博士倫 (BLCO) 2026 年第三季法說會：EBITDA 成長 34%，上調財測指引

重點摘要

• 第三季營收為 13.75 億美元，按固定匯率計算成長 8%，眼科護理（Vision Care）、眼科手術（Surgical）與製藥（Pharmaceuticals）部門均實現成長。
• 調整後 EBITDA 年增 34% 至 3.25 億美元。調整後 EBITDA 利潤率擴張 460 個基點至 23.6%。
• 營業現金流達 2.33 億美元，自由現金流為 1.78 億美元，為該公司自 2022 年首次公開發行（IPO）以來現金生成能力最強的單季。淨槓桿率自去年同期的 5.7 倍降至 4.1 倍。
• 製藥部門帶動各部門成長，成長率達 11%，主要受惠於 Miebo 營收成長 42% 至 1.19 億美元。高級人工晶體（Premium intraocular lens）營收成長 75%，而 Lumify 與 Daily SiHy 則分別成長 38% 及 25%。
• 博士倫（Bausch + Lomb）將 2026 年營收指引上調 1,000 萬美元，並將調整後 EBITDA 指引上調 6,500 萬美元。指引中位數目前意味著調整後 EBITDA 利潤率約為 20.3%。
• 代理執行長 Thomas Appio 表示，優先事項包括獲利性成長、進一步提升 SG&A 效率、嚴謹的研發配置、降低債務，以及可能具增值效益的併購（M&A）以填補產品組合缺口。

核心財務數據

業務與營運表現

製藥部門

製藥營收成長 11% 至 3.67 億美元。美國製藥業務成長 14%，乾眼症藥物產品組合則成長 22%。

受處方量成長推動，Miebo 營收成長 42% 至 1.19 億美元。管理層表示，每週總處方量平均約為 37,000 劑，並維持 2026 年總額轉淨額 (gross-to-net) 假設在 70% 中段區域。Xiidra 貢獻 8,900 萬美元，成長 2%。國際製藥業務成長 3%。

眼科護理部門

眼科護理營收成長 6% 至 7.74 億美元，消費保健產品與隱形眼鏡均有貢獻。

消費保健業務成長 6%。Lumify 營收達 6,600 萬美元，成長 38%，消費乾眼產品組合貢獻 1.15 億美元，成長 3%。PreserVision 和 Ocuvite 護眼維生素貢獻 9,500 萬美元。美國消費端消耗量增長 6%。

隱形眼鏡營收成長 6%。矽水凝膠日拋（Daily SiHy）成長 25%，Ultra 成長 17%。美國隱形眼鏡銷售成長 9%，國際市場則成長 4%。管理層將國際市場較慢的成長歸因於部分舊有產品組合，同時強調日拋與定期更換型產品具有進一步推廣的機會。

Halo 計畫（Project Halo）仍處於開發階段。公司在開始下一階段外部研究前，正著手優化鏡片設計、淚液動力學與包裝。管理層表示，該產品設計為可在現有生產線上運行，從而減少額外資本支出的需求。

眼科手術部門

眼科手術營收成長 9% 至 2.34 億美元。植入式產品在高級人工晶體成長 75% 的帶動下成長 40%。作為該部門最大且毛利率最高的品類，耗材營收成長 5%。

設備營收下降 11%，原因在於博士倫將策略性設備投放優先於確認設備營收。管理層預期擴大的裝機量將支援持續性耗材銷售。本季眼科手術部門毛利率上升約 800 個基點。

管理層財務指引

博士倫將 2026 全年營收指引上調 1,000 萬美元至 54.50 億美元至 55.50 億美元。此項修訂反映基礎業務展望改善 1,500 萬美元，但部分被匯率利多減少 500 萬美元所抵銷。

更新後的範圍意味著按固定匯率計算的營收成長率約為 6.1% 至 8%，較公司 7 月發布的指引高出 30 個基點。

調整後 EBITDA 指引上調 6,500 萬美元至 10.90 億美元至 11.40 億美元。在指引中位數下，管理層預期調整後 EBITDA 利潤率約為 20.3%，較投資人日（Investor Day）提出的 2026 年展望高出約 130 個基點，並較 2025 年 17.5% 的利潤率高出 280 個基點。

其他全年假設包括：

• 匯率對營收的利多約為 4,000 萬美元，低於先前預估的 4,500 萬美元。
• 調整後毛利率為 62.5% 至 63%，高於先前預估的約 62%。
• 研發支出占營收的 7.5% 至 8%。
• 利息費用約為 3.65 億美元。
• 資本支出約為 2.85 億美元。
• 調整後稅率約為 18%，相比先前的 19% 展望。

管理層仍致力於達成投資人日設定的 3.5 倍淨槓桿率目標。公司計劃在提供 2027 年指引時說明其更長期的利潤率走勢。

風險與關注焦點

• 外匯使第三季營收減少約 600 萬美元，且全年的預期匯率收益下調了 500 萬美元。
• 儘管淨槓桿率降至 4.1 倍，仍高於公司 3.5 倍的目標。管理層將降低債務列為資本配置的首要任務。
• 在設備投放策略下，眼科手術設備營收下降 11%。未來的投資回報取決於這些投放設備能否產生持續性的耗材需求。
• 研發管線項目仍受制於臨床結果與監管審查。Elios 計畫（Project Elios）仍處於 FDA 審查階段，而 tonabersat 則需進行一項計畫於 2027 年年初開展的藥物動力學安全性研究。
• 公司正經歷高層過渡期。Appio 表示，他目前的重點是執行「Vision ’27」計畫，並未在已揭露的前任執行長過渡協議之外提供額外細節。

