Transcripts
`
`Healthcare
`
`Bausch Health Companies Inc. (BHC) CEO
`Joseph Papa on Q4 2021 Results - Earnings Call
`Transcript
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`Feb. 23, 2022 2:02 PM ET Bausch Health Companies Inc. (BHC), BHC:CA 11 Comments 2 Likes
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`Q4: 2022-02-23 Earnings Summary
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`► Play Call
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`EPS of $1 .27 beats by $0.12 I Revenue of $2.20B (-0.77% Y/Y) misses by $10.94M
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`Bausch Health Companies Inc. (NYSE: BHC) Q4 2021 Results Conference Call February 23,
`2022 8:00 AM ET
`
`Company Participants
`
`Arthur Shannon - SVP, Head of IR
`
`Joseph Papa - Chairman, CEO
`
`Sam Eldessouky - CFO
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`Thomas Appia - President, Co-Head Bausch + Lomb/International
`
`Scott Hirsch - CEO, Salta Medical
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`Conference Call Participants
`
`Ken Cacciatore - Cowen & Company
`
`Chris Schott - JPMorgan
`
`David Amsellem - Piper Sandler
`https://seekingalpha.com/article/4489552-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q4-2021-results-earnings-call-transcript
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`Slayback Exhibit 1073, Page 1 of 24
`Slayback v. Eye Therapies - IPR2022-00142
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`Gary Nachman - BMO Capital Markets
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`Jason Gerberry - Bank of America
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`Greg Fraser - Truist Securities
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`Balaji Prasad - Barclays
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`Operator
`
`Good morning, and welcome to the Bausch Health Fourth Quarter 2021 Earnings
`Conference Call. [Operator Instructions] Please note, this event is being recorded.
`
`I would now like to turn the conference over to Arthur Shannon, Senior Vice President, Head
`of Investor Relations and Communications. Please go ahead.
`
`Arthur Shannon
`
`Thank you, Anthony. Good morning, everyone, and welcome to our fourth quarter and full
`year 2021 financial results conference call. Participating on today's call are Chairman and
`Chief Executive Officer, Mr. Joe Papa; and Chief Financial Officer, Mr. Sam Eldessouky. In
`addition, Tom Appia and Scott Hirsch will be joining Joe and Sam for the Q&A portion of
`today's call. In addition to this live webcast, a copy of today's slide presentation and a replay
`of this conference call will be available on our website under the Investor Relations section.
`
`Before we begin, we'd like to remind you that our presentation today contains forward-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-GAAP financial measures. For more information about these
`measures, please refer to Slide 2 of the presentation. Non-GAAP reconciliations can be
`found in the appendix of 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 is my pleasure to turn the call over to Joe.
`
`Joseph Papa
`
`Thank you, Art, and thank you, everyone, for joining us today. We have a lot to cover, so I'll
`begin with an update on the Bausch Health strategic alternatives process and discuss the
`2021 full year highlights. Sam Eldessouky, our CFO, will then review the fourth quarter and
`full year financial results in detail and discuss our 2022 Bausch Health guidance. Finally, I'll
`conCB~9¥g$.awi&g::~basili\Q&Sid'l&SWit.aaafcarehE>pef<\~-itils-J~:foir-filua&tiol'i\§s-call-transcript
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`Slayback Exhibit 1073, Page 2 of 24
`Slayback v. Eye Therapies - IPR2022-00142
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`As you can see on Slide 5, we continue to make great progress in our efforts to unlock value
`across the company. The most recent milestones where we raised new debt to refinance
`certain existing Bausch Health debt and announced a refinancing of our existing credit
`facilities, each subject to the B&L IPO to facilitate to B&L IPO in full separation, and we
`publicly filed the registration statement for the proposed IPOs of Bausch & Lomb and Solta
`Medical.
`
`Our planning and preparations to launch the IPOs of Bausch & Lomb and Solta Medical are
`substantially complete. And we are prepared to move forward, subject to market conditions
`and other approvals and factors. After the IPOs are complete, we plan to distribute the
`remaining Bausch & Lomb shares to existing Bausch Health shareholders following the
`expiry of customary lockup achievement of target net leverage ratios and subject to
`regulatory approvals.
