UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended		~~September~~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: 001-41380

Bausch + Lomb Corporation

(Exact name of registrant as specified in its charter)


Canada									98-1613662
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)

520 Applewood ~~Crescent.~~Crescent, Vaughan, Ontario, Canada L4K 4B4

(Address of Principal Executive Offices) (Zip Code)

(905) 695-7700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares, No Par Value

BLCO

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 (§232.405 of this chapter) 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 — ~~350,000,749~~350,701,026 shares outstanding as of ~~October~~July 28, ~~2022.~~2023.

BAUSCH + LOMB CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER~~JUNE 30, ~~2022~~2023

Introductory Note

Except where the context otherwise requires, all references in this Quarterly Report on Form 10-Q for the quarterly period ended ~~September~~June 30, ~~2022~~2023 (this “Form 10-Q”) to the “Company”, “we”, “us”, “our” or similar words or phrases are to Bausch + Lomb Corporation and its subsidiaries, taken together. In this Form 10-Q, references to “$” are to United States (“U.S.”) dollars and references to “€” are to ~~euros and references to “CAD” are to Canadian dollars.~~euros. Unless otherwise indicated, the statistical and financial data contained in this Form 10-Q are presented as of ~~September~~June 30, ~~2022.~~2023.

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~~business prospects and forecasts and changes thereto; product pipeline, prospective products and product approvals, expected launches of new products, product development and results of current and anticipated products; our recently-announced transaction for the acquisition of XIIDRA® and certain other assets and the anticipated timing of completion of that transaction, as well as the Company’s intention to finance the up-front payment for that transaction with new debt; anticipated revenues for our products; expected R&D and marketing spend; our expected primary cash and working capital requirements for ~~2022~~2023 and beyond; our 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 comply with the covenants contained in our credit agreement (the “Credit Agreement”) and, during the period in which we remain a restricted subsidiary thereunder, the credit agreement of Bausch Health Companies Inc. (the “BHC Credit Agreement”) and the senior notes indentures of Bausch Health Companies Inc. and Bausch Health Americas, Inc. (collectively, the “BHC Indentures”); any 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 and economic uncertainty; our expectations regarding our financial performance, including our future financial and operating performance, revenues, expenses, gross margins and income taxes; our impairment assessments, including the assumptions used therein and the results thereof; the anticipated effect of current market conditions and recessionary pressures in one or more of our markets; the anticipated effect of macroeconomic factors, including inflation; the anticipated impact of the evolving COVID-19 pandemic and related responses from governments and private sector participants on the Company and, its supply chain, third-party suppliers, project development timelines, costs, revenues, margins, liquidity and financial condition and the anticipated timing, speed and magnitude of recovery from these COVID-19 pandemic related impacts;pandemic; the anticipated impact from the ongoing conflict between Russia and Ukraine; and the anticipated separation from Bausch Health Companies Inc. (“BHC”), including the structure and expected timetable for completing such separation transaction.

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

•adverse economic conditions and other macroeconomic factors, including inflation, slower growth or a potential recession, which could adversely impact our revenues, expenses and resulting margins;

•the effect of current market conditions and recessionary pressures in one or more of our markets;

(or any resurgence thereof) and the reaction to it (including as it relates to the ~~severity, duration and future impact~~reinstitution of which are highly uncertain and cannot be predicted, and which may have a significant adverse impact on us, including but not limited to our supply chain, third-party suppliers, project development timelines, employee base, liquidity, stock price, financial condition and costs (which may increase) and revenue and margins (both of which may decrease)any lockdowns or other restrictions);

•the challenges the Company faces ~~as a result of the closing of~~following its ~~recent~~ initial public offering (the “B+L IPO”), including the challenges and difficulties associated with managing an independent, complex business, the transitional services being provided by and to BHC, and any potential, actual or perceived conflict of interest of some of our directors and officers because of their equity ownership in BHC and/or because they also serve as directors of BHC;

•our status as a controlled company, and the possibility that BHC’s interest may conflict with our interests and the interests of our other ~~shareholders;~~

•~~the impact on our business of remaining a restricted subsidiary for a period of time following the B+L IPO under the BHC Credit Agreement~~shareholders and ~~the BHC Indentures, which may adversely affect our operations;~~other stakeholders;

•the risks and uncertainties associated with the proposed plan to separate or spinoff Bausch + Lomb from BHC, which include, but are not limited to, the expected benefits and costs of the spinoff transaction, the expected timing of completion of the spinoff transaction and its terms (including the expectation that the spinoff transaction will be completed following the ~~expiry of customary lock-ups related to the B+L IPO (which have now expired) and~~ achievement of targeted debt leverage ratios, subject to ~~market conditions and~~ receipt of applicable shareholder and other necessary ~~approvals)~~approvals and other factors), the ability to complete the spinoff transaction considering the various conditions to the completion of the spinoff transaction (some of which are outside the Company’s and BHC's control, including conditions related to regulatory matters and receipt of applicable shareholder approvals), the impact of any potential sales of our common shares by BHC, ~~subject to expiring of customary lock-ups (which have now expired),~~ that market or other conditions are no longer favorable to completing the transaction, that applicable shareholder, stock exchange, regulatory or other approval is not obtained on the terms or timelines anticipated or at all, the impact on the spinoff transaction (and the timing thereof) of the filing by Norwich Pharmaceuticals Inc. ("Norwich") of its Abbreviated New Drug Application ("ANDA") for Xifaxan® (rifaxamin) 550 mg tablets and BHC's related lawsuit filed against Norwich in connection therewith (including BHC’s ability to successfully appeal the decision of the U.S. District Court for the District of Delaware in such lawsuit), business disruption during the pendency of, or following, the spinoff transaction, diversion of management time on spinoff transaction-related issues, retention of existing management team members, the reaction of customers and other parties to the spinoff transaction, the qualification of the spinoff 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 BHC to satisfy the conditions required to maintain the tax-free status of the spinoff transaction (some of which are beyond their control), other potential tax or other liabilities that may arise as a result of the spinoff transaction, the potential dis-synergy costs resulting from the spinoff transaction, the impact of the spinoff transaction on relationships with customers, suppliers, employees and other business counterparties, general economic conditions, conditions in the markets the Company is engaged in, behavior of customers, suppliers and competitors, technological developments, as well as legal and regulatory rules affecting the Company’s business. In particular, the Company can offer no assurance that any spinoff transaction will occur at all, or that any such transaction will occur on the timelines or in the manner anticipated by the Company and BHC;

•ongoing litigation and potential additional litigation, claims, challenges and/or regulatory investigations challenging or otherwise relating to the B+L IPO and the proposed separation from BHC and the costs, expenses, use of resources, diversion of management time and efforts, liability and damages that may result therefrom;

•~~adverse economic conditions, including inflation, slower growth or a potential recession, which could adversely impact our revenues, expenses and resulting margins;~~

•pricing decisions that we have implemented or may in the future elect to implement at the direction of our ~~recently established Pricing Committee~~pricing committees or otherwise;

•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 and other products, 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”) and equivalent agencies outside of the United States and the results thereof;

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

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

•our ability to comply with the financial and other covenants contained in our Credit Agreement and other current or future debt agreements, ~~and, during the period in which we are a restricted subsidiary thereunder, those covenants contained in the BHC Credit Agreement and the BHC Indentures,~~ including the limitations, restrictions and prohibitions such covenants may impose on the way we conduct our business, including prohibitions on incurring additional debt if certain financial covenants are ~~not met, our ability to draw under the revolving credit facility~~

not met, our ability to draw under the revolving credit facility under our Credit Agreement (the “Revolving Credit Facility”) and restrictions on our ability to make certain investments and other restricted payments;

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

•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 our recently-announced transaction for the acquisition of XIIDRA® and certain other assets, including our 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 our ability to maintain relationships with customers, suppliers, and other business partners, risks relating to potential diversion of management attention away from our ongoing business operations, our 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 we 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 the recently-acquired Blink® product line), 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 manage the transition to our new Chairman and Chief Executive Officer and other new executive officers, the success of such individuals in assuming their respective roles and the ability of such individuals to implement and achieve the strategies and goals of the Company as they develop;

•our ability to retain, motivate and recruit executives and other key ~~employees, including our ability to find a new Chief Executive Officer;~~employees;

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

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

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

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

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

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

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

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

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

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

•the implementation of the new corporate alternative minimum tax (the “CAMT”) under the recently enacted Inflation Reduction Act (the “IRA”) and any future guidance with respect to the interpretation and application of the CAMT, as well as the impact of the other changes made under the IRA;

•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 us;

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

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

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

•conflicts, including the trade conflict between the United States 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 United States, Canada, the EU and other countries against governmental and other entities and individuals in or associated with Russia, Belarus and parts of ~~Ukraine;~~Ukraine, including potential impact on sales, earnings, market conditions and the ability of the Company to manage resources and historical investment in Russia;

•our ability to obtain, maintain and license sufficient intellectual property rights over our products and enforce and defend against challenges to such intellectual property;

•the ability of BHC to enforce and defend against challenges to its intellectual property in connection with the filing by Norwich Pharmaceuticals Inc. ("Norwich") of its Abbreviated New Drug Application ("ANDA") for Xifaxan® (rifaxamin) 550 mg tablets and BHC's related lawsuit filed against Norwich in connection therewith (including BHC’s ability to successfully appeal the decision of the U.S. District Court for the District of Delaware in such lawsuit (such decision, the “Norwich Legal Decision”)) and the impact of such matters on, among other things, our planned separation or spinoff transaction and the timing thereof;

•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;

•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 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;

•potential work stoppages, slowdowns or other labor problems at our facilities and the resulting impact on our manufacturing, distribution and other operations;

•economic factors over which we have no control, including inflationary pressures as a result of historically high domestic and global inflation and otherwise, 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;

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

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

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

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

•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 us or our third-party partners and service providers (over whom we may have limited influence), or the failure by us 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 (the “Health Care Reform Act”) and any 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 us and our businesses and products or the enactment of any new or proposed legislation, laws, rules, regulations or guidance that will impact or apply to us or our businesses or products;

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

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

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

•~~the~~ risks ~~under the section entitled~~in Item 1A. “Risk Factors” in our ~~final prospectus as~~Annual Report on Form 10-K for the year ended December 31, 2022, filed with the U.S. Securities and Exchange Commission (“SEC”) and the Canadian Securities Administrators (the “CSA”) on ~~May 5, 2022 pursuant to Rule 424(b)(4) under the Securities Act~~February 22, 2023, risks in Item 1A. “Risk Factors” of ~~1933, as amended (the “Act”) relating to our Registration Statement on~~Part II of this Form ~~S-1, and our supplemented PREP prospectus as filed with the CSA (as defined below) on May 5, 2022~~10-Q and risks detailed from time to time in our other filings with the 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 ~~Bausch + Lomb’s final prospectus as filed with the SEC on May 5, 2022 pursuant to Rule 424(b)(4) under the Act relating to~~ our ~~Registration Statement~~Annual Report on Form ~~S-1 and in Bausch + Lomb’s supplemented PREP prospectus as~~10-K for the year ended December 31, 2022, filed ~~with the CSA~~ on ~~May 5, 2022,~~February 22, 2023, under ~~the section entitled~~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

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BAUSCH + LOMB CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share amounts)

(Unaudited)


		September 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	287	$	174	Cash and cash equivalents	$	384	$	354
Restricted cash	Restricted cash	10		3		Restricted cash	8		26
Trade receivables, net (Note 4)	Trade receivables, net (Note 4)	685		721		Trade receivables, net (Note 4)	791		724
Inventories, net	Inventories, net	605		572		Inventories, net	699		628
Prepaid expenses and other current assets (Note 4)	Prepaid expenses and other current assets (Note 4)	272		165		Prepaid expenses and other current assets (Note 4)	433		405
Total current assets	Total current assets	1,859		1,635		Total current assets	2,315		2,137
Property, plant and equipment, net	Property, plant and equipment, net	1,222		1,225		Property, plant and equipment, net	1,294		1,300
Intangible assets, net	Intangible assets, net	2,068		2,264		Intangible assets, net	2,021		2,058
Goodwill	Goodwill	4,415		4,586		Goodwill	4,540		4,507
Deferred tax assets, net	Deferred tax assets, net	904		933		Deferred tax assets, net	938		927
Other non-current assets (Note 4)	Other non-current assets (Note 4)	228		180		Other non-current assets (Note 4)	207		215
Total assets	Total assets	$	10,696	$	10,823	Total assets	$	11,315	$	11,144
Liabilities	Liabilities					Liabilities
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable (Note 4)	Accounts payable (Note 4)	$	295	$	239	Accounts payable (Note 4)	$	348	$	370
Accrued and other current liabilities	Accrued and other current liabilities	879		860		Accrued and other current liabilities	952		901
Current portion of long-term debt	Current portion of long-term debt	25		—		Current portion of long-term debt	25		25
Total current liabilities	Total current liabilities	1,199		1,099		Total current liabilities	1,325		1,296
Deferred tax liabilities, net	Deferred tax liabilities, net	10		24		Deferred tax liabilities, net	14		7
Other non-current liabilities	Other non-current liabilities	279		298		Other non-current liabilities	342		329
Long-term debt	Long-term debt	2,413		—		Long-term debt	2,604		2,411
Total liabilities	Total liabilities	3,901		1,421		Total liabilities	4,285		4,043
Commitments and contingencies (Note 18)
Commitments and contingencies (Note 17)						Commitments and contingencies (Note 17)
Equity	Equity					Equity
Common shares, no par value, unlimited shares authorized, 350,000,749 shares issued and outstanding (Note 17)		—		—
Common shares, no par value, unlimited shares authorized, 350,527,323 and 350,000,749 issued and outstanding at June 30, 2023 and December 31, 2022, respectively						Common shares, no par value, unlimited shares authorized, 350,527,323 and 350,000,749 issued and outstanding at June 30, 2023 and December 31, 2022, respectively	—		—
Additional paid-in capital	Additional paid-in capital	8,108		—		Additional paid-in capital	8,321		8,285
Accumulated earnings		7		—
BHC investment		—		10,364
Accumulated (deficit) earnings						Accumulated (deficit) earnings	(116)		6

Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,386)		(1,035)		Accumulated other comprehensive loss	(1,247)		(1,258)
Total Bausch + Lomb Corporation shareholders’ equity	Total Bausch + Lomb Corporation shareholders’ equity	6,729		9,329		Total Bausch + Lomb Corporation shareholders’ equity	6,958		7,033
Noncontrolling interest	Noncontrolling interest	66		73		Noncontrolling interest	72		68
Total equity	Total equity	6,795		9,402		Total equity	7,030		7,101
Total liabilities and equity	Total liabilities and equity	$	10,696	$	10,823	Total liabilities and equity	$	11,315	$	11,144

BAUSCH + LOMB CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share amounts)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues	Revenues									Revenues
Product sales	Product sales	$	937	$	941	$	2,755	$	2,743	Product sales	$	1,031	$	935	$	1,959	$	1,818
Other revenues	Other revenues	5		8		17		21		Other revenues	4		6		7		12
		942		949		2,772		2,764			1,035		941		1,966		1,830
Expenses	Expenses									Expenses
Cost of goods sold (excluding amortization and impairments of intangible assets) (Note 4)	Cost of goods sold (excluding amortization and impairments of intangible assets) (Note 4)	370		361		1,093		1,056		Cost of goods sold (excluding amortization and impairments of intangible assets) (Note 4)	417		377		788		723
Cost of other revenues	Cost of other revenues	2		3		6		8		Cost of other revenues	—		2		1		4
Selling, general and administrative (Note 4)	Selling, general and administrative (Note 4)	381		348		1,092		1,024		Selling, general and administrative (Note 4)	417		368		835		711
Research and development (Note 4)	Research and development (Note 4)	77		63		229		201		Research and development (Note 4)	85		75		162		152
Amortization of intangible assets	Amortization of intangible assets	59		72		188		225		Amortization of intangible assets	56		64		113		129
Other expense, net		7		8		8		13
Other expense (income), net										Other expense (income), net	17		(1)		26		1
		896		855		2,616		2,527			992		885		1,925		1,720
Operating income	Operating income	46		94		156		237		Operating income	43		56		41		110
Interest income	Interest income	2		—		3		—		Interest income	5		1		8		1
Interest expense (Note 4)	Interest expense (Note 4)	(35)		—		(99)		—		Interest expense (Note 4)	(58)		(44)		(108)		(64)
Foreign exchange and other	Foreign exchange and other	6		(6)		15		(5)		Foreign exchange and other	(9)		14		(15)		9
Income before provision for income taxes		19		88		75		232
(Loss) income before provision for income taxes										(Loss) income before provision for income taxes	(19)		27		(74)		56
Provision for income taxes	Provision for income taxes	(34)		(25)		(60)		(93)		Provision for income taxes	(10)		(20)		(43)		(26)
Net (loss) income	Net (loss) income	(15)		63		15		139		Net (loss) income	(29)		7		(117)		30
Net income attributable to noncontrolling interest	Net income attributable to noncontrolling interest	(3)		(3)		(8)		(8)		Net income attributable to noncontrolling interest	(3)		(2)		(5)		(5)
Net (loss) income attributable to Bausch + Lomb Corporation	Net (loss) income attributable to Bausch + Lomb Corporation	$	(18)	$	60	$	7	$	131	Net (loss) income attributable to Bausch + Lomb Corporation	$	(32)	$	5	$	(122)	$	25

Basic and diluted (loss) income per share attributable to Bausch + Lomb Corporation	Basic and diluted (loss) income per share attributable to Bausch + Lomb Corporation	$	(0.05)	$	0.17	$	0.02	$	0.37	Basic and diluted (loss) income per share attributable to Bausch + Lomb Corporation	$	(0.09)	$	0.01	$	(0.35)	$	0.07

Basic and diluted weighted-average common shares	Basic and diluted weighted-average common shares	350		350		350		350		Basic and diluted weighted-average common shares	350		350		350		350

BAUSCH + LOMB CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~(LOSS) INCOME~~LOSS

(in millions)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net (loss) income	Net (loss) income	$	(15)	$	63	$	15	$	139	Net (loss) income	$	(29)	$	7	$	(117)	$	30
Other comprehensive (loss) income	Other comprehensive (loss) income									Other comprehensive (loss) income
Foreign currency translation adjustment	Foreign currency translation adjustment	(169)		(71)		(351)		(136)		Foreign currency translation adjustment	(10)		(122)		11		(182)
Pension and postretirement benefit plan adjustments, net of income taxes	Pension and postretirement benefit plan adjustments, net of income taxes	(1)		—		(4)		6		Pension and postretirement benefit plan adjustments, net of income taxes	1		1		(1)		(3)
Other comprehensive (loss) income	Other comprehensive (loss) income	(170)		(71)		(355)		(130)		Other comprehensive (loss) income	(9)		(121)		10		(185)
Comprehensive (loss) income		(185)		(8)		(340)		9
Comprehensive income attributable to noncontrolling interest		(2)		(3)		(4)		(9)
Comprehensive (loss) income attributable to Bausch + Lomb Corporation		$	(187)	$	(11)	$	(344)	$	—
Comprehensive loss										Comprehensive loss	(38)		(114)		(107)		(155)
Comprehensive (income) loss attributable to noncontrolling interest										Comprehensive (income) loss attributable to noncontrolling interest	(3)		1		(4)		(2)
Comprehensive loss attributable to Bausch + Lomb Corporation										Comprehensive loss attributable to Bausch + Lomb Corporation	$	(41)	$	(113)	$	(111)	$	(157)

BAUSCH + LOMB CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(in millions)

(Unaudited)

BHC Investment Additional Paid in Capital Accumulated Earnings Accumulated Other Comprehensive Loss
Bausch + Lomb
Corporation
Shareholders’
Equity
Non-controlling Interest
Total
Equity
Common Shares
Shares Amount
Three Months Ended September 30, 2022
Balances, July 1, 2022 350 $ — $ — $ 8,088 $ 25 $ (1,217) $ 6,896 $ 75 $ 6,971
Net distributions to BHC and affiliates (Note 4) — — — 2 — — 2 — 2
Noncontrolling interest distributions — — — — — — — (11) (11)
Share-based compensation — — — 18 — — 18 — 18
Net (loss) income — — — — (18) — (18) 3 (15)
Other comprehensive loss — — — — — (169) (169) (1) (170)
Balances, September 30, 2022 350 $ — $ — $ 8,108 $ 7 $ (1,386) $ 6,729 $ 66 $ 6,795
Three Months Ended September 30, 2021
Balances, July 1, 2021 — $ — $ 10,624 $ — $ — $ (949) $ 9,675 $ 76 $ 9,751
Net decrease in BHC investment — — (339) — — — (339) — (339)
Noncontrolling interest distributions — — — — — — — (10) (10)
Net income — — 60 — — — 60 3 63
Other comprehensive loss — — — — — (71) (71) — (71)
Balances, September 30, 2021 — $ — $ 10,345 $ — $ — $ (1,020) $ 9,325 $ 69 $ 9,394
Nine Months Ended September 30, 2022
Balances, January 1, 2022 — $ — $ 10,364 $ — $ — $ (1,035) $ 9,329 $ 73 $ 9,402
Issuance of common shares (Note 17) 350 — (8,164) 8,164 — — — — —
Issuance of BHC Purchase Debt (Note 4) — — (2,200) — — — (2,200) — (2,200)
Net distributions to BHC and affiliates (Note 4) — — — (85) — — (85) — (85)
Noncontrolling interest distributions — — — — — — — (11) (11)
Share-based compensation — — — 29 — — 29 — 29
Net income — — — — 7 — 7 8 15
Other comprehensive loss — — — — — (351) (351) (4) (355)
Balances, September 30, 2022 350 $ — $ — $ 8,108 $ 7 $ (1,386) $ 6,729 $ 66 $ 6,795
Nine Months Ended September 30, 2021
Balances, January 1, 2021 — $ — $ 10,807 $ — $ — $ (889) $ 9,918 $ 70 $ 9,988
Net decrease in BHC investment — — (593) — — — (593) — (593)
Noncontrolling interest distributions — — — — — — — (10) (10)
Net income — — 131 — — — 131 8 139
Other comprehensive (loss) income — — — — — (131) (131) 1 (130)
Balances, September 30, 2021 — $ — $ 10,345 $ — $ — $ (1,020) $ 9,325 $ 69 $ 9,394


				BHC Investment		Additional Paid in Capital		Accumulated (Deficit) Earnings		Accumulated Other Comprehensive Loss		Bausch + Lomb Corporation Shareholders’ Equity		Non-controlling Interest		Total Equity
	Common Shares
	Shares	Amount
	Three Months Ended June 30, 2023
Balances, April 1, 2023	350.2	$	—	$	—	$	8,305	$	(84)	$	(1,238)	$	6,983	$	69	$	7,052
Common shares issued under share-based compensation plans	0.3	—		—		—		—		—		—		—		—
Share-based compensation	—	—		—		18		—		—		18		—		18
Employee withholding taxes related to share-based awards	—	—		—		(2)		—		—		(2)		—		(2)
Net (loss) income	—	—		—		—		(32)		—		(32)		3		(29)
Other comprehensive loss	—	—		—		—		—		(9)		(9)		—		(9)
Balances, June 30, 2023	350.5	$	—	$	—	$	8,321	$	(116)	$	(1,247)	$	6,958	$	72	$	7,030

	Three Months Ended June 30, 2022
Balances, April 1, 2022	350.0	$	—	$	—	$	8,219	$	20	$	(1,099)	$	7,140	$	76	$	7,216
Net distributions to BHC and affiliates (Note 4)	—	—		—		(142)		—		—		(142)		—		(142)
Share-based compensation	—	—		—		11		—		—		11		—		11
Net income	—	—		—		—		5		—		5		2		7
Other comprehensive loss	—	—		—		—		—		(118)		(118)		(3)		(121)
Balances, June 30, 2022	350.0	$	—	$	—	$	8,088	$	25	$	(1,217)	$	6,896	$	75	$	6,971

	Six Months Ended June 30, 2023
Balances, January 1, 2023	350.0	$	—	$	—	$	8,285	$	6	$	(1,258)	$	7,033	$	68	$	7,101
Common shares issued under share-based compensation plans	0.5	—		—		—		—		—		—		—		—
Share-based compensation	—	—		—		42		—		—		42		—		42
Employee withholding taxes related to share-based awards	—	—		—		(6)		—		—		(6)		—		(6)
Net (loss) income	—	—		—		—		(122)		—		(122)		5		(117)
Other comprehensive income (loss)	—	—		—		—		—		11		11		(1)		10
Balances, June 30, 2023	350.5	$	—	$	—	$	8,321	$	(116)	$	(1,247)	$	6,958	$	72	$	7,030

	Six Months Ended June 30, 2022
Balances, January 1, 2022	—	$	—	$	10,364	$	—	$	—	$	(1,035)	$	9,329	$	73	$	9,402
Issuance of common shares (Note 16)	350.0	—		(8,164)		8,164		—		—		—		—		—
Issuance of BHC Purchase Debt (Note 4)	—	—		(2,200)		—		—		—		(2,200)		—		(2,200)
Net distributions to BHC and affiliates (Note 4)	—	—		—		(87)		—		—		(87)		—		(87)
Share-based compensation	—	—		—		11		—		—		11		—		11
Net income	—	—		—		—		25		—		25		5		30
Other comprehensive loss	—	—		—		—		—		(182)		(182)		(3)		(185)
Balances, June 30, 2022	350.0	$	—	$	—	$	8,088	$	25	$	(1,217)	$	6,896	$	75	$	6,971

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

BAUSCH + LOMB CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)


		Nine Months Ended September 30,					Six Months Ended June 30,
		2022		2021			2023		2022
Cash Flows From Operating Activities	Cash Flows From Operating Activities					Cash Flows From Operating Activities
Net income		$	15	$	139
Net (loss) income						Net (loss) income	$	(117)	$	30
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangible assets	Depreciation and amortization of intangible assets	286		315		Depreciation and amortization of intangible assets	184		193
Amortization and write-off of debt premiums, discounts and issuance costs	Amortization and write-off of debt premiums, discounts and issuance costs	5		—		Amortization and write-off of debt premiums, discounts and issuance costs	6		2
Asset impairments		1		11

Allowances for losses on trade receivables and inventories	Allowances for losses on trade receivables and inventories	20		32		Allowances for losses on trade receivables and inventories	10		8
Deferred income taxes	Deferred income taxes	(39)		9		Deferred income taxes	(19)		(41)
Payments of accrued legal settlements	Payments of accrued legal settlements	(4)		—		Payments of accrued legal settlements	—		(3)
Share-based compensation	Share-based compensation	45		45		Share-based compensation	42		27
Foreign exchange loss	Foreign exchange loss	(10)		12		Foreign exchange loss	9		(6)
Gain excluded from hedge effectiveness	Gain excluded from hedge effectiveness	(3)		—		Gain excluded from hedge effectiveness	(6)		—
Other	Other	(23)		(8)		Other	(2)		(29)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Trade receivables	Trade receivables	(68)		(31)		Trade receivables	(74)		(24)
Inventories	Inventories	(108)		(38)		Inventories	(82)		(74)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(10)		(15)		Prepaid expenses and other current assets	(34)		(2)
Accounts payable, accrued and other liabilities	Accounts payable, accrued and other liabilities	79		240		Accounts payable, accrued and other liabilities	3		78
Net cash provided by operating activities		186		711
Net cash (used in) provided by operating activities						Net cash (used in) provided by operating activities	(80)		159
Cash Flows From Investing Activities	Cash Flows From Investing Activities					Cash Flows From Investing Activities
Acquisitions of intangible assets and other investments		(5)		1
Acquisitions and other investments						Acquisitions and other investments	(31)		—
Acquisitions of intangible assets						Acquisitions of intangible assets	(3)		—
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(125)		(131)		Purchases of property, plant and equipment	(64)		(76)
Purchases of marketable securities	Purchases of marketable securities	(15)		(14)		Purchases of marketable securities	(11)		(14)
Proceeds from sale of marketable securities	Proceeds from sale of marketable securities	20		11		Proceeds from sale of marketable securities	10		14
Proceeds from sale of assets and businesses, net of costs to sell						Proceeds from sale of assets and businesses, net of costs to sell	1		—
Interest settlements from cross-currency swaps						Interest settlements from cross-currency swaps	6		—
Net cash used in investing activities	Net cash used in investing activities	(125)		(133)		Net cash used in investing activities	(92)		(76)
Cash Flows From Financing Activities	Cash Flows From Financing Activities					Cash Flows From Financing Activities
Issuance of long-term debt, net of discounts	Issuance of long-term debt, net of discounts	2,440		—		Issuance of long-term debt, net of discounts	200		2,440
Repayments of debt	Repayments of debt	(6)		—		Repayments of debt	(13)		—
Payment of employee withholding taxes related to share-based awards						Payment of employee withholding taxes related to share-based awards	(6)		—
Payments of financing costs	Payments of financing costs	(3)		—		Payments of financing costs	—		(3)
Payments of noncontrolling interest distributions		(11)		(10)

Net borrowings under BHC pooled financing arrangements (Note 4)	Net borrowings under BHC pooled financing arrangements (Note 4)	31		—		Net borrowings under BHC pooled financing arrangements (Note 4)	—		31
Net transfers to BHC (Note 4)	Net transfers to BHC (Note 4)	(2,363)		(665)		Net transfers to BHC (Note 4)	—		(2,271)
Net cash provided by (used in) financing activities		88		(675)
Net cash provided by financing activities						Net cash provided by financing activities	181		197
Effect of exchange rate changes on cash and cash equivalents and restricted cash	Effect of exchange rate changes on cash and cash equivalents and restricted cash	(29)		(8)		Effect of exchange rate changes on cash and cash equivalents and restricted cash	3		(11)
Net increase in cash and cash equivalents and restricted cash	Net increase in cash and cash equivalents and restricted cash	120		(105)		Net increase in cash and cash equivalents and restricted cash	12		269
Cash and cash equivalents and restricted cash, beginning of period	Cash and cash equivalents and restricted cash, beginning of period	177		238		Cash and cash equivalents and restricted cash, beginning of period	380		177
Cash and cash equivalents and restricted cash, end of period	Cash and cash equivalents and restricted cash, end of period	$	297	$	133	Cash and cash equivalents and restricted cash, end of period	$	392	$	446

Non-cash Financing Activity
Non-cash Investing and Financing Activities						Non-cash Investing and Financing Activities
Accrued purchases of property, plant and equipment						Accrued purchases of property, plant and equipment	$	26	$	21
Issuance of BHC Purchase Debt (Note 4)	Issuance of BHC Purchase Debt (Note 4)	$	2,200	$	—	Issuance of BHC Purchase Debt (Note 4)	$	—	$	2,200

BAUSCH + LOMB CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.DESCRIPTION OF BUSINESS

Overview

Bausch + Lomb Corporation (“(“Bausch + Lomb” or the “~~Company”~~“Company”) ~~is a subsidiary of Bausch Health Companies Inc. (“BHC”), and~~ is a leading global eye health company dedicated to protecting and enhancing the gift of sight for millions of people around the world – from the moment of birth through every phase of life. The Company operates in three reportable segments: (i) Vision Care segment which includes both a contact lens business and a consumer eye care business that consists of contact lens care products, over-the-counter (“OTC”) eye drops and eye vitamins, (ii) ~~Ophthalmic~~ Pharmaceuticals segment which consists of a broad line of proprietary and generic pharmaceutical products for post-operative treatments and treatments for a number of eye conditions, such as glaucoma, eye inflammation, ocular hypertension, dry eyes and retinal diseases and (iii) Surgical segment which consists of medical device equipment, consumables, ~~and instrumental tools~~instruments and technologies for the treatment of cataracts, corneal ~~cataracts,~~ and vitreous and retinal eye conditions, ~~and~~which includes intraocular lenses (“IOLs”) and delivery systems, phacoemulsification equipment and other surgical instruments and devices necessary for cataract surgery. Effective June 30, 2023, the Company renamed its former Ophthalmic Pharmaceuticals segment to the Pharmaceuticals segment. Aside from the change in name, there were no other changes made to this segment. See Note ~~19,~~18, “SEGMENT INFORMATION” for additional information regarding these reportable segments.Bausch + Lomb is a subsidiary of Bausch Health Companies Inc. (“BHC”), with BHC holding, directly or indirectly, approximately 88.5% of the issued and outstanding common shares of Bausch + Lomb as of July 28, 2023.

