases were offset by decreases in rebates for Solodyn®, Jublia®, Glumetza®, Ziana® and other products as generic competition caused a decline in volume year over year;
|
|
•
|
chargebacks as a percentage of gross product sales was unchanged as higher chargebacks resulting from higher year over year sales of certain generic drugs such as Glumetza® AG and Targretin® AG and certain branded drugs such as Nifedical® and Xifaxan®. These increases were offset by decreases associated with: (i) lower utilization by the U.S. government of certain products such as Minocin®, Ativan®, and Mysoline®, (ii) lower year over year sales of Zegerid® AG and Nitropress® and other drugs due to generic competition and Provenge® which was divested with the Dendreon Sale and (iii) better contract pricing as a result of the Company's pricing discipline. During much of 2016, the Company was subject to higher chargeback rates as a result of its 2015 pricing strategies. As a result of corrective actions taken by the Company, and its continued pricing discipline during 2016, the previous chargeback rates, which were substantial, are no longer effective during 2017; and
|
|
•
|
a decrease in distribution service fees as a percentage of gross product sales due in part to higher offsetting price appreciation credits and better contract terms with our distributors. Price appreciation credits offset against the total distribution service fees we pay on all of our products to each wholesaler. Price appreciation credits were $10 million and $3 million for the nine months ended September 30, 2017 and 2016, respectively.
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
(in millions)
|
|
2017
|
|
2016
|
||||
|
Gain on the iNova Sale
|
|
$
|
(306
|
)
|
|
$
|
—
|
|
|
Gain on the Skincare Sale
|
|
(316
|
)
|
|
—
|
|
||
|
Gain on the Dendreon Sale
|
|
(98
|
)
|
|
—
|
|
||
|
Net loss (gain) on other sales of assets
|
|
25
|
|
|
(9
|
)
|
||
|
Deconsolidation of Philidor
|
|
—
|
|
|
19
|
|
||
|
Litigation and other matters
|
|
112
|
|
|
(32
|
)
|
||
|
Other, net
|
|
(1
|
)
|
|
2
|
|
||
|
|
|
$
|
(584
|
)
|
|
$
|
(20
|
)
|
|
|
|
Nine Months Ended September 30,
|
|||||||||||||||||||
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
|
(in millions)
|
|
Amount
|
|
Pct.
|
|
Amount
|
|
Pct.
|
|
Amount
|
|
Pct.
|
|||||||||
|
Segment Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Bausch + Lomb/International
|
|
$
|
3,645
|
|
|
55
|
%
|
|
$
|
3,666
|
|
|
50
|
%
|
|
$
|
(21
|
)
|
|
(1
|
)%
|
|
Branded Rx
|
|
1,873
|
|
|
29
|
%
|
|
2,084
|
|
|
29
|
%
|
|
(211
|
)
|
|
(10
|
)%
|
|||
|
U.S. Diversified Products
|
|
1,043
|
|
|
16
|
%
|
|
1,521
|
|
|
21
|
%
|
|
(478
|
)
|
|
(31
|
)%
|
|||
|
Total revenues
|
|
$
|
6,561
|
|
|
100
|
%
|
|
$
|
7,271
|
|
|
100
|
%
|
|
$
|
(710
|
)
|
|
(10
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Segment Profits / Segment Profit Margins
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Bausch + Lomb/International
|
|
$
|
1,097
|
|
|
30
|
%
|
|
$
|
1,072
|
|
|
29
|
%
|
|
$
|
25
|
|
|
2
|
%
|
|
Branded Rx
|
|
1,024
|
|
|
55
|
%
|
|
1,078
|
|
|
52
|
%
|
|
(54
|
)
|
|
(5
|
)%
|
|||
|
U.S. Diversified Products
|
|
757
|
|
|
73
|
%
|
|
1,227
|
|
|
81
|
%
|
|
(470
|
)
|
|
(38
|
)%
|
|||
|
Total segment profits
|
|
$
|
2,878
|
|
|
44
|
%
|
|
$
|
3,377
|
|
|
46
|
%
|
|
$
|
(499
|
)
|
|
(15
|
)%
|
|
•
|
the impact of the Skincare Sale and other divestitures and discontinuations of
$123 million
; and
|
|
•
|
the unfavorable impact of foreign currencies of
$110 million
which includes the unfavorable impact from the Egyptian pound of $125 million.
