Q4 2024 Bausch Health Co Inc Earnings Call
We will see you next week.
Speaker Change: Greetings. Welcome to the Bosh Health fourth quarter 2024 earnings call. At this time, all participants are in listen only mode. A question and answer session will follow the formal presentation.
Speaker Change: non-GAAP financial measures may not be comparable to similarly, titled measures used by other companies and should be considered along with but not as an alternative to measures calculated in accordance with GAAP.
Speaker Change: You will find reconciliations to our non-GAAP measures in the appendix of the slides that accompany this presentation, which are available on <unk> Investor Relations website.
Speaker Change: Finally, the financial guidance in this presentation is effective as of today only we do not undertake any obligation to update guidance.
Speaker Change: Our discussion today Wednesday February 19, we'll focus on Bausch health, excluding partial loan. However, we will briefly comment on Barschel longs results announced this morning.
Speaker Change: We will refer to year over year comparisons with the same period last year unless otherwise noted.
Tom: I'd like to turn the call over to our CEO Tom out Tom.
Tom: Thank you Karen and welcome to everyone joining our earnings call today.
We closed out 2024 with a strong fourth quarter executing.
Tom: Executing on our strategic priorities and reinforcing our focus on patient centered outcomes.
Tom: Bausch health continues to deliver.
Tom: Barking, our seventh consecutive quarter of revenue and adjusted EBITDA growth.
Tom: This performance is a testament to our strong operational execution disciplined approach and relentless focus on value creation.
Tom: We made tremendous progress as a company in 2024.
Tom: As I could not be more proud of what the Bausch health team accomplished and the momentum we have heading into 2025.
Tom: Well J J will discuss our financial results in more detail I will touch briefly on our performance our progress driving our strategic priorities forward and key business highlights from the quarter.
J J: Starting with our strong fourth quarter and full year results.
J J: Revenues for Bausch health, excluding Bausch and Lomb increased 4% on a reported basis and 7% on an organic basis when compared to the fourth quarter of 2023 with strong organic growth in our salix and solve the segments.
J J: Full year revenues for Bausch health, excluding Bausch and Lomb increased 5% on a reported basis and 6% on an organic basis.
J J: For Bausch health, excluding Bausch alone adjusted EBITDA for the fourth quarter of 2024 increased by approximately 7% compared to the prior period.
J J: For the full year of 2024, all four segments delivered revenue and segment profit growth demonstrating our ability to drive performance across our diverse businesses.
J J: Our success translated into strong cash flow from operations for the company in 2024.
J J: Shell's, excluding bausch and lomb generate approximate $1.3 billion in adjusted operating cash flow for the full year.
Speaker Change: Bausch health, excluding Bausch and Lomb revenue and organic growth were at the high end of our guidance range and both adjusted EBITA and adjusted operating cash flow exceeded our guidance.
Speaker Change: These results would not be possible without the hard work and dedication of all our colleagues across the globe across all segments throughout the year. We will carry this momentum into 2025 and look forward to updating you on our performance in the quarters ahead as we execute against the.
Speaker Change: Guidance that we provided today.
Speaker Change: Our 2025 outlook builds on the framework, we laid out last quarter, which aims to drive value through the organization.
Speaker Change: So how do we continue generating value and accomplishing our goals.
Speaker Change: By centering on our value creation efforts around three fundamental pillars first we are relentlessly focused on enhancing the value of Bausch health operational assets driving innovation strengthening execution and maximizing the growth potential of our diverse global portfolio of brands.
Speaker Change: Yes.
Speaker Change: Second we are actively exploring all avenues to unlock the full value of our bausch and lomb equity stake ensuring the greatest benefit for Bausch health shareholders and third we are committed to optimizing our capital structure strategically reducing debt leverage and extending maturities.
Speaker Change: To fortify our financial position for long term success.
Speaker Change: It is these value creation pillars that will contribute to the success of our long term strategic priorities.
In 2024, we made substantial progress against our five strategic priorities highlighting the success, we saw across the company and reinforcing the importance of staying focused on maximizing shareholder value as we head into 2025.
Speaker Change: Our strategic priorities people.
Speaker Change: Growth innovation efficiency and unlocking value are at the core of everything we do at Bausch health.
Speaker Change: Our first priority is people the success of the company begins with our people.
Speaker Change: We added experienced leaders to our executive leadership team in three critical areas. This summer J J, Sharon joined Us as CFO and Amy, Illinois joined US as the leader of our U S pharma business.
Speaker Change: In December we appointed a new Chief Medical Officer, and head of R&D, Jonathan Today, who we are excited to welcome to the team.
