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Shares of Bausch Health Companies Inc. (BHC - Free Report) were down 1.2% in response to third-quarter 2022 results and lowered guidance.
The company’s adjusted earnings per share of 76 cents missed the Zacks Consensus Estimate of 92 cents and decreased from $1.14 reported in the year-ago quarter.
Total revenues of $2 billion missed the Zacks Consensus Estimate by 2.21% and fell 3% year over year.
Revenues in the quarter were affected by the unfavorable impact of foreign exchange of $82 million and the impact of divestitures and discontinuations of $26 million, primarily due to the sale of Amoun Pharmaceutical Company S.A.E. on Jul 26, 2021. Revenues were up 2% on an organic basis year over year.
The stock has plunged 76.6% in the year so far compared with the industry’s decline of 29.5%.
Image Source: Zacks Investment Research
Quarter in Detail
The company reports revenues through five segments – Salix, International, Diversified Products, Solta Medical and Bausch + Lomb.
Salix revenues came in at $544 million, up 3%, driven by growth in Xifaxan, Relistor, Trulance and Plenvu.
International Rx revenues in the quarter were $250 million, down 8%. Revenues increased organically by 10%, driven by growth in Canada and Europe, after excluding the unfavorable impact of foreign exchange of $22 million and the impact of divestitures and discontinuations of $23 million.
Diversified Products revenues were $238 million, down 18% from the year-ago quarter as a result of decreases in sales from neurology and generic. Jublia continues to benefit from its direct-to-consumer investments. Script growth was 34%.
Solta Medical reported revenues of $72 million, down 3%. Revenues were up organically with strong gains in the international business, following a slow first half, given the ongoing COVID lockdowns in China.
Revenues from Bausch + Lomb were $942 million, down 1% year over year. Excluding the unfavorable impact of foreign exchange of $55 million and the impact of divestitures and discontinuations of $1 million, revenues increased 5% year over year organically.
2022 Guidance Lowered
Revenues are now expected in the $8.00-$8.17 billion range (earlier projection: $8.05-$8.22 billion) due to the uncertainties in the overall operating environment. On an organic basis, revenues are projected to be flat to up 2% (unchanged).
Initial Public Offering of Bausch + Lomb
Bausch Health's eye health business, Bausch + Lomb, launched its initial public offering (IPO) and subsequently began trading under the ticker "BLCO" on May 6, 2022.
On Jun 16, 2022, Bausch Health announced it was suspending its plans for the Solta IPO as a result of challenging market conditions and other factors. Solta will remain part of Bausch Health, as it plans to revisit alternate paths for its Solta medical aesthetic devices business.
Xifaxan Litigation
Bausch Health had earlier announced that the U.S. District Court of Delaware issued an Oral Order in the matter litigation regarding the infringement and validity of certain U.S. patents protecting the composition and use of Xifaxan 550 mg tablets for the treatment of irritable bowel syndrome with diarrhea (IBS-D) and reduction in risk of overt hepatic encephalopathy (HE) recurrence.
The company filed its appeal to the U.S. Court of Appeals for the Federal Circuit for the Xifaxan (rifaximin) 550 mg patent decision and will not provide any further comments on patent litigation at this time.
Bausch Health Cos Inc. Price, Consensus and EPS Surprise
Bausch's third-quarter results were pretty ho-hum. The lowering of the guidance disappointed investors. The Xifaxan patent litigation will remain an overhang on shares. An earlier-than-expected generic entry will adversely impact the top line.
Loss estimates for Puma have narrowed to 6 cents from 16 cents over the past 60 days. Puma surpassed estimates in three of the trailing four quarters and missed in the other one, the average being 201.37%.
Earnings estimates for Dynavax have increased to $1.74 from $1.15 for 2022 over the past 90 days. Earnings of Dynavax surpassed estimates in two of the trailing four quarters.
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Bausch (BHC) Q3 Earnings & Sales Miss, Guidance Lowered
Shares of Bausch Health Companies Inc. (BHC - Free Report) were down 1.2% in response to third-quarter 2022 results and lowered guidance.
The company’s adjusted earnings per share of 76 cents missed the Zacks Consensus Estimate of 92 cents and decreased from $1.14 reported in the year-ago quarter.
Total revenues of $2 billion missed the Zacks Consensus Estimate by 2.21% and fell 3% year over year.
Revenues in the quarter were affected by the unfavorable impact of foreign exchange of $82 million and the impact of divestitures and discontinuations of $26 million, primarily due to the sale of Amoun Pharmaceutical Company S.A.E. on Jul 26, 2021. Revenues were up 2% on an organic basis year over year.
The stock has plunged 76.6% in the year so far compared with the industry’s decline of 29.5%.
Image Source: Zacks Investment Research
Quarter in Detail
The company reports revenues through five segments – Salix, International, Diversified Products, Solta Medical and Bausch + Lomb.
Salix revenues came in at $544 million, up 3%, driven by growth in Xifaxan, Relistor, Trulance and Plenvu.
International Rx revenues in the quarter were $250 million, down 8%. Revenues increased organically by 10%, driven by growth in Canada and Europe, after excluding the unfavorable impact of foreign exchange of $22 million and the impact of divestitures and discontinuations of $23 million.
Diversified Products revenues were $238 million, down 18% from the year-ago quarter as a result of decreases in sales from neurology and generic. Jublia continues to benefit from its direct-to-consumer investments. Script growth was 34%.
Solta Medical reported revenues of $72 million, down 3%. Revenues were up organically with strong gains in the international business, following a slow first half, given the ongoing COVID lockdowns in China.
Revenues from Bausch + Lomb were $942 million, down 1% year over year. Excluding the unfavorable impact of foreign exchange of $55 million and the impact of divestitures and discontinuations of $1 million, revenues increased 5% year over year organically.
2022 Guidance Lowered
Revenues are now expected in the $8.00-$8.17 billion range (earlier projection: $8.05-$8.22 billion) due to the uncertainties in the overall operating environment. On an organic basis, revenues are projected to be flat to up 2% (unchanged).
Initial Public Offering of Bausch + Lomb
Bausch Health's eye health business, Bausch + Lomb, launched its initial public offering (IPO) and subsequently began trading under the ticker "BLCO" on May 6, 2022.
On Jun 16, 2022, Bausch Health announced it was suspending its plans for the Solta IPO as a result of challenging market conditions and other factors. Solta will remain part of Bausch Health, as it plans to revisit alternate paths for its Solta medical aesthetic devices business.
Xifaxan Litigation
Bausch Health had earlier announced that the U.S. District Court of Delaware issued an Oral Order in the matter litigation regarding the infringement and validity of certain U.S. patents protecting the composition and use of Xifaxan 550 mg tablets for the treatment of irritable bowel syndrome with diarrhea (IBS-D) and reduction in risk of overt hepatic encephalopathy (HE) recurrence.
The company filed its appeal to the U.S. Court of Appeals for the Federal Circuit for the Xifaxan (rifaximin) 550 mg patent decision and will not provide any further comments on patent litigation at this time.
Bausch Health Cos Inc. Price, Consensus and EPS Surprise
Bausch Health Cos Inc. price-consensus-eps-surprise-chart | Bausch Health Cos Inc. Quote
Our Take
Bausch's third-quarter results were pretty ho-hum. The lowering of the guidance disappointed investors. The Xifaxan patent litigation will remain an overhang on shares. An earlier-than-expected generic entry will adversely impact the top line.
Zacks Rank and Stocks to Consider
Bausch currently carries a Zacks Rank #4 (Sell).
A couple of better-ranked stocks in the healthcare sector are Puma Biotechnology (PBYI - Free Report) and Dynavax (DVAX - Free Report) . Both the stocks carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Loss estimates for Puma have narrowed to 6 cents from 16 cents over the past 60 days. Puma surpassed estimates in three of the trailing four quarters and missed in the other one, the average being 201.37%.
Earnings estimates for Dynavax have increased to $1.74 from $1.15 for 2022 over the past 90 days. Earnings of Dynavax surpassed estimates in two of the trailing four quarters.