BHC

Bausch Health ($BHC) Soars 60% as Hedge Fund Legend Paulson Makes $56M Conviction Purchase

08/13/2025 23:01

Bausch Health Companies ($BHC) is capturing investor attention as legendary hedge fund manager John Paulson has made massive purchases totaling $56.2 million across June and August, sparking renewed interest in this Canadian small-cap pharmaceutical company's investment potential. Bausch Health is a global diversified healthcare company with a portfolio spanning ophthalmic pharmaceuticals, gastrointestinal treatments, and aesthetic medical devices. The company operates through multiple segments including Bausch + Lomb (ophthalmics), Salix (gastrointestinal products), and Solta Medical (aesthetic devices), providing diversification benefits that reduce dependence on any single product. Paulson's buying spree is being interpreted as a strong market signal. The legendary investor who earned $15 billion shorting the subprime crisis in 2008 purchased approximately $35.6 million worth of shares from June 10-13 and another $20.6 million from August 11-13, accumulating 8.9 million shares total. This represents a concentrated conviction play rather than mere portfolio adjustment. The timing of Paulson's purchases reveals remarkable market insight. $BHC bottomed at $4.32 in April 2025 before beginning its recovery in June, precisely when Paulson initiated his first major buying wave. By August 12, shares had recovered to $7.00, representing over 60% gains from the lows. The company's business fundamentals support Paulson's judgment. Q2 2025 results showed revenue of $2.53 billion, up 5.3% year-over-year, while net income surged to $148 million from just $10 million in the prior year period. Particularly impressive was the 12.4% growth in the Salix segment and 25.5% expansion in Solta Medical, indicating strong competitive positioning in high-value segments. Adding to the investment thesis are persistent Bausch + Lomb divestiture rumors. Each time sale speculation emerged in September and December 2024, shares rallied significantly, suggesting the market views current valuations as discounted to asset values. Reports of TPG and Blackstone considering an $11.5 billion acquisition indicate substantial value realization potential. Several positive indicators warrant investor attention. Continued large-scale purchases by sophisticated investors like Paulson, double-digit revenue growth in core segments, and dramatically improved profitability all point to improving fundamentals. However, caution is warranted regarding certain factors. The Diversified Products segment declined 12.8%, and analysts project flat revenue growth over the next three years, below the 8.6% industry average. Historical volatility also suggests investors should prepare for potential near-term fluctuations. Key catalysts to monitor include potential additional Paulson purchases, as his current ~9% stake approaching 10% could trigger more activist value-creation activities. Concrete progress on Bausch + Lomb divestiture negotiations would also directly impact share prices. Q3 earnings will serve as a crucial inflection point. Sustained growth in Salix and Solta Medical could drive broader portfolio revaluation, while any slowdown might question Paulson's investment thesis. Near-term trading is expected in the $6-7 range, but continued Paulson support and segment improvements could drive shares toward $8-9 levels. Conversely, declines below $5 would necessitate investment thesis review. Ultimately, $BHC combines the compelling elements of legendary investor conviction and strong segment growth with the limitation of overall momentum constraints. For investors who understand Paulson's long-term investment philosophy, this presents an intriguing opportunity worth serious consideration.