UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended		~~June~~September 30, 2021
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 001-14956

Bausch Health Companies Inc.

(Exact name of registrant as specified in its charter)

British Columbia

Canada

98-0448205

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

2150 St. Elzéar Blvd. West, Laval, Québec, Canada H7L 4A8

(Address of Principal Executive Offices) (Zip Code)

(514) 744-6792

(Registrant’s telephone number, including area code)

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares, No Par Value

BHC

New York Stock Exchange

Toronto Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common shares, no par value — ~~358,808,755~~359,330,757 shares outstanding as of ~~July 29,~~October 28, 2021.

BAUSCH HEALTH COMPANIES INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED ~~JUNE~~SEPTEMBER 30, 2021

Introductory Note

Except where the context otherwise requires, all references in this Quarterly Report on Form 10-Q for the quarterly period ended ~~June~~September 30, 2021 (this “Form 10-Q”) to the “Company”, “we”, “us”, “our” or similar words or phrases are to Bausch Health Companies Inc. and its subsidiaries, taken together. In this Form 10-Q, references to “$” are to United States (“U.S.”) dollars, references to “€” are to euros and references to "CAD" are to Canadian dollars. Unless otherwise indicated, the statistical and financial data contained in this Form 10-Q are presented as of ~~June~~September 30, 2021.

Forward-Looking Statements

Caution regarding forward-looking information and statements and “Safe-Harbor” statements under the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws:

To the extent any statements made in this Form 10-Q contain information that is not historical, these statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and may be forward-looking information within the meaning defined under applicable Canadian securities laws (collectively, “forward-looking statements”).

These forward-looking statements relate to, among other things: our business strategy, business plans and prospects and forecasts and changes thereto; product pipeline, prospective products and product approvals, expected launches of new products, product development and future performance and results of current and anticipated products; anticipated revenues for our products; expected research and development ("R&D") and marketing spend; our expected primary cash and working capital requirements for 2021 and beyond; the Company's plans for continued improvement in operational efficiency and the anticipated impact of such plans; our liquidity and our ability to satisfy our debt maturities as they become due; our ability to reduce debt levels; our ability to comply with the financial and other covenants contained in our Fourth Amended and Restated Credit and Guaranty Agreement, as amended by the First Incremental Amendment to the Restated Credit Agreement, dated as of November 27, 2018 (the "Restated Credit Agreement"), and senior notes indentures; the impact of our distribution, fulfillment and other third-party arrangements; proposed pricing actions; exposure to foreign currency exchange rate changes and interest rate changes; the outcome of contingencies, such as litigation, subpoenas, investigations, reviews, audits and regulatory proceedings; the anticipated impact of the adoption of new accounting standards; general market conditions; our expectations regarding our financial performance, including revenues, expenses, gross margins and income taxes; our impairment assessments, including the assumptions used therein and the results thereof; the anticipated impact of the evolving COVID-19 pandemic and related responses from governments and private sector participants on the Company, its supply chain, third-party suppliers, project development timelines, costs, revenues, margins, liquidity and financial condition, the anticipated timing, speed and magnitude of recovery from these COVID-19 pandemic related impacts and the Company’s planned actions and responses to this pandemic; the Company’s plan to separate its eye health business, including the structure and timing of completing such separation transaction; and the proposed initial public offering (“IPO”) of the Company’s Solta aesthetic medical ~~aesthetics~~device business, including the timing of such ~~initial public offering.~~IPO.

Forward-looking statements can generally be identified by the use of words such as “believe”, “anticipate”, “expect”, “intend”, “estimate”, “plan”, “continue”, “will”, “may”, “could”, “would”, “should”, “target”, “potential”, “opportunity”, “designed”, “create”, “predict”, “project”, “forecast”, “seek”, “strive”, “ongoing”, “decrease” or “increase” and variations or other similar expressions. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements may not be appropriate for other purposes. Although we have previously indicated certain of these statements set out herein, all of the statements in this Form 10-Q that contain forward-looking statements are qualified by these cautionary statements. These statements are based upon the current expectations and beliefs of management. Although we believe that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making such forward-looking statements, including, but not limited to, factors and assumptions regarding the items previously outlined, those factors, risks and uncertainties outlined below and the assumption that none of these factors, risks and uncertainties will cause actual results or events to differ materially from those described in such forward-looking statements. Actual results may differ materially from those expressed or implied in such statements. Important factors, risks and uncertainties that could cause actual results to differ materially from these expectations include, among other things, the following:

•the risks and uncertainties caused by or relating to the evolving COVID-19 pandemic, the fear of that pandemic, the availability and effectiveness of vaccines for COVID-19 (including with respect to current or future variants), COVID-19 vaccine immunization rates, the emergence of variant strains of COVID-19, the evolving reaction of

duration and future impact of which are highly uncertain and cannot be predicted, and which may have a significant adverse impact on the Company, including, but not limited to, its supply chain, third-party suppliers, project development timelines, employee base, liquidity, stock price, financial condition and costs (which may increase) and revenue and margins (both of which may decrease);

•with respect to the proposed separation of the Company’s eye health business, the risks and uncertainties include, but are not limited to, the expected benefits and costs of the separation transaction, the expected timing of completion of the separation transaction and its terms (including the Company’s expectation that it will launch the IPO of the Bausch + Lomb entity as early as thirty days subsequent to the IPO of the Company’s Solta aesthetic medical device business, subject to market conditions and receipt of regulatory, stock exchange and other approvals and the Company’s expectation that the separation transaction will be completed following the expiry of customary lock-ups and achievement of targeted debt leverage ratios, subject to receipt of applicable shareholder and other necessary approvals), the Company’s ability to complete the separation transaction considering the various conditions to the completion of the separation transaction (some of which are outside the Company’s control, including conditions related to regulatory matters and a possible shareholder vote, if applicable), that market or other conditions are no longer favorable to completing the transaction, that any shareholder, stock exchange, regulatory or other approval (if required) is not obtained on the terms or timelines anticipated or at all, business disruption during the pendency of or following the separation transaction, diversion of management time on separation transaction-related issues, retention of existing management team members, the reaction of customers and other parties to the separation transaction, the qualification of the separation transaction as a tax-free transaction for Canadian and/or U.S. federal income tax purposes (including whether or not an advance ruling from either or both of the Canada Revenue Agency and the Internal Revenue Service will be sought or obtained), potential dissynergy costs resulting from the separation transaction, the impact of the separation transaction on relationships with customers, suppliers, employees and other business counterparties, general economic conditions, conditions in the markets the Company is engaged in, behavior of customers, suppliers and competitors, technological developments, as well as legal and regulatory rules affecting the Company’s business;

•with respect to the proposed ~~initial public offering~~IPO of the Company’s Solta aesthetic medical ~~aesthetics~~device business, the risks and uncertainties include, but are not limited to, risks relating to the expected timing of completion of such transaction (including the Company’s expectation that it will launch such IPO as early as December 2021 or January 2022, subject to market conditions and receipt of regulatory, stock exchange and other approvals) and the Company’s ability to complete such transaction, that market or other conditions are no longer favorable to completing the transaction on a timely basis or at all, the receipt of (or failure to receive) ~~the~~any shareholder, stock exchange, regulatory and other approvals required in connection with the transaction and the timing of receipt of such approvals, business disruption during the pendency of or following such transaction, diversion of management time on transaction-related issues, retention of Solta aesthetic medical ~~aesthetics~~device management team members, the reaction of customers and other parties to such transaction, the impact of such transaction on relationships with customers, suppliers, employees and other business counterparties, and other events that could adversely impact the completion of such transaction, including industry or economic conditions outside of Bausch Health’s control. In particular, the Company can offer no assurance that any ~~initial public offering~~IPO will occur at all, or that any such transaction will occur on the timelines anticipated by the Company;

•the expense, timing and outcome of legal and governmental proceedings, investigations and information requests relating to, among other matters, our past distribution, marketing, pricing, disclosure and accounting practices (including with respect to our former relationship with Philidor Rx Services, LLC ("Philidor")), including a number of pending non-class securities litigations (including certain pending opt-out actions in the U.S. related to the previously settled securities class action (which remains subject to ~~two objectors' appeals~~an objector's appeal of the Court's final approval order) and certain opt-out actions in Canada relating to the recently settled class action in Canada) and purported class actions under the federal ~~RICO statute~~Racketeer Influenced Corrupt Organizations Act (“RICO”) (the settlement of which remains subject to final court approval) and other claims, investigations or proceedings that may be initiated or that may be asserted;

•potential additional litigation and regulatory investigations (and any costs, expenses, use of resources, diversion of management time and efforts, liability and damages that may result therefrom), negative publicity and reputational harm on our Company, products and business that may result from the past and ongoing public scrutiny of our past distribution, marketing, pricing, disclosure and accounting practices and from our former relationship with Philidor;

•the past and ongoing scrutiny of our legacy business practices, including with respect to pricing, and any pricing controls or price adjustments that may be sought or imposed on our products as a result thereof;

•ongoing oversight and review of our products and facilities by regulatory and governmental agencies, including periodic audits by the U.S. Food and Drug Administration (the "FDA") and equivalent agencies outside of the U.S. and the results thereof;

•actions by the FDA or other regulatory authorities with respect to our products or facilities;

•compliance with the legal and regulatory requirements of our marketed products;

•our substantial debt (and potential additional future indebtedness) and current and future debt service obligations, our ability to reduce our outstanding debt levels and the resulting impact on our financial condition, cash flows and results of operations;

•our ability to comply with the financial and other covenants contained in our Restated Credit Agreement, senior notes indentures, 2023 Revolving Credit Facility (as defined below) and other current or future debt agreements and the limitations, restrictions and prohibitions such covenants impose or may impose on the way we conduct our business, including prohibitions on incurring additional debt if certain financial covenants are not met, limitations on the amount of additional obligations we are able to incur pursuant to other covenants, our ability to draw under our 2023 Revolving Credit Facility and restrictions on our ability to make certain investments and other restricted payments;

•any default under the terms of our senior notes indentures or Restated Credit Agreement and our ability, if any, to cure or obtain waivers of such default;

•any downgrade by rating agencies in our credit ratings, which may impact, among other things, our ability to raise debt and the cost of capital for additional debt issuances;

•any reductions in, or changes in the assumptions used in, our forecasts for fiscal year 2021 or beyond, including as a result of the impacts of the COVID-19 pandemic on our business and operations, which could lead to, among other things: (i) a failure to meet the financial and/or other covenants contained in our Restated Credit Agreement and/or senior notes indentures and/or (ii) impairment in the goodwill associated with certain of our reporting units or impairment charges related to certain of our products or other intangible assets, which impairments could be material;

•changes in the assumptions used in connection with our impairment analyses or assessments, which would lead to a change in such impairment analyses and assessments and which could result in an impairment in the goodwill associated with any of our reporting units or impairment charges related to certain of our products or other intangible assets;

•the uncertainties associated with the acquisition and launch of new products, assets and businesses, including, but not limited to, our ability to provide the time, resources, expertise and funds required for the commercial launch of new products, the acceptance and demand for new ~~pharmaceutical~~ products, and the impact of competitive products and pricing, which could lead to material impairment charges;

•our ability or inability to extend the profitable life of our products, including through line extensions and other life-cycle programs;

•our ability to retain, motivate and recruit executives and other key employees;

•our ability to implement effective succession planning for our executives and key employees;

•factors impacting our ability to stabilize and reposition our Ortho Dermatologics business to generate additional value, including the success of recently launched products and the approval of pipeline products (and the timing of such approvals);

•factors impacting our ability to achieve anticipated revenues for our products, including changes in anticipated marketing spend on such products and launch of competing products;

covenants contained in our Restated Credit Agreement, senior notes indentures and the agreements governing our other indebtedness, and the impacts of the COVID-19 pandemic;

•the extent to which our products are reimbursed by government authorities, pharmacy benefit managers ("PBMs") and other third-party payors; the impact our distribution, pricing and other practices may have on the decisions of such government authorities, PBMs and other third-party payors to reimburse our products; and the impact of obtaining or maintaining such reimbursement on the price and sales of our products;

•the inclusion of our products on formularies or our ability to achieve favorable formulary status, as well as the impact on the price and sales of our products in connection therewith;

•the consolidation of wholesalers, retail drug chains and other customer groups and the impact of such industry consolidation on our business;

•our ability to maintain strong relationships with physicians and other healthcare professionals;

•our eligibility for benefits under tax treaties and the continued availability of low effective tax rates for the business profits of certain of our subsidiaries;

•the implementation of the Organisation for Economic Co-operation and Development inclusive framework on Base Erosion and Profit Shifting, including the proposed global minimum corporate tax rate, by the countries in which we operate;

•the actions of our third-party partners or service providers of research, development, manufacturing, marketing, distribution or other services, including their compliance with applicable laws and contracts, which actions may be beyond our control or influence, and the impact of such actions on our ~~Company, including the impact to the Company of our former relationship with Philidor and any alleged legal or contractual non-compliance by Philidor;~~Company;

•the risks associated with the international scope of our operations, including our presence in emerging markets and the challenges we face when entering and operating in new and different geographic markets (including the challenges created by new and different regulatory regimes in such countries and the need to comply with applicable anti-bribery and economic sanctions laws and regulations);

•adverse global economic conditions and credit markets and foreign currency exchange uncertainty and volatility in certain of the countries in which we do business;

•the impact of the United States-Mexico-Canada Agreement ~~(“USMCA”)~~ and any potential changes to other trade agreements;

•~~the impact of Brexit and the post-Brexit trade deal between the European Union and the United Kingdom;~~

•the trade conflict between the United States and China;

•our ability to obtain, maintain and license sufficient intellectual property rights over our products and enforce and defend against challenges to such intellectual ~~property (such as in connection with the filing by Norwich Pharmaceuticals Inc. (“Norwich”) of its Abbreviated New Drug Application (“ANDA”) for Xifaxan~~® ~~(rifaximin) 550 mg tablets and the Company’s related lawsuit filed against Norwich in connection therewith);~~property;

•the introduction of generic, biosimilar or other competitors of our branded products and other products, including the introduction of products that compete against our products that do not have patent or data exclusivity rights;

•our ability to identify, finance, acquire, close and integrate acquisition targets successfully and on a timely basis and the difficulties, challenges, time and resources associated with the integration of acquired companies, businesses and products;

•economic factors over which the Company has no control, including changes in inflation, interest rates, foreign currency rates, and the potential effect of such factors on revenues, expenses and resulting margins;

•interest rate risks associated with our floating rate debt borrowings;

•our ability to effectively distribute our products and the effectiveness and success of our distribution arrangements;

•our ability to effectively promote our own products and those of our co-promotion partners;

•the success of our fulfillment arrangements with Walgreen Co., including market acceptance of, or market reaction to, such arrangements (including by customers, doctors, patients, PBMs, third-party payors and governmental agencies), and the continued compliance of such arrangements with applicable laws;

•our ability to secure and maintain third-party research, development, manufacturing, licensing, marketing or distribution arrangements;

•the risk that our products could cause, or be alleged to cause, personal injury and adverse effects, leading to potential lawsuits, product liability claims and damages and/or recalls or withdrawals of products from the market;

•the mandatory or voluntary recall or withdrawal of our products from the market and the costs associated therewith;

•the availability of, and our ability to obtain and maintain, adequate insurance coverage and/or our ability to cover or insure against the total amount of the claims and liabilities we face, whether through third-party insurance or self-insurance;

•our indemnity agreements, which may result in an obligation to indemnify or reimburse the relevant counterparty, which amounts may be material;

•the difficulty in predicting the expense, timing and outcome within our legal and regulatory environment, including with respect to approvals by the FDA, Health Canada, European Medicines Agency (“EMA”) and similar agencies in other countries, legal and regulatory proceedings and settlements thereof, the protection afforded by our patents and other intellectual and proprietary property, successful generic challenges to our products and infringement or alleged infringement of the intellectual property of others;

•the results of continuing safety and efficacy studies by industry and government agencies;

•the success of preclinical and clinical trials for our drug development pipeline or delays in clinical trials that adversely impact the timely commercialization of our pipeline products, as well as other factors impacting the commercial success of our products, which could lead to material impairment charges;

•uncertainties around the successful improvement and modification of our existing products and development of new products, which may require significant expenditures and efforts;

•the results of management reviews of our research and development portfolio (including following the receipt of clinical results or feedback from the FDA or other regulatory authorities), which could result in terminations of specific projects which, in turn, could lead to material impairment charges;

•the seasonality of sales of certain of our products;

•declines in the pricing and sales volume of certain of our products that are distributed or marketed by third parties, over which we have no or limited control;

•interruptions, breakdowns or breaches in our information technology systems; and

•risks in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, filed on February 24, 2021, risks in Item 1A. “Risk Factors” of Part II of ~~this~~our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed on August 3, 2021, and risks detailed from time to time in our other filings with the U.S. Securities and Exchange Commission (“SEC”) and the Canadian Securities Administrators (the “CSA”), as well as our ability to anticipate and manage the risks associated with the foregoing.

Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found in our Annual Report on Form 10-K for the year ended December 31, 2020, filed on February 24, 2021, under Item 1A. “Risk Factors”, in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed on August 3, 2021, under Item 1A. “Risk Factors” of Part II ~~of this Form 10-Q~~ and in the Company’s other filings with the SEC and the CSA. When relying on our forward-looking statements to make decisions with respect to the Company, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. These forward-looking statements speak only as of the date made. We undertake no obligation to update or revise any of these forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect actual outcomes, except as required by law. We caution that, as it is not possible to predict or identify all relevant factors that may impact forward-looking statements, the foregoing list of important factors that may affect future results is not exhaustive and should not be considered a complete statement of all potential risks and uncertainties.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BAUSCH HEALTH COMPANIES INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except share amounts)

(Unaudited)


		June 30, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	642	$	605	Cash and cash equivalents	$	690	$	605
Restricted cash	Restricted cash	1,214		1,211		Restricted cash	1,214		1,211
Trade receivables, net	Trade receivables, net	1,609		1,577		Trade receivables, net	1,730		1,577
Inventories, net	Inventories, net	1,086		1,094		Inventories, net	1,058		1,094
Prepaid expenses and other current assets	Prepaid expenses and other current assets	899		855		Prepaid expenses and other current assets	632		855
Total current assets	Total current assets	5,450		5,342		Total current assets	5,324		5,342
Property, plant and equipment, net	Property, plant and equipment, net	1,590		1,567		Property, plant and equipment, net	1,584		1,567
Intangible assets, net	Intangible assets, net	7,624		8,445		Intangible assets, net	7,258		8,445
Goodwill	Goodwill	12,527		13,044		Goodwill	12,477		13,044
Deferred tax assets, net	Deferred tax assets, net	2,255		2,137		Deferred tax assets, net	2,266		2,137
Other non-current assets	Other non-current assets	596		664		Other non-current assets	343		664
Total assets	Total assets	$	30,042	$	31,199	Total assets	$	29,252	$	31,199
Liabilities	Liabilities					Liabilities
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	442	$	337	Accounts payable	$	455	$	337
Accrued and other current liabilities	Accrued and other current liabilities	5,075		4,576		Accrued and other current liabilities	4,982		4,576
Total current liabilities	Total current liabilities	5,517		4,913		Total current liabilities	5,437		4,913
Acquisition-related contingent consideration	Acquisition-related contingent consideration	206		216		Acquisition-related contingent consideration	207		216
Non-current portion of long-term debt	Non-current portion of long-term debt	23,439		23,925		Non-current portion of long-term debt	22,358		23,925
Deferred tax liabilities, net	Deferred tax liabilities, net	516		528		Deferred tax liabilities, net	513		528
Other non-current liabilities	Other non-current liabilities	975		1,012		Other non-current liabilities	872		1,012
Total liabilities	Total liabilities	30,653		30,594		Total liabilities	29,387		30,594
Commitments and contingencies (Note 18)	Commitments and contingencies (Note 18)	0		0		Commitments and contingencies (Note 18)	0		0
(Deficit) Equity	(Deficit) Equity					(Deficit) Equity
Common shares, no par value, unlimited shares authorized, 358,653,899 and 355,422,347 issued and outstanding at June 30, 2021 and December 31, 2020, respectively		10,300		10,227
Common shares, no par value, unlimited shares authorized, 359,154,635 and 355,422,347 issued and outstanding at September 30, 2021 and December 31, 2020, respectively						Common shares, no par value, unlimited shares authorized, 359,154,635 and 355,422,347 issued and outstanding at September 30, 2021 and December 31, 2020, respectively	10,312		10,227
Additional paid-in capital	Additional paid-in capital	413		454		Additional paid-in capital	437		454
Accumulated deficit	Accumulated deficit	(9,218)		(8,013)		Accumulated deficit	(9,030)		(8,013)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(2,182)		(2,133)		Accumulated other comprehensive loss	(1,923)		(2,133)
Total Bausch Health Companies Inc. shareholders’ (deficit) equity	Total Bausch Health Companies Inc. shareholders’ (deficit) equity	(687)		535		Total Bausch Health Companies Inc. shareholders’ (deficit) equity	(204)		535
Noncontrolling interest	Noncontrolling interest	76		70		Noncontrolling interest	69		70
Total (deficit) equity	Total (deficit) equity	(611)		605		Total (deficit) equity	(135)		605
Total liabilities and (deficit) equity	Total liabilities and (deficit) equity	$	30,042	$	31,199	Total liabilities and (deficit) equity	$	29,252	$	31,199

BAUSCH HEALTH COMPANIES INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share amounts)

(Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2021		2020		2021		2020
Revenues	Revenues									Revenues
Product sales	Product sales	$	2,076	$	1,637	$	4,079	$	3,623	Product sales	$	2,088	$	2,111	$	6,167	$	5,734
Other revenues	Other revenues	24		27		48		53		Other revenues	23		27		71		80
		2,100		1,664		4,127		3,676			2,111		2,138		6,238		5,814
Expenses	Expenses									Expenses
Cost of goods sold (excluding amortization and impairments of intangible assets)	Cost of goods sold (excluding amortization and impairments of intangible assets)	604		482		1,168		987		Cost of goods sold (excluding amortization and impairments of intangible assets)	574		578		1,742		1,565
Cost of other revenues	Cost of other revenues	8		13		18		27		Cost of other revenues	8		12		26		39
Selling, general and administrative	Selling, general and administrative	685		526		1,291		1,159		Selling, general and administrative	653		572		1,944		1,731
Research and development	Research and development	115		108		227		230		Research and development	121		103		348		333
Amortization of intangible assets	Amortization of intangible assets	360		436		717		872		Amortization of intangible assets	338		391		1,055		1,263
Goodwill impairments	Goodwill impairments	0		0		469		0		Goodwill impairments	—		—		469		—
Asset impairments, including loss on assets held for sale	Asset impairments, including loss on assets held for sale	47		1		195		15		Asset impairments, including loss on assets held for sale	18		2		213		17
Restructuring, integration and separation costs		9		7		21		11
Other expense, net		542		118		512		154
Restructuring, integration, separation and IPO costs										Restructuring, integration, separation and IPO costs	8		2		29		13
Other (income) expense, net										Other (income) expense, net	(183)		18		329		172
		2,370		1,691		4,618		3,455			1,537		1,678		6,155		5,133
Operating (loss) income		(270)		(27)		(491)		221
Operating income										Operating income	574		460		83		681
Interest income	Interest income	2		2		4		9		Interest income	2		2		6		11
Interest expense	Interest expense	(364)		(385)		(732)		(781)		Interest expense	(351)		(374)		(1,083)		(1,155)
Loss on extinguishment of debt	Loss on extinguishment of debt	(45)		(27)		(50)		(51)		Loss on extinguishment of debt	(12)		—		(62)		(51)
Foreign exchange and other	Foreign exchange and other	7		0		8		(13)		Foreign exchange and other	3		(13)		11		(26)
Loss before benefit from income taxes		(670)		(437)		(1,261)		(615)
Benefit from income taxes		77		112		61		138
Net loss		(593)		(325)		(1,200)		(477)
Net income attributable to noncontrolling interest		(2)		(1)		(5)		(1)
Net loss attributable to Bausch Health Companies Inc.		$	(595)	$	(326)	$	(1,205)	$	(478)
Income (loss) before (provision for) benefit from income taxes										Income (loss) before (provision for) benefit from income taxes	216		75		(1,045)		(540)
(Provision for) benefit from income taxes										(Provision for) benefit from income taxes	(25)		(5)		36		133
Net income (loss)										Net income (loss)	191		70		(1,009)		(407)
Net (income) loss attributable to noncontrolling interest										Net (income) loss attributable to noncontrolling interest	(3)		1		(8)		—
Net income (loss) attributable to Bausch Health Companies Inc.										Net income (loss) attributable to Bausch Health Companies Inc.	$	188	$	71	$	(1,017)	$	(407)

Basic and diluted loss per share attributable to Bausch Health Companies Inc.		$	(1.66)	$	(0.92)	$	(3.37)	$	(1.35)
Earnings (loss) per share attributable to Bausch Health Companies Inc.										Earnings (loss) per share attributable to Bausch Health Companies Inc.
Basic										Basic	$	0.52	$	0.20	$	(2.84)	$	(1.15)
Diluted										Diluted	$	0.52	$	0.20	$	(2.84)	$	(1.15)

Basic and diluted weighted-average common shares		359.1		355.3		358.0		354.3
Weighted-average common shares										Weighted-average common shares
Basic										Basic	359.6		355.6		358.5		354.7
Diluted										Diluted	364.0		357.8		358.5		354.7

BAUSCH HEALTH COMPANIES INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ (DEFICIT) EQUITY

(in millions)

(Unaudited)


		Bausch Health Companies Inc. Shareholders' (Deficit) Equity																Bausch Health Companies Inc. Shareholders' (Deficit) Equity
		Common Shares							Accumulated Other Comprehensive Loss		Bausch Health Companies Inc. Shareholders' (Deficit) Equity							Common Shares			Additional Paid-In Capital				Accumulated Deficit		Accumulated Other Comprehensive Loss		Bausch Health Companies Inc. Shareholders' (Deficit) Equity		Non- controlling Interest		Total (Deficit) Equity
		Shares	Amount		Additional Paid-In Capital		Accumulated Deficit						Noncontrolling Interest		Total (Deficit) Equity			Shares	Amount
		Three Months Ended June 30, 2021																Three Months Ended September 30, 2021
Balances, April 1, 2021		358.1	$	10,289	$	393	$	(8,623)	$	(2,256)	$	(197)	$	73	$	(124)
Balances, July 1, 2021																	Balances, July 1, 2021	358.7	$	10,300			$	413			$	(9,218)	$	(2,182)	$	(687)	$	76	$	(611)
Common shares issued under share-based compensation plans	Common shares issued under share-based compensation plans	0.6	11		(7)		—		—		4		—		4		Common shares issued under share-based compensation plans	0.5	12		(6)				—		—		6		—		6
Share-based compensation	Share-based compensation	—	—		31		—		—		31		—		31		Share-based compensation	—	—		33				—		—		33		—		33
Employee withholding taxes related to share-based awards	Employee withholding taxes related to share-based awards	—	—		(4)		—		—		(4)		—		(4)		Employee withholding taxes related to share-based awards	—	—		(3)				—		—		(3)		—		(3)
Net (loss) income		—	—		—		(595)		—		(595)		2		(593)
Other comprehensive income		—	—		—		—		74		74		1		75
Balances, June 30, 2021		358.7	$	10,300	$	413	$	(9,218)	$	(2,182)	$	(687)	$	76	$	(611)
Release of foreign currency translation losses upon disposal of assets held for sale																	Release of foreign currency translation losses upon disposal of assets held for sale	—	—		—				—		340		340		—		340
Noncontrolling interest distributions																	Noncontrolling interest distributions	—	—		—				—		—		—		(10)		(10)
Net income																	Net income	—	—		—				188		—		188		3		191
Other comprehensive loss																	Other comprehensive loss	—	—		—				—		(81)		(81)		—		(81)
Balances, September 30, 2021																	Balances, September 30, 2021	359.2	$	10,312	$	437			$	(9,030)	$	(1,923)	$	(204)	$	69	$	(135)

		Three Months Ended June 30, 2020																Three Months Ended September 30, 2020
Balances, April 1, 2020		354.6	$	10,209	$	396	$	(7,605)	$	(2,281)	$	719	$	71	$	790
Balances, July 1, 2020																	Balances, July 1, 2020	354.9	$	10,217	$	411			$	(7,931)	$	(2,223)	$	474	$	72	$	546
Common shares issued under share-based compensation plans	Common shares issued under share-based compensation plans	0.3	8		(7)		—		—		1		—		1		Common shares issued under share-based compensation plans	0.1	2		(2)				—		—		—		—		—
Share-based compensation	Share-based compensation	—	—		27		—		—		27		—		27		Share-based compensation	—	—		27				—		—		27		—		27
Employee withholding taxes related to share-based awards	Employee withholding taxes related to share-based awards	—	—		(5)		—		—		(5)		—		(5)		Employee withholding taxes related to share-based awards	—	—		(1)				—		—		(1)		—		(1)
Net (loss) income		—	—		—		(326)		—		(326)		1		(325)
Noncontrolling interest distributions																	Noncontrolling interest distributions	—	—		—				—		—		—		(6)		(6)
Net income (loss)																	Net income (loss)	—	—		—				71		—		71		(1)		70
Other comprehensive income	Other comprehensive income	—	—		—		—		58		58		—		58		Other comprehensive income	—	—		—				—		16		16		3		19
Balances, June 30, 2020		354.9	$	10,217	$	411	$	(7,931)	$	(2,223)	$	474	$	72	$	546
Balances, September 30, 2020																	Balances, September 30, 2020	355.0	$	10,219	$	435			$	(7,860)	$	(2,207)	$	587	$	68	$	655

		Six Months Ended June 30, 2021																Nine Months Ended September 30, 2021
Balances, January 1, 2021	Balances, January 1, 2021	355.4	$	10,227	$	454	$	(8,013)	$	(2,133)	$	535	$	70	$	605	Balances, January 1, 2021	355.4	$	10,227	$	454			$	(8,013)	$	(2,133)	$	535	$	70	$	605
Common shares issued under share-based compensation plans	Common shares issued under share-based compensation plans	3.3	73		(58)		—		—		15		—		15		Common shares issued under share-based compensation plans	3.8	85		(64)				—		—		21		—		21
Share-based compensation	Share-based compensation	—	—		62		—		—		62		—		62		Share-based compensation	—	—		95				—		—		95		—		95
Employee withholding taxes related to share-based awards	Employee withholding taxes related to share-based awards	—	—		(45)		—		—		(45)		—		(45)		Employee withholding taxes related to share-based awards	—	—		(48)				—		—		(48)		—		(48)
Release of foreign currency translation losses upon disposal of assets held for sale																	Release of foreign currency translation losses upon disposal of assets held for sale	—	—		—				—		340		340		—		340
Noncontrolling interest distributions																	Noncontrolling interest distributions	—	—		—				—		—		—		(10)		(10)
Net (loss) income	Net (loss) income	—	—		—		(1,205)		—		(1,205)		5		(1,200)		Net (loss) income	—	—		—				(1,017)		—		(1,017)		8		(1,009)
Other comprehensive (loss) income	Other comprehensive (loss) income	—	—		—		—		(49)		(49)		1		(48)		Other comprehensive (loss) income	—	—		—				—		(130)		(130)		1		(129)
Balances, June 30, 2021		358.7	$	10,300	$	413	$	(9,218)	$	(2,182)	$	(687)	$	76	$	(611)
Balances, September 30, 2021																	Balances, September 30, 2021	359.2	$	10,312	$	437			$	(9,030)	$	(1,923)	$	(204)	$	69	$	(135)

		Six Months Ended June 30, 2020																Nine Months Ended September 30, 2020
Balances, January 1, 2020	Balances, January 1, 2020	352.6	$	10,172	$	429	$	(7,452)	$	(2,086)	$	1,063	$	73	$	1,136	Balances, January 1, 2020	352.6	$	10,172	$	429			$	(7,452)	$	(2,086)	$	1,063	$	73	$	1,136
Effect of application of new accounting standard: financial instruments - credit losses		—	—		—		(1)		—		(1)		—		(1)
Application of new accounting standard: financial instruments - credit losses																	Application of new accounting standard: financial instruments - credit losses	—	—		—				(1)		—		(1)		—		(1)
Common shares issued under share-based compensation plans	Common shares issued under share-based compensation plans	2.3	45		(43)		—		—		2		—		2		Common shares issued under share-based compensation plans	2.4	47		(45)				—		—		2		—		2
Share-based compensation	Share-based compensation	—	—		54		—		—		54		—		54		Share-based compensation	—	—		81				—		—		81		—		81
Employee withholding taxes related to share-based awards	Employee withholding taxes related to share-based awards	—	—		(29)		—		—		(29)		—		(29)		Employee withholding taxes related to share-based awards	—	—		(30)				—		—		(30)		—		(30)
Net (loss) income		—	—		—		(478)		—		(478)		1		(477)
Other comprehensive loss		—	—		—		—		(137)		(137)		(2)		(139)
Balances, June 30, 2020		354.9	$	10,217	$	411	$	(7,931)	$	(2,223)	$	474	$	72	$	546
Noncontrolling interest distributions																	Noncontrolling interest distributions	—	—		—				—		—		—		(6)		(6)
Net loss																	Net loss	—	—		—				(407)		—		(407)		—		(407)
Other comprehensive (loss) income																	Other comprehensive (loss) income	—	—		—				—		(121)		(121)		1		(120)
Balances, September 30, 2020																	Balances, September 30, 2020	355.0	$	10,219	$	435			$	(7,860)	$	(2,207)	$	587	$	68	$	655

BAUSCH HEALTH COMPANIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)


		Six Months Ended June 30,					Nine Months Ended September 30,
		2021		2020			2021		2020
Cash Flows From Operating Activities	Cash Flows From Operating Activities					Cash Flows From Operating Activities
Net loss	Net loss	$	(1,200)	$	(477)	Net loss	$	(1,009)	$	(407)
Adjustments to reconcile net loss to net cash provided by operating activities:	Adjustments to reconcile net loss to net cash provided by operating activities:					Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of intangible assets	Depreciation and amortization of intangible assets	807		961		Depreciation and amortization of intangible assets	1,189		1,397
Amortization and write-off of debt premiums, discounts and issuance costs	Amortization and write-off of debt premiums, discounts and issuance costs	25		32		Amortization and write-off of debt premiums, discounts and issuance costs	42		45
Asset impairments, including loss on assets held for sale	Asset impairments, including loss on assets held for sale	195		15		Asset impairments, including loss on assets held for sale	213		17
Goodwill impairments	Goodwill impairments	469		0		Goodwill impairments	469		—
Acquisition-related contingent consideration	Acquisition-related contingent consideration	0		24		Acquisition-related contingent consideration	8		26
Allowances for losses on trade receivable and inventories	Allowances for losses on trade receivable and inventories	35		34		Allowances for losses on trade receivable and inventories	51		52
Deferred income taxes	Deferred income taxes	(120)		(194)		Deferred income taxes	(137)		(213)
Net gain on sale of assets	Net gain on sale of assets	(23)		(1)		Net gain on sale of assets	(2)		(1)
Additions to accrued legal settlements	Additions to accrued legal settlements	532		143		Additions to accrued legal settlements	534		147
Payments of accrued legal settlements	Payments of accrued legal settlements	(129)		(34)		Payments of accrued legal settlements	(144)		(82)
Share-based compensation	Share-based compensation	62		54		Share-based compensation	95		81
Foreign exchange loss	Foreign exchange loss	7		11		Foreign exchange loss	8		14
Gain excluded from hedge effectiveness	Gain excluded from hedge effectiveness	(11)		(11)		Gain excluded from hedge effectiveness	(17)		(17)
Loss on extinguishment of debt	Loss on extinguishment of debt	50		51		Loss on extinguishment of debt	62		51
Payments of contingent consideration adjustments, including accretion	Payments of contingent consideration adjustments, including accretion	(8)		(1)		Payments of contingent consideration adjustments, including accretion	(16)		—
Other	Other	(24)		(9)		Other	(33)		(7)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Trade receivables	Trade receivables	(48)		423		Trade receivables	(177)		67
Inventories	Inventories	(47)		(188)		Inventories	(62)		(178)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	21		(16)		Prepaid expenses and other current assets	37		11
Accounts payable, accrued and other liabilities	Accounts payable, accrued and other liabilities	245		(356)		Accounts payable, accrued and other liabilities	291		(286)
Net cash provided by operating activities	Net cash provided by operating activities	838		461		Net cash provided by operating activities	1,402		717
Cash Flows From Investing Activities	Cash Flows From Investing Activities					Cash Flows From Investing Activities
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(128)		(141)		Purchases of property, plant and equipment	(191)		(222)
Payments for intangible and other assets	Payments for intangible and other assets	(4)		(2)		Payments for intangible and other assets	(9)		(3)
Purchases of marketable securities	Purchases of marketable securities	(11)		(2)		Purchases of marketable securities	(14)		(3)
Proceeds from sale of marketable securities	Proceeds from sale of marketable securities	8		6		Proceeds from sale of marketable securities	11		7
Proceeds from sale of assets and businesses, net of costs to sell	Proceeds from sale of assets and businesses, net of costs to sell	25		21		Proceeds from sale of assets and businesses, net of costs to sell	669		21
Interest settlements from cross-currency swaps	Interest settlements from cross-currency swaps	11		11		Interest settlements from cross-currency swaps	23		23
Net cash used in investing activities		(99)		(107)
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	489		(177)
Cash Flows From Financing Activities	Cash Flows From Financing Activities					Cash Flows From Financing Activities
Issuance of long-term debt, net of discounts	Issuance of long-term debt, net of discounts	1,579		1,477		Issuance of long-term debt, net of discounts	1,576		1,476
Repayments of long-term debt	Repayments of long-term debt	(2,100)		(3,062)		Repayments of long-term debt	(3,200)		(3,162)
Proceeds from the issuances of short-term debt	Proceeds from the issuances of short-term debt	0		1		Proceeds from the issuances of short-term debt	—		1
Repayments of short-term debt						Repayments of short-term debt	—		(1)
Payments of employee withholding taxes related to share-based awards	Payments of employee withholding taxes related to share-based awards	(45)		(29)		Payments of employee withholding taxes related to share-based awards	(48)		(30)
Payments of acquisition-related contingent consideration	Payments of acquisition-related contingent consideration	(41)		(23)		Payments of acquisition-related contingent consideration	(77)		(30)
Payments of financing costs	Payments of financing costs	(38)		(39)		Payments of financing costs	(48)		(39)
Other	Other	14		1		Other	9		(6)
Net cash used in financing activities	Net cash used in financing activities	(631)		(1,674)		Net cash used in financing activities	(1,788)		(1,791)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(6)		(17)		Effect of exchange rate changes on cash and cash equivalents	(15)		(5)
Net increase (decrease) in cash, cash equivalents, restricted cash and cash and cash equivalents held for sale		102		(1,337)
Net increase (decrease) in cash, cash equivalents and restricted cash						Net increase (decrease) in cash, cash equivalents and restricted cash	88		(1,256)
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	1,816		3,244		Cash, cash equivalents and restricted cash, beginning of period	1,816		3,244
Cash, cash equivalents, restricted cash and cash and cash equivalents held for sale, end of period		$	1,918	$	1,907
Cash, cash equivalents and restricted cash, end of period						Cash, cash equivalents and restricted cash, end of period	$	1,904	$	1,988
Cash and cash equivalents	Cash and cash equivalents	$	642	$	896	Cash and cash equivalents	$	690	$	977
Restricted cash, current		1,214		1,011
Cash and cash equivalents, held for sale		62		0
Cash, cash equivalents, restricted cash and cash and cash equivalents held for sale, end of period		$	1,918	$	1,907
Restricted cash						Restricted cash	1,214		1,011
Cash, cash equivalents and restricted cash, end of period						Cash, cash equivalents and restricted cash, end of period	$	1,904	$	1,988

BAUSCH HEALTH COMPANIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.DESCRIPTION OF BUSINESS

Bausch Health Companies Inc. (the “Company” or "Bausch Health") is a multinational, specialty pharmaceutical and medical device company that develops, manufactures and markets, primarily in the therapeutic areas of eye health, gastroenterology ("GI") and dermatology, a broad range of branded, generic and branded generic pharmaceuticals, over-the-counter (“OTC”) products and medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment and aesthetics devices) which are marketed directly or indirectly in approximately 100 countries.

2.SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Use of Estimates

The accompanying unaudited Consolidated Financial Statements have been prepared by the Company in U.S. dollars and in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial reporting, which do not conform in all respects to the requirements of U.S. GAAP for annual financial statements. Accordingly, these notes to the unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements prepared in accordance with U.S. GAAP that are contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the U.S. Securities and Exchange Commission (the “SEC”) and the Canadian Securities Administrators (the “CSA”) on February 24, 2021. The unaudited Consolidated Financial Statements have been prepared using accounting policies that are consistent with the policies used in preparing the Company’s audited Consolidated Financial Statements for the year ended December 31, 2020, except for the new accounting guidance adopted during the period. The unaudited Consolidated Financial Statements reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position and results of operations for the interim periods. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year.

Proposed Separation of Bausch + Lomb Eye Health Business and Proposed Initial Public Offering of Solta Medical Business

On August 6, 2020, the Company announced that it intends to separate its eye health business into an independent publicly traded entity from the remainder of Bausch Health Companies Inc. (the “B+L Separation”). On August 3, 2021, the Company announced its intention to conduct an initial public offering ("IPO") of its ~~medial aesthetics~~aesthetic medical device business, Global Solta (“Solta Medical”) (the “Solta IPO"). The B+L Separation and the Solta IPO will establish 3 separate companies that include: (i) a fully integrated eye health company which will consist of the Company’s Bausch + Lomb Global Vision Care, Global Surgical, Global Consumer and Global Ophthalmology Rx businesses, (ii) a global provider of aesthetic medical ~~aesthetics~~devices which will consist of the Company’s Solta business and (iii) a diversified pharmaceutical company which will include the Company’s Salix, International Rx, dentistry, neurology, medical dermatology and generics pharmaceutical businesses. The anticipated B+L Separation and Solta IPO are subject to regulatory approvals and certain conditions, including final approval by the Company’s Board of Directors and any shareholder vote requirements that may be applicable. These unaudited Consolidated Financial Statements do not include any adjustments to give effect to either the B+L Separation or the Solta IPO.

As of the date of the issuance of these financial statements, the Company ~~continues to make progress toward~~has completed the internal objectives necessary for the B+L Separation and has been actively addressing the internal organizational design and structure of the new Bausch + Lomb entity which it anticipates having completed by the end of its third quarter of 2021. The Company has begun addressingcontinues to address the internal organizational design and structure of the new Solta Medical entity which it anticipates having completed ~~in late~~by the end of 2021. Subject to market conditions and receipt of regulatory, stock exchange and other approvals, the Company expects to launch the Solta IPO as early as December 2021 or January 2022. Subject to receipt of regulatory, stock exchange and other approvals and market conditions the Company expects to launch an IPO of the Bausch + Lomb entity as early ~~2022.~~as thirty days subsequent to the Solta IPO. The Company expects to complete the Separation of Bausch + Lomb, following the expiry of customary lock-ups and achievement of targeted debt leverage ratios, subject to receipt of applicable shareholder and other necessary approvals. Management is also exploring various capitalization structures and the form of each transaction in order to achieve the appropriate capitalization and leverage for each of the 3 entities if and when the proposed transactions are complete.

Impacts of COVID-19 Pandemic

The unprecedented nature of the COVID-19 pandemic has, and continues to, adversely ~~impacted~~impact the global economy. The COVID-19 pandemic and the reactions of governments, private sector participants and the public in an effort to contain the spread of the COVID-19 virus and/or address its impacts have had significant direct and indirect effects on businesses and commerce. This includes, but is not limited to, disruption to supply chains, employee base and transactional activity, ~~facilities~~facility closures and production suspensions.

of a resurgence of the COVID-19 virus and variant strains thereof, such as the delta variant, new information concerning the severity of the COVID-19 virus, the effectiveness and intensity of measures to contain the COVID-19 virus and the economic impact of the pandemic and the reactions to it. Such developments, among others, depending on their nature, duration and intensity, could have a significant adverse effect on the Company's business, financial condition, cash flows and results of operations.

To date, the Company has been able to continue its operations with limited disruptions in supply and manufacturing. Although it is difficult to predict the broad macroeconomic effects that the COVID-19 pandemic will have on industries or individual companies, the Company has assessed the possible effects and outcomes of the pandemic on, among other things, its supply chain, customers and distributors, discounts and rebates, employee base, product sustainability, research and development efforts, product pipeline and consumer demand and currently believes that its estimates are reasonable.

Use of Estimates

In preparing the unaudited Consolidated Financial Statements, management is required to make estimates and assumptions. This includes estimates and assumptions regarding the nature, timing and extent of the impacts that the COVID-19 pandemic will have on its operations and cash flows. The estimates and assumptions used by the Company affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited Consolidated Financial Statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates and the differences could be material.

On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company’s business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company’s results of operations and financial position could be materially impacted.

Principles of Consolidation

The unaudited Consolidated Financial Statements include the accounts of the Company and those of its subsidiaries and any variable interest entities for which the Company is the primary beneficiary. All intercompany transactions and balances have been eliminated.

Reclassifications

Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

Changes in Reportable Segments

Commencing in the first quarter of 2021, the Company operates in the following reportable segments: (i) Bausch + Lomb, (ii) Salix, (iii) International Rx, (iv) Ortho Dermatologics and (v) Diversified Products. Prior to the first quarter of 2021, the Company operated in the following reportable segments: (i) Bausch + Lomb/International, (ii) Salix, (iii) Ortho Dermatologics and (iv) Diversified Products. Prior period presentations have been recast to conform to the current segment reporting structure. See Note 19, "SEGMENT INFORMATION" for additional information.

Adoption of New Accounting Guidance

In December 2019, the Financial Accounting Standards Board ("FASB") issued guidance that simplifies the accounting for income taxes by eliminating certain exceptions to the guidance related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The guidance was effective for the Company beginning January 1, 2021. The application of this guidance did not have a material effect on the Company's financial position, results of operations and cash flows.

Product Sales Provisions

As is customary in the pharmaceutical industry, gross product sales are subject to a variety of deductions in arriving at reported net product sales. The transaction price for product sales is typically adjusted for variable consideration, which may be in the form of cash discounts, allowances, returns, rebates, chargebacks and distribution fees paid to customers. Provisions for variable consideration are established to reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the contract. The amount of variable consideration included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.

Provisions for these deductions are recorded concurrently with the recognition of gross product sales revenue and include cash discounts and allowances, chargebacks, and distribution fees, which are paid to direct customers, as well as rebates and returns, which can be paid to direct and indirect customers. Returns provision balances and volume discounts to direct customers are included in Accrued and other current liabilities. All other provisions related to direct customers are included in Trade receivables, net, while provision balances related to indirect customers are included in Accrued and other current liabilities.

The Company continually monitors its variable consideration provisions and evaluates the estimates used as additional information becomes available. Adjustments will be made to these provisions periodically to reflect new facts and circumstances that may indicate that historical experience may not be indicative of current and/or future results. The Company is required to make subjective judgments based primarily on its evaluation of current market conditions and trade inventory levels related to the Company's products. These judgments include the potential impact of the COVID-19 pandemic on, among other things, unemployment and related changes in customer health insurance levels, customer behaviors during the COVID-19 pandemic and government stimulus bills that focus on ensuring availability and access to lifesaving drugs during a public health crisis. This evaluation may result in an increase or decrease in the experience rate that is applied to current and future sales, or require an adjustment related to past sales, or both. If the trend in actual amounts of variable consideration varies from the Company’s prior estimates, the Company adjusts these estimates when such trend is believed to be sustainable. At that time, the Company would record the necessary adjustments which would affect net product revenue and earnings reported in the current period. The Company applies this method consistently for contracts with similar characteristics.

Over the last several years, the Company has increased its focus on maximizing operational efficiencies and continues to take actions to reduce product returns, including, but not limited to: (i) monitoring and reducing customer inventory levels, (ii) instituting disciplined pricing policies and (iii) improving contracting. These actions have had the effect of improving the sales return experience, primarily related to branded and generic products. Sales return provisions for the nine months ended September 30, 2021 and 2020 were $94 million and $71 million, respectively, and include reductions in variable consideration for sales return provisions related to past sales of approximately $28 million and $38 million for the three months ended September 30, 2021 and 2020, respectively.

Contract Assets and Contract Liabilities

There are no contract assets for any period presented. Contract liabilities consist of deferred revenue, the balance of which is not material to any period presented.

Allowance for Credit Losses

An allowance is maintained for potential credit losses. The Company estimates the current expected credit loss on its receivables based on various factors, including historical credit loss experience, customer credit worthiness, value of collaterals (if any), and any relevant current and reasonably supportable future economic factors. Additionally, the Company generally estimates the expected credit loss on a pool basis when customers are deemed to have similar risk characteristics. Trade receivable balances are written off against the allowance when it is deemed probable that the trade receivable will not be collected. Trade receivables, net are stated net of certain sales provisions and the allowance for credit losses. The activity in the allowance for credit losses for trade receivables for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 is as follows.


