Bausch + Lomb Corporation Price & Performance (BLCO)

In addition to the slide webcast, a copy of today's slide presentation and a replay this conference call will be available on our website under the Investor Relations section. Before we begin, I would like to remind you that our presentation today contains forward looking information. We We would ask that you take a moment to read the forward looking legend at the beginning of our presentation as it contains important information. This presentation contains non GAAP financial measures and ratios. For more information about these measures and ratios, please refer to Slide one of the presentation. Non GAAP reconciliations can be found in the appendix to the presentation posted on our website. Financial guidance in this presentation is effective as of today only. It is our policy to generally not update guidance until the following quarter unless required by law and not to update or affirm guidance other than through broadly disseminated public disclosure. With that, it's my pleasure to turn the call over to Brent. Thank you, George, and thank you everyone for joining us today. I'm going to show progress against our strategy through the lens of our fourth quarter and full year results. And Sam will go deeper on our performance and provide 2025 guidance.

I'll close by highlighting the products and technology that will advance our strategy in 2025 and beyond. We've booked our fifth straight quarter of double digit constant currency revenue growth contributing to 17% constant currency revenue growth for the year. While top line growth isn't the only metric that matters, our trajectory is clear. We're capturing market share in an industry with significant growth [indiscernible] and carving out leadership positions in areas of unmet need. There's no secret sauce behind that growth. In fact, the formula is simple. We continue to introduce new products across businesses and geographies at a steady clip while optimizing our manufacturing process which includes deploying AI. Technology is also a key component of an ongoing investment in our sales force.

Our reps are leveraging digital tools to establish new relationships [indiscernible] deepen existing ties. The easier we make their jobs, the better they perform. Again, it's a simple formula. Underpinning our recent success is a commitment to long term growth. We are once again an innovation company something I couldn't say when I rejoined Bausch and Lomb two years ago.

Our R and D organization has been completely overhauled and infused with top talent. Our refocused pipeline is now filled with promise and potential to significantly enhance the standard of care in eye health. This section of our roadmap to accelerate growth which we highlight every quarter, focuses on Phase two, innovate and execute. I can't think of a more appropriate way to describe our current state Innovation is driving our decision making process and positioning the company for long term sustainable growth. And our relentless focus on execution is clearly reflected in our results. Words on a roadmap are hollow without concrete example. So consider the following when it comes to execution. Our organic revenue CAGR over the past two years is approximately 10%. The success of recent product launches is well documented. Particularly in dry eye space. Where our comprehensive portfolio is approaching $1,000,000,000 in annual revenue. Proof of our commitment to innovation deserves its own slide. These are the pipeline products we're most excited about. With representation from all businesses. Our in house engineers are developing the first of its kind Biomedic that would optimize oxygen permeability and can be produced on existing lines which means minimizing future capital expenditures.

We're also developing the myopia control solution for children and young adolescents. Our consumer pipeline is all about building on the success of category leading brands with new formulations. We're once again working with the National Eye Institute which which we believe would expand the market for our high performance preservation franchise. And address a significant growth opportunity in dry AMD. Lumify Luxe is currently under development and would represent the next chapter of premium redness relief. The recent addition of Elios procedure to our surgical portfolio unlocks new opportunities to treat glaucoma in conjunction with cataract surgery. And we hope to secure an FDA approval later this year. Meanwhile, we continue to roll out premium IOL offerings in a staged approach. With an expected 2026 U. S. Launch [indiscernible] and an adjustable IOL in early stages of development. Finally, transformed our pharma pipeline to potentially introduce several novel treatments These include a first dual action therapeutic to address both evaporative and inflammatory dry eye disease the first product to treat chronic ocular surface pain and the first glaucoma product to lower intraocular pressure and improve visual acuity. Our revamped pipeline positions us to significantly enhance the standard of care for patients across the spectrum of eye health needs.

That's where our focus will continue I reference our holistic strength every quarter. So it's no surprise that I'll do the same when providing a full year review. The key takeaway is there continues to be no laggard. All three reporting segments delivered double digit constant currency revenue growth for the year thanks to a focus on execution, in particular when bringing new products to market. Of note, absent IDRA revenue, Pharmaceuticals saw approximately 15% organic revenue growth for the year. The franchises we highlight speak to that holistic strength. We updated our 2024 projection for MIVO in November and still outperformed expectations with $172,000,000 of revenue. Zydra hit the high end of our projections with $364,000,000 in full year 2024 revenue. And a 14% year over year growth. For Artilac is a reminder that our holistic strength extends to performance across geographies. [indiscernible] with over 70% reported revenue growth through the year. Three things are driving that growth. A superior product offering, sales excellence and a thoughtful approach to how we introduce multifocal and toric options in new markets around the world. I referenced our premium IOL pipeline earlier, but it's important to recognize that we're carving out a significant presence in the category with existing offerings.

