Project Description

Bausch Health Spin-off Notes

February 23, 2021 – Update

Seeking Alpha: Bausch Health Trades Below SOTP

  • Good article but I think 15-20x is a fair multiple for Bauch and Lomb not 30x.


November 5, 2020 – Update

  • From Q3 2020 conference call:

Before I wrap up, I want to give you a quick update on the planned spin-off of Bausch + Lomb on Page 27. Since announcing our intention to separate Bausch + Lomb into an independent company, our goal has been to unlock value across our 2 attractive businesses as soon as possible.

Our team has been working diligently to complete all the necessary actions, which include the items listed on the right of Slide 27. We are making great progress and expect the internal organization design to be completed by the end of the third quarter of 2021.

Finalizing the capitalization structure is more complicated and we are actively pursuing all available options to expedite leverage improvement. Our focus is on positioning these two strong with dissembler businesses so that the financial market see attractive growth opportunity for both entities.

  • Spin-off Slide from Q3 Presentation:

August 27, 2020 – Update

  • On August 6, 2020, Bausch Health Companies Inc. announced that it intends to spin off its leading eye health business into an independent publicly traded entity (“Bausch + Lomb – NewCo”) from the remainder of Bausch Health.
  • Basic notes from Barron’s article.
  • Chris Schott thinks Bausch spin-off would do $870MM in 2021 EBITDA. He thinks a fair value is 15x because peers like Alcon trade at 20x next years EBITDA. Equals value of $13.05BN.
  • Remaining specialty pharma company will trade for 7.5x $2.7BN = $20.25BN.
  • So total value of $33.3BN. Minus $22BN of debt. Leaves $11.3BN of equity value versus $6.0BN currently. 88% upside. 
  • If Bausch spin-off trades at parity with Alcon, even more upside.
  • Questions:
    • What multiple was Bausch originally acquired for?
    • What was acquisition price?
    • How many drugs will come off patent (for both spin-off and remaining specialty pharma co)?