10-Q: Bausch + Lomb Reports Mixed Q3, Revenue Growth Amidst IOL Recall

Bausch + Lomb reported a 7% increase in Q3 revenues to $1.28 billion, but net loss widened to $28 million, impacted by higher expenses and a voluntary IOL recall.

Summary

• Revenues for the three months ended September 30, 2025, increased by $85 million, or 7%, to $1,281 million compared to $1,196 million in the prior year.
• Net loss attributable to Bausch + Lomb Corporation for the three months ended September 30, 2025, was $28 million, compared to net income of $4 million for the same period in 2024.
• For the nine months ended September 30, 2025, revenues increased by $185 million, or 5%, to $3,696 million compared to $3,511 million in 2024.
• Net loss attributable to Bausch + Lomb Corporation for the nine months ended September 30, 2025, was $302 million, a slight improvement from $314 million in 2024.
• Operating income for the three months ended September 30, 2025, was $95 million, up from $43 million in 2024, but for the nine months, it decreased to $1 million from $75 million.
• The Vision Care segment saw revenue increase by 8% to $736 million for the quarter and 6% to $2,145 million for the nine months, driven by dry eye portfolio, eye vitamins, and contact lenses.
• The Pharmaceuticals segment revenue increased by 8% to $330 million for the quarter and 3% to $906 million for the nine months, primarily due to MIEBO® sales.
• The Surgical segment revenue increased by 4% to $215 million for the quarter and 5% to $645 million for the nine months, driven by consumables, equipment, and implantables, despite the enVista IOL recall.
• Cost of goods sold (excluding amortization and impairments) increased by 10% for the quarter and 11% for the nine months, partly due to higher manufacturing variances and an inventory reserve related to the enVista IOL recall.
• Selling, general and administrative expenses increased by 3% for the quarter and 8% for the nine months, mainly due to higher selling costs for MIEBO® and consumer eye care, and Business Transformation Costs.
• Research and development expenses increased by 13% for the quarter and 11% for the nine months, reflecting investment in product development.
• The company completed a debt refinancing in June 2025, establishing a new $800 million revolving credit facility and a new $2,325 million term B loan facility, and issuing €675 million in Senior Secured Floating Rate Notes.
• A voluntary recall of certain enVista IOL products was announced on March 27, 2025, due to an increased number of reports of toxic anterior segment syndrome (TASS), with the issue traced to raw material from a different vendor; full production has resumed.

Sentiment

Score: 5

Explanation: The company shows revenue growth across all segments and significant investment in its pipeline and strategic acquisitions. However, profitability metrics (net loss, operating income for 9 months, and segment profits for Pharmaceuticals and Surgical) have deteriorated, partly due to increased expenses and the IOL recall. The debt refinancing is a positive for liquidity, but overall debt remains substantial. The mixed financial performance and ongoing legal/macroeconomic uncertainties result in a neutral-to-slightly-negative sentiment.

Positives

• Total revenues increased by 7% for the three months and 5% for the nine months ended September 30, 2025, demonstrating consistent top-line growth.
• Vision Care segment revenue grew by 8% for the quarter and 6% for the nine months, driven by strong performance in dry eye, eye vitamins, SiHy Daily lenses, and Biotrue®.
• Pharmaceuticals segment revenue increased by 8% for the quarter and 3% for the nine months, largely due to the continued positive momentum of MIEBO®.
• Operating income for the three months ended September 30, 2025, significantly increased to $95 million from $43 million in the prior year.
• The company successfully completed a debt refinancing in June 2025, establishing new credit facilities and notes, which improved its debt maturity profile.
• The acquisition of Whitecap Biosciences in January 2025 is expected to expand the clinical-stage pipeline with two innovative therapies for glaucoma and geographic atrophy.
• The pending acquisition of manufacturing equipment in Mexico is expected to unlock manufacturing capacity and expand margins.
• Successful launches of Lumify® Preservative Free (Q1 2025), Blink® NutriTears (June 2024), and Blink® Nourish and Blink® Boost (June 2025) expand the consumer eye care portfolio.
• Pipeline advancements include enrolling Phase 2 clinical studies for Dual-Action Lifitegrast and Glaucoma Neuroprotection, and a Phase 1 study for Ocular Pain therapy.
• Settlement was reached with DRL in the Lumify® Paragraph IV proceedings, providing a market entry date of June 30, 2027, or earlier for DRL's generic drops.
• The New Jersey Declaratory Judgment Lawsuit is expected to be dismissed with prejudice in January 2026 following a settlement.

