Bausch Health(BHC)2022-08-08 16:00Product Revenue and Performance - Xifaxan product line represented 81% and 80% of the Salix segment's revenues for the three and six months ended June 30, 2022, respectively[301] - Xifaxan product revenues increased by $7 million or 1% to $775 million for the six months ended June 30, 2022 compared to $768 million in 2021[377] - Approximately 80% of the Salix segment revenues is derived from the Xifaxan product line[468] - Sales of the Xifaxan product line represented 81% and 80% of the Salix segment's revenues for the three and six months ended June 30, 2022, respectively[489] - Trulance revenues were $47 million and $49 million for the six months ended June 30, 2022 and 2021, respectively[374] - Next generation Thermage FLX revenues were $154 million and $142 million for the years 2021 and 2020, respectively[377] - Revenues attributable to Russia for the six months ended June 30, 2022 and 2021 were $63 million and $64 million, respectively[384] - Revenues attributable to Ukraine for the six months ended June 30, 2022 and 2021 were $3 million and $5 million, respectively[384] - Revenues attributable to Belarus for the six months ended June 30, 2022 and 2021 were $4 million in each period[384] - Uceris Tablet revenues for the six months ended June 30, 2022 were approximately $7 million, compared to $5 million in the same period in 2021[419] - Jublia revenues for the six months ended June 30, 2022 were approximately $54 million, compared to $50 million in the same period in 2021[419] - The company's Uceris Tablet revenues for the years 2021, 2020, and 2019 were approximately $10 million, $15 million, and $20 million, respectively[419] - Jublia revenues for the years 2021, 2020, and 2019 were approximately $100 million, $111 million, and $110 million, respectively[419] - Revenue in China for the six months ended June 30, 2022 decreased by $52 million to $177 million compared to $229 million in 2021, reflecting the impact of the omicron variant and government lockdowns[390] - Total revenues decreased by $133 million (6%) to $1,967 million in 2022 compared to $2,100 million in 2021[494] - Bausch + Lomb segment revenues increased by $7 million (1%) to $941 million in 2022, representing 48% of total revenues[494] - Salix segment revenues decreased by $15 million (3%) to $501 million in 2022, with a segment profit margin of 71%[494] - International segment revenues declined by $80 million (26%) to $233 million in 2022, with a segment profit margin of 28%[494] - Diversified Products segment revenues decreased by $29 million (11%) to $235 million in 2022, with a segment profit margin of 60%[494] - Solta Medical segment revenues dropped by $16 million (22%) to $57 million in 2022, with a segment profit margin of 35%[494] - Total segment profits decreased by $98 million (11%) to $789 million in 2022, with a total segment profit margin of 40%[494] Financial Transactions and Debt Management - The Bausch + Lomb IPO resulted in the sale of 35,000,000 common shares at $18.00 per share, generating approximately $675 million in net proceeds[308] - The Company holds 310,449,643 Bausch + Lomb common shares, representing approximately 88.7% of Bausch + Lomb's outstanding common shares after the IPO[309] - The Company completed a series of transactions including a new credit facility for Bausch + Lomb and refinancing of existing credit facilities[318] - The company received approximately $4,100 million in net proceeds from divestitures, including the sale of Amoun for $740 million[322] - The company repaid approximately $10,600 million in long-term debt obligations from January 1, 2016, through June 30, 2022[320] - Debt reduced by approximately $800 million in H1 2022, including $1,000 million issuance of 6.125% Senior Secured Notes due February 2027[352] - B+L IPO completed on May 10, 2022, with net proceeds of approximately $675 million[353] - $2,500 million term loan facility and $500 million revolving credit facility established under B+L Credit Agreement[356] - $10,600 million of long-term debt repaid (net of borrowings) from January 2016 to June 2022[360] - The company recognized a gain on extinguishment of debt of $113 million for the three months ended June 30, 2022, compared to a loss of $45 million in the same period in 2021[481] Research and Development - The company has approximately 160 projects in its global R&D pipeline as of June 30, 2022[327] - A Phase 3 study for Rifaximin (RED-C) has commenced for the prevention of the first episode of Overt Hepatic Encephalopathy[328] - The company plans to file a New Drug Application (NDA) for IDP-126 in the fourth quarter of 2022[333] - The company entered into two exclusive license agreements in October 2020 for the development of treatments for pediatric myopia, with a Phase 3 study expected to complete enrollment by Q1 2023[341] - NOV03 achieved enrollment target in Open Label Safety study and showed