Bausch Health Cos., Inc. Q3 FY2026 earnings call

• CEO Thomas Appio highlighted 14 consecutive quarters of revenue and adjusted EBITDA growth for Bausch Health (ex-B&L) and exceeded $1 billion in quarterly adjusted EBITDA for the first time.
• Net debt was reduced by over $521 million in Q3, contributing to more than $1 billion reduction year-to-date, resulting in $2 billion cash on hand.
• Salix achieved its 17th consecutive quarter of growth, fueled by net realized pricing and volume increases in Xifaxan.
• Solta delivered double-digit reported revenue growth globally, with Thermage up 21% and Fraxel up 52%.
• Management emphasized three core principles: profitable revenue growth via commercial optimization, disciplined resource allocation yielding ~740 bps EBITDA margin expansion over the last 12 months, and robust cash generation supporting debt reduction.
• Future priorities include maximizing current asset performance, enhancing portfolio value through organic growth and operational excellence, and building a sustainable pipeline via internal R&D and strategic business development.

For Bausch Health excluding Bausch & Lomb, consolidated revenues were $1.57 billion (a 12% increase year-over-year), and adjusted EBITDA was $1.02 billion. Salix contributed $831 million in revenue (up $115 million, driven by Xifaxan's 16% growth). The International segment generated $299 million in revenue (up 4% organically, with strong performance in Poland and Hungary). Solta Medical reported $165 million in revenue (up 18% on a reported basis, though organic revenue declined 4% due to phasing and tariff volatility). The Diversified segment brought in $271 million in revenue (up 5%). Additionally, Bausch & Lomb reported $1.38 billion in revenue (up 7% organically).

• Management raised full-year 2026 guidance for the second time this year, increasing the midpoint by approximately $150 million for revenue, $190 million for adjusted EBITDA, and $200 million for adjusted cash flow from operations.
• New Revenue Guidance: $5.525 billion to $5.625 billion (midpoint reflects ~8% YoY growth).
• New Adjusted EBITDA Guidance: $3.225 billion to $3.275 billion (midpoint reflects ~13% YoY growth).
• New Adjusted Cash Flow from Operations Guidance: $1.60 billion to $1.675 billion (midpoint reflects ~29% YoY growth).
• Q4 headwinds are expected to include an 800 bps revenue growth reduction and 1,400 bps EBITDA reduction due to gross-to-net accrual adjustments for the new Xifaxan Medicare price effective Jan 1, 2027, plus normalization of channel inventory effects.

• Regulatory and Pricing Risks: Significant impact anticipated from the Inflation Reduction Act (IRA) and CMS negotiations on Xifaxan pricing starting January 2027, requiring substantial gross-to-net accrual adjustments.
• Litigation Exposure: Ongoing legal proceedings including summary judgment motions in DC District Court regarding FDA framework deviations and Norwich 2 remand issues concerning but-for causation analysis.
• Market Volatility: Solta faces softening consumer confidence and increased competition in China from local and Korean brands, alongside tariff-related revenue phasing distortions in prior periods.
• Operational Execution: Dependence on successful integration of the China distributor and maintaining field execution standards in North America amidst competitive pricing pressures.

Q: Evercore ISI asked about the strategic direction regarding potential formal integration of Bausch & Lomb under Bausch Health, the specific dollar impact of the IRA/Xifaxan price changes on 2027 revenue and margins, and whether an interim analysis is planned for the Phase 3 alcohol-associated hepatitis trial. / A: CEO Tom Appio stated that while BHC already oversees B&L, no structural changes have occurred, emphasizing the strength of separate teams. CFO JJ Charron clarified that the gross-to-net accrual adjustment for the new Medicare price exceeds $100 million, and the total net impact of all IRA factors (price increase vs. rebate) is estimated at $400-$500 million year-over-year based on implicit 2027 guidance. CMO Jonathan Sade noted that no early interim analysis is planned for the hepatitis trial as the study is powered appropriately and on track for 2029 submission.