Separation of Bausch + Lomb

On August 6, 2020, BHC announced its plan to separate Bausch + Lomb into an independent, publicly traded company, separate from the remainder of BHC (the “Separation”), commencing with an initial public offering of Bausch + Lomb's common shares (as further described below). Prior to January 1, 2022, Bausch + Lomb had nominal assets and liabilities. In connection with the B+L IPO (as defined below), BHC transferred to Bausch + Lomb, in a series of steps, all the entities, assets, liabilities and obligations that Bausch + Lomb held upon completion of the B+L IPO pursuant to a Master Separation Agreement (the “MSA”) with BHC.

The registration statement related to the initial public offering (the “IPO”) of Bausch + Lomb’s common shares (the “B+L IPO”) was declared effective on May 5, 2022, and Bausch + Lomb’s common shares 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. Bausch + Lomb also obtained a final receipt to its ~~final~~ Canadian base PREP prospectus on May 5, 2022. Prior to the B+L IPO, Bausch + Lomb was a wholly-owned subsidiary of BHC. On May 10, 2022, a wholly-owned subsidiary of BHC (the “Selling Shareholder”) sold 35,000,000 common shares of Bausch + Lomb, at an offering price of $18.00 per share (less the applicable underwriting discount), pursuant to the Bausch + Lomb prospectuses. 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 price less underwriting commissions. On May 31, 2022, the underwriters for the B+L IPO 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 the applicable underwriting discount). The remainder of the over-allotment option granted to the underwriters expired. The Selling Shareholder received all net proceeds from the B+L IPO and the partial exercise of the over-allotment option by the underwriters. ~~Upon the closing~~As of ~~the B+L IPO (after giving effect to the partial exercise of the over-allotment option),~~July 28, 2023, BHC directly or indirectly ~~holds~~held 310,449,643 ~~Bausch + Lomb~~ common shares ~~which represents approximately 88.7%~~ of Bausch + Lomb, which represented approximately 88.5% of the issued and outstanding common ~~shares.~~shares of Bausch + Lomb.

The completion of the full Separation of Bausch + Lomb, which includes the transfer of all or a portion of BHC’s remaining direct or indirect equity interest in Bausch + Lomb to its shareholders (the “Distribution”), is subject to ~~the expiry of customary lockups related to the B+L IPO (which have now expired) and~~ the achievement of targeted debt leverage ratios ~~subject to market conditions~~ and the receipt of applicable shareholder and other necessary approvals and other factors and is subject to ~~the~~ various risk factors relating to the ~~separation approvals set forth~~Separation. See Item 1A. “Risk Factors” in ~~Bausch + Lomb’s final prospectus as~~the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the ~~SEC~~U.S. Securities and Exchange Commission (the “SEC”) and the Canadian Securities Administrators (“CSA”) on ~~May 5, 2022 pursuant to Rule 424(b)(4) under~~February 22, 2023 (the “Annual Report”) for additional information on the ~~Act relating to the Bausch + Lomb Registration Statement on Form S-1 and in Bausch + Lomb’s supplemented PREP prospectus as filed~~risks associated with the ~~CSA on May 5, 2022, under the section entitled “Risk Factors.”.~~Separation. Bausch + Lomb understands that BHC continues to believe that completing the B+L Separation makes strategic sense and that BHC continues to evaluate all relevant factors and considerations related to completing the Separation, including the effect of the lawsuit filed against Norwich ~~Legal Decision.~~Pharmaceuticals Inc.

reporting on Form 10-Q. Prior to January 1, 2022, the Company’s combined financial statements were prepared on a combined basis and were derived from BHC’s historical consolidated financial statements.

On May 10, 2022, Bausch + Lomb became an independent publicly traded company. The unaudited Condensed Consolidated Financial Statements, for the periods ended after the B+L IPO, have been prepared using the Company’s accounting policies and reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position and results of operations for the interim periods.

~~Prior to the B+L IPO,~~ ~~Bausch~~ + Lomb had historically operated as part of BHC; therefore, separate financial statements were not historically prepared. The accompanying unaudited Condensed Consolidated Financial Statements for periods prior to the B+L IPO were prepared from BHC’s historical accounting records.

The unaudited financial statements for all periods presented, including the historical results of the Company prior to May 10, 2022, are referred to as “Condensed Consolidated Financial Statements”, and have been prepared by ~~Bausch~~ ~~+ Lomb~~the Company in United States (“U.S.”) dollars and in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial reporting and pursuant to the rules and regulations for reporting on Form 10-Q, which do not conform in all respects to the requirements of U.S. GAAP for annual financial statements. Accordingly, certain information and disclosures required by U.S. GAAP for complete Consolidated Financial Statements are not included herein.

~~The results of operations of any interim period are not necessarily indicative of~~ Accordingly, these notes to the ~~results of operations for the full year. In~~ ~~Bausch~~ ~~+ Lomb’s opinion, all adjustments necessary for a fair statement of these interim statements have been included and are of a normal and recurring nature. These interim statements~~unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements prepared in accordance with U.S. GAAP that are contained in the Company’s Annual Report. 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, 2022. The unaudited Condensed Consolidated Financial Statements reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial ~~statements~~position and notes thereto included in Bausch + Lomb’s Registration Statement on Form S-1, as amended, filed on April 28, 2022 and declared effective on May 5, 2022 and in Bausch + Lomb’s final Canadian base PREP prospectus dated May 5, 2022 andresults of operations for the ~~supplemented PREP prospectus dated May 5, 2022.~~interim periods. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year.

Prior to the B+L IPO, Bausch + Lomb had historically operated as part of BHC; therefore, separate financial statements were not historically prepared. The accompanying unaudited Condensed Consolidated Financial Statements for periods prior to the B+L IPO were prepared from BHC’s historical accounting records. Prior to the B+L IPO, Bausch + Lomb relied on BHC’s corporate and other support functions. Therefore, certain corporate and shared costs for periods prior to the B+L IPO ~~have~~had been allocated to Bausch + ~~Lomb, including expenses related~~Lomb. Refer to ~~BHC support functions that are provided~~Note 2 in the Company’s Annual Report for additional details on ~~a centralized~~the Company's basis ~~including expenses for executive oversight, treasury, accounting, legal, human resources, shared services, compliance, procurement, information technology~~of presentation during the periods prior, and other corporate functions. The expenses associated with these services generally include all payroll and benefit costs, certain share-based compensation expenses related to BHC’s long-term incentive program for BHC employees who are providing corporate services to ~~Bausch~~ + Lomb, certain expenses associated with corporate insurance coverage and medical, pension, postretirement and other health plan costs for employees participating in BHC sponsored plans, as well as overhead costs relatedsubsequent, to the ~~support functions. These expenses have been allocated to~~ ~~Bausch~~ ~~+ Lomb using the same basis and methodologies used in preparing~~ ~~Bausch~~ ~~+ Lomb’s audited Combined Financial Statements for the year ended December 31, 2021.~~B+L IPO.

Following the B+L IPO, certain functions that BHC provided to Bausch + Lomb prior to the B+L IPO were provided and, in some cases, continue to be provided to Bausch + Lomb by BHC under a Transition Services Agreement (the “TSA”) or are performed using Bausch + Lomb’s own resources or third-party service providers. Bausch + Lomb has incurred certain costs in its establishment as a standalone public company, and expects additional ongoing costs associated with operating as an independent, publicly traded company. See Note 4, “RELATED PARTIES” for further information regarding agreements between ~~B+L and BHC.~~

~~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, facility closures and production suspensions.

~~The extent to which these events may continue to impact~~ ~~Bausch~~ ~~+ Lomb’s business, financial condition, cash flows and results of operations, in particular, will depend on future developments which are highly uncertain and many of which are outside~~ ~~Bausch~~ + Lomb’s control. Such developments include the availability and effectiveness of vaccines for the COVID-19 virus, COVID-19 vaccine immunization rates, the ultimate geographic spread and duration of the pandemic, the extent and duration of a resurgence of the COVID-19 virus and subvariant and variant strains thereof, such as the delta and omicron variants, new information concerning the severity of the COVID-19 virus, the effectiveness and intensity of measures to contain the COVID-19 virus and the economic impact of the pandemic and the reactions to it. Such developments, among others, depending on their nature, duration and intensity, could have a significant adverse effect on Bausch + Lomb’s business, financial condition, cash flows and results of operations.

~~To date,~~ ~~Bausch~~ + Lomb has been able to continue its operations with limited disruptions in supply and manufacturing. Although, it is difficult to predict the broad macroeconomic effects that the COVID-19 pandemic will have on industries or

~~individual companies,~~ ~~Bausch~~ + Lomb has assessed the possible effects and outcomes of the pandemic on, among other things, its supply chain, customers and distributors, discounts and rebates, employee base, product sustainability, research and development efforts, product pipeline and consumer demand and currently believes that its estimates are reasonable.

~~Out of Period Adjustments~~

During the preparation of the Condensed Consolidated Financial Statements for the three months ended March 31, 2022, management identified immaterial prior period accounting misstatements related to the income tax impact of unrealized gains and losses of Bausch + Lomb’s pension and postretirement benefit plan, which are included in Other comprehensive loss in the Condensed Consolidated Statements of Comprehensive Income and related to the impact of deferred taxes on the Condensed Consolidated Statements of Cash Flows. The misstatements resulted in an overstatement of Other comprehensive loss and of Net cash provided by operating activities of $6 million and an overstatement of Net cash used in financing activities of $6 million for the nine months ended September 30, 2021 and in an understatement of $10 million of Accumulated other comprehensive loss in the Condensed Consolidated Balance Sheet as of December 31, 2021. Bausch + Lomb ~~recorded out of period corrections for the misstatements during the nine months ended September 30, 2022, resulting in an out of period unrealized loss of $10 million, reflected in the Pension~~ and postretirement benefit plan adjustments, net of income taxes caption of its Condensed Consolidated Statements of Comprehensive Income (Loss). The out of period correction also resulted in a decrease in the Deferred income taxes caption and an offsetting increase in the Net Transfers to BHC caption of its Condensed Consolidated Statements of Cash Flows of $10 million for the nine months ended September 30, 2022.

During the preparation of the Condensed Consolidated Financial Statements for the three months ended March 31, 2021, management identified immaterial prior period accounting misstatements related to the allocation of foreign exchange gains and losses reported in its financial statements. ~~Bausch~~ + Lomb recorded an out of period correction for the misstatements during the nine months ended September 30, 2021, resulting in out of period expense of $6 million ($4 million, net of income taxes) included in Foreign exchange and other in its Condensed Consolidated Statements of Operations for the nine months ended September 30, 2021. The misstatement did not impact ~~Bausch~~ ~~+ Lomb’s Condensed Consolidated Balance Sheets or Condensed Consolidated Statements of Cash Flows.~~

Management has evaluated these misstatements and related out of period corrections in relation to the current period financial statements as well as the periods in which they originated and concluded that these misstatements are not material to the impacted periods.BHC.

Use of Estimates

In preparing ~~Bausch~~ ~~+ Lomb’s~~the Company’s Condensed Consolidated Financial Statements, management is required to make estimates and assumptions. This includes estimates and assumptions regarding the nature, timing and extent of the impacts that certain global macroeconomic conditions, including, but not limited to, those related to the COVID-19 pandemic and other macroeconomic factors, including those related to inflation and supply chain, will have on ~~its~~the Company's operations and cash flows. The estimates and assumptions used by ~~Bausch~~ ~~+ Lomb~~the Company affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates made by management include: provisions for product returns, rebates, chargebacks, discounts and allowances and distribution fees paid to certain wholesalers; useful lives of finite-lived intangible assets and property, plant and equipment; expected future cash flows used in evaluating intangible assets for impairment, assessing compliance with debt covenants, reporting unit fair values for testing goodwill for impairment; acquisition-related contingent consideration liabilities; provisions for loss contingencies; provisions for income taxes, uncertain tax positions and realizability of deferred tax assets; the fair value of cross-currency swaps; and the fair value of foreign currency exchange ~~contracts; and~~contracts. Prior to the B+L IPO, significant estimates made by management also included the related allocations described in ~~Bausch~~ ~~+ Lomb’s~~the basis of presentation.

All ~~allocations and~~ estimates in these Condensed Consolidated Financial Statements are based on assumptions that management believes are reasonable. On an ongoing basis, management reviews its ~~allocations and~~ estimates to ensure that these ~~allocations and~~ estimates appropriately reflect changes in ~~Bausch~~ ~~+ Lomb~~the Company's business and new information as it becomes available. ~~However, the Condensed Consolidated Financial Statements included herein may not be indicative of the financial position, results of operations and cash flows of~~ ~~Bausch~~ ~~+ Lomb in the future, or if~~ ~~Bausch~~ ~~+ Lomb had been a separate, standalone entity during the periods presented.~~ If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company's business, financial condition, cash flows and results of operations could be materially impacted.

The extent to which certain global macroeconomic conditions, including, but not limited to, those related to the COVID-19 pandemic and its overall impact on inflation and supply chain, may continue to impact the Company’s business, financial condition, cash flows and results of operations, in particular, will depend on future developments which are highly uncertain and many of which are outside the Company’s control. The Company has assessed the possible effects and outcomes of these macroeconomic conditions on, among other things, its supply chain, customers and distributors, discounts and rebates, employee base, product sustainability, research and development efforts, product pipeline and consumer demand and currently believes that its estimates are reasonable.

Out of Period Adjustments

During the preparation of the Condensed Consolidated Financial Statements ~~could be materially impacted.~~for the three months ended March 31, 2022, management identified immaterial prior period accounting misstatements related to the income tax impact of unrealized gains and losses of the Company’s pension and postretirement benefit plan, which are included in Other comprehensive loss in the Condensed Consolidated Statement of Comprehensive Income and related to the impact of deferred taxes on the Condensed Consolidated Statement of Cash Flows. The misstatements resulted in an overstatement of Other comprehensive loss and of Net cash provided by operating activities of $6 million and an overstatement of Net cash used in financing activities of $6 million for the six months ended June 30, 2021 and in an understatement of $10 million of Accumulated other comprehensive loss in the Condensed Consolidated Balance Sheet as of December 31, 2021. Bausch + Lomb recorded out of period corrections for the misstatements during the six months ended June 30, 2022, resulting in an out of period unrealized loss of $10 million, reflected in the Pension and postretirement benefit plan adjustments, net of income taxes caption of its Condensed Consolidated Statements of Comprehensive Loss. The out of period correction also resulted in a decrease in the Deferred income taxes caption and an offsetting increase in the Net Transfers to BHC caption of its Condensed Consolidated Statement of Cash Flows of $10 million for the six months ended June 30, 2022.

Reclassifications

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

Adoption of New Accounting Standards

There were no new accounting standards adopted during the three months ended June 30, 2023.

3.REVENUE RECOGNITION

Revenue Recognition

~~Bausch~~ ~~+ Lomb’s~~The Company’s revenues are primarily generated from product sales in the therapeutic areas of eye health that consist of: (i) branded prescription eye-medications and pharmaceuticals, (ii) generic and branded generic prescription eye medications and pharmaceuticals, (iii) OTC vitamin and supplement products and (iv) medical devices (contact lenses, ~~intraocular lenses~~IOLs and

ophthalmic surgical equipment). Other revenues include alliance and service revenue from the licensing and co-promotion of products and contract service revenue. Contract service revenue is derived primarily from contract manufacturing for third parties and is not material. See Note ~~19,~~18, “SEGMENT INFORMATION” for the disaggregation of revenues which depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by the economic factors of each category of customer contracts.

~~Bausch~~ ~~+ Lomb~~The Company recognizes revenue when the customer obtains control of promised goods or services and in an amount that reflects the consideration to which ~~Bausch~~ ~~+ Lomb~~the Company expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, ~~Bausch~~ ~~+ Lomb~~the Company applies the five-step revenue model to contracts within its scope: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

Product Sales

A contract with ~~Bausch~~ ~~+ Lomb’s~~the Company’s customers exists for each product sale. Where a contract with a customer contains more than one performance obligation, ~~Bausch~~ ~~+ Lomb~~the Company allocates the transaction price to each distinct performance obligation based on its relative standalone selling price. The transaction price is adjusted for variable consideration which is discussed further below. ~~Bausch~~ ~~+ Lomb~~The Company recognizes revenue for product sales at a point in time, when the customer obtains control of the products in accordance with contracted delivery terms, which is generally upon shipment or customer receipt. Contracted delivery terms will vary by customer and geography. In the U.S., control is generally transferred to the customer upon receipt.

Revenue from sales of surgical equipment and related software is generally recognized upon delivery and installation of the equipment. ~~Intraocular lenses~~IOLs and delivery systems, disposable surgical packs and other surgical instruments are distinct from the surgical equipment and may be sold together with the surgical equipment in a single contract or on a standalone basis. Revenue from the sale of delivery systems, disposable surgical packs and other surgical instruments is recognized in accordance with the contracted delivery terms, generally upon shipment or customer receipt. ~~Intraocular lenses~~IOLs are sold primarily on a consignment basis and revenue is recognized upon notification of use, which typically occurs when a replacement order is placed.

When a sale transaction in the Surgical segment contains multiple performance obligations, the transaction price is allocated to each performance obligation based on the relative standalone sales price and revenue is recognized upon satisfaction of each performance obligation.

Product Sales Provisions

As is customary in the eye health industry, gross product sales of certain product categories are subject to a variety of deductions in arriving at reported net product sales. The transaction price for such product categories 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 ~~Bausch~~ ~~+ Lomb’s~~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 the future period.

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

4.RELATED PARTIES

Prior to May 10, 2022, Bausch + Lomb had been managed and operated in the ordinary course of business with other affiliates of BHC. Accordingly, certain corporate and shared costs prior to May 10, 2022 were allocated to Bausch + Lomb and reflected as expenses in the unaudited Condensed Consolidated Financial Statements. ~~There~~On May 10, 2022, Bausch + Lomb became an independent publicly traded company. However, as of July 28, 2023, BHC directly or indirectly held 310,449,643 common shares of Bausch + Lomb, which represented approximately 88.5% of the issued and outstanding common shares of Bausch + Lomb.

Additionally, there have been no sales made to related parties for all periods presented.

Allocated Centralized Costs Prior to May 10, 2022

Prior to May 10, 2022, the unaudited Condensed Consolidated Financial Statements have been prepared on a standalone basis and were derived from the unaudited consolidated financial statements and accounting records of BHC. BHC incurred significant corporate costs for services it provided to Bausch + Lomb, as well as to other BHC businesses. The allocated corporate and shared costs to Bausch + Lomb for the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022 were $0 and ~~2021 were~~ $76 ~~million and $281~~ million, respectively. The allocated corporate and shared costs to Bausch + Lomb are included in Cost of goods sold (excluding amortization and impairments of intangible assets), Selling, general and administrative ("SG&A") and Research and development in the Condensed Consolidated Statements of Operations. All such amounts have been deemed to have been incurred and settled by Bausch + Lomb in the period in which the costs were recorded and are included in Additional paid-in capital during the ~~nine~~six months ended ~~September~~June 30, ~~2022 and in BHC investment during the nine months ended September 30, 2021.~~2022.

In the opinion of management of BHC and Bausch + Lomb, the expense and cost allocations have been determined on a basis considered to be a reasonable reflection of the utilization of services provided or the benefit received by Bausch + Lomb during the ~~three and nine~~six months ended ~~September~~June 30, ~~2022 and 2021.~~2022. The amounts that would have been, or will be, incurred on a standalone basis could differ from the amounts allocated due to economies of scale, difference in management judgment, a requirement for more or fewer employees or other factors. In addition, the future results of operations, financial position and cash flows could differ materially from the historical results presented herein.

Accounts Receivable and Payable

Certain related party transactions between Bausch + Lomb and BHC have been included in Additional paid-in capital during the ~~nine~~six months ended ~~September~~June 30, 2022 ~~and in BHC investment during the nine months ended September 30, 2021~~ when the related party transactions were not settled in cash.

Certain transactions between Bausch + Lomb and BHC and affiliate businesses are cash-settled on a current basis and, therefore, are reflected in the Condensed Consolidated Balance Sheets. Amounts payable to BHC and its affiliates related to related party transactions were ~~$20~~$39 million and $6$53 million as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022, respectively, and are included within Accounts payable in the Condensed Consolidated Balance Sheets. Amounts due from BHC and its affiliates related to related party transactions were ~~$82~~$91 million and ~~$32~~$102 million as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, of which ~~$0 and $32 million are included within Trade receivables, net, $70~~$79 million and $0$90 million are included within Prepaid expenses and other current assets and $12 million and $0$12 million are included within Other non-current assets on the Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. These amounts are inclusive of the receivables and payables associated with the separation agreements entered into in connection with the B+L IPO, as discussed below.

BHC Pooled Financing Arrangements

Prior to the B+L IPO, certain legal entities comprising Bausch + Lomb participated in BHC pooled financing arrangements, which allowed for individual legal entities participating in the arrangements to borrow from the sponsoring bank. Total borrowings by the BHC pool participants ~~was~~were limited to the aggregate cash maintained in accounts held by the sponsoring

Net Transfers to BHC

The total effect of the settlement of related party transactions is reflected as a financing activity in the Condensed Consolidated Statements of Cash Flows. The components of the Net transfers to BHC for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 are as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	(in millions)	2022		2021		2022		2021		(in millions)	2023		2022		2023		2022
Cash pooling and general financing activities	Cash pooling and general financing activities	$	2	$	(401)	$	(227)	$	(1,159)	Cash pooling and general financing activities	$	—	$	(142)	$	—	$	(229)
Corporate allocations	Corporate allocations	—		91		76		281		Corporate allocations	—		—		—		76
Benefit from income taxes	Benefit from income taxes	—		(29)		66		285		Benefit from income taxes	—		—		—		66
Total net transfers to BHC (as reflected in the Condensed Consolidated Statements of Equity)		$	2	$	(339)	(85)		(593)
Total net transfers to BHC (as reflected in Net distributions to BHC and affiliates in the Condensed Consolidated Statements of Equity)										Total net transfers to BHC (as reflected in Net distributions to BHC and affiliates in the Condensed Consolidated Statements of Equity)	$	—	$	(142)	—		(87)
Payment of BHC Purchase Debt	Payment of BHC Purchase Debt					(2,200)		—		Payment of BHC Purchase Debt					—		(2,200)
Share-based compensation	Share-based compensation					(16)		(45)		Share-based compensation					—		(16)
Other, net	Other, net					(62)		(27)		Other, net					—		32
Net transfers to BHC (as reflected in the Condensed Consolidated Statements of Cash Flows)	Net transfers to BHC (as reflected in the Condensed Consolidated Statements of Cash Flows)					$	(2,363)	$	(665)	Net transfers to BHC (as reflected in the Condensed Consolidated Statements of Cash Flows)					$	—	$	(2,271)

In addition to the previously discussed agreements, Bausch + Lomb has entered into certain other agreements with BHC including, but not limited to, the Intellectual Property Matters Agreement and the Real Estate Matters Agreement that provide a framework for the ongoing relationship with BHC.

Charges incurred related to the above agreements were $6$1 million and $5 million for the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022, respectively, and are primarily reflected within ~~Selling, general and administrative~~SG&A in the Condensed Consolidated Statements of Operations.

5.ACQUISITIONS AND LICENSING AGREEMENTS

~~Licensing Agreements~~The Company regularly considers strategic licensing and acquisition opportunities. Acquired businesses are accounted for using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recorded at fair value, with limited exceptions. Transaction costs and costs to restructure the acquired company are expensed as incurred. The operating results of the acquired business are reflected in the Condensed Consolidated Financial Statements from the date of acquisition. Goodwill is recorded with the acquisition and is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. Acquired in-process research and development (“IPR&D”) is recognized at fair value and initially characterized as an indefinite-lived intangible asset, irrespective of whether the acquired IPR&D has an alternative future use. If the acquired net assets do not constitute a business, the transaction is accounted for as an asset acquisition and no goodwill is recognized. In an asset acquisition, the amount allocated to acquired IPR&D with no alternative future use is charged to expense at the acquisition date and any future contingent consideration is not recorded until it becomes probable.

2023 Acquisitions

InAcquisition of XIIDRA®

On June 30, 2023, a wholly owned subsidiary of the ~~normal course of business,~~ Company, 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 the Company's existing dry eye franchise.

Under the terms of the agreement, the Company, through its affiliate, has agreed to acquire XIIDRA® and certain other ophthalmology assets from Novartis for an up-front cash payment, at closing, of $1,750 million, with potential milestone obligations of up to $750 million, in part, payable upon the achievement of specified commercialization and sales milestones for certain pipeline products to be acquired as part of the transaction and, in part, upon the achievement of specified sales milestones for XIIDRA®. The transaction is expected to close by the end of 2023, subject to receipt of regulatory approval and other customary closing conditions. The Company has obtained debt financing commitments for purposes of this transaction and intends to finance the $1,750 million up-front cash payment with new debt prior to the closing of the transaction.

Acquisition of Blink® Product Line

On July 6, 2023, the Company announced that it had consummated a transaction with Johnson & Johnson Vision, pursuant to which the Company, through an affiliate, had acquired the Blink® product line of eye and contact lens drops, 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. This acquisition was made by the Company to continue to grow its global over-the-counter business.

Under the terms of the purchase agreement, the Company, through an affiliate, acquired the Blink® product line of eye and contact lens drops for an up-front cash payment of $107 million, which was paid on the closing of the transaction in early July 2023.

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

Acquisition of AcuFocus, Inc.

On January 17, 2023, the Company acquired AcuFocus, Inc. ("AcuFocus") for an up-front payment of $35 million, $31 million of which was paid in January 2023 with the remaining purchase price to be paid within 18 months following the date of the transaction, less any amounts that are the subject of any indemnification claims. AcuFocus is an ophthalmic medical device company. The acquisition was made by the Company to acquire breakthrough small aperture intraocular technology for certain cataract patients. The AcuFocus business is included within the Surgical segment. Supplemental pro forma information related to revenue and earnings for 2023 are not provided as they did not have a material impact on the Company's operations. Additional contingent payments may ~~enter~~become due upon achievement of future sales milestones. At the time of acquisition, the acquisition-related contingent consideration liability related to this transaction was $5 million, which the Company reassesses each quarter for changes in fair value. See Note 6, “FAIR VALUE MEASUREMENTS” for additional information regarding the fair value assessment of the acquisition-related contingent consideration liabilities.

The acquisition of AcuFocus has been accounted for as a business combination under the acquisition method of accounting as: (i) substantially all the fair value of the assets acquired is not concentrated in a single identifiable asset or group of similar identifiable assets and (ii) substantive inputs and processes were acquired to contribute to the creation of outputs. As a result of this transaction, recorded within the Condensed Consolidated Balance Sheets are Inventories, net of $4 million, Prepaid expenses and other current assets of $4 million, Intangibles, net of $28 million, Goodwill of $2 million, Deferred tax assets, net of $2 million, Property, plant and equipment, net of $1 million, Accounts payable of $1 million and Accrued and other current liabilities of $1 million. Since the date of acquisition, adjustments made during the measurement process have included a decrease of $6 million to Deferred tax assets, net with an offset to Goodwill.

2022 Licensing Agreement and Acquisitions

As described below, during 2022, the Company entered a strategic licensing agreement and completed the following acquisitions for an aggregate up-front payment of $45 million.

On July 28, 2022, the Company entered into ~~select licensing and collaborative agreements~~an exclusive five year European distribution agreement with Sanoculis Ltd. ("Sanoculis") for Sanoculis' Minimally Invasive Micro Sclerostomy ("MIMS®"). MIMS® is an innovative minimally invasive surgical procedure for the ~~commercialization and/or development~~treatment of ~~unique products. These~~glaucoma and is expected to complement existing Bausch + Lomb products ~~are sometimes investigational treatments in early stage development that target unique conditions. The ultimate outcome, including whether~~within this market. As a part of the agreement, the Company agreed to purchase the MIMS®product ~~will be: (i) fully developed, (ii) approved by regulatory agencies, (iii) covered by third-party payors or (iv) profitable~~from Sanoculis for distribution ~~is highly uncertain.~~in various European countries.

On November 21, 2022, the Company acquired Paragon BioTeck, Inc. (“Paragon BioTeck”), an eye-care focused drug development company, having a primary emphasis on the early detection of ocular diseases. The ~~commitment periods under these agreements vary~~acquisition of Paragon BioTeck has been accounted for by the Company as an asset acquisition. The primary asset in the transaction, the trademarks, represented substantially all of the fair value of the gross assets acquired. There are no future sales milestones associated with this transaction.

On December 12, 2022, the Company acquired Total Titanium, Inc. (“Total Titanium”), a privately held ophthalmic microsurgical instrument and ~~include customary termination provisions. Expenses arising from commitments, if any,~~machined parts manufacturing company. The transaction was completed to ~~fund~~assist in driving revenue growth as well as increasing manufacturing capacity. The fair value of the ~~development~~acquisition of Total Titanium has been accounted for as a business combination and ~~testing~~included in the Surgical segment. Supplemental pro forma information related to revenue and earnings for 2022 are not provided as they did not have a material impact on the Company's operations. Additional contingent payments may be payable upon reaching key future milestone achievements related to sales and employee retention. Refer to Note 21, “COMMITMENTS AND CONTINGENCIES” in the Annual Report for further detail regarding potential future milestone payments related to previously entered transactions and agreements.

As a result of these ~~products~~transactions, recorded within the Condensed Consolidated Balance Sheets are Trade receivables, net of $1 million, Inventories, net of $1 million, Property, plant and ~~their promotion are recognized as incurred. Royalties due are recognized when earned~~equipment, net of $2 million, Intangibles, net of $43 million, Goodwill of $5 million and ~~milestone payments are accrued when each milestone has been achieved and payment is probable and can be reasonably estimated.~~Deferred tax liabilities, net of $11 million.

