Bausch Health (BHC) Q4 2025 Earnings Transcript

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Date

Wednesday, Feb. 18, 2026 at 5 p.m. ET

Call participants

• Chief Executive Officer — Thomas Appio
• Chief Financial Officer — Jean-Jacques Charhon
• Chief Medical Officer, Head of Research and Development — Johnson Sadeh
• Chief Operating Officer — Leszek Sulewski
• Head of Corporate Development — Michael Nedelcovych

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Takeaways

• Revenue (excluding Bausch + Lomb) -- $1.4 billion for the fourth quarter, representing a 9% increase on a reported basis and 5% organic growth.
• Adjusted EBITDA (excluding Bausch + Lomb) -- $773 million for the fourth quarter, up 9% year over year and ahead of internal guidance.
• Full-year revenue growth -- 7% reported and 6% organic, excluding Bausch + Lomb, supported by broad-based results across all core business lines.
• Full-year adjusted EBITDA growth -- Above 10% excluding Bausch + Lomb; management noted results exceeded expectations, even without major acquisitions.
• Salix segment Q4 revenue -- $693 million, a 9% reported increase, with higher-than-expected residual Medicaid volume contributing less than $50 million in revenue.
• International segment Q4 revenue -- $306 million, up 10% reported and 2% organic; EMEA and LATAM drove double-digit reported growth, while Canada declined 6%.
• SOLTA Medical Q4 revenue -- $137 million, down 1% reported and flat organically, with transition from distributor to direct model in China causing a $10 million–$15 million EBITDA impact.
• Diversified segment Q4 revenue -- $255 million, up 12% largely due to improved net pricing.
• Bausch + Lomb Q4 revenue -- $1.4 billion, an increase of 10% reported, led by Pharmaceuticals growth of 16%.
• Cash flow and net debt reduction -- Fourth quarter adjusted operating cash flow was $362 million (down $25 million year over year), enabling a $320 million reduction in net debt; debt maturity profile improved by $1.7 billion through refinancing.
• Shibo acquisition in China -- Closed Dec. 1, 2025, strengthening Solta's direct commercial presence in the country and expected to return China to Solta's top geography in 2026.
• XIFAXAN revenue -- Grew 11% for the full year; management cited "continued impact of our commercial team's efforts."
• Thermage revenue -- Increased 19%, driven by Asia-Pacific demand.
• Guidance for 2026 (excluding Bausch + Lomb) -- Revenue expected at $5.25 billion-$5.4 billion (3% growth at midpoint); adjusted EBITDA at $2.88 billion-$2.95 billion (4% growth at midpoint); adjusted operating cash flow at $1.2 billion-$1.28 billion (4% growth at midpoint), with stronger growth anticipated in the second half.
• Product pipeline advancement -- Phase 3 trial enrollment for larsaquecosterol in alcohol-associated hepatitis began post-quarter; study includes 350 patients with 90-day transplant-free survival as the primary endpoint.
• Business development focus -- Management highlighted acceleration of business development activities enabled by improved capital structure, with ongoing asset screening in core therapeutic areas and recent acquisitions (DIRECT and Shibo) cited as strategic priorities.
• Bausch + Lomb monetization strategy -- CFO Charhon said, "the separation per se will have to be in the form of reselling our B+L equity stake," with flexibility to time and structure sales guided by shareholder value maximization.
• XIFAXAN exclusivity and legal status -- First generic entry is expected on Jan. 1, 2028; ongoing litigation with Teva, Amneal, and Norwich continues, with existing settlements and court processes outlined.
• EBITDA trajectory post-IRA and LOE -- CFO Charhon reiterated, "the average of 2026 and 2027 would be fairly similar to the EBITDA that we delivered in 2025," with 2027 projected around $2.7 billion.

Summary

Bausch Health Companies (NYSE:BHC) posted double-digit adjusted EBITDA growth and 7% revenue growth in 2025, outperforming internal guidance and attributing results to operational improvements and portfolio optimization.

The company completed key refinancing transactions totaling $9.6 billion, reducing near-term debt obligations to below $700 million through 2027. Management said this enables patient, value-driven options for Bausch + Lomb monetization. Salix, International, and Diversified segments all delivered revenue growth, with Salix revenues benefiting in part from one-time state Medicaid volume. Management confirmed launch of a pivotal Phase 3 trial for pipeline asset larsaquecosterol and expects Solta's China business, enhanced by the Shibo acquisition, to reclaim preeminence in 2026. Guidance anticipates mid-single-digit growth for revenue, EBITDA, and cash flow, with stronger acceleration in the latter half of the year due to normalization following non-recurring 2025 benefits.

• XIFAXAN, the largest product, is projected to continue growth in core channels for 2026, but management noted that "2025 might be the peak year for XIFAXAN just because we have some one-time benefits in the year that will not repeat in 2026."
• Thermage and core dermatology products such as Cabtreo and Relastin, particularly in Asia-Pacific and Canada, remain key growth drivers identified by management.
• Bausch Health leadership expects to use improved refinancing flexibility to prioritize selective asset acquisitions that align with its commercial infrastructure and drive long-term shareholder value.
• The company acknowledged that XIFAXAN generic entry is expected Jan. 1, 2028, and management provided transparency on ongoing legal proceedings influencing exclusivity.
• In response to the Inflation Reduction Act and anticipated loss of exclusivity, average adjusted EBITDA for 2026 and 2027 is expected to align closely with 2025 actuals, with 2027 specifically targeted at approximately $2.7 billion.

