Bausch Health Companies Inc.

Please stand by, we are about to begin. Good morning, my name is Christy and I will be your conference operator today. At this time, I would like to welcome everyone to the Bausch Health Company's second quarter 2020 financial results conference call. All lines have been placed in the listen only mode and the floor will be open for your questions following the presentation. If you should require assistance throughout the conference, please press star zero to reach a live operator. At this time, it is my pleasure to turn the floor over to your host. Mr. Shannon, you may begin your conference.

Thank you, Christy. Good morning, everyone, and welcome to our second 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 Herendine. In addition to this live webcast, a copy of today's live presentation and replay of this conference call will be available on our website under the investor relations section. Before we begin, we would like to remind you that our presentation today contains certain 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 for joining us today. I'm going to begin today's call by sharing our current perspective on the COVID recovery process and briefly cover the second quarter highlights. Paul Harradine, our CFO, will then review the second quarter in more detail and update our 2020 guidance. I will conclude by covering the core priorities we have identified to drive BAUCH's health future before opening the line for questions. But before I address these topics, I'd like to comment on this morning's announcement that we have decided to spin off our iHealth business as an independent, publicly traded company. The spinoff will establish two separate companies, a fully integrated, pure play iHealth company built on the iconic Bausch & Lomb brand and a long history of innovation, and an international diversified pharmaceutical company with leading positions in gastroenterology, dermatology, aesthetics, neurology, and an international pharma business. Four years ago, we initiated a multi-year plan, first to stabilize and then to transform Bausch Health into a company position to deliver long-term organic growth. Over that time, We have divested approximately $4 billion of non-core assets, paid down over $8 billion of debt, resolved nearly all of the significant legacy legal issues, and managed a loss of exclusivity on a $1.4 billion product portfolio, while also investing in research and development, new product launches, and core franchises with attractive growth opportunities. Our board and management have been working over the last 12 months to determine how best to unlock value across our businesses and believe that separating into two highly focused and attractive standalone companies is the way to accomplish that goal. We've looked at the value of our peer eye health companies like Alcon and Cooper and believe that Bausch & Lomb would compare very favorably when investors have an opportunity to make a judgment about the relative value of the standalone business. We also believe that now is the right time to begin the separation process, which requires us to complete several steps before a spinoff can occur. Because this process is in the very early stages, there are many details that have not yet been determined, such as leadership, capital structure, and the anticipated financial impact. Our goal is to be in position to execute the spinoff as soon as practical, Once all the necessary conditions have been satisfied, we look forward to providing updated information and additional detail as the spinoff process progresses. With that, let's turn to slide five. Overall, we have successfully managed our supply chain and continue to make the essential products that are needed by our customers and patients during COVID. COVID has impacted each of our businesses, but the amount varies by business and geography. For example, we are seeing variability by geography and the speed and magnitude of the recovery process. In the United States, recovery appears to be progressing more quickly in our B&L surgical, vision care, and OptoRx business. And, in fact, consumer business was less impacted by COVID than our other business units. In B&L Europe-Asia, recovery has been more gradual, as consumers have been slower to return to normal habits despite reopening. Another example of COVID variability is Salix. Zyfaxan, hepatic encephalopathy, prescription volume saw less COVID impact versus Zyfaxan prescriptions for IBSD. Given these conditions, we will continue to focus on investing in our key promoted brands to increase market share, optimize our cost structure, and invest in new technologies like e-commerce. Turning to slide six, a lot of data on this slide, but let me highlight a few key points. Overall, organic revenue declined by 21% during the second quarter, but even during this challenging time, many of our brands and products were able to grow and gain market share. Starting with Bausch & Lomb, an organic revenue decline of 24% was driven by reduction in elective surgeries and reduced wearing contact lenses with COVID. However, several key launch products by Zolta and Lodomax SM each had strong Rx growth, up 42% and 125% respectively compared to last year. Most importantly, we continue to receive new product approvals. 510 clearance for Infuse, our side-high daily lens in the U.S. occurred, and also an approval for Bausch & Lomb Ultra in China. Moving to Salix, while organic revenue declined by 21%, the segment had an LOE drag of approximately $39 million during the second quarter. We saw strong TRX growth from Trulance and Relastor, which were up 50% and 6% respectfully compared to the second quarter of 2019. And Zyfaxim was impacted this quarter by COVID-related office closures, but script declines have started to reverse as of June 2020. In orthodermalogics, the closure of dermatology offices and stay-at-home orders resulted in an organic revenue decline of 5% for this segment. Thermage, however, grew reported revenue by 12%. Jubilee had TRX growth of 7% compared to last year. and received an expanded indication to treat patients as young as six years old. We also launched Araslo in the U.S. during the quarter. With respect to Duobree, we did receive notice on July 23rd that an ANDA has been filed. We have Orange Book listed patents for Duobree covering our product until 2036. We remain confident in the strength of Duobree-related patents and will vigorously defend our intellectual property. A few additional highlights. Christina Ackerman and her legal team recently resolved two pending legacy legal matters. The SEC's investigation of the company's former relationship with Philidor and certain of our company's legacy accounting practices and public disclosures during the time period of 2014-2015. Also, we resolved the Canadian Security Class Action litigation, which is subject to court approval. Despite COVID headwinds, we paid approximately $100 million of debt in the second quarter using cash generated from operations. The second quarter highlights demonstrate that we have a global, diverse portfolio of durable products and strong brands that are well positioned to grow market share and return to growth as the world recovers from the pandemic. With that, I'll turn it over to Paul.