`
`Turning to Slide 6. As we have said previously, we are targeting net leverage for Bausch &
`Lomb of less than 2.5x and in a range of 6.5% to 6. 7 for the Bausch Pharma business at the
`time of the spin. We intend to achieve these target leverage ratios by paying down debt with
`cash generated from the Amoun divestiture that occurred in 2021, the IPO of Bausch &
`Lomb, a Bausch & Lomb debt raise and the IPO of the Solta Medical business.
`
`We also expect to use the remaining value of Solta Medical to delever as well as cash
`generated from operations and improved working capital efficiency. I also want to note that
`beginning with the first quarter of 2022 earnings, we will be reporting our financial results in 3
`segments: Bausch Pharma, Bausch & Lomb and Solta Medical.
`
`Slide 33 in the appendix shows how the new segment structures line up against our current
`segments.
`
`Turning now to Slide 8. We finished the year with total company organic revenue growth of
`6% and reported revenue growth of 5% versus 2020. Importantly, strong adjusted cash flows
`from operations of more than $1.6 billion and cash proceeds from the Amoun divestiture
`helped us to exceed our goal of paying down more than $1 billion of debt in 2021.
`
`Our leading brands saw a strong performance and recovery in '21, including XIFAXAN with a
`reported revenue growth of 11 % versus 2020 and TRULANCE, which reported more than
`$100 million of revenue for the very first time in 2021. The International Rx segment reported
`organic revenue growth of 7% versus last year.
`
`https://seekingalpha.com/article/4489552-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q4-2021-results-earnings-call-transcript
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`And finally, we are delivering on near-term R&D catalysts with 4 new product launches in
`2021 in addition to the XIPERE launch this quarter and the advancement of our late-stage
`clinical trials with statistically significant top line results for both NOV03 and our IDP-126,
`thanks to a great Bausch Health team effort. We achieved our goals in 2021 and entered
`2022 well positioned for continued growth.
`
`The full year and fourth quarter results demonstrate that we are successfully growing market
`share of key products and capitalizing on key growth drivers and catalysts, while taking steps
`to unlock shareholder value and create 3 great companies.
`
`With that, I'll turn it over to Sam to cover the financial results in more detail.
`
`Sam Eldessouky
`
`Thank you, Joe. Just a reminder, before I discuss our fourth quarter results, when we talk
`about the organic revenue growth, we mean on a constant currency basis and adjusted to
`remove the impact of divestitures and discontinuations.
`
`Now turning to our results on Slide 9. Our fourth quarter results build on our strong
`performance throughout 2021 and confirm the continuation of our recovery from COVID
`demonstrating the results of our businesses. In the quarter, we posted 3% organic revenue
`growth. For the full year, we posted 6% organic revenue growth. with our B&L business up
`9%, our Salix business up 9%, International Rx up 7%, Ortho Derm up 1 % and Diversified
`down 11%.
`
`Now let me provide more details on each of our segments. Starting with the B&L segment.
`Fourth quarter revenue of $1 billion was up 7% organically. 3 of the 4 businesses within B&L
`put organic growth, starting with the Global Vision Care business, fourth quarter revenue of
`$227 million was up 9% organically, led by 21 % growth in the U.S., which was driven by
`strength in our Biotrue ONEday alliances and continued growth in our market share of our
`daily SiHy and INFUSE.
`
`International Vision Care was up 3% organically, driven by our brands, including Biotrue
`ONEday, Ultra and SofLens. We continue to see strong performance in our Global Vision
`Care business with a full year growth of 17% organically as compared to last year.
`
`Moving on to our Global Surgical business. Fourth quarter revenue of $198 million was up
`10% organically, with the U.S. up 4% and international up 13%. The growth in our Surgical
`business reflects continued recovery in the number of surgical procedures in all our major
`markets.
`
`For the full year, the Global Surgical business grew 22% organically as compared to 2020,
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`with h~Jf9JliiWa~~~n,Jrart,Q944Y~~~!b~~c~<?~~th~~~p~~J~n·c-bhc-ceo-joseph-papa-on-q4-2021-results-earnings-call-transcript
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`Turning to the Global Consumer business. Fourth quarter revenue of $399 million was up 9%
`organically, with the U.S. consumer business up 7%. LUMIFY led the growth in the U.S. with
`33% growth in the quarter. With this strong performance, LUM I FY exceeded $100 million in
`annual revenue.