Industry glossary

• LOE (Loss of Exclusivity): The point at which a branded drug loses market exclusivity, allowing for generic competition and typically resulting in significant revenue and margin erosion.
• ANDA (Abbreviated New Drug Application): The U.S. FDA submission required to market a generic version of a previously approved pharmaceutical product.
• IRA (Inflation Reduction Act): U.S. legislation with provisions impacting drug pricing and rebates under federal healthcare programs such as Medicare.
• Gross-to-net: The adjustment from gross sales to net revenue after rebates, discounts, and related deductions, commonly referenced in pharmaceutical financial reporting.
• Transplant-free survival: A clinical endpoint measuring the proportion of study subjects alive without undergoing a liver transplant within a set timeframe, utilized in trials for liver disease.

Full Conference Call Transcript

Thomas Appio, Chief Executive Officer; Jean-Jacques Charhon, Chief Financial Officer; and Johnson Sadeh, Chief Medical Officer, Head of Research and Development. Before we begin, I would like to remind you that today's presentation contains forward-looking information. Please take a moment to review the forward-looking statements disclaimer at the beginning of the slides accompanying this presentation, as it contains important information. Actual results may differ materially from those expressed or implied in these forward-looking statements, and you should not place undue reliance on them. Please also refer to our SEC filings and our filings with Canadian Securities Administrators for a discussion of certain risk factors that could cause actual results to differ materially from expectations.

We use non-GAAP financial measures to help investors better understand our operating performance. These non-GAAP measures may not be comparable to similarly titled measures used by other companies and should be considered in addition to, and not as a substitute for, measures calculated in accordance with GAAP. Reconciliations to our non-GAAP measures are included in the appendix of slides accompanying this presentation and are available on Bausch Health Companies Inc.’s Investor Relations website. Finally, the financial guidance in this presentation is effective as of today only. We do not undertake any obligation to update guidance. Discussion today, Wednesday, February 18, will focus on Bausch Health Companies Inc. excluding Bausch + Lomb.

However, we will briefly comment on Bausch + Lomb’s results announced this morning. We will refer to year-over-year comparisons with the same period last year unless otherwise noted. With that, I will turn the call over to our CEO, Thomas Appio.

Thomas Appio: Thank you, Garen, and welcome to everyone joining our earnings call today. Our year concluded with an impressive eleventh consecutive quarter of growth in both revenue and adjusted EBITDA, reflecting our organization's consistent performance. This success is powered by our global team’s unwavering commercial focus and operational excellence, as full year results exceeded our guidance on all key metrics. The fourth quarter gave us an opportunity to reflect on the progress we have made over the past year. Our commercial performance has remained strong across the markets we serve. Our capital structure has improved significantly.

Our operating model has continued to deliver efficiencies, all of which has given us the ability to proactively pursue business development to enhance our long-term outlook. As we begin 2026, our strategic priorities remain firm and our approach consistent. We continue to prioritize initiatives that yield the highest value across our organization.

Jean-Jacques Charhon: Our global footprint and 2025 performance give us confidence for future growth.

Thomas Appio: While Jean-Jacques will walk through the financials in more detail, I would like to take a few minutes to highlight our fourth quarter performance. In the fourth quarter, Bausch Health Companies Inc., excluding Bausch + Lomb, increased revenue by 9% on a reported basis and 5% on an organic basis when compared to 2024. Salix demonstrated resilient demand excluding Medicaid, supported by solid volume in remaining channels and continued execution across promotional, access, and digital capabilities.

Jean-Jacques Charhon: Adjusted EBITDA for Bausch Health Companies Inc., excluding Bausch + Lomb, increased by approximately

Thomas Appio: 9% compared to the prior-year period and ahead of implied guidance for the quarter. The business continued to operate efficiently as teams managed spending thoughtfully while sustaining the investment needed to support growth. On 12/01/2025, we acquired Shibo, a full-service aesthetics distribution platform in China, strengthening our direct commercial presence in this key market. This strategic transaction provides us with access to one of the largest global aesthetics markets and enhances our ability to serve providers directly. Our cash generation remained healthy, allowing us to achieve another year of over $1,000,000,000 in adjusted operating cash flow while also reducing our net debt by several hundred million dollars.

Lastly, we further improved our debt maturity profile by approximately $1,700,000,000 through a debt exchange in late December 2025. This transaction further strengthened our balance sheet and provided additional flexibility as we evaluate opportunities to unlock value across the portfolio. For the full year, Bausch Health Companies Inc., excluding Bausch + Lomb, delivered year-over-year growth of 7% on a reported basis and 6% on an organic basis. This reflects broad-based performance across the enterprise.

Jean-Jacques Charhon: We achieved double-digit adjusted

Thomas Appio: EBITDA growth excluding Bausch + Lomb for full year 2025, ahead of expectations. Excluding the third quarter charge related to acquired in-process research and development would yield an even higher adjusted EBITDA growth rate for the year.