Speaker Change: In addition to these senior leadership appointments, we are strengthening our teams with exceptional talent by continuing to drive a culture of business ownership accountability and compliance.
Speaker Change: We aspire to be principal leaders creative thinkers problem solvers and result seekers.
Speaker Change: We strive to attract the best talent fostering a purpose driven mentality and a sense of urgency in everything we do with an all in together open and collaborative workplace.
Speaker Change: Our second priority is the long term growth of our business with a focus on operational excellence.
Speaker Change: As I mentioned earlier this is our seventh consecutive quarter of top and bottom line growth with a strong closing quarter to the year. We have achieved this through focused execution against our plans.
Speaker Change: Innovation, our next strategic priority is another critical driver of our long term growth objectives.
Speaker Change: We have made great progress here and I am excited to continue to move our innovation efforts forward in the years ahead.
Speaker Change: The approval of their March F. L X as a medical device in China earlier in 'twenty 'twenty four have been well received.
Speaker Change: We have developed tools and algorithms that apply AI and machine learning to our sales process for as a vaccine and we believe this has been one of the drivers of the performance for the product in 2024.
Speaker Change: While we are still in the early stages of leveraging artificial intelligence in our business. We are exploring other opportunities to leverage AI enabled capabilities to drive profitable long term growth.
Speaker Change: As our performance demonstrates our investments in innovation are contributing to our growth.
Speaker Change: Our key pipeline programs continued to progress our Red Sea program for the prevention and delay of the first episode of hepatic encephalopathy remains on track.
Speaker Change: We successfully initiated and are in the midst of two global phase III trials with top line results for each expected by early 2026.
Speaker Change: As a reminder, this program for our solid soluble dispersion rifaximin product may enable us to address an unmet need to a novel therapy for cirrhotic patients globally and continues to be an exciting opportunity for us.
Speaker Change: And our Solta business clear 1 billion touch has been approved in additional markets in Asia Pacific with regulatory submissions in Canada and EMEA. In 2024, we also received FDA clearance for the next generation Frac. So in the U S, which we anticipate launching commercially in 2025.
Speaker Change: Overall, I am energized by the prospects for the innovation that lie ahead for Bausch health, we continue to drive the success of our business forward through our R&D efforts maximizing opportunities to best serve patients across the globe.
Speaker Change: This brings me to our next priority executing with efficiency or cost mindset and operational excellence across the business. We are laser focused on serving our patient population and their health care providers and utilizing our strong supply chain expertise to be nimble in meeting.
Speaker Change: <unk> industry supply needs as they arise we have consistently demonstrated that our pharmaceutical manufacturing and supply chain capabilities are agile and can fulfill patient needs globally. This includes the efforts during the fourth quarter to meet unanticipated well butyrin demand in Canada.
Speaker Change: The four priorities I, just discussed propel our company forward and help drive shareholder value of Bausch health and to that end, let me touch upon our last strategic priority unlocking value as I outlined through our value creation pillars. This remains a core objective that we.
Speaker Change: Continued to pursue across all avenues with a strong sense of urgency and we are fully committed to delivering on this key priority. We look forward to keeping you updated on these key initiatives throughout 2025.
Speaker Change: To summarize Bausch health delivered a solid performance throughout 2024 and has now grown revenues and adjusted EBITDA for seven consecutive quarters.
Speaker Change: Our success in the fourth quarter was broad based Zeiss vaccines delivered 16% revenue growth and with solid volume growth across all channels, resulting in a fourth consecutive quarter of growth.
Speaker Change: <unk> grew 34%.
Speaker Change: <unk> led by Asia Pacific Region.
Speaker Change: Our durable and under appreciated international business continued to deliver where Canada again had double digit growth in promoted brands and EMEA business achieved its eighth consecutive quarter of organic growth.
Speaker Change: And we continue to look for ways to grow our international business in the fourth quarter and in January of this year. We are starting two business development deals by expanding into the potentially large cardio metabolic market, which for Mexico alone is over a 2 billion dollar market. This war.
Speaker Change: Allow us the opportunity to broaden our portfolio of assets across Mexico, and the rest of our Latin American markets for multiple years as well as in Canada.
Speaker Change: Both of these strategic collaborations are good examples of Bausch health leveraging partner expertise and portfolio development and a robust market footprints to serve patients globally.
Speaker Change: In summary, Bausch health had a strong fourth quarter capping off a great year with contributions from all of our businesses and every one of our valued colleagues across the globe. This momentum sets us up for a great year ahead in 2025.
Speaker Change: With that I'll hand, it over to J D to provide additional commentary on our financial results J J.
J J: Thank you Tom.
