Fourth Quarter and Full Year End 2013 Financial Results Conference - PowerPoint PPT Presentation

Fourth Quarter and Full Year End 2013 Financial Results Conference Call February 27, 2014

Forward-looking Statements Forward-looking Statements Certain statements made in this presentation may constitute forward-looking statements, including, but not limited to, statements regarding guidance with respect to expected revenues, non-GAAP cash earnings per share and adjusted cash flows from operations, organic growth, operating margin, integration-related activities and benefits, synergies, launches and approvals of products and assumptions with respect to guidance of Valeant Pharmaceuticals International, Inc. (the “Company”). Forward -looking statements may be identified by the use of the words “anticipates,” “expects,” “intends,” “plans,” “could,” “should,” “would,” “may,” “will,” “believes,” “estimates,” “potential,” or “continue” and variations or similar expressions. These statements are based upon th e 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 other risks and uncertainties detailed from time to time in the Company's filings with the SEC and the Canadian Securities Administrators, which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on any of these forward-looking statements. The Company undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect actual outcomes. Non-GAAP Information To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the company uses non-GAAP financial measures that exclude certain items, such as amortization of inventory step-up, amortization of alliance product assets & property, plant and equipment step up, stock-based compensation step-up, contingent consideration fair value adjustments, restructuring, acquisition-related and other costs, In-process research and development, impairments and other charges, ("IPR&D"), legal settlements outside the ordinary course of business, the impact of currency fluctuations, amortization including intangible asset impairments and other non-cash charges, amortization and write-down of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest, loss on extinguishment of debt, (gain) loss on assets sold/held for sale/impairment, net, (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. Note 1: The guidance in this presentation is only effective as of the date given, February 27, 2014, and will not be updated or affirmed unless and until the Company publicly announces updated or affirmed guidance. 1

Agenda 1. Fourth Quarter & Year End 2013 Results 2. Operations Update 3. Financial Update 2

Fourth Quarter and Year End 2013 Results Q4 2013 Y/Y 2013 Y/Y % % Product Sales $2.0 B 116% $5.6 B 72% Total Revenue $2.1 B 109% $5.8 B 66% Cash EPS $2.15 76% $6.24 51%* Adjusted Cash Flow from Operations $607 M 43% $1.8 B 38% * Excludes $66M dermatology divestitures , $45M milestone payment from GSK and $30M one-time non-cash Fx gain recorded in 2012 3

2013 Organic Growth Same Store Sales Q4 2013 Ex Generics FY 2013 Ex Generics Total U.S. -3% 14% -7% 10% ROW Developed 12% 12% 2% 7% Total Developed 0% 13% -5% 9% Emerging Markets 8% 8% 11% 11% Total 2% 12% 0% 10% Pro Forma Q4 2013 Ex Generics FY 2013 Ex Generics Total U.S. 4% 12% -2% 7% ROW Developed 5% 5% 2% 1% Total Developed 4% 10% -1% 6% Emerging Markets 13% 13% 12% 12% Total 6% 11% 2% 7% Note: Generics excluded include Zovirax Franchise, Retin-A Micro, BenzaClin 4

Bausch + Lomb Performance Same Store Sales Growth Q4 2013 2013 (Since Close) U.S. 17% 16% ROW Developed 1% 2% Total Developed Markets 9% 9% Total Emerging Markets 16% 15% Total Company 10% 10% 5

Bausch + Lomb U.S. Performance Same Store Sales Growth Q4 2013 Contact Lens 14% Surgical 24% Rx 16% Consumer 11% Generics 31% Total U.S 17% 6

Operational Highlights - Top Performing Business Units Business Unit 4Q Run Rate Y/Y Growth Asia $1.0 B >300% Neurology & Other $1.0 B >20% Aesthetics $400 M >300% Russia $400 M >300% Canada $400 M >10% Poland $250 M >30% Oral Health $125 M >20% 7

Adjusted Cash Flow From Operations $607 Excluded Items: • Legal Settlements $423 $408 • Restructuring/Acquisition $345 Related Costs • Tax Benefit from Stock Options 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr  Total 2013 Adjusted Cash Flow from Operations = $1.8 Billion 8