(in millions)	(in millions)	2021		2020		(in millions)	2021		2020
Balance, beginning of period	Balance, beginning of period	$	39	$	48	Balance, beginning of period	$	39	$	48
Retrospective effect of application of new accounting standard	Retrospective effect of application of new accounting standard	0		1		Retrospective effect of application of new accounting standard	—		1
Provision	Provision	0		6		Provision	(1)		7
Write-offs	Write-offs	(1)		(2)		Write-offs	(3)		(3)
Recoveries	Recoveries	1		1		Recoveries	2		1
Foreign exchange and other	Foreign exchange and other	0		(2)		Foreign exchange and other	—		(1)
Balance, end of period	Balance, end of period	$	39	$	52	Balance, end of period	$	37	$	53

4.ACQUISITION, LICENSING AGREEMENTS AND ~~ASSETS HELD FOR SALE~~DIVESTITURE

Option to Purchase All Ophthalmology Assets of Allegro Ophthalmics, LLC ("Allegro")

On September 21, 2020, the Company announced that it had entered into an agreement to acquire an option to purchase all of the ophthalmology assets of Allegro (the "Option"), a privately held biopharmaceutical company focused on the development of therapies that regulate integrin functions for the treatment of ocular diseases. Among the assets to be acquired if the Option was exercised, were the worldwide rights to risuteganib (Luminate®), Allegro's lead investigational compound in retina, which is believed to simultaneously act on the angiogenic, inflammatory and mitochondrial metabolic pathways implicated in diseases such as intermediate dry Age-related Macular Degeneration. During the three months ended September 30, 2020, the Company made and expensed as acquired in-process research and development ("IPR&D") included in Other (income) expense, net, an initial upfront payment of $10 million to acquire the Option. However, on June 23, 2021, Allegro notified the Company that it did not raise the additional funding required under the option agreement. Pursuant to the terms of the option agreement, the Option thereby terminated, and the Company exercised its right to convert the $10 million upfront payment into a minor equity interest in Allegro. The Company expects that it will make 0no additional payments pursuant to this option agreement.

Licensing Agreements

In the normal course of business, the Company may enter into select licensing and collaborative agreements for the commercialization and/or development of unique products. These products are sometimes investigational treatments in early stage development that target unique conditions. The ultimate outcome, including whether the product will be: (i) fully developed, (ii) approved by regulatory agencies, (iii) covered by third-party payors or (iv) profitable for distribution, is highly uncertain. The commitment periods under these agreements vary and include customary termination provisions. Expenses arising from commitments, if any, to fund the development and testing of these products and their promotion are recognized as incurred. Royalties due are recognized when earned and milestone payments are accrued when each milestone has been achieved and payment is probable and can be reasonably estimated.

~~Assets Held for Sale~~Divestiture of Amoun Pharmaceutical Company S.A.E. ("Amoun")

On March 31, 2021, the Company announced that it and certain of its affiliates had entered into a definitive agreement to sell all of its equity interests in Amoun ~~Pharmaceutical Company S.A.E. ("Amoun")~~ for total gross consideration of approximately $740 million (including the assignment to the purchasing entity of an intercompany loan granted by the Company to Amoun), subject to certain adjustments (the “Amoun Sale”). The Amoun Sale closed on July 26, 2021. As part of the Amoun Sale, cash generated by Amoun during the period from the locked-box date of January 1, 2021 through closing was for the benefit of the purchasing entity, subject to working capital during such period. Amoun manufactures, markets and distributes branded generics of human and animal health products. The Amoun business was part of the International Rx

Included in the Consolidated Balance Sheets as of ~~June 30, 2021 and~~ December 31, 2020 are the following carrying amounts of the Amoun business' assets and liabilities held for sale.

(in millions) June 30,
2021 December 31,
2020
Prepaid expenses and other current assets:
Cash and cash equivalents $ 62 $ 0
Trade receivables, net 95 91
Inventories, net 72 63
Prepaid expenses and other current assets 11 8
$ 240 $ 162
Other non-current assets:
Property, plant and equipment, net $ 71 $ 68
Goodwill and Intangible assets, net 166 245
Deferred tax assets, net 2 2
$ 239 $ 315

Accrued and other current liabilities:
Accounts payable $ 10 $ 7
Accrued and other current liabilities 24 28
$ 34 $ 35
Other non-current liabilities:
Deferred tax liabilities, net $ 36 $ 36
Other non-current liabilities 23 21
$ 59 $ 57


(in millions)
Prepaid expenses and other current assets:			Accrued and other current liabilities:
Trade receivables, net	$	91	Accounts payable	$	7
Inventories, net	63		Accrued and other current liabilities	28
Prepaid expenses and other current assets	8			$	35
	$	162
Other non-current assets:			Other non-current liabilities:
Property, plant and equipment, net	$	68	Deferred tax liabilities, net	$	36
Goodwill and Intangible assets, net	245		Other non-current liabilities	21
Deferred tax assets, net	2			$	57
	$	315

5.RESTRUCTURING, INTEGRATION, SEPARATION AND ~~SEPARATION~~IPO COSTS

Restructuring and Integration Costs

The Company evaluates opportunities to improve its operating results and implements cost savings programs to streamline its operations and eliminate redundant processes and expenses. Restructuring and integration costs are expenses associated with the implementation of these cost savings programs and include expenses associated with: (i) reducing headcount, (ii) eliminating real estate costs associated with unused or under-utilized facilities and (iii) implementing contribution margin improvement and other cost reduction initiatives. The liability associated with restructuring and integration costs as of ~~June~~September 30, 2021 was ~~$17~~$16 million.

~~During the six months ended June 30, 2021, the~~The Company incurred $6$9 million and $12 million of restructuring and integration ~~costs. These costs included: (i) $5 million of facility closure~~ costs and ~~(ii) $1 million of severance costs. The Company~~ made payments of $9$13 million ~~for~~and $14 million during the ~~six~~nine months ended ~~June~~September 30, ~~2021.~~

~~During the six months ended June 30,~~2021 and 2020, the Company incurred $11 million of restructuring and integration costs. These costs included: (i) $6 million of facility closure costs and (ii) $5 million of severance costs. The Company made payments of $9 million for the six months ended June 30, 2020.respectively.

Separation Costs, Separation-related Costs, IPO Costs and ~~Separation-related~~IPO-related Costs

The Company has incurred, and will incur, costs associated with activities to effectuate the B+L ~~Separation.~~Separation and the Solta IPO. These activities include: (i) separating the Bausch + Lomb ~~business~~and Solta Medical businesses from the remainder of the Company and (ii) registering the Bausch + Lomb ~~business~~and Solta Medical businesses as an independent publicly traded ~~entity.~~entities. Separation and IPO costs are incremental costs directly related to the B+L Separation and Solta IPO and include, but are not limited to: (i) legal, audit and advisory fees, (ii) talent acquisition costs and (iii) costs associated with establishing a new board of directors and related board committees for the ~~new entity.~~Bausch + Lomb and Solta Medical entities. Included in Restructuring, integration, separation and ~~separation~~IPO costs for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 are Separation and IPO costs of ~~$15~~$20 million and ~~$0,~~$1 million, respectively.

The Company has also incurred, and will incur, Separation-related and IPO-related costs which are incremental costs indirectly related to the B+L ~~Separation.~~Separation and Solta IPO. Separation-related and IPO-related costs include, but are not limited to: (i) IT infrastructure and software licensing costs, (ii) rebranding costs and (iii) costs associated with facility relocation and/or modification. Included in Selling, general and administrative expenses for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 are Separation-related and IPO-related costs of ~~$55~~$91 million and ~~$0,~~$4 million, respectively.

The Company continues to make progress toward internal objectives necessary for the B+L Separation and Solta IPO and the extent and timing of future charges for these costs cannot be reasonably estimated at this time and could be material.

6.FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

Fair value measurements are estimated based on valuation techniques and inputs categorized as follows:

•Level 1 — Quoted prices in active markets for identical assets or liabilities;

•Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

•Level 3 — Unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using discounted cash flow methodologies, pricing models, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following fair value hierarchy table presents the components and classification of the Company’s financial assets and liabilities measured at fair value on a recurring basis:


		June 30, 2021								December 31, 2020									September 30, 2021								December 31, 2020
(in millions)	(in millions)	Carrying Value		Level 1		Level 2		Level 3		Carrying Value		Level 1		Level 2		Level 3		(in millions)	Carrying Value		Level 1		Level 2		Level 3		Carrying Value		Level 1		Level 2		Level 3
Assets:	Assets:																	Assets:
Cash equivalents	Cash equivalents	$	160	$	127	$	33	$	0	$	41	$	8	$	33	$	0	Cash equivalents	$	157	$	141	$	16	$	—	$	41	$	8	$	33	$	—
Restricted cash	Restricted cash	$	1,214	$	1,214	$	0	$	0	$	1,211	$	1,211	$	0	$	0	Restricted cash	$	1,214	$	1,214	$	—	$	—	$	1,211	$	1,211	$	—	$	—
Foreign currency exchange contracts	Foreign currency exchange contracts	$	0	$	0	$	0	$	0	$	3	$	0	$	3	$	0	Foreign currency exchange contracts	$	1	$	—	$	1	$	—	$	3	$	—	$	3	$	—
Liabilities:	Liabilities:																	Liabilities:
Acquisition-related contingent consideration	Acquisition-related contingent consideration	$	280	$	0	$	0	$	280	$	328	$	0	$	0	$	328	Acquisition-related contingent consideration	$	244	$	—	$	—	$	244	$	328	$	—	$	—	$	328
Cross-currency swaps	Cross-currency swaps	$	41	$	0	$	41	$	0	$	70	$	0	$	70	$	0	Cross-currency swaps	$	19	$	—	$	19	$	—	$	70	$	—	$	70	$	—
Foreign currency exchange contracts	Foreign currency exchange contracts	$	4	$	0	$	4	$	0	$	11	$	0	$	11	$	0	Foreign currency exchange contracts	$	2	$	—	$	2	$	—	$	11	$	—	$	11	$	—

approximates fair value due to its short-term nature. These payments will remain in escrow until resolution of the appeals of the final court approval of the settlement agreement, as discussed in Note 18, "LEGAL PROCEEDINGS".

There were no transfers into or out of Level 3 during the ~~six~~nine months ended ~~June~~September 30, 2021.

Cross-currency Swaps

During 2019, the Company entered into cross-currency swaps, with aggregate notional amounts of $1,250 million, to mitigate fluctuation in the value of a portion of its euro-denominated net investment in its consolidated financial statements from fluctuation in exchange rates. The euro-denominated net investment being hedged is the Company’s investment in certain euro-denominated subsidiaries.

The Company’s cross-currency swaps qualify for and have been designated as an accounting hedge of the foreign currency exposure of a net investment in a foreign operation and are remeasured at each reporting date to reflect changes in their fair values. The fair value is determined via a mark-to-market analysis, using observable (Level 2) inputs. These inputs may include: (i) the foreign currency exchange spot rate between the euro and U.S. dollar, (ii) the interest rate yield curves in the euro and U.S. dollar and (iii) the credit risk rating for each applicable counterparty. The net change in fair value of cross-currency swaps is reported as a gain or loss in the Consolidated Statements of Comprehensive Loss as part of Foreign currency translation adjustment to the extent they are effective and remain in Accumulative other comprehensive loss until either the sale or complete, or substantially complete, liquidation of the subsidiary. No portion of the cross-currency swaps ~~were~~was ineffective for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020.

The ~~Company uses~~assets and liabilities associated with the ~~spot method of assessing hedge effectiveness. The Company has elected to amortize amounts excluded from the assessment of effectiveness over the term of its~~Company's cross-currency swaps as ~~Interest expense~~included in the Consolidated ~~Statements of Operations.~~

~~The fair value of the Company’s cross-currency swaps liability~~Balance Sheets as of ~~June~~September 30, 2021 and December 31, 2020 was $41 million and $70 million, respectively. Included in Other non-current liabilities is $50 million and $79 million of cross-currency swaps and included in Prepaid expenses and other current assets is $9 million and $9 million of earned interestare as ~~of June 30, 2021 and December 31, 2020, respectively.~~follows:


(in millions)	September 30, 2021		December 31, 2020
Other non-current liabilities	$	22	$	79
Prepaid expenses and other current assets	$	3	$	9
Net fair value	$	19	$	70

The following table presents the effect of hedging instruments on the Consolidated Statements of Comprehensive Loss and the Consolidated Statements of Operations for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	(in millions)	2021		2020		2021		2020		(in millions)	2021		2020		2021		2020
(Loss) Gain recognized in Other comprehensive loss		$	(12)	$	(18)	$	29	$	55
Gain (loss) recognized in Other comprehensive loss										Gain (loss) recognized in Other comprehensive loss	$	28	$	(54)	$	57	$	1
Gain excluded from assessment of hedge effectiveness	Gain excluded from assessment of hedge effectiveness	$	5	$	5	$	11	$	11	Gain excluded from assessment of hedge effectiveness	$	6	$	6	$	17	$	17
Location of gain of excluded component	Location of gain of excluded component	Interest Expense				Interest Expense				Location of gain of excluded component	Interest Expense				Interest Expense

The assets and liabilities associated with the Company's foreign exchange contracts as included in the Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020 are as follows:


(in millions)	September 30, 2021		December 31, 2020
Accrued and other current liabilities	$	2	$	11
Prepaid expenses and other current assets	$	1	$	3
Net fair value	$	1	$	8

The following table presents the ~~Company reported a realized loss of $9 million and $4 million, respectively, related to settlements~~effect of the Company's foreign ~~currency~~ exchange ~~contracts.~~contracts on the Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020 and the Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2021		2020		2021		2020
Gain (loss) related to changes in fair value	$	2	$	—	$	7	$	(1)
(Loss) gain related to settlements	$	(5)	$	3	$	(14)	$	(1)

Acquisition-related Contingent Consideration Obligations

The fair value measurement of contingent consideration obligations arising from business combinations is determined via a probability-weighted discounted cash flow analysis, using unobservable (Level 3) inputs. These inputs may include: (i) the estimated amount and timing of projected cash flows, (ii) the probability of the achievement of the factor(s) on which the contingency is based and (iii) the risk-adjusted discount rate used to present value the probability-weighted cash flows. Significant increases or decreases in any of those inputs in isolation could result in a significantly higher or lower fair value measurement. At ~~June~~September 30, 2021, the fair value measurements of acquisition-related contingent consideration were determined using risk-adjusted discount rates ranging from 6% to 18%, and a weighted average risk-adjusted discount rate of 7%. The weighted average risk-adjusted discount rate was calculated by weighting each contract's relative fair value at ~~June~~September 30, 2021.

The following table presents a reconciliation of contingent consideration obligations measured on a recurring basis using significant unobservable inputs (Level 3) for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020:


		Six Months Ended June 30,									Nine Months Ended September 30,
(in millions)	(in millions)	2021				2020				(in millions)	2021				2020
Balance, beginning of period	Balance, beginning of period			$	328			$	316	Balance, beginning of period			$	328			$	316
Adjustments to Acquisition-related contingent consideration:	Adjustments to Acquisition-related contingent consideration:									Adjustments to Acquisition-related contingent consideration:
Accretion for the time value of money	Accretion for the time value of money	$	9			$	11			Accretion for the time value of money	$	12			$	17
Fair value adjustments due to changes in estimates of other future payments	Fair value adjustments due to changes in estimates of other future payments	(9)				13				Fair value adjustments due to changes in estimates of other future payments	(4)				9
Acquisition-related contingent consideration	Acquisition-related contingent consideration			0				24		Acquisition-related contingent consideration			8				26
Payments	Payments			(49)				(24)		Payments			(93)				(30)
Foreign currency translation adjustment included in other comprehensive loss				1				0
Foreign currency translation adjustment included in Other comprehensive loss										Foreign currency translation adjustment included in Other comprehensive loss			1				—
Balance, end of period	Balance, end of period			280				316		Balance, end of period			244				312
Current portion included in Accrued and other current liabilities	Current portion included in Accrued and other current liabilities			74				37		Current portion included in Accrued and other current liabilities			37				37
Non-current portion	Non-current portion			$	206			$	279	Non-current portion			$	207			$	275

Goodwill

The changes in the carrying amounts of goodwill during the ~~six~~nine months ended ~~June~~September 30, 2021 and the year ended December 31, 2020 were as follows:


(in millions)	(in millions)	Bausch + Lomb/ International		Bausch + Lomb		Salix		International Rx		Ortho Dermatologics		Diversified Products		Total		(in millions)	Bausch + Lomb/ International		Bausch + Lomb		Salix		International Rx		Ortho Dermatologics		Diversified Products		Total
Balance, January 1, 2020	Balance, January 1, 2020	$	5,786	$	—	$	3,159	$	—	$	1,267	$	2,914	$	13,126	Balance, January 1, 2020	$	5,786	$	—	$	3,159	$	—	$	1,267	$	2,914	$	13,126
Assets held for sale reclassified to goodwill	Assets held for sale reclassified to goodwill	18		—		—		—		—		—		18		Assets held for sale reclassified to goodwill	18		—		—		—		—		—		18
Goodwill reclassified to assets held for sale (Note 4)		(217)		—		—		—		—		—		(217)
Goodwill reclassified to Assets held for sale (Note 4)																Goodwill reclassified to Assets held for sale (Note 4)	(217)		—		—		—		—		—		(217)
Foreign exchange and other	Foreign exchange and other	117		—		—		—		—		—		117		Foreign exchange and other	117		—		—		—		—		—		117
Balance, December 31, 2020	Balance, December 31, 2020	5,704		0		3,159		0		1,267		2,914		13,044		Balance, December 31, 2020	5,704		—		3,159		—		1,267		2,914		13,044
Realignment of segment goodwill	Realignment of segment goodwill	(5,704)		5,395		—		887		—		(578)		0		Realignment of segment goodwill	(5,704)		5,395		—		887		—		(578)		—
Impairment	Impairment	—		—		—		—		(469)		—		(469)		Impairment	—		—		—		—		(469)		—		(469)
Foreign exchange and other	Foreign exchange and other	—		(28)		—		(25)		—		5		(48)		Foreign exchange and other	—		(59)		—		(53)		—		14		(98)
Balance, June 30, 2021		$	0	$	5,367	$	3,159	$	862	$	798	$	2,341	$	12,527
Balance, September 30, 2021																Balance, September 30, 2021	$	—	$	5,336	$	3,159	$	834	$	798	$	2,350	$	12,477

forecasts used in its previous goodwill impairment assessments, for these and other matters. After completing this assessment, although not completely insulated from the negative effects of the COVID-19 pandemic, the Company believes that its long-term forecasted cash flows, as adjusted for the possible outcome of the COVID-19 pandemic and other matters, do not indicate that the fair value of any reporting unit may be below its carrying value.

During the pandemic, the public has been advised to engage in certain "social restrictions" such as: (i) remaining at home or shelter-in-place, (ii) limiting social interaction, (iii) closing non-essential businesses and (iv) postponing certain surgical and elective medical procedures in order to prioritize/conserve available health care resources. During the three months ended March 31, 2020, these factors negatively impacted, most notably, the revenues of the Company's Vision Care and Surgical businesses in Asia, where the COVID-19 pandemic originated. Beginning in March 2020, and throughout most of the second quarter of 2020, the Company experienced steeper declines in these revenues and the revenues of other businesses, as social restrictions expanded worldwide, particularly in the U.S. and Europe. Social restrictions negatively impacted the Company's revenues for contact lenses, intraocular lenses, medical devices, surgical systems and certain pre- and post-operative eye-medications of its Ophtho Rx business, aesthetic medical ~~aesthetics and therapeutic products~~devices of its Global Solta business, and certain branded pharmaceutical products of its Salix, Ortho Dermatologics and Dentistry businesses, as the offices of many health care providers were closed and certain surgeries and elective medical procedures were deferred.

The Company’s 2020 revenues were most negatively impacted during its second quarter by the social restrictions and other precautionary measures taken in response to the COVID-19 pandemic. However, as governments began lifting social restrictions, allowing offices of certain health care providers to reopen and certain surgeries and elective medical procedures to proceed, the negative trend in the revenues of certain businesses began to level off and stabilize prior to the third quarter of 2020. Revenues for the ~~three~~nine months ended ~~June~~September 30, 2021 and 2020 were ~~$2,100~~$6,238 million and ~~$1,664~~$5,814 million, respectively. This increase of ~~$436~~$424 million in revenue represents ~~a continuously~~an improving trend over the decreases in year-over-year revenues for the three-month periods ended June 30, 2020, September 30, 2020 and December 31, 2020 of 23%, 3% and less than 1%, respectively. Presuming there continues to be increased availability of effective vaccines and any further resurgence of the COVID-19 virus, the delta variant and other variant strains thereof do not have a material adverse impact on efforts to contain the COVID-19 virus, the Company anticipates an ongoing, gradual global recovery from the macroeconomic and health care impacts of the pandemic that occurred during the first half of 2020 and anticipates that its revenues will likely return to pre-pandemic levels for many of our businesses and geographies in ~~2021.~~2021 and for the remaining businesses and geographies in 2022. However, the rates of recovery for each business will vary by geography and will be dependent upon, among other things, the availability and effectiveness of vaccines for the COVID-19 virus, COVID-19 vaccine immunization rates, the emergence of variant strains of COVID-19, government responses, rates of economic recovery, precautionary measures taken by patients and customers, the rate at which remaining social restrictions are lifted and once lifted, the presumption that social restrictions will not be materially reenacted in the event of a resurgence of the virus or variant strains thereof and other actions taken in response to the COVID-19 pandemic.

2020 Interim Goodwill Impairment Testing

During the interim periods of 2020, after giving consideration to the nature and timing of the negative impacts of the COVID-19 pandemic on the Company's forecasted cash flows, with the exception of the Ortho Dermatologics reporting unit, no events occurred, or circumstances changed that would indicate that the fair value of any other reporting unit might be below its carrying value and therefore, no impairments were recorded.

During the three months ended March 31, 2020 and June 30, 2020, the operating results for the Ortho Dermatologics reporting unit were less than forecasted primarily due to certain products experiencing longer launch cycles than originally anticipated as a result of the COVID-19 pandemic. The Company revised its long-term forecasts as of March 31, 2020 and as of June 30, 2020 for these matters. Management believed that these events were indicators that there was less headroom as of

Company believed that these factors may suggest that it is more likely than not that the fair value of the Ortho Dermatologics reporting unit is less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

The Company performed a quantitative fair value test for the Ortho Dermatologics reporting unit as of October 1, 2020, utilizing a long-term growth rate of 2.0% and a range of discount rates between 9.50% and 9.75%, in estimation of the fair value of this reporting unit. Based on the quantitative fair value test, the fair value of the Ortho Dermatologics reporting unit was approximately 10% greater than its carrying value and as a result there was 0no impairment to the goodwill of the reporting unit.

First Quarter 2021 - Realignment of Segments

Commencing in the first quarter of 2021, the Company began operating in the following reportable segments: (i) Bausch + Lomb, (ii) Salix, (iii) International Rx, (iv) Ortho Dermatologics and (v) Diversified Products. The Bausch + Lomb segment consists of the: (i) U.S. Bausch + Lomb and (ii) International Bausch + Lomb reporting units. The Salix segment consists of the Salix reporting unit. The International Rx segment consists of the International Rx reporting unit. The Ortho Dermatologics segment consists of the: (i) Ortho Dermatologics and (ii) Global Solta reporting units. The Diversified Products segment consists of the: (i) Neurology and Other, (ii) Generics and (iii) Dentistry reporting units. This realignment in segment structure resulted in a change in the Company's former International reporting unit, which is now divided between the International Bausch + Lomb reporting unit and International Rx reporting unit. In addition, as part of this realignment of segment structure, certain products historically included in the Generics reporting unit are now included in the U.S. Bausch + Lomb reporting unit. See Note 19, "SEGMENT INFORMATION" for additional information.

As a result of this realignment, goodwill was reassigned to each of the aforementioned reporting units using a relative fair value approach. Goodwill previously reported in the former International reporting unit was reassigned to the International Bausch + Lomb and International Rx reporting units, and a portion of goodwill previously reported in the former Generics reporting unit was reassigned to the U.S. Bausch + Lomb reporting unit.

Immediately prior to the change in reporting units, the Company performed a qualitative fair value assessment for its former: (i) International and (ii) Generics reporting units. Based on the qualitative fair value assessment performed, Management believed that it was more likely than not that the carrying values of its former: (i) International and (ii) Generics reporting units were less than their respective fair values and therefore, concluded a quantitative assessment was not required.

Immediately following the change in reporting units, as a result of the change in composition of the net assets for its current: (i) International Bausch + Lomb, (ii) International Rx and (iii) Generics reporting units, the Company performed a quantitative fair value test. The quantitative fair value test utilized a range of long-term growth rates of 1.0% to 3.0% and a range of discount rates between 11.0% and 12.25%, in estimation of the fair value of the reporting units. After completing the testing, the fair value of each of these reporting units exceeded its carrying value by more than 40%, and, therefore, there was 0no impairment to goodwill. In addition, as the U.S. Bausch + Lomb reporting unit had a change in composition of its net assets related to certain products historically included in the Generics reporting unit now being included in the U.S. Bausch + Lomb reporting unit, the Company performed a qualitative assessment of this reporting unit. Based on the qualitative fair value assessment performed, Management believed that it was more likely than not that the carrying value of its current U.S. Bausch + Lomb reporting unit was less than its fair value and therefore, concluded a quantitative assessment was not required.

March 31, 2021 Impairment to Goodwill

During the three months ended March 31, 2021, management identified launches of certain Ortho Dermatologics products which were not going to achieve their trajectories as forecasted once the social restrictions associated with the COVID-19 pandemic began to ease in the U.S. and offices of health care professionals could reopen. In addition, insurance coverage pressures within the U.S. continued to persist limiting patient access to topical acne and psoriasis products. In light of these developments, during the first quarter of 2021, the Company began taking steps to: (i) redirect its R&D spend to eliminate projects it has identified as high cost and high risk, (ii) redirect a portion of its marketing and product development outside the U.S. to geographies where there is better patient access and (iii) reduce its cost structure to be more competitive. As a result, during the three months ended March 31, 2021, the Company revised its long-term forecasts for the Ortho Dermatologics reporting unit. Management believed that these events were indicators that there is less headroom as of March 31, 2021 as compared to the headroom calculated on the date goodwill was last tested for impairment (October 1, 2020). Therefore, a quantitative fair value test for the Ortho Dermatologics reporting unit was performed. The quantitative fair value test utilized the Company's most recent cash flow projections as revised in the first quarter of 2021 to reflect the business changes previously discussed, including a range of potential outcomes, along with a long-term growth rate of 1.0% and a range of discount rates between 9.0% and 10.0%. Based on the quantitative fair value test, the carrying value of the Ortho Dermatologics reporting unit exceeded its fair value at March 31, 2021, and the Company recognized a goodwill impairment of $469 million.

Second Quarter 2021 - Realignment of Bausch + Lomb Reporting Units

Commencing in the second quarter of 2021, the Company changed the way it reviews the financial information of its Bausch + Lomb segment. Beginning in the second quarter of 2021, management no longer reviews the financial information of its Bausch + Lomb segment on a geographic basis, but instead reviews this financial information on a business line basis. This change created a change in the reporting units of the Bausch + Lomb segment. After the change, under its business line view, the Bausch + Lomb segment consists of the global: (i) Vision Care / Consumer Products, (ii) Ophthalmic Pharmaceuticals and (iii) Surgical reporting units. Prior to the second quarter of 2021, under the geographic view, the Bausch + Lomb segment consisted of the former: (i) U.S. Bausch + Lomb and (ii) International Bausch + Lomb reporting units. As a result of this realignment, goodwill was reassigned to each of the aforementioned reporting units using a relative fair value approach. The change in Bausch + Lomb reporting units does not impact the reported revenues and segment profits of the Bausch + Lomb segment for any prior periods.

Immediately prior to the change in its Bausch + Lomb reporting units, the Company performed a qualitative fair value assessment for its former reporting units. Based on the qualitative fair value assessment, management believed that it was more likely than not that the carrying values of its former: (i) U.S. Bausch + Lomb and (ii) International Bausch + Lomb reporting units were less than their respective fair values and, therefore, concluded a quantitative assessment was not required.

As a result of the change in composition of net assets, the Company performed a quantitative fair value test of its new: (i) Vision Care / Consumer Products, (ii) Ophthalmic Pharmaceuticals and (iii) Surgical reporting units immediately following the change in the Bausch + Lomb segment. The quantitative fair value test utilized long-term growth rates of 2.0% and 3.0% and a range of discount rates between 7.0% and 10.0%, in estimation of the fair value of the reporting units. After completing the testing, the fair value of each of these reporting units exceeded its carrying value by more than 45%, and, therefore, there was 0no impairment to goodwill.

June 30, 2021 and September 30, 2021 Interim ~~Assessment~~Assessments of Goodwill

The Company continues to monitor the market conditions impacting the Ortho Dermatologics reporting unit. The Company's latest forecasts for the Ortho Dermatologics reporting unit include a range of potential outcomes for, among other matters: (i) the impacts of the COVID-19 pandemic on operations, (ii) the impact of the loss of exclusivity of certain products, (iii) the impact of longer launch cycles for certain new products, (iv) progress of its product pipeline and (v) ongoing pricing pressures, which could negatively impact the reporting unit's results over the long term. The changes in the amounts and timing of revenues and expenses in the latest forecast as compared to the forecast used at March 31, 2021 (the last time goodwill of the Ortho Dermatologics reporting unit was tested), were not substantial enough to materially adversely affect the recoverability of the Ortho Dermatologics reporting unit's assets and are not material enough to indicate that the fair value of the Ortho Dermatologics reporting unit might be below its carrying value as last tested at March 31, 2021.

No other events occurred or circumstances changed during the period October 1, 2020 (the ~~last time~~earliest date goodwill was tested for all other reporting units) through ~~June~~September 30, 2021 that would indicate that the fair value of any reporting unit, other than the Ortho Dermatologics reporting unit, might be below its carrying value. If market conditions deteriorate, if the factors and circumstances regarding the COVID-19 pandemic escalate beyond management’s current expectations, or if the

10.FINANCING ARRANGEMENTS

Principal amounts of debt obligations and principal amounts of debt obligations net of premiums, discounts and issuance costs consist of the following:


			June 30, 2021				December 31, 2020						September 30, 2021				December 31, 2020
(in millions)	(in millions)	Maturity	Principal Amount		Net of Premiums, Discounts and Issuance Costs		Principal Amount		Net of Premiums, Discounts and Issuance Costs		(in millions)	Maturity	Principal Amount		Net of Premiums, Discounts and Issuance Costs		Principal Amount		Net of Premiums, Discounts and Issuance Costs
Senior Secured Credit Facilities:	Senior Secured Credit Facilities:										Senior Secured Credit Facilities:
2023 Revolving Credit Facility	2023 Revolving Credit Facility	June 2023	$	0	$	0	$	0	$	0	2023 Revolving Credit Facility	June 2023	$	—	$	—	$	—	$	—
June 2025 Term Loan B Facility	June 2025 Term Loan B Facility	June 2025	3,298		3,229		3,298		3,220		June 2025 Term Loan B Facility	June 2025	2,829		2,767		3,298		3,220
November 2025 Term Loan B Facility	November 2025 Term Loan B Facility	November 2025	1,125		1,113		1,125		1,112		November 2025 Term Loan B Facility	November 2025	994		984		1,125		1,112
Senior Secured Notes:	Senior Secured Notes:										Senior Secured Notes:
7.00% Secured Notes	7.00% Secured Notes	March 2024	0		0		2,000		1,987		7.00% Secured Notes	March 2024	—		—		2,000		1,987
5.50% Secured Notes	5.50% Secured Notes	November 2025	1,750		1,737		1,750		1,736		5.50% Secured Notes	November 2025	1,750		1,738		1,750		1,736
5.75% Secured Notes	5.75% Secured Notes	August 2027	500		494		500		494		5.75% Secured Notes	August 2027	500		495		500		494
4.875% Secured Notes	4.875% Secured Notes	June 2028	1,600		1,579		0		0		4.875% Secured Notes	June 2028	1,600		1,580		—		—
Senior Unsecured Notes:	Senior Unsecured Notes:										Senior Unsecured Notes:
6.125%	6.125%	April 2025	3,150		3,136		3,250		3,234		6.125%	April 2025	2,650		2,639		3,250		3,234
9.00%	9.00%	December 2025	1,500		1,480		1,500		1,478		9.00%	December 2025	1,500		1,481		1,500		1,478
9.25%	9.25%	April 2026	1,500		1,488		1,500		1,487		9.25%	April 2026	1,500		1,489		1,500		1,487
8.50%	8.50%	January 2027	1,750		1,754		1,750		1,755		8.50%	January 2027	1,750		1,754		1,750		1,755
7.00%	7.00%	January 2028	750		742		750		742		7.00%	January 2028	750		743		750		742
5.00%	5.00%	January 2028	1,250		1,237		1,250		1,236		5.00%	January 2028	1,250		1,237		1,250		1,236
6.25%	6.25%	February 2029	1,500		1,482		1,500		1,480		6.25%	February 2029	1,500		1,482		1,500		1,480
5.00%	5.00%	February 2029	1,000		989		1,000		988		5.00%	February 2029	1,000		989		1,000		988
7.25%	7.25%	May 2029	750		742		750		741		7.25%	May 2029	750		742		750		741
5.25%	5.25%	January 2030	1,250		1,236		1,250		1,235		5.25%	January 2030	1,250		1,237		1,250		1,235
5.25%	5.25%	February 2031	1,000		989		1,000		988		5.25%	February 2031	1,000		989		1,000		988
Other	Other	Various	12		12		12		12		Other	Various	12		12		12		12
Total long-term debt and other	Total long-term debt and other		$	23,685	23,439		$	24,185	23,925		Total long-term debt and other		$	22,585	22,358		$	24,185	23,925
Less: Current portion of long-term debt and other	Less: Current portion of long-term debt and other				0				0		Less: Current portion of long-term debt and other				—				—
Non-current portion of long-term debt	Non-current portion of long-term debt				$	23,439			$	23,925	Non-current portion of long-term debt				$	22,358			$	23,925

and negative covenants include, among other things, and subject to certain qualifications and exceptions, covenants that restrict the Company’s ability and the ability of its subsidiaries to: incur or guarantee additional indebtedness; create or permit liens on assets; pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness; make certain investments and other restricted payments; engage in mergers, acquisitions, consolidations and amalgamations; transfer and sell certain assets; and engage in transactions with affiliates. As of ~~June~~September 30, 2021, the amount available for restricted payments under the "builder basket" in the Company’s most restrictive indentures (as defined by those indentures) was approximately ~~$13,300~~$13,500 million (although such availability is subject to the Company's compliance with a 2.00:1.00 fixed charge coverage ratio). The 2023 Revolving Credit Facility (as defined below) also contains a financial maintenance covenant that requires the Company to maintain a first lien net leverage ratio of not greater than 4.00:1.00. The financial maintenance covenant may be waived or amended without the consent of the term loan facility lenders and contains a customary term loan facility standstill.

As of ~~June~~September 30, 2021, the Company was in compliance with its financial maintenance covenant related to its debt obligations. The Company, based on its current forecast for the next twelve months from the date of issuance of these financial statements, expects to remain in compliance with its financial maintenance covenant and meet its debt service obligations over that same period.

The Company continues to take steps to improve its operating results to ensure continual compliance with its financial maintenance covenant and may take other actions to reduce its debt levels to align with the Company’s long-term strategy, including divesting other businesses, refinancing debt and issuing equity or equity-linked securities as deemed appropriate.

Senior Secured Credit Facilities

On June 1, 2018, the Company and certain of its subsidiaries as guarantors entered into the “Senior Secured Credit Facilities” under the Company’s Fourth Amended and Restated Credit and Guaranty Agreement, as amended by the First Incremental Amendment to the Restated Credit Agreement, dated as of November 27, 2018 ~~and as further amended~~ (the “Restated Credit Agreement”) with a syndicate of financial institutions and investors as lenders. The Restated Credit Agreement provides for a revolving credit facility of $1,225 million, which matures on the earlier of June 1, 2023 and the date that is 91 calendar days prior to the scheduled maturity of indebtedness for borrowed money of the Company and Bausch Health Americas, Inc. ("BHA") in an aggregate principal amount in excess of $1,000 million (the "2023 Revolving Credit Facility") and term loan facilities of original principal amounts of $4,565 million and $1,500 million, maturing in June 2025 (the “June 2025 Term Loan B Facility”) and November 2025 (the "November 2025 Term Loan B Facility"), respectively. Both the Company and BHA are borrowers under the 2023 Revolving Credit Facility, borrowings under which may be made in U.S. dollars, Canadian dollars or euros.

Current Description of Senior Secured Credit Facilities

Borrowings under the Senior Secured Credit Facilities in U.S. dollars bear interest at a rate per annum equal to, at the Company's option, either: (i) a base rate determined by reference to the highest of: (a) the prime rate (as defined in the Restated Credit Agreement), (b) the federal funds effective rate plus 1/2 of 1.00% or (c) the eurocurrency rate (as defined in the Restated Credit Agreement) for a period of one month plus 1.00% (or if such eurocurrency rate shall not be ascertainable, 1.00%) or (ii) a eurocurrency rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs (provided, however, that the eurocurrency rate shall at no time be less than 0.00% per annum), in each case plus an applicable margin.

Borrowings under the 2023 Revolving Credit Facility in euros bear interest at a eurocurrency rate determined by reference to the costs of funds for euro deposits for the interest period relevant to such borrowing (provided, however, that the eurocurrency rate shall at no time be less than 0.00% per annum), plus an applicable margin.

Borrowings under the 2023 Revolving Credit Facility in Canadian dollars bear interest at a rate per annum equal to, at the Company's option, either: (i) a prime rate determined by reference to the higher of: (a) the rate of interest last quoted by The Wall Street Journal as the “Canadian Prime Rate” or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Bank of Canada as its prime rate and (b) the 1 month BA rate (as defined below) calculated daily plus 1.00% (provided, however, that the prime rate shall at no time be less than 0.00%) or (ii) the bankers’ acceptance rate for Canadian dollar deposits in the Toronto interbank market (the “BA rate”) for the interest period relevant to such borrowing (provided, however, that the BA rate shall at no time be less than 0.00% per annum), in each case plus an applicable margin.

Subject to certain exceptions and customary baskets set forth in the Restated Credit Agreement, the Company is required to make mandatory prepayments of the loans under the Senior Secured Credit Facilities under certain circumstances, including from: (i) 100% of the net cash proceeds of insurance and condemnation proceeds for property or asset losses (subject to reinvestment rights and net proceeds threshold), (ii) 100% of the net cash proceeds from the incurrence of debt (other than permitted debt as described in the Restated Credit Agreement), (iii) 50% of Excess Cash Flow (as defined in the Restated

September 30, 2021, the stated rate of interest on the 2023 Revolving Credit Facility was ~~3.09%~~2.83% per annum. As of ~~June~~September 30, 2021, the Company had 0no outstanding borrowings, ~~$53~~$54 million of issued and outstanding letters of credit and remaining availability of ~~$1,172~~$1,171 million under its 2023 Revolving Credit Facility. In addition, the Company is required to pay commitment fees of 0.25%-0.50% per annum with respect to the unutilized commitments under the 2023 Revolving Credit Facility, payable quarterly in arrears. The Company also is required to pay: (i) letter of credit fees on the maximum amount available to be drawn under all outstanding letters of credit in an amount equal to the applicable margin on eurocurrency rate borrowings under the 2023 Revolving Credit Facility on a per annum basis, payable quarterly in arrears, (ii) customary fronting fees for the issuance of letters of credit and (iii) agency fees.

The Restated Credit Agreement permits the incurrence of incremental credit facility borrowings up to the greater of $1,000 million and 28.5% of Consolidated Adjusted EBITDA (non-GAAP) (as defined in the Restated Credit Agreement), subject to customary terms and conditions, as well as the incurrence of additional incremental credit facility borrowings subject to a secured leverage ratio of not greater than 3.50:1.00, and, in the case of unsecured debt, a total leverage ratio of not greater than 6.50:1.00 or an interest coverage ratio of not less than 2.00:1.00.

Senior Secured Notes

The Senior Secured Notes are guaranteed by each of the Company’s subsidiaries that is a guarantor under the Restated Credit Agreement and existing Senior Unsecured Notes (together, the “Note Guarantors”). The Senior Secured Notes and the guarantees related thereto are senior obligations and are secured, subject to permitted liens and certain other exceptions, by the same first priority liens that secure the Company’s obligations under the Restated Credit Agreement under the terms of the indentures governing the Senior Secured Notes.

The Senior Secured Notes and the guarantees rank equally in right of repayment with all of the Company’s and Note Guarantors’ respective existing and future unsubordinated indebtedness and senior to the Company’s and Note Guarantors’ respective future subordinated indebtedness. The Senior Secured Notes and the guarantees related thereto are effectively pari passu with the Company’s and the Note Guarantors’ respective existing and future indebtedness secured by a first priority lien on the collateral securing the Senior Secured Notes and effectively senior to the Company’s and the Note Guarantors’ respective existing and future indebtedness that is unsecured, including the existing Senior Unsecured Notes, or that is secured by junior liens, in each case to the extent of the value of the collateral. In addition, the Senior Secured Notes are structurally subordinated to: (i) all liabilities of any of the Company’s subsidiaries that do not guarantee the Senior Secured Notes and (ii) any of the Company’s debt that is secured by assets that are not collateral.

Upon the occurrence of a change in control (as defined in the indentures governing the Senior Secured Notes), unless the Company has exercised its right to redeem all of the notes of a series, holders of the Senior Secured Notes may require the Company to repurchase such holder’s notes, in whole or in part, at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest.

4.875% Senior Secured Notes due 2028 - June 2021 Refinancing Transactions

On June 8, 2021, the Company issued $1,600 million aggregate principal amount of 4.875% Senior Secured Notes due June 2028 (the “June 2028 Secured Notes”) in a private placement. The proceeds and cash on hand were used to: (i) repurchase a portion and redeem the remainder of $1,600 million of 7.00% Senior Secured Notes due 2024 (the "March 2024 Secured Notes"), representing the remaining outstanding principal balance of the March 2024 Secured Notes and (ii) pay all fees and expenses associated with these transactions (collectively, the “June 2021 Refinancing Transactions”). The June 2021 Refinancing Transactions were accounted for as an extinguishment of debt and the Company incurred a loss on

guarantor under the Senior Secured Credit Facilities. Future subsidiaries of the Company and BHA, if any, may be required to guarantee the Senior Unsecured Notes.

If the Company experiences a change in control, the Company may be required to make an offer to repurchase each series of Senior Unsecured Notes, in whole or in part, at a purchase price equal to 101% of the aggregate principal amount of the Senior Unsecured Notes repurchased, plus accrued and unpaid interest.

6.25% Senior Unsecured Notes due 2029 - May 2020 Refinancing Transactions

On May 26, 2020, the Company issued $1,500 million aggregate principal amount of 6.25% Senior Unsecured Notes due February 2029 (the "February 2029 Unsecured Notes") in a private placement. The proceeds and cash on hand were used to: (i) repurchase $1,250 million aggregate principal amount of outstanding 6.50% Senior Secured Notes due March 2022, (ii) prepay $303 million of mandatory amortization scheduled for payment in 2022 under the Company's June 2025 and November 2025 Term Loan B Facilities and (iii) pay all fees and expenses associated with these transactions (collectively, the "May 2020 Refinancing Transactions"). The May 2020 Refinancing Transactions were accounted for as an extinguishment of debt, and the Company incurred a loss on extinguishment of debt of $27 million representing the difference between the amount paid to settle the extinguished debt and the extinguished debt's carrying value. The February 2029 Unsecured Notes accrue interest at the rate of 6.25% per year, payable semi-annually in arrears on each of February 15 and August 15.

The Company may redeem all or a portion of the February 2029 Unsecured Notes at any time prior to February 15, 2024, at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption, plus a “make-whole” premium. In addition, at any time prior to August 15, 2023, the Company may redeem up to 40% of the aggregate principal amount of the outstanding February 2029 Unsecured Notes with the net proceeds of certain equity offerings at the redemption price set forth in the February 2029 Unsecured Notes indenture. On or after February 15, 2024, the Company may redeem all or a portion of the February 2029 Unsecured Notes at the applicable redemption prices set forth in the February 2029 Unsecured Notes indenture, plus accrued and unpaid interest to, but not including, the date of redemption.

5.00% Senior Unsecured Notes due 2029 and 5.25% Senior Unsecured Notes due 2031 – December 2020 Refinancing Transactions

On December 3, 2020, the Company issued $1,000 million aggregate principal amount of 5.00% Senior Unsecured Notes due February 2029 (the "5.00% February 2029 Unsecured Notes") and $1,000 million aggregate principal amount of 5.25% Senior Unsecured Notes due February 2031 (the "February 2031 Unsecured Notes") in a private placement. The aggregate proceeds and cash on hand were used to repurchase the remaining outstanding principal amounts of: (i) €1,500 million of 4.50% Senior Unsecured Notes due 2023 (the "Euro Notes”), (ii) $233 million of 5.50% Senior Unsecured Notes due 2023 (the “March 2023 Unsecured Notes”) and (iii) pay all fees and expenses associated with these transactions (collectively, the "December 2020 Refinancing Transactions"). The December 2020 Refinancing Transactions were accounted for as an extinguishment of debt, and the Company incurred a loss on extinguishment of debt of $7 million representing the difference between the amount paid to settle the extinguished debt and the extinguished debt's carrying value. The 5.00% February 2029 Unsecured Notes accrue interest at the rate of 5.00% per year, payable semi-annually in arrears on each of February 15 and August 15. The February 2031 Unsecured Notes accrue interest at the rate of 5.25% per year, payable semi-annually in arrears on each of February 15 and August 15.

The Company may redeem all or a portion of the 5.00% February 2029 Unsecured Notes at any time prior to February 15, 2024, at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption, plus a “make-whole” premium. In addition, at any time prior to February 15, 2024, the Company may redeem up to 40% of the aggregate principal amount of the outstanding 5.00% February 2029 Unsecured Notes with the net proceeds of certain equity offerings at the redemption price set forth in the 5.00% February 2029 Unsecured Notes indenture. On or after February 15, 2024, the Company may redeem all or a portion of the 5.00% February 2029 Unsecured Notes at the applicable redemption prices set forth in the 5.00% February 2029 Unsecured Notes indenture, plus accrued and unpaid interest to, but not including, the date of redemption.

The Company may redeem all or a portion of the February 2031 Unsecured Notes at any time prior to February 15, 2026, at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption, plus a “make-whole” premium. In addition, at any time prior to February 15, 2024, the Company may redeem up to 40% of the aggregate principal amount of the outstanding February 2031 Unsecured Notes with the net proceeds of certain equity offerings at the redemption price set forth in the February 2031 Unsecured Notes indenture. On or after February 15, 2026, the Company may redeem all or a portion of the February 2031 Unsecured Notes at the applicable redemption prices set forth in the February 2031 Unsecured Notes indenture, plus accrued and unpaid interest to, but not including, the date of redemption.

becoming available for reuse after awards are terminated, forfeited, cancelled, exchanged or surrendered under the 2011 Plan and the Company’s 2007 Equity Compensation Plan. The Company registered 20,000,000 common shares ~~of common stock~~ for issuance under the 2014 Plan.

Effective April 30, 2018, the Company amended and restated the 2014 Plan (the “Amended and Restated 2014 Plan”). The Amended and Restated 2014 Plan includes the following amendments: (i) the number of common shares authorized for issuance under the Amended and Restated 2014 Plan has been increased by an additional 11,900,000 common shares, as approved by the requisite number of shareholders at the Company’s annual general meeting held on April 30, 2018, (ii) introduction of a $750,000 aggregate fair market value limit on awards (in either equity, cash or other compensation) that can be granted in any calendar year to a participant who is a non-employee director, (iii) housekeeping changes to address recent changes to Section 162(m) of the Internal Revenue Code, (iv) awards are expressly subject to the Company’s clawback policy and (v) awards not assumed or substituted in connection with a Change of Control (as defined in the Amended and Restated 2014 Plan) will only vest on a pro rata basis.

Effective April 28, 2020, the Company further amended and restated the Amended and Restated 2014 Plan (the “Further Amended and Restated 2014 Plan”). The Further Amended and Restated 2014 Plan includes the following amendments: (i) the number of common shares authorized for issuance under the Further Amended and Restated 2014 Plan has been increased by an additional 13,500,000 common shares, as approved by the requisite number of shareholders at the Company’s annual general meeting held on April 28, 2020, (ii) the exercise price of stock options and share appreciation rights (“SARs”) will be based on the closing price of the underlying common shares on the date such stock options or SARs are granted (rather than on the last preceding trading date), (iii) additional provisions clarifying that: (a) stock options and SARs will not be eligible for the payment of dividend or dividend equivalents and (b) the Talent and Compensation Committee of the Board of Directors of the Company cannot, without shareholder approval, seek to effect any repricing of any previously granted “underwater” stock option or SAR and (iv) other housekeeping and/or clerical changes.

Approximately ~~11,543,000~~11,241,000 common shares were available for future grants as of ~~June~~September 30, 2021. The Company uses reserved and unissued common shares to satisfy its obligations under its share-based compensation plans.

