UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM ~~10-Q/A~~

~~Amendment No. 1~~10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended		June 30, ~~2022~~2023
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 — ~~361,728,490~~364,334,264 shares outstanding as of ~~August 4, 2022.~~July 28, 2023.

~~EXPLANATORY NOTE~~

This Amendment No. 1 on Form 10-Q/A (“Amendment No. 1”) to the Quarterly Report on Form 10-Q of Bausch Health Companies Inc. (the “Company”), amends the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022 (the “Quarterly Report”), which was initially filed with the Securities and Exchange Commission on August 9, 2022. Capitalized terms used in this Explanatory Note and not otherwise defined herein shall have the meanings ascribed to such terms in the Quarterly Report.

This Amendment No. 1 is being filed to correct an error in the Liquidity and Capital Resources section of Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in Part I, Item 2 of the Quarterly Report. The Quarterly Report incorrectly stated that, with respect to the Company’s Senior Unsecured Notes, on a non-consolidated basis, the non-guarantor subsidiaries (which, for the avoidance of doubt, does not give effect to the release of the guarantees in connection with closing of the B+L IPO) had total assets of $6,343 million and total liabilities of $7,106 million as of June 30, 2022, and revenues of $755 million and operating income of $50 million for the six months ended June 30, 2022.

This Amendment No. 1 revises the Quarterly Report to correctly disclose that, with respect to the Company’s Senior Unsecured Notes, on a non-consolidated basis, the non-guarantor subsidiaries had total assets of $12,558 million and total liabilities of $4,299 million as of June 30, 2022, and revenues of $2,028 million and operating income of $10 million for the six months ended June 30, 2022.

No other changes in the Quarterly Report are being made by this Amendment No. 1. However, in accordance with Rule 12b-15 promulgated under the Securities Exchange Act of 1934, as amended, the complete text of Part I, Item 2, as amended, is included herein.

In addition, pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this Amendment No. 1 also contains new certifications of our principal executive officer and principal financial officer as Exhibits 31.1, 31.2, 32.1 and 32.2 hereto. This Amendment No. 1 speaks as of the date of the Quarterly Report, and has not been updated to reflect events occurring subsequent to the original filing date of the Quarterly Report.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~BAUSCH HEALTH COMPANIES INC.

FORM 10-Q

~~INTRODUCTION~~FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2023

~~Unless~~Introductory Note

Except where 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 9, 2022 and should be read in conjunction with the unaudited interim Consolidated Financial Statements and the related notes (the “Financial Statements”~~) included elsewhere~~requires, all references in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, ~~2022~~2023 (this “Form 10-Q”)~~. The matters discussed~~ 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 ~~“Management’s Discussion and Analysis~~this Form 10-Q are presented as of ~~Financial Condition and Results of Operations” contain certain~~June 30, 2023.

Forward-Looking Statements

This Form 10-Q contains forward-looking statements within the meaning of Section 27A of ~~The~~the Securities Act of 1933, as amended, and Section 21E of ~~The~~the Securities Exchange Act of 1934, as amended, and ~~that~~ may be forward-looking information within the meaning ~~defined under~~of applicable Canadian securities laws (collectively, ~~“Forward-Looking Statements”~~“forward-looking statements”)~~. See~~, as described in more detail under the heading “Forward-Looking Statements” ~~at the end~~in Item 2 of Part I of this ~~Item 2. Management’s Discussion~~Form 10-Q. Additional information about these factors and ~~Analysis of Financial Condition and Results of Operations.~~

~~Our accompanying unaudited interim Consolidated Financial Statements as of June 30, 2022 and~~about the material factors or assumptions underlying such forward-looking statements may be found (i) in our Annual Report on Form 10-K for the ~~three~~year ended December 31, 2022, filed on February 23, 2023, under Item 1A. “Risk Factors”; (ii) under Item 1A. “Risk Factors” of Part II of this Form 10-Q; and ~~six months ended June 30, 2022 and 2021 have been prepared in accordance with accounting principles generally accepted~~(iii) in the ~~United States of America (“U.S. GAAP”) and~~Company’s other filings with the ~~rules and regulations of the United States~~U.S. Securities and Exchange Commission (the “SEC”) and the Canadian Securities Administrators (the “CSA”). When relying on our forward-looking statements to make decisions with respect to the Company, investors and others should carefully consider such 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 list of important factors, as described in more detail under the heading “Forward-Looking Statements” in Item 2 of Part I of this Form 10-Q, that may affect future results is not exhaustive and should not be considered a complete statement of all potential risks and uncertainties.

BAUSCH HEALTH COMPANIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in millions)

(Unaudited)


	Bausch Health Companies Inc. Shareholders’ Equity
	Common Shares			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Bausch Health Companies Inc. Shareholders’ Deficit		Non- controlling Interest		Total Equity
	Shares	Amount

	Three Months Ended June 30, 2023
Balances, April 1, 2023	363.6	$	10,405	$	171	$	(9,387)	$	(1,989)	$	(800)	$	945	$	145

Common shares issued under share-based compensation plans	0.4	7		(7)		—		—		—		—		—
Share-based compensation	—	—		33		—		—		33		—		33
Employee withholding taxes related to share-based awards	—	—		(3)		—		—		(3)		—		(3)

Vesting of B+L equity compensation	—	—		(6)		—		—		(6)		6		—

Net income	—	—		—		26		—		26		1		27
Other comprehensive income (loss)	—	—		—		—		87		87		(18)		69
Balances, June 30, 2023	364.0	$	10,412	$	188	$	(9,361)	$	(1,902)	$	(663)	$	934	$	271

	Three Months Ended June 30, 2022
Balances, April 1, 2022	361.3	$	10,373	$	415	$	(9,030)	$	(1,974)	$	(216)	$	75	$	(141)
Proceeds from B+L initial public offering, net of costs (Note 2)	—	—		(327)		—		137		(190)		865		675
Common shares issued under share-based compensation plans	0.3	7		(6)		—		—		1		—		1
Share-based compensation	—	—		26		—		—		26		—		26
Employee withholding taxes related to share-based awards	—	—		(4)		—		—		(4)		—		(4)


Net (loss) income	—	—		—		(145)		—		(145)		6		(139)
Other comprehensive loss	—	—		—		—		(165)		(165)		—		(165)
Balances, June 30, 2022	361.6	$	10,380	$	104	$	(9,175)	$	(2,002)	$	(693)	$	946	$	253

	Six Months Ended June 30, 2023
Balances, January 1, 2023	361.9	$	10,391	$	159	$	(9,186)	$	(2,056)	$	(692)	$	952	$	260

Common shares issued under share-based compensation plans	2.1	21		(21)		—		—		—		—		—
Share-based compensation	—	—		74		—		—		74		—		74
Employee withholding taxes related to share-based awards	—	—		(15)		—		—		(15)		—		(15)
Vesting of B+L equity compensation	—	—		(9)		—		—		(9)		9		—
Net loss	—	—		—		(175)		—		(175)		(7)		(182)
Other comprehensive income (loss)	—	—		—		—		154		154		(20)		134
Balances, June 30, 2023	364.0	$	10,412	$	188	$	(9,361)	$	(1,902)	$	(663)	$	934	$	271

	Six Months Ended June 30, 2022
Balances, January 1, 2022	359.4	$	10,317	$	462	$	(8,961)	$	(1,924)	$	(106)	$	72	$	(34)
Proceeds from B+L initial public offering, net of costs (Note 2)	—	—		(327)				137		(190)		865		675
Common shares issued under share-based compensation plans	2.2	63		(60)		—		—		3		—		3
Share-based compensation	—	—		58		—		—		58		—		58
Employee withholding taxes related to share-based awards	—	—		(29)		—		—		(29)		—		(29)

Net (loss) income	—	—		—		(214)		—		(214)		9		(205)
Other comprehensive loss	—	—		—		—		(215)		(215)		—		(215)
Balances, June 30, 2022	361.6	$	10,380	$	104	$	(9,175)	$	(2,002)	$	(693)	$	946	$	253

The accompanying notes are an integral part of these condensed consolidated financial statements.

BAUSCH HEALTH COMPANIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)


	Six Months Ended June 30,
	2023		2022
Cash Flows From Operating Activities
Net loss	$	(182)	$	(205)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of intangible assets	634		699
Amortization and write-off of debt premiums, discounts and issuance costs	23		64
Asset impairments	50		14
Goodwill impairments	—		83
Acquisition-related contingent consideration	14		(2)
Allowances for losses on trade receivable and inventories	32		19
Deferred income taxes	(30)		(99)
Net loss (gain) on sale of assets	1		(3)
Adjustments to accrued legal settlements	—		7
Payments of accrued legal settlements	(2)		(360)
Share-based compensation	74		58
Foreign exchange loss	15		—
Gain excluded from hedge effectiveness	(6)		—
Gain on extinguishment of debt	—		(113)
Third party fees paid in connection with the Exchange Offer	(2)		—

Payments of contingent consideration adjustments, including accretion	(3)		(1)
Other	6		4
Changes in operating assets and liabilities:
Trade receivables	55		107
Inventories	(160)		(138)
Prepaid expenses and other current assets	(54)		(48)
Accounts payable, accrued and other liabilities	(105)		(26)
Net cash provided by operating activities	360		60
Cash Flows From Investing Activities
Acquisitions and other investments	(31)		—
Purchases of property, plant and equipment	(75)		(98)
Payments for intangible and other assets	(7)		(15)
Purchases of marketable securities	(11)		(14)
Proceeds from sale of marketable securities	9		13
Proceeds from sale of assets and businesses, net of costs to sell	1		—
Interest settlements from cross-currency swaps	6		—
Net cash used in investing activities	(108)		(114)
Cash Flows From Financing Activities
Issuance of long-term debt, net of discounts	455		6,320
Repayments of long-term debt	(690)		(7,083)


Proceeds from B+L initial public offering, net of costs	—		675
Payments of employee withholding taxes related to share-based awards	(15)		(29)
Payments of acquisition-related contingent consideration	(11)		(13)
Payments of financing costs	(1)		(34)
Other	—		2
Net cash used in financing activities	(262)		(162)
Effect of exchange rate changes on cash, cash equivalents and other	7		(24)
Net decrease in cash, cash equivalents, restricted cash and other settlement deposits	(3)		(240)
Cash, cash equivalents, restricted cash and other settlement deposits, beginning of period	591		2,119
Cash, cash equivalents, restricted cash and other settlement deposits, end of period	$	588	$	1,879
Cash and cash equivalents	$	579	$	659
Restricted cash	9		1,220

Cash, cash equivalents, restricted cash and other settlement deposits, end of period	$	588	$	1,879

The accompanying notes are an integral part of these condensed consolidated financial statements.

BAUSCH HEALTH COMPANIES INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.DESCRIPTION OF BUSINESS

Bausch Health Companies Inc. (the “Company” or “Bausch Health”) is a global, diversified specialty pharmaceutical and medical device company that develops, manufactures and markets, primarily in the therapeutic areas of gastroenterology (“GI”), hepatology, neurology and dermatology, a broad range of branded, generic and branded generic pharmaceuticals, over-the-counter (“OTC”) products and aesthetic medical devices, and, through its approximately 89% ownership of Bausch + Lomb Corporation (“Bausch + Lomb” or “B+L”), branded, and branded generic pharmaceuticals, OTC products and medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment) in the therapeutic areas of eye health. The Company’s products are marketed directly or indirectly in approximately 100 countries.

2.SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Use of Estimates

The accompanying unaudited Condensed 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 ~~statements, and~~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 Condensed Consolidated Financial Statements should be read in conjunction with ~~our~~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, 2022, filed with the U.S. Securities and Exchange Commission (the “SEC”) and the Canadian Securities Administrators (the “CSA”) on February 23, 2023. The unaudited Condensed 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, ~~2021, which were included in our Annual Report on Form 10-K filed on February 23,~~ 2022. ~~In our opinion, the~~The unaudited ~~interim~~Condensed Consolidated Financial Statements reflect all ~~adjustments, consisting of~~ normal and recurring adjustments necessary for a fair statement of the Company’s financial ~~condition,~~position and results of operations ~~and cash flows~~ for the interim periods. The operating results for the interim 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~~presented are ~~expressed in U.S. dollars, unless otherwise noted. Certain defined terms used herein have the meaning ascribed to them in the Financial Statements.~~

~~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 gastroenterology (“GI”) and dermatology, and eye health, 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.

Our portfolio of products falls into five operating and reportable segments: (i) Salix, (ii) International (formerly International Rx), (iii) Diversified Products, (iv) Solta Medical and (v) Bausch + Lomb. These segments are discussed in detail in Note 19, “SEGMENT INFORMATION” to our unaudited Consolidated Financial Statements. The following is a brief descriptionnot necessarily indicative of the ~~Company’s segments:~~

•~~The Salix segment~~ ~~consists of sales in the U.S. of GI products. Sales of the Xifaxan~~® ~~product line represented 81% and 80% of the Salix segment’s revenues~~results expected for the ~~three and six months ended June 30, 2022, respectively.~~

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

•~~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, (iii) Ortho Dermatologics (dermatological) products and (iv) dentistry products.

•~~The Solta Medical segment~~ ~~consists of global sales of Solta aesthetic medical devices.~~

•~~The Bausch + Lomb segment~~ ~~consists of global sales of Bausch + Lomb Vision Care, Surgical and Ophthalmic Pharmaceuticals products.~~

During the first quarter of 2022, the Company changed its segment structure. The new segment structure resulted in a change to the Company’s former Ortho Dermatologics segment whereby its medical dermatology business (Ortho Dermatologics) is now managed by the Chief Operating Decision Maker (“CODM”) as part of the Diversified Products segment and the Solta Medical business is now managed by the CODM as its own operating and reportable segment. Prior period presentation of segment revenues and segment profits has been recast to conform to the current reporting structure.

~~Our Focus on Value~~

In 2016, we 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. As discussed below, under the multi-year plan, we have taken actions that among other things included: (i) divesting non-core assets, (ii) making strategic investments in our core businesses and (iii) making measurable progress in improving our capital structure. These measures gave us operating flexibility and put us in a strong position to unlock the additional value to be found in our specific businesses. We believe that these and other actions we have taken to transform our Company, have helped to focus our operations, and improve our capital structure. These positive actions also presented us with an opportunity to unlock potential value across our portfolio of assets by separating our pharmaceutical and eye health businesses. Although management believes the B+L Separation (as defined below) will bring out additional value, there can be no assurance that it will be successful in doing so.

full year.

Separation of the Bausch + Lomb Eye Health Business

On August 6, 2020, wethe Company announced ~~our~~its plan to separate ~~our~~its eye health business, consisting of ~~our~~its Bausch + Lomb ~~Global~~global Vision Care, ~~(formerly Vision Care/Consumer Health), Global~~ Surgical and ~~Global~~Pharmaceuticals (formerly known as Ophthalmic ~~Pharmaceuticals~~Pharmaceuticals) businesses into an independent publicly traded entity, Bausch + Lomb, from the remainder of Bausch Health Companies Inc. (the “B+L Separation”). ~~In January~~On May 5, 2022, ~~we completed~~ the ~~internal organizational design and structure of the new eye health entity. The~~ registration statement related to the B+initial public offering of Bausch +Lomb (the “B+L ~~IPO~~IPO”) was declared effective, ~~on May 5, 2022,~~ and ~~Bausch + Lomb’s~~B+L’s common stock began trading on the New York Stock Exchange and the Toronto Stock Exchange, in each case under the ticker symbol “BLCO” on May 6, 2022. Prior to the effectiveness of the registration statement, ~~Bausch + Lomb~~B+L was an indirect wholly-owned subsidiary of ~~the Company.~~

Bausch Health. On May 10, 2022, a wholly owned subsidiary of ~~the Company (the “Selling Shareholder”)~~Bausch Health sold 35,000,000 common shares of ~~Bausch + Lomb, at an offering price of $18.00 per share,~~B+L pursuant to the B+L IPO. In addition, the Selling Shareholder granted the underwriters an option for a period of 30 days from the date of the B+L IPO to purchase up to an additional 5,250,000 common shares to cover over-allotments at the IPO offering price less underwriting commissions. On May 31, 2022, the underwriters partially exercised the over-allotment option granted by the Selling Shareholder and, on June 1, 2022, the Selling Shareholder sold an additional 4,550,357 common shares of Bausch + Lomb at an offering price of $18.00 per share (less applicable underwriting discount). The remainder of the over-allotment option granted to the underwriters expired.

Upon the closing of the B+L IPO and after giving effect to the partial exercise of the over-allotment option, the Company directly or indirectly holds 310,449,643 Bausch + Lomb common shares, which represents approximately 88.7% of Bausch + Lomb’s outstanding common shares. The aggregate net proceeds from the B+L IPO and thesubsequent partial exercise of the over-allotment option by the underwriters, ~~after deducting underwriting commissions were~~Bausch Health indirectly holds 310,449,643 common shares of Bausch + Lomb, which represents approximately ~~$675 million. The Company remains committed to completing the~~89% of B+~~L Separation~~L’s outstanding common shares as ~~soon as is practical and believes the B+L Separation makes strategic sense.~~ of June 30, 2023.

The completion of the B+L Separation is subject to ~~the expiry of customary lockups related to the B+L IPO,~~ the achievement of targeted debt leverage ratios and the receipt of applicable shareholder and other necessary approvals. The Company continues to evaluate ~~the~~all relevant factors and considerations related to completing the B+L Separation, ~~and~~including the effect of the Norwich Legal Decision (see ~~“Xifaxan~~“Xifaxan®Paragraph IV ~~Proceedings”~~Proceedings” of Note ~~18,~~17, “LEGAL PROCEEDINGS” ~~to our unaudited interim Consolidated Financial Statements)~~) on the B+L Separation.

The B+L ~~Separation will establish~~IPO established two separate ~~independent companies:~~

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

•~~Bausch Pharma~~ -companies that include: (i) a diversified pharmaceutical company with leading positions in gastroenterology, hepatology, dermatology, neurology and international pharmaceuticals, and aesthetic medical devices. The remaining pharmaceutical entity will comprise a diversified portfoliocomprised of ~~our leading durable brands across~~ the Salix, International, ~~dentistry,~~Diversified (dentistry, neurology, medical dermatology and generics pharmaceutical), and Solta Medical aesthetic medical ~~devices businesses.~~

~~We believe the B+L Separation will result in two highly attractive but dissimilar businesses. As independent entities, management believes that each~~device businesses and (ii) a fully integrated eye health company will be better positioned to individually focus on its core businesses to drive additional growth, more effectively allocate capital and better manage its respective capital needs. Further, the B+L Separation will allow us and the market to compare the operating results of each entity with other “pure play” peer companies. Although management believes the B+L Separation will bring out additional value, there can be no assurance that it will be successful in doing so.

At the time of our announcement of the B+L Separation, 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 maximizing value across our portfolio of assets and, so, it is a primary objective of our plan of separation.

As discussed in further detail below, the proceeds from the B+L IPO, along with those from the offering of the February 2027 Secured Notes, the B+L Debt Financing and the 2027 Term Loans (each as defined below), along with cash on hand, were used to repay and refinance a portion of our existing debt. In addition, we intend to use the proceeds from any potential future offers of Bausch + Lomb common shares to further repay, to the extent possible, a portion of our existing debt, thereby improving our capitalization and leverage. We believe the B+L Separation, if consummated, provides us with an attractive opportunity for liquidity to support the appropriate capitalization and leveragewhich consists of the Bausch + Lomb ~~entity~~Vision Care, Surgical and Pharmaceuticals businesses. Other than the ~~remainder of Bausch Health Companies Inc., which we refer to as “Bausch Pharma” and which will assume a new name upon completion~~effects of the B+L ~~Separation. However, management will also continue~~IPO described above, these unaudited Condensed Consolidated Financial Statements do not include any adjustments to ~~explore additional alternatives in order~~give effect to ~~properly capitalize the two entities.~~

We have previously stated that all options for achieving the appropriate capitalization and leverage for these entities post-separation were being considered. Management remains focused on the capitalizations of the post-separation entities and has considered and continues to consider alternative means of achieving this, including dispositions from our existing 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 Pharmaceutical Company S.A.E. (“Amoun”) on July 26, 2021 and, as discussed below, use the net proceeds to repay certain debt obligations.

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 the B+L Separation, 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 the B+L Separation and determination of the pro forma capitalization of each of the two entities post separation. The failure to satisfy all of the required conditions could delay the completion of the B+L Separation for a significant period of time or prevent it from occurring at all. 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. ~~As a result, there can be no assurance as~~

Use of Estimates

In preparing the unaudited Condensed Consolidated Financial Statements, management is required to make estimates and assumptions. The estimates and assumptions used by the ~~timing~~Company affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the ~~completion of the B+L Separation or its structure or terms,~~unaudited Condensed Consolidated Financial Statements, and the ~~information in this Form 10-Q relating to each transaction is preliminary~~reported amounts of revenue and ~~may change as~~expenses during the ~~transactions progress~~reporting periods. Actual results could differ from these estimates and ~~any such changes and their impact on~~ the ~~Company, or any of the companies that result from the consummation of the B+L Separation, may~~differences could be material.

On ~~June 16, 2022,~~an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the ~~Company announced~~Company’s business and new information as it ~~was suspending its previously announced plans~~becomes available. If historical experience and other factors used by management to ~~pursue an IPO~~make these estimates do not reasonably reflect future activity, the Company’s results of ~~our Solta aesthetic medical device business (“Solta Medical”) (the “Solta IPO”). By~~operations and financial position could be materially impacted.

Principles of Consolidation

The unaudited Condensed Consolidated Financial Statements include the ~~end of 2021, we had substantially completed the internal objectives necessary to facilitate the Solta IPO, however, we believe that the interests~~accounts of the Company and those of its ~~stakeholders, including shareholders~~subsidiaries and ~~creditors,~~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.

3.REVENUE RECOGNITION

The Company’s revenues are ~~best served~~primarily generated from product sales, primarily in the ~~near-term by focusing on driving Solta’s~~therapeutic areas of GI, hepatology, neurology, dermatology and eye health, that consist of: (i) branded pharmaceuticals, (ii) generic and branded generic pharmaceuticals, (iii) OTC products and (iv) medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment and aesthetic medical devices). Other revenues include alliance and service revenue ~~profitability~~from the licensing and co-promotion of products and contract service revenue which is derived primarily from contract manufacturing for third parties and which is not material. See Note 18, “SEGMENT INFORMATION” for the disaggregation of revenue which depicts how the nature, amount, timing and uncertainty of revenue and cash ~~flow~~flows are affected by the economic factors of each category of customer contracts.

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 ~~also achieving key operational~~provision balances related to indirect customers are included in Accrued and ~~regulatory milestones,~~other current liabilities.

The Company continually monitors its variable consideration provisions and evaluates the estimates used as ~~such, Solta~~additional information becomes available. Adjustments will ~~remain as part~~be made to these provisions periodically to reflect new facts and circumstances that may indicate that historical experience may not be indicative of ~~Bausch Health~~current and/or future results. The Company is required to make subjective judgments based primarily on its evaluation of current market conditions and ~~continue to contribute~~trade inventory levels related to the Company’s ~~performance, including~~products. This evaluation may result in an increase or decrease in the ~~deleveraging~~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.

unaudited Consolidated Financial Statements) due 2025 (the “April 2025 Unsecured Notes” and the related indenture the “April 2025 Unsecured Notes Indenture”). We believe these transactions bring us one step closer to meeting our commitment to properly capitalize the two entities post-separation while improving our overall capitalization and leverage. These actions are discussed in more detail below in “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt”;

•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, which includes the sale of Amoun as discussed below, on 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;~~

•made measurable progress in improving our capital structure as we have repaid approximately $10,600 million in long-term debt obligations (net of additional borrowings, amounts refinanced and excluding the $1,210 million financing of the U.S. Securities Litigation settlement discussed below) during the period of January 1, 2016 through June 30, 2022, using the proceeds from the divestiture of non-core assets, proceeds from the B+L IPO, cash on hand, and cash from operations, including from a focus on working capital management; and

•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, significantly reducing related possible disruptions and other uncertainties to our operations.

We believe that these and other actions we have taken to transform our Company, have helped focus our operations, unlocked value across our product portfolios, improved our capital structure and mitigated certain risks associated with legacy litigation matters. We believe that these measures, along with our continued commitment to improving people’s lives through our health products, help position us to unlock potential value across our portfolio of assets by separating our eye health and pharmaceutical businesses. Although management believes the B+L Separation will unlock additional value, there can be no assurance that it will be successful in doing so.

~~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 July 26, 2021, we completed the sale of Amoun for total grossvariable 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 segment (previously included within the former Bausch + Lomb/International segment). Revenues associated with Amoun were $137 millionprovisions for the six months ended June 30, ~~2021~~2023 and ~~$157~~2022.


	Six Months Ended June 30, 2023
(in millions)	Discounts and Allowances		Returns		Rebates		Chargebacks		Distribution Fees		Total
Reserve balances, January 1, 2023	$	188	$	427	$	1,023	$	196	$	76	$	1,910
Current period provisions	297		79		1,364		989		123		2,852
Payments and credits	(315)		(103)		(1,372)		(1,004)		(110)		(2,904)
Reserve balances, June 30, 2023	$	170	$	403	$	1,015	$	181	$	89	$	1,858

Included in Rebates in the table above are cooperative advertising credits due to customers of approximately $55 million and $40 million as of June 30, 2023 and January 1, 2023, respectively, which are reflected as a reduction of Trade receivables, net in the Condensed Consolidated Balance Sheets. There were no price appreciation credits during the six months ended June 30, 2023.


	Six Months Ended June 30, 2022
(in millions)	Discounts and Allowances		Returns		Rebates		Chargebacks		Distribution Fees		Total
Reserve balances, January 1, 2022	$	222	$	482	$	944	$	170	$	45	$	1,863
Current period provisions	278		60		1,236		1,028		108		2,710
Payments and credits	(303)		(107)		(1,170)		(976)		(46)		(2,602)
Reserve balances, June 30, 2022	$	197	$	435	$	1,010	$	222	$	107	$	1,971

Included in Rebates in the table above are cooperative advertising credits due to customers of approximately $48 million and $36 million as of June 30, 2022 and January 1, 2022, respectively, which are reflected as a reduction of Trade receivables, net in the Condensed Consolidated Balance Sheets. There were no price appreciation credits during the six months ended June 30, 2022.

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 collateral (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 ~~period of January 1, 2021 through July 26, 2021. On July~~six months ended June 30, ~~2021~~2023 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” (each~~2022 is as ~~defined below), using the proceeds from the Amoun Sale and cash on hand.~~follows.

We will continue to consider further dispositions of various assets in line with this strategy. While we anticipate that any future divestiture activities will be on non-core assets, we will consider dispositions in core areas that we believe represent attractive opportunities for the Company. See Note 4, “LICENSING AGREEMENTS AND DIVESTITURE” to our unaudited interim Consolidated Financial Statements for additional information.

~~Focus on Core Businesses~~

In line with this focus on our core businesses we have: (i) directed capital allocation to drive growth within these 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 our core businesses globally through: (i) R&D investment, (ii) strategic licensing agreements and (iii) strategic investments in our infrastructure. The outcome of this process allows us to better drive value in our product portfolio and generate operational efficiencies.


(in millions)	2023		2022
Balance, beginning of period	$	33	$	35
Provision for expected credit losses	2		1
Write-offs charged against the allowance	(2)		(1)
Recoveries of amounts previously written off	3		3
Foreign exchange and other	(3)		(2)
Balance, end of period	$	33	$	36

~~R&D Investment~~

We 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, 2021, approximately 1,300 dedicated R&D and quality assurance employees in 25 R&D facilities were involved in our R&D efforts internally.

As of June 30, 2022, we have approximately 160 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.

~~Gastrointestinal~~

•Rifaximin - Top line results from a Phase 2 study for the treatment of overt hepatic encephalopathy with a new formulation (SSD IR) of rifaximin showed a treatment benefit. Patients receiving 40 mg twice daily showed a statistically significant separation from placebo. The top line results from this Phase 2 study will help inform further research on potential new indications for rifaximin. A Phase 3 study has commenced (RED-C) with patients actively enrolling for the prevention of the first episode of Overt Hepatic Encephalopathy.

•Rifaximin - Rifaximin recently received orphan drug designation for sickle cell disease. A phase 2 study with novel dosage formulation is currently enrolling patients for the treatment of sickle cell disease.

•~~Rifaximin - Development of a fit for purpose Patient Reported Outcomes tool for small intestinal bacterial overgrowth, or “SIBO”, is continuing in 2022.~~

•Rifaximin - We have entered into an agreement with Cedars Sinai Medical Center to evaluate a new formulation of rifaximin for the treatment of IBS-D. Two preclinical studies have been completed. A Proof of Concept study, that was paused due to COVID-19 pandemic related factors, has recommenced and is fully enrolled. Based on recent FDA comments dated February 10, 2022, the program is being assessed and related timelines reviewed.

•~~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% - In June 2020, we launched this acne product containing lower concentration of tazarotene in a lotion form to help reduce irritation while maintaining efficacy.~~

•Internal Development Project (“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. Both Phase 3 studies have been completed and have met their primary endpoints. A comparative bridging safety and efficacy study was delayed until 2021 due to COVID-19. The bridging study has completed enrollment in July 2022. We anticipate filing a New Drug Application (“NDA”) in the fourth quarter of 2022.

~~Solta Medical~~

•~~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.

~~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~~4.® ~~ONE DAY. SiHy Daily has also received regulatory approval in China, New Zealand, Japan, South Korea, Europe, Singapore and Malaysia, where it will be branded as Bausch + Lomb Ultra~~® ~~ONE DAY, and in the second quarter of 2021, we launched SiHy Daily in South Korea and Singapore as Bausch + Lomb Ultra~~® ~~ONE DAY.~~LICENSING AGREEMENTS AND ACQUISITIONS

•~~LUMIFY~~® (brimonidine tartrate ophthalmic solution, 0.025%) - An OTC eye drop developed as an ocular redness reliever. We launched this product in the U.S. in May 2018 and received Canadian approval in May 2022. Currently, we have several new line formulations under development. The first Phase 3 study in support of these line extensions has initiated. Additional studies are expected to commence in the second half of 2022.

•~~Biotrue~~® ~~ONEday for Astigmatism - A daily disposable contact lens for astigmatic patients. The Biotrue~~® ~~ONEday contact lens incorporates Surface Active Technology~~™ ~~to provide a dehydration barrier. The Biotrue~~® ONEday for Astigmatism also includes evolved peri-ballast geometry to deliver stability and comfort for the astigmatic patient. We launched this product in December 2016 and launched an extended power range and further extended power ranges in each of the years 2017 through 2020. Biotrue® ~~ONEday for Astigmatism has also received regulatory approval in China.~~

•New Ophthalmic Viscosurgical Device (“OVD”) product - A formulation to protect corneal endothelium during phacoemulsification process during a cataract surgery and to help chamber maintenance and lubrication during IOL delivery. A clinical study report was completed for the cohesive OVD product (StableVisc™) during the second quarter of 2022. FDA approval is expected in the fourth quarter of 2022 and launch is expected in the first quarter of 2023. In addition, in March 2021, we received Premarket Approval from the FDA for Clearvisc™ ~~dispersive OVD, which we launched in the U.S. in June 2021.~~

•~~Bausch + Lomb is expanding its portfolio of premium IOLs built on the enVista~~® platform with Monofocal Plus, EDOF and Trifocal optical designs for presbyopia correction. Bausch + Lomb expects that they will be commercialized together with a new preloaded inserter with two options: non-Toric, as well as Toric for astigmatism patients. Bausch + Lomb anticipates launching Monofocal Plus, Trifocal and EDOF optical designs for presbyopia in 2023, 2024 and 2025/2026, respectively.

•~~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 andreceived regulatory approvalfrom the NationalMedical 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 of this product.

•~~Renu~~® ~~Advanced Multi-Purpose Solution (“MPS”) - Contains a triple disinfectant system that kills 99.9% of germs tested, 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, disinfect, rinse and store soft contact lenses including those composed of silicone hydrogels. Prior to 2022, Renu® ~~Advanced MPS was launched in India, Mexico, Korea, Turkey and Greece and gained regulatory approvals in Indonesia, Malaysia, Singapore, the European Union, Belarus and China. In 2022, Renu~~® Advanced MPS was launched in Taiwan, Czech Republic, Israel, Poland and Slovakia. We anticipate launches in China, Taiwan, Argentina and the Latin America region during 2022 and launches in additional regions in 2023 and 2024.

•~~Zen~~™ ~~Multifocal Scleral Lens for presbyopia - In January 2019, we launched this product in the U.S. 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 the U.S. 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.~~

~~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~~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 ~~the FDA or other regulators,~~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.

Acquisition of XIIDRA®

On June 30, 2023, a wholly owned subsidiary of Bausch + Lomb, Bausch + Lomb Ireland Limited, entered into a Stock and Asset Purchase Agreement with Novartis Pharma AG and Novartis Finance Corporation (together with Novartis Pharma AG, “Novartis”) to acquire XIIDRA® (lifitegrast ophthalmic solution) and certain other ophthalmology assets. This acquisition is intended to complement and grow Bausch + Lomb’s existing dry eye franchise.

Under the terms of the agreement, Bausch + Lomb, through its affiliate, has agreed to acquire XIIDRA® and certain ~~agreements, the Company may be required~~other ophthalmology assets from Novartis for an upfront cash payment, at closing, of $1,750 million, with potential milestone obligations of up to ~~make payments contingent~~$750 million, in part, payable 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~~specified commercialization and sales milestones for certain pipeline products to ~~address~~be acquired as part of the ~~unmet need~~transaction and, in part, upon the achievement of ~~treatment~~specified sales milestones for ~~myopia in children.~~XIIDRA®. The ~~first of these two licensing agreements~~transaction 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 expectexpected to ~~complete enrollment for a Phase 3 study during the first quarter of 2023. If approved~~close by the ~~FDA, we believe this investigational product could potentially change the treatment paradigm for the reduction~~end 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~~2023, subject 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~~receipt of ~~myopia in children.~~

~~In December 2019, we announced that we had acquired an exclusive license from Novaliq GmbH for the commercialization~~regulatory approval 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 dry eye diseases (“DED”) associated with Meibomian gland dysfunction (“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 in September 2021, we announced statistically significant topline data from the second Phase 3 study. The NDA was filed in June 2022, and if approved,other customary closing conditions. Bausch + Lomb ~~anticipates launching in the U.S. in 2023. If approved by the FDA, we believe the addition~~has obtained debt financing commitments for purposes of this ~~investigational treatment for DED will help build upon~~transaction and intends to finance the $1,750 million upfront cash payment with new debt prior to the closing of the transaction.

Acquisition of AcuFocus

On January 17, 2023, Bausch + ~~Lomb's strong portfolio~~Lomb acquired AcuFocus, Inc., an ophthalmic medical device company, for an upfront payment of ~~integrated eye health products.~~

$35 million, $31 million of which was paid in January 2023, ~~In October 2019, we acquired an exclusive license from Clearside Biomedical, Inc. (“Clearside”) for~~with the ~~commercialization and development of Xipere~~® ~~(triamcinolone acetonide suprachoroidal injectable suspension) in~~remaining purchase price to be paid within 18 months following the ~~U.S. and Canada. Xipere~~® ~~is a proprietary suspension~~date of the ~~corticosteroid triamcinolone acetonide formulated for suprachoroidal administration via Clearside’s proprietary SCS Microinjector~~®transaction, less any amounts that are the subject of any indemnification claims. ~~In October 2021, the FDA approved Xipere~~® ~~for suprachoroidal use~~The acquisition was made to acquire certain small aperture intraocular technology for the treatment of ~~macular edema associated with uveitis. We launched Xipere~~® ~~in the U.S. in the first quarter~~certain cataract conditions. Additional contingent payments may be payable upon achievement of ~~2022.~~

In April 2019, we entered into 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, both of which support ourfuture sales milestones. Bausch + Lomb ~~business.~~recorded an initial acquisition-related contingent consideration liability of $5 million.

As a result of this transaction, recorded within the Condensed Consolidated Balance Sheets are Intangibles, net of $28 million, Goodwill of $8 million, other assets of $9 million and liabilities of $6 million.

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

Restructuring and Integration Costs

The Company evaluates opportunities to improve its operating results and implement cost savings programs to streamline its operations and eliminate redundant processes and expenses. Restructuring and integration costs are expenses associated with the ~~forecasted demand for our Biotrue~~® ~~ONEday range~~implementation of ~~contact lenses, in July 2017, we placed into service a $175~~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 Company incurred $25 million ~~multi-year strategic expansion project~~of restructuring and integration costs during each of the ~~Waterford facility. The emphasis of the expansion project was to: (i) develop new technology to manufacture, automatically inspect~~six months ended June 30, 2023 and ~~package contact lenses, (ii) bring that technology to full validation and (iii) increase the size of the Waterford facility.~~2022.

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

The Company has incurred, and will incur, costs associated with activities relating to the ~~expected global demand for our~~B+L Separation. In 2022, the Company also incurred costs associated with activities relating to the then planned initial public offering of its aesthetic medical device business, Solta Medical (the “Solta IPO”), which was suspended in June 2022. These B+L Separation and Solta IPO activities include: (i) separating the Bausch + Lomb ~~ULTRA~~® ~~range~~and, in 2022, Solta Medical businesses from the remainder of ~~contact lenses,~~the Company, (ii) completing the B+L IPO and, in ~~December 2017, we completed a multi-year, $220 million strategic upgrade to our Rochester facility. The upgrade increased production capacity in support of our~~2022, preparing for the suspended Solta IPO and (iii) the actions necessary for Bausch + Lomb ~~Ultra~~to become an independent publicly traded entity. Separation and IPO costs are incremental costs directly related to the B+L Separation and, in 2022, the suspended 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 Bausch + Lomb. Included in Restructuring, integration, separation and IPO costs for the six months ended June 30, 2023 and 2022 are separation and IPO costs of $1 million and $23 million, respectively.

The Company has incurred, and expects to continue to incur, incremental costs with respect to the B+L Separation. During 2022, the Company also incurred incremental costs indirectly related to the suspended Solta IPO. These 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 for the six months ended June 30, 2023 and 2022 are separation-related and IPO-related costs of $13 million and $64 million, respectively.

The extent and timing of future charges of these costs to complete the B+L Separation 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 ~~SiHy Daily AQUALOX~~

•™ ~~product lines~~Level 3 — Unobservable inputs that are supported by little or no market activity and ~~better supports~~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, 2023								December 31, 2022
(in millions)	Carrying Value		Level 1		Level 2		Level 3		Carrying Value		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	62	$	54	$	8	$	—	$	94	$	85	$	9	$	—
Restricted cash	$	9	$	9	$	—	$	—	$	27	$	27	$	—	$	—
Foreign currency exchange contracts	$	5	$	—	$	5	$	—	$	6	$	—	$	6	$	—

Liabilities:
Acquisition-related contingent consideration	$	248	$	—	$	—	$	248	$	241	$	—	$	—	$	241
Cross-currency swaps	$	62	$	—	$	62	$	—	$	39	$	—	$	39	$	—
Foreign currency exchange contracts	$	1	$	—	$	1	$	—	$	4	$	—	$	4	$	—

Cash equivalents consist of highly liquid investments, primarily money market funds, with maturities of three months or less when purchased, and are reflected in the Condensed Consolidated Balance Sheets at carrying value, which approximates fair value due to their short-term nature. Cash, cash equivalents and restricted cash as presented in the Condensed Consolidated Balance Sheet as of June 30, 2023 includes $392 million of cash, cash equivalents and restricted cash held by legal entities of

~~production~~Bausch + Lomb. Cash held by Bausch + Lomb legal entities and any future cash from the operating, investing and financing activities 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 expansion projects to add multiple production lines to our Rochester and Waterford facilities. The first phase of the production line installation program has been completed, and in the first half of 2022, we commenced commercial production of certain of our latest contact lenses, at both our Rochester and Waterford facilities. We expect to complete the expansion programs at our Rochester and Waterford facilities in the second half of 2022.

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 200,000 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 programBausch + Lomb is expected to be ~~completed in the second half of 2022.~~

~~In July 2021, we announced plans to invest an additional $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 ourretained by Bausch + Lomb ~~manufacturing facilities in~~entities and are generally not available to support the operations, investing and financing activities of ~~our efforts to increase market share in~~other legal entities, including Bausch Health unless paid as a dividend which would be determined by the ~~contact lens market in the seven years ending 2023.~~

~~We believe the investments in our Waterford, Rochester and Lynchburg facilities and related expansion~~Board of ~~labor forces further demonstrates the growth potential we see in our~~Directors of Bausch + Lomb ~~products~~ and ~~our eye health business.~~paid pro rata to Bausch + Lomb’s shareholders.

There were no transfers into or out of Level 3 assets or liabilities during the six months ended June 30, 2023.

~~Effectively Managing Our Capital Structure~~Cross-currency Swaps

~~In connection~~During the third quarter of 2022, Bausch + Lomb entered into cross-currency swaps, with aggregate notional amounts of $1,000 million, to mitigate fluctuation in the ~~B+L Separation, we~~value of a portion of its euro-denominated net investment in its Condensed Consolidated Financial Statements from fluctuation in exchange rates. The euro-denominated net investment being hedged is Bausch + Lomb’s investment in certain Bausch + Lomb euro-denominated subsidiaries. Bausch + Lomb’s cross-currency swaps qualify for and have ~~emphasized that it is important that~~been designated as a hedge of the ~~post-separation entities be well capitalized, with appropriate leverage~~foreign currency exposure of a net investment in a foreign operation and ~~access~~are remeasured at each reporting date 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~~reflect changes in their respective lines of business and position each entity for sustainable growth. Therefore, we see the appropriate capitalization and leverage of these entities post-separation as a key to bringing out the maximum value across our portfolio offair values.

The assets and ~~so, it is a primary objective~~liabilities associated with Bausch + Lomb’s cross-currency swaps as included in the Condensed Consolidated Balance Sheets as of ~~our plan~~June 30, 2023 and December 31, 2022 are as follows:


(in millions)	June 30, 2023		December 31, 2022
Other non-current liabilities	$	68	$	45
Prepaid expenses and other current assets	$	6	$	6
Net fair value	$	62	$	39

The following table presents the effect of ~~separation.~~

~~Debt Repayments and Other Financing Transactions~~

In 2016, our executive team committed to improving our Company’s capital structure and, since that time, we have been executing and continue to execute on that commitment. As a result of a series of debt repayments and transactions since making that commitment, the Company positioned itself to executehedging instruments on the ~~B+L IPO, while at~~Condensed Consolidated Statements of Comprehensive Income (loss) and the ~~same time progressing toward providing the appropriate capitalization and leverage~~Condensed Consolidated Statements of ~~these businesses to effect the B+L Separation.~~

~~During 2022, we continue to effectively manage our capital structure by: (i) executing on our plan~~Operations for the ~~B+L Separation, including~~three and six months ended June 30, 2023 and 2022:


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2023		2022		2023		2022
Loss recognized in Other comprehensive loss	$	17	$	—	$	23	$	—
Gain excluded from assessment of hedge effectiveness	$	3	$	—	$	6	$	—
Location of gain of excluded component	Interest Expense				Interest Expense

No portion of the ~~B+L IPO which completed its initial closing on May 10, 2022, (ii) reducing our debt through repayments, (iii) extending~~cross-currency swaps were ineffective for the ~~maturities of debt through refinancing and (iv) focusing on our credit ratings.~~six months ended June 30, 2023. During the six months ended June 30, 2023 and 2022, wethe Company received $6 million and $0, respectively, in interest settlements, which are reported as investing activities in the Condensed Consolidated Statements of Cash Flows.

