Q2 2025 Bausch Health Co Inc Earnings Call

Garen Sarafian: 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. I will now turn the conference over to our host, Garen Sarafian, investor relations at Bausch. You may begin.

Welcome to the Bosch.

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.

I will now turn the conference over to our host, Garin sarafian, investor relations at Bosch.

You may begin.

Jean-Jacques Charhon: Good afternoon and welcome to Bausch Health's second quarter 2025 earnings conference call. Participating in today's call are Thomas Appio, Chief Executive Officer of Bausch Health, and Jean-Jacques Charhon, Chief Financial Officer. Before we begin, I would like to remind you that our presentation today contains forward-looking information. 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. Our actual results may vary materially from those expressed or implied in our forward-looking statements, and you should not place undue reliance on any forward-looking statements. Please refer to our SEC filings and our filings with the Canadian securities administrators for a list of some of the risk factors that could cause our actual results to differ materially from our expectations. We use non-GAAP financial measures to help investors understand our operating performance.

Good afternoon and welcome to Bow house. Second quarter 2025 earnings conference call.

Participating in today's call are Thomas AIO Chief Executive Officer of Bao and JJ Sharon Chief Financial Officer,

Before we begin, I would like to remind you, that our presentation. Today contains forward-looking information,

we asked you take a moment to read the forward-looking statements disclaimer at the beginning of the pages that accompanies, this presentation, as a contains important information,

Our actual results may be very materially from those expressed or implied in our forward-looking statements and you should not Place undue Reliance on any forward-looking statements.

Please refer to our SEC filings and our filings with the Canadian Securities administrators for a list of some of the risk factors that could cause our actual results to differ materially from our expectations.

Jean-Jacques Charhon: 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. You will find reconciliations of our historic non-GAAP measures in the appendix of the pages that accompany this presentation, which are available on Bausch Health's investor relations website. Finally, the financial guidance in this presentation is effective as of today only. We do not undertake any obligation to update guidance. Our discussion today, Wednesday, July 30th, will focus on Bausch Health, excluding Bausch & Lomb. However, we will briefly comment on Bausch & Lomb's results announced this morning. We will refer to year-over-year comparisons with the same period last year unless otherwise noted. With that, I would like to turn the call over to our CEO, Tom Appio. Tom?

Our operating performance.

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.

You will find reconciliations of our historic, non-gaap measures in the appendix of the pages that accompanied this presentation, which are available on Bao's investor relations website.

Finally, the financial guidance in this presentation is effective as of today, only.

We do not undertake any obligation to update guidance.

Our discussion today, Wednesday July 30th will focus on Bosch Health's, excluding Bosch and Loan. However, we will briefly comment on Bosch and lungs results announced this morning.

we will refer to you over your comparisons with the same period last year, unless otherwise noted

With that, I would like to turn the call over to our CEO, Thomas Appio.

Thomas Appio: Thank you, Garen, and welcome to everyone joining our earnings call today. In the second quarter, Bausch Health, excluding Bausch & Lomb, continued to perform strongly, delivering our ninth consecutive quarter of revenue and adjusted EBITDA growth. I am proud of the great work by our team, especially as we navigate a more uncertain macro environment. Let me take a moment to share a few highlights from the quarter. We delivered year-over-year revenue growth of 5% on both a reported and organic basis, leading to 10% adjusted EBITDA growth for Bausch Health, excluding Bausch & Lomb, driven by double-digit revenue growth in Salix, SALTA, EMEA, and Canada. We continued to resolve legacy matters in the quarter.

Tom.

Thank you, Garen, and welcome to everyone joining our earnings call today.

In the second quarter, Bosch Health, excluding Bosch, and long continued to perform strongly.

Delivering, our ninth consecutive quarter of Revenue and adjusted IBA growth.

I am proud of the great work by our team especially as we navigate a more uncertain macro environment,

Let me take a moment to share a few highlights from the quarter.

We delivered year-over-year, Revenue, growth of 5% on both, a reported and organic basis, leading to 10% adjusted. Eva to growth for bow Health excluding bowel and long driven by double digit Revenue growth in sales.

Sulta EMA and Canada.

Thomas Appio: We announced after the quarter that we entered into an agreement to acquire Direct Corporation, which, if all closing conditions are satisfied and the acquisition closes, will enable Bausch Health to use its hepatology expertise to develop Direct's main treatment for alcohol hepatitis. Therefore, we are reaffirming our full-year 2025 guidance for revenue, adjusted EBITDA, and adjusted cash flow from operations. The second quarter was another strong quarter of performance where we made progress against our strategic priorities. First is unlocking value. As a reminder, we completed a $7.9 billion debt refinancing on April 8th, which extends our maturities with the options for additional proceeds in the future. We remain active in our efforts to improve our capital structure and are currently evaluating opportunities to take advantage of strong market conditions to address selected upcoming maturities.

We continued to resolve Legacy matters in the quarter.

We announced after the quarter that we entered into an agreement to acquire Direct Corporation, which, if all closing conditions are satisfied and the acquisition closes, will enable Bosch Health to use its hepatology expertise to develop Direct's main treatment for alcohol hepatitis.

Therefore, we are reaffirming our full year 2025 guidance for Revenue, adjusted, Evita and adjusted cash flow from operations.

The second quarter was another strong quarter of performance where we made progress against our strategic priorities.

First is unlocking value.

As a reminder, we completed a 7.9 billion debt refinancing on April 8th, which extends our maturities with the options for additional proceeds in the future.

Thomas Appio: Just this past week, we announced actions to reduce debt maturing in 2026 and pay down our accounts receivable facility to reduce high-interest debt and improve our capital structure. Unlocking value is a key focus, and we are evaluating every option to maximize returns for our stakeholders. Next is growth. The second quarter was an excellent quarter of growth for Bausch Health. We achieved 5% top-line revenue growth, then leveraged it to 10% bottom-line adjusted EBITDA growth, with nine consecutive quarters of year-over-year top-line and adjusted EBITDA growth for Bausch Health, excluding Bausch & Lomb. The diversity of our core businesses across segments and geographies demonstrates both our resilience and momentum. Revenue for our Salix and SALTA segments, as well as EMEA and Canada regions, within international grew double digits. Segment profits for SALTA and Salix also grew double digits.

We remain active in our efforts to improve our capital structure and are currently evaluating opportunities to take advantage of strong market conditions to address selected upcoming maturities.

Just this past week, we announced actions to reduce debt maturing in 2026 and pay down our accounts receivable facility to reduce high-interest debt and improve our capital structure.

Unlocking value is a key focus, and we are evaluating every option to maximize returns for our stakeholders.

