What changed in this filing

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Item 9A. Controls and Procedures

2022-02-23 compared with 2021-02-24 · 695 added, 783 removed, 2010 unchanged (42% of the section changed)

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Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance

Information required under this Item is incorporated herein by reference from information included in the 2022 Proxy Statement.

The Board of Directors has adopted a Code of Ethics that applies to our Chief Executive Officer, Chief Financial Officer, the principal accounting officer, controller, and all vice presidents and above in the finance department of the Company worldwide.

A copy of the Code of Ethics can be found as an annex to our Standards of Business Conduct, which is located on our website at:

The Board of Directors has adopted a code of ethics (the "Code of Conduct") that applies to our Chief Executive Officer, Chief Financial Officer, the principal accounting officer, controller, and all vice presidents and above in the finance department of the Company worldwide.

A copy of the Code of Conduct can be found on our website at:

www.bauschhealth.com .

We intend to satisfy the SEC disclosure requirements regarding amendments to, or waivers from, any provisions of our Code of Ethics on our website.

We intend to satisfy the SEC disclosure requirements regarding amendments to, or waivers from, any provisions of our Code of Conduct on our website.

Executive Compensation

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3.3 Articles of Valeant Pharmaceuticals International, Inc., dated August 8, 2013, originally filed as Exhibit 3.3 to the Company's Current Report on Form 8-K filed on August 13, 2013, which is incorporated by reference herein.

3.4 Notice of Articles of Bausch Health Companies Inc., as of July 16, 2018, originally filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on July 16, 2018, which is incorporated by reference herein.

3.5 Articles of Bausch Health Companies Inc., as of July 13, 2018, originally filed as Exhibit 3.2 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on July 16, 2018, which is incorporated by reference herein.

3.4 Notice of Articles of Bausch Health Companies Inc., as of July 16, 2018, originally filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed on July 16, 2018, which is incorporated by reference herein.

3.5 Articles of Bausch Health Companies Inc., as of July 13, 2018, originally filed as Exhibit 3.2 to the Company's Current Report on Form 8-K filed on July 16, 2018, which is incorporated by reference herein.

4.1 Indenture, dated as of March 27, 2015 (the “VRX Escrow Corp Indenture”), between VRX Escrow Corp., the Bank of New York Mellon Trust Company, N.A., as trustee, registrar and US paying agent, and The Bank of New York Mellon, acting through its London branch, as the Euro paying agent, governing the 5.375% Senior Notes due 2020 (the “2020 Notes”), the 5.875% Senior Notes due 2023 (the “May 2023 Notes”), the 4.5 0 0% Senior Notes due 2023 (the “Euro Notes”) and the 6.125% Senior Notes due 2025 (the “2025 Notes” and together with the 2020 Notes, the May 2023 Notes and the Euro Notes, the “Notes”), originally filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 27, 2015, which is incorporated by reference herein.

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4.5 Indenture, dated as of December 18, 2017, by and among Valeant Pharmaceuticals International, Inc., the guarantors party thereto and The Bank of New York Mellon, as trustee, governing the 9.0 0 0% Senior Notes due 2025, originally filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on December 18, 2017, which is incorporated by reference herein.

4.6 Indenture, dated as of March 26, 2018, by and among Valeant Pharmaceuticals International, Valeant Pharmaceuticals International, Inc., the other guarantors party thereto and The Bank of New York Mellon, as trustee, originally filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 27, 2018, which is incorporated by reference herein.

4.7 Indenture, dated as of June 1, 2018, by and among Valeant Pharmaceuticals International, Valeant Pharmaceuticals international, Inc., the other guarantors party thereto and The Bank of New York Mellon, as trustee, originally filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 1, 2018, which is incorporated by reference herein.

4.6 Indenture, dated as of March 26, 2018, by and among Valeant Pharmaceuticals International, Valeant Pharmaceuticals International, Inc., the other guarantors party thereto and The Bank of New York Mellon, as trustee, governing the 9.250% Senior Secured Notes due 2026, originally filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 27, 2018, which is incorporated by reference herein.

4.7 Indenture, dated as of June 1, 2018, by and among Valeant Pharmaceuticals International, Valeant Pharmaceuticals international, Inc., the other guarantors party thereto and The Bank of New York Mellon, as trustee, governing the 8.500% Senior Secure d Notes due 2027, originally filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 1, 2018, which is incorporated by reference herein.

4.8 Indenture, dated as of March 8, 2019, by and among Bausch Health Companies Inc., the guarantors named therein, The Bank of New York Mellon Trust Company, N.A., as trustee, and the notes collateral agents party thereto, governing the 5.750% Senior Secured Notes due 2027, originally filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 8, 2019, which is incorporated by reference herein.

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4.12 Indenture, dated as of December 3, 2020, by and among Bausch Health Companies Inc., the guarantors named therein and The Bank of New York Mellon, N.A., as trustee, governing the 5.000% Senior Notes due 2029 and the 5.250% Senior Notes due 2031, originally filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on December 3, 2020, which is incorporated by reference herein.

4.13 Indenture, dated as of June 8, 2021, by and among Bausch Health Companies Inc., the guarantors named therein and The Bank of New York Mellon, N.A., as trustee, governing the 4.875% Senior Notes due 2028, originally filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 8, 2021, which is incorporated by reference herein .

4.14 Indenture, dated as of February 10, 2022, by and among Bausch Health Companies Inc., the guarantors named therein, The Bank of New York Mellon, N.A., as trustee and the notes collateral agents party thereto, governing the 6.125% Senior Secured Notes due 2027, originally filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on February 10, 2022, which is incorporated by reference herein .

4.15 Form of Common Share Certificate of Bausch Health Companies Inc., originally filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on July 16, 2018, which is incorporated by reference herein.

4.14 Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, As Amended, originally filed as Exhibit 4.12 to the Company’s Annual Report on Form 10-K filed on February 19, 2020, which is incorporated by reference herein.

4.16 Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, As Amended, originally filed as Exhibit 4.12 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20 19, filed on February 19, 2020, which is incorporated by reference herein.

10.1 Bausch Health Companies Inc.

Further Amended and Restated 2014 Omnibus Incentive Plan, effective as of April 28, 2020 (the "Amended and Restated 2014 Omnibus Incentive Plan").†

10.2 Form of Matching Restricted Stock Unit Agreement (Matching Units) under the Amended and Restated 2014 Omnibus Incentive Plan, originally filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on August 7, 2018, which is incorporated by reference herein.†

Further Amended and Restated 2014 Omnibus Incentive Plan, effective as of April 28, 2020 (the "Amended and Restated 2014 Omnibus Incentive Plan") , originally filed as Exhibit 10 .

1 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed on February 24, 2021, whi ch is incorporated by reference herein .†

10.2 Form of Matching Restricted Stock Unit Agreement (Matching Units) under the Amended and Restated 2014 Omnibus Incentive Plan, originally filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 filed on August 7, 2018, which is incorporated by reference herein.†

10.3 Form of 2016 Stock Option Grant Agreement under the Amended and Restated 2014 Omnibus Incentive Plan, originally filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 filed on May 6, 2019, which is incorporated by reference herein.†

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10.5 Form of Director Restricted Share Units Award Agreement (Annual Grants), under the Amended and Restated 2014 Omnibus Incentive Plan, originally filed as Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed on February 28, 2018, which is incorporated by reference herein.

10.6 Form of Share Unit Grant Agreement (Performance Vesting) (Performance Restricted Share Units), under the Amended and Restated 2014 Omnibus Incentive Plan, originally filed as Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed on March 1, 2017, which is incorporated by reference herein.†

10.6 Form of Stock Option Grant Agreement (Nonstatutory Stock Options), under the Amended and Restated 2014 Omnibus Incentive Plan, originally filed as Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed on March 1, 2017, which is incorporated by reference herein.†

10.8 Form of Restricted Stock Unit Award Agreement (Restricted Stock Units), under the Amended and Restated 2014 Omnibus Incentive Plan, originally filed as Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed on March 1, 2017, which is incorporated by reference herein.

10.7 Form of 2018 Share Unit Grant Agreement (Performance Vesting) (Performance Restricted Share Units), under the Amended and Restated 2014 Omnibus Incentive Plan, originally filed as Exhibit 10.11 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed on February 28, 2018, which is incorporated by reference herein.†

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10.9 Form of 2018 Stock Option Grant Agreement (Nonstatutory Stock Options), under the Amended and Restated 2014 Omnibus Incentive Plan, originally filed as Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed on February 28, 2018, which is incorporated by reference herein.†

10.10 Form of 2021 Share Unit Grant Agreement (Performance Vesting) (Performance Restricted Share Units), under the Amended and Restated 2014 Omnibus Incentive Plan, originally filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 filed on May 4, 2021, which is incorporated by reference herein.

10.11 Form of 2021 Share Unit Grant Agreement (TSR Performance Restricted Share Units), under the Amended and Restated 2014 Omnibus Incentive Plan, originally filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 filed on November 2, 2021, which is incorporated by reference herein.†

10.12 Valeant Pharmaceuticals International, Inc.

2011 Omnibus Incentive Plan (the “2011 Omnibus Incentive Plan”), effective as of April 6, 2011, as amended on and approved by the shareholders on May 16, 2011, originally filed as Annex A to the Company's Management Proxy Circular and Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 14, 2011, as amended by the Supplement dated May 10, 2011 to the Company's Management Proxy Circular and Proxy Statement filed with the Securities and Exchange Commission on May 10, 2011, which is incorporated by reference herein.†

2011 Omnibus Incentive Plan (the “2011 Omnibus Incentive Plan”), effective as of April 6, 2011, as amended on and approved by the shareholders on May 16, 2011, originally filed as Annex A to the Company's Management Proxy Circular and Proxy Statement on Schedule 14A filed on April 14, 2011, as amended by the Supplement dated May 10, 2011 to the Company's Management Proxy Circular and Proxy Statement filed on May 10, 2011, which is incorporated by reference herein.†

10.13 Form of Stock Option Grant Agreement under the 2011 Omnibus Incentive Plan, originally filed as Exhibit 10.2 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011 filed on February 28, 2012, which is incorporated by reference herein.†

10.14* Form of Spinoff Bonus Program Letter Agreement dated November 2, 2020 .†

10.14 Form of Spinoff Bonus Program Letter Agreement dated November 2, 2020 , o riginally filed as Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fisc al year ended December 31, 2020 filed on February 24, 2 021, which is incorporated by reference herein .†

10.15 Valeant Pharmaceuticals International, Inc.

Directors Share Unit Plan, effective May 16, 2011, originally filed as Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2011 filed on August 8, 2011, which is incorporated by reference herein.†

10.16 Employment Agreement between Valeant Pharmaceuticals International, Inc.

10.16 Employment Agreement , dated as of April 25, 2016, between Valeant Pharmaceuticals International, Inc.

and Joseph C.

Papa, dated as of April 25, 2016, originally filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 27, 2016, which is incorporated by reference herein.†

Papa, originally filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 27, 2016, which is incorporated by reference herein.†

10.17 Employment Agreement, dated as of August 17, 2016, between Valeant Pharmaceuticals International, Inc.

Herendeen, originally filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 23, 2016, which is incorporated by reference herein.†

10.18 Employment Agreement between Valeant Pharmaceuticals International, Inc.

and Christina Ackermann, dated July 8, 2016, originally filed as Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed on March 1, 2017, which is incorporated by reference herein.†

10.18 Amendment to Employment Agreement, dated as of April 28, 2021, between Bausch Health Companies Inc.

and Paul Herendeen, originally filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 filed on November 2, 2021, which is incorporated by reference herein.†

10.19 Employment Agreement , dated July 8, 2016, between Valeant Pharmaceuticals International, Inc.

and Christina Ackermann, originally filed as Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed on March 1, 2017, which is incorporated by reference herein.†

10.20* Amended and Restated Employment Agreement, dated February 18, 2022, between Bausch Health Companies Inc.

and Thomas Appio.

10.21 Employment Agreement , dated August 2, 2018, between Bausch Health Companies Inc.

and Joseph F.

Gordon, originally filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 filed on May 6, 2019, which is incorporated by reference herein.†

10.22 Employment Agreement, dated as of June 1, 2021, between Bausch Health Companies Inc.

and Sam Eldessouky, originally filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended Jun e 30, 2021 filed on August 3, 2021, which is incorporated by reference herein.†

10.23 Employment Agreement between Valeant Pharmaceuticals International, Inc.

and William Humphries, dated December 1, 2016, originally filed as Exhibit 10.20 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed on February 28, 2018, which is incorporated by reference herein.†

10.20 Employment Agreement between Valeant Pharmaceuticals International, Inc.

and Thomas Appio, dated March 23, 2017, originally filed as Exhibit 10.21 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed on February 28, 2018, which is incorporated by reference herein.†

10.21 Employment Agreement between Bausch Health Companies Inc.

and Joseph F.

Gordon, dated August 2, 2018, originally filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 filed on May 6, 2019, which is incorporated by reference herein.†

10.24 First Incremental Amendment, dated as of November 27, 2018, to the Fourth Amended and Restated Credit and Guaranty Agreement, by and among Bausch Health Companies Inc., Valeant Pharmaceuticals International, certain subsidiaries of Bausch Health Companies Inc.

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10.26 Amended and Restated License Agreement dated August 6, 2012 by and between Alfa Wassermann S.p.A.

and Salix Pharmaceuticals, Inc., originally filed as Exhibit 10.95 to Salix’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 filed on November 8, 2012, which is incorporated by reference herein.

and Salix Pharmaceuticals, Inc., originally filed as Exhibit 10.95 to Salix Pharmaceutical Inc.

’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 filed on November 8, 2012, which is incorporated by reference herein.

10.27 Letter Amendment dated September 5, 2012 by and between Alfa Wassermann S.p.A.

and Salix Pharmaceuticals, Inc., originally filed as Exhibit 10.100 to Salix’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 filed on November 8, 2012, which is incorporated by reference herein.

and Salix Pharmaceuticals, Inc., originally filed as Exhibit 10.100 to Salix Pharmaceutical Inc.

’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 filed on November 8, 2012, which is incorporated by reference herein.

10.28 Amendment No.

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10.29 Trademark License Agreement (Alfa to Salix) dated August 6, 2012 by and between Alfa Wassermann Hungary Kft.

and Salix Pharmaceuticals, Inc., originally filed as Exhibit 10.98 to Salix’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 filed on November 8, 2012, which is incorporated by reference herein.

and Salix Pharmaceuticals, Inc., originally filed as Exhibit 10.98 to Salix Pharmaceutical Inc.

’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 filed on November 8, 2012, which is incorporated by reference herein.

10.30 Restatement Agreement, dated as of June 1, 2018, among Valeant Pharmaceuticals International, Inc., Valeant Pharmaceuticals International, certain subsidiaries of Valeant Pharmaceuticals International, Inc.

as guarantors, each of the financial institutions named therein as lenders and issuing banks and Barclays Bank PLC, as Administrative Agent, originally filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 1, 2018, which is incorporated by reference herein.

as guarantors, each of the financial institutions named therein as lenders and issuing banks and Barclays Bank PLC, as Administrative Agent, originally filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 1, 2018, which is incorporated by reference herein.

10.31 Amended and Restated Asset Purchase Agreement dated January 4, 2019 among Bausch Health Companies Inc., Bausch Health Ireland Limited, Synergy Pharmaceuticals Inc.

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10.32 Stipulation of Settlement dated December 15, 2019 in the U.S.

Securities Litigation, originally filed as Exhibit 10.30 to the Company’s Annual Report on Form 10-K filed on February 19, 2020, which is incorporated by reference herein.

Securities Litigation, originally filed as Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed on February 19, 2020, which is incorporated by reference herein.

10.33 Director Nomination and Appointment Agreement, dated February 23, 2021, by and among Bausch Health Companies Inc., Carl C.

Icahn and the persons and entities listed therein, originally filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 24, 2021, which is incorporated by reference herein.

21.1* Subsidiaries of Bausch Health Companies Inc.

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Chief Executive Officer and Chairman of the Board February 23, 2022

Executive Vice President and Chief Financial Officer (Principal Financial Officer) February 24, 2021

/s/ SAM ELDESSOUKY

Sam Eldessouky

Executive Vice President and Chief Financial Officer (Principal Financial Officer) February 23, 2022

/s/ FREDERICK J.

Senior Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer) February 23, 2022

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Director February 23, 2022

/s/ BRETT ICAHN

Director February 23, 2022

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Director February 23, 2022

/s/ STEVEN D.

Director February 23, 2022

/s/ ROBERT N.

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Report of Management on Financial Statements F- 2

Report of Independent Registered Public Accounting Firm F- 3

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Consolidated Balance Sheets as of December 31, 2021 and 2020 F- 6

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Consolidated Statements of Comprehensive Loss for the years ended December 31, 2021, 2020 and 2019 F- 8

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2020, 2019 and 2018 F- 9

Consolidated Statements of Shareholders’ Equity (Deficit) for the years ended December 31, 2021, 2020 and 2019 F- 9

Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019 F- 10

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/s/ JOSEPH C.

PAPA /s/ PAUL S.

Chief Executive Officer Paul S.

PAPA /s/ SAM ELDESSOUKY

Chief Executive Officer Sam Eldessouky

Executive Vice President and

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We have audited the accompanying consolidated balance sheets of Bausch Health Companies Inc.

and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations, of comprehensive loss, of shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, of comprehensive loss, of shareholders' equity (deficit) and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Changes in Accounting Principles

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019 and the manner in which it accounts for income taxes and goodwill in 2018.

Basis for Opinions

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A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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The provisions for these deductions are recorded concurrently with the recognition of gross product sales revenue as a reduction in revenue.

The variable consideration provisions, either recognized within accrued and other current liabilities or as a reduction of trade receivables, included $575 million related to return allowances and $779 million related to rebates, including Medicaid rebates as of December 31, 2020.

The variable consideration provisions, either recognized within accrued and other current liabilities or as a reduction of trade receivables, included $482 million related to returns allowances and $944 million related to rebates, including Medicaid rebates as of December 31, 2021.

For certain rebate programs, such as Medicaid, provisions recognized by management are based on the terms of state government-managed programs, estimates of outstanding and future claims for end-customer sales and the sales mix.

For sales returns, management estimates provisions utilizing existing return policies with customers, historical sales and return rates, inventory levels in the distribution channel, prescription demand and product shelf lives.

The principal considerations for our determination that performing procedures relating to Medicaid rebates and sales return allowances is a critical audit matter are (i) the significant judgment by management when developing the estimate of Medicaid rebates and allowances for sales returns and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s estimates, including significant assumptions related to terms of state government-managed Medicaid programs, existing return policies with customers, and projected outstanding and future claims for end-customer sales.

As disclosed by management, for sales returns, management estimates provisions utilizing existing return policies with customers, historical return and exchange levels, external data with respect to inventory levels in the wholesale distribution channel, external data with respect to prescription demand for products, remaining shelf lives of products at the date of sale, and estimated returns liability to be processed by year of sale based on an analysis of lot information related to actual historical returns.

The principal considerations for our determination that performing procedures relating to Medicaid rebates and sales returns allowances is a critical audit matter are the significant judgment by management when developing the estimate of Medicaid rebates and allowances for sales returns as the estimates are based on assumptions developed using terms of state government-managed Medicaid programs, existing return policies with customers, and projected estimated outstanding and future claims for end-customer sales.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to these assumptions.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to provisions for Medicaid rebates and allowances for sales returns, including controls over the assumptions used to estimate these rebates and allowances.

These procedures also included, among others (i) developing an independent estimate of Medicaid rebates by utilizing third-party information on inventory levels in the distribution channel, the terms of the specific Medicaid rebate programs, and the historical trends of actual Medicaid rebate claims paid adjusted for price and projected market conditions (ii) comparing the independent estimate for these Medicaid rebates to management’s estimates, (iii) evaluating the reasonableness of management’s assumptions related to the allowances for sales returns, including existing return policies, comparing to historical trends and considering whether these assumptions were consistent with evidence obtained in other areas of the audit, (iv) evaluating the appropriateness of the sales return model and testing the completeness and accuracy of underlying data used in the model, and (v) testing Medicaid rebate and sales return claims processed by the Company, including evaluating those claims for consistency with the contractual terms of the Company’s arrangements and policies.

These procedures also included, among others (i) developing an independent estimate of Medicaid rebates by utilizing third-party information on inventory levels in the distribution channel, the terms of the specific Medicaid rebate programs, and the historical trends of actual Medicaid rebate claims paid, adjusted for price and projected market conditions, (ii) comparing the independent estimate for these Medicaid rebates to management’s estimates, (iii) evaluating management's process for developing the estimate of the allowance for sales returns and the reasonableness of management’s assumptions related to existing return policies, (iv) evaluating management's assumptions related to existing return policies involved comparing to historical trends and considering whether these assumptions were consistent with evidence obtained in other areas of the audit, (v) evaluating the appropriateness of the method for estimating the allowance for sales returns and testing the completeness and accuracy of underlying data used in the model, and (vi) testing Medicaid rebate and sales returns claims processed by the Company, including evaluating those claims for consistency with the contractual terms of the Company’s arrangements and policies.

Finite-Lived Intangible Assets Impairment Assessment

As described in Note 8 to the consolidated financial statements, the Company’s consolidated finite-lived net intangible assets balance was $6,740 million as of December 31, 2020, which consists of product and corporate brands, product rights/patents, partner relationships and technology and other assets.

As described in Notes 2 and 8 to the consolidated financial statements, the Company’s consolidated finite-lived net intangible assets balance was $5,250 million as of December 31, 2021, which consists of product and corporate brands, product rights/patents, partner relationships and technology and other assets.

Finite-lived intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

As disclosed by management, recoverability is measured through the use of an undiscounted future cash flow model when an indication of impairment is determined to exist.

If an asset is determined to not be recoverable, a discounted cash flow model is used to estimate fair value.

Management’s impairment tests included significant estimates and assumptions related to the amount and timing of projected future cash flows and in the situation when the asset is determined to not be recoverable, the discount rate.

The principal considerations for our determination that performing procedures relating to the finite-lived intangible assets impairment assessment is a critical audit matter are (i) the significant judgment by management in the identification of events that suggest an asset group might not be recoverable and in developing the assumptions used in the impairment testing assessment and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s undiscounted future cash flow projections.

If indicators of impairment are present, the asset is tested for recoverability by comparing the carrying value of the asset to 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.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s undiscounted future cash flow projections.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

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Evaluating the reasonableness of management's assumptions for undiscounted future cash flow projections involved evaluating whether the assumptions used by management were reasonable considering the current and past performance of the asset group and whether these assumptions were consistent with evidence obtained in other areas of the audit.

Goodwill Impairment Assessment – Ortho Dermatologics Reporting Unit

As described in Note 8 to the consolidated financial statements, the Company’s consolidated goodwill balance was $13,044 million as of December 31, 2020, and the goodwill associated with the Ortho Dermatologics segment was $1,267 million.

Goodwill Impairment Assessments – Ortho Dermatologics Reporting Unit

As described in Note 2 and 8 to the consolidated financial statements, the Company’s consolidated goodwill balance was $12,457 million as of December 31, 2021, and the goodwill associated with the Ortho Dermatologics segment was $798 million, inclusive of a goodwill impairment of $469 million.

The Ortho Dermatologics segment consists of the Ortho Dermatologics and Global Solta reporting units.

