Good morning. My name is Chris, and I will be your conference operator today. At this time, I would like to welcome everyone to the Valeant Third Quarter 2017 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. Art Shannon, Senior Vice President and Head of Investor Relations, you may begin your conference.

Thank you, Chris, and good morning, everyone, and welcome to Valeant Pharmaceuticals third quarter 2017 financial results conference call. Participating on today's call are Chairman and Chief Executive Officer, Joe Papa; and Chief Financial Officer, Paul Herendeen. In addition to this live webcast, a copy of today's slide presentation and replay of this conference call will be available on our website under the Investor Relations section. Before we begin, we would like to remind you that our presentation today contains forward-looking information. We would like to – we would ask you to take a moment to read through the forward-looking statement legend at the beginning of our presentation, as it contains important information. The presentation contains non-GAAP financial measures. For more information about these measures, please refer to slide 2 of the presentation. Non-GAAP reconciliations can be found in the appendix to the presentation posted on our website. Finally, the financial guidance in this presentation is effective as of today only. It is our policy to generally not update guidance until the following quarter and not to update or affirm guidance other than through broadly disseminated public disclosure. With that, it's my pleasure to turn the call over to Joe.

Thank you, Art. Before we jump into the quarter, let me first review the topics for today's call. I'll start with the progress since our last earnings call. I'll then turn the call over to Paul – our CFO, Paul Herendeen, to review our third quarter financial results in detail and go through the update to our 2017 guidance. Then I'll briefly cover some of the business and pipeline highlights. Starting with slide 5. This is the checklist we use to measure our progress against the goals for the turnaround. As I've said before, transforming Valeant will not happen overnight. It will take a multi-year process that requires the hard work of thousands of people taking incremental steps to build the right foundation for the company's future success. Since I joined Valeant 18 months ago, we focused on addressing the key action steps, including new leadership, a renewed focus on quality and innovation, and creating a culture that is aligned with the people who use our healthcare products to improve their lives. While there is more work to do to complete the turnaround, to be clear, Valeant today is a stronger company than it was a year ago. We've recruited a new management team, introduced new reportable business segments, and stabilized the company. Now as we're nearing the middle of the turnaround phase, we have taken actions to strengthen our balance sheet, simplify our business, and allocate resources efficiently. 21,000 employees at Valeant are focused on the successful turnaround of Valeant. In fact, every time an analyst criticizes our company, it further unites our Valeant team. How do I know? We recently completed a global employee survey. The results are outstanding. 82% of the respondents consider Valeant to be on the right track for growth, an increase from last year.…

Thank you, Joe. Before I get started, I do want to remind people what we mean when we talk about organic change. That means our actual results adjusted for fluctuation in FX rates, what we call constant currency, and further adjusted to remove the impact of divested assets or businesses. Organic change highlights the fundamental growth or decline of our go-forward businesses. I want to start by providing a little color on the quarter, starting with a walk down of the P&L on slide 10. Total revenues were down 10% versus Q3 of 2016. Adjusted for FX and divested assets – again, what we refer to as organic change – we posted a 4% decline in revenue. We saw about 90 basis points of growth in realized net prices compared with the prior year quarter. And importantly, we saw improved net pricing in both the B+L/International segment and the Branded Rx segment. Total volumes declined nearly 5%, with 80% of that decline coming from the expected impact of the LOE asset shown in the appendix to the slides. Setting aside the LOE assets, the balance of our business was basically flat with the third quarter 2016, as the growth in our B+L/International segment and the Salix business, which as Joe said together accounted for 77% of our revenues, were up 6% organically, offsetting volume declines in our Dermatology business and our Diversified segment. Our gross margin in the quarter declined by some 330 basis points, mainly due to mix, unfavorable FX in our non-U.S. businesses, and the impact of the $13 million settlement of the royalty audit on Glumetza. As Joe said but it's important, the GLUMETZA settlement covered the period from 2013 through 2015. And it reduced our gross margin in the quarter by some 60 basis points. The…

