Since rallying in June, Bausch Health Companies (BHC) managed to give up those gains as the stock continued on a downward pattern. At an inexpensive P/E and saddled with debt that is manageable, markets are unwilling to bid the stock higher. Yet the quarterly earnings report released earlier this month shed some positives on the company’s turnaround.
On its conference call, management said that it would keep price increases under the radar of government. By sticking to a single-digit rate of increase, the company will not appeal to impatient investors looking for a quick rebound in revenue growth. Still, BHC is building its business in a slow and measured pace. For example, SILIQ is priced at the lowest end of the possible range and the product is the best-performing injectable. Dermatologists and patients will notice this and demand will grow.
Short-term, LOE assets will exhibit a decline of $233 million in the back half of this year. Excluding LOE assets, organic growth for Q2 would have been a steady 6 percent.
Sales of Xifaxan, from the Salix unit, grew 8 percent from last year while Relistor grew 43 percent. The dermatology unit faced headwinds in the quarter. Aggressive third-party payers limited or blocked reimbursement, hurting sales of legacy products. Salix will need to continue winning FDA approvals to shift its reliance to newer products.
Takeaway
$4 million in net sales for Siliq is a slow start but building on that just takes time. BHC shareholders need only wait.
