Second Quarter 2016
`Conference Call
`
`August 9, 2016
`
`ACRUX DDS PTY LTD. et al.
`
`EXHIBIT 1578
`
`IPR Petition for
`
`U.S. Patent No. 7,214,506
`
`Page 1 of 43
`
`

`

`Forward-Looking Statements
`
`Certain statements made in this presentation may constitute forward-looking statements, including, but not limited to, statements regarding
`expected future performance of Valeant Pharmaceuticals International, Inc. (“Valeant” or the “Company”), including guidance with respect
`to total revenue, Adjusted EPS and Adjusted EBITDA and the assumptions used in connection with such guidance, revenue expectations and
`expected revenue growth, debt reduction and repayment, the Company’s new business segments and the anticipated growth profile of
`each, the anticipated approval and launch dates for certain of our pipeline products, the expected impact of the complete response letter for
`latanoprostene bunod and the related FDA inspection at our Tampa facility, the Company’s plans for future strategic alternatives for certain
`of its assets, the timing of such strategic alternative transactions and the expected benefits and results of such strategic alternative
`transactions and the Company’s mission and the plans, goals and strategies related thereto. Forward-looking statements may generally be
`identified by the use of the words “anticipates,” “expects,” “intends,” “plans,” “should,” “could,” “would,” “may,” “will,” “believes,”
`“estimates,” “potential,” “target,” 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 and quarterly reports and detailed from time to time in Valeant’s other filings with the
`Securities and Exchange Commission 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. These forward-looking statements speak
`only as of the date hereof. Valeant 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, except as required by law.
`
`
`
`Note 1: The guidance in this presentation is only effective as of the date given, August 9, 2016, and will not
`be updated or affirmed unless and until the Company publicly announces updated or affirmed guidance.
`
`1
`
`Page 2 of 43
`
`

`

`Non-GAAP Information
`
`To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses
`certain non-GAAP financial measures including (i) Adjusted Earnings per Share (“EPS”), (ii) Adjusted Net Income, (iii) Adjusted EBITDA,
`(iv) Adjusted Cost of Goods (COGS), (v) Total Gross Margin, (vi) Adjusted R&D Investment (non-GAAP), (vii) Adjusted SG&A, (viii) Adjusted
`Operating Margin, (ix) Interest Expense (non-GAAP), (x) Tax Expense (non-GAAP), (xi) EBITA Margin/EBITA Growth, (xii) EBITDA and (xiii)
`Total Revenue (non-GAAP).
`
`The reconciliations of these historic non-GAAP measures to the most directly comparable financial measures calculated and presented in
`accordance with GAAP can be found in the appendix to this presentation. Other than with respect to total revenue, the Company only
`provides guidance on a non-GAAP basis and does not provide reconciliations of such forward-looking non-GAAP measures to GAAP, due to
`the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations. In periods where there are
`not expected to be significant acquisitions or divestitures, the Company believes it might have a basis for forecasting the GAAP equivalent for
`certain costs, such as amortization, that would otherwise be treated as non-GAAP to calculate projected net income (loss). However,
`because other deductions (e.g., restructuring, gain or loss on extinguishment of debt and litigation settlements) used to calculate projected
`net income (loss) vary dramatically based on actual events, the Company is not able to forecast on a GAAP basis with reasonable certainty all
`deductions needed in order to provide a GAAP calculation of projected net income (loss) at this time.
`
`Management uses these non-GAAP measures as key metrics in the evaluation of Company performance and the consolidated financial
`results and, in part, in the determination of cash bonuses for its executive officers. The Company believes these non-GAAP measures are
`useful to investors in their assessment of our operating performance and the valuation of our Company. In addition, these non-GAAP
`measures address questions the Company routinely receives from analysts and investors and, in order to assure that all investors have
`access to similar data, the Company has determined that it is appropriate to make this data available to all investors. However, non-GAAP
`financial measures are not prepared in accordance with GAAP, as they exclude certain items as described herein. 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.
`
`Please see the Appendix to this presentation for a more detailed description of each non-GAAP financial measure used by the Company
`herein, including the adjustments reflected in each non-GAAP measure.
`
`
`2
`
`Page 3 of 43
`
`

`

`Today’s Topics
`
`Reconfirming Full Year 2016 Guidance
`
`Q2 2016 Financial Results
`
`Significant Progress Since Q1
`
`The New Valeant
`
`3
`
`Page 4 of 43
`
`

`

`Reconfirming Full Year 2016 Guidance
`
`Total Revenue
`
`2016 Guidance
`
`$9.9B - $10.1B
`
`Adjusted EPS (non-GAAP)1
`
`$6.60 - $7.00
`
`Adjusted EBITDA (non-GAAP) 1
`
`$4.80B - $4.95B
`
`4
`
`1.
`
`See slide 2 for note on non-GAAP information and Appendix for further information
`
`Page 5 of 43
`
`

