Greetings. Welcome to the Bausch Health fourth quarter and full year 2023 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I would now like to turn the conference over to your host, Maria Likuris [ph]. Please go ahead.

Good morning and welcome to Bausch Health’s fourth quarter 2023 earnings conference call. Participating in today’s call are Thomas Appio, Chief Executive Officer of Bausch Health, and John Barresi, interim Chief Financial Officer. Before we begin, I’d like to remind you that our presentation today contains forward-looking information. We ask you to take a moment to read the forward-looking statements disclaimer at the beginning of the slides that accompany this presentation as it contains important information. Our actual results may vary materially from those expressed or implied in our forward-looking statements and you should not place undue reliance on any forward-looking statements. Please refer to our SEC filings and filings with the Canadian securities administrators for a list of some of the risk factors that could cause our actual results to differ materially from our expectations. We use non-GAAP financial measures to help investors understand our ongoing business performance. Non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and should be considered along with but not as an alternative to measures calculated in accordance with GAAP. You will find reconciliations to our non-GAAP measures in the appendix of the slides that accompany this presentation, which are available on Bausch Health’s Investor Relations website. Finally, the financial guidance in this presentation is effective as of today only. We do not undertake any obligation to update guidance. Our discussion today will focus on Bausch Health excluding Bausch & Lomb; however, we will briefly comment on Bausch & Lomb’s results announced yesterday. We will refer to year-over-year comparisons with the same period last year unless otherwise noted. For the benefit of those who may be listening to the replay or archived webcast, this call is held on and recorded on February 22, 2024. With that, it is my pleasure to turn the call over to our CEO, Thomas Appio. Tom?

Thank you and welcome to those of you joining the call this morning. I want to start today’s call by highlighting the strategic priorities we set out to achieve this past year: growth, performance, focus, and unlocking value. These priorities help support our ambition of being a globally integrated healthcare company trusted and valued by patients, healthcare providers, employees and investors as we relentlessly drive to deliver better health outcomes. We made significant progress on these priorities in 2023, reinforcing our strong global foundation which consists of a large portfolio of products across a diverse set of therapeutic areas and geographies. Our significant presence in gastroenterology, hepatology, neurology, dermatology, medical esthetic devices and international pharmaceuticals across the branded, generic, and branded generic markets gives us a solid platform for growth as we are excited about the opportunities in each of these areas. From a financial perspective, I am pleased to report we achieved or exceeded our February 2023 guidance where Bausch Health, excluding B&L, full year revenue was $4.61 billion and organic revenue growth was 6%, both slightly above our February 2023 guidance range and in line with our guidance update in November. For Bausch Health excluding B&L, full year adjusted EBITDA was $2.36 billion, in line with our guidance while funding incremental spend on R&D to support our RED-C and Amiselimod programs. Importantly, we ended the year on a strong note as the fourth quarter represented our third consecutive quarter of year-over-year growth in adjusted EBITDA, and we delivered adjusted operating cash flow of $708 million above our guidance. For the fourth quarter, revenues for Bausch Health excluding B&L were $1.24 billion, up $38 million or 3% on a reported basis and 2% on an organic basis. Adjusted EBITDA was $663 million, an increase of approximately 1% compared to…

Thanks Tom. Hello everyone, and thanks for joining us. We closed the fourth quarter with consolidated revenues for Bausch Health of $2.41 billion, up 10% on a reported basis and 4% on an organic basis over the same quarter last year. On a consolidated basis, revenue increased 8% for the full year on a reported basis and 7% on an organic basis. Fourth quarter revenues for Bausch Health excluding B&L were $1.24 billion, up 3% on a reported basis and up 2% on an organic basis over the same quarter last year, with growth in our international, diversified and Solta segments, while Salix was in line with last year. Bausch Health excluding B&L ended the year with revenues of $4.61 billion, up $255 million or 6% on both a reported and organic basis compared to 2022. Let’s dive into the revenue performance for each segment in more detail, starting on Slide 13 with Salix. Fourth quarter Salix revenues increased $2 million on both an organic and reported basis to $583 million, driven by TRx growth in our key products including Xifaxan, Relistor, and Trulance. Comparisons to the prior year’s quarter were impacted by changes in the timing of wholesaler buying patterns. As you will recall, Salix reported 13% growth in the third quarter of 2023 compared to the third quarter of 2022. As we noted then, we saw an increase in wholesale channel inventory in Q3, earlier than we had anticipated, and this quarter we saw inventory in the wholesale channel decline compare to a build in Q4 of 2022. For the full year, Salix reported revenues of $2.25 billion, an increase of approximately 8% over 2022 on a reported basis. We realized an approximately 3% increase in net price along with an approximately 5% increase in volume, with the…

