Bausch Health Companies Inc. Announces Third-Quarter 2019 Results and Raises Full-Year Revenue and Adjusted EBITDA (non-GAAP) Guidance Ranges
LAVAL, Quebec, Nov. 4, 2019 /PRNewswire/ --
-- Third-Quarter 2019 Financial Results
-- Revenues of $2.209 Billion
-- GAAP Net Loss of $49 Million
-- Adjusted EBITDA (non-GAAP)(1) of $942 Million
-- GAAP Cash Generated from Operations of $515 Million
-- Delivered Total Company Reported Revenue Growth of 3% and Organic
Revenue Growth(1,)(2) of 4% Compared to the Third Quarter of 2018
-- Bausch + Lomb/International Segment Delivered 12(th) Consecutive
Quarter of Organic Revenue Growth(1,)(2)
-- Salix Segment Reported Revenue Increased by 20% Compared to the
Third Quarter of 2018
-- Raised Full-Year 2019 Guidance Ranges
Bausch Health Companies Inc. (NYSE/TSX: BHC) ("Bausch Health" or the "Company" or "we") today announced its third-quarter 2019 financial results.
"In the third quarter, Bausch Health delivered another strong quarter with both reported and organic revenue growth(1,2), demonstrating that our efforts to grow our core businesses are continuing to gain traction. In addition to organic revenue growth(1,2) in both the Bausch + Lomb/International and Salix segments due to higher revenues in several of our durable, established brands, such as XIFAXAN®, BioTrue® ONEday and Bausch + Lomb ULTRA®, our performance was also strengthened by the success of newer products, such as LUMIFY® and Thermage® FLX," said Joseph C. Papa, chairman and CEO, Bausch Health. "Additionally, we are excited by the potential we see from the early days of the launch of DUOBRII®, the newest product in our dermatology portfolio."
Company Highlights
Executing on Core Businesses and Advancing Pipeline
-- The Bausch + Lomb/International segment comprised approximately 53% of
the Company's reported revenue in the third quarter of 2019
-- Increased reported revenue in the Bausch + Lomb/International
segment by 2% compared to the third quarter of 2018; revenue in this
segment grew organically(1,)(2) by 5% compared to the third quarter
of 2018; growth was primarily driven by the Global Consumer,
International Rx and Global Vision Care business units
-- Delivered 12(th) consecutive quarter of organic revenue
growth(1,)(2)
-- Launched Ocuvite® Eye Performance vitamins in the United States,
which are formulated to help protect the eye from digital device
blue light and UV exposure from the sun
-- The Salix segment comprised approximately 25% of the Company's reported
revenue in the third quarter of 2019
-- Increased reported revenue in the Salix segment by 20% compared to
the third quarter of 2018
-- Increased reported revenue of XIFAXAN® by 24% compared to the third
quarter of 2018
-- The Ortho Dermatologics segment comprised approximately 7% of the
Company's reported revenue in the third quarter of 2019
-- The U.S. Food and Drug Administration accepted the New Drug
Application for ARAZLO(TM)(3) (IDP-123) Lotion with a PDUFA action
date of Dec. 22, 2019; if approved, ARAZLO(TM)(3) will be the first
tazarotene acne treatment available in a lotion form
-- Expanded the cash-pay prescription program, Dermatology.com, to all
Walgreens U.S. retail pharmacy locations
-- Reported revenues in the Global Solta business unit increased by 62%
compared to the third quarter of 2018, driven by continued strong
demand of Thermage® FLX following the launch in the Asia Pacific
region
-- Released annual Corporate Social Responsibility report
Strategic Capital Allocation and Debt Management
-- Increased Research and Development (R&D) by approximately 15%, or $16
million, compared to the third quarter of 2018
-- Repaid debt by approximately $450 million in the third quarter of 2019,
including the net impact of activity under our revolving credit facility
Third-Quarter 2019 Revenue Performance
Total reported revenues were $2.209 billion for the third quarter of 2019, as compared to $2.136 billion in the third quarter of 2018, an increase of $73 million, or 3%. Excluding the unfavorable impact of foreign exchange of $15 million, the impact of a 2019 acquisition of $14 million and the impact of divestitures and discontinuations of $13 million, revenue grew organically(1,)(2) by 4% compared to the third quarter of 2018, driven by organic growth(2) in the Salix and Bausch + Lomb/International segments.
Revenues by segment were as follows:
Three Months Ended
Change at
September 30 Reported Reported
Constant
Organic
(in millions) 2019 2018
Change
Change
Currency4 Change1,2
Bausch + Lomb/International $1,175 $1,147 $28 2% 4% 5%
Salix $551 $460 $91 20% 20% 18%
Ortho Dermatologics $147 $176 ($29) (16%) (16%) (16%)
Diversified Products $336 $353 ($17) (5%) (5%) (5%)
Total Revenues $2,209 $2,136 $73 3% 4% 4%
---
Bausch + Lomb/International Segment
Bausch + Lomb/International segment revenues were $1.175 billion for the third quarter of 2019, as compared to $1.147 billion for the third quarter of 2018, an increase of $28 million, or 2%. Excluding the unfavorable impact of foreign exchange of $15 million and the impact of divestitures and discontinuations of $9 million, the Bausch + Lomb/International segment grew organically(1,)(2) by approximately 5% compared to the third quarter of 2018. The increase was primarily driven by growth in the Global Consumer, International Rx and Global Vision Care business units.
