Bausch Health Cos Q4 2025 Earnings Report

Bausch Health Cos EPS Results

• Actual EPS: $1.08
• Consensus EPS: $1.21
• Beat/Miss: Missed by -$0.13
• One Year Ago EPS: N/A

Bausch Health Cos Revenue Results

• Actual Revenue: $2.78 billion
• Expected Revenue: $2.71 billion
• Beat/Miss: Beat by +$73.22 million
• YoY Revenue Growth: N/A

Bausch Health Cos Announcement Details

• Quarter: Q4 2025
• Date: 2/18/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, February 18, 2026
• Conference Call Time: 5:00PM ET

Bausch Health Companies Inc. is a multinational specialty pharmaceutical company headquartered in Laval, Quebec. The company develops, manufactures and markets prescription medicines, over-the-counter products and medical devices, with a focus on gastroenterology, neurology, dermatology and other specialty therapeutic areas.

Its portfolio includes gastrointestinal treatments such as Xifaxan, Trulance and Relistor, as well as products for conditions affecting the central nervous system and skin. Bausch Health also markets the Solta Medical portfolio of aesthetic medical devices. Its former eye-health business, Bausch + Lomb, was separated from Bausch Health as an independent publicly traded company in 2022.

The company traces its history to Valeant Pharmaceuticals International and adopted the Bausch Health name in 2018. Bausch Health serves patients and healthcare providers through operations and commercial activities in North America and international markets. Thomas J. Appio serves as the company's chief executive officer.

Bausch Health Cos Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Bausch Health reported strong FY2025 operating results — an eleventh consecutive quarter of revenue and adjusted EBITDA growth, more than $1 billion in adjusted operating cash flow, and reduced net debt while improving its debt maturity profile through refinancing actions.
• Negative Sentiment: The company announced a setback in R&D as the RED‑C Phase 3 trials failed to meet primary endpoints; management is reviewing the data to identify any alternative development opportunities.
• Positive Sentiment: Solta completed the December 1, 2025 acquisition of Shibo in China to bring distribution in‑house, which management expects to drive long‑term, double‑digit growth for Solta and restore China as its largest geography.
• Negative Sentiment: XIFAXAN, a key revenue driver, faces headwinds — Q4 included ~<$50M of one‑time Medicaid residuals and management warned of upcoming Medicare rebate and patent/generic risks (potential LOE/generic entry on Jan 1, 2028) that could materially pressure future EBITDA.
• Neutral Sentiment: 2026 guidance for Bausch Health (ex Bausch + Lomb) is modestly positive — revenue $5.25–$5.4B and adjusted EBITDA $2.0–$2.1B — while management says it will pursue targeted business development and consider monetizing its Bausch + Lomb stake to unlock shareholder value.

Presentation

[Operator]

Greetings, and welcome to the Bausch Health fourth quarter and full year 2025 earnings conference call and webcast. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. You will be placed in the question queue at any time by pressing star one on your telephone keypad. We ask you to ask one question and one follow-up, then return to the queue. As a reminder, this conference is being recorded. If anyone should require operator assistance, please press star zero. It's now my pleasure to turn the call over to your host, Garen Sarafian, Vice President, Investor Relations. Garen, please go ahead.

[Garen Sarafian, VP and Head of Investor Relations at Bausch Health]

Good afternoon, and welcome to Bausch Health's fourth quarter and full year 2025 earnings conference call. My name is Garen Sarafian, Vice President of Investor Relations. Participating in today's call are Thomas Appio, Chief Executive Officer; JJ Charhon, Chief Financial Officer; and Jonathan Sadeh, Chief Medical Officer and Head of Research and Development. Before we begin, I would like to remind you that today's presentation contains forward-looking information. Please take a moment to review the forward-looking statements disclaimer at the beginning of the slides accompanying this presentation, as it contains important information. Actual results may differ materially from those expressed or implied in these forward-looking statements, and you should not place undue reliance on them. Please also refer to our SEC filings and our filings with the Canadian Securities Administrators for a discussion of certain risk factors that could cause actual results to differ materially from expectations.

[Garen Sarafian, VP and Head of Investor Relations at Bausch Health]

We use non-GAAP financial measures to help investors better understand our operating performance. These non-GAAP measures may not be comparable to similarly titled, titled measures used by other companies and should be considered in addition to, and not as a substitute for, measures calculated in accordance with GAAP. Reconciliations to our non-GAAP measures are included in the appendix of the slides accompanying this presentation, which are available on Bausch Health's Investor Relations website. Finally, the financial guidance in this presentation is effective as of today only. We do not undertake any obligation to update guidance. Our discussion today, Wednesday, February eighteenth, will focus on Bausch Health, excluding Bausch + Lomb. However, we will briefly comment on Bausch + Lomb's results announced this morning. We will refer to year-over-year comparisons with the same period last year, unless otherwise noted.

[Garen Sarafian, VP and Head of Investor Relations at Bausch Health]

With that, I will turn the call over to our CEO, Tom Appio.

[Thomas Appio, CEO at Bausch Health]

Thank you, Garen, and welcome to everyone joining our earnings call today. Our year concluded with an impressive eleventh consecutive quarter of growth in both revenue and adjusted EBITDA, reflecting our organization's consistent performance. This success is powered by our global team's unwavering commercial focus and operational excellence as full-year results exceeded our guidance on all key metrics. The fourth quarter gave us an opportunity to reflect on the progress we have made over the past year. Our commercial performance has remained strong across the markets we serve. Our capital structure has improved significantly. Our operating model has continued to deliver efficiencies, all of which has given us the ability to proactively pursue business development to enhance our long-term outlook. As we begin 2026, our strategic priorities remain firm and our approach consistent. We continue to prioritize initiatives that yield the highest value across our organization.