`
`Our eye vitamin brands, Ocuvite and PreserVision and our lens care brands Biotrue and renu
`multipurpose solutions also gained share in the quarter. The International Consumer
`business was up 11 % organically, mainly driven by gaining market share and strength in
`ARTELAC and in our lens care brands renu and Biotrue multipurpose solution. For the full
`year, the Global Consumer business grew 6% organically versus 2020.
`
`Finally, the Global Ophtho Rx business fourth quarter revenue of $177 million was down 3%
`organically versus fourth quarter 2020. The decline was mainly driven by the LOEs in
`LOTEMAX and the natural erosion of the generics branded products in the U.S. business.
`Excluding the impact of the LOEs, the Global Ophtho Rx business was up 4% organically in
`the fourth quarter.
`
`In the U.S., our promoted brands benefit from expanded patient access. In the current
`quarter, VYZULTA saw 40% TRx growth versus Q4 2020. International Ophtho was up 27%
`organically driven by growth in EMEA and Asia.
`
`Now turning to Salix. Fourth quarter revenue of $559 million was up 6% from Q4 2020.
`Performance was mainly driven by XIFAXAN, which was up 9%, driven by higher demand
`and higher net price. In the fourth quarter, XIFAXAN achieved a milestone by reaching $450
`million in net sales, the highest revenue we've reported for the brand. XIFAXAN continues to
`demonstrate strong growth trends. Despite the long-term Care Canada being fully recovered
`to pre-pandemic levels. We're seeing a steady recovery in the long-term care channel, but
`nursing home occupancy rates remain low. We expect the recovery to continue throughout
`2022.
`
`TRULANCE was up 21 %, driven mainly by volume, in part due to our successful efforts to
`expand mass care coverage for the brand. RELISTOR was up 21 %, mainly from volume but
`also from an increase in net price. For the full year, the Salix business grew 9% as compared
`to 2020.
`
`Now turning to the International Rx segment. Reminder that during the third quarter of 2021,
`we completed the sale of Amoun, our Egyptian Pharma business. The international Rx
`segment was up 7% organically, with fourth quarter revenue of $276 million. The growth was
`mainly driven by strong performance in Canada, which was up 13% organically and Poland,
`which was up 16% organically versus Q4 2020. For the full year, the International Rx
`segment was up 7% organically.
`
`https://seekingalpha.com/article/4489552-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q4-2021-results-earnings-call-transcript
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`Moving on to Ortho Derm segment. Fourth quarter revenue of $146 million was down 7%
`organically. The medical derm business was down 19%, mainly driven by lower net realized
`pricing. The Global Salta business was up 2% organically with strong performance in the
`U.S. and Asia. For the full year, Global Salta revenues were up 18% organically.
`
`Finally, our Diversified segment fourth quarter revenue of $214 million declined 14%
`organically. Our Neuro business was down 9% due to lower volumes on MYSOLINE and
`Ativan, which benefited from a competitor supply issue in the prior year quarter, offset by
`growth in both Wellbutrin and Aplenzin. Our generics business was down 30% organically
`with the biggest factor being the natural erosion of volumes and net pricing as additional
`competitors enter the market and compete with our generic products. Finally, Dentistry was
`flat versus the prior year quarter.
`
`Turning to the quarter and full year P&L on Slides 10 and 11. I just covered revenues, so let
`me walk you through key non-GMP line items. Starting with the adjusted gross margin,
`which was up 60 basis points versus Q4 2020. Mix was a key favorable factor this store,
`which more than offset manufacturing headwinds and enabled us to absorb inflation impacts
`that we saw in the quarter.
`
`Note that our full year adjusted gross margin is 71.6%, which is slightly above our full year
`adjusted gross margin guidance of 71 %. With operating expenses, on an adjusted basis,
`SG&A costs were slightly higher by $17 million versus Q4 2020 as we return to a more
`normal level of promotion activity as compared with Q4 2020. Our full year adjusted SG&A
`was $2.41 billion, which was payroll to our full year 2021 guidance of $2.45 billion.
