Bausch + Lomb Corporation Q2 2026 Earnings Call

Good morning. Welcome to Bausch + Lomb's second quarter 2026 earnings call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to George Gadkowski, Vice President of Investor Relations and Business Insights. Please go ahead. Thank you.

Good morning everyone. Welcome to our second quarter 2026 financial results conference call. Participating on today's call are Chairman and Chief Executive Officer, Mr. Brent Saunders, Chief Financial Officer, Mr. Sam Eldessouky, and President of Surgical, Mr. Luc Bonnefoy. In addition to this live webcast, a copy of today's slide presentation and a replay of this conference call will be available on our website under the Investor Relations section. Before we begin, I would like to remind you that our presentation today contains forward-looking information. We would ask that you take a moment to read the forward-looking legend at the beginning of our presentation, as it contains important information. This presentation contains non-GAAP financial measures and ratios. For more information about these measures and ratios, please refer to slide one of the presentation.

Non-GAAP reconciliations can be found in the appendix to the presentation posted on our website. The financial guidance in this presentation is effective as of today only. It is our policy to generally not update guidance until the following quarter unless required by law and not to update or affirm guidance other than through broadly disseminated public disclosure. With that, it's my pleasure to turn the call over to Brent.

Thank you, George. Thanks to everyone joining us today, especially my colleagues around the world whose commitment and passion are at the heart of everything we achieve. Today's presentation will follow a familiar format. I'll start with an overview of the quarter and Sam will walk through the details of another beat and raise. We'll then cover growth drivers by segment, including an update from our Surgical President, Luc Bonnefoy. The format won't be the only thing that sounds familiar. Leveraging the P&L margin expansion, broad-based revenue growth, improved cash flow generation. These have been themes since we unveiled our three-year plan for growth at Investor Day last November. In the second quarter, progress continued at an accelerated pace. You see that here. 8% constant currency revenue growth once again reflects consistent performance across our pharmaceuticals, vision care, and surgical segments.

Continued momentum from each business creates a stronger, more resilient company and more durable growth profile over time. 28% adjusted EBITDA growth and 17.6% adjusted EBITDA margin demonstrate the quality of the growth we referenced last quarter. Building on the operating leverage and margin expansion that began in the second half of 2025. Of note, SG&A continues to decline as a percentage of revenue, which Sam will cover later. If you're wondering where our confidence in meeting or exceeding our three-year plan comes from, look no further than these charts. On the left, you see the story we've been telling. Constant currency revenue growth accelerating from 6% in the first quarter to 8% in the second, and adjusted EBITDA margin expanding from 16.1% to 17.6%, an increase of 150 basis points.

Growth and margin moving in the same direction quarter after quarter. The more important story is on the right, because expanding margins only matter if they translate into cash, and they are. Adjusted cash flow from operations more than tripled from $45 million in the first quarter to $161 million in the second. Year to date cash conversion is approximately 46% in line with our expectations. Stronger cash generation translated into meaningful balance sheet progress, helping us lower our leverage by a full turn from this point last year. Credibility doesn't come from making bold promises. It comes from making the right commitments and delivering on them quarter after quarter, year after year. That's been our approach from day one. We communicate our priorities, align our teams behind them, and execute with discipline.

The say-do mentality has helped us build trust with stakeholders, and more importantly, has positioned us to create sustainable long-term value. In other words, companies earn credibility through consistency. You see that discipline reflected across these pillars. Second quarter growth was broad-based with standout double-digit performance from pharmaceuticals and surgical. The top-line momentum translated directly into profitability. $246 million in adjusted EBITDA up 28% year-over-year. Again, growth and margin working together consistent with the operating model we outlined. Our selling and operational execution is showing up in the numbers too. In surgical, the accelerating mix shift towards premium IOLs is expanding both revenue and margin.

In pharmaceuticals, MIEBO and XIIDRA both delivered strong revenue growth, the result of a refreshed market access approach and disciplined commercial execution. Last quarter, we laid the groundwork for the introduction of Orphia, an AI-powered digital health platform designed to reduce the operational burden between physicians and their patients. Orphia was built to serve every eye care provider, no matter what they prescribe or what products they use. It fills a real void, and it's already generating encouraging feedback within the eye care community. In our third pillar, what you're seeing is a pipeline delivering on two time horizons at once. In the near term, we have concrete milestones expected to land this year.

We filed our FDA submission for our ELIOS implant-free MIGS excimer laser in the second quarter. Readouts for our dual-action dry eye candidate and ocular surface pain candidate are expected in the second half of this year. Looking further out, we have programs that are expected to extend our run rate well into the next decade and into categories where the unmet need is only growing. We've been in this business long enough to know that not every program will make it to the finish line. That's the nature of innovation in eye health. That's precisely why we've built the pipeline the way we have. Breadth and depth aren't buzzwords for us. They're a deliberate design choice. A robust, diversified pipeline means we're never dependent on any single asset to deliver. It's what gives us confidence in sustained cadence of milestones quarter after quarter, year after year.

