Bausch Health Companies Inc.

Greetings. Welcome to the Bosch Health First Quarter 2025 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 turn the conference over to your host, Garen Serafian, Investor Relations at Bosch. You may begin.

Good afternoon, and welcome to Bosch Health First Quarter 2025 Earnings Conference Call. Participating in today's call are Thomas Appio, Chief Executive Officer of Bausch Health, and JJ Chiron, Chief Financial Officer. Before we begin, I would 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 statements. These 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 of our historic non-GAAP measures in the appendix of the pages that accompany this presentation, which are available on Bausch House 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, April 30th, will focus on Bausch House, excluding Bausch and Long, However, we will briefly comment on Bausch & Lomb's results announced this morning. We will refer to year-over-year comparisons with the same period last year unless otherwise noted. With that, I would like to turn the call over to our CEO, Thomas Zappio. Tom?

Thank you, Garen, and welcome to everyone joining our earnings call today. In the first quarter for Bausch Health, excluding Bausch & Lomb, we continued the momentum we had in 2024 and used it strategically to drive further progress. We delivered year-over-year revenue and adjusted EBITDA growth of 6% and 14% versus the prior year respectively. We successfully completed a $7.9 billion refinancing effort in early April to extend near and medium-term maturities. We received a favorable ruling from the DC District Court in Norwich case against the FDA after the quarter closed. And finally, we are maintaining full year 2025 revenue and adjusted EBITDA guidance while updating guidance for adjusted cash flow from operations to reflect higher interest rate expense. JJ will discuss our financial results in more detail shortly. I will start by touching on several financial performance and key business highlights from the first quarter. We started the year off strong, with Bausch Health, excluding Bausch & Lomb, achieving an eighth consecutive quarter of year-over-year revenue and adjusted EBITDA growth. I'm incredibly thankful and grateful of our global team for their hard work and dedication in the current macroeconomic environment. Revenues for Bausch Health, excluding Bausch and Loan, increased 6% on a reported basis and 7% on an organic basis when compared to the first quarter of 2024. Adjusted EBITDA for Bausch Health, excluding Bausch and Loan, increased by approximately 14% compared to the prior year period. As such, we are maintaining our full year 2025 guidance for revenue, and adjusted EBITDA while updating guidance for adjusted operating cash flows to reflect our successful refinancing transaction. And as JJ will touch on in his prepared remarks, we continue to assess the impacts on our business of evolving tariff and trade measures. We also made progress on our objective of optimizing our capital structure. On April 8th, we closed a private offering of senior secured notes due in 2032 and also entered into a new term loan and revolving credit facility maturing in 2030, the proceeds of which we used in large part to retire approximately $6.9 billion of maturities ranging from 2025 into 2028. This transaction extends our maturity runway and provides the company with additional financial flexibility, allowing us to focus on growing our business and maximizing the value creation for our shareholders. Furthermore, we believe that the tremendous demand we saw in the credit markets underscores investors' confidence in both our future performance as well as the long-term value of our assets. Turning to litigation in Norwich. As many of you are aware, the FDA denied final approval of Norwich's second ANDA for generic Rifaximin 550 MG tablets. Following this decision, Norwich sued the FDA in the DC District Court, alleging that the FDA acted improperly by only granting tentative approval to their second ANDA rather than final approval. Norwich asked the DC District Court to find that Teva had forfeited its first filer status for a Faxman 550 and forced the FDA to grant final approval to their second ANDA. We, along with Teva, intervened as defendants in the FDA lawsuit. We are pleased that on April 17th, the DC District Court granted summary judgment in favor of the FDA, Teva, and the company. The D.C. District Court confirmed that the FDA's decision denying final approval of Norwich Andor was not arbitrary, capricious, or contrary to law because Teva had not forfeited its first filer status. We will continue to vigorously defend our intellectual property and are committed to serving our patients as every patient deserves better health outcomes and the chance to make the most of life. Moving on to page six, where I will touch upon segment-specific key financial and operating highlights in the first quarter. The first quarter reflected a solid performance in growth on an organic basis across many of our business segments. Salix grew 6% on an organic basis versus the prior period and continued to deliver strong Xifaxa performance of 8% growth, including 1.5% total retail script growth and strong non-retail extended unit growth of approximately 6%. Salta. trend of strong double-digit growth continued in the first quarter of 2025, with 33% organic revenue growth primarily driven by strong performance in South Korea and China, with year-over-year organic growth of 136 and 30% respectively. Our international segment demonstrated continued resilience, achieving organic revenue growth across Canada, Latin America, and EMEA, with EMEA marking its ninth consecutive quarter of organic revenue growth. Other highlights include Canada's 18% promoted products portfolio growth and 9% growth in EMEA's second largest market, which is comprised of Serbia and Montenegro. And lastly, the diversified segment grew revenue modestly, driven by neurology, and delivered growth in segment profit in part due to disciplined expense management. Now turning to our strategic priorities for 2025. Although we have achieved eight consecutive quarters of growth, we believe the stock price does not reflect the strong performance of the business and the value of the company. Unlocking value is critical. We have continued to deliver strong financial momentum. with revenue and earnings growth across multiple segments to start the year. And we successfully completed the major refinancing initiative mentioned earlier. Yet we are keenly aware that work still needs to be done to unlock shareholder value. Therefore, we