Management conducted its annual goodwill impairment test as of October 1, 2020 by first assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Goodwill is not amortized but is tested for impairment at least annually as of October 1st 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.

Where the qualitative assessment suggested that it was more likely than not that the fair value of a reporting unit was less than its carrying amount, a quantitative fair value test was performed for that reporting unit.

As disclosed by management, goodwill impairment is measured by the amount the carrying value exceeds the fair value.

Fair value of each reporting unit is estimated by management based on the income approach.

Management’s discounted cash flow model includes judgments and assumptions relating to revenue growth rates, gross profit, projected working capital needs, selling, general and administrative expenses, research and development expenses, capital expenditures, income tax rates, discount rates and terminal growth rates.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the Ortho Dermatologics reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the reporting unit (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s significant assumptions related to revenue growth rates, terminal growth rate, gross profit, and the discount rate, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Goodwill impairment is measured by the amount the carrying value exceeds the fair value.

Fair value of each reporting unit is estimated by management using a discounted cash flow model.

During the quarter ended March 31, 2021, the Company revised its long-term forecasts for the Ortho Dermatologics reporting unit and thus Management conducted an interim quantitative fair value test for this reporting unit and recognized a goodwill impairment of $469 million.

Management also conducted its annual goodwill impairment test on October 1, 2021 and determined that there was no additional impairment of goodwill.

Management’s discounted cash flow model relies on assumptions regarding revenue growth rates, gross profit, projected working capital needs, selling, general and administrative expenses, research and development expenses, capital expenditures, income tax rates, discount rates and terminal growth rates.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments of the Ortho Dermatologics reporting unit is a critical audit matter are the significant judgment by management when developing the fair value estimates of the reporting unit.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates, gross profit, discount rates, and terminal growth rates.

Also, the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Company’s Ortho Dermatologics reporting unit.

These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the Ortho Dermatologics reporting unit, (ii) evaluating the appropriateness of the discounted cash flow model, (iii) testing the completeness and accuracy of underlying data used in the model, and (iv) evaluating the reasonableness of the significant assumptions used by management related to the revenue growth rates, terminal growth rate, gross profit and the discount rate.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessments, including controls over the valuation of the Company’s Ortho Dermatologics reporting unit.

These procedures also included, among others (i) testing management’s process for developing the fair value estimates of the Ortho Dermatologics reporting unit, (ii) evaluating the appropriateness of the discounted cash flow models, (iii) testing the completeness and accuracy of underlying data used in the models, and (iv) evaluating the reasonableness of the significant assumptions used by management related to the revenue growth rates, gross profit, discount rates, and terminal growth rates.

Evaluating management’s assumptions related to revenue growth rates and gross profit involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow model and terminal growth rate and discount rate assumptions.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow models and discount rate and terminal growth rate assumptions.

/s/ PricewaterhouseCoopers LLP

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Cash and cash equivalents $ 582 $ 605

Restricted cash 1,211 1

Restricted cash and other settlement deposits 1,537 1,211

Trade receivables, net 1,775 1,577

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Accrued and other current liabilities 4,791 4,576

Current portion of long-term debt and other — 1,234

Total current liabilities 5,198 4,913

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Total Bausch Health Companies Inc.

shareholders’ equity 535 1,063

shareholders’ (deficit) equity ( 106 ) 535

Noncontrolling interest 72 70

Total equity 605 1,136

Total liabilities and equity $ 31,199 $ 33,863

Total (deficit) equity ( 34 ) 605

Total liabilities and (deficit) equity $ 29,202 $ 31,199

On behalf of the Board:

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

Restructuring, integration and separation costs 22 31 22

Acquisition-related contingent consideration 48 12 ( 9 )

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

Restructuring, integration, separation and IPO costs 50 22 31

Other expense, net 373 502 1,426

7,984 7,351 8,804

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Pension and postretirement benefit plan adjustments:

Net actuarial loss arising during the year ( 15 ) ( 8 ) ( 7 )

Net actuarial gain (loss) arising during the year 24 ( 15 ) ( 8 )

Amortization of prior service credit ( 4 ) ( 4 ) ( 4 )

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BAUSCH HEALTH COMPANIES INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

(in millions)

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Shareholders'

Equity (Deficit)

Shares Amount Additional

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Interest Total

Equity (Deficit)

Balance, January 1, 2019 349.9 $ 10,121 $ 413 $ ( 5,664 ) $ ( 2,137 ) $ 2,733 $ 82 $ 2,815

Effect of application of new accounting standard:

— — — 1,209 — 1,209 — 1,209

Common shares issued under share-based compensation plans

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— — ( 40 ) — — ( 40 ) — ( 40 )

Acquisition of noncontrolling interest — — ( 15 ) — — ( 15 ) ( 3 ) ( 18 )

Noncontrolling interest distributions — — — — — — ( 13 ) ( 13 )

Net (loss) income — — — ( 1,788 ) — ( 1,788 ) 5 ( 1,783 )

Other comprehensive loss — — — — ( 241 ) ( 241 ) ( 3 ) ( 244 )

Other comprehensive income (loss) — — — — 51 51 ( 1 ) 50

Balance, December 31, 2019 352.6 10,172 429 ( 7,452 ) ( 2,086 ) 1,063 73 1,136

Effect of application of new accounting standard:

financial instruments - credit losses

— — — ( 1 ) — ( 1 ) — ( 1 )

Common shares issued under share-based compensation plans

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Net (loss) income — — — ( 560 ) — ( 560 ) 1 ( 559 )

Other comprehensive income (loss) — — — — 51 51 ( 1 ) 50

Other comprehensive (loss) income — — — — ( 47 ) ( 47 ) 2 ( 45 )

Balance, December 31, 2020 355.4 10,227 454 ( 8,013 ) ( 2,133 ) 535 70 605

Effect of application of new accounting standard:

financial instruments - credit losses

— — — ( 1 ) — ( 1 ) — ( 1 )

Common shares issued under share-based compensation plans

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— — ( 52 ) — — ( 52 ) — ( 52 )

Release of foreign currency translation losses upon disposal of assets held for sale — — — — 340 340 — 340

Noncontrolling interest distributions — — — — — — ( 10 ) ( 10 )

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Deferred income taxes ( 225 ) ( 475 ) ( 230 )

(Gain) loss on disposal of assets ( 1 ) ( 31 ) 6

Additions (reductions) to accrued legal settlements 442 1,401 ( 27 )

Gain on disposal of assets ( 2 ) ( 1 ) ( 31 )

Additions to accrued legal settlements 569 442 1,401

Payments of accrued legal settlements ( 351 ) ( 168 ) ( 15 )

Share-based compensation 128 105 102

Foreign exchange loss (gain) 8 7 ( 19 )

Foreign exchange loss 6 8 7

Gain excluded from hedge effectiveness ( 20 ) ( 23 ) ( 9 )

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Proceeds from sale of assets and businesses, net of costs to sell 669 21 45

Interest settlements from cross-currency swaps 23 — —

Net cash used in investing activities ( 261 ) ( 419 ) ( 196 )

Settlements from cross-currency swaps 27 23 —

Net cash provided by (used in) investing activities 409 ( 261 ) ( 419 )

Cash Flows From Financing Activities

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Payments of acquisition-related contingent consideration ( 83 ) ( 35 ) ( 35 )

Payments of deferred consideration — — ( 18 )

Payments of financing costs ( 48 ) ( 39 ) ( 28 )

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Effect of exchange rate changes on cash and cash equivalents ( 19 ) 16 ( 4 )

Net (decrease) increase in Cash and cash equivalents and Restricted cash ( 1,428 ) 2,521 ( 74 )

Cash and cash equivalents and Restricted cash, beginning of year 3,244 723 797

Cash and cash equivalents and Restricted cash, end of year $ 1,816 $ 3,244 $ 723

Net increase (decrease) in Cash and cash equivalents and Restricted cash and other settlement deposits 303 ( 1,428 ) 2,521

Cash and cash equivalents and Restricted cash and other settlement deposits, beginning of year 1,816 3,244 723

Cash and cash equivalents and Restricted cash and other settlement deposits, end of year $ 2,119 $ 1,816 $ 3,244

Cash and cash equivalents, end of year $ 582 $ 605 $ 3,243

Restricted cash, end of year 1,211 1 2

Cash and cash equivalents and Restricted cash, end of year $ 1,816 $ 3,244 $ 723

Restricted cash and other settlement deposits, end of year 1,537 1,211 1

Cash and cash equivalents and Restricted cash and other settlement deposits, end of year $ 2,119 $ 1,816 $ 3,244

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

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All intercompany transactions and balances have been eliminated.

Separation of the Bausch + Lomb Eye-Health Business

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

(the “Separation”).

The Separation will establish two separate companies that include:

(i) a fully integrated eye-health company which will consist of the Company’s Bausch + Lomb Global Vision Care, Global Surgical, Global Consumer and Global Ophthalmology Rx businesses and (ii) a diversified pharmaceutical company which will include the Company’s Salix, International Rx, Solta, neurology and medical dermatology pharmaceutical businesses.

The anticipated separation is subject to regulatory approvals and certain conditions, including final approval by the Company’s Board of Directors and any shareholder vote requirements that may be applicable.

The Company has begun addressing the internal organizational design and structure of the new entity which it anticipates having substantially completed by late 2021.

Management is also exploring various capitalization structures and the form of the Separation transaction in order to properly capitalize both entities post-separation.

As of the date of the issuance of these financial statements, the Company is in the planning phase of the Separation.

As such, there are considerations, approvals and conditions that will determine the ultimate timing and structure of the Separation and there can be no assurance that such a transaction will occur.

These Consolidated Financial Statements do not include any adjustments to give effect to the Separation.

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

On August 6, 2020, the Company announced its intentions to separate its eye-health business into an independent publicly traded entity from the remainder of Bausch Health Companies Inc.

(the “B+L Separation”).

On August 3, 2021, the Company announced its intentions to conduct an initial public offering ("IPO") of its aesthetic medical device business, Global Solta (the “Solta IPO").

In January 2022, the Company completed the internal organizational design and structure of the new eye-health entity, Bausch + Lomb Corporation ("Bausch + Lomb"), and the new Global Solta entity, Solta Medical Corporation ("Solta"), as previously announced and aims to launch the B+L IPO and the Solta IPO when financial market conditions are favorable (and subject to receipt of regulatory, stock exchange and other approvals).

Following the B+L IPO the Company expects 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.

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

(i) a fully integrated eye-health company which will consist of the Company’s Bausch + Lomb Global Vision Care, Global Surgical, Global Consumer and Global Ophthalmic Pharmaceuticals businesses, (ii) a global provider of aesthetic medical devices which will consist of the Company’s Solta business and (iii) a diversified pharmaceutical company which will include the Company’s Salix, International Rx, dentistry, neurology, medical dermatology and generics pharmaceutical businesses.

These audited Consolidated Financial Statements do not include any adjustments to give effect to either the B+L Separation or the proposed Solta IPO.

Impacts of COVID-19 Pandemic

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.

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

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

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

The extent to which these events may continue to impact the Company's business, financial condition, cash flows and results of operations, in particular, will depend on future developments which are highly uncertain and many of which are outside the Company's control.

Such developments include the availability and effectiveness of vaccines for the COVID-19 virus, the ultimate geographic spread and duration of the pandemic, the extent and duration of a resurgence of the COVID-19 virus and variant strains thereof, if any, new information concerning the severity of the COVID-19 virus, the effectiveness and intensity of measures to contain the COVID-19 virus and the economic impact of the pandemic and the

reactions to it.

Such developments include the availability and effectiveness of vaccines for the COVID-19 virus, COVID-19 vaccine immunization rates, the ultimate geographic spread and duration of the pandemic, the extent and duration of a resurgence of the COVID-19 virus and variant strains thereof, such as the delta and omicron variants, new information concerning the severity of the COVID-19 virus, the effectiveness and intensity of measures to contain the COVID-19 virus and the economic impact of the pandemic and the reactions to it.

Such developments, among others, depending on their nature, duration and intensity, could have a significant adverse effect on the Company's business, financial condition, cash flows and results of operations.

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fair value of cross-currency swaps;

fair value of foreign currency exchange contracts;

and the recognition of the fair value of assets and liabilities acquired in a business combination, including the fair value of contingent consideration.

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For derivative instruments not designated as hedging instruments, the gain or loss is recognized in the Consolidated Statements of Operations during the current period.

The Company’s cross-currency swaps qualify for and have been designated as an accounting hedge of the foreign currency exposure of a net investment in a foreign operation and are remeasured at each reporting date to reflect changes in their fair values.

The fair value is determined via a mark-to-market analysis, using observable (Level 2) inputs.

These inputs may include:

The Company’s cross-currency swaps qualified for and had been designated as an accounting hedge of the foreign currency exposure of a net investment in a foreign operation and were remeasured at each reporting date to reflect changes in their

The fair value was determined via a mark-to-market analysis, using observable (Level 2) inputs.

These inputs included:

(i) the foreign currency exchange spot rate between the euro and U.S.

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The Company uses the spot method of assessing hedge effectiveness.

The Company has elected to amortize amounts excluded from the assessment of effectiveness over the term of its cross-currency swaps as a reduction of Interest expense in the Consolidated Statements of Operations.

The Company had elected to amortize amounts excluded from the assessment of effectiveness over the term of its cross-currency swaps as a reduction of Interest expense in the Consolidated Statements of Operations.

The Company uses foreign currency exchange contracts to economically hedge the foreign exchange exposure on certain of the Company’s intercompany and third party balances.

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wholesaler customers accounted for approximately 44 % of net trade receivables.

In addition, as of December 31, 2020 and 2019, the Company’s net trade receivable balance from Argentina, Brazil, Egypt, Greece, Serbia, Turkey, Ukraine, Venezuela and Vietnam amounted to $ 166 million and $ 156 million, respectively, the majority of which is current or less than 90 days past due.

In addition, as of December 31, 2021 and 2020, the Company’s net trade receivable balance from Argentina, Brazil, Egypt, Greece, Serbia, South Africa, Turkey, Ukraine, Venezuela and Vietnam amounted to $ 78 million and $ 166 million, respectively, the majority of which is current or less than 90 days past due.

The portion of the net trade receivable from these countries that is past due more than 90 days amounted to $ 2 million, as of December 31, 2021, a portion of which is comprised of public hospitals.

Based on an analysis of credit risk, including an analysis of bad debt experience

and assessment of historical payment patterns for such customers, the Company has established a reserve covering more than half of the balance past due more than 90 days for such countries.

Based on an analysis of credit risk, including an analysis of bad debt experience and assessment of historical payment patterns for such customers, the Company has established a reserve covering more than half of the balance past due more than 90 days for such countries.

Over the three-year period ended December 31, 2021, the Company has not experienced any material losses from uncollectible accounts in excess of the established reserves.

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The counter-parties to the Company's cross-currency swaps and foreign currency exchange contracts are major financial institutions, and there is no significant concentration of exposure with any one counter-party.

To date, no counterparty has failed to meet its obligations to the Company and management believes the risk of loss associated with these contracts is remote.

To date, no counterparty has failed to meet its obligations to the Company and management believes the risk of loss associated with these contracts is

See Note 5, "FAIR VALUE MEASUREMENTS" for additional details regarding the Company's cross-currency swaps and foreign currency exchange contracts.

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Divestitures of Products

The net proceeds on the divestiture of products and the carrying amount of the related assets is recorded as a gain/loss on sale within Other expense (income), net.

The net proceeds on the divestiture of products and the carrying amount of the related assets is recorded as a gain/loss on sale within Other expense, net.

Any contingent payments that are potentially due to the Company as a result of these divestitures are recorded when realizable.

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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.

If the expected undiscounted cash flows are less than the carrying value of the asset, then the asset is considered to be impaired and its carrying value is written down to fair value, based on the related estimated discounted future cash flows.

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The Company believes that short-term fluctuations in share prices may not necessarily reflect underlying values.

Effective January 1, 2018, the Company elected to early adopt guidance issued by the Financial Accounting Standards Board ("FASB") which simplified the subsequent measurement of goodwill by eliminating “Step 2” from the goodwill impairment test.

Instead, as of January 1, 2018 and all subsequent periods, goodwill impairment is measured as the amount by which a reporting unit's carrying value exceeds its fair value.

Debt Discounts and Premiums, Issuance Costs and Deferred Financing Costs

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Reserve balance, January 1, 2020 $ 182 $ 691 $ 927 $ 168 $ 82 $ 2,050

Acquisition of Synergy — 3 12 — 1 16

Current period provision 621 120 2,174 1,925 196 5,036

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Consistent with industry practice, customers are generally allowed to return a product within a specified period of time before and after its expiration date, excluding European businesses which generally do not provide a right of return.

returns provision is estimated utilizing historical sales and return rates over the period during which customers have a right of return, taking into account available information on competitive products and contract changes.

The returns provision is estimated utilizing historical sales and return rates over the period during which customers have a right of return, taking into account available information on competitive products and contract changes.

The information utilized to estimate the returns provision includes:

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The Company includes options that are reasonably certain to be exercised as part of the lease term.

The Company may negotiate termination clauses in anticipation of changes in market conditions but

generally, these termination options are not exercised.

The Company may negotiate termination clauses in anticipation of changes in market conditions but generally, these termination options are not exercised.

Certain lease agreements also include variable payments that are dependent on usage or may vary month-to-month such as insurance, taxes and maintenance costs.

None of the Company's lease agreements contain material residual value guarantees or material restrictive covenants.

Effective January 1, 2019, the Company adopted a new standard revising the accounting for leases, using the modified retrospective approach.

Upon adoption, the Company elected the available practical expedients, including:

(i) the package of practical expedients as defined in the accounting guidance, which among other things, allowed the carry forward of historical lease classifications, (ii) the election to use hindsight in determining the lease terms for all leases, (iii) the transition method, which does not require the restatement of prior periods, (iv) the election to aggregate lease components with non-lease components and account for these payments as a single lease component and (v) the short-term lease exemption, which does not require recognition on the balance sheet for leases with an initial term of 12 months or less.

The Company has updated its systems, processes and controls to track, record and account for its lease portfolio, including implementation of a third-party software tool to assist in complying with the new standard.

Upon adoption of the new standard, the Company recognized a right-of-use asset and a corresponding lease liability of $ 302 million .

The adoption of the standard did not have a material impact on the Consolidated Statements of Operations, Comprehensive Loss, Equity and Cash Flows for any of the periods presented.

See Note 12, "LEASES" for additional details and application of this standard.

The Company is required to record a right-of-use asset and corresponding lease liability, equal to the present value of the lease payments at the commencement date of each lease.

For all asset classes, in determining future lease payments, the Company has elected to aggregate lease components, such as payments for rent, taxes and insurance costs with non-lease components such as maintenance costs, and account for these payments as a single lease component.

In limited circumstances, when the information necessary to determine the rate implicit in a lease is available, the present value of the lease payments is determined using the rate implicit in that lease.

circumstances, when the information necessary to determine the rate implicit in a lease is available, the present value of the lease payments is determined using the rate implicit in that lease.

If the information necessary to determine the rate implicit in a lease is not available, the Company uses its incremental borrowing rate at the commencement of the lease, which represents the rate of interest that the Company would incur to borrow on a collateralized basis over a similar term.

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Legal fees and other costs related to litigation and other legal proceedings or services are expensed as incurred and are included in Selling, general and administrative expenses.

Certain legal costs associated with acquisitions are included in Acquisition-related costs and certain legal costs associated with divestitures, legal settlements and other business development activities are included in Litigation and other matters or Net (gain) loss on sales of assets within Other expense (income), net, as appropriate.

Certain legal costs associated with acquisitions are included in Acquisition-related costs and certain legal costs associated with divestitures, legal settlements and other business development activities are included in Litigation and other matters or Net gain on sales of assets within Other expense (income), net, as appropriate.

Legal costs expensed are reported net of expected insurance recoveries.

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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.

In October 2016, the FASB issued guidance requiring an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, rather than when the asset has been sold to an outside party.

This guidance was effective for the Company January 1, 2018 and was applied using a modified retrospective approach through a cumulative-effect adjustment to accumulated deficit and deferred income taxes as of the effective date.

The Company recorded a net cumulative-effect adjustment of $ 1,209 million to increase deferred income tax assets and decrease the opening balance of Accumulated deficit for the income tax consequences deferred from past intra-entity transfers involving assets other than inventory.

The tax benefit from an uncertain tax position is recognized only if it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority, based on the technical merits of the position.

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is calculated by dividing Net loss attributable to Bausch Health Companies Inc.

by the weighted-average number of common shares outstanding during the reporting period

after giving effect to dilutive potential common shares for stock options and RSUs, determined using the treasury stock method.

by the weighted-average number of common shares outstanding during the reporting period after giving effect to dilutive potential common shares for stock options and RSUs, determined using the treasury stock method.

Comprehensive Loss

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The determination of defined benefit pension and postretirement plan obligations and their associated expenses requires the use of actuarial valuations to estimate the benefits employees earn while working, as well as the present value of those benefits.

Net actuarial gains and losses that exceed 10 percent of the greater of the plan’s projected benefit obligations or the market-related value of assets are amortized to earnings over the shorter of the estimated average future service period of the plan participants (or the estimated average future lifetime of the plan participants if the majority of plan participants are inactive) or the period until any anticipated final plan settlements.

estimated average future lifetime of the plan participants if the majority of plan participants are inactive) or the period until any anticipated final plan settlements.

Adoption of New Accounting Standards

In June 2016, the FASB issued guidance on the impairment of financial instruments requiring an impairment model based on expected losses rather than incurred losses.

In June 2016, the Financial Accounting Standards Board ("FASB") issued guidance on the impairment of financial instruments requiring an impairment model based on expected losses rather than incurred losses.

Under this guidance, an entity recognizes as an allowance its estimate of expected credit losses.

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The application of this guidance did not have a material effect on the Company's disclosures.

In March 2020, the FASB issued guidance providing optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or a reference rate that is expected to be discontinued as a result of reference rate reform.

Optional expedients are provided for contract modification accounting within the areas of receivables, debt, leases, derivatives and hedging.

The optional amendments are effective for all entities as of March 12, 2020, through December 31, 2022.

During 2020, the Company has not entered into any contract modifications in which the optional expedients were applied.

However, if prior to December 31, 2022 the Company enters into a contract modification in which the optional expedients are applied, the Company will evaluate the impact of adoption of this guidance on its financial position, results of operations and cash flows.

In August 2018, the FASB issued guidance modifying the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

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The application of this guidance did not have a material effect on the Company's disclosures.

Recently Issued Accounting Standards, Not Adopted as of December 31, 2020

In December 2019, the FASB issued guidance that simplifies the accounting for income taxes by eliminating certain exceptions to the guidance related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

The guidance is effective for annual periods beginning after December 15, 2020.

The application of this guidance is not expected to have a material effect on the Company's financial position, results of operations and cash flows.

ACQUISITIONS, LICENSING AGREEMENTS AND ASSETS HELD FOR SALE

The guidance is effective for the Company beginning with annual periods beginning January 1, 2021.

The application of this guidance did not have a material effect on the Company's financial position, results of operations and cash flows.

In March 2020, the FASB issued guidance providing optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or a reference rate that is expected to be discontinued as a result of reference rate reform.

Optional expedients are provided for contract modification accounting within the areas of receivables, debt, leases, derivatives and hedging.

The optional amendments are effective for all entities as of March 12, 2020, through December 31, 2022.

During 2020 and 2021, the Company has not entered into any contract modifications in which the optional expedients were applied.