6.FAIR VALUE MEASUREMENTS

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

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

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

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

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

Assets and Liabilities Measured at Fair Value on a Recurring Basis

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


		September 30, 2022								December 31, 2021									June 30, 2023								December 31, 2022
(in millions)	(in millions)	Carrying Value		Level 1		Level 2		Level 3		Carrying Value		Level 1		Level 2		Level 3		(in millions)	Carrying Value		Level 1		Level 2		Level 3		Carrying Value		Level 1		Level 2		Level 3
Assets:	Assets:																	Assets:
Cash equivalents	Cash equivalents	$	12	$	1	$	11	$	—	$	12	$	—	$	12	$	—	Cash equivalents	$	57	$	49	$	8	$	—	$	81	$	72	$	9	$	—
Foreign currency exchange contracts	Foreign currency exchange contracts	$	1	$	—	$	1	$	—	$	—	$	—	$	—	$	—	Foreign currency exchange contracts	$	2	$	—	$	2	$	—	$	5	$	—	$	5	$	—
Cross-currency swaps		$	14	$	—	$	14	$	—	$	—	$	—	$	—	$	—
Liabilities:	Liabilities:																	Liabilities:
Acquisition-related contingent consideration	Acquisition-related contingent consideration	$	4	$	—	$	—	$	4	$	9	$	—	$	—	$	9	Acquisition-related contingent consideration	$	10	$	—	$	—	$	10	$	4	$	—	$	—	$	4
Foreign currency exchange contracts	Foreign currency exchange contracts	$	2	$	—	$	2	$	—	$	—	$	—	$	—	$	—	Foreign currency exchange contracts	$	1	$	—	$	1	$	—	$	2	$	—	$	2	$	—
Cross-currency swaps																		Cross-currency swaps	$	62	$	—	$	62	$	—	$	39	$	—	$	39	$	—

Cross-currency Swaps

During the third quarter of 2022, the Company entered into cross-currency swaps, with an aggregate notional value of $1,000 million, to mitigate fluctuation in the 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 the Company’s investment in certain euro-denominated subsidiaries. Prior to the third quarter of 2022, the Company had no cross-currency swaps for any period presented.

The accounting for changes in the fair value of a derivative instrument depends on whether the instrument has been designated and qualifies as part of a hedging relationship and on the type of hedging relationship. For derivative instruments designated and qualifying as hedging instruments, the hedging instrument must be designated, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of the foreign currency exposure of a net investment in a foreign operation. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in the Condensed Consolidated Statements of Operations during the current period.

The Company’s cross-currency swaps qualify for and have been designated as a hedge of the foreign currency exposure of a net investment in a foreign operation and are remeasured at each reporting date to reflect changes in their fair values. The fair value is determined via a mark-to-market analysis, using observable (Level 2) inputs. These inputs may include: (i) the foreign currency exchange spot rate between the euro and U.S. dollar, (ii) the interest rate yield curves in the euro and U.S. dollar and (iii) the credit risk rating for each applicable counterparty. The net change in fair value of cross-currency swaps is reported as a gain or loss in the Condensed Consolidated Statements of Comprehensive Income (Loss) as part of Foreign currency translation adjustment to the extent they are effective, and remain in Accumulative Comprehensive Income (Loss) until either the sale or complete, or substantially complete, liquidation of the subsidiary. No portion of the cross-currency swaps were ineffective for the three and nine months ended September 30, 2022. The Company uses the spot method of assessing hedge effectiveness. The Company has elected to amortize amounts excluded from the assessment of effectiveness over the term of its cross-currency swaps as Interest expense in the Condensed Consolidated Statements of Operations.

~~The~~ assets and liabilities associated with the Company's cross-currency swaps as included in the Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 are as follows:


~~(in millions)~~	September 30, 2022		December 31, 2021
~~Other non-current assets~~	$	11	$	—
~~Prepaid expenses and other current assets~~	$	3	$	—
~~Net fair value~~	$	14	$	—


(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 hedging instruments on the Condensed Consolidated Statements of Comprehensive Loss and the Condensed Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	(in millions)	2022		2021		2022		2021		(in millions)	2023		2022		2023		2022
Gain recognized in Other comprehensive loss		$	11	$	—	$	11	$	—
Loss recognized in Other comprehensive loss										Loss recognized in Other comprehensive loss	$	17	$	—	$	23	$	—
Gain excluded from assessment of hedge effectiveness	Gain excluded from assessment of hedge effectiveness	$	3	$	—	$	3	$	—	Gain excluded from assessment of hedge effectiveness	$	3	$	—	$	6	$	—
Location of gain of excluded component	Location of gain of excluded component	Interest Expense								Location of gain of excluded component	Interest expense				Interest Expense

The assets and liabilities associated with the Company’s foreign exchange contractsas 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	$	2
Prepaid expenses and other current assets	$	2	$	5
Net fair value	$	1	$	3

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 six months ended June 30, 2023 and 2022:


	Six Months Ended June 30,
(in millions)	2023		2022
(Loss) Gain related to changes in fair value	$	(2)	$	(4)
Gain related to settlements	$	3	$	4

Acquisition-related Contingent Consideration Obligations

Acquisition-related contingent consideration, which primarily consists of potential milestone payments, is recorded in the Condensed Consolidated Balance Sheets at its acquisition date estimated fair value, in accordance with the acquisition method of accounting. The fair value of the Company’s foreign currency exchange contracts liability as of September 30, 2022 was $1 million. Included in Accrued and other current liabilities are $2 million and included in Prepaid expenses and other current assets are $1 million of foreign currency exchange contracts. The fair value as of December 31, 2021 was not material. During the nine months ended September 30, 2022 and 2021, the net changeacquisition-related contingent consideration is remeasured each reporting period, with changes in fair value ~~was a loss of $1 million and $1 million, respectively. Settlements of the Company's foreign currency exchange contracts are reported as a gain or loss~~recorded in the Condensed Consolidated Statements of ~~Operations as part of Foreign exchange and other and reported as operating activities~~Operations. The fair value measurement is based on significant inputs not observable in the ~~Condensed Consolidated Statements~~market and thus represents a Level 3 measurement as defined in fair value measurement accounting.

The fair value measurement of ~~Cash Flows. During~~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 ~~nine~~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 14% to 28%, and a weighted average risk-adjusted discount rate of 16%. 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 ~~September~~June 30, ~~2022~~2023 and ~~2021, Bausch + Lomb reported a realized loss of $7 million and a loss of $1 million, respectively, related to settlements of~~ ~~the Company’s foreign currency exchange contracts.~~2022:


	June 30,
(in millions)	2023				2022
Balance, beginning of period			$	4			$	9
Adjustments to Acquisition-related contingent consideration:
Accretion for the time value of money	$	1			$	—
Fair value adjustments due to changes in estimates of future payments	—				(5)
Acquisition-related contingent consideration adjustments			1				(5)
Additions (Note 5)			5				—
Payments/Settlements			—				—
Balance, end of period			10				4
Current portion included in Accrued and other current liabilities			4				—
Non-current portion			$	6			$	4

Fair Value of Long-term Debt

The fair value of long-term debt as of ~~September~~June 30, 2023 and December 31, 2022 was ~~$2,319~~$2,588 million and $2,354 million, respectively, and was estimated using the quoted market prices for ~~the same or~~ similar debt issuances (Level 2).

Goodwill

The changes in the carrying amounts of goodwill during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and the year ended December 31, ~~2021~~2022 were as follows:

(in millions) Bausch + Lomb Vision Care Ophthalmic Pharmaceuticals Surgical Total
Balance, January 1, 2021 $ 4,685 $ — $ — $ — $ 4,685
Realignment of segment goodwill (4,685) 3,674 689 322 —
Foreign exchange and other — (78) (14) (7) (99)
Balance, December 31, 2021 — 3,596 675 315 4,586
Foreign exchange and other — (62) (95) (14) (171)
Balance, September 30, 2022 $ — $ 3,534 $ 580 $ 301 $ 4,415


(in millions)	Vision Care		Pharmaceuticals		Surgical		Total
Balance, January 1, 2022	$	3,596	$	675	$	315	$	4,586
Acquisitions (Note 5)	—		—		5		5
Foreign exchange and other	(47)		(30)		(7)		(84)
Balance, December 31, 2022	3,549		645		313		4,507
Acquisitions (Note 5)	—		—		8		8
Foreign exchange and other	6		16		3		25
Balance, June 30, 2023	$	3,555	$	661	$	324	$	4,540

Goodwill is not amortized but is tested for impairment at least annually onas of October 1st at the reporting unit level. A reporting unit is the same as, or one level below, an operating segment. Bausch + Lomb 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).

2022 Annual Goodwill Impairment Test

The ~~fair value~~Company conducted its annual goodwill impairment test as 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.~~ ~~Bausch~~ + Lomb estimates the fair values 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, ~~Bausch~~ ~~+ Lomb discounts the forecasted cash flows of each reporting unit. The discount rate~~ ~~Bausch~~ + Lomb 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, ~~Bausch~~ ~~+ Lomb estimates a terminal value~~October 1, 2022 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,~~ ~~Bausch~~ + Lomb 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 ~~Bausch~~ ~~+ Lomb’s product portfolio, changes in government legislation, product life-cycles, industry consolidations and other changes beyond~~ ~~Bausch~~ ~~+ Lomb’s control could have a positive or negative impact on achieving its targets. Accordingly, if market conditions deteriorate, or if~~ ~~Bausch~~ ~~+ Lomb is unable to execute its strategies, it may be necessary to record impairment charges in the future.~~

~~Second Quarter 2021 - Realignment of Segments~~

~~Bausch + Lomb has historically operated as part of BHC, reported under BHC’s segment structure and historically the Chief Operating Decision Maker (“CODM”) was the CODM of BHC. As~~ ~~Bausch~~ ~~+ Lomb was transitioning into an independent, publicly traded company, BHC’s Chief Executive Officer (“CEO”), who was~~ ~~Bausch~~ ~~+ Lomb’s CODM until the completion of the B+L IPO, evaluated how to view and measure~~ ~~Bausch~~ ~~+ Lomb’s performance. This evaluation necessitated a realignment of~~ ~~Bausch~~ + Lomb’s historical segment structure and, during the second quarter of 2021, Bausch + Lomb determined it is organized into three operating segments, which are also its reportable segments and reporting units. This realignment is consistent with how the CODM: (i) assesses operating performance on a regular basis, (ii) makes resource allocation decisions and (iii) designates responsibilities of his direct reports. Pursuant to these changes, effective in the second quarter of 2021, ~~Bausch~~ ~~+ Lomb operates in the following operating and reportable segments which are generally determined based on the decision-making structure of~~ ~~Bausch~~ ~~+ Lomb and the grouping of similar products and services: (i) Vision Care, (ii) Ophthalmic Pharmaceuticals and (iii) Surgical.~~

This realignment in segment structure resulted in a change in the former Bausch + Lomb reporting units, which are now divided between the: (i) Vision Care, (ii) Ophthalmic Pharmaceuticals and (iii) Surgical reporting units. As a result of this realignment, goodwill was reassigned to each of the aforementioned reporting units using a relative fair value approach.

~~Immediately prior to the change in reporting units,~~ ~~Bausch~~ + Lomb performed a qualitative fair value assessment for its former Bausch + Lomb reporting units. Based on the qualitative fair value assessment performed, Management believed that it was more likely than not that the carrying value of its former Bausch + Lomb reporting units were less than their respective fair values and therefore, concludedperforming a quantitative assessment ~~was not required.~~

~~Immediately following the change in~~for each of its reporting ~~units, as a result of the change in composition of the net assets for its current (i) Vision Care, (ii) Ophthalmic Pharmaceuticals and (iii) Surgical reporting units,~~ ~~Bausch~~ ~~+ Lomb performed a quantitative fair value assessment.~~units. The quantitative ~~fair value test~~assessment utilized long-term growth rates of 2.0% and 3.0% and ~~a range of~~ discount rates ~~between 7.0%~~of 9.5% and ~~10.0%~~12.25%, in estimation of the fair value of the reporting units. After completing the testing, the fair value of each of these reporting units exceeded its carrying value by more than ~~45%, and, therefore, there was no impairment to goodwill.~~

~~2021 Annual Goodwill Impairment Test~~

The Company conducted its annual goodwill impairment test as of October 1, 2021 by first assessing qualitative factors. Based on its qualitative assessment as of October 1, 2021, management believed that, it was more likely than not that the carrying amounts of its reporting units were less than their respective fair values and therefore concluded a quantitative fair value test for any of its reporting units was not required.

~~June 30, 2022 Interim Goodwill Impairment Assessment~~

During the three months ended June 30, 2022, management concluded that the change in the Company’s stock price, driven by overall macroeconomic conditions, such as the volatility in equity markets and interest rates, could result in a decline in the fair value of its reporting units. Therefore, as of June 30, 2022, management performed quantitative fair value tests for each of its three reporting units. The quantitative fair value test utilized the Company’s most recent cash flow projections and utilized long-term growth rates of 2% and 3% and discount rates of 9.0% and 11.5%. After completing the testing, the fair value of each of these reporting units exceeded its carrying value by more than 25%, and, therefore, there was no impairment to goodwill.

~~September~~June 30, ~~2022~~2023 Interim Goodwill Impairment Assessment

No events occurred or circumstances changed during the period from ~~June 30,~~October 1, 2022 (the last time goodwill was tested for all reporting units) through ~~September~~June 30, ~~2022~~2023 that would indicate that the fair value of any reporting unit might be below its carrying value.

If market conditions deteriorate, ~~if the factors and circumstances regarding the COVID-19 pandemic escalate beyond management’s current expectations,~~ or if the Company is unable to execute its strategies, it may be necessary to record impairment charges in the future.

There were no goodwill impairment charges from October 1, 2022 through ~~September~~June 30, ~~2022.~~2023.

9.ACCRUED AND OTHER CURRENT LIABILITIES

Accrued and other current liabilities consist of:


(in millions)	(in millions)	September 30, 2022		December 31, 2021		(in millions)	June 30, 2023		December 31, 2022
Employee compensation and benefit costs						Employee compensation and benefit costs	$	191	$	196
Product rebates	Product rebates	$	168	$	164	Product rebates	145		153
Employee compensation and benefit costs		175		204
Discounts and allowances	Discounts and allowances	82		88		Discounts and allowances	82		85
Professional fees						Professional fees	70		66
Product returns	Product returns	55		60		Product returns	63		59
Net borrowings under BHC pooled financing arrangements (Note 4)		—		28
Other	Other	399		316		Other	401		342
		$	879	$	860		$	952	$	901

10.CREDIT FACILITIES

On May 10, 2022, Bausch + Lomb entered into a credit agreement (the “Credit Agreement”, and the credit facilities thereunder, the “Credit Facilities”) providing for a term loan of $2,500 million with a five-year term to maturity (the “Term Facility”) and a five-year revolving credit facility of $500 million (the “Revolving Credit Facility”). The 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~~Term Facility is denominated in U.S. dollars, and borrowings under the ~~revolving credit facility will~~Revolving Credit Facility may be made available in U.S. dollars, euros, pounds sterling and Canadian dollars. As of ~~September~~June 30, 2023, the principal amount outstanding under the Term Facility was $2,475 million and $2,429 million net of issuance costs. As of December 31, 2022, the principal amount outstanding under the Term Facility was ~~$2,494~~$2,488 million and ~~$2,438~~$2,436 million net of issuance costs. As of ~~September~~June 30, ~~2022,~~2023, the Company had no$200 million of outstanding borrowings, $9$25 million of issued and outstanding letters of credit and remaining availability of ~~$491~~$275 million under its Revolving Credit ~~Facility~~Facility.

Borrowings under the 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) 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 Revolving Credit Facility ~~are~~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~~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 (“S~~&P,~~&P”), Moody’s and Fitch and (y) the 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. The stated rate of interest for borrowings under the Revolving Credit Facility at June 30, 2023 ranges from 7.43% to 7.50% per annum. In addition, Bausch + Lomb is required to pay commitment fees of 0.25% per annum in respect of the unutilized commitments under the Revolving Credit Facility, payable quarterly in arrears until the IG Trigger and, thereafter, 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 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 Term Facility bear interest at a rate per annum equal to, at Bausch + Lomb’s option, ~~either~~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 ~~September~~June 30, ~~2022~~2023 was ~~6.10%~~8.59% per annum.

Subject to certain exceptions and customary baskets set forth in the Credit Agreement, Bausch + Lomb is required to make mandatory prepayments of the loans under the 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 Credit Agreement), (iii) 50% of Excess Cash Flow (as defined in the 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 Term Facility is 1.00% per annum, or $25 million, payable in quarterly installments. Bausch + Lomb may direct that prepayments be applied to such amortization payments in order of maturity. As of ~~September~~June 30, ~~2022,~~2023, the remaining mandatory quarterly amortization payments for the Term Facility were ~~$113~~$94 million through March 2027, with the remaining term loan balance being due in May 2027.

Weighted Average Stated Rate of Interest

The weighted average stated rate of interest for the Company’s outstanding debt obligations as of June 30, 2023 and December 31, 2022 was 8.51% and 7.84%, respectively.

amalgamations; transfer and sell certain assets; and engage in transactions with affiliates. The Revolving Credit Facility also contains financial covenants ~~that~~that: (1) prior to the IG Trigger, require Bausch + Lomb to, if, as of the last day of any fiscal quarter of Bausch + Lomb (commencing with the fiscal quarter ending December 31, 2022), loans under the Revolving Credit Facility and swingline loans are outstanding in an aggregate amount greater than 40% of the total commitments in respect of the Revolving Credit Facility at such time, maintain a maximum first lien net leverage ratio of not greater than 4.50:1.00 and (2) after the IG Trigger, require Bausch + Lomb to, as of the last day of each fiscal quarter ending after the IG Trigger, (a) maintain a total leverage ratio of not greater than 4.00:1.00 (provided that such ratio will increase to 4.50:1.00 in connection with certain acquisitions for the four fiscal quarter period commencing with the quarter in which such acquisition is consummated) and (b) maintain an interest coverage ratio of not less than 3.00:1.00. The financial covenant in effect prior to the IG Trigger may be waived or amended without the consent of the term loan facility lenders and contains a customary term loan facility standstill and customary cure rights.

As of ~~September~~June 30, ~~2022,~~2023, the Company was in compliance with its financial covenant related to its debt obligations. Bausch + Lomb, 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 covenant and meet its debt service obligations over that same period.

Recent Financing Activities

As of August 2, 2023, the Company had $250 million of outstanding borrowings, $25 million of issued and outstanding letters of credit and remaining availability of $225 million under its Revolving Credit Facility.

~~11.~~As discussed in Note 5, “ACQUISITIONS AND LICENSING AGREEMENTS”, the Company has obtained debt financing commitments for purposes of its transaction with Novartis, to acquire XIIDRA~~PENSION AND POSTRETIREMENT EMPLOYEE BENEFIT PLANS~~

~~Bausch~~® ~~+ Lomb has defined benefit plans~~ and ~~a participatory defined benefit postretirement medical~~certain ophthalmology assets, and ~~life insurance plan, which covers a closed grandfathered group~~intends to finance the $1,750 million up-front cash payment with new debt prior to the closing of ~~legacy U.S. employees and employees in certain other countries. Net periodic (benefit) cost for~~ this transaction.~~Bausch~~ ~~+ Lomb’s defined benefit pension plans and postretirement benefit plan for the nine months ended September 30, 2022 and 2021 consists of:~~

Pension Benefit Plans
Postretirement
Benefit
Plan
U.S. Plan Non-U.S. Plans
(in millions) 2022 2021 2022 2021 2022 2021
Service cost $ 1 $ 1 $ 2 $ 2 $ — $ —
Interest cost 3 3 2 2 1 —
Expected return on plan assets (7) (8) (4) (4) — —
Amortization of prior service credit and other — — — (1) (2) (2)
Amortization of net loss — — 1 1 — —
Net periodic (benefit) cost $ (3) $ (4) $ 1 $ — $ (1) $ (2)

~~12.~~11.SHARE-BASED COMPENSATION

BHC Long-term Incentive Program

Prior to MayMay 5, 2022, Bausch + Lomb employees participated in BHC’s long-term incentive program. Therefore, prior to May 5, 2022, share-based compensation expense attributable to Bausch + Lomb was derived from: (i) the specific identification of Bausch + Lomb employees and (ii) an allocation of charges from BHC, related to BHC employees providing corporate services to Bausch + Lomb. Accordingly, the amounts presented are not necessarily indicative of future awards and do not necessarily reflect the results that Bausch + Lomb would have experienced as an independent company for the periods presented. Subsequent to May 5, 2022, share-based compensation expense attributable to Bausch + Lomb employees participating in BHC’s long-term incentive program for grants made prior to May 5, 2022 is recognized as expense by Bausch + Lomb over the remaining vesting period.

Bausch + Lomb 2022 Omnibus Incentive Plan

Effective May 5, 2022, Bausch + Lomb established the Bausch + Lomb Corporation 2022 Omnibus Incentive Plan ~~(the~~(as amended and restated (as described below), the “Plan”). A total of 28,000,000 common shares of Bausch + Lomb ~~are~~were originally authorized for issuance under the Plan. Effective April 24, 2023, Bausch + Lomb’s shareholders approved an amendment and restatement of the Plan to increase the number of shares authorized for issuance thereunder by an additional 10,000,000 common shares, resulting in an aggregate 38,000,000 common shares of Bausch + Lomb authorized for issuance under the Plan (the “Plan Amendment”). The Plan provides for the grant of various types of awards, including restricted stock units (“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.

~~On May 5, 2022, in connection with the B+L IPO,~~ ~~Bausch~~ + Lomb granted certain awards to certain eligible recipients (the "IPO Founder Grants"). Eligible recipients are individuals employed by Bausch + Lomb or employed by an affiliate of Bausch + Lomb. Approximately 3,900,000 IPO Founder Grants were issued to ~~Bausch~~ ~~+ Lomb executive officers and were awarded 50% in the form of stock options and 50% in the form of RSUs. Additionally,~~ ~~Bausch~~ + Lomb granted approximately 5,700,000 stock options and RSUs to non-executive eligible recipients, of which approximately 4,300,000 were IPO Founder Grants. The IPO Founder options have a three-year graded vesting period and the IPO Founder RSUs vest 50% in the second year and 50% in the third year after the grant. With the exception of the separation agreement and

~~retention program, as discussed below, vesting of the IPO Founder Grants are linked to the completion of the Separation and expense recognition will begin near the time of the separation.~~

On July 19, 2022, the Company entered into a separation agreement in connection with the departure of the Company's CEO. Under the terms of the separation agreement, the CEO’s IPO Founder Grants in the form of RSUs will vest upon his termination of service date (pro-rated based on his period of service relative to the original three year vesting period associated with such grants), but the shares received upon settlement will remain fully restricted and nontransferable until the earliest to occur of the Distribution Date (as defined in the MSA), a Change in Control (as defined in the MSA), the date the Board of Directors of the Company (the "Board") determines that the Company will no longer pursue a Distribution (as defined in the MSA), and the two-year anniversary of the CEO’s termination of service date. Under the terms of the separation agreement, the CEO’s IPO Founder Grants in the form of stock options will vest and become exercisable (pro-rated based on his period of service relative to the original three year vesting period associated with such grants) upon the earliest to occur of the Distribution Date (as defined in the MSA), a Change in Control (as defined in the MSA), the date the Board determines that the Company will no longer pursue a Distribution (as defined in the MSA), and the two-year anniversary of the CEO’s termination of service date and will remain exercisable for two years following this date.

During the third quarter of 2022, the Talent and Compensation Committee of the Board approved a retention program that includes the Company’s named executive officers (other than the CEO) and certain other employees. This program provides these executive officers (other than the CEO) for, among other benefits, pro-rata vesting of the IPO Founder Grants previously issued to these named executives, subject to certain restrictions, in the event of an involuntary termination of employment by the Company without "cause" or the employee's resignation for "good reason", in each case through the one-year following the Company’s appointment of the successor to the CEO (pro-rated based on the period of service relative to the original three-year vesting period associated with such grants). Additionally, these named executive officers (other than the CEO) and certain other employees were granted a one-time award of approximately 850,000 RSUs ~~under the retention program pursuant to the Company’s 2022 Omnibus Incentive Plan. The retention grant will generally vest in 1/3 installments on each of the first~~ ~~three~~ ~~anniversaries of the grant date based on continuous employment with the Company.~~

Approximately ~~17,500,000~~18,600,000 common shares were available for future grants as of ~~September~~June 30, ~~2022.~~2023. Bausch + Lomb uses reserved and unissued common shares to satisfy its obligations under its share-based compensation plans.

The Company has a long-term incentive program with the objective of aligning the share-based awards granted to senior management with the Company’s focus on 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 total shareholder return (“TSR”) (the “TSR PSUs”) and (ii) attainment of certain performance targets that are based on the Company’s Organic Revenue Growth (the “Organic Revenue Growth PSUs”). If the Company’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 the Company’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 the Company’s common shares on the date of grant. Expense recognized for the Organic Revenue Growth PSUs in each reporting period reflects the Company’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 Chief Executive Officer ("CEO") and Chair of the Board of Directors of the Company, effective March 6, 2023. Pursuant to Mr. Saunders' employment agreement, on February 23, 2023, Mr. Saunders was granted the following equity grants under the Plan: 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 the Company’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 components and classification of share-based compensation expense related to stock options, PSUs and RSUs directly attributable to those employees specifically identified as Bausch + Lomb employees for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	(in millions)	2022		2021		2022		2021		(in millions)	2023		2022		2023		2022
Stock options	Stock options	$	1	$	1	$	3	$	2	Stock options	$	2	$	1	$	6	$	2
RSUs		17		8		36		26
PSUs/RSUs										PSUs/RSUs	16		10		36		19
Share-based compensation expense	Share-based compensation expense	$	18	$	9	$	39	$	28	Share-based compensation expense	$	18	$	11	$	42	$	21

Research and development expenses	Research and development expenses	$	1	$	1	$	5	$	5	Research and development expenses	$	3	$	2	$	4	$	4
Selling, general and administrative expenses	Selling, general and administrative expenses	17		8		34		23		Selling, general and administrative expenses	15		9		38		17
Share-based compensation expense	Share-based compensation expense	$	18	$	9	$	39	$	28	Share-based compensation expense	$	18	$	11	$	42	$	21

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


~~Stock options~~
~~Granted~~	~~6,455,000~~
~~Weighted-average exercise price~~	$	~~18.00~~
~~Weighted-average grant date fair value~~	$	~~4.55~~
~~Time-based RSUs~~
~~Granted~~	~~4,205,000~~
~~Weighted-average grant date fair value~~	$	~~17.22~~


	Six Months Ended June 30,
	2023		2022
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 ~~September~~June 30, ~~2022,~~2023, the remaining unrecognized compensation expenses related to all outstanding non-vested stock options, time-based RSUs and performance-based RSUs amounted to ~~$72~~$111 million, which will be amortized over a weighted-average period of ~~1.64~~2.30 years.

~~13.~~12.ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss ~~consists~~as of June 30, 2023 and as of December 31, 2022 consist of:


(in millions)	(in millions)	September 30, 2022		December 31, 2021		(in millions)	June 30, 2023		December 31, 2022
Foreign currency translation adjustment	Foreign currency translation adjustment	$	(1,365)	$	(1,018)	Foreign currency translation adjustment	$	(1,219)	$	(1,231)
Pension adjustment, net of tax	Pension adjustment, net of tax	(21)		(17)		Pension adjustment, net of tax	(28)		(27)
		$	(1,386)	$	(1,035)		$	(1,247)	$	(1,258)

~~Bausch~~14. ~~+ Lomb~~OTHER EXPENSE (INCOME), NET

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


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2023		2022		2023		2022

Restructuring, integration and separation costs	$	14	$	4	$	22	$	6


Acquisition-related costs	2		—		3		—
Acquisition-related contingent consideration	1		(5)		1		(5)
Other expense (income), net	$	17	$	(1)	$	26	$	1

The Company evaluates opportunities to improve its operating results and implements cost savings programs to streamline its operations and eliminate redundant processes and expenses. Restructuring and integration costs are expenses associated with the implementation of these cost savings programs and include expenses associated ~~with:~~with reducing headcount and other cost reduction initiatives. Restructuring and integration costs for the six months ended June 30, 2023 and 2022 were $22 million and $3 million, respectively and primarily consist of employee severance costs. These severance costs were provided under an ongoing benefit arrangement and were therefore recorded once they were both probable and reasonably estimable in accordance with the provisions of ASC 712-10, “Nonretirement Postemployment Benefits”.

In connection with the Separation, the Company has incurred and will continue to incur additional costs associated with activities taken to separate the Bausch + Lomb business from the remainder of BHC. Separation costs are incremental costs directly related to the Separation, and include but are not limited to: (i) legal, audit and advisory fees, (ii) talent acquisition costs and (iii) costs associated with establishing new boards of directors and related board committees for Bausch + Lomb. Included in Other expense for the six months ended June 30, 2023 and 2022 are Separation costs of $0 and $3 million, respectively. The Company has also incurred, and will continue to incur, separation-related costs which are incremental costs indirectly related to the Separation and 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. Included in SG&A for the six months ended June 30, 2023 and 2022 are Separation-related costs of $5 million and $10 million, respectively.

As a result of the completion of the B+L IPO, and as the Company prepares for post-Separation operations, the Company is launching certain initiatives that may result in certain changes to, and investment in, its organizational structure and operations. The Company refers to the charges related to these initiatives as "Business Transformation Costs". These costs are recorded in SG&A in the unaudited Condensed Consolidated Statements of Operations and include third-party advisory costs, as well as certain compensation-related costs associated with changes in the Company's executive officers, such as severance-related costs associated with the departure of the Company's former executives and the costs associated with the appointment of the Company's new executives. Further, in connection with the Separation, the Company continues to evaluate opportunities to improve its operating results and may initiate cost savings programs to streamline the Company's 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. 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.

~~16.~~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, subject to certain limitations on the benefit of losses. Income tax expense/benefit related to items not characterized as ordinary income is recognized as a discrete item when incurred. The estimation of Bausch + Lomb’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. ~~Bausch~~ ~~+ Lomb’s~~The Company’s estimated annual effective income tax rate may be revised, if necessary, in each interim period.

Provision for income taxes for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was ~~$60~~$43 million. The difference between the statutory tax rate and the effective tax rate was primarily attributable to jurisdictional mix of earnings and discrete tax effects of establishing a valuation allowance in Canada, the ~~filing~~impact of ~~certain~~a change in tax ~~returns~~attributes, and a change in the deduction for stock compensation. The Provision for income taxes for the ~~nine~~three and six months ended ~~September~~June 30, 2023 was reduced by $7 million due to an immaterial out of period correction. This out of period correction related to an understatement of Deferred tax assets, as included in the December 31, 2022 and December 31, 2021 Consolidated Balance Sheets, which management corrected during the three months ended June 30, 2023. Provision for income taxes for the six months ended June 30, 2022

was ~~$93~~$26 million. The difference between the statutory tax rate and effective tax rate was primarily attributable to jurisdictional mix of earnings and discrete tax effects of internal restructurings.

