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Bausch Health Companies Inc. (NYSE:BHC)
Q1 2020 Earnings Call
May 9, 2020, 8:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the Bausch Health First Quarter 2020 Earnings Call. [Operator Instructions]

I'd now like to turn the conference over to Arthur Shannon. Please go ahead.

Arthur Shannon -- Senior Vice President Head of Investor Relations and Global Communications

Thank you, Grant. Good morning, everyone, and welcome to our first quarter 2020 financial results conference call. Participating on today's call are Chairman and Chief Executive Officer, Mr. Joe Papa; and Chief Financial Officer, Mr. Paul Herendeen.

In addition to this live webcast, a copy of today's slide presentation and a replay of this conference call will be available on our website under the Investor Relations section. Before we begin, we'd like to remind you that our presentation today contains forward-looking information. We would ask that you take a moment to read the forward-looking statement legend at the beginning of our presentation as it contains important information. This presentation contains non-GAAP financial measures for more information about these measures, please refer to slide two of the presentation. Non-GAAP reconciliations can be found in the appendix to the presentation posted on our website.

Finally, the financial guidance in this presentation is effective as of today only. It is our policy to generally not update guidance until the following quarter and not to update or affirm guidance other than through broadly disseminated public disclosure.

With that, it's my pleasure to turn the call over to Joe.

Joseph C. Papa -- Chairman of the Board and Chief Executive Officer

Thank you, Art, and thank you, everyone, for joining us today. I'm going to begin today's call with some comments on our response to COVID-19 and briefly summarize the first quarter results. Paul Herendeen, our CFO, will then review the first quarter in more detail and update our 2020 guidance. I'll conclude with some closing remarks before opening the line for questions. Beginning with slide five. As we started to see the impact of COVID-19 and the unprecedented market disruption it was creating, our first priority was to make sure that our people were safe. We took appropriate measures to protect our supply chain's ability to meet customer demand, we reached out to help our customers, we minimize the disruption to our R&D projects and we protected our financial stability.

Our team did a great job of implementing business continuity plans across 100 countries and enabled us to remain focused on supporting our customers and healthcare patients globally. In fact, we have over 10,000 colleagues on the supply chain front lines who have been and continue to work hard to make sure that Bausch health products remain available for the patients and consumers who rely on them. A big thank you. To all of our supply chain employees that enabled us to continue meeting customer demand.

Importantly, to date, we have not seen any material COVID-19 related supply disruptions. We have access to multiple sources of API and intermediates, many of our products. And at this time, the availability of API intermediates has not had is not expected to have a material impact on our supply chain. With respect to our largest product, XIFAXAN, we have five months' supply on hand and enough active ingredient manufacture another five month supply of finished goods.

We've also been able to minimize disruption of our commercial facilities and R&D efforts. We have been supporting healthcare professionals virtually where in-person interactions are suspended, and we are working with health authorities and investigators to protect our clinical trial participants and personnel. Also, we believe the steps we took over the last several years to manage our capital structure have placed us in a strong position to weather the storm from a liquidity perspective. We have no amortization payments or debt maturities until 2022 and that we have an undrawn revolving credit facility. To sum up, we have taken actions to keep our colleagues safe, our supply lines intact and delay the foundation for our company to work through the COVID-19 uncertainties. With these measures in place, our goal was to fulfill our mission of improving people's lives with our healthcare products.

On slide six, we've outlined the actions we've taken. First and foremost, we are working to advance science to find solutions for COVID-19. We have initiated clinical trial programs in Canada, evaluating investigational use of nebulized antiviral Virazole in combination standard of care therapy to treat hospitalized adult patients with respiratory distress. And the Salix team is working to initiate trials to evaluate XIFAXAN in combination with established therapies to potentially address the symptoms of gastrointestinal distress and pulmonary compromise associated with COVID-19.

Second, Bausch Health is actively donating medicine and healthcare products to assist in the global fight against COVID-19, including Chloroquin, azithromycin, eyedrops, Daily contact lenses and nebulized Virazole. We will remain focused on doing our part to help end this unprecedented global health pandemic and providing resources to support global healthcare systems, frontline healthcare workers and the patients in their care. I am extremely proud of the job that our team has done in facing these challenges and making sure that our business continues to operate during this period with minimal disruption. I thank the entire Bausch Health team for their continued focus and dedication over this critical period.

Moving now to slide seven. In I want to address the estimated impact that COVID-19 has had on our first quarter results. Paul will cover this in more detail. But at a high level, we estimate that COVID-19 adversely impacted first quarter revenue by roughly $35 million or approximately 2%. This included a positive impact of $30 million from pantry loading, including a global consumer and U.S. vision here as customers stocked up on supplies in advance of the shutdown. It was offset by a negative COVID-19 impact to revenue of approximately $65 million. This postponement of elective medical procedures, as directed by public health authorities, affected our Global Solta and Surgical business units as well as our ophthalmology Rx business, where pre and post-operative prescriptions declined.

Our international Vision Care business was impacted by retail store closures by decline in contact lens wear due to decreased social interactions. Finally, medical office closures in the U.S. resulted in prescription declines in late March, which affected our Derm and Dentistry business unit. With these points in mind, let's briefly review the first quarter results on slide eight. I while total company result was flat compared to the prior year, there were a number of first quarter highlights to note. Our largest segment, Bausch + Lomb/International delivered its 14th consecutive quarter of overall organic revenue growth despite headwinds from cover 2019. Sales reported mid single-digit organic growth despite approximately $40 million of LOE loss of exclusivity headwind, primarily from APRISO.

XIFAXAN's TRxs grew by approximately 6% and retail extended units saw approximately 6.5% growth versus the first quarter of 2019. TRULANCE generated $19 million of revenue in the first quarter, and TRxs grew by 52% compared to the prior year quarter. RELISTOR revenue increased by 19% as a result of growth in the oral formulation and new market access formulary wins. We're also able to repay approximately $220 million of debt during the quarter using cash generated from operations. On the right, we have called out some notable key developments. First, after we settled with Teva early in 2018, earlier this week, we resolved the outstanding XIFAXAN IP litigation with Sandoz.