分析師問答亮點

獲利能力與利潤率擴張：管理層將本季利潤率的提升歸因於包括 Miebo、高級人工晶體、Lumify 和 Daily SiHy 在內的高毛利產品，以及製造、採購、網路優化和垂直整合計畫。銷售、一般及行政費用（SG&A）效率的提升為今年迄今的表現帶來約 150 個基點的改善。

資本配置：降低債務仍是第一優先事項，其次是有機與非有機投資。Appio 表示，潛在的併購需要填補產品組合缺口並具備增值效益，資本回報率是決策的核心。

隱形眼鏡展望：管理層形容隱形眼鏡業務具備韌性，且在矽水凝膠日拋（Daily SiHy）領域滲透率仍低，仍有進一步成長的空間。Halo 計畫（Project Halo）有望支撐利潤率，因為該項目預計將使用現有生產線，並具備優異的初始單位成本效益。

研發管線最新動態：據管理層表示，FDA 鼓勵針對早期老年性黃斑部病變進一步臨床開發 tonabersat。藥物動力學安全性研究計畫於 2027 年年初進行。公司亦預計於 2026 年 12 月中旬就其長焦深人工晶體（extended-depth-of-focus IOL）項目舉行提出申請前會議，並計畫於 2026 年第四季展開美國近視研究。

公司架構：當被問及博士倫應維持公開上市還是重新併入母公司時，Appio 拒絕就結構性替代方案發表評論，並重申其重點在於營運表現、管線執行與「Vision ’27」計畫。

法說會逐字稿全文

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完整財報電話會議逐字稿

管理層陳述

Operator

Good morning, and welcome to Bausch + Lomb's Third Quarter 2026 Earnings Call.

[Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to George Gadkowski, Vice President of Investor Relations and Business Insights. Please go ahead.

George Gadkowski

Thank you. Good morning, everyone, and welcome to our third quarter 2026 financial results conference call.

Participating on today's call are Chairman of the Board and Interim Chief Executive Officer, Mr. Tom Appio; and Chief Financial Officer, Mr. Sam Eldessouky.

In addition to this live webcast, a copy of today's slide presentation and a replay of this conference call will be available on our website under the Investor Relations section.

Before we begin, I would like to remind you that our presentation today contains forward-looking information. We would ask that you take a moment to read the forward-looking legend at the beginning of our presentation as it contains important information.

This presentation contains non-GAAP financial measures and ratios. For more information about these measures and ratios, please refer to Slide 1 of the presentation. Non-GAAP reconciliations can be found in the appendix to the presentation posted on our website. The financial guidance in this presentation is effective as of today only. It is our policy to generally not update guidance until the following quarter unless required by law and not to update or affirm guidance other than through broadly disseminated public disclosure.

With that, it's my pleasure to turn the call over to Tom.

Thomas Appio

Thank you, George, and thanks to everyone for joining us today.

Before we begin, I want to say how honored and energized I am to serve as interim CEO of Bausch + Lomb. Having spent a good part of my career with the company, I have developed a deep understanding of our business, our markets, our products and most importantly, the exceptional global team who drive our success. That experience gives me confidence in the strength of our organization, the trust our customers and patients place in us and our ability to execute against our priorities. I am excited to lead Bausch + Lomb through its next phase of growth and value creation.

Today's presentation will follow a familiar format. I will start with a few thoughts on my history with the company and my priorities as interim CEO, then share some perspective on our third quarter performance. Sam will review the quarter in greater detail before we turn to the performance of our businesses and the opportunities ahead.

I have spent enough time at Bausch + Lomb to understand both what makes this company successful and where we can improve. I have seen the strength of our portfolio, the resilience of our business model and the power of our customer relationships. I have also seen opportunities to operate more effectively and unlock additional value.

As Interim CEO, my priorities are straightforward. First, we are focused on identifying opportunities to improve profitability and operate more effectively across the organization. Vision '27 established a clear path for improving the financial profile of this business, and we will continue to build on the progress we have already made. I believe there is still room to enhance how we execute, allocate resources and drive returns from the investments we have made.

Second, we remain committed to meeting or exceeding the targets we laid out in our 3-year plan. The progress we have demonstrated this year reinforces our confidence in the strategy, and we will continue to balance growth, margin expansion and cash generation as we work towards those objectives.

Third, we will continue advancing our pipeline and investing in innovation from dry eye solutions and surgical technologies to the next generation of contact lenses. Our future growth depends on bringing meaningful innovation to patients and eye care professionals. This commitment remains unchanged.

Taken together, the goal is simple, build a stronger, more profitable company while continuing to invest in the innovations that will strengthen our competitive position and improve outcomes for the customers and patients we serve.

This quarter represents another milestone for the company. It marks the fourth consecutive quarter we have delivered against the commitments we outlined at Investor Day, demonstrating our ability to drive growth, expand margins and strengthen the financial profile of the business.

In the third quarter, we grew constant currency revenue by 8%, increased adjusted EBITDA by 34% and expanded adjusted EBITDA margin to 23.6%. That is a result of disciplined execution, strong commercial performance and the actions we have taken over the last several years to strengthen the business.

