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Bausch's (BHC) Q2 Earnings Beat Estimates, Revenues Miss

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Shares of Bausch Health Companies Inc. (BHC - Free Report) were down 10.8% after it reported second-quarter 2021 results. Investors were most likely disappointed by the weak annual guidance.

The stock has gained 27.1% in the year so far against the industry’s decline of 8.2%.

Zacks Investment Research
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The company’s adjusted earnings per share of 98 cents marginally beat the Zacks Consensus Estimate of 97 cents and increased from 47 cents reported in the year-ago quarter.

Total revenues of $2.1 billion missed the Zacks Consensus Estimate by 0.97% but increased 26% year over year. The year-over-year growth was primarily due to higher volumes resulting from the positive impacts of the recovery from the COVID-19 pandemic.

Excluding the favorable impact of foreign exchange of $60 million and the impact of divestitures and discontinuations of $4 million, revenues increased 23% organically from the year-ago quarter.

Quarter in Detail

Revenues in the Bausch + Lomb segment were $934 million, up 38% year over year. Excluding the favorable impact of $33 million from foreign exchange and the impact of divestitures and discontinuations of $2 million, revenues increased organically by 33%, primarily due to higher sales resulting from the positive impacts of recovery from the COVID-19 pandemic.

Bausch Pharma (comprising Salix, International, Ortho Dermatologics and Diversified Products) revenues were $1.16 billion, up 18% year over year. Among these, Salix segment revenues came in at $516 million, up 28%. Xifaxan sales increased 28% year over year.

International Rx segment revenues in the quarter were $313 million, up  26%.

Ortho Dermatologics segment revenues were $137 million in the quarter under review, up 17% year over year.  The Ortho Dermatologics segment grew organically approximately 14%, primarily owing to sales of the Thermage franchise.

Diversified Products segment revenues were $200 million, down 8% from the year-ago quarter, primarily due to the loss of exclusivity of certain products.

During the first half of 2021, the company repaid debt by approximately $500 million.

2021 Guidance Update

Bausch Health revised its revenue guidance primarily due to the divestiture of Amoun Pharmaceutical Company S.A.E., the impact of a recall of certain consumer products due to a quality issue at a third-party supplier and the negative impact of foreign exchange.

Revenues are now projected in the $8.40-$8.60 billion range, down from $8.60-$8.80 billion expected earlier.

Initial Public Offering of Solta Medical

Bausch announced that it plans to pursue an initial public offering (IPO) of its Solta Medical business. Solta is a leading global provider in medical aesthetics with innovative and effective skin rejuvenation and body contouring solutions, including the Thermage RF systems, Fraxel laser, Clear + Brilliant laser and VASER ultrasonic systems. Solta, which is currently reported as part of the Ortho Dermatologics segment, generated revenues of $253 million in 2020.

The move should enable the company to pay down debt, an important step in the previously announced spinoff of the Bausch + Lomb eye health business from Bausch Pharma.

Pipeline Progress

Bausch initiated phase II study to evaluate amiselimod (S1P modulator) for the treatment of mild to moderate ulcerative colitis.

The FDA accepted the resubmitted new drug application (NDA) for Xipere (triamcinolone acetonide suprachoroidal injectable suspension) with a Prescription Drug User Fee Act (PDUFA) date of Oct 30, 2021.

Our Take

Bausch beat on earnings in the second quarter but marginally missed on sales. Nevertheless, management stated that many businesses continue to recover from the COVID-19 pandemic.

Bausch Health Cos Inc. Price, Consensus and EPS Surprise


Bausch Health Cos Inc. Price, Consensus and EPS Surprise

Bausch Health Cos Inc. price-consensus-eps-surprise-chart | Bausch Health Cos Inc. Quote

The revision in annual guidance was disappointing. Moreover, the high levels of debt pose a concern. 

Zacks Rank & Other Stocks to Consider

Bausch currently carries a Zacks Rank #2 (Buy).

Other well placed stocks in the healthcare space are Ironwood Pharmaceuticals, Inc. (IRWD - Free Report) , Repligen (RGEN - Free Report) and Theravance Biopharma, Inc. (TBPH - Free Report) , each carrying the Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings estimates for Ironwood Pharmaceuticals moved up 4 cents for 2021 in the past 30 days. The stock is up 14.2% year to date.

Earnings estimates for Repligen are up 43 cents for 2021 in the past 60 days.  The stock is up 30% year to date.

Loss estimates for Theravance are down 21 cents for 2021 in the past 60 days.