What Bausch Health Cos (BHC) Said on Its Q3 Earnings Call

Key Points

• Bausch Health raised its 2026 outlook for the second consecutive quarter, citing broad-based growth. Excluding Bausch + Lomb, third-quarter revenue rose 12% to $1.566 billion, while consolidated adjusted EBITDA increased 32% to $1.305 billion.
• Salix and XIFAXAN drove quarterly performance, with Salix revenue up 16% to $831 million. However, channel-inventory normalization and a Medicare pricing-related accrual are expected to weigh heavily on fourth-quarter and 2027 results.
• The company reduced net debt by $521 million in the quarter and more than $1 billion year to date. Bausch Health now expects 2026 revenue of $5.525 billion-$5.625 billion, adjusted EBITDA of $3.225 billion-$3.275 billion, and operating cash flow of $1.6 billion-$1.675 billion.

Bausch Health Cos NYSE: BHC raised its full-year 2026 outlook for the second consecutive quarter after reporting third-quarter growth across its operating segments, led by Salix and supported by international operations and Solta Medical.

Excluding Bausch + Lomb, Bausch Health reported third-quarter revenue of $1.566 billion, up 12% from a year earlier, and adjusted EBITDA of $1.022 billion, which Chief Financial Officer J.J. Charhon described as the company’s strongest quarterly performance since Bausch + Lomb’s IPO. Adjusted cash flow from operations rose $192 million year over year to $539 million.

On a consolidated basis, including Bausch + Lomb, revenue totaled $2.941 billion, up 10% on a reported basis and 8% organically. Consolidated adjusted EBITDA increased 32% to $1.305 billion, while adjusted cash flow from operations rose 54% to $782 million.

Salix Drives Quarterly Performance

Salix revenue rose 16% to $831 million during the quarter, driven principally by XIFAXAN. Charhon said the product benefited from favorable net realized pricing and continued demand, with retail prescriptions excluding Medicaid increasing 1.8% year over year. Quarterly new-to-brand patients rose by 1,800 sequentially.

Charhon also noted that XIFAXAN volume growth in the quarter was aided by increased channel inventory. The company expects factors related to XIFAXAN to create headwinds in the fourth quarter.

Specifically, Bausch Health expects to adjust its gross-to-net accrual tied to channel inventory ahead of a new XIFAXAN price for Medicare that takes effect Jan. 1, 2027. The company said the adjustment alone is expected to reduce fourth-quarter revenue growth by 800 basis points and adjusted EBITDA growth by 1,400 basis points.

The company also expects some normalization in XIFAXAN channel inventory, which it said could reduce fourth-quarter revenue growth by at least an additional 300 basis points and adjusted EBITDA growth by 500 basis points.

In response to an analyst question, Charhon said the gross-to-net accrual associated with the anticipated 2027 pricing change exceeds $100 million. He said the company has not provided specific details regarding the subsequent impact of the Medicare rebate, but indicated that its implied 2027 guidance of about $2.7 billion suggests an estimated $400 million to $500 million year-over-year impact from the combined factors.

International and Solta Results

The international segment generated $299 million in revenue, up 4% organically. The company cited contributions from its major geographies, including 3% organic growth in Europe, the Middle East and Africa, where Poland grew 7% and Hungary grew 32%.

Latin America continued its return to growth, according to the company, as its top 10 products increased 18% organically. Bedoyecta, its largest brand in the region, increased 28% organically. Canada’s organic revenue rose 7%, with promoted products led by RYALTRIS and CABTREO posting double-digit gains.

Solta Medical reported revenue of $165 million, up 18% on a reported basis. Reported growth was led by Asia-Pacific markets, including a 66% increase in China and a 23% increase in Taiwan. Organic revenue declined 4% in the quarter, which management attributed to differing revenue phasing compared with the prior year and volatility related to tariffs on U.S. imports to China.

For the first nine months of 2026, Solta revenue increased 34% on a reported basis and 8% organically. Chief Executive Officer Thomas Appio said the company views the year-to-date performance as a better reflection of Solta’s operating trajectory.

Appio said the integration of Solta’s China distributor has progressed well, though consumer confidence and spending in China have softened and local and Korean competitors have entered the skin-tightening market. In Korea, consumables revenue rose 18%, even as equipment sales faced a more saturated market. U.S. revenue was approximately flat, while volume increased, he said.

Charhon said Solta is expected to return to strong reported growth in the fourth quarter, aided by comparisons with the prior year. He said the company expects mid-single-digit organic growth for the segment in the fourth quarter.

Cash Flow, Debt Reduction and Updated Outlook

Bausch Health reduced net debt by $521 million during the third quarter and by more than $1 billion since the start of the year. The company ended the period with $2 billion in cash.

Charhon said Bausch Health is evaluating capital-allocation actions, including early redemptions of its 2027 notes and up to $100 million in open-market repurchases of public debt. The company also announced a $50 million share repurchase program, primarily intended to offset dilution from anticipated management equity award vesting in 2027.

For 2026, Bausch Health now expects:

• Revenue of $5.525 billion to $5.625 billion, with the midpoint representing 8% year-over-year growth.
• Adjusted EBITDA of $3.225 billion to $3.275 billion, with the midpoint representing 13% growth from 2025.
• Adjusted cash flow from operations of $1.6 billion to $1.675 billion, with the midpoint representing 29% growth.

Appio said the company remains focused on maximizing current portfolio performance, pursuing operational improvements, building its pipeline through internal development and business development, and maximizing value for Bausch + Lomb shareholders.

Within research and development, Bausch Health said its Phase III program for larsucosterol in alcohol-associated hepatitis remains on track toward a potential 2029 approval, subject to successful clinical development and regulatory review. Chief Medical Officer and Head of Research and Development Jonathan Sadeh said the company does not currently see a need for an interim analysis, citing the study’s six-month treatment period and the company’s confidence in the Phase II data.

About Bausch Health Cos (NYSE:BHC)

Bausch Health Companies Inc NYSE: BHC is a multinational specialty pharmaceutical company focused on developing, manufacturing and commercializing branded, generic and over-the-counter medicines. Its portfolio serves several therapeutic areas, including gastroenterology, dermatology, neurology, ophthalmology, hospital products and other specialty-care markets.

The company markets products through businesses such as Salix Pharmaceuticals, Ortho Dermatologics, Solta Medical and its international pharmaceutical operations.

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