Why Bausch Health Companies Stock Gained 11% in September

What happened

Health care product specialist Bausch Health (NYSE:BHC) outperformed the market last month, jumping 11% compared to a 0.4% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

The boost added to significant gains for shareholders, as the stock is up about 15% so far in 2018.

^SPX data by YCharts.

So what

September’s rally came in response to news that the company settled an important intellectual property battle under favorable terms. Specifically, Bausch Health made a deal with Actavis Labs owner Teva Pharmaceutical that will give Bausch Health exclusive rights over its Xifaxan gastrointestinal drug until 2028.

Image source: Getty Images.

The agreement removes a cloud of uncertainty about ownership of the popular treatment at no extra cost to Bausch Health.

Now what

Bausch Health cited a 26% spike in Xifaxan sales as a key contributor to its solid second-quarter results, which were headlined by a second straight quarter of organic sales gains. With ownership rights clarified on the drug, the company has one less concern to worry about as it aims to achieve revenue of between $8.15 billion and $8.35 billion this year, down from $8.72 billion in 2017.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bausch Health Companies. The Motley Fool has a disclosure policy.