Why Bausch Health Stock Has Risen 44% in the Last Month

Here are key reasons that have driven a sharp rally in BHC’s stock price in the last few weeks.

Jitendra Parashar

Author Bio Jitendra Parashar is a financial journalist who has been writing for The Motley Fool Canada since June 2020. With more than 13 years of experience in financial journalism, equity research, and market analysis, he helps investors understand market developments and identify long-term investment opportunities. Before joining The Motley Fool Canada, Jitendra spent several years at Market Realist covering U.S. equities, major economic developments, and developments in the automotive and technology industries. He also worked in commodity and currency research at brokerage firms, gaining insight into how economic trends, central bank decisions, and geopolitical events influence financial markets. Jitendra writes for beginner investors, dividend seekers, and Canadians looking to build wealth over the long term. He also contributes to the daily TSX Today series, explaining key Canadian market developments and highlighting news investors should watch. Based in India, Jitendra follows Canadian and U.S. markets closely. Outside of work, he enjoys travelling in the Himalayas, street and nature photography, and exploring programming and artificial intelligence. Education MBA in Finance and International Business Bachelor's degree in Journalism Areas of Expertise Canadian and U.S. financial markets, long-term equity investing, dividend investing, macroeconomic and geopolitical trends, automotive stocks, emerging technologies, and artificial intelligence. Social Media Profiles LinkedIn Muck Rack Favorite Investment Quote “Simplicity is the master key to financial success.” — John C. Bogle

Published September 5, 2022 10:45 am EDT

Doctor talking to a patient in the corridor of a hospital. — Source: Getty Images

What happened?

Shares of Bausch Health Companies (TSX: BHC)(NYSE: BHC) have seen a sharp rally in the last month. After falling for seven months in a row, BHC stock jumped by 33.6% in August, posting its best monthly performance since November 2017. With this, Bausch Health’s stock price has risen by about 44% in the last month against a 1.2% decline in the TSX Composite Index.

So what?

BHC stock started August on a solid note, as it popped by nearly 23% in the first week of the month. Investors’ high expectations from its second-quarter results could be one of the reasons for this rally. However, Bausch Health’s quarterly results, released on August 9, largely disappointed investors.

The company’s total revenue fell by 6.3% year over year in the June quarter to US$1.97 billion due to foreign exchange headwinds of around US$64 million and the impact of divestitures and discontinuations of US$74 million. Similarly, Bausch Health’s adjusted net profit for the quarter fell by 42.9% from a year ago to US$201 million, missing analysts’ estimate of around US$325 billion by a big margin. Its earnings miss clearly disappointed investors, as its stock dived by 10.7% on the day of its earnings event.

Nonetheless, BHC stock rallied sharply by more than 18% in the next couple of sessions. This rally came after the company announced its intentions to appeal the U.S. District Court of Delaware’s decision regarding the XIFAXAN patent in the U.S. Court of Appeals for the Federal Circuit.

On August 22, Bausch Health revealed that it has transferred about Bausch + Lomb’s 38.6% issued and outstanding shares to one of its existing wholly owned unrestricted subsidiaries. With the separation of its eye health business, the company continues to increase its focus on Bausch Pharma and Solta businesses. The rally in BHC stock gained further steam last week after announcing exchange offers and consent solicitations for certain existing senior notes.

Now what?

Despite its solid recovery in the last month, BHC stock continues to trade with massive 75.7% year-to-date losses against a 9.2% decline in the TSX Composite benchmark. While its sales growth might improve in the coming quarters with the help of its intensified focus on the pharma business, Bausch Health stock’s extreme volatility and macroeconomic uncertainties make its stock risky for investors with a low-risk appetite at the moment.