Bausch Health Companies Inc.

Greetings. Welcome to the Bosch Health second quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, John O'Connor. You may begin.

Good morning, and welcome to Bausch Health's second quarter 2023 earnings conference call. This is John O'Connor, Senior Vice President, Investor Relations for Bausch Health. I recently joined the company a few weeks ago, and I am looking forward to leading the investor relations effort here at Bausch Health. Participating in today's call with me are Tom Appio, Chief Executive Officer of Bausch Health, and Tom Batiketh, Chief Financial Officer. Before we begin, I'd like to remind you that our presentation today contains forward-looking information. We ask that you take a moment to read the forward-looking statements at the beginning of the slides that accompany this presentation, as they contain important information. 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 the slides that accompany this presentation, which are 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 Health, excluding Bausch & Lomb. 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. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on August 3rd, 2023. With that, it is my pleasure to turn the call over to our CEO, Thomas Appio. Tom?

Thank you, John, and welcome to those of you joining the call this morning. At Foush Health, our team is focused on enriching lives and through our relentless drive to create better health outcomes for our patients and physicians. The BHC team is tirelessly dedicated to business performance, delivering results, and progressing key strategic objectives. This dedication was on full display this quarter with a number of highlights that I will touch upon. Turning to slide six, we had a strong quarter with revenues for Bausch Health, excluding B&L, $1.13 billion, up $106 million, or 10% reported and 11% on an organic basis. We received a favorable motion ruling in the Xifaxan litigation, which reinforces our continued investments in the Salix growth strategy. We executed an additional proactive balance sheet initiative that further enhances our liquidity profile. We continue to take thoughtful steps as we evaluate the optimal implementation of a potential Bausch and Long distribution. And we continued to progress our R&D pipeline. Let me start by sharing some of our business performance highlights as shown on slide seven. This quarter, Three out of four non-BNL business segments, Salix, International, and Salta Medical, posted double-digit revenue growth, both on a reported and organic basis. The diversified segments saw a modest decline, an improvement from the last few quarters where we have seen double-digit declines. While neurology and generics remain challenging, we are hopeful that that the actions the team has taken will help temper the pressure on these businesses. Let's take each segment in turn. Salix, Q2 net sales for this segment were 557 million, growing 11% in the quarter. I am pleased to report that the investments we have made in this segment are beginning to pay off. Building on the plan we laid out since I became CEO, We are continuing to increase our commercial investments to higher than historical levels in sales and marketing to drive profitable revenue growth in this segment. I am pleased to share that we have made significant progress in our AI customer engagement initiative. We launched the new AI engine towards Zyfaxan Primary Care Fuel Force Team. The AI engine will help our team to understand how to best address patient needs by engaging with the right physicians at the right time. This initiative is a key part of our strategy to improve customer engagement and drive growth. We believe that AI has the potential to revolutionize the way we interact with our customers, and we are excited to be at the forefront of this transformation. As part of our continued commitment to improve HE, and IBSD patient care, we expanded Xifaxin medical field team. The team is now fully trained and working to educate physicians and improve care for thousands of patients. The expanded MSL team leverages insights from advanced analytic models to understand the largest patient care gaps and engage with physicians to reinforce established treatment guidelines. Finally, We have increased our investment in education efforts targeted to undiagnosed, untreated consumers for both of our approved indications, IBSD and HE. These activation campaigns are currently being deployed across a wide range of media channels, such as connected and addressable TV, as well as many different digital and social media platforms. We believe Xifaxin and other products in our GI portfolio are effective options for healthcare providers that have not yet met their full potential to provide patients with the healthcare they need. Turning to international, revenues grew by 11% in the second quarter of 2023, both on a reported and organic basis led by strong performances in EMEA and Canada. While the quarter's growth did benefit from a favorable comparison to the prior year, we are still pleased with our growth in the international business, which was impacted in the corner by a voluntary recall of our Emirate epi-ephirin auto-injector, which Tom V will cover in more detail. While voluntary in nature, our decision to action the recall was, in our view, the prudent and responsible decision to take. Salta Medical, revenues increased by 54% on a reported and 60% on an organic basis, reflecting strong growth in Asia Pacific region, which included the unfavorable impact related to limited activity in China in Q2 of last year due to COVID lockdowns, while performance in other Asia Pacific markets was also very strong. This quarter, I had the pleasure to visit with our U.S., China, and Hong Kong Solta teams and listen to what they're doing on working to continue to build our aesthetics franchise. The teams are highly motivated and dedicated to deliver results and launch new products as we continue to build a world-class global aesthetics business. More than 70% of SALTA revenues are generated from consumable sales, represent an attractive and very durable business profile where we see significant opportunity for long-term growth. We are actively working to accelerate growth in our largest markets by expanding our sales teams in the US and Europe and advance our pipeline of new market authorizations and new generation products. Turning to diversify. Revenues decreased by 3% on a reported and organic basis in the quarter. Dermatology and dentistry had growth in Q2, which helped moderate the decline in neurology and the generics businesses. As noted last quarter, our intention is to increase our marketing