However, if prior to December 31, 2022, the Company enters into a contract modification in which the optional expedients are applied, the Company will evaluate the impact of adoption of this guidance on its financial position, results of operations and cash flows.

ACQUISITIONS, LICENSING AGREEMENTS AND DIVESTITURE

Acquisition Agreement for Synergy Pharmaceuticals Inc.

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Operating results associated with the acquired assets of Synergy during the period March 6, 2019 through December 31, 2019 and pro-forma revenues and operating results for the year 2019 were no t material.

Included in Other expense (income), net for 2019 are acquisition-related costs of $ 8 million directly related to the acquisition of certain assets of Synergy, which include expenditures for advisory, legal, valuation, accounting and other similar services.

Noncontrolling Interest in Medpharm a

On October 16, 2018, using cash on hand, the Company acquired the 40 % noncontrolling interest of Medpharma Pharmaceutical & Chemical Industries LLC (“Medpharma”) for $ 18 million.

The difference between the carrying value and the price paid for the noncontrolling interest in Medpharma of $ 15 million, is a reduction of additional paid-in capital.

Included in Other expense, net for 2019 are acquisition-related costs of $ 8 million directly related to the acquisition of certain assets of Synergy, which include expenditures for advisory, legal, valuation, accounting and other similar services.

There were no other material business combinations in 2021, 2020 or 2019.

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On September 21, 2020, the Company announced that it had entered into an agreement to acquire an option to purchase all of the ophthalmology assets of Allegro (the "Option"), a privately held biopharmaceutical company focused on the development of therapies that regulate integrin functions for the treatment of ocular diseases.

Among the assets to be acquired if the Option 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.

The aggregate payments to acquire the Option are $ 50 million and include an upfront payment of $ 10 million and a second payment of $ 40 million should Allegro raise additional funding.

During the three months ended September 30, 2020, the Company made and expensed the upfront payment of $ 10 million as acquired IPR&D included in Other expense (income), net.

If the Option is exercised, additional payments to acquire all ophthalmology assets of Allegro will be due.

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

During the three months ended September 30, 2020, the Company made and expensed as acquired IPR&D included in Other expense, net, an initial upfront payment of $ 10 million to acquire the Option.

However, on June 23, 2021, Allegro notified the Company that it did not raise the additional funding required under the option agreement.

Pursuant to the terms of the option agreement, the Option thereby terminated, and the Company exercised its right to convert the $ 10 million upfront payment into a minor equity interest in Allegro.

The Company expects that it will make no additional payments pursuant to this option agreement.

Licensing Agreements

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Royalties due are recognized when earned and milestone payments are accrued when each milestone has been achieved and payment is probable and can be reasonably estimated.

Assets Held for Sale

During the three months ended December 31, 2020, the Company identified for disposal a certain business within the Bausch + Lomb/International segment.

This business was classified as held for sale as of December 31, 2020.

The carrying amounts of the assets and liabilities held for sale included in the Consolidated Balance Sheet as of December 31, 2020 are as follows:

Divestiture of Amoun Pharmaceutical Company S.A.E.

On March 31, 2021, the Company announced that it and certain of its affiliates had entered into a definitive agreement to sell all of its equity interests in Amoun for total gross consideration of approximately $ 740 million (including the assignment to the purchasing entity of an intercompany loan granted by the Company to Amoun), subject to certain adjustments (the “Amoun Sale”).

The Amoun Sale closed on July 26, 2021.

As part of the Amoun Sale, cash generated by Amoun during the period from the locked-box date of January 1, 2021 through closing was for the benefit of the purchasing entity, subject to working capital during such period.

Amoun manufactures, markets and distributes branded generics of human and animal health products.

The Amoun business was part of the International Rx segment (previously

included within the former Bausch + Lomb/International segment) and was reclassified as held for sale as of December 31, 2020.

As a result of meeting the criteria for held for sale classification, the carrying value of the Amoun business, was adjusted to its estimated fair value, less costs to sell, and the Company recognized an impairment loss of $ 96 million during the three months ended December 31, 2020 and an additional impairment loss of $ 88 million during 2021, included within Asset impairments, including loss on assets held for sale in the Consolidated Statements of Operations.

In connection with completing the Amoun Sale, the Company recognized an additional loss of $ 26 million during 2021, included within Other (income) expense, net in the Combined Statements of Operations.

The total loss of $ 210 million includes the release of non-cash cumulative foreign currency translation losses of $ 340 million, which were included as part of the carrying value of the Amoun business when measuring for impairment.

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

(in millions)

Prepaid expenses and other current assets:

Trade receivables, net $ 91

Inventories, net 63

Accrued and other current liabilities:

Trade receivables, net $ 91 Accounts payable $ 7

Inventories, net 63 Accrued and other current liabilities 28

Prepaid expenses and other current assets 8 $ 35

Other non-current assets:

Property, plant and equipment, net $ 68

Goodwill and Intangible assets, net 245

Deferred tax assets, net 2

Accrued and other current liabilities:

Accounts payable $ 7

Accrued and other current liabilities 28

Other non-current liabilities:

Deferred tax liabilities, net $ 36

Other non-current liabilities 21

Included within Deferred tax liabilities, net, are book to income tax differences related to the Company's intangible assets.

As a result of meeting the criteria for held for sale classification, the carrying value of this business, was adjusted to its estimated fair value, less costs to sell, and the Company recognized a loss of $ 96 million within Asset impairments, including loss on assets held for sale in the Consolidated Statements of Operations.

This loss was primarily due to the anticipated release of non-cash cumulative foreign currency translation losses of $ 344 million, which were included as part of the carrying value of this business when measuring for impairment.

These losses will be reclassified from Accumulated other comprehensive loss to Net loss upon the disposal of this business.

RESTRUCTURING, INTEGRATION AND SEPARATION COSTS

Property, plant and equipment, net $ 68 Deferred tax liabilities, net $ 36

Goodwill and Intangible assets, net 245 Other non-current liabilities 21

Deferred tax assets, net 2 $ 57

RESTRUCTURING, INTEGRATION, SEPARATION AND IPO COSTS

Restructuring and integration costs

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The liability associated with restructuring and integration costs as of December 31, 2021 was $ 19 million.

During 2020, the Company incurred $ 11 million of restructuring and integration-related costs.

These costs included:

(i) $ 10 million of facility closure costs and (ii) $ 1 million of severance and other costs.

The Company made payments of $ 18 million during 2020.

During 2019, the Company incurred $ 31 million of restructuring and integration costs.

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.

The Company made payments of $ 31 million during 2019.

During 2018, the Company incurred $ 22 million of restructuring and integration costs.

These costs included:

(i) $ 11 million of severance costs, (ii) $ 10 million of facility closure costs and (iii) $ 1 million of other costs.

The Company made payments of $ 33 million during 2018.

Separation costs and separation-related costs

The Company has incurred, and will incur, costs associated with activities to effectuate the Separation.

The Company incurred $ 18 million, $ 11 million and $ 31 million of restructuring and integration-related costs and made payments of $ 19 million, $ 18 million and $ 31 million during 2021, 2020 and 2019, respectively.

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

The Company has incurred, and will incur, costs 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.

Included in Restructuring, integration and separation costs for 2020 is $ 11 million of separation costs.

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:

(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.

Included in Restructuring, integration, separation and IPO costs for the years ended December 31, 2021 and 2020 are Separation and IPO costs of $ 32 million and $ 11 million, respectively.

The Company has also incurred, and will incur, Separation-related and IPO-related costs which are incremental costs indirectly related to the B+L Separation and Solta IPO.

Separation-related and IPO-related costs include, but are not limited to:

(i) IT infrastructure and software licensing costs, (ii) rebranding costs and (iii) costs associated with facility relocation and/or modification.

Included in Selling, general and administrative expenses for 2020 is $ 21 million of separation-related costs.

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.

Included in Selling, general and administrative for years ended December 31, 2021 and 2020 are Separation-related and IPO-related costs of $ 132 million and $ 21 million, respectively.

The extent and timing of future charges for these costs cannot be reasonably estimated at this time and could be material.

FAIR VALUE MEASUREMENTS

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December 31, 2021 December 31, 2020

(in millions) Carrying

Value Level 1 Level 2 Level 3 Carrying

Value Level 1 Level 2 Level 3

(in millions) Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3

Cash equivalents $ 76 $ 58 $ 18 $ — $ 41 $ 8 $ 33 $ —

Restricted Cash $ 1,211 $ 1,211 $ — $ — $ 1 $ 1 $ — $ —

Restricted cash and other settlement deposits $ 1,537 $ 1,537 $ — $ — $ 1,211 $ 1,211 $ — $ —

Foreign currency exchange contracts $ 1 $ — $ 1 $ — $ 3 $ — $ 3 $ —

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Cash equivalents consist of highly liquid investments, primarily money market funds, with maturities of three months or less when purchased, and are reflected in the Consolidated Balance Sheets at carrying value, which approximates fair value due to their short-term nature.

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 certain U.S.

securities litigation, subject to an objector's appeal of the final court approval, and is reflected in the Consolidated Balance Sheets at carrying value, which approximates fair value due to its short-term nature.

These payments will remain in escrow until final approval of the settlement as discussed in Note 20, "LEGAL PROCEEDINGS".

As of December 31, 2021, Restricted cash and other settlement deposits includes $ 1,510 million of payments into escrow funds under the terms of settlement agreements regarding that certain U.S.

securities litigation (subject to an objector's appeal of the final court approval) and the Glumetza Antitrust Litigation.

These payments are reflected in the Consolidated Balance Sheets at carrying value, which approximates fair value due to their short-term nature.

These payments will remain in escrow until final approval of the settlements as discussed in Note 20, "LEGAL PROCEEDINGS".

There were no transfers into or out of Level 3 during 2021 and 2020.

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During 2019, the Company entered into cross-currency swaps, with aggregate notional amounts of $ 1,250 million, to mitigate fluctuation in the value of a portion of its euro-denominated net investment in its consolidated financial statements from 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 cross-currency swaps.

The fair value of the Company’s cross-currency swaps liability as of December 31, 2020 and 2019 was $ 70 million and $ 13 million, respectively.

Included in Other non-current liabilities is $ 79 million and $ 22 million of cross-currency swaps and included in Prepaid expenses and other current assets is $ 9 million and $ 9 million of earned interest within the Consolidated Balance Sheets as of December 31, 2020 and 2019, respectively.

The euro-denominated net investment being hedged was the Company’s investment in certain euro-denominated subsidiaries.

During November 2021, the Company entered into a transaction to unwind its cross-currency swaps and received net proceeds of $ 4 million, which included interest income of $ 6 million, offset by the amount owed by the Company upon the unwinding of $ 2 million.

The gain arising from the transaction of the swaps has been included as a component of Other comprehensive loss.

The assets and liabilities associated with the Company's cross-currency swaps as included in the Consolidated Balance Sheets as of December 31, 2021 and 2020 are as follows:

(in millions) 2021 2020

Other non-current liabilities $ — $ 79

Prepaid expenses and other current assets $ — $ 9

Net fair value $ — $ 70

The following table presents the effect of hedging instruments on the Consolidated Statements of Operations and Consolidated Statements of Comprehensive Loss for 2021 and 2020:

(in millions) 2021 2020

Loss recognized in Other comprehensive loss $ ( 57 ) $ ( 22 )

Gain (loss) recognized in Other comprehensive loss $ 77 $ ( 57 )

Gain excluded from assessment of hedge effectiveness $ 20 $ 23

Location of gain of excluded component Interest Expense

Settlement of the Company's cross-currency swaps occurs in February and August each year.

During 2020, the Company received $ 23 million in settlements which are reported as Investing activities in the Consolidated Statements of Cash Flows.

For the years ended December 31, 2021 and 2020, the Company received $ 27 million and $ 23 million, respectively, in settlements of its cross-currency swaps which are reported as Investing activities in the Consolidated Statements of Cash Flows.

Foreign Currency Exchange Contracts

During 2020, the Company entered into foreign currency exchange contracts, with an aggregate notional amount of $ 485 million.

Prior to 2020, the Company had no foreign currency exchange contracts for any period presented.

The fair value of the Company's foreign currency exchange contracts liability as of December 31, 2020 was $ 8 million.

Included in Accrued and other current liabilities are $ 11 million and included in Prepaid expenses and other current assets are $ 3 million of foreign currency exchange contracts within the Consolidated Balance Sheets.

During 2020, the net change

in fair value was a loss of $ 8 million.

Settlements of the Company's foreign currency exchange contracts are reported as a gain or loss in the Consolidated Statements of Operations as part of Foreign exchange and other and reported as operating activities in the Consolidated Statements of Cash Flows.

During 2020, the Company reported a realized loss of $ 2 million related to settlements of the Company's foreign currency exchange contracts.

During 2021 and 2020, the Company entered into foreign currency exchange contracts.

As of December 31, 2021, these contracts had an aggregate outstanding notional amount of $ 166 million.

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

(in millions) 2021 2020

Accrued and other current liabilities $ — $ 11

Prepaid expenses and other current assets $ 1 $ 3

Net fair value $ 1 $ 8

The following table presents the effect of the Company's foreign exchange contracts on the Consolidated Statements of Operations and the Consolidated Statements of Cash Flows for 2021 and 2020:

(in millions) 2021 2020

Gain (loss) related to changes in fair value $ 9 $ ( 8 )

Loss related to settlements $ ( 17 ) $ ( 2 )

Acquisition-related Contingent Consideration Obligations

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Non-current assets held for sale of $ 245 million as of December 31, 2020 were remeasured to estimated fair value, less costs to sell, which utilized Level 3 unobservable inputs.

See Note 3, "ACQUISITIONS, LICENSING AGREEMENTS AND ASSETS HELD FOR SALE" for additional details regarding these assets held for sale.

In 2019, the Company identified certain products in the Bausch + Lomb/International segment and one product in the Diversified Products segment for disposal.

The products and the related assets and liabilities of this disposal group qualified as a business and an impairment of $ 8 million associated with this business was recognized during the three months ended September 30, 2019.

As a result of changing business dynamics, during the three months ended March 31, 2020, the Company decided not to sell these assets and reclassified $ 39 million of held for sale assets as assets held and used at their respective fair values at the date of the decision not to sell.

This reclassification did not impact the Consolidated Statement of Operations for 2020.

See Note 3, "ACQUISITIONS, LICENSING AGREEMENTS AND DIVESTITURE" for additional details regarding these assets held for sale.

Fair Value of Long-term Debt

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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 in 2021 included:

(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 in 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 as discussed in Note 3, "ACQUISITIONS, LICENSING AGREEMENTS

AND ASSETS 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 IPR&D not in service.

(i) $ 96 million 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 as discussed in Note 3, "ACQUISITIONS, LICENSING AGREEMENTS AND DIVESTITURE", (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 IPR&D not in service.

Asset impairments, including loss on assets held for sale in 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 IPR&D not in service.

Asset impairments, including loss on assets held for sale in 2018 included impairments of:

(i) $ 263 million reflecting decreases in forecasted sales for the Uceris ® Tablet product in the Company's Salix reporting unit due to generic competition, (ii) $ 85 million reflecting decreases in forecasted sales of certain other product lines due to generic competition, (iii) $ 132 million reflecting decreases in forecasted sales for the Arestin ® product in the Company's Dentistry reporting unit and other product lines due to changing market conditions, (iv) $ 55 million, in aggregate, 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, (v) $ 28 million to Acquired IPR&D not in service related to a certain product and (vi) $ 5 million related to assets being classified as held for sale.

The impairments to assets reclassified as held for sale were measured as the difference of the carrying value of these assets as compared to the estimated fair values of these assets less costs to sell determined using a discounted cash flow analysis which utilized Level 3 unobservable inputs.

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Management continually assesses the useful lives related to the Company's long-lived assets to reflect the most current assumptions.

Effective September 12, 2018, the Company changed the estimated useful life of its Xifaxan ® -related intangible assets due to the positive impact of an agreement between the Company and Actavis Laboratories FL, Inc.

("Actavis") resolving the intellectual property litigation regarding Xifaxan ® tablets, 550 mg.

Under the agreement, the parties agreed to dismiss all litigation related to Xifaxan ® tablets, 550 mg and all intellectual property protecting Xifaxan ® will remain intact and enforceable.

As a result, the useful life of the Xifaxan ® -related intangible assets was extended from 2024 to January 1, 2028.

As this change in the estimated useful life is a change in an accounting estimate, amortization expense is impacted prospectively.

The change in the estimated useful life of the Xifaxan ® -related intangible assets resulted in a decrease to the Net loss attributable to Bausch Health Companies Inc.

of $ 476 million, $ 473 million and $ 143 million, and a decrease to the Basic and Diluted Loss per share attributable to Bausch Health Companies Inc.

of $ 1.34 , $ 1.34 and $ 0.41 for the years 2020, 2019 and 2018, respectively.

As of December 31, 2020, the net carrying value of the Xifaxan ® -related intangible assets was $ 3,771 million.

Estimated amortization expense of finite-lived intangible assets for the five years ending December 31 and thereafter are as follows:

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(in millions) Bausch +

International Branded Rx U.S.

Diversified Products Salix Ortho Dermatologics Diversified Products Total

International Bausch +

Lomb Salix International Rx Ortho Dermatologics Diversified Products Total

Balance, January 1, 2019 $ 5,805 $ — $ 3,156 $ — $ 1,267 $ 2,914 $ 13,142

Impairment of the Salix and Ortho Dermatologics reporting units

— ( 2,213 ) — — — — ( 2,213 )

Realignment of Global Solta reporting unit goodwill

( 82 ) 115 ( 33 ) — — — —

Goodwill reclassified to assets held for sale and subsequently disposed

( 2 ) — — — — — ( 2 )

Realignment of segment goodwill

— ( 4,533 ) ( 2,913 ) 3,156 1,267 3,023 —

Impairment of the Dentistry reporting unit

Acquisition of certain assets of Synergy

— — 3 — — — 3

Goodwill reclassified to assets held for sale ( 18 ) — — — — — ( 18 )

Foreign exchange and other ( 1 ) — — — — — ( 1 )

Balance, December 31, 2019 5,786 — 3,159 — 1,267 2,914 13,126

Acquisition of certain assets of Synergy

— — — 3 — — 3

Assets held for sale reclassified to goodwill 18 — — — — — 18

Goodwill reclassified to assets held for sale (Note 3) ( 217 ) — — — — — ( 217 )

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Balance, December 31, 2020 5,704 — 3,159 — 1,267 2,914 13,044

Assets held for sale reclassified to goodwill (Note 5) 18 — — — — — 18

Goodwill reclassified to assets held for sale (Note 3) ( 217 ) — — — — — ( 217 )

Realignment of segment goodwill ( 5,704 ) 5,395 — 887 — ( 578 ) —

Impairment — — — — ( 469 ) — ( 469 )

Foreign exchange and other — ( 77 ) — ( 62 ) — 21 ( 118 )

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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.

The Company conducted its 2017 annual goodwill impairment test as of October 1, 2017 and determined that the fair value of the Ortho Dermatologics reporting unit exceeded its carrying value.

However, at January 1, 2018, unforeseen changes in the business dynamics of the Ortho Dermatologics reporting unit, such as:

(i) changes in the dermatology sector, (ii) increased pricing pressures from third-party payors, (iii) additional risks to the exclusivity of certain products and (iv) an expected longer launch cycle for a new product, were factors that negatively impacted the reporting unit's operating results beyond management's expectations as of October 1, 2017.

In response to these adverse business indicators, as of January 1, 2018, the Company reduced its near and long term financial projections for the Ortho Dermatologics reporting unit.

As a result of the reductions in the near and long term financial projections, the carrying value of the Ortho Dermatologics reporting unit exceeded its fair value at January 1, 2018 and the Company recognized a goodwill impairment of $ 243 million.

2018 Realignment of Solta Business

Effective March 1, 2018, revenues and profits from the U.S.

Solta business included in the former U.S.

Diversified Products segment in prior periods and revenues and profits from the international Solta business included in the Bausch + Lomb/International segment in prior periods, are reported in a new Global Solta reporting unit, which, at that time, was a part of the former Branded Rx segment.

As a result of this change, $ 115 million of goodwill was reallocated to the new Global Solta reporting unit and the Company assessed the impact on the fair values of each of the reporting units affected.

After considering, among other matters:

(i) the limited period of time between last impairment test (January 1, 2018) and the realignment (March 1, 2018), (ii) the results of the last impairment test and (iii) the amount of goodwill reallocated to the new Global Solta reporting unit, the Company did not identify any indicators of impairment at the time of the realignment.

2018 Realignment of Segment Structure

In the second quarter of 2018, the Company began operating in the following reportable segments:

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

The Bausch + Lomb/International segment consists of the:

Bausch + Lomb and (ii) International reporting units.

The Salix segment consists of the Salix reporting unit.

The Ortho Dermatologics segment consists of the:

(i) Ortho Dermatologics and (ii) Global Solta reporting units.

The Diversified Products segment consists of the:

(i) Neurology and Other, (ii) Generics and (iii) Dentistry reporting units.

There was no triggering event which would require the Company to test goodwill for impairment as a result of the second quarter realignment of the segment structure as it did not result in a change in the reporting units.

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.

The Company's remaining reporting units passed the goodwill impairment test as the estimated fair value of each reporting unit exceeded its carrying value at the date of testing and, therefore, there was no impairment to goodwill for any reporting unit other than the Dentistry reporting unit.

In order to evaluate the sensitivity of its fair value calculations on the goodwill impairment test, the Company compared the carrying value of each reporting unit to its fair value as of October 1, 2018, the date of testing.

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 Assessment

In response to the COVID-19 pandemic, the Company has taken actions to protect its employees, customers and other stakeholders and mitigate the negative impact of the COVID-19 pandemic on its operations and operating results.

These and additional actions can increase the costs of doing business during the pandemic and, in the periods that follow, may include the costs of idling and reopening certain facilities in affected areas.

Further, social restrictions and other precautionary measures taken by customers, health care patients and consumers in response to the pandemic are expected to impact the timing and amount of revenues during the COVID-19 pandemic.

Although the Company's revenues for 2020 were less than those forecasted on the date goodwill was last tested for impairment (October 1, 2019), there were no indications that these trends are materially related to developments other than the COVID-19 pandemic.

The negative impacts of the COVID-19 pandemic on the global economy have led to significant volatility in the global equity markets.

The Company has been able to continue its operations with limited disruptions and has assessed the potential impact that the COVID-19 pandemic is likely to have on its forecasted cash flows.

In performing its assessment, the Company considered 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.

In performing its assessment, the Company considered the possible effects 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 used in its previous goodwill impairment assessments, for these and other matters.

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

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

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

During the three months ended March 31, 2020, these factors negatively impacted, most notably, the revenues of the Company's 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.

The Company's 2020 revenues were most negatively impacted during its second quarter by the social restrictions and other precautionary measures taken in response to the COVID-19 pandemic.

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

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 year-over-year revenues for the three month periods ended June 30, 2020 and September 30, 2020 of 23 % and 3 %, respectively.

Presuming there continues to be increased availability of effective vaccines and any further 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 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.

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.

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 discussed above.

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, other than the Ortho Dermatologics reporting unit, might be below its carrying value.

The changes in the amounts and timing of revenues as presented in the Company's latest forecasts 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 throughout 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.

The Company's 2020 revenues were most negatively impacted during its second quarter by certain social restrictions and other precautionary measures taken in response to the COVID-19 pandemic.