|
|
•
|
an increase in product sales volume from our existing business (excluding foreign currency and divestitures and discontinuations) of
$114 million
. The increase in volume was
primarily driven by the U.S. Bausch + Lomb Consumer and international businesses
and, to a lesser extent, the U.S. Bausch + Lomb Vision Care and Surgical businesses; and
|
|
•
|
an increase in average realized pricing of
$97 million
, primarily in Egypt.
|
|
•
|
an increase in contribution as a result of increases in volume and average realized pricing as discussed above; and
|
|
•
|
a decrease in operating expenses (excluding amortization and impairments of intangible assets) of
$32 million
primarily in advertising and promotion, including expenses eliminated as a result of the Skincare Sale and other divestitures and discontinuances.
|
|
•
|
the decrease in contribution from the impact of the Skincare Sale and other divestitures and discontinuations of
$80 million
; and
|
|
•
|
the unfavorable impact of foreign currencies on the existing business, primarily due to the Egyptian pound of
$38 million
.
|
|
•
|
a decrease in volume from our existing business of
$212 million
primarily driven by: (i) the dermatology business, most notably with our Jublia® product, and to a lesser extent our Solodyn® product, which have experienced lower volumes since the change in our fulfillment model, (ii) lower demand within the GI business most notably with our Uceris® products attributable to (a) competition and (b) the increase in high deductible medical plans, and (iii) generic competition as certain products lost exclusivity, such as our Zegerid® product in our GI business and our Carac®, Targetin® and Ziana® products in our dermatology business; and
|
|
•
|
the decrease from the impact of the Dendreon Sale and other divestitures and discontinuations of
$106 million
.
|
|
•
|
a decrease in contribution from the impact of: (i) lower volume partially offset by higher average realized pricing in our existing business, (ii) the Dendreon Sale and other divestitures and discontinuations of
$83 million
and (iii) higher third-party royalty costs on certain drugs.
|
|
•
|
a decrease in operating expenses of
$104 million
primarily related to lower advertising and promotional expenses; and
|
|
•
|
acquisition accounting adjustments related to inventories expensed in 2016 of
$33 million
.
|
|
|
|
Nine Months Ended September 30,
|
|||||||||||||||||||
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||||||||
|
(in millions)
|
|
Amount
|
|
Pct.
|
|
Amount
|
|
Pct.
|
|
Amount
|
|
Pct.
|
|||||||||
|
Wellbutrin®
|
|
$
|
168
|
|
|
16
|
%
|
|
$
|
212
|
|
|
14
|
%
|
|
$
|
(44
|
)
|
|
(21
|
)%
|
|
Isuprel®
|
|
95
|
|
|
9
|
%
|
|
136
|
|
|
9
|
%
|
|
(41
|
)
|
|
(30
|
)%
|
|||
|
Xenazine US®
|
|
90
|
|
|
9
|
%
|
|
124
|
|
|
8
|
%
|
|
(34
|
)
|
|
(27
|
)%
|
|||
|
Syprine®
|
|
65
|
|
|
6
|
%
|
|
68
|
|
|
4
|
%
|
|
(3
|
)
|
|
(4
|
)%
|
|||
|
Cuprimine®
|
|
59
|
|
|
6
|
%
|
|
82
|
|
|
5
|
%
|
|
(23
|
)
|
|
(28
|
)%
|
|||
|
Ativan®
|
|
46
|
|
|
4
|
%
|
|
35
|
|
|
2
|
%
|
|
11
|
|
|
31
|
%
|
|||
|
Mephyton®
|
|
41
|
|
|
4
|
%
|
|
45
|
|
|
3
|
%
|
|
(4
|
)
|
|
(9
|
)%
|
|||
|
Migranal® AG
|
|
40
|
|
|
4
|
%
|
|
40
|
|
|
3
|
%
|
|
—
|
|
|
—
|
%
|
|||
|
Glumetza® AG
|
|
28
|
|
|
3
|
%
|
|
—
|
|
|
—
|
%
|
|
28
|
|
|
—
|
%
|
|||
|
Obagi Nu-Derm®
|
|
23
|
|
|
2
|
%
|
|
21
|
|
|
1
|
%
|
|
2
|
|
|
10
|
%
|
|||
|
Other product revenues
|
|
375
|
|
|
36
|
%
|
|
743
|
|
|
49
|
%
|
|
(368
|
)
|
|
(50
|
)%
|
|||
|
Other revenues
|
|
13
|
|
|
1
|
%
|
|
15
|
|
|
1
|
%
|
|
(2
|
)
|
|
(13
|
)%
|
|||
|
Total U.S. Diversified revenues
|
|
$
|
1,043
|
|
|
100
|
%
|
|
$
|
1,521
|
|
|
100
|
%
|
|
$
|
(478
|
)
|
|
(31
|
)%
|
|
|
|
Nine Months Ended September 30,
|
|||||||||||||
|
|
|
2017
|
|
2016
|
|
Change
|
|||||||||
|
(in millions)
|
|
Amount
|
|
Amount
|
|
Amount
|
|
Pct.