remain committed to evaluating all options for unlocking the value of our shares, including maximizing the value of our Bausch Health and voucher loan assets, as well as other possible initiatives, such as share buybacks. Next is growth. With eight consecutive quarters of year-over-year top-line and bottom-line growth, we continue to invest for sales growth and profitability as we expand across segments and geographies. Zyfaxan's 8% growth this quarter was broad in terms of both price and volume. As it relates to volume, growth was generated across both indications, IBSD and OHE. Activating new patients is core to pharmaceutical product growth, and in the first quarter, over 59,000 new patients were started on Zyfaxan. This represents both year-over-year and quarter-over-quarter growth. Our sales force and our media investments drove the growth as we increased our investments in high ROI channels, such as online streaming, connected and addressable TV, and online video. This positioned us to better reach and activate patients, caregivers, and providers as seen with our first quarter results. representing our fifth consecutive quarter of top-line growth in our Salix business. The Xifax and Salesforce continues to become more productive as we fine-tune our AR engine. Our Salesforce today delivers 20% to 30% more calls than we did 18 months ago and to the right targets, a clear indicator of operational momentum. This increased efficiency has enabled us to do more and deploy resources to other strategic investments for the franchise. SALTA also delivered exceptionally strong results with 33% organic revenue growth, including 136% in South Korea and 30% in China in the first quarter. Importantly, growth was further supported by positive results in the United States, Canada, As announced in our recent press release in April at the American Society of Laser Medicine and Surgery 2025 Annual Conference, we launched Next Generation Fraxel called Fraxel FTX. We have rollouts planned for dermatologists, plastic surgeons, and other licensed professional over the coming months in the United States. And most recently, on April 29th, Bausch Health announced that Health Canada has granted medical device license clearance for our latest generation Thermage FLX device for non-evasive skin tightening and contouring. Canadian providers will now gain access to the same technology in use by leading aesthetics clinics elsewhere in the world. Captrio, the first combination product for the treatment of acne vulgaris, continues to build momentum in North America. In the U.S. alone, we are seeing healthy, sequential, double-digit script growth with over 8,900 healthcare providers having now prescribed Captrio. Now turning to innovation. New product flow is intrinsic to creating value with Bausch Health. We are focused on developing our pipeline internally and seeking licensing opportunities externally. We have a disciplined process for examining opportunities at a detailed level in terms of strategic, operational, and financial logic. We are focused on opportunities with a reasonable probability of technical and regulatory success and that create operating leverage, revenue, and earnings in the near term. Starting with our internal product pipeline, we are pleased with the progress of our Red Sea program, where our phase three global studies remain on track. As we have shared previously, both studies were fully enrolled in the third quarter of last year, and we expect to see the initial data read out by early 2026. To recap, The Red Sea program is studying a solid soluble dispersion rifaximin complex in a unique patented non-crystalline water soluble form that enables delivery throughout the entire gastrointestinal tract. Red Sea is also being studied in patients with cirrhosis from any form of liver disease. The patient population is innovative as these are cirrhotic patients being studied prior to their first decompensation event. In the United States, this patient population is at least three times larger than the OAT population that Zyfaxan serves today. This is also a very meaningful global opportunity for Bausch Health and, if successful, may enable us to address an unmet need and deliver a novel therapy to cirrhotic patients globally. We are already working cross-functionally across multiple areas to sequence global regulatory filings, US NDA planning, and ensuring adequate global product supply. We are also systematically evaluating additional data generation opportunities, both to enhance our current profile in cirrhosis and to evaluate new indications that have potential to impact the gut-liver-brain access. On the business development front, we are expanding into the cardiometabolic market in Latin America. We have two brands already licensed with launches planned to start at the end of May. We look forward to more progress on this front as the year progresses. As a reminder, we also signed an exclusive licensing and supply agreement with George Medicines in December. The partnership grants Bausch Health the exclusive rights to seek regulatory approval of and to commercialize GMRX2 in Canada, Mexico, Colombia, and Central America. GMRX2 is intended for the treatment of hypertension, including initial treatment. This is a proprietary single-pill combination of three classes of antihypertensive medicines. an angiotensin receptor blocker, a calcium channel blocker, and a diuretic. Developed in ultra-low, low, and standard dose options, it has the potential to be the only triple combination approved for the initial treatment of hypertension. The innovative formulation aims to optimize efficacy, safety, and adherence. with a multi-mechanism approach and at lower dosing than today's therapies. GMRX2 is designed to deliver the synergistic benefits of a triple therapy while maintaining tolerability. This is a unique opportunity for advancing cardiometabolic care in these regions that will leverage our expertise and infrastructure. To wrap up on the first quarter, I am encouraged by our strong start to the year, building on our great progress in 2024. We executed against our operational objectives while making significant strides in improving our capital structure and optimizing across our businesses. We remain critically focused on maximizing shareholder value with urgency. Despite the volatile macroeconomic environment, we remain confident in the durability and growth path of our business as we leverage our broad and diverse footprint and the results-driven mindset of our talented global team. With that, I will pass it over to JJ to discuss the financial results in more detail.

