Troubled Club holding Bausch Health Companies (BHC) reported better-than-expected quarterly results before the bell Thursday. However, it’s not nearly enough to get this stock out of the penalty box. Sales in the second quarter rose 10% to $2.17 billion, exceeding expectations of $2.04 billion, according to estimates compiled by Refinitiv. (On an organic basis — which adjusts for foreign currency fluctuations and the impact of recent acquisitions, divestitures and discontinuations — sales were up 11% versus the year-ago period.) Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) advanced nearly 4% year-over-year to $727 million, also outpacing the $721 million consensus estimate. (Normally, we report on a company’s adjusted earnings per share. But, in the case of BHC, its debt load and other factors make adjusted EBITDA a better reflection of how the actual business is doing. So, that’s the number Wall Street focuses on) BHC YTD mountain Bausch Health Companies YTD performance Bottom line This was a strong quarter for Bausch Health as we got beats across all operating segments along with a raise to management’s full-year revenue forecast. That said, as we can see from the price action, an initial nearly 9% rally in BHC to over $10 per share faded somewhat as investors tempered optimism over good results. The reality is that the Xifaxan patent litigation is all that matters at the moment for anyone thinking about this name beyond a short-term trade. While there were some positive developments recently, the legal overhang remains. A final decision in favor of BHC in regard to Xifaxan would certainly be a catalyst for the stock. Another possible catalyst is the monetization of BHC’s Bausch + Lomb (BLCO) stake. Management did provide an update on a slight change to their strategy here — the plan to distribute 80% in a tax-free manner remains. The timing, however, remains unclear. As a result, we’re reiterating our 4 rating ,…
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