Bausch + Lomb's dry-eye treatment Miebo is rapidly gaining market share, according to a new note from RBC Capital Markets. The investment bank says the drug likely became the top branded dry-eye prescription in the third quarter, a significant milestone for a product that has been on the market for just over a year.
The news arrives as investors gear up for Bausch + Lomb's third-quarter earnings report, scheduled for October 28. RBC expects the company to post about $1.38 billion in revenue and $275 million in adjusted EBITDA—a common profitability measure that strips out interest, taxes, depreciation, and amortization to show underlying cash earnings.
What's driving Miebo's rise?
Miebo, which was approved by the FDA in May 2023, treats dry eye disease by targeting tear evaporation—a different mechanism than many older treatments. Its rapid adoption suggests it is resonating with both doctors and patients, and RBC's analysis indicates it has overtaken established rivals in the branded prescription market.
The note also points to improving trends for Xiidra, an older dry-eye brand in Bausch + Lomb's portfolio. RBC says Xiidra's prescription declines are easing, which could provide a steadier revenue stream even as Miebo takes center stage.
For context, the dry-eye market is highly competitive, with several large pharmaceutical companies vying for share. A drug that can demonstrate both efficacy and convenience often gains traction quickly, and Miebo's rise suggests it is doing just that.
The FDA warning letter overhang
Despite the commercial momentum, a cloud hangs over the company. In September, the FDA issued a warning letter concerning Bausch + Lomb's manufacturing plant in Tampa, Florida. Warning letters are formal notices that a facility has violated regulatory requirements, and they can lead to more serious actions if not addressed promptly.
Investors are watching closely to see whether the Tampa issue could disrupt supply or lead to additional regulatory costs. So far, the company has not indicated any major disruption, but the uncertainty remains a key risk factor heading into the earnings call.
This is not the first time Bausch + Lomb has faced regulatory scrutiny. The company, which was spun off from Bausch Health in 2022, has been working to strengthen its manufacturing and quality systems. The Tampa warning letter is a reminder that such issues can persist even as commercial products perform well.
What it means for investors
For everyday investors, the key takeaway is that Bausch + Lomb's core business appears to be improving, driven by Miebo's success. Strong prescription trends often translate into better revenue and earnings, which could support the stock price.
However, the FDA warning letter introduces a degree of uncertainty. Regulatory issues can lead to unexpected costs, production delays, or even product shortages, all of which could hurt financial performance. Investors should listen for any updates on the Tampa plant during the earnings call.
RBC's revenue and EBITDA estimates suggest the company is on a solid financial footing, but the market will likely focus on guidance for the rest of the year and any commentary on the regulatory front.
It's also worth noting that Bausch + Lomb operates in a broader environment where high interest rates are seen as a top threat to growth by many investors. Higher rates can increase borrowing costs and pressure valuations, particularly for companies with debt. Bausch + Lomb's parent, Bausch Health, has significant debt, and any spillover effects could be a consideration.
For those looking at the broader market, the company's performance is a reminder that individual product successes can sometimes be overshadowed by regulatory or macroeconomic concerns. As always, diversification and a long-term perspective are important.
The October 28 earnings report will be a critical moment for Bausch + Lomb. Investors will be looking for confirmation of Miebo's market leadership, any updates on the Tampa plant, and management's outlook for the rest of the year. Until then, the stock may remain sensitive to news flow on both fronts.
