Q3 2025 Bausch Health Co Inc Earnings Call

October 29, 2025

[Analyst]: SA It.

Speaker #1: Greetings and welcome to the Bausch Health third Quarter 2020 Earnings Conference Call . At this time , all participants are in listen only mode A question and answer session will follow the formal presentation .

Operator: Greetings and welcome to the Bausch Health Companies Inc. third quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. You may be placed into the question queue at any time by pressing Star 1 on your telephone keypad. If anyone should require operator assistance, please press Star 0. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Garen Sarafian, Vice President, Investor Relations. Garen, please go ahead.

Operator: Greetings, welcome to the Bausch Health Q3 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. You may be placed in the question queue at any time by pressing star one on your telephone keypad. If anyone should require operator assistance, please press star zero. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Garen Sarafian, Vice President, Investor Relations. Garen, please go ahead.

Speaker #1: You may be placed into question queue at any time by pressing star one on your telephone keypad . If anyone should require operator assistance , please press star zero .

Speaker #1: As a reminder , this conference is being recorded . It's now my pleasure to turn the call over to your host , Garen Sarafian Vice President , Relations .

Speaker #1: Please go ahead .

Speaker #2: Good afternoon , and welcome to Bausch Health . Third quarter 2020 earnings Conference call . Participating in today's call are Thomas Appio Chief Executive officer of Bausch Health and JJ Sharon , chief financial officer .

Garen Sarafian: Good afternoon and welcome to Bausch Health Companies Inc.'s third quarter 2025 earnings conference call. Participating in today's call are Thomas Appio, Chief Executive Officer of Bausch Health Companies Inc., 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 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.

Garen Sarafian: Good afternoon, welcome to Bausch Health's Q3 2025 Earnings Conference Call. Participating in today's call are Thomas Appio, Chief Executive Officer of Bausch Health, and J.J. Sharon, Chief Financial Officer. Before we begin, I would like to remind you that our presentation today contains forward-looking information. We ask you 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.

Speaker #2: 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 forward looking statements .

Speaker #2: Disclaimer at the beginning of the pages that accompany this presentation contains important information . Our the actual results may vary materially from those expressed or implied in our forward looking statements .

Speaker #2: 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 .

Speaker #2: Those documents , including the cautionary statements , are also available on the Investor Relations website . We use non-GAAP financial measures to help investors understand our operating performance .

Garen Sarafian: Those documents, including the full cautionary statements, are also available on Bausch Health Companies Inc.'s Investor Relations website. We use non-GAAP financial measures to help investors understand 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 accompany this presentation which are available on Bausch Health Companies Inc.'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, October 29th, will focus on Bausch Health Companies Inc. excluding Bausch + Lomb. However, we will briefly comment on Bausch + Lomb's results announced this morning.

Garen Sarafian: Those documents, including the full cautionary statements, are also available on Bausch Health's investor relations website. We use non-GAAP financial measures to help investors understand 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 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, October 29th, will focus on Bausch Health, excluding Bausch + Lomb. However, we will briefly comment on Bausch + Lomb's results announced this morning.

Speaker #2: non-GAAP financial measures may not be comparable to similarly titled measures used by other companies , and should be considered , along with , but not as an alternative to , measures calculated in accordance with GAAP .

Speaker #2: You will find reconciliations of our historic non-GAAP measures in the appendix of the pages that accompany this presentation , which are available on the Investor Relations website .

Speaker #2: Finally , the financial guidance in this presentation is effective as of today , only . We do not undertake any obligation to update guidance .

Speaker #2: Our discussion today , Wednesday , October 29th , will focus on Bausch Health , excluding Bausch and Lomb . However , we will briefly comment on Bausch and Lomb results announced this morning .

Speaker #2: 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 , Thomas Appio Tom .

Garen Sarafian: 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, Thomas Appio.

Garen Sarafian: 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?

Thomas Appio: Tom, thank you, Garen, and welcome to everyone joining our earnings call today. In the third quarter, Bausch Health Companies Inc., excluding Bausch + Lomb, delivered our 10th consecutive quarter of revenue and adjusted EBITDA growth. Consistent with our strong performance this year, our teams continue to execute with discipline and focus, driving operational and financial momentum across the business. I will start by providing some highlights from our third quarter results. In the third quarter, Bausch Health Companies Inc., excluding Bausch + Lomb, delivered year-over-year revenue growth of 7% on a reported basis and 5% on an organic basis. We achieved 7% adjusted EBITDA growth for Bausch Health Companies Inc., excluding Bausch + Lomb, which included an $81 million charge to acquire R&D. Excluding this charge, our adjusted EBITDA grew 18%.

Speaker #3: Thank you Gary . And welcome to everyone joining our earnings call today . In the third quarter . Bausch Health , excluding Bausch Lomb , delivered our 10th consecutive quarter of revenue and adjusted EBITDA growth consistent with our strong performance this year .

Thomas J. Appio: Thank you, Garen, welcome to everyone joining our earnings call today. In Q3, Bausch Health, excluding Bausch + Lomb, delivered our 10th consecutive quarter of revenue and Adjusted EBITDA growth, consistent with our strong performance this year. Our teams continue to execute with discipline and focus, driving operational and financial momentum across the business. I will start by providing some highlights from our Q3 results. In Q3, Bausch Health, excluding Bausch + Lomb, delivered year-over-year revenue growth of 7% on a reported basis and 5% on an organic basis. We achieved 7% Adjusted EBITDA growth for Bausch Health, excluding Bausch + Lomb, which included an $81 million charge to acquire IPR&D. Excluding this charge, our Adjusted EBITDA grew 18%.

Tom Appio: Thank you, Garen, welcome to everyone joining our earnings call today. In Q3, Bausch Health, excluding Bausch + Lomb, delivered our 10th consecutive quarter of revenue and Adjusted EBITDA growth, consistent with our strong performance this year. Our teams continue to execute with discipline and focus, driving operational and financial momentum across the business. I will start by providing some highlights from our Q3 results. In Q3, Bausch Health, excluding Bausch + Lomb, delivered year-over-year revenue growth of 7% on a reported basis and 5% on an organic basis. We achieved 7% Adjusted EBITDA growth for Bausch Health, excluding Bausch + Lomb, which included an $81 million charge to acquire IPR&D. Excluding this charge, our Adjusted EBITDA grew 18%.

Speaker #3: Our teams continue to execute with discipline and focus , driving operational and financial momentum across the business . I will start by providing some highlights from our third quarter results .

Speaker #3: In the third quarter , Bausch Health , excluding Bausch and Lomb , delivered year over year revenue growth of 7% on a reported basis and 5% on an organic basis .

Speaker #3: We achieved 7% adjusted EBITDA growth for Bausch Health , excluding Bausch and Lomb , which included an 81 million charge to acquire R&D .

Speaker #3: Excluding this charge , our adjusted EBITDA grew 18% . We reduced our debt by approximately $600 million , using cash on hand and as a result of our strong performance in the first nine months of the year , we are raising full year guidance for revenue , adjusted EBITDA and adjusted cash flow from for Bausch Health .

Thomas Appio: We reduced our debt by approximately $600 million using cash on hand, and as a result of our strong performance in the first nine months of the year, we are raising full-year guidance for revenue, adjusted EBITDA, and adjusted cash flow from operations for Bausch Health Companies Inc., excluding Bausch + Lomb. I am pleased with how our teams have navigated through a dynamic macro backdrop, embodying the culture of accountability and urgency that defines Bausch Health Companies Inc. Across our global platform, we saw traction in many areas. Consolidated Bausch Health Companies Inc., as well as Bausch Health Companies Inc., excluding Bausch + Lomb, both achieved year-over-year revenue growth of 7% on a reported basis and 5% on an organic basis during the quarter, showcasing the consistent strong performance across the enterprise.

Thomas J. Appio: We reduced our debt by approximately $600 million using cash on hand. As a result of our strong performance in the first nine months of the year, we are raising full-year guidance for revenue, Adjusted EBITDA, and adjusted cash flow from operations for Bausch Health, excluding Bausch + Lomb. I am pleased with how our teams have navigated through a dynamic macro backdrop, embodying the culture of accountability, urgency that defines Bausch Health. Across our global platform, we saw traction in many areas. Consolidated Bausch Health, as well as Bausch Health, excluding Bausch + Lomb, both achieved year-over-year revenue growth of 7% on a reported basis and 5% on an organic basis during the quarter, showcasing the consistent strong performance across the enterprise.

Tom Appio: We reduced our debt by approximately $600 million using cash on hand. As a result of our strong performance in the first nine months of the year, we are raising full-year guidance for revenue, Adjusted EBITDA, and adjusted cash flow from operations for Bausch Health, excluding Bausch + Lomb. I am pleased with how our teams have navigated through a dynamic macro backdrop, embodying the culture of accountability, urgency that defines Bausch Health. Across our global platform, we saw traction in many areas. Consolidated Bausch Health, as well as Bausch Health, excluding Bausch + Lomb, both achieved year-over-year revenue growth of 7% on a reported basis and 5% on an organic basis during the quarter, showcasing the consistent strong performance across the enterprise.

Speaker #3: Excluding Bausch and Lomb . I am pleased with how our teams have navigated through a dynamic macro backdrop embodying the culture of accountability , urgency that defines Bausch Health across our global platform .

Speaker #3: We saw traction in many areas , consolidated Bausch Health , as well as Bausch Health , excluding Bausch and Lomb . Both achieved year over year revenue growth of 7% on a reported basis and 5% on an organic basis .

Speaker #3: During the quarter , showcasing the consistent , strong performance across the enterprise , focusing on Bausch Health , excluding Bausch and Lomb at a segment level , we saw excellent double digit growth in our solta Salix businesses .

Thomas Appio: Focusing on Bausch Health Companies Inc., excluding Bausch + Lomb, at a segment level, we saw excellent double-digit growth in our Solta Medical and Salix Pharmaceuticals businesses. Solta Medical saw 25% growth on a reported basis and 24% on an organic basis, while Salix Pharmaceuticals delivered 12% growth on a reported basis and 11% growth on an organic basis. These are two key growth areas that continue to deliver outstanding results. At the product level, we continue to see healthy performance across our diverse portfolio with notable results in our hepatology, dermatology, and neurology offerings. We saw triple-digit growth for CABTREO and Rialtris, as well as double-digit growth for Xifaxan and Thermage FLX. Overall, we continue to demonstrate strong operational performance in the third quarter, and we are well positioned to execute on our strategic priorities as we close out this year and move forward to 2026.

Thomas J. Appio: Focusing on Bausch Health, excluding Bausch + Lomb, at a segment level, we saw excellent double-digit growth in our Solta and Salix businesses. Solta saw 25% growth on a reported basis and 24% on an organic basis, while Salix delivered 12% growth on a reported basis and 11% growth on an organic basis. Two key growth areas that continue to deliver outstanding results. At the product level, we continue to see healthy performance across our diverse portfolio with notable results in our hepatology, dermatology, and neurology offerings. We saw triple-digit growth for CABTREO and RYALTRIS, as well as double-digit growth for Xifaxan and Thermage. Overall, we continue to demonstrate strong operational performance in Q3, and we are well-positioned to execute on our strategic priorities as we close out this year and move forward to 2026.

Tom Appio: Focusing on Bausch Health, excluding Bausch + Lomb, at a segment level, we saw excellent double-digit growth in our Solta and Salix businesses. Solta saw 25% growth on a reported basis and 24% on an organic basis, while Salix delivered 12% growth on a reported basis and 11% growth on an organic basis. Two key growth areas that continue to deliver outstanding results. At the product level, we continue to see healthy performance across our diverse portfolio with notable results in our hepatology, dermatology, and neurology offerings. We saw triple-digit growth for CABTREO and RYALTRIS, as well as double-digit growth for Xifaxan and Thermage. Overall, we continue to demonstrate strong operational performance in Q3, and we are well-positioned to execute on our strategic priorities as we close out this year and move forward to 2026.

Speaker #3: Solta saw 25% growth on a reported basis and 24% on an organic basis , while Salix delivered 12% growth on a reported basis and 11% growth on an organic basis .

Speaker #3: Two key growth areas that continue to deliver outstanding results at the product level , we continue to see healthy performance across our diverse portfolio , with notable results in our hepatology , dermatology and neurology offerings .

Speaker #3: We saw triple digit growth for Cabtreo and Ryaltris , as well as double digit growth for Zai vaccine and Thermage . Overall , we continue to demonstrate strong operational performance in the third quarter and we are well positioned to execute on our strategic priorities as we close out this year and move forward to 2026 .

Speaker #3: With that , I will pass it over to JJ to discuss our financial results in more detail . Before I conclude our call with progress against our key strategic priorities .

Thomas Appio: With that, I will pass it over to JJ to discuss our financial results in more detail before I conclude our call with Bausch Health Companies Inc.'s progress against our key strategic priorities. JJ, thank you, Tom.

Thomas J. Appio: With that, I will pass it over to JJ to discuss our financial results in more detail before I conclude our call with BHC's progress against our key strategic priorities. JJ?

Tom Appio: With that, I will pass it over to JJ to discuss our financial results in more detail before I conclude our call with BHC's progress against our key strategic priorities. JJ?

Speaker #3: JJ thank .

Speaker #4: You , Tom . Let's first turn to our consolidated performance , starting with our non-GAAP financial results for the third quarter , which you will find starting on page nine .

Jean-Jacques Charhon: Thank you, Tom. Let's first turn to our consolidated performance, starting with our non-GAAP financial results for Q3, which you will find starting on page 9. Revenue was $2,681 million, up 7% on a reported basis and 5% on an organic basis compared to the same period a year ago. Adjusted gross margin was 72.7%, 40 basis points lower year-over-year. Adjusted operating expenses were $1,024 million, an increase of $41 million compared to the same period last year. Adjusted EBITDA was $986 million, an increase of $77 million or 8% year-over-year. Finally, adjusted operating cash flow was $508 million.

