Transcripts
`
`Healthcare
`
`Bausch Health Companies, Inc. {BHC) CEO
`Joseph Papa on Q2 2019 Results - Earnings Call
`Transcript
`
`Aug. 06, 2019 3:46 PM ET Bausch Health Companies Inc. (BHC), BHC:CA 6 Comments
`
`SA Transcripts
`132.55K Followers
`
`Q2: 2019-08-06 Earnings Summary
`
`► Play Call
`
`EPS of $1 .07 beats by $0.01 I Revenue of $2.15B (1 .13% Y/Y) beats by $1 .17M
`
`Bausch Health Companies, Inc. (NYSE: BHC) Q2 2019 Earnings Conference Call August 6,
`2019 8:00 AM ET
`
`Company Participants
`
`Arthur Shannon - SVP & Head, IR & Communications
`
`Joseph Papa - CEO & Chairman
`
`Paul Herendeen - EVP & CFO
`
`Conference Call Participants
`
`Christopher Schott - JPMorgan Chase & Co.
`
`Akash Tewari - Wolfe Research
`
`Umer Raffat - Evercore ISi
`
`Annabel Samimy- Stifel, Nicolaus & Company
`
`Gregory Gilbert - SunTrust Robinson Humphrey
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
`Slayback Exhibit 1071, Page 1 of 26
`Slayback v. Eye Therapies - IPR2022-00142
`
`

`

`Jason Gerberry - Bank of America Merrill Lynch
`
`Zhu Shen - Morgan Stanley
`
`David Amsellem - Piper Jaffray Companies
`
`Louise Chen - Cantor Fitzgerald & Co.
`
`Operator
`
`Welcome to the Bausch Health Second Quarter 2019 Earnings Conference Call. [Operator
`Instructions]. I would now like to turn the conference over to Art Shannon, Senior Vice
`President, Investor Relations & Global Communications. Please go ahead.
`
`Arthur Shannon
`
`Thank you, Andrew. Good morning, everyone, and welcome to our second quarter 2019
`financial results conference call. Participating in today's call are Chairman and Chief
`Executive Officer, Mr. Joe Papa; and Chief Financial Officer, Mr. Paul Herendeen. In addition
`to live this webcast, a copy of today's slide presentation and a replay of this conference call
`will be available on our website under the Investors Relations section.
`
`Before we begin, we would like to remind you that our presentation today contains forward(cid:173)
`looking information. We would ask that you take a moment to read the forward-looking
`statement legend at the beginning of our presentation as it contains important information.
`This presentation contains non-GMP financial measures. For more information about these
`measure, please refer to Slide 2 of the presentation. Non-GMP reconciliations can be found
`in the appendix to the presentation posted on our website. Finally, the financial guidance in
`this presentation is effective as of today only. It is our policy to generally not update guidance
`until the following quarter and not to update or affirm guidance other than through broadly
`disseminated public disclosure.
`
`With that, it's my please to turn the call over to Joe.
`
`Joseph Papa
`
`Thank you, Art, and thank you, everyone, for joining us today. I'll begin with the second
`quarter highlights before turning the call over to Paul Herendeen, our CFO, to review the
`financial results in detail and update our 2019 guidance. We'll then review the segment
`highlights and our positioning for the future and how we plan to drive long-term shareholder
`value before we open the line for questions. Beginning with Slide 4.
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
`Slayback Exhibit 1071, Page 2 of 26
`Slayback v. Eye Therapies - IPR2022-00142
`
`