Thank you, Tom. As Tom mentioned, Bausch Health, excluding BNL, achieved its eighth consecutive quarter of year-over-year growth for revenue and adjusted EBITDA. This speaks to the resiliency of our growth strategy. Separately, our performance in Q1 was another illustration of our commitment to profitable growth and cash flow generation which remain instrumental to our objective of deleveraging our balance sheet. Let's now review our first quarter consolidated performance in more detail starting with our non-GAAP financial results for the first quarter, which you will find starting on page 13. Revenue was $2,259,000,000, up 5% on a reported basis and 6% on an organic basis compared to the same period a year ago. Adjusted gross margin was 69.9%, 130 basis points lower year over year. Adjusted operating expenses for the first quarter were $994 million, an increase of $78 million compared to the same period last year. Adjusted R&D expenses for the quarter was $143 million, which was a decrease of 5% compared to the first quarter of last year. Adjusted EBITDA was $661 million, a decrease of $4 million or 1% year-over-year. Finally, adjusted operating cash flow was $110 million. Moving now to the performance of Bausch Health excluding Bausch & Lomb for Q1 starting on page 15. Revenue was $1,120,000,000, or 6% up when compared to the first quarter of 2024. The growth was 7% on an organic basis. Adjusted EBITDA was $576 million, up 14% on a reported basis, partially due to one-time benefits, but also demonstrating our focus in driving efficient cost management. Lastly, our adjusted operating cash flow was down 4% versus the first quarter of 2024, but was in line with expectation given the difference in timing of our cash interest and our outflows as we indicated during our fourth quarter earnings call a couple of months ago. When adjusting for timing and on a comparable basis, our adjusted cash flow from operation was $130 million better than Q124. Moving now to our first quarter performance by segment, starting with Salix on page 16. Salix revenues were $542 million, an increase of $43 million, or 9% on a reported basis and 6% on an organic basis, compared to the same period last year. Lifaxon continues to drive most of the Selix segment revenue, with 8% growth year-over-year, which was balanced across price and volume. Retail scripts grew 1.5%, with new scripts growth at 3%. Extended units grew 1% and includes non-retail settings, such as hospitals and outpatient clinics, which grew mid-single digits. Now moving to the international segment on page 17. Revenues were $262 million, a decrease of 1% on reported basis, but an increase of 5% on an organic basis compared to the first quarter of last year. The difference in growth rates between reported and organic was nearly all due to currency, primarily the Mexican peso. By geography, Revenue in our international segments saw, again, strong double-digit growth in Canada, while EMEA and LATAM grew modestly year-over-year on an organic basis. Canada's double-digit growth was driven by our promoted products portfolio, which grew 18%. In addition, our sales of Wellbutrin continue to benefit from the supply shortages of each generic competition. Now moving to page 18 for review of our Salta medical segment. Revenues were $113 million, an increase of 28% on reported basis and 33% on organic basis compared to the same period last year. Salta's exceptional results were driven by continued strong performance of our markets in Asia Pacific, primarily in South Korea and China. These two markets grew revenue 136% and 30% respectively, all through volume expansion, which was even more impressive. Turning now the focus to our diversified segments, which you will find on page 19. Revenues were $205 million, an increase of 1% on reported basis and flat on an organic basis compared to