Bausch Health(BHC) - 2023 Q4 - Annual Results

Fourth-Quarter and Full-Year 2023 Financial Highlights This section summarizes Bausch Health's financial performance for Q4 and full-year 2023, highlighting revenue growth, CEO commentary, and R&D updates Performance Summary Bausch Health reported significant revenue growth for Q4 and full-year 2023, with reported increases of 10% and 8% respectively, alongside organic revenue growth and stable Adjusted EBITDA despite a GAAP Net Loss Q4 and Full-Year 2023 Key Financial Metrics | Metric | Q4 2023 | Full-Year 2023 | | :--- | :--- | :--- | | Revenues | $2.41 billion | $8.76 billion | | Reported Revenue Growth | 10% | 8% | | Organic Revenue Growth (non-GAAP) | 4% | 7% | | GAAP Net Loss Attributable to BHC | $39 million | $592 million | | Adjusted EBITDA Attributable to BHC (non-GAAP) | $869 million | $3.0 billion | - Full-year 2023 reported revenues increased by $633 million to $8.76 billion, an 8% increase over 2022, with organic revenue growing by 7%[17] - Fourth-quarter 2023 reported revenues increased by $215 million to $2.41 billion, a 10% increase over Q4 2022, with organic revenue growing by 4%[17] CEO Commentary The CEO affirmed meeting 2023 financial guidance, noting progress in business segments, balance sheet, and R&D, positioning the company for continued growth in 2024 - CEO Thomas J. Appio stated the company delivered against its 2023 financial guidance and made meaningful progress across business segments, balance sheet management, and R&D initiatives[24] - The company's focus for 2024 includes advancing the pipeline, investing in growth initiatives, and positioning for long-term success[24] R&D and Regulatory Update Bausch Health provided R&D updates, including positive Phase 2 data for Amiselimod, progress on RED-C Phase 3 trials, and recent regulatory approvals and launches for CABTREO and Thermage® FLX - Amiselimod (S1P modulator): Positive topline data from the Phase 2 study for mild to moderate ulcerative colitis was announced in December 2023[24] - RED-C: Enrollment for one of two global Phase 3 trials for hepatic encephalopathy is complete, with the second trial expected to complete enrollment in H1 2024[24] - CABTREO: Received FDA approval on October 20, 2023, for acne vulgaris, with the U.S. commercial launch in late January 2024[25] - Thermage® FLX: The device and its TR-4 Return Pad were approved by China's National Medical Products Administration in January 2024[25] - Next Generation Fraxel®: An FDA submission is planned for Q2 2024, with potential approval in the second half of 2024[25] Detailed Financial Performance This section provides a detailed analysis of Bausch Health's revenue by segment, operating performance, net loss, Adjusted EBITDA, and cash flow for 2023 Revenue Performance by Segment Bausch Health achieved full-year 2023 revenue growth across most segments, notably Solta Medical (16%) and Bausch + Lomb (10%), with Bausch + Lomb also leading Q4 growth at 18% Full-Year 2023 Revenue by Segment (in millions) | Segment | 2023 Revenue | 2022 Revenue | Reported Change | Organic Change (non-GAAP) | | :--- | :--- | :--- | :--- | :--- | | Total Bausch Health | $8,757 | $8,124 | +8% | +7% | | Salix | $2,250 | $2,090 | +8% | +8% | | International | $1,071 | $988 | +8% | +6% | | Solta Medical | $347 | $300 | +16% | +18% | | Diversified Products | $943 | $978 | -4% | -3% | | Bausch + Lomb | $4,146 | $3,768 | +10% | +8% | Q4 2023 Revenue by Segment (in millions) | Segment | Q4 2023 Revenue | Q4 2022 Revenue | Reported Change | Organic Change (non-GAAP) | | :--- | :--- | :--- | :--- | :--- | | Total Bausch Health | $2,408 | $2,193 | +10% | +4% | | Salix | $583 | $581 | 0% | 0% | | International | $290 | $261 | +11% | +6% | | Solta Medical | $103 | $99 | +4% | +5% | | Diversified Products | $259 | $256 | +1% | +2% | | Bausch + Lomb | $1,173 | $996 | +18% | +7% | - Full-year sales growth in the Salix segment was primarily driven by Xifaxan®, Relistor®, and Trulance®[18] Operating Performance and Net Loss Consolidated operating income significantly improved to $963 million in 2023 due