Bausch Health Companies (BHC 1.74%) CEO Joe Papa thinks his company will be a great turnaround story. And even though the drugmaker posted a loss and declining revenue in the third quarter of 2018, Papa pointed to a positive -- sustained organic revenue growth.

Papa's optimism was put to the test again as Bausch Health reported its fourth-quarter and full-year 2018 results before the market opened on Wednesday. Did the company's turnaround pick up momentum? Here are the highlights from Bausch Health's fourth-quarter update. 

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Image source: Getty Images.

Bausch Health results: The raw numbers


Q4 2018 

Q4 2017 

Year-Over-Year Change


$2.12 billion $2.16 billion


Net income (loss) from continuing operations

($344 million) $513 million


Earnings (loss) per share (EPS)

($0.98) $1.45


Data source: Bausch Health. N/A = Not applicable.

What happened with Bausch Health this quarter?

Bausch Health yet again reported a year-over-year revenue decline in the fourth quarter. But, as was the case in the third quarter, the news wasn't all bad.

Sales for the company's biggest segment, Bausch + Lomb/International, slipped 3% year over year to $4.66 billion. However, divestitures and discontinuations of products resulted in $22 million in lower sales, while unfavorable foreign exchange fluctuations dragged revenue down by another $41 million. Without these factors, the segment's revenue actually increased by 5% year over year on an organic basis.

The picture wasn't quite as good for Bausch Health's Salix business. Solid momentum for Xifaxan, a drug for irritable bowel syndrome with diarrhea (IBS-D), helped drive revenue for the segment to $426 million. However, a planned channel inventory reduction of $47 million and loss of exclusivity for Crohn's disease and ulcerative colitis drug Uceris made overall year-over-year growth only minimal. 

There wasn't much good news for the company's Ortho Dermatologics and diversified-products segments. Both units experienced double-digit percentage sales declines from the prior-year period. Bausch Health's diversified-products business continued to feel the sting of the loss of exclusivity for multiple products.

It might appear at first glance that Bausch Health is moving in the wrong direction with its bottom line. However, the fourth quarter of 2017 included a tax benefit of more than $4 billion that helped the company report a GAAP profit. On a non-GAAP basis, Bausch Health's net income in the fourth quarter of 2018 increased by 6% year over year to $368 million.

What management had to say

Bausch Health chairman and CEO Joe Papa said:

2018 was a strong year for Bausch Health as we delivered organic revenue growth across the entire Company while reducing our total debt by more than $1 billion and strategically investing in our core businesses. As Bausch Health now pivots to offense, we will continue to focus on multiple key launches, including our Significant Seven products. Additionally, we will increase our investment in [research and development] to enable us to develop and bring to market more products that help improve the lives of patients globally.

Check out the latest Bausch Health earnings call transcript.

Looking forward

The company expects full-year revenue for 2019 will be between $8.3 billion and $8.5 billion. The midpoint of that range reflects a small year-over-year increase. Bausch Health also projects that its full-year adjusted earnings before interest, taxes, depreciation, and amortization will be between $3.35 billion and $3.5 billion. The midpoint of this range reflects a slight year-over-year decline. 

Some investors had hoped that Bausch Health's 2019 guidance would be a little higher. But turnarounds take time. Bausch Health continues to deliver organic growth and reduce its debt. 2019 could be a trough year with a return to growth in 2020 as the negative year-over-year comparisons resulting from the loss of exclusivity for a basket of drugs is less of an issue for the company.