Q1 2025 Bausch Health Co Inc Earnings Call
Greetings and welcome to the Bausch Health first quarter 2025 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Please note this conference is being recorded.
Now I'll turn the conference over to your host Garen Sarafian Investor Relations at Bosch.
Begin.
Speaker Change: Good afternoon, and welcome to Bausch Health's first quarter 2025.
Paul.
Thomas IPO: Participating in today's call are Thomas IPO, Chief Executive Officer of Bioshock, and JJ <unk> Chief Financial Officer.
Thomas IPO: Before we begin I would like to remind you that our presentation today contains forward looking information.
Thomas IPO: We ask you to take a moment to read the forward looking statements disclaimer at the beginning of the pages that accompany this presentation as it contains important information.
Thomas IPO: Actual results may vary materially from those expressed or implied in our forward looking statements.
Thomas IPO: And you should not place undue reliance on any forward looking statement.
Thomas IPO: Please refer to our SEC filings and other filings with the Canadian Securities administrators or list of some of the risk factors that could cause our actual results to differ materially from our expectations.
Thomas IPO: We use non-GAAP financial measures to help investors understand our operating performance.
Thomas IPO: 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 measure calculated in accordance with GAAP.
Thomas IPO: You will find reconciliations of our historic non-GAAP measures in the appendix of the pages that accompany this presentation.
Thomas IPO: They are available on <unk> Investor Relations website.
Thomas IPO: Finally, the financial guidance in this presentation is effective as of today only.
Thomas IPO: We do not undertake any obligation to update guidance.
Thomas IPO: Our discussion today Wednesday April 30th well focus on Bausch Hall, excluding box alone.
Thomas IPO: However, we will briefly comment on box Hill Rom's results announced this morning.
Thomas IPO: We will refer to year over year comparisons with the same period last year.
Thomas IPO: Otherwise noted.
Thomas IPO: That I would like to turn the call over to our CEO Thomas IPO.
Thomas IPO: Thank you Gary and welcome to everyone joining our earnings call today.
Thomas IPO: In the first quarter for Bausch health, excluding Bausch alone. We continued the momentum we had in 2024 and used it strategically to drive further progress.
Thomas IPO: We delivered year over year revenue and adjusted EBITDA growth of 6% and 14% versus the prior year respectively.
Thomas IPO: We successfully completed a seven 9 billion dollar refinancing effort in early April to extend near and medium term maturities.
Thomas IPO: We received a favorable ruling from the D. C District Court in Norwich case against the FDA after the quarter close.
Thomas IPO: And finally, we are maintaining full year 2025 revenue and adjusted EBITDA guidance, while updating guidance for adjusted cash flow from operations to reflect higher interest rate expense.
Speaker Change: J J will discuss our financial results in more detail shortly.
J J: Start by touching on several financial performance and key business highlights from the first quarter.
J J: He started the year off strong with our shelf, excluding bausch and lomb, achieving an eighth consecutive quarter of year over year revenue and adjusted EBITDA growth.
J J: I am incredibly thankful and grateful of our global team for their hard work and dedication in the current macroeconomic environment.
J J: Revenues for Bausch health, excluding Bausch and Lomb increased 6% on a reported basis and 7% on an organic basis when compared to the first quarter of 2024.
J J: Adjusted EBITA for Bausch health, excluding bausch alone increased by approximately 14% compared to the prior year period.
J J: As such we are maintaining our full year 2025 guidance for revenue and.
J J: And adjusted EBITDA, while updating guidance for adjusted operating cash flows to reflect our successful refinancing transaction and then it's JJ will touch on in his prepared remarks, we continue to assess the impact on our business of evolving tariff and trade measures.
J J: We have also made progress on our objective of optimizing our capital structure on April eight we closed a private offering of senior secured notes due in 2032 and also entered into a new term loan and revolving credit facility maturing in 2030.
J J: The proceeds of which we used in large part to retire approximately $6 $9 billion of maturities ranging from 2025 into 2028.
J J: This transaction extends our maturity runway and provides the company with additional financial flexibility, allowing us to focus on growing our business and maximizing the value creation for our shareholders.
J J: Furthermore, we believe that there's tremendous demand we saw in the credit markets underscores investors' confidence in both our future performance as well as the long term value of our assets.
Speaker Change: Turning to litigation in Norwich.
Speaker Change: As many of you are aware the FDA denied final approval of Norwich is second hand for generic Rifaximin $5 50 Mg tablets.
Speaker Change: Following this decision nor with sued the FDA in the D. C District court alleging that the FDA acted improperly by only granting tentative approval to their secondhand rather than final approval.
Speaker Change: Norwich asked the D C District court to find the Teva had forfeited its first filer status for Rifaximin $5 50, and forced the F D. A to Grand final approval to their second and we along with Teva intervene as defendants in the F D. A law suit.
Speaker Change: We are pleased that on April 17th the D. C District Court granted summary judgment in favor of the SDA Teva in the company. The D. C District Court confirmed that the Fda's decision denying final approval of Norwich Ando was not arbitrary capricious or contrary to.
Speaker Change: Because I had not forfeited its first filer status.
Speaker Change: We will continue to vigorously defend our intellectual property and are committed to serving our patients is every patient deserves better health outcomes and the chance to make the most of life.
