Good morning, ladies and gentlemen, and welcome to the Bausch Health Third Quarter 2022 Earnings Call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Christina Cheng, Senior Vice President, Investor Relations and Communications at Bausch Health. Ma'am, the floor is yours.
Thanks, Matt. Good morning and welcome to our third quarter 2022 earnings conference call. Participating in today's call are Thomas J. Appio, Chief Executive Officer of Bausch Health, and Tom Vadaketh, Chief Financial Officer. Before we begin, I'd like to remind you that our presentation today contains forward-looking information. We ask you to take a moment to read the forward-looking statements at the beginning of this presentation. Our actual results may vary materially from these expressed or implied in our forward-looking statements, and you should not place undue reliance on any forward-looking statements. Please refer to our SEC filings and filings to the Canadian Securities Administrators for a list of some of the factors that could cause our actual results to differ materially from expectations. We use non-GAAP financial measures to help investors understand our ongoing business performance.
Non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and should be considered along with, but not as an alternative to, measures calculated in accordance with GAAP. You will find reconciliations to our non-GAAP measures in the appendix of this presentation, which is available on Bausch Health's investor relations website. Finally, the financial guidance in this presentation is effective as of today only. We do not undertake any obligation to update guidance. Our discussion today will focus on Bausch Pharma and Salix. However, we will briefly comment on Bausch + Lomb's results announced yesterday. We will refer to year-over-year comparisons with the same period last year, unless otherwise noted. With that, it is my pleasure to turn the call over to our CEO, Thomas Appio.
Thank you, Christina, and welcome to those of you joining the call today. Let me start with the four points on slide six that I want you to take away from this quarter. First, we are encouraged with the sequential sales improvement for Bausch Pharma and Salix this quarter. Second, we created value during difficult market conditions with a very successful exchange offer that reduced debt principal by $2.5 billion. Third, we continue to evaluate potential options to maximize value, including improving our balance sheet and evaluating all factors related to the future distribution of Bausch + Lomb. Fourth, we continue to vigorously defend our intellectual property in the Xifaxan patent litigation. Let me now take you through some specifics. First, on slide seven, I am pleased to report that we are making progress on our key priorities in each of our business segments.
In Salix, we are activating patient and caregivers through targeted commercial strategies, which are starting to drive results, with Xifaxan script growth running positive during the last 8 weeks of the quarter. Other key promoter brands also saw increased scripts, led by double-digit growth for RELISTOR and PLENVU, and mid-single digit growth for TRULANCE. Salix had a 3% organic revenue increase in Q3, improving from the -2% during the first 6 months of the year. We continue to intensify our focus on near-term initiatives to improve the diagnosis and treatment of GI and HE disease. In international, we continue to grow key markets such as Poland, Mexico and Canada with existing brands and new products. The international business posted a 10% organic growth following a healthy 5% increase during the first half of the year.
In Solta Medical, sales grew organically 4% with strong gains in our international business, following a slow first half given the ongoing COVID lockdowns in China. In diversified products, EBITDA margins remained stable, although sales for this segment declined by 17% on an organic basis. JUBLIA continues to benefit from our direct-to-consumer investments, and script growth was 34%. ARESTIN drove a 9% increase in our dentistry business. Second, we took significant step forward in reducing our outstanding debt. After completing an open market repurchase program in the second quarter, which retired $481 million in long-term debt at a significant discount, we executed a very successful debt exchange this quarter that further reduced debt principal by $2.5 billion with minimal cash outlay. This brings our year-to-date debt reduction to approximately $3.3 billion.
I want to thank the teams, both internally and externally, who worked tirelessly through the summer to complete this very successful transaction. We made significant progress in strengthening our financial position this quarter. We reduced our leverage, pushed back our near-term debt maturities, and generated savings in annual interest costs. Third, we continue to evaluate potential options to maximize stakeholder value. This includes ongoing focus on our balance sheet and liquidity. We continue to believe that the separation of Bausch + Lomb makes strategic sense, and we will thoughtfully evaluate all factors related to the P &L separation. In the meantime, we expect that continued focus on commercial execution will improve our operating results and reinforce a solid foundation for our future. Lastly, let me provide a brief update on the Xifaxan patent litigation.
