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Bausch + Lomb Raises $630 Million in IPO, Missing Expectations

The stock was priced at $18 per share, off a filing range of $21 - $24.

Image source: Bausch + Lomb

Bausch + Lomb priced its initial public offering below expectations Thursday, selling 35 million shares at $18 per share for gross proceeds of $630 million.

The deal gives the company a post-money market capitalization of $6.3 billion.

The eye care company had been marketing the deal at a range of $21 to $24 per share, via a syndicate of banks led by Morgan Stanley and Goldman Sachs.

At the midpoint of the filed range, the deal would have raised $787.5 million in gross proceeds.

The stock will begin trading Friday under ticker BLCO on both the New York and Toronto Stock Exchanges.

Bausch Health, the parent company, first announced a spinoff of the eye care business in August 2000.

The company's timing for an IPO wasn't great, given the market's recent volatility, and the lowered pricing may put a further damper on what has already been a down year for new equity issues.

Investment thesis

Investors may wish to just watch the early action as this IPO opens on Friday. Stock index futures are trading slightly lower overnight after the Nasdaq and Dow both posted their worst single-day drops since 2000. 

Futures on the S&P 500, which fell 3.6% Thursday for its second worst showing in 2022, are down 0.2% as of 5am ET.

We think Bausch + Lomb will have a volatile first day with heavy volume, and it may only make sense for the most attentive day traders to wade in until the stock finds its level in the coming days and weeks.

Longer term, however, we like the company as a macro play on demographics and brand recognition:

  • Leading brand recognition in eye care market.
  • Global ophthalmic pharmaceuticals market is $26 billion and growing.
  • United Nations estimates that the population aged 65 and over will grow 80% over the next 30 years.
  • Strong correlation between age and eye diseases.
  • International Diabetes Federation estimates that diabetes prevalence will increase by 50% over next 25 years.
  • Diabetics are at heightened risk for severe ocular conditions.
  • Company had $3.8 billion in revenue in 2021, up 10% from 2020.
  • History of market-leading innovation.

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Source: Equities News