Speaker Change: Moving on to page six where I will touch upon segment specific key financial and operating highlights in the first quarter. The first quarter reflected a solid performance and growth on an organic basis across many of our business segments.
Speaker Change: <unk> grew 6% on an organic basis versus the prior period and continued to deliver strong so the effects of performance of 8% growth, including one 5% total retail script growth and strong non retail extended unit growth of approximately 6%.
Speaker Change: Salter trend of strong double digit growth continued in the first quarter of 2025 with 33% organic revenue growth, primarily driven by strong performance in South Korea, and China with year over year organic growth of 136 and 30%.
Speaker Change: Respectively.
Speaker Change: Our international segment demonstrated continued resilience achieving organic revenue growth of course, Canada, Latin America, and EMEA with EMEA, marking its ninth consecutive quarter of organic revenue growth.
Speaker Change: Other highlights include Canada is 18% promoted products portfolio growth and 9% growth in Emea's second largest market, which is comprised of Serbia and Montenegro.
Speaker Change: And lastly, the diversified segment grew revenue modestly driven by neurology.
Speaker Change: And delivered growth in segment profit in part due to disciplined expense management.
Speaker Change: Now turning to our strategic priorities for 2025.
Speaker Change: Although we have achieved eight consecutive quarters of growth. We believe the stock price does not reflect the strong performance of the business and the value of the company.
Speaker Change: Unlocking value is critical we have continued to deliver strong financial momentum with revenue and earnings growth across multiple segments to start the year and we successfully completed the major refinancing initiatives mentioned earlier, yeah, we are keenly aware.
Speaker Change: That work still needs to be done to unlock shareholder value.
Speaker Change: Therefore, we remain committed to evaluating all options for unlocking the value of our shares including maximizing the value of our Bausch health and Bausch alone assets as well as other possible initiatives such as share buybacks.
Speaker Change: Next is growth with eight consecutive quarters of year over year topline and bottom line growth, we continue to invest for sales growth and profitability as we expand across segments and geographies.
Speaker Change: <unk>, 8% growth this quarter was broad in terms of both price and volume as it relates to volume growth was generated across both indications Ibs D. N O E G.
Speaker Change: Activating new patients is core to pharmaceutical product growth and in the first quarter over 59000, new patients were started on <unk>.
Speaker Change: This represents both year over year and quarter over quarter growth.
Speaker Change: Our sales force and our media investments drove the growth as we increased our investments in high ROI channels, such as online streaming connected and addressable TV and online video.
Speaker Change: This positioned us to better reach and activate patients caregivers and providers as seen with our first quarter results.
Speaker Change: Presenting our fifth consecutive quarter of top line growth in our Salix business.
Speaker Change: Those are facts and Salesforce continues to become more productive as we fine tune our AI engine are.
Speaker Change: Our sales force today delivers 20% to 30% more calls than we did 18 months ago and to the right targets a clear indicator of operational momentum. This increased efficiency has enabled us to do more and deploy resources to other strategic investments for the franchise.
Speaker Change: Salt also delivered exceptionally strong results with 33% organic revenue growth, including a 136% in South Korea, and 30% in China in the first quarter.
Speaker Change: Accordingly growth was further supported by positive result in the United States, Canada and EMEA.
Speaker Change: As announced in our recent press release in April at the American Society of laser Medicine and surgery 2025 Annual conference. We launched next generation Fraxel called Fraxel F T X.
Speaker Change: Have rollouts planned for dermatologists plastic surgeons and other licensed professional over the coming months in the United States.
Speaker Change: And most recently on April 29, Bausch Health announced that health, Canada has granted medical device license clearance for our latest generation, they're Marg F. L X device for noninvasive skin tightening and contouring.
Speaker Change: Canadian providers will now gain access to the same technology in use by leading aesthetics cleaning elsewhere in the world.
Speaker Change: Kept trio the first combination product for the treatment of acne Vulgaris continues to build momentum in North America in the U S alone. We are seeing healthy sequential double digit script growth with over 8900 health care providers, having now prescribed cab trail.
Speaker Change: Now turning to innovation.
Speaker Change: New product flow is intrinsic to creating value with bausch health.
Speaker Change: Our focus on developing our pipeline internally and seeking licensing opportunities externally, we have a disciplined process for examining opportunities at a detailed level in terms of strategic operational and financial logic.
Speaker Change: We are focused on opportunities with a reasonable probability of technical and regulatory success.
Speaker Change: Create operating leverage revenue and earnings in the near term.
Speaker Change: Starting with our internal product pipeline, we are pleased with the progress of our Red Sea program, where our phase III Global studies remain on track as we have shared previously both studies were fully enrolled in the third quarter of last year, and we expect to see the initial data readout.
Speaker Change: By early 2026.
Speaker Change: To recap.
Speaker Change: The Red Sea program is studying a solid soluble dispersion rifaximin complex in a unique patented non crystalline water soluble form that enables delivery throughout the entire gastrointestinal track Red Sea is also being studied in patients with zero.
Speaker Change: This from any form of liver disease.
Speaker Change: The patient population as innovative as these are cirrhotic patients being studied prior to their first decompensation event.