Salix Segment
Salix segment revenues were $551 million for the third quarter of 2019, as compared to $460 million for the third quarter of 2018, an increase of $91 million, or 20%. The increase was primarily driven by XIFAXAN®, which grew 24% as compared to the third quarter of 2018.
Ortho Dermatologics Segment
Ortho Dermatologics segment revenues were $147 million for the third quarter of 2019, as compared to $176 million for the third quarter of 2018, a decrease of $29 million, or 16%, due to lower volumes primarily driven by the loss of exclusivity of ZOVIRAX®, SOLODYN® and ELIDEL®, partially offset by organic revenue growth(2) in the Global Solta business unit and from new product launches in the Ortho Dermatologics business unit.
Diversified Products Segment
Diversified Products segment revenues were $336 million for the third quarter of 2019, as compared to $353 million for the third quarter of 2018, a decrease of $17 million, or 5%. The decrease was primarily attributable to the previously reported loss of exclusivity for a basket of products.
Operating Income
Operating income was $329 million for the third quarter of 2019, as compared to an operating income of $117 million for the third quarter of 2018, an increase of $212 million. The increase in operating results for the third quarter of 2019 was primarily driven by a decrease in amortization and impairments and the increase in reported revenues and higher gross margins in 2019 as compared to 2018, offset by increased Selling, general and administrative (SG&A) expenses and R&D expenses.
Net Loss
Net loss for the three months ended Sept. 30, 2019 was $49 million, as compared to net loss of $350 million for the same period in 2018, a favorable impact of $301 million. The change is primarily due to the increased operating results noted above and the favorable change in income tax provision.
Adjusted net income (non-GAAP)(1) for the third quarter of 2019 was $425 million, as compared to $403 million for the third quarter of 2018, an increase of $22 million, or 5%.
Cash Generated from Operations
The Company generated $515 million of cash from operations in the third quarter of 2019, as compared to $522 million in the third quarter of 2018.
EPS
GAAP Earnings Per Share (EPS) Diluted for the third quarter of 2019 was ($0.14), as compared to ($1.00) for the third quarter of 2018.
Adjusted EBITDA (non-GAAP)(1
)Adjusted EBITDA (non-GAAP)(1) was $942 million for the third quarter of 2019, as compared to $916 million for the third quarter of 2018, an increase of $26 million, or 3%.
2019 Financial Outlook
Bausch Health raised its revenue and Adjusted EBITDA (non-GAAP) guidance ranges for the full year of 2019:
-- Raised full-year revenue range from $8.40 - $8.60 billion to $8.475 -
$8.625 billion
-- Raised full-year Adjusted EBITDA (non-GAAP) range from $3.425 - $3.575
billion to $3.50 - $3.60 billion
-- Mid-point of the November guidance ranges is up by $50 million versus
the mid-point of the August 2019 guidance ranges
Other than with respect to GAAP Revenues, the Company only provides guidance on a non-GAAP basis. The Company does not provide a reconciliation of forward-looking Adjusted EBITDA (non-GAAP) to GAAP net income (loss), due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. In periods where significant acquisitions or divestitures are not expected, the Company believes it might have a basis for forecasting the GAAP equivalent for certain costs, such as amortization, which would otherwise be treated as non-GAAP to calculate projected GAAP net income (loss). However, because other deductions (such as restructuring, gain or loss on extinguishment of debt and litigation and other matters) used to calculate projected net income (loss) vary dramatically based on actual events, the Company is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income (loss) at this time. The amount of these deductions may be material and, therefore, could result in projected GAAP net income (loss) being materially less than projected Adjusted EBITDA (non-GAAP). The guidance provided in this section represents forward-looking information, and actual results may vary. Please see the risks and assumptions referred to in the Forward-looking Statements section of this news release. The primary reasons for our change in our 2019 full-year guidance ranges are higher expected revenues from certain of our products with loss of exclusivity, better than expected base performance and improvements in our gross margins, partially offset by higher than expected R&D expenses.
Additional Highlights
-- Bausch Health's cash, cash equivalents and restricted cash were $827
million at Sept. 30, 2019
-- The Company's availability under the Revolving Credit Facility was
approximately $1.055 billion at Sept. 30, 2019
-- Basic weighted average shares outstanding for the quarter were 352.4
million shares. Diluted weighted average shares outstanding for the
quarter were 356.8 million shares(5)
Conference Call Details
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Monday, Nov. 4, 2019
Time:
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Webcast:
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About Bausch Health
Bausch Health Companies Inc. (NYSE/TSX: BHC) is a global company whose mission is to improve people's lives with our health care products. We develop, manufacture and market a range of pharmaceutical, medical device and over-the-counter products, primarily in the therapeutic areas of eye health, gastroenterology and dermatology. We are delivering on our commitments as we build an innovative company dedicated to advancing global health. More information can be found at www.bauschhealth.com.
