Bausch Health Companies Inc.

Good morning, ladies and gentlemen, and welcome to the Bosch Health Third Quarter 2022 Earnings Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Christina Chang, Senior Vice President, Investor Relations and Communications at Bosch Health. Ma'am, the floor is yours.

Thanks, Matt. Good morning. Welcome to our Third Quarter 2022 Earnings Conference Call. Participating in today's call are Thomas J. Appio, Chief Executive Officer of Bausch Health, and Tom Vatikas, Chief Financial Officer. Before we begin, I'd like to remind you that our presentation today contains forward-looking information. We ask you to take a moment to read the forward-looking statements at the beginning of this presentation. Our actual results may vary materially from these expressed or implied in our forward-looking statements, and you should not place under-reliance on any forward-looking statements. Please refer to our SEC filings and filings to the Canadian Securities Administrators for a list of some of the factors that could cause our actual results to differ materially from expectations. We use non-GAAP financial measures to help investors understand our ongoing business performance. Non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and should be considered along with, but not as an alternative to, measures calculated in accordance with GAAP. You will find reconciliations to our non-GAAP measures in the appendix of this presentation, which is available on Bausch Health's Investor Relations website. Finally, the financial guidance in this presentation is effective as of today only. We do not undertake any obligation to update guidance. Our discussion today will focus on Bausch Pharma and Solta. However, we will briefly comment on Bausch & Lomb's results announced yesterday. We will refer to year-over-year comparisons with the same period last year unless otherwise noted. With that, it is my pleasure to turn the call over to our CEO, Thomas Appio.

Thank you, Christina, and welcome to those of you joining the call today. Let me start with the four points on slide six that I want you to take away from this quarter. First, we are encouraged with the sequential sales improvement for Bausch Pharma and Salta this quarter. Second, We created value during difficult market conditions with a very successful exchange offer that reduced debt principle by $2.5 billion. Third, we continue to evaluate potential options to maximize value, including improving our balance sheet and evaluating all factors related to the future distribution of Bausch and Lomb. Fourth, we continue to vigorously defend our intellectual property in a Xifaxin patent litigation. Let me now take you through some specifics. First, on slide seven, I am pleased to report that we are making progress on our key priorities in each of our business segments. In Salix, we are activating patient and caregivers through targeted commercial strategies, which are starting to drive results, with a Xifaxin script growth running positive during the last eight weeks of the quarter. Other key promoter brands also saw increased scripts led by double-digit growth for Relastor and Plenview and mid single-digit growth for Trulance. Salix had a 3% organic revenue increase in Q3, improving from the minus 2% during the first six months of the year. We continue to intensify our focus on near-term initiatives to improve the diagnosis and treatment of GI and HE disease. In international, we continue to grow key markets such as Poland, Mexico, and Canada with existing brands and new products. The international business posted a 10% organic growth following a healthy 5% increase during the first half of the year. In Sultan Medical, sales grew organically 4% with strong gains in our international business, following a slow first half given the ongoing COVID lockdowns in China. In diversified products, EBITDA margins remain stable, although sales for this segment declined by 17% on an organic basis. Jublia continues to benefit from our direct-to-consumer investments, and script growth was 34%. Arrestin drove a 9% increase in our dentistry business. Second, we took significant step forward in reducing our outstanding debt. After completing an open market repurchase program in the second quarter, which retired $481 million in long-term debt at a significant discount, we executed a very successful debt exchange this quarter that further reduced debt principal by $2.5 billion. with minimal cash outlay. This brings our year-to-date debt reduction to approximately $3.3 billion. I want to thank the teams, both internally and externally, who worked tirelessly through the summer to complete this very successful transaction. We made significant progress in strengthening the financial position this quarter. We reduced our leverage, pushed back our near-term debt maturities, and generated savings in annual interest costs. Third, we continue to evaluate potential options to maximize stakeholder value. This includes ongoing focus on our balance sheet and liquidity. We continue to believe that the separation of Bausch & Lomb makes strategic sense and we will thoughtfully evaluate all factors related to the B&L separation. In the meantime, we expect that continued focus on commercial execution will improve our operating results and reinforce a solid foundation for our future. Lastly, let me provide a brief update on the Xifaxan patent litigation. We filed our appeal with the U.S. Court of Appeals for the Federal Circuit and expect the process to take approximately 12 to 18 months. We will not provide any further comments on patent litigation at this time. With that, I'll turn the call over to Tom Vatikath, who will provide further details on our third quarter performance and outlook for the remainder of the year. Tom?