Speaker Change: Before we review our results overall and at the segment level I would like to share some highlights from the fourth quarter for Bausch health, excluding Bausch and lomb.
Speaker Change: Revenues for the year were $4.834 billion with a year over year growth of 5% or $223 million adjusted EBITDA for the full year was 2 billion to $553 million growing 8% and.
Speaker Change: Adding the continued operating leverage of our business model, thanks to tight expense management and positive business mix.
Speaker Change: Our adjusted cash flow from operation in 2024 was $1 $3 billion or 885% growth year over year, which was exceptional.
Speaker Change: Primary drivers were in addition to our operational performance unusually low cash taxes and the timing of some of our outflows in Q4.
Speaker Change: Even when excluding these onetime benefits adjusted cash flow from operations for the year was approximately $1 billion or about a 40% increase year over year.
Speaker Change: Let me now review, our 'twenty 'twenty four performance in more detail overall and by segment starting with our consolidated performance on page 14.
Speaker Change: Revenue for the fourth quarter, it was $2.559 billion up 6% on a reported basis and 9% on an organic basis versus the same quarter a year ago.
Speaker Change: Revenue for the full year was $9.625 billion, an increase of 10% on a reported basis and 8% on an organic basis.
Speaker Change: Adjusted gross margin for the fourth quarter was 72 point.
Speaker Change: Four 4%, which was 80 basis points higher than the same period, a year ago for the full year. It was 71, 9% an increase of 90 basis points versus 2023.
Adjusted operating expenses for the fourth quarter were $958 million, an increase of $67 million over the same period last year.
Speaker Change: Full year operating expenses were $3.812 billion or an increase of 12% year over year.
Speaker Change: Adjusted R&D expense for the quarter was $163 million, which was a $12 million increase year over year for the full year.
Speaker Change: R&D expense was $615 million or an increase of 2%.
Speaker Change: Adjusted EBITDA was $935 million in Q4, and three billing $307 million for the full year.
Speaker Change: Finally, our adjusted operating cash flow still on a consolidated basis was $601 million in the fourth quarter and $1.572 billion for the full year.
Speaker Change: Focusing now on the performance of Bausch health, excluding Bausch and lomb it.
Speaker Change: Revenue for the fourth quarter was $1.279 billion up 4% on a reported basis and 7% on an organic basis versus the versus the same quarter a year ago.
Speaker Change: Revenue for the full year was $4.834 billion, an increase of 5% on a reported basis and 6% on an organic basis.
Speaker Change: Adjusted EBITDA was $712 million, a 7% increase from the fourth quarter of 2023.
Speaker Change: For the full year, it was $2.553 billion or an increase of 8%.
Speaker Change: Adjusted operating cash flow was $567 million up $289 million when compared to the fourth quarter of 2023.
Speaker Change: And on a full year basis, adjusted operating cash flow was $1.308 billion up $600 million when compared to 2023.
Speaker Change: The impressive cash flow generation in the fourth quarter and overall in 2024 were driven primarily by three factors.
Speaker Change: First and foremost a well balanced operating performance across all segments.
Speaker Change: Unusually low cash taxes and third the favorable timing of some of our off lows in Q4.
Speaker Change: Turning now to our fourth quarter performance by segment, starting with Salix on page 20.
Speaker Change: Selig revenues in the fourth quarter were $634 million, an increase of $51 million or 9% growth year over year, driven primarily by <unk>, which grew an outstanding 16%.
Speaker Change: We continue to be encouraged by the trend of our scripts flowing to reach an optimization of our sales force deployment more specifically.
Speaker Change: What was that facts and scripts for new script growth were both up 5% in the fourth quarter.
Speaker Change: Extending units grew 7% and includes non retail setting such as hospitals and outpatient clinics, which again saw strong low double digit growth.
Speaker Change: Now moving to the international segment on page 21.
Speaker Change: Revenues for international were $279 million during the quarter, a decrease of 4% on a reported basis and an increase of 1% on an organic basis compared to the fourth quarter of last year.
Speaker Change: The 5% of growth difference was driven by the strengthening of the dollar mostly against the Mexican peso.
Speaker Change: By geography, Canada, and EMEA were the strongest contributors to growth in the quarter.
Speaker Change: Revenue in Canada grew 9% on a reported basis and 16% on an organic basis driven by the continued benefits of the world you trained generic competitor supply shortage in the market.
Speaker Change: Also worth noting is the double digit growth of our promoted products in Canada, which reflects the benefits of our sales deployment optimization across our broad portfolio of commercialized products.
Speaker Change: Revenues in EMEA grew 4% on a reported basis and 5% when excluding the impact of effects. Finally in Latin America revenue decreased year over year, 14% on organic basis, mostly due to the timing of government tenders in Mexico.