|
|||||||
|
Net income (loss)
|
|
$
|
1,892
|
|
|
$
|
(1,896
|
)
|
|
$
|
3,788
|
|
|
(200
|
)%
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities
|
|
(850
|
)
|
|
3,520
|
|
|
(4,370
|
)
|
|
(124
|
)%
|
|||
|
Changes in operating assets and liabilities
|
|
670
|
|
|
(49
|
)
|
|
719
|
|
|
(1,467
|
)%
|
|||
|
Net cash provided by operating activities
|
|
1,712
|
|
|
1,575
|
|
|
137
|
|
|
9
|
%
|
|||
|
Net cash provided by (used in) investing activities
|
|
2,797
|
|
|
(131
|
)
|
|
2,928
|
|
|
(2,235
|
)%
|
|||
|
Net cash used in financing activities
|
|
(3,121
|
)
|
|
(1,388
|
)
|
|
(1,733
|
)
|
|
125
|
%
|
|||
|
Effect of exchange rate on cash and cash equivalents
|
|
39
|
|
|
6
|
|
|
33
|
|
|
550
|
%
|
|||
|
Net increase in cash and cash equivalents
|
|
1,427
|
|
|
62
|
|
|
1,365
|
|
|
2,202
|
%
|
|||
|
Cash, cash equivalents and restricted cash, beginning of period
|
|
542
|
|
|
597
|
|
|
(55
|
)
|
|
(9
|
)%
|
|||
|
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
1,969
|
|
|
$
|
659
|
|
|
$
|
1,310
|
|
|
199
|
%
|
|
(in millions)
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
October through December 2017
|
|
$
|
923
|
|
|
$
|
—
|
|
|
2018
|
|
2
|
|
|
3,738
|
|
||
|
2019
|
|
—
|
|
|
2,122
|
|
||
|
2020
|
|
5,365
|
|
|
7,723
|
|
||
|
2021
|
|
3,175
|
|
|
3,215
|
|
||
|
2022
|
|
6,677
|
|
|
4,281
|
|
||
|
Thereafter
|
|
11,284
|
|
|
9,090
|
|
||
|
Gross maturities
|
|
$
|
27,426
|
|
|
$
|
30,169
|
|
|
Rating Agency
|
|
Corporate Rating
|
|
Senior Secured Rating
|
|
Senior Unsecured Rating
|
|
Outlook
|
|
Moody’s
|
|
B3
|
|
Ba3
|
|
Caa1
|
|
Negative
|
|
Standard & Poor’s
|
|
B
|
|
BB-
|
|
B-
|
|
Stable
|
|
•
|
Debt service
—We expect to make contractual debt service payments of principal and interest of
$1,360 million
during the remainder of 2017, which includes the
$923 million
principal repayment using the Restricted cash from the iNova Sale. We may elect to make additional principal payments under certain circumstances. The expected contractual debt service payments of principal and interest are exclusive of: (i) the
$125 million
repayment of our Series F Tranche B Term Loan Facility on
November 2, 2017
and (ii) repayments we may make under our Revolving Credit Facility. In the ordinary course of business, we may borrow and repay amounts under our Revolving Credit Facility to meet business needs;
|
|
•
|
Capital expenditures
—We expect to make payments of approximately
$60 million
for property, plant and equipment during the remainder of 2017, of which there is $52 million in committed amounts as of
September 30, 2017
;
|
|
•
|
Contingent consideration payments
—We expect to make contingent consideration and other approval/sales-based milestone payments of $13 million during the remainder of 2017;
|
|
•
|
Restructuring and integration payments
—We expect to make payments of $24 million during the remainder of 2017 for employee separation costs and lease termination obligations associated with restructuring and integration actions we have taken through
September 30, 2017
; and
|
|
•
|
Benefit obligations
—We expect to make payments under our pension and postretirement obligations of $5 million during the remainder of 2017. See
|
|
(in millions)
|
|
Total
|
|
Remainder of 2017
|
|
2018
|
|
2019 and 2020
|
|
2021 and 2022
|
|
Thereafter
|
||||||||||||
|
Long-term debt obligations, including interest
|
|
$
|
35,785
|
|
|
$
|
1,360
|
|
|
$
|
1,637
|
|
|
$
|
8,605
|
|
|
$
|
12,024
|
|
|
$
|
12,159
|
|
|
•
|
the expense, timing and outcome of legal and governmental proceedings, investigations and information requests relating to, among other matters, our distribution, marketing, pricing, disclosure and accounting practices (including with respect to our former relationship with Philidor Rx Services, LLC ("Philidor")), including pending investigations by the U.S. Attorney's Office for the District of Massachusetts, the U.S. Attorney's Office for the Southern District of New York and the State of North Carolina Department of Justice, the pending investigations by the U.S. Securities and Exchange Commission (the “SEC”) of the Company, the request for documents and information received by the Company from the Autorité des marchés financiers (the “AMF”) (the Company’s principal securities regulator in Canada), the pending investigation by the California Department of Insurance, a number of pending putative securities class action litigations in the U.S. (including related opt-out actions, including the recently filed securities and RICO
|
|
•
|
the impact of the changes in and reorganizations to our business structure, including changes to our operating and reportable segments;
|
|
•
|
the effectiveness of the measures implemented to remediate the material weaknesses in our internal control over financial reporting that were identified by the Company, our deficient control environment and the contributing factors leading to the misstatement of our previously issued results and the impact such measures may have on the Company and our businesses;