Foreign Currency Exchange Contracts

The Company’s foreign currency exchange contracts are remeasured at each reporting date to reflect changes in their fair values determined using forward rates, which are observable market inputs, multiplied by the notional amount. The Company’s foreign currency exchange contracts are economically hedging the foreign exchange exposure on certain of the Company’s intercompany balances. As of June 30, 2023, the Company’s outstanding foreign currency exchange contracts had an aggregate notional amount of $494 million.

The assets and liabilities associated with the Company’s foreign exchange contracts as included in the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 are as follows:


(in millions)	June 30, 2023		December 31, 2022
Accrued and other current liabilities	$	(1)	$	(4)
Prepaid expenses and other current assets	$	5	$	6
Net fair value	$	4	$	2

The following table presents the effect of the Company’s foreign exchange contracts on the Condensed Consolidated Statements of Operations and the Condensed Consolidated Statements of Cash Flows for the three and six months ended June 30, 2023 and 2022:


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2023		2022		2023		2022
Gain (loss) related to changes in fair value	$	1	$	(3)	$	2	$	(10)
Gain (loss) related to settlements	$	8	$	(10)	$	4	$	(3)

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 30, 2023, the fair value measurements of acquisition-related contingent consideration were determined using risk-adjusted discount rates ranging from 6% to 28%, 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 30, 2023.

The following table presents a reconciliation of contingent consideration obligations measured on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2023 and 2022:


	June 30,
(in millions)	2023				2022
Balance, beginning of period			$	241			$	241
Adjustments to Acquisition-related contingent consideration:
Accretion for the time value of money	$	9			$	8
Fair value adjustments due to changes in estimates of other future payments	6				(10)
Acquisition-related contingent consideration			15				(2)
Acquisition of AcuFocus, Inc.			5				—
Payments/Settlements			(14)				(14)

Foreign currency translation adjustment included in Other comprehensive loss			1				—
Balance, end of period			248				225
Current portion included in Accrued and other current liabilities			50				37
Non-current portion			$	198			$	188

Fair Value of Long-term Debt

The fair value of long-term debt as of June 30, 2023 and December 31, 2022 was $13,737 million and $14,011 million, respectively, and was estimated using the quoted market prices for the same or similar debt issuances (Level 2).

7.INVENTORIES

Inventories, net consist of:


(in millions)	June 30, 2023		December 31, 2022
Raw materials	$	405	$	326
Work in process	114		98
Finished goods	721		666
	$	1,240	$	1,090

8.INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

The major components of intangible assets consist of:


	June 30, 2023						December 31, 2022
(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:
Product brands	$	20,965	$	(17,758)	$	3,207	$	20,840	$	(17,196)	$	3,644
Corporate brands	910		(592)		318		899		(542)		357
Product rights/patents	3,353		(3,282)		71		3,347		(3,251)		96
Partner relationships	157		(157)		—		149		(149)		—
Technology and other	204		(199)		5		201		(196)		5
Total finite-lived intangible assets	25,589		(21,988)		3,601		25,436		(21,334)		4,102
B&L Trademark	1,698		—		1,698		1,698		—		1,698
	$	27,287	$	(21,988)	$	5,299	$	27,134	$	(21,334)	$	5,800

Long-lived assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Impairment charges associated with these assets are included in Asset impairments in the Condensed Consolidated Statements of Operations. The Company continues to monitor the recoverability of its finite-lived intangible assets and tests the intangible assets for impairment if indicators of impairment are present. The Company estimates the fair values of long-lived assets with finite lives using an undiscounted cash flow model which utilizes Level 3 unobservable inputs. The undiscounted cash flow model relies on assumptions regarding revenue growth rates, gross profit, selling, general and administrative expenses and research and development expenses.

Asset impairments for the three and six months ended June 30, 2023, were $37 million and $50 million, respectively. Asset impairments for the three months ended June 30, 2023, primarily related to the Company’s Uceris® Foam product, as discussed below. Asset impairments for the six months ended June 30, 2023, also include impairments of $8 million, in aggregate, attributable to certain trade names no longer in use and $5 million related to the discontinuance of a certain product line.

In the second quarter of 2023, the U.S. Food and Drug Administration (“FDA”) approved an Abbreviated New Drug Application (“ANDA”) submitted by a competitor for a budesonide (a steroid (cortisone-like) medicine) foam to help treat mild to moderate active ulcerative colitis. This product, which began to be sold by the competitor in the three months ended June 30, 2023, is a generic version of the Company’s Uceris® Foam product. During the second quarter of 2023, the Company revised its long-term outlook for the Uceris® Foam product to reflect the entrant of this, and potentially other, generic competitors. As a result, the Company recognized an impairment of $37 million to reduce the carrying value of the Uceris® Foam product related intangible assets to their estimated fair value. As of June 30, 2023, the remaining carrying value of the Uceris® Foam product related intangible assets was not material.

Asset impairments for the three and six months ended June 30, 2022, were $6 million and $14 million, respectively, primarily related to discontinuances and decreases in the forecasted sales of certain product lines.

Xifaxan® intangible assets included in the unaudited Condensed Consolidated Balance Sheets had a carrying value of $2,424 million and an estimated remaining useful life of 54 months as of June 30, 2023. On August 10, 2022, a court held, among other matters, that certain U.S. patents protecting the composition and use of Xifaxan® for treating inflammatory bowel syndrome with diarrhea (“IBS-D”) were invalid (the “Norwich Legal Decision”). On August 16, 2022, the Company appealed the Norwich Legal Decision and intends to vigorously defend its Xifaxan® intellectual property. See “Xifaxan® Paragraph IV Proceedings” of Note 17, “LEGAL PROCEEDINGS” for details of this litigation matter and the Company’s response.

As the ultimate outcome of the Norwich Legal Decision and other potential future related developments, including a competitor’s ability to launch a successful generic version to Xifaxan®, could impact the timing and extent of future revenues and cash flows associated with Xifaxan®, the Company determined that, in the third quarter of 2022, the ruling in the Norwich Legal Decision constituted an event requiring assessment of the Xifaxan® intangible assets for potential impairment using different scenarios representing a range of different outcomes which address, among other things, the timing of when a competitor or competitors will be able to successfully launch a generic version to Xifaxan®, if they are able to launch one at all. This assessment resulted in no impairment of the carrying value of the Xifaxan® finite-lived intangible assets as of September 30, 2022.

From September 30, 2022 through the second quarter of 2023 there were no material changes to the facts and circumstances of the Norwich Legal Decision or to actual or expected business performance for Xifaxan®. Based on these factors, no impairment to the carrying value of the Xifaxan® finite-lived intangible assets was identified as of June 30, 2023. The Company also determined that no change to the remaining useful lives of its Xifaxan® finite-lived intangible assets was required.

It is possible that the Norwich Legal Decision and other potential future developments: (i) may adversely impact the estimated future cash flows associated with these products, which could result in an impairment of the value of these intangible assets in one or more future periods and (ii) may result in shortened useful lives of the Xifaxan® intangible assets, which would increase amortization expense in future periods. Any such impairment or shortening of the useful lives of Xifaxan® could be material to the results of operations of the Company in the period or periods in which they were to occur.

Estimated amortization expense of finite-lived intangible assets for the remainder of 2023 and each of the five succeeding years ending December 31 and thereafter is as follows:


(in millions)	Remainder of 2023		2024		2025		2026		2027		2028		Thereafter		Total
Amortization	$	483	$	884	$	804	$	677	$	640	$	42	$	71	$	3,601

Goodwill

The changes in the carrying amounts of goodwill during the six months ended June 30, 2023 and the year ended December 31, 2022 were as follows:


(in millions)	Bausch + Lomb		Salix		International		Dermatology		Solta Medical		Diversified		Total
Balance, January 1, 2022	$	5,318	$	3,159	$	825	$	798	$	—	$	2,357	$	12,457
Realignment of segment goodwill	—		—		—		(798)		115		683		—
Additions	5		—		—		—		—		—		5
Impairment	—		—		—		—		—		(824)		(824)
Foreign exchange and other	(77)		—		(36)		—		—		22		(91)
Balance, December 31, 2022	5,246		3,159		789		—		115		2,238		11,547
Additions	8		—		—		—		—		—		8

Foreign exchange and other	25		—		55		—		—		(7)		73
Balance, June 30, 2023	$	5,279	$	3,159	$	844	$	—	$	115	$	2,231	$	11,628

Goodwill is not amortized but is tested for impairment at least annually on October 1st at the reporting unit level. A reporting unit is the same as, or one level below, an operating segment. The Company performs its annual impairment test by first assessing qualitative factors. Where the qualitative assessment suggests that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative fair value test is performed for that reporting unit (Step 1).

The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants. The Company estimates the fair value of a reporting unit using a discounted cash flow model

which utilizes Level 3 unobservable inputs. The discounted cash flow model relies on assumptions regarding revenue growth rates, gross profit, projected working capital needs, selling, general and administrative expenses, research and development expenses, capital expenditures, income tax rates, discount rates and terminal growth rates. To estimate fair value, the Company discounts the forecasted cash flows of each reporting unit. The discount rate the Company uses represents the estimated weighted average cost of capital, which reflects the overall level of inherent risk involved in its reporting unit operations and the rate of return a market participant would expect to earn. The quantitative fair value test is performed utilizing long-term growth rates and discount rates applied to the estimated cash flows in estimation of fair value. To estimate cash flows beyond the final year of its model, the Company estimates a terminal value by applying an in-perpetuity growth assumption and discount factor to determine the reporting unit’s terminal value.

To forecast a reporting unit’s cash flows the Company takes into consideration economic conditions and trends, estimated future operating results, management’s and a market participant’s view of growth rates and product lives, and anticipates future economic conditions. Revenue growth rates inherent in these forecasts are based on input from internal and external market research that compare factors such as growth in global economies, recent industry trends and product life-cycles. Macroeconomic factors such as changes in economies, changes in the competitive landscape including the unexpected loss of exclusivity to the Company’s product portfolio, changes in government legislation, product life-cycles, industry consolidations and other changes beyond the Company’s control could have ~~reduced~~a positive or negative impact on achieving its targets. Accordingly, if market conditions deteriorate, or if the Company is unable to execute its strategies, it may be necessary to record impairment charges in the future and such charges could be material.

2022

March 31, 2022 Interim Assessment

During the three months ended March 31, 2022, macroeconomic factors had impacted interest rates and the U.S. inflation rate was higher than previously expected. Given the limited headroom of the Dermatology (formerly Ortho Dermatologics) reporting unit as calculated on October 1, 2021, the Company believed that these facts and circumstances suggested the fair value of the Dermatology reporting unit could be less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

The quantitative fair value test utilized the Company’s most recent cash flow projections as revised in the first quarter of 2022 which reflected current market conditions and current trends in business performance. The quantitative fair value test utilized a long-term growth rate of 1.0% and a discount rate of 9.0%. The discount rate contemplated changes in the current macroeconomic conditions noting certain inputs such as the risk-free rate increased over the three months ended March 31, 2022, and was offset by decreases in other reporting unit specific risks during the same period. Based on the quantitative fair value test, the fair value of the Dermatology reporting unit was less than 2% greater than its carrying value and as a result there was no impairment to the goodwill of the reporting unit.

June 30, 2022 Interim Assessment

Dermatology

During the three months ended June 30, 2022, increases in interest rates and, to a lesser extent, higher than expected inflation in the U.S. and other macroeconomic factors impacted key assumptions used to value the Dermatology reporting unit as of March 31, 2022. Given the limited headroom of the Dermatology reporting unit as calculated on March 31, 2022, the Company believed that these facts and circumstances suggested the fair value of the Dermatology reporting unit could be less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

The quantitative fair value test utilized the Company’s most recent cash flow projections for the Dermatology reporting unit as revised in the second quarter of 2022 which reflected current market conditions and current trends in business performance. The Company’s discounted cash flow model for the Dermatology reporting unit included a range of potential outcomes for, among other matters, macroeconomic factors such as higher than expected inflation for many commodities, volatility in many of the equity markets and pressures on market interest rates. The quantitative fair value test utilized a long-term growth rate of 1.0% and a discount rate of 10.0%. The discount rate had increased 1.0% since the assessment performed as of March 31, 2022, as a result of changes in macroeconomic conditions, including an increase in the risk-free rate during the three months ended June 30, 2022. Based on the quantitative fair value test, the carrying value of the Dermatology reporting unit exceeded its fair value as of June 30, 2022, and the Company recognized a goodwill impairment of $83 million.

Bausch + Lomb Reporting Units

During the period May 6, 2022 (the date Bausch + Lomb’s stock began trading publicly) through June 30, 2022, equity and bond markets were negatively impacted by various macroeconomic and geopolitical factors including, but not limited to: rising inflation rates in the U.S. and abroad, uncertainties created by the Russia/Ukraine conflict, interest rate volatility, COVID-19 related lockdowns and supply issues. The equity markets negatively impacted the market price for Bausch + Lomb’s common stock which as of June 30, 2022 was trading below its IPO offering price. The Company believed that these facts and circumstances suggest the fair value of the three reporting units of the Bausch + Lomb segment could be less than their respective carrying amounts. Therefore, separate quantitative fair value tests were performed for the Vision Care, Surgical and Pharmaceuticals reporting units of the Bausch + Lomb segment.

The quantitative fair value tests utilized the Company’s most recent cash flow projections for each of its reporting units as revised in the second quarter of 2022 which reflected current market conditions and current trends in business performance. The quantitative fair value tests utilized long-term growth rates of 2.0% and 3.0% and discount rates of 9.0% and 11.5%. After completing the testing, the fair value of each of these reporting units exceeded their respective carrying values by more than 25%, and, therefore, there was no impairment to goodwill.

September 30, 2022 Interim Assessment

Dermatology

During the third quarter of 2022, the Company continued to monitor the market conditions impacting the Dermatology reporting unit. Continued increases in interest rates and, to a lesser extent, higher than expected inflation in the U.S. and other macroeconomic factors impacted key assumptions used to value the Dermatology reporting unit at June 30, 2022. Based on the impairment of goodwill recognized in the second quarter of 2022 for the Dermatology reporting unit, the reporting unit had no headroom as calculated on June 30, 2022, and as such, the Company believed that these facts and circumstances suggested the fair value of the Dermatology reporting unit could be less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

The quantitative fair value test utilized the Company’s most recent cash flow projections for the Dermatology reporting unit as revised in the third quarter of 2022 which reflected current market conditions and current trends in business performance. The Company’s discounted cash flow model for the Dermatology reporting unit included, among other matters, volatility in many of the equity markets and pressures on market interest rates and macroeconomic factors such as changes in inflation for many commodities. The quantitative fair value test utilized a long-term growth rate of 1.0% and the discount rate increased from 10.0% at June 30, 2022 to 10.5% at September 30, 2022, which reflected the increases in market interest rates. Based on the quantitative fair value test, the carrying value of the Dermatology reporting unit exceeded its fair value at September 30, 2022, and the Company recognized a goodwill impairment of $119 million for the three months ended September 30, 2022. As of September 30, 2022, the Dermatology reporting unit had remaining goodwill of $480 million.

Salix

On August 10, 2022, the Norwich Legal Decision was issued that held, among other matters, that certain U.S. Patents protecting the composition and use of Xifaxan® for treating IBS-D were invalid. On August 16, 2022, the Company appealed the Norwich Legal Decision and intends to vigorously defend its Xifaxan® intellectual property. See “Xifaxan® Paragraph IV Proceedings” of Note 17, “LEGAL PROCEEDINGS”, for details of this litigation matter and the Company’s response.

Xifaxan® revenues represent approximately 80% of the Salix reporting unit’s revenue. The ultimate outcome of the Norwich Legal Decision, and other potential future related developments, including a competitor’s ability to launch a successful generic version to Xifaxan®, could impact the timing and extent of future revenues and cash flows associated with Xifaxan®. As such, the Company believed that this uncertainty of the possible outcomes of the Norwich Legal Decision and the potential impact on Xifaxan® revenues were indicators that the Salix reporting unit’s fair value could be less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

The Company performed its quantitative fair value test using a probability-weighted discounted cash flow analysis, with a base case representing the Company’s most recent cash flow projections as revised in the third quarter of 2022, as well as different scenarios representing a range of different outcomes which address, among other things, the range of possible outcomes of the Norwich Legal Decision and the timing of when a competitor or competitors could be able to successfully launch a generic version of Xifaxan®, if they are able to launch one at all. The forecasted cash flows under each set of outcomes were discounted utilizing a long-term growth rate of 2.5% and discount rates of 9.75% and 10.0%. The Company assigned a probability weighting to each scenario reflecting its best estimate of likelihood of the outcome resulting in each scenario, and calculated a weighted average of the valuations derived from the discounted cash flows under each scenario using this probability weighting.

As of September 30, 2022, the carrying value of the Salix reporting unit was less than its fair value as determined by the Company’s probability-weighted discount valuation model and therefore no impairment was recorded as of September 30, 2022. However, as the Company’s probability-weighted discount valuation includes certain scenarios under which the Company does not retain market exclusivity for Xifaxan® through January 2028, these probability-weighted fair values of the Salix reporting unit exceeded its carrying value by less than 5%.

During the interim periods of 2022, no events occurred, or circumstances changed during the period October 1, 2021 (the date of the last annual impairment test) through September 30, 2022, that indicated that the fair value of any reporting unit, other than the Dermatology reporting unit, the Salix reporting unit and the reporting units of the Bausch + Lomb segment, might be below their respective carrying values.

2022 Annual Impairment Test

The Company’s annual goodwill impairment test as of October 1, 2022, included performing separate quantitative fair value tests for the Neurology and Other reporting unit and the Vision Care, Surgical and Pharmaceuticals reporting units of the Bausch + Lomb segment. For its remaining reporting units, the Company conducted its annual goodwill impairment test as of October 1, 2022, by first assessing qualitative factors. Based on its qualitative assessment as of October 1, 2022, management believed that, it was more likely than not that the carrying amounts of its remaining reporting units were less than their respective fair values and therefore concluded that a quantitative fair value test for those reporting units was not required.

Neurology and Other

The Neurology and Other reporting unit operates in the United States, where shifting market dynamics, including changes in payer demands, health care legislation, and other regulations are contributing to increasing pressure for the reduction of healthcare costs, through both pricing of pharmaceutical products and/or directing patients to lower cost unbranded generic products. The nature of the Neurology and Other reporting unit’s product portfolio, which includes branded generic pharmaceuticals, is by its nature impacted by these changing market dynamics. As a result, the Company has begun taking steps to: (i) reassess its pricing strategies, (ii) re-evaluate its marketing and promotional efforts and (iii) reduce its cost structure, and has revised its long-term forecasts for the Neurology and Other reporting unit to reflect these developments.

The quantitative fair value test for the Neurology and Other reporting unit utilized the most recent cash flow projections for the reporting unit as revised in the fourth quarter of 2022 to reflect current market conditions and current trends in business performance. The quantitative assessment utilized a long-term growth rate of -2.5% and a discount rate of 10.25% in the estimation of the reporting unit’s fair value. As a result of the revisions to its long-term expectations for these and other factors, goodwill for the Neurology and Other reporting unit was impaired during the Company’s most recent annual impairment test reflecting its best estimate at that time of the outlook and risks of this business. Based on the quantitative fair value test, the carrying value of the Neurology and Other reporting unit exceeded its fair value as of October 1, 2022, and the Company recognized a goodwill impairment of $622 million. As of December 31, 2022, the Neurology and Other reporting unit had remaining goodwill of $1,439 million.

Bausch + Lomb Reporting Units

The quantitative fair value test for the Vision Care, Surgical and Pharmaceuticals reporting units of the Bausch + Lomb segment utilized the most recent cash flow projections for each of the reporting units as revised in the fourth quarter of 2022 which reflected current market conditions and current trends in business performance. The quantitative assessment utilized long-term growth rates of 2.0% and 3.0% and discount rates of 9.50% 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 respective carrying value by more than 25% and, therefore, there was no impairment to goodwill.

December 31, 2022

During the period October 1, 2022 through December 31, 2022, the Company continued to monitor the market conditions and trends in business performance for all its reporting units, particularly as they pertain to the Dermatology and Salix reporting units, and determined that no events occurred, or circumstances changed, that would indicate that the fair value of any reporting unit might be below its carrying value.

Dermatology

As a result of the impairment of goodwill in the third quarter of 2022, the Dermatology reporting unit had no headroom on September 30, 2022, and as such, the Company continued to monitor the market conditions impacting the Dermatology reporting unit during the period October 1, 2022 through December 31, 2022.

During the fourth quarter of 2022, the Company evaluated the reporting unit’s performance as well as its revised long-term forecasts in light of current market conditions, current trends in business performance and the expected impacts of

management’s latest business strategies. This evaluation supported management’s previous expectations for long-term business performance. Additionally, based on corporate bond rates as of December 31, 2022, the Company concluded that discount rates would not have increased during the fourth quarter as compared to the discount rate used in determining the fair value of the reporting unit as of September 30, 2022. Based on these factors, management concluded that it was more likely than not that the carrying value of its Dermatology reporting unit was less than its fair value and therefore, concluded a quantitative assessment was not required during the quarter ended December 31, 2022.

Salix

Based on the quantitative fair value testing performed in the third quarter of 2022, the Salix reporting unit had limited headroom as of September 30, 2022 and, as such, the Company continued to monitor the potential impacts of changes in the Norwich Legal Decision and market conditions on the valuation of the Salix reporting unit during the period October 1, 2022 through December 31, 2022.

Through December 31, 2022, there were no material changes in the facts and circumstances of the Norwich Legal Decision, including management’s assessment as to a competitor’s ability to launch a successful generic version to Xifaxan® prior to January 2028, if they are able to launch one at all. The Company also evaluated the reporting unit’s performance in the fourth quarter as well as its revised long-term forecasts in light of current market conditions, current trends in business performance and the expected impacts of management’s latest business strategies. This evaluation supported management’s previous expectations for long-term business performance. Additionally, based on corporate bond rates as of December 31, 2022, the Company concluded that discount rates would not have increased during the fourth quarter as compared to the discount rates used in determining the fair value of the reporting unit as of September 30, 2022. Based on these factors, management concluded that it was more likely than not that the carrying value of its Salix reporting unit was less than its fair value and therefore, concluded a quantitative assessment was not required during the quarter ended December 31, 2022.

2023 Interim Assessment

During the six months ended June 30, 2023, the Company continued to monitor the market conditions and trends in business performance for all its reporting units, particularly as they pertain to the Dermatology, Neurology and Other and Salix reporting units, and determined that no events occurred, or circumstances changed, that would indicate that it is more likely than not that the fair value of any reporting unit might be below its carrying value. However, if market conditions deteriorate, or if the Company is unable to execute its strategies, it may be necessary to record impairment charges in the future and any such charges could be material.

Accumulated goodwill impairment charges through June 30, 2023 were $5,004 million.

9.ACCRUED AND OTHER CURRENT LIABILITIES

Accrued and other current liabilities consist of:


(in millions)	June 30, 2023		December 31, 2022
Product rebates	$	960	$	983
Product returns	403		427
Legal matters and related fees	326		326
Employee compensation and benefit costs	290		300
Interest	205		208
Income taxes payable	52		30
Other	772		714
	$	3,008	$	2,988

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, 2023				December 31, 2022
(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:




2022 Amended Credit Agreement
2027 Revolving Credit Facility	February 2027	$	245	$	245	$	470	$	470
February 2027 Term Loan B Facility	February 2027	2,375		2,336		2,437		2,392
AR Credit Facility	January 2028	—		—		—		—
B+L Credit Facilities
B+L Revolving Credit Facility	May 2027	200		200		—		—
B+L Term Facility	May 2027	2,475		2,433		2,488		2,439
Senior Secured Notes:
5.50% Secured Notes	November 2025	1,680		1,673		1,680		1,672
6.125% Secured Notes	February 2027	1,000		989		1,000		987
5.75% Secured Notes	August 2027	500		496		500		496
4.875% Secured Notes	June 2028	1,600		1,585		1,600		1,583
11.00% First Lien Secured Notes	September 2028	1,774		2,740		1,774		2,826
14.00% Second Lien Secured Notes	October 2030	352		687		352		711
9.00% Intermediate Holdco Secured Notes	January 2028	999		1,397		999		1,423
Senior Unsecured Notes:

9.00%	December 2025	959		952		959		951
9.25%	April 2026	741		737		741		737
8.50%	January 2027	643		644		643		644
7.00%	January 2028	171		170		171		170
5.00%	January 2028	433		430		433		429
6.25%	February 2029	821		813		821		813
5.00%	February 2029	452		448		452		448
7.25%	May 2029	337		334		337		334
5.25%	January 2030	779		772		779		771
5.25%	February 2031	462		459		462		458
Other	Various	12		12		12		12
Total long-term debt and other		$	19,010	20,552		$	19,110	20,766
Less: Current portion of long-term debt and other				444				432
Non-current portion of long-term debt				$	20,108			$	20,334

Covenant Compliance

The Senior Secured Credit Facilities (as defined below), the B+L Credit Facilities (as defined below), the AR Credit Facility (as defined below) and the indentures governing the Senior Secured Notes (as defined and described in the table above), the 9.00% Intermediate Holdco Secured Notes (as defined below) and Senior Unsecured Notes (as defined and described in the table above) contain customary affirmative and negative covenants and specified events of default. These affirmative 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 30, 2023, the amount available for restricted payments under the “builder basket” in the Company’s most restrictive indentures (as defined by those indentures) was approximately $9,800 million (although such availability is subject to the Company’s compliance with a 2.00:1.00 fixed

charge coverage ratio). The 2027 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 30, 2023, 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 ensure compliance with its financial maintenance covenant and may take other actions to reduce its debt levels and improve its capital structure 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.

September 2022 Exchange Offer

On September 30, 2022, the Company closed a series of transactions whereby it exchanged (the “Exchange Offer”) validly tendered senior unsecured notes with an aggregate outstanding principal balance of $5,594 million as set forth in the table below (collectively, the “Existing Unsecured Senior Notes”) for $3,125 million in aggregate principal balance of newly issued secured notes, a reduction of outstanding principal of $2,469 million.

The secured notes issued in the Exchange Offer consist of: (i) $1,774 million in aggregate principal amount of ~~our~~new 11.00% First Lien Secured Notes due 2028 (the “11.00% First Lien Secured Notes”) issued by the Company, (ii) $352 million in aggregate principal amount of new 14.00% Second Lien Secured Notes due 2030 (the “14.00% Second Lien Secured Notes” and, together with the 11.00% First Lien Secured Notes, the “New BHC Secured Notes”) issued by the Company and (iii) $999 million in aggregate principal amount of new 9.00% Senior Secured Notes due 2028 (the “9.00% Intermediate Holdco Secured Notes” and, together with the New BHC Secured Notes, the “New Secured Notes”) issued by 1375209 B.C. Ltd. (“Intermediate Holdco”), an existing indirect wholly-owned unrestricted subsidiary of the Company that holds 38.6% of the issued and outstanding common shares of Bausch + Lomb.

The Company performed an assessment of the Exchange Offer and determined that it met the criteria to be accounted for as a troubled debt ~~obligations by approximately $800 million~~restructuring under Accounting Standards Codification 470-60. For each series of the Existing Unsecured Senior Notes exchanged, the undiscounted cash flows associated with the New Secured Notes issued were compared to the carrying value of the Existing Unsecured Senior Notes exchanged for such New Secured Notes and the applicable exchange was accounted for as follows: (i) to the extent the undiscounted cash flows of the New Secured Notes in question were lower than the carrying value of the applicable Existing Unsecured Senior Notes exchanged, the carrying value of the applicable New Secured Notes was established at the total of these undiscounted cash flows, with a gain recorded for the remaining difference between this value and the carrying value of the applicable Existing Senior Unsecured Notes (as such, no interest expense will be recorded for the applicable New Secured Notes prospectively) and (ii) to the extent the undiscounted cash flows of the New Secured Notes in question exceeded the carrying value of the applicable Existing Unsecured Senior Notes exchanged, the carrying value of the applicable New Secured Notes was established at the carrying value of the applicable Existing Senior Unsecured Notes, and the Company established new effective interest rates based on the carrying value of the applicable Existing Unsecured Senior Notes prior to the Exchange Offer.

The difference between the principal amount of the New Secured Notes and their carrying value was recorded as a premium and is included in long-term debt on the Company’s Condensed Consolidated Balance Sheets.

The premium recorded on the New Secured Notes was $1,835 million, which will be reduced as contractual interest payments are made on the New Secured Notes. During the three and six months ended June 30, 2023, the Company made contractual interest payments of $27 million and $155 million, respectively, related to the New Secured Notes, of which $23 million and $134 million, respectively, was recorded as a reduction of the premium.

Senior Secured Credit Facilities

Senior Secured Credit Facilities under the 2018 Restated Credit Agreement

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 (the “2018 Restated Credit Agreement”). Prior to the 2022 ~~Notes Issuance~~Amended Credit Agreement (as defined below), the 2018 Restated Credit Agreement provided for a revolving credit facility of $1,225 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.

Senior Secured Credit Facilities under the 2022 Amended Credit Agreement

On May 10, 2022, the Company and certain of its subsidiaries as guarantors entered into a Second Amendment (the “Second Amendment”) to the Fourth Amended and Restated Credit and Guaranty Agreement (as amended by the Second Amendment, the “2022 Amended Credit Agreement”). The 2022 Amended Credit Agreement provides for a new term loan facility with an aggregate principal amount of $2,500 million (the “2027 Term Loan B Facility”) maturing on February 1, 2027 and a new revolving credit facility of $975 million (the “2027 Revolving Credit Facility”) that will mature on the earlier of February 1, 2027 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. Borrowings under the 2027 Revolving Credit Facility can be made in U.S. dollars, Canadian dollars or Euros. After giving effect to the Second Amendment, the 2023 Revolving Credit Facility, June 2025 Term Loan B Facility and November 2025 Term Loan B Facility were refinanced (such refinancing, the “Credit Agreement Refinancing”), along with certain of the Company’s existing senior notes, using net proceeds from the borrowings under the 2027 Term Loan B Facility, the B+L IPO and the B+L Debt Financing (as defined below) and available cash on hand. As of June 30, 2023, the Company had drawn $245 million and had $23 million of issued and outstanding letters of credit on the 2027 Revolving Credit Facility.

Borrowings under the 2027 Revolving Credit Facility in: (i) U.S. dollars bear interest at a rate per annum equal to, at the Company’s option, either: (a) the term SOFR rate (subject to a floor of 0.00% per annum) or (b) a U.S. dollar base rate, (ii) Canadian dollars bear interest at a rate per annum equal to, at the Company’s option, either: (a) a Canadian dollar offer rate or (b) a Canadian dollar prime and (iii) euros bear interest at a rate per annum equal to a term benchmark rate determined by reference to the cost of funds for euro deposits (“EURIBOR”) for the interest period relevant to such borrowing (subject to a floor of 0.00% per annum), in each case, plus an applicable margin. Term SOFR rate loans are subject to a credit spread adjustment ranging from 0.10%-0.25%.

The applicable interest rate margin for borrowings under the 2027 Term Loan B Facility is 5.25% for term SOFR rate loans and 4.25% for U.S. dollar base rate loans. The applicable interest rate margin for borrowings under the 2027 Revolving Credit Facility ranges from 4.75% to 5.25% for term SOFR rate loans, BA rate loans and EURIBOR loans and3.75% to 4.25% for U.S. dollar base rate loans and Canadian prime rate loans.

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 2027 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 term SOFR rate borrowings under the 2027 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.

Subject to certain exceptions and customary baskets set forth in the 2022 Amended 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 thresholds), (ii) 100% of the net cash proceeds from the incurrence of debt (other than permitted debt as described in the 2022 Amended Credit Agreement), (iii) 50% of Excess Cash Flow (as defined in the 2022 Amended Credit Agreement) subject to decrease based on leverage ratios and subject to a threshold amount and (iv) 100% of net cash proceeds from asset sales (subject to reinvestment rights and net proceeds thresholds). These mandatory prepayments may be used to satisfy future amortization.

The amortization rate for the 2027 Term Loan B Facility is 5.00% per annum, or $125 million, payable in quarterly installments beginning on September 30, 2022. The Company may direct that prepayments be applied to such amortization payments in order of maturity. As of June 30, 2023, the remaining mandatory quarterly amortization payments for the 2027 Term Loan B Facility were $438 million through December 2026.

The 2022 Amended Credit Agreement permits the incurrence of incremental credit facility borrowings up to the greater of $1,000 million and 40% of Consolidated Adjusted EBITDA (non-GAAP) (as defined in the 2022 Amended Credit Agreement), subject to customary terms and conditions, as well as the incurrence of additional incremental credit facility borrowings subject to, in the case of secured debt, a secured leverage ratio of not greater than 3.50:1.00, and, in the case of

unsecured debt, either 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.

The 2022 Amended Credit Agreement provides that Bausch + Lomb shall initially be a “restricted” subsidiary subject to the terms of the 2022 Amended Credit Agreement covenants, but does not require Bausch + Lomb to guarantee the obligations under the 2022 Amended Credit Agreement. The 2022 Amended Credit Agreement permits the Company to designate Bausch + Lomb as an “unrestricted” subsidiary under the 2022 Amended Credit Agreement and no longer subject to the terms of the covenants thereunder provided that no event of default is continuing or will result from such designation and the total leverage ratio of Remainco (as defined in the 2022 Amended Credit Agreement) will not be greater than 7.60:1.00 on a pro forma basis. The Credit Agreement Refinancing - contains provisions that were designed to facilitate the B+L Separation.

On November 29, 2022, the Company designated 1261229 B.C. Ltd., the entity that directly or indirectly holds approximately 89% of the issued and outstanding shares of Bausch + Lomb, as an unrestricted subsidiary of the Company in accordance with the terms of the Company’s debt documents. In connection therewith, all of the subsidiaries of 1261229 B.C. Ltd., including Bausch + Lomb and its subsidiaries, are unrestricted subsidiaries of the Company and, as a result, are not subject to the covenants under the Bausch Health debt documents, and the earnings and net debt of Bausch + Lomb, as defined in the relevant debt documents, are also not included in the calculation of the Company’s financial maintenance covenant.

Accounts Receivable Credit Facility~~In 2022, we continued to take actions in support of our commitment to improve our liquidity and reduce our leverage. These actions included:~~

On June 30, 2023, certain subsidiaries of the Company entered into a Credit and Security Agreement (the “AR Facility Agreement”) with certain third-party lenders, providing for a non-recourse financing facility collateralized by certain accounts receivable originated by a wholly-owned subsidiary of the Company (the “AR Credit Facility”). The AR Facility Agreement provides for an up to $600 million facility, subject to certain borrowing base tests. Under the AR Credit Facility, a special purpose entity (the “Borrower”), as the borrower, purchases accounts receivable originated by a wholly-owned subsidiary of the Company, which collateralize borrowings under the AR Credit Facility. The Borrower is a bankruptcy remote entity that is unrestricted under the Company’s debt covenants, and which is consolidated by the Company. Borrowings under the AR Credit Facility are for general corporate purposes.

Borrowings under the AR Credit Facility are in U.S. dollars and bear interest at a rate per annum equal to the sum of the one month term SOFR plus 6.65%. The Company is required to pay commitment fees of 0.75% multiplied by the lesser of: (i) the unfunded portion of the lenders’ commitments or (ii) 50% of the total lenders’ commitments. The AR Facility Agreement contains customary events of default, representations and warranties and affirmative and negative covenants primarily applicable to the borrower thereunder, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, dividends and other distributions, and engaging in any business other than as set forth in the AR Facility Agreement. Upon the occurrence and during the continuance of an Amortization Event (as defined in the AR Facility Agreement), including the occurrence of an Event of Default (under and as defined in the 2022 Amended Credit Agreement), and subsequent demand by the Administrative Agent (acting at the direction of the Lenders), the outstanding advances and all other obligations under the AR Facility Agreement will be due and payable. The AR Credit Facility matures on January 28, 2028.

As of June 30, 2023, there were no outstanding borrowings under the AR Credit Facility.

•

Fees incurred with the lenders, their affiliates and other third parties of approximately $20 million associated with the AR Credit Facility were capitalized as deferred financing costs and will be amortized as Interest expense over the term of the AR Facility Agreement.

See Note 19, “SUBSEQUENT EVENTS” for further details on subsequent borrowings under the AR Credit Facility.

Senior Secured Credit Facilities under the B+L Credit Agreement

On May 10, 2022, Bausch + Lomb entered into a credit agreement (the “B+L Credit Agreement”, and the credit facilities thereunder, the “B+L Credit Facilities”) providing for a term loan of $2,500 million with a five-year term to maturity (the “B+L Term Facility”) and a five-year revolving credit facility of $500 million (the “B+L Revolving Credit Facility” and such financing, the “B+L Debt Financing”). The B+L Credit Facilities are secured by substantially all of the assets of Bausch + Lomb and its material, wholly-owned Canadian, U.S., Dutch and Irish subsidiaries, subject to certain exceptions. The term loan is denominated in U.S. dollars, and borrowings under the revolving credit facility will be made available in U.S. dollars, euros, pounds sterling and Canadian dollars. As of June 30, 2023, the B+L Revolving Credit Facility had $200 million of outstanding borrowings, $25 million of issued and outstanding letters of credit and remaining availability of $275 million.

The B+L Revolving Credit Facility is a source of funding for Bausch + Lomb and its subsidiaries only. Absent the payment of a dividend, which would be determined by the Board of Directors of Bausch + Lomb and paid pro rata to Bausch +

Lomb’s shareholders, proceeds from the B+L Revolving Credit Facility are not available to fund the operations, investing and financing activities of any other subsidiaries of Bausch Health.

Borrowings under the B+L Revolving Credit Facility in: (i) U.S. dollars bear interest at a rate per annum equal to, at Bausch + Lomb’s option, either: (a) a term Secured Overnight Financing Rate (“SOFR”)-based rate or (b) a U.S. dollar base rate, (ii) Canadian dollars bear interest at a rate per annum equal to, at Bausch + Lomb’s option, either: (a) a Canadian Dollar Offered Rate (“CDOR”) or (b) a Canadian dollar prime rate, (iii) euros bear interest at a rate per annum equal to EURIBOR and (iv) pounds sterling bear interest at a rate per annum equal to Sterling Overnight Index Average (“SONIA”) (provided, however, that the term SOFR-based rate, CDOR, EURIBOR and SONIA shall be no less than 0.00% per annum at any time and the U.S. dollar base rate and the Canadian dollar prime rate shall be no less than 1.00% per annum at any time), in each case, plus an applicable margin. Term SOFR-based loans are subject to a credit spread adjustment of 0.10%.

The applicable interest rate margins for borrowings under the B+L Revolving Credit Facility are: (i) between 0.75% to 1.75% with respect to U.S. dollar base rate or Canadian dollar prime rate borrowings and between 1.75% to 2.75% with respect to SOFR, EURIBOR, SONIA or CDOR borrowings based on Bausch + Lomb’s total net leverage ratio and (ii) after: (x) Bausch + Lomb’s senior unsecured non-credit-enhanced long term indebtedness for borrowed money receives an investment grade rating from at least two of Standard & Poor’s, Moody’s and Fitch and (y) the B+L Term Facility has been repaid in full in cash (the “IG Trigger”), between 0.015% to 0.475% with respect to U.S. dollar base rate or Canadian dollar prime rate borrowings and between 1.015% to 1.475% with respect to SOFR, EURIBOR, SONIA or CDOR borrowings based on Bausch + Lomb’s debt rating. In addition, Bausch + Lomb is required to pay commitment fees of 0.25% per annum in respect of the unutilized commitments under the B+L Revolving Credit Facility, payable quarterly in arrears until the IG Trigger and a facility fee between 0.110% to 0.275% of the total revolving commitments, whether used or unused, based on Bausch + Lomb’s debt rating and payable quarterly in arrears. Bausch + Lomb is also required to pay 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 SOFR borrowings under the B+L Revolving Credit Facility on a per annum basis, payable quarterly in arrears, as well as customary fronting fees for the issuance of letters of credit and agency fees.

Borrowings under the B+L Term Facility bear interest at a rate per annum equal to, at Bausch + Lomb’s option, either (i) a term SOFR-based rate, plus an applicable margin of 3.25% or (ii) a U.S. dollar base rate, plus an applicable margin of 2.25% (provided, however, that the term SOFR-based rate shall be no less than 0.50% per annum at any time and the U.S. dollar base rate shall not be lower than 1.50% per annum at any time). Term SOFR-based loans are subject to a credit spread adjustment of 0.10%. The stated rate of interest under the Term Facility at June 30, 2023 was 8.59% per annum.

Subject to certain exceptions and customary baskets set forth in the B+L Credit Agreement, Bausch + Lomb is required to make mandatory prepayments of the loans under the B+L Term Facility 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, decrease based on leverage ratios and net proceeds threshold), (ii) 100% of the net cash proceeds from the incurrence of debt (other than permitted debt as described in the B+L Credit Agreement), (iii) 50% of Excess Cash Flow (as defined in the B+L Credit Agreement) subject to decrease based on leverage ratios and subject to a threshold amount and (iv) 100% of net cash proceeds from asset sales (subject to reinvestment rights, decrease based on leverage ratios and net proceeds threshold). These mandatory prepayments may be used to satisfy future amortization.

The amortization rate for the B+L Term Facility is 1.00% per annum, or $25 million, and the first quarterly installment was paid on September 30, 2022. Bausch + Lomb may direct that prepayments be applied to such amortization payments in order of maturity. As of June 30, 2023, the remaining mandatory quarterly amortization payments for the B+L Term Facility were $94 million through March 2027, with the remaining term loan balance being due in May 2027.

Senior Secured Notes

The Senior Secured Notes are guaranteed by each of the Company’s subsidiaries that is a guarantor under the 2022 Amended Credit Agreement and existing Senior Unsecured Notes (together, the “Note Guarantors”). In connection with the closing of the B+L IPO, the redemption of the Company’s 6.125% Senior Unsecured Notes due 2025 (the “April 2025 Unsecured Notes”) (as discussed below) and the related release in respect of the 2018 Restated Credit Agreement, the guarantees and related security provided by Bausch + Lomb and its subsidiaries in respect of the existing senior notes of the Company and BHA were released.

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 2022 Amended Credit Agreement under the terms of the indentures governing the Senior Secured Notes.

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.

6.125% Senior Secured Notes due 2027 - February 2022 Financing

On February 10, 2022, the Company issued $1,000 million aggregate principal amount of 6.125% Senior Secured Notesdue February 2027 (the “February 2027 Secured Notes”). The proceeds from the February 2027 Secured Notes, along with proceeds from the B+L IPO, the 2027 Term Loans and the B+L Debt Financing and cash on hand, were used to redeem the April 2025 Unsecured Notes and the Credit Agreement Refinancing as discussed below. The February 2027 Secured Notes accrue interest at a rate of 6.125% per year, payable semi-annually in arrears on each February and August.