Speaker Change: Now I'm moving to page 22 to review, our Solta medical segments.
Speaker Change: Revenues for Solta were $138 million during the fourth quarter, an increase of 34% on a reported basis. This capped an outstanding year for Solta for both revenue and segment profit.
Speaker Change: What was even more impressive is that our world for Salter was primarily driven by volume right.
Speaker Change: By country, South Korea, and China continued to be the primary drivers of soldiers growth globally.
Speaker Change: As a reminder, it is second quarter of this year, we relaunched <unk> F L X in China, which adds since perform exceptionally well.
Speaker Change: We believe this business is well positioned for sustained growth in the near and long term.
Speaker Change: Turning now I'll focus to the performance of our diversified segments, which you will find on page 23.
Speaker Change: Revenues for the diversified segments were $228 million during the fourth quarter, a decrease of 12% on a reported basis as.
Speaker Change: As a reminder, on our fourth quarter call last year, we referenced marketplace supply constraint that allowed us to capitalize on sales of a television.
Speaker Change: This generic supply shortage did not recur this year impacting overall results in the corner versus the prior year.
Speaker Change: Finally, let me wrap up the segment discussion for the fourth quarter by commenting briefly on Bausch and Lomb topline results on page 25 and 26.
Speaker Change: Revenues were $1 $280 million during the fourth quarter up 9% on a reported basis.
Speaker Change: Full year revenues were $4.791 billion, an increase of 16% versus the prior year on a reported basis.
Speaker Change: Turning now to our balance sheet, starting with page 28.
Speaker Change: As a result of our exceptional cash flow performance in Q4, we will reduce our debt net of cash for Bausch health, excluding bausch and lomb by approximately $520 million.
Speaker Change: For the full year and after payments associated with restructuring and legal settlements all net debt reduction amounted to almost a $1 billion.
Speaker Change: This allowed us to reduce our gross debt by about $730 million through primarily to actions first we executed $555 million of open market purchases in the first half and second we continued to reduce all 2027 term loan balance by one.
Speaker Change: <unk> hundred $25 million as per the mandatory annual amortization obligations.
Speaker Change: The consequence of all these drivers was an increase of our cash on hand by $260 million when compared to where we stood at the end of 2023.
Speaker Change: Overall, the fourth quarter was a strong finish on all fronts that capped off an outstanding year for Bausch health as we continue to optimize the return of our diversified and resilient set of assets across all five segments. We believe we are well positioned for not as stronger operating performance in 2020.
Speaker Change: Five.
Let me now provide you with our 2025 financial gallons for Bausch health, excluding Bausch and Lomb, which you will find on page 30.
Speaker Change: For 2025, we expect revenues to be between full billing $950 million and $5.100 billion. The midpoint of that range would translate into a 4% increase year over year.
Speaker Change: Adjusted EBITDA is expected to be between $2.625 billion and $2.725 billion, making the midpoint of 5% increase versus 2024.
Speaker Change: Finally, we expect adjusted cash flow from operations to be between $975 million and $1.025 billion.
Speaker Change: Although these translate into a 300 million dollar reduction year over year. It represents a more sustainable level of cash flow generation given the one time benefits of cash taxes and working capital changes we recorded in 2020 for it.
Speaker Change: Before I hand, it back to Tom for his concluding remarks, let me end. This performance review by looking at our progress in relation to our value creation framework, we introduced last quarter, which you will find on page 32.
Speaker Change: We still believe that there are three primary levers for value creation for Bausch health shareholders. The first one is to increase the value of our Bausch health portfolio. This is the primary focus of our leadership team.
Speaker Change: We strongly believe we have a broad set of our high performing assets as evidenced by our outstanding performance in 2024.
Speaker Change: As Tom indicated earlier this is the seventh quarter in a row, we have grown our top and Bottomline and speaks to our performance consistency and the resiliency of our growth strategy.
Speaker Change: It also highlights the operating leverage of our business model through positive business mix and tight expense management, what's more because our margins are high and our capital intensity is low our business has been producing strong free cash flows.
Speaker Change: Our second lever is to maximize the value of our bausch and lomb asset for Bausch health shareholders.
Speaker Change: As we indicated two weeks ago, the exploration of selling Bausch and Lomb has concluded at least for now.
Speaker Change: It did not lead to an offer that reflected bausch and lomb long term value.
Nevertheless, the main objectives remains the same which is to complete the separation of Bausch and lomb from Bausch health in the most accretive way for Bausch health shareholders.
Speaker Change: We will continue to evaluate.
Speaker Change: Any and all options to do so.