Speaker Change: United States. This patient population is at least three times larger than the OA population, that's a fax and serves today.
Speaker Change: This is also a very meaningful global opportunity for Bausch health and if successful may enable us to address an unmet need and deliver a novel therapy to cirrhotic patients globally.
Speaker Change: We are already working cross functionally across multiple areas to sequence global regulatory filings U S and D, a planning and ensuring adequate global product supply.
Speaker Change: We are also systematically evaluating additional data generation opportunities both to enhance our current profile in cirrhosis and to evaluate new indications that have potential to impact the gut liver brain access.
Speaker Change: On the business development front, we are expanding into the cardio metabolic market in Latin America, we have two brands already license with launches planned to start at the end of May we look forward to more progress on this front as the year progresses.
Speaker Change: As a reminder, we also signed an exclusive licensing and supply agreement with George Medicines in December the partnership grants Bausch health the exclusive rights to seek regulatory approval and to commercialize G. M. R X two in Canada, Mexico, Colombia and central.
Speaker Change: <unk> America.
Speaker Change: D M. Rx too is intended for the treatment of hypertension, including initial treatment.
<unk> is a proprietary single pill combination of three classes of anti hypertensive medicines.
Speaker Change: An angiotensin receptor blocker or calcium channel blocker and a diuretic.
Speaker Change: Developed in ultra low LOE and standard dose option. It has the potential to be the only triple combination approved for the initial treatment of hypertension.
Speaker Change: The innovative formulation aims to optimize efficacy safety and adherence with a multi mechanism approach and at lower dosing and today's therapies G. M. Rx two is designed to deliver the synergistic benefits of a triple therapy.
Speaker Change: IP, while maintaining tolerability.
Speaker Change: This is a unique opportunity for advancing cardio metabolic care in these regions that will leverage our expertise and infrastructure.
To wrap up on the first quarter I am encouraged by our strong start to the year building on our great progress in 2024, we executed against our operational objectives.
Speaker Change: Making significant strides in improving our capital structure and optimizing across our businesses.
Speaker Change: We remain critically focused on maximizing shareholder value with urgency.
Speaker Change: Despite the volatile macroeconomic environment, we remain confident in the durability and growth path of our business as we leverage our broad and diverse footprint and the results driven mindset of our talented global team.
Speaker Change: With that I will pass it over to J J to discuss the financial results in more detail.
J J: Thank you Tom as Tom mentioned, Bausch health, excluding GNL achieved its eighth consecutive quarter of year over year growth for revenue and adjusted EBITDA.
J J: This speaks to the resiliency of our growth strategy.
J J: Separately our performance in Q1 was another illustration of our commitment to profitable growth and cash flow generation, which remain instrumental to our objective of deleveraging our balance sheet.
J J: Let's now review, our first quarter consolidated performance in more detail starting with our non-GAAP financial results for the first quarter, which you will find starting on page 13.
J J: Revenue was $2 billion and $259 million up 5% on a reported basis and 6% on an organic basis compared to the same period a year ago.
J J: Our adjusted gross margin was 69, 9% 130 basis points lower year over year.
J J: Our adjusted operating expenses for the first quarter or $994 million, an increase of $78 million compared to the same period last year.
J J: Our adjusted R&D expenses for the quarter was $143 million, which was a decrease of 5% compared to the first quarter of last year.
J J: Adjusted EBITDA was $661 million, a decrease of $4 million or 1% year over year finally.
J J: Adjusted operating cash flow was $110 million.
J J: Moving now to the performance of Bausch health, excluding Bausch and Lomb for Q1, starting on page 15.
J J: Revenue was $1 billion $120 million or 6% up when compared to the first quarter of 2024.
J J: The growth was 7% on an organic basis.
J J: Adjusted EBITDA was $576 million up 14% on a reported basis.
Partially due to onetime benefits, but also demonstrating our focus in driving efficient cost management.
J J: Lastly, our adjusted operating cash flow was down 4% versus the first quarter of 'twenty 'twenty four but was in line with expectation given the difference in timing of our cash interest and are the outflows as we indicated during our fourth quarter earnings call a couple of months ago.
J J: When adjusting for timing and on a comparable basis, our adjusted cash flow from operation was $130 million better than Q1 24.
J J: Moving now to our first quarter performance by segment, starting with Salix on page 16.
J J: Salix revenues were $542 million, an increase of $43 million or 9% on a reported basis and 6% on an organic basis compared to the same period last year.
J J: <unk> continues to drive most of the Salix segment revenue with 8% growth year over year, which was balanced across price and volume.
J J: Retail scripts grew one 5% with new script growth at 3%.
Extended units grew 1% and includes non retail settings, such as hospitals and outpatient clinics, which grew mid single digits.
J J: Now moving to the international segment on page 17.
J J: Revenues were $262 million, a decrease of 1% on a reported basis, but an increase of 5% on an organic basis compared to the first quarter of last year.
J J: The difference in growth rates between reported and organic was nearly all due to currency, primarily the Mexico peso.
J J: By geography revenue in our international segments. So again strong double digit growth in Canada, while EMEA and Latam grew modestly year over year on an organic basis.
J J: And it is double digit growth was driven by our promoted products portfolio, which grew 18%.
