Bausch + Lomb Corp. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Strategy and Performance: Reestablished as best eye health company, core business performing well, mid-single-digit constant currency revenue growth.
• Recall Update: Voluntary recall of enVista IOLs due to TASS signal, thorough investigation, enhanced inspection protocols, returned to market, positive feedback from customers.
• Tariffs: Exposure to U.S. to China exports, mitigation strategies include inventory stocking, in-house manufacturing, reevaluating pricing, global footprint optimization.
• Product Highlights: MIEBO growth, XIIDRA volume growth offset by gross to net deductions, Blink products growth, Daily SiHy contact lenses growth, Arise lens-fitting system launch, pipeline innovation in eye health.

Segment Performance

• Vision Care: Q1 revenue $656 million, +5%. Consumer business +5%, LUMIFY +9%, dry eye portfolio $92 million (+15%), Artelac +15%, Blink +85%, Eye Vitamins +4%. Contact lens revenue +5%, Daily portfolio +7% (Daily SiHy +42%), FRP portfolio +5% (ULTRA +15%), China contact lens business +6%.
• Surgical: Q1 revenue $214 million, +11%. Consumables +5%, equipment +9%, implantables +26% (Standard IOLs +6%, Premium IOLs +77% led by enVista).
• Pharma: Q1 revenue $267 million, +1%. U.S. branded Rx +7% (MIEBO $57 million, +8% seq, +100% y-o-y), XIIDRA $67 million, International Pharma +6%, U.S. Generics -23%.

Guidance

• Raised full-year revenue guidance to $5 billion to $5.1 billion (absorbs enVista recall impact, favorable currency).
• Adjusted EBITDA guidance $850 million to $900 million (absorbs enVista recall, favorable currency).
• Adjusted gross margin ~61.5%, R&D ~7.5% of revenue, interest expense ~$375 million, tax rate ~15%, CapEx ~$280 million.
• Tariffs expected to be a ~120 basis point headwind to adjusted EBITDA margin, no update to guidance due to dynamic nature.

Risks

• Tariff impact on U.S. to China exports, evolving tariff landscape, potential operational disruptions.
• Recall impact on enVista IOLs, though mitigated by enhanced protocols and market return.

Question and Answer

• Q: Patrick Wood from Morgan Stanley on implantable side, impact of enVista recall, customer feedback A: Brent Saunders on recall decision, customer interactions at ASCRS, trust earned through safety and transparency
• Q: Young Li from Jefferies on consumer business, tariffs, price pass-through A: Brent Saunders on consumer demand resiliency, Sam Eldessouky on tariff mitigation strategies
• Q: Joanne Wuensch from Citibank on contact lens market, pipeline A: Brent Saunders and Yehia Hashad on contact lens market growth, pipeline progress in biomimetic lenses, myopia contact lens, glaucoma product
• Q: Larry Biegelsen from RBC Capital on tariffs, XIIDRA A: Sam Eldessouky on tariff impact timing, Brent Saunders on XIIDRA strategy
• Q: Douglas Miehm from RBC Capital on pharmaceuticals, glaucoma product A: Yehia Hashad on glaucoma product development, timing
• Q: Matt Miksic from Barclays on M&A, tariffs A: Brent Saunders on M&A posture, focus on early-stage IP
• Q: Robbie Marcus from JPMorgan on tariffs, EPS impact, debt covenants A: Brent Saunders and Sam Eldessouky on tariff transparency, mitigation strategies, debt compliance