Revenue from premium lenses was up 35% in 2024 despite several launches taking place later in the year. I'll now turn it over to Sam for a closer look at the financial Thank you, Brent, and good morning, everyone. Before we begin, please note that all my comments today will be focused on growth expressed on constant currency basis unless specifically indicated otherwise. Turning now to our financial results on Slides eight and nine.

We saw yet another quarter of solid performance with revenue growth across our segment, geographies, and product franchises. The broad based momentum in our business continued during the quarter driven by our sustained focus on execution Total company revenue of $1,280,000,000 for the quarter reflects growth of 1110% on an organic basis. For the full year, total company revenue of $4,791,000,000 reflects growth of 1710% an organic basis. As we have said before, 2024 was one of the most active product launch years in our history, Our steady stream of product launches continues to drive growth. And we are excited about the opportunity ahead of us in 2025 and beyond. For the fourth quarter, translational currency was a headwind of $17,000,000 to revenue and $4,000,000 to adjusted EBITDA For the full year, it was a headwind of $69,000,000 to revenue, and $11,000,000 to adjusted EBITDA. Now let's discuss the results in each of our segments. Vision Care fourth quarter revenue of $723,000,000 increased by 11% driven by growth in both the consumer and contact lens businesses.

We For the full year, Vision Care revenue was $2,739,000,000 dollars and increased by 10% The consumer business grew by 10% in Q4. Let me go over a few highlights on the consumer business. In the quarter, Lumify grew by 24% and continued to expand its market leading position. Our consumer dry eye portfolio delivered $103,000,000 in revenue representing 20% growth in the quarter. Our two key franchises Artalak and Blink, were once again big contributors to the strong performance. Artalact grew by 18% and Blink grew by 12% in the quarter. The dry eye portfolio has continued its outstanding performance. With growth of approximately 27% on average over the past four quarters. I vitamins grew by 7% in Q4 as we continue to see solid consumption trends. And Lens Care grew by 2% for the full year led by our Buy True MPS franchise. Contact Lens revenue growth was 13% with strong performance across modalities, key brands and geographies. For the full year, contact lens revenue growth was 11%. We are continuing to see very strong momentum [indiscernible] Which grew 75% in the quarter. We also saw growth across other key franchises, including Buy True, which was up 3% in the quarter and Ultra was up 10% Contact Lens revenue growth was broad based across markets.

With The U. S. Up 17% in the quarter and international up 11% For the full year, The U. S. Was up 12% and international was up 11%. Outside The U. S, we saw solid performance across all of the regions, with growth in China at 12% in the quarter and 18% for the full year. While we are still in the early innings, we are seeing our investments in Opel in The U. S, and direct to consumer in China pay off. We believe the future of our lens business is highly promising Our execution continues to be strong we have a robust pipeline of innovation. Moving now to the Surgical segment. Fourth quarter revenue was $231,000,000 an increase of 15% For the full year, revenue was $843,000,000 representing growth of 11%. In Q4, we once again saw growth in each of our three surgical product categories, and we also saw growth across all regions. Consumables, our largest product category, grew in the quarter by 10% Revenue from equipment was up 21%. Implantables grew by 19% in the quarter with our standard IOLs up 4% and our premium IOs up 67%. Our Invista IOL platform is continuing to perform well.

With the Envista Aspire Lens, and Invista Envy showing strong earlier results, We are very excited about the Surgical business We are delivering growth that's fastened in the overall market. And our strategy remains the same.

We will continue to focus on the top line growth and drive margin expansion with our premium products. Lastly, revenue in the Pharma segment was $326,000,000 for the quarter. Which represents growth of 7% For the full year, revenue in the Pharma segment was $1,209,000,000 dollars which represents growth of 45% Touching on our Pharma Dry eye portfolio, MIGO has continued its exceptional launch performance. And delivered $53,000,000 in revenue. [indiscernible] For the full year, MIBU delivered $172,000,000 exceeding our latest guidance. I will once again highlight our commitment to making investments to drive MIBEL's strong growth. Including investments in our direct to consumer campaign, Zadra delivered $104,000,000 revenue in the fourth quarter, This represents 6% growth when excluding the one time $8,000,000 re benefit we saw in Q4 of last year. Which was driven by the acquisition from Novartis.

For the full year, Zaidra delivered $364,000,000 in revenue. Coming in at the high end of our guidance range. As we look to 2025, our strategy remains unchanged. We will continue our efforts to maximize access to all Zydra patients. Our team delivered strong ZYDRO TRx growth in Q4 and we expect TRx growth to continue in 2025. As I have previously stated, we also expect a one time impact from the Inflation Reduction Act to be about $25,000,000 in 2025 Bausch. Looking at our broader pharma portfolio, we are seeing solid performance. For the full year, U. S. Generics grew by 10% international pharma grew by 8%. Now let me walk through some of the key non GAAP line items on Slides ten and eleven. Adjusted gross margin for the fourth quarter was 62.5%, For the full year, adjusted gross margin was 62.6%, which was up 160 basis points compared to last year. The increase in adjusted gross margin was mainly driven by product mix As we continue to execute our strategy, to transition to higher margin products, In the fourth quarter, we invested $93,000,000 in adjusted R and D and $342,000,000 for the full year, which is about 7% of revenue.

