Bausch + Lomb is widely considered the crown jewel held within the Bausch Health portfolio. If you have an ad-blocker enabled you may be blocked from proceeding. Luckily, BLCO's current market cap is well in excess of BHC's at $5.95 billion. The common shares are expected to begin trading on the NYSE and on an "if, as and when issued basis" on the TSX on May 6, 2022, in each case under the ticker symbol "BLCO." Bausch Health Cos. Inc. BHC, -0.30% filed for an initial public offering of its Bausch & Lomb Corp. unit on Thursday, with plans to list on the New York Stock Exchange, under the ticker "BLCO." Add in the roughly $2.2 billion debt that BLCO is taking on, and the company has an enterprise value of $8.5 billion, RBC estimates. Its wide open future can attract investors, boosting share price. BHC) shareholders are up 19% this past week, but still in the red over the last three years (Simply Wall St.) Dec-27-22 08:49AM: . Get in Now on Tiny $3 Forever Battery Stock, Early Bitcoin Millionaire Reveals His Next Big Crypto Trade On Air, BLCO Stock: 7 Things to Know About the Bausch + Lomb IPO Today, Analyst Expectations for Bausch & Lomb's Future, Bausch + Lomb Corporation (BLCO) Gets a Buy from H.C. Wainwright, Cortigent, developer of human vision restoration devices, files for $17M IPO, Benzinga's Top Ratings Upgrades, Downgrades For March 9, 2023, The Latest Analyst Ratings for Bausch & Lomb, RBC Capital Sticks to Their Buy Rating for Bausch + Lomb Corporation (BLCO), Morgan Stanley Sticks to Its Hold Rating for Bausch + Lomb Corporation (BLCO), Analysts Offer Insights on Healthcare Companies: United Therapeutics (UTHR) and Bausch + Lomb Corporation (BLCO), Registration on or use of this site constitutes acceptance of our, Yesterday, it was announced that Bausch + Lomb would be pricing its IPO at. However, the stock price has not reflected the progress made by management and the true intrinsic value. Bausch Health Companies Inc. stock plummeted by a quarter Tuesday morning after the company missed earnings expectations and lowered its outlook for the year. Spinoffs shares can lose value for a period of time after the new company is created for other reasons, as well. This will in turn acclerate the spin of the remaining BLCO shares that BHC owns as it will help BHC achieve the 6.7x target. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Jan 6, 2023 11:58am. As a result, their individual stock values would eventually surpass the value they had when part of the parent company. The remaining Bausch and Lomb shares will be distributed to shareholders. Because, in my view, these multiples are unwarranted for companies with a collective prospective CAGR of 4%. Bausch + Lomb ( NYSE:BLCO - Get Rating) last released its quarterly earnings results on Wednesday, February 22nd. She has been an investor, entrepreneur, and advisor for more than 25 years. One Chart That Indicates This Bear Market Is Ending. Spinoff investors may see share price volatility due to the company's newness and lack of financial results. Louis Navellier and the InvestorPlace Research Staff, FRC Stock Alert: First Republic Finally Collapses, Stock Market Crash Alert: Mark Your Calendars for May 3, 3 Meme Stocks to Buy With Actual Growth Potential, MULN Stock Alert: Mullen Announces New Info on D.C. Contract. These ideas will not only come from successful value investors such as Warren Buffett, Eddie Lampert, William Ackman, David Einhorn, etc, but they will also come from other sources such as flagged insider trading, spin-offs, mergers, demutulizaitons and bankruptcies. The reported loss of $0.19 per share missed analysts' expectations for a gain of $1.03, however. Their stock prices remain stable even when the market oscillates wildly. BHC | Complete Bausch Health Cos. Inc. stock news by MarketWatch. All ideas will be thoroughly researched and clearly presented. In conclusion, I would like to highlight the specific parts of this restructuring that make it so attractive. $24,185. This comes on a rather mixed day in the markets. BLCO stock has surged, while BHC stock is currently down approximately 3%. Today, it appears the market has agreed. Its comprehensive portfolio of more than 400 products includes contact lenses, lens care products, eye care products, ophthalmic pharmaceuticals, over-the-counter products and ophthalmic surgical devices and instruments. Entering text into the input field will update the search