`

`Our strong second quarter results demonstrate that our team's efforts to pivot to offense
`continue to gain traction. With 3% organic revenue growth, second quarter 2019 was the 6th
`consecutive quarter of total company organic revenue growth. B + L/lnternational which now
`represent 80% of our total revenue, grew organically by 6% on a combined basis. This was B
`+ L/lnternational's 11th consecutive quarter of organic revenue growth, and Salix reported
`more than $500 million in total quarterly revenue for the first time. Our most important
`products or our top 10 products grew organically by 13% in the aggregate compared to the
`second quarter of 2018. And our continued focus on improving operational efficiency through
`Project CORE is expected to deliver more than $75 million of operating profit during 2019.
`
`Moving over to the right of Slide 4, TRULANCE, a constipation of IBS treatment that we
`acquired last quarter is off to a great start. It generated $17 million of revenue in its first full
`quarter since our acquisition. We've continued to launch new products as well, including
`LOTEMAX SM in April, DUOBRII and ULTRA Multifocal lense in June and our Ocuvite Eye
`Performance vitamins in July. Finally, we continue to strategically manage debt and allocated
`capital. We generated $339 million of cash from operations during the quarter. We increased
`R&D spend by approximately 24% in the second quarter. We refinanced $1.5 billion of 2023
`senior unsecured notes. In year-to-date, as of August 6, we have used $550 million to reduce
`the debt by approximately $350 million; complete the acquisitions of TRULANCE and
`dolcanatide; and licensed amiselimod for development and commercialization. Overall, a
`very strong quarter, thanks to a great team effort and the continued engagement of 21,000
`employees of our health companies who are to truly motivated to launch new products,
`improve operations and keep delivering on commitment to help improve patient lives.
`
`With that, I'll turn it over to Paul.
`
`Paul Herendeen
`
`Thanks, Joe. Turning to Slide 5, and I'll start by walking down the top level P&L and then
`probably provide some color around our results. As Joe said, we had a good solid quarter
`with 1 % reported revenue growth and 3% organic growth versus Q2 of 2018. Adjusted
`EBITDA for the quarter was $880 million, up 1 % compared with Q2 of 2018. So we put a
`good first half on the board and we are raising our revenue and adjusted EBITDA guidance,
`more on that later. Assuming FX stays where we are today, at the midpoint of our revised
`guidance, we'll report about 1 % revenue growth for the full year of 2019 versus '18. That's
`pretty good considering the $180 million growth track from LOEs we've observed in the first
`half of the year and the expected $230 million expected in the second half. So 3% organic
`revenue growth overall versus Q2 2018 with 2% of that coming from net price and 1 % from
`volume, that's company wide.
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
`Slayback Exhibit 1071, Page 3 of 26
`Slayback v. Eye Therapies - IPR2022-00142
`
`

`

`Salix led the way up 12% organically despite the loss of [indiscernible] B + L/lnternational
`continued its string of organic growth quarters up 4% with four of the five subsegments
`posting growth. Ortho Derm declined 13% organically mainly due to LOEs, while diversified
`declined 7% organically. Company-wide adjusted gross margin improved by some 50 basis
`points versus 02 of 2018 with approximately 30% of that improvement coming from better
`operating efficiency and our global supply chain. I'll give a tip of the hat to the Dennis Asharin
`and his team for that. And the balance of that improvement was from a shift in mix to higher(cid:173)
`margin products.
`
`Adjusted selling, advertising and promotion expense increased $20 million on a reported
`basis, with the biggest drivers being the addition of the 100 sales reps and associated
`promotional spend in connection with the TRULANCE acquisition in the Salix segment and
`increased spend in B + L/lnternational to support growth products, including LUMIFY, our eye
`vitamins Ocuvite and PreserVision, Biotrue ONEday and our ULTRA lenses. Adjusted G&A
`was down $10 million or 6% on a reported basis, mainly due to reduced corporate support
`costs, offset a bit by an increase in our IT costs. Our Chief Information Officer, Chuck and his
`team are underway in the process of transforming our global IT systems and infrastructure to
`support our future growth.
`
`R&D was up $23 million or 24% on a reported basis, as we continue to build out our R&D
`organization and construct a portfolio of projects under development to protect our existing
`product franchises and to provide the fuel for longer-term growth. A quick note on how R&D
`appears in our segment P&Ls. R&D shown in the segment P&Ls reflects only the direct cost
`directly associated with those segments, mainly external clinical costs. To help you think
`about how you might allocate R&D to the segments, here is a couple of factoids for you.
`
`Our 2019 guidance suggest company-wide R&D will be the range of 5.3% to 5.4% of
`revenue. As we look forward and think about how our current level of spending in R&D as a
`percent of revenue might be allocated across our segments in the future, B + L/lnternational
`may be at roughly the company-wide average as a percent of revenue; Salix may be higher
`than that; Ortho Derm less than that and diversified much less than that. That could change
`as we evolve, but based on where we are today, I think that color might be helpful. So
`despite the increased selling, advertising and promotion expense to support growth brands
`and higher R&D costs, our adjusted EBITDA rose 1 % on both a reported and constant
`currency basis. That's good stuff. While we continue to believe that adjusted EBITDA is our
`most important profitability performance indicator, I know that some of you also focus on
`adjusted net income and there are couple of items of note below the operating line.
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
`Slayback Exhibit 1071, Page 4 of 26
`Slayback v. Eye Therapies - IPR2022-00142
`
`

