On February 23, 2022 Bausch Health Companies Inc. (NYSE/TSX: BHC) ("Bausch Health" or the "Company" or "we") reported its fourth-quarter and full-year 2021 financial results (Press release, Bausch Health, FEB 23, 2022, View Source [SID1234608872]).
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"In 2021, our reported revenues grew by five percent as several of our key products gained market share, and we delivered on our near-term R&D catalysts with four new product launches," said Joseph C. Papa, chairman and CEO, Bausch Health. "Thanks to the hard work and dedication of our employees, we achieved our goals in 2021 and have entered 2022 well positioned for continued growth."
"We have made great progress in our efforts to unlock value by creating three great companies, including publicly filing the registration statements for the proposed IPOs of Bausch + Lomb and Solta. Our planning and preparations to launch these IPOs are substantially complete, and we are prepared to move forward, subject to market conditions, stock exchange and other approvals," continued Mr. Papa.
Select Company Highlights
Increased total Company reported revenue by 5% compared to the full year of 2020
Reported revenue for XIFAXAN (rifaximin) grew by 11% during the full year of 2021 compared to the full year of 2020
Reported revenue for TRULANCE (plecanatide), which the Company acquired in 2019, exceeded $100 million during the full year of 2021
Reported revenue for the Solta business grew by 22% during the full year of 2021 compared to the full year of 2020
Repaid debt by approximately $1.3 billion for the full year of 2021 using cash on hand, cash generated from operations and in connection with the divestiture of Amoun Pharmaceutical Company S.A.E. ("Amoun")
Launched Solta Medical’s Clear + Brilliant Touch laser in the United States
Launched Bausch + Lomb’s Alaway Preservative Free (ketotifen fumarate ophthalmic solution 0.035%), antihistamine eye drops in the United States
Launched expanded parameters for Bausch + Lomb ULTRA Multifocal for Astigmatism contact lenses in the United States
Launched Biotrue Hydration Boost Lubricant Eye Drops in the United States
ClearVisc dispersive ophthalmic viscosurgical device for use in ophthalmic surgery was approved by the U.S. Food and Drug Administration ("FDA") and launched in the United States in June 2021
Divested Amoun to Abu-Dhabi-based ADQ in July 2021
Released the Company’s annual Environmental, Social and Governance Report in September 2021
Pipeline Advancements
Received FDA approval of the New Drug Application ("NDA") for XIPERE4 (triamcinolone acetonide injectable suspension), which uses the suprachoroidal space to treat patients suffering from macular edema associated with uveitis, and launched in the United States during the first quarter of 2022
Announced statistically significant topline results from two Phase 3 trials evaluating the investigational drug NOV035 (perfluorohexyloctane) as a first-in-class eye drop with a novel mechanism of action to treat the signs and symptoms of dry eye disease associated with Meibomian gland dysfunction; the Company expects to file an NDA with the FDA in the first half of 2022
Announced statistically significant topline results from the second pivotal Phase 3 trial evaluating the investigational IDP-126 gel in acne vulgaris
Entered into an agreement with Lochan LLC to develop the next generation of Bausch + Lomb’s eyeTELLIGENCE clinical decision support software
Initiated Phase 3 clinical trial of rifaximin soluble solid dispersion to study use of rifaximin in the prevention of hepatic encephalopathy
Initiated Phase 2 trial to evaluate amiselimod (S1P modulator) for the treatment of mild to moderate ulcerative colitis
Received regulatory approval for VYZULTA (latanoprostene bunod ophthalmic solution), 0.024%, in 2021 in South Korea, Brazil, Jordan, Qatar, Thailand, Turkey, Ukraine and the United Arab Emirates, and launched in Taiwan
Received regulatory approval for LUMIFY (brimonidine tartrate ophthalmic solution 0.025%) redness reliever eye drops in 2021 in Jordan and South Korea
Accelerating Strategic Alternatives
Bausch Health has continued to execute upon its plans to pursue an initial public offering ("IPO") of its Solta Medical ("Solta") business2 and to pursue an IPO2 and full separation of its Bausch + Lomb business from Bausch Pharma.3,6 The Company has publicly filed a Registration Statement on Form S-1 with the U.S. Securities and Exchange Commission ("SEC") and a preliminary base PREP prospectus with each of the securities regulatory authorities in all of the provinces and territories of Canada (other than Quebec) relating to the proposed IPO of Bausch + Lomb and also has publicly filed a Registration Statement on Form S-1 with the SEC relating to the proposed IPO of Solta Medical Corporation.
Bausch Health has completed all internal procedural steps and is fully prepared to launch both the Solta and Bausch + Lomb IPOs, subject to receipt of regulatory, stock exchange and other approvals. The Company is actively monitoring market conditions to determine the paths forward.2
Fourth-Quarter and Full-Year 2021 Revenue Performance
Total reported revenues were $2.196 billion for the fourth quarter of 2021, as compared to $2.213 billion in the fourth quarter of 2020, a decrease of $17 million, or 1%.