|
|
•
|
potential additional litigation and regulatory investigations (and any costs, expenses, use of resources, diversion of management time and efforts, liability and damages that may result therefrom), negative publicity and reputational harm on our Company, products and business that may result from the recent public scrutiny of our distribution, marketing, pricing, disclosure and accounting practices and from our former relationship with Philidor, including any claims, proceedings, investigations and liabilities we may face as a result of any alleged wrongdoing by Philidor and/or its management and/or employees;
|
|
•
|
the current scrutiny of our business practices including with respect to pricing (including the investigations by the U.S. Attorney's Offices for the District of Massachusetts and the Southern District of New York, and the State of North Carolina Department of Justice) and any pricing controls or price adjustments that may be sought or imposed on our products as a result thereof;
|
|
•
|
pricing decisions that we have implemented, or may in the future elect to implement, whether as a result of recent scrutiny or otherwise, such as the decision of the Company to take no further price increases on our Nitropress® and Isuprel® products and to implement an enhanced rebate program for such products, our decision on the price of our Siliq™ product, the Patient Access and Pricing Committee’s commitment that the average annual price increase for our prescription pharmaceutical products will be set at no greater than single digits and below the 5-year weighted average of the increases within the branded biopharmaceutical industry or any future pricing actions we may take following review by our Patient Access and Pricing Committee (which is responsible for the pricing of our drugs);
|
|
•
|
legislative or policy efforts, including those that may be introduced and passed by the U.S. Congress, designed to reduce patient out-of-pocket costs for medicines, which could result in new mandatory rebates and discounts or other pricing restrictions, controls or regulations (including mandatory price reductions);
|
|
•
|
ongoing oversight and review of our products and facilities by regulatory and governmental agencies, including periodic audits by the FDA and the results thereof;
|
|
•
|
any default under the terms of our senior notes indentures or Credit Agreement and our ability, if any, to cure or obtain waivers of such default;
|
|
•
|
any delay in the filing of any future financial statements or other filings and any default under the terms of our senior notes indentures or Credit Agreement as a result of such delays;
|
|
•
|
our substantial debt (and potential additional future indebtedness) and current and future debt service obligations, our ability to reduce our outstanding debt levels in accordance with our stated intention and the resulting impact on our financial condition, cash flows and results of operations;
|
|
•
|
our ability to meet the financial and other covenants contained in our Credit Agreement, indentures and other current or future debt agreements and the limitations, restrictions and prohibitions such covenants impose or may impose on the way we conduct our business, prohibitions on incurring additional debt if certain financial covenants are not met, limitations on the amount of additional debt we are able to incur where not prohibited, and restrictions on our ability to make certain investments and other restricted payments;
|
|
•
|
any further downgrade by rating agencies in our credit ratings, which may impact, among other things, our ability to raise debt and the cost of capital for additional debt issuances;
|
|
•
|
any reductions in, or changes in the assumptions used in, our forecasts for fiscal year 2017 or beyond, which could lead to, among other things, (i) a failure to meet the financial and/or other covenants contained in our Credit Agreement and/or indentures, and/or (ii) impairment in the goodwill associated with certain of our reporting units (including our
|
|
•
|
changes in the assumptions used in connection with our impairment analyses or assessments, which would lead to a change in such impairment analyses and assessments and which could result in an impairment in the goodwill associated with any of our reporting units or impairment charges related to certain of our products or other intangible assets;
|
|
•
|
the pending and additional divestitures of certain of our assets or businesses and our ability to successfully complete any such divestitures on commercially reasonable terms and on a timely basis, or at all, and the impact of any such pending or future divestitures on our Company, including the reduction in the size or scope of our business or market share, loss of revenue, any loss on sale, including any resultant write-downs of goodwill, or any adverse tax consequences suffered as a result of any such divestitures;
|
|
•
|