Forward-looking Statements
This news release contains forward-looking information and statements, within the meaning of applicable securities laws (collectively, "forward-looking statements"), including, but not limited to, Bausch Health's future prospects and performance, including the Company's 2019 full-year guidance. Forward-looking statements may generally be identified by the use of the words "anticipates," "expects," "intends," "plans," "should," "could," "would," "may," "will," "believes," "estimates," "potential," "target," or "continue" and variations or similar expressions, and phrases or statements that certain actions, events or results may, could, should or will be achieved, received or taken, or will occur or result, and similar such expressions also identify forward-looking information. These forward-looking statements, including the Company's full-year guidance, are based upon the current expectations and beliefs of management and are provided for the purpose of providing additional information about such expectations and beliefs, and readers are cautioned that these statements may not be appropriate for other purposes. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. These risks and uncertainties include, but are not limited to, the risks and uncertainties discussed in the Company's most recent annual and quarterly reports and detailed from time to time in the Company's other filings with the Securities and Exchange Commission and the Canadian Securities Administrators, which risks and uncertainties are incorporated herein by reference. In addition, certain material factors and assumptions have been applied in making these forward-looking statements, including, without limitation, assumptions regarding our 2019 full-year guidance with respect to adjusted SG&A expense (non-GAAP) and the Company's ability to continue to manage such expense in the manner anticipated, the anticipated timing and extent of the Company's R&D expense, the expected timing and impact of loss of exclusivity for certain of our products, expected currency impact, expectations regarding gross margin and expectations regarding base performance, and the assumption that the risks and uncertainties outlined above will not cause actual results or events to differ materially from those described in these forward-looking statements. Additional information regarding certain of these material factors and assumptions may also be found in the Company's filings described above. The Company believes that the material factors and assumptions reflected in these forward-looking statements are reasonable in the circumstances, but readers are cautioned not to place undue reliance on any of these forward-looking statements. These forward-looking statements speak only as of the date hereof. Bausch Health undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect actual outcomes, unless required by law.
Non-GAAP Information
To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP financial measures, including (i) Adjusted EBITDA (non-GAAP), (ii) organic growth/change and (iii) constant currency. As discussed below, we also provide Adjusted Net Income (non-GAAP) to provide supplemental information to readers. Management uses these non-GAAP measures as key metrics in the evaluation of the Company's performance and the consolidated financial results and, in part, in the determination of cash bonuses for its executive officers. The Company believes these non-GAAP measures are useful to investors in their assessment of our operating performance and the valuation of our Company. In addition, these non-GAAP measures address questions the Company routinely receives from analysts and investors, and in order to assure that all investors have access to similar data, the Company has determined that it is appropriate to make this data available to all investors.
However, these measures are not prepared in accordance with GAAP nor do they have any standardized meaning under GAAP. In addition, other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non-GAAP financial measures may not be comparable to such similarly titled non-GAAP measures. We caution investors not to place undue reliance on such non-GAAP measures, but instead to consider them with the most directly comparable GAAP measures. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation. They should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. The reconciliations of these historic non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are shown in the tables below. However, as indicated above, for guidance purposes, the Company does not provide reconciliations of projected Adjusted EBITDA (non-GAAP) to projected GAAP net income (loss), due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations.
Specific Non-GAAP Measures
Adjusted EBITDA (non-GAAP)
Adjusted EBITDA (non-GAAP) is GAAP net (loss) income (its most directly comparable GAAP financial measure) adjusted for certain items, as further described below. Management believes that Adjusted EBITDA (non-GAAP), along with the GAAP measures used by management, most appropriately reflect how the Company measures the business internally and sets operational goals and incentives, especially in light of the Company's new strategies. In particular, the Company believes that Adjusted EBITDA (non-GAAP) focuses management on the Company's underlying operational results and business performance. As a result, the Company uses Adjusted EBITDA (non-GAAP) both to assess the actual financial performance of the Company and to forecast future results as part of its guidance. Management believes Adjusted EBITDA (non-GAAP) is a useful measure to evaluate current performance. Adjusted EBITDA (non-GAAP) is intended to show our unleveraged, pre-tax operating results and therefore reflects our financial performance based on operational factors. In addition, cash bonuses for the Company's executive officers and other key employees are based, in part, on the achievement of certain Adjusted EBITDA (non-GAAP) targets.
Adjusted EBITDA (non-GAAP) reflects adjustments based on the following items:
-- Restructuring and integration costs: The Company has incurred
restructuring costs as it implemented certain strategies, which
involved, among other things, improvements to its infrastructure and
operations, internal reorganizations and impacts from the divestiture of
assets and businesses. In addition, in connection with its acquisition
of certain assets of Synergy, the Company has incurred certain severance
and integration costs which were not essential to complete, close or
report the acquisition. With regard to infrastructure and operational
improvements which the Company has taken to improve efficiencies in the
businesses and facilities, these tend to be costs intended to right size
the business or organization that fluctuate significantly between
periods in amount, size and timing, depending on the improvement
project, reorganization or transaction. With regard to the severance and
integration costs associated with the acquisition of certain assets of
Synergy, these costs are specific to the acquisition itself and provided
no benefit to the ongoing operations of the Company. As a result, the
Company does not believe that such costs (and their impact) are truly
representative of the underlying business. The Company believes that the
adjustments of these items provide supplemental information with regard
to the sustainability of the Company's operating performance, allow for
a comparison of the financial results to historical operations and
forward-looking guidance and, as a result, provide useful supplemental
information to investors.
-- Acquired in-process research and development costs: The Company has
excluded expenses associated with acquired in-process research and
development, as these amounts are inconsistent in amount and frequency
and are significantly impacted by the timing, size and nature of
acquisitions. Furthermore, as these amounts are associated with research
and development acquired, the Company does not believe that they are a
representation of the Company's research and development efforts during
the period.
-- Asset impairments: The Company has excluded the impact of impairments of
finite-lived and indefinite-lived intangible assets, as well as
impairments of assets held for sale, as such amounts are inconsistent in
amount and frequency and are significantly impacted by the timing and/or
size of acquisitions and divestitures. The Company believes that the
adjustments of these items correlate with the sustainability of the
Company's operating performance. Although the Company excludes
intangible impairments from its non-GAAP expenses, the Company believes
that it is important for investors to understand that intangible assets
contribute to revenue generation.