Jean-Jacques Charhon: Salix and Solta delivered

Thomas Appio: double-digit top-line growth of 118%, respectively. Three of our four segments grew revenue this year, and three improved profitability, highlighting the diversification of the portfolio and the contributions generated from multiple areas of the business. At the product level, performance during the year remained healthy across multiple important areas. XIFAXAN revenue grew 11% for the year, reflecting the continued impact of our commercial team's efforts. Thermage revenue grew a robust 19%, anchored in Asia-Pacific. And other products such as Relastin and Cabtreo also grew very well. These outcomes reflect consistent demand, strong field activity, and targeted investments throughout the year.

Jean-Jacques Charhon: Overall,

Thomas Appio: 2025 represented another year of excellent execution leading to results above guidance. Let me take a moment to provide a brief update on RED-C. We are disappointed by the outcome we announced in January that, while safe and well tolerated, neither Phase 3 trial met its primary endpoint. We are currently reviewing the full dataset to determine both potential new development opportunities. Reflecting on the overall performance, we closed 2025 with strong results. Our team advanced our strategic priorities, strengthened the company's operational position, and executed with excellence. I appreciate the unwavering commitment our teams worldwide have shown over the course of the year. Together, we remain focused and committed to delivering results for shareholders.

I will now hand it over to Jean-Jacques to walk you through the detailed financial results. Jean-Jacques?

Jean-Jacques Charhon: Thank you, Tom.

Thomas Appio: Let us start with our consolidated non-GAAP financial performance for the fourth quarter, which you will find on Page 11. Revenue was $2,796,000,000, up 9% on a reported basis compared to the same quarter a year ago. Adjusted gross margin was 71.6%, which was 80 basis points lower than the same period a year ago. Adjusted operating expenses were $10,033,000,000,000,000,000, an increase of $75,000,000 year over year. Adjusted R&D expenses were $161,000,000, which was a $2,000,000 decrease when compared to the fourth quarter of 2024. Adjusted EBITDA was $10,052,000,000,000,000,000 in the fourth quarter, an increase of 13% year over year. Finally, adjusted operating cash flow was $515,000,000.

Moving now to the fourth quarter Bausch Health Companies Inc. performance excluding Bausch + Lomb, starting on Page 15. As Tom indicated, we had another strong operational performance across all metrics in Q4. Revenue for the fourth quarter was $1,391,000,000, up 9% on a reported basis. Adjusted EBITDA for the fourth quarter was $773,000,000, a 9% increase from 2024.

Jean-Jacques Charhon: Adjusted operating cash flow for the fourth quarter was $362,000,000, down $25,000,000 year over year

Thomas Appio: primarily due to the change in timing of our cash interest payments following the refinancing we executed on April 8, 2025. Our strong cash flow generation in Q4 allowed us to reduce our net debt by approximately $320,000,000, which was much better than originally anticipated. Turning now to our fourth quarter performance by segment. Starting with Salix on Page 17. Salix revenues in the fourth quarter were $693,000,000, which was an impressive 9% increase year over year on a reported basis. This strong performance in Q4 was ahead of expectations. While we had anticipated the continuation of our double-digit script growth across all existing channels, we also benefited from some higher-than-planned residual volume from several state Medicaid customers.

We do not expect this to be a material revenue driver moving forward. Now moving to the International segment, which you will find on Page 18. Revenues were $306,000,000, an increase of 10% on a reported basis and 2% on an organic basis compared to the same period a year ago. While the performance was strong overall, the results by geography were mixed. EMEA and LATAM grew double digit on a reported basis, while Canada contracted 6%. Congratulations to the EMEA team for achieving its twelfth consecutive quarter of organic revenue growth, which is very impressive.

Also worth noting is our performance in LATAM, which returned to growth with a 22% increase in revenue on a reported basis and still 11% on an organic basis. What is more, growth was balanced across most of our core brands this quarter. Finally, Canada's revenue contraction was due to a reduction in Wellbutrin volume, which faced more generic competition in this quarter compared to the same quarter one year ago. This was partially offset by the double-digit growth of our promoted products portfolio, led by Cabtreo and Relastin. Now let us review the performance of our Solta Medical segment, which you will find on Page 19. Revenues were $137,000,000, a slight decrease of 1% on a reported basis

Leszek Sulewski: and flat on an organic basis compared to the same period last year. Total solid operational performance was negatively impacted by the transition of our full-service distributor in China. Excluding this one-time impact, we estimate that Solta revenues would have been up mid-single digits in the fourth quarter.

Thomas Appio: Separately,

Leszek Sulewski: special mention goes to our team in South Korea, which continues to perform exceptionally well. Reported revenue in that market was up 40% this quarter, making South Korea our largest revenue-generating geography for Solta in 2025. Turning now our focus to the quarterly performance of our Diversified segment, which you will find on Page 20. Revenues were $255,000,000, an increase of 12% on a reported basis mostly due to the improved net pricing in the quarter. Finally, let me wrap up the segment discussion for the fourth quarter by commenting briefly on Bausch + Lomb results, which you will find on Page 21. Revenues were $1,405,000,000, up 10% on a reported basis compared to the same period last year.