•~~On May 10, 2022:~~

•~~As previously discussed,~~The February 2027 Secured Notes are redeemable at the option of the Company, ~~completed~~in whole or in part, at any time on or after February 2024, at the ~~initial~~redemption prices set forth in the indenture. The Company may redeem some or all of the February 2027 Secured Notes prior to February 2024 at a price equal to 100% of the principal amount thereof plus a “make-whole” premium. Prior to February 2024, the Company may redeem up to 40% of the aggregate principal amount of the February 2027 Secured Notes using the proceeds of certain equity offerings at the redemption price set forth in the indenture.

New BHC Secured Notes

The 11.00% First Lien Secured Notes mature on September 30, 2028, and have a stated interest of 11.00% per year that is payable semi-annually in arrears on each March 30 and September 30. The 11.00% First Lien Secured Notes are redeemable, in whole or in part, at any time at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but not including, the date of redemption plus a “make-whole” premium as described in the 11.00% First Lien Secured Notes indenture.

The 14.00% Second Lien Secured Notes mature on October 15, 2030, and have a stated interest of 14.00% per year that is payable semi-annually in arrears on each April 15 and October 15. The 14.00% Second Lien Secured Notes will be redeemable, in whole or in part, at any time on or after October 15, 2025 at the applicable redemption prices set forth in the 14.00% Second Lien Secured Notes indenture. In addition, some or all of the 14.00% Second Lien Secured Notes may be redeemed prior to October 15, 2025 at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but not including, the date of redemption plus a “make-whole” premium as described in the 14.00% Second Lien Secured Notes indenture. At any time prior to October 15, 2025, up to 40% of the aggregate principal amount of the 14.00% Second Lien Secured Notes may be redeemed with the net proceeds of certain equity offerings at the redemption price set forth in the 14.00% Second Lien Secured Notes indenture.

9.00% Intermediate Holdco Senior Secured Notes

The 9.00% Intermediate Holdco Secured Notes mature on January 30, 2028, and have a stated interest of 9.00% per year that is payable semi-annually in arrears on each January 30 and July 30. The 9.00% Intermediate Holdco Secured Notes are redeemable at the option of Intermediate Holdco, in whole or in part, at any time, at the redemption prices set forth in the 9.00% Intermediate Holdco Secured Notes indenture.

The 9.00% Intermediate Holdco Secured Notes are general senior secured obligations of Intermediate Holdco and secured by first priority liens (subject to permitted liens and certain other exceptions) on substantially all of the assets of Intermediate Holdco, which as of June 30, 2023 were comprised of 38.6% of the issued and outstanding common shares of Bausch + Lomb. The 9.00% Intermediate Holdco Secured Notes and Intermediate Holdco’s other obligations under the indenture governing such notes are not obligations or responsibilities of, or guaranteed by, the Company, Bausch + Lomb or any of their respective affiliates or subsidiaries (other than the issuer Intermediate Holdco). The sole recourse of the holders of the 9.00% Intermediate Holdco Secured Notes under the 9.00% Intermediate Holdco Secured Notes and the indenture governing such notes is limited to Intermediate Holdco and its assets.

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.

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.

Redemption of April 2025 Unsecured Notes

In connection with the closing of the B+L ~~IPO. The aggregate~~IPO, on May 10, 2022, the Company using: (i) the net proceeds from the issuance of the February 2027 Secured Notes, (ii) the net proceeds from the B+L IPO, ~~and~~(iii) the ~~partial exercise of~~net proceeds from the ~~over-allotment option by the underwriters, after deducting underwriting commissions were approximately $675 million.~~

•~~The Company entered into the 2022 Amended Credit Agreement as discussed in further detail below,~~borrowings under “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt”. The 2022 Amended Credit Agreement consists of new term loans of $2,500 million and a revolving credit facility of $975 million.

•~~Bausch + Lomb entered into~~ the B+L ~~Credit Agreement as defined~~Debt Financing and ~~discussed in further detail below under “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt”. The B+L Credit Agreement~~

~~provides for a five-year term loan facility in an initial principal amount of $2,500 million and also provides for a five-year revolving credit facility of $500 million.~~

~~The net proceeds from these transactions, along with~~(iv) cash on hand allowed us to: (i) repay certain amounts outstanding under our then existing June 2025 Term Loan Facility and November 2025 Term Loan Facility, (ii) replace our existing revolving credit facility which was to have matured in 2023, with revolving credit facilities that mature in 2027, (iii) redeemcaused sufficient funds for the redemption in full ~~all~~ of ~~our outstanding~~its April 2025 Unsecured Notes at a redemption price of 101.021% of the principal amount then outstanding to be irrevocably deposited with the Bank of New York Mellon, N.A. The April 2025 Unsecured Notes were redeemed on May 16, 2022 and ~~(iv) replace our then remaining amounts~~were accounted for as an extinguishment of debt.

Weighted Average Stated Rate of Interest

The weighted average stated rate of interest for the Company’s outstanding ~~under our~~debt obligations as of June ~~2025 Term Loan Facility~~30, 2023 and ~~November 2025 Term Loan Facility with term loan facilities that expire~~December 31, 2022 was 7.91% and 7.74%, respectively. Due to the accounting treatment for the New Secured Notes, interest expense in ~~2027.~~the Company’s financial statements for 2023 and in future periods will not be representative of the weighted average stated rate of interest.

~~Early~~Gain (Loss) on Extinguishment of Debt -

During the three months ended June 30, 2022, ~~through a series of transactions we~~the Company repurchased and retired outstanding ~~senior unsecured notes~~Senior Unsecured Notes with an aggregate par value of $481 million in the open market, for ~~approximately~~an aggregate cost of $300 ~~million using: (i)~~million. In connection with these repurchases, the net proceeds from the partial exercise of the over-allotment option in the B+L IPO by the underwriters, after deducting underwriting commissions, (ii) amounts available under our revolving credit facility and (iii) cash on hand. The senior unsecured notes retired had maturities of January 2028 through February 2031 and had a weighted average interest rate of approximately 5.35%. As a result of these transactions, weCompany recognized a gain of $176 million on ~~the~~ extinguishment of debt ~~of approximately $176 million, net of write-offs of debt premiums, discounts and deferred issuance costs, representing~~which represents the differences between the amounts paid to ~~retire~~settle the ~~senior unsecured notes~~extinguished debt and ~~their~~its carrying value.

~~The~~During the three months ended June 30, 2022, in connection with the (i) repayment of the ~~(i)~~ June 2025 Term Loan B Facility, ~~(ii)~~the November 2025 Term Loan B Facility ~~(iii)~~and the 2023 Revolving Credit Facility and ~~(iv)~~(ii) redemption of April 2025 ~~Senior~~ Unsecured ~~notes were accounted for as an extinguishment of debt and~~Notes, the Company incurred a loss on extinguishment of debt of $63 million, representing the difference between the amount paid to settle the extinguished debt and the extinguished debt’s carrying value.

Maturities

The Company may, from time to time, purchase outstanding debt for cash in open market purchases or privately negotiated transactions. Such repurchases or exchanges, if any, will depend on prevailing market conditions, future liquidity requirements, contractual restrictions and other factors.

Maturities of debt obligations for the remainder of 2023, the five succeeding years ending December 31 and thereafter are as follows:


(in millions)
Remainder of 2023	$	75
2024	150
2025	2,789
2026	891
2027	6,913
2028	4,990
Thereafter	3,202
Total debt obligations	19,010
Unamortized premiums, discounts and issuance costs	1,542
Total long-term debt and other	$	20,552

11.SHARE-BASED COMPENSATION

Bausch Health’s Long-Term Incentive Plan

In May 2014, shareholders approved Bausch Health’s 2014 Omnibus Incentive Plan (the “2014 Plan”) which replaced Bausch Health’s 2011 Omnibus Incentive Plan (the “2011 Plan”) for future equity awards granted by the Company. The Company transferred the common shares available under the 2011 Plan to the 2014 Plan. The maximum number of common shares that may be issued to participants under the 2014 Plan was initially equal to 18,000,000 common shares, plus the number of common shares under the 2011 Plan reserved but unissued and not underlying outstanding awards and the number of common shares 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 for issuance under the 2014 Plan. The 2014 Plan was amended and restated effective April 30, 2018, April 28, 2020 and June 21, 2022 to, among other things, increase the number of common shares authorized for issuance under the 2014 Plan.

Effective May 16, 2023, Bausch Health further amended and restated the 2014 Plan, as subsequently amended and restated (the “Amended and Restated 2014 Plan”). Such amendment and restatement increased the number of common shares authorized for issuance under the Amended and Restated 2014 Plan by an additional 7,500,000 common shares, among other things.

Approximately 16,712,000 common shares were available for future grants under the Amended and Restated 2014 Plan as of June 30, 2023. The Company uses reserved and unissued common shares to satisfy its obligations under its share-based compensation plans.

Bausch Health 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 generating operating cash flow 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 vest: (i) upon achievement of certain share price appreciation conditions that are based on total shareholder return (“TSR”), (ii) upon attainment of certain performance targets that are based on the Company’s return on tangible capital (“ROTC”), (iii) upon attainment of Adjusted Operating Cash Flow, as defined in each applicable award agreement, and a Relative Total Shareholder Return modifier performance metric and (iv) fully or partially upon attainment of certain goals that are linked to the B+L Separation.

In order to retain and incentivize certain members of the Company’s senior leadership team, on September 5, 2022, the Talent and Compensation Committee of the Board of Directors approved a retention program for certain executive officers and other members of leadership. Under the retention program, certain executive officers and other members of leadership were granted a one-time award of restricted stock units (the “Retention RSU Grant”) under the Amended and Restated 2014 Plan. The Retention RSU Grants will generally vest in 1/3 installments on each of the first three anniversaries of the grant date based on continuous employment with Bausch Health.

Bausch + Lomb Long-Term Incentive Plan

Prior to May 5, 2022, Bausch + Lomb participated in Bausch Health’s long-term incentive program. Effective May 5, 2022, Bausch + Lomb established the Bausch + Lomb Corporation 2022 Omnibus Incentive Plan (the “B+L Plan”). A total of 28,000,000 common shares of Bausch + Lomb were originally authorized under the B+L Plan. Effective April 24, 2023, the shareholders of Bausch + Lomb approved an amendment and restatement of the B+L Plan to increase the number of shares authorized for issuance thereunder by an additional 10,000,000 common shares, resulting in an aggregate of 38,000,000 common shares of Bausch + Lomb authorized for issuance under the Plan (the “Plan Amendment”). The B+L Plan provides for the grant of various types of awards including RSUs, restricted stock, stock appreciation rights, stock options, performance-based awards and cash awards. Under the Plan, the exercise price of awards, if any, is set on the grant date and may not be less than the fair market value per share on that date. Generally, stock options have a term of ten years and a three-year vesting period, subject to limited exceptions.

Approximately 18,600,000 Bausch + Lomb common shares were available for future grants as of June 30, 2023. Bausch + Lomb uses reserved and unissued common shares to satisfy its obligations under its share-based compensation plans.

Bausch + Lomb has a long-term incentive program with the objective of aligning the share-based awards granted to senior management with Bausch + Lomb’s focus on enhancing its revenue growth while maintaining focus on total shareholder return over the long-term. In addition to stock options and RSUs, during the first quarter of 2023, performance restricted share units (“PSUs”) were also granted. The PSUs are comprised of awards that vest upon: (i) achievement of certain share price appreciation conditions, including absolute and relative TSR and (ii) attainment of certain performance targets that are based on Bausch + Lomb’s Organic Revenue Growth (the “Organic Revenue Growth PSUs”). If Bausch + Lomb’s performance is below a specified performance level, no common shares will be paid. Each vested PSU represents the right of a holder to receive a number of Bausch + Lomb’s common shares up to a specified maximum.

The fair value of each TSR PSU granted was estimated using a Monte Carlo Simulation model, which utilizes multiple input variables to estimate the probability that the performance condition will be achieved. The fair value of the Organic Revenue Growth PSUs is estimated based on the trading price of Bausch + Lomb’s common shares on the date of grant. Expense recognized for the Organic Revenue Growth PSUs in each reporting period reflects Bausch + Lomb’s latest estimate of Organic Revenue Growth in determining the number of PSUs that are expected to vest. If the Organic Revenue Growth PSUs do not ultimately vest due to the Organic Revenue Growth targets not being met, no compensation expense is recognized and any previously recognized compensation expense is reversed.

On February 15, 2023, Bausch + Lomb announced the appointment of Brent Saunders as its Chief Executive Officer, effective March 6, 2023. Pursuant to Mr. Saunders’ employment agreement, on February 23, 2023, Mr. Saunders was granted the following equity grants: 750,000 PSUs, 1,318,681 stock options and 375,000 RSUs. The RSUs are scheduled to vest 50% on the second anniversary of the grant date and the remaining 50% on the third anniversary of the grant date. The stock options are scheduled to vest in equal one-third installments on each of the first three anniversaries of the grant date. The PSUs vest on the fourth anniversary from grant date based on Bausch + Lomb’s achievement of absolute share price hurdles, or upon achievement of absolute and relative TSR hurdles in relation to the S&P 500 Index during the four-year performance period.

The following table summarizes the components and classification of the Company’s share-based compensation expenses related to stock options and RSUs for the three and six months ended June 30, 2023 and 2022:


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2023		2022		2023		2022
Stock options	$	4	$	3	$	10	$	7
RSUs	29		23		64		51
	$	33	$	26	$	74	$	58

Research and development expenses	$	2	$	3	$	5	$	6
Selling, general and administrative expenses	31		23		69		52
	$	33	$	26	$	74	$	58

Share-based awards granted for the six months ended June 30, 2023 and 2022 consist of:


	2023		2022
Bausch Health Share-Based Awards
Stock options
Granted	999,000		2,570,000
Weighted-average exercise price	$	9.25	$	23.95
Weighted-average grant date fair value	$	4.87	$	6.60
Time-based RSUs
Granted	4,667,000		2,680,000
Weighted-average grant date fair value	$	9.06	$	18.49
Adjusted Operating Cash Flow performance-based RSUs
Granted	647,000		—
Weighted-average grant date fair value	$	10.57	$	—
ROTC performance-based RSUs
Granted	—		369,000
Weighted-average grant date fair value	$	—	$	9.40



Bausch+ Lomb Share-Based Awards
Stock options
Granted	3,130,000		6,455,000
Weighted-average exercise price	$	18.16	$	18.00
Weighted-average grant date fair value	$	5.40	$	4.55
RSUs
Granted	2,888,000		3,207,000
Weighted-average grant date fair value	$	17.97	$	17.92
TSR performance-based RSUs
Granted	1,175,000		—
Weighted-average grant date fair value	$	27.65	$	—
Organic Revenue Growth performance-based RSUs
Granted	142,000		—
Weighted-average grant date fair value	$	17.96	$	—

As of June 30, 2023, the remaining unrecognized compensation expenses related to all outstanding non-vested stock options, time-based RSUs and performance-based RSUs amounted to $196 million, which will be amortized over a weighted-average period of 2.11 years.

As of June 30, 2023, the remaining unrecognized compensation expenses related to all outstanding non-vested stock options, time-based RSUs and performance-based RSUs under the B+L Plan amounted to $111 million, which will be amortized over a weighted-average period of 2.30 years.

12.ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss consists of:


(in millions)	June 30, 2023		December 31, 2022
Foreign currency translation adjustment	$	(1,883)	$	(2,038)
Pension adjustment, net of tax	(19)		(18)
	$	(1,902)	$	(2,056)

Income taxes are not provided for foreign currency translation adjustments arising on the translation of the Company’s operations having a functional currency other than the U.S. dollar, except to the extent of translation adjustments related to the Company’s retained earnings for foreign jurisdictions in which the Company is not considered to be permanently reinvested.

As a result of ~~these transactions~~the change in the Company’s ownership interest in Bausch + Lomb, in the second quarter of 2022, the carrying amount of accumulated other comprehensive income was adjusted to reflect the change in the ownership interest in Bausch + Lomb through a corresponding credit of $137 million to equity attributable to the Company.

13.RESEARCH AND DEVELOPMENT

Included in Research and development are costs related to product development and quality assurance programs. Quality assurance are the ~~open market repurchases,~~costs incurred to meet evolving customer and regulatory standards. Research and development costs consist of:


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2023		2022		2023		2022
Product related research and development	$	148	$	120	$	284	$	241
Quality assurance	8		7		15		13
	$	156	$	127	$	299	$	254

14.OTHER (INCOME) EXPENSE, NET

Other (income) expense, net consists of:


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2023		2022		2023		2022
Litigation and other matters	$	(71)	$	8	$	(79)	$	7
Acquisition-related contingent consideration	(17)		(5)		14		(2)
Loss (Gain) on sale of assets, net	1		(3)		1		(3)
Acquired in-process research and development costs	—		1		—		1
Acquisition-related transaction costs	3		—		3		—
Other, Net	1		(1)		1		(1)
	$	(83)	$	—	$	(60)	$	2

For the ~~Company realized a net gain on early extinguishment of $113 million.~~three and six months ended June 30, 2023, Litigation and other matters primarily related to insurance recoveries regarding certain litigation matters.

~~Debt Repayments~~

~~Excluding~~Acquisition-related contingent consideration for the ~~impact~~six months ended June 30, 2023, reflects adjustments for changes in estimates in the timing and amounts of the ~~$1,210 million financing~~future royalty and milestone payments related to certain branded products.

15.INCOME TAXES

For interim financial statement purposes, U.S. GAAP income tax expense/benefit related to ordinary income is determined by applying an estimated annual effective income tax rate against a company’s ordinary income. Income tax expense/benefit related to items not characterized as ordinary income is recognized as a discrete item when incurred. The estimation of the ~~U.S. Securities Litigation settlement (discussed~~Company’s income tax provision requires the use of management forecasts and other estimates, application of statutory 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.

Provision for income taxes for the six months ended June 30, 2023 was $125 million and included: (i) $39 million of income tax provision for the Company’s ordinary loss for the six months ended June 30, 2023 and (ii) $86 million of net income tax provision for discrete items, which includes: (a) $41 million of net income tax expense related to final and potential settlements of various tax audits in the ~~subsequent section titled “Off-Balance Sheet Arrangements and Contractual Obligations”) we have repaid (net of additional borrowings) approximately $10,600~~six months ended June 30, 2023, (b) $21 million of ~~long-term debt during~~income tax expense related to changes in uncertain tax positions, (c) $18 million of income tax expense associated with the ~~period January 1, 2016 through~~establishment of a valuation allowance against deferred tax assets of B+L’s Canadian parent and (d) $7 million of income tax expense associated with stock compensation.

Benefit from income taxes for the six months ended June 30, 2022 ~~using the net cash proceeds from divestitures~~was $6 million and included: (i) $16 million of ~~non-core assets, the B+L IPO, cash on hand, cash from operations, including from our focus on working capital management.~~

~~We believe these transactions bring us closer to meeting our commitment to properly capitalize the two entities post-separation while improving our overall capitalization and leverage.~~

See Note 10, “FINANCING ARRANGEMENTS” to our unaudited interim Consolidated Financial Statements and “Liquidity and Capital Resources: Long-term Debt” below 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.”

~~Continue to Manage our Capital Structure~~

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 and prepare us for post-separation. 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.

~~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~~ - Our Patient Access and Pricing Committee 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. Since its inception in 2016, the Patient Access and Pricing Committee has limited the average annual price increase for our branded prescription pharmaceutical products to single digits. Future pricing changes and programs could affect the average realized pricing for our products and may have a significant impact on our revenues and profits.

~~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. 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. The purpose of the Bausch Health Patient Assistance Program is to provide eligible unemployed patients in the U.S., who meet stated qualifications and 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 products. 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 providesincome tax expense for the ~~next generation of our existing products, but is also poised to bring new products to 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 have 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 well positioned to reach more patients in need of IBS-D treatment.

Our sales force has been successful in delivering consistent growth in demand for our GI products, demonstrated by our growth in Salix revenues of 32% when comparing 2021 to 2017. We continue to seek ways to bring out further value through leveraging our existing sales force including the following opportunities:

~~Trulance~~® ~~Acquisition -~~ ~~In March 2019, we completed the acquisition of certain assets of Synergy Pharmaceuticals Inc. (“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. In order to drive growth of the Trulance~~® ~~product, we have increased the number of sales force representatives for the Trulance~~® ~~product. We believe this has been successful as Trulance~~® ~~revenues were $47 million and $49 million~~Company’s ordinary loss for the six months ended June 30, 2022 and ~~2021, respectively.~~

~~Licensing Arrangement -~~ ~~As previously discussed,~~(ii) $22 million of net income tax benefit for discrete items, which includes: (a) $39 million of net income tax benefit recognized for changes in ~~April 2019, we entered into~~uncertain tax positions and (b) a licensing agreement 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. This license presents a unique developmental opportunity to address unmet needs of individuals suffering$16 million tax provision associated with filing certain tax returns.

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. The valuation allowance against deferred tax assets was approximately $2,200 million as of June 30, 2023 and December 31, 2022. The Company will continue to assess the need for valuation allowances on an ongoing basis.

As of June 30, 2023 and December 31, 2022, the Company had $901 million and $881 million, respectively, of unrecognized tax benefits, which included $43 million and $32 million of interest and penalties, respectively. Of the total unrecognized tax benefits as of June 30, 2023, $402 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 30, 2023 could decrease by approximately $4 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. In the first quarter of 2023, the Company recorded income tax expense related to prior year withholding tax returns.

On April 19, 2021, the Canadian federal government delivered its 2021 budget which contained proposed measures related to limitations on interest deductibility and changes in relation to international taxation. Draft legislative proposals pertaining to interest deductibility were initially released for public comment on February 4, 2022, with revised legislative proposals subsequently released on November 3, 2022. The proposed rules on interest deductibility are expected to be effective no earlier than January 1, 2024. The proposed rules and their application are complex and could have a material adverse impact on the Company’s consolidated effective tax rate and financial results in future years if enacted as drafted.

The Internal Revenue Service (the “IRS”) previously completed its examinations of the Company’s U.S. consolidated federal income tax returns for the years 2013 and 2014. There were no material adjustments to the Company’s taxable income as a result of these examinations. However, the 2014 tax year remains open to the extent of a 2017 capital loss carried back to that year. The Company’s annual tax filings for 2015 and 2016 and short period tax return for the period ended September 8, 2017, which was filed as a result of the Company’s internal restructuring efforts during 2017 is currently under IRS examination. As part of its examination, the Company received a notice of proposed adjustment from the IRS that would disallow the 2017 Capital Loss resulting from its internal restructuring. The Company previously contested this proposed tax deficiency through the IRS administrative appeals process and if necessary, intends to continue to contest any proposed tax deficiency through appropriate litigation. Accordingly, no income tax provision had been recorded as of December 31, 2022.

If the Company were ultimately unsuccessful in defending its position, and all or a substantial portion of the 2017 capital loss deduction were disallowed, the Company estimates, in 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.

In January 2023, as part of an alternative dispute resolution process with the IRS, the Company reached a tentative settlement on the 2017 Capital Loss. This tentative settlement is subject to further review and approvals before it is finalized. In anticipation of the finalization of this settlement agreement the Company has recorded an estimate for the impact of the settlement during the first quarter of 2023.

The Company’s U.S. affiliates remain under examination for various state tax audits in the U.S. for years 2015 through 2022.

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 Condensed Consolidated Financial Statements.

On November 8, 2022 the Company’s affiliate in the Netherlands received an assessment from the Luxembourg Tax Authorities as successor in interest to its affiliate in Luxembourg for tax years 2018 – 2019 for €272 million. The Company is vigorously defending its position and has not recorded any reserves for this assessment.

Certain affiliates of the Company in regions outside of Canada, the U.S., Germany and Luxembourg are currently under examination by relevant taxing authorities, and all necessary accruals have been recorded, including uncertain tax benefits. At this time, the Company does not expect that proposed adjustments, if any, would be material to the Company’s Condensed Consolidated Financial Statements.

~~GI and liver diseases and, if developed and approval~~16.EARNINGS (LOSS) PER SHARE

Earnings (loss) per share attributable to Bausch Health Companies Inc. is ~~obtained from 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.~~calculated as follows:

~~Investment in Next Generation Formulations -~~ ~~Revenues from our Xifaxan~~® ~~product line increased approximately 11%, 2% and 22% in 2021, 2020 and 2019, respectively. For~~


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions, except per share amounts)	2023		2022		2023		2022
Net income (loss) attributable to Bausch Health Companies Inc.	$	26	$	(145)	$	(175)	$	(214)
Basic weighted-average common shares outstanding	364.8		362.2		364.1		361.5
Diluted effect of stock options and RSUs	2.3		—		—		—
Diluted weighted-average common shares outstanding	$	367.1	$	362.2	$	364.1	$	361.5
Earnings (loss) per share attributable to Bausch Health Companies Inc.

Basic	$	0.07	$	(0.40)	$	(0.48)	$	(0.59)
Diluted	$	0.07	$	(0.40)	$	(0.48)	$	(0.59)

During the six months ended June 30, 2023 and during the three and six months ended June 30, 2022, 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 1,184,000 common shares for the three months ended June 30, 2022, and ~~2021, Xifaxan~~® ~~product revenues were $775 million~~approximately 2,859,000 and ~~$768 million respectively, an increase of $7 million or 1%. 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 three R&D programs in progress, we have another R&D program planned for a next generation formulation of Xifaxan~~® ~~(rifaximin) which would address a new 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.

~~Investment in Our Solta Aesthetic Medical Device Business~~ ~~- Next generation Thermage FLX~~®, a fourth-generation non-invasive treatment option using a radio frequency platform designed to optimize key functional characteristics and improve patient outcomes, has been on sale since 2017 in the U.S., Hong Kong, Japan, Korea, Taiwan, Philippines, Singapore, Indonesia, Malaysia, China, Thailand, Vietnam, Australia and various parts of Europe as part of our Solta aesthetic medical devices portfolio. We plan to continue to expand into other regions, paced by country-specific regulatory registrations. Next generation Thermage FLX® revenues were $154 million and $142 million for the years 2021 and 2020, respectively. 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~~ ~~system in the U.S. is expected to serve as a foundation for future launches in Asia and Europe.~~

~~Reposition the Ortho Dermatologics Business to Generate Additional Value -~~ Our Ortho Dermatologics business continues to work towards improving the treatment options for medical dermatology patients needing topical acne and psoriasis products. We continue to explore 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 medical dermatology pipeline products.

In support of the complete dermatology portfolio, we continue to take 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) making key investments in our core medical device and dermatological products portfolios, (iii) 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, (iv) refocusing our operational and promotional resources and (v) improving patient access to our Ortho Dermatologics products through our cash-pay prescription program previously discussed. In addition, we made significant investments to build out our psoriasis and acne portfolios as follows:

~~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 include Arazlo~~® ~~(tazarotene) Lotion (launched in the U.S. 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 the U.S. in January 2018). As previously discussed, we also have a unique acne project in our pipeline (IDP-126) that, if approved by the FDA, we believe will further innovate and advance the treatment of acne.

~~Invest in our Bausch + Lomb Business -~~ 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 to extend our market share through new launches and effective pricing.

For instance, there is an increasing rate of myopia, and importantly, myopia is 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, Canada and South Korea and Singapore), 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: (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 was approved by the FDA in October 2021 and launched in the first quarter of 2022, and is the first treatment 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 DED associated with 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 in February 2021 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 and in South Korea and Singapore in the second quarter of 2021, 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.

~~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” at the end of Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information.

~~Russia-Ukraine War~~

In February 2022, Russia invaded Ukraine. As military activity and sanctions against Russia, Belarus and specific areas of Ukraine have continued, the war has increasingly affected economic and global financial markets and exacerbated ongoing economic challenges, including issues such as rising inflation and global supply-chain disruption.

~~Our revenues attributable to Russia~~2,392,000 common shares for the six months ended June 30, 2023 and 2022, respectively.

During the three and ~~2021~~six months ended June 30, 2023, time-based RSUs, performance-based RSUs and stock options to purchase approximately 16,308,000 and 17,613,000 common shares, respectively, were ~~$63 million~~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 ~~$64 million, respectively. Our revenues attributable to Ukraine for the~~ six months ended June 30, 2022, time-based RSUs, performance-based RSUs and ~~2021~~stock options to purchase approximately 15,372,000 and 13,771,000 common shares, respectively, were ~~$3 million~~not included in the computation of diluted earnings per share because the effect would have been anti-dilutive under the treasury stock method.

During each of the three and ~~$5 million, respectively. Our revenues attributable to Belarus for the~~ six months ended June 30, ~~2022 and 2021~~2023, an additional 90,000, performance-based RSUs were $4 million in each period. As the geopolitical situation in Eastern Europe continues to intensify, political events and sanctions are continually changing, and we continue to assess the impact that the Russia-Ukraine war has had and will have on our businesses. These impacts may include but are not limited to: (i) interruptions or stoppage of production, (ii) damage or loss of inventories, (iii) supply-chain and product distribution disruptions in Eastern Europe, (iv) volatility in commodity prices

~~and currencies, (v) disruption in banking systems and capital markets, (vi) reductions in sales and earnings of business in affected areas, (vii) increased costs and (viii) cyberattacks.~~

To date, these challenges have not yet had a material impact on our operations; however, we anticipate that the ongoing conflict in this region and the sanctions and other actions by the global community in response will continue to hinder our ability to conduct business with customers and vendors in this region. For example, we expect to experience further disruption and delaysincluded in the ~~supply~~computation of ~~our products to our customers in Russia, Belarus and Ukraine. We may also experience further decreased demand for our products in these countries~~diluted earnings per share as ~~a result of~~ the conflict and invasion. In addition, we expect to experience difficulties in collecting receivables from such customers. If we continue to be hampered in our ability to conduct business with new or existing customers and vendors in this region, our business, and operations, including our revenues, profitability and cash flows, could be adversely impacted. Furthermore, ifrequired performance conditions had not been met.

During the sanctions and other retaliatory measures imposed by the global community change, we may be required to cease or suspend our operations in the region or, should the conflict worsen, we may voluntarily elect to do so. We cannot provide assurance that current sanctions or potential future changes in these sanctions or other measures will not have a material impact on our operations in Russia, Belarus and Ukraine. The disruption to or suspension of our business and operations in Russia, Belarus and Ukraine may have a material adverse impact on our business, financial condition, cash flows and results of operations. We will continue to monitor the impacts of the Russia-Ukraine war on macroeconomic conditions and continually assess the effect these matters may have on our businesses.

~~Impacts of COVID-19 Pandemic~~

The unprecedented nature of the COVID-19 pandemic has, and continues to, adversely 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 closures and production suspensions. Our revenues were most negatively impacted during our second quarter of 2020 by certain 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, signaling the beginning of a recovery from the COVID-19 pandemic.

Our revenues gradually returned to pre-pandemic levels for many of our businesses and geographies throughout 2021. However, in some regions, including China (as further described below), we continue to experience negative impacts of the COVID-19 pandemic on our business in those regions. 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 and subvariant 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 and subvariant strains thereof and other actions taken in response to the COVID-19 pandemic.

The outbreak of the omicron variant in China in 2022 has resulted in government enforced lockdowns and other social restrictions, which impacted our ability to conduct business as usual in certain regions in China, particularly Shanghai. The lockdowns in China have impacted the demand for certain products, particularly our consumer, vision care and Solta products, as shelter in place orders limit the demand and need for the use of contact lenses and related products~~as well as for aesthetic medical treatments. Our revenues in China for the six~~three months ended June 30, 2022, ~~and 2021~~an additional 156,000 performance-based RSUs were ~~$177 million and $229 million, respectively, a decrease~~not included in the computation of $52 million and, in part, reflects the impact of the surge of the omicron variant in China. Additionally, government enforced lockdowns have caused certain businesses to suspend operations, creating distribution and other logistic issues for the distribution of our products and the sourcing for a limited number of raw materials. Through the date of this filing, we have dealt with these issues in China with only a minimal impact on our manufacturing and distribution processes. However,diluted earnings per share as the ~~impacts~~required performance conditions had not been met.

17.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 ~~global reaction~~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 ~~COVID-19 pandemic remains a fluid situation, we continue to monitor~~Company’s Consolidated Financial Statements included in the ~~impacts on our businesses of the COVID-19 virus and variant and subvariant strains thereof in order to timely address new issues if and when they arise.~~

~~For a further discussion of these and other COVID-19 related risks, see Item 1A. “Risk Factors — Risk Relating to COVID-19” of our~~Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, filed with the SEC and the CSA on February 23, ~~2022.~~2023.

~~U.S. Tax Reform~~

~~In April 2021, U.S. President Joseph Biden proposed changes to~~On a quarterly basis, the ~~U.S. tax system. Since~~Company evaluates developments in legal proceedings, potential settlements and other matters that ~~date, both houses~~could increase or decrease the amount of ~~Congress have released their own proposals for changes to~~ the ~~U.S. tax system, which differ in a number~~liability accrued. As of ~~respects from~~June 30, 2023, the

President’s proposal. The proposals under discussion have included changes to the U.S. corporate tax system that would increase U.S. corporate tax rates, although the most recent proposals do not include any such rate increase, and changes that would raise the tax rate on and make other changes to the taxation Company’s Condensed Consolidated Balance Sheets includes accrued current loss contingencies of Global Intangible Low Tax Income earned by foreign subsidiaries. Also under consideration are modifications to the Base Erosion and Anti-Abuse Tax, which would tax certain payments, including some that are$326 million related to ~~inventory, made to affiliates that~~matters which are ~~subject to an effective tax rate~~both probable and reasonably estimable. For all other matters, unless otherwise indicated, the Company cannot reasonably predict the outcome of ~~less than specified rates. Certain proposals also include limitations on~~these legal proceedings, nor can it estimate the ~~participation exemption for foreign dividends received and interest expense. In addition, certain proposals include limitations on the deduction~~amount of ~~interest expense and carryforwards~~loss, or range of ~~unused interest expense, as well as an excise tax on certain pharmaceutical products that are non-compliant with the proposed drug pricing legislation.~~

~~We are unable to predict which,~~loss, 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~~may result from these proceedings. An adverse outcome in certain of ~~changes in the U.S. corporate tax system~~these proceedings could have a material adverse effect on ~~our liability for U.S. corporate tax~~the Company’s business, financial condition and ~~our consolidated effective tax rate.~~

~~Global Minimum Corporate Tax Rate~~

~~On October 8, 2021,~~results of operations, and could cause 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 componentsmarket value of ~~a two-pillar plan on global tax reform originally agreed on July 1, 2021, and a timetable for implementation by 2023. The timetable for implementation has since been extended~~its common shares and/or debt securities to 2024. The Inclusive Framework plan has now been agreed to by 141 OECD members, including several countries which did not agree to the initial plan. Under pillar one, a portion of the residual profits of multinational businesses with global turnover above €20 billion and a profit margin above 10% will be allocated to market countries where such allocated profits would be taxed. Under pillar two, the Inclusive Framework has agreed on a global minimum corporate tax rate of 15% for companies with revenue above €750 million, calculated on a country-by-country basis. On October 30, 2021, the G20 formally endorsed the new global minimum corporate tax rate rules. The Inclusive Framework agreement must now be implemented by the OECD Members who have agreed to the plan, effective in 2024. On December 20, 2021, the OECD published model rules to implement the pillar two rules, which are generally consistent with the agreement reached by the Inclusive Framework in October 2021. Some further guidance on the plan and the related rules has been published, with additional guidance expected to be published 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 in these countries, and it is possible that the implementation of the Inclusive Framework agreement, including the global minimum corporate tax rate could have a material 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 2021 and 2020, we incurred costs of $13 million and $21 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 2021 and 2020, we also incurred costs of $94 million and $131 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”).

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 failure of the Senate’s multiple attempts to repeal various combinations of ACA provisions and the change in the U.S. Presidential 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-decline.

~~sponsored insurance coverage,~~Governmental and ~~we cannot predict how future federal or state legislative or administrative changes relating to the reform will affect our business.~~Regulatory Inquiries

~~In 2019,~~Investigation by the U.S. Attorney’s Office for the District of Iowa – re OrthoDerm

The Company received a Civil Investigative Demand in May 2021 from the Civil Division of the United States Department of ~~Health~~Justice and ~~Human Services announced a preliminary plan to allow~~the United States Attorney’s Office for the ~~importation~~District of ~~certain lower-cost drugs from Canada. The preliminary plan excludes insulin, biological drugs, controlled substances~~Iowa, requesting documents and ~~intravenous drugs. The preliminary plan relies on individual states to develop proposals for safe importation~~other information concerning the sales and marketing 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 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 were scheduled to become effective on July 1, 2021, but have been delayed until July 1, 2022. The new regulations will, among other things, change the mechanics of establishing the pricing for products submitted for approval after August 21, 2019 and 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 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.

In December 2020, as part of a series of drug pricing-related rules issued by the Trump Administration, 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 reporting relating to certain value-based purchasing arrangements (which took effect on January 1, 2022) and the price reporting treatment of manufacturer-sponsored patient benefit programs (which take effect on January 1, 2023).

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 this legislation, the impact of which is uncertain at this time.

Adoption of legislation at the federal or state level could materially affect demand for, or pricing of, our products. Additionally, 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. 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 2022 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 2022 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 (“AG”) 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.~~

~~2021 LOE Branded Products~~ ~~- Branded products that began facing generic competition in the U.S. during 2021 included Lotemax~~® ~~Gel, Bepreve~~®~~, Clindagel~~® 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.

~~2022 through 2026 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 2022 through 2026. These products and year of expected LOE include, but are not limited to, Noritate® ~~(2022), Targretin~~® ~~Gel (2022), Xerese~~® ~~(2022)~~and certain other products that are subject to settlement agreements which could impact their exclusivity during the years 2022 through 2026. In aggregate, these products accounted for 2% of our total revenues in 2021. 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.

~~In addition, for a number of our products (including Xifaxan~~® ~~200mg and 550mg,~~ Bryhali®, Duobrii®, ~~Trulance~~®~~, Lumify~~® ~~and Relistor~~® ~~Injection in the U.S. and~~ Jublia® ~~in Canada), 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~~Siliq® ~~Lotion, 0.01% (Glenmark)~~. 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 - InOpt-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) (the “Securities Class Action Settlement”). 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. On January 31, 2021, the District Court issued an order granting final approval of this settlement. After various appeals, and with passage of time, this settlement has become final pursuant to the stipulation of settlement. The matter is now concluded with respect to the Company and all claims have been resolved and discharged as to the Company and its current/former officers and directors.

In addition to the consolidated putative class action, thirty-seven 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 previously described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed on February 23, 2023. Sixteen of the thirty-seven opt-out actions have been dismissed; and the total number of remaining opt-out actions pending in the District of New Jersey is twenty-one 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 were filed in many of these individual actions and 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 opt-out action, closing the case. On September 10, 2019, the Court granted defendants’ motion to dismiss all claims in the Aly 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.

Discovery in the opt-out actions has concluded. Motions for summary judgment were filed on August 1, 2022. On May 22, 2023, the Special Master overseeing the opt-out litigation issued reports and recommendations on all pending summary judgment motions. The Special Master recommended denying Plaintiffs’ motions in their entirety, denying all motions filed by the Company and granting in part certain other defendants’ motions for summary judgment on subparts of their defenses. No defendants would be fully dismissed from the opt-out cases as a result of the reports and recommendations. On June 26, 2023, the Parties filed motions to adopt and objections to the Special Master’s May 22, 2023 reports and recommendations which will be reviewed and ruled on by the District Court. Trial dates have not been set in any of the opt-out actions.

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

U.S. Securities Litigation – Kelk Complaint

On July 26, 2023, a purported class action complaint captioned, Kelk v. Bausch Health Companies, Inc., et al. (No. 23-cv-03996), was filed in the U.S. District Court for the District of New Jersey against the Company and certain of its current or former officers. The action alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Plaintiff alleges that defendants made various misrepresentations and omissions regarding the Company’s proposed spin-off of Bausch + Lomb, and alleges that those purported misrepresentations and omissions concealed that the spin-off was executed as part of a strategy to subvert the pending opt-out lawsuits and leave plaintiffs in those actions without viable means to a potential recovery.

The Company disputes the claims against it and intends to defend itself vigorously.

Canadian Securities Litigation

In 2015, six 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 two 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. These actions were captioned previously in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed on February 23, 2023.

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 the Company’s auditors.

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, one 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 was heard on September 29, 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 December 8, 2021, CalSTRS delivered its amended pleadings.

On March 17, 2021, four 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.

Other Securities and RICO Class Actions and Related Matters

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 two distinct policy periods, (i) 2013-14 and (ii) 2015-16. The lawsuit was brought 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.; Case No. 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, and with two insurers in the 2013-2014 coverage period to resolve its claims against those two insurers for insurance coverage in connection with the Allergan Securities Litigation. As of June 30, 2023, the Company has entered into settlement agreements with the remaining insurers in the 2013-2014 coverage period in which the Company agreed to resolve its remaining claims for insurance coverage in connection with the Allergan Securities Litigation. As a result of all of the settlement agreements entered into with the insurers through June 30, 2023, the Company has received an aggregate sum of $313 million for its claims in the 2013-2014 and 2015-2016 coverage periods. This matter has now concluded.

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.

Antitrust

Glumetza Antitrust Litigation

Between August 2019 and July 2020, eight (8) putative antitrust class actions and four (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. Three (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. Three (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 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 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 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 sought damages under federal antitrust laws for claims based on direct purchases.

On February 8, 2021, the insurer plaintiff filed an action asserting its indirect (state law) claims in the Superior Court of Alameda County, California against the Company and others (the “State Court Action”) (discussed in further detail below, see Glumetza State-Law Insurer Litigations).

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 ~~outstanding~~class plaintiffs’ claims for $300 million, subject to court approval. On August 1, 2021, the Company also reached an agreement in principle to resolve the non-class direct purchaser plaintiffs’ claims, described above, for additional consideration. A final settlement agreement with the non-class direct purchaser plaintiffs was executed on August 6, 2021. As part of the settlements, the Company admitted no liability as to the claims against it and denied all allegations of wrongdoing. On September 20, 2021, the insurer plaintiff 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.

On September 22, 2021, the court 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. On February 3, 2022, the court granted final approval of the class settlement and ordered dismissal of the class plaintiffs’ claims. The deadline to appeal the final approval of the class settlement has now passed, and the settlements have resolved and discharged all asserted class and direct purchaser non-class claims against the Company in the In re Glumetza Antitrust Litigation.

Glumetza State-Law Insurer Litigations

On February 8, 2021, the insurer plaintiff from the federal In re Glumetza Antitrust Litigation, Case No. 3:19-cv-05822- WHA (N.D. Cal.) (the “In re Glumetza Antitrust Litigation”) (discussed in further detail above), Humana Inc. (“Humana”), filed an action asserting its indirect (state law) claims in the Superior Court of Alameda County, California against the Company and others (the “State Court Action”). The State Court Action alleges 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 State Court Action alleges that the settlement agreement resulted in higher prices for Glumetza® and its generic equivalent both prior to and after generic entry. On September 20, 2021, the parties stipulated that Humana’s direct opt-out claims from In re Glumetza Antitrust Litigation, discussed above, were deemed asserted in the State Court Action.