Thanks, Tom. Hello, everyone, and thanks for joining us. My comments today will refer to organic growth and adjusted results. Let's start with slide nine. We're encouraged with the progress we made this quarter, with consolidated third quarter revenues of $2 billion, up 2% on an organic basis over the same quarter last year. This represents an important inflection from the first half of the year, which was flat on an organic basis. At Bosch, Pharma, and Salter, third quarter revenues were $1.1 billion. improving from the 4% decline through the first half of the year to a minus 1% on an organic basis this quarter. This quarter, three out of four businesses posted organic growth, notably Salix, International, and Solta. Let me discuss each segment in greater detail, as shown on slides 10 and 11. Salix revenues were $544 million, an increase of 3% versus the third quarter last year, an improvement from the 2% decline in the first half of this year. Syphaxin revenue was up 4% from the third quarter of last year. TRX growth was flat, but ended the quarter with a positive trend. Increased demand was partially offset by an estimated $13 million reduction of inventory at the retail level. We're also pleased with the performance of Trulance, Relastor, and Planview, with double-digit increases in sales and TRX growth of 6%, 22%, and 23%, respectively. International revenues were $250 million, an increase of 10% on an organic basis compared with the third quarter of last year, driven by strong performance in Canada and Europe and double-digit growth in a number of key brands. Solta medical revenues of $72 million increased 4% on an organic basis this quarter, driven by strong results in the Asia-Pacific region as China recovers from the COVID lockdowns. Diversified products revenues were $238 million, down 17% on an organic basis compared with the third quarter of last year. Revenues from neurology decreased 15%, primarily due to lower demand for Welbutrin and a decline in COVID-related demand for certain products, offset by a 16% increase in Applenzin revenue. As Tom noted earlier, Jublia continues to benefit from our marketing investments. In dentistry, Arrestin was up 10%, and we saw lower sales from legacy products in generics. Lastly, on slide 12, Bosch and Lomb revenues were $942 million, up 5% organically compared with the third quarter of 2021, with organic growth across all B&L segments led by the surgical segment. Turning to the P&L for the quarter on slide 15, I will first refer to results on a consolidated basis and then provide some additional color for the performance of Bosch Pharma and Salta. Third quarter consolidated adjusted gross margin was 71.5 percent, 90 basis points lower compared with the third quarter last year, driven by the impact of inflation. This compares to a 30 basis point decline through the first half of the year. At Bosch Pharma and Salta, adjusted gross margin was approximately 81 percent and flat versus the prior year. Our long-term contractual agreements are providing some cost stability this year, despite increases in energy and distribution costs. We do, however, expect greater pressure on our cost of goods next year as our contracts renew. Consolidated adjusted operating expenses for the third quarter were $758 million, an increase of $37 million, or 5%, with higher R&D and G&A expenses. B&L yesterday reported an increase of $26 million in operating expenses. Consolidated R&D expense increased 10% and represented 6.5% of net sales, compared with 5.7% in the third quarter last year, as we continue to invest in R&D priorities. The increase in consolidated G&A costs reflects the impact of the separation and the costs to stand up to public companies. We will continue to manage our costs prudently. Third quarter consolidated adjusted EBITDA attributable to Bosch Health was $766 million, a decrease of 13% versus last year. For Bosch Pharma and Salta, segment profit was $660 million, a decrease of 5% versus last year, driven by the decline in revenue. which includes $25 million primarily from the Amun divestiture and $27 million from the impact of foreign exchange. On a consolidated basis, third quarter adjusted EBITDA margin was 37.4%, down 450 basis points compared with last year's 41.9%. As a reminder, adjusted EBITDA margin for Bosch Pharma and Solta approximates in the low 50s range, and for Bosch and Lomb approximates in the 20% range. A few words about cash flow. Excluding legacy legal settlements, separation costs, cash provided by Amun, and third-party fees related to our recently completed debt exchange, adjusted cash flow from operations on a consolidated basis was $9 million versus $382 million last year. primarily due to operating results and the timing of working capital movements. Cash flow in the quarter also included advance payments of accrued interest on debt that was exchanged of approximately $100 million that ordinarily would have been paid after Q3. Year-to-date adjusted cash flow from operations for Bosch Pharma and Salta was $297 million. and we expect adjusted cash flow for the full year of $600 million. While cash flow has been lumpy this year due to timing, the business continues to be highly cash generative. Our GAAP cash flow on slide 14 included a payment of $1.2 billion out of the restricted cash balance related to a previous settlement of the legacy U.S. securities litigation. Now let's turn to our balance sheet on slide 16. As Tom mentioned, we made significant strides in deleveraging our balance sheet this quarter. This was accomplished through a successful debt exchange offer that reduced our outstanding principal by $2.5 billion of debt with minimal cash outlay. The exchange offer closed on September 30th. A total of $5.6 billion of previously issued senior unsecured notes were exchanged for $2.1 billion of new senior secured notes of Bosch Health and $1 billion of new senior secured notes of a wholly owned unrestricted subsidiary that holds approximately 38.6% of outstanding shares of Bosch and Lomb. The successful debt exchange also reduced our 25 to 26 debt maturities by 1.3 billion, which you can see in slide 17. We expect the transaction to reduce our interest costs by approximately $65 million annually going forward. You'll note that the gain on extinguishment of debt of approximately $570 million is much smaller than the net reduction in our debt principle of $2.5 billion. Certain gap accounting guidance applicable to the exchange. resulted in the recording of an approximately $1.8 billion premium on the newly issued debt. This premium will be amortized to effectively reduce gap interest expense over the remaining life of the new bonds. Please find additional details in our Form 10-Q. As you can see on Slide 18, total debt excluding Bosch and Lump is $17.1 billion. which consists of $16.1 billion of restricted debt issued by Bosch Pharma and $1 billion of senior secured notes issued by the newly created unrestricted subsidiary. Excluding B&L debt, approximately 85% of our debt is fixed or 70% on a consolidated basis, and we have no maturities until 2025. Bosch Health and its restricted subsidiaries continue to hold the majority of the shares of Bosch and Lomb, which itself remains a restricted subsidiary. We're focused on improving the company's balance sheet and unlocking stakeholder value. We've identified potential options that we believe could advance these objectives. Unrestricting B&L is a potential component of one or more of these possible strategies. We're continuing to carefully and thoughtfully evaluate all such strategies. However, we cannot comment further on any speculation regarding future transactions. I'll now discuss our outlook for the remainder of 2022, which you can find on slides 20 and 21. Our guidance for Bosch Pharma and Solta remains unchanged. with full-year revenues of $4.3 to $4.42 billion, which is down 3% to flat on an organic basis. Full-year adjusted EBITDA is expected to range between $2.28 to $2.34 billion. Our previous assumptions are unchanged, with the exception of adjusted tax rate, which is now expected to be a little higher at 17%, up from 15% previously. While we expect FX to continue to be a headwind, we are maintaining our previously disclosed guidance for the full year. As you heard yesterday, Bausch & Lomb has reduced its full year revenue outlook by $50 million to $3.7 to $3.75 billion, driven by FX, and full year adjusted EBITDA by $25 million to $715 to $755 million. As a result, we're updating our consolidated guidance for revenues of $8 to $8.17 billion and adjusted EBITDA of $2.99 to $3.09 billion for the full year 2022. Our expectation for consolidated organic growth of flat to up 2% is unchanged for the full year. I'll now hand the call back to Tom Appio for concluding remarks. Thank you, Tom.

