Bausch Health Companies Inc.
Q4 2023 Earnings Call Transcript

Published: 22 Feb 2024

[Operator:]

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.

[Maria Likuris:]

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?

[Thomas Appio:]

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

[John Barresi:]

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 volume increase split roughly equally between underlying demand and the impact of higher overall wholesale inventory levels year-over-year. While inventory in the channel declined relative to Q3, we did end the year higher than we ended 2022. Xifaxan continued to represent approximately 80% of Salix segment revenues this year and saw strong growth in underlying demand. Retail prescriptions grew 3.1% in Q4 versus the prior quarter. We saw growth in TRx for IBS-D and, importantly, we also saw solid growth of approximately 6% year-over-year in Q4 in TRx for the long term care channel, as well as strong growth in non-retail units attributable to outpatient clinics. For the quarter, Xifaxan revenues were in line with the prior year as this TRx growth was offset by the timing of wholesale or buying patterns discussed earlier. For the quarter, Relistor delivered 44% growth over the prior year due to both higher demand and improved net pricing, while Trulance revenues were flat as TRx growth was offset by lower net pricing and shifts in wholesale inventory. International revenues were $290 million during the quarter, an increase of 11% on a reported basis and 6% on an organic basis compared to the prior year period, with strong performances across EMEA, Canada and Latin America regions. For the full year, international revenues were $1.07 billion for 2023 compared to $988 million for 2022, an increase of $83 million or 8% on a reported basis and 6% on an organic basis. This year’s international segment performance was driven mainly by an increase in net realized pricing as growth in our portfolio of promoted products was offset by the impact of increased generic competition and the effects of the Emerade recall in the second quarter. Solta Medical revenues were $103 million for the fourth quarter, an increase of 4% on a reported basis and 5% on an organic basis over the prior year period. Growth in the quarter was led by China and to a lesser degree the remainder of Asia Pacific, while sales in the U.S. slightly declined compared to the prior year. Solta Medical ended the year with revenues of $347 million, an increase of 16% on a reported basis and 18% on an organic basis compared to 2022. Revenue growth was driven by strong demand in China, including the effective comparison to 2022 when China, and to a lesser degree the rest of the Asia Pacific region were affected by COVID-related lockdowns. With approximately 80% of the revenue for this business coming from consumables, the recent Thermage FLX approval in China and possible untapped potential in the U.S. and EMEA, we believe Solta Medical is positioned for continued near and long term growth globally. Diversified revenues were $259 million during the fourth quarter, an increase of 1% on a reported basis and 2% on an organic basis compared to the prior year period. Neurology delivered year-over-year growth as we continued to capitalize on opportunities in the market created by supply constraints among competing products in the fourth quarter. In dermatology, revenue declined by 12% for the quarter relative to the prior year as volume increases for Jublia and Arazlo were offset by continued net pricing pressures and continued pressure on our non-promoted products. As Tom mentioned, Cabtreo was launched and available for patients as of late January 2024, and in addition to the important benefits this product is expected to bring patients, we view this as an opportunity to return the dermatology business to growth. The generics business continues to be a profitable cash generative business; however, it also faces a highly competitive environment from both a pricing and volume standpoint. While it plays a role with our LOE products, with the timeline of many of those LOEs and the competitive environment we expect to face for the long term, we have revised our expectations for this business and recorded an impairment of goodwill of $91 million in the quarter. Dentistry revenue of $29 million was in line with a strong fourth quarter in 2022. We continued to invest in the dentistry business for the long term and are looking to accelerate growth in 2024. For the year, diversified segment revenues declined 4% on a reported basis and 3% on an organic basis relative to the prior year, with varying degrees of declines in neurology, dermatology and generics reflecting the pressures we’ve discussed throughout the year. As shown on Slide 18, Bausch & Lomb revenues were $1.17 billion during the fourth quarter, up 18% on a reported basis and 7% on an organic basis compared to the prior year, with growth across all Bausch & Lomb segments. Similarly, Bausch & Lomb revenues for the year increased by $378 million on a reported basis or 10% and 8% on an organic basis compared to 2022. Turning to the fourth quarter P&L on Slides 20 and 21, fourth quarter consolidated adjusted gross margin was 71.6%, 130 basis points higher compared with the prior year. Full year consolidated adjusted gross margin was 71%, 10 basis points higher than last year. For Bausch Health excluding B&L, adjusted