Key Points
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Strong Q3 performance:Bausch + Lomb reported revenue of $1.375 billion, up 8% on a constant-currency basis, with adjusted EBITDA rising 34% to $325 million. All three segments grew, led by pharmaceuticals and surgical products.
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Improving profitability and cash generation:Adjusted EBITDA margin expanded to 23.6%, free cash flow reached $178 million, and net leverage declined to 4.1x from 5.7x a year earlier.
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Full-year outlook raised again:The company increased 2026 revenue guidance to $5.450 billion–$5.550 billion and adjusted EBITDA guidance to $1.090 billion–$1.140 billion, while interim CEO Tom Appio emphasized execution, pipeline development and disciplined capital allocation.
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Bausch + Lomb (NYSE:BLCO) reported third-quarter revenue growth across all three business segments, raised its full-year outlook for the third time in 2026 and highlighted continued margin expansion and cash generation as interim Chief Executive Officer Tom Appio outlined priorities following the company's leadership transition.
The company reported third-quarter revenue of $1.375 billion, up 8% on a constant-currency basis. Foreign exchange reduced reported revenue by approximately $6 million during the quarter. Adjusted EBITDA increased 34% on a reported basis to $325 million, while adjusted EBITDA margin expanded 460 basis points year over year to 23.6%.
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"This quarter represents another milestone for the company," Appio said. "It marks the fourth consecutive quarter we have delivered against the commitments we outlined at Investor Day, demonstrating our ability to drive growth, expand margins, and strengthen the financial profile of the business."
Broad-Based Segment Growth
All three segments recorded constant-currency growth in the quarter. Pharmaceuticals revenue increased 11%, surgical revenue rose 9%, and vision care revenue grew 6%.
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Vision care:Revenue totaled $774 million. Consumer revenue increased 6%, while contact lens revenue also rose 6%. LUMIFY revenue reached $66 million, up 38%, and the consumer dry eye portfolio generated $115 million, up 3%.
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Contact lenses:Daily silicone hydrogel products grew 25%, while ULTRA increased 17%. U.S. contact lens revenue grew 9%, and international revenue rose 4%.
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Surgical:Revenue was $234 million. Implantables increased 40%, driven by a 75% increase in premium intraocular lens revenue. Consumables, the largest part of the surgical portfolio, rose 5%, while equipment revenue declined 11% as the company emphasized strategic system placements.
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Pharmaceuticals:Revenue totaled $367 million, including 14% growth in U.S. pharmaceuticals. The dry eye pharmaceutical portfolio rose 22%, led by MIEBO revenue of $119 million, up 42%. Xiidra generated $89 million in revenue, up 2%.
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Appio said the company's growth was supported by multiple franchises rather than a single product or geography. He pointed to momentum in MIEBO, LUMIFY, contact lenses including INFUSE and ULTRA, and premium IOLs.
Margins, Cash Flow and Leverage Improve
Adjusted gross margin was 64.7%, up 300 basis points from the prior-year quarter. The result included an approximately $14 million one-time tariff refund. Excluding that benefit, adjusted gross margin was 63.6%, according to Chief Financial Officer Sam Eldessouky.
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Eldessouky attributed the margin gains to a more favorable mix of higher-margin brands as well as productivity initiatives across manufacturing and supply chain operations. The company invested $91 million in adjusted research and development during the quarter.
Operating cash flow totaled $233 million, while free cash flow was $178 million. Capital expenditures were $55 million in the quarter, which Eldessouky said moderated as expected. The company reduced net leverage to 4.1x at the end of the quarter, from 5.7x a year earlier.
"This was our strongest quarter of cash generation since the IPO in 2022," Eldessouky said. The company continues to target net leverage of 3.5x under its three-year Investor Day plan.
Adjusted earnings per share, excluding acquired in-process R&D, rose to $0.34 from $0.18 in the prior-year quarter. Net interest expense was $93 million.
Full-Year Guidance Raised Again
Bausch + Lomb increased its 2026 revenue outlook by $10 million to a range of $5.450 billion to $5.550 billion. The revised outlook reflects a $15 million improvement in the underlying business outlook, partly offset by $5 million of lower currency tailwinds.
The company now expects constant-currency revenue growth of approximately 6.1% to 8% for the year, 30 basis points above its July outlook. It expects a $40 million currency-related revenue benefit for the full year, compared with its previous estimate of approximately $45 million.
Adjusted EBITDA guidance was raised by $65 million to a range of $1.090 billion to $1.140 billion. At the midpoint, the outlook implies a 20.3% adjusted EBITDA margin, about 130 basis points above the company's 2026 Investor Day target and 280 basis points above its 2025 margin of 17.5%.
The company now expects adjusted gross margin of 62.5% to 63% for the full year, compared with a prior expectation of approximately 62%. R&D investment is still projected at 7.5% to 8% of revenue, while expectations for approximately $365 million in interest expense and $285 million in capital expenditures were unchanged. The expected adjusted tax rate was reduced to approximately 18% from 19%.
Interim CEO Focuses on Execution and Pipeline
Appio, who recently became interim CEO, said his priorities include improving profitability and operating effectiveness, delivering on the company's Vision 2027 targets, advancing the R&D pipeline and maintaining disciplined capital allocation.
He said the company would seek further efficiencies in selling, general and administrative spending while continuing to support growth investments. Appio also said management would assess potential portfolio gaps and M&A opportunities, but emphasized that transactions would need to be accretive.
On the pipeline, Executive Vice President of Research and Development and Chief Medical Officer Yehia Hashad said the company plans to begin a pharmacokinetic safety study for tonabersat in dry age-related macular degeneration at the beginning of next year, following an FDA meeting. He said Project Ilios remains under FDA review, with the company still planning for approval by year-end if no additional issues arise.
Hashad also said Bausch + Lomb plans to begin a U.S. myopia study in the fourth quarter and is preparing phase III studies for a dual-action dry eye product. The company continues development work on Project Halo, its bioactive contact lens material, including lens design, tear dynamics and packaging studies.
About Bausch + Lomb (NYSE:BLCO)
Bausch + Lomb Corporation (NYSE: BLCO) is a global eye-health company that develops, manufactures and markets products for vision care, ophthalmic pharmaceuticals and eye surgery. The company serves consumers, eye-care professionals, hospitals and surgical centers through a portfolio spanning contact lenses, contact-lens care products, prescription medicines, over-the-counter eye-care products and surgical equipment.
Its vision-care portfolio includes the Biotrue and INFUSE contact-lens brands, as well as solutions and other products used to clean and maintain contact lenses.
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The article " What Bausch + Lomb (BLCO) Said on Its Q3 Earnings Call " was originally published by MarketBeat.