Under the terms of the agreement, all intellectual property protecting XIFAXAN remains intact, and we preserve market exclusivity until 2028. We also had some commercial access improvements due to new formulary wins, VYZULTA and LOTEMAX SM increased Part D access to 45% and 55%, respectively. On the R&D front, we have completed the QT study for amiselimod, which evaluate the cardiac safety profile. Top line results were positive, and we expect to initiate a Phase II study in the second half of 2020. The rifaximin study for Overt Hepatic Encephalopathy was also reported favorable top line results, great news, that will help inform further research on our next-generation indications and formulations.

Finally, despite COVID-19 related headwinds, we expect that our planned 2020 launches will remain on track, including the launch of the SiHy Daily lenses in the U.S., which we are preparing for in the second half of 2020. Overall, we believe these first quarter highlights demonstrate that we have built a sustainable and durable business that is well positioned to weather the uncertainties created by COVID-19.

With that, I'll turn it over to Paul.

Paul S. Herendeen -- Executive Vice President and Chief Financial Officer

Thanks, Joe. We are off to a great start to the year, and then COVID-19 threw us into a world of uncertainty. About the balance of 2020 and about the potentially lasting impacts of the virus on the way we promote our products in 2021 and beyond. Sitting here today, it's unclear what the new normal might look like, but I'm confident that with our portfolio of durable brands, we will adapt and prosper.

I'll start with slide 10, showing our revenue by business. Reported revenue was roughly flat versus Q1 of 2019. FX was a 90 basis point headwind. So constant currency, we grew 1%. Organically, we are flat as the synergy acquisition closed during Q1 of 2019. Both Salix and B&L International posted organic growth. The bulk of the COVID-19 impacts on our Q1 results were in the Asia Pac region. However, social restrictions in the U.S. beginning in March became an immediate headwind for certain of our U.S. businesses as well. B&L international segment was plus 2% on an organic basis.

COVID-19 negatively impacted our Vision Care, Surgical and Ophtho Rx businesses, while consumer and international pharma saw some pantry loading that increased revenue in the quarter. As consumers in the U.S. and other regions observed how social restrictions played out in Asia, they took steps to ensure that they stocked up on products they wanted to have on hand through a lockdown period. B&L Global Vision Care was down 3% organically. This was a tale of two environments. Nearly half of our global lens business is in the Asia Pac region, and it was devastated by COVID-19.

China was down some 66% versus Q1 2019 organically. Overall, Vision Care outside the U.S. was down 16%. The U.S. was another story. The U.S. Vision Care business was up 24% versus Q1 of 2019. The ultra monthly silicone hydrogel brand family was up 49% in the U.S. aided by the mid-March excuse me, mid-2019 launch of the multifocal toric. Biotrue ONEday lenses continued to deliver impressive growth, plus 23% in the U.S. versus Q1 2019. The readthrough here is that as we gear up for the launch of the daily silicon hydrogel lenses in the U.S. which is still on track for the 2020, you are seeing that our Vision Care business, led by John Ferris has in place a high-performing team capable of driving attractive growth in a very competitive category.

B&L consumer was up 12% organically outside the United States, plus 4% and plus 24% in the U.S. We benefited from consumers pantry loading during the quarter. In the U.S., LUMIFY sales in the quarter were up $9 million or 91% versus Q1 of 2019. And LUMIFY was not one of the brands with significant pantry loading. Presentation sales in the U.S. were up 26% from Q1 2019, driven by an impactful DTC campaign and successful promotional activities with Costco. Biotrue Multi-Purpose solution was plus 32% in the U.S. versus Q1 of 2019. My takeaway from the pantry loading is that consumers intend to stick with their B&L consumer products. They loaded up ahead of sheltering at home, and I expect that many found and will find ways to continue to purchase our consumer products, whether that's on trips to the pharmacy, via home delivery or Internet fulfillment.

Some brands will be more resilient than others, but overall, there are reasons for optimism for our global consumer portfolio through this situation. B&L Surgical was down 6% organically, outside the U.S., we were down 8% organically and soft in many markets, but particularly China, where surgical revenues were down more than 40%. In the U.S., we were actually doing quite well until March and ended up down 2% organically. Global Ophtho Rx was down 16% organically, down 10% organically outside the U.S. and down 18% in the U.S. Outside the United States, the COVID impact in China was a big factor.

In the U.S., which accounts for roughly 60% of global Ophtho Rx revenues, two of our major products are most often used pre and post eye surgery. That's Lotemax and Prolensa. Those brands saw rapid declines in TRxs in March as surgeries began to be postponed. Continued erosion from the LOE of Lotemax suspension was a big factor versus the prior year quarter as well. On the plus side, prior to the COVID impact being felt in the U.S., VYZULTA had been showing improved momentum in TRxs. Sales reached $13 million in the quarter, plus 56% versus Q1 of 2019, and that was with only about 30% Med D coverage. Beginning July 1, our Med D coverage for VYZULTA will step up to roughly 45%. And so things are looking up for VYZULTA.

International pharma was plus 9% or plus $24 million organically versus Q1 of 2019. Canada, Poland and other Eastern European countries delivered the growth. I want you to note that our International pharma businesses are mainly in Eastern Europe, the Middle East, Canada and Latin America. Our International pharma businesses in Asia Pac and Western Europe are much smaller. There was very little COVID impact on international pharma during Q1, and we're expecting these units to be relatively resilient.

On to Salix. Salix was up $32 million or 7% on a reported basis. The major growth for XIFAXAN, plus $69 million or 23%; and TRULANCE, which was acquired in March of 2019, which was up $13 million quarter-over-quarter. LOEs, including APRISO and UCERIS were a growth drag in this segment, $40 million. And Glumetza declined as expected by $17 million or roughly 45%. Out of the 23% growth for XIFAXAN, 6% came from increased net selling prices relative to Q1 of last year. As the impact of the price increase that we took in January, offset by associated increases in rebates. The 17% increase in XIFAXAN volume came roughly half from excuse me, from increased in consumption and half from an increase in wholesale and retail channel inventories relative to Q1 of 2019. There was no plan to increase channel inventories.

