Bausch Health Cos Q2 2025 Earnings Report

Bausch Health Cos EPS Results

• Actual EPS: $0.90
• Consensus EPS: $0.97
• Beat/Miss: Missed by -$0.07
• One Year Ago EPS: N/A

Bausch Health Cos Revenue Results

• Actual Revenue: $2.57 billion
• Expected Revenue: $2.47 billion
• Beat/Miss: Beat by +$93.90 million
• YoY Revenue Growth: N/A

Bausch Health Cos Announcement Details

• Quarter: Q2 2025
• Date: 7/30/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, July 30, 2025
• Conference Call Time: 5:00PM ET

Bausch Health Companies Inc. operates as a diversified specialty pharmaceutical and medical device company in the United States and internationally. It develops, manufactures, and markets a range of products primarily in gastroenterology, hepatology, neurology, dermatology, international pharmaceuticals, over-the-counter (OTC) products, aesthetic medical devices, and eye health. The company operates through five segments: Salix, International, Solta Medical, Diversified, and Bausch + Lomb. The Salix segment provides gastroenterology products in the United States. The International segment sells aesthetic medical devices, branded pharmaceuticals, generic pharmaceuticals, and OTC products internationally. The Solta Medical segment engages in the sale of aesthetic medical devices. The Diversified segment offers pharmaceutical products in the areas of neurology and certain other therapeutic classes; generic products; ortho dermatologic; and dentistry products in the United States. The Bausch + Lomb segment offers products in the areas of vision care, surgical, and ophthalmic pharmaceuticals products. The company was formerly known as Valeant Pharmaceuticals International, Inc. and changed its name to Bausch Health Companies Inc. in July 2018. Bausch Health Companies Inc. is headquartered in Laval, Canada.

Bausch Health Cos Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong Q2 financial performance with 5% revenue growth and 10% adjusted EBITDA growth, marking the ninth consecutive quarter of year-over-year increases.
• Positive Sentiment: Completed a $7.9 billion debt refinancing in April and announced plans to pay down high-interest maturities, aiming to improve the capital structure.
• Positive Sentiment: Entered into a definitive agreement to acquire Direct Corporation, positioning Bausch Health to develop a novel alcohol hepatitis therapy pending deal closing.
• Positive Sentiment: Advancing pipeline with two global Phase 3 studies of the amorphous SSD rifaximin complex, expecting initial data readouts by early 2026 to address unmet hepatology needs.
• Negative Sentiment: Ongoing IRA negotiations on XIFAXAN pricing could lead to significant Medicare rebate increases in 2027, with final terms still uncertain.

Presentation

[Operator]

Welcome to the Bosch Health First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to our host, Garen Serafian, Investor Relations at Bosch. You may begin.

[Garen Sarafian, VP - Head of IR at Bausch Health]

Good afternoon, and welcome to Bausch Health's second quarter twenty twenty five earnings conference call. Participating in today's call are Thomas Appio, Chief Executive Officer of Bausch Health and JJ Charron, Chief Financial Officer. Before we begin, I would like to remind you that our presentation today contains forward looking information. We ask you to take a moment to read the forward looking statements disclaimer at the beginning of the pages that accompany this presentation as it contains important information. Our actual results may vary materially from those expressed or implied in our forward looking statements and you should not place undue reliance on any forward looking statements.

[Garen Sarafian, VP - Head of IR at Bausch Health]

Please refer to our SEC filings and our filings with the Canadian Securities Administrators for a list of some of the risk factors that could cause our actual results to differ materially from our expectations. We use non GAAP financial measures to help investors understand our operating performance. Non GAAP financial measures may not be comparable to similarly titled measures used by other companies and should be considered along with, but not as an alternative to, measures calculated in accordance with GAAP. You will find reconciliations of our historic non GAAP measures in the appendix of the pages that accompany this presentation, which are available on Health's Investor Relations website. Finally, the financial guidance in this presentation is effective as of today only.