What gives me confidence is not just the quarter itself, but the consistency of the performance we have delivered over the past year. We are building momentum across the business and the trajectory is encouraging. One of the things I find most encouraging about the quarter is the breadth of the performance. We are seeing growth across all 3 of our business segments. Pharmaceuticals grew 11%, Surgical grew 9% and Vision Care grew 6% on a constant currency basis.

Just as importantly, that growth is being driven by strong performances across multiple franchises rather than any single product or market. Miebo continued its strong trajectory. Lumify delivered another quarter of impressive growth and our contact lens portfolio remained a key contributor to growth led by Infuse and Ultra.

In Surgical, we are also seeing continued momentum from premium IOLs. Reported growth in the quarter approached 70% with our premium offerings continuing to gain traction. We believe there is significant runway ahead, both in terms of adoption and what these products can contribute to the business over time.

Earlier, I mentioned that we have now delivered 4 consecutive quarters against the commitments we outlined at Investor Day. This slide helps explain why we are confident in our ability to meet or exceed the targets we have established.

Over the last 4 quarters, we have consistently achieved strong revenue growth while expanding profitability at an even faster rate. That is exactly the type of operating leverage we said we expected to generate as the business scale and our strategic initiatives gain traction.

Importantly, this is not the result of a single quarter or a single action. It is driven by the breadth of our portfolio and the work we have done to scale the business more efficiently. The progress we have made over the past year gives me confidence in the path we are on. It also reinforces my belief that there are additional opportunities to improve execution, enhance profitability and create even more value over time.

With that, I'll hand the call over to Sam. Sam?

Osama Eldessouky

Thank you, Tom, and good morning, everyone.

Before we begin, please note that all of my comments today will be focused on growth expressed on a constant currency basis, unless specifically indicated otherwise. In addition, all references to adjusted EBITDA will exclude acquired in-process R&D.

Today marks our fourth quarterly report since our 2025 Investor Day, and the results provide clear evidence of the momentum we have built across the business. Revenue grew 8% in the quarter, while adjusted EBITDA increased 34% on a reported basis, bringing our adjusted EBITDA margin to 23.6%. That combination of growth and margin expansion translated into strong cash generation with $233 million of operating cash flow and $178 million of free cash flow in the third quarter. As a result, we reduced net leverage to 4.1x.

This is the progression we laid out at Investor Day, grow revenue, expand margins, convert the performance into cash and reduce leverage. One year in, we are delivering on our Investor Day targets, and our results give us even greater confidence in the path ahead.

Turning now to our financial results on Slide 8. Total company revenue for Q3 was $1.375 billion, up 8% with broad-based growth across all 3 segments. Foreign exchange was a headwind to revenue of approximately $6 million in the third quarter.

Now let's turn to detailed results across the segments. Vision Care third quarter revenue of $774 million increased by 6%, with growth in both consumer and contact lenses. The consumer business grew 6% in the quarter. Lumify generated $66 million of revenue, up 38%. The consumer dry eye portfolio delivered $115 million of revenue in the third quarter, up 3%. Eye vitamins, PreserVision Ocuvite, delivered $95 million of revenue in the quarter. We saw continued strength in consumer demand with the positive trends exiting Q2 carrying through the third quarter and consumption growing at 6% in Q3.

Contact lens delivered another strong quarter with revenue up 6%. Daily SiHy continued to lead the way, growing at 25%, while Ultra was up 17%. Both the U.S. and international markets contributed to the strong performance. The U.S. was up 9% and international was up 4% .

Moving now to the Surgical segment. Third quarter revenue was $234 million, up 9% versus the prior year. Implantables grew 40% with premium IOLs up 75%. This is another clear indication of the progress we're making in transitioning the portfolio to higher-margin premium categories.

In the third quarter, equipment was down 11%, which reflects our continued focus on strategic system placements to position us for future pull-through sales. Consumables, the largest part of the surgical portfolio, were up 5% in the third quarter.

Pharma delivered another strong quarter with revenue of $367 million and growth of 11% U.S. Pharma grew 14%, led by continued momentum in dry eye. The dry eye pharma portfolio was up 22% with both Miebo and Xiidra contributing to the performance. Miebo remained a standout performer with revenue increasing 42% to $119 million. Xiidra generated $89 million of revenue, up 2%. International Pharma added to the performance with growth of 3% in the quarter.

Now let me walk through some of the key non-GAAP line items on Slide 9. Adjusted gross margin in the third quarter was 64.7%, up 300 basis points year-over-year. This includes a onetime car refund of approximately $14 million. Excluding this benefit, adjusted gross margin was a strong 63.6%.

We are executing on the gross margin plan we outlined at Investor Day, driven by favorable mix from higher-margin brands and the results of our productivity initiatives. This is a credit to the strong execution of our manufacturing and supply chain teams.

In Q3, we invested $91 million in adjusted R&D as we continue to advance our pipeline. In the third quarter, adjusted SG&A margin continued to trend lower, building on the significant progress we made in 2025 and through the first 3 quarters in 2026. Our lower fixed cost structure has driven 150 basis points of year-to-date improvement and positions us to continue expanding operating leverage through the remainder of 2026.