Defendants’ demurrer in the State Court Action was heard on September 22, 2021. On November 29, 2021, the court denied the motion in part and granted it in part as to certain state law claims, with leave to amend. Humana did not amend the complaint. Defendants’ answers were filed on February 3, 2022.

On April 5, 2022, Health Care Service Corporation filed an action with similar substantive allegations and similar indirect (state law) claims in the Superior Court of Alameda County, California against the Company and others. Defendants’ answers were filed on June 17, 2022. On November 28, 2022, the Court consolidated this action with the State Court Action for trial and pretrial purposes (the “Consolidated State Case”). Trial is currently scheduled to start in January 2024 in the Consolidated State Case.

The Company disputes the 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). 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, hospitals, pharmacies, States, and various Counties, Cities, and Towns, have been or will be 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 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 the cases. The cases have been placed 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 intends to defend itself vigorously.

These lawsuits cover products of both Bausch + Lomb and the Company’s businesses. It is anticipated that Bausch + Lomb and the Company will split the fees and expenses associated with defending these claims, as well as any potential damages or other liabilities awarded in or otherwise arising from these claims, in the manner set forth in the Master Separation Agreement between Bausch Health and Bausch + Lomb.

Intellectual Property

Patent Litigation/Paragraph IV Matters

From time to time, the Company (and/or certain of its affiliates) is also party to certain intellectual property litigation ~~with Glenmark Pharmaceuticals, Ltd. (“Glenmark”). Under~~proceedings in the ~~terms~~United States and Canada, including as arising from claims filed against the Company or by the Company (or that the Company anticipates filing within the required time periods) related to certain products sold by or on behalf of the ~~agreement,~~Company, which may be in connection with Notices of Paragraph IV Certification (in the ~~Company will grant Glenmark a non-exclusive license to its intellectual property relating to Bryhali~~United States) and Notices of Allegation (in Canada) received from third-party generic manufacturers, where such products include Xifaxan® 200 mg and 550 mg, Arazlo®, Duobrii®, Lumify®, Nuvessa® and Trulance® in the ~~U.S.~~United States and ~~beginning in 2026 (or earlier under certain circumstances), Glenmark will have the option to market a royalty-free generic version of Bryhali~~Jublia® ~~Lotion, should it receive approval from the FDA. The parties have agreed to dismiss all litigation related to Bryhali~~in Canada

Xifaxan® ~~Lotion, and all intellectual property protecting Bryhali~~® ~~Lotion remains intact.~~Paragraph IV Proceedings

~~Bryhali~~® ~~Lotion, 0.01% (Padagis)~~ - On ~~March 20,~~February 17, 2020, the Company and Alfasigma S.p.A. (“Alfasigma”) received a Notice of Paragraph IV Certification from ~~Perrigo Israel~~Norwich Pharmaceuticals ~~Ltd. (now Padagis LLC)~~Inc. (“~~Padagis”~~Norwich”), in which ~~Padagis~~Norwich asserted that ~~certain~~the U.S. patents ~~each of which is~~ listed in the FDA’s Orange Book for ~~Bryhali~~the Company’s Xifaxan® ~~(halobetasol propionate) lotion, 0.01%~~tablets, 550 mg, are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of ~~Padagis’~~Norwich’s generic ~~halobetasol propionate lotion,~~rifaximin tablets, 550 mg, for which an ~~Abbreviated New Drug Application (“ANDA”)~~ANDA has been filed by ~~Padagis.~~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 ~~May 1,~~March 26, 2020, certain of the ~~Company~~Company’s subsidiaries and Alfasigma filed suit against ~~Padagis~~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 ~~Padagis~~Norwich of one or more claims of the ~~Bryhali~~Xifaxan® ~~patents,~~Patents, thereby triggering a 30-month stay of the approval of ~~the Padagis~~Norwich’s ANDA for ~~halobetasol propionate lotion. On September 3, 2020, this action was consolidated with the action between the Company and Padagis described below, regarding Padagis’ ANDA for generic Duobrii~~rifaximin tablets, 550 mg. Xifaxan® ~~(halobetasol propionate and tazarotene) lotion. A trial in~~is protected by 27 patents covering the ~~consolidated action has been scheduled for October 4, 2022. The Company remains confident in the strength~~composition of ~~the Bryhali® patents and intends to vigorously pursue this~~ matter and ~~defend its intellectual property.~~

~~Duobrii~~the use of Xifaxan® ~~Lotion (Padagis) -~~ listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, or the Orange Book. Trial in this matter was held in March 2022. The court issued a final judgment on August 10, 2022, (the “Norwich Legal Decision”), finding that the U.S. Patents protecting the use of Xifaxan® (rifaximin) 550 mg tablets for the reduction in risk of hepatic encephalopathy (“HE”) recurrence valid and infringed and the U.S. Patents protecting the composition, and use of Xifaxan® for treating IBS-D invalid. The Norwich Legal Decision prevents FDA approval of Norwich’s 550 mg ANDA until October 2029. The Company appealed the Norwich Legal Decision to the U.S. Court of Appeals for the Federal Circuit on August 16, 2022. Following the Company’s appeal, Norwich claimed to have removed the HE indication from its existing ANDA and then filed a motion in the District Court requesting modification of the Norwich Legal Decision to permit the FDA to approve their ANDA before October 2029. The Company opposed the motion. On ~~July 23, 2020,~~May 17, 2023, the District Court denied Norwich’s motion and confirmed that the FDA remained enjoined from granting final approval to Norwich’s ANDA until October 2029. Norwich filed its appeal to the U.S. Court of Appeals for the Federal Circuit on May 19, 2023. The Company’s and Norwich’s appeals are now consolidated.

In a letter to Norwich on June 2, 2023, the FDA granted tentative approval to Norwich’s ANDA, but confirmed that it is enjoined from granting final approval until October 2029. On June 5, 2023, Norwich brought a lawsuit against the FDA in the U.S. District Court for the District of Columbia, alleging that the FDA acted improperly by only granting tentative approval to Norwich’s ANDA rather than final approval (the “Norwich DC Lawsuit”). In June 2023, the Company ~~received a Notice of Paragraph IV Certification from Padagis,~~intervened in the Norwich DC Lawsuit.

In January 2023, the U.S. Patent Office issued U.S. Patent No. 11,564,912 (the “’912 Patent”) directed to IBS-D, which ~~Padagis asserted that certain U.S. patents, each of which is~~was then listed in the FDA’s Orange Book for ~~Duobrii~~® ~~(halobetasol propionate and tazarotene) lotion,~~Xifaxan®. On April 28, 2023, the Company received a new Notice of Paragraph IV Certification from Norwich asserting that claims of the ‘912 Patent are ~~either~~ invalid, unenforceable, and/or will not be infringed by the commercial manufacture, use, or sale of ~~Padagis’~~Norwich’s generic ~~lotion, for which an~~rifaximin tablets, 550 mg, under the existing Norwich ANDA. Any suit brought against the existing Norwich ANDA ~~has been filed by Padagis. On August 28, 2020,~~under the ~~Company filed suit against Padagis pursuant~~‘912 Patent is not believed to ~~the Hatch-Waxman Act, alleging infringement by Padagis of one or more claims of the Duobrii~~® ~~Patents, thereby triggering~~result in a new 30-month stay of ~~the approval of the Padagis ANDA. On September 3, 2020, this action was consolidated with the action between the~~approval.

The Company ~~and Padagis described above, regarding Padagis’ ANDA for generic Bryhali~~® ~~(halobetasol propionate) lotion. A trial in the consolidated action has been scheduled for October 4, 2022. We remain~~remains confident in the strength of the ~~Duobrii~~Xifaxan® patents and ~~will~~intends to vigorously defend ~~our~~its intellectual property.

Duobrii® ~~Lotion (Taro)~~Paragraph IV Proceedings

- In June 2022, the Company received a Notice of Paragraph IV Certification from Taro Pharmaceuticals Inc. (“Taro”), in which Taro asserted that certain U.S. patents, each of which is listed in the FDA’s Orange Book for Duobrii® (halobetasol propionate and tazarotene) lotion, are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use, sale, offer for sale, or importation of Taro’s generic lotion, for which an ANDA has been filed by Taro. On July 21, 2022, the Company filed suit against Taro pursuant to the Hatch-Waxman Act, alleging infringement by Taro of one or more claims of the Duobrii® Patents and triggering a 30-month stay of the approval of the Taro ANDA. ~~We remain~~

The Company remains 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. (“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: (i) market a royalty-free generic version of Xifaxan® ~~tablets, 550 mg, should it receive approval from the FDA on its ANDA, or (ii) 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. Trial in this matter was held in March 2022. The court issued an Oral Order on July 28, 2022 indicating that the court will find certain U.S. Patents protecting the use of Xifaxan® ~~(rifaximin) 550 mg tablets for the reduction in risk of hepatic encephalopathy (“HE”) recurrence valid and infringed and U.S. Patents protecting the composition, and use of Xifaxan~~® ~~for treating inflammatory bowel syndrome with diarrhea (“IBS-D”) invalid. The Company remains confident in the strength of the Xifaxan~~® ~~patents and~~ intends to ~~appeal the court’s judgment and~~ vigorously defend its intellectual property.

~~Xifaxan~~Trulance®~~200mg and 550mg Patent Litigation (Sun)~~ Paragraph IV Proceedings

- In April ~~2019,~~2021, the Company ~~and its licensor, Alfasigma,~~ 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~~(plecanatide) 3 mg 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.

In January 2023, the Company ~~received an additional~~commenced litigation against Aurobindo Pharma Limited (“Auro”) alleging patent infringement by Auro’s filing of their ANDA for generic Trulance® (plecanatide) 3 mg tablets. This suit had been filed following receipt of a Notice of Paragraph IV Certification from ~~Sun,~~Auro, in which ~~Sun~~it asserted that the U.S. ~~patents~~patent listed in the FDA’s Orange Book for the Company’s ~~Xifaxan~~Trulance® tablets, ~~550~~3 mg, were ~~either~~ invalid, unenforceable and/or would not be infringed by the commercial manufacture, use or sale of ~~Sun’s~~Auro’s generic ~~rifaximin~~plecanatide 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.

~~Relistor~~® ~~Injection Patent Litigation (Gland)~~ ~~- On February 22, 2022, the Company commenced litigation against Gland Pharma Limited (“Gland”) alleging patent infringement by Gland’s filing of its ANDA No. 216836, referencing Relistor~~® ~~(methynaltrexone bromide injection, vials) and its ANDA No. 216965, referencing Relistor~~® (methynaltrexone bromide injection, pre-filled syringes). This suit had been filed following receipt of two Notices of Paragraph IV Certification from Gland, in which it had asserted that the U.S. patents listed in the FDA’s Orange Book for the Company’s Relistor® ~~methynaltrexone bromide injection, were either invalid, unenforceable and/or would not be infringed by the commercial manufacture, use or sale of its generic methynaltrexone bromide injection.~~3 mg. The filing of this suit triggered a 30-month stay of the approval of the ~~Gland~~Auro ANDA for ~~its methynaltrexone bromide injection. The Company remains confident in the strength of the Relistor~~® ~~patents and will continue to vigorously pursue this matter and defend its intellectual property.~~plecanatide tablets.

~~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~~intends to vigorously pursue this matter and defend its intellectual property.

PreserVision® AREDS Patent Litigation

PreserVision® AREDS and PreserVision® AREDS 2 are over the counter eye vitamin formulas for those with moderate-to-advanced age-related degeneration (“AMD”). The PreserVision® U.S. formulation patent expired in March 2021, but a patent covering methods of using the formulation remains in force into 2026. Bausch & Lomb Incorporated (“B&L Inc.”) has filed patent infringement proceedings against 19 named defendants in 16 proceedings, claiming infringement of these patents and, in certain circumstances, related unfair competition and false advertising causes of action. Twelve of these proceedings were subsequently settled; two resulted in a default. As of the date of this filing, there are two ongoing actions: (1) Bausch & Lomb Inc. & PF Consumer Healthcare 1 LLC v. ZeaVision LLC, C.A. No. 4:22-cv-00914-AGF (E.D. Mo.) and (2) Bausch & Lomb Inc. & PF Consumer Healthcare 1 LLC v. SBH Holdings LLC, C.A. No. 20-cv-01463-GBW-CJB (D. Del.). Bausch + Lomb remains confident in the strength of these patents and B&L Inc. intends to continue to vigorously pursue these matters and defend its intellectual property.

Patent Litigation against Certain Ocuvite and PreserVision

On June 22, 2021, ZeaVision, LLC (“ZeaVision”) filed a complaint for patent infringement against certain of the Ocuvite® and PreserVision® products in the Eastern District of Missouri (Case No. 4:21-cv-00739-RWS). On June 29, 2021, ZeaVision amended its complaint to assert a second patent against certain of the Ocuvite® and PreserVision® products. On November 16, 2021, ZeaVision filed an additional complaint for patent infringement to assert a third patent against certain of the PreserVision® products (Case No. 4:21-cv-01352-RWS). On March 1, 2022, the cases were consolidated. On March 10, 2022, the court granted Bausch + Lomb’s motion to stay all proceedings pending inter partes review. On July 8, 2022, ZeaVision filed a motion to partially lift the stay to allow Case No. 4:21-cv-00739-RWS to proceed, and this motion was denied. On April 18, 2023, the Court ordered all proceedings stayed pending inter partes review of the patents-in-suit. The Company disputes the claims and intends to vigorously defend this matter.

Lumify® ~~Ophthalmic Solution Patent Litigation (Slayback)~~Paragraph IV Proceedings

- On August 16, 2021, ~~the Company~~B&L Inc. received a Notice of Paragraph IV Certification from Slayback Pharma LLC (“Slayback”), in which Slayback asserted that certain U.S. patents, each of which is listed in the FDA’s Orange Book for Lumify® (brimonidine tartrate solution) drops (the “Lumify Patents”), are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Slayback’s generic drops, for which an ANDA has been filed by Slayback. ~~The Company,~~B&L Inc., through its affiliate Bausch + Lomb Ireland Limited, exclusively licenses the Lumify Patents from Eye Therapies, LLC (“Eye Therapies”). On September 10, 2021, B&L Inc., Bausch + Lomb Ireland Limited and Eye Therapies filed suit against Slayback pursuant to the Hatch-Waxman Act, alleging infringement by Slayback of one or more claims of the Lumify Patents, thereby triggering a 30-month stay of the approval of the Slayback ANDA. ~~The Company remains confident in the strength of the Lumify~~® ~~Patents and intends to vigorously defend its intellectual property.~~

~~Lumify~~® ~~Ophthalmic Solution Patent Litigation (Lupin)~~ – On January 20, 2022, B&L Inc. received a Notice of Paragraph IV Certification from Lupin Ltd. (“Lupin”), in which Lupin asserted that certain U.S. patents, each of which is listed in the FDA’s Orange Book for Lumify ~~Patents~~® (brimonidine tartrate solution) drops (the “Lumify Patents”), are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Lupin’s generic brimonidine tartrate solution, for which its ANDA No. 216716 has been filed by Lupin. On February 2, 2022, B&L Inc., Bausch + Lomb Ireland Limited and Eye Therapies filed suit against Lupin pursuant to the Hatch-Waxman Act, alleging patent infringement by Lupin of one or more claims of the Lumify® Patents, thereby triggering a 30-month stay of the approval of the Lupin ANDA. ~~As noted above,~~Since then, U.S. Patent No. 9,259,425 has been dismissed from the ~~Company~~case.

On May 15, 2023, the United States Patent & Trademark Office’s Patent Trial and Appeal Board issued a Final Written Decision, finding all claims of U.S. Patent No. 8,293,742 unpatentable. This decision has been appealed to the United States Court of Appeals for the Federal Circuit and is ongoing. Additionally, an additional patent (US. Patent No. 11,596,600) has been listed in the Orange Book related to Lumify®, and lawsuits have been filed against Slayback and its licensee, Dr. Reddy’s Laboratories S.A. and Dr. Reddy’s Laboratories, Inc. and Lupin, respectively. Those cases have been consolidated and are ongoing in the District of New Jersey, with no trial date set.

B&L Inc. remains confident in the strength of the Lumify® ~~Patents~~related patents and B&L Inc. intends to vigorously defend its intellectual property.

~~Generic Competition to Uceris~~® - Inter Partes Review Proceedings at the U.S. Patent and Trademark Office

In ~~July 2018, a generic competitor launched a product which will directly compete with our Uceris~~® ~~Tablet product. As disclosed~~addition, patents covering the Company’s branded pharmaceutical products may be challenged in ~~our prior filings,~~proceedings other than court proceedings, including inter partes review (“IPR”) at the ~~Company initiated various infringement~~U.S. Patent & Trademark Office. The proceedings

months of institution. IPR challenges have been brought against ~~this generic competitor. The Court construed~~patents covering 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 competitor on our future revenues cannot be predicted; however, Uceris® Tablet revenues for the six months ended June 30, 2022 and 2021 were approximately $7 million and $5 million, respectively, and for the years 2021, 2020 and 2019 were approximately $10 million, $15 million and $20 million, respectively.Company’s branded pharmaceutical products.

~~Generic Competition to Jublia~~® - ~~On June 6, 2018,~~Following Acrux DDS’s IPR petition, the U.S. Patent and Trial Appeal Board (“PTAB”) ~~completed its~~, in May 2017, instituted inter partes review for an Orange Book-listed patent covering Jublia® (U.S. Patent NoNo. 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 enforceable and expires in 2026. Jublia® revenues for the six months ended June 30, 2022 and 2021 were approximately $54 million and $50 million, respectively, and for the years 2021, 2020 and 2019 were approximately $100 million, $111 million and $110 million, respectively. Jublia®is covered by ~~fourteen additional~~seventeen Orange Book-listed patents owned by the Company or its licensor, which expire in the years ~~2028~~2026 through 2035. In ~~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.~~Canada. All cases in the U.S. regarding Jublia® have been settled. InOne lawsuit is pending in Canada ~~two lawsuits remain pending~~regarding Jublia® against ~~Apotex,~~Pharmascience Inc.

~~PreserVision~~Mylan and MSN have filed IPR petitions for certain U.S. patents listed in the FDA Orange Book for Trulance® (plecanatide). On March 21, 2022, Mylan filed a petition for IPR of U.S. Patent ~~Litigation -~~ No. 7,041,786, which was then instituted on September 14,

2022. On October 12, 2022, MSN also filed a petition for IPR of U.S. Patent No. 7,041,786 and the PTAB then issued a decision on December 14, 2022, instituting MSN’s IPR and joining it with Mylan’s IPR. On June 10, 2022, Mylan filed petitions for IPR of U.S. Patent Nos. 9,610,321, 9,616,097, 9,919,024 and 9,925,231. In the Company’s favor, the PTAB issued decisions on Jan. 4, 2022, denying Mylan’s petitions against the ‘321, ‘097, ‘024, and ‘231 patents.

On June 21, 2023, Padagis filed an IPR petition against U.S. Patent No. 11,311,482, which is Orange Book-listed for Arazlo® ~~AREDS and PreserVision~~.® ~~AREDS 2 are over the counter eye vitamin formulas for those with moderate-to-advanced age-related degeneration (“AMD”). 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 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. Twelve 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 two ongoing matters.

The Company remains confident in the strength of these patents and intends to vigorously defend its intellectual property.

Product Liability

Shower to Shower® Products Liability Litigation

Since 2016, the Company has been named in a number of product liability lawsuits involving the Shower to Shower® body powder product acquired in September 2012 from Johnson & Johnson; due to dismissals, twenty-six (26) of such product liability suits currently remain pending. In three (3) cases pending in the Atlantic County, New Jersey Multi-County Litigation, agreed stipulations of dismissal have been entered by the Court, thus dismissing the Company from those cases. Potential liability (including its attorneys’ fees and costs) arising out of these remaining suits is subject to full indemnification obligations of Johnson & Johnson owed to the Company and its affiliates, and legal fees and costs will be paid by Johnson & Johnson. Twenty-five (25) 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, two proposed class actions have been filed in Canada against the Company and various Johnson & Johnson entities (one in the Supreme Court of British Columbia and one 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. On December 16, 2021, the plaintiff in the British Columbia class action filed a Second Amended Notice of Civil Claim and Application for Certification, removing the Company as a defendant; as a result, the British Columbia class action is concluded as to the Company.

Johnson & Johnson, through one or more subsidiaries, has purported to have completed a Texas divisional merger with respect to any talc liabilities at Johnson & Johnson Consumer, Inc. (“JJCI”). LTL Management, LLC (“LTL”), the resulting entity of the divisional merger, assumed JJCI’s talc liabilities and thereafter filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Western District of North Carolina. Pursuant to court orders entered in November 2021, the case was transferred to the United States District Court for the District of New Jersey (the “Bankruptcy Court”), and substantially all cases related to Johnson & Johnson’s talc liability were stayed for a period of 60 days pursuant to a preliminary injunction. Notwithstanding the divisional merger and LTL’s bankruptcy case, the Company and its affiliates continue to have indemnification claims and rights against Johnson & Johnson and LTL pursuant to the terms of the indemnification agreement entered into between JJCI and its affiliates and the Company and its affiliates, which indemnification agreement remains in effect. As a result, it is the Company’s current expectation that it will not incur any material impairments with respect to its indemnification claims as a result of the divisional merger or the bankruptcy. In December 2021, certain talc claimants filed motions to dismiss the bankruptcy case. Shortly thereafter, LTL filed a motion in the Bankruptcy Court to extend the 60-day preliminary injunction. On February 25, 2022, the Bankruptcy Court entered orders denying the motions to dismiss and extending the preliminary injunction staying substantially all cases subject to the indemnification agreement related to Johnson & Johnson’s talc liability through at least June 29, 2022, which it later extended indefinitely. The order denying the motions to dismiss and the order extending the preliminary injunction were subject to appeal and the Bankruptcy Court certified their appeals directly to the United States Court of Appeals for the Third Circuit. On May 11, 2022, the Third Circuit granted authorization for the parties to proceed with their direct appeals. Oral argument before the Third Circuit was held on September 19, 2022. On January 30, 2023, a unanimous three-judge Third Circuit Court of Appeals panel issued its decision directing the Bankruptcy Court to dismiss LTL’s bankruptcy case, concluding that LTL was not in financial distress and could not file a bankruptcy case in good faith. LTL requested a rehearing and on March 22, 2023, the Third Circuit denied LTL’s rehearing request. Thereafter LTL moved for a stay of the mandate of the Third Circuit’s dismissal decision while LTL sought review by the Supreme Court. On March 31, 2023, the Third Circuit denied LTL’s stay motion. At that juncture, the Bankruptcy Court determined it appropriate to discontinue the

proceedings pending there, and on April 4, 2023, entered orders dismissing the bankruptcy case and related adversary proceedings and terminating the preliminary injunction.

However, on April 4, 2023, LTL re-filed for chapter 11 in the Bankruptcy Court and again commenced an adversary proceeding seeking a preliminary injunction enjoining substantially all cases subject to the indemnification agreement. The Bankruptcy Court granted a temporary restraining order enjoining litigation against the “Protected Parties” including the Bausch entities. The Bankruptcy Court held a hearing on April 18, 2023, to consider the preliminary injunction, and on April 20, 2023, the Bankruptcy Court ordered a preliminary injunction solely on a limited basis to enjoin the commencement or continuation of any trial against any Protected Party (including the Bausch entities), which the Bankruptcy Court extended to August 22, 2023. The injunction did not enjoin the commencement of a new suit or any discovery or pre-trial activity in pending suits. The Bankruptcy Court denied the talc claimants’ motion to have the injunction decision certified for direct appeal to the Third Circuit. On or around April 24, 2023, multiple motions to dismiss the newly filed Chapter 11 case were filed and a hearing on the motions to dismiss was held the week of June 27, 2023. On July 28, 2023, the Bankruptcy Court granted the motions to dismiss LTL’s bankruptcy case and directed the parties to prepare and propose a form of Order consistent with the Court’s dismissal.

If the bankruptcy case is ultimately dismissed, the Company’s position vis a vis J&J would return to the status quo prior to the filing. The litigation against the Company and other defendants will no longer be stayed, and LTL and J&J will continue to have indemnification obligations running to the Company and its affiliates for Shower-to-Shower related product liability litigation.

To the extent that any cases proceed during the pendency of the bankruptcy case, or if the case is ultimately dismissed, it is the Company’s expectation that Johnson & Johnson, in accordance with the indemnification agreement, will continue to vigorously ~~pursue~~defend the Company in each of the remaining actions.

General Civil Actions

U.S. Securities Litigation - New Jersey Declaratory Judgment Lawsuit

On March 24, 2022, the Company and Bausch + Lomb were named in a declaratory judgment action in the Superior Court of New Jersey, Somerset County, Chancery Division, brought by certain individual investors in the Company’s common shares and debt securities who are also maintaining individual securities fraud claims against the Company and certain current or former officers and directors as part of the U.S. Securities Litigation. This action seeks a declaratory judgment that alleged transfers of certain Company assets to Bausch + Lomb would constitute a voidable transfer under the New Jersey Voidable Transactions Act and that Bausch + Lomb would be liable for damages, if any, awarded against the Company in the individual opt-out actions. The declaratory judgment action also alleges that the future potential separation of Bausch + Lomb from the Company by distribution of Bausch + Lomb stock to the Company’s shareholders would leave the Company with inadequate financial resources to satisfy these ~~matters~~plaintiffs’ alleged securities fraud damages in the underlying individual opt-out actions. None of the plaintiffs in this declaratory judgment action have obtained a judgment against the Company in the underlying individual opt-out actions and the Company disputes the claims against it in those underlying actions. The underlying individual opt-out actions assert claims under Sections 10(b) and 20(a) of the Exchange Act, and certain actions assert claims under Section 18 of the Exchange Act. The allegations in those underlying individual opt out actions are made against the Company and several of its former officers and directors only and relate to, among other things, allegedly false and misleading statements made during the 2013-2016 time period by the Company and/or failures to disclose information about the Company’s business and prospects including relating to drug pricing and the use of specialty pharmacies. On March 31, 2022, the Company and Bausch + Lomb removed the action to the U.S. District Court for the District of New Jersey. On April 29, 2022, Plaintiffs filed a motion to remand. On November 29, 2022, the District Court granted Plaintiffs’ remand motion and the case was remanded to the New Jersey Superior Court Chancery Division. On December 8, 2022, Plaintiffs filed a proposed Order to Show Cause and motion for a preliminary injunction, and sought interim relief including expedited discovery. On December 13, 2022, the Court denied Plaintiffs’ proposed Order to Show Cause and stayed discovery pending the resolution of the Company and Bausch + Lomb’s forthcoming motions to dismiss, while instructing the Company to provide certain notice to Plaintiffs of the intended completion of a potential future distribution referenced above under certain circumstances. On December 22, 2022, Plaintiffs filed an amended complaint which, among other things, added claims seeking injunctive relief. On January 11, 2023, the Company and Bausch + Lomb moved to dismiss the amended complaint. Briefing was complete on February 24, 2023, and the motion to dismiss was heard on March 3, 2023. On April 3, 2023, the court issued a decision granting in part and denying in part the motion to dismiss.

Both the Company and Bausch + Lomb dispute the claims in this declaratory judgment action and intend to vigorously defend this matter.

California Proposition 65 Related 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. Bausch Health US 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; Appellees’ response briefs were filed on October 8, 2021. This matter was stayed by the Ninth Circuit on December 7, 2021, due to the preliminary injunction entered by the Bankruptcy Court in the LTL bankruptcy proceeding. This stay included Appellants’ reply brief deadline, which was previously due to be filed on or before December 2, 2021. On March 9, 2022, the Ninth Circuit issued an order extending the stay through July 29, 2022. On July 29, 2022, Johnson & Johnson filed a status report in the Gutierrez appeal, outlining the developments since the last status report and the imposition of the stay. Johnson & Johnson noted that following a July 26, 2022, hearing, the Bankruptcy Court left the preliminary injunction in place, and asked the Ninth Circuit to continue to stay this action while the bankruptcy preliminary injunction remained in place. On January 20, 2023, the Ninth Circuit extended the stay until February 17, 2023. On February 17, 2023, Johnson & Johnson requested the court afford it sixty (60) days – until April 18, 2023, or seven (7) days following any lifting of the LTL Bankruptcy Court’s preliminary injunction – whichever comes earliest – to provide an additional status report about the bankruptcy proceeding and the Third Circuit dismissal for which LTL has requested a rehearing. On April 7, 2023, Johnson & Johnson Consumer Inc. filed a status report regarding the bankruptcy proceeding advising the Court of the dismissal of the prior bankruptcy proceeding and the filing of the second bankruptcy proceeding, as well as the preliminary injunction and stay order, and requesting the stay of the appeal remain in place until May 10, 2023, which was granted. Following the entry of a preliminary injunction applicable to this case, which was extended until August 26, 2023, the Ninth Circuit extended the stay to June 15, 2023. On June 22, 2023, Johnson & Johnson and LTL filed a status report requesting the stay be extended to August 26, 2023, consistent with the extension of the preliminary injunction by the bankruptcy court. The Ninth Circuit has not yet acted on that request.

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

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, Inc., the Company and Bausch Health US related to Shower to Shower® and its ~~intellectual property.~~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 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. Trial was scheduled to begin on May 30, 2023, until the case was stayed by an interlocutory appeal to the New Mexico Supreme Court by Johnson & Johnson.

On July 14, 2022, LTL filed an adversary proceeding in the Bankruptcy Court (Case No. 21-30589, Adv. Pro. No. 22-01231) against the State of New Mexico ex rel. Hector H. Balderas, Attorney General, and a motion seeking an injunction barring the New Mexico Attorney General from continuing to prosecute the action while the bankruptcy case is pending. A hearing was held on September 14, 2022, and on October 4, 2022, the Bankruptcy Court entered an order granting the injunction. The New Mexico and Mississippi Attorneys General appealed the order granting the preliminary injunction and sought direct appeal to the Third Circuit. The Bankruptcy Court certified the matter for direct appeal to the Third Circuit Court of Appeals. Following the Third Circuit’s decision requiring dismissal of the main bankruptcy proceeding, and its subsequent denials of LTL’s requests for a rehearing or a stay pending disposition by the Supreme Court, on April 4, 2023, the Bankruptcy Court entered orders dismissing the bankruptcy case and related adversary proceedings. However, also on April 4, 2023, LTL re-filed for chapter 11 in the Bankruptcy Court and again sought a preliminary injunction, though it does not currently include

this lawsuit. The Bankruptcy Court did not grant the broad preliminary injunction requested and, instead, issued a preliminary injunction solely on a limited basis to enjoin the commencement or continuation of any trial against any Protected Party. However, this action remains stayed due to a separate September 13, 2022, stay order from the New Mexico Supreme Court in a pending appeal from a Motion to Compel filed by Johnson & Johnson. Accordingly, at this time this matter remains stayed pending the outcome of that appeal.

The Company and Bausch Health US dispute the claims against them, and this lawsuit will be defended vigorously.

Other General Civil Actions

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. On November 19, 2021, Logan amended her complaint to add a claim for breach of the implied covenant of good faith and fair dealing. 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. On June 20, 2019, the Court entered an order staying the claim for declaratory relief pending the final resolution of the breach of contract claim. Trial is scheduled to commence on September 11, 2023.

The Company disputes the claims against it and intends to defend itself 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. 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. The Court held a hearing on the motion on January 25, 2022. On May 12, 2023, the Court issued a Decision and Order denying Bausch Health Americas’ motion. On June 14, 2023, Bausch Health Americas filed a Notice of Appeal as to the Decision and Order. Bausch Health Americas disputes the claims against it and intends to continue to defend itself vigorously.

18.SEGMENT INFORMATION

Reportable Segments

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

•The Salix segment consists of sales in the U.S. of GI products. Sales of the Xifaxan® product line represented approximately 80% of the Salix segment’s revenues.

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

•The Solta Medical segment consists of global sales of Solta Medical aesthetic medical devices.

•The Diversified (formerly 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) dermatology products, (iii) generic pharmaceutical products and (iv) dentistry products.

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

Segment profit is based on operating income after the elimination of intercompany transactions, including between Bausch + Lomb and other segments. Certain costs such as Amortization of intangible assets, Asset impairments, Goodwill impairments, Restructuring, integration, separation and 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.

Geographic Information

Revenues are attributed to a geographic region based on the location of the customer and were as follows:


	Three Months Ended June 30,				Six Months Ended June 30, 2023
(in millions)	2023		2022		2023		2022
U.S. and Puerto Rico	$	1,269	$	1,190	$	2,380	$	2,305
China	114		74		202		177
Canada	92		88		176		166
Poland	75		63		150		139
Mexico	75		69		144		130
France	63		58		120		115
Japan	48		50		98		101
Germany	42		35		85		80
United Kingdom	30		29		60		57
Russia	36		38		70		63
Spain	25		23		47		44
Italy	23		23		44		43
South Korea	23		20		45		39
Other	252		207		490		426
	$	2,167	$	1,967	$	4,111	$	3,885

Major Customers

Customers that accounted for 10% or more of total revenues were as follows:


	Six Months Ended June 30, 2023
	2023	2022
AmerisourceBergen Corporation	18%	16%
McKesson Corporation (including McKesson Specialty)	14%	13%
Cardinal Health, Inc.	13%	11%

19.SUBSEQUENT EVENTS

Acquisition of Blink® Product Line

In July 2023, Bausch + Lomb entered into a purchase agreement with Johnson & Johnson Vision to acquire its Blink® product line of eye and contact lens drops. This acquisition was made by Bausch + Lomb to continue to grow its global over-the-counter business. Under the terms of the agreement, Bausch + Lomb, through its affiliate, agreed to acquire the Blink® product line of eye and contact lens drops for an upfront cash payment of $107 million.

As this transaction closed during July 2023, Bausch + Lomb is still finalizing the allocation of the purchase price to the individual assets acquired and liabilities assumed.

Accounts Receivable Credit Facility

During the period July 1, 2023 through August 3, 2023, the Company has drawn $350 million, in the aggregate, of borrowings under its AR Credit Facility.

2027 Revolving Credit Facility

During July 2023, the Company repaid the outstanding amount under its 2027 Revolving Credit Facility.

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,” “Bausch Health,” and similar terms refer to Bausch Health Companies Inc. and its subsidiaries, taken together. This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the unaudited interim Condensed Consolidated Financial Statements and the related notes (the “Financial Statements”) included elsewhere in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023 (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 of applicable Canadian securities laws (collectively “Forward-Looking Statements”). See “Forward-Looking Statements” at the end of this Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Our accompanying unaudited interim Condensed Consolidated Financial Statements as of June 30, 2023 and for the three and six months ended June 30, 2023 and 2022 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, 2022, which were included in our Annual Report on Form 10-K filed on February 23, 2023. In our opinion, the unaudited interim Condensed 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. Certain defined terms used herein have the meaning ascribed to them in the Financial Statements.

OVERVIEW

We are a global, diversified specialty pharmaceutical and medical device company that develops, manufactures and markets, primarily in the therapeutic areas of gastroenterology (“GI”), hepatology, neurology and dermatology, a broad range of branded, generic and branded generic pharmaceuticals, over-the-counter (“OTC”) products and aesthetic medical devices, and, through our approximately 89% ownership of Bausch + Lomb Corporation (“Bausch + Lomb” or “B+L”), branded, and branded generic pharmaceuticals, OTC products and medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment) in the therapeutic areas of eye health. Our products are marketed directly or indirectly in approximately 100 countries.

Our portfolio of products falls into five reportable segments: (i) Salix, (ii) International, (iii) Solta Medical, (iv) Diversified (formerly Diversified Products) and (v) Bausch + Lomb. The following is a brief description of the Company’s segments:

•The Salix segment consists of sales in the U.S. of GI products. Sales of the Xifaxan® product line represented approximately 80% of the Salix segment’s revenues.

•The Solta Medical segment consists of global sales of Solta Medical aesthetic medical devices.

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

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

For additional discussion of our reportable segments, see the subsection “ — Segment Revenues and Profits” of Note 18, “SEGMENT INFORMATION” to our unaudited interim Condensed Consolidated Financial Statements.

Separation of the Bausch + Lomb Eye Health Business

On August 6, 2020, we announced our plan to separate our eye health business consisting of our Bausch + Lomb global Vision Care, Surgical and Pharmaceuticals (formerly known as Ophthalmic Pharmaceuticals) businesses into an independent

publicly traded entity, Bausch + Lomb, from the remainder of Bausch Health Companies Inc. (the “B+L Separation”). On May 5, 2022, the registration statement related to the initial public offering of Bausch +Lomb (the “B+L IPO”) was declared effective, and B+L’s common stock began trading on the New York Stock Exchange and the Toronto Stock Exchange, in each case under the ticker symbol “BLCO” on May 6, 2022. Prior to the effectiveness of the registration statement, B+L was an indirect wholly-owned subsidiary of Bausch Health. On May 10, 2022, a wholly owned subsidiary of the Bausch Health sold 35,000,000 common shares of B+L pursuant to the B+L IPO. Upon the closing of the B+L IPO and after giving effect to the subsequent partial exercise of the over-allotment option by the underwriters, Bausch Health indirectly holds 310,449,643 common shares of Bausch + Lomb, which represents approximately 89% of B+L’s outstanding common shares as of the date of this filing.

We continue to believe that completing the B+L Separation makes strategic sense. The completion of the B+L Separation is subject to the achievement of targeted debt leverage ratios and the receipt of applicable shareholder and other necessary approvals. We continue to evaluate all relevant factors and considerations related to the B+L Separation, including the effect of the Norwich Legal Decision (see “Xifaxan® Paragraph IV Proceedings” of Note 17, “LEGAL PROCEEDINGS” to our unaudited interim Condensed Consolidated Financial Statements) on the B+L Separation.

The B+L Separation, if consummated, will result in two separate, independent companies:

•Bausch Health excluding Bausch + Lomb - a diversified pharmaceutical company with leading positions in gastroenterology, hepatology, dermatology, neurology and international pharmaceuticals, and aesthetic medical devices. The remaining pharmaceutical entity will comprise a diversified portfolio of our leading durable brands across the Salix, International, dentistry, neurology, medical dermatology and generics, and aesthetic medical devices businesses; and

•Bausch + Lomb - a fully integrated eye health company built on the iconic Bausch + Lomb brand and its long history of innovation.

As independent entities, management believes that each company will be better positioned to individually focus on its core businesses to drive additional growth, more effectively allocate capital and better manage its respective capital needs. Further, the B+L Separation will allow us and the market to compare the operating results of each entity with other peer companies. Although management believes the B+L Separation will unlock value, there can be no assurance that it will be successful in doing so.

See Item 1A. “Risk Factors — Risk Relating to the B+L Separation” of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC and the CSA on February 23, 2023, for additional risks relating to the B+L Separation.

Focus on Value and Core Businesses

We continue to execute on a multi-year plan designed to transform and bring out value in our Company, which includes focus on, among other factors, our: product portfolio, infrastructure, geographic footprint, capital structure and risk management. We believe that these and other actions we have taken have helped to focus our operations and improve our capital structure.

To position ourselves to unlock the value we see in our individual businesses, we have sought to right-size our portfolio of assets and provide financial flexibility. In line with this focus on our core businesses, we have: (i) made measurable progress in effectively managing our capital structure, including taking actions to reduce the principal balances of our long-term debt, (ii) directed capital allocation to drive growth within these core businesses, (iii) divested assets to improve our capital structure and simplify our business, (iv) resolved certain of the Company’s legacy litigation matters originating back to 2015 and prior, (v) increased our efforts to improve patient access and (vi) continued to invest in sustainable growth drivers to position us for long-term growth.

Effectively Managing Our Capital Structure

capitalization and leverage of these businesses post-separation as a key to maximizing value across our portfolio of assets and, as such, it is a primary objective of our plan of separation. For additional details on the B+L Separation, see “Separation of the Bausch + Lomb Eye Health Business” in Note 2, “SIGNIFICANT ACCOUNTING POLICIES” to our unaudited interim Condensed Consolidated Financial Statements.

Accounts Receivable Credit Facility

On June 30, 2023, certain of our subsidiaries entered into a Credit and Security Agreement (the “AR Facility Agreement”) with certain third-party lenders, providing for a non-recourse financing facility collateralized by certain accounts receivable originated by a wholly-owned subsidiary of the Company (the “AR Credit Facility”). The AR Facility Agreement provides for an up to $600 million facility, subject to certain borrowing base tests. Under the AR Credit Facility, a special purpose entity (the “Borrower”), as the borrower, purchases accounts receivable originated by a wholly-owned subsidiary of the Company, which collateralize borrowings under the AR Credit Facility. The Borrower is a bankruptcy remote entity that is unrestricted under the Company’s debt covenants, and which is consolidated by the Company.

As of June 30, 2023, there were no outstanding borrowings under the AR Credit Facility. During the period July 1, 2023 through the date of this filing, August 3, 2023, we have drawn $350 million, in the aggregate, of borrowings. Borrowings under our AR Credit Facility are for general corporate purposes.

Managing Our Capital Structure in 2022

During 2022, we improved our capital structure and reduced the aggregate principal amount of our debt obligations by approximately $3,800 million, as we: (i) utilized the net proceeds from the B+L IPO which closed on May 10, 2022, to make repayments of debt, (ii) reduced our debt through open market repurchases of debt with a principal value of approximately $927 million for approximately $550 million, (iii) extended the maturities of our debt through refinancing and (iv) completed an exchange offer which reduced the outstanding principal balance of our debt by $2,469 million by exchanging $5,594 million of aggregate principal value of existing unsecured senior notes (the “Existing Unsecured Senior Notes”) for newly issued secured notes with an aggregate principal balance of $3,125 million (the “Exchange Offer”).

The B+L IPO, 2022 Notes Issuance and Credit Agreement Refinancing - In connection with the B+L IPO, we completed a series of transactions in support of our commitment to improve our liquidity, reduce our leverage and better capitalize the two business entities post-separation. These transactions included:

•On February 10, 2022, the Company issued $1,000 million aggregate principal amount of 6.125% Senior Secured Notesdue February 2027 (the “February 2027 Secured Notes”).

•On May 10, 2022:

•The B+L IPO closed, with aggregate net proceeds (including the partial exercise of the over-allotment option by the underwriters), after deducting underwriting commissions, of approximately $675 million.

•The Company entered into the 2022 Amended Credit Agreement as defined and discussed in Note 10, “FINANCING ARRANGEMENTS” to our unaudited interim Condensed Consolidated Financial Statements. The 2022 Amended Credit Agreement consists of new term loans of $2,500 million and a revolving credit facility of $975 million.

•Bausch + Lomb entered into the B+L Credit Agreement, as defined and discussed in Note 10, “FINANCING ARRANGEMENTS” to our unaudited interim Condensed Consolidated Financial Statements. The B+L Credit Agreement provides for a five-year term loan facility in an initial principal amount of $2,500 million and also provides for a five-year revolving credit facility of $500 million.

The net proceeds from these transactions, along with cash on hand, allowed us to: (i) repay certain amounts outstanding under our then existing June 2025 Term Loan B Facility and November 2025 Term Loan B Facility (each as defined and discussed in Note 10, “FINANCING ARRANGEMENTS” to our unaudited interim Condensed Consolidated Financial Statements), (ii) replace our existing revolving credit facility which was due to mature in 2023, with revolving credit facilities that mature in 2027, (iii) redeem in full all of our then outstanding 6.125% Senior Unsecured Notes due 2025 (the “April

2025 Unsecured Notes”) and (iv) replace our then remaining amounts outstanding under our June 2025 Term Loan B Facility and November 2025 Term Loan B Facility with term loan facilities that were to expire in 2027.