You see that breadth and depth here. Rather than the linear pipeline timeline you're used to seeing from us, this view organizes our assets by category, from dry eye disease and surgical, to consumer eye health, contact lenses, retinal disease, and increasingly, AI and computational biology. We believe this distinguishes Bausch + Lomb among eye care companies. Depth of portfolio is only half the story. The other half is where the world is heading. An aging global population, the rapid rise of childhood myopia, longer screen time across every age group, a growing prevalence of dry eye and retinal disease. These aren't temporary tailwinds. They're structural shifts in demand. Each of the programs you see here is designed to meet one of them. As a reminder, we're expanding EBITDA margins while increasing our R&D spend, which is another way of saying we're not sacrificing innovation for metrics.

This is what balance looks like. Every segment growing, every segment contributing. Surgical revenue up 16% on a constant currency basis. Pharmaceuticals up 14%. Vision care up 4%. The headline isn't just the numbers are strong, it's that they're coming from everywhere. Pharmaceuticals continued its momentum with MIEBO and XIIDRA once again anchoring the segment's growth. Vision care delivered another quarter of dependable performance, with contact lenses up 5% on a constant currency basis, powered by ongoing strength in our daily SiHy portfolio. I'd like to spend a moment on surgical. Last quarter, we said the U.S. field force rebuild was the right strategic decision. That the business would strengthen sequentially through the balance of the year. One quarter later, 16% constant currency revenue growth. 17% versus 2Q 2024.

Our premium IOL portfolio delivered 175% reported revenue growth. Premium mix continued to expand both in the U.S. and globally. Every one of the leading signals we pointed to last quarter, productivity, execution, sales trajectory, is now translating directly into results. The results support the strategic actions we took. We expect surgical to remain a meaningful growth driver from here. We're entering the second half of the year with real momentum behind us. Sam, over to you for financial drivers and our refreshed outlook.

Thank you, Brent, and good morning, everyone. Before we begin, please note that all of my comments today will be focused on growth expressed on a constant currency basis, unless specifically indicated otherwise. In addition, all references to adjusted EBITDA will exclude acquired IPR&D. Q2 was another strong quarter and further evidence of the momentum across the business. We delivered meaningful top-line growth and margin expansion. We also generated strong operating leverage with adjusted EBITDA up 28% on a reported basis. Revenue growth and margin expansion are now also translating into stronger cash generation and deleveraging to strengthen the balance sheet. This is the progression we outlined. First, rejuvenating revenue growth. Second, expanding margins. Now converting the stronger earnings into cash and improving our leverage. We are doing this while continuing to invest in the R&D pipeline.

Stepping back, this is the fourth consecutive quarter of delivering on our priorities. This strengthens our confidence that we remain on track to achieve our three-year targets. Turning now to our financial results on slide 9. Total company revenue for the quarter was $1.394 billion, up 8%, driven by broad-based growth across all our segments. Foreign exchange was a tailwind to revenue of approximately $12 million in the second quarter. Let's dive into each of our segments in more detail. Vision Care's second quarter revenue of $784 million increased by 4%, with growth in both consumer and contact lenses. Let me go over a few highlights in our Vision Care segment. The consumer business grew 3% in the quarter. The consumer dry eye portfolio delivered $123 million of revenue in the second quarter, up 5%.

Growth was driven by Blink, which was up 12%, and Artelac, which was up 3%. LUMIFY generated $63 million of revenue, up 2%. Eye vitamins, PreserVision, and Ocuvite delivered $104 million of revenue in the quarter, up 1% on a reported basis. Overall, we saw consumer demand strengthen through the quarter, with healthy consumption trends exiting Q2 and continuing into July. Contact lens revenue grew 5% in the second quarter, driven by broad-based performance across all key product families and all geographies. Across the product families, DAILIES AquaComfort Plus grew 16%, Biotrue is up 13%, and ULTRA is up 9%. The business delivered balanced growth across geographies, with the U.S. up 5% and international up 6%. The international performance was strong across all regions. EMEA at 11%, Latin America at 7%, Canada 11%, and Asia-Pac 3%. Moving to the surgical segment.

Second quarter revenue was $256 million, up 16% versus prior year. To better frame the underlying growth trajectory, we're also comparing surgical performance to the second quarter of 2024, which represents the pre-recall baseline. Versus that baseline, revenue was up 17%. Implantables delivered 64% growth. Premium IOLs were a significant contributor, growing at 175% in the quarter. This reflects the continued transition of the portfolio toward higher margin premium categories. Consumables were up 4% in the second quarter, and equipment revenue was up 2%. Revenue in the pharma segment was $354 million in Q2, an increase of 14%. Our U.S. pharma business delivered 17% growth in the quarter, mainly driven by continued strength in dry eye. The dry eye franchise grew 23% with both MIEBO and XIIDRA contributing to the performance. MIEBO delivered another strong quarter and remains on an impressive growth trajectory.

In Q2, revenue was $91 million, up 44%. Average weekly TRXs increased by 29% year-over-year, which speaks to the continued momentum we are seeing behind the brand. XIIDRA also delivered solid growth in the quarter. Consistent with our commitment to deliver XIIDRA revenue growth, Q2 XIIDRA revenue was $87 million, up 6%. International pharma grew 8% in Q2, adding to the segment's broad-based performance. Now let me walk through some of the key non-GAAP line items on slide 10. Adjusted gross margin in the second quarter was 62.2%, up 160 basis points year-over-year. The expansion was driven by favorable mix from higher margin parts of the portfolio, including in pharma and surgical, as well as continued benefits from productivity initiatives. This builds on the progress we saw in Q1 and demonstrates continued execution against our strategy.