B+L’s strong revenue performance in Q4 was led by its Pharmaceuticals business, which had an impressive 16% growth year over year on a reported basis, while its other two businesses, Vision Care and Surgical, each grew 8%. Now let us end the review of the fourth quarter by highlighting improvements we have made to our capital structure. There were three major highlights for the quarter. First, we repaid our $300,000,000 accounts receivable facility and, in the process, lowered our average cost of debt. We also completed a $1,700,000,000 secured debt exchange, which allowed us to push out maturities for four years and capture $80,000,000 of debt discounts.

Finally, we generated $362,000,000 of adjusted operating cash flow and reduced our net debt by more than $300,000,000 quarter over quarter. The strengthening of our balance sheet caps a great quarter performance across all metrics. Now before I cover our guidance for 2026, let me provide a quick wrap-up of our outstanding full year performance and the progress we have made in the last twelve months. We grew revenue 7% and adjusted EBITDA 10%, demonstrating our continued commitment to driving profitable growth and increasing operating leverage. While we recognize that some of 2025 growth was a result of non-recurring drivers, the underlying operating growth would still be high single digit year over year.

More importantly, it is worth acknowledging that all these outstanding operational results came without the benefit of any major acquisitions and solely through the optimization of the same portfolio we have had for the last four years. Finally, we significantly improved our debt maturity profile by executing two large refinancing transactions totaling together $9,600,000,000 and leaving now less than $700,000,000 of maturities obligation until 2027. This is an incredible turnaround when thinking about where we stood just twelve months ago. That being said, a lot more work lies ahead, but our view is that 2025 marked an inflection point in our operational and financial trajectory.

Now let me provide you with our 2026 financial guidance for Bausch Health Companies Inc., excluding Bausch + Lomb, which you will find on Page 25. For 2026, we expect revenues to be between $5,250,000,000 and $5,400,000,000. The midpoint of that range would translate into a 3% increase year over year. Adjusted EBITDA is expected to be between $2,875,000,000 and $2,950,000,000, representing a 4% increase year over year at the midpoint. Finally, we expect adjusted operating cash flow to be between $1,200,000,000 and $1,275,000,000; the midpoint of that range would translate to a 4% increase year over year. Please note that the guidance for 2026 is at current FX rates.

Let me also add that from a phasing perspective, anticipate a stronger growth rate in the second half of 2026 given the temporary nature of some of the benefits we recorded in 2025. With that context and before I hand it over to Tom, let me review our key financial priorities and how they will be pursued in the coming year.

Jean-Jacques Charhon: First,

Leszek Sulewski: increasing the value of Bausch Health Companies Inc. operational assets through innovation, optimizing the growth of our portfolio of brands across the globe, as well as pursuing opportunities to further expand our portfolio of assets through business development. There is no major change versus what we set out last year, making 2026 an extension of what we accomplished in 2025. Second, evaluating all options for unlocking value for all stakeholders, including maximizing the value of our Bausch Health Companies Inc. and Bausch + Lomb assets. Our improved debt maturity profile now gives us the ability to use value maximization for shareholders as our primary guide for future asset monetization decisions. And third, continue to optimize our capital structure.

Now that we have completed the largest refinancing transaction in our history, the approach will be more opportunistic while maintaining maximum flexibility of funding any future investment in Bausch Health Companies Inc. In short, we expect 2026 to be another opportunity to make good progress against some of our key finance priorities with a more balanced approach between tactical improvement and strategic value creation. I will now turn it over to Tom. Thank you, JJ.

Thomas Appio: I would like to now shift from the financials to how

Leszek Sulewski: we are positioning the company for success in 2026. I would like to highlight a few of our segments and businesses today to illustrate the breadth of our underlying portfolio and the many opportunities we see ahead. Salix is an industry leader in gastroenterology and hepatology. For over thirty-five years, we have built our company position by establishing long-standing relationships with healthcare providers, institutions, and patients. XIFAXAN, RELISTOR, and TRULANCE are a trusted set of brands that anchor our leadership position. Our focus on education, on patient access, and ongoing physician engagement reinforces our standing as one of the top GI pharmaceutical companies in the United States.

In 2026, we will continue our momentum with Salix in commercial and Medicare segments. We continue to leverage our customer insights platform to find new patient starts and accelerate starting treatment in all GI conditions that we treat, including OHE, IBS-D, IBS-C, and OIC. Using AI enables us to do this in a way that is faster, smarter, and more efficient. In 2026, we will leverage our data-driven approach to reach patients through direct-to-consumer advertising and to reach healthcare providers through improved targeting. This is a franchise we expect will continue to perform. Innovation remains central to the Salix segment. Larsaquecosterol, our Phase 3 program for alcohol-associated hepatitis, or AH, represents an important potential advancement.

AH remains an area of substantial unmet need, and we are committed to advancing this program to deliver meaningful therapeutic options for patients. Following quarter end, we began enrolling patients in the Phase 3 study, marking a key step forward for this program. Turning to Solta, Solta is a leading medical aesthetics platform and offers a comprehensive set of energy-based devices within the global aesthetics market. Our technologies address a broad range of clinical applications, enabling us to serve diverse provider segments and consumer needs while strengthening our competitive position across key markets. Solta’s above-market performance reflects a long history of product innovation and strong commercial platform.

We continue to invest thoughtfully to drive long-term growth and capture the significant opportunities ahead.