statistically significant topline data in two Phase 3 studies, with NDA filed in June 2022 and anticipated U.S. launch in 2023[342] - R&D expenses increased by $12 million in Q2 2022, driven by the resumption of activities and clinical trials previously suspended due to COVID-19[428] - R&D expenses increased by $12 million (10%) to $127 million in Q2 2022, primarily due to higher spend on Solta and Salix projects[458] Product Launches and Approvals - Bausch + Lomb expects to launch Monofocal Plus, Trifocal, and EDOF optical designs for presbyopia in 2023, 2024, and 2025/2026, respectively[336] - Renu Advanced Multi-Purpose Solution (MPS) was launched in Taiwan, Czech Republic, Israel, Poland, and Slovakia in 2022, with further launches anticipated in China, Taiwan, Argentina, and Latin America[336] - Bausch + Lomb ULTRA Multifocal for Astigmatism contact lens was launched in June 2019 and received European Union regulatory approval in Q2 2020[336] - Xipere was approved by the FDA in October 2021 for macular edema associated with uveitis and launched in the U.S. in Q1 2022[343] - The company launched Duobrii in June 2019 and Bryhali in November 2018 as part of its psoriasis treatment portfolio[378] - The company launched Arazlo Lotion in June 2020, Altreno in October 2018, and Retin-A Micro 0.06% in January 2018 as part of its acne treatment portfolio[378] - The company acquired a global exclusive license for a myopia control contact lens design developed by BHVI[381] Litigation and Intellectual Property - The company reached a settlement agreement with Actavis in March 2021, dismissing the appeal related to the Relistor tablets patent litigation[416] - The company filed patent infringement suits against MSN and Mylan in April 2021 regarding Trulance 3mg tablets[416] - The company filed suit against Slayback Pharma LLC in September 2021, triggering a 30-month stay of the approval of the Slayback ANDA for Lumify[416] - The company filed suit against Lupin Ltd. in February 2022, triggering a 30-month stay of the approval of the Lupin ANDA for Lumify[417] - The company's PreserVision U.S. formulation patent expired in March 2021, but a patent covering methods of using the formulation remains in force into 2026[419] - Xifaxan 550mg patent litigation with Actavis resolved in 2018, with Actavis granted a non-exclusive license starting January 1, 2028[413] - Xifaxan 550mg patent litigation with Sandoz resolved in 2020, with Sandoz granted a non-exclusive license starting January 1, 2028[413] - Xifaxan 550mg patent litigation with Norwich resulted in a court ruling in July 2022, with certain patents found valid and others invalid, and the company plans to appeal[413] - Xifaxan 200mg and 550mg patent litigation with Sun ongoing, with Notices of Paragraph IV Certification received in 2019 and 2020[414] - Duobrii Lotion (Padagis) litigation is ongoing, with a trial scheduled for October 4, 2022, and the company remains confident in the strength of its patents[410][411] - Duobrii Lotion (Taro) litigation initiated in July 2022, with a 30-month stay on Taro's ANDA approval, and the company remains confident in its patents[413] - Bryhali Lotion, 0.01% (Glenmark) agreement allows Glenmark to market a generic version starting in 2026, with all intellectual property remaining intact[410] Financial Performance and Metrics - Operating income for Q2 2022 was $161 million, compared to an operating loss of $270 million in Q2 2021, reflecting a $431 million improvement[428] - Net loss attributable to Bausch Health Companies Inc. for Q2 2022 was $145 million, an improvement of $450 million compared to Q2 2021[433] - Revenues for the first six months of 2022 decreased by $242 million (6%) to $3,885 million, driven by divestitures, foreign currency impact, and lower volumes[433] - Operating income for the first six months of 2022 was $446 million, compared to an operating loss of $491 million in the same period of 2021, reflecting a $937 million improvement[434] - Goodwill impairments for the first six months of 2022 decreased by $386 million to $83 million, compared to $469 million in the same period of 2021[434] - Net loss attributable to Bausch Health Companies Inc. for the first six months of 2022 was $214 million, an improvement of $991 million compared to the same period in 2021[438] - Gross product sales for Q2 2022 were $3.401 billion, a decrease from $3.489 billion in Q2 2021[446] - Total provisions to reduce gross product sales to net product sales were $1.454 billion (42.8% of gross sales) in Q2 2022, up from $1.413 billion (40.5%) in Q2 2021[446] - Net product sales for Q2 2022 were $1.947 billion (57.2% of gross sales), down from $2.076 billion (59.5%) in Q2 2021[446] - Cost of goods sold decreased by $34 million (6%) to $570 million in Q2 2022, primarily due to divestiture of Amoun and favorable foreign currency impact[450] - SG&A expenses decreased by $9 million (1%) to $676 million in Q2 