Revenues for 2021 and 2020 were $ 8,434 million and $ 8,027 million, respectively.

The increase of $ 407 million in revenue 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.

The Company's revenues returned to pre-pandemic levels for many of its businesses and geographies in 2021 and, presuming there continues to be increased availability of effective vaccines and any further resurgence of the COVID-19 virus, the delta and omicron variants and other variant strains thereof do not have a material adverse impact on efforts to contain the COVID-19 virus, the Company anticipates the COVID-19 pandemic to have a minimal impact on its 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, 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.

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

The Company 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.

In addition, 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.

First Quarter 2021 - Realignment of Segments

Commencing in the first quarter of 2021, the Company began operating in the following reportable segments:

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

The Bausch + Lomb segment consists of the:

Bausch + Lomb and (ii) International Bausch + Lomb reporting units.

The Salix segment consists of the Salix reporting unit.

The International Rx segment consists of the International Rx reporting unit.

The Ortho Dermatologics segment consists of the:

(i) Ortho Dermatologics and (ii) Global Solta reporting units.

The Diversified Products segment consists of the:

(i) Neurology and Other, (ii) Generics and (iii) Dentistry reporting units.

This realignment in segment structure resulted in a change in the Company's former International reporting unit, which is now divided between the International Bausch + Lomb reporting unit and International Rx reporting unit.

In addition, as part of this realignment of segment structure, certain products historically included in the Generics reporting unit are now included in the U.S.

Bausch + Lomb reporting unit.

As a result of this realignment, goodwill was reassigned to each of the aforementioned reporting units using a relative fair value approach.

Goodwill previously reported in the former International reporting unit was reassigned to the International Bausch + Lomb and International Rx reporting units, and a portion of goodwill previously reported in the former Generics reporting unit was reassigned to the U.S.

Bausch + Lomb reporting unit.

Immediately prior to the change in reporting units, the Company performed a qualitative fair value assessment for its former:

(i) International and (ii) Generics reporting units.

Based on the qualitative fair value assessment performed, management believed that it was more likely than not that the carrying values of its former:

(i) International and (ii)

Generics reporting units were less than their respective fair values and therefore, concluded a quantitative assessment was not required.

Immediately following the change in reporting units, as a result of the change in composition of the net assets for its current:

(i) International Bausch + Lomb, (ii) International Rx and (iii) Generics reporting units, the Company performed a quantitative fair value test.

The quantitative fair value test utilized a range of long-term growth rates of 1.0 % to 3.0 % and a range of discount rates between 11.0 % and 12.25 %, in estimation of the fair value of the reporting units.

After completing the testing, the fair value of each of these reporting units exceeded its carrying value by more than 40 %, and, therefore, there was no impairment to goodwill.

In addition, as the U.S.

Bausch + Lomb reporting unit had a change in composition of its net assets related to certain products historically included in the Generics reporting unit now being included in the U.S.

Bausch + Lomb reporting unit, the Company performed a qualitative assessment of this reporting unit.

Based on the qualitative fair value assessment performed, management believed that it was more likely than not that the carrying value of its current U.S.

Bausch + Lomb reporting unit was less than its fair value and therefore, concluded a quantitative assessment was not required.

March 31, 2021 Impairment to Goodwill

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

and offices of health care professionals could reopen.

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

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

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

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

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

As a result, during the three months ended March 31, 2021, the Company revised its long-term forecasts for the Ortho Dermatologics reporting unit.

Management believed that these events were indicators that there is less headroom as of March 31, 2021 as compared to the headroom calculated on the date goodwill was last tested for impairment (October 1, 2020).

Therefore, a quantitative fair value test for the Ortho Dermatologics reporting unit was performed.

The quantitative fair value test utilized the Company's most recent cash flow projections as revised in the first quarter of 2021 to reflect the business changes previously discussed, including a range of potential outcomes, along with a long-term growth rate of 1.0 % and a range of discount rates between 9.0 % and 10.0 %.

Based on the quantitative fair value test, the carrying value of the Ortho Dermatologics reporting unit exceeded its fair value at March 31, 2021, and the Company recognized a goodwill impairment of $ 469 million.

Second Quarter 2021 - Realignment of Bausch + Lomb Reporting Units

Commencing in the second quarter of 2021, the Company changed the way it reviews the financial information of its Bausch + Lomb segment.

Beginning in the second quarter of 2021, management no longer reviews the financial information of its Bausch + Lomb segment on a geographic basis, but instead reviews this financial information on a business line basis.

This change created a change in the reporting units of the Bausch + Lomb segment.

After the change, under its business line view, the Bausch + Lomb segment consists of the global:

(i) Vision Care / Consumer Products, (ii) Ophthalmic Pharmaceuticals and (iii) Surgical reporting units.

Prior to the second quarter of 2021, under the geographic view, the Bausch + Lomb segment consisted of the former:

Bausch + Lomb and (ii) International Bausch + Lomb reporting units.

As a result of this realignment, goodwill was reassigned to each of the aforementioned reporting units using a relative fair value approach.

The change in Bausch + Lomb reporting units does not impact the reported revenues and segment profits of the Bausch + Lomb segment for any prior periods.

Immediately prior to the change in its Bausch + Lomb reporting units, the Company performed a qualitative fair value assessment for its former reporting units.

Based on the qualitative fair value assessment, management believed that it was more likely than not that the carrying values of its former:

Bausch + Lomb and (ii) International Bausch + Lomb reporting units were less than their respective fair values and, therefore, concluded a quantitative assessment was not required.

As a result of the change in composition of net assets, the Company performed a quantitative fair value test of its new:

(i) Vision Care / Consumer Products, (ii) Ophthalmic Pharmaceuticals and (iii) Surgical reporting units immediately following the change in the Bausch + Lomb segment.

The quantitative fair value test utilized long-term growth rates of 2.0 % and 3.0 % and a range of discount rates between 7.0 % and 10.0 %, in estimation of the fair value of the reporting units.

After completing the testing, the fair value of each of these reporting units exceeded its carrying value by more than 45 %, and, therefore, there was no impairment to goodwill.

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

The Company continues to monitor the market conditions impacting the Ortho Dermatologics reporting unit.

The Company's latest forecasts for the Ortho Dermatologics reporting unit include a range of potential outcomes for, among other matters:

(i) the impacts of the COVID-19 pandemic on operations, (ii) the impact of the loss of exclusivity of certain products, (iii) the impact of longer launch cycles for certain new products, (iv) progress of its product pipeline and (v) ongoing pricing pressures, which could negatively impact the reporting unit's results over the long term.

The changes in the amounts and timing of revenues and expenses in the latest forecast as compared to the forecast used at March 31, 2021 (the last time goodwill of the Ortho Dermatologics reporting unit was tested), were not substantial enough to materially adversely affect the recoverability of the Ortho Dermatologics reporting unit's assets and are not material enough to indicate that the fair value of the Ortho Dermatologics reporting unit might be below its carrying value as last tested at March 31, 2021.

No other events occurred or circumstances changed during the period October 1, 2020 (the earliest date goodwill was tested for all other reporting units) through December 31, 2021 that indicated that the fair value of any reporting unit, other than the Ortho Dermatologics reporting unit, might be below its carrying value.

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.

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

Accumulated goodwill impairment charges through December 31, 2021 were $ 4,180 million.

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Product returns 482 575

Interest 341 305

Employee compensation and benefit costs 336 316

Interest 328 341

Income taxes payable 98 158

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5.500 % Secured Notes

March 2024 2,000 1,987 2,000 1,983

5.50 % Secured Notes

November 2025 1,750 1,739 1,750 1,736

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August 2027 500 495 500 494

4.875 % Secured Notes

June 2028 1,600 1,580 — —

Senior Unsecured Notes:

March 2023 — — 402 400

May 2023 — — 1,448 1,441

4.50 % euro-denominated debt

May 2023 — — 1,682 1,674

April 2025 2,650 2,640 3,250 3,234

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Senior Secured Credit Facilities

On February 13, 2012, the Company and certain of its subsidiaries as guarantors entered into the “Senior Secured Credit Facilities” under the Company’s Third Amended and Restated Credit and Guaranty Agreement, as amended (the “Third Amended Credit Agreement”) with a syndicate of financial institutions and investors, as lenders.

As of January 1, 2018, the Third Amended Credit Agreement provided for:

(i) a $ 1,500 million Revolving Credit Facility maturing on April 20, 2020 (the "2020 Revolving Credit Facility") and (ii) a $ 3,521 million term loan under the Company's Series F Tranche B Term Loan Facility maturing in 2022 (the “Series F Tranche B Term Loan Facility”).

There was $ 250 million outstanding under the 2020 Revolving Credit Facility as of January 1, 2018.

2018 Activity

During 2018, the Company repaid (net of additional borrowings) $ 571 million of outstanding debt under its Senior Secured Credit Facilities using cash on hand.

On June 1, 2018, the Company entered into a Restatement Agreement in respect of a Fourth Amended and Restated Credit and Guaranty Agreement (the “Restated Credit Agreement”) which restated in full the Third Amended Credit Agreement.

The Restated Credit Agreement replaced the 2020 Revolving Credit Facility with a revolving credit facility of $ 1,225 million (the "2023 Revolving Credit Facility") and replaced the Series F Tranche B Term Loan Facility principal amount outstanding of $ 3,315 million with a new seven year Tranche B Term Loan Facility of $ 4,565 million (the “June 2025 Term Loan B Facility”) borrowed by the Company’s subsidiary, Bausch Health Americas, Inc.

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 (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 (the "2023 Revolving Credit Facility") and a seven year Tranche B Term Loan Facility of $ 4,565 million (the “June 2025 Term Loan B Facility”) borrowed by the Company’s subsidiary, Bausch Health Americas, Inc.

The 2023 Revolving Credit Facility 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 or BHA in an aggregate principal amount in excess of $ 1,000 million.

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Borrowings under the 2023 Revolving Credit Facility may be made in U.S.

dollars, Canadian dollars or euros.

On June 1, 2018, the Company issued an irrevocable notice of redemption for the remaining outstanding principal amounts of:

(i) $ 691 million of the March 2020 Unsecured Notes (as defined below), (ii) $ 578 million of 6.75 % Senior Unsecured Notes due August 2021 (the “August 2021 Unsecured Notes”), (iii) $ 550 million of 7.25 % Senior Unsecured Notes due July 2022 (the “July 2022 Unsecured Notes”) and (iv) $ 146 million of 6.375 % Senior Unsecured Notes due October 2020 (the March 2020 Unsecured Notes (as defined below), together with the August 2021 Unsecured Notes, the July 2022 Unsecured Notes and the 6.375 % Senior Unsecured Notes due October 2020 the “June 2018 Unsecured Refinanced Debt”).

On June 1, 2018, using the remaining net proceeds from the June 2025 Term Loan B Facility, the net proceeds from the issuance of $ 750 million in aggregate principal amount of 8.50 % Senior Unsecured Notes due 2027 (the "January 2027 Unsecured Notes") by BHA and cash on hand, the Company prepaid the remaining Series F Tranche B Term Loan Facility and redeemed the June 2018 Unsecured Refinanced Debt at its aggregate redemption price and the indentures governing the June 2018 Unsecured Refinanced Debt were discharged (collectively, the “June 2018 Refinancing Transactions”).

The Restated Credit Agreement was accounted for as a modification of debt, to the extent the June 2018 Unsecured Refinanced Debt was replaced with newly issued debt to the same creditor, and as an extinguishment of debt if:

(i) the June 2018 Unsecured Refinanced Debt was replaced with newly issued debt to a different creditor, (ii) a portion of the unamortized deferred financing fees was allocated to debt that was paid down or (iii) the borrowing capacity declined when issuing a new revolving credit facility.

The following was accounted for as an extinguishment of debt:

(i) the difference between the amounts paid to redeem the June 2018 Unsecured Refinanced Debt and the June 2018 Unsecured Refinanced Debt’s carrying value, (ii) the replacement of the Series F Tranche B Term Loan Facility with the June 2025 Term Loan B Facility to the extent any unamortized deferred financing fees were associated with the portion of the Series F Tranche B Term Loan Facility that was paid down and (iii) the replacement of the 2020 Revolving Credit Facility with the 2023 Revolving Credit Facility to the extent any unamortized deferred financing fees were associated with the decline in borrowing capacity.

For amounts accounted for as an extinguishment of debt, the Company incurred a loss on extinguishment of debt of $ 48 million.

Payments made to the lenders and a portion of payments made to third parties of $ 74 million associated with the June 2018 Refinancing Transactions were capitalized and are being amortized as interest

expense over the remaining terms of the debt, ranging from 2023 through 2027.

Third-party expenses of $ 4 million associated with the modification of debt were expensed as incurred and included in Interest expense.

On November 27, 2018, the Company entered into the First Incremental Amendment to the Restated Credit Agreement, which provided an additional seven year Tranche B Term Loan Facility of $ 1,500 million (the "November 2025 Term Loan B Facility") and used the net proceeds, and cash on hand, to repay $ 1,483 million of 7.50 % Senior Unsecured Notes due July 2021 (the “July 2021 Unsecured Notes”) in a tender offer (the "November 2018 Refinancing Transactions").

On December 27, 2018, the Company redeemed, using cash on hand, the remaining outstanding principal amount of $ 17 million of the July 2021 Unsecured Notes.

The repayment of the July 2021 Unsecured Notes was accounted for as an extinguishment of debt and the Company incurred a loss on extinguishment of debt of $ 43 million representing the difference between the amount paid to settle the extinguished debt and the extinguished debt’s carrying value.

Payments made to the lenders and other third parties of $ 25 million associated with the issuance of the November 2025 Term Loan B Facility were capitalized and are being amortized as interest expense over the remaining term of the November 2025 Term Loan B Facility.

2019 Activity

During 2019, the Company repaid (net of additional borrowings) $ 806 million of outstanding debt under its Senior Secured Credit Facilities using cash on hand.

2020 Activity

During 2020, the Company repaid:

(i) $ 471 million of outstanding debt under its Senior Secured Credit Facilities using cash on hand and (ii) $ 250 million of outstanding debt under its Senior Secured Credit Facilities as part of the May 2020 Refinancing Transactions (as defined below).

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.

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).

As of December 31, 2021, the Company had $ 285 million of outstanding borrowings, $ 54 million of issued and outstanding letters of credit, and remaining availability of $ 886 million under its 2023 Revolving Credit Facility.

Current Description of Senior Secured Credit Facilities

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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.

The applicable interest rate margins for the June 2025 Term Loan B Facility and the November 2025 Term Loan B Facility are 2.00 % and 1.75 %, respectively, with respect to base rate and prime rate borrowings and 3.00 % and 2.75 %, respectively, with respect to eurocurrency rate and BA rate borrowings.

respectively, with respect to eurocurrency rate and BA rate borrowings.

As of December 31, 2021, the stated rates of interest on the Company’s borrowings under the June 2025 Term Loan B Facility and the November 2025 Term Loan B Facility were 3.09 % and 2.84 % per annum, respectively.

1 unchanged sentence

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 are $ 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.

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(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.

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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The March 2022 Secured Notes were repaid in full as part of the May 2020 Refinancing Transactions (as defined below).

The March 2024 Secured Notes are redeemable at the option of the Company, in whole or in part, at any time, at the redemption prices set forth in the indenture.

The March 2024 Secured Notes were repaid in full during 2021 with cash on hand and as part of the June 2021 Refinancing Transactions (as defined below).

5.500 % Senior Secured Notes due 2025

On October 17, 2017, the Company issued $ 1,000 million, and, on November 21, 2017, the Company issued $ 750 million, aggregate principal amount of 5.50 % Senior Secured Notes due November 2025 (the “November 2025 Secured Notes”), in a private placement.

On October 17, 2017, the Company issued $ 1,000 million, and, on November 21, 2017, the Company issued $ 750 million, aggregate principal amount of 5.500 % Senior Secured Notes due November 2025 (the “November 2025 Secured Notes”),

in a private placement.

Interest on the November 2025 Secured Notes is payable semi-annually in arrears on each May 1 and November 1.

2 unchanged sentences

On March 8, 2019, BHA and the Company issued:

(i) $ 1,000 million aggregate principal amount of January 2027 Unsecured Notes and (ii) $ 500 million aggregate principal amount of 5.75 % Senior Secured Notes due August 2027 (the "August 2027 Secured Notes"), respectively, in a private placement.

(i) $ 1,000 million aggregate principal amount of 8.500 % Senior Unsecured Notes due 2027 (the "January 2027 Unsecured Notes") and (ii) $ 500 million aggregate principal amount of 5.750 % Senior Secured Notes due August 2027 (the "August 2027 Secured Notes"), respectively, in a private placement.

A portion of the proceeds and cash on hand were used to:

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Prior to August 15, 2022, the Company may redeem up to 40 % of the aggregate principal amount of the August 2027 Secured Notes using the proceeds of certain equity offerings at the redemption price set forth in the indenture.

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

On June 8, 2021, the Company issued $ 1,600 million aggregate principal amount of 4.875 % Senior Secured Notes due June 2028 (the “June 2028 Secured Notes”) in a private placement.

The proceeds and cash on hand were used to:

(i) repurchase a portion and redeem the remainder of $ 1,600 million of the March 2024 Secured Notes, representing the remaining outstanding principal balance of the March 2024 Secured Notes and (ii) pay all fees and expenses associated with these transactions (collectively, the “June 2021 Refinancing Transactions”).

The June 2021 Refinancing Transactions were accounted for as an extinguishment of debt and the Company incurred a loss on extinguishment of debt of $ 38 million representing the difference between the amount paid to settle the extinguished debt and the extinguished debt’s carrying value.

Interest on the June 2028 Secured Notes is payable semi-annually in arrears on each June 1 and December 1.

The June 2028 Secured Notes are redeemable at the option of the Company, in whole or in part, at any time on or after June 1, 2024, at the redemption prices set forth in the June 2028 Secured Notes indenture.

The Company may redeem some or all of the June 2028 Secured Notes prior to June 1, 2024 at a price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest to, but not including, the date of the redemption plus a “make-whole” premium.

In addition, at any time prior to June 1, 2024, the Company may redeem up to 40 % of the aggregate principal amount of the June 2028 Secured Notes using the net proceeds of certain equity offerings at the redemption price set forth in the June 2028 Secured Notes indenture.

Senior Unsecured Notes

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5.500 % Senior Unsecured Notes due 2023

On December 2, 2013, the Company issued $ 900 million aggregate principal amount of December 2021 Unsecured Notes in a private placement.

The December 2021 Unsecured Notes accrued interest at the rate of 5.625 % per year and were subsequently repaid in full:

(i) using cash on hand of $ 200 million in December 2018 and (ii) as part of the March 2019 Refinancing Transactions.

5.50 % Senior Unsecured Notes due 2023

On January 30, 2015, the Company issued $ 1,000 million aggregate principal amount of March 2023 Unsecured Notes in a private placement.

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On March 27, 2015, VRX Escrow Corp.

(the "VRX Issuer"), a newly formed wholly owned subsidiary of the Company, issued $ 2,000 million aggregate principal amount of 5.375 % Senior Unsecured Notes due 2020 (the "March 2020 Unsecured Notes"), $ 3,250 million aggregate principal amount of 5.875 % Senior Unsecured Notes due 2023 (the "May 2023 Unsecured Notes"), € 1,500 million aggregate principal amount of 4.50 % Senior Unsecured Notes due 2023 (the "Euro Notes”) and $ 3,250 million aggregate principal amount of 6.125 % Senior Unsecured Notes due 2025 (the "April 2025 Unsecured Notes" and, together with the March 2020 Unsecured Notes, the May 2023 Unsecured Notes and the Euro Notes, the "VRX Notes") in a private placement.

The March 2020 Unsecured Notes accrued interest at the rate of 5.375 % per year and were repaid in full as part of:

(i) the December 2017 Refinancing Transactions (as defined below), (ii) the March 2018 Refinancing Transactions (as defined below) and (iii) the June 2018 Refinancing Transactions.

(the "VRX Issuer"), a newly formed wholly owned subsidiary of the Company, issued $ 2,000 million aggregate principal amount of 5.375 % Senior Unsecured Notes due 2020 (the "March 2020 Unsecured Notes"), $ 3,250 million aggregate principal amount of May 2023 Unsecured Notes, € 1,500 million aggregate principal amount of 4.500 % Senior Unsecured Notes due 2023 (the "Euro Notes”) and $ 3,250 million aggregate principal amount of 6.125 % Senior Unsecured Notes due 2025 (the "April 2025 Unsecured Notes" and, together with the March 2020 Unsecured Notes, the May 2023 Unsecured Notes and the Euro Notes, the "VRX Notes") in a private placement.

The March 2020 Unsecured Notes accrued interest at the rate of 5.375 % per year and were repaid in full as part of certain refinancing transactions completed in 2017 and 2018.

The May 2023 Unsecured Notes and the Euro Notes accrued interest at the rate of 5.875 % and 4.500 % per year, respectively and were each repaid in full as of December 31, 2020, as discussed below.

The April 2025 Unsecured Notes accrue interest at the rate of 6.125 % per year, payable semi-annually in arrears.

As part of the June 2018 Refinancing Transactions, the Company repaid the remaining outstanding principal amounts of the March 2020 Unsecured Notes.

On March 8, 2019 and May 23, 2019, the Company repurchased $ 584 million and $ 1,118 million of May 2023 Unsecured Notes as part of the March 2019 Refinancing Transactions and the May 2019 Refinancing Transactions (as defined below), respectively, and on October 3, 2019, the Company repaid an additional $ 100 million of May 2023 Unsecured Notes using cash on hand.

As part of a refinancing transaction completed in June 2018, the Company repaid the remaining outstanding principal amounts of the March 2020 Unsecured Notes.

During 2019, the Company repurchased $ 584 million and $ 1,118 million of May 2023 Unsecured Notes as part of the March 2019 Refinancing Transactions and the May 2019 Refinancing Transactions (as defined below), respectively, and on October 3, 2019, the Company repaid an additional $ 100 million of May 2023 Unsecured Notes using cash on hand.

On January 16, 2020, the Company redeemed $ 1,240 million aggregate principal amount of the May 2023 Unsecured Notes as part of the December 2019 Financing and Refinancing Transactions (as defined below).

Throughout 2020, the Company repaid, in aggregate, $ 208 million of the May 2023 Unsecured Notes, with the May 2023 Unsecured Notes having been fully repaid during November 2020.

The Company may redeem all or a portion of the April 2025 Unsecured Notes at the redemption prices set forth in the applicable indenture, plus accrued and unpaid interest to the date of redemption.

On December 3, 2020, the Company redeemed the remaining outstanding balance of the Euro Notes as part of the December 2020 Refinancing Transactions, as defined below.

Throughout 2021, the Company repaid, in aggregate, $ 600 million of the April 2025 Unsecured Notes.

The Company may redeem all or a portion of the April 2025 Unsecured Notes at the redemption prices set forth in the applicable indenture, plus accrued and unpaid interest to the date of redemption.

9.000 % Senior Unsecured Notes due 2025

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On or after December 15, 2021, the Company may redeem all or a portion of the December 2025 Unsecured Notes at the applicable redemption prices set forth in the December 2025 Unsecured Notes indenture, plus accrued and unpaid interest to the date of redemption.

9.25 % Senior Unsecured Notes due 2026 - March 2018 Refinancing Transactions

9.250 % Senior Unsecured Notes due 2026

On March 26, 2018, BHA issued $ 1,500 million in aggregate principal amount of 9.250 % Senior Unsecured Notes due 2026 (the “April 2026 Unsecured Notes”) in a private placement, the net proceeds of which, and cash on hand, were used to repurchase $ 1,500 million in aggregate principal amount of unsecured notes.

