Detailed narrative
Strategic Shift to Operating Leverage and Margin Expansion
Bausch + Lomb has focused on building a strong foundation over the past three years, simplifying the organization, driving cost discipline, and improving execution. This fundamental shift is now translating into operating leverage and margin expansion, as evidenced by 59% adjusted EBITDA growth and a 500 basis point expansion in adjusted EBITDA margin to 16.1% in Q1. The company's Vision 27 initiative has contributed to a more than 300 basis point improvement in adjusted SG&A margin, reflecting enduring structural changes.
Pharmaceuticals Segment Outperformance
The Pharmaceuticals segment delivered an outstanding first quarter with 12% constant currency revenue growth. This was primarily driven by strong execution from Miebo, which saw a 33% increase to $76 million, and Xiidra, which grew 30% to $87 million. The dry eye portfolio has successfully transitioned from a launch phase to a growth mode, with management expecting sustained revenue growth and margin expansion from both products, supported by increasing bottom-line leverage.
Vision Care Strength and Market Leadership
The Vision Care segment, encompassing contact lenses and consumer products, continued to deliver strong results with 5% constant currency revenue growth. Contact lens growth, particularly the Daily SiHy portfolio (up 25%), once again outpaced the industry. In consumer, LUMIFY generated $55 million in revenue, up 15%, and the consumer dry eye portfolio grew 16% to $114 million, led by Artelac's 25% growth. The company maintains its position as the #1 consumer eye health company globally.
Surgical Business Rebuild and Premium Strategy Traction
Surgical segment revenue increased 1%, below expectations due to temporary factors like weather disruption🌐s and reimbursement pressures, and a strategic rebuild of the U.S. field force. Despite this, the premium strategy is gaining traction, with premium IOLs growing 27% and enVista Envy sales up 88%. U.S. system placements were nearly three times higher than the prior year, positioning the company for future procedure growth. The business is expected to strengthen sequentially through the year as the new commercial structure scales.
Robust Pipeline Momentum and Innovation
Bausch + Lomb demonstrated concrete pipeline progress with the NDA filing for LUMIFY NEXT and CE Mark submission for seeLYRA in Q1. Commercialization efforts are also advancing with the shipping of PreserVision AREDS3 and Blink Triple Care preservative-free. The company increased R&D investment by 17% in the quarter, supporting a pipeline of over 60 programs expected to deliver milestones and drive growth well into 2030 and beyond, including new lens offerings like Project Halo starting in 2028.
Financial Discipline and Confident Outlook
The company's financial discipline is evident in the 170 basis point improvement in adjusted gross margin to 61.2% and 340 basis point improvement in adjusted SG&A margin. This led to a 59% year-over-year increase in adjusted EBITDA. Management raised its full-year revenue guidance to $5.42 billion-$5.52 billion and adjusted EBITDA guidance to $1.01 billion-$1.06 billion, reinforcing confidence in achieving its 3-year targets, including a 3.5x net leverage target by end of 2028 and over 600 basis points EBITDA margin improvement by 2028.