On May 6, 2019 Bausch Health Companies Inc. (NYSE/TSX: BHC) ("Bausch Health" or the "Company" or "we") reported its first-quarter 2019 financial results (Press release, Valeant, MAY 6, 2019, View Source [SID1234535762]).
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"Bausch Health is off to a strong start in 2019 with the continued growth of XIFAXAN which grew 11% in the quarter, the launch of BRYHALI, the successful acquisition of TRULANCE, and the approval of DUOBRII and expected launch in June. We believe that our promising pipeline and focus on Project CORE (cost optimization and revenue enhancements) has positioned the Company to build on our growth in 2019 and beyond. Strong operational execution is leading us to raise our full-year 2019 revenue and adjusted EBITDA (non-GAAP)1 guidance," said Joseph C. Papa, chairman and CEO, Bausch Health.
"With nearly 60% of our revenues coming from a diversified mix of medical devices, OTC products and prescription and branded generic products that are not exposed to the U.S. branded prescription drug pricing environment, we believe that Bausch Health is uniquely positioned to grow in health care," Mr. Papa continued.
Company Highlights
Executing on Core Businesses and Advancing Pipeline
The Bausch + Lomb/International segment comprised approximately 55% of the Company’s revenue in the first quarter of 2019
Reported revenue in the Bausch + Lomb/International segment increased by 1% compared to the first quarter of 2018; revenue in this segment grew organically1,2 by 8% compared to the first quarter of 2018, due to an increase in volume across all business units particularly in Global Vision Care, Global Consumer and International Rx
The U.S. Food and Drug Administration (FDA) approved LOTEMAX SM (loteprednol etabonate ophthalmic gel) 0.38%, a new gel formulation for the treatment of postoperative inflammation and pain following ocular surgery, and LOTEMAX SM 0.38% has now launched
Received 510(k) clearance for use of the Tangible Hydra-PEG custom contact lens coating technology with some of its leading Boston gas permeable materials, the Boston XO, Boston XO2, Boston EO and Boston ES lenses, including those utilized in the Zenlens scleral lens family
Acquired the U.S. rights to Eton Pharmaceuticals’ EM-100, an investigational eye drop that, if approved, will be the first over-the-counter preservative-free formulation eye drop for the treatment of ocular itching associated with allergic conjunctivitis
The Salix segment comprised approximately 22% of the Company’s revenue in the first quarter of 2019
XIFAXAN revenue increased by 11% compared to the first quarter of 2018
RELISTOR revenue increased by 30% compared to the first quarter of 2018
Completed the acquisition of certain assets of Synergy Pharmaceuticals Inc. ("Synergy"), including TRULANCE, a treatment for adults with chronic idiopathic constipation and irritable bowel syndrome with constipation (IBS-C), and dolcanatide, an investigational compound that has demonstrated proof-of-concept in treating patients with multiple gastrointestinal conditions, for a cash purchase price, including restructuring, of approximately $190 million and the assumption of certain liabilities
The Ortho Dermatologics segment comprised approximately 7% of the Company’s revenue in the first quarter of 2019
Revenues in the Global Solta business increased by 31% compared to the first quarter of 2018, driven by strong demand of Thermage FLX in Asia Pacific following the launch in the region
BRYHALI has experienced rapid prescription uptake by dermatologists within four months of launch3
The FDA approved DUOBRII Lotion for the topical treatment of plaque psoriasis in adults. DUOBRII is expected to be launched in June 2019
Strategic Capital Allocation and Debt Management
Increased research and development investment by approximately 30% in the first quarter of 2019 vs. the first quarter of 2018
Refinanced $1.5 billion of 2021 and 2023 Senior Unsecured Notes
Reduced debt by >$100 million in the first quarter of 2019 using cash on hand, while still completing the acquisition of certain assets of Synergy
First-Quarter 2019 Revenue Performance
Total reported revenues were $2.016 billion for the first quarter of 2019, as compared to $1.995 billion in the first quarter of 2018, an increase of $21 million, or 1%. Excluding the unfavorable impact of foreign exchange of $59 million, the impact of 2019 acquisition of $6 million and the impact of the 2018 divestitures and discontinuations of $18 million, revenue grew organically1,2 by 5% compared to the first quarter of 2018, driven by organic growth1,2 across the Bausch + Lomb/International and Salix segments.
