Bausch Health Companies (BHC) 8-K Valeant Pharmaceuticals Reports 2010 Fourth Quarter Financial Results

Exhibit 99.1

International Headquarters
7150 Mississauga Road
Mississauga, Ontario L5N 8M5
Phone: 905.286.3000
Fax: 905.286.3050

Contact Information:
Laurie W. Little
949-461-6002
laurie.little@valeant.com

VALEANT PHARMACEUTICALS REPORTS
2010 FOURTH QUARTER FINANCIAL RESULTS

• 2010 Fourth Quarter Total Revenue $515 million

• 2010 Fourth Quarter GAAP EPS ($0.10); Cash EPS $0.51

• 2010 Fourth Quarter GAAP Operating Cash Flow ($1) million; Adjusted Operating Cash Flow $209 million

• 2011 Guidance increased to $2.45 – $2.70 Cash EPS

• Valeant agrees to repurchase common shares from ValueAct Capital for $275 million

     Mississauga, Ontario— February 24, 2014 — Valeant Pharmaceuticals International, Inc. (NYSE: VRX) (TSX: VRX) announces fourth quarter financial results for 2010.

     “Our results for the fourth quarter were ahead of our expectations, and reflect the successful integration work we have completed thus far,” said J. Michael Pearson, chief executive officer. “We are particularly pleased with the performance of our Canadian operations, especially as this business was principally impacted by the integration process. Our combined company has been building momentum since September 2010 and we believe we are on track to deliver strong 2011 financial results.”

Revenue

     Total reported revenue was $514.6 million in the fourth quarter of 2010 as compared to $241.1 million in the fourth quarter of 2009. Product sales were $488.7 million in the fourth quarter of 2010, as compared to $231.6 million in the year-ago quarter. These increases are primarily due to the acquisition of Valeant Pharmaceuticals International (Legacy Valeant) by Biovail Corporation (Legacy Biovail), which was completed in September 2010. In connection with the acquisition, Biovail was renamed Valeant Pharmaceuticals International, Inc. Results for the fourth quarter of 2009 only reflect Legacy Biovail revenues and do not include any revenues from Legacy Valeant. Pro forma organic growth for the combined company was approximately six percent for 2010.

Operating Expenses

     The Company’s cost of goods sold were $210.6 million in the fourth quarter of 2010 and represented 43% of product sales. This number in the fourth quarter of 2010 included a $53.3 million fair value adjustment to inventory and a $7.4 million amortization expense adjustment related to the acquisition of Legacy Valeant by Legacy Biovail. Excluding the adjustments, cost of goods for the fourth quarter of 2010 were 31% of product sales. This rise in cost of goods sold from historical levels is primarily due to contractual changes in the first quarter of 2010 that doubled the cost of goods for Zovirax, to greater than 45% of the product’s sales in 2010. As a result of the purchase of Zovirax rights in the U.S., which was completed on February 22, 2011, and the purchase of rights in Canada, which is expected to close by the end of the first quarter of 2011, total cost of goods sold is expected to be back to historical Legacy Valeant levels in the second half of 2011.

     Selling, General and Administrative expenses were $127.8 million in the fourth quarter of 2010, which included a $16.4 million step-up in stock based compensation expenses related to the acquisition of Legacy Valeant. Research and Development expenses were $18.3 million in the fourth quarter of 2010 and reflect the termination of the majority of Legacy Biovail’s pipeline. These expenses reflect the achievement of approximately $50 million in cost synergies in the fourth quarter of 2010 from the acquisition.

Merger Related Costs & Expenses

     We recorded restructuring and acquisition-related costs of $44.1 million in the quarter, virtually all of which arise from the acquisition and are primarily employee termination costs and research and development cancelation costs.

Net Loss and Cash Flow from Operating Activities

     The Company reported a net loss of $31.1 million for the fourth quarter of 2010, or a loss of $0.10 per diluted share. On an adjusted Cash EPS basis, adjusted income was $167.6 million, or $0.51 per diluted share, as compared to guidance of $0.44 to $0.48 per diluted share.

     GAAP cash flow from operating activities, which includes acquisition transaction fees, was negative $1.4 million in the quarter. Adjusted cash flow from operations was $209.1 million in the fourth quarter of 2010. Excluding working capital changes, adjusted cash flow from operations was $187.6 million, as compared to guidance of $170 to $190 million.

2011 Guidance

     The Company is updating its previous Cash EPS guidance and is now targeting Cash EPS between $2.45 – $2.70 in 2011, up from prior guidance of $2.25 to $2.50. This guidance assumes the completion of the acquisitions of PharmaSwiss S.A. and the Canadian rights to Zovirax (U.S. acquisition closed February 22, 2011) in the next several months.

