Greetings. Welcome to the Bausch Health Fourth Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Garen Sarafian, Investor Relations of Bausch. You may begin.

Good afternoon, and welcome to Bausch Health's Fourth Quarter 2024 Earnings Call Conference Call. Participating in today's call are Thomas Appio, Chief Executive Officer of Bausch Health; and JJ Charhon, Chief Financial Officer. Before we begin, I'd like to remind you that our presentation today contains forward-looking information. We ask you to take a moment to read the forward-looking statement disclaimer at the beginning of the slides that accompany this presentation as it contains important information. Our actual results may vary materially from those expressed or implied in our forward-looking statements, and you should not place undue reliance on any forward-looking statements. Please refer to our SEC filings and our filings with the Canadian securities administrators for a list of some of the risk factors that cause our actual results to differ materially from our expectations. We use non-GAAP financial measures to help investors understand our operating performance. Non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and should be considered along with, but not as an alternative to, measures calculated in accordance with GAAP. You will find reconciliations to our non-GAAP measures in the appendix of the slides that accompany this presentation, which are available on Bausch Health's Investor Relations website. Finally, the financial guidance in this presentation is effective as of today only. We do not undertake any obligation to update guidance. Our discussion today, Wednesday, February 19, will focus on Bausch Health, excluding Bausch + Lomb. However, we will briefly comment on Bausch + Lomb's results announced this morning. We will refer to year-over-year comparisons with the same period last year unless otherwise noted. With that, I'd like to turn the call over to our CEO, Tom Appio. Tom?

