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Bausch (BHC) Up 1% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Bausch Health (BHC - Free Report) . Shares have added about 1% in that time frame, underperforming 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 Q4 Earnings Beat Estimates, Revenues Miss

The company’s adjusted earnings per share of $1.27 beat the Zacks Consensus Estimate of $1.08 but decreased from $1.33 reported in the year-ago quarter.

Total revenues of $2.1 billion missed the Zacks Consensus Estimate by 0.45% and fell 1% year over year.

Quarter in Detail

Revenues from the Bausch + Lomb segment were $1.0 billion, up 6% year over year. Excluding the unfavorable impact of $11 million from foreign exchange and the impact of divestitures and discontinuations of $2 million, revenues increased organically by 7%, 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 $1.19 billion, down 6% year over year.

Salix segment revenues came in at $559 million, up 6%. The growth in revenues was primarily driven by higher sales resulting from the positive impacts of the recovery from the COVID-19 pandemic, including sales of Xifaxan (rifaximin), Relistor (methylnaltrexone bromide) and Trulance (plecanatide), which grew 9%, 21% and 21%, respectively.

International Rx segment revenues in the quarter were $276 million, down 17%.
Ortho Dermatologics segment revenues were $146 million in the quarter, down 7% year over year due to a decrease in net realized pricing of medical dermatology products.

Diversified Products segment revenues were $214 million, down 14% from the year-ago quarter, primarily due to a decrease in volumes.

During 2021, the company repaid its debt by approximately $1.3 billion.

2021 Results

Revenues in 2021 came in at $8.4 billion, up 5% from 2020.  Excluding the favorable impact of foreign exchange of $95 million and the impact of divestitures and discontinuations of $132 million, primarily due to the divestiture of Amoun, revenues increased organically by 6% year over year.

2022 Guidance

Revenues are projected in the $8.40-$8.60 billion range.  The projected range falls short of the Zacks Consensus Estimate of $8.80 billion of revenues for 2022.

Initial Public Offering of Solta Medical

Bausch publicly filed a Registration Statement on Form S-1 with the SEC and a preliminary base PREP prospectus with each of the securities regulatory authorities in all of the provinces and territories of Canada relating to the proposed IPO of Bausch + Lomb and also has publicly filed a Registration Statement on Form S-1 with the SEC relating to the proposed IPO of Solta Medical Corporation.

Pipeline Progress

The company obtained FDA approval of the new drug application for Xipere (triamcinolone acetonide injectable suspension), which uses the suprachoroidal space to treat patients suffering from macular edema associated with uveitis, and launched in the United States during the ongoing quarter.

It also announced statistically significant top-line results from two phase III studies evaluating the investigational drug NOV03 (perfluorohexyloctane) as a first-in-class eye drop with a novel mechanism of action to treat the signs and symptoms of dry eye disease associated with meibomian gland dysfunction. Bausch expects to file an NDA with the FDA in the first half of 2022.

BHC announced statistically significant top-line results from the second pivotal phase III study evaluating the investigational IDP-126 gel in acne vulgaris.

The company also initiated phase III study of rifaximin soluble solid dispersion to study the use of rifaximin to prevent hepatic encephalopathy. The company initiated phase II study to evaluate amiselimod (S1P modulator) for the treatment of mild to moderate ulcerative colitis.


 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

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 upward 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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