Share Repurchase Transaction

     Valeant has agreed to repurchase common shares of the Company’s common stock held by ValueAct Capital for $275 million, negotiated at a 5.77% discount over a 20-day trading day average, which was calculated in a similar manner to Legacy Valeant’s privately negotiated share repurchase completed in May 2010.

     In connection with the pending $275 million share repurchase from ValueAct, the Company is evaluating debt financing alternatives.

Conference Call and Webcast Information

     The Company will host a conference call and a live Internet webcast along with a slide presentation today at 10:00 a.m. ET (7:00 a.m. PT), February 24, 2011 to discuss its fourth quarter financial results for 2010. The dial-in number to participate on this call is (877) 295-5743, confirmation code 41335702. International callers should dial (973) 200-3961, confirmation code 41335702. A replay will be available approximately two hours following the conclusion of the conference call through March 3, 2011 and can be accessed by dialing (800) 642-1687, or (706) 645-9291, confirmation code 41335702. The live webcast of the conference call may be accessed through the investor relations section of the Company’s corporate website at www.valeant.com.

About Valeant

     Valeant Pharmaceuticals International, Inc. (NYSE/TSX:VRX) is a multinational specialty pharmaceutical company that develops and markets a broad range of pharmaceutical products primarily in the areas of neurology, dermatology and branded generics. More information about Valeant can be found at www.valeant.com.

Forward-looking Statements

     This press release may contain forward-looking statements, including, but not limited to, statements regarding our performance, growth, achievement of long-term goals, anticipated Cash EPS and adjusted cash flows from operations for 2011, anticipated closing of pending acquisitions and share repurchases and financing alternatives. Forward-looking statements may be identified by the use of the words “anticipates,” “expects,” “intends,” “plans,” “should,” “could,” “would,” “may,” “will,” “believes,” “estimates,” “potential,” or “continue” and variations or similar expressions. These statements are based upon the current expectations and beliefs of management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, risks and uncertainties discussed in the company’s most recent annual or quarterly report filed with the Securities and Exchange Commission (“SEC”) and risks and uncertainties relating to the proposed merger, as detailed

from time to time in Valeant’s filings with the SEC and the Canadian Securities Administrators (“CSA”), which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on any of these forward-looking statements. Valeant undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect actual outcomes.

Note on Guidance

     The guidance contained in this press release is only effective as of the date given, February 24, 2011, and will not be updated or confirmed until the Company publicly announces updated or affirmed guidance.

Non-GAAP Information

     To supplement the financial measures prepared in accordance with generally accepted accounting principles (GAAP), the company uses non-GAAP financial measures that exclude certain items, such as amortization of inventory step-up, stock-based compensation step-up, restructuring and acquisition-related costs, acquired in-process research and development (“IPR&D”), legal settlements, amortization and other non-cash charges, amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss on extinguishment of debt, and (gain) loss on investments, net, and adjusts tax expense to cash taxes. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a meaningful, consistent comparison of the company’s core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Financial Tables follow.

###

Table 1

Valeant Pharmaceuticals International, Inc.
Condensed Consolidated Statement of Income (Loss)
For the Three and Twelve Months Ended December 31, 2010 and 2009

	Three Months Ended							Twelve Months Ended
	December 31,							December 31,
(In thousands, except per share data)	2010			2009			%Change	2010			2009			%Change
Product sales	$	488,721		$	231,626		NM	$	1,133,371		$	789,026		NM
Alliance and royalty		19,963			5,172		NM		35,109			15,418		NM
Service and other		5,880			4,255		NM		12,757			15,986		NM
Total revenues		514,564			241,053		NM		1,181,237			820,430		NM
Cost of goods sold		210,648			58,743		NM		395,595			204,309		NM
Cost of services		2,944			3,339		NM		10,155			13,849		NM
Selling, general and administrative (“SG&A”)		127,752			30,117		NM		276,546			167,633		NM
Research and development		18,324			14,209		NM		68,311			47,581		NM
Acquired in-process research and development		28,000			20,814		NM		89,245			59,354		NM
Legal settlements		14,110			5,950		NM		52,610			6,191		NM
Restructuring and acquisition-related costs		44,078			14,905		NM		179,102			35,629		NM
Amortization of intangible assets		117,660			34,328		NM		219,758			104,730		NM
		563,516			182,405				1,291,322			639,276
Operating income (loss)		(48,952	)		58,648				(110,085	)		181,154
Interest expense, net		(52,564	)		(9,736	)			(83,013	)		(23,763	)
Loss on extinguishment of debt		(32,413	)		—				(32,413	)		—
Gain (loss) on investments, net		—			(501	)			(5,552	)		17,594
Other income (expense), net including translation and exchange		229			(411	)			(5,200	)		(30	)
Income (loss) before recovery of income taxes		(133,700	)		48,000				(236,263	)		174,955
Recovery of income taxes		(102,570	)		(25,000	)			(28,070	)		(1,500	)
Net income (loss)	$	(31,130	)	$	73,000			$	(208,193	)	$	176,455
Earnings per share:
Basic:
Net income (loss)	$	(0.10	)	$	0.46			$	(1.06	)	$	1.11
Shares used in per share computation		302,005			158,271				195,808			158,236
Diluted:
Net income (loss)	$	(0.10	)	$	0.46			$	(1.06	)	$	1.11
Shares used in per share computation		302,005			158,785				195,808			158,510

