What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-02-23 compared with 2021-02-24 · 795 added, 757 removed, 891 unchanged (64% of the section changed)

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We generated revenues for 2021, 2020 and 2019, of $8,434 million, $8,027 million and $8,601 million, respectively.

Our portfolio of products falls into four operating and reportable segments:

(i) Bausch + Lomb/International, (ii) Salix, (iii) Ortho Dermatologics and (iv) Diversified Products.

• The Bausch + Lomb/International segment consists of:

(i) sales in the U.S.

of pharmaceutical products, OTC products and medical device products, primarily comprised of Bausch + Lomb products, with a focus on the Vision Care, Surgical, Consumer and Ophthalmology Rx products and (ii) with the exception of sales of Solta products, sales in Canada, Europe, Asia, Australia, Latin America, Africa and the Middle East of branded pharmaceutical products, branded generic pharmaceutical products, OTC products, medical device products and Bausch + Lomb products.

Our portfolio of products falls into five operating and reportable segments:

(i) Bausch + Lomb, (ii) Salix, (iii) International Rx, (iv) Ortho Dermatologics and (v) Diversified Products.

These segments are discussed in detail in Note 22, "SEGMENT INFORMATION" to our audited Consolidated Financial Statements.

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

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

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

of GI products.

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

• The Ortho Dermatologics segment consists of:

(i) sales in the U.S.

of Ortho Dermatologics (dermatological) products and (ii) global sales of Solta medical aesthetic devices.

of Ortho Dermatologics (dermatological) products and (ii) global sales of Solta aesthetic medical devices.

• The Diversified Products segment consists of sales in the U.S.

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"Business — Segment Information" and Note 22, "SEGMENT INFORMATION" to our audited Consolidated Financial Statements for further details on these reportable segments.

As discussed further below, on August 6, 2020, the Company announced that it intends to separate its eye-health business into an independent publicly traded entity from the remainder of Bausch Health Companies Inc.

(the “Separation”).

In connection with the Separation, the Company expects to realign and begin managing its operations in a manner consistent with the organizational structure of the two separate entities as proposed by the Separation during the first quarter of 2021.

Our Focus on Value

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Since that time, we have been executing and continue to execute on our commitments to transform the Company and generate value.

Under the multi-year plan, we have taken the following actions, among others:

As discussed below, under the multi-year plan, we have taken actions that among other things included:

(i) divesting non-core assets, (ii) making strategic investments in our core businesses and (iii) making measurable progress in improving our capital structure.

These measures gave us operating flexibility and put us in a strong position to unlock the additional value to be found in our specific businesses.

We believe that these and other positive actions we took to transform our Company, have helped to focus our operations, and improve our capital structure.

These positive actions also presented us with an opportunity to unlock potential value across our portfolio of assets by separating our pharmaceutical, eye-health and skincare businesses, and, in 2020 and 2021, we set out to create three highly attractive but dissimilar businesses.

Although management believes these transactions will bring out additional value, there can be no assurance that either the B+L Separation or the Solta IPO will be successful in doing so.

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

On August 6, 2020, we announced our plan to separate our eye-health business consisting of our Bausch + Lomb Global Vision Care, Global Consumer, Global Surgical and Global Ophthalmic Pharmaceuticals businesses into an independent publicly traded entity, Bausch + Lomb from the remainder of Bausch Health Companies Inc (the “B+L Separation”).

At the time of our announcement, we have previously emphasized that it is important that the post-separation entities be well capitalized, with appropriate leverage and with access to additional capital, if and when needed, to provide each entity with the ability to independently allocate capital to areas that will strengthen their own competitive positions in their respective lines of business and position each entity for sustainable growth.

Therefore, we see the appropriate capitalization and leverage of these businesses post-separation as a key to maximizing value across our portfolio of assets and, so, it is a primary objective of our plan of separation.

We also previously stated that all options for achieving the appropriate capitalization and leverage for these entities post-separation were being considered.

Management remains focused on the capitalizations of the post-separation entities and has considered and continues to consider alternative means of achieving the appropriate outcome, including dispositions in our business that we believe represent attractive opportunities for the Company and are in line with our plan of separation.

This informed our decision to divest Amoun Pharmaceutical Company S.A.E.

("Amoun") on July 26, 2021 and, as discussed below, use the net proceeds to repay certain debt obligations.

It has also informed, in part, our decision to pursue an initial public offering of our Solta aesthetic medical device business (“Solta Medical”) (the “Solta IPO”), which we announced on August 3, 2021.

We believe that the Solta IPO, when and if complete, will allow us to unlock the value of this high-growth business and give us ownership of a valuable financial asset that would compare more favorably to other aesthetic medical device companies.

Since announcing the B+L Separation and Solta IPO, we began executing on those plans and, at the end of 2021, had substantially completed the internal objectives necessary to facilitate the IPOs and related separation of those businesses.

We continue to monitor market conditions and aim to launch the B+L IPO and the Solta IPO when financial market conditions are favorable (subject to receipt of regulatory, stock exchange and other approvals).

However, there can be no assurance as to when we will complete either IPO, if at all.

Until such time, we continue to manage these businesses along with our diverse portfolio of gastrointestinal, dermatology, neurology and other therapeutics, with our commitment to bring out additional value for our shareholders.

Following the B+L IPO, we expect to complete the separation of Bausch + Lomb following the expiry of customary lockups related to the B+L IPO and achievement of targeted debt leverage ratios, subject to the receipt of applicable shareholder and other necessary approvals and market conditions.

We intend to use the proceeds from the B+L Separation and the Solta IPO to repay, to the extent possible, a portion of our existing debt, thereby improving our capitalization and leverage.

We believe the B+L Separation and the Solta IPO provide us with an attractive opportunity for liquidity to support the appropriate capitalization and leverage of the Bausch + Lomb entity, the Solta Medical entity and the remainder of Bausch Health Companies Inc., which we refer to as “Bausch Pharma” and will assume a new name upon completion of the B+L Separation.

However, management continues to consider the forms of the B+L Separation and the Solta IPO and is exploring a number of alternative capitalization structures in order to properly capitalize the three entities.

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

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

• Solta Medical - a leading global aesthetic medical device company focused on the development, manufacture and sale of innovative technologies that provide aesthetic and therapeutic benefits;

• Bausch Pharma - a diversified pharmaceutical company with leading positions in gastroenterology, dermatology, neurology and international pharmaceuticals.

The remaining pharmaceutical entity will comprise a diversified portfolio of our leading durable brands across the Salix, International Rx, dentistry, neurology, medical dermatology and generics businesses.

We believe these transactions will result in three highly attractive but dissimilar businesses.

As separate entities, management believes that each company will be better positioned to individually focus on its core businesses to drive additional growth, more effectively allocate capital and better manage its respective capital needs.

Further, these transactions allow us and the market to compare the operating results of each entity with other “pure play” peer companies.

Although management believes these transactions will bring out additional value, there can be no assurance that either the B+L Separation or the Solta IPO will be successful in doing so.

In January and February 2022, we took certain actions to, and announced others that we believe will, bring us closer in reaching our targeted capitalization of the post-separation entities.

These actions are discussed in more detail in Item “—

Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt” and Note 23, "SUBSEQUENT EVENTS" to our audited Consolidated Financial Statements.

Although an IPO of the Bausch + Lomb and Solta Medical businesses are among the alternate capital structures being considered, this Form 10-K does not constitute an offer to sell, or the solicitation of an offer to buy, any securities of the Bausch + Lomb or Solta Medical entities.

As of the date of this filing, the determination of the capitalization of the three entities continues to evolve, and we do not have a definitive timetable to finalize the respective capital structures.

We continue to monitor market conditions and aim to launch the B+L IPO and Solta IPO when financial market conditions are favorable (and subject to receipt of regulatory, stock exchange, and other regulatory approvals).

In addition to the capitalization and leverage ratios of each entity, there are considerations, approvals and conditions, including market conditions, that will determine the ultimate timing and structure of these transactions, including regulatory approvals, final approval by our board of directors, any shareholder vote requirements that may be applicable, compliance with U.S.

and Canadian securities laws and stock exchange rules, receipt of any applicable opinions and/or rulings with respect to the Canadian and U.S.

federal income tax treatment of such transactions and determination of the pro forma capitalization of each of the three entities.

The failure to satisfy all of the required conditions could delay the completion of these transactions for a significant period of time or prevent them from occurring at all.

In addition to our internal organization and structure work, we will need to complete a number of additional steps that will depend on the ultimate structure of the transactions (in addition to obtaining the regulatory approvals and satisfying the conditions described above) before we can launch the B+L IPO, complete the B+L Separation and/or launch the Solta IPO.

As a result, there can be no assurance as to the timing of the completion of any of these transactions or their terms, and the information in this Form 10-K relating to each transaction is preliminary and may change as the transactions progress and any such changes and their impact on the Company, or any of the companies that result from the consummation of any of these transactions, may be material.

“Risk Factors — Risk Relating to the B+L Separation” of this Form 10-K for additional risks relating to the B+L Separation and the Solta IPO.

Setting Up Our Company to Unlock Value

To position ourselves to unlock the value we see in our individual businesses, we have sought to right-size our portfolio of assets and provide financial flexibility.

The Company has focused on the following growth drivers, that remain a focus of our growth strategies today:

• divested non-core assets in order to narrow the Company's activities to our core businesses where we believe we have an existing and sustainable competitive edge and the ability to generate operational efficiencies.

To date we received approximately $3,500 million in net proceeds from these divestitures;

To date, we received approximately $4,100 million in net proceeds from these divestitures, which includes the sale of Amoun (the "Amoun Sale") which we divested on July 26, 2021, as discussed below;

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

• made measurable progress in improving our capital structure as we have repaid over $8,600 million in debt obligations (net of additional borrowings, amounts refinanced and excluding the $1,210 million financing of the U.S.

Securities Litigation settlement discussed below) during the period January 1, 2016 through the date of this filing using the proceeds from the divestiture of non-core assets, cash generated from our operations and improved working capital management;

• made measurable progress in improving our capital structure as we have repaid approximately $10,000 million in debt obligations (net of additional borrowings, amounts refinanced and excluding the $1,210 million financing of the U.S.

Securities Litigation settlement discussed below) during the period of January 1, 2016 through December 31, 2021 using the proceeds from the divestiture of non-core assets, cash generated from our operations and improved working capital management.

This includes approximately $1,300 million of repayments (net of additional borrowings) during 2021 using cash on hand, cash generated from operations and the net proceeds from the Amoun Sale;

• resolved many of the Company's legacy litigation matters originating back to 2015 and prior, including the most significant legacy legal matter, the U.S.

Securities Litigation settlement discussed below, significantly reducing related possible disruptions and other uncertainties to our operations.

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

Separation of the Bausch + Lomb Eye-Health Business

On August 6, 2020, we announced that we intend to separate our eye-health business into an independent publicly traded entity (“Bausch + Lomb”) from the remainder of Bausch Health Companies Inc.

The Separation will establish two separate companies that include:

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

• a diversified pharmaceutical company with leading positions in gastroenterology, aesthetics/dermatology, neurology and international pharmaceuticals.

The Bausch + Lomb entity will consist of the Company's Bausch + Lomb Global Vision Care, Global Surgical, Global Consumer and Global Ophthalmology Rx businesses.

The remaining pharmaceutical entity will comprise a diversified portfolio of our leading durable brands across the Salix, International Rx, Solta, neurology and medical dermatology businesses.

We believe the Separation will unlock value across the two post-separation entities and create two highly attractive but dissimilar businesses.

Further, the Separation allows us and the market to compare the operating results of each entity with other “pure play” peer companies.

Although management believes the Separation will bring out additional value, there can be no assurance that it will be successful in doing so.

In connection with the Separation, we expect to realign and begin managing our operations in a manner consistent with the organizational structure of the two separate entities as proposed by the Separation during the first quarter of 2021.

Accordingly, we expect to begin reporting our segment results to reflect the proposed realignment of our operating segments on a retrospective basis beginning with our first quarter of 2021.

We are in the process of addressing the organization, structure and pro forma capitalizations of the two entities post-separation.

Based on our assessment, we believe that, by the end of 2021, we will be able to address the organizational matters and regulatory requirements needed to operate the businesses separately and put the Bausch + Lomb entity in position to become an independent publicly traded company.

Management is also considering the form of the Separation and exploring a number of alternative capitalization structures in order to properly capitalize the entities post-separation.

Although a public offering of a portion of the Bausch + Lomb business is among the alternate capital structures being considered, this Form 10-K does not constitute an offer of any securities of Bausch + Lomb for sale.

There are considerations, approvals and conditions that will determine the ultimate timing and structure of this transaction, including regulatory approvals, final approval by our board of directors, any shareholder vote requirements that may be applicable, compliance with U.S.

and Canadian securities laws and stock exchange rules, receipt of any applicable opinions and/or rulings with respect to the Canadian and U.S.

federal income tax treatment of such transaction and determination of the pro forma capitalizations of the two entities.

The failure to satisfy all of the required conditions could delay the completion of this transaction for a significant period of time or prevent it from occurring at all.

“Risk Factors — Risk Relating to the Separation” of this Form 10-K for additional risks relating to the Separation.

We believe that these and other positive actions we have taken to transform our Company have helped focus our operations, unlocked value across our product portfolios, improved our capital structure and mitigated certain risks associated with legacy litigation matters.

We believe that these measures, along with our continued commitment to improving people's lives through our health products, help position us to unlock potential value across our portfolio of assets by separating our pharmaceutical, eye-health and skincare businesses.

Divest Assets to Improve Our Capital Structure and Simplify Our Business

In order to better focus on our core businesses, we continue to evaluate opportunities to simplify our operations and improve our capital structure, including dispositions of various assets.

For example, on July 26, 2021, we completed the sale of Amoun for total gross consideration of approximately $740 million, subject to certain adjustments.

Amoun, which was part of

the International Rx segment, manufactures, markets and distributes branded generics of human and animal health products.

Revenues associated with Amoun were $157 million for the period of January 1, 2021 through July 26, 2021 and were $247 million and $220 million for the years 2020 and 2019, respectively.

Following the completion of the Amoun Sale, the Company made aggregate payments of $600 million, to repay $469 million of its June 2025 Term Loan B Facility and $131 million of its November 2025 Term Loan B Facility, using the net proceeds from the Amoun Sale and cash on hand.

We will continue to consider further dispositions of various assets in line with this strategy.

While we anticipate that any future divestiture activities will be on non-core assets, consistent with our duties to our shareholders and other stakeholders, we will consider dispositions in core areas that we believe represent attractive opportunities for the Company.

See Note 3, "ACQUISITIONS, LICENSING AGREEMENTS AND DIVESTITURE" to our audited Consolidated Financial Statements for additional information.

Impacts of COVID-19 Pandemic

In December 2019, a novel strain of the coronavirus disease, COVID-19, was identified in Wuhan, China.

Since then, COVID-19 has spread to other parts of the world, including the United States, Canada and Europe, and was declared a global pandemic by the World Health Organization (the "WHO") on March 11, 2020.

As a global health care company, now more than ever, we remain focused on our mission of helping to improve people’s lives with our health care products.

The unprecedented nature of the COVID-19 pandemic has adversely impacted the global economy.

The COVID-19 pandemic and the rapidly evolving reactions of governments, private sector participants and the public in an effort to contain the spread of the COVID-19 virus and/or address its impacts have intensified and have had significant direct and indirect effects on businesses and commerce.

This includes, but is not limited to, disruption to supply chains, employee base and transactional activity, facilities closures and production suspensions.

The COVID-19 pandemic has also significantly increased demand for certain goods and services, such as pandemic-related medical services and supplies, alongside decreased demand for others, such as retail, hospitality, elective medical procedures and travel.

As the global economic landscape changes, there is a wide range of possible outcomes regarding the nature and timing of events related to the COVID-19 pandemic, each of which are highly dependent on variables that are difficult to predict.

Developments, including the ultimate geographic spread and duration of the pandemic, the extent and duration of a resurgence, if any, new information concerning the severity of the COVID-19 virus, the effectiveness and intensity of measures to contain the COVID-19 virus, the availability and effectiveness of vaccines for the COVID-19 virus and the economic impact of the pandemic and the reactions to it, could have a significant adverse effect on our business, development programs, financial condition, cash flows and results of operations.

The extent of these developments and the related impacts are highly uncertain and many are outside the Company's control.

To date, the Company has been able to continue its operations with limited disruptions in supply and manufacturing.

Although it is difficult to predict the broad macroeconomic effects that the COVID-19 pandemic will have on industries or individual companies, the Company has assessed the possible effects and outcomes of the pandemic on, among other things, its supply chain, customers and distributors, discounts and rebates, employee base, product sustainability, research and development efforts, product pipeline and consumer demand.

As a result of our assessment, we immediately initiated profit protection measures to manage and reduce operating expenses and preserve cash during the COVID-19 pandemic.

We have also taken actions to manage the level of our investment in support of certain existing products, anticipated launches and the expansion of our sales footprint in Europe.

Postponing these investments may impact the extent and timing in achieving our longer-term forecasts for certain business units, however, we believe these actions will not have a material impact on the underlying value of the related businesses or their associated assets.

We are and will continue to closely monitor the impacts of the COVID-19 pandemic and related responses from governments and private sector participants on the Company, our customers, supply chain, third-party suppliers, project development timelines, costs, revenue, margins, liquidity and financial condition and our planned actions and responses to this pandemic.

We believe we have responded quickly to the human and commercial challenges brought on by the COVID-19 pandemic and that our early actions have, so far, enabled us to keep our employees safe and our supply lines largely intact and we believe these actions have laid the foundation for us to work our way through the uncertainties to come.

Importantly, we believe that the steps we took over the last several years to manage our capital structure place us in a strong position to maintain sufficient liquidity to continue operations through an extended pandemic and we believe that our businesses will not see their long-term value diminished by this unprecedented situation.

Our Employees

Our employees' health, safety, and wellness are important to us.

With the COVID-19 outbreak, a focus in 2020 was protecting the health and safety of our employees and their families.

We broadened our existing remote work policies to enable our global employees to work from home wherever possible.

In circumstances where remote work was not possible (such as at our manufacturing and distribution facilities) we implemented safety measures to ensure we prevented the spread of COVID-19 in the workplace, such as mandatory face coverings, social distancing, hand hygiene, plexiglass barriers, limited face-to-face meetings and other procedures as prescribed by global public health organizations, such as the WHO and U.S.

Centers for Disease Control and Prevention.

We also provided resources for our employees specifically in response to COVID-19, including launching a website – Collaborating in the New Normal – to help our employees encourage each other, lead with empathy and adapt as we navigate these unprecedented times.

Our Supply Chain and Manufacturing Facilities

Our objective is to maintain the uninterrupted availability of our products to meet the needs of patients, consumers and our customers.

Business continuity plans and site-level biosecurity procedures are in place to ensure the well-being of our employees while we work to maintain the integrity of our supply chain.

We have been successful in keeping our manufacturing facilities operational, although, due to shelter-in-place orders, our facilities in Milan and China were forced to temporarily close in March and April of 2020.

These facilities were closed for only a short period of time and were immediately and continually operational once the shelter-in-place orders in the respective geographies were lifted.

As of the date of this filing, we have not experienced any disruption in our supply chain that would have a material impact on our results or operations.

Our global supply chain team worked diligently to stay ahead of the challenges presented by the COVID-19 pandemic once it appeared in Asia.

Although we have put in place procedures to mitigate the risks associated with closures and disruptions at our manufacturing facilities, the COVID-19 pandemic has had an impact on our inventory levels and the manner in which we manage our inventories.

From time to time during 2020, our inventory levels were higher than usual as a result of:

(i) lower demand across multiple business units due to COVID-19 pandemic related matters, (ii) securing additional quantities of active pharmaceutical ingredients ("API") for our Xifaxan ® products from our suppliers in Italy in contemplation of potential supply disruptions in that region, (iii) securing additional quantities of API for our Trulance ® products which have longer procurement times and higher costs and (iv) the acquisition of additional quantities of certain products that were at the lower end of their optimal levels at December 31, 2019.

During our third and fourth quarters, we continued to manage our inventory levels and effectively reduced our inventory levels to be in line with our pre-pandemic inventory levels as of December 31, 2020.

We have dual sources of API and intermediates for many of our products, the availability of which has not had, and at this time we do not expect will have, a material impact on our supply chain.

With respect to our largest product, Xifaxan ® , as of January 31, 2021, we have over four months’ supply of Xifaxan ® finished goods on hand and enough API to manufacture another seven months’ supply of Xifaxan ® finished goods.

We also have open orders for API for Xifaxan ® that we currently expect will arrive on schedule.

However, if we were to experience a lack of availability of API for Xifaxan ® , such disruption to our supply chain could have a significant adverse effect on our business, financial condition and results of operations.

We continue to monitor the impacts of the COVID-19 pandemic and take the actions appropriate to regulate our inventories at levels in line with the current supply and demand for our products.

These actions have been effective at meeting our objectives, and presuming there continues to be increased availability of effective vaccines and any resurgence of the COVID-19 virus and variant strains thereof do not have a material adverse impact on efforts to contain the COVID-19 virus, we believe we can maintain our inventories at their pre-pandemic levels during 2021.

We will continue to monitor our inventories and continue to take the appropriate actions and make the necessary adjustments to maintain the uninterrupted availability of our products to meet the needs of patients, consumers and our customers.

Our Product Pipeline

Our leadership team actively manages the Company's product pipeline to identify what we believe are innovative and realizable projects aligned with our core businesses that are expected to provide incremental and sustainable revenues and growth.

During the COVID-19 pandemic, our R&D team remains focused on meeting these objectives in a timely manner;

however, there are significant events and circumstances regarding the COVID-19 pandemic that may materially affect our R&D team’s ability to do so, many of which are beyond the Company's control.

Due to the challenges of the COVID-19 pandemic, most notably those attributable to "stay at home" and travel restrictions, certain of our R&D activities were forced to pause.

Clinical trials that started prior to governmental shutdowns remained enrolled and existing patients have progressed, while new patient enrollments were paused as most trial sites were not able to accept new patients.

However, during our third quarter of 2020, we saw the pace of new patient enrollments increase, getting close to their pre-COVID-19 pandemic levels in the U.S., and as a result have not had to make material changes to our development timelines.

We continue to monitor the timing and completion of our ongoing and anticipated clinical trial programs.

As of the date of this filing, the delays in our clinical trials have not had a material impact on our operating results;

however, a resurgence of the virus significant enough to necessitate reenacting certain social restrictions could result in unanticipated delays in our ability to conduct new patient enrollments.

Other possible COVID-19 pandemic and resurgence related challenges include, but are not limited to, facility closures, delays by third-party service providers, deferrals of doctor visits, postponement of elective medical procedures and surgeries and changes in prioritization by the FDA and other regulatory authorities.

Delays, if any, caused by the COVID-19 pandemic and a possible resurgence of the virus such as these and others will likely adversely affect the timely approval, launch and commercialization and the commercial success of our products, particularly those in early stage clinical trials, which could have a material adverse effect on our future operating results.

Our Liquidity

Our primary sources of liquidity are our cash and cash equivalents, cash collected from customers, funds as available from our revolving credit facility of $1,225 million due in June 2023 (the “2023 Revolving Credit Facility”), issuances of long-term debt and issuances of equity and equity-linked securities.

We believe these sources will be sufficient to meet our current liquidity needs for at least twelve months from the date of issuance of this Form 10-K.

Further, for the years ended December 31, 2020, 2019 and 2018, we generated positive cash from operations of $ 1,111 million, $ 1,501 million and $ 1,501 million, respectively.

Should our operating results during the COVID-19 pandemic materially suffer in comparison to our 2020, 2019 and 2018 operating results, we believe we would continue to generate sufficient cash flows from operations to meet our obligations in the ordinary course of business.

We have no debt maturities or mandatory amortization payments until 2024.

Ad ditionally, we have no outstanding borrowings, $ 104 million of issued and outstanding letters of credit and remaining availability of $ 1,121 million under our 2023 Revolving Credit Facility.

In the event of a future, unexpected, need for near- term liquidity, our 2023 Revolving Credit Facility would be a source of funding for us.

After reviewing the terms of our Restated Credit Agreement and considering a broad range of possible outcomes of the COVID-19 pandemic, we expect that we will have access to capital under our 2023 Revolving Credit Facility across a broad range of scenarios in the event it is required.

See this Item “— Liquidity and Capital Resources — Long-term Debt” and Note 10, "FINANCING ARRANGEMENTS" to our audited Consolidated Financial Statements for additional discussion of these matters.

Our Operating Results

While we are taking actions to mitigate the impact of the COVID-19 pandemic on daily operations, the global response to the pandemic has and is expected to impact our operating results until the impacts of the pandemic subside, the timing of which is uncertain and may be dependent upon, among other matters, the availability and effectiveness of vaccines for the COVID-19 virus.

The changing dynamics of the pandemic, related responses from governments and private sector participants and the precautionary measures taken by our customers and the health care patients and consumers we serve, are expected to impact the timing and amount of our revenues.

During the pandemic, the public has been advised to engage in certain "social restrictions" such as:

(i) remaining at home or shelter-in-place, (ii) limiting social interaction, (iii) closing non-essential businesses and (iv) postponing certain surgical and elective medical procedures in order to prioritize/conserve available health care resources.

During the three months ended March 31, 2020, these factors negatively impacted, most notably, the revenues of the Company's Global Vision Care and Global Surgical businesses in Asia where the COVID-19 pandemic originated.

Beginning in March 2020, and throughout most of the second quarter of 2020, the Company experienced steeper declines in these revenues and the revenues of other businesses as social restrictions expanded worldwide, particularly in the U.S.

Social restrictions negatively impacted the Company's revenues for contact lenses, intraocular lenses, medical devices, surgical systems and certain pre- and post-operative eye-medications of its Global Ophtho Rx business, medical aesthetics and therapeutic products of its Global Solta business, and certain branded pharmaceutical products of its Salix, Ortho Dermatologics and Dentistry businesses, as the offices of many health care providers were closed and certain surgeries and elective medical procedures were deferred.

Our 2020 revenues were most negatively impacted during our second quarter by the social restrictions and other precautionary measures taken in response to the COVID-19 pandemic.

The unprecedented nature of the COVID-19 pandemic has, and continues to, adversely impact the global economy.

The COVID-19 pandemic and the reactions of governments, private sector participants and the public in an effort to contain the spread of the COVID-19 virus and/or address its impacts have had significant direct and indirect effects on businesses and commerce.

This includes, but is not limited to, disruption to supply chains, employee base and transactional activity, facility closures and production suspensions.

We believe we responded quickly to these and other human and commercial challenges brought on by the COVID-19 pandemic and that our actions allowed us to:

(i) maintain a reliable supply of our products, (ii) protect the health, safety and well-being of our employees, (iii) reduce operating expenses and preserve cash through profit protection measures initiated in response to the COVID-19 pandemic, (iv) limit the disruptions to our product development pipeline and (v) ensure affordability of and access to our products.

We will continue to monitor the impacts of the COVID-19 pandemic and related responses from governments and private sector participants on the Company, our customers, supply chain, third-party suppliers, project development timelines, costs, revenue, margins, liquidity and financial condition and our planned actions and responses to this pandemic.

Our 2020 revenues were most negatively impacted during our second quarter by certain social restrictions and other precautionary measures taken in response to the COVID-19 pandemic.

However, as governments began lifting social restrictions, allowing offices of certain health care providers to reopen and certain surgeries and elective medical procedures to proceed, the negative trend in the revenues of certain businesses began to level off and stabilize prior to our third quarter of 2020.

Our revenues for the three months ended December 31, 2020 and 2019 were $2,213 million and $2,224 million, respectively, a decrease of $11 million.

This decrease of less than 1% represents a continuing improving trend over the decreases in our year-over-year revenues for the three month periods ended June 30, 2020 and September 30, 2020 of 23% and 3%, respectively, and suggests that a recovery is underway.

Presuming there continues to be increased availability of effective vaccines and any resurgence of the COVID-19 virus and variant strains thereof do not have a material adverse impact on efforts to contain the COVID-19 virus, the Company anticipates an ongoing, gradual global recovery from the significant macroeconomic and health care impacts of the pandemic that occurred during the first-half of 2020 and anticipates that its affected businesses could return to pre-pandemic levels during 2021.

However, the rates of recovery for each business will vary by geography and will be dependent upon, among other things, the availability and effectiveness of vaccines for the COVID-19 virus, government responses, rates of economic recovery, precautionary measures taken by patients and customers, the rate at which remaining social restrictions are lifted and once lifted, the presumption that social restrictions will not be materially reenacted in the event of a resurgence of the virus and other actions taken in response to the COVID-19 pandemic.

In the U.S., the recovery is progressing more quickly in our surgical, vision care and ophthalmology businesses, while our consumer business has been less impacted by the COVID-19 pandemic than any of our other businesses.

Although certain

social restrictions were lifted in Europe and Asia during the summer, recovery in these regions has been more gradual, as consumers have been slower to return to their pre-pandemic habits.

Further, various geographies are reinstituting lockdowns or partial lockdowns in response to resurgence of the original COVID-19 virus and as variant strains, possibly more contagious than the original virus, have been identified.

For instance, parts of Europe, such as England, Germany, France and Ireland, and parts of Canada have already announced returns to lockdowns of various lengths and have enacted or are considering enacting other social restrictions.