Fourth quarter adjusted EBITDA excluding IP R and D was $259,000,000 which represents 14% growth versus Q4 of twenty twenty three. For the full year, adjusted EBITDA was $878,000,000 up 20% versus 2023. Net interest expense for the quarter was $93,000,000 and $384,000,000 for the full year. Adjusted EPS excluding IPR and D was $0.25 for the quarter. And $0.63 for the full year. Over the course of 2024, we have discussed our targeted efforts These efforts are paying off. Adjusted cash flow from operations was $263,000,000 compared to fifty six million twenty twenty three. We are pleased with this performance. And we will remain focused Turning now to our 2025 guidance on Slide 15. We expect full year revenue to be in a range of $4,950,000,000 to $5,050,000,000 This reflects constant currency growth of approximately 5.5% to 7.5%. The fundamentals of our business and the eye care market remain strong. And we expect each of our segments to deliver growth in 2025. Shifting to adjusted EBITDA, we are setting our adjusted EBITDA guidance in a range of $900,000,000 to $950,000,000 Consistent with our guidance in 2024, our current guidance excludes any potential onetime IPR and D charges that we may have in 2025.

As we exit 2024, we saw a swift strength of the U. S. Dollar. We for the full year 2025, we estimate currency headwinds of approximately $100,000,000 to revenue. And $20,000,000 to adjusted EBITDA We expect 2025 phasing to follow the natural seasonality of our business. With the first quarter being the lowest and the fourth quarter being the highest. I do, however, want to highlight a couple of factors that will impact our typical phasing. First, given the success we're seeing in the MIBO direct to consumer campaign, we plan to continue the investment through the early part of this year. Second, we also expect to increase our investment in R and D in the first part of the year. As we continue to drive our innovation pipeline. Based on these factors, in Q1 twenty twenty five, we expect to achieve roughly 17% of the full year adjusted EBITDA guidance. And we expect to build on that as we progress throughout the year. While these factors are expected to have a short term impact on phasing, they represent a strategic opportunity that we believe will generate significant growth and sustainable margin expansion over many years.

In terms of the other key assumptions underlying our guidance, We expect adjusted gross margin to be approximately 62.5% Keep in mind that we are absorbing an estimated 25,000,000 impact from the Inflation Reduction Act in adjusted gross margin. For the full year, we expect investments in R and D to be about 7.5% of revenue. As we continue to monitor Fed actions, we expect interest expense be approximately $375,000,000 the full year. Which reflects a moderate decrease relative to 2024. We expect our adjusted tax rate to be roughly 15% to 17% and full year CapEx is expected to be approximately two eighty Now on Slide 16, let me provide some additional color on how to think about the adjusted EBITDA guidance in 2025. The midpoint of our 2025 guidance range $925,000,000 It absorbs currency headwinds of approximately $20,000,000 It also absorbs an estimated impact of approximately $20,000,000 related to our recent acquisition of Eluos. As we prepare for the approval We are excited about bringing Alios to The U. S. Market. And believe it will be an important and profitable contributor to the Surgical business for years to come. Excluding the impact of the currency headwinds, and the Elius acquisition, At the midpoint of our guidance range, adjusted EBITDA margin is 18.9% in 2025.

This reflects a 60 basis point EBITDA margin expansion in our base business relative to 2024. To sum up, we are continuing to see solid execution and strong performance across all segments. Our strategy is paying off There is a clear momentum to further drive revenue growth. And sustainable margin expansion. And now, I'll turn the call back to Brent. Thanks, Sam.

Let's highlight the categories and products that will help fuel our growth 2025. Earlier, I mentioned that we're nearing $1,000,000,000 in annual revenue for our dry eye portfolio. Which is impressive on its own. But how we got there is noteworthy. Organic revenue growth increased nearly 50% year over year. [indiscernible] played a prominent role in that growth as weekly TRx trend lines illustrate. Both have benefited from effective direct to consumer campaigns and a full core press when it comes to educating prescribers on the distinct advantages of each medication. But I'll once again point out that our dry eye portfolio is all encompassing In addition to our flagship pharmaceutical products, we have OTC solutions One prominent example is our Blink franchise which reported 12% revenue growth on a constant currency basis in the fourth quarter.

We've become a one stop shop for dry eye sufferers.

And that's not only true for the approximately one hundred and fifty million U. S. Adults that experience occasional or frequent symptoms of dry eye or roughly the thirty eight million living with dry eye disease we offer relief on a global scale. Two OTC products with recognizable names are poised to have an impact in 2025.

