Bausch Health's Debt Restructuring Strategy: A Strategic Win for Creditors and Investors?

Bausch Health Companies Inc. (NYSE: BHC) has embarked on a high-stakes debt restructuring campaign in 2025, . This maneuver, which saw 46% of noteholders participate, represents a critical step in the company's broader effort to extend debt maturities and alleviate refinancing pressures. For creditors and investors, the question remains: does this strategy mark a turning point for Bausch Health, or does it merely delay inevitable challenges?

Financial Implications: A Mixed Bag of Relief and Risks

The debt exchange directly addresses Bausch Health's immediate liquidity constraints. , the company effectively pushed back its refinancing timeline by four years, reducing the risk of near-term defaults. This aligns with a larger pattern of debt management, including a $4.4 billion senior secured notes offering in March 2025. However, the trade-off is a higher interest rate: the new 10.00% notes, while extending maturities, .

Credit rating agencies have acknowledged these efforts but remain cautious. , while S&P Global raised its rating to 'B-' with a negative outlook. Both upgrades highlight the company's progress in restructuring but underscore lingering concerns, including its heavy reliance on Xifaxan-a drug facing potential Medicare price negotiations-and the looming $4 billion debt maturity wall post-2028. Analysts at . note that while Bausch Health's "GREAT" financial health score suggests resilience, its investment narrative remains "heavily influenced by regulatory changes and product concentration".

Operational Realities: Cost Management and Revenue Dynamics

Operationally, Bausch Health's debt restructuring has had tangible effects. The company in August 2025 using cash on hand, further reducing short-term obligations. However, these actions have not insulated the company from financial strain. In Q2 2025, Bausch + Lomb reported a $11 million operating loss , partly attributed to financing costs from refinancing activities. Despite this, , fueled by contact lens and dry eye product lines.

The company's Free Cash Flow (FCF) remains a key metric. , with projections suggesting a rise to $2.39 billion by 2029. This trajectory, however, hinges on maintaining operational efficiency and avoiding regulatory setbacks. Analysts caution that the loss of Xifaxan's exclusivity in 2028 could erode revenue unless offset by new product launches or market expansion.

Strategic Considerations: A Win for Creditors, but Uncertain for Investors

For creditors, the debt exchange appears to be a strategic win. By securing noteholder support and extending maturities, Bausch Health has reduced the likelihood of distressed debt scenarios in the near term. The 10.00% interest rate on the new notes, , reflects a more sustainable capital structure. Additionally, the company's ability to complete the exchange without U.S. or Canadian securities registration-relying instead on a confidential memorandum-demonstrates operational agility.

Investors, however, face a more nuanced calculus. While the refinancing buys time, it does not eliminate structural risks. The "negative outlook" from S&P and Fitch underscores concerns about Bausch Health's ability to navigate regulatory headwinds and maintain profitability. Moreover, the company's focus on debt management has diverted resources from R&D, . For investors seeking long-term growth, this raises questions about whether Bausch Health can balance debt reduction with innovation.

Conclusion: A Tactical Victory, Not a Strategic Resolution

. For creditors, this reduces immediate refinancing risks and aligns with the company's broader strategy . However, for investors, the move is a double-edged sword. While it provides short-term relief, it does not address the company's reliance on a single product (Xifaxan) or its exposure to regulatory shifts. The true test of this strategy will come in 2028, . Until then, the debt restructuring remains a stopgap measure-a strategic win for creditors but a conditional one for investors.