Third quarter adjusted EBITDA was $325 million, up 34% year-over-year on a reported basis and adjusted EBITDA margin was 23.6%, up 460 basis points year-over-year. In Q3, we generated $233 million of operating cash flow and $178 million of free cash flow with CapEx moderating as expected to $55 million. This was our strongest quarter of cash generation since the IPO in 2022.

Our strong performance drove net leverage down from 5.7x a year ago to 4.1x at the end of the third quarter. With substantial progress already achieved, we are increasingly confident in our ability to achieve our 3.5x target that we outlined on Investor Day. Net interest expense was $93 million for the quarter. Adjusted EPS, excluding acquired in-process R&D, was $0.34 in Q3, a substantial increase versus $0.18 in the prior year quarter.

Now turning to our 2026 guidance on Slide 12. Our momentum continued in Q3, driven by strong execution and a healthy eye care market, and we are now raising guidance for the third time this year. With 1 quarter remaining, we are raising full year revenue guidance by $10 million to a range of $5.450 billion to $5.550 billion. This reflects $15 million increase in the underlying business outlook, partially offset by $5 million of lower currency tailwinds.

The updated revenue guidance reflects full year constant currency growth of approximately 6.1% to 8%, which is 30 basis points above our July guidance. We are also raising full year adjusted EBITDA guidance by $65 million to a range of $1.090 billion to $1.140 billion. At the midpoint, our guidance implies an adjusted EBITDA margin of approximately 20.3%, which is about 130 basis points above our full year 2026 outlook provided at Investor Day.

In terms of the other key assumptions underlying our guidance, for the full year 2026, we now estimate a $40 million revenue tailwind from currency, down from approximately $45 million previously as exchange rates have moderated. We now expect adjusted gross margin to be in the range of 62.5% to 63%, up from approximately 62% previously. R&D investment is expected to remain in the range of 7.5% to 8% of revenue.

Below the line, our expectations for interest expense and CapEx remain unchanged. We continue to expect interest expense of approximately $365 million and full year CapEx of approximately $285 million. We now expect the adjusted tax rate to be approximately 18%, slightly below our previous outlook of 19%.

Our strategy and disciplined execution continue to demonstrate significant and sustained margin expansion. As we close out the year, we remain focused on advancing toward our 3-year Investor Day targets.

Slide 13 highlights the meaningful margin expansion progress we've made since Investor Day, reflecting the strong execution and commitment of our team. Adjusted EBITDA margin was 17.5% in 2025. And at Investor Day, we set a 2026 target of approximately 19%.

Our updated full year guidance now implies an adjusted EBITDA margin of approximately 20.3%, about 280 basis points of expansion versus 2025. And importantly, 130 basis points above our Investor Day target.

One year into our 3-year plan, the business is delivering results with increasing momentum, and we are clearly tracking ahead. We are proud of our progress and confident in the path ahead. None of these results would have been possible without the dedication and commitment of our colleagues across the organization. And I want to sincerely thank them for everything they do.

And with that, I'll turn the call back over to Tom.

Thomas Appio

Thanks, Sam. Earlier, I talked about the breadth of our performance. Let's take a closer look at what is driving the growth across each business.

Miebo and Xiidra continue to serve as the cornerstones of our dry eye portfolio. Miebo revenue grew 42% to $119 million in the quarter, while Xiidra grew 2% to $89 million, further strengthening our position in one of the largest categories in eye health.

What stands out to me is the franchise we have built. Miebo continues to expand its presence in the market, while Xiidra remains an important treatment option for eye care professionals and patients. Together, they give us 2 differentiated brands with the important roles in a large and growing category.

We continue to see strong underlying consumption across our consumer business. U.S. consumption grew 6% in the third quarter, demonstrating continued momentum across our portfolio. Lumify remains one of the standout brands in the business. Reported revenue grew 35% in the quarter, adding to a remarkable track record of growth.

What is particularly impressive is that we are more than 8 years since launch, yet Lumify continues to deliver consistent growth. That kind of durability is rare, and it speaks to the strength of the brand and the demand we continue to see from consumers. And with the next generation of Lumify expected to launch in the first half of '27, we believe there is more opportunity ahead.

What stands out to me about our contact lens business is the strong performance of the total portfolio led by SiHy daily and monthly lenses. Our Daily SiHy portfolio grew 25% on a constant currency basis in the quarter, building on sustained growth across our contact lens offerings. That consistency speaks to the strength and durability of the business.

At the same time, we are continuing to invest in the next generation of innovation such as Project Halo. While we're still early in the development process, we believe this first-of-its-kind bioactive lens material has the potential to further differentiate our portfolio and create a meaningful new growth opportunity over time.

When I look at this business, I see a category that is performing well today and one that has the potential to become even stronger in the years ahead. Earlier, I highlighted the strong growth we are seeing in premium IOLs. The slide provides a closer look at what is driving that performance. Our premium offerings are gaining traction, and we are seeing a clear shift towards these technologies.

This is an important part of the opportunity we see in surgical, not only to grow the business, but to improve the mix and profitability of the portfolio over time. We believe there is significant runway ahead as we drive broader adoption and continue bringing differentiated technology to surgeons and their patients.

One of the things that has impressed me since stepping into the role is the breadth of the pipeline we have built. Across each of our businesses, we are encouraged by the opportunities ahead and their potential to support sustained growth over time. Building that pipeline took significant investment, a lot of work across the organization.

