The rally in Bausch Health Companies (NYSE: BHC) stalled last week despite the company reporting revenue stabilization. Though Q2’s net loss of $327 million looked like bad news, the company beat consensus estimates and raised its guidance. The underperformance of BHC relative to the sector could end soon.
Bausch reported cash and cash equivalents rising from $720M to $838M in the last six months. Sales flattened by just $100 million, to $2.12 billion in the quarter. BHC took an asset impairment of $301 million.
What is disconcerting in BHC’s press release and presentation is that it did not provide a statement of cash flows. Management cited one-off writedowns. Still, the company paid off another $132 million and continues to prioritize its efforts in paying down debt. In short, the boring quarter is good news because BHC should no longer have any more bad news that will weigh down the stock.
Looking ahead, BHC could report $3.5 billion in EBITDA this year. Sales internationally could support that target, although the currency headwinds may hurt the absolute earnings.
Takeaway
BHC has plenty of products in the pipeline. Examples: IDP-120, IDP-123, for Acne are in Phase 3, with results expected in the second half this year.
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