Speaker Change: And lastly, our third lever is to optimize our capital structure to that effect. We have made good progress since last October.
Speaker Change: First and foremost we have accelerated our cash flow generation, which has allowed us to reduce our net debt by almost $1 billion during 2024.
Speaker Change: Separately, we have secure a commitment for up to an additional $700 million credit facility, which.
Speaker Change: Which will increase our operational and financial flexibility.
Speaker Change: With this new facility together with our cash on hand, our $975 million credit facility, our <unk> facility and our anticipated free cash flow generation over the next five quarters, we expect to have older resources, we need to address both our 2025.
Speaker Change: Five and 2026 debt maturity obligations without the need to access additional sources of funding.
Speaker Change: Obviously, we're not done with our capital structure improvement efforts, but this is an important milestones as we read direct the focus towards addressing our 2027 and beyond maturities to that effect, we plan on tapping the capital markets in the first half of 2025, which could include pledging of poor.
Speaker Change: <unk> of the Bausch and Lomb shares owned by the company.
Speaker Change: In conclusion, we have made tremendous progress on many fronts in 2024 and look forward to another successful year in 2025.
Tom: I'll now hand, it back to Tom photo wrap up.
Tom: Thank you J J and thank you to the entire Bausch health team for another strong year of growth and execution as we delivered on our commitments and our strategic priorities.
Tom: As a reminder, we have placed specific emphasis on our people and culture.
Tom: Growing our business encouraging innovation to drive R&D operating with efficiency to capture marketplace demand and unlocking the value of Bausch health in the short and long term.
Tom: Our results for 'twenty 'twenty four provide us with a strong foundation for further success in 2025, we look forward to building on this momentum to drive growth across all business segments, while serving patients and their health care providers.
Tom: With that we will now turn to questions. Operator, Please open the line for Q&A.
Tom: Okay.
Thank you at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Tom: Information tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Tom: Please while we poll for questions.
Tom: Once again, please press star one if you have a question or comment.
Tom: First question comes from Les Sulewski with Truest Securities. Please proceed.
Les Sulewski: Good good afternoon, and thank you for taking my questions could you provide the latest status update on the Norwich situation.
Les Sulewski: And your timelines around the F. D. A lawsuit down do you foresee a possibility of an outbreak claunch will then call. It the 18 month period, and if theyre more knowledge.
Les Sulewski: At risk launch to occur will be some of your response options and I guess secondarily, what are the potential adverse impacts on the timeframes with the other tentative approvals. Thank you.
Les Sulewski: Thanks Les for the question Yeah, I can I can touch upon you know where the Norwich.
Les Sulewski: Starts so Norwich gained tentative approval the FDA denied granting Norwich final approval and conclude that Teva has not forfeited their first filer status. So Norwich has sued the F D. A.
Les Sulewski: Its conclusion and requested the F D a be forced to grant final approval of their <unk>.
Les Sulewski: So both Teva and ourselves Bausch health have intervened. So you know based on Norwich as tentative approval letter, we expect the F D. A to defend its position on tevez non forfeiture right. So.
Speaker Change: I would just say inclusion we believe that the F. D. A is correct and its determination that Teva remains the first filer and as not forfeited I'm.
Speaker Change: I'm not going to speculate on launching at risk at this time, because we believe that the FDA is correct.
Speaker Change: And Teva is a you know continues with their rights of first to file.
Speaker Change: Next question.
Speaker Change: Got it.
Speaker Change: Beginning on the discontinuation of the Crohn's disease study.
Speaker Change: So you were breaking up we couldn't hear you come through what was it.
Speaker Change: Sorry, I'll repeat.
Speaker Change: Obviously mod program, what's the reasoning on the discontinuation of the Crohn's disease study.
Speaker Change: Yeah. So we are we didn't discontinue the study are we on the last call I mentioned that we were evaluating it based on looking at the data.
Speaker Change: And we made the determination when we specifically looked at Crohn's that this class of drug.
Speaker Change: Even though there was some.
Speaker Change: Pluses and minuses of looking at it we just took we determined that it wasn't worth the investment.
Speaker Change: The S P one's performance in Crohns of other drugs that have cried tried it and and crops.
Speaker Change: Got it thank you for that color and just one more for me and I'll hop.
Speaker Change: I'll hop back in the queue can you provide a little more color on the two recent deals and the international side on the cardio metabolic front. Thank you.
Speaker Change: Sure Yeah. So as I said in my prepared remarks, I think that when you look at the international business and I'm looking at it Holistically. Our you know globally you know, it's an underappreciated business. Its a branded generic business that has a very durable no no eloise.
Speaker Change: And so what we have put together we have a team that is solely focused on building out.
