Bausch Health(BHC) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics - Total sales for Bausch Health, excluding Bausch & Lomb (B+L), were $1.13 billion in Q2 2023, up 10$1 billion in Q2 2023, up 10% reported and 12% organically compared to the prior year [6] - Consolidated adjusted EBITDA was $727 million in Q2 2023, up 4$2.3 billion to $2.4 billion [14] Business Segment Performance Salix - Salix revenues grew 11$557 million, driven by Xifaxan, Relistor, and Trulance [21][38] - Xifaxan grew 9% in Q2 2023, with overall demand up 3% year-over-year [38] - Relistor and Trulance posted year-over-year growth of 42% and 73%, respectively [38] International - International revenues grew 11% in Q2 2023 to $259 million, led by strong performances in EMEA and Canada [22][29] - The growth was partially offset by a voluntary recall of Emerade epinephrine autoinjectors, resulting in$12 million in write-offs and charges [29] Solta Medical - Solta Medical revenues were $88 million in Q2 2023, up 60$228 million, with growth in dermatology and dentistry offsetting declines in neurology and generics [24][30] - Arestin in dentistry grew 4% year-over-year, driven by sales force restructuring and consumer awareness efforts [5] Market Performance - Growth in Asia Pacific markets was strong at 23%, though tempered by a decline in the US [13] - The company expects second-half revenue to be relatively flat compared to the prior year, driven by growth in Jublia, Arestin, and Aplenzin, offsetting declines in mature brands [14] Strategic Direction and Industry Competition - The company is focused on separating Bausch & Lomb, with plans to distribute 80% of B+L shares to shareholders [15][26] - The company is exploring a tax reduction of capital for the B+L distribution, which could provide additional strategic flexibility [26] - Investments in AI customer engagement and R&D are key to driving growth, with significant progress in the RED-C program for Xifaxan [10][95] - The company is advancing its pipeline, including Amiselimod for ulcerative colitis and IDP-126 for acne vulgaris [104] Management Commentary on Operating Environment and Future Outlook - The company expects full-year adjusted operating cash flow of $625 million for Bausch Health, excluding B+L, with higher second-half adjusted EBITDA anticipated [7] - Management remains committed to deleveraging the balance sheet, with$181 million in debt reduction in Q2 2023 [41] - The company is optimistic about the potential of AI to revolutionize customer engagement and drive growth [10] Other Important Information - The company entered into a 600 million non-recourse financing facility with KKR, providing additional liquidity [39] - The company expects a decision on the Xifaxan litigation appeal in Q1 2024, with confidence in its intellectual property position [36][71] Q&A Summary Question: Strategic flexibility and debt leverage post-B+L distribution - The company clarified that the revised distribution mechanism does not change the debt targets or liquidity needs, with the focus remaining on deleveraging [16][17] Question: Xifaxan litigation timeline and impact - The company expects a decision on the Xifaxan litigation appeal in Q1 2024 and remains confident in its position [36][71] Question: Use of the 600 million financing facility - The facility is for general corporate purposes, with $350 million drawn as of August 2, 2023, to pay down the revolver [43][64] Question: Long-term solvency and debt maturities - The company expects to generate significant cash flow growth between now and 2027-2028, with plans to prioritize debt reduction and refinance remaining debt [52] Question: RED-C program timeline and physician adoption - The company expects data readout for the RED-C program in late 2025 to early 2026, with a focus on educating physicians about the benefits of prophylactic treatment [56][93]