Bausch Health Companies Inc. · TSX:BHC
Bausch Health Companies — Valeant Pharmaceuticals International — Q3 2016 Earnings Presentation
41 slides from Bausch Health Companies's earnings presentation, Nov 8, 2016
Slide 1: Third Quarter 2016 Conference Call
Third Quarter 2016 Conference Call November 8, 2016
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements made in this presentation may constitute forward-looking statements, including, but not limited to, statements regarding expected future performance of Valeant Pharmaceuticals International, Inc. (“Valeant” or the “Company”), including guidance with resp
Slide 3: Non-GAAP Information
Non-GAAP Information To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP financial measures including (i) Adjusted Earnings per Share (“EPS”), (ii) Adjusted Net Income, (iii) Adjusted EBITDA, (iv) Ad
Slide 4: Today's Topics
Today’s Topics 1 Q3 2016 Financial Results 2 Business Segments Under New Structure 3 Revised Full Year 2016 Guidance 4 Progress Since 2Q / Creating the New Valeant 3
Slide 5: 3Q 2016 Performance
3Q 2016 Performance Positives Negatives 3Q Sequential Improvement vs 2Q Brodalumab PDUFA Date Delay • Revenue • Delay three months to February 16, 2017 • Operating Expenses • Operating Margin Operating /Quality Challenges • Adjusted EBITDA • Rochester NY Site Inspection • Product Recall/Consumer Bus
Slide 6: 3Q 2016 Financial Results
3Q 2016 Financial Results 3Q 2016 2Q 2016 1Q 2016 3Q 2015 (Y/Y) 4Q 2015 Results Results Results Results Results2 Revenues $2,480M $2,420M $2,372M $2,757M $2,787M Adj. COGS $645M $630M $586M $663M $598M (non-GAAP)1 Adj. SG&A $642M $662M $737M $682M $674M (non-GAAP)1 Adj. R&D $101M $108M $103M $96M $1
Slide 7: 3Q 2016 Results by Segment
3Q 2016 Results by Segment BAUSCH + LOMB / US DIVERSIFIED INTERNATIONAL BRANDED Rx PRODUCTS CORPORATE DURABLE GROWTH GROWTH CASH GENERATING OVERHEAD Revenue $1,162M $847M $471M Gross Margin (non-GAAP)1 61% 83% 88% R&D Investment (non-GAAP)1 $22M $21M $2M $56M Adjusted SG&A (non-GAAP)1 $339M $163M $3
Slide 8: Bausch + Lomb / International (~50% of Valeant) "Durable"
Bausch + Lomb / International (~50% of Valeant1) “Durable” SEE BETTER TO LIVE BETTER 3Q 2016 2Q 2016 1Q 2016 4Q 2015 3Q 2015 (Y/Y) Business Unit Revenues Revenues Revenues Revenues Revenues Global Vision Care $195M $194M $170M $172M $194M Global Surgical $154M $175M $164M $181M $151M Global Consumer
Slide 9: Branded Rx (~30% of Valeant) "Growth"
Branded Rx (~30% of Valeant1) “Growth” INVESTING IN Rx FRANCHISES 3Q 2016 2Q 2016 1Q 2016 4Q 2015 3Q 2015 (Y/Y) Business Unit Revenues Revenues Revenues Revenues Revenues Salix $436M $341M $340M $497M $461M2 Dermatology $223M $188M $215M $297M $450M2 Canada $82M $80M $73M $85M $80M Oncology $77M $77
Slide 10: U.S. Diversified Products (~20% of Valeant) "Cash Generating"
U.S. Diversified Products (~20% of Valeant1) “Cash Generating” OPTIMIZING PORTFOLIO OF HIGH-MARGIN, LOW INVESTMENT BUSINESSES 3Q 2016 2Q 2016 1Q 2016 4Q 2015 3Q 2015 (Y/Y) Business Unit Revenues Revenues Revenues Revenues Revenues Neuro & Other $322M $345M $422M $423M $416M2 Generics $120M $122M $11
Slide 11: Revised Full Year 2016 Guidance