and advertising investments for aplentin in our neurology business and to expand our consumer awareness campaign for Jublia in our dermatology business. For the second quarter, Dentistry revenues grew by 4% year over year, driven by Arrestin. We have restructured our sales force in this business and expanded our consumer awareness efforts for Arrestin to drive growth. I am pleased with our overall business performance in the second quarter. We are increasing our revenue guidance for Bausch Health, excluding B&O for this year, and as always, remain committed to delivering long-term value for stakeholders. In addition to the strong business performance, we had a number of other positive developments in the quarter, turning to slide eight. We shared in May 2023 the positive news that the U.S. District Court of Delaware denied Norwich Pharmaceuticals' motion to modify the court's final judgment and prevent the U.S. FDA from granting final approval for Norwich's andorforzifaxin 550 milligrams before October 2, 2029. You may recall that Norwich filed this motion in order to attempt to get a skinny label approved before October of 2029. Norwich appealed this decision. Norwich appeal is now consolidated with our appeal of the final judgment invalidating the IBSD and the polymorph patents. We remain confident in our position and expect a decision on the consolidated appeals as early as Q1 2024. Following the denial of Norwich's motion to modify the final judgment, the FDA granted tentative approval to Norwich's ANDA for Xifaxin 550, but confirmed that it remains barred from granting final approval until October 2, 2029. Norwich cannot launch its ANDA product until it receives final approval from the FDA. Norwich then sued the FDA in the United States District Court for the District of Columbia. This is a separate lawsuit in a different district court than the court that issued the final judgment. Norwich requested that the DC District Court direct the FDA to grant final approval of the ANDA notwithstanding the Delaware Court's final judgment. The FDA opposed Norwich's action, and we have intervened in this lawsuit. This matter is currently being briefed, and we expect a decision in the fall. We are fully committed to vigorously defending our intellectual property and providing healthcare providers and patients with the safe and effective treatment options that Zyfaxan represents. We continued to be successful in proactively addressing our balance sheet entering into a $600 million non-recourse financing facility with KKR, collateralized by accounts receivable, providing us an additional source of liquidity. We continued to make progress on our efforts to complete the potential distribution of Bausch & Lomb and continue to believe that completing the separation of Bausch & Lomb makes strategic sense. As we continue to evaluate all relevant factors related to any distribution, we are exploring options for optimizing the structure if and when a distribution is completed. Our initial intent was to effectuate a potential distribution by way of plan or arrangement, but we have since determined that the optimal way to implement the distribution may instead be through a tax-free reduction of capital which would provide additional flexibility to the company and Bausch and Lomb. We're continuing to evaluate the structure of any distribution and its other related details, and any distribution continues to be subject to the receipt of applicable shareholder and other required approvals. We are working hard to progress our pipeline, as shown on slide nine. We remain excited about the Red Sea program for Xifaxan for the reduction of early decompensation in cirrhosis. The global program is focused on developing novel formulations to address unmet medical needs. Specifically, the treatment is aimed at presenting the first occurrence of hepatic encephalopathy, HE, for patients with mild cirrhosis. Two global phase three studies are currently underway. Enrollment in these studies is progressing, and we expect enrollment to be completed in both trials in Q1 of 2024. To date, we have completed scientific advisory meetings with the Medicines Evaluation Board in the Netherlands and Health Canada and have received positive feedback on the program from the National Medical Products Administration in China. We are currently planning to meet with the authorities in Japan later this year. As I have noted, these are global programs. For amicillimod, a new oral selective S1P receptor modulator that targets the treatment of mild to moderate ulcerative colitis. The phase two trial completed enrollment in July of this year. In dermatology, we have an upcoming PDUFA date of October 20th, 2023 for our NDA for IDP126. If approved, this will be a first-in-class treatment for the triple combination of acne vulgaris and welcome addition to our established acne portfolio. Our submission in Canada was completed on May 30th of this year. Our SOLTA pipeline is active as well. Our next generation Fraxel, a fractionated laser device for skin resurfacing, remains on track for submission to the FDA later this year with the potential to launch in the first half of 2024. We are excited about the benefits offered by this product, including its effectiveness in fine-lined wrinkles, surface scarring, pigmentation, and age spots. Our Clear and Brilliant Touch program is also advancing. With Europe and Canada submissions planned for 2024, Asia Pacific for 2025, Clear and Brilliant Touch is a fractionated laser device for skin rejuvenation. Our next generation VASER Liposystem, which uses ultrasound energy for aesthetics body contouring, is under development and planned for release in late 2024. Lastly, we are developing several exciting features for Thermage FLX to improve on what is already a leading product in non-invasive skin tightening treatments. Solta is well known for the broad portfolio of products that addresses a range of aesthetic skin and body issues. With continued improvements always in mind, our focus is on providing consumers with aesthetics and therapeutic benefits based on cutting edge technology and our R&D team is hard at work on these innovative next-generation enhancements. As a leadership team, we remain committed to driving profitable growth through commercial excellence, intensifying our focus on business development, expanding and progressing our pipeline, and unlocking the value and potential of our companies. It's been an active and productive quarter for Bausch Health, and we are looking forward to building on the momentum across the board. With that, I will turn the call over to Tom Vatiket, who will provide further details on our second quarter performance. Tom?