Lumify preservative free eye drop received FDA approval last year and make a wildly popular brand even more attainable. The product was developed in response to feedback from consumers and eye care professionals. In fact, earlier this year, I had an ophthalmologist tell me she was compounding Lumify for a patient in need of a preservative free option. The drops are now available on Amazon and should be on shelves at most major U. S. Retailers Another example being responsive to the needs of consumers and eye care professionals was last year's launch of Blink NutriTears, a clinically proven OTC supplement for dry eyes. Some dry eye sufferers have an aversion to eye drops or simply prefer adding another pill to their daily regimen. And we've heard countless times from doctors the importance of having a once a day nutraceutical that they can recommend to patients. The opportunity for both products is significant.

In January, we launched a new thirty second ad for Blink Nutra Tears, that will run throughout the year across linear, and connected TV. It's early days, but there are promising signs Since the ad went live, we've seen a 4x increase in sales at major retailers. Unlike NutriTears, [indiscernible] doesn't have to cultivate a nascent category. Instead, it can ride the coattails of a brand that saw 24% reported revenue growth in the fourth quarter. Our contact lens growth is outpacing the market. Which may surprise some in the industry. Not us. As highlighted earlier, daily SBI high lenses are driving that growth. And having the full family of offerings makes it much easier to convert eye care professionals most of whom don't prefer to mix and match. While we typically lead with daily sigh of performance, it's important to remember that other products are contributing to our success. Ultra monthly contacts are a good example with 6% revenue growth in 2024. How we offer contact lenses to patients is increasingly important which is why we're encouraged by the initial interest in Opel. Our e commerce platform launched in October. As more practices adopt this complementary service, product distribution will become increasingly automated and easier with an expected boost in patient loyalty as well.

On another note on distribution, putting the issues in Lynchburg behind us last year, had an obvious impact on our performance. It's no coincidence that the loan quarter single digit constant currency revenue growth for our Lens business was at the tail end of our remediation process. Our steady drumbeat of premium IOL launches continues with an anticipated first quarter launch of Lux Life in Europe. The lens offers a continuous range of vision and adds to the buzz around our aggressive push into the category. I've mentioned this before, but it's worth repeating giving the Surgical business is relationship driven Ophthalmic surgeons are excited about our products. And anxious for what's next I hear it at industry meetings around the world and in conversations not only with our biggest customers, but our newest customers as well. That excitement is certainly reflected in our premium mile revenue growth and supports our pipeline strategy. I'll close with a reminder that cutting edge technology is foundational to how we source, make and sell. I covered Opel earlier Let me highlight some other important platforms and partnerships. We're leveraging collaboration's pharmaceutical data curation and machine learning expertise to identify new drug candidates. ITeligent software simplifies the complex and time consuming surgical planning process and enables device integration.

Our collaboration with Character Bio will focus on developing innovative AMD treatments through the company's patient data platform and AI powered analytical engine. We've partnered with Arena AI to help drive yield and output gains at our contact lens manufacturing sites by utilizing predictive analytics. And finally, Glimpse is our proprietary digital sales platform that uses AI and machine learning to provide tailor made guidance for engaging eye care professionals As made clear by our investments, technology will continue to be a driving force behind our ongoing evolution. Before we take questions, I'd like to thank my colleagues around the world for everything we accomplished in 2024. It's remarkable what we fit into twelve months. And I'm not just talking about the more visible achievements, we made significant strides in every area of our company thanks to their hard work and buy it. Operator, let's take questions.

And answer session. And the first question today is coming from Patrick Wood from Morgan Stanley. Patrick, your line is open. Perfect.

Perfect. Thanks so much. Appreciate taking the question. I'll keep it to one just so everybody gets a chance. But Brent, you touched on it at the end Bausch sort of customer side of things.

And we can see the pipeline and the innovation that's coming through in the company, but I'd love to hear a little bit more about I know you spent a lot of time on the ground with reps and things.

What you're seeing at the customer level? So So is a lot of the growth also coming from I don't know, on the consumer side, more shelf space, more gondola ends? What are you seeing in terms of the rates of bringing new surgeons in who previously wouldn't have had the discussion. I'm trying to pull out the execution component of the scorecard relative to the innovation? I know there are links, but I'm just interested to hear more about that.

Yes. Great question, Patrick. Look, As we sit here today, it kind of marks my two year anniversary With Bausch and Lomb, my return to Bausch Lomb, And I think you hit the nail on the head. When I joined two years ago, I think we were struggling with customer service on multiple fronts, right? It started with operational issues of being able to supply products. Some of it due to the COVID supply chain disruption. Some to our own self forced errors in Lynchburg and the like. And I think we spent a lot of time focused on operational excellence because it's really hard to have selling excellence if you can't supply your products. And Al Waterhouse and our team in supply chain and manufacturing have done a really great job over the last year stabilizing. And you don't hear us talking about anymore an earning report supply issues or recalls. The quality metrics in our plants are trending all into high levels. Our back orders are at all time lows. And so we're really delivering great operational excellence over the last two years.

