Bausch Health Companies Inc. (NYSE:BHC), a pharmaceutical company, announced today that its subsidiary, Bausch + Lomb Corporation, has entered into an amendment to its existing credit agreement to borrow an additional $400 million in term loans. The new financial obligation, termed the Bausch + Lomb Second Incremental Term Loans, was established on Friday, with a maturity date set for May 10, 2027.
Under the terms of the amendment, the loans will be subject to quarterly amortization payments starting March 31, 2025, with the initial eight payments at 0.625% of the principal amount and subsequent payments at 1.875%. The proceeds from this borrowing will be used to repay existing revolving loans and for general corporate purposes.
The interest rate for the Bausch + Lomb Second Incremental Term Loans is variable, depending on the borrower's choice between a base rate or term SOFR (Secured Overnight Financing Rate), plus an applicable margin. The margins have been set at 2.25% for base rate borrowings and 3.25% for term SOFR borrowings.
This financial move comes as Bausch + Lomb continues to navigate the pharmaceutical industry, with the funds aimed at strengthening the company's financial flexibility. The specifics of the agreement were detailed in an 8-K filing with the Securities and Exchange Commission, based on which this report is prepared.
In other recent news, Bausch Health Companies has reported a significant rise in its third-quarter revenues, marking a 12% year-over-year increase and a 9% organic growth. These figures surpassed RBC Capital's estimates and the general market consensus. The company's adjusted EBITDA for the quarter was also noteworthy, exceeding estimates by roughly 9%. RBC Capital Markets responded to these positive developments by raising its price target for Bausch Health from $10 to $11.
This robust financial performance has led Bausch Health to raise its full-year 2024 revenue guidance to between $4.775 billion and $4.85 billion, with adjusted EBITDA expectations also increased to a range of $2.425 billion to $2.475 billion. The company has further reported a 7% growth in the Salix segment, with XIFAXAN showing strong performance, and an 8% organic growth in the International segment.
In addition to these financial highlights, Bausch Health has also been reviewing strategic options to maximize the value of Bausch + Lomb's equity stake for the benefit of its shareholders. This comes alongside the company's ongoing growth trajectory, marked by strong performances in Salix and International segments and advances in strategic initiatives like the Red Sea program and AI-driven customer engagement. These recent developments underscore Bausch Health's resilience and strategic foresight in the competitive pharmaceutical landscape.
InvestingPro Insights
Bausch Health Companies Inc.'s recent financial maneuver aligns with its current market position and future prospects. According to InvestingPro data, the company has a market capitalization of $3.6 billion and has shown strong recent performance, with a 50.82% price return over the last three months. This positive momentum is further reflected in the 14.43% return over the past week.
InvestingPro Tips highlight that net income is expected to grow this year, and analysts predict the company will be profitable. This outlook suggests that the additional $400 million in term loans could be strategically timed to support growth initiatives. However, it's worth noting that the company is not currently profitable over the last twelve months, which underscores the importance of this financial restructuring.
The company's revenue growth of 10.91% over the last twelve months, coupled with a robust gross profit margin of 70.87%, indicates a solid operational foundation. This financial health may have contributed to Bausch Health's ability to secure favorable loan terms.
For investors seeking a deeper understanding of Bausch Health's financial landscape, InvestingPro offers 5 additional tips, providing a more comprehensive analysis of the company's position and potential.
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