In Q2, we invested $114 million in adjusted R&D, an increase of 19% year-over-year. This investment reflects our continued focus on advancing a deep and diversified pipeline designed to capture substantial growth opportunities. In Q2, adjusted SG&A margin improved by approximately 130 basis points, adding to the significant progress delivered in Q1. It reinforces the durability of the structural changes implemented in 2025 and our ability to drive growth with a lower fixed cost structure. Second quarter adjusted EBITDA was $246 million, up 28% year-over-year on a reported basis, and adjusted EBITDA margin was 17.6%, up 260 basis points year-over-year. Q2 adjusted cash flow from operations was $161 million, while CapEx was $71 million and adjusted free cash flow was $90 million. We are seeing the benefits of our revenue growth and margin expansion translate into healthy cash flow generation.

This is exactly the progression we have previously outlined, delivering on the top line, expanding margins, and converting that operating performance into cash. Net leverage as of the end of Q2 was approximately 4.7 times. This reflects a full turn reduction since our Investor Day. Net interest expense was $89 million for the quarter. Adjusted EPS, excluding acquired IPR&D, was $0.16 in Q2, compared with $0.07 in the prior year quarter. Slide 12 brings together the key message from the first half of the year. We are delivering meaningful margin expansion while continuing to invest in the pipeline and future growth. In the first half of the year, adjusted EBITDA margin increased by approximately 370 basis points versus the prior year. This reflects meaningful progress across both gross margin and operating efficiencies.

Gross margin expansion continues to be driven by favorable mix in premium areas of the portfolio, together with manufacturing and productivity initiatives. These drivers contributed approximately 170 basis points of year-to-date adjusted EBITDA margin expansion. At the same time, we are generating strong operating leverage. The structural changes implemented in 2025 are enabling us to deliver growth with a lower fixed cost structure, contributing approximately 250 basis points of year-to-date adjusted EBITDA margin improvement. Importantly, we are continuing to invest for the future. We increased R&D investments by 50 basis points, supporting our deep and diversified pipeline and the substantial opportunities we see across the portfolio. The takeaway is clear. Our strategy is converting into strong financial results. We are expanding margins through mix, productivity and operating discipline, and driving cash flow. We are doing this while continuing to invest in innovation and sustainable long-term growth.

Turning to our 2026 guidance on slide 14. We continue to see solid momentum, supported by strong business fundamentals and a healthy eye care market. Following a strong first half, we are increasingly confident in our ability to deliver over the balance of the year. We are raising our full-year revenue guidance by $20 million to a range of $5.440 billion-$5.540 billion, driven by stronger expectations for the underlying business. Specifically, we are increasing the business outlook by $25 million, partially offset by a $5 million reduction in expected currency tailwinds. The updated revenue guidance reflects concept currency growth of approximately 5.8%-7.7%, which is 50 basis points above our prior outlook. We are also raising full-year adjusted EBITDA guidance by $15 million to a range of $1.025 billion-$1.075 billion.

At the midpoint, this reflects an adjusted EBITDA margin of approximately 19.1% and year-over-year adjusted EBITDA growth of approximately 18%. We continue to execute our margin expansion strategy with discipline and expect meaningful operating leverage in 2026, with adjusted EBITDA growing at nearly three times the rate of revenue. In terms of the other key assumptions underlying our guidance, for the full year 2026, we now estimate a revenue tailwind from currency of approximately $45 million, down from approximately $50 million previously, as exchange rates have moderated. We continue to expect adjusted gross margin to be approximately 62% and investments in R&D to be in the range of 7.5%-8% of revenue. Below the line, our expectations remain unchanged, with interest expense of approximately $365 million, an adjusted tax rate of approximately 19%, and full-year CapEx of approximately $285 million.

Our outlook continues to show earnings growing significantly faster than revenue, reflecting the operating leverage in our business and the benefits of the actions we've taken. As we move through the remainder of the year, our focus remains on execution, and we are increasingly confident in our path to the three-year targets. Now I'll turn the call back over to Brent.

Thanks, Sam. Luc Bonnefoy, president of our surgical business, will walk you through what's driving segment growth and why we're confident in what's ahead.

Thank you, Brent. I will start where the momentum is most visible, implantables. Implantables grew 64% in the quarter on a constant currency basis, and 37% versus Q2 2024. That's a two years growth story, not a one-quarter print, and it is the clearest signal you will see that our premium-led eyewear strategy is working exactly as designed. In 2023, premium eyewear represented 6% of our surgical revenue, 7% in 2024, 9% in 2025, and 13% in the second quarter of this year. That curve is not just steepening, it is compounding. Every point of premium mix that move into the portfolio brings higher margin deeper surgeon relationship, and a stronger pull-through effect across the rest of the business. In other words, this is not just growth. It is a kind of growth that transforms what the surgical business is. That transformation isn't happening by accident.