the same period a year ago. The revenue performance was ahead of expectation and was primarily driven by the neurology business, which achieved double-digit growth thanks to net realized pricing favorability and the continued benefit of the value price optimization we executed last year. Finally, for the Bausch and Lomb segment, revenues were $1.1 billion, up 3% on a reported basis, and 5% on an organic basis compared to the same period last year. Turning now our focus to our balance sheet starting on page 22. Our net debt, excluding Bausch and Lomb, decreased by approximately $85 million in the first quarter. More importantly, As we announced on April 8th, we closed a $7.9 billion refinancing transaction, including a $500 million revolving credit facility, which allowed us to push out most of our remaining debt maturities to 2028 and beyond. Our stated objective in late February to access the capital markets in the first half of 2025 and to significantly improve the company's debt maturity profile was fully executed in less than two months at a time of uncertainty and high volatility of the financial markets. While our debt post-refinancing has a higher blend cost of capital by approximately 100 basis points, this new capital structure now provides significantly more operating and timing optionality for adjusting our capital structure to better fit our business profile post-Xifax and LOE. While we are encouraged by what has been executed to date, more remains to be accomplished in the next couple of years. but this is an important milestone for all Bausch Health stakeholders. I would like to take this opportunity to thank everyone involved with this last refinancing, which was the largest in the company's history. Special mentions go to the finance legal team at Bausch Health, as well as to our advisors, Evercore, ProScour, and JP Morgan. What a great outcome all around through exemplary teamwork. Before I turn it over to Tom for the wrap-up, let me conclude with an update on guidance and outline our strategic priorities for the remainder of the year. Let's start with our full-year guidance. Lots has happened over the last few weeks, particularly in relation to tariffs and the impact they could have on cross-border transactions with the U.S. Based on the information available at this time, we are confirming the full year 2025 guidance for revenue and adjusted EBITDA and updating our adjusted operating cash flow down by $150 million to reflect the impact of the refinancing transaction we executed earlier this month. Our full year guidance for 2025 is now as follows. Revenue guidance is unchanged and is still expected to be between $4,950,000 and $5,100,000. The midpoint of that range would translate into a 4% increase year-over-year. Adjusted debita is also unchanged and is still expected to be between $2,625,000 and $2,725,000. The midpoint of that range would represent a 5% increase versus 2024. Adjusted operating cash flow is now expected to be between $825 million and $875 million. Moving forward, all strategic priorities remain the same. First, increasing the value of Bausch Health operational assets which includes innovation as well as continuing to optimize the growth of our portfolio of brands across the globe. Second, evaluating all options for unlocking value for shareholders, including maximizing the value of our Bausch Health and Bausch & Lomb assets, as well as other initiatives such as share buybacks. And third, continuing to optimize our capital structure. In summary, The first four months of 2025 have been a very strong start for Bausch Health on several fronts. Whether it is our operating performance in Q1 or the improvements we have made to our capital structure, Bausch Health is in a stronger position now than it was just two months ago. I will now hand the call back to Tom for the wrap-up.

