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Bausch (BHC) Down 19.1% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Bausch Health (BHC - Free Report) . Shares have lost about 19.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Bausch due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Bausch Q2 Earnings & Revenues Miss Estimates, Down Y/Y

The company’s adjusted earnings per share of 47 cents missed the Zacks Consensus Estimate of 66 cents and declined from $1.06 reported in the year-ago quarter.

Total revenues of $1.6 billion missed the Zacks Consensus Estimate of $1.8 billion and declined from $2.1 billion a year ago. Revenues were negatively impacted by the COVID-19 pandemic to the tune of approximately $500 million.

Quarter in Detail

Revenues in the Bausch + Lomb/International segment (comprised 53% of the total revenues) were $883 million, down 27% year over year. Excluding the impact of discontinuations and divestitures, the segment organically declined approximately 24% due to the impacts of the COVID-19 pandemic.

The Salix segment revenues declined 21% year over year to $404 million due to the impact of the COVID-19 pandemic and loss of exclusivity of products in the segment, primarily Apriso. Sales of Xifaxan declined 12%.

The Ortho Dermatologics segment revenues were $116 million, down 5% year over year.

Diversified Products segment revenues were $261 million, down 17% from the year-ago quarter, primarily due to the loss of exclusivity of certain products and the pandemic-led impacts.

During the quarter, the company repaid debt by approximately $100 million with cash generated from operations.

2020 Guidance Updated

The company updated its revenue guidance range for 2020, primarily due to the actual and anticipated impacts of the COVID-19 pandemic. Revenues are now projected to be $7.80-$8.00 billion compared with the previous guidance of $7.80-$8.20 billion.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

Currently, Bausch has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Bausch has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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