In the U.S., variant strains of the virus have been identified and there has been a rise in the number of daily average COVID-19 cases heading into 2021 which suggests a possible resurgence in the U.S.

and could lead to new lockdowns or other social restrictions.

After the launch of effective vaccines in December 2020, infection rates began to decline, signaling the beginning of a recovery from the COVID-19 pandemic.

Our revenues were $8,434 million for 2021, as compared to $8,027 million for 2020, a year-over-year increase of $407 million, or 5%, and primarily reflects the positive impacts of the recovery from the COVID-19 pandemic, partially offset by the impact of our divestiture of Amoun on July 26, 2021.

The increase in revenue also represents an improving trend over the decreases in year-over-year revenues for the three-month periods ended June 30, 2020, September 30, 2020 and December 31, 2020 of 23%, 3% and less than 1%, respectively.

Presuming there continues to be increased availability of effective vaccines and any resurgence of the COVID-19 virus and variant strains thereof, such as the delta and omicron variants, do not have a material adverse impact on efforts to contain the COVID-19 virus, the Company anticipates an ongoing, gradual global recovery from the significant macroeconomic and health care impacts of the pandemic.

Our revenues returned to pre-pandemic levels for many of our businesses and geographies in 2021 and, at the current pace of recovery, we anticipate the COVID-19 pandemic to have a minimal impact on the remaining businesses and geographies in 2022.

However, the rates of recovery for each business will vary by geography and will be dependent upon, among other things, the availability and effectiveness of vaccines for the COVID-19 virus and variant strains thereof, government responses, rates of economic recovery, precautionary measures taken by patients and customers, the rate at which remaining social restrictions are lifted and, once lifted, the presumption that social restrictions will not be materially reenacted in the event of a resurgence of the virus or variant strains thereof and other actions taken in response to the COVID-19 pandemic.

Although we put in place procedures to mitigate the risks associated with closures and disruptions at our manufacturing facilities, the COVID-19 pandemic temporarily impacted the manner in which we managed our inventories and inventory levels.

The negative impact of the COVID-19 pandemic on the demand for many of our products necessitated that we, among other things, shorten production runs during 2020 to reduce inventories and mitigate inventory losses.

The shorter production runs, the costs associated with idling certain facilities during government mandated lockdowns and the costs of the precautionary measures taken at our manufacturing facilities in response to the COVID-19 pandemic resulted in manufacturing variances, which temporarily depressed our contribution margins in 2020.

However, in 2021, as demand increased and our retailers and distributors replenished their inventories, the pressures on our manufacturing processes experienced during 2020 have been alleviated and we have avoided many of the COVID-19 pandemic-induced manufacturing variances during 2021.

As we monitor the direction and pace of the recovery in each business and geography, we are also continually monitoring the effectiveness of the profit protection measures we initiated to manage and reduce our operating expenses and preserve cash during the COVID-19 pandemic.

These profit protection measures have been successful in expanding the profit margins in many of our businesses as referenced in the discussion of our operating results to follow.

As the pace of recovery in each geography accelerates, we expect to allocate more resources to selling and other promotional activities to drive our return to sustainable revenue and profit growth.

Therefore, if the recovery continues, we expect our operating expenses to increase in support of our existing products, product launches and products in development and expect to see our operating expenses in 2021 exceed our operating expenses in 2020 as a result.

These profit protection measures were successful in expanding the profit margins in many of our businesses, as referenced in the discussion of our operating results below.

In 2021, we began allocating more resources to selling and other promotional activities in support of our existing products, product launches and products in development.

As a result, our SG&A and R&D expenses increased 11% and 3% during 2021 as compared to 2020, respectively.

We believe our diverse portfolio of durable products and strong brands has served us well through the COVID-19 pandemic and we continue to be well-positioned to grow market share and return to growth as the world recovers.

However, this remains a very fluid situation and we continue to monitor the availability and effectiveness of vaccines and any resurgence of the COVID-19 virus and variant strains thereof on our operations, business and primary goals.

However, this situation remains fluid and we continue to monitor the availability and effectiveness of vaccines and any resurgence of the COVID-19 virus and outbreaks of variant strains thereof, such as the delta and omicron variants, on our operations, businesses and primary goals.

Given these circumstances, we continue to focus on:

(i) revising our go-to-market and sales force strategies to address the changing business dynamics created by the COVID-19 pandemic, (ii) building out our e-commerce presence to enable us to reach customers in new ways, (iii) investing in our key promoted brands and product launches to increase market share, (iv) optimizing our cost structure and (v) looking for key trends in the market to meet changing consumer/patient needs and identify areas for investment and growth.

We believe focusing on these priorities will best enable us to effectively manage the changing business dynamics created by the COVID-19 pandemic, best prepare us for a possible resurgence of the virus and any variant strains thereof and return us to growth once the impacts of the COVID-19 pandemic substantially subside.

The changes in our segment revenues and segment profits, including the impacts of COVID-19 pandemic related matters for the year ended December 31, 2020, are discussed in further detail in the respective subsequent sections “ — Reportable Segment Revenues and Profits”.

The Company continually updates its near term forecasts for the changing facts and circumstances regarding the COVID-19 pandemic and believes that its long-term forecasted cash flows are not materially impacted by COVID-19 pandemic events and related factors.

As more fully discussed in Note 8, "INTANGIBLE ASSETS AND GOODWILL" to our audited Consolidated Financial Statements, as of December 31, 2020 the Company has not identified any impairments in connection with the impacts of the COVID-19 pandemic.

However, if market conditions further deteriorate, if facts and circumstances regarding the COVID-19 pandemic escalate beyond management’s expectations, or if the Company is unable to execute its strategies, it may be necessary to record impairment charges in the future and those charges can be material.

We believe focusing on these priorities will best enable us to effectively manage the changing business dynamics created by the COVID-19 pandemic, prepare us for a possible resurgence of the virus and any variant strains thereof and return us to growth during the recovery from the COVID-19 pandemic.

For a further discussion of these and other COVID-19 related risks, see Item 1A.

"Risk Factors— Risk Relating to COVID-19" of this Form 10-K.

"Risk Factors— Risks Relating to COVID-19" of this Form 10-K.

Focus on Core Businesses

Our strategy is to focus our business on core therapeutic classes that offer attractive growth opportunities.

Within our chosen therapeutic classes, we prioritize durable products which we believe have the potential for strong operating margins and evidence of growth opportunities.

We believe this strategy has reduced complexity in our operations and maximizes the value of our:

(i) eye-health, (ii) GI and (iii) dermatology businesses, which collectively now represent a substantial portion of our revenues.

We have found and continue to believe there is significant opportunity in these businesses and we believe our existing portfolio, commercial footprint and pipeline of product development projects position us to successfully compete in these markets and provide us with the greatest opportunity to build value for our shareholders.

We identify these businesses as “core”, meaning that we believe we are best positioned to grow and develop them.

In order to continue to focus on our core businesses we have:

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We have been aggressively allocating resources to promote our core businesses globally through:

(i) strategic acquisitions, (ii) research and development (“R&D”) investment, (iii) strategic licensing agreements and (iv) strategic investments in our infrastructure.

(i) strategic acquisitions, (ii) R&D investment, (iii) strategic licensing agreements and (iv) strategic investments in our infrastructure.

The outcome of this process allows us to better drive value in our product portfolio and generate operational efficiencies.

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Recently, we have entered into transactions that although not immediately impactful to our operating results, are expected to be accretive to our bottom line in future years and contribute to our long-term growth strategies.

In September 2020, we entered into an agreement which provides the Company an option to acquire all ophthalmology assets of Allegro Ophthalmics, LLC ("Allegro") (the "Option"), a privately held biopharmaceutical company focused on the development of therapies that regulate integrin functions for the treatment of ocular diseases.

Among the assets to be acquired, if the Option is exercised, is the worldwide rights to risuteganib (Luminate ® ), Allegro's lead investigational compound in retina, which is believed to simultaneously act on the angiogenic, inflammatory and mitochondrial metabolic pathways implicated in diseases such as intermediate dry Age-related Macular Degeneration ("AMD").

Phase 2a study with risuteganib in intermediate dry AMD met its primary endpoint of vision recovery and Phase 3 testing is in the planning stages.

We believe the addition of the ophthalmic assets of Allegro would significantly enhance our comprehensive portfolio of products for AMD and if approved, risuteganib may be the first treatment indicated to help reverse vision loss due to dry AMD and address a significant unmet medical need affecting millions of people globally.

In March 2019, we completed the acquisition of certain assets of Synergy Pharmaceuticals Inc.

(“Synergy”) whereby we acquired the worldwide rights to the Trulance ® (plecanatide) product, a once-daily tablet for adults with chronic idiopathic constipation, or CIC, and irritable bowel syndrome with constipation, or IBS-C.

In March 2019, we completed the acquisition of certain assets of Synergy whereby we acquired the worldwide rights to the Trulance ® (plecanatide) product, a once-daily tablet for adults with chronic idiopathic constipation, or CIC, and irritable bowel syndrome with constipation, or IBS-C.

We believe that the Trulance ® product complements our existing Salix products and allows us to effectively leverage our existing GI sales force.

In order to drive growth of the Trulance ® product, we have increased the number of sales force representatives for the Trulance ® product.

We believe this has been successful as Trulance ® revenues were $103 million and $82 million for the years 2021 and 2020, respectively.

In February 2019, we acquired the U.S.

rights to EM-100 (an investigational preservative-free formulation eye drop) from Eton Pharmaceuticals, Inc.

On September 25, 2020, the Company announced that the FDA had approved Alaway ® Preservative Free (ketotifen fumarate) ophthalmic solution, 0.035%, antihistamine eye drops (EM-100) as the first over-the-counter (OTC) preservative-free formulation eye drop approved to temporarily relieve itchy eyes due to pollen, ragweed, grass, animal hair and dander.

On September 25, 2020, the Company announced that the FDA had approved Alaway ® Preservative Free (ketotifen fumarate) ophthalmic solution, 0.035%, antihistamine eye drops (EM-100) as the first OTC preservative-free formulation eye drop approved to temporarily relieve itchy eyes due to pollen, ragweed, grass, animal hair and dander.

Alaway ® Preservative Free was launched in February 2021 and is expected to complement our broad range of Bausch + Lomb integrated eye-health products.

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R&D Investment

Our R&D expenses for 2020, 2019 and 2018, were $452 million, $471 million and $413 million, respectively, and was approximately 6% as a percentage of revenue for 2020 and approximately 5% for 2019 and 2018.

Our investment in R&D reflects our commitment to drive organic growth through internal development of new products, a pillar of our strategy.

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

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Certain core internal R&D projects that have received a significant portion of our R&D investment in current and prior periods are listed below.

However, due to the challenges of the COVID-19 pandemic, most notably those attributable to "stay at home" and travel restrictions, certain of our R&D activities were forced to pause.

However, during our third quarter of 2020, we saw the pace of new

patient enrollments increase, getting close to their pre-COVID-19 pandemic levels in the U.S., and as a result have not had to make material changes to our development timelines.

However, due to the challenges of the COVID-19 pandemic, most notably those attributable to "stay at home" orders and travel restrictions, certain of our R&D activities were forced to pause in 2020.

Clinical trials that started prior to governmental shutdowns remained enrolled and existing patients progressed, while new patient enrollments were paused as most trial sites were not able to accept new patients.

However, during our third quarter of 2020, we saw the pace of new patient enrollments increase, and, although certain of our projects are moving slower than we would like due to the impacts of the COVID-19 pandemic, through the date of this filing we have not had to make changes to our development timelines that would have a material impact on our current or future operating results.

We continue to monitor the timing and completion of our ongoing and anticipated clinical trial programs.

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Delays, if any, caused by the COVID-19 pandemic and a possible resurgence of the virus or variant strains thereof such as these and others will likely adversely affect the timely approval, launch and commercialization and the commercial success of our products, particularly those in early stage clinical trials.

As a result, our estimates regarding the timing and success of our R&D efforts (some of which are set out below), including as it relates to study initiation, enrollment and completion, availability of study results, regulatory submissions, regulatory approvals and commercial launches, may change.

Bausch + Lomb

• Bausch + Lomb ULTRA ® for Astigmatism - A monthly planned replacement contact lens for astigmatic patients.

The Bausch + Lomb ULTRA ® for Astigmatism lens was developed using the proprietary MoistureSeal ® technology.

In addition, the Bausch + Lomb ULTRA ® for Astigmatism lens integrates an OpticAlign ® design engineered for lens stability and to promote a successful wearing experience for the astigmatic patient.

In 2017, we launched this product and the extended power range for this product.

In 2018, we launched the Bausch + Lomb ULTRA ® for Astigmatism -2.75 cylinder expanded SKU range.

• SiHy Daily - A silicone hydrogel daily disposable contact lens designed to provide clear vision throughout the day.

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under the branded name Bausch + Lomb INFUSE ® SiHy Daily Disposable contact lens.

In the fourth quarter of 2020, SiHy Daily was launched in Australia, Hong Kong and Canada under the branded name Ultra ® ONE DAY.

SiHy Daily has also received regulatory approval for New Zealand, South Korea, Singapore and Malaysia, where it will be branded as Ultra ® ONE DAY.

In the fourth quarter of 2020, SiHy Daily was launched in Australia, Hong Kong and Canada under the branded name Bausch + Lomb Ultra ® ONE DAY.

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

• Lumify ® (brimonidine tartrate ophthalmic solution, 0.025%) - An OTC eye drop developed as an ocular redness reliever.

We launched this product in May 2018.

We launched this product in the U.S.

Currently, we have several line extensions under development and expect Phase 3 clinical studies to commence in 2022.

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The Biotrue ® ONEday for Astigmatism also includes evolved peri-ballast geometry to deliver stability and comfort for the astigmatic patient.

We launched this product in December 2016 and launched an extended power range and further extended power ranges in 2017, 2018, 2019 and July 2020.

• New Ophthalmic Viscosurgical Device ("OVD") product - With a formulation to protect corneal endothelium during phacoemulsification process during a cataract surgery and to help chamber maintenance and lubrication during interocular lens delivery.

In January 2020, we commenced an FDA clinical study for cohesive OVD.

The clinical study has now achieved its enrollment target, despite COVID-19 slowdowns, and we expect results in the fourth quarter of 2021.

In April 2020, we filed a Premarket Approval application for the dispersive OVD with the FDA.

• Lotemax ® SM (loteprednol etabonate ophthalmic gel) 0.38% - A new formulation for the treatment of post-operative inflammation and pain following ocular surgery.

Lotemax ® SM is the lowest concentrated loteprednol ophthalmic corticosteroid indicated for the treatment of post-operative inflammation and pain following ocular surgery in the U.S.

We launched this product in April 2019.

We launched this product in December 2016 and launched an extended power range and further extended power ranges in each of the years 2017 through 2020.

Biotrue ® ONEday for Astigmatism has also received regulatory approval in China.

• New Ophthalmic Viscosurgical Device ("OVD") product - A formulation to protect corneal endothelium during phacoemulsification process during a cataract surgery and to help chamber maintenance and lubrication during intraocular lens delivery.

In January 2020, we commenced an FDA clinical study for the cohesive OVD product which has now achieved its enrollment target, despite COVID-19-related slowdowns, and we expect results in the first quarter of 2022.

In addition, in March 2021, we received Premarket Approval from the FDA for Clearvisc ™ dispersive OVD, which we launched in the U.S.

in June 2021.

• enVista ® Trifocal intraocular lens - An innovative lens design.

We initiated an investigative device exemption study for this product in May 2018 and initiated the last phase of this three phase study in the fourth quarter of 2020.

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

We completed enrollment during the first quarter of 2022 for the Canadian study and expect to complete enrollment during the first half of 2022 for the U.S.

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

• Extended depth of focus intraocular lens - Currently under development, however, the timing and completion of which has been delayed due to COVID-19 pandemic related matters.

Once developed and if approved, we anticipate that this product could be launched in the second half of 2021.

Once development is completed, and if approved, we anticipate that this product could be launched in 2024.

• Bausch + Lomb ULTRA ® monthly silicone hydrogel lens - Specifically designed to address the lifestyle and vision needs of patients with MoistureSeal ® technology which maintains 95% of contact lens moisture for a full 16 hours.

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Bausch + Lomb ULTRA ® Multifocal for Astigmatism was launched in June 2019 and received European Union regulatory approval in the second quarter of 2020.

In July 2021, we launched an extended parameter range of this product.

• Renu ® Advanced Multi-Purpose Solution (“MPS”) - Contains a triple disinfectant system that kills 99.9% of germs, and has a dual surfactant system that provides up to 20 hours of moisture.

Renu ® Advanced MPS is FDA cleared with indications for use to condition, clean, remove protein, disinfectant, rinse and store soft contact lenses including those composed of silicone hydrogels.

Renu ® Advanced MPS is FDA cleared with indications for use to condition, clean, remove protein, disinfect, rinse and store soft contact lenses including those composed of silicone hydrogels.

Renu ® Advanced MPS has gained regulatory approvals in Korea, India, Mexico, Indonesia, Malaysia, Singapore and, during the second quarter of 2020, the European Union.

• Custom soft contact lens (Ultra Buttons) - A latheable silicone hydrogel button for custom soft specialty lenses including;

Sphere, Toric, Multifocal, Toric Multifocal and irregular corneas.

This project has been placed on hold as we reprioritize other projects in our pipeline.

• Zen ™ Multifocal Scleral Lens for presbyopia - In January 2019, we launched this product exclusively available with Zenlens ™ and Zen ™ RC scleral lenses and will allow eye care professionals to fit presbyopic patients with irregular and regular corneas and those with ocular surface disease, such as dry eye.

In 2021, Renu ® Advanced MPS was launched in Greece and gained regulatory approvals in China and Taiwan.

• Zen ™ Multifocal Scleral Lens for presbyopia - In January 2019, we launched this product exclusively available with Zenlens ™ and Zen ™ RC scleral lenses and will allow eye care professionals to fit presbyopic patients with regular and irregular corneas and those with ocular surface disease, such as dry eye.

The Zen ™ Multifocal Scleral Lens incorporates decentered optics, enabling the near power to be positioned over the visual axis.

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The top line results from this Phase 2 study will help inform further research on potential new indications for rifaximin;

this will include the commencement of a Phase 3 study (RED-C) in 2021 to seek an indication for the prevention of the first episode of Hepatic Encephalopathy.

A separate new formulation is planned to be studied for the treatment of sickle cell anemia which rifaximin recently received orphan drug designation for and for which clinical trials are expected to commence in 2021.

• Rifaximin - Commencement of a Phase 2 study to evaluate rifaximin for the treatment of small intestinal bacterial overgrowth or SIBO remains pending results from a new formulation study expected to be available in first half 2021.

Development of a fit for purpose Patient Reported Outcomes tool for small intestinal bacterial overgrowth (SIBO is continuing in 2021.

this included the commencement of a Phase 3 study (RED-C) in 2021 to seek an indication for the prevention of the first episode of Hepatic Encephalopathy.

• Rifaximin - Rifaximin recently received orphan drug designation for sickle cell anemia.

A novel dosage formulation is planned to be studied for the treatment of sickle cell anemia and clinical sites began enrolling into the trial at the end of 2021.

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

• Rifaximin - We have entered into an agreement with Cedars Sinai Medical Center to evaluate a new formulation of rifaximin for the treatment of IBS-D.

Two preclinical studies have been completed.

A Proof of Concept study that was paused due to COVID-19 pandemic related factors has recommenced.

• Rifaximin - Our partner Alfasigma S.p.A.

("Alfasigma") is planning a Phase 2/3 study for the treatment of postoperative Crohn's disease using a novel rifaximin extended release formulation.

• Envive ™ - We developed a probiotic supplement to address gastrointestinal disturbances.

We launched this product in October 2020.

• Amiselimod (S1P modulator) - We are preparing to initiate a Phase 2 study to evaluate Amiselimod (S1P modulator) for the treatment of mild to moderate Ulcerative Colitis.

We anticipate the clinical trial to commence in the first half of 2021.

• Duobrii ® - The first and only topical lotion that contains a unique combination of halobetasol propionate and tazarotene for the treatment of plaque psoriasis in adults.

Halobetasol propionate and tazarotene are each approved to treat plaque psoriasis when used separately, but the duration of halobetasol propionate is limited by FDA labeling constraints and the use of tazarotene can be limited due to tolerability concerns.

However, the combination of these ingredients in Duobrii ® , with a dual mechanism of action, allows for expanded duration of use, with reduced adverse events.

We launched this product in June 2019.

• Arazlo ® (tazarotene) Lotion, 0.045% (formerly IDP-123) - An acne product containing lower concentration of tazarotene in a lotion form to help reduce irritation while maintaining efficacy.

We launched this product in June 2020.

• Internal Development Project ("IDP") 120 - An acne product with a fixed combination of mutually incompatible ingredients:

A Proof of Concept study that was paused due to COVID-19 pandemic related factors, has recommenced and is fully enrolled.

Based on recent FDA comments dated February 10, 2022, the program is being assessed and related timelines reviewed.

• Envive ™ - In October 2020, we launched, on a limited basis, a probiotic supplement that was developed to address gastrointestinal disturbances.

In April 2021, we expanded the launch to additional territories in the U.S.

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

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

• IDP-120 - An acne product with a fixed combination of mutually incompatible ingredients:

benzoyl peroxide and tretinoin.

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Phase 3 clinical studies initiated in December 2019 were paused due to COVID-19 pandemic related factors, but resumed in June 2020.

The first Phase 3 trial has been completed, and the second Phase 3 trial results are expected in 2021.

We are currently evaluating next steps for this project.

Both Phase 3 studies have been completed and have met their primary endpoints.

A comparative bridging safety and efficacy study was delayed until 2021 due to COVID-19.

The bridging study is ongoing.

We anticipate filing a New Drug Application ("NDA") in the second half of 2022.

• Clear + Brilliant ® Touch - Next generation Clear + Brilliant ® laser that is designed to deliver a customized and more comprehensive treatment protocol by providing patients of all ages and skin types the benefits of two wavelengths.

We expect to launch this product during the first half of 2021.

• IDP-124 - A topical lotion product designed to treat moderate to severe atopic dermatitis, with pimecrolimus.

Phase 3 clinical studies have been completed with one of the two studies meeting the primary endpoint.

As a result, we have determined to no longer pursue this project.

This product was launched in the U.S.

in March 2021.

Strategic Licensing Agreements

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The ultimate outcome, including whether the product will be:

(i) fully developed, (ii) approved by the FDA, (iii) covered by third-party payors or (iv) profitable for distribution is highly uncertain.

(i) fully developed, (ii) approved by the FDA or other regulators, (iii) covered by third-party payors or (iv) profitable for distribution, is highly uncertain.

Under certain agreements, the Company may be required to make payments contingent upon the achievement of specific developmental, regulatory, or commercial milestones.

In October 2020, we announced that we entered into two exclusive license agreements which present us with unique developmental opportunities to address the unmet need of treatment for myopia in children.

In October 2020, we announced that we had entered into two exclusive license agreements which present us with unique developmental opportunities to address the unmet need of treatment for myopia in children.

The first of these two licensing agreements is with Eyenovia, Inc.

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In an Open Label Safety study, NOV03 has achieved its enrollment target.

We expect the readout of topline results from the first of two Phase 3 studies during the second half of 2021 and anticipate filing an NDA in 2022.

In April 2021, we announced statistically significant topline data from the first of two Phase 3 studies and, in September 2021, we announced statistically significant topline data from the second Phase 3 study.

We anticipate filing an NDA in the first half of 2022.

If approved by the FDA, we believe the addition of this investigational treatment for DED will help build upon our strong portfolio of integrated eye- health products.

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("Clearside") for the commercialization and development of Xipere ™ (triamcinolone acetonide suprachoroidal injectable suspension) in the U.S.

Xipere ™ is a proprietary suspension of the corticosteroid triamcinolone acetonide formulated for suprachoroidal administration via Clearside's proprietary SCS Microinjector ™ that is being investigated as a targeted treatment of macular edema associated with uveitis.

We are working closely with Clearside on the resubmission of the NDA for Xipere ™ to the FDA.

In April 2019, we entered into two licensing agreements which present us with unique developmental opportunities to address unmet needs of individuals suffering with certain GI and liver diseases.

The first of these two licensing agreements is with the University of California for certain intellectual property relating to an investigational compound targeting the pituitary adenylate cyclase receptor 1 in non-alcoholic fatty liver disease (“NAFLD”), nonalcoholic steatohepatitis (“NASH”) and other GI and liver diseases.

Xipere ™ is a proprietary suspension of the corticosteroid triamcinolone acetonide formulated for suprachoroidal

administration via Clearside's proprietary SCS Microinjector.

In October 2021, the FDA approved Xipere ™ for suprachoroidal use for the treatment of macular edema associated with uveitis.

We launched Xipere ™ in the first quarter of 2022.

In April 2019, we entered into two licensing agreements which presented us with unique developmental opportunities to address unmet needs of individuals suffering with certain GI and liver diseases.

The first of these two licensing agreements was with the University of California for certain intellectual property relating to an investigational compound targeting the pituitary adenylate cyclase receptor 1 in non-alcoholic fatty liver disease (“NAFLD”), nonalcoholic steatohepatitis (“NASH”) and other GI and liver diseases.

However, as some early non-clinical (in-vitro) development work did not meet our internal expectations, in September 2021, we made the decision to terminate this license agreement and notified the University of California accordingly.

The second is an exclusive licensing agreement with Mitsubishi Tanabe Pharma Corporation to develop and commercialize MT-1303 (amiselimod), a late-stage oral compound that targets the sphingosine 1-phosphate receptor that plays a role in autoimmune diseases, such as inflammatory bowel disease and ulcerative colitis.

We have completed a thorough QTC study, which evaluated the cardiac safety profile of the compound.

Topline results were positive and we expect to initiate a Phase 2 study in the first half of 2021.

On February 27, 2018, we announced that we entered into an exclusive license agreement with Kaken Pharmaceutical Co., Ltd.

("Kaken") to develop and commercialize a new chemical entity, IDP-131 (KP-470), for the topical treatment of psoriasis.

An early proof of concept study has been completed and the results did not meet expectations.

As a result, the Company and Kaken have terminated the license agreement.

Topline results were positive, and we commenced a Phase 2 study in the first half of 2021.

Strategic Investments in our Infrastructure

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

To meet the forecasted demand for our Biotrue ® ONEday lenses, in July 2017, we placed into service a $175 million multi-year strategic expansion project of the Waterford facility.

To meet the forecasted demand for our Biotrue ® ONEday range of contact lenses, in July 2017, we placed into service a $175 million multi-year strategic expansion project of the Waterford facility.

The emphasis of the expansion project was to:

(i) develop new technology to manufacture, automatically inspect and package contact lenses, (ii) bring that technology to full validation and (iii) increase the size of the Waterford facility.

To address the expected global demand for our Bausch + Lomb ULTRA ® contact lens, in December 2017, we completed a multi-year, $200 million strategic upgrade to our Rochester facility.

To address the expected global demand for our Bausch + Lomb ULTRA ® range of contact lenses, in December 2017, we completed a multi-year, $220 million strategic upgrade to our Rochester facility.

The upgrade increased production capacity in support of our Bausch + Lomb Ultra ® and SiHy Daily AQUALOX ™ product lines and better supports the production of other well-established contact lenses, such as our PureVision ® , PureVision ® 2 (SVS, Toric, and Multifocal), SofLens ® 38 and SilSoft ® .

To address the expected global demand for our SiHy Daily disposable contact lenses, in November 2018, we initiated $300 million of additional expansion projects to add multiple production lines to our Rochester and Waterford facilities.

SiHy Daily disposable contact lenses were launched in the U.S.

in September 2020.

To address the expected global demand for our SiHy Daily disposable contact lenses, in November 2018, we initiated $300 million of additional projects to add multiple production lines to our Rochester and Waterford facilities.

These production lines have recently been completed and we expect to start production of our latest contact lenses, Bausch + Lomb INFUSE ® and Bausch + Lomb ULTRA ® ONE DAY, at these facilities in early 2022.

To further help us meet the anticipated demand of our contact lenses, in 2020, we initiated an expansion of the Company's Lynchburg distribution center.

The new facility is expected to create new jobs over the next five years and expand the overall site to 200,000 square feet, which will provide distribution capabilities for medical devices, primarily contact lens products, and be the main point of distribution for these products in the U.S.

This expansion program is expected to be completed in the first half of 2022.

In July 2021, we announced plans to invest an additional $90 million to increase capacity at our Waterford facility to meet the expected demand for our Biotrue ® ONEday range of daily disposable contact lenses.

The new production lines are expected to be completed in 2023.

If completed as planned, the recently announced expansion of our Waterford facility will be the fifth major expansion of our Bausch + Lomb manufacturing facilities in support of our efforts to increase market share in the contact lens market in the seven years ending 2023.

We believe the investments in our Waterford, Rochester and Lynchburg facilities and related expansion of labor forces further demonstrates the growth potential we see in our Bausch + Lomb products and our eye- health business.

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We continue to effectively manage our capital structure by:

(i) reducing our debt through repayments, (ii) extending the maturities of debt through refinancing and (iii) improving our credit ratings.

Debt Repayments - Excluding the impact of the $1,210 million financing of the U.S.

Securities Litigation settlement discussed below, we have been able to repay (net of additional borrowings) over $8,600 million of long-term debt during the period January 1, 2016 through the date of this filing using the net cash proceeds from divestitures of non-core assets, cash generated from operations and cash generated from tighter working capital management.