`

`Business Stabilizing Based on Sequential Quarterly Results
`
`Improvement
`
`Q2 2016 Results
`
`Q1 2016 Results
`
`2016 Guidance
`
`1H % of 2016
`Guide2
`
`Revenue
`
`$2,420M
`
`$2,372M
`
`$9.9B - $10.1B
`
`48%
`
`$1,923M
`
`$1,930M
`
`NA
`
`NA
`
`NA
`
`NA
`
`NA
`
`NA
`
`$442M
`
`$586M
`
`$737M
`
`39%
`
`$(1.08)
`
`Revenue –
`Developed Markets
`
`Revenue –
`Emerging Markets
`
`Adj. COGS
`(non-GAAP)1
`
`Adj. SG&A
`(non-GAAP)1
`
`Adj. Operating Margin
`(non-GAAP)1
`
`GAAP EPS (diluted)
`
`Adj. EPS
`(non-GAAP)1
`
`Cash Flow from
`Operations
`
`Adj. EBITDA
`(non-GAAP)1
`
`$497M
`
`$630M
`
`$662M
`
`42%
`
`($0.88)
`
`$1.40
`
`$448M
`
`$1.09B
`
`NA
`
`NA
`
`NA
`
`NA
`
`NA
`
`NA
`
`39%
`
`NA
`
`$1.27
`
`$6.60 - $7.00
`
`$558M
`
`NA
`
`$1.01B
`
`$4.80B - $4.95B
`
`43%
`
`5
`
`1.
`2.
`
`See slide 2 for note on non-GAAP information and the Appendix for reconciliations and further information
`Uses midpoint of guidance range
`
`Page 6 of 43
`
`

`

`Shortfall vs. Consensus Driven by Dermatology, R&D Investment
`
`Q2 2016 Results
`
`Q2 2016 Consensus2
`
`Variance
`
`Rationale
`
`Total Revenue
`
`$2,420M
`
`$2,474M
`
`($54M)
`
`Slower recovery in Derm
`Small misses
`
`Total Gross Margin
`(non-GAAP)1
`
`Adj. R&D Investment
`(non-GAAP)1
`
`Adj. SG&A
`(non-GAAP)1
`
`Interest Expense
`(non-GAAP)1
`
`Tax Expense
`(non-GAAP)1
`
`$1,759M
`
`$1,828M
`
`($69M)
`
`Derm, unfavorable mix
`
`$108M
`
`$662M
`
`$100M
`
`$8M
`
`Increased investment for
`brodalumab AdCom
`
`$703M
`
`($41M)
`
`Cost efficiency
`
`$434M
`
`$446M
`
`($12M)
`
`$88M
`
`$90M
`
`($2M)
`
`Adj. Net Income
`1 See slide 2 for note on non-GAAP information and the press release for reconciliations.
`$521M
`$488M
`(non-GAAP)1
`2 See slide 2 for note on non-GAAP information and the Appendix and the press release for reconciliations.
` 3 Fa cts et Estimates
`Adj. EPS
`(non-GAAP)1
`
`$1.40
`
`$1.47
`
`($33M)
`
`($0.07)
`
`6
`
`1.
`2.
`
`See slide 2 for note on non-GAAP information and the Appendix for reconciliations and further information
`FactSet consensus estimates
`
`Page 7 of 43
`
`

`

`Investing in R&D While Rebasing Cost Structure
`
`Q116
`
`Average 2015 (Q1-Q4) Average 2014 (Q1-Q4)
`
`Q216
`
`$662M
`
`27%
`
`$737M
`
`31%
`
`$108M
`
`$103M
`
`4.5%
`
`4.3%
`
`Adj. SG&A
`(non-GAAP)1
`
`Adj. SG&A (non-GAAP)1
`% of Sales
`
`Adj. R&D Investment
`(non-GAAP)1
`
`Adj. R&D Investment
`(non-GAAP)1 % of Sales
`
`$653M
`
`$503M
`
`25%
`
`$83M
`
`3.2%
`
`25%
`
`$61M
`
`3.0%
`
`7
`
`1.
`
`See slide 2 for note on non-GAAP information and the Appendix for reconciliations and further information
`
`Page 8 of 43
`
`

`

`Path to Adjusted EPS Guidance (non-GAAP)1
`
`~$1.15
`
`~$(0.20)
`
`
`~$0.38
`
` ~$6.80
`
`$2.80
`
`$1.40
`
`$1.27
`
`Q1 2016
`
`Q2 2016
`
`2H161
`
`$6.60 – $7.00
`
`Adjusted EPS
`(non-GAAP)2
`
`Headwinds
`- Generic Erosion
`- Tax / Other
`
`Tailwinds
`- 2H Seasonality
`- Derm Growth
`-
`Salix Acceleration
`- Oral Relistor
`- Emerging Markets
`
`Efficiencies
`- COGS Productivity
`-
`SG&A Rationalization
`- R&D Timing
`
`
`8
`
`1.
`2.
`
`Assuming 2Q annualized rate
`See slide 2 for note on non-GAAP information and the Appendix for reconciliations and further information
`
`Page 9 of 43
`
`

