What happened
Shares of Bausch Health Companies (BHC 1.04%) were down more than 9.5% as of 12:30 p.m. ET on Tuesday after the company announced that Chief Financial Officer Tom Vadaketh was departing and the company had a CFO transition plan. The healthcare company's stock is still up more than 20% so far this year.
So what
Bausch Health is a pharmaceutical company that specializes in therapies to treat gastroenterology, hepatology, neurology, dermatology, and eye health. Vadaketh joined Bausch in October 2021. He is leaving to take on the CFO role at Enviri, which provides environmental solutions for industrial and specialty waste streams. He begins his new job on Oct. 16. If a replacement isn't found by then, Bausch said it will appoint John S. Barresi, the company's senior vice president, controller, and chief accounting officer, to be interim CFO.
Vadaketh's departure worried investors, not so much because it seemed to be a harbinger of a dire situation but because the company has shown recent financial improvement and now is losing one of the architects of that rise.
In the second quarter, Bausch reported revenue of $2.17 billion, up 10% year over year, and net income of $26 million, compared to a loss of $145 million in the same period a year ago. The company operates in five segments: Salix; international; Solta Medical; diversified; and Bausch + Lomb. Of the five, four saw double-digit gains in revenue with the only segment seeing a decline being diversified, which fell 3% year over year.
Now what
The CFO concerns are likely a short-term problem. However, the company continues to battle with Norwich Pharma Services regarding a patent dispute over Xifaxan, an irritable bowel syndrome and antidiarrheal drug. On July 28, a district court ruled that certain Bausch patents for the therapy were invalid. The ongoing litigation may drag down the stock, particularly if third-quarter financials aren't as strong as the second-quarter report was.
