UPDATE 2-Bausch Health to spin off eye care business, shares soar
(Adds background on accounting issues, CEO quote, updates share movement)
By Ankur Banerjee
Aug 6 (Reuters) – Canadian drugmaker Bausch Health Companies Inc said on Thursday it would spin off its eye care unit, Bausch + Lomb, into a separate publicly listed company, seven years after acquiring it for nearly $9 billion.
Bausch’s U.S. shares surged 28% before the opening bell.
Bausch Health, previously known as Valeant Pharmaceuticals, has sought to get past a flurry of investigations into its accounting and pricing practices under its previous management.
The company last week agreed to pay $45 million, and three of its former top executives agreed to penalties, to settle charges of improper revenue recognition and misleading disclosures in U.S. regulatory filings.
Since its purchase in 2013, Bausch + Lomb has been a stable source of revenue for the company, especially after the accounting issues led to a steep fall in the share price of the one-time Wall Street darling, compounded by concerns over Bausch’s large debt pile.
Bausch Health said the spin-off would create two companies, one of which would consist of Bausch Health’s global vision care, surgical, consumer and ophthalmic businesses that brought in revenue of about $3.7 billion in 2019.
The other company would comprise brands across the Salix, International, neurology and medical dermatology businesses that brought in a revenue of about $4.9 billion in 2019.
Bausch’s U.S. shares, which touched a record high of $263 in 2015, were trading at $24.85.
“We have divested about $4 billion of non-core assets, paid down over $8 billion of debt, resolved numerous legacy legal issues and managed a loss of exclusivity on an about $1.4 billion product portfolio,” Chief Executive Officer Joseph Papa said in a statement.
Papa, who took over from Michael Pearson in 2016, has tried to regain investor confidence by focusing on newer drugs.
“We believe that the time is right to begin the separation process.”
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