Why Bausch Health Reported a Weak Quarter

When Bausch Health (NYSE:BHC) reported Q1 results, it blamed COVID-19 headwinds for its losses. It also cut its guidance. What exactly happened?

Bausch posted revenue of $2.012 billion but lost $152 million (on a GAAP basis). Its non-GAAP revenue fell 11.7% to $316 million. It lowered its revenue and non-GAAP EBITDA slightly for 2020. CEO Joe Papa did not need to issue a second-half 2020 forecast when other firms withdrew it. Giving an outlook reduces uncertainty and should relieve investors, not scare them.

Q1 drivers include its strong growth in eye vitamin, offset by global vision care due to COVID-19. Salix revenue grew organically in the mid-single-digit range. Xifaxan sales rose 6%. Salix’s Trulance prescription grew by 52% Y/Y, generating revenue of $19 million. BHC paid down $220 million in debt by using cash from operations. It has no major debt due until 2022.

Given the 0% rates thanks to the U.S. Federal Reserve, any debt refinancing should save the company money on interest costs. Still, the company is steadily increasing its revenue growth. B+L and Salix both performed well overall.

Ortho Dermatologics and Diversified Products posted modest revenue declines. But as the economy reopens, the performance of those units will improve.