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Valeant to acquire acne medicine, posts first quarter loss

Valeant CEO Michael Pearson is seen in one of the company's laboratories.

Ryan Remiorz/Ryan Remiorz/THE CANADIAN PRESS

Valeant Pharmaceuticals International, Inc. has a deal to acquire AcneFree, an over-the-counter skin treatment for $64-million (U.S.) plus performance payments.

Canada's largest publicly traded drug maker says the assets that it will acquire from skincare company University Medical Pharmaceuticals Corp., generated $32-million in revenue last year.

Valeant's chief executive officer Michael Pearson says the additional products will immediately add to the company's operations after the deal closes and will provide an opportunity to grow the company's over-the-counter business.

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The deal was announced as Valeant reported a $12.9-million net loss or four cents per share in the first quarter, before adjustments.

The loss included increased provisions for restructuring and acquisition-related costs, legal settlements and a variety of non-cash charges — all higher than in the first quarter of 2011 when Valeant had a $6.5-million net profit.

The company, formerly known as Biovail, has made numerous acquisitions as it revamps its business and changes its focus in response to declining sales of its former flagship product, the prescription anti-depressant Wellbutrin XL.

"The addition of a leading OTC acne treatment will provide us with the ability to expand our OTC business," Mr. Pearson said in a statement.

He also announced an increase in the company's guidance for 2012 cash earnings per share. The new range is $4.45 to $4.70 — up 50 cents per share on both ends of the spectrum from guidance issued in February.

In the first quarter ended March 31, Valeant reported $1.14 cents per share of cash earnings ($360.3-million), or 99 cents per share ($311.8-million) if the impact of a divestiture is excluded.

The cash earnings are an adjusted measure of profitability that excludes a number of items reported in net earnings under standard accounting.

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Among other things, the cash earnings excluded $69.8-million of restructuring and acquisition-related costs in the first quarter, up from $19-million a year earlier, and a $205.2-million item for amortization, up from $114.3-million.

Valeant's total revenue in the quarter was $856.1-million, up $52-million from the first quarter of 2011.

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