`
`R&D was down in the quarter by 2%, mainly as a result of timing of spend. For the full year,
`R&D was up 3% to $465 million. Adjusted EBITDA of $909 million for the quarter was down
`1 % on a constant currency basis compared with Q4 2020. Excluding the impact of the
`Amoun divestitures, adjusted EBITDA was up 2%. A solid fourth quarter performance
`enabled us to post adjusted EBITDA of $3.472 billion for the full year, which is up 3% on a
`constant currency basis from 2020, which was at the high end of our final guidance range for
`2021.
`
`For modeling purposes, I thought it may be helpful for you to understand how our 2021
`adjusted EBITDA split between our key business. The 2021 adjusted EBITDA is roughly
`24. 7% for B&L, 4.3% for Global Salta and the remaining 71 % is for our pharma businesses.
`Slides 12 and 13 were included to provide additional GMP information in response to new
`disclosure requirements.
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`https://seekingalpha.com/article/4489552-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q4-2021-results-earnings-call-transcript
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`Now turning to Slide 14. During the quarter, we generated $24 million of cash from
`operations on a GAAP basis. As we disclosed during our second quarter earnings, we made
`a payment of $205 million for legacy legal settlements in Q4 2021. Also in the fourth quarter,
`we made a payment in connection with taxes related to the Amoun divestiture.
`
`Adjusting only for the legal settlements, legacy legal settlements and separation-related
`costs of $50 million, the adjusted cash generated from operations in Q4 2021 was $279
`million, bringing the full year adjusted cash flow to $1.657 billion. We're very pleased with the
`strong cash generation in 2021, which brought us above our final 2021 guidance of $1.6
`billion.
`
`Turning to Slide 15. We continue to make progress on our debt paydown.
`
`During 2021, we repaid $1.3 billion of debt, net of $285 million revolver drawn in Q4 that we
`subsequently paid in Q1 of 2022 with cash on hand. Our focus and commitment to reducing
`our debt, combined with our strong performance in 2021, resulted in net leverage of 6.5x as
`of the end of the fourth quarter of 2021.
`
`On Slide 16, we continue to make nice progress with our debt maturities by repaying the
`outstanding revolver in Q1 2022 with cash on hand, as of today, we don't have any debt
`maturities or mandatory amortization payments until 2025.
`
`Now turning to our guidance on Slides 18 and 19. Our revenue guidance for 2022 is a range
`of $8.4 billion to $8.6 billion, and that represents organic growth of 3% to 5%. Considering
`the $185 million impact of the Amoun divesture in 2021 and the FX pressure based on
`current rates which we estimate to be $95 million, the base business performance is an
`improvement of $405 million. As we previously communicated, the LOE impact on our
`business continues to moderate and is much lower than prior years. We estimate the impact
`to be approximately $55 million.
`
`Also to help in your modeling, we'll provided additional details on our organic revenue growth
`by business. We expect organic growth for the pharma business to be about 2% to 3%, for
`B&L to be about 4% to and 15% to 18% for Salta. Our adjusted EBITDA guidance for 2022 is
`a range of $3.45 billion to $3.6 billion. Concerning the impact of the Amoun divestiture of $65
`million and the FX pressure, which we estimate to be $30 million, our adjusted EBITDA
`guidance at just 4% growth at the midpoint of our range.
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`https://seekingalpha.com/article/4489552-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q4-2021-results-earnings-call-transcript
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`So with that, backdrop, let's go into the details of our full year guidance on Slide 19. We
`expect our adjusted gross margin to be roughly 72%, which is slightly favorable to our 2021
`gross margin. At a macro level, we have seen gross margin pressure driven by inflation and
`supply chain pressure, which is consistent with what you have seen across the market. We're
`taking proactive steps to mitigate and overcome these challenges by taking measured price
`increases and through supply chain efficiencies. Also, product mix has an impact on the
`overall gross margin.
`
`We expect adjusted SG&A to be in the range of $2.44 billion, which remains relatively flat
`year-over-year as a percentage of revenue. In the last few years, we have taken steps to
`optimize and manage our baseline cost structure. Our guidance suggests that we will benefit
`from the cost optimization that we achieved in 2021 and continue to leverage our cost
`structure to support the top line growth.