The Company has a long-term incentive program with the objective of aligning the share-based awards granted to senior management with the Company’s focus on improving its tangible capital usage and allocation while maintaining focus on improving total shareholder return over the long-term. The share-based awards granted under this long-term incentive program consist of time-based stock options, time-based restricted share units (“RSUs”) and performance-based RSUs. Performance-based RSUs are comprised of awards that: (i) vest upon achievement of certain share price appreciation conditions that are based on total shareholder return (“TSR”), (ii) vest upon attainment of certain performance targets that are based on the Company’s return on tangible capital (“ROTC”) and (iii) vest fully or partially upon attainment of certain goals that are linked to the B+L Separation.

The following table summarizes the components and classification of share-based compensation ~~expense~~expenses related to stock options and RSUs for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	(in millions)	2021		2020		2021		2020		(in millions)	2021		2020		2021		2020
Stock options	Stock options	$	3	$	4	$	7	$	8	Stock options	$	4	$	4	$	11	$	12
RSUs	RSUs	28		23		55		46		RSUs	29		23		84		69
		$	31	$	27	$	62	$	54		$	33	$	27	$	95	$	81

Research and development expenses	Research and development expenses	$	2	$	3	$	5	$	6	Research and development expenses	$	2	$	3	$	7	$	9
Selling, general and administrative expenses	Selling, general and administrative expenses	29		24		57		48		Selling, general and administrative expenses	31		24		88		72
		$	31	$	27	$	62	$	54		$	33	$	27	$	95	$	81

Share-based awards granted for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 consist of:


		2021		2020			2021		2020
Stock options	Stock options					Stock options
Granted	Granted	1,466,000		2,269,000		Granted	1,497,000		2,269,000
Weighted-average exercise price	Weighted-average exercise price	$	32.52	$	24.74	Weighted-average exercise price	$	32.44	$	24.74
Weighted-average grant date fair value	Weighted-average grant date fair value	$	11.18	$	6.60	Weighted-average grant date fair value	$	11.11	$	6.60
Time-based RSUs	Time-based RSUs					Time-based RSUs
Granted	Granted	2,861,000		2,839,000		Granted	3,119,000		3,084,000
Weighted-average grant date fair value	Weighted-average grant date fair value	$	32.26	$	22.58	Weighted-average grant date fair value	$	31.93	$	22.05
TSR performance-based RSUs	TSR performance-based RSUs					TSR performance-based RSUs
Granted	Granted	400,000		425,000		Granted	400,000		425,000
Weighted-average grant date fair value	Weighted-average grant date fair value	$	56.04	$	26.13	Weighted-average grant date fair value	$	56.04	$	26.13
ROTC performance-based RSUs	ROTC performance-based RSUs					ROTC performance-based RSUs
Granted	Granted	413,000		472,000		Granted	413,000		472,000
Weighted-average grant date fair value	Weighted-average grant date fair value	$	31.72	$	27.05	Weighted-average grant date fair value	$	31.72	$	27.05
B+L Separation performance-based RSUs	B+L Separation performance-based RSUs					B+L Separation performance-based RSUs
Granted	Granted	132,000		0		Granted	222,000		—
Weighted-average grant date fair value	Weighted-average grant date fair value	$	32.56	$	0	Weighted-average grant date fair value	$	28.49	$	—

income tax rates, and an evaluation of valuation allowances. The Company's estimated annual effective income tax rate may be revised, if necessary, in each interim period.

Benefit from income taxes for the ~~six~~nine months ended ~~June~~September 30, 2021 was ~~$61~~$36 million and included: (i) ~~$50~~$34 million of income tax benefit for the Company's ordinary loss for the ~~six~~nine months ended ~~June~~September 30, 2021 and (ii) ~~$11~~$2 million of net income tax benefit for discrete items, which includes: (a) $54 million of net income tax benefit associated with certain legal settlements, (b) a $46 million tax provision related to potential and recognized withholding tax on intercompany dividends, (c) ~~a $7~~an $11 million tax provision recognized for changes in uncertain tax positions, (d) an $8 million tax benefit related to a deduction for stock compensation and ~~(d)~~(e) a $4$3 million tax provision associated with ~~the~~ filing of certain tax returns.

Benefit from income taxes for the ~~six~~nine months ended ~~June~~September 30, 2020 was ~~$138~~$133 million and included: (i) ~~$99~~$105 million of net income tax benefit for discrete items, which includes: (a) ~~$64~~$63 million in net tax benefits related to the release of a valuation allowance, (b) ~~$12~~$36 million in tax benefits associated with law changes in the United States, (c) $10 million in tax benefits recognized for changes in uncertain tax positions, ~~(c) a $17 million tax benefit associated with a change in New Jersey law,~~ (d) a $4$7 million tax benefit related to a deduction for stock compensation and (e) $2$11 million of net tax expense associated with filing certain tax returns and (ii) ~~$39~~$28 million of income tax benefit for the Company's ordinary loss for the ~~six~~nine months ended ~~June~~September 30, 2020.

The Company records a valuation allowance against its deferred tax assets to reduce the net carrying value to an amount that it believes is more likely than not to be realized. When the Company establishes or reduces the valuation allowance against its deferred tax assets, the provision for income taxes will increase or decrease, respectively, in the period such determination is made except that, as a result of the 2018 adoption of guidance regarding intra-entity transfers, any change in valuation allowance surrounding the adoption of the intra-entity transfer resulting from this adoption was recorded within equity. The valuation allowance against deferred tax assets was ~~$2,272~~$2,218 million and $2,252 million as of ~~June~~September 30, 2021 and December 31, 2020, respectively. The ~~increase~~decrease was primarily due to ~~loss~~changes in ~~Canada.~~uncertain tax positions. The Company will continue to assess the need for a valuation allowance on a go-forward basis.

On ~~July 1,~~October 8, 2021, the ~~G20 and~~ Organisation for Economic Co-operation and Development ("OECD")/G20 inclusive framework on Base Erosion and Profit Shifting ~~("BEPS")~~ (the "Inclusive Framework") published a statement onupdating and finalizing the key components of a two-pillar plan on global tax reform ~~which~~originally agreed on July 1, 2021, and a timetable for implementation by 2023. The Inclusive Framework plan has now been agreed to by ~~131~~136 OECD ~~members.~~members, including several countries which did not agree to the initial plan. Under pillar one, ~~the principle that the ‘largest and most profitable’ businesses will need to reallocate a share of global residual profit to market countries has been confirmed for~~taxing rights over multinational businesses with global turnover above €20 billion and a profit margin above 10%. will generally be re-allocated to permit market countries to include market countries. Under pillar two, the Inclusive Framework has agreed ~~with the G7 that~~on a global minimum corporate tax ~~should be at least~~rate of 15%, for companies with revenue above €750 million, calculated on a country-by-country basis. ~~Notably for~~On October 30, 2021, the ~~Company,~~G20 formally endorsed the ~~countries which~~new global minimum corporate tax rate rules. The Inclusive Framework agreement must now be implemented by the OECD Members who have ~~not yet~~ agreed to the ~~Inclusive Framework include Ireland and Hungary.~~plan, effective in 2023. The Company will continue to monitor the ~~updates and agreements made within~~implementation of the Inclusive Framework agreement by the countries in which we operate. While the Company is unable to predict when and ~~expects~~how the Inclusive Framework agreement will be enacted into law in these countries, it is possible that the ~~impact~~implementation of ~~this plan will be~~the Inclusive Framework agreement, including the global minimum corporate tax rate could have a material effect on the Company's liability for corporate taxes and the ~~Company.~~Company's consolidated effective tax rate.

As of ~~June~~September 30, 2021 and December 31, 2020, the Company had ~~$1,118~~$1,117 million and $1,025 million of unrecognized tax benefits, which included ~~$52~~$53 million and $49 million of interest and penalties, respectively. Of the total unrecognized tax benefits as of ~~June~~September 30, 2021, ~~$542~~$550 million would reduce the Company’s effective tax rate, if recognized. The Company believes that it is reasonably possible that the total amount of unrecognized tax benefits at ~~June~~September 30, 2021 could decrease by approximately ~~$198~~$194 million in the next 12 months as a result of the resolution of certain tax audits and other events.

The Company continues to be under examination by the Canada Revenue Agency. The Company’s position as of ~~June~~September 30, 2021 with regard to proposed audit adjustments was updated to reflect an updated assessment received for 2014 which would primarily result in a loss of tax attributes that are subject to a full valuation allowance.

In 2017, the Company undertook an internal restructuring in the form of what is commonly known as a Granite Trust transaction, which resulted in a recorded capital loss (the “2017 capital loss”). In the U.S., the 2014 tax year remains open to the extent of athe portion of the 2017 capital loss carried back to that year. The ~~IRS~~Internal Revenue Service ("IRS") is continuing ~~their~~its examination of the ~~Company's~~Company’s annual tax filings for 2015 and 2016 and the ~~Company's~~Company’s short period tax return for the period ended September 8, 2017, which was filed as a result of the ~~Company's~~Company’s internal restructuring efforts during 2017. ~~At this time,~~Recently, the Company has received a notice of proposed adjustment from the IRS that would disallow the 2017 capital loss. To date, the Company has not received an assessment from the IRS but expects to receive a notice of proposed ~~adjustment disallowing~~tax deficiency. The Company intends to contest any proposed tax deficiency through the IRS administrative appeals process, and if necessary, appropriate litigation. If the Company were ultimately unsuccessful in defending its position, and all or a ~~significant~~substantial portion of the 2017 capital loss deduction were disallowed, the Company estimates, in ~~2017.~~a worst case scenario, that it could be liable for additional income taxes (excluding penalties and interest) of up to $2,100 million, which could have an adverse effect on the Company’s financial condition and results of operations. The Company intends to vigorously defend its position, including through appropriate litigation, if necessary, and ultimately believes it will sustain its deduction of the 2017 capital loss, and, accordingly, no income tax provision has been recorded.

The Company's U.S. affiliates remain under examination for various state tax audits in the U.S. for years 2015 through 2018.

The Company’s subsidiaries in Germany are under audit for tax years 2014 through 2016. At this time, the Company does not expect that proposed adjustments, if any, would be material to the Company's Consolidated Financial Statements.

The Company’s subsidiaries in Australia are under audit by the Australian Tax Office for various years beginning in 2011 through 2017. At this time, the Company does not expect that proposed adjustments, if any, would be material to the Company's Consolidated Financial Statements.

Certain affiliates of the Company in regions outside of Canada, the U.S., Germany and Australia are currently under examination by relevant taxing authorities, and all necessary accruals have been recorded, including uncertain tax benefits.

17.~~LOSS~~EARNINGS (LOSS) PER SHARE

~~Loss~~Earnings (loss) per share attributable to Bausch Health Companies Inc. were calculated as follows:

Three Months Ended
June 30, Six Months Ended
June 30,
(in millions, except per share amounts) 2021 2020 2021 2020
Net loss attributable to Bausch Health Companies Inc. $ (595) $ (326) $ (1,205) $ (478)
Basic and diluted weighted-average common shares 359.1 355.3 358.0 354.3
Basic and diluted loss per share attributable to Bausch Health Companies Inc. $ (1.66) $ (0.92) $ (3.37) $ (1.35)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions, except per share amounts)	2021		2020		2021		2020
Net income (loss) attributable to Bausch Health Companies Inc.	$	188	$	71	$	(1,017)	$	(407)
Basic weighted-average common shares outstanding	359.6		355.6		358.5		354.7
Diluted effect of stock options and RSUs	4.4		2.2		—		—
Diluted weighted-average common shares outstanding	$	364.0	$	357.8	$	358.5	$	354.7
Earnings (loss) per share attributable to Bausch Health Companies Inc.
Basic	$	0.52	$	0.20	$	(2.84)	$	(1.15)
Diluted	$	0.52	$	0.20	$	(2.84)	$	(1.15)

During the ~~three and six~~nine months ended ~~June~~September 30, 2021 and 2020, all potential common shares issuable for stock options and RSUs were excluded from the calculation of diluted loss per share, as the effect of including them would have been anti-dilutive. The dilutive effect of potential common shares issuable for stock options and RSUs on the weighted-average number of common shares outstanding would have been approximately ~~4,558,000~~5,221,000 and ~~1,998,000~~3,144,000 common shares for the ~~three~~nine months ended ~~June 30, 2021 and 2020, respectively, and approximately 5,608,000 and 3,602,000 common shares for the six months ended June~~September 30, 2021 and 2020, respectively.

During the three and ~~six~~nine months ended ~~June~~September 30, 2021, time-based RSUs, performance-based RSUs and stock options to purchase approximately ~~3,929,000~~3,103,000 and ~~4,110,000~~3,453,000 common shares, respectively, were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive under the treasury stock method. During the three and ~~six~~nine months ended ~~June~~September 30, 2021, an additional 156,000 performance-based RSUs were not included in the computation of diluted earnings per share as the required performance conditions had not been met. During the three and nine months ended September 30, 2020, time-based RSUs, performance-based RSUs and stock options to purchase approximately ~~11,777,000~~10,489,000 and ~~10,882,000~~10,604,000 common shares, respectively, were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive under the treasury stock method.

18.LEGAL PROCEEDINGS

From time to time, the Company becomes involved in various legal and administrative proceedings, which include product liability, intellectual property, commercial, tax, antitrust, governmental and regulatory investigations, related private litigation and ordinary course employment-related issues. From time to time, the Company also initiates actions or files counterclaims. The Company could be subject to counterclaims or other suits in response to actions it may initiate. The Company believes that the prosecution of these actions and counterclaims is important to preserve and protect the Company, its reputation and its assets. Certain of these proceedings and actions are described in Note 20, “LEGAL PROCEEDINGS,” to the Company's Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC and the CSA on February 24, 2021. Except as described below, there have been no material updates or developments with respect to any such proceedings or actions during the ~~six~~nine months ended ~~June~~September 30, 2021.

On a quarterly basis, the Company evaluates developments in legal proceedings, potential settlements and other matters that could increase or decrease the amount of the liability accrued. As of ~~June~~September 30, 2021, the Company's Consolidated Balance Sheets includes accrued current loss contingencies of ~~$2,076~~$2,061 million related to matters which are both probable and reasonably estimable. For all other matters, unless otherwise indicated, the Company cannot reasonably predict the outcome of these legal proceedings, nor can it estimate the amount of loss, or range of loss, if any, that may result from these proceedings. An adverse outcome in certain of these proceedings could have a material adverse effect on the Company’s business, financial condition and results of operations, and could cause the market value of its common shares and/or debt securities to decline.

The Company is cooperating with this investigation. The Company cannot predict the outcome or the duration of this investigation or any other legal proceedings or any enforcement actions or other remedies that may be imposed on the Company arising out of this investigation.

Securities and RICO Class Actions and Related Matters

U.S. Securities Litigation - Opt-Out Litigation

On December 16, 2019, the Company announced that it had agreed to settle, subject to final court approval, the consolidated securities class action filed in the U.S. District Court for the District of New Jersey (In re Valeant Pharmaceuticals International, Inc. Securities Litigation, Case No. 15-cv-07658). On January 31, 2021, the District Court issued an order granting final approval of this settlement. On February 4, 2021, Timber Hill LLC filed a notice of appeal of the Court’s final approval order, which overruled its objections to the allocation of settlement proceeds as between common stock and options. On March 1, 2021, Cathy Lochridge filed a notice of appeal of the Court’s final approval order, which overruled her objections as to the attorneys’ fees awarded to class counsel. On October 14, 2021, Timber Hill dismissed its appeal of the final approval order.

In October 2015, 4 putative securities class actions were filed in the U.S. District Court for the District of New Jersey against the Company and certain current or former officers and directors. The allegations related to, among other things, allegedly false and misleading statements and/or failures to disclose information about the Company’s business and prospects, including relating to drug pricing, the Company’s use of specialty pharmacies, and the Company’s relationship with Philidor. On May 31, 2016, the court entered an order consolidating the 4 actions under the caption In re Valeant Pharmaceuticals International, Inc. Securities Litigation, Case No. 15-cv-07658. On December 16, 2019, the Company, the current or former officers and directors, ValueAct, and the underwriters announced that they agreed to resolve the securities action for $1,210 million, subject to final court approval. This settlement received final approval from the court on January 31, 2021 and will resolve and discharge all claims against the Company in the class action. As part of the settlement, the Company and the other settling defendants admitted no liability as to the claims against it and deny all allegations of wrongdoing. The settlement remains subject to appeals of the final court approval (as such appeals are further described above). In order to qualify for a settlement payment all persons and entities that purchased or otherwise acquired the Company securities during the class period must have submitted a proof of claim and release form by May 6, 2020. The settlement payments have been paid into an escrow account in accordance with the payment schedule outlined in the settlement agreement. These payments will remain in escrow until resolution of the appeals of the final court approval of the settlement agreement. The opt-out litigations discussed below remain ongoing.

On June 6, 2018, a putative class action was filed in the U.S. District Court for the District of New Jersey against the Company and certain current or former officers and directors. This action, captioned Timber Hill LLC, v. Valeant Pharmaceuticals International, Inc., et al., (Case No. 18-cv-10246) (“Timber Hill”), asserts securities fraud claims under Sections 10(b) and 20(a) of the Exchange Act on behalf of a putative class of persons who purchased call options or sold put options on the Company’s common stock during the period January 4, 2013 through August 11, 2016. On June 11, 2018, this action was consolidated with In re Valeant Pharmaceuticals International, Inc. Securities Litigation, (Case No. 15-cv-07658). On January 14, 2019, the defendants filed a motion to dismiss the Timber Hill complaint. Briefing on that motion was completed on February 13, 2019. On August 15, 2019, the Court denied the motion to dismiss the Timber Hill action, holding that this complaint was a legal nullity as a result of the June 11, 2018 consolidation order.

In addition to the consolidated putative class action, NaN groups of individual investors in the Company’s stock and debt securities have chosen to opt out of the consolidated putative class action and filed securities actions in the U.S. District Court for the District of New Jersey against the Company and certain current or former officers and directors. These actions were captioned previously in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed on

February 24, 2021. NaN of the NaN opt-out actions have been dismissed; and the total number of remaining opt-out actions pending in the District of New Jersey is NaN actions.

These individual shareholder actions assert claims under Sections 10(b), and 20(a) of the Exchange Act. Certain of these individual actions assert additional claims, including claims under Section 18 of the Exchange Act, Sections 11, 12(a)(2), and 15 of the Securities Act, common law fraud, negligent misrepresentation, and claims under the New Jersey Racketeer Influenced and Corrupt Organizations Act. These claims are based on alleged purchases of Company stock, options, and/or debt at various times between January 3, 2013 and August 10, 2016. The allegations in the complaints are similar to those made by plaintiffs in the putative class action. Motions to dismiss have been filed and in most cases decided in many of these individual actions. To date, the Court has dismissed state law claims including New Jersey Racketeer Influenced and Corrupt Organizations Act, common law fraud, and negligent misrepresentation claims in certain cases. On January 7, 2019, the Court entered a stipulation of voluntary dismissal in the Senzar Healthcare Master Fund LP v. Valeant Pharmaceuticals International, Inc. (Case No. 18-cv-02286) opt-out action, closing the case. On September 10, 2019, the Court granted defendants’ motion to dismiss all claims in the Bahaa Aly v. Valeant Pharmaceuticals International, Inc. (“Aly”) (Case No. 18-cv-17393) opt-out action. On October 9, 2019, the Aly Plaintiffs filed a notice of appeal to the United States Court of

Appeals for the Third Circuit. On June 16, 2021, the Court of Appeals granted plaintiffs’ appeal in the Aly action. This action has been remanded to the District Court. On June 19, 2020, the Court entered stipulations of voluntary dismissal in the Catalyst, Mississippi, Connecticut, and Delaware actions. On July 13, 2020, the Court entered a stipulation of voluntary dismissal in the NYCERS action. On December 30, 2020, the Court entered a stipulation of voluntary dismissal in the BlueMountain action. On February 18, 2021, and March 10, 2021, the Court entered stipulations of voluntary dismissal in the T. Rowe, BloombergSen, Principal Funds, Pentwater, Lord Abbett, Equity Trustees, and UC Regents actions. On April 30, 2021, the Court entered a stipulation of voluntary dismissal in the Florida SBA action. On July 20, 2021, the Court entered a stipulation of voluntary dismissal in the Janus action.

The Company disputes the claims against it in the remaining individual opt-out complaints and intends to defend itself vigorously.

Canadian Securities Litigation

In 2015, 6 putative class actions were filed and served against the Company and certain current or former officers and directors in Canada in the provinces of British Columbia, Ontario and Quebec. The Company is also aware of 2 additional putative class actions that were filed with the applicable court but which have not been served on the Company and the factual allegations made in these actions are substantially similar to those outlined herein.

The actions generally allege violations of Canadian provincial securities legislation on behalf of putative classes of persons who purchased or otherwise acquired securities of the Company for periods commencing as early as January 1, 2013 and ending as late as November 16, 2015. The alleged violations relate to the same matters described in the U.S. Securities Litigation description above.

Each of these putative class actions, other than the Catucci action in the Quebec Superior Court, was discontinued. In the Catucci action, on August 29, 2017, the judge granted the plaintiffs leave to proceed with their claims under the Quebec Securities Act and authorized the class proceeding. On October 26, 2017, the plaintiffs issued their Judicial Application Originating Class Proceedings.

After a hearing on November 11, 2019, the court approved a settlement in the Catucci action between the class members and the Company’s auditors and the action was dismissed as against them.

On August 4, 2020, the Company entered into a settlement agreement with the plaintiffs in Catucci, on behalf of the class, pursuant to which it agreed to resolve the Catucci action for the amount of CAD 94,000,000 plus payment of an additional amount to cover notice and settlement administration costs and disbursements. As part of the settlement, the Company and the other defendants admitted no liability as to the claims against it and deny all allegations of wrongdoing. Court approval of the settlement was granted after a hearing on November 16, 2020. The Catucci action has now been dismissed against the Company, its current and former directors and officers, its underwriters and its insurers.

In addition to the class proceedings described above, on April 12, 2018, the Company was served with an application for leave filed in the Quebec Superior Court of Justice to pursue an action under the Quebec Securities Act against the Company and certain current or former officers and directors. This proceeding is captioned BlackRock Asset Management Canada Limited et al. v. Valeant, et al. (Court File No. 500-11-054155-185). The allegations in the proceeding are similar to those made by plaintiffs in the Catucci class action. On June 18, 2018, the same BlackRock entities filed an originating application (Court File No. 500-17-103749-183) against the same defendants asserting claims under the Quebec Civil Code in respect of the same alleged misrepresentations.

The Company is aware that certain other members of the Catucci class exercised their opt-out rights prior to the June 19, 2018 deadline. On February 15, 2019, 1 of the entities which exercised its opt-out rights, the California State Teachers' Retirement System (“CalSTRS”), served the Company with an application in the Quebec Superior Court of Justice for leave to pursue an action under the Quebec Securities Act against the Company, certain current or former officers and directors of the Company and its auditor. That proceeding is captioned California State Teachers’ Retirement System v. Bausch Health Companies Inc. et al. (Court File No. 500-11-055722-181). The allegations in the proceeding are similar to those made by the plaintiffs in the Catucci class action and in the BlackRock opt-out proceedings. On that same date, CalSTRS also served the Company with proceedings (Court File No. 500-17-106044-186) against the same defendants asserting claims under the Quebec Civil Code in respect of the same alleged misrepresentations.

On February 3, 2020, the Quebec Superior Court granted the applications of CalSTRS and BlackRock for leave to pursue their respective actions asserting claims under the Quebec Securities Act. On June 16, 2020, the Quebec Court of Appeal granted the defendants leave to appeal that decision. The appeal ~~is scheduled to be~~was heard on September 29, ~~2021.~~2021 and, by judgment dated October 29, 2021, the appeals were dismissed.

On October 8 and 9, 2020, respectively, CalSTRS amended its proceedings to, among other things, include a new alleged misrepresentation concerning the accounting treatment of “price appreciation credits” in respect of Glumetza® during the

period covered by the claims. A hearing was held on February 17, 2021 with respect to whether CalSTRS would be permitted to file the proposed amended proceedings. On June 9, 2021, the Quebec Superior Court granted the Company’s application to strike the new allegations from its Quebec Securities Act claim, but permitted the amendments to its claim under the Quebec Civil Code.

On March 17, 2021, 4 additional opt-outs from the Catucci class issued a Statement of Claim in the Ontario Superior Court of Justice. That proceeding is captioned The Bank of Korea et al. v. Valeant Pharmaceuticals International Inc. et al. (Court File No. 21-006589666-0000). In addition, these plaintiffs also served and filed a motion for leave to pursue claims under the Ontario Securities Act. The allegations in this proceeding are similar to those made by the plaintiffs in the Catucci class action and the plaintiffs in the opt-out actions described above.

The Company believes that it has viable defenses in each of these actions. In each case, the Company intends to defend itself vigorously.

RICO Class Actions

Between May 27, 2016 and September 16, 2016, 3 actions were filed in the U.S. District Court for the District of New Jersey against the Company and various third-parties (these actions were subsequently consolidated), alleging claims under the federal Racketeer Influenced Corrupt Organizations Act (“RICO”) on behalf of a putative class of certain third-party payors that paid claims submitted by Philidor for certain Company-branded drugs between January 2, 2013 and November 9, 2015. The consolidated complaint alleges, among other things, that the defendants committed predicate acts of mail and wire fraud by submitting or causing to be submitted prescription reimbursement requests that misstated or omitted facts regarding: (1) the identity and licensing status of the dispensing pharmacy; (2) the resubmission of previously denied claims; (3) patient co-pay waivers; (4) the availability of generic alternatives; and (5) the insured’s consent to renew the prescription. The complaint further alleges that these acts constitute a pattern of racketeering or a racketeering conspiracy in violation of the RICO statute and caused plaintiffs and the putative class unspecified damages, which may be trebled under the RICO statute. ~~The parties have reached an agreement in principle to resolve~~On August 4, 2021, the ~~consolidated putative class~~Company executed a stipulation of settlement for this action ~~that~~and, on August 17, 2021, the Court preliminarily approved the settlement. A final approval hearing is ~~subject to additional documentation and, thereafter, subject to court approval.~~scheduled for December 2, 2021.

Insurance Coverage Lawsuit

On December 7, 2017, the Company filed a lawsuit against its insurance companies that issued insurance policies covering claims made against the Company, its subsidiaries, and its directors and officers during 2 distinct policy periods, (i) 2013-14 and (ii) 2015-16. The lawsuit is currently pending in the United States District Court for the District of New Jersey (Valeant Pharmaceuticals International, Inc., et al. v. AIG Insurance Company of Canada, et al.; 3:18-CV-00493). In the lawsuit, the Company seeks coverage for: (i) the costs of defending and resolving claims brought by former shareholders and debtholders of Allergan, Inc. in In re Allergan, Inc. Proxy Violation Securities Litigation and Timber Hill LLC, individually and on behalf of all others similarly situated v. Pershing Square Capital Management, L.P., et al. (the “Allergan Securities Litigation”) (under the 2013-2014 coverage period), and (ii) costs incurred and to be incurred in connection with the securities class actions and opt-out cases described in this section and the SEC Investigation and certain of the other investigations described under “Complete or Inactive Matters” in Note 20, “LEGAL PROCEEDINGS,” to the Company's Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC and the CSA on February 24, 2021 and under “Governmental and Regulatory Inquiries” and “Complete or Inactive Matters” in Note 21, “LEGAL PROCEEDINGS,” to the Company's Consolidated Financial

Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC and the CSA on February 19, 2020 (under the 2015-2016 coverage period).

On July 20, 2021, the Company entered into settlement agreements with the insurers in the 2015-2016 coverage period in which the Company agreed to resolve its claims for insurance coverage in connection with the U.S. Securities Litigation and the Canadian Securities Litigation and related opt-out litigation and related investigations matters described above. On that same day, the Company entered into settlement agreements with 2 of its insurers in the 2013-2014 coverage period in which the Company agreed to resolve its claims against those 2 insurers only for insurance coverage in connection with the Allergan Securities Litigation. As a result of all of the settlement agreements entered into with the insurers on July 20, 2021, the Company ~~will receive~~has received an aggregate sum of $213 million. The Company’s insurance claims with respect to the Allergan Securities Litigation against the remaining insurers in the 2013-2014 coverage period remain pending.

~~Hound Partners Lawsuit~~

In October 2018, Hound Partners Offshore Fund, LP, Hound Partners Long Master, LP, and Hound Partners Concentrated Master, LP, filed a lawsuit against the Company in the Superior Court of New Jersey Law Division/Mercer County that asserts claims for common law fraud, negligent misrepresentation, and violations of the New Jersey Racketeer Influenced and Corrupt Organizations Act. The Company disputes the claims and intends to vigorously defend this matter.

~~Other Securities and RICO Class Actions and Related Matters~~

As referenced above, during the three months ended June 30, 2021, there have been no material updates or developments with respect to certain other proceedings or actions as described under “Securities and RICO Class Actions and Related Matters” in Note 20, “LEGAL PROCEEDINGS,” to the Company's Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 24, 2021. Such matters include:

Derivative Lawsuits

On September 10, 2019 and September 13, 2019, 2 alleged stockholders filed derivative lawsuits purportedly on behalf of the Company against former Company board members and executives. On March 7, 2020, a consolidated amended derivative complaint was filed, captioned In re Bausch Health Companies Inc. F/K/A/ Valeant Pharmaceuticals International, Inc. Stockholder Derivative Litigation (Case No. 19-cv-17833).

Plaintiffs ~~assert~~asserted claims for breach of fiduciary duty, waste of corporate assets, and unjust enrichment related to, among other things, allegedly false and misleading statements and/or failures to disclose information about the Company’s business and prospects, including relating to drug pricing, the Company’s use of specialty pharmacies, and the Company’s relationship with Philidor. The consolidated complaint also ~~asserts~~asserted a claim for contribution and indemnification by the Defendants for any liability the Company ultimately faces as a result of the conduct alleged in the complaint. The claims alleged in these cases ~~are~~were based on the same purported conduct that is at issue in In re Valeant Pharmaceuticals International, Inc. Securities Litigation, all of which occurred prior to 2017. On April 21, 2020, the Defendants filed a motion to dismiss the consolidated amended complaint. Briefing on this motion concluded on August 3, 2020. On November 24, 2020, the Special Master appointed by the Court issued a report recommending that the motion to dismiss be granted in full. ~~While a final decision is still pending~~On September 20, 2021, the District Court adopted the report and recommendation of the Special Master and dismissed the action.

Other Securities and RICO Class Actions and Related Matters

As referenced above, during the three months ended September 30, 2021, there have been no material updates or developments with respect to certain other proceedings or actions as described under “Securities and RICO Class Actions and Related Matters” in Note 20, “LEGAL PROCEEDINGS,” to the Company's Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC and the CSA on February 24, 2021. Such matters include:

Hound Partners Lawsuit

In October 2018, Hound Partners Offshore Fund, LP, Hound Partners Long Master, LP, and Hound Partners Concentrated Master, LP, filed a lawsuit against the Company in the Superior Court ~~Plaintiffs are not contesting~~of New Jersey Law Division/Mercer County that asserts claims for common law fraud, negligent misrepresentation, and violations of the ~~dismissal in full.~~New Jersey Racketeer Influenced and Corrupt Organizations Act. The Company disputes ~~these~~the claims and intends to vigorously defend ~~itself vigorously.~~this matter.

Antitrust

Glumetza Antitrust Litigation

Between August 2019 and July 2020, 8 (8) putative antitrust class actions and 4 (4) non-class complaints naming the Company, Salix Pharmaceuticals, Ltd., Salix Pharmaceuticals, Inc., and Santarus, Inc. (for purposes of this subsection, collectively, the “Company”), among other defendants, were filed or transferred to the Northern District of California. NaN (3) of the class actions were filed by plaintiffs seeking to represent a class of direct purchasers. The purported classes of direct purchasers filed a consolidated first amended complaint and a motion for class certification in April 2020. The court certified a direct purchaser class in August 2020. The putative class action complaints filed by end payer purchasers have all been voluntarily dismissed. NaN (3) of the non-class complaints were filed by direct purchasers. The fourth non-class complaint, asserting claims based on both direct and indirect purchases, was filed by an insurer plaintiff in July 2020 and subsequently amended in September 2020. In December 2020, the court denied the Company’s motion to dismiss as to the insurer plaintiff’s direct claims but dismissed the insurer plaintiff’s indirect claims. On February 2, 2021, the insurer plaintiff’s motion for leave to amend its complaint was denied.

These actions ~~5 (5) of which remain pending, have been~~were consolidated and coordinated in In re Glumetza Antitrust Litigation, Case No. 3:19-cv-05822-WHA (the “In re Glumetza Antitrust Litigation”). The lawsuits ~~allege~~alleged that a 2012 settlement of a patent litigation regarding Glumetza® delayed generic entry in exchange for an agreement not to launch an authorized generic of Glumetza® or grant any other

company a license to do so. The complaints ~~allege~~alleged that the settlement agreement resulted in higher prices for Glumetza® and its generic equivalent both prior to and after generic entry. Both the class and non-class plaintiffs ~~seek~~sought damages under federal antitrust laws for claims based on direct purchases. ~~All Plaintiffs filed a motion for partial summary judgment, whereas defendants have filed a motion for summary judgment as to all claims.On May 6, 2021, all summary judgment motions were denied.~~

On February 8, 2021, the insurer plaintiff filed an action asserting ~~state law~~its indirect (state law) claims in the Superior Court of Alameda County, California against the Company and others (the “State Court Action”). Defendants’ demurrer ~~to all causes of action~~ in the State Court Action ~~will be~~was heard on ~~August 25,~~September 22, 2021.

On July 26, 2021, the Company reached an agreement in principle and, thereafter, on September 14, 2021, executed a final settlement agreement to resolve the class plaintiffs’ claims for $300 million, subject to ~~a final settlement agreement and, thereafter,~~ court approval. ~~The settlement will resolve and discharge all claims against the Company by members of the class.~~ On August 1, 2021, the Company also reached an agreement in principle to resolve the non-class direct purchaser plaintiffs’ ~~direct~~ claims, described above, ~~subject to a~~for additional consideration. A final settlement agreement ~~for additional consideration.~~with the non-class direct purchaser plaintiffs was executed on August 6, 2021. As part of the settlements, ~~in principle,~~ the Company admitted no liability as to the claims against it and denied all allegations of wrongdoing. ~~The opt-out actions of~~On September 20, 2021, the insurer plaintiff ~~described above, remain ongoing.~~

voluntarily dismissed its claims in the consolidated federal action. By stipulation, the insurer plaintiff has asserted its direct opt-out claims in the State Court Action, resulting in the consolidation of all of its opt-out claims in the State Court Action.

~~The~~On September 22, 2021, the court ~~has set a~~granted preliminary approval of the class settlement agreement and vacated the October 2021 trial date and all other pre-trial deadlines in the consolidated actions. A final settlement approval hearing is scheduled for January 20, 2022. Subject to final approval of the class settlement, the settlements will resolve and discharge all asserted class and direct purchaser non-class claims against the Company in the In re Glumetza Antitrust Litigation~~to begin in October 2021.~~.

~~The Company disputes these claims and intends to vigorously defend these matters.~~

Generic Pricing Antitrust Litigation

The Company’s subsidiaries, Oceanside Pharmaceuticals, Inc. (“Oceanside”), Bausch Health US, LLC (formerly Valeant Pharmaceuticals North America LLC) (“Bausch Health US”), and Bausch Health Americas, Inc. (formerly Valeant Pharmaceuticals International) (“Bausch Health Americas”) (for the purposes of this paragraph, collectively, the “Company”), are defendants in multidistrict antitrust litigation (“MDL”) entitled In re: Generic Pharmaceuticals Pricing Antitrust Litigation,, pending in the United States District Court for the Eastern District of Pennsylvania (MDL 2724, ~~16-MD-2724)~~16- F-18 MD-2724). The lawsuits seek damages under federal and state antitrust laws, state consumer protection and unjust enrichment laws and allege that the Company’s subsidiaries entered into a conspiracy to fix, stabilize, and raise prices, rig bids and engage in market and customer allocation for generic pharmaceuticals. The lawsuits, which have been brought as putative class actions by direct purchasers, end payers, and indirect resellers, and as direct actions by direct purchasers, end payers, insurers, States, and various Counties, Cities, and Towns, have been consolidated into the MDL. There are also additional, separate complaints which have been consolidated in the same MDL that do not name the Company or any of its subsidiaries as a defendant. There are 2 cases pending in the Court of Common Pleas of Philadelphia County against the Company and other defendants related to the multidistrict litigation, but no complaint has been filed in ~~either case and~~ the cases. The cases have been or, the Company anticipates, will be put in deferred status. The Company disputes the claims against it and continues to defend itself vigorously.

Additionally, Bausch Health Companies Inc. and certain U.S. and Canadian subsidiaries (for the purposes of this paragraph, collectively “the Company”) have been named as defendants in a proposed class proceeding entitled Kathryn Eaton v. Teva Canada Limited, et al. in the Federal Court in Toronto, Ontario, Canada (Court File No. T-607-20). The plaintiff seeks to certify a proposed class action on behalf of persons in Canada who purchased generic drugs in the private sector, alleging that the Company and other defendants violated the Competition Act by conspiring to allocate the market, fix prices, and maintain the supply of generic drugs, and seeking damages under federal law. The proposed class action contains similar allegations to the In re: Generic Pharmaceuticals Pricing Antitrust Litigation pending in the United States Court for the Eastern District of Pennsylvania. The Company disputes the claims against it and will defend itself vigorously.

Intellectual Property

Patent Litigation/Paragraph IV Matters

From time to time, the Company (and/or certain of its affiliates) is also party to certain patent infringement proceedings in the United States and Canada, including as arising from claims filed by the Company (or that the Company anticipates filing within the required time periods) in connection with Notices of Paragraph IV Certification (in the United States) and Notices of Allegation (in Canada) received from third-party generic manufacturers respecting their pending applications for generic versions of certain products sold by or on behalf of the Company, including ~~Uceris~~®, Xifaxan® 550mg, ~~Plenvu~~Uceris®, Bryhali®, Duobrii®, ~~Trulance~~Lumify®, and ~~Jublia~~Trulance® in the United States, or other similar suits.

On July 23, 2020, the Company received a Notice of Paragraph IV Certification from Perrigo Israel Pharmaceuticals, Ltd. (“Perrigo”), in which Perrigo asserted that certain U.S. patents, each of which is listed in the U.S. Food and Drug Administration's (the "FDA") Orange Book for Duobrii® (halobetasol propionate and tazarotine) lotion, are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Perrigo’s generic lotion, for which an Abbreviated New Drug Application (“ANDA”) has been filed by Perrigo. On August 28, 2020, the Company filed suit against Perrigo pursuant to the Hatch-Waxman Act, alleging infringement by Perrigo of one or more claims of the Duobrii® Patents, thereby triggering a 30-month stay of the approval of the Perrigo ANDA. On September 3, 2020, this action was consolidated with the action between the Company and Perrigo described below, regarding Perrigo’s ANDA for generic Bryhali® ~~(halobetasol propionate) lotion. The Company remains confident in the strength of the Duobrii~~® ~~related patents and will vigorously defend its intellectual property.~~

On March 20, 2020, the Company received a Notice of Paragraph IV Certification from Perrigo, in which Perrigo asserted that certain U.S. patents, each of which is listed in the FDA’s Orange Book for Bryhali® (halobetasol propionate) lotion, 0.01% are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Perrigo’s generic halobetasol propionate lotion, for which an ANDA has been filed by Perrigo. On May 1, 2020, the Company filed suit against Perrigo pursuant to the Hatch-Waxman Act, alleging infringement by Perrigo of one or more claims of the Bryhali® Patents, thereby triggering a 30-month stay of the approval of the Perrigo ANDA for halobetasol propionate lotion. On September 3, 2020, this action was consolidated with the action between the Company and Perrigo described above, regarding Perrigo’s ANDA for generic Duobrii® ~~(halobetasol propionate and tazarotine) lotion. The Company remains confident in the strength of the Bryhali~~® ~~Patents and intends to vigorously pursue this matter and defend its intellectual property.~~

commercial manufacture, use or sale of Norwich’s generic rifaximin tablets, 550 mg, for which an ~~ANDA~~Abbreviated New Drug Application (“ANDA”) has been filed by Norwich. The Company, through its subsidiaries Salix Pharmaceuticals, Inc. and Bausch Health Ireland Limited, holds the New Drug Application for Xifaxan® and owns or exclusively licenses (from Alfasigma) these patents. On March 26, 2020, certain of the Company’s subsidiaries and Alfasigma filed suit against Norwich in the U.S. District Court for the District of Delaware (Case No. 20-cv-00430) pursuant to the Hatch-Waxman Act, alleging infringement by Norwich of one or more claims of the Xifaxan® Patents, thereby triggering a 30-month stay of the approval of Norwich’s ANDA for rifaximin tablets, 550 mg. Xifaxan® is protected by 26 patents covering the composition of matter and the use of Xifaxan® listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, or the Orange Book. A 3-day bench trial is scheduled to begin March 21, 2022. The Company remains confident in the strength of the Xifaxan® patents and will continue to vigorously pursue this matter and defend its intellectual property.

~~In April 2019,~~On July 23, 2020, the Company received a Notice of Paragraph IV Certification from Perrigo Israel Pharmaceuticals, Ltd. (now Padagis LLC) (“Padagis”), in which Padagis asserted that certain U.S. patents, each of which is listed in the FDA's Orange Book for Duobrii® (halobetasol propionate and tazarotine) lotion, are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Padagis’ generic lotion, for which an ANDA has been filed by Padagis. On August 28, 2020, the Company filed suit against Padagis pursuant to the Hatch-Waxman Act, alleging infringement by Padagis of one or more claims of the Duobrii® Patents, thereby triggering a 30-month stay of the approval of the Padagis ANDA. On September 3, 2020, this action was consolidated with the action between the Company and ~~Alfasigma~~Padagis described below, regarding Padagis’ ANDA for generic Bryhali® (halobetasol propionate) lotion. The Company remains confident in the strength of the Duobrii® related patents and will vigorously defend its intellectual property.

On March 20, 2020, the Company received a Notice of Paragraph IV Certification from Padagis, in which Padagis asserted that certain U.S. patents, each of which is listed in the FDA’s Orange Book for Bryhali® (halobetasol propionate) lotion, 0.01% are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Padagis’ generic halobetasol propionate lotion, for which an ANDA has been filed by Padagis. On May 1, 2020, the Company filed suit against Padagis pursuant to the Hatch-Waxman Act, alleging infringement by Padagis of one or more claims of the Bryhali® Patents, thereby triggering a 30-month stay of the approval of the Padagis ANDA for halobetasol propionate lotion. On September 3, 2020, this action was consolidated with the action between the Company and Padagis described above, regarding Padagis’ ANDA for generic Duobrii® (halobetasol propionate and tazarotine) lotion. The Company remains confident in the strength of the Bryhali® Patents and intends to vigorously pursue this matter and defend its intellectual property.

In April 2021, the Company commenced litigation against ~~Sun Pharmaceutical Industries~~MSN Laboratories Private Ltd. (“~~Sun”~~MSN”) and Mylan Pharmaceuticals Inc., (“Mylan”) alleging patent infringement by ~~Sun’s~~MSN’s and Mylan’s filing of ~~its~~their ANDA for ~~Xifaxan~~generic Trulance® ~~(rifaximin) 200 mg~~(plecanatide) 3mg tablets. This suit had been filed following receipt of a Notice of Paragraph IV Certification from ~~Sun,~~each of MSN and Mylan, in which ~~Sun~~they had each asserted that the U.S. patents listed in the FDA's Orange Book for the Company’s ~~Xifaxan~~Trulance® tablets, ~~200~~3 mg, were either invalid, unenforceable and/or would not be infringed by the commercial manufacture, use or sale of ~~Sun’s~~their respective generic ~~rifaximin~~plecanatide tablets, ~~200~~3 mg. ~~Subsequently, on August 10, 2020,~~The filing of these suits triggered a 30-month stay of the approval of the MSN and Mylan ANDAs for plecanatide tablets. The Company remains confident in the strength of the Trulance® patents and intends to vigorously pursue this matter and defend its intellectual property.

In September 2021, the Company ~~received an additional~~commenced litigation against Slayback Pharma LLC and Slayback Pharma India LLP (together, “Slayback”) alleging patent infringement by Slayback Pharma LLC’s filing of its ANDA No. 216361, referencing Lumify® (0.025% brimonidine tartrate ophthalmic solution). This suit had been filed following receipt of a Notice of Paragraph IV Certification from ~~Sun,~~Slayback Pharma LLC, in which ~~Sun~~it had asserted that the U.S. patents listed in the FDA's Orange Book for the Company’s ~~Xifaxan~~Lumify® ~~tablets, 550 mg,~~brimonidine tartrate ophthalmic solution, were either invalid, unenforceable and/or would not be infringed by the commercial manufacture, use or sale of ~~Sun’s~~its generic ~~rifaximin tablets, 550 mg,~~brimonidine tartrate solution. The filing of this suit triggered a 30-month stay of the approval of the Slayback ANDA for ~~which an ANDA had been filed by Sun. On September 22, 2020,~~its brimonidine tartrate solution.The Company remains confident in the ~~Company announced that an agreement had been reached with Sun that resolved~~strength of the ~~outstanding intellectual property disputes with Sun regarding Xifaxan~~Lumify® ~~(rifaximin) 200 mg~~related patents and ~~550 mg tablets. Under the terms of the agreement, the parties agreed~~intends to ~~dismiss all litigation related to Xifaxan~~® ~~(rifaximin) and all~~vigorously defend its intellectual ~~property protecting Xifaxan~~® (rifaximin) 200 mg and 550 mg tablets will remain intact and enforceable until expiry in July and October 2029, respectively. The agreement also grants Sun a non-exclusive license to the intellectual property relating to Xifaxan® (rifaximin) 200 mg and 550 mg tablets in the United States beginning January 1, 2028 (or earlier under certain circumstances). Under the terms of the agreement, beginning January 1, 2028 (or earlier under certain circumstances), Sun will have the right to market royalty-free generic versions of Xifaxan® (rifaximin) 200 mg and 550 mg tablets, should it receive approval from the FDA on its ANDAs. Sun will be able to commence such marketing earlier if another generic rifaximin product is granted approval and such other generic rifaximin product begins to be sold or distributed in the United States before January 1, 2028.property.

In addition, patents covering the Company's branded pharmaceutical products may be challenged in proceedings other than court proceedings, including inter partes review ("IPR") at the U.S. Patent & Trademark Office. The proceedings operate under different standards from district court proceedings, and are often completed within 18 months of institution. IPR challenges have been brought against patents covering the Company's branded pharmaceutical products. For example, following Acrux DDS’s IPR petition, the U.S. Patent and Trial Appeal Board ("PTAB"), in May 2017, instituted inter partes review for an Orange Book-listed patent covering Jublia® (U.S. Patent No. 7,214,506 (the "‘506 Patent")) and, on June 6, 2018, issued a written determination invalidating such patent. An appeal of this decision was filed on August 7, 2018. On March 13, 2020, the Court of Appeals for the Federal Circuit reversed this decision and remanded the matter back to the PTAB for further proceedings. As a result of a settlement, a joint motion to terminate the proceedings was filed on November 12, 2020 and, on January 8, 2021, the PTAB granted this motion. The ‘506 Patent, therefore, remains valid and

is subject to full indemnification obligations of Johnson & Johnson owed to the Company, and legal fees and costs will be paid by Johnson & Johnson. Twenty-eight (28) of these lawsuits filed by individual plaintiffs allege that the use of Shower to Shower® caused the plaintiffs to develop ovarian cancer, mesothelioma or breast cancer. The allegations in these cases include failure to warn, design defect, manufacturing defect, negligence, gross negligence, breach of express and implied warranties, civil conspiracy concert in action, negligent misrepresentation, wrongful death, loss of consortium and/or punitive damages. The damages sought include compensatory damages, including medical expenses, lost wages or earning capacity, loss of consortium and/or compensation for pain and suffering, mental anguish anxiety and discomfort, physical impairment and loss of enjoyment of life. Plaintiffs also seek pre- and post-judgment interest, exemplary and punitive damages, and attorneys’ fees. Additionally, 2 proposed class actions have been filed in Canada against the Company and various Johnson & Johnson entities (1 in the Supreme Court of British Columbia and 1 in the Superior Court of Quebec), on behalf of persons who have purchased or used Johnson & Johnson’s Baby Powder or Shower to Shower®. The class actions allege the use of the product increases certain health risks (British Columbia) or negligence in failing to properly test, failing to warn of health risks, and failing to remove the products from the market in a timely manner (Quebec). The plaintiffs in these actions are seeking awards of general, special, compensatory and punitive damages. On November 17, 2020, the British Columbia court issued a judgment declining to certify a class as to the Company or Shower to Shower®, and at this time no appeal of that judgment has been filed. In accordance with the indemnification agreement, Johnson & Johnson will continue to vigorously defend the Company in each of the remaining actions that are not voluntarily dismissed or subject to a grant of summary judgment.