We filed our appeal with the U.S. Court of Appeals for the Federal Circuit and expect the process to take approximately 12-18 months. We will not provide any further comments on patent litigation at this time. With that, I'll turn the call over to Tom Vadaketh, who will provide further details on our third quarter performance and out-
Slide 9. We're encouraged with the progress we made this quarter. With consolidated third quarter revenues of $2 billion, up 2% on an organic basis over the same quarter last year. This represents an important inflection from the first half of the year, which was flat on an organic basis. At Bausch Pharma and Solta, third quarter revenues were $1.1 billion, improving from the 4% decline through the first half of the year to a -1% on an organic basis this quarter. This quarter, 3 out of 4 businesses posted organic growth, notably Salix, International, and Solta. Let me discuss each segment in greater detail as shown on slides 10 and 11.
Salix revenues were $544 million, an increase of 3% versus the third quarter last year, an improvement from the 2% decline in the first half of this year. Xifaxan revenue was up 4% from the third quarter of last year. TRX growth was flat, but ended the quarter with a positive trend. Increased demand was partially offset by an estimated $13 million reduction of inventory at the retail level. We're also pleased with the performance of TRULANCE, RELISTOR, and PLENVU, with double-digit increases in sales and TRX growth of 6%, 22%, and 23% respectively. International revenues were $250 million, an increase of 10% on an organic basis compared with the third quarter of last year, driven by strong performance in Canada and Europe and double-digit growth in a number of key brands.
Solta Medical revenues of $72 million increased 4% on an organic basis this quarter, driven by strong results in the Asia-Pacific region as China recovers from the COVID lockdowns. Diversified products revenues were $238 million, down 17% on an organic basis compared with the third quarter of last year. Revenues from neurology decreased 15%, primarily due to lower demand for Wellbutrin and a decline in COVID-related demand for certain products, offset by a 16% increase in PLENVU revenue. As Tom noted earlier, JUBLIA continues to benefit from our marketing investments. In dentistry, ARESTIN was up 10%, and we saw lower sales from legacy products in generics.
Lastly, on slide 12, Bausch + Lomb revenues were $942 million, up 5% organically compared with the third quarter of 2021, with organic growth across all P&L segments led by the surgical segment. Turning to the P&L for the quarter on slide 15, I will first refer to results on a consolidated basis and then provide some additional color for the performance of Bausch Pharma and Salix. Third quarter consolidated adjusted gross margin was 71.5%, 90 basis points lower compared with the third quarter last year, driven by the impact of inflation. This compares to a 30 basis point decline through the first half of the year. At Bausch Pharma and Salix, adjusted gross margin was approximately 81% and flat versus the prior year.
Our long-term contractual agreements are providing some cost stability this year despite increases in energy and distribution costs. We do, however, expect greater pressure on our cost of goods next year as our contracts renew. Consolidated adjusted operating expenses for the third quarter was $758 million, an increase of $37 million or 5% with higher R&D and G&A expenses. P&L yesterday reported an increase of $26 million in operating expenses. Consolidated R&D expense increased 10% and represented 6.5% of net sales, compared with 5.7% in the third quarter last year as we continue to invest in R&D priorities. The increase in consolidated G&A costs reflects the impact of the separation and the costs to stand up two public companies. We will continue to manage our costs prudently.
Third quarter consolidated adjusted EBITDA attributable to Bausch Health was $766 million, a decrease of 13% versus last year. For Bausch Pharma and Salix, segment profit was $660 million, a decrease of 5% versus last year, driven by the decline in revenue, which includes $25 million primarily from the Amoun divestiture and $27 million from the impact of foreign exchange. On a consolidated basis, third quarter adjusted EBITDA margin was 37.4%, down 450 basis points compared with last year's 41.9%. As a reminder, adjusted EBITDA margin for Bausch Pharma and Salix approximates in the low fifties range, and for Bausch + Lomb approximates in the 20% range. A few words about cash flow.