result below. Spinoffs have generally performed successfully over time. Get the latest Bausch Health Companies Inc. (BHC) stock price, news, buy or sell recommendation, and investing advice from Wall Street professionals. As a result, it has attracted a lot of famous value investors, such as Carl Icahn, that have pressured the management to split up the company to realize this true value. Bausch Health, together with its subsidiaries, now holds approximately 90.0% of the common shares of Bausch + Lomb (before giving effect to the over-allotment option). LAVAL, QC and VAUGHAN, ON, May 10, 2022 /CNW/ -- Bausch + Lomb Corporation (NYSE/TSX: BLCO) ("Bausch + Lomb") and Bausch Health Companies Inc. (NYSE/TSX: BHC) ("Bausch Health") today announced the closing of the initial public offering ("IPO") of Bausch + Lomb. All investments are encumbered with the risk of catastrophe, such as, in this case, BHC's pharmaceutical business being hit with surprise lawsuits or the macro environment deteriorating to an extent as to render BHC's stake in BLCO as worthless on paper. 15, 2022, 08:22 AM. Bausch + Lomb remains on track to spin off from Bausch Health, following the expiry of customary lock-ups related to the IPO . Solta Medical is relatively much smaller. Bausch Health is unlocking value by spinning off into 3 separate companies. About Bausch + Lomb Bausch + Lomb, a leading global eye health business of Bausch Health Companies, Inc., is dedicated to protecting and enhancing the gift of sight for millions of people around the world from the moment of birth through every phase of life. While technical overhang is usually strongest when a company spins off a small or non-essential component of its business, it may still be present in this case where BHC is spinning off arguably its most attractive business. This downtrend can generally be attributed to market turbulence due to macro factors. By Julie Randall FED NOTES: Originally published in the Spring 2016 edition of Bank Owner magazine. The main risk is that BHC won't be able to meet the bond covenants due to the current economic issues. Back to BHC Overview. This price range would also allow it to raise $840 million. outsized gains. BLCO did close up 11% to $20 per share. Bausch + Lomb Corporation (NYSE/TSX: BLCO) is a leading global eye health company that is dedicated to protecting and enhancing the gift of sight for millions of people around the world - from the moment of birth through every phase of life. Valeant Pharmaceuticals grew through acquisitions, becoming an enormous player in the pharma space. For conservatism's sake, let's assess BHC's prospects if the BLCO distribution does not take place. Check out our wiki to learn more! As a result, investors could see their spinoff stock rise in value. Find the latest news headlines from Bausch + Lomb Corporation Common Shares (BLCO) at Nasdaq.com. The company plans to list it on both the New York and Toronto stock exchanges under the ticker "BLCO." Bausch Health didn't disclose how many shares it would raise or their price range. After more than a year of planning and preparing for the optimal way to split the company, Bausch recently announced the exact details. Revenue for the quarter ended March 31 totalled US$1.92 billion, down from US$2.03 billion in the same period last year. Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. This valuation of $8.4 billion comes from upper end of the Bausch + Lomb IPO price range . Share your opinion and gain insight from other stock traders and investors. The stock dive also came after the Quebec-based firm, which keeps its books in U.S. dollars, notched down its guidance to between US$8.25 billion and US$8.40 billion in revenue for 2022 from US$8.40 billion and US$8.60 billion previously. Given the expected IPO of another division, Solta Medical, a fast-growing aesthetic device business, they may be able to further reduce their debt load and this would provide additional cash flows to invest in improving BHC's performance. Analysts had expected a US$1 million loss on revenues of US$2.04 billion, according to financial data firm Refinitiv. In finance, a stub is a security that is created as a result of a corporate restructuring such as a spin-off, bankruptcy, or recapitalization. Following an earnings miss of $1.48 per share and the lower-than-expected IPO price of BLCO, the stock cratered from $16 and change on May 6 to $9.40 on May 10 and $9.72 as