We then focused on selling axons, right? And And great proof point is since I joined the last two years, our revenue growth CAGR for the last two years is 10% on an organic basis. So growing much faster than our industry and taking market share. And I think that was broad Bausch.

Right? If you look at over the two years, you see or in 'twenty four, you see consumer up 9% on constant currency, contact lens all time high at 11%, surgical at 11% Bausch Pharma at 15% organic constant currency. So really broad based growth by geography, so it would be a very similar story. And so that's not a one pick trick pony. It's a really holistic commitment to selling excellence. And then the third component of my roadmap plan was innovation. And you're right, we see that that playing out in the depth of the pipeline and the new product launches. But as we think about the next two years, it's really about driving continued [indiscernible] and now couple that with [indiscernible] with margin expansion and profitability improvement. And And it's not like we've ignored it. If you look at 24 P and L leverage, right, margin was about 50 Bausch.

If you exclude some of the one off items that Sam mentioned in the prepared remarks, $25,000,000 is about another 60 bps improvement But really I start to get excited when I look at 26 inch 27 of the opportunity we have to to continue that journey in margin expansion. All while investing in the new products and the pipeline.

So as I sit here today, I give the team a really good report card on the last two years of accomplishing and frankly doing what we said we would do and And I look at the opportunity over the next two years and I'm probably even more excited. So all in all, it's good. I think more specifically and then I'll conclude, when I go out and talk to customers, I'll be in China next week and meeting with customers and the team. I'll be at the ACOS meeting in West this weekend. So I'm out of quite a bit. There is just renewed excitement about what they call the new B and L. I don't know if I call it the new B and L, but they do. And and surgeons in particular that really didn't consider B and L in the past are looking at products like Envy [indiscernible] and the chatter there early days about 10,000 lenses now implanted, about 900 surgeons doing [indiscernible] More in the queue that want to do Envys. Are really getting great patient outcomes. They are noticing the difference. And and that's what drives customers to want to be with Vausch and Lomb, innovation and great ex Beautiful.

Thanks so much for the question.

Yes.

Thank you. The next question will be coming from Joanne Wuensch from Citibank. Joanne, your line is live. Good morning and thank you so much for taking the question.

Want to spend just a minute talking about contact lenses. We saw another quarter of very strong double digit growth both in The United States and outside The United States. And I was curious how you thought about the continuous nature of that, continuality, whatever the right word is. And in particular, what you can tell us about the biomimetic lens and myopia control?

Thank you.

Great, Duane. And I should have mentioned, Yahir Harshad is is with us for Q and A. He's our Head of R and D and Chief Medical Officer. So I'll ask him to to weigh in here as well on the pipeline. But look, I couldn't be more proud of our contact lens performance and the team 11% for the year, 13% on constant currency basis for the quarter. We're hitting numbers that really haven't hit in terms of growth at Bausch and Lomb in probably twenty, thirty years. Right. And And really, I dare to say, we don't have all the numbers from competitors, but really probably sales leadership for the year and for the quarter based on what we believe will happen in the industry. And look, contact lines is a great business, right? It's a great market. It's got strong growth. I think we're slightly more optimistic about market growth in 2025 than even 'twenty four, which was a very solid year. Our performance, I think, is quite broad based. I look at what we're doing in The U. S. With the full family of InfuseNow, and Opal, a big investment we made last year is really making a difference.

I look at a big market like China where I'll be next week, and our direct to consumer capabilities that we invested in end of 'twenty three and into 'twenty four really are making a difference in terms of how we interact with customers and and deliver contact lenses. But our product pipeline is is probably what makes me even more excited. Not just the biomedic lines which you hear can contact touch on, but but also our myopia control programs and quite a few other programs there. So I look at the next couple of years executing on the current pipeline of sustainable growth and and And then the future in probably 2027 and beyond gets super exciting with the new products Yajee, you want to talk to you on the Biomimetics?

Yes, sure. So actually, as you always mentioned, Brent, there hasn't been a lot of innovations in the material side of the contact lenses in so many years.

And in fact, Bose and Lomb, one of its strengths is the capabilities we have in research and development for the contact lenses. And one of the areas that we focused on is then what is next in terms of the material and can we create really a new material segments for the future. And this is actually what came up about started the project about Bausch point five years ago. It's a lens been done from a biomaterial substance that is designed to mimic the natural environment inside the eye from a chemistry and a biology perspective. Added to this also, we are revamping completely the packaging solution for the contact lenses to add also to the comfort that can the consumer can feel. And also considering the global sustainability piece that also allow us to be expanding globally. So we have done massive strides in terms of the development. We have done conduct internal clinical studies and the study is showing pretty promising results. We are going for the first external big study during mid this year. And actually, we hope that what we have put from a target product profile that we will be able to see from this clinical study. [indiscernible] that's Yes.