It is a result of a deliberate strategy built on three pillars. First, driving growth in premium IOLs. Our premium portfolio today anchors on enVista, Aspire, and Envy, the diffractive offering powering our current mix shift, alongside our expanding Lux family with LuxSmart and LuxLife in market. Complementary Lux Boost and Lux Lift are expected to launch in 2028. A cadence designed to keep the mix shift on the trajectory you just saw well into the back half of the decade. Second, launching equipment innovation. Helios, Synera, and Sinova each represent a step change in what surgeons can offer their patients, and each strengthens our pull-through economics with every placement. Equipment isn't just a revenue line for us. It is a strategic asset that anchors long-term customer relationships and creates a platform for consumables and implantables growth downstream. Third, expanding manufacturing capabilities and optimizing our network.

This is a piece that doesn't always make the headlines but shows up directly in margin. As we bring more premium product in-house and streamline our supply network, we are driving cost efficiency, deepening customer loyalty, and reducing complexity across the manufacturing footprint. That's how we are building operating leverage into the business, not just the top line, but structurally. Put those three together and you have the engine behind what Brent described earlier, a surgical business that isn't just growing, but transforming as it grows. With the launch calendar and innovation pipeline that extend well into 2028 and beyond, we believe the trajectory is sustainable.

Thanks, Luc. Now to the two brands doing the heavy lifting of pharmaceuticals. MIEBO's revenue grew 44% to $91 million in the quarter, while XIIDRA grew 6% to $87 million. Individually, those are strong numbers. Together, they tell a bigger story. MIEBO and XIIDRA delivering 27% combined revenue growth in the first half of this year versus the first half of 2025. That's why we're increasingly confident in what comes next. Based on where MIEBO is trending, we expect it to soon become the branded industry leader in the treatment of dry eye disease, a category with real unmet patient need and a treatment landscape that's been waiting for a differentiated option. That's the position MIEBO was built to fill. Paired with XIIDRA, a proven established therapy with its own loyal prescriber base, we have a dry eye portfolio that competes on both ends of the treatment paradigm.

That's a structural advantage, it's why we believe pharmaceuticals will remain one of the strongest engines of growth for this company this year and beyond. Turning to consumer, where two recent launches are already shaping the next phase of growth for the business. Blink Triple Care Preservative Free began shipping in the U.S. earlier this year, and it's already proving to be a category expander, with roughly 66% of its volume coming from new users to the franchise. That's exactly what a healthy launch looks like, pulling new consumers in rather than cannibalizing what's already there. It helped push the broader Blink franchise to 12% reported revenue growth in the quarter, continuing a long-running upward trajectory. PreserVision AREDS3 continues to gain shelf presence and digital prominence.

The expanding distribution is one of the reasons the PreserVision franchise still delivered growth, even against some consumer headwinds early in the quarter that track closely to gas prices. It's worth remembering that eye care professionals play an outsized role in recommending eye vitamins. As more ECPs become familiar with AREDS3, we expect that to help blunt any impact from private label AREDS2. Bottom line, the underlying brand health is strong, as AREDS3 availability continues to grow, we expect PreserVision to keep gaining ground. Two franchises, two different playbooks, a consumer engine that keeps humming, reliably adding to the Bausch + Lomb growth story quarter after quarter. Here's a closer look at what's driving contact lens performance, the story really is broad-based. In the U.S., reported revenue grew 5%. Internationally, constant currency revenue grew 6%.

That's a balanced global growth profile powered by three franchises pulling in the same direction. Our daily SiHy portfolio was up 16%, ULTRA monthly up 9%, and Biotrue one day up 13%, all on a constant currency basis. What that mix tells you is that our growth isn't concentrated in a single lens or a single modality or a single geography. It's spread across our portfolio and across our markets, which is exactly the kind of foundation you want when you're competing in a category with structural tailwinds and long product cycles. We're not standing still. The next wave of contact lens innovation is already in motion. With a disciplined global rollout schedule and a development pipeline designed to keep this franchise growing well into the next decade. Contact lenses have been a dependable engine for Bausch + Lomb for quite some time.

Based on where we sit today and where we're headed, we expect it to remain one for years to come. A quick word on the pipeline before we open it up for questions. You've already seen the breadth and depth of the portfolio built to meet where the world is going. This slide shows the pace of progress, milestones delivered in the first half, more expected in the second, and a cadence that carries us into 2027 and well beyond. Operator, let's open it up for questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the star keys. To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. The first question today is coming from Patrick Wood from UBS. Patrick, your line is live.

Beautiful. Thanks so much, guys. Really appreciate the question. I guess maybe just to start, I had two. Just to start, big picture, thinking about the three-year plan. Obviously, this was laid out back in November, how do you feel things have gone since then? Do you feel more confident? Is the shape of the plan coming together in the same kind of way that you had anticipated, or are there any areas that maybe are stronger or weaker than the framework that you had originally laid out? It's obviously very unpredictable. Yeah.

Great. Thank you, Patrick. Congrats on the new platform and role. Great to hear from you. Yeah. Look, in November, we laid out an ambitious three-year plan. I think if you look at every quarter we've printed since Investor Day, we have been proving that we can deliver on our commitments. To be fair, I think it's really very important to me and our team at Bausch + Lomb that we do what we say we're going to do and prove it quarter after quarter, year after year. If you look at where we stand and you look at the quarters printed since the November Investor Day, I think we're showing it.

