Bausch + Lomb Corporation BLCO

Deep-value analysis: BLCO — Bausch + Lomb Corporation

Date: 2026-09-05 · Price: … (yfinance, 2026-09-05) · Market cap: …mn · Shares: 357.17mn · Exchange: NYSE + TSX · Reporting currency = price currency: USD Filings used: 10-K FY2025 (filed 02/18/2026), 10-Q Q1 2026 (04/29/2026), 10-Q Q2 2026 (07/29/2026), 10-K FY2024 (02/19/2025), 10-K FY2023 (02/21/2024), 8-K Q2 2026 results (ex99.1, 07/29/2026), 8-K Q4/FY2025 results (ex99.1, 02/18/2026), 8-K board (08/06/2026), Q2 2026 earnings call transcript (08/07/2026) Trigger: mechanical triage deep_delta.py → FULL, broken claim on net_debt_ebitda (falsifier from the 2026-08-09 thesis, threshold >6.5x)

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Executive summary

Bausch + Lomb is the second-largest global eye-health platform after Alcon: … revenue in 2025 (10-K FY2025, consolidated statement of operations) across three segments — Vision Care (2,923mn, 57%), Pharmaceuticals (1,284mn, 25%), Surgical (894mn, 18%). The brand is 173 years old, the portfolio is broad (SiHy Daily/Ultra/Biotrue contact lenses, OTC Lumify and PreserVision, pharma MIEBO and XIIDRA, premium enVista IOLs) and the top-ten products make up just 56% of revenue (10-Q Q2 2026, Note 17) — a reasonable concentration for a medical-device maker. The problem has never been the operating business. The problem is the capital structure BHC left on the balance sheet when it spun the company off in May 2022, and which the XIIDRA acquisition (a … upfront payment, funded entirely with debt in September 2023) deepened: …mn of gross debt at 06/30/2026 (10-Q Q2 2026, Note 10), …mn of cash, so …mn net debt against a … market cap.

The thesis, in one sentence: the operational inflection is real and confirmed by four consecutive quarters, but today's price fully pays for it and also pays extra for execution of the three-year plan — at … there's no longer a margin of safety left for a B/B1-rated issuer whose EBIT doesn't yet cover interest.

The figures supporting the good side of the thesis: Q2 2026 revenue was …mn, … reported and … at constant currency (10-Q Q2 2026, MD&A), with growth in all three segments — Pharmaceuticals … cc and Surgical … cc. Operating income turned positive again: +…mn in Q2 2026 versus −…mn in Q2 2025, and +…mn for the half versus −…mn (10-Q Q2 2026, consolidated statement of operations). Surgical margin, wrecked in 2025 by the voluntary enVista IOL recall, went from … in H1 2025 to … in H1 2026; Pharmaceuticals margin jumped from 8.3% to 23.5% (own calculation on Note 17 of the 10-Q). Company-reported adjusted EBITDA was …mn in Q2 2026 versus …mn in Q2 2025 (…) and …mn for the half versus …mn (8-K 07/29/2026, ex99.1). Management raised guidance twice in six months: from …–5,475mn revenue and …–1,050mn adjusted EBITDA (February) to …–5,540mn and …–1,075mn (July).

The figures limiting it: on the trailing four quarters ended 06/30/2026, GAAP operating income is …mn, and interest expense …mn — EBIT interest coverage is 0.83x, i.e. below 1. Free cash flow to equity (FCFE, bridge detailed in the valuation chapter) is …mn on the trailing four quarters, a 1.65% yield at current market cap; even the generous CFO − capex definition gives …mn, 2.13% (data pack 2026-09-05). The company has never paid a dividend and has no buyback program (10-K FY2025, Item 5). Net income attributable to shareholders has been negative for four consecutive years: −…mn (2023), −…mn (2024), −…mn (2025), −…mn (H1 2026).

Estimated value. Triangulation on five models, all on an FCFE basis (the flow is already after interest, so debt is not subtracted again): bear DCF …/share, base DCF … bull DCF … no-growth EPV … historical EV/adjusted-EBITDA multiple 12.4x applied to 2026 guidance → … Range … … … versus price, median …. The Monte Carlo simulation over 20,000 scenarios around the base assumptions gives a median intrinsic value of … and an undervaluation probability of 7.6%.

Verdict: AVOID at …, but for a different reason than in the prior report. In August the company looked like a good operating asset in a broken structure. Today the structure is visibly repairing itself — net leverage has fallen from ~5.7x to 4.7x adjusted EBITDA in a year, management targets ≤3.5x by end-2028 (Q2 2026 earnings call), and the January 2, 2026 refinancing pushed major maturities out to 2028 and 2031 and lowered the weighted-average rate from 7.70% to 7.43%. What's missing now is price: the stock climbed from … (the prior report's date) to … 3.3% below the average target of the 13 analysts covering it (…) and at the top of the 52-week range (…–18.92). The market has already priced in the three-year plan. The level at which the thesis becomes interesting: below ~… i.e. a price at which the base-case DCF leaves margin, or after two-three quarters where actual FCFE exceeds …mn annualized.

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