Bausch Health Cos. Inc., formerly known as Valeant Pharmaceuticals, topped Wall Street estimates for quarterly profit on Tuesday and underlined its commitment to reduce its huge debt pile.
The company’s Toronto-listed shares were up 6 per cent, while U.S. shares rose 7.5 per cent in early trading after Bausch also raised full-year adjusted EBITDA forecast.
“We will continue to prioritize the use of available cash to pay debt. We’re clearly an outlier with the amount of leverage we carry,” chief financial officer Paul Herendeen said in a postearnings call with analysts.
“If we can accelerate the process of getting our leverage down, it enables us to loosen up a little bit on … investments that we would like to make.”
Since taking the helm at the erstwhile Valeant in 2016, Joseph Papa has prioritized paying down the company’s debt, which had ballooned after former chief executive Mike Pearson’s aggressive acquisition strategy.
The company had reduced debt by about US$7-billion since the first quarter of 2016, with debt at US$25.43-billion as of June 30.
“[Bausch has] four times more debt than they have equity. The management team is doing all they can … but quite frankly they need more products,” BTIG analyst Timothy Chiang said.
Bausch raised its 2018 forecast for adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to between US$3.20-billion and US$3.35-billion, from an earlier estimate of US$3.15-billion to US$3.3-billion.
Second-quarter revenue got a lift from higher sales in its Salix business. Revenue in the unit, which makes bowel disorder treatments Xifaxan and Relistor, rose nearly 14 per cent to US$441-million.
The company’s Bausch + Lomb/International segment reported organic revenue growth of about 4 per cent, adjusted for divestitures and foreign-exchange effects.
Net loss attributable to the company widened to US$873-million, or US$2.49 a share, for the three months ended June 30, as the company incurred an asset impairment charge and recorded an increase in income tax provision.
Excluding one-time items, the company earned 93 cents a share, well ahead of the average analyst estimate of 80 cents, according to Thomson Reuters I/B/E/S.
Total revenue fell 4.7 per cent to US$2.13-billion, largely owing to a drop in sales in its optical products and dermatology businesses. Analysts had expected US$2.06-billion.