Thank you, J.J. We have continued to drive growth through innovation and executing with discipline across the business. As we move forward, we remain focused on advancing our strategic priorities to deliver value for all shareholders. With a strong start to the year and a number of positive developments to date, we believe we are well positioned to carry out our momentum throughout 2025 and look forward to sharing our continued progress in the quarters ahead. With that, we will now turn to questions. Operator, please open the line for Q&A.

Absolutely. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Once again, please press star one if you have a question or a comment. Our first question comes from Les Soluski with Truist Securities. Please proceed.

Good afternoon. Thank you for taking my questions. You know, last quarter you gave some commentary around tariffs in specific to, you know, the numbers you've called out. Any sort of updates to that and any impact to transfer pricing across your enterprise area? And then as a follow-up, you know, you've called out the $150 million in operating cash flow. It appears most of it is tied to the interest expense. Anything else lumped into that figure? And then kind of how do we think about the cadence for EBITDA margins as you move throughout the remainder of the year? Thank you.

Thanks, Les, for the question. I'll just take the the high level on the tariffs, and then I'll hand it over to JJ to give more specifics. As we look at it, as you can appreciate, you know, it remains a fluid situation, you know, right now where we see the majority of the impact of clearly is our soul to business in China. And, you know, we're monitoring very closely, you know, hopefully as the year progresses, There will be a negotiation there, and the tariff rates will not remain at what they are today. When we look at it, you know, we have inventory, you know, in country, both at our distributor and at our own warehouses. So, you know, we're able to minimize some of the impact, at least in the short term, clearly for the first and some of the second quarter. And we'll monitor it accordingly. We also have, you know, put some of other levers in place to see what we can do to, of course, offset those tariffs if we need to. What I would say is the team has been working really hard on it. As you know, the tariffs today do not impact pharmaceuticals at the present time, and the team has been working on that. The finance team has been looking at it quite closely for months now. But the one good thing, of course, we have a regional supply chain. So most of our manufacturing is done in the regions where we operate. So, but we're, again, continuing to look at it and seeing, you know, what other levers, you know, we could take should pharmaceutical tariffs come into play. With that, I'll just pass it over to JJ for further comments.

Hi, Les. So as Tom mentioned, I think our setup is not, Significantly exposed to to new tariff. Obviously that depends on what US government and then the countries decide to do in terms of retaliation. As you may remember, we had indicated no more than $50,000,000 and at that time the focus was on the flows between the US and Canada and for the pharmaceutical divisions. Obviously those tariffs are not in place at this point in time. The limited. exposure that currently have right now is also a function of the fact that cogs and transfer prices are fairly low as a potential revenue across our business. The China market, which is basically the most important market that is exposed to retaliation from the China government, is still relatively small in relation to our total revenue profile. It's about $150 million. So that's why given all puts and takes, we were able to integrate the impact of tariff into our guidance and maintain the outlook for the full year. For your second question, in terms of adjusted operating cash flow, it is a combination of the higher cost of interest, as I indicated my prepare the marks. It's about an increase of 100 basis points blended. So over obviously $15 billion of net debt. But that has an impact of only three quarters. And then what is also going into that is the transactional expenses associated with the refinancing. Those are really the two major drivers that are explaining the change in the guidance. And then finally, on phasing of our EBITDA, I would take the phasing that we've had in 2024 as a good proxy for what you should be expecting for 2025.

Les, I'll just one last comment on the tariffs. And as we said, when we look at the guidance, the team is really, it's working hard to make sure all the investments we're making as this whole tariff situation plays out, the investments we're making and really focusing on our cost structure and making sure that we're investing wisely. So that's part of, as we look at it, how we can offset some of these tariffs as they are today. So really the team working hard to maximize everything we can and minimize our OPEX.

Operator, next question. Sure.

The next question comes from Douglas Mime with RBC Capital Markets. Please proceed.

Thank you and good afternoon. First question just has to do with Solta. The growth there remains exceptional, especially in Korea. And I'm just curious as to how long you think that that type of growth rate can be sustained. through the next several quarters or the next several years?

Sure, Doug.

