Bausch Health Companies Inc. · TSX:BHC
Bausch Health Companies — Valeant Pharmaceuticals International — Q4 2016 Earnings Presentation
45 slides from Bausch Health Companies's earnings presentation, Feb 28, 2017
Slide 1: 4Q and FY 2016 Financial Results
4Q and FY 2016 Financial Results Conference Call February 28, 2017
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 Recent Assessment of Financial Performance Measures Recently, the Company’s new management team undertook an evaluation of how it would measure the financial performance of the Company going forward. In evaluating its financial performance measures, the Company considered its re
Slide 4: Today's Topics
Today’s Topics 1 Opening Remarks & 2016 Progress Highlights 2 Q4 & FY 2016 Financial Results 3 FY 2017 Guidance 4 Segment Highlights & 2017 Catalysts 3
Slide 5: New Valeant Performance Since Last Quarter Call
New Valeant Performance Since Last Quarter Call • 4Q16 revenues and adj. EBITDA1 in line with revised guidance Positives Challenges Divestitures / Debt Reduction People • Agreed to divest 3 Skincare Brands to L’Oreal for $1.3B • 1Q17 Salesforce turnover increased owing to • Agreed to divest Dendreon
Slide 6: 4Q16 & FY2016 Financial Results
4Q16 & FY2016 Financial Results 4Q 2016 4Q 20152 Y/Y % FY 2016 FY 2015 Y/Y % Revenues $2,403M $2,758M (13%) $9,674M $10,447M (7%) Adj. COGS2 $666M $672M 1% $2,557M $2,402M (6%) (non-GAAP)1 Adj. SG&A $658M $682M 4% $2,698M $2,611M (3%) (non-GAAP)1 Adj. R&D $93M $95M 2% $404M $333M (21%) (non-GAAP)1 A
Slide 7: 4Q 2016 Results by Segment
4Q 2016 Results by Segment BAUSCH + LOMB / US DIVERSIFIED BRANDED Rx CORPORATE INTERNATIONAL PRODUCTS Revenue $1,176M $829M $398M Adjusted Gross Margin 62% 82% 83% (non-GAAP)1 Adjusted R&D (non-GAAP)1 $20M $19M $2M $52M Adjusted SG&A (non-GAAP)1 $331M $186M $33M $108M Adjusted Operating Income (non-
Slide 8: Full Year 2016 Segment Level Financial Results
Full Year 2016 Segment Level Financial Results FY 2016 FY 2015 Y/Y % Bausch + Lomb / International Revenues $4,607M $4,603M 0% Adj. Operating Income $1,371M $1,600M (14%) (non-GAAP)1 Branded RX Revenues $3,148M $3,582M (12%) Adj. Operating Income $1,708M $2,156M (21%) (non-GAAP)1 Diversified Product
Slide 9: Simplifying our Operating Model - Divestiture Update
Simplifying our Operating Model - Divestiture Update • Upon completion of the transactions announced, we will have generated asset sale proceeds of ~$2.35B (upfront) and future milestones of ~$0.35B, or total potential proceeds of $2.7B • We have simplified our operating model by divesting or agreei
Slide 10: Balance Sheet Update
Balance Sheet Update • Stable current and forecasted liquidity position – $542M cash as of quarter end – $875M drawn on $1.5B revolver • $1.84B in permanent debt repayment in 2016 • $1.2B total debt repayment in 2016 • Completed all 2017 mandatory amortization payments in 2016 • We expect to remain
Slide 11: Full Year 2017 Guidance
Full Year 2017 Guidance 2017 Guidance Total Revenues $8.90B - $9.10B Adjusted EBITDA (non-GAAP) 1 $3.55B - $3.70B Key Assumptions Adj. SG&A Expense (non-GAAP)1 $2.6-2.7B Adj. R&D Expense (non-GAAP)1 $420-435M Interest Expense ~$1.85B Adj. Tax Rate (non-GAAP)1 16-18% Avg. Fully Diluted Share Count ~3
Slide 12: Key Product LOE / Divestiture Impact
Key Product LOE / Divestiture Impact Business Product Line with Actual or 2016 Actuals Est. in 2017 Guidance LOE/Divested Impact Unit Anticipated LOE/Divestiture Date1 Revenue GP Revenue GP Revenue Profit • Lotemax® Suspension/Gel LOE 3Q17 Optho Rx (anticipated) $129M $124M ~$75M ~$70M ~($54M) ~($54
Slide 13: Bridge to Revenue Guidance
Bridge to Revenue Guidance Impact of LOE Fx Impact at Base 2016 net 2017 2016 Products current rates Fx and LOEs Growth 2017 $9.674B - $785M - $155M = $8.734B + $166M to $366M = $8.9B to 9.1B Diversified $1.92B Diversified ~(655M) Diversified (7%)-(10%) ~(70M) Brand Rx Diversified +2-5% Brand Rx ~(1
Slide 14: Bridge to Adj. EBITDA (non-GAAP) Guidance
