• Revenue: $2.51 billion, up 12% versus the prior year.
• Adjusted EBITDA: $909 million, an increase of 10% compared to the same quarter last year.
• Adjusted Gross Margin: 73.1%, 80 basis points higher than the same period a year ago.
• Adjusted Operating Cash Flow: $343 million, a 75% increase versus the same period a year ago.
• Salix Segment Revenue: $642 million, a 5% growth year-over-year.
• International Segment Revenue: $291 million, an increase of 6% on a reported basis and 8% on an organic basis.
• Solta Medical Segment Revenue: $112 million, an increase of 35% on a reported basis.
• Diversified Segment Revenue: $269 million, an increase of 4% on a reported basis and 7% on an organic basis.
• Bausch + Lomb Revenue: $1.2 billion, up 19% on a reported basis and 10% on an organic basis.
• Debt Reduction: Reduced by approximately $110 million in the third quarter.

• Warning! GuruFocus has detected 3 Warning Signs with BHC.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bausch Health Companies Inc (NYSE:BHC) reported a sixth consecutive quarter of year-over-year growth in revenue and adjusted EBITDA.
• Revenues, excluding Bausch + Lomb, increased by 7% on a reported basis and 8% on an organic basis compared to the third quarter of 2023.
• The Salix segment, particularly XIFAXAN, showed strong performance with a 7% growth over the third quarter of 2023.
• The International segment delivered 8% organic growth, with notable performance in Canada and Latin America.
• Solta Medical segment achieved 36% organic growth year-over-year, driven by strong demand in South Korea and China.

Negative Points

• Consolidated adjusted operating expenses increased by $150 million from the same period last year.
• The Hatch-Waxman litigation continues against ANDA filings for generic rifaximin 550-milligram tablets, posing potential legal challenges.
• There is ongoing market speculation and legal disputes that could impact the company's strategic priorities.
• Adjusted R&D expenses decreased by 4% compared to Q3 of last year, which may affect future innovation.
• The company faces potential challenges with the upcoming loss of exclusivity for XIFAXAN in 2028, impacting future revenue streams.

Q & A Highlights

Q: Can you provide an update on the legal dispute process with Norwich regarding XIFAXAN? A: Thomas Appio, CEO, stated that Norwich cannot launch a generic version of XIFAXAN until 2029. Bausch Health is addressing new ANDA filings with new patents, including IBSD and polymorph patents, which were not part of previous litigation. The company intends to vigorously defend its intellectual property and believes it has the 30-month stay.

Q: How are you preparing for a post-XIFAXAN world, likely in 2028, in terms of business and debt management? A: Thomas Appio, CEO, emphasized the company's strong performance and the potential of the Red Sea program. Jean-Jacques Charhon, CFO, added that they plan to grow strong assets like Solta and the international segments, reduce debt through strong operating cash flow, and adjust capital allocation to maintain a fit-for-purpose capital structure.

Q: What are the growth opportunities for Bausch Health in 2025 across different segments? A: Thomas Appio, CEO, highlighted growth potential in the Salix segment, particularly with XIFAXAN, and international markets. The company is focusing on business development and leveraging its Solta franchise. Jean-Jacques Charhon, CFO, noted the significant runway for growth in Solta and international segments, supported by a diverse portfolio.

Q: Can you discuss the rationale behind selecting the specific population for the Red Sea program? A: Thomas Appio, CEO, explained that the Red Sea program targets cirrhotic patients to prevent progression to decompensated cirrhosis, addressing a significant unmet need. The program involves a new SSD formulation of rifaximin, aiming to reduce hospitalizations and healthcare costs associated with cirrhosis.

Q: How are you addressing the cost structure in anticipation of XIFAXAN losing exclusivity in 2028? A: Thomas Appio, CEO, stated that Bausch Health is implementing a fit-for-purpose model, continuously evaluating cost reduction opportunities and reinvesting savings into growth areas. The company is focused on maintaining operational efficiency and exploring business development opportunities to enhance its portfolio.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.