Bausch Health Companies Inc.

Good morning, and welcome to Bausch Health's fourth quarter 2022 earnings conference 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. If you would like to enter the queue at any time, you may press star 1. Should you wish to exit the queue, you may press star 2. It is now my pleasure to turn the floor over to Judy DiClemente, Judy, the floor is yours.

Thank you, Tom. Good morning, and welcome to Bausch Health's fourth quarter 2022 earnings conference call. This is Judy DiClemente, Investor Relations for Bausch Health. Participating in today's call are Thomas 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 would 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 those expressed or implied in our forward-looking statements, and you should not place undue reliance on any forward-looking statements. Please refer to our SEC filings and filings with the Canadian Securities Administrators for a list of some of the factors that could cause our actual results to differ materially from our 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 Vouch Health, excluding B&L. However, we will briefly comment on Vouch and Loan's results announced yesterday. We will refer to year-over-year comparisons with the same period last year, unless otherwise noted. For the benefit of those who may be listening to the replay or archived webcast, This call is held and recorded on February 23, 2023. With that, it is my pleasure to turn the call over to our CEO, Thomas Affio. Thomas?

Thank you, Judy, and welcome to those of you joining the call today. Nine months after our new management team took over Bausch Health, I am proud to report the progress we have made. We met guidance for the full year 2022, delivering the revenue of 4.36 billion and EBITDA of 2.32 billion for Bausch Health, excluding BNL. However, revenue and EBITDA declined during 2022. And as I have said in prior calls, my team and I are committed to delivering revenue and EBITDA growth as we go forward. I am pleased with the momentum we saw in the fourth quarter with revenue for Bausch Health, excluding BNL, up 2% on an organic basis, driven by growth in our Salix, Salta, and international businesses. We believe this encouraging top-line performance provides a solid foundation for 2023. Second, we continue to make progress on our strategic alternatives, improving our balance sheet, debt, principal, net of unrestricted cash for Bausch Health, excluding B&L, has now been reduced by $3.2 billion since the IPO of Bausch & Lomb in May of 2022. We have also continued to work to resolve several legacy matters and will continuously vigorously defend our intellectual property. Third, given our momentum, we are providing a solid 2023 outlook which are confident will create long-term value for stakeholders. Let me now take you through some specifics. Starting on slide seven, I am pleased to report that we're making progress in the performance of our business segments. One, the Salix business had organic revenue growth of 4% in the fourth quarter, with encouraging ZyFaction script growth in all channels other than the long-term care channel, which Tom Vatikath will touch on later in this call. Our targeted commercial strategies and initiatives to improve diagnosis and treatment of GI and liver disease continue to drive results. The Salix business has shown momentum after declining 2% organically in the first half of the year. It grew 4% in the second half of the year, resulting in a 1% growth for the full year. Other key promoted brands also saw increased scripts, led by double-digit growth for Relastor and Plenview, and mid-single-digit growth for Trulance. For international, we continued to grow key markets, such as Poland, Mexico, and Canada, with existing brands and new products. The international business posted 2% organic growth in the quarter, resulting in a healthy 5% increase for the year on an organic basis. In salt and medical, sales grew organically by 20% in the quarter, resulting in 2% organic growth for the full year. Our Asia-Pacific business outside of China has been strong, with consistent growth throughout the year. Our business in China continued to recover after the COVID lockdowns in the second quarter and posted strong growth in the fourth quarter. In diversified, Sales for the segment declined by 6% on an organic basis in the quarter and by 13% for the full year. While EBITDA margins for the year remain stable relative to last year, the business has been impacted by generic competition and we are focused on stabilizing the business within the diversified segment. Both our dermatology and dentistry business units showed strong organic growth for the quarter Julia script growth increased by 23% for the quarter turning to slide eight. Let me make a few comments about the progress we have made along the strategic alternative pathway that we started back in 2020. As you know, we completed the IPO of Bausch and Lomb in May of 2022. Since then, we have made progress in delivering our balance sheet during the fourth quarter. we executed an additional open market repurchase, which with previous open market repurchases we made throughout the year and with the successful debt exchange we closed in Q3, enable us to reduce our net debt by 3.2 billion. We have also further reduced our debt maturities in 2025 and 2026. This has strengthened the company's financial position created stakeholder value, and increased our flexibility to capitalize on opportunities as we move forward. We continue to evaluate potential options to maximize stakeholder value. The significant reduction in debt since the B&L IPO has enabled us to achieve the financial matrix required under our debt documents to unrestrict Bausch & Lomb, which we did in the fourth quarter. Furthermore, as it relates to Bausch and Lomb separation, our effective efforts to implement transactions to further strengthen our balance sheet have resulted in us achieving our own 6.5 to 6.7x net leverage targets, excluding the $1 billion of non-recourse debt held by the unrestricted subsidiary, which is collateralized by a portion of B&L shares. We continue to believe the separation of Bausch and Lomb makes strategic sense. We remain committed to creating two strong companies and therefore to ensuring the financial stability of both companies on a standalone basis. In addition, as previously discussed, there remain a number of steps that need to be completed to achieve full separation, including the receipt of shareholder and other necessary approvals. So we continually believe to thoughtfully evaluate all relevant factors related to the B&L separation. In the meantime, we remain focused on commercial performance and improving our operating results, reinforcing a solid foundation for the future. Lastly, we continue to make progress on several other matters. With regard to the Granite Trust, we are pleased to have had a productive engagement with the IRS, We applied for fast track mediation in January of this year. We reached a tentative settlement with