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A month has gone by since the last earnings report for Bausch Health (BHC). Shares have lost about 0.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Bausch due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Bausch's Q4 Earnings and Revenues Surpass Estimates
The company’s adjusted earnings per share of $1.33 easily beat the Zacks Consensus Estimate of $1.11 and increased from $1.15 reported in the year-ago quarter.
Total revenues of $2.2 billion beat the Zacks Consensus Estimate of $2.1 billion but were relatively flat year over year.
Quarter in Detail
Revenues in the Bausch + Lomb/International segment (comprised 56% of the total revenues) were $1.24 billion, flat year over year. Excluding the impact of discontinuations and divestitures, segment sales were flat organically due to the impacts of the COVID-19 pandemic.
The company launched several products in 2020 in this segment. Earlier, the company acquired an exclusive license from Eyenovia, Inc. in the United States and Canada for the development and commercialization of an investigational microdose formulation of atropine ophthalmic solution, which is being investigated for the reduction of pediatric myopia progression in children aged 3-12 years. The company also announced an agreement to acquire an option to purchase all ophthalmology assets of Allegro Ophthalmics, LLC, including global rights for risuteganib (Luminate).
The Salix segment revenues were up 2% year over year to $527 million. Sales of Xifaxan increased 4% and sales of Trulance grew 33%. The FDA granted Orphan Drug designation to rifaximin for the treatment of sickle cell disease.
The Ortho Dermatologics segment revenues were $160 million, up 1% year over year.
Diversified Products segment revenues were $284 million, down 9% from the year-ago quarter, primarily due to the loss of exclusivity of certain products and the pandemic-led woes.
During the quarter, the company repaid the debt by approximately $480 million.
Full-Year 2020 Results
Revenues in 2020 came in at $8.0 billion, down 7% from 2019. Revenues were negatively impacted by the COVID-19 pandemic to the tune of approximately $740 million.
During the quarter, the company repaid the debt of approximately $900 million.
Revenues are projected to be $8.60-$8.80 billion.
Agreement With Carl C. Icahn
Bausch will expand its board of directors to add two designees from Carl C. Icahn and affiliated entities.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -9.09% due to these changes.
At this time, Bausch has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Bausch has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.