Our job now is to make sure we are advancing opportunities with the greatest potential to make a difference for eye care professionals and patients while being thoughtful and disciplined about where we invest. We will continue to prioritize innovation because it is fundamental to the long-term growth of the company. At the same time, we will be rigorous about how we allocate resources with a focus on the programs we believe can create the greatest value over time.

Before we open it up for questions, let me come back to where I started. I am excited to be leading Bausch + Lomb at this point in the company's journey. We are performing well. We have clear opportunities to continue driving margin expansion and create additional value, and we have an impressive pipeline that can support growth well into the future.

I want to thank the global team for everything they have done, and I look forward to working alongside them to build on what we have accomplished and take the company even further.

With that, we are happy to take your questions. Operator, please open the line for Q&A.

Operator

[Operator Instructions] The first question comes from Patrick Wood at UBS.

分析師問答

Patrick Andrew Wood

From my perspective, taking a step back, I mean, the numbers, obviously, you guys crushed it, margins growth pretty much across the piece. Clearly, the strategy has been working well, and I'd love to hear more about that.

But I guess the obvious question on my side is, therefore, what was it that made you feel like a change was the right thing to do in terms of leadership and the Board composition? Just any color around the thought process around that given things are clearly going very well.

Thomas Appio

Yes, Patrick, thank you for the congratulations. I can -- I'll take that question. I think the way we need to look at it is Brent and the Board mutually agreed on this leadership transition as the company enters its next phase of growth. So I'm not prepared to talk about anything that was more than that was in the press release and the 8-K filing.

What I would say is the company, you saw the performance and the product portfolio, clearly, 4 strong areas on the contact lens side, the consumer side, the surgical side and the pharma side. I joined Bausch + Lomb back in 2010, so I have a really strong understanding of this business and the team. So as we move forward, the focus is going to be to drive operational excellence, and in my prepared remarks, I talked about some of the things that we can work on to get better on as we move forward.

What will be critical as we go forward is our R&D pipeline. I talked about that in my prepared remarks as well and how we're allocating those resources and getting those very interesting projects through to conclusion and get the data that we would need to file them. So overall, I'm really excited about the future. And as we look forward, there's a lot of things that this team has been doing that we can continue to build on.

Operator, next question?

Operator

Your next question is coming from Young Li from Jefferies.

Young Li

I guess maybe just a follow-up on that. First off, welcome back to BLCO. You've been there for a long time since 2010, definitely had a front row seat to all the changes in recent years. I guess I wanted to hear a little bit more about what you're going to be doing differently, definitely sounded like there's more focus on profitability. But also, how will you be splitting time between BHC as well as BLCO?

Thomas Appio

Yes. Thanks for the question. What I could say is this is, given the fact that if you look at this company, you go back years ago, it was together, okay? So splitting time is that I don't think is going to be an issue. So of course, we'll have to manage that accordingly.

What I would say is, as we look at the future, okay, and going forward, Vision '27, as Sam said in his prepared remarks, we're 1/3 of the way through. So it's to drive Vision '27 to meet or exceed those targets that were presented approximately a year ago. The second is to focus on the customers and the patients we serve. That is critical as we move forward, we'll continue to work on that.

I mentioned during the last question is focusing on delivering the R&D pipeline. The pipeline has been built over the last few years. Investments have been made. how we're going to allocate those resources into each of those projects and making sure that each of them has the resources and clearly can get to the endpoint because in some of what was discussed in Vision '27, some of that is coming. And then, of course, that will drive future growth at the end of the decade.

I want to focus on continuing to drive the top line. The top line is critical. And then we talked about this already, improving the margins and the operational efficiencies that needs to be had there.

As you know, in this space, especially with our portfolio of products, manufacturing, the changing of the regulations getting -- continuing to have to invest behind all of those portfolios. So be able to invest behind our facilities and also at the same time, driving efficiencies.

I think that when we look at SG&A, there's opportunities to drive SG&A savings that will drive more to the bottom line. That will be helpful. So I'll be spending some time there with all the teams, both on the selling and advertising side, along with the G&A from the functional side to see where we can gain further efficiencies to improve the bottom line. Clearly, as I've always said, it's profitable growth is critical. You have to be able to have a leveraged P&L. Sam and I have talked about this many times.

And then the last 2 things is focusing on the capital allocation, what that is and the balance sheet. And I think that Sam can point to that as well. We have to reduce our debt. And therefore, there's decisions to be made of where you apply capital and where you reduce debt.

And then lastly, M&A. Still, if we look at the portfolio, there's probably -- again, this is only 2 weeks in. There could be gaps in the portfolio that we will need to take a look at. There could be things out there that we want to bring in, but we also have to bring those in from an accretive basis, and that will be the focus as well.

I don't know, Sam, would you want to comment anything on the balance sheet or what we want to do?

Osama Eldessouky

Yes. No. Thank you, Tom. It's been a really important part for us and, Young, as you know, when we set our targets, 3-year out targets, we set 3.5x leverage for the P&L for the balance sheet. And it's been really been focused.

And you see the evidence of the work when we announced that on Investor Day last year, we were saying roughly about 5.7x. We're seeing right now the improvement we're seeing today at 4.1x, which is really remarkable in that period of time in just a year to be able to drop down to that level.

