Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bausch & Lomb Corp (BLCO, Financial) reported a 20% year-over-year constant currency revenue growth for the second quarter of 2024.
- The company saw broad-based growth across all segments, including Vision Care, Surgical, and Pharmaceuticals.
- New product launches, such as Blinkx neutral tiers and Bausch & Lomb INFUSE for astigmatism, are driving growth and innovation.
- The company raised its full-year revenue guidance to a range of $4.7 to $4.8 billion, reflecting strong business momentum.
- Bausch & Lomb Corp (BLCO) is heavily investing in sales execution and operational excellence, which is becoming a cultural norm within the company.
Negative Points
- Currency headwinds negatively impacted revenue by $27 million in the second quarter.
- The company is facing margin pressure due to higher inventory costs and spot buys in the surgical segment.
- Adjusted gross margin for the second quarter was 51.9%, which, while improved, still indicates room for further enhancement.
- Free cash flow was negative $48 million for the quarter, and the company expects to be breakeven to slightly negative for the full year.
- The company is experiencing variability in TRx data for its pharmaceutical products, which could impact future performance assessments.
Q & A Highlights
Q: The quarter was strong all around with broad strength across segments and geographies. How has the rejuvenation of the company been versus expectations when you joined, and what can still use more attention?
A: Brent Saunders, CEO & Chairman of the Board: The strategy is working, focusing on execution, sales excellence, launch excellence, and operational excellence. The company has seen holistic growth across all regions and business units. The culture of executional excellence is sustainable, and the team is motivated and moving in the same direction. The portfolio has durability, with products having long patent protection and strong brand holding power.
Q: Can you talk about the performance of Myovant in the second quarter and the trends in refills and how the integrated sales team is doing?
A: Brent Saunders, CEO & Chairman of the Board: The integrated field force and the new AI-based tool, Glimpse, have shown strong execution. Myovant has great potential, with revenue forecasts significantly increased. The product has a long runway, with managed care access improving. The team is making great progress, and the product has strong ECP support.
Q: The guide implies slightly slower growth in the second half. Is that due to prudence, and what are the key learnings from the first wave of launches?
A: Brent Saunders, CEO & Chairman of the Board: The company is in a constant learning mode, adjusting techniques and leveraging cross-business learnings. Investments in new tools and platforms, such as the DTC platform Opal, are expected to drive future growth. The guidance reflects balanced momentum and multiple outcomes.
Q: Can you discuss the strong performance in the contact lens and equipment businesses, specifically on the surgical side?
A: Brent Saunders, CEO & Chairman of the Board: The contact lens business has shown strong growth, with balanced execution across the portfolio. The daily portfolio, particularly INFUSE, has seen tremendous enthusiasm. The company continues to invest in R&D and new platforms for future growth. The surgical business strategy focuses on placing equipment and driving through implantables and consumables, with strong growth in premium IOLs.
Q: Can you help us understand the EBITDA margin opportunity for the rest of the year and any comments on 2025?
A: Brent Saunders, CEO & Chairman of the Board: The company is investing behind launches, particularly those with long durable lives. Every investment is carefully analyzed for ROI. The strategy focuses on sustainable revenue growth and margin expansion. The guidance reflects a steady improvement in margins, with a focus on maximizing the value of assets.
Q: Can you talk about the expectations for margin cadence in the back half of the year, both gross and operating?
A: Sam Eldessouky, Chief Financial Officer: The margin is expected to expand in the second half, with Q4 being the highest due to seasonality and investments behind launches. The guidance suggests a steady improvement in margins, reflecting the company's strategy.
Q: How do we think about cash flow for the full year and free cash flow conversion into next year?
A: Sam Eldessouky, Chief Financial Officer: The company is in growth mode, with working capital being a use of cash. Inventory levels are higher to manage supply challenges. The full-year cash flow is expected to be breakeven to slightly negative, with investments in capacity for future growth.
Q: Can you provide an update on the potential sampling for Myovant and the DTC introduction in Q4?
A: Brent Saunders, CEO & Chairman of the Board: The sample for Myovant was approved by the FDA and is expected to roll out in the fall. The company is working through some variability in TRx data but sees a positive trend. The DTC campaign is expected to drive further growth.
Q: What are the opportunities for Bausch & Lomb to have a 100% float in the future?
A: Brent Saunders, CEO & Chairman of the Board: The focus is on execution and delivering strong results. While the float and separation are frustrating, the company is confident that it will happen in due time.
Q: Can you provide an update on the contact lens business, particularly the daily portfolio?
A: Brent Saunders, CEO & Chairman of the Board: The daily portfolio, particularly INFUSE, has shown strong growth. The company is in the early innings of driving growth, with a long runway ahead. Investments in new tools and platforms, such as the DTC portal Opal, are expected to drive future growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