-- Goodwill impairments: The Company has excluded the impact of goodwill
impairment. When the Company has made acquisitions where the
consideration paid was in excess of the fair value of the net assets
acquired, the remaining purchase price is recorded as goodwill. For
assets that we developed ourselves, no goodwill is recorded. Goodwill is
not amortized but is tested for impairment. For periods prior to Jan. 1,
2018, the amount of goodwill impairment is measured as the excess of the
carrying value of a reporting unit's goodwill over its implied fair
value. However, in January 2017, new accounting guidance was issued
which simplifies the subsequent measurement of an impairment to
goodwill. Under the new guidance, which the Company early adopted
effective Jan. 1, 2018, the amount of goodwill impairment is measured as
the excess of a reporting unit's carrying value over its fair value.
Management excludes these charges in measuring the performance of the
Company and the business.
-- Share-based compensation: The Company has excluded the impact of costs
relating to share-based compensation. The Company believes that the
exclusion of share-based compensation expense assists investors in the
comparisons of operating results to peer companies. Share-based
compensation expense can vary significantly based on the timing, size
and nature of awards granted.
-- Acquisition-related costs and adjustments excluding amortization of
intangible assets: The Company has excluded the impact of
acquisition-related costs and fair value inventory step-up resulting
from acquisitions as the amounts and frequency of such costs and
adjustments are not consistent and are significantly impacted by the
timing and size of its acquisitions. In addition, the Company has
excluded the impact of acquisition-related contingent consideration
non-cash adjustments due to the inherent uncertainty and volatility
associated with such amounts based on changes in assumptions with
respect to fair value estimates, and the amount and frequency of such
adjustments is not consistent and is significantly impacted by the
timing and size of the Company's acquisitions, as well as the nature of
the agreed-upon consideration.
-- Loss on extinguishment of debt: The Company has excluded loss on
extinguishment of debt as this represents a cost of refinancing our
existing debt and is not a reflection of our operations for the period.
Further, the amount and frequency of such charges are not consistent and
are significantly impacted by the timing and size of debt financing
transactions and other factors in the debt market out of management's
control.
-- Other Non-GAAP charges: The Company has excluded certain other amounts,
including legal and other professional fees incurred in connection with
recent legal and governmental proceedings, investigations and
information requests respecting certain of our distribution, marketing,
pricing, disclosure and accounting practices, litigation and other
matters, and net gain on sale of assets. In addition, the Company has
excluded certain other expenses, such as IT infrastructure investment,
that are the result of other, non-comparable events to measure operating
performance. These events arise outside of the ordinary course of
continuing operations. Given the unique nature of the matters relating
to these costs, the Company believes these items are not normal
operating expenses. For example, legal settlements and judgments vary
significantly, in their nature, size and frequency, and, due to this
volatility, the Company believes the costs associated with legal
settlements and judgments are not normal operating expenses. In
addition, as opposed to more ordinary course matters, the Company
considers that each of the recent proceedings, investigations and
information requests, given their nature and frequency, are outside of
the ordinary course and relate to unique circumstances. The Company
believes that the exclusion of such out-of-the-ordinary-course amounts
provides supplemental information to assist in the comparison of the
financial results of the Company from period to period and, therefore,
provides useful supplemental information to investors. However,
investors should understand that many of these costs could recur and
that companies in our industry often face litigation.
Finally, to the extent not already adjusted for above, Adjusted EBITDA (non-GAAP) reflects adjustments for interest, taxes, depreciation and amortization (EBITDA represents earnings before interest, taxes, depreciation and amortization).
Adjusted Net Income (non-GAAP)
Historically, management has used adjusted net income (non-GAAP) (the most directly comparable GAAP financial measure for which is GAAP net income (loss)) for strategic decision making, forecasting future results and evaluating current performance. This non-GAAP measure excludes the impact of certain items (as further described below) that may obscure trends in the Company's underlying performance. By disclosing this non-GAAP measure, it was management's intention to provide investors with a meaningful, supplemental comparison of the Company's operating results and trends for the periods presented. It was management's belief that this measure was also useful to investors as such measure allowed investors to evaluate the Company's performance using the same tools that management had used to evaluate past performance and prospects for future performance. Accordingly, it was the Company's belief that adjusted net income (non-GAAP) was useful to investors in their assessment of the Company's operating performance and the valuation of the Company. It is also noted that, in recent periods, our GAAP net income (loss) was significantly lower than our adjusted net income (non-GAAP). Commencing in 2017, management of the Company identified and began using certain new primary financial performance measures to assess the Company's financial performance. However, management still believes that adjusted net income (non-GAAP) may be useful to investors in their assessment of the Company and its performance.
In addition to certain of the adjustments described above (namely restructuring and integration costs, acquired in-process research and development costs, loss on extinguishment of debt, asset impairments, goodwill impairments, acquisition-related adjustments, excluding amortization, and other non-GAAP charges), adjusted net income (non-GAAP) also reflects adjustments based on the following additional item:
-- Amortization of intangible assets: The Company has excluded the impact
of amortization of intangible assets, as such amounts are inconsistent
in amount and frequency and are significantly impacted by the timing
and/or size of acquisitions. The Company believes that the adjustments
of these items correlate with the sustainability of the Company's
operating performance. Although the Company excludes amortization of
intangible assets from its non-GAAP expenses, the Company believes that
it is important for investors to understand that such intangible assets
contribute to revenue generation. Amortization of intangible assets that
relate to past acquisitions will recur in future periods until such
intangible assets have been fully amortized. Any future acquisitions may
result in the amortization of additional intangible assets.