[Garen Sarafian, VP - Head of IR at Bausch Health]

We do not undertake any obligation to update guidance. Our discussion today, Wednesday, July 30, will focus on Bausch Health excluding Bausch and Lomb. However, we will briefly comment on Bausch and Lomb's results announced this morning. We will refer to year over year comparisons with the same period last year unless otherwise noted. With that, I would like to turn the call over to our CEO, Tom Appio. Tom?

[Thomas Appio, CEO & Director at Bausch Health]

Thank you, Garren and welcome to everyone joining our earnings call today. In the second quarter, Bausch Health excluding Bausch and Lomb continued to perform strongly delivering our ninth consecutive quarter of revenue and adjusted EBITDA growth. I am proud of the great work by our team especially as we navigate a more uncertain macro environment. Let me take a moment to share a few highlights from the quarter. We delivered year over year revenue growth of 5% on both the reported and organic basis leading to 10% adjusted EBITDA growth for Bausch Health excluding Bausch and Lomb driven by double digit revenue growth in Salix, Solta, EMEA and Canada.

[Thomas Appio, CEO & Director at Bausch Health]

We continued to resolve legacy matters in the quarter. We announced after the quarter that we entered into an agreement to acquire Direct Corporation which if all closing conditions are satisfied and the acquisition closes will enable Bausch Health to use its hepatology expertise to develop direct main treatment for alcohol hepatitis. Therefore, we are reaffirming our full year 2025 guidance for revenue, adjusted EBITDA and adjusted cash flow from operations. The second quarter was another strong quarter of performance where we made progress against our strategic priorities. First is unlocking value.

[Thomas Appio, CEO & Director at Bausch Health]

As a reminder, we completed a $7,900,000,000 debt refinancing on April 8, which extends our maturities with the options for additional proceeds in the future. We remain active in our efforts to improve our capital structure and are currently evaluating opportunities to take advantage of strong market conditions to address selected upcoming maturities. Just this past week we announced actions to reduce debt maturing in 2026 and pay down our accounts receivable facility to reduce high interest debt and improve our capital structure. Unlocking value is a key focus and we are evaluating every option to maximize returns for our stakeholders. Next is growth.

[Thomas Appio, CEO & Director at Bausch Health]

The second quarter was an excellent quarter of growth for Bausch Health. We achieved 5% top line revenue growth then leveraged it to 10% bottom line adjusted EBITDA growth with nine consecutive quarters of year over year top line and adjusted EBITDA growth for Bausch Health excluding Bausch and Lomb. The diversity of our core businesses across geographies demonstrate both our resilience and momentum. Revenue for our Salix and Salix segments as well as EMEA and Canada regions within international grew double digit. Segment profit for Solta and Salix also grew double digits.

[Thomas Appio, CEO & Director at Bausch Health]

The second quarter was our sixth consecutive quarter of top line organic growth in our Salix business where our segment profit increased 21%. Salix grew by 12 on both the reported and organic basis versus the prior year period driven by XIFAXAN's 10% growth in the quarter. Growth came across both indications overt hepatic encephalopathy OHE and IBS D and multiple channel segments retail and non retail. 67,000 new patient starts were initiated in the second quarter, up 8% versus the prior year. Growth was driven by increased OHE media investment as well as sales force focusing on driving new patient starts as we continue to innovate using our customer insight engine.

[Thomas Appio, CEO & Director at Bausch Health]

Given the incredibly high success rate and adherence that we have seen with this AI based platform, we are beginning to leverage these capabilities for RELISTOR to further support sales initiatives. Solta's strong double digit growth driven by South Korea repeated this quarter and while growth in China temporarily softened due to tariff related headwinds in April and May, We remain confident in our ability to grow in these core markets. We also had another quarter of growth in Canada, The United States and EMEA. In June 2025, we started shipments of our next generation Fraxel after U. S.

[Thomas Appio, CEO & Director at Bausch Health]

Launch in this past April. These are positive indicators that point to Solta's growth opportunities beyond the Asia Pacific region and we continue to invest behind additional growth opportunities in this business. Within the international segment, our EMEA business sustained its ongoing trend of organic growth with 6% in the second quarter marking the region's tenth consecutive quarter of organic growth. It is a broad footprint and diversified portfolio with no single drug accounting for double digit share of net revenue minimizing the concentration risk and reinforcing the appeal of this business. In Canada, our team is executing against our plans for each promoted product offering alongside the many growth initiatives we have in place across the portfolio yielding solid results.

