Bausch Health Companies Inc.

Welcome to the Bausch Health Third Quarter 2024 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 would now like to turn the conference over to your host, Garen Sarathyan, Investor Relations at Bausch. You may begin.

Good afternoon, and welcome to Bausch Health's third quarter 2024 earnings conference call. Participating in today's call are Thomas Appio, Chief Executive Officer of Bausch Health, and JJ Charon, 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 pages 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 statement. Please refer to our SEC filings and our filings with the Canadian Securities Administrators for a list of some of the risk factors that could cause our actual results to differ materially from our expectations. We use non-GAAP financial measures to help investors understand our operating 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 pages 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, Wednesday, October 30th, will focus on Bosch Health, excluding Bosch alum. However, we will briefly comment on Bosch alum's results announced this morning. 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. Tom? Thank you, Garen.

and welcome to everyone joining our earnings call today. In the third quarter, we continue the momentum that we started in early 2023, executing against our strategic priorities while maintaining our focus on patient-centered outcomes. I am pleased to share that we delivered a sixth consecutive quarter of year-over-year growth in revenue and in adjusted EBITDA. While JJ will talk in more detail about our financial results, I will touch briefly on our performance. Revenues for Bausch Health, excluding Bausch & Lomb, increased 7% on a reported basis and 8% on an organic basis when compared to the third quarter of 2023, with organic growth in all segments. Adjusted EBITDA for Bausch Health, excluding Bausch & Lomb, increased by approximately 9%, compared to the prior year period. Therefore, we are raising Bausch Health's full year 2024 guidance, excluding Bausch and Long, across multiple matrix, including revenue, adjusted EBITDA, and adjusted operating cash flow. Moving on to page six, we had a strong quarter, underscoring the success of the strategic initiatives We not only delivered strong financial outcomes, but we made significant strides in meeting our 2024 objectives. Sustained growth remains one of our key strategic priorities, and we are pleased to continue to deliver in this area across segments and geographies. All segments delivered revenue growth on both reported and organic basis. Within our salix segment, Xifaxin had a strong performance with 7% growth over the third quarter of 2023, and we continue to see further opportunities for growth. This past Monday, I attended the annual conference held by the American College of Gastroenterology. A new abstract was presented based on results of two randomized Xifaxin trials, which concluded that Xifaxin monotherapy is more effective than lactulose monotherapy for reducing the risk of overt hepatic encephalopathy, OHE, recurrence, and all-cause mortality. These insights reinforce our commitment to ensuring that Xifaxan is prescribed for all patients that meet the criteria for treatment. Our broad portfolio in our international segment continues to deliver with 8% organic growth this quarter. For example, in Canada, we have seen broad and sustained growth trends, particularly in our promoted portfolio products, including Contrate, which competes in the chronic weight management market by reducing hunger cravings for adults and achieves strong double-digit growth. Regarding our diversified segment, the launch of Captrio has delivered to our expectations and we continue to see the benefits of our strategy to improve profitability of Welbutrin and Aplenzin even at lower script volumes. Solta delivered another strong quarter with 36% organic growth year over year with particular strength in South Korea and China. We are continuing to capitalize on Korea's growth momentum by investing in additional sales and marketing resources. We saw especially strong consumer demand in South Korea this year generated by our investment in direct consumer marketing. We also launched Clear and Brilliant Touch, which is a fractionated laser device for skin rejuvenation in the Philippines during the quarter. This is now our third new market outside the United States that clear and brilliant touch has entered this year, with additional new markets targeted for upcoming quarters. In addition to growth, another strategic priority is innovation, where our R&D efforts are well underway. Over the past several years, Bausch Health has been a leader in the liver space. Through our extensive work with multidisciplinary thought leaders, liver experts, and patients, we have learned as many as 4.5 million people are diagnosed with cirrhosis in the United States and many more worldwide. There are no therapies approved in cirrhotic patients to prevent the most serious form of the disease, decompensated cirrhosis. Hospitalizations due to this disease cost the healthcare system billions of dollars each year, with HE as one of the biggest drivers of