Excluding legacy legal settlements, separation costs, cash provided by Amoun, and third-party fees related to our recently completed debt exchange, adjusted cash flow from operations on a consolidated basis was $9 million, versus $382 million last year, primarily due to operating results and the timing of working capital movements. Cash flow in the quarter also included advance payments of accrued interest on debt that was exchanged of approximately $100 million that ordinarily would have been paid after Q3. Year to date, adjusted cash flow from operations for Bausch Pharma and Salix was $297 million, and we expect adjusted cash flow for the full year of $600 million. While cash flow has been lumpy this year due to timing, the business continues to be highly cash generative.
Our GAAP cash flow on slide 14 included a payment of $1.2 billion out of the restricted cash balance related to a previous settlement of the legacy U.S. securities litigation. Now let's turn to our balance sheet on slide 16. As Tom mentioned, we made significant strides in deleveraging our balance sheet this quarter. This was accomplished through a successful debt exchange offer that reduced our outstanding principal by $2.5 billion of debt with minimal cash outlay. The exchange offer closed on September thirtieth. A total of $5.6 billion of previously issued senior unsecured notes were exchanged for $2.1 billion of new secured senior secured notes of Bausch Health and $1 billion of new senior secured notes of a wholly owned, unrestricted subsidiary that holds approximately 38.6% of outstanding shares of Bausch + Lomb.
The successful debt exchange also reduced our 2025-2026 debt maturities by $1.3 billion, which you can see in slide 17. We expect the transaction to reduce our interest costs by approximately $65 million annually going forward. You'll note that the gain on extinguishment of debt of approximately $570 million is much smaller than the net reduction in our debt principal of $2.5 billion. Certain GAAP accounting guidance applicable to the exchange resulted in the recording of an approximately $1.8 billion premium on the newly issued debt. This premium will be amortized to effectively reduce GAAP interest expense over the remaining life of the new bonds. Please find additional details in our Form 10-Q.
As you can see on slide 18, total debt excluding Bausch + Lomb is $17.1 billion, which consists of $16.1 billion of restricted debt issued by Bausch Pharma and $1 billion of senior secured notes issued by the newly created unrestricted subsidiary. Excluding Bausch + Lomb debt, approximately 85% of our debt is fixed, or 70% on a consolidated basis, and we have no maturities until 2025. Bausch Health and its restricted subsidiaries continue to hold the majority of the shares of Bausch + Lomb, which itself remains a restricted subsidiary. We're focused on improving the company's balance sheet and unlocking stakeholder value. We've identified potential options that we believe could advance these objectives. Unrestricting P&L is a potential component of one or more of these possible strategies. We're continuing to carefully and thoughtfully evaluate all such strategies.
However, we cannot comment further on any speculation regarding future transactions. I'll now discuss our outlook for the remainder of 2022, which you can find on slides 20 and 21. Our guidance for Bausch Pharma and Salix remains unchanged, with full year revenues of $4.3 billion-$4.42 billion, which is down 3% to flat on an organic basis. Full year adjusted EBITDA is expected to range between $2.28 billion-$2.34 billion. Our previous assumptions are unchanged, with the exception of adjusted tax rate, which is now expected to be a little higher at 17%, up from 15% previously. While we expect FX to continue to be a headwind, we are maintaining our previously disclosed guidance for the full year.
As you heard yesterday, Bausch + Lomb has reduced its full year revenue outlook by $50 million to $3.7-$3.75 billion, driven by FX, and full year adjusted EBITDA by $25 million to $715-$755 million. We're updating our consolidated guidance for revenues of $8-$8.17 billion and adjusted EBITDA of $2.99-$3.09 billion for the full year 2022. Our expectation for consolidated organic growth of flat to up 2% is unchanged for the full year. I'll now hand the call back to Tom Appio for concluding remarks.