Jean-Jacques Charhon: Let's first turn to our consolidated performance starting with our non-GAAP financial results for the third quarter, which you will find starting on page 9. Revenue was $2,681,000,000, up 7% on a reported basis and 5% on an organic basis compared to the same period a year ago. Adjusted gross margin was 72.7%, 40 basis points lower. Year-over-year adjusted operating expenses were $1,024,000,000, an increase of $41,000,000 compared to the same period last year. Adjusted EBITDA was $986,000,000, an increase of $77,000,000 or 8% year over year. Finally, adjusted operating cash flow was $508,000,000. Moving now to the performance of Bausch Health Companies Inc. excluding Bausch + Lomb for the third quarter starting on page 11, the third quarter marked another period of strong performance. As Tom mentioned, Bausch Health Companies Inc. excluding Bausch + Lomb achieved its tenth quarter of consecutive year-over-year revenue and adjusted EBITDA growth.

Speaker #4: Revenue was $2,000,000,681 million , up 7% on a reported And 5% on an organic basis compared to the same period a year ago .

Speaker #4: Adjusted gross margin was 72.7% , 40 basis points lower year over year . Adjusted operating expenses were $1,000,000,024 million , an increase of $41 million compared to the same period last year .

Speaker #4: Adjusted EBITDA was $986 million , an increase of $77 million , or 8% year over year . Finally , adjusted operating cash flow was $508 million .

Speaker #4: Moving now to the performance of Bausch Health , excluding Bausch and Lomb , for the third quarter . Starting on page 11 , the third quarter marked another period of strong performance .

Jean-Jacques Charhon: Moving now to the performance of Bausch Health, excluding Bausch + Lomb, for Q3, starting on page 11. Q3 marked another period of strong performance. As Tom mentioned, Bausch Health, excluding Bausch + Lomb, achieved its 10th quarter of consecutive year-over-year revenue and Adjusted EBITDA growth. Revenue was $1.4 billion, up 7% on a reported basis and 5% on an organic basis when compared to Q3 2024. Adjusted EBITDA was $773 million, up 7% versus the prior year, and included a charge of in-process R&D of $81 million related to our acquisition of DURECT. Excluding that, our Adjusted EBITDA increased operationally 18% year-over-year, which was outstanding.

Speaker #4: As Tom mentioned , Bausch Health , excluding Bausch and Lomb , achieved its 10th quarter of consecutive year over year revenue and adjusted EBITDA growth .

Speaker #4: Revenue was $1,000,000,400, up 7% on a reported basis and 5% on an organic basis when compared to the third quarter of 2020.

Jean-Jacques Charhon: Revenue was $1,400,000,000, up 7% on a reported basis and 5% on an organic basis when compared to the third quarter of 2024. Adjusted EBITDA was $773,000,000, up 7% versus the prior year and included a charge of in-process R&D of $81,000,000 related to our acquisition of Direct Corporation. Excluding that, our adjusted EBITDA increased operationally 18% year over year, which was outstanding. Finally, adjusted operating cash flow of $347,000,000 was only 1% up versus the third quarter of 2024 due to timing in working capital. Moving now to our third quarter performance by segment, starting with Salix on page 12, revenues were $716,000,000, an increase of $74,000,000 or 12% on a reported basis and 11% on an organic basis compared to the same period last year. Salix's strong performance in Q3 was primarily driven by two factors.

Speaker #4: For adjusted EBITDA was $773 million , up 7% versus the prior year , and included a charge of in-process R&D of $81 million related to our acquisition of Durect .

Speaker #4: Excluding that , our adjusted EBITDA increased operationally 18% year over year , which was outstanding . Finally , adjusted operating cash flow of $347 million was only 1% up versus the third quarter of 2020 .

Jean-Jacques Charhon: Finally, Adjusted operating cash flow of $347 million was only 1% up versus Q3 2024 due to timing in working capital. Moving now to our Q3 performance by segment, starting with Salix on page 12. Revenues were $760 million, an increase of $74 million of 12% on a reported basis and 11% on an organic basis compared to the same period last year. Salix strong performance in Q3 was primarily driven by 2 factors. First, our continued Xifaxan volume growth. Second, some one-time net pricing favorability associated with our Medicaid and 340B channel exits. More specifically, Xifaxan revenue grew 16% in Q3 with volume up 9%.

Speaker #4: Four . Due to timing in working capital . Moving now to our third quarter performance by segment , starting with sales on page 12 , revenues were $716 million , an increase of $74 million of 12% on reported basis and 11% on an organic basis , compared to the same period last year .

Speaker #4: Strong performance in Q3 was primarily driven by two factors . First , our continued xifaxan volume growth , and second , some one time net pricing favorability associated with our Medicaid .

Jean-Jacques Charhon: First, our continued Xifaxan volume growth and second, some one-time net pricing favorability associated with our Medicaid and 340B channel exits. More specifically, Xifaxan revenue grew 16% in the third quarter with volume up 9%. The AI-driven customer insights engine has been a significant contributor to the overall and new patient script growth, which were respectively 9% and 11%, a remarkable accomplishment for a drug which has been on the market for its OHE indication for the last 15 years. Separately, Trulance's volume grew 5% in Q3, which was more than offset by unfavorable net pricing headwinds in the quarter. Finally, ReadyStore continues to face a challenging payer coverage environment, yet we remain optimistic that the brand will soon return to growth. Now moving to the international segment, revenues were $286 million, a decrease of 2% on a reported basis and 4% on an organic basis.

Speaker #4: And three P-40b channel exits . More specifically , Xiafaxan revenue grew 16% in third quarter , with volume up The AI driven customer insights engine has been a significant to the overall and new patient script growth , which were nine and 11% .

Jean-Jacques Charhon: The AI-driven customer insights engine has been a significant contributor to the overall and new patient script growth, which were respectively 9% and 11%. A remarkable accomplishment for a drug which has been on the market for its OHE indication for the last 15 years. Separately, TRULANCE volume grew 5% in Q3, which was more than offset by unfavorable net pricing headwinds in the quarter. Finally, RELISTOR continues to face a challenging payer coverage environment, yet we remain optimistic that the brand will soon return to growth. Moving to the international segment. Revenues were $286 million, a decrease of 2% on a reported basis and 4% on an organic basis compared to Q3 of last year. Performance by geography was mixed. EMEA led the segments with a 12% increase on a reported basis.

Speaker #4: A remarkable accomplishment for drug , which has been on the market for its own indication for the last 15 years . Separately , Trulance volume grew 5% in Q3 , which was more than offset by unfavorable net pricing headwinds in the quarter .

Speaker #4: Finally , Relistor continues to face a challenging payer coverage environment . Yet we remain optimistic that the brand will soon return to growth .

Speaker #4: Now moving to the international segment , revenues were $286 million , a decrease of 2% on a reported basis and 4% on an organic basis compared to the third quarter of last year .

Jean-Jacques Charhon: Compared to the third quarter of last year, performance by geography was mixed. EMEA led the segment with a 12% increase on a reported basis. Canada and LATAM, on the other hand, contracted respectively 8% and 17%. In Canada, the performance of our promoter portfolio grew 21%, which was more than offset by the reduction of our LOE portfolio, which benefited in Q3 2024 from the non-recurrence of Wellbutrin orders due to generic stock outs. LATAM's performance, on the other hand, was primarily due to continued market softness in Mexico. Now moving to page 14 for a review of our Solta Medical segment. Revenues were $140 million, an increase of 25% on a reported basis and 24% on an organic basis compared to the same period last year. Solta's performance was primarily driven by the Asia Pacific region, which continues to contribute approximately 80% of global Solta revenue.

Speaker #4: Performance by geography was mixed . EMEA led the segment with a 12% increase on reported basis . Canada and Latam , on the other hand , contracted respectively .

Jean-Jacques Charhon: Canada and LATAM, on the other hand, contracted respectively 8% and 17%. In Canada, the performance of our promoted portfolio grew 21%, which was more than offset by the reduction of our LOE portfolio, which benefited in Q3 of 2024 from the nonrecurrence of Wellbutrin orders due to generic stockouts. LATAM's performance, on the other hand, was primarily due to continued market softness in Mexico. Now moving to page 14 for a review of our Solta Medical segments. Revenues were $140 million, an increase of 25% on a reported basis and 24% on an organic basis compared to the same period last year. Solta's performance was primarily driven by the Asia Pacific region, which continues to contribute approximately 80% of global Solta revenue.

Speaker #4: ET and 17% . In Canada , the performance of our promoter portfolio grew 21% , which was more than offset by the reduction of our portfolio , which benefited in Q3 of 2024 from the non-recurrence of Wellbutrin orders .

Speaker #4: Due to generic stockouts . Latam's performance , on the other hand , was primarily due to continued market softness in Mexico . Now moving to page 14 for review of our Solta medical segments .

Speaker #4: Revenues were $140 million , an increase of 25% on a reported basis , and 24% on an organic basis , compared to the same period last year .

Speaker #4: Saltus performance was primarily driven by the Asia Pacific region, which continues to contribute approximately 80% of global Solta revenue. Within the APAC region, South Korea again outperformed all other markets with an impressive 96% growth year over year.

Jean-Jacques Charhon: Within the APAC region, South Korea again outperformed all other markets with an impressive 96% growth year over year. China, on the other hand, grew only 3% in Q3. This was primarily attributable to aesthetics consumers adopting a cautious behavior given the uncertainty surrounding the macroeconomic environment outside of Asia. On another positive note, we are encouraged by our double-digit growth in the U.S., EMEA, and Canada following our commercial investments in these geographies. Turning now to our diversified segment, which you will find on page 15, revenues were $258 million, a decrease of 4% on a reported basis and 6% on an organic basis compared to the same period a year ago. The diversified segment's performance was largely driven by our neurology business this quarter.

Jean-Jacques Charhon: Within the Asia Pacific region, South Korea again outperformed all other markets with an impressive 96% growth year-over-year. China, on the other hand, grew only 3% in Q3. This was primarily attributable to aesthetic consumers adopting a cautious behavior given the uncertainty surrounding the macroeconomic environment. Outside of Asia, on another positive note, we are encouraged by our double-digit growth in the US, EMEA, and Canada following our commercial investments in these geographies. Turning now to our diversified segments, which you will find on page 15. Revenues were $258 million, a decrease of 4% on a reported basis and 6% on an organic basis compared to the same period a year ago. The diversified segments performance was largely driven by our neurology business.

Speaker #4: China , on the other hand , grew only 3% in Q3 . This was primarily attributable to aesthetics . Consumers adopting a cautious behavior given the uncertainty surrounding the macroeconomic environment .

Speaker #4: Outside of Asia , on another positive note , we are encouraged by our double digit growth in the US , EMEA and Canada following our commercial investments in these geographies .

Speaker #4: Turning now to our diversified segments , which you will find on page 15 . Revenues were $258 million , a decrease of 4% on a reported basis , and 6% on an organic basis , compared to the same period a year ago .

Speaker #4: The diversified segment's performance was largely driven by our neurology business this quarter , year over year growth in neurology was impacted by the expected non-recurrence of prior orders from temporary generic supplier shortages for cardizem in Q3 of last year .

Jean-Jacques Charhon: This quarter, year-over-year growth in neurology was impacted by the expected nonrecurrence of prior orders from temporary generic supplier shortages for COZYSYM in Q3 of last year. Separately, the performance of our dermatology segment was driven by CAPTRYL and JUBLIA, which grew revenue respectively 186% and 11%. Finally, Bausch + Lomb revenues were $1.3 billion, up 7% on a reported basis and 6% on an organic basis compared to the same period last year. Before wrapping up with our financial priorities, let's review our full year guidance, which you will find on page 19. Our outstanding performance for the first 9 months with revenue and Adjusted EBITDA, excluding acquired IPR&D growing respectively 6% and 14% has put us in a position where we will raise guidance across all our 3 metrics: revenue, Adjusted EBITDA, and adjusted operating cash flow.

Jean-Jacques Charhon: Year over year growth in neurology was impacted by the expected non-recurrence of prior orders from temporary generic supplier shortages for Caudism in Q3 of last year. Separately, the performance of our dermatology segment was driven by CABTREO and Jublia, which grew revenue respectively 186% and 11%. Finally, Bausch + Lomb revenues were $1.3 billion, up 7% on a reported basis and 6% on an organic basis compared to the same period last year. Before wrapping up with our financial priorities, let's review our full year guidance, which you will find on page 19. Our outstanding performance for the first nine months with revenue and adjusted EBITDA excluding acquired IP, R&D growing respectively 6% and 14% has put us in a position where we will raise guidance across all our three metrics: revenue, adjusted EBITDA, and adjusted operating cash flow.

Speaker #4: Separately , the performance of our dermatology segment was driven by capturing Jublia , which grew revenue respectively 186 and 11% . Finally , Bausch and Lomb revenues were $1.3 billion , up 7% on a reported basis and 6% on an organic basis , compared to the same period last year .

Speaker #4: Before wrapping up with our financial priorities , let's review our full year guidance , which you will find on page 19 . Our outstanding performance for the first nine months , with revenue and adjusted EBITDA , excluding acquired IP , R&D , growing respectively six and 14% has put us in a position where we will raise guidance across all our three metrics revenue , adjusted EBITDA and adjusted operating cash flow .

Speaker #4: The new guidance for the full year is now , as follows . Revenue is now expected to be between 5 billion and $5,000,000,100 million .