This was just a normal fluctuation from quarter-to-quarter. TRULANCE TRx growth was driven by increased promotional effort as well as improved managed care coverage. A quick shout out to the Salix team led by Nicola Kayel and Josh Coyle. Our key brands in the GI space rely on the addition of new patients to sustain and grow prescriptions. Roughly half of XIFAXAN Rxs are for the acute indication of IBS-D. And TRULANCE is in a clear growth phase, so both rely on adding due patients to the fund. XIFAXAN and TRULANCE TRxs have been fairly durable through the last eight weeks, and that speaks to the pre COVID success of our Salix team, building awareness and support for our brands among physicians.

For the first four weeks of April, XIFAXAN TRx remain at roughly 90% and TRULANCE better than 95% of pre COVID levels. The Ophtho and Derm segment was down $5 million or 4% on a reported basis. Medical Derm was down $18 million or 18%, half of that coming from price and half from volume. We had strong growth of Jublia and modest growth from DUOBRII, but those were more than offset by a decline in royalty income from Carac and a number of other products. The onset of COVID-19 in the U.S. had a rapid and dramatic impact on our portfolio of Med Derm products. Global Solta grew 37% organically versus Q1 of 2019, pretty good. But Solta was up much more than that early in the quarter before COVID-19 took the wind out of Solta sales.

Though to some 60% of Global Solta revenues are from the Asia Pacific region. Finally, for diversified segment. That was down $27 million or 9%. Neuro was down $24 million versus the first quarter last year. LOEs accounted for a $31 million decline, and that was partially offset by Wellbutrin and Aplenzin that together grew 14% versus Q1 of 2019. Our U.S. Generics business was flat with Q1 last year, and Dentistry was down roughly 16%. The onset of COVID in the U.S. also had a rapid and dramatic impact on our Dentistry business. So that's the revenue story in the quarter.

So let's move to slide 11 to cover the rest of the P&L. Our gross margin improved some 80 basis points from Q1 of 2019. A most of this improvement can be traced to the Salix segment, where gross margins increased over Q1 2019 by 330 basis points as we paid lesser royalties on Glumetza and Apriso due to lower sales. And a royalty on XIFAXAN net sales expired in Q3 of 2019. Selling, advertising and promotional expenses were unfavorable $7 million or roughly 3% on a constant currency basis due to the addition of sales resources in connection with the synergy acquisition and higher selling costs in the U.S. Vision Care group that supported the excellent growth that, that team is delivering. G&A expenses were $35 million unfavorable to Q1 of 2019, mainly due to increased IT and legal costs.

Note that as I've said in the past, our G&A run rate is something like $150 million per quarter. So we are right around that level, and the prior year quarter was at a low level and less reflective of our go-forward run rate. R&D was up $5 million as we continue to build out our R&D organization to support a broader plate of development projects.

So quick summary. Revenue was down $4 million. 80 basis points better gross margin gets you to plus 13% at the gross profit line. opex rose $47 million. Mainly due to an unfavorable comp for G&A, and that gets you to a minus 34% decline at the EBITDA excuse me, adjusted EBITA and down $38 million at adjusted EBITDA versus Q1 of 2019. A couple of things below the operating line. Net interest expense was favorable by $13 million. Going the other way, our income tax rate on adjusted pre-tax earnings increased from 6.3% to 10.4%. Relative to the expected 8% rate, that reduced adjusted net income by roughly $8 million. I'll point out that our quarterly tax rate can be quite volatile in normal times. And in a world, we're forecasting the balance of 2020 is more challenging than normal, even more so. We continue to believe that the tax rate on adjusted earnings will be 8% for the full year 2020.

Turn to slide 12. In the quarter, we generated $261 million of cash from operations. That's down $152 million compared with Q1 of 2019. The biggest factor was an increase in working capital, primarily due to the COVID related delays and collections from accounts, mainly in Asia Pacific. There was also a shift in the timing of cash interest payments due to our refinancing activity. And finally, we made a licensing payment in the quarter for an agreement we executed in Q4 last year.

Turn to slide 13, which shows the progression of our debt balance over the last four quarters. The settlement of the U.S. Securities litigation funded with unsecured debt raised in December last year set us back on reducing the quantum of our debt and improving our leverage ratio. However, it was the right thing to do, and we will get right back to prioritizing the use of available cash to reduce our debt. I reported back on the February call that the December 31, 2019, net debt balance was inflated by the timing of the December debt raise and the use of those proceeds. In on excuse me, our December 31, 2019, net debt pro forma for the deployment of those funds was roughly $24.2 billion. On the same basis, our pro forma balance at March 31, the net debt balance is roughly $24 billion, about $200 million lower than the pro forma net debt at year-end.

Turn to slide 14. The slide 14 is a slide we had relegated to the appendix, but in light of the importance of liquidity in a COVID world, I want to speak to where we are. Sitting here today, we have over $1 billion available under our revolving credit facility and no debt coming due this year or in 2021. Our next debt maturity is in the first quarter of 2022. And importantly, all of our debt coming due in 2022 is of a secured nature. That's an important distinction as the senior secured debt markets are a more predictably available source of capital the risks associated with refinancing the 2022 maturities with secured debt are lower than if those maturities were unsecured. Let's shift gears and cover guidance for the full year 2020.

While COVID-19 had a modest impact on our Q1 results, our expectations of the impact for the full year are meaningful. We have a excuse me, we are a diversified healthcare company. We have different businesses and operate in many geographies around the world. Each of our businesses will be impacted to different degrees as COVID-19 plays out. In addition, the time until the COVID impact bottoms out, and the shape of the recovery curves will be different in each and every one of the markets where we do business.

