Bausch + Lomb (NYSE:BLCO) Q3 2025 Earnings Call October 29, 2025 08:00 AM ET Company ParticipantsPatrick Wood - Managing DirectorSam Eldessouky - CFO and EVPTom Stephan - VP of Healthcare Equity ResearchYehia Hashad - Head of R&D and Chief Medical OfficerDavid Roman - Managing DirectorBrent Saunders - Chairman and CEOGeorge Gadkowski - VP and Head of Investor Relations and Business InsightsLily Lazada - VP of Equity ResearchJoanne Wuensch - Managing DirectorConference Call ParticipantsYoung Li - SVP and Equ ...

Bausch + Lomb (NYSE:BLCO) Q3 2025 Earnings Call October 29, 2025 08:00 AM ET Company ParticipantsPatrick Wood - Managing DirectorSam Eldessouky - CFO and EVPTom Stephan - VP of Healthcare Equity ResearchYehia Hashad - Head of R&D and Chief Medical OfficerDavid Roman - Managing DirectorBrent Saunders - Chairman and CEOGeorge Gadkowski - VP and Head of Investor Relations and Business InsightsLily Lazada - VP of Equity ResearchJoanne Wuensch - Managing DirectorConference Call ParticipantsYoung Li - SVP and Equ ...

Bausch + Lomb (NYSE:BLCO) Q3 2025 Earnings Call October 29, 2025 08:00 AM ET Speaker4Good morning and welcome to Bausch + Lomb's third quarter 2025 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star ...

Core Insights - Orbis International is conducting a three-week training project in Ghana aboard the Orbis Flying Eye Hospital, aimed at enhancing local eye care capabilities and raising awareness about available resources [1][2][4] Group 1: Project Overview - This is the fourth visit of the Orbis Flying Eye Hospital to Ghana, with previous visits occurring between 1990 and 2019, contributing to the strengthening of the country's eye care system [2] - The training will focus on various eye conditions, including cataract, glaucoma, strabismus, and medical retina, with hands-on surgical training for eye care professionals [2][3] - The project involves collaboration with local institutions such as Korle Bu Teaching Hospital, Komfo Anokye Teaching Hospital, and the Ghana Ophthalmic Nursing School [1][2] Group 2: Support and Partnerships - The project is supported by the Alcon Foundation, FedEx, and OMEGA, with Alcon providing monetary donations and advanced ophthalmic equipment [5][6] - FedEx has donated the MD-10 aircraft for the Flying Eye Hospital and offers ongoing financial and operational support [6][7] - OMEGA has been a supporter of Orbis since 2011, contributing to various training projects and raising awareness of Orbis's mission [7][8] Group 3: Long-term Commitment and Impact - Orbis has been active in Ghana since 2014, focusing on pediatric ophthalmology and expanding eye care services across the country [9][10] - The organization has established 25 primary eye care units across 19 districts and improved facilities at national eye hospitals [10][11] - A permanent office in Accra has been opened to signify Orbis's long-term commitment to enhancing eye care in Ghana [11][12]

Group 1: Fund Performance - Parnassus Mid Cap Growth Fund returned 13.29% (net of fees) in Q2 2025, underperforming the Russell Midcap Growth Index which returned 18.20% [1] - Stock selection in the Industrials and Information Technology sectors negatively impacted the fund's performance, while holdings in the Financials sector contributed positively [1] Group 2: Alcon Inc. Overview - Alcon Inc. (NYSE:ALC) is a market leader in the eye care industry, headquartered in Geneva, Switzerland, focusing on research, development, manufacturing, and distribution of eye care products [2][3] - Alcon Inc. reported a one-month return of -5.59% and a 52-week loss of 24.30%, with a closing stock price of $75.00 and a market capitalization of $37.352 billion as of September 24, 2025 [2] Group 3: Investment Insights on Alcon Inc. - Parnassus Mid Cap Growth Fund initiated a position in Alcon Inc., expecting its culture of innovation to drive market share gains and revenue growth [3] - Alcon Inc. reported sales of $2.6 billion in Q2 2025, reflecting a 3% increase compared to the previous year [4] - Despite recognizing Alcon's potential, the fund believes certain AI stocks present greater upside potential and lower downside risk [4]

