Summary

• Bausch Health's Chairman Joseph Papa resigned his position.
• Solta IPO cancellation discussed.
• BHC stock performance expectations.

Image Source: Bausch Health

Bausch Health (NYSE:BHC) shares are in a world of hurt. Shortly before the heavily indebted firm spun off Bausch + Lomb, the stock fell. Selling pressure intensified when the company posted first-quarter results that missed earnings and revenue expectations.

Bausch posted two major news events in June 2022. First, the company's Chairman, Joseph Papa, resigned from his position. Second, the company will suspend its initial public offering plans for Solta Medical. After BHC stock rallied by 20% on June 24, 2022, with the markets, what do those developments mean for BHC stock?
 

First Development: Chairman Resignation

CEO Joseph Papa will give up his chairman title. John Paulson will take his place. BHC said that Papa's decision to leave the board "was not due to any dispute or disagreement with the company, its management or the board on any matter relating to the company's operations, policies or practices."

Shareholders should not dismiss the executive change, as John Paulson takes that position. The executive change could lead to a management shake-up of the company. Paulson may look for a new leader to realize better growth in the company's core products.

Paulson's fund has allocated 18% of BHC stock to his portfolio. Only Horizon Therapeutics (HZNP) has a bigger weight. In the second quarter, Paulson cut his stake in Horizon. The re-weighting is unusual. Horizon Therapeutics posted revenue nearly doubling to $885.2 million in its first quarter. Furthermore, Horizon maintained a net sales guidance of $3.9 billion to $4.0 billion in 2022.

Horizon is advancing its Phase 2 trial in rheumatoid arthritis. It is completing enrollment in its Phase 2 trial in Sjogren's syndrome. When it posts Phase 2 results next year, the stock could break out. Despite the potential, HZNP stock is on a downtrend. Markets expected a stronger net sales guidance. Still, the 22% Y/Y growth values the stock at a price-to-earnings-to-growth ratio of 1.0 times. The stock trades at a P/E of 23 times.

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