This quarter, 8% constant currency revenue growth, EBITDA growth of 28%, cash flow that's nearly double last year's levels of cash flow, reduced leverage by approximately one full turn since Investor Day. If you take all those metrics together, you see this business, Bausch + Lomb, is moving very quickly and very strongly in the right direction with strong quality and broad-based growth. It's not really a one-quarter story, as I've mentioned. It's a multi-quarter story. We're approaching three or four quarters into our commitments. We've delivered on each one, and I'm highly confident we'll continue to do that. A lot of the improvements we've made through our Vision 2027 are structural. They're permanent. You see it in the SG&A line, you see it in the product mix, you see it in the gross margin. These are really important. I think what I'm most proud of is we've been able to do that and see that margin expansion while we still invest in innovation and feed the business for long-term growth.

Net-net, Patrick, the business is stronger than it's ever been. We have strong momentum. We have strong growth plans. We have a strong pipeline, and we're continuing to generate cash at a faster pace and continuing to delever. These are all very strong proof points or evidence that we're on track, and we are going to deliver or exceed the commitments we made last November at our Investor Day.

Love it. Just as a quick follow-up, you guys obviously touch the consumer in a bunch of different categories in a bunch of different ways. Clearly, the contacts number is still in really good shape. Your overall view on the health of the consumer, particularly on the U.S. side, any signs of how things are going overall or pretty stable?

I think it's relatively stable. I think the one thing that we track very carefully, if you look at the consumer and you look at the consumption data from retailers, it tracks very closely to the price of gasoline. We know what's happening with the price of gas, right? It keeps fluctuating. We saw that in the second quarter. We started off with a little more pressure on consumption, as prices of oil came down or the price at the pump came down, consumption grew, and we ended stronger than we started. We keep an eye on that. That being said, this is a very resilient business. What we see is sometimes trade down to smaller pack sizes or more promotionally sensitive in those times. Suffice it to say, I think the consumer is relatively healthy.

We do have to keep an eye on gas, I think that our business was built to be resilient to the consumer, we can work our way through even that.

Love the color. Thanks so much.

Sure. Thank you. The next question will be from Young Li from Jefferies.

Young, your line is live.

All right, great. Thanks for taking our questions. I guess to start, I wanted to ask surgical a little bit. Pretty strong growth in the premium IOLs business, but that's off of the low comps from the recall. I guess, now that it's been a little bit more than a year since you resolved the recall, some of the maybe wait-and-see docs, just kind of curious if they're more comfortable with the product now. What's the continued outlook on growth in that franchise, and how high do you think the premium mix shift can get to in the next 1-2 years?

Yeah. Thanks, Young, for the question. Maybe I'll start and then I'll ask Luc Bonnefoy, since he's joined us on the call here, to give his point of view on this as well. Look, I think hopefully this is the last time we have to talk about the recall. As you mentioned, we're a year through it, and I think the Q2 numbers are the final proof point that we need to say that we have recovered extremely well from that. Most importantly, I'm very proud of how our team worked through it and supported our customers with dedication and urgency. That being said, I think the situation is always more complex than the numbers suggest, right? Because during a recall, surgeons didn't stop cataract surgery. They went to competitive products. Those procedures were performed not with enVista, right, with other products.

We had to go out and win back those customers one at a time. The team did that, and they did that because the doctors had confidence in how we handled the recall, and more importantly, in the quality control and the quality and outcomes that our enVista platform consistently delivers. I think if you're out in the market, which I spend a lot of time with our surgeons, they don't even talk about it anymore. They talk about the great results they're getting with the enVista platform, particularly our Aspire and enVista IOLs. The progress to date, I think, has been significant, and more importantly, the momentum that the team has built is real. Maybe I'll turn it over to Luc to add his color.

Thank you, Brent. Happy to share more details concerning the second quarter for Surgical. Indeed, Q2 shows that we are building real momentum with surgeons and also customers. Like you said, a big part of that is the work our field team is doing every day. The team has been rebuilt, refocused, and now staying closer to customers to support them even more effectively in the field. What is very encouraging is that the momentum is showing up in the areas that matter the most for us. Of course, I mean about premium IOLs. That data has shown us that customers are seeing the value in the portfolio and choosing to engage with us in a more meaningful way. The Surgical business not only grew versus last year, but also versus pre-recall levels.

To put Q2 performance in context, we also look at Q2 versus 2024 as a more normalized pre-recall baseline. On that basis, Implantable grew 37% constant currency versus Q2 2024, and total Surgical 17%. That reinforces our view that the business is not just recovering, it is strengthening and building momentum. The focus from here is pretty straightforward. Keep showing up for customers, support surgeons in the field, and build on the momentum we are seeing. If we do that, and it is what we plan to do, Surgical will keep getting stronger and play an even bigger role in our long-term growth.

Thanks, Luc. All right. Great.

Can I guess, follow up? I guess a question on the competitive dynamics of specifically two products, PureSee and Tryptyr. It doesn't seem to be impacting your business much in those categories. Can you maybe comment a little bit more about what you're seeing in the market for those two launches?