This includes approximately $900 million of repayments with cash on hand and cash generated from operations during 2020.

2018 Refinancing Transactions - In March, June and November 2018, we accessed the credit markets and completed a series of transactions, whereby we extended approximately $8,300 million in aggregate maturities of certain debt obligations due to mature in March 2020 through July 2022, out to June 2025 through January 2027.

As part of these transactions we obtained less stringent loan financial maintenance covenants under our Senior Secured Credit Facilities and extended commitments under our revolving credit facility by more than three years by replacing our then-existing revolving credit

facility, set to expire in April 2020 with a revolving credit facility of $1,225 million due in June 2023 (the “2023 Revolving Credit Facility”).

2019 Refinancing Transactions - In March, May and December 2019, we accessed the credit markets and completed a series of transactions, whereby, we extended approximately $4,200 million in aggregate maturities of certain debt obligations due to mature in December 2021 through May 2023, out to January 2027 through January 2030.

Financing of Litigation Settlement - In December 2019, we announced that we had agreed to resolve the putative securities class action litigation in the U.S.

Securities Litigation") for $1,210 million.

Final court approval of this settlement was granted in January 2021.

As part of the settlement, the Company and the other settling defendants admitted no liability as to the claims against it and deny all allegations of wrongdoing.

Subject to an objector's appeal of the Court's final approval order, this settlement resolves and discharges all claims against the Company in the class action, and as a result resolves the most significant of the Company's remaining legacy legal matters and eliminates a material uncertainty regarding our Company.

To finance the settlement of the U.S.

Securities Litigation and extend certain debt maturities, on December 30, 2019, we accessed the credit markets and issued:

(i) $1,250 million aggregate principal amount of 5.00% Senior Unsecured Notes due January 2028 (the "5.00% January 2028 Unsecured Notes") and (ii) $1,250 million aggregate principal amount of 5.25% Senior Unsecured Notes due January 2030 (the "January 2030 Unsecured Notes") in a private placement.

The proceeds and cash on hand were used to:

(i) redeem $1,240 million of May 2023 Unsecured Notes on January 16, 2020, (ii) finance amounts owed under the Company's $1,210 million settlement agreement relating to the U.S.

Securities Litigation (which is subject to an objector's appeal of the final court approval), the full $1,210 million of which was paid into an escrow fund in accordance with the related settlement agreement and is included in our Restricted cash balance as of December 31, 2020, and (iii) pay all fees and expenses associated with these transactions (collectively, the "December 2019 Financing and Refinancing Transactions").

Through this financing, we have in effect extended the payments of the pending litigation settlement of $1,210 million out to 2028 and 2030, without negatively impacting our working capital available for operations.

2020 Refinancing Transactions - In May and December 2020, we accessed the credit markets and completed a series of transactions, whereby we extended $3,250 million in aggregate maturities of certain debt obligations due to mature in 2022 and 2023 out to 2029 through 2031 and $250 million in aggregate amortization payments due in 2022 out to 2029.

In addition to extending $3,500 million in payments due in 2022 and 2023 to 2029 through 2031, the refinancing transactions replaced secured debt of $1,500 million with unsecured debt.

This provides us with more secured debt capacity under our Restated Credit Agreement and existing indentures if the market for unsecured debt in the future is less favorable.

Further, by replacing $1,500 million of secured debt with unsecured debt we now have additional room under the debt maintenance covenant of our 2023 Revolving Credit Facility that requires us to maintain a first lien net leverage ratio of not greater than 4.00 to 1.00.

The refinancing transactions also repaid in full €1,500 million of debt denominated in euros, thereby reducing our exposure to fluctuations in the value of the euro.

See Note 10, "FINANCING ARRANGEMENTS" to our audited Consolidated Financial Statements for the details of our debt portfolio as of December 31, 2020 and 2019.

The debt repayments and refinancing transactions outlined above have allowed us to:

(i) improve our credit ratings, (ii) finance amounts owed under the Company's previously announced $1,210 million settlement agreement relating to the U.S.

Securities Litigation (which is subject to an objector's appeal of the final court approval) without negatively impacting our working capital available for operations, (iii) extend maturities of certain debt obligations due out to the year 2025 and beyond, (iv) satisfy all debt mandatory amortization payments and maturities until 2024 and (v) reduce our exposure to fluctuations in the value of the euro.

Our prepayment of debt and refinancing transactions over the last four years translate into lower repayments of principal over the next four years, which, in turn, we believe will permit more cash flows to be directed toward developing our core assets, identifying new product opportunities and repaying additional debt amounts.

The mandatory scheduled principal repayments of our debt obligations as of December 31, 2020, were as follows:

(in millions)

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Total

$ — $ — $ — $ 2,291 $ 10,632 $ 1,500 $ 2,250 $ 2,012 $ 3,250 $ 1,250 $ 1,000 $ 24,185

In addition, as a result of the changes in our debt portfolio, approximately 80% of our debt is fixed rate debt as of December 31, 2020, as compared to approximately 60% as of January 1, 2016.

The weighted average stated interest rate of the Company's outstanding debt as of December 31, 2020 and 2019 was 6.02% and 6.21%, respectively.

(i) executing on our plan for the B+L Separation and Solta IPO, (ii) reducing our debt through repayments, (iii) extending the maturities of debt through refinancing and (iv) improving our credit ratings.

Since announcing our plans for the B+L Separation and the Solta IPO, we emphasized that it is important that the post-separation entities be well capitalized, with appropriate leverage and with access to additional capital, if and when needed, to provide each entity with the ability to independently allocate capital to areas that will strengthen their own competitive positions in their respective lines of business and position each entity for sustainable growth.

Therefore, we see the appropriate

capitalization and leverage of these businesses post-separation as a key to maximizing value across our portfolio of assets and, so, it is a primary objective of our plan of separation.

Debt Repayments and Other Financing Transactions — In 2016, our new executive team committed to improving our Company's capital structure and since that time we have been executing and continue to execute on that commitment.

As a result of a series of debt repayments and transactions since making that commitment, the Company positioned itself to add value through the B+L Separation and Solta IPO while at the same time providing for the appropriate capitalization and leverage of these businesses post-separation.

Excluding the impact of the $1,210 million financing of the U.S.

Securities Litigation settlement (discussed in the subsequent section titled "OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS"), we have repaid (net of additional borrowings) approximately $10,000 million of long-term debt during the period January 1, 2016 through December 31, 2021 using the net cash proceeds from divestitures of non-core assets, cash generated from operations and cash generated from tighter working capital management.

This includes approximately $1,300 million of repayments (net of additional borrowings) during 2021 using cash on hand, cash generated from operations and the net proceeds from the Amoun Sale.

Our Focus on Capitalization of the Post-separation Entities

In connection with the B+L Separation and Solta IPO, we have emphasized that it is important that the post-separation entities be well capitalized, with appropriate leverage and with access to additional capital, if and when needed, to provide each entity with the ability to independently allocate capital to areas that will strengthen their own competitive positions in their respective lines of business and position each entity for sustainable growth.

Therefore, we see the appropriate capitalization and leverage of these new entities post-separation as a key to bringing out the maximum value across our portfolio of assets and, so, it is a primary objective of our plan of separation.

We continue to monitor market conditions and aim to launch the B+L IPO and Solta IPO when financial market conditions are favorable, subject to receipt of regulatory, stock exchange and other approvals and, in January and February 2022, took certain actions to, and announced others that we believe will, bring us closer in reaching our targeted capitalizations of the post-separation entities.

These actions are discussed in more detail in Item “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt” and Note 23, "SUBSEQUENT EVENTS" to our audited Consolidated Financial Statements.

Continue to Manage our Capital Structure

We continue to monitor our capital structure and to evaluate other opportunities to simplify our business and improve our capital structure, giving us the ability to better focus on our core businesses.

While we anticipate focusing any future divestiture activities on non-core assets, consistent with our duties to our shareholders and other stakeholders, we will consider dispositions in core areas that we believe represent attractive opportunities for the Company.

Also, the Company regularly evaluates market conditions, its liquidity profile and various financing alternatives for opportunities to enhance its capital structure.

If the Company determines that conditions are favorable, the Company may refinance or repurchase existing debt or issue additional debt, equity or equity-linked securities.

See Note 10, "FINANCING ARRANGEMENTS" to our audited Consolidated Financial Statements for further details and this Item “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt” for additional discussion of these matters.

See Note 10, "FINANCING ARRANGEMENTS" and Note 23, "SUBSEQUENT EVENTS" to our audited Consolidated Financial Statements and Item “— Liquidity and Capital Resources — Liquidity and Debt — Long-term Debt” for further details and additional discussion regarding these matters.

Cash requirements for future debt repayments including interest can be found in this Item “— Off-Balance Sheet Arrangements and Contractual Obligations.”

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The Patient Access and Pricing Committee considers new to market product pricing, price changes and their impact across channels on patient accessibility and affordability.

The Patient Access and Pricing Committee remains committed to limiting the average annual price increase for our branded prescription pharmaceutical products to no greater than single digits and has reaffirmed this commitment for 2021.

These pricing changes and programs could affect the average realized pricing for our products and may have a significant impact on our company revenue and profit.

Bausch Health Assistance Program - We are committed to supporting patients who have lost employment health benefits due to the COVID-19 pandemic, and because it is important to continue prescribed treatments, we are proud to offer certain of our prescription medicines through our Bausch Health Assistance Program.

Since its inception, the Patient Access and Pricing Committee has limited the average annual price increase for our branded prescription pharmaceutical products to single digits.

Future pricing changes and programs could affect the average realized pricing for our products and may have a significant impact on our revenues and profits.

Bausch Health Patient Assistance Program - We are committed to supporting patients who have lost employment health benefits due to the COVID-19 pandemic, and because it is essential that our patients continue their prescribed treatments, we are proud to offer certain of our prescription medicines through our Bausch Health Patient Assistance Program.

In the face of the COVID-19 pandemic, some people have financial obstacles that keep them from obtaining and continuing their prescribed treatments.

The purpose of the Bausch Health Patient Assistance Program is to provide eligible unemployed patients in the U.S., who have lost their health insurance due to the COVID-19 pandemic, with certain of our prescription products although their financial circumstances or insurance status may otherwise interfere with their ability to do so.

The purpose of the Bausch Health Patient Assistance Program is to provide eligible unemployed patients in the U.S., who meet stated qualifications and have lost their health insurance due to the COVID-19 pandemic, with certain of our prescription products where their financial circumstances or insurance status would otherwise interfere with their ability to access such products.

If approved, patients receive their Bausch Health Companies Inc.

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retail pharmacy locations, as well as participating independent retail pharmacies.

Our products available under this fulfillment agreement include certain Ortho Dermatologics products, including our Duobrii ® , Bryhali ® , Arazlo ® , Jublia ® , Luzu ® , Retin-A Micro ® Gel and Onexton ® and select branded prescription pharmaceutical products included in our cash-pay prescription program, and certain ophthalmology products, including our Vyzulta ® , Besivance ® , Lotemax ® , Alrex ® , Prolensa ® , Bepreve ® and Zylet ® products.

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

We are constantly challenged by the changing dynamics of our industry to innovate and bring new products to market.

We have divested certain businesses where we saw limited growth opportunities, so that we can be more aggressive in

redirecting our R&D spend and other corporate investments to innovate within our core businesses where we believe we can be most profitable and where we aim to be an industry leader.

We have divested certain businesses where we saw limited growth opportunities, so that we can be more aggressive in redirecting our R&D spend and other corporate investments to innovate within our core businesses where we believe we can be most profitable and where we aim to be an industry leader.

We believe that we have a well-established product portfolio that is diversified within our core businesses and provides a sustainable revenue stream to fund our operations.

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To extend our market share in eye- health, we continually seek to identify new products tailored to address these key trends for development internally with our own R&D team to generate organic growth.

Recent product launches include Biotrue ® ONEday daily disposable contact lenses, the next generation of Bausch + Lomb ULTRA ® contact lenses, SiHy Daily contact lenses, Lumify ® (an eye redness treatment), Vyzulta ® (a pressure lowering eye drop for patients with angle glaucoma or ocular hypertension) and Ocuvite ® Eye Performance (vitamins to protect the eye from stressors such as sunlight and blue light emitted from digital devices).

Recent product launches include Biotrue ® ONEday daily disposable contact lenses, the next generation of Bausch + Lomb ULTRA ® contact lenses, SiHy Daily contact lenses (branded as AQUALOX ™ ONE DAY in Japan, Bausch + Lomb INFUSE ® SiHy Daily Disposable in the U.S.

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

We also license selective molecules or technology in leveraging our own R&D expertise through development, as well as seek out external product development opportunities.

As previously discussed, we acquired global exclusive licenses for a myopia control contact lens design developed by BHVI, which we plan to pair with our leading contact lens technologies to develop potential contact lens treatments designed to slow the progression of myopia in children, and for the commercialization and development in the U.S.

As previously discussed, we acquired a global exclusive license for a myopia control contact lens design developed by BHVI, which we plan to pair with our leading contact lens technologies to develop potential contact lens treatments designed to slow the progression of myopia in children, and exclusive licenses for the commercialization and development in the U.S.

and Canada of:

a microdose formulation of atropine ophthalmic solution, which is being investigated for the reduction of pediatric myopia progression in children ages 3-12;

Xipere ™ which, if approved by the FDA, will be the first treatment for patients suffering from macular edema associated with uveitis;

Xipere ™ which was approved by the FDA in October 2021 and launched in the first quarter of 2022, and is the first treatment available in the U.S.

that utilizes the suprachoroidal space to treat patients suffering from macular edema associated with uveitis;

and NOV03, an investigational drug with a novel mechanism of action to treat DED associated with MGD.

which has demonstrated statistically significant topline data in two Phase 3 studies.

We also acquired the U.S.

rights to EM-100, which was recently approved by the FDA as Alaway ® Preservative-Free and is the first OTC preservative-free formulation eye drop for the temporary relief of itchy eyes due to pollen, ragweed, grass, animal hair, and dander in adults and children 3 years of age and older.

Recently, we entered into an agreement which provides the Company an option to acquire all ophthalmology assets of Allegro, including risuteganib (Luminate ® ), an investigational compound in retina, which is believed to simultaneously act on the angiogenic, inflammatory and mitochondrial metabolic pathways implicated in diseases such as intermediate dry AMD.

Phase 2a study with risuteganib in intermediate dry AMD met its primary endpoint of vision recovery and Phase 3 testing is in the planning stages.

rights to EM-100, which was launched as Alaway ® Preservative-

Free and is the first OTC preservative-free formulation eye drop for the temporary relief of itchy eyes due to pollen, ragweed, grass, animal hair, and dander in adults and children 3 years of age and older.

We believe investments in these investigational treatments, if approved by the FDA, will complement, and help build upon, our strong portfolio of integrated eye-health products.

As previously discussed, we have also made strategic investments in our infrastructure, the most significant of which are at our Waterford facility in Ireland to meet the forecasted demand for our Biotrue ® ONEday lenses, our Rochester facility in New York to address the expected global demand for our Bausch + Lomb ULTRA ® contact lens and our Lynchburg facility in Virginia to be our main point of distribution for medical devices in the U.S.

During late 2018, we began investing in additional expansion projects at the Waterford and Rochester facilities in order to address the expected global demand for our SiHy Daily disposable contact lenses, which we launched in the U.S.

in August 2020, under the branded name Bausch + Lomb INFUSE ™ SiHy Daily Disposable contact lens.

As previously discussed, we have also made strategic investments in our infrastructure, the most significant of which were at our Waterford facility in Ireland to meet the forecasted demand for our Biotrue ® ONEday lenses, our Rochester facility in New York to address the expected global demand for our Bausch + Lomb ULTRA ® contact lens and our Lynchburg facility in Virginia to be our main point of distribution for medical devices in the U.S.

in August 2020, under the branded name Bausch + Lomb INFUSE ® SiHy Daily Disposable contact lens, and in Australia, Hong Kong and Canada in the fourth quarter of 2020, under the branded name Bausch + Lomb Ultra ® ONE DAY.

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

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We believe that the Trulance ® product complements our existing Salix products and allows us to effectively leverage our existing GI sales force.

Licensing Arrangements - As previously discussed, in April 2019, we entered into two licensing agreements.

The first is for certain intellectual property relating to an investigational compound targeting the pituitary adenylate cyclase receptor 1 in NAFLD, NASH and other GI and liver diseases.

The second is to develop and commercialize MT-1303 (amiselimod), a late-stage oral compound that targets the sphingosine 1-phosphate receptor that plays a role in autoimmune diseases, such as inflammatory bowel disease and ulcerative colitis.

These licenses present unique developmental opportunities to address unmet needs of individuals suffering with certain GI and liver diseases and if developed and approved by the FDA, will allow us to further utilize our existing sales force and infrastructure to extend our market share in the future and create value.

Licensing Arrangements - As previously discussed, in April 2019, we entered into a licensing agreement to develop and commercialize MT-1303 (amiselimod), a late-stage oral compound that targets the sphingosine 1-phosphate receptor that plays a role in autoimmune diseases, such as inflammatory bowel disease and ulcerative colitis.

This license presents a unique developmental opportunity to address unmet needs of individuals suffering with certain GI and liver diseases and if developed and approved by the FDA, will allow us to further utilize our existing sales force and infrastructure to extend our market share in the future and create value.

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

In order to extend growth in Xifaxan ® , we continue to directly invest in next generation formulations of Xifaxan ® and rifaximin, the principal semi-synthetic antibiotic used in our Xifaxan ® product.

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

In order to extend the growth in Xifaxan ® , we continue to directly invest in next generation formulations of Xifaxan ® and rifaximin, the principal semi-synthetic antibiotic used in our Xifaxan ® product.

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

We believe that the acquisition and licensing opportunities discussed above will be accretive to our business by providing us access to products and investigational compounds that are a natural pairing to our Xifaxan ® business, allowing us to effectively leverage our existing infrastructure and sales force.

We believe these opportunities, coupled with our investment in next generation formulations, will allow our GI franchise to continue to further extend market share.

Position the Ortho Dermatologics Business for Growth - In 2018, we realigned our Solta aesthetics business and combined it with our medical dermatology business, creating a complete dermatology portfolio.

We continue to make investments in our Solta portfolio and anticipate building out our Solta sales force, particularly in Europe to address the growing demand.

Our Ortho Dermatologics business continues to work towards improving the treatment options for medical dermatology patients.

In light of persistent insurance coverage pressures within the United States for patients needing topical acne and psoriasis products, we are exploring both strategic e-commerce and partnership expansion opportunities which can enable increased accessibility for patients.

We are continuing to invest in our on market products and are evaluating various opportunities for our key pipeline products.

In support of the complete dermatology portfolio, we have taken and are taking a number of actions that we believe will help our efforts to stabilize our dermatology business.

Reposition the Ortho Dermatologics Business to Generate Additional Value - As of January 2022, we have positioned the Solta Medical business to move forward with the Solta IPO.

We continue to monitor market conditions and aim to launch the Solta IPO when financial market conditions are favorable subject to receipt of regulatory, stock exchange and other approvals.

However, there can be no assurance as to when we will complete the Solta IPO, if at all.

Until such time, we continue to manage our Solta business and our medical dermatology business with our continued commitment to bring out additional value for our shareholders.

We continue to make investments in our Solta portfolio and anticipate building out our Solta sales force,

particularly in Europe, to address the growing demand for our Solta aesthetic medical devices.

Our Ortho Dermatologics business continues to work towards improving the treatment options for medical dermatology patients needing topical acne and psoriasis products.

We also continue to explore additional strategic e-commerce and partnership expansion opportunities which can enable increased accessibility for patients and we continue to invest in our on-market products and evaluate various opportunities for our key medical dermatology pipeline products.

In support of the complete dermatology portfolio, we continue to take a number of actions that we believe will help our efforts to stabilize our dermatology business.

These actions include:

(i) rebranding our dermatology business including our aesthetics business, (ii) appointing a new leader, (iii) making key investments in our core medical device and dermatological products portfolios, (iv) right sizing and reorganizing our dermatology sales force across roughly 195 sales territories, as we work to rebuild relationships with prescribers of our products and (v) improving patient access to our Ortho Dermatologics products through our cash-pay prescription program previously discussed.

(i) building on our legacy brands to improve and meet today’s physician relevance and customer service, (ii) appointing new leadership, (iii) making key investments in our core medical device and dermatological products portfolios, (iv) optimizing our go to market strategy by building on our relationships with prescribers of our products to balance our sales portfolio with the business' profitability, (v) refocusing our operational and promotional resources and (vi) improving patient access to our Ortho Dermatologics products through our cash-pay prescription program previously discussed.

During the three months ended March 31, 2021, we identified launches of certain Ortho Dermatologics products which were not going to achieve their trajectories as forecasted once the social restrictions associated with the COVID-19 pandemic began to ease in the U.S.

and offices of health care professionals could reopen.

In addition, insurance coverage pressures within the U.S.

continued to persist, limiting patient access to topical acne and psoriasis products.

In light of these developments, during the first quarter of 2021, the Company began taking steps to:

(i) redirect its R&D spend to eliminate projects it has identified as high cost and high risk, (ii) redirect a portion of its marketing and product development outside the U.S.

to geographies where there is better patient access and (iii) reduce its cost structure to be more competitive.

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

Aesthetics - In 2017, we launched our next generation Thermage FLX ® product in the U.S., a fourth-generation non-invasive treatment option using a radiofrequency platform designed to optimize key functional characteristics and improve patient outcomes.

During 2018 and 2019, Next Generation Thermage FLX ® was launched in Hong Kong, Japan, Korea, Taiwan, Philippines, Singapore, Indonesia, Malaysia, China, Thailand, Vietnam, and Australia as part of our Solta medical aesthetic devices portfolio.

These launches have been successful as Next Generation Thermage FLX ® revenues for 2020 and 2019 were $142 million and $77 million, respectively.

We expect additional launches of Next Generation Thermage FLX ® in Europe in the near term, paced by country-specific regulatory registrations.

Psoriasis - As the number of reported cases of psoriasis in the U.S.

has increased, we believe there is a need to make further investments in this market in order to maximize our opportunity and supplement our current psoriasis product portfolio.

We launched Duobrii ® in June 2019 and launched Bryhali ® in November 2018.

We expect that

Duobrii ® and Bryhali ® will align well with our existing topical portfolio of psoriasis treatments and, supplemented by our injectable biologic products, such as Siliq ® (launched in July 2017), will provide a diverse choice of psoriasis treatments to doctors and patients.

Acne - In support of our established acne product portfolio, we have developed and launched several products, which includes Arazlo ® (tazarotene) Lotion (launched in June 2020), Altreno ® (launched in the U.S.

in October 2018), the first lotion (rather than a gel or cream) product containing tretinoin for the treatment of acne, and Retin-A Micro ® 0.06% (launched in January 2018).

We also have two other unique acne projects in our pipeline that, if approved by the FDA, we believe will further innovate and advance the treatment of acne.

Bolstered by new product launches in our aesthetics, psoriasis and acne product lines and the potential of other products under development, our experienced dermatology sales leadership team, our sales force and our cash-pay prescription program, we believe we have set the groundwork to position the Ortho Dermatologics business for future growth.

Next generation Thermage FLX ® was launched in the U.S., Hong Kong, Japan, Korea, Chinese Taipei, Philippines, Singapore, Indonesia, Malaysia, China, Thailand, Vietnam, Australia and various parts of Europe as part of our Solta aesthetic medical devices portfolio.

These launches have been successful as next generation Thermage FLX ® revenues were $154 million, $142 million and $77 million for the years ended December 31, 2021, 2020 and 2019, respectively.

We plan to continue to expand into other regions, paced by country-specific regulatory registrations.

Consistent with our business strategy to continually update and improve our technology, in 2021, we launched, our next generation Clear + Brilliant ® Touch system in the U.S., which is designed to deliver a customized and more comprehensive treatment protocol by providing patients of all ages and skin types the benefits of two wavelengths.

The launch of our next generation Clear + Brilliant ® Touch system in the U.S.

is expected to serve as a foundation for future launches in Asia and Europe.

Psoriasis - In response to the increasing number of reported cases of psoriasis in the U.S., we launched Duobrii ® in June 2019 and launched Bryhali ® in November 2018, which align well with our topical portfolio of psoriasis treatments.

Although, we continue to support a diverse portfolio of topical and injectable biologics, in order to provide a diverse choice of psoriasis treatments to doctors and patients;

we believe some patients prefer topical products as an alternative to injectable biologics.

Acne - In support of our established acne product portfolio, we have developed and launched several products, which include Arazlo ® (tazarotene) Lotion (launched in the U.S.

in June 2020), Altreno ® (launched in the U.S.

in October 2018), the first lotion (rather than a gel or cream) product containing tretinoin for the treatment of acne, and Retin-A Micro ® 0.06% (launched in the U.S.

in January 2018).

We also have a unique acne project in our pipeline that, if approved by the FDA, we believe will further innovate and advance the treatment of acne.

Business Trends

In addition to the actions previously outlined, the events described below have affected and may affect our business trends.

The matters discussed in this section contain Forward-Looking Statements.

Please see “Forward-Looking Statements” for additional information.

In April 2021, U.S.

President Joseph Biden proposed changes to the U.S.

Since that date, both houses of Congress have released their own proposals for changes to the U.S.

tax system, which differ in a number of respects from the President’s proposal.

The proposals under discussion have included changes to the U.S.

corporate tax system that would

increase U.S.

corporate tax rates, although the most recent proposals do not include any such rate increase, and changes that would raise the tax rate on and make other changes to the taxation of Global Intangible Low Tax Income earned by foreign subsidiaries.

Also under consideration are modifications to the Base Erosion and Anti-Abuse Tax, which would tax certain payments, including some that are related to inventory, made to affiliates that are subject to an effective tax rate of less than specified rates.

Certain proposals also include limitations on the participation exemption for foreign dividends received and interest expense.

In addition, certain proposals include limitations on the deduction of interest expense and carryforwards of unused interest expense, as well as an excise tax on certain pharmaceutical products that are non-compliant with the proposed drug pricing legislation.

We are unable to predict which, if any, U.S.

tax reform proposals will be enacted into law, and what effects any enacted legislation might have on our liability for U.S.

corporate tax.

However, it is possible that the enactment of changes in the U.S.

corporate tax system could have a material adverse effect on our liability for U.S.

corporate tax and our consolidated effective tax rate.

Global Minimum Corporate Tax Rate

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 Inclusive Framework plan has now been agreed to by 141 OECD members, including several countries which did not agree to the initial plan.

Under pillar one, a portion of the residual profits of multinational businesses with global turnover above €20 billion and a profit margin above 10% will be allocated to market countries where such allocated profits would be taxed.

Under pillar two, the Inclusive Framework has agreed on a global minimum corporate tax rate of 15% for companies with revenue above €750 million, calculated on a country-by-country basis.

On October 30, 2021, the G20 formally endorsed the new global minimum corporate tax rate rules.

The Inclusive Framework agreement must now be implemented by the OECD Members who have agreed to the plan, effective in 2023.

On December 20, 2021, the OECD published model rules to implement the pillar two rules, which are generally consistent with the agreement reached by the Inclusive Framework in October 2021.

Additional guidance is expected to be published in 2022.

We will continue to monitor the implementation of the Inclusive Framework agreement by the countries in which we operate.

While we are unable to predict when and how the Inclusive Framework agreement will be enacted into law in these countries, and it is possible that the implementation of the Inclusive Framework agreement, including the global minimum corporate tax rate could have a material effect on our liability for corporate taxes and our consolidated effective tax rate.

Health Care Reform

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Adoption of legislation at the federal or state level could materially affect demand for, or pricing of, our products.

Beginning in 2011, the law imposed a significant annual fee on companies that manufacture or import branded prescription drug products.

More recently, the Bipartisan Budget Act of 2018 amended the Patient Protection and Affordable Care Act, effective January 1, 2019, to close the donut hole in most Medicare drug plans.

In addition, in April 2018, the Centers for Medicare & Medicaid Services published a final rule that gives states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the Patient Protection and Affordable Care Act for plans sold through such marketplaces.

In 2018, we faced uncertainties due to federal legislative and administrative efforts to repeal, substantially modify or invalidate some or all of the provisions of the ACA.

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In 2019, the U.S.

Health and Human Services Administration announced a preliminary plan to allow for the importation of certain lower-cost drugs from Canada.

Department of Health and Human Services announced a preliminary plan to allow for the importation of certain lower-cost drugs from Canada.

The preliminary plan excludes insulin, biological drugs, controlled substances and intravenous drugs.

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Although the preliminary plan has some support from the prior administration, at this time, studies to evaluate the related costs and benefits, evaluate the reasonableness of the logistics, and measure the public reaction of such a plan have not been performed.

While we do not believe this will have

a significant impact on our future cash flows, we cannot provide assurance as to the ultimate context, timing, effect or impact of such a plan.

In 2019, the Government of Canada (Health Canada) published in the Canadian Gazette the new pricing regulation for patented drugs.

These regulations will become effective on July 1, 2021.

The new regulations will change the mechanics of establishing the pricing for products submitted for approval after August 21, 2019;

they will also require full transparency of discounts agreed with provincial bodies;

and finally, will change the number and composition of reference countries used to determine if a drug’s price is excessive.

While we do not believe this will have a significant impact on our future cash flows, we cannot provide assurance as to the effect or impact of such a plan.