General Civil Actions

California Proposition 65 Related ~~Matters~~

~~On January 29, 2020, Plaintiff Jan Graham filed a lawsuit (Graham v. Bausch Health Companies, Inc., et al.~~, Case No. 20STCV03578) in Los Angeles County Superior Court against the Company, Bausch Health US and several other manufacturers, distributors and retailers of talcum powder products, alleging violations of California Proposition 65 by manufacturing and distributing talcum powder products containing chemicals listed under the statue, without a compliant warning on the label. On January 29, 2021, certain defendants including the Company and Bausch Health US filed a Motion for Summary Judgment or in the Alternative Motion for Summary Adjudication, which was granted with prejudice on May 26, 2021; Plaintiff waived the right to appeal.Matter

On June 19, 2019, plaintiffs filed a proposed class action in California state court against Bausch Health US and Johnson & Johnson (Gutierrez, et al. v. Johnson & Johnson, et al., Case No. 37-2019-00025810-CU-NP-CTL), asserting claims for purported violations of the California Consumer Legal Remedies Act, False Advertising Law and Unfair Competition Law in connection with their sale of talcum powder products that the plaintiffs allege violated Proposition 65 and/or the California Safe Cosmetics Act. This lawsuit was served on Bausch Health US in June 2019 and was subsequently removed to the United States District Court for the Southern District of California, where it is currently pending. Plaintiffs seek damages, disgorgement of profits, injunctive relief, and reimbursement/restitution. The Company filed a motion to dismiss Plaintiffs’ claims, which was granted in April 2020 without prejudice. In May 2020, Plaintiffs filed an amended complaint and in June 2020, filed a motion for leave to amend the complaint further, which was granted. In August 2020, Plaintiffs filed the Fifth Amended Complaint. On January 22, 2021, the Court granted the motion to dismiss with prejudice. On February 19, 2021, Plaintiffs filed a Notice of Appeal with the Ninth Circuit Court of Appeals. On July 1, 2021, Appellants (Plaintiffs) filed their opening ~~brief,~~brief; Appellees' response briefs ~~are currently due September 1,~~were filed on October 8, 2021.

The Company and Bausch Health US dispute the claims against them and intend to defend ~~each of these lawsuits~~this lawsuit vigorously.

~~Doctors Allergy Formula Lawsuit~~

In April 2018, Doctors Allergy Formula, LLC (“Doctors Allergy”), filed a lawsuit against Bausch Health Americas in the Supreme Court of the State of New York, County of New York, asserting breach of contract and related claims under a 2015 Asset Purchase Agreement, which purports to include milestone payments that Doctors Allergy alleges should have been paid by Bausch Health Americas. Doctors Allergy claims its damages are not less than $23 million. The Company has asserted counterclaims against Doctors Allergy. The Company filed a motion seeking an order granting the Company summary judgment on its counterclaims against Plaintiff and dismissing Plaintiff’s claims against the Company. The motion was fully briefed as of May 2021 and remains pending.

Other General Civil Actions

As referenced above, during the three months ended ~~June~~September 30, 2021, there have been no material updates or developments with respect to certain proceedings or actions as described under “General Civil Actions” in Note 20, “LEGAL PROCEEDINGS,” to the Company's Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC and the CSA on February 24, 2021. These matters include:

California Proposition 65 Related Matter

On January 29, 2020, Plaintiff Jan Graham filed a lawsuit (Graham v. Bausch Health Companies, Inc., et al., Case No. 20STCV03578) in Los Angeles County Superior Court against the Company, Bausch Health US and several other manufacturers, distributors and retailers of talcum powder products, alleging violations of California Proposition 65 by

manufacturing and distributing talcum powder products containing chemicals listed under the statue, without a compliant warning on the label. On January 29, 2021, certain defendants including the Company and Bausch Health US filed a Motion for Summary Judgment or in the Alternative Motion for Summary Adjudication, which was granted with prejudice on May 26, 2021; Plaintiff waived the right to appeal.

New Mexico Attorney General Consumer Protection Action

The Company and Bausch Health US were named in an action brought by State of New Mexico ex rel. Hector H. Balderas, Attorney General of New Mexico, in the County of Santa Fe New Mexico First Judicial District Court (New Mexico ex rel. Balderas v. Johnson & Johnson, et al., Civil Action No. D-101-CV-2020-00013, filed on January 2, 2020), alleging consumer protection claims against Johnson & Johnson and Johnson & Johnson Consumer Companies, Inc., the Company and Bausch Health US related to Shower to Shower® and its alleged causal link to mesothelioma and other cancers. In April 2020, Bausch Health US filed a motion to dismiss, which in September 2020, the Court granted in part as to the New Mexico Medicaid Fraud Act and New Mexico Fraud Against Taxpayers Act claims and denied as to all other claims. The State of New Mexico brings claims against all defendants under the New Mexico Unfair Practices Act and other common law and equitable causes of action, alleging defendants engaged in wrongful marketing, sale and promotion of talcum powder products. The lawsuit seeks to recover the cost of the talcum powder products as well as the cost of treating asbestos-related cancers allegedly caused by those products. Bausch Health US filed its ~~Answer~~answer on November 16, 2020. On December 30, 2020 Johnson & Johnson filed a Motion for Partial Judgment on the Pleadings and on January 4, 2021, Bausch Health US filed a joinder to that motion, which was denied on March 8, 2021.

The Company and Bausch Health US dispute the claims against them and intend to defend ~~each~~this lawsuit vigorously.

Doctors Allergy Formula Lawsuit

In April 2018, Doctors Allergy Formula, LLC (“Doctors Allergy”), filed a lawsuit against Bausch Health Americas in the Supreme Court of ~~these lawsuits~~the State of New York, County of New York, asserting breach of contract and related claims under a 2015 Asset Purchase Agreement, which purports to include milestone payments that Doctors Allergy alleges should have been paid by Bausch Health Americas. Doctors Allergy claims its damages are not less than $23 million. Bausch Health Americas has asserted counterclaims against Doctors Allergy. Bausch Health Americas filed a motion seeking an order granting Bausch Health Americas summary judgment on its counterclaims against Plaintiff and dismissing Plaintiff’s claims against it. The motion was fully briefed as of May 2021 and remains pending. Bausch Health Americas disputes the claims against it and will continue to defend itself vigorously.

Litigation with Former Salix CEO

On January 28, 2019, former Salix Ltd. CEO and director Carolyn Logan filed a lawsuit in the Delaware Court of Chancery, asserting claims for breach of contract and declaratory relief. The lawsuit arises out of the contractual termination of approximately $30 million in unvested equity awards following the determination by the Salix Ltd. Board of Directors that Logan intentionally engaged in wrongdoing that resulted, or would reasonably be expected to result, in material harm to Salix Ltd., or to the business or reputation of Salix Ltd. Logan seeks the restoration of the unvested equity awards and a declaration regarding certain rights related to indemnification.

The Company disputes the claims against it in each of these matters and intends to vigorously defend the matters.

19.SEGMENT INFORMATION

Reportable Segments

In connection with the planned separation of its eye health business into an independent publicly traded entity from the remainder of Bausch Health Companies Inc., the Company has begun managing its operations in a manner consistent with the organizational structure of the separate entities as proposed by the B+L Separation. As a result, during the first quarter of 2021, the Company’s Chief Executive Officer ("CEO"), who is the Company’s Chief Operating Decision Maker, commenced managing the business differently through changes in its operating and reportable segments, which necessitated a realignment of the Company's historical segment structure. This realignment is consistent with how the Company’s CEO currently: (i) assesses operating performance on a regular basis, (ii) makes resource allocation decisions and (iii) designates responsibilities of his direct reports. Pursuant to these changes, effective in the first quarter of 2021, the Company operates in the following reportable segments: (i) Bausch + Lomb, (ii) Salix, (iii) International Rx, (iv) Ortho Dermatologics and (v) Diversified Products. In addition, as part of this realignment of segment structure, certain products historically included in certain segments are now included in their new respective segments based on the organizational structure of the two separate entities as proposed by the B+L Separation. Prior period presentation of segment revenues and segment profits has been recast to conform to the current segment reporting structure.

The following is a brief description of the Company’s segments:

•The Bausch + Lomb segment consists of global sales of Bausch + Lomb Vision Care, Consumer, Surgical and Ophthalmology Rx products.

•The Salix segment consists of sales in the U.S. of GI products.

•The International Rx segment consists of sales, with the exception of sales of Bausch + Lomb products and Solta aesthetic medical ~~aesthetic~~ devices, outside the U.S. and Puerto Rico of branded pharmaceutical products, branded generic pharmaceutical products and OTC products.

•The Ortho Dermatologics segment consists of: (i) sales in the U.S. of Ortho Dermatologics (dermatological) products and (ii) global sales of Solta aesthetic medical ~~aesthetic~~ devices.

•The Diversified Products segment consists of sales in the U.S. of: (i) pharmaceutical products in the areas of neurology and certain other therapeutic classes, (ii) generic products and (iii) dentistry products.

Segment Revenues and Profits

Segment revenues and profits were as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	(in millions)	2021		2020		2021		2020		(in millions)	2021		2020		2021		2020
Revenues:	Revenues:									Revenues:
Bausch + Lomb	Bausch + Lomb	$	934	$	677	$	1,815	$	1,552	Bausch + Lomb	$	949	$	916	$	2,764	$	2,468
Salix	Salix	516		404		988		881		Salix	527		496		1,515		1,377
International Rx	International Rx	313		249		619		540		International Rx	271		308		890		848
Ortho Dermatologics	Ortho Dermatologics	137		117		278		248		Ortho Dermatologics	140		143		418		391
Diversified Products	Diversified Products	200		217		427		455		Diversified Products	224		275		651		730
		$	2,100	$	1,664	$	4,127	$	3,676		$	2,111	$	2,138	$	6,238	$	5,814
Segment profits:	Segment profits:									Segment profits:
Bausch + Lomb	Bausch + Lomb	$	213	$	124	$	452	$	387	Bausch + Lomb	$	247	$	274	$	699	$	661
Salix	Salix	370		289		697		608		Salix	377		360		1,074		968
International Rx	International Rx	103		75		212		173		International Rx	92		104		304		277
Ortho Dermatologics	Ortho Dermatologics	61		38		131		85		Ortho Dermatologics	64		69		195		154
Diversified Products	Diversified Products	140		154		311		321		Diversified Products	161		207		472		528
		887		680		1,803		1,574			941		1,014		2,744		2,588
Corporate	Corporate	(199)		(145)		(380)		(301)		Corporate	(186)		(141)		(566)		(442)
Amortization of intangible assets	Amortization of intangible assets	(360)		(436)		(717)		(872)		Amortization of intangible assets	(338)		(391)		(1,055)		(1,263)
Goodwill impairments	Goodwill impairments	0		0		(469)		0		Goodwill impairments	—		—		(469)		—
Asset impairments		(47)		(1)		(195)		(15)
Restructuring, integration and separation costs		(9)		(7)		(21)		(11)
Other expense, net		(542)		(118)		(512)		(154)
Operating (loss) income		(270)		(27)		(491)		221
Asset impairments, including loss on assets held for sale										Asset impairments, including loss on assets held for sale	(18)		(2)		(213)		(17)
Restructuring, integration, separation and IPO costs										Restructuring, integration, separation and IPO costs	(8)		(2)		(29)		(13)
Other income (expense), net										Other income (expense), net	183		(18)		(329)		(172)
Operating income										Operating income	574		460		83		681
Interest income	Interest income	2		2		4		9		Interest income	2		2		6		11
Interest expense	Interest expense	(364)		(385)		(732)		(781)		Interest expense	(351)		(374)		(1,083)		(1,155)
Loss on extinguishment of debt	Loss on extinguishment of debt	(45)		(27)		(50)		(51)		Loss on extinguishment of debt	(12)		—		(62)		(51)
Foreign exchange and other	Foreign exchange and other	7		0		8		(13)		Foreign exchange and other	3		(13)		11		(26)
Loss before benefit from income taxes		$	(670)	$	(437)	$	(1,261)	$	(615)
Income (loss) before (provision for) benefit from income taxes										Income (loss) before (provision for) benefit from income taxes	$	216	$	75	$	(1,045)	$	(540)

Revenues by Segment and Product Category

Revenues by segment and product category were as follows:


(in millions)	(in millions)	Bausch + Lomb		Salix		International Rx		Ortho Dermatologics		Diversified Products		Total		(in millions)	Bausch + Lomb		Salix		International Rx		Ortho Dermatologics		Diversified Products		Total
		Three Months Ended June 30, 2021													Three Months Ended September 30, 2021
Pharmaceuticals	Pharmaceuticals	$	134	$	514	$	67	$	59	$	164	$	938	Pharmaceuticals	$	120	$	525	$	61	$	62	$	173	$	941
Devices	Devices	397		0		0		73		0		470		Devices	396		—		—		73		—		469
OTC	OTC	329		0		32		0		2		363		OTC	365		—		41		—		3		409
Branded and Other Generics	Branded and Other Generics	68		0		206		0		31		305		Branded and Other Generics	61		—		161		—		47		269
Other revenues	Other revenues	6		2		8		5		3		24		Other revenues	7		2		8		5		1		23
		$	934	$	516	$	313	$	137	$	200	$	2,100		$	949	$	527	$	271	$	140	$	224	$	2,111
		Three Months Ended June 30, 2020
															Three Months Ended September 30, 2020
Pharmaceuticals	Pharmaceuticals	$	96	$	403	$	55	$	70	$	161	$	785	Pharmaceuticals	$	137	$	494	$	64	$	65	$	216	$	976
Devices	Devices	220		0		0		42		0		262		Devices	360		—		—		72		—		432
OTC	OTC	295		0		20		0		2		317		OTC	341		—		31		—		2		374
Branded and Other Generics	Branded and Other Generics	57		0		161		0		55		273		Branded and Other Generics	71		—		204		—		54		329
Other revenues	Other revenues	9		1		13		5		(1)		27		Other revenues	7		2		9		6		3		27
															$	916	$	496	$	308	$	143	$	275	$	2,138
		$	677	$	404	$	249	$	117	$	217	$	1,664
		Six Months Ended June 30, 2021													Nine Months Ended September 30, 2021
Pharmaceuticals	Pharmaceuticals	$	259	$	984	$	126	$	124	$	341	$	1,834	Pharmaceuticals	$	379	$	1,509	$	187	$	186	$	514	$	2,775
Devices	Devices	779		0		0		145		0		924		Devices	1,175		—		—		218		—		1,393
OTC	OTC	645		0		57		0		4		706		OTC	1,010		—		98		—		7		1,115
Branded and Other Generics	Branded and Other Generics	119		0		418		0		78		615		Branded and Other Generics	180		—		579		—		125		884
Other revenues	Other revenues	13		4		18		9		4		48		Other revenues	20		6		26		14		5		71
		$	1,815	$	988	$	619	$	278	$	427	$	4,127		$	2,764	$	1,515	$	890	$	418	$	651	$	6,238
		Six Months Ended June 30, 2020
															Nine Months Ended September 30, 2020
Pharmaceuticals	Pharmaceuticals	$	234	$	880	$	121	$	146	$	343	$	1,724	Pharmaceuticals	$	371	$	1,374	$	185	$	211	$	559	$	2,700
Devices	Devices	561		0		0		93		0		654		Devices	921		—		—		165		—		1,086
OTC	OTC	616		0		46		0		4		666		OTC	957		—		77		—		6		1,040
Branded and Other Generics	Branded and Other Generics	125		0		349		0		105		579		Branded and Other Generics	196		—		553		—		159		908
Other revenues	Other revenues	16		1		24		9		3		53		Other revenues	23		3		33		15		6		80
		$	1,552	$	881	$	540	$	248	$	455	$	3,676		$	2,468	$	1,377	$	848	$	391	$	730	$	5,814

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

INTRODUCTION

Unless the context otherwise indicates, as used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the terms “we,” “us,” “our,” “the Company,” and similar terms refer to Bausch Health Companies Inc. and its subsidiaries. This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” has been updated through ~~August 3,~~November 2, 2021 and should be read in conjunction with the unaudited interim Consolidated Financial Statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q for the quarterly period ended ~~June~~September 30, 2021 (this “Form 10-Q”). The matters discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contain certain forward-looking statements within the meaning of Section 27A of The Securities Act of 1933, as amended, and Section 21E of The Securities Exchange Act of 1934, as amended, and that may be forward-looking information within the meaning defined under applicable Canadian securities laws (collectively, “Forward-Looking Statements”). See “Forward-Looking Statements” at the end of this discussion.

Our accompanying unaudited interim Consolidated Financial Statements as of ~~June~~September 30, 2021 and for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) for interim financial statements, and should be read in conjunction with our Consolidated Financial Statements for the year ended December 31, 2020, which were included in our Annual Report on Form 10-K filed on February 24, 2021. In our opinion, the unaudited interim Consolidated Financial Statements reflect all adjustments, consisting of normal and recurring adjustments, necessary for a fair statement of the financial condition, results of operations and cash flows for the periods indicated. Additional company information is available on SEDAR at www.sedar.com and on the SEC website at www.sec.gov. All currency amounts are expressed in U.S. dollars, unless otherwise noted.

OVERVIEW

We are a global company whose mission is to improve people’s lives with our health care products. We develop, manufacture and market, primarily in the therapeutic areas of eye health, gastroenterology ("GI") and dermatology, a broad range of: (i) branded pharmaceuticals, (ii) generic and branded generic pharmaceuticals, (iii) over-the-counter (“OTC”) products and (iv) medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment and aesthetics devices), which are marketed directly or indirectly in approximately 100 countries.

Core Businesses

Our strategy is to focus our business on core therapeutic classes that offer attractive growth opportunities. Within our chosen therapeutic classes, we prioritize durable products which we believe have the potential for strong operating margins and evidence of growth opportunities. We believe this strategy has reduced complexity in our operations and maximizes the value of our: (i) eye health, (ii) GI and (iii) dermatology businesses, which collectively now represent a substantial portion of our revenues. We have found and continue to believe there is significant opportunity in these businesses and we believe our existing portfolio, commercial footprint and pipeline of product development projects position us to successfully compete in these markets and provide us with the greatest opportunity to build value for our shareholders. We identify these businesses as “core”, meaning that we believe we are best positioned to grow and develop them.

Reportable Segments and Strategies

As discussed further below, on August 6, 2020, the Company announced that it intends to separate its eye health business into an independent publicly traded entity from the remainder of Bausch Health Companies Inc. (the “B+L Separation”). In connection with the planned separation of its eye health business into an independent publicly traded entity from the remainder of Bausch Health Companies Inc., the Company has begun managing its operations in a manner consistent with the organizational structure of the separate entities as proposed by the B+L Separation. As a result, during the first quarter of 2021, the Company’s Chief Executive Officer ("CEO"), who is the Company’s Chief Operating Decision Maker, commenced managing the business differently through changes in its operating and reportable segments, which necessitated a realignment of the Company's historical segment structure. This realignment is consistent with how the Company’s CEO currently: (i) assesses operating performance on a regular basis, (ii) makes resource allocation decisions and (iii) designates responsibilities of his direct reports. Pursuant to these changes, effective in the first quarter of 2021, the Company operates in the following reportable segments: (i) Bausch + Lomb, (ii) Salix, (iii) International Rx, (iv) Ortho Dermatologics and (v) Diversified Products. In addition, as part of this realignment of segment structure, certain products historically included in certain segments are now included in their new respective segments based on the organizational structure of the two separate entities as proposed by the B+L Separation. Prior period presentation of segment revenues and segment profits has been recast to conform to the current segment reporting structure.

The Bausch + Lomb segment - consists of our Global Bausch + Lomb eye health business which includes our Global Vision Care, Global Surgical, Global Consumer and Global Ophthalmology Rx products, which in aggregate accounted for approximately ~~44%~~45%, 42% and 44% of our Company's revenues for the ~~six~~nine months ended ~~June~~September 30, 2021 and the years 2020 and 2019, respectively. Our Bausch + Lomb business is a fully-integrated eye health business, which we believe is critical to maintaining and developing our position in the global eye health market. As a fully integrated eye health business with a legacy of over 165 years, Bausch + Lomb has an established line of contact lenses, intraocular lenses and other medical devices, surgical systems and devices, vitamin and mineral supplements, lens care products, prescription eye-medications and other consumer products that positions us to compete in all areas of the eye health market.

As part of our global Bausch + Lomb business strategy, we continually look for key trends in the eye health market to meet changing consumer/patient needs and identify areas for investment and growth. For instance, one of these trends is the increasing rate of myopia, and importantly, myopia as a potential risk factor for glaucoma, macular degeneration and retinal detachment. We continue to see increased demand for new eye health products that address conditions brought on by factors, such as increased screen time, lack of outdoor activities and academic pressures, as well as conditions brought on by an aging population, for example, as more and more baby-boomers in the U.S. are reaching the age of 65. To supplement our well-established Bausch + Lomb product lines, we continue to identify new products tailored to address these key trends, which we develop internally with our own research and development (“R&D”) team to generate organic growth. Recent product launches include Biotrue® ONEday daily disposable contact lenses, the next generation of Bausch + Lomb ULTRA® contact lenses, SiHy Daily contact lenses (branded as AQUALOX™ ONE DAY in Japan, Bausch + Lomb INFUSE™® SiHy Daily Disposable in the U.S. and Bausch + Lomb Ultra® ONE DAY in Australia, Hong Kong and Canada), Lumify® (an eye redness treatment), Vyzulta® (a pressure lowering eye drop for patients with angle glaucoma or ocular hypertension), Ocuvite® Eye Performance (vitamins to protect the eye from stressors such as sunlight and blue light emitted from digital devices), and SimplifEYE™® (preloaded intraocular lens injector platform for enVista intraocular lens).

We also license selective molecules or technology in leveraging our own R&D expertise through development, as well as seek out external product development opportunities. Examples of this include the acquired global exclusive license for a myopia control contact lens design developed by BHVI, which we plan to pair with our leading contact lens technologies to develop potential contact lens treatments designed to slow the progression of myopia in children, and the acquired exclusive licenses for the commercialization and development in the U.S. and Canada of: (i) a microdose formulation of atropine ophthalmic solution, which is being investigated for the reduction of pediatric myopia progression in children ages 3-12; (ii) Xipere™ which ifwas approved by the U.S. Food and Drug Administration ("FDA")~~, will be~~ in October 2021, and is the first treatment ~~for~~available in the U.S. that utilizes the suprachoroidal space to treat patients suffering from macular edema associated with uveitis; and (iii) NOV03, an investigational drug with a novel mechanism of action to treat Dry Eye Disease ("DED") associated with Meibomian gland dysfunction ("MGD"). and has demonstrated statistically significant topline data in two Phase 3 studies. We also acquired the U.S. rights to EM-100, which was recently launched as Alaway® Preservative-Free and is the first OTC preservative-free formulation eye drop for the temporary relief of itchy eyes due to pollen, ragweed, grass, animal hair and dander in adults and children 3 years of age and older. We believe investments in these investigational treatments, if approved by the FDA, will complement, and help build upon, our strong portfolio of integrated eye health products.

The Salix segment - consists of sales in the U.S. of GI products, which in aggregate accounted for approximately 24%, 24% and 23% of our Company's revenues for the ~~six~~nine months ended ~~June~~September 30, 2021 and the years 2020 and 2019, respectively. The Salix segment includes our Xifaxan® product which accounted for approximately 19%, 18% and 17% of our Company's revenues for the ~~six~~nine months ended ~~June~~September 30, 2021 and the years 2020 and 2019, respectively.

We have been making investments in our Salix business since 2017, including: (i) hiring 200 trained and experienced sales force representatives to expand the commercial field force for Xifaxan®, (ii) increasing the focus on the development of next generation formulations of our Salix intellectual property to address new indications, (iii) completing the strategic acquisition of certain assets of Synergy Pharmaceuticals Inc. (“Synergy”), which included the Trulance® product, and (iv) increasing the number of sales force representatives for Trulance®. In addition, we have entered into licensing agreements for investigational products, which, once developed and if approved by the FDA, will be new treatments for certain GI and liver diseases and we anticipate will contribute to the future growth. Each of these opportunities potentially provides us with the ability to expand our GI portfolio and allows us to leverage our existing GI sales force, supply channel and distribution channel.

The International Rx segment - consists of sales, ~~other than~~with the exception of sales of ~~our~~ Bausch + Lomb products and Solta aesthetic medical devices, ~~in Canada, Europe, Asia, Australia, Latin America, Africa~~outside the U.S. and ~~the Middle East~~Puerto Rico of branded pharmaceutical products, branded generic pharmaceutical products and OTC products, which in aggregate accounted for approximately ~~15%~~14%, 15% and 13% of our Company's revenues for the ~~six~~nine months ended ~~June~~September 30, 2021 and the years 2020 and 2019, respectively. Principal products within our International Rx segment include Bisocard®, Thrombo ASS®, Contrave® / Mysimba®, Jublia®, Ivexterm® and Espaven®.

The Ortho Dermatologics segment - consists of: (i) sales in the U.S. of Ortho Dermatologics (dermatological products) and (ii) global sales of Solta aesthetic medical devices. Revenues from the Ortho Dermatologics segment accounted for approximately 7% of our Company's revenues for the ~~six~~nine months ended ~~June~~September 30, 2021 and the years 2020 and 2019.

The Ortho Dermatologics business is our medical dermatology business dedicated to the treatment of a range of therapeutic areas, including psoriasis, actinic keratosis, acne, atopic dermatitis, onychomycosis and other dermatoses. As part of our business strategy for the Ortho Dermatologics business, we have made significant investments to build out our psoriasis, atopic dermatitis and acne product portfolios, which are the markets within dermatology where we see the greatest opportunities, with a focus on topical gel and lotion products over injectable biologics. We continue to support the use of injectable biologics; however, we believe some patients prefer topical products as an alternative to injectable biologics. Further, as topical products can, in many cases, defer the use of injectable biologics that often come with associated risk/benefit profiles, a topical product is usually readily adopted by payors, is less expensive and can be more cost-effective than injectable biologics. Therefore, we believe topical products represent alternative treatments for physicians, payors and patients, and as the preferred choice of treatment, have the potential to drive greater volumes, generate better margins and potentially be a key contributing factor of our Ortho Dermatologics business.

Our Solta business is ~~dedicated to~~a leading global aesthetic medical device business focused on the development, manufacture and sale of innovative ~~treatment~~ technologies that provide ~~proven and effective medical~~ aesthetic and therapeutic ~~benefits to consumers.~~benefits. Global Solta revenues were ~~$145~~$219 million, ~~$93~~$166 million, $253 million and $194 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 and the years 2020 and 2019, respectively. The increase in revenue is primarily attributable to ~~Next Generation~~next generation Thermage FLX®, a fourth-generation non-invasive treatment option using a radiofrequency platform designed to optimize key functional characteristics and improve patient outcomes. During 2018 and 2019, ~~Next Generation~~next generation Thermage FLX® was launched in Hong Kong, Japan, Korea, Taiwan, Philippines, Singapore, Indonesia, Malaysia, China, Thailand, Vietnam, and Australia as part of our Solta aesthetic medical ~~aesthetic device~~devices portfolio. These launches have been successful as ~~Next Generation~~next generation Thermage FLX® revenues were ~~$73~~$110 million, ~~$53~~$94 million, $142 million and $77 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 and the years 2020 and 2019, respectively. We expect additional launches of ~~Next Generation~~next generation Thermage FLX® in Europe in the near term, paced by country-specific regulatory registrations. Consistent with our business strategy to continually update and improve our technology, in 2021, we launched, in the U.S., our next generation Clear + Brilliant®Touch system which is designed to deliver a customized and more comprehensive treatment protocol by providing patients of all ages and skin types the benefits of two wavelengths. The launch of our next generation Clear + Brilliant®Touch in the U.S. is expected to serve as a foundation for future launches in Asia and Europe.

The Diversified Products segment - consists of sales in the U.S. of: (i) pharmaceutical products in the areas of neurology and certain other therapeutic classes, such as Wellbutrin®, Aplenzin®, Cuprimine®, Ativan® and Migranal®, (ii) generic products, such as Uceris® authorized generic (“AG”), Elidel® AG, Migranal® AG and Diastat® AG, and (iii) dentistry products, such as Arestin® and NeutraSal®. Revenues from our Diversified Products segment accounted for approximately 10%, 12% and 13% of our Company's revenues for the ~~six~~nine months ended ~~June~~September 30, 2021 and the years 2020 and 2019, respectively. The Company utilizes the Diversified Products segment to extend the long-term cash flows from a number of assets that are expected to decline over time due to the loss of exclusivity, by launching and selling authorized generic versions of certain branded assets.

For a comprehensive discussion of our business, business strategy, products and other business matters, see Item 1. “Business” included in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC and the Canadian Securities Administrators ("CSA") on February 24, 2021.

Our Focus on Value

In 2016, we retained a new executive team which implemented a multi-year plan designed to transform and bring out value in our Company. The multi-year plan increased our focus on, among other factors, our: product portfolio, infrastructure, geographic footprint, capital structure and risk management. Since that time, we have been executing and continue to execute on our commitments to transform the Company and generate value. Under the multi-year plan we have taken the following actions, among others:

•divested non-core assets in order to narrow the Company's activities to our core businesses where we believe we have an existing and sustainable competitive edge and the ability to generate operational efficiencies. To date, we received approximately $4,100 million in net proceeds from these divestitures, ~~and~~which includes the sale of Amoun Pharmaceutical Company S.A.E. ("Amoun"), as discussed below, which we divested inon July 26, 2021;

•made strategic investments in our core businesses in order to support recent revenue growth and prepare for additional growth opportunities we plan to capitalize on for our core businesses;

•resolved many of the Company's legacy litigation matters originating back to 2015 and prior, including the most significant legacy legal matter, the U.S. Securities Litigation settlement discussed below, significantly reducing related possible disruptions and other uncertainties to our operations.

We believe that these and other positive actions we have taken to transform our Company, have properly focused our operations and improved our capital structure, and we also believe that, as a result of such actions, we are now presented with an opportunity to unlock additional value across our portfolio of assets by creating two highly attractive but dissimilar businesses.

Proposed Separation of the Bausch + Lomb Eye Health Business and Proposed IPO of Solta Medical Business

On August 6, 2020, we announced that we intend to separate our eye health business into an independent publicly traded entity, Bausch + Lomb, from the remainder of Bausch Health Companies Inc. The Bausch + Lomb entity will consist of the Company's Bausch + Lomb Global Vision Care, Global Consumer, Global Surgical and Global Ophthalmology Rx businesses. We remain committed to this plan and continue to believe this is an opportunity to unlock additional value across our portfolio of assets.

At the time of our announcement, we emphasized that it is important that the post-separation entities be well capitalized, with appropriate leverage and with access to additional capital, if and when needed, to provide each entity with the ability to independently allocate capital to areas that will strengthen their own competitive positions in their respective lines of business and position each entity for sustainable growth. Therefore, we see the appropriate capitalization and leverage of these businesses post-separation as a key to bringing out the maximum value across our portfolio of assets and, so, it is a primary objective of our plan of separation.

We also previously stated that all options for achieving the appropriate capitalization and leverage for these entities post-separation were being considered. Management continues to consider alternative means of achieving these outcomes, including dispositions in our business that we believe represent attractive opportunities for the Company and are in line with our plan of separation. This informed our decision to divest Amoun on July 26, 2021 and, as discussed below, use the net proceeds to repay certain debt obligations. It has also informed, in part, our decision to pursue an initial public offering of our Solta aesthetic medical ~~aesthetic~~device business (“Solta Medical”) (the “Solta IPO”), which we publicly announced on August 3, 2021. We believe that the Solta IPO will enable us to further repay certain of our debt obligations. However, we also believe that the Solta IPO will allow us to unlock the value of this high-growth business and give us ownership of a valuable financial asset that would compare more favorably to other medical aesthetic companies.

We intend to use the proceeds from the B+L Separation and the Solta IPO to repay, to the extent possible, a portion of our existing debt, thereby improving our capitalization and leverage. We believe the B+L Separation and the Solta IPO provides us with an attractive opportunity for liquidity to support the appropriate capitalization and leverage of the Bausch + Lomb entity, the Solta Medical entity and the remainder of Bausch Health Companies Inc., which we refer to as “Bausch Pharma” and will assume a new name upon completion of the B+L Separation. However, management continues to consider the forms of the B+L Separation and the Solta IPO and is exploring a number of alternative capitalization structures in order to properly capitalize the three entities.

The B+L Separation and the Solta IPO will establish three separate companies that include:

•Bausch + Lomb - a fully integrated, pure play eye-health company built on the iconic Bausch + Lomb brand and long history of innovation;

•Solta Medical - a leading global ~~provider~~aesthetic medical device company focused on the development, manufacture and sale of ~~medical~~innovative technologies that provide aesthetic ~~devices, with a history of being a pioneer in the non-surgical skin tightening category;~~and therapeutic benefits; and

•Bausch Pharma - a diversified pharmaceutical company with leading positions in gastroenterology, dermatology, neurology and international pharmaceuticals. The remaining pharmaceutical entity will comprise a diversified portfolio of our leading durable brands across the Salix, International Rx, dentistry, neurology, medical dermatology and generics businesses.

~~quarter~~Solta IPO as early as December 2021 or January 2022. Subject to receipt of ~~2021. We have also begun the process of addressing the organization design~~regulatory, stock exchange and ~~structure~~other approvals and market conditions we expect to launch an IPO of the Bausch + Lomb entity as early as thirty days subsequent to the Solta ~~Medical entity post-separation.~~IPO. We expect to complete the Separation of Bausch + Lomb, following the expiry of customary lock-ups and achievement of targeted debt leverage ratios, subject to receipt of applicable shareholder and other necessary approvals.

As of the date of this filing, the determination of the capitalization of the three entities is evolving, and we do not have a definitive timetable to finalize the respective capital structures. Although a public offering of a portion of the Bausch + Lomb and/or the Solta Medical businesses are among the alternate capital structures being considered, this Form 10-Q does not constitute an offer of any securities of the Bausch + Lomb or Solta Medical entities for sale.

In addition to the capitalization and leverage ratios of each entity, there are considerations, approvals and conditions, including market conditions, that will determine the ultimate timing and structure of these transactions, including regulatory approvals, final approval by our board of directors, any shareholder vote requirements that may be applicable, compliance with U.S. and Canadian securities laws and stock exchange rules, receipt of any applicable opinions and/or rulings with respect to the Canadian and U.S. federal income tax treatment of such ~~transaction~~transactions and determination of the pro forma capitalizations of the three entities. The failure to satisfy all of the required conditions could delay the completion of these transactions for a significant period of time or prevent them from occurring at all. In addition to our internal organization and structure work, we will need to complete a number of additional steps that will depend on the ultimate structure of the transactions (in addition to obtaining the regulatory approvals and satisfying the conditions described above) before we can complete the B+L Separation and/or the Solta IPO. As a result, there can be no assurance as to the timing of the completion of both or either of these transactions or their terms, and the information in this Form 10-Q relating to each transaction is preliminary and may change as the transactions progress and any such changes and their impact on the Company, or any of the companies that result from the consummation of any of these transactions, may be material.

See Item 1A. “Risk Factors — Risk Relating to the Separation” of our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC and the CSA on February 24, 2021, for additional risks relating to the B+L Separation. See Item 1A. “Risk Factors — Risk Relating to the Proposed IPO of the Solta Aesthetic Medical ~~Aesthetics~~Device Business" of ~~this~~Part II of our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed with the SEC and CSA on August 3, 2021, for additional risks relating to the Solta IPO.

Divest Assets to Improve Our Capital Structure and Simplify Our Business

In order to better focus on our core businesses, we continue to evaluate opportunities to simplify our operations and improve our capital structure, including dispositions of various assets. For example, on ~~March 31,~~July 26, 2021, we ~~announced~~completed the sale of Amoun for total gross consideration of approximately $740 million, subject to certain adjustments (the “Amoun Sale”). Amoun manufactures, markets and distributes branded generics of human and animal health products. The Amoun business was part of the International Rx segment ~~(formerly~~(previously included within the former Bausch + Lomb/International segment). ~~The Amoun Sale closed on July 26, 2021.~~ Revenues associated with Amoun were ~~$118~~$157 million for the period of January 1, 2021 through July 26, 2021 and were $247 million, $220 million and $183 million for ~~the six months ended June 30, 2021 and~~ the years 2020, 2019 and 2018, respectively. On July 30, 2021 and August 3, 2021, the Company made aggregate payments of $600 million, to repay $469 million of its June 2025 Term Loan B Facility and $131 million of its November 2025 Term Loan B Facility, using the net proceeds from the Amoun Sale and cash on hand.

We are actively considering further dispositions of various assets in line with this strategy. While we anticipate that any future divestiture activities will be on non-core assets, consistent with our duties to our shareholders and other stakeholders, we will consider dispositions in core areas that we believe represent attractive opportunities for the Company. See Note 4, "ACQUISITION, LICENSING AGREEMENTS AND ~~ASSETS HELD FOR SALE"~~DIVESTITURE" to our unaudited interim Consolidated Financial Statements for additional information.

Impacts of COVID-19 Pandemic

~~Our Operating Results~~

Our 2020 revenues were most negatively impacted during our second quarter by the social restrictions and other precautionary measures taken in response to the COVID-19 pandemic. However, as governments began lifting social restrictions, allowing offices of certain health care providers to reopen and certain surgeries and elective medical procedures to proceed, the negative trend in the revenues of certain businesses began to level off and stabilize prior to our third quarter of 2020. After the launch of effective vaccines in December 2020, infection rates began to decline in 2021 signaling the beginning of a ~~potential~~ recovery from the COVID-19 pandemic.

Our revenues were ~~$2,100~~$6,238 million for the ~~three~~nine months ended ~~June~~September 30, 2021, as compared to ~~$1,664~~$5,814 million for the ~~three~~nine months ended ~~June~~September 30, 2020, a year-over-year increase of ~~$436~~$424 million, or ~~26%~~7%, and primarily reflects the positive impacts from the recovery from the COVID-19 pandemic. In the U.S., the recovery in our GI, surgical, vision care, ophthalmology and dentistry businesses continues to progress, as offices of certain health care providers have reopened and most surgeries and elective medical procedures proceed, while our U.S. consumer and Solta medical aesthetics businesses had been less impactedpandemic, partially offset by the ~~COVID-19 pandemic. The recovery~~impact of our ~~businesses in China seems to be further along than the rest~~divestiture of our business in Asia, as the revenues of many of our businesses in China have returned to their pre-pandemic levels. Although certain social restrictions were lifted in Europe during the summer of 2020, recovery in this region has been more gradual, as consumers have been slower to return to their pre-pandemic habits. Further, various geographies reinstituted lockdowns or partial lockdowns as needed in response to resurgence of the original COVID-19 virus and as variant strains, such as the delta variant were identified. For instance, parts of Europe, such as England, Germany, France and Ireland, and parts of Canada, parts of Southeast Asia and Japan returned to lockdowns of various lengths and enacted or are still considering enacting other social restrictions. During the first half of 2021, the daily average number of new COVID-19 cases in the U.S. declined and vaccinations in certain U.S. geographies reached sufficiently high levels such that many government and social restrictions were lifted. However variant strains of the virus, particularly the delta variant, have been identified in the U.S. and a portion of the country's residents have demonstrated reluctance to get vaccinated. Further, for various logistical, regulatory, economical, governmental and/or other availability factors, certain geographies outside the U.S. have limited access to effective vaccines allowing the spread of the original virus and variant strains such as the delta variant, to develop. These factors are challenges to achieving herd immunity in the U.S. and globally and could lead to a resurgence and new lockdowns or other social restrictions globally.

Amoun on July 26, 2021. Presuming there continues to be increased availability of effective vaccines and any resurgence of the COVID-19 virus and variant strains thereof, such as the delta variant, do not have a material adverse impact on efforts to contain the COVID-19 virus, the Company anticipates an ongoing, gradual global recovery from the significant macroeconomic and health care impacts of the pandemic. However, the rates of recovery for each business will vary by geography and will be dependent upon, among other things, the availability and effectiveness of vaccines for the COVID-19 virus and variant strains thereof, government responses, rates of economic recovery, precautionary measures taken by patients and customers, the rate at which remaining social restrictions are lifted and, once lifted, the presumption that social restrictions will not be materially reenacted in the event of a resurgence of the virus or variant strains thereof and other actions taken in response to the COVID-19 pandemic.

At the current pace of the recovery, we anticipate that our revenues will likely return to pre-pandemic levels for many of our businesses and geographies in ~~2021.~~2021 and for the remaining businesses and geographies in 2022. However, as our revenues were most negatively impacted by the social restrictions and other precautionary measures taken in response to the COVID-19 pandemic during our second quarter of 2020, we expect the rate of growth for the remainder of 2021 to be lower than the year-over-year revenue growth for the ~~six~~nine months ended ~~June~~September 30, 2021.

Although we put in place procedures to mitigate the risks associated with closures and disruptions at our manufacturing facilities, the COVID-19 pandemic temporarily impacted the manner in which we managed our inventories and inventory levels. The negative impact of the COVID-19 pandemic on the demand for many of our products necessitated that we, among other things, shorten production runs to reduce inventories and mitigate inventory losses. The shorter production runs, the costs associated with idling certain facilities during government mandated lockdowns and the costs of the precautionary measures taken at our manufacturing facilities in response to the COVID-19 pandemic resulted in manufacturing variances,

preserve cash during the COVID-19 pandemic. These profit protection measures were successful in expanding the profit margins in many of our businesses, as referenced in the discussion of our operating results below. In 2021, we began allocating more resources to selling and other promotional activities in support of our existing products, product launches and products in development. ~~Should the pace of recovery in each geography accelerate, we expect to allocate more resources to these activities to drive our return to sustainable revenue and profit growth.~~ As a result, ifour Selling, general & administrative ("SG&A") and R&D expenses increased 12% and 5% during the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020, respectively. As the recovery continues, we expect to continue to see our operating expenses infor the remainder of 2021 to exceed our operating expenses over the same period in 2020.

We believe our diverse portfolio of durable products and strong brands has served us well through the COVID-19 pandemic and we continue to be well-positioned to grow market share and return to growth as the world recovers. However, this situation remains very fluid and we continue to monitor the availability and effectiveness of vaccines and any resurgence of the COVID-19 virus, the delta variant and other variant strains thereof on our operations, businesses and primary goals. Given these circumstances, we continue to focus on: (i) revising our go-to-market and sales force strategies to address the changing business dynamics created by the COVID-19 pandemic, (ii) building out our e-commerce presence to enable us to reach customers in new ways, (iii) investing in our key promoted brands and product launches to increase market share, (iv) optimizing our cost structure and (v) looking for key trends in the market to meet changing consumer/patient needs and identify areas for investment and growth. We believe focusing on these priorities will best enable us to effectively manage the changing business dynamics created by the COVID-19 pandemic, best prepare us for a possible resurgence of the virus and any variant strains thereof and return us to growth during the recovery from the COVID-19 pandemic.

The changes in our segment revenues and segment profits, including the impacts of COVID-19 pandemic related matters for the three and ~~six~~nine months ended ~~June~~September 30, 2021, are discussed in further detail in the respective subsequent section “ — Reportable Segment Revenues and Profits”.

For a further discussion of these and other COVID-19 related risks, see Item 1A. "Risk Factors— Risk Relating to COVID-19" of our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC and the CSA on February 24, 2021.

Focus on Core Businesses

In order to continue to focus on our core businesses we have: (i) directed capital allocation to drive growth within our core businesses, (ii) made measurable progress in effectively managing our capital structure, (iii) increased our efforts to improve patient access and (iv) continued to invest in sustainable growth drivers to position us for long-term growth.

Direct Capital Allocation to Drive Growth Within Our Core Businesses

Our capital allocation is driven by our long-term growth strategies. We have been aggressively allocating resources to promote our core businesses globally through: (i) strategic acquisitions, (ii) R&D investment, (iii) strategic licensing agreements and (iv) strategic investments in our infrastructure. The outcome of this process allows us to better drive value in our product portfolio and generate operational efficiencies.

Strategic Acquisitions

We remain very selective when considering any acquisition and pursue only those opportunities that we believe align well with our current organization and strategic plan. We sometimes refer to these opportunities as "bolt on" acquisitions. In being selective, we seek to enter into only those acquisitions that provide us with significant synergies with our existing business, thereby minimizing risks to our core businesses and providing long-term growth opportunities. Recently, we have entered into transactions that, although not immediately impactful to our operating results, are expected to be accretive to our bottom line in future years and contribute to our long-term growth strategies.

In March 2019, we completed the acquisition of certain assets of Synergy whereby we acquired the worldwide rights to the Trulance® (plecanatide) product, a once-daily tablet for adults with chronic idiopathic constipation, or CIC, and irritable bowel syndrome with constipation, or IBS-C. We believe that the Trulance® product complements our existing Salix products and allows us to effectively leverage our existing GI sales force. In order to drive growth of the Trulance® product, we have increased the number of sales force representatives for the Trulance® product. ~~This~~We believe this has been successful as Trulance® revenues were ~~$49~~$74 million and ~~$36~~$58 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively.

We are considering further acquisition opportunities within our core therapeutic areas, some of which could be material in size.

R&D Investment

We continuously search for new product opportunities through internal development and strategic licensing agreements, that, if successful, will allow us to leverage our commercial footprint, particularly our sales force, and supplement our existing product portfolio and address specific unmet needs in the market.

Our internal R&D organization focuses on the development of products through clinical trials. As of December 31, 2020, approximately 1,300 dedicated R&D and quality assurance employees in 23 R&D facilities were involved in our R&D efforts internally.

We have approximately 200 projects in our global pipeline. Certain core internal R&D projects that have received a significant portion of our R&D investment in current and prior periods are listed below. However, due to the challenges of the COVID-19 pandemic, most notably those attributable to "stay at home" orders and travel restrictions, certain of our R&D activities were forced to pause in 2020. Clinical trials that started prior to governmental shutdowns remained enrolled and existing patients ~~have~~ progressed, while new patient enrollments were paused as most trial sites were not able to accept new patients. However, during our third quarter of 2020, we saw the pace of new patient enrollments increase, and, although certain of our projects are moving slower than we would like due to the impacts of the COVID-19 pandemic, through the date of this filing we have not had to make changes to our development timelines that would have a material impact on our current or future operating results.

We continue to monitor the timing and completion of our ongoing and anticipated clinical trial programs. As of the date of this filing, the delays in our clinical trials have not had a material impact on our operating results; however, a resurgence of the virus significant enough to necessitate reenacting certain social restrictions could result in unanticipated delays in our ability to conduct new patient enrollments. Other possible COVID-19 pandemic and resurgence related challenges include, but are not limited to, facility closures, delays by third-party service providers, deferrals of doctor visits, postponement of elective medical procedures and surgeries and changes in prioritization by the FDA and other regulatory authorities. Delays, if any, caused by the COVID-19 pandemic and a possible resurgence of the virus or variant strains thereof such as these and others will likely adversely affect the timely approval, launch and commercialization and the commercial success of our products, particularly those in early stage clinical trials. As a result, our estimates regarding the timing and success of our R&D efforts (some of which are set out below), including as it relates to study initiation, enrollment and completion, availability of study results, regulatory submissions, regulatory approvals and commercial launches, may change.

Bausch + Lomb

•SiHy Daily - A silicone hydrogel daily disposable contact lens designed to provide clear vision throughout the day. In September 2018, we launched SiHy Daily in Japan under the branded name AQUALOX™ ONE DAY. In August 2020, we launched SiHy Daily in the U.S. under the branded name Bausch + Lomb INFUSE™® SiHy Daily Disposable contact lens. In the fourth quarter of 2020, SiHy Daily was launched in Australia, Hong Kong and Canada under the branded name Bausch + Lomb Ultra® ONE DAY. SiHy Daily has also received regulatory approval for New Zealand, South Korea, Singapore and Malaysia, where it will be branded as Bausch + Lomb Ultra® ONE DAY.

•enVista® Trifocal intraocular lens - An innovative lens design. We initiated an investigative device exemption study for this product in May 2018 and initiated the last phase of this three-phase study in the fourth quarter of 2020. We expect to complete enrollment during the fourth quarter of 2021 for the Canadian study and during the first half of 2022 for the U.S. study.

•SimplifEYE™® preloaded intraocular lens injector platform for enVista intraocular lens - We have received approvals from the European Union and Canada and received FDA clearance for the injector and launched this platform in October 2020.

•Extended depth of focus intraocular lens - Currently under development, however, the timing and completion of which has been delayed due to COVID-19 pandemic related matters. Once development is completed, and if approved, we anticipate that this product could be launched in ~~the first half of 2022.~~2023.

•Bausch + Lomb ULTRA® monthly silicone hydrogel lens - Specifically designed to address the lifestyle and vision needs of patients with MoistureSeal® technology, which maintains 95% of contact lens moisture for a full 16 hours. In the second quarter of 2020, Bausch + Lomb ULTRA® received a seven day extended wear indication approval from the European Union and received regulatory approval from the National Medical Products Administration in China.

•Bausch + Lomb ULTRA® Multifocal for Astigmatism contact lens - The first and only multifocal toric lens available as a standard offering in the eye care professional's fit set. The new monthly silicone hydrogel lens, which was specifically designed to address the lifestyle and vision needs of patients with both astigmatism and presbyopia, combines the Company's unique 3-Zone Progressive™ multifocal design with the stability of its OpticAlign® toric with MoistureSeal® technology to provide eye care professionals and their patients an advanced contact lens technology that offers the convenience of same-day fitting during the initial lens exam. Bausch + Lomb ULTRA® Multifocal for Astigmatism was launched in June 2019 and received European Union regulatory approval in the second quarter of 2020. In July 2021, we launched an extended parameter range.