Next is growth.

The second quarter was an excellent quarter of growth for Bosch Health.

We achieved 5% Topline, Revenue growth then leveraged it to 10% bottom line. Adjusted ebit to growth with 9 consecutive quarters of year-over-year, Topline and adjusted Eva to growth for Bosch Health. Excluding Bosch along

The diversity of our core businesses across segments and geographies demonstrates both our resilience and momentum.

Revenue for our sales and salta segments as well as EMA and Canada regions within International Group, double digits.

Thomas Appio: The second quarter was our sixth consecutive quarter of top-line organic growth in our Salix business, where our segment profit increased 21%. Salix grew by 12% on both a reported and organic basis versus the prior year period, driven by Xifaxan's 10% growth in the quarter. Growth came across both indications: overt hepatic encephalopathy, OHE, and IBSD, and multiple channel segments, retail and non-retail. 67,000 new patient starts were initiated in the second quarter, up 8% versus the prior year. Growth was driven by increased OHE media investment, as well as Salesforce focusing on driving new patient starts as we continue to innovate using our customer insight engine. Given the incredibly high success rate and adherence that we have seen with this AI-based platform, we are beginning to leverage these capabilities for Relistor to further support sales initiatives.

Segment profit for salta and Salix. Also grew double digits.

The second quarter was our sixth consecutive quarter of Topline organic growth in our sales business where our segment profit increased 21%.

Driven by a 10% growth in the quarter, growth came across both indications: Overt Hepatic and SEALUP, as well as IBS.

And multiple Channel segments, retail, and non retail.

67,000. New patient starts were initiated in the second quarter up 8% versus the prior. Year growth was driven by increased. Oh, media investment, as well as Salesforce focusing on driving new patient starts as we continue to innovate using our customer Insight engine.

Thomas Appio: SALTA's strong double-digit growth, driven by South Korea, repeated this quarter, and while growth in China temporarily softened due to tariff-related headwinds in April and May, we remain confident in our ability to grow in these core markets. We also had another quarter of growth in Canada, the United States, and EMEA. In June 2025, we started shipments of our next-generation Fraxel after US launch in this past April. These are positive indicators that point to SALTA's growth opportunities beyond the Asia-Pacific region, and we continue to invest behind additional growth opportunities in this business. Within the international segment, our EMEA business sustained its ongoing trend of organic growth with 6% in the second quarter, marking the region's 10th consecutive quarter of organic growth.

Given the incredibly High success rate and adherence that we have seen with this AI based platform. We are beginning to leverage these capabilities for Rella store to further support sales initiatives.

Salt is strong, double-digit growth driven by South Korea, repeated this quarter. And while growth in China temporarily softened due to tariff-related headwinds in April and May, we remain confident in our ability to grow in these core markets.

We also had another quarter of growth in Canada, the United States and EMA.

In June 2025, we started shipments of our next Generation. Fractal after us launched in this past April.

These are positive indicators that point to sta's growth opportunities beyond the asia-pacific region, and we continue to invest behind additional growth opportunities in this business.

Thomas Appio: It is a broad footprint and diversified portfolio, with no single drug accounting for double-digit share of net revenue, minimizing the concentration risk and reinforcing the appeal of this business. In Canada, our team is executing against our plans for each promoted product offering alongside the many growth initiatives we have in place across the portfolio, yielding solid results. CABTRIO's launch in Canada has been successful as we continue to broaden patient access with the goal to position CABTRIO as a leading acne treatment in Canada. REALTRIS, another promoted product, has gained steady traction since its 2023 launch in the Canadian market. Now turning to innovation, we continue to focus on advancing opportunities for pipeline expansion. We are making progress internally as we assess partnerships and licensing opportunities that can offer a reasonable probability of success on multiple fronts.

Within the international segment our EMA business sustained. Its ongoing trend of organic growth with 6%. In the second quarter marking. The Region's 10th consecutive quarter over organic growth

It is a broad footprint and diversified portfolio with no single drug accounting for double digit. Share of net revenue minimizing, the concentration risk and reinforcing the appeal of this business.

In Canada. Our team is executing against our plans for each promoted product offering alongside the many growth initiatives we have in place across the portfolio.

Yielding solid results.

Caprio's launched in Canada has been successful, as we continue to broaden patient access with the goal to position cap Trio as a leading acne treatment in Canada.

Ryaltris another promoted product has gained steady traction since its 2023 launch in the Canadian Market.

Now, turning to innovation.

Thomas Appio: In EMEA, we announced a strategic partnership this June with YunNV, a recognized leader in microbiome skincare solutions. This collaboration has the potential to reshape the skincare landscape, starting with the expected launch of Yun's probiotic-based products for acne-prone skin to the Polish market later this year. Leveraging our broad footprint and seasoned sales force, this partnership will focus on bringing new probiotherapy solutions utilizing good bacteria for a variety of indications, including acne, fungus, atopic eczema, and baby skincare. These microbiome skincare solutions use live probiotics to help restore the skin's natural microbiome balance, offering a modern, science-driven approach to managing acne-prone skin. As we shared last quarter, we launched our cardiometabolic brands in Latin America in June, which, in addition to our current portfolio line, now includes two new brands.

We continue to focus on advancing opportunities for pipeline expansion. We are making progress internally as we assess Partnerships and Licensing opportunities that can offer a reasonable probability of success on multiple fronts.

In EMA, we announced a strategic partnership this June with June ND, a recognized leader in microbiome, skin care solution.

This collaboration has the potential to reshape the Skin Care landscape starting with the expected launch of June's. Probiotic base products for acne. Prone skin to the Polish market later this year.

Leveraging, our broad footprint and seasoned Salesforce, this partnership will focus on bringing new Pro. Bio Therapy Solutions, utilizing, good bacteria for a variety of indications, including acne.

Fungus atopic.

Biomes Skin Care Solutions, use live probiotics to help restore, the Skin's natural. Microbiome, balance offering a modern science-driven approach to managing acne prone skin.

Thomas Appio: As a reminder, the cardiometabolic market is one of the fastest growing therapy areas in the Mexican pharmaceutical market, and we are excited to be able to participate in such a high growth area. Now turning to our internal product pipeline, we remain on track with our two global phase three studies for Red C, our amorphous solid soluble dispersion, SSD Rifaximin complex, and we expect to see initial data readouts by early 2026. As a reminder, this program is centered on a solid soluble dispersion Rifaximin complex in unique, patented, non-crystalline water soluble form that enables delivery throughout the entire gastrointestinal tract. Amorphous SSD Rifaximin is being studied in patients with cirrhosis prior to their first decompensation event from any form of liver disease. This product, if approved, has the potential to offer this patient population a therapy to slow disease progression and provide a meaningful clinical benefit.