Negatives

• Net loss attributable to Bausch + Lomb Corporation widened to $28 million for the three months ended September 30, 2025, compared to net income of $4 million in the prior year.
• Operating income for the nine months ended September 30, 2025, decreased significantly to $1 million from $75 million in 2024.
• Pharmaceuticals segment profit decreased by 38% for the nine months ended September 30, 2025, primarily due to higher selling and advertising expenses for MIEBO®, declines in U.S. generics, gross-to-net pricing pressures, and higher R&D.
• Surgical segment profit decreased by 38% for the quarter and 89% for the nine months, largely due to the impact of the enVista IOL recall and higher selling expenses.
• Cost of goods sold as a percentage of product sales increased to 39.9% for the quarter and 41.1% for the nine months, driven by product mix and the enVista IOL recall.
• Interest expense increased by $1 million for the quarter and $22 million for the nine months, partly due to financing fees associated with the June 2025 refinancing.
• The provision for income taxes for the three months ended September 30, 2025, was an unfavorable change of $88 million compared to a benefit in the prior year.
• The voluntary recall of certain enVista IOL products in March 2025 caused disruption and impacted the Surgical segment's performance.
• The Red River Talc LLC bankruptcy plan, related to Shower to Shower® litigation, was denied, and the bankruptcy case dismissed, potentially prolonging the resolution of these claims.