[Thomas Appio, CEO & Director at Bausch Health]

Launch in Canada has been successful as we continue to broaden patient access with the goal to position Cabtrio as a leading acne treatment in Canada. Rialtris, another promoted product has gained steady traction since its twenty twenty three launch in the Canadian market. Now turning to innovation. We continue to focus on advancing opportunities for pipeline expansion. We are making progress internally as we assess partnerships and licensing opportunities that can offer a reasonable probability of success on multiple fronts.

[Thomas Appio, CEO & Director at Bausch Health]

In EMEA, we announced a strategic partnership this June with YunnV, a recognized leader in microbiome skincare solution. This collaboration has the potential to reshape the skincare landscape starting with the expected launch of Yun's probiotic based products for acne prone skin to the Polish market later this year. Leveraging our broad footprint and seasoned sales force, this partnership will focus on bringing new ProBiotherapy solutions utilizing good bacteria for a variety of indications including acne, fungus, atopic eczema and baby skin care. These microbiome skin care solutions use live probiotics to help restore the skin's natural microbiome balance offering a modern science driven approach to managing acne prone skin. As we shared last quarter, we launched our cardio metabolic brands in Latin America in June which in addition to our current portfolio line now includes two new brands.

[Thomas Appio, CEO & Director at Bausch Health]

As a reminder, the cardiometabolic market is one of the fastest growing therapy areas in the Mexican pharmaceutical market and we are excited to be able to participate in such a high growth area. Now turning to our internal product pipeline. We remain on track with our two global Phase three studies for Red Sea, our amorphous solid soluble dispersion, SSD rifaximin complex and we expect to see initial data readouts by early twenty twenty six. As a reminder, this program is centered on a solid soluble dispersion rifaximin complex in unique patented non crystalline water soluble form that enables delivery throughout the entire gastrointestinal tract. Amorphous SSD rifaximin is being studied in patients with cirrhosis prior to their first decompensation event from any form of liver disease.

[Thomas Appio, CEO & Director at Bausch Health]

This product if approved has the potential to offer this patient population of therapy to slow disease progression and provide a meaningful clinical benefit. We look forward to sharing further updates in early twenty twenty six. A successful outcome may position us to address a significant unmet need in hepatology and to bring a novel therapy to cirrhotic patients on a global scale. I want to touch on our recently announced definitive agreement to acquire Direct Corporation. The agreement remains subject to the satisfaction of certain conditions including a majority of the outstanding shares of Direct being tendered in the tender offer that we intend to commence shortly.

[Thomas Appio, CEO & Director at Bausch Health]

Through this proposed acquisition we intend to advance the development and commercialization of DIRECT's lead pipeline candidate larsucostol, an FDA breakthrough therapy designation asset targeting alcohol hepatitis, Ah. There is currently no Food and Drug Administration or European Medicine Agency approval treatment for Ah and novel therapeutic strategies are needed to improve patient survival. Assuming all conditions are met including the successful completion of the tender offer, we anticipate closing the deal in the 2025. As such, we are limited in what we can share at this time. I look forward to sharing more information regarding this transaction following the closing.

[Thomas Appio, CEO & Director at Bausch Health]

I want to thank our business development team who has worked incredibly hard on this transaction. We are committed to intensifying our focus and rigor behind R and D and business development. This announcement demonstrates our commitment to hepatology and finding new ways to address unmet medical needs. Lastly, turning to legal matters. Year to date we have settled nine more opt out cases.

[Thomas Appio, CEO & Director at Bausch Health]

Of the 37 cases there are now 11 remaining. We continue to vigorously defend the remaining claims. Regarding the Granite Trust matter, I am very pleased to announce that near the end of the second quarter we received communication from the internal revenue service that the case has officially concluded consistent with the view we have communicated on prior calls. There will not be any negative cash flow as a result. In summary, it was another strong quarter.