On slide 16, we group our businesses into four buckets. From those businesses that we believe will be least impacted to those that we think will be most impacted by COVID-19. Bear in mind that the B&L International segment that represents roughly 50% of our excuse me, 56% of our total revenue in 2019 operates in more than 100 countries and that the mixes of revenue within each of those countries are very different. For example, in Asia Pac, more than 40% of the region's revenues come from Vision Care. In North America, Vision Care is only 5% of total revenues. The progression of COVID-19 in each and every country will be different depending on the nature and effectiveness of local steps taken to control the spread of the virus. Within the U.S., the recovery is unlikely to be uniform across all regions, as a little long-winded there, but I think it's important when you think about the range of outcomes for us in 2020.

But to slide 17, where we list our major assumptions with respect to COVID-19, to start with broad assumptions. First, we are assuming that the health authorities will use the learnings from the initial outbreak and recovery be far better prepared to deal with a potential resurgence of the virus in the fall. We assume that in the event of a fall resurgence, we will not see significant social restrictions put in place by local authorities. Second, we are assuming that global economies will recover as the COVID-19 situation resolves over the balance of 2020. With respect to our business impact and recovery assumptions, we see the greatest impact on our businesses during Q2 due to the shelf in place directives, closing of retail outlets, healthcare providers closing offices and postponement elective surgeries.

We expect the recovery to begin in the latter part of Q2 and continue into Q3 and Q4. We expect that all of our businesses have the ability to return to pre COIVID levels, some perhaps as early as late 2020, but most certainly in 2021. Several of our business units will recover more slowly, particularly B&L Surgical, our Medical Dermatology business and our Dentistry business.

On slide 18, we show our revised guidance for 2020. The uncertainty around the depth of the COVID impacts and the shape of the recovery curves for each of our businesses presented challenges for us, for sure. We developed multiple scenarios based on various assumptions regarding the impacts of COVID-19 on our businesses. Based on our review, the range of outcomes, and therefore, our guidance ranges are wider than normal. I want to point out that FX rates have been very volatile since we provided guidance back in February and reduced our revenue expectations for 2020 by some $160 million and adjusted EBITDA by $70 million. four currencies account for the bulk of that change, the euro, the Russian ruble, the Canadian dollar and the Mexican peso. Our revised guidance ranges are for revenue of $7.8 million to $8.2 billion. An adjusted EBITDA of $3.15 billion to $3.35 billion.

We are now expecting SG&A to be down roughly $200 million on a reported basis, with about $25 million of that decrease due to FX. So in light of the reduced revenue expectations for 2020, we took steps to reduce our full year 2020 SG&A by roughly $175 million on a constant currency basis. Finally, with reduced revenue and profit expectations, we have reduced our guidance for cash generated from operating activities to roughly $1 billion. With liquidity, a topic that is top of mind, I want to state emphatically that we are in excellent shape. Even at the low end of our revised guidance ranges, we are still strongly cash flow positive. We remain in comfortable compliance with the terms of our debt agreements with substantial covenant cushions. We have a $1.225 billion revolving credit facility, under which we have ready access to more than $1 billion. And we have no scheduled debt payments until the first quarter of 2020 excuse me, 2022.

Before we turn to the 2020 guidance bridge, please note, we are revising our revenue and adjusted EBITDA guidance out to 2022. The way we've expressed this in the past was a little awkward and possibly confusing. What we said was that off of the midpoint of the original 2019 guidance at constant currency, we expect the CAGR on revenue and adjusted EBITDA to be in a range of 4% to 6% for revenue and 5% to 8% for adjusted EBITDA. For clarity, our starting points for that guidance was $8.4 million for revenue and $3.425 billion for adjusted EBITDA. Adjusted to today's FX rates, those amounts would be $8.23 billion and $3.355 billion, respectively.

Slide 19 shows the 2022 ranges defined by the CAGRs in dollars at current FX rates, which I hope will be less confusing. As part of our detailed review of the depth and duration of the impact of COVID-19 for each of our business units, we took steps to protect our near-term profit and cash flow by pairing back eliminating or deferring some near term investments. For example, DTC for DUOBRII, the planned expansion of our sales footprint in Europe for both B&L and for Solta and other programs, and that was to ensure that we do our best to protect earnings and remain solidly cash flow positive through the COVID dip and recovery. The deferral of these investments come at a cost to our longer-term outlook for various of our business units.

Today, we're revising our CAGR guidance using the same starting points to 3% to 5% for revenue and 4% to 7% for adjusted EBITDA. Please see slide 19 for the 2022 dollar ranges at current FX rates. COVID-19 was not the only factor in our revised outlook for 2022. And we continually review and update our longer-range forecast for all of our business units, and it was a combination of both changes in outlook and the impacts of COVID-19 that caused us to revise our CAGR guidance. Absent the longer-term impacts of COVID-19, we would have maintained our prior CAGR ranges.

Turn to slide 20 for the guidance bridge. At the midpoint of our range, we are reducing our 2020 revenue expectation by $560 million on a constant currency basis, almost entirely due to the impact of COVID-19. I you'll also see that we expect to offset some of that lost gross profit through reductions of SG&A and a modest decrease in our expected R&D spend.

And with that, let me turn it back to you, Joe.

Joseph C. Papa -- Chairman of the Board and Chief Executive Officer

Thank you, Paul. Well, our revised 2020 guidance largely reflects the impact of COVID-19 on our business. I want to emphasize that it's based on a set of assumptions, there is still uncertainty around COVID-19 and its impact. However, we believe Bausch Health is well positioned to return to growth when we can move beyond the impact of COVID-19.

Turning now to slide 22. We highlight the durable brands in each of our business units. Beginning at Bausch + Lomb, our largest segment represents 56% of total revenue. The brands include products like Lumify eyedrops, PreserVision vitamins, contact lens items such as Bausch + Lomb's Biotrue Oneday Surgical devices like the IenVista Intraocular Lens and the Solaris Elite system, all great brands. In our Salix segment, which represents 23% of our revenue, XIFAXAN Trulance and RELISTOR are key durable brands. And our Dermatology business, represents 7% of our sales. We have great brands, including Jublia, DUOBRII and Thermage FLX. So great brands there.

