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 EndedJune 30, 2023March 31, 2024
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)
Canada98-1613662
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
520 Applewood 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 classTrading Symbol(s)Name of each exchange on which registered
Common Shares, No Par ValueBLCONew York Stock ExchangeToronto 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 — 350,701,026351,482,100 shares outstanding as of July 28, 2023.April 24, 2024.


BAUSCH + LOMB CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2023MARCH 31, 2024
INDEX
Part I.Financial Information
Item 1.
Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2023March 31, 2024 and 20222023
Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30,March 31, 2024 and 2023 and 2022
Item 2.
Item 3.
Item 4.
Part II.Other Information
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Signatures

i

BAUSCH + LOMB CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2023MARCH 31, 2024
Introductory Note
Except where the context otherwise requires, all references in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023March 31, 2024 (this “Form 10-Q”) to the “Company”, “Bausch + Lomb”, “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. Unless otherwise indicated, the statistical and financial data contained in this Form 10-Q are presented as of June 30, 2023.March 31, 2024.
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, 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;products, including XIIDRA®; expected R&D and marketing spend; our expected primary cash and working capital requirements for 2023the remainder of 2024 and beyond; our plans for continued improvement in operational efficiency and the anticipated impact of such plans; expected risks of loss of patent or regulatory exclusivity; 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, as amended,(the “Credit“Amended Credit Agreement”) and in the indenture governing our October 2028 Secured Notes (as defined below); 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; the anticipated impact from the ongoing conflictconflicts between Russia and Ukraine;Ukraine and in the Middle East involving Israel and Hamas; 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,” “future,” “will,” “may,” “can,” “might,” “could,” “would,” “should,” “target,” “potential,” “opportunity,” “designed,” “create,” “predict,” “project,” “timeline,” “forecast,” “outlook,” “guidance,” “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;
ii

•the risks and uncertainties caused by or relating to the evolving COVID-19 pandemic, including the potential effects and economic and future impact of that pandemic (or any resurgence thereof) and the reaction to it (including as it relates to the reinstitution of any lockdowns or other restrictions);
•the challenges the Company faces following its 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 and 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 achievement of targeted debt leverage ratios, subject to receipt of applicable shareholder and other necessary approvals and other factors)factors, including those factors described in BHC’s public filings), 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, 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 structure of the spinoff transaction and related distribution, 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;
•pricing decisions that we have implemented or may in the future elect to implement at the direction of our 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 Amended Credit Agreement, the indenture governing our October 2028 Secured Notes and other current or future debt agreements, 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
iii

not met, our ability to draw under the revolving credit facility under our Amended 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;
iii

•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 ophthalmology assets (the “XIIDRA Acquisition”), 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;all and risks relating to our increased levels of debt as a result of debt incurred to finance such acquisition;
•the uncertainties associated with the acquisition and launch of new products, assets and businesses (including the recently-acquired XIIDRA® product and Blink® product line)line and our recently launched MIEBO® product), 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, the failure to obtain required regulatory approvals, clearances or authorizations, 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 and key employees, 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;
•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;
iv

•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);
iv

•adverse global economic conditions and credit markets and foreign currency exchange uncertainty and volatility in certain of the countries in which we do business;
•trade conflicts, including thecurrent and future trade conflictdisputes between the United States and China;
•the impact ofrisks associated with 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, including its potential escalation and the potential impact on sales, earnings, market conditions and the ability of the Company to manage resources and historical investment in Russia;
•risks associated with the ongoing conflict in the Middle East involving Israel and Hamas, including its potential escalation and the potential impact on our operations, sale of products and revenues in this region;
•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 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;
v

•our indemnity agreements, which may result in an obligation to indemnify or reimburse the relevant counterparty, which amounts may be material;
•the difficulty in predicting the expense, timing and outcome within our legal and regulatory environment, including with respect to approvals by the FDA, Health Canada, the European Medicines Agency (“EMA”) and similar agencies in other jurisdictions, legal and regulatory proceedings and settlements thereof, the protection afforded by our patents and other intellectual and proprietary property, successful generic challenges to our products and infringement or alleged infringement of the intellectual property of others;
•the results of continuing safety and efficacy studies by industry and government agencies;
v

•the success of preclinical and clinical trials for our drug development pipeline or delays in clinical trials that adversely impact the timely commercialization of our pipeline products, as well as other factors impacting the commercial success of our products, which could lead to material impairment charges;
•uncertainties around the successful improvement and modification of our existing products and development of new products, which may require significant expenditures and efforts;
•the results of management reviews of our research and development portfolio (including following the receipt of clinical results or feedback from the FDA or other regulatory authorities), which could result in terminations of specific projects which, in turn, could lead to material impairment charges;
•the seasonality of sales of certain of our products;
•declines in the pricing and sales volume of certain of our products that are distributed or marketed by third parties, over which we have no or limited control;
•compliance by 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
•risks in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022,2023, filed with the U.S. Securities and Exchange Commission (“SEC”) and the Canadian Securities Administrators (the “CSA”) on February 22, 2023, risks in Item 1A. “Risk Factors” of Part II of this Form 10-Q21, 2024 and risks detailed from time to time in our other filings with the SEC and the CSA, as well as our ability to anticipate and manage the risks associated with the foregoing.
Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found in our Annual Report on Form 10-K for the year ended December 31, 2022,2023, filed on February 22, 2023,21, 2024, under Item 1A. “Risk Factors”, under Item 1A. “Risk Factors” of Part II of this Form 10-Q and in the Company’s other filings with the SEC and the CSA. When relying on our forward-looking statements to make decisions with respect to the Company, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. These forward-looking statements speak only as of the date made. We undertake no obligation to update or revise any of these forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect actual outcomes, except as required by law. We caution that, as it is not possible to predict or identify all relevant factors
vi

that may impact forward-looking statements, the foregoing list of important factors that may affect future results is not exhaustive and should not be considered a complete statement of all potential risks and uncertainties.
viivi

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
BAUSCH + LOMB CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share amounts)
(Unaudited)
June 30, 2023December 31, 2022 March 31, 2024December 31, 2023
AssetsAssets  Assets 
Current assets:Current assets:  Current assets: 
Cash and cash equivalentsCash and cash equivalents$384 $354 
Restricted cashRestricted cash8 26 
Trade receivables, net (Note 4)791 724 
Trade receivables, net
Inventories, netInventories, net699 628 
Prepaid expenses and other current assets (Note 4)Prepaid expenses and other current assets (Note 4)433 405 
Total current assetsTotal current assets2,315 2,137 
Property, plant and equipment, netProperty, plant and equipment, net1,294 1,300 
Intangible assets, netIntangible assets, net2,021 2,058 
GoodwillGoodwill4,540 4,507 
Deferred tax assets, netDeferred tax assets, net938 927 
Other non-current assets (Note 4)Other non-current assets (Note 4)207 215 
Total assetsTotal assets$11,315 $11,144 
LiabilitiesLiabilities Liabilities 
Current liabilities:Current liabilities: Current liabilities: 
Accounts payable (Note 4)Accounts payable (Note 4)$348 $370 
Accrued and other current liabilitiesAccrued and other current liabilities952 901 
Current portion of long-term debtCurrent portion of long-term debt25 25 
Total current liabilitiesTotal current liabilities1,325 1,296 
Deferred tax liabilities, netDeferred tax liabilities, net14 7 
Other non-current liabilitiesOther non-current liabilities342 329 
Long-term debtLong-term debt2,604 2,411 
Total liabilitiesTotal liabilities4,285 4,043 
Commitments and contingencies (Note 17)Commitments and contingencies (Note 17)Commitments and contingencies (Note 17)
EquityEquity  Equity 
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, 351,401,653 and 350,913,804 issued and outstanding at March 31, 2024 and December 31, 2023, respectively
Additional paid-in capitalAdditional paid-in capital8,321 8,285 
Accumulated (deficit) earnings(116)6 
Accumulated deficit
Accumulated other comprehensive lossAccumulated other comprehensive loss(1,247)(1,258)
Total Bausch + Lomb Corporation shareholders’ equity
6,958 7,033 
Accumulated other comprehensive loss
Accumulated other comprehensive loss
Total Bausch + Lomb Corporation shareholders’ equity
Noncontrolling interestNoncontrolling interest72 68 
Total equityTotal equity7,030 7,101 
Total liabilities and equityTotal liabilities and equity$11,315 $11,144 
The accompanying notes are an integral part of these condensed consolidated financial statements.

1

BAUSCH + LOMB CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(Unaudited)
Three Months Ended
June 30,		Six Months Ended
June 30,
2023202220232022
RevenuesRevenues  
Revenues
Revenues
Product sales
Product sales
Product salesProduct sales$1,031 $935 $1,959 $1,818 
Other revenuesOther revenues4 6 7 12 
1,035 941 1,966 1,830 
Other revenues
Other revenues
1,099
1,099
1,099
ExpensesExpenses
Cost of goods sold (excluding amortization and impairments of intangible assets) (Note 4)417 377 788 723 
Expenses
Expenses
Cost of goods sold (excluding amortization and impairments of intangible assets)
Cost of goods sold (excluding amortization and impairments of intangible assets)
Cost of goods sold (excluding amortization and impairments of intangible assets)
Cost of other revenues
Cost of other revenues
Cost of other revenuesCost of other revenues— 2 1 4 
Selling, general and administrative (Note 4)Selling, general and administrative (Note 4)417 368 835 711 
Research and development (Note 4)85 75 162 152 
Selling, general and administrative (Note 4)
Selling, general and administrative (Note 4)
Research and development
Research and development
Research and development
Amortization of intangible assetsAmortization of intangible assets56 64 113 129 
Other expense (income), net17 (1)26 1 
Amortization of intangible assets
Amortization of intangible assets
Other expense, net
Other expense, net
Other expense, net
1,093
1,093
1,093
Operating income (loss)
Operating income (loss)
Operating income (loss)
Interest income
Interest income
Interest income
Interest expense
Interest expense
Interest expense
Foreign exchange and other
Foreign exchange and other
Foreign exchange and other
Loss before provision for income taxes
Loss before provision for income taxes
Loss before provision for income taxes
Provision for income taxes
Provision for income taxes
Provision for income taxes
Net loss
Net loss
Net loss
Net income attributable to noncontrolling interest
Net income attributable to noncontrolling interest
Net income attributable to noncontrolling interest
Net loss attributable to Bausch + Lomb Corporation
Net loss attributable to Bausch + Lomb Corporation
Net loss attributable to Bausch + Lomb Corporation
992 885 1,925 1,720 
Operating income43 56 41 110 
Interest income5 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 
Provision for income taxes(10)(20)(43)(26)
Net (loss) income(29)7 (117)30 
Net income attributable to noncontrolling interest(3)(2)(5)(5)
Net (loss) income attributable to Bausch + Lomb Corporation$(32)$5 $(122)$25 
Basic and diluted loss per share attributable to Bausch + Lomb Corporation
Basic and diluted (loss) income per share attributable to Bausch + Lomb Corporation$(0.09)$0.01 $(0.35)$0.07 
Basic and diluted loss per share attributable to Bausch + Lomb Corporation
Basic and diluted weighted-average common shares350 350 350 350 
Basic and diluted loss per share attributable to Bausch + Lomb Corporation
Basic weighted-average common shares
Basic weighted-average common shares
Basic weighted-average common shares
Diluted weighted-average common shares
Diluted weighted-average common shares
Diluted weighted-average common shares
The accompanying notes are an integral part of these condensed consolidated financial statements.

2

BAUSCH + LOMB CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in millions)
(Unaudited)
Three Months Ended
June 30,		Six Months Ended June 30,
2023202220232022
Net (loss) income$(29)$7 $(117)$30 
Other comprehensive (loss) income
Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
2024
2024
2024
Net loss
Net loss
Net loss
Other comprehensive loss
Other comprehensive loss
Other comprehensive loss
Foreign currency translation adjustment
Foreign currency translation adjustment
Foreign currency translation adjustmentForeign currency translation adjustment(10)(122)11 (182)
Pension and postretirement benefit plan adjustments, net of income taxesPension and postretirement benefit plan adjustments, net of income taxes1 1 (1)(3)
Other comprehensive (loss) income(9)(121)10 (185)
Pension and postretirement benefit plan adjustments, net of income taxes
Pension and postretirement benefit plan adjustments, net of income taxes
Other comprehensive loss (income)
Other comprehensive loss (income)
Other comprehensive loss (income)
Comprehensive lossComprehensive loss(38)(114)(107)(155)
Comprehensive (income) loss attributable to noncontrolling interest(3)1 (4)(2)
Comprehensive loss
Comprehensive loss
Comprehensive income attributable to noncontrolling interest
Comprehensive income attributable to noncontrolling interest
Comprehensive income attributable to noncontrolling interest
Comprehensive loss attributable to Bausch + Lomb CorporationComprehensive loss attributable to Bausch + Lomb Corporation$(41)$(113)$(111)$(157)
Comprehensive loss attributable to Bausch + Lomb Corporation
Comprehensive loss attributable to Bausch + Lomb Corporation
The accompanying notes are an integral part of these condensed consolidated financial statements.
3

BAUSCH + LOMB CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(in millions)
(Unaudited)
Additional Paid in CapitalAccumulated (Deficit) EarningsAccumulated Other Comprehensive Loss
Bausch + Lomb
Corporation
Shareholders’
Equity
Non-controlling Interest
Total
Equity
Common Shares
BHC InvestmentAdditional Paid in CapitalAccumulated (Deficit) EarningsAccumulated Other Comprehensive Loss
Bausch + Lomb
Corporation
Shareholders’
Equity
Non-controlling Interest
Total
Equity
Common Shares
SharesAmount
Three Months Ended June 30, 2023
Balances, April 1, 2023350.2 $— $— $8,305 $(84)$(1,238)$6,983 $69 $7,052 
Three Months Ended March 31, 2024
Three Months Ended March 31, 2024
Three Months Ended March 31, 2024
Balances, January 1, 2024
Common shares issued under share-based compensation plansCommon shares issued under share-based compensation plans0.3 — — — — — — — — 
Share-based compensationShare-based compensation— — — 18 — — 18 — 18 
Employee withholding taxes related to share-based awardsEmployee withholding taxes related to share-based awards— — — (2)— — (2)— (2)
Net (loss) income
Net (loss) income
Net (loss) incomeNet (loss) income— — — — (32)— (32)3 (29)
Other comprehensive lossOther comprehensive loss— — — — — (9)(9)— (9)
Balances, June 30, 2023350.5 $— $— $8,321 $(116)$(1,247)$6,958 $72 $7,030 
Balances, March 31, 2024
Three Months Ended June 30, 2022
Balances, April 1, 2022350.0 $— $— $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, 2022350.0 $— $— $8,088 $25 $(1,217)$6,896 $75 $6,971 
Six Months Ended June 30, 2023
Three Months Ended March 31, 2023
Three Months Ended March 31, 2023
Three Months Ended March 31, 2023
Balances, January 1, 2023Balances, January 1, 2023350.0 $— $— $8,285 $6 $(1,258)$7,033 $68 $7,101 
Common shares issued under share-based compensation plansCommon shares issued under share-based compensation plans0.5 — — — — — — — — 
Share-based compensationShare-based compensation— — — 42 — — 42 — 42 
Employee withholding taxes related to share-based awardsEmployee withholding taxes related to share-based awards— — — (6)— — (6)— (6)
Net (loss) incomeNet (loss) income— — — — (122)— (122)5 (117)
Other comprehensive income (loss)Other comprehensive income (loss)— — — — — 11 11 (1)10 
Balances, June 30, 2023350.5 $— $— $8,321 $(116)$(1,247)$6,958 $72 $7,030 
Balances, March 31, 2023
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, 2022350.0 $— $— $8,088 $25 $(1,217)$6,896 $75 $6,971 
The accompanying notes are an integral part of these condensed consolidated financial statements.
4

BAUSCH + LOMB CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Six Months Ended
June 30,		 Three Months Ended
March 31,
20232022 20242023
Cash Flows From Operating ActivitiesCash Flows From Operating Activities  Cash Flows From Operating Activities 
Net (loss) income$(117)$30 
Adjustments to reconcile net income to net cash provided by operating activities:  
Net loss
Adjustments to reconcile net loss to net cash provided by operating activities:Adjustments to reconcile net loss to net cash provided by operating activities:  
Depreciation and amortization of intangible assetsDepreciation and amortization of intangible assets184 193 
Amortization and write-off of debt premiums, discounts and issuance costsAmortization and write-off of debt premiums, discounts and issuance costs6 2 
Allowances for losses on trade receivables and inventoriesAllowances for losses on trade receivables and inventories10 8 
Allowances for losses on trade receivables and inventories
Allowances for losses on trade receivables and inventories
Deferred income taxesDeferred income taxes(19)(41)
Payments of accrued legal settlements— (3)
Gain on sale of assets
Share-based compensationShare-based compensation42 27 
Foreign exchange loss9 (6)
Share-based compensation
Share-based compensation
Foreign exchange (loss) gain
Gain excluded from hedge effectivenessGain excluded from hedge effectiveness(6)— 
Amortization of interim contract and inventory step-up resulting from acquisitions
OtherOther(2)(29)
Changes in operating assets and liabilities:Changes in operating assets and liabilities:
Trade receivables
Trade receivables
Trade receivablesTrade receivables(74)(24)
InventoriesInventories(82)(74)
Prepaid expenses and other current assetsPrepaid expenses and other current assets(34)(2)
Accounts payable, accrued and other liabilitiesAccounts payable, accrued and other liabilities3 78 
Net cash (used in) provided by operating activities(80)159 
Net cash provided by (used in) operating activities
Cash Flows From Investing ActivitiesCash Flows From Investing Activities  Cash Flows From Investing Activities  
Acquisitions and other investmentsAcquisitions and other investments(31)— 
Acquisitions of intangible assets(3)— 
Purchases of property, plant and equipmentPurchases of property, plant and equipment(64)(76)
Purchases of marketable securitiesPurchases of marketable securities(11)(14)
Proceeds from sale of marketable securitiesProceeds from sale of marketable securities10 14 
Proceeds from sale of assets and businesses, net of costs to sellProceeds from sale of assets and businesses, net of costs to sell1 — 
Interest settlements from cross-currency swapsInterest settlements from cross-currency swaps6 — 
Net cash used in investing activitiesNet cash used in investing activities(92)(76)
Cash Flows From Financing ActivitiesCash Flows From Financing Activities  Cash Flows From Financing Activities  
Issuance of long-term debt, net of discountsIssuance of long-term debt, net of discounts200 2,440 
Repayments of debtRepayments of debt(13)— 
Payment of employee withholding taxes related to share-based awardsPayment of employee withholding taxes related to share-based awards(6)— 
Payments of financing costs— (3)
Net borrowings under BHC pooled financing arrangements (Note 4)— 31 
Net transfers to BHC (Note 4)— (2,271)
Net cash provided by financing activities
Net cash provided by financing activities
Net cash provided by financing activitiesNet cash provided by financing activities181 197 
Effect of exchange rate changes on cash and cash equivalents and restricted cashEffect of exchange rate changes on cash and cash equivalents and restricted cash3 (11)
Net increase in cash and cash equivalents and restricted cash12 269 
Net decrease in cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash, beginning of periodCash and cash equivalents and restricted cash, beginning of period380 177 
Cash and cash equivalents and restricted cash, end of periodCash and cash equivalents and restricted cash, end of period$392 $446 
Non-cash Investing and Financing ActivitiesNon-cash Investing and Financing Activities
Non-cash Investing and Financing Activities
Non-cash Investing and Financing Activities
Accrued purchases of property, plant and equipmentAccrued purchases of property, plant and equipment$26 $21 
Issuance of BHC Purchase Debt (Note 4)$— $2,200 
Accrued purchases of property, plant and equipment
Accrued purchases of property, plant and equipment
The accompanying notes are an integral part of these condensed consolidated financial statements.