J J: In addition, our sales of all beauty trend continued to benefit from the supply shortages of each generate competition.
J J: Now I'm moving to page 18 for a review of our Solta Medical segment.
J J: Revenues were $113 million, an increase of 28% on a reported basis and 33% on an organic basis compared to the same period last year.
J J: Soldiers exceptional results were driven by continued strong performance of our markets in Asia Pacific, primarily in South Korea and China.
J J: These two markets grew revenue, 136% and 30% respectively, all through volume expansion, which was even more impressive.
J J: Turning now to focus to our diversified segments, which you will find on page 19.
J J: Revenues were $205 million, an increase of 1% on a reported basis and flat on an organic basis compared to the same period a year ago.
J J: The revenue performance was ahead of expectation and was primarily driven by the neurology business, which achieved double digit growth. Thanks to net realized pricing favorability and the continued benefit of the value price optimization, we executed last year.
J J: Finally.
J J: Oh, the Bausch and Lomb segment revenues were $1 1 billion up 3% on a reported basis and 5% on an organic basis compared to the same period last year.
J J: Turning now our focus to our balance sheet starting on page 22.
J J: Our net debt, excluding bausch and lomb decreased by approximately $85 million in the first quarter more importantly, as we announced on April eight we closed a 7.9 billion dollar refinancing transaction, including a $500 million revolving credit facility.
J J: Which allowed us to push out most of our remaining debt maturities to 2028 and beyond.
J J: Our stated objective in late February to access the capital markets in the first half of 2025 and to significantly improve the company's debt maturity profile was fully executed in the last two months at a time of uncertainty and high volatility of the financial markets.
While our debt post refinancing as a higher blended cost of capital by approximately 100 basis points. This new capital structure now provide significantly more operating and timing optionality for adjusting our capital structure to better fit our business profile post <unk>.
J J: Facts and L O E.
J J: While we are encouraged by what has been executed to date more remains to be accomplished in the next couple of years, but this is an important milestone for all Bausch health stakeholders.
J J: I would like to take this opportunity to thank everyone involved with this last refinancing which was the largest in the company's history.
J J: Special mentions go to the financing Ingalls team at Bausch health as well as tour advisors, Evercore Pro scour and J P. Morgan.
J J: What a great outcome all around true exemplary teamwork.
J J: Before I turn it over to Tom for the wrap up let me conclude with an update on guidance and outline our strategic priorities for the remainder of the year.
J J: Let's start with our full year guidance.
J J: Lots as happened over the last few weeks, particularly in relation to tariffs and the impact they could have on cross border transactions with the U S.
J J: Based on the information available at this time, we are confirming the full year of 2025 guidance for revenue and adjusted EBITDA and updating our adjusted operating cash flow down by $150 million to reflect the impact of the refinancing transaction, we executed earlier.
J J: This month.
J J: Our full year guidance for 2025 is now as follows.
J J: Revenue guidance is unchanged and is still expected to be between $4.950 billion and $5.100 billion.
J J: The midpoint of that range would translate into a 4% increase year over year.
J J: Adjusted EBITDA is also unchanged and is still expected to be between $2 billion $625 million and $2.725 billion. The midpoint of that range would represent a 5% increase versus 2024.
J J: Adjusted operating cash flow is now expected to be between $825 million and $875 million.
J J: Moving forward, our strategic priorities remain the same first increasing the value of Bausch health operational assets, which includes innovation as well as continuing to optimize the growth of our portfolio of brands.
J J: Ross the globe.
J J: Second is evaluating all options for unlocking value for shareholders, including maximizing the value of our Bausch health and Bausch and lomb assets as well as other initiatives such as share buybacks.
J J: And third continuing to optimize our capital structure.
J J: In summary.
J J: The first four months of 2025 has been a very strong start for Bausch health on several fronts.
J J: Whereas it is our operating performance in Q1 or the improvements we have made to our capital structure Bausch health is in a stronger position now than it was just two months ago.
J J: I will now hand, the call back to Tom photo wrap up.
Thank you JJ.
Speaker Change: We have continued to drive growth through innovation and executing with discipline across the business.
Speaker Change: As we move forward, we remain focused on advancing our strategic priorities to deliver value for all shareholders.
Speaker Change: With a strong start to the year in a number of positive developments to date. We believe we are well positioned to carry out our momentum throughout 2025 and look forward to sharing our continued progress in the quarters ahead.
Speaker Change: With that we will now turn to questions.
Operator, please open the line for Q&A.
Speaker Change: Absolutely 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.
Speaker Change: A confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for.
Speaker Change: For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: Once again, please press star one if you have a question or comment.
Our first question comes from.
Speaker Change: Blaise.
Speaker Change: <unk> with <unk> Securities. Please proceed.
Speaker Change: Good afternoon, and thank you for taking my questions.
Speaker Change: Last quarter, you gave some commentary around tariffs.
Speaker Change: And so to say to you know the numbers you've called out any sort of updates to that and any impact to transfer pricing across your enterprise.
Speaker Change: And then as a follow up you know you've called out the 150 million in operating cash flow.
Speaker Change: It appears.
Speaker Change: Most of it is tied to the interest expense anything else lumped into that figure.
Speaker Change: And then I did.