to decreased goodwill impairments, though net loss attributable to Bausch Health widened to $592 million primarily from lower gains on debt extinguishment - Consolidated operating income for full-year 2023 was $963 million, a $509 million increase from $454 million in 2022[21] - The improvement in operating income was driven by a $435 million increase in contribution and decreases in Goodwill impairments ($331 million) and Amortization of intangible assets ($138 million), partially offset by higher SG&A and R&D expenses[21] - Net loss attributable to Bausch Health was $592 million for the full year 2023, an unfavorable change from a $225 million loss in 2022, primarily due to lower gains on the extinguishment of debt compared to the prior year[56] GAAP Loss Per Share | Period | 2023 | 2022 | | :--- | :--- | :--- | | Q4 | ($0.11) | ($1.13) | | Full Year | ($1.62) | ($0.62) | Adjusted EBITDA and Net Income (non-GAAP) Adjusted EBITDA attributable to Bausch Health increased 6% to $869 million in Q4 2023, remaining nearly flat at $3.014 billion for the full year, with Adjusted Net Income also showing increases Adjusted EBITDA Attributable to Bausch Health (non-GAAP) | Period | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Q4 | $869 million | $823 million | +$46 million | | Full Year | $3,014 million | $3,022 million | -$8 million | Adjusted Net Income Attributable to Bausch Health (non-GAAP) | Period | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Q4 | $406 million | $372 million | +$34 million | | Full Year | $1,274 million | $1,113 million | +$161 million | Cash Flow and Balance Sheet Cash provided by operating activities significantly improved to $1.032 billion in 2023, with the company holding $962 million in cash and equivalents and substantial revolving credit facility availability - Cash provided by operating activities was $1,032 million for the full year 2023, a significant improvement from the $728 million used in operating activities in 2022[58][92] - As of December 31, 2023, the company had $962 million in cash, cash equivalents, and restricted cash[59] - At year-end, Bausch Health (excl. B+L) had approximately $950 million available under its revolving credit facility, and Bausch + Lomb had approximately $199 million available[59] 2024 Financial Outlook This section outlines Bausch Health's financial projections for the full year 2024, including revenue and Adjusted EBITDA guidance for the consolidated entity and its segments 2024 Financial Guidance Bausch Health projects full-year 2024 total revenues between $9.300 billion and $9.550 billion and Adjusted EBITDA between $3.20 billion and $3.35 billion, with 2%-5% organic revenue growth for Bausch Health (excl. B+L) Full-Year 2024 Guidance (as of Feb. 22, 2024) | Metric (in Billions) | BHC | BHC (excl. B+L) | B+L | | :--- | :--- | :--- | :--- | | Revenues | $9.300 – $9.550 | $4.700 – $4.850 | $4.600 - $4.700 | | Adjusted EBITDA (non-GAAP) | $3.20 - $3.35 | $2.36 - $2.46 | $0.84 – $0.89 | - The company projects 2%-5% organic revenue growth for Bausch Health (excluding B+L) versus the prior year[35] - The company does not provide a reconciliation of forward-looking Adjusted EBITDA to GAAP net income due to the inherent difficulty in forecasting certain items like restructuring costs and litigation matters[59][60] Non-GAAP Financial Measures This section explains the rationale and specific definitions for Bausch Health's non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, and Organic Revenue Explanation of Non-GAAP Measures The company uses non-GAAP measures like Adjusted EBITDA and Organic Revenue to provide supplemental information, believing they are key for evaluating operational performance and investor assessment by excluding certain items - Management uses non-GAAP measures as key metrics to evaluate performance, determine executive cash bonuses, and provide supplemental information to investors[40] - The company cautions that its non-GAAP measures may not be comparable to those of other companies and should be considered as a supplement to, not a substitute for, GAAP