[Thomas Appio, CEO at Bausch Health]

Our global footprint and 2025 performance give us confidence for future growth. While JJ will walk through the financials in more detail, I would like to take a few minutes to highlight our fourth quarter performance. In the fourth quarter, Bausch Health, excluding Bausch + Lomb, increased revenue by 9% on a reported basis and 5% on an organic basis when compared to the fourth quarter of 2024. Salix, in particular, demonstrated resilient demand, excluding Medicaid, supported by solid volume in remaining channels and continued execution across promotional, access, and digital capabilities. Adjusted EBITDA for Bausch Health, excluding Bausch + Lomb, increased by approximately 9% compared to the prior year period and ahead of implied guidance for the quarter. The business continued to operate efficiently as teams managed spending thoughtfully while sustaining the investment needed to support growth.

[Thomas Appio, CEO at Bausch Health]

On December 1, 2025, we acquired XiBo, full-service aesthetics distribution platform in China, strengthening our direct commercial presence in this key market. This strategic transaction provides us with the access to one of the largest global aesthetics markets and enhances our ability to serve providers directly. Our cash generation remained healthy, allowing us to achieve another year of over $1 billion in adjusted operating cash flow, while also reducing our net debt by several hundred million dollars. Lastly, we further improved our debt maturity profile by approximately $1.7 billion through a debt exchange in late December 2025. This transaction further strengthened our balance sheet and provided additional flexibility as we evaluate opportunities to unlock value across the portfolio. For the full year, Bausch Health, excluding Bausch + Lomb, delivered year-over-year growth of 7% on a reported basis and 6% on an organic basis.

[Thomas Appio, CEO at Bausch Health]

This reflects broad-based performance across the enterprise. We achieved double-digit Adjusted EBITDA growth, excluding Bausch + Lomb, for full year 2025, ahead of expectations. Excluding the third quarter charge related to acquired in-process research and development, would yield an even higher Adjusted EBITDA growth rate for the year. Salix and Solta delivered double-digit top-line growth of 11% and 18%, respectively. Three of our four segments grew revenue this year, and three improved profitability, highlighting the diversification of the portfolio and the contributions generated from multiple areas of the business. At the product level, performance during the year remained healthy across multiple important areas. Xifaxan revenue grew 11% for the year, reflecting the continued impact of our commercial team's efforts. Thermage revenue grew a robust 19%, anchored in Asia Pacific, and other products, such as Ryaltris and CABTRIO, also grew very well.

[Thomas Appio, CEO at Bausch Health]

These outcomes reflect consistent demand, strong field activity, and targeted investments throughout the year. Overall, 2025 represented another year of excellent execution, leading to results above guidance. Let me take a moment to provide a brief update on RED-C. We are disappointed by the outcome we announced in January, that while safe and well-tolerated, neither phase III trial met its primary endpoint. We are currently reviewing the full data set to determine potential new development opportunities. Reflecting on the overall performance, we closed 2025 with strong results. Our team advanced our strategic priorities, strengthened the company's operational position, and executed with excellence. I appreciate the unwavering commitment our teams worldwide have shown over the course of the year. Together, we remain focused and committed to delivering results for shareholders. I will now hand it over to JJ to walk you through the detailed financial results. JJ?

[JJ Charhon, EVP and CFO at Bausch Health]

Thank you, Tom. Let's start with our consolidated non-GAAP financial performance for the fourth quarter, which you will find on page eleven. Revenue was $2,796 million, up 9% on a reported basis compared to the same quarter a year ago. Adjusted gross margin was 71.6%, which was 80 basis points lower than the same period a year ago. Adjusted operating expenses were $1,033 million, an increase of $75 million year-over-year. Adjusted R&D expenses were $161 million, which was a $2 million decrease when compared to the fourth quarter of 2024. Adjusted EBITDA was $1,052 million in the fourth quarter, an increase of 13% year-over-year. Finally, adjusted operating cash flow was $515 million.

[JJ Charhon, EVP and CFO at Bausch Health]

Moving now to the fourth quarter of Bausch Health performance, excluding Bausch + Lomb, starting on page 15. As Tom indicated, we had another strong operational performance across all metrics in Q4. Revenue for the fourth quarter was $1,391 million, up 9% on a reported basis. Adjusted EBITDA for the fourth quarter was $773 million, a 9% increase from the fourth quarter of 2024. Adjusted operating cash flow for the fourth quarter was $362 million, down $205 million year-over-year, primarily due to the change in timing of our cash interest payments following the refinancing we executed on April eighth, 2025.

[JJ Charhon, EVP and CFO at Bausch Health]

Our strong cash flow generation in Q4 allow us to reduce our net debt by approximately $320 million, which was much better than originally anticipated. Turning now to our fourth quarter performance by segment, starting with Salix on page seventeen. Salix revenues in the fourth quarter were $693 million, which was an impressive 9% increase year-over-year on a reported basis. This strong performance in Q4 was ahead of expectations. While we had anticipated the continuation of our double-digit script growth across all existing channels, we also benefited from some higher than planned residual volume from several state Medicaid customers. We do not expect this to be a mature revenue driver moving forward. Now, moving to the international segment, which you will find on page eighteen.