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 ~~$54~~$132 million and ~~$53~~$54 million as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

~~On August 16, 2022, US President Joseph Biden signed~~ The increase is related to the ~~Inflation Reduction Act (the “IRA”) into law, which includes implementation of a new alternative minimum~~valuation allowance established against the prior deferred tax ~~an excise tax on stock buybacks, and significant tax incentives for energy and climate initiatives, among other provisions. The corporate alternative minimum tax (“CAMT”) imposes a minimum tax on~~assets in Canada as well as certain attributes the adjusted financial statement income (“AFSI”) for “applicable corporations” with average annual AFSI over a three-year period in excess of $1 billion. A corporation that is a member of a foreign-parented multinational group, as defined inCompany acquired during the IRA, must include the AFSI (with certain modifications) of all members of the group in applying the $1 billion test, but would only be subject to CAMT if the three-year average AFSI of its US members, US trades or business of foreign group membersyear that are not subsidiaries of US members, and foreign subsidiaries of US members exceeds $100 million. The Company is currently considered a member of BHC’s foreign-parented multinational group and the Company’s “applicable corporations” would be combined with that of BHC’s “applicable corporations”expected to ~~determine the applicability of the CAMT. The Company currently does not believe this will have a significant impact on its tax results, but will continue~~expire prior to ~~evaluate the law and its potential impacts.~~their utilization.

The Company’s U.S. affiliates remain under examination for various state tax audits in the U.S. for years 2015 through ~~2020.~~2022.

The Company’s subsidiaries in Germany are under audit for tax years 2014 through ~~2016.~~2019. At this time, the Company does not expect that proposed adjustments, if any, would be material to the Company’s Consolidated Financial Statements. Any liability to arise from this audit would be indemnified by ~~BHC.~~BHC pursuant to the Tax Matters Agreement.

As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022, the Company had ~~$58~~$70 million and ~~$72~~$70 million of unrecognized tax benefits, which included $10 million and ~~$10~~$9 million of interest and penalties, respectively. Of the total unrecognized tax benefits as of ~~September~~June 30, ~~2022, $54~~2023, $62 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 ~~September~~June 30, ~~2022~~2023 could decrease by an immaterial amount in the next 12 months as a result of the resolution of certain tax audits and other events.

~~17.~~16.EARNINGS PER SHARE

On April 28, 2022, Bausch + Lomb effected a share consolidation as a result of which it had 350,000,000 issued and outstanding common shares. T~~hese~~These common shares are treated as issued and outstanding at January 1, ~~2021~~2022 for purposes of calculating Basic and diluted (loss) income per share attributable to Bausch + Lomb Corporation.

~~Income~~(Loss) income per share attributable to Bausch + Lomb Corporation for the three and six months ended June 30, 2023 and 2022 were calculated as follows:

Three Months Ended September 30, Nine Months Ended September 30,
(in millions, except per share amounts) 2022 2021 2022 2021
Net (loss) income attributable to Bausch + Lomb Corporation $ (18) $ 60 $ 7 $ 131
Basic weighted-average common shares outstanding 350.0 350.0 350.0 350.0
Diluted effect of stock options and RSUs — — 0.1 —
Diluted weighted-average common shares outstanding $ 350.0 $ 350.0 $ 350.1 $ 350.0
(Loss) Earnings per share attributable to Bausch + Lomb Corporation
Basic (0.05) 0.17 0.02 0.37
Diluted (0.05) 0.17 0.02 0.37


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions, except per share amounts)	2023		2022		2023		2022
Net (loss) income attributable to Bausch + Lomb Corporation	$	(32)	$	5	$	(122)	$	25


Basic and Diluted weighted-average common shares outstanding	350.5		350.0		350.3		350.0

Basic and Diluted (Loss) Earnings per share attributable to Bausch + Lomb Corporation	$	(0.09)	$	0.01	$	(0.35)	$	0.07

During the three and six months ended ~~September~~June 30, ~~2022,~~2023, all potential common shares issuable for RSUs, performance-based RSUs and 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 RSUs, performance-based RSUs and stock options ~~and RSUs~~ on the weighted-average number of common shares outstanding would have been approximately ~~155,500~~1,623,000 and 1,452,000 common shares for the three and six months ended ~~September~~June 30, ~~2022.~~2023, respectively. Dilutive equity instruments or equity awards outstanding for three and six months ended June 30, 2022 were not material. There were no dilutive equity instruments or equity awards outstanding prior to the B+L IPO.

During the three and six months ended ~~September~~June 30, ~~2022, time-based~~2023, RSUs, performance-based RSUs and stock options to purchase approximately ~~2,729,000~~3,199,000 and 4,448,000 common shares, respectively, were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive under the treasury stock method. During the three and six months ended ~~September~~June 30, 2022, RSUs, performance-based RSUs and stock options to purchase approximately 1,386,000 were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive under the treasury stock method. During the three and six months ended June 30, 2023, an additional ~~5,417,000 performance-based~~5,483,000 IPO Founders Grants in the form of stock options and RSUs, which were granted to certain eligible recipients in connection with the B+L IPO, and an additional 892,000 PSUs, were not included in the computation of diluted earnings per share as they are either linked to the completion of the Separation or the required performance conditions had not yet been met. ~~There were no dilutive equity instruments or equity awards outstanding prior to the B+L IPO.~~

~~18.~~17.LEGAL PROCEEDINGS

Bausch + Lomb is involved, and, from time to time, may become involved, in various legal and administrative proceedings, which include or may 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, Bausch + Lomb also initiates or may initiate actions or file counterclaims. Bausch + Lomb could be subject to counterclaims or other suits in response to actions it may initiate. Bausch + Lomb believes that the prosecution of these actions and counterclaims is important to preserve and protect Bausch + Lomb, its reputation and its assets. ~~Certain of these proceedings and actions are described below.~~

On a quarterly basis, Bausch + Lomb evaluates developments in legal proceedings, potential settlements and other matters that could increase or decrease the amount of the liability accrued. As of ~~September~~June 30, ~~2022,~~ 2023, Bausch + Lomb’s Condensed Consolidated Balance Sheets includes accrued current loss contingencies of $2$4 million related to matters which are both probable and reasonably estimable. For all other matters, unless otherwise indicated, Bausch + Lomb cannot reasonably predict the outcome of these legal proceedings, nor can it estimate the amount of loss, or range of loss, if any, that may result from these proceedings. An adverse outcome in certain of these proceedings could have a material adverse effect on Bausch + Lomb’s business, financial condition and results of operations, and could cause the market value of its common shares ~~and/or debt securities~~ to decline.

Antitrust

Generic Pricing Antitrust Litigation

BHC’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 U.S. 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 these cases. The cases have been put in deferred status. The Company disputes the claims against it and these cases will be defended vigorously.

Additionally, BHC 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 this case will be defended vigorously.

These lawsuits cover products of both Bausch + Lomb and BHC’s other businesses. It is anticipated that Bausch + Lomb and BHC 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.~~MSA.

PreserVision® AREDS 2 Antitrust Litigation

Bausch & Lomb Incorporated ("B&L Inc.") is a defendant in an antitrust suit filed by a competitor on December 20, 2021, in the United States District Court for the Eastern District of Missouri (ZeaVision, LLC v. Bausch & Lomb Incorporated, et al., Civil Action No. 4:21-cv-01487). The complaint alleged various antitrust and Lanham act claims. After B&L Inc. moved to dismiss the original complaint on ~~March 4,~~February 11, 2022, ZeaVision, LLC (“ZeaVision”) filed its First Amended Complaint on March 4, 2022, dismissing B&L Inc.’s co-defendant and its conspiracy to monopolize claim. The First Amended Complaint alleges that B&L Inc.’s efforts to enforce its patents constitutes ~~objectively baseless~~ sham litigation, that certain B&L Inc. advertising is false and violates antitrust laws and ~~makes allegations related to~~that certain conduct by B&L Inc. constitutes monopolization. It also includes a false advertising claim under the Lanham Act. On April 1, 2022, B&L Inc. filed a motion to dismiss, or in the alternative, to stay or transfer the First Amended Complaint. ~~ZeaVision’s opposition to the motion to dismiss was filed on May 31,~~On November 21, 2022, ~~and~~ B&L Inc.’s ~~reply in support of its~~ motion ~~to dismiss~~ was ~~filed on July 1, 2022. In conjunction with its Opposition to B&L’s motion to dismiss, ZeaVision also filed a motion~~granted, and the action was dismissed for ~~leave to conduct jurisdictional discovery limited to the issue~~lack of personal jurisdiction. ~~B&L’s opposition was filed on July 1, 2022, and ZeaVision’s reply in support was filed on July 8, 2022. A hearing on both motions was held on July 11, 2022. The~~ZeaVision has appealed this decision to the Eighth Circuit Court ~~took the motions under advisement and a decision is pending.~~

~~In September,~~of Appeals. ZeaVision filed ~~a notice~~its opening Appellant brief on February 9, 2023. B&L Inc. filed its responsive Appellee brief on April 5, 2023. In addition to responding to ZeaVision’s personal jurisdiction arguments, B&L Inc. also raised Rule 12(b)(6) arguments as an alternative basis to affirm the District Court’s dismissal of ~~supplemental authority, alerting~~ the ~~Court that B+L’s patent case that had previously been pending in the W.D.N.Y was transferred to the E.D. Mo. B+L~~First Amended Complaint. ZeaVision filed ~~a response shortly thereafter informing the Court~~its Reply brief on April 27,

2023. The matter is now fully briefed on appeal. The Eighth Circuit has indicated that the ~~patent case’s transfer does not have any bearing on several of the bases upon which the Court should dismiss ZeaVision’s~~ case ~~and reiterating that the court should grant B+L’s motion.~~ will be set for oral argument, but, to date, no oral argument has been scheduled.

B&L Inc. disputes the claims against it and will defend the ~~cases~~case vigorously.

Product Liability

Shower to Shower® Products Liability Litigation

Since 2016, BHC ~~has~~and its affiliates, including Bausch + Lomb, have 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 BHC and its affiliates, including Bausch + Lomb, 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~~were filed in Canada against BHC 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 BHC 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 BHC as a defendant; as a result, the British Columbia class action is concluded as to BHC.

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 sixty (60) days pursuant to a preliminary injunction. Notwithstanding the divisional merger and LTL’s bankruptcy case, BHC and Bausch + Lomb 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 BHC and its affiliates, which indemnification agreement remains in effect. As a result, it is Bausch + Lomb’s current expectation that BHC and Bausch + Lomb 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.~~2022, which it later extended indefinitely. The order denying the motions to dismiss and the order extending the preliminary injunction ~~are~~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, and~~2022. On January 30, 2023, a unanimous three-judge Third Circuit Court of Appeals panel issued its decision ~~is pending. Further, pursuant to a court order dated March 18, 2022,~~directing the Bankruptcy Court ~~directed certain talc claimants~~to dismiss LTL’s bankruptcy case, concluding that LTL was not in financial distress and ~~LTL to mediate the issues related to the~~could not file a bankruptcy case in good faith. LTL requested a rehearing, and on March 22, 2023, the ~~hopes~~Third Circuit denied LTL’s rehearing request. Thereafter LTL moved for a stay of ~~achieving~~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 bankruptcy protection in the Bankruptcy Court and again commenced an adversary proceeding seeking a ~~global resolution and ordered separate mediation with respect~~preliminary injunction enjoining substantially all cases subject to ~~certain consumer protection claims against LTL by various state attorneys general.~~the

indemnification agreement. The Bankruptcy Court ~~extended LTL’s exclusive period to file~~granted a ~~chapter 11 plan until November 17, 2022~~temporary restraining order enjoining litigation against the “Protected Parties”, including BHC and ~~the talc claimants filed a motion to terminate LTL's exclusivity.~~Bausch + Lomb. The ~~parties have since consensually agreed to extend LTL's exclusive period to December 13, 2022. On July 26, 2022, the~~ Bankruptcy Court held a hearing on April 18, 2023, to consider ~~alternative paths to case resolution,~~the preliminary injunction, and on ~~July 28, 2022, authorized an abbreviated estimation process designed to determine the extent of LTL's aggregate liability. Additionally,~~April 20, 2023, the Bankruptcy Court ~~appointed an independent expert who will issue~~ordered a ~~report forecasting and estimating~~preliminary injunction solely on a limited basis to enjoin the ~~volume and value~~commencement or continuation of ~~claims.~~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 ~~has scheduled November 16, 2022,~~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 ~~status update~~hearing on the ~~expert report and~~motions to ~~discuss scheduling further formal mediation sessions.~~

dismiss was held the week of June 27, 2023. On July 28, ~~2022,~~2023, the Bankruptcy Court ~~also ruled that it~~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, BHC’s and Bausch + Lomb’s position vis a vis Johnson & Johnson would ~~leave in place~~return to the ~~stay~~status quo prior to the filing. The litigation against BHC, Bausch + Lomb and ~~injunction enjoining talc~~other defendants will no longer be stayed, and LTL and Johnson & Johnson will continue to have indemnification obligations running to BHC and its affiliates, including Bausch + Lomb, for Shower to Shower® related product liability ~~cases from proceeding until at least the completion of the estimation process.~~ litigation.

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

General Civil Actions

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

On March 24, 2022, BHC 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 BHC’s common shares and debt securities who are also maintaining individual securities fraud claims against BHC and certain current or former officers and directors as part of the U.S. Securities Litigation. This ~~newly filed~~ action seeks a declaratory judgment that ~~the transfer~~alleged transfers of certain BHC assets to Bausch + Lomb would constitute a voidable transfer under the New ~~Jersey’s Uniform~~Jersey Voidable Transactions Act and that Bausch + Lomb ~~would become~~be liable for damages, if any, awarded against BHC in the individual opt-out actions. The declaratory judgment action also alleges that ~~a transfer~~the potential future separation of ~~assets from BHC to~~ Bausch + Lomb from BHC by distribution of Bausch + Lomb stock to BHC’s shareholders would leave BHC with inadequate financial resources to satisfy these 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 BHC in the underlying individual opt-out actions and BHC 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 Securities Exchange Act of 1934 (the "Exchange Act"), and certain actions assert claims under Section 18 of the Exchange Act. The allegations in those underlying individual ~~opt out~~opt-out actions are made against BHC 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 BHC and/or failures to disclose information about BHC’s business and prospects, including relating to drug pricing and the use of specialty pharmacies. On March 31, 2022, BHC and Bausch + Lomb removed the declaratory judgment action to the U.S. District Court for the District of New Jersey. ~~As a result, the New Jersey Superior Court action is closed and the case is now pending in the District of New Jersey (Case No. 22-cv-01823).~~ On April 29, 2022, Plaintiffs filed a motion to remand. ~~That~~On November 29, 2022, the District Court granted Plaintiffs’ remand motion ~~is fully briefed~~ 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 ~~as of June 3, 2022. Other proceedings are in abeyance pending~~the resolution of ~~Plaintiffs’ remand motion.~~BHC’s and Bausch + Lomb’s forthcoming motions to dismiss, while instructing BHC to provide certain notice to plaintiffs of the intended completion of a future potential 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, BHC 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.

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. BHC 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 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 ~~current~~ stay. Johnson & Johnson noted that following a July 26, 2022, hearing, the Bankruptcy Court left the preliminary injunction in place, and ~~accordingly,~~ asked the Ninth Circuit ifto 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 ~~could have~~requested that the court afford it 60 days – until ~~December 19, 2022,~~April 18, 2023, or seven (7) days following any lifting of the LTL Bankruptcy Court’s preliminary injunction, whichever comes earliest – to provide ~~the next~~an additional status report ~~while~~about the bankruptcy proceeding and the Third Circuit dismissal for which the 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 ~~remains~~of the appeal remain in place inuntil May 10, 2023, which was granted. Following the entry of a preliminary injunction applicable to this ~~action. They also indicated they will inform~~case, which was extended until August 26, 2023, the ~~court if~~Ninth Circuit extended the stay to June 15, 2023. On June 22, 2023, J&J/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 ~~stay changes.~~court. The Ninth Circuit has not yet acted on that request.

~~BHC and~~ Bausch Health US ~~dispute~~disputes the claims ~~against them and~~in this lawsuit and will ~~be defended~~defend it vigorously.

New Mexico Attorney General Consumer Protection Action

BHC 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., BHC and Bausch Health US related to Shower to Shower® and its alleged causal link to mesothelioma and other cancers. In April 2020, Bausch Health US filed a motion to dismiss, which in September 2020, the Court granted in part as to the New Mexico Medicaid Fraud Act and New Mexico Fraud Against Taxpayers Act claims and denied as to all other claims. The State of New Mexico brings claims against all defendants under the New Mexico Unfair Practices Act and other common law and equitable causes of action, alleging defendants engaged in wrongful marketing, sale and promotion of talcum powder products. The lawsuit seeks to recover the cost of the talcum powder products as well as the cost of treating asbestos-related cancers allegedly caused by those products. Bausch Health US filed its answer 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 iswas scheduled to begin on May 30, ~~2023.~~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 AGs appealed the order granting the preliminary injunction and ~~noting~~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 bankruptcy protection in the Bankruptcy Court and again sought a preliminary injunction, though it ~~would be revisited during~~does not

currently include this lawsuit. The Bankruptcy Court did not grant the ~~December~~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, ~~omnibus hearing.~~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.

BHC and Bausch Health US dispute the claims against them, and this lawsuit will be defended 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~~Americas' summary judgment on its counterclaims against Plaintiff and dismissing Plaintiff’s claims against Bausch ~~+ Lomb.~~Health Americas. The motion was fully briefed as of May 2021.The Court held a hearing on the motion on January 25, 2022. ~~The motion remains pending.~~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 this lawsuit will be defended vigorously.

Intellectual Property Matters

PreserVision® AREDS Patent Litigation

PreserVision® AREDS and PreserVision® AREDS 2 are OTC eye vitamin formulas for those with moderate-to-advanced 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. 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. ~~6:20-cv-06452-CJS (W.D.N.Y.~~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-VAC-CJB~~20-cv-01463-GBW-CJB (D. Del.). Bausch + Lomb remains confident in the strength of these patents and B&L Inc. will 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 1,8, 2022, ZeaVision filed a motion to partially lift the stay to allow Case No. 4:~~21-cv-01352-RWS~~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® Paragraph IV Proceedings

On August 16, 2021, 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 Abbreviated New Drug Application (“ANDA”) has been filed by Slayback. B&L Inc., through its affiliate Bausch + Lomb Ireland Limited, exclusively licenses the Lumify Patents (as defined below) 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.Since then, U.S. Patent No. 9,259,425 has been dismissed from the case.

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® (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.Since then, U.S. Patent No. 9,259,425 has been dismissed from the 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.

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

In addition to the intellectual property matters described above, in connection with the Vyzulta® ~~product,~~and Lotemax® SM products, the Company has commenced ongoing infringement proceedings against a potential generic competitor in the U.S.

~~Completed or Inactive Matters~~

The following matters have concluded, have settled, are the subject of an agreement to settle or have otherwise been closed during or prior to the three months ended September 30, 2022 or have been inactive from the Company’s perspective for several fiscal quarters or the Company anticipates that no further material activity will take place with respect thereto. Due to the closure, settlement, inactivity or change in status of the matters referenced below, these matters will no longer appear in the Company's next public reports and disclosures, unless required. With respect to inactive matters, to the extent material activity takes place in subsequent quarters with respect thereto, the Company will provide updates as required or as deemed appropriate.

~~PreserVision~~® ~~AREDS 2 Antitrust Litigation~~

B&L Inc. was a defendant in an antitrust suit filed by a competitor on December 8, 2021 in the United States District Court for the Central District of California (Pharmavite LLC v. Bausch & Lomb Incorporated, et al., Case No. 2:21-CV-09507 (the

“Pharmavite case”)). The lawsuit asserted that B&L Inc.’s efforts to enforce one of its patents against the competitor in a patent infringement suit in Delaware (Bausch & Lomb Inc., et al. v. Nature Made Nutritional Products & Pharmavite LLC, C.A. No. 21-cv-01030-UNA (D. Del.)) (the “Delaware Action”) and certain B&L Inc. marketing statements constitute monopolization, attempted monopolization, and a conspiracy to monopolize the alleged product market of eye health dietary supplements. Plaintiff sought damages and injunctive relief under Section 2 of the Sherman Act, and a declaratory judgment finding that the competitor does not infringe the relevant patent, that the relevant patent is invalid, and that B&L Inc. has misused the relevant patent. On April 26, 2022, the Parties notified the court that they had reached a settlement in principle and asked the court to vacate pending deadlines. On April 28, 2022, the court dismissed the Pharmavite case “without prejudice to the right ... to reopen the action if settlement is not consummated.” The Parties have since reached a final settlement agreement and final dismissal orders were entered with the courts.

~~California Proposition 65 Related Matter~~

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

~~Pre-Suit Notice and Demand Letter re Eye Drop Products~~

On August 31, 2021, B&L Inc. received a pre-suit notice and demand letter pursuant to California Civil Code Section 1782, attaching a proposed Class Action Complaint (the “Notice Letter”) from an attorney on behalf of an individual seeking to represent a class of purchasers of Soothe® eye drop products labeled “preservative free.” The Notice Letter alleges B&L Inc. may be liable under the California Consumer Legal Remedies Act, False Advertising Law, and Unfair Competition Law in connection with, inter alia, the labeling and marketing of Soothe® eye drop products as “preservative free” when they contain the alleged preservative boric acid. Pursuant to a negotiated resolution for a non-material amount with the claimant, this claimant will forego the filing of a lawsuit and the Company now considers this matter closed.

~~19.~~18.SEGMENT INFORMATION

Reportable Segments

~~Bausch + Lomb has historically operated as part of BHC, reported under BHC’s segment structure and historically the CODM was the CODM of BHC. In 2021, as~~ ~~Bausch~~ ~~+ Lomb was transitioning into an independent, publicly traded company, BHC’s~~The Company’s CEO, who ~~was~~ ~~Bausch~~ ~~+ Lomb’s CODM until~~is the ~~closing of~~Company’s Chief Operating Decision Maker, manages the ~~B+L IPO, evaluated how to view~~business through operating and ~~measure~~ ~~Bausch~~ ~~+ Lomb’s performance. This evaluation necessitated a realignment of~~ ~~Bausch~~ ~~+ Lomb’s historical segment structure, and, during the second quarter of 2021, Bausch + Lomb determined it is organized into three operating~~reportable segments ~~which are also its reportable segments. This realignment is~~ consistent with how the ~~CODM:~~Company’s CEO: (i) assesses operating performance on a regular basis, (ii) makes resource allocation decisions and (iii) designates responsibilities of his direct reports. ~~Pursuant to these changes, effective in the second quarter of 2021, Bausch + Lomb~~The Company operates in the following reportable segments which are generally determined based on the decision-making structure of Bausch + Lomb and the grouping of similar products and services: (i) Vision Care, (ii) ~~Ophthalmic~~ Pharmaceuticals and (iii) Surgical. ~~As of March 31, 2022, the Vision Care/Consumer Health Care segment name was changed to Vision Care.~~

•The Vision Care segment consists of: (i) sales of contact lenses that span the spectrum of wearing modalities, including daily disposable and frequently replaced contact lenses, and (ii) sales of contact lens care products and ~~over-the-counter (~~“~~OTC”)~~OTC eye drops, eye vitamins and mineral supplements that address various conditions, including eye allergies, conjunctivitis and dry eye.

•The ~~Ophthalmic~~ Pharmaceuticals segment consists of sales of a broad line of proprietary and generic pharmaceutical products for post-operative treatments and the treatment of a number of eye conditions, such as glaucoma, ocular hypertension and retinal diseases.

•The Surgical segment consists of sales of medical devices and technologies for the treatment of cataracts, cornea, vitreous and retinal eye conditions and includes ~~intraocular lenses~~IOLs and delivery systems, phacoemulsification and vitrectomy equipment and other surgical instruments and devices.

Effective in the first quarter of 2023, certain products historically included in the reported results of the Pharmaceuticals segment are now included in the reported results of the Vision Care segment and certain products included in the reported results of the Vision Care segment are now included in the reported results of the Pharmaceuticals segment. Management believes these movements are necessary in order to better align these products with the groupings of similar products. The net impact of these product movements were not material to the periods presented. Prior period presentations of segment revenues and profits have been conformed to the current segment reporting structure.

Segment profit is based on operating income after the elimination of intercompany transactions. Certain costs, such as Amortization of intangible assets, ~~Asset impairments, In-process research and development costs, Restructuring and integration costs, Acquisition-related contingent consideration costs~~ and Other expense (income), net, are not included in the measure of segment profit, as management excludes these items in assessing segment financial performance.

Segment Revenues and Profit

Segment revenues and profits for the three and six months ended June 30, 2023 and 2022 were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2023		2022		2023		2022
Revenues:
Vision Care	$	646	$	588	$	1,233	$	1,148
Pharmaceuticals	194		169		355		324
Surgical	195		184		378		358
Total revenues	$	1,035	$	941	$	1,966	$	1,830
Segment profit:
Vision Care	$	167	$	145	$	321	$	304
Pharmaceuticals	68		52		114		92
Surgical	9		11		20		26
Total segment profit	244		208		455		422
Corporate	(128)		(89)		(275)		(182)
Amortization of intangible assets	(56)		(64)		(113)		(129)
Other expense, net	(17)		1		(26)		(1)
Operating income	43		56		41		110
Interest income	5		1		8		1
Interest expense (Note 4)	(58)		(44)		(108)		(64)
Foreign exchange and other	(9)		14		(15)		9
(Loss) income before provision for income taxes	$	(19)	$	27	$	(74)	$	56

Revenues by Segment and by Product Category

Revenues by segment and product category were as follows:


		Vision Care				Ophthalmic Pharmaceuticals				Surgical				Total					Vision Care				Pharmaceuticals				Surgical				Total
		Three Months Ended September 30,																	Three Months Ended June 30,
(in millions)	(in millions)	2022		2021		2022		2021		2022		2021		2022		2021		(in millions)	2023		2022		2023		2022		2023		2022		2023		2022
Pharmaceuticals	Pharmaceuticals	$	4	$	5	$	117	$	116	$	—	$	—	$	121	$	121	Pharmaceuticals	$	1	$	1	$	133	$	113	$	—	$	—	$	134	$	114
Devices	Devices	221		226		—		—		169		170		390		396		Devices	215		213		—		—		193		180		408		393
OTC	OTC	361		364		—		—		—		—		361		364		OTC	421		366		—		—		—		—		421		366
Branded and Other Generics	Branded and Other Generics	10		7		55		53		—		—		65		60		Branded and Other Generics	7		7		61		55		—		—		68		62
Other revenues	Other revenues	2		3		—		2		3		3		5		8		Other revenues	2		1		—		1		2		4		4		6
		$	598	$	605	$	172	$	171	$	172	$	173	$	942	$	949		$	646	$	588	$	194	$	169	$	195	$	184	$	1,035	$	941

		Nine Months Ended September 30,																	Six Months Ended June 30,
		2022		2021		2022		2021		2022		2021		2022		2021			2023		2022		2023		2022		2023		2022		2023		2022
Pharmaceuticals	Pharmaceuticals	$	10	$	15	$	339	$	364	$	—	$	—	$	349	$	379	Pharmaceuticals	$	2	$	2	$	240	$	219	$	—	$	—	$	242	$	221
Devices	Devices	648		664		—		—		521		511		1,169		1,175		Devices	439		427		—		—		375		352		814		779
OTC	OTC	1,060		1,009		—		—		—		—		1,060		1,009		OTC	774		702		—		—		—		—		774		702
Branded and Other Generics	Branded and Other Generics	23		22		154		158		—		—		177		180		Branded and Other Generics	14		13		115		103		—		—		129		116
Other revenues	Other revenues	6		7		2		5		9		9		17		21		Other revenues	4		4		—		2		3		6		7		12
		$	1,747	$	1,717	$	495	$	527	$	530	$	520	$	2,772	$	2,764		$	1,233	$	1,148	$	355	$	324	$	378	$	358	$	1,966	$	1,830

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,” “Bausch + Lomb,” the “Company,” and similar terms refer to Bausch + Lomb Corporation and its subsidiaries. This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” has been updated through ~~November~~August 2, ~~2022~~2023 and should be read in conjunction with the unaudited interim Condensed Consolidated Financial Statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q for the quarterly period ended ~~September~~June 30, ~~2022~~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 (the “Act”), and Section 21E of The Securities Exchange Act of 1934, as amended, and that may be forward-looking information within the meaning defined under applicable Canadian securities laws (collectively, “Forward-Looking Statements”). See “Forward-Looking Statements” at the end of this discussion.

Our accompanying unaudited interim Condensed Consolidated Financial Statements as of ~~September~~June 30, ~~2022~~2023 and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~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 ~~Combined~~Consolidated Financial Statements for the year ended December 31, ~~2021,~~2022, which ~~are~~were included in ~~Bausch + Lomb’s final prospectus as~~our Annual Report on Form 10-K filed with the SEC ~~on May 5, 2022 pursuant to Rule 424(b)(4) under the Act relating to Bausch + Lomb’s Registration Statement on Form S-1~~ and ~~Bausch + Lomb’s supplemented PREP prospectus filed with~~ the Canadian Securities Administrators (the “CSA”) on ~~May 5, 2022.~~February 22, 2023 (the “Annual Report”). 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~~www.sedarplus.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 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.

OVERVIEW

Bausch + Lomb is a subsidiary of Bausch Health Companies Inc. (“BHC”), with BHC ~~currently~~ holding (as of July 28, 2023), directly or indirectly, approximately ~~88.7%~~88.5% of the issued and outstanding common shares of Bausch + Lomb. Bausch + Lomb is a leading global eye health company dedicated to protecting and enhancing the gift of sight for millions of people around the world—from the moment of birth through every phase of life. Our mission is simple, yet powerful: helping you see better, to live better. We develop, manufacture and market a range of products, primarily in the areas of eye health, which are marketed directly or indirectly in approximately 100 countries. As a fully integrated eye health business, Bausch + Lomb has an established line of contact lenses, intraocular lenses (“IOLs”) 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.

Our comprehensive portfolio of over 400 products is ~~fully integrated and~~ built to serve our customers across the full spectrum of their eye health needs throughout their lives. Our iconic brand is built on the deep trust and loyalty of our customers established over our ~~nearly~~ 170-year history. We have a significant global research, development, manufacturing and commercial footprint of approximately ~~12,800~~13,000 employees and a presence in approximately 100 countries, extending our reach to billions of potential customers across the globe. We have long been associated with many of the most significant advances in eye health, and we believe we are well positioned to continue leading the advancement of eye health in the future.

