Bausch Health (TSX:BHC) could have sold off like Teva Pharmaceuticals (NYSE:TEVA) did after reporting fourth quarter earnings. Instead, the single-digit revenue decline, controlled costs and stable revenue at Bausch + Lomb/International limited the profit-taking on the stock. Management is delivering on a slow but steady turnaround.
BHC stock fell 7% last week which is still better than Teva’s 11% monthly and 21% quarterly decline. Xifaxan’s revenue growth of 22% and Relistor’s 37% growth were the highlights for the quarter. On the balance sheet, the $1 billion in debt repayment in 2018 is welcome but Bausch still has a high debt load to pay off. It had $24.63 billion in total debt at the end of 2018.
Still, as long as cash flow grows annually, the company is not in any danger of missing debt interest payments. Last year, it refinanced over $8 billion of its debt. Management will only need to keep new products in the development pipeline while accelerating growth of new drugs.
Takeaway
BHC stock is unlikely to spike into the $30 - $35 range this year. Sales is growing at a moderate rate. As sales for its recently launched products gain market share – SILIQ, Bryhali, Duobrii (after launch, or its eye drug Vyzulta – the stock will move higher.
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