Thank you, Paul. The chart on slide 19 has been updated from last quarter to show the progress we've made in closing the previously announced divestitures. As you can see, we have now closed 11 of the 12 previously announced asset sales, and we are expecting to close Obagi very soon. As we transform Valeant, we continue to focus our resources on core businesses, because we believe these are the areas where we can best drive value for our shareholders, customers, and patients. On slide 20, third quarter revenues for Bausch + Lomb/International segment were $1.254 billion. The business is growing organically 6%. To me, the chart on the right of the page 20 says it all for Bausch + Lomb. We've taken a business that was declining to flat a year ago and delivered three consecutive quarters of 6% organic growth. Bausch + Lomb's presence is also growing on Amazon, with a remarkable 69% growth year over year. This is a strong indicator of the strength of the Bausch + Lomb brand. Staying with Bausch + Lomb, we provide an update on our Consumer and Vision Care business. To call out a few highlights, first, in the international markets, Bausch + Lomb is the number one Vision Care brand in China. It is outgrowing the category with a five-year CAGR of 20%. Our OTC eye drop franchise is number two in China, with a strong annual growth rate of 19%. In the U.S., Consumer revenues are up 9% organically year over year. And the chart in the right shows the third quarter performance for U.S. Consumer healthcare companies. While the health and beauty category was down 2.8% in the aggregate, B+L is one of the clear leaders in the category, up 2.5%. On slide 22 we announced last week…

Your first question comes from the line of Umer Raffat with Evercore ISI. Please go ahead.

Hi, guys. Thanks so much for taking my question. I wanted to focus on two topics, if I may. First, just on Bausch + Lomb. I was looking at the organic growth estimates. And one of the questions I had was how much of the year-over-year growth is coming from the channel refill in Eastern Europe? Just wanted to understand and quantify that, if I may. And just to put it in the context of the 6% year-over-year growth reported for the Bausch segment. So this is again from the Eastern European and the International channel resale. And the second one is maybe for Paul. Paul, can you help us understand exactly what the year over year – so if I just take the latest quarter's EBITDA, annualize it, how much of a year over year, like going to 2018, LOE impact would you guide us to? Because I see that slide you guys put up in the appendix. And I just want to make sure I fully understand what you guys are baking in versus not? Thank you so much.

Hey, Umer, I'll the first part of the question. And then, Paul, I'll turn to you for that second part of the question. Well, I mean, first of all, if you think about what's happening with Bausch + Lomb, you can see that all of the businesses with the exception of the Ophtho Rx are growing organically. So we have the Global Vision Care at plus 8% organically, there's Global Surgical at plus 2%, the Global Consumer at plus 6%. Those together account for a fairly large part of the – let's call it more than the 50%, 60% of our total business in the Bausch + Lomb/International segment. So that's clearly the largest part of the business. There is some significant International revenue growth. And I think as Paul said that the restocking of Poland did help that International business. But we also got some significant price appreciation in Egypt as a result of the some of the currency devaluation that has occurred previously. So I think it's been a combination of factors. I don't have the specific impact of the International side. But I would say a large part of that International growth, going from the $327 million to the $344 million, or let's call it the $17 million, a large part of that is a result of some of the restocking but also the Egyptian currency devaluation and the price increases there. That's really the majority of that portion. But you could really quickly – because of the way we've done it, you can really look at it by each of the individuals. We've given you exactly the sales numbers and the actual growth rates. So gives you a chance to break it out. To answer exactly the questions, I just don't want to do the math as I'm sitting here right now.

Yeah. Hey, Umer, it's Paul. I can do the math, because I have those kind of worksheets in front of me all the time. About 30% of the volume pickup in B+L/International was related to the pipeline activity. So 70% of the volume pickup in International came from other than the pipeline. Surely, we benefited from it. That's why I called it out in my remarks. The second question you had was, how do you think about using the revised presentation of the LOE assets? And what I would say is, now we're showing that that basket of LOE assets, very specific baskets, like the products included in that basket have not changed. We expect to have sales in our 2017 results totaling approximately $524 million. And the profit, which I don't have that slide right in front of me right now, but the associated profit, it won't go away in its entirety in 2018. We're also not providing guidance today on 2018. But that certainly a solid portion of that will carry forward into 2018 and potentially beyond. I mean, while they are LOE assets, they won't go to zero. They may asymptotically approach zero, but they won't go to zero. I hope that answers. And if it doesn't, I'll hopefully see you at lunch later, where we can talk about it more.

