Bausch Health Companies reported that the global Phase 3 RED-C clinical program testing amorphous-rifaximin SSD for primary prevention of hepatic encephalopathy failed to meet its primary endpoint, according to Raymond James. The trial outcome is a significant disappointment for a program designed for the broad liver cirrhosis population and has contributed to a pronounced move in the company's shares over the past week.
Company management has indicated it will undertake a detailed review of the complete RED-C dataset to determine whether there are alternative development opportunities for the SSD formulation. Until that review is complete, the result represents a clear clinical setback for the asset and reduces near-term visibility for that element of the pipeline.
With RED-C no longer delivering the expected readout, Bausch Health's remaining Salix-branded clinical focus centers on larsucosterol, an asset acquired from DURECT Corp. in the third quarter of 2025, which is being developed for alcohol-associated hepatitis. That indication presents a materially smaller addressable population by the company's own metrics - roughly 150,000 annual U.S. hospitalizations - versus the approximately 1.9 million U.S. patients tied to the broader liver cirrhosis population the RED-C program targeted.
Investors have reacted to the trial failure and the narrower pipeline opportunity set; the stock has declined meaningfully over the prior week, and technical measures currently indicate the shares are trading in oversold territory. At the same time, several underlying financial metrics point to operating strength: Bausch Health reported a gross profit margin of 70.7% and is expected to post higher net income this year. Management has guided toward the higher end of its adjusted operating cash flow range for fiscal 2025 - $0.975 billion to $1.025 billion - excluding the Bausch + Lomb Corporation business.
Balance sheet management remains a central theme for the company. Raymond James reiterated a Market Perform rating with an $8 price target and highlighted that the company's investment case now relies more heavily on the ability to shrink a $14.5 billion net debt burden through core cash flows and potential asset monetizations. Total debt stands at $21 billion, underscoring the scale of the deleveraging challenge.
Recent corporate finance activity illustrates management's emphasis on liability management and liquidity optimization. Over the last twelve months Bausch Health generated $1.1 billion in levered free cash flow, supporting management's ongoing share repurchase program. The company also completed a $1.6 billion debt exchange offer that permits holders of existing notes to swap into newly issued 10.00% Senior Secured Notes due 2032, a step intended to manage and extend maturities.
Parallel developments at the Bausch + Lomb unit will alter that business's capital structure and governance. Bausch + Lomb announced board appointments - Eduardo C. Alfonso, MD, and Steven H. Collis - effective January 1, 2026, expanding the board to ten directors. The business also allocated $2.8 billion in new term B loans intended to refinance outstanding facilities and to reduce interest margins on its borrowings.
Management continues to identify monetizing its equity stake in Bausch + Lomb as a top priority for reducing consolidated leverage. Analysts note the stock appears inexpensive on conventional multiples, with a price-to-earnings ratio near 6.1, but emphasize the company's near-term trajectory will be influenced by cash flow generation, potential asset sales and the outcome of the post-trial data review.
The RED-C miss is important to investors because it reshapes the company's clinical outlook and narrows late-stage opportunities, while concurrently placing renewed emphasis on execution in financial operations and strategic transactions to address a sizable debt load.