Reportable Segments

Our portfolio of products falls into three operating and reportable segments: (i) Vision Care, ~~(formerly Vision Care/Consumer Health),~~ (ii) ~~Ophthalmic~~ Pharmaceuticals and (iii) Surgical. We have found and continue to believe there is significant opportunity in these businesses and we believe our existing portfolio, commercial footprint and pipeline of product development projects position us to successfully compete in these markets and provide us with the greatest opportunity to build value for our shareholders. The following is a brief description of the Company’s segments:

The Vision Care segment—includes both our contact lens and consumer eye care businesses, and includes leading products such as our Biotrue® ONEday daily disposables and our Biotrue® multi-purpose solution.

Our contact lens portfolio spans the spectrum of wearing modalities, including daily disposable and frequently replaced contact lenses, and contact lenses that are indicated for therapeutic use and that can also provide optical correction during healing, if required. In particular, our Vision Care contact lens portfolio includes our Bausch + Lomb INFUSE® (silicone

hydrogel (“SiHy”)) daily disposable contact lenses, Biotrue® ONEday daily disposables, PureVision® SiHy contact lenses, SofLens® daily disposables and Bausch + Lomb ULTRA® contact lenses.

Our consumer eye care business consists of contact lens care products, over-the-counter (“OTC”) eye drops that address various conditions, including eye allergies, conjunctivitis, dry eye, ~~and~~ redness relief, and eye vitamins and mineral supplements. Our ~~Eye Vitamin Products~~eye vitamin products include our PreserVision® AREDS 2 formula which contains the exact levels of six key nutrients recommended by the National Eye Institute to help reduce the risk of progression in patients with moderate to advanced age-related macular degeneration (“AMD”), and other supplements, that support general eye health. Within our consumer eye care business, our lens care product portfolio includes Biotrue® and Renu® multipurpose solutions and Boston® cleaning and conditioning solutions, our eye drops include LUMIFY®, Soothe®, Artelac®, Alaway® and Mioclear™ and our Eye Vitamins include PreserVision® and Ocuvite®.

~~For the year ended December 31, 2021, our Vision Care segment had seven product franchises that generated over $100 million in annual revenues, as follows: PreserVision~~®~~/Ocuvite~~®~~, Biotrue~~®~~, SofLens~~®~~, Renu~~®~~, Bausch + Lomb ULTRA~~®~~, Artelac~~® ~~and LUMIFY~~®.

The ~~Ophthalmic~~ Pharmaceuticals segment—consists of a broad line of proprietary and generic pharmaceutical products for post-operative treatments and treatments for a number of eye conditions, such as glaucoma, eye inflammation, ocular hypertension, dry eyes and retinal diseases. Key proprietary ~~ophthalmic~~ pharmaceutical brands are VYZULTA®, Lotemax®, Prolensa® and Minims®. Effective June 30, 2023, the Company renamed its former Ophthalmic Pharmaceuticals segment to the Pharmaceuticals segment. Aside from the change in name, there were no other changes made to this segment.

The Surgical Segment—consists of medical device equipment, consumables and technologies for the treatment of ~~corneal,~~ cataracts, ~~and~~corneal, vitreous and retinal eye conditions, which includes ~~intraocular lenses ("IOLs")~~IOLs and delivery systems, phacoemulsification equipment and other surgical instruments and devices necessary for cataract surgery. Key surgical brands include Akreos®, AMVISC®, Crystalens® IOLs, enVista® IOLs, Millennium®, Stellaris Elite® vision enhancement system, Storz® ophthalmic instruments, VICTUS® femtosecond laser, Teneo™, Eyefill® and Zyoptix®.

Initial Public Offering and Separation of the Bausch + Lomb Eye Health Business

On August 6, 2020, our parent company, BHC, announced its plan to separate our eye health business into an independent publicly traded entity, separate from the remainder of BHC (the “Separation”). In January 2022, BHC completed the internal organizational design and structure of our new eye health entity. The next step in the Separation was an initial public offering of the common shares of Bausch + Lomb. The registration statement related to the initial public offering of Bausch + Lomb (the “B+L IPO”) was declared effective on May 5, 2022, and our common ~~stock~~shares 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. Bausch + Lomb also obtained a final receipt to its Canadian base PREP prospectus on May 5, 2022. Prior to the completion of the B+L IPO, we were an indirect wholly-owned subsidiary of BHC. On May 10, 2022, a ~~wholly-owned~~wholly owned subsidiary of BHC (the “Selling Shareholder”) sold 35,000,000 common shares of Bausch + Lomb, at an offering price of $18.00 per share (less the applicable underwriting discount), pursuant to the Bausch + Lomb prospectus. 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 of Bausch + Lomb to cover over-allotments at the IPO offering price less underwriting commissions. On May 31, 2022, the underwriters ~~of the B+L IPO~~ partially exercised the over-allotment option granted ~~to them~~ 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 the applicable underwriting discount). The remainder of the over-allotment option granted to the underwriters expired. The Selling Shareholder received all net proceeds from the B+L IPO. ~~The remainder~~As of ~~the over-allotment option granted to the underwriters expired.~~

~~Upon the closing of the B+L IPO (after giving effect to the partial exercise of the over-allotment option),~~July 28, 2023, BHC directly or indirectly ~~holds~~held 310,449,643 issued and outstanding common shares of Bausch + Lomb, ~~common shares,~~ which ~~represents~~represented approximately ~~88.7%~~88.5% of our common shares.

The completion of the ~~separation~~full Separation of Bausch + Lomb is subject to the ~~expiry of customary lockups related to the B+L IPO (which have now expired) and, the~~ achievement of targeted debt leverage ratios ~~subject to market conditions~~ and the receipt of applicable shareholder and other necessary approvals and ~~the~~other factors, and is subject to various risk factors relating to the separation approvals set forth in Bausch + Lomb’s final prospectus as filed with the SEC on May 5, 2022 pursuant to Rule 424(b)(4) under the Act relating to our Registration Statement on Form S-1 and in Bausch + Lomb’s supplemented PREP prospectus as filed with the CSA on May 5, 2022, under the section entitled “Risk Factors”.Separation. We understand that BHC continues to believe that completing the B+L Separation makes strategic sense and that BHC continues to evaluate all relevant factors and considerations related to completing the Separation, including the effect of the lawsuit filed against Norwich ~~Legal Decision (as defined below) .~~Pharmaceuticals Inc.

See Note 2, “SIGNIFICANT ACCOUNTING POLICIES” to our unaudited interim Condensed Consolidated Financial Statements for additional information.

Positioning for Growth

Product Development

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

We are focused on bringing innovative products to market to serve doctors, patients and consumers in the pursuit of helping people see better to live better all over the world. We consistently look for key trends in the eye health market to meet changing doctor, patient and consumer needs and identify areas for investment to expand our market share and maintain our leading positions across business segments. Our leadership team actively manages our pipeline in order to identify what we believe are innovative and realizable projects that meet the unmet needs of consumers, patients and eye health professionals and 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 losemomentum~~.health.

We believe our ~~unparalleled~~ eye health knowledge and insights allow us to capitalize on market trends by differentiating our approach to product development, with a pipeline focused on prioritizing customer needs and actively seeking external innovation to design, develop and advance creative, ethical eye health products across our portfolio, to address unmet and evolving needs of eye care professionals, patients and consumers. Our team of approximately 850 dedicated Research and Development (“R&D”) employees is focused on advancing our pipeline and identifying new product opportunities and we believe we have a significant innovation opportunity today. We plan to develop and, where applicable, commercialize our global pipeline of over 60 projects, many of which are global projects being developed in and for multiple countries. These global and individual projects are in various stages of pre-clinical and clinical development, including new contact lenses and prescription medications for myopia, next-generation cataract equipment, premium IOLs, investigational treatments for dry eye, novel formulation for eye vitamins and preservative free formulation of eye drops, ~~and, next-generation cataract equipment,~~ among others, that are designed to grow our portfolio and accelerate future growth.

Our internal R&D organization focuses on the development of products through robust bench testing that is designed to comply with international standards and through clinical trials. ~~As of September 30, 2022, we have over 60 projects in our global~~Certain key near-term pipeline ~~which are being developed in and for multiple countries. Certain core internal R&D projects~~products that have received a significant portion of our R&D investment in current and prior periods are listed below.

~~Vision Care Pipeline~~

We believe that vision care is a very innovation-sensitive market. As a result, we believe our vision care business will achieve growth through our focus on new materials and products. We have leveraged our expertise in eye health to build a vision care pipeline based on innovative next generation materials and products, and we intend to continue developing our pipeline through a combination of internal and external business development initiatives. Our range of vision care pipeline products are as follows:

~~Contact Lens Pipeline~~

~~We are developing new materials and expect to continue to introduce innovative products, like our Bausch + Lomb INFUSE~~® contact lens, which is a silicone hydrogel daily disposable contact lens designed with a next generation material infused with ProBalance Technology™ to help maintain ocular surface homeostasis and help reduce symptoms of contact lens dryness. Silicone hydrogel materials provide increased oxygen transmission for eye health, improved safety and

~~increased comfort for end users. This combination should continue to benefit our other SiHy brands: Bausch + Lomb ULTRA~~®~~, AQUALOX™ and PureVision~~®~~. Our contact lens pipeline includes:~~

•SiHy Daily - A silicone hydrogel daily disposable contact lens designed to provide outstanding comfort and clear vision throughout the day. ~~In September 2018, we launched~~To date SiHy Daily has been launched in ~~Japan~~approximately 50 countries, under the ~~branded name AQUALOX™ ONE DAY. In August 2020, we launched SiHy Daily in the U.S. under the branded name Bausch + Lomb~~brand names INFUSE® ~~SiHy Daily Disposable contact lens. In the fourth quarter of 2020, SiHy Daily was launched in Australia, Hong Kong and Canada under the branded name Bausch + Lomb Ultra~~® ~~ONE DAY. SiHy Daily has also received regulatory approval in China, New Zealand, Japan, South Korea, Europe, Singapore and Malaysia, where it will be branded as Bausch + Lomb Ultra~~, ULTRA® ONE DAY and ~~in the second quarter of 2021, we launched SiHy Daily in South Korea and Singapore as Bausch + Lomb Ultra~~AQUALOX® ONE DAY.

•In October 2020, we announced that we had entered into an exclusive global licensing agreement with Brien Holden Vision Institute (“BHVI” and the license, the “BHVI License”) for a myopia control contact lens design developed by BHVI. We plan to ~~pair BHVI’s novel~~launch our SiHy Daily lenses into additional countries throughout 2023. In addition, we launched our first silicone hydrogel daily disposable multifocal contact lens ~~design with our leading contact lens technologies to develop potential contact lens treatments designed to slow the progression of myopia~~ in ~~children. A global clinical trial is expected to begin in 2023.~~

•~~We are developing a custom-finished orthokeratology lens with a proprietary software based fitting system for the treatment of myopia, especially in children, which we expect~~May 2023, and plan to launch a toric lens in ~~2023, subject to FDA approval.~~

•~~We are developing certain cosmetic contact lenses with improved color technology, which has been recently approved in Japan and we expect to launch in certain other Asian markets in 2023 and~~ 2024.

•In June 2022, we launched Revive™ custom soft contact lenses in the United States. Revive™ is a new family of customizable soft contact lenses, which are available in spherical, toric, multifocal and multifocal toric options and are designed to meet the vision needs of more patients, including those with high or unique prescriptions.

~~Consumer Eye Care Pipeline~~

We have built and strengthened our consumer eye care product pipeline through internal development initiatives and external business development opportunities and intend to continue developing our pipeline through a combination of internal and external business development initiatives. Our consumer eye care product pipeline includes:

•LUMIFY® (brimonidine tartrate ophthalmic solution, 0.025%) - An OTC eye drop developed as an ocular redness reliever. To date, we have launched and acquired the right to launch Lumify® in various countries. We ~~launched this product~~also have several innovative new line extension formulations under development, including Lumify® Eye Illuminations, which we expect to launch in 2023, Lumify Preservative Free, for which the New Drug Application (“NDA”) was submitted to the U.S. Food and Drug Administration (the “FDA”) in May ~~2018~~2023, and ~~in Canada in June 2022. Currently,~~Lumify® Allergy, for which we ~~have several new line formulations under development. The first Phase 3 study in support of these line extensions has initiated. Additional studies have commenced~~expect to submit an NDA during ~~October 2022.~~2024.

•~~Renu~~Biotrue® ~~Advanced Multi-Purpose Solution (“MPS”) - Contains a triple disinfectant system that kills 99.9% of germs tested,~~– We have expanded, and ~~has a dual surfactant system that provides up~~continue to ~~20 hours of moisture. Renu~~expand, the Biotrue® 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, Slovakia, China, Argentina, Columbia, Ecuador and Peru. We anticipate launches in Slovenia, other parts of Europe and the Nordic regions.

•brand. Biotrue® Hydration Plus Multi-Purpose Solution ~~– A next generation Biotrue~~® MPS that contains 25% more Hyaluronan (HA), triple disinfectant system that kills 99.9% of germs tested, dual surfactant system that provides lens conditioning/cleaning and erythritol providing antioxidant properties. This formulation provides up to 20 hours of hydration. Biotrue® Hydration Plus MPS is U.S. FDA and Health Canada cleared with indications for use to condition, clean, remove protein, disinfect, rinse and store soft contact lenses including those composed of silicone hydrogels. Biotrue® ~~Hydration Plus MPS~~ was launched in the U.S. and Canada (branded as Biotrue® Advanced MPS) in 2022 and ~~has gained regulatory approval from China’s National Medical Products Administration (“NMPA”). We~~we anticipate launching Biotrue® Advanced MPS in China in the second half of 2023. In addition, certain Biotrue® branded dry eye line extensions have been developed or are currently under development, including Biotrue® Preservative Free Contact Lens Rehydrating Drops, which received FDA clearance in December 2022 and were launched in May 2023.

•~~Preservative Free Biotrue~~MIEBO®TM Hydration Boost lubricant eye drops was launched in the U.S. during June 2021. This formulation is enhanced with Hyaluronan (HA), electrolytes, an anti-oxidant and marketed in a preservative free multi-dose container. Additional line extensions are currently under development.

~~Ophthalmic Pharmaceutical Pipeline~~

We intend to strengthen our innovative pharmaceuticals pipeline through internal development and external business development opportunities with a focus on life cycle management, generics and biosimilars, dry eye and “back of the eye” diseases. Our range of ophthalmic pharmaceutical pipeline products include:

•~~In October 2019, we acquired an exclusive license from Clearside Biomedical, Inc. (“Clearside” and the license, the “Clearside License”) for the commercialization and development of XIPERE~~® ~~(triamcinolone acetonide suprachoroidal injectable suspension) in the U.S. and Canada. XIPERE~~® ~~is a proprietary suspension of the corticosteroid triamcinolone acetonide formulated for suprachoroidal administration via Clearside’s proprietary SCS Microinjector~~®~~. In October 2021, the FDA approved XIPERE~~® ~~for suprachoroidal use for the treatment of macular edema associated with uveitis. We launched XIPERE~~® ~~in the first quarter of 2022, and believe that it is the first and only therapy currently available in the U.S. for suprachoroidal use for the treatment of macular edema associated with uveitis.~~

•(perfluorohexyloctane) (formerly known as NOV03) – In December 2019, we ~~announced that we had~~ acquired an exclusive license from Novaliq GmbH (the “Novaliq License”) for the commercialization and development in the U.S. and Canada of MIEBOTM for the ~~investigational~~ treatment ~~NOV03 (perfluorohexyloctane), a first-in-class investigational drug that if approved by~~of the ~~FDA will have a novel mechanism~~signs and symptoms of ~~action to treat~~ dry eye disease (“DED”) ~~associated with Meibomian Gland Dysfunction (“MGD”)~~. 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 ~~New Drug Application~~NDA was filed with the FDA in June 2022 ~~(and accepted~~and was approved by the FDA ~~in September 2022 with a Prescription Drug User Fee Act (PDUFA) date of June 28, 2023),~~on May 18, 2023. MIEBOTM is the first and ~~if approved, we~~only FDA-approved treatment for DED that directly targets tear evaporation. We anticipate launching MIEBOTM in the U.S. in the ~~second half~~third quarter of 2023. ~~If approved by~~We submitted the ~~FDA, we~~filing for Canadian approval of this product during the first quarter of 2023. We believe the addition of ~~this investigational treatment for DED with MGD~~MIEBOTM will help build upon our strong portfolio of integrated eye health products. ~~We expect to make our Canadian filing in the first half of 2023.~~

•Under the terms of an October 2020 agreement with Eyenovia, Inc., we have acquired an exclusive license (the “Eyenovia License”) in the U.S. and Canada for the development and commercialization of an investigational microdose formulation of atropine ophthalmic solution; a potentially first-in-class investigational treatment of the reduction of pediatric myopia progression. Microdose administration is designed to result in low systemic and ocular drug exposure. We expect to complete enrollment for a Phase 3 study during 2023. If approved by the FDA, we believe this investigational product could potentially change the treatment paradigm for the reduction of myopia progression in children.

•LuxSmartIn May 2020, we entered into an exclusive license agreement (the “STADA-Xbrane License”) with STADA Arzneimittel AG and its development partner, Xbrane Biopharma AB (“Xbrane”), to commercialize in the U.S. and Canada a biosimilar candidate to Lucentis®TM (ranibizumab), a VEGF inhibitor used in the treatment of serious eye diseases, such as wet AMD. We expect, subject to FDA alignment, that Xbrane will resubmit the abbreviated Biologics License Application (“aBLA”) for the product by the end of 2022 and we anticipate launching the product in the U.S. in late 2023 or early 2024 (depending on the exact timing of such resubmission).

~~Surgical Pipeline~~

We have built and strengthened our ophthalmic surgical pipeline through internal and external development and licensing initiatives and intend to continue developing our pipeline through a combination of internal and external business development initiatives. Our range of surgical pipeline products are developed with the goal to reinforce our position in existing segments, as well as entering new segments in order to broaden the offering. Our surgical pipeline includes:

•– In the first quarter of 2021, we launched LuxSmartTMpremium IOLs designed for providing distance and intermediate continuous vision with ~~extended depth of focus (“EDOF”) design. We started first implantation~~potentially similar dysphotopsia profile as a monofocal, thanks to its Pure Refractive Optics Technology. This product had been launched in ~~December 2020,~~various European markets and we expanded prelaunch activities in the U.K., France, Germany, Sweden, Italy, Spain, Poland, Hong Kong and the Czech Republic in the first quarter of 2021. During the remainder of 2021, we expanded the launch of LuxSmartTM ~~IOLs to other European countries, including Belgium, Netherlands, Norway, Portugal, Switzerland, Greece, Bulgaria, Hungary, Romania and Serbia. We~~ expect to expand the launch of LuxSmartTM IOLs in select other markets in 2023.

•enVista® – We are expanding our portfolio of premium IOLs built on the enVista® platform with ~~Monofocal Plus, EDOF~~AspireTM (Monofocal Plus), EnvyTM Trifocal and ~~Trifocal~~BEYONDTM (extended depth of focus (“EDOF”)) optical designs with two options: non-Toric and Toric for ~~presbyopia correction.~~astigmatism patients. We expect that they will be commercialized together with a new preloaded ~~inserter with two options: non-Toric, as well as Toric for astigmatism patients.~~EyeGility inserter. We anticipate launching Monofocal Plus, Trifocal and EDOF optical designs for presbyopia in the U.S. in 2023, 2024 and 2025/2026, respectively.

•~~We are developing a new generation Phaco and Vitroretinal combined surgical system that we expect will be a future innovation that builds on the existing Stellaris Elite~~® vision enhancement system by introducing a new fluidics system, enhancing interconnectivity and networking, expanding surgical parameters and offering a wide range of new peripherals to enhance the surgeons’ control throughout the surgical procedures.

•~~We are developing two new femto lasers with advanced technology that we expect to launch in 2024. These products are designed for the cataract and refractive surgery markets.~~

•~~We are developing new innovative, personalized corneal treatments for our Teneo™ Excimer laser, which we expect to launch in the U.S. in 2023, subject to FDA approval.~~

•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.~~

Strategic Acquisitions and 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. ~~Our strategic~~In addition to licensing agreements, we selectively consider any acquisition that we believe aligns well with our current organization and strategic plan to help drive profitable growth and advance our mission of helping people see better to live better. Certain recent strategic acquisitions and licensing agreements that we have entered into include the ~~BVHI License outlined~~following:

2023 Acquisitions

•Acquisition of XIIDRA® – On June 30, 2023, the Company announced that it had 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 the Company 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. We believe this acquisition will complement and grow our 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.

•Acquisition of Blink® Product Line – In July 2023, we 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. We believe this acquisition will enable us to continue to grow our global OTC business.

•During January 2023, we acquired AcuFocus, Inc. ("AcuFocus"). AcuFocus is an ophthalmic medical device company that has delivered breakthrough small aperture intraocular technology to address diverse unmet needs in eye care. The IC-8® Apthera™ IOL was approved by the ~~discussion~~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. We believe that the IC-8® AptheraTM EDOF IOL will bolster our ~~Vision Care pipeline above~~surgical portfolio by enhancing our IOL offerings, which is a strategic area of focus for the Company.

2022 Licensing Agreement and ~~the Clearside License, Novaliq License, Eyenovia License and STADA-Xbrane License each outlined in the discussion of our Ophthalmic Pharmaceutical product pipeline above.~~Acquisitions

~~In addition, during~~•During July 2022, we entered into an exclusive European distribution agreement with Sanoculis Ltd. ("Sanoculis") for Sanoculis' Minimally Invasive Micro Sclerostomy ("MIMS®"). MIMS® is an innovative minimally invasive surgical procedure for the treatment of glaucoma. We also made an equity investment in Sanoculis as part of a Series C round of funding and have an option to acquire all of the assets of Sanoculis.

•During September 2022, we entered into an exclusive distribution agreement with Alfa Instruments s.r.l., under which Bausch + Lomb will distribute and commercialize Alfa Instruments' line of surgical intraocular dyes, Vitreocare, globally with the exception of Italy, where Alfa Instruments is based.

•During November 2022, we acquired Paragon BioTeck, Inc. (“Paragon BioTeck”), an eye-care focused drug development company, having a primary emphasis on the early detection of ocular diseases. This acquisition allows us to maximize the revenues and margins associated with Paragon BioTeck’s products, for which Bausch + Lomb had previously had commercialization rights.

•During December 2022, we acquired Total Titanium Inc., an ophthalmic microsurgical instrument and machined parts manufacturing company. We believe that this ~~distribution agreement,~~acquisition is an important step in continuing to expand our

surgical portfolio as ~~well as~~it provides us with the ~~equity stake~~opportunity to increase our manufacturing capacity and ~~option, will help build upon~~more specifically bolster our ~~strong portfolio of integrated eye health products.~~

Inposition in the normal course of business, we will 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, (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.ophthalmic microsurgical instrumentation market.

We ~~are and we will continue to~~regularly consider further strategic licensing ~~opportunities to address the unmet needs of the consumer, patient~~ and ~~eye health professional,~~acquisition opportunities, some of which could be material in size.

~~Strategic Acquisitions~~

We selectively consider any acquisition that we believe aligns well with our current organization and strategic plan. 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.

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

~~Sales Force Expansion~~

~~We have an established sales network that uniquely positions us to meet customers’ demands across the geographies weserve, building deeply loyal and enduring relationships. Through our teams, we are engaged with various physician and patientassociations across the world. These professional relationships are the foundation of our proven track record of convertinginnovation into trusted products with high sales and provide us additional patient insights and consumer feedback thatvirtuously informs the innovation effort. We look for opportunities to strategically expand our sales force in specificgeographies as needed and in support of new product launches, most recently in support of our launches of our Bausch + LombINFUSE~~®~~, Biotrue~~® ~~ONEday and Bausch + Lomb ULTRA~~® ~~contact lenses in order to drive growth and maximize the returnon our product portfolio.~~

~~e-Commerce~~

We see an opportunity in e-Commerce for growth, which now represents more than 10% of our Vision Care revenues. We believe that the trend of using e-Commerce platforms to shop for our products will continue to affect our business due to the convenience of online ordering and subscription delivery. We believe that our products are well suited to sales through e-Commerce channels as they are shelf stable, inexpensive to ship as our products are light in weight, and easy to transport. Additionally, the recurring purchase cycles for many of our products will position them to capitalize on continued growth of subscription services. We continue to look for additional opportunities to invest in these platforms to meet consumer demand and drive growth.

Investment in Our Manufacturing Facilities

~~In support of~~As our ~~core businesses,~~business continues to grow, we have made 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. We note that~~Virginia, as well as certain international facilities. The continued investment in our infrastructure ~~remained an area~~is in support of our ~~focus~~recent and ~~transformation. We have identified and continue to identify opportunities~~future product launches; to increase ~~our~~ capacity to ~~manufacture~~meet increased demand for our ~~products~~products; as well as to meet forecasted global demand, particularly in our Vision Care product lines. Our projects have included emphasis on developing new technologies to assist in the manufacture, inspection, and packaging of contact lenses to drivepromote efficiencies, ~~in our manufacturing processes.~~

~~Additionally, we have increased and continue to increase our investments~~including those to enhance our supply chain and distribution capabilities in both the ~~U.S~~U.S. and international locations. ~~These recent investments in our supply chain included adding additional distribution capabilities for medical devices, primarily contact lens products.~~

From a manufacturing and distribution expansion perspective, we have made approximately $785 million in capital expenditures/commitments over the past 5 years to increase capacity and meet increased demand for our products. We believe the continued investmentsContinued investment in our infrastructure ~~most specifically the Waterford, Rochester~~remains an area of our focus and ~~Lynchburg facilities,~~ further demonstrates the growth potential we see in our products.

Our Competitive Environment

We operate in a marketplace with many competitors and face competition from competitors’ products and new products entering the market. We also face the threat of competition from new entrants to our markets as well as from existing competitors, including those overseas who may have lower production costs. In order to protect and grow our market share we: (i) actively manage our pricing, (ii) refresh our product portfolio with innovative new products and (iii) manage our product portfolio to address generic competition.

Business Trends

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

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~~high levels of inflation and global supply-chain disruption.

~~Our revenues attributable~~Most recently, during May 2023 the Biden administration announced a round of U.S. sanctions and export controls against Russia and Belarus in response to the ongoing war. These sanctions impact our ability to distribute our U.S. manufactured contact lenses and our U.S. surgical products to Russia and Belarus. However, in response to these sanctions, we are in the process of applying for licenses with the ~~nine months ended September 30, 2022~~U.S. Department of Commerce’s Bureau of Industry and ~~2021 were $90 million and $75 million, respectively. Our revenues attributable~~Security ("BIS") to ~~Ukraine for~~allow us to resume the nine months ended September 30, 2022 and 2021 were $5 million and $7 million, respectively. Our revenues attributable to Belarus for the nine months ended September 30, 2022 and 2021 were $6 million and $5 million, respectively. As the geopolitical situation in Eastern Europe continues to intensify, political events and sanctions are continually changing, and we continue to assess the impactsale of the ~~Russia-Ukraine war will have~~currently sanctioned products. In addition, in June 2023, the EU agreed upon another round of sanctions against Russia that include, among other key elements, new targeted sanctions against individuals and entities, an expansion of the restrictions on ~~our businesses. These impacts may include but are not limited to: (i) interruptions or stoppage~~the sale, export and transit of ~~production, (ii) damage or loss of inventories, (iii) supply-chain~~certain goods and ~~product distribution disruptions in Eastern Europe, (iv) volatility in commodity prices~~technology 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.~~

additional anti-circumvention measures. To date, ~~these~~the challenges associated with the Russia-Ukraine War and related sanctions from the U.S., EU and elsewhere have not yet had a material impact on our ~~operations; however,~~operations.

Our revenues attributable to Russia, Ukraine and Belarus were approximately 3% and 4% of our total revenues for the ~~ongoing~~six months ended June 30, 2023 and year ended December 31, 2022, respectively. In addition, we do not have any research or manufacturing facilities in Russia, Ukraine or Belarus. While we have been monitoring this conflict, ~~in this region~~ and ~~the sanctions and other actions by the global community in response has hindered (and we anticipate~~ will continue to ~~hinder) our ability~~do so as this conflict continues to ~~conduct business with customers and vendors in~~evolve, we are unable to predict the impact of this ~~region. For example, we expect to experience further disruption and delays in~~conflict on the supply of our products to our customers in Russia, Belarus and Ukraine. We may also experience further decreased demand for our products in these countries as a result of the conflict and invasion. In addition,

Company’s business.

we may 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, if 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.

For a further discussion of these and other risks relating to our international business, see “Risk ~~Factors—Risks Relating to the International Scope~~Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations- Business Trends” of our ~~Business~~” included in Bausch + Lomb’s final prospectus as filed with the SEC on May 5, 2022 pursuant to Rule 424(b)(4) under the Act relating to Bausch + Lomb’s Registration Statement on Form S-1 and in Bausch + Lomb’s supplemented PREP prospectus as filed with the CSA on May 5, 2022.Annual Report.

Impacts of COVID-19 Pandemic

~~The unprecedented nature of the COVID-19 pandemic has, and continues to, adversely impact~~As 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 recoveryeconomy recovers 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 continued 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~~China. Throughout 2022, lockdowns in China ~~had~~ impacted the demand for certain products, particularly our contact lens and consumer eye care products, as shelter in place orders limit the demand and need for the use of contact lenses and related products. Our revenues in China for the nine months ended September 30, 2022 and 2021 were $251 million and $277 million, respectively, a decrease of $26 million and, in part, reflects the challenges created by the surge of the omicron variant in China. During the third quarter of 2022, the impact on our revenues from the headwinds from China’s COVID-19 policies and lockdowns that we saw during the first half of 2022 began to normalize and we began to see growth in volumes in this region. 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~~We have dealt with these issues in China with only a minimal impact on our manufacturing and distribution processes. These lockdowns in China were halted in December 2022, and, in March 2023, China reopened its

borders to tourists. Our revenues in China for the six months ended June 30, 2023 and 2022 were $163 million and $158 million, respectively, representing an increase of $5 million, despite the unfavorable foreign currency impact, and we expect to continue to see gradual improvements to our revenues in China over time. However, as the impacts of global reaction to the COVID-19 pandemic remains a fluid situation, we continue to monitor the impacts on our businesses of the COVID-19 virus and variant and subvariant strains thereof in 2023 in order to timely address new issues if and when they arise. Future developments with respect to COVID-19, the reaction thereto and other governmental and/or geopolitical developments in China may impact our business and results of operations, and while we remain confident that our business in China is well-positioned to return to stable growth over time, there can be no guarantee as to the performance of our business in China for any future period.

For a further discussion of these and other COVID-19 related risks, see “Risk Factors— Risks Relating to COVID-19” included in Bausch + Lomb’s final prospectus as filed with the SEC on May 5, 2022 pursuant to Rule 424(b)(4) under the Act relating to Bausch + Lomb’s Registration Statement on Form S-1Economic and ~~in Bausch + Lomb’s supplemented PREP prospectus as filed with the CSA on May 5, 2022.~~Market Conditions” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations- Business Trends” of our Annual Report.

