Bausch Health Companies Inc (BHC) reported mixed financial results for the third quarter of 2022, with lower revenues and higher expenses, but also an increase in net income.
Bausch Health Companies Inc, Formerly known as Valeant Pharmaceuticals, sells medicine and other healthcare products. They are based in Canada but do business all over the world. The company operates through five segments: Bausch + Lomb, Salix, International Rx, Ortho Dermatologics, and Diversified Products. The stock price of BHC has gone up and down over the years, like a rollercoaster ride. Sometimes it has been worth a lot of money, and other times not so much. But overall, the stock has done pretty well over the last few years. One problem that BHC has faced is that some of the medicines they make and sell have become more expensive. This has made it harder for some people to afford to buy them but BHC is working on ways to make their medicines more affordable for everyone.
BHC has many competitors, which are other companies that make and sell similar products. These include pharmaceutical giants Johnson & Johnson (JNJ), Pfizer Inc (PFE), Novartis AG (NVS), GlaxoSmithKline (GSK), AbbVie Inc (ABBV) as well other competition from smaller and specialized companies in specific therapeutic areas. Additionally, it also faces competition from generic drug manufacturers and from other healthcare providers such as hospitals and clinics. However BHC brings unique value by focusing on developing and manufacturing a wide range of products across several therapeutic areas and geographies. Additionally, Bausch Health Companies Inc also invests in research and development to bring innovative products to its customers. Let's discuss how they are able to do this.
BHC Buy-Outs
One of the successes of BHC is that they have been able to grow their business by buying other companies that make similar products. This has made them bigger and stronger, and it has helped them to sell more products. Bausch Health Companies Inc (BHC) has made several acquisitions over the years to grow its business and expand its product portfolio. Some of the notable companies that BHC has acquired in the past include:
Salix Pharmaceuticals: BHC acquired Salix Pharmaceuticals in 2015 for $11.1 billion. Salix was a specialty pharmaceutical company focused on the treatment of gastrointestinal diseases.
Ortho Dermatologics: BHC acquired Ortho Dermatologics, a dermatology business, in 2019 for $8 billion.
Obagi Medical Products: BHC acquired Obagi Medical Products, a skincare company, in 2013 for $344 million.
Astatech: BHC acquired Astatech, a private specialty pharmaceutical company, in 2018.
ProSolus: BHC acquired ProSolus, a privately held specialty pharmaceutical company, in 2013.
These acquisitions have allowed BHC to expand its product portfolio and enter new therapeutic areas, such as dermatology, and also to increase its scale and capabilities, by adding new products and capabilities to its existing businesses.
BHC Financial Analysis
BHC has a market capitalization of $2.99 billion. The company's 50-day simple moving average is $7.09, and its 200-day simple moving average is $6.99 which is still fairly close to traded between its 12-month low of $4.00 and far from its 12-month high of $26.39. Important financial ratios to take note of include the current ratio of 1.05, its quick ratio of 0.77, its debt-to-equity ratio of 48.05, its P/E ratio of 11.37, and its PEG ratio of 0.11. The company's beta of 1.01 makes the company to be considered roughly as volatile as the overall stock market.
In the third quarter of 2022, Bausch Health Companies Inc (BHC) reported an operating income of $244 million, a decrease of $330 million compared to the same period in 2021. The decrease was primarily driven by lower revenues, higher expenses, and non-recurring insurance recoveries received in the third quarter of 2021. The higher expenses were mainly due to a goodwill impairment of $119 million and higher favorable adjustments related to the settlement of certain litigation matters in the third quarter of 2021.
Net income attributable to Bausch Health for the third quarter of 2022 was $399 million, compared with $188 million for the third quarter of 2021, an increase of $211 million mainly driven by an increase in income before taxes of $223 million and the gain from debt extinguishment. However, adjusted net income (non-GAAP) decreased by $140 million mainly due to foreign exchange headwinds and higher operating and interest expenses. BHC also reported that cash used in operating activities was $1,263 million in the third quarter of 2022, compared to cash provided by operating activities of $564 million in the same period of 2021, mainly due to the reduction of $1.2 billion from restricted cash in connection with the settlement of legacy US securities litigation and business results.
“The results this quarter demonstrate the resilient demand for our products in the current macro environment. Our recently completed debt exchange offer accelerated our debt reduction and we expect this will provide additional flexibility to invest, innovate and further improve our capital structure over time.”
Reported revenues were $2.046 billion, which was a decrease of 3% compared to the same period in 2021. However, when adjusting for the negative impact of foreign exchange and divestitures, organic revenue growth was 2%. Here is a summary of the performance of each of BHC's main segments in the third quarter of 2022:
Salix Segment: This segment reported revenues of $544 million in the third quarter of 2022, an increase of 3% compared to the same period in 2021. The growth was driven by sales of Xifaxan, Relistor, Trulance, and Plenvu.
International Segment: This segment reported revenues of $250 million in the third quarter of 2022, a decrease of 8% compared to the same period in 2021. However, when adjusting for the negative impact of foreign exchange and divestitures, organic revenue growth was 10%. The segment had healthy growth in Canada and Europe.
Solta Medical Segment: This segment reported revenues of $72 million in the third quarter of 2022, a decrease of 3% compared to the same period in 2021. However, when adjusting for the negative impact of foreign exchange, organic revenue growth was 4%.
Diversified Products Segment: This segment reported revenues of $238 million in the third quarter of 2022, a decrease of 18% compared to the same period in 2021. The decrease was primarily due to decreases in sales from neurology and generics. However, when adjusting for the impact of divestitures, organic revenue growth decreased by 17%.
Bausch + Lomb Segment: This segment reported revenues of $942 million in the third quarter of 2022, a decrease of 1% compared to the same period in 2021. However, when adjusting for the negative impact of foreign exchange and divestitures, organic revenue growth was 5%. The segment had increased across all business units.
In general, the different segments of Bausch Health Companies Inc (BHC) showed mixed results in the third quarter of 2022. While some segments performed well, others faced challenges. However, adjusting for the impact of foreign exchange and divestitures, organic revenue growth was positive across all segments, with the Bausch + Lomb segment showing the highest growth. The company continues to focus on expanding its product portfolio and entering new therapeutic areas to drive growth in the future.
AI Trading
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Our subscribers get exclusive market insights based on artificial intelligence and are updated daily about the best market opportunities before they happen. Above is our stock pick from our 1-month stock prediction publicly announcing BHC as a buy on December 22nd, 2022. In this stock prediction, the Signal Confidence (SC) is 56%. The Signal Confidence (SC), which is expressed as a percentage out of 100% is calculated based on the historical accuracy of each prior financial asset prediction as well as current market variables important to stock pricing.
Stock Ticker | Open: Dec 22, 2022 | Close: Jan 23, 2023 | ROI% |
Bausch Health Companies (BHC) | $6.82 | $8.18 | 19.94% |
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Sources: 1. Bausch Health Companies Investor Relations, "BAUSCH HEALTH ANNOUNCES THIRD QUARTER 2022 RESULTS" (2022)
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