There's more room for us to go. I think our focus still at the 3.5x, I think really makes that 3.5x very achievable as we plan forward. And that's going to be our #1 priority. But investing in the business is -- comes in second from a capital allocation as well as Tom mentioned and that either investing organically or inorganically. But the key is going to be really how we can actually drive the right ROI behind those investments in both ways and make sure that we keep driving the business for the top line growth.

Thomas Appio

Operator, next question?

Operator

Your next question is coming from Lawrence Biegelsen from Wells Fargo.

Lei Huang

It's Lei calling in for Larry. Really strong quarter. My question is really on EBITDA. It's 2 parts. I mean you beat in Q3 very strong, even excluding the tariff refund. You raised the guidance for '26 on EBITDA. Talk about what were the key drivers of the Q3 beat and the raise. And perhaps importantly, you set a target, EBITDA margin target of 23% in 2028, and that's up roughly 600 basis points or so from '25. A year in, you're nearly halfway there. So how do we think about the remaining path to 23% and maybe there is potential to kind of exceed that target?

Thomas Appio

So it's a very good question, and it's many parts. So let me try to unpack it here as we go through. And if I miss any of the parts, just have me on the short and let me know.

So let me start with just focus on the quarter first. And I want to just reflect on what we were able to achieve in the quarter because it's been remarkable, and it's been a journey and the team have done a really fantastic work across the board. It really all starts from the top line, right? We set a really ambitious and sort of goal for us, a high bar on the top line and the commercial team has been doing a really good job delivering, and we saw that with the 8% constant currency growth.

But then as you go work your way down the P&L, gross margin has been just remarkable for us. And I called out the tariff. It's a onetime. It's about $14 million. You that impact is roughly about 100 basis points or so on the gross margin. But when you look excluding the tariff, we're seeing roughly about 62.6% gross margin. That's up from 61% last year. Great improvement.

A couple of parts here, I would say on gross margin. The product mix played a really important role for us. The growth that we've seen around the strategy around execution around the growth around Miebo. You've seen the numbers around Miebo with 42% growth in the quarter. You've seen the IOLs around the -- premium IOLs with the really great growth that we're seeing there with 70-plus in the quarter. And you're seeing Lumify was hitting at 38% with Daily SiHy hitting at 25%. So all the key elements of the portfolio that drives high margin has been growing really on a nice trajectory, and that's really driving product mix.

That being said, the supply and manufacturing team have been doing a really nice job with what we refer to as the execution of the Vision '27, which is what we talked about at Investor Day, where the network optimization work have launched as well as the work around our sourcing and network optimization as well as vertical integration. And you're still early days on those work because we still have 3 years to go as far as the execution of that work to go. But the early signs is really encouraging with the results that you're seeing in the gross margin.

Now as you shift from the gross margin and you look at the OpEx, in 2025, we talked about resizing our fixed cost structure around the OpEx, especially around G&A as well as taking, I'll call it, a step from a launch phase to a growth mode around our selling and A&P and the commercial spend around that part of it. And we've seen that really drive roughly about 150 basis points this year on the SG&A side. And that's really, again, great progress.

Those were the initial steps. Tom talked about there's going to be that part of our focus, and we're continuing that we're going to continue to drive more efficiency out of that as we launch new initiatives to be able to still get to our 200 basis improvement for the next couple of years. But that's -- you see that part of it is driving all into where we got us to the EBITDA numbers that we saw this quarter, which is really great work by the entire team and focus on execution.

In terms of the long-term plan, which -- the way I would say is we're very pleased with the guidance, 20.3% EBITDA margin. That's a really good thing for us, 2026. It probably will be one of the things we will look at as we give 2027 guidance. We'll be able to be -- that probably will be the appropriate time for us to be able to talk more about the long-term plan.

Operator, next question?

Operator

Your next question is coming from Joanne Wuensch from Citi.

Unknown Analyst

This is Anthony on for Joanne. Could you maybe characterize a bit more what you're seeing in the market in contact lenses in the U.S. and outside U.S. And then maybe talk a little bit about competition. U.S. was up 9%. OUS was a little bit slower 4%. Just anything more on that would be helpful.

Thomas Appio

Yes, Anthony, thank you for the question. I'll take that and then maybe Sam can add anything on to it.

When I look at the contact lens business, I always thought this was an underappreciated business by -- when you look at it, it's a strong durable business. If you look at the growth that the contact lens franchise has had over the previous years, it's a durable performer that continues to outgrow the market.

I think when you look at the portfolio in contact lens, and I said this back many years ago, if you look at the base business, the FRP business, that is a nice base. And then building off of it, you have the Daily SiHy portfolio. And I think our R&D colleagues in Rochester did a wonderful job when they designed Ultra ONEday and Infuse.

And if you see that, of course, you look at the growth that, that portfolio has been driving. And if you look also at the -- you have the spherical, you got -- you have the toric, you got the multifocal, you got the multifocal toric. So there's a lot of runway there to continue to grow as it rolls out across the globe.

When you look at the U.S. business, some of our competitors have challenges, but we don't see that for us. If you take a look at 9% growth well above the market in the U.S. and then from the international side, growing at 4%. But as we look at some of the portfolio, probably more of the legacy portfolio, that has an impact there from an international side.