measures[65] Specific Non-GAAP Definitions Key non-GAAP metrics are defined, with Adjusted EBITDA adjusting GAAP Net Income for various non-operating items, Adjusted Net Income making similar adjustments, and Organic Revenue normalizing for currency and M&A impacts - Adjusted EBITDA (non-GAAP): Defined as Net income (loss) adjusted for interest expense, taxes, depreciation, amortization, and other specific items such as goodwill impairments, restructuring costs, and acquisition-related costs[42][43] - Adjusted Net Income (non-GAAP): Defined as Net income adjusted for items including asset/goodwill impairments, restructuring costs, acquisition-related costs, gain/loss on debt extinguishment, and amortization of intangible assets[45] - Organic Revenue (non-GAAP): Defined as GAAP Revenue adjusted for changes in foreign currency exchange rates and excluding the impact of recent acquisitions, divestitures, and discontinuations to allow for a supplemental period-to-period comparison[4] Financial Statements and Reconciliations This section presents Bausch Health's consolidated financial statements, including statements of operations, reconciliations of GAAP net loss to Adjusted EBITDA, organic revenue growth, and a summary of the balance sheet and debt Consolidated Statements of Operations (Unaudited) For 2023, Bausch Health reported total revenues of $8.757 billion and a net loss of $611 million, compared to $8.124 billion revenue and $212 million net loss in 2022 Consolidated Statements of Operations (in millions) | Line Item | Twelve Months Ended Dec 31, 2023 | Twelve Months Ended Dec 31, 2022 | | :--- | :--- | :--- | | Total Revenues | $8,757 | $8,124 | | Total Expenses | $7,794 | $7,670 | | Operating Income | $963 | $454 | | Loss before income taxes | ($390) | ($129) | | Net Loss | ($611) | ($212) | | Net Loss Attributable to BHC Inc. | ($592) | ($225) | Reconciliation of GAAP Net Loss to Adjusted EBITDA (non-GAAP) A GAAP Net Loss of $611 million for full-year 2023 was reconciled to an Adjusted EBITDA of $3.110 billion, with $3.014 billion attributable to Bausch Health after noncontrolling interest adjustments Full-Year GAAP Net Loss to Adjusted EBITDA Reconciliation (in millions) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | Net Loss (GAAP) | ($611) | ($212) | | Interest expense, net | $1,302 | $1,450 | | Provision for income taxes | $221 | $83 | | Depreciation and amortization | $1,264 | $1,394 | | EBITDA | $2,176 | $2,715 | | Goodwill impairments | $493 | $824 | | Other Adjustments... | ... | ... | | Adjusted EBITDA (non-GAAP) | $3,110 | $3,080 | | Adjusted EBITDA attributable to noncontrolling interest | ($96) | ($58) | | Adjusted EBITDA attributable to BHC Inc. (non-GAAP) | $3,014 | $3,022 | Organic Revenue Growth (non-GAAP) by Segment The report details the reconciliation of reported to organic revenues, showing full-year 2023 total reported revenue of $8.757 billion adjusted to $8.661 billion organic revenue, representing 7% growth Full-Year 2023 Organic Revenue Reconciliation (in millions) | Description | Amount | | :--- | :--- | | Total Reported Revenue 2023 | $8,757 | | Impact of Foreign Exchange | $45 | | Impact of Acquisitions | ($141) | | Organic Revenue 2023 (non-GAAP) | $8,661 | | Total Reported Revenue 2022 | $8,124 | | Impact of Divestitures/Discontinuations | ($22) | | Organic Revenue 2022 (non-GAAP) | $8,102 | | Change in Organic Revenue | +$559 (+7%) | Balance Sheet and Debt Summary As of December 31, 2023, total long-term debt increased to $21.006 billion, while cash and cash equivalents rose to $947 million, with significant debt maturities in 2025, 2027, and 2028 Key Balance Sheet Items (in millions) | Item | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $947 | $564 | | Total long-term debt and other | $21,006 | $19,110 | - The company's total debt obligations increased by approximately $1.9 billion from year-end 2022 to year-end 2023[12] Maturities of Debt Obligations (in millions) | Year | Amount | | :--- | :--- | | 2024 | $155 | | 2025 | $2,790 | | 2026 | $892 | | 2027 | $6,748 | | 2028 | $7,219 | | 2029 - 2031 | $3,202 |