Speaker Change: We think about the cadence for EBITDA margins as you move throughout the remainder of the year. Thank you.
Speaker Change: Okay. Thanks, Les the question.
Speaker Change: I'll just take the.
Speaker Change: The high level on the tariffs and then I'll hand, it over to J J to give more specifics as we look at it as you can appreciate.
Speaker Change: It remains a fluid situation right now where we see the majority of the impact.
Speaker Change: Clearly as our Solta business in China.
Speaker Change: And we're monitoring very closely hopefully as the year progresses.
Speaker Change: There'll be a negotiation there and the tariff rates will not remain at what they are today.
Speaker Change: When we look at it.
Speaker Change: Inventory in country.
Speaker Change: Both at our distributor and at our own warehouses. So we're able to minimize some of the impact at least in the short term clearly for the first and some of the second quarter.
Speaker Change: And we'll monitor it accordingly.
Speaker Change: Also have you know puts of other levers in place to to see what we can do to of course offset.
Speaker Change: Those tariffs if we need to.
Speaker Change: What I would say is the team.
Speaker Change: <unk> has been working really hard on it as you know the tariffs today are.
Speaker Change: Do not impact our pharmaceuticals at the present time.
Speaker Change: And we're also the team has been working on that the finance team has been looking at it quake.
Speaker Change: Closely for months now, but the one good thing of course, we have a regional supply chain.
Speaker Change: Most of our manufacturing is done in the regions, where we operate so but we're again continuing to look at it and seeing what other levers we could take should pharmaceutical tariffs.
Speaker Change: Tariffs come into play with that I'll just pass it over to JJ for further comments.
Linda: Hi, Linda.
Speaker Change:
Speaker Change: So as Tom mentioned I think our setup is not significantly exposed to the new tariff obviously that depends on what.
Speaker Change: Governments in the countries decided to do in terms of retaliation.
Speaker Change: You May remember, we had indicated no more than $50 million and at that time. The focus was on the of flows between the U S and Canada and for the pharmaceutical.
Speaker Change: Visions, obviously those tariff on not in place at this point in time.
Speaker Change: On the limited exposure that currently have right. Now is also a function of the fact that Cogs and transfer prices offsetting lower central revenue across our business on the China market, which is <unk>.
Speaker Change: Basically the most important market that is exposed to retaliation from China.
Speaker Change: China government.
Speaker Change: It's still relatively small in relation to our total revenue profile, it's about $150 million.
Speaker Change: So thats why given all the puts and takes we were able to integrate the impact of tariffs into our guidance and maintain the outlook for the full year.
Speaker Change: Okay.
Speaker Change: For your second question in terms of adjusted operating cash flow.
Speaker Change: It is a combination of the higher cost of interest as I indicated in my.
Speaker Change: Prepared remarks, it's about an increase of a 100 basis points.
Speaker Change: Blended so over oversee 15.
Speaker Change: $15 billion of net debt.
Speaker Change: But that has an impact of only three quarters and then what is also going into that is the transactional expenses associated with the refinancing those are really the two.
Speaker Change: Major drivers of.
Speaker Change: That are explaining the change in the guidance and then finally on phasing over our EBITDA I would take the phasing that we had in 2024 is a good proxy for what you should be expecting for 2025.
Speaker Change: Just one last comment on the tariffs.
Speaker Change: And as we said when we look at the guidance. The team is really working hard to make sure. All the investments. We're making is this whole tariff situation plays out investments, we're making and really focusing on our cost structure and making sure that we're investing.
Speaker Change: Isley. So that's part of as we look at at how we can offset.
Speaker Change: Some of these tariffs at the as they are today, so really the team working hard to maximize everything we can and.
Speaker Change: Minimise our opex.
Speaker Change: Great. Thank you for asking another question.
Speaker Change: Sure.
Douglas: The next question comes from Douglas <unk> with RBC capital markets. Please proceed.
Speaker Change: Thank you and good afternoon.
Speaker Change: First question just has to do with <unk>.
Speaker Change: <unk>.
Speaker Change: The growth here remains exceptional, especially in Korea.
Speaker Change: And I'm just curious as to how long you think that that type of growth rate can be sustained.
Speaker Change: Through the next several quarters.
Speaker Change: The next several years.
Speaker Change: Yeah.
Speaker Change: Sure Doug.
Speaker Change: Clearly as I've said, many times I love this business durable.
Speaker Change: Model, we have our team has done an exceptional job in terms of being able to have capital equipment and then the consumable so of course very durable business for us.
Speaker Change: If we look specifically of Korea, the Korean team has done a great job in 2024.
Speaker Change: Selling and capital equipment.
Speaker Change: And therefore, we're seeing the benefits of that of course, we had very strong growth last year and that growth has continued into the first quarter and clearly having a large installed base in Korea, and then driving the capital the consumable side of the business has attributed.
Speaker Change: So the growth that you see in the first quarter. So what I would say is.
Speaker Change: We have high expectations of our Korean business going forward, but you should see that becoming coming down because the consumables that are going in in the first quarter and some into the into the second quarter as the installed base that was put in in 2024.
Speaker Change: And that was being picked up in probably the second or third quarter fourth quarter of the prior year. So you should see it come down but still.
Speaker Change: Good growth for US and then of course, China continues to perform.
