Bausch Health Companies Inc. (BHC): A Bull Case Theory 

We came across a bullish thesis on Bausch Health Companies Inc. on Countervail Capital’s Substack by Johann Colloredo-Mansfeld. In this article, we will summarize the bulls’ thesis on BHC. Bausch Health Companies Inc.’s share was trading at $7.25 as of September 11th. BHC’s trailing and forward P/E were 27.88 and 1.76 respectively according to Yahoo Finance.

Bausch Health (BHC), formerly Valeant Pharmaceuticals, is a diversified healthcare company spanning pharmaceuticals and medical devices, with operations across eye care, gastroenterology, neurology, dermatology, and aesthetics. Despite structural demographic tailwinds, healthcare stocks have broadly re-rated lower amid higher interest rates, policy uncertainty, and post-COVID overcapacity, with BHC shares down nearly 80% since July 2021.

The company generates stable cash flows, supported by a 3.5% five-year revenue CAGR, 31.5% LTM EBITDA margins, and modest reinvestment needs, resulting in a 35.8% free cash flow yield. Yet leverage remains a major overhang, with $20B in net debt versus $3.1B in EBITDA, leaving BHC trading at steep discounts of 66.5% on TEV/EBITDA and 31.5% on TEV/sales relative to peers. Its 2022 spin-off of Bausch + Lomb (BLCO) provided $630M in debt reduction, and BHC still holds an 87.5% stake worth $4.8B, nearly twice its market cap.

However, with a $6B maturity wall in 2028 and the looming 2029 patent expiry of its $1.9B IBS drug Xifaxan, solvency pressures are intensifying. A critical catalyst emerged in August 2025 when Paulson Capital acquired Icahn Group’s 34M-share block at a 19.8% premium, signaling potential asset monetization. A sale of the BLCO stake could significantly deleverage the balance sheet, but execution depends on maintaining a sub-4.25x net debt/EBITDA ratio at the stub entity.

Scenario modeling highlights a binary outcome: a 39% probability of bankruptcy versus a 20% chance of outsized gains between 6.4x and 13.9x. Overall, BHC offers an asymmetric, positively skewed risk/reward with low beta, where successful deleveraging could unlock substantial equity value, but failure risks complete loss.

Previously we covered a bullish thesis on Teva Pharmaceutical Industries Limited (TEVA) by Kontra in April 2025, which highlighted cost optimization, margin expansion, branded drug growth, and pipeline catalysts, alongside reduced litigation overhang. The company’s stock price has appreciated approximately by 42% since our coverage. The thesis still stands as Teva continues executing. Johann Colloredo-Mansfeld shares a similar perspective but emphasizes Bausch Health’s deleveraging challenges.

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Disclosure: None.