Bausch + Lomb (BLCO) Q4 2025 Earnings Transcript

Bausch + Lomb posted record Q4 revenue of $1.405 billion (+7% constant currency) and record adjusted EBITDA of $330 million (+27% YoY), with margin expanding to 23.5%. Full-year revenue rose to $5.101 billion and 2026 guidance calls for $5.375 billion-$5.475 billion in revenue and $1.0 billion-$1.05 billion of adjusted EBITDA, implying about 15% EBITDA growth. Miebo remained a standout at $112 million in Q4 (+111%) and management raised its peak sales view to above $600 million, while margin expansion is expected to continue despite a higher 2026 tax rate of about 19%.

Analysis

BLCO is transitioning from a “recovery story” into a real leverage story: the important shift is not just that top-line growth is improving, but that the mix is moving toward self-funding franchises with much lower incremental SG&A. That matters because the company now has a visible path to compound EBIT faster than revenue for several years, which should compress skepticism around the durability of the margin program.

The underappreciated second-order effect is capital allocation. As dry eye and premium vision care become bigger profit pools, management can keep launch investment steady while letting gross profit expansion flow through, meaning 2026 is likely to be the inflection year where operating leverage becomes more predictable. If that holds, the market may start valuing BLCO less like a turnaround and more like a niche medtech compounder, which is the key multiple re-rating scenario.

The main risk is not demand, but timing: the earnings cadence is likely to become lumpier as pharmaceutical seasonality grows and as the tax rate normalizes sharply higher. That creates a setup where reported EPS can look noisy even while underlying cash earnings improve, so consensus may underappreciate FCF conversion while overreacting to quarterly volatility. The other latent overhang is float; even if operations continue to execute, that supply issue can cap the speed of multiple expansion for months.

Contrarian read: the market may be too focused on the sustainability of Miebo’s ramp and not enough on the breadth of the platform. The more durable thesis is that BLCO has multiple independently growing drivers, so any one launch disappointment is less damaging than it would have been two years ago. The setup favors buying weakness on tax/seasonality-related selloffs rather than chasing strength after headline guide beats.

Key Decisions for Investors

• Long BLCO on post-earnings pullbacks over the next 2-6 weeks; use downside created by tax-rate or seasonality anxiety to build a position, with a 6-12 month target for margin-re-rating as 2026 EBITDA inflects toward the midpoint of guidance.
• Pair trade: long BLCO / short a slower-growth healthcare consumer name with weaker operating leverage; the trade is designed to monetize BLCO’s superior mix shift and fixed-cost absorption while reducing market beta.
• Buy BLCO call spreads 3-6 months out to express upside from multiple expansion without paying full premium for float-related overhang; best strike structure is around the level implied by ~19% EBITDA margin execution.
• If holding BLCO equity, hedge with short-dated puts into the quarters where seasonality is most pronounced; the goal is to protect against volatility from the higher tax rate and lumpy pharma phasing while preserving upside over 12 months.