Sure. Happy to. Let's take PureSee and just the premium IOL segment. I think when you look at the dynamics of the cataract market in the first half of this year, you're starting to see a transition to premium. You're seeing monofocal cataract procedure volume kind of flattish. You're seeing the growth coming from premium. Some of that is something this industry had wanted to see for a long time, and we're starting to see early green shoots of that happening. That's because I think the IOLs are delivering better than they ever have. PureSee is a good IOL, and it seems to be sourcing most of its volume from their existing customer base in Alcon. Envy is a best-in-class trifocal. It's giving surgeons more options to give better outcomes to patients, and I think we can compete very effectively there.

Obviously, we're looking forward to launching enVista Beyond later next year. I think we're incredibly well-positioned and very competitive in the premium IOL market. Tryptyr, it has its segment to compete in the dry eye market, right? In increased tear production. Frankly, the majority of the market is in inflammation and tear evaporation. There's no doubt, I think, anymore that our franchises of MIEBO and XIIDRA are the ones with the most momentum, the ones that doctors turn to first when they think about treating a patient for dry eye, and the ones that deliver the best results for patients. There, I'm easy to say we're the undisputed leader with the most momentum, the larger share of voice, and the best product profiles.

I think we have a very strong position in a category that has a lot of growth yet to build.

Great. Thank you very much.

Thank you. The next question will be from Joanne Wuensch from Citi. Joanne, your line is live.

Hi. Good morning. This is Anthony on for Joanne. Thanks for taking our questions. Another solid quarter in contact lens. Could you maybe just characterize a bit more what you're seeing regionally, both in terms of market growth and competition?

Yeah, sure. I think I was asked at the beginning of the year, perhaps by Joanne, Anthony, where I thought contact lens market growth would be. If you look at 2025, it was about 4% for the market. I had predicted that we'd see an improvement in 2026 at perhaps closer to approximately 4.5% market growth. I think, based on where we sit today, it's probably closer to 4.5% than 4%, or as we have, I guess, another six months to go. That's where I think we're probably right. A bit of strengthening in the growth in the market. For us, when you look at our growth, very balanced between U.S. and international. We also saw nice growth in China at 3%, in a tougher market with a tougher dynamic right now. We saw Canada up 11%, Europe up 11%, LATAM up 7%.

Very balanced growth across the globe. I think we're very well-positioned when you look at our new products. Our DAILIES Aquacomfort Hydra Gleam growing at 16%, but then more mature products like Biotrue up 13% and ULTRA up 8%. It shows that this growth is being sourced in our business from a very strong geographical mix as well as a product family mix. I feel very good about where we are. Then, of course, bridging to our Project Halo and BioActive lens, hopefully launching towards the end of 2028 or the back half of 2028. I think this business is incredibly well-positioned for strong growth for many, many years to come.

Great. There's a quick follow-up. You have leverage down about a turn year-over-year. I guess, could you give maybe updated thoughts on how you're thinking about capital allocation moving forward?

Really no change from what we've been saying on capital allocation. Clearly, delevering is our highest priority. We had said at Investor Day we want to be 3.5 times or better, by the end of 2028. We're absolutely committed, as I started the call, to doing what we say we're going to do, that's a very high priority. I think second to that is reinvesting in the business. In terms of reinvestment, we tend to look for things that are immediately accretive and fairly neutral to the leverage ratios. That's our criteria, and we look at a lot of things. We're very active that way, but we are going to prioritize delevering as a goal. Sam, anything you'd add to that?

No, you covered it pretty well, Brent. I think you'll see that the progress with the full turn since Investor Day, it's really put us in a very good position as we think about the 3-year targets here. Really moving pretty well with a very strong cash flow generation that's exceeding our expectations.

Thank you. Thanks, Anthony. Thank you.

The next question will be from Robbie Marcus from J.P. Morgan. Robbie, your line is live.

Thanks for the question. This is Alan on for Robbie. Just a quick one on the cash flow side. As you highlighted in your opening remarks, this really was a really strong cash flow quarter. When I think about the outlook for the back half of the year, what gives you confidence in your ability to continue driving that kind of free cash flow and reiterating your CapEx outlook?

I'll ask Sam to provide more detail, I would mention one point, which is the kind of rhythm of our business or the seasonality of the business. The back half is always stronger than the front half. With good cash generation in the first half, it gives us a lot of momentum to continue to improve that in the back half. I'll turn it to Sam for more color.

Sure. We're very pleased with what we've seen and what we were able to do on the cash end. It's important to talk about Q2, but also, I want to step back. We restarted the year in a very strong position with cash with Q1. When you think about the second quarter, $161 million of cash, that's roughly about 87% growth on cash on a year-over-year basis for Q2, with a very nice conversion. As a point on your point on terms of the second half, Brent touched on the seasonality, which is very important. There's also fundamental shifts that we've done in terms of how we measure our working capital. We've taken roughly about 12 days out of our working capital on a year-over-year basis, and that's not just a one time.

You've seen it sort of steady and carrying forward with us. We're really getting the benefit of that as we go forward. When you think about full year, we're moving towards our goal of the 45% cash flow to EBITDA, just EBITDA conversion. What's more important is the three-year target that we put out, which we said 50-plus % conversion by 2028. As we sit here today, I would say we're tracking ahead of that target. It's really given us a lot of confidence, not only in 2026, but also how we're thinking about the next three years and achieving the three-year targets being ahead of our expectation.

