Bausch Health Companies Inc.

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 our host, Garen Serafian, Investor Relations at Bosch. You may begin.

Good afternoon, and welcome to Bosch Health Second Quarter 2025 Earnings Conference Call. Participating in today's call are Thomas Appio, Chief Executive Officer of Bosch Health, and JJ Charon, 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. 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 of our historic non-GAAP measures in the appendix of the pages that accompany this presentation, which are available on Bosch 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, July 30th, will focus on Bosch Health excluding Bosch and Loan. However, we will briefly comment on Bosch and Loan's results announced this morning. We will refer to -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, Tom Appio. Tom?

Thank you, Garen, and welcome to everyone joining our earnings call today. In the second quarter, Bosch Health, excluding Bosch and Loan, continued to perform strongly, delivering our ninth consecutive quarter of revenue and adjusted EBITDA growth. I am proud of the great work by our team, especially as we navigate a more uncertain macro environment. Let me take a moment to share a few highlights from the quarter. We delivered -over-year revenue growth of 5% on both the reported and organic basis, leading to 10% adjusted EBITDA growth for Bosch Health, excluding Bosch and Loan, driven by double-digit revenue growth in Salix, Solta, EMA, and Canada. We continued to resolve legacy matters in the quarter. We announced after the quarter that we entered into an agreement to acquire direct corporation, which if all closing conditions are satisfied and the acquisition closes, will enable Bosch Health to use its hepatology expertise to develop direct main treatment for alcohol hepatitis. Therefore, we are reaffirming our full year 2025 guidance for revenue, adjusted EBITDA, and adjusted cashflow from operations. The second quarter was another strong quarter of performance where we made progress against our strategic priorities. First is unlocking value. As a reminder, we completed a $7.9 billion debt refinancing on April 8th, which extends our maturities with the options for additional proceeds in the future. We remain active in our efforts to improve our capital structure and are currently evaluating opportunities to take advantage of strong market conditions to address selected upcoming maturities. Just this past week, we announced actions to reduce debt maturing in 2026 and pay down our accounts receivable facility to reduce high interest debt and improve our capital structure. Unlocking value is a key focus and we are evaluating every option to maximize returns for our stakeholders. Next is growth. The second quarter was an excellent quarter of growth for Bosch Health. We achieved 5% top line revenue growth, then leveraged it to 10% bottom line adjusted EBITDA growth with nine consecutive quarters of year over year top line and adjusted EBITDA growth for Bosch Health, excluding Bosch and Long. The diversity of our core businesses across segments and geographies demonstrate both our resilience and momentum. Revenue for our Salix and Solta segments as well as EMEA and Canada regions within international grew double digit. Segment profit for Solta and Salix also grew double digits. The second quarter was our sixth consecutive quarter of top line organic growth in our Salix business where our segment profit increased 21%. Salix grew by 12% on both the reported and organic basis versus the prior year period, driven by Zifaxin's 10% growth in the quarter. Growth came across both indications, overt hepatic encephalopathy, OHE and IBSD, and multiple channel segments, retail and non-retail. 67,000 new patient starts were initiated in the second quarter, up 8% versus the prior year. Growth was driven by increased OHE media investment as well as Salesforce focusing on driving new patient starts as we continue to innovate using our customer insight engine. Given the incredibly high success rate and adherence that we have seen with this AI based platform, we are beginning to leverage these capabilities for Relistor to further support sales initiatives. Solta's strong double digit growth driven by South Korea repeated this quarter. And while growth in China temporarily soften due to tariff related headwinds in April and May, we remain confident in our ability to grow in these core markets. We also had another quarter of growth in Canada, the United States and EMEA. In June, 2025, we started shipments of our next generation Fraxel after US launched in this past April. These are positive indicators that point to Solta's growth opportunities beyond the Asia Pacific region and we continue to invest behind additional growth opportunities in this business. Within the international segment, our EMEA business sustained its ongoing trend of organic growth with 6% in the second quarter, marking the region's 10th consecutive quarter of organic growth. It is a broad footprint and diversified