Thank you, Tom. As I said, since becoming the CEO, we have four priorities. One, driving sales and EBITDA growth. Two, focusing on operating rigor behind R&D and business development. Three, developing a high-performance results-oriented culture. And four, creating value through strategic alternatives. We have made solid progress this quarter. Our strategy is starting to produce results for Bausch Pharma and Salix with three out of our four segments posting organic growth and a very successful debt exchange offer that has created additional flexibility to invest and innovate. We have also made good progress in research and development, which I'd like to touch on briefly today. We continue to invest strategically in R&D to advance our clinical and regulatory programs in GI, hepatology, and other key areas. One of our new formulations of rifaximin gained regulatory alignment with various global health authorities on two pivotal phase three trials.
Our RED-C program could bring a much-needed treatment to patients living with liver cirrhosis to prevent their first episode of overt hepatic encephalopathy, OHE. This is a much larger patient population than patients being treated with the current formulation of rifaximin for OHE. This product would be a global franchise for Salix. Findings published in our second Liver Trends report this past quarter highlighted the urgent needs in this area. Our research finds that 81% of the respondents believe preventing the recurrence of liver disease symptoms is extremely important, and yet 51% of primary care physicians surveyed were uncomfortable treating OHE. We will continue to increase our efforts to educate medical practitioners, improve both the diagnosis of HE and patient adherence.
We expect the recent approval of the new ICD-10 code for HE will support the continued reimbursement for and access to treatment of this life-threatening condition. In conclusion, we will continue to drive growth, profitability, and improve our balance sheet. We will continue to vigorously defend our intellectual property and address patient needs with Xifaxan. We will continue to evaluate potential options to maximize value for all our stakeholders. I'd like to thank the Bausch Health team for all their hard work, focus, and dedication in driving performance and building a results-oriented culture. As I have stated before, we are a resilient team, motivated, working with a sense of urgency and ownership, and we will remain focused as we execute with excellence to drive performance. With that, we will now take any questions you have. Operator, please open the line for Q&A.
Certainly. Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. We do ask that all Q&A participants please limit to one question and one follow-up. Once again, if you have any questions or comments, please press star one on your phone. Your first question is coming from Gary Nachman from BMO Capital Markets. Your line is live.
Great. Thanks. Good morning. So first, maybe you could talk at a high level, what are the different options you might have related to the distribution of P&L? Is it all related to achieving the appropriate leverage targets? Have those targets changed at all how you're thinking about them? And without visibility on the Xifaxan appeal at this point, can you actually still do the distribution? Can you affect that? And then secondly, just follow-up. Just, Tom, maybe you could talk also at a high level, just the status of potential divestitures. Are you close to anything? Do you feel like discussions have progressed and maybe what the timeframe is for us to hear about something on that front? Thanks.
Okay, Gary. Thanks. What I'll do is I'll let Tom Vadaketh take the first part, and then I'll answer the second part. Tom?
Yeah. Hi, Gary. Good morning. Thanks for your question. Look, in terms of options, we continue to consider all options, you know, as you mentioned, criteria being, you know, what's gonna create value for all our stakeholders. We're focused on that. What would position the company for long-term success. I think you've seen already this year that we've been quite thoughtful in the steps we have taken, and we're gonna continue to be thoughtful with each action and each step that we're gonna take. We're not gonna comment on this call on individual actions, but we are considering everything, and taking each step, you know, pretty thoughtfully. You know, that's all we can say about next steps vis-à-vis distribution or unrestricting or anything else, on that front.
Yeah, Gary, on the question on divestitures, you know, I continue, and the team continues to look at the assets that we have globally, and seeing, you know, what we have, what we can do. It's something that we're reviewing constantly. Of course, we have a lot of valuable assets. You know, if there was a divestiture, it would have to be at a premium price. That's something that we continue to look at because if we were able to divest some assets, we do have some things that we're very interested in from an investment standpoint or paying down debt. Next question.
Your next question is coming from Georgi Yordanov from Cowen. Your line is live.
Hey, thank you so much for taking our question. So we have one, and I guess a follow-up. Just on a follow-up on the previous question. Can you confirm that at this point you've satisfied all the debt covenant requirements to allow for the spin? And what is your updated thinking on the previously guided optimal leverage ratios? And then just as a follow-up, do we have any updates on the citizen petition? And if you can talk about what those bioequivalence guidance might look like. Are there any examples that the FDA has required for other generic products in a specific in a similar product-specific guidance?