`

`Addressed Dermatology Challenges Since June 7th
`
`Enhanced Profitability of
`Walgreens and Beyond
`
`Restored net profitability to new dermatology prescriptions – Aug 5
`
`Launched coupon for independent pharmacies – June 27
`
`Launched new prior authorization program at Walgreens – Aug 4
`
`Enhanced pharmacist training and education
`
`Repairing Corporate Reputation
`and Trust
`
`Completed > 50 KOL/Prescriber meetings
`
`Launching Brodalumab
`
`Completed successful advisory panel
`
`Expanded Managed Care Access
`
`Improved position with important formularies
`
`
`
`Maintained key product access on the ESI and Caremark formularies
`
`9
`
`Page 10 of 43
`
`

`

`Launched Salix Acceleration Plan Since June 7th
`
`XIFAXAN RETAIL TRX PERFORMANCE1
`
`2014
`2015
`2016
`
`Dec
`
`Nov
`
`Oct
`
`Sep
`
`Aug
`
`Jul
`
`Jun
`
`May
`
`Apr
`
`Mar
`
`Feb
`
`Jan
`
`Xifaxan Growth
`
`Grew Xifaxan monthly TRx 28%
`year-over-year
`
`Increased HE refill rate
`
`Sales leadership
`engagement
`
`Reduced salesforce turnover
`
`Achieved year-
`over-year growth
`in other Salix
`brands
`
`Investment in
`pipeline
`opportunities to
`sustain long-term
`growth
`
`Uceris® TRx growth of 8%
`
`Relistor® TRx growth of 9%
`
`Apriso® TRx growth of 5%
`
`
`
` Oral formulation
`received FDA approval in 2Q and
`upcoming launch in late 3Q
`
`65,000
`
`60,000
`
`55,000
`
`50,000
`
`45,000
`
`40,000
`
`35,000
`
`30,000
`
`1.
`
`Symphony IDV: Retail TRx
`
`10
`
`Page 11 of 43
`
`

`

`Continued Focus on Debt Reduction
`
`• Solid current and forecasted liquidity position
`
`– ~$850M cash as of quarter end
`
`• $1.29B permanent debt repayment year-to-date (as of August 9th)
`
`– Repaid ~$880M permanent debt (since end of Q1)
`
`– Completed all 2016 scheduled amortization payments
`
`– Repaid Q1 2017 mandatory amortization
`
`
`
`• 2016: Committed to minimum permanent debt pay down of $1.7B
`
`
`• 2017: Minimal remaining amortization - ~$475M term loans
`
`11
`
`Page 12 of 43
`
`

`

`Significant Progress Since Q1
`
`Launched New Prior Authorization Program for Dermatology
`
`Partnered with Wilson’s Disease Association
`
`Initiated Xifaxan New Formulation Activities
`
`Stabilized Salesforce
`
`Received Oral Relistor FDA Approval
`
`Won 18-0 Vote from Brodalumab FDA Advisory Committee
`
`Received Authorization to Relaunch Ofloxacin Otic
`
`Partnered for Novel Bowel Cleansing Product
`
`Streamlined Portfolio – Brodalumab EU rights, Ruconest, OEM Business
` Upfront $181M
` Milestones up to an additional $329M (sales/approval)
`
`Reduced Permanent Debt – Paid down ~$880M
`
`12
`
`Page 13 of 43
`
`

`

`The New Valeant
`
`1 Mission, Vision, and Five Pillars
`
`2
`
`3
`
`Five Strategic Imperatives
`
`Changes to Management Team
`
`4 New Business Segments
`
`5 New Product Pipeline
`
`6
`
`Strengthening Balance Sheet
`
`13
`
`Page 14 of 43
`
`

`

` Mission, Vision, and Five Pillars
`1
`
`OUR VISION
`TO BE YOUR TRUSTED
`HEALTHCARE PARTNER
`
`Quality
`Healthcare
`Outcomes
`
`Customer
`Focused
`
`Innovation
`
`Efficiency
`
`People
`
`To Improve People’s Lives With Our Healthcare Products
`
`OUR MISSION
`
`14
`
`Page 15 of 43
`
`

`

` Strategic Imperatives
`2
`
`1
`
`Focus on Specialty Driven
`Markets
`
`2
`
`Focus on Markets with
`Above Average Growth
`
`3
`
`Build Leadership Position
`and Pipeline
`
`# Prescribers
`
`Market Growth Rates 1
`
`Dermatology
`
`~15,000
`
`Dermatology
`
`GI
`
`Eye Care
`
`~11,000
`
`GI
`
`~50,000
`
`Eye Care
`
`Total U.S. Physicians
`
`~970,000
`
`Total Pharma
`
`~15%
`
`~10%
`
`~5%
`
`~5%
`
`Market
`Share2
`
`Pipeline
`
`Dermatology
`(US)
`
`~16%
`
`18 products
`
`GI (US)
`
`~15%
`
`5 products
`
`Eye Care
`(Global)
`
`~14%
`
`44 products
`
`4
`
`Drive Efficient
`Resource Allocation
`
`5
`
`Build Durable Brands
`in Key Geographies
`
` Valeant R&D efficiency exceeds industry norms
`
`1. Consumer
`
` Over 20 new product launches
`
` 62 late stage active U.S. programs
`
`2. Eye Care
`
` 30 early stage active U.S. programs
`
` Rebased cost structure
`
`3. Emerging Markets / Branded Generics
`
`1.
`2.
`
`
`
`15
`
`Gl obal Eye Ca re Market sources: EvaluatePharma, ReportsnReports, Ma rket Scope, US Dermatology/GI source: Evaluate Pharma
`Ba sed on Valeant ca tegory a nalysis
`
`
`Page 16 of 43
`
`