Summary of Aier Eye Hospital Earnings Review Company Overview - **Company**: Aier Eye Hospital (300015.SZ) - **Industry**: Ophthalmology healthcare services in China Key Financial Results - **1H25 Revenue**: Rmb11,507 million, up 9.1% year-over-year (yoy), slower than expected (-1.6% vs. Goldman Sachs estimate) [1][2] - **1H25 Net Profits**: Rmb2,051 million, up 0.1% yoy, but down 9.9% vs. Goldman Sachs estimate due to lower non-operating income [1][5] - **EBIT**: Not explicitly stated, but implied to be in line with expectations [5] Segment Performance - **Refractive Surgery Revenue**: Grew by 11% yoy in 1H25, indicating strong demand despite weak consumption confidence [2][4] - **Optometry Services Revenue**: Increased by 15% yoy in 1H25, reflecting robust growth [2][4] - **Cataract Surgery Revenue**: Only grew by 3% yoy, attributed to: - Tightening national healthcare insurance budget in 2Q25 - Delayed demand due to weak macroeconomic conditions [2][4] Market Dynamics - **Demand Pull-Forward**: Earlier admissions for military academy/military recruitment created a pull-forward effect, impacting 2Q25 demand [1][2] - **Technological Advancements**: The company is promoting new technologies in refractive surgery (e.g., SMILE pro) to maintain average selling prices (ASP) and avoid price competition with smaller hospitals [2][11] Future Outlook - **Cataract Surgery**: Expected gradual improvement in 2H25 as the company adapts to the tightening budget [2] - **Target Market**: Increasing opportunities from the 50+ demographic with a net worth over Rmb3 million, particularly in premium treatments [11] Valuation and Investment Thesis - **Price Target**: Rmb15, with an upside of 8.5% from the current price of Rmb13.83 [12][14] - **Investment Rating**: Buy, supported by improving fundamentals and attractive risk-reward profile [11][12] - **Revised Profit Estimates**: Net profit estimates adjusted down by 2.6% for 2025E due to lower non-operating income and slight pressure on gross profit margin (GPM) [9][10] Risks - **Cataract Surgery Premiumization**: Risk of slower-than-expected premiumization trend [12] - **Price Competition**: Intensifying price competition in refractive surgery [12] - **Policy Impact**: Potential pricing pressure from policies related to OK lenses [12] Additional Insights - **Gross Profit Margin (GPM)**: Decreased to 48.6% in 1H25 from 49.4% in 1H24, primarily due to lower margins from newly opened flagship hospitals with high investment costs [9]

Core Insights - Alcon Inc. (ALC) is recognized as a leader in the eye care business, demonstrating solid performance due to its strong market position [1] - The company's shares are considered fully valued despite its clear vision and leadership in the industry [1] Group 1 - Alcon Inc. has maintained a leading position within the eye care sector, contributing to its robust performance [1] - The investment group "Value In Corporate Events" focuses on identifying opportunities in major corporate events such as IPOs, mergers & acquisitions, and earnings reports [1] - The service provides coverage of approximately 10 significant events each month, aiming to uncover the best investment opportunities [1]

