Investment Thesis
Bausch & Lomb faces critical financial distress despite 6.5% revenue growth. The company is unprofitable (net margin -5.7%), burning cash (FCF -$68M), and has an interest coverage ratio of 0.3x—unable to service its $5B debt burden from operating income. Deteriorating earnings and negative free cash flow signal structural operational challenges that cannot be sustained.
Strengths
- Revenue growth of 6.5% year-over-year demonstrates market demand in ophthalmic sector
- Moderate leverage with debt-to-equity ratio of 0.79x relative to $6.4B equity base
- Current ratio of 1.53x provides adequate near-term liquidity coverage
Risks
- Interest coverage ratio of 0.3x indicates inability to cover debt service from operating income—critical solvency risk
- Negative free cash flow of -$68M while funding $100M capex indicates unsustainable cash burn
- Net profitability declined 15.4% YoY to -$71M, with net margin at -5.7%—worsening operational performance
- Quick ratio of 0.99x reflects tight liquidity after inventory adjustment
- Limited cash reserves ($268M) insufficient to cover debt service and capex requirements long-term
Key Metrics to Watch
- Interest coverage ratio—must improve above 1.5x to indicate debt sustainability
- Free cash flow trajectory—negative FCF unsustainable; must return to positive
- Net profit margin recovery—current -5.7% indicates structural cost challenges requiring resolution
- Debt reduction progress—$5B long-term debt must decline to improve financial flexibility
Financial Metrics
Revenue
1.2B
Net Income
-71.0M
EPS (Diluted)
$-0.20
Free Cash Flow
-68.0M
Total Assets
13.8B
Cash
268.0M
Profitability Ratios
Gross Margin
N/A
Operating Margin
2.7%
Net Margin
-5.7%
ROE
-1.1%
ROA
-0.5%
FCF Margin
-5.5%
Balance Sheet & Liquidity
Current Ratio
1.53x
Quick Ratio
0.99x
Debt/Equity
0.79x
Debt/Assets
53.2%
Interest Coverage
0.34x
Long-term Debt
5.0B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T14:32:19.414184 |
Data as of: 2026-03-31 |
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