5

BAUSCH + LOMB CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.DESCRIPTION OF BUSINESS
Overview
Bausch + Lomb Corporation (“Bausch + Lomb” or the “Company”) 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) 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, instruments and technologies for the treatment of cataracts, corneal and vitreous and retinal eye conditions, which includes intraocular lenses (“IOLs”) and delivery systems, phacoemulsification equipment and other surgical instruments and devices necessary for cataractophthalmic 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 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%88.3% of the issued and outstanding common shares of Bausch + Lomb as of July 28, 2023April 24, 2024.
Separation of Bausch + Lomb from BHC
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 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. As of July 28, 2023,April 24, 2024, BHC directly or indirectly held 310,449,643 common shares of Bausch + Lomb, which represented approximately 88.5%88.3% of the issued and outstanding common 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 achievement of targeted debt leverage ratios and the receipt of applicable shareholder and other necessary approvals and other factors and is subject to various risk factors relating to the Separation. See Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the U.S. Securities and Exchange Commission (the “SEC”) and the Canadian Securities Administrators (“CSA”) on February 22, 2023 (the “Annual Report”) for additional information on the risks associated with the 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 Pharmaceuticals Inc.those factors described in BHC’s public filings.
6

2.SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
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 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. Accordingly, these notes to the 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.Report on Form 10-K for the year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission (“SEC”) and the Canadian Securities Administrators (the “CSA”) on February 21, 2024. 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, 2022.2023. The unaudited Condensed Consolidated Financial Statements reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position and results of operations for the interim periods. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year.
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 had been allocated to Bausch + Lomb. Refer to Note 2 in the Company’s Annual Report for additional details on the Company's basis of presentation during the periods prior, and subsequent, to the 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 Bausch + Lomb and BHC.
Use of Estimates
In preparing the Company’sunaudited 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 the Company's operations and cash flows. The estimates and assumptions used by 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. Prior tocontracts; and the B+L IPO, significant estimates made by management also includedrecognition of the related allocations describedfair value of assets and liabilities acquired in the basis of presentation.a business combination or asset acquisition.
All estimates in these Condensed Consolidated Financial Statements are based on assumptions that management believes are reasonable. On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company's business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company's 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.
7

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 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.March 31, 2024.
7

Recently Issued Accounting Standards, Not Adopted as of March 31, 2024
In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and subsequent interim periods, with early adoption permitted. Retrospective application is required for all periods presented in the financial statements. The Company is currently evaluating the impact of adopting this ASU on its disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. The ASU is effective for the Company's Annual Report on Form 10-K for fiscal year ended December 31, 2025. Early adoption is permitted and may be applied prospectively or retrospectively. The Company is currently evaluating the impact of adoption of this ASU on its disclosures.
3.REVENUE RECOGNITION
Revenue Recognition
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, 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” 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.revenues.
The Company recognizes revenue when the customer obtains control of promised goods or services and in an amount that reflects the consideration to which the Company expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, 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 the Company’s customers exists for each product sale. Where a contract with a customer contains more than one performance obligation, 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. 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. 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. 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.
8

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 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.
8

Provisions for these deductions are recorded concurrently with the recognition of gross product sales revenue and include cash discounts and allowances, chargebacks and distribution fees, which are paid to direct customers, as well as rebates and returns, which can be paid to direct and indirect customers. Returns provision balances and volume discounts to direct customers are included in Accrued and other current liabilities. All other provisions related to direct customers are included in Trade receivables, net, while provision balances related to indirect customers are included in Accrued and other current liabilities.
The following tables present the activity and ending balances of the Company’s variable consideration provisions for the sixthree months ended June 30, 2023March 31, 2024 and 2022:2023:
Six Months Ended June 30, 2023
Three Months Ended March 31, 2024Three Months Ended March 31, 2024
(in millions)(in millions)
Discounts
and
Allowances
ReturnsRebatesChargebacks
Distribution
Fees
Total(in millions)
Discounts
and
Allowances
ReturnsRebatesChargebacks
Distribution
Fees
Total
Reserve balance, January 1, 2023$146 $59 $188 $73 $18 $484 
Reserve balance, January 1, 2024
Current period provisionCurrent period provision180 36 280 268 11 775 
Payments and creditsPayments and credits(195)(32)(274)(279)(4)(784)
Reserve balance, June 30, 2023$131 $63 $194 $62 $25 $475 
Reserve balance, March 31, 2024
Included in Rebates in the table above are cooperative advertising credits due to customers of approximately $49$33 million and $35 million as of June 30, 2023March 31, 2024 and January 1, 2023,2024, respectively, which are reflected as a reduction of Trade receivables, net in the Condensed Consolidated Balance Sheets. For the three months ended March 31, 2024, included in Payments and credits in the table above, are payments made, or to be made, by Novartis, on behalf of the Company, in accordance with the agreements associated with the XIIDRA Acquisition.
Six Months Ended June 30, 2022
Three Months Ended March 31, 2023Three Months Ended March 31, 2023
(in millions)(in millions)
Discounts
and
Allowances
ReturnsRebatesChargebacks
Distribution
Fees
Total(in millions)
Discounts
and
Allowances
ReturnsRebatesChargebacks
Distribution
Fees
Total
Reserve balance, January 1, 2022$167 $60 $195 $29 $17 $468 
Reserve balance, January 1, 2023
Current period provisionCurrent period provision160 35 270 211 11 687 
Payments and creditsPayments and credits(169)(37)(241)(151)— (598)
Reserve balance, June 30, 2022$158 $58 $224 $89 $28 $557 
Reserve balance, March 31, 2023
Included in Rebates in the table above are cooperative advertising credits due to customers of approximately $43$39 million and $31$35 million as of June 30, 2022March 31, 2023 and January 1, 2022,2023, respectively, which are reflected as a reduction of Trade receivables, net in the Condensed Consolidated Balance Sheets.
Contract Assets and Contract Liabilities
There are no contract assets for any period presented. Contract liabilities consist of deferred revenue, the balance of which is not material to any period presented.
Allowance for Credit Losses
An allowance is maintained for potential credit losses. TheThe Company estimates the current expected credit loss on its receivables based on various factors, including historical credit loss experience, customer credit worthiness, value of collaterals (if any), and any relevant current and reasonably supportable future economic factors. Additionally, the Company generally estimates the expected credit loss on a pooled basis when customers are deemed to have similar risk characteristics. Trade receivable balances are written off against the allowance when it is deemed probable that the trade receivable will not be collected. Trade receivables, net are stated net of certain sales provisions and the allowance for credit losses.
9

The activity in the allowance for credit losses for trade receivables for the sixthree months ended June 30,March 31, 2024 and 2023 and 2022 is as follows:
Six Months Ended June 30,
Three Months Ended
March 31,		Three Months Ended
March 31,
(in millions)(in millions)20232022(in millions)20242023
Balance, beginning of periodBalance, beginning of period$22 $16 
ProvisionProvision2 1 
Write-offsWrite-offs(1)(1)
Foreign exchange and otherForeign exchange and other(1)2 
Balance, end of periodBalance, end of period$22 $18 
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. On May 10, 2022, Bausch + Lomb became an independent publicly traded company. However, asAs of July 28, 2023,April 24, 2024, BHC directly or indirectly held 310,449,643 common shares of Bausch + Lomb, which represented approximately 88.5%88.3% 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 six months ended June 30, 2023 and 2022 were $0 and $76 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 six months ended June 30, 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 six months ended June 30, 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 six months ended June 30, 2022 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 $39$51 million and $53$43 million as of June 30, 2023March 31, 2024 and December 31, 2022,2023, 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 $91$59 million and $102$55 million as of June 30, 2023March 31, 2024 and December 31, 2022,2023, respectively, of which $79$40 million and $90$36 million are included within Prepaid expenses and other current assets and $12$19 million and $12$19 million are included within Other non-current assets on the Condensed Consolidated Balance Sheets as of June 30, 2023March 31, 2024 and December 31, 2022,2023, 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 were limited to the aggregate cash maintained in accounts held by the sponsoring
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bank. Net borrowings under BHC pooled financing arrangements from legal entities comprising Bausch + Lomb were $0 as of December 31, 2022. BHC held a net positive cash balance in this pool, as these borrowings were more than offset by cash held by other BHC owned legal entities, including legal entities which have commingled Bausch + Lomb and non-Bausch + Lomb activities. Cash from these commingled legal entities has generally not been included in Bausch + Lomb’s Condensed Consolidated Balance Sheets as such cash is not specifically identifiable to Bausch + Lomb. These borrowings are presented on the Condensed Consolidated Balance Sheets within Accrued and other current liabilities and in the Cash Flows From Financing Activities section of the Condensed Consolidated Statements of Cash Flows as Net borrowings under BHC pooled financing arrangements. Interest incurred on such borrowings were not material for any period presented.
Net Transfers to BHC
The total effect of the settlement of related party transactions is reflected as a financing activity in the Condensed Consolidated Statements of Cash Flows. The components of the Net transfers to BHC for the three and six months ended June 30, 2023 and 2022 are as follows:
Three Months Ended
June 30,		Six Months Ended June 30,
(in millions)2023202220232022
Cash pooling and general financing activities$— $(142)$— $(229)
Corporate allocations— — — 76 
Benefit from income taxes— — — 66 
Total net transfers to BHC (as reflected in Net distributions to BHC and affiliates in the Condensed Consolidated Statements of Equity)$— $(142)— (87)
Payment of BHC Purchase Debt— (2,200)
Share-based compensation— (16)
Other, net— 32 
Net transfers to BHC (as reflected in the Condensed Consolidated Statements of Cash Flows)$— $(2,271)
Repayment of BHC Purchase Debt and Return of Capital
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. The BHC Purchase Debt had an original maturity of two years and; interest at the rate of 3.625% per annum. On May 1, 2022, the Company entered into an addendum to amend the interest rate of the BHC Purchase Debt to a rate of 6.000% per annum. The cumulative catch-up for this amendment to the interest rate was recorded in the Condensed Consolidated Statements of Operations as part of Interest expense, during the three months ended June 30, 2022. On May 10, 2022, Bausch + Lomb made payments to BHC of: (i) $2,200 million in full satisfaction of the BHC Purchase Debt and (ii) $229 million in return of capital using the proceeds from the Term Facility (as defined in Note 10, “CREDIT FACILITIES”) and cash on hand. Included in Interest expense in the Condensed Consolidated Statements of Operations for the six months ended June 30, 2022 was $47 million of interest attributed to the BHC Purchase Debt.
Separation Agreement with BHC
In connection with the completion of the B+L IPO, the Company entered into the MSA, that, together with the other agreements summarized herein, govern the relationship between BHC and the Company following the completion of the B+L IPO.
Other agreements that the Company entered into with BHC that govern aspects of Bausch + Lomb’s relationship with BHC following the B+L IPO include:
•Transition Services Agreement - In connection with the completion of the B+L IPO, Bausch + Lomb has entered into the TSA with BHC to provide each other, on a transitional basis, certain administrative, human resources, treasury and support services and other assistance, for a limited time to help ensure an orderly transition following the B+L IPO. The TSA specifies the calculation of Bausch + Lomb costs and receipts for these services. Under the TSA, Bausch + Lomb has received certain services from BHC, including information technology services, technical and engineering support, application support for operations, legal, payroll, finance, tax and accounting, general administrative services and other support services, and has also provided certain similar services to BHC. Individual services provided under the TSA have been scheduled for a specific period, generally ranging from six to twelve months, depending on the nature of the services. As of the date of this filing, a number of these transitional services have either expired or been terminated; however, certaina limited number of these transitional services are still being provided by the parties.
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•Tax Matters Agreement - In connection with the completion of the B+L IPO, Bausch + Lomb has entered into a Tax Matters Agreement with BHC that governs the parties’ respective rights, responsibilities and obligations with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and other matters regarding taxes following the B+L IPO.
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•Employee Matters Agreement - In connection with the completion of the B+L IPO, Bausch + Lomb has entered into an Employee Matters Agreement with BHC that governs, among other things, the allocation of employee-related liabilities, the mechanics for the transfer of Bausch + Lomb employees, the treatment of outstanding equity awards and the treatment of Bausch + Lomb employees’ participation in BHC’s retirement and health and welfare plans.
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 $1 million and $5 million for each of the sixthree months ended June 30,March 31, 2024 and 2023, and 2022, respectively, and are primarily reflected within Selling, general and administrative ("SG&A&A") in the Condensed Consolidated Statements of Operations.
5.ACQUISITIONS AND 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
Acquisition of XIIDRA®
On June 30, 2023, a wholly owned subsidiary of the Company, Bausch + Lomb Ireland Limited, entered into a Stock and Asset Purchase Agreement (the “Acquisition Agreement”) with Novartis Pharma AG and;and Novartis Finance Corporation (together with Novartis Pharma AG, “Novartis”) and, solely for purposes of guaranteeing certain obligations of the acquiring entity under the Acquisition Agreement, the Company, 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.assets (the “XIIDRA Acquisition”).
UnderOn September 29, 2023, under the terms of the agreement,Acquisition Agreement, the Company, through its affiliate, has agreed to acquireconsummated the XIIDRA® and certain other ophthalmology assets from Novartis for Acquisition for: (i) an up-front cash payment at closing, of $1,750 million, with(ii) the assumption of certain pre-existing milestone payments and (iii) potential future milestone obligationsobligations. As of up to $750the acquisition date, the Company recognized contingent consideration liabilities of $34 million, in part, payable upon the achievementaggregate, related to assumed pre-existing milestones and potential future milestones. The Company reassesses its acquisition-related contingent consideration liabilities each quarter for changes in fair value. See Note 6, “FAIR VALUE MEASUREMENTS” for additional information regarding the fair value assessment of specified commercializationthe acquisition-related contingent consideration liabilities. The XIIDRA Acquisition complements Bausch + Lomb’s existing dry eye franchise that includes eye and sales milestonescontact lens drops from the Company’s consumer brand franchises and novel treatments within its pharmaceutical business, such as MIEBO® (perfluorohexyloctane ophthalmic solution). The XIIDRA Acquisition has been accounted for certain pipeline products to beas a business combination under the acquisition method of accounting. The assets acquired and liabilities assumed are included within the Company's Pharmaceuticals segment.
As of the acquisition date, the Company allocated the aggregate purchase consideration of $1,753 million based on estimated fair values, which included recording $1,600 million of identifiable intangible assets, $130 million of other net assets, and $23 million of goodwill. See Note 4, “ACQUISITIONS AND LICENSING AGREEMENTS” in the Annual Report for additional information regarding the XIIDRA Acquisition, including further detail regarding the assets acquired and liabilities assumed. The valuation of the assets acquired and liabilities assumed, as part of the transaction and, in part, upon the achievementXIIDRA Acquisition, has not yet been finalized as of specified sales milestones for XIIDRA®.March 31, 2024. The transaction is expected to close by the end of 2023,areas that could be subject to receipt of regulatory approval and other customary closing conditions.change primarily relate to income tax matters. The Company has obtained debt financing commitments for purposes of this transaction and intends to financewill finalize these amounts no later than one year from the $1,750 million up-front cash payment with new debt prior to the closing of the transaction.acquisition date.
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. The Company accounted for the transaction as an asset acquisition. The acquired assets are included within the Company's Vision Care segment. See Note 4, “ACQUISITIONS AND LICENSING AGREEMENTS” in early July 2023.
As this transaction closed during July 2023, the Company is still finalizingAnnual Report for additional information regarding the allocationacquisition of the purchase price to the individual assets acquired and liabilities assumed.
Acquisition of AcuFocus, Inc.Blink® product line.
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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 acquisition of AcuFocus has been accounted for as a business combination under the acquisition method of accounting. 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 become due upon achievement of future sales milestones. At the time of acquisition, the acquisition-related contingent consideration liability related to this transaction was approximately $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 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 treatment of glaucoma and is expected to complement existing Bausch + Lomb products within this market. As a part of the agreement, the Company agreed to purchase the MIMS® product from Sanoculis for distribution 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 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 machined parts manufacturing company. The transaction was completed to assist in driving revenue growth as well as increasing manufacturing capacity. The fair value of the acquisition of Total Titanium has been accounted for as a business combination and 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 transactions, recorded within the Condensed Consolidated Balance Sheets are Trade receivables, net of $1 million, Inventories, net of $1 million, Property, plant and equipment, net of $2 million, Intangibles, net of $43 million, Goodwill of $5 million and 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.
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If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following fair value hierarchy table presents the components and classification of the Company’s financial assets and liabilities measured at fair value on a recurring basis:
June 30, 2023December 31, 2022 March 31, 2024December 31, 2023
(in millions) (in millions)
Carrying
Value
Level 1Level 2Level 3
Carrying
Value
Level 1Level 2Level 3 (in millions)
Carrying
Value
Level 1Level 2Level 3
Carrying
Value
Level 1Level 2Level 3
Assets:Assets:        Assets: 
Cash equivalentsCash equivalents$57 $49 $8 $— $81 $72 $9 $— 
Foreign currency exchange contractsForeign currency exchange contracts$2 $— $2 $— $5 $— $5 $— 
Liabilities:Liabilities: 
Acquisition-related contingent considerationAcquisition-related contingent consideration$10 $— $— $10 $4 $— $— $4 
Acquisition-related contingent consideration
Acquisition-related contingent consideration
Foreign currency exchange contractsForeign currency exchange contracts$1 $— $1 $— $2 $— $2 $— 
Cross-currency swapsCross-currency swaps$62 $— $62 $— $39 $— $39 $— 
Cash equivalents consist of highly liquid investments, primarily money market funds, with maturities of three months or less when purchased, and are reflected in the Condensed Consolidated Balance Sheets at carrying value, which approximates fair value due to their short-term nature.
There were no transfers into or out of Level 3 during the sixthree months ended June 30, 2023March 31, 2024 and 2022.2023.
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Cross-currency Swaps
During the third quarter of 2022, theThe Company entered intouses 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 quarterAs of 2022, the CompanyMarch 31, 2024, these swaps had no cross-currency swaps for any period presented.an aggregate notional value of $1,000 million.
The assets and liabilities associated with the Company's cross-currency swaps as included in the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 are as follows:
(in millions)(in millions)June 30,
2023		December 31,
2022		(in millions)March 31,
2024		December 31,
2023
Other non-current liabilitiesOther non-current liabilities$68 $45 
Prepaid expenses and other current assetsPrepaid expenses and other current assets$6 $6 
Net fair valueNet 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 six months ended June 30, 2023March 31, 2024 and 2022:2023:
Three Months Ended
June 30,		Six Months Ended June 30,
Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
(in millions)(in millions)2023202220232022
Loss recognized in Other comprehensive loss$17 $— $23 $— 
(in millions)
(in millions)
Gain (loss) recognized in Other comprehensive loss
Gain (loss) recognized in Other comprehensive loss
Gain (loss) recognized in Other comprehensive loss
Gain excluded from assessment of hedge effectiveness
Gain excluded from assessment of hedge effectiveness
Gain excluded from assessment of hedge effectivenessGain excluded from assessment of hedge effectiveness$3 $— $6 $— 
Location of gain of excluded componentLocation of gain of excluded componentInterest expenseInterest Expense
Location of gain of excluded component
Location of gain of excluded component
No portion of the cross-currency swaps were ineffective for the sixthree months ended June 30, 2023.March 31, 2024. During the sixthree months ended June 30, 2023,March 31, 2024, the Company received $6 million in interest settlements, which are reported as investing activities in the Condensed Consolidated Statements of Cash Flows.
Foreign Currency Exchange Contracts
The Company enters into foreign currency exchange contracts to economically hedge the foreign exchange exposure on certain of the Company's intercompany balances. As of June 30, 2023,March 31, 2024, these contracts had an aggregate notional amount of $258$328 million.
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The assets and liabilities associated with the Company’s foreign exchange contracts as included in the Condensed Consolidated Balance Sheets as of June 30, 2023March 31, 2024 and December 31, 20222023 are as follows:
(in millions)(in millions)June 30,
2023		December 31,
2022		(in millions)March 31,
2024		December 31,
2023
Accrued and other current liabilitiesAccrued and other current liabilities$1 $2 
Prepaid expenses and other current assetsPrepaid expenses and other current assets$2 $5 
Net fair valueNet fair value$1 $3 
The following table presents the effect of the Company’s foreign exchange contracts on the Condensed Consolidated Statements of Operations and the Condensed Consolidated Statements of Cash Flows for the sixthree months ended June 30, 2023March 31, 2024 and 2022:2023:
Six Months Ended June 30,
Three Months Ended
March 31,		Three Months Ended
March 31,
(in millions)(in millions)20232022(in millions)20242023
(Loss) Gain related to changes in fair value$(2)$(4)
Gain (loss) related to changes in fair value
Gain related to settlementsGain 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 acquisition-related contingent consideration is remeasured each reporting period,
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with changes in fair value recorded in the Condensed Consolidated Statements of Operations. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in fair value measurement accounting.
The fair value measurement of contingent consideration obligations arising from business combinations is determined via a probability-weighted discounted cash flow analysis, using unobservable (Level 3) inputs. These inputs may include: (i) the estimated amount and timing of projected cash flows, (ii) the probability of the achievement of the factor(s) on which the contingency is based and (iii) the risk-adjusted discount rate used to present value the probability-weighted cash flows. Significant increases or decreases in any of those inputs in isolation could result in a significantly higher or lower fair value measurement. At June 30, 2023,March 31, 2024, the fair value measurements of acquisition-related contingent consideration were determined using risk-adjusted discount rates ranging from 14%11% to 28%, and a weighted average risk-adjusted discount rate of 16%12%. The weighted average risk-adjusted discount rate was calculated by weighting each contract’s relative fair value at June 30, 2023.March 31, 2024.
The following table presents a reconciliation of contingent consideration obligations measured on a recurring basis using significant unobservable inputs (Level 3) for the sixthree months ended June 30, 2023March 31, 2024 and 2022:2023:
June 30,
(in millions)(in millions)20232022(in millions)20242023
Balance, beginning of period$4 $9 
Balance, as of January 1,
Adjustments to Acquisition-related contingent consideration:Adjustments to Acquisition-related contingent consideration:
Accretion for the time value of moneyAccretion for the time value of money$1 $— 
Accretion for the time value of money
Accretion for the time value of money
Fair value adjustments due to changes in estimates of future paymentsFair value adjustments due to changes in estimates of future payments— (5)
Fair value adjustments due to changes in estimates of future payments
Fair value adjustments due to changes in estimates of future payments
Acquisition-related contingent consideration adjustments
Acquisition-related contingent consideration adjustments
Acquisition-related contingent consideration adjustmentsAcquisition-related contingent consideration adjustments1 (5)
Additions (Note 5)Additions (Note 5)5 — 
Payments/SettlementsPayments/Settlements— — 
Balance, end of period10 4 
Balance, as of March 31,
Current portion included in Accrued and other current liabilitiesCurrent portion included in Accrued and other current liabilities4 — 
Non-current portionNon-current portion$6 $4 
Fair Value of Long-term Debt
The fair value of long-term debt as of June 30, 2023March 31, 2024 and December 31, 20222023 was $2,588$4,672 million and $2,354$4,668 million, respectively, and was estimated using the quoted market prices for similar debt issuances (Level 2).
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7.INVENTORIES
Inventories, net consist of:
(in millions)(in millions)June 30,
2023		December 31,
2022		(in millions)March 31,
2024		December 31,
2023
Raw materialsRaw materials$191 $163 
Work in processWork in process55 44 
Finished goodsFinished goods453 421 
$699 $628 
$
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8.INTANGIBLE ASSETS AND GOODWILL
Intangible Assets
The major components of intangible assets consist of:
June 30, 2023December 31, 2022 March 31, 2024December 31, 2023
(in millions)(in millions)
Gross
Carrying
Amount
Accumulated
Amortization and Impairments
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization and Impairments
Net
Carrying
Amount
(in millions)
Gross
Carrying
Amount
Accumulated
Amortization and Impairments
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization and Impairments
Net
Carrying
Amount
Finite-lived intangible assets:Finite-lived intangible assets:      Finite-lived intangible assets:  
Product brandsProduct brands$2,726 $(2,466)$260 $2,650 $(2,373)$277 
Corporate brandsCorporate brands12 (8)4 12 (7)5 
Product rights/patentsProduct rights/patents993 (939)54 992 (919)73 
Technology and otherTechnology and other67 (62)5 66 (61)5 
Total finite-lived intangible assetsTotal finite-lived intangible assets3,798 (3,475)323 3,720 (3,360)360 
Acquired in-process research and development intangible asset
B&L TrademarkB&L Trademark1,698 — 1,698 1,698 — 1,698 
$5,496 $(3,475)$2,021 $5,418 $(3,360)$2,058 
$
Long-lived assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Impairment charges associated with these assets are included in Other expense, net in the Condensed Consolidated Statements of Operations. Bausch + Lomb continues to monitor the recoverability of its finite-lived intangible assets and tests the intangible assets for impairment if indicators of impairment are present.
AssetThere were no asset impairments were not material during the sixthree months ended June 30, 2023March 31, 2024 and 2022.2023.
Estimated amortization expense of finite-lived intangible assets for the remainder of 20232024 and the five succeeding years ending December 31 and thereafter are as follows:
(in millions)(in millions)Remainder of 202320242025202620272028ThereafterTotal(in millions)Remainder of 202420252026202720282029ThereafterTotal
AmortizationAmortization$77 $97 $51 $18 $17 $17 $46 $323 
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Goodwill
The changes in the carrying amounts of goodwill during the sixthree months ended June 30, 2023March 31, 2024 and the year ended December 31, 20222023 were as follows:
(in millions)Vision CarePharmaceuticalsSurgicalTotal
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, 20223,549 645 313 4,507 
Acquisitions (Note 5)— — 8 8 
Foreign exchange and other6 16 3 25 
Balance, June 30, 2023$3,555 $661 $324 $4,540 
(in millions)Vision CarePharmaceuticalsSurgicalTotal
Balance, January 1, 2023$3,549 $645 $313 $4,507 
Acquisitions (Note 5)— 23 8 31 
Foreign exchange7 25 5 37 
Balance, December 31, 20233,556 693 326 4,575 
Foreign exchange(8)(18)(2)(28)
Balance, March 31, 2024$3,548 $675 $324 $4,547 
Goodwill is not amortized but is tested for impairment at least annually as 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
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2023 Annual Goodwill Impairment Test
The Company conducted its annual goodwill impairment test as of October 1, 20222023 by performing a quantitative assessment for each of its reporting units. The quantitative assessment utilized long-term growth rates of 2.0% and 3.0% and discount rates of 9.5%ranging from 10.25% and 12.25%11.50%, 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 25%, and, therefore, there was no impairment to goodwill.
June 30, 2023March 31, 2024 Interim Goodwill Impairment Assessment
No events occurred or circumstances changed during the period from October 1, 20222023 (the last time goodwill was tested for all reporting units) through June 30, 2023March 31, 2024 that would indicate that the fair value of any reporting unit might be below its carrying value.
If market conditions deteriorate, or if the Company is unable to execute its strategies, it may be necessary to record impairment charges in the future.
There were no goodwill impairment charges from October 1, 20222023 through June 30, 2023.March 31, 2024.
9.ACCRUED AND OTHER CURRENT LIABILITIES
Accrued and other current liabilities consist of:
(in millions)June 30,
2023		December 31,
2022
Employee compensation and benefit costs$191 $196 
Product rebates145 153 
Discounts and allowances82 85 
Professional fees70 66 
Product returns63 59 
Other401 342 
$952 $901 
Under the terms of a December 2019 agreement with Novaliq GmbH, the Company is required to make future payments related to the future sales associated with MIEBOTM (formerly known as NOV03). On May 18, 2023, the U.S. Food and Drug Administration (“FDA”) approved the New Drug Application (“NDA”) for MIEBOTM and the Company accrued the $45 million milestone payment, which is included within Other, in the table above, as of June 30, 2023.
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(in millions)March 31,
2024		December 31,
2023
Product rebates$313 $191 
Employee compensation and benefit costs189 233 
Discounts and allowances71 84 
Product returns71 66 
Interest71 44 
Advertising and Promotion69 45 
Other377 364 
$1,161 $1,027 

