Bausch + Lomb Corporation Q2 FY2025 earnings call

• Constant currency revenue growth driven by portfolio breadth and new introductions.
• Contact lens performance outpacing industry averages, with dry eye portfolio reaching $1 billion and continuing to gain market share.
• EnVista intraocular lenses back in full production, with efforts to recapture momentum.
• Robust innovation pipeline with a focus on upcoming Investor Day on November 13 to showcase promising candidates.
• Operational excellence highlighted, including resilient execution despite unexpected challenges.
• Commitment to methodically progressing through phases of the strategic road map.

Vision Care

• Second quarter revenue: $753 million, up 6%. Consumer business grew 6%, with LUMIFY up 27% to $61 million. Dry eye portfolio generated $115 million in Q2, a 19% growth; ARTELAC grew 34% and Blink 13%. Eye vitamins declined 8% due to retailer destocking. Contact lenses revenue grew 7%, with Daily SiHy up 36%, ULTRA monthly up 8%, Biotrue up 2%, and growth in key markets (U.S. +11%, EMEA +11%, LatAm +25%, Japan +3%, China +7%).

Surgical

• Second quarter revenue: $216 million, up 1%. Excluding the enVista recall, growth was 15%. Consumables (56% of surgical revenue) grew 10%. Implantables declined 16% and Equipment declined 2% due to the recall, but progress is being made with enVista's return to market.

Pharma

• Second quarter revenue: $309 million, down 1%. U.S. branded Rx up 8% (MIEBO $63 million, 11% sequential growth, 50% year-over-year; XIIDRA $82 million, 12% year-over-year TRx growth). International Pharma up 2%, while U.S. Generics declined 29%, with expectations of improvement in the second half.

• Raised full-year revenue guidance to $5.05 billion to $5.15 billion (constant currency growth of 5%-7%), up from $5 billion to $5.1 billion.
• Adjusted EBITDA guidance raised to $860 million to $910 million, up from $850 million to $900 million.
• Adjusted gross margin expected to be approximately 61.5%, absorbing an estimated 50 basis points headwind from the enVista recall.
• R&D investments expected to be about 7.5% of revenue, interest expense ~$375 million, CapEx ~$280 million.
• Fourth quarter expected to be the strongest due to seasonality, enVista ramp-up, and U.S. Generics improvement efforts.

• Tariffs remain a fluid policy, but guidance assumes offset of impact.
• U.S. Generics business underperformed in the first half, with ongoing efforts to improve performance in the second half.

Q: What are the key reasons for recommitting to the company and the confidence in the future?

A: Brent Saunders cited confidence in the team, products, and R&D pipeline, resilience through unexpected challenges, and the significant opportunity to transform the company.

Q: How is the tariff impact quantified and managed?

A: Tariffs are fluid, but guidance assumes offset. The team has mitigated impact through navigation and strategic steps, with an estimated 40 basis points impact absorbed in guidance.

Q: How does the pharma business plan to handle competition for Miebo?

A: Miebo is unique for evaporative dry eye, with strong clinical outcomes, high tolerability, and managed care coverage, positioning it well to grow despite competition.

Q: What is the outlook for the contact lens market?

A: The contact lens market is healthy, with growth in both new and legacy brands, driven by innovation and direct-to-consumer efforts.

Q: What is the timeline for Elios approval and adoption?

A: Elios filing is pending, with expectations to submit this year, approval early second half next year, and clinical success in Europe providing confidence for adoption.