Jean-Jacques Charhon: The new guidance for the full year is now as follows. Revenue is now expected to be between $5 billion and $5.1 billion. The midpoint of that range has been increased by $25 million and translates to a 4% increase year over year. Our adjusted EBITDA outlook is now expected to be between $2.7 billion and $2.75 billion. Excluding the impact of acquired IP R&D, the midpoint of that range is now increased by $50 million and represents a 7% increase versus 2024. Adjusted operating cash flow is now expected to be between $975 million and $1.025 billion, bringing up the midpoint of that range by $150 million. Before I turn it over to Tom for his wrap up, let me review our financial priorities which remain unchanged. First, increasing the value of Bausch Health operational assets.

Jean-Jacques Charhon: The new guidance for the full year is now as follows. Revenue is now expected to be between $5 billion and $5 billion 100 million. The midpoint of that range has been increased by $25 million and translate to a 4% increase year-over-year. Our Adjusted EBITDA outlook is now expected to be between $2 billion 700 million and $2 billion 750 million excluding the impact of acquired IP R&D. The midpoint of that range is now increased by $50 million and represents a 7% increase versus 2024. Adjusted operating cash flow is now expected to be between $975 million and $1 billion 25 million, bringing up the midpoint of that range by $150 million.

Speaker #4: The midpoint of that range has been increased by $25 million and translate to a 4% increase year over year . Our adjusted EBITDA outlook is now expected to be between 2,700,000,002 billion $750 million , excluding the impact of acquired IP , R&D .

Speaker #4: The midpoint of that range is now increased by $50 million and represents a 7% increase versus 2020 . For adjusted operating cash flow is now expected to be between 975,000,001 billion $25 million , bringing up the midpoint of that range by $150 million .

Speaker #4: Before I turn it over to Tom for his wrap up , let me review our financial priorities , which remain unchanged . First , increasing the value of Bausch Health operational assets , whether it is our acquisition of direct or the operational performance during the first nine months of the year , continuing to execute our innovation and profitable growth agenda remains top of mind for all leaders at Bausch Health .

Jean-Jacques Charhon: Before I turn it over to Tom for his wrap-up, let me review our financial priorities, which remain unchanged. First, increasing the value of Bausch Health operational assets. Whether it is our acquisition of DURECT or the operational performance during the first 9 months of the year, continuing to execute our innovation and profitable growth agenda remains top of mind for all leaders at Bausch Health. Second, evaluating all options for unlocking value for all stakeholders. The $7.9 billion refinancing transaction we closed early this year has provided us with expanded optionalities for maximizing the value of our Bausch Health and Bausch + Lomb assets. We're now assessing all initiatives for driving shareholder value creation. Third, continuing to optimize our capital structure.

Jean-Jacques Charhon: Whether it is our acquisition of Direct Corporation or the operational performance during the first nine months of the year, continuing to execute our innovation and profitable growth agenda remains top of mind for all leaders at Bausch Health. Second, evaluating all options for unlocking value for all stakeholders. The $7.9 billion refinancing transaction we closed early this year has provided us with expanded optionalities for maximizing the value of our Bausch Health and Bausch + Lomb assets. We are now assessing all initiatives for driving shareholder value creation and third, continuing to optimize our capital structure. As we indicated earlier, we retired over $600 million in senior unsecured notes and have eliminated in October our high cost accounts receivable facility. Moving forward, we will continue to look at all options to improve our maturity profile, provided of course it is in the best long term interest of the company.

Speaker #4: Second , evaluating all options for unlocking value for all stakeholders . The $7.9 billion refinancing transaction we closed earlier this year as provided us with expanded optionality for maximizing the value of our Bausch Health and Bausch and Lomb assets .

Speaker #4: We are now assessing all initiatives for driving shareholder value creation . And third , continuing to optimize our capital structure as we indicated earlier , we retire over $600 million in senior unsecured notes and have eliminated in October our high cost accounts receivable facility .

Jean-Jacques Charhon: As we indicated earlier, we retired over $600 million in senior unsecured notes and have eliminated in October our high-cost accounts receivable facility. Moving forward, we will continue to look at all options to improve our maturity profile, provided of course, it is in the best long-term interest of the company. In short, we are proud of the progress we have made in the last 9 months and look forward to close out 2025 on a strong note as evidenced by our improved full-year guidance. I will now hand it back to Tom.

Speaker #4: Moving forward, we will continue to look at all options to improve our maturity profile, provided, of course, it is in the best long-term interest of the company.

Speaker #4: In short, we are proud of the progress we made in the last nine months and look forward to closing out 2025 on a strong note.

Jean-Jacques Charhon: In short, we are proud of the progress we have made in the last nine months and look forward to close out 2025 on a strong note as evidenced by our improved full year guidance. I will now hand it back to Tom.

Speaker #4: As evidenced by our improved full year guidance . I will now hand it back to Tom .

Speaker #3: Thank you . JJ . We made progress in the third quarter on multiple fronts in support of our five strategic priorities . People growth , efficiency , innovation and unlocking value .

Thomas Appio: Thank you, JJ. We made progress in the third quarter on multiple fronts in support of our five strategic priorities: People, Growth, Efficiency, Innovation, and unlocking value. These remain central to our culture, lay the foundation for our strategy, and guide our vision for the future. Additionally, we are growing the business with the discipline required to achieve our financial targets, taking all capital allocation priorities into account, including deleveraging. With that in mind, I'd like to take a few minutes to highlight the progress we are seeing against these priorities. Xifaxan growth continued to accelerate through 2025 in Q3. The growth was broad-based, driven by both volume and price and across all indications. Our largest indication for Xifaxan, overt hepatic encephalopathy (OHE), had an 8.2% increase in total prescription volume in Q3 over prior years. IBS-D increased 15.4% over prior year.

Thomas J. Appio: Thank you, JJ. We made progress in Q3 on multiple fronts in support of our 5 strategic priorities: people, growth, efficiency, innovation, and unlocking value. These remain central to our culture, lay the foundation for our strategy, and guide our vision for the future. We are growing the business with the discipline required to achieve our financial targets, taking all capital allocation priorities into account, including deleveraging. With that in mind, I'd like to take a few minutes to highlight the progress we are seeing against these priorities. Xifaxan growth continued to accelerate through 2025. In Q3, the growth was broad-based, driven by both volume and price and across all indications. Our largest indication for Xifaxan, overt hepatic encephalopathy, OHE, had an 8.2% increase in total prescription volume in Q3 over prior years. IBS-D increased 15.4% over prior year.

Tom Appio: Thank you, JJ. We made progress in Q3 on multiple fronts in support of our 5 strategic priorities: people, growth, efficiency, innovation, and unlocking value. These remain central to our culture, lay the foundation for our strategy, and guide our vision for the future. We are growing the business with the discipline required to achieve our financial targets, taking all capital allocation priorities into account, including deleveraging. With that in mind, I'd like to take a few minutes to highlight the progress we are seeing against these priorities. Xifaxan growth continued to accelerate through 2025. In Q3, the growth was broad-based, driven by both volume and price and across all indications. Our largest indication for Xifaxan, overt hepatic encephalopathy, OHE, had an 8.2% increase in total prescription volume in Q3 over prior years. IBS-D increased 15.4% over prior year.

Speaker #3: These remain central to our culture . Lay the foundation for our strategy and guide our vision for the future . Additionally , we are growing the business with the discipline required to achieve our financial targets .

Speaker #3: Taking all capital allocation priorities into account , including deleveraging . With that in mind , I'd like to take minutes to highlight the progress we are seeing against these priorities .

Speaker #3: Xiafaxan growth continued to accelerate through 2025 . In Q3 . The growth was broad based , driven by both volume and price , and across all indications , our largest indication for Xiafaxan overt hepatic encephalopathy .

Speaker #3: Oh had an 8.2% increase in total prescription volume in Q3 over prior years . Ibs-d increased 15.4% over prior year . This growth was driven by innovation in marketing and operational excellence .

Thomas Appio: This growth was driven by innovation in marketing and operational excellence that is core within our U.S. pharmaceutical commercial engine. Starting with marketing, in Q3 we doubled our media investment in high-return addressable and connected TV, launching a new "I Wish I Knew" campaign for OHE, providing important educational information directly to patients and caregivers on the impact that cirrhosis can have on the brain, which is an important driver of patient action, often resulting in prescription. Given that Xifaxan is the only product approved to reduce the recurrence of OHE and prevent rehospitalization, direct-to-consumer advertising combined with continuous improvement and enhanced capabilities in our AI-driven customer insight engine enabled us to directly target and activate patients, caregivers, and healthcare professionals in Q3.

Thomas J. Appio: This growth was driven by innovation in marketing and operational excellence that is core within our US pharmaceutical commercial engine. Starting with marketing. In Q3, we doubled our media investment in high-return addressable and connected TV, launching a new I Wish I Knew campaign for OHE, providing important educational information directly to patients and caregivers on the impact that cirrhosis can have on the brain, which is an important driver of patient action, often resulting in prescription. Given that Xifaxan is the only product approved to reduce the recurrence of OHE and prevent rehospitalization. Direct-to-consumer advertising, combined with continuous improvement enhanced capabilities in our AI customer insight engine, enabled us to directly target and activate patients, caregivers, and healthcare professionals in Q3.

Tom Appio: This growth was driven by innovation in marketing and operational excellence that is core within our US pharmaceutical commercial engine. Starting with marketing. In Q3, we doubled our media investment in high-return addressable and connected TV, launching a new I Wish I Knew campaign for OHE, providing important educational information directly to patients and caregivers on the impact that cirrhosis can have on the brain, which is an important driver of patient action, often resulting in prescription. Given that Xifaxan is the only product approved to reduce the recurrence of OHE and prevent rehospitalization. Direct-to-consumer advertising, combined with continuous improvement enhanced capabilities in our AI customer insight engine, enabled us to directly target and activate patients, caregivers, and healthcare professionals in Q3.

Speaker #3: That is core within our US pharmaceutical commercial engine , starting with marketing in Q3 , we doubled our media investment in high return addressable and connected TV , launching a new I wish I knew campaign for OAG , providing important educational information directly to patients and caregivers on the impact that cirrhosis can have on the brain , which is an important driver of patient action , often resulting in prescription .

Speaker #3: Given that Xifaxan is the only product approved to reduce the recurrence of oh and prevent rehospitalization . Direct to consumer advertising combined with continuous enhanced capabilities in our AI customer Insight engine enabled us to directly target and activate patients , caregivers and healthcare professionals .

Speaker #3: In Q3 , our laser focus on driving new patient resulted in 71,000 new patients being started on Rifaximin in Q3 , an increase of 14% in Q3 over the prior year .

Thomas Appio: Our laser focus on driving new patient starts resulted in 71,000 new patients being started on Xifaxan in Q3, an increase of 14% in Q3 over the prior year. Year to date, 196,000 new patients have been prescribed Xifaxan. This quarter marks the seventh consecutive quarter of top-line organic revenue growth in our Salix Pharmaceuticals business, and we will continue to maximize its growth. Turning to our dermatology business, in January 2024 we launched CABTREO, the first and only triple combination in one topical application for acne. The launch has progressed well. Earlier this year, CABTREO became the number one prescribed topical branded acne product in new brand patient starts. 10,000 HCPs have prescribed CABTREO from launch to date, with 105,000 new patients prescribed CABTREO year to date, up 69% over the prior year.

Thomas J. Appio: Our laser focus on driving new patient starts resulted in 71,000 new patients being started on Xifaxan in Q3, an increase of 14% in Q3 over the prior year. Year to date, 196,000 new patients have been prescribed Xifaxan. This quarter marks the seventh consecutive quarter of top-line organic revenue growth in our Salix business, and we will continue to maximize its growth. Turning to our dermatology business. In January 2024, we launched CABTREO, the first and only triple combination in one topical application for acne. The launch has progressed well. Earlier this year, CABTREO became the number one prescribed topical branded acne product in new brand patient starts. 10,000 HCPs have prescribed CABTREO from launch to date, with 105,000 new patients prescribed CABTREO year to date, up 69% over the prior year.

Tom Appio: Our laser focus on driving new patient starts resulted in 71,000 new patients being started on Xifaxan in Q3, an increase of 14% in Q3 over the prior year. Year to date, 196,000 new patients have been prescribed Xifaxan. This quarter marks the seventh consecutive quarter of top-line organic revenue growth in our Salix business, and we will continue to maximize its growth. Turning to our dermatology business. In January 2024, we launched CABTREO, the first and only triple combination in one topical application for acne. The launch has progressed well. Earlier this year, CABTREO became the number one prescribed topical branded acne product in new brand patient starts. 10,000 HCPs have prescribed CABTREO from launch to date, with 105,000 new patients prescribed CABTREO year to date, up 69% over the prior year.

Speaker #3: Year to date , 196,000 new patients have been prescribed Xifaxan this quarter marked the seventh consecutive quarter of top line organic revenue growth in our Salix business , and we will continue to maximize its growth .

Speaker #3: Turning to our dermatology business in January 2024 , we launched Cabtreo , the first and only triple combination in one topical application for acne .

Speaker #3: The launch has progressed well . Earlier this year . Cabtreo became the number one prescribed topical branded acne product in new brand patient starts 10,000 Hcp's have prescribed cabtreo from launch to date , with 105,000 new patients prescribed cabtreo year to date up 69% over the prior year .

Speaker #3: Turning to our aesthetics business Solta , we have made excellent progress driving new opportunities for growth in this business . Solta is a global leader in medical aesthetics that operates a portfolio of trusted brands with a leading presence in South Korea and China .

