BLCO Q3 Deep Dive: Pharmaceuticals and Pipeline Drive Growth, Margin Initiatives Take Shape

Eyecare company Bausch + Lomb (NYSE:BLCO) met Wall Streets revenue expectations in Q3 CY2025, with sales up 7.1% year on year to $1.28 billion. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $5.1 billion at the midpoint. Its non-GAAP profit of $0.18 per share was 11.9% above analysts’ consensus estimates.

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StockStory’s Take

Bausch + Lomb’s third quarter saw a positive market response, as the company posted growth across all major segments and met Wall Street’s revenue expectations. Management highlighted that strong performance in the Pharmaceuticals division—particularly the continued momentum of Miebo and Xiidra for dry eye disease—drove results. CEO Brent Saunders credited “effective selling” and successful new product introductions for the uplift, and noted that premium intraocular lens (IOL) offerings experienced a sharp recovery following last year’s recall. The team also pointed to significant gains from revitalized consumer brands like Blink and Artelac, alongside steady demand in contact lenses.

Looking forward, management’s guidance reflects confidence in sustained revenue growth and improving profitability, anchored by the transition from a launch-heavy phase to a focus on margin expansion. Saunders emphasized the addition of a ‘financial excellence’ pillar, which prioritizes disciplined spending and resource allocation to drive long-term margin improvement. CFO Osama Eldessouky reiterated that ongoing investments in research and development will continue, but with a sharper focus on high-return projects. Management acknowledged that external factors such as tariffs remain fluid but expressed confidence in their ability to offset these headwinds through operational levers and cost controls, stating, “We can absorb it, we can manage it.”

Key Insights from Management’s Remarks

Management attributed third quarter performance to the outperformance of its Pharmaceuticals segment, a strong recovery in Surgical following the enVista recall, and robust demand for contact lenses and consumer products.

• Pharmaceuticals momentum: The Pharmaceuticals segment, led by Miebo and Xiidra, saw robust prescription growth despite new competition in dry eye treatments. Miebo achieved 110% year-over-year prescription growth, while Xiidra maintained steady volume growth and market share. Management noted that combination therapy approaches are likely to further expand the dry eye market opportunity.
• Contact lens outperformance: The contact lens portfolio grew faster than the market, driven by new product introductions and solid execution. The daily silicone hydrogel (SiHy) line grew 24% on a constant currency basis, with expansion in both the U.S. and over 50 international markets. Management commented that maintaining growth in legacy products while introducing new ones helped avoid share loss.
• Surgical recovery post-recall: The Surgical segment rebounded as the enVista intraocular lens platform returned to market. Envy, a premium IOL, reached 91% of pre-recall sales by September, and overall premium IOLs saw a 27% sequential revenue increase. Management emphasized the importance of surgeon trust and rapid reestablishment of product availability.
• Consumer franchise revitalization: Brands like Blink and Artelac delivered notable double-digit revenue growth, attributed to successful brand-building and expanded product offerings. Blink reported nearly 40% growth, and Artelac expanded to over 40 countries.
• Margin expansion and cost control: The company achieved sequential improvement in operating margin, driven by lower selling, general, and administrative (SG&A) expenses and a shift in spending toward revenue-generating activities. The new ‘financial excellence’ initiative, Vision ‘27, aims for further improvement in cost discipline and resource allocation.

Drivers of Future Performance

Management expects above-market growth to continue, supported by product innovation, cost discipline, and progress on margin expansion initiatives.

• Pipeline progress and launches: The company is preparing multiple new product launches in both consumer and pharmaceuticals, including next-generation dry eye treatments and bioactive contact lenses. Management believes these innovations will broaden the addressable market and sustain long-term growth.
• Operational efficiency focus: The Vision ‘27 initiative is designed to drive disciplined spending and resource reallocation, aiming for meaningful operating margin expansion. Management expects to maintain investment in research and development while shifting SG&A toward high-ROI activities.
• External risks and mitigation: Tariffs and consumer softness in certain markets, especially China and Southeast Asia, remain risks. However, management stated they have teams dedicated to monitoring and offsetting tariff impacts, and are closely watching emerging trends in global demand for premium products.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) the pace and success of new product launches in both pharmaceuticals and consumer eye care, (2) the ongoing recovery and expansion of the Surgical business following the enVista recall, and (3) management’s execution of the Vision ‘27 initiative to drive margin expansion. Monitoring the company’s ability to maintain above-market growth in the face of external risks such as tariffs and regional consumer weakness will also be key.

Bausch + Lomb currently trades at $15.47, up from $15.18 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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