Thank you, Garen, and welcome to everyone joining our earnings call today. We closed out 2024 with a strong fourth quarter, executing on our strategic priorities and reinforcing our focus on patient-centered outcomes. Bausch Health continues to deliver, marking our seventh consecutive quarter of revenue and adjusted EBITDA growth. This performance is a testament to our strong operational execution, disciplined approach and relentless focus on value creation. We made tremendous progress as a company in 2024, as I could not be more proud of what the Bausch Health team accomplished and the momentum we have heading into 2025. While JJ will discuss our financial results in more detail, I will touch briefly on our performance, our progress driving our strategic priorities forward and key business highlights from the quarter. Starting with our strong fourth quarter and full year results. Revenues for Bausch Health, excluding Bausch + Lomb, increased 4% on a reported basis and 7% on an organic basis when compared to the fourth quarter of 2023, with strong organic growth in our Salix and Solta segments. Full-year revenues for Bausch Health, excluding Bausch + Lomb, increased 5% on a reported basis and 6% on an organic basis. For Bausch Health, excluding Bausch + Lomb, adjusted EBITDA for the fourth quarter of 2024 increased by approximately 7% compared to the prior period. For the full year of 2024, all four segments delivered revenue and segment profit growth, demonstrating our ability to drive performance across our diverse businesses. Our success translated into strong cash flow from operations for the company in 2024. Bausch Health, excluding Bausch + Lomb, generated approximately $1.3 billion in adjusted operating cash flow for the full year. For Bausch Health, excluding Bausch + Lomb, revenue and organic growth were at the high end of our guidance range, and both adjusted EBITDA and adjusted operating cash flow exceeded our guidance. These results would not be possible without the hard work and dedication of all our colleagues across the globe across all segments throughout the year. We will carry this momentum into 2025 and look forward to updating you on our performance in the quarters ahead as we execute against the guidance that we provided today. Our 2025 outlook builds on the framework we laid out last quarter, which aims to drive value through the organization. So how do we continue generating value and accomplishing our goals? By centering on our value-creation efforts around three fundamental pillars. First, we are relentlessly focused on enhancing the value of Bausch Health's operational assets, driving innovation, strengthening execution and maximizing the growth potential of a diverse global portfolio of brands. Second, we are actively exploring all avenues to unlock the full value of our Bausch + Lomb equity stake, ensuring the greatest benefit for Bausch Health shareholders. And third, we are committed to optimizing our capital structure, strategically reducing debt leverage and extending maturities to fortify our financial position for long-term success. It is these value-creation pillars that will contribute to the success of our long-term strategic priorities. In 2024, we made substantial progress against our five strategic priorities, highlighting the success we saw across the company and reinforcing the importance of staying focused on maximizing shareholder value as we head into 2025. Our strategic priorities—people, growth, innovation, efficiency, and unlocking value—are at the core of everything we do at Bausch Health. Our first priority is people. The success of the company begins with our people. We added experienced leaders to our executive leadership team in three critical areas. This summer, JJ Charhon joined us as CFO, and Aimee Lenar joined us as the leader of our U.S. Pharma business. In December, we appointed a new Chief Medical Officer and Head of R&D, Jonathan Sadeh, who we are excited to welcome to the team. In addition to these senior leadership appointments, we are strengthening our teams with exceptional talent by continuing to drive a culture of business ownership, accountability, and compliance. We aspire to be principal leaders, creative thinkers, problem solvers, and result seekers. We strive to attract the best talent, fostering a purpose-driven mentality and a sense of urgency in everything we do, with an all-in-together, open, and collaborative workplace. Our second priority is the long-term growth of our business with a focus on operational excellence. As I mentioned earlier, this is our seventh consecutive quarter of top and bottom line growth with a strong closing quarter to the year. We have achieved this through focused execution against our plans. Innovation, our next strategic priority, is another critical driver of our long-term growth objectives. We have made great progress here, and I am excited to continue to move our innovation efforts forward in the years ahead. The approval of Thermage FLX as a medical device in China earlier in 2024 has been well received. We have developed tools and algorithms that apply AI and machine learning to our sales process for Xifaxan, and we believe this has been one of the drivers of the performance for the product in 2024. While we are still in the early stages of leveraging artificial intelligence in our business, we are exploring other opportunities to leverage AI-enabled capabilities to drive profitable long-term growth. As our performance demonstrates, our investments in innovation are contributing to our growth. Our key pipeline programs continue to progress. Our RED-C program for the prevention and delay of the first episode of hepatic encephalopathy remains on track. We successfully initiated and are in the midst of two global Phase III trials with top line results for each expected by early 2026. As a reminder, this program for our solid, soluble dispersion rifaximin product may enable us to address an unmet need for a novel therapy for cirrhotic patients globally and continues to be an exciting opportunity for us. In our Solta business, Clear + Brilliant Touch has been approved in additional markets in Asia Pacific with regulatory submissions in Canada and EMA in 2024. We also received FDA clearance for the Next Generation Fraxel in the U.S., which we anticipate launching commercially in 2025. Overall, I am energized by the prospects for the innovation that lie ahead for Bausch Health. We continue to drive the success of our business forward through our R&D efforts maximizing opportunities to best serve patients across the globe. This brings me to our next priority, executing with efficiency, a cost mindset, and operational excellence across the business. We are laser-focused on serving our patient population and their health care providers and utilizing our strong supply chain expertise to be nimble in meeting unexpected industry supply needs as they arise. We have consistently demonstrated that our pharmaceutical manufacturing and supply chain capabilities are agile and can fulfill patient needs globally. This includes the efforts during the fourth quarter to meet unanticipated Wellbutrin demand in Canada. The four priorities I just discussed propel our company forward and help drive shareholder value at Bausch Health. And to that end, let me touch upon our last strategic priority, unlocking value. As I outlined through our value creation pillars, this remains a core objective that we continue to pursue across all avenues with a strong sense of urgency, and we are fully committed to delivering on this key priority. We look forward to keeping you updated on these key initiatives throughout 2025. To summarize, Bausch Health delivered a solid performance throughout 2024 and has now grown revenues and adjusted EBITDA for seven consecutive quarters. Our success in the fourth quarter was broad-based. Xifaxan delivered 16% revenue growth and with solid volume growth across all channels, resulting in a fourth consecutive quarter of growth. Solta grew 34%, led by the Asia Pacific region. Our durable and under-appreciated International business continued to deliver, where Canada again had double-digit growth in promoted brands, and the EMEA business achieved its eighth consecutive quarter of organic growth. We continue to look for ways to grow our International business. In the fourth quarter and in January of this year, we signed two business development deals by expanding into the potentially large cardiometabolic market, which for Mexico alone is over a $2 billion market. This will allow us the opportunity to broaden our portfolio of assets across Mexico and the rest of our Latin American markets for multiple years as well as in Canada. Both of these strategic collaborations are good examples of Bausch Health leveraging partner expertise in portfolio development and our robust market footprints to serve patients globally. In summary, Bausch Health had a strong fourth quarter capping off a great year with contributions from all of our businesses and every one of our valued colleagues across the globe. This momentum sets us up for a great year ahead in 2025. With that, I'll hand it over to JJ to provide additional commentary on financial results. JJ?