Turning to slide 23. We have outlined a few clinical milestones to watch in 2020. First, we expect approval and U.S. launch of the SiHy Daily lenses. We have received 510(k) filing acceptance from the FDA and the expected launch is on track for the second half of 2020. Next is the rifaximin soluble solid dispersion, which we call SSD immediate release formulation. We received positive top line results from a Phase II study at the end of March. According to the results, using rifaximin SSD in combination with standard of care therapy was statistically significantly superior to the placebo plus standard of care therapy in Overt Hepatic Encephalopathy. We are excited about these results, which will help us decide on further results and further research for new potential indications. We expect the first application will be in sickle cell anemia with clinical trials starting to commence later this year or sometime in 2021.

We have also have a number of additional rifaximin studies evaluating new formulations for treating other GI conditions, including postoperative Crohn's disease, SIBO and the complications of cirrhosis. Finally, positive top line results from Amiselimod QT study demonstrated Amiselimod has no effect on QT interval prolongation, which has been associated with other molecules in this class. No other significant secondary safety signals were identified, and we expect to initiate a Phase II study in the second half of 2020.

Before I begin my concluding remarks, I want to briefly address the impact of COVID-19 on our R&D organization. The R&D slide in the appendix on page 26, provides a snapshot of our late-stage pipeline and status of each program. Well, new patient enrollment in clinical trials have been temporarily paused due to the impact of COVID-19. We continue to work with our investigator sites to follow-up for subjects that were already enrolled in various trials prior to shutdowns as per the study protocols. We plan to resume new patient enrollment clinical trials once restrictions on COVID-19 have been lifted and look forward to getting our clinical trials back on track.

Finally, on slide 24. As Paul mentioned, the COVID-19 pandemic and its impacts triggered revisions to our long-term outlook. We now expect a three-year CAGR from the midpoint of our 2019 guidance of 3% to 5% revenue growth, and 4% to 7% adjusted EBITDA growth over the period from 2019 to 2022 on a constant currency basis. While the impacts of COVID-19 are numerous, we believe Bausch Health has a global diversified business model that is durable. We have broad and diverse product portfolio with approximately 1,400 products in a broad array of therapeutic areas. We launched more than 15 of these products in 2019 and we anticipate additional launch over the next several months.

These products will help drive durable growth over the long term. We also have a very diverse mix of prescription over-the-counter and device revenue. And we will also benefit from Bausch Health's global footprint. Our products are sold in approximately 100 countries and every day around the world, more than 150 million people use a Bausch Health product. To conclude, when our business faced an unprecedented disruption earlier this year, we took a number of steps to mitigate the impact. Due to these actions and the durability of our business model, we are confident that our business will remain well positioned for growth over the long term.

With that, operator, let's open up the line for questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question will come from Ken Cacciatore with Cowen and Company. Please go ahead.

Ken Cacciatore -- Cowen -- Analyst

Good morning, guys. Thanks for the question.I just had a couple. First, thank you for the detail on the 2022 thoughts, Paul. I was wondering, when I look at our model versus your expectations, you're nicely higher than us. So I was wondering, do you include any pipeline in that analysis? And as you look at the consensus models, can you talk about the delta where you all may be different? And why do you think that is? And then also, as an organization, you obviously, as you mentioned, are in over 100 countries. Can you talk about just green shoots you're seeing in some of these areas that help inform your guidance in the U.S., I know that XIFAXAN seems to be just picking up a little bit. So can you talk about where we were and maybe what we're seeing real-time now in terms of the impact on COVID?

Joseph C. Papa -- Chairman of the Board and Chief Executive Officer

Paul, why don't you take the first part of that question and talk about the commentary on the pipeline in the 2022. And then as we get to the countries, I'll take over on that on XIFAXAN. And so why don't you start first on that guidance question.

Paul S. Herendeen -- Executive Vice President and Chief Financial Officer

Sure. Thanks, Joe. And Ken, thanks for the question. I mean the looking out when we do our long-range forecast. So we are taking into consideration those new products that we expect to introduce that come out of our development pipeline. As I say, not all of those are going to be of the blockbuster nature, but it's a steady stream of new products that come out of our development pipeline that are included in that 2022 and '23 and '24 as we continue to forecast out our business. We point out that a good chunk of what you're seeing in call it the next year.

So 02021, well, 2020 is going to be an interesting year, but 2021, '22 is the continued ramps of the products that we've very recently introduced. And you heard me speak about in my prepared remarks about my excitement around the upcoming launch of the Daily SiHy lens in light of the great job that our U.S. team is doing marketing the portfolio that they have now. That's clearly a part of it. And so a lot of the other products that we have within our portfolio today, but there is a steady stream of products being added. That helped to contribute to that 2022 number that goes into that CAGR?

Joseph C. Papa -- Chairman of the Board and Chief Executive Officer

I'll take that. That second part is the I think, Ken, you're asking the question about what's happening in the rest of the world. And as you walk around the world, what are we seeing? I mean, if you think about what's happened here, we clearly the United States know that the visits to the dermatologist to the eye care doctors the gastroenterologists are down somewhere in the 40% to 75%. So clearly, that's what we saw. But as you said about green shoots, we are starting to see some things happen. So for example, in Europe, our expectation is that we'll see Europe starting to open up in June. We think Germany is already starting to open up now in May. China, we're in the field. Activities are back up and running in China. So that gives you some sense of what we are seeing from a global perspective.

Our expectation on the Surgical side is that there is a backlog in the cataract surgery as an example. We're not going to work through all that in 2020. And but some portions of that will work through in quarter three and quarter four as we see that absorb it. In other places like our Dental business, that's a little different. If you didn't go in and get your teeth clean, you will go into the future, but you're going to there's going to be some loss in that business. And I think that's how Paul tried to portray that as we thought about what was happening there. And that's the kind of things that we're seeing. XIFAXAN, we feel really good about XIFAXAN. Yes, there's some short-term issues, but hepatic encephalopathy holding up very strong. Same comment with our TRULANCE business.