Organic Growth/Change
Organic growth/change, a non-GAAP metric, is defined as a change on a period-over-period basis in revenues on a constant currency basis (if applicable) excluding the impact of recent acquisitions, divestitures and discontinuations (if applicable). Organic growth/change is change in GAAP Revenue (its most directly comparable GAAP financial measure) adjusted for certain items, as further described below, of businesses that have been owned for one or more years. Organic revenue is impacted by changes in product volumes and price. The price component is made up of two key drivers: (i) changes in product gross selling price and (ii) changes in sales deductions. The Company uses organic revenue and organic growth/change to assess performance of its business units and operating and reportable segments, and the Company in total, without the impact of foreign currency exchange fluctuations and recent acquisitions, divestitures and product discontinuations. The Company believes that such measures are useful to investors as it provides a supplemental period-to-period comparison.
Organic growth/change reflects adjustments for: (i) the impact of period-over-period changes in foreign currency exchange rates on revenues and (ii) the revenues associated with acquisitions, divestitures and discontinuations of businesses divested and/or discontinued. These adjustments are determined as follows:
-- Foreign currency exchange rates: Although changes in foreign currency
exchange rates are part of our business, they are not within
management's control. Changes in foreign currency exchange rates,
however, can mask positive or negative trends in the business. The
impact for changes in foreign currency exchange rates is determined as
the difference in the current period reported revenues at their current
period currency exchange rates and the current period reported revenues
revalued using the monthly average currency exchange rates during the
comparable prior period.
-- Acquisitions, divestitures and discontinuations: In order to present
period-over-period organic revenues (non-GAAP) on a comparable basis,
revenues associated with acquisitions, divestitures and discontinuations
are adjusted to include only revenues from those businesses and assets
owned during both periods. Accordingly, organic revenue (non-GAAP)
growth/change excludes from the current period, revenues attributable to
each acquisition for twelve months subsequent to the day of acquisition,
as there are no revenues from those businesses and assets included in
the comparable prior period. Organic revenue (non-GAAP) growth/change
excludes from the prior period (but not the current period), all
revenues attributable to each divestiture and discontinuance during the
twelve months prior to the day of divestiture or discontinuance, as
there are no revenues from those businesses and assets included in the
comparable current period.
Constant Currency
Changes in the relative values of non-U.S. currencies to the U.S. dollar may affect the Company's financial results and financial position. To assist investors in evaluating the Company's performance, we have adjusted for foreign currency effects. Constant currency impact is determined by comparing 2019 reported amounts adjusted to exclude currency impact, calculated using 2018 monthly average exchange rates, to the actual 2018 reported amounts.
Please also see the reconciliation tables below for further information as to how these non-GAAP measures are calculated for the periods presented.
1 Please see the tables at the end of this
news release for a reconciliation of
this and other non-GAAP measures to
the nearest comparable GAAP measure.
2 Organic growth/change, a non-GAAP
metric, is defined as a change on a
period-over-period basis in revenues
on a constant currency basis (if
applicable) excluding the impact of
recent acquisitions, divestitures and
discontinuations.
3
Provisional name.
4 To assist investors in evaluating the
Company's performance, we have adjusted
for changes in foreign currency
exchange rates. Change at constant
currency, a non-GAAP metric, is
determined by comparing 2019 reported
amounts adjusted to exclude currency
impact, calculated using 2018 monthly
average exchange rates, to the actual
2018 reported amounts.
5 Diluted weighted average shares includes
the dilutive impact of options and
restricted stock units, which are
4,453,000 common shares for the 3
months ended Sept. 30, 2019, and which
are excluded when calculating GAAP
diluted loss per share because the
effect of including the impact would be
anti-dilutive.
FINANCIAL TABLES FOLLOW
Bausch Health Companies Inc. Table 1
Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2019 and 2018
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2019 2018 2019 2018
Revenues
Product sales $
2,180 $
2,108 $
6,291 $
6,173
Other revenues 29 28 86 86
2,209 2,136 6,377 6,259
Expenses
Cost of goods sold (excluding amortization and impairments of 571 573 1,675 1,717
intangible assets)
Cost of other revenues 13 9 40 32
Selling, general and administrative 648 614 1,886 1,847
Research and development 123 107 357 293
Amortization of intangible assets 475 658 1,452 2,142
Goodwill impairments 2,213
Asset impairments 33 89 49 434
Restructuring and integration costs 4 3 28 16
Acquisition-related contingent consideration 3 (19) 2 (23)
Other expense (income), net 10 (15) 15 (3)
1,880 2,019 5,504 8,668
Operating income (loss) 329 117 873 (2,409)
Interest income 2 3 9 9
Interest expense (406) (420) (1,221) (1,271)
Loss on extinguishment of debt (40) (75)
Foreign exchange and other 9 12 18
Loss before benefit from (provision for) income taxes (66) (300) (367) (3,728)
Benefit from (provision for) income taxes 18 (51) 101 (74)
Net loss (48) (351) (266) (3,802)
Net (income) loss attributable to noncontrolling interest (1) 1 (6) (2)
Net loss attributable to Bausch Health Companies Inc. $
(49) $
(350) $
(272) $
(3,804)
Bausch Health Companies Inc. Table 2
Reconciliation of GAAP Net Loss to Adjusted Net Income (non-GAAP)
For the Three and Nine Months Ended September 30, 2019 and 2018
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2019 2018 2019 2018
Net loss attributable to Bausch Health Companies Inc. $
(49) $
(350) $
(272) $
(3,804)
Non-GAAP adjustments: (a)
Amortization of intangible assets 475 658 1,452 2,142
Asset impairments 33 89 49 434
Goodwill impairments 2,213
Restructuring and integration costs 4 3 28 16
Acquired in-process research and development costs 1 9 1
Acquisition-related costs and adjustments (excluding amortization of 3 (19) 15 (23)
intangible assets)
Loss on extinguishment of debt 40 75
IT infrastructure investment 6 15
Legal and other professional fees 3 15 22 35
Net (gain) loss on sale of assets (1) 26 (10) 26
Litigation and other matters 9 (40) 12 (30)
Other 1 (1) (6) (1)
Tax effect of non-GAAP adjustments (60) 22 (199) (42)
Total non-GAAP adjustments 474 753 1,427 4,846
Adjusted net income attributable to Bausch Health Companies Inc. $
425 $
403 $
1,155 $
1,042
(non-GAAP)
(a) The components of and further
details respecting each of
these non-GAAP adjustments
and the financial statement
line item to which each
component relates can be found
on Table 2a.