Revised Full Year 2016 Guidance Revised 2016 Guidance Previous 2016 Guidance Total Revenues $9.55B - $9.65B $9.9B - $10.1B Adjusted EPS (non-GAAP)1 $5.30 - $5.50 $6.60 - $7.00 Adjusted EBITDA (non-GAAP) 1 $4.25B - $4.35B $4.80B - $4.95B 10 1. See slide 2 for note on non-GAAP information and Appendix
Slide 12: Bridge to Adjusted EPS Guidance (non-GAAP)
Bridge to Adjusted EPS Guidance (non-GAAP)1 $6.80 ~ ($0.55) B+L International ~$0.38 Efficiencies ~($0.45) Branded Rx • Challenges in Europe and Asia ~($0.20) Diversified Products • Eastern Europe • Dental Backorder inventory reduction ~($0.20) Incremental Expenses • Dermatology • Consumer Recall So
Slide 13: Focus on the Balance Sheet
Focus on the Balance Sheet Stable current and forecasted liquidity position • ~$660M cash as of quarter end 2017: Repaid Q1 through Q3 2017 mandatory amortization • ~$160M mandatory 2017 term loan repayments remaining • Planned to be completed by year end 2016 leaving no remaining 2017 mandatory amo
Slide 14: Tangible Progress Since 2Q / Creating the New Valeant
Tangible Progress Since 2Q / Creating the New Valeant New Management Additions GI Growth – Xifaxan® PCP strategy, Oral Relistor Launch Dermatology Rx Recovery / Walgreens Improvement Consumer Business Continues Consistent Growth Stabilization of Salesforce Continuing R&D Investments 2016 -2017 Actio
Slide 15: New Management Additions
New Management Additions Paul S. Herendeen Louis W. Yu, Ph.D EVP, Finance & Chief Chief Quality Officer, Financial Officer Global Quality • Joined Valeant in August 2016 • Joined Valeant in October 2016 • EVP & CFO of Zoetis Inc. for 2 years • EVP, Global Quality and Compliance at The • CFO of Warne
Slide 16: GI Update
GI Update 1Q 2016 4Q 2015 3Q 2015 Business Unit 3Q 2016 Revenues 2Q 2016 Revenues Revenues Revenues Revenues1 Salix $436M $341M $340M $497M $461M Xifaxan 2016 Retail TRx Performance2 • Continued Xifaxan monthly TRx 14% 65,000 Xifaxan Growth year-over-year in 3Q and 24% yr/yr 60,000 Solution for 55,0
Slide 17: Dermatology Rx Recovery / Walgreens Improvement
Dermatology Rx Recovery / Walgreens Improvement 1Q 2016 4Q 2015 3Q 2015 Business Unit 3Q 2016 Revenues 2Q 2016 Revenues Revenues Revenues Revenues1 Dermatology $223M $188M $215M $297M $450M Dermatology 2016 Rx Performance • TRx and NRx growth continues to show 350,000 2016 Rx Growth recovery post 20
Slide 18: Year-to-date US Consumer Business Strength
Year-to-date US Consumer Business Strength 8.3% 7.7% Top US consumer healthcare companies1 5.2% 4.3% 3.7% YTD Average Market Growth of 2% 2.4% 2.0% 1.4% -0.4% -1.1% -1.3% -1.7% -2.3% -3.0% $MM $1,949 $658 $623 $4,755 $1,070 $908 $962 $1,516 $602 $1,163 $475 $11,079 $481 $2,553 1 YTD 10-02-16. Based
Slide 19: Salesforce Stabilization
Salesforce Stabilization Total US Sales Force Retention by Quarter 95% 94% 93% 92% 91% 90% 89% 88% 87% 86% 1Q 2016 2Q 2016 3Q 2016 Source: Internal company data. Total US sales force retention data by quarter. 18
Slide 20: Continuing R&D Investments
Continuing R&D Investments 134 Total Company R&D Projects Key Upcoming R&D Programs Overall R&D +38% Y/Y • Biologic for treatment of severe psoriasis % of R&D Brodalumab Launch Timeframe Programs • 2Q17 Anticipated Launch1 2017-2019 ~80% • Once daily single agent therapy eye drop latanoprostene for
