Bausch Health Companies Inc. Keeps Momentum Going in the Second Quarter

The last time that Valeant Pharmaceuticals reported its quarterly results was literally the last time. That's because the drugmaker changed its name to Bausch Health Companies Inc. (BHC 0.70%) on July 13, 2018. The company ended its time as Valeant on a positive note, with better-than-expected revenue and organic growth for its two largest segments in the first quarter of 2018.

Bausch Health reported its second-quarter results before the market opened on Tuesday, and they revealed that the momentum from earlier in the year continued. Here are the highlights. 

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Bausch Health results: The raw numbers

Data source: Bausch Health.

What happened with Bausch Health this quarter?

Although Bausch Health's second-quarter revenue fell from the prior-year period, there was some good news. The year-over-year comparison was hurt by divestitures and discontinuations last year totaling $183 million and helped a bit by roughly $25 million due to the favorable impact of foreign exchange fluctuations. Excluding these factors, Bausch's revenue increased 3% organically over the second quarter of 2017.

The strongest performance came from the company's Salix business segment. Revenue for the segment totaled $441 million in the second quarter, up 14% on a reported basis and organically. Higher sales for gastrointestinal drugs Xifaxan and Relistor helped drive growth for the segment. 

Bausch Health's largest business unit, Bausch + Lomb/international, posted second-quarter revenue of $1.2 billion, a decline of $14 million, or 1%, from the prior-year period. However, excluding divestitures and discontinuations of $84 million and a positive foreign exchange impact of $25 million, the segment's revenue increased by 4% year over year. The segment's results were boosted by launches of new products, including Lumify, which achieved a market share of 21% among eye redness relievers. 

The company still had its weak spots, though. Revenue for its ortho dermatologics segment was $142 million in the second quarter. That reflected a 12% year-over-year decline on a reported basis and an 11% drop organically. Revenue for the diversified products segment fell 27% on a reported basis and decreased by 8% organically from the prior-year period to $336 million.

Bausch Health's bottom-line performance worsened, but it's not as bad as it looks. The wider net loss stemmed in large part from an increase in the provision for income taxes of $343 million. Other contributing factors included an asset impairment associated with the loss of exclusivity of a key product and an increase in amortization of intangible assets.

What management had to say

Joseph Papa, chairman and CEO of Bausch Health, stated: "For a second consecutive quarter, the Company delivered overall organic growth, driven by solid results in our Salix and Bausch + Lomb/International segments, which together represented approximately 78% of our business in the quarter. Growth in the Salix segment reflects higher sales of our promoted brands, most notably Xifaxan and Relistor, while organic growth in the Bausch + Lomb/International segment was primarily due to volume increases and strong growth across Europe and China."

Looking forward

Thanks to its relatively good second-quarter performance, Bausch Health raised its full-year 2018 adjusted EBITDA guidance. The company now expects adjusted EBITDA between $3.2 billion and $3.35 billion in 2018, up from its previous guidance of $3.15 billion to $3.30 billion.

Bausch still expects full-year 2018 revenue between $8.15 billion and $8.35 billion. Papa stated that the company was maintaining this guidance "despite significant foreign exchange headwinds."

New products could continue to help improve revenue. Year-over-year comparisons could also begin to look better in future quarters as Bausch Health moves past the overhang of previous divestitures and discontinuations.