Bausch Health Companies Inc.
Table 2a
Reconciliation of GAAP to Non-GAAP Financial Information
For the Three and Nine Months Ended September 30, 2019 and 2018
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2019 2018 2019 2018
Cost of goods sold reconciliation:
GAAP Cost of goods sold (excluding amortization and impairments of $
571 $
573 $
1,675 $
1,717
intangible assets)
Fair value inventory step-up resulting from acquisitions (a) (5)
Adjusted cost of goods sold (excluding amortization and impairments of $
571 $
573 $
1,670 $
1,717
intangible assets) (non-GAAP)
Selling, general and administrative reconciliation:
GAAP Selling, general and administrative $
648 $
614 $
1,886 $
1,847
IT infrastructure investment (b) (6) (15)
Legal and other professional fees (c) (3) (15) (22) (35)
Other Selling, general and administrative (d) 2 1
Adjusted selling, general and administrative (non-GAAP) $
639 $
599 $
1,851 $
1,813
Amortization of intangible assets reconciliation:
GAAP Amortization of intangible assets $
475 $
658 $
1,452 $
2,142
Amortization of intangible assets (e) (475) (658) (1,452) (2,142)
Adjusted amortization of intangible assets (non-GAAP)
$
$
$
$
Goodwill impairments reconciliation:
GAAP Goodwill impairments
$
$
$ $
2,213
Goodwill impairments (f) (2,213)
Adjusted goodwill impairments (non-GAAP)
$
$
$
$
Restructuring and integration costs reconciliation:
GAAP Restructuring and integration costs $
4 $
3 $
28 $
16
Restructuring and integration costs (g) (4) (3) (28) (16)
Adjusted restructuring and integration costs (non-GAAP)
$
$
$
$
Asset impairments reconciliation:
GAAP Asset impairments $
33 $
89 $
49 $
434
Asset impairments (i) (33) (89) (49) (434)
Adjusted asset impairments (non-GAAP)
$
$
$
$
Acquisition-related contingent consideration reconciliation:
GAAP Acquisition-related contingent consideration $
3 $
(19) $
2 $
(23)
Acquisition-related contingent consideration (a) (3) 19 (2) 23
Adjusted acquisition-related contingent consideration (non-GAAP)
$
$
$
$
Bausch Health Companies Inc. Table 2a (continued)
Reconciliation of GAAP to Non-GAAP Financial Information
For the Three and Nine Months Ended September 30, 2019 and 2018
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2019 2018 2019 2018
Other expense (income), net reconciliation:
GAAP Other expense (income), net $
10 $
(15) $
15 $
(3)
Net gain (loss) on sale of assets (j) 1 (26) 10 (26)
Acquisition-related costs (a) (8)
Litigation and other matters (k) (9) 40 (12) 30
Acquired in-process research and development costs (l) (1) (9) (1)
Other (d) (1) 1 4
Adjusted other expense (income) (non-GAAP)
$
$
$
$
Loss on extinguishment of debt reconciliation:
GAAP Loss on extinguishment of debt
$
$ $
(40) $
(75)
Loss on extinguishment of debt (m) 40 75
Adjusted loss on extinguishment of debt (non-GAAP)
$
$
$
$
Benefit from (provision for) income taxes reconciliation:
GAAP Benefit from (provision for) income taxes $
18 $
(51) $
101 $
(74)
Tax effect of non-GAAP adjustments (n) (60) 22 (199) (42)
Adjusted provision for income taxes (non-GAAP) $
(42) $
(29) $
(98) $
(116)
(a) Represents the three components of the non-
GAAP adjustment of "Acquisition-related
costs and adjustments (excluding
amortization of intangible assets)" (see
Table 2).
(b) Represents the sole component of the non-
GAAP adjustment of "IT infrastructure
investment" (see Table 2).
(c) Represents the sole component of the non-
GAAP adjustment of "Legal and other
professional fees" (see Table 2). Legal
and other professional fees incurred
during the three and nine months ended
September 30, 2019 and 2018 in connection
with recent legal and governmental
proceedings, investigations and
information requests related to, among
other matters, our distribution,
marketing, pricing, disclosure and
accounting practices.
(d) Represents the two components of the non-
GAAP adjustment of "Other" (see Table 2).
(e) Represents the sole component of the non-
GAAP adjustment of "Amortization of
intangible assets" (see Table 2).
