Craig Bijou: Yeah, look, I mean, I think, yeah. Go ahead, we’re good.
Operator: Okay. Thank you very much. Your next question is coming from Joanne Wuensch from Citi. Joanne, your line is live.
Joanne Wuensch: Good morning and thank you for the question and nice quarter. Two, and I’m going to put them both out upfront, the Rx portfolio grew about 1% off of a somewhat tougher comp. Obviously, this is before you’re really layering in XIIDRA and MIEBO. But I want to make sure that I understand if there were any onetime headwinds, et cetera that I need to think about. And then my second question is, in the lay press, the FDA warned against certain eye drops. Bausch wasn’t on that list, but I was curious if you have a view on how that might create market opportunity for you. Thank you.
Brent Saunders: Yes, sure. So with respect to Rx growth in the quarter, 1%, the key metric I track there is the promoted products, which was anchored by VYZULTA, which was up 54% I think in the quarter. And so the sales team and what we focus on saw good growth in the quarter. We did have two older non-promoted products that had supply constraints in the quarter. If you took those out, pharma would have been up around 4% versus the 1%. But I think the dynamics and the reporting there will change dramatically in the next quarter when we have MIEBO and XIIDRA in there. I think as you look to next year, we have a PROLENSA LOE, and we’ve talked about that quite a bit. But outside of that, that’s the only puts and takes in there.
And I think there’s more puts with XIIDRA and MIEBO going in than takeouts, Joanne. Hopefully, that clarifies that for you. On the FDA recall, it doesn’t in and of itself present any kind of specific opportunity for us. But I think it underscores the importance of quality control in manufacturing and supply. I think what I’ve seen from the ECPs, there’s a lot of promotion on staying with the branded companies in this category, whether it be us or our competitors being mentioned as alternatives. And I think lastly, it shows how hard it is to make these products in a sterile environment and provide high-quality supply. So all-in-all, our focus and our absolute commitment is to supply high-quality products. And to the extent there is an opportunity, perhaps retailers take some of these drops off their shelf and give us more shelf space for our products, whether it be LUMIFY or Blink or any of the other products in the reset that will happen as a result of these SKUs coming off shelf.
So small opportunity, but I think more importantly, underscoring the importance of high-quality supply.
Joanne Wuensch: Thank you.
Operator: Thank you very much. Your next question is coming from Vijay Kumar from Evercore ISI. Vijay your line is live.
Vijay Kumar: Hey, guys. Thanks for taking my question. I had two questions. Maybe, Brent, first one for you on revenues here. Some of your comments you made here on fiscal ’24 were helpful. The Lynchburg disruption, can you quantify the revenue impact in fiscal ’23? Are they, lost revenues, should they come back in fiscal ’24? And I think you did touch upon consumer strength. How should we think about consumer business in a recessionary environment?
Brent Saunders: Yes. On Lynchburg, we’ve made a lot of progress in the last month or two. And Lynchburg in this quarter, the fourth quarter, I think is starting to ship, particularly domestically, on time. And so we’re getting — we’re pretty close. Clearly, we need a little bit more time to get the optimization out of Lynchburg, but we’re making progress. We still have some hiccups in international orders, but all-i- all, it’s a big improvement in the fourth quarter. The revenues in ’23 are roughly $20 million impact. And to be fair, that’s revenue lost. The patients who got fit with lenses, got fit with other lenses versus the ones we couldn’t provide. So it’s more or less revenue lost. We will come back. There is good demand for our products.
We will see a return to our product line, and we’re seeing that happening. We’re seeing green shoots of that right now in the fourth quarter. But that’s — it’s an unfortunate situation and why I continuously talk about the need for strategic and thoughtful leadership in our global supply operations. Because at the end of the day, what matters most is getting your products to patients and consumers. And that’s how you actually create a robust business, as practically as that sounds. The consumer business in a recessionary environment, I think clearly, if there was — if we saw a consumer recession, we would have to be thoughtful about that, and we would feel some impact. But at the end of the day, people don’t stop treating their eyes in a consumer recession.
I think we have somewhat of a protection in our business from that. Would people trade down? Perhaps. But as we just talked about with Joanne, some of the lower-cost providers of eye drops as an example, have quality issues. It’s a tough thing to trade down on price for treating your eyes. Not that some won’t do it, but we have I think some immunity from a potential consumer recession. That being said, we don’t see that. We don’t see that in any of our businesses anywhere in the world, and we don’t see that in any of the data we track as well.
Vijay Kumar: Understood. Helpful comments, Brent. Sam, one for you on the margins here. I think you mentioned FX $100 million headwind on was it the revenue impact. What’s the drop down here on EBITDA? Should that be similar to fiscal ’23? Where it sounds like there’s some incremental investments to support new product launches. Should we be thinking of that as incremental versus where we were three months ago?
Sam Eldessouky: Vijay, I would think about — let me take the currency first. It’s hard to predict currency, right? I’m giving the $100 million as of today based on the rates of today. Probably the best I’ll call direction I’ll provide will be you can use the proxy of what we’ve seen in ’23 as sort of a flow-through that will give you a directional of how we’re thinking about the currency as we stand. But this is something I’ll have to come back to you and update it as we end this year, and we give guidance for full ’24 to update you on the currency and sort of truly the flow-through. In terms of the investment, the launches, I think I’ll break it up into two parts. I think Brent showed a slide that shows all the launches that are coming into 2024.
This is our largest number of launches that we have in a single year in the company’s history as we recall. So that’s definitely going to be an investment that we will have to think about and we will be able to make sure we dedicate the right resources behind it. I called out MIEBO specifically because I think it’s a large asset for us, a large brand. When you think about the early data that we’re seeing on MIEBO, it’s very encouraging and very positive. We want to see that trend continue. And as that trend continues, I think we will have the decision to be able to say, do we want to spend and invest incremental dollars behind it and accelerate growth? Again, it’s a long game for us. And that decision will have to come in and we’ll update more of it as we give the full year guidance for 2024.
Brent Saunders: Perhaps said another way, we have a big opportunity with MIEBO and XIIDRA and other launches across the portfolio in ’24. Many of those launches lead us to higher-margin product mix for the long term. And so being successful in those are really an investment in improving margins. That being said, making that investment impacts margins to the negative in ’24. And so what we want to do is be thoughtful about that. We are committed to margin improvement, but we want to make data-driven decisions. When we look at early data on MIEBO, and you’ll see a clearer picture when IQVIA comes out and you’ll see what we’re seeing on November 17th, you’ll understand why we’re pausing and saying, could we do more with MIEBO? Could it be more than $350 million in peak sales?
