Bausch Health Companies (NYSE:BHC) reported third-quarter financial results on Wednesday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Bausch Health Companies reported a strong third quarter with $1 billion in quarterly adjusted EBITDA for the first time, marking 14 consecutive quarters of revenue and adjusted EBITDA growth.
The company increased its full-year 2026 guidance for revenue, adjusted EBITDA, and adjusted cash flow from operations, with revenue expected between $5.525 billion and $5.625 billion.
The Salix segment led growth with a 16% revenue increase, driven by Xifaxan’s performance. The International business and Solta Medical also posted significant growth.
Net debt was reduced by $521 million in the quarter, part of a broader effort to reduce debt by over $1 billion since the start of the year.
Management emphasized disciplined resource allocation, profitable growth, and cash generation as key strategic principles.
Future guidance indicates expected Q4 headwinds due to adjustments related to Xifaxan’s price reduction for Medicare and inventory normalization.
The company is focused on driving peak performance across its portfolio, enhancing organic growth, and building a sustainable pipeline through R&D and business development.
Full Transcript
OPERATOR
Good afternoon, and welcome to the Bausch Health Companies third quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Garan Sarafian, Head of Investor Relations.
Please go ahead.
Garan Sarafian (Vice President, Investor Relations)
Good afternoon and welcome to Bausch Health Companies’ third quarter 2026 earnings conference call. My name is Garan 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 Companies’ 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 28th, will focus on Bausch Health Companies 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.
Thomas J. Appio (Chief Executive Officer)
Thank you, Garan, 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 Companies 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 Companies, 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 and 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.
Jean-Jacques (JJ) Charhon (Executive Vice President & Chief Financial Officer)
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 million, an increase of $274 million, or 54% year over year.
Moving now to the performance of Bausch Health Companies 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. Adjusted EBITDA was $1,022,000,000, our strongest quarterly performance since the IPO of BNL. Finally, adjusted cash flow from operations was $539,000,000, an increase of $192,000,000 year over year.
These results reflect broad-based operating performance across the whole portfolio, while the largest drivers of growth remain Salix. All segments grew revenue and segment profit in the quarter, a rare feat we are very proud of. Moving now to our third quarter performance by segment, starting with Salix on page 15. Salix had another quarter of double-digit growth for both revenue and segment profit. Revenues were $831 million, an increase of $115 million. This outstanding performance was primarily driven by Xifaxan, which grew 16% year over year thanks to favorable net realized pricing and continued solid demand, as evidenced by total retail prescriptions excluding Medicaid which grew 1.8%.
Separately, our quarterly new-to-brand patients grew by 1,800 sequentially, reflecting the continued vitality of Xifaxan today. Please note that volume growth in Q3 was also boosted by an increase in channel inventory. Now moving to the International segments. Revenues in the third quarter were $299 million, which was up 4% on an organic basis compared to the third quarter of last year. Growth was supported by contribution from all major geographies, reflecting the broad-based performance of our International portfolio. Here are a few highlights by region: EMEA continued its streak in sales growth, up 3% organically, now delivering a remarkable 15th consecutive quarter of organic revenue growth.
Special mentions go to Poland and Hungary, which grew respectively 7% and 32%. LATAM continued its return to growth, fueled by our top 10 products growing 18% organically, thanks to an outstanding performance of our largest brand Bedee ecta, which was up 28% on an organic basis. Canada also returned to growth with organic revenue up 7% and promoted product delivering another quarter of double-digit gains led by Realtris and Captrio. Now moving to page 17 for a review of our Solta Medical segment. Solta Medical also delivered solid revenue in the quarter of $165 million, an increase year over year of 18% on a reported basis. Asia Pacific continued to lead in reported growth, with China and Taiwan increasing 66% and 23% respectively. Korea was relatively flat, despite continued growth through its consumables, which were up 18% year over year. Organic revenue declined 4% in the quarter, reflecting a different revenue phasing for the first nine months versus what we experienced in 2025, which was much more uneven and driven by the volatility of tariffs on U.S. imports to China.
On a year-to-date basis, Solta has grown revenues 34% on a reported basis and 8% on an organic basis, which we believe is a more accurate representation of the strong performance we have consistently seen from Solta in 2026. Turning now to our Diversified segment, which you will find on page 18, revenues were $271 million, an increase of 5% compared to the same period a year ago. Revenue growth was primarily driven by double-digit growth in Dermatology and thanks to favorable net realized pricing. Finally, Bausch + Lomb revenue were $1,375,000,000, up 7% on an organic basis compared to the same period last year.