[JJ Charhon, EVP and CFO at Bausch Health]

Revenues were $306 million, an increase of 10% on a reported basis and 2% on an organic basis compared to the same period a year ago. While the performance was strong overall, the results by geography was mixed. EMEA and LatAm grew double digits on a reported basis, while Canada contracted 6%. Congratulations to the EMEA team for achieving its twelfth consecutive quarter of organic revenue growth, which is very impressive. Also worth noting is our performance in LatAm, which returned to growth with a 22% increase in revenue on a reported basis and still 11% on an organic basis. What's more, growth was balanced across most of our core brands this quarter.

[JJ Charhon, EVP and CFO at Bausch Health]

Finally, Canada's revenue contraction was due to a reduction in Wellbutrin volume, which faced more generic competition in this quarter compared to the same quarter one year ago. This was partially offset by the double-digit growth of our promoted products portfolio, led by CABTRIO and Ryaltris. Now, let's review the performance of our Solta Medical segment, which you will find on page 19. Revenues were $137 million, a slight decrease of 1% on a reported basis, and flat on an organic basis compared to the same period last year. Solta's solid operational performance was negatively impacted by the transition of our full-service distributor in China. Excluding this one-time impact, we estimate that Solta revenues would have been up mid-single digits in the fourth quarter. Separately, special mention goes to our team in South Korea, which continues to perform exceptionally well.

[JJ Charhon, EVP and CFO at Bausch Health]

Reported revenue in that market was up 40% this quarter, making South Korea our largest revenue-generating geography for Solta in 2025. Turning now our focus to the quarterly performance of our diversified segment, which you will find on page 20. Revenues were $255 million, an increase of 12% on a reported basis, mostly due to the improved net pricing in the quarter. Finally, let me wrap up the segment discussion for the fourth quarter by commenting briefly on Bausch + Lomb results, which you will find on page 21. Revenues were $1.405 billion, up 10% on a reported basis compared to the same period last year.

[JJ Charhon, EVP and CFO at Bausch Health]

B+L's strong revenue performance in Q4 was led by its pharmaceuticals business, which had an impressive 16% growth year-over-year on a reported basis, while its other two businesses, vision care and surgical, each grew 8%. Now, let's end the review of the fourth quarter by highlighting improvements we have made to our capital structure. There were three major highlights for the quarter. First, we repaid our $300 million accounts receivable facility and, in the process, lowered our average cost of debt. We also completed a $1.7 billion secure debt exchange, which allowed us to push out maturities for four years and capture $80 million of debt discounts. Finally, we generated $362 million of adjusted operating cash flow and reduced our net debt by more than $300 million quarter-over-quarter.

[JJ Charhon, EVP and CFO at Bausch Health]

This strengthening of our balance sheet caps a great quarter performance across all metrics. Now, before I cover our guidance for 2026, let me provide a quick wrap-up of our outstanding full-year performance and the progress we've made in the last 12 months. We grew revenue 7% and Adjusted EBITDA 10%, demonstrating our continued commitment to driving profitable growth and increasing operating leverage. While we recognize that some of 2025 growth was a result of non-recurring drivers, the underlying operating growth would still be high single digits year-over-year. More importantly, it is worth acknowledging that all these outstanding operational results came without the benefit of any major acquisitions and solely through the optimization of the same portfolio we've had for the last years.

[JJ Charhon, EVP and CFO at Bausch Health]

Finally, we significantly improved our debt maturity profile by executing two large refinancing transactions, totaling together $9.6 billion and leaving now less than $700 million of maturities obligation until the end of 2027. This is an incredible turnaround when thinking about where we stood just twelve months ago.... That being said, a lot more work lies ahead, but our view is that 2025 mark an inflection point in our operational and financial trajectory. Now, let me provide you with our 2026 financial guidance for Bausch Health, excluding Bausch + Lomb, which you will find on page 25. For 2026, we expect revenues to be between $5.25 billion and $5.4 billion. The midpoint of that range would translate into a 3% increase year-over-year.

[JJ Charhon, EVP and CFO at Bausch Health]

Adjusted EBITDA is expected to be between $2 billion-$2.1 billion at the midpoint. Finally, we expect adjusted operating cash flow to be between $1.2 billion and $1.275 billion. The midpoint of that range would translate to a 4% increase year-over-year. Please note that the guidance for 2026 is at current FX rates. Let me also add that from a phasing perspective, we anticipate a stronger growth rate in the first half of 2026, given the temporary nature of some of the benefits we recorded in the second half of 2025. With that context, and before I hand it over to Tom, let me review our key financial priorities and how they will be pursued in the coming years.

[JJ Charhon, EVP and CFO at Bausch Health]

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 further expand our portfolio of assets through business development. There is no major change versus what we set out last year, making 2026 an extension of what we accomplished in 2025. Second, evaluating all options for unlocking value for all stakeholders, including maximizing the value of our Bausch Health and Bausch + Lomb assets. Our improved debt maturity profile now gives us the ability to use value maximization for shareholders as our primary guide for future asset monetization decisions. And third, continue to optimize our capital structure. Now that we have completed the largest refinancing transaction in our history, the approach will be more opportunistic while maintaining maximum flexibility for funding any future investment in Bausch Health.