All fees and expenses associated with these transactions were paid with cash on hand (collectively, the “March 2018 Refinancing Transactions”).

The March 2018 Refinancing Transactions were accounted for as an extinguishment of debt and the Company incurred a loss on extinguishment of debt of $ 26 million representing the difference between the amount paid to settle the extinguished debt

and the extinguished debt’s carrying value.

The April 2026 Unsecured Notes accrue interest at the rate of 9.250 % per year, payable semi-annually in arrears on each of April 1 and October 1.

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On or after April 1, 2022, BHA may redeem all or a portion of the April 2026 Unsecured Notes at the applicable redemption prices set forth in the April 2026 Unsecured Notes indenture, plus accrued and unpaid interest to the date of redemption.

8.50 % Senior Unsecured Notes due 2027 - June 2018 Refinancing Transactions and March 2019 Refinancing Transactions

As part of the June 2018 Refinancing Transactions, BHA issued $ 750 million in aggregate principal amount of January 2027 Unsecured Notes in a private placement, the net proceeds of which, when combined with the remaining net proceeds from the June 2025 Term Loan B Facility and cash on hand, were used to redeem the June 2018 Unsecured Refinanced Debt at its aggregate redemption price and the indentures governing the June 2018 Unsecured Refinanced Debt were discharged.

8.500 % Senior Unsecured Notes due 2027

As part of a 2018 refinancing transaction, BHA issued $ 750 million in aggregate principal amount of January 2027 Unsecured Notes in a private placement.

The January 2027 Unsecured Notes accrue interest at the rate of 8.500 % per year, payable semi-annually in arrears on each of January 31 and July 31.

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(i) $ 1,250 million aggregate principal amount of 5.000 % Senior Unsecured Notes due January 2028 (the " 5.000 % January 2028 Unsecured Notes") and (ii) $ 1,250 million aggregate principal amount of 5.250 % 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 the $ 1,210 million settlement of certain U.S.

proceeds and cash on hand were used to:

(i) redeem $ 1,240 million of May 2023 Unsecured Notes on January 16, 2020, (ii) finance the $ 1,210 million settlement of certain U.S.

Securities litigation as discussed in Note 20, "LEGAL PROCEEDINGS" and (iii) pay all fees and expenses associated with these transactions (collectively, the "December 2019 Financing and Refinancing Transactions").

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The Company may redeem all or a portion of the 5.000 % February 2029 Unsecured Notes at any time prior to February 15, 2024, at a price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption, plus a “make-whole” premium.

In addition, at any time prior to February 15, 2024, the Company may redeem up to 40 % of the aggregate principal amount of the outstanding 5.00 % February 2029 Unsecured Notes with the net proceeds of certain equity offerings at the redemption price set forth in the 5.00 % February 2029 Unsecured Notes indenture.

On or after February 15, 2024, the Company may redeem all or a portion of the 5.00 % February 2029 Unsecured

Notes at the applicable redemption prices set forth in the 5.00 % February 2029 Unsecured Notes indenture, plus accrued and unpaid interest to, but not including, the date of redemption.

In addition, at any time prior to February 15, 2024, the Company may redeem up to 40 % of the aggregate principal amount of the outstanding 5.000 % February 2029 Unsecured Notes with the net proceeds of certain equity offerings at the redemption price set forth in the 5.000 % February 2029 Unsecured Notes

On or after February 15, 2024, the Company may redeem all or a portion of the 5.000 % February 2029 Unsecured Notes at the applicable redemption prices set forth in the 5.000 % February 2029 Unsecured Notes indenture, plus accrued and unpaid interest to, but not including, the date of redemption.

The Company may redeem all or a portion of the February 2031 Unsecured Notes at any time prior to February 15, 2026, at a price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption, plus a “make-whole” premium.

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Under the Restated Credit Agreement, there is no Excess Cash Flow payment due for 2021.

On February 11, 2022, the Company repaid its outstanding balance of $ 285 million under its 2023 Revolving Credit Facility.

As more fully discussed in Note 23, "SUBSEQUENT EVENTS", during January 2022, the Company:

(i) issued conditional notices of redemption to redeem in full all of its outstanding April 2025 Unsecured Notes and to redeem $ 370 million aggregate principal amount of its outstanding December 2025 Unsecured Notes and (ii) issued $ 1,000 million aggregate principal amount of 6.125 % Senior Secured Notes due February 2027.

PENSION AND POSTRETIREMENT EMPLOYEE BENEFIT PLANS

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postretirement benefit plan was amended effective January 1, 2005 to eliminate employer contributions after age 65 for participants who did not meet the minimum requirements of age and service on that date.

The employer contributions for medical and prescription drug benefits for participants retiring after March 1, 1989 were frozen effective January 1, 2010.

The employer contributions for medical and prescription

drug benefits for participants retiring after March 1, 1989 were frozen effective January 1, 2010.

Effective January 1, 2014, the Company no longer offers medical and life insurance coverage to new retirees.

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Amortization of prior service credit — — — ( 1 ) ( 1 ) ( 1 ) ( 3 ) ( 3 ) ( 2 )

Settlement loss recognized — — — 8 — — — — —

Other — — — — — 1 — — —

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Interest cost 4 6 4 4 1 1

Employee contributions — — — — — 1

Settlements ( 4 ) — ( 43 ) ( 3 ) — —

Benefits paid ( 11 ) ( 15 ) ( 4 ) ( 4 ) ( 3 ) ( 4 )

Actuarial losses 17 18 13 30 1 2

Actuarial (gain) losses ( 6 ) 17 ( 8 ) 13 ( 2 ) 1

Currency translation adjustments — — ( 18 ) 22 — —

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Actual return on plan assets 8 29 18 11 — —

Employee contributions — — — — — 1

Company contributions — 1 28 8 3 4

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Recognized as:

Other non-current assets $ 4 $ — $ — $ — $ — $ —

Accrued and other current liabilities $ — $ — $ 2 $ 2 $ 4 $ 4

Other non-current liabilities $ — $ 5 $ 51 $ 103 $ 31 $ 35

Included in Settlement loss recognized and Settlements in the tables above are the costs and payments associated with the conversion of a portion of the Company’s defined benefit plan in Ireland to a defined contribution plan during the fourth quarter of 2021.

A number of the Company’s pension benefit plans were underfunded as of December 31, 2021 and 2020, having accumulated benefit obligations exceeding the fair value of plan assets.

There were no U.S.

pension benefit plans that were underfunded as of December 31, 2021, having accumulated benefit obligations exceeding the fair value of plan assets.

Information for the underfunded pension benefit plans is as follows:

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Variable operating lease costs $ 12 $ 12 $ 16

Upon adoption of the new standard for accounting for leases on January 1, 2019, the Company elected the modified retrospective approach without revising prior periods.

Rent expense related to operating lease agreements was $ 92 million for 2018.

Other information related to operating leases for 2021, 2020 and 2019 is as follows:

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Right-of-use assets obtained in exchange for new operating lease liabilities $ 46 $ 39 $ 47

Weighted-average remaining lease term 7.6 years 8.2 years

Weighted-average remaining lease term 7.2 years 7.6 years 8.2 years

Weighted-average discount rate 6.1 % 6.2 % 6.2 %

Right-of-use assets obtained in exchange for new operating lease liabilities during the year ended December 31, 2019 of $ 47 million in the table above does not include $ 282 million of right-of-use assets recognized upon adoption of the new standard for accounting for leases on January 1, 2019.

See Note 2, "SIGNIFICANT ACCOUNTING POLICIES" for further detail regarding the impact of adoption.

As of December 31, 2021, future payments under noncancelable operating leases for each of the five succeeding years ending December 31 and thereafter are as follows:

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The Company transferred the common shares available under the 2011 Plan to the 2014 Plan.

The maximum number of common shares that may be issued to participants under the 2014 Plan was equal to 18,000,000 common shares, plus the number of common shares under the 2011 Plan reserved but unissued and not underlying outstanding awards and the number of common shares becoming available for reuse after awards are terminated, forfeited, cancelled, exchanged or surrendered under the 2011 Plan and the Company’s 2007 Equity Compensation Plan.

surrendered under the 2011 Plan and the Company’s 2007 Equity Compensation Plan.

The Company registered 20,000,000 common shares of common stock for issuance under the 2014 Plan.

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The Further Amended and Restated 2014 Plan includes the following amendments:

(i) the number of common shares authorized for issuance under the Further Amended and Restated 2014 Plan has been

increased by an additional 13,500,000 common shares, as approved by the requisite number of shareholders at the Company’s annual general meeting held on April 28, 2020, (ii) the exercise price of stock options and share appreciation rights (“SARs”) will be based on the closing price of the underlying common shares on the date such stock options or SARs are granted (rather than on the last preceding trading date), (iii) additional provisions clarifying that:

(i) the number of common shares authorized for issuance under the Further Amended and Restated 2014 Plan has been increased by an additional 13,500,000 common shares, as approved by the requisite number of shareholders at the Company’s annual general meeting held on April 28, 2020, (ii) the exercise price of stock options and share appreciation rights (“SARs”) will be based on the closing price of the underlying common shares on the date such stock options or SARs are granted (rather than on the last preceding trading date), (iii) additional provisions clarifying that:

(a) stock options and SARs will not be eligible for the payment of dividend or dividend equivalents and (b) the Talent and Compensation Committee of the Board of Directors of the Company cannot, without shareholder approval, seek to effect any repricing of any previously granted “underwater” stock option or SAR and (iv) other housekeeping and/or clerical changes.

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Performance-based RSUs are comprised of:

(i) awards that vest upon achievement of certain share price appreciation conditions that are based on total shareholder return (“TSR”) and (ii) awards that vest upon attainment of certain performance targets that are based on the Company’s return on tangible capital (“ROTC”).

(i) awards that vest upon achievement of certain share price appreciation conditions that are based on total shareholder return (“TSR”), (ii) awards that vest upon attainment of certain performance targets that are based on the Company’s return on tangible capital (“ROTC”) and (iii) vest fully or partially upon attainment of certain goals that are linked to the B+L Separation.

The components and classification of share-based compensation expense related to stock options and RSUs for the years 2021, 2020 and 2019 were as follows:

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Such additional RSUs will have the same vesting dates and will vest under the same terms as the RSUs in respect of which such additional RSUs are credited.

To the extent provided for in a RSU agreement, the Company may, in lieu of all or a portion of the common shares which would otherwise be provided to a holder, elect to pay a cash amount equivalent to the market price of the Company’s common shares on the vesting date for each vested RSU.

common shares on the vesting date for each vested RSU.

The amount of cash payment will be determined based on the average market price of the Company’s common shares on the vesting date.

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Non-vested, December 31, 2021 2.3 $ 33.92

During 2020, the Company granted approximately 897,000 performance-based RSUs, consisting of approximately 425,000 units of TSR performance-based RSUs with an average grant date fair value of $ 26.13 per RSU and approximately 472,000 units of ROTC performance-based RSUs with a weighted-average grant date fair value of $ 27.05 per RSU.

During 2021, the Company granted approximately 1,035,000 performance-based RSUs, consisting of approximately 400,000 units of TSR performance-based RSUs with an average grant date fair value of $ 56.04 per RSU, approximately 413,000 units of ROTC performance-based RSUs with a weighted-average grant date fair value of $ 31.72 per RSU and approximately 222,000 of other performance-based RSU's with a weighted-average grant date fair value of $ 28.49 .

As of December 31, 2021, the total remaining unrecognized compensation expense related to non-vested performance-based RSUs amounted to $ 32 million, which will be amortized over the weighted-average remaining requisite service period of approximately 1.7 years.

A maximum of approximately 3,476,000 common shares could be issued upon vesting of the performance-based RSUs outstanding as of December 31, 2021.

In connection with the 2018 grant of long-term incentive awards with an aggregate value of $ 10 million, approximately 933,000 performance-based RSUs received by the Company’s Chief Executive Officer ("CEO") upon his hire in 2016 were canceled, and the shares underlying those performance-based RSUs were permanently retired and are not available for future grants under the 2014 Plan.

The CEO's long-term incentive award was accounted for as an award modification whereby the Company continues to recognize the unamortized compensation associated with the original award plus the incremental fair value of the new award measured at the date of grant, over the vesting period of the new award.

ACCUMULATED OTHER COMPREHENSIVE LOSS

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Research and development $ 465 $ 452 $ 471

OTHER EXPENSE (INCOME), NET

Other expense (income), net for the years 2020, 2019 and 2018 consists of:

OTHER EXPENSE, NET

Other expense, net for the years 2021, 2020 and 2019 consists of:

(in millions) 2021 2020 2019

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Acquired in-process research and development costs 8 32 41

Net (gain) loss on sales of assets ( 1 ) ( 31 ) 6

Acquisition-related costs — 8 1

Net gain on sales of assets ( 2 ) ( 1 ) ( 31 )

Acquisition-related contingent consideration 11 48 20

Other, net — 1 ( 5 )

Other expense (income), net $ 454 $ 1,414 $ ( 20 )

Other expense, net $ 373 $ 502 $ 1,426

In 2021, Litigation and other matters of $ 356 million includes adjustments related to the Glumetza Antitrust Litigation, partially offset by insurance recoveries related to certain litigation matters.

In 2020, Litigation and other matters of $ 422 million includes net charges related to the U.S.

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In 2019, Litigation and other matters of $ 1,401 million 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 2018, Litigation and other matters of $ 27 million includes a favorable adjustment of $ 40 million related to the Salix legacy litigation matter.

These matters and other significant matters are discussed in further detail in Note 20, "LEGAL PROCEEDINGS".

securities class action matter.

Certain of these matters and other significant matters are discussed in further detail in Note 20, "LEGAL PROCEEDINGS".

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) loss on sales of assets includes $ 20 million related to the achievement of a milestone related to a certain product.

In 2019, Net gain on sales of assets includes $ 20 million related to the achievement of a milestone related to a certain product.

The components of Loss before benefit from income taxes for 2021, 2020 and 2019 consist of:

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Deferred revenue 3 9

Unrealized FX on U.S.

dollar debt and other financing cost — 94

Prepaid expenses 26 27

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Less valuation allowance ( 2,222 ) ( 2,252 )

Net deferred tax assets 1,999 1,135

Deferred tax assets net of valuation allowance 2,065 1,999

Deferred tax liabilities:

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The Company considered such provisions and expects to fully utilize any interest carry forwards in future periods.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law and included a number of changes in the U.S.

tax law, most notably a reduction of the U.S.

corporate income tax rate from 35% to 21% for tax years beginning after December 31, 2017.

The Tax Act also implemented a modified territorial tax system that included a one-time transition tax on the accumulated previously untaxed earnings of foreign subsidiaries (the “Transition Toll Tax”) equal to 15.5% (reinvested in liquid assets) or 8% (reinvested in non-liquid assets).

At the taxpayer's election, the Transition Toll Tax can be paid over an eight-year period without interest, starting in 2018.

The Company elected not to use this option and instead used a portion of its U.S.

net operating losses ("NOLs") to offset this income inclusion.

The provisional amounts included in Benefit from income taxes for the year 2017, including the Transition Toll Tax, were finalized during 2018.

Differences between the provisional net income tax benefits provided for the year 2017 attributable to the Tax Act and the benefit for income taxes as finalized are included in the Benefit from income taxes for 2018 and were not material to the Company’s financial results for the year 2018.

The Company has provided for income taxes in accordance with guidance issued by accounting regulatory bodies, the U.S.

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A valuation allowance has been provided for the portion of the deferred tax assets that the Company determined is more likely than not to remain unrealized based on estimated future taxable income and tax planning strategies.

As a result of taxable losses in Canada as offset by a reduction of deferred tax assets due to internal restructurings, the valuation allowance decreased by $ 579 million during 2020 and decreased by $ 82 million during 2019.

In 2021, the valuation allowance decreased by $ 30 million primarily due to book taxable income in Canada, the change in deferred tax assets in Canada and the use of deferred tax assets in the U.S.

in connection with internal restructurings.

In 2020, the valuation allowance decreased by $ 579 million as a result of taxable losses in Canada as offset by a reduction of deferred tax assets due to internal restructurings.

Given the Company’s history of pre-tax losses and expected future losses in Canada, the Company maintained that there was insufficient objective evidence to release the valuation allowance against Canadian tax loss carryforwards, International Tax Credits (“ITC”) and pooled Scientific Research and Experimental Development Tax Incentive (“SR&ED”) expenditures.

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In addition, as of December 31, 2021 and 2020, pooled SR&ED expenditures available to offset against future taxable income in Canada were approximately $ 196 million and $ 206 million, respectively, which may be carried forward indefinitely.

As of December 31, 2020 and 2019, a full valuation allowance against the net Canadian deferred tax assets has been provided of $ 1,966 million and $ 2,461 million, respectively.

As of December 31, 2021 and 2020, a full valuation allowance against the net Canadian deferred tax assets on the parent company has been provided of $ 1,965 million and $ 1,966 million, respectively.

As of December 31, 2021 and 2020, the Company had accumulated taxable losses available to offset future years' federal taxable income in the U.S.

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were approximately $ 119 million and $ 110 million, respectively, which includes acquired research and development credits and which expire in the years 2022 through 2042.

the Company has a capital loss of which is offset by a full valuation allowance since the benefit is not expected to be realized.

As of December 31, 2021 and 2020, the Company had accumulated taxable losses available to offset future years’ taxable income in Ireland of approximately $ 10,040 million and $ 8,387 million, respectively.

As of December 31, 2020 and 2019, the Company recognized a capital loss and established a valuation allowance on the portion of the loss for which a benefit is not expected to be realized.

The Company provides for Canadian tax on the unremitted earnings of its direct foreign affiliates except for its direct U.S.

As of December 31, 2021, the Company continues to have a capital loss which is offset by a valuation allowance on the portion of the loss for which a benefit is not expected to be realized.

The Company provides for income taxes on the unremitted earnings of its direct foreign affiliates except for its direct U.S.

subsidiaries.

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subsidiaries will be permanently reinvested and not repatriated.

As of December 31, 2020, the Company estimates there will be no tax liability attributable to the permanently reinvested U.S.

As of December 31, 2021, the Company estimates that there will be no tax liability attributable to unremitted earnings of its U.S.

subsidiaries.

However, distribution of future earnings could be subject to U.S.

withholding tax.

As of December 31, 2021 and 2020, unrecognized tax benefits (including interest and penalties) were $ 927 million and $ 1,025 million, of which $ 271 million and $ 414 million would affect the effective income tax rate, respectively.

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The Company provides for interest and penalties related to unrecognized tax benefits in the provision for income taxes.

As of December 31, 2020 and 2019, accrued interest and penalties related to unrecognized tax benefits were approximately

$ 49 million and $ 45 million, respectively.

In 2020 and 2019, the Company recognized a net increase of approximately $ 4 million and $ 3 million of interest and penalties, respectively.

As of December 31, 2021 and 2020, accrued interest and penalties related to unrecognized tax benefits were approximately $ 41 million and $ 49 million, respectively.

In 2021, the Company recognized a net decrease of approximately $ 8 million and, in 2020, recognized an increase of $ 4 million of interest and penalties, respectively.

The Company and one or more of its subsidiaries file federal income tax returns in Canada, the U.S., and other foreign jurisdictions, as well as various provinces and states in Canada and the U.S.

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Australia 2011 - 2020

The Internal Revenue Service completed its examinations of the Company’s U.S.

Luxembourg 2017 - 2020

The Internal Revenue Service (the "IRS") completed its examinations of the Company’s U.S.

consolidated federal income tax returns for the years 2013 and 2014.

There were no material adjustments to the Company's taxable income as a result of these examinations.

The 2014 tax year remains open to the extent of a 2017 capital loss carried back to that year.

Additionally, the Internal Revenue Service has selected for examination the Company's annual tax filings for 2015 and 2016 and the Company's short period tax return for the period ended September 8, 2017, which was filed as a result of the Company's internal restructuring efforts during 2017.

At this time, the Company does not expect that proposed adjustments, if any, for these periods would be material to the Company's Consolidated Financial Statements.

The Company is currently under examination by the Canada Revenue Agency for four separate cycles:

(a) years 2005 through 2006, (b) years 2007 through 2009, (c) years 2012 through 2013 and (d) years 2014 through 2015.

The Company received from the Canada Revenue Agency a proposed audit adjustment for the years 2005 through 2009.

The Company disagrees with the adjustments and has filed the respective Notices of Objection.

The total proposed adjustment will result in a loss of tax attributes which are subject to a full valuation allowance and will not result in material change to the provision for income taxes.

The Canada Revenue Agency audits of the 2010 and 2011 tax years were closed in 2016, and resulted in no material adjustments.

However, the 2014 tax year remains open to the extent of a 2017 capital loss carried back to that year.

Additionally, the IRS has selected for examination the Company's annual tax filings for 2015 and 2016 and the Company's short period tax return for the period ended September 8, 2017, which was filed as a result of the Company's internal restructuring efforts during 2017.

In 2017, the Company undertook an internal restructuring in the form of what is commonly known as a Granite Trust transaction, which resulted in a recorded capital loss (the “2017 Capital Loss”).

Recently, the Company has received a notice of proposed adjustment from the IRS that would disallow the 2017 Capital Loss and expects to receive a notice of proposed tax deficiency from the IRS, after which the Company intends to contest proposed tax deficiency through the IRS administrative appeals process.

If the Company were ultimately unsuccessful in defending its position, and all or a substantial portion of the 2017 Capital Loss deduction were disallowed, the Company could be liable for additional taxes (excluding penalties and interest) of up to $ 2,100 million, which could have an adverse effect on the Company’s financial condition and results of operations.

The Company intends to vigorously defend its position, including through appropriate litigation, if necessary, and ultimately believes it will sustain its deduction of the 2017 Capital Loss, and, accordingly, no income tax provision has been recorded.

The Company is currently under examination by the Canada Revenue Agency (“CRA”) for three separate cycles:

(a) years 2012 through 2013 (b) years 2014 through 2015, and (c) years 2016 through 2017.

The Company believes that the CRA will open an audit cycle for the years 2018 – 2019 in 2022.

The Company settled the tax years from 2005 through 2009

with the CRA.

The Company had previously filed a Notice of Objection related to the assessment of these years and reduced net operating losses with a full valuation allowance by CAD 44 million to close these years.

The adjustment did not result in a material change to the provision for income taxes.

The CRA audits of the 2010 and 2011 tax years were closed in 2016 and resulted in no material adjustments.

The Company received an assessment for certain transfer pricing matters in 2012 and 2013 for CAD 85 million and CAD 90 million, respectively.

The Company disagrees with the adjustments and has filed a Notice of Objection for 2012 and will file an objection for 2013.

Of the total proposed adjustments, all but CAD 3 million will result in a loss of tax attributes which are subject to a full valuation allowance and will not result in a material change to the provision for income taxes.

The Company disagrees with the adjustments and has filed a Notice of Objection for 2012 and 2013.

The Company settled certain transfer pricing matters relating the 2015 and 2016 tax years resulting in a reduction to its NOLs of approximately CAD 21 million for 2015 and will receive a further adjustment for 2016.

The expected adjustment for 2016 will reduce NOLs currently offset by a full valuation allowance.

The Company’s subsidiaries in Germany are under audit for tax years 2014 through 2016.