Thomas Appio: Turning to our aesthetics business, Solta, we have made excellent progress driving new opportunities for growth in this business. Solta is a global leader in medical aesthetics that operates a portfolio of trusted brands with a leading presence in South Korea and China. While each market is unique, we see significant white space across the region and expect to further strengthen our reach across our footprint. During the third quarter, Solta delivered exceptional results with another quarter of double-digit growth in our leading aesthetics portfolio. Revenue grew by 25% on a reported basis across multiple regions, led by South Korea, which nearly doubled year over year. This growth was supported by robust domestic demand, complemented by high levels of medical aesthetics-related tourism to the region. In recent years, beyond the strength in the Asia Pacific region, we achieved double-digit growth in the U.S. and European markets.

Thomas J. Appio: Turning to our aesthetics business, Solta. We have made excellent progress driving new opportunities for growth in this business. Solta is a global leader in medical aesthetics that operates a portfolio of trusted brands. With a leading presence in South Korea and China. While each market is unique, we see significant white space across the region and expect to further strengthen our reach across our footprint. During Q3, Solta delivered exceptional results with another quarter of double-digit growth in our leading aesthetics portfolio. Revenue grew by 25% on a reported basis across multiple regions, led by South Korea, which nearly doubled year-over-year. This growth was supported by robust domestic demand, complemented by high levels of medical aesthetics-related tourism to the region in recent years. Beyond the strength in the Asia Pacific region, we achieved double-digit growth in the US and European markets.

Tom Appio: Turning to our aesthetics business, Solta. We have made excellent progress driving new opportunities for growth in this business. Solta is a global leader in medical aesthetics that operates a portfolio of trusted brands. With a leading presence in South Korea and China. While each market is unique, we see significant white space across the region and expect to further strengthen our reach across our footprint. During Q3, Solta delivered exceptional results with another quarter of double-digit growth in our leading aesthetics portfolio. Revenue grew by 25% on a reported basis across multiple regions, led by South Korea, which nearly doubled year-over-year. This growth was supported by robust domestic demand, complemented by high levels of medical aesthetics-related tourism to the region in recent years. Beyond the strength in the Asia Pacific region, we achieved double-digit growth in the US and European markets.

Speaker #3: While each market is unique , we see significant white space across the region and expect to further strengthen our reach across our footprint during the third quarter , Solta delivered exceptional results with another quarter of double digit growth in our leading aesthetics portfolio .

Speaker #3: grew by 25% on a reported basis across multiple regions , led by South Korea , which nearly doubled year over year . This growth was supported by robust domestic demand , complemented by high levels of medical aesthetics related tourism to the region .

Speaker #3: In recent years . Beyond the strength in the Asia-Pacific region , we achieved double digit growth in the US and European markets . We remain optimistic about salts premium positioning as a driver of future growth and are encouraged by another quarter of solid growth outside the Asia Pacific region .

Thomas Appio: We remain optimistic about Solta's premium positioning as a driver of future growth and are encouraged by another quarter of solid growth outside the Asia Pacific region. Building on this momentum, earlier this year we received medical device licensing clearance for Thermage FLX in Canada. As the fourth generation of radio frequency technology, the Thermage platform has been relied upon for over 20 years by providers and patients. We also reached a key milestone. Our Thermage non-surgical treatment technology has now been used to perform more than 5 million skin tightening and smoothing treatments worldwide. Additionally, in South Korea, Thermage has now surpassed the 1,000 unit install base milestone, which is a significant achievement. These successes underscore our belief in Solta's growth potential and may position us to capitalize on the opportunities ahead.

Thomas J. Appio: We remain optimistic about Solta's premium positioning as a driver of future growth and are encouraged by another quarter of solid growth outside the Asia Pacific region. Building on this momentum, earlier this year, we received medical device licensing clearance for Thermage in Canada as the fourth generation of radiofrequency technology. The Thermage platform has been relied upon for over 20 years by providers and patients. We also reached a key milestone. Our Thermage nonsurgical treatment technology has now been used to perform more than 5 million skin tightening and smoothing treatments worldwide. In Korea, Thermage has now surpassed the 1,000 unit installed base milestone, which is a significant achievement. These successes underscore our belief in Solta's growth potential and may position us to capitalize on the opportunities ahead.

Tom Appio: We remain optimistic about Solta's premium positioning as a driver of future growth and are encouraged by another quarter of solid growth outside the Asia Pacific region. Building on this momentum, earlier this year, we received medical device licensing clearance for Thermage in Canada as the fourth generation of radiofrequency technology. The Thermage platform has been relied upon for over 20 years by providers and patients. We also reached a key milestone. Our Thermage nonsurgical treatment technology has now been used to perform more than 5 million skin tightening and smoothing treatments worldwide. In Korea, Thermage has now surpassed the 1,000 unit installed base milestone, which is a significant achievement. These successes underscore our belief in Solta's growth potential and may position us to capitalize on the opportunities ahead.

Speaker #3: Building on this momentum, earlier this year, we received medical device licensing clearance for Thermage in Canada as the fourth generation of radiofrequency technology.

Speaker #3: The thermometer platform has been relied upon for over 20 years by providers and patients . We also reached a key milestone our Thermage non-surgical treatment technology has now been used to perform more than 5 million skin tightening and smoothing treatments worldwide .

Speaker #3: Additionally , in Korea , Thermage has now surpassed the 1000 unit install base milestone , which is a significant achievement . These successes underscore our belief in growth potential and may position us to capitalize on the opportunities ahead .

Speaker #3: We launched Fraxel 50 this April , beginning the rollout of our leading skin rejuvenation treatment for dermatologists , plastic surgeons and other licensed aesthetics professionals across the United States .

Thomas Appio: We launched Fraxel FTX this past April, beginning the rollout of our leading skin rejuvenation treatment for dermatologists, plastic surgeons, and other licensed aesthetics professionals across the United States, with global expansion plans in the pipeline. While it is still early days, we are pleased with Fraxel's momentum in the U.S. This expands our Solta portfolio and presence in key growth geographies and that we anticipate will contribute to the strength and breadth of our aesthetics business. In summary, Solta had a terrific quarter and we continue to invest in our clinical programs and R&D innovation to deliver long-term growth. Underscoring our commitment to innovation, we closed our acquisition of Direct Corporation on September 11, 2025. The addition of Direct complements our existing portfolio, enhances our R&D pipeline, and is consistent with Bausch Health Companies Inc.'s efforts to focus on areas of strength for innovation to drive future growth.

Thomas J. Appio: We launched Fraxel FTX this past April, beginning the rollout of our leading skin rejuvenation treatment for dermatologists, plastic surgeons, and other licensed aesthetics professionals across the US, with global expansion plans in the pipeline. While it is still early days, we are pleased with Fraxel's momentum in the US. This expands our Solta portfolio and presence in key growth geographies, and that we anticipate will contribute to the strength and breadth of our aesthetics business. In summary, Solta had a terrific quarter, and we continue to invest in our clinical programs and R&D innovation to deliver long-term growth. Underscoring our commitment to innovation, we closed our acquisition of DURECT Corporation on 11 September 2025. The addition of DURECT complements our existing portfolio, enhances our R&D pipeline, and is consistent with Bausch's efforts to focus on areas of strength for innovation to drive future growth.

Tom Appio: We launched Fraxel FTX this past April, beginning the rollout of our leading skin rejuvenation treatment for dermatologists, plastic surgeons, and other licensed aesthetics professionals across the US, with global expansion plans in the pipeline. While it is still early days, we are pleased with Fraxel's momentum in the US. This expands our Solta portfolio and presence in key growth geographies, and that we anticipate will contribute to the strength and breadth of our aesthetics business. In summary, Solta had a terrific quarter, and we continue to invest in our clinical programs and R&D innovation to deliver long-term growth. Underscoring our commitment to innovation, we closed our acquisition of DURECT Corporation on 11 September 2025. The addition of DURECT complements our existing portfolio, enhances our R&D pipeline, and is consistent with Bausch's efforts to focus on areas of strength for innovation to drive future growth.

Speaker #3: With global expansion plans in the pipeline . While it is still early days , we are pleased with Fraxel momentum in the US .

Speaker #3: This expands our soul portfolio and presence in key growth geographies , and that we anticipate will the strength and breadth of our aesthetics , business .

Speaker #3: In summary , Solta had a terrific quarter and we continue to invest in our clinical programs and R&D innovation to deliver long term growth .

Speaker #3: Underscoring our commitment to innovation , we closed our acquisition of Direct Corporation on September 11th , 2025 . The addition of direct complements our existing portfolio , enhances our R&D pipeline , and is consistent with Bausch's efforts to focus on areas of strength for innovation to drive future growth .

Speaker #3: Since then , we have been working seamlessly , integrating direct into the Bausch . Our portfolio now includes direct lead asset La Secosterol , a novel epigenetic modulator with FDA breakthrough Therapy designation for treatment of alcohol associated hepatitis or as in Bausch Health Hepatology pipeline .

Thomas J. Appio: Since then, we have been working seamlessly integrating DURECT into the Bausch team. Our portfolio now includes DURECT lead asset, larsucosterol, a novel epigenetic modulator with FDA breakthrough therapy designation for treatment of alcohol-associated hepatitis, or AH, in Bausch Health hepatology pipeline. Currently, there are no approved therapies indicated to treat AH, and patients must rely on supportive care such as corticosteroids, which are often inadequate for long-term treatment and result in about 30% mortality within 90 days of hospitalization. A registrational Phase 3 program is currently planned to evaluate the safety and efficacy of larsucosterol for the treatment of patients with severe AH. It is important to recognize that this is a global opportunity, and we are initially pursuing the US market to replicate the region's success in Phase 2.

Tom Appio: Since then, we have been working seamlessly integrating DURECT into the Bausch team. Our portfolio now includes DURECT lead asset, larsucosterol, a novel epigenetic modulator with FDA breakthrough therapy designation for treatment of alcohol-associated hepatitis, or AH, in Bausch Health hepatology pipeline. Currently, there are no approved therapies indicated to treat AH, and patients must rely on supportive care such as corticosteroids, which are often inadequate for long-term treatment and result in about 30% mortality within 90 days of hospitalization. A registrational Phase 3 program is currently planned to evaluate the safety and efficacy of larsucosterol for the treatment of patients with severe AH. It is important to recognize that this is a global opportunity, and we are initially pursuing the US market to replicate the region's success in Phase 2.

Thomas Appio: Since then, we have been working seamlessly integrating Direct into the Bausch team. Our portfolio now includes Direct lead asset Larsucosterol, a novel epigenetic modulator with FDA Breakthrough Therapy designation for treatment of alcohol-associated hepatitis, or AH, in the Bausch Health hepatology pipeline. Currently, there are no approved therapies indicated to treat AH and patients must rely on supportive care such as corticosteroids, which are often inadequate for long-term treatment and result in about 30% mortality within 90 days of hospitalization. A registrational Phase 3 program is currently planned to evaluate the safety and efficacy of Larsucosterol for the treatment of patients with severe AH. It is important to recognize that this is a global opportunity and we are initially pursuing the U.S. market to replicate the region's success in Phase 2.

Speaker #3: Currently , there are no approved therapies indicated to treat RH and patients must rely on supportive care such as corticosteroids , which are often inadequate for long term treatment and result in about 30% mortality within 90 days of hospitalization .

Speaker #3: A registrational phase three program is currently planned to evaluate the safety and efficacy of our casserole for the treatment of patients with severe RH .

Speaker #3: It is important to recognize that this is a global opportunity, and we are initially pursuing the U.S. market to replicate the region's success in phase two.

Speaker #3: Our team is working diligently to finalize the phase three protocol , with a goal to initiate the study by early 2026 . We are excited about the addition of LA orchestral to our R&D portfolio , and look forward to updating you through the development and commercialization process .

Thomas Appio: Our team is working diligently to finalize the Phase 3 protocol with a goal to initiate the study by early 2026. We are excited about the addition of Larsucosterol to our R&D portfolio and look forward to updating you through the development and commercialization process. Direct is an important addition to our hepatology portfolio that supports our innovation and growth priorities while also leveraging Bausch Health Companies Inc.'s existing expertise in development and commercialization of assets. Now turning to the RED-C clinical trial program, which we believe could be a next-generation treatment to delay and prevent the occurrence of overt hepatic encephalopathy. We remain on track with our two global Phase 3 studies and we expect to see initial data readouts by early 2026.

Thomas J. Appio: Our team is working diligently to finalize the Phase 3 protocol with a goal to initiate the study by early 2026. We are excited about the addition of larsucosterol to our R&D portfolio and look forward to updating you through the development and commercialization process. DURECT is an important addition to our hepatology portfolio that supports our innovation and growth priorities, while also leveraging Bausch Health's existing expertise in development and commercialization of assets. Now turning to RED-C, which we believe could be a next-generation treatment to delay and prevent the occurrence of overt hepatic encephalopathy. We remain on track with our two global Phase 3 studies. We expect to see initial data readouts by early 2026.

Tom Appio: Our team is working diligently to finalize the Phase 3 protocol with a goal to initiate the study by early 2026. We are excited about the addition of larsucosterol to our R&D portfolio and look forward to updating you through the development and commercialization process. DURECT is an important addition to our hepatology portfolio that supports our innovation and growth priorities, while also leveraging Bausch Health's existing expertise in development and commercialization of assets. Now turning to RED-C, which we believe could be a next-generation treatment to delay and prevent the occurrence of overt hepatic encephalopathy. We remain on track with our two global Phase 3 studies. We expect to see initial data readouts by early 2026.

Speaker #3: Direct is an important addition to our Hepatology portfolio that supports our innovation and growth priorities, while also leveraging Bausch Health's existing expertise in the development and commercialization of assets.

Speaker #3: Now turning to Red sea , which we believe could be a next generation treatment to delay and prevent the occurrence of overt hepatic encephalopathy .