As we share last quarter, we launched our cardio metabolic brands in Latin America in June which in addition to our current portfolio line. Now includes 2 new brands.

As a reminder, the cardio metabolic Market is 1 of the fastest growing therapy areas in the Mexican pharmaceutical market. And we are excited to be able to participate in such a high growth area.

There are 2. Global phase 3, studies for Red Sea are amorphous, solid soluble dispersion SSD, rafaam and complex. And we expect to see initial data readouts by early 2026.

As a reminder, this program is centered on a solid soluble dispersion reifax in unique patented non-crystalline water soluble form. That enables delivery throughout the entire gastroenter, International track. Amorphous SSD refactor is being studied in patients with cirrhosis prior to their first decompensation event from any form of liver disease.

Thomas Appio: We look forward to sharing further updates in early 2026. A successful outcome may position us to address a significant unmet need in hepatology and to bring a novel therapy to cirrhotic patients on a global scale. I want to touch on our recently announced definitive agreement to acquire Direct Corporation. The agreement remains subject to the satisfaction of certain conditions, including a majority of the outstanding shares of Direct being tendered in the tender offer that we intend to commence shortly. Through this proposed acquisition, we intend to advance the development and commercialization of Direct's lead pipeline candidate, or Sucastrol, an FDA breakthrough therapy designation asset targeting alcohol hepatitis, There is currently no Food and Drug Administration or European Medicine Agency approval treatment for and novel therapeutic strategies are needed to improve patient survival.

This product if approved has the potential to offer this patient population of therapy to slow disease, progression and provide a meaningful clinical benefit.

We look forward to sharing further updates in early 2026. A successful outcome may position us to address a significant unmet need in hepatology and to bring a novel therapy to cirrhotic patients on a global scale.

I want to touch on our recently. Announced definitive agreement to acquire direct Corporation.

The agreement remains subject to the satis satisfaction of certain conditions including a majority of the outstanding shares of direct being tendered in the tender offer that we intend to commence shortly.

Through this proposed acquisition, we attend to advance the development and commercialization of directs lead pipeline candidate or Suka straw.

And FDA breakthrough therapy. Designation asset, targeting alcohol. Hepatitis A H.

Thomas Appio: Assuming all conditions are met, including the successful completion of the tender offer, we anticipate closing the deal in the third quarter of 2025. As such, we are limited in what we can share at this time. I look forward to sharing more information regarding this transaction following the closing. I want to thank our business development team, who has worked incredibly hard on this transaction. We are committed to intensifying our focus and rigor behind R&D and business development. This announcement demonstrates our commitment to hepatology and finding new ways to address unmet medical needs. Lastly, turning to legal matters, year to date, we have settled nine more opt-out cases. Of the 37 cases, there are now 11 remaining. We continue to vigorously defend the remaining claims.

There is currently no Food and Drug Administration, or european medicine, agency approval, treatment for, ah, and novel therapeutic. Strategies are needed to improve patient survival. Assuming all conditions are met including the successful completion of the tender offer. We anticipate closing the deal in the third quarter of 2025 as such. We are limited in what we can share at this time. I look forward to sharing more information regarding this transaction following the closing.

I want to thank our business development team who has worked incredibly hard on this transaction. We are committed to intensifying our focus and rigor behind R&D and business development.

This announcement demonstrates, our commitment to hepatology and finding new ways to address unmet medical needs.

Thomas Appio: Regarding the Granite Trust matter, I am very pleased to announce that near the end of the second quarter, we received communication from the Internal Revenue Service that the case has officially concluded, consistent with the view we have communicated on prior calls. There will not be any negative cash flow as a result. In summary, it was another strong quarter. I remain confident in our ability to execute on our strategic priorities focused on delivering tangible results. We strive for operational excellence throughout our company, which will maximize long-term shareholder value. With that, I will pass it over to JJ to discuss the financial results in more detail. JJ. Thank you, Tom. Let's first review quickly our consolidated performance in more detail, starting with our non-GAAP financial results for the second quarter, which you will find starting on page 13.

Lastly turning to legal matters year to date. We have settled 9 more opt-out cases of the 37 cases. There are now 11 remaining, we continue to vigorously defend the remaining claims

Regarding the granite trust matter. I am very pleased to announce that near the end of the second quarter. We received communication from the Internal Revenue Service that the case has officially concluded consistent. With the view, we have communicated on prior calls, there will not be any negative cash flow as a result.

In summary, it was another strong quarter, I remain confident in our ability to execute on our strategic priorities focused on on delivering tangible results.

We strive for operational excellence throughout our company, which will maximize long-term shareholder value.

With that, I will pass it over to JJ to discuss the financial results in more detail.

JJ.

Thank you, Tom.

Thomas Appio: Revenue was $2,530,000,000, up 5% on a reported basis and 4% on an organic basis compared to the same period a year ago. Adjusted gross margin was 70.6%, 30 basis points lower year over year. Adjusted operating expenses were $1,016 million, an increase of $61 million compared to the same period last year. Adjusted EBITDA was $871 million, an increase of $45 million, or 5% year over year. Finally, adjusted operating cash flow was $442 million. Moving now to the performance of Bausch Health, excluding Bausch & Lomb for the second quarter, starting on page 15. Q2 was undoubtedly another quarter of strong performance. Nine quarters in a row of growth for revenue and adjusted EBITDA is outstanding, particularly when acknowledging that this was realized on an organic basis without any material business development or acquisition in the last three years.

Let's first review quickly, our Consolidated performance in more detail, starting with our non-gaap financial results for the second quarter, which you will find starting on page 13.

Revenue was 2 billion and 530 million up, 5% on the reported basis, and 4% on an organic basis. Compared to the same period a year ago.

Adjusted gross margin was 70.6% 30 basis points lower year-over-year.

Rate expenses were 1 billion dollars an increase of 61 million compared to the same period last year.

Year-over-year.

In cash flow was 442 million.

moving now to the performance of Bosch Health, excluding Bashan law for the second quarter starting on page 15

Thomas Appio: Revenue was $1,252,000,000, up 5% when compared to the second quarter of 2024. Adjusted EBITDA was $676,000,000, up 10%, demonstrating the continued commitment to driving operating leverage through positive segment mix and tight cost management. Adjusted operating cash flow of $355 million was up 34% versus the second quarter of 2024 due to our double-digit adjusted EBITDA growth combined with the favorable timing of cash interest payments. On cash taxes, as we stated repeatedly during our prior quarter earnings calls, the conclusion of the Granite Trust matter would not be associated with any negative outflow in the future. I am happy to confirm that there were none in the first half of 2025. Moving now to our second quarter performance by segment, starting with Salix on page 16. Salix revenues were $627,000,000, an increase of $69,000,000, or 12% compared to the same period last year.