Clearly, as I've said many times, I love this business. Durable, the model we have. Our team has done an exceptional job in terms of being able to have capital equipment and then the consumable. So, of course, very durable business for us. If we look specifically of Korea, the Korean team has done a great job in 2024 of selling in capital equipment. And therefore, we're seeing the benefits of that. Of course, we had very strong growth last year, and that growth has continued into the first quarter. And clearly, having a large install base in Korea and then driving the capital, the consumable side of the business has attributed to the growth that you see in the first quarter. So what I would say is, We have high expectations of our Korean business going forward, but you should see that coming down because the consumables that are going in in the first quarter and some into the second quarter is the install base that was put in in 2024, and that was being picked up in probably the second or fourth quarter of the prior year. So you should see it come down, but still good growth for us. And then Of course, China continues to perform. The growth was 30%. Another strong quarter of consumer demand in China, despite a lot of the issues, of course, with the tariffs. As we discussed earlier, consumer demand is still there. And given the segmentation of the market and consumers who use this product are resilient in terms of what is taking place economically. So we're really very pleased with the growth in China. And then lastly, the U.S. growth grew by 9%. We talked about, you know, the U.S. growth, the EMEA growth, and then Canada as well. And then, of course, the launching of FLX is going to drive growth further. And then, as I said in my prepared remarks, getting Canada FLX approved is in canada is a big win for us uh and uh we see uh good growth there uh coming in the future so the salt of business performing very nicely for us in the first quarter uh and we're very happy with it excellent and then just as a follow-up question um i am curious a little bit about uh zypax and any comment you can give us on your thoughts around the ira impact in 2027 and then

Can you confirm that the IP for Xifaxin is held in Ireland or Europe? And then when you talk about regional manufacturing, I just want to know if, you know, for Xifaxin, if you're talking about North America as a region or distinctly the U.S.? And I'll leave it there. Thank you very much.

Sure. Of course, we talked about Zyfax in the prepared remarks, had another great quarter for us, 8% revenue growth, well-balanced, four on price, four on volume. In my prepared remarks, one of the things that we really are tracking is new to brand, 59,000 new to brand in the quarter. happy with the performance that we've had. What I would say is the IRA negotiations is in the early stages. We've already had one meeting with them in person. Too early to determine, you know, what the outcome will be, but we are working collaboratively to discuss, you know, what the impact will be and with CMS. On the question on IP, JJ will take that. Yeah.

The IP is owned in the U.S. and licensed to our principal company in Ireland.

Yeah, and then your last question on manufacturing. So when I say regional, so most of our manufacturing for Latin America is done in Latin America, Mexico, and Colombia. When we look at our European business, most of the manufacturing is done by either CMOs or manufacturing facilities in Europe. in Poland. And then when we look at, when we come to the Canadian business, a good part of our manufacturing is in our Laval facility for our DERM business. So when I talk regionally, I say, you know, in most of those places, the consumption is where those plants are or in those regions. Operator, next question.

The next question comes from Mike Nedelkovich with TD Callen. Please proceed.

Thank you for the questions. I have two and a quick follow-up. My first question is, if we end up in a recession, either in the U.S. or globally, what elements of your business do you think are most at risk, and what elements do you think are most resilient? My second question relates to Red Sea. I'm curious, in the current state of affairs, do you have a sense of whether and what level of off-label prescription of Zyfaxan for covert HIV may already be ongoing, and how much of a risk might that be commercially if you were to launch a novel product that would otherwise occupy that niche? And then my quick follow-up is on the Zyfaxan manufacturing and supply chain. You mentioned various territories, but I don't believe you mentioned the U.S. Is U.S. Zyfaxan manufactured in the U.S., or is it imported?