Early Extinguishment of Debt - During 2022, through a series of transactions we repurchased and retired outstanding senior unsecured notes with an aggregate par value of $927 million in the open market for approximately $550 million using: (i) the net proceeds from the partial exercise of the over-allotment option in the B+L IPO by the underwriters, after deducting underwriting commissions, (ii) amounts available under our revolving credit facility and (iii) cash on hand.

The (i) repayment of the June 2025 Term Loan B Facility, November 2025 Term Loan B Facility and 2023 Revolving Credit Facility and (ii) redemption of the April 2025 Senior Unsecured notes were accounted for as an extinguishment of debt and the Company incurred a loss on extinguishment of debt of $63 million representing the difference between the amount paid to settle the extinguished debt and the extinguished debt’s carrying value. As a result of these transactions and the open market repurchases, the Company realized a net gain on early extinguishment of $113 million.

September 2022 Exchange Offer - As discussed in further detail below under “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt”, we made the strategic decision based on the fair value of our Senior Unsecured Notes to undertake the Exchange Offer in September 2022. We exchanged certain validly tendered existing senior unsecured notes, with an aggregate outstanding principal balance of approximately $5,594 million with maturities of 2025 through 2031 for newly issued senior secured notes, with an aggregate principal balance of approximately $3,125 million with maturities of 2028 and 2030. After fees and expenses, the Exchange Offer reduced the principal balances of our outstanding debt obligations by $2,469 million and extended the maturities of approximately $2,400 million of principal balances coming due during the years 2025 through 2027 to the years 2028 and 2030.

The secured notes issued in the Exchange Offer consist of: (i) $1,774 million in aggregate principal amount of new 11.00% First Lien Secured Notes due 2028 (the “11.00% First Lien Secured Notes”) issued by the Company, (ii) $352 million in aggregate principal amount of new 14.00% Second Lien Secured Notes due 2030 (the “14.00% Second Lien Secured Notes”, and, together with the 11.00% First Lien Secured Notes, the “New BHC Secured Notes”) issued by the Company and (iii) $999 million in aggregate principal amount of new 9.00% Senior Secured Notes due 2028 (the “9.00% Intermediate Holdco Secured Notes”, and, together with the New BHC Secured Notes, the “New Secured Notes”) issued by 1375209 B.C. Ltd. (“Intermediate Holdco”), an existing wholly-owned unrestricted subsidiary of the Company that holds 38.6% of the issued and outstanding common shares of Bausch + Lomb.

Maturities of our principal balances of debt obligations as of June 30, 2023 were as follows:


(in millions)	Remainder of 2023		2024		2025		2026		2027		2028		Thereafter		Total
Total debt obligations	$	75	$	150	$	2,789	$	891	$	6,913	$	4,990	$	3,202	$	19,010

We believe these transactions improve our overall capitalization and leverage.

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

Continue to Manage our Capital Structure

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. 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.

Direct Capital Allocation to Drive Growth Within Our Core Businesses

Our capital allocation is also driven by our long-term growth strategies. We allocate resources to promote our core businesses globally through: (i) strategic acquisitions, (ii) research and development (“R&D”) investment, (iii) strategic licensing agreements and (iv) strategic investments in our infrastructure. We believe that the outcome of this process allows us to better drive value in our product portfolio and generate operational efficiencies.

R&D Investment

Our internal R&D organization focuses on the development of products through clinical trials. As of December 31, 2022, approximately 1,300 dedicated R&D and quality assurance employees in 25 R&D facilities were involved in our R&D efforts internally.

As of June 30, 2023, we had approximately 100 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.

Gastrointestinal

•Rifaximin -

◦Two global Phase 3 studies for the use of a rifaximin soluble solid dispersion (“SSD”) formulation for the prevention of overt hepatic encephalopathy (“OHE”) in patients with early decompensation in liver cirrhosis (RED-C) have commenced. We expect to complete enrollment of two global Phase 3 trials in the first quarter of 2024. Based on the top line results of a Phase 2 study, patients receiving 40 mg twice daily showed a statistically significant separation from placebo. We have completed scientific advisory meetings with the Medicines Evaluation Board in the Netherlands and with Health Canada, and have received feedback on the program from National Medical Products Administration in China. We are currently planning to meet with authorities in Japan later this year.

◦Recently received orphan drug designation for sickle cell disease. A phase 2 study with novel dosage formulation is currently enrolling patients for the treatment of sickle cell disease.

◦Development of a fit for purpose Patient Reported Outcomes tool for small intestinal bacterial overgrowth, or “SIBO”, is continuing in 2023 and will be validated in an upcoming clinical trial.

•Amiselimod (S1P modulator) - A Phase 2 study to evaluate Amiselimod (S1P modulator) for the treatment of mild to moderate ulcerative colitis completed enrollment in July 2023 and the study is expected to be completed in the fourth quarter of 2023.

Solta Medical

•Clear + Brilliant®Touch - Next generation Clear + Brilliant® laser 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 with submissions in Europe and Canada planned in 2024, and in Asia Pacific markets in 2025.

•Fraxel® - Next Generation Fraxel® is a fractionated laser device for skin resurfacing and is planned for FDA submission later in 2023.

Dermatology

•Internal Development Project (“IDP”) - 126 - An acne product with a fixed combination of benzoyl peroxide, clindamycin phosphate and adapalene. The FDA has accepted our New Drug Application (“NDA”) with an October 20, 2023 Prescription Drug User Fee Act (“PDUFA”) date. A New Drug Submission was submitted to Health Canada on May 30, 2023.

Bausch + Lomb

•SiHy Daily - A silicone hydrogel daily disposable contact lens designed to provide clear vision throughout the day. To date, SiHy Daily has been launched in approximately 50 countries, under the brand names INFUSE®, ULTRA® ONE DAY and AQUALOX® ONE DAY. Bausch + Lomb plans to launch its SiHy Daily lenses into additional countries throughout 2023. In addition, Bausch + Lomb launched its first silicone hydrogel daily disposable multifocal contact lens in May 2023 and plans to launch a toric lens in 2024.

•LUMIFY® (brimonidine tartrate ophthalmic solution, 0.025%) - An OTC eye drop developed as an ocular redness reliever. To date, Bausch + Lomb has launched and acquired the right to launch Lumify® in various countries. Bausch + Lomb also has several innovative new line extension formulations under development, including Lumify® Eye Illuminations which Bausch + Lomb expects to launch in 2023, Lumify Preservative Free, for which an NDA was submitted to the FDA in May 2023 and Lumify® Allergy, for which an NDA is expected to be submitted to the FDA during 2024.

•Bausch + Lomb is expanding its portfolio of premium intraocular lenses (“IOL”) built on the enVista® platform with AspireTM (Monofocal Plus), EnvyTM Trifocal and BEYONDTM (extended depth of focus (“EDOF”)) optical designs with two options: non-Toric and Toric for astigmatism patients. Bausch + Lomb expects that they will be commercialized together with a new preloaded EyeGility inserter. Bausch + Lomb anticipates launching Monofocal Plus, Trifocal and EDOF optical designs for presbyopia in the U.S. in 2023, 2024 and 2025/2026, respectively.

Strategic 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 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.

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.

During July 2023, Bausch + Lomb acquired the Blink® product line of eye and contact lens drops from Johnson & Johnson Vision, which consists of Blink® Tears Lubricating Eye Drops, Blink® Tears Preservative Free Lubricating Eye Drops, Blink GelTears® Lubricating Eye Drops, Blink® Triple Care Lubricating Eye Drops, Blink Contacts® Lubricating Eye Drops, and Blink-N-Clean® Lens Drops. Bausch + Lomb believes this acquisition will enable it to continue to grow its global OTC business.

During June 2023, Bausch + Lomb entered into a definitive agreement with Novartis Pharma AG and Novartis Finance Corporation (together with Novartis Pharma AG, “Novartis”) to acquire XIIDRA®, the first and only non-steroid eye drop specifically approved to treat the signs and symptoms of dry eye disease focusing on inflammation associated with dry eye. As part of the transaction Bausch + Lomb will also acquire libvatrep, an investigational compound being studied for the treatment of chronic ocular surface pain, and AcuStream® technology, an investigational device that may have the potential to facilitate precise dosing and accurate delivery of certain topical ophthalmic medications to the eye. Bausch + Lomb believes this acquisition will complement and grow its existing dry eye franchise. The transaction is expected to close by the end of 2023, subject to receipt of regulatory approval and other customary closing conditions. See Item 1A “Risk Factors” of Part II of this Form 10-Q for additional information on the risks relating to the acquisition of XIIDRA®.

During January 2023, Bausch + Lomb acquired AcuFocus, Inc., an ophthalmic medical device company that has delivered small aperture intraocular technology to address the diverse unmet needs in eye care. The IC-8® Apthera™ IOL was approved by the FDA in July 2022 as the first and only small aperture non-toric EDOF IOL for certain cataract patients who have as much as 1.5 diopters of corneal astigmatism and wish to address presbyopia at the same time. Bausch + Lomb believes the IC-8® Apthera™ EDOF IOL will bolster its surgical portfolio by enhancing the IOL offerings, which is a strategic area of focus for Bausch + Lomb.

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 Team - We formed the Patient Access and Pricing Team which is committed to maintaining patients ability to access our branded prescription pharmaceutical products. All future pricing actions will be subject to review by the Patient Access and Pricing Team. Future pricing changes and programs could affect the average realized pricing for our products and may have a significant impact on our revenues and profits.

Bausch Health Patient Assistance Program - We are committed to supporting patients through our Patient Assistance Program which offers free medication for patients who meet income and other eligibility criteria. If approved, patients receive their Bausch Health 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 - The cash-pay program was adopted 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. This program is currently limited to a select group of our brands and offered through our unique telemedicine and fulfillment platform which allows for patients to choose direct delivery to their home or to use a pharmacy of their choice. This program is designed to connect patients with dermatologists and provide patients both a predictable customer experience and a predictable cost for their dermatology health care needs.

Walgreens Fulfillment Arrangements - Under our brand fulfillment arrangement with Walgreen Co. (“Walgreens”), we make 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. Our investment in R&D reflects our commitment to drive organic growth through internal development of new products 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. We continue to make strategic investments to drive revenue growth and build our R&D pipeline to ultimately bring products that serve patient needs. 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. To that end, we have identified key growth drivers across all our business segments and where we see significant opportunity.

Focus on Core Business in 2023

We remain focused on growth, through innovation increasing the size, breadth and depth of our product pipeline through R&D and strategic business development.

Our key investment priorities for 2023 are as follows:

Salix - We believe in our GI product portfolio and we have implemented initiatives, including increasing our marketing investment in Xifaxan®, to further capitalize on the value of the infrastructure we have built around these products to extend our market share. We are increasing our investment in Xifaxan® direct-to-consumer (“DTC”) advertising and new sales force capabilities. We also continue to invest in our product line. Our rifaximin SSD formulation, is under development for the prevention of OHE and other complications in patients with early decompensation in liver cirrhosis (RED-C). The drug candidate is administered orally, and is a next-generation rifaximin formulation that acts by targeting beta-subunit of bacterial DNA-dependent RNA polymerase.

International - Our International product portfolio consists of several new launches including Ryaltris® for moderate to severe seasonal allergic rhinitis and Uceris®, an aerosol foam for distal ulcerative colitis in Canada. We are also pursuing opportunities in the dermatology markets globally for products that address acne, atopic dermatitis, psoriasis and onychomycosis. To address these and other opportunities we continue to invest in the training and expansion of our sales and marketing teams.

Solta Medical - More than 70% of our Solta Medical business revenues has historically come from consumables, which we believe results in a durable business model. We continue to invest in expanding our presence in key markets, including broadening the reach of our DTC campaigns in the U.S., the expansion of Thermage® FLX and the strengthening of our sales force in the U.S. and Europe.

Diversified - We continue to seek out ways to bring out value in our promoted and nonpromoted products within our Diversified portfolios. In 2023 we anticipate making additional investments in the marketing and advertising of Aplenzin® as the only approved major depressive disorder product for Seasonal Affective Disorder, and also expanding our consumer awareness campaign for Jublia®. In addition, in support of our established acne product portfolio we also have a project in our pipeline, IDP-126, which is a fixed combination of benzoyl peroxide, clindamycin phosphate and adapalene. The FDA has accepted our NDA with an October 20, 2023 PDUFA date. In our generics portfolio, we are focused on effectively managing this portfolio of non-promoted products. In our Dentistry business, we are increasing our investments in Arestin® direct to patient activation and awareness campaigns.

Business Trends

Russia-Ukraine War

In February 2022, Russia invaded Ukraine. As military activity and sanctions against Russia, Belarus and specific areas of Ukraine have continued, the war has affected economic and global financial markets as well as ongoing economic challenges, including issues such as high levels of inflation and global supply-chain disruption.

Our revenues attributable to Russia, Ukraine and Belarus, in the aggregate, were approximately $77 million and $71 million for the six months ended June 30, 2023 and 2022, respectively. The Company does not have any research or manufacturing facilities in Russia, Ukraine or Belarus. To date, the Russia-Ukraine war has not had a material impact on our business, however we are not able to determine the ultimate future direct or indirect impacts this war may have on our business.

For a further discussion of these and other risks relating to our international business, see Item 1A. “Risk Factors — Risk Relating to the Russia and Ukraine conflict” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC and the CSA on February 23, 2023.

COVID-19 Update

During 2022, the outbreak of the omicron variant in China resulted in government enforced lockdowns and other social restrictions, which impacted our ability to conduct business as usual in certain regions in China, particularly Shanghai. The lockdowns in China impacted the demand for certain products, particularly B+L’s Vision care and our Solta Medical products, as shelter in place orders limited the demand and need for the use of contact lenses and related products as well as for aesthetic medical treatments. Additionally, government enforced lockdowns caused certain businesses to suspend operations, creating distribution and other logistic issues for the distribution of our products and the sourcing for a limited number of raw materials. These lockdowns began to ease during the fourth quarter of 2022. Our revenues in China for the six months ended June 30, 2023 and 2022 were $202 million and $177 million, respectively, an increase of $25 million. To date, we have dealt with these issues in China with only a minimal impact on our manufacturing and distribution processes and we continue to monitor the impact of COVID-19 on all aspects of our business.

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, 2022, filed with the SEC and the CSA on February 23, 2023.

Health Care Reform

The U.S. federal and state governments continue to propose and pass legislation designed to regulate the health care industry. Many of these changes focus on health care cost containment, which result in pricing pressures relating to the sales and reimbursements of healthcare products. The Biden Administration and Congress continue to focus on health care cost containment which could result in legislative and regulatory changes.

In addition, we continue to face various proposed health care pricing changes and regulations from governments throughout the world in locations in which we operate our business. These proposed changes may also continue to result in pricing pressures relating to sales, promotions and reimbursement of our product portfolio.

We continually review newly enacted and proposed U.S. federal and state legislation, as well as proposed rule-making and guidance published by the U.S. Department of Health and Human Services, the FDA, and applicable foreign governments in locations in which we operate; 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 2023 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 2023 or in later years. For example, during the second quarter of 2023, the

first generic competitor product for Uceris® Foam was introduced. 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 (“AG”) 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.

2023 through 2027 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 2023 through 2027. These products and year of expected LOE include, but are not limited to, Aplenzin® (2026), Bryhali® (2026), Noritate® (2023), Onexton® (2023), Prolensa® (2023) and Xerese® (2023). 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.

In addition, for a number of our products (including Xifaxan® 550 mg, Arazlo®, Duobrii®, Trulance® and Lumify® in the U.S. and Jublia® in Canada), 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.

See Note 17, “LEGAL PROCEEDINGS” to our unaudited interim Condensed Consolidated Financial Statements elsewhere in this Form 10-Q, as well as Note 20, “LEGAL PROCEEDINGS” of our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, filed with the SEC and the CSA on February 23, ~~2022~~2023 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, ~~2021,~~2022, filed with the SEC and the CSA on February 23, ~~2022,~~2023, 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 all operating sites are in good

FINANCIAL PERFORMANCE HIGHLIGHTS

The following table provides selected unaudited financial information for the three and six months ended June 30, ~~2022~~2023 and ~~2021:~~2022:

Three Months Ended June 30, Six Months Ended June 30,
(in millions, except per share data) 2022 2021 Change 2022 2021 Change
Revenues $ 1,967 $ 2,100 $ (133) $ 3,885 $ 4,127 $ (242)
Operating income (loss) $ 161 $ (270) $ 431 $ 446 $ (491) $ 937
Loss before income taxes $ (129) $ (670) $ 541 $ (211) $ (1,261) $ 1,050
Net loss attributable to Bausch Health Companies Inc. $ (145) $ (595) $ 450 $ (214) $ (1,205) $ 991
Basic and diluted loss per share attributable to Bausch Health Companies Inc. $ (0.40) $ (1.66) $ 1.26 $ (0.59) $ (3.37) $ 2.78


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except per share data)	2023		2022		Change		2023		2022		Change
Revenues	$	2,167	$	1,967	$	200	$	4,111	$	3,885	$	226
Operating income	$	412	$	161	$	251	$	587	$	446	$	141
Income (loss) before income taxes	$	79	$	(129)	$	208	$	(57)	$	(211)	$	154
Net income (loss) attributable to Bausch Health Companies Inc.	$	26	$	(145)	$	171	$	(175)	$	(214)	$	39
Basic	$	0.07	$	(0.40)	$	0.47	$	(0.48)	$	(0.59)	$	0.11
Diluted	$	0.07	$	(0.40)	$	0.47	$	(0.48)	$	(0.59)	$	0.11

Financial Performance

Summary of the Three Months Ended June 30, ~~2022~~2023 Compared to the Three Months Ended June 30, ~~2021~~2022

Revenues for the three months ended June 30, 2023 and 2022 were $2,167 million and ~~2021 was~~ $1,967 million, ~~and $2,100 million,~~ respectively, ~~a decrease~~an increase of ~~$133~~$200 million, or 6%10%. The ~~decrease~~increase was primarily due ~~to:~~to growth in the Bausch + Lomb, Salix, Solta Medical and International segments driven by higher volumes and improved net pricing, partially offset by: (i) ~~the impact of our divestiture of Amoun on July 26, 2021, (ii) a decrease in net~~lower volumes in our Diversified ~~Products, Salix and Solta segments, offset by an increase in net volumes in our Bausch + Lomb~~ segment, ~~and (iii)~~(ii) the unfavorable impact of foreign currencies, primarily in Asia and Europe and ~~Asia. These decreases were partially offset by an increase in net realized pricing, primarily in our Bausch + Lomb segment.~~(iii) the impact of divestitures and discontinuations.

Operating income for the three months ended June 30, 2023 and 2022 was $412 million and $161 million, ~~as compared to an operating loss~~respectively, and included non-cash charges for Depreciation and amortization of ~~$270~~intangible assets of $315 million ~~for the three months ended June 30, 2021, an~~and $347 million, Goodwill impairments of $0 and $83 million, Asset impairments of $37 million and $6 million and Share-based compensation of $33 million and $26 million, respectively. The increase in our operating results of ~~$431~~$251 million ~~and~~ reflects, among other factors:

•~~a decrease~~an increase in contribution (Product sales revenue less Cost of goods sold, excluding amortization and impairments of intangible assets) of ~~$95~~$130 million primarily due ~~to: (i)~~to the ~~decrease~~increase in revenues as previously ~~discussed and (ii) higher manufacturing variances, primarily as a result of inflationary pressures related to certain manufacturing costs;~~discussed;

•~~a decrease~~an increase in selling, general and administrative (“SG&A”) of $9$35 million primarily attributable ~~to:~~to higher: (i) ~~the impact of our divestiture of Amoun on July 26, 2021~~selling, advertising and promotion expenses, (ii) compensation and (iii) certain administrative expenses, partially offset by: (i) a decrease in separation-related costs and (ii) the favorable impact of foreign ~~currencies partially offset by: (i) higher selling, advertising and promotion expenses, (ii) higher compensation expense and (iii) an increase in separation-related and IPO-related costs;~~currencies;

•an increase in R&D expenses of ~~$12~~$29 million primarily attributable to ~~lower R&D~~higher spend, ~~in 2021, as~~primarily on certain ~~R&D activities and clinical trials which were suspended in response to the COVID-19 pandemic in 2020 and did not normalize until later in 2021;~~

•an increase in Goodwill impairments of $83 million. During the three months ended June 30, 2022, we recognized an $83 million impairment to the goodwill of the Ortho Dermatologics reporting unit primarily driven by an increase in the discount rate due to changes in market conditions;Salix projects;

•a decrease in Amortization of intangible assets of ~~$58~~$33 million primarily attributable to fully amortized intangible assets no longer being amortized in ~~2022;~~

•a decrease in Asset impairments, including loss on assets held for sale of $41 million primarily attributable to an adjustment to the loss on assets held for sale in connection with the Amoun Sale during 2021;2023;

•an increase in ~~Restructuring, integration, separation and IPO costs~~Asset impairments of ~~$26~~$31 million during the three months ended June 30, 2023, primarily attributable to ~~an increase in Separation costs and IPO costs associated with~~ the ~~B+L Separation, the B+L IPO completed on May 10, 2022 and the Solta IPO which was suspended in June 2022;~~launch of a generic competitor to Uceris® Foam; and

•a favorable change in Other (income) expense, net of ~~$542~~$83 million, primarily attributable to: (i) insurance recoveries and (ii) adjustments to ~~higher adjustments related to~~reflect changes in estimates of the ~~settlements of certain litigation matters during~~liability for Acquisition-related contingent consideration.

Income before income taxes for the three months ended June 30, ~~2021.~~

2023, was $79 million as compared to a loss before income taxes of $129 million, for the three months ended June 30, 2022, an increase of $208 million. The increase is primarily attributable to: (i) the increase in our operating results of $251 million, as previously discussed and (ii) a decrease in interest expense of $91 million, partially offset by a decrease in Gain on extinguishment of debt of $113 million. The decrease in interest expense is primarily due to the impact of the accounting treatment for a portion of interest payments on the New Secured Notes, which reduced reported interest expense by $74 million relative to contractual interest cost.

Summary of the Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022

Revenues for the ~~three~~six months ended June 30, ~~2021~~2023 and 2022 were $4,111 million and $3,885 million, respectively, an increase of $226 million, or 6%. The increase was primarily due to growth in the Bausch + Lomb, Salix, Solta Medical and International segments driven by higher volumes and improved net pricing, partially offset by: (i) lower revenues in our Diversified segment, (ii) the unfavorable impact of foreign currencies, primarily in Europe and Asia and (iii) the impact of divestitures and discontinuations.

Operating income for the six months ended June 30, 2023 and 2022 was $587 million and $446 million, respectively, and included non-cash charges for Depreciation and amortization of intangible assets of ~~$347~~$634 million and ~~$404~~$699 million, Asset impairments of $50 million and $14 million, Goodwill impairments of ~~$83 million~~$0 and ~~$0, Asset impairments, including loss on assets held for sale, of $6 million and $47~~$83 million and Share-based compensation of ~~$26~~$74 million and ~~$31~~$58 million, respectively.

~~Loss before income taxes for the three months ended June 30, 2022 and 2021 was $129 million and $670 million, respectively, a decrease of $541 million.~~ The ~~decrease in our Loss before income taxes is primarily attributable to: (i) the~~ increase in our operating results of ~~$431~~$141 million ~~as previously discussed and (ii) the favorable change in Gain (loss) on extinguishment of debt of $158 million, partially offset by an increase in Interest expense of $46 million.~~

Net loss attributable to Bausch Health Companies Inc. for the three months ended June 30, 2022 and 2021 was $145 million and $595 million, respectively, an increase in our results of $450 million. The increase in our results was primarily due to the decrease in our Loss before income taxes of $541 million, as previously discussed, partially offset by an unfavorable change in income taxes of $87 million.

~~Summary of the Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021~~

Revenues for the six months ended June 30, 2022 and 2021 was $3,885 million and $4,127 million, respectively, a decrease of $242 million, or 6%. The decrease was primarily due to: (i) the impact of our divestiture of Amoun on July 26, 2021, (ii) the unfavorable impact of foreign currencies and (iii) a decrease in net volumes primarily attributable to our Diversified Products, Salix and Solta segments partially offset by an increase in volumes in our Bausch + Lomb segment. These decreases were partially offset by an increase in net realized pricing, primarily in our Salix and International segments.

Operating income for the six months ended June 30, 2022 was $446 million and operating loss for the six months ended June 30, 2021 was $491 million, an increase in our operating results of $937 million and reflects, among other factors:

•~~a decrease~~an increase in contribution of ~~$179~~$125 million primarily due ~~to: (i)~~to the ~~decrease~~increase in revenues as previously ~~discussed and (ii) higher manufacturing variances, primarily as a result of inflationary pressures related to certain manufacturing costs;~~discussed;

•an increase in SG&A of $7$138 million primarily attributable ~~to:~~to higher: (i) ~~higher~~selling, advertising and promotion expenses, (ii) ~~higher~~ compensation ~~expense~~ and (iii) ~~an increase in separation-related and IPO-related costs~~certain administrative expenses, partially offset by: (i) ~~the impact of our divestiture of Amoun on July 26, 2021~~a decrease in separation-related costs and (ii) the favorable impact of foreign currencies;

•an increase in R&D of ~~$27~~$45 million primarily attributable to ~~lower R&D~~higher spend, ~~in 2021, as~~primarily on certain ~~R&D activities and clinical trials which were suspended in response to the COVID-19 pandemic in 2020 and did not normalize until later in 2021;~~Salix projects;

•a decrease in Amortization of intangible assets of ~~$105~~$70 million primarily attributable to fully amortized intangible assets no longer being amortized in ~~2022;~~2023;

•a decrease in Goodwill impairments of ~~$386~~$83 million. Goodwill impairments associated with our ~~Ortho Dermatologics~~Dermatology reporting unit were $83 ~~million and $469~~ million for the six months ended June 30, ~~2022 and 2021, respectively;~~2022;

•an increase in Asset impairments of $36 million during six months ended June 30, 2023, primarily attributable to the launch of a generic competition to Uceris® Foam;

•a decrease ~~in Asset impairments, including loss on assets held for sale of $181 million, primarily attributable to an adjustment to the loss on assets held for sale in connection with the Amoun Sale during 2021;~~

•~~an increase~~ in Restructuring, integration, separation and IPO costs of $27 million primarily attributable to an increase in Separation costs and IPO costs associated with the B+L Separation, the B+L IPO completed on May 10, 2022 and the Solta IPO which was suspended in June 2022;$22 million; and

•a favorable change in Other (income) expense, net of ~~$510~~$62 million primarily attributable to: (i) insurance recoveries and (ii) adjustments to ~~higher adjustments related to~~reflect changes in estimates of the ~~settlements of certain litigation matters during the six months ended June 30, 2021.~~

~~Operating income~~liability for the six months ended June 30, 2022 was $446 million and operating loss for the six months ended June 30, 2021 was $491 million, and included non-cash charges for Depreciation and amortization of intangible assets of $699 million and $807 million, Asset impairments, including loss on assets held for sale of $14 million and $195 million, Goodwill impairments of $83 million and $469 million and Share-based compensation of $58 million and $62 million, respectively.Acquisition-related contingent consideration.

Loss before income taxes for the six months ended June 30, 2023 and 2022 was $57 million and ~~2021 was~~ $211 million, ~~and $1,261 million,~~ respectively, ~~a decrease~~an increase in our results of ~~$1,050~~$154 million. The ~~decrease in our Loss before income taxes~~increase is primarily attributable to: (i) a decrease in Interest expense of $146 million and (ii) the increase in our operating results of ~~$937~~$141 million, as previously discussed, ~~and (ii) the favorable change~~partially offset by: (i) a decrease in Gain ~~(loss)~~ on

RESULTS OF OPERATIONS

Our unaudited operating results for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 were as follows:

Three Months Ended June 30, Six Months Ended June 30,
(in millions) 2022 2021 Change 2022 2021 Change
Revenues
Product sales $ 1,947 $ 2,076 $ (129) $ 3,845 $ 4,079 $ (234)
Other revenues 20 24 (4) 40 48 (8)
1,967 2,100 (133) 3,885 4,127 (242)
Expenses
Cost of goods sold (excluding amortization and impairments of intangible assets) 570 604 (34) 1,113 1,168 (55)
Cost of other revenues 7 8 (1) 15 18 (3)
Selling, general and administrative 676 685 (9) 1,298 1,291 7
Research and development 127 115 12 254 227 27
Amortization of intangible assets 302 360 (58) 612 717 (105)
Goodwill impairments 83 — 83 83 469 (386)
Asset impairments, including loss on assets held for sale 6 47 (41) 14 195 (181)
Restructuring, integration, separation and IPO costs 35 9 26 48 21 27
Other expense, net — 542 (542) 2 512 (510)
1,806 2,370 (564) 3,439 4,618 (1,179)
Operating income (loss) 161 (270) 431 446 (491) 937
Interest income 3 2 1 5 4 1
Interest expense (410) (364) (46) (772) (732) (40)
Gain (loss) on extinguishment of debt 113 (45) 158 113 (50) 163
Foreign exchange and other 4 7 (3) (3) 8 (11)
Loss before income taxes (129) (670) 541 (211) (1,261) 1,050
(Provision for) benefit from income taxes (10) 77 (87) 6 61 (55)
Net loss (139) (593) 454 (205) (1,200) 995
Net income attributable to noncontrolling interest (6) (2) (4) (9) (5) (4)
Net loss attributable to Bausch Health Companies Inc. $ (145) $ (595) $ 450 $ (214) $ (1,205) $ 991


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2023		2022		Change		2023		2022		Change
Revenues
Product sales	$	2,146	$	1,944	$	202	$	4,068	$	3,835	$	233
Other revenues	21		23		(2)		43		50		(7)
	2,167		1,967		200		4,111		3,885		226
Expenses
Cost of goods sold (excluding amortization and impairments of intangible assets)	640		568		72		1,212		1,104		108
Cost of other revenues	9		9		—		19		24		(5)
Selling, general and administrative	711		676		35		1,436		1,298		138
Research and development	156		127		29		299		254		45
Amortization of intangible assets	269		302		(33)		542		612		(70)
Goodwill impairments	—		83		(83)		—		83		(83)
Asset impairments	37		6		31		50		14		36
Restructuring, integration, separation and IPO costs	16		35		(19)		26		48		(22)
Other (income) expense, net	(83)		—		(83)		(60)		2		(62)
	1,755		1,806		(51)		3,524		3,439		85
Operating income	412		161		251		587		446		141
Interest income	7		3		4		13		5		8
Interest expense	(319)		(410)		91		(626)		(772)		146
Gain on extinguishment of debt	—		113		(113)		—		113		(113)
Foreign exchange and other	(21)		4		(25)		(31)		(3)		(28)
Income (loss) before income taxes	79		(129)		208		(57)		(211)		154
(Provision for) benefit from income taxes	(52)		(10)		(42)		(125)		6		(131)
Net income (loss)	27		(139)		166		(182)		(205)		23
Net (income) loss attributable to noncontrolling interest	(1)		(6)		5		7		(9)		16
Net income (loss) attributable to Bausch Health Companies Inc.	$	26	$	(145)	$	171	$	(175)	$	(214)	$	39

Three Months Ended June 30, ~~2022~~2023 Compared to the Three Months Ended June 30, ~~2021~~2022

Revenues

The Company’s revenues are primarily generated from product sales, ~~principally~~primarily in the therapeutic areas of GI, hepatology, neurology, dermatology and eye health, that consist of: (i) branded pharmaceuticals, (ii) generic and branded generic pharmaceuticals, (iii) OTC products and (iv) medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment and ~~aesthetics~~aesthetic medical devices). Other revenues include alliance and service revenue from the licensing and co-promotion of products and contract service revenue which is derived primarily ~~in the areas of dermatology~~from contract manufacturing for third parties and ~~topical medication.~~which is not material.

Our revenues were ~~$1,967~~$2,167 million and ~~$2,100~~$1,967 million for the three months ended June 30, 2023 and 2022, ~~and 2021,~~ respectively, ~~a decrease~~an increase of ~~$133~~$200 million, or 6%10%. The ~~decrease~~increase was primarily due to: (i) an increase in volumes of $145 million attributable to our Bausch + Lomb, Solta Medical, Salix and International segments, (ii) an increase in net realized pricing of $76 million primarily attributable to our Salix and Bausch + Lomb segments and (iii) incremental sales attributable to acquisitions of $2 million, partially offset by: (i) the unfavorable impact of foreign currencies of $17 million, primarily in Europe and Asia and (ii) the impact of divestitures and discontinuations of $74 million, primarily attributable to our divestiture of Amoun on July 26, 2021, (ii) the unfavorable impact of foreign currencies of $61 million, primarily in Europe and Asia and (iii) a decrease in volumes of $17 million primarily due to decreases in our Salix, Diversified Products and Solta segments offset by increases in volumes in our Bausch + Lomb segment. These decreases were partially offset by an increase in net realized pricing of $19 million, primarily in our Bausch + Lomb segment.$6 million.

The changes in our segment revenues and segment profits for the three months ended June 30, ~~2022,~~2023, are discussed in further detail in the respective subsequent section “ — Reportable Segment Revenues and ~~Profits”.~~Profits.”

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 Condensed 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 30, ~~2022~~2023 and ~~2021~~2022 were as follows:


		Three Months Ended June 30,									Three Months Ended June 30,
		2022				2021					2023				2022
(in millions)	(in millions)	Amount		Pct.		Amount		Pct.		(in millions)	Amount		Pct.		Amount		Pct.
Gross product sales	Gross product sales	$	3,401	100.0	%	$	3,489	100.0	%	Gross product sales	$	3,627	100.0	%	$	3,398	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	144		4.2	%	159		4.6	%	Discounts and allowances	158		4.4	%	144		4.2	%
Returns	Returns	41		1.2	%	43		1.2	%	Returns	37		1.0	%	41		1.2	%
Rebates	Rebates	655		19.3	%	625		17.9	%	Rebates	700		19.3	%	655		19.3	%
Chargebacks	Chargebacks	557		16.4	%	531		15.2	%	Chargebacks	524		14.4	%	557		16.4	%
Distribution fees	Distribution fees	57		1.7	%	55		1.6	%	Distribution fees	62		1.7	%	57		1.7	%
Total provisions	Total provisions	1,454		42.8	%	1,413		40.5	%	Total provisions	1,481		40.8	%	1,454		42.8	%
Net product sales	Net product sales	1,947		57.2	%	2,076		59.5	%	Net product sales	2,146		59.2	%	1,944		57.2	%
Other revenues	Other revenues	20				24				Other revenues	21				23
Revenues	Revenues	$	1,967			$	2,100			Revenues	$	2,167			$	1,967

branded ~~products, such as Glumetza~~® ~~SLX and~~generics, (ii) increased volumes for our GI product Xifaxan® and ~~certain generic products such as Ofloxacin, Nifediac and Uceris~~® ~~AG partially offset by lower~~(iii) increased gross product sales and ~~lower~~higher chargeback ~~rates~~rate for ~~certain generic products, such as Glumetza~~our neurology product Librax® ~~AG and for certain branded products such as Mysoline~~® ~~and Atavin~~®; and

•distribution service fees as a percentage of gross product sales were unchanged as the impact of higher ~~primarily due to higher gross product sales and changes in the year over year customer mix~~volumes for our GI products Xifaxan®. and Trulance® was offset by the impact of lower volumes for certain of our dermatology products such as Retin-A® Cream and our GI product Uceris® Tablets. Price appreciation credits are offset against distribution service fees when due to wholesalers. There were no price appreciation credits for the three months ended June 30, ~~2022~~2023 and ~~2021.~~2022.

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 ~~$570~~$640 million and ~~$604~~$568 million for the three months ended June 30, 2023 and 2022, ~~and 2021,~~ respectively, ~~a decrease~~an increase of ~~$34~~$72 million, or 6%13%. The ~~decrease~~increase was primarily driven by: (i) the ~~impact of the divestiture of Amoun on July 26, 2021, (ii) the decrease~~increase in volumes as previously discussed, and ~~(iii)~~(ii) charges related to the Injector recall discussed below, partially offset by the favorable impact of foreign currencies. These decreases were partially offset by higher manufacturing variances, primarily as a result of inflationary pressures related to certain manufacturing costs, partially offset by the impact of manufacturing variances incurred in 2021 related to a quality issue at a third-party supplier, as discussed below.

In 2021, B&L Inc. was notified by a third-party supplier of sterilization services for its lens care solution bottles and caps at its Milan, Italy facility, of inconsistencies in the sterilization data versus certificates of conformance previously submitted to B&L Inc. by that supplier. Based on B&L Inc.’s internal Health and Safety Analysis, it was determined that this issue did not affect the safety or performance of any of its products and was 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, B&L Inc. has 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 B&L Inc.’s 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, B&L Inc. has removed this supplier from its Approved Supplier List and qualified another sterilization supplier, who, along with an existing secondary supplier, will provide bottle sterilization, thereby allowing the Milan facility to return to full production capacity.

Cost of goods sold as a percentage of product sales revenue were ~~29.3%~~29.8% and ~~29.1%~~29.2% for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, an increase of ~~0.2~~0.6 percentage points. Cost of goods sold as a percentage of product sales revenue was unfavorably impacted by: (i) changes in product mix and (ii) inflationary pressures, partially offset by: (i) higher net realized pricing, as discussed above and (ii) the favorable impact of foreign currencies.

In May 2023 we initiated a voluntary recall in EMEA and Canada of our Emerade epinephrine auto-injectors (0.3 mg and 0.5 mg) (the “Injector”) used to deliver an emergency treatment of epinephrine to patients who are at risk of serious allergic reactions (anaphylaxis). The recall resulted in inventory provisions of approximately $7 million, product return provisions of approximately $2 million and other costs of approximately $3 million. It is possible that additional charges may be incurred based on future developments associated with this voluntary recall.

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. The Company has incurred, and expects to continue to incur, incremental costs with respect to the B+L Separation. During 2022, the Company also incurred ~~Separation-related and IPO-related costs which are~~ incremental costs indirectly related to the ~~B+L Separation and the~~ suspended Solta ~~IPO and will continue to incur incremental costs indirectly related with the B+L Separation. Separation-related~~IPO. These 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 ~~$676~~$711 million and ~~$685~~$676 million for the three months ended June 30, 2023 and 2022, ~~and 2021,~~ respectively, ~~a decrease~~an increase of $9$35 million, or 1%5%. The ~~decrease~~increase was primarily attributable ~~to:~~to higher: (i) ~~the impact of our divestiture of Amoun on July 26, 2021,~~selling, advertising and promotion expenses, (ii) ~~lower~~ compensation ~~expense~~ and (iii) certain administrative expenses, due in part to incremental costs associated with the separation of certain functions in connection with the B+L Separation. These increases were partially offset by: (i) lower professional fees and (ii) the favorable impact of foreign ~~currencies partially offset by: (i) higher selling, advertising and promotion expenses and (ii) an increase in separation-related and IPO-related costs.~~currencies.

Amortization of Intangible Assets

Intangible assets with finite lives are amortized using the straight-line method over their estimated useful lives, generally 21 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 ~~$302~~$269 million and ~~$360~~$302 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, a decrease of ~~$58~~$33 million. The decrease was primarily attributable to fully amortized intangible assets no longer being amortized in ~~2022.~~

~~Intangible assets, net includes finite-lived intangible assets related to our Xifaxan~~® ~~branded products. The aggregate carrying value of our Xifaxan~~® intangible assets is approximately $2,963 million as of June 30, 2022, and have remaining useful lives of 66 months. Amortization expense related to these intangible assets is approximately $539 million annually. While we intend to appeal the Norwich Legal Decision (see “~~Xifaxan~~® ~~Paragraph IV Proceedings” of Note 18, “LEGAL PROCEEDINGS” to our unaudited interim Consolidated Financial Statements), it is possible that this and other potential future developments:~~

•~~may adversely impact the estimated future cash flows of our Xifaxan~~® brands, which could result in an impairment of the value of these intangible assets in one or more future periods. Any such impairment could be material to the Company’s results of operations in the period in which it occurs; and

•~~may result in shortened useful lives of the Xifaxan~~® ~~intangible assets, which would increase amortization expense in future periods.~~2023.

See Note 8, “INTANGIBLE ASSETS AND GOODWILL” to our unaudited interim Condensed Consolidated Financial Statements for further details related to our intangible assets.

Goodwill Impairments

There were no goodwill impairments for the three months ended June 30, 2023. Goodwill impairments ~~were $83 million and $0~~ for the three months ended June 30, 2022, ~~and 2021, respectively, an increase of~~were $83 million.

~~The Company continues to monitor the market conditions impacting the Ortho Dermatologics reporting unit.~~ During the three months ended June 30, 2022, increases in interest rates and, to a lesser extent, higher than expected inflation in the U.S. and other macroeconomic factors impacted key assumptions used to value the ~~Ortho Dermatologics~~Dermatology reporting unit at

March 31, 2022 (the last time goodwill of the ~~Ortho Dermatologics~~Dermatology reporting unit was tested). Given the limited headroom of the ~~Ortho Dermatologics~~Dermatology reporting unit as calculated on March 31, 2022, the Company believed that these facts and circumstances suggest the fair value of the ~~Ortho Dermatologics~~Dermatology reporting unit could be less than its carrying amount, and therefore a quantitative fair value test was performed for the reporting unit.

~~During the three months ended June 30, 2022, the~~The quantitative fair value test utilized the Company’s then most recent cash flow projections as revised in the second quarter of 2022 which ~~reflect~~reflected current market conditions and current trends in business performance. Our latest discounted cash flow model for the ~~Ortho Dermatologics~~Dermatology reporting unit ~~includes~~included a range of potential outcomes for, among other matters, macroeconomic factors such as higher than expected inflation for many commodities, volatility in many of the equity markets and pressures on market interest rates. The quantitative fair value test utilized a long-term growth rate of 1% and a discount rate of 10%. The discount rate ~~has~~ increased 1% since the assessment performed at March 31, 2022, as a result of changes in ~~current~~ macroeconomic conditions, including an increase in the risk free rate during the three months ended June 30, 2022. Based on the quantitative fair value test, the carrying value of the ~~Ortho Dermatologics~~Dermatology reporting unit exceeded its fair value at June 30, 2022, and we recognized a goodwill impairment of $83 million.

~~Approximately 80% of our Salix segment revenues is derived from our Xifaxan~~® ~~product line. While we intend to appeal the Norwich Legal Decision (see “Xifaxan~~® ~~Paragraph IV Proceedings~~” of Note 18, “LEGAL PROCEEDINGS” to our unaudited interim Consolidated Financial Statements), it is possible that this and other potential future developments may adversely impact the estimated fair value of the Salix segment, in one or more future periods. Any such impairment could be material to the Company’s results of operations in the period in which it occurs.

See Note 8, “INTANGIBLE ASSETS AND GOODWILL” to our unaudited interim Condensed Consolidated Financial Statements for further details related to our goodwill.