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The Company intends to defend its tax position in this matter vigorously and has filed a holding objection against the assessment by the Australian Taxation Office and has secured a bank guarantee to cover any potential cash outlays regarding this assessment.

The bank guarantee has been reduced over time to now be an immaterial value.

Negotiations with the Australian Tax Office are ongoing and the Company expects to enter into a Settlement Deed in early 2022 with no material adverse results.

The Company's U.S.

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for years 2015 through 2020.

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

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

At this time, the Company does not expect that proposed adjustments, if any, would be material to the Company's Consolidated Financial Statements.

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Additionally, in 2021, 2020 and 2019, stock options, time-based RSUs and performance-based RSUs to purchase approximately 3,428,000 , 9,551,000 and 2,598,000 common shares of the Company, respectively, were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive under the treasury stock method.

During 2021, an additional 156,000 performance-based RSUs were not included in the computation of diluted earnings per share as the required performance conditions had not been met.

SUPPLEMENTAL CASH FLOW DISCLOSURES

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Securities and RICO Class Actions and Related Matters

Securities Litigation - Opt-Out Litigation

Securities Litigation

On December 16, 2019, the Company announced that it had agreed to settle, subject to final court approval, the consolidated securities class action filed in the U.S.

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15-cv-07658).

On January 31, 2021 the District Court issued an order granting final approval of this settlement.

On February 4, 2021, Timber Hill filed a notice of appeal of the Court’s final approval order, which overruled its objections to the allocation of settlement proceeds as between common stock and options.

The deadline for other parties to file notices of appeal from the final approval order is March 2, 2021.

On January 31, 2021, the District Court

issued an order granting final approval of this settlement.

On February 4, 2021, Timber Hill LLC filed a notice of appeal of the Court’s final approval order, which overruled its objections to the allocation of settlement proceeds as between common stock and options.

On March 1, 2021, Cathy Lochridge filed a notice of appeal of the Court’s final approval order, which overruled her objections as to the attorneys’ fees awarded to class counsel.

On October 14, 2021, Timber Hill dismissed its appeal of the final approval order.

On December 20, 2021, the Third Circuit denied Lochridge’s appeal.

On January 3, 2022, Lochridge filed a petition for rehearing of the appeal en banc which remains pending.

In October 2015, four putative securities class actions were filed in the U.S.

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Securities Litigation, Case No.

On December 16, 2019, the Company, the current or former officers and directors, ValueAct, and the underwriters announced that they agreed to resolve the securities action for $ 1,210 million.

On December 16, 2019, the Company, the current or former officers and directors, ValueAct, and the underwriters announced that they agreed to resolve the securities action for $ 1,210 million, subject to final court approval.

This settlement received final approval from the court on January 31, 2021 and will resolve and discharge all claims against the Company in the class action.

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

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

The settlement remains subject to an appeal of the final court approval (as such appeal is further described above).

In order to qualify for a settlement payment all persons and entities that purchased or otherwise acquired the Company securities during the class period must have submitted a proof of claim and release form by May 6, 2020.

The settlement payment was paid into an escrow fund in accordance with the settlement agreement.

The settlement payments have been paid into an escrow account in accordance with the payment schedule outlined in the settlement agreement.

These payments, less certain settlement expenses and attorneys' fees, will remain in escrow until resolution of the appeal of the final court approval of the settlement agreement.

The opt-out litigations discussed below remain ongoing.

As of December 31, 2021, Restricted cash and other settlement deposits includes an aggregate $ 1,210 million of:

(i) payments in the escrow fund and (ii) certain disbursements for settlement expenses and attorney's fees.

Disbursements for attorney's fees remain refundable until resolution of the appeal of the final court approval of the settlement agreement.

On June 6, 2018, a putative class action was filed in the U.S.

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On August 15, 2019, the Court denied the motion to dismiss the Timber Hill action, holding that this complaint was a legal nullity as a result of the June 11, 2018 consolidation order.

In addition to the consolidated putative class action, thirty-seven groups of individual investors in the Company’s stock and debt securities have chosen to opt out of the consolidated putative class action and filed securities actions pending in the U.S.

District Court for the District of New Jersey against the Company and certain current or former officers and directors.

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Valeant Pharmaceuticals International, Inc.

18-cv-0032) (“NYCERS”);

Hound Partners Offshore Fund, LP v.

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20-cv-07460) (“GIC”).

Twelve of the thirty-seven opt out actions have been dismissed;

and the total number of remaining opt out actions pending in the District of New Jersey is twenty-five actions.

Four additional matters have been settled and dismissals are expected in March 2021.

Sixteen of the thirty-seven opt-out actions have been dismissed;

and the total number of remaining opt-out actions pending in the District of New Jersey is twenty-one actions.

These individual shareholder actions assert claims under Sections 10(b), and 20(a) of the Exchange Act.

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On October 9, 2019, the Aly Plaintiffs filed a notice of appeal to the United States Court of Appeals for the Third Circuit.

Oral argument on Plaintiffs’ appeal was held on October 20, 2020.

On June 16, 2021, the Court of Appeals granted plaintiffs’ appeal in the Aly action.

This action has been remanded to the District Court.

On June 19, 2020, the Court entered stipulations of voluntary dismissal in the Catalyst, Mississippi, Connecticut, and Delaware actions.

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On December 30, 2020, the Court entered a stipulation of voluntary dismissal in the BlueMountain action.

On February 18, 2021, the Court entered stipulations of voluntary dismissal in the T.

Rowe, BloombergSen, Principal Funds and Equity Trustees actions.

On February 18, 2021, and March 10, 2021, the Court entered stipulations of voluntary dismissal in the T.

Rowe, BloombergSen, Principal Funds, Pentwater, Lord Abbett, Equity Trustees, and UC Regents actions.

On April 30, 2021, the Court entered a stipulation of voluntary dismissal in the Florida SBA action.

On July 20, 2021, the Court entered a stipulation of voluntary dismissal in the Janus action.

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

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(Court File No.

540-17-011743159, then Court File No.

500-06-000783-163) (Quebec Superior Court) (filed October 26, 2015);

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and (ii) Sukenaga v Valeant et al.

(CV-15-540567-00CP) (Ontario Superior Court) (filed November 16, 2015), and the factual allegations made in these actions are substantially similar to those outlined above.

(CV-15-540567-00CP) (Ontario

Superior Court) (filed November 16, 2015), and the factual allegations made in these actions are substantially similar to those outlined herein.

The actions generally allege violations of Canadian provincial securities legislation on behalf of putative classes of persons who purchased or otherwise acquired securities of the Company for periods commencing as early as January 1, 2013 and ending as late as November 16, 2015.

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Securities Litigation description above.

Each of these putative class actions, other than the Catucci action in the Quebec Superior Court, has been discontinued.

Each of these putative class actions, other than the Catucci action in the Quebec Superior Court, was discontinued.

In the Catucci action, on August 29, 2017, the judge granted the plaintiffs leave to proceed with their claims under the Quebec Securities Act and authorized the class proceeding.

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

On August 4, 2020, the Company entered into a settlement agreement with the plaintiffs in Catucci, on behalf of the class, pursuant to which it agreed to resolve the Catucci action for the amount of CAD 94,000,000 plus payment of an additional amount to cover notice and settlement administration costs and disbursements.

On August 4, 2020, the Company entered into a settlement agreement with the plaintiffs in Catucci, on behalf of the class, pursuant to which it agreed to resolve the Catucci action for the amount of CAD 94 million plus payment of an additional amount to cover notice and settlement administration costs and disbursements.

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

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The Company is aware that certain other members of the Catucci class exercised their opt-out rights prior to the June 19, 2018 deadline.

On February 15, 2019, one of the entities which exercised its opt-out rights (“CalSTRS”) served the Company with an application in the Quebec Superior Court of Justice for leave to pursue an action under the Quebec Securities Act against the Company, certain current or former officers and directors of the Company and its auditor.

On February 15, 2019, one of the entities which exercised its opt-out rights, the California State Teachers' Retirement System (“CalSTRS”), served the Company with an application in the Quebec Superior Court of Justice for leave to pursue an action under the Quebec Securities Act against the Company, certain current or former officers and directors of the Company and its auditor.

That proceeding is captioned California State Teachers’ Retirement System v.

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On June 16, 2020, the Quebec Court of Appeal granted the defendants leave to appeal that decision.

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

during the period covered by the claims.

CalSTRS has filed an application for permission to amend and the Company has filed an application to strike the amendments.

The appeal was heard on September 29, 2021 and, by judgment dated October 29, 2021, the appeals were dismissed.

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

A hearing was held on February 17, 2021 with respect to whether CalSTRS would be permitted to file the proposed amended proceedings.

On June 9, 2021, the Quebec Superior Court granted the Company’s application to strike the new allegations from its Quebec Securities Act claim, but permitted the amendments to its claim under the Quebec Civil Code.

On December 8, 2021, CalSTRS delivered its amended pleadings.

On March 17, 2021, four additional opt-outs from the Catucci class issued a Statement of Claim in the Ontario Superior Court of Justice.

That proceeding is captioned The Bank of Korea et al.

Valeant Pharmaceuticals International Inc.

(Court File No.

21-00658966-0000).

In addition, these plaintiffs also served and filed a motion for leave to pursue claims under the Ontario Securities Act.

The allegations in this proceeding are similar to those made by the plaintiffs in the Catucci class action and the plaintiffs in the opt-out actions described above.

The Company believes that it has viable defenses in each of these actions.

In each case, the Company intends to defend itself vigorously.

RICO Class Actions

Between May 27, 2016 and September 16, 2016, three actions were filed in the U.S.

District Court for the District of New Jersey against the Company and various third-parties (these actions were subsequently consolidated), alleging claims under the federal Racketeer Influenced Corrupt Organizations Act (“RICO”) on behalf of a putative class of certain third-party payors that paid claims submitted by Philidor for certain Company-branded drugs between January 2, 2013 and November 9, 2015.

The consolidated complaint alleges, among other things, that the defendants committed predicate acts of mail and wire fraud by submitting or causing to be submitted prescription reimbursement requests that misstated or omitted facts regarding:

(1) the identity and licensing status of the dispensing pharmacy;

(2) the resubmission of previously denied claims;

(3) patient co-pay waivers;

(4) the availability of generic alternatives;

and (5) the insured’s consent to renew the prescription.

The complaint further alleges that these acts constitute a pattern of racketeering or a racketeering conspiracy in violation of the RICO statute and caused plaintiffs and the putative class unspecified damages, which may be trebled under the RICO statute.

On August 4, 2021, the Company executed a stipulation of settlement for this action and, on August 17, 2021, the Court preliminarily approved the settlement.

On December 6, 2021 the Special Master overseeing this litigation issued a report and recommendation recommending final approval of the settlement, and on February 22, 2022 the settlement was approved by the district court.

Insurance Coverage Lawsuit

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Pershing Square Capital Management, L.P., et al.

(under the 2013-2014 coverage period), and (ii) costs incurred and to be incurred in connection with the securities class actions and opt-out cases described in this section and certain of the investigations described herein and in the Company's prior annual and quarterly reports (under the 2015-2016 coverage period).

RICO Class Actions

Between May 27, 2016 and September 16, 2016, three actions were filed in the U.S.

District Court for the District of New Jersey against the Company and various third-parties (these actions were subsequently consolidated), alleging claims under the federal Racketeer Influenced Corrupt Organizations Act (“RICO”) on behalf of a putative class of certain third-party payors that paid claims submitted by Philidor for certain Company branded drugs between January 2, 2013 and November 9, 2015.

On November 30, 2016, the Court entered an order consolidating the three actions under the caption In re Valeant Pharmaceuticals International, Inc.

Third-Party Payor Litigation, No.

3:16-cv-03087.

A consolidated class action complaint was filed on December 14, 2016.

(2) the resubmission of previously denied claims;

(3) patient co-pay waivers;

(4) the availability of generic alternatives;

and (5) the insured’s consent to renew the prescription.

A Special Master appointed by the Court has recommended that the Company’s motion to dismiss be denied, but a final decision is still pending with the Court.

The Company believes these claims are without merit and intends to defend itself vigorously.

(the “Allergan Securities Litigation”) (under the 2013-2014 coverage period), and (ii) costs incurred and to be incurred in connection with the securities class actions and opt-out cases described in this section and the SEC Investigation and certain of the other investigations described under “Complete or Inactive Matters” in Note 20, “LEGAL PROCEEDINGS,” to the Company's Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC and the CSA on February 24, 2021 and under “Governmental and Regulatory Inquiries” and “Complete or Inactive Matters” in Note 21, “LEGAL PROCEEDINGS,” to the Company's Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC and the CSA on February 19, 2020 (under the 2015-2016 coverage period).

On July 20, 2021, the Company entered into settlement agreements with the insurers in the 2015-2016 coverage period in which the Company agreed to resolve its claims for insurance coverage in connection with the U.S.

Securities Litigation and the Canadian Securities Litigation and related opt-out litigation and related investigations matters described above.

On that same day, the Company entered into settlement agreements with two of its insurers in the 2013-2014 coverage period in which the Company agreed to resolve its claims against those two insurers only for insurance coverage in connection with the Allergan Securities Litigation.

As a result of all of the settlement agreements entered into with the insurers on July 20, 2021, the Company has received an aggregate sum of $ 213 million.

The Company’s insurance claims with respect to the Allergan Securities Litigation against the remaining insurers in the 2013-2014 coverage period remain pending.

Hound Partners Lawsuit

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This suit asserts claims for common law fraud, negligent misrepresentation, and violations of the New Jersey Racketeer Influenced and Corrupt Organizations Act.

This matter is currently stayed pending the completion of discovery in one of the above-noted federal opt-out cases.

The Company disputes the claims and intends to vigorously defend this matter.

Derivative Lawsuits

On September 10, 2019 and September 13, 2019, two alleged stockholders filed derivative lawsuits purportedly on behalf of the Company against former Company board members and executives.

The cases are Wessels v.

Pearson (Case No.

3:19-cv-17833) and Shabbouei v.

Pearson (Case No.

3:19-cv-17987).

On March 7, 2020, a consolidated amended derivative complaint was filed, captioned In re Bausch Health Companies Inc.

F/K/A/ Valeant Pharmaceuticals International, Inc.

Stockholder Derivative Litigation (Case No.

19-cv-17833).

Plaintiffs assert claims for breach of fiduciary duty, waste of corporate assets, and unjust enrichment related to, among other things, allegedly false and misleading statements and/or failures to disclose information about the Company’s business and prospects, including relating to drug pricing, the Company’s use of specialty pharmacies, and the Company’s relationship with Philidor.

The consolidated complaint also asserts a claim for contribution and indemnification by the Defendants for any liability the Company ultimately faces as a result of the conduct alleged in the complaint.

alleged in these cases are based on the same purported conduct that is at issue in In re Valeant Pharmaceuticals International, Inc.

Securities Litigation, all of which occurred prior to 2017.

The Shabbouei complaint also asserts a claim for contribution and indemnification by the Defendants for any liability the Company ultimately faces as a result of the conduct alleged in the complaint.

On January 3, 2020, the parties submitted a letter to the Court requesting consolidation of the two derivative lawsuits.

On April 21, 2020, the Defendants filed a motion to dismiss the consolidated amended complaint.

Briefing on this motion concluded on August 3, 2020.

On November 24, 2020, the Special Master appointed by the Court issued a report recommending that the motion to dismiss be granted in full.

While a final decision is still pending with the Court, Plaintiffs are not contesting the dismissal in full.

The Company continues to believe these claims are without merit and intends to defend itself vigorously.

Generic Pricing Antitrust Litigation

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(formerly Valeant Pharmaceuticals International) (“Bausch Health Americas”) (for the purposes of this paragraph, collectively, the “Company”), are defendants in multidistrict antitrust litigation (“MDL”) entitled In re:

Generic Pharmaceuticals Pricing Antitrust Litigation , pending in the United States District Court for the Eastern District of Pennsylvania (MDL 2724, 16-MD-2724).

Generic Pharmaceuticals Pricing

Antitrust Litigation , pending in the United States District Court for the Eastern District of Pennsylvania (MDL No.

2724, 16-MD-2724).

The lawsuits seek damages under federal and state antitrust laws, state consumer protection and unjust enrichment laws and allege that the Company’s subsidiaries entered into a conspiracy to fix, stabilize, and raise prices, rig bids and engage in market and customer allocation for generic pharmaceuticals.

The lawsuits, which have been brought as putative class actions by direct purchasers, end payers, and indirect resellers, and as direct actions by direct purchasers, end payers, insurers, States, and various Counties, Cities, and Towns, have been or are expected to be consolidated into the MDL.

There are also additional, separate complaints which have been consolidated in the same MDL that do not name the Company or any of its subsidiaries as a defendant.

In July 2019, 87 health plans commenced an action in the Court of Common Pleas of Philadelphia County against the Company and other defendants related to the multidistrict litigation, but no complaint has been filed and the case has been put in deferred status.

In May 2020, seven health plans commenced an additional action in the Court of Common Pleas of Philadelphia County against the Company and other defendants related to the multidistrict litigation, but no complaint has been filed.

There are cases pending in the Court of Common Pleas of Philadelphia County against the Company and other defendants related to the multidistrict litigation, but no complaint has been filed in the cases.

The cases have been put in deferred status.

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

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and certain U.S.

and Canadian subsidiaries (for the purposes of this paragraph, collectively “the Company”) have been named as defendants in a proposed class proceeding entitled Kathryn Eaton vs.

and Canadian subsidiaries (for the purposes of this paragraph, collectively “the Company”) have been named as defendants in a proposed class proceeding entitled Kathryn Eaton v.

Teva Canada Limited, et al.

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

Glumetza Antitrust Litigation

Between August 2019 and July 2020, eight (8) putative antitrust class actions and four (4) non-class complaints naming the Company, Salix Pharmaceuticals, Ltd., Salix Pharmaceuticals, Inc., and Santarus, Inc.

(for purposes of this subsection, collectively, the “Company”), among other defendants, were filed or transferred to the Northern District of California.

Three (3) of the class actions were filed by plaintiffs seeking to represent a class of direct purchasers.

The purported classes of direct purchasers filed a consolidated first amended complaint and a motion for class certification in April 2020.

The court certified a direct purchaser class in August 2020.

The putative class action complaints filed by end payer purchasers have all been voluntarily dismissed.

Three (3) of the non-class complaints were filed by direct purchasers.

The fourth non-class complaint, asserting claims based on both direct and indirect purchases, was filed by an insurer plaintiff in July 2020 and subsequently amended in September 2020.

In December 2020, the court denied the Company’s motion to dismiss as to the insurer plaintiff’s direct claims but dismissed the insurer plaintiff’s indirect claims.

On February 2, 2021, the insurer plaintiff’s motion for leave to amend its complaint was denied.

On February 8, 2021, the insurer plaintiff filed an action in state court asserting state law claims.

The federal actions, five (5) of which remain pending, have been consolidated and coordinated in In re Glumetza Antitrust Litigation , Case No.

3:19-cv-05822-WHA.

The lawsuits allege that a 2012 settlement of a patent litigation regarding Glumetza ® delayed generic entry in exchange for an agreement not to launch an authorized generic of Glumetza ® or grant any other company a license to do so.

The complaints allege that the settlement agreement resulted in higher prices for

Glumetza ® and its generic equivalent both prior to and after generic entry.

Both the class and non-class plaintiffs seek damages under federal antitrust laws for claims based on direct purchases.

All Plaintiffs have filed a motion for partial summary judgment concerning market power, whereas all Defendants have filed a motion for summary judgment on all claims against them.

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

Glumetza State-Law Insurer Litigation

On February 8, 2021, the insurer plaintiff from the federal In re Glumetza Antitrust Litigation , Case No.

3:19-cv-05822-WHA (N.D.

Cal.) (the “ In re Glumetza Antitrust Litigation ”) (discussed in further detail below) filed an action asserting its indirect (state law) claims in the Superior Court of Alameda County, California against the Company and others (the “State Court Action”).

The State Court Action alleges that a 2012 settlement of a patent litigation regarding Glumetza ® delayed generic entry in exchange for an agreement not to launch an authorized generic of Glumetza ® or grant any other company a license to do so.

The State Court Action alleges that the settlement agreement resulted in higher prices for Glumetza ® and its generic equivalent both prior to and after generic entry.

On September 20, 2021, the parties stipulated that the insurer plaintiff’s direct opt-out claims from In re Glumetza Antitrust Litigation , discussed below, were deemed asserted in the State Court Action.

Defendants’ demurrer in the State Court Action was heard on September 22, 2021.

On November 11, 2021, the court denied the motion in part and granted it in part as to certain state law claims, with leave to amend.

The insurer plaintiff did not amend the complaint.

Defendants’ answers were filed on February 3, 2022.

The Company disputes the claims and intends to vigorously defend this matter.

Intellectual Property

Patent Litigation/Paragraph IV Matters

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

These matters are proceeding in the ordinary course.

In September 2019, the Company received a Notice of Paragraph IV Certification from Sandoz, Inc.

(“Sandoz”), in which Sandoz asserted that the following U.S.

patents, each of which is listed in the FDA’s Orange Book for Salix Pharmaceuticals, Inc.’s (“Salix Inc.”) Xifaxan ® tablets, 550 mg, are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Sandoz’s generic rifaximin tablets, 550 mg, for which an Abbreviated New Drug Application (“ANDA”) has been filed by Sandoz:

8,309,569 (the “‘569 patent”), U.S.

7,045,620 (the “‘620 patent”), U.S.

7,612,199 (the “‘199 patent”), U.S.

7,902,206 (the “‘206 patent”), U.S.

7,906,542 (the “‘542 patent”), U.S.

7,915,275 (the “‘275 patent”), U.S.

8,158,644 (the “‘644 patent”), U.S.

8,158,781 (the “‘781 patent”), U.S.

8,193,196 (the “‘196 patent”), U.S.

8,518,949 (the “‘949 patent”), U.S.

8,741,904 (the “‘904 patent”), U.S.

8,835,452 (the “‘452 patent”), U.S.

8,853,231 (the “‘231 patent”), and U.S.

9,271,968 (the “’968 Patent”) (collectively, the “Xifaxan ® Patents”).

holds the New Drug Application ("NDA") for Xifaxan ® and its affiliate, Salix Pharmaceuticals, Ltd.

(“Salix Ltd.”), is the owner of the ‘569 patent and Alfasigma S.p.A.

(“Alfasigma”) is the owner of the ‘620 patent, the ‘199 patent, the ‘206 patent, the ‘542 patent, the ‘275 patent, the ‘644 patent, the ‘781 patent, the ‘196 patent, the ‘949 patent, the ‘904 patent, the ‘452 patent, the ‘231 patent, and the ‘968 patent, each of which has been exclusively licensed to Salix Inc.

and its affiliate, Bausch Health Ireland Limited (“BIRL”) to market Xifaxan ® tablets, 550 mg.

On September 30, 2019, Salix Inc.

and its affiliates, Salix Ltd.

and BIRL, and Alfasigma (the “Plaintiffs”) filed suit against Sandoz in the U.S.

District Court for the District of New Jersey (Case No.

19-18566) pursuant to the Hatch-Waxman Act, alleging infringement by Sandoz of one or more claims of each of the Xifaxan ® Patents, thereby triggering a 30 -month stay of the approval of Sandoz’s ANDA for rifaximin tablets, 550 mg.

Xifaxan ® 550 mg 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.

On May 6, 2020, the Company announced that an agreement had been reached with Sandoz that resolved this litigation.