gross margin for the fourth quarter was 80.2%, approximately 30 basis points lower than last year’s fourth quarter. For the full year, adjusted gross margin was 80.1%, a decline of 50 basis points, which included the impact of the Emerade recall earlier in the year. At B&L, adjusted gross margin was 62.5% for Q4 of 2023 compared to 57.9% for Q4 of 2022, driven primarily by product mix, including Xiidra. Consolidated adjusted operating expenses for the fourth quarter were $891 million, an increase of $121 million. For Bausch Health excluding B&L, adjusted operating expenses increased by approximately $16 million during the quarter a higher A&P was driven by investments in the Salix segment. R&D expenses also increased primarily related to our Salix initiatives. Adjusted G&A for Bausch Health excluding B&L was slightly favorable to the prior year as we annualized stabilization of the post-IPO structure and focused on cost containment. B&L reported an increase of $105 million in adjusted operating expenses due primarily to increased selling in A&P, driven by product launches. Consolidated adjusted R&D expense for the quarter was $151 million, an increase of 6% compared to the prior year and represented 6.3% of product sales, compared with 6.5% for the prior year period. For Bausch Health excluding B&L, R&D expenses of $72 million increased by approximately $8 million for the fourth quarter as compared to the same quarter last year. As Tom mentioned, we expect another meaningful step-up in R&D expense throughout 2024 to support the next phase of development for Amiselimod. We also will continue to progress our two global RED-C Phase III clinical trials. Fourth quarter consolidated adjusted EBITDA was $897 million, an increase of $56 million or 7% on a reported basis. Adjusted EBITDA for Bausch Health excluding B&L was $663 million for the quarter, a slight increase from $659 million in the fourth quarter of 2022. For the full year, consolidated adjusted EBITDA was $3.11 billion, and for Bausch Health excluding B&L was $2.36 billion, both slight increases from 2022. Turning to cash flow, on a consolidated basis, Bausch Health generated $390 million of operating cash flow and $305 million of adjusted operating cash flow in the fourth quarter. Full year cash flow from operations on a consolidated basis was $1.03 billion and adjusted cash flow from operations on a consolidated basis was $763 million. For Bausch Health excluding B&L, adjusted operating cash flow was $278 million for the fourth quarter and $708 million for the full year, compared to adjusted operating cash flow of $340 million for the fourth quarter of ’22 and $637 million for the full year 2022, with the changes primarily reflecting the timing of working capital movements and for Q4 the timing of interest payments. The full year 2023 also exceeded our guidance of $625 million driven by our focus on expense management as well as by the timing of cash collections, based on the wholesale buying patterns I discussed earlier. As we’ve discussed in prior quarters, as a result of the accounting treatment for the senior notes issued as part of our 2022 debt exchange, a portion of our cash interest payments are classified as financing cash flows. Adjusted cash flow includes payments of the full contractual interest as well as adjustments for the payment of separation costs, business transformation costs, and litigation and other matters net of insurance proceeds. Now let’s turn to our balance sheet on Slide 22. We continue to prioritize liquidity management and the de-levering of our balance sheet. In the fourth quarter of 2023, we reduced our debt net of cash for Bausch Health excluding B&L by approximately $250 million. We continue to evaluate alternatives to reduce our overall leverage while also focusing on our maturity profile. Despite only retiring a small amount of debt in Q4, in January 2024 we retired $250 million in principal value of 2025 and 2026 maturities through open market repurchases, capturing approximately $12 million of discount in the process. At the end of the fourth quarter, Bausch Health excluding B&L had $350 million outstanding under our accounts receivable facility and had no outstanding borrowings, and approximately $950 million of availability under our revolving credit facility. As shown on Slides 23 and 24, total debt for Bausch Health excluding Bausch & Lomb at the end of the quarter was $16.4 billion, which consisted of approximately $15 billion of restricted debt issued by Bausch Health excluding B&L and approximately $1.4 billion of unrestricted debt, which includes the $1 billion of senior secured notes issued by the unrestricted subsidiary created in the third quarter of 2022, and the $350 million drawn under our accounts receivable facility. Excluding B&L debt, approximately 85% of our debt is fixed and approximately 70% of the company’s debt on a consolidated basis is fixed. Debt net of cash for Bausch Health excluding B&L is down approximately $670 million since the beginning of 2023. We ended the year with over $1.5 billion of liquidity, including approximately $616 million of cash and $950 million of availability under our revolving credit facility. We will continue to evaluate the best uses of that liquidity, including focus on our maturity profile and our overall leverage. Overall, we are pleased that revenues, adjusted EBITDA and adjusted operating cash flow for 2023 for Bausch Health