Financial Data and Key Metrics Changes - Alcon's Q2 2025 sales reached $2.6 billion, reflecting a 3% increase year-over-year, consistent with Q1 performance [27] - Core gross margin for Q2 was 62.2%, in line with the previous year, while core operating margin decreased by 100 basis points to 19.1% due to increased R&D investments [31] - Core diluted earnings per share were $0.76, broadly in line with the previous year on a constant currency basis [31] Business Line Data and Key Metrics Changes - Surgical franchise revenue increased by 1% year-over-year to $1.5 billion, with implantable sales down 2% to $456 million due to soft market conditions and competitive pressures [27][28] - Vision Care sales rose by 5% to $1.1 billion, with contact lens sales up 7% to $692 million, driven by product innovation and price increases [29] - Oculo Health sales were $430 million, up 2% year-over-year, led by eye drops, partially offset by declines in contact lens care [30] Market Data and Key Metrics Changes - Global cataract volumes grew approximately low single digits in Q2, compared to a historical average of about 4% [25] - The retail market for contact lenses grew mid single digits during the quarter [25] Company Strategy and Development Direction - Alcon is focused on acquiring transformative technologies in eye care, with recent acquisitions including the Voyager Direct device for glaucoma and STAR for refractive surgery [8][9] - The company aims to leverage its broader commercial infrastructure to accelerate adoption of new products and expand its presence in high-growth markets like China [11][12] - Alcon's strategy includes driving organic growth through innovation and execution, with a robust pipeline and strategic expansion planned for 2026 and beyond [7][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term durability of end markets and the resilience of customers despite softer market conditions in the first half of the year [6][7] - The company anticipates a gradual return to historical growth rates in surgical procedures, driven by an aging population and increasing cataract prevalence [57][58] - Alcon expects to fully offset tariff impacts through foreign exchange and operational actions, maintaining a focus on innovation and cost discipline [32][33] Other Important Information - Alcon generated $681 million in free cash flow in the first half of the year, enabling $287 million in returns to shareholders through share repurchases and dividends [32] - The company incurred $27 million in tariff-related charges during Q2, with an expected full-year impact of approximately $100 million on cost of sales [32] Q&A Session Summary Question: Stability in PCIOLs share in the U.S. and international markets - Management noted a sequential improvement in U.S. share by about four points, attributed to the successful reception of PanOptix Pro, while acknowledging competitive pressures in international markets [43][46] Question: Outlook for 2026 and impact of recent acquisitions - Management refrained from providing specific guidance for 2026 but expressed confidence in the strategic value of recent acquisitions, emphasizing the importance of synergies and operational support [51][53] Question: Market weakness and outlook for recovery - Management highlighted that the aging population and increasing cataract prevalence underpin confidence in future growth, despite current market normalization [57][58] Question: Unity VCS order book and placements - Management reported over 1,000 qualified leads for Unity VCS within ten weeks of launch, emphasizing a deliberate ramp-up in installations to ensure proper training and support for surgeons [62][64] Question: Performance of SUSTAIN and competitive dynamics - Management indicated mid to high single-digit growth for SUSTAIN, noting a market pop due to competitor advertising, while addressing supply issues affecting some products [92][94] Question: Growth outlook for STAR and local competition in China - Management acknowledged local competition in China but expressed confidence in the long-term growth potential of the EVO ICL platform, supported by Alcon's critical mass and market presence [96][99]

Core Insights - Bausch + Lomb reported a GAAP revenue growth of 5% year over year to $1.278 billion, exceeding analyst expectations by $18 million [1] - Adjusted EPS (non-GAAP) was $0.07, beating consensus estimates by $0.01 but down 46.2% from $0.13 in the previous year [2] - The company experienced a narrowed net loss of $62 million compared to $151 million a year earlier, indicating some operational improvement [2][8] Business Overview - Bausch + Lomb specializes in eye health products, including contact lenses, OTC consumer eye care brands, prescription pharmaceuticals, and surgical devices, operating in three segments: Vision Care, Surgical, and Pharmaceuticals [3] Strategic Focus - The growth strategy includes a broad product portfolio, separation from Bausch Health Companies, geographic expansion, and investment in R&D, while managing regulatory risks and increasing scale in consumer and surgical markets [4] Quarterly Performance - Vision Care segment revenue reached $753 million, up 8% year over year, driven by daily silicone hydrogel contact lenses and consumer brands [5] - Surgical segment revenue was $216 million, growing 3% year over year, despite a voluntary recall of certain enVista IOL products [6] - Pharmaceuticals revenue declined to $309 million, attributed to weak US generics performance and pricing pressures [7] Profitability Metrics - Adjusted EBITDA (non-GAAP) decreased to $191 million, reflecting higher spending on marketing and costs from the recall [8] - Cash flow from operations improved to $35 million, a 133.3% increase from the previous year, due to better working capital management [2][8] Research and Development - R&D expenses increased to $96 million, with around 60 projects underway, including next-generation contact lenses and therapeutics for glaucoma and dry eye disease [9] Future Guidance - Full-year 2025 revenue guidance was raised to $5.05 billion to $5.15 billion, with projected constant currency revenue growth between 5% and 7% [10] - Adjusted EBITDA guidance for 2025 is set at $860 million to $910 million, driven by demand in Vision Care and Surgical [10] Key Watch Points - Management highlighted potential tariff impacts on adjusted EBITDA margin, estimating a 120 basis point headwind in the second half of 2025 [11] - Ongoing cost control, stabilization of Pharmaceuticals, and new product rollouts in Vision Care and Surgical are critical areas to monitor [11]