[Thomas Appio, CEO & Director at Bausch Health]

I remain confident in our ability to execute on our strategic priorities focused on delivering tangible results. We strive for operational excellence throughout our company which will maximize long term shareholder value. With that I will pass it over to JJ to discuss the financial results in more detail. JJ?

[Jean-Jacques Charhon, EVP & CFO at Bausch Health]

Thank you, Tom. Let's first review quickly our consolidated performance in more detail starting with our non GAAP financial results for the second quarter which you will find starting on page 13. Revenue was $2,530,000,000 up 5% on a reported basis and 4% on an organic basis compared to the same period a year ago. Adjusted gross margin was 70.6%, 30 basis points lower year over year. Adjusted operating expenses were $1,016,000,000 dollars an increase of $61,000,000 compared to the same period last year.

[Jean-Jacques Charhon, EVP & CFO at Bausch Health]

Adjusted EBITDA was $871,000,000 an increase of $45,000,000 or 5% year over year. Finally, adjusted operating cash flow was $442,000,000 Moving now to the performance of Bausch Health excluding Bausch and Lomb for the second quarter starting on page 15. Q2 was undoubtedly another quarter of strong performance. Nine quarters in a row of growth for revenue and adjusted EBITDA is outstanding, particularly when acknowledging that this was realized on an organic basis without any material business development or acquisition in the last three years. Revenue was $1,252,000,000 dollars up 5% when compared to the 2024.

[Jean-Jacques Charhon, EVP & CFO at Bausch Health]

Adjusted EBITDA was $676,000,000 up 10% demonstrating the continued commitment to driving operating leverage through positive segment mix and tight cost management. Adjusted operating cash flow of $355,000,000 was up 34% versus the 2024 due to our double digit adjusted EBITDA growth combined with the favorable timing of cash interest payments. On cash taxes, as we stated repeatedly during our prior quarter earnings calls, the conclusion of the Granite Trust matter would not be associated with any negative outflow in the future. I am happy to confirm that there were none in the 2025. Moving now to our second quarter performance by segment, starting with Salix on page 16.

[Jean-Jacques Charhon, EVP & CFO at Bausch Health]

Salix revenues were $627,000,000 an increase of $69,000,000 or 12% compared to the same period last year. Our strong performance was primarily due to favorable net pricing across our three major brands namely XIFAXAN, RELISTOR and TRULANCE. Separately, XIFAXAN had another strong volume performance with retail scripts up 6% and new scripts up 7%. Extended Units also grew 7% and includes non retail settings such as hospitals and outpatient clinics, which grew double digits. Revenues for the international segments were $278,000,000 an increase of 1% compared to the second quarter of last year.

[Jean-Jacques Charhon, EVP & CFO at Bausch Health]

The revenue in the second quarter was driven by double digit growth in Canada and EMEA partially offset by softness in LatAm. Canada top line growth was once again driven by our Promoted Products portfolio, which grew 12%. EMEA achieved an impressive milestone of ten consecutive quarters of organic growth across the region led by its top three markets Poland, Serbia and Russia. Finally, LATAM's softer performance was a result of the ongoing macroeconomic challenges in the region as well as some partial channel destocking. Now moving to page 18 for a review of our Sultan Medical segments.

[Jean-Jacques Charhon, EVP & CFO at Bausch Health]

Revenues were $128,000,000 an increase of 25% on a reported basis and 26% on an organic basis compared to the same period last year. Solta's performance continues to be fueled primarily by South Korea and to a lesser extent this quarter China. South Korea once again outperformed expectations resulting in 115% organic revenue growth year over year. China grew more modestly at four percent this quarter, mostly due to channel inventory reduction. The timing of our shipments from our plant in Bothell, Washington to China was managed to minimize the impact of tariffs on U.

[Jean-Jacques Charhon, EVP & CFO at Bausch Health]

S. Imports in April and May. Finally, special mentions goes to our double digit growth of Salter in The U. S. And Canada following our increased promotional efforts in these two regions.