10.CREDIT FACILITIESFINANCING ARRANGEMENTS
Principal amounts of debt obligations and principal amounts of debt obligations net of issuance costs consist of the following:
March 31, 2024December 31, 2023
(in millions)MaturityPrincipal AmountNet of Issuance CostsPrincipal AmountNet of Issuance Costs
Senior Secured Credit Facilities
Revolving Credit FacilityMay 2027$300 $300 $275 $275 
May 2027 Term FacilityMay 20272,456 2,420 2,462 2,423 
September 2028 Term FacilitySeptember 2028498 486 499 487 
Senior Secured Notes
8.375% Secured NotesOctober 20281,400 1,378 1,400 1,377 
Total long-term debt$4,654 4,584 $4,636 4,562 
Less: Current portion of long-term debt30 30 
Non-current portion of long-term debt$4,554 $4,532 
Senior Secured 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. Prior to the September 2023 Credit Facility Amendment (as defined below), the Credit Agreement provided for a term loan of $2,500 million with a five-year term to maturity (the “Term“May 2027 Term Facility”) and a five-year revolving credit facility of $500 million (the “Revolving Credit Facility”).
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On September 29, 2023, Bausch + Lomb entered into an incremental term loan facility secured on a pari passu basis with the Company’s existing May 2027 Term Facility. This incremental term loan facility was entered into in the form of an incremental amendment (the "September 2023 Credit Facility Amendment") to the Company’s existing Credit Agreement (the Credit Agreement, as amended by the September 2023 Credit Facility Amendment, the “Amended Credit Agreement”) and consisted of borrowings of $500 million in new term B loans with a five-year term to maturity (the "September 2028 Term Facility" and, together with the May 2027 Term Facility and the Revolving Credit Facility, the “Senior Secured Credit Facilities”). A portion of the proceeds from the September 2028 Term Facility and October 2028 Secured Notes (as defined below) were used to finance the $1,750 million upfront payment related to the XIIDRA Acquisition (as discussed further in Note 5, “ACQUISITIONS AND LICENSING AGREEMENTS”) and related acquisition and financing costs.
On April 19, 2024, Bausch + Lomb entered into a Suspension of Rights Agreement (the “Suspension of Rights Agreement”) with respect to the Credit Agreement, pursuant to which Canadian dollar-denominated loans will cease to be available from June 28, 2024 until such date as the parties enter into an amendment of the Credit Agreement (a “CDOR Replacement Amendment”) to replace the Canadian Dollar Offered Rate with an alternative benchmark with respect to Canadian dollar-denominated loans.
The Senior Secured 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 May 2027 Term Facility isand September 2028 Term Facility are denominated in U.S. dollars, and borrowings under the Revolving Credit Facility may be made available in U.S. dollars, euros and pounds sterling and(and, subject to effectiveness of a CDOR Replacement Amendment, Canadian dollars.dollars). As of June 30, 2023,March 31, 2024, the principal amountamounts outstanding under the May 2027 Term Facility was $2,475and September 2028 Term Facility were $2,456 million and $2,429$498 million, net of issuance costs.respectively. As of DecemberMarch 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, 2023,2024, the Company had $200$300 million of outstanding borrowings, $25$26 million of issued and outstanding letters of credit and remaining availability, subject to certain customary conditions, of $275$174 million under its Revolving Credit 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"(“SOFR”)-based rate or (b) a U.S. dollar base rate, (ii) Canadian dollars, when available pursuant to the Suspension of Rights Agreement and the effectiveness of a CDOR Replacement Amendment, will 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,be agreed between the parties, (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 loansborrowings under the Revolving Credit Facility 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 CDORSONIA borrowings based on Bausch + Lomb’s total net leverage ratio and (ii) after: (x) Bausch + Lomb’s senior unsecured non-credit-enhanced long-term indebtedness for borrowed money receives an investment grade rating from at least two of Standard & Poor’s (“S&P”), Moody’s and Fitch and (y) the May 2027 Term Facility hasand September 2028 Term Facility have 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 CDORSONIA borrowings based on Bausch + Lomb’s debt rating. The stated rate of interest for borrowings under the Revolving Credit Facility at June 30, 2023March 31, 2024 ranges from 7.43%8.17% to 7.50%8.18% 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 May 2027 Term Facility bear interest at a rate per annum equal to, at Bausch + Lomb’s option, either: (i) a term SOFR-based rate, plus an applicable margin of 3.25% or (ii) a U.S. dollar base rate, plus an applicable margin of 2.25% (provided, however, that the term SOFR-based rate shall be no less than 0.50% per annum at any time and the U.S. dollar base rate shall not be lower than 1.50% per annum at any time). Term SOFR-based loansborrowings under the May 2027 Term Facility are subject to a credit spread adjustment of 0.10%. The stated rate of interest under the May 2027 Term Facility at June 30, 2023March 31, 2024 was 8.59%8.68% per annum.
Borrowings under the September 2028 Term Facility bear interest at a rate per annum equal to, at Bausch + Lomb’s option, either: (i) a term SOFR-based rate, plus an applicable margin of 4.00%, or (ii) a U.S. dollar base rate, plus an applicable margin of 3.00% (provided, however, that the term SOFR-based rate shall be no less than 0.00% per annum at any time and the U.S. dollar base rate shall not be lower than 1.00% per annum at any time). Term SOFR-based borrowings under the
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September 2028 Term Facility are not subject to any credit spread adjustment. The stated rate of interest under the September 2028 Term Facility at March 31, 2024 was 9.33% per annum.
Subject to certain exceptions and customary baskets set forth in the Amended Credit Agreement, Bausch + Lomb is required to make mandatory prepayments of the loans under the May 2027 Term Facility and September 2028 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 Amended Credit Agreement), (iii) 50% of Excess Cash Flow (as defined in the Amended Credit Agreement) subject to decrease based on leverage ratios and subject to a threshold amount and (iv) 100% of net cash proceeds from asset sales (subject to reinvestment rights, decrease based on leverage ratios and net proceeds threshold). These mandatory prepayments may be used to satisfy future amortization.
The amortization rate for the May 2027 Term Facility is 1.00% per annum, or $25 million, payable in quarterly installments, and the first installment was paid on September 30, 2022. Bausch + Lomb may direct that prepayments be applied to such amortization payments in order of maturity. As of March 31, 2024, the remaining mandatory quarterly amortization payments for the May 2027 Term Facility were $75 million through March 2027, with the remaining term loan balance being due in May 2027.
The amortization rate for the September 2028 Term Facility is 1.00% per annum, or $5 million, payable in quarterly installments. Bausch + Lomb may direct that prepayments be applied to such amortization payments in order of maturity. As of June 30, 2023,March 31, 2024, the remaining mandatory quarterly amortization payments for the September 2028 Term Facility were $94$21 million through March 2027,June 2028, with the remaining term loan balance being due in May 2027.September 2028.
Senior Secured Notes
On September 29, 2023, Bausch + Lomb issued $1,400 million aggregate principal amount of 8.375% Senior Secured Notes due October 2028 (the "October 2028 Secured Notes"). A portion of the proceeds from the October 2028 Secured Notes, along with the proceeds of September 2028 Term Facility, were used to finance the $1,750 million upfront payment related to the XIIDRA Acquisition (as discussed further in Note 5, “ACQUISITIONS AND LICENSING AGREEMENTS”) and related acquisition-related transaction and financing costs. The October 2028 Secured Notes accrue interest at a rate of 8.375% per year, payable semi-annually in arrears on each April 1 and October 1, commencing on April 1, 2024.
The October 2028 Secured Notes are guaranteed by each of the Company’s subsidiaries that is a guarantor under the Amended Credit Agreement (the “Note Guarantors”). The October 2028 Secured Notes and the guarantees related thereto are senior obligations and are secured, subject to permitted liens and certain other exceptions, by the same first priority liens that secure the Company’s obligations under the Amended Credit Agreement under the terms of the indenture governing the October 2028 Secured Notes.
The October 2028 Secured Notes and the guarantees related thereto rank equally in right of repayment with all of the Company’s and Note Guarantors’ respective existing and future unsubordinated indebtedness and senior to the Company’s and Note Guarantors’ respective future subordinated indebtedness. The October 2028 Secured Notes and the guarantees related thereto are effectively pari passu with the Company’s and the Note Guarantors’ respective existing and future indebtedness secured by a first priority lien on the collateral securing the October 2028 Secured Notes and effectively senior to the Company’s and the Note Guarantors’ respective existing and future indebtedness that is unsecured, or that is secured by junior liens, in each case to the extent of the value of the collateral. In addition, the October 2028 Secured Notes are structurally subordinated to: (i) all liabilities of any of the Company’s subsidiaries that do not guarantee the October 2028 Secured Notes and (ii) any of the Company’s debt that is secured by assets that are not collateral.
Upon the occurrence of a change in control (as defined in the indenture governing the October 2028 Secured Notes), unless the Company has exercised its right to redeem all of the notes of a series, holders of the October 2028 Secured Notes may require the Company to repurchase such holders' notes, in whole or in part, at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, but not including, the date of purchase.
The October 2028 Secured Notes are redeemable at the option of the Company, in whole or in part, at any time on or after October 1, 2025, at the redemption prices set forth in the indenture. Prior to October 1, 2025, the Company may redeem the October 2028 Secured Notes in whole or in part at a redemption price equal to the principal amount of the Notes redeemed plus a make-whole premium. Prior to October 1, 2025, the Company may on any one or more occasions redeem up to 40% of the aggregate principal amount of the October 2028 Secured Notes at a redemption price of 108.375% of the principal amount thereof, redeemed plus accrued and unpaid interest to, but not including, the date of redemption with the proceeds of one of more equity offerings.
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Weighted Average Stated Rate of Interest
The weighted average stated rate of interest for the Company’s outstanding debt obligations as of June 30, 2023March 31, 2024 and December 31, 20222023 was 8.51%8.62% and 7.84%8.65%, respectively.
Maturities and Mandatory Payments
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Maturities and mandatory payments of debt obligations for the remainder of 2024, five succeeding years ending December 31 and thereafter are as follows:

(in millions)
Remainder of 2024$23 
202530 
202630 
20272,692 
20281,879 
2029— 
Thereafter— 
Total gross maturities4,654 
Unamortized discounts(70)
Total long-term debt and other$4,584 
Covenant Compliance
The Credit Facilities contain customary affirmative and negative covenants and specified events of default. These affirmative and negative covenants include, among other things, and subject to certain qualifications and exceptions, covenants that restrict Bausch + Lomb’s ability and the ability of its subsidiaries to: incur or guarantee additional indebtedness; create or permit liens on assets; pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness; make certain investments and other restricted payments; engage in mergers, acquisitions, consolidations and amalgamations; transfer and sell certain assets; and engage in transactions with affiliates. The Revolving Credit Facility also contains financial covenants 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. The indenture governing the October 2028 Secured Notes also contains negative covenants and events of default that are similar to those contained in the Credit Facilities.
As of June 30, 2023,March 31, 2024, the Company was in compliance with its financial covenantcovenants 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,Condensed Consolidated Financial Statements, expects to remain in compliance with its financial covenantcovenants 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.
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® and certain ophthalmology assets, and intends to finance the $1,750 million up-front cash payment with new debt prior to the closing of this transaction.
11.SHARE-BASED COMPENSATION
BHC Long-term Incentive Program
Prior to May 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 Corporation Omnibus Incentive Plan
Effective May 5, 2022, Bausch + Lomb established the Bausch + Lomb Corporation 2022 Omnibus Incentive Plan (as amended and restated by the 2023 Plan Amendment (as described below), the “Plan”). A total of 28,000,000 common shares of Bausch + Lomb 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“2023 Plan Amendment”). At the Company’s upcoming annual general meeting (currently scheduled to be held on May 29, 2024), Bausch + Lomb’s shareholders are being asked to approve a
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further amendment and restatement of the Plan to increase the number of shares authorized for issuance thereunder by an additional 14,000,000 common shares.
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.
Approximately 18,600,0006,800,000 common shares were available for future grants as of June 30, 2023.March 31, 2024. Bausch + Lomb uses reserved and unissued common shares to satisfy its obligations under its share-based compensation plans.
The Talent and Compensation Committee of the Board of Directors approved a Performance Share Unit (“PSU”) award for a limited number of key senior leaders (the “Executives”) as of February 28, 2024, including each of the Company's current named executive officers (Brent Saunders, Sam Eldessouky, Bob Bailey, Yehia Hashad and Andrew Stewart) whose compensation is required to be disclosed pursuant to SEC rules. This PSU award is designed to reward the Executives for achieving significant outperformance of performance goals (the "OPG PSU") that the Company hasbelieves would ultimately deliver substantial value to the Company's shareholders if achieved.
The OPG PSUs may be earned between 0% and 300% based on the level of achievement of: (i) 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 optionsmetric (measured for fiscal year 2026) 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
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appreciation conditions, including absolute and(ii) a relative total shareholder return (“TSR”) (the “TSR PSUs”) and (ii) attainmentmetric measured over the three-year period ending December 31, 2026. In the event that the Company’s absolute TSR during such period is negative, then the maximum payout of certain performance targetsthe PSU award will be capped at 50%. Any PSUs that are basedearned will vest on February 28, 2027, subject generally to the Company’s Organic Revenue Growth (the “Organic Revenue Growth PSUs”). IfExecutive’s continued employment through such date, except in limited circumstances set forth in 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.applicable award agreement.
The fair value of each TSRthe OPG 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 PSUsOPG PSU in each reporting period reflects the Company’s latest estimateprobability of Organic Revenue Growththe Company achieving certain revenue targets in determining the number of PSUs that are expected to vest. If the Organic Revenue GrowthOPG PSUs do not ultimately vest due to the Organic Revenue Growthrevenue 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 six months ended June 30,March 31, 2024 and 2023 and 2022 were as follows:
Three Months Ended June 30,Six Months Ended June 30,
(in millions)2023202220232022
Stock options$2 $1 $6 $2 
PSUs/RSUs16 10 36 19 
Share-based compensation expense$18 $11 $42 $21 
Research and development expenses$3 $2 $4 $4 
Selling, general and administrative expenses15 9 38 17 
Share-based compensation expense$18 $11 $42 $21 
In addition to share-based compensation expense attributable to employees that are specific to Bausch + Lomb's business, share-based compensation expense also includes $0 and $6 million for the six months ended June 30, 2023 and 2022, respectively, of allocated charges from BHC, based on revenues, related to BHC employees providing corporate services to Bausch + Lomb.
Three Months Ended March 31,
(in millions)20242023
Stock options$2 $4 
PSUs/RSUs17 20 
Share-based compensation expense$19 $24 
Research and development expenses$1 $1 
Selling, general and administrative expenses18 23 
Share-based compensation expense$19 $24 
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Share-based awards granted for the sixthree months ended June 30,March 31, 2024 and 2023 and 2022 consist of:
Six Months Ended
June 30,
20232022
Three Months Ended
March 31,		Three Months Ended
March 31,
202420242023
Stock optionsStock options
Granted
Granted
GrantedGranted3,130,000 6,455,000 
Weighted-average exercise priceWeighted-average exercise price$18.16 $18.00 
Weighted-average grant date fair valueWeighted-average grant date fair value$5.40 $4.55 
RSUsRSUs
GrantedGranted2,888,000 3,207,000 
Granted
Granted
Weighted-average grant date fair valueWeighted-average grant date fair value$17.97 $17.92 
TSR performance-based RSUsTSR performance-based RSUs
Granted
Granted
GrantedGranted1,175,000 — 
Weighted-average grant date fair valueWeighted-average grant date fair value$27.65 $— 
Organic Revenue Growth performance-based RSUsOrganic Revenue Growth performance-based RSUs
GrantedGranted142,000 — 
Granted
Granted
Weighted-average grant date fair valueWeighted-average grant date fair value$17.96 $— 
OPG performance-based RSUs
Granted
Granted
Granted
Weighted-average grant date fair value
As of June 30, 2023,March 31, 2024, the remaining unrecognized compensation expenses related to all outstanding non-vested stock options, time-based RSUs and performance-based RSUs amounted to $111$176 million, which will be amortized over a weighted-average period of 2.302.37 years.
12.ACCUMULATED OTHER COMPREHENSIVE LOSS
Accumulated other comprehensive loss as of June 30, 2023 and as of December 31, 2022 consistconsists of:
(in millions)(in millions)June 30,
2023		December 31,
2022		(in millions)March 31,
2024		December 31,
2023
Foreign currency translation adjustmentForeign currency translation adjustment$(1,219)$(1,231)
Pension adjustment, net of taxPension adjustment, net of tax(28)(27)
$(1,247)$(1,258)
$
Income taxes are not provided for foreign currency translation adjustments arising on the translation of Bausch + Lomb’s operations having a functional currency other than the U.S. dollar, except to the extent of translation adjustments related to Bausch + Lomb’s retained earnings for foreign jurisdictions in which Bausch + Lomb is not considered to be permanently reinvested.
13.RESEARCH AND DEVELOPMENT
Included in Research and development are costs related to product development and quality assurance programs. Quality assurance are the costs incurred to meet evolving customer and regulatory standards. Research and development costs for the three and six months ended June 30,March 31, 2024 and 2023 and 2022 consist of:
Three Months Ended June 30,Six Months Ended June 30,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
(in millions)
(in millions)
(in millions)(in millions)2023202220232022
Product related research and developmentProduct related research and development$79 $69 $151 $141 
Product related research and development
Product related research and development
Quality assurance
Quality assurance
Quality assuranceQuality assurance6 6 11 11 
Research and developmentResearch and development$85 $75 $162 $152 
Research and development
Research and development
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14.OTHER EXPENSE, (INCOME), NET
Other expense, (income), net for the three and six months ended June 30,March 31, 2024 and 2023 and 2022 consists of:
Three Months Ended June 30,Six Months Ended June 30,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
(in millions)
(in millions)
(in millions)(in millions)2023202220232022
Restructuring, integration and separation costsRestructuring, integration and separation costs$14 $4 $22 $6 
Restructuring, integration and separation costs
Restructuring, integration and separation costs
Gain on sale of assets
Gain on sale of assets
Gain on sale of assets
Litigation and other matters
Litigation and other matters
Litigation and other matters
Acquisition-related costs
Acquisition-related costs
Acquisition-related costsAcquisition-related costs2 — 3 — 
Acquisition-related contingent considerationAcquisition-related contingent consideration1 (5)1 (5)
Other expense (income), net$17 $(1)$26 $1 
Acquisition-related contingent consideration
Acquisition-related contingent consideration
Other expense, net
Other expense, net
Other expense, net
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 reducing headcount and other cost reduction initiatives. Restructuring and integration costs for the sixthree months ended June 30,March 31, 2024 and 2023 and 2022 were $22$11 million and $3$8 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.
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. The Company’s estimated annual effective income tax rate may be revised, if necessary, in each interim period.
Provision for income taxes for the sixthree months ended June 30,March 31, 2024 was $73 million. The difference between the statutory tax rate and the effective tax rate was primarily attributable to jurisdictional mix of earnings and the discrete tax effects of: (a) the filing of certain tax returns and (b) a change in the deduction for stock compensation. Provision for income taxes for the three months ended March 31, 2023 was $43$33 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 as well as the impactfiling of a change incertain tax attributes,returns and a change in the deduction for stock compensation. The Provision for income taxes for the three and six months ended 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
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was $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 $132$161 million and $54$150 million as of June 30, 2023March 31, 2024 and December 31, 2022,2023, respectively. The increase is related to the valuation allowance established againstlosses incurred during the prior deferred tax assetsquarter in Canada as well as certain attributesjurisdictions for which the Company acquired during the year that are expected to expire prior to their utilization.has established a full valuation allowance.
The Company’s U.S. affiliates remain under examination for various state tax audits in the U.S. for years 2015 through 2022.
The Company’s subsidiaries in Germany are under audit for tax years 2014 through 2019. At this time,2022. During the three months ended September 30, 2023, the Company does not expectreceived a preliminary assessment from the German taxing authority that proposed adjustments,would disallow certain transfer pricing adjustments. The Company intends to contest this alleged tax deficiency through the appropriate appeals process, and if necessary, intends to continue to contest any would be materialalleged tax deficiency through appropriate litigation. Accordingly, no income tax provision has been recorded as of March 31, 2024. The Company continues to the Company’s Consolidated Financial Statements. Anybelieve any liability to arise from this audit would be indemnified by BHC pursuant to the Tax Matters Agreement.
As of June 30, 2023March 31, 2024 and December 31, 2022,2023, the Company had $70$67 million and $70$68 million of unrecognized tax benefits, which included $10$9 million and $9 million of interest and penalties, respectively. Of the total unrecognized tax benefits as of June 30, 2023, $62March 31, 2024, $59 million would reduce the Company’s effective tax rate, if recognized. The Company believes that it is reasonably possible that the total amount of unrecognized tax benefits at June 30, 2023March 31, 2024 could decrease by an immaterial amount$2 million in the next 12 months as a result of the resolution of certain tax audits and other events.
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16.EARNINGSLOSS PER SHARE
On April 28, 2022, Bausch + Lomb effected a share consolidation as a result of which it had 350,000,000 issued and outstanding common shares. These common shares are treated as issued and outstanding at January 1, 2022 for purposes of calculating Basic and diluted (loss) income per share attributable to Bausch + Lomb Corporation.
(Loss) incomeLoss per share attributable to Bausch + Lomb Corporation for the three and six months ended June 30,March 31, 2024 and 2023 and 2022 were calculated as follows:
Three Months Ended June 30,Six Months Ended June 30,
(in millions, except per share amounts)2023202220232022
Net (loss) income attributable to Bausch + Lomb Corporation$(32)$5 $(122)$25 
Basic and Diluted weighted-average common shares outstanding350.5 350.0 350.3 350.0 
Basic and Diluted (Loss) Earnings per share attributable to Bausch + Lomb Corporation$(0.09)$0.01 $(0.35)$0.07 
Three Months Ended March 31,
(in millions, except per share amounts)20242023
Net loss attributable to Bausch + Lomb Corporation$(167)$(90)
Basic weighted-average common shares outstanding351.1 350.0 
Diluted effect of stock options and RSUs— — 
Diluted weighted-average common shares outstanding351.1 350.0 
Basic and Diluted Loss per share attributable to Bausch + Lomb Corporation$(0.48)$(0.26)
During the three and six months ended June 30,March 31, 2024 and 2023, all potential common shares issuable for RSUs, performance-based RSUs and stock options 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 on the weighted-average number of common shares outstanding would have been approximately 1,623,0001,600,000 and 1,452,0001,281,000 common shares for the three and six months ended June 30,March 31, 2024 and 2023, respectively. Dilutive equity instruments or equity awards outstanding for
During the 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 June 30, 2023,March 31, 2024, RSUs, performance-based RSUs and stock options to purchase approximately 3,199,000 and 4,448,00011,181,000 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 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,March 31, 2024, an additional 5,483,0004,000,000 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 892,0002,888,000 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.
During the three months ended March 31, 2023, RSUs, performance-based RSUs and stock options to purchase approximately 6,990,000 common shares 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 months ended March 31, 2023, an additional 5,690,000 IPO Founders Grants in the form of stock options and RSUs, respectively, which were granted to certain eligible recipients in connection with the B+L IPO, and an additional 142,000 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.
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
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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.
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 June 30, 2023,March 31, 2024, Bausch + Lomb’s Condensed Consolidated Balance Sheets includes accrued current loss contingencies of $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., 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
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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 beenare 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 beare consolidated into the MDL. There are also additional, separate complaints which have beenare consolidated in the same MDL that do not name the Company or any of its subsidiaries as a defendant. State of Connecticut, et al. v. Sandoz, Inc., et al., C.A. No. 2:20-03539 (D. CT, C.A. No. 3:20-00802), in which Bausch Health US and Bausch Health Americas are defendants has been remanded to and is pending in the United States District Court for the District of Connecticut. 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 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 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 sham litigation, that certain B&L Inc. advertising is false and violates antitrust laws and 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. On November 21, 2022, B&L Inc.’s motion was granted, and the action was dismissed for lack of personal jurisdiction. ZeaVision has appealed this decision to the Eighth Circuit Court of Appeals. ZeaVision filed 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 the First Amended Complaint. ZeaVision filed its Reply brief on April 27,
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2023. The matter is now fully briefed on appeal. The Eighth Circuit has indicated that the case 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 case vigorously.
Product Liability
Shower to Shower® Products Liability Litigation
Since 2016, BHC 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)twenty-seven (27) 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)Twenty-six (26) 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 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.
In October 2021, Johnson & Johnson, through one or more subsidiaries has purported to have completedcomplete 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 enteredCarolina, which in November 2021 the case was transferred to the United States District Court for the District of New Jersey (the "Bankruptcy Court"“Bankruptcy Court”),. The first bankruptcy case was dismissed on April 4, 2023, after a decision by the Third Circuit Court of Appeals, and LTL re-filed a new chapter 11 case in the Bankruptcy Court on the same day. Several motions to dismiss were again filed, and on August 11, 2023, the Bankruptcy
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Court dismissed the second chapter 11 case. On August 24, 2023, LTL and certain supporting creditors and tort claimants filed notices of appeal of the dismissal order. On October 20, 2023, the Third Circuit accepted the appeal, which remains pending. During the pendency of LTL’s bankruptcy cases, the Bankruptcy Court extended a preliminary injunction that had stayed substantially all cases subject to the indemnification agreement related to Johnson & Johnson’s talc liability, werewhich injunction was terminated in connection with the bankruptcy case dismissal.
After the dismissal of the Chapter 11 case, BHC’s and Bausch + Lomb’s position vis a vis Johnson & Johnson returned to the status quo prior to the filing. The litigation against BHC, Bausch + Lomb and other defendants is no longer stayed, and LTL and Johnson & Johnson continues to have indemnification obligations running to BHC and its affiliates, including Bausch + Lomb, for a period of sixty (60) days pursuantShower to a preliminary injunction. Shower® related product liability litigation.
Notwithstanding the divisional merger and LTL’s bankruptcy case,cases, 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, which it later extended indefinitely. The order denying the motions to dismiss and the order extending the preliminary injunction were subject to appeal and the Bankruptcy Court certified their appeals directly to the United States Court of Appeals for the Third Circuit. On May 11, 2022, the Third Circuit granted authorization for the parties to proceed with their direct appeals. Oral argument before the Third Circuit was held on September 19, 2022. On January 30, 2023, a unanimous three-judge Third Circuit Court of Appeals panel issued its decision directing the Bankruptcy Court to dismiss LTL’s bankruptcy case, concluding that LTL was not in financial distress and could not file a bankruptcy case in good faith. LTL requested a rehearing, and on March 22, 2023, the Third Circuit denied LTL’s rehearing request. Thereafter LTL moved for a stay of the mandate of the Third Circuit’s dismissal decision while LTL sought review by the Supreme Court. On March 31, 2023, the Third Circuit denied LTL’s stay motion. At that juncture, the Bankruptcy Court determined it appropriate to discontinue the proceedings pending there, and on April 4, 2023, entered orders dismissing the bankruptcy case and related adversary proceedings and terminating the preliminary injunction.
However, on April 4, 2023, LTL re-filed for Chapter 11 bankruptcy protection in the Bankruptcy Court and again commenced an adversary proceeding seeking a preliminary injunction enjoining substantially all cases subject to the
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indemnification agreement. The Bankruptcy Court granted a temporary restraining order enjoining litigation against the “Protected Parties”, including BHC and Bausch + Lomb. The Bankruptcy Court held a hearing on April 18, 2023, to consider the preliminary injunction, and on April 20, 2023, the Bankruptcy Court ordered a preliminary injunction solely on a limited basis to enjoin the commencement or continuation of any trial against any Protected Party (including the Bausch entities), which the Bankruptcy Court extended to August 22, 2023. The injunction did not enjoin the commencement of a new suit or any discovery or pre-trial activity in pending suits. The Bankruptcy Court denied the talc claimants’ motion to have the injunction decision certified for direct appeal to the Third Circuit. On or around April 24, 2023, multiple motions to dismiss the newly filed Chapter 11 case were filed, and a hearing on the motions to dismiss was held the week of June 27, 2023. On July 28, 2023, the Bankruptcy Court granted the motions to dismiss LTL’s bankruptcy case and directed the parties to prepare and propose a form of Order consistent with the Court’s dismissal.
If the bankruptcy case is ultimately dismissed, BHC’s and Bausch + Lomb’s position vis a vis Johnson & Johnson would return to the status quo prior to the filing. The litigation against BHC, Bausch + Lomb and 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 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 action seeks a declaratory judgment that alleged transfers of certain BHC assets to Bausch + Lomb would constitute a voidable transfer under the New Jersey Voidable Transactions Act and that Bausch + Lomb be liable for damages, if any, awarded against BHC in the individual opt-out actions. The declaratory judgment action also alleges that the potential future separation of 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 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. On April 29, 2022, Plaintiffs filed a motion to remand. On November 29, 2022, the District Court granted Plaintiffs’ remand motion and the case was remanded to the New Jersey Superior Court Chancery Division. On December 8, 2022, Plaintiffs filed a proposed Order to Show Cause and motion for a preliminary injunction and sought interim relief including expedited discovery. On December 13, 2022, the Court denied Plaintiffs’ proposed Order to Show Cause and stayed discovery pending the resolution of 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.
Both BHC and Bausch + Lomb dispute the claims in this declaratory judgment action and intend to vigorously defend this matter.
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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. BHCBausch Health US filed a motion to dismiss Plaintiffs’ claims, which was granted in April 2020 without prejudice. In May 2020, Plaintiffs filed an amended complaint and in June 2020, filed a motion for leave to amend the complaint further, which was granted. In August 2020, Plaintiffs filed the Fifth Amended Complaint. On January 22, 2021, the Court granted the motion to dismiss with prejudice. On February 19, 2021, Plaintiffs filed a Notice of Appeal with the Ninth Circuit Court of Appeals. On July 1, 2021, Appellants (Plaintiffs) filed their opening brief; Appellees’ response briefs were filed October 8, 2021. This matter was stayed by the Ninth Circuit on December 7, 2021, due to the preliminary injunction entered by the Bankruptcy Court in the LTL bankruptcy proceeding. This stay included Appellants’ reply brief deadline, which was previously due to be filed on or before December 2, 2021. On March 9, 2022, the Ninth Circuit issued an order extending the stay through July 29, 2022. On July 29, 2022, Johnson & Johnson filed a status report in the Gutierrez appeal, outlining the developments since the last status report and the imposition of the stay. Johnson & Johnson noted that following a July 26, 2022, hearing, the Bankruptcy Court left the preliminary injunction in place, and asked the Ninth Circuit to continue to stay this action while the bankruptcy preliminary injunction remained in place. On January 20, 2023, the Ninth Circuit extended the stay until February 17, 2023. On February 17, 2023, Johnson & Johnson requested that the court afford it 60 days – until April 18, 2023, or seven (7) days following any lifting of the LTL Bankruptcy Court’s preliminary injunction, whichever comes earliest – to provide an additional status report about the bankruptcy proceeding and the Third Circuit dismissal for which 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 of the appeal remain in place until May 10, 2023, which was granted. Following the entry of a preliminary injunction applicable to this case, which was extended until August 26, 2023, the Ninth Circuit extended the stay to June 15, 2023. On June 22, 2023, J&J/Johnson & Johnson/LTL filed a status report requesting the stay be extended to August 26, 2023, consistent with the extension of the preliminary injunction by the bankruptcy court. TheOn August 15, 2023, Johnson & Johnson filed a supplemental status report notifying the Ninth Circuit has not yet actedthat the second bankruptcy proceeding was dismissed on August 11, 2023 so the stay could be lifted and briefing could proceed to conclusion and setting of oral argument. On September 13, 2023, the Ninth Circuit lifted the stay. On April 8, 2024, the Ninth Circuit heard oral argument on Plaintiffs' appeal of the lower court's dismissal of the case with prejudice, and, on April 29, 2024, the Ninth Circuit issued a memorandum disposition that request.
affirmed the dismissal of the case in full. Bausch Health US disputes the claims in this lawsuit and will defend it vigorously.
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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 was scheduled to begin on May 30, 2023, until the case was stayed by an interlocutory appeal to the New Mexico Supreme Court by Johnson & Johnson.
On July 14, 2022, LTL filed an adversary proceeding in the Bankruptcy Court (Case No. 21-30589, Adv. Pro. No. 22-01231) against the State of New Mexico ex rel. Hector H. Balderas, Attorney General, and a motion seekingobtained an injunction from the Bankruptcy Court barring the New Mexico Attorney General from continuing to prosecute the action while the bankruptcy case iswas pending. A hearing was held on September 14, 2022, and, on October 4, 2022,Because the Bankruptcy Court entered an order granting the injunction. The New Mexicohas ultimately dismissed both LTL’s first and Mississippi AGs appealed the order granting the preliminary injunction and sought direct appealsecond bankruptcy cases, this suit has returned to the Third Circuit. The Bankruptcy Court certified the matter for direct appealits status quo prior 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 does not
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currently include this lawsuit. The Bankruptcy Court did not grant the broad preliminary injunction requested and, instead, issued a preliminary injunction solely on a limited basis to enjoin the commencement or continuation of any trial against any Protected Party. However, this action remains stayed due to a separate September 13, 2022, stay order from the New Mexico Supreme Court in a pending appeal from a Motion to Compel filed by Johnson & Johnson. Accordingly, at this time this matter remains stayed pending the outcome of that appeal.filing.
BHC and Bausch Health US dispute the claims against them, and this lawsuit will be defended vigorously.
California Consumer Protection Action
On October 31, 2023, Plaintiff County of Los Angeles filed an action on behalf of the state of California against the Company and Johnson & Johnson, seeking injunctive relief, restitution and damages in California state court (People of the State of California, by and through County of Los Angeles v. Johnson & Johnson, et al., Case No. 23STCV27015). The lawsuit asserts claims for purported violations of the California False Advertising Law, Unfair Competition Law, and public nuisance claims, against multiple manufacturers of talcum powder products, including Shower to Shower®, that the plaintiffs allege caused or contributed to development of ovarian cancer and mesothelioma in residents of California. The lawsuit seeks injunctive relief, restitution, statutory penalties and damages. Pursuant to an agreed stipulation, responses to the Complaint will be due May 13, 2024. The Company and its affiliates dispute the claims against them, and this lawsuit will be defended vigorously.
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 action seeks a declaratory judgment that alleged transfers of certain BHC assets to Bausch + Lomb would constitute a voidable transfer under the New Jersey Voidable Transactions Act and that Bausch + Lomb would be liable for damages, if any, awarded against BHC in the individual opt-out actions. The declaratory judgment action also alleges that the potential future separation of 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 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. On April 29, 2022, Plaintiffs filed a motion to remand. On November 29, 2022, the District Court granted Plaintiffs’ remand motion and the case was remanded to the New Jersey Superior Court Chancery Division. On December 8, 2022, Plaintiffs filed a proposed Order to Show Cause and motion for a preliminary injunction and sought interim relief including expedited discovery. On December 13, 2022, the Court denied Plaintiffs’ proposed Order to Show Cause and stayed discovery pending the resolution of 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 potential future distribution referenced above under certain circumstances. On December 22, 2022, Plaintiffs
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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. Discovery is ongoing.
Both BHC and Bausch + Lomb dispute the claims in this declaratory judgment action and intend to vigorously defend this matter.
Doctors Allergy Formula Lawsuit
In April 2018, Doctors Allergy Formula, LLC (“Doctors Allergy”), filed a lawsuit against Bausch Health Americas in the Supreme Court of the State of New York, County of New York, asserting breach of contract and related claims under a 2015 Asset Purchase Agreement, which purports to include milestone payments that Doctors Allergy alleges should have been paid by Bausch Health Americas. Doctors Allergy claims its damages are not less than $23 million. Bausch Health Americas has asserted counterclaims against Doctors Allergy. Bausch Health Americas filed a motion seeking an order granting Bausch Health Americas' summary judgment on its counterclaims against Plaintiff and dismissing Plaintiff’s claims against Bausch Health Americas. The motion was fully briefed as of May 2021.The Court held a hearing on the motion on January 25, 2022. On May 12, 2023, the Court issued a Decision and Order denying Bausch Health Americas’ motion. On June 14, 2023, Bausch Health Americas filed a Notice of Appeal as to the Decision and Order.Order to the Appellate Division of the New York Supreme Court, First Department. On March 13, 2024, Bausch Health Americas filed its appellant motion and brief with the Appellate Division of the New York Supreme Court, First Department, appealing the trial court’s denial of Bausch Health America’s motion for summary judgment. Doctors Allergy is due to file its answering brief on or before June 28, 2024, and Bausch Health Americas is due to file its reply brief on or before August 16, 2024. The Appellate Division has not set a date for oral argument. 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. Bausch & Lomb Incorporated (“B&L Inc.”) has filed patent infringement proceedings against 19 named defendants in 16 proceedings claiming infringement of these patents and, in certain circumstances, related unfair competition and false advertising causes of action. TwelveThirteen of these proceedings were subsequently settled; two resulted in a default. As of the date of this filing, there are twois one ongoing actions: (1) Bausch & Lomb Inc. & PF Consumer Healthcare 1 LLC v. ZeaVision LLC, C.A. No. 4:22-cv-00914-AGF (E.D. Mo.); and (2)action: Bausch & Lomb Inc. & PF Consumer Healthcare 1 LLC v. SBH Holdings LLC, C.A. No. 20-cv-01463-GBW-CJB (D. Del.). Bausch + Lomb remains confident in the strength of these patents and B&L Inc. will continue to vigorously pursue these mattersthis matter and defend its intellectual property.
Patent Litigation against Certain Ocuvite® and PreserVision®
On June 22, 2021, ZeaVision filed a complaint for patent infringement against certain of the Ocuvite® and PreserVision® products in the Eastern District of Missouri (Case No. 4:21-cv-00739-RWS). On June 29, 2021, ZeaVision amended its complaint to assert a second patent against certain of the Ocuvite® and PreserVision® products. On November 16, 2021, ZeaVision filed an additional complaint for patent infringement to assert a third patent against certain of the PreserVision® products (Case No. 4:21-cv-01352-RWS). On March 1, 2022, the cases were consolidated. On March 10, 2022, the court granted Bausch + Lomb’s motion to stay all proceedings pending inter partes review. On July 8, 2022, ZeaVision filed a motion to partially lift the stay to allow Case No. 4:21-cv-00739-RWS to proceed, and this motion was denied. On April 18, 2023, the Court ordered all proceedings stayed pending inter partes review of the patents-in-suit. The Company disputes the claims and intends to vigorously defend this matter.
Lumify® Paragraph IV Proceedings - DRL
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
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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 (the “PTAB”) 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 the appeal is ongoing. Additionally, an Furthermore, twoadditional patent (US.patents (U.S. Patent No. 11,596,600) hasNos. 11,596,600 and 11,833,245) have issued and been listed in the Orange Book as related to Lumify®, and lawsuits have been. Lawsuits alleging infringement of these patents were filed against Slayback and its licensee, Dr. Reddy’s Laboratories S.A. and Dr. Reddy’s Laboratories, Inc. (collectively, “DRL”). On December 15, 2023, B&L Inc., Bausch + Lomb Ireland Limited, and Lupin, respectively. Those cases have been consolidatedEye Therapies filed a Motion for a Preliminary Injunction requesting the court to enjoin any infringing activities by DRL and a hearing was held in January. The parties are awaiting a decision.
Additionally, on December 18, 2023, B&L Inc., Bausch + Lomb Ireland Limited, and Eye Therapies amended its complaint to add claims for copyright infringement, as well as claims under the Lanham Act, including trademark and trade dress
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infringement. DRL subsequently petitioned for inter partes review (“IPR”) of U.S. Patent Nos. 11,596,600 and 11,833,245 and the PTAB has not yet issued a decision as to institution of either IPR.
The lawsuit against DRL is 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® and Lotemax® SM products, the Company has commenced ongoing infringement proceedings against a potential generic competitor in the U.S.
18.SEGMENT INFORMATION
Reportable Segments
The Company’s CEO, who is the Company’s Chief Operating Decision Maker, manages the business through operating and reportable segments consistent with how the Company’s CEO: (i) assesses operating performance on a regular basis, (ii) makes resource allocation decisions and (iii) designates responsibilities of his direct reports. 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) Pharmaceuticals and (iii) Surgical.
•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, dry eye and dry eye.redness relief, and eye vitamin and mineral supplements.
•The 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, eye inflammation, ocular hypertension, dry eyes and retinal diseases.
•The Surgical segment consists of sales of medical devicesdevice equipment, consumables and technologies for the treatment of cataracts, cornea,corneal, vitreous and retinal eye conditions, andwhich includes 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 aredevices 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.for cataract surgery.
Segment profit is based on operating income after the elimination of intercompany transactions. Certain costs, such as Amortization of intangible assets, and Other expense (income), net, are not included in the measure of segment profit, as management excludes these items in assessing segment financial performance.
Corporate includes the finance, treasury, certain research and development programs, tax and legal operations of Bausch + Lomb’s businesses and incurs certain expenses, gains and losses related to the overall management of Bausch + Lomb, which are not allocated to the other business segments. In assessing segment performance and managing operations, management does not review segment assets. Furthermore, a portion of share-based compensation is considered a corporate cost, since the amount of such expense depends on company-wide performance rather than the operating performance of any single segment.
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Segment Revenues and Profit
Segment revenues and profits for the three and six months ended June 30,March 31, 2024 and 2023 and 2022 were as follows:
Three Months Ended June 30,Six Months Ended June 30,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
(in millions)
(in millions)
(in millions)(in millions)2023202220232022
Revenues:Revenues:  
Revenues:
Revenues:
Vision Care
Vision Care
Vision CareVision Care$646 $588 $1,233 $1,148 
PharmaceuticalsPharmaceuticals194 169 355 324 
Pharmaceuticals
Pharmaceuticals
Surgical
Surgical
SurgicalSurgical195 184 378 358 
Total revenuesTotal revenues$1,035 $941 $1,966 $1,830 
Total revenues
Total revenues
Segment profit:
Segment profit:
Segment profit:Segment profit:  
Vision CareVision Care$167 $145 $321 $304 
Vision Care
Vision Care
Pharmaceuticals
Pharmaceuticals
PharmaceuticalsPharmaceuticals68 52 114 92 
SurgicalSurgical9 11 20 26 
Surgical
Surgical
Total segment profit
Total segment profit
Total segment profitTotal segment profit244 208 455 422 
CorporateCorporate(128)(89)(275)(182)
Corporate
Corporate
Amortization of intangible assets
Amortization of intangible assets
Amortization of intangible assetsAmortization of intangible assets(56)(64)(113)(129)
Other expense, netOther expense, net(17)1 (26)(1)
Operating income43 56 41 110 
Other expense, net
Other expense, net
Operating income (loss)
Operating income (loss)
Operating income (loss)
Interest incomeInterest income5 1 8 1 
Interest expense (Note 4)(58)(44)(108)(64)
Interest income
Interest income
Interest expense
Interest expense
Interest expense
Foreign exchange and otherForeign exchange and other(9)14 (15)9 
(Loss) income before provision for income taxes$(19)$27 $(74)$56 
Foreign exchange and other
Foreign exchange and other
Loss before provision for income taxes
Loss before provision for income taxes
Loss before provision for income taxes
Revenues by Segment and by Product Category
Revenues by segment and product category were as follows:
Vision CarePharmaceuticalsSurgicalTotal
Three Months Ended June 30,
Vision CareVision CarePharmaceuticalsSurgicalTotal
Three Months Ended March 31,Three Months Ended March 31,
(in millions)(in millions)20232022202320222023202220232022(in millions)20242023202420232024202320242023
PharmaceuticalsPharmaceuticals$1 $1 $133 $113 $— $— $134 $114 
DevicesDevices215 213 — — 193 180 408 393 
OTCOTC421 366 — — — — 421 366 
Branded and Other GenericsBranded and Other Generics7 7 61 55 — — 68 62 
Other revenuesOther revenues2 1 — 1 2 4 4 6 
$
$646 $588 $194 $169 $195 $184 $1,035 $941 
Six Months Ended June 30,
20232022202320222023202220232022
Pharmaceuticals$2 $2 $240 $219 $— $— $242 $221 
Devices439 427 — — 375 352 814 779 
OTC774 702 — — — — 774 702 
Branded and Other Generics14 13 115 103 — — 129 116 
Other revenues4 4 — 2 3 6 7 12 
$1,233 $1,148 $355 $324 $378 $358 $1,966 $1,830 
Certain reclassifications to product categories have been madeThe top ten products/franchises represented 55% and are reflected in54% of total revenues for the table above. These reclassifications are not material.three months ended March 31, 2024 and 2023, respectively.
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The top ten products/franchises represented 57% and 58% of total revenues for the six months ended June 30, 2023 and 2022, respectively.
Geographic Information
Revenues are attributed to a geographic region based on the location of the customer and were as follows:
Three Months Ended
June 30,		Six Months Ended
June 30,
Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
(in millions)
(in millions)
(in millions)(in millions)2023202220232022
U.S. and Puerto RicoU.S. and Puerto Rico$466 $430 $870 $816 
U.S. and Puerto Rico
U.S. and Puerto Rico
China
China
ChinaChina89 76 163 158 
FranceFrance62 56 118 111 
France
France
Japan
Japan
JapanJapan46 47 94 97 
GermanyGermany40 33 82 76 
Germany
Germany
United Kingdom
United Kingdom
United KingdomUnited Kingdom29 27 58 54 
CanadaCanada27 24 53 46 
Canada
Canada
RussiaRussia26 30 50 47 
Russia
Russia
Italy
Italy
Italy
SpainSpain24 22 44 41 
Italy22 21 42 41 
Spain
Spain
Mexico
Mexico
MexicoMexico15 14 31 25 
PolandPoland14 12 26 23 
Poland
Poland
South KoreaSouth Korea12 11 23 22 
Australia11 9 21 17 
South Korea
South Korea
OtherOther152 129 291 256 
$1,035 $941 $1,966 $1,830 
Other
Other
$
$
$
Major Customers
NoMajor customers that accounted for 10% or more of total revenues were as follows:
Three Months Ended March 31,
2024
McKesson Corporation11 %
For the three months ended March 31, 2023, no individual customer accounted for 10% or more of total revenues.
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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 August 2, 2023May 1, 2024 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 June 30, 2023March 31, 2024 (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 June 30, 2023March 31, 2024 and for the three and six months ended June 30,March 31, 2024 and 2023 and 2022 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) for interim financial statements, and should be read in conjunction with our Consolidated Financial Statements for the year ended December 31, 2022,2023, which were included in our Annual Report on Form 10-K filed with the SEC and the Canadian Securities Administrators (the “CSA”) on February 22, 202321, 2024 (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 SEDARSEDAR+ at 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, 2023March 31, 2024 and for the three and six months ended June 30, 2023March 31, 2024 and 2022.2023.
OVERVIEW
Bausch + Lomb is a subsidiary of Bausch Health Companies Inc. (“BHC”), with BHC holding (as of July 28, 2023), directly or indirectly, approximately 88.5% of the issueddevelops, manufactures 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 marketmarkets 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 a comprehensive portfolio of approximately 400 products, which includes 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 portfolioBausch + Lomb is a subsidiary of over 400 products is builtBausch Health Companies Inc. (“BHC”), with BHC holding, directly or indirectly, approximately 88.3% of the issued and outstanding common shares of Bausch + Lomb, as of April 24, 2024. On August 6, 2020, BHC, announced its plan to serveseparate our customers acrosseye health business into an independent publicly traded entity, separate from the remainder of BHC (the “Separation”). This resulted in the initial public offering of Bausch + Lomb (the “B+L IPO”), and our 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. The completion of the full spectrumseparation of their eye health needs throughout their lives. Our iconic brandBausch + Lomb from the remainder of BHC (the “Separation”), 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 builtsubject to the achievement of targeted debt leverage ratios and the receipt of applicable shareholder and other necessary approvals and other factors and is subject to various risk factors relating to the Separation. Bausch + Lomb understands that BHC continues to believe that completing the Separation makes strategic sense and that BHC continues to evaluate all relevant factors and considerations related to completing the Separation, including those factors described in BHC’s public filings. For additional information on the deep trust and loyaltyrisks related to the Separation, see Item 1A. “Risk Factors — Risks Relating to the Separation” of our customers established over our 170-year history. We have a significant global research, development, manufacturing and commercial footprint of approximately 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.Annual Report.
Reportable Segments
Our portfolio of products falls into three operating and reportable segments: (i) Vision Care, (ii) 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
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healing, if required. In particular, our Vision Care contact lens portfolio includes our Bausch + Lomb INFUSE® (silicone
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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 include our PreserVision® AREDS 2 formula 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 LUMIFYLumify®, Soothe®, Artelac®, Alaway® and Mioclear™Mioclear® and our Eye Vitaminseye vitamins include PreserVision® and Ocuvite®.
The 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 pharmaceutical brands are VYZULTAMIEBO®, Vyzulta®, Lotemax®, Prolensa® and Minims®. Effective June 30,In addition, during September 2023, the Company renamed its former Ophthalmic Pharmaceuticals segmentacquired XIIDRA® (as further discussed below), which complements and is expected to grow the Pharmaceuticals segment. Aside from the change in name, there were no other changes made to this segment.Company's existing dry eye franchise.
The Surgical Segment—segment— consists of medical device equipment, consumables and technologies for the treatment of cataracts, corneal, vitreous and retinal eye conditions, which includes IOLs and delivery systems, phacoemulsification equipment and other surgical instruments and devices necessary for cataract surgery. Key surgical brands include Akreos®, AMVISC®, IC-8® Apthera™, Crystalens® IOLs, enVista® IOLs, Millennium®, Stellaris Elite® vision enhancement system, Synergetics®, ClearVisc®, StableVisc™, 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 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 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 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. As of July 28, 2023, BHC directly or indirectly held 310,449,643 issued and outstanding common shares of Bausch + Lomb, which represented approximately 88.5% of our common shares.
The completion of the full Separation of Bausch + Lomb is subject to the achievement of targeted debt leverage ratios and the receipt of applicable shareholder and other necessary approvals and other factors, and is subject to various risk factors relating to the 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 Pharmaceuticals Inc.
See Note 2, “SIGNIFICANT ACCOUNTING POLICIES” to ourunaudited interim Condensed Consolidated Financial Statements for additional information.
We believe the Separation presents Bausch + Lomb with a unique opportunity, and provides us operating flexibility and puts us in a strong position to unlock additional value in our eye health business as a separate and dissimilar business from the remainder of BHC’s product portfolios and businesses. As a separate entity, Bausch + Lomb’s management believes that it is positioned to focus on its core businesses to drive additional growth, more effectively allocate capital and better manage our capital needs. Further, the Separation allows us and the market to compare the operating results of our eye health business with other eye health companies. Although management believes these transactions will unlock value for our shareholders, there can be no assurance that the Separation will be consummated, or, even if consummated, that the Separation will be successful in doing so.
For additional information on the risks related to the Separation, see Item 1A. “Risk Factors — Risks Relating to the Separation” of our Annual Report.
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Positioning for Growth
Product Development
We continuously search for new product opportunities through internal development, 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 ofhelping people see better to live better all over the world. We consistently look for key trends in the eye health market to meetchanging doctor, patient and consumer needs and identify areas for investment to expand our market share and maintain ourleading positions across business segments. Our leadership team actively manages our pipeline in order to identify what webelieve are innovative and realizable projects that meet the unmet needs of consumers, patients and eye health professionals andare expected to provide incremental and sustainable revenues and growth into the future. We believe that our current pipelineis strong enough to meet these objectives and provide future sources of revenues, in our core businesses, sufficient enough tosustain our growth and corporate health.
We believe our 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, 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. Certain key near-term pipeline products that have received a significant portion of our R&D investment in current and prior periods are listed below.
•SiHy Daily - A silicone hydrogel daily disposable contact lens designed to provide outstanding comfort and clear vision throughout the day. To date SiHy Daily has been launched in approximately 50 countries, under the brand names INFUSE®, BAUSCH + LOMB ULTRA® ONE DAY and AQUALOX® ONE DAY. We continue to plan to launch our SiHy Daily lenses into additional countries throughout 2023.2024. In addition, we launched our first silicone hydrogel daily disposable multifocal contact lens in May 2023, and plan to launch a toric lens in 2024.
•LUMIFYLumify® (brimonidine tartrate ophthalmic solution, 0.025%) - An OTC redness reliever eye drop developed as an ocularthat significantly reduces redness reliever.to help eyes look whiter and brighter, revealing eyes’ natural beauty. To date, we have launched and acquired the right to launch Lumify® in various countries. We also have several innovative new line extension formulations that were recently launched or are under development, includingincluding: (i) Lumify Eye IlluminationsTM, three clinically proven products for the sensitive eye area which launched in the U.S. in September 2023 and (ii) Lumify® Eye Illuminations, which we expect to launch in 2023, Lumify Preservative Free, for which the New Drug Application (“NDA”) was submitted toapproved by the U.S. Food and Drug Administration (the “FDA”) in May 2023, and Lumify® Allergy, for which we expect to submit an NDA during 2024.
•Biotrue® – We have expanded, and continue to expand, the Biotrue® brand. Biotrue® Hydration Plus Multi-Purpose Solution was launched in the U.S. and Canada (branded as Biotrue® Advanced MPS) in 2022April 2024 and we anticipate launching Biotruein the first quarter of 2025.
•BlinkTM NutriTears® Advanced MPS- We are expanding our over-the-counter dry eye portfolio with BlinkTM NutriTears®, a daily nutritional supplement formulated to address the symptoms of dry eyes in China in the second half of 2023. In addition, certain Biotrueas little as two to four weeks. We anticipate launching Blink® NutriTears® 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.during the third quarter of 2024.
•MIEBOTM® (perfluorohexyloctane) (formerly known as NOV03) – In December 2019, we 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 treatment of the signs and symptoms of dry eye disease (“DED”). The NDA was filed with the FDA in June 2022, and was approved by the FDA on May 18, 2023. MIEBOTM is the first2023 and only FDA-approved treatment for DED that directly targets tear evaporation. We anticipate launching MIEBOTMlaunched in the U.S. in the third quarter ofSeptember 2023.
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We submitted the filing for Canadian approval of this product during the first quarter of 2023. We2023 and expect approval during 2024. MIEBO® is the first and only FDA-approved treatment for DED that directly targets tear evaporation and we believe the addition of MIEBOTM® will help build upon our strong portfolio of integrated eye health products.
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•LuxSmartLuxLifeTM® – In the first quarterWe are expanding our portfolio of 2021, we launched LuxSmartTM premium IOLs designedbuilt on the “Lux” platform with the LuxLife® Trifocal IOL with two options, non-Toric and Toric for providing distance and intermediate continuous vision with potentially similar dysphotopsia profile as a monofocal, thanks to its Pure Refractive Optics Technology.astigmatic patients.  This product had beenis expected to be launched in various European markets and we expect to expand the launch of LuxSmartTM IOLs in select other markets in 2023.2025.
•enVista® – We are expanding our portfolio of premium IOLs built on the enVista® platform with enVista AspireTM (Monofocal Plus), enVista EnvyTM Trifocal and BEYONDenVista BeyondTM (extended depth of focus (“EDOF”)) optical designs with two options: non-Toric and Toric for astigmatism patients. We expect that they will be commercialized togetherenVista AspireTM monofocal and toric IOLs with a new preloaded EyeGility inserter. WeIntermediate Optimized optics launched in the U.S. during October 2023 and we anticipate launching Monofocal Plus, Trifocalin Europe and EDOF optical designs for presbyopiaCanada in 2025. In addition, we anticipate launching enVista EnvyTM in the U.S. and Canada in 2024, and in Europe in 2025, and anticipate launching enVista BeyondTM in the U.S. in 2023, 2024 and 2025/2026, respectively.2026.
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. In addition to licensing agreements, we selectively consider any acquisitionacquisitions that we believe alignsalign 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 following:
2023 Acquisitions
•Acquisition of XIIDRA® – On June 30,In September 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 acquireacquired 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,eye, and AcuStream® technology, an investigational device that may have the potential to facilitate precise dosingcertain other ophthalmology assets from Novartis Pharma AG and accurate delivery of certain topical ophthalmic medications to the eye.Novartis Finance Corporation (together with Novartis Pharma AG, “Novartis”) (the “XIIDRA Acquisition”). We believe this acquisitionthe XIIDRA Acquisition complements and 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® OTC 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.Drops (collectively, the “Blink® Product Line”). We believe this acquisition will enable us to continue to grow our global OTC business.
•Acquisition of AcuFocus – 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 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 surgical portfolio by enhancing our IOL offerings, which is a strategic area of focus for the Company.
2022 Licensing Agreement and Acquisitions
•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 acquisition is an important step in continuing to expand our
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surgical portfolio as it provides us with the opportunity to increase our manufacturing capacity and more specifically bolster our position in the ophthalmic microsurgical instrumentation market.
We regularly consider further strategic licensing and acquisition opportunities, some of which could be material in size.
Investment in Our Manufacturing Facilities
As our 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, as well as certain international facilities. The continued investment in our infrastructure is in support of our recent and future product launches; to increase capacity to meet increased demand for our products; as well as to promote efficiencies, including those to enhance our supply chain and distribution capabilities in both the U.S. and international locations. Continued investment in our infrastructure remains an area of our focus and 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 productsentering the market. We also face the threat of competition from new entrants to our markets as well as from existingcompetitors, 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 productportfolio 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 high levels of inflation and global supply-chain disruption.
Most recently, duringIn 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 impacttemporarily impacted 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 applyingapplied for licenses with the U.S. Department of Commerce’s Bureau of Industry and Security ("BIS")for both Russia and Belarus and we have now received all licenses necessary to allow us to resume the sale of the applicable currently sanctioned products. products in each of these countries. The recent rounds of sanctions imposed by the U.S. Department of the Treasury’s Office of Foreign Assets
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Control (OFAC), including those in September 2023 and February 2024, do not require us to obtain any further licenses, other than those already in process.
In addition, in June 2023, the EU agreed upon another roundhas also imposed several rounds of sanctions against Russia, that include,including (i) in June 2023, which included, among other key elements, new targeted sanctions against individuals and entities, an expansion of the restrictions on the sale, export and transit of certain goods and technology and additional anti-circumvention measures. measures, and (ii) in February 2024, which imposed asset freezes on additional individuals and entities, expanded sectoral sanctions and further limited Russia’s access to military technology via entities based outside of the EU. In addition, in December 2023, the EU announced an additional package of sanctions (the 12th package), the focus of which is to impose additional import and export bans on Russia, combat sanctions circumvention and close loopholes. In particular, the 12th package removes the exemption to provide certain “controlled” business services to Russian affiliates, effective June 2024. The categories of “controlled” services are broad and capture a number of types of business services. We continue to assess the impact of these new EU sanctions on our operations in and services provided through the EU. If it is determined that the Company provides such “controlled” business services from the EU, we may be required to obtain further licenses if we want to continue to provide such services from the EU.
To date, 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; although, as noted above, we continue to review the 12th package of EU sanctions and are still assessing their impact on our operations.
Our revenues attributable to Russia, Ukraine and Belarus, in the aggregate, were approximately 3% and 4% of our total revenues for, both, the sixthree months ended June 30, 2023March 31, 2024 and year ended December 31, 2022, respectively.2023. In addition, we do not have any research or manufacturing facilities in Russia, Ukraine or Belarus. While we have been monitoring this conflict, and will continue to do so as this conflict continues to evolve, we are unable to predict the impact of this conflict on the Company’s business.
For a further discussion of these and other risks relating to our international business, see “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations- Business Trends” of our Annual Report.
Israel-Hamas Conflict
Impacts of COVID-19 Pandemic
AsThe conflict between Israel and Hamas began during October 2023 and continues to impact the global economy recovers from the impacts of the COVID-19 pandemic, the outbreak of the omicron variant in China in 2022 resulted in government enforced lockdownsregion. Our revenues attributable to Israel and other social restrictions, which impacted our ability to conduct business as usual in certain regions in China. Throughout 2022, lockdowns in China impacted the demand for certain products, particularly our contact lens and consumer eye care products, as shelter in place orders limit the demand and needIran for the use of contact lensesthree months ended March 31, 2024 and related products. Additionally, government enforced lockdowns caused certain businesses to suspend operations, creating distribution and other logistic issues for the distributionyear ended December 31, 2023 were less than 1% of our products and the sourcing for a limited number of raw materials. 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
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borders to tourists. Ourtotal revenues in China for the six months ended June 30, 2023each period. Sales in Iran are covered by a general OFAC license. While we have been monitoring this conflict, and 2022 were $163 million and $158 million, respectively, representing an increase of $5 million, despite the unfavorable foreign currency impact, and we expect towill continue to see gradual improvementsdo so as this conflict continues to our revenues in China over time. However, asevolve, we are unable to predict the impactsimpact of global reaction tothis conflict on 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.Company’s business.
For a further discussion of these and other COVID-19 related risks relating to our international business, see “Risk Factors— Risks Relating to Economic and Market Conditions”Factors” 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,Over 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,past few years 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 havehad experienced inflationary pressures related to certain materials for our products. We have also been experiencing certain supply chain challenges, which havehad caused disruptions in availability and delays in shipping, which has led to challenges in meeting end market demand, primarily within our contact lens and surgical businesses.
The supply-chain challenges have impacted our revenues and resulting margins, despite our efforts to manage these impacts through strategic pricing actions and other initiatives. While we expect these supply chain challenges to continue through 2023, the duration and extent of these challenges is uncertain and could have an adverse impact on results of operations.shipping. We will continue to monitor these inflationary and supply chain challenges and are implementinghad therefore implemented actions to help mitigate thesethose challenges, including strategically spot buying key components of inventory. However,inventory and securing multiple supply sources. While we are subjectwill continue to price control restrictionsmonitor any future supply chain challenges, the actions taken to mitigate our previous challenges has resulted in higher cost of inventory, which in turn has put pressure on our prescription ophthalmology products in a number of countries in which we operate, and, as a result,margins, primarily within our ability to raise prices in a timely fashion in anticipation of, or responding to, inflation may be limited or delayed.surgical business.
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 2024.2024 or, with respect to certain components of the plan, to 2025. The Inclusive Framework plan has now been agreed to by 143145 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 membersMembers who have agreed to the plan, effective in 2024. OnMany members of the Inclusive
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Framework have either introduced or announced their intention to introduce certain components of the global minimum tax in line with the model rules for fiscal year beginning on or after December 31, 2023. For example, on December 15, 2022, the European Union member states unanimously adopted the directive to implement pillar two rules. According to the directive, the member states arewere expected to enact pillar two rules into domestic law in 2023, with certain elements becoming effective for fiscal years beginning on or after December 31, 2023. On August 4, 2023, Canada released draft legislation to enact certain components of the pillar two proposals into Canadian law as the Global Minimum Tax Act (“GMTA”). The GMTA is generally aligned with the model rules proposed by the OECD and is expected to become effective for fiscal years beginning on or after December 31, 2023. The United States did not announce plans to enact the tax measures under the two-pillar plan. 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. The OECD has published model rules and other guidance with respect to pillar two, which are generally consistent with the agreement reached by the Inclusive Framework in October 2021. On February 1, 2023, the Inclusive Framework released a package of technical and administrative guidance on the implementation of pillar two, including the scope of companies that will be subject to the Global Anti-Base Erosion Rules, transition rules, and guidance on domestic minimum taxes that countries may choose to adopt, among other topics. We will continueOn December 18, 2023 the OECD announced plans to monitorrelease additional guidance on model rules and to start the implementation of the Inclusive Framework agreement by the countriespeer review process in 2024. While many jurisdictions in which we operate. Although we are unable to predict when and how the Inclusive Framework agreement will be enacted into law in these countries, it is possible that the implementation of the Inclusive Framework agreement, includingCompany operates have adopted the global minimum corporatetax provision of the OECD pillar two effective for tax years beginning in January 2024, the Company has concluded that there is minimal impact to its 2024 tax rate could have a material effect on our liabilitydue to the accounting for corporate taxes and our consolidatedthe tax effects of intercompany transactions. The Company expects that there is risk that the impact of the global minimum tax may eventually result in an increase to its overall 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
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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. Many of these changes focus on health care cost containment, which result in pricing pressures relating to the sales and reimbursements of health care products. The Biden administration and Congress continue to focus on health care cost containment which could result in legislative and regulatory changes that may negatively impact our businesses.
In addition, we continue to face various proposed health care pricing changes and regulations from governments throughout the world in locations in which we operate our business. These proposed changes may also continue to result in pricing pressures relating to sales, promotions and reimbursement of our product portfolio.
We continually review newly enacted and proposed U.S. federal and state legislation, as well as proposed rulemaking and guidance published by the U.S. Department of Health and Human Services, the FDA and applicable foreign governments in locations in which we operate; however, at this time, it is unclear the effect these matters may have on our businesses.
Generic Competition and Loss of Exclusivity
Certain of our products face the expiration of their patent or regulatory exclusivity, over the next five years, following which we anticipate generic competition of these products. Following a loss of exclusivity (“LOE”) of and/or generic competition for a product, we would anticipate that product sales for such product would decrease significantly shortly following the LOE or entry of a generic competitor. Where we have the rights, we may elect to launch an authorized generic (“AG”) of such product (either ourselves or through a third party) prior to, upon or following generic entry, which may mitigate the anticipated decrease in product sales.
Based on current patent expiration dates, settlement agreements and/or competitive information, we have identified one product, Prolensa®, which is expected to beginbegan facing LOE in the second halffourth quarter of 2023, which in the aggregate accounted for approximately 1% of our total revenues in 2022. This2023. While we expect our risk of LOE to be limited over the next five years, 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, in connection with our Lumify®, PreserVision®, Vyzulta® and Lotemax® SM products, we have commenced ongoing infringement proceedings (or anticipate commencing infringement proceedings) against potential generic competitors or other potential infringers 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%7% of our total revenues in 20222023 and 2021,2022, 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®
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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 17, “LEGAL PROCEEDINGS” to our unaudited interim Condensed Consolidated Financial Statements included elsewhere in this Form 10-Q, as well as Note 20, “LEGAL PROCEEDINGS” of our audited Consolidated Financial Statements for the year ended December 31, 2022,2023, included in our 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 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, 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.
See the section entitled “Risk Factors” included in our Annual Report, for additional information on the risks associated with our intellectual property and our competition risks.
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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.
RESULTS OF OPERATIONS
Our unaudited operating results for the three and six months ended June 30,March 31, 2024 and 2023 and 2022 were as follows:
Three Months Ended
June 30,		Six Months Ended
June 30,
Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
(in millions)
(in millions)
(in millions)(in millions)20232022Change20232022Change
RevenuesRevenues
Revenues
Revenues
Product sales
Product sales
Product salesProduct sales$1,031 $935 $96 $1,959 $1,818 $141 
Other revenuesOther revenues4 6 (2)7 12 (5)
1,035 941 94 1,966 1,830 136 
Other revenues
Other revenues
1,099
1,099
1,099
ExpensesExpenses
Cost of goods sold (excluding amortization and impairments of intangible assets) (Note 4)417 377 40 788 723 65 
Expenses
Expenses
Cost of goods sold (excluding amortization and impairments of intangible assets)
Cost of goods sold (excluding amortization and impairments of intangible assets)
Cost of goods sold (excluding amortization and impairments of intangible assets)
Cost of other revenues
Cost of other revenues
Cost of other revenuesCost of other revenues— 2 (2)1 4 (3)
Selling, general and administrative (Note 4)Selling, general and administrative (Note 4)417 368 49 835 711 124 
Research and development (Note 4)85 75 10 162 152 10 
Selling, general and administrative (Note 4)
Selling, general and administrative (Note 4)
Research and development
Research and development
Research and development
Amortization of intangible assetsAmortization of intangible assets56 64 (8)113 129 (16)
Other expense (income), net17 (1)18 26 1 25 
992 885 107 1,925 1,720 205 
Operating income43 56 (13)41 110 (69)
Amortization of intangible assets
Amortization of intangible assets
Other expense, net
Other expense, net
Other expense, net
1,093
1,093
1,093
Operating income (loss)
Operating income (loss)
Operating income (loss)
Interest incomeInterest income5 1 4 8 1 7 
Interest expense (Note 4)(58)(44)(14)(108)(64)(44)
Interest income
Interest income
Interest expense
Interest expense
Interest expense
Foreign exchange and otherForeign exchange and other(9)14 (23)(15)9 (24)
(Loss) income before provision for income taxes(19)27 (46)(74)56 (130)
Foreign exchange and other
Foreign exchange and other
Loss before provision for income taxes
Loss before provision for income taxes
Loss before provision for income taxes
Provision for income taxesProvision for income taxes(10)(20)10 (43)(26)(17)
Net (loss) income(29)7 (36)(117)30 (147)
Provision for income taxes
Provision for income taxes
Net loss
Net loss
Net loss
Net income attributable to noncontrolling interestNet income attributable to noncontrolling interest(3)(2)(1)(5)(5)— 
Net (loss) income attributable to Bausch + Lomb Corporation$(32)$5 $(37)$(122)$25 $(147)
Net income attributable to noncontrolling interest
Net income attributable to noncontrolling interest
Net loss attributable to Bausch + Lomb Corporation
Net loss attributable to Bausch + Lomb Corporation
Net loss attributable to Bausch + Lomb Corporation
3936