`

`First, as we continue to use available cash to reduce debt, then predictably, interest expense
`declined and act as kind of adjusted net earnings accelerator. It's the P&L manifestation of
`the enterprise value shipped from debt to equity every time we reduce our debt. From Q2 of
`2019 to '19, our interest expense declined $26 million. The other item of note is our income
`tax rate on adjusted earnings, roughly 8% this quarter versus 12% in Q2 of 2018. The
`combination of those two items result in adjusted net income being up 13% on a constant
`currency basis in Q2 '19 versus Q2 of 2018.
`
`Turning quickly to the segments and starting with the B + L/lnternational on Slide 6. 4%
`organic growth was driven by 1% by price and 3% by volume. Just a couple of items of note.
`In terms of dollar contribution of growth, the Global Consumer business was up a solid 5%
`organically on strong sales of our eye vitamins PreserVision and Ocuvite and our Redness
`Reliever LUM I FY. The growth in consumer was all volume-driven as realized prices were
`down slightly. Global Vision Care was very strong, plus 8% organically, the 8th consecutive
`quarter of growth for the Global Vision Care business. For growth dollars in Global Vision
`Care came roughly equally from within the U.S. and internationally. Growth in Global Vision
`Care was all volume as realized net pricing was flat across the segment. Note that in the
`U.S., over the last couple of years, we have been using discounting strategically, while
`partnering with independent optometrists and eye care retailers, and that was to regain
`momentum in increased share. It's working and under Joe Gordon's direct leadership, the
`U.S. Vision Care business has grown in dollar currently for eight consecutive quarters. We've
`ratcheted back our use of discounting and in Q2 of 2019 versus '18, our realized net pricing
`in the U.S. decreased only slightly versus Q2 of '18, while volume was up significantly, a
`good stuff indeed.
`
`The growth drivers in the segment for the quarter were the Biotrue ONEday family, our
`silicone hydrogel daily disposable, AQUALOX in Japan and our ULTRA family of silicone
`hydrogel lenses, particularly outside the United States. Our international pharma business
`grew 4% organically, which benefited from solid performance mainly in Canada, Eastern
`Europe and in the Middle East and that was mainly in a moon in Egypt. Global Ophtho
`declined 1 % organically, impacted by a decline in Lotemax due to loss of exclusivity that was
`offset by VYZUL TA growth and strong performance in international markets. Global Surgical
`grew 2% organically, driven mainly by growth in our international businesses outside the U.S.
`Down in our operating expenses for B + L/lnternational, you can see increase in selling,
`advertising and promotion expenses that I talked about earlier.
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
`Slayback Exhibit 1071, Page 5 of 26
`Slayback v. Eye Therapies - IPR2022-00142
`
`