•Renu® Advanced Multi-Purpose Solution (“MPS”) - Contains a triple disinfectant system that kills 99.9% of germs, and has a dual surfactant system that provides up to 20 hours of moisture. Renu® Advanced MPS is FDA cleared with indications for use to condition, clean, remove protein, ~~disinfectant,~~disinfect, rinse and store soft contact lenses including those composed of silicone hydrogels. Renu® Advanced MPS has gained regulatory approvals in Korea, India, Mexico, Indonesia, Malaysia, Singapore and, during the second quarter of 2020, the European Union.

• In 2021, Renu~~Custom soft contact lens (Ultra Buttons) - A latheable silicone hydrogel button for custom soft specialty lenses including; Sphere, Toric, Multifocal, Toric Multifocal~~® Advanced MPS was launched in Greece and ~~irregular corneas. This project has been placed on hold as we reprioritize other projects~~gained regulatory approvals in ~~our pipeline.~~China and Taiwan.

•Zen™ Multifocal Scleral Lens for presbyopia - In January 2019, we launched this product exclusively available with Zenlens™ and Zen™ RC scleral lenses and will allow eye care professionals to fit presbyopic patients with regular and irregular corneas and those with ocular surface disease, such as dry eye. The Zen™ Multifocal Scleral Lens incorporates decentered optics, enabling the near power to be positioned over the visual axis.

•Tangible® Hydra-PEG® - A high-water polymer coating that is bonded to the surface of a contact lens and designed to address contact lens discomfort and dry eye. We launched this product in March 2019. Tangible® Hydra-PEG® coating technology in combination with our Boston® materials and Zenlens™ family of scleral lenses will help eye care professionals provide a better lens wearing experience for their patients with challenging vision needs.

•Envive™ - In October 2020, we launched, on a limited basis, a probiotic supplement that was developed to address gastrointestinal disturbances. In April 2021, we expanded the launch to additional territories in the U.S.

•Amiselimod (S1P modulator) - We commenced a Phase 2 study during the first half of 2021 to evaluate Amiselimod (S1P modulator) for the treatment of mild to moderate ulcerative colitis.

Dermatology

•Arazlo® (tazarotene) Lotion, 0.045% (formerly Internal Development Project ("IDP")-123) - In June 2020, we launched this acne product containing lower concentration of tazarotene in a lotion form to help reduce irritation while maintaining efficacy.

•IDP-120 - An acne product with a fixed combination of mutually incompatible ingredients: benzoyl peroxide and tretinoin. Phase 3 clinical studies have been completed and met the primary endpoints. We are currently evaluating next steps for this project.

•IDP-126 - An acne product with a fixed combination of benzoyl peroxide, clindamycin phosphate and adapalene. Phase 3 clinical studies initiated in December 2019 were paused due to COVID-19 pandemic related factors, but resumed in June 2020. ~~The first~~Both Phase 3 ~~study has~~studies have been completed and ~~the second Phase 3~~have met their primary endpoints. A comparative bridging safety and efficacy study ~~showed statistically significant topline results.~~was delayed until 2021 due to COVID-19. The bridging study is ongoing. We anticipate filing ~~an NDA~~a New Drug Application ("NDA") in the second half of 2022.

•Clear + Brilliant® Touch - Next generation Clear + Brilliant® laser that is designed to deliver a customized and more comprehensive treatment protocol by providing patients of all ages and skin types the benefits of two wavelengths. This product was launched in the U.S. in March 2021.

Strategic Licensing Agreements

To supplement our internal R&D initiatives and to build-out and refresh our product portfolio, we also search for opportunities to augment our pipeline through arrangements that allow us to gain access to unique products and investigational treatments, by strategically aligning ourselves with other innovative product solutions.

In the normal course of business, the Company will enter into select licensing and collaborative agreements for the commercialization and/or development of unique products primarily in the U.S. and Canada. These products are sometimes investigational treatments in early stage development that target unique conditions. The ultimate outcome, including whether the product will be: (i) fully developed, (ii) approved by the FDA or other regulators, (iii) covered by third-party payors or (iv) profitable for distribution, is highly uncertain. Under certain agreements, the Company may be required to make payments contingent upon the achievement of specific developmental, regulatory, or commercial milestones.

In October 2020, we announced that we had entered into two exclusive license agreements which present us with unique developmental opportunities to address the unmet need of treatment for myopia in children. The first of these two licensing agreements is with Eyenovia, Inc. for the development and commercialization in the United States and Canada of an

investigational microdose formulation of atropine ophthalmic solution, which is being investigated for the reduction of pediatric myopia progression, also known as nearsightedness, in children ages 3-12. We expect to complete enrollment for a Phase 3 study during the second half of 2022. If approved by the FDA, we believe this investigational product could potentially change the treatment paradigm for the reduction of myopia progression in children. The second is an exclusive global licensing agreement with BHVI for a myopia control contact lens design developed by BHVI. The Company plans to pair BHVI's novel contact lens design with our leading contact lens technologies to develop potential contact lens treatments designed to slow the progression of myopia in children.

In December 2019, we announced that we had acquired an exclusive license from Novaliq GmbH for the commercialization and development in the U.S. and Canada of the investigational treatment NOV03 (perfluorohexyloctane), a first-in-class investigational drug with a novel mechanism of action to treat DED associated with MGD. In an Open Label Safety study, NOV03 has achieved its enrollment target. In April 2021, we announced statistically significant topline data from the first of two Phase 3 studies and ~~anticipate the readout of~~in September 2021, we announced statistically significant topline ~~results~~data from the second Phase 3 ~~study during the second half of 2021 and~~study. We anticipate filing an NDA in the first half of 2022. If approved by the FDA, we believe the addition of this investigational treatment for DED will help build upon our strong portfolio of integrated eye health products.

In October 2019, we acquired an exclusive license from Clearside Biomedical, Inc. ("Clearside") for the commercialization and development of Xipere™ (triamcinolone acetonide suprachoroidal injectable suspension) in the U.S. and Canada. Xipere™ is a proprietary suspension of the corticosteroid triamcinolone acetonide formulated for suprachoroidal administration via Clearside's proprietary SCS Microinjector™ ~~that is being investigated as a targeted~~. In October 2021, the FDA approved Xipere™ for suprachoroidal use for the treatment of macular edema associated with uveitis. ~~In June 2021, the FDA accepted the resubmitted NDA for~~We expect to make Xipere™ ~~and assigned a Prescription Drug User Fee Act date~~available during the first quarter of ~~October 30, 2021.~~2022.

In April 2019, we entered into two licensing agreements which present us with unique developmental opportunities to address unmet needs of individuals suffering with certain GI and liver diseases. The first of these two licensing agreements iswas with the University of California for certain intellectual property relating to an investigational compound targeting the pituitary adenylate cyclase receptor 1 in non-alcoholic fatty liver disease (“NAFLD”), nonalcoholic steatohepatitis (“NASH”) and other GI and liver diseases. However, as some early non-clinical (in-vitro) development work did not meet our internal expectations, in September 2021, we made the decision to terminate this license agreement and notified the University of California accordingly. The second is an exclusive licensing agreement with Mitsubishi Tanabe Pharma Corporation to develop and commercialize MT-1303 (amiselimod), a late-stage oral compound that targets the sphingosine 1-phosphate receptor that plays a role in autoimmune diseases, such as inflammatory bowel disease and ulcerative colitis. We have completed a thorough QTC study, which evaluated the cardiac safety profile of the compound. Topline results were positive and we commenced a Phase 2 study in the first half of 2021.

Strategic Investments in our Infrastructure

In support of our core businesses, we have and continue to make strategic investments in our infrastructure, the most significant of which are at our Waterford facility in Ireland, our Rochester facility in New York and our Lynchburg facility in Virginia.

To meet the forecasted demand for our Biotrue® ONEday range of contact lenses, in July 2017, we placed into service a $175 million multi-year strategic expansion project of the Waterford facility. The emphasis of the expansion project was to: (i) develop new technology to manufacture, automatically inspect and package contact lenses, (ii) bring that technology to full validation and (iii) increase the size of the Waterford facility.

To address the expected global demand for our Bausch + Lomb ULTRA® range of contact lenses, in December 2017, we completed a multi-year, $200 million strategic upgrade to our Rochester facility. The upgrade increased production capacity in support of our Bausch + Lomb Ultra® and SiHy Daily AQUALOX™ product lines and better supports the production of other well-established contact lenses, such as our PureVision®, PureVision®2 (SVS, Toric, and Multifocal), SofLens® 38 and SilSoft®.

To address the expected global demand for our SiHy Daily disposable contact lenses, in November 2018, we initiated $300 million of additional projects to add multiple production lines to our Rochester and Waterford facilities. These production lines have recently been completed and we expect to start production of our latest contact lenses, Bausch + Lomb INFUSE® and ULTRA ONE DAY®, at these facilities by the end of 2021.

To further help us meet the anticipated demand of our contact lenses, in 2020, we initiated an expansion of the Company's Lynchburg distribution center. The new facility is expected to create new jobs over the next five years and expand the overall site to 190,000 square feet, which will provide distribution capabilities for medical devices, primarily contact lens products, and be the main point of distribution for these products in the U.S. This expansion program is expected to be completed in the first half of 2022.

In July 2021, we announced plans to invest an additional ~~$90~~€90 million to increase capacity at our Waterford facility to meet the expected demand for our Biotrue® ONEday range of daily disposable contact lenses. The new production lines are expected to be completed in 2023.

If completed as planned, the recently announced expansion of our Waterford facility will be the fifth major expansion of our Bausch + Lomb manufacturing facilities in support of our efforts to increase market share in the contact lens market in the seven years ending 2023. We believe the investments in our Waterford, Rochester and Lynchburg facilities and related expansion of labor forces further demonstrates the growth potential we see in our Bausch + Lomb products and our eye health business.

Effectively Managing Our Capital Structure

We continue to effectively manage our capital structure by: (i) reducing our debt through repayments, (ii) extending the maturities of debt through refinancing and (iii) improving our credit ratings.

Debt Repayments - Excluding the impact of the $1,210 million financing of the U.S. Securities Litigation settlement ~~discussed below,~~(discussed in the subsequent section titled "OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS"), we have repaid (net of additional borrowings) approximately ~~$9,900~~$10,000 million of long-term debt during the period January 1, 2016 through the date of this filing using the net cash proceeds from divestitures of non-core assets, cash generated from operations and cash generated from tighter working capital management. This includes approximately ~~$1,250~~$1,300 million of repayments (net of additional borrowings) during 2021 using cash on hand, cash generated from operations and ~~a portion of~~ the net proceeds from the Amoun Sale.

2020 Refinancing Transactions - In May and December 2020, we accessed the credit markets and completed a series of transactions, whereby we extended $3,250 million in aggregate maturities of certain debt obligations due to mature in 2022 and 2023 out to 2029 through 2031 and $250 million in aggregate amortization payments due in 2022 out to 2029 (the "2020 Refinancing Transactions"). In addition to extending $3,500 million in payments due in 2022 and 2023 to 2029 through 2031, the 2020 Refinancing Transactions replaced secured debt of $1,500 million with unsecured debt. This provides us with more secured debt capacity under our Restated Credit Agreement and existing indentures if the market for unsecured debt in the future is less favorable. Further, by replacing $1,500 million of secured debt with unsecured debt we now have additional room under the debt maintenance covenant of our 2023 Revolving Credit Facility that requires us to maintain a first lien net leverage ratio of not greater than 4.00 to 1.00. The 2020 Refinancing Transactions also repaid in full €1,500 million of debt denominated in euros, thereby reducing our exposure to fluctuations in the value of the euro.

2021 Refinancing Transactions - In June 2021, we accessed the credit markets and completed a transaction, whereby we: (i) extended $1,600 million in aggregate maturities of certain debt obligations due to mature in 2024 out to 2028 and (ii) refinanced $1,600 million in aggregate of existing 7.00% Senior Secured Notes due 2024 with $1,600 million in aggregate of 4.875% Senior Secured Notes due 2028 (the "2021 Refinancing Transactions").

See Note 10, "FINANCING ARRANGEMENTS" to our unaudited interim Consolidated Financial Statements for the details of our debt portfolio as of ~~June~~September 30, 2021 and December 31, 2020.

The debt repayments and refinancing transactions outlined above have allowed us to: (i) improve our credit ratings, (ii) extend maturities of certain debt obligations due in 2022 through 2024 out to the years 2029 through 2031, (iii) satisfy all debt mandatory amortization payments ~~and maturities until 2025~~ and (iv) reduce our exposure to fluctuations in the value of the euro.

Our prepayment of debt and refinancing transactions over the last four years translate into lower repayments of principal over the next four years, which, in turn, we believe will permit more cash flows to be directed toward developing our core assets, identifying new product opportunities and repaying additional debt amounts. The mandatory scheduled principal repayments of our debt obligations as of ~~June~~September 30, 2021, were as follows:


(in millions)	(in millions)																							(in millions)
2021	2021	2022		2023		2024		2025		2026		2027		2028		2029		2030		2031		Total		2021	2022		2023		2024		2025		2026		2027		2028		2029		2030		2031		Total
$	—	$	—	$	—	$	291	$	10,532	$	1,500	$	2,250	$	3,612	$	3,250	$	1,250	$	1,000	$	23,685	—	$	—	$	—	$	—	$	9,723	$	1,500	$	2,250	$	3,612	$	3,250	$	1,250	$	1,000	$	22,585

On July 30, 2021 and August 3, 2021, the Company made aggregate payments of $600 million, to repay $469 million of its June 2025 Term Loan B Facility and $131 million of its November 2025 Term Loan B Facility, using the net proceeds from the Amoun Sale and cash on hand. On August 2, 2021, the Company redeemed $150 million aggregate principal amount of outstanding 6.125% Senior Notes due 2025 using cash on hand. These payments satisfy in full the $291 million of mandatory repayments in 2024, the $114 million of remaining mandatory repayments in 2025 and also reduces certain maturities due in 2025. As a result of these payments, there are no maturities due until 2025. The following table gives effect to these repayments and shows our mandatory scheduled principal repayments of our debt obligations as of August 3, 2021:

(in millions)
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Total
$ — $ — $ — $ — $ 10,073 $ 1,500 $ 2,250 $ 3,612 $ 3,250 $ 1,250 $ 1,000 $ 22,935

Additionally, on August 3, 2021, we announced we will redeem an additional $350 million in aggregate principal amount of our outstanding 6.125% Senior Notes due 2025 using cash on hand in September 2021, which has not been reflected in the table above.

We continue to monitor our capital structure and to evaluate other opportunities to simplify our business and improve our capital structure, giving us the ability to better focus on our core businesses. While we anticipate focusing any future divestiture activities on non-core assets, consistent with our duties to our shareholders and other stakeholders, we will consider dispositions in core areas that we believe represent attractive opportunities for the Company. Also, the Company regularly evaluates market conditions, its liquidity profile and various financing alternatives for opportunities to enhance its capital structure. If the Company determines that conditions are favorable, the Company may refinance or repurchase existing debt or issue additional debt, equity or equity-linked securities.

See Note 10, "FINANCING ARRANGEMENTS" to our unaudited interim Consolidated Financial Statements and “Management's Discussion and Analysis - Liquidity and Capital Resources: Long-term Debt” for additional discussion of these matters. Cash requirements for future debt repayments including interest can be found in “Management's Discussion and Analysis - Off-Balance Sheet Arrangements and Contractual Obligations.”

Improve Patient Access

Improving patient access to our products, as well as making them more affordable, is a key element of our business strategy.

Patient Access and Pricing Committee - In 2016, we formed the Patient Access and Pricing Committee which is responsible for setting, changing and monitoring the pricing of our products and evaluating contract arrangements that determine the placement of our products on drug formularies. The Patient Access and Pricing Committee considers new to market product pricing, price changes and their impact across channels on patient accessibility and affordability. The Patient Access and Pricing Committee remains committed to limiting the average annual price increase for our branded prescription pharmaceutical products to no greater than single digits and has reaffirmed this commitment for 2021. These pricing changes and programs could affect the average realized pricing for our products and may have a significant impact on our company revenue and profit.

Bausch Health Patient Assistance Program - We are committed to supporting patients who have lost employment health benefits due to the COVID-19 pandemic, and because it is essential that our patients continue their prescribed treatments, we are proud to offer certain of our prescription medicines through our Bausch Health Patient Assistance Program. In the face of the COVID-19 pandemic, some people have financial obstacles that keep them from obtaining and continuing their prescribed treatments. The purpose of the Bausch Health Patient Assistance Program is to provide eligible unemployed patients in the U.S., who have lost their health insurance due to the COVID-19 pandemic, with certain of our prescription products where their financial circumstances or insurance status would otherwise interfere with their ability to access such product. If approved, patients receive their Bausch Health Companies Inc. prescription product(s) at no cost to them for up to one year, and may be able to reapply to the program annually if they continue to meet eligibility requirements and have a valid prescription.

Cash-pay Prescription Program - In February 2019, we launched Dermatology.com, a cash-pay product acquisition program offering certain branded Ortho Dermatologics products directly to patients. In March 2020, the name Dermatology.com was removed as the cash-pay product program name, with the name Dermatology.com limited to only online usage, including future digital teledermatology and e-commerce offerings. The cash-pay program is designed to address the affordability and availability of certain branded dermatology products, when insurers and pharmacy benefit managers are no longer offering those branded prescription pharmaceutical products under their designated pharmacy benefit offerings.

Walgreens Fulfillment Arrangements - In the beginning of 2016, we launched a brand fulfillment arrangement with Walgreen Co. ("Walgreens"). Under the terms of the brand fulfillment arrangement, as amended in July 2019, we made certain dermatology and ophthalmology products available to eligible patients through patient access and co-pay assistance programs at Walgreens U.S. retail pharmacy locations, as well as participating independent retail pharmacies.

Invest in Sustainable Growth Drivers to Position us for Long-Term Growth

We are constantly challenged by the changing dynamics of our industry to innovate and bring new products to market. We have divested certain businesses where we saw limited growth opportunities, so that we can be more aggressive in redirecting our R&D spend and other corporate investments to innovate within our core businesses where we believe we can be most profitable and where we aim to be an industry leader.

We believe that we have a well-established product portfolio that is diversified within our core businesses and provides a sustainable revenue stream to fund our operations. However, our future success is also dependent upon our ability to continually refresh our pipeline, to provide a rotation of product launches that meet new and changing demands and replace other products that have lost momentum. We believe we have a robust pipeline that not only provides for the next generation of our existing products, but is also poised to bring new products to market.

Invest in our Eye Health Business - As part of our global Bausch + Lomb business strategy, we continually look for key trends in the eye health market to meet changing consumer/patient needs and identify areas for investment to extend our market share through new launches and effective pricing.

For instance, there is an increasing rate of myopia, and importantly, myopia as a potential risk factor for glaucoma, macular degeneration and retinal detachment. We continue to see increased demand for new eye health products that address conditions brought on by factors such as increased screen time, lack of outdoor activities and academic pressures, as well as conditions brought on by an aging population (for example, as more and more baby-boomers in the U.S. are reaching the age of 65). To extend our market share in eye health, we continually seek to identify new products tailored to address these key trends for development internally with our own R&D team to generate organic growth. Recent product launches include Biotrue® ONEday daily disposable contact lenses, the next generation of Bausch + Lomb ULTRA® contact lenses, SiHy Daily contact lenses (branded as AQUALOX™ ONE DAY in Japan, Bausch + Lomb INFUSE™® SiHy Daily Disposable in the

U.S. and Bausch + Lomb Ultra® ONE DAY in Australia, Hong Kong and Canada), Lumify® (an eye redness treatment), Vyzulta® (a pressure lowering eye drop for patients with angle glaucoma or ocular hypertension), Ocuvite® Eye Performance (vitamins to protect the eye from stressors such as sunlight and blue light emitted from digital devices) and SimplifEYE™® (preloaded intraocular lens injector platform for enVista intraocular lens).

We also license selective molecules or technology in leveraging our own R&D expertise through development, as well as seek out external product development opportunities. As previously discussed, we acquired a global exclusive license for a myopia control contact lens design developed by BHVI, which we plan to pair with our leading contact lens technologies to develop potential contact lens treatments designed to slow the progression of myopia in children, and exclusive licenses for the commercialization and development in the U.S. and Canada of: a microdose formulation of atropine ophthalmic solution, which is being investigated for the reduction of pediatric myopia progression in children ages 3-12; Xipere™ which ifwas approved by the FDA ~~will be~~in October 2021, and is the first treatment ~~for~~available in the U.S. that utilizes the suprachoroidal space to treat patients suffering from macular edema associated with uveitis; and NOV03, an investigational drug with a novel mechanism of action to treat DED associated with ~~MGD.~~MGD which has demonstrated statistically significant topline data in two Phase 3 studies. We also acquired the U.S. rights to EM-100, which was launched as Alaway® Preservative-Free and is the first OTC preservative-free formulation eye drop for the temporary relief of itchy eyes due to pollen, ragweed, grass, animal hair, and dander in adults and children 3 years of age and older. We believe investments in these investigational treatments, if approved by the FDA, will complement, and help build upon, our strong portfolio of integrated eye health products.

As previously discussed, we have also made strategic investments in our infrastructure, the most significant of which were at our Waterford facility in Ireland to meet the forecasted demand for our Biotrue® ONEday lenses, our Rochester facility in New York to address the expected global demand for our Bausch + Lomb ULTRA® contact lens and our Lynchburg facility in Virginia to be our main point of distribution for medical devices in the U.S. During late 2018, we began investing in additional expansion projects at the Waterford and Rochester facilities in order to address the expected global demand for our SiHy Daily disposable contact lenses, which we launched in Japan in September 2018, under the branded name AQUALOX™ ONE DAY, in the U.S. in August 2020, under the branded name Bausch + Lomb INFUSE™® SiHy Daily Disposable contact lens, and in Australia, Hong Kong and Canada in the fourth quarter of 2020, under the branded name Bausch + Lomb Ultra® ONE DAY.

We believe our recent product launches, licensing arrangements and the investments in our Waterford, Rochester and Lynchburg facilities demonstrate the growth potential we see in our Bausch + Lomb products and our eye health business and that these investments will position us to further extend our market share in the eye health market.

Leveraging our Salix Infrastructure - We strongly believe in our GI product portfolio and we have implemented initiatives, including increasing our marketing presence and identifying additional opportunities outside our existing GI portfolio, to further capitalize on the value of the infrastructure we built around these products to extend our market share.

In the first quarter of 2017, we hired approximately 250 trained and experienced sales force representatives and managers to create, bolster and sustain deep relationships with primary care physicians (“PCP”). With approximately 70% of IBS-D patients initially presenting symptoms to a PCP, we continue to believe that the dedicated PCP sales force is better positioned to reach more patients in need of IBS-D treatment.

This initiative provided us with positive results, as we experienced consistent growth in demand for our GI products throughout 2017 through 2020, which was evident by our growth in Salix revenues of 22% when comparing 2020 to 2017. These results encouraged us to seek out ways to bring out further value through leveraging our existing sales force and, in the later portion of 2018 and in 2019, we identified and executed on certain opportunities which we describe below.

Strategic Acquisition - As previously discussed, in March 2019, we completed the acquisition of certain assets of Synergy, whereby we acquired the worldwide rights to the Trulance® product, a once-daily tablet for adults with chronic idiopathic constipation, or CIC and irritable bowel syndrome with constipation, or IBS-C. We believe that the Trulance® product complements our existing Salix products and allows us to effectively leverage our existing GI sales force.

Licensing Arrangements - As previously discussed, in April 2019, we entered into ~~two~~a licensing agreements. The first is for certain intellectual property relating to an investigational compound targeting the pituitary adenylate cyclase receptor 1 in NAFLD, NASH and other GI and liver diseases. The second isagreement to develop and commercialize MT-1303 (amiselimod), a late-stage oral compound that targets the sphingosine 1-phosphate receptor that plays a role in autoimmune diseases, such as inflammatory bowel disease and ulcerative colitis. ~~These licenses present~~This license presents a unique developmental ~~opportunities~~opportunity to address unmet needs of individuals suffering with certain GI and liver diseases and if developed and approved by the FDA, will allow us to further utilize our existing sales force and infrastructure to extend our market share in the future and create value.

Investment in Next Generation Formulations - Revenues from our Xifaxan® product increased approximately 2%, 22% and 22% in 2020, 2019 and 2018, respectively. In order to extend growth in Xifaxan®, we continue to directly invest in next generation formulations of Xifaxan® and rifaximin, the principal semi-synthetic antibiotic used in our

Xifaxan® product. In addition to ~~one~~three R&D ~~program~~programs in progress, we have ~~three other~~another R&D ~~programs~~program planned for a next generation ~~formulations~~formulation of Xifaxan® (rifaximin) which would address a new ~~indications.~~indication.

We believe that the acquisition and licensing opportunities discussed above will be accretive to our business by providing us access to products and investigational compounds that are a natural pairing to our Xifaxan® business, allowing us to effectively leverage our existing infrastructure and sales force. We believe these opportunities, coupled with our investment in next generation formulations, will allow our GI franchise to continue to further extend market share.

Reposition the Ortho Dermatologics Business to Generate Additional Value - In 2018, we realigned our Solta aesthetic medical ~~aesthetics~~device business and combined it with our medical dermatology business, creating a complete dermatology portfolio. We continue to make investments in our Solta portfolio and anticipate building out our Solta sales force, particularly in Europe, to address the growing demand. Our Ortho Dermatologics business continues to work towards improving the treatment options for medical dermatology patients needing topical acne and psoriasis products. We are exploring additional strategic e-commerce and partnership expansion opportunities which can enable increased accessibility for patients and we continue to invest in our on-market products and evaluate various opportunities for our key pipeline products.

In support of the complete dermatology portfolio, we have taken and are taking a number of actions that we believe will help our efforts to stabilize our dermatology business. These actions include: (i) building on our legacy brands to improve and meet today’s physician relevance and customer service, (ii) appointing new leadership, (iii) making key investments in our core medical device and dermatological products portfolios, (iv) optimizing our go to market strategy by building on our relationships with prescribers of our products to balance our sales portfolio with the business' profitability, (v) refocusing our operational and promotional resources and (vi) improving patient access to our Ortho Dermatologics products through our cash-pay prescription program previously discussed.

During the three months ended March 31, 2021, we identified recent launches of certain Ortho Dermatologics products which are not going to achieve their trajectories as forecasted once the social restrictions associated with the COVID-19 pandemic began to ease in the U.S. and offices of health care professionals could reopen. In addition, insurance coverage pressures within the U.S. continued to persist, limiting patient access to topical acne and psoriasis products. In light of these developments, during the first quarter of 2021, the Company began taking steps to: (i) redirect its R&D spend to eliminate projects it has identified as high cost and high risk, (ii) redirect a portion of its marketing and product development outside the U.S. to geographies where there is better patient access and (iii) reduce its cost structure to be more competitive.

Investment in Our Core Dermatology Portfolio - We have made significant investments to build out our aesthetics, psoriasis and acne product portfolios, which are the markets within dermatology where we see the greatest opportunities to extend our market share.

Aesthetics - In 2017, we launched our ~~Next Generation~~next generation Thermage FLX® product in the U.S., a fourth-generation non-invasive treatment option using a radiofrequency platform designed to optimize key functional characteristics and improve patient outcomes. During 2018 and 2019, ~~Next Generation~~next generation Thermage FLX® was launched in Hong Kong, Japan, Korea, Taiwan, Philippines, Singapore, Indonesia, Malaysia, China, Thailand, Vietnam, and Australia as part of our Solta aesthetic medical ~~aesthetic~~ devices portfolio. These launches have been successful as ~~Next Generation~~next generation Thermage FLX® revenues were ~~$73~~$110 million, ~~$53~~$94 million, $142 million and $77 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 and the years 2020 and 2019, respectively. We expect additional launches of ~~Next Generation~~next generation Thermage FLX® in Europe in the near term, paced by country-specific regulatory registrations. Consistent with our business strategy to continually update and improve our technology, in 2021, we launched, in the U.S., our next generation Clear + Brilliant®Touch system which is designed to deliver a customized and more comprehensive treatment protocol by providing patients of all ages and skin types the benefits of two wavelengths. The launch of our next generation Clear + Brilliant®Touch in the U.S. is expected to serve as a foundation for future launches in Asia and Europe.

Psoriasis - In response to the increasing number of reported cases of psoriasis in the U.S., we launched Duobrii® in June 2019 and launched Bryhali® in November 2018, which align well with our topical portfolio of psoriasis treatments. Although, we continue to support a diverse portfolio of topical and injectable biologics, in order to provide a diverse choice of psoriasis treatments to doctors and patients; we believe some patients prefer topical products as an alternative to injectable biologics.

Acne - In support of our established acne product portfolio, we have developed and launched several products, which ~~includes~~include Arazlo® (tazarotene) Lotion (launched in June 2020), Altreno® (launched in the U.S. in October 2018), the first lotion (rather than a gel or cream) product containing tretinoin for the treatment of acne, and Retin-A Micro® 0.06% (launched in January 2018). We also have a unique acne project in our pipeline that, if approved by the FDA, we believe will further innovate and advance the treatment of acne.

Business Trends

In addition to the actions previously outlined, the events described below have affected and may affect our business trends. The matters discussed in this section contain Forward-Looking Statements. Please see “Forward-Looking Statements” for additional information.

U.S. Tax Reform

OnIn April 7, 2021, U.S. President Joseph Biden proposed changes to the U.S. tax ~~system.~~system and, in September 2021, the House Ways & Means Committee approved a draft reconciliation bill, which included changes to the U.S. tax system which differed in a number of respects from the President’s proposal. The ~~Proposals~~proposals under discussion include changes to the U.S. corporate tax system that would increase U.S. corporate tax rates ~~impose a corporate minimum book tax~~ and ~~double~~raise the tax rate on and make other tax changes to Global Intangible Low Tax Income earned by foreign subsidiaries. Also, under consideration ~~is a replacement of~~are modifications to the Base Erosion and Anti-Abuse Tax ("BEAT") ~~with Stopping Harmful Inversions and Ending Low-Tax Developments ("SHIELD") rules~~, which would ~~deny deductions for~~tax certain ~~related-party~~ payments, including some that are related to inventory, made to ~~low-tax jurisdictions. While it is expected~~affiliates that aare subject to an effective tax ~~reform~~rate of less than 10%. The draft reconciliation bill ~~will be introduced in~~includes additional limitations on the ~~House of Representatives in~~participation exemption for foreign dividends received and interest expense. In addition, the ~~near term, many aspects of~~draft reconciliation bill reduces the ~~current proposals~~carryforward period for unused interest expense to five years and introduces an excise tax on certain pharmaceutical products that are ~~unclear or undeveloped.~~non-compliant with the proposed drug pricing legislation. We are unable to predict which, if any, U.S. tax reform proposals will be enacted into law, and what effects any enacted legislation might have on our liability for U.S. corporate tax. However, it is possible that the enactment of changes in the U.S. corporate tax system could have a material adverse effect on our liability for U.S. corporate tax and our consolidated effective tax rate.

Global Minimum Corporate Tax Rate

~~As part~~On October 8, 2021, the Organisation for Economic Co-operation and Development ("OECD")/G20 inclusive framework on Base Erosion and Profit Shifting (the "Inclusive Framework") published a statement updating and finalizing the key components of ~~its agenda,~~a two-pillar plan on global tax reform originally agreed on July 1, 2021, and a timetable for implementation by 2023. The Inclusive Framework plan has now been agreed to by 136 OECD members, including several countries which did not agree to the ~~Biden Administration is working~~initial plan. Under pillar one, taxing rights over multinational businesses with global turnover above €20 billion and a profit margin above 10% will generally be re-allocated to ~~reach an agreement with other world leaders~~permit market countries to ~~establish~~include market countries. Under pillar two, the Inclusive Framework has agreed on a global minimum corporate tax rate ~~which would mean that no matter where~~of 15% for companies ~~are based, they would pay at least~~with revenue above €750 million, calculated on a ~~certain amount in corporate taxes. In early June~~country-by-country basis. On October 30, 2021, the ~~G7 finance ministers met and came to an agreement on~~G20 formally endorsed the concept of a minimum corporate tax rate. Subsequently, a global corporate tax rate of at least 15% was agreed upon by 131 countries representing more than 90% of global GDP (according to the Organisation for Economic Co-operation and Development), although certain countries such as Ireland, Hungary and Estonia have so far refused to sign up for the minimum tax, creating a potential roadblock because of the need for unanimity on tax issues within the European Union. We are unable to predict what, if any,new global minimum corporate tax rate ~~proposal~~rules. The Inclusive Framework agreement must now be implemented by the OECD Members who have agreed to the plan, effective in 2023. We will continue to monitor the implementation of the Inclusive Framework agreement by the countries in which we operate. While we are unable to predict when and how the Inclusive Framework agreement will be enacted into law ~~and what effects any enacted legislation might have on our liability for corporate tax. However,~~in these countries, it is possible that ~~enactment~~the implementation of athe Inclusive Framework agreement, including the global minimum corporate tax rate could have a material ~~adverse~~ effect on our liability for corporate taxes and our consolidated effective tax rate.

Health Care Reform

The U.S. federal and state governments continue to propose and pass legislation designed to regulate the health care industry. In March 2010, the Patient Protection and Affordable Care Act (the “ACA”) was enacted in the U.S. The ACA contains several provisions that impact our business, including: (i) an increase in the minimum Medicaid rebate to states participating in the Medicaid program, (ii) the extension of the Medicaid rebates to Managed Care Organizations that dispense drugs to Medicaid beneficiaries, (iii) the expansion of the 340(B) Public Health Services drug pricing program, which provides outpatient drugs at reduced rates, to include additional hospitals, clinics and health care centers and (iv) a fee payable to the federal government based on our prior-calendar-year share relative to other companies of branded prescription drug sales to specified government programs.

In addition, in 2013, federal subsidies began to be phased in for brand-name prescription drugs filled in the Medicare Part D coverage gap. The ACA also included provisions designed to increase the number of Americans covered by health insurance. In 2014, the ACA's private health insurance exchanges began to operate. The ACA also allows states to expand Medicaid coverage with most of the expansion’s cost paid for by the federal government.

For 2020 and 2019, we incurred costs of $21 million and $20 million, respectively, related to the annual fee assessed on prescription drug manufacturers and importers that sell branded prescription drugs to specified U.S. government programs (e.g., Medicare and Medicaid). For 2020 and 2019, we also incurred costs of $131 million and $137 million, respectively, on Medicare Part D utilization incurred by beneficiaries whose prescription drug costs cause them to be subject to the Medicare Part D coverage gap (i.e., the “donut hole”).

The financial impact of the ACA will be affected by certain additional developments over the next few years, including pending implementation guidance and certain health care reform proposals. Additionally, policy efforts designed specifically

to reduce patient out-of-pocket costs for medicines could result in new mandatory rebates and discounts or other pricing restrictions. Also, it is possible, as discussed further below, that legislation will be passed by Congress repealing the ACA in whole or in part. Adoption of legislation at the federal or state level could materially affect demand for, or pricing of, our products.

In 2018, we faced uncertainties due to federal legislative and administrative efforts to repeal, substantially modify or invalidate some or all of the provisions of the ACA. However, we believe there is low likelihood of repeal of the ACA, given the recent failure of the Senate’s multiple attempts to repeal various combinations of ACA provisions and the recent change in administration. There is no assurance that any replacement or administrative modifications of the ACA will not adversely affect our business and financial results, particularly if the replacing legislation reduces incentives for employer-sponsored insurance coverage, and we cannot predict how future federal or state legislative or administrative changes relating to the reform will affect our business.

In 2019, the U.S. Health and Human Services Administration announced a preliminary plan to allow for the importation of certain lower-cost drugs from Canada. The preliminary plan excludes insulin, biological drugs, controlled substances and intravenous drugs. The preliminary plan relies on individual states to develop proposals for safe importation of those drugs from Canada and submit those proposals to the federal government for approval. Although the preliminary plan has some support from the prior administration, at this time, studies to evaluate the related costs and benefits, evaluate the reasonableness of the logistics, and measure the public reaction of such a plan have not been performed. While we do not believe this will have a significant impact on our future cash flows, we cannot provide assurance as to the ~~ultimate context, timing,~~ effect or impact of such a plan.

In 2019, the Government of Canada (Health Canada) published in the Canada Gazette the new pricing regulation for patented drugs. These regulations will become effective on January 1, 2022. The new regulations will change the mechanics of establishing the pricing for products submitted for approval after August 21, 2019; they will also require full transparency of discounts agreed with provincial bodies; and finally, will change the number and composition of reference countries used to determine if a drug’s price is excessive. While we do not believe this will have a significant impact on our future cash flows, as additional facts materialize, we cannot provide assurance as to the ultimate content, timing, effect or impact of such regulations.

In July 2020, former U.S. President Donald Trump signed four Executive Orders related to drug pricing, including orders addressing: (i) Part D rebate reform, (ii) the provision of deeply discounted insulin and/or an EpiPen to patients of Federally Qualified Health Centers, (iii) drug importation from Canada and (iv) most favored nation pricing for Medicare. In November 2020, former U.S. President Donald Trump announced the Most Favored Nation Model for Medicare Part B Payment which was to be implemented by the Centers for Medicare & Medicaid Services Innovation Center on January 1, 2021; however, it has not been implemented, as it is currently being challenged in court. It is also uncertain whether the Biden administration intends to reverse these measures or adopt similar policy initiatives. However, U.S. President Joseph Biden and several members of the current U.S. Congress have indicated that lowering drug prices is a legislative and political

priority, and some have introduced proposals that seek to address drug pricing. We are currently reviewing those Executive Orders and the Most Favored Nation Model, the impact of which is uncertain at this time.

In ~~addition,~~December 2020, as part of a series of drug pricing-related rules issued by the Trump Administration, ~~in December 2020,~~ the Center for Medicare & Medicaid Services issued a Final Rule that makes significant modifications to the Medicaid Drug Rebate Program regulations in several areas, including with respect to the definition of key terms “line extension” and “new formulation” and best price (BP) reporting relating to certain value-based purchasing (VBP) arrangements (which take effect on January 1, 2022) and the price reporting treatment of manufacturer-sponsored patient benefit programs (which take effect on January 1, 2023). We are currently reviewing the Final Rule, the impact of which is uncertain at this time.

In March 2021, the U.S. Congress enacted the American Rescue Plan Act of 2021. One of the provisions included within the American Rescue Plan Act of 2021 eliminated the Maximum Rebate Amount for Single Source drugs and Innovator Multiple Source drugs in the Medicaid Drug Rebate Program. We are currently reviewing the Final Rule, the impact of which is uncertain at this time.

Other legislative efforts relating to drug pricing have been enacted and others have been proposed at the U.S. federal and state levels. For instance, certain states have enacted legislation related to prescription drug pricing transparency. Several states have passed importation legislation and Florida is working with the U.S. government to implement an importation program from Canada. We also anticipate that Congress, state legislatures and third-party payors may continue to review and assess alternative health care delivery and payment systems and may in the future propose and adopt legislation or policy changes or implementations affecting additional fundamental changes in the health care delivery system. We continually review newly enacted and proposed U.S. federal and state legislation, as well as proposed rulemaking and guidance published by the Department of Health and Human Services and the FDA; however, at this time, it is unclear the effect these matters may have on our businesses.

Generic Competition and Loss of Exclusivity

Certain of our products face the expiration of their patent or regulatory exclusivity in 2021 or in later years, following which we anticipate generic competition of these products. In addition, in certain cases, as a result of negotiated settlements of some of our patent infringement proceedings against generic competitors, we have granted licenses to such generic companies, which will permit them to enter the market with their generic products prior to the expiration of our applicable patent or regulatory exclusivity. Finally, for certain of our products that lost patent or regulatory exclusivity in prior years, we anticipate that generic competitors may launch in 2021 or in later years. Following a loss of exclusivity ("LOE") of and/or generic competition for a product, we would anticipate that product sales for such product would decrease significantly shortly following the LOE or entry of a generic competitor. Where we have the rights, we may elect to launch an authorized generic of such product (either ourselves or through a third-party) prior to, upon or following generic entry, which may mitigate the anticipated decrease in product sales; however, even with launch of an authorized generic, the decline in product sales of such product would still be expected to be significant, and the effect on our future revenues could be material.

A number of our products already face generic competition. Prior to and during 2021, in the U.S., these products include, among others, Ammonul®, Apriso®, Benzaclin®, Bepreve®, Bupap®, Cuprimine®, Demser®, Edecrin®, Elidel®, Glumetza®, Istalol®, Isuprel®, Locoid® Lotion, Lotemax® Gel, Lotemax® Suspension, Mephyton®, Migranal®, MoviPrep®, Nitropress®, Solodyn®, Syprine®, Timoptic® in Ocudose®, Uceris® Tablet, Virazole®, Wellbutrin XL®, Xenazine®, Zegerid® and Zovirax® cream. In Canada, these products include, among others, Glumetza®, Wellbutrin® XL and Zovirax® ointment.

2020 LOE Branded Products - Branded products that began facing generic competition in the U.S. during 2020 include, Migranal®, MoviPrep® and certain other products. In aggregate, these products accounted for less than 1% of our total revenues in 2020. While certain of these products have already begun experiencing an adverse impact on volume and/or pricing as a result of the entry into the market of generic competition, we are unable to predict the complete magnitude or timing of this impact.

2021 LOE Branded Products - Branded products that began facing generic competition in the U.S. during 2021 included Lotemax® Gel, ~~and~~ Bepreve®. and certain other products. These products accounted for less than 1% of our total revenues in 2020. We believe the entry into the market of generic competition generally would have an adverse impact on the volume and/or pricing of the affected products, however we are unable to predict the magnitude or timing of this impact.

2021 through 2025 LOE Branded Products - Based on current patent expiration dates, settlement agreements and/or competitive information, we have identified branded products that we believe could begin facing potential LOE and/or generic competition in the U.S. during the years 2021 through 2025. These products and year of expected LOE include, but are not limited to, Clindagel® (2021), Noritate® (2021), Targretin® Gel (2022), Xerese® (2022) and certain other products that are subject to settlement agreements which could impact their exclusivity during the years 2021 through 2025. In aggregate, these products accounted for 2% of our total revenues in 2020. These dates may change based on, among other things, successful challenge to our patents, settlement of existing or future patent litigation and at-risk generic launches. We believe the entry into the market of generic competition generally would have an adverse impact on the volume and/or pricing of the affected products, however we are unable to predict the magnitude or timing of this impact.

~~2021 OTC Product Patent Expiry -~~ ~~PreserVision~~® ~~AREDS and PreserVision~~® ~~AREDS 2 are OTC eye vitamin formulas for those with moderate-to-advanced age-related macular degeneration. PreserVision~~® ~~products accounted for 3% of our total~~

~~revenues in 2020. The PreserVision~~® U.S. formulation patent expired in March 2021, but a patent covering methods of using the formulation remains in force until 2026. While the Company cannot predict the magnitude or timing of the impact from its patent expiry, this is an OTC product and thus, the impact is not expected to be as significant as the LOE of a branded pharmaceutical product.

In addition, for a number of our products (including ~~Plenvu~~®, Xifaxan® 550mg, Uceris®, Bryhali®, Duobrii®, ~~Uceris~~®, Trulance® and ~~Jublia~~Lumify® in the U.S.), we have commenced (or anticipate commencing) and have (or may have) ongoing infringement proceedings against potential generic competitors in the U.S. and Canada. If we are not successful in these proceedings, we may face increased generic competition for these products.

Bryhali® Lotion, 0.01% (Glenmark) - In December 2019, the Company announced that it had reached an agreement to resolve the outstanding intellectual property litigation with Glenmark Pharmaceuticals, Ltd. ("Glenmark"). Under the terms of the agreement, the Company will grant Glenmark a non-exclusive license to its intellectual property relating to Bryhali® in the U.S. and, beginning in 2026 (or earlier under certain circumstances), Glenmark will have the option to market a royalty-free generic version of Bryhali® Lotion, should it receive approval from the FDA. The parties have agreed to dismiss all litigation related to Bryhali® Lotion, and all intellectual property protecting Bryhali® Lotion remains intact.

Bryhali® Lotion, 0.01% ~~(Perrigo)~~(Padagis) - On March 20, 2020, the Company received a Notice of Paragraph IV Certification from Perrigo Israel Pharmaceuticals, Ltd. (now Padagis LLC) (“~~Perrigo”~~Padagis”), in which ~~Perrigo~~Padagis asserted that certain U.S. patents, each of which is listed in the FDA’s Orange Book for Bryhali® (halobetasol propionate) lotion, 0.01% are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of ~~Perrigo’s~~Padagis’ generic halobetasol propionate lotion, for which an Abbreviated New Drug Application ("ANDA") has been filed by ~~Perrigo.~~Padagis. On May 1, 2020, the Company filed suit against ~~Perrigo~~Padagis pursuant to the Hatch-Waxman Act, alleging infringement by ~~Perrigo~~Padagis of one or more claims of the Bryhali® Patents, thereby triggering a 30-month stay of the approval of the ~~Perrigo~~Padagis ANDA for halobetasol propionate lotion. On September 3, 2020, this action was consolidated with the action between the Company and ~~Perrigo~~Padagis described below, regarding ~~Perrigo’s~~Padagis’ ANDA for generic Duobrii® (halobetasol propionate and tazarotine) lotion. The

Company remains confident in the strength of the Bryhali® patents and intends to vigorously pursue this matter and defend its intellectual property.

Duobrii® Lotion ~~(Perrigo)~~(Padagis) - On July 23, 2020, the Company received a Notice of Paragraph IV Certification from ~~Perrigo,~~Padagis, in which ~~Perrigo~~Padagis asserted that certain U.S. patents, each of which is listed in the FDA's Orange Book for Duobrii® (halobetasol propionate and tazarotine) lotion, are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of ~~Perrigo’s~~Padagis’ generic lotion, for which an ANDA has been filed by ~~Perrigo.~~Padagis. On August 28, 2020, the Company filed suit against ~~Perrigo~~Padagis pursuant to the Hatch-Waxman Act, alleging infringement by ~~Perrigo~~Padagis of one or more claims of the Duobrii® Patents, thereby triggering a 30-month stay of the approval of the ~~Perrigo~~Padagis ANDA. On September 3, 2020, this action was consolidated with the action between the Company and ~~Perrigo~~Padagis described above, regarding ~~Perrigo’s~~Padagis’ ANDA for generic Bryhali® (halobetasol propionate) lotion. We remain confident in the strength of the Duobrii® patents and will vigorously defend our intellectual property.

Xifaxan® 550mg Patent Litigation (Actavis) - On March 23, 2016, the Company initiated litigation against Actavis Laboratories FL, Inc.’s ("Actavis"), which alleged infringement by Actavis of one or more claims of each of the Xifaxan® patents. On September 12, 2018, we announced that we had reached an agreement with Actavis that resolved the existing litigation and eliminated the pending challenges to our intellectual property protecting Xifaxan® (rifaximin) 550 mg tablets. As part of the agreement, the parties agreed to dismiss all litigation related to Xifaxan® (rifaximin), Actavis acknowledged the validity of the licensed patents for Xifaxan® (rifaximin) 550 mg tablets and all intellectual property protecting Xifaxan® (rifaximin) 550 mg tablets will remain intact and enforceable until expiry in 2029. The agreement also grants Actavis a non-exclusive license to the intellectual property relating to Xifaxan® (rifaximin) 550 mg tablets in the United States beginning January 1, 2028 (or earlier under certain circumstances). The Company will not make any financial payments or other transfers of value as part of the agreement. In addition, under the terms of the agreement, beginning January 1, 2028 (or earlier under certain circumstances), Actavis will have the option to: (1) market a royalty-free generic version of Xifaxan® tablets, 550 mg, should it receive approval from the FDA on its ANDA, or (2) market an authorized generic version of Xifaxan® tablets, 550 mg, in which case, we will receive a share of the economics from Actavis on its sales of such an authorized generic. Actavis will be able to commence such marketing earlier if another generic rifaximin product is granted approval and such other generic rifaximin product begins to be sold or distributed before January 1, 2028.

Xifaxan® 550mg Patent Litigation (Sandoz) - In October 2019, the Company announced that it and its licensor, Alfasigma had commenced litigation against Sandoz Inc. ("Sandoz"), a Novartis division, alleging patent infringement of 14 patents by Sandoz's filing of its ANDA for Xifaxan® (rifaximin) 550 mg tablets. On May 6, 2020, the Company announced that an agreement had been reached with Sandoz that resolved this litigation. Under the terms of the agreement, the parties agreed to dismiss all litigation related to Xifaxan® (rifaximin), Sandoz acknowledged the validity of the licensed patents for Xifaxan® (rifaximin) 550 mg tablets and all intellectual property protecting Xifaxan® (rifaximin) 550 mg tablets will remain intact and enforceable until expiry in October 2029. The agreement also grants Sandoz a non-exclusive license to the

intellectual property relating to Xifaxan® (rifaximin) 550 mg tablets in the United States beginning January 1, 2028 (or earlier under certain circumstances). Under the terms of the agreement, beginning January 1, 2028 (or earlier under certain circumstances), Sandoz will have the right to market a royalty-free generic version of Xifaxan® (rifaximin) 550 mg tablets, should it receive approval from the FDA on its ANDA. Sandoz will be able to commence such marketing earlier if another generic rifaximin product is granted approval and such other generic rifaximin product begins to be sold or distributed in the U.S. before January 1, 2028. The Company did not make any financial payments or other transfers of value as part of this agreement with Sandoz.