Three Months Ended June 30, 2023March 31, 2024 Compared to the Three Months Ended June 30, 2022March 31, 2023
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, 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 $1,035$1,099 million and $941$931 million for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, an increase of $94$168 million, or 10%18%. The increase was attributable to: (i) incremental sales attributable to acquisitions of $88 million, primarily within our Pharmaceuticals segment, (ii) increased volumes of $84$70 million across each of our segments (ii)and (iii) increased net realized pricing of $28$32 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 $18$20 million, primarily in Asia, and Europe, and (ii) the impact of divestitures and discontinuations of $2 million, driven byparticularly the discontinuation of certain products within our SurgicalVision Care and Vision CarePharmaceuticals 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 three months ended June 30, 2023March 31, 2024 and 2022.2023.
20232022Change
(in millions)AmountPct.AmountPct.AmountPct.
Segment Revenues
Vision Care$646 62 %$588 62 %$58 10 %
Pharmaceuticals194 19 %169 18 %25 15 %
Surgical195 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.
20242023Change
(in millions)AmountPct.AmountPct.AmountPct.
Segment Revenues
Vision Care$635 58 %$587 63 %$48 8 %
Pharmaceuticals267 24 %161 17 %106 66 %
Surgical197 18 %183 20 %14 8 %
Total revenues$1,099 100 %$931 100 %$168 18 %
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.
4037