Thomas Appio: By

Leszek Sulewski: investing in our people

Thomas Appio: strengthening our management structure,

Leszek Sulewski: developing our team members and attracting top talent to support the next phase of growth. Investing in scale: as mentioned earlier, we completed the acquisition of Shibo’s aesthetics business in December, bringing distribution, sales, and marketing capabilities fully in-house for Solta China. This enhances our reach, deepens provider and consumer engagement, and increases utilization. We expect China to reclaim the number-one geography for Solta in 2026. Investing in innovation: expanding our R&D organization and building new medical and clinical affairs capabilities to accelerate product development and generate robust clinical evidence. Investing in manufacturing capacity: ensuring we can meet rising global demand while maintaining quality and operational excellence.

Based on the momentum we have seen to date and the opportunities we anticipate in this market, we believe that Solta is well positioned to continue delivering double-digit growth in 2026, supported by strong fundamentals. Let me now turn to our International segment, which is often underappreciated yet continues to perform well and we expect will remain an important contributor to the company in 2026. The segment includes several diverse markets, each with a robust commercial model and well-established brands. Within our EMEA market, we expect Central Europe to maintain its solid position supported by established presence in Poland with an excellent team. This presence will allow us to introduce new products and product line extensions.

We plan to continue leveraging our position as the number-one pharmaceutical company in Serbia across multiple therapeutic areas. In Mexico, the largest component of our Latin American business, we are ranked as the number-two dermatology company. In both Mexico and Colombia, our Berojekta products are ranked as the number-one complex B brand. Across Mexico and Central America, our Bausch Health Companies Inc. branded generics hold at least one top-three position across the therapeutic categories. We have now entered the cardiometabolic market in Latin America, which represents a large and growing opportunity for Bausch Health Companies Inc. Our infrastructure, brand recognition, and commercial reach position us well to compete effectively in the cardiometabolic category.

We expect Mexico to continue to return to growth in 2026, including drivers Berojekta and our newly launched

Jean-Jacques Charhon: cardiometabolic franchise.

Leszek Sulewski: In Canada, we are ranked as the number-one dermatology company supported by strong brands including Cabtreo and Jublia that continue to perform well and solidify our presence in the market. Together with our promoted products, we expect promoted products to continue to grow in double digits in 2026. With the results we have seen, and the opportunities across our global footprint, we expect our International segment to deliver growth in 2026, supported by durable, underlying fundamentals. Our five strategic pillars will continue to guide Bausch Health Companies Inc. in 2026. These pillars—people, growth, innovation, efficiency, and unlocking value—provide structure and clarity to our decision making. They drive alignment of our teams on the actions required to deliver sustainable results.

These priorities shape our daily operations, reinforcing accountability, ownership, execution, and a focus on progress. We remain committed to commercial, operational, and R&D excellence, along with the proactive pursuit of business development initiatives that expand our portfolio and enhance our long-term outlook. We finished 2025 on a high note with exceptional full year results reflecting significant progress across our strategic priorities. I want to extend my sincere gratitude to the Bausch Health Companies Inc. team worldwide. These achievements are a direct result of your passion, intelligence, and unwavering dedication. We are entering 2026 with confidence. The company has a strong team and a diversified portfolio with multiple paths to growth and innovation.

With that, we will open the line for Q&A.

Operator: Thank you. We will now begin conducting a question-and-answer session. Our first question today is coming from Umer Raffat from Evercore ISI. Your line is now live.

Unknown Analyst: Hello, this is JP in for Umer. Congratulations on the quarter. I have one question. Post RED-C readout, what is your updated decision framework for the separation? How are you thinking about debt repayments? Can you please illustrate?

Leszek Sulewski: Yes, thanks for the question. I think the way I would say it is there is no change. We are, of course, disappointed in the results from RED-C. We continue to focus on repaying debt

Thomas Appio: and reinvesting in our business, whether promoting existing products,

Leszek Sulewski: developing new products, or engaging, as I said in my prepared remarks, engaging in business development activities, which is

Thomas Appio: one of the things we are accelerating now that we have significantly changed our capital structure with the refinancing.

Unknown Analyst: Following up on the BD, can you please give us a little more color about your business development plans?

Thomas Appio: Sure.

Michael Nedelcovych: Well, firstly, as you know, the acquisition DIRECT

Leszek Sulewski: and Jonathan is here and he can talk about that. And when we acquired DIRECT, we acquired it not just for alcohol-associated hepatitis, but also as a platform. So we have been, and Jonathan can speak to that. The other thing also from a business development front is looking at the therapeutic areas that we compete in. We have screened a lot of assets, looking at where we can bring in acquisitions that we can leverage with our outstanding commercial team. That is one of the greatest assets of this company, the commercial excellence, both from a selling and marketing perspective. So we are looking for different assets that we can put and slot in to those teams.

Also looking, as I talked about in my prepared remarks, on Solta, where Solta is a great brand for us. We have great innovation there, and there are opportunities to continue to look at acquisition possibilities to slot into the portfolio as well. I will hand it to Jonathan. You might want to talk about the DIRECT acquisition and why we see it as a platform.