hospitalizations. Our Red C program for our solid soluble dispersion, SSD, Rifaximin product continues as planned. The Red C program is studying a unique form of Rifaximin inclusive of different dosing and different delivery in a unique patient population, compensated cirrhosis. Both global studies are fully enrolled and progressing on track. We have begun building our internal commercial team that will prepare us to bring this important innovation to market if or when the product is approved. Let me remind you that this is a global opportunity for Bausch Health and may enable us to address an unmet need through a novel therapy to cirrhotic patients around the globe. So this is an exciting opportunity, and I will be providing updates on future calls. We also continue to promote operational innovation within our organization. You may recall that in the third quarter of last year, we discussed the launch of an AI-driven customer engagement initiative for Xifaxin to maximize sales effectiveness within our GI business, Salix. Since the launch over 12 months ago, we have transformed our approach to Salesforce planning for Zyfaxan through dynamic healthcare provider targeting and messaging. This AI-enabled customer insights engine is helping our representatives deliver the right message to the right healthcare provider at the right time to further accelerate Xifaxian growth. Our sales teams has embraced our AI engine with adoption rates maximizing our investment. Improved efficiency and operational execution is another strategic priority to ensure that the process behind other priorities growth innovation are sustainable. A core Bausch Health capability is our agile pharmaceutical manufacturing process and supply chain management. In the third quarter, we demonstrated this capability by opportunistically fulfilling short-term market supply needs with Cardizem in the United States and Wellbutrin in Canada. Of course, none of this can be achieved without our prioritization of the people who make up our organization. with a results-oriented culture of accountability. JJ and I have had the opportunity recently to visit with our talented and dedicated teams across the United States, Latin America, Europe, and the Asia-Pacific region, where there is a clear sense of excitement and opportunity for Bausch Health. This engagement allows us to reinforce our values and vision while fostering a culture of collaboration where employees, regardless of location, feel heard and connected. Most importantly, on-site visits allow me to better understand regional challenges and market-specific dynamics and provide a platform to align on our objectives and where I can help the teams to achieve our goals. We look forward to updating you on further progress towards our strategic priorities in the quarters to come. Now turning to updates on the litigation front. A trial date was set for September 4th in one of the remaining federal securities opt-out cases. However, prior to the commencement of the trial, the parties reached a mutually acceptable settlement, so the trial did not proceed. There are currently no other trial dates pending. Regarding Xifaxan, the Hatch Waxman's litigation continues against ANDA filings for generic Rifaximin 550-milligram tablets. We received three new paragraph 4 certifications against Rifaxin 550-milligram since we last provided an update, which is not unexpected. Notably, the patents we now assert and intend to assert against Rifaxin ANDAs are different from those adjudicated in earlier litigation. We will continue to vigorously defend our intellectual property. On the Granite Trust matter, we continue to expect the settlement with the IRS to be finalized in the coming months. While the process has taken longer than anticipated, we have not changed our expectation that the anticipated settlement outcome will not have a material impact on the company's overall financial results or cash flows. I want to touch on recent market speculation that has attracted some attention. As JJ will elaborate in his prepared remarks, we have levers for value creation. This quarter demonstrated our ability to continue generating value from our portfolio of assets as I touched on earlier. We have also consistently stated that the full separation of Bausch and Lomb continues to be a strategic priority. We continue to evaluate strategies with the objective of ensuring that any transaction results in two appropriately capitalized companies. This remains the same today. While we are unable to comment on any speculation, it is important to note that maximizing the value of our Bausch & Lomb ownership stake has been, is, and will remain a priority. Once again, Bausch Health's third quarter results reflect our continued execution on our growth strategies as we make targeted investments and expand the breadth of our patient solutions through advancing our pipeline and leveraging our commercial assets. And to further emphasize people as a strategic priority, I am very pleased to welcome our new Chief Financial Officer, J.J. Sharon, to the Bausch Health team. He is a seasoned executive who we are very excited to have on board, and we will now provide additional commentary on our financial results.