Pomerantz Named Co-Lead Counsel in Investor Suit Against Bausch Health Companies

Pomerantz was named Co-Lead Counsel in a shareholder suit against Bausch Health Companies, Inc. The suit alleges that Bausch misled investors about the company’s financial standing when Bausch planned to spin off its subsidiary Bausch + Lomb Corporation (B+L), an eye health company.

Bausch Health Companies is a global pharmaceutical company based in Quebec that develops, produces, and markets a wide array of products primarily in the areas of gastroenterology, neurology, and dermatology. In August 2020, the Company announced that it planned to spin off B+L into its own publicly tradeable entity, the benefits of which included “improved strategic focus and enhanced financial transparency.” Joseph Papa, Bausch’s CEO at the time, described the spinoff as “unlock[ing] what we see as unrecognized value in Bausch Health shares.” Plaintiffs allege that, contrary to what was announced publicly, the spinoff would not result in two strong separate companies, but rather would leave Bausch overly leveraged and without the cashflow generated by B+L. As a result, Bausch securities traded at artificially inflated prices, causing investors to suffer economic losses due to Bausch’s misleading statements. In addition, the complaint alleges that Bausch concealed the real purpose of the B+L spinoff: to thwart the ability of plaintiffs who had opted out of a previous class action to collect a potentially billion-dollar settlement by shifting the company’s most valuable assets to B+L. Bausch is also alleged to have hidden from investors another major consequence of the spinoff, that its single most valuable drug Xifaxan’s market exclusivity would be threatened by patents that were ruled invalid when Norwich Pharmaceutical, Inc. brought Bausch to court in 2022.

On May 4, 2023, Bausch announced its disappointing Q1, 2023 earnings, revealing that B+L share distribution would be delayed and that the probability of distribution was less than 50%. Following this, Bausch’s share price fell approximately 20%.

On June 6, 2023, Bausch revealed that the FDA had granted tentative approval to Norwich’s Xifaxan application and that Norwich had sued the FDA for final approval. On this news, Bausch’s share price dropped further by approximately 10%.

Bausch’s CEO Thomas Appio, former CEO Joseph Papa, and former CFO Paul Herendeen are also named as defendants in the suit.