Okay. Georgi, I'll let Tom take the first part, and I'll take the second part.
Georgi, thanks. In terms of criteria for spin, as we've said before, there are certain leverage targets that the company had set, we've set for ourselves, as well as various regulatory and other approvals and steps that we've got to take. We are considering all of those, and not just leverage targets. Obviously, the debt exchange has made nice progress, as Tom said and I've said in our prepared remarks. At this point, you know, we have no further comments on whether or not we're closer to a spin.
Regarding the second part of the question, regarding the citizen petition. You know, right now, the FDA granted Bausch's petition in part and intends to revise the Xifaxan product-specific guidance, but as of right now, have not issued the actual guidance yet. Next question.
Thank you. Your next question is coming from David Amsellem from Piper Sandler. Your line is live.
Hey, guys. This is Isaac on for David. Thanks so much for taking our questions. Two for me. On Xifaxan, we saw the tentative approval for Alvogen's generic of the 200 milligram strength about, you know, a month or two ago. It looks like the agency went ahead with their decision without updating the draft guidance. How does that dynamic alter your thinking about a potential label carve-out for the HE indication? As a follow-up, this one on Xifaxan commercially, what is your ability to, you know, invest more, you know, given the state of the capital structure or, you know, should we at this point think Xifaxan as a largely mature asset that you're gonna just manage and maximize the cash flows out of? Thanks so much.
Okay. I'll take those two questions. First, you know, on the 200 milligram, you know, I can't speculate at this time regarding that question. What I would say is, let's just talk about Xifaxan and what I believe and the team believes we have. You know, we have a great asset here in two very important indications. If you take a look at the incidence of these diseases, clearly we have a lot of area for growth. And if I just take a look from an IBS-D perspective, you know, 2.5 million patients are diagnosed with IBS-D, but only 140,000 are treated with second line medication like Xifaxan.
There's a lot of area there to grow. We are investing, you know, this year and next year. Our plan is to continue and to put more investment behind this franchise. When we take a look at HE, you know, our analytics indicates that there's about 193,000 patients potentially have HE, and only 50,000 are treated with Xifaxan, which is the standard of care and the only approved medication in this indication. I believe there is. We are expecting to increase that investment in 2023. I think there's, as we look at it, this is a really core franchise for us that we can continue to grow. Next question.
Thank you. Your next question is coming from Umer Raffat from Evercore. Your line is live.
Hi, guys. Sorry. Thanks for taking my question. A couple of quick ones, if I may. Number one, you mentioned you're evaluating numerous options to maximizing shareholder value. Could Solta be on the table? And then also, if you could remind us if a shareholder approval is needed for spin to go through on BLCO. Thank you.
Hey, Umer. Thanks for the question. Okay. Of course, the Solta franchise, I believe, is again another great asset that we have. As you know, now that, you know, again, with it part of the Bausch Health family of assets, gives us a global footprint around the world. I think this is an asset that we can continue to grow, continue to invest in, but you know, keep all options open. As I stated previously, you know, any type of actions that we would take with our assets would have to be, especially an asset like Solta, at a premium price.
You know, again, we always, we're open to looking at different things, but we believe this asset can really grow for us, and really be part of the Bausch Health family. Tom, you wanna take the second part of the question regarding shareholder approval?
Yeah. Hi, Umer. Yes, indeed. Shareholder approval is required for the BLCO spin.
Next question.
Certainly. Your next question is coming from Annabel Samimy from Stifel. Your line is live.
Hi, this is Jack calling in for Annabel. Thanks for taking our question. You touched on HE briefly, but would you be able to provide any additional color on any update for some of the other rifaximin programs and which of the several you have going might have the potential to offer a future offset to Xifaxan revenues?
Jack, as I said in my prepared remarks, you know, when I look at the RED-C program, I think that this is an area where this is a much larger patient population. This indication and the work that's going on here will be, you know, what is a much larger pool. We believe that this program can really be a real growth driver for us in the future. Of course, you know, we have to wait and see on the data, but the RED-C program is a high priority for us and we really believe in it. Next question.