Asset ~~Impairments, Including Loss on Assets Held for Sale~~impairments

Long-lived assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Impairment charges associated with these assets are included in Asset impairments in the Condensed Consolidated ~~Statement~~Statements of Operations. The Company continues to monitor the recoverability of its finite-lived intangible assets and tests the intangible assets for impairment if indicators of impairment are present. The Company estimates the fair values of long-lived assets with finite lives using an undiscounted cash flow model which utilizes Level 3 unobservable inputs. The undiscounted cash flow model relies on assumptions regarding revenue growth rates, gross profit, selling, general and administrative expenses and research and development expenses.

Asset impairments ~~including loss on assets held for sale~~ were $6$37 million and ~~$47~~$6 million for the three months ended June 30, 2023 and 2022, ~~and 2021,~~ respectively, ~~a decrease~~an increase of ~~$41~~$31 million. Asset impairments ~~including loss on~~for the three months ended June 30, 2023 of $37 million were primarily related to the impairment to the intangible assets ~~held for sale~~associated with our Uceris® Foam product as discussed below. Asset impairments for the three months ended June 30, 2022 ofwere $6 million ~~was~~and were primarily related to changes in forecasted ~~revenues~~revenue and production costs of a neurology product. ~~Asset impairments, including loss on assets held~~

Uceris® Foam - On April 12, 2023, the FDA approved an ANDA submitted by a competitor, for ~~sale for the three months ended~~a budesonide (a steroid (cortisone-like) medicine) foam to help treat mild to moderate active ulcerative colitis. This product is a generic version of our Uceris® Foam product. As of June 30, ~~2021~~2023, the carrying value of ~~$47 million include: (i) impairments~~the Uceris® Foam product related intangible assets exceeded the undiscounted expected cash flows from the Uceris® Foam. As a result, the Company recognized an impairment of ~~$25 million due to decreases in forecasted sales of a certain product line in our Diversified Products segment, (ii) an adjustment of $20~~$37 million to reduce the ~~loss~~carrying value of the Uceris® Foam product related intangible assets ~~held for sale in connection with~~to their estimated fair value. As of June 30, 2023, the ~~Amoun Sale and (iii) impairments~~carrying value of ~~$2 million, in aggregate,~~the Uceris® Foam product related ~~to the discontinuance of certain product lines.~~intangible assets was not material.

See Note 8, “INTANGIBLE ASSETS AND GOODWILL” to our unaudited interim Condensed Consolidated Financial Statements for further details related to our intangible assets.

Restructuring, Integration, Separation and IPO Costs

Restructuring, integration, separation and IPO costs were ~~$35~~$16 million and $9$35 million for the three months ended June 30, 2023 and 2022, ~~and 2021,~~ respectively, ~~an increase~~a decrease of ~~$26~~$19 million.

Restructuring and Integration Costs

The Company evaluates opportunities to improve its operating results and implement 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.

Restructuring and integration costs were ~~$22~~$16 million and $3$22 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, 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 expects to continue to incur costs associated with activities relating to ~~effectuate~~ the B+L Separation. ~~The~~In 2022, the Company also incurred costs associated with activities relating to ~~effectuate~~ the Solta IPO, which was suspended in June 2022. These B+L Separation and Solta IPO activities include: (i) separating the Bausch + Lomb and, in 2022, Solta Medical businesses from the remainder of the Company, (ii) completing the B+L IPO and, in 2022, preparing for the suspended Solta IPO and (iii) ~~completing~~ the actions necessary for Bausch + Lomb to become an independent publicly traded entity. Separation and IPO costs are incremental costs directly related to the ongoing B+L Separation and, in 2022, the suspended 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~~ Bausch + ~~Lomb and Solta Medical entities.~~Lomb. Separation and IPO costs were ~~$13~~less than $1 million and $6$13 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The extent and timing of future charges of these costs to complete the B+L Separation cannot be reasonably estimated at this time and could be material.

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

Other ~~expense, net~~(Income) Expense, Net

Other ~~expense, net~~(Income) Expense, Net for the three months ended June 30, ~~2022~~2023 and ~~2021~~2022 consists of the following:


		Three Months Ended June 30,					Three Months Ended June 30,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
Litigation and other matters	Litigation and other matters	$	8	$	532	Litigation and other matters	$	(71)	$	8
Acquisition-related contingent consideration	Acquisition-related contingent consideration	(5)		9		Acquisition-related contingent consideration	(17)		(5)
Gain on sale of assets, net		(3)		—
Loss (Gain) on sale of assets, net						Loss (Gain) on sale of assets, net	1		(3)
Acquired in-process research and development costs	Acquired in-process research and development costs	1		1		Acquired in-process research and development costs	—		1
Acquisition-related transaction costs						Acquisition-related transaction costs	3		—
Other, Net	Other, Net	(1)		—		Other, Net	1		(1)
		$	—	$	542		$	(83)	$	—

For the three months ended June 30, 2023, Litigation and other matters primarily relates to insurance recoveries associated with certain legacy litigation matters.

As a result of revisions to an existing royalty agreement of certain branded products during the three months ended June 30, 2023, the Company has revised its long-term sales forecast for those products. Acquisition-related contingent consideration for the three months ended June 30, 2023, primarily includes adjustments to reflect the reduction in estimates of the future royalty payments related to those branded products.

Non-Operating Income and Expense

Interest Expense

Interest expense primarily consists of interest payments due, amortization and write-off of debt discounts, premiums ~~discounts~~ and ~~deferred~~debt issuance costs ~~on indebtedness~~ under our credit facilities and notes ~~and~~as well as the amortization of amounts excluded from the assessment of hedge effectiveness over the term of the Company’s cross-currency ~~swaps during 2021. In November 2021, we entered into a transaction to unwind our cross-currency~~ swaps. ~~In July 2022, we entered into new cross-currency swaps with aggregate notional amounts of $1,000 million.~~

Interest expense was ~~$410~~$319 million and ~~$364~~$410 million, and included non-cash amortization and write-offs of debt premiums, discounts and deferred issuance costs of ~~$50~~$12 million and ~~$12~~$50 million, for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Interest expense for the three months ended June 30, ~~2022 increased $46~~2023 decreased $91 million, or ~~13%~~22%, as compared to the three months ended June 30, ~~2021,~~2022, primarily ~~attributable~~due to: (i) the accounting for contractual interest payments on the New Secured Notes, portions of which are recorded as a reduction of related premiums and not as interest expense, which had the impact of reducing interest expense by $74 million relative to ~~the higher~~contractual interest ~~rates partially offset by~~cost and (ii) the impact of lower outstanding debt ~~balances.~~ balances in 2023 as compared to 2022, partially offset by higher interest rates.

The weighted average stated rate of interest as of June 30, 2023 and 2022 was 7.91% and ~~2021 was~~ 6.34% ~~and 5.85%~~, respectively. The increase in the weighted average stated rate of interest of 157 bps is primarily attributable to the New Secured Notes and higher interest rates on our variable rate debt. Due to the accounting treatment for the New Secured Notes, interest expense in the Company’s financial statements will not be representative of the weighted average stated rate of interest.

See Note 10, “FINANCING ARRANGEMENTS” to our unaudited interim Condensed Consolidated Financial Statements and the section titled “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt” for further details.

Gain ~~(Loss)~~ on Extinguishment of Debt

Gain ~~(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. ~~The~~There was no gain on extinguishment of debt for the three months ended June 30, 2023. Gain on extinguishment of debt was $113 million for the three months ended June 30, ~~2022 as compared to a loss on extinguishment of debt of $45 million for the three months ended June 30, 2021.~~2022.

The gain on extinguishment of debt for the three months ended June 30, 2022 includes $176 million of gains associated with the early retirement of senior unsecured notes as discussed below, partially offset by $63 million of losses associated with the refinancing and modification to certain debt obligations completed in connection with the B+L IPO ~~as discussed in further detail below, under “— Liquidity and Capital Resources — Liquidity and Debt”~~ and represents the differences between the amounts paid to settle the extinguished debt and its carrying value.

During June 2022, through a series of transactions we repurchased and retired, outstanding senior unsecured notes with an aggregate par value of $481 million in the open market for approximately $300 million using: (i) the net proceeds from the partial exercise of the over-allotment option in the B+L IPO by the underwriters, after deducting underwriting commissions, (ii) amounts available under our revolving credit facility and (iii) cash on hand. The senior unsecured notes retired had maturities of January 2028 through February 2031 and had a weighted average interest rate of approximately 5.35%. As a result of these transactions, we recognized a gain on the extinguishment of debt of approximately $176 million, net of write-offs of debt premiums, discounts and deferred issuance costs, representing the differences between the amounts paid to retire the senior unsecured notes and their carrying value.

The loss on extinguishment of debt of $45 million for the three months ended June 30, 2021 is primarily associated with refinancing transactions during the three months ended June 30, 2021 and represents the differences between the amounts paid to settle the extinguished debt and its carrying value.

See Note 10, “FINANCING ARRANGEMENTS” to our unaudited interim Condensed 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 loss of $21 million for the three months ended June 30, 2023, as compared to a gain of $4 ~~million and $7~~ million for the three months ended June 30, 2022, ~~and 2021, respectively,~~ an unfavorable net change of ~~$3 million.~~$25 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

Provision for income taxes was $52 million and $10 million for the three months ended June 30, 2023 and 2022, ~~and compares to a benefit for~~respectively, an unfavorable change of $42 million.

Our effective income ~~taxes of $77 million~~tax rate for the three months ended June 30, ~~2021, an unfavorable change~~2023 differs from the statutory Canadian income tax rate primarily due to: (i) the tax provision generated from our annualized mix of ~~$87 million.~~earnings by jurisdiction, (ii) the recording of valuation allowances on entities for which no tax benefit of losses is expected and (iii) the discrete treatment of certain tax matters, primarily related to changes in uncertain tax positions.

Our effective income tax rate for the three months ended June 30, 2022 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) adjustments for book to income tax return provisions, (b) a tax deduction for stock compensation and (c) changes in uncertain tax positions.

Our effective income tax rate for the three months ended June 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) potential and recognized withholding taxes on intercompany dividends, (b) adjustments for book to income tax return provisions, (c) tax deduction for stock compensation and (d) changes in uncertain tax positions.

See Note ~~16,~~15, “INCOME TAXES” to our unaudited interim Condensed Consolidated Financial Statements for further details.

Reportable Segment Revenues and Profits

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

•The Salix segment consists of sales in the U.S. of GI products. Sales of the Xifaxan® product line represented ~~81% and~~approximately 80% of the Salix segment’s ~~revenues for the three and six months ended June 30, 2022, respectively.~~revenues.

•The Solta Medical segment consists of global sales of Solta Medical aesthetic medical 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~~dermatology products, (iii) ~~Ortho Dermatologics (dermatological)~~generic pharmaceutical products and (iv) dentistry products.

•~~The Solta Medical segment~~ ~~consists of global sales of Solta aesthetic medical devices.~~

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 30, ~~2022~~2023 and ~~2021.~~2022. 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 30, ~~2022~~2023 and ~~2021.~~2022.


		Three Months Ended June 30,													Three Months Ended June 30,
		2022				2021				Change					2023				2022				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
Salix	Salix	$	501	25	%	$	516	25	%	$	(15)	(3)	%	Salix	$	557	26	%	$	501	25	%	$	56	11	%
International	International	233		12	%	313		15	%	(80)		(26)	%	International	259		12	%	233		12	%	26		11	%
Diversified Products		235		12	%	264		13	%	(29)		(11)	%
Solta Medical	Solta Medical	57		3	%	73		3	%	(16)		(22)	%	Solta Medical	88		4	%	57		3	%	31		54	%
Diversified														Diversified	228		11	%	235		12	%	(7)		(3)	%
Bausch + Lomb	Bausch + Lomb	941		48	%	934		44	%	7		1	%	Bausch + Lomb	1,035		47	%	941		48	%	94		10	%
Total revenues	Total revenues	$	1,967	100	%	$	2,100	100	%	$	(133)	(6)	%	Total revenues	$	2,167	100	%	$	1,967	100	%	$	200	10	%

Segment Profits / Segment Profit Margins	Segment Profits / Segment Profit Margins													Segment Profits / Segment Profit Margins
Salix	Salix	$	354	71	%	$	370	72	%	$	(16)	(4)	%	Salix	$	386	69	%	$	354	71	%	$	32	9	%
International	International	66		28	%	103		33	%	(37)		(36)	%	International	68		26	%	66		28	%	2		3	%
Diversified Products		141		60	%	162		61	%	(21)		(13)	%
Solta Medical	Solta Medical	20		35	%	39		53	%	(19)		(49)	%	Solta Medical	45		51	%	20		35	%	25		125	%
Diversified														Diversified	138		61	%	141		60	%	(3)		(2)	%
Bausch + Lomb	Bausch + Lomb	208		22	%	213		23	%	(5)		(2)	%	Bausch + Lomb	244		24	%	208		22	%	36		17	%
Total segment profits	Total segment profits	$	789	40	%	$	887	42	%	$	(98)	(11)	%	Total segment profits	$	881	41	%	$	789	40	%	$	92	12	%

~~Diversified Products Segment:~~

~~Diversified Products Segment Revenue~~

The Diversified Products segment revenue for the three months ended June 30, 2022 and 2021 was $235 million and $264 million, respectively, a decrease of $29 million, or 11%. The decrease was primarily driven by: (i) a decrease in volume of $17 million and (ii) a decrease in net realized pricing of $12 million, primarily in our Neurology and Other business and Ortho Dermatologics business. The decrease in volume was primarily attributable to our Neurology and Other business primarily due to: (i) unfavorable inventory balancing of our Wellbutrin® ~~product by our wholesalers and (ii) lower demand for Ativan~~® ~~and Mysoline~~®.

~~Diversified Products Segment Profit~~

~~The Diversified Products segment profit for the three months ended June 30, 2022 and 2021 was $141 million and $162 million, respectively, a decrease of $21 million, or 13%. The decrease~~increase was primarily driven by ~~the decrease~~an increase in contribution ~~primarily~~ attributable to the ~~net decrease~~increase in revenues, as previously discussed, partially offset by ~~lower general and administrative expenses, primarily due to lower litigation costs.~~higher manufacturing variances.

Solta Medical Segment:

Solta Medical Segment Revenue

The Solta Medical segment includes the Thermage® product line, which accounted for approximately ~~71%~~83% and 70% of the Solta Medical segment revenues for the three months ended June 30, ~~2022. No other single product group represents 10% or more of the Solta segment revenues.~~2023 and 2022, respectively. The Solta Medical segment revenue for the three months ended June 30, 2023 and 2022 was $88 million and ~~2021 was~~ $57 million, ~~and $73 million,~~ respectively, ~~a decrease~~an increase of ~~$16~~$31 million, or ~~22%~~54%. The ~~decrease~~increase was primarily attributable ~~to a decrease~~to: (i) an increase in ~~volume~~volumes of ~~$20~~$32 million ~~primarily driven by the impact of the COVID-19 pandemic in China, partially offset by~~and (ii) an increase in net realized pricing of $4$2 million, partially offset by the unfavorable impact of foreign currencies of $3 million. The increase in volumes is attributable in part to the impact of the COVID-19 pandemic restrictions in China for the three months ended June 30, 2022, on our revenues for the Asia-Pacific region.

Solta Medical Segment Profit

The Solta Medical segment profit for the three months ended June 30, 2023 and 2022 was $45 million and ~~2021 was~~ $20 million, respectively, an increase of $25 million, or 125%. The increase was primarily attributable to the increase in contribution attributable to the increase in revenues, as previously discussed.

Diversified Segment:

Diversified Segment Revenue

The Diversified segment revenue for the three months ended June 30, 2023 and ~~$39~~2022 was $228 million and $235 million, respectively, a decrease of ~~$19~~$7 million, or ~~49%~~3%. The decrease was primarily driven ~~by: (i)~~by decreases in volumes of $13 million, primarily in our Neurology and other businesses, partially offset by increased net realized pricing of $6 million, in our Dermatology and Neurology and other businesses.

Diversified Segment Profit

The Diversified segment profit for the three months ended June 30, 2023 and 2022 was $138 million and $141 million, respectively, a decrease ~~in contribution~~of $3 million, or 2%. The decrease was primarily driven by lower contribution attributable to the net decrease in revenues, as previously discussed, partially offset by lower advertising and ~~(ii) an increase in R&D.~~promotion expenses.

Bausch + Lomb Segment:

Bausch + Lomb Segment Revenue

~~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 ~~$941~~$1,035 million and ~~$934~~$941 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, an increase of $7$94 million, or 1%10%. The increase was attributable ~~to increases~~to: (i) an increase in volumes of ~~$41~~$84 million, ~~and~~across the Bausch + Lomb businesses, (ii) net realized pricing of ~~$15 million. The increase in volume was due to: (i)~~$28 million primarily driven by the Vision Care business ~~primarily~~and (iii) incremental sales attributable ~~to: (a) increased demand for certain consumer eye health products including Lumify~~®~~, Biotrue~~® ~~and PreserVision~~® ~~and (b)~~to acquisitions of $2 million within the impact of a quality issue in 2021 related to a third-party supplier of sterilization services for certain lens care solution bottles and caps, as previously discussed, and (ii) increased demand of consumables and intraocular lenses within our Surgical business, partially offset by: (i) a decrease in volume in our international contact lens business, primarily driven by the impact of the COVID-19 pandemic in China and (ii) a decrease in volume in our U.S. Ophthalmic Pharmaceuticals business, primarily driven by the impact of generic competition on certain products that had previously lost exclusivity, such as Lotemax® ~~Gel, Lotemax~~® ~~Suspension and Bepreve~~®~~. The overall increases in revenues and net realized pricing were~~ partially offset by: (i) the unfavorable impact of foreign currencies ~~across all our international businesses~~ of ~~$46~~$18 million, primarily in ~~Europe~~Asia and ~~Asia~~Europe and (ii) the impact of divestitures and discontinuations of ~~$3 million, related to the discontinuation of certain products.~~$2 million.

Bausch + Lomb Segment Profit

The Bausch + Lomb segment profit for the three months ended June 30, 2023 and 2022 was $244 million and ~~2021 was~~ $208 million, ~~and $213 million,~~ respectively, ~~a decrease~~an increase of $5$36 million, or 2%17%. The ~~decrease~~increase was primarily driven ~~by: (i)~~by higher ~~SG&A expenses within U.S. Consumer~~contribution, attributable to the increase in volume and ~~Surgical, (ii) the unfavorable impact of foreign currencies and (iii) higher manufacturing variances, primarily~~pricing, as ~~a result of inflationary pressures related to certain manufacturing costs,~~previously discussed, partially offset by ~~the impact of manufacturing variances incurred in 2021 related to a quality issue at a third-party supplier, as previously discussed. These decreases were partially offset by the~~an increase in ~~revenues, as previously discussed.~~

•chargebacks as a percentage of gross product sales were ~~higher~~lower primarily due to lower gross product sales of certain generic products such as Nifediac and certain branded generics such as Apriso® AG, Targretin® AG, Syprine® AG and Cuprimine® AG. These decreases were partially offset by: (i) increased gross product sales of our GI products Xifaxan® and Glumetza® SLX and (ii) higher chargeback rates for certain ~~products such as Glumetza~~® ~~SLX, Ofloxacin~~generics and ~~Xifaxan~~®~~, partially offset by lower chargeback rates and gross product sales for certain generic products such as Glumetza~~® ~~AG and Targretin~~® ~~AG and certain~~ branded ~~products such as Mysoline~~® ~~and Ativan~~®;generics; and

•distribution service fees as a percentage of gross product sales were ~~unchanged.~~higher primarily due to higher gross product sales of certain branded products such as Xifaxan® and Trulance®. Price appreciation credits are offset against ~~the~~ distribution service fees when due to wholesalers. ~~Price~~There were no price appreciation credits ~~were $0 and $1 million~~ for the six months ended June 30, ~~2022~~2023 and ~~2021, respectively.~~2022.

Expenses

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

Cost of goods sold was ~~$1,113~~$1,212 million and ~~$1,168~~$1,104 million for the six months ended June 30, 2023 and 2022, ~~and 2021,~~ respectively, ~~a decrease~~an increase of ~~$55~~$108 million, or 5%10%. The ~~decrease~~increase was primarily driven by: (i) the ~~impact of the divestiture of Amoun on July 26, 2021, (ii) the net decrease~~increase in volumes as previously discussed, and ~~(iii)~~(ii) charges related to the Injector recall, as previously discussed, partially offset by: (i) lower unfavorable manufacturing variances and (ii) the favorable impact of foreign currencies. These decreases were partially offset by higher manufacturing variances, primarily as a result of inflationary pressures related to certain manufacturing costs, partially offset by the impact of manufacturing variances incurred in 2021 related to a quality issue at a third-party supplier, as previously discussed.

Cost of goods sold as a percentage of product sales revenue was ~~28.9%~~29.8% and ~~28.6%~~28.8% for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, an increase of ~~0.3~~1.0 percentage points. Costs of goods sold as a percentage of Product sales

revenue was unfavorably impacted ~~by higher manufacturing variances as previously discussed,~~by: (i) changes in product mix and (ii) inflationary pressures, partially offset by ~~the increase in~~higher net realized pricing, as ~~previously discussed.~~discussed above.

Selling, General and Administrative Expenses

SG&A expenses were ~~$1,298~~$1,436 million and ~~$1,291~~$1,298 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, an increase of $7$138 million, or 1%11%. The ~~decrease~~increase was primarily attributable ~~to:~~to higher: (i) ~~higher~~ selling, advertising and promotion expenses, (ii) compensation and ~~(ii) an increase~~(iii) certain administrative expenses, due in ~~separation-related and IPO-related~~part to incremental costs associated with the separation of certain functions in connection with the B+L Separation. These increases were partially offset by: (i) ~~the impact of our divestiture of Amoun on July 26, 2021~~lower professional fees and (ii) the favorable impact of foreign currencies.

~~Research~~Income Taxes

Provision for income taxes was $52 million and ~~Development~~$10 million for the three months ended June 30, 2023 and 2022, respectively, an unfavorable change of $42 million.

Our effective income tax rate for the three months ended June 30, 2023 differs from the statutory Canadian income tax rate primarily due to: (i) the tax provision generated from our annualized mix of earnings by jurisdiction, (ii) the recording of valuation allowances on entities for which no tax benefit of losses is expected and (iii) the discrete treatment of certain tax matters, primarily related to changes in uncertain tax positions.

See Note 15, “INCOME TAXES” to our unaudited interim Condensed Consolidated Financial Statements for further details.

Reportable Segment Revenues and Profits

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

•The Salix segment consists of sales in the U.S. of GI products. Sales of the Xifaxan® product line represented approximately 80% of the Salix segment’s revenues.

•The Solta Medical segment consists of global sales of Solta Medical aesthetic medical devices.

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

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 30, 2023 and 2022. 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 30, 2023 and 2022.


	Three Months Ended June 30,
	2023				2022				Change
(in millions)	Amount		Pct.		Amount		Pct.		Amount		Pct.
Segment Revenues
Salix	$	557	26	%	$	501	25	%	$	56	11	%
International	259		12	%	233		12	%	26		11	%
Solta Medical	88		4	%	57		3	%	31		54	%
Diversified	228		11	%	235		12	%	(7)		(3)	%
Bausch + Lomb	1,035		47	%	941		48	%	94		10	%
Total revenues	$	2,167	100	%	$	1,967	100	%	$	200	10	%

Segment Profits / Segment Profit Margins
Salix	$	386	69	%	$	354	71	%	$	32	9	%
International	68		26	%	66		28	%	2		3	%
Solta Medical	45		51	%	20		35	%	25		125	%
Diversified	138		61	%	141		60	%	(3)		(2)	%
Bausch + Lomb	244		24	%	208		22	%	36		17	%
Total segment profits	$	881	41	%	$	789	40	%	$	92	12	%

Organic Revenues and Organic Growth Rates (non-GAAP)

Organic revenue and organic revenue change are non-GAAP measures. Non-GAAP measures are not standardized measures under the financial reporting framework used to prepare the Company’s financial statements and might not be comparable to similar financial measures disclosed by other issuers.

Organic revenue (non-GAAP) and change in organic revenue (non-GAAP), are defined as GAAP Revenue and change in GAAP revenue (the most directly comparable GAAP financial measures), adjusted for changes in foreign currency exchange rates (if applicable) and excluding the impact of recent acquisitions, divestitures and discontinuations, as defined below. Organic revenue (non-GAAP) is impacted by changes in product volumes and price. The price component is made up of two key drivers: (i) changes in product gross selling price and (ii) changes in sales deductions. The Company uses organic revenue (non-GAAP) and change in organic revenue (non-GAAP) to assess performance of its reportable segments, and the Company in total. The Company believes that providing these measures is useful to investors as they provide a supplemental period-to-period comparison.

The adjustments to GAAP Revenue and changes in GAAP revenue to determine organic revenue (non-GAAP) and changes in organic revenue (non-GAAP) are 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 business. The impact of 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 revenue (non-GAAP) growth/change 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 and organic growth/change exclude from the current period, 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 and change in organic revenue exclude from the prior 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.

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 30, 2023 and 2022 by segment.


	Three Months Ended June 30, 2023								Three Months Ended June 30, 2022						Change in Organic Revenue (Non-GAAP)
	Revenue as Reported		Changes in Exchange Rates		Acquisitions		Organic Revenue (Non-GAAP)		Revenue as Reported		Divestitures and Discontinuations		Organic Revenue (Non-GAAP)
(in millions)															Amount		Pct.
Salix	$	557	$	—	$	—	$	557	$	501	$	—	$	501	$	56	11	%
International	259		(4)		—		255		233		(4)		229		26		11	%
Solta Medical	88		3		—		91		57		—		57		34		60	%
Diversified	228		—		—		228		235		—		235		(7)		(3)	%
Bausch + Lomb	1,035		18		(2)		1,051		941		(2)		939		112		12	%
Total	$	2,167	$	17	$	(2)	$	2,182	$	1,967	$	(6)	$	1,961	$	221	11	%

Salix Segment:

Salix Segment Revenue

The Salix segment includes our Xifaxan® product line. Revenues from our Xifaxan® product line accounted for approximately 80% of the Salix segment revenues for each of the three months ended June 30, 2023 and 2022. No other single product group represents 10% or more of the Salix segment product sales. Salix segment revenue for the three months ended June 30, 2023 and 2022 was $557 million and $501 million, respectively, an increase of $56 million, or 11%. The increase is primarily attributable to increases in: (i) in net realized pricing of $30 million and (ii) volumes of $26 million, primarily driven by Xifaxan®.

Salix Segment Profit

The Salix segment profit for the three months ended June 30, 2023 and 2022 was $386 million and $354 million, respectively, an increase of $32 million, or 9%. The increase was primarily driven by an increase in contribution attributable to the increase in revenues, as previously discussed, partially offset by higher: (i) R&D expenses, ~~were $254~~including for our global RED-C program, as previously discussed, (ii) advertising and promotion primarily due to increased Xifaxan® investments and (iii) selling expenses.

International Segment:

International Segment Revenue

The International segment has a diversified product line with no single product group representing 10% or more of its product sales. The International segment revenue was $259 million and ~~$227~~$233 million for the three months ended June 30, 2023 and 2022, respectively, an increase of $26 million, or 11%. The increase was primarily attributable to: (i) an increase in volumes of $16 million, (ii) an increase in net realized pricing of $10 million and (iii) the favorable impact of foreign currencies of $4 million, partially offset by the impact of divestitures and discontinuations of $4 million. Revenues for the three months ended June 30, 2022, also reflect charges of $11 million representing a change in the estimated future returns in one market, driven by lower estimated demand following the easing of local COVID-19 lockdown restrictions as well as a change in distributors.

International Segment Profit

The International segment profit for the three months ended June 30, 2023 and 2022 was $68 million and $66 million, respectively, an increase of $2 million, or 3%. The increase was primarily driven by an increase in contribution attributable to the increase in revenues, as previously discussed, partially offset by higher manufacturing variances.

Solta Medical Segment:

Solta Medical Segment Revenue

The Solta Medical segment includes the Thermage® product line, which accounted for approximately 83% and 70% of the Solta Medical segment revenues for the three months ended June 30, 2023 and 2022, respectively. The Solta Medical segment revenue for the three months ended June 30, 2023 and 2022 was $88 million and $57 million, respectively, an increase of $31 million, or 54%. The increase was primarily attributable to: (i) an increase in volumes of $32 million and (ii) an increase in net realized pricing of $2 million, partially offset by the unfavorable impact of foreign currencies of $3 million. The increase in volumes is attributable in part to the impact of the COVID-19 pandemic restrictions in China for the three months ended June 30, 2022, on our revenues for the Asia-Pacific region.

Solta Medical Segment Profit

The Solta Medical segment profit for the three months ended June 30, 2023 and 2022 was $45 million and $20 million, respectively, an increase of $25 million, or 125%. The increase was primarily attributable to the increase in contribution attributable to the increase in revenues, as previously discussed.

Diversified Segment:

Diversified Segment Revenue

The Diversified segment revenue for the three months ended June 30, 2023 and 2022 was $228 million and $235 million, respectively, a decrease of $7 million, or 3%. The decrease was primarily driven by decreases in volumes of $13 million, primarily in our Neurology and other businesses, partially offset by increased net realized pricing of $6 million, in our Dermatology and Neurology and other businesses.

Diversified Segment Profit

The Diversified segment profit for the three months ended June 30, 2023 and 2022 was $138 million and $141 million, respectively, a decrease of $3 million, or 2%. The decrease was primarily driven by lower contribution attributable to the net decrease in revenues, as previously discussed, partially offset by lower advertising and promotion expenses.

Bausch + Lomb Segment:

Bausch + Lomb Segment Revenue

The Bausch + Lomb segment revenue was $1,035 million and $941 million for the three months ended June 30, 2023 and 2022, respectively, an increase of $94 million, or 10%. The increase was attributable to: (i) an increase in volumes of $84 million, across the Bausch + Lomb businesses, (ii) net realized pricing of $28 million primarily driven by the Vision Care business and (iii) incremental sales attributable to acquisitions of $2 million within the Surgical business, partially offset by: (i) the unfavorable impact of foreign currencies of $18 million, primarily in Asia and Europe and (ii) the impact of divestitures and discontinuations of $2 million.

Bausch + Lomb Segment Profit

The Bausch + Lomb segment profit for the three months ended June 30, 2023 and 2022 was $244 million and $208 million, respectively, an increase of $36 million, or 17%. The increase was primarily driven by higher contribution, attributable to the increase in volume and pricing, as previously discussed, partially offset by an increase in selling expenses primarily attributable to increased headcount and distribution costs, and higher advertising and promotional expenses.

Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022

Revenues

Our revenue was $4,111 million and $3,885 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, an increase of ~~$27~~$226 million, or ~~12%~~6%. ~~R&D expenses as a percentage~~The increase was primarily due to: (i) an increase in volumes of ~~Product~~$222 million attributable to our Bausch + Lomb, Salix, Solta Medical and International segments, (ii) an increase in net realized pricing of $68 million in the Bausch + Lomb, International, Salix and Solta Medical segments and (iii) incremental sales ~~were approximately 7%~~attributable to acquisitions of $4 million, partially offset by: (i) the unfavorable impact of foreign currencies of $57 million, primarily in Asia and 6%Europe and (ii) the impact of divestitures and discontinuations of $11 million.

The changes in our segment revenues and segment profits for the six months ended June 30, 2023, are discussed in further detail in the respective subsequent section “ — Reportable Segment Revenues and Profits”.

Cash Discounts and Allowances, Chargebacks and Distribution Fees

Provisions recorded to reduce gross product sales to net product sales and revenues for the six months ended June 30, 2023 and 2022 were as follows:


	Six Months Ended June 30,
	2023				2022
(in millions)	Amount		Pct.		Amount		Pct.
Gross product sales	$	6,920	100.0	%	$	6,545	100.0	%
Provisions to reduce gross product sales to net product sales
Discounts and allowances	297		4.3	%	278		4.2	%
Returns	79		1.1	%	60		0.9	%
Rebates	1,364		19.7	%	1,236		18.9	%
Chargebacks	989		14.3	%	1,028		15.7	%
Distribution fees	123		1.8	%	108		1.7	%
Total provisions	2,852		41.2	%	2,710		41.4	%
Net product sales	4,068		58.8	%	3,835		58.6	%
Other revenues	43				50
Revenues	$	4,111			$	3,885

Cash discounts and ~~2021, respectively. The increase was~~allowances, returns, rebates, chargebacks and distribution fees as a percentage of gross product sales were 41.2% and 41.4% for the six months ended June 30, 2023 and 2022, respectively, a decrease of 0.2 percentage points and includes:

•discounts and allowances as a percentage of gross product sales were higher primarily due to increases in gross product sales of certain branded products such as Xifaxan® and Trulance® and our branded generic Diastat® AG;

•returns were higher primarily due to reductions in the estimates of variable consideration for sales returns related to past sales in 2022. The Company continues to focus on maximizing operational efficiencies and 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 ~~result~~effect of improving the sales return experience;

•rebates as a percentage of gross product sales were higher primarily due to an increase in gross product sales and higher rebate rates for certain branded products such as Xifaxan®, Trulance®, Jublia® and Arazlo®, partially offset by lower ~~R&D spend in early 2021~~gross product sales for certain branded products such as Retin-A® Microsphere .06%, Retin-A® Cream and Retin-A® Microsphere .08%;

•chargebacks as a percentage of gross product sales were lower primarily due to lower gross product sales of certain ~~R&D activities~~generic products such as Nifediac and ~~clinical trials which~~certain branded generics such as Apriso® AG, Targretin® AG, Syprine® AG and Cuprimine® AG. These decreases were ~~suspended in response to the COVID-19 pandemic in 2020~~partially offset by: (i) increased gross product sales of our GI products Xifaxan® and ~~did not normalize until later in 2021, as previously discussed,~~Glumetza® SLX and (ii) higher ~~spend on~~chargeback rates for certain ~~Bausch + Lomb~~generics and ~~Salix projects~~branded generics; and

~~Amortization~~•distribution service fees as a percentage of ~~Intangible Assets~~gross product sales were higher primarily due to higher gross product sales of certain branded products such as Xifaxan® and Trulance®. Price appreciation credits are offset against distribution service fees when due to wholesalers. There were no price appreciation credits for the six months ended June 30, 2023 and 2022.

~~Amortization~~Expenses

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

Cost of goods sold was ~~$612~~$1,212 million and ~~$717~~$1,104 million for the six months ended June 30, 2023 and 2022, ~~and 2021,~~ respectively, ~~a decrease~~an increase of ~~$105~~$108 million, or ~~15%~~10%. The ~~decrease~~increase was primarily ~~attributable to fully amortized intangible assets no longer being amortized~~driven by: (i) the increase in ~~2022.~~

•~~may result in shortened useful lives of the Xifaxan~~® ~~intangible assets, which would increase amortization expense in future periods.~~

~~See Note 8, “INTANGIBLE ASSETS AND GOODWILL” to our unaudited interim Consolidated Financial Statements for further details related to our intangible assets.~~

~~Goodwill Impairments~~

~~Goodwill impairments were $83 million for the six months ended June 2022, related to our Ortho Dermatologics unit~~volumes as previously discussed, and (ii) charges related to the Injector recall, as previously discussed, partially offset by: (i) lower unfavorable manufacturing variances and (ii) the favorable impact of foreign currencies.

Cost of goods sold as a percentage of product sales revenue was 29.8% and 28.8% for the six months ended June 30, ~~2021 were $469 million.~~

~~As previously discussed, the Company believed that increases in interest rates~~2023 and ~~other macroeconomic factors during the three months ended June 30,~~ 2022, ~~impacted key assumptions used to value the Ortho Dermatologics reporting unit at March 31, 2022 (the last time goodwill~~respectively, an increase of ~~the Ortho Dermatologics reporting unit was tested) and therefore the Company performed a quantitative fair value test for the reporting unit.~~

~~During the three months ended June 30, 2022, the quantitative fair value test utilized the Company’s most recent cash flow projections as revised in the second quarter~~1.0 percentage points. Costs of 2022 which reflect current market conditions and current trends in business performance. Our latest discounted cash flow model for the Ortho Dermatologics reporting unit includes a range of potential outcomes for, among other matters, macroeconomic factors such as higher than expected inflation for many commodities, volatility in many of the equity markets and pressures on market interest rates. The quantitative fair value test utilized a long-term growth rate of 1% and a discount rate of 10%. The discount rate has increased 1% since the assessment performed at March 31, 2022,goods sold as a ~~result~~percentage of changes in current macroeconomic conditions, including an increase in the risk free rate during the three months ended June 30, 2022. Based on the quantitative fair value test, the carrying value of the Ortho Dermatologics reporting unit exceeded its fair value at June 30, 2022, and we recognized a goodwill impairment of $83 million.

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 had 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 was 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 for further details related to our goodwill.~~Product sales

~~Asset Impairments, Including Loss on Assets Held for Sale~~revenue was unfavorably impacted by: (i) changes in product mix and (ii) inflationary pressures, partially offset by higher net realized pricing, as discussed above.

~~Asset impairments, including loss on assets held for sale~~Selling, General and Administrative Expenses

SG&A expenses were ~~$14~~$1,436 million and ~~$195~~$1,298 million for the six months ended June 30, ~~2022~~2023 and ~~2021, respectively, a decrease of $181 million. Asset impairments, including loss on assets held for sale for the six months ended June 30,~~ 2022, includes: (i) impairments of $10 million, in aggregate, due to decreases in forecasted sales of certain product lines and (ii) impairments of $4 million, in aggregate, related to the discontinuance of certain product lines. Asset impairments, including loss on assets held for sale for the six months ended June 30, 2021 include: (i) impairments of $96 million, in aggregate, due to decreases in forecasted 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 million, in aggregate, related to the discontinuance of certain product lines.

~~See Note 8, “INTANGIBLE ASSETS AND GOODWILL” to our unaudited interim Consolidated Financial Statements for further details related to our intangible assets.~~

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

~~Restructuring, integration, separation and IPO costs were $48 million and $21 million for the six months ended June 30, 2022 and 2021,~~ respectively, an increase of ~~$27 million.~~

~~Restructuring and Integration Costs~~

Restructuring and integration costs were $25 million and $6 million for the six months ended June 30, 2022 and 2021, respectively, an increase of $19 million. 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 $23 million and $15 million for the six months ended June 30, 2022 and 2021, respectively. The extent and timing of future charges of these costs to complete the B+L Separation cannot be reasonably estimated at this time and could be material.

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

~~Other Expense, Net~~

~~Other expense, net for the six months ended June 30, 2022 and 2021 consists of the following:~~

Six Months Ended
June 30,
(in millions) 2022 2021
Litigation and other matters $ 7 $ 532
Acquisition-related contingent consideration (2) —
Gain on sale of assets, net (3) (23)
Acquired in-process research and development costs 1 3
Other, Net $ (1) $ —
$ 2 $ 512

~~Non-Operating Income and Expense~~

~~Interest Expense~~

Interest expense was $772 million and $732 million and included non-cash amortization and write-offs of debt premiums, discounts and deferred issuance costs of $64 million and $25 million for the six months ended June 30, 2022 and 2021, respectively. Interest expense increased $40$138 million, or ~~5%,~~11%. The increase was primarily attributable to higher: (i) selling, advertising and promotion expenses, (ii) compensation and (iii) certain administrative expenses, due in part to ~~higher interest rates partially offset by lower outstanding principal balances. The weighted average stated rate of interest as of June 30, 2022 and 2021 was 6.34% and 5.85%, respectively.~~

~~Gain (Loss) on Extinguishment of Debt~~

~~The gain on extinguishment of debt was $113 million for the six months ended June 30, 2022 as compared to a loss on extinguishment of debt of $50 million for the six months ended June 30, 2021.~~

~~The gain on extinguishment of debt for the six months ended June 30, 2022 includes $176 million of gains~~incremental costs associated with the ~~early retirement~~separation of ~~senior unsecured notes as previously discussed, partially offset by $63 million of losses associated with the refinancing and modification to~~ certain ~~debt obligations completed~~functions in connection with the B+L IPO, as discussed in further detail below, under “— Liquidity and Capital Resources — Liquidity and Debt” and represents the differences between the amounts paid to settle the extinguished debt and its carrying value.

The loss on extinguishment of debt of $50 million for the six months ended June 30, 2021 is primarily associated with refinancing transactions during the six months ended June 30, 2021 and represents the differences between the amounts paid to settle the extinguished debt and its carrying value.

~~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 loss of $3 million and a gain of $8 million for the six months ended June 30, 2022 and 2021, respectively, an unfavorable net change of $11 million primarily due to:~~Separation. These increases were partially offset by: (i) ~~translation gains/losses on intercompany loans and third-party liabilities~~lower professional fees and (ii) the ~~gain/loss due to~~favorable impact of foreign ~~currency exchange contracts.~~currencies.

Income Taxes

~~Benefit from~~Provision for income taxes was $6$52 million and ~~$61~~$10 million for the ~~six~~three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, an unfavorable change of ~~$55~~$42 million.

Our effective income tax rate for the ~~six~~three months ended June 30, 2023 differs from the statutory Canadian income tax rate primarily due to: (i) the tax provision generated from our annualized mix of earnings by jurisdiction, (ii) the recording of valuation allowances on entities for which no tax benefit of losses is expected and (iii) the discrete treatment of certain tax matters, primarily related to changes in uncertain tax positions.

Our effective income tax rate for the three months ended June 30, 2022 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) ~~changes in uncertain tax positions, (b)~~ adjustments for book to income tax return provisions, ~~and (c)~~(b) a tax deduction for stock ~~compensation.~~

Our effective income tax rate for the six months ended June 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 expectedcompensation and ~~(iii) the discrete treatment of certain tax matters, primarily related to: (a) the release of a valuation allowance, (b) tax law changes,~~ (c) ~~adjustments for book to income tax return provisions, (d)~~ changes in uncertain tax ~~positions and (e) a tax deduction for stock compensation.~~positions.

See Note ~~16,~~15, “INCOME TAXES” to our unaudited interim Condensed Consolidated Financial Statements for further details.

The following table presents segment revenues, segment revenues as a percentage of total revenues, and the ~~year-over-year~~period-over-period changes in segment revenues for the ~~six~~three months ended June 30, ~~2022~~2023 and ~~2021.~~2022. The following table also presents segment profits, segment profits as a percentage of segment revenues and the ~~year-over-year~~period-over-period changes in segment profits for the ~~six~~three months ended June 30, ~~2022~~2023 and ~~2021.~~2022.