Bausch + Lomb/International Segment
Bausch + Lomb/International segment revenues were $1.118 billion for the first quarter of 2019, as compared to $1.103 billion for the first quarter of 2018, an increase of $15 million. Excluding the unfavorable impact of foreign exchange of $58 million and the impact of the 2018 divestitures and discontinuations of $14 million, the Bausch + Lomb/International segment grew organically1,2 by approximately 8% compared to the first quarter of 2018, primarily due to higher volumes. Bausch + Lomb/International reported the highest quarter of organic revenue growth2 since the Bausch + Lomb acquisition.
Salix Segment
Salix segment revenues were $445 million for the first quarter of 2019, as compared to $422 million for the first quarter of 2018, an increase of $23 million despite the loss of exclusivity of UCERIS. The increase was primarily driven by XIFAXAN, which grew 11% in the quarter as compared to the first quarter of 2018.
Ortho Dermatologics Segment
Ortho Dermatologics segment revenues were $138 million for the first quarter of 2019, as compared to $140 million for the first quarter of 2018, a decrease of $2 million, or 1%, due to lower volumes primarily driven by the loss of exclusivity of ELIDEL, ZOVIRAX and SOLODYN, mostly offset by 31% revenue growth in the Global Solta business.
Diversified Products Segment
Diversified Products segment revenues were $315 million for the first quarter of 2019, as compared to $330 million for the first quarter of 2018, a decrease of $15 million, or 5%. The decrease was primarily attributable to the previously reported loss of exclusivity for a basket of products.
Operating Income/Loss
Operating income was $287 million for the first quarter of 2019, as compared to an operating loss of $2.281 billion for the first quarter of 2018, an increase in operating results of $2.568 billion. The increase in the Company’s operating results for the first quarter of 2019 reflects: (i) lower impairments and amortization and (ii) the increase in reported revenues and higher gross margins in 2019 as compared to 2018, partially offset by increased research and development spend and increased advertising and promotion spend following the launch of several new products.
Net Loss
Net loss for the three months ended March 31, 2019 was $52 million, as compared to net loss of $2.581 billion for the same period in 2018, a decrease of $2.529 billion. The decrease in net loss is primarily due to: (i) the increase in operating results discussed above, (ii) lower interest expense and (iii) lower loss on extinguishment of debt.
Adjusted net income (non-GAAP)1 for the first quarter of 2019 was $358 million, as compared to $312 million for the first quarter of 2018, an increase of $46 million, or 15%.
Operating Cash
The Company generated $413 million of cash from operations in the first quarter of 2019, as compared to $438 million in the first quarter of 2018, a decrease of $25 million, or 6%, primarily driven by the increase in working capital related to the timing of anticipated sales demand and new product launches, partially offset by the improved operating results discussed above.
EPS
GAAP Earnings Per Share (EPS) Diluted for the first quarter of 2019 was ($0.15), as compared to ($7.36) for the first quarter of 2018.
Adjusted EBITDA (non-GAAP)1
Adjusted EBITDA (non-GAAP) 1 was $851 million for the first quarter of 2019, as compared to $832 million for the first quarter of 2018, an increase of $19 million, or 2%.
2019 Financial Outlook
Bausch Health raised its full-year revenue and Adjusted EBITDA (non-GAAP)1 guidance ranges for 2019:
Raised Full-Year Revenues from $8.30 – $8.50 billion to the range of $8.35 – $8.55 billion
Raised Full-Year Adjusted EBITDA (non-GAAP)1 from $3.35 – $3.50 billion to the range of $3.40 – $3.55 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. 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)1. The guidance provided in this section represents forward-looking information, and actual results may vary. Please see the risks and assumptions referred to in the Forward-looking Statements section of this news release. The primary reasons for our change in our 2019 full-year guidance ranges are better than expected base performance and the inclusion of our expectations regarding the newly acquired TRULANCE product.
Additional Highlights
Bausch Health’s cash, cash equivalents and restricted cash were $784 million at March 31, 2019
The Company’s availability under the Revolving Credit Facility was approximately $1.055 billion at March 31, 2019
Conference Call Details
Date:
Monday, May 6, 2019
Time:
8:00 a.m. EDT
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