Now turning our focus to our cash flow and balance sheet, our cash flow performance continues to be above expectations, primarily thanks to our adjusted EBITDA growth, which is tracking well ahead of plan and external guidance. Consequently, we were able to reduce our net debt by $521 million during the quarter. Since the beginning of the year, we have reduced our net debt by more than a billion dollars, which has been great progress. We now have $2 billion of cash on hand and are looking at a way for optimizing our capital allocation which will include early redemptions of our 2027 notes and up to $100 million of open market repurchases of some of our public debt. Separately, we are announcing a $50 million share repurchase program primarily aimed at offsetting the dilution coming from the anticipated vesting of Management Equity Awards in 2027.
Before I hand it over to Tom, let me close with our Full Year Guidance which you will find on page 22. Not surprisingly, the strength of our result in Q3 is allowing us to raise our 2026 full year guidance across all metrics for the second quarter in a row. More specifically, we are increasing the midpoint of our full year guidance by $150 million for revenue, approximately $190 million for adjusted EBITDA and $200 million for adjusted cash flow from operations.
The new Full Year Guidance stands now as revenue is expected to be between $5,525,000,000 and $5,625,000,000. The midpoint of that range translates to an 8% increase year over year. Adjusted EBITDA is now expected to be between $3,225,000,000 and $3,275,000,000. The midpoint of that range represents a 13% increase versus 2025. Finally, we now anticipate adjusted cash flow from operations to be between $1,600,000,000 and $1,675,000,000. The midpoint of that range translates to a 29% increase year over year.
Even with this new guidance, we will face headwinds in Q4 as performance is expected to be impacted by two primary drivers. First and foremost, as we have communicated consistently, we will need to adjust the gross-to-net accrual associated with our channel inventory in anticipation of the new Xifaxan price to Medicare taking effect on 1 January 2027. This element alone represents 800 basis points of revenue growth reduction and 1,400 basis points of adjusted EBITDA growth reductions for the quarter.
Second, we have assumed in our revised guidance some normalization of the Xifaxan channel inventory. That driver could represent at least another 300 basis points of growth reduction in Q4 and 500 basis points of adjusted EBITDA for the quarter. In summary, Q3 was another outstanding quarter performance across all segments. Following an equally impressive first half, we are raising our full year guidance for the second time this year and look forward to closing out the year operationally on a strong note. I will now hand it back to
Thomas J. Appio (Chief Executive Officer)
Tom thank you, JJ. As JJ outlined, we delivered strong results through the first nine months of 2026 with revenue and adjusted EBITDA increasing by 14% and 26% respectively. Looking ahead, our business priorities remain clear. First, drive peak performance across our portfolio. Second, enhance the value of our portfolio through consistent organic growth and operational excellence initiatives. Third, build a sustainable pipeline of future growth opportunities organically and inorganically through business development and fourth, maximize the value of Bausch + Lomb for shareholders.
These priorities provide a clear framework for how we intend to create value, maximize the performance of the assets we have today, strengthen those businesses through disciplined execution and use our capabilities to create new avenues for growth. That opportunity extends across our portfolio. Beyond Xifaxan, we have established businesses with many of the capabilities to support continued growth. Let me highlight several examples. EMEA is approaching four consecutive years of quarterly organic revenue growth.
It is a branded generics business serving hospital and retail channels with no single product representing more than 8% of revenue. Our established commercial infrastructure, particularly in Poland, is well positioned to support additional assets including those sourced through business development. In Latin America, our business consists predominantly of branded generics with no meaningful loss of exclusivity exposure. Mexico remains our largest market with reach across 10 additional Central American countries.
We see additional potential within the cardiometabolic therapies, while Bedoyecta remains a leading and highly trusted brand in the region. In Canada, our promoted portfolio continues to grow at double digit rate supported by established commercial capabilities. This infrastructure provides a scalable foundation for future pipeline opportunities across the country. In the United States, our dermatology franchise is expected to strengthen as a result of optimizing our commercial deployment.
Finally, SOLTA gives us a differentiated global medical aesthetics platform with premium brands, a broad global portfolio and recurring revenue from consumables across its install base. Each of these businesses is different, but they share a common foundation, established platforms, commercial capabilities and local expertise that can support organic growth as well as additional assets over time. Together, these businesses demonstrate the breadth of our portfolio, the value of our commercial infrastructure, and the opportunities available to us through operational excellence. They also provide capabilities we can build upon as we invest in the future.