our shift in focus to much lower business development activity through acquisitions for the foreseeable future as we focus on reducing our outstanding debt levels and as a result of the restrictions imposed by our Credit Agreement that restrict us from, among other things, making acquisitions over an aggregate threshold (subject to certain exceptions) and from incurring debt to finance such acquisitions, until we achieve a specified leverage ratio;
|
|
•
|
the uncertainties associated with the acquisition and launch of new products (such as our Siliq™ product), including, but not limited to, our ability to provide the time, resources, expertise and costs required for the commercial launch of new products, the acceptance and demand for new pharmaceutical products, and the impact of competitive products and pricing, which could lead to material impairment charges;
|
|
•
|
our ability to retain, motivate and recruit executives and other key employees, including subsequent to retention payments being paid out and as a result of the reputational challenges we face and may continue to face;
|
|
•
|
our ability to implement effective succession planning for our executives and key employees;
|
|
•
|
the challenges and difficulties associated with managing a large complex business, which has, in the past, grown rapidly;
|
|
•
|
our ability to compete against companies that are larger and have greater financial, technical and human resources than we do, as well as other competitive factors, such as technological advances achieved, patents obtained and new products introduced by our competitors;
|
|
•
|
our ability to effectively operate, stabilize and grow our businesses in light of the challenges that the Company currently faces, including with respect to its substantial debt, pending investigations and legal proceedings, scrutiny of our pricing, distribution and other practices, reputational harm and limitations on the way we conduct business imposed by the covenants in our Credit Agreement, indentures and the agreements governing our other indebtedness;
|
|
•
|
the success of our fulfillment arrangements with Walgreen Co. ("Walgreens"), including market acceptance of, or market reaction to, such arrangements (including by customers, doctors, patients, pharmacy benefit managers ("PBMs"), third party payors and governmental agencies), the continued compliance of such arrangements with applicable laws, and our ability to successfully negotiate any improvements to our arrangements with Walgreens;
|
|
•
|
the extent to which our products are reimbursed by government authorities, PBMs and other third party payors; the impact our distribution, pricing and other practices (including as it relates to our former relationship with Philidor, any alleged wrongdoing by Philidor and our current relationship with Walgreens) may have on the decisions of such government authorities, PBMs and other third party payors to reimburse our products; and the impact of obtaining or maintaining such reimbursement on the price and sales of our products;
|
|
•
|
the inclusion of our products on formularies or our ability to achieve favorable formulary status, as well as the impact on the price and sales of our products in connection therewith;
|
|
•
|
our eligibility for benefits under tax treaties and the continued availability of low effective tax rates for the business profits of certain of our subsidiaries, including the impact on such matters of the proposals published by the Organization for Economic Co-operation and Development ("OECD") respecting base erosion and profit shifting ("BEPS") and various corporate tax reform proposals being considered in the U.S.;
|
|
•
|
our recent shift in business strategy as we are seeking to sell a variety of assets, some of which may be material and/or transformative;
|
|
•
|
the actions of our third party partners or service providers of research, development, manufacturing, marketing, distribution or other services, including their compliance with applicable laws and contracts, which actions may be beyond our control or influence, and the impact of such actions on our Company, including the impact to the Company of our former relationship with Philidor and any alleged legal or contractual non-compliance by Philidor;
|
|
•
|
the risks associated with the international scope of our operations, including our presence in emerging markets and the challenges we face when entering and operating in new and different geographic markets (including the challenges created by new and different regulatory regimes in such countries and the need to comply with applicable anti-bribery and economic sanctions laws and regulations);
|
|
•
|
adverse global economic conditions and credit markets and foreign currency exchange uncertainty and volatility in the countries in which we do business (such as the current or recent instability in Brazil, Russia, Ukraine, Argentina, Egypt, certain other countries in Africa and the Middle East, the devaluation of the Egyptian pound, and the adverse economic impact and related uncertainty caused by the United Kingdom's decision to leave the European Union (Brexit));
