Bausch + Lomb's Q3 2025: Contradictions Emerge on Dry Eye Market Growth, Miebo Profitability and Strategic Shifts, and EnVista Recall Recovery

Date of Call: October 29, 2025

Financials Results

• Revenue: $1.281B, up 6% year-over-year (constant currency); currency tailwind approx. $19M
• EPS: $0.18 adjusted EPS (excluding acquired IPR&D) for the quarter
• Gross Margin: 61.7% adjusted gross margin, down 130 basis points year-over-year (primarily product mix and enVista recall impact)
• Operating Margin: 19% adjusted EBITDA margin (excluding acquired IP R&D), up 400 basis points sequentially; adjusted EBITDA $243M, up 7% year-over-year

Guidance:

• Maintain FY2025 revenue guidance $5.05B–$5.15B (~5%–7% constant currency growth)
• Updated adjusted EBITDA guidance $870M–$910M (raised lower bound from $860M)
• Expect adjusted gross margin of ~61.5%
• R&D investment expected ~7.5% of revenue; adjusted tax rate ~15%; interest expense ~ $375M
• Full-year CapEx now expected ~ $295M
• Guidance excludes any potential one-time IPR&D charges
• Updated guidance assumes ability to offset 2025 tariff impact

Business Commentary:

• Revenue Growth and Segment Performance:
• Bausch + Lomb reported total company revenue of $1.281 billion for Q3 2025, reflecting 6% year-over-year growth.
• Growth was driven by strong performance across all segments, including Vision Care, Surgical, and Pharma.
• Vision Care revenue increased by 6%, led by a 37% revenue growth in Blink and 24% growth in Artelac.
• The Surgical segment saw a 1% revenue increase, with implantables up 2% and equipment up 4%.

• Pharma segment revenue grew by 7%, with Miebo delivering $84 million in revenue.

• Miebo and Dry Eye Market Leadership:

• The dry eye drug Miebo achieved $84 million in revenue, reflecting a 71% increase year-over-year and a 110% TRx growth.
• The growth was due to Miebo's comprehensive dry eye portfolio, which is front and center for eye care professionals, patients, and consumers.

• The introduction of combination therapies, such as using Miebo and Xiidra together, is expected to expand treatment options and market opportunity.

• EnVista Recovery and Premium IOL Market:

• EnVista intraocular lens sales reached 82% of Q1 pre-recall levels, with Envy reaching 91%.
• This recovery was faster than expected, attributed to successful management of the recall and strong relationships with ophthalmic surgeons.

• The premium IOL market showed 27% constant currency revenue growth, indicating strong progress in regaining market momentum.

• Strong Cash Flow and Financial Guidance:

• Adjusted cash flow from operations was $161 million, and adjusted free cash flow was $87 million.
• Bausch + Lomb maintained its 2025 revenue guidance at $5.05 billion to $5.15 billion, representing constant currency growth of 5% to 7%.
• The company attributed this to disciplined cost management and execution of its margin expansion strategy.

Sentiment Analysis:

Overall Tone: Positive

• Management called it an "impressive third quarter," cited 6% constant-currency revenue growth, highlighted adjusted EBITDA of $243M (up 7% YoY) and a 19% adjusted EBITDA margin (up 400 bps sequentially), and noted adjusted cash flow from operations of $161M—statements emphasizing strong growth, margin improvement and cash generation.

Q&A:

• Question from Patrick Wood (Morgan Stanley): High level: what does the new "financial excellence" pillar mean—cash conversion, margin structure, impetus—any color ahead of Investor Day?
  Response: Vision '27 financial excellence is disciplined resource allocation to ensure every dollar drives growth/efficiency—focus on operating expense control, mix improvement, margin expansion and stronger cash conversion across company initiatives.

• Question from Joanne Wuensch (Citigroup): Thoughts on contact lens market share and the Wall Street Journal / Cooper article—any additional color?
  Response: Bausch + Lomb is outgrowing the market via new product innovation and execution; they will not engage in Cooper shareholder matters but noted a scaled competitor could benefit consumers.

• Question from Young Li (Jefferies): On Miebo vs. TRYPTYR and combo therapy—can you expand on combo use to expand the dry eye market?
  Response: Miebo is driving strong TRx growth (110% YoY); management sees combination therapy (stimulant + Miebo or lifitegrast/Xiidra + Miebo) as clinically appropriate for multifactorial dry eye and likely market-expanding.

• Question from David Roman (Goldman Sachs): Please contextualize enVista launch recovery, recall impact, surgeon feedback and trajectory into Q4/next year.
  Response: enVista recovery has been faster than expected—Q3 enVista sales at ~82% of Q1 pre-recall levels (Envy 91%; September Envy > Q1 monthly), consignment near restoration and recall-related work largely behind the salesforce.

• Question from David Roman (Goldman Sachs): Follow-up—sustainability of SG&A leverage versus reinvestment in growth given many opportunities?
  Response: Management views SG&A leverage as sustainable through mix shift and disciplined redeployment of spend to revenue-generating activities while continuing targeted R&D investments, supporting ongoing margin expansion.

• Question from Lilia-Celine Lozada (JPMorgan): You expect to offset tariffs in 2025—how should we think about ability to offset in 2026 and magnitude of tariff impact?
  Response: Tariff outlook is fluid; guidance assumes B+L can offset 2025 impact via mitigation levers, but 2026 exposure depends on trade developments—team monitoring closely and prepared to act.