A key part of that investment is building our pipeline. We are pursuing this in two ways, advancing innovation internally and selectively adding opportunities through business development. Within R&D, our Phase 3 program for larsucosterol in alcohol-associated hepatitis continues to progress well and remain on track toward our goal of approval in 2029, subject to the successful completion of clinical development and regulatory review. At the same time, we continue to look externally for opportunities to strengthen our pipeline.
Business development remains a high priority and we are actively evaluating opportunities where our existing expertise and commercial capabilities can add value, particularly across hepatology, gastroenterology, dermatology and neuroscience. Our approach remains disciplined and strategic. We are focused on opportunities that complement our existing businesses, leverage capabilities and have the potential to contribute to sustainable growth over time, while remaining thoughtful about how these investments fit with our capital structure.
In closing, 2026 is shaping up to be another strong year for Bausch Health Companies. Our third quarter results build on the progress achieved during the first half. Based on that performance, we are again raising our full year guidance for revenue, adjusted EBITDA and adjusted cash flow from operations. Our priorities are well defined. We remain focused on operational excellence across our businesses, making targeted investments in our portfolio and pursuing opportunities that can create sustainable long term value.
Following the strong performance of the past nine months, I want to take this opportunity to recognize and thank our colleagues around the world. Their continued dedication, accountability and commitment has made a difference in our relentless drive to create better health outcomes for patients. We are entering the fourth quarter with solid momentum and confidence in the path ahead. With that, I will turn the call over to the operator so we can open the line for Q&A.
OPERATOR
Thank you. We’ll now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you.
Our first question is from Umer Rafat with Evercore ISI.
Umer Rafat (Analyst)
Hi guys. Thanks for taking my question and congrats on all the data. A couple of points if I may. Perhaps first, as I think about sort of the overall strategy going forward now, it seems increasingly that perhaps there may be possibly the two companies coming together, perhaps all under one roof, which technically is already the case. But maybe perhaps more formally. Could you speak to that, Tom? And sort of the general direction you see going forward?
I just think that would be very, very helpful. And then also, JJ, could you clarify? I know you mentioned some points around Xifaxan’s impact from IRA on top line. You mentioned it in basis points growth. Could you just say it in dollars? What’s the dollar impact on revenue and the dollar impact on margin next year? And then finally, as you think about the powering for the phase three trial you structured in alcohol associated hepatitis, is there any possibility of an interim analysis that could come early, which may not necessarily be in the street expectations?
Thank you very much.
Thomas J. Appio (Chief Executive Officer)
Hi Omer, thanks for the question. I’ll take the first part, then JJ can take the second part and then Jonathan can take the third part of your question. When we look at overall from a BHC perspective, so, you know, nothing has changed in the past. What I would say is, I believe, and we believe that by many talented team. So, you know, the way I see it is, you know, we. Yeah, so.
Jean-Jacques (JJ) Charhon (Executive Vice President & Chief Financial Officer)
Hi Umer, how are you? So let me break down the impact of the new price to CMS into two components. The first component is the gross-to-net accrual I was referring to in my prepared remarks. That is in anticipation of the price reduction happening in 2027. That amount is in excess of $100 million. We’ve provided some growth rate impact. I think you can back into. The second part of your question is really the impact of that reduction following the IRA rebate. We haven’t provided any specific details. Suffice to say that this information is public. So when you look at the impact of that CMS rebate, you have to factor in two things. Number one, kind of the price increase, which is the starting point, and then the second part is the rebate down to a fixed price that was negotiated in September of 2024.
What I think you can infer from the implicit guidance we provided for 2027, which is about $2.7 billion, is that the net impact of all the puts and takes is around $400 to $500 million of dollars year over year, which is a good order of magnitude to consider when looking at the CMS impact.
Jonathan Sadeh, M.D., M.Sc. (Executive Vice President, Chief Medical Officer and Head of R&D)
And I’ll take the third question about looking at the study, at the phase three study to do an interim analysis. I think it’s a good question. There’s a few situations where we may want to do it. One is if we’re looking for futility, and we think that’s not the case here, we feel pretty confident about the data from phase two and we think we’ve powered the study appropriately. The second, if you want to stop, I think that’s what you’re referring to, stop early and submit earlier.
We think that’s not really a possibility. We’re only doing one study. Remember, in this indication, it’s a fairly short one. It’s only a six month treatment period. So we think we’re on track to deliver, complete the enrollment data and submit that approval with assuming results will be replicated phase two in 2029. We feel pretty confident about it and don’t see really a need to do any interim analyses.