`

` Aligning Management to New Strategy
`3
`
`New Hires
`• Christina Ackermann, EVP, General Counsel
`• Scott Hirsch, SVP, Business Strategy and Communications
`• Sam Eldessouky, SVP, Corporate Controller and Chief Accounting Officer
`
`Promotions and Expanded Roles
`• Dr. Ari Kellen, EVP and Company Group Chairman, Bausch & Lomb / International
`• Anne Whitaker, EVP and Company Group Chairman, Branded Rx
`• Tom Appio, EVP and Company Group Chairman, International Markets
`• Dennis Asharin, SVP, Global Manufacturing and Supply Chain
`• Joe Gordon, SVP and General Manager, Consumer Business
`• Barb Purcell, SVP and General Manager, US Diversified Products
`• Dr. Tage Ramakrishna, Chief Medical Officer and President, R&D/Quality
`• Kelly Webber, SVP, Global Human Resources
`
`16
`
`Page 17 of 43
`
`

`

` New Business Segments
`4
`
`BAUSCH + LOMB /
`INTERNATIONAL
`
`• Global Vision care
`• Global Surgical
`• Global Consumer
`• Global Ophthalmology Rx
`International
`•
`
`BRANDED
`Rx
`
`Salix
`•
`• Dermatology
`• Canada
`• Dendreon
`• Dentistry
`• Women’s Health
`
`US DIVERSIFIED
`PRODUCTS
`
`• Neuro and Other
`• Generics
`Solta
`•
`• Obagi
`
`DURABLE GROWTH
`
`GROWTH
`
`CASH GENERATING
`
`~50%
`
`~30%
`
`~20%
`
`Revenue % of 2016 Annualized Guidance
`
`17
`
`Page 18 of 43
`
`

`

`Bausch + Lomb / International (~50%1 of Valeant) “Durable Growth”
`
`• Durable growth business
`– Global Ophthalmology Rx
`– Global Vision care
`– International
`– Global Surgical
`
`– Global Consumer
`
`
`
`
`Revenue Growth
`
`2016-2018 Profile
`
`EBITA Growth (non-GAAP)2
`
`R&D Investment (segment)
`
`6-8%
`
`8-12%
`
`3-6%
`
`EBITA Margin (non-GAAP)2
`
`32-36%
`
`B+L / International Revenue Breakdown
`
`30%
`
`16%
`
`14%
`
`13%
`
`27%
`
`Global Vision Care
`
`Global Surgical
`
`Global Consumer
`
`Global Ophthalmology Rx
`
`International
`
`1.
`2.
`
`2016 revenue based on annualized guidance
`See slide 2 for note on non-GAAP information and Appendix for further information
`
`18
`
`Page 19 of 43
`
`

`

`Branded Rx (~30%1 of Valeant) “Growth”
`
`• Growth Business
`– Salix
`– Dermatology
`– Dendreon
`
`
`
`– Dentistry
`– Canada
`– Women’s Health
`
`2016-2018 Profile
`
`Revenue Growth
`
`EBITA Growth (non-GAAP)2
`
`R&D Investment (segment)
`
`5-10%
`
`7-10%
`
`7-9%
`
`EBITA Margin (non-GAAP)2
`
`50-55%
`
`Branded Rx Revenue Breakdown
`
`<1%
`
`10%
`
`5%
`
`9%
`
`27%
`
`47%
`
`Salix
`
`Dermatology
`
`Dendreon
`
`Dentistry
`
`Canada
`
`Women's Health
`
`19
`
`1.
`2.
`
`2016 revenue based on annualized guidance
`See slide 2 for note on non-GAAP information and Appendix for further information
`
`Page 20 of 43
`
`

`

`US Diversified Products (~20%1 of Valeant) “Cash Generating”
`
`• Cash Generating Business
`– Neuro and Other
`– Generics
`– Solta
`– Obagi
`
`
`
`
`2016-2018 Profile
`
`
`Revenue Growth
`
`~(20%)*
`
`EBITA Growth (non-GAAP)2
`
` ~ (25%)*
`
`R&D Investment (segment)
`
`<2%
`
`EBITA Margin (non-GAAP)2
`
`65-75%
`
`* Reflects generic impact of Isuprel & Nitropress which drive near
`term decline. Post-2018, we expect the decline to moderate
`
`Diversified Products Revenue Breakdown
`
`3% 1%
`
`2%
`
`24%
`
`70%
`
`Neuro and Other
`
`Generics
`
`Solta
`
`Obagi
`
`Other
`
`20
`
`1.
`2.
`
`2016 revenue based on annualized guidance
`See slide 2 for note on non-GAAP information and Appendix for further information
`
`Page 21 of 43
`
`