Speaker Change: Our brand and generic portfolios around the world are the two deals that I mentioned was it was in Latin America and those are.
Speaker Change: A variety of products one of them was with M. S N, which is a broad portfolio of branded generic products. As you know our Latin America business is very successful in the branded generic space and building brands.
And then a second one was looking at a single a triple combination therapy with commonly used you know hypertension medicines.
And which will be novel and it will be proprietary and in multiple strengths. So that is going to give us those two deals put together and that we're continuing to look at others of building out a franchise that can really power our growth in Latin America some of those deals.
Speaker Change: Also include other international our international locations as well, but the focus for for the Latin America region will power our growth for the next years to come.
Speaker Change: Up next is Dominion with RBC capital. Please proceed Doug.
Alright, thank you.
Speaker Change: Couple of questions with respect to the 229 B C. There's 700 million that youre contemplating.
Speaker Change: Funding them with.
Speaker Change: With that and using a portion of the B L. C O holdings.
Speaker Change: I'll stick to the 38, 5% that was put in for.
Speaker Change: For the $999 million mm.
Speaker Change: Previously, what what sort of quantum.
Speaker Change: Of potential shareholdings of B L C O would be required.
Speaker Change: Under the $700 million wouldn't it be proportionally it probably wouldn't be but.
Speaker Change: Maybe you can walk me through Hum.
Speaker Change: How much would have to be placed within that company.
J J: Hi, Doug This is J J <unk>.
J J: First of all just as a point of clarification, although the billing dollars against the number code that holds 38% of the shares only 30% on really fully encumbered.
About 8% can be sold or transferred to another entity. These 8% would be added to the remaining 50% that would be a use as collateral to.
J J: That credit facility.
J J: Okay.
J J: Okay.
And then on top of that if you were to go ahead and explore accessing capital markets.
J J: This would be incremental in terms of the proportion of insurers are bosch alone that we'd be pledged or not.
J J: Just trying to understand well show based.
J J: Yeah, we're looking at different packages, so I'm not going to come on specifically on.
J J: What we'd be looking at but the packages. We're looking at would be looking at replacing that credit facility. So we have more of a permanent structure in place to deal with our 2027 maturities and B L.
J J: Okay, Okay fine.
J J: Then if we go to your guidance, which was a strong year on the top line. It was in line with so we're looking for them I think most other people, but our bottom line was better but.
J J: Perhaps you can talk about the contribution on a relative basis that you expect to come from Black Fox and.
J J: Given the strong growth we've seen recently when you look at that guide how much of that is associated with a Dutch auction growth.
Speaker Change: Yeah. So we haven't provided any specifics in terms of quantification, but the two biggest contributors of our growth in 2025 will be indeed, salix with XIAFLEX <unk> and Solta.
Speaker Change: I think the dynamics that you're seeing particularly in the second half for XIAFLEX and should be assumed as continue in 2025.
Speaker Change: Okay, and then just to wrap up.
Speaker Change: Can you update us on any potential settlement.
Speaker Change: And what the auto groups are granted trust, where we stand there.
Speaker Change: That'd be great. Thank you.
Speaker Change: Yeah of course on the on the Granite Trust there is really no meaningful update to the guidance. We provided in prior calls which is that we do not expect any.
Speaker Change: Meaningful a negative cash flow coming out of the settlement, we're still awaiting the final resolution and decisions from the IRS and we are all I'm, hoping to get that so pretty soon on the legal settlement, it's really hard to speculate on any future.
Speaker Change: Your negotiations and so so at this point in time, we are we've made progress as you know and our 2024 and we look forward to 2025 and making some further progress.
Speaker Change: Once again, if you have a question or a comment. Please press star one we do ask that all QA participants please limit to one question and one follow up.
Speaker Change: The next question comes from Jason Gilbert with Bank of America. Please proceed.
Jason Gilbert: Oh, Hey, thanks for taking our question. This is key for chase.
Jason Gilbert: I would like to ask you a follow up on the earlier question on the new law, which case.
Jason Gilbert: Is it your understanding it now which is not subject to the 30 month stay and the only gating factor for the full approval from the FDA of the generic side effects.
Speaker Change: Is around 180 day exclusivity and for that case do you have a sense of the timing for next staff would you expect that trial to be scheduled in the coming couple of months. Thanks. So much.
Speaker Change: Yeah I'll take that question. We believe are the 30 month stay applies and that's with our legal team is focused on and.
Speaker Change: And getting ready for them, so that's where that stands.
Speaker Change: Okay.
Speaker Change: Next question.
Speaker Change: Do you have a sense of the timing I apologize if I may follow up in the legal documents always claimed the FDA has determined that Norwich is not subjected to 30 months. They can you talk about that thank you.