Thomas Appio: Yes, of course. So Larsaquecosterol was

Leszek Sulewski: really a great acquisition for us. To remind you, it is an epigenetic modulator, so it prevents cell death in response to acute cell injury. DIRECT did a great job of proving that this drug is very efficacious in one setting of acute cell injury, in alcohol-associated hepatitis, and that is the first, the lead indication that we have started Phase 3 with and strongly believe in, based on the data that we saw in Phase 2.

But we, as Tom was saying, believe this is a platform because if we do see an effect, such a strong effect, in one form of acute cell injury like alcohol-associated hepatitis, we believe—and actually DIRECT has some preclinical and clinical data to suggest—that in other settings of acute cell injury we would also see efficacy. So we are now actually going over all these other potential indications and hope to prioritize some of those in the very near future.

Operator: Thank you very much. Next question. Thank you. Next question today is coming from Leszek Sulewski from Truist Securities. Your line is now live.

Leszek Sulewski: Good evening. Thank you for taking my questions. I have two and then a follow-up, maybe to Jonathan. So first on Solta, can you just share some puts and takes around the Shibo and think specifically how much of the guided revenue and EBITDA growth is driven by the accounting step-up versus the volume growth of Thermage? And could you provide the expected margin accretion from the shift once the channel is fully operational? Second, on the Diversified segment, should we expect generics of Uplenzin and Bryhali launching this year? And if so, what is a fair erosion step down to model? And how are you thinking about plugging these revenue gaps?

Thomas Appio: Okay, Les. I will take the first part of the question regarding Solta. So we closed the acquisition on 12/01/2025, and things are going very well with a very smooth transition. The teams in China, both from the Solta side and the Shibo side, have done a wonderful job working to integrate the two companies. I was there in December, spoke to the entire team there, and the Shibo team is extremely excited to be part of Solta. It has been a long-standing relationship that we have had with Shibo, so it is going very well. In terms of your question regarding the accounting, I will pass that to JJ.

Jean-Jacques Charhon: Hi, Les. There are two major impacts in the quarter. The first one is we purposely decided not to sell additional volume in November. So November obviously was kind of a blank for Solta in China. Conversely, we started selling directly to the market in December, so that provided kind of a partial offset. And then on top of that, due to purchase accounting, we basically had a step-up on some of the volume that was sold to our customers in December. Net-net, it is about a $10,000,000 to $15,000,000 hit from an EBITDA perspective in the quarter.

Michael Nedelcovych: Want to take that?

Leszek Sulewski: The revenue gap on the LOE? Yes. Uplenzin, the way I would model it is a kind of a standard erosion curve. We are expecting a number of competitors to come immediately after we lose exclusivity on Uplenzin, which is in June. And so I would not expect any unusual behavior there. Pat, you had a follow-up?

Leszek Sulewski: Yes. Thank you. For Jonathan, perhaps on the larsaquecosterol, can you share some color around the Phase 3 study design? What effect size are you powering for, and what will control mortality rate would you assume? And, I guess, what is the delta in survival you think that is sufficient for filing?

Leszek Sulewski: Yes, it is a great question. So first of all, in terms of design of the study, we have started the study now in record time, three months after we acquired the drug from DIRECT. It will be a U.S.-only study. It will include about 350 patients randomized between drug and placebo, and the primary endpoint is 90-day transplant-free survival. We have had discussions with regulators, with the FDA, about this and feel very confident about it. Somewhat fairly similar to the design of the Phase 2 trial that DIRECT ran. We have just made some design improvements, and we think the trial will be a bit more efficient than was run in Phase 2.

Now your question about the effect size. I think we have followed the Phase 2 results, and we are data-driven and following what was seen in Phase 2. We designed the trial to reflect that DIRECT saw over 50% reduction in 90-day mortality. We believe that if we can replicate that, that would be an amazing result. To remind you, there are actually no therapies approved right now, no therapies available really for this patient population. So we think this would be a huge advancement in the management of these patients and will be really very important for us and for patients out there.

Jean-Jacques Charhon: Does that answer your question?

Leszek Sulewski: Yes. Very helpful. Thank you.

Michael Nedelcovych: Thank you,

Operator: Next question today is coming from Michael Freeman from Raymond James. Your line is now live.

Leszek Sulewski: Hey, good evening, Tom, JJ, Jonathan, Garen. Thanks for taking the question. My first is on XIFAXAN. I wonder if it is fair to think that 2026 will be peak year for XIFAXAN sales given we have some renegotiated under Medicare for 2027? And if that holds true, what are your plans to accelerate sales during 2026 and mitigate the impact of the renegotiated rates under Medicare in 2027?

Jean-Jacques Charhon: Yes, Michael. Thanks for the question.

Leszek Sulewski: As you know, since I became the CEO, my focus has been on XIFAXAN and driving growth. And that was the one thing that drove the decision to have our AI engine and build it. We think we have a best-in-class engine here, which is really helping our field forces be very efficient in terms of who they are speaking to and how frequently they are speaking and what they are actually delivering in the message of what the HCP wants. So the focus here has been continuing to accelerate. As you saw, we continue to grow XIFAXAN already on the market over twenty years; we still delivered a 10% net sales growth in Q4.