`
`We are guiding to roughly $500 million in R&D for 2022, which is up $35 million from 2021.
`For interest expense, we're guiding to $1.4 billion. We expect our adjusted tax rate to be
`roughly 10%, and we expect full year adjusted cash flows from operations to be in the range
`of $1.7 billion.
`
`Finally, we provide additional guidance details that will be helpful for you as you update your
`models. In summary, we're very pleased with our 2021 performance. We believe that the
`strong underlying momentum in the business will continue in 2022. Our 2022 guidance is
`based on our expectation of solid organic revenue growth and adjusted EBITDA growth,
`improved gross margin, optimized cost structure and strong cash flow generation.
`
`Now back to you, Joe.
`
`Joseph Papa
`
`Thank you, Sam. Let me make a few comments on the business results, starting with Bausch
`& Lomb on Slide 21. Let me call out a few highlights first. Global Vision Care saw strength
`both in the U.S. and internationally, and we believe that the continued rollout of our SiHy
`daily lenses will be a tailwind in 2022 as we launched spherical and the multifocal lenses in
`many new markets.
`
`Our SiHy daily lenses continue to accelerate sales and gain share. In the U.S., we ended the
`year with a 140% increase in fixed debt coverage. We now have over 13,000 customers. We
`also grew U.S. consumption sales by 70% in the second half of 2021 versus the first half.
`This not only exceeds our plans but builds a strong base for our future launch of the Si Hy
`daily multifocal.
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`https://seekingalpha.com/article/4489552-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q4-2021-results-earnings-call-transcript
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`In Global Consumer, LUMIFY became a $100 million plus brand in 2021 and achieved
`approximately a 50% market share in the redness reliever category. Global Surgical
`rebounded from 2020 as markets reopened and saw 25 reported revenue growth compared
`to 2020, driven by enVista, IOLs, Stellaris Elite consumables and instruments. Geographic
`growth in Europe was driven by strong demand in The U.K., France and Spain.
`
`I want to spend a moment on LUMIFY on Slide number 22. We have illustrated the power of
`our fully integrated B&L eye care platform to successfully launch, promote and drive the
`performance of our products.
`
`In the case of LUMIFY, we began with a highly differentiated product backed by clinical
`results. Our team was able to drive education and awareness for the product by collaborating
`with eye care professionals while driving awareness among beauty enthusiasts with a strong
`television, public relations and social media presence.
`
`We are then able to leverage the 400-plus person Bausch & Lomb sales force for detailing
`and distribution directly to optometrists and ophthalmologists and achieved the distinction of
`being the number 1 physician recommended product in the redness reliever category. These
`efforts, along with a 97% customer satisfaction rate helped to drive patient demand which
`we're able to meet through the ongoing partnership with retailers and through e-commerce
`channels. We believe these results speak for themselves. After launching in May of 2018,
`LUMIFY became a $100-plus million brand in 2021 with approximately a 50% market share
`in the redness reliever category.
`
`LUMIFY's performance is one example of the benefits of a fully integrated eye care platform,
`and we expect to continue to leverage this key Bausch & Lomb differentiator with future
`products and innovations. The charts on Slide 23 illustrates the ongoing growth and progress
`B&L has made over the last few years.
`
`Moving now to Slide 24, I'll start by calling out a few highlights for Bausch pharma. Salix
`reported revenue growth by 9% compared to fiscal year '20, driven by XIFAXAN, TRULANCE
`and RELISTOR. We are also driving pipeline advancement for Salix with the initiation of a
`Phase Ill clinical trial of the rifaximin SSD formulation and a Phase II trial of amiselimod.
`
`International Rx revenue grew by 7% versus last year. Ortho Dermatologies reported
`statistically significant top line results from the second pivotal Phase Ill trial of IDP-126,
`Finally, in Diversified products, Wellbutrin and Aplenzin saw reported revenue growth of 16%
`versus the prior year quarter on a combined basis, driven by net realized pricing on both
`products and higher Aplenzin volume. And I'm happy to say that Aplenzin also has now
`crossed the $100 million product level in 2021.