I think it's important. We spent a lot of time as a management team talking about cash. Sam is the most active of doing that at every meeting we have. The fact that the margin expansion is translating into strengthening or improving the balance sheet is a real key criteria for us and something we hold ourselves and measure ourselves on weekly.

Thanks. Just a quick follow-up. You're looking to enter the MIGS market with ELIOS. This is a market that has become more competitive and a little bit more saturated. Your device is definitely differentiated against the other offerings on the market, but just curious your views on the competitiveness and how you're going to position that portfolio against the other MIGS competitors. Thanks so much. Yeah. Maybe I'll ask both Luc and Yahia, who are both here to add their comment.

Very quickly, at a high level, I think it's highly differentiated, right? This is a best-in-class procedure. It's implant free. The Excimer is the perfect laser to provide these microchannels in the trabecular meshwork. We're very excited to get this approval in the second half of the year and get it launched. Luc- Yeah you want to talk about positioning and then maybe Yahia- For sure just how it's differentiated from an efficacy and technology perspective.

In addition to what you just said, the beauty of the ELIOS is really that it can be done during the cataract surgery, so the patient is already there. 20% of the patients arriving for cataract surgery have glaucoma, probably moderated, and they can be a target for ELIOS. The patient is there in OR, the ASC has paid the nurses, the custom pack is open, and they just need five minutes additional operating time to treat the glaucoma and reduce the drops dependency. It's not only efficient, it's better for the clinic, it's better for the patient, and it's also very good for the surgeon. We have very good hope with this product.

Yeah. The other thing I would say is, before I ask Yehia to talk about the procedure itself, if you go to the surgical meetings or conventions, two things are happening that I haven't seen happen in my 13, 14 years of being in this field, which is they're talking about not just IOLs and cataract surgery, they're talking about interventional glaucoma and their responsibility in eliminating or reducing the burden of drops in glaucoma management and helping patients be drop-free or less dependent on drops where there's compliance and persistence issues that are significant. They're talking about the health of the ocular surface prior to cataract surgery, which plays into our dry eye portfolio. There's a real synergy between those two things and cataract surgery, and Bausch + Lomb is incredibly well-positioned to help manage both of those with ELIOS and our dry eye portfolio.

It's a really good strategic setup for us at the right time when there's real momentum around both of these issues during cataract surgery. Yehia, you want to talk about ELIOS a little?

I think that majority of the advantages have been mentioned, but I would like really to stress on additional two things. One, it's a very easy surgery to be done. Actually, the majority of the cataract surgeon that have never done even MIGS before, we actually, when we met with them and they have tested in a wet lab, they found it very easy to adapt. This is one of the biggest area for us as well, because anybody who's doing cataract surgery and would like to get into this field, this could be the right technology for them to use. The second part that I really also would like, that we are actually through the Excimer laser, which is very precise, cutting these microchannels.

We leave the trabecular meshwork in a very healthy way, even after the procedure, which allows for the patients that if for any reason they require additional surgery or anything like that still the majority of the trabecular meshwork remain intact. The third part is obviously, as Brent mentioned, one of the main objectives of this MIGS is to get the patients off their pharmacologic treatment. What we have seen in the clinical trial results over two years, that over 80% of these patients have been drop-free. This is a great achievement with regard to this treatment as well.

Great. Thank you. Thank you.

The next question will be from Larry Biegelsen from Wells Fargo. Larry, your line is live.

Hi, good morning. It's Leigh calling in for Larry. Thanks for taking the questions. Congrats on a good quarter there. My question first is around your guidance. You delivered 7% growth in the first half. You raised the outlook for the year. That implies similar growth in the second half versus first half. Comps do get a bit tougher in the back half. Can you just talk about how you maintain that growth momentum against the tougher comps and anything specific to call out in terms of Q3 versus Q4?

Hey, Leigh, it's Sam. Let me take this question. You're absolutely right. We did look. When you look at the first half, up about 7%, that suggests roughly the same level of growth in the second half. Couple of things to keep in mind here. The first one is the momentum that we've seen in the first half was really good and really strong. That sort of led us to raise the guidance not only this quarter, but also last quarter. We've been consistently doing that for the last two quarters here. We're seeing that momentum continue with us in the second half. We know the seasonality of the business plays a factor. We know that the second half is stronger than the first half. That plays a factor. Also the momentum that we're seeing around all four businesses and what they're able to deliver is very strong.

That gives us the confidence in the raised guidance and the, sort of I'll call it, the carrying that momentum forward into the second half. You see that also, by the way, translates through the P&L as well, when you think about just margins, because margin is very important for us. We've been talking about it. Our first half were just roughly about, call it 16.9% on EBITDA margin. When you think about the second half, we're looking to accelerate to get to the 19.1% EBITDA margin I referenced in my prepared remarks. That will suggest roughly about a 21% EBITDA margin in the second half. You're seeing not only top-line accelerating, but also you're seeing that momentum carry with the EBITDA margin as well.

