Bausch Health Companies Inc. (BHC) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call showed strong financial performance with significant revenue growth in key segments like Salix and Solta, a net debt reduction, and a positive outlook for future growth. Despite some uncertainties, such as potential destocking and tariff impacts, management provided reassuring responses. The acquisition of Shibo and the strategic focus on high-growth areas like China and GI franchise investments are positive indicators. Given the market cap, the stock is likely to react positively, albeit moderately, to these developments.
Key Financial Performance
Revenue (Bausch Health, excluding Bausch & Lomb) Increased by 14% on a reported basis compared to Q1 2025. Growth was driven by Salix and Solta, with Salix benefiting from Xifaxan's strong performance in IBS-D and OHE, and Solta experiencing robust demand for systems and consumables.
Adjusted EBITDA (Bausch Health, excluding Bausch & Lomb) Increased by 17% on a reported basis year-over-year, attributed to Salix's improved margin dynamics following payer channel optimization and Solta's earnings growth despite a one-time acquisition-related cost.
Cash Flow Generation Healthy cash flow generation in Q1 2026, progressing well towards guidance expectations. This includes reducing net debt by over $100 million and concluding U.S. opt-out litigation settlements.
Revenue (Overall Bausch Health) $2.524 billion, up 12% on a reported basis and 7% on an organic basis compared to Q1 2025.
Adjusted Gross Margin 70.9%, an increase of 100 basis points year-over-year.
Adjusted Operating Expenses $1.023 billion, an increase of $29 million compared to Q1 2025, excluding a $1.4 billion goodwill impairment charge.
Adjusted EBITDA (Overall Bausch Health) $837 million, a 27% increase year-over-year.
Adjusted Operating Cash Flow $374 million.
Revenue (Salix) $639 million, an 18% increase year-over-year. Xifaxan revenue grew 21% year-over-year due to volume growth, net pricing, and residual Medicaid volume.
Revenue (International Segments) $285 million, up 9% on a reported basis but flat on an organic basis. EMEA grew 3%, LatAm was flat, and Canada contracted 7% due to non-promoted portfolio performance.
Revenue (Solta Medical) $171 million, a 51% increase year-over-year on a reported basis and 19% on an organic basis. Growth was driven by a 193% increase in China due to higher pricing and volume growth, as well as positive momentum in South Korea, the U.S., EMEA, and Canada.
Revenue (Diversified Segments) $185 million, a 10% decrease year-over-year due to lower volume, partially offset by favorable pricing.
Revenue (Bausch & Lomb) $1.244 billion, up 9% on a reported basis and 6% on an organic basis year-over-year.
Net Debt Reduction Net debt (excluding Bausch & Lomb) decreased by approximately $150 million in Q1 2026, despite a $160 million outflow for legacy litigation settlements.
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Operating Highlights
Larsucosterol Phase III program: Advancing for alcohol-associated hepatitis, addressing significant unmet needs. Potential platform asset for multiple indications.
Biafine: Launched in the U.S., a heritage formulation for sensitive skin, scientifically proven to fortify the skin barrier, now available without prescription.
Geographic expansion: Expanding product reach to new geographies like Poland and Serbia, Montenegro.
Solta China: Integration of Shibo distribution business, achieving 193% year-over-year revenue growth in China.
AI-enabled customer insights engine: Implemented for Xifaxan, Relistor, and neurosciences, leading to increased sales productivity and efficiency in promotional efforts.
AI in R&D: Utilized for site selection, patient recruitment, pharmacovigilance, and indication selection, improving efficiency and reducing costs.
Business development focus: Prioritizing late-stage or commercial-ready assets in GI, hepatology, neurosciences, dermatology, and aesthetics for efficient execution and value creation.
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Risk or Challenges
Exit from Medicaid and 340B: The company's exit from Medicaid and 340B programs may impact growth in the Salix and Diversified segments in the latter half of the year.
Tariffs on pharma products: New tariffs on pharmaceutical products, expected to take effect on September 29, 2026, are anticipated to impact adjusted EBITDA.
Softness in government tenders in LatAm: The softness of received orders associated with secured government tenders in Latin America continues to be a headwind.
Decline in Canada's branded generic portfolio: Canada's branded generic portfolio experienced a drop in volume, offsetting growth in the promoted portfolio.
Residual impact of Shibo acquisition costs: Higher inventory costs associated with the Shibo acquisition impacted Solta segment profit in Q1.
Litigation settlements: Approximately $160 million outflow due to various legacy litigations, including U.S. opt-out settlements, impacted financials.
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Guidance & Outlook
Revenue Guidance: Bausch Health, excluding Bausch & Lomb, expects revenue for 2026 to be between $5.250 billion and $5.400 billion, representing a 3% increase year-over-year at the midpoint.
Adjusted EBITDA Guidance: Adjusted EBITDA for 2026 is projected to be between $2.875 billion and $2.950 billion, reflecting a 4% increase year-over-year at the midpoint.
Adjusted Operating Cash Flow Guidance: Adjusted operating cash flow for 2026 is expected to range between $1.200 billion and $1.275 billion, translating to a 4% increase year-over-year at the midpoint.
Tariffs Impact: The 2026 adjusted EBITDA guidance includes the anticipated impact of new tariffs on pharmaceutical products, expected to take effect on September 29, 2026.
Product Launches in EMEA: More than 30 products are expected to launch in 10 countries within EMEA in 2026, spanning gastroenterology, dermatology, joint health, neurology, and hospital-based therapies.