[Jean-Jacques Charhon, EVP & CFO at Bausch Health]

Turn now our focus to our diversified segment, which you will find on page 19. Revenues were $219,000,000 a decrease of 13% compared to the same period a year ago. The decrease of our revenue was driven by both the neurology and dermatology businesses, which had benefit in 2024 from one time pricing adjustments and unexpected demand for Cardizem from the Department of Defense due to generic supplier stock outs. After adjusting for these non recurring elements, our diversified segment was ahead of expectation, thanks to strong Wellbutrin performance and outstanding Rx growth for Captrio. Finally, Box and Lom's revenue were $1,300,000,000 up 5% on a reported basis and 3% on an organic basis compared to the same period last year.

[Jean-Jacques Charhon, EVP & CFO at Bausch Health]

Now turning our focus to our balance sheet starting on page 22. Our strong operational cash flow generation was largely offset by outflows associated with the $7,900,000,000 refinancing we closed on April 8. This resulted to our net debt remaining flat during the quarter. While gross debt stands approximately at $16,100,000,000 our cash on hand at the end of Q2 has now increased to almost $1,500,000,000 This is allowing us to actively reduce the negative carry associated with our cash on hand without jeopardizing our financial flexibility for the future. As we announced earlier this week, about $900,000,000 of available liquidities will be used in the coming weeks to repay some of our most expensive debt, namely our nine point two five percent twenty twenty six notes and our accounts receivables facility.

[Jean-Jacques Charhon, EVP & CFO at Bausch Health]

This will still leave us with almost $600,000,000 of cash on hand for general business purposes, including reinvestment in the business, business development related payments and working capital needs. Separately, given the current strength of the financial markets, will be exploring options to push out some of our 2028 maturities either through our April 2025 financing agreements or other means. Let me now move to our full year guidance before wrapping up with our strategic priorities for the back half of the year, which you will find on Page 24. We are reaffirming our full year 2025 guidance for Bausch Health excluding Bausch and Lomb, which remains as follows. Revenue is expected to be between $4,950,000,000 and $5,100,000,000 The midpoint of that range translates to a 4% increase year over year.

[Jean-Jacques Charhon, EVP & CFO at Bausch Health]

Our adjusted EBITDA outlook is also unchanged and is still expected to be between $2,625,000,000 and $2,725,000,000 The midpoint of that range would represent a 5% increase versus 2024. Adjusted operating cash flow is still expected to be between $825,000,000 and $875,000,000 In summary, we had an outstanding first six months and remain on track for achieving our full year objectives. Our strategic priorities remain the same. First, increasing the value of Bausch Health operational assets through innovation, optimizing the growth of our portfolio of brands across the globe as well as pursuing opportunities to build further our portfolio of assets through business development. Second, evaluating all options for unlocking value for all stakeholders, including maximizing the value of our Bosch Health and Bosch Enlom assets.

[Jean-Jacques Charhon, EVP & CFO at Bausch Health]

And third, continuing to optimize our capital structure. As we indicated earlier, we have already identified specific opportunities to reduce the net cost of capital of our debt over the next couple of months. I will now hand the call back to Tom for the wrap up.

[Thomas Appio, CEO & Director at Bausch Health]

Thank you, JJ. Before we turn over for questions, I want to thank the entire Bausch Health global team for their hard work and dedication helping us to deliver another strong quarter building our momentum through the 2025 and positioning us well to continue executing against our strategic priorities for the remainder of the year. We remain confident in the growth opportunities ahead of us and our ability to deliver value for our stakeholders. With that, we will now turn to questions. Operator, please open the line for Q and A.

[Operator]

Thank you. And our first question comes from Jason Gerberry with Bank of America. Please state your question.

[Jason Gerberry, MD & Equity Research Analyst - Biotech & Pharma at Bank of America Merrill Lynch]

Thanks for taking my questions. Just wanted to follow-up. So I think some of the commentary on capital deployment, I didn't hear buybacks. I think you guys did mention share buybacks as something of potential interest in 1Q. So I'm just kind of curious if that's still something possibly being contemplated.

[Jason Gerberry, MD & Equity Research Analyst - Biotech & Pharma at Bank of America Merrill Lynch]

And then on the DTC efforts with XIFAXAN, is this can you just confirm, is this mainly on the IBS side? My recollection is that the growth outlook was perhaps more robust on the IBS side, whereas HE market share had kind of hit a ceiling. So maybe if you just kind of confirm sort of the outlook there on the DTC side?

