Bausch Health Companies Inc 2026 Q3 Earnings Call

Please go ahead. Good afternoon, and welcome to Bausch Health third quarter 2026 earnings conference call.

My name is Garen Sarafian, Vice President of Investor Relations. Participating in today's call are Thomas Appio, Chief Executive Officer, JJ Charhon, Chief Financial Officer, and Jonathan Sadeh, Chief Medical Officer and Head of Research and Development. Before we begin, I would like to remind you that today's presentation contains forward-looking information. Please take a moment to review the forward-looking statements disclaimer at the beginning of the slides accompanying this presentation, as it contains important information. Actual results may differ materially from those expressed or implied in these forward-looking statements, and you should not place undue reliance on them. Please also refer to our SEC filings and our filings with the Canadian Securities Administrators for a discussion of certain risk factors that could cause actual results to differ materially from expectations.

We use non-GAAP financial measures to help investors better understand our operating performance. These non-GAAP measures may not be comparable to similarly titled measures used by other companies and should be considered in addition to, and not as a substitute for, measures calculated in accordance with GAAP. Reconciliations to our non-GAAP measures are included in the appendix of the slides accompanying this presentation, which are also 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 28, will focus on Bausch Health, excluding Bausch + Lomb. However, we will briefly comment on Bausch + Lomb's results announced this morning. We will refer to year-over-year comparisons with the same period last year, unless otherwise noted.

With that, I will turn the call over to our CEO, Tom Appio.

Tom? Thank you, Garen, and thank you to everyone joining us today.

Before I discuss our third quarter results, I want to briefly address my recent appointment as Interim CEO of Bausch + Lomb. I am honored and energized to serve as Interim CEO. Having spent a good part of my career with the company, I have developed a deep understanding of their business, markets, products, and most importantly, the exceptional global team who drive their success. Having said that, I want to reiterate that I remain fully committed to Bausch Health and all its stakeholders. I am proud of our 7,000 colleagues around the world and all that we continue to achieve together. Both companies have experienced teams and well-defined operating priorities, allowing us to remain focused on execution across each business. Turning now to Bausch Health.

We delivered another solid quarter, extending our record to 14 consecutive quarters of year-over-year revenue and Adjusted EBITDA growth for Bausch Health, excluding Bausch + Lomb. For the first time, we exceeded $1 billion in quarterly Adjusted EBITDA, marking another important milestone for our company. We generated one of our highest adjusted quarterly cash flow from operations since the IPO of Bausch + Lomb. Building on the progress achieved during the first half of the year, this cash generation enabled us to reduce our net debt by more than a half a billion dollars. Our execution through the first nine months gives us the confidence to again raise our full year 2026 guidance for revenue, Adjusted EBITDA, and adjusted cash flow from operations.

More importantly, the consistency of our performance continues to demonstrate the strength of our strategy, the discipline of our operations, and the accountability that we have built throughout the organization. Let me start with a few highlights from the quarter. Within Salix, revenue increased 16%, driven by net realized pricing and increased XIFAXAN volume within the channels we serve today. This is the 17th consecutive quarter of growth for Salix. Our international business grew mid-single digit on both a reported and organic basis. Canada achieved 6% growth with continued momentum in promoted products. EMEA delivered its 15th consecutive quarter of organic revenue growth, supported by several markets, including Poland and Hungary. Latin America also delivered positive underlying growth in both established brands and new products. Finally, Solta delivered another quarter of double-digit reported revenue growth, supported by its leading aesthetics portfolio and the successful integration of our China distributor.

This quarter, Thermage FLX grew 21% globally, while Fraxel FTX and Clear + Brilliant Touch grew 52% and 49% respectively off more modest bases. These results demonstrate the breadth of our global organization and the progress across multiple segments, markets, and products. While we are pleased with our third quarter results, the greater achievement is our ability to sustain this level of performance over time. We have greater discipline, accountability, and consistency in our execution across the organization. The result is 14 consecutive quarters of revenue and Adjusted EBITDA growth across a diverse portfolio of businesses and markets. This performance reflects a consistent set of management principles that guide how we operate the business every day. The first principle is profitable revenue growth with the objective of delivering long-term value creation. Our last 12 months revenue provides a good measure of that progress.

The metric has grown every quarter since year-end 2023, resulting in approximately 24% growth cumulatively over that period. Throughout our businesses, we are optimizing the operating levers available to us. Within Salix, we are maximizing performance throughout the product life cycle, supported by customer insights engine and strong commercial capabilities. At Solta, we are improving commercial execution while investing in innovation and R&D to support future growth. In international, we are strengthening the portfolio through targeted product launches, including important markets such as Mexico and Poland. For all our businesses, the objective is the same: disciplined commercial focus that drives sustainable, profitable growth. The second principle is disciplined resource allocation and operating leverage. We make targeted strategic investments where we see the potential for attractive long-term returns. At the same time, we continuously evaluate our infrastructure and pursue productivity opportunities throughout the organization.

This combination of profitable growth and resource discipline has contributed to approximately 740 basis points of last 12 months Adjusted EBITDA margin expansion compared with 2023. The third principle is cash generation. Our operating performance has translated into growing cash flow from our existing businesses. This has supported a reduction in net debt every quarter since the fourth quarter of 2023, with this quarter representing one of the largest quarterly net debt reductions since the IPO of Bausch + Lomb. These core principles continue to guide our actions and priorities across the organization. Our third quarter performance is further evidence that consistent execution can create sustainable value across the business. With that, I will turn the call over to JJ for a more detailed review of our financial results and updated guidance.

JJ? Thank you, Tom. Let's start with our consolidated non-GAAP financial results for the third quarter, which you will find starting on page 12.

Revenues were $2,941,000,000, a 10% increase on a reported basis and 8% on an organic basis compared to the same period a year ago. Adjusted gross margin was 75%, which was 230 basis points higher year-over-year. Adjusted EBITDA was $1,305,000,000, an increase of $319,000,000, or 32% year-over-year. Finally, adjusted cash flow from operations was $782,000,000, an increase of $274,000,000, or 54% year-over-year. Moving now to the performance of Bausch Health, excluding Bausch + Lomb for the third quarter, starting on page 14. As Tom indicated earlier, we had an outstanding third quarter. The highlights for the quarter were as follows: revenues were $1,566,000,000, a 12% increase when compared to the third quarter of 2025.