Bausch Health Companies Inc. · TSX:BHC
Bausch Health Companies — Valeant Pharmaceuticals International — Q2 2015 Earnings Presentation
35 slides from Bausch Health Companies's earnings presentation, Jul 23, 2015
Slide 1: Valeant Pharmaceuticals International, Inc. Q2 2015 Financial Results
Valeant Pharmaceuticals International, Inc. Q2 2015 Financial Results July 23, 2015
Slide 2: Forward-looking Statements
Forward-looking Statements Forward-looking Statements Certain statements made in this presentation may constitute forward-looking statements, including, but not limited to, statements regarding the expected closing of pending acquisitions, the integration of the Dendreon and Salix businesses and the
Slide 3: Q2 2015 Highlights (1/2)
Q2 2015 Highlights (1/2) Exceeded top line and bottom line Q2 guidance Continued outperformance of U.S. businesses, specifically contact lenses, dental, dermatology, neurology/generics and ophthalmology RX Strong results in Asia, Australia, Canada, Mexico and Middle East/North Africa Fourth
Slide 4: Q2 2015 Highlights (2/2)
Q2 2015 Highlights (2/2) M&A update Eight tuck-in deals signed or closed so far this year Annual update of our M&A performance since 2008 Increasing guidance for 2015 Continued outperformance of legacy Valeant and approval of IBS-D Total company organic growth > 10% (same store) for the
Slide 5: Q2 2015 Financial Results
Q2 2015 Financial Results Adjusted Q2 2015 Q2 2014 Y/Y% Y/Y% (a) $2.7 B Total Revenue $2.0 B 34% 27% (guidance $2.45 - 2.55) $2.56 Cash EPS $1.91 34% 43% (guidance $2.40 – 2.50) a) FX Y/Y Impact: Revenue $173M and Cash EPS ($0.13), Salix impact of $313M and Cash EPS ($0.04) 4
Slide 6: Q2 2015 Organic Growth
Q2 2015 Organic Growth Same Store Sales – Y/Y growth rates for businesses that have been owned for one year or more Q2 2015 YTD 2015 Total U.S. 32% 29% Total Developed 24% 21% Total Emerging Markets 4% 6% Total Company 19% 17% Pro Forma* – Y/Y growth rates for entire business, including businesses t
Slide 7: Bausch + Lomb Organic Growth
Bausch + Lomb Organic Growth Country/Region Q1 2015 Q2 2015 Y/Y% YTD% Product Sales Product Sales United States $321M $354M 10% 12% Consumer $111M $119M 1% 3% Rx Pharma $116M $128M 21% 26% Surgical $48M $56M 1% 0% Contact Lens $48M $51M 19% 18% Other Developed $240M $261M 4% 0% Markets Emerging Mark
Slide 8: Q2 2015 Top 20 Brands
Q2 2015 Top 20 Brands Top 20 products revenue of $1.1B in Q2 2015, representing 40% of total revenue Xifaxan contributed 5% of Q2 revenue Jublia now our 2nd largest product, with annual run rate sales of ~$450M Provenge now our 3rd largest product, with annual run rate sales of ~$300M Top
Slide 9: Q2 2015 Top 20 Brands (1/2)
Q2 2015 Top 20 Brands (1/2) ($M) Q2 Q3 Q4 Q1 Q2 Product 2014 2014 2014 2015 2015 1) Xifaxan® - - - - $148 2) Jublia® $3 $13 $53 $62 $102 3) Provenge® - - - $30 $74 4) Wellbutrin® $72 $80 $82 $68 $67 5) Xenazine® $54 $56 $52 $57 $66 6) Solodyn® $43 $54 $61 $57 $65 7) Nitropress® - - - $62 $64 8) Ocuv
Slide 10: Q2 2015 Top 20 Brands (2/2)
Q2 2015 Top 20 Brands (2/2) ($M) Q2 Q3 Q4 Q1 Q2 Product 2014 2014 2014 2015 2015 11) Isuprel® - - - $72 $49 12) ReNu Multiplus® $49 $41 $46 $42 $46 13) Apriso - - - - $31 14) Elidel® $25 $22 $31 $26 $31 15) CeraVe® $26 $21 $27 $30 $30 16) BioTrue® Solution $27 $26 $25 $28 $29 17) Syprine® $18 $20 $3
Slide 11: U.S. Dermatology Outperforming
U.S. Dermatology Outperforming Jublia #1 branded product for onychomycosis Successful 8mL launch in May 29% of TRx’s are 8mL TRxs up 37% Q2/Q1; up 55% on a 4mL equivalents basis Onexton Launched TV ad campaign April 6th TRx volume at 8K per week and growing Luzu TRxs up 55% Q2/Q1
Slide 12: U.S. Eye Health Continues Strong Growth
U.S. Eye Health Continues Strong Growth Contact Lenses Bausch + Lomb ULTRA® ~$9M in net sales First commercial line operational, with yields tracking to schedule Second line will commence production in Q4; lines 3&4 in 2016 Lines 5 and 6 approved Biotrue® ONEday growing 4x category, up