Thank you John. In summary, as you heard today, we made significant progress against our 2023 strategic priorities, and we enter 2024 with strong momentum and a clear set of objectives. We are excited about the potential of our Salix business, led by Xifaxan, and we will continue to advance our pipeline with RED-C and Amiselimod. We believe Solta is poised for long term growth with Thermage FLX in China and untapped potential in the U.S. and EMEA. The broad portfolio of products and geographies in our international business will continue to provide balanced growth and in our diversified business, we believe dermatology with the launch of Cabtreo and dentistry will deliver growth, with the remainder of the portfolio remaining profitable and cash generative in a challenging competitive and regulatory environment. For the year ahead, we are focused on building on the foundation we have set across our diverse global business by driving a results-oriented culture of accountability, delivering on our revenue, adjusted EBITDA and adjusted operating cash flow commitments, executing with operational excellence and cost-focused mindset across the enterprise, intensifying our focus and operating rigor behind R&D and business development, and continuing to evaluate strategic alternatives. We will execute against these objectives with a focus on operational excellence with a patient-centered mentality. I am thankful for and proud of our Bausch Health team for their achievements this year. They have worked tirelessly and are all in to position our business for the long term. Life won’t wait, neither can we. Every patient deserves better health and the chance to make the most of life. This drives us on with urgency and efficiency to deliver the products patients need most to enrich their lives. On behalf of our entire Bausch Health team, I thank you for your interest in and support of our company. With that, we will now take questions. Operator, please open the line for Q&A.

Thank you very much. At this time, we will be conducting our question and answer session. [Operator instructions] Thank you. Your first question is coming from Glen Santangelo of Jefferies. Glen, your line is live.

Yes, thanks for taking my question. Hey Tom, I just had two quick ones. I appreciate all the details on the two pipeline programs, but as we think about doing some long term modeling, I was wondering if you could maybe help us think about broad timelines for both these programs as we think about the path to approval. Then maybe secondly, in recent quarters the company has talked about a number of different recapitalization opportunities, and in your prepared remarks you talked about how you retired $250 million of debt in January. I was just sort of wondering, given where the debt’s trading, where BLCO is trading, given that Salt is doing much better, without getting specific, do you see any meaningful opportunities for further recapitalization efforts in 2024? I’ll stop there, thanks.

Hi Glen, thanks. I appreciate the question. Overall, when we take a look at these two programs, clearly if we take a look at RED-C, we think this is a great opportunity. Clearly the patient pool here is large, much bigger than today’s patient pool that we’re looking at, because this a prevention trial, so as we--one of the things that we did this year was really energize and put more money behind those studies to make sure we got the recruitment. As I said in my prepared remarks, we had the first--the one study completely recruited, and then the second study, we’re expecting that in the first half, so trying to really accelerate that program so we have a launch, probably sometime in 2027. This is going to be, again, a large pool, it is prevention, so clearly there is a really good opportunity for us. On the Amiselimod side, of course we are really pleased with the data on the Phase II program. This was a very large Phase II program. We’re working right now to see what the timing will be of the Phase III program. We’re expecting at the end of the decade to be able to launch the product in UC. As I said in my prepared remarks, there is an opportunity here to continue to expand if we looked at Crohn’s and running a Phase II program, and then if the data is good, clearly running a Phase III program which would push approval, something into the first half of the next decade. I really think these two programs give us a really good momentum on our R&D programs as we look forward. I’ll turn the call over to--the question over to John to talk about the debt.

Yes, thanks Glen. As we’ve said, we’re always looking at the options that we have to manage our balance sheet, manage our debt. We’re not going to comment on any specific strategies or actions that we may undertake at any point in the future, but what I will say is if you think about where we sit today, we have over $1.5 billion of liquidity between our cash and revolver flexibility. We’re guiding to $775 million to $825 million of adjusted operating cash flow, and we typically use a fair amount of that to manage our debt. As you noted, we do have the flexibility on the roughly 8% of BLCO that we still own, that we have the option to monetize at some point, and we are focused on reducing debt, so we’re always looking at all the tools and all the options, but we’re not going to comment on anything specifically at this point.

Appreciate all the detail, thanks.