Risks

• Adverse economic conditions and macroeconomic factors, including heightened inflation and interest rates, slower growth, or a potential recession, could negatively impact revenues, expenses, and margins.
• Risks associated with the voluntary recall of enVista IOL products, including the ability to resupply inventory and the success of enhanced inspection protocols.
• The imposition of and adverse changes to U.S. duty, tariff, and other trading policies, and retaliatory measures by other countries, could increase manufacturing, distribution, and operational costs.
• Trade conflicts, including current and future disputes between the United States and other countries like China and Canada, pose risks.
• Challenges associated with managing an independent, complex business following the B+L IPO, including limited transitional services from BHC and potential conflicts of interest.
• The status as a controlled company, with BHC holding approximately 88% of common shares, means BHC's interests may conflict with other securityholders.
• Uncertainties and risks associated with the proposed plan to separate Bausch + Lomb from BHC, including timing, form (Distribution or Sale Transaction), and potential dis-synergy costs.
• Ongoing and potential additional litigation, claims, challenges, and regulatory investigations related to the B+L IPO and proposed Separation from BHC.
• Legislative or policy efforts to reduce patient out-of-pocket costs for medicines could result in new mandatory rebates, discounts, or pricing restrictions.
• Ongoing oversight and review of products and facilities by regulatory agencies like the FDA, and potential actions by these authorities.
• Ability to comply with financial and other covenants in the Amended Credit Agreement and indentures governing Senior Secured Notes, including restrictions on incurring additional debt or making certain payments.
• Any downgrade in credit ratings could increase borrowing costs and negatively impact the ability to raise additional debt capital.
• Changes in assumptions for impairment analyses could lead to goodwill or intangible asset impairment charges.
• Risks and uncertainties related to acquisitions and other business development transactions, including failure to close pending transactions, realize expected benefits, or commercialize pipeline products.
• Uncertainties associated with the acquisition and launch of new products, assets, and businesses, including obtaining regulatory approvals and market acceptance.
• Ability to extend the profitable life of products through line extensions and life-cycle programs.
• Ability to retain, motivate, and recruit executives and other key employees, and implement effective succession planning.
• Factors impacting the ability to achieve anticipated revenues and market acceptance for products, including pricing, promotional efforts, and competing products.
• Ability to compete against larger companies with greater resources and other competitive factors like technological advances and new products from competitors.
• The extent to which products are reimbursed by government authorities, PBMs, and other third-party payors, and the impact of such reimbursement on price and sales.
• Consolidation of wholesalers, retail drug chains, and other customer groups could impact the business.
• Eligibility for benefits under tax treaties and the continued availability of low effective tax rates for certain subsidiaries.
• Implementation of the OECD inclusive framework on Base Erosion and Profit Shifting (Pillar Two) and potential protective measures by the U.S. could increase the effective tax rate.
• Actions of third-party partners or service providers, including their compliance with laws and contracts, which may be beyond control or influence.
• Risks associated with international operations, including presence in emerging markets and compliance with anti-bribery and economic sanctions laws.
• Adverse global economic conditions, credit markets, and foreign currency exchange uncertainty and volatility.
• Risks associated with the ongoing conflict between Russia and Ukraine, and the conflict in the Middle East, including potential escalation and impact on operations and sales.
• Ability to obtain, maintain, and license sufficient intellectual property rights and defend against challenges.
• Introduction of generic, biosimilar, or other competitors for branded products, especially after patent or regulatory exclusivity expiration.
• Expense, timing, and outcome of pending or future legal and governmental proceedings, arbitrations, investigations, and regulatory audits.
• Ability to obtain components, raw materials, or finished products from third parties, and other manufacturing and supply chain difficulties.
• Disruption of product delivery and routine flow of manufactured goods.
• Potential work stoppages, slowdowns, or other labor problems at facilities.
• Economic factors beyond control, including inflationary pressures, heightened interest rates, and foreign currency rates.
• Interest rate risks associated with floating rate debt borrowings.
• Risk that products could cause personal injury and adverse effects, leading to lawsuits, product liability claims, and recalls.
• Mandatory or voluntary recall or withdrawal of products from the market and associated costs.
• Availability of adequate insurance coverage and ability to cover total claims and liabilities.
• Indemnity agreements that may result in material obligations to indemnify or reimburse counterparties.
• Difficulty in predicting the expense, timing, and outcome within the legal and regulatory environment, including FDA approvals and patent protection.
• Results of continuing safety and efficacy studies by industry and government agencies.
• Success of preclinical and clinical trials for drug development pipeline or delays that impact timely commercialization.
• Uncertainties around successful improvement and modification of existing products and development of new products.
• Results of management reviews of the R&D portfolio could lead to project terminations and material impairment charges.
• Seasonality of sales for certain products.
• Declines in pricing and sales volume of products distributed or marketed by third parties.
• Compliance by the company or third-party partners with healthcare fraud and abuse laws, anti-bribery laws, economic sanctions, environmental laws, and privacy regulations.
• Impacts of the Patient Protection and Affordable Care Act and other healthcare reforms.
• Impact of changes in federal laws and policy under the Trump administration.
• Illegal distribution or sale of counterfeit versions of products.
• Interruptions, breakdowns, or breaches in information technology systems.

Future Outlook

The company plans to continue advancing its pipeline of over 60 projects, including new contact lenses for myopia, next-generation cataract equipment, premium IOLs, and investigational treatments for dry eye. Key anticipated launches include AREDS3 vitamins in 2026, enVista Beyond EDOF in early 2027 in the U.S., and further global expansion of enVista Envy and LuxLife Trifocal IOLs. The U.S. submission for the ELIOS® procedure is being planned. The company expects to remain in compliance with financial covenants and meet debt service obligations for the next twelve months. It is also monitoring macroeconomic factors, potential impacts of new U.S. legislation (One Big Beautiful Bill Act), and the global minimum corporate tax rate, which may increase its effective tax rate in the future.