`

`On to Salix Slide 7. Salix was up 12% organically, that's excluding the $17 million of revenue
`from TRULANCE that was acquired earlier this year. XIFAXAN was a star, up 21 % overall.
`Volume was up 8%, that's in line with the growth in TRxs, improved gross net spreads -(cid:173)
`gross to net associated with our Project CORE added about another 7%, and the net impact
`of the January price increase after the associated contractual increases in rebates added
`another plus 6%. The full through benefits of our Project CORE activities on XIFAXAN that
`have improved our gross to net for the brand will likely be a bit of a growth tailwind through
`Q3 of this year, but I expect them to moderate in Q4 and beyond. GLUMETZA has continue
`to do well despite the loss of exclusivity for the brand. Our proactive management of the
`brand through that loss of exclusivity resulted in our seeing excellent realized net pricing in
`the quarter and a marked uptick in volume. A word of caution here with respect to
`GLUMETZA. As we move into the back half of 2019, we fully expect a significant drop in
`realized net pricing for GLUMETZA, especially in Q4 and beyond.
`
`Down in Salix operating expenses, you see the impact of the acquisition of TRULANCE in
`the 29% increase in selling, advertising and promotion expenses.
`
`On to Ortho Dermatologies in Slide 8. Overall segment revenue was down 13%, as it
`continued and I would say, impressive growth of Solta could not overcome the impact of
`LOEs in the medical derm business. I Solta, as we rolled out Thermage FLX in the Asia Pac,
`the demand was even stronger than we had forecasted there was the big driver of the 44%
`organic growth over Q2 of 2018. In medical derm, the $36 million impact of LOEs, including
`for ELIDEL, SOLODYN and ZOVIRAX overwhelmed the $4 million pickup in the balance of
`the portfolio.
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
`Slayback Exhibit 1071, Page 6 of 26
`Slayback v. Eye Therapies - IPR2022-00142
`
`

`

`Turning to Slide 9 in the diversified segment. Our generics business benefited from lunches
`of authorized generic versions of UCERIS and ELIDEI, and our team continue to capitalize
`on competitive supply issues. Our Dentistry business continues to face reimbursement
`challenges from payers particularly for and our neurology business absorbed an LOE impact
`of $30 million versus Q2 of 2018. As a reminder, our diversified segment is not expected to
`grow. We manage the assets in the segment to maximize cash flows over time and the 7%
`decline in revenue for the quarter is consistent with that goal. Note that we selectively
`promote some of the products in this segment where we believe that the durability and
`duration of the brand enables us to earn appropriate returns on those promotional
`investments. I'm talking about products like Wellbutrin, Aplenzin and Migranal. You see that
`selling, advertising and promotion expense increased versus Q2 of 2018, that's why. I'd these
`activities aren't as high profile as say promoting XIFAXAN or LUMIFY, but they are valued
`generative nevertheless. For example, Aplenzin was up 62% compared with Q2 of 2018. The
`neural business had been run by a talented colleague named Yolanda Barnard and she
`delivered excellent results for us. And that earned to the to move over and now head our
`U.S. Ortho Rx business.
`
`On to the balance sheet on Slide 10. If you look at the balance sheet from the end of 2018 to
`June 30 of 2019, year-to-date, we reduced total debt by some $250 million. I'll point out that
`we also played -- recently paid down another $100 million of our debt. So year-to-date to
`today, debt reduction in 2019 is roughly $350 million.
`
`Turning to Slide 11 and our cash flow. Our cash provided by operating activities in Q2 totaled
`$339 million. This was higher than we expected due to some deputy in the timing of cash
`receipts at the end of the quarter. I'm bringing this up because we said in the past that Q2
`and Q4 are expected to be weaker cash generation quarters due to the clustering of inter(cid:173)
`settlement dates in those two quarters. About 1/3 of our cash interest in each of Q2 and Q4
`and about 1/6 in Q1 and Q3. The higher cash generated in Q2 due to the fortunate timing of
`cash receipts will take the top off to some of our cash generation in Q3, while we are still on
`track to generate between $1.5 billion and $1.6 billion in cash from operating activities in
`2019.
`
`On to guidance on Slide 12. We are raising our revenue guidance by $50 million across the
`range and for adjusted EBITDA by $25 million across the range. Most of the other guidance
`unchanged, except that we revised our guidance for gross margin to roughly 72% based on
`where we are at the halfway point and we increased the share-based comp to $110 million.
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
`Slayback Exhibit 1071, Page 7 of 26
`Slayback v. Eye Therapies - IPR2022-00142
`
`