Speaker #3: We remain on track with our two global phase three studies , and we expect to see initial data readouts by early 2026 . Our hope is that Red sea may offer this patient population a therapy to slow disease progression and provide a meaningful clinical benefit .

Thomas Appio: Our hope is that RED-C may offer this patient population a therapy to slow disease progression and provide meaningful clinical benefit, addressing a significant unmet need and bringing a novel therapy to cirrhotic patients on a global scale. Bausch Health Companies Inc. has a history treating liver disease and providing patients with innovative treatment solutions, which we hope to continue and expand upon with Direct and the RED-C clinical trial program. In summary, we had another standout quarter. I want to thank our teams around the world for their dedication and hard work in driving these results. Our focus on disciplined execution against our strategic priorities and operational excellence will enable us to continue to deliver tangible results and long term value for shareholders. With that, we will now turn to questions. Operator, please open the line for Q&A.

Thomas J. Appio: Our hope is that RED-C may offer this patient population a therapy to slow disease progression and provide a meaningful clinical benefit, addressing a significant unmet need and bringing a novel therapy to cirrhotic patients on a global scale. Bausch has a history treating liver disease and providing patients with innovative treatment solutions, which we hope to continue and expand upon with DURECT and RED-C.

Tom Appio: Our hope is that RED-C may offer this patient population a therapy to slow disease progression and provide a meaningful clinical benefit, addressing a significant unmet need and bringing a novel therapy to cirrhotic patients on a global scale. Bausch has a history treating liver disease and providing patients with innovative treatment solutions, which we hope to continue and expand upon with DURECT and RED-C.

Speaker #3: Addressing a significant need and bringing a novel therapy to cirrhotic patients on a global scale . Bausch has a history of treating liver disease and providing patients with innovative treatment solutions , which we hope to continue and expand upon with direct and Red sea .

Speaker #3: In summary , we had another standout quarter . I want to thank our teams around the world for their dedication and hard work in driving these results .

Jean-Jacques Charhon: In summary, we had another standout quarter. I want to thank our teams around the world for their dedication and hard work in driving these results. Our focus on disciplined execution against our strategic priorities and operational excellence will enable us to continue to deliver tangible re-results and long-term value for shareholders. With that, we will now turn to questions. Operator, please open the line for Q&A.

Tom Appio: In summary, we had another standout quarter. I want to thank our teams around the world for their dedication and hard work in driving these results. Our focus on disciplined execution against our strategic priorities and operational excellence will enable us to continue to deliver tangible re-results and long-term value for shareholders. With that, we will now turn to questions. Operator, please open the line for Q&A.

Speaker #3: Our focus on disciplined execution against our strategic priorities and operational excellence will enable us to continue to deliver tangible results and long term value for shareholders .

Speaker #3: With that , we will now turn to questions . . Please open the line for Q&A .

Speaker #1: Certainly without the a question and answer session . If you'd like to be placed into question queue , please press star one on your telephone keypad .

Operator: Certainly. We will now be conducting a question and answer session. If you'd like to be placed into the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing 1. One moment please while we poll for questions. Our first question today is coming from Les Sulewski from Trua Security. Her line is now live.

Operator: Certainly. We'll now be conducting a question-and-answer session. If you'd like to be placed into question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to move your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star one. One moment please while we poll for questions. Our first question today is coming from Leszek Sulewski from Truist Securities. Your line is now live.

Speaker #1: A confirmation tone will indicate your line is in the question queue . You may press star two if you'd like to move your question from the queue for participants using speaker equipment may be necessary to pick up your handset before pressing star one .

Speaker #1: One moment please . While we pull for questions . Our first question today is coming from Les from Truist Securities . Your line is now live .

Speaker #5: Good afternoon . Thank you for taking my questions . The first one , it appears the revenue growth for Xiafaxan is outpacing the growth .

Leszek Sulewski: Good afternoon. Thank you for taking my questions. First one, it appears the revenue growth for Xifaxan is outpacing the script growth. First, can you touch on the disconnect there? Is it backed by a greater focus on commercial plans and direct-to-consumer initiative? Second, can you talk to which channel is mostly driving the overall script growth? Is it the primary care side? How durable is this growth profile as we kind of look out for the end of the life cycle management for the asset? I have a follow-up.

Thomas Appio: Good afternoon. Thank you for taking my questions. First one, it appears the revenue growth for Xifaxan is outpacing the scrip growth. Can you touch on the disconnect there? Is it backed by a greater focus on commercial plans and direct to consumer initiative? Can you talk to which channel is mostly driving the overall scrip growth? Is it the primary care side, and how durable is this growth profile as we look out for the end of the lifecycle management for the asset? I have a follow up.

Les Sulewski: Good afternoon. Thank you for taking my questions. First one, it appears the revenue growth for Xifaxan is outpacing the script growth. First, can you touch on the disconnect there? Is it backed by a greater focus on commercial plans and direct-to-consumer initiative? Second, can you talk to which channel is mostly driving the overall script growth? Is it the primary care side? How durable is this growth profile as we kind of look out for the end of the life cycle management for the asset? I have a follow-up.

Speaker #5: So first , can you touch on disconnect there ? Is it backed by a greater focus on commercial plans and direct to consumer initiative .

Speaker #5: And then second , can you talk to which channel is mostly driving the overall script growth . the primary care side ? And and how durable is this growth profile as we kind of look out for the end of the life cycle management for the asset .

Speaker #5: And then I have a follow up .

Speaker #4: Hi . This is J.J. on . I'm going to take up , first of all , your pricing question . As I indicated in my prepared remarks .

Jean-Jacques Charhon: Hi Les, this is JJ. I'm going to take up first of all your pricing question. As I indicated in my prepared remarks, Xifaxan can benefit from a one-time benefit associated with the gross to net accrual that we typically hold on the balance sheet based on the inventory that is held by our distributors. Given our exit of 340B and Medicaid, that gross to net weighted average, if you want, has changed. Therefore, there was a benefit that really increased or inflated, if you want, what is referred to as pricing. Typically, pricing for that faction year over year is in the mid single digit %. That's what you should assume year over year. On the volume side, we have, I think, a fairly balanced growth across all channels. As you can see, the new patient starts have continued to be very strong, which we're very happy about.

Jean-Jacques Charhon: Hi, Les. This is J.J. I'm gonna take up, first of all, your pricing question. As I indicated in my prepared remarks, Xifaxan benefits from a one-time benefit associated with the gross to net accrual that we typically hold on the balance sheet based on the inventory that is held by our distributors. Given our exit of 340B in Medicaid, that gross to net weighted average, if you want, has changed. Therefore, there was a benefit that really increased or inflated, if you want, what is referred to as pricing. Typically pricing for Xifaxan year-over-year is in the mid-single digits, so that's what you should assume, you know, year-over-year.

Speaker #4: As a benefit from one time benefit associated with the gross to net accrual that we typically hold on the balance sheet based on the inventory that is held by our distributors , given our exit of 340 B in Medicaid , that's gross to net weighted average .

Speaker #4: If you want has changed . And so therefore , there was a benefit that really increased or inflated . If you want what is referred to as pricing .

Speaker #4: Typically pricing for xiafaxan year over year is in the mid single digit . So that's what you should assume . You know , year over year on the volume side , we have , I think , a fairly balanced growth across all channels .

Jean-Jacques Charhon: On the volume side, we have, I think a fairly balanced growth across all channels. As you can see, the new patient starts continued to be very strong, which we're very happy about. The AI-driven engine that allows us to optimize our call points really continues to drive benefits as we continue to develop, you know, scripts growth across the board.

Speaker #4: As you can see , the new patient starts have been continue to be very strong , which we're very happy about . And the the AI driven engine that allows us to optimize our call points really continues to drive benefits as we continue to develop , you know , scripts growth across the board .

Jean-Jacques Charhon: The AI-driven engine that allows us to optimize our call points really continues to drive benefits as we continue to develop scripts growth across the board.

Speaker #3: Les , let me just add to that in terms of when you take a look from the channel perspective . So the TRX , total TRX growth was 9% in the quarter .

Thomas Appio: Les, let me just add to that in terms of when we take a look from the channel perspective. The TRX, total TRX growth, was 9% in the quarter. Non-retail extended units was 20%. When we take a look at it from a total extended unit perspective, it's 11%. On the new to brand, which is the one we're really looking at a lot, it's 14%. There's a lot of new to brands on Xifaxan in the third quarter, and for this year the focus is to drive new to brand. That's where clearly our investment in DTC along with the artificial intelligence engine that we're having is focusing there. You had a follow-up? Yes, thank you. That is helpful.

Thomas J. Appio: Yeah, Les, let me just add to that in terms of when we take a look from the channel perspective. The total TRX growth was 9% in the quarter. Non-retail extended units was 20%. When we take a look at it, and from a total extended unit perspective, it's 11%. On the new to brand, which is the one we're really looking at, a lot is 14%. There's a lot of new to brand on Xifaxan in Q3, and which has been historically, you know, for this year. The focus is to drive new to brand, and that's where clearly, our investment in DTC, along with the artificial intelligent engine that we're having is focusing there. You had a follow-up?

Tom Appio: Yeah, Les, let me just add to that in terms of when we take a look from the channel perspective. The total TRX growth was 9% in the quarter. Non-retail extended units was 20%. When we take a look at it, and from a total extended unit perspective, it's 11%. On the new to brand, which is the one we're really looking at, a lot is 14%. There's a lot of new to brand on Xifaxan in Q3, and which has been historically, you know, for this year. The focus is to drive new to brand, and that's where clearly, our investment in DTC, along with the artificial intelligent engine that we're having is focusing there. You had a follow-up?

Speaker #3: Non-retail extended units was 20% . So when we take a look at it from a total extended unit perspective , it's 11% on the new to brand , which is the one we're really looking at a lot is the Is 14% .

Speaker #3: So there's there's a lot of new to brand on in the third quarter and which has been historically , you know for this year .

Speaker #3: The focus is is to drive new to brand . And that's where clearly our investments in DTC , along with the artificial intelligence engine that we're having , is focusing there .

Speaker #3: You had a follow-up.

Speaker #5: Yes . Thank you . That is helpful . Okay . So as we're getting ready for CMS to disclose the final pricing from IRA Price negotiations , perhaps maybe give us a little bit of a sense of where that facts in land .

Leszek Sulewski: Yes. Thank you. That is helpful. Okay. As we're getting ready for CMS to disclose the final pricing from IRA price negotiations, you know, perhaps maybe give us a little bit of a sense of where Xifaxan lands and then the script trends for tied to Medicare Part D and any sort of commentary that you could provide. How receptive has CMS been to your challenges, you know, specifically given OHE's and orphan indication and the LOE component to the asset? Thank you.

Les Sulewski: Yes. Thank you. That is helpful. Okay. As we're getting ready for CMS to disclose the final pricing from IRA price negotiations, you know, perhaps maybe give us a little bit of a sense of where Xifaxan lands and then the script trends for tied to Medicare Part D and any sort of commentary that you could provide. How receptive has CMS been to your challenges, you know, specifically given OHE's and orphan indication and the LOE component to the asset? Thank you.

Thomas Appio: As we're getting ready for CMS to disclose the final pricing from IRA price negotiations, perhaps give us a little bit of a sense of where that fax in land and the script transfer tied to Medicare Part D and any sort of commentary that you could provide. How receptive has CMS been to your challenges, specifically given OHC and orphan indication and the LOE component to the asset? Thank you. Yes, Les, what I'll say is this. The negotiations, as I've said on previous calls, were ongoing. The discussions have been fruitful and good exchange of information between the company and CMS. As I said on previous calls, we did not think that we should have been on the CMS list, but we were. The team, our market access team, has worked really hard working with CMS. The negotiations have concluded.

Speaker #5: On the script for tied to Medicare Part D , and then he sort of commentary that you could provide how receptive has CMS been to your challenges ?

Speaker #5: You know , specifically given an orphan indication and the low component to the asset ? Thank you .

Speaker #3: Yes . So what I'll say is this the negotiations , as I've said on previous calls , were ongoing , the discussions have been fruitful and good exchange of of information between the company and CMS .

Thomas J. Appio: Yes, Les. What I'll say is this, the negotiations, as I've said on previous calls, were ongoing. The discussions have been fruitful, and good exchange of information between the company and CMS. As I said on previous calls, we did not think that we should have been on the CMS list, but we were. The team, our market access team has worked really hard, working with CMS. The negotiations have concluded. We are expecting that, you know, CMS will publish their agreed pricing on 30 November 2025. In terms of the overall impact, I'll pass that to J.J.

Tom Appio: Yes, Les. What I'll say is this, the negotiations, as I've said on previous calls, were ongoing. The discussions have been fruitful, and good exchange of information between the company and CMS. As I said on previous calls, we did not think that we should have been on the CMS list, but we were. The team, our market access team has worked really hard, working with CMS. The negotiations have concluded. We are expecting that, you know, CMS will publish their agreed pricing on 30 November 2025. In terms of the overall impact, I'll pass that to J.J.

Speaker #3: As I said on previous calls , we did not think that we should have been on the CMS list , but we were and the team , our market access team has worked really hard working with CMS and have concluded we are expecting that CMS will publish their agreed pricing on November 30th , 2025 .

Thomas Appio: We are expecting that CMS will publish their agreed pricing on November 30, 2025. In terms of the overall impact, I'll pass that to JJ.

Speaker #3: In terms of the overall impact, I'll pass that to JJ. Yeah.