Operator, our next question?

Your next question comes from Gregg Gilbert of Deutsche Bank. Your line is open.

Thank you. Paul, I know you're not looking to give guidance for 2018. But can you offer any observations as you've considered how people are modeling it and things you'd like to point out now to avoid any confusion as we head into 2018? And maybe could offer some preliminary thoughts on the items in tax reform that you have an eye on that could be issues for Valeant. Thanks.

Yeah, yeah, sure. I mean let me address first, thinking about 2018 obviously. As I said, we're not providing guidance for 2018. That said, I mean, in the spirit of transparency and as I said, being responsive to feedback that we got from a number of investors, we've changed the presentation of that LOE slide. And we've added a slide to show you the estimates of what we expect revenue and profits to be from divested assets included in our actual 2017 results. And so using your own estimate of 2017, you should be able to pull apart and get rid of the divested assets. And then as Umer was – the road Umer was going down, come to your own points of view about how you think about that basket of the 2017 LOE products. How that $524 million translates into 2018 and as I said, potentially beyond. So the pieces are all there, but I'll give you one qualitative point, which I'm very comfortable making the statement is, set aside the LOE assets, set aside the divested assets, we are confident that the base business, the business that we manage, the business that we can control and manage and drive fundamentals for, will grow in 2018 v 2017. That's our core businesses. And so that I hope provides at least a framework for how you might think about 2018. The tax reform thing like, gee, it came out last week. And wow, there's a lot there and the proposal obviously contains several provisions that could impact on our go-forward tax rate. And before I get into those three areas, I'll just point out none of this is final. And all companies, including us, are guessing at this stage how it might impact our situations. You've heard me say…

Thank you.

Thank you.

The only comment I'd add to what Paul said, Gregg, is I think clearly we're not going to provide 2018 guidance. But the key variables for us and for all pharmaceutical and healthcare companies is always going to come back to the new products. Fortunately, we've got a number of – over 50 launches in 2017 in new products, products including RELISTOR, SILIQ, VYZULTA, the Retin-A Micro 0.06%, Stellaris Elite, Vitesse, the ULTRA toric multifocal. And then go rolling into 2018, we're going to have products like the IDP-118 if approved, PLENVU if approved, a SiHy daily, Luminesse if approved. So we've got a number of good opportunities for the new product side as we think about 2018. And I think that's going to be an important driver for us.

Operator, our next question?

Your next question comes from Louise Chen of Cantor. Your line is open.

Hi, thanks for taking my question. So I'm just curious, what gives you confidence that you can enhance equity shareholder value, given the large amount of debt that you have to pay down? And what are some of the key growth drivers that you feel good about right now? The base business actually has been stabilizing. And then are you still considering creative ways to lower your leverage ratio? Thanks.

Well, let me start. I mean I think first and foremost, what we've done since I arrived and since Paul have arrived is really focus our attention towards what are the key growth drivers for this business? Which in the health care is always going to come out to the new products. So we continue to look at these new products, introduce new products, get new products through the pipeline. As I said we're really excited about a product like VYZULTA. If you look at what it – the market today for glaucoma, it's a large market. It's a growing market. And the reality is that two-thirds of the market in the U.S. at least is either a Xalatan or a generic equivalent to Xalatan. We have a dual mechanism of action that includes the latanoprostene but also has the nitric oxide donation. That dual action is really what we think is going to be important. If you go through – same comment for IDP-118. The facts are that the current treatment of psoriasis with the topical products with a super-high potency steroid are limited to a two-week duration, because of the potential effects on the thinning or atrophy of the skin. We believe that based on what we've submitted to the FDA, if approved, this could be a game changer with IDP-118, because of the ability to use it for a longer duration. Those are the types of reasons why we think that we've got a very strong business and good, strong growth opportunities. Clearly, we're seeing the results with XIFAXAN in our incremental promotion efforts. So we put those forward as ways that we could help drive the bottom line of our business, increase our EBITDA. And as that EBITDA comes forward, reduce our debt. Final comment I'd say is if you look at what Paul and Linda have done in terms of moving out the debt, we've done a lot to take the debt, push it out further. So there's no debt due between now and 2020. That gives us the, what I call, freedom to operate to ensure that over the long term, we can drive shareholder value for the future. So to me, that's really the game plan. Grow the base business, launching new products, and then obviously take the bottom line, look at the improvements we made in working capital, and put that toward debt reduction, which makes us a stronger company for the future.

