Bausch Health Companies Inc.

Good morning and welcome to the Bosch HealthCare Fourth Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Art Shannon, Senior Vice President of Investor Relations and Communications. Please go ahead, sir.

Thank you, Rocco. Good morning, everyone, and welcome to our fourth quarter and full year 2018 Financial Results Conference Call. Participating on today's call are Chairman and Chief Executive Officer, Mr. Joe Papa, and Chief Financial Officer, Mr. Paul Herendine. 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 two of the presentation. Non-GAAP reconciliations can be found in the appendix to the presentation posted on our website. Finally, the financial guidance in this presentation is effective as of today only. It is our policy to generally not update guidance until the following quarter and not to update or affirm guidance other than through broadly disseminated public disclosure. And with that, it is my pleasure to turn the call over to Joe.

Thank you, Art, and thanks everyone on the phone for joining us today. Let's quickly review the topics we will cover. I'll begin with a brief summary of our 2018 company highlights before turning the call over to Paul Harradine, our CFO. Paul will take us through the fourth quarter and the full year financial results and provide our 2019 guidance. I will then review the segment highlights and catalysts before opening the line for questions. Beginning on slide four, 2018 was a year of strong execution for Bausch Health. For the full year, the total company grew organically by 2%. This was the first year of total company organic revenue growth since 2015. We also generated organic revenue growth in all four quarters of 2018. B&L International and Salix, our two largest segments, grew organically by 6% on a combined basis during 2018. Our top 10 products grew organically by 11%. in the aggregate compared to 2017. We generated $1.5 billion of cash from operations. We increased R&D investment by more than 30% in the fourth quarter and approximately 15% for the full year. And we improved our gross margin through manufacturing efficiencies both in the fourth quarter and the full year. And we resolved the Syphaxin IP litigation, which we believe preserves the product's market exclusivity until 2028. Moving to the top right, we launched 10 key products during 2018, including two co-promotions. Four of our significant seven products were launched during the year, and we are expecting a decision from the FDA on do-overry shortly. We will also continue to delever our balance sheet, having repaid more than a billion dollars of debt in 2018 and cash generated from operations. Finally, in 2018, we refinanced approximately $8.3 billion of debt to extend maturity and provide more flexibility, which gives us the ability to pivot to offense in 2019. Turn to slide five. We have a snapshot of the key 2018 financial highlights for each of the four segments. Approximately 75% of our total 2018 revenue was generated by the B&L International segment and the Salix segment combined. B&L International grew organically by 4% compared to 2017, with organic growth across all five reporting businesses. Salix grew by 12% organically in 2018, driven by Syfaxon, which had a great year with 22% growth. Great results from our two largest segments. Delivering on commitments is important to us. On slide six, we show how we perform against the guidance we provided one year ago in February 2018. A year ago, we promised to deliver 2018 revenues in the range of $8.1 to $8.3 billion. We actually delivered $8.38 billion. A year ago, we promised to deliver adjusted EBITDA in the range of $3.05 to $3.2 billion. We delivered $3.47 billion. Paul will walk you through the fourth quarter and the full year results in more detail.