Jean-Jacques Charhon: As you, as we mentioned during our previous call, the CMS impact was combined with a number of mitigation strategy across all of our portfolio to reduce the impact that this would have on our financials. While, you know, the impact obviously on Xifaxan is significant, you know, 30% of our volume goes through Medicare Part D. The only indication I would provide at this stage is we still are assessing the final impact on our business moving forward, is that when you look at our business across all segments, including the CMS impact. It's probably fair to assume that the average EBITDA over the next two years will not be materially different than what we're providing in the outlook and the revised guidance.

Speaker #4: So as you as we mentioned during our previous call , the CMS impact was combined with a number of mitigation strategy across all of our portfolio to reduce the impact that this would have on our financials .

Jean-Jacques Charhon: As we mentioned during our previous call, the CMS impact was combined with a number of mitigation strategies across all of our portfolio to reduce the impact that this would have on our financials. While the impact obviously on Xifaxan is significant, 30% of our volume goes through Medicare Part D. The only indication I would provide at this stage, as we still are assessing the final impact on our business moving forward, is that when you look at our business across all segments, including the CMS impact, it's probably fair to assume that the average EBITDA over the next two years will not be materially different than what we're providing in the outlook in the revised guidance. I just want to clarify what I mean by that.

Speaker #4: And while , you know the impact of obviously on the vaccine is a significant , you know , 30% of our volume goes through Medicare Part D , the only indication I would provide at this stage , as we still are assessing the final impact on our business , moving forward , is that when you look at our business across all segments , including the CMS impact is probably fair to assume that the average EBITDA over the next two years will not materially different than what we're providing in the outlook in the revised guidance , and I just want to clarify what I mean by that .

Jean-Jacques Charhon: I just wanna clarify what I mean by that. If you take EBITDA in 26, 27, you take the average of those two numbers, you shouldn't have a materially different number than what we have for the outlook of 25.

Speaker #4: If you take EBITDA in 2026 and 2027, you should take the average of those two numbers. You shouldn't have a materially different number than what we have for the outlook of 2025.

Jean-Jacques Charhon: If you take EBITDA in 2026, 2027, you take the average of those two numbers, you shouldn't have a materially different number than what we have for the outlook of 2025. Operator, next question.

Speaker #3: Operator next .

Thomas J. Appio: That's very helpful. Thank you.

Les Sulewski: That's very helpful. Thank you.

[Analyst] (Evercore ISI): Operator, next question.

Tom Appio: Operator, next question.

Speaker #5: Question .

Speaker #1: Thank you. Our next question today is coming from Umer Raffat from Evercore ISI. Your line is now live.

Thomas J. Appio: Thank you. Next question today is coming from Umer Raffat from Evercore ISI. Your line is now live.

Operator: Thank you. Next question today is coming from Umer Raffat from Evercore ISI. Your line is now live.

Operator: Thank you. Next question today is coming from Umar Rafat from Evercore ISI. The line is now live.

Speaker #6: Hello , guys . Congrats on the quarter . This is JP for Rafat . First question on MFN . Do you are you guys planning on negotiating anything regarding manufacturing in the US ?

Jean-Jacques Charhon: Hello guys. Congrats on the quarter. This is JP for Umar Rafat. First question on MFN. Are you guys planning or negotiating anything regarding manufacturing in the U.S.? What's your exposure there?

JP: Hello, guys. Congrats on the quarter. This is J.P. for Umer Raffat. First question. On MFN, are you guys planning or negotiating anything regarding manufacturing in the US? What's your exposure there?

[Analyst] (Evercore ISI): Hello, guys. Congrats on the quarter. This is J.P. for Umer Raffat. First question. On MFN, are you guys planning or negotiating anything regarding manufacturing in the US? What's your exposure there?

Speaker #6: What's your exposure there ?

Speaker #3: Yeah , I can I can take that question . As you know we have our footprint around the world when it comes to manufacturing .

Thomas Appio: Yeah, I can take that question. As you know, we have our footprint around the world when it comes to manufacturing, it is regional based. Where we produce our products is where we sell. In the U.S., of course, Xifaxan comes out of Canada right now. The way our manufacturing footprint plays out, there is no plans at this time. However, we are open to continuing to take a look at it as new products come into the portfolio.

Thomas J. Appio: Yeah, I can take that question. As you know, we have our footprint around the world, when it comes to manufacturing, is regional based. You know, where we produce our products is where we sell. In the US, of course, Xifaxan comes out of Canada. Right now, you know, the way our manufacturing footprint plays out, there is, you know, no plans at this time. However, we are open to continuing to take a look at it as new products, you know, come into the portfolio.

Tom Appio: Yeah, I can take that question. As you know, we have our footprint around the world, when it comes to manufacturing, is regional based. You know, where we produce our products is where we sell. In the US, of course, Xifaxan comes out of Canada. Right now, you know, the way our manufacturing footprint plays out, there is, you know, no plans at this time. However, we are open to continuing to take a look at it as new products, you know, come into the portfolio.

Speaker #3: Is is regional based . So you know , where we where we produce our products is where we sell in the US , of course , like faxing comes out of Canada right now , you know , the way our manufacturing footprint plays out , there no plans at this time .

Speaker #3: is

Speaker #3: However , we are open to continuing to take a look at it as new products . You know , come into the portfolio .

Speaker #4: Let me just add a couple of elements to that for their facts and specifically it's a single active ingredient product . And so therefore country

Jean-Jacques Charhon: Let me just add a couple of elements to that. For Xifaxan specifically, it's a single active ingredient product, and so therefore, country of origin is considered to be Italy. For all the other products is typically in US pharma coming mostly from Canada. Both EU trade agreements currently and obviously the USMCA exclude pharma products from those tariffs. At this point in time, there is no material tariff that are imposed on our fund flow or, you know, the flow of our products. Obviously, they could change in the future, but that's where we are right now.

Jean-Jacques Charhon: Let me just add a couple of elements to that. For Xifaxan specifically, it's a single active ingredient product, and so therefore country of origin is considered to be Italy. For all the other products, it's typically in U.S. Pharma, coming mostly from Canada. Both EU trade agreements currently and obviously the USMCA excludes pharma products from those tariffs. At this point in time, there is no material tariff that is imposed on our fund flow or, you know, the flow of our products. Obviously, they could change in the future, but that's where we are right now.

Speaker #4: of origin is considered to be Italy for all the other products is typically in US pharma coming mostly from from Canada , both EU trade agreements currently and obviously the Umca exclude former products from those tariffs .

Speaker #4: So at this point in time there is no material tariff that are imposed on our funds flow or , you know , the flow of our products .

Speaker #4: Obviously they could change in the future , but that's where we are right now .

Speaker #3: Operator next question .

Thomas Appio: Operator, question.

Thomas J. Appio: Operator, next question.

Tom Appio: Operator, next question.

Speaker #1: Thank you . Next question today is coming from Jason Gerberry from Bank of America . Your line is now live .

Operator: you. The next question today is coming from Jason Gerberry from Bank of America. Your line is now live.

JP: Thank you very much.

[Analyst] (Evercore ISI): Thank you very much.

Thomas J. Appio: Thank you. Next question today is coming from Jason Gerberry for Bank of America. Your line is now live.

Tom Appio: Thank you. Next question today is coming from Jason Gerberry for Bank of America. Your line is now live.

Speaker #5: Hey .

[Analyst]: Hey, this is Chi on for Jason. Thanks for taking our questions. I have a couple. Maybe the first one is on the revised guidance. You saw strength across multiple pharma segments this quarter, yet you are only taking up the lower bound of the top line guidance by 1% and 50 bps at the midpoint. Can you just talk about that? Are you seeing one timers in Q3 that you wouldn't expect to carry forward in Q4? I know you've just talked about the gross to net dynamic with Xifaxan, but are you seeing one timer elsewhere? What about Jublia and some of the other legacy brands in neuro and dermatology? I have a couple of follow ups after that.

Chi: This is Chi, for Jason. Thanks for taking our questions. I have a couple. Maybe the first one is on the revised guidance. You saw strength across multiple pharma segments this quarter, but yet you're only taking up the lower bound of the top line guidance by 1% and 50 bits of the midpoint. Can you just talk about that? Are you seeing one-timers in Q3 that you wouldn't expect to carry forward in Q4? I know you've just talked about the gross to net dynamic with Xifaxan, but are you seeing one-timer elsewhere? What about JUBLIA and some of the other legacy brands in neuro and dermatology? I have a couple of follow-ups after that.

Speaker #7: This is Kai on for Jason . Thanks for taking our questions . I have a couple . Maybe the first one is on the the revised guidance .

[Analyst] (Bank of America): This is Chi, for Jason. Thanks for taking our questions. I have a couple. Maybe the first one is on the revised guidance. You saw strength across multiple pharma segments this quarter, but yet you're only taking up the lower bound of the top line guidance by 1% and 50 bits of the midpoint. Can you just talk about that? Are you seeing one-timers in Q3 that you wouldn't expect to carry forward in Q4? I know you've just talked about the gross to net dynamic with Xifaxan, but are you seeing one-timer elsewhere? What about JUBLIA and some of the other legacy brands in neuro and dermatology? I have a couple of follow-ups after that.

Speaker #7: So you saw strength across multiple pharma segments this quarter . But yet you're only taking up the lower bound of the top line guidance by 1% and 50 bits of the midpoint .

Speaker #7: Can you just talk about that ? Are you seeing one timers in three ? Q that you wouldn't expect to carry forward in four ?

Speaker #7: Q I know you've just talked about the gross to net dynamic with side , but are you seeing one timer elsewhere ? What about Jublia and some of the other legacy brands in neuro and dermatology ?

Speaker #7: And I have a couple of follow ups after that .

Speaker #4: Yes . So just to reiterate , we got some one timers in Q3 in the form of a an adjustment of our gross to net rebate associated with our inventory in the channel .

Jean-Jacques Charhon: Yeah, just to reiterate, we got some one-timers in Q3 in the form of an adjustment of our gross to net rebates associated with our inventory in the channel. You know, we had anticipated, I would say, a good proportion of that. The Q4 is roughly in line with our prior expectations. I think $25 million on the size of our business is not a material change, but still reflects, I think, the positive trend that we're seeing across the portfolio. As you can see, our increase in guidance is greater for EBITDA and cash flow, which reflects really a change in assumptions in how we're thinking about our free cash flow conversion.

Jean-Jacques Charhon: Yeah. Just to reiterate, we got some one timers in Q3 in the form of an adjustment of our gross to net rebate associated with our inventory in the channel, and we had anticipated, I would say, a good proportion of that, and the fourth quarter is roughly in line with our prior expectations. I think $25 million on the size of our business is not a material change, but still reflects, I think, the positive trend that we're seeing across the portfolio. As you can see, our increase in guidance is greater for EBITDA and cash flow, which reflects really a change of assumptions how we're thinking about our free cash flow conversion.

Speaker #4: And , you know , we had anticipated , I would say , a good proportion of that . And the fourth quarter is roughly in line with our prior expectations .

Speaker #4: I think $25 million on the size of our business is not material change , but still reflects , I think , the the positive trend that we're seeing across the portfolio , as you can see , our increase in guidance is greater for EBITDA and cash flow , which reflects really a change how we're thinking about our free cash flow conversion .

Chi: My second question is on the P&L. The SG&A spend this quarter is below the L-phase run rate for the past 5 quarters. Is there any seasonality with the SG&A spend this quarter? How should we think about the SG run rate going forward? Should we look at Q2 balance or the Q3 balance as a better indicator for future run rates?

Speaker #4: .

Speaker #7: And my second question is on the P&L. The spend this quarter is below the average run rate for the past five quarters.

[Analyst]: My second question is on the P&L. The SG&A spend this quarter is below the LPH1 rate for the past 5 quarters. Is there any seasonality with the SG&A spend this quarter? How should we think about the SG&A run rate going forward? Should we look at Q2 balance or the Q3 balance as a better indicator for future run rates?

[Analyst] (Bank of America): My second question is on the P&L. The SG&A spend this quarter is below the L-phase run rate for the past 5 quarters. Is there any seasonality with the SG&A spend this quarter? How should we think about the SG run rate going forward? Should we look at Q2 balance or the Q3 balance as a better indicator for future run rates?

Speaker #7: Is there any seasonality with the spend this quarter ? How should we think about the runway going forward ? Should we look at QQ balance or the three Q balance as a better indicator for future run rates ?

Speaker #4: Yeah . Three Q is unusually low . There's been some changes to accruals that we process in the quarter that's all nonrecurring . So I would certainly look at the first couple of quarters at a better indicator of our spending .

Jean-Jacques Charhon: Yes, Q3 is unusually low. There have been some changes to accruals that we process in the quarter that are non-recurring. I would certainly look at the first couple of quarters as a better indicator of our SG&A spending.

Jean-Jacques Charhon: Yeah. Q3 is unusually low. There's been some changes to accruals that we processed in the quarter that are non-recurring. I would certainly look at the first couple of quarters as a better indicator of our SG&A spending.

Speaker #7: And then just another one from me on the pipeline. You mentioned you're going to have research for Red Sea early next year.

Speaker #7: And then just another one from me on the pipeline. You mentioned you're going to have Phase 3. Are you planning a concurrent readout for both Phase 3 and early 2026?

Chi: Just another one from me on the pipeline. You mentioned you're gonna have phase 3 results for RED-C early next year. Are you planning a concurrent readout for both phase 3 in early 2026? I think I heard the commentary framing that the data will be early initial readout. I just wanna confirm this is the final phase 3 top line that we'll have the final results in early 2026. Once you have the results, do you expect you need more data before you can go to regulate it, this potential filing should the studies be positive?