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 three months ended June 30, 2023March 31, 2024 and 2022.2023.
Three Months Ended June 30, 2023Three Months Ended June 30, 2022Change in
Constant Currency Revenue
(Non-GAAP)
Revenue
as
Reported		Changes in Exchange RatesConstant Currency Revenue
(Non-GAAP)		Revenue
as
Reported
Three Months Ended March 31, 2024Three Months Ended March 31, 2024Three Months Ended March 31, 2023Change in
Constant Currency Revenue
(Non-GAAP)
Revenue
as
Reported
(in millions)
(in millions)
(in millions)(in millions)Revenue
as
Reported		Changes in Exchange RatesConstant Currency Revenue
(Non-GAAP)		Revenue
as
Reported		AmountPct.AmountPct.
Vision CareVision Care$73 12 %Vision Care$635 $$18 $$653 $$587 $$66 11 11 %
PharmaceuticalsPharmaceuticals194 2 196 169 27 16 %Pharmaceuticals267 1 1 268 268 161 161 107 107 66 66 %
SurgicalSurgical195 1 196 184 12 7 %Surgical197 1 1 198 198 183 183 15 15 8 8 %
TotalTotal$1,035 $18 $1,053 $941 $112 12 %Total$1,099 $$20 $$1,119 $$931 $$188 20 20 %
Vision Care Segment Revenue
The Vision Care segment revenue was $646$635 million and $588$587 million for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, an increase of $58$48 million, or 10%8%. 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 wasprimarily driven by higher sales of PreserVisionfrom Lumify®, Biotrue®, ArtelacPreserVision® and Lumify® inour dry eye portfolio within our consumer eye care business and SiHy Daily lenses within our contact lens business. These increases wereThis increase included: (i) an increase in net pricing of $36 million, (ii) an increase in volumes of $22 million and (iii) incremental sales attributable to acquisitions driven by the acquisition of the Blink® Product Line in July 2023, partially offset by: (i) the unfavorable impact of foreign currencies of $15$18 million, primarily in Asia and Europe,Russia, and (ii) the impact of divestitures and discontinuations of $1 million, driven by the discontinuation of certain products.discontinuations.
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$267 million and $169$161 million for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, an increase of $25$106 million, or 15%66%. The increase was primarily driven byby: (i) the XIIDRA Acquisition, (ii) the launch of MIEBO® in September 2023 and (iii) increased demand of certain products within our generics business. This increase included: (i) incremental sales from the XIIDRA Acquisition of $79 million and (ii) an increase in volumes of $27$38 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 byby: (i) a decrease in net realized pricing of $9 million, (ii) the unfavorable impacteffect of foreign currencies of $2$1 million primarily in Asia.and (iii) the impact of discontinuations of $1 million.
Surgical Segment Revenue
The Surgical segment revenue was $195$197 million and $184$183 million for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, an increase of $11$14 million, or 6%8%. The increase was primarily driven by: (i) increased demand of consumables, (ii) increased demand of implantables, driven by our premium IOL portfolio and (iii) increased system sales. This increase included: (i) an increase in volumes of $9$10 million primarily due to increased demand of consumables and equipment, (ii) an increase in net realized pricing of $2$5 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)by 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 product.million.
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 customers, as well as rebates and returns, which can be paid or credited to direct and indirect customers. Provision balances relating to amounts payable to direct customers are netted against trade receivables and balances relating to indirect customers are included in accrued liabilities.
We actively manage these offerings, focusing on the incremental costs of our patient assistance programs, the level of discounting to non-retail accounts and identifying opportunities to minimize product returns. We also concentrate on managing our relationships with our payors and wholesalers, reviewing the ranges of our offerings and being disciplined as to the amount and type of incentives we negotiate. Provisions recorded to reduce gross product sales to net product sales and revenues for the three months ended June 30,March 31, 2024 and 2023 and 2022 were as follows:
4138

Three Months Ended June 30,
20232022
Three Months Ended March 31,Three Months Ended March 31,
202420242023
(in millions)(in millions)AmountPct.AmountPct.(in millions)AmountPct.AmountPct.
Gross product salesGross product sales$1,454 100.0 %$1,302 100.0 %Gross product sales$1,727 100.0 100.0 %$1,279 100.0 100.0 %
Provisions to reduce gross product sales to net product salesProvisions to reduce gross product sales to net product sales
Discounts and allowances
Discounts and allowances
Discounts and allowancesDiscounts and allowances97 6.70 %83 6.40 %99 5.70 5.70 %82 6.40 6.40 %
ReturnsReturns18 1.20 %17 1.30 %Returns24 1.40 1.40 %18 1.40 1.40 %
RebatesRebates146 10.00 %142 10.90 %Rebates333 19.30 19.30 %133 10.40 10.40 %
ChargebacksChargebacks156 10.80 %119 9.10 %Chargebacks160 9.30 9.30 %113 8.80 8.80 %
Distribution feesDistribution fees6 0.40 %6 0.50 %Distribution fees17 1.00 1.00 %5 0.40 0.40 %
Total provisionsTotal provisions423 29.10 %367 28.20 %Total provisions633 36.70 36.70 %351 27.40 27.40 %
Net product salesNet product sales1,031 70.90 %935 71.80 %Net product sales1,094 63.30 63.30 %928 72.60 72.60 %
Other revenuesOther revenues4 6 
RevenuesRevenues$1,035 $941 
Revenues
Revenues
Cash discounts and allowances, returns, rebates, chargebacks and distribution fees as a percentage of gross product sales were 29.1%36.7% and 28.2%27.4% for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, an increase of 0.9%9.3% percentage points, and is primarily attributable to the increase in chargebacks as a percentage of revenues. Chargebacks were $156 million and $119 million for the three months ended June 30, 2023 and 2022, respectively, an increase of $37 million. The increase in chargebacks isrebates, primarily attributable to our generics portfolio as a result of changes in product XIIDRA® and customer mix, as well as growth in volume.MIEBO®.
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 $417$423 million and $377$371 million for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, an increase of $40$52 million, or 11%14%. The increase was primarily driven by higher volumes, supply shortages resulting in increased costs, most notably in our Surgical products, and higher manufacturing efficiency ramp-upby: (i) costs of our Daily SiHy lenses, partially offset by the favorable impact of foreign currencies.sales associated with acquisitions entered into subsequent to March 31, 2023 and (ii) higher volumes.
Contribution (product sales revenue less cost of goods sold, exclusive of amortization and impairments of intangible assets) increased by $56$114 million, primarily driven byby: (i) the increase in volumes, andincluding related to the launch of MIEBO® during September 2023, (ii) contribution associated with acquisitions entered into subsequent to March 31, 2023, (iii) the increase in net realized pricing, as previously discussed partially offset by the increase in cost of goods sold due to supply shortages, the Lynchburg system implementation disruptions,and (iv) higher manufacturing efficiency ramp-up costs of our Daily SiHy lenses andduring the three months ended March 31, 2023. These increases were partially offset by the unfavorable impact of foreign currencies.
Cost of goods sold as a percentage of Product sales was 40.4%38.7% and 40.3%40.0% for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, an increase of 0.1%, as the increase in 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.respectively.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses primarily include: employee compensation associated with sales and marketing, finance, legal, information technology, human resources and other administrative functions; certain outside legal fees and consultancy costs; product promotion expenses; overhead and occupancy costs; depreciation of corporate facilities and equipment; and other general and administrative costs.
SG&A expenses were $417$504 million and $368$418 million for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, an increase of $49$86 million, or 13%21%. 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 (as defined below), and (iii) higher selling expenses,and advertising and promotion costs, primarily relatedattributable to warehousing and distribution costs, mostly driven by inflationary pressures.
42
XIIDRA
®
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 appointmentlaunch of the Company's new executives.MIEBO®.
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
39

