Introduction
Bausch + Lomb is a global leader in the eye health industry, dedicated to helping people see better and live better. With a rich history spanning over 170 years, the company has evolved into a diversified and innovative force in the field of ophthalmology. As a fully integrated eye health business, Bausch + Lomb offers a comprehensive portfolio of approximately 400 products, including contact lenses, intraocular lenses (IOLs), surgical systems and devices, vitamin and mineral supplements, lens care products, prescription eye-medications, and other consumer products.
History and Evolution
The company's history can be traced back to 1853, when John Jacob Bausch, a German-born American, opened a small optical goods shop in Rochester, New York. In 1859, Bausch partnered with Henry Lomb, and together they laid the foundation for what would become one of the most renowned eye health companies in the world. Over the decades, Bausch + Lomb has been at the forefront of groundbreaking innovations, from the invention of the first plastic contact lens in 1971 to the development of advanced IOLs and surgical equipment.
Bausch + Lomb began as a small optical goods shop and grew to become a leading manufacturer of eyeglasses, camera lenses, binoculars, and other optical products. The company expanded its product offerings and global reach over the years, introducing the first soft contact lens for the consumer market in 1971, which revolutionized the vision care industry. This was followed by the launch of numerous innovative contact lens and lens care solutions over the following decades. Bausch + Lomb also grew its pharmaceutical and surgical product lines, becoming a fully integrated eye health business.
In the early 2000s, Bausch + Lomb faced several challenges, including product quality issues, litigation, and financial difficulties. The company was acquired by Valeant Pharmaceuticals (now Bausch Health Companies Inc.) in 2013. Under new ownership, Bausch + Lomb refocused its efforts on its core eye health businesses and began investing in research and development to revitalize its product portfolio. In May 2022, Bausch + Lomb completed an initial public offering, becoming an independent, publicly traded company again. This allowed the company to sharpen its strategic focus on driving growth across its Vision Care, Pharmaceuticals, and Surgical segments.
Business Segments
Today, Bausch + Lomb operates in three main reportable segments: Vision Care, Pharmaceuticals, and Surgical. The Vision Care segment encompasses the company's contact lens and consumer eye care businesses, offering a diverse range of products for various wearing modalities and eye care needs. The Pharmaceuticals segment focuses on a broad line of proprietary and generic pharmaceutical products for post-operative treatments and the management of various eye conditions, such as glaucoma, eye inflammation, and dry eyes. The Surgical segment, on the other hand, specializes in medical device equipment, consumables, and technologies for the treatment of cataracts, corneal, vitreous, and retinal eye conditions.
The Vision Care segment consists of sales of contact lenses that span the spectrum of wearing modalities, including daily disposable and frequently replaced contact lenses, as well as sales of contact lens care products, over-the-counter (OTC) eye drops that address various conditions like eye allergies, conjunctivitis, dry eye and redness relief, and eye vitamin and mineral supplements. Key products in this segment include Bausch + Lomb INFUSE silicone hydrogel (SiHy) daily disposable contact lenses, Biotrue ONEday daily disposables, PureVision SiHy contact lenses, SofLens daily disposables, Bausch + Lomb ULTRA contact lenses, Biotrue and Renu multipurpose solutions, Boston cleaning and conditioning solutions, Lumify, Soothe, Artelac, Alaway, Mioclear eye drops, and PreserVision and Ocuvite eye vitamins.
The Pharmaceuticals segment consists of sales of a broad line of proprietary and generic pharmaceutical products for post-operative treatments and the treatment of a number of eye conditions, such as glaucoma, eye inflammation, ocular hypertension, dry eyes and retinal diseases. Key brands in this segment include MIEBO, XIIDRA, Vyzulta, Lotemax, Prolensa, and Minims.
The Surgical segment consists of sales of medical device equipment, consumables, instruments and technologies for the treatment of cataracts, corneal and vitreous and retinal eye conditions, which includes intraocular lenses (IOLs) and delivery systems, phacoemulsification equipment and other surgical instruments and devices necessary for ophthalmic surgery. Key brands in this segment include Akreos, AMVISC, IC-8 Apthera, Crystalens IOLs, enVista IOLs, Millennium, Stellaris Elite vision enhancement system, Synergetics, ClearVisc, StableVisc, Storz ophthalmic instruments, VICTUS femtosecond laser, Teneo, Eyefill, and Zyoptix.
Financials
Financially, Bausch + Lomb has demonstrated a strong track record in recent years. As of the company's latest reported quarter (Q3 2024), total revenue stood at $1.196 billion, reflecting a 19% increase compared to the same period in the previous year. This robust performance was driven by solid execution and growth across all three of the company's business segments.