Speaker Change: Growth was 30%.
Speaker Change: Another strong quarter consumer demand in China. Despite a lot of the issues of course with the with the tariffs as we discussed earlier consumer demand is still there.
Speaker Change: And given the.
Speaker Change: The segmentation of the market and.
Speaker Change: Consumers, who use this product are resilient.
Speaker Change: And in terms of what is taking place economically. So we're really very pleased with the growth in China and then lastly.
Speaker Change: The U S growth grew by 9% we talked about.
Speaker Change: Both.
Speaker Change: EMEA growth and then Canada as well and then of course, the launching of F. L. X is going to drive growth further and then as I said in my prepared remarks, getting Canada F. L X approved.
Speaker Change: And Canada is a big win for us.
Speaker Change: And we see good growth there coming in the future. So the solta business performing very nicely for us in the first quarter.
Speaker Change: We're very happy with it.
Speaker Change: Excellent and then just as a follow up.
Speaker Change: Question.
Speaker Change: I am curious a little bit about subtraction to any comment you can give us on your thoughts around the IRI impact in 2027, and then can you confirm that the IP for <unk> is held in Ireland are Europe and then.
Speaker Change: When you talked about regional.
Speaker Change:
Speaker Change: Manufacturing I just wanted to know us.
Speaker Change: No.
Speaker Change: For satisfaction this you're talking about North America, as a region or distinctly the U S and I'll leave it there. Thank you very much.
Speaker Change: Sure.
Speaker Change: Of course, we talked about say fax it in the prepared remarks had another.
Speaker Change: Great quarter for us, 8% revenue growth well balanced four four on price for on volume.
Speaker Change: In my prepared remarks, one of the things that we really are tracking as new to brand 59000, new to brand in the quarter. So happy with the performance that we've had what I would say is as the IRI negotiations is in the early stages we've.
Speaker Change: We've already had one meeting with them in person.
Speaker Change: Too early to determine.
What the outcome will be but we are working collaboratively to.
Speaker Change: To discuss what the impact will be and with CMS.
Speaker Change: On the.
Speaker Change: Question on IP.
Speaker Change: J J will take that <unk>.
Speaker Change: One in the U S and license to our principal company in Ireland.
Speaker Change: Okay and then your last question on the.
Speaker Change: Manufacturing, so when I say regional so most of our manufacturing for Latin America is done in Latin America, Mexico and Colombia.
Speaker Change: When we look at our European business most of the manufacturing is done by either <unk> or our manufacturing facilities in.
Speaker Change: In Poland and then when we look at when we come to the Canadian business a good part of our manufacturing is in our Laval facility for our derm business. So when I talk regionally I would say in most of those places the consumption is where those plants are or in those regions.
Speaker Change: Operator next question.
Speaker Change: The next question comes from Mike metal Kovich with TD Cowen. Please proceed.
Mike Metalcovich: Hi, Thank you for the questions I have two and a quick follow up my first question is if we end up in a recession, either U S or globally, what elements of your business do you think are most at risk and what elements do you think are most resilient.
Mike Metalcovich: My second question relates to Red Sea.
Mike Metalcovich: I'm curious in the current state of Affairs do you have a sense of whether and what level of off label prescription of <unk> vaccine for covert each E may already be ongoing and how much of a risk might be commercially. If you were to launch a novel product that would otherwise occupied a niche.
Mike Metalcovich: And then my quick follow up is on <unk>.
Speaker Change: Vaccine manufacturing and supply chain.
Speaker Change: Mentioned various territories that I don't believe you mentioned the U S is U S faxing and manufactured in the U S or is it reported.
Speaker Change: Yes.
Speaker Change: Yeah, Mike I'll take those questions in a hand, a few off to Jay Jay to add some more color.
Jay Jay: When we look at our.
Jay Jay: Business, it's pretty resilient in terms of.
Jay Jay: From a recession.
Jay Jay: <unk> when we look around the world, we look at our business in the U S pretty tough for me to comment but.
Our product portfolio in the U S is much needed by our patients. So it's pretty resilient in terms of.
Jay Jay: Of that from a pharmaceutical perspective, if you then look.
Jay Jay: And you go outside the United States, It's the same.
Jay Jay: Most of our business as you know we have a branded generic business, mostly in eastern Europe.
Jay Jay: And in Latin America, and that's that's very resilient too.
Jay Jay: And if you look at the.
Jay Jay: What we're able to deliver high quality products.
Jay Jay: At a good cost to the patient so I would say and then if you look at the salt business.
Jay Jay: In it where the Solta business is positioned and who is using those products.
Jay Jay: It is resilient, even as I mentioned earlier about in China.
Jay Jay: The population of the consumer base, that's using it is a little bit more.
Jay Jay: Economic resilient as opposed.
Jay Jay: Two other products that are there so.
Jay Jay: Tough to comment on what's going to happen, but I think we're probably in pretty good shape I believe we are.
Jay Jay: Red Red Sea in terms of overall.
Jay Jay: What I would say is this is I can't comment on off label use but what I can say is as I said this in my prepared remarks.
Jay Jay: The asset the Formula is is very different drug than say facts and it works differently.
Jay Jay: And it impacts patients in different ways. So when you when we look at it this new formula is quite different of course, the dosing is different.
