Bausch + Lomb (BLCO) - 2024 Q2 - Quarterly Report

Product Portfolio and Development - Bausch + Lomb reported a comprehensive portfolio of approximately 400 products in eye health, marketed in around 100 countries [161]. - The company has over 60 projects in its global pipeline, including new contact lenses and next-generation cataract equipment [166]. - The acquisition of XIIDRA in September 2023 enhances the company's dry eye franchise, being the first non-steroid eye drop approved for dry eye disease [171]. - The company launched Blink NutriTears in June 2024, targeting root causes of dry eyes and promoting healthy tear production [168]. - Bausch + Lomb's Vision Care segment includes leading products like Biotrue ONEday daily disposables and Biotrue multi-purpose solution [163]. - The Surgical segment includes key brands such as Akreos and VICTUS femtosecond laser, focusing on cataract and retinal conditions [164]. - The company acquired AcuFocus in January 2023, enhancing its surgical portfolio with the IC-8 Apthera IOL [171]. - The company plans to launch enVista Aspire and enVista Envy in the U.S. and Europe in 2024 and 2025, respectively [169]. - The company has received FDA approval for Lumify Preservative Free, expected to launch in Q1 2025 [167]. Financial Performance - Product sales for the three months ended June 30, 2024, were $1,213 million, an increase of$182 million (approximately 17.6%) compared to $1,031 million for the same period in 2023 [190]. - Total revenues for the six months ended June 30, 2024, were$2,315 million, up $349 million (approximately 17.8$1,966 million for the same period in 2023 [190]. - Operating income for the three months ended June 30, 2024, was $26 million, a decrease of$17 million (approximately 39.5%) compared to $43 million for the same period in 2023 [190]. - Net loss attributable to Bausch + Lomb Corporation for the three months ended June 30, 2024, was$151 million, an increase of $119 million compared to a net loss of$32 million for the same period in 2023 [190]. - The cost of goods sold for the three months ended June 30, 2024, was $482 million, an increase of$65 million (approximately 15.6%) compared to $417 million for the same period in 2023 [190]. - Selling, general, and administrative expenses for the three months ended June 30, 2024, were$535 million, an increase of $118 million (approximately 28.3$417 million for the same period in 2023 [190]. - Revenues for the three months ended June 30, 2024, were $1,216 million, an increase of$181 million, or 17%, compared to $1,035 million in 2023 [192]. - Vision Care segment revenue increased by$51 million, or 8%, to $697 million, driven by sales from the dry eye portfolio and contact lenses, despite a$20 million unfavorable impact from foreign currencies [198]. - Pharmaceuticals segment revenue rose by $116 million, or 60$310 million, primarily due to the XIIDRA acquisition and the launch of MIEBO, with incremental sales from XIIDRA contributing $89 million [199]. - Surgical segment revenue increased by$14 million, or 7%, to $209 million, driven by increased system sales and demand for consumables [199]. Cost and Expense Management - Cost of goods sold increased by$65 million, or 16%, to 482 million, primarily due to costs associated with recent acquisitions [204]. - SG&A expenses rose by 118 million, or 28%, to 535 million, mainly due to higher selling and advertising costs related to XIIDRA and MIEBO [205]. - R&D expenses decreased slightly by 1 million, or 1%, to $84 million, reflecting ongoing investment in product development [207]. - Amortization of intangible assets increased by$18 million, or 32%, to $74 million, primarily due to acquisitions [208]. - Operating income decreased by$17 million to 26 million, reflecting increased SG&A and amortization expenses [210]. - Total provisions to reduce gross product sales to net product sales were 35.4% for Q2 2024, up from 29.1% in Q2 2023, primarily due to increased rebates [202]. Segment Performance - Vision Care segment profit increased to 192 million in Q2 2024, up 15% from $167 million in Q2 2023, driven by higher volume and pricing [214]. - Pharmaceuticals segment profit rose to$78 million in Q2 2024, a 15% increase from $68 million in Q2 2023, primarily due to increased contributions from XIIDRA and MIEBO [214]. - Surgical segment profit decreased to$4 million in Q2 2024, down 56% from $9 million in Q2 2023, attributed to higher costs and selling expenses [215]. - Total revenues for the six months ended June 30, 2024, were$2,315 million, an 18% increase from $1,966 million in 2023, driven by acquisitions and increased volumes [221]. - Vision Care segment revenue was$1,332 million for the six months ended June 30, 2024, an 8% increase from $1,233 million in 2023, primarily from dry eye products and contact lenses [225]. - Pharmaceuticals segment revenue surged to$577 million in the first half of 2024, a 63% increase from $355 million in 2023, mainly due to the XIIDRA acquisition and MIEBO launch [228]. Challenges and Risks - The ongoing Russia-Ukraine war has impacted the company's distribution capabilities, but necessary licenses have been obtained to sell products in those regions [175]. - Revenues attributable to Russia, Ukraine, and Belarus accounted for approximately 3$102 million in Q2 2024, an increase of $44 million from$58 million in Q2 2023, mainly due to new debt instruments [217]. - Net loss attributable to Bausch + Lomb Corporation was $151 million in Q2 2024, a significant increase from a loss of$32 million in Q2 2023, driven by higher taxes and interest expenses [220]. - SG&A expenses increased by $204 million, or 24$1,039 million for the six months ended June 30, 2024, primarily due to higher selling and advertising costs [233]. - R&D expenses rose by $4 million, or 2$166 million for the same period, driven by ongoing product development [233]. - Amortization of intangible assets increased by $35 million, or 31$148 million, mainly due to acquisitions [234]. - Operating income decreased by $9 million, or 22$32 million, reflecting higher SG&A and amortization expenses [236]. - Interest expense surged by $93 million to$201 million, attributed to various debt facilities [241]. - Provision for income taxes increased by $102 million to$145 million, influenced by changes in earnings jurisdiction and discrete tax effects [243]. - Net cash provided by operating activities was $56 million, an increase of$136 million compared to a net cash used of $80 million in the prior year [246]. - As of June 30, 2024, the interest rate for borrowings under the Revolving Credit Facility ranges from 8.18$1,400 million aggregate principal amount of 8.375% Senior Secured Notes due October 2028 [265]. - The Company expects to make interest payments of approximately $200 million and mandatory debt amortization payments of$15 million for the period July 1, 2024 through December 31, 2024 [273]. - The remaining mandatory quarterly amortization payments for the May 2027 Term Facility were $69 million through March 2027 [264]. - The remaining mandatory quarterly amortization payments for the September 2028 Term Facility were$20 million through June 2028 [264]. - As of July 24, 2024, Bausch + Lomb had 351,895,407 issued and outstanding common shares [280]. - The weighted average stated rate of interest for the Company's outstanding debt obligations as of June 30, 2024 was 8.63% [269]. - Bausch + Lomb acquired AcuFocus, Inc. for an up-front purchase price of $35 million, with$31 million paid in January 2023 [274]. - The company anticipates continued improvement in operational efficiency and plans to manage cash and working capital requirements for the remainder of 2024 and beyond [285].