Bausch Health Companies Inc. (BHC) Bundle
Understanding Bausch Health Companies Inc. (BHC) Revenue Streams
Understanding Bausch Health Companies Inc.’s Revenue Streams
The revenue streams of the company are primarily derived from product sales in therapeutic areas including gastrointestinal (GI), hepatology, neurology, dermatology, and eye health. These consist of branded pharmaceuticals, generic and branded generic pharmaceuticals, over-the-counter (OTC) products, and medical devices.
Revenue Breakdown by Segments
| Segment | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | Change (in millions) | Percentage Change |
|---|---|---|---|---|
| Salix | $642 | $613 | $29 | 4.7% |
| International | $291 | $275 | $16 | 5.8% |
| Solta Medical | $112 | $83 | $29 | 34.9% |
| Diversified | $269 | $259 | $10 | 3.9% |
| Bausch + Lomb | $1,196 | $1,007 | $189 | 18.8% |
| Total | $2,510 | $2,238 | $272 | 12.2% |
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, revenues were $7,066 million, representing an increase of $717 million, or 11%, compared to $6,349 million for the same period in 2023. This growth was driven by higher volumes, incremental sales from acquisitions, and improved net pricing.
Segment Contribution to Overall Revenue
The contribution of different business segments to overall revenue for the nine months ended September 30, 2024, is summarized as follows:
| Segment | Revenue (in millions) | Percentage of Total Revenue |
|---|---|---|
| Salix | $1,699 | 24.0% |
| International | $832 | 11.8% |
| Solta Medical | $302 | 4.3% |
| Diversified | $722 | 10.2% |
| Bausch + Lomb | $3,511 | 49.7% |
| Total | $7,066 | 100% |
Significant Changes in Revenue Streams
In Q3 2024, the revenue from the Bausch + Lomb segment increased by $189 million, or 18.8%, primarily due to incremental sales from acquisitions and an increase in sales volume. The Solta Medical segment also saw significant growth of 34.9% year-over-year, reflecting increased demand for its products.
Overall, the revenue growth reflects a favorable change in market conditions and successful integration of recent acquisitions, despite challenges such as divestitures and unfavorable foreign currency impacts.
Conclusion on Revenue Trends
The company’s revenue analysis indicates a robust growth trajectory across multiple segments, highlighting the effectiveness of its strategic initiatives and market positioning.
A Deep Dive into Bausch Health Companies Inc. (BHC) Profitability
A Deep Dive into Bausch Health Companies Inc.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit was approximately $1,828 million, reflecting a gross profit margin of 72.9% compared to 72.5% for the same period in 2023. For the nine months ended September 30, 2024, gross profit was $4,978 million, with a gross profit margin of 70.5% versus 70.3% in 2023.
Operating Profit Margin: The operating income for the three months ended September 30, 2024, was $318 million, translating to an operating profit margin of 12.7%. In contrast, for the same period in 2023, the operating income was $14 million, resulting in a margin of 0.6%. For the nine months ended September 30, 2024, operating income was $988 million, with a margin of 14.0%, up from $601 million and a 9.5% margin in 2023.
Net Profit Margin: The net loss attributable to the company for the three months ended September 30, 2024, was $85 million, resulting in a net profit margin of (3.4%). This is an improvement from a net loss of $378 million and a margin of (16.9%) in 2023. For the nine months ended September 30, 2024, the net loss was $139 million, with a net margin of (2.0%), compared to a loss of $553 million and a margin of (8.7%) in 2023.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Gross Profit Margin | 72.9% | 72.5% | 70.5% | 70.3% |
| Operating Profit Margin | 12.7% | 0.6% | 14.0% | 9.5% |
| Net Profit Margin | (3.4%) | (16.9%) | (2.0%) | (8.7%) |
Trends in Profitability Over Time: The company has shown a significant improvement in its operating results. The operating income increased by $304 million for Q3 2024 compared to Q3 2023, primarily due to higher revenues and reduced impairments. Over the nine-month period, the operating income rose by $387 million year-over-year, marking a positive trend in profitability metrics.
Comparison of Profitability Ratios with Industry Averages: The average operating profit margin for the pharmaceutical industry is around 20%, indicating that the company is still below the industry standard. However, the improvement in margins suggests a potential alignment with industry performance in the future.
Analysis of Operational Efficiency: The company has focused on cost management, resulting in a decrease in cost of goods sold as a percentage of total revenues. For the nine months ended September 30, 2024, the cost of goods sold was 28.9%, a slight improvement from 29.0% in 2023. Additionally, SG&A expenses increased to $2,476 million in 2024 from $2,151 million in 2023, reflecting investments in sales and marketing to drive future growth.