Management Comments

• Management believes that the expectations reflected in forward-looking statements are reasonable, but such statements involve risks and uncertainties.
• The company continues to believe that completing the separation of its eye health business from Bausch Health Companies Inc. (BHC) makes strategic sense and continues to evaluate all relevant factors and considerations.
• The company has implemented enhanced inspection protocols for IOLs and more explicit standards for how monomers are prepared by vendors, following the enVista IOL recall, and has returned to full production.
• The company is monitoring the status of tariffs, counter-tariffs, and other trade restrictions and believes it has potential actions to mitigate their impact, such as strategic inventory stocking, leveraging its global footprint to shift manufacturing, and optimizing existing capacity for in-source manufacturing.
• The leadership team routinely evaluates the impact of generic competition on future profitability and operations, aggressively defending patents and actively managing the pipeline for innovative projects.

Industry Context

Bausch + Lomb operates in the global eye health industry, which is subject to ongoing innovation, competitive pressures, and regulatory scrutiny. The company's focus on expanding its clinical-stage pipeline through acquisitions like Whitecap Biosciences and developing new products like Lumify® Preservative Free and AREDS3 vitamins aligns with industry trends towards specialized and advanced eye care solutions. The voluntary recall of enVista IOLs highlights the inherent risks in medical device manufacturing and the importance of supply chain integrity. The industry also faces macroeconomic headwinds, including inflation, interest rate fluctuations, and geopolitical conflicts, which can impact supply chains, operational costs, and market demand. Legislative changes, such as the 'One Big Beautiful Bill Act' and global minimum corporate tax rates, are creating a complex tax environment for multinational pharmaceutical and medical device companies.

Comparison to Industry Standards

• The company's R&D spend, increasing by 11% for the nine months, indicates a commitment to innovation, which is crucial in the competitive eye health sector where companies like Alcon, Johnson & Johnson Vision, and CooperVision are also heavily investing in new technologies and product development.
• The successful debt refinancing in June 2025, which extended maturities and diversified debt instruments, is a positive step in managing capital structure, a common strategy among large healthcare companies to optimize financing costs and liquidity.
• The voluntary recall of enVista IOLs due to TASS, while negative, was followed by a swift investigation and implementation of enhanced inspection protocols, demonstrating a response mechanism comparable to industry best practices for product quality and patient safety.
• The company's strategy of acquiring clinical-stage assets like Whitecap Biosciences and commercial-stage products like XIIDRA® and Trukera Medical is consistent with industry trends where major players seek to expand their portfolios and address unmet needs through strategic M&A to drive growth.

Management Changes

Corporate Governance

Legal Proceedings

• Bausch + Lomb Corporation has been removed as a defendant in the In re: Generic Pharmaceuticals Pricing Antitrust Litigation (MDL 2724), though BHC subsidiaries remain defendants.
• Twenty-three product liability lawsuits involving the Shower to Shower® body powder product remain pending, with Johnson & Johnson having indemnification obligations. The Red River Talc LLC bankruptcy plan, which aimed to resolve ovarian cancer-related talc claims, was denied on March 31, 2025.
• The U.S. Securities Litigation New Jersey Declaratory Judgment Lawsuit, naming BHC and Bausch + Lomb, reached a settlement in early August 2025 and is expected to be dismissed with prejudice in January 2026.
• The Doctors Allergy Formula Lawsuit against Bausch Health Americas is scheduled for trial with jury selection beginning April 20, 2026.
• In Lumify® Paragraph IV proceedings, a settlement was reached with DRL on July 9, 2025, allowing DRL's generic drops market entry by June 30, 2027 (or earlier). New infringement suits were filed against Somerset Therapeutics, LLC and Gland Pharma Limited on April 28, 2025, triggering 30-month stays.
• Infringement proceedings related to Vyzulta® and Lotemax® SM products against potential generic competitors in the U.S. are ongoing.
• The PreserVision® AREDS Patent Litigation is now closed, with the last ongoing matter dismissed with prejudice on April 10, 2025.