In 2019, the Government of Canada (Health Canada) published in the Canada Gazette the new pricing regulation for patented drugs.

These regulations were scheduled to become effective on July 1, 2021, but have been delayed until July 1, 2022.

The new regulations will, among other things, change the mechanics of establishing the pricing for products submitted for approval after August 21, 2019 and the number and composition of reference countries used to determine if a drug’s price is excessive.

While we do not believe this will have a significant impact on our future cash flows, as additional facts materialize, we cannot provide assurance as to the ultimate content, timing, effect or impact of such regulations.

In July 2020, U.S.

In July 2020, former U.S.

President Donald Trump signed four Executive Orders related to drug pricing, including orders addressing:

(i) Part D rebate reform, (ii) the provision of deeply discounted insulin and/or an EpiPen to patients of Federally Qualified Health Centers, (iii) drug importation from Canada and (iv) most favored nation pricing for Medicare.

In November 2020, U.S.

In November 2020, former U.S.

President Donald Trump announced the Most Favored Nation Model for Medicare Part B Payment which was to be implemented by the Centers for Medicare & Medicaid Services Innovation Center on January 1, 2021;

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It is also uncertain whether the Biden administration intends to reverse these measures or adopt similar policy initiatives.

However, President Biden and several members of the current U.S.

However, U.S.

President Joseph Biden and several members of the current U.S.

Congress have indicated that lowering drug prices is a legislative and political priority, and some have introduced proposals that seek to address drug pricing.

We are currently reviewing those Executive Orders and the Most Favored Nation Model, the impact of which is uncertain at this time.

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

In March 2021, the U.S.

Congress enacted the American Rescue Plan Act of 2021.

One of the provisions included within the American Rescue Plan Act of 2021 eliminated the Maximum Rebate Amount for Single Source drugs and Innovator Multiple Source drugs in the Medicaid Drug Rebate Program.

We are currently reviewing this legislation, the impact of which is uncertain at this time.

Other legislative efforts relating to drug pricing have been enacted and others have been proposed at the U.S.

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We continually review newly enacted and proposed U.S.

federal and state legislation, as well as proposed rulemaking and guidance published by the Department of Health and Human Services and the FDA;

federal and state legislation, as well as proposed rulemaking and guidance published by the U.S.

Department of Health and Human Services and the FDA;

however, at this time, it is unclear the effect these matters may have on our businesses.

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A number of our products already face generic competition.

Prior to and during 2020, in the U.S., these products include, among others, Ammonul ® , Apriso ® , Benzaclin ® , Bupap ® , Cuprimine ® , Demser ® , Edecrin ® , Elidel ® , Glumetza ® , Istalol ® , Isuprel ® , Locoid ® Lotion, Lotemax ® Suspension, Mephyton ® , Migranal ® , MoviPrep ® , Nitropress ® , Solodyn ® , Syprine ® , Timoptic ® in Ocudose ® , Uceris ® Tablet, Virazole ® , Wellbutrin XL ® , Xenazine ® , Zegerid ® and Zovirax ® cream.

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

In Canada, these products include, among others, Glumetza ® , Wellbutrin ® XL and Zovirax ® ointment.

2021 LOE Branded Products - Branded products that began facing generic competition in the U.S.

during 2020 include, Migranal ® and MoviPrep ® .

In aggregate, these products accounted for less than 1% of our total revenues in 2020.

While certain of these products have already begun experiencing an adverse impact on volume and/or pricing as a result of the entry into the market of generic competition, we are unable to predict the complete magnitude or timing of this impact.

during 2021 included Lotemax ® Gel, Bepreve ® , Clindagel ® and certain other products.

These products accounted for less than 1% of our total revenues in 2020.

We believe the entry into the market of generic competition generally would have an adverse impact on the volume and/or pricing of the affected products, however we are unable to predict the magnitude or timing of this impact.

2022 through 2026 LOE Branded Products - Based on current patent expiration dates, settlement agreements and/or competitive information, we have identified branded products that we believe could begin facing potential LOE and/or generic competition in the U.S.

during the years 2022 through 2026.

These products and year of expected LOE include, but are not limited to, Clindagel ® (2021), Lotemax ® Gel (2021), Noritate ® (2021), Targretin ® Gel (2022), Xerese ® (2022) and certain other products that are subject to settlement agreements which could impact their exclusivity during the years 2021 through 2025.

aggregate, these products accounted for 2% of our total revenues in 2020.

These products and year of expected LOE include, but are not limited to, Noritate ® (2022), Targretin ® Gel (2022), Xerese ® (2022) and certain other products that are subject to settlement agreements which could impact their exclusivity during the years 2022 through 2026.

In aggregate, these products accounted for 2% of our total revenues in 2021.

These dates may change based on, among other things, successful challenge to our patents, settlement of existing or future patent litigation and at-risk generic launches.

2021 OTC Product Patent Expiry - PreserVision ® AREDS and PreserVision ® AREDS 2 are OTC eye vitamin formulas for those with moderate-to-advanced age-related macular degeneration.

PreserVision ® products accounted for 3% of our total revenues in 2020.

The PreserVision ® U.S.

formulation patent expires in 2021, but a patent covering methods of using the formulation remains in force until 2026.

While the Company cannot predict the magnitude or timing of the impact from its patent expiry, this is an OTC product and thus, the impact is not expected to be as significant as the LOE of a branded pharmaceutical product.

In addition, for a number of our products (including Relistor ® , Plenvu ® , Xifaxan ® 550mg, Bryhali ® , Duobrii ® and Jublia ® in the U.S.

and Jublia ® in Canada), we have commenced (or anticipate commencing) and have (or may have) ongoing infringement proceedings against potential generic competitors in the U.S.

In addition, for a number of our products (including Xifaxan ® 550mg, Bryhali ® , Duobrii ® , Trulance ® , Lumify ® and Relistor ® Injection in the U.S and Jublia ® in Canada.), we have commenced (or anticipate commencing) and have (or may have) ongoing infringement proceedings against potential generic competitors in the U.S.

If we are not successful in these proceedings, we may face increased generic competition for these products.

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The parties have agreed to dismiss all litigation related to Bryhali ® Lotion, and all intellectual property protecting Bryhali ® Lotion remains intact.

Bryhali ® Lotion, 0.01% (Perrigo) - On March 20, 2020, the Company received a Notice of Paragraph IV Certification from Perrigo Israel Pharmaceuticals, Ltd.

(“Perrigo”), in which Perrigo asserted that certain U.S.

patents, each of which is listed in the FDA’s Orange Book for Bryhali ® (halobetasol propionate) lotion, 0.01% are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Perrigo’s generic halobetasol propionate lotion, for which an Abbreviated New Drug Application ("ANDA") has been filed by Perrigo.

On May 1, 2020, the Company filed suit against Perrigo pursuant to the Hatch-Waxman Act, alleging infringement by Perrigo of one or more claims of the Bryhali ® Patents, thereby triggering a 30-month stay of the approval of the Perrigo ANDA for halobetasol propionate lotion.

On September 3, 2020, this action was consolidated with the action between the Company and Perrigo described below, regarding Perrigo’s ANDA for generic Duobrii ® (halobetasol propionate and tazarotine) lotion.

Bryhali ® Lotion, 0.01% (Padagis) - On March 20, 2020, the Company received a Notice of Paragraph IV Certification from Perrigo Israel Pharmaceuticals, Ltd.

(now Padagis LLC) ("Padagis"), in which Padagis asserted that certain U.S.

patents, each of which is listed in the FDA’s Orange Book for Bryhali ® (halobetasol propionate) lotion, 0.01% are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Padagis' generic halobetasol propionate lotion, for which an Abbreviated New Drug Application ("ANDA") has been filed by Padagis.

On May 1, 2020, the Company filed suit against Padagis pursuant to the Hatch-Waxman Act, alleging infringement by Padagis of one or more claims of the Bryhali ® patents, thereby triggering a 30-month stay of the approval of the Padagis ANDA for halobetasol propionate lotion.

On September 3, 2020, this action was consolidated with the action between the Company and Padagis described below, regarding Padagis' ANDA for generic Duobrii ® (halobetasol propionate and tazarotine) lotion.

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

Duobrii ® Lotion (Perrigo) - On July 23, 2020, the Company received a Notice of Paragraph IV Certification from Perrigo, in which Perrigo asserted that certain U.S.

patents, each of which is listed in the FDA's Orange Book for Duobrii ® (halobetasol propionate and tazarotine) lotion, are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Perrigo’s generic lotion, for which an ANDA has been filed by Perrigo.

On August 28, 2020, the Company filed suit against Perrigo pursuant to the Hatch-Waxman Act, alleging infringement by Perrigo of one or more claims of the Duobrii ® Patents, thereby triggering a 30-month stay of the approval of the Perrigo ANDA.

On September 3, 2020, this action was consolidated with the action between the Company and Perrigo described above, regarding Perrigo’s ANDA for generic Bryhali ® (halobetasol propionate) lotion.

Duobrii ® Lotion (Padagis) - On July 23, 2020, the Company received a Notice of Paragraph IV Certification from Padagis, in which Padagis asserted that certain U.S.

manufacture, use or sale of Padagis' generic lotion, for which an ANDA has been filed by Padagis.

On August 28, 2020, the Company filed suit against Padagis pursuant to the Hatch-Waxman Act, alleging infringement by Padagis of one or more claims of the Duobrii ® Patents, thereby triggering a 30-month stay of the approval of the Padagis ANDA.

On September 3, 2020, this action was consolidated with the action between the Company and Padagis described above, regarding Padagis' ANDA for generic Bryhali ® (halobetasol propionate) lotion.

We remain confident in the strength of the Duobrii ® patents and will vigorously defend our intellectual property.

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Xifaxan ® 550mg is protected by 26 patents covering the composition of matter and the use of Xifaxan ® listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, or the Orange Book.

A 3-day bench trial is scheduled to begin March 21, 2022.

The Company remains confident in the strength of the Xifaxan ® patents and will continue to vigorously pursue this matter and defend its intellectual property.

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Court of Appeals for the Federal Circuit.

In March 2021, the Company and Actavis reached a settlement agreement and the appeal was dismissed.

Relistor ® Injection Patent Litigation (Gland) - On February 22, 2022, the Company commenced litigation against Gland Pharma Limited (“Gland”) alleging patent infringement by Gland’s filing of its ANDA No.

216836, referencing Relistor ® (methynaltrexone bromide injection, vials) and its ANDA No.

216965, referencing Relistor ® (methynaltrexone bromide injection, pre-filled syringes).

This suit had been filed following receipt of two Notices of Paragraph IV Certification from Gland, in which it had asserted that the U.S.

patents listed in the FDA's Orange Book for the Company’s Relistor ® methynaltrexone bromide injection, were either invalid, unenforceable and/or would not be infringed by the commercial manufacture, use or sale of its generic methynaltrexone bromide injection.

The filing of this suit triggered a 30-month stay of the approval of the Gland ANDA for its methynaltrexone bromide injection.

The Company remains confident in the strength of the Relistor ® patents and will continue to vigorously pursue this matter and defend its intellectual property.

Trulance ® 3mg Tablets Patent Litigation (MSN and Mylan) - In March 2021, the Company received Notices of Paragraph IV Certification from MSN Laboratories Private Ltd.

(“MSN”) and Mylan Pharmaceuticals Inc., (“Mylan”) in which MSN and Mylan asserted that certain U.S.

patents, each of which is listed in the FDA’s Orange Book for Trulance ® (plecanatide) 3mg tablets, are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of their generic plecanatide tablets, for which each of MSN and Mylan had filed an ANDA.

In April 2021, the Company filed suit against MSN and Mylan, alleging infringement of one or more claims of the patents listed for Trulance ® in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, or the Orange Book.

The Company remains confident in the strength of the Trulance ® patents and will continue to vigorously pursue this matter and defend its intellectual property.

Lumify ® Ophthalmic Solution Patent Litigation (Slayback) - In September 2021, the Company commenced litigation against Slayback Pharma LLC and Slayback Pharma India LLP (together, “Slayback”) alleging patent infringement by Slayback Pharma LLC’s filing of its ANDA No.

216361, referencing Lumify ® (0.025% brimonidine tartrate ophthalmic solution).

This suit had been filed following receipt of a Notice of Paragraph IV Certification from Slayback Pharma LLC, in which it had asserted that the U.S.

patents listed in the FDA's Orange Book for the Company’s Lumify ® brimonidine tartrate ophthalmic solution, were either invalid, unenforceable and/or would not be infringed by the commercial manufacture, use or sale of its generic brimonidine tartrate solution.

The filing of this suit triggered a 30-month stay of the approval of the Slayback ANDA for its brimonidine tartrate solution.

The Company remains confident in the strength of the Lumify ® patents and will continue to vigorously pursue this matter and defend its intellectual property.

Lumify ® Ophthalmic Solution Patent Litigation (Lupin) – On February 2, 2022 the Company commenced litigation against Lupin Pharmaceuticals, Inc.

(“Lupin”) alleging patent infringement by Lupin’s filing of its ANDA No.

216716, referencing Lumify ® (0.025% brimonidine tartrate ophthalmic solution).

This suit had been filed following receipt of a Notice of Paragraph IV Certification from Lupin, in which it had asserted that the U.S.

The filing of this suit triggered a 30-month stay of the approval of the Lupin ANDA for its brimonidine tartrate solution.

The Company remains confident in the strength of the Lumify ® patents and will continue to vigorously pursue this matter and defend its intellectual property.

Generic Competition to Uceris ® - In July 2018, a generic competitor launched a product which will directly compete with our Uceris ® Tablet product.

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On December 18, 2020, the Court of Appeals for the Federal Circuit affirmed the District Court’s claim construction.

The ultimate impact of this generic competitor on our future revenues cannot be predicted;

The ultimate impact of this generic competitor on our

future revenues cannot be predicted;

however, Uceris ® Tablet revenues for 2021, 2020 and 2019 were approximately $10 million, $15 million and $20 million, respectively.

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Jublia ® is covered by fourteen additional Orange Book-listed patents owned by the Company or its licensor, which expire in the years 2028 through 2035.

In August and September 2018, we received notices of the filing of a number of ANDAs with paragraph IV certification, and have timely filed patent infringement suits against these ANDA filers, and, in addition, we have also commenced certain patent infringement proceedings in Canada against three separate defendants.

In August and September 2018, the Company received notices of the filing of a number of ANDAs with paragraph IV certification, and has timely filed patent infringement suits against these ANDA filers, and, in addition, the Company has also commenced certain patent infringement proceedings in Canada against four separate defendants.

All cases in the U.S.

regarding Jublia ® have been settled.

In Canada, two lawsuits remain pending against Apotex, Inc.

PreserVision ® Patent Litigation - PreserVision ® AREDS and PreserVision ® AREDS 2 are OTC eye vitamin and mineral supplements containing nutrient formulas recommended by the National Eye Institute to reduce the risk of progression of intermediate to advanced AMD.

PreserVision ® products accounted for 3% of our total revenues in 2021.

The PreserVision ® U.S.

formulation patent expired in March 2021, but a patent covering methods of using the formulation remains in force into 2026.

The Company has filed patent infringement proceedings against 16 defendants claiming infringement of these patents and, in certain circumstances, related unfair competition and false advertising causes of action.

Eleven of these proceedings were subsequently settled;

two resulted in entry of a default.

One defendant filed a declaratory judgment action after the Company filed its suit, seeking declaratory judgment related to patent claims as well as false advertising and unfair competition claims.

As of the date of this filing, there are four unresolved actions.

The Company remains confident in the strength of these patents and will continue to vigorously pursue these matters and defend its intellectual property.

While the Company cannot predict the magnitude or timing of the impact from the PreserVision ® patent expiry, this is an OTC product and thus, the impact is not expected to be as significant as the LOE of a branded pharmaceutical product.

See Note 20, "LEGAL PROCEEDINGS" to our audited Consolidated Financial Statements for further details regarding certain infringement proceedings.

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“Risk Factors” of this Form 10-K for additional information on our competition risks.

Regulatory Matters

In the normal course of business, our products, devices and facilities are the subject of ongoing oversight and review by regulatory and governmental agencies, including general, for cause and pre-approval inspections by the relevant competent authorities where we have business operations.

Through the date of this filing, all of our global operations and facilities have the relevant operational good manufacturing practices certificates and all Company products and operating sites are in good compliance standing with all relevant notified bodies and global health authorities.

Further, all sites under FDA jurisdiction are rated as either No Action Indicated (where there was no Form 483 observation) or Voluntary Action Indicated (“VAI”) (where there was a Form 483 with one or more observations).

In the case of VAI inspection outcomes, the FDA has accepted our responses to the issues cited, which will be verified when the agency makes its next inspection of those specific facilities.

FINANCIAL PERFORMANCE HIGHLIGHTS

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Summary of 2021 Compared with 2020

Revenues for 2021 and 2020 were $8,434 million and $8,027 million, respectively, an increase of $407 million, or 5%.

The increase was primarily driven by:

(i) a net increase in volumes and (ii) the favorable impact of foreign currencies, primarily in Europe, Asia and Canada.

These increases were partially offset by:

(i) our divestiture of Amoun on July 26, 2021 and (ii) a decrease in net realized pricing.

The net increase in volumes was primarily due to the positive impacts from the recovery from the COVID-19 pandemic and the easing of certain social restrictions, as previously discussed, primarily during the three months ended June 30, 2021, partially offset by the impact of the loss of exclusivity of certain products.

The changes in our segment revenues and segment profits are discussed in further detail in the subsequent section titled “Reportable Segment Revenues and Profits”.

Operating income was $450 million and $676 million for 2021 and 2020, respectively, a decrease in our operating results of $226 million which reflects, among other factors:

• an increase in contribution (product sales revenue less cost of goods sold, exclusive of amortization and impairments of intangible assets) of $259 million.

The increase was primarily driven by:

(i) the increase in volumes, as previously discussed, and (ii) the favorable impact of foreign currencies, partially offset by:

(i) the impact of our divestiture of Amoun on July 26, 2021 and (ii) the decrease in net realized pricing;

• an increase in Selling, general, and administrative (“SG&A”) expenses of $257 million, primarily attributable to:

• an increase in R&D of $13 million primarily attributable to the non-recurrence of the temporary suspension in certain R&D activities and clinical trials in 2020, partially offset by a rebalancing of our portfolio within the Ortho Dermatologics business;

• a decrease in Amortization of intangible assets of $270 million primarily attributable to fully amortized intangible assets no longer being amortized in 2021;

• Goodwill impairments of $469 million related to the impairment to the goodwill of the Ortho Dermatologics reporting unit during the three months ended March 31, 2021 as a result of revised forecasts due to:

(i) certain products that continued to experience longer launch cycles than originally anticipated, in part due to COVID-19 pandemic factors, and (ii) other changes to its product pipeline;

• an increase in Asset impairments, including loss on assets held for sale of $120 million, primarily attributable to:

(i) higher impairments to certain products and (ii) additional losses during 2021 related to assets classified as held for sale;

• a decrease in Other expense, net of $129 million, primarily attributable:

(i) higher insurance recoveries related to certain litigation matters in 2021 as compared to 2020 and (ii) decreases in charges for Acquisition-related contingent consideration and Acquired in-process research and development costs.

Operating income was $450 million and $676 million for 2021 and 2020, respectively, and includes non-cash charges for Depreciation and amortization of intangible assets of $1,552 million and $1,825 million, Asset impairments, including loss on assets held for sale of $234 million and $114 million, Goodwill impairments of $469 million and $0 and Share-based compensation of $128 million and $105 million for 2021 and 2020, respectively.

Our Loss before benefit from income taxes for 2021 and 2020 was $1,024 million and $934 million, respectively, an increase in our Loss before benefit from income taxes of $90 million.

The increase in our Loss before benefit from income taxes is primarily attributable to the decrease in our operating results of $226 million, as previously discussed, partially offset by:

(i) a decrease in Interest expense of $108 million and (ii) the favorable net change in Foreign exchange and other of $37 million.

Net loss attributable to Bausch Health Companies Inc.

for 2021 and 2020 was $948 million and $560 million, respectively, a decrease in our results of $388 million.

The decrease in our results was primarily due to:

(i) a decrease in the Benefit from income taxes of $288 million, primarily attributable to the release of a portion of our valuation allowance against deferred tax assets in 2020 and (ii) the increase in Loss before benefit from income taxes of $90 million, as previously discussed.

Summary of 2020 Compared with 2019

Revenues for 2020 and 2019 were $8,027 million and $8,601 million, respectively, a decrease of $574 million, or 7%.

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These decreases in our revenues were partially offset by the incremental sales of our Trulance ® product, which we added to our portfolio in March 2019 as part of the acquisition of certain assets of Synergy.

Net realized pricing was flat with increases in Bausch + Lomb/International and Diversified Products being offset by decreases in Salix and Ortho Dermatologics.

Net realized pricing was flat with increases in our Diversified Products, International Rx and Bausch + Lomb segments being offset by decreases in our Salix and Ortho Dermatologics segments.

The changes in our segment revenues and segment profits are discussed in further detail in the subsequent section titled “Reportable Segment Revenues and Profits”.

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The decrease was partially offset by lower third-party royalty costs;

• a decrease in Selling, general, and administrative (“SG&A”) expenses of $187 million, primarily attributable to profit protection measures taken to manage and reduce operating expenses during the COVID-19 pandemic;

• a decrease in SG&A expenses of $187 million, primarily attributable to profit protection measures taken to manage and reduce operating expenses during the COVID-19 pandemic;

• a decrease in R&D of $19 million primarily attributable to social restrictions and other precautionary measures taken in response to the COVID-19 pandemic, as previously discussed;

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Asset impairments, including loss on assets held for sale in 2020 were primarily related to:

(i) reclassifying a business within our Bausch + Lomb/International segment as held for sale and (ii) certain product lines as a result of changes to forecasted sales.

(i) reclassifying a business within our International Rx segment as held for sale and (ii) certain product lines as a result of changes to forecasted sales.

Impairments during 2019 were primarily related to:

(i) certain product lines as a result of changes to forecasted sales due to generic competition and other factors and (ii) impairments related to assets being classified as held for sale;

• a decrease in Other expense (income), net of $960 million, primarily attributable the decrease in net charges to Litigation and other matters.

• a decrease in Other expense, net of $924 million, primarily attributable the decrease in net charges to Litigation and other matters.

The decrease in Litigation and other matters was primarily related to the settlement of a legacy U.S.

securities class action matter (which is subject to an objector's appeal of the final court approval) in 2019, to which the Company and the other settling defendants admitted no liability as to the claims against it and denied all allegations of wrongdoing.

including loss on assets held for sale of $114 million and $75 million and Share-based compensation of $105 million and $102 million for 2020 and 2019, respectively.

Operating income for 2020 was $676 million compared to Operating loss for 2019 of $203 million and includes non-cash charges for Depreciation and amortization of intangible assets of $1,825 million and $2,075 million, Asset impairments, including loss on assets held for sale of $114 million and $75 million and Share-based compensation of $105 million and $102 million for 2020 and 2019, respectively.

Our Loss before benefit from income taxes for 2020 and 2019 was $934 million and $1,837 million, respectively, an increase in our results before benefit from income taxes of $903 million.

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The increase in our results was primarily due to:

(i) the decrease in Loss before benefit from income taxes of $903 million, as previously discussed, and (ii) the favorable net change in the Benefit from income taxes of $321 million.

Summary of 2019 Compared with 2018

Revenues for 2019 and 2018 were $8,601 million and $8,380 million, respectively, an increase of $221 million, or 3%.

The increase was primarily driven by:

(i) higher net realized pricing, (ii) higher volumes and (iii) sales of our Trulance ® product, which we added to our portfolio in March 2019 as part of the acquisition of certain assets of Synergy.

These increases in Revenues were partially offset by:

(i) the unfavorable effect of foreign currencies, primarily in Europe, Asia and Latin America, and (ii) the impact of divestitures and discontinuations.

Operating loss for 2019 and 2018 was $203 million and $2,384 million, respectively, an increase in our operating results of $2,181 million which reflects, among other factors:

• an increase in contribution (product sales revenue less cost of goods sold, exclusive of amortization and impairments of intangible assets) of $230 million.

The increase was primarily driven by:

(i) higher gross selling prices, (ii) higher volumes, (iii) the incremental contribution of the sales of our Trulance ® product, which we added to our portfolio in March 2019 as part of the acquisition of certain assets of Synergy and (iv) better inventory management, partially offset by:

(i) the unfavorable effect of foreign currencies, (ii) the impact of divestitures and discontinuations, (iii) higher sales deductions and (iv) the amortization of the inventory fair value step-up recorded in acquisition accounting related to the inventories we acquired as part of the acquisition of certain assets of Synergy;

• an increase in SG&A expenses of $81 million, primarily attributable to:

(i) higher selling, advertising and promotion expenses, (ii) the impact of the acquisition of certain assets of Synergy, (iii) costs in 2019 attributable to our IT infrastructure improvement projects and (iv) the charge associated with the termination of a co-promotional agreement with US WorldMeds, LLC.

The increase was partially offset by:

(i) the favorable effect of foreign currencies, (ii) lower costs related to professional services and (iii) the impact of divestitures and discontinuations;

• an increase in R&D of $58 million primarily attributable to a number of projects within our Bausch + Lomb and GI businesses;

• a decrease in Amortization of intangible assets of $747 million, primarily due to:

(i) the impact of the change in the estimated useful life of the Xifaxan ® related intangible assets made in September 2018 to reflect management's changes in assumptions, (ii) fully amortized intangible assets no longer being amortized in 2019 and (iii) lower amortization as a result of impairments to intangible assets in prior periods;

• a decrease in Goodwill impairments of $2,322 million, as a result of impairments in 2018 to the goodwill of our:

(i) Salix reporting unit upon adopting the new guidance for goodwill impairment accounting at January 1, 2018, (ii) Ortho Dermatologics reporting unit due to unforeseen changes in business dynamics during the three months ended March 31, 2018 and (iii) Dentistry reporting unit as a result of revised forecasts due to changing market conditions during the three months ended December 31, 2018;

• a decrease in Asset impairments, including loss on assets held for sale of $493 million, primarily related to specific impairments in 2018 as a result of:

(i) decreases in forecasted sales for the Uceris ® Tablet product due to generic competition and (ii) decreases in forecasted sales for the Arestin ® product due to changing market conditions;

• an increase in Other expense (income), net of $1,434 million, primarily attributable to:

(i) an increase in net charges to Litigation and other matters primarily related to the settlement of a legacy U.S.

securities class action matter (which is

subject to an objector's appeal of the final court approval) in 2019, to which the Company and the other settling defendants admitted no liability as to the claims against it and deny all allegations of wrongdoing and (ii) Acquired in-process research and development costs incurred during 2019 associated with the upfront payments to enter into certain exclusive licensing agreements.

These increases in other expenses were partially offset by the expected receipt for the achievement of a milestone related to a certain product.

Operating loss for 2019 and 2018 was $203 million and $2,384 million, respectively, and includes non-cash charges for Depreciation and amortization of intangible assets of $2,075 million and $2,819 million, Goodwill impairments of $0 and $2,322 million, asset impairments of $75 million and $568 million and Share-based compensation of $102 million and $87 million, respectively.

Our Loss before benefit from income taxes for 2019 and 2018 was $1,837 million and $4,154 million, respectively, an increase in our results before benefit from income taxes of $2,317 million.

The decrease in our Loss before benefit from income taxes is primarily attributable to:

(i) the increase in our operating results of $2,181 million previously discussed, (ii) the decrease in the Loss on extinguishment of debt of $77 million and (iii) a decrease in Interest expense of $73 million as a result of lower principal amounts of outstanding debt for most of 2019, partially offset by the effect of higher interest rates during 2019.

The decrease in our Loss before benefit from income taxes was partially offset by an unfavorable net change in Foreign exchange and other of $15 million.

Net loss attributable to Bausch Health Companies Inc.

for 2019 and 2018 was $1,788 million and $4,148 million, respectively, an increase in our results of $2,360 million.

The increase in our results was primarily due to the decrease in Loss before benefit from income taxes of $2,317 million, as previously discussed, and the increase in the Benefit from income taxes of $44 million.

(i) the decrease in Loss before benefit from income taxes of $903 million, as previously discussed, and (ii) the favorable net change in the Benefit from income taxes of $321 million, primarily attributable to the release of a portion of our valuation allowance against deferred tax assets in 2020.

RESULTS OF OPERATIONS

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Asset impairments, including loss on assets held for sale 234 114 75 120 39

Restructuring, integration and separation costs 22 31 22 (9) 9

Acquisition-related contingent consideration 48 12 (9) 36 21

Other expense (income), net 454 1,414 (20) (960) 1,434

Restructuring, integration, separation and IPO costs 50 22 31 28 (9)

Other expense, net 373 502 1,426 (129) (924)

7,984 7,351 8,804 633 (1,453)

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$ (948) $ (560) $ (1,788) $ (388) $ 1,228

A detailed discussion of the year-over-year changes of the Company’s 2019 results compared with that of 2018 can be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2019 filed on February 19, 2020.

A detailed discussion of the year-over-year changes of the Company’s 2020 results compared with that of 2019 can be found under "Management’s Discussion and Analysis of Financial Condition and Results of Operations with Retrospective Segment Changes of the 2020 Form 10-K" in Exhibit 99.1 of our Form 8-K filed on May 4, 2021.

