Bausch Health Cos. named hedge fund billionaire John Paulson as its new chairman, replacing Joseph Papa, who resigned Thursday.

The pharmaceutical and device company, which focuses on eye care, gastroenterology and dermatology products, said Papa’s resignation wasn’t the result of “any dispute or disagreement.” Paulson, who is also the company’s second-largest shareholder, starts immediately.

Bausch shares rose as much as 11 per cent as of 9:45 a.m. in New York, their biggest intraday gain in more than a month. Once known as Valeant Pharmaceuticals, the company rebranded in 2018 in the wake of a public outcry over drug price hikes and the conviction of a former executive for accepting a bribe. 

Its shares have been falling this year, declining more than 70 per cent as of Thursday’s close, partly driven by the suspension of a planned spinoff of its skin-care business. That’s much steeper than the 16 per cent drop in the Dow Jones Industrial Average over the same period. The company spun off its eye-care unit, Bausch + Lomb Corp., earlier this year. 

“We have made progress towards the separation of Bausch + Lomb,” Paulson said in a statement provided by Bausch Health. “We will intensify our focus on driving future growth and profitability as we capitalize on our expertise and commercial scale to expand market share globally. We are committed to taking decisive actions to harness Bausch Health’s full potential and unlock significant shareholder value.”

Papa was also the Chief Executive Officer of Bausch until May, when he was replaced by Thomas Appio, the current CEO. Papa moved to the role of chairman and CEO of Bausch + Lomb when that company completed its initial public offering the same month.

Paulson, 66, is worth US$4.6 billion, according to the Bloomberg Billionaires Index. He’s famous for pulling off one of the most successful trades in history, when he bet against the US housing market before the 2008 financial crisis.

The hedge-fund manager made US$20 billion for himself and investors when subprime mortgage bonds collapsed. His investment firm, Paulson & Co. Inc., later ventured into different areas, but ultimately stumbled. In 2020, he said that he would turn his firm into a family office, in which he manages his own money.

Paulson’s stake in Bausch was worth about US$188 million at the end of trading Thursday. He owns nearly 26 million shares, or 7.2 per cent of the total shares outstanding, according to Bloomberg data.

He was previously on the board of directors at Bausch from June 2017 to May 2022, according to the company. Bausch didn’t give further details about Papa’s split with the company.