And I think Benoit here won't say this, but outside of the great work his team has done in developing this biomimetic [indiscernible] The one requirement I gave the R and D team was they had to design for purpose on existing equipment. To really essentially minimize or really not have any significant capital expenditure that generally comes with new material development and they did just that. So not only is it a breakthrough innovation, it's going to be a high margin lens at the get go and not require big cash capital expenditures to get up and scale. So we're super excited about it. Obviously, the clinical trial data is to the success of the lens, but we're really excited about it. Thank you. And the next question is coming from Craig Bijou from Bank of America. Craig, your line is live.

Good morning, guys. Thanks for taking the questions.

I guess wanted to start with the dry eye franchise on, at least on the prescription side. And obviously, MIVO has seen a significant ramp since it launched and through twenty four. Xiidra looks like it's rebounded. So we'd just love to understand the expectations that we should be thinking about for both of those in 2025. So for my bow, can you can you grow sales sequentially like you have been? And then ProXiDRA is the mid single digits revenue growth that you've talked about in the past. Is that still the right way to think about growth for that franchise?

Yes. So let me start and then I'll ask Sam to chime in as well.

So great question, Craig. Thank you.

Look, I think both of those products are really the the workhorses of our U. S. Pharmaceutical business MIBO is think it is the most successful launch in ocular surface history. And we're really proud of what we've done there.

We do have very high expectations for MIBO to for the long term. And look, it's one data point. You guys get the weekly report card in IQVIA data.

January looked quite strong. The momentum from Q4 has carried into January. And I think that's more impressive when you think about the seasonality of of this category drag category tends to see the first quarter and in particular January be the weakest month of the year because of the way that copays work and deductibles work. And so I think that's good. Xiidra, Sam can provide some more commentary. Our goal is TRx growth. We have this asset for the next several years and we're making an investment in managed care coverage in 2025. Which we talked about quite a bit. I think at every quarter last year, about the investment we needed to make to maintain coverage. But clearly, we see a real [indiscernible] and believe this is going to be a growth driver for us for the long term. But Sam, you want to touch on any financial metrics? Sure. And I'll start with MIGO and Craig, I think when you reflect back on Q4 for Mybo, we had sales of roughly about $53,000,000 That's a pretty good baseline for us to think about as you think about front rate for and growth into 2025. Just keep it in mind that sequential element that you asked Bausch to point out is very important to understand the seasonality.

Q1 is always the lowest, Q4 is the highest. So look at Q4 to Q1, you just have to keep that in mind as you think about the Q1 and you start phasing the growth from MyITO. In terms of Xiidra, our strategy in Xiidra has been working. And you've seen that in the TRxs especially in the second half of twenty twenty. And we ended the year with the average JRX of 23,000 plus that Brent highlighted. This is a very important factor. As you think about 2025 Bausch, that momentum in terms of driving the volume will continue with us and we expect to see that in 2025. The two things that we've been highlighting throughout 2024 is first is the IRA, the Inflation Reduction Act. Which we quantify roughly by 25%. That would be a one time headwind for us as we think about '25 versus '24 in Xiidra. The other part is the level of confidence that we have developed as we've started seeing the execution and the TRxs we always highlighted have to invest also in making sure that we have the right access And that's something we will be doing. We highlighted in '24 that we'll make sure that that's taking place in 2025.

That also will be a one time sort of investment I refer to it as it's a short term investment in 2025. It does pay a lot of dividends. Beyond 25% as you go and you start driving those volume up, I refer to it as a simple ROI no brainer. In terms of kind of an investment with the TRxs that we're seeing so far. Go ahead, Craig.

Thanks, Brian. I was just going to ask one quick follow-up, if I may. So on the market contact lens performance, just wanted to get your comments on your market share versus maybe transitioning your existing customers Or I guess a mix benefit from transition transitioning some of your existing customers to the daily disposables?

Yes. I mean, I think there's a combination here of obviously transitioning some of our existing customers and us also focusing on new fits or new starts. And I think there's a real nice balance being accomplished throughout the execution in the field. And you see that we saw ultra monthly up 6% for the year. So So when you look at this, it's not all of just coming from from the new products. It's maintaining growth in the older products while we use the new products to accelerate.

And so it's not a leaky bucket. It's filling the bucket higher and higher.

Thanks for the extra question, guys. Sure. Thanks, Greg. Thank you. The next question will be from Larry Biegelsen from Wells Fargo.

Larry, your line is live.

Strong finish to the year here. Brent and Sam, you talked about 10% organic growth in the last two years, Brent, and in Q4.