As I said, since becoming the CEO, we have four priorities. One, driving sales and EBITDA growth. Two, focusing on operating rigor behind R&D and business development. Three, developing a high-performance results-oriented culture. And four, creating value through strategic alternatives. We have made solid progress this quarter. Our strategy is starting to produce results for Bausch, Farmer, and Solta with three out of our four segments posting organic growth and a very successful debt exchange offer that has created additional flexibility to invest and innovate. We have also made good progress in research and development, which I'd like to touch on briefly today. We continue to invest strategically in R&D to advance our clinical and regulatory programs in GI, hepatology, and other key areas. One of our new formulations of Rifaximin gained regulatory alignment with various global health authorities on two pivotal phase three trials. Our RED-C program could bring a much-needed treatment to patients living with liver cirrhosis to prevent their first episode of overt hepatic encephalopathy, OHE. This is a much larger population than patients being treated with the current formulation of rifaximin for OHE. This product would be a global franchise for Salix. Findings published in our second liver trends report this past quarter highlighted the urgent needs in this area. Our research finds that 81% of the respondents believe preventing the reoccurrence of liver disease symptoms is extremely important, and yet 51% of primary care physicians surveyed were uncomfortable treating OHE. We will continue to increase our efforts to educate medical practitioners and prove both the diagnosis of HE and patient adherence. We expect the recent approval of the new ICD-10 code for HE will support the continued reimbursement for and access to treatment of this life-threatening condition. In conclusion, we will continue to drive growth profitability, and improve our balance sheet. We will continue to vigorously defend our intellectual property and address patient needs with Zyfaxan. We will continue to evaluate potential options to maximize value for all our stakeholders. I'd like to thank the Bausch Health team for all their hard work, focus, and dedication in driving performance and building a results-oriented culture. As I have stated before, we are a resilient team, motivated, working with a sense of urgency and ownership, and we will remain focused as we execute with excellence to drive performance. With that, we will now take any questions you will have. Operator, please open the line for Q&A.