2021 Compared with 2020

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See Note 22, "SEGMENT INFORMATION" to our audited 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 $8,027 million and $8,601 million for 2020 and 2019, respectively, a decrease of $574 million, or 7%.

The decrease was primarily driven by:

(i) lower volumes of $528 million primarily in our Bausch + Lomb/International and Diversified Products segments primarily due to social restrictions and other precautionary measures taken in response to the COVID-19 pandemic, as previously discussed, (ii) the unfavorable effect of foreign currencies of $39 million primarily in Latin America and (iii) the impact of divestitures and discontinuations of $20 million.

The decreases in our revenues were partially offset by the incremental product sales of our Trulance® product, which we added to our portfolio in March 2019 as part of the acquisition of certain assets of Synergy of $13 million.

Net realized pricing was flat with increases in Bausch + Lomb/International and Diversified Products being offset by decreases in Salix and Ortho Dermatologics.

Our revenues were $8,434 million and $8,027 million for 2021 and 2020, respectively, an increase of $407 million, or 5%.

The increase was due to:

(i) a net increase in volumes of $471 million primarily in our Bausch + Lomb, Salix, Ortho Dermatologics and International Rx segments and (ii) the favorable impact of foreign currencies of $95 million primarily in Europe, Asia and Canada.

These increases were partially offset by:

(i) the impact of divestitures and discontinuations of $132 million, primarily attributable to our divestiture of Amoun on July 26, 2021 and (ii) a decrease in net realized pricing of $27 million primarily the result of higher sales deductions.

The net increase in volumes was primarily due to the positive impacts of the recovery from the COVID-19 pandemic and the easing of certain social restrictions, as previously discussed, partially offset by:

(i) the impact of the loss of exclusivity of certain products primarily in our Diversified Products, Bausch + Lomb and Ortho Dermatologics segments and (ii) the impacts of a quality issue at a third-party supplier on the revenues of certain Consumer products included in our Bausch + Lomb segment, as discussed below.

Our 2020 revenues were most negatively impacted during our second quarter by the social restrictions and other precautionary measures taken in response to the COVID-19 pandemic.

Our revenues for the three months ended December 31, 2020 and 2019 were $2,213 million and $2,224 million, respectively, a decrease of $11 million.

The changes in our year over year segment revenues and segment profits, including the impacts of COVID-19 pandemic related matters for 2020, are discussed in further detail in the respective subsequent sections “ — Reportable Segment Revenues and Profits”.

The changes in our segment revenues and segment profits, including the impacts of COVID-19 pandemic related matters, are discussed in further detail in the respective subsequent section “ — Reportable Segment Revenues and Profits”.

Cash Discounts and Allowances, Chargebacks and Distribution Fees

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Net product sales $ 8,342 60.6 % $ 7,924 61.1 %

Cash discounts and allowances, returns, rebates, chargebacks and distribution fees as a percentage of gross product sales were 38.9% and 38.4% in 2020 and 2019, respectively.

Changes in cash discounts and allowances, returns, rebates, chargebacks and distribution fees as a percentage of gross product sales were primarily driven by:

• discounts and allowances as a percentage of gross product sales was lower primarily due to lower discount rates for certain generic products, such as Glumetza ® AG, Migranal ® AG and Syprine ® AG, partially offset by the impact of higher gross product sales of Xifaxan ® and Lotemax ® AG;

• returns as a percentage of gross product sales was relatively unchanged.

Over the last several years, the Company increased its focus on maximizing operational efficiencies and continues to take actions to reduce product returns, including but not limited to:

Discounts and allowances, returns, rebates, chargebacks and distribution service fees as a percentage of gross product sales were 39.4% and 38.9% in 2021 and 2020, respectively, an increase of 0.5% percentage points and includes:

• discounts and allowances as a percentage of gross product sales were lower primarily due to lower discount rates and gross product sales for certain generic products, such as Migranal ® AG, Elidel ® AG and Diastat ® AG, partially offset by the impact of higher discount rates for and lower sales of Glumetza ® AG;

• returns as a percentage of gross product sales were higher and represent the impacts of:

(i) higher sales of certain products, primarily Xifaxan ® and (ii) returns associated with a quality issue at a third-party supplier on the revenues of certain Consumer products included in our Bausch + Lomb segment, as discussed below, offset by improving sales returns experience in 2021 as compared to 2020.

Over the last several years, the Company has increased its focus on maximizing operational efficiencies and continues to take actions to reduce product returns, including, but not limited to:

(i) monitoring and reducing customer inventory levels, (ii) instituting disciplined pricing policies and (iii) improving contracting.

These actions have had the effect of improving sales return experience, primarily related to branded and generic products.

Included in the product sales return provisions for 2020 and 2019 are reductions in variable consideration for sales returns related to past sales of approximately $38 million and $80 million, respectively.

These actions have had the effect of improving the sales return experience, related to branded and generic products.

Included in the product returns provision for 2021 and 2020 are reductions in variable consideration for sales returns related to past sales of approximately $28 million and $38 million, respectively.

See Note 2, "SIGNIFICANT ACCOUNTING POLICIES" to our audited Consolidated Financial Statements regarding further details related to product sales provisions;

• rebates as a percentage of gross product sales was higher primarily due the impact of:

(i) increases in gross product sales for products that carry higher contractual rebates and co-pay assistance programs, including the impact of incremental rebates from contractual price increase limitations for promoted products, such as Xifaxan ® and Jublia ® and (ii) sales of our Trulance ® product, which we added to our portfolio in March 2019 as part of the acquisition of certain assets of Synergy, partially offset by decreases in gross product sales for products which carry higher rebate rates, such as Apriso ® as a result of its generic release, Lotemax ® Suspension and Lotemax ® Gel;

• chargebacks as a percentage of gross product sales was higher primarily due to the impact of:

(i) higher chargeback rates and gross product sales for Glumetza ® SLX, Xifaxan ® and Nifedical ® and (ii) the release of the generic Apriso ® AG (December 2019).

The higher chargebacks as a percentage of gross product sales were partially offset by the impact of lower gross product sales of:

(i) certain generic products, such as Glumetza ® AG, Targretin ® AG, and Ofloxacin and (ii) the branded product Nifedical ® ;

• distribution service fees as a percentage of gross product sales was unchanged as the impact of:

(i) higher gross product sales and higher distribution service fee rates associated with our Xifaxan ® and Glumetza ® SLX products and (ii) sales of our Trulance ® product, which we added to our portfolio in March 2019 as part of the acquisition of certain assets of Synergy were offset by the impact of lower gross product sales of certain branded products, such as Apriso ® as a result of its generic release.

Price appreciation credits are offset against the distribution service fees we pay wholesalers and were $15 million and $11 million for 2020 and 2019, respectively.

• rebates as a percentage of gross product sales were higher primarily due the impact of:

(i) an increase in gross product sales of certain branded products with higher rebate rates, such as Xifaxan ® , Prolensa ® , Jublia ® and Trulance ® and (ii) an increase in rebates due to the launch of Arazlo ® (June 2020) and was partially offset by lower gross product sales for certain branded products, such as Duobrii ® , Apriso ® and Lotemax ® Gel;

• chargebacks as a percentage of gross product sales were lower primarily due to the impacts of:

(i) lower chargeback rates and gross product sales for certain products, such as Glumetza ® AG and Wellbutrin ® and (ii) lower gross product sales for certain products, such as Targretin ® AG, partially offset by higher chargeback rates and gross product sales for certain products, such as Glumetza ® SLX, Syprine ® AG and Mysoline ® ;

• distribution service fees as a percentage of gross product sales were unchanged.

Price appreciation credits were offset against the distribution service fees we paid wholesalers and were $17 million and $15 million for 2021 and 2020, respectively.

Operating Expenses

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

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

Cost of goods sold primarily includes:

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depreciation of manufacturing facilities and equipment;

and lower of cost or market adjustments to inventories.

and lower of cost or net

realizable value 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 $2,202 million and $2,297 million for 2020 and 2019, respectively, a decrease of $95 million, or 4%.

The decrease was primarily driven by:

(i) lower third-party royalty costs, (ii) lower volumes, as previously discussed, and (iii) the favorable impact of foreign currencies.

The decrease was partially offset by:

(i) higher manufacturing variances primarily due to the impacts of the COVID-19 pandemic and (ii) changes in product mix.

Cost of goods sold as a percentage of Product sales revenue was 27.8% and 27.1% for 2020 and 2019, respectively, an increase of 0.7 percentage points.

Costs of goods sold as a percentage of Product sales revenue was unfavorably impacted as a result of:

(i) changes in product mix and (ii) higher manufacturing variances primarily due to the impacts of the COVID-19 pandemic.

These factors were partially offset by lower third-party royalty costs.

Cost of goods sold was $2,361 million and $2,202 million for 2021 and 2020, respectively, an increase of $159 million, or 7%.

The increase was primarily driven by:

(i) the net increase in volumes, as previously discussed, (ii) the unfavorable impact of foreign currencies and (iii) higher manufacturing variances, primarily the result of:

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

These increases were partially offset by:

(i) the impact of the divestiture of Amoun on July 26, 2021 and (ii) a reduction in third party royalties.

As the recovery from the COVID-19 pandemic continues and businesses reopen, many companies are reporting increases for certain costs, such as labor, materials, shipping and utilities.

The increased costs have resulted in additional manufacturing variances and have had a negative impact on our contribution margins during 2021.

Through the date of this filing, we are unable to determine if these inflationary factors are transitory or should be expected to continue over a medium or long term.

Cost of goods sold as a percentage of Product sales revenue was 28.3% and 27.8% for 2021 and 2020, respectively, an increase of 0.5 percentage points primarily attributable to the year-over-year changes in product mix.

We were notified by a third-party supplier of sterilization services for our lens care solution bottles and caps at our Milan, Italy facility, of inconsistencies in the sterilization data versus certificates of conformance previously submitted to us by that supplier.

Based on our internal Health and Safety Analysis, it was determined that this issue did not affect the safety or performance of any of our products and is limited to a specific number of lots for certain Consumer products within our Bausch + Lomb segment.

However, out of an abundance of caution and working with the appropriate notified body and responsible health authorities, we have contained and/or recalled down to the consumer level the limited number of affected lots of products resulting in $8 million of manufacturing variances and $6 million of returns.

Further, although our Greenville, South Carolina facility increased production to support some of the demand in the near term, due to the limited availability of qualified materials, production at the Milan facility could not keep up with demand, which negatively impacted our sales for the affected products in this region during 2021.

At this time, we have removed this supplier from our Approved Supplier List and qualified another sterilization supplier, who, along with an existing secondary supplier, have and will provide bottle sterilization, thereby allowing our Milan facility to return to full production capacity.

Although it is possible additional charges may be incurred, at this time we believe no additional charges will be necessary.

Selling, General and Administrative Expenses

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depreciation of corporate facilities and equipment;

separation-related and IPO-related costs;

and other general and administrative costs.

Also included in SG&A expenses for 2020 are separation-related costs.

The Company has incurred, and will incur, separation-related costs which are incremental costs indirectly related to the Separation.

Separation-related costs include, but are not limited to:

The Company has incurred, and will incur, Separation-related and IPO-related costs which are incremental costs indirectly related to the B+L Separation and Solta IPO.

Separation-related and IPO-related costs include, but are not limited to:

(i) IT infrastructure and software licensing costs, (ii) rebranding costs and (iii) costs associated with facility relocation and/or modification.

SG&A expenses were $2,367 million and $2,554 million for 2020 and 2019, respectively, a decrease of $187 million, or 7%.

The decrease was primarily attributable to:

(i) the impacts of social restrictions and other precautionary measures taken in response to the COVID-19 pandemic, as previously discussed, and (ii) profit protection measures taken to manage and reduce operating expenses during the COVID-19 pandemic and resulted in decreases in:

(a) advertising and promotion expenses and (b) selling expenses.

The profit protection measures have been successful in expanding the profit margins in many of our businesses.

As the pace of recovery in each geography accelerates, we expect to allocate more resources to selling and other promotional activities to drive our return to sustainable revenue and profit growth.

Included within SG&A expenses for 2020 were $21 million of separation-related costs.

Included within SG&A expenses for 2019 was a charge associated with the termination of a certain co-promotional agreement.

SG&A expenses were $2,624 million and $2,367 million for 2021 and 2020, respectively, an increase of $257 million, or 11%.

The increase was primarily attributable to:

(i) the impacts of the non-recurrence of certain profit protection measures taken in 2020 to manage and reduce operating expenses during the COVID-19 pandemic, (ii) an increase in Separation-related and IPO-related costs of $111 million and (iii) the impact of foreign currencies.

These increases were partially offset by the impact of the Amoun Sale on July 26, 2021.

During 2020, the Company took certain profit protection measures to manage and reduce operating expenses during the COVID-19 pandemic, which resulted in year-over-year increases primarily in selling expenses and advertising and promotion expenses.

These profit protection measures were successful in expanding the profit margins in many of our businesses as previously discussed.

As the pace of recovery in each geography accelerated, we continued to allocate more resources to selling and other promotional activities to drive our return to sustainable revenue and profit growth and as a result our operating expenses for 2021 exceeded our operating expenses in 2020.

Research and Development Expenses

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clinical manufacturing and scale-up costs;

and other third-party development costs.

third-party development costs.

Quality assurance are the costs incurred to meet evolving customer and regulatory standards and include:

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and other third-party costs.

R&D expenses were $452 million and $471 million for 2020 and 2019, respectively, a decrease of $19 million, or 4%.

R&D expenses were $465 million and $452 million for 2021 and 2020, respectively, an increase of $13 million, or 3%.

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

R&D expenses as a percentage of Product sales were approximately 6% and 6% for 2021 and 2020, respectively.

As previously discussed, primarily during our second quarter of 2020, certain of our R&D activities were limited and others, including new patient enrollments in clinical trials, were temporarily paused as most trial sites were not able to accept new patients due to government mandated shutdowns.

However, during our third quarter of 2020, many of these trial sites began to reopen and we saw the pace of new patient enrollments increasing, getting close to their pre-COVID-19 levels in the U.S.

As of the date of this filing, we have not had to make material changes to our development timelines and the pause in our clinical trials have not had a material impact on our operating results;

In 2020, certain of our R&D activities were limited and others, including new patient enrollments in clinical trials, were temporarily paused primarily during our second quarter, as most trial sites were not able to accept new patients due to government-mandated shutdowns.

However, during our third quarter of 2020, many of these trial sites began to reopen and we saw the pace of new patient enrollments increase, although at this time certain of our projects are moving slower than we would like due to the impacts of the COVID-19 pandemic.

As of the date of this filing, we have not had to make material changes to our development timelines and the pause in our clinical trials has not had a material impact on our operating results;

however, a resurgence of the virus could result in unanticipated delays in our ability to conduct new patient enrollments and create other delays, which could have a significant adverse effect on our future operating results.

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

Goodwill Impairments

Goodwill is not amortized but is tested for impairment at least annually at the reporting unit level.

An interim goodwill impairment test in advance of the annual impairment assessment may be required if events occur that indicate an impairment might be present.

A reporting unit is the same as, or one level below, an operating segment.

The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants.

The Company estimates the fair values of all reporting units using a discounted cash flow model, which utilizes Level 3 unobservable inputs.

Goodwill impairments were $469 million and $0 for 2021 and 2020, respectively.

During the three months ended March 31, 2021, management identified launches of certain Ortho Dermatologics products which were not going to achieve their trajectories as forecasted once the social restrictions associated with the COVID-19 pandemic began to ease in the U.S.

and offices of health care professionals could reopen.

In addition, insurance coverage pressures within the U.S.

continued to persist limiting patient access to topical acne and psoriasis products.

In light of these developments, during the first quarter of 2021, the Company began taking steps to:

(i) redirect its R&D spend to eliminate projects it has identified as high cost and high risk, (ii) redirect a portion of its marketing and product development outside the U.S.

to geographies where there is better patient access and (iii) reduce its cost structure to be more competitive.

As a result, during the three months ended March 31, 2021, the Company revised its long-term forecasts for the Ortho Dermatologics reporting unit.

Management believed that these events were indicators that there is less headroom as of March 31, 2021 as compared to the headroom calculated on the date goodwill was last tested for impairment (October 1, 2020).

Therefore, a quantitative fair value test for the Ortho Dermatologics reporting unit was performed.

The quantitative fair value test utilized the Company's most recent cash flow projections as revised in the first quarter of 2021 to reflect the business changes previously discussed, including a range of potential outcomes, along with a long-term growth rate of 1.0% and a range of discount rates between 9.0% and 10.0%.

Based on the quantitative fair value test, the carrying value of the Ortho Dermatologics reporting unit exceeded its fair value at March 31, 2021, and the Company recognized a goodwill impairment of $469 million.

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

Asset impairments, including loss on assets held for sale

Long-lived assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

Impairment charges associated with these assets are included in Asset impairments in the Consolidated Statement of Operations.

The Company continues to monitor the recoverability of its finite-lived intangible assets and tests the intangible assets for impairment if indicators of impairment are present.

Asset impairments, including loss on assets held for sale were $234 million and $114 million for 2021 and 2020, respectively, an increase of $120 million.

Asset impairments, including loss on assets held for sale for 2020 included impairments of:

(i) $96 million to reduce the carrying value of a business within the Bausch + Lomb/International segment to its estimated fair value less costs to sell due to classifying the business as held for sale, (ii) $16 million, in aggregate, due to decreases in forecasted sales of certain product lines, (iii) $1 million, in aggregate, related to the discontinuance of certain product lines not aligned with the focus of the Company's core businesses and (iv) $1 million related to Acquired in-process research and development not in service.

Asset impairments, including loss on assets held for sale for 2019 included impairments of:

(i) $58 million reflecting decreases in forecasted sales of certain product lines due to generic competition and other factors, (ii) $8 million related to assets being classified as held for sale, (iii) $5 million related to certain product/patent assets associated with the discontinuance of specific product lines not aligned with the focus of the Company's core businesses and (iv) $4 million related to Acquired in-process research and development not in service.

Asset impairments, including loss on assets held for sale for 2021 includes:

(i) impairments of $105 million, in aggregate, due to decreases in forecasted sales of certain product lines, (ii) an $88 million loss on assets held for sale in connection with the Amoun Sale, (iii) impairments of $23 million, in aggregate, related to the discontinuance of certain product lines and (iv) $18 million related to a portion of an IT infrastructure improvement project no longer being utilized.

Asset impairments, including loss on assets held for sale for 2020 includes:

(i) a $96 million adjustment to reduce the carrying value of the Amoun business to its estimated fair value less costs to sell due to classifying the business as held for sale, (ii) $16 million, in aggregate, due to decreases in forecasted sales of certain product lines, (iii) $1 million, in aggregate, related to the discontinuance of certain product lines not aligned with the focus of the Company's core businesses and (iv) $1 million related to Acquired in-process research and development not in service.

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

Restructuring, Integration and Separation Costs

Restructuring, integration and separation costs were $22 million and $31 million for 2020 and 2019, respectively, a decrease of $9 million.

Restructuring, Integration, Separation and IPO Costs

Restructuring, integration, separation and IPO costs were $50 million and $22 million for 2021 and 2020, respectively, an increase of $28 million.

Restructuring and integration costs

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(i) reducing headcount, (ii) eliminating real estate costs associated with unused or under-utilized facilities and (iii) implementing contribution margin improvement and other cost reduction initiatives.

Restructuring and integration costs were $11 million and $31 million for 2020 and 2019, respectively, a decrease of $20 million.

During 2020, these costs included:

(i) $10 million of facility closure costs and (ii) $1 million of severance and other costs.

During 2019, these costs included:

(i) $11 million of severance costs and other costs associated with the acquisition of certain assets of Synergy, (ii) $11 million of facility closure costs and (iii) $9 million of other severance costs.

Restructuring and integration costs were $18 million and $11 million for 2021 and 2020, respectively, an increase of $7 million.

The Company continues to evaluate opportunities to streamline its operations and identify additional cost savings globally.

Although a specific plan does not exist at this time, the Company may identify and take additional exit and cost-rationalization restructuring actions in the future, the costs of which could be material.

Separation costs

The Company has incurred, and will incur, costs associated with activities to effectuate the Separation.

Separation and IPO costs

In addition to the Separation-related and IPO-related costs, which are incremental costs indirectly related to the B+L Separation and Solta IPO and included in Selling, general and administrative expenses, as previously discussed, the Company has incurred, and will incur, costs directly associated with activities to effectuate the B+L Separation and the Solta IPO.

These activities include:

(i) separating the eye-health business from the remainder of the Company and (ii) registering the eye-health business as an independent publicly traded entity.

Separation costs are incremental costs directly related to the Separation and include, but are not limited to:

(i) legal, audit and advisory fees, (ii) employee hiring, relocation and travel costs and (iii) costs associated with establishing a new board of directors and audit committee.

Separation costs were $11 million for 2020.

The Company is in

the planning phase of the Separation and the extent and timing of future charges for these costs cannot be reasonably estimated at this time and could be material.

See Note 4, "RESTRUCTURING, INTEGRATION AND SEPARATION COSTS" to our audited Consolidated Financial Statements for further details regarding these actions.

Acquisition-Related Contingent Consideration

Acquisition-related contingent consideration primarily consists of potential milestone payments and royalty obligations associated with businesses and assets we acquired in the past.

These obligations are recorded in the Consolidated Balance Sheets at their estimated fair values at the acquisition date, in accordance with the acquisition method of accounting.

The fair value of the acquisition-related contingent consideration is remeasured each reporting period, with changes in fair value recorded in the 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.

Acquisition-related contingent consideration was a loss of $48 million in 2020 and included:

(i) net fair value adjustments of $25 million, which included net fair value adjustments to expected future royalty payments and (ii) accretion for the time value of money of $23 million.

Acquisition-related contingent consideration was a loss of $12 million in 2019 and included accretion for the time value of money of $22 million, partially offset by net fair value adjustments of $10 million, which included net fair value adjustments to expected future royalty payments.

See Note 5, "FAIR VALUE MEASUREMENTS" to our audited Consolidated Financial Statements for further details.

Other expense (income), net

Other expense (income), net for 2020 and 2019 consists of the following:

(i) separating the Bausch + Lomb and Solta Medical businesses from the remainder of the Company and (ii) registering the Bausch + Lomb and Solta Medical businesses as independent publicly traded entities.

Separation and IPO costs are incremental costs directly related to the B+L Separation and Solta IPO and include, but are not limited to:

(i) legal, audit and advisory fees, (ii) talent acquisition costs and (iii) costs associated with establishing a new board of directors and related board committees for the Bausch + Lomb and Solta Medical entities.

Separation and IPO costs were $32 million and $11 million for 2021 and 2020, respectively.

At the end of 2021, we had substantially completed the internal objectives necessary to facilitate the B+L Separation and Solta IPO and related separation of these businesses.

We continue to monitor market conditions and aim to launch the B+L IPO and the Solta IPO when financial market conditions become favorable (subject to receipt of regulatory, stock exchange and other approvals).

Until such time, we continue to manage these businesses along with our pharmaceutical portfolio of gastrointestinal, dermatology, neurology and other therapeutics, with our continued commitment to bring out additional value for our shareholders.

See Note 4, "RESTRUCTURING, INTEGRATION, SEPARATION AND IPO COSTS" to our audited Consolidated Financial Statements for further details regarding these actions.

Other expense, net

Other expense, net for 2021 and 2020 consists of the following:

(in millions) 2021 2020

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Acquired in-process research and development costs 8 32

Net (gain) loss on sales of assets (1) (31)

Acquisition-related costs — 8

Net gain on sales of assets (2) (1)

Acquisition-related contingent consideration 11 48

Other, net — 1

Other expense (income), net $ 454 $ 1,414

In 2020, Litigation and other matters includes net charges related to the U.S.

Securities Litigation, the SEC Investigation and the Canadian Securities Litigation and related opt-outs.

In 2020, Litigation and other matters also includes an insurance recovery related to a certain litigation matter.

In 2019, Litigation and other matters includes the settlement of a legacy U.S.

securities class action matter (which is subject to an objector's appeal of the final court approval).

In December 2019, we announced that we had agreed to resolve the U.S.

Securities Litigation for $1,210 million.

Final court approval of this settlement was granted in January 2021.

Subject to an objector's appeal of the Court's final approval order, the settlement resolves and discharges all claims against the Company in this class action and resolves the most significant of the Company's remaining legacy legal matters and eliminates a material uncertainty.

As part of the settlement, the Company and the other settling defendants admitted no liability as to the claims against it and denied all allegations of wrongdoing.

In addition to the anticipated resolution of the U.S.

Securities Litigation, through the date of this filing, we achieved dismissals and other positive outcomes in a number of litigations, disputes and investigations, as we continue to actively address others.

These matters and other significant matters are discussed in further detail in Note 20, "LEGAL PROCEEDINGS" to our audited Consolidated Financial Statements.

In 2020 and 2019, Acquired in-process research and development costs of $32 million and $41 million, primarily consist of costs associated with the upfront payments to enter into certain exclusive licensing agreements.

In 2019, Net gain on sales of assets includes $20 million related to the achievement of a milestone related to a certain product.

Other expense, net $ 373 $ 502

Litigation and other matters for 2021, includes adjustments related to the Glumetza Antitrust Litigation, partially offset by insurance recoveries of $213 million related to certain litigation matters.

See Note 20, "LEGAL PROCEEDINGS" to our audited Consolidated Financial Statements for further details regarding these matters.

Litigation and other matters for 2020, includes adjustments related to an SEC investigation into the Company and its former relationship with Philidor Rx Services, LLC, its accounting practices and policies, its public disclosures and other matters (which investigation has now been settled) (the “SEC Investigation”) and the U.S.

Securities Litigation and the Canadian Securities Litigation and related opt-outs of each.

Litigation and other matters also includes an insurance recovery related to a certain litigation matter.

See Note 20, "LEGAL PROCEEDINGS" to our audited Consolidated Financial Statements for further details regarding certain of these matters.

Acquired in-process research and development costs primarily consists of costs associated with the upfront payments to enter into certain exclusive licensing agreements.

Non-Operating Income and Expense

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Interest expense was $1,426 million and $1,534 million and included non-cash amortization and write-offs of debt discounts and deferred financing costs of $55 million and $61 million for 2021 and 2020, respectively.

Interest expense decreased $78 million, or 5%, primarily due to:

(i) a lower weighted average stated rate of interest, (ii) lower interest as a result of debt repayments during the year and (iii) a benefit related to the Company's cross-currency swaps.

These decreases were partially offset by the interest associated with $1,210 million of additional financing in December 2019 relating to the U.S.

Securities Litigation.

Interest expense decreased $108 million, or 7%, in 2021 as compared to 2020, primarily due to lower outstanding principal balances.

The weighted average stated rate of interest as of December 31, 2021 and 2020 was 5.88% and 6.02%, respectively.

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Loss on extinguishment of debt represents the differences between the amounts paid to settle extinguished debts and the carrying value of the related extinguished debt.

Loss on extinguishment of debt was $59 million and $42 million for 2020 and 2019, respectively, associated with a series of transactions which allowed us to refinance and extend the maturities of portions of our debt arrangements.

Loss on extinguishment of debt was $62 million and $59 million for 2021 and 2020, respectively, primarily associated with certain refinancing transactions that occurred each year.

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

Foreign Exchange and Other

Foreign exchange and other primarily includes:

Foreign exchange and other was a gain of $7 million for 2021 as compared to a loss of $30 million for 2020, a favorable net change of $37 million primarily due to:

(i) translation gains/losses on intercompany loans and third-party liabilities and (ii) the gain/loss due to foreign currency exchange contracts.

Foreign exchange and other was a loss of $30 million for 2020 as compared to a gain of $8 million for 2019, an unfavorable net change of $38 million.

Income taxes are accounted for under the liability method.

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Deferred tax assets for outside basis differences in investments in subsidiaries are only recognized if the difference will be realized in the foreseeable future.

Benefit from income taxes was $375 million and $54 million in 2020 and 2019, respectively, an increase of $321 million.

Benefit from income taxes was $87 million and $375 million in 2021 and 2020, respectively, an unfavorable net change of $288 million, primarily attributable to the release of a portion of the

Company's valuation allowance against deferred tax assets in 2020 in excess of the release of its valuation allowance in 2021.

In 2021, the Company's valuation allowance decreased by $30 million primarily attributable to the impact of book taxable income in Canada, change in deferred tax assets in Canada and use of deferred tax assets in the U.S.

in connection with internal restructurings.

In 2020, our valuation allowance decreased by $579 million primarily attributable to the impact of taxable losses in Canada, partially offset by the impact of internal restructurings which resulted in reductions to our deferred tax assets.

Our consolidated foreign rate differential reflects the net total tax cost or benefit on income earned or losses incurred in jurisdictions outside of Canada as compared to the net total tax cost or benefit of such income (on a jurisdictional basis) at the Canadian statutory rate of 26.9%.

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(i) the recording of valuation allowance on entities for which no tax benefit of losses is expected, (ii) the tax benefit generated from our annualized mix of earnings by jurisdiction and (iii) the discrete treatment of certain tax matters, primarily related to:

(a) the release of a valuation allowance, (b) internal restructurings, (c) changes in uncertain tax positions and (d) changes in the manner in which an outside basis difference will be recovered in future periods.

(a) changes in uncertain tax positions, (b) impairment of United States generally accepted accounting principles (“U.S.

