Bausch Health finance plan gets thumbs up at Raymond James

New financings from Bausch Health (Bausch Health Stock Quote, Chart, News, Analysts, Financials NYSE:BHC) should extend the company runway in a nice way.

So says Raymond James analyst Michael W. Freeman, who, in a research update to clients March 19 maintained his “Market Perform 3” rating on the stock.

On March 19, BHNC announced, in separate press releases, the details of two debt offerings, the first $3.8-billion in new senior credit facilities due in 2031, the second $4.0-billion in new senior secured notes due in 2032.

“The launch of this syndication is the result of a thorough process led by our Board, management team, and independent advisors to evaluate several debt financing alternatives and is consistent with Bausch Health’s previously stated objective to comprehensively improve our debt maturity profile. The transaction is part of a broader initiative aimed at opportunistically accessing capital markets to address our near- and mid-term maturities,” CEO Thomas J. Appio said. “The Company has a diverse, substantial portfolio of assets and, with seven consecutive quarters of top- and bottom-line growth, strong momentum to build on our success in 2025.”

Freeman says this new could mean near term gains for shareholders and long-term stability.

“We view BHC’s ability to pay down its nearer-term, higher interest debt (lower-interest debt to be paid down with cash flow) to potentially extend its runway for several years and improve the possibility of BLCO’s full separation very positively; we would expect to see a positive reaction in the stock during the next days,” he wrote. “Also, BHC’s choice to pay down its 9.0% Intermediate Holdco Notes due 2028 infers to us that it aims to free up a portion of its pledged BLCO shares for future refinancings: another positive. On closing of these offerings, we will review more fulsome information around the applicable interest rates of these facilities and the proportion of BHC’s stake in BLCO that was pledged. These instruments are secured against substantially all assets of BHC, including a pledge of direct equity interest in BLCO. We note that ~58% of BLCO’s equity was left for BHC to pledge following its use of 30% as collateral for its current HoldCo notes; we expect that the majority (not all) of its remaining stake in BLCO will be pledged in connection with this offering.”

The analyst thinks BHC will post Adjusted EBITDA of $3.62-billion on revenue of $10.0-billion in fiscal 2025.