Thank you. Yeah, Mike, I'll take those questions and hand a few off to JJ to add some more color. When we look at our business, it's pretty resilient in terms of from a recession perspective. When we look around the world, we look at our business in the U.S. Pretty tough for me to comment, but our product portfolio in the U.S. is much needed by our patients. So it's pretty resilient in terms of that from a pharmaceutical perspective. If you then look and you go outside the United States, it's the same. Most of our business, as you know, we have a branded generic business, mostly in Eastern Europe and in Latin America. And that's very resilient, too. And if you look at what we're able to deliver, high-quality products at a good cost for the patient. So I would say, and then if you look at the SALTA business, In where the SALTA business is positioned and who is using those products, it is resilient. Even as I mentioned earlier about in China, the population or the consumer base that's using it is a little bit more economic resilient as opposed to other products that are there. Tough to comment on what's going to happen, but I think we're probably in pretty good shape. I believe we are. Red C, in terms of overall, you know, what I would say is this, is I can't comment on off-label use, but what I can say is, and I said this in my prepared remarks, The SSD formula is a very different drug than Xifaxan. It works differently, you know, and it impacts patients in different ways. So when we look at it, this new formula is quite different. Of course, the dosing is different, and therefore, we think we have a great opportunity here. When we look at the patient population of, you know, I said it in my prepared remarks, what I think the size of this is, and we look at it globally, and we look at the amount of cirrhotic patients there are in the world today, you're probably looking at over 30 million patients who are cirrhotic today. So as we look at this, we get closer to the data. As I said earlier, we've put together a team, a launch team, and we're really excited of what we can do for patients in this indication. And clearly when we look at what our primary endpoint is and our secondary endpoint of all cause mortality and all cause hospitalizations, this can be a really nice franchise for us. In terms of you, the last part of the question was Zyfax in manufacturing. I'll hand this to JJ. Of course, as I think you know, Zyfax is manufactured in Canada, but I can pass it to him for more color on that.

Yeah. So the country of revision for the API is Italy, given that it's a single API product. Country of origin on the label is also Italy, but the manufacturing is coming from Canada. So, for U.S. custom purposes, it's really treated as an Italian import.

Operator, next question.

Next question comes from Jason Gerberry with Bank of America. Please proceed.

Hey, guys. Thanks for taking my questions. Just on Solta and the revenue sourcing into China, I know you make the consumables in the US. How easy is it? I mean, we know drugs are hard in multiple years to shift manufacturing around. With something like consumables, is that something you can kind of move manufacturing around to be locally sourced, insulated if there's a protracted tariff situation with China? And then, uh, second question is just on your, um, your EBITDA X BLCO of 576. I think you mentioned some one-time items. Can you, can you quantify, uh, what those are? Um, and then I guess just lastly, how does share buybacks sort of, uh, rank order and the pecking order with like net debt reduction over the next few years from, in terms of a capital allocation priority? I think this is the first quarter you guys have talked about buybacks within the, uh, capital allocation prioritization.

Jason, I'll take a few of those questions, and I'll hand it over to JJ. I'll take the stock buyback question first, and then JJ can talk about it. But, you know, with a stock price of five and a quarter, you know, we're looking at all options. As I said in my prepared remarks, the stock is undervalued. So, but he can talk about more, but, you know, clearly as a management team, you know, putting all options on the table and looking at it carefully. What I would say, let's just go back to Solta, China. You know, right now we do all our manufacturing in Bothell, Washington, both for our capital equipment and the consumables. difficult in the short term, you know, to be able to move manufacturing. But, you know, as we have been looking at various things in terms of business development, even prior to, you know, the tariff issue, this was one of the things that we were always looking at when we're trying to expand our business in China. That could be something that we would look to do, not easy to do in the short term, but something we could look. And certainly when we're looking at candidates, of possible business development. This was one piece of it. So good question. When you look at how difficult it is to make a tip and a consumable, it's difficult, very precise. We have a great manufacturing team in Baltimore, Washington. So it's It would be tough to move it given how technical it is, but something that has been and being looked at on the radar screen. With that, I'll pass it over to JJ for your second part of your question regarding EBITDA and maybe more color on the share buyback.

Yes. The one-time items are mostly associated with really three drivers. Number one is timing of expenses. some of the expenses were anticipated really to happen more in Q1 and happen in other quarters. And then we typically have some adjustments to our growth to net that don't have a recurring impact. The way I would think about our performance in the first quarter from an EBITDA perspective is really to think that it's very similar to the kind of guidance we provided on a full-year basis if you were to normalize it. On the share buybacks, the capital allocation strategy remains the same. Number one is to get the capital structure consistent with our portfolio, pose that fact and then consider any reinvestment in the business, and only after that to consider return to shareholders, which can take many forms, including share buybacks. As Tom indicated, When the stock is lingering at $5, it really forces us to really think through, again, this prioritization logic, which is really the main focus, absent any exceptional circumstances. We do believe that the stock is not trading where it needs to be from an intrinsic value perspective. And so, therefore, if there are opportunities to create value for shareholders, then we'll take a look at that.