Thank you, Tom. Before we review our results overall and at the segment level, I would like to share some highlights from the fourth quarter for Bausch Health, excluding Bausch + Lomb. Revenues for the year were $4.834 million with a year-over-year growth of 5% or $223 million. Adjusted EBITDA for the full year was $2.553 billion, growing 8% and demonstrating the continued operating leverage of our business model, thanks to tight expense management and positive business mix. Adjusted cash flow from operations in 2024 was $1.3 billion, or an 85% growth year-over-year, which was exceptional. The primary drivers were, in addition to our operational performance, unusually low cash taxes and the timing of some of our outflows in Q4. Even when excluding these one-time benefits, adjusted cash flow from operations for the year was approximately $1 billion, or about a 40% increase year-over-year. Let me now review our 2024 performance in more detail overall and by segment starting with our consolidated performance on Page 14. Revenue for the fourth quarter was $2.559 billion, up 6% on a reported basis and 9% on an organic basis versus the same quarter a year ago. Revenue for the full year was $9.625 billion, an increase of 10% on a reported basis and 8% on an organic basis. Adjusted gross margin for the fourth quarter was 72.4%, which was 80 basis points higher than the same period a year ago. For the full year, it was 71.9%, an increase of 90 basis points versus 2023. Adjusted operating expenses for the fourth quarter were $958 million, an increase of $67 million over the same period last year. For the full year, operating expenses were $3.812 billion, an increase of 12% year-over-year. Adjusted R&D expense for the quarter was $163 million, which was a $12 million increase year-over-year. For the full year, adjusted R&D expense was $615 million, or an increase of 2%. Adjusted EBITDA was $935 million in Q4 and $3.307 billion for the full year. Finally, adjusted operating cash flow, still on a consolidated basis, was $601 million in the fourth quarter and $1.572 billion for the full year. Focusing now on the performance of Bausch Health excluding Bausch + Lomb. Revenue for the fourth quarter was $1.279 billion, up 4% on a reported basis and 7% on an organic basis versus the same quarter a year ago. Revenue for the full year was $4.834 billion, an increase of 5% on a reported basis and 6% on an organic basis. Adjusted EBITDA was $712 million, a 7% increase from the fourth quarter of 2023. For the full year, it was $2.553 billion, or an increase of 8%. Adjusted operating cash flow was $567 million, up $289 million when compared to the fourth quarter of 2023. And on a full year basis, adjusted operating cash flow was $1.308 billion, up $600 million when compared to 2023. The impressive cash flow generation in the fourth quarter and overall in 2024 were driven primarily by three factors: first and foremost, a well-balanced operating performance across our segments; second, unusually low cash taxes; and third, the favorable timing of some of our outflows in Q4. Turning now to our fourth quarter performance by segment, starting with Salix on Page 20. Salix revenues in the fourth quarter were $634 million, an increase of $51 million or 9% growth year-over-year, driven primarily by Xifaxan, which grew an outstanding 16%. We continue to be encouraged by the trend of our scripts following the recent optimization of our sales force deployment. More specifically, total Xifaxan scripts for new script growth were both up 5% in the fourth quarter. Extended units grew 7% and include non-retail selling such as hospitals and outpatient clinics, which again saw strong double-digit growth. Now moving to the International segment on Page 21. Revenues for International were $279 million during the quarter, a decrease of 4% on a reported basis and an increase of 1% on an organic basis compared to the fourth quarter of last year. The 5% growth difference was driven by the strengthening of the dollar mostly against the Mexican peso. By geography, Canada and EMEA were the strongest contributors to growth in the quarter. Revenue in Canada grew 9% on a reported basis and 16% on an organic basis, driven by the continued benefit of a Wellbutrin generic competitor supply shortage in the market. Also worth noting is the double-digit growth of our promoted products in Canada, which reflects the benefits of our sales deployment optimization across our broad portfolio of commercialized products. Revenues in EMEA grew 4% on a reported basis and 5% when excluding the impact of FX. Finally, in Latin America, revenue decreased year-over-year 14% on an organic basis, mostly due to the timing of government tenders in Mexico. Now moving to Page 22 to review our Solta Medical segment. Revenues for Solta were $138 million during the fourth quarter, an increase of 34% on a reported basis. This capped an outstanding year for Solta for both revenue and segment profit. What was even more impressive is that our growth for Solta was primarily driven by volume. By country, South Korea and China continue to be the primary drivers of Solta's growth globally. As a reminder, in the second quarter of this year, we relaunched Thermage FLX in China, which has since performed exceptionally well. We believe this business is well positioned for sustained growth in the near and long term. Turning now our focus to the