Thomas J. Appio (Chief Executive Officer)
Operator, next question.
OPERATOR
As a reminder, if you’d like to ask a question, please press star one on your telephone keypad. Our next question is from Doug Mame with RBC Capital Markets.
Doug (Analyst)
Yeah, good afternoon, everyone. First question just has to do with Solta, and can management provide a bit more granularity on the organic demand trajectory in Asia Pacific, Shibo, and sustainability of the Shibo integration benefits? And then maybe you could also comment related to that just on North America. It was also down, and just curious about the softness there.
Thomas J. Appio (Chief Executive Officer)
Sure, Doug, thanks for the question. I’ll take the first part of it, and then JJ might want to add to it. You know, when we look at the Solta business, organically—and I look at year to date because there was a lot in the prior year, given the tariff issue, given that we were going into the integration with Shibo—it was a little lumpy in the quarters as we looked at it in 20, in 2025. So organically, year to date, the total business is growing by 8%, and on a reported basis, including Shibo, 34%.
Now, when I look at overall—if I look at the China market—the integration has gone very well, and the team is very confident as we move forward into 27. I think that the other issue that is China-specific has to do with the market has softened a little bit in terms of consumer confidence and spending. So that has somewhat of an impact. And then you look at some of the local competitors that are coming into the China market, especially in the skin-tightening area.
And it can be the local competitors that are Chinese brands or the Korean competitors. So that also has some sort of impact, certainly in the early days, but then usually will flush out as you move forward. So we still believe that the China business organically has a good future. When I look at Korea, when we look organically in Korea, one of the things there was the—you know, we had placed a lot of equipment in the prior years, and what we had said on previous calls is that that wasn’t going to continue. You know, it’s a saturated—you know, it can be a very well-saturated market. But clearly, you know, if we’re growing consumables, that means the machines are being used and procedures are being done. You know, we see growth there.
You know, overall in the U.S., it was basically flat, but volume was up. When I take a look there, one of the focuses has been on field execution and some of the work we’re doing there to execute better at the field level. And there have been some competitor entrants as well. And the different price points and deal terms can impact that in the short term. With that, JJ, do you have anything else to add?
Jean-Jacques (JJ) Charhon (Executive Vice President & Chief Financial Officer)
The only additional color I would provide to you is really looking at Q4. Q4 is going to be a quarter for Solta that’s going to have a lot of puts and takes for a couple of reasons. Number one, in anticipation of the acquisition of our distributor in China, there were actually no sales recorded in November. And then the second thing is December marked the first month where the increased price associated with the integration of our full-service distributor was really benefiting the business.
And so on a reported basis, you will see we will return to strong growth in the fourth quarter, even on an organic basis. I think the expectation is that we would be in the mid-single digits for overall Solta, reflecting the very healthy dynamics we see in Korea, both from a volume but also from a price standpoint.
Doug (Analyst)
Okay, perfect.
Thomas J. Appio (Chief Executive Officer)
Operator, next question. Yeah, yeah, go ahead, Dick, go ahead.
Dick
Oh no, yeah, just going to have a quick follow-up on the Xifaxan litigation. Is there any visibility on the ruling timeline around the summary judgment motion? And on the Norwich II remand, has the FDA provided any indication of a timeline for the but-for causation analysis? If you could just help us out on those two.
Thomas J. Appio (Chief Executive Officer)
Sure. Let’s take the first one regarding the D.C. District Court. As you know, the D.C. District Court directed the FDA to devise a new framework. Right now, it hasn’t gone back to the FDA yet, but I’m assuming that’s going to happen shortly, and then we’ll have to wait and see what that timeline would be. When it comes to the other litigation in terms of summary judgment, it has been heard, but we do not have anything at this time.
Dick
Okay. Thank you.
Thomas J. Appio (Chief Executive Officer)
All right, Doug. Thank you. Operator, next question.
OPERATOR
Thank you. There are no further questions at this time. I would like to hand the floor back over to Tom Appio, CEO, for any closing remarks,
Thomas J. Appio (Chief Executive Officer)
Your questions, and for your continued interest in Bausch Health Companies. As I said, you know, we remain focused on executing with discipline, strengthening our portfolio, and delivering against the priorities we discussed today. I want to thank our colleagues around the world for everything they do on behalf of Bausch Health Companies. We look forward to updating you again on our progress.
OPERATOR
Thank you. This does conclude today’s conference call. We thank you again for your participation. You may now disconnect.
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