Allergan Swings to Loss on Deals-Related Charges -- 2nd Update

By Tess Stynes 

Allergan PLC swung to a second-quarter loss on charges related to recent acquisitions and other one-time items.

The results mark the first full quarter since Actavis PLC completed its roughly $66 billion deal for the maker of wrinkle treatment Botox in March, forming one of the top 10 drug companies by sales. The combined Dublin-based pharmaceutical company renamed itself as Allergan in June.

Shares of Allergan fell 5.1% Thursday to $319.47.

Separately, Allergan noted that its Actavis business had received a subpoena in June from the Justice Department seeking information relating to the marketing and pricing of certain generic products and the company's communications with competitors about such products. Allergan said it intends to cooperate fully with the agency's requests.

As reported by The Wall Street Journal, the Justice Department has been investigating price increases for certain generic drugs.

Meanwhile, Allergan and several other health-products companies have been on a deal-making binge in recent years with the help of low interest rates, and to cope with pricing pressures and relatively high U.S. corporate tax rates.

Among Allergan's recent moves, the company last month reached a deal to sell its generics unit to Teva Pharmaceutical Industries Ltd., a move expected to provide cash to reduce Allergan's debt load and allow the company to focus on more lucrative brand-name drugs. Allergan also is in the process of acquiring double-chin treatment maker Kythera Biopharmaceuticals Inc. in a $1.2 billion deal.

The new Allergan also has its foundation in a series of previous deals. Actavis' predecessor company, Watson Pharmaceuticals Inc., acquired Swiss rival Actavis Group in October 2012 for about $5.72 billion and later adopted that name. Later, the company bought Warner Chilcott PLC and Forest Laboratories Inc. in multibillion-dollar deals.

Overall, Allergan reported a loss of $243.1 million, or 80 cents a share, compared with year-earlier earnings of $48.7 million, or 28 cents a share, a year earlier. Excluding acquisition-related charges and other items, per-share earnings rose to $4.41 from $3.42.

Revenue more than doubled to $5.76 billion.

Analysts polled by Thomson Reuters expected per-share profit of $4.38 and revenue of $5.71 billion.

In prepared remarks Thursday, Chief Executive Brett Saunders said the company's recent agreements to acquire Kythera, Oculeve and Naurex, and its agreement to license two of Merck's experimental migraine treatments complement Allergan's existing products in its eye-care, aesthetics and central-nervous system businesses.

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