`

`On Slide 13, you see the guidance bridge. Since we last provided guidance back in May, FX
`improved at the revenue level by $10 million. We increased our expectation for revenues for
`the LOE assets by $20 million and increased our expectations for our base business by $20
`million. The change in the LOE estimate was based on our moving out to the date for Q4. At
`adjusted EBITDA, we raised guidance by $25 million across the range and that was driven
`by $10 million of incremental profit from the LOE assets and improved profitability in our base
`business. Before I turn it back to Joe, I think it's worth taking stock of where we are today and
`how we are positioned for the future. We made significant progress in reducing the quantum
`of our debt, were down from $8 billion since Q1 of '16 and in managing our upcoming
`maturities. As Joe loves to say, that came gave us the freedom to operate to put our
`company on the right path. We have now posted six consecutive quarters of organic revenue
`growth, which, considering the sheer volume of LOEs, we had to work through this quite an
`accomplishment. We've laid the foundation to enable the company to capitalize on its
`competitive strength and deliver consistent growth of organic revenue, profits and cash flow.
`That started with reorganizing our businesses and putting in place a strong commercial
`leadership team. Then we took a hard look at our operating expenses, eliminate ineffective
`costs and allocated additional resources where we could drive growth.
`
`To ensure that we can grow organically, we've increased our spend in R&D. So today, with
`the great progress we've made in dealing with our capital structure and with the magnitude of
`the LOE impact is decreasing, we believe that we are a company that can grow amid single(cid:173)
`digit grades over time, is highly diversified with positions of competitors styrene [ph] in each
`of our core businesses, and enjoys an efficient global tax structure that enables us to convert
`a large percentage of earnings into cash that can be used to shift the enterprise value from
`our debt holders to our equity holders.
`
`We've come a long way since 2016. Joe?
`
`Joseph Papa
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
`Slayback Exhibit 1071, Page 8 of 26
`Slayback v. Eye Therapies - IPR2022-00142
`
`

`

`Thank you, Paul. Another great review. Let's go through some of the highlights in our B +
`L/lnternational segment on Slide 14. First, this segment delivered 4% organic growth, as you
`can see in. the chart. The second quarter's organic growth was driven by an increase in
`volume, particularly in Global Consumer and Global Vision Care. And looking ahead to future
`growth drivers for this business, we believe there are mega trends that have the potential to
`drive demand for eye care products in the years ahead. One of these mega trends myopia or
`nearsightedness is increasing to epidemic level. Importantly, myopia is also a risk factor for
`glaucoma, macular degeneration and retinal detachment. And this unfortunately is a global
`trend. Nearly 40% of North Americans are now affected by myopia and the number of cases
`have doubled between 1972 and 2004. In Europe, 42% of adults between the age of 25 to 29
`have myopia, almost twice the rate of the 55 to 59 year-old, and we're seeing a similar trend
`in Eastern Asia. 87% of individuals born after 1997 in Hong Kong have myopia compared to
`30% born prior to 1950. Bausch + Lomb integrated eye care platform is well positioned,
`provide products to improve the lives of those with myopia, including corrective lenses, over(cid:173)
`the-counter ophthalmic products, surgical offerings and prescription treatments.
`
`Turning now to Global Consumer on Slide 15. Our eye vitamins, Ocuvite and PreserVision,
`grew by 13% organically in the second quarter on a combined basis, driven by brand
`extensions. LUMIFY continues to outpace expectations, having achieved a weekly market
`share of more than 35%, just one year after launch. IN the Redness Reliever category,
`LUMIFY is number one physician-recommended product and number one eye drop on
`Amazon. E-commerce continues to be an important channel for our Global Consumer
`product as a second order of Amazon data demonstrates with 83% growth compared to the
`second quarter of 2018.
`
`Onto Slide 16, new products are driving 8% organic growth in Vision Care. International, we
`saw significant growth in Japan, China, and Russia. And in the U.S., Vision Care had its 21st
`consecutive month of market-leading growth. If you look at the chart on the bottom left, you
`can see Bausch + Lomb's estimated U.S. contact lens growth of 13% in the second quarter
`compared to the industry average of approximately 8%. Globally, B + L grew by 8%
`compared to the industry average of approximately 5%. I want to highlight one new launch
`product that is helping drive this growth, ULTRA multifocal contacts for astigmatism. Breaking
`new ground, this product is the first multifocal toric lens available as a standard offering in fit
`sets, rather than as a customer order. Now available in the U.S., the ULTRA lenses allow for
`a seamless transition between distances and given that the limited options for the 32 million
`people in the U.S. who have both astigmatism and we believe these lenses will have a strong
`market position and significant growth opportunity.
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
`Slayback Exhibit 1071, Page 9 of 26
`Slayback v. Eye Therapies - IPR2022-00142
`
`