Thank you.

Operator, next question?

Your next question comes from Annabel Samimy of Stifel. Your line is open.

Hi, guys. This is Andrew (46:40) in for Annabel. So my question is, so SILIQ appears to be getting strong reimbursement and good feedback. But we're still seeing an extremely competitive environment in psoriasis and some competing products, specifically Otezla are seeing rebate pressure. So when you think about next year, can SILIQ offset the declines in Derm and expected LOEs by next year? Or do we have to wait until 2019 when other products are on board? And if I could sneak in another one. Your near-term debt goals have been met, and you still have strong cash flow. So can you be more constructive on capital allocation now that you would focus on – truly focus on operational investment or business development? Or are you still more focused on balance sheet strengthening? And do you have a plan – do you have another debt pay-down target? Thank you.

Okay. Well, I'll take the first one, and then Paul, you probably take the second one. Let me start with, we're very pleased with SILIQ. We knew the uptake for SILIQ was going to be slow in the sense that, well, we knew that we had to put physicians – get them through a REMS certification. We're doing that as we speak. And as I said, we have over 371 physicians already REMS certified. We think that's an important first step. We are seeing patients. We – in terms of, as they enroll we're seeing the usage of the product. We think the important comment about SILIQ is that the long-term value of it is really going to be in the rapid onset of efficacy with the product and then the long duration of efficacy. Because once again, we are the receptor blocker versus the other products that inhibit the enzymatic pathway around the inflammatory factors. We block the receptor. We think that's what's good for the long term. The only other comment I would say on 2018 is clearly the other area that we are looking for growth in the Dermatology business is the IDP-118, first and foremost, that'll be approved – or has a PDUFA date in June 18 of 2018. We think that would be potentially a contributor to our long-term growth of the Dermatology business, especially based on the comments I made before in terms of it being a unique product. Potentially with the opportunity to use longer duration of therapy than previous high potency corticosteroids. And then obviously, we have the Retin-A Micro 0.06% as another way to strengthen our acne. So we think it's the combination of all those activities that are really going to help us to grow the Dermatology business. And importantly, as I said before, we have enough products in our pipeline over the next five years that we believe double the size of the business, based on where it is today. Paul, you want to talk about the capital allocation?

Sure. And if I might, I might just spend two seconds on the Derm as well. Because I think that, one, we have the opportunity to deal – we have a very attractive legacy portfolio. We watched it obviously face a very difficult reimbursement environment. As I said in my prepared remarks, I mean we've seen stabilization of our realized net pricing. And now that becomes – it becomes a volume game, and it becomes a game where over a period of time we would expect to maximize the value of that legacy portfolio. We're not just turning away from it. I think there's real value there. And as Joe said, then you lay on top of that in – looking ahead to 2018, again not providing guidance, but stating that you've got SILIQ, you've got IDP-118, you've got RAM 0.06%. I mean we've got a number of new products, which we would expect to help us turn that franchise back to a growth mode. And we think we have a great opportunity with Ortho Dermatologics. On the balance sheet, you hit it, Andrew (50:17), you hit on a topic that's a very challenging one for us at all times, is our first – if you had a list of five priorities, the first four are generate cash to reduce debt. That's top of our mind for sure. That said, we do come across some modest – and a emphasis on modest – or even call them small sized opportunities to use capital to acquire rights, to lay things into our R&D pipeline, and all in. So to the extent that we see those things, we're likely to pursue them if they make sense. And I think that you should be encouraged as either debt or equity investors that as…

Operator, next call?