Speaker Change: Yeah, what I'd say, we believe are the 30 months they still applies.
Speaker Change: And so you know that's.
Speaker Change: That's the way we're proceeding.
Speaker Change: Okay.
Speaker Change: You know I really don't want to speculate right now on.
Speaker Change: What the F D a or what you've said are they said, but we believe and we are continuing to.
Speaker Change: Work on.
Speaker Change: Where that trial stands in that case dance and we believe 30 months still a plus.
Speaker Change: The next question comes from Michael Freeman with Raymond James. Please proceed.
Michael Freeman: Hey, good evening, Tom JJ Garen.
Speaker Change: Congratulations on these earnings a couple of questions from me.
Speaker Change: There have been plenty of government government initiatives that may potentially affect your business going forward. So I wonder if you could comment on if that's actually being included in the Medicare Renegotiating renegotiation last for 2027.
Speaker Change: Any any sort of preparation for those negotiations and potential preparation for <unk>.
Speaker Change: Potentially a material price reduction.
Speaker Change: Then if you could give a quick comment perhaps on the potential.
Speaker Change: For a pharma oriented.
Speaker Change: International tariffs and how that might affect.
Speaker Change: Maybe your supply chains of pricing going forward.
Speaker Change: Yeah.
Speaker Change: Yeah, Michael Thanks, I'll take those questions. So yeah. We were we were on the list of course are the facts and has great has had great success and we wound up on the risk list. What I would say is it's you know it's still early.
Speaker Change: You know in the process and we're going to be in the process of negotiating.
Speaker Change: Our focus right now is to prepare for that are in and go through the process with CMS.
Speaker Change: C M S N and M, which will come into effect in 2027.
Speaker Change: I just think it's too early to offer detail commentary.
Speaker Change: With with that regard, but we continue to remain focused on demonstrating the value of the facts and you know you know during which we're going to share the information on the value it delivers to patients providers and the overall.
Speaker Change: Health care system.
Speaker Change: In terms of when you look at you know it is.
Speaker Change: The facts and are on the OA indication, which is more than 70% of the business and.
Speaker Change: The amount of cost savings are you know regarding hospitalizations ER is it drives a big benefit. So you know we're closely monitoring the situation we have a super fantastic team.
Speaker Change: In this space of market access.
Speaker Change: And we're looking at all possibilities.
Speaker Change: In terms of the tariffs.
Speaker Change: I'd say something and then maybe Jay Jay wants to add again, it's still too early.
Speaker Change: There's a lot of a lot of discussions here on the tariffs of what it would mean for us and we've been closely following it.
Speaker Change: In terms of our supply chain.
Speaker Change: And what impact that would mean.
Speaker Change: I'll hand, it over to Jay Jamie has a few further comments on that.
Speaker Change: Yes, so in terms of our setup and our supply chain of course, the fact that cost of goods sold is a relatively small proportion of our revenue for pharmaceutical company the financial impact of those tariffs you know, let's assume the scenario that has been the most publicized.
Speaker Change: 25% and that would be for full year, the impact would be below $50 million in terms of cash flow for the company. So I wanted to give you. Some some order of magnitude on how to think about it.
Speaker Change: Excellent that's very helpful.
Speaker Change: Just a quick one we had a doctor so they joined the team as our new CMO and I noticed that the.
Speaker Change: There was a choice to not pursue the crohn's opportunity I wonder if if there are some further changes in the approach to your clinical development programs or some new ideas that doctors today has brought to the team and as a as a 10 year so far.
Speaker Change: Yeah, I think it's a great question of course, we are.
Speaker Change: So pleased to have Jonathan join us.
Speaker Change: And discussing.
Speaker Change: How to build our pipeline for the future as you know we have the Red Sea program in fact today downstairs.
Speaker Change: You know having advisory boards, we're really excited about the Red Sea program and what that's going to mean for us and what it can mean for patients.
Speaker Change: As again this is a prevention trial. So we're really excited about that we did mention that we did not.
Speaker Change: You're not going to pursue looking at Omnicell a modest crohn's.
Speaker Change: And Jonathan It just since he's joined in the last two months, we've been actively discussing what are what we're going to pursue what we're going to develop and then from a business development standpoint, some of the assets that we could possibly look to bring into the portfolio, but we're excited to have Jonathan here.
Speaker Change: And we'll you know, we'll fill you will give more information as things progress on rebuilding.
Speaker Change: And you know building up this pipeline.
Speaker Change: Okay. Thank you Tom.
Speaker Change: The next question comes from Mike Metal Cry with TD Cowen Mike. Please proceed.