Under the terms of the agreement, the parties agreed to dismiss all litigation related to Xifaxan ® (rifaximin), Sandoz acknowledged the validity of the licensed patents for Xifaxan ® (rifaximin) 550 mg tablets and all intellectual property protecting Xifaxan ® (rifaximin) 550 mg tablets will remain intact and enforceable until expiry in October 2029.

The agreement also grants Sandoz a non-exclusive license to the intellectual property relating to Xifaxan ® (rifaximin) 550 mg tablets in the United States beginning January 1, 2028 (or earlier under certain circumstances).

Under the terms of the agreement, beginning January 1, 2028 (or earlier under certain circumstances), Sandoz will have the right to market a royalty-free generic version of Xifaxan ® (rifaximin) 550 mg tablets, should it receive approval from the FDA on its ANDA.

Sandoz will be able to commence such marketing earlier if another generic rifaximin product is granted approval and such other generic rifaximin product begins to be sold or distributed in the United States before January 1, 2028.

The Company will not make any financial payments or other transfers of value as part of this agreement with Sandoz.

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

On February 17, 2020, the Company and Alfasigma S.p.A.

("Alfasigma") received a Notice of Paragraph IV Certification from Norwich Pharmaceuticals Inc.

(“Norwich”), in which Norwich asserted that the following U.S.

patents, each of which is listed in the FDA’s Orange Book for the Company's Xifaxan ® tablets, 550 mg, are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Norwich’s generic rifaximin tablets, 550 mg, for which an ANDA has been filed by Norwich:

each of the Xifaxan ® Patents (as described above), as well as U.S.

8,642,573 (the “573 patent”), U.S.

8,829,017 (the “017 patent”), U.S.

8,946,252 (the “252 patent”), U.S.

8,969,398 (the “‘398 patent”), U.S.

9,421,195 (the “‘195 patent”), U.S.

9,629,828 (the “‘9828 patent”), U.S.

10,314,828 (the “’4828 patent”), U.S.

10,335,397 (the “‘397 patent”), U.S.

10,456,384 (the “‘384 patent”), U.S.

10,703,763 (the “‘763 patent”), U.S.

10,709,694 (the “‘694 patent”), and U.S.

10,765,667 (the “‘667 patent”).

holds the NDA for Xifaxan ® and is the

owner of the ‘569 patent, the ‘573 patent, the ‘017 patent, the ‘252 patent, the ‘398 patent, the ‘195 patent, the ‘9828 patent, the ‘4828 patent, the ‘397 patent, the ‘384 patent, the ‘694 patent, and the ‘667 patent.

Alfasigma is the owner of the ‘620 patent, the ‘199 patent, the ‘206 patent, the ‘542 patent, the ‘275 patent, the ‘644 patent, the ‘781 patent, the ‘196 patent, the ‘949 patent, the ‘904 patent, the ‘452 patent, the ‘231 patent, the ‘968 patent, and the ‘763 patent, each of which has been exclusively licensed to Salix Inc.

and/or its affiliate, Bausch Health Ireland Limited (“BIRL”) to market Xifaxan ® tablets, 550 mg.

(“Norwich”), in which Norwich asserted that the U.S.

patents listed in the FDA's Orange Book for the Company’s Xifaxan ® tablets, 550 mg, are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Norwich’s generic rifaximin tablets, 550 mg, for which an Abbreviated New Drug Application (“ANDA”) has been filed by Norwich.

The Company, through its subsidiaries Salix Pharmaceuticals, Inc.

and Bausch Health Ireland Limited, holds the New Drug Application for Xifaxan ® and owns or exclusively licenses (from Alfasigma) these patents.

On March 26, 2020, certain of the Company’s subsidiaries and Alfasigma filed suit against Norwich in the U.S.

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20-cv-00430) pursuant to the Hatch-Waxman Act, alleging infringement by Norwich of one or more claims of the Xifaxan ® Patents, thereby triggering a 30 -month stay of the approval of Norwich’s ANDA for rifaximin tablets, 550 mg.

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

In April 2019, the Company and Alfasigma commenced litigation against Sun Pharmaceutical Industries Ltd.

(“Sun”), alleging patent infringement by Sun’s filing of its ANDA for Xifaxan ® (rifaximin) 200 mg tablets.

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

patents listed in the FDA's Orange Book for the Company’s Xifaxan ® tablets, 200 mg, were either invalid, unenforceable and/or would not be infringed by the commercial manufacture, use or sale of Sun’s generic rifaximin tablets, 200 mg.

Subsequently, on August 10, 2020, the Company received an additional Notice of Paragraph IV Certification from Sun, in which Sun asserted that the U.S.

patents listed in the FDA's Orange Book for the Company’s Xifaxan ® tablets, 550 mg, were either invalid, unenforceable and/or would not be infringed by the commercial manufacture, use or sale of Sun’s generic rifaximin tablets, 550 mg, for which an ANDA had been filed by Sun.

On September 22, 2020, the Company announced that an agreement had been reached with Sun that resolved the outstanding intellectual property disputes with Sun regarding Xifaxan ® (rifaximin) 200 mg and 550 mg tablets.

Under the terms of the agreement, the parties agreed to dismiss all litigation related to Xifaxan ® (rifaximin) and all intellectual property protecting Xifaxan ® (rifaximin) 200 mg and 550 mg tablets will remain intact and enforceable until expiry in July and October 2029, respectively.

The agreement also grants Sun a non-exclusive license to the intellectual property relating to Xifaxan ® (rifaximin) 200 mg and 550 mg tablets in the United States beginning January 1, 2028 (or earlier under certain circumstances).

Under the terms of the agreement, beginning January 1, 2028 (or earlier under certain circumstances), Sun will have the right to market royalty-free generic versions of Xifaxan ® (rifaximin) 200 mg and 550 mg tablets, should it receive approval from the FDA on its ANDAs.

Sun will be able to commence such marketing earlier if another generic rifaximin product is granted approval and such other generic rifaximin product begins to be sold or distributed in the United States before January 1, 2028.

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

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

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

On July 23, 2020, the Company received a Notice of Paragraph IV Certification from Perrigo Israel Pharmaceuticals, Ltd.

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

patents, each of which is listed in the U.S.

Food and Drug Administration's (the "FDA") Orange Book for Duobrii ® (halobetasol propionate and tazarotine) lotion, are either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Perrigo’s generic lotion, for which an Abbreviated New Drug Application (“ANDA”) has been filed by Perrigo.

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

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

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

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

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

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

The Company remains confident in the strength of the Duobrii ® related patents and will vigorously defend its intellectual property.

On March 20, 2020, the Company received a Notice of Paragraph IV Certification from Perrigo, in which Perrigo asserted that certain U.S.

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

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

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

On March 20, 2020, the Company received a Notice of Paragraph IV Certification from Padagis, in which Padagis asserted that certain U.S.

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

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

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

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

In April 2021, the Company commenced litigation against MSN Laboratories Private Ltd.

(“MSN”) and Mylan Pharmaceuticals Inc., (“Mylan”) alleging patent infringement by MSN’s and Mylan’s filing of their ANDA for generic Trulance ® (plecanatide) 3mg tablets.

This suit had been filed following receipt of a Notice of Paragraph IV Certification from each of MSN and Mylan, in which they had each asserted that the U.S.

patents listed in the FDA's Orange Book for the Company’s Trulance ® tablets, 3 mg, were either invalid, unenforceable and/or would not be infringed by the commercial manufacture, use or sale of their respective generic plecanatide tablets, 3 mg.

The filing of these suits triggered a 30 -month stay of the approval of the MSN and Mylan ANDAs for plecanatide tablets.

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

In September 2021, the Company 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 intends to vigorously defend its intellectual property.

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.

Jublia Patent Litigation

In addition, patents covering the Company's branded pharmaceutical products may be challenged in proceedings other than court proceedings, including inter partes review ("IPR") at the U.S.

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For example, following Acrux DDS’s IPR petition, the U.S.

Patent and Trial Appeal Board ("PTAB"), in May 2017, instituted inter

partes review for an Orange Book-listed patent covering Jublia ® , U.S.

7,214,506 (the “‘506 patent”).

On June 6, 2018, the PTAB issued a written determination invalidating such patent;

and on March 13, 2020, the Court of Appeals for the Federal Circuit reversed this decision and remanded the matter back to the PTAB for further proceedings.

Patent and Trial Appeal Board ("PTAB"), in May 2017, instituted inter partes review for an Orange Book-listed patent covering Jublia ® (U.S.

7,214,506 (the "‘506 Patent")) and, on

June 6, 2018, issued a written determination invalidating such patent.

An appeal of this decision was filed on August 7, 2018.

On March 13, 2020, the Court of Appeals for the Federal Circuit reversed this decision and remanded the matter back to the PTAB for further proceedings.

As a result of a settlement, a joint motion to terminate the proceedings was filed on November 12, 2020 and, on January 8, 2021, the PTAB granted this motion.

The ‘506 Patent therefore remains valid and enforceable until its expected expiration in 2026.

Jublia ® continues to be covered by fourteen other Orange Book-listed patents owned by the Company and its licensor, which expire in the years 2028 through 2035.

The ‘506 Patent, therefore, remains valid and enforceable and expires in 2026.

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

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

All cases in the U.S.

regarding Jublia ® have been settled.

In Canada, two lawsuits remain pending against Apotex Inc.

Product Liability

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Since 2016, the Company has been named in a number of product liability lawsuits involving the Shower to Shower® body powder product acquired in September 2012 from Johnson & Johnson;

due to dismissals, only twenty-eight ( 28 ) of such product liability suits currently remain pending, and these twenty-eight ( 28 ) matters are subject to the Johnson & Johnson indemnification referenced below.

Potential liability (including its attorneys’ fees and costs) arising out of the covered Shower to Shower ® lawsuits filed against the Company is subject to certain indemnification obligations of Johnson & Johnson owed to the Company, and legal fees and costs will be paid by Johnson & Johnson.

The Company and Johnson & Johnson reached an agreement on April 17, 2019, regarding the scope of the indemnification relating to the majority of the Shower to Shower ® matters (the “Covered Matters”) and the Company has dismissed the demand for arbitration that the Company filed against Johnson & Johnson to assert its rights to indemnification.

Johnson & Johnson will fully indemnify the Company in the Covered Matters, which include:

(i) personal injury and products liability actions arising from alleged exposure to Shower to Shower ® prior to March 2020 and (ii) consumer fraud, consumer protection, false advertising or other regulatory actions arising out of the manufacture, use, or sale of Shower to Shower ® up to and including September 9, 2012.

The Company does not believe that the Covered Matters will have a material impact on the Company’s financial results going forward.

The various lawsuits include a number of cases, either originally filed in or transferred to the In re Johnson & Johnson Talcum Powder Litigation , Multidistrict Litigation 2738, pending in the United States District Court for the District of New Jersey (“MDL”).

The Company and Bausch Health US were first named in a lawsuit filed directly into the MDL alleging that the use of the Shower to Shower ® product caused the plaintiff to develop ovarian cancer.

The plaintiff agreed to a dismissal of all claims against the Company and Bausch Health US in that matter without prejudice.

The Company has subsequently been named in one additional lawsuit, originally filed in the District of Puerto Rico and subsequently transferred into the MDL, but has not been served in that case.

The Company has also been named in eighteen additional lawsuits filed directly into the MDL that have also not yet been served.

These lawsuits also include a number of matters filed in the Superior Court of Delaware and the Superior Court of New Jersey alleging that the use of Shower to Shower ® caused the plaintiffs to develop ovarian cancer.

Nearly all of these actions have been voluntarily dismissed.

Presently, two cases remain pending in New Jersey and one in Delaware.

One of the New Jersey cases has not yet been served.

The allegations in these cases generally include failure to warn, design defect, negligence, gross negligence, breach of express and implied warranties, civil conspiracy concert in action, negligent misrepresentation, wrongful death, and punitive damages.

In addition, these lawsuits also include a number of cases filed in certain state courts in the United States (including the Superior Courts of California, Delaware and New Jersey);

the District Court of Louisiana;

the Supreme Court of New York (Niagara County);

the District Court of Oklahoma City, Oklahoma;

the South Carolina Court of Common Pleas (Richland County);

the Ohio Court of Common Pleas (Cuyahoga County);

and the District Court of Nueces County, Texas (transferred to the asbestos multidistrict litigation docket in the District Court of Harris County, Texas for pre-trial purposes) alleging use of Shower to Shower ® and other products resulted in the plaintiffs developing mesothelioma.

The Company has been successful in obtaining voluntary dismissals in most of these cases or the plaintiffs have not opposed summary judgment.

Presently, four cases remain pending in the Superior Court of New Jersey, and one case in the Court of Common Pleas of Cuyahoga County, Ohio, in which a Notice of Voluntary Dismissal Without Prejudice has been agreed to between the parties.

The allegations in these cases generally include design defect, manufacturing defect, failure to warn, negligence, and punitive damages, and in some cases breach of express and implied warranties, misrepresentation, and loss of consortium.

The damages sought by the various plaintiffs include compensatory damages, including medical expenses, lost wages or earning capacity, and loss of consortium.

In addition, plaintiffs seek compensation for pain and suffering, mental anguish anxiety and discomfort, physical impairment and loss of enjoyment of life.

due to dismissals, twenty-nine ( 29 ) of such product liability suits currently remain pending.

Potential liability (including its attorneys’ fees and costs) arising out of these remaining suits is subject to full indemnification obligations of Johnson & Johnson owed to the Company and its affiliates, and legal fees and costs will be paid by Johnson & Johnson.

Twenty-eight ( 28 ) of these lawsuits filed by individual plaintiffs allege that the use of Shower to Shower ® caused the plaintiffs to develop ovarian cancer, mesothelioma or breast cancer.

The allegations in these cases include failure to warn, design defect, manufacturing defect, negligence, gross negligence, breach of express and implied warranties, civil conspiracy concert in action, negligent misrepresentation, wrongful death, loss of consortium and/or punitive damages.

The damages sought include compensatory damages, including medical expenses, lost wages or earning capacity, loss of consortium and/or compensation for pain and suffering, mental anguish anxiety and discomfort, physical impairment and loss of enjoyment of life.

Plaintiffs also seek pre- and post-judgment interest, exemplary and punitive damages, and attorneys’ fees.

The Company also acquired the rights to the Shower to Shower ® product in Canada from Johnson & Johnson in September 2012.

In the British Columbia matter, the plaintiff sought to certify a proposed class action on behalf of persons in British Columbia and Canada who have purchased or used Johnson & Johnson’s Baby Powder or Shower to Shower ® , including their estates, executors and personal representatives, and is alleging that the use of this product increases certain health risks.

On November 7, 2020, the British Columbia court issued a judgment declining to certify a class as to the Company or Shower to Shower ® , and at this time no appeal of that judgment has been filed.

In the Quebec matter, the plaintiff sought to certify a proposed class action on behalf of persons in Quebec who have used Johnson & Johnson’s Baby Powder or Shower to Shower ® , as well as their family members, assigns and heirs, and is alleging negligence in failing to properly test, failing to warn of health risks, and failing to remove the products from the market in a timely manner.

A certification (also known as authorization) hearing was held in the Quebec matter and the Court certified (or as stated under Quebec law, authorized) the bringing of a class action by a representative plaintiff on behalf of people in Quebec who have used Johnson & Johnson's Baby Powder and/or Shower to Shower ® in their perineal area and have been diagnosed with ovarian cancer and/or family members, assigns and heirs.

Additionally, two proposed class actions have been filed in Canada against the Company and various Johnson & Johnson entities ( one in the Supreme Court of British Columbia and one in the Superior Court of Quebec), on behalf of persons who have purchased or used Johnson & Johnson’s Baby Powder or Shower to Shower ® .

The class actions allege the use of the product increases certain health risks (British Columbia) or negligence in failing to properly test, failing to warn of health risks, and failing to remove the products from the market in a timely manner (Quebec).

The plaintiffs in these actions are seeking awards of general, special, compensatory and punitive damages.

In accordance with the indemnification agreement, Johnson & Johnson will continue to vigorously defend the Company in each of the remaining actions that are not voluntarily dismissed or subject to a grant of summary judgment.

On November 17, 2020, the British Columbia court issued a judgment declining to certify a class as to the Company or Shower to Shower ® , and at this time no appeal of that judgment has been filed.

On December 16, 2021, the plaintiff in the British Columbia class action filed a Second Amended Notice of Civil Claim and Application for Certification, removing the Company as a defendant;

as a result, the British Columbia class action is concluded as to the Company.

Johnson & Johnson, through one or more subsidiaries has purported to have completed a Texas divisional merger with respect to any talc liabilities at Johnson & Johnson Consumer, Inc.

LTL Management, LLC (“LTL”), the resulting entity of the divisional merger, assumed JJCI’s talc liabilities and thereafter filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Western District of North Carolina.

Pursuant to a court order, the case was transferred to the United States District Court for the District of New Jersey.

Notwithstanding the divisional merger and LTL’s bankruptcy case, the Company and its affiliates continue to have indemnification claims and rights against Johnson & Johnson and LTL pursuant to the terms of the indemnification agreement entered into between JJCI and its affiliates and the Company and its affiliates, which indemnification agreement remains in effect.

As a result, it is the Company's current expectation that it will not incur any material impairments with respect to its indemnification claims as a result of the divisional merger or the bankruptcy.

Substantially all cases subject to the indemnification agreement related to Johnson & Johnson’s talc liability are stayed through February 28, 2022, pursuant to a preliminary injunction issued by the bankruptcy court.

Motions to dismiss the LTL bankruptcy, as well as extend the stay beyond February 28, 2022, were argued in the bankruptcy court in February 2022.

A decision of the court is pending.

To the extent that any cases subject to the indemnification agreement proceed during the pendency of the bankruptcy case, it is the Company's expectation that Johnson & Johnson, in accordance with the indemnification agreement, will continue to vigorously defend the Company in each of the remaining actions.

General Civil Actions

California Proposition 65 Related Matters

On April 15, 2019, a plaintiff filed a pre-suit notice letter with the California Attorney General notifying the Attorney General’s office of its intent to file suit after 60 days against the Company and certain of its subsidiaries, alleging they committed violations of the California Safe Drinking Water and Toxic Enforcement Act of 1986 (“Proposition 65”) by manufacturing and distributing Shower to Shower ® that they allege contained silica, arsenic, lead and chromium (hexavalent compounds), which they allege are known to cause cancer and/or reproductive toxicity.

That notice letter was served on the Company on April 18, 2019.

On January 29, 2020, Plaintiff Jan Graham filed a lawsuit ( Graham v.

Bausch Health Companies, Inc., et al.

20STCV03578) in Los Angeles County Superior Court against the Company, Bausch Health US and several other manufacturers, distributors and retailers of talcum powder products, alleging violations of Proposition 65 by manufacturing and distributing talcum powder products containing chemicals listed under the statute, without a compliant warning on the label.

On January 29, 2021, certain defendants including the Company and Bausch Health US filed a Motion for Summary Judgment or in the Alternative Motion for Summary Adjudication, which remains pending.

California Proposition 65 Related Matter

On June 19, 2019, plaintiffs filed a proposed class action in California state court against Bausch Health US and Johnson & Johnson ( Gutierrez, et al.

Johnson & Johnson, et al.

37-2019-00025810-CU-NP-CTL), asserting claims for purported violations of the California Consumer Legal Remedies Act, False Advertising Law and Unfair Competition Law in connection with their sale of talcum powder products that the plaintiffs allege violated Proposition 65 and/or the California Safe Cosmetics Act.

This lawsuit was served on Bausch Health US in June 2019 and was subsequently removed to the United States District Court for the Southern District of California.

37-2019-00025810-CU-NP-CTL), asserting claims for

purported violations of the California Consumer Legal Remedies Act, False Advertising Law and Unfair Competition Law in connection with their sale of talcum powder products that the plaintiffs allege violated Proposition 65 and/or the California Safe Cosmetics Act.

This lawsuit was served on Bausch Health US in June 2019 and was subsequently removed to the United States District Court for the Southern District of California, where it is currently pending.

Plaintiffs seek damages, disgorgement of profits, injunctive relief, and reimbursement/restitution.

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In August 2020, Plaintiffs filed the Fifth Amended Complaint.

On January 22, 2021, the Court granted the motion to dismiss on all claims and dismissed the case with prejudice.

On January 22, 2021, the Court granted the motion to dismiss with prejudice.

On February 19, 2021, Plaintiffs filed a Notice of Appeal with the Ninth Circuit Court of Appeals.

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

On July 1, 2021, Appellants (Plaintiffs) filed their opening brief;

Appellees' response briefs were filed on October 8, 2021.

This matter was stayed by the Ninth Circuit on December 7, 2021, due to the preliminary injunction entered by the bankruptcy court in the LTL bankruptcy proceeding.

This stay included Appellants’ reply brief deadline, which was previously due to be filed on or before December 2, 2021.

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

New Mexico Attorney General Consumer Protection Action

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In April 2020, Bausch Health US filed a motion to dismiss, which in September 2020, the Court granted in part as to the New Mexico Medicaid Fraud Act and New Mexico Fraud Against Taxpayers Act claims and denied as to all other claims.

State of New Mexico brings claims against all defendants under the New Mexico Unfair Practices Act and other common law and equitable causes of action, alleging defendants engaged in wrongful marketing, sale and promotion of talcum powder products.

The State of New Mexico brings claims against all defendants under the New Mexico Unfair Practices Act and other common law and equitable causes of action, alleging defendants engaged in wrongful marketing, sale and promotion of talcum powder products.

The lawsuit seeks to recover the cost of the talcum powder products as well as the cost of treating asbestos-related cancers allegedly caused by those products.

Bausch Health US filed its Answer to the Complaint on November 16, 2020.

On December 30, 2020 Johnson & Johnson filed a Motion for Partial Judgment on the Pleadings and on January 4, 2021, Bausch Health US filed a joinder to that motion, which remains pending.

Bausch Health US filed its answer on November 16, 2020.

On December 30, 2020 Johnson & Johnson filed a Motion for Partial Judgment on the Pleadings and on January 4, 2021, Bausch Health US filed a joinder to that motion, which was denied on March 8, 2021.

Trial is scheduled to begin on January 18, 2023.

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

Doctors Allergy Formula Lawsuit

In April 2018, Doctors Allergy Formula, LLC (“Doctors Allergy”), filed a lawsuit against Bausch Health Americas in the Supreme Court of the State of New York, County of New York, Index No.

Doctors Allergy asserts breach of contract and related claims under a 2015 Asset Purchase Agreement, which purports to include milestone payments that Doctors Allergy alleges should have been paid by Bausch Health Americas.

In April 2018, Doctors Allergy Formula, LLC (“Doctors Allergy”), filed a lawsuit against Bausch Health Americas in the Supreme Court of the State of New York, County of New York, asserting breach of contract and related claims under a 2015 Asset Purchase Agreement, which purports to include milestone payments that Doctors Allergy alleges should have been paid by Bausch Health Americas.

Doctors Allergy claims its damages are not less than $ 23 million.

On June 14, 2018, Bausch Health Americas filed a motion to dismiss the complaint in part and a motion to strike.

On July 16, 2019 the court granted the Company's motion in part and dismissed Doctor's Allergy's fraud and punitive damages claims.

On August 28, 2019, the Company filed an Amended Answer and asserted Counterclaims against Doctors Allergy alleging breach of the covenant of good faith and fair dealing and tortious interference with contract.

Bausch Health Americas disputes the claims against it and intends to vigorously defend against those claims and enforce its rights as asserted in its Counterclaims.