		Six Months Ended June 30,													Three Months Ended June 30,
		2022				2021				Change					2023				2022				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
Salix	Salix	$	965	25	%	$	988	24	%	$	(23)	(2)	%	Salix	$	557	26	%	$	501	25	%	$	56	11	%
International	International	477		12	%	619		14	%	(142)		(23)	%	International	259		12	%	233		12	%	26		11	%
Diversified Products		484		13	%	560		14	%	(76)		(14)	%
Solta Medical	Solta Medical	129		3	%	145		4	%	(16)		(11)	%	Solta Medical	88		4	%	57		3	%	31		54	%
Diversified														Diversified	228		11	%	235		12	%	(7)		(3)	%
Bausch + Lomb	Bausch + Lomb	1,830		47	%	$	1,815	44	%	15		1%		Bausch + Lomb	1,035		47	%	941		48	%	94		10	%
Total revenues	Total revenues	$	3,885	100	%	$	4,127	100	%	$	(242)	(6)	%	Total revenues	$	2,167	100	%	$	1,967	100	%	$	200	10	%

Segment Profits / Segment Profit Margins	Segment Profits / Segment Profit Margins													Segment Profits / Segment Profit Margins
Salix	Salix	$	676	70	%	$	697	71	%	$	(21)	(3)	%	Salix	$	386	69	%	$	354	71	%	$	32	9	%
International	International	157		33	%	212		34	%	(55)		(26)	%	International	68		26	%	66		28	%	2		3	%
Diversified Products		299		62	%	362		65	%	(63)		(17)	%
Solta Medical	Solta Medical	55		43	%	80		55	%	(25)		(31)	%	Solta Medical	45		51	%	20		35	%	25		125	%
Diversified														Diversified	138		61	%	141		60	%	(3)		(2)	%
Bausch + Lomb	Bausch + Lomb	414		23	%	452		25	%	(38)		(8)	%	Bausch + Lomb	244		24	%	208		22	%	36		17	%
Total segment profits	Total segment profits	$	1,601	41	%	$	1,803	44	%	$	(202)	(11)	%	Total segment profits	$	881	41	%	$	789	40	%	$	92	12	%

The following table presents a reconciliation of GAAP revenues to organic ~~revenue~~revenues (non-GAAP) and the ~~year-over-year~~period-over-period changes in organic revenue (non-GAAP) for the ~~six~~three months ended June 30, ~~2022~~2023 and ~~2021~~2022 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, 2022						Six Months Ended June 30, 2021						Change in Organic Revenue (Non-GAAP)					Three Months Ended June 30, 2023																Three Months Ended June 30, 2022												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				Acquisitions				Organic Revenue (Non-GAAP)				Revenue as Reported				Divestitures and Discontinuations				Organic Revenue (Non-GAAP)
(in millions)	(in millions)													Amount		Pct.		(in millions)											Amount																				Pct.
Salix	Salix	$	965	$	—	$	965	$	988	$	—	$	988	$	(23)	(2)	%	Salix			$	557			$	—			$	—			$	557			$	501			$	—			$	501			$	56			11	%
International	International	477		27		504		619		(140)		479		25		5	%	International	259				(4)				—				255				233				(4)				229				26				11	%
Diversified Products		484		—		484		560		—		560		(76)		(14)	%
Solta Medical	Solta Medical	129		—		129		145		—		145		(16)		(11)	%	Solta Medical	88				3				—				91				57				—				57				34				60	%
Diversified																		Diversified	228				—				—				228				235				—				235				(7)				(3)	%
Bausch + Lomb	Bausch + Lomb	1,830		75		1,905		1,815		(6)		1,809		96		5	%	Bausch + Lomb	1,035				18				(2)				1,051				941				(2)				939				112				12	%
Total	Total	$	3,885	$	102	$	3,987	$	4,127	$	(146)	$	3,981	$	6	—	%	Total	$	2,167			$	17			$	(2)			$	2,182			$	1,967			$	(6)			$	1,961			$	221			11	%

Salix Segment Profit

The Salix segment profit for the ~~six~~three months ended June 30, 2023 and 2022 ~~and 2021~~ was ~~$676~~$386 million and ~~$697~~$354 million, respectively, ~~a decrease~~an increase of ~~$21~~$32 million, or 3%9%. The ~~decrease~~increase was primarily driven ~~by: (i) a decrease~~by an increase in contribution ~~primarily~~ attributable to the ~~net decrease~~increase in revenues, as previously discussed, ~~and~~partially offset by higher: (i) R&D expenses, including for our global RED-C program, as previously discussed, (ii) ~~higher selling,~~ advertising and promotion ~~expenses~~ primarily ~~associated with~~due to increased Xifaxan®~~, partially offset by lower litigation costs.~~investments and (iii) selling expenses.

International Segment:

International Segment Revenue

The International segment has a diversified product line with no single product group representing 10% or more of its product sales. The International segment revenue was ~~$477~~$259 million and ~~$619~~$233 million for the three months ended June 30, 2023 and 2022, respectively, an increase of $26 million, or 11%. The increase was primarily attributable to: (i) an increase in volumes of $16 million, (ii) an increase in net realized pricing of $10 million and (iii) the favorable impact of foreign currencies of $4 million, partially offset by the impact of divestitures and discontinuations of $4 million. Revenues for the three months ended June 30, 2022, also reflect charges of $11 million representing a change in the estimated future returns in one market, driven by lower estimated demand following the easing of local COVID-19 lockdown restrictions as well as a change in distributors.

International Segment Profit

Solta Medical Segment:

Solta Medical Segment Revenue

Solta Medical Segment Profit

Diversified Segment:

Diversified Segment Revenue

Diversified Segment Profit

Bausch + Lomb Segment:

Bausch + Lomb Segment Revenue

Bausch + Lomb Segment Profit

Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022

Revenues

Our revenue was $4,111 million and $3,885 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $226 million, or 6%. The increase was primarily due to: (i) an increase in volumes of $222 million attributable to our Bausch + Lomb, Salix, Solta Medical and International segments, (ii) an increase in net realized pricing of $68 million in the Bausch + Lomb, International, Salix and Solta Medical segments and (iii) incremental sales attributable to acquisitions of $4 million, partially offset by: (i) the unfavorable impact of foreign currencies of $57 million, primarily in Asia and Europe and (ii) the impact of divestitures and discontinuations of $11 million.

Cash Discounts and Allowances, Chargebacks and Distribution Fees

Provisions recorded to reduce gross product sales to net product sales and revenues for the six months ended June 30, 2023 and 2022 were as follows:


	Six Months Ended June 30,
	2023				2022
(in millions)	Amount		Pct.		Amount		Pct.
Gross product sales	$	6,920	100.0	%	$	6,545	100.0	%
Provisions to reduce gross product sales to net product sales
Discounts and allowances	297		4.3	%	278		4.2	%
Returns	79		1.1	%	60		0.9	%
Rebates	1,364		19.7	%	1,236		18.9	%
Chargebacks	989		14.3	%	1,028		15.7	%
Distribution fees	123		1.8	%	108		1.7	%
Total provisions	2,852		41.2	%	2,710		41.4	%
Net product sales	4,068		58.8	%	3,835		58.6	%
Other revenues	43				50
Revenues	$	4,111			$	3,885

Cash discounts and allowances, returns, rebates, chargebacks and distribution fees as a percentage of gross product sales were 41.2% and 41.4% for the six months ended June 30, 2023 and 2022, respectively, a decrease of 0.2 percentage points and includes:

•rebates as a percentage of gross product sales were higher primarily due to an increase in gross product sales and higher rebate rates for certain branded products such as Xifaxan®, Trulance®, Jublia® and Arazlo®, partially offset by lower gross product sales for certain branded products such as Retin-A® Microsphere .06%, Retin-A® Cream and Retin-A® Microsphere .08%;

•chargebacks as a percentage of gross product sales were lower primarily due to lower gross product sales of certain generic products such as Nifediac and certain branded generics such as Apriso® AG, Targretin® AG, Syprine® AG and Cuprimine® AG. These decreases were partially offset by: (i) increased gross product sales of our GI products Xifaxan® and Glumetza® SLX and (ii) higher chargeback rates for certain generics and branded generics; and

•distribution service fees as a percentage of gross product sales were higher primarily due to higher gross product sales of certain branded products such as Xifaxan® and Trulance®. Price appreciation credits are offset against distribution service fees when due to wholesalers. There were no price appreciation credits for the six months ended June 30, 2023 and 2022.

Expenses

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

Cost of goods sold was $1,212 million and $1,104 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $108 million, or 10%. The increase was primarily driven by: (i) the increase in volumes as previously discussed, and (ii) charges related to the Injector recall, as previously discussed, partially offset by: (i) lower unfavorable manufacturing variances and (ii) the favorable impact of foreign currencies.

Cost of goods sold as a percentage of product sales revenue was 29.8% and 28.8% for the six months ended June 30, 2023 and 2022, respectively, an increase of 1.0 percentage points. Costs of goods sold as a percentage of Product sales

revenue was unfavorably impacted by: (i) changes in product mix and (ii) inflationary pressures, partially offset by higher net realized pricing, as discussed above.

Selling, General and Administrative Expenses

SG&A expenses were $1,436 million and $1,298 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $138 million, or 11%. The increase was primarily attributable to higher: (i) selling, advertising and promotion expenses, (ii) compensation and (iii) certain administrative expenses, due in part to incremental costs associated with the separation of certain functions in connection with the B+L Separation. These increases were partially offset by: (i) lower professional fees and (ii) the favorable impact of foreign currencies.

Research and Development

R&D expenses were $299 million and $254 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $45 million, or 18%. R&D expenses as a percentage of Product sales were approximately 7% for each of the six months ended June 30, 2023 and 2022. The increase was primarily due to higher spend on certain Salix projects.

Amortization of Intangible Assets

Amortization of intangible assets was $542 million and $612 million for the six months ended June 30, 2023 and 2022, respectively, a decrease of $70 million, or 11%. The decrease was primarily attributable to fully amortized intangible assets no longer being amortized in 2023.

See Note 8, “INTANGIBLE ASSETS AND GOODWILL” to our unaudited interim Condensed Consolidated Financial Statements for further details related to our intangible assets.

Goodwill Impairments

There were no goodwill impairments for the six months ended June 30, 2023. Goodwill impairments for the six months ended June 30, 2022, were $83 million.

As previously discussed, the Company believed that increases in interest rates and other macroeconomic factors during the three months ended June 30, 2022, impacted key assumptions used to value the Dermatology reporting unit at March 31, 2022 (the last time goodwill of the Dermatology reporting unit was tested) and therefore the Company performed a quantitative fair value test for the reporting unit. Based on the quantitative fair value test, the carrying value of the Dermatology reporting unit exceeded its fair value at June 30, 2022, and we recognized a goodwill impairment of $83 million.

See Note 8, “INTANGIBLE ASSETS AND GOODWILL” to our unaudited interim Condensed Consolidated Financial Statements for further details related to our goodwill.

Asset impairments

Asset impairments were $50 million and $14 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $36 million. Asset impairments for the six months ended June 30, 2023 includes: (i) impairments of $37 million to the intangible assets associated with Uceris® Foam product related intangible assets, as previously discussed, (ii) impairments of $8 million, in aggregate, attributable to certain trade names no longer in use and (iii) impairments of $5 million, in aggregate, related to the discontinuance of certain product lines.

Asset impairments for the six months ended June 30, 2022 include: (i) impairments of $10 million, in aggregate, due to decreases in forecasted sales of certain product lines and (ii) impairments of $4 million, in aggregate, related to the discontinuance of certain product lines.

See Note 8, “INTANGIBLE ASSETS AND GOODWILL” to our unaudited interim Condensed Consolidated Financial Statements for further details related to our intangible assets.

Restructuring, Integration, Separation and IPO Costs

Restructuring, integration, separation and IPO costs were $26 million and $48 million for the six months ended June 30, 2023 and 2022, respectively, a decrease of $22 million.

Restructuring and Integration Costs

Restructuring and integration costs were $25 million for each of the six months ended June 30, 2023 and 2022. 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 $1 million and $23 million for the six months ended June 30, 2023 and 2022, respectively. The extent and timing of future charges of these costs to complete the B+L Separation cannot be reasonably estimated at this time and could be material.

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

Other (Income) Expense, Net

Other (income) expense, net for the six months ended June 30, 2023 and 2022 consists of the following:


	Six Months Ended June 30,
(in millions)	2023		2022
Litigation and other matters	$	(79)	$	7
Acquisition-related contingent consideration	14		(2)
Loss (Gain) on sale of assets, net	1		(3)
Acquired in-process research and development costs	—		1
Acquisition-related transaction costs	3		—
Other, Net	1		(1)
	$	(60)	$	2

For the six months ended June 30, 2023, the Litigation and other matters primarily relates to insurance recoveries associated with certain legacy litigation matters.

As a result of revisions to an existing royalty agreement of certain branded products during the six months ended June 30, 2023, the Company has revised its long-term sales forecast for those products. Acquisition-related contingent consideration for the six months ended June 30, 2023, primarily includes adjustments to reflect the reduction in estimates of the future royalty payments related to those branded products.

Non-Operating Income and Expense

Interest Expense

Interest expense was $626 million and $772 million and included non-cash amortization and write-offs of debt premiums, discounts and deferred issuance costs of $23 million and $64 million for the six months ended June 30, 2023 and 2022, respectively. Interest expense decreased $146 million, or 19%, primarily due to: (i) the accounting for contractual interest payments on the New Secured Notes, portions of which are recorded as a reduction of related premiums and not as interest expense, which had the impact of reducing interest expense by $148 million relative to contractual interest cost and (ii) the impact of lower outstanding debt balances in 2023 as compared to 2022, partially offset by higher interest rates.

The weighted average stated rate of interest as of June 30, 2023 and 2022 was 7.91% and 6.34%, respectively. The increase in the weighted average stated rate of interest of 157 bps is primarily attributable to the New Secured Notes and higher interest rates on our variable rate debt. Due to the accounting treatment for the New Secured Notes, interest expense in the Company’s financial statements will not be representative of the weighted average stated rate of interest.

Gain on Extinguishment of Debt

The gain on extinguishment of debt was $0 and $113 million for the six months ended June 30, 2023 and 2022, respectively.

The gain on extinguishment of debt for the six months ended June 30, 2022 includes $176 million of gains associated with the early retirement of senior unsecured notes as previously discussed, partially offset by $63 million of losses associated with the refinancing and modification to certain debt obligations completed in connection with the B+L IPO and represents the differences between the amounts paid to settle the extinguished debt and its carrying value.

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

Foreign Exchange and Other

Foreign exchange and other was a loss of $31 million and $3 million for the six months ended June 30, 2023 and 2022, respectively, an unfavorable net change of $28 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

Provision for income taxes was $125 million for the six months ended June 30, 2023 as compared to a Benefit from income taxes of $6 million for the six months ended June 30, 2022, an unfavorable change of $131 million. Our effective income tax rate for the six months ended June 30, 2023 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 provision generated from our annualized mix of earnings by jurisdiction and ~~2021,~~(iii) the discrete treatment of certain tax matters, primarily related to: (a) final and potential settlements of various tax audits accrued in the six months ended June 30, 2023, (b) changes in uncertain tax positions, (c) income tax expense associated with the establishment of a valuation allowance against deferred tax assets of B+L’s Canadian parent and (d) income tax expense associated with stock compensation.

Our effective income tax rate for the six months ended June 30, 2022 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) changes in uncertain tax positions, (b) adjustments for book to income tax return provisions and (c) a tax deduction for stock compensation.

See Note 15, “INCOME TAXES” to our unaudited interim Condensed 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 months ended June 30, 2023 and 2022. 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 months ended June 30, 2023 and 2022.


	Six Months Ended June 30,
	2023				2022				Change
(in millions)	Amount		Pct.		Amount		Pct.		Amount		Pct.
Segment Revenues
Salix	$	1,053	26	%	$	965	25	%	$	88	9	%
International	506		12	%	477		12	%	29		6	%
Solta Medical	161		4	%	129		3	%	32		25	%
Diversified	425		10	%	484		13	%	(59)		(12)	%
Bausch + Lomb	1,966		48	%	1,830		47	%	136		7	%
Total revenues	$	4,111	100	%	$	3,885	100	%	$	226	6	%

Segment Profits / Segment Profit Margins
Salix	$	700	66	%	$	676	70	%	$	24	4	%
International	145		29	%	157		33	%	(12)		(8)	%
Solta Medical	81		50	%	55		43	%	26		47	%
Diversified	245		58	%	299		62	%	(54)		(18)	%
Bausch + Lomb	455		23	%	414		23	%	41		10	%
Total segment profits	$	1,626	40	%	$	1,601	41	%	$	25	2	%

The following table presents organic revenue (non-GAAP) and the year-over-year changes in organic revenue (non-GAAP) for the six months ended June 30, 2023 and 2022 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, 2023								Six Months Ended June 30, 2022						Change in Organic Revenue (Non-GAAP)
	Revenue as Reported		Changes in Exchange Rates		Acquisitions		Organic Revenue (Non-GAAP)		Revenue as Reported		Divestitures and Discontinuations		Organic Revenue (Non-GAAP)
(in millions)															Amount		Pct.
Salix	$	1,053	$	—	$	—	$	1,053	$	965	$	—	$	965	$	88	9	%
International	506		2		—		508		477		(7)		470		38		8	%
Solta Medical	161		6		—		167		129		—		129		38		29	%
Diversified	425		—		—		425		484		—		484		(59)		(12)	%
Bausch + Lomb	1,966		49		(4)		2,011		1,830		(4)		1,826		185		10	%
Total	$	4,111	$	57	$	(4)	$	4,164	$	3,885	$	(11)	$	3,874	$	290	7	%

Salix Segment:

Salix Segment Revenue

The Salix segment includes the Xifaxan® product line. Revenues from our Xifaxan® product line accounted for approximately 80% of the Salix segment revenues for each of the six months ended June 30, 2023 and 2022. No other single product group represents 10% or more of the Salix segment product sales. The Salix segment revenue for the six months ended June 30, 2023 and 2022 was $1,053 million and $965 million, respectively, ~~a decrease~~an increase of ~~$142~~$88 million, or ~~23%~~9%. The ~~decrease~~increase was primarily attributable to increases in: (i) volumes of $75 million, primarily driven by Xifaxan® and (ii) net realized pricing of $13 million.

Salix Segment Profit

The Salix segment profit for the six months ended June 30, 2023 and 2022 was $700 million and $676 million, respectively, an increase of $24 million, or 4%. The increase was primarily driven by an increase in contribution attributable to the increase in revenues, as previously discussed, partially offset by higher: (i) R&D expenses, including for our global RED-C program, as previously discussed, (ii) advertising and promotion primarily due to increased Xifaxan® investments and (iii) selling expenses.

International Segment:

International Segment Revenue

The International segment has a diversified product line with no single product group representing 10% or more of its product sales. The International segment revenue was $506 million and $477 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $29 million, or 6%. The increase was primarily attributable to: (i) an increase in net realized pricing of $21 million and (ii) an increase in volumes of $17 million, partially offset by: (i) the impact of divestitures and discontinuations of ~~$140~~$7 million ~~primarily attributable to our divestiture of Amoun on July 26, 2021~~ and (ii) the unfavorable impact of foreign currencies of ~~$27~~$2 million, primarily in Canada and Europe. ~~This decrease was partially offset by: (i) an increase in net realized pricing~~Revenues for the six months ended June 30, 2022, also reflect charges of ~~$16 million and (ii) an increase in volumes of $9 million. The increase in volumes is primarily attributable to Europe and was partially offset by charges for approximately~~ $11 million ~~of returns in connection with a change in certain distribution agreements~~ representing a change in estimated future returns in one market, driven by lower estimated demand following the easing of local COVID-19 lockdown restrictions as well as a change ofin distributors.

International Segment Profit

The International segment profit for the six months ended June 30, 2023 and 2022 ~~and 2021~~ was ~~$157~~$145 million and ~~$212~~$157 million, respectively, a decrease of ~~$55~~$12 million, or ~~26%~~8%. The decrease was primarily ~~driven by the decrease in contribution primarily~~ attributable to ~~the impact of the divestiture of Amoun on July 26, 2021 partially offset by the increases net realized pricing, as previously discussed.~~

~~Diversified Products Segment:~~

~~Diversified Products Segment Revenue~~

~~The Diversified Products segment revenue for the six months ended June 30, 2022~~an increase in: (i) General and ~~2021 was $484 million and $560 million, respectively, a decrease of $76 million, or 14%. The decrease was primarily driven by: (i) a decrease in net realized pricing of $3 million~~administrative expenses and (ii) ~~a decrease in volume of $73 million. The decrease in volume was primarily attributable to our Neurology~~advertising and ~~Other business, including: (i) decreases in Ativan~~®~~, Mysoline~~® ~~and Pepcid~~® ~~attributable to the favorable impact of mail order programs in 2021 not recurring in 2022, (ii) a decrease in Wellbutrin~~® ~~attributable to a decrease in demand and the unfavorable impacts of inventory rebalancing by our distributors and (iii) the impacts of more generic competitors.~~

~~Diversified Products Segment Profit~~

The Diversified Products segment profit for the six months ended June 30, 2022 and 2021 was $299 million and $362 million, respectively, a decrease of $63 million, or 17% and was primarily driven by the decrease in revenues, as previously discussed.promotion expenses.

Solta Medical Segment:

Solta Medical Segment Revenue

The Solta Medical segment includes the Thermage® product line, which accounted for approximately ~~74%~~81% and 73% of the Solta Medical segment revenues for the six months ended June 30, ~~2022.~~2023 and 2022, respectively. No other single product group represents 10% or more of the Solta Medical segment revenues. The Solta Medical segment revenue for the six months ended June 30, 2023 and 2022 was $161 million and ~~2021 was~~ $129 million, ~~and $145 million,~~ respectively, ~~a decrease~~an increase of ~~$16~~$32 million, or ~~11%~~25%. The ~~decrease~~increase was ~~primarily~~ attributable ~~to a decrease~~to: (i) an increase in ~~volume~~volumes of ~~$25~~$36 million ~~primarily driven by the impact of the COVID-19 pandemic in China partially offset by~~and (ii) an increase in net realized pricing of $9$2 million, partially offset by the unfavorable impact of foreign currencies of $6 million. The increase in volumes is attributable in part

Bausch + Lomb Segment:

Bausch + Lomb Segment Revenue

The Bausch + Lomb segment revenue was ~~$1,830~~$1,966 million and ~~$1,815~~$1,830 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, an increase of ~~$15~~$136 million, or 1%7.0%. The increase was primarily attributable to: (i) an increase in volumes across ~~all of our~~the Bausch + Lomb businesses of ~~$88~~$126 million, ~~and~~(ii) an increase in net realized pricing of ~~$8 million. The increase in volumes was primarily driven by: (i) our Vision Care business, primarily attributable to: (a) increased demand for certain consumer eye health products including Lumify~~®~~, Biotrue~~® ~~and PreserVision~~® and (b) the impact of a quality issue in 2021 related to a third-party supplier of sterilization services for certain lens care solution bottles and caps, as previously discussed, and (ii) increased demand of consumables and intraocular lenses within our Surgical business, partially offset by a decrease in volume in our international contact lens business,$59 million, primarily driven by the ~~impact~~Vision Care business and (iii) incremental sales attributable to acquisitions of $4 million within the ~~COVID-19 pandemic~~Surgical business. The increase in ~~China. These increases were~~revenue was partially offset by: (i) the unfavorable impact of foreign currencies ~~across all Bausch + Lomb’s international businesses~~ of ~~$75~~$49 million, primarily in Europe and Asia and (ii) the impact of divestitures and discontinuations of ~~$6 million, related to the discontinuation of certain products.~~$4 million.

Bausch + Lomb Segment Profit

The Bausch + Lomb segment profit for the six months ended June 30, 2023 and 2022 was $455 million and ~~2021 was~~ $414 million, ~~and $452 million,~~ respectively, ~~a decrease~~an increase of ~~$38~~$41 million, or 8%10%. The ~~decrease~~increase was primarily driven ~~by: (i)~~by higher ~~SG&A expenses within U.S. Consumer and Surgical, (ii) the unfavorable impact of foreign currencies and (iii) higher manufacturing variances, primarily as a result of inflationary pressures related~~contribution, attributable to certain manufacturing costs, partially offset by the impact of manufacturing variances incurred in 2021 related to a quality issue at a third-party supplier, as previously discussed. These decreases were partially offset by the increase in revenues, as previously ~~discussed.~~discussed, partially offset by: (i) increased cost of goods sold, driven by inflationary pressures and higher manufacturing ramp-up costs of Daily SiHy lenses, (ii) selling expenses attributable to increased headcount and distribution costs and (iii) higher advertising and promotional expenses.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows


		Six Months Ended June 30,							Six Months Ended June 30,
(in millions)	(in millions)	2022		2021		Change		(in millions)	2023		2022		Change
Net loss	Net loss	$	(205)	$	(1,200)	$	995	Net loss	$	(182)	$	(205)	$	23
Adjustments to reconcile net loss to net cash provided by operating activities	Adjustments to reconcile net loss to net cash provided by operating activities	370		1,867		(1,497)		Adjustments to reconcile net loss to net cash provided by operating activities	806		370		436
Cash provided by operating activities before changes in operating assets and liabilities	Cash provided by operating activities before changes in operating assets and liabilities	165		667		(502)		Cash provided by operating activities before changes in operating assets and liabilities	624		165		459
Changes in operating assets and liabilities	Changes in operating assets and liabilities	(105)		171		(276)		Changes in operating assets and liabilities	(264)		(105)		(159)
Net cash provided by operating activities	Net cash provided by operating activities	60		838		(778)		Net cash provided by operating activities	360		60		300
Net cash used in investing activities	Net cash used in investing activities	(114)		(99)		(15)		Net cash used in investing activities	(108)		(114)		6
Net cash used in financing activities	Net cash used in financing activities	(162)		(631)		469		Net cash used in financing activities	(262)		(162)		(100)
Effect of exchange rate on cash and cash equivalents and other		(24)		(6)		(18)
Net increase in cash, cash equivalents, restricted cash and other settlement deposits		(240)		102		(342)
Effect of exchange rate changes on cash, cash equivalents and other								Effect of exchange rate changes on cash, cash equivalents and other	7		(24)		31
Net decrease in cash, cash equivalents, restricted cash and other settlement deposits								Net decrease in cash, cash equivalents, restricted cash and other settlement deposits	(3)		(240)		237
Cash, cash equivalents, restricted cash and other settlement deposits, beginning of period	Cash, cash equivalents, restricted cash and other settlement deposits, beginning of period	2,119		1,816		303		Cash, cash equivalents, restricted cash and other settlement deposits, beginning of period	591		2,119		(1,528)
Cash, cash equivalents, restricted cash and other settlement deposits, end of period	Cash, cash equivalents, restricted cash and other settlement deposits, end of period	$	1,879	$	1,918	$	(39)	Cash, cash equivalents, restricted cash and other settlement deposits, end of period	$	588	$	1,879	$	(1,291)

Changes in operating assets and liabilities resulted in a net decrease in cash of $264 million for the six months ended June 30, 2023, as compared to $105 million for the six months ended June 30, 2022, ~~as compared to~~ a ~~net increase~~decrease of ~~$171 million for~~$159 million. During the six months ended June 30, ~~2021, respectively,~~2023, Changes in operating assets and liabilities were negatively impacted by: (i) a decrease in inventories of ~~$276~~$160 million and (ii) the timing of other payments in the ordinary course of business of $159 million, partially offset by the timing of collection of trade receivables of $55 million. During the six months ended June 30, 2022, Changes in operating assets and liabilities was positively impacted by: (i) an increase in inventories of $138 million and (ii) the timing of other payments in the ordinary course of business of $74 million, partially offset by the collection of trade receivables of $107 million. During the six months ended June 30, 2021, Changes in operating assets and liabilities was positively impacted by: (i) the timing of other payments in the ordinary course of business of $254 million and (ii) an increase in accrued interest due to timing of payments of $12 million and was partially offset by: (i) an increase in trade receivables of $48 million and (ii) an increase in inventories of $47 million.

Investing Activities

Net cash used in investing activities was $108 million for the six months ended June 30, 2023 and was primarily driven by Purchases of property, plant and equipment of $75 million and acquisitions and other investments of $31 million.

Net cash used in investing activities was $114 million for the six months ended June 30, 2022 and was primarily driven by Purchases of property, plant and equipment of $98 million.

Financing Activities

Net cash used in ~~investing~~financing activities was ~~$99~~$262 million for the six months ended June 30, ~~2021~~2023 and was primarily driven by ~~Purchases~~the repayment of ~~property, plant~~long-term debt of $690 million which includes: (i) the repayment of $480 million of amounts outstanding under our 2027 Revolving Credit Facility, (ii) the $134 million of contractual interest payments on the New Secured Notes allocated to the reduction of the recorded premiums, as discussed above, and ~~equipment~~(iii) payments of ~~$128~~$75 million on

the Term Loan B Facilities, partially offset ~~by: (i) Proceeds from sale~~by draws of ~~assets~~$455 million under the 2027 Revolving Credit Facility and ~~businesses, net of costs to sell of $25 million and (ii) Interest settlements from cross-currency swaps of $11 million.~~

~~Financing Activities~~the B+L Revolving Credit Facility.

Net cash used in financing activities was $162 million for the six months ended June 30, 2022 and was primarily driven by: (i) the issuance of long-term debt, net of discounts, of $6,320 million related to the February 2027 Secured Notes, 2027 Term Loan B Facility, draws on the 2027 Revolving Credit Facility and the B+L Term Loan Facility and (ii) net proceeds from the B+L IPO of $675 million, partially offset by the repayment of long-term debt of $7,083 million related to: (i) the repayment of the outstanding balance under our 2023 Revolving Credit Facility, (ii) the repayment of the outstanding balance of our 6.125% Senior Unsecured Notes, (iii) the repayment of the outstanding balances under our 2025 Term Loan B Facilities and (iv) the repurchase and retirement of certain outstanding Senior Secured Notes in the open market with an aggregate par value of $481 million for approximately $300 million.

Net cash used in financing activities was $631 million for the six months ended June 30, 2021 and was primarily driven by the repayments of debt of $2,100 million which consisted of: (i) $1,600 million of 7.00% Senior Secured Notes due 2024 as part of the 2021 Refinancing Transactions and (ii) the aggregate prepayments of $500 million of Senior Secured and Senior Unsecured Notes using cash on hand and cash from operations. Issuance of long-term debt, net of discounts of $1,579 million primarily includes the proceeds of $1,583 million from the issuance of $1,600 million in principal amount of 4.875% Senior Secured Notes due June 2028.

See Note 10, “FINANCING ARRANGEMENTS” to our unaudited interim Condensed Consolidated Financial Statements for additional information regarding the financing activities described above, including the definitions of certain defined terms used 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 and AR Credit Facility, issuances of long-term debt and issuances of equity ~~and~~or 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, repurchase or ~~repurchase~~exchange existing debt or issue equity or equity-linked securities.

Cash, cash equivalents and restricted cash ~~and other settlements~~ as presented in the Condensed Consolidated Balance Sheet as of June 30, ~~2022~~2023 includes ~~$446~~$392 million of cash, cash equivalents and restricted cash held by legal entities of Bausch + ~~Lomb of which approximately $92 million was due to be distributed to other legal entities owned by the Company in connection with the B+L Separation.~~Lomb. Cash ~~otherwise~~ held by Bausch + Lomb legal entities and any future cash from the ~~operations,~~operating, investing and financing activities of Bausch + Lomb is expected to be retained by Bausch + Lomb entities and are generally not available to support the operations, investing and financing activities of other legal entities, including Bausch ~~+ Lomb’s parent company~~Health unless paid as a dividend which would be determined by the Board of Directors of Bausch + Lomb and paid pro rata to Bausch + Lomb’s shareholders.

Long-term Debt

Long-term debt, net of unamortized premiums, discounts and issuance costs was ~~$21,814~~$20,552 million and ~~$22,654~~$20,766 million as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Aggregate contractual principal amounts due under our debt obligations were ~~$22,056~~$19,010 million and ~~$22,870~~$19,110 million as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, a decrease of ~~$814~~$100 million.

See Note 10, “FINANCING ARRANGEMENTS” to our unaudited interim Condensed Consolidated Financial Statements for additional information regarding long term debt.

Accounting for the Exchange Offer

The ~~decrease~~Company performed an assessment of the Exchange Offer and determined that it met the criteria to be accounted for as a troubled debt restructuring under Accounting Standards Codification 470-60. As a result of the application of this accounting, the difference between the principal amount of the New Secured Notes and their carrying value was recorded as a premium and is ~~attributable~~included in long-term debt on the Company’s Condensed Consolidated Balance Sheet.

The original premium recorded on the New Secured Notes was $1,835 million, which will be reduced as contractual interest payments are made on the New Secured Notes. The portion of each contractual interest payment allocated to reduce the ~~debt repayments~~recorded premium is determined as ~~previously discussed under, under “— Liquidity~~the difference between the payment due and ~~Capital Resources — Cash Flows — Financing Activities” during~~the calculated interest at the effective interest rate of the underlying carry amount of the associated note. During the six months ended June 30, ~~2022.~~

~~Senior Secured Credit Facilities~~

~~Senior Secured Credit Facilities under the 2018 Restated Credit Agreement~~

~~On June 1, 2018,~~2023, the Company ~~and certain~~made contractual interest payments 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$155 million related to the ~~Restated Credit Agreement, dated~~New Secured Notes, of which $134 million was recorded as ~~of November 27, 2018 (the “2018 Restated Credit Agreement”) with~~ a syndicate of financial institutions and investors as lenders. Prior to the 2022 Amended Credit Agreement (as defined below), the 2018 Restated Credit Agreement provided for a revolving credit facility of $1,225 million, maturing on the earlier of June 1, 2023 and the date that is 91 calendar days prior to the scheduled maturity of indebtedness for borrowed moneyreduction 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.

~~Senior Secured Credit Facilities under the 2022 Amended Credit Agreement~~

On May 10, 2022, the Company and certain of its subsidiaries as guarantors entered into a Second Amendment (the “Second Amendment”) to the Fourth Amended and Restated Credit and Guaranty Agreement (as amended by the Second Amendment, the “2022 Amended Credit Agreement”). The 2022 Amended Credit Agreement provides for a new term loan facility with an aggregate principal amount of $2,500 million (the “2027 Term Loan B Facility”) maturing on February 1, 2027 and a new revolving credit facility of $975 million (the “2027 Revolving Credit Facility”) that will mature on the earlier of February 1, 2027 and the date that is 91 calendar days prior to the scheduled maturity of indebtedness for borrowed money of the Company and BHA in an aggregate principal amount in excess of $1,000 million. Borrowings under the 2027 Revolving Credit Facility can be made in U.S. dollars, Canadian dollars or Euros. After giving effect to the Second Amendment, the 2023 Revolving Credit Facility, June 2025 Term Loan B Facility and November 2025 Term Loan B Facility were refinanced (such refinancing, the “Credit Agreement Refinancing”), along with certain of the Company’s existing senior notes, using net proceeds from the borrowings under the 2027 Term Loan B Facility, the B+L IPO and the B+L Debt Financing (as defined below) and available cash on hand. As of June 30, 2022, the Company had drawn $425 million on the 2027 Revolving Credit Facility.

Borrowings under the 2027 Term Loan B Facility bear interest at a rate per annum equal to, at the Company’s option, either: (a) a forward-looking term rate determined by reference to the financing rate for borrowing U.S. dollars overnight collateralized by U.S. Treasury securities (“term SOFR rate”) for the interest period relevant to such borrowingor (b) a base rate determined by reference to the highest of: (i) the prime rate (as defined in the 2022 Amended Credit Agreement), (ii) the federal funds effective rate plus 1/2 of 1.00% and (iii) the term SOFR rate for a period of one month plus 1.00% (or if such rate shall not be ascertainable, 1.50%) (provided, however, that the term SOFR rate with respect to the 2027 Term Loan B Facility shall at no time be less than 0.50% per annum), in each case, plus an applicable margin. Borrowings under the 2027 Revolving Credit Facility in: (i) U.S. dollars bear interest at a rate per annum equal to, at the Company’s option, either: (a) the term SOFR rate (provided, however, that the term SOFR rate with respect to the 2027 Revolving Credit Facility shall at no time be less than 0.00% per annum) or (b) a base rate determined by reference to the highest of: (x) the prime rate (as defined in the 2022 Amended Credit Agreement), (y) the federal funds effective rate plus 1/2 of 1.00% or (z) the term SOFR rate for a period of one month plus 1.00%, (ii) Canadian dollars bear interest at a rate per annum equal to, at the Company’s option, either: (a) 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) or (b) a prime rate determined by reference to the higher of: (x) 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 (y) the one month BA rate calculated daily plus 1.00% (provided, however, that the prime rate shall at no time be less than 0.00% per annum) and (iii) euros bear interest at a rate per annum equal to a term benchmark rate determined by reference to the cost of funds for euro deposits (“EURIBOR”) for the interest period relevant to such borrowing (provided, however, that such rate, shall at no time be less than 0.00% per annum in each case, plus an applicable margin). Term SOFR rate loans are subject to a credit spread adjustment ranging from 0.10%-0.25%.recorded premium.

The ~~applicable~~following table presents the future scheduled contractual interest ~~rate margin for borrowings under~~payments of the ~~2027 Term Loan B Facility is 5.25% for term SOFR rate loans and 4.25% for U.S. dollar base rate loans. The applicable~~New Secured Notes. Contractual interest rate margin for borrowings under the 2027 Revolving Credit Facility ranges from 4.75% to 5.25% for term SOFR rate loans, BA rate loans and EURIBOR loans and 3.75% to 4.25% for U.S. dollar base rate loans and Canadian prime rate loans.

~~In addition, the Company is required to pay commitment fees of 0.25%-0.50% per annum with respect~~payments will be allocated to the ~~unutilized commitments under~~reduction of the ~~2027 Revolving Credit Facility, payable quarterly in arrears.~~recorded premium and interest expense as presented below. The ~~Company also is required to pay: (i) letter~~amount of ~~credit fees on~~interest which reduces the ~~maximum amount available to~~recorded premium will be ~~drawn under all outstanding letters of credit in an amount equal to the applicable margin on term SOFR rate borrowings under the 2027 Revolving Credit Facility on~~reported as a ~~per annum basis, payable quarterly in arrears, (ii) customary fronting fees for the issuance of letters of credit and (iii) agency fees.~~

~~Subject to certain exceptions and customary baskets set forth~~financing activity in the ~~2022 Amended Credit Agreement, the Company is required to make mandatory prepayments~~Condensed Consolidated Statements 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 thresholds), (ii) 100% of the net cash proceeds from the incurrence of debt (other than permitted debt as described in the 2022 Amended Credit Agreement), (iii) 50% of Excess Cash Flow (as defined in the 2022 Amended Credit Agreement) subject to decrease based on leverage ratios and subject to a threshold amount and (iv) 100% of net cash proceeds from asset sales (subject to reinvestment rights, and net proceeds thresholds). These mandatory prepayments may be used to satisfy future amortization.Flows.

The amortization rate for the 2027 Term Loan B Facility is 5.00% per annum, or $125 million, payable in quarterly installments beginning on September 30, 2022. The Company may direct that prepayments be applied to such amortization payments in order of maturity. As of June 30, 2022, the remaining mandatory quarterly amortization payments for the 2027 Term Loan B Facility were $563 million through December 2026.

The 2022 Amended Credit Agreement provides that Bausch + Lomb shall initially be a “restricted” subsidiary subject to the terms of the 2022 Amended Credit Agreement covenants, but does not require Bausch + Lomb to guarantee the obligations under the 2022 Amended Credit Agreement. The 2022 Amended Credit Agreement permits the Company to designate Bausch + Lomb as an “unrestricted” subsidiary under the 2022 Amended Credit Agreement and no longer subject to the terms of the covenants thereunder provided that no event of default is continuing or will result from such designation and the total leverage ratio of Remainco (as defined in the 2022 Amended Credit Agreement) will not be greater than 7.60:1.00 on a pro forma basis. The Credit Agreement Refinancing contains provisions designed to facilitate the B+L Separation.

~~Senior Secured Credit Facilities under the B+L Credit Agreement~~

On May 10, 2022, Bausch + Lomb entered into a credit agreement (the “B+L Credit Agreement”, and the credit facilities thereunder, the “B+L Credit Facilities”) providing for term loans of $2,500 million with a five-year term to maturity (the “B+L Term Facility”) and a five-year revolving credit facility of $500 million (the “B+L Revolving Credit Facility” and such financing, the “B+L Debt Financing”). The B+L Credit Facilities are secured by substantially all of the assets of Bausch + Lomb and its material, wholly-owned Canadian, U.S., Dutch and Irish subsidiaries, subject to certain exceptions. The term loans are denominated in U.S. dollars, and borrowings under the revolving credit facility will be made available in U.S. dollars, euros, pounds sterling and Canadian dollars. As of June 30, 2022, the B+L Revolving Credit Facility remains undrawn.

Borrowings under the B+L Revolving Credit Facility in: (i) U.S. dollars bear interest at a rate per annum equal to, at Bausch + Lomb’s option, either: (a) the term SOFR rate for the interest period relevant to such borrowing or (b) a base rate, determined by reference to the highest of: (i) the prime rate (as defined in the B+L Credit Agreement), (ii) the federal funds effective rate plus 1/2 of 1.00% and (iii) the term SOFR rate for a period of one month plus 1.00% (or if such rate shall not be ascertainable, 1.00%) (provided, however, that the term SOFR rate with respect to the B+L Revolving Credit Facility shall at no time be less than 0.00% per annum), (ii) Canadian dollars bear interest at a rate per annum equal to, at Bausch + Lomb’s option, either: (a) 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) or (b) prime rate determined by reference to the higher of: (x) 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 (y) the one month BA rate calculated

daily plus 1.00% (provided, however, that the prime rate shall at no time be less than 0.00% per annum), (iii) euros bear interest at a rate per annum equal to EURIBOR for the interest period relevant to such borrowing (provided, however, that such rate shall at no time be less than 0.00% per annum) and (iv) pounds sterling bear interest at a rate per annum equal to the effective overnight interest rate for unsecured transaction in the Sterling Overnight Index Average (“SONIA”) (provided, however, that such rate, shall at no time be no less than 0.00% per annum, in each case, plus an applicable margin. Term SOFR rate loans are subject to a credit spread adjustment of 0.10% and sterling loans are subject to a credit spread adjustment of 0.0326%.

The applicable interest rate margins for borrowings under the B+L Revolving Credit Facility are: (i) between 0.75% to 1.75% with respect to U.S. dollar base rate or Canadian dollar prime rate borrowings and between 1.75% to 2.75% with respect to term SOFR rate, EURIBOR, SONIA or BA rate borrowings based on Bausch + Lomb’s total net leverage ratio and (ii) after: (x) Bausch + Lomb’s senior unsecured non-credit-enhanced long term indebtedness for borrowed money receives an investment grade rating from at least two of S&P, Moody’s and Fitch and (y) the B+L Term Loan Facility has been repaid in full in cash (the “IG Trigger”), between 0.015% to 0.475% with respect to U.S. dollar base rate or Canadian dollar prime rate borrowings and between 1.015% to 1.475% with respect to term SOFR rate, EURIBOR, SONIA or BA rate borrowings based on Bausch + Lomb’s debt rating. In addition, Bausch + Lomb is required to pay commitment fees of 0.25% per annum in respect of the unutilized commitments under the B+L Revolving Credit Facility, payable quarterly in arrears until the IG Trigger and a facility fee between 0.110% to 0.275% of the total revolving commitments, whether used or unused, based on Bausch + Lomb’s debt rating and payable quarterly in arrears. Bausch + Lomb is also required to pay 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 term SOFR rate borrowings under the B+L Revolving Credit Facility on a per annum basis, payable quarterly in arrears, as well as customary fronting fees for the issuance of letters of credit and agency fees.