[JJ Charhon, EVP and CFO at Bausch Health]

In short, we expect 2026 to be another opportunity to make good progress against some of our key finance priorities, with a more balanced approach between tactical improvement and strategic value creation. I will now turn it over to Tom.

[Thomas Appio, CEO at Bausch Health]

Thank you, JJ. I would like to now shift from the financials to how we are positioning the company for success in 2026. I would like to highlight a few of our segments and businesses today to illustrate the breadth of our underlying portfolio and the many opportunities we see ahead. Salix is an industry leader in gastroenterology and hepatology. For over 35 years, we have built our company position by establishing long-standing relationships with healthcare providers, institutions, and patients. XIFAXAN, RELISTOR, and TRULANCE are trusted set of brands that anchor our leadership position. Our focus on education, on patient access, and ongoing physician engagement reinforces our standing as one of the top GI pharmaceutical companies in the United States. In 2026, we will continue our momentum with Salix in commercial and Medicare segments.

[Thomas Appio, CEO at Bausch Health]

We continue to leverage our customer insights platform to find new patient starts and accelerate starting treatment in all GI conditions that we treat, including OHE, IBS-D, IBS-C, and OIC. Using AI enables us to do this in a way that is faster, is smarter, and is more efficient. In 2026, we will leverage our data-driven approach to reach patients through direct-to-consumer advertising and to reach healthcare providers through improved targeting. This is a franchise we expect will continue to perform. Innovation remains central to the Salix segment. Larsucosterol, our phase III program for alcohol-associated hepatitis, or AH, represents an important potential advancement. AH remains an area of substantial unmet need, and we are committed to advancing this program to deliver meaningful therapeutic options for patients. Following quarter end, we began enrolling patients in the phase III study, marking a key step forward for this program.

[Thomas Appio, CEO at Bausch Health]

Turning to Solta. Solta is a leading medical aesthetics platform and offers a comprehensive set of energy-based devices within the global aesthetics market. Our technologies address a broad range of clinical applications, enabling us to serve diverse provider segments and consumer needs while strengthening our competitive position across key markets. Solta's above-market performance reflects a long history of product innovation and strong commercial platform. We continue to invest thoughtfully to drive long-term growth and capture the significant opportunities ahead by investing in our people, strengthening our management structure, developing our team members, and attracting top talent to support the next phase of growth. Investing in scale. As mentioned earlier, we completed the acquisition of Shibo's Aesthetics business in December, bringing distribution, sales, and marketing capabilities fully in-house for Solta China. This enhances our reach, deepens provider and consumer engagement, and increases utilization.

[Thomas Appio, CEO at Bausch Health]

We expect China to reclaim the number one geography for Solta in 2026. Investing in innovation, expanding our R&D organization, and building new medical and clinical affairs capabilities to accelerate product development and generate robust clinical evidence. Investing in manufacturing capacity, ensuring we can meet rising global demand while maintaining quality and operational excellence. Based on the momentum we have seen to date and the opportunities we anticipate in this market, we believe that Solta is well positioned to continue delivering double-digit growth in 2026, supported by strong fundamentals. Let me now turn to our international segment, which is often underappreciated, yet continues to perform well and we expect will remain an important contributor to the company in 2026. The segment includes several diverse markets, each with a robust commercial model and well-established brands.

[Thomas Appio, CEO at Bausch Health]

Within our EMEA market, we expect Central Europe to maintain its solid position, supported by established presence in Poland with an excellent team. This presence will allow us to introduce new products and product line extension. We plan to continue leveraging our position as the number one pharmaceutical company in Serbia across multiple therapeutic areas. In Mexico, the largest component of our Latin American business, we are ranked as the number two dermatology company. In both Mexico and Colombia, our Bedoyecta products are ranked as the number one complex B brand. Across Mexico and Central America, our Bausch Health branded generics hold at least one top three position across the therapeutic categories. We have now entered the cardiometabolic market in Latin America, which represents a large and growing opportunity for Bausch Health. Our infrastructure, brand recognition, and commercial reach position us well to compete effectively in the cardiometabolic category.

[Thomas Appio, CEO at Bausch Health]

We expect Mexico to continue to return to growth in 2026, including drivers Betteryecta and our newly launched cardiometabolic franchise. In Canada, we are ranked as the number one dermatology company, supported by strong brands, including CABTRIO and Jublia, that continue to perform well and solidify our presence in the market. Together with our promoted products, we expect promoted products to continue to grow in double digits in 2026. With the results we have seen and the opportunities across our global footprint, we expect our international segment to deliver growth in 2026, supported by durable underlying fundamentals. Our five strategic pillars will continue to guide Bausch Health in 2026. These pillars: people, growth, innovation, efficiency, and unlocking value, provide structure and clarity to our decision-making. They drive alignment of our teams on the actions required to deliver sustainable results.

[Thomas Appio, CEO at Bausch Health]

These priorities shape our daily operations, reinforcing accountability, ownership, execution, and a focus on progress. We remain committed to commercial, operational, and R&D excellence, along with the proactive pursuit of business development initiatives that expand our portfolio and enhance our long-term outlook. We finished 2025 on a high note, with exceptional full year results, reflecting significant progress across our strategic priorities. I want to extend my sincere gratitude to the Bausch Health team worldwide. These achievements are a direct result of your passion, intelligence, and unwavering dedication. We are entering 2026 with confidence. The company has a strong team and a diversified portfolio with multiple paths to growth and innovation. With that, we can open the line for Q&A.