Thanks. Operator, next question?

Thank you very much. Your next question is coming from David Amsellem of Piper Sandler. David, your line is live.

Hi, this is Schuyler on for David. First, what are your thoughts on how Amiselimod could fit into the UC space in the context of existing approved S1Ps and a pretty competitive pipeline? Then separately, could you also talk about the extent to which you will further invest in Xifaxan as it moves through the later part of its commercial life? Thanks.

Yes, what I would say is on Amiselimod, clearly among S1Ps, the positive top line data suggests it could be a promising therapy in terms of efficacy and safety in this space. There are a few others in this space. When we look at the data, we think we have a real competitive product here, so as we continue to really look at the data and build our Phase III program, we’ll see where that fits, but we think again, on the positive top line data, it looks really good. What I would say is on Xifaxan, we have multiple formulations on Xifaxan. We’re always looking from an R&D perspective of where we could use these new formulations The RED-C program, clearly we’re using one of our new formulations, but we’re always looking for and looking at the link between the gut and the brain, and then clearly that is a focus for the team. If we want to talk about investing in Xifaxan on the commercial life side of it, I still think even though Xifaxan is late in its life cycle, as you saw the results for 2023, they are strong. We believe we can continue to grow our franchise, the investments we have put behind AI for the field force, and that has been rolled out to the entire--you know, the field force on both the primary care and specialty care side. If you look at the data that we saw in the fourth quarter as we exited the year, the data was strong, and so those tools are really going to help us move forward with Xifaxan. The other thing also is when I take a look at Xifaxan, clearly there is a lot of unmet need still there, and I think we can tap that with the programs and the investments that we’re making between AI and DTC, as I said in my prepared remarks. The team has really done a really great job this year with Xifaxan and getting the growth on it, and then the unmet need that is still there in both the IBS-D side of the business and the HE side of the business, there’s still an unmet need that we can treat more patients. Operator, next question?

Thank you very much. Your next question is coming from Umer Raffat of Evercore ISI. Umer, your line is live.

Hi, this is James on for Umer. Thank you for taking our questions. Two questions, if I may. First, in the scenario that Norwich loses the patent appeal, will they reignite their [indiscernible] appeal, and if so, what would be the angle? Secondly, can we get more color on the [indiscernible] increase in fourth quarter and your expectation in 2024? Thank you.

On the first part of your question, what specifically were you asking on Norwich? I’m trying to understand what you’re actually asking there.

Let me repeat. In the scenario that Norwich loses the patent appeal case, will they reignite their APA against FDA case, if so, what will be the angle?

Yes, I can’t comment on what they would do on their litigation if they were to lose. Again, I can’t comment on the call of what their steps would be, but again we feel confident in our appeal and in our intellectual property. Next question?

Thank you very much. Your next question is coming from Jason Gerberry of Bank of America. Jason, your line is live.

Hi, this is Chi [ph] on for Jason. Thanks for taking our questions. A couple from us. Regarding the Xifaxan appeal decision that you expect later in first quarter or early second quarter, let’s say if the appeal is favorable to Bausch, how does a favorable appeal ruling impact your thinking on the separation of BLCO? Would you look to move quickly once that particular legal matter is resolved, or are there other settlements and legal matters contingent? My second question is on Amiselimod. You ran a Phase II in mild to moderate, and it sounds like you are moving--thinking about moving Phase III to moderate to severe population, so I’m curious what prompted that change, given there are multiple other S1Ps already approved or in development in the moderate or moderate to severe population. Thanks.

Okay, on your first part of the question regarding Xifaxan, what I would say is this - as you know, we had the appeal that was heard, the oral arguments were heard in January. We believe it went well. What I would say is we believe that if we were to win, there are still factors that we need to consider. We believe that separation continues to make strategic sense, and there are many factors that will go into the timing of any potential distribution and there’s no committed timeline at this time. What I would say on Amiselimod, when we look at the data and the positive data that we saw - as you know, we ran the trial mild to moderate, we think that Amiselimod has the potential to be very broad in what the data shows. When the trial was running, we did have mild to moderate, but as we look at it, we can move it more into moderate to severe on the Phase III program, and as I said in my prepared remarks, probably treat all, but that’s still under discussion. Operator, next question?

Thank you very much. Your next question is coming from Douglas Miehm of RBC Capital Markets. Douglas, your line is live.

