Bausch Health Companies Inc.

Good morning and welcome to the Bausch Health First Quarter 2020 Earnings 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 touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Arthur Shannon. Please go ahead.

Thank you, Grant. Good morning, everyone, and welcome to our first quarter 2020 financial results conference call. Participating on today's call are Chairman and Chief Executive Officer, Mr. Joe Papa, and Chief Financial Officer, Mr. Paul Herendy. In addition to this live webcast, a copy of today's live 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. With that, it's my pleasure to turn the call over to Joe.

Thank you, Art, and thank you, everyone, for joining us today. I'm going to begin today's call with some comments on our response to COVID-19 and briefly summarize the first quarter results. Paul Harradine, our CFO, will then review the first quarter in more detail and update our 2020 guidance. I'll conclude with some closing remarks before opening the line for questions. Beginning with slide five, As we started to see the impact of COVID-19 and the unprecedented market disruption it was creating, our first priority was to make sure that our people were safe. We took appropriate measures to protect our supply chain's ability to meet customer demand. We reached out to help our customers. We minimized disruption to our R&D projects, and we protected our financial stability. Our team did a great job of implementing business continuity plans across 100 countries and enabled us to remain focused on supporting our customers and healthcare patients globally. In fact, we have over 10,000 colleagues on the supply chain front lines who have been and continue to work hard to make sure that Bausch Health's products remain available for the patients and consumers who rely on them. A big thank you to all of our supply chain employees that enable us to continue meeting customer demand. Importantly, To date, we have not seen any material COVID-19-related supply disruptions. We have access to multiple sources of API and intermediates for many of our products. At this time, the availability of API intermediates is not expected to have a material impact on our supply chain. With respect to our largest product, Sifaxon, we have five months' supply on hand and enough active ingredients to manufacture another five-month supply of finished goods. We've also been able to minimize disruption of our commercial capabilities and R&D efforts. We have been supporting healthcare professionals virtually where in-person interactions are suspended, and we're working with health authorities and investigators to protect our clinical trial participants and personnel. Also, we believe the steps we took over the last several years to manage our capital structure have placed us in a strong position to weather the storm from a liquidity perspective. We have no amortization payments or debt maturities until 2022, and we have an undrawn revolving credit facility. To sum up, we have taken actions to keep our colleagues safe, our supply lines intact, and to lay the foundation for our company to work through the COVID-19 uncertainties. With these measures in place, our goal was to fulfill our mission of improving people's lives with our healthcare products. On slide six, We've outlined the actions we've taken. First and foremost, we are working to advance science to find solutions for COVID-19. We have initiated clinical trial programs in Canada, evaluating investigational use of nebulized antiviral virazol in combination with standard of care therapy to treat hospitalized adult patients with respiratory distress. And the SALICS team is working to initiate trials to evaluate sifaxin in combination with established therapies to potentially address the symptoms of gastrointestinal distress and pulmonary compromise associated with COVID-19. Second, Bausch Health is actively donating medicine and healthcare products to assist in the global fight against COVID-19, including chloroquine, azithromycin, eye drops, daily contact lenses, and nebulized virusol. We will remain focused on doing our part to help end this unprecedented global health pandemic and providing resources to support global healthcare systems frontline healthcare workers, and the patients in their care. I am extremely proud of the job that our team has done in facing these challenges and making sure that our business continues to operate during this period with minimal disruption. I thank the entire Bouch Health team for their continued focus and dedication over this critical period. Moving now to slide seven, I want to address the estimated impact that COVID-19 has had on our first quarter results. Paul will cover this in more detail, but At a high level, we estimate that COVID-19 adversely impacted first quarter revenue by roughly $35 million or approximately 2%. This included a positive impact of $30 million from pantry loading, including a global consumer and U.S. vision here, as customers stocked up on supplies in advance of the shutdown. And it was offset by a negative COVID-19 impact to revenue of approximately $65 million and The postponement of elected medical procedures as directed by public health authorities affected our global SOLTA and surgical business units, as well as our ophthalmology RX business, where pre- and post-operative prescriptions declined. Our international vision care business was impacted by retail store closures, by decline in contact lens wear due to decreased social interactions. Finally, medical office closures in the U.S. resulted in prescription declines in late March, which affected our derm and dentistry business units. With these points in mind, let's briefly review the first quarter results on slide eight. While total company result was flat compared to the prior year, there were a number of first quarter highlights to note. Our largest segment, Bausch & Lomb International, delivered its 14th consecutive quarter of overall organic revenue growth, despite headwinds from COVID-19. Salus reported mid-single-digit organic growth, despite approximately $40 million of LOE loss of exclusivity headwinds, primarily from Aprizo. Syphaxin TRXs grew by approximately 6%, and retail extended units saw approximately 6.5% growth versus the first quarter of 2019. Trulance generated $19 million of revenue in the first quarter, and TRXs grew by 52%. compared to the prior year quarter. Relastar revenue increased by 19% as a result of growth in the oral formulation and new market access formulary wins. We were also able to repay approximately $220 million of debt during the quarter using cash generated from operations. On the right, we have called out some notable key developments. First, after we settled with Teva earlier in 2018, earlier this week, we resolved the outstanding Zyfaxan IP litigation with Sandoz. Under the terms of the agreement, all intellectual property protecting Syfaxon remains intact, and we preserve market exclusivity until 2028. We also had some commercial access improvements due to new formulary wins. Visalta and Lodomax SM increased Part D access to 45% and 55%, respectively. On the R&D front, We have completed the QT study for Amicelamide, which evaluated the cardiac safety profile. Top-line results were positive, and we expect to initiate a Phase II study in the second half of 2020. The Rifaximin study for overt hepatic encephalopathy was also reported favorable top-line results. Great news that will help inform further research on our next-generation indications and formulations. Finally, Despite COVID-19-related headwinds, we expect that our planned 2020 launches will remain on track, including the launch of the Sci-Hi daily lenses in the U.S., which we are preparing for in the second half of 2020. Overall, we believe these first quarter highlights demonstrate that we have built a sustainable and durable business that is well-positioned to weather the uncertainties created by COVID-19. With that, I'll turn it over to Paul.