GAAP”) goodwill, (c) internal restructurings, and (d) changes in the manner in which an outside basis difference will be recovered in future periods.

We record a valuation allowance against our deferred tax assets to reduce their net carrying value to an amount that we believe is more likely than not to be realized.

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When we establish/increase or reduce/decrease the valuation allowance, the provision for income taxes will increase or decrease, respectively, in the period such determination is made.

Our valuation allowance against deferred tax assets as of December 31, 2020 and 2019 was $2,252 million and $2,831 million, respectively, a decrease of $579 million which was primarily driven by a release of valuation allowance for a change in judgment during 2020 related to previously established deferred tax assets.

Our valuation allowance against deferred tax assets as of December 31, 2021 and 2020 was $2,222 million and $2,252 million, respectively, a decrease of $30 million, as discussed above.

See Note 17, "INCOME TAXES" to our audited Consolidated Financial Statements for further details.

Reportable Segment Revenues and Profits

Our portfolio of products falls into four operating and reportable segments:

(i) Bausch + Lomb/International, (ii) Salix, (iii) Ortho Dermatologics and (iv) Diversified Products.

Our portfolio of products falls into five operating and reportable segments:

(i) Bausch + Lomb, (ii) Salix, (iii) International Rx, (iv) Ortho Dermatologics and (v) Diversified Products.

The following is a brief description of our segments:

• The Bausch + Lomb/International segment consists of:

(i) sales in the U.S.

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

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

of GI products.

• The Ortho Dermatologics segment consists of:

(i) sales in the U.S.

of Ortho Dermatologics (dermatological) products and (ii) global sales of Solta medical aesthetic devices.

of Ortho Dermatologics (dermatological) products and (ii) global sales of Solta aesthetic medical devices.

• The Diversified Products segment consists of sales in the U.S.

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Segment profit is based on operating income after the elimination of intercompany transactions.

Certain costs, such as Amortization of intangible assets, Asset impairments, including loss on assets held for sale, Restructuring, integration and separation costs, Acquisition-related contingent consideration costs and Other expense (income), net, are not included in the measure of segment profit, as management excludes these items in assessing segment financial performance.

Certain costs, such as Amortization of intangible assets, Asset impairments, including loss on assets held for sale, Restructuring, integration, separation and IPO costs, and Other expense, net, are not included in the measure of segment profit, as management excludes these items in assessing segment financial performance.

See Note 22, "SEGMENT INFORMATION" to our audited Consolidated Financial Statements for a reconciliation of segment profit to Loss before benefit from income taxes.

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Segment Revenue

Bausch + Lomb/International $ 4,408 55 % $ 4,739 55 % $ (331) (7) %

Bausch + Lomb $ 3,765 45 % $ 3,415 42 % $ 350 10 %

Salix 2,074 24 % 1,904 24 % 170 9 %

International Rx 1,166 14 % 1,181 15 % (15) (1) %

Ortho Dermatologics 564 7 % 548 7 % 16 3 %

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Segment Profits / Segment Profit Margins

Bausch + Lomb/International $ 1,159 26 % $ 1,332 28 % $ (173) (13) %

Bausch + Lomb $ 958 25 % $ 909 27 % $ 49 5 %

Salix 1,493 72 % 1,338 70 % 155 12 %

International Rx 403 35 % 386 33 % 17 4 %

Ortho Dermatologics 265 47 % 228 42 % 37 16 %

Diversified Products 624 72 % 717 73 % (93) (13) %

Total segment profit $ 3,578 45 % $ 3,835 45 % $ (257) (7) %

Total $ 3,743 44 % $ 3,578 45 % $ 165 5 %

Organic Revenues and Organic Growth Rates (non-GAAP)

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(i) changes in product gross selling price and (ii) changes in sales deductions.

The Company uses organic revenue (non-GAAP) and organic revenue growth (non-GAAP) to assess performance of its reportable segments, and the Company in total, without the impact of foreign currency exchange

fluctuations and recent acquisitions, divestitures and product discontinuations.

The Company believes that such measures are useful to investors as they provide a supplemental period-to-period comparison.

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

Organic revenue growth (non-GAAP) reflects adjustments for:

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Organic revenue growth (non-GAAP) excludes from the prior period (but not the current period), all revenues attributable to each divestiture and discontinuance during the twelve months prior to the day of divestiture or discontinuance, as there are no revenues from those businesses and assets included in the comparable current period.

There were no acquisitions during 2021.

The following table presents a reconciliation of GAAP revenues to organic revenues (non-GAAP) and presents organic revenue (Non-GAAP) and the year over year changes in organic revenue (Non-GAAP) for 2021 and 2020 by segment.

Year Ended December 31, 2021 Year ended December 31, 2020 Change in

Organic Revenue

Reported Changes in Exchange Rates Acquisition Organic Revenue (Non-GAAP) Revenue

Organic Revenue (Non-GAAP)

Reported Changes in Exchange Rates Organic Revenue (Non-GAAP) Revenue

Reported Divestitures and Discontinuations Organic Revenue (Non-GAAP)

(in millions) Amount Pct.

Bausch + Lomb/International $ 4,408 $ 42 $ — $ 4,450 $ 4,739 $ (19) $ 4,720 $ (270) (6) %

Bausch + Lomb $ 3,765 $ (58) $ 3,707 $ 3,415 $ (10) $ 3,405 $ 302 9 %

Salix 2,074 — 2,074 1,904 — 1,904 170 9 %

International Rx 1,166 (28) 1,138 1,181 (113) 1,068 70 7 %

Ortho Dermatologics 564 (9) 555 548 — 548 7 1 %

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Total $ 8,434 $ (95) $ 8,339 $ 8,027 $ (132) $ 7,895 $ 444 6 %

Bausch + Lomb/International Segment:

Bausch + Lomb/International Segment Revenue

The Bausch + Lomb/International segment has a diversified product line with no single product group representing 10% or more of its segment revenues.

The Bausch + Lomb/International segment revenue was $4,408 million and $4,739 million for 2020 and 2019, respectively, a decrease of $331 million, or 7%.

The decrease was primarily attributable to:

(i) a decrease in volume of $334 million, as discussed below, (ii) the unfavorable effect of foreign currencies of $42 million, primarily in Latin America and (iii) the impact of divestitures and discontinuations of $19 million.

These decreases were partially offset by an increase in net realized pricing of $64 million, primarily driven by our International Rx and Global Consumer businesses.

The volumes of our Bausch + Lomb/International segment were negatively impacted, primarily in Europe, Asia and the U.S., by social restrictions and other precautionary measures taken in response to the COVID-19 pandemic, as previously discussed.

The postponement of certain surgical and elective medical procedures related to the COVID-19 pandemic, and associated declines in pre- and post-operative prescriptions, negatively impacted the volumes of our Global Ophthalmology and Global Surgical businesses.

The reduction in the consumption of contact lenses worldwide due to limited social interactions and in some regions government recommended use of frames, negatively impacted the volumes of our Global Vision Care business.

During our first quarter of 2020, certain customers engaged in "pantry-loading", which, along with stay-at-home orders, negatively impacted the volumes of our Global Consumer business for our second quarter of 2020.

However, as governments began lifting social restrictions, the negative trend in the revenues of these businesses began to level off and stabilize prior to our third quarter of 2020 and continued in the fourth quarter of 2020.

Therefore, our revenues for the year 2020 were most impacted by the COVID-19 pandemic in our second quarter of 2020.

Although we experienced additional COVID-19 pandemic related declines in year-over-year revenues in certain geographies during our third and fourth quarters of 2020, total Bausch + Lomb/International segment revenues for the three months ended December 31, 2020 and 2019 were $1,242 million and $1,238 million, respectively, an increase of $4 million.

This increase of less than 1% represents a continuing improving trend over the decreases in our year-over-year revenues for the three month periods ended June 30, 2020 and September 30, 2020 of 27% and 1%, respectively, and suggests that a recovery is underway.

Presuming the increased availability of effective vaccines,

and any resurgence of the COVID-19 virus and variant strains thereof or reenactment of social restrictions are not significant, we anticipate that our affected businesses could possibly return to pre-pandemic levels in 2021.

Bausch + Lomb/International Segment Profit

The Bausch + Lomb/International segment profit was $1,159 million and $1,332 million for 2020 and 2019, respectively, a decrease of $173 million, or 13%.

The decrease was primarily driven by the decrease in contribution as a result of social restrictions and other precautionary measures taken in response to the COVID-19 pandemic, as previously discussed, partially offset by lower SG&A expenses.

Bausch + Lomb Segment:

Bausch + Lomb Segment Revenue

The Bausch + Lomb segment has a diversified product line with no single product group representing 10% or more of its segment revenues.

The Bausch + Lomb segment revenue was $3,765 million and $3,415 million for 2021 and 2020, respectively, an increase of $350 million, or 10%.

The increase was primarily attributable to:

(i) an increase in volumes across all of our Bausch + Lomb businesses of $337 million primarily due to the positive impacts from the recovery from the COVID-19 pandemic and the easing of certain social restrictions, as previously discussed, partially offset by:

(a) the impact of generic competition as certain products, primarily Lotemax ® Gel, lost exclusivity and (b) the impacts of a third-party supplier quality issue on the revenues of certain Consumer products, as previously discussed, and (ii) the favorable impact of foreign currencies of $58 million, primarily in Europe and Asia.

These increases were partially offset by:

(i) a decrease in net realized pricing of $35 million primarily due to higher sales deductions in our Ophthalmic Pharmaceuticals business and (ii) the impact of divestitures and discontinuations of $10 million, related to several products.

The increase in volumes was across all Bausch + Lomb businesses, most notably seen in our Surgical and Vision Care businesses, and across all geographies, most notably in the U.S., Asia and Europe.

During 2020, the volumes of our Bausch + Lomb segment were most negatively impacted by the social restrictions and other precautionary measures taken in response to the COVID-19 pandemic during the second quarter of 2020.

However, as governments began lifting social restrictions, the negative trend in the revenues began to level off and stabilize prior to our third quarter and continued into our fourth quarter of 2020 and first quarter of 2021.

Our revenues returned to pre-pandemic levels for many of our Bausch + Lomb businesses and geographies in 2021 and, at the current pace of recovery, we anticipate the COVID-19 pandemic to have a minimal impact on the remaining businesses and geographies in 2022.

Bausch + Lomb Segment Profit

The Bausch + Lomb segment profit was $958 million and $909 million for 2021 and 2020, respectively, an increase of $49 million, or 5%.

The increase was primarily driven by an increase in contribution primarily attributable to the net increase in revenues, as previously discussed.

This increase was partially offset by:

(i) the impacts of the non-recurrence of certain profit protection measures taken in 2020 to manage and reduce operating expenses during the COVID-19 pandemic, as previously discussed, which resulted in year-over-year increases primarily in selling expenses and advertising and promotion expenses, (ii) the non-recurrence of the temporary suspension in certain R&D activities and clinical trials in 2020 due to social restrictions and other precautionary measures taken in response to the COVID-19 pandemic, as previously discussed and (iii) inflationary pressures related to certain manufacturing costs.

On January 13, 2022, in connection with the B+L Separation, Bausch + Lomb Corporation filed a Registration Statement on Form S-1 with the SEC (the "Registration Statement"), which as of the date of this filing has not been declared effective.

As the Bausch + Lomb business has historically operated as part of the Company, Bausch + Lomb Corporation relied on the Company’s corporate and other support functions.

Therefore, certain corporate and shared costs have been allocated to Bausch + Lomb Corporation in the financial results and other financial information as presented by Bausch + Lomb in its filings with the SEC, including expenses related to the support functions that are provided on a centralized basis by the Company and not included in the measurement of segment profit for any segment in the table above.

This includes expenses for executive oversight, treasury, accounting, legal, human resources, shared services, compliance, procurement, information technology and other corporate functions.

Therefore, any measurement of Bausch + Lomb Corporation's net operating results, as presented in Bausch + Lomb Corporation's filings with the SEC, will not agree to Bausch + Lomb's segment profit as presented in the table above.

Salix Segment:

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No other single product group represents 10% or more of the Salix segment revenues.

The Salix segment revenue was $1,904 million and $2,022 million for 2020 and 2019, respectively, a decrease of $118 million, or 6%.

The decrease includes:

(i) a decrease in net realized pricing of $96 million, primarily attributable to higher sales deductions for Glumetza ® SLX, partially offset by higher gross selling prices for Xifaxan ® , and (ii) a decrease in volume of $35 million primarily attributable to the decrease in demand for Apriso ® due to LOE.

The decrease in revenue was partially offset by sales of our Trulance ® product, which we added to our portfolio in March 2019 as part of the acquisition of certain assets of Synergy, of $13 million.

Certain branded pharmaceutical products within our Salix segment were negatively impacted by social restrictions and other precautionary measures taken in response to the COVID-19 pandemic, as previously discussed.

Although we experienced COVID-19 pandemic related declines in year-over-year revenues in 2020, Salix segment revenues for the three months ended December 31, 2020 and 2019 were $527 million and $517 million, respectively, an increase of $10 million.

This increase of 2% represents a continuing improving trend over the decreases in our year-over-year revenues for the three month periods ended June 30, 2020 and September 30, 2020 of 21% and 10%, respectively, and suggests that a recovery is underway.

Presuming the increased availability of effective vaccines, and any resurgence of the COVID-19 virus and variant strains thereof or reenactment of social restrictions are not significant, we anticipate that our affected Salix businesses could possibly return to pre-pandemic levels in 2021.

The Salix segment revenue was $2,074 million and $1,904 million for 2021 and 2020, respectively, an increase of $170 million, or 9%.

The increase was primarily attributable to increases in:

(i) volume of $101 million, primarily attributable to increased volumes for our Xifaxan ® and Trulance ® product lines driven in part by the positive impacts of the recovery from the COVID-19 pandemic and the easing of certain social restrictions, as previously discussed, and (ii) net realized pricing of $69 million, primarily attributable to our Xifaxan ® product line, partially offset by higher sales adjustments for Glumetza ® SLX.

Salix Segment Profit

The Salix segment profit was $1,338 million and $1,349 million for 2020 and 2019, respectively, a decrease of $11 million, or 1%.

The decrease was primarily driven by the decrease in contribution as a result of the decrease in revenue, as previously discussed, partially offset by lower third-party royalty costs.

The decrease in segment profit was partially offset by:

(i) decreases in SG&A expenses due to:

(a) COVID-19 pandemic related matters, as previously discussed, and (b) a charge associated with the termination of a certain co-promotional agreement during 2019 and (ii) the contribution from the sales of our Trulance ® product, which we added to our portfolio in March 2019 as part of the acquisition of certain assets of Synergy.

The Salix segment profit was $1,493 million and $1,338 million for 2021 and 2020, respectively, an increase of $155 million, or 12%.

The increase was primarily driven by the increase in contribution as a result of:

(i) the increase in revenue, as previously discussed, and (ii) a reduction in third party royalties.

This increase was partially offset by the impacts of the non-recurrence of certain profit protection measures taken in 2020 to manage and reduce operating expenses during the COVID-19 pandemic, as previously discussed, which resulted in year-over-year increases primarily in selling expenses and advertising and promotion expenses.

International Rx Segment:

International Rx Segment Revenue

The International Rx segment has a diversified product line with no single product group representing 10% or more of its product sales.

The International Rx segment revenue was $1,166 million and $1,181 million for 2021 and 2020, respectively, a decrease of $15 million, or 1%.

The decrease was primarily attributable to the impact of divestitures and discontinuations of $113 million, primarily attributable to our divestiture of Amoun on July 26, 2021.

Amoun revenues were $157 million for the period of January 1, 2021 through July 26,2021 and were $247 million for the full year 2020.

The decreases were partially offset by:

(i) an increase in volumes of $51 million, (ii) the favorable impact of foreign currencies of $28 million, primarily in Canada and Latin America, and (iii) an increase in net realized pricing of $19 million.

The increase in volumes is primarily due to the positive impacts from the recovery from the COVID-19 pandemic and the easing of certain social restrictions, as previously discussed.

Although we experienced COVID-19 pandemic related declines in year-over-year revenues in certain products and geographies during 2021, at the current pace of recovery, we anticipate the COVID-19 pandemic to have a minimal impact on the remaining businesses and geographies in 2022.

International Rx Segment Profit

The International Rx segment profit for 2021 and 2020 was $403 million and $386 million, respectively, an increase of $17 million, or 4%.

The increase was primarily driven by a decrease in SG&A expenses, partially offset by the decrease in contribution primarily attributable to our divestiture of Amoun on July 26, 2021.

Ortho Dermatologics Segment:

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No other single product group represents 10% or more of the Ortho Dermatologics segment revenues.

The Ortho Dermatologics segment revenue was $553 million and $565 million for 2020 and 2019, respectively, a decrease of $12 million, or 2%.

The decrease was primarily attributable to a decrease in net realized pricing of $26 million partially offset by:

(i) an increase in volume of $11 million and (ii) the favorable effect of foreign currencies of $3 million.

The decrease in average realized pricing was the result of higher sales deductions in our medical dermatology products.

The increase in volume was primarily due to increased demand of Thermage FLX ® , primarily in China, and was partially offset by the impact of generic competition as certain products, such as Elidel ® , Zovirax ® and Solodyn ® , lost exclusivity.

Certain medical aesthetics, therapeutic products and branded pharmaceutical products within our Ortho Dermatologics segment were negatively impacted by social restrictions and other precautionary measures taken in response to the COVID-19 pandemic.

Although we experienced COVID-19 pandemic related declines in year-over-year revenues in 2020, Ortho Dermatologics segment revenues for the three months ended December 31, 2020 and 2019 were $160 million and $158 million, respectively, an increase of $2 million.

This increase of 1% represents a continuing improving trend over the decreases in our year-over-year revenues for the three month periods ended June 30, 2020 and September 30, 2020 of 5% and 2%, respectively, and suggests that a recovery is underway.

Presuming the increased availability of effective vaccines, and any resurgence of the

COVID-19 virus and variant strains thereof or reenactment of social restrictions are not significant, we anticipate that our affected businesses could possibly return to pre-pandemic levels in 2021.

The Ortho Dermatologics segment revenue was $564 million and $548 million for 2021 and 2020, respectively, an increase of $16 million, or 3%.

The increase was primarily attributable to:

(i) an increase in volume of $54 million and (ii) the favorable impact of foreign currencies of $9 million.

These increases were partially offset by a decrease in net realized pricing of $47 million, as a result of higher sales deductions for our medical dermatology products.

The increase in volume was primarily due to:

(i) increased demand of Thermage FLX ® in our Solta aesthetic medical device business and (ii) the positive impacts from the recovery from the COVID-19 pandemic and the easing of certain social restrictions, as previously discussed, and were partially offset by the impact of generic competition as certain medical dermatology products, such as Elidel ® , lost exclusivity.

Ortho Dermatologics Segment Profit

The Ortho Dermatologics segment profit was $265 million and $228 million for 2021 and 2020, respectively, an increase of $37 million, or 16%.

The increase was primarily driven by decreases in:

(i) selling expenses and (ii) R&D expenses and was partially offset by the decrease in contribution as a result of the decrease in revenue, as previously discussed.

The increase was primarily due to:

(i) an increase in contribution primarily attributable to the net increase in revenues, as previously discussed, (ii) a decrease in selling expenses and (iii) a decrease in R&D expenses due to the impact of rebalancing our portfolio within the Ortho Dermatologics business.

Diversified Products Segment:

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53 6% 50 5% 3 6%

Neo/Poly/HC Otic 35 3% 22 2% 13 59%

Tobramycin/Dexamethasone 33 3% 31 2% 2 6%

Cardizem ® Franchise

27 3% 35 4% (8) (23)%

Diastat ® Franchise

Mysoline ® Franchise

26 3% 27 3% (1) (4)%

Librax ® Franchise

Diastat ® Franchise

24 3% 30 3% (6) (20)%

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22 3% 29 3% (7) (24)%

Other 492 42% 665 53% (173) (26)%

Elidel ® Franchise

19 2% 17 2% 2 12%

17 3% — —% 17 100%

Other product revenues 218 24% 351 35% (133) (38)%

Other revenues 7 1% 8 2% (1) (13)%

Total Diversified Products revenues $ 865 100% $ 979 100% $ (114) (12)%

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The decrease was primarily driven by:

(i) a decrease in volume of $170 million and (ii) the impact of divestitures and discontinuations of $1 million.

The decrease was partially offset by an increase in net realized pricing of $58 million due to lower sales deductions, primarily within the Wellbutrin ® Franchise, and higher gross selling prices.

The decrease in volume was primarily attributable to:

(i) the impact of generic competition as certain products in our Neurology and Other business, such as Cuprimine ® , Migranal ® , Syprine ® , Isuprel ® and Xenazine ® , lost exclusivity and (ii) the postponement of certain surgeries and elective medical procedures in response to the COVID-19 pandemic primarily impacting our Dentistry business.

The decrease in volume was partially offset by an increase in volumes for Pepcid ® due to a competitor recall in 2020.

(i) a decrease in volume of $72 million, (ii) a decrease in net realized pricing of $33 million and (iii) the impact of divestitures and discontinuations of $9 million.

The decrease in volume was primarily attributable to the impact of generic competition as certain products in our Neurology and Other business, such as Migranal ® , Xenazine ® , Mephyton ® , Isuprel ® , Syprine ® , Cuprimine ® and Demser ® , lost exclusivity.

Diversified Products Segment Profit

The Diversified Products segment profit was $848 million and $932 million for 2020 and 2019, respectively, a decrease of $84 million, or 9%.

The decrease was primarily driven by the decrease in revenue, as previously discussed.

The Diversified Products segment profit was $624 million and $717 million for 2021 and 2020, respectively, a decrease of $93 million, or 13% and was primarily driven by the decrease in revenues, as previously discussed.

LIQUIDITY AND CAPITAL RESOURCES

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Net cash provided by operating activities 1,426 1,111 1,501 315 (390)

Net cash used in investing activities (261) (419) (196) 158 (223)

Net cash provided by (used in) investing activities 409 (261) (419) 670 158

Net cash (used in) provided by financing activities (1,513) (2,294) 1,443 781 (3,737)

Effect of exchange rate changes on cash and cash equivalents (19) 16 (4) (35) 20

Net (decrease) increase in Cash and cash equivalents and Restricted cash (1,428) 2,521 (74) (3,949) 2,595

Cash and cash equivalents and Restricted cash, beginning of year 3,244 723 797 2,521 (74)

Cash and cash equivalents and Restricted cash, end of year $ 1,816 $ 3,244 $ 723 $ (1,428) $ 2,521

A detailed discussion of the year-over-year changes of the Company’s 2019 summarized cash flow information compared with that of 2018 can be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2019 filed on February 19, 2020.

Net increase (decrease) in Cash and cash equivalents and Restricted cash and other settlement deposits 303 (1,428) 2,521 1,731 (3,949)

Cash and cash equivalents and Restricted cash and other settlement deposits, beginning of year 1,816 3,244 723 (1,428) 2,521

Cash and cash equivalents and Restricted cash and other settlement deposits, end of year $ 2,119 $ 1,816 $ 3,244 $ 303 $ (1,428)

Operating Activities

Net cash provided by operating activities was $1,111 million and $1,501 million in 2020 and 2019, respectively, a decrease of $390 million.

The decrease was attributable to net decreases in:

(i) Cash provided by operating activities before changes in operating assets and liabilities and (ii) Changes in operating assets and liabilities.

Cash provided by operating activities before changes in operating assets and liabilities for the years 2020 and 2019 was $1,477 million and $1,819 million, respectively, a decrease of $342 million.

The decrease was primarily attributable to:

(i) the negative impacts to our operating results associated with the social restrictions and other precautionary measures taken in response to the COVID-19 pandemic, as previously discussed, (ii) higher payments of legal settlements in 2020 as compared to 2019 of $153 million and (iii) the upfront payment of $10 million in 2020 with respect to the option to acquire all ophthalmology assets of Allegro, as previously discussed.

Changes in operating assets and liabilities resulted in a net decrease in cash of $366 million and $318 million in 2020 and 2019, respectively, a decrease of $48 million.

Net cash provided by operating activities was $1,426 million and $1,111 million in 2021 and 2020, respectively, an increase of $315 million.

The increase was attributable to the year-over-year increases in:

(i) Changes in operating assets and liabilities of $238 million and (ii) Cash provided by operating activities before changes in operating assets and liabilities of $77 million.

Cash provided by operating activities before changes in operating assets and liabilities for the years 2021 and 2020 was $1,554 million and $1,477 million, respectively, an increase of $77 million.

The increase was primarily attributable to:

(i) the positive impacts on our operating results of the recovery from the COVID-19 pandemic and the easing of certain social restrictions, as previously discussed, and (ii) higher insurance recoveries during 2021 as compared to 2020 associated with certain litigation matters.

These increases were partially offset by:

(i) higher payments of accrued legal settlements during 2021 as compared to 2020, (ii) higher payments for Separation and IPO costs and Separation-related and IPO-related costs during 2021 as compared to 2020 and (iii) the impacts of the non-recurrence of certain profit protection measures taken in 2020 to manage and reduce operating expenses during the COVID-19 pandemic, as previously discussed, which resulted in year-over-year increases in payments primarily for selling expenses and advertising and promotion expenses.

Changes in operating assets and liabilities resulted in a net decrease in cash of $128 million and $366 million in 2021 and 2020, respectively, a favorable change of $238 million.

During 2021, Changes in operating assets and liabilities was negatively impacted by:

(i) the timing of other payments in the ordinary course of business of $495 million and (ii) an increase in inventories of $77 million and was partially offset by:

(i) the collection of trade receivables of $170 million and (ii) an increase in accrued interest due to timing of payments of $36 million.

(i) the increase in trade receivables of $229 million, (ii) an increase in inventories of $16 million and (iii) lower interest payable due to the timing of payments of $13 million, partially offset by the positive impact of the timing of other payments in the ordinary course of business of $130 million.

During 2020, Changes in operating assets and liabilities was negatively impacted by:

(i) the build-up of inventories of $209 million and (ii) the timing of other payments in the ordinary course of business of $180 million and was partially offset by:

(i) the timing of other payments in the ordinary course of business of $495 million and (ii) an increase in inventories of $77 million and was partially offset by:

(i) the collection of trade receivables of $170 million and (ii) an increase in accrued interest due to timing of payments of $36 million.

Investing Activities

Net cash provided by investing activities was $409 million in 2021 and was primarily driven by:

(i) Proceeds from sale of assets and businesses, net of costs to sell of $669 million, which is primarily attributable to the Amoun Sale and (ii) Settlements from cross-currency swaps of $27 million, partially offset by Purchases of property, plant and equipment of $269 million.

Net cash used in investing activities was $261 million in 2020 and was primarily driven by Purchases of property, plant and equipment of $302 million partially offset by:

(i) Interest settlements from cross-currency swaps of $23 million and (ii) Proceeds from sale of assets and businesses, net of costs to sell of $21 million, primarily related to the receipt of a milestone payment associated with a prior year divestiture.

Net cash used in investing activities was $419 million in 2019 and was driven by:

(i) Purchases of property, plant and equipment of $270 million and (ii) Acquisition of businesses, net of cash acquired of $180 million, related to the acquisition of certain assets of Synergy.

Net cash used in investing activities was partially offset by Proceeds from sale of assets and businesses, net of costs to sell of $45 million, primarily related to the receipt of a milestone payment associated with a prior year divestiture.

Financing Activities

Our financing activities reflect our leadership's commitment to improve the Company’s capital structure.

Through debt repayments and refinancings during 2020 and 2019, we have effectively managed our capital structure which has allowed us to, among other things:

(i) improve our credit ratings, (ii) access the credit markets to finance amounts owed under the Company's previously announced $1,210 million settlement agreement relating to the U.S.

Securities Litigation without negatively impacting our working capital available for operations and (iii) eliminate our mandatory scheduled principal repayments of our debt obligations through 2024.

Net cash used in financing activities during 2021 was $1,513 million and was primarily driven by the repayments of debt of $3,440 million which consisted of:

(i) $1,600 million of 7.000% Senior Secured Notes due 2024 as part of the 2021 Refinancing Transactions (as defined below), (ii) the aggregate prepayments of $1,600 million using cash on hand, cash generated from operations and the net proceeds from the Amoun Sale and (iii) the repayment of $240 million previously drawn under our 2023 Revolving Credit Facility.

Issuance of long-term debt (net of discounts) of $2,100 million primarily includes:

(i) the proceeds of $1,575 million from the issuance of $1,600 million in principal amount of 4.875% Senior Secured Notes due June 2028 and (ii) draw downs of $525 million under our 2023 Revolving Credit Facility which we used primarily to make deposits of approximately $300 million, in the aggregate, into escrow funds under the terms of settlement agreements regarding the Glumetza Antitrust Litigation and to pay interest and other business expenses.

Net cash used in financing activities during 2020 was $2,294 million and was primarily driven by repayments of long-term debt, net of issuances and related discounts, of $2,187 million.

These repayments primarily include:

(i) $1,240 million of May 2023 Unsecured Notes, which was previously financed as part of the December 2019 Financing and Refinancing Transactions and (ii) debt repayments during 2020 with cash on hand of $902 million.

Net cash provided by financing activities during 2019 was $1,443 million and primarily reflects the aggregate net proceeds from the issuance of the 5.00% January 2028 Unsecured Notes and January 2030 Unsecured Notes of $2,472 million, partially offset by:

(i) debt repayments during 2019 with cash on hand of $906 million and (ii) payments for all other financing activities.