From a phasing perspective, we're, I'll call it, in a very normal cadence of phasing. I use 25 probably as a good reference point right now. We saw that the top line was probably about a 25% achievement from our midpoint of our guidance. For EBITDA, I would say it probably would be the same. Maybe we'll do a little bit better. I'll say between 25% and 26% achievement of the full-year guidance that we have right now.

That's helpful. Thank you. My other question, just around the strength of the surgical business in Q2, excuse me. On the Q1 call, you had talked about there were some weather and reimbursement changes that affected the performance. Was there anything to call out in Q2 as far as catch-up or reversal that you would highlight? Thank you again for the question.

Not really. Q2 was a pretty typical quarter. We didn't see clearly the weather wasn't as big of a factor, where surgery centers were closed in the U.S. in the quarter. There were also strikes in Europe, I think Spain.

Plus Spain continued, yes, in Q2, and will probably continue until the end of the year. It's the only major events that we have in Europe.

Yeah. I think fairly typical. No, nothing spectacular to call out in Q2. I think it was just great execution across the world, across the portfolio.

Thank you. The next question will be from Douglas Miehm from RBC. Douglas, your line is live.

Yeah. Thank you. First question just has to do with the commentary around MIEBO. I know that you've indicated that in 2026, this product would turn profitable, and I'm wondering if it has turned profitable or if you expect that to happen in the second half of the year. The second question I have is just around the dual action drug product that you will have data read out on shortly. Can you speak to anything specifically that you're looking at in terms of those 2B results? In the event of a positive trial, when could we see that phase III start for a registration study and move through? When could we see that completed? I'll leave it there. Thank you.

Great. Thanks, Doug. Look, MIEBO obviously is a powerhouse that continues to exceed our expectations. Frankly, it's a combination of great execution by the team and just great medicine, right? Its safety profile is incredibly positive. Its efficacy is very quick in a category where most of the other treatments take weeks or a month or longer to kick in. You're looking at really almost instantaneously treating the patient to satisfaction. So it's really important that you not just look at the execution, but actually the quality of the underlying medicine that MIEBO is. Look, when you see 44% revenue growth on MIEBO in the quarter, you see that this is a product just that has great momentum in a category that's still under-penetrated from a prescription therapy perspective and lots of room for growth.

I would also say, when you look at MIEBO, we continue to improve coverage. Medicare coverage just increased from 71% to 88% as we picked up Humana Medicare. A lot of growth still to drive MIEBO with. With respect to dual action, maybe I'll turn it over to Yehia- Yeah to talk about the phase II.

We still expect a data readout in this half of the year.

Yes. Thanks, Brent. I guess, as mentioned, we are on track to deliver the top line in the second half of the year. I think your second part of the question was related to what we are expecting to see in terms of the study. This is a phase II study. This is the first study that we are testing the combination therapy. We usually look to the overall efficacy and overall safety of the combination therapy, we have added additional endpoints where we can look to what's called contribution of elements, something that regulators usually look for any combination treatment, which means that we need to demonstrate some superiority versus each individual component. This is also planned within the study design. Again, as mentioned, I think the study completed recruitment.

We are actually just within the terms of cleaning the data and so forth. We should be expecting toward end of quarter three, the top lines.

The phase III would start depending on the result.

On the third part of the question about the phase III, obviously depending on what we will see in this one, we are planning to start the phase III, provided that the results support that in the coming year, 2027.

Excellent. Thank you. Thank you.

The final question for today will be coming from Thomas Stephan from Stifel. Tom, your line is live.

Great. Hey, guys. Thanks for taking the questions. I'll just keep it to one in the interest of time. Brent, can you maybe talk a little bit more about the update on enVista Beyond from the press release? What's kind of the likely path forward here for the product? I guess it sounds like a 2027 launch is still the base case expectation, maybe if you can discuss those results a bit further and kind of where we go from here. Thanks. Thanks, Thomas Stephan. We still are anticipating a launch next year.

Since Yehia Hashad is here and he's the expert, I'll let him talk a little bit more about enVista Beyond.

Yes. Thomas Stephan, hi. Thank you for the question. We currently actually just received the first set of data, and we're still completing our full analysis of the data sets. We shall share more additional information once the review has been completed. However, having said that, it's important to realize that we remain confident in the strength of the overall data that we have seen so far, which demonstrated a clinically meaningful benefit for all patients that have been implanted. As Brent Saunders mentioned, we are still on track for the submission by the end of this year and also the approval by end of next year. It's a 1-year review period.

Again, as mentioned, I think the overall data set's still not complete even, we just received the first wave, and this is based on the first wave of what we have seen so far.

We are excited to get this product on the market. I think it will be a very strong addition to our premium portfolio. If you look at where the EDOFs sit in the treatment paradigm, it's an important product for us, and we're excited to get it out.

Got it. Thanks, guys. Great.

Operator, I'll just conclude by thanking everyone for joining us on the call. Hopefully, as you look at the results we delivered this quarter and we continue to focus on delivering on our three-year commitments. This was another strong proof point that we are going to do what we say we do and deliver on our commitments to meet or exceed those targets. Our business has great momentum. Our people are committed, and our product portfolio continues to expand. Our future is bright, and we look forward to continuing to keep you updated and delivering strong quarter after quarter. Thank you for joining us.

Thank you. The conference is now concluded. Thank you for attending today's presentation.