Eyecare company Bausch + Lomb (NYSE: BLCO) fell short of the market’s revenue expectations in Q1 CY2025 as sales rose 3.5% year on year to $1.14 billion. On the other hand, the company’s full-year revenue guidance of $5.05 billion at the midpoint came in 1.1% above analysts’ estimates. Its non-GAAP loss of $0.07 per share was significantly below analysts’ consensus estimates.
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Bausch + Lomb (BLCO) Q1 CY2025 Highlights:
- Revenue: $1.14 billion vs analyst estimates of $1.14 billion (3.5% year-on-year growth, 0.7% miss)
- Adjusted EPS: -$0.07 vs analyst estimates of $0.02 (significant miss)
- Adjusted EBITDA: $126 million vs analyst estimates of $163.4 million (11.1% margin, 22.9% miss)
- The company lifted its revenue guidance for the full year to $5.05 billion at the midpoint from $4.98 billion, a 1.5% increase
- EBITDA guidance for the full year is $875 million at the midpoint, below analyst estimates of $921.9 million
- Operating Margin: -7.3%, down from 0.5% in the same quarter last year
- Free Cash Flow was -$135 million compared to -$26 million in the same quarter last year
- Constant Currency Revenue rose 5.2% year on year (20.2% in the same quarter last year)
- Market Capitalization: $4.16 billion
StockStory’s Take
Bausch + Lomb’s first quarter results reflected ongoing growth in core eye care franchises, with management citing strong uptake of daily silicone hydrogel (SiHy) contact lenses and robust performance in its over-the-counter (OTC) dry eye brands. However, leadership acknowledged the quarter was impacted by a voluntary recall of its enVista intraocular lens (IOL) platform and underperformance in high-margin U.S. generics, both of which are being directly addressed. CEO Brent Saunders emphasized the company’s ability to maintain steady revenue growth across all business segments, despite these setbacks, and pointed to the swift market return of enVista as a testament to operational resilience.
In discussing full-year guidance, management highlighted both opportunities and challenges ahead. The company raised its revenue outlook, buoyed by product momentum and a diversified manufacturing footprint, but noted that ongoing tariff volatility and the lingering effects of the enVista recall would weigh on margins. CFO Sam Eldessouky described the tariff environment as a “moving target,” with scenario planning and mitigation strategies underway to limit downside risk. The company reiterated its focus on innovation and operational flexibility as key to navigating a complex macroeconomic and regulatory landscape.
Key Insights from Management’s Remarks
Management cited operational resilience and product momentum as key themes for the first quarter, while outlining responses to external and internal headwinds that shaped performance.
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Voluntary enVista IOL Recall: The company initiated a voluntary recall of its enVista intraocular lenses in March due to a safety signal. Management prioritized patient safety and transparency, returning to market within a month by enhancing inspection protocols and vendor standards. They expect a one-time impact from the recall but anticipate rebuilding customer trust and market share in subsequent quarters.
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Daily SiHy Contact Lens Growth: Daily SiHy contact lenses saw 42% constant currency revenue growth, fueled by strong U.S. demand and plans for product expansion in Japan and other geographies. Management attributed this to manufacturing flexibility and effective direct-to-consumer campaigns.
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OTC Dry Eye Franchise Expansion: The Blink and Artelac OTC dry eye brands delivered substantial growth, driven by new product launches such as Blink NutriTears and increased eye care professional engagement. A tenfold sales increase for NutriTears followed a targeted advertising campaign, highlighting management’s focus on consumer outreach.
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Tariff Mitigation Strategies: Management detailed immediate and longer-term plans to mitigate the effects of reciprocal tariffs between the U.S. and China. These include inventory management, scenario planning for manufacturing shifts, and selective price adjustments, leveraging the company’s global production footprint.
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Pharmaceutical Segment Mixed Results: The pharmaceutical business faced underperformance in U.S. generics due to increased competition and lower inventory, while branded products like MIEBO and XIIDRA continued to post strong prescription growth. Management stated that further gross-to-net headwinds for XIIDRA were expected, but volume gains would be supported by direct-to-consumer marketing and access initiatives.
Drivers of Future Performance
Management’s outlook for the remainder of the year centers on product innovation, operational agility, and ongoing responses to external pressures such as tariffs and inventory dynamics.
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Pipeline Advancements: Multiple new products are expected to enter clinical trials, including a biomimetic contact lens and a dual-action therapeutic for dry eye disease. Management believes these pipeline assets could enhance standard of care and support mid- to high-single-digit revenue growth over time.
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Tariff and Supply Chain Flexibility: The company’s ability to shift manufacturing across global sites and adjust supply chains will be critical in mitigating tariff-related headwinds. Management noted that scenario planning is ongoing, and rapid implementation of mitigation levers could limit margin impact if trade tensions persist.
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Rebound in Surgical and Premium IOLs: The return of enVista IOLs, along with the upcoming launch of the LuxLife and LuxSmart platforms in Europe, is expected to drive recovery in the surgical segment. Management indicated that regaining surgeon confidence and rebuilding inventory channels are top priorities for the second half of the year.
Top Analyst Questions
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Patrick Wood (Morgan Stanley): Asked about the customer response and overall market impact from the enVista recall. Management reported that most surgeons plan to resume use quickly, and trust was reinforced by the recall’s transparency and speed of market return.
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Young Li (Jefferies): Inquired about consumer demand trends and whether sentiment or inventory destocking signaled any slowdown. CEO Brent Saunders stated that actual consumption remains resilient, even as some retailer destocking continues, and highlighted essential healthcare demand as a buffer.
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Joanne Wuensch (Citi): Requested details on contact lens market demand and the development pipeline for next-generation lenses. Management responded that demand is steady globally and described new lenses in late-stage development, emphasizing design for existing manufacturing lines to minimize capital needs.
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Unidentified Analyst (Wells Fargo): Probed the timing and magnitude of tariff impacts. CFO Sam Eldessouky disclosed that actions taken so far will protect the first half of the year, with most tariff effects expected in the second half if policies remain unchanged.
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Robbie Marcus (JPMorgan): Asked why tariff impacts were not included in full-year guidance and about debt covenant risks. Management explained the exclusion was due to ongoing policy uncertainty and assured compliance with existing debt agreements regardless of tariff scenarios.
Catalysts in Upcoming Quarters
In coming quarters, the StockStory team will be watching (1) the pace of enVista IOL adoption and the restoration of market share in surgical implants, (2) execution on pipeline milestones, including clinical trial progress for new contact lens and dry eye therapies, and (3) the effectiveness of tariff mitigation strategies as U.S.-China trade dynamics evolve. Developments in consumer product launches and the ramp-up of new premium IOL platforms in Europe will also serve as important indicators of recovery and long-term growth.
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