Bausch Health(BHC) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics - Q2 2024 revenues for Bausch Health (excluding Bausch + Lomb) were $1.19 billion, up 5% on a reported basis and 6% on an organic basis compared to Q2 2023 [4] - Adjusted EBITDA for Bausch Health (excluding B+L) was$ 614 million, an 8% increase compared to the prior year [4] - Consolidated revenues for Bausch Health were $2.4 billion, up 11% on a reported basis and 8% on an organic basis over Q2 2023 [15] - Adjusted EBITDA attributable to Bausch Health was$ 798 million, a 10% increase compared to the same quarter last year [24] - The company ended Q2 with approximately $1.5 billion of liquidity, including$ 320 million in cash and $950 million available under its revolving credit facility [27] Business Segment Performance - Salix segment revenues increased by$ 1 million to $558 million, driven by 10% growth in Xifaxan revenue [16] - Xifaxan revenues grew 10% year-over-year, with extended units growing 4% despite flat retail prescription growth [17] - Solta Medical revenues were$ 102 million, up 16% on a reported basis and 19% on an organic basis, led by strong growth in Asia Pacific [18] - International revenues increased 7% to $276 million, with double-digit organic growth in Canada and mid-single-digit growth in Latin America [18] - Dermatology revenues grew 21% on a reported basis and 25% on an organic basis, benefiting from favorable net pricing comparisons [19] - Neurology revenues grew 11% year-over-year, driven by competitor supply disruptions and favorable net pricing [20] - Generics business revenues declined 11% on a reported basis and 4% on an organic basis due to competitive pressures [21] Market Performance - Asia Pacific markets, particularly South Korea, China, and Taiwan, drove strong growth for Solta, with South Korea nearly doubling its business [4] - Thermage FLX launched in China as a medical device, with early results meeting expectations [10] - The U.S. market for Solta saw a 4% year-over-year decline, but the company is investing in sales teams and tools to drive future growth [19] Strategic Direction and Industry Competition - The company continues to prioritize the full separation of Bausch + Lomb, aiming to ensure both entities are appropriately capitalized [14] - Bausch Health is focused on driving growth through existing assets, targeted investments, and commercial excellence while advancing its R&D pipeline [30] - The company is defending its intellectual property, particularly around Xifaxan, with ongoing litigation against Norwich and Amneal [12][13] - The RED-C program for Rifaximin aims to address a larger market by focusing on preventing hepatic encephalopathy, with top-line results expected by early 2026 [9] Management Commentary on Operating Environment and Future Outlook - Management highlighted the company's fifth consecutive quarter of year-over-year growth in revenue and adjusted EBITDA, positioning it well for the second half of 2024 [4] - The company remains focused on cost management and operational effectiveness while driving growth in key areas such as Xifaxan, Solta, and international markets [30] - Management expressed confidence in the potential of the RED-C program and the aesthetics pipeline, including Thermage FLX and Clear + Brilliant Touch [9][10][11] Other Important Information - The company repaid over$ 360 million of debt in Q2, including $305 million of bonds with 2025 maturities, and has retired$ 555 million in principal value of 2025 and 2026 maturities year-to-date [25][26] - Aimee Lenar joined as Executive Vice President of US Pharma, and JJ Charhon will join as CFO in mid-August, bringing extensive industry experience [7] - The company is maintaining its full-year 2024 guidance, expecting revenue of $4.7 billion to$ 4.85 billion and adjusted EBITDA of $2.36 billion to$ 2.46 billion [28] Q&A Session Summary Question: Balance sheet and leverage concerns, including potential negotiations with the co-op [32] - The company denied rumors of bankruptcy or insolvency proceedings and reiterated its focus on growing the business and generating results [33] - Management emphasized the strategic priority of separating Bausch + Lomb and ensuring both companies are appropriately capitalized [34][36] Question: Plan B if the separation of Bausch + Lomb is not feasible [39] - The company reiterated that the separation remains a strategic priority and did not provide details on alternative plans [40] Question: Commercial assumptions for the Phase 3 IBD program for Amiselimod [39] - The company believes there is a significant unmet need in the market and is confident in the data supporting the program [40] Question: Xifaxan script dynamics and investment strategy [42] - Management highlighted strong NBRx growth and the potential to treat more patients, particularly in OHE and IBSD [43][45] Question: RED-C trial and its potential impact on the company [49] - The company sees the RED-C program as a significant opportunity to expand the market for Rifaximin, particularly in prevention rather than treatment [51] Question: Solvency and debt maturities [57] - The company highlighted its liquidity position, ability to monetize its BLCO stake, and focus on growing non-Xifaxan businesses like Solta and international markets [62][63] Question: Thermage FLX reception in China and potential IPO for Solta [64] - Management expressed optimism about the growth potential of Solta in China and globally, with no immediate plans for an IPO [65][67]