[Analyst] (Bank of America): Just another one from me on the pipeline. You mentioned you're gonna have phase 3 results for RED-C early next year. Are you planning a concurrent readout for both phase 3 in early 2026? I think I heard the commentary framing that the data will be early initial readout. I just wanna confirm this is the final phase 3 top line that we'll have the final results in early 2026. Once you have the results, do you expect you need more data before you can go to regulate it, this potential filing should the studies be positive?

[Analyst]: Just another one from me on the pipeline. You mentioned you're going to have Phase 3 results for RED-C early next year. Are you planning a concurrent readout for both Phase 3 and early 2026? I think I heard the commentary framing that the data will be early initial readout. I just want to confirm this is the final Phase 3 top line that will have the final results in early 2026. Once you have the results, do you expect you need more data before you can go to regulated this potential filing? Should the studies be positive?

Speaker #7: And I think I heard the commentary framing that the data will be early initial readout . I to confirm this is the final phase three top line that will have the final results in early , early , early 2026 .

Speaker #7: And once you have the results , do you expect you need more data before you can go to regulator ? Discount filing ? Should the studies be positive ?

Speaker #3: Yeah , I can , I can answer those for you . So as you know , we have you know , two global phase three studies .

Thomas Appio: Yeah, Chi, I can answer those for you. As you know, we have two global Phase 3 studies. They're fully enrolled. We decided to have the readout of both trials together as these were these two global trials. As we look at the patient populations that are in each and the geographies, we thought it best to combine them and read it out in the first quarter. Clearly, this will be our final readout of this very important program.

Thomas J. Appio: Yeah, Chi, I can answer those for you. As you know, we have, you know, 2 global phase 3 studies. They're fully enrolled. We decided to have the readout of both trials together, as these 2 global trials, as we look at the patient populations that are in each and the geographies, we thought it best to combine them and read it out in Q1. Clearly, you know, this will be our final readout of this very important program.

Tom Appio: Yeah, Chi, I can answer those for you. As you know, we have, you know, 2 global phase 3 studies. They're fully enrolled. We decided to have the readout of both trials together, as these 2 global trials, as we look at the patient populations that are in each and the geographies, we thought it best to combine them and read it out in Q1. Clearly, you know, this will be our final readout of this very important program.

Speaker #3: They're fully enrolled . We decided to have the readout of both trials together as as these were these two global trials , as we look at the patient populations that are in each and the geographies we thought it best to combine them and read it out in the first quarter .

Speaker #3: And you know , clearly , you know , this will be our final readout of this very important program .

Chi: Do you have any expectation or how would you frame what would be a successful outcome of the trial? Is it just meeting the primary endpoint, or is there more to it?

[Analyst] (Bank of America): Do you have any expectation or how would you frame what would be a successful outcome of the trial? Is it just meeting the primary endpoint, or is there more to it?

Speaker #7: If any expectation of how would you frame what would be a successful outcome of the trial? Is it just meeting the primary endpoint?

[Analyst]: Do you have any expectation or how would you frame what would be a successful outcome of the trial? Is it just needing a primary endpoint or is there more to it?

Speaker #7: Or is there more to it?

Speaker #3: You know , when when I look at red , sea , it's a prevention trial . As I've on previous calls , there's a lot of important information there .

Thomas J. Appio: You know, when I look at RED-C, it's a prevention trial, as I've said on previous calls. There's a lot of important information there. You know, the primary endpoints. There's also very important secondary endpoints as well. Too early to comment there, but as I've said in the past, this program and the amount of patients or US adults with cirrhosis who've never had OHE is large. The opportunity for us is could be very large. As we wait for the data, we'll see what it looks like.

Tom Appio: You know, when I look at RED-C, it's a prevention trial, as I've said on previous calls. There's a lot of important information there. You know, the primary endpoints. There's also very important secondary endpoints as well. Too early to comment there, but as I've said in the past, this program and the amount of patients or US adults with cirrhosis who've never had OHE is large. The opportunity for us is could be very large. As we wait for the data, we'll see what it looks like.

Thomas Appio: You know, when I look at RED-C, it's a prevention trial. As I've said on previous calls, there's a lot of important information there. The primary endpoints, there's also very important secondary endpoints as well. It's too early to comment there. As I've said in the past, this program and the amount of patients or U.S. adults with cirrhosis who've never had OHE is large. The opportunity for us could be very large. As we wait for the data, we'll see what it looks like.

Speaker #3: You know , the primary endpoints , there's also very important secondary endpoints as well . So too early to comment . There . But as I've said in the past , this program and the amount of patients or U.S.

Speaker #3: adults with cirrhosis who've never had is large . So the opportunity for us is could be very large . And as we wait for the data , we'll see what it looks like .

Speaker #7: Okay , great . Thank you .

[Analyst]: Okay, great. Thank you.

Chi: Okay, great. Thank you.

[Analyst] (Bank of America): Okay, great. Thank you.

Speaker #3: Next question .

Thomas Appio: Next question.

Thomas J. Appio: Next question.

Tom Appio: Next question.

Speaker #1: Thank you . Next question today is coming from Dennis Ting from Jefferies . Your line is now live .

Operator: Thank you. Next question today is coming from Dennis Ding from Jefferies. Your line is now live.

Speaker #8: Hi . Thanks for taking the question . And congrats on the quarter . May I follow up with IRA that what would you think about the dynamics for the commercial spillover ?

Dennis Ding: Hi, thanks for taking the question and congrats on the quarter. May I follow up with IRA, but, what would you think about the dynamics for the commercial spillover? By the way, I'm.

[Analyst]: Hi, thanks for taking the question and congrats on the quarter. May I follow up with IRA, but, what would you think about the dynamics for the commercial spillover? By the way, I'm.

[Analyst]: Hi, thanks for taking the question and congrats on the quarter. May I follow up with IRA, but what do you think about the dynamics for the commercial spillover? By the way, I'm Lewin Wen for Danisting. Thank you.

Speaker #8: And by the way, I'm leaving when for dancing. Thank you.

Speaker #3: Yes . Could you be more specific of what you're what the question is the dynamic . .

Thomas Appio: Could you be more specific of what the question is, what dynamic?

Speaker #8: Like the commercial spillover ?

[Analyst]: Is the commercial still over?

Speaker #4: Yeah . The only thing I would say , Denise , is that this , this impact really , or this renegotiation really impacts only 2027 .

Jean-Jacques Charhon: Yes. The only thing I would say, Denise, is that this impact really or this renegotiation really impacts only 2027. It really doesn't change the commercial dynamics per se. It just changes the discount that will be provided to the volume of grant going to CMS for the Medicare Part D program.

Speaker #4: It really doesn't change the commercial dynamics per se; it just changes the discount that will be provided to the volume of growth going to CMS for the Medicare Part D program.

Speaker #8: Gotcha . And can I follow up with what do you think about the erosion curve with the generic for 2028 plus ?

[Analyst]: Gotcha. Can I follow up with what do you think about the erosion curve with the generic for 2028 plus?

Speaker #3: Yeah , go ahead .

Thomas Appio: Go ahead.

Speaker #4: What we have guided in the past is that you should assume a typical erosion curve for , you know , multiple generic entry in 2028 .

Jean-Jacques Charhon: What we have guided in the past is that you should assume a typical erosion curve for multiple generic entry in 2028. Nothing unusual I would expect, but obviously it's all speculative at this stage.

Speaker #4: So nothing unusual . I would expect . But obviously it's it's all speculative at this stage .

Speaker #8: Okay . Thank you .

[Analyst]: Okay, thank you.

Speaker #3: Next question .

Thomas Appio: Next question.

Speaker #1: Thank you . Next question today is coming from Mike Nedeljkovic from TD Cowen . Your line is now live .

Operator: Thank you. Next question today is coming from Michael Nedelcovych from TD Cowen. Your line is now live.

Speaker #9: Hi. Thanks for the questions. I have a couple, actually. The first are just a couple of points of clarification in response to an earlier question.

[Analyst]: Hi, thanks for the questions. I have a couple. Actually, the first are just a couple of points of clarification in response to an earlier question. Did I hear correctly that you suggested 2026 and 2027? EBITDA is expected to be flattish versus 2025.

Speaker #9: Did I hear correctly that you suggested 2026 and 2027 ? EBITDA ? Is expected to be flattish versus 2025 .

Speaker #4: No . What I said is that if you combine 26 and 26 , 27 together , the average of those two years would be similar to 2025 .

Jean-Jacques Charhon: No, what I said is that if you combine 2026 and 2027 together, the average of those two years would be similar to 2025.

Speaker #9: Okay , okay . And that's across the business . That's not specific to the IRA impact .

[Analyst]: Okay. That's across the business. That's not specific to the IRA impact.

Speaker #4: Correct .

Jean-Jacques Charhon: Correct.

Speaker #9: Got it . Okay . Thank you very much . And then my next question is on Xiafaxan . And its follow on . Do you know what .

[Analyst]: Got it. Okay, thank you very much. My next question is on Xifaxan and it's a follow on do you know what. Or maybe you've told us before, but roughly what proportion of prescribers of Xifaxan that use it to treat hepatic encephalopathy are hepatologists versus gastroenterologists? How do you think that split might change for Xifaxan SSD if the RED-C clinical trial program is successful and that product is launched for overt hepatic encephalopathy prevention?

Speaker #9: Or maybe you've told us before, but roughly what proportion of prescribers of Xifaxan who use it to treat hepatic encephalopathy are hepatologists versus gastroenterologists?

Speaker #9: And how do you think that split might change for rifaximin SSD ? If Red sea is successful in that product , is launched for e.g. prevention ?

Speaker #3: Yeah , Mike , I don't have the specific split . You know , we look at in terms of gastroenterology together with with hepatology .

Thomas Appio: Yeah, Mike, I don't have the specific split. We look at it in terms of gastroenterology together with hepatology. That's why we always say the franchise is gastroenterology. I can get you that after the call, what the actual split is. When we take a look just in terms of the opportunity, of course, this is a different product. In terms of the program we're running with RED-C, we call it SSD. If you just take a look at the patient population and how it splits out, it's like 650,000 patients in the U.S. adults with cirrhosis with OHE and 1.9 million with cirrhosis who have never had OHE. That's how it kind of splits out as we look at the opportunity that is in front of us.

Speaker #3: That's why we always say , you know , the franchise is gastroenterology . So I don't I can get you that , you know , after the call of what the actual split is .

Speaker #3: But when we take a look just in terms of the opportunity between , of course , this is a different product in terms of the of the program we're running with Red sea .

Speaker #3: We call it SSD . If you just take a look at just the patient population and how it splits out , it's like 650,000 patients in the U.S.

Speaker #3: , adults with cirrhosis with Ohe and 1.9 million with cirrhosis , who have never had OAG . So that's how it kind of splits out .

Speaker #3: As we look at the opportunity that is in front of us .

Speaker #9: Got it . Thank you . If I may , one more question on Red . See when we get the initial topline data , what is the likelihood that we also see the all cause mortality data .

[Analyst]: Got it. Thank you. If I may, one more question on RED-C. When we get the initial top line data, what is the likelihood that we also see the all-cause mortality data? Would that be mature as well, or might we at least expect an initial data cut?

Speaker #9: Would that be mature as well . Or might we at least expect an initial data cut ?

Speaker #3: Yeah . When we look at the initial data , as I said on the previous question , you know , the primary endpoint .

Thomas Appio: Yeah, when we look at the initial data, as I said on the previous question, the primary endpoint and then there's very important secondary endpoints. We'll be looking at, once we get the data, providing it in totality both from primary and secondary.

Speaker #3: And then there's there's very important secondary endpoints . So we'll be looking know , once we get the data , you know , providing it in totality , both from , you know , primary and secondary .

Speaker #9: Thanks so much .

[Analyst]: Thanks so much.

Speaker #3: Next question .

Thomas Appio: Next question.

Speaker #1: Our next question today is coming from Doug Mills from RBC Capital Markets. Your line is now live.

Operator: Our next question today is coming from Doug Miehm from RBC Capital Markets. Your line is now live.

Speaker #10: Yeah . Thanks very much . Just with respect to those accruals , would you be able to expand on those that impacted the this quarter ?

Thomas Appio: Yeah, thanks very much. Just with respect to those accruals, would you be able to expand on those that impacted this quarter? I know you indicated that we should use Q1 and Q2 as a guideline for SGA. How did they specifically arise?

Speaker #10: I know you indicated that we should use Q1 and Q2 as a guideline for SG&A, but how did they specifically arise?

Speaker #4: It's just estimates of liability that we were thinking of incurring associated to prior fiscal that we had to adjust in the third quarter .

Jean-Jacques Charhon: It's just estimates of liability that we were thinking of incurring associated to prior fiscal that we had to adjust in the third quarter. They kind of roughly offset with the IP R&D that were recorded obviously as a result of the Direct Corporation acquisition. That's why I think Q1 and Q2 is a little bit cleaner from a run rate perspective.

Speaker #4: They kind of roughly offset with the IP R&D that were recorded. Obviously, as a result of the direct acquisition. So that's why I think Q1 and Q2 is a little bit cleaner from a run rate perspective.

Jean-Jacques Charhon: Roughly offset with the IP R&D that were recorded obviously as a result of the DURECT acquisition. That's why I think Q1, Q2 is a little bit cleaner from a run rate perspective.

Speaker #10: Okay . And then with respect to capital allocation , as you as you think about the next couple of years , you've given , you know , helpful guidance with respect to , I believe , the the EBITDA , 2627 .

[Analyst]: Okay.

[Analyst] (Evercore ISI): Okay. With respect to capital allocation, as you think about the next couple years, you've given, you know, helpful guidance with respect to, I believe, the EBITDA 26, 27, the average versus this year, et cetera, et cetera. Can you speak to cash flow in those two years as well, and how that cash flow is gonna be apportioned or used to pay down debt? I'll leave it there. Thanks very much.