Table 2

Valeant Pharmaceuticals International, Inc.
Reconciliation of GAAP EPS to Adjusted Non-GAAP (Cash) EPS
For the Three and Twelve Months Ended December 31, 2010 and 2009 (a)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
(In thousands, except per share data)	2010			2009(a)			2010			2009(a)
Net income (loss)	$	(31,130	)	$	73,000		$	(208,193	)	$	176,455
Non-GAAP adjustments(b)(c):
Inventory step-up (d)		53,266			—			53,266			—
Stock-based compensation step-up (e)		17,040			—			17,040			—
Restructuring and acquisition-related costs (f)		44,078			14,905			179,102			35,629
Acquired in-process research and development		28,000			20,814			89,245			59,354
Legal settlements		14,110			5,950			52,610			6,191
Amortization and other non-cash charges		122,729			42,868			232,954			130,496
		279,223			84,537			624,217			231,670
Amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest		3,624			4,034			15,698			9,069
Loss on extinguishment of debt		32,413			—			32,413			—
(Gain) loss on investments, net		—			501			5,552			(17,594	)
Write-down of deferred financing costs		—			—			5,774			537
Tax		(116,570	)		(28,500	)		(54,370	)		(13,500	)
Total adjustments		198,690			60,572			629,284			210,182
Adjusted income	$	167,560		$	133,572		$	421,091		$	386,637
GAAP earnings per share — diluted	$	(0.10	)	$	0.46		$	(1.06	)	$	1.11
Adjusted Non-GAAP (Cash) earnings per share — diluted	$	0.51		$	0.84		$	2.05		$	2.44
Shares used in diluted per share calculation — GAAP earnings per share		302,005			158,785			195,808			158,510
Shares used in diluted per share calculation — Adjusted Non-GAAP (Cash) earnings per share		330,452			158,785			205,529			158,510

(a)	Prior year non-GAAP adjustments have been modified to conform to the 2010 disclosure.
(b)	To supplement the financial measures prepared in accordance with generally accepted accounting principles (GAAP), the company uses non-GAAP financial measures that exclude certain items, such as amortization of inventory step-up, stock-based compensation step-up, restructuring and acquisition-related costs, acquired in-process research and development (“IPR&D”), legal settlements outside the ordinary course of business, amortization and other non-cash charges, amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss on extinguishment of debt, (gain) loss on investments, net, and adjusts tax expense to cash taxes. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a more meaningful, consistent comparison of the company’s core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.
(c)	This table includes Adjusted Non-GAAP (Cash) Earnings Per Share, which is a non-GAAP financial measure that represents earnings per share, excluding amortization of inventory step-up, stock-based compensation step-up, restructuring and acquisition-related costs, acquired in-process research and development (“IPR&D”), legal settlements outside the ordinary course of business, amortization and other non-cash charges, amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss on extinguishment of debt, (gain) loss on investments, net, and adjusts tax expense to cash taxes.
(d)	ASC 805, accounting for business combinations requires an inventory fair value step-up. The impact of the amortization of this step-up is included in cost of goods sold. For the three months and year ended December 31, 2010 the impact is $53.3 million for the merger with Valeant Pharmaceutical International.
(e)	Total stock-based compensation for the three and twelve months ended December 31, 2010 was $26.2 million and $98.0 million, respectively, of which $17.0 million reflects the amortization of the fair value increment resulting from the merger.
(f)	Restructuring and acquisition-related costs for the three months and twelve months ended December 31, 2010 relate to costs related to the merger with Valeant Pharmaceuticals International and include $13.8 million of expenses related to R&D program cancelation costs, $11.2 million and $58.6 million related to employee severance, $5.2 million related to R&D wind down costs, $3.9 million and $49.5 million related to accelerated equity compensation, $4.9 million related to facility closure costs, and $2.5 million and $8.8 million of other miscellaneous costs related to the merger. Acquisition-related costs of $2.6 million and $38.3 million for the three months and year ended December 31, 2010, respectively, relate to the merger with Valeant Pharmaceuticals International.