Slide 21: 2016 – 2017 Action Plan
2016 – 2017 Action Plan 1 Building the New Valeant Team Investing in R&D / Quality / New Product 2 Launch Capability Reducing Operating Costs – Zero Based 3 Budgeting, Saving $75-100M in 2017 Improving Gross Profit by an Annualized $150-250M 4 by 2020 through Supply Chain Rationalization 5 Addressin
Slide 22: Creating the "New Valeant"
Creating the “New Valeant” OUR MISSION Improve People’s Lives with our Healthcare Products STABILIZE TURNAROUND TRANSFORM 2016 2017-2018 2018+ New Management Strengthen balance Lead in our categories sheet Launch new Fixing Derm Focus on specialty products Growing Salix driven markets Balance organi
Slide 23: Appendix
Appendix 22
Slide 24: Q3 2016 Top Products – B+L / International
Q3 2016 Top 10 Products – B+L / International Top 10 products by revenues, trailing five quarters Rank Product Q3 2016 Q2 2016 Q1 2016 Q4 2015 Q3 2015 1 SofLens® Total $78M $79M $70M $73M $83M 2 Occuvite + Preservision® $65M $68M $55M $60M $57M 3 ReNu® Total $58M $54M $48M $53M $52M 4 Lotemax® Total
Slide 25: Q3 2016 Top Products – Branded Rx
Q3 2016 Top 10 Products – Branded Rx Top 10 products by revenues, trailing five quarters Rank Product Q3 2016 Q2 2016 Q1 2016 Q4 2015 Q3 2015 1 Xifaxan® Total $273M $200M $208M $205M $220M 2 Provenge® $77M $78M $72M $77M $69M 3 Jublia® Total $44M $31M $38M $68M $106M 4 Uceris® Tablets $40M $37M $35M
Slide 26: Q3 2016 Top Products – US Diversified Products
Q3 2016 Top 10 Products – US Diversified Products Top 10 products by revenues, trailing five quarters Rank Product Q3 2016 Q2 2016 Q1 2016 Q4 2015 Q3 2015 1 Wellbutrin® Total $65M $80M $67M $90M $88M 2 Nitropress® $36M $34M $58M $58M $35M 3 Xenazine® US $35M $42M $47M $50M $57M 4 Isuprel® $30M $40M
Slide 27: Bausch + Lomb / Int'l Segment Trailing Five Quarters
Bausch + Lomb / Int’l Segment Trailing Five Quarters1 Bausch + Lomb / 3Q 2016 2Q 2016 1Q 2016 4Q 2015 3Q 2015 International Global Vision Care Revenue $195M $194M $170M $172M $194M Global Surgical Revenue $154M $175M $164M $181M $151M Global Consumer Revenue $383M $397M $351M $363M $367M Global Opht
Slide 28: Branded Rx Segment Trailing Five Quarters
Branded Rx Segment Trailing Five Quarters1 Brand Rx 3Q 2016 2Q 2016 1Q 2016 4Q 2015 3Q 2015 Salix Revenue $436M $341M $340M $497M $461M3 Dermatology Revenue $223M $188M $215M $297M $450M3 Canada Revenue $82M $80M $73M $85M $80M Dendreon Revenue $77M $77M $72M $77M $69M Dentistry Revenue $29M $45M $3
Slide 29: Diversified Products Segment Trailing Five Quarters
Diversified Products Segment Trailing Five Quarters1 Diversified Products 3Q 2016 2Q 2016 1Q 2016 4Q 2015 3Q 2015 Neuro & Other Revenue $322M $345M $422M $423M $416M3 Generics Revenue $120M $122M $119M $115M $125M Solta Revenue $8M $7M $6M $9M $9M Obagi Revenue $17M $13M $10M $17M $12M Other Revenue
Slide 30: Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation
Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation Qtr 3 2016 Cost of Total Total Interest (Recovery of) Net Goods Gross Gross R&D Operating Expense, Provision for Income/ Sold Margin Margin SG&A Expense Margin net income taxes (Loss) EPS* GAAP $ 649.2 $ 1,821.6 73.5% $ 660.9 $ 100.
