Company Reports

The Financial Times reported on Sept. 18 that a number of private equity firms, including Blackstone, Advent International, and TPG, are considering offers for Bausch & Lomb. While there is no guarantee that the firm will be sold off, this increasingly looks to be a more likely option than a spinoff, given that Bausch Health—Bausch & Lomb’s parent company, which owns about 88% of its subsidiary—could use the proceeds to pay down its USD 21.2 billion in long-term debt.

The Financial Times reported on Sept. 14 that Bausch & Lomb is working with advisors to explore a sale. Bausch & Lomb went public in 2022 but is still about 88% owned by its parent company, Bausch Health, and the full separation was supposed to take place with necessary approvals once Bausch Health reached certain leverage targets. At the end of June, Bausch Health had over $20 billion in debt ($15.7 billion excluding Bausch & Lomb’s debt) with a trailing 12-month adjusted EBITDA of around $3.1 billion ($2.4 billion excluding Bausch & Lomb), putting the firm’s leverage ratio at about 6.4.

Narrow-moat Bausch & Lomb reported solid second-quarter results, with top-line growth and EPS exceeding our expectations. Total sales were up 18% year over year to $1.2 billion, mainly driven by healthy demand for vision care products and contributions from drugs Xiidra and Miebo. We maintain our fair value estimate of $19 (CAD 26) per share and believe near-term product launches, led by the Infuse portfolio and Miebo, should add to the company’s intangible assets that reinforce its moat rating.

Bausch & Lomb shares experienced unusual volatility on July 24 from news on its parent company Bausch Health. Reorg, a data and analytics provider, reported that Bausch Health was in talks to file for Chapter 11 bankruptcy, which sent its shares as well as Bausch & Lomb shares to plummet, falling at one point over 45% and 15%, respectively. Since then, however, Bausch Health responded that it is not considering bankruptcy and that Reorg's article contains "unsubstantiated" information. Bausch Health and Bausch & Lomb somewhat recovered losses but still closed about 23% and 5% lower, respectively, from close the day before.

Narrow-moat Bausch & Lomb reported first-quarter earnings that came largely in line our expectations. Total sales of $1.0 billion were up 18% year over year from strong demand in consumer products and a substantial sales hike in the ophthalmic pharmaceuticals segment thanks to Xiidra and Miebo contributions. Despite unfavorable foreign exchange, which created about $20 million in headwinds, strong execution across categories made for a solid quarter.

Bausch & Lomb is one of the largest vision care companies in the U.S. Bausch spun off from its former parent company, Bausch Health, in 2022 and it now operates in three segments: vision care, surgical, and ophthalmic pharmaceuticals.

Bausch & Lomb is one of the largest vision care companies in the U.S. Bausch spun off from its former parent company, Bausch Health, in 2022 and it now operates in three segments: vision care, surgical, and ophthalmic pharmaceuticals.

Narrow-moat Bausch & Lomb reported fourth-quarter earnings that were ahead of our expectations. Total sales were up 17.8% year over year thanks to strong performance across the board. We maintain our fair value estimate of $26 per share (CAD 34.50 per share) as the results didn't significantly change our long-term outlook for the company.

Narrow-moat Bausch & Lomb reported better-than-expected third-quarter results. Total sales were up 6.9% year over year thanks to strong demand and a healthy product mix. Milestones in the quarter include the closing of Xiidra deal (dry-eye drug from Novartis) and the launch of Miebo (the first and only U.S. Food and Drug Administration-approved treatment for dry-eye disease that directly targets tear evaporation). We maintain our fair value estimate of $26 (CAD 34.50) per share.

Narrow-moat Bausch & Lomb reported second-quarter earnings that were ahead of our expectations. Total sales were up 10% year over year thanks to great performance from its consumer vision care and pharmaceutical businesses. Supply chain issues and unfavorable foreign exchange remain, but these challenges were more than offset by robust growth in Bausch’s base business and promising recovery in China, which was up 24% on constant currency. We maintain our fair value estimate of $26 (CAD 34.50) per share.

Bausch & Lomb announced an agreement with Novartis to acquire dry eye drug Xiidra (along with a few early-stage eye care products) for $1.75 billion in upfront cash and potential sales-based milestone payments of up to $750 million. After baking in the impact of the acquisition, we are raising our fair value estimate to $26 from $25 (CAD 34.50 from CAD 34). We expect a roughly $500 million annual top-line contribution from Xiidra and a healthy margin boost until 2030 when we expect Xiidra to start facing generic entry. We are also raising Bausch’s Uncertainty Rating to High from Medium given the level of debt required to finance this deal combined with already high levels of debt outstanding. The company ended 2022 with $380 million in cash and a debt balance of $2.4 billion, but we expect an additional debt raise of $1.0 billion-$1.25 billion to fund the acquisition, raising its net debt/EBITDA to over 4.0. The deal is expected to close by the end of 2023, and we don’t think the deal will have a major impact on the firm’s narrow moat.

Bausch & Lomb is one of the largest vision care companies in the U.S. Bausch spun off from its former parent company, Bausch Health, in 2022 and it now operates in three segments: vision care, surgical, and ophthalmic pharmaceuticals.

Narrow-moat Bausch & Lomb reported first-quarter earnings that were lower than anticipated. We are maintaining our $25 fair value estimate as our lowered near-term assumptions are offset by the time value of money.

Bausch & Lomb is one of the largest vision care companies in the U.S. Bausch spun off from its former parent company, Bausch Health, in 2022 and it now operates in three segments: vision care, surgical, and ophthalmic pharmaceuticals.

After reviewing our key valuation assumptions, we are maintaining our $25 fair value estimate for Bausch & Lomb.

Bausch & Lomb is one of the largest vision care companies in the U.S. Bausch spun off from its former parent company, Bausch Health, in 2022 and it now operates in three segments: vision care, surgical, and ophthalmic pharmaceuticals.

Narrow-moat Bausch & Lomb posted a solid quarter with good top line growth as it ramps up its vision and surgical portfolio. Margins were held back by continued currency headwinds and supply chain inflation, as well as increased research investment. We think the firm is catching up with the more robust portfolios of its peers in the surgical vision space with premium intraocular lens releases like the earlier AcuFocus acquisition and the recent LuxSmart launch in Europe. Guidance for fiscal 2023 will be provided in the first-quarter earnings release by Brent Saunders, who is returning as CEO. While adjusted net income has not yet turned positive, we think the firm is on track to grow its premium sales and improve mix. After evaluating the earnings, we are maintaining our fair value estimate.

Narrow–moat Bausch & Lomb posted moderate third-quarter results. Though organic growth was strong across segments, negative currency conversions brought top-line growth to negative 1% while supply constraints put mild pressure on operating costs. We view these headwinds as temporary compared with our long-term growth outlook for the firm, so we are maintaining our fair value estimate of $25 per share.

As a new public company, Bausch & Lomb will be primarily focused on ramping up research and development to become more competitive in its key markets of contact lens and solution, eyecare surgery, and ophthalmic pharmaceuticals.

Narrow-moat Bausch & Lomb had a decent quarter with 6% constant currency sales growth driven by demand for Lumify redness relieving drops, increased share of daily lenses, and higher demand for lens solution, as consumers traveled and took part in more outdoor activities than in the last year. We just relaunched coverage of the company on August 1 with a $25 fair value estimate, and we are keeping this valuation intact while slightly reducing our full-year expectations to account for the negative effects of inflation and currency changes.