Bausch Health Cos Q2 Earnings Call Highlights

Key Points

• Bausch Health raised its full-year outlook after reporting strong second-quarter growth: excluding Bausch + Lomb, revenue rose 16% to $1.458 billion and adjusted EBITDA increased 28% to $865 million.
• Salix led segment performance, with revenue up 21% and XIFAXAN revenue up 26%, while Solta Medical revenue grew 38% and benefited from strong momentum in China and other Asia-Pacific markets.
• The company reduced net debt by $434 million to $13.7 billion, but warned of second-half headwinds from gross-to-net adjustments, Aplenzin’s loss of exclusivity and Medicaid erosion. Management also continues evaluating options to unlock value from Bausch + Lomb.

Bausch Health Cos NYSE: BHC reported second-quarter results that management said extended its streak of revenue and adjusted EBITDA growth to 13 consecutive quarters, driven by performance in its Salix, international and Solta Medical businesses.

For Bausch Health excluding Bausch + Lomb, second-quarter revenue rose 16% year over year to $1.458 billion. Adjusted EBITDA increased 28% to $865 million, while adjusted cash flow from operations climbed $116 million from a year earlier to $471 million. The company raised its full-year outlook for revenue, adjusted EBITDA and adjusted cash flow from operations.

On a consolidated basis, including Bausch + Lomb, revenue totaled $2.852 billion, up 13% on a reported basis and 11% organically. Consolidated adjusted EBITDA increased 28% to $1.075 billion, and adjusted cash flow from operations rose 44% to $637 million.

Salix Leads Segment Growth

Salix revenue increased 21% to $758 million during the quarter, led by a 26% increase in XIFAXAN revenue. Chief Financial Officer JJ Charhon said XIFAXAN benefited from favorable net pricing as the company continued to optimize its volume-price tradeoff after exiting Medicaid and the 340B program.

Total retail prescriptions for XIFAXAN, excluding Medicaid, rose 4% year over year, while extended units excluding Medicaid declined 2%. Charhon attributed the unit decline to reduced volume associated with 340B institutions.

CEO Tom Appio said the company intends to continue optimizing XIFAXAN’s revenue and margin profile during its exclusivity period. Bausch Health’s 2027 adjusted EBITDA outlook remains $2.7 billion and assumes XIFAXAN maintains market exclusivity through Jan. 1, 2028.

Management cautioned that growth is expected to slow in the second half of 2026. The company expects a roughly $150 million headwind from changes in gross-to-net accruals related to channel inventory, including an expected $90 million fourth-quarter expense tied to higher rebates owed to the Centers for Medicare & Medicaid Services beginning in 2027.

The company also expects about $50 million of second-half pressure following Aplenzin’s loss of exclusivity at the end of June and an additional approximately $75 million headwind from gradual erosion in Medicaid and former 340B patient revenue.

International and Solta Performance

International segment revenue increased 10% on a reported basis and 5% organically to $305 million. Organic revenue grew 16% in Latin America and 9% in Europe, the Middle East and Africa, while Canada declined 9% due to the absence of a prior-year one-time net pricing benefit.

Appio highlighted continued expansion of the company’s cardiometabolic franchise in Latin America. In Canada, Charhon said the promoted-brand portfolio grew 14% excluding the prior-year pricing benefit, led by a 64% increase in RYALTRIS revenue.

Solta Medical revenue rose 38% on a reported basis and 12% organically to $176 million. Segment profit increased 69% to $91 million. Revenue in China grew 136%, supported by the integration of Shibo, the company’s full-service distributor in China, as well as momentum in other Asia-Pacific markets.

South Korea, Solta’s second-largest revenue contributor, grew 8%, while Taiwan revenue rose 42%. Charhon said the company estimates Solta’s full-year segment-profit run rate at about $330 million, approximately $100 million above 2025, after accounting for revenue seasonality and expense timing.

Management said it plans to continue investing in Solta’s field-force capabilities and direct-to-consumer efforts in the U.S., while expanding commercial resources in China.

Debt Reduction and Updated Outlook

Bausch Health reduced net debt by $434 million during the quarter to $13.7 billion. Charhon said strong operating performance, favorable working-capital changes and lower outflows for legacy litigation and restructuring supported the reduction. The company said it completed the final payment related to settled U.S. opt-out litigation in the first quarter.

For the first half, excluding Bausch + Lomb, revenue grew 15% and adjusted EBITDA rose 23% from the prior-year period. Based on that performance, Bausch Health increased the midpoint of its full-year guidance by $100 million for revenue, $150 million for adjusted EBITDA and $200 million for adjusted cash flow from operations.

• Revenue is now projected at $5.35 billion to $5.50 billion.
• Adjusted EBITDA is expected to be $3.025 billion to $3.10 billion.
• Adjusted cash flow from operations is forecast at $1.40 billion to $1.475 billion.

The midpoint of the updated ranges implies 5% revenue growth, 10% adjusted EBITDA growth and 21% adjusted cash flow from operations growth versus 2025, according to the company.

Business Development and Bausch + Lomb

Appio said business development remains a strategic priority, particularly within the company’s U.S. pharmaceutical platform. He cited gastrointestinal and liver disease, neuroscience, dermatology, pain and adjacent categories as areas of interest, while also saying the company is open to therapeutic areas where its commercial infrastructure can add value.

Charhon said capital allocation priorities remain reducing leverage and reinvesting in the business. Smaller development-stage investments could resemble the company’s DURECT transaction, while larger acquisitions would need to offer a relatively quick payback, be close to commercialization or present clear synergy opportunities, he said.

Regarding Bausch + Lomb, management said it continues to assess options to realize the asset’s value for Bausch Health shareholders. Bausch + Lomb reported second-quarter revenue of $1.394 billion, up 9% on a reported basis and 8% organically.

About Bausch Health Cos (NYSE:BHC)

Bausch Health Cos Inc, formerly known as Valeant Pharmaceuticals International, is a global specialty pharmaceutical company headquartered in Laval, Quebec, Canada. The company operates through two primary segments: Ophthalmology, led by its Bausch + Lomb franchise, and Diversified Brands, which encompasses prescription dermatology, gastrointestinal, neurology and branded pharmaceutical products. Bausch Health develops, manufactures and markets a range of therapeutic and over-the-counter offerings designed to address conditions such as cataracts, dry eye, glaucoma, acne, rosacea, migraine and gastrointestinal disorders.

The Ophthalmology segment under the Bausch + Lomb name provides products for eye health, including prescription drops, contact lens care solutions, intraocular lenses, surgical instruments and diagnostic devices.

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