[Operator]

Thank you. We'll now be conducting a question and answer session. If you'd like to be placed into question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to move your question from the queue. As a reminder, we ask you, please ask one question, one follow-up, then return to the queue. Our first question today is coming from Umer Raffat from Evercore ISI. Your line is now live.

[Umer Raffat, Equity Research of Biotech, Pharma-major, and Specialty Pharma at Evercore ISI]

Hello, guys. This is JP in for Umer. Congrats on the quarter. I have one question. Post RED-C readout, what is your updated decision framework for the separation? How are you thinking about getting items and, you know, debt repayments? Can you please illustrate?

[Thomas Appio, CEO at Bausch Health]

Yeah, thanks for the question. I think that, the way I would say it is, there's no change. You know, we're, of course, we're disappointed in the results from RED-C, but, you know, we continue to focus on repaying debt, and reinvesting in our business, whether promoting existing products, developing new products, or, you know, engaging, as I said in my prepared remarks, engaging in, business development activities, which is, one of the things we are accelerating now that we have significantly, changed our capital structure, with the refinancing.

[Umer Raffat, Equity Research of Biotech, Pharma-major, and Specialty Pharma at Evercore ISI]

Following up on the BD.

[Thomas Appio, CEO at Bausch Health]

Yeah, sure.

[Umer Raffat, Equity Research of Biotech, Pharma-major, and Specialty Pharma at Evercore ISI]

Yeah. Can you please give us a little more color about your business development plans?

[Thomas Appio, CEO at Bausch Health]

Sure. Well, firstly, as you know, the acquisition of DURECT, and Jonathan is here, and he can talk about that. And when we acquired DURECT, we acquired it not just for alcohol-associated hepatitis, but also as a platform. So we have been... And Jonathan can speak to that. The other thing also from the business development front is looking at the therapeutic areas that we compete in. We have screened a lot of assets, looking at where we can, you know, bring in acquisitions, that we can leverage, with our outstanding commercial team. That's one of the greatest assets of this company, is the, you know, commercial excellence, both from a selling and marketing perspective. So we're looking for, you know, different assets that we can put and slot into those teams.

[Thomas Appio, CEO at Bausch Health]

Also looking, as I talked about in my prepared remarks on Solta, where Solta is, you know, a great brand for us. We have great innovation there, and there is opportunities to continue to look at acquisition possibilities, you know, to slot into the portfolio as well. I'll hand it to Jonathan. You might want to talk about the DURECT acquisition and why we see it as a platform.

[Jonathan Sadeh, CMO and Head of Research and Development at Bausch Health]

Yeah, of course. So larsucosterol was really a great acquisition for us. To remind you, it's an epigenetic modulator, so prevents cell death and responds to acute cell injury. DURECT did a great job of proving that this drug is very efficacious in one setting of acute cell injury and alcohol-associated hepatitis, and that's the first, the lead indication that we have started phase III with, and strongly believe in the data that we saw in phase II.

[Jonathan Sadeh, CMO and Head of Research and Development at Bausch Health]

But we, as Tom was saying, we believe this is a platform, because if we do see an effect, such a strong effect in one form of acute cell injury like alcohol-associated hepatitis, we believe and actually DURECT has some preclinical and clinical data to suggest that in other settings of acute cell injury, we would also see efficacy. So we're now actually going over all these other potential indication and hope to prioritize some of those in the very near future.

[Umer Raffat, Equity Research of Biotech, Pharma-major, and Specialty Pharma at Evercore ISI]

Thank you very much.

[Thomas Appio, CEO at Bausch Health]

Next question.

[Operator]

Thank you. Next question today is coming from Les Sulewski from Truist Securities. Your line is now live.

[Les Sulewski, VP of Spec Pharma and Biotech Equity Research at Truist Securities]

Good evening. Thank you for taking my questions. I have two, and then a follow-up maybe to Jonathan. First on Solta, can you just share some puts and takes around the Shibo integration? Specifically, how much of the guided revenue and EBITDA growth is driven by the accounting step up, versus the volume growth or, of Thermage? And could you provide the expected margin accretion from the shift once the channel is fully operational? Second, on the diversified segment, should we expect generics of Aplenzin and Bryhali launching this year? If so, what's a fair erosion step down to model, and how are you thinking about plugging these revenue gaps?

[Thomas Appio, CEO at Bausch Health]

Okay, Les, I'll take the first part of the question regarding Solta. So, we closed the acquisition on December 1, 2025. And you know, things are going very well with a very smooth transition. The teams in China, both from the Solta side and the Shibo side, have done a wonderful job of, you know, working to integrate the two companies. I was there in the middle of December, spoke to the entire team. They're the Shibo team is extremely excited to be part of Solta. It has been a long-standing relationship that we've had with Shibo, so it is going very well. In terms of your question regarding the accounting, I will pass that to JJ.

[JJ Charhon, EVP and CFO at Bausch Health]

Hi, Les. There are two major impacts in the quarter. The first one is we purposely decided not to sell additional volume in November. So November obviously was kind of a blank for Solta in China. Conversely, we start selling directly to the market in December, so that provided kind of a partial offset. And then on top of that, you know, due to purchasing accounting, we basically had to step up on some of the volume that was sold to our customers in December. Net-net, it's about a $10-$15 million hit from an EBITDA perspective in the quarter.

[Thomas Appio, CEO at Bausch Health]

... Want to take the revenue gap on the Plendin LOE?

