A month has gone by since the last earnings report for Bausch Health (BHC). Shares have lost about 11.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Bausch due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Bausch Health Q3 Earnings and Revenues Top, Xifaxan Boosts Sales
Adjusted earnings per share of $1.12 beat the Zacks Consensus Estimate of $1.03. The reported figure increased from $1.03 in the year-ago quarter due to higher revenues.
Total revenues of $2.5 billion were up 12% year over year. The top line also beat the Zacks Consensus Estimate of $2.4 billion.
Excluding the impact of $9 million in foreign exchange, $96 million in acquisitions, and $16 million in divestitures and discontinuations, revenues increased 9% organically.
Third Quarter Highlights
The company reports revenues under five segments — Salix, International, Diversified Products, Solta Medical and Bausch + Lomb.
Salix revenues totaled $642 million, up 5% year over year. Within this segment, Xifaxan revenues were up 7%, led by growth in underlying demand. Relistor and Trulance revenues were up 9% each.
Xifaxan 550 mg tablets are indicated for the reduction in the risk of overt hepatic encephalopathy recurrence and the treatment of IBS-D in adults.
Salix revenues beat the Zacks Consensus Estimate of $590 million and ourmodel estimate of $583.9 million.
International revenues totaled $291 million, up 6% year over year, led by double-digit organic growth in Canada and solid organic growth in Latin America. The figure beat both the Zacks Consensus Estimate of $281 million and our model estimate of $269.9 million. Revenues increased 8% organically.
Diversified Product revenues amounted to $269 million, up 4% from the year-ago level due to an increase in neurology sales.
Neurology posted a 25% year-over-year increase, driven by Wellbutrin and Aplenzin. Dermatology sales were flat year over year. Sales from the Dentistry business were down 8% year over year. Generics business was down 58%.
Diversified Product revenues beat the Zacks Consensus Estimate of $248 million and our model estimate of $252.1 million.
Solta Medical reported revenues of $112 million, up 35% year over year. The figure beat the Zacks Consensus Estimate of $100 million and our model estimate of $101.9 million. Revenues were up 36% organically, primarily driven by South Korea and China.
Revenues from Bausch + Lomb totaled $1.19 billion, up 19% year over year. The figure missed both the Zacks Consensus Estimate and our model estimate of $1.2 billion. Bausch + Lomb’s revenues increased 10% organically on a year-over-year basis, driven by growth across all business units.
Pipeline Development
Cabtreo (fixed-dose, triple-combination topical treatment for acne vulgaris) was approved in Canada in the third quarter and launched in October 2024.
The phase II study on amiselimod, a new oral S1P receptor modulator that targets the treatment of mild to moderate ulcerative colitis (UC), completed enrollment. Bausch also submitted a draft protocol to the FDA for a phase III study for moderate to severe UC patients. Bausch is also advancing plans for a phase II study on amiselimod for Crohn's disease.
The phase III studies in the RED-C program on rifaximin for the prevention and delay of the first episode of hepatic encephalopathy are in the treatment phase.
The company’s program for Clear and Brilliant Touch, a fractionated laser device for skin rejuvenation, is also advancing. Bausch is awaiting European regulatory response to submission with additional plans to submit to Asia Pacific markets and Canada thereafter.
Raises 2024 Guidance
Bausch now expects revenues to be in the range of $9.5-$9.675 billion (previous estimate: $9.4-$9.650 billion). Excluding Bausch + Lomb, revenues are anticipated to be in the band of $4.775-$4.850 billion (previous guidance: $4.7-$4.850 billion). Bausch + Lomb revenues are expected to be in the range of $4.725-$4.825 billion (previous guidance: $4.700-$4.800 billion).
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
Currently, Bausch has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Bausch has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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