Bausch Health Companies announced Thursday that it intends to spin off its eye health business from its core pharmaceutical business into an independent publicly traded entity called Bausch + Lomb – NewCo.
The spinoff will establish two separate companies—Bausch + Lomb- NewCo, a fully integrated, pure play eye-health company; and Bausch Health, a diversified pharmaceutical company with positions in gastroenterology, aesthetics/dermatology, neurology and international pharmaceuticals.
Bausch Health stated that move will unlock unrecognized value in Bausch Health shares and give each business greater flexibility to pursue strategic opportunities.
“We are committed to taking action to unlock what we see as unrecognized value in Bausch Health shares, and we believe that separating our business into two highly focused, stand-alone companies is the way to accomplish that goal,” Joseph C. Papa, chairman and CEO of Bausch Health, said in a company news release.
The eye-care business is returning to being a separate company, as it was before Valeant Pharmaceuticals acquired Bausch & Lomb for $8.7 billion in 2013.
“Four years ago, we initiated a multi-phase plan, first to stabilize and then to transform Bausch Health into a company positioned to deliver long-term organic growth. We have divested approximately $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 approximately $1.4 billion product portfolio, while also investing in R&D, new product launches and core franchises with attractive growth opportunities,” Mr. Papa said. “Our Board of Directors and management team have been working on alternatives over the last 12 months to determine how to best unlock value across our businesses, and we believe that the time is right to begin the separation process, so each business has greater flexibility to pursue strategic opportunities in their respective markets.”
Bausch + Lomb – NewCo, which will consist of Bausch Health’s global vision care, surgical, consumer and ophthalmic Rx businesses, would have had 2019 revenue of approximately $3.7 billion and a CAGR of 4.1% (2017-2019). Bausch Health, which would have had 2019 revenue of approximately $4.9 billion and CAGR of 1.8% (2017-2019), will comprise a diversified portfolio of leading durable brands across the Salix, International Rx, Solta, neurology and medical dermatology businesses.
The timing of the anticipated spinoff will be tied to certain conditions and approvals, and the company’s completion of several actions, including the reorganization of the reporting segments, which the company expects to begin reporting in the first quarter of 2021.