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 $85$82 million and $75$77 million for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, an increase of $10$5 million, or 13%6%, primarily due to 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 23 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 $56$74 million and $64$57 million for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, a decreasean increase of $8$17 million, or 13%30%, primarily due to assets acquired through acquisitions, as previously discussed, partially offset by fully amortized intangible assets no longer being amortized in 2023.2024.
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 June 30,March 31, 2024 and 2023 and 2022 consists of the following:
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
(in millions)
(in millions)
(in millions)
Three Months Ended June 30,
(in millions)20232022
Restructuring, integration and separation costsRestructuring, integration and separation costs$14 $4 
Restructuring, integration and separation costs
Restructuring, integration and separation costs
Gain on sale of assets
Gain on sale of assets
Gain on sale of assets
Litigation and other matters
Litigation and other matters
Litigation and other matters
Acquisition-related costs
Acquisition-related costs
Acquisition-related costsAcquisition-related costs2 — 
Acquisition-related contingent considerationAcquisition-related contingent consideration1 (5)
Other expense (income), net$17 $(1)
Acquisition-related contingent consideration
Acquisition-related contingent consideration
Other expense, net
Other expense, net
Other expense, net
Operating income
Operating income was $43 million and $56$6 million for the three months ended June 30,March 31, 2024, as compared to an operating loss of $2 million for the three months ended March 31, 2023, and 2022, respectively, a decreasean increase of $13 million, or 23%, and$8 million. This increase primarily reflects the increase in SG&A and Other expense,contribution, partially offset by the increase in contribution,SG&A, 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. Segment profit is a measure of operating performance of our reportable segments and may not be comparable to similar measures reported by other companies. Segment profit is a performance metric utilized by the Company’s CEO, who is the Company’s Chief Operating Decision Maker, to allocate resources to and assess performance of the Company’s segments. 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.
43

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, 2023March 31, 2024 and 2022.2023.
20232022Change
202420242023Change
(in millions)(in millions)AmountPct.AmountPct.AmountPct.(in millions)AmountPct.AmountPct.AmountPct.
Segment Profits / Segment Profit MarginsSegment Profits / Segment Profit Margins
Vision CareVision Care$167 26 %$145 25 %$22 15 %
Vision Care
Vision Care$178 28 %$154 26 %$24 16 %
PharmaceuticalsPharmaceuticals68 35 %52 31 %16 31 %Pharmaceuticals53 20 20 %46 29 29 %7 15 15 %
SurgicalSurgical9 5 %11 6 %(2)(18)%Surgical11 6 6 %11 6 6 %— — — %
Total segment profits$244 24 %$208 22 %$36 17 %
40

Vision Care Segment Profit
The Vision Care segment profit was $167$178 million and $145$154 million for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, an increase of $22$24 million, or 16%. The increase was primarily driven by increased contribution, driven by: (i) the increases in volume and pricing, as previously discussed and (ii) higher manufacturing efficiency ramp-up costs of our Daily SiHy lenses during the three months ended March 31, 2023. The increase in contribution was partially offset by higher advertising and promotional expenses in our consumer eye care business driven by Lumify® and the Blink® Product Line.
Pharmaceuticals Segment Profit
The Pharmaceuticals segment profit was $53 million and $46 million for the three months ended March 31, 2024 and 2023, respectively, an increase of $7 million, or 15%. The increase was primarily driven by increased contribution, primarily driven by the increases in volume XIIDRA® and pricing, as previously discussed,MIEBO®, 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 ofrelated to XIIDRA® and MIEBOTM®.
Surgical Segment Profit
The Surgical segment profit was $9 million and $11 million for each of the three months ended June 30,March 31, 2024 and 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 byas the increase in revenues, as previously discussed.revenue was offset by higher cost of sales.
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.facilities.
Interest expense was $5899 million and $4450 million for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, an increase of $1449 million. The increase is primarily attributable to increasedto: (i) interest expense associated with theour October 2028 Secured Notes and September 2028 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 three months ended June 30, 2022, (ii) increased interest expense included $27 million ofassociated with the May 2027 Term Facility (as defined and discussed in further detail, under Item “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt”) and (iii) interest attributedexpense related to the BHC Purchase Debtoutstanding balance under our Revolving Credit Facility (as defined below)and discussed in further detail, under Item “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt”). See Note 10, “CREDIT FACILITIES”“FINANCING ARRANGEMENTS” to our unaudited interim Condensed Consolidated Financial Statements for further details regarding the October 2028 Secured Notes, September 2028 Term Facility, the May 2027 Term Facility and the Revolving Credit 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. 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 primarily includes translation gains/losses on intercompany loansbalances and third-party liabilities and the gain/loss due to the change in fair value of foreign currency exchange contracts. Foreign exchange and other was $0 and a net loss of $9 million and a net gain of $14$6 million for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively.
Income Taxes
Provision for income taxes were $10$73 million and $20$33 million for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, a decrease of $10 million. The decrease in income taxes was primarily related to: (i) a change in the
44

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 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 $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.
20232022Change
(in millions)AmountPct.AmountPct.AmountPct.
Segment Revenues
Vision Care$1,233 63 %$1,148 63 %$85 7 %
Pharmaceuticals355 18 %324 18 %31 10 %
Surgical378 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, 2023Six Months Ended June 30, 2022Change in
Constant Currency Revenue (Non-GAAP)
Revenue
as
Reported		Changes in Exchange RatesConstant Currency Revenue
(Non-GAAP)		Revenue
as
Reported
(in millions)AmountPct.
Vision Care$1,233 $35 $1,268 $1,148 $120 10 %
Pharmaceuticals355 7 362 324 38 12 %
Surgical378 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
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$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,
20232022
(in millions)AmountPct.AmountPct.
Gross product sales$2,734 100.0 %$2,505 100.0 %
Provisions to reduce gross product sales to net product sales
Discounts and allowances180 6.60 %160 6.40 %
Returns36 1.30 %35 1.40 %
Rebates280 10.20 %270 10.80 %
Chargebacks268 9.80 %211 8.40 %
Distribution fees11 0.40 %11 0.40 %
Total provisions775 28.30 %687 27.40 %
Net product sales1,959 71.70 %1,818 72.60 %
Other revenues7 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.
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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)20232022
Restructuring, integration and separation costs$22 $6 
Acquisition-related costs3 — 
Acquisition-related contingent consideration1 (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.
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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.
20232022Change
(in millions)AmountPct.AmountPct.AmountPct.
Segment Profits / Segment Profit Margins
Vision Care$321 26 %$304 26 %$17 6 %
Pharmaceuticals114 32 %92 28 %22 24 %
Surgical20 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$40 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, (c) the reduction of certain tax attributes (d) the filings of certain tax returns and (e)(b) 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) incomeloss attributable to Bausch + Lomb Corporation
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Net loss attributable to Bausch + Lomb Corporation was $167 million and $90 million for the sixthree months ended June 30,March 31, 2024 and 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,respectively, a decrease in our results of $147$77 million and was primarily due to: (i) the decrease in our operating results of $69 million, (ii) an increase in interest expense of $44 million, (iii) the unfavorable net change in Foreign exchange and other of $24$49 million and (iv)(ii) the increase in the Provisionprovision for income taxes of $17$40 million, partially offset by the increase in our operating results of $8 million, each as previously discussed.
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LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Six Months Ended June 30,
Three Months Ended March 31,Three Months Ended March 31,
(in millions)(in millions)20232022Change(in millions)20242023Change
Net cash (used in) provided by operating activities$(80)$159 $(239)
Net cash provided by (used in) operating activities
Net cash used in investing activitiesNet cash used in investing activities(92)(76)(16)
Net cash provided by financing activitiesNet cash provided by financing activities181 197 (16)
Effect of exchange rate changes on cash and cash equivalents and restricted cashEffect of exchange rate changes on cash and cash equivalents and restricted cash3 (11)14 
Net increase in cash and cash equivalents and restricted cash12 269 (257)
Net decrease in cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash, beginning of periodCash and cash equivalents and restricted cash, beginning of period380 177 203 
Cash and cash equivalents and restricted cash, end of periodCash and cash equivalents and restricted cash, end of period$392 $446 $(54)
Operating Activities
Net cash provided by operating activities was $41 million for the three months ended March 31, 2024, as compared to net cash used by operating activities of $56 million for the three months ended March 31, 2023, an increase of $97 million.
Net cash provided by operating activities for the three months ended March 31, 2024 was positively impacted by: (i) our net earnings, excluding non-cash expenses and other adjustments primarily for depreciation and amortization, deferred income taxes and share-based compensation, and (ii) changes in our operating assets and liabilities driven by the ongoing impact of the XIIDRA Acquisition, partially offset by an increase in inventories.
Net cash used in operating activities was $80 million for the sixthree months ended June 30,March 31, 2023 as compared to net cash providedwas negatively impacted by operating activities of $159 million for the six months ended June 30, 2022, a decrease of $239 million. The decrease is primarily attributable to the change in our operating assets and liabilities, due to: (i) growth in sales volumes, as previously discussed, which drove an increase in our trade receivables, (ii) the timing of payments in the ordinary course of business, (iii) costs incurred in 2023 as a stand-alone entity, such as higher SG&A expense, as previously discussed, and increased interest payments and (iv) a strategic increase in inventories.inventories in anticipation of future product launches and to help mitigate supply-chain challenges.
Investing Activities
Net cash used in investing activities was $92$57 million and $76$64 million for the sixthree months ended June 30,March 31, 2024 and 2023, and 2022, respectively, an increasea decrease of $16$7 million and was primarily driven by payments related to acquisitions duringincreases in purchases of property, plant and equipment, partially offset by cash used in the six months ended June 30, 2023 of $31 million related to the acquisition of AcuFocus, as previously discussed.
Financing Activities
Net cash provided by financing activities was $181$12 million and $197$91 million for the sixthree months ended June 30,March 31, 2024 and 2023, and 2022, respectively, a decrease of $16$79 million. The 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, which included: (i) Net borrowings under BHC pooled financing agreements of $31 million and (ii) Net transfers to BHC of $2,271 million, for the six months ended June 30, 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 byless borrowings under the Revolving Credit Facility (as defined below) and higher repayments of $200 million duringdebt. For the sixthree months ended June 30, 2023.March 31, 2024, issuances of long-term debt, net of discounts were $75 million, representing borrowings under the Revolving Credit Facility and repayments of debt were $58 million, which included $50 of repayments under the Revolving Credit Facility. For the three months ended March 31, 2023, issuances of long-term debt, net of discounts were $100 million, representing borrowings under the Revolving Credit Facility and repayments were $6 million.
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 needed from our Revolving Credit Facility, (as defined below), and issuances of other long-term debt, additional equity and equity-linked securities. We believe these sources will be sufficient to meet our current liquidity needs for the next twelve months, from the date of issuance of the Condensed Consolidated Financial Statements included elsewhere in this Form 10-Q, 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 on reasonable terms or at all.
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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
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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 cash as presented 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. Prior to the September 2023 Credit Facility Amendment (as defined below), the Credit Agreement provided for a term loan of $2,500 million with a five-year term to maturity (the “Term“May 2027 Term Facility”) and a five-year revolving credit facility of $500 million (the “Revolving Credit Facility”).
On September 29, 2023, Bausch + Lomb entered into an incremental term loan facility secured on a pari passu basis with the Company’s existing May 2027 Term Facility. This incremental term loan facility was entered into in the form of an incremental amendment (the "September 2023 Credit Facility Amendment") to the Company’s existing Credit Agreement (the Credit Agreement, as amended by the September 2023 Credit Facility Amendment, the “Amended Credit Agreement”) and consisted of borrowings of $500 million in new term B loans with a five-year term to maturity (the "September 2028 Term Facility" and, together with the May 2027 Term Facility and the Revolving Credit Facility, the “Senior Secured Credit Facilities”). A portion of the proceeds from the September 2028 Term Facility and October 2028 Secured Notes were used to finance the $1,750 million upfront payment related to the XIIDRA Acquisition and related acquisition and financing costs.
On April 19, 2024, Bausch + Lomb entered into a Suspension of Rights Agreement (the “Suspension of Rights Agreement”) with respect to the Credit Agreement, pursuant to which Canadian dollar-denominated loans will cease to be available from June 28, 2024 until such date as the parties enter into an amendment of the Credit Agreement to replace the Canadian Dollar Offered Rate with an alternative benchmark with respect to Canadian dollar-denominated loans.
The Senior Secured 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 May 2027 Term Facility isand September 2028 Term Facility are denominated in U.S. dollars, and borrowings under the Revolving Credit Facility may be made available in U.S. dollars, euros, and pounds sterling and(and, subject to the Suspension of Rights Agreement, Canadian dollars.dollars). As of June 30, 2023,March 31, 2024, the principal amountamounts outstanding under the May 2027 Term Facility was $2,475and September 2028 Term Facility were $2,456 million and $2,429$498 million, net of issuance costs.respectively. As of DecemberMarch 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, 2023,2024, the Company had $200$300 million of outstanding borrowings, $25$26 million of issued and outstanding letters of credit and remaining availability, subject to certain customary conditions of $275$174 million under its Revolving Credit Facility, subject to certain customary conditions.
Prior to November 29, 2022, Bausch + Lomb was a restricted subsidiary under the credit agreement of BHC (the "BHC Credit Agreement") and the senior notes indentures of BHC and Bausch Health Americas, Inc. (collectively the "BHC Indentures"), which meant that although neither we nor our subsidiaries were guarantors of BHC debt, our status as a restricted subsidiary meant that our ability to take certain actions, including the incurrence of debt, was restricted by the terms of the BHC Credit Agreement and BHC Indentures. On November 29, 2022, BHC designated Bausch + Lomb as an unrestricted subsidiary under the BHC Credit Agreement and the BHC Indentures. Following such designation, we are no longer restricted by the terms of the BHC Credit Agreement or BHC Indentures.Facility.
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"(“SOFR”)-based rate or (b) a U.S. dollar base rate, (ii) Canadian dollars, when available pursuant to the terms of the Suspension of Rights Agreement, will 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,be agreed between the parties, (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 loansborrowings under the Revolving Credit Facility 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 CDORSONIA borrowings based on the 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”), Moody’s and Fitch and (y) the May 2027 Term Facility hasand September 2028 Term Facility have 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 CDORSONIA borrowings based on the Company’s debt rating. The stated rate of interest for borrowings under the Revolving Credit Facility at June 30, 2023March 31, 2024 ranges from 7.43%8.17% to 7.50%8.18% 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 May 2027 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,
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(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
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not be lower than 1.50% per annum at any time). Term SOFR-based loansborrowings under the May 2027 Term Facility are subject to a credit spread adjustment of 0.10%. The stated rate of interest under the May 2027 Term Facility at June 30, 2023March 31, 2024 was 8.59%8.68% per annum.
Borrowings under the September 2028 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 4.00%, or (ii) a U.S. dollar base rate, plus an applicable margin of 3.00% (provided, however, that the term SOFR-based rate shall be no less than 0.00% per annum at any time and the U.S. dollar base rate shall not be lower than 1.00% per annum at any time). Term SOFR-based borrowings under the September 2028 Term Facility are not subject to any credit spread adjustment. The stated rate of interest under the September 2028 Term Facility at March 31, 2024 was 9.33% per annum.
Subject to certain exceptions and customary baskets set forth in the Amended Credit Agreement, the CompanyBausch + Lomb is required to make mandatory prepayments of the loans under the May 2027 Term Facility and September 2028 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 Amended Credit Agreement), (iii) 50% of Excess Cash Flow (as defined in the Amended Credit Agreement) subject to decrease based on leverage ratios and subject to a threshold amount and (iv) 100% of net cash proceeds from asset sales (subject to reinvestment rights, decrease based on leverage ratios and net proceeds threshold). These mandatory prepayments may be used to satisfy future amortization.
The amortization rate for the May 2027 Term Facility is 1.00% per annum, or $25 million, payable in quarterly installments, and the first installment was paid on September 30, 2022. Bausch + Lomb may direct that prepayments be applied to such amortization payments in order of maturity. As of June 30, 2023,March 31, 2024, the remaining mandatory quarterly amortization payments for the May 2027 Term Facility were $94$75 million through March 2027, with the remaining term loan balance being due in May 2027.
The amortization rate for the September 2028 Term Facility is 1.00% per annum, or $5 million, payable in quarterly installments. Bausch + Lomb may direct that prepayments be applied to such amortization payments in order of maturity. As of March 31, 2024, the remaining mandatory quarterly amortization payments for the September 2028 Term Facility were $21 million through June 2028, with the remaining term loan balance being due in September 2028.
Description of Senior Secured Notes
On September 29, 2023, Bausch + Lomb issued $1,400 million aggregate principal amount of 8.375% Senior Secured Notes due October 2028 (the “October 2028 Secured Notes”). A portion of the proceeds from the October 2028 Secured Notes, along with the proceeds of September 2028 Term Facility, were used to finance the $1,750 million upfront payment related to the acquisition of XIIDRA® and certain other ophthalmology assets from Novartis and related acquisition-related transaction and financing costs. The October 2028 Secured Notes accrue interest at a rate of 8.375% per year, payable semi-annually in arrears on each April 1 and October 1, commencing on April 1, 2024.
The October 2028 Secured Notes are guaranteed by each of the Company’s subsidiaries that is a guarantor under the Amended Credit Agreement (the “Note Guarantors”). The October 2028 Secured Notes and the guarantees related thereto are senior obligations and are secured, subject to permitted liens and certain other exceptions, by the same first priority liens that secure the Company’s obligations under the Amended Credit Agreement under the terms of the indenture governing the October 2028 Secured Notes.
The October 2028 Secured Notes and the guarantees related thereto rank equally in right of repayment with all of the Company’s and Note Guarantors’ respective existing and future unsubordinated indebtedness and senior to the Company’s and Note Guarantors’ respective future subordinated indebtedness. The October 2028 Secured Notes and the guarantees related thereto are effectively pari passu with the Company’s and the Note Guarantors’ respective existing and future indebtedness secured by a first priority lien on the collateral securing the October 2028 Secured Notes and effectively senior to the Company’s and the Note Guarantors’ respective existing and future indebtedness that is unsecured, or that is secured by junior liens, in each case to the extent of the value of the collateral. In addition, the October 2028 Secured Notes are structurally subordinated to: (i) all liabilities of any of the Company’s subsidiaries that do not guarantee the October 2028 Secured Notes and (ii) any of the Company’s debt that is secured by assets that are not collateral for the October 2028 Notes.
Upon the occurrence of a change in control (as defined in the indenture governing the October 2028 Secured Notes), unless the Company has exercised its right to redeem all of the notes of a series, holders of the October 2028 Secured Notes may require the Company to repurchase such holders’ notes, in whole or in part, at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, but not including, the date of redemption.
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The October 2028 Secured Notes are redeemable at the option of the Company, in whole or in part, at any time on or after October 1, 2025, at the redemption prices set forth in the indenture. Prior to October 1, 2025, the Company may redeem the October 2028 Secured Notes in whole or in part at a redemption price equal to the principal amount of the Notes redeemed plus a make-whole premium. Prior to October 1, 2025, the Company may on any one or more occasions redeem up to 40% of the aggregate principal amount of the October 2028 Secured Notes at a redemption price of 108.375% of the principal amount thereof, redeemed plus accrued and unpaid interest to, but not including, the date of redemption with the proceeds of one of more equity offerings.
Weighted Average Stated Rate of Interest
The weighted average stated rate of interest for the Company’s outstanding debt obligations as of June 30, 2023March 31, 2024 and December 31, 20222023 was 8.51%8.62% and 7.84%8.65%, respectively.
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.
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®, and intends to finance the $1,750 million up-front cash payment with a new debt issuance prior to the closing of this transaction.
Credit Ratings
As of the date of this filing, August 2, 2023,May 1, 2024, the credit ratings and outlook from Moody’s, S&P and Fitch for certain outstanding obligations of Bausch + Lomb were as follows:
Rating AgencyCorporate RatingSenior Secured RatingOutlook
Moody’sB1NegativeStable
Standard & Poor’sB-B-Positive
FitchB-BB-Rating Watch Evolving
On April 22, 2024, Moody's changed its outlook assigned to Bausch + Lomb from negative to stable, reflecting a similar revision to the outlook of our parent company, BHC. 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.
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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, August 2, 2023,May 1, 2024, we expect our primary cash requirements for the period JulyApril 1, 20232024 through December 31, 20232024 to include:
•Debt repayments and interest—We expect to make interest payments of approximately $122$300 million and mandatory debt amortization payments of $13$23 million for the period JulyApril 1, 20232024 through December 31, 20232024 under our Senior Secured 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, see Item 1A. Risk Factors—"Our indebtedness could adversely affect our business and our ability to meet our obligations"obligations” included in our Annual Report;
•Capital expenditures—We expect to make payments of approximately $130$185 million for property, plant and equipment for the period JulyApril 1, 20232024 through December 31, 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 $4 million for the period July 1, 2023 through December 31, 2023. See Note 11, “PENSION AND POSTRETIREMENT EMPLOYEE BENEFIT PLANS” to our audited Consolidated Financial Statements for the year ended December 31, 2022, included in 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 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 the risks relating to the acquisition of XIIDRA®.
Acquisition of Blink® Product Line
In July 2023, the Company made the up-front cash payment of $107 million to Johnson & Johnson Vision in connection with the closing of the previously discussed acquisition of the Blink® product line of eye and contact lens drops.2024.
Acquisition of AcuFocus, Inc.
As previously discussed, on January 17, 2023, the Company acquired AcuFocus, Inc. (“AcuFocus”) for an up-front purchase price of $35 million. During January 2023, the Company paid approximately $31 million of the up-front purchase price, with the remaining purchase price to be paid within 18 months following the transaction, less any amounts that are the subject of any indemnification claims. If certain future sales-based milestones relating to the AcuFocus business are achieved between the closing date of the acquisition and December 31, 2027, additional payments by the Company will become due in future 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 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
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costs and (iii) costs associated with establishing new boards of 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 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, and as theThe Company prepares for post-Separation operations, the Company ishas been 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“Business Transformation Costs"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'sCompany’s executive officers, such as severance-related costs associated with the departure of the Company'sCompany’s former executives and the costs associated with the appointment of the Company'sCompany’s new executives.
Further, in connection with the Separation and certain transformation initiatives, we continue to evaluate opportunities to improve our operating resultsperformance 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. 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.
Future Litigation
In the ordinary course of business, we are involved in litigation, claims, government inquiries, investigations, charges and proceedings. See Note 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 up-front fee to secure the agreement. See Note 21, “COMMITMENTS AND CONTINGENCIES” to our audited Consolidated Financial Statements for the year ended December 31, 2022,2023, included in 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. TheseOur common shares are treated as issued and outstanding at January 1, 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 shares began tradinglisted on the New York Stock ExchangeTSX and the Toronto Stock Exchange, in each caseNYSE 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). 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. As of July 28, 2023, BHC directly or indirectly held 310,449,643 common shares of Bausch + Lomb, which represented approximately 88.5% of our issued and outstanding common shares.
At July 28, 2023,April 24, 2024, we had 350,701,026351,482,100 issued and outstanding common shares. In addition, as of July 28, 2023,April 24, 2024, we had outstanding approximately 8,300,0009,300,000 stock options and 5,600,0007,600,000 restricted share units that each represent the right of a holder to receive one of Bausch + Lomb’s common shares and 1,300,0004,100,000 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 3,300,00010,800,000 common shares could be issued upon vesting of the performance-based restricted share units outstanding.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Critical accounting policies and estimates are those policies and estimates that are most important and material to the preparation of our Condensed Consolidated Financial Statements, and which require management’s most subjective and complex judgment due to the need to select policies from among alternatives available, and to make estimates about matters that are inherently uncertain. Management has reassessed the critical accounting policies and estimates as disclosed in Note 2 to the audited Consolidated Financial Statements included in our Annual Report, and determined that there were no significant changes in our critical accounting policies and estimates during the sixthree months ended June 30, 2023.March 31, 2024.
NEW ACCOUNTING STANDARDS
None.
FORWARD-LOOKING STATEMENTS
Caution regarding forward-looking information and statements and “Safe-Harbor” statements under the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws:
To the extent any statements made in this Form 10-Q contain information that is not historical, these statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and may be forward-looking information within the meaning defined under applicable Canadian securities laws (collectively, “forward-looking statements”).
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These forward-looking statements relate to, among other things: our business strategy, business plans, 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;products, including XIIDRA®; expected R&D and marketing spend; our expected primary cash and working capital requirements for 2023the remainder of 2024 and beyond; our plans for continued improvement in operational efficiency and the anticipated impact of such plans; expected risks of loss of patent or regulatory exclusivity; 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, as amended,(the “Credit“Amended Credit Agreement”); and in the indenture governing our October 2028 Secured Notes; 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; the anticipated impact from the ongoing conflictconflicts between Russia and Ukraine;Ukraine and in the Middle East involving Israel and Hamas; 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,” “future,” “will,” “may,” “can,” “might,” “could,” “would,” “should,” “target,” “potential,” “opportunity,” “designed,” “create,” “predict,” “project,” “timeline,” “forecast,” “outlook,” “guidance,” “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;
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•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, including the potential effects and economic and future impact of that pandemic (or any resurgence thereof) and the reaction to it (including as it relates to the reinstitution of any lockdowns or other restrictions);
•the challenges the Company faces following its 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 and 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 achievement of targeted debt leverage ratios, subject to receipt of applicable shareholder and other necessary approvals and other factors)factors, including those factors described in BHC’s public filings), 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, 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 structure of the spinoff transaction and related
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distribution, 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;
•pricing decisions that we have implemented or may in the future elect to implement at the direction of our 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 Amended Credit Agreement, the indenture governing our October 2028 Secured Notes and other current or future debt agreements, including the limitations, restrictions and prohibitions such covenants may impose on the
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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 under our Amended 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 ophthalmology assets (the “XIIDRA Acquisition”), 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;all and risks relating to our increased levels of debt as a result of debt incurred to finance such acquisition;
•the uncertainties associated with the acquisition and launch of new products, assets and businesses (including the recently-acquired XIIDRA® product and Blink® product line)line and our recently launched MIEBO® product), 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, the failure to obtain required regulatory approvals, clearances or authorizations, 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 and key employees, 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;
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•our ability to retain, motivate and recruit executives and other key 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;
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•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;
•trade conflicts, including thecurrent and future trade conflictdisputes between the United States and China;
•the impact ofrisks associated with 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, including its potential escalation and the potential impact on sales, earnings, market conditions and the ability of the Company to manage resources and historical investment in Russia;
•risks associated with the ongoing conflict in the Middle East involving Israel and Hamas, including its potential escalation and the potential impact on our operations, sale of products and revenues in this region;
•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 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;
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•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;
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•the availability of, and our ability to obtain and maintain, adequate insurance coverage and/or our ability to cover or insure against the total amount of the claims and liabilities we face, whether through third-party insurance or self-insurance;
•our indemnity agreements, which may result in an obligation to indemnify or reimburse the relevant counterparty, which amounts may be material;
•the difficulty in predicting the expense, timing and outcome within our legal and regulatory environment, including with respect to approvals by the FDA, Health Canada, the European Medicines Agency (“EMA”) and similar agencies in other jurisdictions, legal and regulatory proceedings and settlements thereof, the protection afforded by our patents and other intellectual and proprietary property, successful generic challenges to our products and infringement or alleged infringement of the intellectual property of others;
•the results of continuing safety and efficacy studies by industry and government agencies;
•the success of preclinical and clinical trials for our drug development pipeline or delays in clinical trials that adversely impact the timely commercialization of our pipeline products, as well as other factors impacting the commercial success of our products, which could lead to material impairment charges;
•uncertainties around the successful improvement and modification of our existing products and development of new products, which may require significant expenditures and efforts;
•the results of management reviews of our research and development portfolio (including following the receipt of clinical results or feedback from the FDA or other regulatory authorities), which could result in terminations of specific projects which, in turn, could lead to material impairment charges;
•the seasonality of sales of certain of our products;
•declines in the pricing and sales volume of certain of our products that are distributed or marketed by third parties, over which we have no or limited control;
•compliance by 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;
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•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
•risks in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022,2023, filed with the U.S. Securities and Exchange Commission (“SEC”) and the Canadian Securities Administrators (the “CSA”) on February 22, 2023, risks in Item 1A. “Risk Factors” of Part II of this Form 10-Q21, 2024 and risks detailed from time to time in our other filings with the SEC and the CSA, as well as our ability to anticipate and manage the risks associated with the foregoing.
Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found in our Annual Report on Form 10-K for the year ended December 31, 2022,2023, filed on February 22, 2023,21, 2024, under Item 1A. “Risk Factors”, under Item 1A. “Risk Factors” of Part II of this Form 10-Q and in the Company’s other filings with the SEC and the CSA. When relying on our forward-looking statements to make decisions with respect to the Company, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. These forward-looking statements speak only as of the date made. We undertake no obligation to update or
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revise any of these forward-looking statements to reflect events or circumstances after the date of this Form 10-Q or to reflect actual outcomes, except as required by law. We caution that, as it is not possible to predict or identify all relevant factors that may impact forward-looking statements, the foregoing list of important factors that may affect future results is not exhaustive and should not be considered a complete statement of all potential risks and uncertainties.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to the Company's assessment of its sensitivity to market risks that affect the disclosures presented in the section entitled “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2023.March 31, 2024. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2023.March 31, 2024.
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act or under other applicable U.S. or Canadian securities laws or stock exchange rules is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal controls over financial reporting that occurred during the three months ended June 30, 2023March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are involved in legal proceedings from time to time in the ordinary course of our business. Based on information currently available and established reserves, we have no reason to believe that the ultimate resolution of any known legal proceeding will have a material adverse effect on our financial position, liquidity or results of operations. However, there can be no assurance that the outcome of any such legal proceeding will be favorable, and adverse results in certain of these legal proceedings could have a material adverse effect on our financial position, results of operations in any one reporting period, or liquidity.
For additional information, see Note 17, “LEGAL PROCEEDINGS” of notes to the unaudited interim Condensed Consolidated Financial Statements.
Item 1A. Risk Factors
Except as set forth below, thereThere have been no material changes to the risk factors as disclosed in the section entitledItem 1A. “Risk Factors” ofincluded in our Annual Report.
The Xiidra Acquisition may not be consummated within the anticipated timeframe,Report on the current terms or at all, which could prevent us from receiving the anticipated benefits from the acquisition in the anticipated timeframe or at all.
On June 30, 2023, a wholly owned subsidiary of the Company, Bausch + Lomb Ireland Limited, entered into a Stock and Asset Purchase Agreement (the “Purchase Agreement”) with Novartis Pharma AG and Novartis Finance Corporation (together, “Novartis”) to acquire XIIDRA® (lifitegrast ophthalmic solution) and certain other ophthalmology assets from Novartis (the “Xiidra Acquisition”). The Company expects to complete the Xiidra Acquisition by the end of 2023, subject to customary closing conditions, including the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the absence of any law or judgment preventing the closing. Although the parties have agreed to use reasonable best efforts to promptly obtain the antitrust approvals requiredForm 10-K for the Xiidra Acquisition, there can be no assurance whether these clearances and approvals will be obtained in a timely manner, or at all. As a result, there is no assurance that the Xiidra Acquisition will be consummated in the anticipated timeframe or at all. In addition, the U.S. Federal Trade Commission (the “FTC”), the Antitrust Division of the U.S. Department of Justice or other applicable governmental authorities may seek to impose conditionsyear ended December 31, 2023, filed on the completion of the Xiidra Acquisition or require changes to the terms of the Xiidra Acquisition. If we become subject to and agree to any material conditions in order to obtain any clearances or approvals required to complete the Xiidra Acquisition, we may incur additional costs and experience further diversion of management time and resources, the business we are acquiring may be adversely affected and/or the imposition of such conditions and actions taken in response thereto may reduce the anticipated benefits of the transaction. In addition, we may be required to pay a reverse termination fee of $100 million if the Purchase Agreement is terminated in certain circumstances, including as a result of certain antitrust law-related conditions.
There can be no assurance that the Xiidra Acquisition will be consummated on the current terms or on the anticipated timeline, or at all.
We may fail to realize the anticipated benefits expected from the Xiidra Acquisition.
We expect to realize certain benefits following the consummation of the Xiidra Acquisition. However, our ability to realize these anticipated benefits from the Xiidra Acquisition will depend, in part, on our ability to successfully integrate the acquired business into our current business. It is possible that the integration process following the consummation of the Xiidra Acquisition could result in the disruption of our business or the ongoing business associated with Xiidra or the pipeline assets that we are acquiring in connection with the Xiidra Acquisition. For example, suppliers, vendors, and other third parties with whom we or the acquired business do business or otherwise have relationships may experience uncertainty associated with the Xiidra Acquisition, and this uncertainty could materially affect their decisions with respect to existing or future business relationships with us while the Xiidra Acquisition is pending or with us after the Xiidra Acquisition is consummated. Integration efforts between us and the acquired business will also divert management attention and resources. For example, we expect to bring on the sales force currently supporting Xiidra as part of the Xiidra Acquisition. There can be no assurance that we will be able to integrate the existing sales force with our business, or that the actual integration of the acquired business will not result in additional and unforeseen expenses or liabilities (including those that may be assumed in connection with the Xiidra Acquisition), and, as a result, any anticipated benefits of the integration plan may not be realized. If we are not able to adequately address these challenges, we may be unable to successfully integrate Xiidra and the pipeline assets into our business, or to realize some or any of the anticipated benefits of the Xiidra Acquisition. In addition, delays encountered in the integration process could result in a failure to realize the anticipated benefits on the anticipated timeline, or at all.
61