Q2 was undoubtedly another quarter of strong performance, 9 quarters in a row of growth for revenue and adjusted eida is outstanding. Particularly when the acknowledging that this was realized on an organic basis. Without any material Business Development or acquisition in the last 3 years.

Revenue was 1 bill24. Our adjusted ebida was 676 million up. 10% demonstrating the continued commitment to driving operating leverage through positive segment, mix and tight cost management.

Adjusted operating cash flow of $355 million was up 34% versus the second quarter of 2024 due to our double-digit adjusted EBITDA growth combined with the favorable timing of cash interest payments.

On cash taxes as we stated repeatedly during our prior quarter earnings calls, the conclusion of the Granite trust. Matter would not be associated with any negative outflow in the future.

I am happy to confirm that, there were none in the first half of 2025.

Moving down to our second quarter performance by segments, starting with sales on page 16.

Thomas Appio: Our strong performance was primarily due to favorable net pricing across our three major brands, namely Xifaxan, Relistor, and Truelance. Separately, Xifaxan had another strong volume performance with retail scripts up 6% and new scripts up 7%. Extended Units also grew 7% and includes non-retail settings such as hospitals and outpatient clinics, which grew double digits. Revenues for the international segments were $278,000,000, an increase of 1% compared to the second quarter of last year. The revenue in the second quarter was once again driven by our promoted products portfolio, which grew 12%. EMEA achieved an impressive milestone of 10 consecutive quarters of organic growth across the region, led by its top three markets: Poland, Serbia, and Russia. Finally, LatAm's softer performance was a result of the ongoing macroeconomic challenges in the region, as well as some partial channel disruption.

Felix revenues were 627 million, an increase of 69 million, or 12%, compared to the same period last year.

our strong performance was primarily due to favorable Le pricing across all 3, Major Brands, namely zi facts and red store and troll lamps,

Separately, Ze Faxon had not a strong volume performance, with retail scripts up 6% and new scripts up 7%.

Extending units. Also grew 7% and includes non retail settings. Such as hospitals and outpatient clinics, which grew double digits.

Revenues for the international. Segments were 278 million and increase of 1% compared to the second quarter of last year.

The revenue in the second quarter was.

Once again, driven by our promoted products portfolio, which grew 12%.

Achieve an impressive Milestone of 10 consecutive quarters of organic growth across the region led by its top, 3 markets, Poland, Serbia and Russia.

Thomas Appio: Now moving to page 18 for a review of our SALTA medical segments. Revenues were $128,000,000, an increase of 25% on a reported basis and 26% on an organic basis compared to the same period last year. SALTA's performance continues to be fueled primarily by South Korea and, to a lesser extent this quarter, China. South Korea once again outperformed expectations, resulting in 115% organic revenue growth year over year. China grew more monetary at 4% this quarter, mostly due to channel inventory reduction. The timing of our shipments from our plant in Bothell, Washington, to China was managed to minimize the impact of tariffs on US imports in April and May. Finally, special mentions go to our double-digit growth of SALTA in the US and Canada, following our increased promotional efforts in these two regions.

Finally, latan softer performance was a result of the ongoing macroeconomic challenges in the region as well as some partial Channel. This stocking

Now, moving to page 18 for a review of our Sultan medical segments.

Revenues were 128 million, an increase of 25%, on a reported basis and 26% on an organic basis, compared to the same period last year.

salt is performance continues to be fueled primarily by South Korea, and to our lesser extent this quarter of China,

South Korea. Once again, outperformed expectations. Resulting in 115% organic Revenue. Growth year-over-year.

China grew more monetary at 4%, this quarter, mostly due to channel inventory reduction.

The timing of our shipments from our plant in battle Washington, to China was managed to minimize the impact of Harris.

on us Imports in April and May,

Finally.

This goes to our double.

Thomas Appio: Turning now our focus to our diversified segment, which you will find on page 19. Revenues were $219 million, a decrease of 13% compared to the same period a year ago. The decrease of our revenue was driven by both the neurology and dermatology businesses, which had benefited in 2024 from one-time pricing adjustments and unexpected demand for Cardizem from the Department of Defense due to generic supplier stockouts. After adjusting for these non-recurring elements, our diversified segment was ahead of expectation, thanks to strong wellbutrin performance and outstanding Rx growth for CABTRIO. Finally, Bausch & Lomb's revenue were $1.3 billion, up 5% on a reported basis and 3% on an organic basis compared to the same period last year. Now turning our focus to our balance sheet, starting on page 22.

W in Canada, following our increase promotional efforts in these 2 regions.

Turn now our Focus to our diversity segments, which you will find on page 19.

Revenues were 219 million? A decrease of 13% compared to the same period a year ago.

From the Department of Defense due to generic supplier, stockouts.

After adjusting for these non-recurring elements are Diversified segment. Was ahead of expectation. Thanks to Strong World. Butrin performance and outstanding RX growth for cap Trio.

Finally Barkin, Long's Revenue were 1.3 billion up 5% on reported basis and 3% on an organic basis. Compared to the same period last year.

Thomas Appio: Our strong operational cash flow generation was largely offset by outflows associated with the $7.9 billion refinancing we closed on April 8th. This resulted in our net debt remaining flat during the quarter. While growth debt stands approximately at $16.1 billion, our cash on hand at the end of Q2 has now increased to almost $1.5 billion. This is allowing us to actively reduce the negative carry associated with our cash on hand without jeopardizing our financial flexibility for the future. As we announced earlier this week, about $900 million of available liquidities will be used in the coming weeks to repay some of our most expensive debts, namely our nine-and-a-quarter 2026 notes and our accounts receivables facility. This will still leave us with almost $600 million of cash on hand for general business purposes, including reinvestment in the business, business development-related payments, and working capital needs.

Now, turning our focus to our balance sheet, starting on page 22,

A strong operational. Cash flow. Generation was largely upset by outflows associated with the 7. 4 9.

This resulted to our net debt remaining flat during the quarter.

While growth debt stands approximately at $16.1 billion, our cash on hand at the end of Q2 has now increased to almost $1.5 billion.

This is allowing us to actively reduce the negative carry associate.

With our cash on hand, without jeopardizing our financial flexibility for the future.

