Bausch Health Sets 2025 Targets: Sees 4-5% Revenue and EBITDA Growth Post Strategic Refinancing

Insights from Earnings Call: Bausch Health Companies Inc. (BHC) First Quarter 2025

Management View

• CEO Thomas Appio emphasized an eighth successive quarter of increased year-on-year revenue and adjusted EBITDA, noting rises of 6% and 14%, respectively, from the previous year. He attributed this success to robust teamwork and well-executed strategies despite difficult economic conditions.
• A major refinancing initiative was successfully executed, paying off $6.9 billion worth of debts maturing between 2025 and 2028, thereby enhancing the firm’s financial leeway. This move highlighted investors' trust in both the company's operational success and the valuation of its assets.
• The revenues from Salix segments increased by 6% organically, primarily driven by an 8% rise in Xifaxan sales, as evidenced by 59,000 additional patients starting treatment within the quarter. Meanwhile, Solta Medical saw a substantial 33% increase in organic revenue, significantly supported by strong performances in South Korea (up by 136%) and China (with a 30% boost).
• Chief Financial Officer Jean-Jacques Charhon announced revenues of $2,259 million, marking a 5% increase, along with an adjusted cash flow of $110 million for the quarter. Compared to the previous year, adjusted operating expenses saw an uptick of $78 million.

Outlook

• The firm maintained its financial projections for the year 2025, anticipating revenues between $4.950 billion and $5.100 billion along with an adjusted EBITDA ranging from $2.625 billion to $2.725 billion. This forecast suggests a projected increase of about 4% in revenue and approximately 5% in adjusted EBITDA.
• The projected adjusted operating cash flow has been updated to range from $825 million to $875 million, attributed to increased interest expenses due to recent refinancing activities.
• The management emphasized their commitment to enhancing shareholder value by exploring various strategies such as possible share repurchases and optimizing assets.

Financial Results

• Apart from Bausch + Lomb, the revenues amounted to $1.120 billion, representing a 6% rise compared to the first quarter of 2024, including an organic growth rate of 7%. The adjusted EBITDA saw a 14% boost to reach $576 million.
• The Salix segment produced $542 million in revenue, with Xifaxan seeing an 8% increase due to steady price adjustments and higher sales volumes.
• Solta Medical reported revenues of $113 million, showing significant growth in South Korea and China due to an increase in volume.
• The adjusted operating cash flow declined compared to the previous year because of the scheduling of interest payments and various outgoing transactions; however, this still aligned with what the management had anticipated.

Q&A

• Les Sulewski from Truist Securities asked about the impact of tariffs and changes in operating cash flow. CEO Appio mentioned their pro-active approach to inventory control and localized supply chain strategies aimed at reducing the effect of these tariffs. Meanwhile, CFO Charhon explained that increased interest rates along with expenditures related to refinancing were key factors affecting their cash flow forecasts.
• Doug Miehm from RBC Capital looked for information about Solta's continued growth potential in South Korea. Appio mentioned that although the growth rate might slow down, the existing stock of capital equipment guarantees steady consumption demands.
• Analysts brought up concerns about Xifaxan being included in the IRA discussion list. Appio stressed their continuous efforts to showcase the medication’s importance in decreasing hospital admissions for HE patients.

Sentiment Analysis

• The analysts maintained an upbeat yet careful stance, concentrating on issues like tariffs, refinancing expenses, and the negotiations for Xifaxan’s pricing under Medicare. The queries showcased a blend of interest and apprehension regarding how strategies would be carried out and the potential market risks involved.
• The management kept an assured attitude, stressing their resilience, ongoing operations improvements, and strategic plans. Appio pointed out the company’s robustness and promising expansion prospects even amidst external difficulties.

Quarter-over-Quarter Comparison

• The revenue forecast and adjusted EBITDA predictions continue to align with the previous quarter’s estimates, indicating ongoing faith in our operational effectiveness.
• The management emphasized consistency in their strategic goals, highlighting expansion within the Salix and Solta divisions as well as utilizing refinancing options to enhance financial adaptability.
• Interest among analysts turned towards examining the effects of tariffs and the pricing discussions surrounding theIRA, indicative of changing external pressures.

Risks and Concerns

• Management recognized possible effects stemming from changing tariff policies, stressing the importance of bolstering regional supply chain resilience and adjusting inventory approaches to reduce these risks.
• Experts voiced worries about the consequences of Xifaxan being included in Medicare's price talks and how this might impact its projected earnings down the line.
• Increasing costs related to interest and their effect on cash liquidity were likewise pointed out as issues of worry.

Final Takeaway

Bausch Health highlighted robust operational performance and strategic advancements, marking eight successive quarters of increased revenues and EBITDA. Their effective refinancing efforts have improved their financial agility, aligning with the 2025 forecasts. Despite concerns from experts regarding issues like tariffs and Xifaxan’s Medicare pricing, the leadership maintained an upbeat stance on future expansion opportunities and enhancing shareholder wealth.

Review the complete earnings call transcript here.

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