excluding B&L met or exceeded expectations. With that as the backdrop, I’ll now discuss our guidance for 2024, which you can find on Slide 26. In 2024, we expect revenues of $4.7 billion to $4.85 billion, with growth of 2% to 5% on an organic basis. For 2024, we expect foreign exchange impact to be a slight tailwind. Full year adjusted EBITDA for Bausch Health excluding B&L is expected to be $2.36 billion to $2.46 billion. For Salix, we expect to see mid single digit revenue growth. Based on the investments we’ve made, we expect volume growth from a TRx and extended units perspective to expand relative to what we saw in 2023, although changes in wholesale or purchasing dynamics may temper how that growth translates into revenue growth. We also intend to maintain our investments in selling and A&P consistent with 2023 levels. Lastly, as we’ve noted in the past, we typically see a seasonal step-up in sales in the second half, particularly in Xifaxan, primarily due to wholesaler inventory dynamics as well as patient-level patterns related to insurance deductible activity. For international, we expect mid single digit organic revenue growth led by the EMEA and Latin America regions. We are excited by the potential for new product launches in these regions. In Canada, we plan to further grow the recently launched products Ryaltris and Uceris and continue to focus on obtaining approval of Cabtreo. We’re also making targeted investments in sales teams and promotion across the different regions. For Solta, we anticipate strong double digit organic revenue growth across all major geographies. We have new leaders in key positions in this business and have invested in expansion of the U.S. sales team, therefore we anticipate growth led by China and Asia Pacific, as well as double digit growth in the U.S. and EMEA regions. For diversified, we expect an overall mid single digit decline in organic revenue. We expect growth in dermatology led by the introduction of Cabtreo, and in dentistry driven by continued investment in the sales force and related tools, with continued pressures in our neurology and generics businesses. From a gross margin perspective, we expect to continue to mitigate the impact of inflation on our cost of goods sold and we expect our gross margin to remain comparable to last year at approximately 80%. On the expense side, we anticipate that selling and A&P will grow in line with sales growth as we maintain the base we established in 2023 and make targeted investments to drive growth in businesses, including Solta and dentistry. Additionally, as we’ve discussed previously, there will be a meaningful increase in R&D spend throughout the year as we invest for the future in our GI and esthetics pipeline programs. We think it is critical to continue to allocate capital to this area for the long term as it will benefit patients and healthcare providers, while positioning our business to deliver stakeholder value. Lastly, we expect adjusted operating cash flow for Bausch Health excluding B&L in a range of approximately $775 million to $825 million for 2024. As I said earlier, adjusted cash flow includes adjustments for the payment of separation costs, the payment of the full contractual interest on our existing debt, and also includes lower tax payments in 2024 relative to 2023 inclusive of the impact of the tentative Granite Trust settlement. I’ll now hand the call back to Tom.

[Thomas Appio:]

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.

[Operator:]

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.

[Glen Santangelo:]

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.

[Thomas Appio:]

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.

[John Barresi:]

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.

[Glen Santangelo:]

Appreciate all the detail, thanks.

[Thomas Appio:]

Thanks. Operator, next question?

[Operator:]

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

[Schuyler van den Broek:]

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.

[Thomas Appio:]

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?

[Operator:]

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

[James:]

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.

[Thomas Appio:]

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.

[James:]

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?

[Thomas Appio:]

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?

[Operator:]

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

[Chi:]

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.

[Thomas Appio:]

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?

[Operator:]

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

[Douglas Miehm:]

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.

[Thomas Appio:]

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.

[John Barresi:]

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.

[Thomas Appio:]

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?

[Operator:]

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

[Michael Nedelcovych:]

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?

[Thomas Appio:]

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?

[Operator:]

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.

[Thomas Appio:]

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.

[Operator:]

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.