Slide 13: Other U.S. Business Highlights
Other U.S. Business Highlights Neuro & Other/Generics Continued strong double digit Y/Y growth Several products now promoted by Salix hospital and pain sales teams (e.g., Ammonul, Bupap) Continued strong performance of Orphan diseases products portfolio (Syprine, Cuprimine) for treatment of
Slide 14: Strong Organic Growth in Rest of World
Strong Organic Growth in Rest of World Canada ▪ $80M Russia ▪ 7% Y/Y ▪ $65M Western Europe ▪ 7% Y/Y ▪ $202M ▪ 5% Y/Y South Korea ▪ $15M ▪ 23% Y/Y China Mexico ▪ $72M Middle East/ ▪ 15% Y/Y ▪ $59M North Africa ▪ 12% Y/Y ▪ $42M ▪ 18% Y/Y Australia South Africa ▪ $48M ▪ $15M ▪ 6% Y/Y ▪ 12% Y/Y 13
Slide 15: Salix Off to Fast Start
Salix Off to Fast Start Key R&D Milestones Achieved Xifaxan for IBS-D indication Relistor Oral NDA filed Revenues and EBITA significantly ahead of deal model IBS-D update Immediate Xifaxan script growth uptake post-approval Soft launch immediately after approval Sales force trained i
Slide 16: Strong Xifaxan NRx Uptake following IBS-D Approval
Strong Xifaxan NRx Uptake following IBS- D Approval +33% Y/Y since 7,500 IBS-D approval 5/27/15 IBS-D approval 7,000 +15% Y/Y 6,500 through May 6,000 5,500 5,000 4,500 4,000 24-Apr 1-May 8-May 15-May 22-May 29-May 5-Jun 12-Jun 19-Jun 26-Jun 3-Jul 10-Jul 2015 NRx 2014 NRx Source: Symphony. 15
Slide 17: Results of Salix Pipeline Review
Results of Salix Pipeline Review Project Status Uceris Foam Expected to launch in Q4 Ulcerative colitis Relistor (Oral) Filed Opioid-induced constipation Rifaximin EIR In discussions with partner, Alfa (extended intestinal release) Wassermann Crohn’s Disease Rifaximin SSD Continuing to fund (soluble
Slide 18: BD Update – Eight Deals Closed/Signed
BD Update – Eight Deals Closed/Signed Deal Status Rationale +26% Y/Y since Amoun Signed Adds to existing business to create ~$500M+ IBS-D approval MENA branded generics business in MENA region, one of the fastest ~$225M revenue growing emerging markets Humax Signed Entry into Colombia market Branded
Slide 19: Amoun at a Glance
Amoun at a Glance Leading local branded generics company in Egypt Leading brand name with well established brands ~800 sales reps across Egypt Strong local product development and manufacturing capability Strong platform for further expansion across Middle East and North Africa Adds ~$22
Slide 20: Deal Scorecard Since 2008
Deal Scorecard Since 2008 Deal activity since 2008 ▪ ~140+ acquisitions / licenses / co-promotes ▪ $40B+ in capital deployed Target high hurdle rates ▪ IRRs of at least 20% ▪ Statutory tax rates ▪ Cash payback period of 6 years or less Financial discipline ▪ Track top line and EBITA by quarter for e
Slide 21: M&A Summary (USD)
M&A Summary (USD) $ Deployed Deal Performance ($M) Large ~$30,000 • Biovail, Medicis, B+L, and Salix: all in- ($1B+) line or significantly ahead of deal model Mid ~$5,000 • 10 of 11 tracking to 20% IRR or ($300M -$1B) higher Small ~$2,500 • ~50 deals in aggregate performing (< $300M) above 20% IRR 2
Slide 22: Returns on Acquisitions 2008 - Q2 2015
Returns on Acquisitions 2008 - Q2 2015 Cumulative EBITA Cumulative Net Income USD Billions USD Billions 12.4 11.8 10.5 +18% +59% 7.4 Deal Achieved Deal Achieved* Model Model * Includes corporate tax structure 21
Slide 23: Cash Payback on Largest Deals 2008 - Q2 2015
Cash Payback on Largest Deals 2008 - Q2 2015 Purchase Deal Price($M) Cash Payback Coria 95 2.9 2008 Dow 285/400 1.1 Aton 318 2.5 2010 Biovail 2,636 1.2 PSwiss/Sanitas 939 0.6 2011 Ortho/Dermik 706 1.3 iNova 657 0.4 GL 164 0.6 2012 OraPharma 312 0.4 Medicis 2,600 0.6 Natur Produkt 137 0.5 2013 Obagi
Slide 24: Bausch + Lomb Organic Growth has Significantly Improved Under Valeant