Dennis Ding: Okay. With respect to capital allocation, as you think about the next couple years, you've given, you know, helpful guidance with respect to, I believe, the EBITDA 26, 27, the average versus this year, et cetera, et cetera. Can you speak to cash flow in those two years as well, and how that cash flow is gonna be apportioned or used to pay down debt? I'll leave it there. Thanks very much.

Thomas Appio: With respect to capital allocation, as you think about the next couple years, you've given helpful guidance with respect to, I believe, the EBITDA 2026, 2027, the average versus this year, etc. etc. Can you speak to cash flow in those two years as well and how that cash flow is going to be apportioned or used to pay down debt? I'll leave it there. Thanks very much. Yeah.

Speaker #10: The average versus this year , etc. , But can you speak to cash flow in those two years as well ? And how that cash flow is going to be apportioned or used to pay down debt ?

Speaker #10: etc. .

Speaker #10: And I'll leave it there. Thanks very much.

Speaker #4: Yeah, we'll provide some more specific guidance around cash flow associated with 26. When we report.

Jean-Jacques Charhon: Yeah, we'll provide some more specific guidance around cash flow associated with 2026 when we report our full quarter results. We were trying to provide a little bit some directional view on how 2026 and 2027, taken together really, is gonna behave as a result of CMS and other dynamics in our portfolio. Our capital allocation remains the same, which is first and foremost to service our debt, including deleveraging the business. Second is reinvest in the business whenever obviously it makes sense in light of our strategy. Then third and last, only if there is some excess, potentially return capital to shareholders. We obviously, the focus is on number one and number two.

Jean-Jacques Charhon: We'll provide some more specific guidance around cash flow associated with 2016 when we report our fourth quarter results. We were trying to provide a little bit some directional view on how 2026 and 2027 taken together really is going to behave as a result of CMS and other dynamics in our portfolio. Our capital allocation remains the same, which is first and foremost to service our debt, including deleveraging the business. Second is reinvest in the business whenever obviously it makes sense in light of our strategy. Third and last, only if there is some excess, potentially return capital to shareholders. We obviously the focus is on number one and number two.

Speaker #4: Our fourth quarter results. We were trying to provide a little bit of directional view on how 2026 and 2027, taken together, really are going to behave as a result of CMS and other dynamics in our portfolio.

Speaker #4: Our capital allocation remains the same, which is, first and foremost, to service our debt, including deleveraging the business. Second is reinvesting in the business whenever, obviously, it makes sense in light of our strategy.

Speaker #4: And then third and last , only if there is some excess potentially return capital to shareholders . But we obviously the focus is on number one .

Speaker #4: And number two .

Speaker #10: Excellent . Thank you .

Thomas Appio: Excellent. Thank you. Next question.

[Analyst] (Evercore ISI): Excellent. Thank you.

Dennis Ding: Excellent. Thank you.

Speaker #3: Next question .

Jean-Jacques Charhon: Next question.

Speaker #1: Our next question today is coming from Michael Freeman from Raymond James . Your line is now live .

Operator: Thank you. Our next question today is coming from Michael Freeman from Raymond James. Your line is now live.

[Analyst]: Hi, Doug. Hi, Jean-Jacques. I wonder if you could take us through the thought process that led to Bausch Health Companies Inc.'s decision to cease participation in the 340B program and the Medicaid drug rebate program.

Michael Freeman: Hey, Tom and JJ. I wonder if you could take us through the thought process that led to Bausch Health's decision to cease participation in the 340B program and the Medicaid Drug Rebate Program.

Speaker #11: JJ, I wonder if you could take us through the thought process that led to Bausch Health's decision to cease participation in the three TB program in the Medicaid Drug Rebate Program.

Speaker #3: Yeah , Mike , I can take that question . So as we looked at it , we're continually evaluating ways to optimize our sales channel .

Thomas Appio: Yeah, Mike, I can take that question. As we looked at it, we're continually evaluating ways to optimize our sales channel in all the markets we operate in, including the U.S. When we did the evaluation, we determined that it was in the company's and the patient's best interest to exit Medicaid in the 340B channel for all products marketed in the U.S. as of October 1. What I would say is that as we looked at it, made the decision and the key was to enhance our patient assistance program, to really make sure that the care was there and the patient assistance program was robust to be able to offer eligible Medicaid patients access to a broad range of Bausch Health Medicines at no cost consistent with the program terms.

Jean-Jacques Charhon: Yeah, Mike, I can take that question. As we looked at it, we're continually evaluating ways to optimize our sales channel in all the markets we operate in, including the US. When we did the evaluation, we determined that it was in the company's and the patient's best interest to exit Medicaid and the 340B channel for all products marketed in the US as of 1 October. What I would say is that as we looked at it, made the decision, the key was to enhance, you know, our patient assistance program to really make sure that the care was there, and the patient assistance program was robust to be able to, you know, offer eligible Medicaid patients access to a broad range of Bausch Health medicines at no cost, consistent with the program terms.

Tom Appio: Yeah, Mike, I can take that question. As we looked at it, we're continually evaluating ways to optimize our sales channel in all the markets we operate in, including the US. When we did the evaluation, we determined that it was in the company's and the patient's best interest to exit Medicaid and the 340B channel for all products marketed in the US as of 1 October. What I would say is that as we looked at it, made the decision, the key was to enhance, you know, our patient assistance program to really make sure that the care was there, and the patient assistance program was robust to be able to, you know, offer eligible Medicaid patients access to a broad range of Bausch Health medicines at no cost, consistent with the program terms.

Speaker #3: And all the markets we operate in , including the US . So when we we did the the evaluation , we determined that it was in the company's and the patient's best interest to exit Medicaid .

Speaker #3: And the 340 B channel for all products marketed in the US . As of October 1st , what I would say is , is that as we looked at it made the decision .

Speaker #3: The key was , was to enhance , you know , our patient assistance program to really make sure that the care was there and the patient assistance program was robust to be able to offer eligible Medicaid patients access to a broad range of Bausch Health medicines at no cost , consistent with the program terms , the patient benefit .

Jean-Jacques Charhon: The patient benefit, when we look at it compared to Medicaid, you know, it's an enhanced path program with 0 out-of-pocket costs. The patient also is able to get 90 days treatment, where if you're in Medicaid, it would only be 30 days for each script. As we looked at it, we thought we could really have an opportunity to enhance the patient experience and also have a good situation for the company.

Tom Appio: The patient benefit, when we look at it compared to Medicaid, you know, it's an enhanced path program with 0 out-of-pocket costs. The patient also is able to get 90 days treatment, where if you're in Medicaid, it would only be 30 days for each script. As we looked at it, we thought we could really have an opportunity to enhance the patient experience and also have a good situation for the company.

Thomas Appio: The patient benefit when we look at it compared to Medicaid, it's an enhanced PAP program with zero out-of-pocket cost. The patient also is able to get 90 days treatment where if you're in Medicaid it would only be 30 days for each script. As we looked at it, we thought we could really have an opportunity to enhance the patient experience and also have a good situation for the company.

Speaker #3: When we look at it , compared to Medicaid , you know , it's an enhanced PAP program with zero out of pocket , out of pocket costs , and then the patient also is able to get 90 days treatment where if you're in Medicaid , it would only be 30 days for each script .

Speaker #3: So we as we looked at it , we thought we could really have an opportunity to enhance the patient experience . And also have a good situation for the company .

Speaker #11: To follow up on that, I wonder: you described the patient benefits. Well, I wonder if you could describe the benefits to the company and any benefits beyond that sort of one time where we saw with accruals.

Michael Freeman: Right. Just following up on that, I wonder, you described the patient benefits well. I wonder if you could describe, you know, benefits to the company and any benefits beyond that sort of one time release saw with accruals.

[Analyst]: Just following up on that, I wonder, you described the patient benefits. I wonder if you could describe benefits to the company and any benefits beyond that sort of one time where we saw with accruals.

Speaker #3: As I said , you know , we're always looking at different sales channels and how to optimize them . And there are benefits .

Jean-Jacques Charhon: As I said, you know, we're always looking at different sales channels and how to optimize them. There are benefits, as we looked at. I'm not gonna get into the specifics, it's early days, you know, since October first and how each of these benefits, you know, flows through and what it will look like.

Tom Appio: As I said, you know, we're always looking at different sales channels and how to optimize them. There are benefits, as we looked at. I'm not gonna get into the specifics, it's early days, you know, since October first and how each of these benefits, you know, flows through and what it will look like.

Thomas Appio: As I said, we're always looking at different sales channels and how to optimize them, and there are benefits as we've looked at. I'm not going to get into the specifics. It's early days since October 1, and how each of these benefits flows through and what it will look like.

Speaker #3: As we look at it, I'm not going to get into the specifics. It's early days, you know, since October 1st.

Speaker #3: And how each of these benefits, you know, flows through and what it'll look like.

Speaker #11: All , I wonder , maybe a question for JJ now , if you could give us the lay of the land on your on your debt refinancing programs and further steps you envision taking in the future to to de-lever .

Speaker #11: right

Michael Freeman: All right. I wonder, it may maybe a question for JJ now. I wonder if you could give us the lay of the land on your, on your debt refinancing programs and further steps you envision taking in the future, to delever.

[Analyst]: I wonder maybe a question for JJ now if you could give us the lay of the land on your debt refinancing programs and further steps you envision taking in the future to delever.

Speaker #4: Well , the we've repeatedly said that there are really two main sources for deleveraging . The company . The first one is free cash flow generated by operations that

Jean-Jacques Charhon: There are really two main sources for deleveraging the company. The first one is free cash flow generated by operations that will continue certainly at a fairly similar level than what we've incurred for the next couple of years until we lose exclusivity on Xifaxan. That needs to be supplemented by one of three sources: either new equity raise, which obviously would be very dilutive at our current share price, so very unlikely that we would do that, would be certainly a last resort option. The second possibility would be to capture some debt discount. As you know, our debt has traded back up and therefore the discount that is left is fairly minimal. The last source of extra funding would be proceeds from asset sales either at Bausch Health Companies Inc. or Bausch + Lomb.

Jean-Jacques Charhon: Well, they, we've repeatedly said that there are really two main sources for deleveraging the company. The first one is free cash flow generated by operations that will continue certainly at a fairly similar level than what we've incurred for the next couple of years until we lose exclusivity on Xifaxan. That needs to be supplemented by one of three sources, either new equity raise, which obviously would be very dilutive at our current share price, so very unlikely that we would do that. Would be certainly a last resort option. The second possibility would be to capture some debt discount. As you know, our debt has traded back up, and therefore, the discount that is left is fairly minimal.

Speaker #4: that will continue , certainly at a at a fairly similar level than what we've incurred for the next couple of years . Until we lose exclusivity on that and that that needs to be supplemented by one of three sources , either new equity raise , which obviously would be very dilutive at our current share price .

Speaker #4: So, very unlikely that we would do that; it would be certainly a last resort option. The second possibility would be to capture some of that discount.

Speaker #4: As you know , or our debt has traded back up and therefore the discount that is left is is fairly minimal . So the last source of extra funding would be proceeds from asset sales , either at BK or BNL .

Jean-Jacques Charhon: The last source of extra funding would be proceeds from asset sales, either at BHC or B+L. The B+L equity stake is the more logical candidate given that it's the only one that is not associated with some EBITDA generation for the BHC. That becomes, I would say, the most probable outcome for completing the leveraging or the deleveraging solve for us between now and, you know, sometime in the future.

Jean-Jacques Charhon: The Bausch + Lomb equity stake is the more logical candidate given that it's the only one that is not associated with some EBITDA generation for Bausch Health Companies Inc. That becomes, I would say, the most probable outcome for completing the deleveraging solve for us between now and sometime in the future.

Speaker #4: The BNL equity stake is the more logical candidate , given that it's the only one that is not associated with some EBITDA generation for for BK , so that becomes , I would say the most probable outcome for completing the the leveraging of the bridging solve for us between now and , you know , sometime in the future .

Speaker #1: Thank you. We have now reached the end of our question-and-answer session and our earnings call. I would like to turn the floor back over to our CEO, Thomas Appio, for closing remarks.

Operator: Thank you. We reached the end of our question and answer session and our earnings call. I'd like to turn the floor over back to our CEO Thomas Appio for closing remarks.

Operator: Thank you. We've reached the end of our question and answer session and our earnings call. I'd like to turn the floor over back to our CEO, Tom Appio, for closing remarks.

Speaker #3: Okay. Well, thank you all for joining the call today and for your continued interest in support of the company. We are committed to executing against our strategic priorities and focusing on unlocking value.

Thomas Appio: Thank you all for joining the call today and for your continued interest and support of the company. We remain committed to executing against our strategic priorities and focused on unlocking value. We appreciate your ongoing engagement and look forward to sharing further updates with you on the progress to close the year. Thank you and have a good evening.

Jean-Jacques Charhon: Okay. Well, thank you all for joining the call today and for your continued interest and support of the company. We remain committed to executing against our strategic priorities and focused on unlocking value. We appreciate your ongoing engagement and look forward to sharing further updates with you on the progress to close the year. Thank you, and have a good evening.

Tom Appio: Okay. Well, thank you all for joining the call today and for your continued interest and support of the company. We remain committed to executing against our strategic priorities and focused on unlocking value. We appreciate your ongoing engagement and look forward to sharing further updates with you on the progress to close the year. Thank you, and have a good evening.

Speaker #3: We appreciate your ongoing engagement and look forward to sharing further updates with you on our progress to close the year. Thank you, and have a good evening.

Speaker #1: Thank you . That does conclude today's teleconference and webcast . You may disconnect your line at this time and have a wonderful day .

Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

[Analyst]: It.

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