So clearly a lot of momentum here, but you're guiding to about 6% at the midpoint '25. Why is that the right starting point Which businesses slow relative to '24 and Sam, I didn't hear you talk about revenue seasonality. [indiscernible] [indiscernible] I reflect on sort of all businesses, we don't see any business that's slowing. Actually, maybe take a step back and look at the overall market dynamics, right? The market dynamics are solid and we've seen the market is growing roughly around mid single digits And as you pointed, our guidance brackets roughly Bausch anywhere between 5.5% to 7.5% with the midpoint of 6.5%. In terms of revenue top line growth. Really, the framework that we've been following and we've seen that work very nicely in 2024 is driving our performance to be growing above market. And that's really what our guidance suggested growth in terms of what we're seeing in terms of Gonga.

Faster than the market, continuing to gain share, One of the elements that you have to keep in mind is we're also absorbing some of the elements of the IRA that I mentioned earlier in terms of the growth on a year to year basis and also the market access elements of that. That's absorbed on a year to year basis. But overall, So growing past net of market. So given the fact we're this is the first time we're setting our guidance for 2025, We think it's a reasonable place to start. With the guidance range and we factor in all the different elements of our business and we think it's pretty well balanced guidance at the start of the year. And then seasonality, Tim? Seasonality, it follows the natural seasonality that we've seen in 2024. Really on the revenue side. EBITDA was really the two factors that were unusual or unique for us in 2025 that's why I called them out. Being the investments that we're continuing in MIVO, DTC, which will continue in Q1 that didn't happen in Q1 last year. As well as the Helios acquisition and the registration, which we expect to be taking place in the first of twenty four percent.

So that's why I called out the EBITDA seasonality. But other than that, seasonality should fall out 24. Is Nancy.

All right. Thanks so much guys.

Next question, operator. Thank you. The next question will be from Doug Maim from RBC Capital.

Doug, your line is Yes. Good morning, everyone. Thank you. My question has to do with MIBO. I'm really curious if you could update us on how managed care insurance contracting has gone over the last year. I know that you'd been hoping for one midyear of last year, but that got delayed to the beginning of this year.

Wonder if you could update us there? And then finally, when you think about the profitability of the product and the fact that you've like extended that DTC campaign, do you expect that product as it leads this year, 2025, to be profitable? Or are we really looking at '26, '27 to see that profitability come through. I'll leave it there. Thank you.

Yes. So thanks, Doug. Yes, so MIVO coverage is quite strong. We're just starting the second year of launch here. Right? This is the sixth quarter since launch and we're at 74% commercial coverage and 64% Medicare. So nearing full coverage, I usually say when both numbers in the 70s, you're full coverage. So we're just a hair away. And so that that's That's why you invest in the DTC because you have that coverage. We have the reps. The doctors are experiencing it. The patients are happy. And so all that comes together for strong execution. Clearly, what we see with MiBA, which we have for approximately another decade, is a path to driving real profitability starting next year. And so, as most pharmaceutical launches, the first two years are investment years. And then you see the profitability improve. I think we'll follow that that very customary path. But the good news is our numbers just keep improving, improving like we did last year, we kept taking guidance up. We kept over achieving. I do think that MIVO has the potential to just continue to outperform the category. As it's incredibly well tolerated and effective medicine for patients that suffer from GI eye disease.

So I think we're strongly positioned, Doug.

Thank you. Thank you. The next question will be from [indiscernible] Miksic from Barclays. Matt, your line is live.

Hi. Thanks so much for taking the question.

So maybe just a clarification on the comments you made about organic growth and the guidance for this year. It sounds like if we were to think about the difference, the double digits and then and then a slightly lower 2025 growth. It's the IRA impact and then it's sort of maybe setting your goal to grow above market but not really gunning for double digit growth each year. That gives me one quick clarification. And then on surgical, if I could, Maybe it'd be great to hear you had some success with Envy. You've got a pipeline of new lenses coming to the market. Where do you think You still have key kind of gaps that you're aiming to close that you think could significantly step up competitive and share trends within that market? Or are there any and what what are those in addition to the products that you rolled out? Thanks so much.

Yes. So let me answer the surgical one and I'll pass pass it over to Sam for the guidance question, Matt.

Look, on surgical, our strategy was starting two years ago was to really drive into the premium category And that really just kicked off in the fourth quarter. With the launch of Envy. So we're just a few months into it. And obviously, we have Envy launching and really gaining early quick adoption. We're very pleased with that. Early days, but great reported outcomes from surgeons and patients. And now in Europe, we're launching Lux Life right now.

The Envista platform will launch in the back half of the year in Europe as well.

He and his team are got the EDOF lens in Vista launch towards the end of twenty twenty six. And so the IOL portfolio is the table is set, right? We have to add one more piece to it, but that's in clinical studies and I feel like we have arguably the most comprehensive we actually do have the most comprehensive IO portfolio once we have beyond in place. I think on the equipment side, we have Cinnova, our upgrade to to our FAKO machine. Elios, which we expect an FDA approval for in [indiscernible] later this year, is I think really game changer and minimally invasive glaucoma surgery. And so I think all the pieces are coming together. I'd mentioned in the prepared remarks we have adjustable IOL in very early development. We continue to look at technologies in both accommodation and adjustability. In IOLs. And so I think I don't think we have any significant gaps. We have work to do, but I don't see any real significant gaps. In the near term, at least over the next couple of years.

