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    BHC
    Earnings call· Jun 2026(Q2 FY26)

    Bausch Health Companies Q2 FY26 earnings call BHC

    Jul 29, 2026 Source

    Executive summary

    Bausch Health Q2 FY26 — Strong Growth Across Segments and Raised Full-Year Guidance

    Bausch Health delivered an exceptional second quarter, extending its streak of top-line and bottom-line growth to 13 consecutive quarters. Strong performance across Salix, International, and Solta segments, particularly driven by the successful integration of Solta's China distributor, led to significant revenue and adjusted EBITDA expansion. The company raised its full-year guidance across all key financial metrics, reflecting confidence in its strategic execution and operational excellence, despite anticipating some headwinds in the second half of the year.

    Highlights

    5

    • Revenue grew 16% year-over-year (11% organic) to $2.852 billion, marking the 13th consecutive quarter of top-line growth.

    • Adjusted EBITDA increased 28% year-over-year to $1.075 billion, achieving a historical high of 59% adjusted EBITDA margin.

    • Adjusted cash flow from operations rose 44% year-over-year to $637 million, leading to a $434 million net debt reduction.

    • Salix segment revenue increased 21% year-over-year to $758 million, driven by Xifaxan demand and net pricing.

    • Solta Medical revenue surged 38% year-over-year (12% organic) to $176 million, with segment profit up 69% due to China integration.

    Concerns

    4

    • Canada segment revenue declined 9% year-over-year due to the absence of prior one-time net pricing benefits.

    • Anticipated $150 million headwind in H2 FY26 from gross-to-net accrual changes, including a $90 million expense for increased CMS rebates.

    • Expected $50 million headwind in H2 FY26 from generic competition for Aplenzin following loss of exclusivity.

    • Projected $75 million headwind in H2 FY26 from gradual erosion of Medicaid and 340B channel revenue.

    Guidance & targets

    4
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $5.35 billion - $5.50 billion
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    $3.025 billion - $3.100 billion
    high materiality
    High
    Full-year 2026 Adjusted Cash Flow from Operations
    $1.4 billion - $1.475 billion
    high materiality
    High
    Full-year 2027 Adjusted EBITDA
    $2.7 billion
    high materiality
    Medium

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    Salix
    Strong performance driven by Xifaxan demand and favorable net pricing, following optimization of volume-price trade-off after exiting Medicaid and 340B programs.
    Xifaxan revenue growth: 26% YoYXifaxan total retail scripts (ex-Medicaid) growth: 4% YoYXifaxan expanded units (ex-Medicaid) decline: 2% YoY
    		$758 million21%——
    International
    Mixed performance across regions, with strong organic growth in LATAM and EMEA.
    Organic growth: 5% YoY
    		$305 million10% reported——
    International - LATAM
    Revenue growth supported by volume expansion and favorable net pricing, led by Bedoyecta and the cardiometabolic franchise.
    		—16% organic——
    International - EMEA
    Achieved 14 consecutive quarters of organic revenue growth.
    		—9% organic——
    International - Canada
    Decline reflects the absence of a prior one-time net pricing benefit. Promoted brands showed strong growth.
    Promoted brand portfolio growth (excl. one-time benefit): 14%Ryaltris growth: 64% YoY
    		—-9%——
    Solta Medical
    Strong revenue and profit growth, primarily driven by the successful integration of the full-service distributor in China and momentum in other APAC markets. Medical aesthetics tourism stabilized in South Korea.
    Organic growth: 12% YoYSegment profit growth: 69% YoYChina revenue growth: 136% YoYSouth Korea revenue growth: 8% YoYTaiwan revenue growth: 42% YoY
    		$176 million38% reported—$91 million
    Diversified
    Growth in neuroscience (favorable net pricing) was offset by lower revenue in dermatology, generics, and dentistry.
    		$219 millionFlat——

    Operational metrics

    15
    Revenue (BHC ex B+L) growth
    16%YoY
    Q2 FY26

    Reported basis.

    Revenue (BHC ex B+L) organic growth
    11%YoY
    Q2 FY26

    Organic basis.

    Adjusted gross margin
    72.9%Up 230 bps YoY
    Q2 FY26

    Non-GAAP measure.

    Adjusted EBITDA
    $1.075 billionUp 28% YoY ($233 million increase)
    Q2 FY26

    Non-GAAP measure.

    Adjusted EBITDA margin
    59%Up 530 bps YoY
    Q2 FY26

    Historical high.

    Net debt
    $13.7 billionReduced by $434 million QoQ
    Q2 FY26

    Reduced since debt refinancing in 2022. Reduction in Q2 due to low outflow associated with legacy litigation and restructuring payments.

    Portfolio (ex-Salix) revenue growth
    12%YoY
    Q2 FY26

    Reported basis.

    Portfolio (ex-Salix) segment profit growth
    19%YoY
    Q2 FY26

    Reported basis.

    Medicaid and 340B benefit (historical)
    $60 million
    Q3 FY25

    Benefit recorded at the end of Q3 2025 to reflect the exit of Medicaid and 340B channels. Used as a baseline for future headwinds.

    Solta Medical full-year run rate segment profit
    $330 millionApproximately $100 million increase vs FY25
    FY26

    Management's estimate for the full-year run rate, reflecting integration of Shibo and continued market growth. Does not reconcile to Q2 profit x4 due to seasonality and expense phasing.

