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Bausch + Lomb’s IPO plans come into focus as BHC prepares to split into three

Bausch + Lomb, a company that started as a small optical goods shop in upstate New York and grew to become a global ophthalmic products business, is returning to the public markets. The company has filed preliminary paperwork for an IPO, a deal that could become one of the biggest ever in the healthcare field.

The IPO filing was expected. Bausch Health Companies (BHC), the parent company of Bausch + Lomb, announced in 2020 its plans to spin off the eye health business as an independent and publicly traded company. In documents filed with securities regulators on Thursday, Vaughan, Ontario-based Bausch + Lomb said it has applied to list its shares on both the New York Stock Exchange and the Toronto Stock Exchange under the stock symbol “BLCO.”

Bausch + Lomb is one of two separations and IPOs BHC is preparing. Last August, the company announced plans to spin off Solta Medical, its skin care business. The pharma business of BHC that remains will also be a standalone, publicly traded company. Speaking during a fireside chat at the annual J.P. Morgan HealthCare Conference on Wednesday, BHC Chairman and CEO Joe Papa said the next step would be the filing of registration statements with securities regulators. Bausch + Lomb ended up being filed ahead of Solta.

“We are substantially complete in our planning and preparation to launch the Bausch + Lomb and the Solta IPOs, obviously those will be subject to market conditions and appropriate approvals,” Papa said. “But we are positioned to move forward with either the Bausch + Lomb or the Solta IPO quickly when market conditions are right for each of them.”

In the filing, Bausch + Lomb set a $100 million placeholder figure for proposed stock offering. IPO research firm Renaissance Capital estimates that the company’s return to the public markets could raise about $3 billion. According to research from Reuters, the biggest U.S. IPO ever, in terms of dollars raised, was Alibaba Group’s $25 billion stock market debut in 2014. Visa is next with $19.6 billion, followed by General Motors with $18.1 billion.

Bausch + Lomb traces its origins to 1853 when John Jacob Bausch set up an optical goods shop in Rochester, New York. According to the company’s corporate history, Bausch’s friend, Henry Lomb, loaned him $60 to keep the business going; as it grew, Lomb became a full partner. From its eyeglasses frames beginnings, the company went on to become a pioneer in contact lenses. Those products are part of what is now Bausch + Lomb’s vision care business, one of three operating segments. The other two segments are pharmaceutical and surgical. According to a BHC investor presentation, Bausch + Lomb has about 12,500 employees in 100 countries.

For nearly 50 years, Bausch + Lomb traded on the New York Stock Exchange until the company was taken private in 2007 via a $4.5 billion acquisition by Warburg Pincus and Welsh, Carson, Anderson & Stowe. In 2013, Valeant Pharmaceuticals paid $8.7 billion to buy Bausch + Lomb from the private equity firms, making it its eye care division. Five years later, Valeant adopted the name of its subsidiary, changing the corporation’s name to Bausch Health Companies. Valeant was rebranding after weathering an accounting scandal and facing scrutiny for its practice of acquiring drugs then steeply hiking their prices.

When Valeant acquired Bausch + Lomb, the eye products company’s annual revenue was nearly $1.3 billion. Revenue in 2020 topped $3.3 billion, according to the IPO filing. That’s a 9.3% decline compared to the prior year, a change the company attributes to the impacts of Covid-19. However, sales are recovering. For the nine months ending September 30, 2021, revenue was about $2.7 billion, a nearly 12% increase over the same period in 2020.

Bausch + Lomb won’t receive any proceeds from its IPO. The money raised will go to BHC, according to the filing. Papa said in his JPM presentation that proceeds from both the Bausch + Lomb and Solta IPOs would be used to pay down BHC’s debt.

Though Bausch + Lomb is separating from its parent, the two entities will continue to be closely linked. The number of shares for the offering and pricing details have not yet been set, but Bausch + Lomb said in the filing that it will be what’s called a controlled company—after the IPO, the majority of shares will be owned by BHC. Meanwhile, the rebranding will continue. Once the separations of Bausch + Lomb and Solta are complete, BHC said its remaining pharma business will take on a new name.

Photo by Flickr user Ken Teegardin via a Creative Commons license

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