So as we look to 2026, we will continue to stay focused on driving execution in the channels where we compete. So we feel confident in being able to continue to grow in those channels. There is still a lot of unmet need for patients to be treated with OHE. As I have said on previous calls, right now we are probably still only treating—of course, this is patients that are diagnosed—probably 40% to 50%. So there is still a good amount of space there to continue to grow before the product goes LOE. Maybe JJ wants to add something to that.

Jean-Jacques Charhon: Yes. Hi, Michael. A couple of things just to highlight. While we will continue to grow the business in the channels we are currently selling XIFAXAN, which exclude Medicaid and, to a certain extent, the 340B channel, on a reported basis, 2025 might be the peak year for XIFAXAN just because we have some one-time benefits in the year that will not repeat in 2026. I think we have clarified that in the prepared remarks. So I will mention a couple of elements. First, at the end of the third quarter, we had to adjust our gross-to-net percentage to reflect the fact that we had exited Medicaid. So that was kind of a good guy in the third quarter.

In the fourth quarter, we still had some residual volume from Medicaid states that were not discounted by definition because we had exited programs. That provides also another benefit. And then conversely, if you look at 2026, there will need to be an adjustment of our gross-to-net accrual in 2026 to reflect the fact that the new CMS rebate will become effective on 01/01/2027. So a lot of accounting pluses and minuses, but I think you are thinking about it the right way, which is operationally in the channels we currently serve. We will continue to grow our XIFAXAN revenue in 2026.

Michael Nedelcovych: Okay. Okay. Thank you for that. And now

Leszek Sulewski: a follow-up. I guess, thinking another way about, I guess, the timing and your framework for thinking about the full separation of Bausch + Lomb? What are you hoping to see develop within that business before it is appropriate to pursue the full separation?

Michael Nedelcovych: Yes. Michael, I think we look at it, as we talked about in the prepared remarks, the refinancing provided great flexibility for us. So it was a significant achievement this year. And I do not know if you had a chance to listen to Bausch + Lomb’s call this morning. So I think I look at it this way. We believe in the Bausch + Lomb plan: the growth story, the margin expansion story, and the selling and operational excellence. They have a robust pipeline; they have a robust product portfolio today. And then if you had listened to Investor Day, where their pipeline is going. So we really believe in that pipeline.

And then lastly, they have a great team. And they had a great quarter, and we are really excited about the future of Bausch + Lomb and, given the fact that we own 88% of it. So we are just looking now to the market to reflect the value in Bausch + Lomb. JJ, do you have any further comment?

Leszek Sulewski: The only thing I would just clarify or add is that the refinancing basically, based on our projections, allows us to pretty much deal with the maturities until 2028, assuming we maintain exclusivity on XIFAXAN until 01/01/2028. So that flexibility allows us to really be patient and to wait for the share price of B+L to reflect the improved execution and the financials that have been shared with investors late last year during Investor Day. So that is point number one. Point number two is, in light of what I think we have discussed last year, the separation per se will have to be in the form of reselling our B+L equity stake.

There has been, I think, in the past some chatter around some distribution of B+L shares, but I think the highest probability will be in the form of selling down our equity stake.

Michael Nedelcovych: Operator, next question.

Operator: Thank you. Next question is coming from Glen Santangelo from Barclays. Your line is now live.

Glen Santangelo: Yes. Thanks for taking my question. Hey, Tom, I think everybody just generally accepts the fact that the near-term results continue to look fantastic, but based on our incoming call volume, it seems like everybody just wants to talk about EBITDA impact in 2027 coming from the IRA and the pricing changes, and then again in 2028 with the LOE. And I seem to remember, I thought you gave us some guidance in the past about how 2027 EBITDA may shape up relative to 2025, and I could not remember specifically, but I do not know if there is anything you can give us, a better sense of the EBITDA trajectory just given those two events that are coming up.

Thanks.

Michael Nedelcovych: Hi, thanks for the question. And yes, the results—we are really pleased with the 2025 results. I am going to hand it over to JJ because on previous calls he has discussed this.

Leszek Sulewski: Yes. Hi, Glen. What we have said in prior calls, actually more specifically in Q3, is that the average of 2026 and 2027 would be fairly similar to the EBITDA that we delivered in 2025. Despite the overperformance that we have had in 2025 and the very strong fourth quarter, I can reiterate that guidance. Now obviously, given that we have provided guidance for 2026, you can figure out exactly how we are thinking about 2027 in light of that guidance.

But yes, there are obviously partial offsets to that higher CMS discount that provide us to soften, I would say, the relative drop that you can see, but we have got other growth platforms that we continue to work on, starting with Solta and some of the other segments. So I think that will help you rationalize the implied number for 2027.

Glen Santangelo: All right, thanks for that. Maybe I can just ask one quick follow-up on the cap structure. Obviously, you made a lot of good progress here. And Tom, I do not want to put words in your mouth, but it sounds like you believe that you are at a place where you can start doing business development currently, and you have done that this quarter. But just to follow up on JJ’s comments, you now believe the plan would ultimately be to sell Bausch + Lomb as opposed to do the spin.

Would the sale have to be in all one shot, or could it be theoretically you sell different pieces of the company or different percentages of the company down as need be? The upcoming maturities seemingly are not till 2028 anyway, so it seems like you have some time. So I just wanted to really try to understand the strategy of how you may approach Bausch + Lomb, given you have a little bit of time on your side versus maybe near-term business development priorities. Thanks. I will stop there.