Xifaxan® 550mg Patent Litigation (Norwich) - On March 26, 2020, the Company and its licensor Alfasigma filed suit against Norwich Pharmaceuticals Inc. (“Norwich”), alleging infringement by Norwich of one or more claims of the 23 Xifaxan® patents by Norwich’s filing of its ANDA for Xifaxan® (rifaximin) 550 mg tablets. On November 13, 2020, an additional three patents alleged to be infringed by Norwich were added to the suit. Xifaxan® 550mg is protected by 26 patents covering the composition of matter and the use of Xifaxan® listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, or the Orange Book. A 3-day bench trial is scheduled to begin March 21, 2022. The Company remains confident in the strength of the Xifaxan® patents and will continue to vigorously pursue this matter and defend its intellectual property.

Xifaxan® 200mg and 550mg Patent Litigation (Sun) - In April 2019, the Company and its licensor, Alfasigma, commenced litigation against Sun Pharmaceutical Industries Ltd. (“Sun”), alleging patent infringement by Sun’s filing of its ANDA for Xifaxan® (rifaximin) 200 mg tablets. This suit had been filed following receipt of a Notice of Paragraph IV Certification from Sun, in which Sun asserted that the U.S. patents listed in the FDA's Orange Book for the Company’s Xifaxan® tablets, 200 mg, were either invalid, unenforceable and/or would not be infringed by the commercial manufacture, use or sale of Sun’s generic rifaximin tablets, 200 mg. Subsequently, on August 10, 2020, the Company received an additional Notice of Paragraph IV Certification from Sun, in which Sun asserted that the U.S. patents listed in the FDA's Orange Book for the Company’s Xifaxan® tablets, 550 mg, were either invalid, unenforceable and/or would not be infringed

by the commercial manufacture, use or sale of Sun’s generic rifaximin tablets, 550 mg, for which an ANDA had been filed by Sun. On September 22, 2020, the Company announced that an agreement had been reached with Sun that resolved the outstanding intellectual property disputes with Sun regarding Xifaxan® (rifaximin) 200 mg and 550 mg tablets. Under the terms of the agreement, the parties agreed to dismiss all litigation related to Xifaxan® (rifaximin) and all intellectual property protecting Xifaxan® (rifaximin) 200 mg and 550 mg tablets will remain intact and enforceable until expiry in July and October 2029, respectively. The agreement also grants Sun a non-exclusive license to the intellectual property relating to Xifaxan® (rifaximin) 200 mg and 550 mg tablets in the U.S. beginning January 1, 2028 (or earlier under certain circumstances). Under the terms of the agreement, beginning January 1, 2028 (or earlier under certain circumstances), Sun will have the right to market royalty-free generic versions of Xifaxan® (rifaximin) 200 mg and 550 mg tablets, should it receive approval from the FDA on its ANDAs. Sun will be able to commence such marketing earlier if another generic rifaximin product is granted approval and such other generic rifaximin product begins to be sold or distributed in the U.S. before January 1, 2028.

Relistor® Tablets Patent Litigation (Actavis) - On December 6, 2016, the Company initiated litigation against Actavis, which alleged infringement by Actavis of one or more claims of U.S. Patent No. 8,524,276 (the “‘276 Patent”), which protects the formulation of RELISTOR® tablets. Actavis had challenged the validity of such patent and alleged non-infringement by its generic version of such product. In July 2019, we announced that the U.S. District Court of New Jersey had upheld the validity of and determined that Actavis infringed the ‘276 Patent, expiring in March 2031. Actavis appealed this decision to the U.S. Court of Appeals for the Federal Circuit. In March 2021, the Company and Actavis reached a settlement agreement and the appeal was dismissed.

Trulance® 3mg Tablets Patent Litigation (MSN and Mylan) - In March 2021, the Company received Notices of Paragraph IV Certification from MSN Laboratories Private Ltd. (“MSN”) and Mylan Pharmaceuticals Inc., (“Mylan”) in which MSN and Mylan asserted that certain U.S. patents, each of which is listed in the FDA’s Orange Book for Trulance® (plecanatide) 3mg tablets, are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of their generic plecanatide tablets, for which each of MSN and Mylan had filed an ANDA. In April 2021, the Company filed suit against MSN and Mylan, alleging infringement of one or more claims of the patents listed for Trulance® in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, or the Orange Book. The Company remains confident in the strength of the Trulance® patents and will continue to vigorously pursue this matter and defend its intellectual property.

Lumify® Ophthalmic Solution Patent Litigation (Slayback) - In September 2021, the Company commenced litigation against Slayback Pharma LLC and Slayback Pharma India LLP (together, “Slayback”) alleging patent infringement by Slayback Pharma LLC’s filing of its ANDA No. 216361, referencing Lumify® (0.025% brimonidine tartrate ophthalmic solution). This suit had been filed following receipt of a Notice of Paragraph IV Certification from Slayback Pharma LLC, in which it had asserted that the U.S. patents listed in the FDA's Orange Book for the Company’s Lumify® brimonidine tartrate ophthalmic solution, were either invalid, unenforceable and/or would not be infringed by the commercial manufacture, use or sale of its generic brimonidine tartrate solution. The filing of this suit triggered a 30-month stay of the approval of the Slayback ANDA for its brimonidine tartrate solution. The Company remains confident in the strength of the Lumify® patents and will continue to vigorously pursue this matter and defend its intellectual property.

Generic Competition to Uceris® - In July 2018, a generic competitor launched a product which will directly compete with our Uceris® Tablet product. As disclosed in our prior filings, the Company initiated various infringement proceedings against this generic competitor. The Court construed the claims of the asserted patents on August 2, 2019 and, on October 24, 2019, the Company agreed to a judgment that the asserted patents did not cover the generic tablets under the Court’s claim construction, while reserving its right to appeal the claim construction. On November 22, 2019, the Company filed a Notice of Appeal with respect to the claim construction in the Court of Appeals for the Federal Circuit. On December 18, 2020, the Court of Appeals for the Federal Circuit affirmed the District Court’s claim construction. The ultimate impact of this generic

August and September 2018, the Company received notices of the filing of a number of ANDAs with paragraph IV certification, and has timely filed patent infringement suits against these ANDA filers, and, in addition, the Company has also commenced certain patent infringement proceedings in Canada against three separate defendants. All cases in the U.S. and Canada regarding Jublia® have been ~~settled and all but one case in the U.S. regarding Jublia~~settled.

PreserVision® Patent Litigation - PreserVision® AREDS and PreserVision® AREDS 2 are OTC eye vitamin and mineral supplements containing nutrient formulas recommended by the National Eye Institute to reduce the risk of progression of intermediate to advanced AMD. PreserVision® products accounted for 3% of our total revenues in 2020. The PreserVision® U.S. formulation patent expired in March 2021, but a patent covering methods of using the formulation remains in force into 2026. The Company has ~~been settled.~~filed patent infringement proceedings against 16 defendants claiming infringement of these patents and, in certain circumstances, related unfair competition and false advertising causes of action. Eleven of these proceedings were subsequently settled; two resulted in entry of a default. One defendant filed a declaratory judgment action after the Company filed its suit, seeking declaratory judgment related to patent claims as well as false advertising and unfair competition claims. As of the date of this filing, there are four unresolved actions. The Company remains confident in the strength of these patents and will continue to vigorously pursue these matters and defend its intellectual property. While the Company cannot predict the magnitude or timing of the impact from the PreserVision® patent expiry, this is an OTC product and thus, the impact is not expected to be as significant as the LOE of a branded pharmaceutical product.

See Note 18, "LEGAL PROCEEDINGS" to our unaudited interim Consolidated Financial Statements elsewhere in this Form 10-Q, as well as Note 21, "LEGAL PROCEEDINGS" of our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC and the CSA on February 24, 2021 for further details regarding certain infringement proceedings.

The risks of generic competition are a fact of the health care industry and are not specific to our operations or product portfolio. These risks are not avoidable, but we believe they are manageable. To manage these risks, our leadership team continually evaluates the impact that generic competition may have on future profitability and operations. In addition to aggressively defending the Company's patents and other intellectual property, our leadership team makes operational and investment decisions regarding these products and businesses at risk, not the least of which are decisions regarding our pipeline. Our leadership team actively manages the Company's pipeline in order to identify innovative and realizable projects aligned with our core businesses that are expected to provide incremental and sustainable revenues and growth into the future. We believe that our current pipeline is strong enough to meet these objectives and provide future sources of revenues, in our core businesses, sufficient enough to sustain our growth and corporate health as other products in our established portfolio face generic competition and lose momentum.

We believe that we have a well-established product portfolio that is diversified within our core businesses. We also believe that we have a robust pipeline that not only provides for the next generation of our existing products, but also brings new solutions into the market.

See Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC and the CSA on February 24, 2021 for additional information on our competition risks.

Regulatory Matters

In the normal course of business, our products, devices and facilities are the subject of ongoing oversight and review by regulatory and governmental agencies, including general, for cause and pre-approval inspections by the relevant competent authorities where we have business operations. Through the date of this filing, all of our global operations and facilities have the relevant operational good manufacturing practices certificates and all Company products and operating sites are in good compliance standing with all relevant notified bodies and global health authorities. Further, all ~~but one of our~~ sites under FDA jurisdiction are rated as either No Action Indicated (where there was no Form 483 observation) or Voluntary Action Indicated (“VAI”) (where there was a Form 483 with one or more observations). In the case of VAI inspection outcomes, the FDA has accepted our responses to the issues cited, which will be verified when the agency makes its next inspection of those specific facilities. At this time, one site is awaiting FDA review to our responses to a recently issued Form 483 with one deficiency observation. A Form 483 is issued at the end of each inspection when FDA investigators have observed any condition that in their judgment may constitute violations of current good manufacturing practices.

FINANCIAL PERFORMANCE HIGHLIGHTS

The following table provides selected unaudited financial information for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020:

Three Months Ended June 30, Six Months Ended June 30,
(in millions, except per share data) 2021 2020 Change 2021 2020 Change
Revenues $ 2,100 $ 1,664 $ 436 $ 4,127 $ 3,676 $ 451
Operating (loss) income $ (270) $ (27) $ (243) $ (491) $ 221 $ (712)
Loss before income taxes $ (670) $ (437) $ (233) $ (1,261) $ (615) $ (646)
Net loss attributable to Bausch Health Companies Inc. $ (595) $ (326) $ (269) $ (1,205) $ (478) $ (727)
Basic and diluted loss per share attributable to Bausch Health Companies Inc. $ (1.66) $ (0.92) $ (0.74) $ (3.37) $ (1.35) $ (2.02)


	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, except per share data)	2021		2020		Change		2021		2020		Change
Revenues	$	2,111	$	2,138	$	(27)	$	6,238	$	5,814	$	424
Operating income	$	574	$	460	$	114	$	83	$	681	$	(598)
Income (loss) before income taxes	$	216	$	75	$	141	$	(1,045)	$	(540)	$	(505)
Net income (loss) attributable to Bausch Health Companies Inc.	$	188	$	71	$	117	$	(1,017)	$	(407)	$	(610)
Earnings (loss) per share attributable to Bausch Health Companies Inc.
Basic	$	0.52	$	0.20	$	0.32	$	(2.84)	$	(1.15)	$	(1.69)
Diluted	$	0.52	$	0.20	$	0.32	$	(2.84)	$	(1.15)	$	(1.69)

Financial Performance

Summary of the Three Months Ended ~~June~~September 30, 2021 Compared to the Three Months Ended ~~June~~September 30, 2020

Revenue for the three months ended ~~June~~September 30, 2021 and 2020 was ~~$2,100~~$2,111 million and ~~$1,664~~$2,138 million, respectively, ~~an increase~~a decrease of ~~$436~~$27 million, or ~~26%~~1%. The ~~increase~~decrease was primarily due to: (i) the impact of our divestiture of Amoun on July 26, 2021 and (ii) a decrease in net realized pricing. These decreases were partially offset by: (i) the net increase in volumes ~~across all~~primarily in our Bausch + Lomb and Salix segments and (ii) the favorable impact of foreign currencies, primarily in ~~Europe,~~ Asia, Latin America and Canada. ~~These increases were partially offset by: (i) a decrease in net realized pricing and (ii) the impact of divestitures and discontinuations.~~ The net increase in volumes was primarily due to the positive impacts from the recovery from the COVID-19 pandemic and the easing of certain social restrictions, as previously discussed, partially offset by the impact of the loss of exclusivity of certain products.

Operating ~~loss~~income for the three months ended ~~June~~September 30, 2021 and 2020 was ~~$270~~$574 million and ~~$27~~$460 million, respectively, ~~a decrease~~an increase in our operating results of ~~$243~~$114 million and reflects, among other factors:

•~~an increase~~a decrease in contribution (Product sales revenue less Cost of goods sold, excluding amortization and impairments of intangible assets) of ~~$317~~$19 million primarily due to: (i) the ~~increase in volumes, as previously discussed, (ii) the favorable impact of foreign currencies and (iii) lower manufacturing variances, partially offset by the~~ decrease in net realized ~~pricing;~~pricing and (ii) the impact of our divestiture of Amoun on July 26, 2021;

•an increase in ~~Selling, general and administrative expenses (“~~SG~~&A”)~~&A of ~~$159~~$81 million primarily attributable to: (i) the impacts of the non-recurrence of certain profit protection measures taken in 2020 to manage and reduce operating expenses during the COVID-19 pandemic, as previously discussed and (ii) Separation-related and IPO-related costs ~~incurred in 2021 and (iii) the impact of foreign currencies;~~incurred;

•an increase in R&D of $7$18 million primarily attributable to the non-recurrence of the temporary suspension in certain R&D activities and clinical trials in 2020 due to social restrictions and other precautionary measures taken in response to the COVID-19 pandemic, as previously discussed, partially offset by the impact of rebalancing our portfolio within the Ortho Dermatologics business;

•a decrease in Amortization of intangible assets of ~~$76~~$53 million primarily attributable to fully amortized intangible assets no longer being amortized in 2021;

•an increase in Asset impairments, including loss on assets held for sale of ~~$46~~$16 million ~~primarily~~ attributable ~~to: (i)~~to higher impairments to certain ~~products and (ii) additional losses during the three months ended June 30, 2021 related to assets classified as held for sale;~~products; and

•~~an increase~~a favorable change in Other (income) expense, net of ~~$424~~$201 million, primarily attributable to ~~higher adjustments~~insurance recoveries related to ~~the settlements of~~ certain litigation matters ~~during~~partially offset by the ~~three months ended June 30, 2021.~~loss on the completion of the Amoun Sale.

Operating ~~loss~~income for the three months ended ~~June~~September 30, 2021 and 2020 was ~~$270~~$574 million and ~~$27~~$460 million, and included non-cash charges for Depreciation and amortization of intangible assets of ~~$404~~$382 million and ~~$480~~$436 million, Asset impairments, including loss on assets held for sale of ~~$47~~$18 million and $1$2 million and Share-based compensation of ~~$31~~$33 million and $27 million, respectively.

~~Loss~~Income before income taxes for the three months ended ~~June~~September 30, 2021 and 2020 was ~~$670~~$216 million and ~~$437~~$75 million, respectively, an ~~unfavorable change~~increase of ~~$233~~$141 million. The ~~unfavorable change in our Loss before income taxes~~increase is primarily attributable to: (i) the ~~decrease~~increase in our operating results of ~~$243~~$114 million, as previously discussed, (ii) a decrease in Interest expense of $23 million and ~~(ii)~~(iii) a

Net ~~loss~~income attributable to Bausch Health Companies Inc. for the three months ended ~~June~~September 30, 2021 and 2020 was ~~$595~~$188 million and ~~$326~~$71 million, respectively, ~~a decrease~~an increase in our results of ~~$269~~$117 million. The ~~decrease~~increase in our results was primarily due to the ~~decrease~~increase in our ~~Loss~~Income before income taxes of ~~$233~~$141 million, as previously discussed, ~~and the~~partially offset by an unfavorable change in income taxes of ~~$35~~$20 million.

Summary of the ~~Six~~Nine Months Ended ~~June~~September 30, 2021 Compared to the ~~Six~~Nine Months Ended ~~June~~September 30, 2020

Revenue for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 was ~~$4,127~~$6,238 million and ~~$3,676~~$5,814 million, respectively, an increase of ~~$451~~$424 million, or ~~12%~~7%. The increase was primarily due to: (i) the net increase in volumes and (ii) the favorable impact of foreign currencies, primarily in Europe, Asia and Canada. These increases were partially offset by: (i) a decrease in net realized pricing and (ii) ~~the impact~~our divestiture of ~~divestitures and discontinuations.~~Amoun on July 26, 2021. The net increase in volumes was primarily due to the positive impacts from the recovery from the COVID-19 pandemic and the easing of certain social restrictions, as previously discussed, primarily during the three months ended June 30, 2021, partially offset by the impact of the loss of exclusivity of certain products.

Operating ~~loss for the six months ended June 30, 2021 was $491 million and Operating~~ income for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 was ~~$221~~$83 million and $681 million, respectively, a decrease in our operating results of ~~$712~~$598 million and reflects, among other factors:

•an increase in contribution of ~~$275~~$256 million primarily due to: (i) the increase in volumes, as previously discussed, and (ii) the favorable impact of foreign currencies, partially offset byby: (i) the decrease in net realized ~~pricing;~~pricing and (ii) the impact of our divestiture of Amoun on July 26, 2021;

•an increase in SG&A of ~~$132~~$213 million primarily attributable to: (i) the impacts of the non-recurrence of certain profit protection measures taken in 2020 to manage and reduce operating expenses during the COVID-19 pandemic, as previously discussed, (ii) Separation-related and IPO-related costs incurred in 2021 and (iii) the impact of foreign currencies;

•~~a decrease~~an increase in R&D of $3$15 million primarily attributable to ~~the rebalancing of our portfolio within the Ortho Dermatologics business partially offset by~~ the non-recurrence of the temporary suspension in certain R&D activities and clinical trials in ~~2020;~~2020, partially offset by a rebalancing of our portfolio within the Ortho Dermatologics business;

•a decrease in Amortization of intangible assets of ~~$155~~$208 million primarily attributable to fully amortized intangible assets no longer being amortized in 2021;

•~~an increase in~~ Goodwill impairments of $469 million related to the impairment to the goodwill of the Ortho Dermatologics reporting unit during the three months ended March 31, 2021 as a result of revised forecasts due to: (i) certain products that continued to experience longer launch cycles than originally anticipated, in part due to COVID-19 pandemic factors, and (ii) other changes to its product pipeline;

•an increase in Asset impairments, including loss on assets held for sale of ~~$180~~$196 million, primarily ~~related to impairments during the six months ended June 30, 2020 related~~attributable to: (i) higher impairments to certain ~~product lines as a result of changes to forecasted sales due to generic competition and other factors~~products and (ii) additional losses during ~~the six months ended June 30,~~ 2021 related to assets classified as held for sale; and

•an ~~increase~~unfavorable change in Other (income) expense, net of ~~$358~~$157 million primarily ~~attributable~~attributable: (i) to higher adjustments related to the settlements of certain litigation matters during the ~~six~~nine months ended ~~June~~September 30, 2021 and (ii) the loss on the completion of the Amoun Sale during the three months ended September 30, 2021, partially offset by: (i) ~~a decrease~~insurance recoveries related to certain litigation matters during the three months ended September 30, 2021 and (ii) decreases in charges for Acquisition-related contingent consideration and ~~(ii) an increase in Net gain on sale of assets.~~Acquired in-process research and development costs.

~~Operating loss for the six months ended June 30, 2021 was $491 million and~~ Operating income for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 was ~~$221~~$83 million and $681 million, respectively, and included non-cash charges for Depreciation and amortization of intangible assets of ~~$807~~$1,189 million and ~~$961~~$1,397 million, Asset impairments, including loss on assets held for sale of ~~$195~~$213 million and ~~$15~~$17 million, Goodwill impairments of $469 million and $0, and Share-based compensation of ~~$62~~$95 million and ~~$54~~$81 million, respectively.

Our Loss before income taxes for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 was ~~$1,261~~$1,045 million and ~~$615~~$540 million, respectively, an increase of ~~$646~~$505 million. The increase in our Loss before income taxes is primarily attributable toto: (i) the decrease in our operating results of ~~$712~~$598 million, as previously discussed, and (ii) an increase in Loss on extinguishment of debt of $11 million partially offset by: (i) a decrease in Interest expense of ~~$49~~$72 million and (ii) the favorable change in Foreign exchange and other of ~~$21 million and (iii) a decrease in Loss on extinguishment of debt of $1~~$37 million.

RESULTS OF OPERATIONS

Our unaudited operating results for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 were as follows:


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	(in millions)	2021		2020		Change		2021		2020		Change		(in millions)	2021		2020		Change		2021		2020		Change
Revenues	Revenues													Revenues
Product sales	Product sales	$	2,076	$	1,637	$	439	$	4,079	$	3,623	$	456	Product sales	$	2,088	$	2,111	$	(23)	$	6,167	$	5,734	$	433
Other revenues	Other revenues	24		27		(3)		48		53		(5)		Other revenues	23		27		(4)		71		80		(9)
		2,100		1,664		436		4,127		3,676		451			2,111		2,138		(27)		6,238		5,814		424
Expenses	Expenses													Expenses
Cost of goods sold (excluding amortization and impairments of intangible assets)	Cost of goods sold (excluding amortization and impairments of intangible assets)	604		482		122		1,168		987		181		Cost of goods sold (excluding amortization and impairments of intangible assets)	574		578		(4)		1,742		1,565		177
Cost of other revenues	Cost of other revenues	8		13		(5)		18		27		(9)		Cost of other revenues	8		12		(4)		26		39		(13)
Selling, general and administrative	Selling, general and administrative	685		526		159		1,291		1,159		132		Selling, general and administrative	653		572		81		1,944		1,731		213
Research and development	Research and development	115		108		7		227		230		(3)		Research and development	121		103		18		348		333		15
Amortization of intangible assets	Amortization of intangible assets	360		436		(76)		717		872		(155)		Amortization of intangible assets	338		391		(53)		1,055		1,263		(208)
Goodwill impairments	Goodwill impairments	—		—		—		469		—		469		Goodwill impairments	—		—		—		469		—		469
Asset impairments, including loss on assets held for sale	Asset impairments, including loss on assets held for sale	47		1		46		195		15		180		Asset impairments, including loss on assets held for sale	18		2		16		213		17		196
Restructuring, integration and separation costs		9		7		2		21		11		10
Other expense, net		542		118		424		512		154		358
Restructuring, integration, separation and IPO costs														Restructuring, integration, separation and IPO costs	8		2		6		29		13		16
Other (income) expense, net														Other (income) expense, net	(183)		18		(201)		329		172		157
		2,370		1,691		679		4,618		3,455		1,163			1,537		1,678		(141)		6,155		5,133		1,022
Operating (loss) income		(270)		(27)		(243)		(491)		221		(712)
Operating income														Operating income	574		460		114		83		681		(598)
Interest income	Interest income	2		2		—		4		9		(5)		Interest income	2		2		—		6		11		(5)
Interest expense	Interest expense	(364)		(385)		21		(732)		(781)		49		Interest expense	(351)		(374)		23		(1,083)		(1,155)		72
Loss on extinguishment of debt	Loss on extinguishment of debt	(45)		(27)		(18)		(50)		(51)		1		Loss on extinguishment of debt	(12)		—		(12)		(62)		(51)		(11)
Foreign exchange and other	Foreign exchange and other	7		—		7		8		(13)		21		Foreign exchange and other	3		(13)		16		11		(26)		37
Loss before benefit from income taxes		(670)		(437)		(233)		(1,261)		(615)		(646)
Benefit from income taxes		77		112		(35)		61		138		(77)
Net loss		(593)		(325)		(268)		(1,200)		(477)		(723)
Net income attributable to noncontrolling interest		(2)		(1)		(1)		(5)		(1)		(4)
Net loss attributable to Bausch Health Companies Inc.		$	(595)	$	(326)	$	(269)	$	(1,205)	$	(478)	$	(727)
Income (loss) before (provision for) benefit from income taxes														Income (loss) before (provision for) benefit from income taxes	216		75		141		(1,045)		(540)		(505)
(Provision for) benefit from income taxes														(Provision for) benefit from income taxes	(25)		(5)		(20)		36		133		(97)
Net income (loss)														Net income (loss)	191		70		121		(1,009)		(407)		(602)
Net (income) loss attributable to noncontrolling interest														Net (income) loss attributable to noncontrolling interest	(3)		1		(4)		(8)		—		(8)
Net income (loss) attributable to Bausch Health Companies Inc.														Net income (loss) attributable to Bausch Health Companies Inc.	$	188	$	71	$	117	$	(1,017)	$	(407)	$	(610)

~~surgeries and elective medical procedures to proceed, the negative trend in the revenues of certain businesses began to level off and stabilize prior to our third quarter of 2020.~~

The year-over-year increases in our revenues for the three month periods ended June 30, 2021 and March 31, 2021 of 26% and 1%, respectively, represents a continuously improving trend over the decreases in our year-over-year revenues for the three-month periods ended June 30, 2020, September 30, 2020 and December 31, 2020 of 23%, 3% and less than 1%, respectively. At the current pace of the recovery, we anticipate that our revenues will likely return to pre-pandemic levels in 2021. However, as our revenues were most negatively impacted by the social restrictions and other precautionary measures taken in response to the COVID-19 pandemic during our second quarter of 2020, we expect the rate of growth for the remainder of 2021 to be lower than the year-over-year revenue growth for the six months ended June 30, 2021.

Cash Discounts and Allowances, Chargebacks and Distribution Fees

As is customary in the pharmaceutical industry, gross product sales are subject to a variety of deductions in arriving at net product sales. Provisions for these deductions are recognized concurrently with the recognition of gross product sales. These provisions include cash discounts and allowances, chargebacks, and distribution fees, which are paid or credited to direct customers, as well as rebates and returns, which can be paid or credited to direct and indirect customers. As more fully discussed in Note 3, "REVENUE RECOGNITION" to our unaudited interim Consolidated Financial Statements, the Company continually monitors the provisions for these deductions and evaluates the estimates used as additional information becomes available. Price appreciation credits are generated when we increase a product’s wholesaler acquisition cost (“WAC”) under our contracts with certain wholesalers. Under such contracts, we are entitled to credits from such wholesalers for the impact of that WAC increase on inventory on hand at the wholesalers. In wholesaler contracts, such credits are offset against the total distribution service fees we pay on all of our products to each such wholesaler. In addition, some payor contracts require discounting if a price increase or series of price increases in a contract period exceeds a negotiated threshold. Provision balances relating to amounts payable to direct customers are netted against trade receivables and balances relating to indirect customers are included in accrued liabilities.

We actively manage these offerings, focusing on the incremental costs of our patient assistance programs, the level of discounting to non-retail accounts and identifying opportunities to minimize product returns. We also concentrate on managing our relationships with our payors and wholesalers, reviewing the ranges of our offerings and being disciplined as to the amount and type of incentives we negotiate. Provisions recorded to reduce gross product sales to net product sales and revenues for the three months ended ~~June~~September 30, 2021 and 2020 were as follows:


		Three Months Ended June 30,									Three Months Ended September 30,
		2021				2020					2021				2020
(in millions)	(in millions)	Amount		Pct.		Amount		Pct.		(in millions)	Amount		Pct.		Amount		Pct.
Gross product sales	Gross product sales	$	3,489	100.0	%	$	2,677	100.0	%	Gross product sales	$	3,437	100.0	%	$	3,431	100.0	%
Provisions to reduce gross product sales to net product sales	Provisions to reduce gross product sales to net product sales									Provisions to reduce gross product sales to net product sales
Discounts and allowances	Discounts and allowances	159		4.6	%	137		5.1	%	Discounts and allowances	166		4.8	%	164		4.8	%
Returns	Returns	43		1.2	%	12		0.4	%	Returns	17		0.5	%	17		0.5	%
Rebates	Rebates	625		17.9	%	416		15.5	%	Rebates	615		17.9	%	569		16.6	%
Chargebacks	Chargebacks	531		15.2	%	433		16.2	%	Chargebacks	494		14.4	%	516		15.0	%
Distribution fees	Distribution fees	55		1.6	%	42		1.6	%	Distribution fees	57		1.6	%	54		1.6	%
Total provisions	Total provisions	1,413		40.5	%	1,040		38.8	%	Total provisions	1,349		39.2	%	1,320		38.5	%
Net product sales	Net product sales	2,076		59.5	%	1,637		61.2	%	Net product sales	2,088		60.8	%	2,111		61.5	%
Other revenues	Other revenues	24				27				Other revenues	23				27
Revenues	Revenues	$	2,100			$	1,664			Revenues	$	2,111			$	2,138

reductions in variable consideration for sales returns related to past sales of ~~certain Consumer products as a result of a quality issue at a third-party supplier, as discussed below;~~approximately $28 million and $38 million, respectively. See Note 3, "REVENUE RECOGNITION" to our unaudited interim Consolidated Financial Statements regarding further details related to product sales provisions;

•rebates as a percentage of gross product sales were higher primarily due to: (i) an increase in gross product sales of certain branded products with higher rebate rates, such as Xifaxan®, Prolensa® and ~~Elidel~~Trulance® and (ii) an increase in rebates due to the launch of Arazlo® (June 2020) and ~~was~~were partially offset by the impact of lower ~~rebate rates~~gross product sales for certain branded products, such as ~~Apriso~~Retin-A Micro®~~, Aplenzin~~ 0.06, Duobrii® and Uceris® Tablets, and our generic product Glumetza® ~~SLX;~~AG;

•chargebacks as a percentage of gross product sales were lower primarily due to the impact of lower ~~chargeback rates for certain products with higher~~ gross product sales ~~such as Wellbutrin~~for Glumetza® ~~and Xifaxan~~®AG partially offset by increased gross product sales and higher chargeback rates for certain products, such as Glumetza® SLX, ~~Syprine~~Xifaxan®AG, Retin-A-Cream® and Mysoline® AG; and

•distribution service fees as a percentage of gross product sales were unchanged. No price appreciation credits were provided for the three months ended ~~June~~September 30, 2021 and 2020.

Expenses

Cost of Goods Sold (excluding amortization and impairments of intangible assets)

Cost of goods sold primarily includes: manufacturing and packaging; the cost of products we purchase from third parties; royalty payments we make to third parties; depreciation of manufacturing facilities and equipment; and lower of cost or market adjustments to inventories. Cost of goods sold typically vary between periods as a result of product mix, volume, royalties, changes in foreign currency and inflation. Cost of goods sold excludes the amortization and impairments of intangible assets.

Cost of goods sold was ~~$604~~$574 million and ~~$482~~$578 million for the three months ended ~~June~~September 30, 2021 and 2020, respectively, ~~an increase~~a decrease of ~~$122~~$4 million, or ~~25%~~1%. The ~~increase~~decrease was primarily driven by: (i) the ~~net~~impact of the divestiture of Amoun on July 26, 2021 and (ii) lower manufacturing variances partially offset by the increase in volumes, as previously ~~discussed and (ii) the unfavorable impact of foreign currencies, partially offset by lower manufacturing variances. The lower~~discussed. Lower manufacturing variances ~~were~~are primarily due to the benefits from the non-recurrence of certain variances driven by the impacts of the COVID-19 pandemic in 2020, as previously discussed, partially offset ~~by: (i) charges related to a quality issue at a third-party supplier, as discussed below, and (ii)~~by inflationary pressures related to certain manufacturing ~~costs, as discussed below.~~

We were notified by a third-party supplier of sterilization services for our lens care solution bottles and caps at our Milan, Italy facility, of inconsistencies in the sterilization data versus certificates of conformance previously submitted to us by that supplier. Based on our internal Health and Safety Analysis, it was determined that this issue did not affect the safety or performance of any of our products and is limited to a specific number of lots for certain Consumer products within our Bausch + Lomb segment. However, out of an abundance of caution and working with the appropriate notified body and responsible health authorities, we have contained and/or recalled down to the consumer level the limited number of affected lots of products resulting in $7 million of manufacturing variances and $6 million of returns during the three months ended June 30, 2021. Further, although our Greenville, South Carolina facility increased production to support some of the demand in the near term, due to the limited availability of qualified materials, production at the Milan facility could not keep up with demand which negatively impacted our sales for the affected products in this region during the three months ended June 30, 2021. At this time, we have removed this supplier from our Approved Supplier List and qualified another sterilization supplier, who, along with an existing secondary supplier, will provide bottle sterilization, thereby allowing our Milan facility to return to full production capacity. The Company is continuing its evaluation of this issue, and it is possible that additional charges may be necessary.costs.

As the recovery from the COVID-19 pandemic ~~begins~~continues and businesses reopen, many companies are reporting unexpected price increases for certain costs, such as labor, materials, shipping and utilities. The increased costs have resulted in additional manufacturing variances and have had a negative impact on our contribution margins during the ~~six~~nine months ended ~~June~~September 30, 2021. Through the date of this filing, we are unable to determine if these inflationary factors are transitory or should be expected over a long term.

Cost of goods sold as a percentage of product sales revenue were ~~29.1%~~27.5% and ~~29.4%~~27.4% for the three months ended ~~June~~September 30, 2021 and 2020, respectively, ~~a decrease~~an increase of ~~0.3~~0.1 percentage points. Costs of goods sold as a percentage of Product sales revenue was favorably impacted by lower manufacturing variances, previously discussed, partially offset by the decrease in net realized pricing, as previously discussed.

Selling, General and Administrative Expenses

SG&A expenses primarily include: employee compensation associated with sales and marketing, finance, legal, information technology, human resources and other administrative functions; certain outside legal fees and consultancy costs; product promotion expenses; overhead and occupancy costs; depreciation of corporate facilities and equipment; and other general and administrative costs. Also included in SG&A expenses for the three and ~~six~~nine months ended ~~June~~September 30, 2021 are Separation-related and IPO-related costs. The Company has incurred, and will incur, Separation-related and IPO-related costs which are incremental costs indirectly related to the B+L ~~Separation.~~Separation and Solta IPO. Separation-related and IPO-related costs include, but are not limited to: (i) IT infrastructure and software licensing costs, (ii) rebranding costs and (iii) costs associated with facility relocation and/or modification.

SG&A expenses were ~~$685~~$653 million and ~~$526~~$572 million for the three months ended ~~June~~September 30, 2021 and 2020, respectively, an increase of ~~$159~~$81 million, or ~~30%~~14%. The increase was primarily attributable to: (i) the impacts of the non-recurrence of certain profit protection measures taken in 2020 to manage and reduce operating expenses during the COVID-19 pandemic, as previously discussed and (ii) an increase in Separation-related and IPO-related costs ~~incurred during the three months ended June 30, 2021~~ of ~~$35 million and (iii) the impact of foreign currencies.~~$32 million.

continues, we expect our operating expenses to increase in support of our existing products, product launches and products in development and as a result expect to see our operating expenses for the remainder of 2021 to exceed our operating expenses in 2020 for the same period.

Research and Development Expenses

Included in Research and development are costs related to our product development and quality assurance programs. Expenses related to product development include: employee compensation costs; overhead and occupancy costs; depreciation of research and development facilities and equipment; clinical trial costs; clinical manufacturing and scale-up costs; and other third-party development costs. Quality assurance are the costs incurred to meet evolving customer and regulatory standards and include: employee compensation costs; overhead and occupancy costs; amortization of software; and other third-party costs.

R&D expenses were ~~$115~~$121 million and ~~$108~~$103 million for the three months ended ~~June~~September 30, 2021 and 2020, respectively, an increase of $7$18 million, or 6%17%. The increase was primarily attributable to the non-recurrence of the temporary suspension in certain R&D activities and clinical trials in 2020 due to social restrictions and other precautionary measures taken in response to the COVID-19 pandemic, as previously discussed, partially offset by the impact of rebalancing our portfolio within the Ortho Dermatologics business. R&D expenses as a percentage of Product sales were approximately 6% and 7%5% for the three months ended ~~June~~September 30, 2021 and 2020, respectively.

In 2020, certain of our R&D activities were limited and others, including new patient enrollments in clinical trials, were temporarily paused primarily during our second quarter, as most trial sites were not able to accept new patients due to government-mandated shutdowns. However, during our third quarter of 2020, many of these trial sites began to reopen and we saw the pace of new patient enrollments increase, although at this time certain of our projects are moving slower than we would like due to the impacts of the COVID-19 pandemic. As of the date of this filing, we have not had to make material changes to our development timelines and the pause in our clinical trials has not had a material impact on our operating results; however, a resurgence of the virus could result in unanticipated delays in our ability to conduct new patient enrollments and create other delays which could have a significant adverse effect on our future operating results.

Amortization of Intangible Assets

Intangible assets with finite lives are amortized using the straight-line method over their estimated useful lives, generally 2 to 20 years. Management continually assesses the useful lives related to the Company's long-lived assets to reflect the most current assumptions.

Amortization of intangible assets was ~~$360~~$338 million and ~~$436~~$391 million for the three months ended ~~June~~September 30, 2021 and 2020, respectively, a decrease of ~~$76~~$53 million. The decrease was primarily attributable to fully amortized intangible assets no longer being amortized in 2021.

See Note 8, "INTANGIBLE ASSETS AND GOODWILL" to our unaudited interim Consolidated Financial Statements regarding further details related to the Amortization of intangible assets.

Restructuring, Integration, Separation and ~~Separation~~IPO Costs

Restructuring, integration separation and ~~separation~~IPO costs were $9$8 million and $7$2 million for the three months ended ~~June~~September 30, 2021 and 2020, respectively, an increase of $2$6 million.

Restructuring and Integration Costs

Restructuring and integration costs were $3 million and $7$1 million for the three months ended ~~June~~September 30, 2021 and 2020, respectively. The Company continues to evaluate opportunities to streamline its operations and identify additional cost savings globally. Although a specific plan does not exist at this time, the Company may identify and take additional exit and cost-rationalization restructuring actions in the future, the costs of which could be material.

Separation and IPO Costs

The Company has incurred, and will incur, costs associated with activities to effectuate the B+L ~~Separation.~~Separation and the Solta IPO. These activities include: (i) separating the Bausch + Lomb ~~business~~and Solta Medical businesses from the remainder of the Company and (ii) registering the Bausch + Lomb ~~business~~and Solta Medical businesses as an independent publicly traded ~~entity.~~entities. Separation and IPO costs are incremental costs directly related to the B+L Separation and Solta IPO and include, but are not limited to: (i) legal, audit and advisory fees, (ii) talent acquisition costs and (iii) costs associated with establishing a new board of directors and related board committees for the ~~new entity.~~Bausch + Lomb and Solta Medical entities. Separation and IPO costs were $6$5 million and $0$1 million for the three months ended ~~June~~September 30, 2021 and 2020, respectively. The Company continues to make progress toward internal objectives necessary for the B+L Separation and Solta IPO and the extent and timing of future charges for these costs cannot be reasonably estimated at this time and could be material.

See Note 5, "RESTRUCTURING, INTEGRATION, SEPARATION AND ~~SEPARATION~~IPO COSTS" to our unaudited interim Consolidated Financial Statements for further details regarding these actions.

Other (Income) Expense, Net

Other (income) expense, net for the three months ended ~~June~~September 30, 2021 and 2020 consists of the following:


		Three Months Ended June 30,					Three Months Ended September 30,
(in millions)	(in millions)	2021		2020		(in millions)	2021		2020
Litigation and other matters	Litigation and other matters	$	532	$	100	Litigation and other matters	$	(212)	$	4
Loss on sale of assets						Loss on sale of assets	21		—
Acquisition-related contingent consideration	Acquisition-related contingent consideration	9		11		Acquisition-related contingent consideration	8		2
Acquired in-process research and development costs	Acquired in-process research and development costs	1		7		Acquired in-process research and development costs	—		12
		$	542	$	118		$	(183)	$	18

Non-Operating Income and Expense

Interest Expense

Interest expense primarily consists of interest payments due, amortization of debt premiums, discounts and deferred issuance costs on indebtedness under our credit facilities and notes and the amortization of amounts excluded from the assessment of hedge effectiveness over the term of the Company's cross-currency swaps.

Interest expense was ~~$364~~$351 million and ~~$385~~$374 million, and included non-cash amortization and write-offs of debt premiums, discounts and deferred issuance costs of ~~$12~~$17 million and ~~$17~~$13 million, for the three months ended ~~June~~September 30, 2021 and 2020, respectively. Interest expense for the three months ended ~~June~~September 30, 2021 decreased ~~$21~~$23 million, or 5%6%, as compared to the three months ended ~~June~~September 30, 2020, primarily due to lower outstanding principal balances. The weighted average stated rate of interest as of ~~June~~September 30, 2021 and 2020 was ~~5.85%~~5.91% and ~~5.95%~~5.94%, respectively.

See Note 10, "FINANCING ARRANGEMENTS" to our unaudited interim Consolidated Financial Statements for further details.

Loss on Extinguishment of Debt

Loss on extinguishment of debt represents the differences between the amounts paid to settle extinguished debts and the carrying value of the related extinguished debt. Loss on extinguishment of debt was ~~$45~~$12 million and ~~$27 million~~$0 for the three months ended ~~June~~September 30, 2021 and 2020, respectively, primarily associated with debt repayments made during the three months ended September 30, 2021, ~~Refinancing Transactions and the 2020 Refinancing Transactions, respectively,~~ as previously discussed.

See Note 10, "FINANCING ARRANGEMENTS" to our unaudited interim Consolidated Financial Statements for further details.

Foreign Exchange and Other

Foreign exchange and other primarily includes: (i) translation gains/losses on intercompany loans and third-party liabilities and (ii) the gain/loss due to foreign currency exchange contracts. Foreign exchange and other was a gain of $7$3 million and $0a loss of $13 million for the three months ended ~~June~~September 30, 2021 and 2020, respectively, a favorable net change of $7$16 million.

Income Taxes

~~Benefit from~~Provision for income taxes was ~~$77~~$25 million and ~~$112~~$5 million for the three months ended ~~June~~September 30, 2021 and 2020, respectively, an unfavorable change of ~~$35~~$20 million.

Our effective income tax rate for the three months ended ~~June~~September 30, 2021 differs from the statutory Canadian income tax rate primarily due to: (i) the tax benefit generated from our annualized mix of earnings by jurisdiction, (ii) the discrete treatment of certain tax matters, primarily related to: (a) a deduction for the accrual of legal settlements, (b) changes in uncertain tax positions, (c) tax deduction for stock compensation and (d) adjustments for book to income tax return provisions and (iii) the recording of valuation allowance on entities for which no tax benefit of losses is ~~expected.~~expected, (ii) the tax benefit generated from our annualized mix of earnings by jurisdiction and (iii) the discrete treatment of certain tax matters, primarily related to: (a) changes in uncertain tax positions, (b) adjustments for book to income tax return provisions and (c) a tax deduction for stock compensation.

Our effective income tax rate for the three months ended ~~June~~September 30, 2020 differs from the statutory Canadian income tax rate primarily due to: (i) the recording of valuation allowance on entities for which no tax benefit of losses is expected, (ii) the tax benefit generated from our annualized mix of earnings by jurisdiction and (iii) the discrete treatment of certain tax matters, primarily related to: (a) tax law changes, (b) adjustments for book to income tax return provisions and (c) changes in uncertain tax positions.

See Note 16, "INCOME TAXES" to our unaudited interim Consolidated Financial Statements for further details.

Reportable Segment Revenues and Profits

included in their new respective segments based on the organizational structure of the two separate entities as proposed by the B+L Separation. Prior period presentation of segment revenues and segment profits has been recast to conform to the current segment reporting structure.

The following is a brief description of the Company’s segments:

•The Bausch + Lomb segment consists of global sales of Bausch + Lomb Vision Care, Consumer, Surgical and Ophthalmology Rx products.

•The Salix segment consists of sales in the U.S. of GI products.

•The Ortho Dermatologics segment consists of: (i) sales in the U.S. of Ortho Dermatologics (dermatological) products and (ii) global sales of Solta aesthetic medical ~~aesthetic~~ devices.

Segment profit is based on operating income after the elimination of intercompany transactions. Certain costs, such as Amortization of intangible assets, Asset impairments, Acquired in-process research and development costs, Restructuring, integration, separation and ~~separation~~IPO costs and Other (income) expense, net, are not included in the measure of segment profit, as management excludes these items in assessing segment financial performance. See Note 19, "SEGMENT INFORMATION" to our unaudited interim Consolidated Financial Statements for a reconciliation of segment profit to Income (loss) before (provision for) benefit from income taxes.

The following table presents segment revenues, segment revenues as a percentage of total revenues, and the period-over-period changes in segment revenues for the three months ended ~~June~~September 30, 2021 and 2020. The following table also presents segment profits, segment profits as a percentage of segment revenues and the period-over-period changes in segment profits for the three months ended ~~June~~September 30, 2021 and 2020.


		Three Months Ended June 30,													Three Months Ended September 30,
		2021				2020				Change					2021				2020				Change
(in millions)	(in millions)	Amount		Pct.		Amount		Pct.		Amount		Pct.		(in millions)	Amount		Pct.		Amount		Pct.		Amount		Pct.
Segment Revenues	Segment Revenues													Segment Revenues
Bausch + Lomb	Bausch + Lomb	$	934	44	%	$	677	41	%	$	257	38	%	Bausch + Lomb	$	949	45	%	$	916	43	%	$	33	4	%
Salix	Salix	516		24	%	404		24	%	112		28	%	Salix	527		24	%	496		23	%	31		6	%
International Rx	International Rx	313		15	%	249		15	%	64		26	%	International Rx	271		13	%	308		14	%	(37)		(12)	%
Ortho Dermatologics	Ortho Dermatologics	137		7	%	117		7	%	20		17	%	Ortho Dermatologics	140		7	%	143		7	%	(3)		(2)	%
Diversified Products	Diversified Products	200		10	%	217		13	%	(17)		(8)	%	Diversified Products	224		11	%	275		13	%	(51)		(19)	%
Total revenues	Total revenues	$	2,100	100	%	$	1,664	100	%	$	436	26	%	Total revenues	$	2,111	100	%	$	2,138	100	%	$	(27)	(1)	%

Segment Profits / Segment Profit Margins	Segment Profits / Segment Profit Margins													Segment Profits / Segment Profit Margins
Bausch + Lomb	Bausch + Lomb	$	213	23	%	$	124	18	%	$	89	72	%	Bausch + Lomb	$	247	26	%	$	274	30	%	$	(27)	(10)	%
Salix	Salix	370		72	%	289		72	%	81		28	%	Salix	377		72	%	360		73	%	17		5	%
International Rx	International Rx	103		33	%	75		30	%	28		37	%	International Rx	92		34	%	104		34	%	(12)		(12)	%
Ortho Dermatologics	Ortho Dermatologics	61		45	%	38		32	%	23		61	%	Ortho Dermatologics	64		46	%	69		48	%	(5)		(7)	%
Diversified Products	Diversified Products	140		70	%	154		71	%	(14)		(9)	%	Diversified Products	161		72	%	207		75	%	(46)		(22)	%
Total segment profits	Total segment profits	$	887	42	%	$	680	41	%	$	207	30	%	Total segment profits	$	941	45	%	$	1,014	47	%	$	(73)	(7)	%

selling price and (ii) changes in sales deductions. The Company uses organic revenue (non-GAAP) and organic revenue growth (non-GAAP) to assess performance of its reportable segments, and the Company in total, without the impact of foreign currency exchange fluctuations and recent acquisitions, divestitures and product discontinuations. The Company believes that such measures are useful to investors as they provide a supplemental period-to-period comparison.

Organic revenue growth (non-GAAP) reflects adjustments for: (i) the impact of period-over-period changes in foreign currency exchange rates on revenues and (ii) the revenues associated with acquisitions, divestitures and discontinuations of businesses divested and/or discontinued. These adjustments are determined as follows:

Foreign currency exchange rates: Although changes in foreign currency exchange rates are part of our business, they are not within management’s control. Changes in foreign currency exchange rates, however, can mask positive or negative trends in the underlying business performance. The impact for changes in foreign currency exchange rates is determined as the difference in the current period reported revenues at their current period currency exchange rates and the current period reported revenues revalued using the monthly average currency exchange rates during the comparable prior period.

Acquisitions, divestitures and discontinuations: In order to present period-over-period organic revenues (non-GAAP) on a comparable basis, revenues associated with acquisitions, divestitures and discontinuations are adjusted to include only revenues from those businesses and assets owned during both periods. Accordingly, organic revenue growth (non-GAAP) excludes from the current period, all revenues attributable to each acquisition for twelve months subsequent to the day of acquisition, as there are no revenues from those businesses and assets included in the comparable prior period. Organic revenue growth (non-GAAP) excludes from the prior period (but not the current period), all revenues attributable to each divestiture and discontinuance during the twelve months prior to the day of divestiture or discontinuance, as there are no revenues from those businesses and assets included in the comparable current period. There were no acquisitions during the twelve month period ended ~~June~~September 30, 2021.

