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Bausch Health Companies' (BHC) CEO Joe Papa on Q1 2021 Results - Earnings Call Transcript

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Bausch Health Companies, Inc. (NYSE:BHC) Q1 2021 Earnings Conference Call May 4, 2021 8:00 AM ET

Company Participants

Arthur Shannon – Senior Vice President, Head of Investor Relations and Global Communications

Joe Papa – Chairman and Chief Executive Officer

Paul Herendeen – Chief Financial Officer

Conference Call Participants

Ken Cacciatore – Cowen and Company

Gary Nachman – BMO Capital Markets

David Amsellem – Piper Sandler

Gregg Gilbert – Truist

Balaji Prasad – Barclays

Umer Raffat – Evercore

David Steinberg – Jefferies


Good morning, and welcome to the Bausch Health First Quarter 2021 Results Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I’d now like to turn the conference over to Arthur Shannon, Senior Vice President, Head of Investor Relations and Global Communications at Bausch Health. Please go ahead.

Arthur Shannon

Thank you, Drew. That’s quite impressive. Good morning, everyone, and welcome to our first quarter 2021 financial results conference call. Participating on today’s call are Chairman and Chief Executive Officer, Mr. Joe Papa; and Chief Financial Officer, Mr. Paul Herendeen. In addition to this live webcast, a copy of today’s slide presentation and a replay of this conference call will be available on our website under the Investor Relations section.

Before we begin, we’d like to remind you that our presentation today contains forward-looking information. We would ask that you take a moment to read the forward-looking statement legend at the beginning of our presentation as it contains important information. This presentation contains non-GAAP financial measures. For more information about these measures, please refer to Slide 2 of the presentation. Non-GAAP reconciliations can be found in the appendix of the presentation posted on our website. Finally, the financial guidance in this presentation is effective as

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Comments (9)

This was not was everybody expected - Joe Papa will be CEO of the new B&L eyecare so it could be that they sell/ipo the eye business cheap and the remaining Co (probably with paul herendeen as the new CEO, which I would like) is left with too much debt or at least not with maximum profit when selling the eye care business. That probably explains the massive selloff today which was very costly to me since BHC is my biggest position. But I still hope I am wrong with this conclusion.
@IQ-Investment There was considerable change discussed today. Instead of the eye care business carrying debt to EBITDA of 4 and the pharma company 5.5, we now have the eye business carrying 2.5 and the pharma piece carrying 6.5 or more. That’s a hell of a debt load for the pharma piece. I can see why Papa wanted to go with the eye business. Sounds like they are tossing in the towel on the derm business and cutting costs and maximizing free cash flow. Can’t really blame them as everything they have done there has failed when you factor in milestone payments. Just no big winners. Sounds like they are betting on a huge valuation for the eye business, hope they are right because I’m long here. Very nervous long.
@browndlee the 6.5x pharma piece was clearly the worst piece of news. The team at BHC never seem to be able to tell their story correctly to investors. Maybe they are just too close to the business to see out. Does reducing the debt on B&L down to 2.5x radically change the valuation? Enough to warrant doing so? Is this being done to prepare for a sale?

Investors in BHC were looking for clarity from management. Today's call did not add clarity, it actually feels like it did the opposite and added more uncertainty as to what is next.

The impairment charges are interesting. They would not have taken this impairment unless there was a sale in the works and the value of that transaction is less than the carrying cost. I suspect a sale of Ortho could be announced soon.
@browndlee Hi,
The thing is, leverage at the moment of sale is 6.5 or more.
After IPO or sale - assuming they will get 21ish B for the eye Co with a 10% tax rate three remaining Co will get net of 19 billion - when they use this to pay all die debt reduction remaining debt will be 5 billion with a remain EBIDTA of around 2.2 million - that equals a leverage of 2.5 x after the sale. Is everything to dumb to see this or where I am wrong?

PS: disclaimer BHC is my biggest position. I am long shares and 01/2022 30US$ calls.
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