BLCO Q2 Deep Dive: Product Launches Offset Margin Pressures, Management Highlights Pipeline Investments

Eyecare company Bausch + Lomb (NYSE:BLCO) announced better-than-expected revenue in Q2 CY2025, with sales up 5.1% year on year to $1.28 billion. The company’s full-year revenue guidance of $5.1 billion at the midpoint came in 1.4% above analysts’ estimates. Its non-GAAP profit of $0.07 per share was 16.9% below analysts’ consensus estimates.

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StockStory’s Take

Bausch + Lomb’s second quarter revealed a mixed response from the market, as revenue growth outpaced analyst expectations but non-GAAP profitability fell short. Management attributed top-line momentum to robust demand for the company’s consumer and dry eye portfolios, as well as the ongoing recovery of its enVista intraocular lens business following a recall. CEO Brent Saunders acknowledged operational challenges, particularly in the U.S. generics segment, but emphasized that improved execution in contact lenses and strong launches in over-the-counter dry eye products helped stabilize performance.

Looking forward, Bausch + Lomb’s updated guidance reflects management’s confidence in accelerating growth, driven by new product introductions and margin recovery initiatives. The company is focused on expanding its dry eye and surgical product portfolios, while expecting improvements in its generics business in the second half of the year. CFO Sam Eldessouky pointed to planned investments in research and development and the ramp-up of enVista production as critical to achieving higher margins, stating, "We continue to expect our adjusted gross margin to be approximately 61.5%, even as we absorb one-time headwinds."

Key Insights from Management’s Remarks

Management identified key drivers of the quarter’s results, ranging from product launches to the impact of operational setbacks, while emphasizing the importance of execution and pipeline investments.

• Dry eye product momentum: The company’s dry eye portfolio, including MIEBO, XIIDRA, ARTELAC, and Blink, continued to post double-digit growth, supported by direct-to-consumer campaigns and expanded insurance coverage. Management highlighted that MIEBO’s rapid uptake is largely due to its unique positioning for evaporative dry eye, an under-treated segment.
• Contact lens outperformance: Bausch + Lomb’s contact lens business outpaced industry growth, with Daily SiHy lenses leading the way. The ULTRA monthly and Biotrue brands also showed resilience, countering typical declines seen in legacy products when new launches occur. Geographic expansion and direct-to-consumer initiatives in the U.S. and China were cited as contributors.
• enVista recall recovery: The surgical segment’s growth was limited by the lingering effects of the enVista intraocular lens recall, but management reported rapid progress in restoring supply and regaining surgeon confidence. Surgeons loyal to the brand resumed adoption quickly, while new users are being brought on as inventory normalizes.
• Generics segment underperformance: U.S. generics saw a sharp revenue decline, which management attributed to execution issues and increased competition. Actions taken include appointing new leadership and leveraging domestic manufacturing, with expectations for improvement in the second half of the year.
• Pipeline investments and launches: The company increased R&D spending to support a robust pipeline, including new preservative-free OTC products, clinical study initiations for next-generation contact lenses, and progress in surgical and pharmaceutical innovation. Upcoming launches, such as the LuxLife intraocular lens in Europe, were highlighted as future growth drivers.

Drivers of Future Performance

Bausch + Lomb’s outlook is centered on sustained product innovation, margin improvement, and market expansion, while managing competitive and regulatory headwinds.

• Pipeline-driven growth: Management expects continued revenue momentum from recent and forthcoming product launches, especially in dry eye treatments and premium surgical offerings. New clinical studies, such as for biomimetic contact lenses, are positioned to bolster the portfolio over the next year.
• Margin recovery focus: The company is targeting margin improvement through operational efficiency, disciplined cost management, and the normalization of the generics and surgical businesses. The ramp-up of enVista production and generics stabilization are expected to contribute to higher profitability in late 2025 and into 2026.
• Competitive and regulatory challenges: Management acknowledged the risk of increased competition, particularly in dry eye and generics, as well as evolving tariff policies. The company believes its comprehensive product suite and proactive supply chain measures will help offset these pressures, but remains vigilant regarding policy changes and market dynamics.

Catalysts in Upcoming Quarters

In the coming quarters, our team will be monitoring (1) the ramp-up of enVista intraocular lens production and its effect on surgical segment recovery, (2) the stabilization and potential rebound of the U.S. generics business under new leadership, and (3) continued momentum in dry eye and contact lens portfolios, particularly in the context of new competitive entrants and regulatory developments. Execution on pipeline milestones and new product launches will also be key indicators of progress.

Bausch + Lomb currently trades at $13.77, down from $14.67 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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