Bausch Health Stock Surges 17% as Xifaxan Fuels Strong Quarter, Debt Cuts Top $1 Billion and Guidance Rises

Bausch Health shares surged 17% in early trading Thursday. The Canadian drugmaker reported a strong third quarter driven by its gut drug Xifaxan, cut its debt further and raised its full-year guidance for the second time this year.

The stock rose $1.18, or 17%, to $8.13, lifting Bausch Health's market value to about $3 billion. More than 824,000 shares changed hands early in the session.

Fourteenth straight quarter of growth

Bausch Health reported consolidated third-quarter revenue of $2.94 billion, up 10% on a reported basis and 8% organically from $2.68 billion a year earlier.

Adjusted earnings rose 53% to $1.77 a share from $1.16. On a reported basis, net income attributable to the company more than doubled to $436 million, or $1.15 a share, from $179 million.

Adjusted EBITDA rose 32% to $1.31 billion.

The company said it had delivered "another solid quarter, marking fourteen consecutive quarters" of growth, according to Chief Executive Thomas Appio.

"These results give us confidence to again raise our full year 2026 guidance," Appio said.

Xifaxan powers Salix

The Salix gastroenterology unit was again the main growth driver, with revenue up 16% to $831 million.

Xifaxan, used to treat irritable bowel syndrome with diarrhea and a serious liver condition, grew 16% in the quarter. Chief Financial Officer Jean-Jacques Charhon said that growth was "thanks to favorable net realized pricing."

Charhon also said volume growth "was also boosted by an increase in channel inventory," a factor that may not repeat.

Key third-quarter figures:

Revenue: $2.94 billion, up 10% Adjusted EPS: $1.77, up 53% Adjusted EBITDA: $1.31 billion, up 32% Salix revenue: $831 million, up 16% Operating cash flow: $813 million, up 101% Cash: $2.49 billion

Debt reduction

Investors have long been concerned about Bausch Health's heavy debt load, and the company highlighted progress on that front.

"We were able to reduce our net debt by $521 million during the quarter," Charhon said on the earnings call. "Since the beginning of the year, we have reduced our net debt by more than $1 billion."

The company plans early redemptions of its 2027 notes and up to $100 million of open-market debt repurchases. It also announced a $50 million share buyback, mainly to offset dilution from management stock awards.

Guidance raised

Bausch Health raised its 2026 guidance for its business excluding Bausch + Lomb. It now expects revenue of $5.525 billion to $5.625 billion, growth of 7% to 9%, and adjusted EBITDA of $3.225 billion to $3.275 billion.

Charhon said the company was "increasing the midpoint of our full year guidance by $150 million for revenue" and by about $190 million for adjusted EBITDA.

For the consolidated company, including its controlling stake in eye care business Bausch + Lomb, it forecast revenue of $10.975 billion to $11.175 billion.

Headwinds ahead

Executives warned of challenges in the fourth quarter and next year.

Charhon said Bausch Health will need to adjust its Xifaxan accounting before Medicare price changes take effect on Jan. 1, 2027. "This element alone represents 800 basis points of revenue growth reduction" in the fourth quarter, he said.

He said the net impact of the Medicare pricing changes in 2027 is expected to be "around $400 million to $500 million year over year."

Xifaxan was among the drugs selected for Medicare price negotiations under the Inflation Reduction Act.

Bausch + Lomb role

Appio has also taken on the role of interim chief executive of Bausch + Lomb.

"I am honored and energized to serve as interim CEO," Appio said on the call, adding: "I remain fully committed to Bausch Health and all its stakeholders."

Bausch + Lomb's revenue rose 7% to $1.38 billion in the quarter.

Long recovery

Bausch Health has spent years restructuring after an earlier era of aggressive acquisitions and drug price increases left it with heavy debt.

Thursday's jump suggests investors are gaining confidence in the company's ability to pay down debt and keep growing, although the 2027 Medicare price cut for Xifaxan remains a significant risk.

_This article is for information only and does not constitute financial advice._