Bausch + Lomb (BLCO) - 2024 Q1 - Quarterly Results

Executive Summary Bausch + Lomb reported strong first-quarter 2024 results with significant revenue growth across all segments and key product advancements - Bausch + Lomb reported strong first-quarter 2024 results with total revenue growing 18% as reported and 20% on a constant currency basis, driven by broad-based growth across all business segments[36][49] - Key franchises, including Daily SiHy lenses, LUMIFY®, and eye vitamins, showed broad-based growth[49] - The company is extending its leading position in the dry eye category with strong uptake of MIEBO® and ongoing execution of the XIIDRA® relaunch strategy, further bolstered by the upcoming launch of Blink™ NutriTears®[49] - A broad market entry for enVista® Aspire™ marks the beginning of continuous IOL innovation[49] First-Quarter 2024 Financial Performance Bausch + Lomb achieved substantial Q1 2024 revenue growth and improved operating income, despite an increased net loss from higher interest and tax expenses Revenue Performance Total reported revenue for Q1 2024 increased 18% to $1,099 million (or 20% constant currency), driven by broad-based segment growth Total Revenue Performance (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 (Millions) | Q1 2023 (Millions) | Reported Change (Millions) | Reported Change (%) | Constant Currency Change (%) | |:----------------------------|:-------------------|:-------------------|:---------------------------|:--------------------|:-----------------------------| | Total Bausch + Lomb Revenue | $1,099 | $931 | $168 | 18% | 20% | - Foreign exchange negatively impacted revenue by approximately $20 million in Q1 2024[36][49] Revenue by Segment (Q1 2024 vs. Q1 2023) | Segment | Q1 2024 (Millions) | Q1 2023 (Millions) | Reported Change (Millions) | Reported Change (%) | Constant Currency Change (%) | |:----------------|:-------------------|:-------------------|:---------------------------|:--------------------|:-----------------------------| | Vision Care | $635 | $587 | $48 | 8% | 11% | | Surgical | $197 | $183 | $14 | 8% | 8% | | Pharmaceuticals | $267 | $161 | $106 | 66% | 66% | - Vision Care segment growth was primarily driven by Daily SiHy lenses, LUMIFY®, eye vitamin, and consumer dry eye franchises[52] - Surgical segment growth was driven by consumables, implantables, and equipment[37] - Pharmaceuticals segment growth was primarily due to the acquisition of XIIDRA, strong launch performance of MIEBO, and growth in U.S. Generics and International Pharmaceuticals[44] Operating Results Q1 2024 operating income improved to $6 million, with Adjusted EBITDA up and cash flow positive, despite increased net loss Key Operating Results (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 (Millions) | Q1 2023 (Millions) | Change (Millions) | |:-------------------------------------------------|:-------------------|:-------------------|:------------------| | Operating Income (Loss) | $6 | ($2) | $8 |\n| Net Loss Attributable to Bausch + Lomb Corp. | ($167) | ($90) | ($77) |\n| Adjusted Net Income (non-GAAP) | $24 | $34 | ($10) |\n| Adjusted EBITDA (non-GAAP) | $180 | $141 | $39 |\n| Cash Flow from Operations | $41 | ($56) | $97 |\n| Basic and Diluted Loss per Share (GAAP) | ($0.48) | ($0.26) | ($0.22) |\n| Adjusted EPS (non-GAAP) | $0.07 | $0.10 | ($0.03) | - The increase in operating income was largely driven by increased sales, partially offset by higher advertising and promotional spend (primarily for XIIDRA and MIEBO) and increased amortization expense[38] - The unfavorable change in net loss was primarily due to an increase in interest expense and provision for taxes, partially offset by improved operating results[52] - Adjusted EBITDA increased primarily due to higher sales, partially offset by investment in launch products like MIEBO and XIIDRA[55] - Cash flow from operations was positively impacted by the acquisition of XIIDRA, partially offset by an increase in