The following table presents a reconciliation of GAAP revenues to organic revenues (non-GAAP) and the period-over-period changes in organic revenue (Non-GAAP) for the three months ended ~~June~~September 30, 2021 and 2020 by segment.


		Three Months Ended June 30, 2021						Three Months Ended June 30, 2020						Change in Organic Revenue					Three Months Ended September 30, 2021						Three Months Ended September 30, 2020						Change in Organic Revenue (Non-GAAP)
		Revenue as Reported		Changes in Exchange Rates		Organic Revenue (Non-GAAP)		Revenue as Reported		Divestitures and Discontinuations		Organic Revenue (Non-GAAP)							Revenue as Reported		Changes in Exchange Rates		Organic Revenue (Non-GAAP)		Revenue as Reported		Divestitures and Discontinuations		Organic Revenue (Non-GAAP)
(in millions)	(in millions)													Amount		Pct.		(in millions)													Amount		Pct.
Bausch + Lomb	Bausch + Lomb	$	934	$	(33)	$	901	$	677	$	(2)	$	675	$	226	33	%	Bausch + Lomb	$	949	$	(10)	$	939	$	916	$	(4)	$	912	$	27	3	%
Salix	Salix	516		—		516		404		—		404		112		28	%	Salix	527		—		527		496		—		496		31		6	%
International Rx	International Rx	313		(23)		290		249		(1)		248		42		17	%	International Rx	271		(7)		264		308		(42)		266		(2)		(1)	%
Ortho Dermatologics	Ortho Dermatologics	137		(4)		133		117		—		117		16		14	%	Ortho Dermatologics	140		(2)		138		143		—		143		(5)		(3)	%
Diversified Products	Diversified Products	200		—		200		217		(1)		216		(16)		(7)	%	Diversified Products	224		—		224		275		—		275		(51)		(19)	%
Total	Total	$	2,100	$	(60)	$	2,040	$	1,664	$	(4)	$	1,660	$	380	23	%	Total	$	2,111	$	(19)	$	2,092	$	2,138	$	(46)	$	2,092	$	—	—	%

The Bausch + Lomb segment has a diversified product line with no single product group representing 10% or more of its product sales. The Bausch + Lomb segment revenue was ~~$934~~$949 million and ~~$677~~$916 million for the three months ended ~~June~~September 30, 2021 and 2020, respectively, an increase of ~~$257~~$33 million, or ~~38%~~4%. The increase was primarily attributable to: (i) an increase in volumes across all our Bausch + Lomb businesses of ~~$243~~$49 million primarily due to the positive impacts from the recovery from the COVID-19 pandemic and the easing of certain social restrictions, as previously discussed, partially offset byby: (a) the ~~impacts~~non-recurrence of a ~~third-party supplier quality issue on~~sale of Soothe®, a product of our Consumer business, to a key U.S. customer during the ~~revenues~~three months ended September 30, 2020 and (b) the impact of generic competition as certain ~~Consumer~~ products, such as ~~previously discussed,~~Lotemax® Gel, lost exclusivity and (ii) the favorable impact of foreign currencies of ~~$33~~$10 million, primarily in Europe and Asia. These increases were partially offset by: (i) a decrease in net realized pricing of ~~$17~~$22 million primarily due to higher sales deductions in our Ophthalmology business in the U.S. and (ii) the impact of divestitures and discontinuations of $2$4 million, related to the discontinuation of several products. The ~~net~~ increase in volumes was most notable in our ~~Surgical~~Consumer and ~~Vision Care~~Surgical businesses, and geographically ~~can~~was primarily be attributable to increases in ~~the U.S., Europe and Asia.~~

positively impacted the volumes of our Consumer business during that quarter but negatively impacted the volumes of our Consumer business for our second quarter of 2020. However, as governments began lifting social restrictions, the negative trend in the revenues of these businesses began to level off and stabilize prior to our third quarter and continued into our fourth quarter of 2020 and first quarter of 2021.

Although we experienced COVID-19 pandemic related declines in year-over-year revenues in certain products and geographies in 2021, total Bausch + Lomb segment revenues for the three months ended June 30, 2021 and March 31, 2021 increased 38% and 1%, respectively, when compared to the three months ended June 30, 2020 and March 31, 2020. At the current pace of the recovery, we anticipate that our revenues will likely return to pre-pandemic levels in 2021. However, as our revenues were most negatively impacted by the social restrictions and other precautionary measures taken in response to the COVID-19 pandemic during our second quarter of 2020, we expect the rate of growth for the remainder of 2021 to be lower than the year-over-year revenue growth for the three months ended June 30, 2021.

Bausch + Lomb Segment Profit

The Bausch + Lomb segment profit for the three months ended ~~June~~September 30, 2021 and 2020 was ~~$213~~$247 million and ~~$124~~$274 million, respectively, ~~an increase~~a decrease of ~~$89~~$27 million, or ~~72%~~10%. The ~~increase~~decrease was primarily driven by the increase in contribution primarily attributable to: (i) the net increase in revenues, as previously discussed, and (ii) lower manufacturing variances, partially offset by higher royalties. The increase in contribution was partially offset by: (i) the impacts of the non-recurrence of certain profit protection measures taken in 2020 to manage and reduce operating expenses during the COVID-19 pandemic, as previously discussed, which resulted in year-over-year increases primarily in selling expenses and advertising and promotion expenses and (ii) the non-recurrence of the temporary suspension in certain R&D activities and clinical trials in 2020 due to social restrictions and other precautionary measures taken in response to the COVID-19 pandemic, as previously discussed.

These decreases were partially offset by an increase in contribution primarily attributable to: (i) the net increase in revenues, as previously discussed, and (ii) lower manufacturing variances. The lower manufacturing variances were primarily due to the non-recurrence of certain variances driven by the impacts of the COVID-19 pandemic in 2020, as previously discussed, partially offset ~~by: (i) charges related to a quality issue at a third-party supplier, previously discussed, and (ii)~~by inflationary pressures related to certain manufacturing costs, as previously discussed.

Salix Segment:

Salix Segment Revenue

The Salix segment includes our Xifaxan® product line. Revenues from our Xifaxan® ~~products were $402 million, $315 million~~product line accounted for approximately 81% and ~~$356 million~~77% of the Salix segment revenues for the three months ended ~~June~~September 30, 2021 ~~2020~~ and ~~2019,~~2020, respectively. No other single product group represents 10% or more of the Salix segment product sales. Salix segment revenue for the three months ended ~~June~~September 30, 2021 and 2020 was ~~$516~~$527 million and ~~$404~~$496 million, respectively, an increase of ~~$112~~$31 million, or ~~28%~~6%. The increase is primarily driven by: (i) an increase in volumes of ~~$103~~$28 million primarily attributable to our Xifaxan® IBS-D product and the positive impacts from the recovery from the COVID-19 pandemic and the easing of certain social restrictions, as previously discussed, partially offset by the impact of generic competition as certain products, such as Apriso®, lost exclusivity and (ii) an increase in net realized pricing of ~~$9 million primarily attributable to higher net realized pricing for our Trulance~~$3 million.® ~~and Apriso~~® ~~products.~~

Although we experienced COVID-19 pandemic related declines in year-over-year revenues in certain products during 2021, year-over-year Salix segment revenues for the three months ended June 30, 2021 increased 28% and the decrease in year-over-year Salix segment revenues for the three months ended March 31, 2021 of 1% is not material. At the current pace of the recovery, we anticipate that our revenues will likely return to pre-pandemic levels in 2021. However, as our revenues were most negatively impacted by the social restrictions and other precautionary measures taken in response to the

~~COVID-19 pandemic during our second quarter of 2020, we expect the rate of growth for the remainder of 2021 to be lower than the year-over-year revenue growth for the three months ended June 30, 2021.~~

Salix Segment Profit

The Salix segment profit for the three months ended ~~June~~September 30, 2021 and 2020 was ~~$370~~$377 million and ~~$289~~$360 million, respectively, an increase of ~~$81~~$17 million, or ~~28%~~5%. The increase was primarily driven by ~~an increase in contribution primarily attributable to~~ the net increase in revenues, as previously discussed, partially offset by the impacts of the non-recurrence of certain profit protection measures taken in 2020 to manage and reduce operating expenses during the COVID-19 pandemic, as previously discussed, which resulted in year-over-year increases primarily in selling expenses and advertising and promotion expenses.

International Rx Segment:

International Rx Segment Revenue

The International Rx segment has a diversified product line with no single product group representing 10% or more of its product sales. The International Rx segment revenue was ~~$313~~$271 million and ~~$249~~$308 million for the three months ended ~~June~~September 30, 2021 and 2020, respectively, ~~an increase~~a decrease of ~~$64~~$37 million, or ~~26%~~12%. The ~~increase~~decrease was primarily attributable to: (i) the impact of divestitures and discontinuations of $42 million, primarily attributable to our divestiture of Amoun on July 26, 2021 and (ii) a decrease in volumes of $16 million, primarily in Canada and Latin America. Revenues associated with Amoun were $20 million and $60 million for the three months ended September 30, 2021 and 2020, respectively. These decreases were partially offset by: (i) an increase in ~~volumes~~net realized pricing of ~~$48~~$14 million ~~primarily in Poland~~ and (ii) the favorable impact of foreign currencies of ~~$23~~$7 million, primarily in Latin America.

International Rx Segment Profit

The International Rx segment profit for the three months ended September 30, 2021 and 2020 was $92 million and $104 million, respectively, a decrease of $12 million, or 12%. The decrease was primarily attributable to: (i) our divestiture of Amoun on July 26, 2021 and (ii) the decrease in volumes, previously discussed, partially offset by the increase in net realized pricing, previously discussed.

Ortho Dermatologics Segment:

Ortho Dermatologics Segment Revenue

The Ortho Dermatologics segment includes the Thermage® and Jublia® product lines, which accounted for approximately 41% and 11% of the Ortho Dermatologics segment revenues for the three months ended September 30, 2021, respectively. No other single product group represents 10% or more of the Ortho Dermatologics segment revenues. The Ortho Dermatologics segment revenue for the three months ended September 30, 2021 and 2020 was $140 million and $143 million, respectively, a decrease of $3 million, or 2%. The decrease is a result of a decrease in net realized pricing of $6 million, as a result of higher sales deductions in our medical dermatology products. The decrease was partially offset by: (i) the favorable impact of foreign currencies of $2 million and (ii) an increase in volume of $1 million.

Ortho Dermatologics Segment Profit

The Ortho Dermatologics segment profit for the three months ended September 30, 2021 and 2020 was $64 million and $69 million, respectively, a decrease of $5 million, or 7%. The decrease was primarily driven by: (i) the net decrease in revenues, as previously discussed, and (ii) an increase in R&D expenses due to the non-recurrence of the temporary suspension in certain R&D activities and clinical trials in 2020 due to social restrictions and other precautionary measures taken in response to the COVID-19 pandemic, as previously discussed.

Diversified Products Segment:

Diversified Products Segment Revenue

The following table displays the Diversified Products segment revenue by product and product revenues as a percentage of segment revenue for the three months ended September 30, 2021 and 2020.


	Three Months Ended September 30,
	2021				2020				Change
(in millions)	Amount		Pct.		Amount		Pct.		Amount		Pct.
Wellbutrin® Franchise	$	66	29	%	$	81	29	%	$	(15)	(19)	%
Aplenzin®	25		11	%	26		9	%	(1)		(4)	%
Arestin®	21		9	%	17		6	%	4		24	%
Ativan® Franchise	11		5	%	22		8	%	(11)		(50)	%
Librium®	10		4	%	—		—	%	10		100	%
Cardizem® Franchise	8		4	%	11		4	%	(3)		(27)	%
Diastat® Franchise	7		3	%	8		3	%	(1)		(13)	%
Mysoline® Franchise	6		3	%	8		3	%	(2)		(25)	%
Xenazine® Franchise	5		2	%	7		3	%	(2)		(29)	%
Elidel® Franchise	5		2	%	3		1	%	2		67	%
Other product revenues	59		28	%	89		33	%	(30)		(34)	%
Other revenues	1		—	%	3		1	%	(2)		(67)	%
Total Diversified Products revenues	$	224	100	%	$	275	100	%	$	(51)	(19)	%

The Diversified Products segment revenue for the three months ended September 30, 2021 and 2020 was $224 million and $275 million, respectively, a decrease of $51 million, or 19%. The decrease was primarily driven by: (i) a decrease in volume of $26 million and (ii) a decrease in net realized pricing of $25 million, primarily in our Generics and Neurology and Other business. The decrease in volume was primarily attributable to a decrease in our Neurology and Other business primarily due to lower demand of Wellbutrin®, Ativan® and Pepcid®.

Diversified Products Segment Profit

The Diversified Products segment profit for the three months ended September 30, 2021 and 2020 was $161 million and $207 million, respectively, a decrease of $46 million, or 22%. The decrease was primarily driven by a decrease in contribution primarily attributable to the net decrease in revenues, as previously discussed.

Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020

Revenues

Our revenue was $6,238 million and $5,814 million for the nine months ended September 30, 2021 and 2020, respectively, an increase of $424 million, or 7%. The increase was due to: (i) the net increase in volumes of $451 million primarily in our Bausch + Lomb, Salix, Ortho Dermatologics and International Rx segments and (ii) the favorable impact of foreign currencies of $112 million primarily in Europe, Asia and ~~Asia.~~Canada. These increases were partially offset by: (i) a decrease in net realized pricing of $6$79 million primarily due to higher sales deductions and (ii) the impact of divestitures and discontinuations of ~~$1 million.~~$60 million, primarily attributable to our divestiture of Amoun on July 26, 2021. The net increase in volumes iswas primarily due to the positive impacts from the recovery from the COVID-19 pandemic and the easing of certain social restrictions, as previously discussed, partially offset byby: (i) the impact of the loss of exclusivity ~~for certain products.~~

~~Although we experienced COVID-19 pandemic related declines in year-over-year revenues in~~of certain products primarily in our Diversified Products, Bausch + Lomb and ~~geographies~~Ortho Dermatologics segments and (ii) the impacts of a third-party supplier quality issue on the revenues of certain Consumer products included in ~~2021, total International Rx~~our Bausch + Lomb segment, as discussed below.

Our 2020 revenues ~~for~~were most negatively impacted during our second quarter by the ~~three months ended June 30, 2021~~social restrictions and ~~March 31, 2021 increased 26% and 5%, respectively, when compared~~other precautionary measures taken in response to the ~~three months ended June 30, 2020~~COVID-19 pandemic. However, as governments began lifting social restrictions, allowing offices of certain health care providers to reopen and ~~March 31,~~certain surgeries and elective medical procedures to proceed, the negative trend in the revenues of certain businesses began to level off and stabilize prior to our third quarter of 2020. At the current pace of the recovery, we anticipate that our revenues will likely return to pre-pandemic levels ~~in most~~for many of our businesses and geographies in ~~2021.~~2021 and for the remaining businesses and geographies in 2022. However, as our revenues were most negatively impacted by the social restrictions and other precautionary measures taken in response to the COVID-19 pandemic during our second quarter of 2020, we expect the rate of growth for the remainder of 2021 to be lower than the year-over-year revenue growth for the ~~three~~nine months ended ~~June 30, 2021.~~

~~International Rx Segment Profit~~

The International Rx segment profit for the three months ended June 30, 2021 and 2020 was $103 million and $75 million, respectively, an increase of $28 million, or 37%. The increase was primarily driven by an increase in contribution primarily attributable to: (i) the net increase in revenues, as previously discussed, and (ii) lower manufacturing variances. The increase in contribution was partially offset by the impacts of the non-recurrence of certain profit protection measures taken in 2020 to manage and reduce operating expenses during the COVID-19 pandemic, as previously discussed, which resulted in year-over-year increases primarily in selling expenses and advertising and promotion expenses.

~~Ortho Dermatologics Segment:~~

~~Ortho Dermatologics Segment Revenue~~

~~The Ortho Dermatologics segment includes the Thermage~~® ~~and Jublia~~® product lines, which accounted for approximately 41% and 11% of the Ortho Dermatologics segment revenues for the three months ended June 30, 2021, respectively. No other single product group represents 10% or more of the Ortho Dermatologics segment revenues. The Ortho Dermatologics segment revenue for the three months ended June 30, 2021 and 2020 was $137 million and $117 million, respectively, an increase of $20 million, or 17%. The increase is a result of: (i) an increase in volume of $34 million and (ii) the favorable impact of foreign currencies of $4 million. The increases were partially offset by a decrease in net realized pricing of $18 million, as a result of higher sales deductions in our medical dermatology products. The increase in volume is primarily due to increased demand of Thermage FLX®~~, partially offset by the impact of generic competition as certain medical dermatology products, such as Elidel~~®~~, lost exclusivity.~~

~~Ortho Dermatologics Segment Profit~~

The Ortho Dermatologics segment profit for the three months ended June 30, 2021 and 2020 was $61 million and $38 million, respectively, an increase of $23 million, or 61%. The increase was primarily driven by: (i) an increase in contribution primarily attributable to: (a) the net increase in revenues, as previously discussed, and (b) lower manufacturing variances and (ii) a decrease in R&D expenses due to the impact of rebalancing our portfolio within the Ortho Dermatologics business.

~~Diversified Products Segment:~~

~~Diversified Products Segment Revenue~~

~~The following table displays the Diversified Products segment revenue by product and product revenues as a percentage of segment revenue for the three months ended June 30, 2021 and 2020.~~

Three Months Ended June 30,
2021 2020 Change
(in millions) Amount Pct. Amount Pct. Amount Pct.
Wellbutrin® Franchise
$ 63 32 % $ 65 30 % $ (2) (3) %
Aplenzin®
26 13 % 23 11 % 3 13 %
Arestin®
23 12 % 6 3 % 17 283 %
Ativan® Franchise
13 7 % 7 3 % 6 86 %
Xenazine® Franchise
6 3 % 8 4 % (2) (25) %
Diastat® Franchise
6 3 % 3 1 % 3 100 %
Mysoline® Franchise
6 3 % 5 2 % 1 20 %
Ammonul®
5 3 % 1 — % 4 400 %
Uceris® AG
5 3 % 3 1 % 2 67 %
Cardizem® Franchise
4 2 % 4 2 % — — %
Other product revenues 40 17 % 93 43 % (53) (57) %
Other revenues 3 2 % (1) — % 4 (400) %
Total Diversified Products revenues $ 200 100 % $ 217 100 % $ (17) (8) %

The Diversified Products segment revenue for the three months ended June 30, 2021 and 2020 was $200 million and $217 million, respectively, a decrease of $17 million, or 8%. The decrease was primarily driven by a decrease in net realized pricing of $21 million, primarily in our Generics business, partially offset by an increase in volume of $5 million. The increase in volume was primarily attributable the positive impacts from the recovery from the COVID-19 pandemic and the easing of certain social restrictions, as previously discussed, particularly within our Dentistry business, partially offset by the impact of generic competition as certain products in our Neurology and Other business, such as Migranal®~~, Cuprimine~~®~~, Syprine~~®~~, Mephyton~~® ~~and Xenazine~~®~~, lost exclusivity.~~

~~Diversified Products Segment Profit~~

The Diversified Products segment profit for the three months ended June 30, 2021 and 2020 was $140 million and $154 million, respectively, a decrease of $14 million, or 9%. The decrease was primarily driven by a decrease in contribution primarily attributable to the net decrease in revenues, as previously discussed, offset by a decrease in royalties.

~~Six Months Ended June 30, 2021 Compared to the Six Months Ended June 30, 2020~~

~~Revenues~~

Our revenue was $4,127 million and $3,676 million for the six months ended June 30, 2021 and 2020, respectively, an increase of $451 million, or 12%. The increase was due to: (i) the net increase in volumes of $415 million primarily in our Bausch + Lomb, Salix, International Rx and Ortho Dermatologics segments and (ii) the favorable impact of foreign currencies of $93 million primarily in Europe, Asia and Canada. These increases were partially offset by: (i) a decrease in net realized pricing of $43 million primarily due to higher sales deductions in our Ortho Dermatologics and U.S. Ophthalmology businesses and (ii) the impact of divestitures and discontinuations of $14 million. The net increase in volumes was primarily due to the positive impacts from the recovery from the COVID-19 pandemic and the easing of certain social restrictions, as previously discussed, partially offset by: (i) the impacts of a third-party supplier quality issue on the revenues of certain Consumer products, as previously discussed, and (ii) the impact of the loss of exclusivity of certain products primarily in our Diversified Products segment.

As previously discussed, at the current pace of the recovery, we anticipate that our revenues will likely return to pre-pandemic levels in 2021. However, our revenues were most negatively impacted by the social restrictions and other precautionary measures taken in response to the COVID-19 pandemic during our second quarter of 2020, and we therefore

~~expect the rate of growth for the remainder of 2021 to be lower than the year-over-year revenue growth for the six months ended June~~September 30, 2021.

Cash Discounts and Allowances, Chargebacks and Distribution Fees

Provisions recorded to reduce gross product sales to net product sales and revenues for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 were as follows:


		Six Months Ended June 30,									Nine Months Ended September 30,
		2021				2020					2021				2020
(in millions)	(in millions)	Amount		Pct.		Amount		Pct.		(in millions)	Amount		Pct.		Amount		Pct.
Gross product sales	Gross product sales	$	6,792	100.0	%	$	6,000	100.0	%	Gross product sales	$	10,229	100.0	%	$	9,431	100.0	%
Provisions to reduce gross product sales to net product sales	Provisions to reduce gross product sales to net product sales									Provisions to reduce gross product sales to net product sales
Discounts and allowances	Discounts and allowances	306		4.5	%	293		4.9	%	Discounts and allowances	472		4.6	%	457		4.8	%
Returns	Returns	77		1.1	%	54		0.9	%	Returns	94		0.9	%	71		0.8	%
Rebates	Rebates	1,227		18.1	%	1,018		17.0	%	Rebates	1,842		18.0	%	1,587		16.8	%
Chargebacks	Chargebacks	993		14.6	%	917		15.2	%	Chargebacks	1,487		14.6	%	1,433		15.2	%
Distribution fees	Distribution fees	110		1.6	%	95		1.6	%	Distribution fees	167		1.6	%	149		1.6	%
Total provisions	Total provisions	2,713		39.9	%	2,377		39.6	%	Total provisions	4,062		39.7	%	3,697		39.2	%
Net product sales	Net product sales	4,079		60.1	%	3,623		60.4	%	Net product sales	6,167		60.3	%	5,734		60.8	%
Other revenues	Other revenues	48				53				Other revenues	71				80
Revenues	Revenues	$	4,127			$	3,676			Revenues	$	6,238			$	5,814

but not limited to: (i) ~~adjustments in 2020 to~~monitoring and reducing customer inventory levels, (ii) instituting disciplined pricing policies and (iii) improving contracting. These actions have had the ~~return reserves to reflect actual~~effect of improving the sales return experience, primarily related to branded and generic products. Included in the product returns provision for ~~certain products~~the nine months ended September 30, 2021 and ~~(ii)~~2020, are reductions in variable consideration for sales returns related to past sales of approximately $28 million and $38 million, during the three months ended September 30, 2021 and 2020, respectively. See Note 3, "REVENUE RECOGNITION" to our unaudited interim Consolidated Financial Statements regarding further details related to product sales provisions. In addition, returns as a percentage of gross product sales was higher due to the recall of certain Consumer products as a result of a ~~quality issue at a~~ third-party supplier ~~as previously~~of sterilization services for our lens care solution bottles and caps at our Milan, Italy facility, discussed ~~partially offset by lower return experience for a limited number of products;~~below;

•rebates as a percentage of gross product sales were higher primarily due the impact of: (i) an increase in gross product sales of certain branded products with higher rebate rates, such as Xifaxan®, Jublia®, and Prolensa® and (ii) an increase in rebates due to the launch of Arazlo® (June 2020) and was partially offset by lower gross product sales and lower rebate rates for branded products such as Apriso®, ~~Wellbutrin~~Duobrii®, ~~Duobrii~~Wellbutrin® and ~~Siliq~~Uceris®; Tablets;

•chargebacks as a percentage of gross product sales were lower primarily due to the ~~impact~~impacts of lower chargeback rates and gross product sales for certain products such as Glumetza® AG, Wellbutrin® and ~~Xifaxan~~Targretin® ~~and certain other products and~~AG partially offset by higher chargeback rates and gross product sales for certain products such as Glumetza® SLX, Mysoline® and Syprine® ~~AG, Mysoline~~® ~~and certain other products;~~AG; and

•distribution service fees as a percentage of gross product sales were unchanged. Price appreciation credits were offset against the distribution service fees we paid wholesalers and were $1 million and $4 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively.

Expenses

Cost of Goods Sold (excluding amortization and impairments of intangible assets)

Cost of goods sold was ~~$1,168~~$1,742 million and ~~$987~~$1,565 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively, an increase of ~~$181~~$177 million, or ~~18%~~11%. The increase was primarily driven by: (i) the net increase in volumes, as previously discussed, and (ii) the unfavorable impact of foreign currencies. ~~Manufacturing~~These increases were partially offset by: (i) the impact of the divestiture of Amoun on July 26, 2021 and (ii) lower manufacturing variances ~~were unchanged for the six months ended June 30, 2021, as compared~~primarily due to ~~the six months ended June 30, 2020, as~~ the benefits from the non-recurrence of certain variances driven by the impacts of the COVID-19 pandemic in 2020, as previously discussed, ~~were~~partially offset by: ~~(i)~~

(a) charges related to a quality issue at a third-party supplier, as ~~previously~~ discussed below, and ~~(ii)~~(b) inflationary pressures related to certain manufacturing costs, as previously discussed.

Cost of goods sold as a percentage of product sales revenue was ~~28.6%~~28.2% and ~~27.2%~~27.3% for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively, an increase of ~~1.4~~0.9 percentage points. Costs of goods sold as a percentage of Product sales revenue was unfavorably impacted by the decrease in net realized pricing, as previously discussed.

We were notified by a third-party supplier of sterilization services for our lens care solution bottles and caps at our Milan, Italy facility, of inconsistencies in the sterilization data versus certificates of conformance previously submitted to us by that supplier. Based on our internal Health and Safety Analysis, it was determined that this issue did not affect the safety or performance of any of our products and is limited to a specific number of lots for certain Consumer products within our Bausch + Lomb segment. However, out of an abundance of caution and working with the appropriate notified body and responsible health authorities, we have contained and/or recalled down to the consumer level the limited number of affected lots of products resulting in $8 million of manufacturing variances and $6 million of returns. Further, although our Greenville, South Carolina facility increased production to support some of the demand in the near term, due to the limited availability of qualified materials, production at the Milan facility could not keep up with demand which negatively impacted our sales for the affected products in this region during the nine months ended September 30, 2021. At this time, we have removed this supplier from our Approved Supplier List and qualified another sterilization supplier, who, along with an existing secondary supplier, have and will provide bottle sterilization, thereby allowing our Milan facility to return to full production capacity. Although it is possible additional charges may be incurred, at this time we believe no additional charges will be necessary.

Selling, General and Administrative Expenses

SG&A expenses were ~~$1,291~~$1,944 million and ~~$1,159~~$1,731 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively, an increase of ~~$132~~$213 million, or ~~11%~~12%. The increase was primarily attributable to: (i) the impacts of the non-recurrence of certain profit protection measures taken in 2020 to manage and reduce operating expenses during the

COVID-19 pandemic, as previously discussed, (ii) an increase in Separation-related and IPO-related costs ~~during the six months ended June 30, 2021~~ of ~~$55~~$87 million and (iii) the impact of foreign currencies.

During 2020, the Company took certain profit protection measures to manage and reduce operating expenses during the COVID-19 pandemic, which resulted in year-over-year increases primarily in selling expenses and advertising and promotion expenses. These profit protection measures were successful in expanding the profit margins in many of our businesses as previously discussed. As the pace of recovery in each geography accelerates, we expect to allocate more resources to selling and other promotional activities to drive our return to sustainable revenue and profit growth. Therefore, if the recovery continues, we expect our operating expenses to increase in support of our existing products, product launches and products in development and as a result expect to see our operating expenses for the remainder of 2021 exceed our operating expenses in 2020 for the same period.

Research and Development

R&D expenses were ~~$227~~$348 million and ~~$230~~$333 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively, ~~a decrease~~an increase of $3$15 million, or 1%5%. The increase was primarily attributable to the non-recurrence of the temporary suspension in certain R&D activities and clinical trials in 2020 due to social restrictions and other precautionary measures taken in response to the COVID-19 pandemic, as previously discussed, partially offset by the impact of rebalancing our portfolio within the Ortho Dermatologics business. R&D expenses as a percentage of Product sales were approximately 6% ~~and 6%~~ for both the ~~six~~nine months ended ~~June~~September 30, 2021 and ~~2020, respectively.~~2020.

Amortization of Intangible Assets

Amortization of intangible assets was ~~$717~~$1,055 million and ~~$872~~$1,263 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively, a decrease of ~~$155~~$208 million, or ~~18%~~16%. The decrease was primarily attributable to fully amortized intangible assets no longer being amortized in 2021.

Goodwill Impairments

Goodwill impairments were $469 million and $0 for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively. During the three months ended March 31, 2021, management identified launches of certain Ortho Dermatologics products which were not going to achieve their trajectories as forecasted once the social restrictions associated with the COVID-19 pandemic began to ease in the U.S. and offices of health care professionals could reopen. In addition, insurance coverage pressures within the U.S. continued to persist limiting patient access to topical acne and psoriasis products. In light of these developments, during the first quarter of 2021, the Company began taking steps to: (i) redirect its R&D spend to eliminate projects it has identified as high cost and high risk, (ii) redirect a portion of its marketing and product development outside the U.S. to geographies where there is better patient access and (iii) reduce its cost structure to be more competitive. As a result, during the three months ended March 31, 2021, the Company revised its long-term forecasts for the Ortho Dermatologics reporting unit. Management believed that these events were indicators that there is less headroom as of March 31, 2021 as compared to the headroom calculated on the date goodwill was last tested for impairment (October 1, 2020). Therefore, a quantitative fair value test for the Ortho Dermatologics reporting unit was performed. The quantitative fair value test utilized the Company's most recent cash flow projections as revised in the first quarter of 2021 to reflect the business changes previously discussed, including a range of potential outcomes, along with a long-term growth rate of 1.0% and a range of discount rates between 9.0% and 10.0%. Based on the quantitative fair value test, the carrying value of the Ortho Dermatologics reporting unit exceeded its fair value at March 31, 2021, and the Company recognized a goodwill impairment of $469 million.

See Note 8, "INTANGIBLE ASSETS AND GOODWILL" to our unaudited interim Consolidated Financial Statements regarding further details related to our goodwill impairment analysis.

Asset Impairments, Including Loss on Assets Held for Sale

Asset impairments, including loss on assets held for sale were ~~$195~~$213 million and ~~$15~~$17 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively, an increase of ~~$180~~$196 million. Asset impairments, including loss on assets held for

sales of certain product lines, (ii) an adjustment of $88 million to the loss on assets held for sale in connection with the Amoun Sale and (iii) impairments of ~~$11~~$20 million, in aggregate, related to the discontinuance of certain product lines. Asset impairments, including loss on assets held for sale for the ~~six~~nine months ended ~~June~~September 30, 2020 include impairments of: (i) ~~$14~~$16 million, in aggregate, due to decreases in forecasted sales of a certain product ~~line~~lines and (ii) $1 million, in aggregate, related to the discontinuance of certain product lines not aligned with the focus of the Company's core businesses.

See Note 8, "INTANGIBLE ASSETS AND GOODWILL" to our unaudited interim Consolidated Financial Statements regarding further details related to our intangible assets.

Restructuring, Integration, Separation and ~~Separation~~IPO Costs

Restructuring, integration, separation and ~~separation~~IPO costs were ~~$21~~$29 million and ~~$11~~$13 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively, an increase of ~~$10~~$16 million.

Restructuring and Integration Costs

Restructuring and integration costs were $6$9 million and ~~$11~~$12 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively, a decrease of $5$3 million. During the six months ended June 30, 2021 these costs included: (i) $5 million of facility closure costs and (ii) $1 million of severance costs. During the six months ended June 30, 2020, these costs included: (i) $6 million of facility closure costs and (ii) $5 million of other severance costs. The Company continues to evaluate opportunities to streamline its operations and identify additional cost savings globally. Although a specific plan does not exist at this time, the Company may identify and take additional exit and cost-rationalization restructuring actions in the future, the costs of which could be material.

Separation and IPO Costs

Separation and IPO costs were ~~$15~~$20 million and $0$1 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively. The Company continues to make progress toward internal objectives necessary for the B+L Separation and Solta IPO and the extent and timing of future charges for these costs cannot be reasonably estimated at this time and could be material.

See Note 5, "RESTRUCTURING, INTEGRATION, SEPARATION AND ~~SEPARATION~~IPO COSTS" to our unaudited interim Consolidated Financial Statements for further details regarding these actions.

Other (Income) Expense, Net

Other (income) expense, net for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 consists of the following:


		Six Months Ended June 30,					Nine Months Ended September 30,
(in millions)	(in millions)	2021		2020		(in millions)	2021		2020
Litigation and other matters	Litigation and other matters	$	532	$	123	Litigation and other matters	$	320	$	127
Acquisition-related contingent consideration	Acquisition-related contingent consideration	—		24		Acquisition-related contingent consideration	8		26
Net gain on sale of assets		(23)		(1)
Gain on sale of assets, net						Gain on sale of assets, net	(2)		(1)
Acquired in-process research and development costs	Acquired in-process research and development costs	3		8		Acquired in-process research and development costs	3		20
		$	512	$	154		$	329	$	172

Loss on Extinguishment of Debt

Loss on extinguishment of debt represents the differences between the amounts paid to settle extinguished debts and the carrying value of the related extinguished debt. Loss on extinguishment of debt was ~~$50~~$62 million and $51 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively, primarily associated with the 2021 Refinancing Transactions and the 2020 Refinancing Transactions, respectively, as previously discussed.

See Note 10, "FINANCING ARRANGEMENTS" to our unaudited interim Consolidated Financial Statements for further details.

Foreign Exchange and Other

Foreign exchange and other was a gain of $8$11 million and a loss of ~~$13~~$26 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively, a favorable net change of ~~$21~~$37 million primarily due to: (i) translation gains/losses on intercompany loans and third-party liabilities and (ii) the gain/loss due to foreign currency exchange contracts.

Income Taxes

Benefit from income taxes was ~~$61~~$36 million and ~~$138~~$133 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively, an unfavorable change of ~~$77~~$97 million. Our effective income tax rate for the ~~six~~nine months ended ~~June~~September 30, 2021 differs from the statutory Canadian income tax rate primarily due to: (i) the tax benefit generated from our annualized mix of earnings by jurisdiction, (ii) the recording of valuation allowance on entities for which no tax benefit of losses is expected and (iii) the discrete treatment of certain tax matters, primarily related to: (a) net income tax benefit associated with certain legal settlements, (b) tax provision related to potential and recognized withholding tax on intercompany dividends, (c) changes in uncertain tax positions, (d) adjustments for book to income tax return provisions and (e) a tax deduction for stock compensation.

Our effective income tax rate for the nine months ended September 30, 2020 differs from the statutory Canadian income tax rate primarily due to: (i) the tax benefit generated from our annualized mix of earnings by jurisdiction, (ii) the recording of valuation allowance on entities for which no tax benefit of losses is expected and (iii) the discrete treatment of certain tax matters, primarily related to: (a) ~~$54 million of net income tax benefit associated with certain legal settlements, (b) changes in uncertain tax positions, (c)~~ the release of a valuation allowance, ~~(d)~~(b) tax law changes, ~~and (e)~~(c) adjustments for book to income tax return ~~provisions.~~provisions, (d) changes in uncertain tax positions and (e) a tax deduction for stock compensation.

See Note 16, "INCOME TAXES" to our unaudited interim Consolidated Financial Statements for further details.

Reportable Segment Revenues and Profits

The following table presents segment revenues, segment revenues as a percentage of total revenues, and the year-over-year changes in segment revenues for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020. The following table also presents segment profits, segment profits as a percentage of segment revenues and the year-over-year changes in segment profits for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020.


		Six Months Ended June 30,													Nine Months Ended September 30,
		2021				2020				Change					2021				2020				Change
(in millions)	(in millions)	Amount		Pct.		Amount		Pct.		Amount		Pct.		(in millions)	Amount		Pct.		Amount		Pct.		Amount		Pct.
Segment Revenues	Segment Revenues													Segment Revenues
Bausch + Lomb	Bausch + Lomb	$	1,815	44	%	$	1,552	42	%	$	263	17	%	Bausch + Lomb	$	2,764	45	%	$	2,468	42	%	$	296	12	%
Salix	Salix	988		24	%	881		24	%	107		12	%	Salix	1,515		24	%	1,377		24	%	138		10	%
International Rx	International Rx	619		15	%	540		15	%	79		15	%	International Rx	890		14	%	848		14	%	42		5	%
Ortho Dermatologics	Ortho Dermatologics	278		7	%	248		7	%	30		12	%	Ortho Dermatologics	418		7	%	391		7	%	27		7	%
Diversified Products	Diversified Products	427		10	%	455		12	%	(28)		(6)	%	Diversified Products	651		10	%	730		13	%	(79)		(11)	%
Total revenues	Total revenues	$	4,127	100	%	$	3,676	100	%	$	451	12	%	Total revenues	$	6,238	100	%	$	5,814	100	%	$	424	7	%

Segment Profits / Segment Profit Margins	Segment Profits / Segment Profit Margins													Segment Profits / Segment Profit Margins
Bausch + Lomb	Bausch + Lomb	$	452	25	%	$	387	25	%	$	65	17	%	Bausch + Lomb	$	699	25	%	$	661	27	%	$	38	6	%
Salix	Salix	697		71	%	608		69	%	89		15	%	Salix	1,074		71	%	968		70	%	106		11	%
International Rx	International Rx	212		34	%	173		32	%	39		23	%	International Rx	304		34	%	277		33	%	27		10	%
Ortho Dermatologics	Ortho Dermatologics	131		47	%	85		34	%	46		54	%	Ortho Dermatologics	195		47	%	154		39	%	41		27	%
Diversified Products	Diversified Products	311		73	%	321		71	%	(10)		(3)	%	Diversified Products	472		73	%	528		72	%	(56)		(11)	%
Total segment profits	Total segment profits	$	1,803	44	%	$	1,574	43	%	$	229	15	%	Total segment profits	$	2,744	44	%	$	2,588	45	%	$	156	6	%

The following table presents organic revenue (non-GAAP) and the year-over-year changes in organic revenue (non-GAAP) for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 by segment. Organic revenues (non-GAAP) and organic growth (non-GAAP) rates are defined in the previous section titled “Reportable Segment Revenues and Profits”.


		Six Months Ended June 30, 2021						Six Months Ended June 30, 2020						Change in Organic Revenue					Nine Months Ended September 30, 2021						Nine Months Ended September 30, 2020						Change in Organic Revenue (Non-GAAP)
		Revenue as Reported		Changes in Exchange Rates		Organic Revenue (Non-GAAP)		Revenue as Reported		Divestitures and Discontinuations		Organic Revenue (Non-GAAP)							Revenue as Reported		Changes in Exchange Rates		Organic Revenue (Non-GAAP)		Revenue as Reported		Divestitures and Discontinuations		Organic Revenue (Non-GAAP)
(in millions)	(in millions)													Amount		Pct.		(in millions)													Amount		Pct.
Bausch + Lomb	Bausch + Lomb	$	1,815	$	(59)	$	1,756	$	1,552	$	(4)	$	1,548	$	208	13	%	Bausch + Lomb	$	2,764	$	(69)	$	2,695	$	2,468	$	(8)	$	2,460	$	235	10	%
Salix	Salix	988		—		988		881		—		881		107		12	%	Salix	1,515		—		1,515		1,377		—		1,377		138		10	%
International Rx	International Rx	619		(27)		592		540		(2)		538		54		10	%	International Rx	890		(34)		856		848		(44)		804		52		6	%
Ortho Dermatologics	Ortho Dermatologics	278		(7)		271		248		—		248		23		9	%	Ortho Dermatologics	418		(9)		409		391		—		391		18		5	%
Diversified Products	Diversified Products	427		—		427		455		(8)		447		(20)		(4)	%	Diversified Products	651		—		651		730		(8)		722		(71)		(10)	%
Total	Total	$	4,127	$	(93)	$	4,034	$	3,676	$	(14)	$	3,662	$	372	10	%	Total	$	6,238	$	(112)	$	6,126	$	5,814	$	(60)	$	5,754	$	372	6	%

As previously discussed, during 2020, the volumes of our Bausch + Lomb segment were most negatively impacted by the social restrictions and other precautionary measures taken in response to the COVID-19 pandemic during our second quarter of 2020. However, as governments began lifting social restrictions, the negative trend in the revenues began to level off and stabilize prior to our third quarter and continued into our fourth quarter of 2020 and first quarter of 2021.

Although we experienced COVID-19 pandemic related declines in year-over-year revenues in certain products and geographies in 2021, total Bausch + Lomb segment revenues for the three months ended June 30, 2021 and March 31, 2021 increased 38% and 1%, respectively, when compared to the three months ended March 31, 2020 and June 30, 2020. At the current pace of the recovery, we anticipate that our revenues will likely return to pre-pandemic levels for many of our Bausch + Lomb businesses and geographies in ~~2021.~~2021 and for the remaining Bausch + Lomb businesses and geographies in 2022. However, as our revenues were most negatively impacted by the social restrictions and other precautionary measures taken in response to the COVID-19 pandemic during our second quarter of 2020, we expect the rate of growth for the remainder of 2021 to be lower than the year-over-year revenue growth for the ~~three and six~~nine months ended ~~June~~September 30, 2021.

Bausch + Lomb Segment Profit

The Bausch + Lomb segment profit for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 was ~~$452~~$699 million and ~~$387~~$661 million, respectively, an increase of ~~$65~~$38 million, or ~~17%~~6%. The increase was primarily driven by the increase in contribution primarily attributable to the net increase in revenues, as previously discussed. These increases were partially offset by: (i) the impacts of the non-recurrence of certain profit protection measures taken in 2020 to manage and reduce operating expenses during the COVID-19 pandemic, as previously discussed, which resulted in year-over-year increases primarily in selling expenses and advertising and promotion expenses and (ii) the non-recurrence of the temporary suspension in certain R&D activities and clinical trials in 2020 due to social restrictions and other precautionary measures taken in response to the COVID-19 pandemic, as previously discussed.

Salix Segment:

Salix Segment Revenue

The Salix segment includes the Xifaxan® product line. Revenues from our Xifaxan® ~~products were $768 million, $690 million~~product line accounted for approximately 79% and ~~$662 million~~78% of the Salix segment revenues for the ~~six~~nine months ended ~~June~~September 30, 2021 ~~2020~~ and ~~2019,~~2020, respectively. No other single product group represents 10% or more of the Salix segment product sales. The Salix segment revenue for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 was ~~$988~~$1,515 million and ~~$881~~$1,377 million, respectively, an increase of ~~$107~~$138 million, or ~~12%~~10%. The increase was primarily attributable to increases in: (i) volume of ~~$79~~$107 million, primarily attributable to our Xifaxan® and Trulance®product lines and to the

positive impacts from the recovery from the COVID-19 pandemic and the easing of certain social restrictions, as previously discussed, and (ii) net realized pricing of ~~$28~~$31 million, primarily attributable to our Xifaxan® ~~and Apriso~~®product ~~lines,~~line, partially offset by higher sales adjustments for Glumetza® SLX.

Although we experienced COVID-19 pandemic related declines in year-over-year revenues in certain products during 2021, at the current pace of the recovery, we anticipate that our revenues will likely return to pre-pandemic levels for most of our Salix products in 2021. However, as our revenues were most negatively impacted by the social restrictions and other precautionary measures taken in response to the COVID-19 pandemic during our second quarter of 2020, we expect the rate of growth for the remainder of 2021 to be lower than the year-over-year revenue growth for the ~~three and six~~nine months ended ~~June~~September 30, 2021.

Salix Segment Profit

The Salix segment profit for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 was ~~$697~~$1,074 million and ~~$608~~$968 million, respectively, an increase of ~~$89~~$106 million, or ~~15%~~11%. The increase was primarily driven by the increase in contribution as a result of the increase in revenue, as previously discussed, partially offset by the impacts of the non-recurrence of certain profit protection measures taken in 2020 to manage and reduce operating expenses during the COVID-19 pandemic, as previously discussed, which resulted in year-over-year increases primarily in selling expenses and advertising and promotion expenses.

International Rx Segment:

International Rx Segment Revenue

The International Rx segment has a diversified product line with no single product group representing 10% or more of its product sales. The International Rx segment revenue was ~~$619~~$890 million and ~~$540~~$848 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively, an increase of ~~$79~~$42 million, or ~~15%~~5%. The increase was primarily attributable to: (i) an increase in volumes of ~~$57~~$41 million, ~~and~~ (ii) the favorable impact of foreign currencies of ~~$27~~$34 million, primarily in Canada and Europe, and ~~Canada. These increases were partially offset by: (i) a decrease~~(iii) an increase in net realized pricing of ~~$3 million and (ii) the impact of divestitures and discontinuations of $2~~$11 million. The increase in volumes is primarily due ~~to: (i)~~to the positive impacts from the recovery from the COVID-19 pandemic and the easing of certain social restrictions, as previously ~~discussed,~~discussed. These increases were partially offset by the impact of divestitures and ~~(ii) increased volumes in Mexico~~discontinuations of ~~Ivexterm~~®~~, due~~$44 million, primarily attributable to ~~its off label use as a treatment~~our divestiture of Amoun on July 26, 2021. Amoun revenues for ~~COVID-19,~~the nine months ended September 30, 2021 and ~~Bedoyecta~~2020 were $157 million and $179 million, respectively.

Although we experienced COVID-19 pandemic related declines in year-over-year revenues in certain products ~~and geographies in~~during 2021, total International Rx segment revenues for the three months ended June 30, 2021 and March 31, 2021 increased 26% and 5%, respectively, when compared to the three months ended March 31, 2020 and June 30, 2020. Atat the current pace of the recovery, we anticipate that our revenues will likely return to pre-pandemic levels ~~in most~~for many of our International Rx products and geographies in ~~2021.~~2021 and for the remaining International Rx products and geographies in 2022. However, as our revenues were most negatively impacted by the social restrictions and other precautionary measures taken in response to the COVID-19 pandemic during our second quarter of 2020, we expect the rate of growth for the remainder of 2021 to be lower than the year-over-year revenue growth for the ~~three and six~~nine months ended ~~June~~September 30, 2021.

International Rx Segment Profit

The International Rx segment profit for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 was ~~$212~~$304 million and ~~$173~~$277 million, respectively, an increase of ~~$39~~$27 million, or ~~23%~~10%. The increase was primarily driven by the increase in contribution primarily attributable to the net increase in revenues, as previously ~~discussed.~~discussed, partially offset by our divestiture of Amoun on July 26, 2021.

Ortho Dermatologics Segment:

Ortho Dermatologics Segment Revenue

The Ortho Dermatologics segment includes the Thermage® and Jublia® product lines, which accounted for approximately 41% and ~~10%~~11% of the Ortho Dermatologics segment revenues for the ~~six~~nine months ended ~~June~~September 30, 2021, respectively. No other single product group represents 10% or more of the Ortho Dermatologics segment revenues. The Ortho Dermatologics segment revenue for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 was ~~$278~~$418 million and ~~$248~~$391 million, respectively, an increase of ~~$30~~$27 million, or ~~12%~~7%. The increase was primarily attributable to: (i) an increase in volume of ~~$53~~$54 million and (ii) the favorable impact of foreign currencies of $7$9 million. These increases were partially offset by a decrease in net realized pricing of ~~$30~~$36 million, as a result of higher sales deductions in our medical dermatology products. The increase in volume was primarily due to: (i) increased demand of Thermage FLX® in our Solta aesthetic medical device business and (ii) the positive impacts from the recovery from the COVID-19 pandemic and the easing of certain social restrictions, as previously discussed, and were partially offset by the impact of generic competition as certain medical dermatology products, such as Elidel®, lost exclusivity.

Ortho Dermatologics Segment Profit

The Ortho Dermatologics segment profit for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 was ~~$131~~$195 million and ~~$85~~$154 million, respectively, an increase of ~~$46~~$41 million, or ~~54%~~27%. The increase is primarily due to: (i) an increase in contribution

Diversified Products Segment:

Diversified Products Segment Revenue

The following table displays the Diversified Products segment revenue by product and product revenues as a percentage of segment revenue for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020.