`

`Our Path to 2018 Adjusted EBITDA (non-GAAP)1 Growth
`Illustrative and not to scale2
`
`$4.95Bn
`
`$4.80Bn
`
`2016
`Guidance
`
`LOEs
`
`Base
`Business
`Growth
`
`Derm & Salix
`Growth
`
`New
`Product
`Launches
`
`Annualized
`Cost
`Efficiencies
`
`2018
`Adj. EBITDA
`
`We expect key franchise growth, new products, and cost efficiencies to more than offset LOE
`
`1.
`2.
`
`See slide 2 for note on non-GAAP information and the Appendix for further information
`The contents of this slide are illustrative only, do not constitute guidance or outlook and are subject to a variety of assumptions
`
`21
`
`Page 22 of 43
`
`

`

`5
`
` Received Unanimous FDA AdComm Vote for Brodalumab
`
`• Dermatological and Ophthalmic Drugs Advisory Committee voted 18-0 in favor of approval
`• PDUFA Date of November 16, 2016
`• Brodalumab showed statistical superiority vs. Stelara (2015 worldwide sales $2.74B)
`• Brodalumab demonstrated impressive clearance rates and rapid onset
`
`
`PASI 100 (NRI): Brodalumab 210 Q2W
`Superior to Ustekinumab
`
`22
`
`Page 23 of 43
`
`

`

`Addressing Latanoprostene Bunod Complete Response Letter
`
`Tampa site inspected by FDA Feb 2016 and received Form 483 observations
`•
`• We are working to complete activities required for an FDA re-inspection within six months
`• We expect no disruption to current products
`
`
`Received Complete Response Letter
`(CRL) from the FDA in July 2016
`
`•
`
`Communicated with FDA regarding a resolution
`
`•
`
`•
`
`•
`
`•
`
`CRL did not identify any efficacy or safety concerns of
`latanoprostene bunod
`
`Addressing issues at the Tampa Facility
`
`Expect no disruption of manufacturing or shipments
`
`Expect no recall of existing products
`
`Concerns in CRL pertain to Current
`Good Manufacturing Practices
`(CGMP) inspection at B+L facility in
`Tampa, FL
`
`Existing products
`
`23
`
`Page 24 of 43
`
`

`

` Strengthening Balance Sheet
`6
`
`• Cash flow available for debt repayment and other purposes expected to increase in 2017
`– Reduced business development and contingent payments/milestones
`• $500M 1Q16 Sprout payment does not recur
`• Reduced contingent consideration/milestones (i.e., Relistor Oral, Brodalumab payments)
`
`• We expect free cash flow and non-core asset sales to reduce debt by more than $5B
` over 18 months
`
`
`
`
`
`
`
`
`
`24
`
`Page 25 of 43
`
`

`

`Strengthening Balance Sheet
`
`Non-Core Asset Sales
`
`• Evaluating strategic alternatives for a number of non-core businesses and geographies that
`represent revenue greater than $2B
`
`• Based on comparable asset sales and/or unsolicited indications of interest we have received,
`these assets represent a transaction value of ~$8B or a weighted average of 11x EBITDA
`
`• This excludes core assets
`
`• We have engaged multiple banks and advisors in this process to explore our options
`
`• We fully intend to make decisions regarding our asset base in the best long term interest of
`our shareholders
`
`• We expect to simplify the business and reduce our debt through strategic measures over the
`next 12-18 months
`
`
`
`
`
`
`
`25
`
`Page 26 of 43
`
`

`

`Summary – Creating the “New Valeant”
`
`OUR MISSION
`Improve People’s Lives
`
`STABILIZE
`3-6 MONTHS
`
`TURNAROUND
`2017-2018
`
`TRANSFORM
`2018+
`
`Paying down debt
`
`Attracting new talent
`
`Re-recruiting employees
`
`Fixing Derm
`
`Growing Salix
`
`Launching new segments
`
`26
`
`Focus on specialty driven
`markets
`
`Focus on markets with above
`average growth rates
`
`Focus on leadership position
`and pipeline
`
`Efficient resource allocation
`
`Strengthen balance sheet
`
`Lead in our
`categories
`
`Launch new
`products
`
`Balance organic and
`inorganic growth
`
`Page 27 of 43
`
`