of May 31, giving BHC a total market cap of $3.63 billion. BLCO | Complete Bausch + Lomb Corp. stock news by MarketWatch. The partial Bausch and Lomb & Solta spinoff proceeds will be used to pay down debt. Currently, the stock is up more than 6% in afternoon trading on a strong opening day. The two companies opened during a slow time for new issues. It's a high risk, long term play. Bausch Health reported a loss of US$69 million in its first quarter compared with a loss of US$610 million a year earlier when it took a goodwill impairment charge in its Ortho Dermatologics business. A wholly owned subsidiary of Bausch Health (the "Selling Shareholder") sold 35,000,000 common shares at a public offering price of $18.00 per share for aggregate gross proceeds of $630 million, before deducting underwriting commissions and estimated offering expenses. It's calculated by multiplying the current market price by the total number of shares outstanding. With investors focused in on valuations and a slowing IPO market, it seems Wall Street is optimistic about this consumer-facing brand coming public. Spinoff shares can be volatile in the early period after a new company is created. Once again, this is a steep discount to Cramer's relative valuation of Solta, which he valued at $5.15 billion. BHC must achieve its target leverage ratio of 6.5-6.7x EBITDA in order for the distribution of 80% of BLCO shares to be distributed to BHC shareholders. SEC Form 10-12B is a Securities and Exchange Commission (SEC) form a public company must file when it issues a new stock through a spinoff. BHC has a debt load in excess of $20 billion and being that BLCO contributed hundreds of millions in FCF per year its creditors will obviously shun the proposed distribution. Not all spinoffs generate shareholder value in early years. For example, a large company with many divisions may have a stock price that management feels understates the value of those divisions. After the spinoff, the rest of the Bausch and Lomb shares will be distributed and the rest of Solta Medical will be kept to help de-lever the company further. These statements include those set forth above regarding our plan to spin off the Company's eye health business, the ability of each of BHC and Bausch + Lomb - NewCo to focus on distinct therapeutic areas, the anticipated capital structure and financial strength of BHC and Bausch + Lomb - NewCo following the spinoff, the tax treatment of the transaction for the Company and its shareholders . So, if we take $7 billion from the $16 billion enterprise value we calculated, we are left with $9 billion of Bausch and Lomb value that will eventually be distributed to shareholders. Shares of healthcare name Bausch Health . Active contributors also get free access to SA Premium. Bausch + Lomb is widely considered the crown jewel held within the Bausch Health portfolio. Spinoffs can have great potential for growth due to their smaller size and a management motivated to achieve success. Do this now. The best-case scenario, namely a distribution of BLCO to shareholders and an IPO of Solta Medical and a multiple expansion for both BLCO and BHC, presents a potential 500% upside for investors. Don't hesitate to tell us about a ticker we should know about, but read the sidebar rules before you post. The underwriters will get an option of purchasing an additional 5.25 million common shares of Bausch + Lomb within 30 days. Bausch + Lomb is one of two separations and IPOs BHC is preparing. Bausch and Lomb Financial Details sec.gov. Unless BLCO stock soars for example, closing above $30 a share when it ends first-day trade on the NYSE today, I expect other companies waiting on the IPO runway to delay going public. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines. Florham Park, New Jersey 07932 . Here is why they thought the spinoff would create shareholder value: Bausch Health trades on the Nasdaq exchange under the ticker BHC. Historically, spinoffs have been good for investors. Furthermore, my valuation of Solta Medical, which is set to be IPOed and sold entirely by BHC, is approximately $2 billion. Solta will get valued at around $2-$4 billion depending on what multiple is given to a fast-growing (~37% CAGR 2018-2020) aesthetic medical devices with ttm EBITDA of ~150 million. Thus far, BHC has not yet IPOed Solta Medical and has only sold 10% of its stake in BLCO. I applied a 50% margin of safety to this multiple