Inflation and Supply Chain

Changes in economic conditions, including, supply chain constraints, logistics challenges, labor shortages, the Russia-Ukraine War, and steps taken by governments and central banks, particularly in response to the COVID-19 pandemic, as well as other stimulus and spending programs, have led to higher inflation, which has led to an increase in costs and may cause changes in fiscal and monetary policy, including increased interest rates. In a higher inflationary environment, we may be unable to raise the prices of our products and services sufficiently to keep up with the rate of inflation. Moreover, negative macroeconomic conditions could adversely impact our ability to obtain financing in the future on terms acceptable to us, or at all. In addition, the geopolitical instability and related sanctions could continue to have significant ramifications on global financial markets, including volatility in the U.S. and global financial markets. As a result of these global macroeconomic conditions, including, but not limited to those caused by the Russia-Ukraine War and the COVID-19 pandemic, we have ~~been experiencing~~experienced inflationary pressures related to certain materials for our products.

We have also been experiencing certain ~~supply-chain~~supply chain challenges which have caused disruptions in availability and delays in shipping, which has led to challenges in meeting end market ~~demand.~~demand, primarily within our contact lens and surgical businesses.

~~These inflationary pressures and~~The supply-chain challenges have impacted our revenues and resulting margins, despite our ~~effort~~efforts to manage these impacts through strategic pricing actions and other initiatives. While we expect these ~~inflationary pressures and supply-chain~~supply chain challenges to continue through ~~2022,~~2023, the duration and extent of these challenges is uncertain and could have an adverse impact on results of operations. We will continue to monitor these inflationary and ~~supply-chain~~supply chain challenges and are implementing actions to help mitigate these ~~challenges.~~

~~Inflation Reduction Act~~

~~On August 16, 2022, US President Joseph Biden signed the Inflation Reduction Act (the “IRA”) into law, which includes implementation~~challenges, including strategically spot buying key components of a new alternative minimum tax, an excise tax on stock buybacks, and significant tax incentives for energy and climate initiatives, among other provisions. The corporate alternative minimum tax (“CAMT”) imposes a minimum tax on the adjusted financial statement income (“AFSI”) for “applicable corporations” with average annual AFSI over a three-year period in excess of $1 billion. A corporation that is a member of a foreign-parented multinational group, as defined in the IRA, must include the AFSI (with certain modifications) of all members of the group in applying the $1 billion test, but would only beinventory. However, we are subject to ~~CAMT if the three-year average AFSI~~price control restrictions on our prescription ophthalmology products in a number of ~~its US members, US trades~~countries in which we operate, and, as a result, our ability to raise prices in a timely fashion in anticipation of, or business of foreign group members that are not subsidiaries of US members, and foreign subsidiaries of US members exceeds $100 million. The Company is currently considered a member of BHC’s foreign-parented multinational group and the Company’s “applicable corporations” wouldresponding to, inflation may be combined with that of BHC’s “applicable corporations” to determine the applicability of the CAMT. The Company currently does not believe this will have a significant impact on its tax results, but will continue to evaluate the law and its potential impacts.limited or delayed.

Global Minimum Corporate Tax Rate

On October 8, 2021, the Organisation for Economic Co-operation and Development (“OECD”)/G20 inclusive framework on Base Erosion and Profit Shifting (the “Inclusive Framework”) published a statement updating and finalizing the key components of 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 to 2024. The Inclusive Framework plan has now been agreed to by ~~141~~143 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~~members who have agreed to the plan, effective in 2024. On December ~~20, 2021,~~15, 2022, the European Union member states unanimously adopted the directive to implement pillar two rules. According to the directive, the member states are expected to enact pillar two rules into domestic law in 2023, with certain elements becoming effective on or after December 31, 2023. The OECD has published model rules and other guidance with respect to ~~implement the~~ pillar two, ~~rules,~~ which are generally consistent with the agreement reached by the Inclusive Framework in October 2021. ~~Some further~~On February 1, 2023, the Inclusive Framework released a package of technical and administrative guidance on the ~~plan~~implementation of pillar two, including the scope of companies that will be subject to the Global Anti-Base Erosion Rules, transition rules, and ~~the related rules has been published, with additional~~ guidance ~~expected~~on domestic minimum taxes that countries may choose to ~~be published in 2023.~~adopt, among other topics. We will continue to monitor the implementation of the Inclusive Framework agreement by the countries in which we operate. ~~While~~Although 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. On February 1, 2023, the U.S. Financial Accounting Standards Board indicated that they believe the minimum tax imposed under pillar two is an alternative minimum tax, and, accordingly, deferred tax assets and

liabilities associated with the minimum tax would not be recognized or adjusted for the estimated future effects of the minimum tax but would be recognized in the period incurred.

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,~~Many of these changes focus on health care cost containment, which result in pricing pressures relating to the ~~Patient Protection~~sales and ~~Affordable Care Act (the “ACA”) was enacted~~reimbursements of health care products. The Biden administration and Congress continue to focus on health care cost containment which could result in ~~the U.S. The ACA contains several provisions~~legislative and regulatory changes that may negatively 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 Act 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.businesses.

In addition, ~~in 2013 federal subsidies began~~we continue 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 $3 million and $3 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 $24 million and $20 million, respectively, on

~~Medicare Part D utilization incurred by beneficiaries whose prescription drug costs cause them to be subject to the Medicare Part D coverage gap (i.e., the “donut hole”).~~

~~The financial impact of the ACA will be affected by certain additional developments over the next few years, including pending implementation guidance and certain~~face various proposed health care ~~reform proposals. Additionally, policy efforts designed specifically~~pricing changes and regulations from governments throughout the world in locations in which we operate our business. These proposed changes may also continue to ~~reduce patient out-of-pocket costs for medicines could~~ result in ~~new mandatory rebates~~pricing pressures relating to sales, promotions and discounts or other pricing restrictions. Also, it is possible, as discussed further below, that legislation will be passed by Congress repealing the ACA in whole or in part. Adoption of legislation at the federal or state level could materially affect demand for, or pricingreimbursement of our ~~products.~~product portfolio.

Beginning in 2011, the law imposed a significant annual fee on companies that manufacture or import branded prescription drug products. More recently, the Bipartisan Budget Act of 2018 amended the ACA, effective January 1, 2019, to close the donut hole in most Medicare drug plans. In addition, in April 2018, the Centers for Medicare & Medicaid Services published a final rule that gives states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the ACA for plans sold through such marketplaces.

In 2018, we faced uncertainties due to federal legislative and administrative efforts to repeal, substantially modify or invalidate some or all of the provisions of the ACA. However, we believe there is low likelihood of repeal of the ACA, given the recent failure of the Senate’s multiple attempts to repeal various combinations of ACA provisions and the 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-sponsored insurance coverage, and we cannot predict how future federal or state legislative or administrative changes relating to the reform will affect our business.

In 2019, the U.S. Department of Health and Human Services announced a preliminary plan to allow for the importation of certain lower-cost drugs from Canada. The preliminary plan excludes insulin, biological drugs, controlled substances and intravenous drugs. The preliminary plan relies on individual states to develop proposals for safe importation of those drugs from Canada and submit those proposals to the federal government for approval. Although the preliminary plan has some support from the prior administration, at this time, studies to evaluate the related costs and benefits, evaluate the reasonableness of the logistics, and measure the public reaction of such a plan have not been performed. While we do not believe this will have a significant impact on our future cash flows, we cannot provide assurance as to the 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 were delayed to July 1, 2022. The new regulations, 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 Center 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. However, U.S. President Joseph Biden and several members of the current U.S. Congress have indicated that lowering drug prices is a legislative and political priority, and some have introduced proposals that seek to address drug pricing.

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 (BP) reporting relating to certain value-based purchasing (VBP) 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 the legislation, the impact of which is uncertain at this time.

Other legislative efforts relating to drug pricing have been enacted and others have been proposed at the U.S. federal and state levels. For instance, certain states have enacted legislation related to prescription drug pricing transparency. Several states have passed importation legislation and Florida is working with the U.S. government to implement an importation program from Canada. We also anticipate that Congress, state legislatures and third-party payors may continue to review and assess alternative health care delivery and payment systems and may in the future propose and adopt legislation or policy changes or implementations affecting additional fundamental changes in the health care delivery system. We continually review newly enacted and proposed U.S. federal and state legislation, as well as proposed rulemaking and guidance published by the U.S. Department of Health and Human Services, the FDA and ~~the FDA;~~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 2022 or in later~~over the next five 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)~~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.sales.

~~Certain of our products already face generic competition. During 2021, products that began facing LOE in the U.S. included, Lotemax~~® ~~Gel and Bepreve~~®~~, which in aggregate accounted for less than 1% of our total revenues in 2021.~~ Based on current patent expiration dates, settlement agreements and/or competitive information, we have ~~also~~ identified ~~branded products that we believe could~~one product, Prolensa®, which is expected to begin facing ~~potential~~ LOE ~~and/or generic competition~~ in the ~~U.S. over the next five years,~~second half of 2023, which in the aggregate accounted for approximately 1% of our total revenues in ~~2021.~~2022. This could 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, ~~the PreserVision~~® ~~U.S. formulation patent expired in March 2021, but a patent covering methods of using the formulation remains in force into 2026. PreserVision~~® ~~products accounted for approximately 6% of our total revenues in 2021. PreserVision~~® ~~is (or was) the subject of certain ongoing and past patent infringement proceedings. While the Company cannot predict the magnitude or timing of the impact from the PreserVision~~® ~~patent expiry, this is an OTC product and thus, the impact is not expected to be as significant as the LOE of a branded pharmaceutical product.~~

~~In addition,~~ in connection with our Lumify®, PreserVision®, Vyzulta® and ~~Vyzulta~~Lotemax®SM products, we have commenced ongoing infringement proceedings (or anticipate commencing infringement proceedings) against potential generic competitors in the U.S. If we are not successful in these proceedings, we may face increased generic competition for these products.

In addition, the PreserVision® U.S. formulation patent expired in March 2021, but a patent covering methods of using the formulation remains in force into 2026. PreserVision® products accounted for approximately 7% and 6% of our total revenues in 2022 and 2021, respectively. PreserVision® is (or was) the subject of certain ongoing and past patent infringement proceedings. While the Company cannot predict the magnitude or timing of the impact from the PreserVision® patent expiry, this is an OTC product and thus, the impact is not expected to be as significant as the LOE of a branded pharmaceutical product.

See Note ~~18,~~17, “LEGAL PROCEEDINGS” to our unaudited interim Condensed Consolidated Financial Statements included elsewhere in this Form 10-Q, as well as Note ~~18,~~20, “LEGAL PROCEEDINGS” of our ~~Combined~~audited Consolidated Financial Statements for the year ended December 31, ~~2021, which are~~2022, included in Bausch + Lomb’s final prospectus as filed with the SEC on May 5, 2022 pursuant to Rule 424(b)(4) under the Act relating to Bausch + Lomb’s Registration Statement on Form S-1 and Bausch + Lomb’s supplemented PREP prospectus filed with the CSA on May 5, 2022our Annual Report, for further details regarding certain of these infringement proceedings.

The risks of generic competition are a fact of the eye health 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~~routinely evaluates the impact that generic competition may have on future profitability and operations. In addition to aggressively defending our 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~~including decisions regarding our pipeline. Our leadership team actively manages our pipeline in order to identify innovative and realizable projects that are expected to provide incremental and sustainable revenues and growth into the future. 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.

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 of our products and operating sites are in good compliance standing with all relevant notified bodies and global health authorities. Further, all sites under FDA jurisdiction are rated as either No Action Indicated (where there was no Form 483 observation) or Voluntary Action Indicated (“VAI”) (where there was a Form 483 with one or more observations). In the case of VAI inspection outcomes, the FDA has accepted our responses to the issues cited, which will be verified when the agency makes its next inspection of those specific facilities.

~~FINANCIAL PERFORMANCE HIGHLIGHTS~~

On April 28, 2022, Bausch + Lomb effected a share consolidation as a result of which it had 350,000,000 issued and outstanding common shares. These common shares are treated as issued and outstanding at January 1, 2021 for purposes of calculating Basic and diluted (loss) income per share attributable to Bausch + Lomb Corporation. The following table provides selected unaudited financial information for the three and nine months ended September 30, 2022 and 2021:

Three Months Ended September 30, Nine Months Ended September 30,
(in millions, except per share data) 2022 2021 Change 2022 2021 Change
Revenues $ 942 $ 949 $ (7) $ 2,772 $ 2,764 $ 8
Operating income $ 46 $ 94 $ (48) $ 156 $ 237 $ (81)
Income before provision for income taxes $ 19 $ 88 $ (69) $ 75 $ 232 $ (157)
Net (loss) income attributable to Bausch + Lomb Corporation $ (18) $ 60 $ (78) $ 7 $ 131 $ (124)
Basic and diluted (loss) income per share attributable to Bausch + Lomb Corporation $ (0.05) $ 0.17 $ (0.22) $ 0.02 $ 0.37 $ (0.35)

~~Financial Performance~~

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

Revenues for the three months ended September 30, 2022 and 2021 were $942 million and $949 million, respectively, a decrease of $7 million, or 1%. The decrease was primarily attributable to the unfavorable impact of foreign currencies across all our international businesses. This decrease was partially offset by increases in: (i) volumes across each of our segments and (ii) net realized pricing, primarily in our Vision Care segment.

~~Operating income for the three months ended September 30, 2022 and 2021 was $46 million and $94 million, respectively, a decrease of $48 million which reflects, among other factors:~~

•a decrease in contribution (product sales revenue less cost of goods sold, exclusive of amortization and impairments of intangible assets) of $13 million, primarily driven by: (i) the unfavorable impact of foreign currencies and (ii) higher manufacturing variances, driven by inflationary pressures and higher manufacturing efficiency ramp-up costs of our Daily SiHy lenses, partially offset by the increase in pricing;

•an increase in selling, general and administrative ("SG&A") expenses of $33 million, primarily attributable to: (i) higher professional fees and higher compensation expenses, primarily related to separation-related costs and dis-synergy costs associated with the Company becoming a stand-alone entity and (ii) higher selling expenses, partially offset by the favorable impact of foreign currencies;

•~~an increase in R&D of $14 million primarily due to higher medical device regulation costs;~~

•~~a decrease in Amortization of intangible assets of $13 million, primarily due to fully amortized intangible assets no longer being amortized in 2022; and~~

•~~a decrease in Other expense, net of $1 million, primarily due to lower asset impairment charges, partially offset by higher restructuring, integration and separation costs.~~

Operating income for the three months ended September 30, 2022 and 2021 was $46 million and $94 million, respectively, and includes non-cash charges for Depreciation and amortization of intangible assets of $93 million and $98 million and Share-based compensation of $18 million and $16 million, respectively.

Income before provision for income taxes for the three months ended September 30, 2022 and 2021 was $19 million and $88 million, respectively, a decrease of $69 million and is primarily attributable to: (i) the decrease in our operating results of $48 million, as previously discussed and (ii) an increase in interest expense of $35 million, partially offset by a favorable net change in Foreign exchange and other of $12 million.

Net loss attributable to Bausch + Lomb for the three months ended September 30, 2022 was $18 million, as compared to Net income attributable to Bausch + Lomb for the three months ended September 30, 2021 of $60 million, a decrease in our results of $78 million and was primarily due to the decreases in Income before provision for income taxes of $69 million, as previously discussed, partially offset by a decrease in the Provision for income taxes of $9 million.

~~Summary of the Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021~~

Revenues for the nine months ended September 30, 2022 and 2021 were $2,772 million and $2,764 million, respectively, an increase of $8 million. The increase was attributable to: (i) increases in volumes in each of our segments and (ii) an increase in net realized pricing in our Vision Care segment, partially offset by decreases in net realized pricing in our Ophthalmic Pharmaceuticals segment. These increases were also partially offset by: (i) the unfavorable impact of foreign currencies across all our international businesses and (ii) the impact of divestitures and discontinuations.

~~Operating income for the nine months ended September 30, 2022 and 2021 was $156 million and $237 million, respectively, a decrease of $81 million which reflects, among other factors:~~

•a decrease in contribution (product sales revenue less cost of goods sold, exclusive of amortization and impairments of intangible assets) of $25 million, primarily driven by: (i) higher manufacturing variances, driven by inflationary pressures and higher manufacturing efficiency ramp-up costs of our Daily SiHy lenses and (ii) year-over-year changes in product mix. The higher manufacturing variances were partially offset by the non-recurrence of prior year charges related to a quality issue at a third-party supplier, as discussed below;

•an increase in SG&A expenses of $68 million, primarily attributable to: (i) higher professional fees and higher compensation expenses, primarily related to separation-related costs and dis-synergy costs associated with the Company becoming a stand-alone entity and (ii) higher selling expenses, primarily related to freight, partially offset by the favorable impact of foreign currencies;

•~~an increase in R&D of $28 million primarily due to higher medical device regulation costs;~~

•~~a decrease in Amortization of intangible assets of $37 million, primarily due to fully amortized intangible assets no longer being amortized in 2022; and~~

•a decrease in Other expense, net of $5 million, primarily due to: (i) lower asset impairment charges and (ii) a fair value adjustment related to acquisition-related contingent consideration, partially offset by higher restructuring, integration and separation costs.

Operating income for the nine months ended September 30, 2022 and 2021 was $156 million and $237 million, respectively, and includes non-cash charges for Depreciation and amortization of intangible assets of $286 million and $315 million and Share-based compensation of $45 million and $45 million, respectively.

Income before provision for income taxes for the nine months ended September 30, 2022 and 2021 was $75 million and $232 million, respectively, a decrease of $157 million and is primarily attributable to: (i) an increase in interest expense of $99 million and (ii) the decrease in our operating results of $81 million, as previously discussed, partially offset by a favorable net change in Foreign exchange and other of $20 million.

Net income attributable to Bausch + Lomb for the nine months ended September 30, 2022 was $7 million, as compared to Net income attributable to Bausch + Lomb for the nine months ended September 30, 2021 of $131 million, a decrease in our results of $124 million and was primarily due to the decreases in Income before provision for income taxes of $157 million, as previously discussed, partially offset by a decrease in the Provision for income taxes of $33 million.

RESULTS OF OPERATIONS

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


		Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	(in millions)	2022		2021		Change		2022		2021		Change			(in millions)	2023		2022		Change		2023		2022		Change
Revenues	Revenues														Revenues
Product sales	Product sales	$	937	$	941	$	(4)	$	2,755	$	2,743	$	12		Product sales	$	1,031	$	935	$	96	$	1,959	$	1,818	$	141
Other revenues	Other revenues	5		8		(3)		17		21		(4)			Other revenues	4		6		(2)		7		12		(5)
		942		949		(7)		2,772		2,764		8				1,035		941		94		1,966		1,830		136
Expenses	Expenses														Expenses
Cost of goods sold (excluding amortization and impairments of intangible assets) (Note 4)	Cost of goods sold (excluding amortization and impairments of intangible assets) (Note 4)	370		361		9		1,093		1,056		37			Cost of goods sold (excluding amortization and impairments of intangible assets) (Note 4)	417		377		40		788		723		65
Cost of other revenues	Cost of other revenues	2		3		(1)		6		8		(2)			Cost of other revenues	—		2		(2)		1		4		(3)
Selling, general and administrative (Note 4)	Selling, general and administrative (Note 4)	381		348		33		1,092		1,024		68			Selling, general and administrative (Note 4)	417		368		49		835		711		124
Research and development (Note 4)	Research and development (Note 4)	77		63		14		229		201		28			Research and development (Note 4)	85		75		10		162		152		10
Amortization of intangible assets	Amortization of intangible assets	59		72		(13)		188		225		(37)			Amortization of intangible assets	56		64		(8)		113		129		(16)
Other expense, net		7		8		(1)		8		13		(5)
Other expense (income), net															Other expense (income), net	17		(1)		18		26		1		25
		896		855		41		2,616		2,527		89				992		885		107		1,925		1,720		205
Operating income	Operating income	46		94		(48)		156		237		(81)			Operating income	43		56		(13)		41		110		(69)
Interest income	Interest income	2		—		2		3		—		3			Interest income	5		1		4		8		1		7
Interest expense (Note 4)	Interest expense (Note 4)	(35)		—		(35)		(99)		—		(99)			Interest expense (Note 4)	(58)		(44)		(14)		(108)		(64)		(44)
Foreign exchange and other	Foreign exchange and other	6		(6)		12		15		(5)		20			Foreign exchange and other	(9)		14		(23)		(15)		9		(24)
Income before provision for income taxes		19		88		(69)		75		232		(157)
(Loss) income before provision for income taxes															(Loss) income before provision for income taxes	(19)		27		(46)		(74)		56		(130)
Provision for income taxes	Provision for income taxes	(34)		(25)		(9)		(60)		(93)		33			Provision for income taxes	(10)		(20)		10		(43)		(26)		(17)
Net (loss) income	Net (loss) income	(15)		63		(78)		15		139		(124)			Net (loss) income	(29)		7		(36)		(117)		30		(147)
Net income attributable to noncontrolling interest	Net income attributable to noncontrolling interest	(3)		(3)		—		(8)		(8)		—			Net income attributable to noncontrolling interest	(3)		(2)		(1)		(5)		(5)		—
Net (loss) income attributable to Bausch + Lomb Corporation	Net (loss) income attributable to Bausch + Lomb Corporation	$	(18)	$	60	$	(78)	$	7	$	131	$	(124)		Net (loss) income attributable to Bausch + Lomb Corporation	$	(32)	$	5	$	(37)	$	(122)	$	25	$	(147)

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

Revenues

Our revenues are primarily generated from product sales in the therapeutic areas of eye health that consist of: (i) branded prescription eye-medications and pharmaceuticals, (ii) generic and branded generic prescription eye medications and pharmaceuticals, (iii) OTC vitamin and supplement products and (iv) medical devices (contact lenses, ~~intraocular lenses~~IOLs and ophthalmic surgical equipment). Other revenues include alliance and service revenue from the licensing and co-promotion of products and contract service revenue. Contract service revenue is derived primarily from contract manufacturing for third parties and is not material. See Note 18, “SEGMENT INFORMATION” to our unaudited interim Condensed Consolidated Financial Statements for the disaggregation of revenues which depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by the economic factors of each category of customer contracts.

Our revenues were ~~$942~~$1,035 million and ~~$949~~$941 million for the three months ended ~~September~~June 30, 2023 and 2022, ~~and 2021,~~ respectively, ~~a decrease~~an increase of $7$94 million, or 1%10%. The ~~decrease~~increase was attributable to: (i) increased volumes of $84 million across each of our segments, (ii) increased net realized pricing of $28 million, primarily driven by our Vision Care segment and (iii) incremental sales attributable to acquisitions of $2 million within our Surgical segment. The increases in revenue were partially offset by: (i) the unfavorable impact of foreign currencies across all of our international businesses of ~~$55~~$18 million, primarily in Asia and Europe, and (ii) the impact of divestitures and discontinuations of $2 million, driven by the discontinuation of certain products within our Surgical and Vision Care segments.


	2023				2022				Change
(in millions)	Amount		Pct.		Amount		Pct.		Amount		Pct.
Segment Revenues
Vision Care	$	646	62	%	$	588	62	%	$	58	10	%
Pharmaceuticals	194		19	%	169		18	%	25		15	%
Surgical	195		19	%	184		20	%	11		6	%
Total revenues	$	1,035	100	%	$	941	100	%	$	94	10	%

Beginning in the first quarter of 2023, certain products historically included in the reported results of the Pharmaceuticals segment are now included in the reported results of the Vision Care segment and certain products included in the reported results of the Vision Care segment are now included in the reported results of the Pharmaceuticals segment. The net impact of these product movements were not material to the periods presented. Prior period presentations of segment revenues and profits have been conformed to the current segment reporting structure. See Note 18, “SEGMENT INFORMATION” to the unaudited interim Condensed Consolidated Financial Statements for additional information regarding these reportable segments.

Constant Currency Revenues and Constant Currency Revenue Growth (non-GAAP)

Constant Currency Revenue Growth, a non-GAAP measure, is defined as a change in Revenues (its most directly comparable GAAP financial measure) on a period-over-period basis adjusted for changes in foreign currency exchange rates (if applicable). The Company uses Constant Currency Revenues (non-GAAP) and Constant Currency Revenue Growth (non-GAAP) to assess performance of its reportable segments, and the Company in total, without the impact of foreign currency exchange fluctuations. The Company believes that such measures are useful to investors as they provide a supplemental period-to-period comparison.

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

Non-GAAP financial measures and non-GAAP ratios are not prepared in accordance with GAAP nor do they have any standardized meaning under GAAP. In addition, other companies may use similarly titled non-GAAP financial measures and ratios that are calculated differently from the way we calculate such measures and ratios. Accordingly, the Company’s non-GAAP financial measures and ratios may not be comparable to such similarly titled non-GAAP financial measures and ratios used by other companies.


	Three Months Ended June 30, 2023						Three Months Ended June 30, 2022		Change in Constant Currency Revenue (Non-GAAP)
	Revenue as Reported		Changes in Exchange Rates		Constant Currency Revenue (Non-GAAP)		Revenue as Reported
(in millions)									Amount		Pct.
Vision Care	$	646	$	15	$	661	$	588	$	73	12	%
Pharmaceuticals	194		2		196		169		27		16	%
Surgical	195		1		196		184		12		7	%
Total	$	1,035	$	18	$	1,053	$	941	$	112	12	%

Vision Care Segment Revenue

The Vision Care segment revenue was $646 million and $588 million for the three months ended June 30, 2023 and 2022, respectively, an increase of $58 million, or 10%. The increase was driven by: (i) an increase in volumes of $48 million and (ii) an increase in net pricing of $26 million. These increases in volumes and pricing were across both our consumer eye care business and contact lens business. The increase in revenue was driven by higher sales of PreserVision®, Biotrue®, Artelac® and Lumify® in our consumer eye care business and SiHy Daily lenses within our contact lens business. These increases were partially offset by: (i) the unfavorable impact of foreign currencies of $15 million, primarily in Asia and Europe, and (ii) the impact of divestitures and discontinuations of $1 million, driven by the discontinuation of certain products.

Our change in volumes for the three months ended June 30, 2023 within our contact lens business was unfavorably impacted by unfulfilled orders at our Lynchburg distribution facility. During the second quarter of 2023, we put into place a system upgrade; however, we incurred disruptions during the implementation of this upgrade, which resulted in the slower than normal processing of certain orders, thereby negatively impacting our revenues for the three months ended June 30, 2023. We expect order processing to return to normal during the second half of 2023.

Pharmaceuticals Segment Revenue

The Pharmaceuticals segment revenue was $194 million and $169 million for the three months ended June 30, 2023 and 2022, respectively, an increase of $25 million, or 15%. The increase was driven by an increase in volumes of $27 million, primarily driven by opportunities from competitor supply issues within our generics business and an ongoing recovery in China due to less COVID-19 restrictions. This increase was partially offset by the unfavorable impact of foreign currencies of $2 million, primarily in Asia.

Surgical Segment Revenue

The Surgical segment revenue was $195 million and $184 million for the three months ended June 30, 2023 and 2022, respectively, an increase of $11 million, or 6%. The increase was driven by: (i) an increase in volumes of $9 million, primarily due to increased demand of consumables and equipment, (ii) an increase in net realized pricing of $2 million, primarily driven by strategic pricing increases taken in January 2023 across certain products and (iii) incremental sales attributable to acquisitions of $2 million. These increases were partially offset by: (i) the unfavorable effect of foreign currencies of $1 million, primarily in Asia, and (ii) the impact of divestitures and discontinuations of $1 million, related to the discontinuation of a certain products. These decreases were partially offset by increases in: (i) volumes of $25 million and (ii) net realized pricing of $24 million, primarily within our Vision Care segment. The increase in volumes was due to: (i) new launches within our international contact lens business, (ii) increased demand of consumables and IOLs within our Surgical segment and (iii) increased demand and new launches within our Ophthalmic Pharmaceuticals segment.

The changes in our segment revenues and segment profits for the three months ended September 30, 2022 are discussed in further detail in the respective subsequent sections titled “—Reportable Segment Revenues and Profits.”product.

Cash Discounts and Allowances, Chargebacks and Distribution Fees

As is customary in the health care 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


	Three Months Ended June 30,
	2023				2022
(in millions)	Amount		Pct.		Amount		Pct.
Gross product sales	$	1,454	100.0	%	$	1,302	100.0	%
Provisions to reduce gross product sales to net product sales
Discounts and allowances	97		6.70	%	83		6.40	%
Returns	18		1.20	%	17		1.30	%
Rebates	146		10.00	%	142		10.90	%
Chargebacks	156		10.80	%	119		9.10	%
Distribution fees	6		0.40	%	6		0.50	%
Total provisions	423		29.10	%	367		28.20	%
Net product sales	1,031		70.90	%	935		71.80	%
Other revenues	4				6
Revenues	$	1,035			$	941

Cash discounts and allowances, returns, rebates, chargebacks and distribution fees as a percentage of gross product sales were ~~27.8%~~29.1% and ~~25.8%~~28.2% for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, an increase of ~~2.0%~~0.9% percentage points, and is primarily attributable to the increase in chargebacks as a percentage of revenues. Chargebacks were ~~$119~~$156 million and ~~$90~~$119 million for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, an increase of ~~$29~~$37 million. The increase in chargebacks is primarily attributable to our generics portfolio as a result of changes in product and customer mix, ~~and lower contract pricing due to increased competition on certain products.~~as well as growth in volume.

Operating Expenses

Cost of Goods Sold (exclusive of 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 ~~$370~~$417 million and ~~$361~~$377 million for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, an increase of $9$40 million, or 2%11%. The increase was primarily driven ~~by: (i)~~by higher ~~manufacturing variances, driven by inflationary pressures~~volumes, supply shortages resulting in increased costs, most notably in our Surgical products, and higher manufacturing efficiency ramp-up costs of our Daily SiHy lenses, ~~and (ii) higher volumes, as previously discussed,~~ partially offset by the favorable impact of foreign currencies. ~~We continue~~

Contribution (product sales revenue less cost of goods sold, exclusive of amortization and impairments of intangible assets) increased by $56 million, primarily driven by the increase in volumes and net realized pricing, as previously discussed, partially offset by the increase in cost of goods sold due to ~~monitor~~supply shortages, the Lynchburg system implementation disruptions, higher manufacturing efficiency ramp-up costs of our Daily SiHy lenses and the unfavorable impact of inflationary pressures on our operating results, particularly on our manufacturing costs, and we expect higher year over year manufacturing variances for the remainder of 2022 as a result of inflation.foreign currencies.

Cost of goods sold as a percentage of Product sales was ~~39.5%~~40.4% and ~~38.4%~~40.3% for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, an increase of 1%0.1%, ~~primarily~~ as ~~a result of inflationary pressures related to certain manufacturing costs, partially offset by~~ the increase in ~~net realized pricing.~~volumes were mostly able to offset the supply shortages, the Lynchburg system implementation disruptions and higher manufacturing efficiency ramp-up costs of our Daily SiHy lenses.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A&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. ~~In connection with the Separation, the Company has also incurred, and expects to continue~~

As a result of the ~~favorable impact~~completion of ~~foreign currencies.~~the B+L IPO, and as the Company prepares for post-Separation operations, the Company is launching certain initiatives that may result in certain changes to, and investment in, its organizational structure and operations. The Company refers to the charges related to these initiatives as "Business Transformation Costs". These costs are recorded in SG&A in the unaudited Condensed Consolidated Statements of Operations and include third-party advisory costs, as well as certain compensation-related costs associated with changes in the Company's executive officers, such as severance-related costs associated with the departure of the Company's former executives and the costs associated with the appointment of the Company's new executives.