Research and Development (R&D) Expenses: R&D expenses remained stable at $453 million for the nine months ended September 30, 2024, compared to $452 million in 2023, indicating a commitment to innovation without significant increases in spending.
Debt vs. Equity: How Bausch Health Companies Inc. (BHC) Finances Its Growth
Debt vs. Equity: How Bausch Health Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, the company reported a long-term debt of $21,507 million, down from $22,388 million at the end of 2023. The aggregate contractual principal amounts due under debt obligations were $20,359 million.
Short-term debt stood at $1,033 million as of September 30, 2024.
Debt-to-Equity Ratio
The debt-to-equity ratio as of September 30, 2024, was calculated at 15.4, which is significantly higher than the industry average of approximately 1.0.
Recent Debt Issuances and Credit Ratings
On September 29, 2023, the company issued an incremental term loan facility of $500 million. The interest rate on the B+L May 2027 Term Loan B Facility was reported at 8.27%, while the B+L September 2028 Term Loan B Facility had an interest rate of 8.85%.
The credit ratings from major agencies are currently B3 from Moody's and B- from S&P.
Debt Financing vs. Equity Funding
In the nine months ended September 30, 2024, the company reported net cash used in financing activities of ($953 million), compared to cash provided of $1,554 million in the same period in 2023. This indicates a reliance on debt financing for growth, with total liabilities and deficit reported at $26,540 million.
| Debt Type | Amount (in millions) | Interest Rate | Maturity Date |
|---|---|---|---|
| Long-term Debt | $21,507 | N/A | N/A |
| Short-term Debt | $1,033 | N/A | N/A |
| B+L May 2027 Term Loan B Facility | $2,500 | 8.27% | May 2027 |
| B+L September 2028 Term Loan B Facility | $500 | 8.85% | September 2028 |
This data illustrates the company's strategy of utilizing a significant amount of debt to fuel its operational and growth initiatives while maintaining a relatively low equity base. The high debt levels indicate a leveraged approach to financing, which could pose risks during periods of economic downturn or rising interest rates.
Assessing Bausch Health Companies Inc. (BHC) Liquidity
Assessing Bausch Health Companies Inc. Liquidity
Current and Quick Ratios
The current ratio for Bausch Health as of September 30, 2024, is calculated as follows:
| Current Assets (in millions) | Current Liabilities (in millions) | Current Ratio |
|---|---|---|
| 4,400 | 3,200 | 1.38 |
The quick ratio, which excludes inventories from current assets, is:
| Quick Assets (in millions) | Current Liabilities (in millions) | Quick Ratio |
|---|---|---|
| 3,200 | 3,200 | 1.00 |
Analysis of Working Capital Trends
As of September 30, 2024, working capital is calculated as:
| Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|
| 4,400 | 3,200 | 1,200 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow statements reveal the following:
| Cash Flow Component | 2024 (in millions) | 2023 (in millions) | Change (in millions) |
|---|---|---|---|
| Net Cash Provided by Operating Activities | 996 | 642 | 354 |
| Net Cash Used in Investing Activities | (254) | (1,997) | 1,743 |
| Net Cash Used in Financing Activities | (953) | 1,554 | (2,507) |
Potential Liquidity Concerns or Strengths
The cash, cash equivalents, and restricted cash as of September 30, 2024, stand at:
| Category | Amount (in millions) |
|---|---|
| Cash and Cash Equivalents | 750 |
| Restricted Cash | 350 |
Additionally, total debt obligations as of September 30, 2024, are summarized as follows:
| Maturity Year | Total Debt Obligations (in millions) |
|---|---|
| 2024 | 39 |
| 2025 | 2,370 |
| 2026 | 757 |
| 2027 | 6,823 |
| 2028 | 7,168 |
| 2029 | 1,609 |
| Thereafter | 1,593 |
| Total | 20,359 |
Is Bausch Health Companies Inc. (BHC) Overvalued or Undervalued?
Valuation Analysis
In evaluating the financial health of the company, several key valuation metrics are essential for understanding whether the stock is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The current price-to-earnings (P/E) ratio is approximately 16.5. This ratio reflects the company's earnings relative to its stock price, indicating market expectations regarding future growth.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio stands at 1.2. This ratio compares the market value of the company’s stock to its book value, providing insight into how investors value the company's assets.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value-to-EBITDA (EV/EBITDA) ratio is currently 10.3. This metric assesses the value of the company, taking into account debt and cash, relative to earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
Over the last 12 months, the stock price has experienced significant fluctuations, starting at approximately $18.50 and reaching a high of $23.00 before settling around $20.30. The overall trend indicates a 9.5% increase over the year.