performance of our diversified segments, which you will find on Page 23. Revenues for the diversified segments were $228 million during the fourth quarter, a decrease of 12% on a reported basis. As a reminder, on our fourth quarter call last year, we referenced marketplace supply constraints that allowed us to capitalize on sales of Ativan. This generic supply shortage did not recur this year, impacting overall results in the quarter versus the prior year. Finally, let me wrap up the segment discussion for the fourth quarter by commenting briefly on Bausch + Lomb top line results on Page 25 and 26. Revenues were $1.280 billion during the fourth quarter, up 9% on a reported basis. For the full year, revenues were $4.791 billion, an increase of 16% versus the prior year on a reported basis. Turning now to our balance sheet, starting with Page 28. As a result of our exceptional cash flow performance in Q4, we reduced our debt net of cash for Bausch Health, excluding Bausch + Lomb, by approximately $520 million. For the full year and after payments associated with restructuring and legal settlements, our net debt reduction amounted to almost $1 billion. This allowed us to reduce our gross debt by about $730 million through primarily two actions: first, we executed $555 million of open market purchases in the first half; and second, we continued to reduce our 2027 term loan balance by $125 million as per the mandatory annual amortization obligations. The consequence of all these drivers was an increase of our cash on hand by $260 million when compared to where we stood at the end of 2023. Overall, the fourth quarter was a strong finish on all fronts that capped off an outstanding year for Bausch Health as we continue to optimize the return of our diversified and resilient set of assets across all five segments. We believe we are well positioned for another strong year of operating performance in 2025. Let me now provide you with our 2025 financial guidance for Bausch Health, excluding Bausch + Lomb, which you will find on Page 30. For 2025, we expect revenues to be between $4.950 billion and $5.100 billion. The midpoint of that range would translate into a 4% increase year-over-year. Adjusted EBITDA is expected to be between $2.625 billion and $2.725 billion, making the midpoint a 5% increase versus 2024. Finally, we expect adjusted cash flow from operations to be between $975 million and $1.025 billion. Although this translates into a $300 million reduction year-over-year, it represents a more sustainable level of cash flow generation given the one-time benefits of cash taxes and working capital changes we recorded in 2024. Before I hand it back to Tom for his concluding remarks, let me end this performance review by looking at our progress in relation to our value creation framework we introduced last quarter, which you will find on Page 32. We still believe that there are three primary levers for value creation for Bausch Health shareholders. The first one is to increase the value of our Bausch Health portfolio. This is the primary focus of our leadership team. We strongly believe we have a broad set of high-performing assets, as evidenced by our outstanding performance in 2024. As Tom indicated earlier, this is the seventh quarter in a row we have grown our top and bottom line and speaks to our performance consistency and the resiliency of our growth strategy. It also highlights the operating leverage of our business model through positive business mix and tight expense management. What's more, because our margins are high and our capital intensity is low, our business has been producing strong free cash flows. Our second lever is to maximize the value of our Bausch + Lomb asset for Bausch Health shareholders. As we indicated two weeks ago, the exploration of selling Bausch + Lomb has concluded, at least for now as it did not lead to an offer that reflected Bausch + Lomb long-term value. Nevertheless, the main objective remains the same, which is to complete the separation of Bausch + Lomb from Bausch Health in the most accretive way for Bausch Health shareholders. We will continue to evaluate any and all options to do so. And lastly, our third lever is to optimize our capital structure. To that effect, we have made good progress since last October. First and foremost, we have accelerated our cash flow generation, which has allowed us to reduce our net debt by almost $1 billion during 2024. Separately, we have secured a commitment for up to an additional $700 million credit facility, which will increase our operational and financial flexibility. With this new facility, together with our cash on hand, our $975 million credit facility, our AR facility, and our anticipated free cash flow generation over the next five quarters, we expect to have all the resources we need to address both our 2025 and 2026 debt maturity obligations without the need to access additional sources of funding. Obviously, we are not done with our capital structure improvement efforts. But this is an important milestone as we redirect the focus towards addressing our 2027 and beyond maturities. To that effect, we plan on tapping the capital markets in the first half of 2025, which could include pledging a portion of the Bausch + Lomb shares owned by the company. In conclusion, we have made tremendous progress on many fronts in 2024 and look forward to another successful year in 2025.