Speaker Change: Alright, thanks for the questions I have one and a follow up my first question relates to <unk> vaccine and our 27 IRA price negotiation are you able to tell us what portion of sales are derived from the Medicare channel and then ultimately regardless of the discount they get negotiated by CMS do you.
That pricing will leak into the private insurance channel that's.
Speaker Change: That's my first question and then my follow up is actually a follow up on a previous question.
Speaker Change: Related to your plan to access the capital markets, possibly by pledging a portion of Belgian Moon shares. This is very helpful insight, but can you bracket. This for us at all is there any level of quantification at all that you could provide thank you.
Michael Freeman: Yeah, So Mike I'll take the first one on the facts and price negotiation.
Michael Freeman: As you know are there are they factoring business is in Ibs D and E G.
Michael Freeman: <unk> is a blended you know again what would be subjected.
Michael Freeman: To the I R. A price negotiations I don't I can't give you a you know what the percentage is that would be.
Speaker Change: As I said, we have been looking at this carefully for some time.
Speaker Change: What the different levers are that we will be able to look at as we go through the negotiation. So it's it's still early.
Speaker Change: In the process and again as you know this comes in January of 2027, So there's still a lot to be done and discussed here and then as I said previously are already they fax in on the Chi indication is if you look at hospitalization call.
Speaker Change: <unk> and patients not being in hospital Theyre all already is a very large savings.
Speaker Change: Into the health care system onsite facts and I'll.
J J: And the other question that you had over to J J.
Speaker Change: Yeah.
Speaker Change: Yeah, so well done no.
Speaker Change: I'm not going to comment specifically on the quantum of debt that we're looking at we're looking at various options. The one thing I would just reinforce and highlight is that we've got $7 billion of maturities between now and the end of 2027, you have we'll just need to take into consideration the cash on hand, the cash flow that.
Speaker Change: We'll be generating between now and the end of 'twenty seven as we indicated in our guidance. This is a business that.
Speaker Change: Certainly in the near term and generates $1 billion plus of cash flow per year, and Hum and so the the objective here is really to deal as is to deal with as much maturities as possible during that horizon.
Speaker Change: Great. Thank you.
Speaker Change: Okay and our last question comes from Glenn Santana Chiller with Jefferies. Please proceed.
Speaker Change: Oh, yeah. Thanks for taking my question, Hey, Tom just two quick ones for me I mean, it seems pretty obvious why you maybe walked away from the B L. C O sales process and so in your prepared remarks, you seem like youre continuing to sort of actively explore you know different processes to maybe monetize this asset, but you know what might.
Speaker Change: You do differently going forward versus what you did over the sort of past couple of years and do you think 2025, you know could be it.
Speaker Change: It could be in the cards to ultimately get a deal done and then my follow up to that is for J J. You know just on the follow up question. When you think about you know trying to tackle these maturities and pledging some of the B L. C. O shares does that in any way impact or saying anything about the potential timing or ability to do a deal in the near term.
Speaker Change: Thanks.
Speaker Change: Yes, Hi, Glenn This is Joe Jay I'm going to cover both questions. So as we said obviously the maximizing the value for shareholders of our <unk> equity stake is one of the primary value creation levers.
Speaker Change: For us and there are many ways you can go out and achieve that the goal is obviously to complete the separation between <unk> and BH seed, but the monetization of that asset is going to play a key part in our journey.
Tony: Tony over the next three years and.
Tony: Listen Theres no real timeline associated with that I think it's more a function of what makes sense for shareholders and whether.
Tony: The transactions that were considering are accretive to DHT share.
Tony: Sure value. So that's that's what I would say on that front and then in terms of the financing that we're looking at raising our obviously our.
Tony: So we could just take us a big ask to go to the company. So will you.
Tony: Use partially or totally as collateral to some of the financing we may decide to raise as we indicated in our prepared remarks, and it doesn't really impact I think the timing or the decision would be making on the LCR more what we would be doing with the proceeds.
Tony: As indicated by potential covenants or obligation associated with the debt raising.
Tony: Okay.
Tony: Okay. Thank you.
Speaker Change: I would now like to turn the call back over to management for any closing remarks.
Speaker Change: Thank you all for joining us this afternoon and for your questions. We closed out another strong quarter of growth leading to a strong year with consistent results across our broad portfolio of assets I want once again to thank the entire Bausch health team.
Speaker Change: Across the globe for their hard work and dedication and relentless drive to deliver the products patients need most to enrich their lives. Thank you for your time and your interest in the company and we look forward to another strong year of execution and progress in 2025.
Speaker Change: Enjoy your evening. Thank you.
Speaker Change: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.