Certainly. Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time. We do ask that while posing your question, please pick up your handset, if you're listening on speakerphone, to provide optimum sound quality. We do ask that all Q&A participants please limit to one question and one follow-up. Once again, if you have any questions or comments, please press star 1 on your phone. Your first question is coming from Gary Nachman from BMO Capital Markets. Your line is live.

Great. Thanks. Good morning. So first, maybe you could talk at a high level. What are the different options you might have related to the distribution of B&L? Is it all related to achieving the appropriate leverage targets? Have those targets changed at all? How are you thinking about them? And without visibility on the vaccine appeal at this point, Can you actually still do the distribution? Can you affect that? And then secondly, just a follow-up, just Tom, maybe you could talk also at a high level, just the status of potential divestitures. Are you close to anything? Do you feel like discussions have progressed and maybe what the timeframe is for us to hear about something on that front? Thanks.

Okay, Gary, thanks. What I'll do is I'll let Tom Vatica take the first part, and then I'll answer the second part. Tom?

Yeah, hi, Gary. Good morning. Thanks for your question. Look, in terms of options, we continue to consider all options, as you mentioned, criteria being what's going to create value for all our stakeholders, and so we're focused on that, and then also what would position the company for long-term success. I think you've seen already this year that we've been quite thoughtful in the steps we have taken, and we're going to continue to be thoughtful with each action and each step that we're going to take. And so we're not going to comment on this call on individual actions. We're considering everything and taking each step pretty thoughtfully. So that's all we can say about next steps vis-a-vis distribution or unrestricting or anything else on that front?

Yeah, Gary, on the question on divestitures, I continue and the team continues to look at the assets that we have globally and seeing what we have, what we can do. So it's something that we're viewing constantly. And then, of course, we have a lot of valuable assets and if there was a divestiture, it would have to be at a premium price. But that's something that we continue to look at because if we were able to divest some assets, we do have some things that we're very interested in from an investment standpoint or paying down debt.

Next question. Your next question is coming from Georgi Yordanov from Cowan. Your line is live.

Hey, thank you so much for taking our question. So we have one and I guess a follow-up. Just on a follow-up on the previous question, can you confirm that at this point you've satisfied all the debt covenant requirements to allow for the spin? And what is your updated thinking on the previously guided optimal leverage ratios? And then just as a follow-up, do you have any updates on the citizen's petition? And if you can talk about what those bioequivalence guidance might look like. Are there any examples that the FDA has required for other generic products in a similar product-specific guidance?

