Shares of Bausch Health Companies Inc. (BHC - Free Report) were down 7.3% on disappointing results for the first quarter of 2020. The company lowered its revenue guidance for 2020.
Bausch’s stock has plunged 45.2% in the year so far compared with the industry’s decline of 3.7%.
The company’s adjusted earnings per share of 89 cents were a penny short of the Zacks Consensus Estimate of 90 cents and down from $1.02 reported in the year-ago quarter.
Total revenues of $2.01 billion missed the Zacks Consensus Estimate by 1.68% and marginally declined from $2.02 billion a year ago. Revenues were negatively impacted by the COVID-19 pandemic to the tune of approximately $35 million.
Quarter in Detail
Revenues in the Bausch + Lomb/International segment (comprised 55.3% of the total revenues) were $1.1 billion, roughly flat year over year. Excluding the impact of discontinuations and divestitures, the segment organically improved approximately 2%, driven by growth in the Global Consumer and International business.
The Salix segment revenues rose 7% year over year to $477 million, primarily driven by 23% growth in Xifaxan.
The company announced top-line results from a phase II study evaluating an investigative soluble solid dispersion (SSD) formulation of immediate release (IR) rifaximin in combination with the current standard-of-care therapy for the treatment of Overt Hepatic Encephalopathy. Results showed that the 40 mg BID of rifaximin SSD IR plus standard-of-care therapy arm met its primary endpoint with statistically significantly superior results compared with the placebo plus standard-of-care therapy arm.
The Ortho Dermatologics segment revenues were $133 million, down 4% year over year due to lower volumes resulting from the loss of exclusivity of Elidel, Zovirax and Solodyn. This was partially offset by 34% growth in the Global Solta business, driven by continued strong demand for ThermageFLX following its launch in the Asia-Pacific region.
Diversified Products segment revenues were $288 million, down 9% from the year-ago quarter, primarily due to the loss of exclusivity of certain products.
During the quarter, the company repaid debt by approximately $220 million with cash generated from operations.
2020 Guidance Lowered
The company lowered its revenue guidance range for 2020 primarily due to the actual and anticipated impacts of the COVID-19 pandemic. Revenues are now projected to be $7.80-$8.20 billion compared with the previous guidance of $8.65-$8.85 billion.
Bausch missed on earnings and sales in the first quarter as the COVID-19 pandemic wreaks havoc worldwide. The company also lowered its annual guidance amid the uncertainty. Postponement of elective medical procedures until the situation stabilizes will continue to affect the surgical business.
Nevertheless, the Salix business continues to grow as Xifaxan maintains momentum. The company has resolved the outstanding Xifaxan IP litigation with Sandoz, the generic unit of Novartis (NVS - Free Report) . The company now holds market exclusivity for the drug until 2028.
Meanwhile, Bausch initiated a clinical study on Virazole (ribavirin for inhalation solution, USP) in combination with standard-of-care therapy to treat hospitalized adult patients having respiratory distress due to the deadly coronavirus in Canada.
We note that Mallinckrodt (MNK - Free Report) too warned that the next few quarters will be challenging due to the impact of COVID-19, while Endo International (ENDP - Free Report) withdrew its guidance due to the uncertain environment.
Bausch currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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