Investing.com - Bausch Health Companies Inc (NYSE:BHC) shares shed 23.3% on Wednesday following an unconfirmed report from Reorg.com that the company is negotiating a potential prepackaged Chapter 11 bankruptcy filing to help deleverage its balance sheet.
Analysts at Truist noted that the headline appears to have been reported on various other financial media sources, including StreetAccount. Analysts have also attempted to reach out to management for comment but have not received a response yet.
Bausch Health is negotiating a potential prepackaged chapter 11 bankruptcy filing, I reported for @Reorg earlier citing sources $BHC- Harvard Zhang (@HarvardZhang)
In a scenario where the report is true, it is noted that a potential Chapter 11 bankruptcy filing cannot be ruled out given BHC's ~7x leverage amid a looming refinancing event and the Loss of Exclusivity (LOE) for Xifaxan in January 2028.
As highlighted by analysts at Truist, refinancing was always a concern with upcoming debt maturities in 2025-2026. The company ended Q1 2024 with total debt of $22 billion against cash of $755 million and a leverage ratio of 6.7x. Free Cash Flow (FCF) is expected to reach $1.3 billion, according to analysts' model.
Last quarter, management noted that the favorable Xifaxan ruling is a "significant milestone" towards a potential separation of Bausch+Lomb (BLCO, NR). However, it is believed that a potential bankruptcy filing would put the separation on hold as creditors reassess the situation.
Truist maintained their HOLD rating for Bausch Health with a price target of $8.