Geographic Expansion: Bausch Health plans to expand the geographic reach of its existing portfolio to countries such as Poland and Serbia, Montenegro.
Latin America Cardiometabolic Franchise: Two additional therapies are expected to launch in Mexico in the second quarter of 2026, building on three products launched in late 2025.
Solta China Integration: The integration of the Shibo distribution business in China is progressing as planned, enhancing vertical integration and providing better demand forecasting capabilities.
AI-Driven Insights: AI-enabled customer insights are being expanded across U.S. pharmaceutical brands, with early results showing significant increases in sales productivity and prescription growth.
R&D Advancements: AI is being utilized to improve clinical operations, pharmacovigilance, and indication selection, leading to increased efficiency and reduced costs in R&D processes.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What are your expectations for Xifaxan inventory destocking in Q4 due to IRA? How do you expect wholesalers to act ahead of the pricing step down in 2027?
A:Jean-Jacques Charhon stated that there is not much destocking expected in terms of volume. They anticipate a gross-to-net accrual adjustment due to the higher discount rate effective January 1, 2027, but no significant change in current volume is expected.
Q:Why is Solta experiencing strong growth in China, especially compared to other companies reporting weaker performance in the same market? Is this growth sustainable?
A:Thomas Appio attributed the growth to the acquisition of Shibo, which improved access to providers and customers, and the strong execution by the team in China. The Thermage business is insulated from broader economic issues, and the integration of Shibo has enhanced sales execution. The company expects continued growth and a strong year in 2026.
Q:Given the success at Solta and the importance of the GI franchise, where do you expect to see investment go?
A:Thomas Appio emphasized the importance of their global commercial team and stated that they are looking at business development opportunities across therapeutic areas. They aim to bring in commercially available or pipeline products that align with their expertise, including specialty and rare drugs, as well as opportunities in the Solta business.
Q:How does your planning around separation and debt refinancing change if the D.C. Circuit Court reverses prior findings? Do you have a contingency plan for Xifaxan?
A:Thomas Appio stated that they are planning for a generic entrant on January 1, 2028, and remain confident in their IP. Contingency plans are in place, but they continue to prepare for the expected timeline. Jean-Jacques Charhon added that losing exclusivity earlier would reduce free cash flow and might require asset monetization or debt refinancing, but equity issuance is not a priority.
Q:What changes have been made to the Phase III trial for larsucosterol to avoid the failure seen in Phase IIb?
A:Jonathan Sadeh explained that the Phase III trial focuses on a U.S.-only population, ensures early randomization within 9 days of presentation, and is highly powered to 90% alpha. These changes address issues from the Phase IIb trial, such as delayed randomization and differences in patient populations.
Q:What is the status of the internal review for amiselimod?
A:Jonathan Sadeh stated that the review is ongoing and part of a broader portfolio evaluation. They are prioritizing indications based on scientific evidence, regulatory paths, and commercial opportunities, considering all drugs and indications in their portfolio.
Q:Can you provide more detail on your current tariff exposure?
A:Thomas Appio and Jean-Jacques Charhon noted that local production minimizes tariff impact. Recently announced tariffs will affect Xifaxan and TRULANCE starting in late 2026, but the impact on the P&L is expected to be minimal in 2026 and manageable in 2027 with mitigation efforts.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer to the question about raising equity to finance R&D and trials for new assets. Jean-Jacques Charhon mentioned that equity issuance is a possibility but not a priority, without elaborating on the feasibility or specific plans.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
BL front
BL progress
Bedoyecta softness
Canada momentum
Canada portfolio
Cash flow
China position
China pricing
Core expectation
DURECT larsucosterol
Demand system
EMEA LatAm
Head
Health Conference
Health excellence
Korea contributor
LatAm Canada
Medical
Officer Chief
President Investor
RD development
Salix Solta
Sarafian Vice
Shibo
Solta Salix
Vice President
core RD
flexibility
litigation
opt
payment
region
segment Revenues
settlement
slide presentation
supply
volume channel
BHC Transcript
Bausch Health Companies Inc. (BHC) Q1 2026 Earnings Call Transcript
Positive4-29
The earnings call showed strong financial performance with significant revenue growth in key segments like Salix and Solta, a net debt reduction, and a positive outlook for future growth. Despite some uncertainties, such as potential destocking and tariff impacts, management provided reassuring responses. The acquisition of Shibo and the strategic focus on high-growth areas like China and GI franchise investments are positive indicators. Given the market cap, the stock is likely to react positively, albeit moderately, to these developments.
Bausch Health Companies Inc. (BHC) Q4 2025 Earnings Call Transcript
Positive2-18
The earnings call highlights strong financial performance with increased revenue and reduced debt, alongside optimistic guidance. The company's strategic initiatives, including acquisitions and product launches, are promising. Despite some management vagueness in the Q&A, the overall sentiment is positive, particularly with raised guidance and solid growth in key segments like Xifaxan and Solta. Given the company's market cap, these factors suggest a positive stock price movement in the short term.
Bausch Health Companies Inc. (BHC) Presents at Evercore 8th Annual Healthcare Conference Transcript
Neutral12-2
Bausch Health Companies Inc. (BHC) Q3 2025 Earnings Call Transcript
Positive10-29
The earnings call indicates strong growth in Bausch + Lomb and international segments, and strategic initiatives like debt refinancing and acquisitions bolster long-term prospects. Despite some revenue declines and conservative guidance adjustments, positive Q&A insights on Xifaxan's growth and RED-C trials suggest optimism. Market reaction should be positive, with a projected 2-8% stock price increase, considering the company's market cap and strategic positioning.
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