Bausch Health's Q3 Outperformance: A Strategic Deleveraging Play with Increasing Conviction

Bausch Health Companies Inc. (BHC) has emerged as a compelling case study in corporate restructuring, with its third-quarter 2025 results underscoring a disciplined approach to debt reduction and operational efficiency. The company's ability to outperform expectations while navigating a challenging healthcare landscape has reignited investor interest in its long-term strategy.

Q3 2025: A Blueprint for Strategic Execution

Bausch Health reported consolidated revenues of $2.68 billion in Q3 2025, a 7% year-over-year increase on a reported basis and 5% on an organic basis, according to the company's Q3 2025 earnings announcement. Adjusted EBITDA reached $986 million, up 8% from the prior year, despite an $81 million charge for acquired In-Process Research & Development (IPR&D) tied to the DURECT Corporation acquisition, as noted in the earnings announcement. This outperformance, coupled with the tenth consecutive quarter of growth in revenue and EBITDA (excluding Bausch + Lomb), highlights the company's resilience.

The revised full-year 2025 guidance further reinforces this narrative. Bausch Health now projects revenue between $10.05 billion and $10.25 billion and adjusted EBITDA between $3.57 billion and $3.66 billion, reflecting a 6%–8% growth trajectory, according to the earnings announcement. These upward revisions, driven by strong performance in key segments like Salix (notably Xifaxan's 16% revenue growth), signal confidence in the company's ability to balance innovation with profitability.

Deleveraging: A Calculated Path to Stability

Debt reduction has been a cornerstone of Bausch Health's strategy. In Q3 2025, the company completed a $7.9 billion refinancing transaction and retired its high-cost accounts receivable facility, reducing near-term liquidity risks, according to the earnings announcement. As of September 30, 2025, Bausch Health held $1.3 billion in cash and equivalents, up from $1.2 billion at year-end 2024, as reported in the earnings announcement.

The debt-to-EBITDA ratio, a critical metric for assessing leverage, stood at 21.34 as of Q3 2025, calculated using total long-term debt of $21,042 million and quarterly EBITDA of $986 million, according to the SEC filing. While this remains elevated, management's focus on deleveraging-through asset sales, cost optimization, and potential divestitures of non-core assets like Bausch + Lomb-demonstrates a clear roadmap. CFO Jean-Jacques Charhon emphasized that average EBITDA over 2026 and 2027 is expected to remain "materially similar" to 2025's outlook, mitigating concerns about government pricing pressures, according to the earnings transcript.

Operational Efficiency: Beyond the Numbers

Operational excellence has underpinned Bausch Health's progress. The company's SG&A spend in Q3 2025 was described as "unusually low" due to non-recurring accrual changes, though management anticipates normalization in future periods, according to the earnings transcript. This suggests a disciplined approach to cost management, even as the company invests in growth platforms like hepatology (via Larsucosterol) and periodontal care (through OraPharma's expansion into Canada and Puerto Rico), as detailed in the Morningstar coverage.

The acquisition of DURECT Corporation, while adding an $81 million IPR&D charge, also expanded Bausch Health's therapeutic portfolio, aligning with its strategy to diversify revenue streams, as reported in the earnings announcement. Such targeted investments, combined with deleveraging efforts, position the company to weather macroeconomic headwinds while maintaining growth momentum.

The Investment Case: Conviction in Restructuring

Bausch Health's Q3 results and revised guidance present a high-conviction opportunity for investors seeking value in the healthcare sector's restructuring narrative. The company's ability to generate consistent EBITDA growth, despite a challenging regulatory environment, underscores its operational resilience. Meanwhile, its deleveraging initiatives-bolstered by strategic refinancing and asset optimization-reduce downside risk.

For long-term investors, the key question is whether Bausch Health can sustain its current trajectory. The management team's emphasis on "operational excellence" and its proactive approach to capital deployment suggest a strong likelihood of continued progress. As the healthcare sector grapples with pricing pressures and margin compression, Bausch Health's disciplined execution offers a rare combination of stability and growth potential.