2013 Performance v. Guidance Original Expectations Final Results  Revenue $4.4 - $4.8 billion  Revenue $5.8 billion  Cash EPS $6.24  Cash EPS $5.35 - $5.65  $1.5 - $1.75 billion in  $1.8 billion in Adjusted Adjusted Cash Flow from Cash Flow from Operations Operations  Organic Growth*:  10% same store sales  7% pro forma * Generics excluded include Zovirax Franchise, Retin-A Micro, BenzaClin 9

Update on 2014 Expected Product Launches Product Business Unit Description Estimated Launch Date Bensal Derm Rx Topical treatment for the inflammation and Launched irritation associated with many forms of dermatitis CeraVe Baby Line Consumer OTC Moisturizer Launched enVista Inserter Surgical Latest enhancements Approved and Launched Ossix Plus Oral Health Dental Membrane Launched Bausch+Lomb Ultra Contact Lens Silicone Hydrogel monthly disposable contact Launched lenses Luzu Derm Rx Topical antifungal approved for tinea cruris, To Be Launched 3/31 corporis, and pedis Neotensil Aesthetics Topical product that reduces the appearance of To Be Launched 3/31 under-eye bags within one hour Peroxiclear Consumer Hydrogen peroxide-based contact lens solution To Be Launched Late March Retin-A Micro .08% Derm Rx Topical medication to treat Acne Approved and To Be Launched June FDA corneal incision clearance Victus Enhancements Surgical Launch of multiple VICTUS enhancements Feb 14 / FDA lens fragmentation estimated 2H of 2014 Jublia Derm Rx Topical antifungal for onychomycosis 2H 2014 (pending FDA approval) Trulign ranges Surgical Broader range of powers Q2 BioTrue Oneday for Contact Lens Daily Contact Lens Launching regionally in 2014 Presbyopia Hyaluronic Acid for Lips Aesthetics Small-particle filler Q4 2014 10

Update on R&D Projects Program Status Result Next Steps Mapracorat Phase 3 Unsuccessful Discontinued Brimonidine (Eye Whitener) Phase 3 Successful Submit in 2015 Latanoprostene bunod (Glaucoma) Phase 3 Pending Receive data 2H 2014 MIM-D3 (Dry Eye) Phase 3 Pending Receive data Q1 2015 Jublia Submitted Pending Launch 2H 2014 Retin-A Micro .08% sNDA Approved Launch in June Onexton (Acne) Phase 3 Submitted PDUFA date - Nov 2014 Bausch + Lomb Ultra Toric / Multi- 510k Cleared Design Validation focal BioTrue Multifocal 510k Cleared Design Validation 11

Emphasis on Sales Professionals Total % of Headcount (Excl Mfg) Sales Professionals Total U.S 1,445 73% Asia 1,900 87% Europe 2,300 68% Latin America 800 69% Total Company 6,680 72% 12

Update on Aesthetic and Oral Health Expansions  Aesthetics  Increase facial injectable sales professionals in Q1 2014  Total facial injectables sales force ~200  Integration of Solta complete  Launch Neotensil March 31, 2014  Launch of Obagi 360 system  OraPharma  Completed sales force expansion by ~50%  Recently launched Ossix Plus (dental membrane) in U.S. market  Doubled the market share for Xerese (within dental market segment) from Dec 2012 - Dec 2013 through sales promotion by OraPharma team 13

Financial Update Howard Schiller

Financial Summary Q4 2013 Q4 2012 FY 2013 FY 2012 Product Sales $2.0B $942M $5.6M $3.3B Ongoing Service/Alliance Revenue $32M $44M $129M $147M Total Revenue excl. “one - timers” $2.1B $986M $5.8B $3.4B One-time items N/A N/A N/A $45M Total Revenue $2.1B $986M $5.8B $3.5B Cost of Goods Sold% 2 (% of product sales) 26% 25% 25% 24% SG&A% 2 (% of total revenue) 22% 20% 22% 21% R&D Expense $60M $20M $157M $79M EBITA Margin 1 (% of total revenue) 49% 53% 50% 53% Cash EPS (Reported) $2.15 $1.22 $6.24 $4.51 w/o one-time items $2.15 $1.22 $6.24 $4.14 Adjusted Cash Flow from Operations $607M $423M $1.8B $1.3B Fully Diluted Share Count 341M 312M 327M 313M 1 Excludes all non-operating expenses 15 2 Excludes adjustments per Press Tables 2a & 2b