`

`'VALEANT
`
`Appendix
`Appendix
`
`27
`
`Page 28 of 43
`
`Page 28 of 43
`
`

`

`Q2 2016 Top 30 Brands1
`
`Providing top 30 products under historic reporting segments for comparable purposes
`
`Rank Product
`
`Primary
`Business Unit
`
`Patent Durability
`
`% Sold
`outside US
`
`Q2 2016
`
`Q2 2015
`
`Y/Y%
`
`1)
`
`Xifaxan
`
`GI
`
` 2019-2029
`
`2) Wellbutrin
`
`Neuro & Other
`
`Expired
`
`3)
`
`SofLens Total
`
`Lens
`
` None
`
`4)
`
`Provenge
`
`Oncology/Urology
`
` 2018
`
`5)
`
`Ocuvite /
`Preservision
`
`Consumer
`
`6)
`
`Total ReNu
`
`Consumer
`
`OTC
`
` OTC
`
`7)
`
`Xenazine
`
`Neuro & Other
`
`Expired
`
`8)
`
`Arestin
`
`Dental
`
`2022
`
`9)
`
`Isuprel
`
`Neuro & Other
`
`Expired
`
`0%
`
`4%
`
`88%
`
`0%
`
`26%
`
`75%
`
`6%
`
`0%
`
`0%
`
`10)
`
`PureVision
`
`Lens
`
`None
`
`73%
`
`200
`
`148
`
`83
`
`79
`
`77
`
`69
`
`56
`
`44
`
`43
`
`40
`
`39
`
`67
`
`84
`
`74
`
`59
`
`59
`
`66
`
`52
`
`49
`
`44
`
`36%
`
`25%
`
`(5%)
`
`4%
`
`17%
`
`(5%)
`
`(33%)
`
`(18%)
`
`(19%)
`
`
`(11%)
`
`Top 30 Brands Represent 52% of Total Q2 Company Revenue
`
`28
`
`1.
`
`Products with sales outside the U.S. impacted by F/X changes. Please note rounding impact on percentages.
`
`Page 29 of 43
`
`

`

`Q2 2016 Top 30 Brands (Continued)1
`
`Providing top 30 products under historic reporting segments for comparable purposes
`
`Rank Product
`
`Primary
`Business Unit
`
`Patent Durability
`
`% Sold
`outside US
`
`Q2 2016
`
`Q2 2015
`
`Y/Y%
`
`11) Uceris Tablets
`
`GI
`
`2031
`
`12) Nitropress
`
`Neuro & Other
`
`Expired
`
`13)
`
`Lotemax
`
`Ophthalmology
`
`2017
`
`14)
`
`Apriso
`
`GI
`
`15)
`
`Biotrue MPS
`
`Consumer
`
`16)
`
`Jublia
`
`Dermatology
`
`17)
`
`CeraVe
`
`Consumer
`
`18)
`
`Zegerid AG
`(Omeprazole)
`
`Generics
`
`19)
`
`BioTrue (OneDay)
`
`Lens
`
`2030
`
` OTC
`
`2030
`
` OTC
`
`AG
`
`OTC
`
`20)
`
`Cuprimine
`
`Neuro & Other
`
` None
`
`0%
`
`0%
`
`13%
`
`0%
`
`33%
`
`18%
`
`6%
`
`0%
`
`58%
`
`0%
`
`37
`
`34
`
`34
`
`32
`
`32
`
`31
`
`31
`
`30
`
`28
`
`25
`
`24
`
`64
`
`53
`
`31
`
`29
`
`52%
`
`(46%)
`
`(35%)
`
`4%
`
`9%
`
`102
`
`(69%)
`
`30
`
`-
`
`22
`
`8
`
`3%
`
`NM
`
`27%
`
`202%
`
`Top 30 Brands Represent 52% of Total Q2 Company Revenue
`
`29
`
`1.
`
`Products with sales outside the U.S. impacted by F/X changes. Please note rounding impact on percentages.
`
`Page 30 of 43
`
`

`

`Q2 2016 Top 30 Brands (Continued)1
`
`Providing top 30 products under historic reporting segments for comparable purposes
`
`Rank Product
`
`Primary
`Business Unit
`
`Patent Durability
`
`% Sold
`outside US
`
`Q2 2016
`
`Q2 2015
`
`Y/Y%
`
`21)
`
`Elidel
`
`Dermatology
`
`22)
`
`Anterior
`Disposables
`
`23)
`
`Akreos
`
`Surgical
`
`Surgical
`
` 2018
`
` None
`
`2031
`
`8%
`
`79%
`
`85%
`
`24) Artelac
`
`Consumer
`
` None
`
`100%
`
`25)
`
`Boston Solutions
`
`Consumer
`
` OTC
`
`53%
`
`26)
`
`Syprine
`
`Neuro & Other
`
` None
`
`27)
`
`Targretin
`
`Dermatology
`
`28) Ultra
`
`Lens
`
`29)
`
`Solodyn
`
`Dermatology
`
`2016
`
`OTC
`
`2027
`
`30) Migranal AG
`
`Neuro & Other
`
`None
`
`3%
`
`0%
`
`6%
`
`0%
`
`0%
`
`23
`
`22
`
`22
`
`21
`
`20
`
`20
`
`19
`
`17
`
`17
`
`16
`
`31
`
`21
`
`24
`
`25
`
`20
`
`28
`
`25
`
`9
`
`65
`
`8
`
`(25%)
`
`3%
`
`(11%)
`
`(16%)
`
`2%
`
`(29%)
`
`(24%)
`
`94%
`
`(74%)
`
`88%
`
`Top 30 Brands Represent 52% of Total Q2 Company Revenue
`
`30
`
`1.
`
`Products with sales outside the U.S. impacted by F/X changes. Please note rounding impact on percentages.
`
`Page 31 of 43
`
`