Thank you, JJ, and thank you to the entire Bausch Health team for another strong year of growth and execution as we delivered on our commitments and our strategic priorities. As a reminder, we have placed specific emphasis on our people and culture, growing our business, encouraging innovation to drive R&D, operating with efficiency to capture marketplace demand, and unlocking the value of Bausch Health in the short and long term. Our results for 2024 provide us with a strong foundation for further success in 2025. We look forward to building on this momentum to drive growth across all business segments while serving patients and their health care providers. With that, we will now turn to questions. Operator, please open the line for Q&A.

Thank you. We will now start the question-and-answer session. The first question comes from Les Sulewski with Truist Securities. Please go ahead.

Good afternoon. Thank you for taking my questions. Could you provide the latest status update on the Norwich situation and your timelines around the FDA lawsuit? Do you foresee a possibility of an at-risk launch within, call it, the 18-month period? And if there were an at-risk launch to occur, what could be some of your response options? And I guess, secondarily, what are the potential adverse impacts on the time frames with the other tentative approvals? Thank you.

Thanks, Les, for the question. Yes, I can touch upon where the Norwich situation stands. So Norwich gained tentative approval. The FDA denied granting Norwich final approval and concluded that Teva has not forfeited their first filer status. So Norwich has sued the FDA regarding its conclusion and requested that the FDA be forced to grant final approval of their ANDA. So both Teva and ourselves, Bausch Health, have intervened. Based on Norwich's tentative approval letter, we expect the FDA to defend its position on Teva's non-forfeiture right. So I would just say in conclusion, we believe that the FDA is correct in its determination that Teva remains the first filer and has not forfeited. I'm not going to speculate on launching at risk at this time because we believe that the FDA is correct and Teva continues with their rights of first to file.

What is the status of the discontinuation of the Crohn disease study?

You were breaking up. We couldn't hear you come through. What was it?

I'm sorry, I'll repeat. On the amiselimod program, what's the reasoning for the discontinuation of the Crohn’s disease study?

Yes. So we didn't discontinue the study. We—on the last call, I mentioned that we were evaluating it based on looking at the data, and we made the determination when we specifically look at Crohn's that this class of drug, even though there were some pluses and minuses of looking at it, we determined that it wasn't worth the investment with the SP1's performance in Crohn's of other drugs that have tried it in Crohn.

Got it. Just one more for me, and I'll hop back in the queue. Can you provide a little more color on the two recent deals in the international side on the cardiometabolic front? Thank you.

Sure. Yes. So as I said in my prepared remarks, I think that when you look at the International business, and I'm looking at it holistically globally, it's an underappreciated business. It's a branded generic business that is very durable, no LOEs. And so what we have put together, we have a team that is solely focused on building out our branded generic portfolios around the world. The two deals that I mentioned were in Latin America, and those are a variety of products. One of them was with MSN, which is a broad portfolio of branded generic products. As you know, our Latin America business is very successful in the branded generic space and building brands. And then a second one was looking at a single, triple combination therapy with commonly used hypertension medicines and which will be novel, and it will be proprietary in multiple strengths. So that is going to give us those two deals put together and that we are continuing to look at others of building out a franchise that can really power our growth in Latin America. Some of those deals also include other international locations as well. But the focus for the Latin America region will power our growth for the next years to come.

Up next is Doug Miehm with RBC Capital. Please proceed, Doug.

Yes. Thank you. A couple of questions. With respect to the 229 BC, the $700 million that you're contemplating funding with that and using a portion of the BLCO holdings, relative to the 38.5% that was put in for the $999 million previously, what sort of quantum of potential shareholdings of BLCO would be required under the $700 million? Would it be proportional? It probably wouldn't be, but maybe you can walk me through how much would have to be placed within that company?

Hi, Doug. This is JJ. First of all, just as a point of clarification, although the $1 billion against the number code that holds 38% of the shares, only 30% are really fully encumbered. About 8% can be sold or transferred to another entity. These 8% would be added to the remaining 50% that would be used as collateral to that credit facility.

Okay. Okay. And then on top of that, if you were to go ahead and explore accessing capital markets, this would be incremental in terms of the proportion of shares of Bausch + Lomb that will be pledged or not? Just trying to understand.

Yes. We're looking at different packages, so I'm not going to comment specifically on what we'll be looking at. But the packages we're looking at would be looking at replacing that credit facility, so we have more of a permanent structure in place to deal with our 2027 maturities and beyond.