Great, thank you. My question has to do with Q4 for Xifaxan and Trulance, where it looked like it was all flat; and forgive me if you spoke about this already, just curious as to why that occurred given the strong prescription strength during the quarter, and also the pricing increase you took at the beginning of the year. Then perhaps related to that, you can expand on the commentary that was made around prescription growth in the guidance, 2024, and how that could be impacted by, I think it was managed care that you talked about? Thank you.

Yes, so let me just overall--you know, when we look at Xifaxan and the TRx growth, if you look at the product for the full year, we had an increase of 8%, 3% on price, 5% on volume, and we talked about some of the inventory channel that we had. But overall, the TRx growth as we looked at it for the year was strong, and when we looked at the fourth quarter on the IBS-D side, we were exiting at much higher than what the full year looked like. When we look at HE in the long term care space, that was over 6%, so the product--the performance as we ramped up the investments, okay, and launched different activities during the year, you could see it benefited from the second half. I’ll let John talk specifically about the second part of the question.

Yes, on the revenue trends, if you remember in the third quarter, Salix was plus-13, I believe, for the third quarter, and we saw--at the time, we spoke about some pull forward of the demand increase that we’d normally see in Q4 into the later stages of Q3, and so that, I think is the biggest driver of the difference between revenue growth and TRx growth for Q4 on the Xifaxan and the Trulance side. Then on the question on the Q4 guidance, I think what we had said was we expect expansion of the growth of TRx, however we did end 2023 a little bit higher in the wholesale channel than we ended 2022, and so we had a little bit of a build there. It’s possible, right - the wholesalers have their own algorithms for how and when they buy, but it’s possible that if we see that revert back a little, that it could temper some of the benefit from a revenue standpoint of the underlying demand growth.

Then lastly, when we just take a look at it to frame it, when we look at IBS-D, there’s 2.2 million patients that are diagnosed but only about 140,000 receive treatment, so again--with a second line medication like Xifaxan, so clearly still a large unmet need and some of the investments that we have made this year and last year, and we will continue to make in 2024 to capture that. On the HE side, if you look at the analytics that we look at, there’s about 190,000 patients that potentially have HE, and only 50,000 approximately are treated with Xifaxan, which is the standard of care and the only approved medication for HE, so again large unmet need that we’re going to continue to invest behind. Operator, next question?

Thank you very much. Your next question is coming from Michael Nedelcovych of TD Cowen. Michael, your line is live.

Thank you for the questions, I have two. For the first, if you could transport us to late May, let’s assume that you had a wildly favorable ruling in the case against Norwich, such that Xifaxan’s exclusivity out to 2028 is all but certain. I know that as it relates to the Bausch & Lomb full separation, there are multiple additional factors to consider, but what is Item No. 2 on your checklist? So the Xifaxan ruling is done and its outlook is certain, what’s Item No. 2 when you move toward full separation? Then my second question relates to Amiselimod. As already been noted, there are two other S1P receptor modulators approved for UC, but their market reception so far has been lukewarm. Do you think that Amiselimod has better commercial prospects than the agents already approved, and if so, why is that?

Yes, so let’s take the first part of the question. I can’t speculate on what number two would be. As I said, there’s still many factors that go into the timing of the potential distribution, and clearly again we believe in our intellectual property and hoping for a favorable outcome, but there are a multitude of steps, so I can’t speculate on what number two would be, but clearly looking to a favorable outcome on the Xifaxan case. When it comes to Amiselimod, we’ve had a lot of discussions on this internally. Yes, the two that are out there are, as you use, lukewarm. We believe based on our data that we have a competitive product, a once-a-day treatment and oral, so clearly as we continue to look at it and build the Phase III program, I can give you more information as we move forward on the program and see what we think going forward. But if we look at our data, again we think it’s positive and we think we have a really interesting product here. Operator, next question?

Thank you very much. That appears to be the last of our questions. I will now hand back over to Tom for any closing comments.

Okay, well since there’s no further comments, I want to say thank you to all who joined the call today. As we discussed on this call, we had a solid Q4 and 2023. We grew our company and delivered or exceeded our guidance. I would like to thank my over 7,000 colleagues around the world for their relentless drive to deliver better health outcomes and continue to build a company that is trusted and valued by patients, healthcare professionals and investors. We entered 2024 with strong momentum and look forward to executing on our strategic objectives, delivering on our commitments as we continue transforming Bausch Health, positioning our company for the long term. Thank you for your interest in and the support of Bausch Health.

Thank you very much everyone. This does conclude today’s conference. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.