BLCO Q4 2024: Miebo $53M Lift, but $45M IRA & FX Headwinds
- Strong Dry Eye Franchise Momentum: Executives highlighted that products like Miebo are showing impressive uptake with high refill rates and robust TRx growth, suggesting that the franchise has strong patient adherence and market acceptance.
- Robust Contact Lens Performance & Innovation: The call emphasized record double-digit growth in the contact lens segment, with ongoing innovations such as the biomimetic lens and myopia control programs, positioning the company for sustainable long-term leadership in this market.
- Diverse and Expanding Product Pipeline: The management's discussion of both current execution and future launches in the surgical and premium lens segments (e.g., Envy, LuxLife, and the expanded IOL portfolio) supports a bull case based on a balanced mix of high-performing existing products and promising new innovations.
- IRA and Currency Headwinds: Guidance for 2025 reflects one-time impacts from the Inflation Reduction Act ($25 million) and currency headwinds ($20 million to adjusted EBITDA), which may pressure revenue growth and margins in the near term.
- Seasonality and Front-Loaded Investments: Q&A discussions highlight that Q1 2025 is expected to be the weakest quarter due to natural seasonality and significant upfront investments in the Miebo direct-to-consumer campaign and R&D, which could temporarily suppress earnings and cash flow.
- Managed Care and Profitability Concerns for Miebo: While Miebo shows strong uptake, there are concerns regarding delayed managed care contracting and the longer path to achieving profitability, with the first couple of years being largely investment years, posing near-term financial risks.
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Free Cash Flow & EPS
Q: Free cash flow and EPS expectations?
A: Management expects positive free cash flow in 2025 with modest EPS growth of roughly $0.02–$0.04, supported by strong cash generation seen in 2024 with $263 million adjusted cash flow and balanced tax and currency headwinds. -
Miebo Profitability
Q: Miebo coverage and profitability timeline?
A: Miebo has reached 74% commercial and 64% Medicare coverage, and management expects it to become profitable starting next year, following the typical pharma product lifecycle. -
Growth Guidance
Q: Why reduce 2025 organic growth?
A: Guidance is set at 5.5%–7.5% due to natural seasonality and the impact of the Inflation Reduction Act, aligning overall growth to remain above market trends. -
Dry Eye Outlook
Q: What about Miebo and Xiidra growth?
A: Miebo posted a strong Q4 baseline of $53 million, and Xiidra is seeing solid TRx momentum despite a one-time IRA headwind, positioning both for continued 2025 success. -
Lens Innovation
Q: Status of biomimetic lens and myopia control?
A: The company is developing a biomimetic lens with promising clinical study results and advancing myopia control solutions, built on existing manufacturing lines to limit extra capital expenses. -
Operational Performance
Q: How is customer execution driving growth?
A: Improved operational execution with stabilized supply and customer service has driven consistent 9%–11% growth across segments, reinforcing a strong execution track record. -
Lens Market Share
Q: Progress in transitioning to daily disposables?
A: The strategy includes transitioning existing customers through new fits and daily disposables, as shown by ULTRA monthly growing 6%, while still sustaining legacy product sales. -
Surgical Strategy
Q: Are there gaps in the surgical portfolio?
A: No significant gaps remain; the premium segment is strong with Envy performing well, and future launches like LuxLife and enVista Beyond promise a comprehensive surgical portfolio. -
Compliance & Refills
Q: What are the compliance and refill rates for dry eye?
A: Miebo has notably higher refill rates compared to its peers, reflecting its strong clinical profile and better patient tolerance, making it a more “sticky” prescription option.