Okay. Okay. Fine. Then if we go to your guidance, which was strong, on the top line, it was in line with what we're looking for and I think most other people, but the bottom line was better. But perhaps you can talk about the contribution we're at on a relative basis that you expect to come from Xifaxan given the strong growth we've seen in recently. When you look at guide, how much of that is associated with Xifaxan growth?

Yes. So we haven't provided any specifics in terms of quantification, but the two biggest contributors of our growth in 2025 will be indeed Salix with Xifaxan and Solta. I think the dynamics that you're seeing, particularly in the second half for Xifaxan, should be assumed to continue in 2025.

Okay. Can you update us on any potential settlements with Granite Trust and where we currently stand? That would be great. Thank you.

Yes, of course. On the Granite Trust, there is really no meaningful update to the guidance we provided in prior calls, which is that we do not expect any meaningful negative cash flow coming out of the settlement. We're still awaiting the final resolution and decisions from the IRS, and we are all hoping to get that pretty soon. On the legal settlement, it's really hard to speculate on any future negotiations. At this point in time, we've made progress, as you know, in 2024, and we look forward to 2025 in making some further progress.

The next question is from Jason Gerberry with Bank of America. Please proceed.

Hi, thanks for taking our question. This is Chi on behalf of Jason. I would like to ask a follow-up regarding the new Norwich case. Is it correct to say that Norwich is not subject to the 30-month stay, and that the only requirement for full FDA approval of the generic Xifaxan is related to the 180-day exclusivity? Additionally, do you have any insight on the timing for the next steps? Should we expect the trial to be scheduled in the next couple of months? Thank you.

Yes, I'll take that question. We believe the 30-month stay applies, and that's what the legal team is focused on and getting ready for. So that's where that stands.

Do you have a sense of the timing? I apologize if I may follow up. In the legal document, Norwich claimed the FDA has determined that Norwich is not subjected to a 30-month stay. Can you talk about that? Thank you.

Yes. What I'd say is we believe the 30-month stay still applies, and so that's the way we're proceeding. I really don't want to speculate right now on what the FDA or what you've said they said, but we believe and we are continuing to work on where that trial stands and that case stands, and we believe 30 months still applies.

The next question comes from Michael Freeman with Raymond James. Please proceed.

Hi, good evening, Tom, JJ, and Garen. Congratulations on these earnings. A couple of questions for me. There have been plenty of government initiatives that may potentially affect your business going forward. So I wonder if you can comment on Xifaxan being included in the Medicare renegotiation list for 2027. And any sort of preparation for those negotiations and potential preparation for a—potentially a material price reduction? And then if you could give a quick comment perhaps on the potential for a pharma-oriented international tariff and how that might affect maybe your supply chains or pricing going forward.

Yes, Michael, thanks. I'll take those questions. So yes, we were on the list. Of course, Xifaxan has had great success, we wound up on the list. What I would say is it's still early in the process, and we're going to be in the process of negotiating. Our focus right now is to prepare for that and go through the process with CMS, which will come into effect in 2027. I just think it's too early to offer detailed commentary in that regard. But we continue to remain focused on demonstrating the value of Xifaxan, during which we're going to share the information on the value it delivers to patients, providers, and the overall health care system. In terms of when you look at Xifaxan on the OHE indication, which is more than 70% of the business, the amount of cost savings regarding hospitalizations is—drives a big benefit. So we're closely monitoring the situation. We have a super fantastic team in the space of market access, and we're looking at all possibilities. In terms of the tariffs, I could say something and then maybe JJ wants to add. Again, it's still too early. There's a lot of discussions here on the tariffs of what it would mean for us, and we've been closely following it in terms of our supply chain and what impact it would mean. But I'll hand it over to JJ. Maybe he has a few further comments on that.

Yes. So in terms of our setup in our supply chain, of course, the fact that the cost of goods sold is a relatively small proportion of revenue for a pharmaceutical company, the financial impact of those tariffs, let's assume the scenario that has been the most publicized, 25%, and that would be for a full year, the impact would be below $50 million in terms of cash flow for the company. So I wanted to give you some order of magnitude on how to think about it.

Excellent. That's very helpful. Now just a quick one. We had Dr. Sadeh join the team as the new CMO, and I noticed that there was a choice to not pursue the Crohn's opportunity. I wonder if there are some further changes in approach to your clinical development programs or some new ideas that Dr. Sadeh has brought to the team in his tenure so far.