The Vision Care segment, which accounts for the largest portion of Bausch + Lomb's revenue, reported $684 million in Q3 2024, a 6% increase year-over-year. This growth was fueled by strong performance in both the consumer and contact lens portfolios, with the company's Daily SiHy lens franchise delivering a remarkable 79% increase in revenue during the quarter. The segment profit for Vision Care was $201 million, with a segment profit margin of 29%. The increase in Vision Care revenues was primarily driven by sales growth in the dry eye portfolio within the consumer eye care business and the SiHy Daily lenses within the contact lens business.
The Pharmaceuticals segment, which includes the company's flagship dry eye products Miebo and Xiidra, reported revenue of $306 million in Q3 2024, reflecting a 76% year-over-year increase. Miebo, in particular, has been a standout performer, with the company reporting that approximately 17,000 eye care professionals are now prescribing the product to around 150,000 patients. The segment profit for Pharmaceuticals was $69 million, with a segment profit margin of 23%. The increase in Pharmaceuticals revenues was primarily driven by incremental sales from the acquisition of XIIDRA and the launch of MIEBO.
The Surgical segment, which encompasses the company's medical device equipment, consumables, and IOL technologies, delivered $206 million in revenue for Q3 2024, representing a 12% year-over-year increase. The segment's strong performance was driven by growth across all three of its product categories: consumables, equipment, and implantables. The segment profit for Surgical was $13 million, with a segment profit margin of 6%. The increase in Surgical revenues was primarily driven by increased demand for consumables, systems, and implantables, particularly the premium IOL portfolio.
For the most recent fiscal year (2023), Bausch + Lomb reported total revenue of $4.15 billion, with a net loss of $260 million. Operating cash flow (OCF) was negative $17 million, and free cash flow (FCF) was negative $198 million. However, the company's financial performance has shown significant improvement in the most recent quarter (Q3 2024), with net income improving from a loss of $84 million in Q3 2023 to a profit of $4 million in Q3 2024. OCF and FCF also improved significantly year-over-year, with OCF reaching $154.4 million and FCF reaching $93.4 million in Q3 2024.
Liquidity
Bausch + Lomb's commitment to innovation is evident in its robust pipeline of new products and technologies. The company's recent FDA approval of the enVista Envy trifocal IOL, which offers a continuous range of vision with excellent dysphotopsia tolerance, is a testament to its focus on developing cutting-edge solutions for the eye health market.
In terms of liquidity, Bausch + Lomb reported cash and cash equivalents of $331 million as of September 30, 2024. The company also had $121 million available under its Revolving Credit Facility. The debt-to-equity ratio stood at 0.70, while the current ratio was 1.57 and the quick ratio was 0.95, indicating a reasonably strong liquidity position.
Regarding guidance, Bausch + Lomb has raised its full-year 2024 revenue guidance to a range of $4.725 billion to $4.825 billion, up from the previous range of $4.7 billion to $4.8 billion. This revised guidance reflects the company's continued strong performance and its confidence in its ability to deliver sustainable growth. The company continues to expect full year 2024 constant currency revenue growth of approximately 16% to 18%. Bausch + Lomb has also raised its full year 2024 guidance for Miebo revenue to a range of $165 million to $170 million, up from the previous range of $150 million to $160 million. For Xiidra, the company expects revenue to be in the range of $355 million to $365 million for the full year 2024.
The company's adjusted EBITDA guidance, excluding acquired IP R&D, remains at a range of $850 million to $900 million for the full year 2024. Bausch + Lomb expects adjusted gross margin to be 62.5% for the full year 2024, which is at the high end of its previous guidance range. The company continues to expect investments in R&D to be about 7% to 8% of revenue for the full year 2024.
Conclusion
Despite the challenges faced by the broader market, Bausch + Lomb has demonstrated its resilience and ability to navigate the dynamic eye health landscape. The company's diversified business model, innovative pipeline, and strong execution have positioned it well for long-term success.
The eye health industry is estimated to have a global market size of over $40 billion and is expected to grow at a CAGR of around 5-6% over the next several years, driven by factors like an aging population, increased myopia prevalence, and innovation in products. Bausch + Lomb's strong presence in this growing market, combined with its focus on innovation and operational efficiency, bodes well for its future prospects.
It's worth noting that the company has been involved in some legal proceedings, including multidistrict antitrust litigation related to generic pharmaceutical pricing (along with other industry participants), product liability lawsuits related to Shower to Shower powder products (which are indemnified by Johnson & Johnson), and a declaratory judgment action related to the separation of Bausch + Lomb from Bausch Health Companies. However, the company has not reported any major scandals, short seller reports, or CEO departures.
As Bausch + Lomb continues to navigate the evolving eye health industry, investors will be closely watching the company's ability to maintain its growth momentum, expand its market share, and capitalize on emerging trends and technologies. With its rich history, strong brand recognition, and commitment to innovation, Bausch + Lomb remains a compelling investment opportunity in the eye health sector.