and arrived at the terminal multiple of 15. More risk-averse investors may instead choose the stability of parent company stock. Jobs In Rosslyn Pretoria, What makes this company so intriguing? Now, investors are likely familiar with Bausch Health (NYSE:BHC), the rebranded Valeant. Assuming management monetizes the additional 8.7% at $15.66, they should be . This will in turn acclerate the spin of the remaining BLCO shares that BHC owns as it will help BHC achieve the 6.7x target. This gives investors an ample margin of safety while allowing for the potential of outsized gains. The share price of the parent company can rise when spinoff plans are announced if investors believe such a move is financially beneficial. For those interested about this IPO, lets dive into a few things to know. This comes on a rather mixed day in the markets. Specifically, the true gem of the company is the Bausch and Lomb unit that stands to trade at a much higher multiple as a standalone company with a better capital structure. Shea Moisture Virgin Coconut Oil Body Wash, Is this happening to you frequently? Basic notes from Barron's article. I arrived at this multiple by constructing a 10-year DCF model starting with $650 million in FCF, an aggressive 10% discount rate, conservative 4% growth rate and conservative terminal multiple of 13. 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. Ultimately, spinoffs tend to perform well over time. I/we have a beneficial long position in the shares of BHC either through stock ownership, options, or other derivatives. Bausch Health's Ortho Dermatologics Reports FDA New Drug Application Filing Acceptance .. Bausch Health Brief: Ortho Dermatologics Announcing U.S. Food and Dr.. Bausch + Lomb Brief: Releasing Annual Environmental, Social and Gove.. Bausch + Lomb to Present New Scientific Data on Products, Pipeline Programs at Cataract.. Bausch + Lomb Brief: Announcing Presentation of New Scientific Data .. Bausch Health : Salix Partners with the Colorectal Cancer Alliance on Community Screening .. Bausch + Lomb Detailing New Options For Dual-action Protection During Cataract Surgery. Because BHC's EBITDA independent of BLCO at about $2 billion a year (which can be arrived at by subtracting BLCO's and Solta Medical's respective $900 million and $100 million in EBITDA from BHC's $3 billion in EBITDA), a multiple of 12 suggests an EV of $24 billion and with $20 billion of debt, a market cap of $4 billion which is not a far cry away from the aforementioned current market cap of $3.63 billion. We have not yet dealt with the potentially problematic technical overhang incumbent upon BLCO's stock subsequent to an equity distribution to shareholders. Fitch estimates a standalone reorganized EV for BHC of $11.9 billion and then adds an assumed $1.5 billion to reflect BHC's share of BLCO's equity post BLCO fully drawing down on its revolver, resulting in $13.4 billion of EV available for claimants. I wrote this article myself, and it expresses my own opinions. Bausch Health Companies Inc. stock plummeted by a quarter Tuesday morning after the company missed earnings expectations and lowered its outlook for the year. A plan to merge Daum Communications, the nation's second-largest Internet portal, with the top mobile messenger service, Kakao, may face a stumbling block if dissenting shareholders excessively exercise their appraisal rights. . Our organic growth in the first quarter of 2022 was stable compared to the same quarter last year, despite incremental macro pressures and a challenging supply chain environment, Thomas Appio, incoming chief executive officer, said in a release. . CELULARITY INC. 170 Park Ave . Fitch assumes that administrative claims consume 10% of this value in the recovery analysis. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Share your opinion and gain insight from other stock traders and investors. Price Target $22.95 ( 39.60% upside) Analyst Consensus: Buy Stock Forecasts News All Videos Press Releases Conversation When Valeant acquired Bausch + Lomb, the eye products company's annual revenue was nearly $1.3 billion. For those unfamiliar, Bausch + Lomb is a popular maker of contact lenses and eyecare products. Employees with job insecurity could affect a spinoff's performance. Adjusted earnings before interest, taxes, depreciation and amortization are forecast at US$3.22 billion to US$3.38 billion, down from US$3.35 billion to US$3.50 billion.