Sam, you want to touch guidance? Yes. And Matt, when you think about the revenue, I think Given the fact that again you're starting setting up the guidance in the beginning of the year for twelve months out, you start by anchoring into where the market is and the market growth is. And the market growth, as I said, is about mid single digits Our framework is to continue to grow faster in our market that's why we positioned ourselves between the 5.5% to 7.5 in terms of growth. The U. P. O. And the IRA that's definitely a headwind for us in 2025. Also, I did mention the access So I was talking about Zydra that will also be a headwind for us in 2025. Putting those two points in terms of aside, there's always going to be puts and takes with our guidance range. And I think there's definitely areas where we can have the opportunity to be able to outperform but we will have to be able to work our way through as we see those areas, how they play out throughout the year. And that's our guidance factor in multiple of those scenarios as we think about it.

Thank you for the color and the questions.

Yes. Thanks, Matt. Thank you. The next question will be from Robbie Marcus JPMorgan. Robbie, your line is live.

Great. Thanks for taking the questions. Two for me. Sam, I'll just ask them together. One, maybe I missed it. How do we think about free cash flow in 2025? It was negative in '24.

Can that turn positive? And how positive And second, my rough math based on the guidance gets me to something like $0.02 to $0.04 of EPS growth Is that the right ballpark?

And how do you think about taking this good top line growth you're seeing and driving EPS and free cash flow in the future? Thanks.

Thanks, Ravi. Let me take them in part here. So let me start with the cash flow. We're very pleased with what we've seen in 2024 with the cash generation. And we've seen that really come to fruition for us in the second half, starting with Q3 and then full year as well. Our cash adjusted cash flow as we reported morning, $263,000,000 As we think about twenty five year Ravi, I would that the momentum that we had with the adjusted cash from operations that will continue pretty much not like not sort of taking any steps back from all the actions we've put in place to keep continue to drive that cash flow So I expect that level of conversion to continue with potential to improve as we go into 2025. In terms of CapEx, we are guided to roughly about $280,000,000 There's always going to be a little bit of a timing around the spend of those CapEx and the timing of projects, launches and spend it when it takes place. I do expect that we would be in a positive free cash flow in 2025. Based on what we see today in terms of our actions we've taken in place for the cash generation.

Well as where we're thinking about the CapEx, but that's something we'll continue to update on as we go throughout the year. In terms of the other part of your question on EPS, So I would there's a couple of things. When you think about EPS, we're going to see EPS growth on a year over year basis. We ended the year right now at 63 We expect to be a growth on a year to year basis. The two things I'll probably highlight for you to keep in mind as you think through it is, our tax rate guiding to a 15% to 17% tax rate in 2025. That will be a little bit of a headwind as we think about the EPS growth. As well as the currency, which I highlighted on the EBITDA is about $20,000,000 I will see that flow of that currency. As I go through the EPS And just to clarify, is free cash flow positive in 2025?

Or just improving towards positive?

We expect to be positive.

Great.

Thanks, Charlie. Thank you.

Our last question Last question today will be from Gary Nachman from Raymond James. Gary, your line is live.

Hey, guys. Good morning. This is Dennis Reznick on for Gary Nachman. Thank you for taking my question. Congrats on the quarter. Just for the dry eye franchise, are there any metrics or color that you can share as a patient's compliance with the dosing? And then any color on the refill rates And then in the third quarter, you previously mentioned about how you've begun sampling the one point six ml from Ibo. Can you just talk about the conversion efforts there and if I was able to activate any new prescribers Thanks so much.

Sure. So one of the I think one of the important differentiating characteristics of MIVO versus the the other drugs including Xiidra in the inflammatory category. Is higher refund rates. I don't have the exact number front of me. I can have George send it to you. But it is Its refull rate is significantly higher than that of the other in the category. Which goes to the I think strong clinical profile and safety profile of the medicine. I think people just feel better on it. To be fair and that drives a lot of refill. So in essence, MIBO is potentially a harder working prescription because it's a stickier prescription. Versus the other drugs that tend to take a little longer to work and require a little bit more persistence from the patient to get relief. And so that's why that investment in MIBO and the long term outlook for Mybo is particularly exciting for us.

Great. Thank you.

Okay.

Yes. So operator, maybe just a quick few closing remarks. First and foremost, I really do want to thank my colleagues at Bausch Alham for delivering such a strong year and quarter. And I look forward to working with them and '25 to continue to deliver on our expectations. And then also a quick thank you to all of our customers and paid to provide great products and continue to drive innovation. We look forward to keeping you updated and talk to you next quarter.

Thank you. This concludes today's conference. [indiscernible] [indiscernible]