[JJ Charhon, EVP and CFO at Bausch Health]

Yeah, I, Plendin, the way I would model it is, is a kind of a standard erosion curve. We are expecting a number of competitors to come immediately after we lose exclusivity on Plendin, which is in June of this year. I would not expect any unusual behavior there. You had a follow-up?

[Les Sulewski, VP of Spec Pharma and Biotech Equity Research at Truist Securities]

Yes, thank you. For Jonathan, perhaps on larsucosterol. Can you share some color around the phase III study design? What effect size are you powering for, and what control mortality rates would you assume? I guess, what's the delta in survival, do you think, that's sufficient for filing?

[Jonathan Sadeh, CMO and Head of Research and Development at Bausch Health]

Yeah, it's a great question. First of all, in terms of the design of the study, we've started the study now in record time, three months after we acquired the drug from DURECT. It will be a U.S.-only study. It will include about 350 patients randomized between drug and placebo, and the primary endpoint is 90-day transplant-free survival. We've had discussions with regulators, with the FDA about this and feel very confident about it. It's fairly similar to the design of the phase II trial that DURECT ran. We've just made some design improvements, and we think the trial will be a bit more efficient than was run in phase II.

[Jonathan Sadeh, CMO and Head of Research and Development at Bausch Health]

Now, to your question about the effect size, I think we've followed the phase II results, and we're, you know, we're data-driven and following what was seen in phase II. We designed the trial to reflect that. DURECT saw over 50% reduction in 90-day mortality. We believe that if we can replicate that, that would be an amazing result. To remind you, there's actually no therapies approved right now, no therapies available really, for this patient population. So I think, we think this would be a huge advancement in the management of these patients, and will be really very important for us and for patients out there. Does that answer your question?

[Les Sulewski, VP of Spec Pharma and Biotech Equity Research at Truist Securities]

Yes, very helpful. Thank you.

[Operator]

Thank you. Next question today is coming from Michael Freeman from Raymond James. Your line is now live.

[Michael Freeman, Equity Research Analyst at Raymond James]

Hey, good evening, Tom, J.J., Jonathan, Garen. Thanks for taking the question. My first is on Xifaxan. I wonder if it's fair to think that 2026 will be peak year for Xifaxan sales, given we have some renegotiated rates under Medicare for 2027. If that holds true, what are your plans to, you know, accelerate sales during 2026 and mitigate the impact of the renegotiated rates under Medicare in 2027?

[Thomas Appio, CEO at Bausch Health]

Yeah, Michael, thanks for the question. As you know, since I became the CEO, my focus has been on Xifaxan and driving growth. And that was the one thing that drove the decision to have our AI engine and build it. We think we have a best-in-class engine here, which has really helped our field forces be very efficient in terms of, you know, who they're speaking to and how frequently they're speaking, and what they're actually delivering in the message of what the HCP wants. So the focus here has been continuing to accelerate. As you saw, we continue to grow Xifaxan, you know, already on the market over 20 years.

[Thomas Appio, CEO at Bausch Health]

You know, we still delivered, you know, a 10% net sales growth in Q4. So as we look to 2026, we will continue to stay focused on driving execution, you know, in the channels where we compete. So, you know, we feel confident in being able to continue to grow in those channels. There's still a lot of unmet need for patients to be treated with OHE. As I've said on, you know, previous calls, you know, right now, we're probably still only treating, of course, this is, you know, patients that are diagnosed, you know, probably 40%-50%. So there's still a good amount of space there to continue to grow before the product goes LOE. I wanna... Maybe JJ wants to add something to that.

[JJ Charhon, EVP and CFO at Bausch Health]

Yeah. Hi, Michael. A couple of things just to highlight. While, you know, we'll continue to grow the business in the channels, we're currently selling XIFAXAN, which exclude the Medicaid and to a certain extent, the 340B channel. You know, on a reported basis, 2025 might be the peak year for XIFAXAN just because we had some one-time benefits in the year, that, you know, will not repeat in 2026. I think, we've clarified that in the prepared remarks. So I'll mention a couple of elements. First, at the end of the third quarter, we had to adjust our gross to net percentage to reflect the fact that we had exited Medicaid, so that was kind of a good guy in the third quarter.

[JJ Charhon, EVP and CFO at Bausch Health]

In the fourth quarter, we still had some residual volume from Medicaid states that were not discounted by definition because we had exited programs, so that provided also another benefit. Conversely, if you look at 2026, there will need to be an adjustment of our gross to net accrual in the fourth quarter of 2026 to reflect the fact that the new CMS rebate will become effective on the first of January, 2027. A lot of accounting, you know, pluses and minuses, but I think you're thinking about the right way, which is operationally in the channels we currently serve, we'll continue to grow our XIFAXAN revenue in 2026.

[Michael Freeman, Equity Research Analyst at Raymond James]

Okay. Okay, thank you for that. Now, a follow-up, I guess, thinking another way about the timing and your framework for thinking about the full separation of Bausch + Lomb. What are you hoping to see develop within that business before it's appropriate to pursue the full separation?

[Thomas Appio, CEO at Bausch Health]

Yeah, Michael, I think when we look at it, right, as we talked about in the prepared remarks, you know, the refinancing provided, you know, great flexibility for us. So, you know, it was a significant achievement this year, and I don't know if you had a chance to listen to Bausch + Lomb's call this morning. So, I think I look at it this way: we believe in the Bausch + Lomb plan. The growth story, the margin expansion story, and the selling and operational excellence. They have a robust pipeline, they have a robust product portfolio today, and then, if you had listened to Investor Day, you know, where their pipeline is going, so we really believe in that pipeline.

