Key Takeaways
- Bausch Health jumped 21% after adjusted EPS of $1.77 beat estimates, and it raised its outlook again.
- The raise already counts a fourth-quarter hit from Xifaxan’s new Medicare price.
- AbbVie faces Medicare prices on two drugs in 2027, and Teva can sell a generic Xifaxan from 2028.
- The stock still trades below its five-year average forward P/E, and 2027 guidance is the next test.
Bausch Health (BHC) stock is up 21% today on a third-quarter beat after Wednesday’s close and a raised full-year outlook. CEO Thomas Appio cited quarterly adjusted EBITDA, excluding Bausch + Lomb, “exceeding $1 billion for the first time.”
The engine was Xifaxan, whose Medicare price takes effect in 2027. AbbVie (ABBV) is in the same boat with Vraylar and Linzess, and Teva Pharmaceutical Industries (TEVA) has the right to sell a generic Xifaxan from 2028.
Xifaxan carried the quarter
Adjusted EPS of $1.77 topped the $1.24 analysts expected, and revenue rose 10% to $2.94 billion. Xifaxan and its Salix segment both grew 16%. Bausch also cut net debt by more than $500 million.
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The raise already counts the hit
CFO JJ Charhon warned on the call that “we will need to adjust the gross to net accrual associated with our channel inventory in anticipation of the new Xifaxan price to Medicare taking effect on January 1, 2027.”
So the raised adjusted EBITDA target of $3.225-$3.275 billion, excluding Bausch + Lomb, already counts it.
2027 is the bigger test. Analysts expect EBITDA to fall from $4.07 billion this year to $3.77 billion next year.
This quarter’s raise should lift the 2026 figure, but it says little about 2027.
AbbVie, which reports later this week, has the same date circled. Analysts expect its earnings per share to rise from $13.95 this year to $16.20 in 2027. Does AbbVie see a Medicare hit like Bausch’s coming for Vraylar and Linzess?
Teva’s turn comes in 2028, when its patent settlement lets it sell a generic of Xifaxan’s 550 mg tablet. A brand growing 16% is a real prize. In the second quarter, Teva’s generics revenue fell 15% in local currency as competition hit its generic Revlimid.
Still priced for a cliff
Bausch’s forward P/E was 1.6x at Wednesday’s close, below its five-year average of 2.2x.
Today’s jump takes it to about 2x.
My take: The jump is deserved. The stock is priced as if Xifaxan’s profits vanish, and Bausch is using them to pay down debt while it has them.
Of course, 2027 guidance, likely early next year, is the first real look at Xifaxan under its Medicare price.
So what is Bausch Health stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
