Bausch Health(BHC) - 2019 Q3 - Quarterly Report

Part I. Financial Information Item 1. Consolidated Financial Statements (unaudited) Bausch Health reported increased revenues and significantly narrowed net loss for the nine months ended September 30, 2019, driven by reduced non-cash charges and improved cash flow from operations Consolidated Financial Statements The consolidated financial statements reflect year-over-year revenue growth, a narrowed net loss due to reduced non-cash charges, and a strengthened balance sheet with decreased total liabilities | Financial Metric | Q3 2019 (Millions USD) | Q3 2018 (Millions USD) | YTD 2019 (Millions USD) | YTD 2018 (Millions USD) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $2,209 | $2,136 | $6,377 | $6,259 | | Operating Income (Loss) | $329 | $117 | $873 | $(2,409) | | Net Loss Attributable to BHC | $(49) | $(350) | $(272) | $(3,804) | | Diluted Loss Per Share | $(0.14) | $(1.00) | $(0.77) | $(10.83) | | Balance Sheet Item | Sept 30, 2019 (Millions USD) | Dec 31, 2018 (Millions USD) | | :--- | :--- | :--- | | Total Assets | $31,667 | $32,492 | | Total Liabilities | $29,107 | $29,677 | | Non-current portion of long-term debt | $23,466 | $24,077 | | Total Equity | $2,560 | $2,815 | - Net cash provided by operating activities for the nine months ended September 30, 2019, was $1.27 billion, an increase from $1.18 billion in the same period of 2018, with $812 million used in financing activities primarily for net repayment of long-term debt[27] Notes to the Consolidated Financial Statements The notes detail accounting policies, revenue recognition, the acquisition of Trulance® for $180 million, improved sales return provisions, and ongoing legal and government investigations - In March 2019, the company acquired certain assets of Synergy Pharmaceuticals Inc. for approximately $180 million in cash, including worldwide rights to Trulance®, now part of the Salix segment[54] - The provision for sales returns improved by a net of $159 million for the nine months ended September 30, 2019, due to enhanced operational efficiencies and disciplined pricing[48] - The useful life of Xifaxan®-related intangible assets was extended to January 1, 2028, following a litigation settlement, resulting in a $353 million decrease to Net Loss for the nine months ended September 30, 2019[88] - The company is subject to ongoing investigations by the SEC, Canada's AMF, and U.S. Attorney's Offices regarding past practices related to Philidor, patient assistance programs, pricing, and accounting[176][178][181][182] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management outlines a strategy focused on eye-health, GI, and dermatology, reporting a 3% Q3 2019 revenue increase to $2.21 billion, driven by Salix growth, and highlights significant debt reduction and new product launches - The company's strategy focuses on core therapeutic areas of eye-health, gastroenterology, and dermatology for growth opportunities[244] - The "Significant Seven" products, including Duobrii®, Bryhali®, and Lumify®, are key growth drivers, all launched by June 2019[257] - The company improved its capital structure by repaying over $7.45 billion of long-term debt (net) since 2016, eliminating mandatory principal repayments through 2020[296] | Segment | Q3 2019 Revenue (Millions USD) | YoY Change | Key Drivers | | :--- | :--- | :--- | :--- | | Bausch + Lomb/International | $1,175 | +2% | Volume growth in Global Vision Care (Biotrue®, Ultra®) and Consumer (Lumify®) | | Salix | $551 | +20% | Higher pricing and volume for Xifaxan®, plus $14M from new Trulance® product | | Ortho Dermatologics | $147 | -16% | Volume declines from generic competition for Solodyn®, Zovirax®, Elidel® | | Diversified Products | $336 | -5% | Volume declines due to loss of exclusivity for several neurology products | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate fluctuations on its $5.24 billion variable-rate debt, with a 100 basis-point increase potentially impacting earnings by $52 million annually - The company faces interest rate risk on $5.24 billion of variable-rate debt, where a 100 basis-point increase could result in an annualized pre-tax negative impact of approximately $52 million[549] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2019, with no material changes to internal controls over financial reporting during Q3 2019 - The CEO and CFO concluded the company's disclosure controls and procedures were effective as of quarter-end[550] - No material changes were made to internal control over financial reporting during the third quarter of 2019[551] Part II. Other Information Item 1. Legal Proceedings This section refers to Note 19 of the consolidated financial statements for detailed information on ongoing legal proceedings - The report directs readers to Note 19 in the financial statements for details on legal proceedings[554] Item 1A. Risk Factors No material changes to risk factors were reported since the filing of the 2018 Annual Report on Form 10-K - No material changes to risk factors were reported since the filing of the 2018 Form 10-K[555] Other Part II Items The company reported no activity under Unregistered Sales of Equity Securities, Defaults Upon Senior Securities, Mine Safety Disclosures, or Other Information for the period - The company reported no activity under Unregistered Sales of Equity Securities, Defaults Upon Senior Securities, Mine Safety Disclosures, or Other Information[555][556]