inventories[46] Balance Sheet Highlights As of March 31, 2024, Bausch + Lomb reported $325 million in cash and equivalents, with 351.1 million basic shares outstanding Balance Sheet Highlights (as of March 31, 2024) | Metric | Amount (Millions) | |:-------------------------------------------|:------------------|\n| Cash, cash equivalents and restricted cash | $325 |\n| Basic weighted average shares outstanding | 351.1 |\n| Diluted weighted average shares outstanding| 352.7 | 2024 Financial Outlook Bausch + Lomb raised its full-year 2024 constant currency revenue growth guidance to 13-15%, with updated revenue and Adjusted EBITDA ranges, and increased foreign exchange headwinds Full-Year 2024 Financial Guidance | Metric | Guidance Range (Millions) | |:-----------------------------------------|:--------------------------|\n| Full-year Revenue | $4,600 – $4,700 |\n| Full-year Adjusted EBITDA (non-GAAP) | $840 – $890 |\n| Constant Currency Revenue Growth (Revised)| 13-15% (previously 12-14%)|\n| Foreign Exchange Revenue Headwinds | ~$90 (previously ~$40) | Company Information This section outlines Bausch + Lomb's global eye health business and details its Q1 2024 earnings conference call About Bausch + Lomb Bausch + Lomb is a global eye health company founded in 1853, offering a comprehensive portfolio of approximately 400 products and operating in nearly 100 countries - Bausch + Lomb is a leading global eye health company dedicated to protecting and enhancing sight[4] - The company's comprehensive portfolio includes approximately 400 products, such as contact lenses, lens care products, eye care products, ophthalmic pharmaceuticals, over-the-counter products, and ophthalmic surgical devices[4] - Founded in 1853, Bausch + Lomb has approximately 13,000 employees and a presence in nearly 100 countries, with corporate offices in Vaughan, Ontario, and Bridgewater, New Jersey[4] Conference Call Details The conference call for the first-quarter 2024 results was held on Wednesday, May 1, 2024, at 8:00 a.m. ET, with webcast and dial-in options provided - The conference call for Q1 2024 results was held on Wednesday, May 1, 2024, at 8:00 a.m. ET[4] - Webcast access was available at https://www.webcaster4.com/Webcast/Page/2883/49631, with dial-in numbers for North America and International participants[4] - A replay of the conference call was available until May 15, 2024[29] Important Disclosures This section details Bausch + Lomb's forward-looking statements and the use and reconciliation of non-GAAP financial measures Forward-looking Statements This section outlines forward-looking statements regarding Bausch + Lomb's future prospects, 2024 full-year guidance, product launches, and growth from manufacturing investments - Forward-looking statements include Bausch + Lomb's future prospects, 2024 full-year guidance, anticipated product launches, and expected future growth from investments in manufacturing and supply chain optimization[5] - These statements are based on current management expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially[5] - Key risks include those related to the proposed spinoff from Bausch Health Companies Inc. (BHC), the acquisition of XIIDRA® and other ophthalmology assets, and adverse macroeconomic conditions such as inflation, slower growth, or recession[5][6] Non-GAAP Information Bausch + Lomb uses non-GAAP financial measures like Adjusted EBITDA, Adjusted Net Income, Constant Currency Revenue, and Adjusted EPS to supplement GAAP results for performance evaluation - The company uses non-GAAP financial measures and ratios as key metrics to evaluate performance, determine executive cash bonuses, and provide useful information to investors[9] - Non-GAAP measures are intended to supplement, not substitute for, GAAP measures and may not be comparable to similarly titled measures used by other companies[10] - Management believes these non-GAAP measures are useful for strategic decision-making, forecasting, and evaluating