Research and Development Expenses

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

R&D expenses were ~~$77~~$85 million and ~~$63~~$75 million for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, an increase of ~~$14~~$10 million, or ~~22%. R&D expenses as a percentage of Product sales were approximately 8.0% and 7.0% for the three months ended September 30, 2022 and 2021, respectively. The increase in R&D expenses is~~13%, primarily due to ~~higher medical device regulation costs.~~certain products in development, as previously discussed.

Amortization of Intangible Assets

Intangible assets with finite lives are amortized using the straight-line method over their estimated useful lives, generally 12 to 17 years. Management continually assesses the useful lives related to our long-lived assets to reflect the most current assumptions.

Amortization of Intangible assets was ~~$59~~$56 million and ~~$72~~$64 million for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, a decrease of ~~$13~~$8 million, or 13%, primarily due to fully amortized intangible assets no longer being amortized in ~~2022.~~2023.

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

Other expense (income), net

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

Three Months Ended September 30,
(in millions) 2022 2021
Asset impairments $ 1 $ 8
Restructuring, integration and separation costs 5 —
Acquired in-process research and development costs 1 —
Other expense, net $ 7 $ 8


	Three Months Ended June 30,
(in millions)	2023		2022
Restructuring, integration and separation costs	$	14	$	4
Acquisition-related costs	2		—
Acquisition-related contingent consideration	1		(5)
Other expense (income), net	$	17	$	(1)

Operating income

Operating income was $43 million and $56 million for the three months ended June 30, 2023 and 2022, respectively, a decrease of $13 million, or 23%, and primarily reflects the increase in SG&A and Other expense, partially offset by the increase in contribution, each as previously discussed.

Segment Profit

Segment profit is based on operating income after the elimination of intercompany transactions. Certain costs, such as Amortization of intangible assets and Other expense, net, are not included in the measure of segment profit, as management excludes these items in assessing segment financial performance. See Note 18, “SEGMENT INFORMATION” to our unaudited interim Condensed Consolidated Financial Statements for a reconciliation of segment profit to Income before provision for income taxes.

The following table 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.


	2023				2022				Change
(in millions)	Amount		Pct.		Amount		Pct.		Amount		Pct.
Segment Profits / Segment Profit Margins
Vision Care	$	167	26	%	$	145	25	%	$	22	15	%
Pharmaceuticals	68		35	%	52		31	%	16		31	%
Surgical	9		5	%	11		6	%	(2)		(18)	%
Total segment profits	$	244	24	%	$	208	22	%	$	36	17	%

Vision Care Segment Profit

The Vision Care segment profit was $167 million and $145 million for the three months ended June 30, 2023 and 2022, respectively, an increase of $22 million, or 15%. The increase was primarily driven by increased contribution, driven by the increases in volume and pricing, as previously discussed, partially offset by higher selling expenses across each of our businesses, primarily attributable to increased headcount and distribution costs and higher R&D expense primarily related to the Lumify® projects, as previously discussed.

Pharmaceuticals Segment Profit

The Pharmaceuticals segment profit was $68 million and $52 million for the three months ended June 30, 2023 and 2022 respectively, an increase of $16 million, or 31%. The increase was primarily driven by increased contribution, driven by the increase in volume, as previously discussed, partially offset by higher advertising and promotional expenses, primarily as a result of increased spending in anticipation of the launch of MIEBOTM.

Surgical Segment Profit

The Surgical segment profit was $9 million and $11 million for the three months ended June 30, 2023 and 2022, respectively, a decrease of $2 million, or 18%. The decrease was primarily driven by higher advertising and promotional expenses, in support of product launches, and higher G&A expenses, partially offset by the increase in revenues, as previously discussed.

Non-Operating Income and Expense

Interest Expense

Interest expense primarily consists of interest payments due, amortization of debt discounts and deferred issuance costs on indebtedness under our credit facilities and interest previously due on a promissory note to BHC.

Interest expense was ~~$35~~$58 million and $0$44 million for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, an increase of ~~$35 million.~~$14 million. The increase is primarily attributable to increased interest expense associated with the Term Facility ~~(as~~and outstanding balance under our Revolving Credit Facility (each as defined and discussed in further detail, under Item “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt”) entered into May 2022. For the three months ended June 30, 2022 interest expense included $27 million of interest attributed to the BHC Purchase Debt (as defined below). See Note 10, “CREDIT FACILITIES” to our unaudited interim Condensed Consolidated Financial Statements for further details regarding the Term Facility and the Revolving Credit Facility.

jurisdictional mix of earnings and (ii) discrete tax effects of: (a) changes in uncertain tax positions, (b) the reduction of certain tax attributes, (c) the filings of certain tax returns and (d) a change in the deduction for stock compensation.

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

Net (loss) income attributable to Bausch + Lomb Corporation

Net loss attributable to Bausch + Lomb Corporation for the three months ended June 30, 2023 was $32 million, as compared to Net income attributable to Bausch + Lomb Corporation for the three months ended June 30, 2022 of $5 million, a decrease in our results of $37 million and ~~2021,~~was primarily due to: (i) the unfavorable net change in Foreign exchange and other of $23 million, (ii) an increase in interest expense of $14 million and (iii) the decrease in our operating results of $13 million, each as previously discussed.

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

Revenues

Our revenues were $1,966 million and $1,830 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $9$136 million, or 7%. The increase was attributable to increases in: (i) volumes of $126 million across each of our segments, (ii) net realized pricing of $59 million, primarily driven by our Vision Care segment and (iii) incremental sales attributable to acquisitions of $4 million within our Surgical segment. The increases in revenue were partially offset by: (i) the unfavorable impact of foreign currencies across all of our international businesses of $49 million, primarily in Europe and Asia, and (ii) the impact of divestitures and discontinuations of $4 million, related to the discontinuation of certain products within our Surgical and Vision Care segments.

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 six months ended June 30, 2023 and 2022.


	2023				2022				Change
(in millions)	Amount		Pct.		Amount		Pct.		Amount		Pct.
Segment Revenues
Vision Care	$	1,233	63	%	$	1,148	63	%	$	85	7	%
Pharmaceuticals	355		18	%	324		18	%	31		10	%
Surgical	378		19	%	358		19	%	20		6	%
Total revenues	$	1,966	100	%	$	1,830	100	%	$	136	7	%

Constant Currency Revenues and Constant Currency Revenue Growth (non-GAAP)

The following table presents a reconciliation of Revenues to constant currency revenues (non-GAAP) and the period-over-period changes in constant currency revenue (non-GAAP) for the six months ended June 30, 2023 and 2022. Constant Currency Revenues (non-GAAP) and Constant Currency Revenue Growth (non-GAAP) are defined in the previous section titled “Constant Currency Revenues and Constant Currency Revenue Growth (non-GAAP)”.


	Six Months Ended June 30, 2023						Six Months Ended June 30, 2022		Change in Constant Currency Revenue (Non-GAAP)
	Revenue as Reported		Changes in Exchange Rates		Constant Currency Revenue (Non-GAAP)		Revenue as Reported
(in millions)									Amount		Pct.
Vision Care	$	1,233	$	35	$	1,268	$	1,148	$	120	10	%
Pharmaceuticals	355		7		362		324		38		12	%
Surgical	378		7		385		358		27		8	%
Total	$	1,966	$	49	$	2,015	$	1,830	$	185	10	%

Vision Care Segment Revenue

The Vision Care segment revenue was $1,233 million and $1,148 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $85 million, or 7%. The increase was driven by: (i) an increase in volumes of $70 million and (ii) an increase in net pricing of $51 million. These increases in volumes and pricing were across both our consumer eye care business and contact lens business. The increase in revenue was driven by higher sales of Artelac®, Lumify®,PreserVision® andBiotrue® Multi-Purpose Solution in our consumer eye care business and SiHy Daily lenses and Ultra® within our contact lens business. These increases were partially offset by: (i) the unfavorable impact of foreign currencies of

$35 million, primarily in Asia and Europe and (ii) the impact of divestitures and discontinuations of $1 million, driven by the discontinuation of certain products.

Our change in volumes for the six months ended June 30, 2023 within our contact lens business was unfavorably impacted by unfulfilled orders at our Lynchburg distribution facility. During the second quarter of 2023, we put into place a system upgrade; however, we incurred disruptions during the implementation of this upgrade, which resulted in the slower than normal processing of certain orders, thereby negatively impacting our revenues for the six months ended June 30, 2023. We expect order processing to return to normal during the second half of 2023.

Pharmaceuticals Segment Revenue

The Pharmaceuticals segment revenue was $355 million and $324 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $31 million, or 10%. The increase was driven by: (i) an increase in volumes of $34 million, primarily driven by our generics business and increased demand for Vyzulta®, primarily related to certain international launches and (ii) an increase in net realized pricing of $4 million, primarily driven by strategic pricing increases taken in January 2023. These increases were partially offset by the unfavorable impact of foreign currencies of $7 million, primarily in Europe and Asia.

Surgical Segment Revenue

The Surgical segment revenue was $378 million and $358 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $20 million, or 6%. The increase was driven by: (i) an increase in volumes of $22 million, primarily due to increased demand of consumables and equipment, (ii) an increase in net realized pricing of $4 million, primarily driven by strategic pricing increases taken in January 2023 across certain products and (iii) incremental sales attributable to acquisitions of $4 million. These increases were partially offset by: (i) the unfavorable effect of foreign currencies of $7 million, primarily in Europe and Asia, and (ii) the impact of divestitures and discontinuations of $3 million, related to the discontinuation of certain products.

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	$	2,734	100.0	%	$	2,505	100.0	%
Provisions to reduce gross product sales to net product sales
Discounts and allowances	180		6.60	%	160		6.40	%
Returns	36		1.30	%	35		1.40	%
Rebates	280		10.20	%	270		10.80	%
Chargebacks	268		9.80	%	211		8.40	%
Distribution fees	11		0.40	%	11		0.40	%
Total provisions	775		28.30	%	687		27.40	%
Net product sales	1,959		71.70	%	1,818		72.60	%
Other revenues	7				12
Revenues	$	1,966			$	1,830

Cash discounts and allowances, returns, rebates, chargebacks and distribution fees as a percentage of gross product sales were 28.30% and 27.40% for the six months ended June 30, 2023 and 2022, respectively, an increase of 0.9% percentage points, and is primarily attributable to the increase in chargebacks as a percentage of revenues. Chargebacks were $268 million and $211 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $57 million. The increase in chargebacks is primarily attributable to our generics portfolio as a result of changes in product and customer mix, as well as growth in volume.

Operating Expenses

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

Cost of goods sold was $788 million and $723 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $65 million, or 9%. The increase was primarily driven by inflationary pressures, supply shortages, higher manufacturing efficiency ramp-up costs of our Daily SiHy lenses and higher volumes, partially offset by the favorable impact of foreign currencies.

Contribution (product sales revenue less cost of goods sold, exclusive of amortization and impairments of intangible assets) increased by $76 million, primarily driven by the increase in net realized pricing and volumes, as previously discussed, partially offset by the increase in cost of goods sold due to inflation and supply shortages resulting in increased costs, most notably in our Surgical products, higher manufacturing efficiency ramp-up costs of our Daily SiHy lenses, the Lynchburg system implementation disruptions and the unfavorable impact of foreign currencies.

Cost of goods sold as a percentage of Product sales was 40.2% and 39.8% for the six months ended June 30, 2023 and 2022, respectively, an increase of 0.4%, primarily attributable to inflation, supply shortages, the Lynchburg system implementation disruptions, higher manufacturing efficiency ramp-up costs of our Daily SiHy lenses and the unfavorable impact of foreign currencies.

Selling, General and Administrative Expenses

SG&A expenses were $835 million and $711 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $124 million, or 17%. The increase was primarily attributable to: (i) higher compensation expenses, primarily related to dis-synergy costs associated with the Company becoming a stand-alone entity, (ii) higher professional fees, primarily related to Business Transformation Costs, and (iii) higher selling expenses, primarily related to warehousing and distribution costs, mostly driven by inflationary pressures. These increases in SG&A expenses were partially offset by the favorable impact of foreign currencies.

Research and Development Expenses

R&D expenses were $162 million and $152 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $10 million, or 7%, primarily due to certain products in development, as previously discussed.

Amortization of Intangible Assets

Amortization of Intangible assets was $113 million and $129 million for the six months ended June 30, 2023 and 2022, respectively, a decrease of $16 million, or 12%, primarily due 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 the Amortization of intangible assets.

Other expense, net

Other 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

Restructuring, integration and separation costs	$	22	$	6


Acquisition-related costs	3		—
Acquisition-related contingent consideration	1		(5)
Other expense, net	$	26	$	1

Operating Income

Operating income for the six months ended June 30, 2023 and 2022 was $41 million and $110 million, respectively, a decrease of $69 million, or 63%, and primarily reflects the increase in SG&A and Other expense, partially offset by the increase in contribution, each as previously discussed.

Segment Profit

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


	2023				2022				Change
(in millions)	Amount		Pct.		Amount		Pct.		Amount		Pct.
Segment Profits / Segment Profit Margins
Vision Care	$	321	26	%	$	304	26	%	$	17	6	%
Pharmaceuticals	114		32	%	92		28	%	22		24	%
Surgical	20		5	%	26		7	%	(6)		(23)	%
Total segment profits	$	455	23	%	$	422	23	%	$	33	8	%

Vision Care Segment Profit

The Vision Care segment profit was $321 million and $304 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $17 million, or 6%. The increase was primarily driven by the increase in contribution, driven by the increase in revenues, as previously discussed, partially offset by increased cost of goods sold, driven by inflationary pressures and higher manufacturing efficiency ramp-up costs of our Daily SiHy lenses. This increase in contribution was partially offset by higher selling expenses across each of our businesses, primarily attributable to increased distribution costs.

Pharmaceuticals Segment Profit

The Pharmaceuticals segment profit was $114 million and $92 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $22 million, or 24%. The increase was primarily driven by increased contribution, mostly driven by the increase in volume, as previously discussed. This increase was partially offset by higher advertising and promotional expenses, primarily as a result of increased spending in anticipation of the launch of MIEBOTM.

Surgical Segment Profit

The Surgical segment profit was $20 million and $26 million for the six months ended June 30, 2023 and 2022, respectively, a decrease of $6 million, or 23%. The decrease was primarily driven by higher selling and G&A expenses, primarily driven by higher warehousing and distribution costs, employee headcount and compensation costs, partially offset by the increase in revenues, as previously discussed.

Non-Operating Income and Expense

Interest Expense

Interest expense was $108 million and $64 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $44 million. The increase is primarily attributable to interest associated with the Term Facility and outstanding balance under our Revolving Credit Facility (each as defined and discussed in further detail, under Item “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt”) entered into May 2022. For the six months ended June 30, 2022 interest expense included $47 million of interest attributed to the BHC Purchase Debt. See Note 10, “CREDIT FACILITIES” to our unaudited interim Condensed Consolidated Financial Statements for further details regarding the Term Facility and the Revolving Credit Facility.

Foreign Exchange and Other

Foreign exchange and other was a net loss of $15 million and a net gain of $9 million for the six months ended June 30, 2023 and 2022, respectively.

Income Taxes

Provision for income taxes was $43 million and $26 million for the six months ended June 30, 2023 and 2022, respectively, an increase of $17 million. The increase in income taxes was primarily related to: (i) a change in the jurisdictional mix of earnings and (ii) discrete tax effects of: (a) the valuation allowance established in Canada, (b) the changes in uncertain tax positions, ~~(b)~~(c) the ~~filing~~reduction of certain tax attributes (d) the filings of certain tax returns and ~~(c)~~(e) a change in the deduction for stock compensation.

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~~Net (loss) income attributable to Bausch + ~~Lomb’s segments:~~

•~~The Vision Care segment~~ consists of: (i) sales of contact lenses that span the spectrum of wearing modalities, including daily disposable and frequently replaced contact lenses and (ii) sales of contact lens care products and OTC eye drops, eye vitamins and mineral supplements that address various conditions including eye allergies, conjunctivitis and dry eye.

•~~The Ophthalmic Pharmaceuticals segment~~ consists of sales of a broad line of proprietary and generic pharmaceutical products for post-operative treatments and the treatment of a number of eye conditions such as glaucoma, ocular hypertension and retinal diseases.

•~~The Surgical segment~~ consists of sales of tools and technologies for the treatment of cataracts, and vitreous and retinal eye conditions and includes intraocular lenses and delivery systems, phacoemulsification equipment and other surgical instruments and devices.

Segment profit is based on operating income after the elimination of intercompany transactions. Certain costs, such as Amortization of intangible assets and Other (income) expense, net, are not included in the measure of segment profit, as management excludes these items in assessing segment financial performance. See Note 19, “SEGMENT INFORMATION” to our unaudited interim Condensed Consolidated Financial Statements for a reconciliation of segment profit to Income before provision for income taxes.

The following table presents segment revenues, segment revenues as a percentage of total revenues and the period-over-period changes in segment revenues for the three months ended September 30, 2022 and 2021. 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 September 30, 2022 and 2021.

Three Months Ended September 30,
2022 2021 Change
(in millions) Amount Pct. Amount Pct. Amount Pct.
Segment Revenues
Vision Care $ 598 64 % $ 605 64 % $ (7) (1) %
Ophthalmic Pharmaceuticals 172 18 % 171 18 % 1 1 %
Surgical 172 18 % 173 18 % (1) (1) %
Total revenues $ 942 100 % $ 949 100 % $ (7) (1) %
Segment Profits / Segment Profit Margins
Vision Care $ 167 28 % $ 145 24 % $ 22 15 %
Ophthalmic Pharmaceuticals 50 29 % 74 43 % (24) (32) %
Surgical 9 5 % 26 15 % (17) (65) %
Total segment profits $ 226 24 % $ 245 26 % $ (19) (8) %

~~Organic Revenues and Organic Growth Rates (non-GAAP)~~

Organic growth, a non-GAAP measure, is defined as a change on a period-over-period basis in revenues on a constant currency basis (if applicable) excluding the impact of recent acquisitions, divestitures and discontinuations. Organic revenue growth (non-GAAP) is growth in Revenue (its most directly comparable GAAP financial measure), adjusted for certain items, of businesses that have been owned for one or more years. 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 organic revenue growth (non-GAAP) to assess performance of its reportable segments, and the Company in total, without the impact of foreign currency exchange fluctuations and recent acquisitions, divestitures and product discontinuations. The Company believes that such measures are useful to investors as they provide a supplemental period-to-period comparison.

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

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

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

The following table presents a reconciliation of Revenues to organic revenues (non-GAAP) and the period-over-period changes in organic revenue (non-GAAP) for the three months ended September 30, 2022 and 2021.

Three Months Ended September 30, 2022 Three Months Ended September 30, 2021 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)
(in millions) Amount Pct.
Vision Care $ 598 $ 34 $ 632 $ 605 $ — $ 605 $ 27 4 %
Ophthalmic Pharmaceuticals 172 8 180 171 — 171 9 5 %
Surgical 172 13 185 173 (1) 172 13 8 %
Total $ 942 $ 55 $ 997 $ 949 $ (1) $ 948 $ 49 5 %

~~Vision Care Segment:~~

~~Vision Care Segment Revenue~~

The Vision Care segment revenue was $598 million and $605 million for the three months ended September 30, 2022 and 2021, respectively, a decrease of $7 million, or 1%. The decrease was driven by the unfavorable impact of foreign currencies of $34 million, primarily in Asia and Europe. The decrease was partially offset by: (i) an increase in net pricing of $23 million primarily within our consumer eye care business and (ii) an increase in volumes of $4 million, primarily due to new launches within our international contact lens business.

~~Vision Care Segment Profit~~

The Vision Care segment profit was $167 million and $145 million for the three months ended September 30, 2022 and 2021, respectively, an increase of $22 million, or 15%. The increase was primarily driven by: (i) a decrease in R&D expenseLomb Corporation

~~primarily in our U.S. contact lens business and (ii)~~Net loss attributable to Bausch + Lomb Corporation for the six months ended June 30, 2023 was $122 million, as compared to Net income attributable to Bausch + Lomb Corporation for the six months ended June 30, 2022 of $25 million, a decrease in ~~SG&A, primarily due to the favorable impact~~our results of foreign currencies on the Company's expenses. These decreases were partially offset by higher manufacturing variances, primarily within our contact lens business, driven by inflationary pressures and higher manufacturing efficiency ramp-up costs of our Daily SiHy lenses.

~~Ophthalmic Pharmaceuticals Segment:~~

~~Ophthalmic Pharmaceuticals Segment Revenue~~

~~The Ophthalmic Pharmaceuticals segment revenue was $172~~$147 million, and $171 million for the three months ended September 30, 2022 and 2021, respectively, an increase of $1 million, or 1%. The increase was driven by an increase in volumes of $10 million, primarily due to increased demand and new launches. This increase was partially offset by: (i) the unfavorable impact of foreign currencies of $8 million, primarily in Europe and (ii) a decrease in net pricing of $1 million.

~~Ophthalmic Pharmaceuticals Segment Profit~~

The Ophthalmic Pharmaceuticals segment profit was $50 million and $74 million for the three months ended September 30, 2022 and 2021, respectively, a decrease of $24 million, or 32%. The decrease was primarily driven by: (i) higher R&D expense and (ii) higher advertising and promotional costs due to newly launched products, such as XIPERE® ~~in the first quarter of 2022.~~

~~Surgical Segment:~~

~~Surgical Segment Revenue~~

The Surgical segment revenue was $172 million and $173 million for the three months ended September 30, 2022 and 2021, respectively, a decrease of $1 million, or 1%. The decrease was driven by the unfavorable effect of foreign currencies of $13 million, primarily in Europe and (ii) the impact of divestitures and discontinuations of $1 million, related to the discontinuation of certain products. These decreases were partially offset by: (i) an increase in volumes of $11 million, primarily due to increased demand of consumables and intraocular lenses and (ii) an increase in net realized pricing of $2 million.

~~Surgical Segment Profit~~

The Surgical segment profit was $9 million and $26 million for the three months ended September 30, 2022 and 2021, respectively, a decrease of $17 million, or 65%. The decrease was primarily driven by: (i) higher R&D expense and (ii) higher SG&A expense.

~~Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021~~

~~Revenues~~

Our revenues were $2,772 million and $2,764 million for the nine months ended September 30, 2022 and 2021, respectively, an increase of $8 million, or less than 1%. The increase was attributable to increases in: (i) volumes of $113 million across each of our segments and (ii) net realized pricing of $32 million. The increase in volumes was primarily driven by: (i) our consumer eye care business, driven by: (a) increased demand for Lumify®~~, Biotrue~~® ~~and PreserVision~~® and (b) the non-recurrence of a third-party supplier quality issue on the prior year revenues of certain consumer eye care products, as discussed below, (ii) increased demand of consumables and intraocular lenses within our Surgical segment and (iii) increased demand and new launches within our Ophthalmic Pharmaceuticals Segment. These increases in volume were partially offset by the impact of the COVID-19 pandemic during the first half of the year on our contact lens business in China. The increases in revenue were partially offset by: (i) the unfavorable impact of foreign currencies across all our international businesses of $130 million, primarily in Europe and Asia, and (ii) the impact of divestitures and discontinuations of $7 million, related to the discontinuation of certain products.

The changes in our segment revenues and segment profits for the nine months ended September 30, 2022 are discussed in further detail in the respective subsequent sections titled “—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 nine months ended September 30, 2022 and 2021 were as follows:~~

Nine Months Ended September 30,
2022 2021
(in millions) Amount Pct. Amount Pct.
Gross product sales $ 3,802 100.0 % $ 3,696 100.0 %
Provisions to reduce gross product sales to net product sales
Discounts and allowances 245 6.40 % 250 6.80 %
Returns 52 1.40 % 58 1.60 %
Rebates 403 10.60 % 389 10.50 %
Chargebacks 330 8.70 % 243 6.50 %
Distribution fees 17 0.40 % 13 0.40 %
Total provisions 1,047 27.50 % 953 25.80 %
Net product sales 2,755 72.50 % 2,743 74.20 %
Other revenues 17 21
Revenues $ 2,772 $ 2,764

Cash discounts and allowances, returns, rebates, chargebacks and distribution fees as a percentage of gross product sales were 27.5% and 25.8% for the nine months ended September 30, 2022 and 2021, respectively, an increase of 1.7 percentage points, and is primarily attributable to the increase in chargebacks as a percentage of revenues. Chargebacks were $330 million and $243 million for the nine months ended September 30, 2022 and 2021, respectively, an increase of $87 million. The increase in chargebacks is primarily attributable to our generics portfolio as a result of product and customer mix and lower contract pricing due to increased competition on certain products.

~~Operating Expenses~~

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

Cost of goods sold was $1,093 million and $1,056 million for the nine months ended September 30, 2022 and 2021, respectively, an increase of $37 million, or 4%. The increase was primarily driven by: (i) higher volumes, as previously discussed and (ii) higher manufacturing variances, driven by inflationary pressures and higher manufacturing efficiency ramp-up costs of our Daily SiHy lenses, partially offset by the favorable impact of foreign currencies. The higher manufacturing variances were partially offset by the non-recurrence of prior year charges related to a quality issue at a third-party supplier, as discussed below. We continue to monitor the impact of inflationary pressures on our operating results, particularly on our manufacturing costs, and we expect higher year over year manufacturing variances for the remainder of 2022 as a result of inflation.

In 2021, we were notified by a third-party supplier of sterilization services for our lens care solution bottles and caps at our Milan, Italy facility, of inconsistencies in the sterilization data versus certificates of conformance previously submitted to us by that supplier. Based on our internal Health and Safety Analysis, it was determined that this issue did not affect the safety or performance of any of our products and was limited to a specific number of lots for certain consumer eye care products within our Vision Care segment. However, out of an abundance of caution and working with the appropriate notified body and responsible health authorities, we contained and/or recalled down to the consumer level the limited number of affected lots of products resulting in $8 million of manufacturing variances and $6 million of returns during the nine months ended September 30, 2021. Further, although our Greenville, South Carolina facility increased production to support some of the demand in the near term, due to the limited availability of qualified materials, production at the Milan facility could not keep up with demand which negatively impacted our sales for the affected products in this region during the nine months ended September 30, 2021. During the third quarter of 2021, we had removed this supplier from our Approved Supplier List and qualified another sterilization supplier, who, along with an existing secondary supplier, will provide bottle sterilization, thereby allowing our Milan facility to return to full production capacity.

Cost of goods sold as a percentage of Product sales was 39.7% and 38.5% for the nine months ended September 30, 2022 and 2021, respectively, an increase of 1.2% primarily attributable to: (i) higher manufacturing variances and (ii) year-over-year changes in product mix.

~~Selling, General and Administrative Expenses~~

SG&A expenses were $1,092 million and $1,024 million for the nine months ended September 30, 2022 and 2021, respectively, an increase of $68 million, or 7%. The increase was primarily attributable to: (i) higher professional fees and higher compensation expenses, primarily related to separation-related costs and dis-synergy costs associated with the Company becoming a stand-alone entity and (ii) higher selling expenses, primarily related to freight, partially offset by the favorable impact of foreign currencies.

~~Research and Development Expenses~~

R&D expenses were $229 million and $201 million for the nine months ended September 30, 2022 and 2021, respectively, an increase of $28 million, or 14%. The increase in R&D expenses is primarily due to higher medical device regulation costs and due to R&D spend not beginning to normalize until the second half of 2021, as a result of the COVID-19 pandemic, as discussed below. R&D expenses as a percentage of Product sales were approximately 8% and 7% for the nine months ended September 30, 2022 and 2021, respectively.

In 2020, certain of our R&D activities were limited and others, including new patient enrollments in clinical trials, were temporarily paused, as most trial sites were not able to accept new patients due to government-mandated shutdowns in response to the COVID-19 pandemic. During our third quarter of 2020, many of these trial sites began to reopen and the pace of new patient enrollments increased heading into 2021. During 2021, these activities and related R&D spend gradually increased until they approached a normalized spend rate toward the end of the year. As of the date of this filing, we have not had to make material changes to our development timelines and the pause in our clinical trials has not had a material impact on our operating results; however, a resurgence of the virus could result in unanticipated delays in our ability to conduct new patient enrollments and create other delays which could have a significant adverse effect on our future operating results.

~~Amortization of Intangible Assets~~

Amortization of Intangible assets was $188 million and $225 million for the nine months ended September 30, 2022 and 2021, respectively, a decrease of $37 million, primarily due to fully amortized intangible assets no longer being amortized in 2022.

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

~~Other expense, net~~

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

Nine Months Ended September 30,
(in millions) 2022 2021
Asset impairments $ 1 $ 11
Restructuring, integration and separation costs 11 1
Acquired in-process research and development costs 1 1
Acquisition-related contingent consideration (5) —
Other expense, net $ 8 $ 13

~~Non-Operating Income and Expense~~

~~Interest Expense~~

Interest expense was $99 million and $0 for the nine months ended September 30, 2022 and 2021, respectively, an increase of $99 million. The increase is primarily attributable to interest associated with: (i) the Term Facility (as defined and discussed in further detail, under Item “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt”) entered into May 2022 and (ii) BHC Purchase Debt (as defined below) entered into in January 2022. See Note 10, “CREDIT FACILITIES” to our unaudited interim Condensed Consolidated Financial Statements for further details regarding the Term Facility.

On January 1, 2022, in anticipation of the B+L IPO, Bausch + Lomb issued a $2,200 million promissory note to BHC (the “BHC Purchase Debt”) in conjunction with a legal reorganization. Included in Interest expense for the nine months ended September 30, 2022 was $47 million of interest attributed to the BHC Purchase Debt. The BHC Purchase Debt was repaid in full on May 10, 2022. See Note 4, “RELATED PARTIES” to our unaudited interim Condensed Consolidated Financial Statements for further details.

~~Foreign Exchange and Other~~

~~Foreign exchange and other was a net gain of $15 million~~ ~~and a loss of~~ ~~$5 million for the nine months ended September 30, 2022 and 2021, respectively.~~

~~Income Taxes~~

Provision for income taxes were $60 million and $93 million for the nine months ended September 30, 2022 and 2021, respectively, a favorable change of $33 million. The decrease in income taxes was primarily related to: (i) a change in the jurisdictional mix of earnings and (ii) discrete tax effects of: (a) internal restructurings in 2021, (b) changes in uncertain tax positions, (c) the filings of certain tax returns and (d) a change in the deduction for stock compensation.

~~See Note 16, “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 period-over-period changes in segment revenues for the nine months ended September 30, 2022 and 2021. 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 nine months ended September 30, 2022 and 2021.

