Why Is Bausch Health (BHC) Up 17% Today?

  • Today, Bausch Health (BHC) surged 17% after announcing a $4 billion debt swap.
  • This swap looks to push out some of the company's debt to 2028-2030, though at higher interest rates.
  • Investors appear to be taking the view that this move will allow the company more runway to grow its way out of its debt load.
BHC stock - Why Is Bausch Health (BHC) Up 17% Today?

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In today’s rather volatile session, investors looking for big movers do have their fair share to consider. Among the biggest gainers in today’s market is Bausch Health (NYSE:BHC). As of early afternoon trading, BHC stock is up approximately 17% in a rather surprising move.

This move is surprising considering the apparent lack of drivers for such an outsized move. Bausch Health did announce today a rather convoluted plan to swap out existing debt for new debt, at interest rates between 9% and 11%.

Interestingly, this move does not appear to provide additional capital to the company, given it’s a debt swap. However, with due dates on the company’s new debt being between 2028 and 2030, Bausch appears to be looking to push its debt further out, with some of its senior secured notes being due as early as 2025.

Let’s dive into what investors may want to make of this move, considering today’s price action.

What’s Going On With BHC Stock?

Bausch Health is a rather interesting company with a storied history. Formerly Valeant Pharmaceuticals, a Canada-based healthcare conglomerate that employed a debt-heavy growth-by-acquisition model, Bausch Health is the remnants of a portfolio of pharmaceutical, medical devices, and over-the-counter product brands. Known for its Bausch + Lomb division, this company’s skin care products are the core of its business.

Bausch Health has been engaging in a years-long push to generate positive earnings to reduce its bloated balance sheet. Now profitable, investors have looked to Bausch Health as an intriguing healthcare name with speculative upside, should the company be able to grow its way out of this hole.

Perhaps today’s announced debt swap will provide the runway to do so. At least, the market appears to be pricing this move in this manner. However, given these incredibly high-interest rates, I’m not so sure investors should be cheering too loudly right now. This will certainly be a stock to watch from here, for investors interested in growth names in the healthcare sector.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

Article printed from InvestorPlace Media, https://investorplace.com/2022/08/why-is-bausch-health-bhc-up-17-today/.

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