Bausch Health Companies Inc.

Greetings. Welcome to the Bosch Health third 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. Please note this conference is being recorded. I will now like to turn the conference over to your host, Lisa Wilson. You may begin.

Good morning and welcome to Bausch Health's Third Quarter 2023 Earnings Conference Call. This is Lisa Wilson, Investor Relations for Bausch Health. Participating in today's call are Thomas Appio, Chief Executive Officer of Bausch Health, and John Barresi, Interim 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 disclaimer at the beginning of the slides that accompany this presentation as it contains 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 November 2, 2023. With that, it is my pleasure to turn the call over to our CEO, Thomas Appio. Tom?

Thank you, Lisa, and welcome to those of you joining the call this morning. At Bausch Health, our team is focused on enriching lives through our relentless drive to create better health outcomes for our patients and the physicians who treat them. The BHC team is tirelessly dedicated to business performance, driving results, and progressing our key strategic objectives. We continue to demonstrate this commitment in the third quarter. Let me share some highlights. Turning to slide six, from a performance standpoint, we had another solid quarter with revenues for Bausch Health excluding B&L of $1.23 billion, up $127 million or 12% on a reported basis and 10% on an organic basis. I am pleased to share that each of our four segments posted revenue growth in the quarter, which we will discuss in more detail later. We continue to progress our R&D pipeline. On October 20, we received FDA approval for IDP-126, now branded as Captrio. We continue to defend our intellectual property rights for Xifaxin. The consolidated appeals of the Delaware Court's ruling are ongoing at the Court of Appeals for the Federal District Circuit. Briefing is now complete and we are awaiting a date for oral argument. We expect a decision by the end of Q1 2024 and remain confident in our position. With regard to Norwich's lawsuit against the FDA in the D.C. District Court where Norwich was seeking immediate approval of their ANDA, oral argument was held on October 6, 2023. On November 1, the Court denied Norwich's motion and granted summary judgment in favor of the FDA and Salix. We are fully committed to vigorously defend our intellectual property and providing healthcare providers and patients with safe and effective treatment options. We also continue to evaluate strategies regarding the potential full separation of Bausch Long, which I will discuss later. And in the meantime, we remain focused on managing our balance sheet. We reduced our debt net of cash by approximately $150 million in the quarter. And lastly, now that we are three quarters of the way through 2023, we are updating our guidance for BHC, excluding B&L, to a narrower band within our previously disclosed ranges. Let me now start by sharing some of our business performance highlights as shown on slide seven. This quarter, all of our Bausch Health segments delivered revenue growth year over year, with Salix International and Salta Medical growing by double digits on a reported basis. Let us take each segment in turn. Salix. Q3 net sales for Salix grew 13% on both a reported and organic basis. While about half of the growth in the quarter was a result of wholesaler stocking patterns, we are encouraged by continued underlying growth in this segment, including for Trulance and Relastore. And building on the plan we laid out last year, we are continuing to focus our commercial investments in sales and marketing to spread awareness of the underlying medical conditions and the options that are available to treat these conditions. You may have seen our recent press release announcing our partnership with Bellamy Young, who is speaking out to help educate patients, families, and caregivers impacted by hepatic encephalopathy, also known as H8. These efforts reflect our commitment to driving long-term profitable growth in this important franchise. Turning to international, revenues grew by 10% on a reported basis in the third quarter and 4% on an organic basis, led by strong performances in Latin America and Poland. In SALTA Medical, revenues increased by 15% on a reported basis and 17% on an organic basis. reflecting strong growth in the Asia-Pacific region, including China, and low single-digit growth in the U.S. market. Notably, more than 70% of SALTA revenues are generated from consumable sales, representing an attractive and very durable business profile where we see significant opportunity for long-term growth. Efforts are underway to accelerate growth in our largest markets, expand our sales teams in the U.S. and Europe, and advance our pipeline of new market authorizations and next-generation products. Our Solta team is focused on continuing to build a world-class aesthetics business. Turning to diversified, revenues increased by 9% on both a reported and organic basis in the quarter. Our neurology and generic units reported growth in Q3 as both businesses benefited from their ability to