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`https://seekingalpha.com/article/4489552-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q4-2021-results-earnings-call-transcript
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`Dentistry saw reported revenue increase by 38% in 2021 compared to a full year '20. As a
`catalyst for the business, we just launched the OraFit aligner yesterday. We're very excited
`about this opportunity.
`
`On Slide 25, XIFAXAN fourth quarter revenue of $450 million was the highest quarterly
`reported revenue on record. NRx market share also grew to 87.2% in the fourth quarter. And
`while nursing home occupancy levels continue to weigh on XIFAXAN's recovery, we believe
`this represents a potential tailwind for 2022 as nursing home occupancy returns to pre(cid:173)
`pandemic levels.
`
`Like XIFAXAN, TRULANCE finished the year strong and generated the highest quarterly
`revenue on record in the fourth quarter of 2021. TRULANCE 2021 total prescription volume
`grew by 23% versus 2020 and outpaced the market growth of approximately 4%.
`
`I want to spend a minute on TRULANCE on Slide 26. Since we acquired the product for
`approximately $180 million in 2019, the Bausch Health team successfully implemented
`strategies to improve market access and physician targeting while growing geographic
`footprint, which resulted in more than 120% TRx growth since acquisition, as you see on the
`slide on 26. We also launched TRULANCE in Canada earlier this month. We're proud of the
`team's coordinated efforts to grow TRULANCE into a $100 million plus brand and believe
`there's a lot more we can do here.
`
`On Slide 27, we show a strong TRx and new Rx share market share gains we achieved last
`year for XIFAXAN, TRULANCE and RELISTOR. We believe these gains are a great leading
`indicator of the overall strength of our gastro and neurology product portfolio.
`
`Turning now to Slide 28, International Rx. This business has a very diverse portfolio of more
`than 500 prescription products. In the full year and fourth quarter of 2021, this business grew
`organically by 7% compared to the prior period. We've shown the revenue breakdown by
`region on the top right and listed these 3 products in each region along with the evolution
`index, which shows the growth of these products is outpacing the market growth rate.
`
`Moving on to Salta Medical on Slide 29. First, we announced the public filing of Salta Medical
`registration statement on February 8, and we are substantially complete in our preparations
`and planning for the Salta Medical IPO. The Salta business had a very strong 2021
`compared to last year, ending the year with a 22% reported revenue growth driven by 26%
`consumable organic growth for the year.
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`https://seekingalpha.com/article/4489552-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q4-2021-results-earnings-call-transcript
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`As we noted on the third quarter call, the comparison with 2020 is denormalize as COVID(cid:173)
`related shutdown in 2020 shifted our selling days into the second half of 2020 and skewed
`the comparison. However, as a reference point, on a more apples-to-apples basis, revenue
`for the fourth quarter of 2021 was 39% higher than the normalized 2019 fourth quarter, and it
`grew sequentially over the third quarter of 2021 by 20%.
`
`In the U.S., growth versus 2020 was impressive with a 46% year-over-year growth. Clear
`brilliant reported revenues grew by 100% versus 2020, primarily due to the successful launch
`of our Clear and Brilliant touch in the U.S.
`
`On Slide 30, we have listed the key highlights for the company, showing in particular Bausch
`Pharma, Bausch & Lomb and Salta Medical. For Bausch Pharma, we have a differentiated
`product portfolio. We have a global presence in approximately 70 countries. We have strong
`cash flow to support delevering and investment. We have the advancement of the pipeline
`opportunities, including novel rifaximin formulations. We have a global infrastructure that can
`be leveraged to pursue a robust business development agenda and a fit-for-purpose
`operating model supporting top line acceleration and operating margin expansion.
`
`Moving now to Bausch & Lomb. We're going to build on the strong momentum with key
`franchises and the continued rollout of our SiHy daily lenses in new geography. We also
`anticipate the launch of a 3D microscope. We plan to build out our premium IOL platform,
`launched the next-generation eyeTELLIGENCE ecosystem. We continue to roll out
`VYZULTA in additional international markets. We have the U.S. launch of XIPERE an NDA
`filing exceptions for NOV03; and finally, aBLA filing acceptance for Lucentis biosimilar is also
`planned for 2022.
`
`Next, Salta Medical, which has posted an impressive 32% revenue CAGR from 2018 to
`2021, we believe proves the market opportunity for Salta brands is sustainable and will still
`have substantial room to grow. Key highlights for Salta, our strong double-digit growing
`aesthetics market.