    Implied BHC enterprise value increase from Solta
    $1 billion
    Current

    Based on applying a conservative 10x earnings multiple to the $100 million increase in Solta's segment profit run rate.

    Bausch + Lomb revenue growth
    9%YoY
    Q2 FY26

    Reported basis.

    Bausch + Lomb organic revenue growth
    8%YoY
    Q2 FY26

    Organic basis.

    Revenue (BHC ex B+L) growth (H1 FY26)
    15%YoY
    H1 FY26

    Compared to first 6 months of 2025.

    Adjusted EBITDA (BHC ex B+L) growth (H1 FY26)
    23%YoY
    H1 FY26

    Compared to first 6 months of 2025.

    Industry KPIs

    5
    MetricValueDetails
    EPS revenue guidanceRevenue: $5.35B-$5.50B; Adj. EBITDA: $3.025B-$3.100BUSD
    Pricing policy impact$90 millionUSD
    Product franchise net sales26%%
    Price volume mix decompositionFavorable net pricing
    Business development capacity deal appetiteOpen to pursuing opportunities

    Deals & partnerships

    2
    ShiboIntegration of full-service distributor in China for Solta Medical

    The integration has been executed exceptionally well and created significant value for Bausch Health in just 6 months.

    DURECTAcquisition of an asset in the third quarter of last year

    Example of a relatively small investment at the development stage that fits the company's strategy and capabilities.

    Risks & headwinds

    4
    Gross-to-net accrual changesH2 FY26

    $150 million headwind

    Increased CMS rebatesQ4 FY26 (in anticipation of Jan 1, 2027 start)

    $90 million expense

    Generic competition for AplenzinH2 FY26 (starting Q3 FY26)

    $50 million headwind

    Erosion of Medicaid and 340B channel revenueH2 FY26

    $75 million headwind

    What to watch in Q3 FY26

    5

    Gross-to-net accrual impact

    Q3 FY26
    CurrentAnticipated $150M headwind in H2 FY26
    TargetActual impact on revenue and profitability

    Why it matters

    This is a significant headwind that could impact the company's ability to meet its raised full-year guidance.

    First, the change of our gross-to-net accrual associated with the channel inventory is anticipated to be a headwind of roughly $150 million.

    Q&A highlights

    5

    What are the key areas of interest for business development, and what financial guidelines (e.g., leverage) would Bausch Health consider for such pursuits?

    Management highlighted U.S. Pharma (GI, liver, neuroscience, derm, pain) and adjacent therapeutic areas as key interests, leveraging their commercial engine and AI capabilities. Capital allocation prioritizes debt reduction and reinvestment. BD can involve small development-stage investments or larger assets with quick payback or significant synergies, without hindering debt reduction.

    “The strategy that we've set out for capital allocation remains the same. The first one is obviously to fix the capital structure and reduce our net debt leverage. Second is to reinvest in the business.”

    asked by Michael Freeman · answered by Jean-Jacques Charhon

    2 min read5 chapters

    Detailed Narrative

    01

    Consistent Performance and Strategic Pillars

    Bausch Health achieved its 13th consecutive quarter of top-line and bottom-line growth, demonstrating consistent execution of its strategy. The company's management principles focus on maximizing operating levers for profitable growth, driving operating leverage through effective resource management, and disciplined cash flow generation. These efforts have led to a 20% LTM revenue growth since year-end 2023 and a 400 basis point increase in adjusted EBITDA margin compared to 2023.

    02

    Solta Medical's Value Accretion from China Integration

    Solta Medical delivered outstanding results, with revenue up 38% and segment profit up 69% year-over-year. This performance was significantly boosted by the successful integration of its full-service distributor, Shibo, in China, where revenue increased 136%. Management estimates the full-year run rate for Solta's segment profit to be approximately $330 million, a $100 million increase from 2025, implying a potential $1 billion increase in Bausch Health's enterprise value.

    03

    Business Development Focus and Capital Allocation

    Business development remains a high strategic priority, particularly in the U.S. Pharma platform (GI, liver, neuroscience, derm, pain) and adjacent therapeutic areas, leveraging the company's commercial infrastructure and AI-powered customer insights. The capital allocation strategy prioritizes fixing the capital structure and reducing net debt, followed by reinvestment in the business. BD opportunities range from small development-stage investments (like DURECT) to larger assets with quick payback or significant synergies.

    04

    Second Half 2026 Headwinds and 2027 Outlook

    Despite strong first-half performance, the company anticipates several headwinds in the second half of 2026. These include a $150 million impact from gross-to-net accrual changes (including a $90 million expense for increased CMS rebates starting January 2027), a $50 million headwind from Aplenzin generic competition, and a $75 million headwind from continued erosion in Medicaid and 340B channels. The 2027 adjusted EBITDA guidance of $2.7 billion remains unchanged, assuming Xifaxan exclusivity until January 2028.

    05

    Bausch + Lomb Monetization Strategy

    Bausch Health continues to evaluate avenues to fully realize the value of its Bausch + Lomb asset for BHC shareholders. The 2025 refinancing extended the runway and increased flexibility regarding the timing of📎 this process. Bausch + Lomb's aggressive Vision 2027 financial targets, including significant EBITDA and revenue increases by 2028, are important considerations in the monetization strategy.

    AI-generated summary of the company’s earnings call. Not investment advice.