Certainly. Your next question is coming from Greg Fraser from Truist Securities. Your line is live.
Morning, folks. Thanks for taking the question. On the BLCO spin, are the IRS dispute and the remaining legacy legal cases factors that could influence the process? I guess, do you need visibility on those in order to move forward? On working capital, can you just comment further on the quarter? You mentioned that changes in working capital impacted cash flow from ops. Any additional color there would be helpful. Thank you.
Hi, Greg. Tom Vadaketh here. I'll take both. On the working capital, it's nothing unusual really that you know that goes beyond what occurs at most companies. It's hard to predict and have an even cash flow pattern throughout the year. We've just had just working capital movements moving cash in and out of the quarter. Q2 and Q3 have been particularly low as you know. This year, we're gonna end up with a sort of barbell year where we had pretty nice cash flow in Q1, and then we expect Q4 to be pretty strong as well. On the legacy, I think you meant the IRS litigation, correct, Greg? So were you-
The IRS and then the shareholders lawsuits that still remain.
Yeah, look, like I said, you know, at the beginning, that are in the best interest and beneficial for the company as well as our stakeholders. All of these factors kind of play into that decision-making process as they have been really, frankly, for the last few years.
Next question.
Certainly. Your next question is coming from Doug Miehm from RBC Capital Markets. Your line is live.
Thank you and good morning. Two questions. Number one, can you talk about turnover at the company and how things are looking from that perspective? Secondly, for Tom, when we think about the debt covenant construct and where the holdco sits, which is outside of that, leverage ratios would appear to be below or at the six.
0.5-6.7. Could you elaborate on how you're viewing the $1 billion that's held within the holdco? Thank you.
Yeah, Douglas, I'll take the first part, and then Tom will take the second part. If we take a look at, you know, since the IPO of P&L, you know, there's been a lot of, you know, of course, changes in the company. As we went through the year, you know, with, you know, the normal course that we see on turnover in the sales force is pretty much what has been tracking for the previous years. You know, again, there can be spikes from time to time, but we're tracking as we look at it, but we haven't seen, you know, turnover, you know, above what was in prior years.
When we look at what our policies are in terms of you know, returning to work post-COVID, we have been really you know, putting some things in place there that give our employees optionality of how they wanna work, so that has helped. Also, we have you know, restacked our global headquarters, so we now are separated between Bausch Pharma and Solta and of course, then P&L. We're seeing stabilization. And of course, as you know, with what has taken place you know, globally, from a workforce perspective, there are some movements around. You know, right now, we're seeing it you know, pretty stable in that regard other than some spikes here and there. Tom, you wanna take the second part?
Yeah. Hi, Doug, good morning. Let me just take the second part of question in pieces. I think first, just around the covenant and our credit agreements, the debt, the $1 billion that is at that holdco level, that is an unrestricted subsidiary. I don't wanna, you know, I'll get into trouble with my legal team here if I try and attempt to interpret our agreements, but I can tell you briefly that that debt is not part of our would not count, you know, in our, in the covenants basically and any leverage ratios that we are calculating in accordance with the covenants.
On the 6.5-6.7, I'll remind you that that was a company target and a leverage ratio that we had set out for ourselves to ensure that the remaining company is financially strong. We have never said, you know, we've not said how that's gonna be calculated, and I don't wanna, you know, speculate on whether we are at that level or not. The debt, the $1 billion is a debt of the consolidated company, and I'll just leave it at that.
Next question.
Thank you. Your next question is coming from Rishi Parekh from J.P. Morgan. Your line is live.
How you doing? Thanks for taking my question. I have 2. 1, you've noted in the past that you would consider all options as it relates to the spin. Do any of these options include just not moving forward with the spin, or are you at the point where the spin is happening and it's just about market timing and meeting covenant requirements? My follow-up, as it relates to the requirements, you're below the leverage target. I believe you're at or near your interest coverage target. As it relates to that 50% equity that you own, what's holding you back from unrestricted that? Is it the litigation? Does it have to do with the Canadian approval process? Anything with the solvency opinions? Can you just walk us all through just what's remaining and what's holding you back?