As we announced earlier this week about 900 million dollars of available liquidity will be used in the coming weeks to rebates of our most expensive debts, namely our 9 and a quarter 2026 notes and our accounts receivables facility.

Thomas Appio: Separately, given the current strength of the financial markets, we will be exploring options to push out some of our 2028 maturities either through our April 2025 financing agreements or other means. Let me now move to our full-year guidance before wrapping up with our strategic priorities for the back half of the year, which you will find on page 24. We are reaffirming our full-year 2025 guidance for Bausch Health, excluding Bausch & Lomb, which remains as follows: Revenue is expected to be between $4,950,000,000 and $5,100,000. The midpoint of that range translates to a 4% increase year over year. Our adjusted EBITDA outlook is also unchanged and is still expected to be between $2,625,000,000 and $2,725,000,000. The midpoint of that range would represent a 5% increase versus 2024. Adjusted operating cash flow is still expected to be between $825,000,000 and $875,000,000.

This will still leave us with almost 600 million of cash on hand for General business purposes, including reinvestment in the business business development, related payments and working capital needs.

separately given the current strength of the financial markets, we will be exploring options to push out some of our 2028 maturities, either through our April 2025 financing agreements or other means

Let me now move to our full year guidance.

Before wrapping up.

Strategic parties for the back half of the year which you will find on page 24.

We are reaffirming our full year 2025 guidance. For Bosch Health, excluding Bashan law which remains as follows.

Revenue is expected to be between 4 billion, 950 million and 5 billion 100 million dollars.

The midpoint of that range translates to a 4% increase year-over-year.

Our adjusted outlook remains unchanged and is still expected to be between $2.625 billion and $2.725 billion. The midpoint of that range would represent a 5% increase versus 2024.

Thomas Appio: In summary, we had an outstanding first six months and remain on track for achieving our full-year objectives. Our strategic priorities remain the same. First, increasing the value of Bausch Health operational assets through innovation, optimizing the growth of our portfolio of brands across the globe, as well as pursuing opportunities to build further our portfolio of assets through business development. Second, evaluating all options for unlocking value for all stakeholders, including maximizing the value of our Bausch Health and Bausch & Lomb assets. And third, continuing to optimize our capital structure. As we indicated earlier, we have already identified specific opportunities to reduce the net cost of capital of our debt over the next couple of months. I will now hand the call back to Tom for the wrap-up. Thank you, JJ.

Adjusted operating cash flow is still expected to be between 825 million and 875 million.

In summary we had an outstanding first 6 months and remain on track for achieving our full year objectives.

All strategic parties remain the same. First increasing the value of B Health operational assets through Innovation optimizing. The growth of our portfolio of Brands across the globe, as well, as pursuing opportunities, to build further, our portfolio of assets, through Business Development.

Second, evaluating all options, for unlocking value, for all stakeholders, including maximizing the value of our Bosch health and Bosch, and law assets.

And third continuing to optimize our capital structure as we indicated earlier. We have already identified specific opportunities to reduce the net cost of capital of our debt or the next couple months.

I will not hand the call back to Tom for the wrap-up.

Thomas Appio: Before we turn it over for questions, I want to thank the entire Bausch Health global team for their hard work and dedication, helping us to deliver another strong quarter, building our momentum through the first half of 2025, and positioning us well to continue executing against our strategic priorities for the remainder of the year. We remain confident in the growth opportunities ahead of us and our ability to deliver value for our stakeholders. With that, we will now turn to questions. Operator, please open the line for Q&A.

Thank you, JJ.

Before we turn it over for questions, I want to thank the entire Bosch Health Global team for their hard work and dedication.

Helping us to deliver another strong Quarter, building our momentum, through the first half of 2025 and positioning us. Well to continue executing against our strategic priorities for the remainder of the year.

We remain confident in the growth opportunities ahead of us, and our ability to deliver value for our stakeholders.

With that, we will now turn to questions. Operator, please open the line for Q&A.

Garen Sarafian: Thank you. And at this time, we will conduct a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would 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. One moment, please, while we pull for questions. And our first question comes from Jason Gerberry with Bank of America. Please state your question.

And at this time, we will conduct a question and answer session.

If you would like to ask a question, please press *1 on your telephone keypad.

Question Q.

You may press start if you would 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.

1 moment, please, while we pull for questions.

Jason Gerberry: Oh, thanks for taking my question. Just wanted to follow up. So I think some of the commentary on capital deployment, I didn't hear buybacks, although I think you guys did mention share buybacks as something of potential interest in one queue. So I'm just kind of curious if that's still something possibly being contemplated. And then on the DTC efforts with Xifaxan, can you just confirm, is this mainly on the IBS side? You know, my recollection is, you know, the growth outlook was perhaps more robust on the IBS side, whereas HE market share had kind of hit a ceiling. So maybe if you just kind of confirm sort of the outlook there on the DTC side.

And our first question comes from Jason gbury with Bank of America, please State your question,

Oh uh thanks for taking my questions. Um,

Just wanted to follow up. So I think some of the comments here on Capitol deployment. Um, I didn't hear BuyBacks, although I think you guys did mention chair BuyBacks is something of potential interest in 1 Q. So, I'm just kind of curious, that's still, uh, something possibly being contemplated and then on the DTC efforts with the fact and is this, can you just confirm is this mainly on the IBS side? Um, you know, my recollection is, you know, the the growth Outlook was maybe perhaps more robust on the IBS side. Whereas H market share had kind of hit a ceiling. So but maybe if you just kind of confirm sort of the the Outlook there on the DTC side,

Thomas Appio: Sure. Okay. So I think we'll take the question on the share repurchase first. I'll hand that to JJ. Yeah. So our capital allocation strategy remains the same. The first is to really deliver the business. The second is to reinvest in the business. And then if there's any surplus return capital to shareholders in different forms, a share buyback could be one of those forms. We did mention that as a possibility last quarter just because the stock price was so depressed. And so therefore, when there are exceptional circumstances, there's always, I think, the obligation to review the priority list and see if there's any opportunity to do a program limited in size. Since then, a number of things have changed. We've decided to reinvest in the business, as evidenced by the direct deal that we've just announced.

Sure, um, okay, so I think we'll we'll take the um, the question on the share repurchase first, I'll hand that to JJ.

Thomas Appio: And so therefore, while we continue to evaluate the possibility, it has gone back to the back burner. Yeah. And Jason, I'll take the second part of your question regarding Salix and Xifaxan. So the investment that we're making is in OHE DTC. In the past, we have had DTC campaigns for IBSD, but right now our focus is growing OHE. And we have had broad growth on both indications, but we are focusing on our OHE indication and investing heavily behind it. I think when we look at the quarter and the 10% growth, we're getting a really nice growth in the volume side at 6% and a little bit on the price side at 3%. So again, driving volume, if you look at the TRX growth in the quarter, it's 6%.