Bridge to Adj. EBITDA (non-GAAP)1 Guidance Impact of LOE Fx Impact at Base 2016 net 2017 2016 Products current rates Fx and LOEs Growth 2017 $4.304B - $715M - $55M = $3.53B + (16M to 166M) = $3.55 to 3.70B ` ~(715M) $3.55 - 3.70B ~(55M) 0% to +5% Growth 1. See slide 2 for note on non-GAAP informatio
Slide 15: Segment Revenue Growth Expectation
Segment Revenue Growth Expectation 2017-2020 Revenue CAGR Bausch + Lomb / International 4% – 6% Branded Rx 8% - 10% Diversified (8%) – (10%) 14
Slide 16: Dermatology / Walgreens
Dermatology / Walgreens 4Q 2016 3Q 2016 2Q 2016 1Q 2016 4Q 2015 Business Unit Revenues Revenues Revenues Revenues Revenues Dermatology $214M $223M $188M $215M $297M Dermatology 2H16 Rx Performance • Derm Rxs stabilized in 2016 but we expect 80,000 74,570 volume pressure (from higher co-pays) and 71,
Slide 17: GI Update
GI Update 4Q 2016 3Q 2016 2Q 2016 1Q 2016 4Q 2015 Business Unit Revenues Revenues Revenues Revenues Revenues Salix $414M $436M $341M $340M $497M Xifaxan 2016 Retail TRx Performance2 • Xifaxan® +18% 65,000 60,000 • Uceris® +6% 2016 Prescription 55,000 Highlights • Apriso® +4% 50,000 • Relistor® +1% (
Slide 18: Stabilized Valeant Sales Force
Stabilized Valeant Sales Force Quarterly US Sales Force Retention 94.0% 93.6% 91.1% 89.2% 1Q 2016 2Q 2016 3Q 2016 4Q 2016
Slide 19: Investing in the New Valeant Business
Investing in the New Valeant Business Salix Primary Care Salesforce • Increasing field force by 40% Dermatology • Increasing market access team to support Walgreens and Independent Pharmacies model Bausch + Lomb • Investing in contact lens manufacturing capabilities to yield improved capacity and co
Slide 20: 2017 Product Launch Update for the New Valeant
2017 Product Launch Update for the New Valeant ~ +50 Product Launches Expected Worldwide in 2017 ~ $100M in Annualized Revenues US EMENA • Bausch + Lomb ULTRA for Presbyopia – • Louis Widmer – Jan 2017 expanded parameters – Q1 2017 • Bausch + Lomb ULTRA® lenses – Jan. 2017 • Zen™ RC Scleral Contact
Slide 21: Anticipated R&D Catalysts in 2017
Anticipated R&D Catalysts in 2017 • SAN-300 (Rheumatoid Arthritis) Phase II data read out H1 • enVista® Trifocal (Intraocular Lens) Initiate IDE study in H1 • New Material (Ophthalmic Viscosurgical Device); Initiate IDE in H1 • Loteprednol Gel 0.38% (Ocular Inflammation) Complete Phase III enrollmen
Slide 22: Siliq (brodalumab) Approved
SiliqTM (brodalumab) Approved • Biologic for treatment of severe psoriasis • Total US Psoriasis Market : Estimated ~$7B in 2018 • BLA approved on Feb 15, 2017 for the treatment of moderate-to-severe plaque psoriasis in adult patients who are candidates for systemic therapy or phototherapy and have f
Slide 23: IDP-118: Second Half of 2017 NDA Filing
IDP-118: Second Half of 2017 NDA Filing • Potential Indication: moderate to severe plaque psoriasis in adults • Unique Topical Combination - 1st corticosteroid-retinoid combination for psoriasis • Studied in over 1900 subjects in a comprehensive clinical program comprising 11 studies – This combinat
Slide 24: Latanoprostene Bunod (Vyzulta) Refiled with FDA
Latanoprostene Bunod (Vyzulta™*) Refiled with FDA • ~3M Americans affected by glaucoma • Latanoprostene bunod (LBN) ophthalmic solution 0.024% • 17M Prostaglandin Rx’s written annually (LBN) is a nitric oxide-donating prostaglandin analog being – ~70% latanoprost molecule evaluated for the reduction
Slide 25: Tangible Progress Toward Turnaround
Tangible Progress Toward Turnaround OUR MISSION Improve People’s Lives with our Healthcare Products STABILIZE TURNAROUND TRANSFORM 2016 2017-2018 2018+ Hired New Management Team Strengthen balance Lead in our categories sheet Launch new Fixing Derm Focus on specialty products Growing Salix driven ma
Slide 26: Appendix
Appendix VALEANT
Slide 27: Q4 2016 Top Products – B+L / International
Q4 2016 Top 10 Products – B+L / International Top 10 products by revenues, trailing five quarters Rank Product Q4 2016 Q3 2016 Q2 2016 Q1 2016 Q4 2015 1 SofLens® Total $78M $78M $79M $70M $73M 2 Occuvite + Preservision® $69M $65M $68M $55M $60M 3 ReNu® Total $54M $58M $54M $48M $53M 4 Cerave® Total
Slide 28: Q4 2016 Top Products – Branded Rx
