Bausch Health Companies Inc. 10-Q

Item 1A. Risk Factors Except as set forth below, there have been no material changes to the risk factors as disclosed in Item 1A. “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC and the CSA on February 23, 2023. The Xiidra Acquisition may not be consummated within the anticipated timeframe, on the current terms or at all, which could prevent Bausch + Lomb from receiving the anticipated benefits from the acquisition in the anticipated timeframe or at all. On June 30, 2023, a wholly owned subsidiary of Bausch + Lomb, Bausch + Lomb Ireland Limited, entered into a Stock and Asset Purchase Agreement (the “Purchase Agreement”) with Novartis Pharma AG and Novartis Finance Corporation (together, “Novartis”) to acquire XIIDRA ® (lifitegrast ophthalmic solution) and certain other ophthalmology assets from Novartis (the “Xiidra Acquisition”). Bausch + Lomb expects to complete the Xiidra Acquisition by the end of 2023, subject to customary closing conditions, including the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the absence of any law or judgment preventing the closing. Although the parties have agreed to use reasonable best efforts to promptly obtain the antitrust approvals required for the Xiidra Acquisition, there can be no assurance whether these clearances and approvals will be obtained in a timely manner, or at all. As a result, there is no assurance that the Xiidra Acquisition will be consummated in the anticipated timeframe or at all. In addition, the U.S. Federal Trade Commission (the “FTC”), the Antitrust Division of the U.S. Department of Justice or other applicable governmental authorities may seek to impose conditions on the completion of the Xiidra Acquisition or require changes to the terms of the Xiidra Acquisition. If Bausch + Lomb becomes subject to and agrees to any material conditions in order to obtain any clearances or approvals required to complete the Xiidra Acquisition, Bausch + Lomb may incur additional costs and experience further diversion of management time and resources, the business Bausch + Lomb is acquiring may be adversely affected and/or the imposition of such conditions and actions taken in response thereto may reduce the anticipated benefits of the transaction. In addition, Bausch + Lomb may be required to pay a reverse termination fee of $100 million if the Purchase Agreement is terminated in certain circumstances, including as a result of certain antitrust law-related conditions. There can be no assurance that the Xiidra Acquisition will be consummated on the current terms or on the anticipated timeline, or at all. Bausch + Lomb may fail to realize the anticipated benefits expected from the Xiidra Acquisition . Bausch + Lomb expects to realize certain benefits following the consummation of the Xiidra Acquisition. However, Bausch + Lomb’s ability to realize these anticipated benefits from the Xiidra Acquisition will depend, in part, on their ability to successfully integrate the acquired business into Bausch + Lomb’s current business. It is possible that the integration process following the consummation of the Xiidra Acquisition could result in the disruption of Bausch + Lomb’s business or the ongoing business associated with Xiidra or the pipeline assets that Bausch + Lomb is acquiring in connection with the Xiidra Acquisition. For example, suppliers, vendors, and other third parties with whom Bausch + Lomb or the acquired business do business or otherwise have relationships may experience uncertainty associated with the Xiidra Acquisition, and this uncertainty could materially affect their decisions with respect to existing or future business relationships with Bausch + Lomb while the Xiidra Acquisition is pending or with us after the Xiidra Acquisition is consummated. Integration efforts between Bausch + Lomb and the acquired business will also divert management attention and resources. For example, Bausch + Lomb expects to bring on the sales force currently supporting Xiidra as part of the Xiidra Acquisition. There can be no assurance that Bausch + Lomb will be able to integrate the existing sales force with its business, or that the actual integration of the acquired business will not result in additional and unforeseen expenses or liabilities (including those that may be assumed in connection with the Xiidra Acquisition), and, as a result, any anticipated benefits of the integration plan may not be realized. If Bausch + Lomb is not able to adequately address these challenges, Bausch + Lomb may be unable to successfully integrate Xiidra and the pipeline assets into its business, or to realize some or any of the anticipated benefits of the Xiidra Acquisition. In addition, delays encountered in the integration process could result in a failure to realize the anticipated benefits on the anticipated timeline, or at all. In addition, the anticipated benefits Bausch + Lomb expects from the Xiidra Acquisition are subject to numerous assumptions, including assumptions derived from Bausch + Lomb’s diligence efforts concerning the status of and prospects for the Xiidra business and the pipeline assets. Bausch + Lomb cannot provide any assurances with respect to the accuracy of 87 its assumptions, including its assumptions with respect to future revenues of the Xiidra products or assumptions regarding Bausch + Lomb’s ability to successfully develop and obtain regulatory approval for the acquired pipeline assets. There are a variety of risks and uncertainties, some of which are outside of Bausch + Lomb’s control, which could cause actual results to differ materially from these anticipated benefits. There can be no assurance that Bausch + Lomb will realize the anticipated benefits from the Xiidra Acquisition in the anticipated timelines, or at all. Bausch + Lomb has expended and will continue to expend significant time and resources in connection with the Xiidra Acquisition and expects to incur material indebtedness to fund the Xiidra Acquisition. Bausch + Lomb has expended and will continue to expend significant management time and resources and expenses related to the Xiidra Acquisition, including in connection with the consummation of such transaction and the integration of the acquired business with Bausch + Lomb’s business. These expenses include, but are not limited to, fees paid to legal, financial and accounting advisors, filing fees and fees associated with the expected debt financing for this transaction. Many of these expenses must be paid regardless of whether the Xiidra Acquisition is consummated. Additional unanticipated costs may be incurred in the integration of the acquired business with Bausch + Lomb’s business. Bausch + Lomb also expects to incur material additional indebtedness to finance the Xiidra Acquisition, which indebtedness may limit Bausch + Lomb’s operating or financial flexibility relative to its current position. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no sales of equity securities by the Company during the three months ended June 30, 2023. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures None.