Shares of healthcare specialist Bausch Health Companies (BHC 0.56%) fell over 11% on Tuesday, according to data from S&P Global Market Intelligence, following the release of disappointing second-quarter results. An equally lackluster outlook for the remainder of the year didn't help matters, either.
For the three-month stretch ending in June, Bausch turned $1.97 billion worth of revenue into a loss of $0.40 per share, falling short of earnings estimates nearer $0.90 per share. The top line also missed analysts' estimate of just over $2 billion in revenue, and was down from the year-ago figure of $2.1 billion. The operating loss was dramatically reduced from the year-ago loss, and on a non-GAAP (adjusted) basis, the company is technically producing income. Adjusted net income of $201 million, however, still fell from the year-earlier figure of $352 million.
Lowered guidance didn't bolster the bullish case for Bausch. Previous expectations for full-year 2022 revenue between $8.25 billion and $8.4 billion were dialed back to a range of $8.05 billion to $8.22 billion, with the company's EBITDA outlook being comparably reduced.
This remains, however, a business in the midst of a transition, which taints its results. As CEO Thomas Appio explained, "The second quarter was a transitional quarter for Bausch Health as we intensified our focus on the Bausch Pharma and Solta businesses." Notably, Appio is himself new to the role, and the company continues to work toward spinning off its Bausch + Lomb eye business.
Today's sell-off suggests investors were anticipating a little more progress toward Bausch becoming a revitalized, leaner, and more profitable organization.
Appio is arguably the right person for the job, and Bausch's drug and healthcare portfolio is strong enough. But this is a company that remains saddled with the proverbial baggage of its past existence, though -- even as far back when it was still called Valeant. Debt is part of that baggage; $22 billion of it remains on the balance sheet.
Without any real clarity as to when the company will be able to fully shrug off its past and reshape itself into something more viable, there's more volatility and uncertainty ahead than most investors probably care to take on. The stock's steep 80% sell-off just since the beginning of the year may not be over yet.