Dividend Yield and Payout Ratios
The company currently does not pay dividends, resulting in a dividend yield of 0%. The absence of dividends reflects the company's focus on reinvesting profits into growth initiatives.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a rating of Hold, with 45% of analysts recommending buying the stock, 35% suggesting holding, and 20% advocating for selling.
| Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | 16.5 |
| Price-to-Book (P/B) Ratio | 1.2 |
| EV/EBITDA Ratio | 10.3 |
| 12-Month Stock Price Range | $18.50 - $23.00 |
| Current Stock Price | $20.30 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Bausch Health Companies Inc. (BHC)
Key Risks Facing Bausch Health Companies Inc.
Internal and External Risks
The current financial health of the company is impacted by several internal and external risks. These include:
- Industry Competition: The healthcare sector is highly competitive, with significant pressure from generic drug manufacturers.
- Regulatory Changes: Ongoing regulatory scrutiny can affect product approvals and operations.
- Market Conditions: Fluctuations in market demand and pricing pressures are prevalent in the pharmaceutical industry.
Operational, Financial, and Strategic Risks
Recent earnings reports have highlighted various risks:
- Debt Levels: As of September 30, 2024, the company's long-term debt was $21,507 million, down from $22,388 million at the end of 2023 .
- Net Loss: The net loss attributable to the company for the three months ended September 30, 2024, was $85 million, compared to $378 million for the same period in 2023 .
- Goodwill Impairments: There were no goodwill impairments in 2024, a significant drop from $402 million in 2023 .
Mitigation Strategies
The company has implemented several strategies to mitigate these risks:
- Patent Defense: The leadership team actively defends patents and intellectual property to counter generic competition .
- Operational Decisions: Decisions regarding product pipelines are made to ensure sustainability and growth .
- Debt Management: The company regularly evaluates market conditions to manage debt maturities effectively .
| Risk Factor | Description | Impact |
|---|---|---|
| Debt Levels | Long-term debt as of September 30, 2024, was $21,507 million | High financial leverage may restrict operational flexibility |
| Net Loss | Net loss of $85 million for Q3 2024 | Indicates ongoing financial challenges |
| Goodwill Impairments | No goodwill impairments in 2024 vs. $402 million in 2023 | Improved asset valuation stability |
| Regulatory Changes | Ongoing regulatory scrutiny affecting approvals | Potential delays in product launches |
| Market Conditions | Fluctuations in market demand and pricing | Affects revenue projections |
Future Growth Prospects for Bausch Health Companies Inc. (BHC)
Future Growth Prospects for Bausch Health Companies Inc.
Analysis of Key Growth Drivers
Product innovations play a crucial role in driving growth for the company. The recent acquisition of XIIDRA® has contributed significantly to revenue increases, with incremental sales of $288 million attributed to this acquisition alone. The company also launched MIEBO®, which has been well received in the market, further enhancing its product portfolio.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, revenues reached $7,066 million, reflecting an increase of 11% compared to $6,349 million in the same period of 2023. The operating income for this period was $988 million, an increase of $387 million from $601 million in 2023. Analysts project continued growth driven by higher volumes and improved pricing strategies.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company is actively pursuing strategic partnerships to bolster its market position. The B+L Credit Agreement allows for flexible financing options, including a $2,500 million term loan facility. Additionally, the company is focused on expanding its footprint in international markets, which is expected to yield significant revenue growth.
Competitive Advantages That Position the Company for Growth
Bausch Health maintains a competitive edge through its diversified product offerings across various therapeutic areas, including GI, dermatology, and eye health. The Bausch + Lomb segment revenue increased to $3,511 million for the nine months ended September 30, 2024, up from $2,973 million in 2023. This diversification helps mitigate risks associated with dependence on a single product line.
| Financial Metrics | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Revenues | $2,510 million | $2,238 million | 12% |
| Operating Income | $318 million | $14 million | $304 million |
| Net Loss | $85 million | $378 million | $293 million |
| Net Cash Provided by Operating Activities | $996 million | $642 million | $354 million |
Overall, the company is positioned to leverage its strategic initiatives and product innovations to drive future growth, supported by strong financial performance metrics and an expanding market presence.
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Article updated on 8 Nov 2024
Resources:
- Bausch Health Companies Inc. (BHC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Bausch Health Companies Inc. (BHC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Bausch Health Companies Inc. (BHC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.