Fixed Income Forum

Data provided by Solve Advisors Inc

Shares of Bausch Health Companies Inc. (Stock Ticker BHC) fell 34% since the company announced underwhelming first quarter performance on May 10th. The stock has plunged by more than 60% this year.

Revenue for the quarter ending March 2022 declined 5.4% to $1.9B, while EPS dipped to -$0.43, well below market expectations of +$1.03. The company attributed the weakness in performance to supply chain challenges, and profit protection measures taken in the first quarter. Following the announcement, the company faced analyst downgrades from the likes of Bank of America that cut their price target from $25 to $12, and RBC from $21 to $17.

While the stock has fallen materially over the past month, CDS spreads have skyrocketed even more aggressively with 5yr mid spreads jumping from 830 on April 18th to 2,588 on May 18th. The fixed income market has clearly reset risk expectations for this credit since the first quarter announcement.

Notably, the company’s eye care division Bausch + Lomb (Stock Ticker BLCO) went public this month, and the business operates as two separate companies now.

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