|
|
•
|
our ability to obtain, maintain and license sufficient intellectual property rights over our products and enforce and defend against challenges to such intellectual property;
|
|
•
|
the introduction of generic, biosimilar or other competitors of our branded products and other products, including the introduction of products that compete against our products that do not have patent or data exclusivity rights;
|
|
•
|
if permitted under our Credit Agreement, and to the extent we elect to resume business development activities through acquisitions, our ability to identify, finance, acquire, close and integrate acquisition targets successfully and on a timely basis;
|
|
•
|
factors relating to the acquisition and integration of the companies, businesses and products that have been acquired by the Company and that may in the future be acquired by the Company (if permitted under our Credit Agreement and to the extent we elect to resume business development activities through acquisitions), such as the time and resources required to integrate such companies, businesses and products, the difficulties associated with such integrations (including potential disruptions in sales activities and potential challenges with information technology systems integrations), the difficulties and challenges associated with entering into new business areas and new geographic markets, the difficulties, challenges and costs associated with managing and integrating new facilities, equipment and other assets, the risks associated with the acquired companies, businesses and products and our ability to achieve the anticipated benefits and synergies from such acquisitions and integrations, including as a result of cost-rationalization and integration initiatives. Factors impacting the achievement of anticipated benefits and synergies may include greater than expected operating costs, the difficulty in eliminating certain duplicative costs, facilities and functions, and the outcome of many operational and strategic decisions;
|
|
•
|
the expense, timing and outcome of pending or future legal and governmental proceedings, arbitrations, investigations, subpoenas, tax and other regulatory audits, reviews and regulatory proceedings against us or relating to us and settlements thereof;
|
|
•
|
our ability to obtain components, raw materials or finished products supplied by third parties (some of which may be single-sourced) and other manufacturing and related supply difficulties, interruptions and delays;
|
|
•
|
the disruption of delivery of our products and the routine flow of manufactured goods;
|
|
•
|
economic factors over which the Company has no control, including changes in inflation, interest rates, foreign currency rates, and the potential effect of such factors on revenues, expenses and resulting margins;
|
|
•
|
interest rate risks associated with our floating rate debt borrowings;
|
|
•
|
our ability to effectively distribute our products and the effectiveness and success of our distribution arrangements, including the impact of our arrangements with Walgreens;
|
|
•
|
our ability to secure and maintain third party research, development, manufacturing, marketing or distribution arrangements;
|
|
•
|
the risk that our products could cause, or be alleged to cause, personal injury and adverse effects, leading to potential lawsuits, product liability claims and damages and/or recalls or withdrawals of products from the market;
|
|
•
|
the mandatory or voluntary recall or withdrawal of our products from the market and the costs associated therewith;
|
|
•
|
the availability of, and our ability to obtain and maintain, adequate insurance coverage and/or our ability to cover or insure against the total amount of the claims and liabilities we face, whether through third party insurance or self-insurance;
|
|
•
|
the difficulty in predicting the expense, timing and outcome within our legal and regulatory environment, including with respect to approvals by the FDA, Health Canada and similar agencies in other countries, legal and regulatory proceedings and settlements thereof, the protection afforded by our patents and other intellectual and proprietary property, successful generic challenges to our products and infringement or alleged infringement of the intellectual property of others;
|
|
•
|
the results of continuing safety and efficacy studies by industry and government agencies;
|
|
•
|
the success of preclinical and clinical trials for our drug development pipeline or delays in clinical trials that adversely impact the timely commercialization of our pipeline products, as well as other factors impacting the commercial success of our products (such as our Siliq™ product), which could lead to material impairment charges;
|
|
•
|
