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Bausch Health: Strong Cash Flow Trends in Fiscal 2018

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Cash from operations

Bausch Health (BHC) generated cash from operations of $522 million in the third quarter, a YoY rise of 6.53%. According to the company’s third-quarter earnings presentation, the rise in cash generated from operations is attributable to increased operating profits coupled with reduced working capital requirements.

The company reported cash from operations of $1.18 billion in the first nine months of 2018, a YoY decline of 30.96%. Bausch Health has improved its working capital days by more than 25%, resulting in cash generation of around $1.0 billion. Bausch Health expects to generate an average $400 million in cash from operations per quarter. However, according to the company’s third-quarter earnings conference call, the actual average cash per quarter generated in 2018 YTD has been $394 million on account of payments made for the Allergan (AGN) settlement and the SOLODYN settlement.

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Capital expenditure guidance

In its third-quarter earnings presentation, Bausch Health forecasted capital expenditure for fiscal 2018 of around $175 million, lower than the guidance provided in February 2018 and reiterated in May 2018 of $250 million and then provided in August 2018 of $200 million.

Wall Street analysts expect Bausch Health to report the capital expenditure of $188.63 million in fiscal 2018, a YoY rise of 10.31%. The company is also expected to report the capital expenditure of $173.38 million in fiscal 2019, a YoY decline of 8.08%. Wall Street analysts have also forecasted Bausch Health’s fiscal 2020 capital expenditure to be $170.74 million, a YoY decline of 1.52%. In the first nine months of 2018, Bausch Health reported capital expenditures of $95 million, a YoY decline of 19.49%.

In the next article, we’ll discuss seven new product launches of Bausch Health.

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