Bausch + Lomb Signals Profitable Growth After Record Year

Bausch + Lomb Corporation ((BLCO)) has held its Q4 earnings call. Read on for the main highlights of the call.

Bausch + Lomb’s latest earnings call struck a confident tone, with management leaning into record quarterly and full‑year results and highlighting broad‑based growth across its eye‑health portfolio. While risks around tariffs, interest expense and the lingering impact of a surgical lens recall remain, the company framed them as manageable against accelerating EBITDA, stronger cash discipline and clearer 2026 targets.

Record Quarter and Full Year Performance

Bausch + Lomb reported Q4 revenue of $1.405 billion, up 7% in constant currency, delivering the highest quarterly revenue in its history. Adjusted EBITDA jumped 27% year over year to $330 million with margin expanding 330 basis points to 23.5%, while full‑year sales reached $5.101 billion and adjusted EBITDA was $891 million at a 17.5% margin.

Vision Care Remains a Core Growth Engine

Vision Care continued to lead, with Q4 revenue of $778 million up 5% and full‑year sales of $2.923 billion up 6%, driven by strong contact lens demand. Contact lenses grew 8% in Q4 and 7% for the year, led by premium Daily Disposable SiHy and the Ultra family, with U.S. lens revenue up 11% in Q4 and international markets up 6%.

Pharma Breakout Led by Miebo and Dry Eye

Pharma revenue surged 14% in Q4 to $378 million and 6% for the year to $1.284 billion, powered by the dry eye franchise. Miebo stood out with Q4 sales of $112 million, up 111% year over year and 33% sequentially, prompting management to lift peak‑sales expectations to above $600 million after prescriptions more than doubled and exceeded 2 million.

Consumer Brands Build Momentum

The consumer dry‑eye portfolio also gained traction, with Q4 revenue of $116 million up 6% and Blink posting 33% growth in the quarter. LUMIFY delivered Q4 revenue of $63 million, up 24%, and full‑year sales of $221 million, while new launches like PreserVision AREDS3 and Blink Triple Care are set to extend the consumer franchise in 2025.

Surgical Franchise Recovering After Recall

The Surgical segment showed signs of normalization after the enVista voluntary recall, with Q4 revenue of $249 million up 3% and 6% excluding the recall impact. Full‑year Surgical revenue grew 4% to $894 million, or 10% excluding recall, as premium IOLs rose 20% in Q4 and implantables improved sequentially, although some monofocal business still needs to be rebuilt.

Advancing Pipeline and R&D Investments

Management emphasized a steady cadence of pipeline milestones, from the rollout of PreserVision AREDS3 and Blink Triple Care to a planned CE mark filing for the seeLYRA femtosecond laser. The company spent $94 million on adjusted R&D in Q4 and $371 million for the year, up 8%, and remains on track for a 2028 launch of a new bioactive contact lens platform.

Ambitious but Defined 2026 Financial Targets

For 2026, Bausch + Lomb laid out guidance calling for revenue of $5.375 billion to $5.475 billion, implying 5% to 7% constant‑currency growth with a modest FX tailwind. Adjusted EBITDA is projected at $1.0 billion to $1.05 billion, roughly a 19% margin and about 15% growth year over year, supported by an expected 62% gross margin and R&D at 7.5% to 8% of sales.

Improving Cash Flow and Capital Efficiency

Cash generation is moving in the right direction, with adjusted operating cash flow of $152 million in Q4 and $381 million for the year and adjusted free cash flow of about $76 million in Q4. Management cut CapEx plans to roughly $285 million in 2026 from $349 million in 2025 and expects cash conversion to improve toward 45% in 2026 and beyond 50% by 2028.

Margin Expansion and Cost Discipline

Despite roughly 80 basis points of tariff drag, Q4 adjusted gross margin reached 62.1% and full‑year margin was 61%, underscoring cost control. The company highlighted its Vision 27 program and SG&A efficiencies as key drivers of operating leverage, with Q4 EBITDA growth running nearly three times faster than revenue growth as structural costs are streamlined.

Diversified Product and Geographic Mix

Management underscored that growth is broadly diversified across Consumer, Vision Care, Pharma and Surgical, reducing reliance on any single business line. Contact lenses have outpaced the market with average constant‑currency growth of about 9% over 2024–2025 versus mid‑single‑digit industry expansion, and China contact lens sales proved resilient with 7% growth in Q4 and 8% for the year.

Managing Recall Fallout and Tariff Headwinds

The enVista recall continued to weigh on reported Surgical growth, with management pointing to stronger underlying trends when recall effects are stripped out, but some monofocal volume is still constrained by prior purchasing contracts. Tariffs shaved around 80 basis points from Q4 gross margin and are expected to remain a headwind into 2025, tempering the pace of margin improvement.

Debt Costs, Free Cash Flow and Tax Headwinds

Net interest expense totaled $95 million in Q4 and $376 million for the year, and is projected at about $365 million in 2026, limiting near‑term net income and free cash flow despite rising EBITDA. Reported free cash flow remains modest and will be further pressured by a higher 2026 tax rate, expected to rise to around 19% from a one‑time‑benefit‑aided 10% in 2025.

Seasonality, Payer Dynamics and Investment Mix

The company reiterated that results are highly seasonal, with Q1 the softest and Q4 the strongest, a pattern that should intensify as the dry eye franchise expands. Management also flagged payer changes around Xiidra and higher R&D intensity of 7.5% to 8% of revenue as factors that could mute near‑term margin gains even as net pricing improves and long‑term growth is supported.

Forward‑Looking Guidance and Outlook

Looking ahead to 2026, Bausch + Lomb expects mid‑single‑digit to high‑single‑digit constant‑currency revenue growth, backed by expanding dry eye, contact lens and surgical portfolios. With adjusted EBITDA growth targeted at about 15%, a roughly 19% margin, disciplined CapEx and improving cash conversion, management framed the next two years as a period of profitable growth, albeit with ongoing interest, tax and tariff headwinds.

Bausch + Lomb’s call painted a picture of a company transitioning from repair and recall recovery to broad‑based growth, anchored by standout performance in dry eye and contact lenses. While leverage, tariffs and tax normalization still cloud near‑term earnings, the record 2024 results, stronger margins and detailed 2026 roadmap will likely reassure investors looking for durable growth in eye health.