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Bausch Gains 38.9% YTD on Product Launches & Debt Reduction

Zacks Equity Research

Shares of Bausch Health Companies Inc. BHC have rallied 38.9% in the year so far, outperforming the industry’s growth of 3.9%.


The company develops, manufactures and markets a wide range of branded, generic and over-the-counter (OTC) products. After a tumultuous period, it began a turnaround journey in 2018 and the efforts toward the same have been reaping encouraging results so far.

Bausch has narrowed its focus on seven recently launched or expected to be launched products, pending completion of testing and receipt of FDA approval. The products include Vyzulta, Siliq, Bryhali (psoriasis), Lumify, Duobrii, Relistor and SiHy Daily. Four of these seven products were launched in 2018. The company has other products in its pipeline as well.

A couple of product launches boosted investor sentiment last month. Bausch launched psoriasis lotion, Duobrii, in the United States. The FDA has approved Duobrii Lotion for the topical treatment of plaque psoriasis in adults in April 2019.  The company already has Siliq in its portfolio for psoriasis.

Bausch also announced the U.S. launch of Bausch + Lomb ULTRA Multifocal for Astigmatism contact lenses for patients with both astigmatism and presbyopia.

Meanwhile, the Salix business continues to drive growth and contribute to the top line. In particular, increased sales of Xifaxan are boosting the segment. The company recently settled the Xifaxan IP litigation, which should preserve market exclusivity until 2028. The company also entered an exclusive agreement with Dova Pharmaceuticals, Inc. DOVA to co-promote Doptelet in the United States for the treatment of thrombocytopenia in adult patients with chronic liver disease who are scheduled to undergo a procedure. The addition of Trulance from the Synergy acquisition has bolstered the franchise.

In the meantime, investors cheered Bausch’s announcement of clearing an additional $100 million of its senior secured term loans in June 2019, using cash generated from operations. This led the company to eliminate all mandatory amortization for the first quarter of 2020. The company’s efforts to sell non-core assets and clear huge levels of debt are commendable.

Though it is still difficult to comment on the slow rebuilding process, we expect the momentum to pick up gradually as Bausch strengthens its ophthalmology franchise and Salix business.

Zacks Rank & Other Stocks to Consider

Bausch currently carries a Zacks Rank #2 (Buy). A couple of other similar-ranked stocks from the same sector are Adamas Pharmaceuticals, Inc. ADMS and Acasti Pharma, Inc. ACST.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Loss estimates for Adamas for 2019 have narrowed to $3.77 from $4.14 in the past 60 days.

Loss estimates for Acasti for 2021 have narrowed by 6 cents to 11 cents in the past 60 days.

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