		Six Months Ended June 30,													Nine Months Ended September 30,
		2021				2020				Change					2021				2020				Change
(in millions)	(in millions)	Amount		Pct.		Amount		Pct.		Amount		Pct.		(in millions)	Amount		Pct.		Amount		Pct.		Amount		Pct.
Wellbutrin® Franchise	Wellbutrin® Franchise	$	116	27	%	$	123	27	%	$	(7)	(6)	%	Wellbutrin® Franchise	$	182	28	%	$	204	28	%	$	(22)	(11)	%
Aplenzin®	Aplenzin®	52		12	%	49		11	%	3		6	%	Aplenzin®	77		12	%	75		10	%	2		3	%
Arestin®	Arestin®	46		11	%	25		5	%	21		84	%	Arestin®	67		10	%	42		6	%	25		60	%
Ativan® Franchise	Ativan® Franchise	31		7	%	15		3	%	16		107	%	Ativan® Franchise	42		6	%	37		5	%	5		14	%
Mysoline® Franchise	Mysoline® Franchise	17		4	%	10		2	%	7		70	%	Mysoline® Franchise	23		4	%	18		2	%	5		28	%
Pepcid®		13		3	%	8		2	%	5		63	%
Cardizem® Franchise														Cardizem® Franchise	20		3	%	25		3	%	(5)		(20)	%
Diastat® Franchise	Diastat® Franchise	12		3	%	14		3	%	(2)		(14)	%	Diastat® Franchise	19		3	%	22		3	%	(3)		(14)	%
Xenazine® Franchise	Xenazine® Franchise	12		3	%	16		4	%	(4)		(25)	%	Xenazine® Franchise	17		3	%	23		3	%	(6)		(26)	%
Librax® Franchise	Librax® Franchise	9		2	%	11		2	%	(2)		(18)	%	Librax® Franchise	13		2	%	16		2	%	(3)		(19)	%
Uceris® AG	Uceris® AG	9		2	%	12		3	%	(3)		(25)	%	Uceris® AG	12		2	%	15		2	%	(3)		(20)	%
Other product revenues	Other product revenues	106		25	%	169		37	%	(63)		(37)	%	Other product revenues	174		26	%	247		35	%	(73)		(30)	%
Other revenues	Other revenues	4		1	%	3		1	%	1		33	%	Other revenues	5		1	%	6		1	%	(1)		(17)	%
Total Diversified Products revenues	Total Diversified Products revenues	$	427	100	%	$	455	100	%	$	(28)	(6)	%	Total Diversified Products revenues	$	651	100	%	$	730	100	%	$	(79)	(11)	%

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows


		Six Months Ended June 30,							Nine Months Ended September 30,
(in millions)	(in millions)	2021		2020		Change		(in millions)	2021		2020		Change
Net loss	Net loss	$	(1,200)	$	(477)	$	(723)	Net loss	$	(1,009)	$	(407)	$	(602)
Adjustments to reconcile net loss to net cash provided by operating activities	Adjustments to reconcile net loss to net cash provided by operating activities	1,867		1,075		792		Adjustments to reconcile net loss to net cash provided by operating activities	2,322		1,510		812
Cash provided by operating activities before changes in operating assets and liabilities	Cash provided by operating activities before changes in operating assets and liabilities	667		598		69		Cash provided by operating activities before changes in operating assets and liabilities	1,313		1,103		210
Changes in operating assets and liabilities	Changes in operating assets and liabilities	171		(137)		308		Changes in operating assets and liabilities	89		(386)		475
Net cash provided by operating activities	Net cash provided by operating activities	838		461		377		Net cash provided by operating activities	1,402		717		685
Net cash used in investing activities		(99)		(107)		8
Net cash provided by (used in) investing activities								Net cash provided by (used in) investing activities	489		(177)		666
Net cash used in financing activities	Net cash used in financing activities	(631)		(1,674)		1,043		Net cash used in financing activities	(1,788)		(1,791)		3
Effect of exchange rate on cash and cash equivalents	Effect of exchange rate on cash and cash equivalents	(6)		(17)		11		Effect of exchange rate on cash and cash equivalents	(15)		(5)		(10)
Net increase (decrease) in cash, cash equivalents, restricted cash and cash held for sale	Net increase (decrease) in cash, cash equivalents, restricted cash and cash held for sale	102		(1,337)		1,439		Net increase (decrease) in cash, cash equivalents, restricted cash and cash held for sale	88		(1,256)		1,344
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	1,816		3,244		(1,428)		Cash, cash equivalents and restricted cash, beginning of period	1,816		3,244		(1,428)
Cash, cash equivalents, restricted cash and cash and cash equivalents held for sale, end of period		$	1,918	$	1,907	$	11
Cash, cash equivalents and restricted cash, end of period								Cash, cash equivalents and restricted cash, end of period	$	1,904	$	1,988	$	(84)

of ~~$1,579~~$1,576 million primarily includes the proceeds of ~~$1,583~~$1,580 million from the issuance of $1,600 million in principal amount of 4.875% Senior Secured Notes due June 2028.

Net cash used in financing activities was ~~$1,674~~$1,791 million for the ~~six~~nine months ended ~~June~~September 30, 2020 and was primarily driven by ~~the~~ repayments of long-term debt, net of ~~$3,062 million which consisted of: (i) $1,250 million~~issuances and related discounts, of ~~6.50% Senior Secured Notes due March 2022, (ii)~~$1,686 million. These repayments include $1,240 million of May 2023 Unsecured Notes, which was previously financed as part of the December 2019 Financing and Refinancing Transactions, which were completed in January 2020, (iii) $371 million of our June 2025 Term Loan B Facility (as defined below), (iv) $100 million of 5.50% Senior Unsecured Notes due March 2023, (v) $75 million of our November 2025 Term Loan B Facility (as defined below) and (vi) the repurchase and retirement of outstanding senior unsecured notes with an aggregate par value of $27 million in the open market, for an aggregate cost of $26 million. Issuance of long-term debt, net of discounts of $1,477 million primarily includes the proceeds of $1,481 million from the issuance of $1,500 million in principal amount of 6.25% Senior Unsecured Notes due February 2029, partially offset by $4 million in payments we made in 2020 for issuance costs associated with long-term debt issued in previous years. Payments of financing costs associated with the refinancing of certain debt was $39 million for the six months ended June 30, 2020.Transactions.

See Note 10, "FINANCING ARRANGEMENTS" to our unaudited interim Consolidated Financial Statements for additional information regarding the financing activities described above.

Liquidity and Debt

Future Sources of Liquidity

Our primary sources of liquidity are our cash and cash equivalents, cash collected from customers, funds as available from our revolving credit facility, issuances of long-term debt and issuances of equity and equity-linked securities. We believe these sources will be sufficient to meet our current liquidity needs for at least the twelve months following the issuance of this Form 10-Q.

The Company regularly evaluates market conditions, its liquidity profile, and various financing alternatives for opportunities to enhance its capital structure. If opportunities are favorable, the Company may refinance or repurchase existing debt or issue equity or equity-linked securities. We believe our existing cash and cash generated from operations will be sufficient to service our debt obligations through 2024.

Long-term Debt

Long-term debt, net of unamortized premiums, discounts and issuance costs was ~~$23,439~~$22,358 million and $23,925 million as of ~~June~~September 30, 2021 and December 31, 2020, respectively. Aggregate contractual principal amounts due under our debt obligations were ~~$23,685~~$22,585 million and $24,185 million as of ~~June~~September 30, 2021 and December 31, 2020, respectively, a decrease of ~~$500~~$1,600 million. The decrease is attributable to the debt repayments previously discussed under "Cash Flows - Financing Activities" during the ~~six~~nine months ended ~~June~~September 30, 2021.

Our prepayment and refinancing of debt over the last four years translate into lower repayments of principal over the next four years, which, in turn, we believe will permit more cash flows to be directed toward developing our core assets, identifying new product opportunities and repaying additional debt amounts. The mandatory scheduled principal repayments of our debt obligations as of ~~June~~September 30, 2021, were as follows:


(in millions)	(in millions)																							(in millions)
2021	2021	2022		2023		2024		2025		2026		2027		2028		2029		2030		2031		Total		2021	2022		2023		2024		2025		2026		2027		2028		2029		2030		2031		Total
$	—	$	—	$	—	$	291	$	10,532	$	1,500	$	2,250	$	3,612	$	3,250	$	1,250	$	1,000	$	23,685	—	$	—	$	—	$	—	$	9,723	$	1,500	$	2,250	$	3,612	$	3,250	$	1,250	$	1,000	$	22,585

~~Additionally, on August 3,~~During October 2021, we ~~announced~~drew down, net of repayments, $290 million under our 2023 Revolving Credit Facility which we ~~will redeem an additional $350~~used primarily to make deposits of approximately $300 million, in the aggregate, ~~principal amount~~into escrow funds under the terms of ~~our outstanding 6.125% Senior Notes due 2025 using cash on hand in September 2021, which has not been reflected in~~settlement agreements regarding the ~~table above.~~

Glumetza Antitrust Litigation and to pay interest and other business expenses. See Note 10, "FINANCING ARRANGEMENTS" to our unaudited interim Consolidated Financial Statements and “Management's Discussion and Analysis - Liquidity and Capital Resources: Long-term Debt” for further details.

Senior Secured Credit Facilities

facilities of original principal amounts of $4,565 million and $1,500 million, maturing in June 2025 (the “June 2025 Term Loan B Facility”) and November 2025 (the "November 2025 Term Loan B Facility"), respectively. Both the Company and BHA are borrowers under the 2023 Revolving Credit Facility, borrowings under which may be made in U.S. dollars, Canadian dollars or euros.

Current Description of Senior Secured Credit Facilities

The applicable interest rate margins for the June 2025 Term Loan B Facility and the November 2025 Term Loan B Facility are 2.00% and 1.75%, respectively, with respect to base rate and prime rate borrowings and 3.00% and 2.75%, respectively, with respect to eurocurrency rate and BA rate borrowings. As of ~~June~~September 30, 2021, the stated rates of interest on the Company’s borrowings under the June 2025 Term Loan B Facility and the November 2025 Term Loan B Facility were ~~3.09%~~3.08% and ~~2.84%~~2.83% per annum, respectively.

The amortization rate for both the June 2025 Term Loan B Facility and the November 2025 Term Loan B Facility is 5.00% per annum. The Company may direct that prepayments be applied to such amortization payments in order of maturity. As of ~~June~~September 30, 2021, ~~the aggregate~~there were no remaining mandatory quarterly amortization payments for the Senior Secured Credit ~~Facilities were $405 million through November 1, 2025.~~Facilities.

subject to a secured leverage ratio of not greater than 3.50:1.00, and, in the case of unsecured debt, a total leverage ratio of not greater than 6.50:1.00 or an interest coverage ratio of not less than 2.00:1.00.

Senior Secured Notes

The aggregate principal amount of our Senior Secured Notes as of ~~June~~September 30, 2021 and December 31, 2020 was $3,850 million and $4,250 million, respectively, a decrease of $400 million representing the prepayment of $400 million 7.00% Senior Secured Notes due 2024 using cash on hand and cash generated from operations during 2021. Further, in June 2021 as part of the 2021 Refinancing Transactions previously discussed, we accessed the credit markets and refinanced the remaining $1,600 million of existing 7.00% Senior Secured Notes due 2024 with $1,600 million of 4.875% Senior Secured Notes due 2028.

Senior Unsecured Notes

The Senior Unsecured Notes issued by the Company are the Company’s senior unsecured obligations and are jointly and severally guaranteed on a senior unsecured basis by each of its subsidiaries that is a guarantor under the Senior Secured Credit Facilities. The Senior Unsecured Notes issued by BHA are senior unsecured obligations of BHA and are jointly and severally guaranteed on a senior unsecured basis by the Company and each of its subsidiaries (other than BHA) that is a guarantor under the Senior Secured Credit Facilities. Future subsidiaries of the Company and BHA, if any, may be required to guarantee the Senior Unsecured Notes. On a non-consolidated basis, the non-guarantor subsidiaries had total assets of ~~$2,921~~$2,088 million and total liabilities of ~~$2,034~~$1,682 million as of ~~June~~September 30, 2021, and revenues of ~~$850~~$1,273 million and operating income of $3$44 million for the ~~six~~nine months ended ~~June~~September 30, 2021.

Since 2017 through the date of this filing, the Company completed several actions which included using cash flows from operations to repay debt and refinancing debt with near-term maturities. These actions have reduced the Company’s debt balance and positively affected the Company’s ability to comply with the financial maintenance covenant. As of ~~June~~September 30, 2021, the Company was in compliance with its financial maintenance covenant related to its outstanding debt. The Company, based on its current forecast, as adjusted for the potential impacts of the COVID-19 pandemic, expects to remain in compliance with the financial maintenance covenant and meet its debt service obligations for at least the twelve months following the date of issuance of this Form 10-Q.

The Company continues to take steps to improve its operating results to ensure continual compliance with its financial maintenance covenant and take other actions to reduce its debt levels to align with the Company’s long-term strategy. The Company may consider taking other actions, including divesting other businesses, refinancing debt and issuing equity or equity-linked securities as deemed appropriate, to provide additional coverage in complying with the financial maintenance covenant and meeting its debt service obligations.

On August 6, 2020, we announced that we intend to separate our eye health business into an independent publicly traded entity, Bausch + Lomb from the remainder of Bausch Health Companies Inc. On August 3, 2021, we announced our intention to conduct an initial public offering of our aesthetic medical ~~aesthetics~~device business, Solta Medical. We intend to use the proceeds from the B+L Separation and the Solta IPO to repay, to the extent possible, a portion of our existing debt, thereby improving our capitalization and leverage. We believe the B+L Separation and the Solta IPO provides us with an attractive opportunity for liquidity to support the appropriate capitalization and leverage of the Bausch + Lomb entity, the Solta Medical entity and Bausch Pharma. However, management continues to consider the forms of the B+L Separation and the Solta IPO and is exploring a number of alternative capitalization structures in order to properly capitalize the three entities.

Weighted Average Interest Rate

The weighted average stated rate of interest of the Company's outstanding debt as of ~~June~~September 30, 2021 and December 31, 2020 was ~~5.85%~~5.91% and 6.02%, respectively.

See Note 10, "FINANCING ARRANGEMENTS" to our unaudited interim Consolidated Financial Statements for further details.

Credit Ratings

~~In May 2021, both Standard & Poor's and Fitch maintained our credit ratings but changed our outlook from stable to negative.~~ As of ~~August 3,~~November 2, 2021, the credit ratings and outlook from Moody's, Standard & Poor's and Fitch for certain outstanding obligations of the Company were as follows:

Rating Agency

Corporate Rating

Senior Secured Rating

Senior Unsecured Rating

Outlook

Moody’s

Ba2

Stable

Standard & Poor’s

B+

Negative

Fitch

Negative

Any downgrade in our corporate credit ratings or other credit ratings may increase our cost of borrowing and may negatively impact our ability to raise additional debt capital.

In addition to our working capital requirements, as of ~~June~~September 30, 2021, we expect our primary cash requirements during the remainder of 2021 to include:

•Debt repayments—As a result of prepayments and a series of refinancing transactions, we have reduced and extended the maturities of a substantial portion of our long-term debt and, ~~have no debt maturities or mandatory amortization payments due until 2025,~~ as of the date of this ~~filing.~~filing, have no debt maturities until 2023 and have no mandatory amortization payments. We expect to make interest payments of approximately ~~$701~~$360 million during the remainder of ~~2021. In addition, on July 30,~~ 2021 and August 3, 2021, the Company made aggregate payments of $600 million, to repay $469 million of its June 2025 Term Loan B Facility and $131 million of its November 2025 Term Loan B Facility, using the net proceeds from the Amoun Sale and cash on hand. On August 2, 2021, we also redeemed $150 million aggregate principal amount of our outstanding 6.125% Senior Notes due 2025, and, on August 3, 2021, we announced we will redeem an additional $350 million in aggregate principal amount of our outstanding 6.125% Senior Notes due 2025 using cash on hand in September 2021. We may also elect to make additional principal payments under certain circumstances. During October 2021, we drew down, net of repayments, $290 million under our 2023 Revolving Credit Facility which we used primarily to make deposits of approximately $300 million, in the aggregate, into escrow funds under the terms of settlement agreements regarding the Glumetza Antitrust Litigation, as discussed below, and to pay interest and other business expenses. Further, in the ordinary course of business, we may borrow and repay other amounts under our 2023 Revolving Credit Facility to meet business needs;

•IT Infrastructure Investment—We expect to make payments of approximately ~~$27~~$15 million for licensing, maintenance and capitalizable costs associated with our IT infrastructure improvement projects during the remainder of 2021;

•Capital expenditures—We expect to make payments of approximately ~~$150~~$85 million for property, plant and equipment during the remainder of 2021;

•Contingent consideration payments—We expect to make contingent consideration and other development/approval/sales-based milestone payments of approximately ~~$75~~$25 million during the remainder of 2021;

•Restructuring and integration payments—We expect to make payments of $4$3 million during the remainder of 2021 for employee separation costs and lease termination obligations associated with restructuring and integration actions we have taken through ~~June~~September 30, 2021;

•Benefit obligations—We expect to make aggregate payments under our pension and postretirement obligations of $7$4 million during the remainder of 2021; and

•Litigation Payments - In the ordinary course of business, the Company is involved in litigation, claims, government inquiries, investigations, charges and proceedings. As of ~~June~~September 30, 2021, the Company's Consolidated Balance Sheet includes accrued current loss contingencies of ~~$2,076~~$2,061 million related to matters which are both probable and reasonably estimable, of which $1,738 million, has been paid or is expected to be payable during the remainder of 2021; however, a reliable estimate of the period in which the remaining loss contingencies will be payable, if ever, cannot be made. The amounts which can be expected to be payable during the remainder of 2021 include inter ~~alia: (i) the~~alia agreements to resolve:

U.S. Securities Litigation for $1,210 million - The Company reached an agreement to resolve the U.S. Securities Litigation for $1,210 million. Final court approval of this settlement was granted in January 2021 but is subject to ~~two objectors' appeals~~an objector's appeal of the Court's final approval order. The settlement resolves and discharges all claims against the Company in the class action. As part of the settlement, the Company and the other settling defendants admitted no liability as to the claims against it and deny all allegations of wrongdoing. This settlement resolves the most significant of the Company's remaining legacy legal matters and eliminates a material uncertainty regarding our Company. As of ~~June~~September 30, 2021, Restricted cash includes $1,210 million of payments into an escrow fund under the terms of a settlement agreement regarding the U.S. Securities ~~Litigation; and (ii)~~Litigation.

Glumetza Antitrust Litigation for $300 million - The Company reached an agreement ~~the Company reached~~ in principle on July 26, 2021, to resolve the class plaintiffs’ claims in the Glumetza Antitrust Litigation for $300 million, subject to a final settlement agreement and, thereafter, court approval. ~~The settlement will resolve and discharge all claims against~~On September 22, 2021, the ~~Company by members~~court granted preliminary approval of the ~~class.~~class settlement agreement. A final settlement approval hearing is scheduled for January 20, 2022. As part of the proposed settlement, the Company admitted no liability as to the claims against it and denies all allegations of wrongdoing. During October 2021, primarily using amounts drawn under our 2023 Revolving Credit Facility, we deposited approximately $300 million into escrow funds under the terms of a settlement agreement regarding the Glumetza Antitrust Litigation.

See Note 18, "LEGAL PROCEEDINGS" to our unaudited interim Consolidated Financial Statements for further details of this and other matters. Our ability to successfully defend the Company against pending and future litigation may impact future cash flows.

with activities to effectuate the B+L Separation and ~~expects to incur costs associated with activities to effectuate~~ the Solta IPO. These activities include: (i) separating the Bausch + Lomb and the Solta Medical businesses from the remainder of the Company and (ii) registering the Bausch + Lomb and the Solta Medical businesses as independent publicly traded entities. Separation ~~costs~~ and IPO costs are incremental costs directly related to the B+L Separation and Solta IPO and include, but are not limited to: (i) legal, audit and advisory fees, (ii) talent acquisition costs and (iii) costs associated with establishing new boards of directors and related board committees for the Bausch + Lomb and Solta Medical entities. The Company has also incurred, and will incur, Separation-related and IPO-related costs which are incremental costs indirectly related to the B+L Separation and ~~expects to incur costs associated with activities to effectuate the~~ Solta IPO. These costs include, but are not limited to: (i) IT infrastructure and software licensing costs, (ii) rebranding costs and (iii) costs associated with facility relocation and/or modification. The Company continues to make progress toward internal objectives necessary for the B+L Separation and the Solta IPO and the extent and timing of future charges for these costs cannot be reasonably estimated at this time and could be material.

Future Cost Savings Programs

We continue to evaluate opportunities to improve our operating results and may initiate additional cost savings programs to streamline our operations and eliminate redundant processes and expenses. These cost savings programs may include, but are not limited to: (i) reducing headcount, (ii) eliminating real estate costs associated with unused or under-utilized facilities and (iii) implementing contribution margin improvement and other cost reduction initiatives. The expenses associated with the implementation of these cost savings programs could be material and may impact our cash flows.

Future Licensing Payments

In the ordinary course of business, the Company may enter into select licensing and collaborative agreements for the commercialization and/or development of unique products primarily in the U.S. and Canada. In connection with these agreements, the Company may pay an upfront fee to secure the agreement. See Note 4, "ACQUISITION, LICENSING AGREEMENTS AND ~~ASSETS HELD FOR SALE"~~DIVESTITURE" to our unaudited interim Consolidated Financial Statements. Payments associated with the upfront fee for these agreements cannot be reasonably estimated at this time and could be material.

Unrecognized Tax Benefits

As of ~~June~~September 30, 2021, the Company had unrecognized tax benefits totaling ~~$1,118~~$1,117 million, of which, ~~$198~~$194 million is expected to be realized during the remainder of 2021, however a reliable estimate of the period in which the remaining uncertain tax positions will be payable, if ever, cannot be made.

There have been no other material changes to the contractual obligations disclosed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Off-Balance Sheet Arrangements and Contractual Obligations” included in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC and the CSA on February 24, 2021.

OUTSTANDING SHARE DATA

Our common shares trade on the New York Stock Exchange and the Toronto Stock Exchange under the symbol “BHC”.

At ~~July 29,~~October 28, 2021, we had ~~358,808,755~~359,330,757 issued and outstanding common shares. In addition, as of ~~July 29,~~October 28, 2021, we had outstanding ~~9,300,866~~8,993,149 stock options and ~~5,448,598~~5,304,482 time-based restricted share units that each represent the right of a holder to receive one of the Company’s common shares, and ~~2,207,728~~2,292,902 performance-based restricted share units that represent the right of a holder to receive a number of the Company's common shares up to a specified maximum. A maximum of ~~3,786,963~~3,958,100 common shares could be issued upon vesting of the performance-based restricted share units outstanding.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Critical accounting policies and estimates are those policies and estimates that are most important and material to the preparation of our Consolidated Financial Statements, and which require management’s most subjective and complex judgment due to the need to select policies from among alternatives available, and to make estimates about matters that are inherently uncertain. Management has reassessed the critical accounting policies and estimates as disclosed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” included in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC and

Note 8, "INTANGIBLE ASSETS AND GOODWILL" to our unaudited interim Consolidated Financial Statements, (iii) the estimates associated with the fair value of Ortho Dermatologics reporting unit in testing goodwill for impairment as discussed in Note 8, "INTANGIBLE ASSETS AND GOODWILL" to our unaudited interim Consolidated Financial Statements, (iv) the impact that the COVID-19 pandemic has on the Company’s assessment of goodwill as discussed in Note 8, "INTANGIBLE ASSETS AND GOODWILL" to our unaudited interim Consolidated Financial Statements and (v) recently adopted accounting guidance as discussed in Note 2, "SIGNIFICANT ACCOUNTING POLICIES" to our unaudited interim Consolidated Financial Statements.

NEW ACCOUNTING STANDARDS

Adoption of New Accounting Guidance

Information regarding recently issued accounting guidance is contained in Note 2, "SIGNIFICANT ACCOUNTING POLICIES" of notes to our unaudited interim Consolidated Financial Statements.

FORWARD-LOOKING STATEMENTS

Caution regarding forward-looking information and statements and “Safe-Harbor” statements under the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws:

These forward-looking statements relate to, among other things: our business strategy, business plans and prospects and forecasts and changes thereto; product pipeline, prospective products and product approvals, expected launches of new products, product development and future performance and results of current and anticipated products; anticipated revenues for our products; expected ~~research and development ("~~R~~&D")~~&D and marketing spend; our expected primary cash and working capital requirements for 2021 and beyond; the Company's plans for continued improvement in operational efficiency and the anticipated impact of such plans; our liquidity and our ability to satisfy our debt maturities as they become due; our ability to reduce debt levels; our ability to comply with the financial and other covenants contained in our ~~Fourth Amended and~~ Restated Credit ~~and Guaranty~~ Agreement, ~~(the "Restated Credit Agreement"),~~ and senior notes indentures; the impact of our distribution, fulfillment and other third-party arrangements; proposed pricing actions; exposure to foreign currency exchange rate changes and interest rate changes; the outcome of contingencies, such as litigation, subpoenas, investigations, reviews, audits and regulatory proceedings; the anticipated impact of the adoption of new accounting standards; general market conditions; our expectations regarding our financial performance, including revenues, expenses, gross margins and income taxes; our impairment assessments, including the assumptions used therein and the results thereof; the anticipated impact of the evolving COVID-19 pandemic and related responses from governments and private sector participants on the Company, its supply chain, third-party suppliers, project development timelines, costs, revenues, margins, liquidity and financial condition, the anticipated timing, speed and magnitude of recovery from these COVID-19 pandemic related impacts and the Company’s planned actions and responses to this pandemic; the Company’s plan to separate its eye health business, including the structure and timing of completing such separation transaction; and the proposed ~~initial public offering~~IPO of the Company’s Solta aesthetic medical ~~aesthetics~~device business, including the timing of such ~~initial public offering.~~IPO.

governments, private sector participants and the public to that pandemic, and the potential effects and economic impact of the pandemic and the reaction to it, the severity, duration and future impact of which are highly uncertain and cannot be predicted, and which may have a significant adverse impact on the Company, including, but not limited, to its supply chain, third-party suppliers, project development timelines, employee base, liquidity, stock price, financial condition and costs (which may increase) and revenue and margins (both of which may decrease);

•the expense, timing and outcome of legal and governmental proceedings, investigations and information requests relating to, among other matters, our past distribution, marketing, pricing, disclosure and accounting practices (including with respect to our former relationship with ~~Philidor Rx Services, LLC ("Philidor"))~~Philidor), including a number of pending non-class securities litigations (including certain pending opt-out actions in the U.S. related to the previously settled securities class action (which remains subject to ~~two objectors' appeals~~an objector's appeal of the Court's final approval order) and certain opt-out actions in Canada relating to the recently settled class action in Canada) and purported class actions under the federal ~~RICO statute~~Racketeer Influenced Corrupt Organizations Act (the settlement of which remains subject to final court approval) and other claims, investigations or proceedings that may be initiated or that may be asserted;

•pricing decisions that we have implemented, or may in the future elect to implement, such as the Patient Access and Pricing Committee’s commitment that the average annual price increase for our branded prescription pharmaceutical

products will be set at no greater than single digits, or any future pricing actions we may take following review by our Patient Access and Pricing Committee (which is responsible for the pricing of our drugs);

•legislative or policy efforts, including those that may be introduced and passed by the U.S. Congress, designed to reduce patient out-of-pocket costs for medicines, which could result in new mandatory rebates and discounts or other pricing restrictions, controls or regulations (including mandatory price reductions);

•ongoing oversight and review of our products and facilities by regulatory and governmental agencies, including periodic audits by the ~~U.S. Food and Drug Administration (the "FDA")~~FDA and equivalent agencies outside of the U.S. and the results thereof;

•actions by the FDA or other regulatory authorities with respect to our products or facilities;

•compliance with the legal and regulatory requirements of our marketed products;

•our ability to comply with the financial and other covenants contained in our Restated Credit Agreement, senior notes indentures, 2023 Revolving Credit Facility and other current or future debt agreements and the limitations, restrictions and prohibitions such covenants impose or may impose on the way we conduct our business, including prohibitions on incurring additional debt if certain financial covenants are not met, limitations on the amount of additional obligations we are able to incur pursuant to other covenants, our ability to draw under our 2023 Revolving Credit Facility and restrictions on our ability to make certain investments and other restricted payments;

•any default under the terms of our senior notes indentures or Restated Credit Agreement and our ability, if any, to cure or obtain waivers of such default;

•any downgrade by rating agencies in our credit ratings, which may impact, among other things, our ability to raise debt and the cost of capital for additional debt issuances;

•our ability or inability to extend the profitable life of our products, including through line extensions and other life-cycle programs;

•our ability to retain, motivate and recruit executives and other key employees;

•our ability to implement effective succession planning for our executives and key employees;

•factors impacting our ability to achieve anticipated revenues for our products, including changes in anticipated marketing spend on such products and launch of competing products;

•factors impacting our ability to achieve anticipated market acceptance for our products, including acceptance of the pricing, effectiveness of promotional efforts, reputation of our products and launch of competing products;

•our ability to compete against companies that are larger and have greater financial, technical and human resources than we do, as well as other competitive factors, such as technological advances achieved, patents obtained and new products introduced by our competitors;

•our ability to effectively operate and grow our businesses in light of the challenges that the Company has faced and market conditions, including with respect to its substantial debt, pending investigations and legal proceedings, scrutiny of our past pricing and other practices, limitations on the way we conduct business imposed by the covenants contained in our Restated Credit Agreement, senior notes indentures and the agreements governing our other indebtedness, and the impacts of the COVID-19 pandemic;

•the inclusion of our products on formularies or our ability to achieve favorable formulary status, as well as the impact on the price and sales of our products in connection therewith;

•the consolidation of wholesalers, retail drug chains and other customer groups and the impact of such industry consolidation on our business;

•our ability to maintain strong relationships with physicians and other healthcare professionals;

•our eligibility for benefits under tax treaties and the continued availability of low effective tax rates for the business profits of certain of our subsidiaries;

•adverse global economic conditions and credit markets and foreign currency exchange uncertainty and volatility in certain of the countries in which we do business;

•the impact of the United States-Mexico-Canada Agreement ~~(“USMCA”)~~ and any potential changes to other trade agreements;

•~~the impact of Brexit and the post-Brexit trade deal between the European Union and the United Kingdom;~~

•the trade conflict between the United States and China;

•any divestitures of our assets or businesses and our ability to successfully complete any such divestitures on commercially reasonable terms and on a timely basis, or at all, and the impact of any such divestitures on our Company, including the reduction in the size or scope of our business or market share, loss of revenue, any loss on sale, including any resultant impairments of goodwill or other assets, or any adverse tax consequences suffered as a result of any such divestitures;

•our ability to negotiate the terms of or obtain court approval for the settlement of certain legal and regulatory proceedings;

•our ability to obtain components, raw materials or finished products supplied by third parties (some of which may be single-sourced) and other manufacturing and related supply difficulties, interruptions and delays;

•the disruption of delivery of our products and the routine flow of manufactured goods;

•interest rate risks associated with our floating rate debt borrowings;

•our ability to effectively distribute our products and the effectiveness and success of our distribution arrangements;

•our ability to effectively promote our own products and those of our co-promotion partners;

•the success of our fulfillment arrangements with Walgreens, including market acceptance of, or market reaction to, such arrangements (including by customers, doctors, patients, PBMs, third-party payors and governmental agencies), and the continued compliance of such arrangements with applicable laws;

•our ability to secure and maintain third-party research, development, manufacturing, licensing, marketing or distribution arrangements;

•the mandatory or voluntary recall or withdrawal of our products from the market and the costs associated therewith;

•our indemnity agreements, which may result in an obligation to indemnify or reimburse the relevant counterparty, which amounts may be material;

•the results of continuing safety and efficacy studies by industry and government agencies;

•uncertainties around the successful improvement and modification of our existing products and development of new products, which may require significant expenditures and efforts;

•the seasonality of sales of certain of our products;

•declines in the pricing and sales volume of certain of our products that are distributed or marketed by third parties, over which we have no or limited control;

•compliance by the Company or our third-party partners and service providers (over whom we may have limited influence), or the failure of our Company or these third parties to comply, with health care “fraud and abuse” laws and other extensive regulation of our marketing, promotional and business practices (including with respect to

•the impact of any changes in or reforms to the legislation, laws, rules, regulation and guidance that apply to the Company and its businesses and products or the enactment of any new or proposed legislation, laws, rules, regulations or guidance that will impact or apply to the Company or its businesses or products;

•the impact of changes in federal laws and policy that may be undertaken under the Biden administration;

•illegal distribution or sale of counterfeit versions of our products;

•interruptions, breakdowns or breaches in our information technology systems; and

•risks in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, filed on February 24, 2021, risks in Item 1A. “Risk Factors” of Part II of ~~this~~our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed on August 3, 2021, and risks detailed from time to time in our other filings with the SEC and the Canadian Securities Administrators (the “CSA”), as well as our ability to anticipate and manage the risks associated with the foregoing.

In early 2019, we began providing our estimates regarding the Company’s three year compound annual growth rate (“CAGR”) for the 2019 to 2022 period on both a revenue and adjusted EBITDA (non-GAAP) basis. However, subsequent to that, we announced our intention to separate our eye health business from the remainder of the Company and to complete the IPO of Solta Medical. We have made significant progress towards achieving these goals, including the sale of Amoun (which we completed in the third quarter of 2021), and, as announced, subject to market conditions, and receipt of regulatory, stock exchange and other approvals, we now believe that the IPOs of both Solta Medical and the Bausch + Lomb entity will occur in the near term. As a result, given these fundamental changes (which changes have already resulted in separation costs and have the potential for further incremental costs, including as a result of dissynergies), at this time, we no longer believe that our long-term CAGR estimates represent a meaningful metric for the performance of the Company or its businesses and, as such, we do not expect to provide long-term CAGR estimates for the Company going forward.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Other than as indicated below under “— Interest Rate Risk”, there have been no material changes to our exposures to market risks as disclosed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Quantitative and Qualitative Disclosures About Market Risks” included in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC and the CSA on February 24, 2021.

Interest Rate Risk

As of ~~June~~September 30, 2021, we had ~~$19,262~~$18,762 million and ~~$4,423~~$3,823 million principal amount of issued fixed rate debt and variable rate debt, respectively. The estimated fair value of our issued fixed rate debt as of ~~June~~September 30, 2021 was ~~$19,537~~$18,918 million. If interest rates were to increase by 100 basis-points, the fair value of our issued fixed rate debt would decrease by approximately ~~$544~~$526 million. If interest rates were to decrease by 100 basis-points, the fair value of our issued fixed rate debt would increase by approximately ~~$522~~$485 million. We are subject to interest rate risk on our variable rate debt as changes in interest rates could adversely affect earnings and cash flows. A 100 basis-points increase in interest rates would have an annualized pre-tax effect of approximately ~~$44~~$38 million in our Consolidated Statements of Operations and Cash

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For information concerning legal proceedings, reference is made to Note 18, "LEGAL PROCEEDINGS" of notes to the unaudited interim Consolidated Financial Statements included elsewhere in this Form 10-Q.

Item 1A. Risk Factors

~~Except as set forth below, there~~There have been no material changes to the risk factors as disclosed in Item 1A. “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC and the CSA on February 24, ~~2021.~~

~~Risk Relating to the Proposed IPO~~2021 as supplemented by risk factors disclosed in Item 1A. “Risk Factors” of ~~the Solta Medical Aesthetics Business~~

~~Our plan to pursue an initial public offering~~Part II of our ~~Solta medical aesthetics business (“Solta Medical”) is subject to various risks and uncertainties and may not be completed in accordance~~Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, filed with the ~~expected plans or anticipated timeline, or at all,~~SEC and ~~will involve significant time, expense, and distraction, which could disrupt or have a material adverse effect~~CSA on ~~our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.~~

On August 3, 2021, we announced that we intend to pursue an initial public offering of Solta Medical (the “Solta IPO”). The proposed Solta IPO would establish Solta Medical as a separate publicly traded company that consists of our medical aesthetics business. The anticipated Solta IPO is subject to regulatory approvals and certain conditions, including final approval by our Board of Directors and compliance with (including completion of all necessary filings required by) U.S. securities laws and stock exchange rules. The failure to satisfy all of the required conditions could delay the completion of the Solta IPO for a significant period of time or prevent it from occurring at all.

Unanticipated developments, including disruptions to business and commerce induced by the COVID-19 pandemic, unfavorable changes in market conditions, possible delays in obtaining any necessary stock exchange, regulatory or other approval or the failure to obtain any such approvals, negotiating challenges, the uncertainty of the financial markets, changes in the law, reactions of customers and other parties, industry or economic conditions outside of the Company’s control, and other challenges in executing the Solta IPO, could delay or prevent the completion of the Solta IPO, or cause the Solta IPO to occur on terms or conditions that are different or less favorable than expected. While we anticipate that we will be able to complete the Solta IPO in the fourth quarter of 2021 or the first half of 2022, the timing will ultimately depend on satisfying the conditions described above and market conditions. Any changes to the Solta IPO or delay in completing the Solta IPO could cause us not to realize some or all of the expected benefits, or realize them on a different timeline than expected. Further, our Board of Directors could decide, either because of a failure to satisfy conditions or because of market or other factors, to abandon the Solta IPO. No assurance can be given as to whether and when the Solta IPO will occur or whether the Solta IPO will achieve the benefits we expect. As a result, there can be no assurance as to the timing of the completion of the Solta IPO or its terms, and, the information in this Form 10-Q relating to the Solta IPO is preliminary and may change as the transaction progresses and any such change may be material. Any changes with respect to the timing of the Solta IPO or the terms and conditions on which the Solta IPO occurs could also delay the B+L Separation or cause the B+L Separation to occur on terms or conditions that are different or less favorable than expected.

Executing the Solta IPO will require significant resources, time and attention from our senior management and employees, which senior management and employees are already expending significant resources, time and attention on the B+L Separation. The Solta IPO could cause further distractions and further divert attention and resources away from other projects and the day-to-day operation of our business. We may also experience increased difficulties in attracting, retaining, and motivating management and employees during the pendency of the Solta IPO and following its completion. The Solta IPO, whether or not completed, may also have an adverse impact on our relationships with our customers, suppliers and other business counterparties. Our stock price could also fluctuate significantly in response to developments or market speculation related to the proposed Solta IPO.

We have already incurred expenses in connection with the Solta IPO, and expect that the process of completing the Solta IPO will be time-consuming and involve significant additional costs and expenses, which may not yield a discernible benefit if the Solta IPO is not completed. In addition, if the Solta IPO is not completed, we will still be required to pay certain costs and expenses incurred in connection therewith, such as legal, accounting, and other professional and advisory fees. Furthermore, the Solta IPO, if completed, may result in potential dyssynergy costs, which may be greater than we anticipate and/or may be significant.

Any of the above factors could cause the Solta IPO (or the failure to consummate the Solta IPO) to have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline.2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no sales of equity securities by the Company during the three months ended ~~June~~September 30, 2021.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain ~~Officers.~~Officers

~~On August 3, 2021, Bausch Health Companies Inc. (“Bausch Health”) announced that in~~In connection with the previously announced separation of its Bausch + Lomb eye health business (“Bausch + Lomb”) from Bausch Health Companies Inc. (“Bausch Health”), Frederick J. Munsch, the ~~remainder~~current Senior Vice President, Controller and Chief Accounting Officer of Bausch Health, ~~which is being referred to as “Bausch Pharma”, that Thomas J. Appio~~ will ~~be the~~become Senior Vice President, Controller and Chief ~~Executive~~Accounting Officer ~~(“CEO”) of Bausch Pharma and Robert A. Spurr will be the President, U.S. Bausch Pharma.~~

~~Mr. Appio has been President & Co-Head~~ of Bausch + ~~Lomb/International since August 2018,~~Lomb, effective as of the closing of the initial public offering of Bausch + Lomb. A successor for Mr. Munsch in his current role as Controller and ~~was previously Executive Vice President, Company Group Chairman, International from August 2016 until July 2018. Mr. Spurr has been President~~Chief Accounting Officer of ~~Salix since May 2020, and was previously Senior Vice President, Market Access and Commercial Operations from August 2018 to May 2020. Before joining~~ Bausch Health ~~he was a Vice President at Novartis Pharmaceuticals since 2012.~~

~~In connection with Mr. Appio becoming CEO of Bausch Pharma, effective September 1, 2021, his annual base salary~~is under review and will be ~~$1,000,000, his annual cash incentive opportunity will be 120%, and he will receive~~announced at a promotion equity grant with an aggregate value of $5,000,000, 50% in the form of restricted stock units and 50% in the form of performance stock units. In connection with Mr. Spurr becoming President, U.S. Bausch Pharma, effective September 1, 2021, his annual base salary will be $700,000, his annual cash incentive opportunity will be 80%, and he will receive a promotion equity grant with an aggregate value of $500,000, 50% in the form of restricted stock units and 50% in the form of stock options.later date.


Part I.	Financial Information
Item 1.	Consolidated Financial Statements (unaudited)
	Consolidated Balance Sheets as of ~~June~~September 30, 2021 and December 31, 2020	1
	Consolidated Statements of Operations for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020	2
	Consolidated Statements of Comprehensive ~~Loss~~I ncome (Loss) for the three and ~~six~~nine months ended ~~June~~Sept ember 30, 2021 and 2020	3
	Consolidated Statements of Shareholders' (Deficit) Equity for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020	4
	Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020	5
	Notes to the Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4043
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	9397
Item 4.	Controls and Procedures	9398
Part II.	Other Information
Item 1.	Legal Proceedings	9499
Item 1A.	Risk Factors	9499
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9599
Item 3.	Defaults Upon Senior Securities	9599
Item 4.	Mine Safety Disclosures	9599
Item 5.	Other Information	9599
Item 6.	Exhibits	96100
Signatures		97101


		June 30, 2021						December 31, 2020							September 30, 2021						December 31, 2020
(in millions)	(in millions)	Gross Carrying Amount		Accumulated Amortization and Impairments		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization and Impairments		Net Carrying Amount		(in millions)	Gross Carrying Amount		Accumulated Amortization and Impairments		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization and Impairments		Net Carrying Amount
Finite-lived intangible assets:	Finite-lived intangible assets:													Finite-lived intangible assets:
Product brands	Product brands	$	20,876	$	(15,622)	$	5,254	$	20,890	$	(14,914)	$	5,976	Product brands	$	20,845	$	(15,900)	$	4,945	$	20,890	$	(14,914)	$	5,976
Corporate brands	Corporate brands	907		(440)		467		907		(404)		503		Corporate brands	902		(455)		447		907		(404)		503
Product rights/patents	Product rights/patents	3,312		(3,122)		190		3,305		(3,055)		250		Product rights/patents	3,307		(3,147)		160		3,305		(3,055)		250
Partner relationships	Partner relationships	166		(166)		0		169		(168)		1		Partner relationships	160		(160)		—		169		(168)		1
Technology and other	Technology and other	210		(202)		8		210		(200)		10		Technology and other	208		(206)		2		210		(200)		10
Total finite-lived intangible assets	Total finite-lived intangible assets	25,471		(19,552)		5,919		25,481		(18,741)		6,740		Total finite-lived intangible assets	25,422		(19,868)		5,554		25,481		(18,741)		6,740
Acquired IPR&D not in service	Acquired IPR&D not in service	7		—		7		7		—		7		Acquired IPR&D not in service	6		—		6		7		—		7
Bausch + Lomb Trademark	Bausch + Lomb Trademark	1,698		—		1,698		1,698		—		1,698		Bausch + Lomb Trademark	1,698		—		1,698		1,698		—		1,698
		$	27,176	$	(19,552)	$	7,624	$	27,186	$	(18,741)	$	8,445		$	27,126	$	(19,868)	$	7,258	$	27,186	$	(18,741)	$	8,445


(in millions)	(in millions)	Remainder of 2021		2022		2023		2024		2025		2026		Thereafter		Total		(in millions)	Remainder of 2021		2022		2023		2024		2025		2026		Thereafter		Total
Amortization	Amortization	$	660	$	1,176	$	1,019	$	896	$	812	$	679	$	677	$	5,919	Amortization	$	320	$	1,169	$	1,013	$	891	$	809	$	678	$	674	$	5,554


		Pension Benefit Plans								Postretirement Benefit Plan					Pension Benefit Plans								Postretirement Benefit Plan
		U.S. Plan				Non-U.S. Plans									U.S. Plan				Non-U.S. Plans
(in millions)	(in millions)	2021		2020		2021		2020		2021		2020		(in millions)	2021		2020		2021		2020		2021		2020
Service cost	Service cost	$	0	$	0	$	2	$	1	$	0	$	0	Service cost	$	—	$	1	$	3	$	2	$	—	$	—
Interest cost	Interest cost	2		3		1		2		0		0		Interest cost	3		4		3		3		—		1
Expected return on plan assets	Expected return on plan assets	(5)		(6)		(3)		(2)		0		0		Expected return on plan assets	(8)		(10)		(4)		(4)		—		—
Amortization of prior service credit and other	Amortization of prior service credit and other	0		0		0		0		(1)		(1)		Amortization of prior service credit and other	—		—		(1)		—		(2)		(2)
Amortization of net loss	Amortization of net loss	$	0	$	0	$	1	$	0	$	0	$	0	Amortization of net loss	$	—	$	—	$	1	$	1	$	—	$	—
Net periodic (benefit) cost	Net periodic (benefit) cost	$	(3)	$	(3)	$	1	$	1	$	(1)	$	(1)	Net periodic (benefit) cost	$	(5)	$	(5)	$	2	$	2	$	(2)	$	(1)


~~4.1~~10.1*			~~Indenture,~~Form of 2021 Share Unit Grant Agreement (TSR Performance Restricted Share Units) under the Amended and Restated 2014 Omnibus Incentive Plan.†
10.2*			Amendment to Employment Agreement dated ~~as of June 8,~~April 28, 2021 ~~by and among~~between Bausch Health Companies Inc., and Paul Herendeen.†
31.1*			Certification of the ~~guarantors party thereto, The Bank~~Chief Executive Officer pursuant to Section 302 of ~~New York Mellon,~~the Sarbanes-Oxley Act of 2002.
31.2*			Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*			Certificate of the Chief Executive Officer of Bausch Health Companies Inc. pursuant to 18 U.S.C. § 1350 as ~~trustee~~adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*			Certificate of the Chief Financial Officer of Bausch Health Companies Inc. pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*			Inline XBRL Instance Document
101.SCH*			Inline XBRL Taxonomy Extension Schema Document
101.CAL*			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*			Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*			Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*			Inline XBRL Taxonomy Extension Definition Linkbase Document
104*			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


		Bausch Health Companies Inc. (Registrant)

Date:	November 2, 2021	/s/ JOSEPH C. PAPA
		Joseph C. Papa Chief Executive Officer (Principal Executive Officer and Chairman of the ~~notes collateral agents party thereto, originally filed as~~ Board)


Date:	November 2, 2021	/s/ SAM ELDESSOUKY
		Sam Eldessouky Executive Vice President and Chief Financial Officer (Principal Financial Officer)


Exhibit Number			Exhibit ~~4.1 to the Company’s Current Report on Form 8-K filed on June 8, 2021, which is incorporated by reference herein.~~Description
10.1*			Form of 2021 Share Unit Grant Agreement (TSR Performance Restricted Share Units) under the Amended and Restated 2014 Omnibus Incentive Plan.†
10.2*			Amendment to Employment Agreement dated ~~as of June 1,~~April 28, 2021 ~~by and~~ between Bausch Health Companies Inc. and ~~Sam Eldessouky.~~Paul Herendeen.†
31.1*			Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*			Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*			Certificate of the Chief Executive Officer of Bausch Health Companies Inc. pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*			Certificate of the Chief Financial Officer of Bausch Health Companies Inc. pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*			Inline XBRL Instance Document
101.SCH*			Inline XBRL Taxonomy Extension Schema Document
101.CAL*			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*			Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*			Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*			Inline XBRL Taxonomy Extension Definition Linkbase Document
104*			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


		~~Bausch Health Companies Inc.~~ ~~(Registrant)~~

~~Date:~~	~~August 3, 2021~~	~~/s/ JOSEPH C. PAPA~~
		Joseph C. Papa Chief Executive Officer (Principal Executive Officer and Chairman of the Board)


~~Date:~~	~~August 3, 2021~~	~~/s/ SAM ELDESSOUKY~~
		Sam Eldessouky Executive Vice President and Chief Financial Officer (Principal Financial Officer)


Exhibit Number			~~Exhibit Description~~
~~4.1~~			Indenture, dated as of June 8, 2021 by and among Bausch Health Companies Inc., the guarantors party thereto, The Bank of New York Mellon, as trustee and the notes collateral agents party thereto, originally filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 8, 2021, which is incorporated by reference herein.
10.1*			~~Employment Agreement, dated as of June 1, 2021, by and between Bausch Health Companies Inc. and Sam Eldessouky.†~~
31.1*			~~Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
31.2*			~~Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
32.1*			~~Certificate of the Chief Executive Officer of Bausch Health Companies Inc. pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
32.2*			~~Certificate of the Chief Financial Officer of Bausch Health Companies Inc. pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
101.INS*			~~Inline XBRL Instance Document~~
101.SCH*			~~Inline XBRL Taxonomy Extension Schema Document~~
101.CAL*			~~Inline XBRL Taxonomy Extension Calculation Linkbase Document~~
101.LAB*			~~Inline XBRL Taxonomy Extension Label Linkbase Document~~
101.PRE*			~~Inline XBRL Taxonomy Extension Presentation Linkbase Document~~
101.DEF*			~~Inline XBRL Taxonomy Extension Definition Linkbase Document~~
104*			~~Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)~~