In constructing that 50% spin-off, will it move to the unrestricted sub that you created back in August? Thank you.
Okay, Rishi, I will take the first part. Tom will take the second part. You know, in the first part of your question, you know, what I said in my prepared remarks, you know, we continue to evaluate all relevant factors, you know, and considerations regarding, you know, the Bausch + Lomb distribution. You know, this includes, you know, looking at, you know, of course, the Xifaxan patent situation. You know, and we're focused on doing everything that we can to continue improving the company's balance sheet and liquidity. You know, we, you know, again, we have identified, you know, potential options and paths that we believe could reach, you know, the objectives.
You know, we still think the spin-off makes strategic sense, but we're considering, you know, everything, you know, given, you know, the situation that we have today. Tom, you wanna take the second part?
Yeah. Hi, Rishi. I think Tom sort of addressed, you know, the second part of your question as well. You know, the unrestricting is just a step. It's, you know, I don't view it as some end in itself. It's a step towards our overall strategic path here, towards the separation of the company. In doing that, in deciding to unrestrict or not, we are, as Tom said, looking at all the options. We're trying to be very thoughtful about each step we're taking, and we haven't unrestricted P&L yet. You know, and I'll leave it at that.
Next question.
Thank you. Our last question is coming from Jason Gerberry from Bank of America Securities. Your line is live.
Hi, this is Chimei Fong for Jason Gerberry. Thanks for taking the questions. Maybe on Xifaxan, wondering if you can elaborate on the price and volume dynamic this quarter. I think coming out of COVID, IBS-D was a little slower to pick up. I'm wondering if you can talk about the underlying growth dynamics between the IBS-D and HE indications. I guess on Solta, you know, can you elaborate a bit more on the growth dynamics, your 4% organic growth? Do you think this segment has returned to more normalized growth? If not, when might you expect this segment to return to more normalized growth? I hate to squeeze that last one in, but I know you can't talk a lot more about what you have done or what you already have with the distribution.
I'm curious, BLCO's previous talk about potential timing for a spin, and I'm wondering, do you guys have an internal estimate of what that timeline might be? Thank you.
We'll break this question down. I'll take the one on Solta first. You know, when we look at the growth, you know, when we look at Asia Pac, which is a big part of our business, you know, as Asia Pac returns to normal post-COVID, with the lockdowns in China somewhat, you know, coming back, you know, to normalize levels, you know, again, this growth dynamic, I think this business can get back on the trajectory of good growth. We have a lot of areas where we can continue to invest in driving the performance. Clearly, we do have, you know, in China, regulatory hurdles that we have to overcome, which, you know, is ongoing work.
As we look at you know what it can do around the world globally, we see really good things ahead. We look at our European business. Clearly, COVID impacted our investments there and our build-out of Solta. There's a really great opportunity to accelerate that build-out that we had planned for, but was delayed you know due to COVID. You know, from a Solta perspective, think this is a really great asset. We have great products, and we have some really good work going on the R&D front as we continue to innovate in this area.
What I'll do is I'll pass your second part of the question to Tom regarding the distribution timing and the Xifaxan underlying performance.
Yeah, I'll start with distribution timing. Yeah, as we've said several times on this call, we are not really gonna comment on our next steps, you know, and so I'll leave it at that. On Xifaxan and on Salix in particular, just a reminder, so our growth, our organic growth for the quarter was 3%, and that was predominantly price, that's coming through. So it's, we took pricing actions at the beginning of the year, and we're seeing most of that stick, which is great. On the volume side, as I mentioned, we've seen an uptick in prescription growth in the back half of the quarter.
TRX growth set by a drop in or at least we're seeing, we think, a drop in retail inventory of about $13 million, which I mentioned in my comments. Volume growth was negative during the quarter.
Okay. We don't have any more questions, so we'll end the conference call here. What I'd like to say thank you very much to everybody who joined today. Really appreciate the time that you took to spend with us, and look forward to continuing the dialogue as we move forward with building and growing this company. Thank you.
Thank you, ladies and gentlemen. This concludes today's event. You may disconnect at this time and have a wonderful day.