Financial Data and Key Metrics Changes - Total company revenue for Q2 2025 was $1,278 million, reflecting a year-over-year growth of 3% [14] - Excluding the impact of the Envista recall, total company revenue grew by 6% in the quarter [15] - Adjusted gross margin for Q2 was 60.6%, representing a 130 basis points decrease year-over-year [26] - Adjusted EBITDA for Q2, excluding acquired IPR&D, was $192 million, absorbing a one-time impact of $19 million from the investor recall [27] Business Line Data and Key Metrics Changes - Vision Care segment revenue for Q2 was $753 million, increasing by 6%, driven by growth in both consumer and contact lenses [16] - The consumer business grew by 6% in Q2, with Lumify growing by 27% and the dry eye portfolio delivering $115 million in revenue, representing 19% growth [18][19] - Surgical segment revenue was $216 million, an increase of 1%, but would have been 15% growth excluding the recall impact [21] - Pharma segment revenue was $309 million in Q2, representing a decline of 1%, with U.S. branded Rx business up 8% [23] Market Data and Key Metrics Changes - U.S. contact lens revenue grew by 11%, EMEA by 11%, LATAM by 25%, Japan by 3%, and China by 7% [20] - The dry eye portfolio saw a 16% constant currency revenue growth, with Blink eye drops growing by 13% and Artilac by 39% [34] Company Strategy and Development Direction - The company is focused on innovation and has a robust pipeline aimed at transforming the company and accelerating sales growth [6][9] - The strategic roadmap emphasizes operational excellence and a commitment to recapturing market share post-recall [10][11] - The company plans to showcase promising candidates at the upcoming Investor Day, indicating a focus on category disruption [41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the team's ability to overcome challenges and transform the company, highlighting the resilience shown in Q2 [44][45] - The company anticipates steady improvement in the U.S. generics business in the second half of the year [25] - Management expects the fourth quarter to be the strongest due to seasonality and the ramp-up of Envista [29] Other Important Information - The company raised its full-year revenue guidance to a range of $5,050 million to $5,150 million, reflecting constant currency growth of approximately 5% to 7% [28] - Adjusted EBITDA guidance was raised to a range of $860 million to $910 million [29] - The company successfully refinanced $3,100 million of its debt, extending maturities to 2031 [28] Q&A Session Summary Question: Highlights informing the decision to recommit to the company - Management expressed deep confidence in the team, products, and R&D pipeline, emphasizing the opportunity to transform the company [44][46] Question: Quantifying tariff impact and strategy in pharma - Management noted that the tariff impact is now estimated at 40 basis points for 2025, which is absorbed in the guidance [58][59] - The focus in pharma is on driving prescription and demand, with expectations for profitability to improve in 2026 and beyond [50][51] Question: Update on the contact lens market - Management sees the contact lens market as healthy, with strong performance from both new and legacy products [75][76] Question: Pipeline updates and approval timelines - The company expects to submit the ILIUS file this year, with approval anticipated in early second half of next year [93] - The launch of Envista Beyond may experience a couple of months delay due to recruitment issues [97]