Company News

UPDATE 2-Bausch Health beats profit estimates, promises to cut debt

* Revenue boosted by Salix unit performance

* Raises 2018 adj EBITDA forecast

* Toronto shares rise 6 pct; New York shares 7.5 pct (Adds details from conference call, analyst comment, updates share price)

Aug 7 (Reuters) - Bausch Health Cos Inc , formerly known as Valeant Pharmaceuticals, topped Wall Street estimates for quarterly profit on Tuesday, and underlined its commitment to reduce its huge debt pile.

The company’s Toronto-listed shares were up 6 percent, while U.S. shares rose 7.5 percent in early trading after Bausch also raised full-year adjusted EBITDA forecast.

“We will continue to prioritize the use of available cash to pay debt. We’re clearly an outlier with the amount of leverage we carry,” Chief Financial Officer Paul Herendeen said in a post-earnings call with analysts.

“If we can accelerate the process of getting our leverage down, it enables us to loosen up a little bit on ... investments that we would like to make.”

Since taking the helm at the erstwhile Valeant in 2016, Joseph Papa has prioritized paying down the company’s debt, which had ballooned following former Chief Executive Officer Mike Pearson’s aggressive acquisition strategy.

The company had reduced debt by about $7 billion since the first quarter of 2016, with debt at $25.43 billion as of June 30.

“(Bausch has) four times more debt than they have equity. The management team is doing all they can... but quite frankly they need more products,” BTIG analyst Timothy Chiang said.

Bausch raised its 2018 forecast for adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to between $3.20 billion and $3.35 billion, from an earlier estimate of $3.15 billion to $3.30 billion.

Second-quarter revenue got a lift from higher sales in its Salix business. Revenue in the unit, which makes bowel disorder treatments Xifaxan and Relistor, rose nearly 14 percent to $441 million.

The company’s Bausch + Lomb/International segment reported organic revenue growth of about 4 percent, adjusted for divestitures and foreign exchange impacts.

Net loss attributable to the company widened to $873 million, or $2.49 per share, for the three months ended June 30, as the company incurred an asset impairment charge and recorded an increase in income tax provision.

Excluding one-time items, the company earned 93 cents per share, well ahead of the average analyst estimate of 80 cents, according to Thomson Reuters I/B/E/S.

Total revenue fell 4.7 percent to $2.13 billion, largely due to a drop in sales in its optical products and dermatology businesses. Analysts had expected $2.06 billion.

The Toronto- listed shares were up nearly 6 percent at C$31.45, while U.S. shares rose about 7.5 percent to $24.12.

Reporting by Aakash Jagadeesh Babu and Tamara Mathias in Bengaluru; Editing by Sriraj Kalluvila