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What's in the Cards for Bausch Health (BHC) Q2 Earnings?

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Bausch Health Companies Inc. (BHC - Free Report) is scheduled to report second-quarter results on Aug 9, before market open.

In the last reported quarter, the company’s earnings missed estimates by 30.10%.The company beat earnings expectations in three of the last four quarters, the average negative surprise being 1.24%.

The stock has plunged 83.4% in the year so far compared with a 28.8% decline for the industry.

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Factors at Play

During the first quarter of 2022, Bausch changed its segment structure.  Per the new structure, the Ortho Dermatologics reporting unit is now part of the current Diversified Products segment and the Solta reporting unit is now its own operating and reportable segment.  The company has also split its eye care business into a separate company.

The company will now focus on Bausch Pharma and Solta businesses. Revenues from these businesses were down 3% organically in the previous quarter.  The first quarter was challenging for Bausch Health due to the Omicron resurgence impacting primary care and nursing home capacity in the United States as well as the resulting COVID lockdowns in China. Nevertheless, the situation is likely to have improved somewhat in the second quarter.

On a segment basis, Salix segment reported a 2% decline in revenues in the previous quarter due to the loss of exclusivity of certain products. However, revenues are likely to have increased in the to-be-reported quarter on higher sales of Xifaxan (rifaximin), Trulance (plecanatide) and Plenvu, which grew 1%, 14% and 60%, respectively, in the first quarter.

International segment reported a 20% decline in the previous quarter, primarily due to the divestiture of Amoun on Jul 26, 2021, but revenues increased organically by 8%. The trend is likely to have continued in the second quarter.

Diversified Products segment revenues were down 16% on lower volumes, and the trend is likely to have continued in the second quarter.

Solta medical revenues were flat in the previous quarter as an increase in pricing was offset by a decline in volumes primarily due to inventory shortfalls resulting from the impact of lockdowns in China due to the new COVID-19 variant and microchip supply chain constraints. Solta is Bausch’s medical aesthetics unit with innovative and effective skin rejuvenation and body contouring solutions, including the Thermage RF systems, Fraxel laser, Clear + Brilliant laser and VASER ultrasonic systems.  The second quarter has most likely seen a similar trend.

Key Developments

Bausch announced that it is suspending its plans for the initial public offering (IPO) of its Solta Medical business, citing challenging market conditions and other factors.

Bausch stated that the decision has been taken in the interests of the stakeholders and the company will drive Solta's revenues, profits and cash flow while also achieving key operational and regulatory milestones. Solta will remain part of Bausch Health.  BHC will revisit alternative paths for Solta in the future.

The company had launched the IPO for its eye health business, Bausch + Lomb, which subsequently began trading under the ticker "BLCO" on May 6, 2022.   Bausch Health was looking to separate its eye health business and Solta Medical business to improve strategic focus, enhance financial transparency and manage its high levels of debt. 

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Bausch this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP for Bausch is 0.00%. This is because both the Zacks Consensus Estimate stands and the Most Accurate Estimate stand at 93 cents.

Zacks Rank: Bausch carries a Zacks Rank #3.

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

Stocks to Consider

Here are some companies you may consider, as our model shows that these have the right combination of elements to deliver an earnings beat this reporting cycle.

Ionis Pharmaceuticals (IONS - Free Report) has an Earnings ESP of +27.61% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ionis has a mixed track record, having topped earnings estimates in two of the last four quarters and missing in the remaining two. It pulled off a four-quarter earnings surprise of 24.35%, on average.

Verrica Pharmaceuticals (VRCA - Free Report) has an Earnings ESP of +7.94% and a Zacks Rank #2.

Verrica topped earnings estimates in all of the last four quarters. VRCA delivered a four-quarter earnings surprise of 28.45%, on average.

Zoetis (ZTS - Free Report) has an Earnings ESP of +2.17% and a Zacks Rank #3.

Zoetis topped earnings estimates in all of the last four quarters. Zoetis delivered a four-quarter earnings surprise of 9.05%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.