the results of management reviews of our research and development portfolio (including following the receipt of clinical results or feedback from the FDA or other regulatory authorities), which could result in terminations of specific projects which, in turn, could lead to material impairment charges;
|
|
•
|
the seasonality of sales of certain of our products;
|
|
•
|
declines in the pricing and sales volume of certain of our products that are distributed or marketed by third parties, over which we have no or limited control;
|
|
•
|
compliance by the Company or our third party partners and service providers (over whom we may have limited influence), or the failure of our Company or these third parties to comply, with health care “fraud and abuse” laws and other extensive regulation of our marketing, promotional and business practices (including with respect to pricing), worldwide anti-bribery laws (including the U.S. Foreign Corrupt Practices Act), worldwide economic sanctions and/or export laws, worldwide environmental laws and regulation and privacy and security regulations;
|
|
•
|
the impacts of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Health Care Reform Act”) and potential repeal or amendment thereof and other legislative and regulatory healthcare reforms in the countries in which we operate, including with respect to recent government inquiries on pricing;
|
|
•
|
the impact of any changes in or reforms to the legislation, laws, rules, regulation and guidance that apply to the Company and its business and products or the enactment of any new or proposed legislation, laws, rules, regulations or guidance that will impact or apply to the Company or its businesses or products;
|
|
•
|
the impact of changes in federal laws and policy under consideration by the new administration and Congress, including the effect that such changes will have on fiscal and tax policies, the potential repeal of all or portions of the Health Care Reform Act, international trade agreements and policies and policy efforts designed to reduce patient out-of-pocket costs for medicines (which could result in new mandatory rebates and discounts or other pricing restrictions);
|
|
•
|
illegal distribution or sale of counterfeit versions of our products;
|
|
•
|
interruptions, breakdowns or breaches in our information technology systems; and
|
|
•
|
risks in Item 1A. "”Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 1, 2017, and risks detailed from time to time in our other filings with the SEC and the Canadian Securities Administrators (the “CSA”), as well as our ability to anticipate and manage the risks associated with the foregoing.
|
|
Period
|
|
Total Number of
Shares
Purchased
(1)(2)
|
|
Average Price
Paid Per Share
|
|
Total Number of Shares
Purchased as
Part of Publicly
Announced Plans
|
|
Maximum Number
(Approximate Dollar Value)
of Shares That
May Yet Be Purchased
Under the Plans
(2)
|
||||||
|
July 1, 2017 to July 31, 2017
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
August 1, 2017 to August 31, 2017
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
September 1, 2017 to September 30, 2017
|
|
126
|
|
|
$
|
14.43
|
|
|
—
|
|
|
$
|
—
|
|
|
(1)
|
Represents 126 purchased (subsequently canceled) under the employee stock purchase program.
|
|
(2)
|
The Company currently has no active securities repurchase plan.
|
|
4.1
|
Indenture, dated as of October 17, 2017, by and among Valeant Pharmaceuticals International, Inc., the guarantors party thereto, The Bank of New York Mellon, as trustee and the notes collateral agents party thereto, originally filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on October 17, 2017, which is incorporated by reference herein.
|
|
*101.INS
|
XBRL Instance Document
|
|
*101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
*101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
*101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
*101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
*101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
Valeant Pharmaceuticals International, Inc.
(Registrant) |
|
|
|
|
Date: November 7, 2017
|
/s/ JOSEPH C. PAPA
|
|
|
Joseph C. Papa
Chief Executive Officer (Principal Executive Officer and Chairman of the Board) |
|
|
|
|
|
|
|
Date: November 7, 2017
|
/s/ PAUL S. HERENDEEN
|
|
|
Paul S. Herendeen
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
|
Exhibit
Number
|
Exhibit Description
|
|
4.1
|
Indenture, dated as of October 17, 2017, by and among Valeant Pharmaceuticals International, Inc., the guarantors party thereto, The Bank of New York Mellon, as trustee and the notes collateral agents party thereto, originally filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on October 17, 2017, which is incorporated by reference herein.
|
|
*101.INS
|
XBRL Instance Document
|
|
*101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
*101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
*101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
*101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
*101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|