Q4 2016 Top 10 Products – Branded Rx Top 10 products by revenues, trailing five quarters Rank Product Q4 2016 Q3 2016 Q2 2016 Q1 2016 Q4 2015 1 Xifaxan® Total $251M $273M $200M $208M $205M 2 Provenge® $77M $77M $77M $72M $77M 3 Uceris® Tablets $44M $40M $37M $35M $39M 4 Apriso® $39M $38M $32M $33M $
Slide 29: Q4 2016 Top Products – US Diversified Products
Q4 2016 Top 10 Products – US Diversified Products Top 10 products by revenues, trailing five quarters Rank Product Q4 2016 Q3 2016 Q2 2016 Q1 2016 Q4 2015 1 Wellbutrin® Total $67M $65M $80M $67M $90M 2 Isuprel® $42M $30M $40M $66M $53M 3 Xenazine® US $33M $35M $42M $47M $50M 4 Cuprimine® $22M $29M $
Slide 30: Bausch + Lomb / Int'l Segment Trailing Five Quarters
Bausch + Lomb / Int’l Segment Trailing Five Quarters 1 Bausch + Lomb / 4Q 2016 3Q 2016 2Q 2016 1Q 2016 4Q 2015 International Global Vision Care $175M $195M $194M $170M $172M Revenue Global Surgical Revenue $176M $154M $175M $164M $181M Global Consumer Revenue $376M $383M $397M $351M $363M Global Oph
Slide 31: Branded Rx Segment Trailing Five Quarters
Branded Rx Segment Trailing Five Quarters 1 Brand Rx 4Q 2016 3Q 2016 2Q 2016 1Q 2016 4Q 2015 Salix Revenue $414M $436M $341M $340M $497M Dermatology Revenue $214M $223M $188M $215M $297M Canada Revenue $85M $82M $80M $73M $85M Dendreon Revenue $77M $77M $77M $72M $77M Dentistry Revenue $38M $29M $45
Slide 32: Diversified Products Segment Trailing Five Quarters
Diversified Products Segment Trailing Five Quarters 1 Diversified Products 4Q 2016 3Q 2016 2Q 2016 1Q 2016 4Q 2015 Neuro & Other Revenue $276M $321M $345M $422M $423M Generics Revenue $93M $120M $122M $119M $115M Solta Revenue $9M $8M $7M $6M $9M Obagi Revenue $17M $17M $13M $10M $17M Other Revenue
Slide 33: Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation
Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation 32
Slide 34: Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation
Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation 33
Slide 35: Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation
Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation 34
Slide 36: Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation
Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation 35
Slide 37: Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation
Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation 36
Slide 38: Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation
Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation 37
Slide 39: Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation
Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation 38
Slide 40: Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation
Financial Summary – Adjusted (non-GAAP) Presentation Reconciliation 39
Slide 41: Reconciliation of reported Net Income (Loss) to EBITDA and Adjusted EBITDA ($M)
Reconciliation of reported Net Income (Loss) to EBITDA and Adjusted EBITDA ($M) 40
Slide 42: 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. These measures do not have any standardized mean
Slide 43: Non-GAAP Appendix (2/4)
Non-GAAP Appendix (2/4) • Asset Impairments: The Company has excluded the impact of impairments of finite-lived and indefinite-lived intangibles, as well as impairments of assets held for sale, as such amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/
Slide 44: Non-GAAP Appendix (3/4)
Non-GAAP Appendix (3/4) Adjusted EBITDA (non-GAAP) Adjusted EBITDA (non-GAAP) is GAAP net income (its most directly comparable GAAP financial measure) adjusted for certain items, as further described below. The Company has historically used Adjusted EBITDA to evaluate current performance. As indicat
Slide 45: Non-GAAP Appendix (4/4)
Non-GAAP Appendix (4/4) Adjusted Cost of Goods (COGS) Management uses this non-GAAP measure (the most directly comparable GAAP financial measure for which is Cost of Goods Sold) as a supplemental measure for period-to-period comparison. Adjusted Cost of Goods Sold excludes certain costs primarily re
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