2022, driven by divestiture of Amoun and lower compensation expenses[455] - Amortization of intangible assets decreased by $58 million to $302 million in Q2 2022, due to fully amortized assets[461] - Goodwill impairments increased by $83 million to $83 million in Q2 2022, primarily due to macroeconomic factors impacting the Ortho Dermatologics reporting unit[464] - Xifaxan intangible assets have a carrying value of $2.963 billion as of June 30, 2022, with remaining useful lives of 66 months[462] - The company incurred $7 million in manufacturing variances and $6 million in returns due to a quality issue at a third-party supplier in Q2 2021[451] - The company recognized a goodwill impairment of $83 million for the Ortho Dermatologics reporting unit due to the carrying value exceeding its fair value at June 30, 2022[467] - Asset impairments, including loss on assets held for sale, decreased by $41 million to $6 million for the three months ended June 30, 2022 compared to $47 million in the same period in 2021[470] - Restructuring, integration, separation and IPO costs increased by $26 million to $35 million for the three months ended June 30, 2022 compared to $9 million in the same period in 2021[472] - Separation and IPO costs were $13 million for the three months ended June 30, 2022, compared to $6 million in the same period in 2021[475] - Interest expense increased by $46 million, or 13%, to $410 million for the three months ended June 30, 2022 compared to $364 million in the same period in 2021[479] - The provision for income taxes was $10 million for the three months ended June 30, 2022, compared to a benefit of $77 million in the same period in 2021, an unfavorable change of $87 million[486] Market and Regulatory Environment - The company anticipates generic competition for certain products due to patent or regulatory exclusivity expirations in 2022 and later years[407] - The company may launch authorized generics to mitigate sales declines following loss of exclusivity, but revenue impacts are still expected to be significant[409] - Several products faced generic competition in 2021, including Lotemax Gel and Bepreve, which accounted for less than 1% of total revenues in 2020[410] - Branded products expected to face generic competition from 2022 to 2026, such as Noritate and Targretin Gel, accounted for 2% of total revenues in 2021[410] - The OECD/G20 Inclusive Framework agreed on a global minimum corporate tax rate of 15% for companies with revenue above €750 million, effective in 2024[394] - The U.S. government proposed changes to the corporate tax system, including potential increases in corporate tax rates and modifications to the Base Erosion and Anti-Abuse Tax[393] - The American Rescue Plan Act of 2021 eliminated the Maximum Rebate Amount for certain drugs in the Medicaid Drug Rebate Program, with uncertain impact on the company[405] - The company continues to monitor potential legislative and administrative changes in health care reform, including drug pricing transparency and importation programs[406] - The company incurred costs of $13 million in 2021 and $21 million in 2020 related to the annual fee assessed on branded prescription drug sales to U.S. government programs[397] - Medicare Part D utilization costs were $94 million in 2021 and $131 million in 2020 for beneficiaries subject to the coverage gap[397] Operational and Strategic Initiatives - The Solta Medical IPO plans were suspended to focus on driving revenue, profitability, and cash flow, with future alternative paths to be revisited[316] - $175 million expansion of Waterford facility completed in July 2017 to meet demand for Biotrue ONEday contact lenses[345] - $220 million upgrade to Rochester facility completed in December 2017 to support Bausch + Lomb ULTRA and SiHy Daily AQUALOX product lines[345] - $300 million expansion projects initiated in November 2018 for SiHy Daily disposable contact lenses, with commercial production starting in H1 2022[347] - $90 million investment announced in July 2021 to increase capacity at Waterford facility for Biotrue ONEday lenses, expected completion in 2023[349] - The company faced distribution and logistic issues in China due to lockdowns, but manufacturing and distribution processes were minimally impacted[390] - Organic revenue (non-GAAP) is used to assess performance by adjusting for foreign currency exchange rates and excluding impacts of acquisitions, divestitures, and discontinuations[495] - Changes in foreign currency exchange rates can mask underlying business performance trends and are adjusted in organic revenue calculations[496] Acquisitions and Divestitures - Amoun generated revenues of $137 million for the six months ended June 30, 2021, and $157 million for the period from January 1, 2021, through July 26, 2021[322] - The company received approximately $4,100 million in net proceeds from divestitures, including the sale of Amoun for $740 million[322]