Jay Jay: And therefore, we think we have.
Jay Jay: Great opportunity here.
Jay Jay: When we look at the patient population of.
Speaker Change: <unk> said it in my prepared remarks.
Speaker Change: I think the size of this is and we look at it globally.
Speaker Change: If we look at the amount of cirrhotic patients there are in the world today.
Speaker Change: We're probably looking at.
Speaker Change: Over 30 million patients who are cirrhotic today, so as we as we looked at this we get closer to the data as I said earlier, we are we've put together a team of launch team.
Speaker Change: And we're really excited of what we can do for patients.
Speaker Change: In this in this indication and.
Speaker Change: And clearly when we look at what our primary endpoint is in our secondary endpoint of all cause mortality and all cause hospitalizations.
Speaker Change: This can be a really nice for.
Speaker Change: Franchise for us.
Speaker Change: In terms of your the last part of the question was I faxed in manufacturing.
Speaker Change: Had this to J&J of course as I think you know.
Speaker Change: <unk> is manufactured in Canada, but I can pass it to him for more color on that.
Speaker Change: So the.
Speaker Change: The country or revision for the API is Italy, given that it's a single API product.
Speaker Change: Our country of origin on the Labor is also Italy, but the manufacturing is coming from Canada. So for U S customer purposes, it's really treated as the Italian important.
Speaker Change: Operator next question.
Jason <unk>: Next question comes from Jason <unk> with Bank of America. Please proceed.
Jason <unk>: Hey, guys. Thanks for taking my questions.
Speaker Change: Solta and <unk> and the revenue sourcing into China.
Speaker Change: I know you can make the consumables in the U S. How easy.
Speaker Change: Is it I mean, we know drugs are hard and it's multiple years to shift manufacturing around with something like consumables is that something you can kind of move manufacturing around to be locally sourced insulated.
Speaker Change: Theres a protracted.
Speaker Change: Tariff situation with China, and then a second question is just on your EBITDA ex the Alco.
Speaker Change: 176, I think you mentioned some one time items can you can you quantify.
Speaker Change: What those are.
Speaker Change: And then I guess just lastly.
Speaker Change: How does share buybacks sort of a rank order in the pecking order with like net debt reduction over the next few years I mean in terms of the capital allocation priority. I think this is the first quarter you guys have talked about buybacks within the.
Speaker Change: Capital allocation prioritization.
Speaker Change: Yeah, So Jason I'll take a few of those questions and I'll hand, it over to J J.
Speaker Change: I'll take the stock buyback question first and then JJ can talk about it but you know what.
Speaker Change: With the stock price of five in a quarter.
Speaker Change: Yeah, we're looking at all options as as I said in my prepared remarks believe.
Speaker Change: The stock is undervalued. So he can talk about more but clearly as a management team putting all options on the table.
Speaker Change: And looking at it carefully what I would say, let's just go back to salt or China.
Speaker Change: Right now we do all our manufacturing in Bothell, Washington, both for our capital equipment and the consumables.
Speaker Change: Difficult in the short term to be able to move manufacturing, but you know as we have been looking at various things in terms of business development, even prior to the tariff issue. This was one of the things that we were always looking at when we're trying to expand our business in China.
Speaker Change: That could be something that we would look to do not.
Speaker Change: Not easy to do in the short term, but something we could look and certainly when we're looking at candidates.
Speaker Change: Possible business development. This was one piece of it so a good question.
Speaker Change: When you look at our.
Speaker Change: How difficult it is to make a tip and a consumable.
Speaker Change: It's difficult a very precise we have a great manufacturing team in Boston, Washington, So it's a it.
Speaker Change: It would be tough to to move it given the how technical days, but something that has been and being looked at on the radar screen with that I'll pass it over to J J for your second part of your question regarding EBITDA.
Speaker Change: And maybe more color on the share buyback.
Speaker Change: Yeah.
Speaker Change: The onetime item all mostly associated with.
Speaker Change: Really three drivers number one is timing of expenses.
Speaker Change: Some of the expenses were anticipated are really two to happen more in Q1 and happen in other quarters and then we typically have some adjustments to our gross to net.
Speaker Change: We'll have a recurring impact the way I would think about our performance in the first quarter from an EBITDA perspective is really to think that is very similar to the kind of guidance. We provided on a full year basis.
Speaker Change: If you were to normalize it.
The on the share buybacks the.
Speaker Change: The capital allocation strategy remains the same.
Speaker Change: Number one is too.
Speaker Change: Get the capital structure consistent with our portfolio possess accidentally then consider any reinvestments in the business and only after that to consider return to shareholders, which can take many forms including share buybacks as Tom indicated when the.
Speaker Change: Stock is lingering at $5.
Speaker Change: <unk> forces us to really think through again this prioritization logic, which is really the main focus absence any exceptional circumstances we.
Speaker Change: Do believes that the stock is not trading.
Speaker Change: Where it needs to be from an intrinsic value perspective, and so therefore, if there are opportunities to.
Speaker Change: Create value for shareholders, then we will take a look at that.
Speaker Change: Operator next question.
Michael Freeman: And our last question comes from Michael Freeman with Raymond James. Please proceed.