But overall, the contact lens business for us is performing really strong. And as I said, underappreciated in the durableness of this business and the breadth of the portfolio that we have from a daily to the FRP lenses.

I think that -- the other thing, and maybe Yehia can talk about this as well, is Project Halo. This is a very interesting project. I think it's going to be a game changer from a contact lens perspective. And then Sam can talk about this as well and Yehia in terms of being able to run this platform on existing equipment, which is critical to continuing to drive margin expansion.

So with that, let me just turn it over to Sam and Yehia, maybe they could add to that.

Osama Eldessouky

Yes. Thanks, Tom. And let me maybe just focus on the operation side and the lens side because I think Tom covered it really nice with sort of the broader view and big picture in terms of what we're seeing.

The one thing I'll maybe take a step back and just remind you, like we're seeing, for example, a Daily SiHy growing at 25% this quarter. And that's coming off double-digit growth in the last 2 quarters. and that's based on also a 28% growth last year. So you're seeing the momentum here around Daily SiHy is just continuing.

And I agree with Thomas, we're under-indexed in that category, and there's a lot of room for us to still continue to grow, and we're seeing that growth and the team is doing a great job in terms of execution and expanding the portfolio across the board.

What's also important is the FRP, which I don't want to lose sight of it because I think we're seeing the -- not only the daily is growing, but you're seeing also FRP is growing, and we saw that growing roughly about 17% this quarter. Just keep in mind that's coming off roughly about 10% growth of last year as well. So again, it's not a 1 quarter type of momentum. You're seeing that momentum continues very nicely.

Before I turn it to Yehia to talk about, one just aspect I will comment on Project Halo is the fact that we talked about the importance of the cost around the lenses as well as the capital need around a build-out of any type of new lenses. And one of the opportunities that we have here with this new project is you don't need the build-out capital intensity that is required because it's going to be on existing lines, and that's a really plus for us, especially from a cash flow perspective.

The second part is the starting point of the cost per unit is very attractive, and it puts us in a position that you're not starting with the higher cost and having to work your way down with the yield, you're starting at a lower cost point, which really gives us a very good opportunity from a margin perspective on that product.

Yehia, I don't know if you want to add anything.

Yehia Hashad

Yes, absolutely. I can give just an update on the Project Halo, which we -- the team has been making great progress on that project as well. Since we reported the results earlier in the year about the first external study, the team actually have done several internal insertion studies in order to optimize the lens design.

We're also conducting a lot of tier dynamics studies in order for -- this is a completely innovative new material, so to understand exactly how they work in the eye and with the tear homeostasis. So this is work being in progress now. In addition to this, also, we're doing a lot of studies related to the packaging solution because at the end of the day, we are targeting the end of day dryness that affects the majority of the contact lenses that can happen with it. So this is where the majority of the work is being done now.

And we are actually don't want to start the next expect study until we are very confident about the design, the tier dynamics as well as the packaging solution. So great work being done and the progress is on track to deliver it as planned before.

Thomas Appio

So Anthony, that's just an overall view of the business, but I believe that this is a really nice growth driver for us going forward. And as I said, durable and really need to appreciate what we have.

Operator, next question?

Operator

Your next question is coming from Robbie Marcus from JPMorgan.

Unknown Analyst

This is Henry on for Robbie. Congratulations on the strong quarter. Maybe looking a bit at surgical. We did see some softness there in the quarter relative to expectations, looking like maybe mostly on the capital equipment side. Can you talk a bit about what you're seeing in the market there during the quarter? And then I just have a quick follow-up.

Thomas Appio

Yes, Henry, thanks for the question. Overall, when we look at the surgical business, as we talked about in the prepared remarks and also Sam mentioned it as well, driving the premium IOL business. We think we have a really nice product here in the premium sector that is very competitive. Overall, in the quarter, you looked at just our consumable growth, which, again, driving procedures through the providers.

What I would say is on the equipment, really the -- when you look at the equipment, it's a strategy there of placing equipment versus recording revenue. So I think that, that is what has changed the dynamic there as we really are focusing on the premium IOL business and, of course, the consumables.

I don't know, Sam, do you want to add anything more to that?

Osama Eldessouky

Not much, Tom. I think you said it well. I think when you think about for the last couple of quarters, we've been calling out the placement of the equipment. And it's really part of our own strategy in terms of how we position our equipment in the marketplace.

And we're seeing the benefit of that already and you start to see that the number of placements is high. But that's also the important of that is it also with the expansion of that placement, it also expands our installed base which drives more recurring revenue for us around the consumables. And you saw that really play in the quarter with 5%.

And consumables is the largest part of our surgical business and it's the highest margin part of our surgical business. So it's really driving that. You see -- I know we didn't file the 10-Q yet, but when you see the 10-Q later in the day when we get filed, you'll see, for example, the gross margin around surgical was up about 800 basis points in the quarter. So you're seeing that play out from a margin perspective, which is really the strategy that we outlined.

Thomas Appio

Yes. I think, Henry, also to add to that, on the premium IOLs, if you look at the premium momentum that we've had in the U.S. now extending into Europe and with enVista and the launches. So the strategy, delivering the top line growth and margin expansion there is the focus. And then in the quarter, it was solid growth in consumables, which is our largest business.

So as we move forward and as I spent some time with the surgical team, it's only been 2 weeks since I've been in the role. I'll spend some time with the surgical team. I have a really good understanding of the surgical business globally and hopefully really do a deep dive into what else we can do to further grow.