`

`Turning now to Slide 17, Salix had a great quarter, delivering over $500 million of revenue for
`the first time, driven by XIFAXAN, which had its highest quarterly reported revenue to date.
`Compared to the prior year quarter, TRx for our promoted brands all grew up nicely in the
`second quarter. XIFAXAN was up 8%. TRULANCE grew by 31 %, and RELISTOR oral was
`up 12%. Our team also resolved two important property matters. The court upheld the validity
`in terms of activists infringe our patent protecting RELISTOR tablets, and we resolved the
`APRISO IP litigation with two out of the four paragraph IV filers.
`
`Finally, we anticipate some near-term developments that are expected to be catalyst for this
`business. These includes three new indication development programs for Rifaximin and a
`cardiovascular [indiscernible] readout for Amiselimod that we are expecting around the year
`end. On the right we show our approach to expanding and diversifying the GI business, at
`the base of our portfolio-promoted products, including TRULANCE lands, which we recently
`acquired. Building on that basis, the sales team has had a number of additional initiatives
`that we expect to help grow this business over the longer-term, including new indications for
`rifaximin, Amiselimod, which is S1 P modulator for the treatment of ulcerative colitis,
`dolcanatide, an investigational compound, which has demonstrated proof-of-concept in
`treating multiple GI conditions, and investigational treatment for NASH, and finally, and an
`over-the-counter, probiotic. Overall, we are pleased that progress in our GI pipeline and we're
`looking forward to a lot of activity over the next 12 months.
`
`I want to talk more about XIFAXAN on Slide 18 given its record quarter of 21 % reported
`revenue growth. As Paul discussed earlier, this growth was primarily driven by volume and
`proactive steps to improve gross to net. We're seeing strong script growth with TRx up 8%
`versus the second quarter 2018 and up 6% versus just the first quarter sequential of 2019.
`The primary care of expense is delivering. New Rxs in primary care grew by 16% in the
`second quarter versus the prior year quarter. You can see the quarterly TRx churn on the
`right, which shows the TRx growth since the primary care team was added in the first quarter
`of 2017. And in the second quarter of 2019, XIFAXAN was up approximately 13% in the non(cid:173)
`retail channel, compared to the prior year quarter.
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
`Slayback Exhibit 1071, Page 10 of 26
`Slayback v. Eye Therapies - IPR2022-00142
`
`