(f) Represents the sole component of the non-
GAAP adjustment of "Goodwill impairment"
(see Table 2).
(g) Represents the sole component of the non-
GAAP adjustment of "Restructuring and
integration costs" (see Table 2).
(h) Represents the sole component of the non-
GAAP adjustment of "Acquired in-process
research and development costs" (see Table
2).
(i) Represents the sole component of the non-
GAAP adjustment of "Asset impairments"
(see Table 2).
(j) Represents the sole component of the non-
GAAP adjustment of "Net (gain) loss on
sale of assets" (see Table 2).
(k) Represents the sole component of the non-
GAAP adjustment of "Litigation and other
matters" (see Table 2).
(l) Represents the sole component of the non-
GAAP adjustment of "Acquired in-process
research and development costs" (see Table
2).
(m) Represents the sole component of the non-
GAAP adjustment of "Loss on extinguishment
of debt" (see Table 2).
(n) Represents the sole component of the non-
GAAP adjustment of "Tax effect of non-
GAAP adjustments" (see Table 2).
Bausch Health Companies Inc.
Table 2b
Reconciliation of GAAP Net Loss to Adjusted EBITDA (non-GAAP)
For the Three and Nine Months Ended September 30, 2019 and 2018
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2019 2018 2019 2018
Net loss attributable to Bausch Health Companies Inc. $
(49) $
(350) $
(272) $
(3,804)
Interest expense, net 404 417 1,212 1,262
(Benefit from) provision for income taxes (18) 51 (101) 74
Depreciation and amortization 520 703 1,583 2,273
EBITDA 857 821 2,422 (195)
Adjustments:
Asset impairments 33 89 49 434
Goodwill impairments 2,213
Restructuring and integration costs 4 3 28 16
Acquired in-process research and development costs 1 9 1
Acquisition-related costs and adjustments (excluding amortization of 3 (19) 15 (23)
intangible assets)
Loss on extinguishment of debt 40 75
Share-based compensation 26 22 77 65
Other adjustments:
IT infrastructure investment 6 15
Legal and other professional fees (a) 3 15 22 35
Net (gain) loss on sale of assets (1) 26 (10) 26
Litigation and other matters 9 (40) 12 (30)
Other 1 (1) (6) (1)
Adjusted EBITDA (non-GAAP) $
942 $
916 $
2,673 $
2,616
(a) Legal and other professional fees
incurred during the three and
nine months ended September 30,
2019 and 2018 in connection with
recent legal and governmental
proceedings, investigations and
information requests related to,
among other matters, our
distribution, marketing, pricing,
disclosure and accounting
practices.
Bausch Health Companies Inc. Table 3a
Organic Growth (non-GAAP) - by Segment
For the Three Months Ended September 30, 2019 and 2018
(unaudited)
Calculation of Organic Revenue for the Three Months Ended
September 30, 2019
September 30, 2018 Change in
Organic
Revenue
Revenue Changes Acquisition Organic Revenue Divestitures Organic
in Revenue Revenue
as Exchange (Non- as and (Non-
Rates (a) GAAP) (b) Discontinuations GAAP) (b)
Reported Reported
(in millions) Amount Pct.
---
Bausch + Lomb/International
Global Vision Care $
219 $
2
$ $
221 $
209 $
(1) $
208 $
13 6
%
Global Surgical 161 4 165 159 (2) 157 8 5
%
Global Consumer Products 370 5 375 354 (2) 352 23 7
%
Global Ophtho Rx 150 2 152 161 161 (9) (6)
%
International Rx 275 2 277 264 (4) 260 17 7
%
Total Bausch + Lomb/International 1,175 15 1,190 1,147 (9) 1,138 52 5
%
Salix 551 (14) 537 460 (3) 457 80 18
%
Ortho Dermatologics
Ortho Dermatologics(c) 100 100 147 147 (47) (32)
%
Global Solta 47 47 29 29 18 62
%
Total Ortho Dermatologics 147 147 176 176 (29) (16)
%
Diversified Products
Neurology and Other 186 186 211 (1) 210 (24) (11)
%
Generics(c) 126 126 118 118 8 7
%
Dentistry(c) 24 24 24 24 %
Total Diversified Products 336 336 353 (1) 352 (16) (5)
%
Totals $
2,209 $
15 $
(14) $
2,210 $
2,136 $
(13) $
2,123 $
87 4
%
(a) The impact for changes in foreign
currency exchange rates is determined
as the difference in the current
period reported revenues at their
current period currency exchange rates
and the current period reported
revenues revalued using the monthly
average currency exchange rates during
the comparable prior period.
(b) To supplement the financial measures
prepared in accordance with GAAP, the
Company uses certain non-GAAP
financial measures. For additional
information about the Company's use of
such non-GAAP financial measures,
refer to the body of the news release
to which these tables are attached.
Organic revenue (non-GAAP) for the
three months ended September 30, 2019
is calculated as revenue as reported
adjusted for: (i) the impact for
changes in exchange rates (previously
defined in this news release) and (ii)
revenues attributable to acquisitions
during the twelve months subsequent to
the day of acquisition, as there are
no revenues from those businesses
included in the comparable prior
period. Organic revenue (non-GAAP)
for the three months ended September
30, 2018 is calculated as revenue as
reported less revenues attributable to
divestitures and discontinuances
during the twelve months prior to the
day of divestiture or discontinuance,
as there are no revenues from those
businesses and assets included in the
comparable current period.