`

`Financial Summary – Adjusted (non-GAAP)
`Presentation Reconciliation
`
`31
`
`Total
`Revenue
`
`2,420.2$
`
`Cost of
`Goods
`Sold
` $ 647.3
`
`(7.5)
`
`(3.9)
`
`
`
`(5.7)
`
`
`
`2,420.2$
`
`
`
`630.2$
`
`Total
`Revenue
`
`2,371.6$
`
`Cost of
`Goods
`Sold
` $ 620.2
`
`(28.9)
`
`(1.9)
`
`
`
`(1.9)
`
`
`
`(3.3)
`
`
`
`2,369.7$
`
`
`
`586.1$
`
`Cost of
`Goods
`Gross
`Sold %
`Margin
`27.1% $ 1,741.4
`-0.3%
`
`7.5
`-0.2%
`
`3.9
`
`-
`
`-
`
`-
`
`-
`
`-
`
`5.7
`
`-
`
`-
`
`-
`
`-
`
`26.4% 1,758.5$
`
`-0.2%
`
`Cost of
`Gross
`Goods
`Margin
`Sold %
`26.5% $ 1,715.9
`-1.2%
`
`28.9
`-0.1%
`
`1.9
`
`-
`
`-
`
`-
`
`-
`
`-
`
`1.4
`
`-
`
`-
`
`-
`
`-
`
`25.1% 1,748.1$
`
`-0.1%
`
`Interest
`Expense,
`net
`
`470.4$
`
`(Recovery of)
`Provision for
`income taxes
`(72.8)$
`
`
`Reconciliation of GAAP to Non-GAAP
`
`SG&A
`
`671.5$
`
`SG&A %
`27.7%
`
`R&D
`Expense
`
`124.3$
`
`R&D %
`5.1%
`
`(0.6)
`
`
`1.7
`
`0.0%
`0.1%
`
`
`
`(0.4)
`
`0.0%
`
`
`
`(10.3)
`
`-0.4%
`
`
`
`(15.5)
`
`-0.6%
`
`Operating
`Income
`
`80.5$
`
`7.5
`
`4.9
`
`(1.7)
`
`6.9
`
`17.4
`
`(45.3)
`
`19.5
`
`31.5
`
`887.6
`
`Operating
`Margin
`3.3%
`0.3%
`0.2%
`-0.1%
`0.3%
`0.7%
`-1.9%
`0.8%
`1.3%
`36.7%
`
`
`
`662.3$
`
`27.4%
`
`
`
`108.4$
`
`4.5%
`
`
`
`1,008.8$
`
`41.7%
`
`
`
`434.3$
`
`160.8
`
`
`88.0$
`
`
`
`(36.1)
`
`Interest
`Expense,
`net
`
`425.7$
`
`(Recovery of)
`Provision for
`income taxes
`7.2$
`
`
`Reconciliation of GAAP to Non-GAAP
`
`SG&A
`
`812.6$
`
`SG&A %
`34.3%
`
`R&D
`Expense
`
`103.1$
`
`R&D %
`4.3%
`
`(0.6)
`
`
`0.9
`
`0.0%
`0.0%
`
`
`
`(0.3)
`
`0.0%
`
`
`
`(76.0)
`
`-3.2%
`
`Operating
`Income
`
`66.2$
`
`28.9
`
`2.8
`
`(0.9)
`
`2.4
`
`0.5
`
`22.6
`
`39.8
`
`77.4
`
`694.5
`
`Operating
`Margin
`2.8%
`1.2%
`0.1%
`0.0%
`0.1%
`0.0%
`1.0%
`1.7%
`3.3%
`29.3%
`
`
`
`736.9$
`
`31.1%
`
`
`
`102.8$
`
`4.3%
`
`
`
`934.2$
`
`39.4%
`
`
`
`405.2$
`
`70.7
`
`
`77.9$
`
`
`
`(20.5)
`
`Net
`Income
`
`(302.3)$
`7.5
`
`
`4.9
`
`(1.7)
`6.9
`
`
`17.4
`
`(45.3)
`
`19.5
`
`31.5
`
`887.6
`
`36.1
`
`(13.8)
`
`(160.8)
`
`487.5$
`
`EPS*
`
`(0.88)$
`
`0.02
`
`0.01
`
`(0.00)
`
`0.02
`
`0.05
`
`(0.13)
`
`0.06
`
`0.09
`
`2.54
`
`0.10
`
`(0.04)
`
`(0.46)
`
`1.40$
`
`Net
`Income
`
`(373.7)$
`
`28.9
`2.8
`
`
`(0.9)
`2.4
`
`
`0.5
`
`22.6
`
`39.8
`
`77.4
`
`694.5
`
`20.5
`
`(1.5)
`
`(70.7)
`
`442.6$
`
`EPS*
`
`(1.08)$
`
`0.08
`
`0.01
`
`(0.00)
`
`0.01
`
`0.00
`
`0.06
`
`0.11
`
`0.22
`
`1.99
`
`0.06
`
`(0.00)
`
`(0.20)
`
`1.27$
`
`Qtr 2 2016 GAAP
`Inventory step-up
`PP&E step-up/down
`Share-based compensation
`Acquisition-related contingent consideration
`In-process research and development impairments and other charges
`Other (income)/expense
`Restructuring, Integration, acquisition and other costs
`Other non-GAAP charges
`Amortization and impairments of finite-lived intangibles
`Amortization of deferred financing costs and debt discounts
`Foreign exchange and other
`Tax effect on non-GAAP adjustments
`Qtr 2 2016 Non-GAAP
`
`*Earnings Per Share Impact will not foot due to rounding.
`
`Qtr 1 2016 GAAP
`Inventory step-up
`PP&E step-up/down
`Share-based compensation
`Acquisition-related contingent consideration
`In-process research and development impairments and other charges
`Other (income)/expense
`Restructuring, Integration, acquisition and other costs
`Other non-GAAP charges
`Amortization and impairments of finite-lived intangibles
`Amortization of deferred financing costs and debt discounts
`Foreign exchange and other
`Tax effect on non-GAAP adjustments
`Qtr 1 2016 Non-GAAP
`
`*Earnings Per Share Impact will not foot due to rounding.
`
`Page 32 of 43
`
`