Notwithstanding all the noise out there about COVID, the TRULANCE business is up 50 plus percent. Outstanding performance there with TRULANCE. So we're looking at these things and finding the opportunity. The RELISTOR products continue to grow. XIFAXAN is going to continue to grow. We're looking for those kind of things for the future. The only other comment I'd add to what Paul said on the side ideally because that is our one of our key product launches is that we know that the SiHy market is about 15% of the global market. And it's growing at 30-plus percent. So that's why we're excited about what we think the opportunity to launch that silicone hydrogel product here in the United States. We've launched in Japan and then take it around the world. Operator, next question?

Operator

Our next question will come from David Amsellem with Piper Sandler. Please go ahead.

David Amsellem -- Piper Sandler -- Analyst

Thanks. So just a couple. So first on the lens business, I know you cited reduced lens wear, but I wanted to get your sense over the long-term regarding whether we could see something of a new normal in terms of reduced lens usage due to more social distancing or just more vigilant behavior, if you will. So is this something that you're planning for over the long term? That's number one. And then number two, you had had planned to convert some of your Derm assets to cash pay with dermatology.com. I was wondering if you could talk about how COVID is impacting your plans there. Is that something that you're considering broadening over time or incorporating more into telemedicine. If you will, and help us understand your strategic thinking given the realities of the pandemic regarding this cash pay model? Thanks.

Paul S. Herendeen -- Executive Vice President and Chief Financial Officer

Sure. I'll try to make sure I get all of those questions. First, starting on the lens contact lens usage. We actually expect this to actually bounce back to what I would say would be what we before continued growth in our lens care business, continued movement toward the daily contact lens continued movement to SiHy Daily. So all those trends that we've seen, I think, will come back. Is there some question about the reduced social interaction? Yes, that is true. However, notwithstanding that, if you think about it for a second, certainly, only thing people can see behind the mask is the eyes. So in fact, I mean, I know that sounds silly, but the reality is we're seeing incredible uptake in what we refer to our cosmetic ones, our color lenses less that we have in some of our geographies around the world.

So there is some expectation that the contact lens business will continue to return. On the question of derm.com and how we're managing that. Do I think COVID is going to impact our plans to convert more product to cash pay? I do think that there will be some movement in that. If you think about what's happening, the data I looked at is in telemedicine. Is that in one particular plan, it was less than 1% of the doctor visits prior to 2020 were for telemedicine. The most recent data that's out there is that telemedicine is now accounting for approximately 15%. So you're seeing an absolute transition for telemedicine. We believe our dermatology.com will fit in very well with that because of what we're doing for the dermatologists.

So we're looking to continue to see that kind of growth, that kind of opportunity for what we're planning on with our derm.com and telemedicine and how the cash pay fits in with that. Our belief, once again, is that this model will allow physicians to get the formulation they want have a predictable price. There won't be any prior authorization and patients won't be upset with them that there was promised the price of action. There's a completely different price than when they went to the pharmacy counter. So for those reasons, we do think there's a good opportunity with our dermatology.com in the telemedicine world. Operator, next question.

Operator

Our next question will come from Annabel Samimy with Stifel. Please go ahead.

Annabel Samimy -- Stifel -- Analyst

Hi, thanks for taking my question. I want to talk to you about the guidance assumptions. I guess, each of the different regions of the world are different in need to assume that it runs its course, and you're not going to see social restrictions eased and, say, a second wave of this, but there's very different experiences across the globe versus the U.S. So how have you contemplated that in your guidance? And is that in the low end of your guidance? And what might that end up doing from a liquidity perspective, is there any scenario where you would have to draw on that revolver? Thank you.

Joseph C. Papa -- Chairman of the Board and Chief Executive Officer

Well, I'll start on some of this. And then clearly, though, you should also comment in terms of the guidance assumptions. I think what we tried to do is, as we thought about this, we were fortunate we have a significant business in China and Asia. We utilize the information and the knowledge that we gained from the earlier activities in Asia to help us think about what was going to happen with our business going forward. And as I mentioned before, as we're starting to see China now recovered, they started a little earlier. So we're starting to we're learning from that.

But to be clear, we developed not just a scenario here, the one that we presented. We developed, I think it was four different scenarios with different time points and different returns and trying to anticipate that there could be multiple things that could happen here. So we built in the four different scenarios, and we came up with what we referred to, I would say, the most likely scenario and Paul and his team have just done a great job in thinking through the multiple parts of this, the pushes and the pulls relative to when the business would come back how it would operate going forward in the future. We don't have a crystal ball, but we do clearly want to make sure that we look at all the contingencies.

And I'll just say before I turn it to Paul, that the work that Paul and the treasury team have done over the last three years have put us in a much stronger position to weather the storm here of COVID-19 and clearly be ready regardless of which way it goes. But Paul, why don't you take share your thoughts, too?

Paul S. Herendeen -- Executive Vice President and Chief Financial Officer

Yes. Thanks, Joe, and thanks for the question, Annabel. Interesting is we do have so many businesses in so many markets that we are able to take learnings from other markets. The fellow, Tom Appio, who is the who runs our B&L business outside the United States has been just a wealth of information about how this has played out because it started in Asia, and there were some things and we were hopeful that some of that data about how this plays out would be directly relevant to how we play out in other markets. But the reality is each market is different. That's why I went through that discussion. And so that's what leads us to having such a wide range of possible scenarios.

And including taking into effect, a much more protracted period to the end of the dip. As well as protracted periods as we work our way out of this environment. Now what I called out, I want to I think it's an important point is we looked at how we thought 2020 would play out. And in the light of that revenue reduction, we reduced our opex, mainly, as selling and advertising and promotion. By circa $175 million on a constant currency basis. I can assure you that we have scenarios within our company that if things trend below lines, we would take additional actions in order to protect our profit and to protect our cash flow. It was a very involved process or led by my right-hand man, Sam Eldessouky, who develops all these things so that we can prepare and be ready, depending on how the situation plays out because nobody knows.

