Industry News
Bausch Health To Spin Off Its Eye Health Business
Bausch Health Companies Inc. ("Bausch Health" or the "Company") announced that it intends to spin off its leading eye health business into an independent publicly traded entity ("Bausch + Lomb - NewCo") from the remainder of Bausch Health ("BHC"). The spinoff will establish two separate companies that include:
- A fully integrated, pure play eye-health company built on the iconic Bausch + Lomb brand and long history of innovation; and
- A diversified pharmaceutical company with leading positions in gastroenterology, aesthetics/dermatology, neurology and international pharmaceuticals.
According to the company, the benefits of separating these attractive, but disparate businesses include improved strategic focus and enhanced financial transparency to better enable stakeholders to value each business independently. The timing of the anticipated spinoff will be tied to certain conditions and approvals, and the Company's completion of several important actions, including the reorganization of the reporting segments, which we expect to begin reporting in the first quarter of 2021.
"We are committed to taking action to unlock what we see as unrecognized value in Bausch Health shares, and we believe that separating our business into two highly focused, stand-alone companies is the way to accomplish that goal," said Joseph C. Papa, chairman and CEO of Bausch Health. "Four years ago, we initiated a multi-phase plan, first to stabilize and then to transform Bausch Health into a company positioned to deliver long-term organic growth. We have divested approximately $4 billion of non-core assets, paid down over $8 billion of debt, resolved numerous legacy legal issues and managed a loss of exclusivity on an approximately $1.4 billion product portfolio, while also investing in R&D, new product launches and core franchises with attractive growth opportunities. Our Board of Directors and management team have been working on alternatives over the last 12 months to determine how to best unlock value across our businesses, and we believe that the time is right to begin the separation process, so each business has greater flexibility to pursue strategic opportunities in their respective markets."
Bausch + Lomb - NewCo
Bausch + Lomb - NewCo, which will consist of Bausch Health's global vision care, surgical, consumer and ophthalmic Rx businesses, would have had 2019 revenue of approximately $3.7 billion and a CAGR of 4.1% (2017-2019). We believe that Bausch + Lomb - NewCo is well-positioned to continue delivering consistent organic revenue growth across the globe, with more than half of its sales outside of the United States. The combination of pipeline expansion and established durable eye care brands, including BAUSCH + LOMB ULTRA®, Biotrue® ONEday, LUMIFY®, Ocuvite® and PreserVision®, among others, as well as the launch of BAUSCH + LOMB INFUSE™ contact lenses, is expected to drive this growth.
BHC
BHC, which would have had 2019 revenue of approximately $4.9 billion and CAGR of 1.8% (2017-2019), will comprise a diversified portfolio of leading durable brands across the Salix, International Rx, Solta, neurology and medical dermatology businesses. Core products include XIFAXAN®, TRULANCE® and RELISTOR® for gastrointestinal diseases; JUBLIA®, DUOBRII® and Thermage® FLX for dermatologic conditions; and WELLBUTRIN® and APLENZIN® for neurological conditions.
Transaction Information
Bausch Health will need to take several steps to facilitate the completion of the spinoff. As a first step to preparing stand-alone carve-out financial statements, Bausch Health expects to report Bausch + Lomb as a separate segment beginning in the first quarter of 2021. Furthermore, there are several important internal and external considerations, approvals and conditions that will drive the ultimate timing and structure of any transaction, including, but not limited to, consideration of one-time costs; capital market conditions; determination of the pro forma capitalizations of Bausch + Lomb - NewCo and BHC; final approval by Bausch Health's Board of Directors; receipt of applicable regulatory approvals; tax considerations, including receipt of any applicable opinions and/or rulings with respect to the Canadian and U.S. federal income tax treatment of the transaction; and compliance with U.S. and Canadian securities laws and stock exchange rules and any shareholder vote requirements that may be applicable. Many of these considerations, approvals and conditions will be influenced by and/or be dependent on the specific structure that is ultimately selected.
Bausch Health's management has initiated a process to determine the future executive leadership teams for each company. As the separation process commences, the Company looks forward to providing additional information on the future management teams and Boards of Directors for both companies.