Okay. So, Giorgi, I'll let Tom take the first part, and I'll take the second part.

Giorgi, thanks. In terms of criteria for SPIN, as we've said before, there are certain leverage targets that the company, we've set for ourselves, as well as various regulatory and other approvals and steps that we've got to take. So we are considering all of those and not just leverage targets. Obviously, the debt exchange is nice progress, as Tom said and I've said in our prepared remarks. But at this point, we have no further comments on whether or not we're closer to a spin.

Regarding the second part of the question, regarding the citizen's petition, right now the FDA granted Bausch's petition in part and intends to revise the Xifax product-specific guidance, but as of right now have not issued the actual guidance yet.

Next question.

Thank you. Your next question is coming from David Amselem from Piper Sandler. Your line is live.

Hey, guys. This is Isaac on for David. Thanks so much for taking our questions. Two for me. So on Xifaxan, We saw the tentative approval for allergens generic of the 200 milligram strength about, you know, a month or two ago. And it looks like the agency went ahead with their decision without updating the draft guidance. So, you know, how does that dynamic alter your thinking about a potential label carbon out for the HG indication? And then as a follow-up, this one is actually commercially. what is your ability to, you know, invest more, you know, given the state of the capital structure or, you know, should we at this point think Syfaxon as a largely mature asset that you're going to just manage and maximize the cash flows out of? Thanks so much.

Okay, I'll take those two questions. You know, firstly, you know, on the 200 milligram, No, I can't speculate on this time regarding that question. What I would say is let's just talk about the facts and what I believe and the team believes we have. We have a great asset here in two very important indications. If you take a look at the incidence of these diseases, clearly we have a lot of area for growth. And if I just take a look from an IBSD perspective, 2.5 million patients are diagnosed with IBSD, but only 140,000 are treated with second-line medication like Xifaxin. So there's a lot of area there to grow. We are investing this year and next year Our plan is to continue and to put more investment behind this franchise. When we take a look at HE, our analytics indicate that there's about 193,000 patients potentially have HE, and only 50,000 are treated with ifaxan, which is the standard of care and the only approved medication in this indication. I believe there is a lot of space there to continue to grow this franchise, and we put extra investment in the Xifaxian franchise for 2022, and we are expecting to increase that investment in 2023. So I think as we look at it, this is a really core franchise for us that we can continue to grow. Next question.

Thank you. Your next question is coming from Umar Rafat from Evercore. Your line is live.

Hi, guys. Sorry. Thanks for taking my question. A couple of quick ones, if I may. Number one, you mentioned you're evaluating numerous options to maximizing shareholder value. Could SOLTA be on the table? And then also, if you could remind us if a shareholder approval is needed for SPIN to go through on BLCO. Thank you.

Hey, Omar. Thanks for the question. Okay. So, of course, the Solta franchise, I believe, is, again, another great asset that we have. As, you know, now that, you know, again, with it part of the Bausch Health family of assets gives us a global footprint around the world. I think this is an asset that we can continue to grow, can continue to invest in, but, you know, keep all options open. But, again, as I stated previously, you know, any type of action that we would take with our assets would have to be, especially an asset like Solta, at a premium price. So, you know, again, we always were open to looking at different things, but we believe this asset can really grow for us and really be part of the Bausch Health family. So, Tom, you want to take the second part of the question regarding shareholder approval?

Yes, indeed, shareholder approval is required for the B&O SPIN.

Next question?

Certainly. Your next question is coming from Annabelle Samimi from Stifel. Your line is live.

Hi, this is Jack calling in for Annabelle. Thanks for taking our question. So you touched on HE briefly, but would you be able to provide any additional color on any updates for some of the other rifaximin programs and which of the several you have going might have the potential to offer a future offset to xifaxin revenues?

Yeah, Jack, as I said in my prepared remarks, when I look at the Red Sea program, I think that this is an area where This is a much larger patient population, and so this indication and the work that's going on here is a much larger pool. So we believe that this program can really be a growth driver for us in the future. Of course, we have to wait and see on the data, but the Red Sea program is a high priority for us, and we really believe in it.

