The separation of Bausch Health from the multi-cash eye care unit has officially begun, as the spinoff closes its public offering and the company is tapping a team to lead it to a “new chapter. ” Bad investors are not on the same page.
Bausch Health Companies $ BHC stock fell more than 25% on Tuesday, pricing at nearly $ 9.67 a share.
The drop follows a difficult few years for Bausch, marked by increasing legal turmoil and a major rebrand. Last year, Bausch pledged more than a billion dollars to settle class claims in a securities fraud case, and critics argue the new spinout is just an attempt. to protect company assets from ongoing litigation.
“It’s a privilege to lead Bausch Health as it enters a new chapter,” future Bausch Health CEO Thomas Appio said in the company’s Q1 call. “Ultimately, we are committed to building a culture of performance and accountability, while going forward we will focus on people, products and processes.”
Bausch announced Tuesday morning that Appio will replace Joseph Papa, who has headed Bausch Health since 2016 when it was still known as Valeant Pharmaceuticals. He guided the company through a name change in 2018 after the company faced numerous investigations into its accounting and pricing practices. That same year former exec Gary Tanner was sentenced to one year in prison after being convicted of defrauding the company in a kickback scheme.
After taking over in 2016, Dad promised to put Bausch on a “new course,” and has since divested billions in non-core assets, while formulating a plan to separate the main pharmaceutical business. from the eye care business. The latter is one of the world’s largest suppliers of contact lenses, lenses and eye care products, along with pharmaceuticals such as the glaucoma drug Vyzulta. The unit brought in $ 889 million in the last quarter, worth less than half of the company’s total revenue for that period.
Meanwhile, Bausch Health is stocking up on popular medications such as a range of gastrointestinal products from Salix, including the IBS drug Xifaxan.
“Our anchor brand of Xifaxan is best positioned for further growth with additional investments intended to further increase awareness of the unnecessary clinical need for IBS-D and HE,” said Appio.
This past quarter, Bausch Health saw $ 72 million in savings from divestitures and layoffs, primarily due to its deal to sell Egypt -based Amoun Pharmaceutical, which manufactures and sells branded generics and products in animal health.
Dad will now bring in Bausch + Lomb, which priced a public offer of 35 million for $ 18 each last week, just below the targeted $ 21 to $ 24 it put in. The resulting $ 630 million will be used to pay off Bausch Health’s debt, Dad said.
“Given the current market conditions, we decided to pursue a smaller IPO offering than we originally intended,” Papa said in a Q1 call, adding that Bausch Health has a 90% majority stake. to the eye care company at the end.
Dad also intends to pursue a public offering for Solta Medical, part of Bausch’s ortho dermatologics business, but that’s no longer the plan – at least for now.
“We remain patient with Solta and wait for better market conditions for its IPO,” he said in a Q1 call. “Solta Medical is a valuable asset and has the potential to grow in double numbers driven by healthy demand for aesthetic products and services.”
Appio, who fills Dad’s shoe, has been at Bausch since 2010 when he joined as managing director of China. In August 2016, he was promoted to president of Bausch + Lomb/International. Prior to joining the company, he served 23 years at Schering-Plow in multiple positions.
Going forward, Appio said the company plans to take advantage of the international commercial scale by launching 45 products in 50 markets within its international segment. He also explains that the newer, slimmer Bausch Health may not stay slim for long.
“We’re building a whole BD and strategy team, and that’s looking at the tuck-in type claims we can bring to the portfolio,” he said.