Your next question comes from David Amsellem of Piper Jaffray. Your line is open. David A. Amsellem - Piper Jaffray & Co.: So got a couple of XIFAXAN questions. So I realize that the NRx share has grown, based on the chart in slide 23. But it does look like overall, volumes year over year are kind of stuck in the single digit range. So do you feel that you're getting enough out of the Primary Care salesforce? And then secondly, what are your expectations for 2018? Do you still think that you can get an uptick in sales? Or are we looking at more of a maturing type of landscape for XIFAXAN? And then lastly, in terms of gross to nets, maybe give us some color on what you think 2018 might be for the product as well? Thanks.

Okay, I'll start. And I hope I get all the pieces that you said. So first and foremost, as I said, we think we're going to get single – we agree with the single digit growth in the business in terms of what we've seen historically. I think what we've tried to do in looking at Primary Care though is really open up for a very large opportunity as it would relate to the IBS-D category. We're seeing in IBS-D an opportunity to grow, significantly grow our share in that category. And we've not yet saturated that market anything close to it. We think there's a lot more opportunity there in IBS-D. When we looked at the Primary Care team we put together, it was 200-plus sales professionals. We looked at it from a return on investment point of view. And we're going to always continue to look at it that way. We're pleased with the results we're seeing already. Obviously the team has got to continue to develop. They've only been out there, as of the data we presented, really for about eight months. So we think we're still in the early stages of the success of that. We think that will continue to accelerate for 2018 and beyond. So that brings me to that part of the question. Where do we see growth in 2018 and beyond? We think there is an opportunity to have a growth in volume. We're not going to give guidance specifically on it, but we think the volume will go up. We also think that there is an opportunity to have what I'd call a single digit price increase. Which in my mind, if I use 8% just for the sake of argument – I'm not saying we're going to increase prices 8% – we'd get about 4% pricing. In other words, we get about half of what we put forward as a gross price as a net realized price is the logic we have. We're not once again saying what prices will do next year. On the comment on gross to net, yeah, my comment on gross to net is there will always be additional pressure on gross to net. We're, somewhere in the GI category, somewhere in that 40% gross to net. Do I believe it's somewhere around that next year? The answer is yeah. It's been relatively consistent at least for the time I've been with the business, 2016, 2017, is approximately that 40% gross to net. I expect it to be relatively consistent with that going into 2018 and beyond as well. David A. Amsellem - Piper Jaffray & Co.: Thank you.

Any – next question, please?

Your next question comes from David Risinger of Morgan Stanley. Your line is open.

David? David R. Risinger - Morgan Stanley & Co. LLC: I've always wanted to be – I don't know if that's French? I've always wanted...

Yeah, that confused me there for a second. David R. Risinger - Morgan Stanley & Co. LLC: I guess I'm married now. So I don't need to be French. But anyway in terms of questions. So first, could you just talk about fill rates? How you're experiencing fill rates in the U.S.? Whether there are any changes? We're hearing from some other companies that they're experiencing some fill rate pressure? Second, could you just update us on your focus on resolving litigation issues? And, I don't know, key areas to watch in the near term? And then third, if you could discuss cost cutting opportunities ahead. I'm not clear on where you are in rationalizing the cost structure. Thank you.

Sure. So I will say on this question of fill rates and what we're seeing in our – the people picking up our prescriptions, we do have the data. We are looking at – I refer to all that as really compliance and how patients are filling their prescriptions. We check that, especially in all of our chronic medications, a XIFAXAN, for example. We have put together a number of programs where we think we're trying to put programs in place that improves the patients' compliance. Those types of programs that, especially as you do them with specialty pharmacies like we do with SILIQ, are all designed to try to help patients and make sure that we improve that. But it is something we're keeping our mind on. We're not seeing a lot of challenges there. But it is something we're keeping a look on all the time, David. On the question of resolving litigation, what can – I don't know if I can say much more than what we've done in the presentation. Christina Ackermann and her legal team have just done an outstanding job. If you think about from the second quarter earnings call to now, resolving 21 litigation or legal matters, we think is an outstanding achievement. And very much credit to the team that's done that as we've worked our way through it. The issues that we've identified – I mean each one of them are in the slides – I think are all very important matters for us. I mean if you think about the – we had a GLUMETZA case that got identified. We have been working with them. For some reason, they filed a lawsuit. We did solve that though very quickly, got it behind us. And that's really the important way that…

Operator, we have probably time for maybe one more question.