Slide 31: Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation
Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation Qtr 1 2016 Cost of Total Total Interest (Recovery of) Net Goods Gross Gross R&D Operating Expense, Provision for Income/ Sold Margin Margin SG&A Expense Margin net income taxes (Loss) EPS* GAAP $ 620.2 $ 1,741.7 73.4% $ 812.6 $ 103.
Slide 32: Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation
Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation Qtr 3 2015 Cost of Total Total Interest (Recovery of) Net Goods Gross Gross R&D Operating Expense, Provision for Income/ Sold Margin Margin SG&A Expense Margin net income taxes (Loss) EPS* GAAP $ 634.6 $ 2,138.6 76.7% $ 697.6 $ 101.
Slide 33: Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation
Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation Qtr 3 2016 Qtr 2 2016 B&L / International B&L / International Segment R&D Operating Segment R&D Operating Gross Margin SG&A Investment Income Gross Margin SG&A Investment Income GAAP 60.8% $ 339.1 $ 22.2 $ 345.6 63.1% $ 380.7 $ 22.4
Slide 34: Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation
Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation Qtr 3 2016 Qtr 2 2016 Branded Rx Branded Rx Segment R&D Operating Segment R&D Operating Gross Margin SG&A Investment Income Gross Margin SG&A Investment Income GAAP 83.0% $ 163.0 $ 20.5 $ 520.1 79.8% $ 176.2 $ 41.2 $ 366.8 Amortizat
Slide 35: Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation
Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation Qtr 3 2016 Qtr 2 2016 US Diversified US Diversified Segment R&D Operating Segment R&D Operating Gross Margin SG&A Investment Income Gross Margin SG&A Investment Income GAAP 87.4% $ 31.0 $ 1.8 $ 378.3 86.2% $ 36.6 $ 2.4 $ 384.0 Integ
Slide 36: Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation
Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation Qtr 3 2016 Corporate R&D Operating SG&A Investment Income GAAP 127.8 $ 56.3 $ (2,107.0) Acquisition-related contingent consideration 9.0 In-process research and development impairments and other costs 36.0 Other (income)/expense 1.1
Slide 37: Reconciliation of reported Net Income (Loss) to EBITDA and Adjusted EBITDA
Reconciliation of reported Net Income (Loss) to EBITDA and Adjusted EBITDA ($M) Adjusted EBITDA (non-GAAP) Three Months Ended September 30, June 30, March 31, December 31, 2015 2016 2015 2016 2015 2016 (restated) 2015 Net income (loss) attributable to Valeant Pharmaceuticals International, Inc. $(1,
Slide 38: Non-GAAP Appendix (1/4)
Non-GAAP Appendix (1/4) Description of Non-GAAP Financial Measures To supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP financial measures, as follows. Other companies may use similarly titled non-GAA
Slide 39: Non-GAAP Appendix (2/4)
Non-GAAP Appendix (2/4) • Restructuring, integration, acquisition-related expenses and other costs: In recent years, the Company completed a number of acquisitions, which resulted in operating expenses which varied significantly from period to period and which would not otherwise have been incurred.
Slide 40: Non-GAAP Appendix (3/4)
Non-GAAP Appendix (3/4) Adjusted EBITDA Adjusted EBITDA is net income (its most directly comparable GAAP financial measure) adjusted for certain items, as further described below. Management uses this non-GAAP measure as part of its guidance and to forecast future results. Management also believes A
Slide 41: Non-GAAP Appendix (4/4)
Non-GAAP Appendix (4/4) Adjusted Operating Margin, Adjusted Operating Income and Adjusted Segment Operating Income Management uses these non-GAAP measures (the most directly comparable GAAP financial measure for which is Total GAAP Revenue less total operating expenses (GAAP)) to assess performance
Valeant Pharmaceuticals International — Q3 2016 Earnings Presentation on 6ix