address short-term supply disruptions that arose in the market. While we are obviously pleased with this performance, the continuation of these tailwinds is uncertain. In particular, the neurology and dermatology businesses continue to face long-term challenges. These businesses are highly profitable and cash generative, and we continue to look for opportunities to make targeted investments where appropriate. In neurology, we are excited about our recently launched marketing campaign for aplenzin, focused on seasonal affective disorder, also known as SAD. In dermatology, we continue to focus on building consumer awareness for jubilee And as I mentioned earlier, on October 20th, we received FDA approval of Cabtrio. We are looking forward to providing patients with this innovative product beginning in 2024. In the third quarter, dentistry revenues declined slightly, ending down 4% year over year after posting solid growth in the first two quarters of the year. We expect dentistry to return to growth as we begin to benefit from the investments we have made, increasing consumer awareness efforts for Arrestin, including our Cover Your Basis campaign in collaboration with Alex Rodriguez to raise awareness about the prevalence and the impact of gum disease. We have also strategically deployed our sales team with greater focus on each of the two customer segments, the dental support organizations and private practice dentists. We are pleased with the strong performance of our business in the third quarter. We have also continued to focus on the other areas of strategic importance since our last call. You will recall that in January of this year, we had reached a tentative settlement with the IRS to resolve the Granite Trust matter. We expect the settlement to be finalized in the coming months. As we have previously said, the anticipated outcome of the settlement does not have a material impact on the company's results or cash flows. We continue to believe that the separation of B&L makes strategic sense. Any decision regarding if and when a distribution occurs or its structure will be based on and subject to any assessment of all the relevant factors and circumstances. Any potential distribution will also be subject to shareholder and other applicable approvals. In the meantime, we continue our focus on managing our balance sheet and growing our business for the long term. To that end, we finished the quarter with more than $1 billion of liquidity. Let me now briefly cover the recent progress we have made advancing our pipeline, as shown on slide 8. Starting with our SALIX pipeline, Our RED-C program for rifaximin for reduction of early decompensation in cirrhosis continues to advance. This global program is focused on developing novel formulations and assessing the efficacy of rifaximin SSD formulation versus placebo to delay the occurrence of HE-related hospitalizations. We expect a complete enrollment of two global Phase III trials, with approximately 1,000 patients across the major markets of North America, Europe, and Asia Pacific in the first quarter of 2024. Bramacillomod, a new oral-selective S1P receptor modulator that targets the treatment of mild to moderate ulcerative colitis. The Phase II study completed enrollment in July of this year. This is a large phase two study with over 300 patients in 19 countries. And the induction phase of this study is expected to be completed in the fourth quarter. In dermatology, we are pleased that the FDA approved Captrio, the brand name for IDP-126, indicated for the treatment of acne vulgaris in patients 12 years of age and older. Captrio is the first and only FDA approved fixed-dose triple-combination topical medication for acne. We are excited to bring this product to the millions of patients who suffer from acne each year. Captrio has the potential not only to simplify dosing with a once-daily topical regime, but also to improve patient outcomes. Captrio utilizes three mechanisms of action to treat acne, combining an antibiotic, antibacterial, and retinoid to provide a novel, effective, and tolerable treatment that addresses three of the four pathogenic factors that cause acne. We expect to launch CAB TRIO in the United States in the first quarter of 2024. We have also submitted CAB TRIO for approval with Health Canada and expect to be poised for launch of CAB TRIO in Canada in the second half of 2024. Our SALTA pipeline is very active as well. Our FDA submission for our Next Generation Fraxel, a fractionated laser device for skin resurfacing, is planned for the first quarter of 2024 with approval expected sometime in the first half of next year. Our program for Clear and Brilliant Touch, a fractionated laser device for skin rejuvenation, is also advancing with regulatory submissions planned in 2024 for Europe, Canada, and Asia Pacific markets. As a leadership team, we remain committed to driving growth through commercial excellence, intensifying our focus on business development, and expanding and progressing our pipeline, all with a patient-centered mentality. With that, I would like to turn the call over to John Baresse, who will provide further details on our third quarter performance.