Speaker Change: Hi, Tom JJ, Darren Thanks, very much for taking my question.
Michael Freeman: I Wonder if you could you could talk about the debt for debt refinancing.
Michael Freeman: <unk>.
Michael Freeman: Maybe go a little deeper on the on the additional flexibility.
Michael Freeman: That this offers you and just specifically I wonder if you could describe.
Michael Freeman: The quantum of your Balco stake.
Michael Freeman: Today is not pledged against any debt instruments.
Speaker Change: And then I'll have a follow up.
Speaker Change: Yes, so Michael I'll have Jay Jay take most of what I would just say is and J J said it in his prepared remarks.
Speaker Change: The team worked extremely hard on doing this refinancing 7.9 billion gives us.
Speaker Change: Really a runway here.
Speaker Change: Clearly JJ can talk to what the options are but clearly investing back in the business is one of them of the business development team has been working hard and there was no.
Speaker Change: Many things that we screen and look at but clearly.
Speaker Change: The finance team and our legal team being able to get this done has really given us a nice runway.
J J: For future investments in the business or or other things, we might want to do but I'll pass it over to J J.
J J: To talk more specifically about it.
J J: Yeah, Hi, Michael.
7.9, so if you really focus really on the forward because $500 million is the revolving credit facility, we declare out most of our maturities between now and the end of 2027 it was about.
J J: 121 $3 billion left.
J J: And then we have another four three still outstanding.
J J: In 2028.
J J: So if you had those those two together you come to roughly $5 $6 billion of maturities between now and 2020 eights. The focus is on extending the runway.
J J: We include all the maturities up to the end of 2028.
J J: A good proportion of that five six would be handled through free cash flow being generated between now and the end of 2028. We also have about $1 billion of cash on hand, which will allow us to to take out some of those are the maturities. So it leaves about I would say $1 6 billion.
J J: <unk> of them additional refinancing that we'd have to execute as you know or.
J J: The refinancing debt.
J J: We just closed a couple of weeks ago provides this upsizing capability either.
J J: Picking the same collateral package.
J J: That is associated with a seven four with a combination of.
J J: The restricted group and additional <unk> shares or.
J J: To do a dropdown inside of the restricted group and then.
J J: It really only lose those assets as collateral.
J J: B.
J J: The consideration is really between those two options timing and cost of capital to really decide what's the best options for us.
J J: There are a couple of them.
J J: Debt instruments that might be available later in the year.
J J: For foreign exchange or could be subject of this refinancing but.
J J: It is clearly still on the table and an opportunity for us to continue to.
J J: Clear all the maturities between now and 2028.
J J: In terms of <unk> shares that are unencumbered.
J J: 35, 5% or less if we were to use one of the two options to upsize the seven four transaction an additional seven 5%.
J J: It has to be pledged.
J J: Which would leave 28% or about 100 million shares.
J J: Give or take that would be unencumbered that can be used either for monetization for you know raising some new debt and obviously the proceeds could be allocated to whatever use we sit at that time, including reinvestment in business.
Michael Freeman: Michael you had a follow up.
Michael Freeman: Yes, there was a there was an April 22.
Michael Freeman: Press release.
Michael Freeman: And just because of NDA filing.
Michael Freeman: Proxy supplement.
Speaker Change: Supplement to the proxy statements I Wonder if you could if you could describe.
Speaker Change: It provided more insight into this into the supplement and describe the status of your shareholder rights plan.
Speaker Change: Yes, sure Michael I can take that so.
Speaker Change: I'll start with the shareholder rights plan first.
Speaker Change: We adopted a shareholder rights plan.
Speaker Change: Really to help ensure that all shareholders are treated fairly and equally.
Speaker Change: In connection with any unsolicited takeover bid or any other.
Speaker Change: Acquisition of control so.
Speaker Change: We believe the plan is in the best interest of company.
Speaker Change: And the shareholders.
Speaker Change: As we talk about the proxy filing.
Speaker Change: I would say is I.
Speaker Change: I want I don't want to comment specifically on it I mean, I think everything was laid out pretty much in the press release.
Speaker Change: But as you saw.
Speaker Change: We believe.
Speaker Change: Some of the issues that were laid out in the press release and then what how the stock responded afterwards demonstrated.
Speaker Change: We'll see value.
Speaker Change: In <unk> and Bausch health.
Speaker Change: Yeah.
Speaker Change: Okay, I think operator that was the last question.
Tom: I'd now like to turn the call back over to Tom <unk> for any closing remarks.
Okay, well, thank you everyone for joining the call today and.
Tom: For your questions really appreciate all the questions and you continue continued interest in and support of the company.
Tom: As I said, we delivered our eighth consecutive of year over year growth of revenue and adjusted EBITDA and this team is highly motivated to continue to deliver a strong performance in 2025.
Tom: We're committed to delivering against our strategic priorities as I discussed.
Tom: And remaining focused on unlocking value growth and innovation with the commitment to evaluate all the options to unlock the value of our shares it wouldn't have been possible to have this type of performance in the first quarter and the momentum we had oh.
Tom: Over from 2024, so I want to thank all of our employees globally for their commitment and dedication to driving our company forward and delivering on our objectives. Thank you all for joining and have a good evening.
Tom: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.