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Bausch (BHC) Beats on Q3 Earnings & Sales, Raises Guidance

Zacks Equity Research

Bausch Health Companies Inc.’s BHC earnings and sales beat estimates in the third quarter of 2019. Moreover, the company raised its annual sales guidance.

The company’s adjusted earnings per share of $1.19 easily beat the Zacks Consensus Estimate of $1.06 and increased from $1.15 reported in the year-ago quarter.

Total revenues of $2.2 billion comfortably beat the Zacks Consensus Estimate of $2.15 billion and increased 3% year over year.

Quarter in Detail

Revenues in the Bausch + Lomb/International segment (comprised 53% of the total revenues) were $1.2 billion, up 2% year over year. Excluding the impact of discontinuations and divestitures, the segment organically improved approximately 5%, driven by growth in Global Consumer, International and Global Vision Care sales.

The Salix segment revenues rose 20% year over year to $551 million, primarily driven by 24% growth in Xifaxan.

The Ortho Dermatologics segment revenues were $147 million, down 16% year over year due to lower volumes resulting from the loss of exclusivity of Elidel, Zovirax and Solodyn. This was partially offset by growth in the Global Solta business.

Diversified Products segment revenues were $336 million, down 5% from the year-ago quarter primarily due to the loss of exclusivity of certain products.

The company reduced debt by approximately $450 million in the third quarter of 2019. 

Pipeline Update

The FDA accepted the New Drug Application for Arazlo (IDP-123) Lotion and granted a PDUFA action date of Dec 22, 2019.

2019 Guidance

For 2019, revenues are now expected between $8.475 billion and $8.625 billion (previous guidance was $8.40-$8.60 billion). The Zacks Consensus Estimate is $8.52 billion, down from the midpoint of $8.55 billion. 

Our Take

Bausch beat both earnings and sales estimates in the third quarter and raised annual guidance. Both the Bausch + Lomb/International and Salix segments drove the quarterly performance on higher revenues in several established brands, such as Xifaxan, BioTrue ONEday and Bausch + Lomb ULTRA. Newer products, such as Lumify and Thermage FLX, also performed well. The initial uptake of psoriasis lotion, Duobrii, has been encouraging as well.

Bausch’s stock has surged 41.8% in the year so far against the decline of 0.4% for the industry.

 

After a tumultuous period, the company started a rebuilding process. Bausch has narrowed its focus on seven products — Vyzulta, Siliq, Bryhali, Lumify, Duobrii, Relistor and SiHy Daily. These have now been launched and hence the company’s performance for the rest of the year is expected to be strong.

Zacks Rank & Stocks to Consider

Bausch currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the healthcare space are FibroGen FGEN, Lannett Inc. LCI and Portola Pharmaceuticals PTLA.  All stocks carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

FibroGen’s loss per share estimates have narrowed from $1.09 from 37 cents for 2019 in the past 90 days.

Portola’s loss per share estimates have narrowed from $3.83 to $3.77 for 2019 in the past 60 days.

Lannett’s loss per share estimates have increased to $1.25 from $1.18 in the past 60 days.

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