The aggregate net proceeds from the issuance of the January 2028 Unsecured Notes and January 2030 Unsecured Notes are to be used and were used to:

(i) pay the Company's previously announced $1,210 million settlement agreement relating to the U.S.

Securities Litigation (which is subject to an objector's appeal of the final court approval), the full amount of which we paid into an escrow fund under the terms of a settlement agreement and is included within Restricted cash as of December 31, 2020, and (ii) redeem $1,240 million of May 2023 Unsecured Notes on January 16, 2020.

(i) $1,240 million of 5.875% Senior Unsecured Notes due 2023 (the "May 2023 Unsecured Notes"), which was previously financed as part of the December 2019 Financing and Refinancing Transactions and (ii) debt repayments of $902 million using cash on hand and cash generated from operations.

See Note 10, "FINANCING ARRANGEMENTS" to our audited Consolidated Financial Statements for further details regarding the financing activities previously described.

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We believe these sources will be sufficient to meet our current liquidity needs for the next twelve months.

As previously discussed, at the end of 2021, we had substantially completed the internal objectives to facilitate the IPOs and related separation of the B+L and Solta Medical businesses.

However, there can be no assurance as to when we will complete either IPO, if at all.

Until such time, we continue to manage these businesses along with our diverse portfolio of gastrointestinal, dermatology, neurology and other therapeutics, with our continued commitment to bring out additional value for our shareholders.

Following the B+L IPO, we expect to complete the separation of Bausch + Lomb after the expiry of customary lockups related to the B+L IPO and achievement of targeted debt leverage ratios, subject to the receipt of applicable shareholder and other necessary approvals and market conditions.

Nothing in the Form 10-K shall constitute an offer to sell or the solicitation of an offer to buy any securities of the Bausch + Lomb or Solta entities.

The Company regularly evaluates market conditions, its liquidity profile, and various financing alternatives for opportunities to enhance its capital structure.

If opportunities are favorable, the Company may refinance or repurchase existing debt or issue equity or equity-linked securities.

As a result of prepayments and the series of refinancing transactions, we have no debt maturities or mandatory amortization payments due until 2024.

We believe our existing cash and cash generated from operations will be sufficient to service our debt obligations in the years 2021 through 2023.

Long-term Debt

Long-term debt, net of unamortized discounts and finance costs was $23,925 million and $25,895 million as of December 31, 2020 and 2019, respectively.

Long-term debt, net of unamortized premiums, discounts and issuance costs was $22,654 million and $23,925 million as of December 31, 2021 and 2020, respectively.

Aggregate contractual principal amounts due under our debt obligations were $22,870 million and $24,185 million as of December 31, 2021 and 2020, respectively, a decrease of $1,315 million.

The decrease was primarily driven by net debt repayments previously discussed under " - Cash Flows - Financing Activities".

In addition to extending $3,500 million in payments due in 2022 and 2023 to 2029 through 2031, the refinancing transactions replaced secured debt of $1,500 million with unsecured debt.

This provides us with more secured debt capacity under our Restated Credit Agreement and existing indentures if the market for unsecured debt in the future is less favorable.

The refinancing transactions also repaid in full €1,500 million of debt denominated in euros, thereby reducing our exposure to fluctuations in the value of the euro.

Our prepayments of debt and refinancing transactions over the last four years translate into lower mandatory repayments of principal over the next four years, which, in turn, we believe will permit more cash flows to be directed toward developing our core assets, identifying new product opportunities and repaying additional debt amounts.

The mandatory scheduled principal repayments of our debt obligations as of December 31, 2020, were as follows:

(in millions)

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Total

$ — $ — $ — $ 2,291 $ 10,632 $ 1,500 $ 2,250 $ 2,012 $ 3,250 $ 1,250 $ 1,000 $ 24,185

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

The weighted average stated rate of interest as of December 31, 2020 and 2019 was 6.02% and 6.21%, respectively.

Current Description of Senior Secured Credit Facilities

On June 1, 2018, the Company and certain of its subsidiaries as guarantors entered into the “Senior Secured Credit Facilities” under the Company’s Fourth Amended and Restated Credit and Guaranty Agreement, as amended by the First Incremental Amendment to the Restated Credit Agreement, dated as of November 27, 2018, and as further amended (the “Restated Credit Agreement”) with a syndicate of financial institutions and investors as lenders.

The decrease during 2021 was attributable to the debt repayments previously discussed under " - Cash Flows - Financing Activities".

Senior Secured Credit Facilities

On June 1, 2018, the Company and certain of its subsidiaries as guarantors entered into the “Senior Secured Credit Facilities” under the Company’s Fourth Amended and Restated Credit and Guaranty Agreement, as amended by the First Incremental Amendment to the Restated Credit Agreement, dated as of November 27, 2018 (the “Restated Credit Agreement”) with a syndicate of financial institutions and investors as lenders.

The Restated Credit Agreement provides for a revolving credit facility of $1,225 million, which matures on the earlier of June 1, 2023 and the date that is 91 calendar days prior to the scheduled maturity of indebtedness for borrowed money of the Company and Bausch Health Americas, Inc.

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Both the Company and BHA are borrowers under the 2023 Revolving Credit Facility, borrowings under which may be made in U.S.

dollars, Canadian dollars or euros.

dollars or Canadian dollars (or if an amendment to the Restated Credit Agreement is made to replace LIBOR with an alternative benchmark rate with respect to borrowings under the Revolving Credit Facility denominated in euros, euros).

Current Description of Senior Secured Credit Facilities

Borrowings under the Senior Secured Credit Facilities in U.S.

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dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs (provided however, that the eurocurrency rate shall at no time be less than 0.00% per annum), in each case plus an applicable margin.

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

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

Borrowings under the 2023 Revolving Credit Facility in Canadian dollars bear interest at a rate per annum equal to, at the Company's option, either:

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Subject to certain exceptions and customary baskets set forth in the Restated Credit Agreement, the Company is required to make mandatory prepayments of the loans under the Senior Secured Credit Facilities under certain circumstances, including from:

(i) 100% of the net cash proceeds of insurance and condemnation proceeds for property or asset losses (subject to reinvestment rights and net proceeds threshold), (ii) 100% of the net cash proceeds from the incurrence of debt (other than permitted debt as described in the Restated Credit Agreement), (iii) 50% of Excess Cash Flow (as defined in the Restated 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).

(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 Restated Credit Agreement), (iii) 50% of Excess Cash Flow (as defined in the Restated 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.

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The Company may direct that prepayments be applied to such amortization payments in order of maturity.

As of December 31, 2020, the aggregate remaining mandatory quarterly amortization payments for the Senior Secured Credit Facilities were $405 million through November 1, 2025.

As of December 31, 2021, there were no remaining mandatory quarterly amortization payments for the Senior Secured Credit Facilities.

The applicable interest rate margins for borrowings under the 2023 Revolving Credit Facility are 1.50% - 2.00% with respect to base rate or prime rate borrowings and 2.50% - 3.00% with respect to eurocurrency rate or BA rate borrowings.

As of December 31, 2021, the stated rate of interest on the 2023 Revolving Credit Facility was 2.84% per annum.

As of December 31, 2020, the Company had no outstanding borrowings, $104 million of issued and outstanding letters of credit, and remaining availability of $1,121 million under its 2023 Revolving Credit Facility.

As of the date of this filing, the Company had $285 million outstanding borrowings, $54 million of issued and outstanding letters of credit, and remaining availability of $886 million under its 2023 Revolving Credit Facility.

In addition, the Company is required to pay commitment fees of 0.25% - 0.50% per annum with respect to the unutilized commitments under the 2023 Revolving Credit Facility, payable quarterly in arrears.

The Company also is required to pay:

(i) letter of credit fees on the maximum amount available to be drawn under all outstanding letters of credit in an amount equal to the applicable margin on eurocurrency rate borrowings under the 2023 Revolving Credit Facility on a per annum basis, payable quarterly in arrears, (ii) customary fronting fees for the issuance of letters of credit and (iii) agency fees.

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

(i) letter of credit fees on the maximum amount available to be drawn under all outstanding letters of credit in an amount equal to the applicable margin on eurocurrency rate

borrowings under the 2023 Revolving Credit Facility on a per annum basis, payable quarterly in arrears, (ii) customary fronting fees for the issuance of letters of credit and (iii) agency fees.

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

Senior Secured Notes

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

The aggregate principal amount of our Senior Secured Notes as of December 31, 2020 and 2019 was $4,250 million and $5,500 million, respectively, a decrease of $1,250 million representing the repayment of the 6.50% Senior Secured Notes due March 2022 as part of the 2020 Refinancing Transactions.

The aggregate principal amount of our Senior Secured Notes as of December 31, 2021 and 2020 was $3,850 million and $4,250 million, respectively, a decrease of $400 million representing the prepayment of $400 million 7.00% Senior Secured Notes due 2024 using cash on hand and cash generated from operations during 2021.

Additionally, in June 2021, we accessed the credit markets and completed a series of transactions, whereby we:

(i) extended $1,600 million in aggregate maturities of certain debt obligations due to mature in 2024 out to 2028 and (ii) refinanced $1,600 million in aggregate of existing 7.00% Senior Secured Notes due 2024 with $1,600 million in aggregate of 4.875% Senior Secured Notes due 2028 (the "2021 Refinancing Transactions").

Senior Unsecured Notes

The Senior Unsecured Notes issued by the Company are the Company’s senior unsecured obligations and are jointly and severally guaranteed on a senior unsecured basis by each of its subsidiaries that is a guarantor under the Senior Secured Credit Facilities.

The Senior Unsecured Notes issued by the Company’s subsidiary, BHA, are senior unsecured obligations of BHA and are jointly and severally guaranteed on a senior unsecured basis by the Company and each of its subsidiaries (other than BHA) that is a guarantor under the Senior Secured Credit Facilities.

The Senior Unsecured Notes issued by BHA are senior unsecured obligations of BHA and are jointly and severally guaranteed on a senior unsecured basis by the Company and each of its subsidiaries (other than BHA) that is a guarantor under the Senior Secured Credit Facilities.

Future subsidiaries of the Company and BHA, if any, may be required to guarantee the Senior Unsecured Notes.

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

The aggregate principal amount of our Senior Unsecured Notes as of December 31, 2020 and 2019 was $15,500 million and $15,532 million, respectively, a decrease of $32 million.

The aggregate principal amount of our Senior Unsecured Notes as of December 31, 2021 and 2020 was $14,900 million and $15,500 million, respectively, a decrease of $600 million, representing the prepayment of $600 million 6.125% Senior Unsecured Notes due 2025 (the "6.125% Notes due 2025") using cash on hand and cash generated from operations during 2021.

Covenant Compliance

Any inability to comply with the covenants under the terms of our Restated Credit Agreement, Senior Secured Notes indentures or Senior Unsecured Notes indentures could lead to a default or an event of default for which we may need to seek relief from our lenders and noteholders in order to waive the associated default or event of default and avoid a potential acceleration of the related indebtedness or cross-default or cross-acceleration to other debt.

acceleration of the related indebtedness or cross-default or cross-acceleration to other debt.

There can be no assurance that we would be able to obtain such relief on commercially reasonable terms or otherwise and we may be required to incur significant additional costs.

In addition, the lenders under our Restated Credit Agreement, holders of our Senior Secured Notes and holders of our Senior Unsecured Notes may impose additional operating and financial restrictions on us as a condition to granting any such waiver.

During 2019 and 2020, the Company completed several actions which included using cash flows from operations to repay debt and refinancing debt with near term maturities.

Since 2017 through the date of this filing, the Company completed several actions which included repaying debt with proceeds from divestitures and cash flows from operations, as well as refinancing debt with near term maturities.

These actions have reduced the Company’s debt balance and positively affected the Company’s ability to comply with its financial maintenance covenant.

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The Company continues to take steps to improve its operating results to ensure continual compliance with its financial maintenance covenant and take other actions to reduce its debt levels to align with the Company’s long-term strategy.

The Company may consider taking other actions, including divesting other businesses, refinancing debt and issuing equity or equity-linked securities as deemed appropriate, to provide additional coverage in complying with the financial maintenance covenant and meeting its debt service obligations.

The Company may consider taking other actions, including divesting other businesses, refinancing debt and issuing equity or equity-linked securities including secondary offerings of the common stock of Bausch + Lomb and Solta Medical, as deemed appropriate, to provide additional coverage in complying with the financial maintenance covenant and meeting its debt service obligations.

The Senior Notes and Secured Notes are guaranteed by a substantial portion of the Company’s subsidiaries.

On a non-consolidated basis, the non-guarantor subsidiaries had total assets of $2,442 million and $2,682 million and total liabilities of $1,804 million and $1,075 million as of December 31, 2020 and 2019, respectively, and revenues of $1,320 million and $1,463 million for 2020 and 2019, respectively, and operating loss of $38 million for 2020 and operating income of $121 million for 2019.

On a non-consolidated basis, the non-guarantor subsidiaries had total assets of $2,161 million and $2,442 million and total liabilities of $942 million and $1,804 million as of December 31, 2021 and 2020, respectively.

On a non-consolidated basis, the non-guarantor subsidiaries had revenues of $1,755 million and $1,320 million for 2021 and 2020, respectively.

On a non-consolidated basis, the non-guarantor subsidiaries had operating income of $116 million for 2021 and an operating loss of $38 million for 2020.

Focus on Capitalization of the Post-separation Entities

In connection with the B+L Separation and Solta IPO, we have emphasized that it is important that the post-separation entities be well-capitalized, with appropriate leverage and with access to additional capital, if and when needed, to provide each entity with the ability to independently allocate capital to areas that will strengthen their own competitive positions in their respective lines of business and position each entity for sustainable growth.

Therefore, we see the appropriate capitalization and leverage of these businesses post-separation as a key to bringing out the maximum value across our portfolio of assets and, it is a primary objective of our plan of separation.

On January 18, 2022, in connection with the anticipated B+L IPO and Solta IPO, the Company issued conditional notices of redemption to redeem in full all of its outstanding 6.125% Notes due 2025 and to redeem $370 million aggregate principal amount of its outstanding 9.000% Notes due 2025.

The redemption and discharge of the indenture governing the 6.125% Notes due 2025 will be conditioned upon the completion of the Credit Agreement Refinancing, as defined below.

The redemption of the 9.000% Notes due 2025 will be conditioned upon the receipt of aggregate gross proceeds from the B+L IPO, the B+L Debt Financing as defined below, the Credit Agreement Refinancing and the offering of the February 2027 Secured Notes, as defined below, of at least $7,000 million.

The foregoing redemptions are subject to the conditions described above, and there can be no assurance that such conditions will be satisfied and that such redemptions will occur.

On January 18, 2022, the Company announced its intention to refinance its existing Restated Credit Agreement with an amended Restated Credit Agreement (the "New Restated Credit Agreement" and such refinancing, the "Credit Agreement Refinancing").

The New Restated Credit Agreement is expected to consist of approximately $2,500 million of term B loans and a $975 million revolving credit facility.

The Credit Agreement Refinancing is expected to occur only upon completion of the B+L IPO and a related debt financing by Bausch + Lomb (the "B+L Debt Financing").

At the time of the B+L IPO, the Credit Agreement Refinancing will provide that Bausch + Lomb initially be a "restricted" subsidiary subject to the terms of the Credit Agreement covenants, however the Credit Agreement Refinancing is expected to permit the Company to designate Bausch + Lomb as an "unrestricted" subsidiary under the New Restated Credit Agreement covenants upon achievement of a 7.6x pro forma "Remainco Total Leverage Ratio." Such designation could take place at any time after the B+L IPO (including as soon as the closing of the B+L IPO).

The Credit Agreement Refinancing is designed to facilitate the separation and distribution of Bausch + Lomb.

The Credit Agreement Refinancing will not be consummated until completion of the B+L IPO and related B+L Debt Financing.

There can be no assurance that the Credit Agreement Refinancing will occur on the terms described above, or at all.

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

The February 2027 Secured Notes accrue interest at a rate of 6.125% per year, payable semi-annually in arrears on each February and August.

The February 2027 Secured Notes are redeemable at the option of the Company, in whole or in part, at any time on or after February 2024, at the redemption prices set forth in the indenture.

The Company may redeem some or all of the February 2027 Secured Notes prior to February 2024 at a price equal to 100% of the principal amount thereof plus a “make-whole” premium.

Prior to February 2024, the Company may redeem up to 40% of the aggregate principal amount of the February 2027 Secured Notes using the proceeds of certain equity offerings at the redemption price set forth in the indenture.

If the B+L IPO does not occur on or prior to August 15, 2022, the Company will be required to redeem the February 2027 Secured Notes at such time at a redemption price equal to the issue price of the February 2027 Secured Notes plus accrued and unpaid interest.

Weighted Average Interest Rate

The weighted average stated rate of interest of the Company's debt as of December 31, 2021 and 2020 was 5.88% and 6.02%, respectively.

See Note 10, "FINANCING ARRANGEMENTS" and Note 23, "SUBSEQUENT EVENTS" to our audited Consolidated Financial Statements for further details.

Credit Ratings

During 2021, Moody's, Standard & Poor's and Fitch maintained our credit ratings but changed our outlook from Stable to Negative.

As of February 23, 2022, the credit ratings and outlook from Moody's, Standard & Poor's and Fitch for certain outstanding obligations of the Company were as follows:

Rating Agency Corporate Rating Senior Secured Rating Senior Unsecured Rating Outlook

Moody’s B2 Ba2 B3 Stable

Standard & Poor’s B+ BB B Stable

Fitch B BB B Stable

Moody’s B2 Ba2/Ba3 B3 Negative

Standard & Poor’s B+ BB B Negative

Fitch B BB B Negative

As a part of the financing transactions launched in January 2022 discussed above, Moody’s assigned a Ba3 rating to the $2,500 million of term B loans and the $975 million revolving credit facility as anticipated by the Credit Agreement Refinancing and to the newly issued February 2027 Secured Notes.

The Ba3 rating is one notch lower than Moody’s rating of Ba2 for our existing senior secured debt.

As the Credit Agreement Refinancing will not be consummated until completion of the B+L IPO and related B+L Debt Financing, there can be no assurance that the Credit Agreement Refinancing will occur on the terms described above, or at all.

Should the Credit Agreement Refinancing be completed as described above, Moody's anticipates downgrading its ratings on our existing senior secured notes to Ba3 from Ba2, consistent with the Ba3 rating assigned to the $2,500 million of term B loans and the $975 million revolving credit facility as anticipated by the Credit Agreement Refinancing and to the newly issued February 2027 Secured Notes.

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

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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.

Our other future cash requirements relate to working capital, capital expenditures, business development transactions (contingent consideration), restructuring, integration and separation costs, benefit obligations and litigation settlements.

Our other future cash requirements relate to working capital, capital expenditures, business development transactions (contingent consideration), restructuring, integration, separation and IPO costs, benefit obligations and litigation settlements.

In addition, we may use cash to enter into licensing arrangements and/or to make strategic acquisitions.

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

In addition to our working capital requirements, we expect our primary cash requirements for 2021 to include:

• Debt repayments —As a result of prepayments and a series of refinancing transactions we have reduced and extended the maturities of a substantial portion of our long-term debt and have no debt maturities or mandatory amortization payments due until 2024.

We expect to make interest payments of approximately $1,425 million during 2021.

In addition to our working capital requirements, as of December 31, 2021, we expect our primary cash requirements for 2022 to include:

• Debt repayments and interest payments —On February 11, 2022, we repaid $285 million representing all amounts outstanding under our 2023 Revolving Credit Facility as of December 31, 2021, and, therefore as a result of prepayments and a series of refinancing transactions we have reduced and extended the maturities of a substantial portion of our long-term debt and have no debt maturities until 2025 (other than our obligation to redeem the February 2027 Secured Notes if the B+L IPO does not occur on or prior to August 15, 2022 as discussed above) and have no mandatory amortization payments.

Based on our debt portfolio as of December 31, 2021, which does not reflect changes in our capitalization in

connection with the B+L Separation and the Solta IPO if and when they occur, we anticipate making interest payments of approximately $1,350 million during 2022.

Further, in connection with the conditional notices of redemption discussed above, we anticipate:

(i) redeeming in full all of our outstanding 6.125% Notes due 2025 conditioned upon the completion of the Credit Agreement Refinancing, as discussed above, and (ii) redeeming $370 million aggregate principal amount of our 9.000% Notes due 2025 conditioned upon the receipt of aggregate gross proceeds from the B+L IPO, the B+L Debt Financing, the Credit Agreement Refinancing and the February 2027 Secured Notes of at least $7,000 million, as discussed above.

The foregoing redemptions are subject to the conditions described above, and there can be no assurance that such conditions will be satisfied and that such redemptions will occur.

We may also elect to make additional principal payments under certain circumstances.

Further, in the ordinary course of business, we may borrow and repay amounts under our 2023 Revolving Credit Facility to meet business needs;

Further, in the ordinary course of business, we may borrow and repay additional amounts under our credit facilities using cash on hand, cash generated from operations and cash provided from the sale of common stock and additional debt financings in connection with the B+L Separation and the Solta IPO;

• IT Infrastructure Investment —We expect to make payments of approximately $65 million for licensing, maintenance and capitalizable costs associated with our IT infrastructure improvement projects during 2022;

• Capital expenditures —We expect to make payments of approximately $275 million for property, plant and equipment during 2022;

• Contingent consideration payments —We expect to make contingent consideration and other development/approval/sales-based milestone payments of $164 million during 2021;

• Contingent consideration payments —We expect to make contingent consideration and other development/approval/sales-based milestone payments of approximately $64 million during 2022;

• Restructuring and integration payments —We expect to make payments of $8 million during 2022 for employee separation costs and lease termination obligations associated with restructuring and integration actions we have taken through December 31, 2021;

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See Note 11, "PENSION AND POSTRETIREMENT EMPLOYEE BENEFIT PLANS" to our audited Consolidated Financial Statements for further details of our benefit obligations;

Securities Litigation Settlement —As more fully discussed in Note 20, "LEGAL PROCEEDINGS" to our audited Consolidated Financial Statements, we announced that we had agreed to resolve the U.S.

• Litigation Payments —In the ordinary course of business, the Company is involved in litigation, claims, government inquiries, investigations, charges and proceedings.

As of December 31, 2021, the Company's Consolidated Balance Sheet includes accrued current loss contingencies of $1,890 million related to matters which are both probable and reasonably estimable, of which $1,567 million, has been paid or is expected to be payable during 2022;

however, no assurance can be provided as to when such amount will be payable, if at all.

The amounts which can be expected to be payable during 2022 include among other agreements to resolve:

Securities Litigation for $1,210 million - The Company reached an agreement to resolve the U.S.

Securities Litigation for $1,210 million.

Final court approval of this settlement was granted in January 2021.

Subject to an objector's appeal of the Court's final approval order, the settlement resolves and discharges all claims against the Company in the class action.

As part of the settlement, the Company and the other settling defendants admitted no liability as to the claims against it and deny all allegations of wrongdoing.

Final court approval of this settlement was granted in January 2021 but is subject to an objector's appeal of the Court's final approval order.

The settlement resolves and discharges all claims against the Company in the class action.

As part of the settlement, the Company and the other settling defendants admitted no liability as to the claims against them and deny all allegations of wrongdoing.

This settlement resolves the most significant of the Company's remaining legacy legal matters and eliminates a material uncertainty regarding our Company.

As of December 31, 2020, Restricted cash includes $1,210 million of payments into an escrow fund under the terms of a settlement agreement regarding the U.S.

As of December 31, 2021, Restricted cash and other settlement deposits includes $1,210 million of payments into an escrow fund under the terms of a settlement agreement regarding the U.S.

Securities Litigation.

Costs of Separation

As previously discussed, with the goal of unlocking additional Company value, on August 6, 2020, the Company announced that it intends to separate its eye-health business into an independent publicly traded entity.

The Company has incurred, and will incur, costs associated with activities to effectuate the Separation.

These activities include:

(i) separating the eye-health business from the remainder of the Company and (ii) registering the eye-health business as an independent publicly traded entity.

Separation costs are incremental costs directly related to the Separation and include, but are not limited to:

(i) legal, audit and advisory fees, (ii) employee hiring, relocation and travel costs and (iii) costs associated with establishing a new board of directors and audit committee.

The Company has also incurred, and will incur, separation-related costs which are incremental costs indirectly related to the Separation.

Separation-related costs include, but are not limited to:

Glumetza Antitrust Litigation for $300 million - On September 14, 2021, the Company executed a final settlement agreement to resolve the class plaintiffs’ claims in the Glumetza Antitrust Litigation for $300 million, subject to court approval.

On February 3, 2022, the court granted final approval of the class settlement and ordered dismissal of the class plaintiffs’ claims.

Subject to appeal of the final approval of the class settlement, the settlement will resolve and discharge all asserted class claims against the Company.

As part of the settlement, the Company admitted no liability as to the claims against it and denied all allegations of wrongdoing.

As of December 31, 2021, Restricted cash and other settlement deposits includes approximately $300 million of payments into an escrow fund under the terms of a settlement agreement regarding the class plaintiffs' claims in the Glumetza Antitrust Litigation.

See Note 20, "LEGAL PROCEEDINGS" to our audited interim Consolidated Financial Statements for further details of these and other matters.

Our ability to successfully defend the Company against pending and future litigation may impact future cash flows.

Future Costs of B+L Separation and Solta IPO

The Company has incurred, and will incur, costs associated with activities to complete the B+L Separation and the Solta IPO.

These activities include the costs of:

(i) separating the Bausch + Lomb and the Solta Medical businesses from the remainder of the Company and (ii) registering the Bausch + Lomb and the Solta Medical businesses as independent publicly traded entities.

Separation and IPO costs are incremental costs directly related to the B+L Separation and Solta IPO and include, but are not limited to:

(i) legal, audit and advisory fees, (ii) talent acquisition costs and (iii) costs associated with establishing new boards of directors and related board committees for the Bausch + Lomb and Solta Medical entities.

The Company has also incurred, and will incur, Separation-related and IPO-related costs which are incremental costs indirectly related to the B+L Separation and Solta IPO.

These costs include, but are not limited to:

(i) IT infrastructure and software licensing costs, (ii) rebranding costs and (iii) costs associated with facility relocation and/or modification.

As of the date of this filing, we are in the planning phase of the Separation and future payments for separation costs and separation-related costs cannot be reasonably estimated at this time and could be material.

The extent and timing of future charges for these costs cannot be reasonably estimated at this time and could be material.

Future Cost Savings Programs

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The expenses associated with the implementation of these cost savings programs could be material and may impact our cash flows.

Option to Acquire All Ophthalmology Assets of Allegro

As previously discussed, on September 21, 2020, we announced that we entered into an agreement which provides us an option to acquire all ophthalmology assets of Allegro.

Aggregate payments under the Option are up to $50 million and include an upfront payment of $10 million and a second payment of $40 million should Allegro raise additional funding.

During 2020, we made and expensed the upfront payment of $10 million as Acquired in-process research and development.

If the Option is exercised, additional payments to acquire all of the ophthalmology assets of Allegro will be due over time.

Future Litigation Payments

In addition to the U.S.

Securities Litigation discussed above, in the ordinary course of business, the Company is involved in litigation, claims, government inquiries, investigations, charges and proceedings.

See Note 20, "LEGAL PROCEEDINGS" to our audited Consolidated Financial Statements for further details of these matters.

Our ability to successfully defend the Company against pending and future litigation may impact future cash flows.

Future Licensing Payments

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In connection with these agreements, the Company may pay an upfront fee to secure the agreement.

See Note 3, "ACQUISITIONS, LICENSING AGREEMENTS AND ASSETS HELD FOR SALE" to our audited Consolidated Financial Statements.

See Note 3, "ACQUISITIONS, LICENSING AGREEMENTS AND DIVESTITURE" to our audited Consolidated Financial Statements.

Payments associated with the upfront fee for these agreements cannot be reasonably estimated at this time and could be material .

Unrecognized Tax Benefits

As of December 31, 2020, the Company had unrecognized tax benefits totaling $414 million, of which, $145 million is expected to be realized within the next twelve months, however a reliable estimate of the period in which the remaining uncertain tax positions will be payable, if ever, cannot be made.

As of December 31, 2021, the Company had unrecognized tax benefits totaling $104 million which are expected to be realized within the next twelve months.

OUTSTANDING SHARE DATA

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At February 17, 2022, we had 359,646,496 issued and outstanding common shares.

In addition, as of February 18, 2021, we had 8,601,400 stock options and 5,530,821 time-based RSUs that each represent the right of a holder to receive one of the Company’s common shares, and 2,529,506 performance-based RSUs that represent the right of a holder to receive a number of the Company's common shares up to a specified maximum.

In addition, as of February 17, 2022, we had 8,734,135 stock options and 5,150,139 time-based restricted share units ("RSUs") that each represent the right of a holder to receive one of the Company’s common shares, and 2,625,722 performance-based RSUs 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 3,937,844 common shares could be issued upon vesting of the performance-based RSUs outstanding.

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Foreign Currency Risk

In the year ended December 31, 2020, a majority of our revenue and expense activities and capital expenditures were denominated in U.S.

In 2021, a majority of our revenue and expense activities and capital expenditures were denominated in U.S.

We have exposure to multiple foreign currencies, including, among others, the Euro, Chinese yuan, Polish zloty, Canadian dollar and Mexican peso.

