Why Is Bausch (BHC) Down 46.5% Since Last Earnings Report?

A month has gone by since the last earnings report for Bausch Health (BHC). Shares have lost about 46.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Bausch due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Bausch's Q4 Earnings Match Estimates, Revenues Miss

Bausch reported mixed results for the fourth quarter of 2019, wherein earnings were in line with estimates while revenues fell marginally short of the same.

The company’s adjusted earnings per share of $1.15 were in line with the Zacks Consensus Estimate and increased from $1.05 reported in the year-ago quarter.

Total revenues of $2.2 billion missed the Zacks Consensus Estimate by 0.02% but increased 5% year over year.

Quarter in Detail

Revenues in the Bausch + Lomb/International segment (comprised 55.7% of the total revenues) were $1.2 billion, up 3% year over year. Excluding the impact of discontinuations and divestitures, the segment organically improved approximately 3%, driven by growth in the Global Consumer, Global Surgical and Global Vision Care business units.

The Salix segment revenues rose 21% year over year to $517 million, primarily driven by 29% growth in Xifaxan. Relistor and Plenvu also contributed significantly.

The Ortho Dermatologics segment revenues were $158 million, down 1% year over year due to lower volumes resulting from the loss of exclusivity of Elidel, Zovirax and Solodyn. This was partially offset by growth in the Global Solta business. The FDA approved the New Drug Application for its acne lotion, Arazlo (tazarotene).

Diversified Products segment revenues were $311 million, down 6% from the year-ago quarter, primarily due to the loss of exclusivity of certain products.

2019 Results

Earnings per share came in at $4.42 in 2019 as compared to $4.03 in 2018. Revenues came in at $8.6 billion in 2019, up 3% from 2018. The company reduced debt by approximately $900 million in 2019.

2020 Guidance

The company expects revenues of $8.65-$8.85 billion in 2020.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

At this time, Bausch has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Bausch has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.