Related Party Transactions

• Bausch Health Companies Inc. (BHC) directly or indirectly holds approximately 88% (310,449,643 shares) of Bausch + Lomb's issued and outstanding common shares as of October 22, 2025.
• Amounts payable to BHC and its affiliates were $15 million as of September 30, 2025, an increase from $5 million as of December 31, 2024.
• Amounts due from BHC and its affiliates were $12 million as of September 30, 2025, a decrease from $25 million as of December 31, 2024.
• Limited transitional services are still being provided by and to BHC under a Transition Services Agreement (TSA), with most services having expired or been terminated.
• Charges incurred related to agreements with BHC (including TSA, Tax Matters Agreement, Employee Matters Agreement) were $6 million for the nine months ended September 30, 2025, compared to $5 million for the same period in 2024.
• The company expects BHC to indemnify it for the immaterial tax cost from the finalized German tax audit settlement for 2014-2016, pursuant to the Tax Matters Agreement.

Stakeholder Impact

• Shareholders: Experience mixed financial results with revenue growth but increased net loss for the quarter and decreased operating income for the nine months. The ongoing separation from BHC and legal proceedings introduce uncertainty, while pipeline advancements and strategic acquisitions offer long-term potential.
• Employees: Benefit from continued investment in R&D and strategic acquisitions, but may be impacted by restructuring and integration costs, which primarily consist of employee severance costs.
• Customers: Benefit from new product launches (e.g., Lumify® Preservative Free, Blink® Nourish, Blink® Boost) and pipeline developments, but were affected by the voluntary recall of certain enVista IOL products, which has since been resolved with resumed production.
• Suppliers: The company has implemented more explicit standards for third-party suppliers of raw materials for IOLs following the recall, potentially impacting existing supplier relationships and requiring new vendor qualifications.
• Creditors: The debt refinancing in June 2025 improved the company's debt maturity profile, but the overall debt level remains substantial, and interest expense has increased. Compliance with financial covenants is crucial for maintaining creditor confidence.

Next Steps

• Close the acquisition of manufacturing equipment and assets in Mexico, expected in Q4 2025 or Q1 2026.
• Continue launching enVista Aspire IOLs in Canada and enVista Envy in the U.S., Europe, Singapore, and Hong Kong.
• Plan the U.S. submission for the ELIOS® procedure.
• Launch AREDS3, a next-generation eye vitamin formulation, anticipated in 2026.
• Receive a year 1 interim report for the Myopia control contact lens study during 2026.
• Continue enrolling patients in Phase 2 clinical studies for Dual-Action Lifitegrast and Glaucoma Neuroprotection, and a Phase 1 study for Ocular Pain therapy.
• Proceed with the trial for the Doctors Allergy Formula Lawsuit, with jury selection beginning April 20, 2026.
• Monitor the ongoing Vyzulta® and Lotemax® SM infringement proceedings.

Key Dates

Recommendation

Bausch + Lomb demonstrates solid revenue growth across its segments, driven by new product launches and strategic acquisitions, which are positive indicators for its market position and future potential. The successful debt refinancing also addresses near-term liquidity concerns. However, the widening net loss for the quarter and a significant drop in operating income for the nine-month period, coupled with declining segment profits in Pharmaceuticals and Surgical, raise concerns about profitability and operational efficiency. The impact of the enVista IOL recall, ongoing legal challenges, and macroeconomic uncertainties add layers of risk. Given the mixed financial performance, the strong pipeline and strategic moves are balanced by profitability pressures and external risks, suggesting a 'hold' recommendation for investors to observe how the company navigates these challenges and translates revenue growth into sustainable earnings.

Keywords

Eye Health, Ophthalmology, Pharmaceuticals, Vision Care, Surgical Devices, Contact Lenses, Intraocular Lenses, Dry Eye, Glaucoma, SEC Filing, 10-Q, Financial Results, Product Pipeline, Acquisitions, Debt Refinancing, Regulatory Compliance, Intellectual Property, Product Recall, Bausch + Lomb