Total reported revenues were $8.434 billion for the full year of 2021, as compared to $8.027 billion in the full year of 2020, an increase of $407 million, or 5%. Excluding the favorable impact of foreign exchange of $95 million and the impact of divestitures and discontinuations of $132 million, primarily due to the divestiture of Amoun, revenue increased organically1,7 by 6% compared to the full year of 2020.
Bausch + Lomb Segment8
Bausch + Lomb segment revenues were $1.001 billion for the fourth quarter of 2021, as compared to $947 million for the fourth quarter of 2020, an increase of $54 million, or 6%. Excluding the unfavorable impact of foreign exchange of $11 million and the impact of divestitures and discontinuations of $2 million, the Bausch + Lomb segment increased organically1,7 by approximately 7% compared to the fourth quarter of 2020, primarily due to higher sales resulting from the positive impacts of the recovery from the COVID-19 pandemic.
Bausch + Lomb segment revenues were $3.765 billion for the full year of 2021, as compared to $3.415 billion for the full year of 2020, an increase of $350 million, or 10%. Excluding the favorable impact of foreign exchange of $58 million and the impact of divestitures and discontinuations of $10 million, the Bausch + Lomb segment increased organically1,7 by approximately 9% compared to the full year of 2020, primarily due to higher sales resulting from the positive impacts of the recovery from the COVID-19 pandemic.
Bausch Pharma (non-GAAP)1,8,10
Bausch Pharma revenues (non-GAAP)1,10 were $1.195 billion for the fourth quarter of 2021, as compared to $1.266 billion for the fourth quarter of 2020, a decrease of $71 million, or 6%. Excluding the unfavorable impact of foreign exchange of $6 million and the impact of divestitures and discontinuations of $70 million, revenue was flat organically.1,7
Bausch Pharma revenues (non-GAAP)1,10 were $4.669 billion for the full year of 2021, as compared to $4.612 billion for the full year of 2020, an increase of $57 million, or 1%. Excluding the favorable impact of foreign exchange of $37 million and the impact of divestitures and discontinuations of $122 million, revenue increased organically1,7 by 3%.
Salix Segment
Salix segment reported and organic1,7 revenues were $559 million for the fourth quarter of 2021, as compared to $527 million for the fourth quarter of 2020, an increase of $32 million, or 6%. The increase was primarily driven by higher sales resulting from the positive impacts of the recovery from the COVID-19 pandemic, including sales of XIFAXAN (rifaximin), RELISTOR (methylnaltrexone bromide) and TRULANCE (plecanatide), which grew by 9%, 21% and 21%, respectively, compared to the fourth quarter of 2020.
Salix segment reported and organic1,7 revenues were $2.074 billion for the full year of 2021, as compared to $1.904 billion for the full year of 2020, an increase of $170 million, or 9%. The increase was primarily driven by higher sales resulting from the positive impacts of the recovery from the COVID-19 pandemic, including sales of XIFAXAN (rifaximin), TRULANCE (plecanatide) and RELISTOR (methylnaltrexone bromide), which grew by 11%, 26% and 13%, respectively, compared to the full year of 2020.
International Rx Segment8
International Rx segment revenues were $276 million for the fourth quarter of 2021, as compared to $333 million for the fourth quarter of 2020, a decrease of $57 million, or 17%. Excluding the unfavorable impact of foreign exchange of $6 million and the impact of divestitures and discontinuations of $69 million, primarily due to the divestiture of Amoun, the International Rx segment increased organically1,7 by 7% compared to the fourth quarter of 2020.
International Rx segment revenues were $1.166 billion for the full year of 2021, as compared to $1.181 billion for the full year of 2020, a decrease of $15 million, or 1%. Excluding the favorable impact of foreign exchange of $28 million and the impact of divestitures and discontinuations of $113 million, primarily due to the divestiture of Amoun, the International Rx segment increased organically1,7 by 7% compared to the full year of 2020. The decrease in revenues was partially offset by higher sales resulting from the positive impacts of the recovery from the COVID-19 pandemic.
Ortho Dermatologics Segment8
Ortho Dermatologics segment reported and organic1,7 revenues were $146 million for the fourth quarter of 2021, as compared to $157 million for the fourth quarter of 2020, a decrease of $11 million, or 7%, primarily driven by a decrease in net realized pricing of our medical dermatology products.
Ortho Dermatologics segment revenues were $564 million for the full year of 2021, as compared to $548 million for the full year of 2020, an increase of $16 million, or 3%. Excluding the favorable impact of foreign exchange of $9 million, the Ortho Dermatologics segment increased organically1,7 by 1% compared to the full year of 2020, primarily driven by an increase in sales in the Thermage and Clear + Brilliant franchises and due to the positive impacts of the recovery from the COVID-19 pandemic, partially offset by a decrease in net realized pricing of our medical dermatology products.
Diversified Products Segment8
Diversified Products segment reported revenues were $214 million for the fourth quarter of 2021, as compared to reported revenues of $249 million for the fourth quarter of 2020, a decrease of $35 million, or 14%. Excluding the impact of divestitures and discontinuations of $1 million, the Diversified Products segment declined organically1,7 by 14% compared to the fourth quarter of 2020, primarily attributable to a decrease in volumes.