Nine Months Ended September 30,
2022 2021 Change
(in millions) Amount Pct. Amount Pct. Amount Pct.
Segment Revenues
Vision Care $ 1,747 63 % $ 1,717 62 % $ 30 2 %
Ophthalmic Pharmaceuticals 495 18 % 527 19 % (32) (6) %
Surgical 530 19 % 520 19 % 10 2 %
Total revenues $ 2,772 100 % $ 2,764 100 % $ 8 — %
Segment Profits / Segment Profit Margins
Vision Care $ 471 27 % $ 431 25 % $ 40 9 %
Ophthalmic Pharmaceuticals 142 29 % 208 39 % (66) (32) %
Surgical 35 7 % 55 11 % (20) (36) %
Total segment profits $ 648 23 % $ 694 25 % $ (46) (7) %

The following table presents a reconciliation of Revenues to organic revenues (non-GAAP) and the period-over-period changes in organic revenue (non-GAAP) for the nine months ended September 30, 2022 and 2021. Organic revenues (non-GAAP) and organic growth (non-GAAP) rates are defined in the previous section titled “Reportable Segment Revenues and Profits”.

Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021 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)
(in millions) Amount Pct.
Vision Care $ 1,747 $ 82 $ 1,829 $ 1,717 $ — $ 1,717 $ 112 7 %
Ophthalmic Pharmaceuticals 495 18 513 527 — 527 (14) (3) %
Surgical 530 30 560 520 (7) 513 47 9 %
Total $ 2,772 $ 130 $ 2,902 $ 2,764 $ (7) $ 2,757 $ 145 5 %

~~Vision Care Segment:~~

~~Vision Care Segment Revenue~~

The Vision Care segment revenue was $1,747 million and $1,717 million for the nine months ended September 30, 2022 and 2021, respectively, an increase of $30 million, or 2%. The increase was driven by: (i) an increase in net pricing of $58 million, primarily due to pricing increases across certain contact lens and consumer products and (ii) an increase in volumes of $54 million. The increase in volumes was primarily due to: (i) ~~increased demand for Lumify~~®~~, Biotrue~~® ~~and PreserVision~~® within our consumer eye care business, (ii) the non-recurrence of a third-party supplier quality issue on the prior year revenues of certain consumer eye care products, as previously discussed, and (iii) new launches within our international contact lens business. These increases were partially offset by: (i) the unfavorable impact of foreign currencies of $82 million, primarily in Europe and Asia and (ii) the impact of the COVID-19 pandemic during the first half of the year on our contact lens business in China.

~~Vision Care Segment Profit~~

The Vision Care segment profit was $471 million and $431 million for the nine months ended September 30, 2022 and 2021, respectively, an increase of $40 million, or 9%. The increase was primarily driven by: (i) the increase in net realized pricing and volumes as previously discussed, (ii) lower R&D expense, primarily in our U.S. contact lens, (iii) lower advertising and promotional expenses, primarily in our U.S. contact lens and International consumer businesses and (iv) lower G&A expenses in the U.S. consumer eye care and contact lens businesses. These increases were partially offset by: (i)

higher manufacturing variances, driven by inflationary pressures and higher manufacturing efficiency ramp-up costs of our Daily SiHy lenses and (ii) higher selling expenses primarily due to increased freight costs. The higher manufacturing costs were partially offset by the non-recurrence of prior year charges related to a quality issue at a third-party supplier, as discussed above.

~~Ophthalmic Pharmaceuticals Segment:~~

~~Ophthalmic Pharmaceuticals Segment Revenue~~

The Ophthalmic Pharmaceuticals segment revenue was $495 million and $527 million for the nine months ended September 30, 2022 and 2021, respectively, a decrease of $32 million, or 6%. The decrease was driven by: (i) a decrease in net realized pricing of $31 million due to higher chargeback rates for certain generics products as a result of product and customer mix and lower contract pricing due to increased competition on certain products and (ii) the unfavorable impact of foreign currencies of $18 million, partially offset by an increase in volumes of $17 million, primarily in Europe.

~~Ophthalmic Pharmaceuticals Segment Profit~~

The Ophthalmic Pharmaceuticals segment profit was $142 million and $208 million for the nine months ended September 30, 2022 and 2021, respectively, a decrease of $66 million, or 32%. The decrease was primarily driven by: (i) the decrease in ~~net realized pricing, as previously discussed, (ii) higher selling, advertising and promotional expenses, primarily as a result~~our operating results of ~~newly launched products, such as XIPERE~~® ~~in the first quarter of 2022 and (iii) higher R&D expense.~~

~~Surgical Segment:~~

~~Surgical Segment Revenue~~

~~The Surgical segment revenue was $530~~$69 million, and $520 million for the nine months ended September 30, 2022 and 2021, respectively, an increase of $10 million, or 2%. The increase was driven by: (i) an increase in volumes of $42 million, primarily due to increased demand of consumables and intraocular lenses and (ii) an increase in ~~net realized pricing~~interest expense of ~~$5 million. These increases were partially offset by: (i)~~$44 million, (iii) the unfavorable ~~effect~~net change in Foreign exchange and other of ~~foreign currencies of $30 million, primarily in Europe and (ii) the impact of divestitures and discontinuations of $7 million, related to the discontinuation of certain products.~~

~~Surgical Segment Profit~~

~~The Surgical segment profit was $35~~$24 million and $55 million for the nine months ended September 30, 2022 and 2021, respectively, a decrease of $20 million, or 36%. The decrease was primarily driven by: (i) higher selling, advertising and promotional expenses and (ii) higher R&D expenses. These decreases were partially offset by the(iv) increase in ~~volumes,~~the Provision for income taxes of $17 million, each as previously discussed.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows


		Nine Months Ended September 30,							Six Months Ended June 30,
(in millions)	(in millions)	2022		2021		Change		(in millions)	2023		2022		Change
Net cash provided by operating activities		$	186	$	711	$	(525)
Net cash (used in) provided by operating activities								Net cash (used in) provided by operating activities	$	(80)	$	159	$	(239)
Net cash used in investing activities	Net cash used in investing activities	(125)		(133)		8		Net cash used in investing activities	(92)		(76)		(16)
Net cash provided by (used in) financing activities		88		(675)		763
Net cash provided by financing activities								Net cash provided by financing activities	181		197		(16)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	Effect of exchange rate changes on cash and cash equivalents and restricted cash	(29)		(8)		(21)		Effect of exchange rate changes on cash and cash equivalents and restricted cash	3		(11)		14
Net increase in cash and cash equivalents and restricted cash	Net increase in cash and cash equivalents and restricted cash	120		(105)		225		Net increase in cash and cash equivalents and restricted cash	12		269		(257)
Cash and cash equivalents and restricted cash, beginning of period	Cash and cash equivalents and restricted cash, beginning of period	177		238		(61)		Cash and cash equivalents and restricted cash, beginning of period	380		177		203
Cash and cash equivalents and restricted cash, end of period	Cash and cash equivalents and restricted cash, end of period	$	297	$	133	$	164	Cash and cash equivalents and restricted cash, end of period	$	392	$	446	$	(54)

Operating Activities

Net cash used in operating activities was $80 million for the six months ended June 30, 2023, as compared to net cash provided by operating activities ~~was $186 million and $711~~of $159 million for the ~~nine~~six months ended ~~September~~June 30, 2022, ~~and 2021, respectively,~~ a decrease of ~~$525~~$239 million. The decrease is primarily attributable ~~to: (i)~~to the change in our operating assets and liabilities, ~~primarily driven by~~due to: (i) growth in sales volumes, as previously discussed, which drove an increase in ~~inventories and~~our trade receivables, (ii) the timing of payments in the ordinary course of business, ~~(ii) the decrease~~(iii) costs incurred in ~~our operating results,~~2023 as a stand-alone entity, such as higher SG&A expense, as previously discussed, and ~~(iii) the change~~increased interest payments and (iv) a strategic increase in ~~deferred income taxes.~~inventories.

Investing Activities

Net cash used in investing activities was ~~$125~~$92 million and ~~$133~~$76 million for the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022, ~~and 2021,~~ respectively, ~~a decrease~~an increase of $8$16 million and was primarily driven ~~by: (i) an increase in Proceeds from sale~~by payments related to acquisitions during the six months ended June 30, 2023 of ~~marketable securities and (ii) a decrease a in Purchases~~$31 million related to the acquisition of ~~property, plant and equipment.~~AcuFocus, as previously discussed.

Financing Activities

Net cash provided by financing activities was ~~$88~~$181 million and $197 million for the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022, ~~as compared to Net cash used in financing activities~~respectively, a decrease of ~~$675 million for the nine months ended September 30, 2021, an increase of $763~~$16 million. The ~~increase~~decrease is primarily attributable to the issuance of long-term debt, net of $2,440 million, related to the Term Facility (defined below), partially offset by intercompany transactions between Bausch + Lomb and our parent company, ~~BHC. These intercompany transactions include:~~BHC, which included: (i) ~~Net transfers to BHC of $2,363 million and $665 million for the nine months ended September 30, 2022 and 2021, respectively and (ii)~~ Net borrowings under BHC pooled financing ~~arrangements~~agreements of $31 million and $0(ii) Net transfers to BHC of $2,271 million, for the ~~nine~~six months ended ~~September~~June 30, ~~2022 and 2021, respectively.~~2022. For further details regarding Net transfers to BHC, see Note 4, “RELATED PARTIES” to our unaudited interim Condensed Consolidated Financial Statements. This decrease was partially offset by borrowings under the Revolving Credit Facility (as defined below) of $200 million during the six months ended June 30, 2023.

Liquidity and Debt

Future Sources of Liquidity

Our primary sources of liquidity are expected to be our cash and cash equivalents, cash collected from customers, funds as ~~available~~needed from our Revolving Credit Facility (as defined below), and issuances of other long-term debt, additional equity and equity-linked ~~securities not anticipated as of the date of this filing.~~securities. We believe these sources will be sufficient to meet our current liquidity needs for the next twelve months and be sufficient to support our future cash needs, however, we can provide no assurance that our liquidity and capital resources will meet future funding requirements.

The global financial markets recently have undergone and may continue to experience significant volatility and disruption. The timing and sustainability of an economic recovery is uncertain and additional macroeconomic, business and financial disruptions may arise. As markets change, there can be no assurance that the challenging economic environment or a further economic downturn would not impact our liquidity or our ability to obtain future ~~financing.~~financing on reasonable terms or at all.

We will regularly evaluate market conditions, our liquidity profile, and various financing alternatives for opportunities to enhance our capital structure. If opportunities are favorable, we may from time to time enter into new financing arrangements, refinance the Credit Facilities (as defined below) or repurchase debt, or issue additional equity and equity-linked securities.

Long-term Debt

Prior to the B+L IPO, we participated in BHC’s cash management arrangements, and generally all of our excess cash was transferred to BHC periodically. Cash disbursements for operations and/or investing activities were funded as needed by BHC. Cash and cash equivalents and ~~Restricted~~restricted cash as presented in our Combined Financial Statements for the year ended December 31, 2021, which are included in Bausch + Lomb’s final prospectus as filed with the SEC on May 5, 2022 pursuant to Rule 424(b)(4) under the Act relating to Bausch + Lomb’s Registration Statement on Form S-1 and in Bausch + Lomb’s supplemented PREP prospectus as filed with the CSA on May 5, 2022 and in our unaudited interim Condensed Consolidated Financial Statements are amounts recorded on legal entities dedicated to Bausch + Lomb.

On May 10, 2022, in connection with the B+L IPO and in order to properly capitalize our business, Bausch + Lomb entered into a credit agreement (the “Credit Agreement”, and the credit facilities thereunder, the “Credit Facilities”) providing for a term loan of $2,500 million with a five-year term to maturity (the “Term Facility”) and a five-year revolving credit facility of $500 million (the “Revolving Credit Facility” ~~or such financing, the “Debt Financing”~~). As of September 30, 2022, the Company had no outstanding borrowings, $9 million of issued and outstanding letters of credit and remaining availability of $491 million under its Revolving Credit Facility The 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~~Term Facility is denominated in U.S. dollars, and borrowings under the Revolving Credit Facility ~~will~~may be made available in U.S. dollars, euros, pounds sterling and Canadian dollars. As of June 30, 2023, the principal amount outstanding under the Term Facility was $2,475 million and $2,429 million net of issuance costs. As of December 31, 2022, the principal amount outstanding under the Term Facility was $2,488 million and $2,436 million net of issuance costs. As of June 30, 2023, the Company had $200 million of outstanding borrowings, $25 million of issued and outstanding letters of credit and remaining availability of $275 million under its Revolving Credit Facility, subject to certain customary conditions.

~~Currently, we are~~Prior to November 29, 2022, Bausch + Lomb was a restricted subsidiary under the credit agreement ~~and senior notes indentures~~ of BHC (the "BHC Credit Agreement") and the senior notes indentures of BHC and Bausch Health Americas, Inc. (collectively the "BHC Indentures") ~~and the senior note indentures of BHC, under~~, which ~~BHC had an aggregate amount of $17,080 million in outstanding indebtedness as of September 30, 2022 (which excludes amounts under our Credit Facilities). Although~~meant that although neither we nor our subsidiaries ~~are~~were guarantors of ~~such~~BHC debt, our status as a restricted subsidiary ~~means~~meant that our ability to take certain actions, including the incurrence of debt, ~~will be~~was restricted by the terms of the BHC Credit Agreement and BHC Indentures. ~~We will remain a restricted~~On November 29, 2022, BHC designated Bausch + Lomb as an unrestricted subsidiary ~~until BHC designates us as “unrestricted”, which is expected to occur at or prior to the distribution anticipated~~ under the ~~proposed~~

~~Separation. See “Risk Factors—Risks Relating to~~BHC Credit Agreement and the ~~Separation—We expect that~~BHC Indentures. Following such designation, we ~~will initially remain a~~are no longer restricted ~~subsidiary under BHC's credit facilities and indentures at~~by the ~~time~~terms of completion of this offering and will be subject to various covenants under these facilities and indentures, which may adversely affect our operations” included in Bausch + Lomb’s final prospectus as filed with the SEC on May 5, 2022 pursuant to Rule 424(b)(4) under the Act relating to Bausch + Lomb’s Registration Statement on Form S-1 and in Bausch + Lomb’s supplemented PREP prospectus as filed with the CSA on May 5, 2022.BHC Credit Agreement or BHC Indentures.

Description of Credit Facilities

Borrowings under the Revolving Credit Facility in: (i) U.S. dollars bear interest at a rate per annum equal to, at our 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 our option, either (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 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 the ~~company’s~~Company’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 (“S~~&P,~~&P”), Moody’s and Fitch and (y) the ~~term loan facility~~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 the Company’s debt rating. The stated rate of interest for borrowings under the Revolving Credit Facility at June 30, 2023 ranges from 7.43% to 7.50% per annum. In addition, we are required to pay commitment fees of 0.25% per annum in respect of the unutilized commitments under the Revolving Credit Facility, payable quarterly in arrears until the IG Trigger and, thereafter, a facility fee between 0.110% to 0.275% of the total revolving commitments, whether used or unused, based on the Company’s debt rating and payable quarterly in arrears. We are 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 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 ~~term loan facility~~Term Facility bear interest at a rate per annum equal to, at our 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 Credit Agreement, the Company is required to make mandatory prepayments of the loans under the 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 Credit Agreement), (iii) 50% of Excess Cash Flow (as defined in the 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 Term Facility is 1.00% per annum, or $25 million, payable in quarterly installments, and the first installment ~~is payable~~was paid on September 30, 2022. Bausch + Lomb may direct that prepayments be applied to such amortization payments in order of maturity. ~~Provided, however, that~~As of June 30, 2023, the remaining mandatory quarterly amortization payments for the Term Facility were $94 million through March 2027, with the remaining term ~~SOFR-based~~loan balance being due in May 2027.

Weighted Average Stated Rate of Interest

The weighted average stated rate ~~shall be no less than 0.50% per annum at any time~~of interest for the Company’s outstanding debt obligations as of June 30, 2023 and December 31, 2022 was 8.51% and 7.84%, respectively.

Recent Financing Activities

As of August 2, 2023, 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~~Company had $250 million of outstanding borrowings, $25 million of issued and outstanding letters of credit ~~spread adjustment~~and remaining availability of ~~0.10%.~~

Credit Ratings

As of the date of this filing, ~~November~~August 2, ~~2022,~~2023, the credit ratings and outlook from Moody’s, S&P and Fitch for certain outstanding obligations of Bausch + Lomb were as follows:

Rating Agency

Corporate Rating

Senior Secured Rating

Outlook

Moody’s

Negative

Standard & Poor’s

~~CCC+~~B-

Positive

Fitch

B-

BB-

Rating Watch Evolving

In April 2022, S&P initially assigned Bausch + Lomb a B+ corporate rating and a B+ senior secured rating. On May 31, 2022, S&P lowered these ratings one notch to a B corporate rating and a B senior secured rating. In August 2022, S&P lowered these ratings two notches to a CCC+ corporate rating and a CCC+ senior secured rating simultaneously with its downgrade of the corporate rating and senior secured rating of our parent company BHC. In October 2022, S&P changed its outlook assigned to Bausch + Lomb from developing to positive. In April 2022, Moody’s initially assigned Bausch + Lomb a Ba2 senior secured rating and, in August 2022, lowered this rating two notches to a B1 senior secured rating, reflecting a similar downgrade assigned to our parent company BHC. In April 2022, Fitch initially assigned Bausch + Lomb a BB- corporate rating. In August 2022, Fitch lowered this rating one notch to a B+ corporate rating. In October 2022, Fitch lowered this rating two notches to a B- corporate rating, as well as lowered the senior secured rating two notches to BB-. Each of these downgrades reflected a similar downgrade assigned to our parent company BHC. As previously discussed, Bausch + Lomb is a restricted subsidiary under the BHC Credit Agreement and the BHC Indentures and we will remain a restricted subsidiary until BHC designates us as “unrestricted”, which is expected to occur at or prior to the distribution anticipated under the proposed Separation. We expect Bausch + Lomb’s credit ratings could be capped to that of BHC, until BHC designates us as “unrestricted”.

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

Upon full Separation, we expect to refinance the Bausch + Lomb debt, and to transition to a longer-term capital structure.

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 future effect on our results of operations, financial condition, capital expenditures, liquidity, or capital resources.

Other Future Cash Requirements

Our other future cash requirements relate to working capital, capital expenditures, business development transactions (contingent consideration), restructuring and integration, 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 further acquisition opportunities within our core therapeutic areas, some of which could be sizable.

In addition to our working capital requirements, as of the date of this filing, ~~November~~August 2, ~~2022,~~2023, we expect our primary cash requirements ~~(excluding the repayments to BHC related to the BHC Purchase Debt and capital return as discussed below)~~ for the period ~~October~~July 1, ~~2022~~2023 through December 31, ~~2022~~2023 to include:

•Debt repayments and interest—We expect to make interest payments of approximately ~~$44~~$122 million and mandatory debt amortization payments of $6$13 million for the period ~~October~~July 1, ~~2022~~2023 through December 31, ~~2022~~2023 under our ~~Term Facility~~Credit Facilities and may elect to make additional principal payments under certain circumstances. Further, in the ordinary course of business, we may borrow and repay amounts under our Revolving Credit Facility to meet business ~~needs;~~needs, see Item 1A. Risk Factors—"Our indebtedness could adversely affect our business and our ability to meet our obligations" included in our Annual Report;

•Capital expenditures—We expect to make payments of approximately ~~$75~~$130 million for property, plant and equipment for the period ~~October~~July 1, ~~2022~~2023 through December 31, ~~2022 and;~~2023;

•Milestones—As previously discussed, we filed an NDA for MIEBOTM (formerly known as NOV03) with the FDA in June 2022. Due to the drug's approval by the FDA in May 2023, we anticipate launching MIEBOTM in the U.S. in the third quarter of 2023, upon which we expect to make a payment of $45 million, under the terms of a December 2019 agreement with Novaliq GmbH, related to the future sales associated with MIEBOTM; and

•Benefit obligations—We expect to make aggregate payments under our pension and postretirement obligations of $3$4 million for the period ~~October~~July 1, ~~2022~~2023 through December 31, ~~2022.~~2023. See Note 11, “PENSION AND POSTRETIREMENT EMPLOYEE BENEFIT PLANS” to our ~~Combined~~audited Consolidated Financial Statements for the year ended December 31, ~~2021, which were~~2022, included in ~~Bausch + Lomb’s final prospectus as filed~~our Annual Report.

Acquisition of XIIDRA®

As previously discussed, on June 30, 2023, the Company announced that it had entered into a definitive agreement with Novartis to acquire XIIDRA® and certain other ophthalmology assets. Under the ~~SEC~~terms of the agreement, the Company, through its affiliate, has agreed to make an up-front cash payment of $1,750 million, with additional payments that may become due upon achievement of future pipeline commercialization and 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. The Company has obtained debt financing commitments for purposes of this transaction and intends to finance the $1,750 million up-front cash payment with new debt prior to the closing of the transaction. See Item 1A “Risk Factors” ofPart II of this Form 10-Q for additional information on ~~May 5, 2022 pursuant to Rule 424(b)(4) under~~ the ~~Act~~risks relating to ~~Bausch + Lomb’s Registration Statement on Form S-1 and in Bausch + Lomb’s supplemented PREP prospectus as filed with~~ the ~~CSA on May 5, 2022.~~acquisition of XIIDRA®.

~~Repayment~~Acquisition of ~~BHC Purchase Debt and Capital Return~~Blink® Product Line

~~As discussed in detail in Note 4, “RELATED PARTIES”~~In July 2023, the Company made the up-front cash payment of $107 million to ~~our unaudited interim Condensed Consolidated Financial Statements, on May 10, 2022,~~Johnson & Johnson Vision in connection with the ~~B+L IPO,~~closing of the previously discussed acquisition of the Blink® product line of eye and contact lens drops.

Acquisition of AcuFocus, Inc.

As previously discussed, on January 17, 2023, the Company acquired AcuFocus, Inc. (“AcuFocus”) for an up-frontpurchase price of $35 million. During January 2023, the Company paid approximately $31 million of the up-front purchaseprice, with the remaining purchase price to be paid within 18 months following the transaction, less any amounts that are thesubject of any indemnification claims. If certain future sales-based milestones relating to the AcuFocus business are achievedbetween the closing date of the acquisition and December 31, 2027, additional payments by the Company will become due infuture years.

Costs of Separation

In connection with the Separation, the Company has incurred and will continue to incur additional costs associated with activities taken to separate the Bausch + Lomb ~~using the proceeds~~business from the ~~Term Facility~~remainder of ~~approximately $2,500 million of principal indebtedness~~BHC. Separation costs are incremental costs directly related to the Separation, and ~~cash on hand:~~include but are not limited to: (i) ~~repaid approximately $2,200 million of BHC Purchase Debt,~~legal, audit and advisory fees, (ii) ~~made $229 million of net distributions to our parent, BHC and affiliates~~talent acquisition

costs and (iii) ~~paid approximately $47 million~~costs associated with establishing new boards of ~~interest on~~directors and related board committees for Bausch + Lomb. The Company has also incurred, and will continue to incur, separation-related costs which are incremental costs indirectly related to the ~~BHC Purchased Debt. Prior to~~Separation and 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.

Cost Savings Programs

As a result of the completion of the B+L IPO, ~~Bausch + Lomb was a wholly-owned subsidiary~~and as the Company prepares for post-Separation operations, the Company is launching certain initiatives that may result in certain changes to, and investment in, its organizational structure and operations. The Company refers to the charges related to these initiatives as "Business Transformation Costs". These costs are recorded in SG&A in the unaudited Condensed Consolidated Statements of ~~BHC. We did not receive any proceeds from~~Operations and include third-party advisory costs, as well as certain compensation-related costs associated with changes in the ~~sale~~Company's executive officers, such as severance-related costs associated with the departure of the ~~common shares~~Company's former executives and the costs associated with the appointment of the Company's new executives.

Further, in connection with the ~~B+L IPO. The net proceeds from the B+L IPO were received by the Selling Shareholder.~~

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

~~The Company evaluates~~certain transformation initiatives, we continue to evaluate opportunities to improve ~~its~~our operating results and ~~implements~~may initiate cost savings programs to streamline ~~its~~our operations and eliminate redundant processes and expenses. ~~Restructuring and integration costs primarily consist of costs associated with the implementation of~~These cost savings programs ~~to streamline operations and eliminate redundant processes and expenses. The expenses associated with the implementation of these cost savings programs~~may include, ~~expenses associated with:~~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. Although a specific plan does not exist at this time, we may identify and take additional exit and cost-rationalization restructuring actions in the future, the costs of which could be material.

In connection with the Separation, we have incurred and will continue to incur additional costs associated with activities taken to: (i) separate the Bausch + Lomb business from the remainder of BHC and (ii) register the Bausch + Lomb business as an independent publicly traded entity and these costs could be material. During 2022 and until the proposed Separation is completed, if completed, in addition to amounts paid for internal costs incurred in preparing for the separation of Bausch + Lomb from the remainder of BHC, we anticipate making cash payments for third-party costs. These third-party costs include amounts for, but not limited to; legal, consulting, accounting, IT infrastructure and certain other administrative services. The expenses associated with the Separation could be material and may impact our cash flows.

Further, in connection with the Separation, we continue to evaluate opportunities to improve our operating results and may initiate 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 Litigation

In the ordinary course of business, we are involved in litigation, claims, government inquiries, investigations, charges and proceedings. See Note ~~18,~~17, “LEGAL PROCEEDINGS” to our unaudited interim Condensed Consolidated Financial Statements for further details of these matters. Our ability to successfully defend the Company against pending and future litigation may impact cash flows.

Future Licensing Payments

In the ordinary course of business, we may enter into select licensing and collaborative agreements for the commercialization and/or development of unique products. In connection with these agreements, the Company may pay an ~~upfront~~up-front fee to secure the agreement. See Note ~~19,~~21, “COMMITMENTS AND CONTINGENCIES” to our ~~Combined~~audited Consolidated Financial Statements for the year ended December 31, ~~2021, which were~~2022, included in Bausch + Lomb’s final prospectus as filed with the SEC on May 5, 2022 pursuant to Rule 424(b)(4) under the Act relating to Bausch + Lomb’s Registration Statement on Form S-1 and in Bausch + Lomb’s supplemented PREP prospectus as filed with the CSA on May 5, 2022.our Annual Report.

OUTSTANDING SHARE DATA

On April 28, 2022, Bausch + Lomb effected a share consolidation as a result of which it had 350,000,000 issued and outstanding common shares. These common shares are treated as issued and outstanding at January 1, ~~2021~~2022 for purposes of calculating Basic and diluted (loss) income per share attributable to Bausch + Lomb Corporation.

The registration statement related to the B+L IPO was declared effective on May 5, 2022, and our common ~~stock~~shares 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, we were an indirect wholly-owned subsidiary of BHC. On May 10, 2022, the Selling Shareholder sold 35,000,000 common shares of Bausch + Lomb, at an offering price of $18.00 per share (less the applicable underwriting discount)~~, pursuant to the Bausch + Lomb prospectuses.~~. 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 of the B+L IPO partially exercised the over-allotment option granted to them 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 the applicable underwriting discount). The remainder of the over-allotment option granted to the underwriters expired. ~~Upon the closing~~As of ~~the B+L IPO (after giving effect to the partial exercise of the over-allotment option),~~July 28, 2023, BHC directly or indirectly ~~holds~~held 310,449,643 common shares of Bausch + Lomb, ~~common shares,~~ which ~~represents~~represented approximately ~~88.7%~~88.5% of our issued and outstanding common shares.

At ~~October~~July 28, ~~2022,~~2023, we had ~~350,000,749~~350,701,026 issued and outstanding common shares. In addition, as of ~~October~~July 28, ~~2022,~~2023, we had outstanding approximately ~~6,300,000~~8,300,000 stock options and ~~4,100,000~~5,600,000 restricted share units that each represent the right of a holder to receive one of Bausch + Lomb’s common ~~shares.~~shares and 1,300,000 performance-based restricted share units that represent the right of a holder to receive a number of the Company’s common shares up to a specified maximum. A maximum of 3,300,000 common shares could be issued upon vesting of the performance-based restricted share units outstanding.

FORWARD-LOOKING STATEMENTS

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

These forward-looking statements relate to, among other things: our business strategy, business plans, ~~and~~business prospects and forecasts and changes thereto; product pipeline, prospective products and product approvals, expected launches of new products, product development and results of current and anticipated products; our recently-announced transaction for the acquisition of XIIDRA® and certain other assets and the anticipated timing of completion of that transaction, as well as the Company’s intention to finance the up-front payment for that transaction with new debt; anticipated revenues for our products; expected R&D and marketing spend; our expected primary cash and working capital requirements for ~~2022~~2023 and beyond; our 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 comply with the covenants contained in our ~~Credit Agreement and, during the period in which we remain a restricted subsidiary thereunder, the BHC Credit Agreement and the BHC Indentures forward-looking statements;~~credit agreement (the “Credit Agreement”); any 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 and economic uncertainty; our expectations regarding our financial performance, including our future financial and operating performance, revenues, expenses, gross margins and income taxes; our impairment assessments, including the assumptions used therein and the results thereof; the anticipated effect of current market conditions and recessionary pressures in one or more of our markets; the anticipated effect of macroeconomic factors, including inflation; the anticipated impact of the evolving COVID-19 pandemic and related responses from governments and private sector participants on the Company and, its supply chain, third-party suppliers, project development timelines, costs, revenues, margins, liquidity and financial condition and the anticipated timing, speed and magnitude of recovery from these COVID-19 pandemic related impacts;pandemic; the anticipated impact from the ongoing conflict between Russia and Ukraine; and the anticipated separation from Bausch Health Companies Inc. (“BHC”), including the structure and expected timetable for completing such separation transaction.

•adverse economic conditions and other macroeconomic factors, including inflation, slower growth or a potential recession, which could adversely impact our revenues, expenses and resulting margins;

•the effect of current market conditions and recessionary pressures in one or more of our markets;

•the risks and uncertainties caused by or relating to the evolving COVID-19 pandemic, ~~the fear of that pandemic, the emergence of variants and sub-variants of COVID-19~~ (including but not limited to, the resurgence of COVID-19 cases in China and other countries) and any resulting reinstitution or strengthening of lockdowns or other restrictions, the availability and effectiveness of vaccines for COVID-19 (including with respect to current or future variants and sub-variants), COVID-19 vaccine immunization rates, the evolving reaction of governments, private sector participants and the public to that pandemic, and the potential effects and economic and future impact of ~~the~~that pandemic (or any resurgence thereof) and the reaction to it (including as it relates to the ~~severity, duration and future impact~~reinstitution of which are highly uncertain and cannot be predicted, and which may have a significant adverse impact on us, including but not limited to our supply chain, third-party suppliers, project development timelines, employee base, liquidity, stock price, financial condition and costs (which may increase) and revenue and margins (both of which may decrease)any lockdowns or other restrictions);