Yeah, so our, um, Capital allocation strategy Remains the Same. The first is to really deliver the business second is to reinvest in the business and then, if there's any surplus, uh, return Capital to shareholders in different forms and share buyback. Could be 1 of those, uh, forms. Uh, we did mention that as a possibility last quarter, just because the stock price was so depressed. And so, therefore, when there are exceptional circumstances, there's always, uh, I think the obligation to review, uh, the priority list and see if there's any opportunity to um uh do a program, uh, Limited in size. Um, since then, uh, a number of things have changed. We've decided to, uh, reinvest in in the business, um, uh, as evidenced by the direct deal that we've just announced. Um, and so, therefore, while we continue to evaluate

Uh the possibility. It it has gone back to the back burner.

Thomas Appio: You look at the non-retail as 18% and total extended units is 7%, with a total new to brand, as I said in my prepared remarks, 8% growth and 67,000 new patient starts. So our OHE business is growing very nicely. And clearly, as I've talked about in prior conference calls, our engine that we are using to drive our customers' insight engine now is reaching heights of 90% adherence. So our focus continues to be investment in our field force, in the tools that they have, and of course, the DTC investments as well. Operator, next question.

Yeah, Jason, I'll take the SEC. The second part of your question regarding, uh, Selix and Z fact. And so, the investment that we're making, uh, is in. Oh, uh, DTC, uh, in the past we have had, uh, uh, DTC campaigns for IBS D, but right now our focus is growing. Oh, and that's we have had broad growth on both indications. But, you know, we are focusing on, oh, indication and investing heavily behind it. I think the, you know, when we look at the quarter, uh, and the 10% growth, you know, we're getting a really nice, uh, growth in the volume side. It's 6%. And a little bit of on the price side at 3%. So again, driving volume, if you look at the TRX growth, in the quarter, uh, is is 6%. You look at the non retail is 18 and total extended units is 7. Um, with uh, you know, a total new to Brand as I

As I said in my prepared remarks, 8% growth and a CI at 67,000 new patient starts. So our OE, um, the business is growing very nicely, uh, and clearly, as I've talked about in, um, prior conference calls, our, you know, our engine that we are using to drive our customer inside engine now is reaching, uh, heights of 90% adherence. So our focus continues.

Continues to be investment in our fuel force in the tools that they have. Uh, and of course, uh, the DTC, uh, Investments as well.

Operator. Next question.

Garen Sarafian: Thank you. And a reminder to the audience: to ask a question at this time, press star one on your telephone keypad. To remove yourself from the queue, press star two. Once again, to ask a question, press star one on your telephone keypad. And your next question comes from Umer Rafat with Evercore ISI. Please state your question.

Thank you and a reminder to the audience to ask a question at this time. Press star 1 on your telephone keypad,

To remove yourself from the queue, press *2.

once again to ask a question, press star 1 on your telephone keypad,

Jason Gerberry: I got a couple of questions on the Rifaximin franchise, if I may. First, the SSD trials, I wanted to confirm that lactulose background therapy is, in fact, allowed. And secondly, I also wanted to confirm the population you're using is, in fact, inadequate responders to lactulose in the primary prevention setting. And then finally, have you guys considered or debated internally the possibility of a Xifaxan OTC? Thank you.

and your next question comes from Umar Rafa with evercore isi, please State your question,

Setting. And then finally um have you guys considered or debated internally the possibility of a zapin OTC. Thank you.

Thomas Appio: Thanks, Umer, for the question regarding Rifaximin. So I think that when we, again, when we look at what we're trying to achieve here, this is a prevention trial. And what I have to, when we look at it and the population that we can treat, just I want to just level set the size of the opportunity. And then I can talk specifically about what your question was. 4.5 million patients in the US suffer from chronic liver disease and/or cirrhosis. 2.5 million are adults with cirrhosis. So if we take a look and then split it out, when we look at Xifaxan today, where we are, we're looking at a patient population of about 650,000 patients. On the SSD side, we're looking at 1.9 million patients. So we see this as a great opportunity to expand our franchise. I'll take the second part of your question.

Thomas Appio: Have we considered the possibility of Xifaxan OTC? It's a good question. I have not really considered it at this time. When we look specifically to your question of wanting to know the combination of lactulose, I'll have to get back to you on specifically how that was run in the trial with lactulose. But that would be something the team can follow up with after this call. Operator, next question.

Thank you for the question uh, regarding Rafa. So I think that when we again, when we look at what we're trying to achieve here, this is a prevention trial. Um and what I have to, when we look at it and the population that we can trait, just I want to just level set, you know the the size of the opportunity. And then what I can talk specifically about what your question was, you know, 4.5 million patients in the US suffer from chronic liver disease. Uh Andor cirrhosis, you know, 2.5 million, you are adults with cirrhosis. So if we take a look and then split it out, um, you know, when we look at zaps in today where we are, we're looking at a patient population about 650,000 patients on the SSD side, we're looking at 1.9 million patients. So we see this as a great opportunity, uh, to expand our franchise. Um, I'll take the second part of your question. Have we considered the possibility?

Of the facts and OTC. Uh, you know, it's a good question. Uh, have not, uh, really, you know, considered at this time when we look specifically to your question of wanting to know the combination of lulos, uh, I'll have to get back to you on, you know, specifically how that was run on the, in the trial, uh, with lactulose. But that would be something the team can follow up with, uh, you know, after this call.

Operator. Next question.

Garen Sarafian: Thank you. Just another reminder to ask a question, press star one on your telephone keypad. And your next question comes from Doug Meeham with RBC Capital Markets. Please state your question.

Thank you. It's just another reminder task. A question press star 1 on your telephone keypad.

Doug Miehm: Yeah. Good afternoon. My question, just the first one, just has to do with Xifaxan. Maybe you could provide any details as you think about potential IRA headwinds in 2027. And then the second one just has to do with, and maybe you touched on this a little bit, the discrepancy between revenue growth and prescription growth, both for Relistor and Truelance. Thanks very much.

And your next question comes from Doug Miam with RBC Capital Markets. Please state your question.

Yeah, good afternoon. Um, my question just uh first 1 just has to do with side fact and maybe you could um

Provide any details as you think about them about potential Roi, headwinds Ira, headwinds in 2027, and then the second 1, uh, just has to do with, um, and maybe you touched on this a little bit, the discrepancy between, uh, Revenue growth and prescription growth, uh, both for Lister and true lines. Thanks very much.