Next question. Certainly. Your next question is coming from Greg Frazier from Truist Securities. Your line is live.

Morning, folks. Thanks for taking the questions. On the B&L spin, are the IRS disputes and the remaining legacy legal cases factors that could influence the process? I guess, do you need visibility on those in order to move forward? And then on working capital, can you just comment further on the quarter? You mentioned that changes in working capital impacted cash flow from ops. Any additional color there would be helpful. Thank you.

Hi, Greg. Tom Vatiketh here. I'll take both. So on the working capital, it's nothing unusual really that goes beyond what occurs at most companies. It's hard to predict and have an even cash flow pattern throughout the year. And we've just had just working capital movements moving cash in and out of the quarter. And so Q2 and Q3 have been particularly low, as you know. And so this year, we're going to end up with this sort of barbell year where we had pretty nice cash flow in Q1, and then we expect Q4 to be pretty strong as well. And then on the legacy, I think you mentioned you meant the IRS litigation, correct, Greg?

The IRS and the measure holders lawsuits that still remain valid.

Yeah, like I said at the beginning, and Tom's also said, we are evaluating all the factors and then evaluating all the options and trying to very carefully step forward and take actions and steps that are in the best interest and beneficial for the company as well as our stakeholders. So all of these factors kind of play into that decision-making process, as they have been really, frankly, for the last few years.

Next question? Certainly. Your next question is coming from Douglas Mame from RBC Capital Markets. Your line is live.

Thank you. Good morning. Two questions. Number one, can you talk about turnover at the company and how things are looking from that perspective? And then secondly, for Tom, when we think about the debt covenant construct and where the hold cost sits, which is outside of that, leverage ratios would appear to be below or at the 6.5 to 6.7. Could you elaborate on how you're viewing the billion that's held within the holdco? Thank you.

Douglas, I'll take the first part and then Tom will take the second part. If we take a look at, you know, since the IPO of B&L, you know, there's been a lot of, you know, of course, changes in the company. And then as we went through the year, you know, with, you know, the normal course that we see on turnover in the sales force is pretty much what has been tracking for the previous years, you know, Again, there can be spikes at times as we look at it, but we haven't seen turnover above what was in prior years. When we look at what our policies are in terms of returning to work post-COVID, we have been really putting some things in place there that give our employees optionality of how they want to work. So that has helped. Also, we have, you know, restacked our global headquarters. So we now are separated between Bausch Pharma and Solta and, of course, then BNL. So we're seeing stabilization. And, of course, as you know, with what is taking place, you know, globally from a workforce perspective, there are some movements around. But, you know, right now, we're seeing it pretty stable in that regard, other than some spikes here and there. Tom, you want to take the second part?

Yeah. Hi, Doug. Good morning. Let me just take the second part of the equation in pieces. So I think first, just around the covenant and our credit agreements, the debt, the $1 billion that is at that whole core level, that is an unrestricted subsidiary. And so I don't want to, you know, I'll get into trouble with my legal team if I try and attempt to interpret our agreements. But I can tell you briefly that that debt is not part of our, would not count, you know, in the covenants basically and any leverage ratios that we are calculating in accordance with the covenants. On the 6.5 to 6.7, I'll remind you that that was a company target. and a leverage ratio that we had set out for ourselves to ensure that the remaining company is financially strong. And so we have never said, you know, we're not said how that's going to be calculated. And I don't, you know, I don't want to, you know, speculate on whether we are at that level or not. The debt, the $1 billion is the debt of the consolidated company, you know, and I just leave it at that. Next question.

Thank you. Your next question is coming from Rishi Parekh from JP Morgan. Your line is live.

How are you doing? Thanks for taking my question. So I have two. One, you've noted in the past that you would consider all options as it relates to the SPIN. Do any of these options include just not moving forward with the SPIN or are you at the point where the SPIN is happening and it's just about market timing and meeting covenant requirements? And my follow-up as it relates to the requirements, you're below the leverage target. I believe you're at or near your interest coverage target. And then as it relates to that 50% equity that you own, what's holding you back from unrestricting that? Is it the litigation? Does it have to do with the Canadian approval process? Anything with the solvency opinions? Can you just walk us through just what's remaining and what's holding you back? And then in constructing that 50%, spinoff, will it move to the unrestricted sub that you created back in August? Thank you.

