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Why Is Bausch (BHC) Up 15.2% Since Last Earnings Report?

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A month has gone by since the last earnings report for Bausch Health (BHC - Free Report) . Shares have added about 15.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Bausch due for a pullback? 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 catalysts.

Bausch's Q2 Earnings Beat Estimates, Revenues Miss

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.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

Currently, Bausch has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

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

Outlook

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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