[Thomas Appio, CEO at Bausch Health]

And then lastly, they have a great team, and they had a great quarter, and we are, you know, really excited about the future of Bausch + Lomb and, you know, given the fact that we own 88% of it. So, you know, we're just looking now to the market to reflect the value in Bausch + Lomb. JJ, you have any further comments?

[JJ Charhon, EVP and CFO at Bausch Health]

The only thing I would just clarify or add is that the refinancing, basically based on our projections, allow us to pretty much deal with the maturities until the end of 2028, assuming we maintain exclusivity on XIFAXAN until the first of January, 2028. That flexibility allows us to really be patient and to wait for the share price of BNL to reflect the improved execution and the financials that have been shared with investors late last year during Investor Day. That's point number one. Point number two is, in light of what I think we've discussed last year, the separation per se will have to be in the form of reselling our BNL equity stake.

[JJ Charhon, EVP and CFO at Bausch Health]

You know, there's been, I think, in the past, some chatter around some distribution of B&L shares, but I think the highest probability outcome will be in the form of selling down our equity stake.

[Thomas Appio, CEO at Bausch Health]

Operator, next question.

[Operator]

Thank you. Next question is coming from Glen Santangelo from Barclays. Your line is now live.

[Glen Santangelo, Managing Director at Barclays]

Oh, yeah, thanks for taking my question. Hey, Tom, I think everybody just generally accepts the fact that the near-term results, they continue to look fantastic, but sort of based on our incoming call volume, it seems like everybody just wants to talk about the EBITDA impact in 2027, you know, coming from the IRA and the pricing changes, and then again in sort of 2028 with the LOE. And I seem to remember, I thought you gave us some guidance in the past about how 2027 EBITDA may shape up relative to 2025, and I couldn't remember specifically, but I don't know if there's anything you can give us to give us a better sense of the EBITDA trajectory, just sort of given those two events that are kind of coming up. Thanks.

[Thomas Appio, CEO at Bausch Health]

Hi, Glenn. Thanks. Thanks for the question. Yeah, the results, you know, we're really pleased with the 2025 results. I'm gonna hand it over to JJ, because, you know, on previous calls he's discussed this.

[JJ Charhon, EVP and CFO at Bausch Health]

Yes. Hi, Glenn. What we've said in, in prior calls, actually more specifically in Q3, is that the average of 2026 and 2027 would be fairly similar to the EBITDA that we deliver in 2025. And despite the overperformance that we've had in, in 2025 and the very strong fourth quarter, I can reiterate that guidance. Now, obviously, given that we've provided guidance for 2026, you can figure it out exactly how we're thinking about 2027 in light of that guidance.

[JJ Charhon, EVP and CFO at Bausch Health]

But, yeah, there are obviously partial offset to that higher CMS discount that provide us to, you know, soften, I would say, the relative drop that you can see, but we've got other growth platforms that we continue to work on, starting with Solta and some of the other segments. So I think that will help you rationalize the implied number for 2027.

[Glen Santangelo, Managing Director at Barclays]

All right. Thanks for that. Maybe if I could just ask one quick follow-up on the cap structure. Obviously, you made a lot of good progress here. And Tom, I don't want to put words in your mouth, but it sounds like you believe that you're at a place where you can start doing business development, you know, currently, and you've done that this quarter. But just to sort of follow up on JJ's comments, you know, you now believe the plan will ultimately be to sell, you know, sell Bausch + Lomb, as opposed to do the spin.

[Glen Santangelo, Managing Director at Barclays]

Would the sale have to be an all in one shot, or could it theoretically, you know, you sell different pieces of the company or different percentages of the company down as need be, to handle the upcoming maturities, which seemingly are not till 2028 anyway, so it seems like you have some time. So I just wanted to really try to understand the strategy of how you may approach Bausch + Lomb, just sort of given you have a little bit of time on your side versus maybe near-term business development priorities. Thanks, and I'll stop there.

[Thomas Appio, CEO at Bausch Health]

... Thanks. Thanks, Glenn. So, yeah, when it comes to business development, you know, of course, doing the refinancing, you know, the finance team, and the legal team did an outstanding job. This is just incredible what we've been able to do and to give us runway. And so with that runway, and, you know, we're able to now really do focusing on, on BD. As you saw with the DURECT acquisition that we did in the third quarter, the Shibo acquisition in the fourth quarter, and, you know, looking at our, our capital allocation and where we can create the, the best value. And, there is a lot of assets out there that we continue to screen, and looking for the right fit for Bausch Health.

[Thomas Appio, CEO at Bausch Health]

As I said in a previous question, one of the greatest assets we have is our commercial team and our commercial capabilities, in worldwide. That's-- that is going to be the focus going forward, of course, all driven by being able to do the refinancing. I'll hand it off to JJ to add more to your question.

[JJ Charhon, EVP and CFO at Bausch Health]

Yeah, when it comes to the monetization of our BNL equity stake, really all options are on the table. I think what will guide really our monetization decisions, as we said in our prepared remarks, is really shareholder value creation. The flexibility that we've got and the extended runway that we've created through the refinancing of $9.6 billion of our debt last year now allows us to be more patient and to evaluate all possible options to monetize our equity stake, while at the same time creating shareholder value. That's the way we think about it.