[Thomas Appio, CEO & Director at Bausch Health]

Sure. Okay. So I think we'll take the question on the share repurchase first. I'll hand that to JJ.

[Jean-Jacques Charhon, EVP & CFO at Bausch Health]

Yes. So our capital allocation strategy remains the same. The first is to really delever the business. Second is to reinvest in the business. And then if there is any surplus return capital to shareholders in different forms and the share buyback could be one of those forms.

[Jean-Jacques Charhon, EVP & CFO at Bausch Health]

We did mention that as a possibility last quarter just because the stock price was so depressed. And so therefore, when there are exceptional circumstances, there's always, I think, the obligation to review the priority list and see if there's any opportunity to do a program limited in size. Since then, a number of things have changed. We've decided to reinvest in the business as evidenced by the direct deal that we've just announced. And so therefore, we continue to evaluate the possibility, it has gone back to the back burner. Yes.

[Thomas Appio, CEO & Director at Bausch Health]

And Jason, I'll take the second part of your question regarding Salix and XIFAXAN. So the investment that we're making is in OHE DTC. In the past we have had DTC campaigns for IBS D, but right now our focus is growing OHE and that's we have had broad growth on both indications but we are focusing on our OHE indication and investing heavily behind it. I think when we look at the quarter and the 10% growth, we're getting a really nice growth in the volume side at 6% and a little bit on the price side at 3%. So again driving volume, if you look at the TRx growth in the quarter is 6%.

[Thomas Appio, CEO & Director at Bausch Health]

You look at the non retail is 18% and total extended units is 7% with a total new to brand as I said in my prepared remarks 8% growth and 67,000 new patient starts. So our OAG business is growing very nicely and clearly as I've talked about in prior conference calls, our engine that we are using to drive our customers inside engine now is reaching heights of 90% adherence. So our focus continues to be investment in our field force, in the tools that they have and of course the DTC investments as well. Operator, next question.

[Operator]

Thank you.

[Operator]

And your next question comes from Umer Raffat with Evercore ISI. Please state your question.

[Umer Raffat, Senior Managing Director at Evercore ISI]

Hi, guys. A couple of questions on the rifaximin franchise, if I may. First, the SSD trials, I wanted to confirm that lactulose background therapy is in fact allowed? And secondly, I also wanted to confirm the population you're using is in fact inadequate responders to lactulose in the primary prevention setting. And then finally, have you guys considered or debated internally the possibility of a XIFAXAN OTC? Thank you.

[Thomas Appio, CEO & Director at Bausch Health]

Thanks Uma for the question regarding rifaximin. So I think that when we again when we look at what we're trying to achieve here, this is a prevention trial. And what I have to when we look at it and the population that we can treat, I want to just level set the size of the opportunity and then I can talk specifically about what your question was. Four point five million patients in The U. S.

[Thomas Appio, CEO & Director at Bausch Health]

Suffer from chronic liver disease and or cirrhosis. Two point five million are adults with cirrhosis. So if we take a look and then split it out, when we look at XIFAXAN today where we are, we're looking at a patient population of about six hundred and fifty thousand patients. On the SSD side, we're looking at one point nine million patients. So we see this as a great opportunity to expand our franchise.

[Thomas Appio, CEO & Director at Bausch Health]

I'll take the second part of your question, have we considered the possibility of Xifaxan OTC? It's a good question, have not really considered at this time. When we look specifically to your question of wanting to know the combination of Laxulose, I'll have to get back to you on specifically how that was run-in the trial with Laxulose. But that would be something the team can follow-up with after this call. Operator, next question.

[Operator]

And your next question comes from Doug Meehan with RBC Capital Markets. Please state your question.

[Douglas Miehm, Analyst at RBC Capital Markets]

Yes. Good afternoon. My question just first one just has to do with XIFAXAN. Maybe you could provide any details as you think about them about potential ROA headwinds in 2027? And then the second one just has to do with and maybe you touched on this a little bit, the discrepancy between revenue growth and prescription growth both for RELISTOR and TRULANCE? Thanks very much.