Bausch + Lomb Organic Growth has Significantly Improved Under Valeant 6/30/13 6/30/15 LTD Global Business Last 12 Months Last 12 Months Valeant Unit Y/Y% Y/Y% Ownership (Previous (Valeant Ownership) Ownership) Consumer 5% 5% 6% Rx Pharma 4% 15% 14% Surgical 2% 6% 8% Contact Lens (3%) 8% 6% U.S Gener
Slide 25: Key Observations from 140+ deals since 2008 (1/2)
Key Observations from 140+ deals since 2008 (1/2) Large deals have delivered the most upsides Accelerated growth through decentralized operating model (e.g. Bausch + Lomb: every significant market in the world) Captured upside from pipeline products that were not built into the deal model (e.g
Slide 26: Key Observations from 140+ deals since 2008 (2/2)
Key Observations from 140+ deals since 2008 (2/2) Captured unmodeled revenue synergies (e.g., Medicis: alternative fulfillment; Bausch + Lomb: consumer scale; Salix: Hospital and Federal account teams) Retained key organizational talent and expertise: Salix: Philippe Adams, Bill Bertrand, John
Slide 27: Financial Summary
Financial Summary Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Total Revenue $2,041M $2,056M $2,280M $2,191M $2,732M Cost of Goods Sold (% of product sales) 28% 26% 24% 25% 23% SG&A (% of total revenue) 25% 24% 23% 26% 25% R&D Expense $66M $59M $59M $56M $81M Operating Margin (% of total revenue) (exclud
Slide 28: Disaggregation of Q2 Financial Results
Disaggregation of Q2 Financial Results Valeant (Ex. Salix) Salix Combined Total Revenue $2,419M $313M $2,732M Cost of Goods Sold (% of product sales) 24% 15% 23% SG&A (% of total revenue) 27% 17% 25% R&D Expense $56M 25M $81M Operating Margin (% of total revenue) (excluding amortization) 47% 61% 49%
Slide 29: Disaggregation of Q2 Adjusted Cash Flow
Disaggregation of Q2 Adjusted Cash Flow Valeant Salix Combined Excl. Salix Total GAAP Cash Flow $714M ($303M) $411M Add: Restructuring $41M $42M $83M Stock Based Comp $4M $168M $172M Working Capital Related to BD Activity - $96M $96M Legal Settlements / Tax on Stock Options $11M - $11M Adjusted Cash
Slide 30: Impact of Salix Inventory and Drawdown
Impact of Salix Inventory and Drawdown Actual Estimated Q2 Q3 Net Sales (including IBS-D) $313M ~$300M Inventory Reduction $141M ~$200M Net Sales Adj. for Inventory Reduction $454M ~$500M Beginning Months on Hand 4-5 3 - 3.5 Ending Months on Hand 3 - 3.5 2 - 2.5 Q3 will be about the same as Q2 at
Slide 31: Restructuring and Integration Expenses
Restructuring and Integration Expenses Q2 restructuring and integration expenses of $153M Salix - $122M Additional $175M expected in remainder of 2015 Dendreon - $18M Minimal remaining for rest of year (<$5M) Bausch + Lomb - ~$0M (now complete) All others including Acrivet, Invado, Mar
Slide 32: Balance Sheet
Balance Sheet Strong liquidity position $1.5B undrawn revolver $958M of cash at end of Q2 Repurchased $50M of Valeant shares from Credit Suisse as part of a block offer in Q2 at $223 per share We remain committed to getting leverage to be below 4.0x by end of 2016 Accounts Receivable DSO
Slide 33: Updated 2015 Guidance
Updated 2015 Guidance Q3 2015 Q4 2015 New 2015 Previous 2015 Revenues $2.6 - $2.8B $3.2 - $3.4B $10.7 - $11.1B $10.4 - $10.6B Cash EPS $2.60 - $2.70 $3.98 - $4.18 $11.50 - $11.80 $10.90 - $11.20 per share per share per share per share Adj. Cash NA NA >$3.2B >$3.1B Flow from Operations Organic grow
Slide 34: H2 2015 Guidance Assumptions
H2 2015 Guidance Assumptions Exchange rates based on current spot rates Targretin (July) and Xenazine (expected August) genericized No impact from future acquisitions included in guidance Signed or closed business development transactions factored into guidance Amoun assumed to close in Q4
Slide 35: Valeant Pharmaceuticals International, Inc. Q2 2015 Financial Results
Valeant Pharmaceuticals International, Inc. Q2 2015 Financial Results July 23, 2015
Valeant Pharmaceuticals International — Q2 2015 Earnings Presentation on 6ix