(c) Effective in the first quarter of 2019,
one product historically included in
the reported results of the Ortho
Dermatologics business unit in the
Ortho Dermatologics segment is now
included in the reported results of
the Generics business unit in the
Diversified Products segment and
another product historically included
in the reported results of the Ortho
Dermatologics business unit in the
Ortho Dermatologics segment is now
included in the reported results of
the Dentistry business unit in the
Diversified Products segment as
management believes the products
better align with the new respective
business units. These changes in
product alignment are not material.
Prior period presentations of business
unit and segment revenues and profits
have been conformed to current segment
and business unit reporting
structures.
Bausch Health Companies Inc. Table 3b
Organic Growth (non-GAAP) - by Segment
For the Nine Months Ended September 30, 2019 and 2018
(unaudited)
Calculation of Organic Revenue for the Nine Months Ended
September 30, 2019
September 30, 2018 Change in
Organic Revenue
Revenue Changes Acquisition Organic Revenue Divestitures and Organic
in Revenue Discontinuations Revenue
as Exchange (Non- as (Non-
Rates (a) GAAP) (b) GAAP) (b)
Reported Reported
(in millions) Amount Pct.
---
Bausch + Lomb/International
Global Vision Care $
638 $
18
$ $
656 $
611 $
(2) $
609 $
47 8
%
Global Surgical 505 20 525 512 (5) 507 18 4
%
Global Consumer Products 1,065 34 1,099 1,053 (12) 1,041 58 6
%
Global Ophtho Rx 483 12 495 482 482 13 3
%
International Rx 810 26 836 801 (16) 785 51 6
%
Total Bausch + Lomb/International 3,501 110 3,611 3,459 (35) 3,424 187 5
%
Salix 1,505 (37) 1,468 1,323 (9) 1,314 154 12
%
Ortho Dermatologics
Ortho Dermatologics(c) 277 277 367 367 (90) (25)
%
Global Solta 130 2 132 90 90 42 47
%
Total Ortho Dermatologics 407 2 409 457 457 (48) (11)
%
Diversified Products
Neurology and Other 547 547 636 (3) 633 (86) (14)
%
Generics(c) 342 342 298 298 44 15
%
Dentistry(c) 75 75 86 86 (11) (13)
%
Total Diversified Products 964 964 1,020 (3) 1,017 (53) (5)
%
Totals $
6,377 $
112 $
(37) $
6,452 $
6,259 $
(47) $
6,212 $
240 4
%
(a) The impact for changes in foreign
currency exchange rates is determined
as the difference in the current
period reported revenues at their
current period currency exchange rates
and the current period reported
revenues revalued using the monthly
average currency exchange rates during
the comparable prior period.
(b) To supplement the financial measures
prepared in accordance with GAAP, the
Company uses certain non-GAAP
financial measures. For additional
information about the Company's use of
such non-GAAP financial measures,
refer to the body of the news release
to which these tables are attached.
Organic revenue (non-GAAP) for the
nine months ended September 30, 2019
is calculated as revenue as reported
adjusted for: (i) the impact for
changes in exchange rates (previously
defined in this news release) and (ii)
revenues attributable to acquisitions
during the twelve months subsequent to
the day of acquisition, as there are
no revenues from those businesses
included in the comparable prior
period. Organic revenue (non-GAAP)
for the nine months ended September
30, 2018 is calculated as revenue as
reported less revenues attributable to
divestitures and discontinuances
during the twelve months prior to the
day of divestiture or discontinuance,
as there are no revenues from those
businesses and assets included in the
comparable current period.
(c) Effective in the first quarter of 2019,
one product historically included in
the reported results of the Ortho
Dermatologics business unit in the
Ortho Dermatologics segment is now
included in the reported results of
the Generics business unit in the
Diversified Products segment and
another product historically included
in the reported results of the Ortho
Dermatologics business unit in the
Ortho Dermatologics segment is now
included in the reported results of
the Dentistry business unit in the
Diversified Products segment as
management believes the products
better align with the new respective
business units. These changes in
product alignment are not material.
Prior period presentations of business
unit and segment revenues and profits
have been conformed to current segment
and business unit reporting
structures.
Bausch Health Companies Inc. Table 4
Other Financial Information
(unaudited)
(in millions) September 30, December 31,
2019 2018
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents $
825 $
721
Restricted cash 2 2
Cash, cash equivalents and restricted cash $
827 $
723
Debt Obligations
Senior Secured Credit Facilities:
Revolving Credit Facility
$ $
75
Term Loan Facilities 5,119 5,725
Senior Secured Notes 5,448 4,948
Senior Unsecured Notes 12,987 13,545
Other 12 12
Total long-term debt and other, net of premiums, discounts and issuance costs 23,566 24,305
Plus: Unamortized premiums, discounts and issuance costs 275 327
Total long-term debt and other $
23,841 $
24,632
Maturities and Mandatory Payments of Debt Obligations
Remainder of 2019 $
100 $
228
2020 303
2021 203 1,003
2022 1,553 1,553
2023 3,788 6,348
2024 2,303 2,303
2025 10,632 10,632
2026 - 2029 5,262 2,262
Total debt obligations $
23,841 $
24,632
Three Months Ended September
30, Nine Months Ended September 30,
2019 2018 2019 2018
Cash provided by operating activities $
515 $
522 $
1,267 $
1,182
Investor Contact:
Media Contact:
Arthur Shannon
Lainie Keller
arthur.shannon@bauschhealth.com
lainie.keller@bauschhealth.com
(514) 856-3855
(908) 927-1198
(877) 281-6642 (toll free)
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