Thomas Appio: Thanks, Doug, for the question. Yeah, we can, I'll touch upon the first one in terms of Xifaxan details in the IRA. As you know, Xifaxan was selected for the negotiation, and those negotiations are ongoing. Right now, it's scheduled to conclude in October of 2025, and CMS is expected to announce the final price by November of 2025. As we're going through the process, multiple meetings, we have an outstanding market access team monitoring the situation. Right now, we have the next meeting set for the coming month, and we'll see how the negotiation goes. But clearly, as we look at it, we're working hard on it and presenting our case. As we always said, Xifaxan today has a huge savings in the burden of the government payers, especially in the hospital setting.

Thanks for the question. Yeah, we can. I'll touch upon the first 1 in terms of the facts and details in the ira, as you know, as I fax in was selected, uh, for the negotiation, um, and those negotiations are ongoing, uh, right now, uh, it's scheduled to conclude in in October of 2025, uh, and CMS is expected to announce, uh, you know, the final price, uh, by November of of 2025, um, you know, as we, you know, we're we're going through the process, uh, multiple meetings. Uh, we have a outstanding Market access team monitoring the situation. Um, you know, right now, uh, you know, we have, uh, the next meeting set for the coming month and we'll see how the negotiation goes, uh, but clearly, uh, as we look at it, um, we're, you know, working hard on it and uh, presenting our case, you know, as we all

Thomas Appio: So we think that it continues to reduce hospitalization costs and creates a large savings for the healthcare system today. The discrepancies between revenue and the prescription growth for Relistor and Truelance, on the Relistor side, we now have a new leader in place, and we're continuing to look for ways to grow that franchise. We have grown in the second quarter, and we're really seeing some really nice trends there. And then on the Truelance side, the product continues to perform. As we look at it, the challenge on the Truelance side is always from a growth-to-net standpoint. JJ, you want to add anything to that? Yeah. Hi, Doug. Yes, for the three brands, we got some favorability on growth-to-net with some accruals that were released in the quarter.

Always said as I fax in today, has huge savings, uh, you know, in the burden of the government, uh, payers, you know, especially in the hospital setting. So we think that, uh, you know, it continues, uh, to reduce hospitalization costs and creates a large, uh, savings. So, the health care system today, um, you know, the discrepancies between revenue and the prescription growth for RellaStore and TruLens. Uh, we on the RellaStore side.

Uh, we now have uh, a new leader in place, and we're continuing to look, uh, for ways to to grow that franchise. We have, we have grown in the second quarter. Um, and we're really seeing some really nice Trends there, um, and then on a true land side, uh, the, you know, the product continues, uh, you know, to perform, you know, as

As we look at it, the challenge untrue land side is always from growth to net standpoint.

JJ. Want to add anything to that? Yeah. Hi Doug. Um, yes. Uh, 4. The for the 3 Brands. We got some variability on the gross to net.

Thomas Appio: So that really explains the large discrepancy between the revenue performance of Truelance and Relistor and the script or the volume behavior in the quarter.

Behavior in the quarter.

Doug Miehm: Perfect.

Thomas Appio: Operator, next question?

Doug Miehm: Yeah.

Thomas Appio: Yeah.

Doug Miehm: Sorry. Doug, you have another question? Well, yeah, I did want to just ask on Direct. Is there any additional information you can provide on that? It looks like an interesting acquisition, given that you may be the only approved product if the results work out and you get approval, of course. Is there anything you want to add to the opportunity there?

Perfect. Next question. Yeah, sorry have another question.

Oh, yeah. I did want to just ask on Direct. Is there any additional information you can provide on that? It looks like an interesting acquisition. Given that you may be the only approved product, if the results work out when you get approval, of course, is there anything you want to add to the opportunity there?

Thomas Appio: Yeah. So, as you said, it's a very interesting opportunity. We're very pleased. As you know, with our announcement, we intend to commence a tender offer shortly. So I'm limited as what I can say. But assuming we successfully close the acquisition, I'm really looking forward to providing further detail on the thinking and the underlying science behind this acquisition. As we've talked about already on the call in terms of Xifaxan and hepatology and OHE and the opportunities to address this patient population, we are a hepatology company. We have really strong expertise in this area from the R&D side and also from the commercial side. So I'm really looking forward to providing more on the science after the deal closes.

Yeah. So, um, as you said, it's a, you know, a very, uh, interesting opportunity. Um, we're we're very pleased as, you know, you know, with our announcement. We tend to we intend to commence the tender offer shortly, so I'm limited as what I can say. But you know, assuming we successfully successfully closed the acquisition. I'm really looking forward to providing further detail on the thinking and the underlying science behind this acquisition. As, as we've talked about, already on the call in terms of zy fact, in and hepatology and oh uh and the opportunities to address this patient population uh we are a hepatology company. We have really strong expertise in this area from the um, R&D side and also from the commercial side. Um, so I'm really looking forward to uh, you know, providing more

Doug Miehm: Sure. Thank you.

On the science, uh, after the deal closes.

Sure, thank you.

Thomas Appio: Thank you. Next question.

Thank you.

Garen Sarafian: And your next question comes from Mike Nadelkovich with TD Cowan. Please state your question.

Next question.

Doug Miehm: Hi. Thank you for the questions. I have two. My first is on the Direct asset. It looks like large two Costorol missed its primary survival endpoint in phase 2B, though there was a positive trend. So what gives you the confidence that data will improve rather than worsen in a larger phase three trial? And on a related note, the press release suggests that only one phase three trial will be required. Am I understanding that correctly? And then my second question relates to Rifaximin SSD. Although not approved for primary prevention, there are some studies that suggest Xifaxan could be effective in that setting. And so far, it's not totally clear that Rifaximin SSD offers any differentiation. So it would seem the risk of off-label generic Rifaximin use for primary prevention might be relatively high.

On your next question comes from Mike Nadler.

Doug Miehm: So my question, given this possibility, is whether you've considered running a head-to-head trial between the two formulations. Thank you.

Hi. Thank you for the questions I have 2. Uh, my first is on the direct asset. It looks like large 2 koester. All missed its primary survival endpoint in Phase 2B, though, there was a positive trend. So what gives you the confidence that data will improve rather than in a larger phase 3 trial. Uh, and On a related note, the press release suggests that only 1 phase 3 trial will be required. And my understanding that correctly uh and then my second question relates to rifaximin SSD although not approved for primary prevention. There are some studies that suggest side facts and could be effective in that setting. And so far, it's not totally clear that right facts and then SSD offers any differentiation. So it would seem the risk of off-label generic, right faxing been used for, primary prevention, might be relatively high. So, my question, given this possibility is whether you've considered running a head-to-head trial between the 2 formulations.

