Bausch + Lomb (BLCO) - 2025 Q1 - Quarterly Report

Financial Information This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and detailed notes on key financial areas Condensed Consolidated Financial Statements (Unaudited) The company reported a net loss of $211 million on revenues of $1,137 million for Q1 2025, with total assets of $13,428 million and liabilities of $6,995 million Condensed Consolidated Balance Sheets The balance sheet as of March 31, 2025, shows total assets of $13,428 million and total liabilities of $6,995 million, with a decrease in cash and cash equivalents Condensed Consolidated Balance Sheets (in millions) | (in millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $202 | $305 | | Total current assets | $2,694 | $2,788 | | Intangible assets, net | $3,427 | $3,494 | | Goodwill | $4,567 | $4,523 | | Total assets | $13,428 | $13,469 | | Liabilities & Equity | | | | Total current liabilities | $1,726 | $1,738 | | Long-term debt | $4,789 | $4,744 | | Total liabilities | $6,995 | $6,925 | | Total equity | $6,433 | $6,544 | Condensed Consolidated Statements of Operations For Q1 2025, revenues increased to $1,137 million, but the company reported an operating loss of $83 million and a net loss of $212 million due to increased operating expenses Condensed Consolidated Statements of Operations (in millions, except per share) | (in millions, except per share) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenues | $1,137 | $1,099 | | Cost of goods sold | $481 | $423 | | Selling, general and administrative | $563 | $504 | | Operating (loss) income | ($83) | $6 | | Net loss attributable to B+L | ($212) | ($167) | | Basic and diluted loss per share | ($0.60) | ($0.48) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $25 million in Q1 2025, with a net decrease of $101 million in cash and cash equivalents during the quarter Condensed Consolidated Statements of Cash Flows (in millions) | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($25) | $41 | | Net cash used in investing activities | ($116) | ($57) | | Net cash provided by financing activities | $31 | $12 | | Net decrease in cash and cash equivalents | ($101) | ($9) | Note 5: Acquisitions The company completed several acquisitions in Q1 2025 and 2024, including Whitecap Biosciences, Elios Vision, and Trukera Medical, to expand its pipeline and product portfolios - On January 3, 2025, the company acquired Whitecap Biosciences for an upfront payment of ~$28 million, which was expensed as acquired in-process R&D costs[68][70] - In December 2024, the company acquired Elios Vision for ~$99 million in cash plus potential future milestone payments, adding a minimally invasive glaucoma surgery procedure to its portfolio[72] - In July 2024, the company acquired Trukera Medical for ~$24 million, expanding its presence in the dry eye market with the ScoutPro osmolarity measurement device[73] Note 10: Financing Arrangements As of March 31, 2025, the company's total long-term debt was $4,881 million with a weighted average interest rate of 7.92%, and it remained in compliance with all debt covenants Long-Term Debt (in millions) | (in millions) | Principal Amount (Mar 31, 2025) | Maturity | | :--- | :--- | :--- | | Revolving Credit Facility | $160 | May 2027 | | May 2027 Term Facility | $2,431 | May 2027 | | May 2027 Incremental Term Facility | $398 | May 2027 | | September 2028 Term Facility | $492 | Sep 2028 | | October 2028 Secured Notes | $1,400 | Oct 2028 | | Total long-term debt | $4,881 | | - The weighted average stated interest rate for outstanding debt was 7.92% as of March 31, 2025[103] - As of March 31, 2025, the company was in compliance with its financial covenants[106] Note 16: Legal Proceedings The company is involved in various legal proceedings, including antitrust and intellectual property disputes, and has accrued $6 million for probable loss contingencies as of March 31, 2025 - As of March 31, 2025, the company accrued $6 million for current loss contingencies from legal matters that are both probable and reasonably estimable[125] - The company is a defendant in multidistrict antitrust litigation alleging conspiracy to fix prices for generic pharmaceuticals, with Bausch + Lomb and BHC splitting associated costs and liabilities[127][129] - The company faces ongoing patent infringement proceedings against potential generic competitors for key products including Lumify®, Vyzulta®, and Lotemax SM®[145][146][148] Note 17: Segment Information In Q1 2025, Vision Care was the largest segment with $656 million in revenue and $176 million in profit, while Pharmaceuticals and Surgical segments saw profit declines Segment Performance (in millions) | (in millions) | Revenue Q1 2025 | Revenue Q1 2024 | Segment Profit Q1 2025 | Segment Profit Q1 2024 | | :--- | :--- | :--- | :--- | :--- | | Vision Care | $656 | $635 | $176 | $178 | | Pharmaceuticals | $267 | $267 | $11 | $53 | | Surgical | $214 | $197 | ($7) | $11 | | Total | $1,137 | $1,099 | $180 | $242 | - The top ten products/franchises represented 55% of total revenues for the three months ended March 31, 2025, up from 54% in the prior year period[154] Management's Discussion and Analysis (MD&A) Management discusses a 3% revenue increase to $1,137 million for Q1 2025, alongside an operating loss of $83 million due to increased costs and an enVista IOL recall, while maintaining sufficient liquidity Business Overview and Trends The company's business overview highlights its R&D pipeline, the enVista IOL recall, and the monitoring of geopolitical conflicts and global tax changes, with no material impact to date - The company has a global R&D pipeline of over 60 projects, including new contact lenses, next-generation cataract equipment, and investigational treatments for dry eye[163] - On March 27, 2025, the company initiated a voluntary recall of certain enVista IOL products due to TASS, with production resuming after identifying a raw material vendor issue[173][174] - Revenues from Russia, Ukraine, and Belarus were approximately 3% of total revenues for Q1 2025, while the Middle East accounted for less than 1%, with neither having a material impact to date[179][181][182] - The company expects minimal impact to its 2025 tax rate from the new global minimum tax (Pillar Two) but notes a risk of future increases to its overall effective tax rate[191] Results of Operations Q1 2025 revenues grew 3% to $1,137 million, but operating results shifted to an $83 million loss due to increased Cost of Goods Sold and SG&A expenses, leading to a wider net loss Key Financial Results (in millions) | (in millions) | Q1 2025 | Q1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1,137 | $1,099 | $38 | 3% | | Vision Care | $656 | $635 | $21 | 3% | | Pharmaceuticals | $267 | $267 | $0 | 0% | | Surgical | $214 | $197 | $17 | 9% | | Operating (loss) income | ($83) | $6 | ($89) | N/A | | Net loss attributable to B+L | ($212) | ($167) | ($45) | 27% | - On a constant currency basis, total revenue grew 5% YoY[212] - Cost of goods sold increased by $58 million (14%), including a $15 million inventory reserve charge related to the enVista IOL recall[221] - SG&A expenses increased by $59 million (12%), primarily due to higher selling and promotion costs for MIEBO® and increased business transformation costs[224] Liquidity and Capital Resources The company's liquidity is supported by cash from operations and its revolving credit facility, with total debt of $4,881 million as of March 31, 2025, and recent credit rating upgrades - Net cash used by operating activities was $25 million in Q1 2025, a $66 million decrease from cash provided in Q1 2024, primarily due to lower operating results and a $28 million payment for acquired in-process R&D[243][244] - As of March 31, 2025, the company had total debt principal of $4,881 million and $304 million of availability under its Revolving Credit Facility[98][250] - Credit ratings were upgraded by S&P to 'B' (Corporate) in March 2025 and by Fitch to 'B' (Corporate) in April 2025[257][258] - For the remainder of 2025, primary cash requirements include ~$320 million for interest payments, $30 million for mandatory debt amortization, and ~$170 million for capital expenditures[265] Quantitative and Qualitative Disclosures About Market Risk No material changes to the company's market risk sensitivity assessment have occurred since the 2024 Annual Report, except for interest rate risk - There have been no material changes to the Company's assessment of its sensitivity to market risks, except for interest rate risk, since its last annual report[285] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[286] - No material changes to internal controls over financial reporting occurred during the first quarter of 2025[288] Other Information This section provides additional information on legal proceedings and risk factors, noting no material changes since the last annual report Legal Proceedings The company is involved in various legal proceedings, but management does not anticipate a material adverse effect on its financial position or operations from their ultimate resolution - The company believes that the ultimate resolution of any known legal proceeding will not have a material adverse effect on its financial position, liquidity, or results of operations[290] - Detailed information on legal proceedings is provided in Note 16 to the Condensed Consolidated Financial Statements[291] Risk Factors No material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K have been reported - There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K[292]