[Thomas Appio, CEO & Director at Bausch Health]

Thanks, Doug, for the question. Yes, we can I'll touch upon the first one in terms of XIFAXAN details in the IRA. As you know, XIFAXAN was selected for the negotiation and those negotiations are ongoing. Right now, it's scheduled to conclude in October 2025 and CMS is expected to announce the final price by November 2025. As we're going through the process multiple meetings, we have a outstanding market access team monitoring the situation.

[Thomas Appio, CEO & Director at Bausch Health]

Right now we have the next meeting set for the coming months and we'll see how the negotiation goes. But clearly as we look at it, we're working hard on it and presenting our case. As we always said, XIFAXAN today has a huge savings in the burden of the government payers especially in the hospital setting. So we think that it continues to reduce hospitalization costs and creates a large savings for the healthcare system today. The discrepancies between revenue and the prescription growth for RELISTOR and TRULANCE, on the RELISTOR side, we now have a new leader in place and we're continuing to look for ways to grow that franchise.

[Thomas Appio, CEO & Director at Bausch Health]

We have grown in the second quarter and we're really seeing some really nice trends there. And then on the TRULANCE side, the product continues to perform as we look at it the challenge on TRULANCE side is always from growth to net standpoint. JJ, you want to add anything to that?

[Jean-Jacques Charhon, EVP & CFO at Bausch Health]

Hi, Doug. Yes, for the three brands, we got some favorability on gross to net with some accruals that were released in the quarter. So that really explains the large discrepancy between the revenue performance of Trulance and Redistore and the script or the volume behavior in the quarter.

[Douglas Miehm, Analyst at RBC Capital Markets]

Perfect.

[Thomas Appio, CEO & Director at Bausch Health]

Next question. Doug, you have another question?

[Douglas Miehm, Analyst at RBC Capital Markets]

Well, yes, I did want to just ask on direct. Is there any additional information you can provide on that? It looks like an interesting acquisition given that you may be the only approved product if the results work out and you get approval of course. Is there anything you want to add to the opportunity there?

[Thomas Appio, CEO & Director at Bausch Health]

Yes. So as you said it's a very interesting opportunity. We're very pleased as you know with our announcement we intend to commence a tender offer shortly. So I'm limited as what I can say. But assuming we successfully closed the acquisition, I'm really looking forward to providing further detail on the thinking and the underlying science behind this acquisition.

[Thomas Appio, CEO & Director at Bausch Health]

As we've talked about already on the call in terms of XIFAXAN and hepatology and OHE and the opportunities to address this patient population, we are a hepatology company. We have really strong expertise in this area from the R and D side and also from the commercial side. So I'm really looking forward to providing more on the science after the deal closes.

[Douglas Miehm, Analyst at RBC Capital Markets]

Thank you.

[Thomas Appio, CEO & Director at Bausch Health]

Thank you. Next question?

[Operator]

Arden, your next question comes from Mike Nadelkovich with TD Cowen. Please state your question.

[Michael Nedelcovych, Director - Equity Research at TD Cowen]

Hi, thank you for the questions. I have two. My first is on the direct asset. It looks like LARS two costarol missed its primary survival endpoint in Phase 2b. There was a positive trend.

[Michael Nedelcovych, Director - Equity Research at TD Cowen]

So what gives you the confidence that data will improve rather than worsen in a larger Phase three trial?

[Michael Nedelcovych, Director - Equity Research at TD Cowen]

And on a related note, the press release suggests that only one Phase three trial will be required. Am I understanding that correctly? And then my second question relates to rifaximin SSD. Although not approved for primary prevention, there are some studies that suggest XIFAXAN could be effective in that setting. And so far, it's not totally clear that Rifaximin SSD offers any differentiation.

[Michael Nedelcovych, Director - Equity Research at TD Cowen]

So it would seem the risk of off label generic Rifaximin use for primary prevention might be relatively high. So my question given this possibility is whether you've considered running a head to head trial between the two formulations?