We have a great deal of uncertainty, but we're prepared if it plays out in a less favorable way. We're ready to roll. If we start to recover more rapidly, we've done our level best to ensure that we have our resources as one of my favorite phrases "Tanned. Rested. Ready." to get back to work and to start driving us back toward pre-COVID levels. Now your second question was around liquidity. And first of all, I said in my remarks, this we are in a terrific position. Even in a downside scenario here, we are strongly cash flow positive from operations. And I said this, I think we tried to articulate this in our 8-K early on in this process. In 2019, our cash from operations was circa $1.5 billion we generated. And you have to remember that after covering a very hefty cash interest load.

So after all that cash interest we generated $1.5 billion. This right now, based on our range of guidance, we're saying circa $1 billion of cash generated from operations. In 2020 under some scenarios that are down that are clearly down. We can self-fund. We absolutely can sell fund. Secondarily, we have our revolver available to us. You asked the question, would we borrow on that revolver? Yes, we will borrow on that revolver in the same way as we have borrowed on the revolver in the past, which is to fund short-term requirements. At the end of the quarter, there were no borrowings outstanding under the revolver. Will there be borrowings during the year? Sure of a short-term nature because our cash flows do not come in on a linear basis across the course of the year.

But we are in a very good position a liquidity wise. I can't emphasize enough. I am very pleased that we were able to accomplish everything we were able to accomplish with respect to our debt capital over the last, I'll call it, almost three years now. Such that our first real maturities are of any substance of any substance around in 2022. Those are in secured nature. Those are easier, nothing too easy, but those are easier to finance to refinance. And we feel like we're in very good shape to ride this out. You're seeing in our 2020 guidance. What we believe is the range of outcomes in 2020. And we're prepared, whether it's toward the lower end of that range or the upper end of that range, we're prepared either way to manage through it and without blinking.

Annabel Samimy -- Stifel -- Analyst

All right. Thank you.

Joseph C. Papa -- Chairman of the Board and Chief Executive Officer

Operator, next question.

Operator

Our next question will come from Gregg Gilbert with SunTrust. Please go ahead.

Greg Gilbert -- SunTrust -- Analyst

Thanks. Good morning. I wanted to go back to the second half launches you're expecting. And I wanted to make sure I understood whether that was a bet on things returning to normal versus you plan to launch regardless. It's just a function of how you would launch and with what tactics. And then on the biosimilar deal you did, I'm curious, and I'm sorry if you already covered this, I don't think you did. But can you talk about the expense of that program over time? And any associated time lines and whether highly is in your sites as well? Thanks.

Joseph C. Papa -- Chairman of the Board and Chief Executive Officer

Sure. I'll take the first part of this in the second to start a deal. First of all, on the second half of 2020, are we expecting a return to what I would refer to as the new normal? Yes, we are spending that in the second half of 2020. It's not going to be like flipping a light switch. It's going to be a gradual. We're already, as I mentioned before, seeing some activities in China opening up now. We're saying in Germany we expected in May. Europe, we expect in June. United States is going to be variable by state. Some of the states, as you know, are already opening up already. Some of them, we've already had conversations we're doing a lot of virtual meetings with our docs now, and we expect that some of their opening up their practices and looking forward to getting back into the surgical suite.

So we're going to see it happen over time. It's not going to be like a light switch. It's going to be a gradual, and we're looking at multiple geographies and multiple states as we do that forecast. On the specific question about the launch, though, for the SiHy Daily is our expectation. As I mentioned, we've already had acceptance to file for the 510(k). It is our expectation that we will launch that in the latter half of 2020. We believe that markets will return and will be there will be ability to get that product launched. It's going to it's not going to be, once again, an immediate quarterly across all doctors, it's going to be as they open up, we're going to have the product available, and we have the product available.

We'll give them the fit sets appropriate to launch and make sure that we move forward with those launch activities. So we do think that that's an exciting product, exciting opportunity. And as I mentioned, it's a very fast-growing part of the market and one that we think we can participate in with what we think is a great product. It's already, as you know, launched in Japan. So we've got the experience with the manufacturing side, and we'll continue to move forward. That's clearly the biggest product. On the STADA deal, minimal expense to us over time, STADA has the program already under way. What state was looking for, I think, is they had the expertise for the manufacturing side, in the biosimilar side, we had the expertise on calling on these doctors.

We did not have access to a product like this. We felt this opportunity would be a perfect opportunity for us to partner with STADA and gives them a win, give us a win in getting out to the North American doctors with this product. So we think it's exciting. We're looking forward to partnering this percent is biosimilar opportunity, and we will work forward toward that. But minimal other than the upfront expense and then some milestone payments as we get closer to launch to very minimal R&D expense for us. Operator next question please?

Operator

Our next question will come from Umer Raffat with Evercore. Please go ahead.

Umer Raffat -- Evercore -- Analyst

Take my question. Paul, I'm very confused about something today, which is, I recall we discussed specifically the implied 2022 revenues and implied 2022 EBITDA off of which was off of the growth CAGRs you had laid out, but the growth CAGRs were being applied on the midpoint of 2019 guidance. Today, I'm noticing, not only are the growth CAGRs down, they are no longer being applied on the midpoint of 2019 guidance. Instead, they're being applied on an FX-adjusted version of the 2019 guidance. And I'm just trying to understand why that is? And why not maybe just give clean growth numbers implied? Is it is it around 3% on the low end on EBITDA growth CAGR if we still work off of the original numbers, which was midpoint of 2019 guidance?