portfolio with no single drug accounting for double digit share of net revenue, minimizing the concentration risk and reinforcing the appeal of this business. In Canada, our team is executing against our plans for each promoted product offering alongside the many growth initiatives we have in place across the portfolio, yielding solid results. CabTrio's launch in Canada has been successful as we continue to broaden patient access with the goal to position CabTrio as a leading acne treatment in Canada. Realtris, another promoted product has gained steady traction since its 2023 launch in the Canadian market. Now turning to innovation. We continue to focus on advancing opportunities for pipeline expansion. We are making progress internally as we assess partnerships and licensing opportunities that can offer a reasonable probability of success on multiple fronts. In EMEA, we announced a strategic partnership this June with Yun Envi, a recognized leader in microbiome skincare solution. This collaboration has the potential to reshape the skincare landscape, starting with the expected launch of Yun's probiotic based products for acne prone skin to the Polish market later this year. Leveraging our broad footprint and seasoned salesforce, this partnership will focus on bringing new pro-biotherapy solutions, utilizing good bacteria for a variety of indications, including acne, fungus, atopic eczema, and baby skincare. These microbiome skincare solutions use live probiotics to help restore the skin's natural microbiome balance, offering a modern, science-driven approach to managing acne prone skin. As we shared last quarter, we launched our cardio metabolic brands in Latin America in June, which in addition to our current portfolio line, now includes two new brands. As a reminder, the cardio metabolic market is one of the fastest growing therapy areas in the Mexican pharmaceutical market, and we are excited to be able to participate in such a high growth area. Now turning to our internal product pipeline, we remain on track with our two global phase three studies for Red Sea, our amorphous solid soluble dispersion, SSD, refaximin complex, and we expect to see initial data readouts by early 2026. As a reminder, this program is centered on a solid soluble dispersion refaximin complex in unique, patented, non-crystalline, water soluble form that enables delivery throughout the entire gastrointestinal tract. Amorphous SSD refaximin is being studied in patients with cirrhosis prior to their first decompensation event from any form of liver disease. This product, if approved, has the potential to offer this patient population a therapy to slow disease progression and provide a meaningful clinical benefit. We look forward to sharing further updates in early 2026. A successful outcome may position us to address a significant unmet need in hepatology and to bring a novel therapy to cirrhotic patients on a global scale. I want to touch on our recently announced definitive agreement to acquire direct corporation. The agreement remains subject to the satisfaction of certain conditions, including a majority of the outstanding shares of direct being tendered in the tender offer that we intend to commence shortly. Through this proposed acquisition, we intend to advance the development and commercialization of direct lead pipeline candidate, Lorsuchostrol, an FDA breakthrough therapy designation asset targeting alcohol hepatitis, AH. There is currently no Food and Drug Administration or European Medicine Agency approval treatment for AH and novel therapeutic strategies are needed to improve patient survival. Assuming all conditions are met, including the successful completion of the tender offer, we anticipate closing the deal in the third quarter of 2025. As such, we are limited in what we can share at this time. I look forward to sharing more information regarding this transaction following the closing. I want to thank our business development team who has worked incredibly hard on this transaction. We are committed to intensifying our focus and rigor behind R&D and business development. This announcement demonstrates our commitment to hepatology and finding new ways to address unmet medical needs. Lastly, turning to legal matters. Year to date, we have settled nine more opt-out cases. Of the 37 cases, there are now 11 remaining. We continue to vigorously defend the remaining claims. Regarding the Granite Trust matter, I am very pleased to announce that near the end of the second quarter, we received communication from the Internal Revenue Service that the case has officially concluded. Consistent with the view we have communicated on prior calls, there will not be any negative cashflow as a result. In summary, it was another strong quarter. I remain confident in our ability to execute on our strategic priorities focused on delivering tangible results. We strive for operational excellence throughout our company, which will maximize long-term shareholder value. With that, I will pass it over to JJ to discuss the financial results in more detail. JJ.