`

`Onto Slide 19, TRULANCE continues to perform well relative to the 2019 guidance we gave
`last quarter. In the first quarter of promotion since the acquisition, TRULANCE TRx grew by
`31 % versus the prior quarter and by 7% over the first quarter. Leveraging Salix existing GI in
`primary care relation for TRULANCE, we have further integrated TRULANCE with our largest
`XIFAXAN sales force. As we shown on the bottom ride, we had about 100 reps detailing
`TRULANCE in the first quarter. We added another 100 sales reps in the second quarter. And
`as of this month, we've increased that number to approximately 500 sales reps promoting
`TRULANCE. We also increased GI and Primary Care targets by more than 65% in the
`second quarter, and increased reach and frequency to healthcare providers by more than
`60% since the acquisition.
`
`Our team has also done an excellent job in improving market access, commercial coverage
`as it increased to approximately 86%, and unrestricted access is right around 47%. We've
`also added 2.4 million covered lives across five regional plans since acquisition and
`improved coverage for roughly 7 million federal lives through the TRICARE program. Overall,
`we are very pleased with TRULANCE performance.
`
`Moving on to Ortho Dermatologies on Slide 14. While we report a total segment organic
`revenue decline in the second quarter, the performance of our aesthetic business has been
`outstanding, up 44% organically driven by the strong launch of Thermage FLX. Another
`highlight is Dermatology.com, our cash paid prescription program, which is gaining traction.
`We recently announced that the program will be available at more than 9,500 Walgreens
`U.S. retail pharmacy locations by the end of this month. We expect approximately 15
`products to be available through the Dermatology.com channel before the year end and to
`launch e-commerce and telemedicine on the platform in 2020. We see a real opportunity for
`Ortho Dermatologies to be a leader in delivering predictable access to prescription
`dermatologies at predictable prices. Segment as a whole, we're pleased that new products
`and aesthetics are driving the transformation of the dermatology business.
`
`You can see the progress making on the graph on the bottom of Slide 20. Here we shown the
`percentage of revenue from Global Salta base business in green and new products,
`including the Thermage FLX, which are shown at the time line at the bottom of the slide in
`blue. Beginning in 2017, the revenue from Global Salta generated approximately 15.2% of
`total segment revenue. In 2018, Global Salta and new products contributed 18.3% and 7.7%,
`respectively, of total segment revenue. And in the first half of 2019, Global Salta revenue had
`grown to 21. 7% and new products generated 23% of total segment revenue. So with nearly
`half of total segment revenue being driven by Global Salta and newly launched product,
`we're moving in the right direction and expecting this trend to continue.
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
`Slayback Exhibit 1071, Page 11 of 26
`Slayback v. Eye Therapies - IPR2022-00142
`
`

`

`On to Slide 21. Early feedback on DUOBRII has been very positive. First and foremost,
`DUOBRI I is a topical treatment you can keep using until your skin is clear before your health
`care provide instruction. This is a key differentiator. Many healthcare providers recommended
`benefits of topical products that does not have the duration limitation of other treatments for
`psoriasis, which is a chronic disease. We're strong momentum and product demand. In the
`5th week, post launch, we've delivered more than 1,650 prescriptions. Also DUOBRll's
`managed care value proposition is compelling. It has the potential to delay some patients
`from switching to more expensive biological treatment, which could result in an overall
`healthcare savings. In terms of reimbursement coverage, DUOBRII has more than 30% of
`covered lives at launch, and we are projecting approximately 75% of covered lives, 12
`months post launch. Based on early data, we remain very optimistic about DUOBRll's
`potential, which combined DUOBRll's efficacy as a treatment. With its potential to create
`significant cost savings for managed care, we believe there is an enormous opportunity for
`this product.
`
`On to Slide 22, I'm happy to report that all of the Significant Seven products have now been
`launched. And in the first half of 2019, Significant Segment revenue increased by 76%
`versus the first half of 2018. On Slide 23, we present our prospective and how the company
`is positioned for future growth and how we plan to drive long-term shareholder value. First,
`building on the points that Paul made earlier, we continue to improve and de-risk our balance
`sheet. We're reduced debt by approximately $8 billion since the first quarter of 2016, and we
`are successfully managing our maturity profile. Next is growth. We've overcome the primary
`loss of exclusivity challenge facing the business. And anyway you look at it, we are now
`growing. The second quarter was our 6th constitutive quarter of total company organic
`growth.
`
`Finally, investment. Our growth is not coming at the expense of tomorrow. We are investing
`in future growth drivers. We've increased R&D spend and we're getting new products
`approved and launched, while also strengthening our new product pipeline through business
`development. We have invested and continue to invest in sales teams to drive commercial
`growth. Our XIFAXAN Primary Care sales team is delivering growth, and we are deploying
`500 sales reps behind TRULANCE as a new driver for our Salix business. We are also
`expanding sales force were highly and do over it. And we are continuing to build out Solta's
`geographic footprint. For these reasons, we believe that Bausch Health is well positioned for
`the future.
`
`https://seekingalpha.com/article/4282236-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q2-2019-results-earnings-call-transcript
`
`Slayback Exhibit 1071, Page 12 of 26
`Slayback v. Eye Therapies - IPR2022-00142
`
`

`

`To wrap up, Slide 24 summarizes the expectations for 2019 that we set forth at the beginning
`of the year. To review, first, we expect