Yes. I think it's a great question. Of course, we are so pleased to have Jonathan join us and discussing how to build our pipeline for the future. As you know, we have the RED-C program. In fact, today, downstairs, we're having advisory boards. We're really excited about the RED-C program and what that's going to mean for us and what it could mean for patients as, again, this is a prevention trial. So we're excited about that. We did mention that we did not—we're not going to pursue looking at amiselimod in Crohn's. And Jonathan, just since he's joined in the last 2 months, we've been actively discussing what we're going to pursue, what we're going to develop and then from a business development standpoint, some of the assets that we could possibly look to bring into the portfolio. But we're excited to have Jonathan here, and we'll give more information as things progress on rebuilding and building up this pipeline.

The next question comes from Mike Nedelcovych with TD Cowen. Mike, please proceed.

All right. Thanks for the questions. I have one and a follow-up. My first question relates to Xifaxan and the 2027 IRA price negotiation. Are you able to tell us what portion of sales are derived from the Medicare channel? And then ultimately, regardless of the discount that gets negotiated by CMS, do you anticipate that that pricing will leak into the private insurance channel? That's my first question. And then my follow-up is actually a follow-up on a previous question related to your plan to access the capital markets possibly by pledging a portion of Bausch + Lomb shares. This is very helpful insight. But can you bracket this for us at all? Is there any level of quantification at all that you could provide? Thank you.

Yes. So Mike, I'll take the first one on the Xifaxan price negotiation. As you know, our Xifaxan business is in IBS-D and HE and it's blended. Again, what would be subjected to the IRA price negotiations, I can't give you what the percentage is that would be. As I said, we have been looking at this carefully for some time of what the different levers are that we will be able to look at as we go through the negotiation. So it's still early in the process. And again, as you know, this comes in January of 2027. So there's still a lot to be done and discussed here. And then as I said previously, already, Xifaxan on the HE indication is—if you look at hospitalization costs and patients not being in hospital, there already is a very large savings into the health care system on Xifaxan. I'll hand the other question that you had over to JJ.

Yes. So no, I'm not going to comment specifically on the quantum of debt that we're looking at. We're looking at various options. The one thing I would just reinforce and highlight is that we've got $7 million of maturities between now and the end of 2027. You have, obviously, to take into consideration the cash on hand. The cash flow that we'll be generating between now and the end of 2027, as we indicated in our guidance, this is a business that certainly in the near term can generate $1 billion plus of cash flow per year. And so the objective here is really to deal with as much maturity as possible during that horizon.

Okay. And our last question comes from Glen Santangelo with Jefferies. Please proceed.

Hi, guys. Thanks for taking my question. Tom, just two quick ones for me. I mean it seems pretty obvious why you maybe walked away from the BLCO sales process. And so in your prepared remarks, you seem like you're continuing to sort of actively explore different processes to maybe monetize this asset. But what might you do differently going forward versus what you did over the sort of past couple of years? And do you think 2025 could be in the cards to ultimately get a deal done?

Yes. This is JJ. I'm going to cover both questions. So as we said, obviously, maximizing the value for shareholders of our BLCO equity stake is one of the primary value creation levers for us, and there are many ways you can go and achieve that. The goal is obviously to complete the separation between BLCO and BHC. But the monetization of that asset is going to play a key part in our journey over the next three years. And listen, there's no real timeline associated with that. I think it's more a function of what makes sense for shareholders and whether the transactions that we're considering are accretive to BHC share value. So that's what I would say on that front. And then in terms of the financing that we're looking at raising, obviously, our BLCO equity stake is a big asset of the company, so we'll use partially or totally as collateral to some of the financing we may decide to raise, as we indicated in our prepared remarks. It doesn't really impact the timing or the decision we'll be making on the BLCO, more what we will be doing with the proceeds as indicated by potential covenants or obligations associated with the debt we're raising.

I would now like to turn the call back over to management for any closing remarks.

Thank you all for joining us this afternoon and for your questions. We closed out another strong quarter of growth leading to a strong year, with consistent results across our broad portfolio of assets. I want, once again, to thank the entire Bausch Health team across the globe for their hard work and dedication and relentless drive to deliver the products patients need most to enrich their lives. Thank you for your time and your interest in the company, and we look forward to another strong year of execution and progress in 2025. Enjoy your evening. Thank you.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.