Thank you.

Thomas Appio: Yeah, Mike, thanks for the question. On the Direct, there's, as I said on the previous question, I'm limited to what I can speak about at this time. Yes, you are correct in terms of the trial that they ran, but it was a very slight miss on the primary endpoint. As I said previously, our R&D team has, we are an expert in hepatology, and we believe that this is a very interesting asset for us. So I'm looking forward in the future to providing the science behind it. And yes, confidence in running one three-phase trial at the present time. On the second question, the SSD formula is quite different. The dosage is quite different, and the way it acts in the gut is quite different. So with this new formula, we believe this is the product to use for prevention.

Yeah, Mike. Thanks for the question. Um, on the direct. Uh, there's as I said on the previous question, you know, I'm limited to to what I can speak about at this time. Uh, yes, you are correct, uh, in terms of the trial that they ran, um, but it was a very slight, uh, you know, Miss on the primary endpoint as I said, uh, previously, uh, you know, our R&D team, uh, has, uh, you know, we are an expert in hepatology. Uh, and uh, we believe that this is a very interesting asset for us. So I'm looking forward in the future to be providing the science behind it. And yes, uh, confidence in running, you know, 1 3 phase trial at the present time on the second question. Um, you know, we are the SSD formula, uh, is quite different. The dosage is quite different and the way it acts in the gut is quite different. Uh, so you know, with this new, uh,

Thomas Appio: And we are not, at this time, planning to run any head-to-head trials. Operator, next question.

Formula, you know, we believe this is the product to use for prevention.

And we are not uh at this time running uh you know, plants to run any uh head-to-head trials.

Operate, our next question.

Garen Sarafian: Thank you. And the last question will come from Umer Rafat with Evercore ISI. Please state your question.

Jason Gerberry: I got it. Thanks for the follow-up. I just wanted to touch base again on some of the IRA points you made. I know the negotiations are ongoing, but just to level set and prepare the street, would you agree that some of the price points we saw for the 2026 drugs, which were anywhere between 40% and 80% and generally about a 60% cut median, is probably the zip code we're talking as Xifaxan makes progress through this? Or would you rather point us to some of the emerging feedback that the ongoing negotiations are more in HHS is being much more aggressive than previously? I just want to make sure we're all prepared for this.

Thank you. And the last question will come from Umar Rafa with evercore isi. Please State your question.

I got thanks for the follow-up. I just wanted to touch back uh touch base. Again on some of the IRA points you made, I know you're the negotiations are ongoing but just to level set and prepare the street. Uh, would you agree that some of the price points we saw for the 2026 drugs? Which were anywhere between 40 and 80%? And generally about a 60%, cut medium. Um, is probably the ZIP code. We're talking as the fact and makes progress through this. Or um, would you rather point us to some of the emerging feedback that the ongoing negotiations are more in HHS is being much more aggressive than previously? I just want to make sure we're all prepared for this.

Thomas Appio: Yes, Umer, thanks for the follow-up question. Yeah, I'll just touch on it briefly in terms of the negotiation, and then I'll hand it over to JJ. As we look at this and in these negotiations, we did not believe we should have been on the list to begin with. So if you look at some of the criteria, but we were. And so as we go through this negotiation and speaking to CMS and what our points would be and the savings already to the healthcare system, what I would say is our team is evaluating multiple levers here as we look to see what we can do as we get to the end and get to a price that would be the discount that we have to give.

Thomas Appio: So looking at our various options and many levers and turning over every stone to make sure that we try to minimize the impact. JJ? Umer, this is JJ. So the way you're looking at it is accurate, but relies on a big assumption as to how the drug is classified, whether it's a long-term monopoly or a short-term monopoly. Then the regulations will drive a certain level of percentage, minimum and maximum that will be applied to really the gross revenue. So you have to look at the size of the business that goes through basically Medicare Part D, how the drug is going to be classified. As we said repeatedly, those discussions are ongoing.

You know, as we look at this, um, and in these negotiations, you know, we we did not believe we should have been on the list, uh, to begin with. Um, so you know, if you if you look at uh, some of the criteria but we were and so as we go through um you know this negotiation and speaking to IMF CMS um you know, and what our points would be and the savings are ready to the Health Care System. What I would say is, um, you know, we our team is evaluating multiple levers here as we look to see what we can do, as we get to the end and get to a price uh, that you know, would be the discount that we have to give. So looking at our various options, uh, and many levers, and turning over every stone to make sure uh, that we, um, try to minimize the impact.

JJ.

Umar, uh, this is JJ. So, the way um, you you're looking at it is is accurate, uh, but relies on a big assumption as to how the drug is classified. Whether it's a long-term Monopoly, or a short-term Monopoly, then the regulations will will drive a certain level of, uh, percentage minimum and maximum that will be applied to uh, really the gross revenue. Um, so you have to look at the size of the business that goes through through. Basically Medicare Part D, how the drug is going to be class.

Thomas Appio: And then, as Tom alluded to, once you have an understanding of the baseline, then there are a number of strategies we can deploy to offset the potential impact associated with the increase in the rebate level. So once all those variables settle, we'll be in a better position to really communicate to the market what's going to be the one-time impact in 2027.

Jason Gerberry: That's very helpful, JJ. Thank you.

Ified, as we said the repeatedly those uh uh discussions are ongoing and then as Tom alluded to once you have an understanding of the Baseline. Then there are a number of strategies we can deploy to uh offsets uh the potential impact associated with the increase in the rebate level. Um so once all those variables settle will be in a better position to really communicate uh, to the market. What's going to be the 1 time in back in 2027?

That's very helpful, J. Thank you.

Garen Sarafian: Thank you. And we have reached the end of the question and answer session. I will now turn the call over to Tom Appio for closing remarks.

Thank you. And we have reached the end of the question and answer session. I will now turn the call over to Tom abio for closing remarks.

Thomas Appio: Thank you for all joining the call today and for your continued interest and support of the company. We remain committed to executing against our strategic priorities and focus on unlocking value and driving sustainable growth and advancing innovation across our portfolio. We appreciate your ongoing engagement and look forward to sharing further updates on the progress in the quarters ahead. Thank you and have a good evening.

Thank you for all joining the call today and for your continued interest and support of the company.

Garen Sarafian: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

We remain committed to executing against our strategic priorities and focus on unlocking value and driving sustainable growth and advancing Innovation across our portfolio. We appreciate your ongoing engagement and look forward to sharing further updates on the progress in the quarters ahead. Thank you and have a good evening.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.