Diversified Products segment reported revenues were $865 million for the full year of 2021, as compared to reported revenues of $979 million for the full year of 2020, a decrease of $114 million, or 12%. Excluding the impact of divestitures and discontinuations of $9 million, the Diversified Products segment declined organically1,7 by 11% compared to the full year of 2020, primarily attributable to a decrease in volumes and net realized pricing.
Operating Results
Operating income was $367 million for the fourth quarter of 2021, as compared to a loss of $5 million for the fourth quarter of 2020, a favorable change of $372 million. The change was primarily driven by a decrease in Other expense, net, and lower loss on assets held for sale and amortization, partially offset by an increase in Selling, general and administrative (SG&A) expenses primarily due to an increase in separation, separation-related, IPO and IPO-related costs.
Operating income was $450 million for the full year of 2021, as compared to operating income of $676 million for the full year of 2020, an unfavorable change of $226 million. The change was primarily driven by a goodwill impairment charge of $469 million in our Ortho Dermatologics business, an increase in SG&A expenses due to the non-recurrence of profit protection measures taken in 2020 to manage and reduce operating expenses during the COVID-19 pandemic and an increase in separation, separation-related, IPO and IPO-related costs, partially offset by a decrease in the amortization of intangible assets and an increase in contribution due to the positive impacts of the recovery of the COVID-19 pandemic.
Net Income/Loss
Net income for the fourth quarter of 2021 was $69 million, as compared to a net loss of $153 million for the fourth quarter of 2020, a favorable change of $222 million. The change was primarily due to the favorable change in operating income as discussed above and lower interest expense, partially offset by a decrease in benefit from income taxes.
Net loss for the full year of 2021 was $948 million, as compared to a net loss of $560 million for the full year of 2020, an unfavorable change of $388 million. The change was primarily due to the unfavorable change in operating income as discussed above and a decrease in benefit from income taxes, partially offset by lower interest expense.
Adjusted net income (non-GAAP)1 for the fourth quarter of 2021 was $463 million, as compared to $478 million for the fourth quarter of 2020, a decrease of $15 million.
Adjusted net income (non-GAAP)1 for the full year of 2021 was $1.602 billion, as compared to $1.428 billion for the full year of 2020, an increase of $174 million.
Cash Generated from Operations
The Company generated $24 million of cash from operations in the fourth quarter of 2021, as compared to $394 million in the fourth quarter of 2020, a decrease of $370 million, or 94%. The decrease in cash from operations was primarily attributed to the timing of payments in the normal course of business, an increase in payments for legal settlements, an increase in separation, separation-related, IPO and IPO-related costs and a decrease in net cash provided by Amoun operating activities.
The Company generated $1.426 billion of cash from operations in 2021, as compared to $1.111 billion in 2020, an increase of $315 million, or 28%. The increase in cash from operations is primarily attributable to the timing of payments in the normal course of business and the positive impacts from the recovery from the COVID-19 pandemic, partially offset by an increase in payments for legal settlements, an increase in separation, separation-related, IPO and IPO-related costs and a decrease in net cash provided by Amoun operating activities.
Earnings Per Share
GAAP Earnings Per Share ("EPS") Diluted for the fourth quarter of 2021 was $0.19, as compared to ($0.43) for the fourth quarter of 2020. GAAP EPS Diluted for the full year of 2021 was ($2.64), as compared to ($1.58) for the full year of 2020.
Adjusted EBITDA (non-GAAP)1
Adjusted EBITDA (non-GAAP)1 was $909 million for the fourth quarter of 2021, as compared to $911 million for the fourth quarter of 2020, a decrease of $2 million. Excluding the impact of the Amoun divestiture, Adjusted EBITDA (non-GAAP)1 increased by $17 million, or 2%, compared to the fourth quarter of 2020.
Adjusted EBITDA (non-GAAP)1 was $3.472 billion for the full year of 2021, as compared to $3.294 billion for the full year of 2020, an increase of $178 million. The increase was driven by higher sales resulting from the positive impacts of the recovery from the COVID-19 pandemic, partially offset by the Adjusted EBITDA (non-GAAP)1 associated with Amoun, which was divested in July 2021.
2022 Financial Outlook
Bausch Health provided guidance for the full year of 2022 as follows:
Full-year revenue range of $8.40 – $8.60 billion
Full-year Adjusted EBITDA (non-GAAP)11 range of $3.45 – $3.60 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)11 to GAAP net income (loss), due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. In periods where significant acquisitions or divestitures are not expected, the Company believes it might have a basis for forecasting the GAAP equivalent for certain costs, such as amortization, which would otherwise be treated as non-GAAP to calculate projected GAAP net income (loss). However, because other 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)11. 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.
Additional Highlights
Bausch Health’s cash, cash equivalents, restricted cash and other settlement deposits were $2.119 billion12 at Dec. 31, 2021
The Company’s availability under its 2023 Revolving Credit Facility was $886 million at Dec. 31, 2021
Basic weighted average shares outstanding for the fourth quarter of 2021 were 360.0 million
Diluted weighted average shares outstanding for the fourth quarter of 2021 were 364.1 million