Our final question comes from Chris Schott of JPMorgan. Your line is open.

Morning. This is Chris (59:55) on for Chris. Thanks for the question. First one's on Salix. Recently you had an adverse District Court ruling on the patent for Uceris. Could you just talk about the impact of that for Salix? And maybe the timing and overall expectation for a competitive product launch? And then secondly, on Ortho Dermatologics. Could you maybe talk about IDP-121 and -122 and how you see those fitting into the marketplace over time? And then also bigger picture, how are you thinking about peer (1:00:28) access and pricing, given current pressures in the Derm market? Thanks so much.

Okay. Well, I'm going to do my best to catch all three of them. So let me start with the Uceris question. As you know, there was some intellectual property challenges on the Uceris. The judge issued his opinion in late October. We have looked at that opinion. We certainly plan to appeal that ruling on the opinion of the judge. However, I think it's important to say that in any product case where certainly there's intellectual property, the other important aspect of that is whether or not a company or one of the generic companies has an approval. To our knowledge, according to FDA publications, no company currently has an FDA approval to market a generic version of Uceris. We think that's a probably as important part of this question, as we think about whether or not somebody can come to the marketplace. So we are looking at the intellectual property. We will defend our intellectual property. But the other important comment certainly is the lack of any regulatory approvals at this time, relative to a generic ability to market a generic version of Uceris. On the question of the Ortho Dermatologics business, once again, we're excited. We think -121 and -122 in addition to -118 are all very good opportunities for us. We have -121. It has – as I mentioned in my public comments, we've had a chance to file that one for acne. We do think it has a very good opportunity to continue to expand our Retin-A portfolio with a new formulation. And then -122 as a product is a – once again, it's the high dose or high potency corticosteroid in a very unique formulation that's got very good results. You can see some of the results of – as I presented -118, -122 is a component of the -118. So we think that's the other reason why we have a high potency corticosteroid opportunity that has a very unique formulation that we think is going to help for those patients with psoriasis. And the final question was on pricing. I'm sorry. Repeat the last part of the pricing question?

Yeah. So I guess for the topical launches that you have in Dermatology, how are you thinking about peer (1:02:56) access and pricing, just given current dynamics in the Derm market?

Sure. Thank you. Sorry, just with the three questions, I got the first two. I knew it was pricing. On the question on pricing, we haven't set any pricing to be clear. But think of it this way, and I'm going to start with IDP-118, because I think it's probably the easiest way to start. Unfortunately, patients with psoriasis need long term chronic treatment. Many patients go onto biologics. If we with IDP-118 can offer patients either a delayed start to the biologic and/or for that patient who's on a biologic but, unfortunately, still has a breakthrough, and let's call it on their elbow just for sake of argument, and they can treat that breakthrough in that area by the use of the IDP-118, that's we think a very significant opportunity for the patient to get the potentially 100% clearance of the skin. Obviously, with our drug SILIQ, we do think we have good efficacy and a PASI 100. But in some of the drugs there, they don't have the PASI 100 results. Therefore, we think we can supplement the biologic with our product, potentially depending on FDA approval, and allow the patient to get that better clearance of their skin. So relative to pricing, we haven't set any specific prices. But we do think there's opportunities there, especially to make our products very cost effective versus the alternative for patients who have psoriasis. That's probably about as far as I can say right now on pricing. We'll have a lot more to say as we bring out these new products.

But let me conclude with thanks to everybody. Thank you very much for joining us today. We're really excited about the opportunities in front of it. I think you could hear the excitement from myself and from Paul. We want to thank all of the employees of the Valeant organization for what they've done to help continue to build the strength of this business and turn around the Valeant company. We'll conclude the call right now. Thank you. Thank you very much for joining us today. Have a great day, everyone.

This concludes today's conference call. You may now disconnect.