In addition, the anticipated benefits we expect from the Xiidra Acquisition are subject to numerous assumptions, including assumptions derived from our diligence efforts concerning the status of and prospects for the Xiidra business and the pipeline assets. We cannot provide any assurances with respect to the accuracy of our assumptions, including our assumptions with respect to future revenues of the Xiidra products or assumptions regarding our ability to successfully develop and obtain regulatory approval for the acquired pipeline assets. There are a variety of risks and uncertainties, some of which are outside of our control, which could cause actual results to differ materially from these anticipated benefits.
There can be no assurance that we will realize the anticipated benefits from the Xiidra Acquisition in the anticipated timelines, or at all.
We have expended and will continue to expend significant time and resources in connection with the Xiidra Acquisition and expect to incur material indebtedness to fund the Xiidra Acquisition.
We have expended and will continue to expend significant management time and resources and expenses related to the Xiidra Acquisition, including in connection with the consummation of such transaction and the integration of the acquired business with our business. These expenses include, but are not limited to, fees paid to legal, financial and accounting advisors, filing fees and fees associated with the expected debt financing for this transaction. Many of these expenses must be paid regardless of whether the Xiidra Acquisition is consummated. Additional unanticipated costs may be incurred in the integration of the acquired business with our business. We also expect to incur material additional indebtedness to finance the Xiidra Acquisition, which indebtedness may limit our operating or financial flexibility relative to our current position.February 21, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There were no unregistered sales of equity securities, nor any purchases of our equity securities, by the Company during the three months ended June 30, 2023.March 31, 2024.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
6253

Item 6. Exhibits
2.13.1
Stock and Asset Purchase Agreement by and among Bausch + Lomb Ireland Limited, Novartis Pharma AG, Novartis Finance Corporation and, for the limited purposes set forth therein,Amended Articles of Bausch + Lomb Corporation, dated as of June 30, 2023, originally filed as Exhibit 2.13.1 to Bausch + Lomb Corporation’s Form 8-K filed with the SEC on July 7, 2023,May 10, 2022, which is incorporated by reference herein.
3.2
Amended By-laws of Bausch + Lomb Corporation, originally filed as Exhibit 3.2 to Bausch + Lomb Corporation’s Form 8-K filed with the SEC on May 10, 2022, which is incorporated by reference herein.
Employment Agreement dated as of April 24, 2023, by and between Bausch + Lomb Corporation and A. Robert D. Bailey. ††
Employment Agreement dated as of April 24, 2023, by and between Bausch + Lomb Corporation andAndrew Stewart. ††
Form of Share Unit Award Agreement (Performance Restricted Share Units – Organic Revenue Growth)under the Bausch + Lomb Corporation 2022 Omnibus Incentive Plan. ††

Form of Share Unit Award Agreement (Performance Restricted Share Units – Relative TSR) under theBausch + Lomb Corporation 2022 Omnibus Incentive Plan. ††

Form of Share Unit Award Agreement (Restricted Share Units) under the Bausch + Lomb Corporation 2022Omnibus Incentive Plan. ††

Form of Stock Option Grant Agreement (Non-Qualified Stock Option) under the Bausch + Lomb Corporation2022 Omnibus Incentive Plan. ††

Form of Share Unit Award Agreement (Performance Restricted Share Units – Organic Revenue Growth) under the Bausch + Lomb Corporation 2022 Omnibus Incentive Plan, by and between Bausch +Lomb Corporation andBrenton L. Saunders. ††
Form of Share Unit Award Agreement (Performance Restricted Share Units – Relative TSR) under the Bausch +Lomb Corporation 2022 Omnibus Incentive Plan, by and between Bausch +Lomb Corporation and BrentonL. Saunders. ††
Form of Share Unit Award Agreement (Restricted Share Units) under the Bausch + Lomb Corporation 2022Omnibus Incentive Plan, by and between Bausch +Lomb Corporation and Brenton L. Saunders. ††
Form of Stock Option Grant Agreement (Non-Qualified Stock Option) under the Bausch + Lomb Corporation 2022 Omnibus Incentive Plan, by and between Bausch +Lomb Corporation and Brenton L. Saunders. ††
Form of Share Unit Award Agreement (Outperformance Performance Restricted Share Units) under the Bausch + Lomb Corporation 2022 Omnibus Incentive Plan. ††
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certificate of the Chief Executive Officer of Bausch + Lomb Corporation pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certificate of the Chief Financial Officer of Bausch + Lomb Corporation pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*Inline XBRL Instance Document
101.SCH*Inline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document
104*Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.
†† Management contract or compensatory plan or arrangement.

54

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Bausch + Lomb Corporation
(Registrant)
Date:May 1, 2024/s/ BRENTON L. SAUNDERS
Brenton L. Saunders
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer and Chairman of the Board)
Date:May 1, 2024/s/ SAM ELDESSOUKY
Sam Eldessouky
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
55

INDEX TO EXHIBITS
Exhibit
Number		Exhibit Description
3.1
Amended Articles of Bausch + Lomb Corporation, originally filed as Exhibit 3.1 to Bausch + Lomb Corporation’s Form 8-K filed with the SEC on May 10, 2022, which is incorporated by reference herein.
3.2
Amended By-laws of Bausch + Lomb Corporation, originally filed as Exhibit 3.2 to Bausch + Lomb Corporation’s Form 8-K filed with the SEC on May 10, 2022, which is incorporated by reference herein.
Description of Securities.
Amendment to Executive Employment Agreement dated as of June 9,April 24, 2023, by and between Bausch + Lomb Corporation and Joseph F. Gordon.††A. Robert D. Bailey. ††
Employment Agreement dated as of April 24, 2023, by and between Bausch + Lomb Corporation and Andrew Stewart. ††
Form of Share Unit Award Agreement (Performance Restricted Share Units – Organic Revenue Growth) under the Bausch + Lomb Corporation 2022 Omnibus Incentive Plan. ††

Form of Share Unit Award Agreement (Performance Restricted Share Units – Relative TSR) under the Bausch + Lomb Corporation 2022 Omnibus Incentive Plan. ††

Form of Share Unit Award Agreement (Restricted Share Units) under the Bausch + Lomb Corporation 2022 Omnibus Incentive Plan. ††

Form of Stock Option Grant Agreement (Non-Qualified Stock Option) under the Bausch + Lomb Corporation 2022 Omnibus Incentive Plan. ††

Form of Share Unit Award Agreement (Performance Restricted Share Units – Organic Revenue Growth) under the Bausch + Lomb Corporation 2022 Omnibus Incentive Plan, as amendedby and restated effective asbetween Bausch +Lomb Corporation and Brenton L. Saunders. ††
Form of April 24, 2023, originally filed as Exhibit 10.3 toShare Unit Award Agreement (Performance Restricted Share Units – Relative TSR) under the Bausch + Lomb Corporation’s Quarterly Report on Corporation 2022 Omnibus Incentive Plan, by and between Bausch +Lomb Corporation and Brenton L. Saunders. ††
Form 10-Q forof Share Unit Award Agreement (Restricted Share Units) under the quarter ended March 31, 2023, filed withBausch + Lomb Corporation 2022 Omnibus Incentive Plan, by and between Bausch +Lomb Corporation and Brenton L. Saunders. ††
Form of Stock Option Grant Agreement (Non-Qualified Stock Option) under the SEC on May 3, 2023, which is incorporatedBausch + Lomb Corporation 2022 Omnibus Incentive Plan, by reference herein.††and between Bausch +Lomb Corporation and Brenton L. Saunders. ††
Form of Share Unit Award Agreement (Outperformance Performance Restricted Share Units) under the Bausch + Lomb Corporation 2022 Omnibus Incentive Plan. ††
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certificate of the Chief Executive Officer of Bausch + Lomb Corporation pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certificate of the Chief Financial Officer of Bausch + Lomb Corporation pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*Inline XBRL Instance Document
101.SCH*Inline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document
104*Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.
†† Management contract or compensatory plan or arrangement.
6356

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Bausch + Lomb Corporation
(Registrant)
Date:August 2, 2023/s/ BRENTON L. SAUNDERS
Brenton L. Saunders
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer and Chairman of the Board)
Date:August 2, 2023/s/ SAM ELDESSOUKY
Sam Eldessouky
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
64

INDEX TO EXHIBITS
Exhibit
Number		Exhibit Description
Stock and Asset Purchase Agreement by and among Bausch + Lomb Ireland Limited, Novartis Pharma AG, Novartis Finance Corporation and, for the limited purposes set forth therein, Bausch + Lomb Corporation, dated as of June 30, 2023, originally filed as Exhibit 2.1 to Bausch + Lomb Corporation’s Form 8-K filed with the SEC on July 7, 2023, which is incorporated by reference herein.
3.1
Amended Articles of Bausch + Lomb Corporation, originally filed as Exhibit 3.1 to Bausch + Lomb Corporation’s Form 8-K filed with the SEC on May 10, 2022, which is incorporated by reference herein.
3.2
Amended By-laws of Bausch + Lomb Corporation, originally filed as Exhibit 3.2 to Bausch + Lomb Corporation’s Form 8-K filed with the SEC on May 10, 2022, which is incorporated by reference herein.
Description of Securities.
Amendment to Executive Employment Agreement, dated as of June 9, 2023, by and between Bausch + Lomb Corporation and Joseph F. Gordon.††
Bausch + Lomb Corporation 2022 Omnibus Incentive Plan, as amended and restated effective as of April 24, 2023, originally filed as Exhibit 10.3 to Bausch + Lomb Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May 3, 2023, which is incorporated by reference herein.††
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certificate of the Chief Executive Officer of Bausch + Lomb Corporation pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certificate of the Chief Financial Officer of Bausch + Lomb Corporation pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*Inline XBRL Instance Document
101.SCH*Inline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document
104*Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.
†† Management contract or compensatory plan or arrangement.
65