current performance by providing a meaningful comparison of operating results and trends[30] Specific Non-GAAP Measures This section defines and explains the rationale for specific non-GAAP measures used by Bausch + Lomb, including EBITDA, Adjusted EBITDA, Adjusted Net Income, Constant Currency, and Adjusted EPS - EBITDA (non-GAAP) is Net income (loss) attributable to Bausch + Lomb Corporation adjusted for interest, income taxes, depreciation, and amortization[12] - Adjusted EBITDA (non-GAAP) further adjusts EBITDA for items such as asset impairments, restructuring, integration and transformation costs, acquisition-related costs, share-based compensation, and separation costs, to focus on underlying operational results and business performance[12][13][15] - Adjusted Net Income (non-GAAP) adjusts GAAP net income for asset impairments, restructuring, integration and transformation costs, acquisition-related contingent consideration, separation costs, other non-GAAP adjustments, amortization of intangible assets, and specific acquisition-related costs[17] - Constant Currency Revenue (non-GAAP) adjusts GAAP revenue for changes in foreign currency exchange rates to assess performance without the impact of currency fluctuations, providing a supplemental period-to-period comparison[18][19] - Adjusted EPS (non-GAAP) is calculated by adjusting GAAP diluted income per share for the per-diluted-share impact of each adjustment made to reconcile Net income (loss) to Adjusted net income (non-GAAP), aiming to provide a meaningful comparison of the company's results and trends[20] Financial Tables This section presents detailed financial tables, including GAAP income statements and non-GAAP reconciliations for Q1 2024 GAAP Income Statement The GAAP income statement for the three months ended March 31, 2024, shows total revenues of $1,099 million, an operating income of $6 million, and a net loss attributable to Bausch + Lomb Corporation of $167 million, resulting in a basic and diluted loss per share of ($0.48) GAAP Income Statement (Three Months Ended March 31) | Metric | 2024 (Millions) | 2023 (Millions) | |:-----------------------------------------------------------------|:----------------|:----------------|\n| Revenues | $1,099 | $931 |\n| Cost of goods sold (excluding amortization and impairments) | $423 | $371 |\n| Selling, general and administrative | $504 | $418 |\n| Research and development | $82 | $77 |\n| Amortization of intangible assets | $74 | $57 |\n| Operating income (loss) | $6 | ($2) |\n| Interest expense | ($99) | ($50) |\n| Loss before provision for income taxes | ($90) | ($55) |\n| Provision for income taxes | ($73) | ($33) |\n| Net loss attributable to Bausch + Lomb Corporation | ($167) | ($90) |\n| Basic and diluted loss per share attributable to Bausch + Lomb | ($0.48) | ($0.26) | Reconciliation of GAAP Net Loss to Adjusted Net Income and EPS (non-GAAP) This table reconciles GAAP net loss and diluted loss per share to Adjusted Net Income (non-GAAP) and Adjusted EPS (non-GAAP), showing a Q1 2024 GAAP net loss of ($167) million adjusted to a non-GAAP net income of $24 million Reconciliation of GAAP Net Loss to Adjusted Net Income (non-GAAP) (Three Months Ended March 31) | Metric | 2024 Income (Expense) (Millions) | 2024 Share Impact | 2023 Income (Expense) (Millions) | 2023 Share Impact | |:------------------------------------------------------------------------------------------------------|:---------------------------------|:------------------|:---------------------------------|:------------------|\n| Net loss and Diluted loss per share attributable to Bausch + Lomb Corporation | ($167) | ($0.48) | ($90) | ($0.26) |\n| Amortization of intangible assets | $74 | $0.21 | $57 | $0.16 |\n| Restructuring, integration and transformation costs | $28 | $0.08 | $32 | $0.09 |\n| Acquisition-related costs and adjustments (excluding amortization of intangible assets) | $21 | $0.06 | $1 | — |\n| Separation costs and separation-related