• Question from Lilia-Celine Lozada (JPMorgan): Contact lens market appears softer—what's driving slightly softer outlook and role of price?
  Response: Market likely ~4%–5% this year with regional softness (Southeast Asia, China); premium lenses outperform lower-income/private-label segments, so pricing and premium mix are key drivers.

• Question from Pito Chickering (Deutsche Bank): Walk through gross margin drivers this quarter, including mix, tariffs and FX.
  Response: Q3 gross margin decline (~130 bps YoY) was primarily product mix and enVista recall reintroduction impacts; management highlighted enVista ramp and seasonal strength should help margins going forward.

• Question from Pito Chickering (Deutsche Bank): Is the implied Q4 ramp mainly enVista or other moving parts?
  Response: Q4 improvement is driven by continued enVista ramp and normal seasonality, per management.

• Question from Matthew Miksic (Barclays): Thoughts on surgical market health/volumes and pharma coverage (Miebo/Xiidra coverage and annualization of investments)?
  Response: Cataract market appears steady with an aging population tailwind; Miebo and Xiidra field coverage ~70% (near full for this category) and Xiidra investments set a new baseline in 2025 as the investment cycle winds down.

• Question from Gary Nachman (Raymond James): Dry eye market growth outlook, underpenetration, investment strategy for Miebo; and U.S. generics strategy/divestiture thoughts?
  Response: Dry eye market growing ~10%+ with a long runway; B+L will continue targeted, ROI-focused investment (not broad taper) to grow the market; U.S. generics treated opportunistically to absorb plant capacity and capture margin when attractive, not prioritized for aggressive growth or immediate divestiture.

• Question from Douglas Miehm (RBC Capital Markets): Could Miebo profitability timing shift earlier given Q3 strength? And how will incremental cash be allocated (debt paydown vs reinvestment)?
  Response: Miebo is moving from launch to growth phase with deliberate investments—profitability timing remains as guided toward 2026; capital allocation priorities are deleveraging (targeting investment grade), selective tuck-ins and continued high-ROI R&D.

• Question from Thomas Stephan (Stifel): Miebo ASP has been choppy—why was Q3 sequentially higher and is Q3 a new base?
  Response: Quarter-to-quarter ASP variability is expected; management recommends modeling Miebo on an annualized gross-to-net run rate (~mid-70s) rather than extrapolating from a single quarter.

Contradiction Point 1

Dry Eye Market Growth and Strategy

It involves differing perspectives on the dry eye market growth rate and the company's strategic approach to manage profitability alongside market expansion, which are crucial for investors to understand the company's financial outlook and market positioning.

Can you discuss dry eye market growth and your strategy for balancing Miebo's profitability with market expansion? - Gary Nachman (Raymond James & Associates, Inc)

2025Q3: The dry eye market is growing around 10% annually, driven by Miebo and Xiidra. - Brenton L. Saunders(CEO)

Will a major competitor entering the dry eye market impact your investment plans and profitability timeline? - Young Li (Jefferies)

2025Q2: The market growth is mid-single digits. - Brenton L. Saunders(CEO)

Contradiction Point 2

Miebo's Profitability and ASP Strategy

It highlights inconsistencies in the company's stated approach to profitability and pricing strategy for Miebo, which are key financial considerations for investors.

When might Miebo reach profitability, and what is the capital allocation strategy for future cash flow? - Douglas Miehm (RBC Capital Markets)

2025Q3: Profitability from Miebo will come as the product moves from launch to growth phase, supported by efficient deployment of SG&A dollars. - Brenton L. Saunders(CEO)

What pricing strategies are planned for Miebo considering expected competition? - Douglas Miehm (RBC Capital Markets)

2025Q2: Miebo has strong coverage, with 74% commercial and 71% Medicare coverage. Competitors will struggle due to patient abandonment without coverage. The focus is on adoption and market expansion. - Brenton L. Saunders(CEO)

Contradiction Point 3

EnVista Recall Impact and Recovery

It addresses the impact of the EnVista recall on the company's surgical business, which is crucial for understanding the financial health and operational resilience of the company.

How will the enVista recall impact the surgical business and its future outlook? - David Roman (Goldman Sachs Group, Inc)

2025Q3: Progress on enVista is faster than expected, with 82% of Q1 pre-recall levels in Q3. EnVy sales surpassed first quarter levels in September, indicating quick recovery. - Brenton L. Saunders(CEO)

What is the impact of the EnVista recall, and what customer feedback have you received on the return to market? - Patrick Wood (Morgan Stanley)

2025Q1: We've been working closely with the FDA on a voluntary medical device recall of the enVista Toric IOL and expect to complete the recall by the end of the first quarter, removing all units from customer inventory. - Brenton L. Saunders(CEO)

Contradiction Point 4

Miebo Profitability Expectations

It involves differing expectations for the profitability of Miebo, which is crucial for understanding the company's financial performance and strategic direction.

When does Miebo expect to become profitable, and what is its capital allocation strategy for future cash flow? - Douglas Miehm (RBC Capital Markets)

2025Q3: Profitability from Miebo will come as the product moves from launch to growth phase, supported by efficient deployment of SG&A dollars. - Brenton L. Saunders(CEO), Osama Eldessouky(CFO)

What is the status of Miebo's managed care coverage and anticipated profitability? - Doug Miehm (RBC Capital)

2024Q4: Miebo coverage is nearing full coverage at 74% commercial and 64% Medicare. Profitability is expected to improve over the coming years, with significant potential for continued growth beyond the initial investment years. - Brent Saunders(CEO)