the IRS to resolve the matter. Although the settlement is subject to further review and approvals before it is finalized, we do not expect the outcome will have a material impact on the company's full year results or cash flows. Our cash flow guidance for 2023 reflects the potential impact of this matter. Let me make a few comments with respect to the Zyfaxin litigation. As we have previously disclosed on August 10th, 2022, the court issued a decision in our dispute with Norwich finding certain Zyfaxin 550, Empatic Encephalopathy, HE, patents valid and infringed and certain Zyfaxin composition and IBSD patent invalid. As we have stated, we disagree with certain portions of the court's decision and have filed an appeal. However, I would like to point out that the court's current decision prevents Norwich Anda from receiving final FDA approval until October of 2029. Since the court's decision was issued, Norwich has advised the court that has sought to remove the HE indication from its ANDA and has filed a motion to modify the final judgment to permit the FDA to approve the ANDA before 2029. We have opposed this motion and await a decision from the court. Separately, the FDA issued an update to the Xifaximin product-specific guidance to remove the opportunity for generics to receive bio-waivers and now requires in vivo bioequivalent studies for Xifaximin 550 On January 31st, the U.S. Patent and Trademark Office issued an additional U.S. patent that protects Xifaxin 550 product for the treatment of IBSD and expires in February 2029. The patent is now orange book listed for the Xifaxin 550 product and further supports our Xifaxin patent portfolio. We remain confident in the strength of the Xifaxan patents. This is all we are prepared to say about the Xifaxan litigation at this time. Before I turn the call over to Tom Vatiketh to discuss our fourth quarter 2022 results and 2023 guidance, I'd like to share on a high level some of the key growth drivers we see for 2023 across our business segments. On slide nine, starting with Salix, We are pleased with the momentum in the second half of 2022, and we believe there is significant opportunity to accelerate the growth of Xifaxin over the next few years. The addressable market for both HE and IBSD is large, and Xifaxin has been endorsed by guidelines and recommended as standard of care for both indications. There are still a large number of patients across HE and IBSD are not receiving the treatment. We are significantly increasing our investment in direct-to-consumer advertising to activate consumers for both IBSD and HE. We are investing in new Salesforce capabilities to enhance effectiveness, leveraging artificial intelligence and machine learning. We are expanding our Salesforce footprint in the industry space to engage with new integrated delivery networks. We are executing a variety of new point-of-sale pharmacy initiatives to improve both the provider and patient access experience. We will continue to work with payers to solidify Xifax's strong value proposition. We also continue to invest in Rifaximin. We have several programs underway in our pipeline, including a global development program for Red Sea for the prevention of the first episode of HE, a complication associated with cirrhosis. We have the global rights for this program, which address unmet needs in a global patient population that is much larger than Xifaxin's current patient population for overt HE. which we only market in the U.S. today. Enrollment in our Phase III clinical trials for Red Sea Program is on track. We are pleased also to receive orphan drug designation for Rifaximin Sickle Cell Disease Program, and enrollments for the Phase II clinical trial for this formulation are ongoing. Finally, in our SALICS pipeline, we are progressing with our large Phase to study for amicillimod for patients suffering with ulcerative colitis UC. Turning to our international business, in Canada, we are focusing our efforts in 2023 on profitable growth in dermatology for acne, atopic dermatitis, psoriasis, and onychomycosis using direct promotion, digital engagement, as well as direct-to-consumer programs. We are leveraging our data management systems to enable more rapid insight generation and enhance understanding of HCP preferences, in turn generating an expanded customized digital offering to our customers. In Europe, we aim to continue to drive strong growth through HCP education, enhance digital engagement, as well as continuous training of our marketing and sales teams. We have several new product launches across the international business, including Realtris for moderate to severe seas allergic rhinitis, Euceris, an aerosol foam for distal ulcerative colitis in Canada. In Latin America, we are launching line extensions for Betajecta and Beniderm in Mexico, and we are driving our expansion into Central America with the launching of existing brands. In Solta Medical, this is a strong, durable business operating in very attractive markets with more than 70% of the revenue coming from consumables. We believe that this business has significant growth potential. We will continue to invest in expanding our presence in key markets, including through broadening the reach of our direct-to-consumer campaigns in the U.S., the geo-expansion of Thermage FLX, and the strengthening of our sales forces in Europe. We are encouraged by the lifting of the COVID lockdowns in China, and we are cautiously optimistic about the recovery in the volume of treatment procedures to pre-COVID levels. For diversified, in our dermatology business, the FDA has accepted our new drug application for IDP-126, the first triple combination product for the treatment of acne vulgaris. We presented findings for IDP-126 at the Innovations in Dermatology Conference in Las Vegas last November and received positive feedback. We are finalizing our plans for the launch of this product as soon as we receive FDA approval. In our neurology business, we will be investing in antidepressant and plensin, including for patients diagnosed with seasonal affective disorder or SAD. And more broadly, we are looking to manage our portfolio of non-promoted products in this business in a more effective and efficient manner. Finally, in dentistry, we reinforced our commercial efforts on our core product, Arrestin. Arrestin is an antibiotic used in the treatment of periodontitis, a condition suffered by large patient population. We saw the benefit of this strategy in 2022 with an acceleration in growth in the second half and expect to see this continue in 2023. As you can see, we have a number of exciting and encouraging programs underway. We are proud of the momentum that this team has built to date, and we continue to make strategic investments to drive revenue growth and build out our R&D pipeline to ultimately bring products to market that serve patient needs. With that, I will turn the call over to Tom Vatikas, who will provide further details on our fourth quarter performance and an outlook for the remainder of the year. Tom.