costs | $2 | $0.01 | $3 | $0.01 |\n| Gain on sale of assets | ($4) | ($0.01) | — | — |\n| Other | $2 | $0.01 | — | — |\n| Tax effect of non-GAAP adjustments | $68 | $0.19 | $31 | $0.10 |\n| Total non-GAAP adjustments | $191 | $0.55 | $124 | $0.36 |\n| Adjusted net income (non-GAAP) and Adjusted earnings per share (non-GAAP) | $24 | $0.07 | $34 | $0.10 | Reconciliation of GAAP Expenses to Adjusted Expenses (non-GAAP) This section provides detailed reconciliations of various GAAP expense lines to their non-GAAP adjusted counterparts for Q1 2024 and Q1 2023, highlighting significant adjustments Reconciliation of GAAP Expenses to Adjusted Expenses (non-GAAP) (Three Months Ended March 31) | Expense Category | 2024 GAAP (Millions) | 2024 Adjustments (Millions) | 2024 Adjusted (Millions) | 2023 GAAP (Millions) | 2023 Adjustments (Millions) | 2023 Adjusted (Millions) | |:-------------------------------------------------------------------------------|:---------------------|:----------------------------|:-------------------------|:---------------------|:----------------------------|:-------------------------|\n| Cost of goods sold (excluding amortization and impairments of intangible assets)| $423 | ($20) | $403 | $371 | — | $371 |\n| Selling, general and administrative | $504 | ($19) | $485 | $418 | ($27) | $391 |\n| Research and development | $82 | ($1) | $81 | $77 | — | $77 |\n| Amortization of intangible assets | $74 | ($74) | $0 | $57 | ($57) | $0 |\n| Other expense, net | $9 | ($9) | $0 | $9 | ($1) | $8 |\n| Provision for income taxes | ($73) | $68 | ($5) | ($33) | $31 | ($2) | Reconciliation of GAAP Net Loss to Adjusted EBITDA (non-GAAP) The reconciliation shows that GAAP net loss attributable to Bausch + Lomb Corporation was ($167) million in Q1 2024, resulting in an Adjusted EBITDA (non-GAAP) of $180 million, a significant increase from $141 million in Q1 2023 Reconciliation of GAAP Net Loss to Adjusted EBITDA (non-GAAP) (Three Months Ended March 31) | Metric | 2024 (Millions) | 2023 (Millions) | |:--------------------------------------------------------------------|:----------------|:----------------|\n| Net loss attributable to Bausch + Lomb Corporation | ($167) | ($90) |\n| Interest expense, net | $96 | $47 |\n| Provision for income taxes | $73 | $33 |\n| Depreciation and amortization of intangible assets | $110 | $91 |\n| EBITDA | $112 | $81 |\n| Restructuring, integration and transformation costs | $28 | $32 |\n| Acquisition-related costs and adjustments (excluding amortization) | $21 | $1 |\n| Share-based compensation | $19 | $24 |\n| Separation costs and separation-related costs | $2 | $3 |\n| Gain on sale of assets | ($4) | — |\n| Other non-GAAP adjustments | $2 | — |\n| Adjusted EBITDA (non-GAAP) | $180 | $141 | Constant Currency Revenue by Segment (non-GAAP) This table details revenue performance by segment on both a reported and constant currency basis for Q1 2024 and Q1 2023, showing total constant currency revenue of $1,119 million Constant Currency Revenue by Segment (non-GAAP) (Three Months Ended March 31) | Segment | 2024 Revenue as Reported (Millions) | Changes in Exchange Rates (Millions) | 2024 Constant Currency Revenue (Millions) | 2023 Revenue as Reported (Millions) | Change in Reported Amount (Millions) | Reported Pct. Change | Change in Constant Currency Revenue (Millions) | Constant Currency Pct. Change | |:----------------|:------------------------------------|:-------------------------------------|:------------------------------------------|:------------------------------------|:-------------------------------------|:---------------------|:-----------------------------------------------|:------------------------------|\n| Vision Care | $635 | $18 | $653 | $587 | $48 | 8% | $66 | 11% |\n| Surgical | $197 | $1 | $198 | $183 | $14 | 8% | $15 | 8% |\n| Pharmaceuticals | $267 | $1 | $268 | $161 | $106 | 66% | $107 | 66% |\n| Total revenues | $1,099 | $20 | $1,119 | $931 | $168 | 18% | $188 | 20% |