Borrowings under the B+L Term Facility bear interest at a rate per annum equal to, at Bausch + Lomb’s option, either (i) the term SOFR rate for the interest period relevant to such borrowing (provided, however, that the term SOFR rate with respect to the B+L Term Facility shall at no time be less than 0.50% per annum), plus an applicable margin of 3.25% or (ii) a base rate determined by reference to the highest of (x) the prime rate (as defined in the B+L Credit Agreement), (y) the federal funds effective rate plus 1/2 of 1.00% and (z) the term SOFR rate for a period of one month plus 1.00% (or if such rate shall not be ascertainable, 2.25% (provided, however, that the base rate with respect to the B+L Term Facility shall at no time be less than 0.50% per annum), plus an applicable margin of 2.25%. Term SOFR rate loans are subject to a credit spread adjustment of 0.10%.

The amortization rate for the B+L Term Facility is 1.00% per annum, or $25 million, payable in quarterly installments beginning on September 30, 2022. Bausch + Lomb may direct that prepayments be applied to such amortization payments in order of maturity. As of June 30, 2022, the remaining mandatory quarterly amortization payments for the B+L Term Facility were $119 million through March 2027.

~~Senior Secured Notes~~

The Senior Secured Notes are guaranteed by each of the Company’s subsidiaries that is a guarantor under the 2022 Amended 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 2022 Amended 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.

The aggregate principal amount of our Senior Secured Notes as of June 30, 2022 and December 31, 2021 was $4,850 million and $3,850 million, respectively, an increase of $1,000 million representing the issuance of February 2027 Secured Notes.


(in millions)	Remainder of 2023		2024		2025		2026		2027		Thereafter		Total





Interest payments:
11.00% First Lien Secured Notes due 2028	$	98	$	195	$	195	$	195	$	195	$	195	$	1,073
14.00% Second Lien Secured Notes due 2030	25		49		49		49		49		149		370
9.00% Intermediate Holdco Secured Notes due 2028	45		90		90		90		90		45		450

	$	168	$	334	$	334	$	334	$	334	$	389	$	1,893
Interest payments recorded as:
Interest expense	$	20	$	39	$	36	$	34	$	31	$	32	$	192
Reduction of recorded premium	148		295		298		300		303		357		1,701
	$	168	$	334	$	334	$	334	$	334	$	389	$	1,893

Senior Unsecured Notes

The Senior Unsecured Notes (as defined in Note 10, “FINANCING ARRANGEMENTS” to our unaudited interim Condensed Consolidated Financial Statements) 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 2022 Amended Credit Agreement. 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 2022 Amended Credit Agreement. Future subsidiaries of the Company and BHA, if any, may be required to guarantee the Senior Unsecured Notes. In connection with the closing of the B+L IPO, the discharge of the April 2025 Unsecured Notes Indenture and the related release under the 2022 Amended Credit Agreement described above, the guarantees and related security provided by Bausch + Lomb and its subsidiaries in respect of the existing senior notes of the Company and BHA were released. On a non-consolidated basis, the non-guarantor subsidiaries had total assets of ~~$12,558~~$13,076 million and total liabilities of ~~$4,299~~$5,750 million as of June 30, ~~2022,~~2023, and revenues of ~~$2,028~~$2,192 million and operating income of ~~$10~~$54 million for the six months ended June 30, ~~2022.~~2023.

IfAccounts Receivable Credit Facility

On June 30, 2023, we entered into the AR Credit Facility with certain third-party lenders, providing for a non-recourse financing facility collateralized by certain of the Company’s accounts receivable. The AR Facility Agreement provides for an up to $600 million facility, subject to certain borrowing base tests. Under the AR Credit Facility, the Borrower purchases accounts receivable, originated by a wholly-owned subsidiary of Bausch Health, which collateralize borrowings under the AR Credit Facility. The Borrower is a bankruptcy remote entity that is unrestricted under the Company’s debt covenants, and which is consolidated by the Company.

Borrowings under the AR Credit Facility are in U.S. dollars and bear interest at a rate per annum equal to, the sum of the one month term SOFR plus 6.65%. The Company ~~experiences a change in control, the Company may be~~is required to ~~make an offer to repurchase each series~~pay commitment fees of ~~Senior Unsecured Notes, in whole or in part, at a purchase price equal to 101%~~0.75% multiplied by the lesser of: (i) the unfunded portion of the ~~aggregate principal amount~~lenders’ commitments or (ii) 50% of the ~~Senior Unsecured Notes repurchased, plus accrued and unpaid interest.~~total lenders’ commitments.

~~The aggregate principal amount of~~See Note 10, “FINANCING ARRANGEMENTS” to our Senior Unsecured Notes as of June 30, 2022 and December 31, 2021 was $11,769 million and $14,900 million, respectively, a decrease of $3,131 million, attributable to: (i) the redemption in full of the April 2025 Senior Unsecured Notes and (ii) the repurchase and retirement of certain outstanding Senior Secured Notes in the open market with an aggregate par value of approximately $481 millionunaudited interim Condensed Consolidated Financial Statements for ~~$300 million.~~additional details.

Availability Under Revolving Credit Facilities

As of ~~the date of this filing,~~ August ~~9, 2022,~~3, 2023, there were ~~$550 million of~~no outstanding borrowings, ~~$40~~$23 million of issued and outstanding letters of credit and approximately ~~$385~~$952 million of remaining availability under the 2027 Revolving Credit Facility.

As of June 30, 2023, there were no outstanding borrowings under the ~~date~~AR Credit Facility. During the period July 1, 2023 through August 3, 2023, we have drawn $350 million, in the aggregate, of ~~this filing,~~borrowings. Borrowings under our AR Credit Facility are for general corporate purposes.

As of August ~~9, 2022,~~3, 2023, there were $250 million of outstanding borrowings, $25 million of issued and outstanding letters of credit and $225 million remaining availability under the B+L Revolving Credit ~~Facility remains undrawn and has availability of approximately $500 million.~~Facility. Absent the ~~making~~payment of a dividend, which would be determined by the Board of Directors of Bausch + Lomb and paid pro rata to Bausch + Lomb’s shareholders, proceeds from the B+L Revolving Credit Facility are not available to fund the operations, investing and financing activities of any other subsidiaries of Bausch Health.

Covenant Compliance

As of June 30, 2023, the Company was in compliance with its financial maintenance covenant related to its outstanding debt. The Company, based on its current forecast, 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.

Any inability to comply with the covenants under the terms of our 2022 Amended ~~Credit Agreement, B+L~~ Credit Agreement, Senior Secured Notes indentures or Senior Unsecured Notes indentures could lead to a default or an event of default for which we may need to seek relief from our lenders and noteholders in order to waive the associated default or event of default and avoid a potential acceleration of the related indebtedness or cross-default or cross-acceleration to other debt. There can be no assurance that we would be able to obtain such relief on commercially reasonable terms or otherwise and we may be required to incur significant additional costs. In addition, the lenders under our 2022 Amended Credit Agreement, ~~and B+L Credit Agreement,~~ holders of our Senior Secured Notes and holders of our Senior Unsecured Notes may impose additional operating and financial restrictions on us as a condition to granting any such waiver.

~~As of June 30,~~On November 29, 2022, the Company ~~was~~designated 1261229 B.C. Ltd., the entity that directly or indirectly holds 89% of the issued and outstanding shares of Bausch + Lomb, as an unrestricted subsidiary of the Company in ~~compliance~~accordance with the terms of the Company’s indentures. In connection therewith, Bausch + Lomb and its subsidiaries are unrestricted subsidiaries of the Company and, as a result, are not subject to the covenants under the relevant Bausch Health indentures, and the earnings and debt of Bausch + Lomb, as defined in the relevant indentures, are also not included in the calculation of the Company’s financial maintenance covenant related to its outstanding debt. The Company, based on its current forecast, 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.covenant.

The Company continues to take steps to seek to improve its operating results to ensure continual compliance with its financial maintenance covenant and take other actions to reduce its debt levels and improve its capital structure 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 including secondary offerings of the common shares of Bausch + Lomb, as deemed appropriate, to provide additional coverage in complying with the financial maintenance covenant and meeting its debt service obligations.

Weighted Average Interest Rate

The accounting for the Exchange Offer results in the New Secured Notes being carried at a premium relative to their principal amount and will result in no interest expense to be recorded in our financial statements for a significant portion of the New Secured Notes. Therefore, interest expense recorded in our financial statements will differ significantly from the contractual interest rates of the New Secured Notes and term loan facilities. The weighted average interest rate of our debt as reported in our financial statements and the weighted average stated rate of interest ~~of the Company’s outstanding debt~~was 6.29% and 7.91%, respectively, as of June 30, ~~2022 and December 31, 2021 was 6.34% and 5.88%, respectively.~~

~~See Note 10, “FINANCING ARRANGEMENTS” to our unaudited interim Consolidated Financial Statements for further details.~~2023.

Focus on Capitalization of the Post-separation Entities

In connection with the B+L Separation, we have 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~~additional value across our portfolio of assets and it iscontinues to be a primary objective of our plan of separation.

Credit ~~Ratings~~Rating

As of August ~~9, 2022,~~3, 2023, the credit ratings and outlook from Moody’s, Standard & Poor’s (“S&P’s”) and Fitch for certain outstanding obligations of the Company were as follows:

Bausch Health Companies Inc.

Bausch + Lomb Corporation

Rating Agency

Corporate Rating

Senior Secured Rating

Senior Unsecured Rating

Outlook

Corporate Rating

Senior Secured Rating

Outlook

Moody’s

Caa2

Caa1

~~Caa2~~Ca

Negative

Standard & Poor’s

CCC

CCC+

CCC-

Negative

B-

Positive

Fitch

CCC

~~CCC~~CC

~~Negative~~

~~CCC+~~

~~Developing~~

~~Fitch~~No Outlook

B-

BB-

B-

~~Negative~~

B+

~~BB+~~

Rating Watch Evolving

Bausch Health Companies Inc. - ~~On May 10, 2022, in connection with the B+L IPO and related Credit Agreement Refinancing, Moody’s assigned our senior secured notes a Ba3 rating, consistent with the Ba3 rating assigned~~There were no changes to the ~~$2,500 million of term B loans and the $975 million revolving credit facility and to the newly issued February 2027 Secured Notes.~~

~~On May 31, 2022, S&P’s downgraded all of its~~corporate credit ratings ~~1-notch and affirmed its negative outlook.~~

~~On July 29, 2022, Moody’s lowered its~~or other credit ratings two notches to: a corporate rating of Caa1, a senior secured rating of B2 and a senior unsecured rating of Caa2. On August 1, 2022, S&P’s lowered its credit ratings two notches to: a corporate rating to CCC+, a senior secured rating of B and a senior unsecured rating of CCC. On August 3, 2022, Fitch lowered its credit ratings one notch to: a corporate rating of B-, a senior secured rating of BB- and a senior unsecured rating of B-. These downgrades were a result of the ~~Norwich Legal Decision (see “Xifaxan~~® ~~Paragraph IV Proceedings~~”Company during the second quarter of ~~Note 18, “LEGAL PROCEEDINGS” to our unaudited interim Consolidated Financial Statements).~~2023.

Bausch + Lomb Corporation - Bausch + Lomb is a restricted subsidiary under the 2022 Amended Credit Agreement and related indentures and will remain a restricted subsidiary until Bausch Health designates Bausch + Lomb as “unrestricted”, which is expected to occur at or priorThere were no changes to the ~~distribution anticipated under the proposed B+L Separation. We expect Bausch + Lomb’s credit ratings could be capped to that of the Company, until we designate Bausch + Lomb as “unrestricted”.~~

~~In August 2022, S&P lowered its credit ratings for Bausch + Lomb two notches to: a~~ corporate rating of CCC+ and a senior secured rating of CCC+. Moody’s lowered its senior secured rating for Bausch + Lomb two notches to B1. Fitch lowered its corporate rating for Bausch + Lomb one notch to B+ and maintained its senior secured rating for Bausch + Lomb of BB+. These downgrades were made simultaneously with the downgrades to the credit ratings of Bausch ~~Health, Bausch~~ + ~~Lomb’s parent company.~~Lomb Corporation during the second quarter of 2023.

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.

OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

We have no off-balance sheet arrangements that have a material current effect or that are reasonably likely to have a material effect on our results of operations, financial condition, capital expenditures, liquidity or capital resources.

A substantial portion of our cash requirements for the remainder of ~~2022~~2023 are for debt service. Our other future cash requirements relate to working capital, capital expenditures, business development transactions ~~(contingent~~(including contingent consideration), ~~restructuring, integration and separation costs,~~ benefit obligations and litigation settlements. In addition, we may use cash to enter into licensing arrangements and/or to make strategic acquisitions. We regularly consider licensing and acquisition opportunities within our core therapeutic areas, some of which could be sizable.

In addition to our working capital requirements, as of June 30, ~~2022,~~2023, we expect our primary cash requirements during the remainder of ~~2022~~2023 to include:

•Debt repayments and interest payments—Based on our debt portfolio as of August 3, ~~2022,~~2023, we anticipate making mandatory amortization ~~payments of approximately $75 million~~ and interest payments of approximately ~~$730~~$836 million during the period July 1, ~~2022~~2023 through December 31, ~~2022. As discussed below, we~~2023. We have, and in the future may also elect to make additional principal payments under certain circumstances. Further, in the ordinary course of business, we may borrow and repay additional amounts under our credit facilities using cash on hand, cash from operations and cash provided from the sale of common stock and additional debt financings in connection with the B+L Separation;

•~~IT Infrastructure Investment—We expect to make payments of approximately $20 million for licensing, maintenance and capitalizable costs associated with our IT infrastructure improvement projects during the remainder of 2022;~~

•Capital expenditures—We expect to make payments of approximately ~~$180~~$200 million for property, plant and equipment during the ~~remainder of 2022;~~period July 1, 2023 through December 31, 2023;

•Contingent consideration and milestone payments—We expect to make contingent consideration ~~and other development/approval/sales-based milestone~~ payments of approximately ~~$25~~$65 million during the ~~remainder~~period July 1, 2023 through December 31, 2023. These payments include a $45 million payment in connection with Bausch + Lomb’s agreement with Novaliq GmbH for MIEBOTM (formerly known as NOV03), for the treatment of ~~2022;~~

•the signs and symptoms of dry eye disease. Bausch + Lomb anticipates launching MIEBO~~Restructuring~~TM in the U.S. in the third quarter of 2023; and ~~integration payments~~—We expect to make payments of $20 million during the remainder of 2022 for employee separation costs and lease termination obligations associated with restructuring and integration actions we have taken through June 30, 2022;

•Benefit obligations—We expect to make aggregate payments under our pension and postretirement obligations of $6$4 million during the ~~remainder of 2022; and~~period July 1, 2023 through December 31, 2023.

•Litigation Payments—

In the ordinary course of business, the Company is involved in litigation, claims, government inquiries, investigations, charges and proceedings. As of June 30, ~~2022,~~2023, the Company’s Condensed Consolidated Balance Sheet includes accrued ~~current~~ loss contingencies of ~~$1,536~~$326 million related to matters which are both probable and reasonably estimable, ~~of which $1,210 million is expected to be payable during the period July 1, 2022 through December 31, 2022;~~ however, a reliable estimate of the period in which the remaining loss contingencies will be payable, if ever, cannot be made.

~~U.S. Securities Litigation for $1,210 million~~ - The amounts which can be expected to be payable during the period July 1, 2022 through December 31, 2022 include inter alia the 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 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 them 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 30, 2022, Restricted cash and other settlement deposits includes $1,210 million of payments into an escrow fund under the terms of a settlement agreement regarding the U.S. Securities Litigation.

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

~~Future Costs~~See Note 17, “LEGAL PROCEEDINGS” to our unaudited interim Condensed Consolidated Financial Statements for further details.

Acquisition of ~~B+L Separation~~XIIDRA®

The Company has incurred costs associated with activities to complete the B+L Separation and the suspended, Solta IPO, and will continue to incur costs associated with the B+L separation. These activities include the costs of: (i) separatingAs previously discussed, on June 30, 2023, Bausch + Lomb entered into a definitive agreement with Novartis to acquire XIIDRA® and certain other ophthalmology assets. Under the ~~Solta Medical businesses from the remainder~~terms of the ~~Company and (ii) registering~~agreement, Bausch + Lomb, asthrough its affiliate, has agreed to make an ~~independent publicly traded entity. Separation~~upfront cash payment of $1,750 million, with additional payments that may become due upon achievement of future pipeline commercialization and ~~IPO costs are incremental costs directly related~~future sales milestones. The transaction is expected to close by the end of 2023, subject to receipt of regulatory approval and other customary closing conditions. Bausch + Lomb intends to finance the $1,750 million upfront cash payment with new debt prior to the ~~B+L Separation~~closing of the transaction. See Item 1A “Risk Factors” of Part II of this Form 10-Q for additional information on the risks relating to the acquisition of XIIDRA®.

~~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~~Acquisition of ~~directors and related board committees for~~Blink® Product Line

During July 2023, Bausch + ~~Lomb. The Company has also incurred,~~Lomb made the upfront cash payment of $107 million to Johnson & Johnson Vision in connection with the closing of the previously discussed acquisition of the Blink® product line of eye and will incur, Separation-related and IPO-related costs which are incremental costs indirectly related to the B+L Separation. 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 extent and timing of future charges for these costs cannot be reasonably estimated at this time and could be material.contact lens drops.

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, “LICENSING AGREEMENTS AND ~~DIVESTITURE”~~ACQUISITIONS” to our unaudited interim Condensed 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 30, ~~2022,~~2023, the Company had unrecognized tax benefits totaling ~~$840~~$901 million, of which, ~~$14~~$4 million is expected to be realized during the remainder of ~~2022,~~2023, however a reliable estimate of the period in which the remaining uncertain tax positions will be payable, if ever, cannot be made.

Future Repurchases of Debt

The Company regularly evaluates market conditions, its liquidity profile, and various financing alternatives for opportunities to enhance its capital structure. If opportunities are favorable, we may, from time to time, purchase outstanding debt for cash in open market purchases or privately negotiated transactions. Such repurchases or exchanges, if any, will depend on prevailing market conditions, future liquidity requirements, contractual restrictions and other factors.

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, ~~2021,~~2022, filed with the SEC and the CSA on February 23, ~~2022.~~2023.

OUTSTANDING SHARE DATA

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

At ~~August 4, 2022,~~July 28, 2023, we had ~~361,728,490~~364,334,264 issued and outstanding common shares. In addition, as of ~~August 4, 2022,~~July 28, 2023, we had outstanding ~~10,932,203~~11,572,015 stock options and ~~5,824,121~~10,716,174 time-based restricted share units that each represent the right of a holder to receive one of the Company’s common shares, and ~~1,518,449~~730,125 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 ~~1,129,202~~1,460,250 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,~~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, ~~2021,~~2022, filed with the SEC and the CSA on February 23, ~~2022,~~2023, and determined that there were no significant changes in our critical accounting policies and estimates during the six months ended June 30, ~~2022, except for: (i) estimates and assumptions regarding~~2023.

Interim Goodwill Assessment

No events occurred, or circumstances changed during the ~~nature, timing and extent~~three months ended June 30, 2023, that indicated that the ~~COVID-19 pandemic had on the Company’s operations and cash flows~~fair value of any reporting unit might be below its respective carrying value. However, as ~~discussed in Note 2,~~a result of certain market conditions,

~~“SIGNIFICANT ACCOUNTING POLICIES”~~macroeconomic factors and other business specific related factors that existed in 2022, the Company continues to monitor changes in the facts and circumstances which may impact the fair value of its Dermatology and Neurology and other reporting units.

Dermatology

As a result of the impairment of goodwill in 2022, the Dermatology reporting unit had no headroom on September 30, 2022. As such, we continue to monitor conditions which may impact the valuation of the reporting unit including the reporting unit’s performance and revisions, if any, to its long-term forecasts in light of current market conditions, current trends in business performance and the expected impacts of management’s latest business strategies. Our current evaluation of these matters supports our ~~unaudited interim Consolidated Financial Statements, (ii)~~previous expectations for the ~~impact~~long-term business performance. Additionally, based on reference interest rates as of June 30, 2023, the Company concluded that discount rates would not have increased as compared to the discount rate used in determining the fair value as of September 30, 2022 when the unit was last tested. Based on our evaluation, we have not identified any changes in facts or circumstances that would suggest that it is more likely than not that the ~~current year segment and~~fair value of this reporting unit ~~realignments had~~is less than its carrying value. However, given the limited headroom for this reporting unit, if market conditions deteriorate, or if we are unable to execute on our strategies, it may be necessary to record impairment charges in the ~~Company’s allocation~~future and those charges could be material.

Neurology and Other

As a result of the impairment of goodwill in 2022, the Neurology and Other reporting unit had no headroom on October 1, 2022. As such, we continue to monitor conditions which may impact the valuation of the reporting unit including the reporting unit’s performance and revisions, if any, to its long-term forecasts in light of current market conditions, current trends in business performance and the expected impacts of management’s latest business strategies. Our current evaluation of these matters supports our previous expectations for the long-term business performance. Additionally, based on reference interest rates, the Company concluded that discount rates would not have increased as ~~discussed~~compared to the discount rate used in determining the fair value as of October 1, 2022 when the reporting unit was last tested. Based on our evaluation, we have not identified any changes in facts or circumstances that would suggest that it is more likely than not that the fair value of this reporting unit is less than its carrying value. However, if market conditions deteriorate, or if we are unable to execute on our strategies, it may be necessary to record impairment charges in the future and those charges could be material.

See Note 8, “INTANGIBLE ASSETS AND GOODWILL” to our unaudited interim Condensed Consolidated Financial Statements ~~and (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”~~further details related to ~~our unaudited interim Consolidated Financial Statements.~~goodwill.

NEW ACCOUNTING STANDARDS

None.

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 ~~2022~~this fiscal year 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 dated as of June 1, 2018 (the “Restated Credit Agreement”), as amended by~~ the First Incremental Amendment to the Restated Credit Agreement, dated as of November 27, 2018 (the “2018 Restated Credit Agreement”) and the Second Amendment (the “Second Amendment”) to the 2018 Restated Credit Agreement, dated as of May 10, 2022 ~~(as so amended, and as may be further amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, the “2022~~ Amended Credit ~~Agreement”),~~Agreement and senior notes indentures; the ability of our subsidiary, Bausch + Lomb, ~~Corporation (“Bausch + Lomb”),~~ to comply with the financial and other covenants contained in ~~its Credit and Guaranty Agreement (the “B+~~the B+L Credit ~~Agreement”, and the credit facilities thereunder, the “B+L Credit Facilities”), dated as of May 10, 2022;~~Agreement; 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

anticipated impact from the ongoing conflict between Russia and Ukraine; and the Company’s plan to separate its eye health business, including the structure and timing of completing such separation transaction.

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. 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 and subvariants), COVID-19 vaccine immunization rates, the emergence of variant and subvariant strains of COVID-19, thepotential resurgence of the COVID-19 virus ~~and variant and subvariant strains thereof (including, but not limited to, the recent resurgence of COVID-19 cases)~~ and any resulting reinstitution of lockdowns and other restrictions, the evolving reaction of 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, costs (which may increase) and revenue and margins (both of which may decrease);

•the challenges the Company faces as a result of the closing of the ~~initial public offering (“IPO”) of Bausch + Lomb (the “B+~~B+L ~~IPO”),~~IPO, including the transitional services being provided by and to Bausch + Lomb, any potential, actual or perceived conflict of interest of some of our directors and officers because of their equity ownership in Bausch + Lomb and/or because they also serve as directors or officers of Bausch + Lomb and our ability to timely consolidate the financial results of the Bausch + Lomb business;

•with respect to the ~~Company's proposed plan to spinoff Bausch + Lomb,~~B+L Separation, the risks and uncertainties include, but are not limited to, the expected benefits and costs of the ~~spinoff,~~B+L Separation, the expected timing of completion of the ~~spinoff~~B+L Separation and its terms, (including the Company’s expectation that the spinoff will be completed following the expiry of customary lock-ups related to the B+L IPO and achievement of targeted debt leverage ratios, subject to receipt of applicable shareholder and other necessary approvals), the Company’s ability to complete the ~~spinoff~~B+L Separation considering the various conditions to the completion of the ~~spinoff~~B+L Separation (some of which are outside the Company’s control, including conditions related to regulatory matters and applicable shareholder and stock exchange approvals), that market or other conditions are no longer favorable to completing the ~~spinoff,~~B+L Separation, that the previously announced planned ~~IPO of the Company’s aesthetics medical device business, Global~~ Solta ~~(the “Solta IPO”)~~IPO has been suspended, that the Norwich Legal Decision (see ~~“Xifaxan~~“Xifaxan®Paragraph IV Proceedings” of Note ~~18,~~17, “LEGAL PROCEEDINGS” to our unaudited interim Condensed Consolidated Financial Statements) may affect the timing of, or our ability to complete the B+L Separation, that applicable shareholder, stock exchange, regulatory or other approvals isare not obtained on the terms or timelines anticipated or at all, business disruption during the pendency of, or following, the ~~spinoff,~~B+L Separation, 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 the Canada Revenue Agency and/or the Internal Revenue Service will be sought or obtained), the ability of the Company and the separated entity to satisfy the conditions required to maintain the tax-free status of the ~~spinoff~~B+L Separation (some of which are beyond their control), limitations on the Company’s ability to sell a portion of the Company’s interest in Bausch + Lomb in order to maintain the tax-free status of the B+L Separation (including due to dilution from B+L’s issuance of share-based compensation awards), other potential tax or other liabilities that may arise as a result of the ~~spinoff,~~B+L Separation, the potential dissynergy costs resulting from the ~~spinoff,~~B+L Separation, the impact of the ~~spinoff~~B+L Separation 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. In particular, the Company can offer no assurance that any ~~spinoff~~B+L Separation will occur at all, or that any such transaction will occur on the timelines anticipated by the Company;

•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;

•pricing decisions that we have implemented, or may in the future elect to implement, such as the Patient Access and Pricing Committee’s historic practice of limiting the average annual price increase for our branded prescription pharmaceutical products to single digits, or any future pricing actions we may take in ~~2022~~2023 or beyond 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 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 senior notes indentures, the 2027 Revolving Credit Facility, ~~(as defined below),~~ the 2022 Amended Credit Agreement, the B+L Credit Agreement and other current or future credit and/or debt agreements, including the ability of Bausch + Lomb to comply with its covenants and obligations under the B+L Credit Agreement, 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 2027 Revolving Credit Facility, Bausch + Lomb’s ability to draw down under the revolving credit facility under the B+L Credit Agreement and restrictions on our ability to make certain investments and other restricted payments;

•any default under the terms of our senior notes indentures or the 2022 Amended Credit Agreement (and other current or future credit and/or debt agreements) 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 ~~2022~~2023 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 the 2022 Amended Credit Agreement, senior notes indentures and/or the B+L Credit Agreement (and other current or future credit and/or debt agreements) 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 risks and uncertainties relating to Bausch + Lomb’s recently-announced transaction for the acquisition of XIIDRA® and certain other assets, including its ability to consummate that transaction and the timing thereof, the possibility that any or all of the conditions to the consummation of the transaction may not be satisfied or waived, including failure to receive required regulatory approvals, the effect of the announcement or pendency of the transaction on its ability to maintain relationships with customers, suppliers, and other business partners, risks relating to potential diversion of management attention away from its ongoing business operations, its ability to finance the transaction as anticipated, risks relating to our increased levels of debt as a result of debt expected to be incurred to finance such acquisition and risks that Bausch + Lomb may not realize the expected benefits of the acquisition on a timely basis or at all;

•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 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 directors, 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~~Dermatology 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;

•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;

•the challenges and difficulties associated with managing a large complex business, which has, in the past, grown rapidly;

•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 2022 Amended Credit Agreement, the B+L Credit Agreement, our 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; the impact of obtaining or maintaining such reimbursement on the price and sales of our products; and the launch and implementation of any new pharma-care or dental-care program or related spending by the Canadian federal government;

•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 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~~inclusive framework on Base Erosion and Profit Shifting, including the global minimum corporate tax rate, by the countries in which we operate;

•the outcome of any audits by taxation authorities, which outcomes may differ from the estimates and assumptions that we may use in determining our consolidated tax provisions and accruals;

•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;

•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, including rates of inflation, and credit markets and foreign currency exchange uncertainty and volatility in certain of the countries in which we do business;

•the trade conflict between the U.S. and China;

•the impact of the ongoing conflict between Russia and Ukraine and the export controls, sanctions and other restrictive actions that have been or may be imposed by the U.S., Canada, the EU and other countries against governmental and other entities in Russia, Belarus and parts of Ukraine; including potential impact on sales, earnings, market conditions and the ability of the Company to manage its resources and operations in Russia;

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

•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®~~Xifaxan® (rifaximin) 550 mg tablets and the Company’s related lawsuit filed against Norwich in connection therewith) and the ~~impact~~impacts of the Norwich ~~matter~~Legal Decision and related litigation on, among other things, our business results, financial results, and the ~~proposed separation of~~ B+L;L Separation;

•our ability to successfully appeal the decision of the U.S. District Court for the District of Delaware in the Company’s lawsuit against Norwich in connection with Norwich’s ANDA and challenge Norwich’s ability to achieve a modified ANDA that avoids ~~an injunction [expected to be issued]~~the August 10, 2022 final judgment by the District Court and omits the ~~Xifaxan®~~Xifaxan® hepatic encephalopathy (“HE”) indication and HE safety data;

•the fact that a substantial amount of our revenues are derived from the ~~Xifaxan®~~Xifaxan® product line, and that we may be materially impacted by the entry of a generic rifaximin product earlier than January ~~2028;~~2028, including the risk of a competitor launching a generic rifaximin at risk prior to a final unappealable decision;

•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;

•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;

•the expense, timing and outcome of pending or future legal and governmental proceedings, arbitrations, investigations, subpoenas, tax and other regulatory audits, examinations, reviews and regulatory proceedings against us or relating to us and settlements thereof;

•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;

•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 and potential other impacts 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;

•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 pricing), worldwide anti-bribery laws (including the U.S. Foreign Corrupt Practices Act and the Canadian

Corruption of Foreign Public Officials Act), worldwide economic sanctions and/or export laws, worldwide environmental laws and regulation and privacy and security regulations;

•the impacts of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 and potential amendment thereof and other legislative and regulatory health care reforms in the countries in which we operate, including with respect to recent government inquiries on pricing;

•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 current administration;

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

•any plans for the ~~Company's~~Company’s aesthetic medical business;

•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, ~~2021,~~2022, filed on February 23, ~~2022,~~ 2023, risks ~~under~~in Item 1A. “Risk Factors” of Part II of this Form 10-Q and risks detailed from time to time in our other filings with the ~~U.S. Securities and Exchange Commission (“SEC”)~~SEC and the ~~Canadian Securities Administrators (the “CSA”),~~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, ~~2021,~~2022, filed on February 23, ~~2022,~~2023, under Item 1A. “Risk Factors”, 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Other than as indicated below under “— Interest Rate Risk” and “— Inflation 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, 2022, filed with the SEC and the CSA on February 23, 2023.

Interest Rate Risk

As of June 30, 2023, we had $13,715 million and $5,295 million in outstanding aggregate principal amount of fixed rate debt and variable rate debt, respectively. The estimated fair value of our issued fixed rate debt as of June 30, 2023 was $9,111 million. If interest rates were to increase by 100 basis-points, the fair value of our issued fixed rate debt would decrease by approximately $279 million. If interest rates were to decrease by 100 basis-points, the fair value of our issued fixed rate debt would increase by approximately $269 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-point increase in interest rates would have an annualized pre-tax effect of approximately $53 million in our Condensed Consolidated Statements of Operations and Cash Flows, based on current outstanding borrowings and effective interest rates on our variable rate debt. While our variable-rate debt may impact earnings and cash flows as interest rates change, it is not subject to changes in fair value.

Inflation Risk

We are subject to price control restrictions on our pharmaceutical products in a number of countries in which we operate. As a result, our ability to raise prices in a timely fashion in anticipation of inflation may be limited in some markets.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For information concerning legal proceedings, reference is made to Note 17, “LEGAL PROCEEDINGS” to the unaudited interim Condensed Consolidated Financial Statements included elsewhere in this Form 10-Q.

Item 1A. Risk Factors

Except as set forth below, 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, 2022, filed with the SEC and the CSA on February 23, 2023.

The Xiidra Acquisition may not be consummated within the anticipated timeframe, on the current terms or at all, which could prevent Bausch + Lomb from receiving the anticipated benefits from the acquisition in the anticipated timeframe or at all.

On June 30, 2023, a wholly owned subsidiary of Bausch + Lomb, Bausch + Lomb Ireland Limited, entered into a Stock and Asset Purchase Agreement (the “Purchase Agreement”) with Novartis Pharma AG and Novartis Finance Corporation (together, “Novartis”) to acquire XIIDRA® (lifitegrast ophthalmic solution) and certain other ophthalmology assets from Novartis (the “Xiidra Acquisition”). Bausch + Lomb expects to complete the Xiidra Acquisition by the end of 2023, subject to customary closing conditions, including the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the absence of any law or judgment preventing the closing. Although the parties have agreed to use reasonable best efforts to promptly obtain the antitrust approvals required for the Xiidra Acquisition, there can be no assurance whether these clearances and approvals will be obtained in a timely manner, or at all. As a result, there is no assurance that the Xiidra Acquisition will be consummated in the anticipated timeframe or at all. In addition, the U.S. Federal Trade Commission (the “FTC”), the Antitrust Division of the U.S. Department of Justice or other applicable governmental authorities may seek to impose conditions on the completion of the Xiidra Acquisition or require changes to the terms of the Xiidra Acquisition. If Bausch + Lomb becomes subject to and agrees to any material conditions in order to obtain any clearances or approvals required to complete the Xiidra Acquisition, Bausch + Lomb may incur additional costs and experience further diversion of management time and resources, the business Bausch + Lomb is acquiring may be adversely affected and/or the imposition of such conditions and actions taken in response thereto may reduce the anticipated benefits of the transaction. In addition, Bausch + Lomb may be required to pay a reverse termination fee of $100 million if the Purchase Agreement is terminated in certain circumstances, including as a result of certain antitrust law-related conditions.

There can be no assurance that the Xiidra Acquisition will be consummated on the current terms or on the anticipated timeline, or at all.

Bausch + Lomb may fail to realize the anticipated benefits expected from the Xiidra Acquisition.

Bausch + Lomb expects to realize certain benefits following the consummation of the Xiidra Acquisition. However, Bausch + Lomb’s ability to realize these anticipated benefits from the Xiidra Acquisition will depend, in part, on their ability to successfully integrate the acquired business into Bausch + Lomb’s current business. It is possible that the integration process following the consummation of the Xiidra Acquisition could result in the disruption of Bausch + Lomb’s business or the ongoing business associated with Xiidra or the pipeline assets that Bausch + Lomb is acquiring in connection with the Xiidra Acquisition. For example, suppliers, vendors, and other third parties with whom Bausch + Lomb or the acquired business do business or otherwise have relationships may experience uncertainty associated with the Xiidra Acquisition, and this uncertainty could materially affect their decisions with respect to existing or future business relationships with Bausch + Lomb while the Xiidra Acquisition is pending or with us after the Xiidra Acquisition is consummated. Integration efforts between Bausch + Lomb and the acquired business will also divert management attention and resources. For example, Bausch + Lomb expects to bring on the sales force currently supporting Xiidra as part of the Xiidra Acquisition. There can be no assurance that Bausch + Lomb will be able to integrate the existing sales force with its business, or that the actual integration of the acquired business will not result in additional and unforeseen expenses or liabilities (including those that may be assumed in connection with the Xiidra Acquisition), and, as a result, any anticipated benefits of the integration plan may not be realized. If Bausch + Lomb is not able to adequately address these challenges, Bausch + Lomb may be unable to successfully integrate Xiidra and the pipeline assets into its business, or to realize some or any of the anticipated benefits of the Xiidra Acquisition. In addition, delays encountered in the integration process could result in a failure to realize the anticipated benefits on the anticipated timeline, or at all.

In addition, the anticipated benefits Bausch + Lomb expects from the Xiidra Acquisition are subject to numerous assumptions, including assumptions derived from Bausch + Lomb’s diligence efforts concerning the status of and prospects for the Xiidra business and the pipeline assets. Bausch + Lomb cannot provide any assurances with respect to the accuracy of

its assumptions, including its assumptions with respect to future revenues of the Xiidra products or assumptions regarding Bausch + Lomb’s ability to successfully develop and obtain regulatory approval for the acquired pipeline assets. There are a variety of risks and uncertainties, some of which are outside of Bausch + Lomb’s control, which could cause actual results to differ materially from these anticipated benefits.

There can be no assurance that Bausch + Lomb will realize the anticipated benefits from the Xiidra Acquisition in the anticipated timelines, or at all.

Bausch + Lomb has expended and will continue to expend significant time and resources in connection with the Xiidra Acquisition and expects to incur material indebtedness to fund the Xiidra Acquisition.

Bausch + Lomb has expended and will continue to expend significant management time and resources and expenses related to the Xiidra Acquisition, including in connection with the consummation of such transaction and the integration of the acquired business with Bausch + Lomb’s business. These expenses include, but are not limited to, fees paid to legal, financial and accounting advisors, filing fees and fees associated with the expected debt financing for this transaction. Many of these expenses must be paid regardless of whether the Xiidra Acquisition is consummated. Additional unanticipated costs may be incurred in the integration of the acquired business with Bausch + Lomb’s business. Bausch + Lomb also expects to incur material additional indebtedness to finance the Xiidra Acquisition, which indebtedness may limit Bausch + Lomb’s operating or financial flexibility relative to its current position.

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 30, 2023.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

Executive Officer Severance Arrangement

The Talent and Compensation Committee of the Board of Directors approved an update effective August 1, 2023 to the cash severance payment for which our Executive Officers are eligible, excluding our CEO whose employment agreement remains unchanged. In connection with a qualifying termination of employment, the cash severance payment for which they are eligible will be equal to one and a half times the sum of annual base salary and annual target incentive.

All other terms and conditions under each Executive Officer’s employment agreement remain unchanged. This provision was approved effective through December 31, 2024.


Part I.	Financial Information
Item 1.	Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	1
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022	2
	Condensed Consolidated Statements of Comprehensive Income (Loss ) for the three and six months ended June 30, 2023 and 2022	3
	Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, 2023 and 2022	4
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022	5
	Notes to the Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	146
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	85
Item 4.	Controls and Procedures	86
Part II.	Other Information
Item 6.	~~Exhibits~~1.	54Legal Proceedings	87
Item 1A.	Risk Factors	87
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	88
Item 3.	Defaults Upon Senior Securities	88
Item 4.	Mine Safety Disclosures	88
Item 5.	Other Information	88
Item 6.	Exhibits	88
Signatures		5590


	June 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	579	$	564
Restricted cash	9		27
Trade receivables, net	1,743		1,790
Inventories, net	1,240		1,090
Prepaid expenses and other current assets	890		776
Total current assets	4,461		4,247
Property, plant and equipment, net	1,599		1,600
Intangible assets, net	5,299		5,800
Goodwill	11,628		11,547
Deferred tax assets, net	2,191		2,166
Other non-current assets	325		326
Total assets	$	25,503	$	25,686
Liabilities
Current liabilities:
Accounts payable	$	515	$	521
Accrued and other current liabilities	3,008		2,988
Current portion of long-term debt	444		432
Total current liabilities	3,967		3,941
Acquisition-related contingent consideration	197		208
Non-current portion of long-term debt	20,108		20,334
Deferred tax liabilities, net	215		202
Other non-current liabilities	745		741
Total liabilities	25,232		25,426
Commitments and contingencies (Note 17)
Equity
Common shares, no par value, unlimited shares authorized, 364,063,514 and 361,898,846 issued and outstanding at June 30, 2023 and December 31, 2022, respectively	10,412		10,391
Additional paid-in capital	188		159
Accumulated deficit	(9,361)		(9,186)
Accumulated other comprehensive loss	(1,902)		(2,056)
Total Bausch Health Companies Inc. shareholders’ deficit	(663)		(692)
Noncontrolling interest	934		952
Total equity	271		260
Total liabilities and equity	$	25,503	$	25,686


		Three Months Ended June 30, 2022						Three Months Ended June 30, 2021						Change in Organic Revenue (Non-GAAP)					Three Months Ended June 30, 2023																Three Months Ended June 30, 2022												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				Acquisitions				Organic Revenue (Non-GAAP)				Revenue as Reported				Divestitures and Discontinuations				Organic Revenue (Non-GAAP)
(in millions)	(in millions)													Amount		Pct.		(in millions)											Amount																				Pct.
Salix	Salix	$	501	$	—	$	501	$	516	$	—	$	516	$	(15)	(3)	%	Salix			$	557			$	—			$	—			$	557			$	501			$	—			$	501			$	56			11	%
International	International	233		15		248		313		(71)		242		6		2	%	International	259				(4)				—				255				233				(4)				229				26				11	%
Diversified Products		235		—		235		264		—		264		(29)		(11)	%
Solta Medical	Solta Medical	57		—		57		73		—		73		(16)		(22)	%	Solta Medical	88				3				—				91				57				—				57				34				60	%
Diversified																		Diversified	228				—				—				228				235				—				235				(7)				(3)	%
Bausch + Lomb	Bausch + Lomb	941		46		987		934		(3)		931		56		6	%	Bausch + Lomb	1,035				18				(2)				1,051				941				(2)				939				112				12	%
Total	Total	$	1,967	$	61	$	2,028	$	2,100	$	(74)	$	2,026	$	2	—	%	Total	$	2,167			$	17			$	(2)			$	2,182			$	1,967			$	(6)			$	1,961			$	221			11	%


Exhibit Number
2.1			Stock and Asset Purchase Agreement by and among Bausch + Lomb Ireland Limited, Novartis Pharma AG and Novartis Finance Corporation and, for the limited purposes set forth therein, Bausch + Lomb Corporation, dated as June 30, 2023, originally filed as Exhibit ~~Description~~2.1 to the Company’s Current Report on Form 8-K filed on July 7, 2023, which is incorporated by reference herein.
10.1			Credit and Security Agreement, dated June 30, 2023, by and among Bausch Receivables Funding LP, as Borrower, Bausch Receivables Funding GP ULC, Bausch Health US, LLC, as the Master Servicer, GLAS USA LLC, as Administrative Agent, GLAS Americas LLC, as Collateral Agent, KKR Capital Markets LLC, as Left Lead Arranger, KKR Credit Advisors (US) LLC, as Structuring Advisor, and the Lenders from time to time party thereto, originally filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 7, 2023, which is incorporated by reference herein.
10.2			Bausch Health Companies Inc. 2014 Omnibus Incentive Plan (As Amended and Restated, Effective as of May 16, 2023), originally filed as Exhibit B to the Company’s definitive proxy statement (File No. 001-14956) filed on April 6, 2023, which is incorporated by reference herein. †
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:	~~September 2, 2022~~August 3, 2023	/s/ THOMAS J. APPIO
		Thomas J. Appio Chief Executive Officer (Principal Executive Officer)


Date:	~~September 2, 2022~~August 3, 2023	/s/ TOM G. VADAKETH
		Tom G. Vadaketh Executive Vice President, Chief Financial Officer (Principal Financial Officer)