Bausch Health’s Steady Performance Amid Challenges

Bausch Health, a global pharmaceutical and medical device company, has reported its financial results for the first quarter of 2025. Despite facing various industry challenges, the company has maintained a steady performance, showcasing its resilience and strategic focus.

Overview of Financial Performance

For the three months ended March 31, 2025, Bausch Health reported revenues of $2,259 million, an increase of 5% compared to the same period in 2024. This growth was driven by higher sales volumes, improved net pricing, and the impact of recent acquisitions, partially offset by the unfavorable effect of foreign currency exchange rates.

Operating income for the quarter was $276 million, a slight decrease of $5 million compared to the same period in 2024. This decline was primarily due to higher selling, general, and administrative (SG&A) expenses, partially offset by an increase in contribution (product sales revenue less cost of goods sold) and a decrease in amortization of intangible assets.

The company reported a net loss of $58 million, an improvement of $6 million compared to the same period in 2024. This was mainly attributable to a favorable change in loss before income taxes, partially offset by an unfavorable change in income taxes.

Segment Performance

Bausch Health’s operations are divided into five reportable segments: Salix, International, Solta Medical, Diversified, and Bausch + Lomb.

The Salix segment, which focuses on gastrointestinal (GI) products, reported a 9% increase in revenues, driven by higher net realized pricing and volumes. Segment profit for Salix increased by 13%, primarily due to higher contribution and lower research and development (R&D) expenses.

The International segment, which includes sales of branded pharmaceutical, branded generic, and over-the-counter (OTC) products outside the U.S. and Puerto Rico, saw a 1% decrease in revenues, mainly due to the unfavorable impact of foreign currencies and the impact of divestitures and discontinuations, partially offset by higher net realized pricing and volumes. Segment profit for the International segment decreased by 2%.

The Solta Medical segment, which sells aesthetic medical devices globally, reported a 28% increase in revenues, driven by higher volumes, partially offset by a decrease in net realized pricing and the unfavorable impact of foreign currencies. Segment profit for Solta Medical increased by 33%, primarily due to the higher contribution from increased revenues.

The Diversified segment, which includes sales of pharmaceutical products in the areas of neurology and other therapeutic classes, dermatology products, generic pharmaceutical products, and dentistry products in the U.S., saw a 1% increase in revenues, driven by higher net realized pricing, partially offset by lower volumes. Segment profit for the Diversified segment increased by 11%, primarily due to higher contribution and lower SG&A expenses.

The Bausch + Lomb segment, which encompasses global sales of vision care, surgical, and pharmaceutical products, reported a 3% increase in revenues, driven by higher volumes and incremental sales from acquisitions, partially offset by the unfavorable impact of foreign currencies, lower net realized pricing, and the impact of divestitures and discontinuations. Segment profit for Bausch + Lomb decreased by 26%, primarily due to higher selling expenses, advertising and promotion expenses, and charges associated with the voluntary recall of certain intraocular lens (IOL) products.

Liquidity and Capital Structure

Bausch Health has taken several actions to effectively manage its capital structure and improve its financial flexibility. In April 2025, the company completed a series of refinancing transactions, which extended the maturities of approximately $6.9 billion in aggregate debt from 2025-2028 to 2030-2032. This provides the company with more flexibility to operate and allocate capital to initiatives that will strengthen its products and brands.

As of March 31, 2025, the company had $1,157 million in cash, cash equivalents, and restricted cash. Bausch Health’s primary sources of liquidity include cash on hand, cash collected from customers, funds available from its revolving credit facilities and accounts receivable credit facility, and the issuance of long-term debt and equity securities.

The company continues to monitor its capital structure and evaluate opportunities to simplify its business and improve its capital structure, including through refinancing, repurchasing existing debt, and issuing additional debt, equity, or equity-linked securities.

Separation of Bausch + Lomb

Bausch Health remains committed to separating its eye health business, Bausch + Lomb, into an independent publicly traded entity. The company believes that the separation will unlock value and allow each business to focus on its core operations and capital needs.

The completion of the separation is subject to the achievement of targeted debt leverage ratios and the receipt of necessary approvals. Bausch Health continues to evaluate all relevant factors and considerations related to the separation, including the ongoing Xifaxan® Generics Litigation.

Outlook and Challenges

Bausch Health faces several industry-wide challenges, including:

1. Generic Competition and Loss of Exclusivity: Certain of the company’s products are expected to face generic competition in the coming years as patents and regulatory exclusivities expire. This could lead to a significant decline in sales for these products.

2. Regulatory and Pricing Pressures: The company’s products are subject to ongoing regulatory oversight and potential pricing controls, such as those introduced by the Inflation Reduction Act in the U.S. These measures could impact the company’s revenues and profits.

3. Macroeconomic Factors: The company is monitoring the impact of global economic conditions, including inflation, interest rate changes, and trade policies, which could affect its operations and financial performance.

4. Litigation and Investigations: Bausch Health continues to be involved in various legal proceedings and governmental investigations, which could result in significant costs and liabilities.

Despite these challenges, the company remains focused on executing its strategic priorities, including:

• Directing capital allocation to drive growth within its core businesses through R&D investments, strategic licensing agreements, and selective acquisitions.
• Improving patient access to its products and making them more affordable through initiatives such as the Patient Assistance Program and cash-pay prescription program.
• Investing in sustainable growth drivers, such as new product launches and line extensions, to position the company for long-term success.

Conclusion

Bausch Health has demonstrated resilience in the face of industry challenges, reporting steady financial performance in the first quarter of 2025. The company’s strategic focus on managing its capital structure, separating its eye health business, and investing in its core operations positions it to navigate the evolving healthcare landscape and deliver value to its shareholders over the long term.