`
`Cross-selling programs include this full Salta product portfolio, the geographic expansion
`both in Europe and Latam and also product enhancements and next-generation launches.
`Lastly, of course, we have organic and inorganic growth opportunities. As you can see, each
`of these business segments have a variety of initiatives, products and near-term catalysts to
`drive growth.
`
`To wrap up, we've made great progress in our efforts to unlock value across our company. In
`addition to completing the preparations and launching of the IPOs of Bausch & Lomb and
`Salta, we grew market share for our key products. We paid down debt using strong cash
`from operations, and we advanced our scientific innovations.
`
`https://seekingalpha.com/article/4489552-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q4-2021-results-earnings-call-transcript
`
`Slayback Exhibit 1073, Page 11 of 24
`Slayback v. Eye Therapies - IPR2022-00142
`
`

`

`Looking ahead, our focus is on significant debt paydown, separating into 3 publicly traded
`companies, driving execution in 3 large distinct and addressable markets and continuing to
`focus on innovations for the future.
`
`With that, operator, let's open up the line for questions.
`
`Question-and-Answer Session
`
`Operator
`
`[Operator Instructions] Our first question comes from Ken Cacciatore with Cowen &
`Company.
`
`Ken Cacciatore
`
`I was wondering if we could try to tighten down the timing. It looks like the order you've
`established on Slide 6. Can you give us a sense of timing? And is there anything in the
`current markets? I know we're subject to market condition, but I would assume we're not
`seeing anything currently that would kind of skew the timing. So that would be great to
`review.
`
`And then also one of the questions that we're constantly getting is how do we close the real
`or perceived operational and a real valuation discount to your peers. Can you talk about from
`the Bausch & Lomb business when you get standalone, Joe, any first priorities as steady as
`we go, really what we need to accomplish here? Is there any kind of low-hanging fruits in
`terms of priorities that you want to address when you get standalone?
`
`Joseph Papa
`
`Great questions, Ken. I'll try to make sure I get them all, if I leave any out, please remind me.
`On the question of our overall timing of the IPOs, I think we tried to lay out the specifics here.
`We are substantially complete in all the information that needs to get accomplished. To be
`clear, we will continue to update our financials with the SEC as we now completed the fourth
`quarter, we'll first submit those fourth quarter reports to the SEC on a timely basis.
`
`But we'll be ready depending on market conditions to go with that revised financials.
`
`Sometime, let's call it, mid-March, we'll be ready for mid- to end of March to go forward with
`the IPOs both for the Solta and for the Bausch & Lomb IPOs, we are substantially complete
`on both of those. Obviously, we will make sure we manage that in a prudent way to maximize
`shareholder value as we think about the overall market conditions that we face for these 2
`IPOs, but we're excited. We think we've done all the work that needs to get done in terms of
`looking at the opportunity.
`
`https://seekingalpha.com/article/4489552-bausch-health-companies-inc-bhc-ceo-joseph-papa-on-q4-2021-results-earnings-call-transcript
`
`Slayback Exhibit 1073, Page 12 of 24
`Slayback v. Eye Therapies - IPR2022-00142
`
`

`

`Obviously, we've got to make sure the markets are correct. We wanted to do this with
`urgency to be clear, but we also want to make sure we maximize the value for our
`shareholders.
`
`On the question of the B&L and some of the valuation discount to peers, our expectation is
`that as these companies are separated the 3 independent pure-play eye health company, a
`Solta Medical aesthetics company and the Bausch Pharma global company, we believe that
`the market will have a better way to evaluate the total of these companies as well as the
`amount of debt paydown that we will realize through the IPOs and through the B&L debt we
`put on B&L by reducing that overall quantum of that, we think that will help in terms of
`valuation.
`
`The second thing is, as we certainly execute on these IPOs, we believe that, that also will
`help the market look at the pure-play Bausch & Lomb, for example, versus the peer
`company. So I think all those things are going to help the marketplace as they assess the
`overall valuation of the B&L pure-play eye health company, the Solta Medical aesthetics
`company as it compares with the likes of the other medical aesthetics com