On August 9, 2022 Bausch Health Companies Inc. (NYSE/TSX: BHC) ("Bausch Health" or the "Company" or "we" or "our") reported its second-quarter 2022 financial results (Press release, Bausch Health, AUG 9, 2022, View Source [SID1234617860]).
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"The second quarter was a transitional quarter for Bausch Health as we intensified our focus on the Bausch Pharma and Solta businesses," Thomas J. Appio, Chief Executive Officer, Bausch Health, said. "In our first ninety days, our leadership team has taken immediate action to strengthen execution and accelerate change. We have advanced debt paydown through open market repurchases this quarter. We are focused on creating value through driving growth, profitability and improving our balance sheet."
Strategic Alternatives Update
The Company believes that spinning off Bausch + Lomb makes strategic sense and it remains committed to doing so as soon as it is able to satisfy all applicable conditions as previously disclosed. The Company is evaluating all relevant factors and considerations regarding the distribution as it assesses the potential impacts of the Norwich XIFAXAN patent litigation.
Second-Quarter 2022 Revenue Performance
Total reported revenues were $1.967 billion for the second quarter of 2022, as compared to $2.1 billion in the second quarter of 2021, a decrease of $133 million, or 6%. Excluding the unfavorable impact of foreign exchange of $61 million and the impact of divestitures and discontinuations of $74 million, primarily due to the divestiture of Amoun Pharmaceutical Company S.A.E. ("Amoun") on July 26, 2021, revenue was flat on an organic basis1,2 compared to the second quarter of 2021.
Reported revenues by segment were as follows:
Salix Segment
Salix segment reported and organic1,2 revenues were $501 million for the second quarter of 2022, as compared to $516 million for the second quarter of 2021, a decrease of $15 million, or 3%. The decrease was primarily driven by a decline in sales of TRULANCE and certain non-promoted products, partially offset by increased sales of XIFAXAN and PLENVU.
International Segment3
International segment reported revenues were $233 million for the second quarter of 2022, as compared to $313 million for the second quarter of 2021, a decrease of $80 million, or 26%. Excluding the unfavorable impact of foreign exchange of $15 million and the impact of divestitures and discontinuations of $71 million, primarily from the divestiture of Amoun, segment revenues increased organically1,2 by 2% compared to the second quarter of 2021. 2022 includes a provision for expected future product returns of $11 million. Excluding the impact of this returns provision, segment revenues increased by 7% on an organic1,2 basis.
Diversified Products Segment3
Diversified Products segment reported and organic1,2 revenues were $235 million for the second quarter of 2022, as compared to $264 million for the second quarter of 2021, a decrease of $29 million, or 11%, primarily attributable to a decrease in volumes attributable to the neurology business and lower net realized pricing. Revenues from Jublia increased 13% as the brand continues to benefit from marketing investment.
Solta Medical Segment3
Solta Medical segment reported and organic1,2 revenues were $57 million for the second quarter of 2022, as compared to $73 million in the second quarter of 2021, a decrease of $16 million, or 22%. Ongoing COVID-related lockdowns in China drove the decline.
Bausch + Lomb Segment3
Bausch + Lomb segment reported revenues were $941 million for the second quarter of 2022, as compared to $934 million for the second quarter of 2021, an increase of $7 million, or 1%. Excluding the unfavorable impact of foreign exchange of $46 million and the impact of divestitures and discontinuations of $3 million, the Bausch + Lomb segment revenue increased organically1,2 by 6% compared to the second quarter of 2021, driven by sales growth in Vision Care and Surgical, offset by lower revenues from Ophthalmic Pharmaceuticals.
Operating Income/Loss
Operating income was $161 million for the second quarter of 2022, as compared to an operating loss of $270 million for the second quarter of 2021, a favorable change of $431 million, primarily driven by a decrease in Other expense, primarily attributable to higher adjustments related to the settlement of certain litigation matters in the second quarter of 2021 and lower amortization of intangible assets in 2022, partially offset by an impairment to goodwill in 2022.
Net Loss Attributable to Bausch Health
Net loss attributable to Bausch Health for the second quarter of 2022 was $145 million, as compared to $595 million for the second quarter of 2021, a favorable change of $450 million as a result of the change in operating results discussed above and a net gain on extinguishment of debt in 2022, partially offset by an increase in the provision for income taxes and higher interest expense.
Adjusted net income attributable to Bausch Health (non-GAAP)1 for the second quarter of 2022 was $201 million, as compared to $352 million for the second quarter of 2021, a decrease of $151 million primarily due to the investment of Amoun, lower gross profit due to sales performance and inflation, higher operating expenses (investments in sales and marketing and research and development) and higher interest and income tax expense.
Earnings Per Share Attributable to Bausch Health
GAAP Earnings Per Share attributable to Bausch Health for the second quarter of 2022 was ($0.40), as compared to ($1.66) for the second quarter of 2021.
Adjusted EBITDA attributable to Bausch Health (non-GAAP)1
Adjusted EBITDA attributable to Bausch Health (non-GAAP)1 was $701 million for the second quarter of 2022, as compared to $826 million for the second quarter of 2021, a decrease of $125 million, primarily due to the divestment of Amoun, lower gross profit as discussed above and higher investments in sales and marketing and research and development.
Cash Provided by Operating Activities
The Company generated cash provided by operating activities of $123 million in the second quarter of 2022, as compared to $395 million in the second quarter of 2021, a decrease of $272 million due to business results and changes in working capital.
Balance Sheet Highlights as of June 30, 2022:
Cash, cash equivalents, restricted cash and other settlement deposits were $1.879 billion5.
The Company executed an open market repurchase program in the second quarter in which the Company purchased $481 million of unsecured bonds for $300 million of cash consideration.
Bausch Health had availability under its 2027 Revolving Credit Facility of approximately $500 million and Bausch + Lomb had availability of approximately $500 million under its Revolving Credit Facility.
2022 Financial Outlook
Bausch Health updated its consolidated guidance for the full year 2022 as follows:
Full year revenue range of $8.05 – $8.22 billion compared to prior guidance of $8.25 – $8.40 billion
Full year Adjusted EBITDA (non-GAAP)1 range of $3.02 – $3.12 billion compared to prior guidance of $3.225 – $3.375 billion
Other than with respect to GAAP Revenues, the Company only provides guidance on a non-GAAP basis. The Company does not provide a reconciliation of forward-looking Adjusted EBITDA (non-GAAP)1 to GAAP net income (loss), due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. Because deductions (such as restructuring, gain or loss on extinguishment of debt and litigation and other matters) used to calculate projected net income (loss) vary dramatically based on actual events, the Company is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income (loss) at this time. The amount of these deductions may be material and, therefore, could result in projected GAAP net income (loss) being materially less than projected Adjusted EBITDA (non-GAAP)1. These statements represent forward-looking information and may represent a financial outlook, and actual results may vary. Please see the risks and assumptions referred to in the Forward-looking Statements section of this news release. The guidance in this news release is only effective as of the date given, August 9, 2022, and will not be updated or affirmed unless and until the Company publicly announces updated or affirmed guidance.