Table 3

Valeant Pharmaceuticals International, Inc.
Statement of Revenue — by Segment
For the Three Months Ended December 31, 2010 and 2009

(In thousands)

	Three Months Ended
	December 31,
											2010
											excluding
					%			2010			currency		%
	2010		2009		Change			currency			impact		Change
	GAAP		GAAP		(c)			impact			non-GAAP		(c)
Revenue(a)(b)
U.S. Neurology & Other	$	212,899	$	161,441		32	%	$	—		$	212,899		32	%
U.S. Dermatology		103,896		46,254		125	%		121			104,017		125	%
Total U.S.		316,795		207,695		53	%		121			316,916		53	%
Canada/Australia		80,421		28,205		185	%		(4,319	)		76,102		170	%
Specialty Pharmaceuticals		397,216		235,900		68	%		(4,198	)		393,018		67	%
Branded Generics — Europe		48,310		5,153		838	%		2,643			50,953		889	%
Branded Generics — Latin America		69,038		—	NM				(2,772	)		66,266	NM
Branded Generics		117,348		5,153	NM				(129	)		117,219	NM
Total revenue	$	514,564	$	241,053		113	%	$	(4,327	)	$	510,237		112	%

(a)	Note: Currency effect for constant currency sales is determined by comparing 2010 reported amounts adjusted to exclude currency impact, calculated using 2009 monthly average exchange rates, to the actual 2009 reported amounts. Constant currency sales is not a GAAP-defined measure of revenue growth. Constant currency sales as defined and presented by us may not be comparable to similar measures reported by other companies.
(b)	See footnote (a) to Table 2.
(c)	The % change reflects revenue for the combined company for the three months ended December 31, 2010 as compared to Legacy Biovail alone for the three months ended December 31, 2009.

Table 4

Valeant Pharmaceuticals International, Inc.
Reconciliation of GAAP Statement of Cost of Goods Sold to Non-GAAP Statement Cost of Goods Sold — by Segment
For the Three Months Ended December 31, 2010

(In thousands)

	Three Months Ended
	December 31,
								2010
						2010		excluding
						fair value		fair value
						adjustment		adjustment
						to inventory		to inventory
	2010		%			and		and		%
	as reported		of product			amortization		amortization		of product
	GAAP		sales			(b)		non-GAAP		sales
Cost of goods sold(a)
U.S. Neurology & Other	$	70,924		35	%	$	22,436	$	48,488		24	%
U.S. Dermatology		42,775		47	%		11,300		31,475		35	%
Canada/Australia		33,693		42	%		11,409		22,284		28	%
Branded Generics — Europe		24,320		50	%		5,975		18,345		38	%
Branded Generics — Latin America		38,475		56	%		9,534		28,941		42	%
Corporate		461					—		461
	$	210,648		43	%	$	60,654	$	149,994		31	%

(a)	See footnote (a) to Table 2.
(b)	U.S. Neurology and Other and U.S. Dermatology include $15.1 million and $11.2 million of fair value adjustment to inventory and $7.3 million and $0.1 million of amortization, respectively.

Table 5

Valeant Pharmaceuticals International, Inc.
Consolidated Balance Sheet and Other Data
(In thousands)

5.1 Cash

	As of		As of
	December 31,		December 31,
	2010		2009
Cash and cash equivalents	$	394,269	$	114,463
Marketable securities		6,083		9,566
Total cash and marketable securities	$	400,352	$	124,029

5.2 Summary of Cash Flow Statement

	Three Months Ended
	December 31,
	2010			2009
Cash flow provided by (used in):
Adjusted cash flow from operations (Non-GAAP) (a)	$	209,052		$	142,552
Restructuring and acquisition-related costs		(44,078	)		(14,905	)
Payment of accrued legal settlements		(38,500	)		—
Effect of ASC 470-20 (FSP APB 14-1)		(4,934	)		—
Changes in Working Capital Related to Acquisition and Restructuring Costs		(122,939	)		—
Net cash provided by (used in) operating activities (GAAP)	$	(1,399	)	$	127,647

(a) See footnote (b) to Table 2. 2010 includes $21.5 million reduction in working capital unrelated to merger/restructuring activities and 2009 includes $1.0 million increase in working capital.