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dollar and/or further devaluation of foreign currencies will have a negative impact on our reported revenue and reported results.

As of December 31, 2020, a 1% change in foreign currency exchange rates would have impacted our shareholders’ equity by approximately $51 million, which could be partially mitigated by our cross-currency swaps discussed below.

As of December 31, 2021, a 1% change in foreign currency exchange rates would have impacted our shareholders’ deficit by approximately $39 million.

As of December 31, 2021, the unrealized foreign exchange gain on the translation of the remaining principal amount of U.S.

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Any resulting gain will result in a corresponding reduction in our available Canadian Losses, Scientific Research and Experimental Development Pool, and/or Investment Tax Credit carryforward balances.

However, the repayment of the senior notes and the intercompany loans

denominated in U.S.

However, the repayment of the senior notes and the intercompany loans denominated in U.S.

dollars does not result in a foreign exchange gain or loss being recognized in our Consolidated Financial Statements, as these statements are prepared in U.S.

We may use derivative financial instruments from time to time to mitigate our foreign currency risk and not for trading or speculative purposes.

During 2019, we entered into cross-currency swaps, with aggregate notional amounts of $1,250 million, to mitigate fluctuation in the value of a portion of our euro-denominated net investment in our consolidated financial statements from adverse movements in exchange rates.

The euro-denominated net investment being hedged is the Company’s investment in certain euro-denominated subsidiaries.

Prior to 2019, the Company had no derivative instruments for any period presented.

Interest Rate Risk

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As it is our intent and policy to hold these investments until maturity, we do not have a material exposure to interest rate risk.

As of December 31, 2020, we had $19,762 million and $4,423 million principal amount of issued fixed rate debt and variable rate debt, respectively, that requires U.S.

dollar repayment.

As of December 31, 2021, we had $18,762 million and $4,108 million principal amount of issued fixed rate debt and variable rate debt, respectively.

The estimated fair value of our issued fixed rate debt as of December 31, 2021 was $18,599 million.

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We are subject to interest rate risk on our variable rate debt as changes in interest rates could adversely affect earnings and cash flows.

A 100 basis-points increase in interest rates, based on 3-month LIBOR, would have an annualized pre-tax effect of approximately $44 million in our Consolidated Statements of Operations and Consolidated Statements of Cash Flows, based on current outstanding borrowings and effective interest rates on our variable rate debt.

A 100 basis-points increase in interest rates, would have an annualized pre-tax effect of approximately $41 million in our Consolidated Statements of Operations and Consolidated Statements of Cash Flows, based on current outstanding borrowings and effective interest rates on our variable rate debt.

While our variable-rate debt may impact earnings and cash flows as interest rates change, it is not subject to changes in fair value.

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Revenue Recognition

In May 2014, the Financial Accounting Standards Board ("FASB") issued guidance on recognizing revenue from contracts with customers.

The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

In applying the revenue model to contracts within its scope, an entity will:

The Company’s revenues are primarily generated from product sales, primarily in the therapeutic areas of eye-health, GI and dermatology that consist of:

(i) branded pharmaceuticals, (ii) generic and branded generic pharmaceuticals, (iii) OTC products and (iv) medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment and aesthetics devices).

Other revenues include alliance and service revenue from the licensing and co-promotion of products and contract service revenue primarily in the areas of dermatology and topical medication.

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.

In addition to these provisions, the new standard provides implementation guidance on several other topics, including the accounting for certain revenue-related costs, as well as enhanced disclosure requirements.

The new guidance requires entities to disclose both quantitative and qualitative information that enables users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

The Company adopted this guidance effective January 1, 2018 using the modified retrospective approach.

Based upon review of customer contracts, the Company concluded the implementation of the new guidance did not have a material quantitative impact on its 2018 Consolidated Financial Statements as the timing of revenue recognition for product sales did not significantly change.

The new guidance did however result in additional disclosures as to the nature, amounts, and concentrations of revenue.

The development and application of the critical accounting policies associated with the current revenue recognition guidance, including the policies associated with each of our product sales provisions and the table showing the activity and ending balances for our product sales provisions, are discussed in more detail in Note 2, "SIGNIFICANT ACCOUNTING POLICIES".

Other Revenues

We generate alliance revenue and service revenue from the licensing of products and from contract services mainly in the areas of dermatology and topical medication.

Contract service revenue is derived primarily from contract manufacturing for third parties.

As is customary in the pharmaceutical industry, gross product sales are subject to a variety of deductions in arriving at reported net product sales.

The transaction price for product sales is typically adjusted for variable consideration, which may be in the form of cash discounts, allowances, returns, rebates, chargebacks and distribution fees paid to customers.

Provisions for variable consideration are established to reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the contract.

The amount of variable consideration included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in the future period.

Provisions for these deductions are recorded concurrently with the recognition of gross product sales revenue and include cash discounts and allowances, chargebacks, and distribution fees, which are paid to direct customers, as well as rebates and returns, which can be paid to direct and indirect customers.

The development and application of the critical accounting policies associated with the revenue recognition guidance, including the policies associated with each of our product sales provisions and the table showing the activity and ending balances for our product sales provisions, are discussed in more detail in Note 2, "SIGNIFICANT ACCOUNTING POLICIES" to our audited Consolidated Financial Statements.

Acquisition-Related Contingent Consideration

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For example, the introduction of a competing product that results in a significant loss of market share.

Impairment exists when the carrying value of the asset exceeds the related estimated undiscounted future cash flows expected to be derived from the asset.

Impairment exists when the carrying value of the asset exceeds the related estimated undiscounted future cash flows expected to be derived from the asset, which include the amount and timing of the projected future cash flows.

If impairment exists, the carrying value of the asset is adjusted to its fair value.

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Some of the estimates and assumptions inherent in a discounted cash flow model include the amount and timing of the projected future cash flows, and the discount rate used to reflect the risks inherent in the future cash flows.

A change in any of these estimates and assumptions could produce a different fair value, which could have a material impact on our results of operations.

A change in any of these estimates and assumptions

could produce a different fair value, which could have a material impact on our results of operations.

In addition, an intangible asset’s expected useful life can increase estimation risk, as longer-lived assets necessarily require longer-term cash flow forecasts, which for some of our intangible assets can be up to 20 years.

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A reporting unit is the same as, or one level below, an operating segment.

The Company performs its annual impairment test by

first assessing qualitative factors.

The Company performs its annual impairment test by first assessing qualitative factors.

Where the qualitative assessment suggests that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative fair value test is performed for that reporting unit (Step 1).

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Accordingly, if market conditions deteriorate, or if the Company is unable to execute its strategies, it may be necessary to record impairment charges in the future.

Adoption of New Accounting Guidance for Goodwill Impairment Testing

Effective January 1, 2018, the Company elected to early adopt a new accounting standard which simplifies the subsequent measurement of goodwill by eliminating “Step 2” from the goodwill impairment test.

Goodwill impairment is now measured as the amount by which a reporting unit's carrying value exceeds its fair value.

Upon adopting the new standard, the Company tested goodwill for impairment and determined that the carrying value of the Salix reporting unit exceeded its fair value resulting in the Company recognizing a goodwill impairment of $1,970 million associated with the Salix reporting unit.

2019 Annual Goodwill Impairment Test

The Company conducted its 2018 annual goodwill impairment test as of October 1, 2018 and determined that the carrying value of the Dentistry reporting unit exceeded its fair value and, as a result, the Company recognized a goodwill impairment of $109 million, representing the full amount of goodwill for the Dentistry reporting unit.

Changing market conditions such as:

(i) an increasing competitive environment and (ii) increasing pricing pressures negatively impacted the reporting unit's operating results.

As of October 1, 2018, the fair value of each reporting unit with associated goodwill exceeded its carrying value by more than 15%.

2019 Annual Goodwill Impairment Test

The Company conducted its annual goodwill impairment test as of October 1, 2019 by first assessing qualitative factors.

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As a result, there was no impairment to the goodwill of any reporting unit.

2020 Interim Goodwill Impairment Assessments

An interim goodwill impairment test in advance of the annual impairment assessment may be required if events occur that indicate an impairment might be present.

For example, a substantial decline in the Company’s market capitalization, changes in reportable segments, unexpected adverse business conditions, economic factors and unanticipated competitive activities may signal that an interim impairment test is needed.

Accordingly, during 2020 the Company continually monitored among other matters the possible affects and outcomes of the COVID-19 pandemic on, among other things, its supply chain, customers and distributors, employee base, product sustainability, research and development activities, product pipeline and consumer demand and related rebates and discounts and has made adjustments, although not considered to be material, to its long-term forecasts as of October 1, 2019 (the date goodwill was last tested for impairment) for these and other matters.

After completing this assessment, although not completely insulated from the negative effects of the COVID-19 pandemic, the Company believed that its long-term forecasted cash flows, as adjusted for the possible outcome of the COVID-19 pandemic

and other matters, did not indicate that the fair value of any reporting unit may be below its carrying value.

On a quarterly basis, using its latest forecasts of cash flows, the Company gave consideration to the nature and timing of the expected revenue losses resulting from COVID-19 pandemic related matters.

No events occurred or circumstances changed during the period October 1, 2019 through September 30, 2020 that would indicate that the fair value of any reporting unit, with the exception of the Ortho Dermatologics reporting unit as discussed below, might be below its carrying value.

The changes in the amounts and timing of revenues as presented in the Company's forecasts during 2020 included a range of potential outcomes and, with the exception of the Ortho Dermatologics reporting unit as discussed below, were not substantial enough to materially adversely affect the recoverability of any of the associated reporting units’ assets and were not material enough to indicate that the fair values of those reporting units might be below their respective carrying values.

However, based on the results of the October 1, 2019 annual goodwill impairment test, the Company continued to assess the performance of the Ortho Dermatologics reporting unit and the Neuro and Other reporting unit on a quarterly basis 2020.

2020 Interim Goodwill Impairment Assessments - Neuro and Other

As part of its quarterly qualitative interim assessments of the Neuro and Other reporting unit, management considered the totality of all relevant events or circumstances that could have affected the carrying amount or fair value of the reporting unit, including comparing the reporting unit’s operating results to the forecast used to test the goodwill of the Neuro and Other reporting unit as of October 1, 2019.

Based on the qualitative assessments, management believed that the carrying value of Neuro and Other reporting unit did not exceed its fair value and, therefore, concluded a quantitative fair value test was not required for any quarterly period.

2020 Interim Goodwill Impairment Assessments and Testing - Ortho Dermatologics

During the three months ended March 31, 2020, the operating results for the Ortho Dermatologics reporting unit were less than those forecasted at October 1, 2019 for that period.

As part of its qualitative assessment as of March 31, 2020, the Company revised its forecasts for the year 2020, for among other matters, the lower than originally forecasted operating results for the three months ended March 31, 2020 and the range of potential impacts of the COVID-19 pandemic, including longer than expected launch cycles for certain new products.

Management believed that the revisions to its forecasts for the year 2020 were indicators that there was less headroom as of March 31, 2020 as compared to the headroom calculated on the date goodwill was last tested for impairment (October 1, 2019).

Therefore, a quantitative fair value test for the Ortho Dermatologics reporting unit was performed at March 31, 2020.

Based on the quantitative fair value test, the fair value of the Ortho Dermatologics reporting unit continued to be greater than its carrying value and as a result there was no impairment to the goodwill of the reporting unit at March 31, 2020.

During the three months ended June 30, 2020, the Company identified certain Ortho Dermatologics’ products that were experiencing longer launch cycles than originally anticipated due to the COVID-19 pandemic and, as a direct result, took actions to mitigate the impact of these matters, including right-sizing its Ortho Dermatologics’ sales force.

As part of its qualitative assessment as of June 30, 2020, the Company revised its long-term forecasts for, among other matters, the decrease in forecasted revenues of the identified products, the reduction in sales force and related costs and a range of potential impacts of COVID-19 pandemic related matters.

Management believed that these events were indicators that there was less headroom as of June 30, 2020 as compared to the headroom calculated on the date Ortho Dermatologics goodwill was last tested for impairment (March 31, 2020).

Therefore, a quantitative fair value test for impairment to the goodwill of the Ortho Dermatologics reporting unit was performed at June 30, 2020.

Management believed that based on its qualitative assessments as of September 30, 2020, it was more likely than not that the carrying amount of the Ortho Dermatologics reporting unit was less than its fair value and, therefore, concluded a quantitative fair value test was not required at September 30, 2020.

2020 Interim Goodwill Impairment Assessment

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

During the three months ended March 31, 2020 and June 30, 2020, the operating results for the Ortho Dermatologics reporting unit were less than forecasted primarily due to certain products experiencing longer launch cycles than originally anticipated as a result of the COVID-19 pandemic.

The Company revised its long-term forecasts as of March 31, 2020 and as of

June 30, 2020 for these matters.

Management believed that these events were indicators that there was less headroom as of March 31, 2020 and June 30, 2020 as compared to the headroom calculated on the date Ortho Dermatologics goodwill was previously tested for impairment.

Therefore, a quantitative fair value test for impairment to the goodwill of the Ortho Dermatologics reporting unit was performed at March 31, 2020 and at June 30, 2020.

Based on the quantitative fair value tests, the fair value of the Ortho Dermatologics reporting unit continued to be greater than its carrying value and as a result there was no impairment to the goodwill of the reporting unit at March 31, 2020 or at June 30, 2020.

2020 Annual Goodwill Impairment Test

The Company conducted its annual goodwill impairment test as of October 1, 2020 by first assessing qualitative factors.

Based on its qualitative assessment as of October 1, 2020, management believed that, with the exception of the Ortho Dermatologics reporting unit, it was more likely than not that the carrying amounts of its reporting units were less than their respective fair values and therefore concluded a quantitative fair value test for those reporting units was not required.

Based on its qualitative assessment as of October 1, 2020, management believed that, with the exception of the Ortho Dermatologics reporting unit, it was more likely than not that the carrying amounts of its reporting units were less than their respective fair values and therefore concluded that a quantitative fair value test for those reporting units was not required.

As part of its qualitative assessment of the Ortho Dermatologics reporting unit as of October 1, 2020, the Company considered, among other matters, a range of potential impacts of COVID-19 pandemic related matters and the limited headroom calculated on the date Ortho Dermatologics goodwill was last tested for impairment (June 30, 2020).

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

The Company performed a quantitative fair value test for the Ortho Dermatologics reporting unit as of October 1, 2020, utilizing a long-term growth rate of 2.0% and a range of discount rates between 9.50% and 9.75%, in estimation of the fair value of this reporting unit.

Based on the quantitative fair value test, the fair value of the Ortho Dermatologics reporting unit was approximately 10% greater than its carrying value and as a result there was no impairment to the goodwill of the reporting unit.

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.

Specifically, the Company continues to assess the performance of the Ortho Dermatologics reporting unit as compared to its respective projections and will perform qualitative interim assessments of the carrying value and fair value on a quarterly basis to determine if impairment testing of goodwill will be warranted.

2021 Interim Goodwill Impairment Test

and offices of health care professionals could reopen.

In addition, insurance coverage pressures within the U.S.

continued to persist limiting patient access to topical acne and psoriasis products.

In light of these developments, during the first quarter of 2021, the Company began taking steps to:

(i) redirect its R&D spend to eliminate projects it has identified as high cost and high risk, (ii) redirect a portion of its marketing and product development outside the U.S.

to geographies where there is better patient access and (iii) reduce its cost structure to be more competitive.

As a result, during the three months ended March 31, 2021, the Company revised its long-term forecasts for the Ortho Dermatologics reporting unit.

Therefore, a quantitative fair value test for the Ortho Dermatologics reporting unit was performed.

2021 Annual Goodwill Impairment Test

The Company conducted its annual goodwill impairment test as of October 1, 2021 by first assessing qualitative factors.

Based on its qualitative assessment as of October 1, 2021, management believed that, with the exception of the Ortho Dermatologics reporting unit, it was more likely than not that the carrying amounts of its reporting units were less than their respective fair values and therefore concluded that a quantitative fair value test for those reporting units was not required.

As part of its qualitative assessment of the Ortho Dermatologics reporting unit as of October 1, 2021, the Company considered, among other matters, the limited headroom as a result of the impairment to the goodwill of the Ortho Dermatologics reporting unit when last tested (March 31, 2021) and macroeconomic factors such as higher than expected inflation for many commodities, volatility in many of the equity markets and pressures on market interest rates.

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

The Company performed a quantitative fair value test for the Ortho Dermatologics reporting unit as of October 1, 2021, utilizing a long-term growth rate of 1.0% and a discount rate of 9.0%, in estimation of the fair value of this reporting unit.

See Note 8, "INTANGIBLE ASSETS AND GOODWILL" to our audited Consolidated Financial Statements for further details on the goodwill impairments recognized in 2021.

The Company expects to realign and begin managing its operations in a manner consistent with the organizational structure of the two separate entities as proposed by the Separation during the first quarter of 2021, and as a result the Company may need to perform an impairment test upon realignment of its operating segments.

Contingencies

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our business strategy, business plans and prospects and forecasts and changes thereto;

product pipeline, prospective products and product approvals, product development and future performance and results of current and anticipated products;

product pipeline, prospective products and product approvals, expected launches of new products, product development and future performance and results of current and anticipated products;

anticipated revenues for our products;

anticipated growth in our Ortho Dermatologics business;

expected R&D and marketing spend;

our expected primary cash and working capital requirements for 2022 and beyond;

our plans for continued improvement in operational efficiency and the anticipated impact of such plans;

the Company's plans for continued improvement in operational efficiency and the anticipated impact of such plans;

our liquidity and our ability to satisfy our debt maturities as they become due;

our ability to reduce debt levels;

our ability to meet the financial and other covenants contained in our Fourth Amended and Restated Credit and Guaranty Agreement (the "Restated Credit Agreement") and senior notes indentures;

our ability to comply with the financial and other covenants contained in the Restated Credit Agreement, and senior notes indentures;

the impact of our distribution, fulfillment and other third-party arrangements;

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our impairment assessments, including the assumptions used therein and the results thereof;

the anticipated impact of the evolving COVID-19 pandemic and related responses from governments and private sector participants on the Company, its supply chain, third-party suppliers, project development timelines, costs, revenue, margins, liquidity and financial condition, the anticipated timing, speed and magnitude of recovery from these COVID-19 pandemic related impacts and the Company’s planned actions and responses to this pandemic;

and the Company’s plan to separate its eye-health business, including the structure and timing of completing such separation transaction.

Forward-looking statements can generally be identified by the use of words such as “believe”, “anticipate”, “expect”, “intend”, “estimate”, “plan”, “continue”, “will”, “may”, “could”, “would”, “should”, “target”, “potential”, “opportunity”, “designed”, “create”, “predict”, “project”, “forecast”, “seek”, “strive”, “ongoing” or “increase” and variations or other similar expressions.

the anticipated impact of the evolving COVID-19 pandemic and related responses from governments and private sector participants on the Company, its supply chain, third-party suppliers, project development timelines, costs, revenues, margins, liquidity and financial condition, the anticipated timing, speed and magnitude of recovery from these COVID-19 pandemic related impacts and the Company’s planned actions and responses to this pandemic;

the Company’s plan to separate its eye- health business, including the structure and timing of completing such separation transaction;

and the proposed initial public offering (“IPO”) of the Company’s Solta aesthetic medical device business, including the timing of such IPO.

Forward-looking statements can generally be identified by the use of words such as “believe”, “anticipate”, “expect”, “intend”, “estimate”, “plan”, “continue”, “will”, “may”, “could”, “would”, “should”, “target”, “potential”, “opportunity”, “designed”, “create”, “predict”, “project”, “forecast”, “seek”, “strive”, “ongoing”, “decrease” or “increase” and variations or other similar expressions.

In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances are forward-looking statements.

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Important factors, risks and uncertainties that could cause actual results to differ materially from these expectations include, among other things, the following:

• the risks and uncertainties caused by or relating to the evolving COVID-19 pandemic, the fear of that pandemic, the availability and effectiveness of vaccines for COVID-19, the rapidly evolving reaction of governments, private sector participants and the public to that pandemic, and the potential effects and economic impact of the pandemic and the reaction to it, the severity, duration and future impact of which are highly uncertain and cannot be predicted, and which may have a significant adverse impact on the Company, including but not limited to its supply chain, third-party suppliers, project development timelines, employee base, liquidity, stock price, financial condition and costs (which may increase) and revenue and margins (both of which may decrease);

• with respect to the proposed separation of the Company’s eye-health business, the risks and uncertainties include, but are not limited to, the expected benefits and costs of the separation transaction, the expected timing of completion of the separation transaction and its terms, the Company’s ability to complete the separation transaction considering the

various conditions to the completion of the separation transaction (some of which are outside the Company’s control, including conditions related to regulatory matters and a possible shareholder vote, if applicable), that market or other conditions are no longer favorable to completing the transaction, that any shareholder, stock exchange, regulatory or other approval (if required) is not obtained on the terms or timelines anticipated or at all, business disruption during the pendency of or following the separation transaction, diversion of management time on separation transaction-related issues, retention of existing management team members, the reaction of customers and other parties to the separation transaction, the qualification of the separation transaction as a tax-free transaction for Canadian and/or U.S.

federal income tax purposes (including whether or not an advance ruling from either or both of the Canada Revenue Agency and the Internal Revenue Service will be sought or obtained), potential dyssynergy costs resulting from the separation transaction, the impact of the separation transaction on relationships with customers, suppliers, employees and other business counterparties, general economic conditions, conditions in the markets the Company is engaged in, behavior of customers, suppliers and competitors, technological developments, as well as legal and regulatory rules affecting the Company’s business;

• the risks and uncertainties caused by or relating to the evolving COVID-19 pandemic, the fear of that pandemic, the availability and effectiveness of vaccines for COVID-19 (including with respect to current or future variants), COVID-19 vaccine immunization rates, the emergence of variant strains of COVID-19, the evolving reaction of governments, private sector participants and the public to that pandemic, and the potential effects and economic impact of the pandemic and the reaction to it, the severity, duration and future impact of which are highly uncertain and cannot be predicted, and which may have a significant adverse impact on the Company, including but not limited to its supply chain, third-party suppliers, project development timelines, employee base, liquidity, stock price, financial condition and costs (which may increase) and revenue and margins (both of which may decrease);

• with respect to the proposed separation of the Company’s eye-health business, the risks and uncertainties include, but are not limited to, the expected benefits and costs of the separation transaction, the expected timing of completion of the separation transaction and its terms, (including the Company’s expectation that it will launch the IPO of the Bausch

+ Lomb entity when financial market conditions are favorable, subject to receipt of regulatory, stock exchange and other approvals, and the Company’s expectation that the separation transaction will be completed following the expiry of customary lockups related to the B+L IPO and achievement of targeted debt leverage ratios, subject to receipt of applicable shareholder and other necessary approvals), the Company’s ability to complete the separation transaction considering the various conditions to the completion of the separation transaction (some of which are outside the Company’s control, including conditions related to regulatory matters and a possible shareholder vote, if applicable), that market or other conditions are no longer favorable to completing the transaction, that any shareholder, stock exchange, regulatory or other approval (if required) is not obtained on the terms or timelines anticipated or at all, business disruption during the pendency of or following the separation transaction, diversion of management time on separation transaction-related issues, retention of existing management team members, the reaction of customers and other parties to the separation transaction, the qualification of the separation transaction as a tax-free transaction for Canadian and/or U.S.

federal income tax purposes (including whether or not an advance ruling from the Canada Revenue Agency will be sought or obtained), the ability of the Company and the separated entity to satisfy the conditions required to maintain the tax-free status of the separation transaction (some of which are beyond their control), the ability of the Company and the separated entity to satisfy the conditions required to maintain the tax-free status of the separation transaction (some of which are beyond their control), the potential dissynergy costs resulting from the separation transaction, the impact of the separation transaction on relationships with customers, suppliers, employees and other business counterparties, general economic conditions, conditions in the markets the Company is engaged in, behavior of customers, suppliers and competitors, technological developments, as well as legal and regulatory rules affecting the Company’s business.

In particular, the Company can offer no assurance that any IPO or separation will occur at all, or that any such transaction will occur on the timelines anticipated by the Company;

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

In particular, the Company can offer no assurance that any IPO will occur at all, or that any such transaction will occur on the timelines anticipated by the Company;

• the expense, timing and outcome of legal and governmental proceedings, investigations and information requests relating to, among other matters, our past distribution, marketing, pricing, disclosure and accounting practices (including with respect to our former relationship with Philidor Rx Services, LLC ("Philidor")), including a number of pending non-class securities litigations (including certain pending opt-out actions in the U.S.

related to the previously settled securities class action (which is subject to an objector's appeal of the final court approval) and certain opt-out actions in Canada relating to the recently settled class action in Canada) and purported class actions under the federal RICO statute and other claims, investigations or proceedings that may be initiated or that may be asserted;

related to the previously settled securities class action (which remains subject to an objector's appeal of the Court's final approval order) and certain opt-out actions in Canada relating to the recently settled class action in Canada), certain pending lawsuits and other claims, investigations or proceedings that may be initiated or that may be asserted;

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

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

• pricing decisions that we have implemented, or may in the future elect to implement, such as the Patient Access and Pricing Committee’s commitment that the average annual price increase for our branded prescription pharmaceutical products will be set at no greater than single digits, or any future pricing actions we may take following review by our Patient Access and Pricing Committee (which is responsible for the pricing of our drugs);

• pricing decisions that we have implemented, or may in the future elect to implement, such as the Patient Access and Pricing Committee’s historic practice of limiting the average annual price increase for our branded prescription pharmaceutical products to single digits, or any future pricing actions we may take in 2022 or beyond following review by our Patient Access and Pricing Committee (which is responsible for the pricing of our drugs);

• legislative or policy efforts, including those that may be introduced and passed by the U.S.

Congress, designed to reduce patient out-of-pocket costs for medicines, which could result in new mandatory rebates and discounts or other pricing restrictions, controls or regulations (including mandatory price reductions);

• ongoing oversight and review of our products and facilities by regulatory and governmental agencies, including periodic audits by the FDA and equivalent agencies outside of the U.S.

• ongoing oversight and review of our products and facilities by regulatory and governmental agencies, including periodic audits by the U.S.

Food and Drug Administration (the "FDA") and equivalent agencies outside of the U.S.

and the results thereof;

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

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

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

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

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

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

• any default under the terms of our senior notes indentures or Restated Credit Agreement (and other current or future credit and/or debt agreements) and our ability, if any, to cure or obtain waivers of such default;

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

• any reductions in, or changes in the assumptions used in, our forecasts for fiscal year 2021 or beyond, including as a result of the impacts of the COVID-19 pandemic on our business and operations, which could lead to, among other

(i) a failure to meet the financial and/or other covenants contained in our Restated Credit Agreement and/or senior notes indentures and/or (ii) impairment in the goodwill associated with certain of our reporting units or impairment charges related to certain of our products or other intangible assets, which impairments could be material;

• any reductions in, or changes in the assumptions used in, our forecasts for fiscal year 2022 or beyond, including as a result of the impacts of the COVID-19 pandemic on our business and operations, which could lead to, among other things:

(i) a failure to meet the financial and/or other covenants contained in our Restated Credit Agreement and/or senior notes indentures (and other current or future credit and/or debt agreements) and/or (ii) impairment in the goodwill associated with certain of our reporting units or impairment charges related to certain of our products or other intangible assets, which impairments could be material;

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

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

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

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

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

• factors impacting our ability to achieve anticipated growth in our Ortho Dermatologics business, including the success of recently launched products (such as Arazlo ® ), expected geographic expansion in our Solta business (including with respect to Next Generation Thermage FLX ® ), the ability to successfully implement and operate our cash-pay prescription program for certain of our Ortho Dermatologics branded products, and the ability of such program to achieve the anticipated goals respecting patient access and fulfillment, the approval of pending and pipeline products (and the timing of such approvals), changes in estimates on market potential for dermatology products and continued investment in and success of our sales force;

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

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

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

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

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

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

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

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

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

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

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

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

• the final outcome and impact of Brexit negotiations;

• the trade conflict between the United States and China;

• the potential conflict between Russia and Ukraine and any restrictive actions that may be taken by the U.S.

and/or other countries in response thereto, such as sanctions or export controls;

• our ability to obtain, maintain and license sufficient intellectual property rights over our products and enforce and defend against challenges to such intellectual property (such as in connection with the filing by Norwich Pharmaceuticals Inc.

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

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

sale, including any resultant impairments of goodwill or other assets, or any adverse tax consequences suffered as a result of any such divestitures;

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

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• 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, including the impact of our arrangements with Walgreens;

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

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

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

• the success of our fulfillment arrangements with Walgreen Co.

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

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

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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;

• 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 and similar agencies in other countries, legal and regulatory proceedings and settlements thereof, the protection afforded by our patents and other intellectual and proprietary property, successful generic challenges to our products and infringement or alleged infringement of the intellectual property of others;

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

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

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

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

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

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

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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 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 impacts of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 and potential amendment thereof and other legislative and regulatory health care reforms in the countries in which we operate, including with respect to recent government inquiries on pricing;

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

• the impact of changes in federal laws and policy that may be undertaken following the change in the U.S.

administration;

• 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;

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Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found elsewhere in this Form 10-K, under Item 1A.

"Risk Factors" and in the Company's other filings with the SEC and the Canadian Securities Administrators (the “CSA”).

"Risk Factors" 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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis