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Why Is Bausch (BHC) Down 16.2% Since Last Earnings Report?

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It has been about a month since the last earnings report for Bausch Health (BHC - Free Report) . Shares have lost about 16.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Bausch due for a breakout? 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 Q1 Earnings Beat Estimates, Revenues Miss

Bausch Health reported mixed results for the first quarter of 2019. The company’s adjusted earnings per share of $1.03 beat the Zacks Consensus Estimate of 89 cents and increased from 90 cents reported in the year-ago quarter.

Total revenues of $2.01 billion marginally missed the Zacks Consensus Estimate of $2.04 billion, but increased 1% year over year.

Quarter in Detail

Revenues in the Bausch + Lomb/International segment were $1.1 billion, up 1% from the year-ago quarter’s figure. Excluding the impact of discontinuations and divestitures, the Bausch + Lomb/International segment organically improved approximately 8%. The increase was primarily due to higher volumes.

Salix segment revenues came in at $445 million, up 5% year over year, driven by 11% growth in Xifaxan despite the loss of exclusivity of Uceris.

Ortho Dermatologics segment revenues were $138 million, down 1% year over year due to lower volumes driven by the loss of exclusivity of Elidel, Zovirax and Solodyn. This was partially offset by 31% revenue growth in the Global Solta business.

Diversified Products segment revenues were $315 million, down 5% from the year-ago quarter, primarily due the loss of exclusivity for few products.

Pipeline Update

During the reported quarter, the FDA approved Lotemax Sm (loteprednol etabonate ophthalmic gel) 0.38%, a new gel formulation for the treatment of postoperative inflammation and pain following ocular surgery. The company acquired the U.S. rights to Eton Pharmaceuticals' EM-100, an investigational eye drop that, if approved, will be the first over-the-counter preservative-free formulation eye drop for the treatment of ocular itching associated with allergic conjunctivitis.

The company acquired certain assets of Synergy Pharmaceuticals Inc., including Trulance, a treatment for adults with chronic idiopathic constipation and irritable bowel syndrome with constipation (IBS-C).

The FDA approved Duobrii Lotion for the topical treatment of plaque psoriasis in adults.

2019 Guidance Updated

Revenues are now expected between $8.35 billion and $8.55 billion (previous guidance: $8.30 – $8.50 billion).

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Bausch has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Bausch has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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