`

`Reconciliation of reported Net Income (Loss) to EBITDA
`and Adjusted EBITDA ($M)
`
`(a)
`
`In-process research and development impairments and other charges for the three months and six months ended June 30, 2016 is $17.4 million and $17.9 million of impairment and other charges, respectively,
`including a $14.2 million impairment related to termination of a development program for Cirle 3-dimensional surgical navigation technology, resulting from feasibility analysis and other smaller impairments and
`charges. In-process research and development impairments and other charges for the three months and six months ended June 30, 2015 (restated), $12.3 million, is related to the write-off of Arestin® Peri-
`Implantitis developmental program. In-process research and development impairments and other charges for the twelve months ended December 31, 2015 of $248 .4 million is primarily related to the $100.0 million
`upfront payment in connection with the license of brodalumab, a $90.2 million impairment related to the Rifaximin SSD develop mental program, a $28.2 million impairment related to Emerade® in the fourth quarter, a
`$12.3 million impairment related to Arestin® Peri-Implantitis developmental program and other smaller impairments.
`(b) ASC 805, Business Combinations, requires inventory to be recorded at fair value, resulting in an inventory step -up whose total impact for the three months ended June 30, 2016 is $7.5 million primarily due to the
`acquisition of Salix Pharmaceuticals Ltd. (“Salix”) on April 1, 2015. For the three months ended June 30, 2015, the impact of inventory fair value step -up is $46.0 million primarily due to the acquisitions of Salix and
`certain assets of Marathon Pharmaceuticals, LLC (“Marathon”) on February 10, 2015. For the six months ended June 30, 2016 , the impact of inventory fair value step-up is $36.4 million primarily due to the Salix
`acquisition and acquisition of Synergetics USA, Inc. on October 15, 2015. For the six months ended June 30, 2015 (restated), the impact of inventory fair value step-up is $70.5 million primarily due to the
`acquisitions of Salix and certain assets of Marathon. For the twelve months ended December 31, 2015, the impact of inventory fair value step -up is $133.7 million, primarily due to the acquisitions of Salix and certain
`assets of Marathon.
`Foreign exchange loss/(gain) on intercompany financing arrangements for the three months ended June 30, 2016 and 2015 is $(13.8) million and $(10.4) million, respectively. Foreign exchange loss/(gain) on
`intercompany financing arrangements for the six months ended June 30, 2016 and 2015 (restated) is ($15.3) million and $39.0 million, respectively. The six months ended June 30, 2015 (restated) and twelve months
`ended December 31, 2015 also include an unrealized foreign exchange loss of $26.6 million relating to a foreign currency forw ard-exchange contract.
`
`
`
`
`
`
`(c)
`
`
`
`
`
`
`32
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Page 33 of 43
`
`

`

`Reconciliation of reported Net Income (Loss) to EBITDA
`and Adjusted EBITDA ($M) (continued)
`
`(d) For the three months ended June 30, 2016, other (income)/expense of ($45.3) million primarily relates to a favorable adjustment of ($39.4) million to the legal accruals recognized as part of Salix
`acquisition and a net gain of ($10.9) million on sales of assets and businesses as well as termination of certain license rights, including the divestiture of a portfolio of neurology medical device products
`and the termination of our rights to develop and commercialize brodalumab in Europe partially offset by a charge of $5.0 million related to settlement of various legal matters. For the three months ended
`June 30, 2015, other expense of $176.9 million primarily relates to post-combination expense of $168.4 million related to the acceleration of unvested restricted stock for Salix employees and a loss on
`sale of divested assets of $3.8 million. For the six months ended June 30, 2016, other (income)/expense of ($22.7) million is primarily due to a favorable adjustment of ($39.4) million to the legal accruals
`assumed as part of Salix acquisition and a net gain of ($9.0) million on sales of assets and businesses as well as termination of certain license rights, including the divestiture of a portfolio of neurology
`medical device products and the termination of our rights to develop and commercialize brodalumab in Europe partially offset by a charge of $6.6 million related to settlement of various legal matters and
`an $18.4 million loss recognized upon the deconsolidation of Philidor Rx Services, LLC (“Philidor”) as of January 31, 2016. For the six months ended