Operator, next question?

Operator

Your next question is coming from Pito Chickering from Deutsche Bank.

Kieran Ryan

You've got Kieran Ryan on here for Pito. I wanted to ask about the pipeline. I guess, Tom, if there's anything you want to talk about there that you want to highlight or are most excited about. But more specifically, I wanted to ask if you could provide any updates on the dry eye AMD program. I think you have some interesting stuff going on there with an earlier intervention in oral.

Thomas Appio

Yes, Kieran, thank you for the question. Clearly, innovation is critical, investing behind innovation. There's some very interesting projects that are in our R&D pipeline. I'm going to spend some time next week with the R&D team going through each of these projects. But clearly, the breadth of a health care company is to have innovation and provide innovation and the relentless drive to create better health outcomes.

And so when I look at what's in the pipeline, there's various things in each of the areas where we compete that I think are very interesting. And I think the team is working on some projects that can, of course, are part of Vision '27, but also can help us in the end of the decade and the beginning of the next decade. Of course, you always need to have the data and you need -- of course, you have to prove it, but that's the business that we're in.

I'll hand it over to Yehia. He can talk more specifically about some of the programs.

Yehia Hashad

Yes. So first of all, thank you for the question on the pipeline. Let me start by the last part that you asked about specifically, and then I'll give you also a quick update on at least the critical projects that we have.

So obviously, you were speaking about the tonabersat that we issued a press release about meeting with the FDA in the dry AMD or the pre-geographic atrophy or pre wet AMD stage. This is actually an orally administered once-daily small molecule that inhibits pathologically opening of the Connexin 43. These are hemi channels existing. And once it open pathologically, it release a lot of inflammatory mediators like primarily created by inflammasome.

And what does this product does, it inhibits this type of inflammation. So it works really upstream. And this is a high unmet medical need area because there is no available treatment now for these earlier stages or pre-atrophic stages of AMD. And being an orally administered is a great advantage.

In fact, when we met with the FDA, they acknowledge a lot this approach, and they encourage us that we actually try. I think the whole discussion with the FDA went into the clinical program and how we progress on the clinical program. We are trying several doses in the first study and some of these doses were not tested before.

So that's why they asked us for a PK safety study to start with, which we are planning to start at the beginning of next year. The meeting actually was actually very encouraging from the FDA side towards whether the unmet medical need or even the mechanism of action of this product to work with.

The second thing I would like is just to give you a very quick one. I think Halo, I already gave an update on it. Some of the critical projects we have, Project Elios is still on track under the FDA review currently. And we are actually still planning to get approval by the end of the year if there is no other issues issued by the FDA.

Second, I would like also to mention that we are primarily from a surgical perspective, we have a pre-submission meeting for the EDOF. We already announced the results of our EDOF study earlier, and we have a meeting that's planned around mid-December for pre-submission on that side.

On the Vision Care, we mentioned Halo myopia, we are planning to start the myopia study in the U.S. in quarter 4. And then on the other pharma studies, you mentioned also dry eye. We are actually in the phase of planning our Phase III studies with the dual action products that we also announced the results. And we are expecting very soon the results of the ocular surface pain post PRK or post photorefractive keratectomy, refractive surgery. So these are the quick highlights of the pipeline. But again, happy to receive any other questions.

Thomas Appio

Operator, next question?

Operator

Your next question is coming from Daniel Clark from Leerink.

Daniel Christopher Clark

Congrats on the quarter. I wanted to ask about Miebo, very strong performance there. How should we think about that strength, whether from the volume side or if there are any changes in gross to net, both in the quarter itself and in the fourth quarter and into next year?

Thomas Appio

Yes. So when you think about Miebo, the performance is really all coming in from the [indiscernible] all the TRxs and we saw the really impressive TRx growth. We're averaging roughly about 37,000 TRxs. So it's really impressive in terms of the work and the execution that the pharma team was able to do there.

From a gross to net perspective, really nothing has changed for '26. We also thought about the gross to net roughly about the mid-70s for Miebo, and that continues to be the same part of our thinking as we think about Q4 as well and the full year for '26.

Next question?

Operator

Your next question is coming from Doug Miehm from RBC Capital.

Douglas Miehm

I think most questions have already been answered. But Tom, you're in a very unique position here as CEO of both companies and with a deep knowledge of both those companies given your history. Is it the best thing for this company to remain public? Or should Bausch + Lomb become part of the parent again at some point in the future?

Thomas Appio

Doug, thanks for joining the call. I appreciate it. What I would say is this is my focus right now as interim CEO is to drive performance. And I laid that out before in a previous question of what my focus is going to be.

When we look at Vision '27, what needs to be done there. It's only -- we're 1 year into a 3-year plan. And I'm going to stay real focused on driving performance there on the top line through the gross margin line, through the expense line, invest in innovation, get those R&D projects through the pipeline. And clearly, we can do some M&A that can really help us to fill gaps and help patients.

I think that overall, when we execute on that, it's good for B&L shareholders. And that's all I can say as I'm in this job now for 2 weeks. And I really think that we have a great team around the world that can execute on Vision '27.

Operator?

Operator

Thank you. We are now out of time, and this concludes our question-and-answer session and our conference has now concluded. Thank you for attending today's presentation. You may now disconnect.