[Thomas Appio, CEO at Bausch Health]

I think, Glenn, you know, as we look at the performance for 2025, the focus is going to be, you know, getting more products into the hands of our commercial team. So, you know, it's going to be a focus now, you know, continuing to look for assets to bring into the portfolio, not only that are possibly already on the market, but the fact of what we can do from a development perspective in R&D.

[Glen Santangelo, Managing Director at Barclays]

Thank you.

[Thomas Appio, CEO at Bausch Health]

Next question.

[Operator]

Thank you. Next question today is coming from Jason Gerberry from Bank of America. Your line is now live.

[Analyst at Bank of America]

Hey, guys, this is Chi in for Jason. Thanks for taking our questions. One and another follow-up. So the first one is, you mentioned there were some higher-than-planned residual volume from several state Medicaid. Can you quantify the impact of 4Q? And was that impact segment across portfolio? If not, which product benefit the most from this one-time dynamic? And my follow-up is on the scope of BD. How much of a BD deal are you willing to consider based on your current capital structure? Thanks so much.

[Thomas Appio, CEO at Bausch Health]

Yeah, Chi, thanks for the question. I'll take your second question first, and then I'll hand it off to JJ. You know, we're looking at all types. You know, as you know, we are constrained in terms of the capital structure that we have and what we can, you know, how much we can spend. But, you know, there is... As we look at it, we look at our portfolio and how do we, are we able to maximize it? And is there, you know, assets that we can bring in at a certain value? You know, are there other assets that, that, you know, some others could be interested in? So we look at it.

[Thomas Appio, CEO at Bausch Health]

We keep a very open approach to, you know, type of deals we can do and the size of the deal we can do. So that's the framework that we're using today. I'll hand it over to JJ on your question on the residual volume on Xifaxan.

[JJ Charhon, EVP and CFO at Bausch Health]

Yeah, most of that volume is really associated with XIFAXAN in the fourth quarter, and really happened in October, November. It was less than $50 million in terms of revenue.

[Analyst at Bank of America]

Thanks so much.

[Thomas Appio, CEO at Bausch Health]

Operator, next question.

[Operator]

Certainly. Our next question is coming from Mike Makovsky from KeyBanc. Your line is now live.

[Analyst at KeyBanc]

Hi, thank you for the questions. I have two. My first is on the outlook for Xifaxan generics. What are the key events that we should be watching that could decide if a Xifaxan generic becomes available before 2028? We're less than two years away now, so I'm curious, what would you say is your level of confidence that Xifaxan will retain exclusivity through to the settlements with generics companies in 2028? That's my first question, and then my second question is more of a follow-up. It relates to the medium-term outlook. JJ, you hinted at this in a previous response, but I think you said on the last call that EBITDA averaged across 2026 and 2027 would be roughly flat versus 2025. So we now know that you're looking for low- to mid-single-digit EBITDA growth this year.

[Analyst at KeyBanc]

Should we then assume a step down in 2027 of a similar magnitude? Thank you.

[Thomas Appio, CEO at Bausch Health]

Yeah, Mike, I'll take the first question, and I'll let JJ take the second. You know, as you know, we know we will have a generic in January 1, 2028. So, you know, as we look at it, we're trying to maximize the value of XIFAXAN today. As you also know, from the public records, you know, Teva continues to be the first filer. At first filer status, there's two cases, you know, right now, in the D.C. District Court on appeal, and you know, that's taking its course.

[Thomas Appio, CEO at Bausch Health]

And then lastly, you know, we have our other patent case in the New Jersey District Court, you know, on the new patents at issue with Amneal and Norwich, of which, you know, we're still waiting to see. But, you know, is there, you know, the 30-month stay applies to Norwich second ANDA and still needs to be determined, which we believe the 30-month stay applies. You know, basically, the way we look at it is, you know, we'll continue to provide updates, you know, on these matters as it moves through the court system. JJ?

[JJ Charhon, EVP and CFO at Bausch Health]

Yeah. So, you're correct. There will be a dip in 2027. I think the math basically suggests that 2027 would be around $2.7 billion if you follow the math and the logic that I just outlined.

[Analyst at KeyBanc]

Thank you.

[Operator]

Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to Tom Appio, CEO, for closing remarks.

[Thomas Appio, CEO at Bausch Health]

Well, thank you all for joining us today for your questions. We closed out another solid quarter and a year of meaningful growth, supported by results across a broad portfolio. Our progress in 2025 reinforces the foundation we are carrying into 2026 and positions us to deliver another year of strong execution and continued progress. I thank you again for the time, and the interest you have in our company, and enjoy the rest of your evening.

[Operator]

Thank you. That does conclude today's teleconference webcast. We disconnect your line at this time, and have a wonderful day. We thank you for your participation today.

Participants

Analysts

• Garen Sarafian, VP and Head of Investor Relations at Bausch Health
• Glen Santangelo, Managing Director at Barclays
• JJ Charhon, EVP and CFO at Bausch Health
• Jonathan Sadeh, CMO and Head of Research and Development at Bausch Health
• Les Sulewski, VP of Spec Pharma and Biotech Equity Research at Truist Securities
• Michael Freeman, Equity Research Analyst at Raymond James
• Thomas Appio, CEO at Bausch Health
• Umer Raffat, Equity Research of Biotech, Pharma-major, and Specialty Pharma at Evercore ISI
• Analyst at Bank of America
• Analyst at KeyBanc