Bausch Health Americas has asserted counterclaims against Doctors Allergy.

Bausch Health Americas filed a motion seeking an order granting Bausch Health Americas summary judgment on its counterclaims against Plaintiff and dismissing Plaintiff’s claims against it.

The motion was fully briefed as of May 2021.

The Court held a hearing on the motion on January 25, 2022.

The motion remains pending.

Bausch Health Americas disputes the claims against it and will continue to defend itself vigorously.

Litigation with Former Salix CEO

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2019-0059, asserting claims for breach of contract and declaratory relief.

On November 19, 2021, Logan amended her complaint to add a claim for breach of the implied covenant of good faith and fair dealing.

The lawsuit arises out of the contractual termination of approximately $ 30 million in unvested equity awards following the determination by the Salix Ltd.

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On June 19, 2019, the Court entered an order staying the claim for declaratory relief pending the final resolution of the breach of contract claim.

Trial is scheduled to commence on September 6, 2022.

The Company disputes the claims and intends to vigorously defend the matter.

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With respect to inactive matters, to the extent material activity takes place in subsequent quarters with respect thereto, the Company will provide updates as required or as deemed appropriate.

SEC Investigation

Beginning in November 2015, the Company received from the staff of the Los Angeles Regional Office of the SEC ("the Staff") subpoenas for documents, as well as various document, testimony and interview requests, related to its investigation of the Company, including requests concerning the Company's former relationship with Philidor Rx Services, LLC ("Philidor"), its accounting practices and policies, its public disclosures and other matters.

On March 27, 2020, the Staff issued a Wells Notice informing the Company that they had reached a preliminary determination to recommend that the SEC bring charges against the Company for violating the federal securities laws as a result of SEC filings and other statements made by Valeant and its former executives in 2014-2015 concerning Philidor, as well as other accounting and disclosure matters, including the Company’s disclosure of certain price appreciation credits in 2015 - 2016.

The Company has entered into a settlement with the SEC that has resolved all allegations by the SEC against the Company.

Under the terms of the settlement, the Company neither admitted nor denied the SEC’s allegations and agreed to pay a $ 45 million civil monetary penalty.

AMF Investigation

On April 12, 2016, the Company received a letter from the Autorité des marchés financiers (the “AMF”) requesting documents concerning the work of the Company’s ad hoc committee of independent directors, the Company’s former relationship with Philidor, the Company's accounting practices and policies and other matters.

In July 2018, the Company

was advised by the AMF that it had issued a formal investigation order against it.

On September 30, 2020, the AMF confirmed that it had closed its investigation.

California Proposition 65 Related Matters

On February 11, 2019, plaintiffs filed a pre-suit notice letter with the California Attorney General notifying the Attorney General’s office of their intent to file suit after 60 days against the Company and certain of its subsidiaries, alleging they committed violations of Proposition 65 by manufacturing and distributing Shower to Shower ® that they allege contained talc contaminated with asbestos, a listed carcinogen.

That notice letter was served on the Company on February 22, 2019.

By statute, a private lawsuit may not be filed until at least 60 days have passed following service of this pre-suit notice letter.

In April 2019, rather than filing a lawsuit against Bausch Health US, the plaintiffs moved for leave to amend their complaint in a pending Proposition 65 lawsuit ( Luna, et al.

Johnson & Johnson, et al.

, case 2:18-cv-04830-GW-KS) against Johnson & Johnson in federal court in California to add Bausch Health US as a defendant.

Plaintiffs subsequently filed a motion to dismiss the lawsuit without prejudice.

The court dismissed the case without prejudice on December 18, 2019.

Contact Lens Antitrust Class Actions

Beginning in March 2015, a number of civil antitrust class action suits were filed by purchasers of contact lenses against B&L Inc., three other contact lens manufacturers, and a contact lens distributor, alleging that the defendants engaged in an anticompetitive scheme to eliminate price competition on certain contact lens lines through the use of unilateral pricing policies, and alleging violations of Section 1 of the Sherman Act, 15 U.S.C.

§ 1, and of various state antitrust and consumer protection laws.

These cases have been consolidated in the Middle District of Florida by the Judicial Panel for Multidistrict Litigation, under the caption In re Disposable Contact Lens Antitrust Litigation, Case No.

3:15-md-02626-HES-JRK.

On August 19, 2019, B&L Inc.

entered into a settlement, subject to court approval, by which it agreed to pay $ 10 million to fully and finally resolve plaintiffs’ class claims against B&L Inc.

On October 8, 2019, the settlement agreement was preliminarily approved by the court.

A final fairness hearing regarding the settlement was held on February 25, 2020.

On March 4, 2020, the Court granted final approval of the settlement agreement in all respects and dismissed the case with prejudice as to B&L Inc., except as to any claim by persons who validly and timely requested exclusion from the settlement classes.

Mississippi Attorney General Consumer Protection Action

The Company and Bausch Health US were named in an action brought by James Hood, Attorney General of Mississippi, in the Chancery Court of the First Judicial District of Hinds County, Mississippi ( Hood ex rel.

State of Mississippi , Civil Action No.

G2014-1207013, filed on August 22, 2014), alleging consumer protection claims against Johnson & Johnson and Johnson & Johnson Consumer Companies, Inc., the Company and Bausch Health US related to the Shower to Shower ® body powder product and its alleged causal link to ovarian cancer.

As indicated above, the Company acquired the Shower to Shower ® body powder product in September 2012 from Johnson & Johnson.

The State sought compensatory damages, punitive damages, injunctive relief requiring warnings for talc-containing products, removal from the market of products that fail to warn, and to prevent the continued violation of the Mississippi Consumer Protection Act.

The State also sought disgorgement of profits from the sale of the product and civil penalties.

The State did not make specific allegations as to the Company or Bausch Health US.

The Company and Bausch Health US agreed to resolve this litigation pursuant to a settlement agreement with the State of Mississippi for a no n-material amount.

On January 8, 2020, an order of dismissal with prejudice was entered by the Court.

Investigation by the State of Texas

On May 27, 2014, the State of Texas served Bausch & Lomb Incorporated (“B&L Inc.”) with a Civil Investigative Demand (“CID”) concerning various price reporting matters relating to the State's Medicaid program and the amounts the State paid in reimbursement for B&L products for the period from 1995 to the date of the CID.

and the State agreed to settle the matter for $ 10 million.

The Company made the payment on April 1, 2020.

On July 1, 2020, the State moved to dismiss the case by filing a notice that it was taking a nonsuit, with prejudice to refiling, effective immediately.

Glumetza Antitrust Litigation

Between August 2019 and July 2020, eight ( 8 ) putative antitrust class actions and four ( 4 ) non-class complaints naming Bausch Health Companies Inc., Salix Pharmaceuticals, Ltd., Salix Pharmaceuticals, Inc., and Santarus, Inc.

(for purposes of this subsection, collectively, the “Company”), among other defendants, were filed or transferred to the Northern District of California.

Three ( 3 ) of the class actions were filed by plaintiffs seeking to represent a class of direct purchasers.

The purported classes of direct purchasers filed a consolidated first amended complaint and a motion for class certification in April 2020.

The court certified a direct purchaser class in August 2020.

The putative class action complaints filed by end payer purchasers have all been voluntarily dismissed.

Three ( 3 ) of the non-class complaints were filed by direct purchasers.

The fourth non-class complaint, asserting claims based on both direct and indirect purchases, was filed by an insurer plaintiff in July 2020 and subsequently amended in September 2020.

In December 2020, the court denied the Company’s motion to dismiss as to the insurer plaintiff’s direct claims but dismissed the insurer plaintiff’s indirect claims.

On February 2, 2021, the insurer plaintiff’s motion for leave to amend its complaint was denied.

These actions were consolidated and coordinated in In re Glumetza Antitrust Litigation , Case No.

3:19-cv-05822-WHA (N.D.

Cal.) (the “ In re Glumetza Antitrust Litigation ”).

The lawsuits alleged that a 2012 settlement of a patent litigation regarding Glumetza ® delayed generic entry in exchange for an agreement not to launch an authorized generic of Glumetza ® or grant any other company a license to do so.

The complaints alleged that the settlement agreement resulted in higher prices for Glumetza ® and its generic equivalent both prior to and after generic entry.

Both the class and non-class plaintiffs sought damages under federal antitrust laws for claims based on direct purchases.

On July 26, 2021, the Company reached an agreement in principle and, thereafter, on September 14, 2021, executed a final settlement agreement to resolve the class plaintiffs’ claims for $ 300 million, subject to court approval.

On August 1, 2021, the Company also reached an agreement in principle to resolve the non-class direct purchaser plaintiffs’ claims, described above, for additional consideration.

A final settlement agreement with the non-class direct purchaser plaintiffs was executed on August 6, 2021.

As part of the settlements, the Company admitted no liability as to the claims against it and denied all allegations of wrongdoing.

On September 20, 2021, the insurer plaintiff voluntarily dismissed its claims in the consolidated federal action.

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

On September 22, 2021, the court granted preliminary approval of the class settlement agreement and vacated the October 2021 trial date and all other pre-trial deadlines in the consolidated actions.

On February 3, 2022, the court granted final approval of the class settlement and ordered dismissal of the class plaintiffs' claims.

Subject to appeal of the final approval of the class settlement, the settlements will resolve and discharge all asserted class and direct purchaser non-class claims against the Company in the In re Glumetza Antitrust Litigation .

California Proposition 65 Related Matter

On January 29, 2020, Plaintiff Jan Graham filed a lawsuit ( Graham v.

Bausch Health Companies, Inc., et al.

20STCV03578) in Los Angeles County Superior Court against the Company, Bausch Health US and several other manufacturers, distributors and retailers of talcum powder products, alleging violations of California Proposition 65 by manufacturing and distributing talcum powder products containing chemicals listed under the statue, without a compliant warning on the label.

On January 29, 2021, certain defendants including the Company and Bausch Health US filed a Motion for Summary Judgment or in the Alternative Motion for Summary Adjudication, which was granted with prejudice on May 26, 2021;

Plaintiff waived the right to appeal.

Derivative Lawsuits

On September 10, 2019 and September 13, 2019, two alleged stockholders filed derivative lawsuits purportedly on behalf of the Company against former Company board members and executives.

On March 7, 2020, a consolidated amended derivative complaint was filed, captioned In re Bausch Health Companies Inc.

F/K/A/ Valeant Pharmaceuticals International, Inc.

Stockholder Derivative Litigation (Case No.

19-cv-17833).

Plaintiffs asserted claims for breach of fiduciary duty, waste of corporate assets, and unjust enrichment related to, among other things, allegedly false and misleading statements and/or failures to disclose information about the Company’s business and prospects, including relating to drug pricing, the Company’s use of specialty pharmacies, and the Company’s relationship with Philidor.

The consolidated complaint also asserted a claim for contribution and indemnification by the Defendants for any liability the Company ultimately faces as a result of the conduct alleged in the complaint.

The claims alleged in these cases were based on the same purported conduct that is at issue in In re Valeant Pharmaceuticals International, Inc.

Securities Litigation, all of which occurred prior to 2017.

On April 21, 2020, the Defendants filed a motion to dismiss the consolidated amended complaint.

Briefing on this motion concluded on August 3, 2020.

On November 24, 2020, the Special Master appointed by the Court issued a report recommending that the motion to dismiss be granted in full.

On September 20, 2021, the District Court adopted the report and recommendation of the Special Master and dismissed the action.

COMMITMENTS AND CONTINGENCIES

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

As of December 31, 2020, the Company believes it is reasonably possible that it may potentially make milestone and license fee payments, including sales-based milestone payments, of

approximately $ 360 million over time, in the aggregate, to third parties for products currently under development or being marketed, primarily consisting of the following:

As of December 31, 2021, the Company believes it is reasonably possible that it may potentially make milestone and license fee payments, including sales-based milestone payments, of approximately $ 340 million over time, in the aggregate, to third parties for products currently under development or being marketed, primarily consisting of the following:

• Under the terms of a June 2013 distribution and supply agreement with Mylan Pharmaceuticals Inc.

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The Company believes it is reasonably possible that these payments over time may approximate $ 70 million, in the aggregate.

• Under the terms of an April 2019 agreement with Mitsubishi Tanabe Pharma Corporation, the Company has acquired an exclusive license to develop and commercialize MT-1303 (amiselimod), a late-stage oral compound that targets the sphingosine 1-phosphate (S1P) receptor that plays a role in autoimmune diseases, such as Inflammatory Bowel Disease and ulcerative colitis.

• Under the terms of an April 2019 agreement with Mitsubishi Tanabe Pharma Corporation, the Company has acquired an exclusive license 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.

The Company may be required to make development and sales-based milestone payments over time of up to $ 60 million, in the aggregate, as well as royalties on future sales.

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The Company believes it is reasonably possible that these payments over time may approximate $ 36 million, in the aggregate.

• Under the terms of an October 2020 agreement with Eyenovia, Inc., the Company has acquired an exclusive license in the United States and Canada for the development and commercialization of an investigational microdose formulation of atropine ophthalmic solution, which is being investigated for the reduction of pediatric myopia progression, also known as nearsightedness, in children ages 3-12.

• Under the terms of an October 2020 agreement with Eyenovia, Inc., the Company has acquired an exclusive license in the U.S.

and Canada for the development and commercialization of an investigational microdose formulation of atropine ophthalmic solution, which is being investigated for the reduction of pediatric myopia progression, also known as nearsightedness, in children ages 3-12.

Under the terms of the agreement, the Company may be required to make development and sales-based milestone payments.

The Company believes it is reasonably possible that these payments over time may approximate $ 35 million, in the aggregate.

• Under the terms of a May 2020 agreement with STADA Arzneimittel AG and its development partner, Xbrane Biopharma AB, to commercialize in the United States and Canada a biosimilar candidate to Lucentis (ranibizumab), the Company may be required to make development and sales-based milestone payments.

In addition, under the terms of a September 2020 agreement with Allegro, the Company may be required to make a payment of $ 40 million should Allegro raise additional funding.

This amount is excluded from the milestone and license fee payments disclosed above.

See Note 3, "ACQUISITIONS, LICENSING AGREEMENTS AND ASSETS HELD FOR SALE" for additional details regarding this agreement.

On February 27, 2018, the Company announced that it 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.

• Under the terms of a May 2020 agreement with STADA Arzneimittel AG and its development partner, Xbrane Biopharma AB, to commercialize in the U.S.

and Canada a biosimilar candidate to Lucentis (ranibizumab), the Company may be required to make development and sales-based milestone payments.

Due to the nature of these arrangements, the future potential payments related to the attainment of the specified milestones over a period of several years are inherently uncertain.

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Reportable Segments

The Company’s CEO, who is the Company’s Chief Operating Decision Maker, manages the business through operating and reportable segments consistent with how the Company’s CEO:

The Company’s Chief Executive Officer ("CEO"), who is the Company’s Chief Operating Decision Maker, manages the business through operating and reportable segments consistent with how the Company's CEO:

(i) assesses operating performance on a regular basis, (ii) makes resource allocation decisions and (iii) designates responsibilities of his direct reports.

The Company operates in the following reportable segments:

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

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

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

• 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.

• 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.

(i) pharmaceutical products in the areas of neurology and certain other therapeutic classes, (ii) generic products and (iii) dentistry products.

Effective in the first quarter of 2019, one product historically included in the reported results of the Ortho Dermatologics business unit in the Ortho Dermatologics segment is now included in the reported results of the Generics business unit in the Diversified Products segment and another product historically included in the reported results of the Ortho Dermatologics business unit in the Ortho Dermatologics segment is now included in the reported results of the Dentistry business unit in the Diversified Products segment as management believes the products better align with the new respective business units.

These changes in product alignment are not material.

Prior period presentations of business unit and segment revenues and profits have been conformed to current segment and business unit reporting structures.

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.

Corporate includes the finance, treasury, certain research and development programs, tax and legal operations of the Company’s businesses and incurs certain expenses, gains and losses related to the overall management of the Company, which are not allocated to the other business segments.

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Furthermore, a portion of share-based compensation is considered a corporate cost, since the amount of such expense depends on company-wide performance rather than the operating performance of any single segment.

In connection with the planned separation of its eye-health business into an independent publicly traded entity from the remainder of Bausch Health Companies Inc., the Company has begun addressing the internal organizational design and structure of the new entity, which it anticipates having substantially complete by late 2021.

As of the date of the issuance of these financial statements, these matters are in the planning phase.

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.

Accordingly, the Company expects to begin reporting under the following reporting segments on a retrospective basis beginning with its first quarter of 2021:

Bausch + Lomb, International Rx, Salix, Ortho Dermatologics and Diversified Products.

In connection with the planned separation of its Solta business into an independent publicly traded entity from the remainder of Bausch Health Companies Inc., on February 23, 2022, the Company announced its plan to change its segment structure in a manner which is consistent with the organizational structure of the two separate entities as proposed by the Solta IPO during the first quarter of 2022.

The new segment structure will not impact the Company’s reporting units but will realign the two reporting units of the Ortho Dermatologics segment whereby its medical dermatology reporting unit (Ortho Dermatologics) will now be managed by the CODM as part of the Diversified Products segment and the Solta reporting unit will be managed by the CODM as its own operating and reportable segment.

Accordingly, the Company expects to begin reporting under the following reporting segments on a retrospective basis beginning with its first quarter of 2022 as follows:

Bausch + Lomb, Salix, International Rx, Solta and Diversified Products.

Segment Revenues and Profit

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(in millions) 2021 2020 2019

Bausch + Lomb/International $ 4,408 $ 4,739 $ 4,664

Bausch + Lomb $ 3,765 $ 3,415 $ 3,778

Salix 2,074 1,904 2,022

International Rx 1,166 1,181 1,154

Ortho Dermatologics 564 548 560

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Segment profit:

Bausch + Lomb/International $ 1,159 $ 1,332 $ 1,330

Bausch + Lomb $ 958 $ 909 $ 1,117

Salix 1,493 1,338 1,349

International Rx 403 386 352

Ortho Dermatologics 265 228 216

Diversified Products 624 717 801

Total segment profit 3,578 3,835 3,748

Total 3,743 3,578 3,835

Corporate ( 792 ) ( 619 ) ( 609 )

2 unchanged sentences

Asset impairments, including loss on assets held for sale ( 234 ) ( 114 ) ( 75 )

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

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

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

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

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

Operating income (loss) 450 676 ( 203 )

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Loss before benefit from income taxes $ ( 1,024 ) $ ( 934 ) $ ( 1,837 )

Certain reclassifications have been made to segment revenue and profit in order for the prior years to conform to current year presentation.

These reclassifications are not material.

Capital Expenditures

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Capital expenditures:

Bausch + Lomb/International $ 282 $ 225 $ 139

Bausch + Lomb $ 201 $ 253 $ 186

International Rx 22 29 39

Ortho Dermatologics 1 2 1

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Revenues by segment and product category were as follows:

(in millions) Bausch + Lomb/ International Salix Ortho Dermatologics Diversified Products Total

Bausch + Lomb Salix International Rx Ortho Dermatologics Diversified Products Total

(in millions) For the year ended December 31, 2021

Pharmaceuticals $ 514 $ 2,066 $ 259 $ 241 $ 683 $ 3,763

Devices 1,596 — — 307 — 1,903

OTC 1,388 — 136 — 8 1,532

Branded and Other Generics 240 — 737 — 167 1,144

Other revenues 27 8 34 16 7 92

$ 3,765 $ 2,074 $ 1,166 $ 564 $ 865 $ 8,434

Bausch + Lomb Salix International Rx Ortho Dermatologics Diversified Products Total

For the year ended December 31, 2020

Pharmaceuticals $ 506 $ 1,899 $ 255 $ 275 $ 745 $ 3,680

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$ 3,415 $ 1,904 $ 1,181 $ 548 $ 979 $ 8,027

Bausch + Lomb Salix International Rx Ortho Dermatologics Diversified Products Total

For the year ended December 31, 2019

Pharmaceuticals $ 623 $ 2,022 $ 268 $ 353 $ 813 $ 4,079

Devices 1,524 — — 193 — 1,717

OTC 1,322 — 119 — 6 1,447

Branded and Other Generics 260 — 730 — 256 1,246

Other revenues 49 — 37 14 12 112

$ 3,778 $ 2,022 $ 1,154 $ 560 $ 1,087 $ 8,601

Geographic Information

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Canada 343 331 339

Egypt 243 218 178

Poland 280 238 231

Japan 226 241 226

Mexico 256 225 228

Japan 230 226 241

France 208 179 201

Germany 144 150 170

Russia 160 137 180

Egypt 156 243 218

Germany 154 144 150

United Kingdom 116 86 115

Spain 88 78 86

Italy 80 71 85

Other 986 937 995

$ 8,434 $ 8,027 $ 8,601

Certain reclassifications have been made and are reflected in the table above.

Long-lived assets consisting of property, plant and equipment, net of accumulated depreciation, are attributed to geographic regions based on their physical location as of December 31, 2021 and 2020 were as follows:

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2021 2020 2019

McKesson Corporation 17 % 17 % 18 %

AmerisourceBergen Corporation 18 % 17 % 16 %

McKesson Corporation 16 % 17 % 17 %

Cardinal Health, Inc.

12 % 13 % 14 %

SUPPLEMENTARY DATA (UNAUDITED)

Selected unaudited quarterly consolidated financial data are shown below:

(in millions, except per share amounts) First

Quarter Second

Quarter Third

Quarter Fourth

Revenue $ 2,012 $ 1,664 $ 2,138 $ 2,213

Expenses 1,764 1,691 1,678 2,218

Operating income (loss) $ 248 $ ( 27 ) $ 460 $ ( 5 )

Net (loss) income attributable to Bausch Health Companies Inc.

$ ( 152 ) $ ( 326 ) $ 71 $ ( 153 )

Basic and Diluted (loss) earnings per share attributable to Bausch Health Companies Inc.

$ ( 0.43 ) $ ( 0.92 ) $ 0.20 $ ( 0.43 )

Net cash provided by operating activities $ 261 $ 200 $ 256 $ 394

(in millions, except per share amounts) First

Quarter Second

Quarter Third

Quarter Fourth

Revenue $ 2,016 $ 2,152 $ 2,209 $ 2,224

Expenses 1,729 1,895 1,880 3,300

Operating income (loss) $ 287 $ 257 $ 329 $ ( 1,076 )

Net loss attributable to Bausch Health Companies Inc.

$ ( 52 ) $ ( 171 ) $ ( 49 ) $ ( 1,516 )

Basic and Diluted loss per share attributable to Bausch Health Companies Inc.

$ ( 0.15 ) $ ( 0.49 ) $ ( 0.14 ) $ ( 4.30 )

Net cash provided by operating activities $ 413 $ 339 $ 515 $ 234

SUBSEQUENT EVENTS

On January 18, 2022, the Company issued conditional notices of redemption to redeem in full all of its outstanding April 2025 Unsecured Notes and to redeem $ 370 million aggregate principal amount of its outstanding December 2025 Unsecured Notes.

On February 10, 2022, the Company extended these conditional notices of redemption through March 15, 2022.

The redemption and discharge of the indenture governing the April 2025 Unsecured Notes will be conditioned upon the completion of the Credit Agreement Refinancing, as defined below.

The redemption of the December 2025 Unsecured Notes 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.

On January 18, 2022, the Company announced its intention to refinance its existing Restated Credit Agreement with a Fifth 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 7.6 x 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.

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 9A. Controls and Procedures