Paul S. Herendeen -- Executive Vice President and Chief Financial Officer

I take that question. Yes, sure. I mean as it just clearly directed at me. The guidance where we provided it was always meant to be constant currency. It's why we talk about organic. We can't control currency. We operate in many markets around the world. And that's why we talk about organic, that's why we talk about constant currency. When we laid it out, it was meant to be at constant currency. All we did was, indeed, take the midpoint of that 2019 guidance bring it to the FX today, which, by the way, anybody who is kind of follow along at home, you could follow all of our quarters and every time we talk about FX and total up the cumulative impact of FX.

And that's what it is. And that's what we can grow off of. That's how we measure ourselves is constant currency. And so I'm only trying to express it now on that slide 19 in a way that people can at least say, based on currency today, that's what I that's the range of outcomes. To hold ourselves to say we'd put a longer-term CAGR range and say, and we'll take currency, I don't think that's reasonable.

Umer Raffat -- Evercore -- Analyst

Thank you very much.

Joseph C. Papa -- Chairman of the Board and Chief Executive Officer

Operator, we have time maybe one last question, please.

Operator

Our last question will come from Akash Tewari with Wolfe Research. Please go ahead.

Akash Tewari -- Wolfe Research -- Analyst

Thanks so much. So there seems to be a disconnect between how much the midpoint of adjusted EBITDA came down versus how much cash flow from operations declined, 300 versus 500, can you explain what's going on there? And I know there's a lot of moving parts, but given the change in long-term guidance and the stock drop payout, we're getting to you getting under 5 times leverage it seems like it's more like a late 2024 or 2025 event. Is that a fair take? Or do you have more operating leverage here than we're really appreciating? Thank you.

Joseph C. Papa -- Chairman of the Board and Chief Executive Officer

Paul, why don't you take that question, and then I'll comment after you finish.

Paul S. Herendeen -- Executive Vice President and Chief Financial Officer

Yes, sure. I mean, I'll start with we've got a very broad range of outcomes here for both revenue and for adjusted EBITDA. We've selected a point estimate of roughly $1 billion of operating cash flow to cover the range. The rationale is I even called it out with respect to respect to cash flow generated in the first quarter. COVID impacts are not solely on operating results. COVID impacts are also on classic adjusted working capital type accounts, where I called out in the Asia Pacific region, we've had to extend payment terms to a number of our customers in order to help them work through this crisis. As I say, we're not being foolish about it, but it's absolutely stretching the time that it takes for us to convert revenue to cash. Secondarily, management of inventories during this time period is also a challenge. If you're hoping for and planning for a more rapid recovery, you maintain inventories on hand to provide a high service level.

And that could across a range of outcomes, end up being a classic use of cash for our growth of adjusted working capital. Flip side of it is that we, like everyone else, are doing our best to ensure that on the payable side, we do what we can do to help offset some of that. But the reality is that we while we work our way through this, the normal ratios that you might look at with respect to adjusted working capital and how to think about that as the push-pull of cash generation don't apply until we get back to a more normal state. The range of outcomes is pretty broad. I did not want to put a broad range of forecast for cash generated from operations on the table. We put the circa $1 billion as a good solid spot for you to take a look at for the balance of the year. I'm sorry, not for the balance, but for the full year. I'm sorry, the second part of the question, Akash?

Akash Tewari -- Wolfe Research -- Analyst

Yeah.

Joseph C. Papa -- Chairman of the Board and Chief Executive Officer

It was the question of leverage.

Akash Tewari -- Wolfe Research -- Analyst

Right. So 5 times leverage, it seems like late 2024, 2025 event now. Is that a fair take? Or am I missing something?

Paul S. Herendeen -- Executive Vice President and Chief Financial Officer

Well, I just state basic factoids. One, we certainly push that the timing of our getting to be below 5 times out when we settled the U.S. Securities litigation and added $1.1 billion essentially to our debt load. Secondarily, as you take if you go with my forecast, as I articulated during guidance today, from $1.5 billion of cash from operations down to $1 billion, that cash is not deployed to reduce debt. So yes, I mean, there is a knock-on effect that we'll push this out and also that will knock-on effects in the longer-term of recovery long-term recovery from COVID certainly pushed that out. I'm not going to peg a date when we would expected to reduce below 5 times.

Akash Tewari -- Wolfe Research -- Analyst

Thanks so much. I appreciate that.

Joseph C. Papa -- Chairman of the Board and Chief Executive Officer

Maybe the only thing I'd add to what Paul has said is that we recognize when I got your 3.5, four years ago that we had too much leverage, and we're working very diligently to reduce that we did make some decisions though to invest in the business, invest behind XIFAXAN and with the primary care. We did make decisions to invest and acquire a product like TRULANCE. All those business decisions, we think, have been the right decisions, and we do them all the time because we're building this business for the long term. Having said that, though, we're absolutely laser-focused on this concept of driving shareholder value.

And as you know, we've done before, we've divested approximately $3.8 billion of asset proceeds in the past, and we will continue to look at things that will drive down this leverage and will improve the overall share price performance of our company. That's everything from asset divestitures. That's looking at spinoffs of our business if we do not believe we're getting the appropriate some of the parts for our company. So we're going to look at all the things that will drive long-term shareholder value for our company. And you can expect, as the management team that we are focused on that in terms of driving the shareholder value and urgently looking at the things that we can do to try to help increase shareholder value. Thank you, everyone, for joining us today.

I'm going to conclude this Q&A. But appreciate your attention to our company. And please let us know if there are additional questions, happy to try to answer those questions as we go forward. Thank you, everyone, for joining us. Have a great day.

Operator

[Operator Closing Remarks]

Duration: 62 minutes

Call participants:

Arthur Shannon -- Senior Vice President Head of Investor Relations and Global Communications

Joseph C. Papa -- Chairman of the Board and Chief Executive Officer

Paul S. Herendeen -- Executive Vice President and Chief Financial Officer

Ken Cacciatore -- Cowen -- Analyst

David Amsellem -- Piper Sandler -- Analyst

Annabel Samimy -- Stifel -- Analyst

Greg Gilbert -- SunTrust -- Analyst

Umer Raffat -- Evercore -- Analyst

Akash Tewari -- Wolfe Research -- Analyst

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