Operator, next question.

And our last question comes from Michael Freeman with Raymond James. Please proceed.

Hi, Tom. Thanks very much for taking my question. I wonder if you could talk about the debt refinancing broadly and maybe go a little deeper on the additional flexibility that this offers you. And just specifically, I wonder if you could describe the quantum of your Belco stake that today is not pledged against any debt instrument, and then I'll have a follow-up.

Yeah, so Michael, I'll have JJ take most of it. What I would just say is, and JJ said it in his prepared remarks, the team worked extremely hard on doing this refinancing, $7.9 billion gives us really a runway here. And clearly, JJ can talk to of what the options are. But clearly, investing back in the business is one of them. The business development team has been working hard, and there was many things that we screen and look at. But clearly, the finance team and the legal team being able to get this done has really given us a nice runway for future investments in the business or other things we might want to do. But I'll pass it over to JJ to talk more specifically about it.

Yeah, hi, Michael. The 7.9, so if you really focus really on the 7.4, because $500 million is the revolving credit facility, we declare out most of our maturities between now and the end of 2027. There's about $1.2, $1.3 billion left. And then we have another 4.3 still outstanding in 2028. So, if you had those two together, you'd come to roughly $5.6 billion of maturities between now and the end of 2028. The focus is on extending the runway to include all the maturities up to the end of 2028. A good proportion of that 5.6 will be handled through free cash flow being generated between now and the end of 2028. We also have about a billion dollars of cash on hand, which will allow us to take out some of those other maturities. So it leaves about, I would say, $1.6 billion of additional refinancing that we'd have to execute, as you know, or the refinancing that we just closed a couple of weeks ago provides this upsizing capability, either picking the the same collateral package that is associated with the 7.4 with the combination of the restricted group and additional blco shares or to do a drop down inside of the restricted group and then really only lose those assets as collateral b The consideration is really between those two options, timing and cost of capital to really decide what's the best options for us. There are a couple of that instruments that might be available later in the year for foreign exchange or could be subject of this refinancing. But this is clearly still on the table. and an opportunity for us to continue to um uh clear out the maturities between now and 2028. uh in terms of dlco shares that are unencumbered uh 35.5 percent are left if we were to use one of the two options to upsize the 7.4 transaction an additional 7.5 percent would have to be pledged which would leave 28% or about 100 million shares, give or take, that would be unencumbered, that could be used either for monetization, for, you know, raising some new debt, and obviously the proceeds could be allocated to whatever use we see fit at that time, including reinvestment in business.

Michael, you had a follow-up?

Yes, there was an April 22 press release on discussing the filing of a proxy supplement or a supplement to the proxy statement. I wonder if you could provide, I guess, more insight into this supplement and describe the status of your shareholder rights plan.

Yeah, sure. I'll, Michael, I can take that. So I'll start with the shareholder rights plan first. We adopted a shareholder rights plan, you know, really to help ensure that all shareholders are treated fairly and equally in, you know, in connection with any unsolicited takeover bid or, you know, any other acquisition of control. So it's, we believe the plan is in the best interest of company and the shareholders. As we talk about the proxy filing, what I would say is I don't want to comment specifically on it. I mean, I think everything was laid out pretty much in the press release. But as you saw, you know, we believe, you know, some of the issues that were laid out in the press release and then how the stock responded afterwards demonstrated, you know, people see value, you know, in Bausch Health.

Okay, I think, operator, that was the last question.

I would now like to turn the call back over to Tom Appio for any closing remarks.

Okay, well, thank you, everyone, for joining the call today and, you know, for your questions. Really appreciate all the questions and your continued interest in and support of the company. As I said, we delivered our eighth consecutive year-over-year growth of revenue in adjusted EBITDA, and this team is highly motivated to continue to deliver a strong performance in 2025. We're committed to delivering against our strategic priorities, as I discussed, and remaining focused on unlocking value. growth and innovation with the commitment to evaluate all the options to unlock the value of our shares. It wouldn't have been possible to have this type of performance in the first quarter and the momentum we had over from 2024. So I want to thank all of our employees globally for their commitment and dedication to driving our company forward and delivering on our objectives. Thank you all for joining and have a good evening.

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.