[Thomas Appio, CEO & Director at Bausch Health]

Thank you. Yes, Mike. Thanks for the question. On the direct, there's as I said on the previous question, I'm limited to what I can speak about at this time. Yes, you are correct in terms of the trial that they ran, but it was a very slight miss on the primary endpoint.

[Thomas Appio, CEO & Director at Bausch Health]

As I said previously, our R and D team has we are an expert in hepatology and we believe that this is a very interesting asset for us. So I'm looking forward in the future to providing the science behind it and yes confidence in running one three phase trial at the present time. On the second question, we are the SSD formula is quite different, the dosage is quite different and the way it acts in the gut is quite different. So with this new formula, we believe this is the product to use for prevention and we are not at this time running plans around any head to head trials. Operator, next question.

[Operator]

Thank you. And the last question will come from Umer Raffat with Evercore ISI. Please state your question.

[Umer Raffat, Senior Managing Director at Evercore ISI]

Hi, Thanks for the follow-up. I just wanted to touch base again on some of the IRA points you made. I know your the negotiations are ongoing, but just to level set and prepare The Street, would you agree that some of the price points we saw for the 2026 drugs, which were anywhere between 4080% and generally about a 60% cut median, is probably the ZIP code we're talking as XIFAXAN makes progress through this? Or would you rather point us to some of the emerging feedback that the ongoing negotiations are more in HHS is being much more aggressive than previously. I just want to make sure we're all prepared for this.

[Thomas Appio, CEO & Director at Bausch Health]

Yes, Umer. Thanks for the follow-up question. I'll just touch on it briefly in terms of the negotiation and then I'll hand it over to JJ. As we look at this and in these negotiations, we did not believe we should have been on the list to begin with. So if you look at some of the criteria.

[Thomas Appio, CEO & Director at Bausch Health]

But we were and so as we go through this negotiation and speaking to CMS and what our points would be and with the savings already to the healthcare system. What I would say is we our team is evaluating multiple levers here as we look to see what we can do as we get to the end and get to a price that would be the discount that we have to give. So looking at our various options and many levers and turning over every stone to make sure that we try to minimize the impact. JJ?

[Jean-Jacques Charhon, EVP & CFO at Bausch Health]

Umer, this is JJ.

[Jean-Jacques Charhon, EVP & CFO at Bausch Health]

So the way you're looking at it is accurate, but relies on a big assumption as to how the drug is classified whether it's a long term monopoly or a short term monopoly. Then the regulations will drive a certain level of percentage, minimum and maximum that will be applied to really the gross revenue. So you have to look at the size of the business that goes through basically Medicare Part D, how the drug is going to be classified. As we said repeatedly, those discussions are ongoing. And then as Tom alluded to, once you have an understanding of the baseline, then there are a number of strategies we can deploy to offset the potential impact associated with the increase in the rebate level.

[Jean-Jacques Charhon, EVP & CFO at Bausch Health]

So once all those variables settle, we'll be in a better position to really communicate to the market what's going to be the onetime impact in 2027.

[Umer Raffat, Senior Managing Director at Evercore ISI]

That's very helpful, J. J. Thank you.

[Operator]

Thank you. And we have reached the end of the question and answer session. I will now turn the call over to Tom Napio for closing remarks.

[Thomas Appio, CEO & Director at Bausch Health]

Thank you for all joining the call today and for your continued interest and support of the company. We remain committed to executing against our strategic priorities and focused on unlocking value, driving sustainable growth and advancing innovation across our portfolio. We appreciate your ongoing engagement and look forward to sharing further updates on the progress in the quarters ahead. Thank you and have a good evening.

[Operator]

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Analysts

• Garen Sarafian, VP - Head of IR at Bausch Health
• Thomas Appio, CEO & Director at Bausch Health
• Jean-Jacques Charhon, EVP & CFO at Bausch Health
• Jason Gerberry, MD & Equity Research Analyst - Biotech & Pharma at Bank of America Merrill Lynch
• Umer Raffat, Senior Managing Director at Evercore ISI
• Douglas Miehm, Analyst at RBC Capital Markets
• Michael Nedelcovych, Director - Equity Research at TD Cowen