Michael Nedelcovych: Thanks, Glen. So when it comes to business development, of course, doing the refinancing, the finance team and the legal team did an outstanding job. This is just incredible what we have been able to do to give us runway. And so with that runway, we are able to now really focus on BD, as you saw with the DIRECT acquisition that we did in the third quarter, the Shibo acquisition in the fourth quarter, and looking at our capital allocation and where we can create the best value. And there are a lot of assets out there that we continue to screen and look for the right fit for Bausch Health Companies Inc.

As I said in a previous question, one of the greatest assets we have is our commercial team and our commercial capabilities worldwide. So that is going to be the focus going forward, of course driven by being able to do the refinancing. I will hand it off to JJ to add more to your question.

Leszek Sulewski: Yes. So when it comes to the monetization of our B+L equity stake, really all options are on the table. I think what will guide our monetization decisions, as we said in our prepared remarks, is really shareholder value creation. The flexibility that we have got and the extended runway that we have created through the refinancing of $9,600,000,000 of our debt last year now allows us to be more patient and to evaluate all possible options to monetize our equity stake while at the same time creating shareholder value. So that is the way we think about it.

Michael Nedelcovych: And I think, Glen, as we look at the performance for 2025, the focus is going to be getting more products into the hands of our commercial team. So it is going to be a focus now, continuing to look for assets to bring into the portfolio, not only that are possibly already on the market, but what we can do from a development perspective in R&D.

Jean-Jacques Charhon: Thank you.

Michael Nedelcovych: Next question.

Jean-Jacques Charhon: Thank you. Next question today is coming from Jason Gerberry from

Operator: Bank of America. Your line is now live.

Michael Nedelcovych: Hey, guys, this is

Leszek Sulewski: Chi on for Jason. Thanks for taking our questions. One and another follow-up. So the first one is, you mentioned there were some heightened planned residual volume from several state Medicaid. Can you quantify the impact of 4Q, and what is that impact segmented across the portfolio? If not, which product benefited the most from this one-time dynamic? And my follow-up is on the scope of BD. How large of a BD deal are you willing to do based on your current capital structure?

Michael Nedelcovych: Yes, Chi, thanks for the question. I will take your second question first, and then I will hand it off to JJ. We are looking at all types. As you know, we are constrained in terms of the capital structure that we have and how much we can spend. But as we look at it, we look at our portfolio and how we are able to maximize it. And are there assets that we could bring in at a certain value? Are there other assets that some others could be interested in? So we look at it, we keep a very open approach to the type of deals we can do and the size of the deal we can do.

And so that is the framework that we are using today. I will hand it over to JJ on your question on the residual volume on XIFAXAN.

Leszek Sulewski: Most of that volume is really associated with XIFAXAN, and in the fourth quarter it really happened in October and November. It was less than $50,000,000 in terms of revenue.

Michael Nedelcovych: Thanks so much. Operator, next question.

Operator: Certainly. Our next question is coming from Michael Thomas Nedelcovych from TD Cowen. Your line is now live.

Glen Santangelo: Hi, thank you for the questions. I have two.

Michael Nedelcovych: My first is on the outlook for XIFAXAN generics. What are the key events that we should be watching that could decide if a XIFAXAN generic becomes available before 2028? Less than two years away now, so I am curious, what would you say is your level of confidence that XIFAXAN will retain exclusivity through to the settlements with generics companies in 2028? My first question. And then my second question is more of a follow-up. It relates to the medium-term outlook. JJ, you hinted at this in a previous response, but I think you said on the last call that EBITDA averaged across 2026 and 2027 would be roughly

Operator: Growth this year. Should we then assume a step down in 2027 of a similar magnitude? Thank you.

Thomas Appio: Yes, Mike. I will take the first question, and I will let JJ take the second. As you know, we know we will have a generic on 01/01/2028. So as we look at it, we are trying to maximize the value of XIFAXAN today. As you also know from the public records, Teva continues to be the first filer, at first filer status. There are two cases right now in the D.C. District Court on appeal, and that is taking its course. And then lastly, we have our other patent case in the New Jersey Court on the new patents at issue with Amneal and Norwich, of which we are still waiting to see.

There is the thirty-month stay that applies to Norwich’s second ANDA and still needs to be determined, which we believe the thirty-month stay applies. Basically, the way we look at it is we will continue to provide updates on these matters as they move through the court system. JJ?

Jean-Jacques Charhon: Yes. So, you are correct. There will be a dip in 2027. I think the math basically suggests that 2027 would be around $2,700,000,000 if you follow the math and the logic that I just outlined.

Thomas Appio: Thank you.

Operator: Thank you. We have reached the end of our question-and-answer session.

Garen Sarafian: I would like to turn the floor back over to Thomas Appio, CEO, for closing remarks.

Thomas Appio: Well, thank you all for joining us today. We closed out another solid quarter and a year of meaningful growth supported by results across a broad portfolio. Our progress in 2025 reinforces the foundation we are carrying into 2026 and positions us to deliver another year of strong execution and continued progress. I thank you again for the time and the interest you have in our company, and enjoy the rest of your evening.

Garen Sarafian: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

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