Okay, Rishi, I will take the first part. Tom will take the second part. So, you know, in the first part of your question, so, you know, what I said in my prepared remarks, you know, we continue to evaluate all relevant factors, you know, and considerations regarding, you know, the Bausch and Lomb distribution. You know, this includes, you know, looking at, you know, of course, the Zyfax and patent situation, you know, and we're focused on doing everything that we can to continue improving the company's balance sheet and liquidity. So, you know, we, you know, again, we have identified, you know, you know, potential options and paths that we believe could reach, you know, the objectives. You know, we... We still think the spin-off makes strategic sense, but we're considering everything given the situation that we have today. Tom, you want to take the second part?

Yeah. Hi, Rishi. I think Tom sort of addressed the second part of your question as well. The unrestricting is just a step. I don't view it as some end in itself. It's a step towards our overall strategic path here towards the separation of the company. And so in doing that, in deciding to unrestrict or not, we are, as Tom said, looking at all the options. We're trying to be very thoughtful about each step we're taking. And we haven't unrestricted B&L yet. And I'll leave it at that.

Next question. Thank you. Our last question is coming from Jason Gerbery from Bank of America Securities. Your line is live.

Hi, this is Chi for Jason. Thanks for taking the questions. So maybe on Syfex, I'm wondering if you can elaborate on the price and volume dynamic this quarter. I think coming out of COVID, IBSD was a little slower to pick up. So I'm wondering if you can talk about the underlying growth dynamics between the IVF, D&HD indications. And I guess on SALTA, you know, can you talk a little, elaborate a bit more on the growth dynamics, your 4% organic growth? Do you think this segment has returned to more normalized growth? And if not, when might you expect this segment to return to more normalized growth? And I hate to squeeze that last one in, but I know you can't talk a lot more about what you have done, what you already have with the distribution, but I'm curious, backwards previous talk about potential timing for a spin. And I'm wondering, do you guys have an internal estimate of what that timeline might be? Thank you.

So let's, we'll break this question down. So I'll take the one on Solta first. You know, when we look at the growth, you know, when we look at Asia pack, which is a big part of our business, you know, as Asia pack returns to normal post COVID, with the lockdowns in China somewhat coming back to normalize levels. Again, this growth dynamic, I think this business can get back on the trajectory of good growth. We have a lot of areas where we can continue to invest in driving the performance. Clearly, we do have in China regulatory conditions hurdles that we have to overcome, which is ongoing work. But as we look at what this business, what it can do around the world globally, we see really good things ahead. We look at our European business. Clearly, COVID impacted our investments there and our build-out of Solta. So there's a really great opportunity to accelerate that build-out that we had planned for but was delayed due to COVID. So from a SOLTRER perspective, I think this is a really great asset. We have great products, and we have some really good work going on on the R&D front as we continue to innovate in this area. What I'll do is I'll pass your second part of the question to Tom regarding the distribution timing and the Xifax and underlying performance.

Yeah, I'll start with distribution timing. As we've said several times on this call, we are not really going to comment on our next steps, and so I'll leave it at that. On Xifax and on Salix in particular, just to remind us, our organic growth for the for the quarter was 3%, and that was predominantly price that's coming through. So we took pricing actions at the beginning of the year, and we're seeing most of that stick, which is great. On the volume side, as I mentioned, we've seen an uptick in prescription growth in the back half of the quarter, TRX growth for the full quarter, quarter was basically flat, but we're excited by the growth that we saw in the last part of the quarter. That was coming across both indications. But that growth then was offset by a drop in, or at least we're seeing, we think, a drop in retail inventory of about $13 million, which I mentioned in my comments. And so volume growth was negative during the quarter.

Okay, so we don't have any more questions, so we'll end the conference call here. What I'd like to say, thank you very much to everybody who joined today. Really appreciate the time that you took to spend with us and look forward to continuing the dialogue as we move forward with building and growing this company. Thank you.

Thank you, ladies and gentlemen. This concludes today's event. You may disconnect at this time and have a wonderful day.